ML19329D002
| ML19329D002 | |
| Person / Time | |
|---|---|
| Site: | Davis Besse, Perry  |
| Issue date: | 05/17/1976 |
| From: | Campanella V, Goldberg R, Hjelmfelt D CLEVELAND, OH, GOLDBERG, FIELDMAN & HJELMFELT |
| To: | Atomic Safety and Licensing Board Panel |
| References | |
| NUDOCS 8002240016 | |
| Download: ML19329D002 (16) | |
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s UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION Before the Atomic Safety and Licensing Board In the Matter of )
) -m The Toledo Edison Company and ) Docket Nos. 50-346A -
The Cleveland Electric Illuminating ) 50-500A Company ) 50-501 A (Davis-Besse Nuclear Power Station, )
Units 1, 2 and 3) )
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The Cleveland Electric Illuminating ) Docket Nos. 50-440A Company, et al. ) 50-441 A (Perry Nuclear Power Plant, )
Units 1 and 2) )
ANSWER OF THE CITY OF CLEVELAND TO MOTION OF DUQUESNE LIGHT COMPANY FOR AN ORDER DISMISSING SPECIFIC ALLEGATIONS MADE AGAINST IT On April 20, 1976, Duquesne Light Company (Duquesne) filed its motion with the Board for an order dismissing certain allegations made against it by the Staff of the Nuclear Regulatory Commission (Staff), the Department of Justice (Department) and the City of Cleveland (Cleveland).
Cleveland believes that the evidence adduced to date fully supports the charges and therefore opposes Duquesne's motion in the following respects.
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I THE ALLEGATIONS MADE WITH RESPECT <
TO DUQUESNE'S RELATIONS WITH THE BOROUGH OF ETNA AND THE BOROUGH OF SHARPSBURG Cleveland believes that evidence relating to these specific Boroughs was ' improperly excluded. While it is,true that the Board ruled that it was not " helpful to investigate the particulars of each merger and acquisition occurring in the early part of this century" (Tr. 6599-6600), the Board also noted that it "would be prepared to find . . . if it were relevant to its consideration of the issues in controversy that the CAPCO companies obtained substantial growth during the years through acquisition and merger" (Tr. 6599).
II ALLEGATIONS CONCERNING DUQUESNE'S RELATIONS WITH THE BOROUGH OF ELLWOOD CITY It is clear from the evidence presented that Duquesne refused to even discuss the possible sale for resale of electricity to Ellwood City.
Around June cf 1966, Mr. Luxenberg, in a discussion with middle manage ,
ment employees of Duquesne, requested wholesale service for Ellwood City (Tr. 6404-6405). Duquesne's response was that Ellwood City was in Penn Power's service area and that Duquesne could not and would not discuss the matter (Tr. 6406).
Duquesne argues that the request was not bona fide (Motion, p. 4) because it had not been authorized by the City Council of Ellwood City.
However, at the time of the request, E11 wood's Solicitor, accompanied by the Borough Manager and two Council members, deliberately sought out the Duquesne middle management employees to make the request for wholesale service (Tr. 6417).
Duquesne argues that the request wts made in a social setting (Motion, p. 4). " Social setting" is, of course, simply Duquesne's conclu-sion and not the record statement. Mr. Luxenberg described it as a
" hospitality room" (Tr. 6405) and said that the Borough convention is
" semi-social" (Tr. 6414) and that the conventions are " informative,"
" educational," " sales" and " social" (Tr. 6415).
Duquesne attempts to make much of the fact that Mr. Luxenberg did not realize that the hotel at which the Borough convention was held was 1
across the street from Duquesne's corporate headquarters (Motion, p. 4).
There is absolutely no basis for the argument that this indicated a lack of !
l interest in purchasing power from Duquesne. It is simply irrelevant. !
It ls asserted without record reference that Duquesne did not own any transmission lines in the vicinity of Ellwood City (Motion, p. 5). The record shows quite the contrary. There is a point of interconnection between l
t the transmission lines of Fenn Power and Duquesne 1/2 to 3/4 of a mile from Ellwood City (Tr. 6403). Duquesne would attempt to justify its refusal to sell power at wholesale to Ellwood City on the grounds that
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4 Ellwood City had made no arrangements for receiving the power (Motion,
- p. 5). Until Ellwood City knew it would purchase power from Duquesne, it would be foolish to construct a line to interconnect with Duquesne.
