ML19331A763
| ML19331A763 | |
| Person / Time | |
|---|---|
| Site: | Midland |
| Issue date: | 06/15/1977 |
| From: | Coufal F, Leeds J, Luebke E Atomic Safety and Licensing Board Panel |
| To: | Atomic Safety and Licensing Board Panel |
| Shared Package | |
| ML19331A762 | List: |
| References | |
| NUDOCS 8007230762 | |
| Download: ML19331A763 (11) | |
Text
-
i UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION i
BEFORE THE ATOMIC SAFETY AND LICENSING BOARD
)
In the.'atter of
)
)
CONSUMER; POWER COMPANY Docket Nos. 50-329 50-330 (Midland Plant, Units 1 and 2)
)
MEMORANDUM Ouring the Midland suspension hearings, two documents that were introduced into the record by the Licensee and one document that resulted from a discovery request by the irtervenors other than Dow may describe a " situation inconsistent with the antitrust laws."
This Board has no antitrust jurisdiction (see In Re Houston Lightino and Power Co., et al., South Texas Project, Units 1 and 2, ALAB-381, March 1977). However, the Midland Antitrust Board still has juris-diction because the Comission has not directed that the record be certified to it for final decision nor rendered a final decision, nor has the Midland Antitrust Board disqualified itself (see 10 CFR !i 2.717a).
If the initial decision of the Midland Antitrust Board was not before the Appeal Board, we would simply refer the matter to the Midland Anti-trust Board for whatever action that they deemed appropriate. Because the antitrust decision is before the Appeal Board, we deem it prudent i
l l
8007230 7[ 2
(
s
. to refer the matter to the Appeal Board so that they may act on the matter on their own or remand the matter to the Antitrust Board for appropriate action. We would respectfully suggest that the matter be remanded to the Licensing Board with instructions to reopen the record.
The two documents introduced into this record by the Applicant are the Steam and the Electric Contracts between Consumer power and Dow (Testimony of Mr. Howell following Tr. 2074). On page 3 of the Electric Contract, Dow is prevented from reselling electricity. On page 28 of the Steam Contract, Dow is prevented from reselling steam.
The discovery document is Dow's minutes of a meei;ing between the Licensee a n d Dow held on February 24, 1976. These minutes appear to reflect the Licensee's intent to prevent municipalities and/or com-petitors frca selling power to Dow after having purchased that power from the Licensee.
(For the Appeal Board's convenience, copies of page 3 of the Electric Contract, page 28 of the Steam Contract and pages 6, 7 and 18 of the meeting minutes are enclosed.)
HE ATOMIC SAFETY AN 1.ICENSING BOARD
'7 eric J. Coufal h uscd AA *^ %c' Er th A.
uecka
~
'l M Fu./enn Leeds
/
Dated at Bethesda, Maryland
/
this 15th day of June,1977.
3-
Enclosures:
1)
L'tr. to Chase R. Stephens, Chief, Docketing and Service Branch, Office of the Secretary I
2)
P. 3 of Electric Contract,
- p. 28 of Steam Contract, and pp. 6, 7 and 18 of Minutes e
4 r
i i
l e
4 e
w9-
-ww
-r.-
m y 9
-me--+~,-.-%-.-m------+w--,'w-
, p w
w ww -
w,-%,--w--
e,--*,rw--
-v=m-r.
5-m*
,m+*v.,
-t v
-**---'-ee--..es
-+. -
a te w
o-e-e
+-wir
==
e vew*--
.'Fi
~
-g.
s.
4 Exhibit To S
)
~
q c
f?
P.
- 4 5
n 9
..1 g
~ f AGREFJE?iT.FOR EIICIRIC SERVICE E Tr4EEN CONSUMERS Poh7:R CC!GANY AND
- TITS DOW CECCAL CC5CJMiY 4 -
l P
s g
.m g
0 g
g l
)
,.._-.c-
.p o
y.
'ff
~,
u l
3
~
q t
- 3. 'Dov shall pay for such energy in acec dance with censu:aers y
j Power's Rate "F."
By rencen of the character Of the proposed tse of acrvter, 11. La nico cubject to the provinic== cf Rule 1S(i) - Auxilin:f 1,
or Standby Service, of Concu=ers Pover's Standard Electric Rules and Hegulations. A copy of said Rate and Sheet No. 5 06 cnd Sheet No. 5 07 containing said Rule are attached hereto 'and =cde a part hereof.-
'Said.
serv.4 ce shall also be subject to such future revisions a=d a=end-ants
~
to said Rate or Rule, or beth, suppla-ants thereto, er substitutes 'hre '
for as are hereafter filid with and approved by the Michigan Public Se. rice C e dssion.
4.
