ML19329D110

Exceptions to 770106 Initial Decision Common to All Applicants.Decision Should Be Reversed.Certificate of Svc Encl

ML19329D110
Person / Time
Site:	Davis Besse, Perry
Issue date:	02/07/1977
From:	Reynolds W CLEVELAND ELECTRIC ILLUMINATING CO., SHAW, PITTMAN, POTTS & TROWBRIDGE, TOLEDO EDISON CO.
To:	NRC ATOMIC SAFETY & LICENSING APPEAL PANEL (ASLAP)
References
NUDOCS 8002240099
Download: ML19329D110 (35)

Text

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. n ebruary 7, 1977' UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION

! Before the Atomic Safety and Licensing Appeal Board In the Matter of )

)

THE TOLEDO EDISON COMPANY and )

~'N THE CLEVELAND ELECTRIC ILLUMINATING ) Docket Nc7 50-346A' COMPANY )

(Davis-Besse Nuclear Power Station, )

Unit 1) )

)

THE CLEVELAND ELECTRIC ILLUMINATING )

COMPANY, ET AL. ) Docket Nos. 50-440A (Perry Nuclear Power Plant, ) 50-441A Units 1 and 2) )

)

THE TOLEDO EDISON COMPANY, ET AL. )

(Davis-Besse Nuclear Power Station, ) Docket Nos. 50-500A Units 2 and 3) ) 50-501A EXCEPTIONS TO THE INITIAL DECISION COMMON TO ALL APPLICANTS Pursuant to 10 C.F.R. S2.762 of the Commission's Rules of Practice, Applicants hereby take the following exceptions to the Initial Decision of January 6,1977,*

rendered by the Atomic Safety and Licensing Board (" Board")

conducting antitrust review in the above-captioned consoli-dated proceeding:

1. The Board erroneously denied Applicants an op-portunity for full and complete discovery on the allegations

• These exceptions are not being made jointly by the Applicants but rather are being set forth in a single filing on behalf of all of the Applicants individually so as not to

, burden the Board with unnecessary repetition in.the separate exceptions filed herewith. 3"# -

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made for the first time in the Department of Justice's Advice Letter recommending antitrust review for Davis-Besse Units 2 and 3 and in the September 5 filings of the parties (p. 6) .

2. T2 Board erroneously failed to require that antitrust charges against Applicants be articulated with meaningful specificity (pp.6-7) .

3. The Board erroneously permitted the opposi-tion parties to enlarge specific charges from time-to-time l

throughout the proceeding without making a good cause showing (pp.7-8).

4. The Board erroneously concluded that the principal issue in these proceedings is "whether dominant electric companies in a relevant market area which do not compete with one another may make competitive benefits, including coordination and pooling, available to each other while denying these benefits to smaller actual or potential competitive entities within the market" (p.9).

5. The Board erroneously concluded that the power generated from the proposed nuclear stations involved will have a substantial competitive impact upon the delivery or sale of electric energy in any relevant market (p.9).

6. The Board erroneously concluded that the

" principal issue", as framed by it, becomes of statutory concern to the Commission simply because benefits to be shared or denied include power generated from proposed l

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a nuclear stations (p.9).

7. The Board erroneously concluded that the existence of a situation inconsistent with the antitrust laws turns largely upon the fashion in which Applicants deal with ,

one another in comparison to their treatment of other electric ,

entities in the CCCT area (p.12).

8. The Board erroneously concluded that Appli-4 cants, by agreement or inaction, have not . engaged in compe-tition with one another in the sale of electric energy in the State of Ohio (p.13).

9. The Board erroneously concluded that Applicants individually and through their combination as a CAPCO group, with minor exceptions, have refused to make available to other electric entities in actual or potential competition with individual Applicant companies the benefits achieved through membership in CAPCO (p.14).

10. The Board erroneously concluded that certain policies of Applicants, which policies the Board misstates, caused or con,tributed substantially to the decisions of certain isolated generating systems within the CCCT to abandon electric generation (p.14).

11. The ' Board erroneously concluded that certain of the actions employed by the Applicants constitute viola-tions of the antitrust laws (pp.14-15).

12. The Board erroneously concluded that Applicants 1

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engaged in mutually supporting action having the ef fect of increasing the dominance of each individual Applicant within its own service area and that such actions may constitute monopolization, attempted monopolization, and a combination to monopolize (p.15).

13. The Board erroneously found that Applicants undertook the plant construction of a series of nuclear generating stations in a fashion calculated to further in-crease their stipulated dominance in their respective service areas (p.15) .

14. The Board erroneously found that Applicants had imposed artificial barriers to prevent competitors from gaining access to, or the same type of benefits from, the nuclear plants as they . contemplate for themselves (pp.15-16) .

15. The Board erroneously concluded that Appli-cants have a prolonged history, both individually and collectively, of misuse of their dominant position within the CCCT and their respective service areas to achieve anti-competitive results (p.16) .

16. The Board erroneously concluded that a mean-ingful nexus can be said to exist between activities under i

the licenses for the Davis-Besse and Perry plants and the anticompetitive situation it concluded (albeit erroneously) that Applicants have nurtured within the CCCT (p.16).

