ML19330A132
| ML19330A132 | |
| Person / Time | |
|---|---|
| Site: | Midland |
| Issue date: | 09/23/1977 |
| From: | Coufal F, Leeds J, Luebke E Atomic Safety and Licensing Board Panel |
| To: | |
| References | |
| NUDOCS 8007150903 | |
| Download: ML19330A132 (44) | |
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4 417 UNITED STATES OF AMERICA c5.9p.h4 3
NUCLEAR REGULATORY COMMISSION y
In the Matter of
)
W
)
CONSUMERS POWER COMPANY
)
Docket Nos. 50-329
)
50-330 (Midland Plant, Units 1 and 2)
)
ORDER 1.
This order is the result of a hearing held on whether or not existing construction permits for Units 1 and 2 of Consumers Power Company Midland Plant be continued, modified, or suspended until the time action is taken on certain issues remanded to the Commission by the Court of Appeals for the District of Columbia as the result of appeals taken from the issuance of those construction per-mits.
For convenience we will frequently refer to the pro-ceeding which has led to this order as the " suspension pro-ceeding" to distinguish it from the proceeding on the merits of the issues remanded; we will occasionally refer to that as the " remand proceeding."
Based upon the evidence presented in this suspension proceeding, we decline to modify or suspend the licenses pending the outcome of the remand proceeding.
BACKGROLWD 2.
The partias to this proceeding are Consumers Power Company (Licensee or Consumers), the Nuclear Regulatory 80 07150 N 3 G
. Commission Staff (Staff), the Dow Chemical Company (Dow),
and a group of intervencrs other than Dow who have taken a consolidated position (Intervenors).
3.
Licensee made an application on January 13, 1969, for permits to construct two pressurized water nuclear reactors at Midland, Michigan.
Unit No. 1 is designed to have a gross electrical output of 506 MW and to produce process steam; Unit No. 2 is designed to have a gross elec-trical output of 855 MW electric.
After hearings, construc-tion permits were issued on December 14, 1972.
When their appeals within the Commission failed, the Latervenors filed a petition for review in the U. S. Court of Appeals _for the District of Columbia Cir cuit on August 6,1973.
That Court on July 21, 1976, in a case captioned Nelson Aeschliman, et al. v. U. S. Nuclear Reculatorv Commission, 547 F.2d 622, remanded the matter to the Commission because the Court held that the Commission had failed to properly consider. energy conservation as an alternative to the lHidland plant, that the Advisory Committee on Reactor Safeguards had failed to provide a clear report, that there should be an inquiry as to whether circumstances have changed regarding Dow's need for process steam, and that the Commission failed to consider the environmental impacts of the nuclear fuel
, cycle.
The fuel cycle issue came as a result of a decision in the same court on the same day in Natural Resources Defense Council, et al. v. U.
S. Nuclear Regulatorv Commission, 547 F.2d 633.
4.
On August 13, 1976, the Commission issued a General Statement of Policy (GSP) entitled Environmental Effects of the Uranium Fuel Cvele, 41 F.R. 34707, in which it discussed the agency response to the decisions relating to the fuel cycle.
On August 16, 1976, the Commission reconvened an Atomic Safety and Licensing Board (Board) in this proceeding, ordered it to consider whether the construction permits should be continued, modified, or suspended pending the promulgation of an interim fuel cycle rule, and directed that no hearing should be held on the merits of the other issues remanded by the Court of Appeals until the decision of that Court had become final.
CLI-76-ll, NRCI-76/8, p.
65.
On September 3, 1976, the Court of Appeals issued its mandate in Aeschliman and on September 14, 1976, the Commission ordered this Board to consider all of the Aeschliman issues as well as the fuel cycle issue to determine whether_or not to continue, modify, or suspend the licenses.
CLI-76/14, NRCI-76/9, p. 163.
4 5.
An interim fuel cycle rule was promulgated on March 14, 1977, at 42 F.R. 13803.
The Appeal Board then ordered this Board to consider the interim fuel cycle rule in this case.
ALAB-396, 5 NRC 1141.
6.
The August 16, 1976, Memorandum and order of the Commission directed that a Board be reconvened for the purpose of considering whether the construction permit for Nddland be continued, modified or suspended, for fuel
- cycle reasons.
In accord with the Commission's GSP, well established equitable factors were to be considered in the resolution of the continuation, suspension or modification issue.
Among those factors are:
(1) the extent of the NEPA violation; (2) the timeliness of objections; (3) the likeli-hood that significant adverse Lnpacts would occur until a new fuel cycle rule is in place; (4) the effect of the delay; (5) the need for the project; (6) whether reasonable alternatives will be foreclosed by continued construction; (7) the possibility that the cost-benefit balance would be tilted throubn increased investment; and (8) general public policy concerns.
4 y--
.- 7.
After the Aeschliman mandate was issued, the Com-mission directed the Board to consider the other matters remanded by the court in that decision,1! but provided no new framework within which resolution of the issues should be considered.
In March 1977, the Commission indicated that the framework for deciding cases involving suspension may be found in a traditional balancing of equities and the consideration of any likely prejudice to the decision that might be called for by the remand,2/ a rule which seems to us a broad way of stating the more specific eight points listed in the GSP.S!
8.
Licensee urges that among the equitable factors to be applied in this suspension proceeding are those relating 1/
Memorandum and Order, CLI-76/14, 4 NRC 163 (September 14, 1976).
2/
Public Service Commission of New Hampshire (Seabrook,
~
Units 1 and 2), CLI-/7/S, 5 NRC 503-3Z1 (March 21, 1977) (reviewing ALAB-366 cited at' footnote 3) which was cited by the Appeal Board in this case in ALAB-395, 5 NRC 772.
3/
The Appeal Board's rejection of the GSP factors in its Seabrook decision of January 21, 1977, ALAB-366, 5 NRC 39, at page 71, seems to us to not vitiate this view.
