ML19326A612

Forwards FPC Order Re Authority to Approve or Disapprove Cancellation of Electric Svc Subj to Jurisdiction

ML19326A612
Person / Time
Site:	Davis Besse, Perry
Issue date:	08/25/1977
From:	Reynolds W SHAW, PITTMAN, POTTS & TROWBRIDGE
To:	Rosenthal A, Salzman R, Sharfman J NRC ATOMIC SAFETY & LICENSING APPEAL PANEL (ASLAP)
References
NUDOCS 8002250922
Download: ML19326A612 (11)

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........... CD w August 25, 1977 Alan S. Rosenthal, Esquire Jerome E. Sharfman, Esquire I Chairman, Atomic Safety and Atomic Safety and Licensing i Licensing Appeal Board Appeal Board l U.S. Nuclear Regulatory Comm. U.S. Nuclear Regulatory Comm. I Washington, D.C. 20555 Washington, D.C. 20555 Richard S. Salzman, Esquire Atomic Safety and Licensing Appeal Board U.S. Nuclear Regulatory Comm.

Washington, D.C. 20555 Re: The Toledo Edison Company and The Cleveland Electric Illuminating Company (Davis-Besse Nuclear Power Station, Unit 1)

NRC Docket No. 50-1agn.

The Cleveland Electric Illuminating Co., et al.

(Perry Nuclear Power Plant, Units 1 and 2)

' NRC Docket Nos. 50-440A and 50-441A; The Toledo Edison Company, et al.  !

(Davis-Besse Power Station, Units 2 and 3) '

NRC Docket Nos. 50-500A and 50-501A l Gentlemen:

Enclosed herewith is a copy of a recent Order issued by the Federal Power Commission ("FPC", on August 1, 1977, in the matter of Public Service Company of Indiana. Ic.c . (Docket No. ER76-739) .

The Order contains a discussioc of the F2C's authority to approve or disapprove cancellation of electric service subject to its jurisdiction.

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. m SHAW, PITTMAN, POTTS & TROWBRIDGE Alan S. Rosenthal, Esquire ~

Jerome E. Sharfman, Esquire -

Richard S. Salzman, Esquire August 25, 1977 Page 2 Applicants wish to bring this FPC Order to the attention of the Appeal Board and the opposition parties since it is relevant to the first of the three exceptions taken by the City of Cleveland and will likely be referred to by Applicants at the oral argument.

The FPC had not yet rendered its ruling on June 30, 1977, when Applicants filed their Brief in opposition to Cleveland's exceptions.

Respectfully submitted,

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Wm. Bradford Reynolds Counsel for Applicants Enclosure cc: All Parties 1

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$ Bef ore Commissioners : Richard L Dunham, Chairraun ;.

I Don S. Smith, anc John h Holloman III.

Public Service Company pf,. ) Docke No. ER76-739 Indiana,.Inc. ,

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n C ORDER ACCEPTING MOT" T OF TER*' INT. TION At'tf 5 ",

OF POOLIEG AGREE:OT FOP. FI lit:G ,

GRANTING WAIVER OF ?!"./T' CE PSQUIPLICN 'S , -"', 'l l [

! INSTITUTING I:T.'ESTIGATICN, DENYENG ?:CTLON TO C PEND GP TO REJECT AND GP,ANTIF INTERVENTIO.*S 1

l (Issued Au;.;t.cc 1, 1977)

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Cn June 7, 1976, Public Service Company cf :*iiana, f r. c .

.PSCI), filed a notice terminating the "entuck2 ~ndian: Poc' Plann nc and Op. rating (KIP) Agreement and all m dme.ns anc upplements thereto as of July 1, 1976. The K;P .igreement is

presently on file at the Cce.missic. as PSCI Ra'.e Schec'ule F* C .

l No. 225. The instant notice purports to teminate only .

centractual pla.ining functions pursuant to Section 6.01 of.the Agreement. For the reasons hereinafter stated t'..e C0rnissicn shall accept PSCI's Notice of Termination .for filing,. grant a waiver of the statutory thirty day notice requirement makin.J such filing effective as of July 1, 1976, and institute an investigation pursuant to Secticns 202, 206 and 207 cf the Federal Pcwer I.ct to deternine if such termination is just and coason 1 hic and consister.t with the publie- interut.