17. The Board erroneously failed to take into l

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account in its consideration of general antitrust principles the nature of the electric utility industry and the extent to which natural forces, economic realities and regulatory requirements largely eliminate meaningful competition between and among electric utilities (whether private or public) in the State of Ohio and th'e Commonwealth of Pennsylvania (pp.17-20) .

'18. The Board erroneously found certain activities of Applicants to be per se violations in total disregard of the overwhelming authority to the contrary when such activi-ties occur in a natural monopoly environment and can be shown to have reasonable justification (pp.20-21).

19. The Board erroneously interpreted Otter Tail

v. United States, 410 U.S. 366 (1973), and misconceived its application to this proceeding (pp.23-24).

20. The Board erroneously failed to give recog-nition in its antitrust analysis to the settled principle that private action which would otherwise be suspect under th.e antitrust laws may be entirely permissible when taken in direct furtherance of a regulatory policy.

21. The Board erroneously failed to give recog-nition in its antitrust analysis to the settled principle that private action which would otherwise be suspect under the antitrust laws may be entirely permissible where its purpose and effect is to ameliorate more restrictive regula-tory policy.

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22. The Board's discussion of unfair trade prac-tices is erroneous and irrelevant to this proceeding (pp.27-28) .

23. The Board erroneously characterized the genera-tion capability and transmission capacity of the individual Applicants as "CAPCO" capacity and therefore erroneo'u sly found that as of 1973 the total "CAPCO" net dependable capacity was 11,735 mw, consisting of 4,753 pole-miles of transmission lines of 69 kv and above (p.31) .

24. The Board erroneously concluded that the

" Northeast electric blackout of 1960 (sic] " served as an ,

impetus only to those pooling arrangements designed to pro-vide for emergency interconnection (p.35).

25. The Board erroneously concluded that nuclear units offer special opportunities for CAPCO member companies to achieve the benefits of economies of scale (p.35) .

26. The Board erroneously concluded that there is a discernible re[ationship between the CAPCO agreement for joint ownership of nuclear facilities and use of high-voltage transmission lines and the competitive stance of the individual members of CAPCO (p.37).

27. The Board erroneously f ailed to find that power pools are formed when two or more electric systems become convinced that through pool participation they will mutually achieve cost savings and service improvements.

28. The Board erroneously failed to find that an e .

essential element of pooling is a willingness of the pool participants to surrender some autonomy of action so that joint planning and operating philosophies, acce' ptable to all, can be developed.

29. The Board erroneously failed to find that for a pool to remain viable it is necessary that the benefits one party derives and the responsibilities it undertakes will accrue in similar fashion to all parties, i,.e., that there will be mutuality among pool members.

30. The Board erroneously failed to find that mere monetary compensation is no substitute for mutuality.

31. The Board erroneously failed to find that the

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FPC has identified some minimum responsibilities of pool J

membership which all entities must satisfy if the pool is to wo r k .

32. The Board erroneously failed to find that there are scale-related limitations on the ability of elec-tric systems to meet these minimum responsibilities.

33. The Board erroneously failed to find that electric systems incapable of achieving efficient perform-ance by way of pool participation can receive the full benefits of power pooling through indirect means. j

34. The Board erroneously equated the difficulty l in constructing duplicative transmission lines with an inability of small systems to have access to the benefits

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(i.e., reliable and economic energy production) of trans-mission facilities (pp.37-38).

35. The Board erroneously found that small systems frequently find it infeasible to construct "duplicative" transmission facilities ( pp.37-38 ) .

36. The Board erroneously concluded that con-struction of "duplicative" transmission systems is essen-tially impossible (p.38) .

37. The Board erroneously failed to find that the construction of "duplicative" transmission systems has in fact been possible (p.38) .

38. The Board erroneously equated the unavail-ability of transmissions with the inability of a system to obtain access to the benefits of coordinated operation and development ( p.38 ) .

39. The Board erroneously found that individual CAPCO companies make use of another utility's transmission lines for the sale of economy energy (pp.39,40) .

40. The Board erroneously found that the CAPCO member companies wheel electric energy for one another i (p.39).

41. The Board erroneously concluded that there was no substantial difference in concept among the various definitions of wheeling used by witnesses throughout the proceeding (p.39).

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42. The Board erroneously concluded that the bookkeeping activities relating to inadvertent power flows are somehow relevant to a determination of the nature and extent of wheeling transactions allegedly engaged in by Applicants (p.40).

43. The Board erroneously concluded that Applicants' alleged ability to absorb large increases in load detracts from Applicants' argument that engineering and safety reasons preclude operating a closed switch inter-connection with small generating entities in the CCCT (pp.40-41), which argument is misstated in any event.

44. The Board erroneously f ailed to find, in view of Finding No. 14 (p.41), whether any " competitive" electric entity sought a program of staggered construction, seriously

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requested third-party wheeling, or was in a position to engage, to any relevant degree, in economy interchange.

45. The Board erroneously concluded that the existence of electric systems within the CCCT in actual or potential competition with the Applicants' respective systems was known to Applicants during CAPCO's formative period (p.41).

46. The Board erroneously concluded that "for virtually all non-CAPCO systems in the CCCT area", coopera-tion of one or more Applicants is a prerequisite to the acquisition of bulk power and energy from non-CAPCO sources (p.42).

