ML19322C355

Testimony of Bh Cherry Before PA Public Utils Commission on Behalf of Met Ed & PA Electric Co Re Customer Economic Studies in Light of Facility Incident.Exhibits Encl

ML19322C355
Person / Time
Site:	Crane
Issue date:	01/16/1980
From:	Cherry B GENERAL PUBLIC UTILITIES CORP.
To:
Shared Package
ML19322C344	List: ML19322C343 ML19322C348 ML19322C352 ML19322C355 ML19322C358 ML19322C363 ML19322C370
References
TASK-TF, TASK-TMR PN-309, NUDOCS 8001160892
Download: ML19322C355 (14)

Text

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Exhibit No.

FERC Docket tio.

'R78-494 i

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r Testimony and Exhibits of 4

1 Mr. B.

H. Cherry 1

Before the Pennsylvania Public Utilities Commission in i

Docket No. I-79040308 a

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Mo:-Id/Penelec Sta:e=o:: 1 h* i t m o s s :

Ber *rd E.

Cher?v TEST!MCNT 0? S IEN A F.*

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CEILIT 3efere the ?entrelvreis Publie 7:111:e Ce::issten 0 179040308 et al.

My.na=e is Bernard I.

Cherry.

a= a picyed by G?U Service Cerperatics serving as Vice President, Cc pera

e Planning.

My testi=c:7 is presented en behalf of Me::cpelita: Idise Oc=pany ("Me:-Id") and Pas:sylva=ia Elec:ri: Cc=pany ("?acele

"),

both of which are subsidiaries of General Publi: Utilities Cerpera:1c: ("G?r").

I h av e been e=pleved bv. G?; s ub sidiaries fe,r 10

v. ears, first as a semic: nuclear engineer vi:h the Jersey Ces::a1 ?cuer & Ligh:

Cc=pa=y

(" Jersey Cen::al"), and finally c =y curre:: positie in Augus; ef 1977.

I held a Bachele: ef Science Degree 1:

Ch emi s t ry

d Mathe=atics f r o: :he Univ e r s i ty of Illinois, a Mas:e ef Scie::e Degree in Nuclear I:gineering f c: the University of 1111:cis, and have done pos: gradua:e study in Nuclear Science and Ingineer; g a: Ce lu=bia Univer si:7

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addi: ice, I have par:1cipa:ed in courses in Inergy Supply, and Decision Analysis a: the Massachusetts Ins:itute of Te chselegy.

In addi:ic: :e =y verk at GPC, I a= ac:1vely engaged i: a nu=ber of ac:ivi:1es related to e ergy supply planning a:c lead forecas:ing.

I have served as Chair an of an Inergy Medaling

'f energy demand.

Teru= (IXy) group focusing en :he forecasting o

IM y is a= a c :1v i t y funded by :he Ilec:ric Power Re search i rb

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!:stitute and ad=isistered by Sta:ferd University.

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a me=her of the North A=eri::: Secie:7 fer C :pera:e Planning, and I also s e rv e c: the divisie:a1 ce==it:ee of the I ? ?.! Ice:gy and Invire==en: Divisic:, the Idise: Ilectric I:s:1:ute Nuclea:

?cuer. Advisory C===1::ee, and :he A=erican Nu clear 50ciety Executive C:==ittet en :he Fuel Cycle.

have bee

r e s p ens ib l e fer the =anage en: ef the GPUSC C-pera:e Flas ing Divisic since 1: vas fer=ed i: August, 1977.

4 The divisic: vas se up i: recogni: ice of the need for i=p;cve-

=en i: the everall =anage=e : and coerdica:1c ef the several facets of c =pany pia =:ing activi:ies.

i My tes:i=c:7 p;crides se=e data :

assis: the C:==1ssie: ir furthering its u:ders asding cf the benefits G?t's cus c=ers have received, and =ay expect :c r e c e iv e, f::= cur nuclear operaticus.

By way of the exhibits and the tex: ef this t e s : i= = = y, ! vill shev : hat G?U's nuclear TMI-1 and Oyster Creek facilities have already yielded custe=e ces: savings

ht: ra:ge up to 5700 =1111e:.

3efere directing =y attentie: Oc the specific cus:e=e: ect c=1c s:udies, a brief discussie: ef the genera:1c: planning p ccess is in c:dar.

1: the design of a genera:ic: plan, a =ultitude of se=e:i=es non-ce= parable considera:icus

==s he studied and ev al ua t e d, and finally a judg=e : rendered c a specific c our s e of actics.

We begin vi:h an energy and lead ferecas: for 20 ye ars tha: defines expec:ed de=and for electric power by our IM 9 p. :n( M.. %g'q,'y.