Finally, Duquesne argues that it can serve only in its defined exclusive service area, and since Ellwood City is not in Duquesne's service area, "Duquesne was prohibited by law from selling electricity M Ellwood City" (Motion, p. 5: emphasis added). To support the proposition, Duquesne tites only pages 33-34 of the Department's prehearing brief.
The Board should not be deceived by the argument made by Duquesne. It is true that the Department's prehearing supports the proposition that Duquesne could not sell at retail M Ellwood City. But nothing cited by Duquesne supports the proposition that Duquesne could not sell g Ellwood City. O The issue here, of course, is the sale of power to Ellwood City --
- 1. e. , competition in the wholesale market. Duquesne's refusal to sell at wholesale foreclosed Ellwood City's competitive options in the wholesale market.
III DUQUESNE'S RELATIONSHIP WITH ASPINWALL Duquesne argues that it was unlawful for it to sell power at whole-sale to Aspinwall and therefore there could be no anticompetitive situation J_/ See, for example, fn. 10, p. 24, of Duquesne's prehearing brief where it is asserted that Duquesne was not Pitcairn's only source of bulk power.
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4 arising from its refusal to sell power at wholesale (Motion, pp. 7-9).
! Duquesne relles on Rule 18 in its tariff for the proposition that it was unlawful to make wholesale sales of power.
Duquesne's Rule 18, a not uncommon rule among electric utilities, is intended to reduce or eliminate retail competition. It is directed at the situation in which a landlord purchases electricity at one meter point and then resells that power to his tenants. The danger in such a practice was described by the New Jersey Supreme Court in Sixty-Seven South Munn, Inc. v. New Jersey Public Utility Commissioners. 106 NJL 45 (1959):
If the utility should be compelled to submit to this practice, it is conceivable that the meter company, or some like concern, could become a very real competitor. The meter company could take each square block as a unit of operation and, by keeping its paraphernalia off the public streets, refraim from becoming a utility, keep out of the control of 1 the board of public utility commissioners, take its power through a master meter somewhere in the square, and compete with the utility for sale and delivery to the various users in the block. It might or might not develop that the distributing agency was dishonest and irresponsible: that the consumer's meters were inaccurate: that the rates were unfair; that the service was faulty. No matter what the abuse, neither the individual consumer nor the general public could obtain redress from the board.
Similar re.asoning led the Pennsylvania Commission to uphold the reason-ableness and legality of Rule 18 in Pennsylvania Public Utility Commission.
et al. v. Duquesne Light. 42 Pa PUC 706 (1966), as quoted at page 43 of Duquesne's prehearing brief:
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. . . our broader concern . . . has been the effect on the public interest of an unregulated private profit enterprise trafficking in a necessary and vital public utility service in competition with a regulated public utility company.
It is clear then that the purpose of Rule 18 in the rationale of the Public Utility Commission of Pennsylvania was not to prevent the sale of wholesale power to municipal systems which have no possibility of compet-ing at retail. 2/ Duquesne has alleged (Prehearing Brief, p. 37) that:
. . . the complete legal barrier to competition between private utilities and borought with respect to retail electric service at any given location . . .
continues to exist.
Duquesne itself recognizes that Rule 18 was not a bar to the sale of power at wholesale to municipal systems. Under rate "M" Duquesne in fact sold power for resale at the very time Rule 18 was claimed to prohibit such sales. As Duquesne states (Prehearing Brief, p. 48):
It must be recalled that the essence of the disagree-ment between Pitcairn and Duquesne was not whether Duquesne would provide Pitcairn with power for resale, but what price would be charged.
It is a sham to argue then that Rule 18 precluded Duquesne from selling at wholesale. 3 /
2/ In refusing to sell power at wholesale to Pitcairn. Duquesne did not state that such sales were prohibited by Rule 18. Rather, Duquesne said that it was unwilling to make such sales (NRC-16) or that Duquesne did not intend to make such sales (NRC-13). Rule 18 is counsel's after-the-fact attempt to explain away Duquesne's refusal to sell at wholesale.
3/ See generally the testimony of Mr. Gilfillan.
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Duquesne argues that it had no antitrust obligation to file a tariff permitting wholesale sales at a rate other than rate "M" (Motion. p. 9).
For this proposition Duquesne's reliance on Business Aides. Inc. v.