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47. The Board erroneously failed to conclude that it would be against the public interest to encourage in the electric utility industry a diversity of approaches and the freedom to shop for power supply options (p.42) .

48. The Board erroneously failed to conclude that, if in fact there has been a contrast and discrepancy between services offered by Applicants to one another and those offered by Applicants to other electric entities, there was good and lawful reasons therefor (pp.42-43).

49. The Board erroneously concluded that the CAPCO member companies have dealt with each other on a more favorable basis than with other electric entities within the CCCT and/or their respective service areas (p.43) .

50. The Board erroneously concluded that relevant product markets for purposes of this proceeding exist with respect to bulk power services, regional power exchange transactions and retail power transactions (pp.47-53) .

51. The Board erroneously accepted the market definitions set forth in the expert testimony of Dr. Wein as being enumerated rationally and in accordance with applic-able legal guidelines (p.47).

52. The Board erroneously f ailed to define its concept of " bulk power services", gave no meaningful defi-l nition to its understanding of " regional power exchange

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transactions", and failed to distinguish between the two (pp.47-50)

53. The Board erroneously found that the relevant geographic market for purposes of this proceeding was the CCCT (p.54).

54. The Board erroneous.ly found that when Appli-cants' " competitors" attempted to achieve coordination with non-Applicant companies, Applicants frustrated such attempts (p.54).

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55. The Board erroneously concluded that the "one system" concept suggests that the CAPCO pool or its-present members may be regarded by adjacent buyers and sellers as a separate regional market (p.55) .

56. The Board erroneously concluded that, at the time of formation of CAPCO in 1967, each of the Appli-cants had participated in actions intended or having the foreseeable effect of reducing the reliability and economic viability of " competitive" electric operating and distribu-tion entities within their respective service areas (p.187) .

57. The Board erroneously concluded that non-Applicant entities are actual or potential competitors of Applicants, and thus throughout the Initial Decision the

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Board erroneously refers to them as " competitive entities".

58. The Board erroneously concluded that each ,

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Applicant took certain specified actions intended or with the l

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a foreseeable effect of eliminating competition with non-Applicants in retail power transactions (p.187) .

59. The Board erroneously concluded that each Applicant has entered into agreements and understandings the effect of which is to create and maintain a situation inconsistent with the antitrust laws within its own service territory (p.187).

60. The Board erroneously concluded that actions or policies of Applicants have had a cumulative affect of reducing the level of competition within the CCCT or of pre-venting competition from being as vigorous as it otherwise might have been ( p.188 ) .

61. The Board erroneously found that a collateral and well understood result of the formation of CAPCO was to deny to " competitive entities" in the CCCT access to coordi-nated operation and development (p.188).

62. The Board erroneously found that, following specific consideration of the inclusion of municipal systems in the CAPCO group, it was collectively decided that only investor-owned utilities should be permitted to join and that municipals or cooperatively-owned systems should be excluded (p.188).

63. Although recognizing that the overriding con-cern at the time of CAPCO's formation was meeting Duquesne's planning deadlines for the installation of a large scale i

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t generating unit, the Board erroneously discounted that con-sideration and ignored its undisputed impact on the decision regarding who could reasonably be included as participants in the CAPCO agreements (p.189) .

64. The Board erroneously concluded that on numerous occasions Applicants had considered and rejected municipal participation in CAPCO (p.189).

65. The Board erroneously faulted Applicants for studying the effects of the proposed generating allocation method on variously sized systems, including a system similar in size and configuration to that of the City of Cleveland (p.189).

66. The Board erroneously concluded that providing the benefits of pool participation to public power bcdies through the sale of power under FPC approved rates was a sham (pp.190-91).

67. The Board erroneously read Exhibit CSS as something other than an exchange of legal views on the effect of entering into a tenancy-in-common arrangement,with respect to participation in generating facilities (pp.191-192) .

68. The Board erroneously failed to find that if Duquesne and Penn Power were to be able to include 'their respective ownership shares of jointly committed units in each of their respective rate bases, Pennsylvania law re-quired that they take that ownership only on a tenancy in common basis.

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69. The Board erroneously misstates Applicants' argument to be that the NRC essentially is ousted from jurisdiction in these proceedings because of the pervasive

, regulations of the FPC over all aspects of Applicants' operation (p.191) , which argument Applicants have never advanced.

70. The Board erroneously found that Applicants combined to exclude municipal systems in the CCCT from CAPCO membership (p.192) .

71. The Board erroneously concluded that Appli-cants had a policy of isolating competitors and denying them the benefits of coordination which Applicants received and made available to other systems (p.192) .

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72. The Board erroneously found that it was the consensus opinion of Applicants that municipal systems not be included in CAPCO and that allocation formulas be adopted that made it difficult for municipalities to join (p.192) .

73. The Board erroneously concluded on the basis of two sets of notes concerning the same meeting that evidence only admissible against one Applicant may be received in evidence against all Applicants (p.193) .

. 74. The Board erroneously found a relationship between the alleged collective denial of membership in CAPCO and the alleged individual intent and practices of y the Applicants (p.193).

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75. The Board erroneously concluded that, at least from August 20, 1967 forward, Applicants were a party to a joint plan or combination, one facet of which was to exclude CAPCO participation by municipals (p.193) .