ALAB-366 dealt with a case in which there was one fact of such significance that it alone could be relied upon for decision making.
i l
l
. to stays on appeal stated in Virzinia Petroleum Jobbers A'ssn. v. FPC, 259 F.2d 921, 925 (D.C. Cir. 1958).
Of the four tests mentioned in that case, the one strongly urged for application here is whether or not the moving party must make a strong showing that it is likely to prevail on the merits.
It is clear that the Virginia Petroleum Jobbers tests apply in NRC proceedings where a stay pending appeal is requested.b!
But we are bound by Commission and Appeal Board holdings that the tests do not apply to a case involving the possible suspension of a license for NEPA defects.
In Seabrook (page 521), the Commission specifically distinguished the test there announced from Virzinia Petroleum Jobbers and said it was less stringent than the latter.
The Appeal Board in Midland emphasized that result in ALAB-395, 5 NRC 772, 784 and 785 (April 29, 1977).
We have concluded that the moving parties here need not prove what their chances are on the remand hearing and that at this juncture we must view the latter proceeding as one in which any party has a substantial chance of success.
4/
This requirement was lately codified at 10 CFR 52.788.
l l
l I
O e
. 9.
Another aspect of Seabrook (page 530) influences our decision on suspension.
The Commission in Seabrook took the view that in consid -ing matters related to cost-benefit balancing as between one plant in which a substantial investment has been made and a replacement plant, one must t.;;ke the facts found to exist.
Thus credit must be given to the partially completed site for the work already done.
This rule holds where the integrity of the NEPA process up to hearing time has been sound; where that is missing, the cost to society of ignoring sunk costs may be justified if to add sunk costs as a benefit to an existing site would be unjust.
An example of this injustice is where consideration of such sunk costs might reward an Applicant who had withheld Laformation adverse to his plan for construction.
10.
There is evidence in this record that Licensee has considered conducting its share of this proceeding in such a way as to not disclose important facts to the Board.
Notes taken by a Dow attorney of meetings with Consumers' attorneys indicate the desire of the latter to " finesse" the dispute with Dow if no Latervenors appeared (Intervenors Ex. 25, page 2, paragraph B).
The same notes reflect the exploration by a Consumers' attorney of the possibility of using Dow witnesses unfamiliar with the facts relating to
. the Dow-Consumers dispute to testify at the hearing; they further disclose a proposed strategy by Consumers to " drag feet" in the hearing process because as long as construc-tion continues, Consumers "has a lever" (page 3, paragraph 4).
None of these proposed stratagems were successful.
Aggressive Intervenors did appear and the Dow-Consumers matter was aired; the Dow witnesses furnished were highly knowledgeable men (Mr. Temple headed the Michigan Division of Dow); and Licensee has not slowed the suspension hearing.
i Of course there remains the suspicion, raised by the dis-l closure of these instances, that there may have been similar ploys which were successful.
11.
Tnese may be the kinds of activity that the Commission had in mind in describing the situation where the use of sunk costs is unjust.
If so, we decline in this instance to ignore sunk costs.
If it is generally proper to use sunk costs in the comparison of alternatives, we i
think that to ignore several hundred millicn dollars worth as a punishment would work an out-of-proportion injustice on those who will ultimately provide the money.
12.
With this background in mind, we turn to a dis-cussion of the facts and the law.
i 9-ANALYSIS OF THE EO.UITIES RELATIVE TO SUSPENSION A.
The Extent of the NEPA Violations 13.
An appraisal of the magnitude of the NEPA viola-tion relative to the fuel cycle issue has been assisted by a number of events which have transpired since the construc-tion permit was issued in this case.
At that time there was no generic rule regarding the uranium fuel cycle and costs related to that cycle were not considered in licensing cases.
After F.idland was licensed, the Commission adopied its Table S-3 as a part of 10 CFR 551.20.
That table gave values to the various aspects of the uranium fuel cycle and the attend-4 anc regulation directed that those values would be used in cost-benefit balancing for the NEPA evaluation.
The environ-mental effects of the fuel cycle were said by the Commission to be "relatively insignificant" but ones which should be recognized.
39 F.R. 14188, 14190.
Then followed NRDC v.
U. S. Nuclear Regulatorv Commission, suora which struck down Table S-3 and remanded the cases in which it had been used.
It likewise caused (through Aeschliman) the remand of this case "or failure to consider the environmental effects of the cycle at all.
Next came an interim rule promulgated on March 14, 1977, with respect to which the Commission said the values in the old rule and those in
e
. the interim rule "are not substantially different."E!
The Commission in that order indicated its belief that the operation of the interim rule would not be likely to require suspension of a construction permit.
We conclude therefore that while failure to consider the effects on the environment of the nuclear fuel cycle was a NEPA violation, it was one of small magnitude.
14.
The second NEPA violation is more difficult to treat.
The plant uas designed and located under an assump-tion that Dow would purchase process steam from Consumers.
The steam to be sold to Dow was not a by-product 'of power production; the reactors were designed so that one would provide about 800 MRe and the second, of the same thermal capacity, would produce about 500 MRe and the balance of its capacity would be utilized in producing steam for Dow.
Because steam can be delivered only over relatively short distances, the plant was situated near the Dow industrial facilities in Midland.5/
5/
In the Matter of Vermont Yankee Nuclear Power Corporation, et al., CLI-77/10, 5 NRC 717 (1977).
6/
Initial Decision, 5 AEC 214 (1972).
l
)
4 11 -
15.
Following the issuance of the construction permit, Intervenor twice sought an order reopening the proceedings because of changes in the Dow-Consumers relationship.
The motions culminated in a Commission order dated April 11, 1974, which recited that the Commission had reviewed the contracts and that there were no changed circumstances
~
warranting a reopening.
The order went on to say that it was significant that Dow had a contract to buy steam and electricity from Consumers.
CLI-74/15, 7 AEC 311.
16.
The Court of Appeals in 'its remand has assumed, "that the Commission will take into account the citanged circumstances regarding Dow's need for process steam, and 4
the intended continued operation of Dow's fossil-fuel generating facilities."
Aeschliman, page 632.
17.