Chesapeake 8e Potomac Telephone Co. of Virginia 480 F2d 754, is mis-placed. In Business Aldes the Court noted specifically that, unlike public service corporations in Virginia which may promulgate new regulations which take effect unless suspended by the State Corporation Commission, the telephone company had to first obtain approval from the Commission.
The Court then said, at page 758:
Under the circumstances of the instant case we con-clude that this public utility is not required to seek revision of its tariff for the convenience of a cus-tomer.
Unlike the telephone company in Business Aides. Duquesne may amend its rules, regulations, practices and rates upon 60 days' notice to the PUC.
66 PS $ 1148. Duquesne admits in its prehearing brief, p. 38, that "[t]he amendments may become effective with no further action by the PUC. "
Similarly misplaced is Duquesne's reliance on Washington Gas Light Co. v. Virginia Electric Power Co. , 438 F2d 248 (4th Cir. 1971),
and Gas Light of Columbus v. Georgia Power Company 440 F2d 1135 (5th Cir. 1971). In Gas Light of Columbus the Court noted (p.1140) that:
. . . the Commission here gave lengthy considera-tion to each of the practices and rates under attack.
and after full adversary hearings ordered them into effect, some with major modifications.
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In this instance the review of Rule 18 by the Pennsylvania Commission dealt with the rule in a context completely divorced from any question of sales at wholesale to municipal systems. In fact, it is obvious that neither Duquesne nor the Commission considered Rule 18 to have the effect now claimed for it by Duquesne because Duquesne actually made sales for resale under rate "M".
Finally. Duquesne argues that the issue is moot and that Duquesne's policy now is that it will sell base-load power for resale.4 / Duquesne notes (Motion, p.10) that there has been "no request since 1966 for whole-sale power which has not eventually been satisfied" (emphasis added).
Past practices of Duquesne in refusing to sell power at wholesale to municipal systems is part of Duquesne's desire to acquire all of the municipal systems in its service area. One by one it has picked them off until today only Pitcairn remains. The structure of the industry in Duquesne's territory today is in part at least the fruit of Duquesne's past practice.
Those refusals helped to create the present situation inconsistent with the antitrust laws. They demonstrate both the existence of market power and the willingness to use if for purposes of monopolization. The fact that for the time being Duquesne has determined not to exercise that market power
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does not remove the ability to exercise it again.
- 4) Interestingly, at page 10 of its motion Duquesne speaks in terms of a policy with respect to sales for resale when the Pennsylvania Commis-sion had jurisdiction whereas it earlier argued a legal restraint on sales for resale.
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-9 IV DUQUESNE'S RELATIONS WITH THE BOROUGH OF PITCAIRN Duquesne's argument that Pitcairn only wanted emergency service and not wholesale service is directly contrary to the record. Mr. McCabe testified at page 1619:
As I recall, we made a request for 3 possible types of interconnection. Those types of interconnection were 1, that we have an interconnection with the Duquesne Light Company where they would operate in parallel with us so that we could buy some or part of our load from Duquesne Light. 2, if they weren't agreeable to that, we proposed that they sell us wholesale power for resale without operating in parallel with us. 3rd, we suggested that if they would not do that, if they would consider making arrangements with us on an emergency basis independent of their filed tariff which was rate M for emergency interconnection.
Although Duquesne contends that Pitcairn actually sought an emer-gency interconnection, the truth is that Pitcairn sought a wholesale con-tract and if that could not be obtained it wanted an emergency power schedule. (See also Tr. 1641 1642, quoted at page 15 of Duquesne's motion. ) Pitcairn's interest in obtaining wholesale power is also reflected in Exhibit Nos. NRC-13, NRC-14, and NRC-16.
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Duquesne argues that Pitcairn did not make a serious request for participation in a CAPCO unit. NRC-17 demonstrates that when it became i
apparent that Duquesne would not permit Pitcairn to join CAPCO, Pitcairn ;
asked to participate in a share of the new Beaver Valley unit. Pitcairn was i
i told that it could not share in a unit without joining CAPCO. No additional requests were made because Mr. McCabe believed that it would take extensive litigation to obtain access to CAPCO generation (Tr.1718). In the context of Duquesne's refusals to sell wholesale power to Pitcairn and its refusal to permit Pitcairn to join CAPCO, it is unreasonable to expect Pitcairn to put any additional effort into pursuing a request for participation.
Duquesne may or may not have changed its policy regarding access to nuclear units since it refused to permit Pitcairn to obtain access to CAPCO units. If Duquesne's policy has truly changed, it has never made that policy change known to Pitcairn (Tr. 1718-1719).