76. The Board erroneously concluded that the CAPCO agreement was an agreement in restraint of trade in that it extended to entities who allegedly had agreed not to compete services and benefits which it purportedly denied to their would-be competitors (p.194) .

77. The Board erroneously concluded that the CAPCO agreement was an act of monopolization in that it denied to others membership opportunities (p.194) .

78. The Board erroneously concluded that the CAPCO agreement constituted a group boycott (p.194) .

79. The Board erroneously found that refusals to approve membership requests in CAPCO were the result of col-lective action contemplated from the outset of the CAPCO agreements ( p.194) .

80. The Board erroneously faulted Applicants for circulating among -themselves copies of correspondence with Pitcairn regarding the Borough's request for membership in CAPCO (pp.195-199).

81. The Board erroneously failed to find that good i

and legitimate business reasons required Applicants to circu-late among themselves correspondence regarding Pitcairn's

request to become a member of CAPCO (pp.195-199).

82. The Board erroneously failed to conclude that in the circumstances circulation of the Pitcairn correspond-ence among Applicants gives rise to no inference that the views expressed therein were the result of joint or collec-tive action (pp.195-199).

83. The Board erroneously found that discussion among cunasel for Applicants on Pitcairn's membership re-quests constituted collective or joint action by the CAPCO companies (pp.195-196).

84. The Board erroneously assumed that because the Applicants each had similar positions in responding to Pitcairn, they acted in a fashion inconsistent with the anti-trust laws (p.196).

85. The Board erroneously characterized the ini-tial responses to Pitcairn by CEI, Toledo Edison, Duquesne, and Ohio Edison and Penn Power as refusing Pitcairn's re-quest for membership in CAPCO (pp.196-197).

. 86. The Board erroneously concluded that in a natural monopoly industry like the electric power industry the stipulated dominance of Applicants imposer certain

" obligations" on their conduct (p.198 ) .

87. The Board erroneously assumed that Pitcairn was not fully advised of the nature of the CAPCO pool because it was not provided with copies of the recently executed

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Memorandum of Understanding (p.198-199).

88. The Board erroneously concluded that the refusal to provide Pitcairn with copies of the Memorandum of Understanding was a deliberate attempt to frustrate negotiations (p.199).

89. The Board erroneously. failed to conclude that any entity wishing to join an electric power pool must demonstrate that its participation in the pool would be mutually beneficial to all entities (p.198) .

90. The Board erroneously concluded that the f ashion in which each Applicant responded to Pitcairn's request for membership was unreasonable and anticompetitive even though the Board was unable to find that the responses were, in and of themselves, unreasonable (p.199) .

91. The Board erroneously failed to find that Pitcairn would have been unable to meet the minimum pool requirements necessary to assure mutuality or to satisfy its obligations under the CAPCO contracts (p.199).

92. The Board erroneously faulted the CAPCO companies for not making provision for the participation of rival systems within the CAPCO pool irrespective of the size of these rivals (which in itself underscores the Board's misunderstanding of the CAPCO arrangement) (p.199), not-withstanding the fact that the Board itself saw fit to condition CAPCO membership on system capability of 10 mw

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1 or greater (Board Lic. Cond. 4(a) and (b)).

93. The Board erroneously found that it was solely because of Duquesne's adamant stance on the membership question that Pitcairn decided it was useless to continue seek-ing CAPCO membership (p.200).

94. The Board erroneously failed to conclude that there is no relationship (i.e., nexus) between Pitcairn's request for membership in CAPCO and the activities under the nuclear licenses.

95. The Board erroneously concluded that there is a direct nexus between access to the Perry nuclear units and membership in CAPCO (p.200).

96. The Board erroneously found that the City of Cleveland's August 3,1973 letter did not contain inconsistent requests for membership in CAPCO and for participation in cer-tain select generating facilities (p.201).

97. The Board erroneously found that by letter of Aug ust 17, 1973, CEI communicated to the other Applicant com-panies its intent to exclude Cleveland from CAPCO membership (p.201).

98. The Board erroneously found that Cleveland was required to deal exclusively with CEI as representative of the CAPCO group (p.202) .

99. The Board erroneously concluded that this alleged requirement created an agency relationship between

I CEI and the other CAPCO companies (p.202) .

100. The Board erroneously found that Applicants combined to resist the entry of any municipal, including Cleveland, to CAPCO (p.202).

101. The Board erroneously found that at a Decem-ber 7, 1973 mqeting "it was decided jointly that CEI (sic)

(Cleveland) would not be permitted membership in CAPCO"

(pp.202-203).

102. The Board erroneously found that Lee Howley i

acted on behalf of the CAPCO companies in allegedly denying Cleveland's requests for membership in CAPCO (p.203).

103. The Board erroneously failed to find that Cleveland had neither the facilities necessary to meet its responsibilities in CAPCO, nor the inclination or capability i

to work together with the CAPCO companies in a constructive fashion ( pp.201-203) .

104. The Board erroneously failed to find that the l

addition of . Cleveland to the CAPCO group was not beneficial to either Cleveland or the CAPCO companies (pp.201-203) .

105. The Board erroneously failed to find that CEI presented a counterproposal to Cleveland offering Cleveland the full benefits of coordinated operation and development while avoiding the disadvantages of pool member- .

ship (pp.201-203).

l 106. The Board erroneously concluded that the

l denials of Cleveland's request for membership constituted a boycott and a refusal to deal (p.203) .

