ML19319C534
| ML19319C534 | |
| Person / Time | |
|---|---|
| Site: | Davis Besse, Perry  |
| Issue date: | 07/25/1974 |
| From: | Brebbia J, Farmakides J, Hall G Atomic Safety and Licensing Board Panel |
| To: | NRC COMMISSION (OCM) |
| References | |
| NUDOCS 8002190970 | |
| Download: ML19319C534 (19) | |
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UNITED STATES OF AMERICA ATCMIC ENERGY COMMISSION Before the Atomic Safety and Licensing Board In the Matter of
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THE TOLEDO EDISON COMPANY
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THE CLEVELAND ELECTRIC ILLUMINATING )
Docket Nos
-346A COMPANY
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50-44 (Davis-Besse Nuclear Power Station) )
50-441A
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THE CLEVELAND ELECTRIC ILLUMINATING )
COMPANY, et al.
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(Perry Nuclear Power Plant,
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N' Units 1 and 2)
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P' 0 0 C ~ E i I !!
O CIS JUL 2 31974 => H
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. f c.e.. m PREHEARING CONFERENCE ORDER #2
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Background
gsj Pursuant to Notice and Order for same, the Second Prehearing Conference in this consolidated proceeding was held on June 25, 1974.
Counsel for all parties were present and participated except counsel for State of Ohio, who had 1/
1 earlier requested, and the Board had granted, leave to be absent.
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By letter dated June 20, 1974 from Deborah M. Powell, Esq., Assistant Attorney General, incorporated herein by reference.
By attachment to said letter, the State, with agreenent of the parties, set forth the nature and scope of its participation under Section 2.715(c).
The Board approved same.
4 800219o97o A
. Pursuant to Prehearing Order number 1, the Regulatory Staff of the Atomic Energy Commission (Staff), the Depart-ment of Justice (Justice) and the Intervenors, City of Cleveland (Cleveland) and American Municipal Power-Ohio (AMP-0) prepared a " Joint Statement of AEC Regulatory Staff, Department of Justice and Intervenors Regarding the Con-tentions and Matters in Controversy" dated May 28, 1974 (hereafter Joint Statement).
The Applicants responded on June 7,1974 and the other parties replied on June 14, 1974 to the Applicants' response.
Thus, the prime purpose of the Second Prehearing Conference was to discuss the issues and matters in controversy and the scope of discovery pur-suant to them.
Following said Prehearing Conference, on June 28, 1974, the Board issued an " Order Requesting Clarification", re-questing each party, individually, to develop its position i
fully on several key issues related to discovery.
The Applicants, Staff and Cleveland responded timely with helpful briefs which have assisted the Board in its attempt to clarify the issues in this proceeding and to determine the scope of discovery.
Justice filed a response, which only summarized
al several general conclusions.
The party AMP-O filed no respense timely; by an untimely letter dated July 16, 1974, filed after the responses of the other parties were filed, II AMP-O adopted the City of Cleveland position.
The Joint Statement proposes broad issues and matters in controversy involving:
first, the structure of various markets for electric power and Applicants' positions therein; and, second, Applicants' conduct vis-a-vis its competitors and customers in those markets.
At the Second Prehearing Conference, Counsel for Staff emphasized that while the parties other than the Applicants view the case as basically one of " structure", they also believe that exploration of
" conduct" matters is required.
In responding to the Board's
" Order Requesting Clarification", the parties further devel-oped the issue of the relative importance of " structure" versus " conduct" and their positions concerning the need, if any, to explore allegations about Applicants' retail prac-tices, as well as other basic questions about Section 105(c) of the Act.
2/
In view of the special duty and status afforded to the Department of Justice in the Atomic Energy Commission Act (Act), the Board regrets it did not have the benefit of a logical exposition of the legal standards to be applied in administering Section 105(c) of the Act with authorities and citations for Justice's position on the questions posed.
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See paragraph E, below.
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. B.
