ML19326A600
| ML19326A600 | |
| Person / Time | |
|---|---|
| Site: | Davis Besse, Perry, Harris  |
| Issue date: | 07/22/1977 |
| From: | Dircks W NRC COMMISSION (OCM) |
| To: | Helms J SENATE |
| Shared Package | |
| ML19326A601 | List: |
| References | |
| NUDOCS 8002250914 | |
| Download: ML19326A600 (8) | |
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2 wik JUL 2 21977 Docket Nosh "k 50-440A, 50-441A, 50-500A, 50-501A, 50-400A, 50-401A, 50-402A, 50-403A The Honorable Jesse Helms United States Senate Washington, D.C.
20510
Dear Senator ffelrs:
i This is in response to your letter of June 30, 1977 to which you attached a copy of a letter from your constituent, Mr. Mark F. Bennett of New Bern, North Carolina. Mr. Bennett had written concerning a recent antitrust decision by an Atomic Safety and Licensing Board of the Nuclear Regulatory Comission involving the Cleveland Electric Illuminating Company and others,(Dockets 50-346A, 50-440A, 50-441 A, 50-500A and 50-501A) and that Board's consideration of the question of " price squeeze". Mr. Bennett also wished to be advised of possible courses of action at the NRC which might be available to the municipal electric system of New Bern in its-rate relationship with Carolina Power & Light Company ("CP&L").
With respect to the Cleveland matter, on January 6,1977, an Atomic Safety and Licensing Board issued an initial antitrust decision concluding that the issuance of an unconditioned license for the applied for nuclear i
units wou3d create and maintain a situation inconsistent with the anti-trust laws. A copy of the decision, which is presently on appeal to the Atomic Safety and Licensing Appeal Board, is attached hereto. The question of " price squeeze" is discussed on pages 208 to 211 of that decision.
Although the Licensing Board ordered the imposition of antitrust license conditions, it did not seek to adjust any rates.
It should be noted that wholesale rates of electric utilities are set by the Federal Power Comission and industrial rates are detennined by state public utility comissions.
Pursuant to the recent Supreme Court decision in Federal Power Comission v.
Conway Corp., 426 U.S. 271 (1976), the F.P.C. has authority to examine price squeeze allegations. While 'the FPC may not set retail rates, it may consider them in setting the wholesale rate.
~ CP&L has applied for licenses to construct and operate the Shearon Harris Nuclear Power Plant Units 1, 2, '3, and 4 (Docket Nos. 50-400A, 50-401A, 50-402A and 50-403A). CP&L has previously agreed to the imposition of antitrust license conditions (attached hereto) with respect to those units.g Y(M /fsu9frasf m ser) o,>=-
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k The pntitrust intervention period as set forth in the Comission's Rules of Practice during which New Bern could file a timely intervention petition expired in 1972. A subsequent antitrust review with respect to those units would only occur if the Comission found that significant changes in the proposed project exist. Of course, New Bern would have an opportunity to raise antitrust questions with respect to any future applict.tions by CP3L for authorization to construct comercial nuclear power reactors.
If any further infornation on this catter i_s desired, please contact me.
Sincerely, WiH;3: I. Dircks Assistani Exectiivs Di.cciar for Q o st x.:
Enclosures:
- 1. Initial Decision (Antitrust) Perry.
- 2. Commitments for CP&L.
- 3. Return of Incoming letter.
Distribution:
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Form ALC.318 (Po. 9 53) AICM C240 W u. s.oovannuant pamtme orrIcs: ter4.sas see
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. 50-346A, 50-440A, 50-441 A,
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50-500A, 50-501A, 50-400A, 0-401A, 50-402A, 50-403A The Honorable J se Helms United States Sen te Washington, D.C.
510
Dear Senator Helms:
This is in response to yo letter of June 30, 1977 to which you attached a copy of a letter rom your constituent, Mr. Mark F. Bennett of New Bern, North Carolina.
fr. Bennett had written concerning a recent antitrust decision by a Atomic Safety and Licensing Board of the Nuclear Regulatory Commissio ("NRC") involving the Cleveland Electric Illuminating Company (Doc ets 50-346A, 50-440A, 50-441A, 50-500A and 50-501A) and that Board's nsideration of the question of
" price squeeze". Mr. Bennett also wi ed to be advised of possible courses of action at the NRC which mig be available to the municipal electric system of New Bern in its rate lationship with Carolina Power & Light Company ("CP&L").