Dow continues to need process steam.
Mr. Joseph G.
Temple, General Manager of the Michigan Division of Dow Chemical USA, which is a unit of the Dow Chemical Company (Temple, page 1)1! testified that it was essential to its operation (Tr. 2357).
The company now produces its own steam in antiquated facilities that will not likely be Z/
The Temple direct follows Tr. page 220.
operable through 1984 (Temple page 3, Tr. 2669, 2733),
which do not now meet Michigan air quality standards, and which are being operated under a waiver from the Michigan Air Pollution Control Commission (Temple, page 4).
Further waivers depend upon what the Michigan Commission might do.
18.
Dow's original contract for steam from Midland apparently contemplated the maximum purchase of 4,050,000 lbs/hr (I.
D., 5 AEC 214, 215, paragraph 1).
The contract was renegotiated in 1974 (Consumers' Ex. 7c attached to Howell's Testimony). !
It now provides for a minimum pur-chase of 2,000,000 and a maximum of 2,400,000 lb/hr of 175 psig steam and 400,000 lb/hr of 600 psig steam (Temple, page 8).
The parties originally contemplated that steam deliveries would begin on March 1, 1980 (Temple, Tr. 210 and Howell, Tr. 2020) but there is no fixed contractual date.
19.
Dow has continuously reviewed its situation regard-ing purchase of steam from the Midland plant because of con-struction delays and cost increases (Temple, page 2).
This review resulted in a decision in the summer of 1976 by the 8/
Testimony of Stephen H. Howell, following Tr. 2074.
. Midland Division of Dow that the Consumers contract was no
. longer advantageous to Dow (Board Ex. 1, Temple 387).
A corporate review then took place (Board Exs. 1 and 2; Temple, Tr. 424).
This resulted in a conclusion that the Dow-Consumers relationship retained a cost advantage over a Dow owned coal-fired plant but that the original advantage had narrowed
.(Temple, page 5; Orrefice, Tr. 2699).
20.
Aside from steam production costs, Dow is seriously concerned because Consumers' Board Chairman has stated that Consumers will hold Dow liable for about $600,000,000 in the event that 'Dow fails to take steam (Tr. 2695 3dL Egg ).
The two factors that were the most important in the corporate review were the economic advantage of Midland steam and the possibility of liability for failure to buy it.
The two items combined were convincing that the relationship should continue (Tr. 2699).
f 21.
New nuclear fuel cocts presented at the hearing show an increase in the cost of steam to Dow over that con-templated at the 1976 corporate review (Keeley following 4
Tr. 3646; Roberts, following Tr. 5099).
22.
The Dow position is and continues to be one of keeping its options open; in the event that circumstances 1
. change, Dow might change its position regarding steam pur-chases (Tr. 2690-2693).
The circumstances which principally concern Dow include the cost of N1dland (Tr. 2709, 2301) and the completion schedule (Tr. 2709 and 2711-2712); it has other, perhaps less crucial, concerns about Consumers' abil-itv to operate the plant (Tr. 2709), the Michigan regulatory elimate (Tr. 2418), and the cost and availability of nuclear fuel (Tr. 2419).
23.
While Dow needs steam, Dow does not necessarily need it from Midland and whether Dow will ever buy steam from that plant is, on the record, speculative.
Whether this circumstance will change by the time that the remand hearing is concluded is inpossible to know.
r 24.
In the event that Dow fails to buy steam from i
Consumers, the circumstance will be one of a plant at a cite for which only very limited alternatives were explored, designed in substantial part for a purpose which will not be fulfilled.
The effect on the values that NEPA protects could be serious unless plant design can be modified to accommodate the changed conditions.
25.
The failure to consider energy conservation is a NEPA violation.
Substantially less demand could recult
, in the construction of a plant not now needed.
B.
Timeliness of Obiections 26.
Without including here a list of the dates upon which the various issues remanded by the Court of Appeals were first raised by Intervenors, we are easily able to conclade that they acted promptly.
27.
We find this a treublesome factor in this proceed-ing.
A timely raising of issues must mean something more than that the Intervenors are not penalized if they are not late.
In the administrative and legal system governing these cases, the application for a license alone involves the spending of tremendous sums of money.
If the application evolves into a license and construction begins, the amount of expenditure increases rapidly.
Here the Licensing Board's initial licensing decision was dated December 14, 1972; the case then worked its way through the Commission, arriving at the Court of Appeals on August 6,1973, where it remained until a decision was issued on July 21, 1976.
It has again been in Commission channels since then and will probably remain there for several more months.
In the meantime construction has been underway except for delays due to financial problems accompanying the recession earlier in
/
. this decade.
Consumers' expenditures at Midland are in the half billion dollar range.
Though Intervenors acted promptly, the sunk costs are a factor that is difficult to overcome.
C.
Adverse Environmental Impacts Which Might occur if Construction Is Not Suspended 28.
Due to the amount of construction that has been done, the environmental effects of continued construction rather than suspension will not be a decisive factor (Consumers' Exs. 1-3, Wells page 2 et seq.2/
The continued construction on-site will be attended by the ordinary off-site dust, noise, movement of vehicles, and the like (Wells, page 6 and Echols page 1 et sec.).10/
D.
Effect of Delav 29.
A delay due to suspension would have an effect on Licensee, its investors and customers, Dow, and the Michigan economy.
9/
. Wells Testimony following Tr. 2946.
10/
Echols Testimony following Tr. page 3056.
. 30.
For the purpose of calculating its economic costs during a suspension, Consumers assumed delay periods of 5 months and 9 months and that these would actually result in delays in commercial operations of 9 and 15 months respec-tively because of remobilization of the work force and the like (Keeley III-1).1b!
We find these estimates to be reasonable; because of our experience thus' far in this case, we do not feel it likely that the shorter suspension period of 9 as opposed to 15 months is realistic and therefore limit our analyses to the longer delay.
31.
It is Consumers' position that total plant costs will increase by about $245,975,000 in the event of the longer delay (Ex.16 to Keeley testimony).