Applicants' General Position with Respect to the Issues and Matters in Controversy Inter alia, the Applicants have objected to the Joint Statement because they believe:
(1) the issues and matters should be limited to relationships among the electric enti-ties that are parties to these proceedings; and (2) that the Applicants' proposed stipulations eliminate most of the need for discoveey with respect to whether a situation inconsistent with the antitrust laws (hereinafter " situation") may exist as contemplated by Section 105 of the Act.
Each such objec-tion will be considered in turn.
1.
Limitation of Issues 1
The Applicants strongly urge the Board to limit the issues and matters in controversy in this proceedir ;, the related discovery, and any license conditions that might be imposed, to relationships among the parties.
The seek to exclude any consideration given to "other electric entities."
It is important to distinguish between the Board's responsibility for determining, first, whether a " situation"
, exists, and, second, if such a " situation" does exist, what is the appropriate remedy.
At this stage of the proceeding, the Board is concerned only with whether a " situation" exists.
Resolving the disputes among the parties as well as insuring the protection of the public interest may require considera-tion of non-party competitors or customers in the relevant
- markets, i.e.,
"other electric entities".
Should the remedy stage be reached, it may or may not be appropriate to limit the remedy to the parties that have participated in the proceedings.
2.
Applicants' Proposed Stipulations Applicants' proposed stipulations allegedly would obviate j
the need for extensive discovery.
During the Second Prehear-ing Conference, Counsel for applicants stated that its pro-1 posed procedure was equivalent to the assumption arguendo procedure outlined by the Commission in its second Waterford hJ Memorandum and Order.
However, during the course of the 4/
In the Matter of Louisiana Power & Light Company, Waterford Unit 3, Docket No. 50-382A, Memorandum and Order of September 28, 1973, CLI-73-25, RAI 73-9-619, at 622
. 2 conference, the Board concluded daat, with one exception, this was not the case and that Applicants ' proposed stipu-lation dealt with the question of remedies, and not a
" situation".
In effect, Applicants appear willing to offer license conditions that they allege will satisfy the remedy W
requests of the other parties.
However, the other parties consider such license conditions to be inadequate and there is no record established by evidence, assumptions arguendo or " situation" stipulations that would permit the Board to adjudicate properly Applicants ' offer.
As the Commission has stated in its Catawba Memorandum and Order, in the j
l absence of a resolution of the " situation" issue, a stipu-lation as to remedy is not sufficient to obviate a full 11 hearing under Section 105(c).
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Applicants have stipulated that each is " dominant" in its respective service area with regard to transmission and bulk power generation facilities in the CAPCO area.
By " dominance", Applicants refer to percentage shares of ownership.
The stipulations do not extend to such matters
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as the definition of " relevant markets" or to " control" and other legal elements necessary to resolve the question of whether or not there may be created a situation incon-sistent with the antitrust laws.
U Except for the " wheeling" remedy that AMP-O desires.
2/
In the Matter of Duke Power Company, Catawba Nuclear Station, Units 1 & 2, CLI-74-14, RAI 74-4-307, at 309.
See also, In the Matter of Louisiana Power & Light l
Comp any, Waterford Unit 3, CLI-73-7, RAI-73-2-48, at 50, fn 2, and CLI-73-9, 25, RAI-9-619, at 621-6 22.
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, Since the record docs not contain appropriate assump-tions or stipulations as to " situation", the Board must con-sider what evidentiary record is required with respect to the situation that the Staff, Justice, and Intervenors assert is inconsistent with the antitrust laws and, therefore, what discovery is appropriate.
C.
Dominance and the Issues and Matters in Controversy The Board considered at length the question of whether, within the context of an AEC licensing procedure, dominance alone, in the sense of large market shares, is sufficient in and of itself under Section 105(c) of the Act to constitute l
a situation inconsistent with policies underlying the anti-El trust laws.
If so, these proceedings could be materially simplified and discovery substantially shortened.
If, how-ever, a showing of the exercise of monopoly power is re-quired in addition to dominance, then the scope of discovery must be expanded.
