ML19326D127
| ML19326D127 | |
| Person / Time | |
|---|---|
| Site: | Midland |
| Issue date: | 06/15/1977 |
| From: | Coufal F, Leeds J, Luebke E Atomic Safety and Licensing Board Panel |
| To: | |
| Shared Package | |
| ML19326D126 | List: |
| References | |
| NUDOCS 8006060671 | |
| Download: ML19326D127 (13) | |
Text
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UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION BEFORE THE ATOMIC SAFETY AND LICENSING BOARD
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In the Matter of CONSUMERS POWER COMPANY Docket Nos. 50-329 50-330 (Midland Plant, Units 1 and 2)
)
MEMORANDUM During the Midland suspension hearings, two documents that were introduced into the record by the Licensee and one docu:::ent that resulted from a discovery request by the intervenors other than Dow may describe a " situation inconsistent with the antitrust laws."
This Board has no antitrust jurisdiction (see In Re Houston Lighting and Power Co., et al., South Texas Project, Units 1 and 2, ALAB-381, March 1977). However, the Midland Antitrust Board still has juris-diction because the Comission has not directed that the record be certified to it for final decision nor rendered a final decision, nor has the Midland Antitrust Board disqualified itself (see 10 CFR 5 2.717a).
If the initial decision of the Midland Antitrust Board was not before the Appeal Board, we would simply refer the matter to the Midland Anti-trust Board for whatever action that they deemed appropriate. Because f
the antitrust decision is before the Appeal Board, we deem it prudent t
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. to refer the matter to the Appeal Board so that they may act on the matter on their own or remand the matter to the Antitrust Board for appropriate action. We would respectfully suggest that the matter be remanded to the Licensing Board with instructions to reopen the record.
The two documents introduced into this record by the Applicant are the Steam and the Electric Contracts between Consumer Power and Dow (Testimony of Mr. Howell following Tr. 2074). On page 3 of the Electric Contract, Dow is prevented frcm reselling electricity. On page 28 of the Steam Contract, Dow is prevented from reselling steam.
The discovery document is Dow's minutes of a meeting between the Licensee a n d Dow held on February 24, 1976. These minutes appear to reflect the Licensee's intent to prevent municipalities and/or com-petitors from selling power to Dow after having purchased that power from the Licensee.
(For the Appeal Board's convenience, copies of page 3 of the Electric Contract, page 28 of the Steam Contract and pages 6, 7 and 18 of the meeting minutes are enclosed.)
FOR
'HE ATOMIC SAFETY AN 1.ICENSING BOARD l
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Enclosures:
- 1) Ltr. to Chase R. Stephens, Chief, Docketing and Service Branch.
Office of the Secretary 1
- 2) :P. 3 of Electric Contract,
- p. 28 of Steam Contract, and pp. 6, 7 and 18 of Minutas 4
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Exhibit 7b
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Dev shan pay for auch energy in acecrdance with Cc=s=ers Power's Rate "F."
By renaca cf the character of the proposed use of
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I acrvler, it. La nico cubject to the provicic=s of Rule 12(1),- Auxilin:j or Standby Service, of Conou=ers Pcver's Standard ncetric Rules and Heguintions. A copy of said Rate and Sheet No. 5 06 cnd Sheet No. 5 07 centnining said Rule nre attacted hereto 'and =cde a part hereof. Said.
senice shall also te subject to such future revisic=s and a=end=ents L
to said Rate er Rule, or both, supple =ents thereto, er substitutes Were ~
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for as are hereafter filid with and approved by the Michigan Public Service C --" 43 sic =.