Public not ico of PSCI's fil1:ir, 1:; i ': u ." r ru -

in the Federal register en Jul. 24 , 197:, wid . ro t s t : , p..'

3 or responses due on or before k gast 20, 1976 On 1.ug :: . ") , . . , -

g the Electric and Water Plant Board of t!e City cf Fr'n: fe rt,

, Kentucky (Frankfort) filed a ':::? tion to Intervene, a ce 'ue: c -

for an inve.stigation anel motion recues tir;g rejr.ction cf TSCI's f, filing or, in the alternati/e, suz.pensica of its operation i- for five months pursuant to ecctica 205 of the Federal dow3r

{ Act. On August 20, 1976, the In-liana ".unicipal Electri.

i Asscciation and the Cities an:i ir.m.s of Be.inbridga; Ea:.;c s fil 2 :

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Dockct ?!o . ER7u -739 Cen terville; Coving ton; Darlington; Edinburg; Flora; Greendale; Greenfield; Hagerstown; Lawrenceburg Utilities, Lawrenceburg;

Lebanon; Linton;'Middletown; Daoli; tandleton; Rising Sun;'

.Rockville; Scottsburg; South Unitley; Thorntowa; Tipten; Veedersburg; and-the Town of Waynetown, all located in the State of Indiana -(IMEA Cities) , filed a Petition to Intervene and a request for investigation to determine whether PSCI's filing is in the public interest. Frankfort and IMEA-Cities shall hereinafter be referred to as Municipal Intervenors.

Municipal Intervenors state that they are municipal electric

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utilities purchasing their power from members of KIP 1/. As a, result, Municipal Intervenors state that they are iikel.y to be adversely affected if PSCI's costs are increased or reliability ,

of service decreased due to termination cf KIP. 2/ Frankfort -

itself states that since it ~ is seeking to enter the bulk supply business, termination of KIP may adversely affect'its opportuni:14 to obtain bulk power supply, coordination, joint planning services and necessarvsupport services in the KIP area. Municipal Intervenors. also state that their interests are not represented by the persons now parti.es to the proceeding. Wherefore, Municipal Intervenors respectfu' l-f request that they b; per-mitted to intervene in this procceding.

In their petitions Municipal Intervenors ctate tha PSCI has not supplied the specific infor;.:ation required b/ 18 C.F.R.

S 35.13(a) j/ of the Commissior.'s pegulations, and that the Commission would be " derelict" in carrying out its duties under Section 202(a) of'the Act if it did not order an investication.

Frankfort separately requested by mction that the Commissioh either reject PSCI's filing as insufficient, or in the alterna-tivc, suspend . t; cperation for five months pursuant' to Section 205 cf the Act pending the ' outcome of an investigation and n ea ri ng .

1/ Frankfort.is a total requirements custcmer of Xcntuckf Utilities' Company (KU). IMEA Cities are total rbguiren. r.s customers cf!Public Ser*/ite Cor.pany of Indiana, Inc.

2/' Presumably these allegation relate to tne impact of PSCI's action..on, current KIP operad.ons and on existing rate schedules covering.transacticns under KIP. +

3/ By alleging the applicibili ; cf 1 . L . r . .t . 335.13(a) snd Section'205 of the Act, Municipal :ntervenors have characterized PSCI's filing as a rato schedule change.