It is further agreed that:
~
(a)
Dov's centrset de=cnd for euch service chall P
be established at 3co,cco kilovntts.g such service is for the cole use of 'Dev, for the purposes aferesaid, and shall not be tranc=itted elsewhere cr shared or recold. Scid energy =ay be used by Dev as auxiliary to c1=ctric energy generated h Dev by its.evn generating f d7 4 ties existing and f
operating c$ eperable as of Ja=uary 15, 1774. It is a ec ddtien of Cencu=ers Pover's agrea--"t to serve Dev he -"-da-that Dev may reycir, but shall not repisce er add to, Dov's said gener-ating facilitien. Dev may generate end utilize is its Midis =d Plant such pcrtien of Dov'c Mir11c=d Ple=t elec rical pcver re-quir:.cnts as =ny be supplic d incidentally f_ cha-d cal precc=ses nt Dov's Midland Pin =t.
Censu=crs Pover agrees to per=it Dc.r, when Dov so desires,,to c; crate Dev's electric generating. fa-Cilitics.13 parallel Vith Ccnst=crs pcVer's J1ectric syste=I provided, hsaa7er, that M yeraSLMA 'ermAd,m @a4_re, m
a B
_g
- = -
. _ -...~...
.,_.m g.
- *g.=
. m.
-~
y s*.
I hib" o c O
e
. :d.
- g
?
e 9.
y i!
1 4
I 11
,J.
j
=
' d
.L 1
t CCOAC TCR STT.a3 sg,rge EET*dErr CCNSIFr4 PC'4ER CCMFM.T l
Mm
~
M M*4 CECCAL CCMPMT 2
3 l
o G
. i b
o 5
j 6
B e
t I
(
[e O.
~
~
e e
i 4,-
e w-s-,~
w w
, w 1--,
,,,m-en--
m--
~
n
t I
- -. ~
. m Sectien Q (Contd) 28 I.
i.
i of authority or regulation by gover== ental or military authorities. When-
[
h !
ever there shall be any interruption in cervice or variation in pressure or l.
I
'other service charscteristics due.to the afore=entioned causes of conditions, Dov shall'use all reasonable efN rts to're=ove such causes or conditiens.
Stea= supplied to Dov hereunder shall be for the sole use of Dow, for the purycse aforesaid, and shall not be trans=itted elsewhere, or shared or rescid.
1 i
m,
- 11. Dov : day generate and utill:e in its Midland Pht the foav-j ing supplies of steam, and the sa=e shel' be excluded frc= Dev's ob' ligation
,1 to purchase all of its Midland ?'a-t stess require =ents fres Censu=e'rs ?cver as pr wided in Secticn 1:
6 a.
fres ai' of its facilities at Dev's. Midland Plant which are operating cr operable as cf January 15, 1974, any j
ii a= cunt of steLu, as standby er auxiliary to the stess to be provided by Censu=ers ?cver; provided, havever, t
that Dov =ay repair, but ab=71 not replace er add to, i-
~
'its stes=-producing facilities at the South and West
(
Power Houses at its Mid'a d Plast; and provided, further, j.I g
that upon retire =ent of said ?cver Ecuse facd'd ties. Dow t* '
may generate and utili:e in its Midland Plant an a= cunt of stess not exceedi=g 1,C00,0C0 lbs/hr of stess at a lj I
pressure not exceeding sc inal 175 psig frc= any facili-ties evned and cpersted by Dow,.as sts=dby or auxiliary
}
to the steas to be W ded by Cc=su=ers Pover.
The
{.
foregoing a unts of stes= sF=' be dee'=ed to include, i
I 4
p
va(
b/U 0/$
. s m
DON CONFIDCt1TIAL
/
DOW-CONSUMERS NUCLEAR PROJECT MEETING February 24, 1976 Jac:: con, Michigan Present:
Dow
~
Parke Brown Jim Burroughs Lee Nute Joe Temple Mac Whiting Consumers Judd Bacon Steve Howell Gil Keeley Russ Youngdahl
/-lclk.c I\\ /*c).; :i !. a:a Clin,u J g
e" O
a 1
O r
,.-m_
"/
Ton ? car Powers Consumcrs wants a firm contract for ten years cothmuncing when e nuclear steam contract bes into service to sell Dow all the power that Dow purchascs.
Consumers would sell this powcr at their then current system industrial rato.
They i
would 'not be required to meet a rate offered to Dow by any competitive source that might wish to soll power to Dow.
The reason for taking this position is that Consumers does not want to find themselves in the position of selling part of their Midland plant to municipalities and/or cooperatives and then have them turn around and sell power to Dow cheeper than Consumers can because of their different tax situation..
Consumers said that, in summary, these were the two conditions that Consumers wanted Dow to agree to if Consumers would Allow i
Dow to have a year-to-year electrical contract and the right to generate its own power.
First, that the cost of any change in f acilities built to serve Dow as a result of capacity reservations will be charged to Dow.
Second, Consumers shall also have the right of first refusal to sell to Dow any purchased power Dow wishes to buy over what Dow agrees now to purchase beginning when Consumers' commercial steam delivery to Dow starts and Consumers wants that right for ten years.
Dow replied that Dow does not want to be discriminated against except for what is specifically defined in the contract.
Consumers said that Consumers is not trying to discriminate against Dow versus other industrial concerns such as General Motors and that the only difference from present system rate restrictions that apply to everyone would be the 10 year 100% purchase requirements clause.
Deregulation:
Dow commented that we could understand why Consumers wanted to be protected from unfair competition that is caused by built in tax advantages.