107. The Board erroneously failed to conclude that there is no relationship (i.e., nexus) between Cleveland's request for membership in CAPCO and the activities under the nuclear licenses.

108. The Board erroneously concluded that certain Applicants have denied access to nuclear facilities to other electric entities in their respective service areas (p.204) .

109. Even assuming such denials had taken place, the Board erroneously concluded that they were in the circum-

) stances inconsistent with the antitrust laws, that they were made pursuant to common objectives and understandings among 4

Applicants to limit the availability of bulk power services to non-Applicant entities, and that they were inconsistent with congressional policy (pp.204-205).

110. The Board erroneously concluded that Appli-cants acted in concert to deny " vital entities" (?) access to bulk power services (p.204) .

l 111. The Board erroneously found that it theoretically was no business of the other Applicants what collateral arrangements CEI might make for the disposal of any portion of the nuclear output of the Davis-Besse or Perry plants (p.207) .

112. The Board erroneously found that Lee Howley

spoke for the CAPCO companies in responding to Cleveland's request for access to nuclear units (p.208).

113. The Board erroneously found that a letter from John Arthur refused Cleveland's request for participation in the Perry 1 and 2, Davis-Besse and Beaver Valley 2 nuclear units, and that such letter reflected a "CAPCO joint position" on nuclear participation (pp.208-209).

114. The Board erroneously found that there were joint and separate denials of nuclear access which allegedly creates and maintains a situation inconsistent with the anti-trust laws (p.211).

l 115. The Board erroneously concluded that Appli-cants' Proposed License Conditions ( App. 44) maintain a situation inconsistent with the antitrust laws because they allegedly do not provide the same range of bulk power ser-vices Applicants make available to each other (p.211).

116. The Board erroneously found that many wide area power pools calculate reserve requirements on the basis of equal percentage reserves or the largest single unit down standard (p.212).

117. The Board erroneously found that the P/N method has the recognized effect of applying extraordinary j reserve requirements to small systems (p.213) .

l 118. The Board erroneously found that the P/N method imposes a dilemma -- that is, that small systems must sacrifice economies of scale in order to avoid carrying exces-sive reserves -- not otherwise facing snall systems (p.213) .

119. The Board erroneously found that the Appli-cants were aware that the P/N formula discriminated against municipal systems and would be desirable as an exclusionary tool (p.213).

120. The Board erroneously concluded that the CAPCO P/N reserve method of allocating responsibility is exclusionary and serves as a barrier to entry into CAPCO for municipal systems (p.213) .

121. The Board erroneously found that arbitrary allocations were made for the first few years of CAPCO operations (pp.213-214) .

122. The Board erroneously found that the change from a pro rata to an investment responsibility computation was made with the intent and purpose of raising entrance barriers to potential CAPCO members (p.214) .

123. Even assuming that the P/N formula represents a barrier to pool membership, the Board erroneously concluded  !

that such a barrier violates the antitrust laws (p.214) .

124. The Board erroneously stated as an unsubstan-tiated premise (and one which is incorrect in any event) that i membership in the CAPCO pool is necessary to the competitive viability of electric entities in the CCCT (p.214) .

125. The Board erroneously found that non-Applicant I

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1 entities are unable to obtain sufficient bulk power services

'tur means other than CAPCO membership (p.215) .

126. The Board erroneously concluded that denial of membership in CAPCO was equivalent to denial of access to a

" bottleneck" facility (p.215).

127. In view of Finding No. 215 (p.215), the Board erroneously failed to find that no " rival entities" had re-quested CAPCO membership other than Pitcairn and Cleveland and the members of CAPCO had never indicated such requests would be denied if made.

128. The Board erroneously f ailed to find that denial of membership in CAPCO to Pitcairn was, in the circum-stances, reasonable. -

129. The Board erroneously failed to find that the request of the City of Cleveland to join CAPCO was not made in good faith but merely constituted a sham.

130. The Board erroneously f ailed to find that denial of membership in CAPCO to the City of Cleveland was, in the circumstances, reasonable.

'.31. The Board erroneously concluded that the mere commingling of electric power generated by a nuclear station or stations into the overall system output of an Applicant is, in and of itself, sufficient to meet the Waterford I nexus standard where the commingling is on "an extraordinary scale" (p.220).

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132. The Board erroneously concluded there is a relationship between the nuclear generating plants and the transmission systems of Applicants and their ability to limit the power supply options of small electric entities in

. the CCCT (p.221).

133. The Board erroneously concluded that trans-mission expansion on Applicants' respective systems would render it increasingly difficult for small utilities to obtain approvals to construct alternate transmission systems (p.221).

134. The Board erroneously found that Applicants had refused to make available bulk power services to other electric entities in the CCCT and thereby had effectively denied to them the option of effective utilization of nuclear power (p.222) .

135. The Board erroneously concluded that the various proposals by Applicants for access to Davis-Besse and Perry (which proposals the Board either misconceives or conveniently mischaracterizes as anticompetitive) have 4 the effect of both creating and maintaining a situation inconsistent with the ant,itrust laws (p.'222) .

