ML19326D376

Correctly Reproduced Affidavit Re Fair Reserve Sharing Arrangements Between Util & Mi Municipal & Cooperative Power Pool.Served as Exhibit a to DOJ 730302 First Response to Applicant Interrogatories in Case Involving CPC

ML19326D376
Person / Time
Site:	Midland
Issue date:	06/14/1971
From:	Keen J AFFILIATION NOT ASSIGNED, WOLVERINE POWER SUPPLY COOPERATIVE, INC. (FORMERLY
To:	US ATOMIC ENERGY COMMISSION (AEC)
Shared Package
ML19326D374	List: ML19326D373 ML19326D376
References
60-415-20, NUDOCS 8006110385
Download: ML19326D376 (7)

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Exhibit A UNITED STATES OF AMERICA v

ATOMIC ENERGY CC:f!ISSION In the Matter of *

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Concumers Fower Company ) .,

Application for Reactor ) Docket No. 50-329A

Construction Parait and ) Docket No. 50-330A Operating License )

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Affidavit of Mr. John N. Keen My name is John N. Keen. I en General bbnager of f the Wolverine Electric Cooperative Inc. of Big Rapids,

< Michigan (P. O. Box 822) Big Rapids, Michigan 49307.

The Wolverine Electric Cooperative is a cooperative generation and transmission system that serves four ,

distribution c operatives. These are:

O&A Electric Cocporative, The Tri-County Electric Cooperative, Oceana Electric Cooperative, Western Michigau Electric Cooperative

! The Wolverine' Cooperative owns and operates generation and transmission facilitics which serve as a source of bulk power supply for these distribution c'ooperatives. In addition, Wolverine it connected threugh 69 KV transmission lines to several other bulk power suppliers in Michigan.

In general, the facilities of these interconnected systems are locsted in the ucstern cnd nc;;hern pev:icne of tha Michigan's lower peninsula. They include Northern Michigan 4 4

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Electric Cooperative which server as bulk power supplier for three ccoperat*ve distribution systems, ncmely Presque

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Isle Electric Cooperative, Top'O Michigan Rural Electric

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Cooperative and Cherryland Rural Electric Cooperative Association. They also include the City of Traverse City, the City of Crand Haven, the City of Hart, the City of -

Zeeland, the City of Lowell and the City of Portland. .

Wolverine, Northern Michigan, Crrnd Haven and Traverse City, the four largest, have formed a bulk, power coordinating organization and the other entities participating in that organization do so through Wolverine. This group is known as the Michigan Municipal and Cooperative Power Pool 00:CPP) and I an Chairman of its Coordinating Committee.

By.and large the c:CPP presently plans and operates its facilities as if it were isolated, although there is one low capacity (20 megawatt) interconnection at or near the village of Alba with the Consumers Pouer Company.

At the present time the contract Ohich governs the division of cost and benefits from operating that inter-connection is such as to deny the MMCPP from participating s

in the benefits of reserve sharing. Over the last 2 to 3 4

years we have been attempting to work out a true coordinating contract with Consumers Power Company. This should include the poolinh of insec11ed reserves of MXCPP with those of

! Consumers Power Cocpany and the fair apportionment of meeting

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the reserve responsibility between the two entities. This would not only reduce our proportionate reserve requirement but also allow us to contemplate the installation of large sized generating units. Our negotiations have been with Consumers Power Company since it has sole co:. trol of all the high voltage 'ar chv transmission lines withia economical

• transmission distance of our system. We attempted, 6 or 7 i

s years ago, to determine whether we could coordinate or obtain power from the Indiana-Michigan Electric Company which is a subsidiary of the American Electric Power System (AEP). AEP at that time advised that it was not interested in power supply to an entity in the general service area of another company. Further, the transmission cost of an interconnection L.

with Indiana-Michigan was high.

We have not considered interconnection or coordinating arrangements with the Detroit Edison System because the _.

Detroit Edison System as presently constituted is remote from the main load centers on our system. The ' cost of transmission for an arrangement with Detroit, would be prohibitive.

Our present negotiations with Consu:ers Power Conpany have not achieved the objective of obtaining a coordinating

• arrangement which would allow us to engage in reserve sharing  !

by maintaining a percentage of installed reserves with  !

respect to our system load equal to that maintained by the 1

other parties to the interconnection, namely Consumers Power Company or the Plchigan Pool, with respect to their load.

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Because of our lack of success in achieving this more limited type of coordination, we have not raised the subject of a coordinated developmen'. program between the MMCPP and the Consumers Power System or the N1chigan Pool, which includes both Consumer Power and Detroit Edison. We would be interested in such an arrangement, which we thiak would not only benefit the customers of the MMCPP but also the customers of the Michigan Pool and the public generally through savings in faci? ! P.ies and resources.