Duquesne's argument that good business reasons existed for excluding Pitcairn from CAPCO (Motion, pp. 25-30) contains misstatements of fact.
For example, at page 29 of Duquesne's motion, it is stated "Mr. McCabe indicated that the problems raised at that meeting were serious enough to warrant consultation with Pitcairn's engineer. " The record citation to support that statement says that Mr. McCabe "said that having had the benefit of this discussion, he wished to go back and explore the matter further with his Borough engineer. " Thus, the record cited is absolutely l devoid of any indication as to whether Mr. McCabe believed the problems
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raised were serious or frivolous. The only conclusion that can be drawn is that the problems raised were engineering in nature.
Similarly, Duquesne quotes (Motion, p. 29) the testimony of Dr.
Wein (Tr. 7129) in the context of an argument that the Department's witness
corroborated Duquesne's position with respect to Pitcairn's request for membership. D'uquesne neglects to quote the question to which Dr. Wein was responding which makes it clear that Dr. Wein's answer dealt only with the subject of staggered construction. Moreover, Dr. Wein's answer continued to point out that when Pitcairn's 3 mW contribution was added to the loads of other municipalities, there would be a substantial contribution which the municipalities could make to staggered construction. However, since Duquesne and its co-conspirators had already decided that no municipalities would be admitted to CAPCO, it remained open for Duquesne to talk in terms of Pitcairn's isolated contribution to staggered construction and to ignore the aggregate municipal load.
While it is true that Dr. Hughes suggested that full CAPCO member-ship for Pitcairn may not be feasible, he also stated (Tr. 3808, lines 11-14):
One would have to explore other possibilities that would involve less active participation and there, transaction costs, for instance, of a participation share in a unit might be substantially lower . . . .
Of course, Duquesne also refused to permit Pitcairn's participation in a
. share of a unit on the grounds that parties cannot pick and choose among CAPCO uriits. Duquesne also refused to enter into an interchange agree-ment with Pitcairn (NRC-14).
When considered in context, it is clear that Duquesne's refusal to permit Pitcairn to join CAPCO and its refusals at the same time to sell wholesale power, to permit participation in individual CAPCO units or to i
enter into an interchange agreement were attempts by Duquesne to deny Pitcairn access to coordination and development. Moreover, these refusals were calculated to promote Duquesne's goal of ultimately acquiring Pitcairn's electric systsm.
WHEREFORE, for the foregoing reasons, City of Cleveland prays that Duquesne's motion be denied.
Resp tfully submitted, w c g+
Reuben Goldberg David C. Hjelmfelt Goldberg, Fieldman & Hjelmfelt 1-700 Pennsylvania Avenue, N. W.
Washington, D. C. 20006 Telephone (202) 659-2333 Vincent C. Campanella Director of Law Robert D. Hart First Assistant Director of Law City of Cleveland 213 City Hall Cleveland, Ohio 44114 Telephone (216) 694-2737 Attorneys for City of Cleveland, Ohio May 17,1976 i
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CERTIFICATE OF SERVICE I hereby certify that service of the foregoing " Answer of the City of Cleveland to Motion of Duquesne Light Company for an Order Dismissing
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Specific Allegations Made Against It" has been made on the following parties listed on the attachment hereto, this 17th day of May,1976, by depositing copies thereof in the United States mail, first class postage prepaid, or by hand delivery.
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Reulsen Gol rg Attachment O
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ATTACHMENT 1
Douglas V. Rigler, Esq. , Chairman Ivan W. Smith, Esq.
Atomic Safety and Licensing Board John M. Frysiak, Esq. <
Foley, Lardner, Hollabaugh and Jacobs Atomic Safety and Licensing Board 815 Connecticut Avenue, N. W. U.S. Nuclear Regulatory Commission Washington, D. C. 20006 Washington, D. C. 20555 Alan S. Rosenthal, Chairman . Elizabeth S. Bowers, Chairman Atomic Safety and Licensing Appeals Board Edward Luton U. S. Nuclear Regulatory Commission Thomas W. Reilly Washington, D. C. 20555 Atomic Safety and Licensing Board Panel U.S. Nuclear Regulatory Commission Richard S. Salzman Washington, D. C. 20555 Jerome E. Sharfman Atomic Safety and Licensing Appeals Board Atomic Safety and Licensing Appeal U.S. Nuclear Regulatory Commission ~ Board Panel Washington, D. C. 20555 U.S. Nuclear Regulatory Commission Washington, D. C. 20555 Howard K. Shapar, Esq.