136. The Board erroneously concluded, on the basis of a distorted reading of the testimony of Dr. Hughes, that nexus can be established solely by the " structure of competi-tion in the CCCT" (p.223).

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n 137. The Board erroneously concluded that certain Applicants placed or a'ttempted to place unreasonable restraints on the disposition or use of power to be generated by the licensed activities (p.224-227) .

138. Even assuming such restraints in fact occurred, the Board erroneously concluded that each one provides a sufficient basis alone to establish nexus as to all other

" inconsistent" activities not only of the particular Applicant  !

involved, but of all other Applicants who were not involved (p.224). )

l 139. The Board erroneously misstated Applicants' argument as being that FPC regulation is an effectivo check on all alleged anticompetitive acts of the Applicant companies which were considered in this proceeding (p.227), which argu-ment Applicants never advanced. l 140. The Board erroneously concluded that the l

denial of CAPCO membership constituted an attempt to place I

unreasonable restraints en the disposition or use of power to be generated by the licensed activities (p.227). l 141. The Board erroneously implied that argu-ments raised in " Applicants' Joint Brief in Support of their Proposed Findings of Fact and Conclusions of Law" and in " Applicants' Joint Proposed Findings of Fact and Con-clusions of Law" were not important to the resolution of )

the issues in this controversy (p.229) .

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142. The Board erroneously misstated Applicants' argument to be that simply as a result of state and federal regulatory schemes, competition is suppressed and antitrust abuses cannot arise, which argument Applicants never advanced (p.229).

143. The Board erroneously concluded that Karl Rudolph's opposition to a particular piece of legislation, a 1968 proposed power reliability act, indicates a resistance to federal regulation and an intent to conduct pooling oper-ations without " governmental assistance or interference" (p.230).

144. In any event, the Board erroneously ascribed the views of Karl Rudolph and CEI to the other Applicants (p.230).

145. The Board erroneously misstated Applicants' argument to be that " regulation has acted as a substitute or replacement Sor competition in the CCCT" (p.232).

146. The Board erroneously misperceived the import of the Supreme Court's decision in FPC v. Conway, 426 U.S.

271 (1976), and its application to this proceeding (pp.232-l 233).

147. The Board also erroneously misperceived the import of the Supreme Court's decision in Cantor v. Detroit Edison Company, U.S. (1976), and its application to this proceeding (pp.233-235).

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148. The Board erroneously found that it is Appli-cants, rather than the consumers of electricity in Ohio and Pennsylvania, who are the direct beneficiaries of the regula-t,ary scheme which pervades the electric utility industry (p.234).

149. The Board erroneously found, without any evidentiary support, that it was Applicants who had the primary interest in the passage of the " Ohio Anti-Pirating Act" (p.234).

150. The Board erroneously assumed that the ef fect of the " Ohio Anti-Pirating Act" is to insulate Applicants' systems from the possible loss of customers to more "competi-tive" suppliers (p.234).

151. The Board erroneously leaped from the premise that where regulatory schemes were enacted to protect the public interest the federal antitrust laws nevertheless "may apply", to the conclusion that the federal antitrust laws totally oust regulation in this proceeding without any analysis or attempt to reconcile the regulatory and antitrust schemes (p.235) .

152. The Board further evidences this erroneous 1egal analysis by arguing that if regulation obviates situations inconsistent with the antitrust laws there would have been no need for Congress to enact Section 105(c) of the Atomic Energy Act, rather than viewing its responsibilities I

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i under that Section as requiring it to reconcile the regula-tory and antitrust schemes (p.236) .

153. The Board erroneously assumed that there was state or federal regulation in the two retail markets where the Supreme Court found substantive antitrust violations in Otter Tail Power Co. (p.236).

154. The Board, once again, erroneously misstated Applicants' argument to be the " foolish" suggestion that regulation either eliminates the possibility of competition or is intended to serve as a complete substitute to competi-tion (p.236), which " foolish" suggestion surfaced for the first time in the Board's mischaracterization of Applicants' po sition .

155. The Board erroneously concluded that the stat-utory scheme of Ohio contemplates " competition", as it has used that term throughout its opinion, and that " territorial and customer allocations" are not a part of that regulatory scheme (p.236).

1

-156. The Board erroneously failed to respond in any  !

l meaningful or comprehensible fashion to the substance of Appli- l 1

cants' argument that the offers of access to nuclear power found in App. 44, together with the wholesale power option which Applicants are -currently af fording to all municipal i

entities in the CCCT on a full or partial requirements basis, I

make available to non-Applicant entities in the CCCT the full ,

l l

m

~

benefits of coordinated operations and development, thereby precluding the possibility of the creation or maintenance of a situation inconsistent with the antitrust laws as a result of issuance of the subject nuclear licenses (pp.237-238).

157. The Board erroneously misstated Applicants' argument to be that a municipal's cost of construction for small fossil-fueled plants would be lower than Applicants' construction costs for the same plant (pp.238-239), which is not an argument advanced by Applicants anywhere in this pro-ceeding.

158. The Board erroneously failed to find that notwithstanding the testimony of Dr. Hughes, municipalities

could achieve cost advantages similar to Applicants' by constructing small fossil-fueled plants (p.238) .