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~ On September' 3,1976, KU and Indianapolis Power and Light

~ Company . (IP &L) , filed late Petitions to Intervene and Answers in opposition to Municipal Intervenors' prior filings. KU and IP&L' state that since they did not contest PSCI's right under

- the KIP Agreement to terminate' joint clanning functions, and since they assumed that no entity n'ot a party to KIP had standing to challenge PSCI's action, they did not respond by the l -Commission's August 20, 1976, intervention deadline. KU and i

IP&L further state that they did not reaaive Municipal Inter-

venor's petitions until August 23, 1976. Accordin(tly, KU

.and IP&L respectfully request leave to intervene cut of time.

The Ccmmission's review indicates that good cause exists - to grant KU and IP&L intervention despite their petition being late filed.

On September 7, 1976, PSCI filed a responsa in opposition .

to Municipal Intervenors' Petitions to Intervene advancinc ~ sub-stantially the same grounds ' advanced by KU and IP&L 4/.

p Together, the KIP Companies state that Municipal Intirvenors '

petitions, and attendant requests, are " substantive nullities" and should.be rejected. In support thereof, the KIP Ccmpanies state that said intervenors have not demcastrated an' interest, pursuant to Section 1.8 of the Conmission's Reaulatione, f-sufficient to justify granting them intervention; that

, Frankfort's motion to reject or suspend PSCI's submittal is inappropriate because PSCI's filing does not modify cr cancel i current rate schedules on file with the ComnisspJn covering existing-commitments for~various trensactions under KIP: and

• hat the Conaission has no 22the-ity under secticn 202 (a) ,

Cection 205 or any other prcvisior of the Federal Dcwer Ac: to order public utilities to engage in planning activities, to compel' regional interconnection and ccordination (cr.clanninc theref or) , or to order the requested investigation and heariE.g.

.The KIP Conpanies state tnat Municipal Intervencrs ar2 net nembers of KIP and will no: 'ce directl af fected oy tennina:icn

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of the joint planning funct:cns.of KII. KU and I?&L separatelv state that since their interests in seakinc tc minimi.w cost ~

j are identical to Municipal Intersenors', aaid Intervencrs' l

interests are adequately represented b; KU and :P&L.

l i/ .PSCI, KU and IP&L shall hereit.after be referred to as

the KIP Co.T.panies. East Kentucky Pcwer Cocperative, Inc.

is the forth menber of KIP, is no: a narty to this proceeding 2nd is excluded in the " ore' goihy reference.

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Docket No. ER76-739 -

The KIP Companics further state that sinco PSCI:s action affects only contractual planning functions, not rate schedules and'since physical inter-or rates and services t hereun der, connections among the KIP Companies will remain intact, 'ccincident with the fact that preexisting' Interconnection and Poolinh Agreements suspended during the ef fectiveness oof KIP, wi1~1 be reactivated upon its termination, Municipal Intervenor's action in:the proceeding":as required by 18 C.F.R. -

S 1. 8 (b) (2) ; s ,

In the sum, the KIP Companies _ view PSCI's submittal ac an

-informaticnal filing not subject to the requirments of 18 C.F.R.

and therefore, not Part 35 governing changes in rate sched.ules,

• subject to rejection or sus. pension. They point out that KIP was ,

entered into voluntarily consistent with the policy expressed in Section 202(a) of the Federal Power Act, and that the instant, filing merely indicates the exercise of a contractual right reserved under the KIP Agreement. PSCI asserts that the KIP

'Ccmpanies' position is sup'borted 'ay the legislative history - -

• underlying Sections 202 and 205.

- The-Commission's review of the filing'in this docket indicates.

that . two basic issues exist: whether, pursuant to 18 C.F.R.

i S1.8, Municipal Intervenors have standing to intervene and ,

whether the Commission has-authority to reject, suspend or institute. an' investigation regarding PSCI's terr.ination of the joint planning functions of. KIP.