About $120,000,000 of this is in AFUDC,1 ! $49,150,000 is in escalation of the costs of major components ($2,250,000) and other items
($46,900,000).
32.
The Staff generally supports the Consumers' position on additional capital costs (Meltz, following Tr. 4573) though 11/
Testimony of Mr. Keeley following Tr. 3638.
The delay
. I period was postulated to run from December 1, 1976.
12/
Allowance for funds used during construction.
,y
. pointing out that the AFUDC is not an out-of-pocket item, rather a load to be borne by the racepayer if and when the plant gets on the line (Meltz, page 3).
What happens to AFUDC if the plant never operates does not appear in the record.
Furthermore we have no way of knowing how the Michigan Utilities Commissien would handle any costs. spent on an incomplete and abandoned plant.
33.
Intervenors are critical of both the analysis by Consumers and that of the Staff for failure to consider the time value of money (Timm, page 66).13_/
Dr. Timm contends that his admittedly rough calculations would indicate a benefit to ratepayers of about $140,000,000 because they would not have to pay for construction during the suspension period; an added benefit he said, would be the extended life of the plant due to a later startup.
Mr. Meltz of the Staff discussed this subject in his rebuttal testimony;1b!
and Dr. Timm in a surrebuttal affidavit (Latervenors' Exhibit R-1). We conclude that there would be an increase in capital 13/
The Tims testimony appears following Tr. 16A in the
~~
Rebuttal Volume dated March 23, 1977.
li/
The Meltz testimony is in the Rebuttal Volume dated March 23, 1977.
19 -
costs as a result of suspension but that the magnitude is uncertain.
34.
Another aspect of the economic costs of delay is the projected increase in the cost of nuclear fuel.
This is said by the Licensee to be about $20,000,000 (Ex. 16 to Keeley III), a number we have been given no reason to dispute.
35.
A major item in delay costs is replacement power, projected by Consumers to be $414,000,000 (Heins at 14, following Tr. 1648 and Ex. 14 attached; Keeley at III-7 following Tr. 3638 and Ex. 16 attached; Calcaterra rebuttal affidavit marked Ex. R-l and attachment 1 thereto).
The Intervenors have attacked this figure on several bases.
Some of these are the lack of a showing of real need by municipalities and cooperatives for power that Consumers projects it will sell to them, the erroneous treatment of
" forced purchases" by Consumers (Timm rebuttal page 15 gr seq.), and use of unjustifiably high coal costs by Consumers (Timm direct, page 45).
36.
The Staff made the assumptions that there would be little or no growth on Consumers' system and that there would be internal fossil fuel capacity to make up the loss of Midland (Feld, following Tr. 4509).
A range of capacity
-e w
,w e
~ - -
s-factors was reviewed.
During the hearing, Staff updated its replacement power costs and, based on the assumptions mentioned, arrived at replacement costs of 3.8 to 5.3 million dollars per month for coal-fired capacity and 9 to 12.5 million dollars per month for oil-fired capacity (Feld, updating coal cost estimates, Table 2, following Tr. 5169).
Thus, the Staff's high estimate for replacement fuel for a nine-month suspension (which results in 15 months) is
$187,500,000 (15 x $12,500,000); its estimate at the low end is $57,000,000 (15 x $3,800,000).
These cost differences have not been reconciled by Consumers or the Staff so that no hard conclusion can be made relative to which estimates are more nearly correct.
Our only conclusion can be that Consumers' estimate of replacement fuel cost in the event of a suspension appear to be overstated but that a substan-tial cost is involved.
37.
There are other effects of delay.
Consumers' ability to raise funds would likely bd impaired (Boris page 5 following Tr. 4912).
Mr. Keeley identified several more in his testimony (III page 10, et seq.); they include the loss of 2,500 construction jobs with resulting effects on the community.
,e*.
38.
Delay in the construction of Midland might cause Dow to elect to pursue another means of supplying its need for process steam.
E.
Need for the Proiect 39.
There is need for electrical power and process steam during the first half of the next decade in the area served by Consumers.
Dow's need for steam and for 175 to 200 FM of electricity in 1982 is clear (Temple', Tr. following page 217).
Though Intervenors contend that Licensee's load projection is excessive and that it aspires to a higher standard of reliability than is necessary, they have not claimed that there is no need at all for additional genera-tion to serve Consumers' customers.
Dr. Timm posits as an alternative to Midland, 800 MWe of capacity in addition to the capacity needed to serve Dow (Timm page 83).
The Latervenors thus recognize a need for about 1000 MRe.
The Licensee wants to construct about 130,0 MRe.
There is support in the record for new base load capacity (Feld page 6)1E! which may be used to replace oil-fired units in 15/
Follows Tr. 7343.
22 -
order to obtain lower generating costs and because National Policy does not support oil as boiler fuel.16/
40.
Our consideration of Midland rather than some other alternative as the supplier for these needs is contained in the next section of this Decision.
F.
Foreclosure of Alternatives by Continued Construction and Tilting the Cost-Benefit Balance
)
1 Through Increased Investment 41.
In its analysis of the effects of the continued i
construction of the Midland plant as a foreclosure of other alternatives, Consumers concludes that no alternative would be foreclosed because all other alternatives to Midland have already been foreclosed by the passage of time and the expenditure of resources (Keeley IV-7 following Tr. 3636).
This conclusion rests cn many assumptions including one that the most economical replacement for Midland would be two 800 MW electric coal-fired units (Keeley IV-3).
The testimony was received during February, 1977, and some of the analyses having to do with periods of abandonment or suspension is out-dated because the dates have already passed.
There is, however, 16/
See Seabrook ALAB-422 at page 142 (July 26, 1977).
an analysis of a September 1, 1977, abandonment date that may be used for our purpose here.
According to Licensee, the cost of abandonment of Midland on September 1, 1977, is
$578,500,000 (Keeley Ex. 19) and the capital cost of comple-tion as of that date is $1,100,000,000 (Keeley Ex. 20).
The capital cost of building a high sulphur coal replacement facility is $1,272,000,000.