We believe that the problem lies in the fact that one entity, such as Consumers Power Company owns and controls all the transmission in our area, forming a single bargaining entity approximately 20 - 25 times the size of our entire interconnected MMCPP. If instead of a single o=pany there were a number of companies in our area of a much smaller size, we believe we could negotiate an interconnectioc. cn fair terms with one or all of these whi~ch would allow us to provide pooled power supply to our (MMCPP) respective distribution systems at a competitive. cost. As isolated, or as interconnected through the interconnection arrangements presently proposed by the Consumers Power Company, we would be forced to engineer generation and transmission expansion progrs=s which would , require the construction of cmall 4

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c We are in competition with Consumers Power Company in a number of different w ys. First, there is competition for three-phase loads. Up until 1969 there were no exclusive service areas in Michigr$n except in so far as cities could refrain from permitting private utility service within the city limits. In 1969. most competition for single phase leads, which are generally small loads, was terminated by Michigan law. The larger loads which are three phase loads, are still open to competition. The determinants of the competition are ordinarily the sizd of the load and the distence from the existing facilities of one er the other of the competitors.

If quite a large load such as a 25 negawatt industrir ' load was located et a point adjacent to ansmission facilities -

of the Consumers Power Company and one of the members of the MICPP, the fact that the Cor,eumers Power Company is able to install much larger units would give it a decided acvantage in competing for the load. If we, that is the MICPP, would .

have access to coordination so that we,were able to install larger units than we are at present able to, it would increase our chances of effectively competing.for such load. To the extent that access to larger units wc 1J reduce cost for the MMCPP group, its members would also be in a better competitive position against other energy sources, as for example, electric heating as against gas heating. To the extent our

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• uneconomic generating units and maintain excessive installed reserves. As far as our operations of existing plants, we would be forced to waste fuel in carrying excess spinning reserves, and even be required to impose upcn our customers, outages in service which would not be required if we had j access to automatic pool ac2istance from the surrounding

• interconnected network on fair terms.

If we could work out a fair arrangement as far as installed reserves, we would be interested in coord'inating a

the development of our system with Consumers Power or the Michigan Pool. By dais, I specifically mean a reserve-sharing arrangement in which the MMCPP would be required to maintain as its part of the reserves for the interconnected f

system the same proportion of reserve as a percent of its i i

j peak load as the other members of the Michigan Pc::er Pool maintain. The information supplied by the applicant ,

indicates that at the time the Midland unit would coes on ,

line their reserve percentage would approximate 17 - 18 percent of their peak load. So far as coordinating develc,--

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ment, once we had assurance of access to reserve sharing on that basis, we could consider the purchase of a portion of a i unit to be installed either by Consumers Power for its own account or a unit to be installed by Consumers Power or by

-Detroit Edison for the tuchigan Pool. The annual. load groweb . l

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of the Consumers Power Company alone is 300 to 500 megawatts a year, and for the Michigen Pool is in the order of 800 to

'T5 " ~1300 rnegawatts a year. Wolverine's own load grows only 5

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__- - mw a year and the total annual ISICPP annual load growth would be in the range of 12 to 20 =w per year.

The negotiations between Wolverine on behalf of !cCPP and Consumers Power Company are documented by a number of letters, four of which are attached hereto as Exhibits 1 through 4 and incorporated herein by reference.

Exhibit 1. - Three page letter of Wolverine Electric Cooperative Inc (Wolverine) to Consumers Power Compan;-

(Consumers) dated June 8, 1970.

Exhibit 2. - Four page letter of Consumers to Wolverine dated July 2,1970, with a two page attachment.

Exhibit 3. - Two page letter of Consumers to Uolverine dated January 8,1971.

Exhibit 4. - Two page letter of Consumers Power to Wolverine dated February 3, 1971 with an attachment which is entitled (Prc.ininary Only) Agreement for Interchange and Wholesale Power Purchase between Consumers Power Company and turthern Michigan Electric Cooperative, Inc. Wolverine Electric Cooperative Inc., City of Crand Haven, FEchigan and City of Traverse City, Michigan, a two page Exhibit A, a two page Exhibit B, and a two page Exhibit C to'the attachment.

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member syste=s can grow, and obtain a fair share of the growth market, we are in a better position to obtain the economies of scale in electric pdwer supply, and to pass these savings on to our customers.

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John H. Keen ,

John N. Keen, being first duly sworn, deposes and says: I as the General Manager of the Wolverine Electric Cooperative, Inc. and the Chairman of the Coordinating Co::xnittee of the Michigan Municipal and Cooperative Power

. Pool; I make this affidavit in behalf of those organizations; In the course of business I have knowledge of and as familiar 1:-

l with the matters related herein except as to those matters

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l stated on information, and as to those matters I believe them to be true.

f i ,% 1. D John H. Keen y /* 587/

Subscribed and sworn to before me this /[f/

fa/6 d' 'a Notary Public in cnd for the County of /" v' State of

! My' Commission expires M m M 'O 4

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