ML19331D794
| ML19331D794 | |
| Person / Time | |
|---|---|
| Site: | Crane  |
| Issue date: | 08/29/1980 |
| From: | Sweeney L JERSEY CENTRAL POWER & LIGHT CO. |
| To: | Vollmer R Office of Nuclear Reactor Regulation |
| References | |
| NUDOCS 8009030582 | |
| Download: ML19331D794 (300) | |
Text
.-
Jersey Central Power & Ugni Nmpany Madison Avenue at Punen Bowf Rcad m
Mornstown, New Jersey 07960 D
f ('
(201)455-8200 August 29, 1980
>*x. Richard H. Vollmer Director, Three Mile Island-2 Support Office of Nuclear Reacter Regulation U.S. Nuclear Regulatory Cccmission 7920 Nerfolk Avenue Bethesda, MD 2001h NRC Docket No. 50-289 - T5C-1 Restart Prceeeding Be:
Dear Mr. Vollmer:
21, 1979, to R. C. Arnold, and Mr. J. C.
3y your letter dated Septe=berPetersen's data requests sent to C. W. S=
979, you l
y develop-requested us to keep the NRC informed of significant regu atorAccordingly, the
=ents affecting the GPU companies.
(8 copies) has been sent for that purpose.
25 and 26, Enclosed ic a copy of the trenscripts for hearings held August 1980, in 3FU Decket Nos. 80h-285 and 807 h88.
Very truly yours,
5-Oh,%
Y lawrence E. Sweeney Rate Depart =ent rc Enclosure M. Karlevies (v/ene) ec:
J. Petersen
't/c ene)
D. Carro
W. D. Garland L. Gentieu l
THIS DOCUMENT CollTAlliS POOR QUALITY PAGES 6000030582
- 1 471 1
voLU:c 4 NE'J JZ3SE'? DEPARTIC'iT OF ENERGY l
2 30A2D OF PCBLIC CILITIES i
I 3
NE'fAP2, NSi JERSEY MONDAY, ACGUST 25, 1980;4 1
4 In the Matter of the Petition of t
1 Jersey Central Pcwer & Light Cc=-
OAL 00CKET NO.
5 pany for appreval of an increase PUC 3518-80 f
in ratos for electric servica 3PU DOCKET NO.
j 6
and for nwnd=ent to the Levelized 304-235 807-4S3 Energy Adjustr.ent Clause and fac-7 tor for such service.
q' 1
1 9
BEFORE:
STEP.m G. MARSHALL, ESQ.,
Administrative Lau Judge 1
10
.I
.E i
11 A T P E A R A N C E S:
c 12 j Fcr the Petitlener, Jersey Central Pcwer l
p 13 ]j i
& Light Co=pany, appears:
i V
KI2SIE'i, FRIECMA'.i & CHEPlN, ESOS.,
SY:
JACK B. KISS': Tai, ESQ., and l
14]
i COLORES DELAS AR, ESQ.,
i 15 17 Acade...y S tree t Newark, New Jersey i
i 16
-and-17 WILLIAM F. HYL743D, ESO., Of Counsel IS 1 JAMES B. LIBERMAN, ESO., Of Counsel 1q 19j For the Department of the Public Advoce.'ca, 4
Division of Rate Counsel, appears:
20 ALFRED L. NAPJDELLI, ESQ.,
t Deputy Director.
I 21 ]i RAYMCND MAKUL, ESQ.,
j I
22 l Deputy Public Advocato i
10 Cc=cerco Court 23 '
Newark, New Jersey
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sb O w C...43
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24 Cc--'rce Screet 24 Newark, New Jersey i
25.
(201) 623-1374 4
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i 472 l
.a 1l A P P E A R A N C E S:
(Centinuad)
., i For the Staff o" the Board of Public Utilities, appears:
3 i
CARLA VIVIAN BELLO, ESO.,
I 4l Deputy Attorney General
'I 5
I. PAUL SLEVIN, Supervising Rata Analyst For the Board of Chosen Freeholdora of 7
Ocean County, appear 8
BERRY, SUICERILL, PISCAL, KAGAN &
PRIVETERA, ESQS.,
9 BY:
JCEN C. SAHRADNIK, ESQ.,
34 Washington Street 10 '
Toms River, New Jersey i
[
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16 17 18 1
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21 22,
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1 473 JUDGE MARSHALL:
Good morning, ladies and gentlemen.