It is appropriate to subtract some recoveries which will occur if Midland is abandoned.
These total $197,900,000.
It is also appropriate to add some expenditures made necessary by the abandonment of the N1dland site including cancellation of contracts less salvage
$45,400,000 and site restoration $131,000,000 totaling
$176,400,000 (Keeley Ex. 21).
Thus the net for a coal-fired facility is about $1,250,000,000 or $175,000,000 more than Consumers estimates for the completion of Midland.
The Board notes that the estimates for the cost of the Midland plant have increased tremendously since original licensing and is aware that the current ones may also change.
We s
expect the same may be true of the estimates for the coal-fired alternative.
l 42.
The Licensee also contends (Keeley Ex. 20) that j
if Midland continues to be built without suspension or abandonment, its non-capital cost over its life will be i
,e-
,e
,..---r-,,;---
n,
. $2,163,000,000 broken down into these elements:
taxes
$768,000,000, fuel $840,000,000, operation and maintenance
$502,000,000, and nuclear insurance $53,000,000.
Similar costs for the alternate would be $7,762,000,000 according to Licensee.
This consists of the following items:
costs due to delay $829,000,000, taxes and insurance $496,000,000,.
fuel $6,173,000,000 'and operation and maintenance $264,000,000.
Thus, Licensee's evidence is to the effect that there is about a $5,500,000,000 advantage to the completion of Midland with-out interruption.
43.
The Staff made two observations:
Consumers' nuclear fuel costs assumed plutonium recycle (which is no longer real-istic) and the nuclear fuel costs appeared high (Robert follow-ing Tr. 5099).
The Staff did its own analysis of two 800 MWe plants for both the high and low sulphur coal alternatives.
For each alternative the components considered were capital, operation and maintenance, fuel, taxes, decommissioning and insurance for the coal alternatives cost of replacement power was considered.17/
44.
In calculating the cost of replacement power, the Staff assumed an in-service date for the coal alternative ll/
Testimony of Sidney E. Feld following Tr. 4509.
. of January 1, 1984.
As the Midland Units are presently scheduled to come on line on March 1, 1981, and March 1, 1982, abandonment of the Midland Plant would require the generation of replacement power for the period 1981-1983 (Feld testimony, pages 6-7).
In its calculations, the Staff has estimated that this replacement power can be made up internally with Consumers' generation while a portion might have to be purchased at greater cost to Consumers (Feld testimony, pages 1-2).
The Board is not prepared to con-clude that, in view of the history of Midland, these dates are inflexible; we likewise feel that delay may well alter the schedule for construction of a coal plant and that it is realistic to assume a time differential during which replacement power would be needed.
45.
The Staff did not consider sunk costs La its analysis which is an additional conservatism (Feld testimony, pages 1-2).
s 46.
The results of the Staff's analysis are presented in Table 1 of the Feld testimony (page 8).
The low-sulfur coal alternative is the most economic alternative to the Midland Plant with a 30-year levelized cost of 52.5 mills per kwh as compared to a lower 30-year levelized cost of the Midland Plant of 43.3 mills per kwh.
m 26 -
47.
Dr. Feld discussed the conservative assumptions involved La the analysis (Tr. 4512-13).
These assumptions include the use of total capital costs rather than "to go" costs, escalation in the price of coal at the rate of S% a year which is the general inflation rate and assumes no real price increase, and the assumption that interim power can be made up by existing units on the Consumers' system and not through purchased power.
48.
The Staff's analysis included in its nuclear fuel costs the assumption that plutonium would be recycled.
If there is no recycle, nuclear fuel costs would be increased by approximately 10% of the levelized mills per kwh basis which would increase the cost of the Midland Plant but not enough to substantially affect the large spread in costs between the Midland Plant and the low-sulfur coal alternative (Feld, Tr. 4545).
The levelized cost of the Midland Plant would increase from 43.3 mills per kwh to 44.4 mills per kwh (Feld, Tr. 4545; Feld Testimony, Table
-1, page 8).
Reprocessing costs are included in the assump-tion of plutonium recycle.
49.
Dr. Feld presented 1981 present worth values for the Midland Plant and low-sulfur coal facility (Feld, Tr.
-'r' D
e 4we-y
- NY-w
' 4516).
The cost for the Midland Plant is $3,816,000,000 and the cost for the low-sulfur coal facility is $4,540,000,000.
The effect of no recycle of plutonium and reprocessing on the Midland Plant costs in terms of 1981 present worth dollars would increase the cost to $3,917,000,000 (Feld, Tr. 4554).
50.
The Staff updated its coal cost estimates which affected the cost of replacement power ana the cost of the coal alternatives.18/
The Staff continued to support the 5% escalation factor applied in its analysis.
However, based on more recent information, the Staff determined that it had initially understated the price of coal under new contracts (Feld Testimony, page 1).
In a review of more recent data including data gathered from the Federal Power Commission 4
and data presented by Consumers,1E/ the Staff developed revised base prices which were then used to update the com-parison of alternatives and the cost of replacement power (Feld Testimony, page 2).
The results of the analysis are presented in Table 1 (Feld Testimony, 'page 3).
The most reasonable alternative remains the low-sulfur coal alternative 18/
Testimony of Sidney Feld following Tr. 5169.
19/
Testimony of Robert W. Wilkinson following Tr. 4881.
% with a 30-year levelized cost of 59.2 mills per kwh as com-pared to 43.3 mills per kwh for the Midland Plant.
51.
The Staff's analysis was prepared in late 1976 and presented in early 1977 and assumed an in-service date for the coal-fired alternative of January 1, 1984, based on an immediate abandonment of the Midland Plant.
The Staff's analysis would be conservative for a later abandonment date for the Midland Plant for, as the abandonment date for Midland is extended, the January 1, 1984,date for the coal-fired alternative becomes less realistic.
Consequently, the replacement facility would come on line at a later date and there would be a need for more replacement power assuming the validity of the projected completion dates for Midland.
52.