With respect to the Cleveland matter, on Janu ry 6,1977, an Atomic Safety and Licensing Board issued an initial a itrust decision with respect to the applications to construct severa nuclear facilities by the Cleveland Electric Illuminating Company, The ledo Edison Company, Duquesne Light Company, The Ohio Edison Company, an The Pennsylvania Power Company. The Licensing Board concluded that a ivities under the applied for nuclear-licenses would create and maintain a situation in-consistent with the antitrust laws. With respect to th Applicant Ohio Edison Company, the Licensing Board concluded that Ohio ison charges municipal electric systems purchasing power at wholesale f m it significantly higher, and in fact, discriminatory rates, wh compared with similar sales to its industrial customers. This particu ar finding was but one element of the anticompetitive situation which the icensing Board found to exist. Although the Board ordered that antitrus license conditions be imposed with respect to each of the five companies, it did not seek to adjust any wholesale or industrial rates. Various aspe ts of this decision are presently on appeal to the Atomic Safety and Li nsing Appeal Board.
It should be noted that wholesale rates are set by the Federal Power Commission and industrial rates of electric utilities are determined by state public utility commissions.
Pursuant to the recent Supreme Court decision in Federal Power Commission v. Conway Corp., 426 U.S. 271 (1976),
m the F.P.C. has authority to examine price squeeze allegations, including, g
a comparison of a proposed wholesale rate with existing industrial and other retail rates. While the FPC may not set retail rates, it may conside them in setting the wholesale rate.
In response to Mr. Bennett's inquiry regarding antitrust intervention s
by the City'qf Cleveland in the Cleveland Electric Illuminating Co.
matter, the C1ty of Cleveland timely filed petitions to intervene in dockets 50-346A 50-440A and 50-441A within the 30 day time period pro-vided for in th omission's Rules of Practice (10 CFR Part 2 et seq) after publication qf the statutorily required Attorney General's anti-trust advice letter in the Federal Register.
With specific referenc to pending applications of CP&L before the Comission, on August lh 1972, the Attorney General through the Assistant Attorney General of the Akitrust Division of the Department of Justice, pursuant to the statutory p cedure set forth in Section 105(c) of the Atomic Energy Act of 1954, a amended, advised the Commission that if CP&L agreed that certain antitrust cense conditions would be included in licenses issued by the Commissi for the Shearon Harris Nuclear Power Plant Units 1, 2, 3 and 4 (Docket Cos. 50-400A, 50-401 A, 50-402A, and 50-403A) there would be no need for an antitYqst hearing.
CP&L has agreed to the imposition of those license conditiong (attached hereto) and accordingly, the conditions will be attached to thevonstruction permits for those units when issued.
CP&L has previously deferr d these units, but it is presently estimated that an initial construction pe it for Unit 1, with the antitrust conditions attached, will issue in early 19 if so authorized by the Licensing Board which presides over the safet and environnental phase of the hearing. Moreover, a subsequent antitrust eview may occur prior to the issuance of an operating license if the Comm ssion finds that significant changes in the proposed project have occurred si(ncq the construction p antitrust review.
Of course, any future applicati by CP&L for author-ization to construct commercial nuclear power react will be the subject of separate antitrust advice from the Attorney Genera and members of the public will have an opportunity to request a hearing on\\ antitrust matters.
Moreover, prior to rendering his advice, the Assistant A'ttorney General contacts by letter, and solicits the views of each electric system in the area served by the Applicant.
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. i If further informaticn on this matter is desired, please contact me Sincerely,
Enclosures:
1.
Comitments for C ',L.
2.
Return of incoming etter Distribution:
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CUMil118 3r.N L b PUK UAlall.1 iia PUWr.R rs 1.1 b181 Sill 3tgN -11AP3TitIJHTS 1, 2, 3 & 4 Commitmen t No. 1 Licensee recognizes that it is genetally in the public intercut for c1cceric utilitics to interconnect, coordinate reserves, and engage in bulk power supply transactions, in order to increase electric system reliability and reduce the costs of electric power.
Ilulk power cupply arrangements should be such as to provide benefits, on balance, each to Liccusee and to other participant (s),
resp ec t iv e ly.
The benefits to participants.in such arrangements need not be equal and the benefits realized by a small system may be proportionately greater than those realiacd by a larger systcn.
In imple.nonting the ccmaitnents which it makes in the succeeding, paragraphs, Licenece will act in accordance with the foregoing principles.
y Explanatory Note *
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(a) Ucither Licensee nor any other participant' shall be cbligated to enter into such arrangements (1) if to do so would violate, incapacitate, or limit its ability to perf om any other existing contractual arrangement, or (2) to do so would adversely af f ect its system operations or the reliability of power supply to its customers, or (3) if to do so would jeopardize the applicant's ability to finance or construct on reasonable terms f acilitics needed to meet its own anticipated system requirements.
Ccmmitm en t No. 2
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Licensee will interconnect with and coordinate reserves by means of the sale and exchange of cacrgency bulk pouer with any entity or entitics in its service area ** cngaging in or proposing to engage in electric bulk pouer supply on terms that will provide f or Licensce's costs (including a reasonable return) in connection thercuith; and allow the other participant (s), as wcll as Licensec, full access on a proportionate basis to the benefits of reserve co-ordination.