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cus:::ers.

is tho

ocessary :

desis: a sys:e= expansie:

pla: :e assure tha: the requi:ed capaci:7 is available in a reliable, ecs:-effe::1ve, and e:vire==e:: ally acceptable

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er.

Th e,,.r e s ul: 1:g plan is a =ix of ba s ele ad, inter:ediate c cycling, and peaking capa:1:7 uni:s, bulk ::ans=1ssie: and local dis:ributie: ne:verks, all geographically ce figured i:

a =anser to assure syste= stabili:7 and reliabili:y of the power supply. This is deze i: a decisien envire==es: tha:

recogni:es emerging regulatiens c the tech::1cgy, the ta:ura:ien cf tha: :ech=clogy, and in reces: years the

siderable uncertainties regarding fuel prices.

Ap p r extra :ely 3 0 years age GPU e= barked on a pe cgra= desigted

= achieve the benefi:s of etene=1:s of scale 1: generating fa:ilities by installing units si:ed te :he :::al Gy; Syste:

lead, rather thae the leads of the individual =e=bers of :he a

Systa=.

L'reever, is erder Oc realize the e enc =ies of ::ans-perti:g ele::ric energy by vire rather :han ceal by rail: cad, the G?U Sys:e: buil an ex:ensive ::ansmissie: syste= and the firs: :ve uni:s a: its Shavville s:a:1e near :he coal fields in Wester: Pennsylva:ia.

As the Sys:e= icad grev, :ve additional units were installed a: S h a vv 111 e and ane:her a:

Sevard, ais e loca:ed tear :he Pennsylvania

al fields.

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While it was fossibit the GPC cc=pacios te build a signifi-can: par: of : heir generating capaci:y at c: near =1:e-=cuth, conditions of reliability aise made it necessary :o build generating capacity 1: the easter portie:s of the service area and duri:g this sa=e ti=e fra=e c o al-f i r e d genera:ing uni:s

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we re ins:alled at the Per land 5:a:1ot (c the Delavare Liver) and a: the Sayreville Static: in Ne w Jer sey.

The GPU Systen aise did sc=e pioneering verk c the develop =e of ex::a high vel: age ::ansmissie and i: the pro =ctice of semancy-ince==ce evnership by ce:-affilia:ed u:111:1es of large

=ine-=euth coal-fired generating staticus which led :c :he Keys:cce and the: s ub s e q ue' :17 the Cene=augh and Eener Ci:y 5:a:icus near Jehnstovt.

The G?C Sys:e= is a participant is i

these :hree s:ations.

Acditie ally', the GPO ce=panses ec -

s::ucted :he Sax: : Nuclear Izperimen:a1 genera:ing s:a:1ce :c gain firs: hand experie:ce with :he cess: ue:1ce, operation and cate:enance of a nuclear genera:ics facili:y.

Through

he A:omic Inergy Ac: ef 1954, :he yederal Gever==e:: had, of course, actively encouraged the develep=e : ef nuclear gener-a: ion of elec: ic energy.

Th e decisio: e:viron=es: in the =1d 1960's, when co==i =ents vsre being =ade for TY.I-l and Oyster Creek, was ce=siderably different fro = that of today.

This wa s an era whe: the price of fuel oil was approx 1=ately 40 ce::s per =1111o: 3TU's, as co= pared with :oday's price of $ 3. 0 0 p e r =1111e= ETr's.

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This was a :imo whe: facilities were bai:s cons: u::ed without the regulations of the Clea: Air Act of 1970, and :here was c s::c=g natic a1 ce==1:=et: to expand cur nu clear generating capac1:7 Thus,"by :he =id-1960's, G?U had substanzial exis:1:3 wholly-ovned vester coal-fired genera:1:s capaci:7 ( S h a vv 111 e,

seward, Warren) and was ce==i::ed to several vester: Pe==syl-va:La coal facilities then under cess::ue:ie: -- Ieys:::e service 1967/68), Ce:e=augh (1: s e rvic e 1970/71), and Ee=e:

City U:its 1 and 2 (in service 1969).

Give these ce==1:=en:s, and recogni:ing :ha: cur system was spread f== the A:lat:ic Ocea: through the Sta:es of Nev Jersey and Pennsylvania c lake Irie, our future plassing focused c the need for additional baseload capacity 1: :he Eas:.

Our ferecasts indicated :ht:

cur theere:ical lead cente was in easter: Pe :sylvania c:

ves:er: New Jersey; hence, for systen stabili:y and reliability reascus, our atte::1c: vas directed toward such loca:1c=s as 07s:e: Cr eek (near Tc=s River, NJ) and Three Mile Island (near Middle ovn, FA).