In order to generate its own steam and electricity, Dow would require new generating facilities.
Modifying existing facilities so that they could continue to operate has been examined and rejected by Dow (Temple, Tr. 2444-i 2445).
The alternatives to the Midland Plant which were felt to be feasible were examined in the " Comparison of Dow Alternatives for Supplying Steam and Power to the Midland Plant" (Intervenors Ex. 26).
The most favorable alternatives were found to be either a new coal-fired steam
e
- and electric generating facility or a coal-gas facility.
The coal gasification technology consists of a proposed prototype unit so that costs for that system are less reli-able than for a conventional coal system (Temple, Tr. 2645).
Dow employed its own coal costs in the analysis.
~
Based on Dow's evaluation,'the Midland Plant is clearly preferable at a 30% return on investment and about even at 15%.
See Intervenors Ex. 26.
53.
Consumers has examined the alternative of Dow generating its own process steam and electricity.20/
7n performing its analysis, Consumers used the cost data pre-sented by Dow with the exception of coal costs.
Consumers took Dow's 1982 cost assumptions as shown in Case "C,"
of Midland Intervenors Ex. 26 for feedwater, limestone, opera-tion and maintenance, and capital costs (Brzezinski testimony, page 3) and concluded that Dow's coal costs understated a reasonable projection of expected coal costs (Wilkinson testimony, page 10).21/
Consumers then used its own coal cost information.
1 20/
Testimony of Richard F. Brzezinski following Tr. 4959.
21/
Testimony of Robert W. Wilkinson following Tr. 4881.
/^ 54.
The base price of coal identified by Consumers is 4
$1.23 per million BTU for high-sulfur coal and $2.19 per million BTU for low-sulfur coal in 1976.
Consumers used an escalation rate of 12% for 1977 and 1978, 10% for 1979-1983 and 9% thereafter (Wilkinson testimony, pages 3-5).
Revised
' nuclear fuel costs and revisions in the projected Dow electric rates consistent with the Con.sumers' most recent rate case filing were used (Brzezinski testimony, page 5).
The results of the analysis are presented in columns 4 and 5 at page 7 to the Brzezinski testimony.
Consumers concluded that at either a 15% or 30% rate of return, the Dow alternative of generating its own process steam and electricity was not economically preferred.
55.
The Staff has examined as an alternative to the 4
Midland Plant a combination of facilities which could result if Dow decided to provide its own process steam and electricity requirements.SS/
Under this alternative, Dow would build and operate four high-sulfur coal units capable of producing 24,000,000 lb/hr of steam and 167 157 of electricity and Consumers would construct and operate a low-sulfur coal plant with a net electrical output of 1178 MR.
The combined 22/
Testimony of Sidney E. Feld following Tr. 5169.
t
.=.
~
,. Plant (including sunk costs) was compared with the alternative of self generation by Dow plus a reduced size coal-fired plant to be constructed by Consumers.
The Midland Plant has a cost advantage of from $1,277,000,000 to $1,775,000,000.
~
60.
Intervenors also presented testimony on a Dow
'P alternative to the Midland Plant.
The alternative proposed that Dow construct facilities and generate all of its elec-trical and process steam requirements using coal-fired boilers and that Consumers construct an 800 megawatt electric coal-fired generating facility (Timm testimony, page 83)21/ rather than.the 1178 MWe facility proposed by the Staff.
61.
It was assumed in the analysis that the Dow facil-ities would be completed by 1982, and the Consumers facility would be completed in 1983 (Timm testimony, page 83).
Capital costs for the coal generating facility and for the Midland Plant were the same costs used by Consumers in its analysis.
Capital costs for the Dow facilities were those used by Dow
\\
in its analysis (Timm testimony, page 85).
However, Inter-venors did use separately developed coal costs (Timm testimony, page 85).
23/
Testimony of Richard J. Timm bound in the special tran-script volume of March 23, 1977, following Tr. 16A.
(-
34 -
the Midland Plant (Timm, Tr. 6170-6179).
When sunk costs are applied, the alternative becomes $290,500,000 more expensive than Midland.
65.
The Board finds that the alternative analysis performed by batervenors has no cost advantage for the Dow alternative when sunk costs are considered.
66.
Based on the evidence presented at the suspension hearing and the Commission's decision in Seabrook relative to sunk costs and their relation to suspension, the Board concludes that no alternative to Midland will be foreclosed due to continued construction because all other alternatives have now been foreclosed.
OTHER MATTERS A.
ACRS Recort 4
67.
Thus far we have said little about that part o; the remand having to do with the ACRS, letter.
Aeschliman held that the original ACRS report dated June 18, 1970, (with its supplement dated September 23, 1970), did not meet the requirements of the Atomic Energy Act because it failed to provide sufficient information for a layman to understand the matters that concerned the Committee about the plant.
That original report has been augmented and there is now
f electrical and steam output from these facilities would equal the output of steam and electricity from the Midland Plant (Feld testimony, page 1).
56.
The Staff used cost data developed by Dow in its analysis of alternatives to the Midland Plant with the excep-tion of coal costs.
The coal costs used in the analysis.were those of the Staff updated at the hearing (Feld testimony, page 1).
57.
The Staff presented coal cost information which corroborated the high-sulfur and low-sulfur base prices selected by Consumers (Feld testimony, pages 1-2).
- However, the Staff employed a more conservative 57. escalation rate in its analysis (Feld, page 5).
58.
For the separate facility to be constructed by Consumers, the Staff analyzed a low-sulfur coal plant as it was found to be more economical than a high-sulfur alter-native.
The costs associated with ans1178 megawatt electric coal plant were taken to be directly proportional to the costs associated with the 1600 megawatt electrical coal plant (Feld, pages 2-3).
59.
The results of the Staff's analysis are presented in Table 1 of the Feld testimony.
In the table the Midland l
. 62.
The results of Intervenors' analysis are presented in Intervenors Ex. 46.
This exhibit shows a cost advantage of $150,000,000 for the Dow alternative, disregarding sunk costs.