The Commission- concludes that Municipal Intervenors hava met the requirements of 18 C.F.R. S 1.8 and that their inter-vention may be in the public interest. Che Commission believes that as wholesale customers of the KIP companies, said inter-venors may be directly affected by proven increased costs, decrease 6 ' reliability or anticompetitve ref f ects 'resulting f rer the instant termination. ,

r Since the KIP Ageement is a rate schedule currently on

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! file at.the Conmission 5/fanc since the KIP Companies'.ccenitment to engage in planning , coordination and pcoling is a service SfL'PSCI: Rate' Schedule FPC No. 225, filed pursuant to Section 205(c) of the Act. - l S C . F . .:. . S 35.2(b) defines a rate schedule as "a statement cf -f D electric service as

- defined in paragraph (a) of tnis section (2) ratca and charges for or!in connect on w;th that servica, and

~(3) ~ all classifications,- practices, rules, regulations, or contracts'which in any manner affect or rela ' t )4 _,J aforementioned service, rates and charges." D D 8

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under that rate schedule, PSCI's June 7 filing purportedly terminating the service, is a rate schedule change within the meaning of Section 2.4 of the Commission's Regulations and

'is subject to the requirements of Secticn 205 of the Federal '

Power Act. Furthermore, PSCI's June 7 filing is the fi'rst

. step'in terminating KIP in its ent'irety since PSCI stated therein that it "will submit notices of termination of the rate schedules a

attached to the KIP Agreement at the appropriate times." Since the forego'ing attached ra'te schedules were entered into'while the KIP Agreement planning provisions were in effect, the .

. Commission's review indicates that . customers purchasing .' .

electric power under these rate schedules might be required to bear increasad costs or reduced reliabil.ity of service as ~

a result of PSC1's. filing. Consequently, the Commission has an obligation to determine if PSCI's ' filing is consistant with the standards of Section 205 and 206 of the Federal Power Act, and the Ccmmission's Regulations thereunder.

PSCI's statement in its June 7 filing that contractual plannia' "uncticns under KIP will terminate "as of July 1, 1976'"

doet not meet the, thirty day notice requirement of -Section 205 (d1 of the Federal Power Act. Ccnsequently, implicit in PSCI's filing is a request for waiver of such requirement which request is pernitted by Sections 1.7(b), 1.14(a) 4.nd 33.11 of the Commission's Regulations. With regard thereto, the Ccamissicn notes that the June 7 filing mere.ly purports to terminate the future planning functions of KIP, but does not address, or pur-port to change, rate schedules' underlying KIP. Accordingly, the Commission concludes that goed cause exists to waiver the aforesaid notice requirement under its Regulations and to gran t PSCI's implicit request, thus assigning an'effe ive date of July 1, 1976, to its June 7 filing.

Attached to PSCI's June 7 filing was a letter dated June 1, 1976, from PSCI's management to the other KIP members which stated the reasons for its actions : "'(D)ue to the inability cf the parties to cgree: (i; upon the terms and conditions for the inclusion of sur two cronesed nucle ar

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generating units in the poc1, (ii) upon r'ev'isicas in the KIP Agreement that we feel are financially vital tc cur Company; and,'(iii)-upon operating preceaures that'are t;nancially important - to~ our Company, we ha re no al ternative othcr than' to terminate this KIP Agreemen: " The Iomnission shcIl accep; these reasons as meeting the require.nents of 15 C.F.c. 35.13(at for filing purposes and'shall accep- PSCI's su:'n;t:al fcr

' filing, giving it the effective date of July 1, l 'J 7 6 , stated above. Accordingly, Frankfert's otion rcquest;ng raiecti

1. 5 of PSCI's filing shall be den;ed.

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6-Commission review of Municipal.Interveno'rs' request that PSCI's filing be suspended for five months pursuant to Section 205.of the Federal Power Act indicates that a grant of such request is neither warranted by the' circumstances surrounding PSCI's filing, nor necessary to carry out Ccmmission resppnn.i- '

bilities to protect the public interest under the Act.

Ac.cordingly Frankfort's motion requesting a five mcnth,

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suspension of PSCI's filing shall be denied.