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It is further agreed that:
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Dev's centract de-a-d for such senice chall W
be established at 200 C00 kil'ovntts.t Such service is for g
3 the cole use of'Dov, for the purgeses afercanid, and shall not i.1c trn===1tted elsewhere or shared or resold. Scid energy =ay be used by Dev a= av'da: / to clectric energy Se: crated by Dev by its. evn generating facilities existing and operating er cperable as of.Tc=uary 15, 1974. It is a ec d' tics of Const=ers Power's agree t to serve Ecv hereunder that Dev may repair, but shsil not replace er aid to, Dcv's said gener-atirs facilities. Dov =ay sencrate c=d utilize in its Midis =d j
Plant such portien of Dov'c Midland Plcnt electrical power re-qui.
cnts as =ny be cupplied incidentally fr=n chemical preccesca at Dov's Midland Pin =t.
Censu=crs Power agrees to pc:=1t Dev, when Dov so desires,,to opernte Dev's electric generating. fa-cilities in parallel vith Ccesu=crs Pever's electric syste=;
provided, however, that such parallel operation shall at no n..,
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,.1 CONTRACT FOR STEAM SERVICZ 2
ET'dEE T CCNST2ERS poe,ER CCMPANY AND
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a of authority or regulatica by gover.= ental or =ilitary authorities. When-j.
u ever there sba'1 he any interruption in service or variatien in pressure or l.
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'other service characteristics due to the afere=enti:ned causes of centiitions j
i Dov sha n ~use all reasonable efforts to re=ove such causes or conditiens.
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team supplied to Dov hereunder shall be for the sole use f:.
of Dow, for the pur;cse aferesaid, and shall not be transmitted elsewhere, 3
or shared or res
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- 11. Dov =ay generate an:1 utiline in its Midland Plant the fellcw-j ing supplies of stea=, and the sane shall be excluded frca Dov's cb' ligation to purchase all of its Midland Plant stes.s require =ents frc= Const=e'rs ?cwer as provided in Section 1:
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frc= a of its facilities e.t Dov's. Mid'=-d Plant inich are operating or operable as of Janua:715,197', any
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4 a= cunt of steas, as standby er au=iliary to the stes=
to be provideci by Consu=ers Fever; provide:1, hcvever, that Dow =ay repair, but sk='7 nou replace or adi to, 8
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its stes=-producing facilities at the South an:1 West 2
Power Houses at its Mid'a-d Plast; and provided, fr.her, j- -
that upon retire =ent of said ?ower Ecuse facd'd ties. Dov I
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of steam not exceeding 1,CCO,CCO lis/hr of steam at a r.
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pressure not exceetiing nc 4-=' 175 psig frc= any facili-ties owne:i and operated by Dov,.as stanciby or an=iliary
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to the steam to be provided by Consu=ers ?cwer. The j
foregoing a= cunts of stess sha be dee*=ed to include, l'
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DON CO:!PIDCNTIAL 7
DOW-CONSUMERS NUCLEAR PROJECT MEETING February 24, 1976 Jackson, Michigan Present:
Dow Parke Brown Jim Burroughs Lee Nute Joe Temple Mac Whiting Consumers Judd Bacon Steve Howell Gil Keeley Russ Youngdahl
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Ten Year Power,:
Concumcrc wants a firm contract for ten years communcing when te nuclear steam contract 'oes into service to sell Dow all the power that Dow purchases.
Censumers would sell this powcr at their then current system industrial rate.
They would not bc required to meet a rate of fered to Dow by any competitive source that might wish to sell pouer to Dow.
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reason for taking this position is that Consumers does not want I
to find themselves in the position of selling part of their Midland plant to municipalities and/or cooperatives and then have them turn around and sell power to Dow cheaper than Consumers can because of their different tax situation..
Consumers said that, in summary, these were the two conditions that Consumers wanted Dow to agree to if Consumers would allow Dow to have a year-to-year electrical contract and the right to t
generate its own power.
First, that the cost of any change in facilities built to serve Dow as a result of capacity reservations will be charged to Dow.
Second, Consumers shall also have the right of first refusal to sell to Dow any purchased power Dow wishes to buy over what Dow agrees now to purchase beginning when Consumers' commercial steam delivery to Dow starts and Consumers wants that right for ten years.
Dow replied that Dow does not want to be discriminated against except for what is specifically defined in the contract.