Sunk costs in the project were projected to be
$578,500,000.on September 1, 1977 (Keeley Ex. 19 following Tr. 3646).24/
Assigning these sunk costs to the Dow alter-native would thus result in a cost disadvantage for that alternative of approximately $428,000,000.
63.
The analysis.>erformed did not include the costs of replacement power for the years 1981-83 because Inter-venors concluded that the added two years of generating capability associated with the coal alternative coming on-line in 1983 as opposed to the Midland Plant on-line date of 1981 would roughly cancel out the costs associated with replacement power (Timm testimony, page 86).
64.
Dr. Timm updated Intervenors Ex. 46 at the hearing to incorporate a variety of changes.
Using the modified values, he concluded that the Dow alternative was $288,000,000 cheaper than continued construction of 24/
$595,000,000 less various salvage items and plus site restoration and other expenses.
i J
m
. before the Board a new report.
As a part of the remand procedure we will determine whether the report as it now stands satisfies, in our view, the requirements of the Court.
It is the Intervenors' position that because of the
" opacity" of the reportSb! and because some generic ACRS items are allegedly never resolved (Tr. 4216-4227 and 4259-4266) there is no way for anyone to know how much it might cost to modify the plant to provide a safe solution to ACRS concerns or at what point construction has progressed so far that solutions are foreclosed.
The Licensee centends that all the generic ACRS items identified have either been provided for so that solutions for them are not foreclosed or that there has not been a resolution of the problem so that there is nothing to foreclose.21/
It appears that of the 11 generic items identified by ACRS, the Staff has con-cluded that none would be foreclosed by continued construction.SS!
68.
It has long been the practice in this licensing precedure to permit deferral of the resolution of generic 25/
Intervenors' Brief filed with their Proposed Findings, page 4.
26/
Licensee's Brief filed with its Proposed Findings, page 27.
M /
Testimony of Mr. Crocker following Tr. page 4177.
- - -+
36 -
safety items such as these to the operating license stage.28/
We are reluctant to conclude that this practice should be suspended in this instance because of the faulty ACRS letter in the absence of some indication of a problem that will create serious safety concerns should construction continue until the remand decision is issued.
We therefore decline to suspend construction on that ground.
B.
Quality Assurance and Quality Control 69.
Intervenors have indicated their belief that inquiry into Consumers' Quality Assurance and Quality Control program is a proper subject for this case and that the results of such inquiry would provide further grounds for a suspension.
Intervenors' Proposed Findings 8, 9, 67-73.
We disagree.
The Commission orders relative to remand of the case to a Licensing Board defined quite carefully the issues that were to be considered.
Jurisdiction over other matters was not delegated and thus resides elsewhere.21/
There is a procedure available s
28/
See In the Matter of Georgia Power Company (Alvin W.
~~
Vogtle Nuclear Plant, U its 1 and 2), ALAB-291, 2 NRC n
404, 411.
29/
See Vogtle, supra.
. a under the rules which is designed to permit any person to l
raise questions such as these.
See 10 CFR Sec. 2.200 et seq., particularly Sec. 2.206.
BALANCING THE EQUITIES 70.
As we have endeavored to show, there are substan-tial equities favoring the Intervenors' case for suspension.
They have timely demonstra::ad in t. e construction permit proceeding the weakness of the original NEPA review and the weakness of the original ACRS letter.
The defects in that proceeding were significant enough that the Court of Appeals remanded the matter to the Commission.
71.
On the other side of the balance, are the need for the project, the effects of delay, the foreclosure.of alternatives caused by construction.and investment, and the cost advantage over the plant's life of the use of nuclear fuel.
The need for generating capacity and process steam weigh against suspension.
Delay would' result in an economic cost and would have other effects mentioned in the foregoing parts of this Order.
Based on the present record, it is our view that, considering future operating costs and sunk costs, there is no alternative which if now begun, would not l
result in an increase in total costs of several hundred l
million dollars.
,-..n g
. 72.
We conclude that on balancing the equities we should not order suspension or modification of the Midland construction permit pending a decision on the items remanded by the Court of Appeals.
We do this with the understanding that if construction continues as planned and sunk costs are credited to Midland, the balance and the foreclosure will, with time, become more pronounced.
ORDER IT IS THEREFORE ORDERED:
(1) that all of the motions of the Intervenors for suspension of the construction permits for Midland Units 1 and 2 are denied and such permits are continued in effect; (2) that in accordance with 10 CFR 552.760, 2.762, 2.764, 2.785 and 2.786, this Order shall become effective Lunediately and shall constitute with respect.to the matters covered therein the final action of the Commission thirty days after the date of issuance hereof, subject to any review pursuant to the Commission's Rules of Practice.
Exceptions
39 -
to this Order may be filed by any party within seven days after service of this Order, and a brief in support of such exceptions may be filed by any party within fifteen days [ twenty days in the case of the Staff] thereafter.
Within fifteen days of the filing and service of the brief of the appellant [ twenty days in the case of the Staff), any other party may file a brief in support of, or in opposition to, the exceptions; and (3) that because we are not certain that this is an appealable order under the Commission's Rules of Practice,SS! and because we think it is important that it be reviewed now, we refer to the Appeal Board the rulings made herein.
s 30/
In the Matter of The Toledo Edison Comoanv, et al.
~~
(Davis-Besse Nuclear Power S63 tion) and The Cleveland Electric Illuminating Comoanv, et al. (Perry Nuclear i
Power Plant, Units 1 and 2) ALAB-300 2 NRC 752 at 758.
a
THE ATOMIC SAFETY AND LICENSING BOARD
/
o W
/Dr. J. Venn Lepers, Member 4
b l
Dr. Emmeth A. Luebke, Member l
.h Frederic J. Couf al,(JChairbn Dated at Bethesda, Maryland, this 23rd day of September, 1977.
i 1
I I
.-------'c'
,n UNITED STATES OF ABIRICA NUCLEAR RECUT.ATORY C0:C:ISSION In the Matter of
)
)
CONSU>ERS POWER COMPANY
)
Docket No.(s) 50-329
)
50-330 (Midland Plant, Units 1 and 2)
)
)
)
)
)
CERTIFICATE OF SERVICE I hereby certify that Ihavethisdarservedtheforegoingdocument(sk upon cach person designated on the official service list compiled by the Office of the Secretary of the Commission in this proceeding in accordance with the requirements of Section 2.712 of 10 CFR Part 2-Rules of Practice, of the Nuclear Regulatory Commission's Rules and Regulations.
