ML19317G510
| ML19317G510 | |
| Person / Time | |
|---|---|
| Site: | Crystal River  |
| Issue date: | 08/30/1971 |
| From: | Tremmel E US ATOMIC ENERGY COMMISSION (AEC) |
| To: | US ATOMIC ENERGY COMMISSION (AEC) |
| References | |
| NUDOCS 8003180798 | |
| Download: ML19317G510 (6) | |
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~ ATOMIC ENERGY COMMISSION'-
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whomb Memoran'dum to-File MEETINGWITHA.P.PENEZ, PRESIDENT,FLORIDAPOWERCORPORATION On Monday, August 23, I met with Mr. A. P. Perez, President, Florida Power Corporation.
He gave me copies of their news release in regard
..to.their~ announcement on August 19 to construct a second nuclear generating unit at th'eir Crystal River plant site.
The new unit wil1 be a 897,000 kw pressurized water reactor and an order was placed with
-Westinghouse for this reactor.
He also gave me a copy of a -letter dated August 13, 1971, that he had written to the Honorable Jess Yarborough, Chairman ofc the Florida.Public Service Commission, refuting the crent
' accusation of Senator Lee Metcalf of Montana.
Attached to his 1r cer islan article wnich appeared in the St. Petersburg Times, entitla, "On Carrots and Kilowatts and How They Differ," whi.ch also is aimed at Senator Metcalf's accusation. A copy of the news release and article are' attached.
'Mr. Perez said thatitiieir decision-to ' contract with Westinghouse was a very close.but. clear-cut decision.
He said Combustion Engineering and B&W were very competitive
He said that GE was essentially ruled out
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because. Florida Power Corporation favored another pressurized water reactor. at the Crystal = River. site.
One of the biggest factors -in awarding to Westinghouse is a program
. Westinghouse has developed in regard -to standardizing and licensing.
.He 'said their orderLto Westinghouse would be the sixth one for a standardized Westinghouse plant;and is of the same type as the four that Carolina Power & Light ordered recently.from Westinghouse.
Their overall plansL now include fossil plantis for.1974-75, no new plants
- for 1976-77, andithe second Crystal River nuclear plant for operation in 1978. ~ Their.first Crystal River nuclear plant is scheduled for operation tin 1973. 'In.1976 and 1977,..they will probably work in several dual cycle fossiliplants oripeaking capacity._
He said that United Engineers helped them evaluate their proposals and that Stoller. consultants helped evaluate the fuel proposals.
Gilbert Associates wil.1 be the Architect-Engineer for the plant.
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He said fossil fuel costs are very high and _ the environmentalists are
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beginning to~ intervene on these types of plants.. Thus, irregardless of the many problems of. licensing nuclear plants, they felt-this was the direction to go.- He~'said they have included approximately $10 million
.in their funding of.the nuclear plant for cooling towers.
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Ernest B. Tremmel, Director Division of Industrial Participation -
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Enclosures:
1.
News Release dtd 8/19/71-2.
Ltr APPerez to Hon. JYarborough dtd 8/13/71 w/enci (art, from St. Petersburg Times dtd 8/11/71) cc:
Chairman (2)..
Commissioner Ramey Commissioner Johnson
' Commissioner Larson Commissioner Doub
- Secretary General Manager General Co'unsel-P. Fine, CA
- J. Flaherty, AGM :
M. Shaw, RDT-H. Price, DR P.- A.: Morris, DRL
. A.:A._ Wells, ASLBP R.:Fraley,~ACRS-H. Brown, Jr., AGM 9
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F Lb H IDA POWE Rt C O R PO R ATION
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- sT. FETENsBURo '
FIORIDA s
August 13,, 1971 The Honorable Jess Yarborough, Chairman Florida Public Service Conanission 700 South Adams Street Tallahassee,. Florida 32304 1
Dear Mr. Chairman:
Recently, Senator I.ee Metcalf of Montana released figures which.he claimed showed Florida's investor-owned electric utilities, as well'as all other private tax-paying utilities in the Nation, were making excessive profits. This is the Senator's annual manipulation of the regulated electric utilities' published reports.
The Senator chose to ignore capital investment in his com-putations, which makes his allegations totally untrue. He-took the operating revenues and the net income and got a percentage of the two.
This percentage was what he then released and called profit.