Section 202 (a) of the'Fsderal Power'Act mandates that "It shall be the duty of the Commission to promote and' encourage such interconnection and coordination...". The - '

importance of encouraging coordinated planning-and operation 4 of bulk power supply systems has been a cornerstone of .,

Commission policy for many years. In the .964 National Power

' Survey, the Commission reviewed the various ways in which coordination can reduce the overall cost of power thrcugh .'

savings in reduced reserve r2quirements, through utilization of larger and more. economical bulk power supply f acilities, e.nd in other ways. The Commission concluded: "What isi

-now needed is acceleration of the trend toward increasing.'n comprehensive cocrdination over expanding geographic areas."

'In the 1970 National Power Survey, the Commission stated:

'"The large increasa in the electric power requirenen ts anticipated during the next decade makes it imperative that electric utilities, accclerate coordinated planning and operations in order :o optimize the use of recources and to minimize che envircnrental impact of electric facilities." .

The Commisaica has brcad authority to ecnsider public utility actions touchinq the "public interest" under all sections of the Federal Power Act, including Section 202 (a) .

See Gulf S tates Utilit. es v. F.P.C., 411 U.S. 747 (1973).

Recognizing tnis autho:ity and the possible harm to the public interest as a re sult of the termination of the planning function under the KIP 4.g reemen t , the Commission at its meeting of January 4, 1977, directed the staff to neet with rspr tives of the KIP Pool and representa-tives of the "unicip,esenta-al Intervenors. Among the matters mentioned ~for discussion were the reasons for the impending breakup of t;:e cool, the possibilities 'for keeping the pool in being, the econ mic effects of termination cf the members, and the alternatives available to pool, members.

A Notico of Conference was iss;cd on Januar7 5. , 1977, ..nd en February 10, 1977, FPC's staff helt ths meetino, a n ..

reporte'd to the Commission at the regu.ar igenda eetinc G m)

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of May 18, 1977, that the information reluctantly clicited was not sufficient to get a clear understanding of the necessitf for the terminatien and its future effects.

As a folicw-up to the foregoing effort, the Commissicn.

directed staff to contact the East Central Area Commission

. Reliability Council (ECAR) to -determine the impact .of terminati6n of KIP on pow'er supply in the region. Staff' contacted a number of ECAR officials and reported at the agenda meeting of June.29 that none of the officials centacted were f amiliar in any detail with the problems within KIP.

Subsequent contacts by Staf f with of ficials of the Kentucky' Public Service Commission and Eastern Kentucky Power Cooperative, '

the smallest of the four KIP members, did not shed light on thee basis or the publi~c interest effects of PSCI's submittal. '

Wherefore, the Commi,ssion shall order an investigation of the circumstances surrounding, PSCI's filing in order to effectucte its Section 202(a) duties of protecting the public interest and promoting and encouraging voluntary interconnection and coordination. The importance of power pcoling for One efficient planning and operacion of power systems ccnnot be questioned thus making the impending breakup of the KIF power pool a - natter of the utmost seriousness. It is not-enough-to knou that the KIP members were unable to ag"ce on the treatment of two nuclear units proposed to be built by PSCI.

To effectuate its 202(a) responsibilities the Commission rust know the extenu of the efforts made to preserve the olanning functions of this pool, the reasons why they could not be preserved, 'the alternatives available to pcol m>mbers , and the extent-to which the problems of this poci may bc _ typical of othar pools, since it may be that legislative proposals need to be formula ted cr to allow the Commission to respond to Congressional inquiries on legislation now pending 6/. Certaini, the Ccmmission has the. authority, to investigate su lt es t ta:

for this purpose under Section 307. 7/. In addition,,the Commission needs to knew tne econcmic impact on the /arious 6/ See e.g., H.R. 6831, Nationa. Energy Ict; M . rt . 6660, 51ectric Utility Act of 1977; H.R. 2615, Electric Utilit; Rate Reform and Regulatory Ir: rov men': Act; H.R. 2393, Federal Power Ccamission R;for.1 Ac t of 1977; and H.R. ,

823, Electric Rate Reg:latory reforr Act of 1977. I 7/ Section 307 provides in part- "The Comm ssica .may invastiga:

any . . . matte'rs . . . in obtaining information to serve as :c basis for etecer.endinc further lec sintien conce..i matutrs to which this #c: relates.. D m) 0 l

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. A T Docket No. ER 7G-739 Wherefore, the Commission's review indicates that PSCI's ,

. 21ing has not been shown to be in the public interes t.