Dated 2.: ash ington,
D..C.
this
'0h
__197Y.
.db ' ~
day of
/
i "l
OfficeoftheSecretaryoftheCommission g.)
? ibbt/ ~
bct W a )
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i C49) i I
l
.L/lhj/',pu n.ct' d 4 v did f;'3/77 ($/N y.l(b,ib (EuG.o Chnii od$cuk) dWL 9 8/7 CT)
a.
UNITED STATES OF AMERICA NUCLEAR REGULATORY CO.'O!ISSION
)
In the Matter of
)
)
CONSUMERS POWER COMPANY
)
Docket No.(s) 50-329
)
50-330 (Midland Plant, Units 1 and 2)
)
)
SERVICE LIST Frederic J. Coufal, Esq., Chairman Atemic Safety and Licensing Board U.S. Nuclear Regulatory Connission Washington, D.C.
20555 Dr. Emmeth A. Luebke James A. Kendall, Esq.
Atomic Safety and Licensing Board Currie and Kendall U.S. Nuclear Regulatory Comnission 135 North Saginaw Road Washing:on, D.C.
20555 Midland, Michigan 48640 Dr. J. 7enn Leeds, Jr.
Judd L. Bacon, Esq.
10807 A:vell Consumers Power Company Houston, Texas 77096 212 West Michigan Avenue Jackson, Michigan 49201 Office of the Executive Legal Director Counse'. for NRC Staff William J. Ginster, Esq.
U.S. Nuclear Regulatory Commission Merrill Building, Suite 4 washington, D.C.
20555 Saginaw, Michigan 48602 4
Myron M. Cherry, Esq.
One IBM Plaza Chicago, Illinois 60611 Harold F. Reis, Esq.
Lowensr.ein, Newman, Reis & Axelrad Honokable Curtis G. Beck 1025 Connecticut Avenue, N.W.
Assistant Attorney General Washington, D.C.
20036 State of Michigan Seven Story Office Building Honoraole Charles A. Briscoe 525 West Ottawa Assistant Attorney General Lansing, Michigan 48913 State of Kansas Topeka, Kansas 66612 Lee Nute, Esq.
Michigan Division Irving Like, Esq.
The Dow Chemical Company Reilly, Like and Schneider 47 Building 200 Weat Main Street Midland, Michigan 48640 Babylon, New York 11702
ra su.,
e
[ 1.
5,0-329, -33' page 2 Anthony Z. Roisman, Esc.
Natural.Resou'rces Defense Council 917 - 15th Street, N.W.
Washington, D.C.
20005 Joseph Gallo, Esq.
Isham, Lincoln & Beale 1050 - 17th Street, N.W.
Washington, D.C.
20036 Michael I. Miller, Esq.
Caryl A. Bartelman, Esq.
Isham, Lincoln & Beale One First Nationh1 Bank Plaza Chicago, Illinois 60603 Ns. Mary Sinclair 5711 Summerset Street Midland, Michigan 48640 Mr. Steve Gadler, P.E.
2120 Carter Avenue St. Paul, Minnesota 55108 Grace ;ow Memorial Library 1710 Wes: St. Andrew Road Midlanc, Michigan 48640 f
+
)
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+
1 I
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.o 5d-329/330 Page 3 Mr. Harold Rasmussen Mr. Carl L. De Santo Business Manager, Local 169 Business Manager, Local Union Bciler Makers Union.
No. 408 5936 Chase Road Sheet Metal Worker's International
Dearborn,
Michigan 48126 Association 1400 W. Genessee Mr. Arthur Chambers, Presidnet Saginaw, Michigan' 48602 3
Tri-County Building Trades United Association of Journeymen Mr. Robert Ducharme and Apprentices of the Plumbing Business Manager, U. A. Local 85 Pipe Fitting Industry' United Association of Journeymen and 20115 Washington Street Apprentices of the Plumbing and Bay City, Michigan 48705 Pipe Fitting Industry 1
731 Gratiot Avenue Mr. Gerald E. Richert Saginaw, Michigan 48602 l-Biasiness Representative, Local Union No. 1654 Mr. Richard L. Wheeler United Brotherhood of Carpenters and Business Manager, Fin. Sec. Trea.
l t
Joiners of America Reinforced Iron Workers Local Union 426 300 State Street 16322 West Warren Avenue Midland, Michigan 48640 Detroit, Michigan 48228 Ms. Nancy P. Sinclair Mr. Robert E. Lynch Business Rapresentative, Local No.
Saginaw Intervenors and President, 324, 32/-A. 324-B, 324-C, 324-D Citizens Committee to Protect I
Internatic.s' Jnion of Operating Michigan Environment Engine'.s 5711 Summerset Dr.
1640 Pciter Street Midland, Michigan 48640 Detroi :. MI Mgan 48216 Dr. Robert G. Asperger 12 Dennis Ct.
Mr. Lawrence Meier Business Manager, Laborer's Local 1098 Midland, Michigan 48640 Labor's International Union of North Ms, Mary P. Sinclair' America S711 Summerset Drive 345 Morley Drive Midland, Michigan 48640 Saginaw, Michigan 48601 i
2 Mr. Richard D. White
}
Business Agent, International Association 1
Ch her Commerce of Heat and Frost Insulators and 300 Rodd Street E*"
-l 40 N 11 St. Louis, Michigan 48880 Mr. Floyd_ Young Business Manager, Local Union No. 629, AFL-CIO "nternational Brotherhood of Electrical Workers 1330 West Thomas Street Bay City, Michigan 48706 y
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