As you knew, this bears no relation to reality.
Since elec-tric utilities have one of the highest capital investments per dollar of revenue of any industry, the only appropriate and recognized method of determining earnings is to relate not income to the investment which is used and useful in serving the public.
Senator Metcalf used no accepted utility accounting princi-ples recognized by any state or federal regulatory agency.
His. type of approach has never been accepted or considered as a valid means of
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determining the financial status of utilities.
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'As.you know, our books and records are regularly audited by
- your Commission, periodically audited by the Federal Power Commission, and annually audited by the Internal Revenue Service.
In addition, our: financial reports are audited and certified to by Arthur Andersen
& Co., one f of the world's largest firms of certified public accountants.
'Furthermore, detailed statistical reports of'our financial picture are published by Moody's and Standard & Poors, financial rating' agencies.
No one,'save Senator Metcalf, gives any meaning or credence to the ratio of an electric utility's net income to gross income.
Enclosed is an article which was published in the St. Peters-burn Times on August' 11', 1971. The author of this story is business editor :of the paper and a former writer for the Wall Street Journal.
I think you will'. agree he surns up the : Senator's errors concisely and ex-
- plains how it really is in understandable terms.
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The Honorable Jess Yarborough, Chairman Florida Public Service Commission h
August 13, 1971.
Page 2 It is unfortunate that a United States Senator would release misleading information about an_ industry which is so critical to the continued economic and physical well-being of the Nation.
It is even more unfortunate that it would receive such wide circulation and there-by credibility. However, an indication of his acceptance by his col-
-leagues in the Senate would have to be the fact that no other member-has ever joined him in this annual misguided effort.
Senator Metcalf directs his meaningless accusations exclus-ively at the regulated segment of the electric utility industry -- as an advocate of public power his biased motives are no secret.
I hope this information proves to be useful in helping to clarify recent news stories.
Cordially, FLORIDA PCWER CORPORATICH I
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A. P. Peres President APP:tm Encl.
cc: Covernor Reubin O'D. Askew
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.Consissioner William T. Mayo
'u Connissioner William H. Bevis All Members of: Florida Cabinet Florida Congressional Dulegation Florida Legislature Pinellas County Cornission City of St. Petersburg City Council
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-w Wednesday, Aug. 11, 1971 On Carrots And Kilowatts And How They Differ By CIAYTON REED the nation, and it's pretty sales volume with it. His prof-Imoking at last year's $158-Tie m see in us w hard to sell a rate boost when it may be low, perhaps $10,000 million in revenues, you find somebody says you're rolling or $15,000, for a " profit mar-that after paying 35,7-m,ilh,en The role of television per-in dough already.
gin" cf 2 or 3 per cent.
In operating expenses. Sh, sonality doesn't come easy for m!!! ion in taxes. 317 millien in:
A. P. Perez He's an eng!-
T11E SENATOR a!!eged But he has paid his employ-interest (borrowing costs),
neer, and has been since he that all three of the state's big es (and possibly himself) 317. mil!!cn in stock dividends-took his degree In e!ectrical power producers - Merida wages, and settled his bi!!s (the 3.05 per cent yield oni engineering from A u b u r n Power & Ught Co. of Miami, with the wholesalers, so 2 or 3 common isn't much to brag back in the early Depressicn Tampa Electric Co. and Flori-per cent in profit margin about), and $23-million in as <
days.
da Power Com. - hat' far ex-micht be a cause for celebra-scrted other charges, the tii But Perez "Jee" to his ceeded a 6.95'per cen " profit tien with him.
fat t.tility ended up with abcut friends - found himself be.
!!mit" set by e.e Plouda Pub-FUPPOSE, however, he had
$4 mill!cn in inecme it ceu!d fere "[V cameras the other lic Service C o m r. I s s i o n to invest $3C0.000 to start the play around with.
day. His associates at Florida (PSC).