However, Dow couldn't under-stand why Consumers shouldn't be competitive with other utilities such as Detroit Edison, Toledo Edison, etc., all of whom have essentially the same tax situation and might be willing and able to sell power to Dow.
Therefore, Dow would like to see a clause in the contract that Dow would not be restricted from purchasing power from someone
~
else if the real world changes during the 10 year period and there are no regulations preventing other reputable sources of supply of electricity from competing with Consumers for Dow's business.
A clause allowing Consumers to retain Dow's business by meeting the competitive price is reasonable.
Dow is reluctant to agree to Consumers' proposal unless there is a competitive
. price clause since Dou believes Consumers ought to be competitive, with other public utilities.
Consumers replied that they had no concern with a clause such as Dow suggested provided that Consumers was totally deregulated.
1 They pointed out that the municipalities and cooperatives are f not regulated in Michigan ~ and this creates unfair competition.
e 1
" Dos,rciterated ' hat we were interested in 'ho possibility of deregulation i.
[
needs to be a part of any electric contract that runs out intoche the 1990's.
Antitrust:
Dow commentcd that we thought there could be antitrust problcms with a 10 year 100% requirement to purchase power, especially one without even a competitive price clause.
Dow asked if Consumers had considered this.
Consumers said yes.
Dow asked whether if, in their opinion this was a problem.
Consumers replied that "they are aware,of the problem and have looked at it."
Dow will investigate t,%e matter further and suggested Consumers do likewise.
PURCHASE POWER COST.
Current 1982 Estimate:
Consumers is now predicting that Dow's KWH versus 30 mills estimated last April. power cost in 1982 for the impact of their latest' fuel cost estimates but does notThis estimate includes include the impact of their latest estimate of the Midland nuclear plant's cost.
authorized rate of return on equity in 1982.Also it is based on obtaining should get a 14% return, Dow's power cost would increase to 32However, if they mills.
In Consumers' latest rate increase request, asked for a 14-1/2% return but the MPSC Consumers (Michigan Public Service Commission) Staff is recommending that 13-1/2% be authorized.
Current' Rate Structures:
. ~
In the last two rate requests the MPSC granted Consumers, they redefined rate structures.
assuming an overall rate cost index of 100, Currently, the residential rate would be 80, the industrial 100, and commercial rates would be over 100.
In Consumers' opinion, Dow's and General Motor's the cost of service concept. intervention in rate cases has been ve Time of Da'y Rate:
Consumers has been investigating time of'
~
day rate structures (higher rates during peak demand periods).
However, the feedback they have received from industrial users indicates this type of rate structure would not be.of much value for shifting load demand.
Industrial users indicated that if there was too large a time of day penalty, they might move out of the State.
impact on industrial users if it is based on cost of servic
- However, required to set peak demand costs on some other bases.there is Life Line Rates:
a push for life line rates for the poor.Throughout the country there has been q These rates allow people to purchase a minimum of about 300KNH at an artificially low cost.
If this happens in Michigan, the industrial and Consumers opposes this concept bcommercial users can be expected not necessarily, low power users.ecause lower income people are
[3
+y-~~~=l== 7L-R = W ' f G ?~?~
.s:-
,p i
power from Consumers.
Dow proposed to pay the contract price for the 4,050M0/hr. of secam plus a conversion fce including a f,
profit to Consumers for that part of the steam demand that was converted by Consumers into power for Dow.
Dow would pay for
~
the steam on a take or pay bases, but if we didn't get the steam we required and the amount of power agreed upon we would.
pay only for what we did get -- a true "take or pay".
Consumers commented ~ that they have never sold unit power from a power plant.
They voiced concern that.in working out a conversion cost they did not discriminate against other electric customers.
Dow asked if the City of Lansing and Oldsmobile weren't doing this ?
r Consumers didn't know. Nig Cu
,q 8,*h7 Consumers concluded by saying they hadn't thought of this propositicn, were interested, and would give it serious consideration.
CLEAN BILL OF HEALTH.
~
Both companies agreed there was no point in. discussing a clean bill of health at present.
The general consensus was that this should be done only after everything else was agreed upon.
Dow restated that Consumers should not undervalue this item in the negotiations.
SITE RELATED COSTS. "
Censumers asked Dow if Dow wanted them to consider as a separ'te a
item the S1,500,000 designated in the contract as the price for acquiring land for a typical power generating site or include this item as part of the total site related costs problem.
Dow agreed it should be part of the overall site related cost problem.
Consumers stated that they did not think that the time should be taken during these negotiations to solve this whole problem I
because.it was too involved.
Dow agreed.
I P
l DON SELL STEAM.
Dow co==ented that at the last meeting the question was left unanswered as to whether Consumers would allow Dow to. sell nuclear steam.
Consumers replied that Consumers didn't care how Dow used nuclear steam but hadn't intended for Dow to sell any of the steam.
Consumers still doesn't want Dow to sell steam but will consider this question as part of the total package.
They stated that if
. Dow commits to a certain quantity of steam on a take or pay basis, Consumers could see no great advantage, realistically, in restricting what Dow does with the steam within that demand --
including its sale.
g L-
_