(" Proportionate basis" ref ers to the equalized percentage of reserves concept rather than the largest single-unit concept, unicas all participants otherwisc agrec.)
Explanatory Notes (a) Interconnections will not be limited to low voltages uhen higher voltages arc available f rom Licensce's ' installed f acilitics in the arca where inter-connection is desired, when the proposed arrangement is f ound to be tdchnically and economically feasible.
- In order to clarify the commitments, certain explanatory not es have been added.
- The use of the term " service arca" as f ound in this commitment or in any other section of the ccxamitments is intended to describe those areas in North Carolina nnd Sourb ri.iolina where Licensec providen some class of electric service, but
'J u av u.if s o.t iv at eu an' assigiuacnt or allocation of whulesale market arcan.
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(b) Ducrgency nervice a~rcements will not he limited '
a f ixed amount, but cmergency nervice, svf ded under nuch agreements s.21 he furnished if and
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when availabic tuni desired where nuch r.upply docu not impair or threaten to impair service to the supplier's customers dun to. capacity availability fuci supply, nyntem reliability or other good canne.
Licensee, however, shall not be nbligated to provido. emergency service to another entity in lieu of such entity's maintaining its own adequate system reserven or fuct supply.
(c) An example of the type of rccerve sharing arrangement available to any participant and which would provide " full acccas on a proportjonal basis to the benefits of reserve coordination" would be one in which the f ollowing conditions would obtain:
(i) The Licensec~ and each participant (s) shall provide to the other emergency power if and when availabic f rom its own generation, or through its transmission f ron the generation of others to the extent it can do so without disrupting or threatening to impair service to its own custcmers due to capacity availability, fuel supply, system reliability or other good causa.
(ii) The pat cic~ipants to the roscrve sharing agreement, including Licensec, shall, consistent with Licensce's reserve policy as established f rom time to time by Licensec, deterninc a mini;nua percentage reserve to bc
' installed and/or purchased by the participants, including Licensee, as necessary to maintain in total an adequate and reliable power supply on the interconnected system of Licensec and participant (s).
O Ccrmnitment No. 3 Licensec will purchase f rom or sell " bulk power" to any 'other entity in its service area engagin; in. or proposing to engage in the generation of c1cetric powcr in bulk at the sellcr's cost (including a reasonable return) whenever such transactions uould serve to reduce the overall costs of new bulk power supply, each, f or itself and other participant (s) to the transaction, respec-Itiv ely.
(" Costs" ref ers to costs of bulk power supply determined in accordanc with the scller's normal practices, without regard to the purchascr's intended use of the power or the status of the purchaser.) This paragraph refers specifically to the opportunity to coordinate in the planning of new generatic transmission and a cociated f acilitics.
If Licensec questions the desirabilit of a proposed trardaction on the ground that it vould not reducc its overall bulk power costs, it will make available upon requegt to the entity proposing the tTansaction such information as is reicvant and reasonably necessary to
, establish its bulk power costs.
Explanatory Notes (a) It is not to be considered that this condition requires applicant to purchase or sell hulk power if such purchase or sale is technically infcasible or that the benefits theref rom do not exceed the costs in connection with such purchase or sale.
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3 Comnd t' ment No.
_4_
Licenscc will facilitate the c'xchange of bulk power by tranciaission over its system between or among two or more entitics with which it is interconnected on terms which will fully compensate it f or the service perf onacd, to the extent that such arrangements reasonably can be acconunodated frem a functional and technical standpoint.
Dcplanatory. Notes (a) This condition applies to entitics with 'which Licensee is intetconnected in the future as well as those. to which it is now interconnected.
Commitment No. 5 Licenscc* will soll power 'in bulk to any entity in the aforesaid arca ~now engaging in or proposing to engage in the retail distribution of electric power.
Explanatory Notes (a) This is provided that Licensee has such poucr available for sale af ter making adequate provision f or the capacity, fuel and other requirements of its service area custe.ners.
Commitment No. 6 Q
The impicmentation of these numbered paragraphs shall be in all respects on reasonable terms and conditions as consistent with the Federal Power Act and all other lauful regulation and cuthority, and shall be subject to cugineering and technical f easibility f or Licensec's system.
Licenscc will negotiate (including the execution of a contingent statement of intent) with respect to the f oregoing cccmitments with any entity in its service area engaging in cr.-
proposing to engage in bulk power supply transactions, but Licensee shall not
> be required to enter into any f;inal arrangenents prior to resolution of any substantial questions as to the lawful authority of an entity to engage in the transactions.
Commitment No. 7 In contracts between Licensee and its wholesale customers, Licensec will not attempt to restrict such custancrs f rca electrically connecting with other sourecs of power if reasonabic written notice to Licenscc has been made and agreccent reached by the parties on such measures or conditicas, if any, as may be required for the protection and reliability of both systems.
APPROVD :
DATE:
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