159. The Board erroneously mischaracterized Applicar is' position to be that the tax subsidy available to municipalities gave Applicants a license to engage in boycott activities (p.239) .

160. The Board, after granting Applicants' request for leave to file an extensive brief in support of their pro-posed findings and conclusions (which separate filing is expressly provided for in the Commission's Rules), erroneously

, reprimanded Applicants' counsel for submitting their support-ing brief under a request for permission to file the same,

.- - . - . =- ._.

precisely as Applicants' counsel had advised the Board in advance on the final hearing day (pp.240-245) .

161. The Board erroneously drafted license condi-tions that are not in the public interest (pp.254-264) .

162. The Board erroneously exercised its responsi-bilities under 105(c)(6) of.the Atomic Energy Act of 1954, i

as amended, prior to apprising the parties of its findings under Section 105(c)(5) of the Act and affording Applicants ,

an opportunity to comment upon appropriate license conditions in accordance with Applicants' request ( pp.254-264) .

i 163. The Board erroneously exercised its responsi- l

! bilities under Section 105(c)(6) of the Act by failing to i

4 consider factors other than its affirmative finding under Section 105(c)(5) of the Act in f ashioning relief "necessary to protect the public interest" (pp.254-264).

164. The Board erroneously failed to fashion license conditions that bear any relation to the activities found by it to be inconsistent with the antitrust laws (pp. 254-64).

165. The Board erroneously f ailed to draft separate license conditions for each individual Applicant tailored to the' situation or situations that the Board found to exist in their respective service areas (pp.254-264) .

166. The Board erroneously concluded that unlimited

)

opportunities for bulk power service options, particularly unlimited opportunities for coordinated operation, reserve l I _ . - - _ _ _ _ . - _ _ __ _ _ _ . . . _ _ _ _ _ . .. -_ _ _ _ .

sharing, wheeling, and economy energy exchange, are neces-sary to provide meaningful access to the benefits of nuclear generation (pp.254-255) .

167. The license conditions, as drafted by the Bocrd, require Applicants to do much which is virtually im-possible to perform and which Applicants cannot realisti-cally be expected to perform (pp.254-264) .

168. License conditions 1 through 4, as drafted by the Board, exceed the jurisdiction of the Commission in that they bear no relationship to the activities under the nuclear licenses (pp.256-261).

169. License conditions 5 through 8, as drafted by 4

the Board, exceed the jurisdiction of the Commission in that Applicants' obligations to provide the bulk power services contained therein are not limited to those necessary for entities to obtain meaningful access to the benefits of nuclear generation (pp.261-262).

170. License condition 9, as draf ted by the Board, exceeds the jurisdiction of the Commission in that it affords entities preferential access to the benefits of nuclear gen-eration and imposes license conditions on as yet unapplied for nuclear facilities (pp.262-263).

171. ' The Board throughout its Initial Decision erroneously and prejudicially treated the several Applicants collectively, without regard for the separate individuality

of each one in relation to the electric entities located within each of their respective service areas.

172. The Board erroneously approached this case from the outset with the preconceived attitude that Appli-cants engaged in impermissible collective action, that their dominance in generation and transmission in their respective service areas rendered all their activities suspect under the antitrust laws, that the structure of the electric utility industry was alone inconsistent with the antitrust laws, and that nexus required only that it be shown that Applicants had decided to construct nuclear facilities, all of which is reflected in the Board's prehearing orders, its rulings at the evidentiary hearing, its statement of the principal issue in its Initial Decision, and its discussion in the factual findings and legal conclusions to which Applicants have taken exception.

Respectfully submitted, SHAW, PITTMAN, POTTS & TROWBRIDGE By: ,L .b+ .1 U- -

l Wm. Bradford Reynoldsk Robert E. Zahler Counsel for Applicants Dated: February 7, 1977

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= - - _ - _ . .. - . - . . _ . . _. _ __ ._.

UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION Before the Atomic Safety and Licensing Appeal Board f

l In the Matter of )

)

1 THE TOLEDO EDISON COMPANY and )

! THE CLEVELAND ELECTRIC ILLUMINATING ) Docket No. 50-346A COMPANY )

- (Davis-Besse Nuclear Power Station, )

Unit 1) )

)

THE CLEVELAND ELECTRIC ILLUMINATING )

COMPANY, ET AL. ) Docket Nos. 50-440A (Perry Nuclear Power Plant, ) 50-441A Units 1 and 2) )

)

THE TOLEDO EDISON COMPANY, ET AL. )

(Davis-Besse Nuclear Power Station, ) Docket Nos. 50-500A Units 2 and 3) ) 50-501A CERTIFICATE OF SERVICE i

I hereby certify that copies of the foregoing

" Exceptions To The Initial Decision Common To All Applicants" were served upon each of the persons listed on the attached Service List, by hand delivering copies to those persons in the Washington, D. C. area, and by mailing copies, postage prepaid, to all others, all on this 7th day of February,1977.