Consumers said that Consumers is not trying to discriminate against Dow I
versus other industrial concerns such as General Motors and that the only difference from present system rate restrictions that apply to everyone would be the 10 year 100% purchase requirements clause.
Deregulation:
Dow commented that we could understand why Consumers wanted to be protected from unfair competition that is caused by built in tax advantages.
However, Dow couldn't under-stand why Consumers shouldn't be competitive with other utilities such as Detroit Edison, Toledo Edison, etc., all of whom have essentially the same tax situation and might be willing and able to sell power to Dow.
Therefore, Dow would like to see a clause in the contract that Dow would not be restricted from purchasing power from someone else if the real world changes during the 10 year period and there are no regulations preventing other reputable sources of I
supply of electricity from competing with Consumers for Dow's business.
A clause allowing Consumers to retain Dow's business by meeting the competitive price is reasonable.
Dow is reluctant i
to agree to Consumers' proposal unless there is a competitive
. price clause since Dow believes Consumers ought to be ccmpetitive, with other public utilities.
Consumers replied that they had no concern with a clause such as Dow suggested provided that Consumers was totally deregulated.
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They pointed out that the municipalities and cooperatives are l
f not regulated in Michigan ~ and this creates unfair competition.
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" Dos,rciterated ' hat we were interested ir i
ho possibility of
/I ddrogulation i. thu future and that uc feel needs to be a part of any electric contract that runs out intothat this certainly the 1990's.
Antitrust:
Dow commented that we thought there could be -
antitrust prob 1 cms with a 10 year 100% requirement to purchase power, especially one without even a competitive price clause.
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Dow asked if Consumers had considered this.
Constmers said yes.
Dow asked whether if, in their opinion, this was a problem.
Consumers replied that "they are aware of the problem and have looked at it."
Dow uill investigate the matter further and suggested Conswners do likewise.
m PURCHASE POWER COST.
Current 1982 Estimate:
power cost in 1982 for 300MW @ Consumers is now predicting that Dow's KWH versus 30 mills estimated last April.100% load factor will be 31 mills /
This estimate includes the impact of their latest' fuel cost estimates but does not include the impact of their latest estimate of the Midland nuclear plant's cost.
Also it is based on obtaining their 12.12%
authorized rate of return on equity in 1982.
should get a 14% return, Dow's power cost would increase to 32However, if they mills.
In Consumers' latest rate increase request, Consumers asked for a 14-1/2% return but the MPSC (Michigan Public Service Commission) Staff is recommending that 13-1/2% be authorized.
Current' Rate Structures:
In the last two rate' requests the MPSC granted. Consumers, they redefined rate structures.
Currently, assuming an overall rate cost index of 100, the residential rate would be 80, the industrial 100, and commercial rates would be over 100.
In Consumers' opinion, Dow's and General Motor's intervention in rate cases has been very positive in protecting '
the cost of service concept.
Time of Da'y Rate: " Consumers has been investigating time of' day rate structures
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(higher rates during peak demand periods).
However, the feedback they have received from industrial users indicates this type of rate structure would not be.of much value for shifting load de. Mand.
Industrial users indicated that if there was too large a time of day penalty, they might move out of the State.
impact on industrial users if it is based on cost of servi However, there is a :real hazard in that Consumers might be required to set peak demand costs on some other bases.
Life Line Rates:
T push for life line rates for the poor.Throughout the country there has been These rates allow pnople to purchase a minimum of about 300KWH at an artificially lou cost.
If this happens in Michigan, the industrial and Consumers opposes this concept bcommercial users can be expected
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not necessarily, low power users.ecause lower income people are
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power from Consumers.
Dowproposedtopaythecontrabtprice for the 4,050M0/hr. of steam plus a conversion fee including a
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profit to Consumers for that part of the steam demand that uns converted by Consumers into powcr for Dow.
Dow would pay for the steam on a take or pay bases, but if we didn't get the steam we required and the amount of power agreed upon we would pay only for what we did get -- a true "take or pay".