After considering all pleadings and views of the parties on this question, the Board has determined not to limit discovery to the subject of dominance only.
How-ever, the parties should be mindful that the Board considers g/
10 CFR, Part 2, Appendix A,Section X, Paragraph (i)
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, l the contentions to relate primarily to structure, and only incidentally to conduct.
Accordingly, any discovery directed to conduct should be limited and clearly designed to develop whatever evidence of conduct is needed beyond structure to demonstrate the " situation" referred to herein.
D.
The Issues and Matters in Controversy The following Issues and Matters in Controversy, as finally formulated by the Board, and based on the joint stip-l ulation and record to date, are admitted as issues in the i
l proceeding for purposes of discovery:
BROAD ISSUE A Whether the structure of the relevant market or markets 2l and Applicants' position or positions dherein gives them l'he ability, acting individually, together, or together with others, to hinder or prevent:
2/
Applicants are the five participants in the Davis-Besse and Perry nuclear units:
Cleveland Electric Illuminating (CEI), Duquesne Light Company, Ohio Edison Company, Pennsylvania Power Company and Toledo Edison Company.
The Applicants are also the five members of CAPCO, referred to below.
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(1)
Other electric entities from achieving access 11/
to the benefits of coordinated operation either among themselves, or with Applicants:
(2)
Other electric entities fran achieving access to the benefits of economy of size of large electric 12f generating units by coordinated development, 1
either among themselves, or with Applicants:
BROAD ISSUE B.
If the answer to Broad Issue A is yes, has Applicants' ability been used, is it being used, or might it be used to create and maintain a situation or situations inconsistent with the antitrust laws or the policies underlying these laws.
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"Other electric entities" refers to commercisl firms, (other than the five Applicants), cooperatives, govern-mental units or similar organizations that generate, transmit or distribute electric power within the relevant market (s).
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" Coordinated operation" includes but is not limited to j
such activities as reserve sharing, exchange or sale of finn power and energy, deficiency power and energy, emergency power and energy, surplus power and energy, and economy power and energy.
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" Coordinated development" includes but is not limited to joint planning and development of generation and trans-mission facilities.
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MATTERS IN CONTROVERSY UNDER BROAD ISSUES A AND B (1)
Whether the Combined CAPCO-Company Territories 13/
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(CCCT) is an appropriate geographic market for analyzing the possible creation or maintenance of a situation incensistent with the antitrust laws or the policies underlying those laws.
(2)
Whether there are any relevant geographic sub-markets, and, if so, what are the boundaries.
(3)
Whether any or all of the following are relevant product markets for analyzing the possi-ble creation or maintenance of a situation incon-sistent with the antitrust laws or the policies underlying those laws:
(a)
Regional power exchange transactions within power pooling arrangements involving ex-changes and/or sales of electric power for i
resale.
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The Combined CAPCO Company (Central Area Power Coordi-nation Group) Territories (CCCT) refers to the region bounded by the outer perimeters of the geographic ter-ritories of the five CAPC0 members, as shown on the map submitted by CEI as Exhibit F to Information Requested by the Attorney General for Antitrust Review in con-nection with the Perry Nuclear Power Plant Units 1 & 2 (The map is entitled " Principal Facilities of CAPCO as of October 31, 1969" and was prepared by Duquesne Light Co.)
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, (b)
Bulk power transactions involving individual contracts for sale-for-resale of firm electric power or for emergency, deficiency or other types of wholesale power.
(c)
Retail power transactions involving sales of electricity to ultimate consumers.
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(4)
Whether Applicants' stipulated dominance of bulk power trans:3.ssion facilities in the CCCT gives them the ability to hinder or preclude com-petition in the transmission of bulk power.
l (5)
Assuming the answer to (4) is yes, whether Appli-cants have, do or could use their ability to pre-clude any other electric entities within the CCCT 1
from obtaining sources of bulk power from other j
electric entities outside the CCCT.