Executive Legal Director Joseph Rutberg, Esq.
U.S. Nuclear Regulatory Commission Jack R. Goldberg,. Esq.
Washington, D. C. 20555 Office of the Executive Legal Director U.S. Nuclear Regulatory Commission Mr. Frank W. Karas, Chief Washington, D. C. 20555 Public Proceedings Branch Office of the Secretary Benjamin H. Vogler, Esq.
U.S. Nuclear Regulatory Commission Robert J. Verdisco, Esq.
Washington, D. C. 20555 Roy P. Lessy, Jr. , Esq.
Office of the General Counsel Abraham Braitman, Esq. Regulation Office of Antitrust and Indemnity U.S. Nuclear Regulatory Commission U.S. Nuclear Regulatory Commission Washington, D. C. 20$55 Washington, D. C. 20555 Melvin G. Berger, Esq.
Frank R. C1okey, Esq. Joseph J. Saunders, Esq.
Special Assistant Attorney General Steven M. Charno, Esq.
Towne House Apartments, Room 219 David A. Leckie, Esq.
Harrisburg, Pennsylvania 17105 Janet R. Urban, Esq.
Antitrust Division Edward A. Matto, Esq. Department of Justice Assistant Attorney General Post Office Box 7513 Chief, Antitrust Section Washington, D. C. 20044 30 East Broad Street, 15th floor Columbus, Ohio 43215 Karen H. Adkins, Esq.
Christopher R. Schraff, Esq. Richard M. Firestone, Esq.
Assistant Attorney General Assistant Attorneys General
! Environmental Law Section Antitrust Section l 361 East Broad Street, 8th floor 30 East Bread Street, 15th floor Columbus, Ohio 43215 Columbus, Ohio 43215
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Page 2 ATTACHMENT (Continued)
Russell J. Spetrino, Esq. Leslie Henry, Esq. ;
Thomas A. Kayuha, Esq. Michael M. Briley, Esq.
Ohio Edison Company Roger P. Klee, Esq.
47 North Main Street Funer, Henry, Hodge k Snyder l Akron, Ohio 44308 Post Office Box 2088 Toledo, Ohio 43604 i Jcha Lansdale, Jr. , Esq. L Cox, Langford & Brown James R. Edgerly, Esq.
21 Dupon': Circle, N. W. Secretary and General Counsel Washington, D. C. 20036 Pennsylvania Power Company One East Washington Street
. Richard A. Miner, Esq. New Castle, Pennsylvania 16103 Vice President and General Counsel The Cleveland Electric Hluminating Co. Donald H. Hauser, Esq.
Post Office Box 5000 Victor A. Greenslade, Jr. , Esq.
I Cleveland, Ohio 44101 The Cleveland Electric Hluminating Co.
I Post Office Box 5000 Gerald Charnoff, Esq. Cleveland, Ohio 44101 Wm. Bradford Reynolds, Esq.
Shaw, Pittman, Potts k Trowbridge Thomas J. Munsch, Jr. , Esq.
1800 M Street, N. W. .
General Attorney Washington, D. C. 20036 Duquesne Light Company 435 Sixth Avenue David McNeill Olds, Esq. Pittsburgh, Pennsylvania 15219 William S. Lerach, Esq.
Reed, Smith, Shaw & McClay Joseph A. Rieser, Esq.
Post Office Box 2009 Reed,- Smith, Shaw & McClay Pittsburgh, Pennsylvania 15230 1155 Fifteenth Street, N. W.
Washington, D. C. 20005 Terrence H. Benbow, Esq.
Steven B. Peri, Esq. John C. Engle, President Winthrop, Stimson, Putnam & Roberts AMP-O, Inc.
40 Wall Street
- 20 High Street New York, New York 10005 Hamilton, Ohio 45012 Docketing and Service Section Atomic Safety and Licensing Bcard Panel Office of the Secretary U. S. Nuclear Regulatory Commission U.S. Nuclear Regulatory Commission Washington, D. C. 20555 Washington, D. C. 20555 Alan P. Buchmann, Esq. Michael R. Gallagher, Esq.
Squire, Sanders & Dempsey 630 Bulkley Building 1800 Union Commerce Building 1501 Euclid Cleveland, Ohio 44115 Cleveland, Ohio 44115 t
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