Consumers commented that they have never sold unit power from a power plant.
They voiced concern that.in working out a conversion cost they did not discriminate agains.t other electric customers.
Dow asked if the City of Lansing and Oldsmobile weren' t doing this?
Consumers didn't know. hg du ' $l7 Consumers concluded by saying they hadn ' t thought of this proposition, were interested, and would give it serious consideration.
CLEAN BILL OF HEALTH.
Both companies agreed there was no point in. discussing a clean bill of health at present.
The general consensus was that this should be done only after everything else was agreed upon.
Dow restated that Consumers should not undervalue this item in the negotiations.
SITE RELATED COSTS.
Consumers asked Dow if Dow wanted them to consider as a separate item the $1,500,000 designated in the contract as the price for acquiring land for a typical power genera' ting site or include this item as part of the total site related costs problem.
Dow agreed it should be part of the overall site related cost problem.
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Consumers stated that they did not think that the time should be taken during these negotiations to solve this whole problem because it was too involved.
Dow agreed.
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DOW SELL STEAM.
Dow commented that at the last meeting the question was left unanswered as to whether Consumers would allow Dow to. sell nuclear steam.
Consumers replied that consumers didn't care how Dow used nuclear steam but hadn't intended for Dow to sell any of the steam.
l Consumers still doesn't want Dow to sell steam but will consider this question as part of the total package.
They stated that if Dow commits to a cortain quantity of steam on a take or pay basis, Consumers could see no great advantage, realistically, in restricting what Dow does with the steam within that demand --
including its sale.
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4 UNITED STATES OF AMERICA NUCLEAR REClTLATORY COMMISSION I
In the Matter of
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CONSUMERS POWER COMPANY
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Dockct No.(s) 50-329A
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50-330A (Midland Plant, Units 1 and 2)
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CERTIFICATE OF SERVICE I hereby certify that I have this day served the foregoing document (s) upon cach person designated on the of ficial service list co= piled by the-Of fice of the Secretary of the Cc mission in this proceeding in accordance with the requirements of Section 2.712 of 10 CFR Far: 2-l Rules of Practice, of.the Nuclear Regulatory Commission's Rules and Regulations.
i Dated at Washington, D.C. this
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UNITED STATES OF AMERICA MUCLEAR REGULATORY C0:CISSIO::
In the Matter of
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CONSUMERS POWER COP.PANY
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Docket No.(s) 50-329A
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50-330A (Midland Plant, Units 1 and 2)
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SERVICE LIST Hugh K. Clark, Esq., Chairman George Spiegel, Esq.
P. O. Box 127A James Carl Pollock, Esq.
Kennedyville, Maryland 21645 2600 Virginia Avenue, N. W.
Washington, D. C.
20037 Dr. J. V. Leeds, Jr.
P. O. Box 941 Houston, Texas 77001 Joseph Rutberg, Esq.
Benjamin H. Vogler, Esq.
Antitrust Counsel U. S. Nuclear Regulatory Commission Joseph J. Saunders, Esq., Chief Washington, D. C.
20555 Public Counsel and Legislative Section Antitrust Division Jerome D. Saltzman, Esq., Chief U. S. Department of Justice Antitrust and Indemnity Group Washington, D. C.
20530 Office of Nuclear Reactor Regulation U. S. Nuclear Regulatory Commission William T. Clabault, Esq.
Washington, D. C.
20555 Antitrust Division P. O. Box 7513 David A. Leckie, Esq.
Washington, D. C.
20044 Public Counsel Section Antitrust Division Grace Dow Memorial Library Department of Justice 1710 We s t S t. Andrew Road Washington, D. C.
20530 Midland, Michigan 43540 William Warfield Ross, Esq.
Keith S. Watson, Esq.
Toni K. Golden, Esq.
Wald, Harkrader, Nicholson & Ross 1320 19th Street, N. W.
Washington, D. C.
20036