(6)
Assuming that the answer to (4) is yes, whether Applicants have exercised, are exercising, or intend to exercise, their ability to prevent i
other electric entities in the CCCT from achieving:
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Transcript pp. 448-451; 473; 483-484 lj/
Dominance here and below refers to percentage shares of 75% or more in relevant service market areas l
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_ (a) the benefits of coordinated operations either among themselves or with Applicants.
(b) access to the benefits of economy of size from large nuclear generating facilities.
(c) any other benefits from coordinated de-velopment either among themselves or with Applicants.
(7)
Assuming the answer to (6) is yes; has this ability to hinder or preclude campetition been exercised for the purpose or effect of eliminating one or more of the other electric entities in the CCCT.
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(8)
Whether Applicants' stipulated dominance of bulk power generation in the CCCT gives them the ability to hinder or preclude competition in one or more relevant markets.
(9)
Assuming the answer to (8) is yes, whether Appli-cants have exercised control over bulk power fa-cilities to deny to other electric entities in the CCCT:
(a) acecas to the benefits of coordinated oper-ation, either among themselves, or with l
Applicants.
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Transcript pp. 440-441.
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(b) access to the benefits of economy of size of large electric generating units.
(c) assess to any other benefits fran coordinated development, either among themselves or with Applicants.
(10)
Whether Applicants ' policy or policies with respect to providing access to their nuclear facilities to other electric entities in the CCCT, that are or could be connected to Applicants, deprives these other electric entities fran realizing the benefits of nuclear power.
(11)
Whether there are logical cennections between the activities under the proposed licenses for the nuclear facilities and each of the matters in contention (1) through (10) that meet th nexus 17/
test established by the Atomic Energy Commission."~
The Board will not address issues and matters in con-troversy with respect to remedy until a situation 17/
In the Matter of Louisiana Power & Light Company, Waterford Unic 3, Docket No. 50-382A, Memorandum and Order of February 23, 1973, RAI-73-2-48 and In the Matter of Louisiana Power & Light Company, Waterford Unit 3, Docket i
No. 50-382A, Memorandum and Order of September 28, 1973, RAI-73-9-619.
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i 1 inconsistent with the antitrust laws or underlying policies i
thereof has been established.
Consequently, at this time, i
no discovery specifically directed to potential remedies is j
appropriate.
E.
Clarification of AMP-O's Contentions In its Memorandum and Order of April 15, 1974, the Board required AMP-0 to explain more fully the mechanisms and relationships that it believed would result in operations under the licenses for the Davis-Besse and Perry plants injuring AMP-0.
This requirement was held in abeyance pending the development of the Joint Statement.
The Joint Statement did not provide the information the Board seeks, and consequently, such requirement is hereby reinstated.
AMP-O's statement shall be filed within 10 days cf this Order.
In any event, since AMP-O's contentions were limited to wheeling, its discovery shall also be so limited.
The Board notes that AMP-0 has not filed the proposed schedule requested and did not file timely a response to the Board's Order requesting clarification.
Henceforth, the Board will not accept an untimely filed pleading unless it is
s
, supported with ample good cause.
in addition, any party not filing a response to a Board Order or one required by the Rules will be deemed to have waived all rights in re-gard thereto.
A continuing failure to thus participate in the proceeding will lead to an order to show cause why that party should not be dismissed from the proceeding.
F.
Schedule All Parties, except AMP-0, have submitted proposed schedules for the future milestones in this proceeding.
After considering these proposals and the discussion at the Second Prehearing Conference, the Board sets the fol-18/
lowing schedule:
Final Date:
For:
l August 1, 1974 Discovery begins.
August 26, 1974 Discovery requests (other than admissions).
Septanber 9,1974 Written objections to discovery requests.
September 13, 1974 Hearing on objections, if needed.
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Cleveland's motion dated July 17, 1974, for leave to file an untimely, supplemental brief in support of its proposed schedule is hereby denied in view of our earlier rulings on such " supplementary" filings.