As we were already ce==1::ed a: tha: time te satisfy a large fractie: ef our require =ents f ce coal, in :he i=:eres: ef diversificaties of sources of energy, ve were aise considert g oil or uclear baseload capaci:y.

Our acecomic s:udies, even 1: the =1 d-19 6 0 ' s -- before 0?IC -- de= ens: rated the superiority of nuclear.

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Eaviss deficod the decisic p ccess tha: lod te r elc tiv oly eas:er: 1cca:icts of bulk pcus: suclear'u i:s ( M -1 a:d 2 and Oyster Creek), I vill nov :ur: directly te a re: respective econe:1c discussio: of the savi:gs tha:, 1: fact, did accrue :e our.cus:c:ers f c= the cess::ue:ie: ad opera:ic: ef :hese units.

To p;cvide s: ue:u:e te this a:alysis, ; vill discuss the ce=parise ef TEI-1 vi:h a hype:hetical cil plas: iccated a: Three Eile is land, and the ec=parise: ef our cys ter Cr eek icca:ed near Tc=s facility with a typothetical oil pla::

Liver. :: that cessectics, I migh: = = : e' tha: the envir e==e

a1 regulatices adop:ed i: New Jersey beginning 1: ths ic:e 1960's necessitated the conversic: ef the S a yr eville and G11ber:

coal-fired units in New Jersey te o il-b ur cin g ac that c:her u:111:ies 1: Pennsylva:La installed new cil-bur =ing units i:

the sa=e time period.

These c e=p aris e ns are centained in Ex hib i t s 1-1 and L-2 =c this tes:1=c=y.

I: is notable tha: 1: the four years since its in-1 servi:e date, our TE!-1 f a cility ha s yielded custe=e: s av in g s ce the erder of three hundred cillic: dellars (5300 =illic:)

as oil-fired uni: a: t h'e same site. It is ecually co= pared vish at per:ine:: :o observe :ha: in 1:s si=e yex s of service, cur Ov. ster Creek f a cili:v. has benefited our custe=ars c: the of four hund:ed millic: dollars ($400 =1111c } cf ces: savi:ss co= pared vich an o il-f ir e d usi: a: the sa:e site.

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For ce=ple:enoss of this prosan:atics, I p : vide the coal vs.

=u c lea r c==parise: 1: these sa=e Exhibi:s.

These :ailes de=cestrate the co=pesite be eft:s of these tve units (as cc= pared vi h coal-fired units a: the sa=e si:es) te be on :he c:da of $300 =illica since their in-s e rvic e da:es.

The presen: v alu e of the life:1=e benefits of such nuclear units (as c e=p ar ed with coal units) is exp e c t e d :: be c: the order cf 51.4 b illi e n.

1 In s c =a ry, re:respe::ive customer e ::c=1 assessments in-dica:e :ha: the al t e rna tiv e s to the TMI-1 and Oyster Creek 1

facilities vould have ecs: cur cus:c=ers as much as seve:

hundred =illice dellars (5700 =11110 ) =cre'during the four years of eperatie: of TMI-l and the nine years cf operatie ef Oys:e Creek.

These savings, by way of the regula:ery pr: cess, a : ue diree:17 :o cur cu s :c=e r s as lower charges tha: those

'which would have been necessary if the Oyste Creek c: IMI-l units had been fossil-fired.

!= c:her verds, our cus:c=ers have r e c e iv e d all the econc=ic benefits of :he Oyster Creek and TX -1 ins:alla:icus.

Moreover the perfor=t :e of :hese u=1:s has been vell above the na:iccal average and our cu s : c=e r s have received all,the benefits of that superier performance.

• J e enderse that philoscphy.

Th e p: cs pe c tiv e benefits of the GPU ce==1:=en: :: nuclear energy are underlined by the inf o rma tion contained in Exhib i:

t-3 :c this testi=cuy.

This exhibi: de= ens :a:es :ha the rate

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ef oscalatics c a ce::s-por =illic: STU basis of oil and coal has bee: significantly greater than =uclear. This table suggests that the savings to cur cus:ccers f ce :hese tvc nuclear uni:s, ever the coming decades, vill cc :i=ue te be v e ry substantial.

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GPU Systa: Is:i=ated Revenue Requirements TM:-1 and Tessil A1:erra: 1ves Milliens S Nuclear TMI-1 011 TM:

Coal - TM!