SHAW, PITTMAN, POTTS & TROWBRIDGE r

By: . Md - -

s- d-Wm. Bradfo'rd Reynolds i

_ ,, _= ___- _

'NITED STAT::S OF AMERICA NUCLEAR REGULATORY COMMISSIOd Before the Atomic Safety and Licensing Appeal Board t

In the Matter of )

)

THE TOLEDO EDISON COMPANY and )

THE CLEVELAND ELECTRIC ILLUMINATING ) Docket No. 50-346A COMPANY )

(Davis-Besse Nuclear Power Station, )

Unit 1) )

)

THE CLEVELAND ELECTRIC ILLUMINATING )

COMPANY, ET AL. ) Docket Nos. 50-440A (Perry Nuclear Power Plant, ) 50-441A Units 1 and 2) )

)

THE TOLEDO EDISON COMPANY, ET AL. )

(Davis-Besse Nuclear Power Station, ) Docket Nos. 50-500A Units 2 and 3) ) 50-501A SERVICE LIST Alan S. Rosenthal, Esq. Ivan.W. Smith, Esq.

Chairman, Atcmic Safety and Atomic Safety and Licensing Board Licensing Appeal Board U.S. Nuclear Regulatory Commission U.S. Nuclear Regulatory Commission Washington, D. C. 20555 Washington, D. C. 20555 John M. Frysiak, Esq.

Jerome E. Sharfman, Esq. Atemic Safety and Licensing Board

. Atomic Safety and Licensing U.S. Nuclear Regulatory Commission Appeal Board Washington, D. C. 20555 U.S. Nuclear Regulatory Commission .

Washington, D. C. 20555 Atomic Safety and Licensing Board Panel Richard S. Salzman, Esq. U.S. Nuclear Regulatorv Commission Atcmic Safety and Licensing Washington, D. C. 20555 Appeal Board U.S. Nuclear Regulatory. Commission . Docketing & Service Section Washington, D. C. 20555 Office of the Secretary U.S. Nuclear Regulatorv Commission

-Atomic Safety and Licensing Washington, D. C. 20006 Appeal Board Panel U.S. Nuclear Regulatory Commission

, Joseph Rutherg, Esq.

Washington, D. C. 20555 Benjamin.H. Vcgler, Esq.

Douglas V. Rigler, Esc. EOY.P. Lessy, Jr., Esq.

Chairman, Atomic Safety and Office of the Executive Licensing Board Legal Director Foley, Lardner, Hollabaugh and Jacobs U.S. Nuclear Regulatory Ccamission Chanin Building - Suite 206 Wasn,ington, D. C. 20232 815 Connecticut Avenue, N.W.

• Washington, D. C. 20006

i l

~2-l Joseph J. Saunders, Esq. Terence H. Benbow, Esq.

Antitrust Division A. Edward Grashof, Esq.

D3partment of Justice Steven A. Berger, Esq.

Washington, D. C. 20530 Steven B. Peri, Esq. '

Winthrop, Stimson, Putnam & Roberts Malvin G. Berger, Esq. 40 Wall Street Jcnet R. Urban, Esq. New York, New York 10005 Antitrust Division P. O. Box 7513 Thomas J. Munsch, Esq.

Washington, D. C. 20044 General Attorney

. Duquesne Light Company Rsuben Goldberg, Esq. 435 Sixth Avenue David C. Hjelmfelt, Esq. Pittsburgh, PA 15219 Michael D. Oldak, Esq.

Goldberg, Fieldman & Hjelmfelt David McNeil Olds, Esq.

Suite 550 Reed Smith Shaw & McClay 1700 Pennsylvania Ave., N'.W. Union Trust Building Washington, D. C. 20006

• Box 2009 ,

Pittsburgh, PA 15230 Vincent C. Campanella, Esq.

Director of Law Lee A. Rau, Esq.

Robert D. Hart, Esq. Joseph A. Rieser, Jr., Esq.

1st Ass't Director of Law Reed Smith Shaw & McClay City of Cleveland Suite 900 213 City Hall 1150 Connecticut Avenue, N.W.

Cleveland, Ohio 44114 Washington, D. C. 20036 Frank R. Clokey, Esq. James R. Edgerly, Esq.

Special Ass't Attorney General Secretary and General Counsel Room 219 Pennsylvania Power Company Towne~ House Apartments .

One East Washington 6treet Harrisburg, PA 17105

• New' Castle, PA 16103 Donald H. Hauser, Esq. John Lansdale, Esq.

Victor F. Greenslade, Jr.,- Esq. Cox, Langford & Brown William J. Kerner, Esq. 2' Dupont Circle, N . W. ,

The Cleveland Electric Wasnangton, D. C. 20036 Illuminating Company 55 Public Square Alan P. Suchmann, Esq.

Cleveland, Ohio 44101 Squire, Sanders & Dempsey 1800. Union Commerc.e Building Michael M. Briley, Esq. Clevela'nd, Ohio 44115 Paul M. Smart, Esq.

Fuller, Henry,- Hodge &'Snyder Edward'A. Matto, Esq- .

P. O. Box 2088 Richard M. Firestone, Esq.

. Toledo, Ohio 43603 Karen H. Adkins, Esq.

Antitrust Section Russell J. Spetrino, Esq. 30 E. Broad Street, 15th Floor Thomas A. Kayuha, Esq. Columbus, Ohio 43215 1 Ohio Edison Company Christopher R. Schraff, Esq.

! 75 South Main Street Assistant Attorney General L Akron, Ohio 44308 ', Environmental Law Section r

361 E. Broad Street, 9th Floor Columbus, Ohio 43215

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