As stated, absent a showing of subst:7tial good cause --
not found here -- rulings will be strictly adhered to.
, December 15, 1974 Completion of all pretrial discovery.
January 10, 1975 Statements on ultimate issues to be heard.
January 20, 1975 Responses to Statements on ultimate issues.
January 25, 1975 Prehearing Conference No. 3 February 20, 1975 Written Testimony (Justice, Staff, Intervenors)
March 12,1975 Written Testimony, Applicant April 2,1975 Filing of any Motions for Summary Disposition.
April 14, 1975 Filing of any responses to Motions for Summary Disposition.
April 18, 1975 Prehearing Conference No. 4 April 30,1975 Filing of Pre-trial Briefs May 14, 1975 Hearing Camences l
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' 30 days following final Filing of rebuttal testimony, hearing date.
20 days following filing Hearing on reubttal.
of rebuttal testimony.
ATOMIC SAFETY AND LICENSING BOARD 40,JLl/L e
! John K Brebbia, Member
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deorge Rpal'1, Member
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E$t-J B. parMkides, Chairon Issued at Bethesda, Maryland, this 25th day of July 1974
UNITED STATES OF A:' ERICA ATOMIC E:.TRGY CO:CIISSION In th'e Matter of
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TOLEDO EDISON CO:Ga:Pl. ET AL.
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Docket No. (s) 50- 346A CLEVELu'3 CLECTRIC ILLCII:3TU;G )
50-440A C05A:,7
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50-441A
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'. CERTIFICATE OF SERVICE -
I hereby certify that I have this day served the foregoing document (s*
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upon each persen designated on the official service list compiled by the Office of the Secretarv of the Cc==ission in this proceeding in accordance with the recuire=ents of Section 2.712 of 10 CFR Part 2-Rules of Practice, of the Ato=ic Energy Co==ission's Rules and Regulations.
Dated at Washic; ten, D. C. this
,957 hday of, J. /*.
197 4
)[80 / 8 %
1 Office of the Secr ary of the Cor=rission o,
e 9
.s UNITED STATES OF N! ERICA ATalIC ENERGY C04 FISSION In the Matter of
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) Docket No. 50-346A CLEVE1AND ELECTRIC ILLGIINATING
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60-440A C0t!PANY
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50-441A-SERVICE LIST John B. Farmakides, Esq., Chairman Gerald Charnoff, Esq.
Atomic Safety and Licensing Board W. B. Reynolds, Esq.
U.S. Atomic Energv Cocnission Shaw, Pittman, Potts S Trowbridge Washington, D.C. 20545 910 17th Street, N.N.
Washington, D.C. 20006 John H. Brebbia, Esq.
Atomic Safety and Licensing Board Joseph Rutherg, Esq.
Alston,5 tiller 5 Gaines Benjamin H. Vogler, Esq.
1776 K Street, N.W.
Antitrust Counsel Washington, D.C. 20006 Office of General Counsel Regulation Dr. George R. Hall U.S. Atomic Energy Comission Atomic Safety and Licensing Board Washington, D.C. 20545 U.S. Atomic Energv Comission Washington, D.C. 20545 Leslie Henzv, Esq.
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W. Snyder, Esq.
Fuller, Henry, Hodge 5 Snyder 300 Madison Avenue Toledo, Ohio 41604 John C. Engle, President A\\tP-0, Inc.
}!unicipal Building 20 High Street Hamilton, Ohio 45012 George B. Crosby Director of Utilities Donald H. Hauser, Esq.,
Piqua, Ohio 45350 Managing Attorney
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Cleveland Electric Illuminating William M. Lewis, Jr.
Company W. M. Lewis S Associates Public Square P. O. Box 1383 Cleveland, Ohio 44101 Portsmouth, Ohio 45662 Honorable Richard N. McLaren Robert D. Hart, Esq.
Assistant Attorney General Assistant Law Direct 0r Antitrust Division City Hall U.S. Department of Justice Cleveland, Ohio 44114 Washington, D.C. 20530 e-w
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