Accordingly', the. Commission shall accept PSCI's June 7

• Notice of Terminaticn for filing, grant a waiver- of the 'statu-tory thirty day notice requirement making such filing effective as of July 1, 1976, and institute an investigation under. Sections 202, 206, 307 and 311' of the Federal Power Act to determine if such termination is consistent with the public interest. .

In order to expedite this investigation we shall' order a pre-hearing conference at which a Presiding Administrative Law Judge shall se't further pr'ocedural dates, establish pyocedures fcr expedituous discovery of the relevant facts, and receive the views of the parties on'such other matters as affect the  !

conduct of the. investigation herein ordered. .

The Commission finds: '

(1) Good.cause exists to accept for filing PSCI.'s Ziotice of. Termination filed herein en June 7, 1976, grant a waiver of

.the statutory thirty day notice requirement making such filing effective as of July 1, 1976, and deny Frankfort's moticr to reject the filing or to suspend its operation for five months.

6 (2) It is nscessary and proper in the public interest and to aid in enforcement of the Federal Power Act that the -

Commission enter upon an investigation of the circumstances surrounding the termination of joint planning functions of the KIP Agreement.

(3) Good cause exists to grant the Petitions to Intervene of the Municipal Intervenors, KU and IPSL, as hereinafter crdered and conditioned.

The Commission orders:

(A) Pursuant to the authority of th(. Iedpral Po. ear Act, particularly Sections 202, 206, 307, and 311 thereof, and the Commission's Rules and Regulations, the Ccenissica here'by institutes an investigation' of the circumstances surrounding the termination of jcint planning functions of the KIP Agreement.

( B )' PSCI.'s June.7 submittal is hereby cceepted for filing, the implicit ; request for waiver of notice requiranents as permitted by.Section 35.11 of the Ccmmission 's regulations is ' hereby granted, and the filing is hereby assigned an effective date of July 1,'1976.

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(C) Frankfort's motion to reject PSCI's filinggpr to .

suspend it's: operation for five months,-is hereby denied.

(D) A prehearing conference shall be held at 10 A.M.,

August 22, 1977, for the purpose of setting further procedural dates, establishing procedures for expeditious discovery of

.the relevant facts, and receiving the views of the parties on ,

such other matters as affect the conduct of-the investigation

' herein ordered. .

(E) N Presiding' Administrative Law Judge to be.besignated by the Chief Administrative Law Judge for that purpose .('See '

Delegation of Authority, 18 CFR 3. 5 (d) ) , shall preside at the pre-hearing conference and at the later hearings, shall prescribe relevant' procedural matters'not herein provided, anu shall control this proceeding in accordance with the policies and limitations expressed in this order.

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(F) Municipal Intervenors, KU and IP&L are hereby permitted to intervene in these proceedings subject to the rule's and regulations of the Commission: Provided, however, that I.:. rtici-pation of such intervenors shall -be limited -to matters af f ecting asserted richts and inter,ssts as specifically set f orth "in their respective ' Petitions to Intervene; and Provided, further, that the admission of such intervenors shall not be codstrued as 3

recognition by the Cor.aission that they might be aggrieved because of any order or orders of .the Commission entered- in this

' proceeding . .

(G) The Secretary shall cause prompt publication .of this order to be made in the Federal Register.

By the Commissicn.

( S'E A L ) .

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Lcis D. Ca' s hell, A :ing Secretary.

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