business. Suppose he took the That was promptly flowed Tcwer Ccrp. per:uaded him Well, there is no such an!-
$100.0C0 he had and put it with
- n;3 3 g;CC-million eenetrue, that the cause was urgent mal. David Swafford. d! rector 3400.000 borrowed at 9 per tien p egram needed ta b--
encuch, so he s u f f e r e d of PSC's rating division in cent to build a really classy up with Florida's explos through three days of rehears-Tallahassee, q u i c k 1 y re-food mart. And suppose he growth. By reinvest!ng this is als, sa't still for the makeup spended that terulaters deit still pulled in only 3500,000 in the business, the company man, then went befcre the ar.d can't go by the familiar sales for a protit margin of avelded that m"ch more he cameras to p! cad Florida "crefit margin" - the ratio
$10,000-315.000 cr 2-3 per cent.
cost borrowing and ear-d d Power's case for its first rate of pre!1ts to sales - in judg.
increase in 13 years, ing milities, e would be wiped out in no good bond rating on Wai{
Street (where it still mus berrow 31'0 million in 15 t!me. He interest cost on his PEREZ'S DECISION to un.
"The law says they're enti-
$KC,000 borrowing would run dertake a TV commercial tied to a ' sufficient rate of re-him 306,000 the first year.
WITH INFLATION slashina himself, as company pres!,
turn' on any preperty used nat, in a nutshell oversim.
at utilities no less than at tb dent, points up the concern and useful, but there's no set plification for purposes of and me, Florida Power's ne-rate - that's what we have clarity, explains the utilities, felt at the big St. Petersburg all these rate h e a ri n g s predicament. Florida Power utility about the fate of its n' about " said Swafford.
last year had a whopping $31-ly - but this essay isn't in quested $20-million rate boost.
million in profit out of the tended to defend its rate bocs MA E conect 1n 3158-million collected in reve-plea. The merits of that wid Officials are confident they n
ng rida owe,s be we ghed at PSC pubb the 12 per cent increase be-E E'
nues, for the " profit margin" can suffielent!y show r.eed for of 19.79 per cent that Metcalf fore the Menda Public Ser.
19.73 per ce.t last year - if grumbled about.
hearings next winter.
vice Commissien, but "the tim-you go by the accounting But there is a difference be e d used.at the corur BUT ITS total investment in tween carrots and Kilcwattd ing was the worst " as one grocery store. Tampa Elec-plant was something like and th!s is aimed only at en FPC man Eut it
".st c" day tric's was 19.63 per cent and 3G55.million. And the "capini-i-
Scw 'en Metca' hf. lain M' ' hits after t.,,.e appucation was Florida Power & Ught's 1441.
Izatien" behind that - he grocery stor f!!ed. Sen. I/e Metcalf. D.
But a gmcery store can money accumulated to bulli
- with his electricity company
'. Mont.. !1sted Merida Power as start up with maybe a build.
32<cunty electr:c company -
And how it happens t' a one of 100 electric utilities ing and seme shelf stock -
was $338-millioi.
. per cent you're seeing an amiable ta that are already making too say a $100.000 investment in long term borreg, 44 per theatrical engineer named JJ much money, all-and do a 3300.000 annual cent common and preferred Pere: performing en the v
- CO Metcalf's ' charge, inserted tube these days.
in the Congress:enal Record, was considerably eff base, as -
. events preved. But the news
' ' rnedia trumpeted it all acms O@?
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% NONS RELEASE
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1,]j FLORIDA POWER CORPORATION
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W. C. (8FLL) JOHNSON. PUBUC INFORMATION OFFICER / ST. PETERS 8URG, FLORfDA33733 / (813) 898 2141 FOR RELEASE AFTER 3:00 P.M.
THURSDAY, AUGUST 19, 1971 TbeboardofdirectorsofFloridaPowerCorporation approved plans today to construct a second nuclear generating unit at the Crystal River plant site.
The new unit will be an 897,000 kilowatt (kw) pressurized water reactor similar to the company's first nuclear unit which is now under construction and scheduled for operation in 1973.
Target date for the second unit to begin operation is 1978.
"The proiccted growth of our service area, along with the continued increased usage of electricity by present customers has indicated to us that this unit is a necessity for the late 1970s," A. P. Perez, president, said.
" Presently, we have 2,000,000 kw of generating capability under construction, and this new unit
.;., will bring us to almost 3,000,000 kw being added in the ne:ct seven years.
That is approximately one and one-half times the size of the present system."
The new nuclear unit, which will be the largest committed to data in the state of Florida will be supplied by Westinghouse Electric Corporation.
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Gilbert Associates, Inc. of Reading, Penna., have been selected as architect-engineers for the project.
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