19 7 4-I c c Tuel, O&Mie3 5

114 5

601 5

353 Tired Charges3 335 210 193 Is ti=a t ed Total Revenue lequire=ents3 S

452

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546

_ife:1=e Revenue Rectire=ents Fuel, O&M l4 S

501 52,764 51,456 Fixed Charges'.L I 102 595 534

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a1 Presen: Value Revenue le cuir e= e :s '

51,603 S3,359 52,C00 I ?uel burned, payroll, other O&M 3?lan: deprecia: Lou, income : axes, operating incone, other taxes including gress receip:s, nuclear decom=issio=ing 3No: prese:- valued

'?resen: valued :o 1979 a: 10.5%

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.Daca cud Assu ptiens TM*-1 and Fess 11 A1:erez:1ves In-service date, all plan: :ypes 9/74 Type Nuclear Coal Oil

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Capital Cost, including ATC 1974 S/KW 518 300 264 Fu el and O&M, Mills /KWE 1974 4.3 13.6 2 2.~ 7 1975 52 13 7 23 9 1976 6.2 12 3 26.3 1977 4.1 12 3 28.2 lei.s

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.,..c Pe s :-19 7 8 Fuel and O&M Iscalatien Ra:e 7:

Average 1974-1975 TX: Capaci:7 Fac:er 78: ( Ac :ual)

Average 19 7 4-19 7 8 Co al and 011 Capaci:7 Tac:c

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Pes:-1975 Capacity Fac:cr, all types 65:=

Nuclear Dece==issiccing, 1978 5

539.6 Millic:

Disecus: Ra : e 10.5*

Ra e of Re :urt, Cc=posi:e 10.5%

Gress Receipts Tax, Cc=p es i e

(: ef pr e-Tax Revenue) 7:

In c ese Tax Ra t e s, Cc=pesite Sta:e and Federal Weigh:ed for Ovnership A11oca:1e:

1974-1976 52.12 1977-1978 52.55:

1979 c:

50.73:

• Future esti= ate based c an averase of national and GPU

,i nuclear experience.'

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[1 c'~ m W9 U Pil Syntem EntImnted Muvenue RegiIromenta g

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llentern Enntern nynter Creek Oynter Creek Cont Coal Enntern Coal Huclear 011 Plant 1Keyntone)

JPortlandl joynter_Creckl yg 1970-1978 Fuel, O&H I*

150 576 270 358 399 Fixed Chargen2,3 21I l75 I [9 158 163 3

361 751 449 516 5 f> 2 Estimated Total Revenue Requirementn 1.lfetime Revenue Requirements Fuel, 0 7. H I.4 404

$2,246

$1,135

$1,400

$1,519 F1xed Cle n r g e n2,4 56fl 518 464 429 443 Total Present Value Revenue Requirementn 972

$2,764

$1,599

$1,829

$1,962 4

I FueI le u r n e el, payrolI, other o f.Il 2 Plant depreciation, income tnxen, operntIng income, other taxen i n c l uel i ng gronn receipts, nuclear ele c ommi n n i on i n g INot prenent valued Orrenent valued to 1979 at 10.5%

Data and Assu=p:10:s OEster Creek and Tessil A1:ertz:1ves I -service'date, all plan: types 12/69 tocatiii' Nuclear Coal Coal C: al Oil

- Typ e Keys:: e Portland Oyste: Cr eek Oyster Creek Capital Co st,

!=:luding AIC, 1969 S/KW 165 148*

118 118 104 Fuel and O&Y.,

Eills/KWE 1970 3.2 3.7 6.7 6.7 7.4 1971 2.5 4.7 6.3 6.9 S.1 1972 2.6 4.8 6.8 7.2 S.7 1973 34 5.3 7.0 7.8 90 1974 5.1 S.4 12 3 14.1 22 7 1975 59 86 15.9 15.6 23 9 1976 4.6 9.5 13.9 16.3 26.3 1977 7.3 12.4 14 1 16.5 28.2 1978 7.6 13 9 16.9 15.3 27.5

'es:-1978 Tuel and O&Y. Es cala:1== Ra:e 7:

Average 197D-1975 Oyster Creek Capaci:7 Fae ::

67: (A:: al)

Average 197D-1975 Coal and Oil Capaci 7 Fae:::

65

?:s:-19 78 Capacity Fae:::, all types 65:*=

Nuclear De - 'ssiccing, 1975 S S26.8 Eide:

Dis==un: Ra te 10.5:

Co=pesite Ra te of Re tur:

10.5%

Gr:ss Receipts Tax (: of pre-Tax Revenue) 14 1 : me Tax Rates, C =posite Sta:e and Federal

?a. Plant N.J. Plan:

19 7C.-19 71 50 08:

48 1972 49.99:

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1973 49 91 48:

1974-1976 49 65:

48 1977-1975 49 82:

48:

1979 c 47.89:

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• Includes 1 ::e= ental ::acr=1ssie construe:1e: ecs: ef $30/KW 1

• • ?u:ure es:i=a:e based en as average of ca: =nal and G?? suelear cxperiance 1

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