This is a continued! hearing i 2
the matter of the Petition of Jersey Central 3'
Power and Light for an increase in rates for 4
a revision of their Levelized Energy Adjustment 5
l Clause, OAL Dcchet No. PUC 3518-30 with Stephon 6
Marshall residing as Ad=inistrative Law Judge!.
7 May I please have tna appearances?
8 MR. KIRSTEU:
Jack B. Kirsten of the 9
firm of Kirsten, Friedman and Cherin, Attorneys 10 for the Petitioner, Jersey Central Power and 11 Light Company and Mr. James B. Liberman and 12 Hilliam F. Hyland of Counsel.
O 13 MS. BELLO:
'Carla Vivian Bello, Deputy i.
14 Attorney General on behalf of th? Board of 15 j
Public Utilities.
16 MR. MAKUL Raymond Makul, Deputy 17 Public Advocate for the Department of Public 18 Advocate.
l 19 MR. SAHRADNIK John C. Sahradnik of 20 Berry, Summarill, Piscal, Kagan and Privetera, 21 appearing on behalf of the County of Ocean.
i i
2 l
JUDGZ MARSHALL:
Thank you, ladies and 1 23 l gent 3cmen.
24 >
25 :
l I
I
3 474.
1 JUDGE MARSHALL:
(Continuing.)
Are O
2 there any procedural catters to cover before 3
we go to today's witnesses?
4 MR. KIRSS.N:
We were in the midst of 5
the cross-examination of Mr. Goldstein.
6 JUEGE MARSHALL:
Off the record a =c=ent.
7 (A discussion was held off the record.)
8 JUDGE MARSHALL:
Back en the record.
9 We will continue with the cross-10 examination of Mr. Goldstein, who has been 11 sworn in previously.
12 '
i I
13 H.
LAWRENCE GGLD5TEIN, having been 14 previously. sworn, testifies further as follows:
f*
16 J CROSS-E'GICTATION - (COIiTUUING) 1 i
E I
16 gi MR. MAKUL:
17 Q
Good morning, Mr. Gcidstein.
l 1
1, A
Good morning.
19 Q
I believe on Friday we had established that 20 the burned rt us for oil over the recent few conths have 21 been lower than the 3-pluc-9 budget that was prepared last 22 fall, I believe.
23 A
?.at 's t rue.
24 '
q 3y appr xi.:ataly what zagnitude has the price O
25 -
been 10 er1=s2 i
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8 I believe you referred :3 to JC/ 33.
i 9,
A 2.at is correct, i
i 10 i Q
All right.
'iow, on Fa,e 2 cf 3, th. 's a i
11,!
sur.tc.ary of actur.1 tersus forecc2t on tha src. des of six oil.
~
12 A
?.at's correct.
3 O5 13
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the Acril to July seriod, the.3 sulphur six 011, the for2-r i
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-as' pr ce wm*,
.$ 2 '. 0 0
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I 16 A
Okay.
That is the fcur-c.on,h s.rerage cost.
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17 q
Right; but the actual cost experier.c ed : :
l 18 '
$28,99, which deviated -- was lower ths.n the budget by.32.3 2 i
1 19 :
a barrel.
1 i
20 l A
2.at's correct.
i 1,
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G ldstein-cr:ss 476.
I Il Q
Uith reference to the 1 percent sulphur oil, gg e
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2 the forecast uns 26.74 P e actual experience was 26.05, t
3 or 69 cents a barrel ch: aper tnan mat the forecast is pre-4 dicted?
5 A
That's correct.
2 6
For an overall average on six oil, the price 7
of the actual $23.37 compared to a forecast of 30.38, or 8
S2.01 louer than the forecast on two oil, which is on the 9
next oage, 3 of 3.
The forecast shows a price of 433.63.
i 10 j The actual experience was $32.16, which c.eans that the i
11 !
actual price experience was $1.!'7 less than the forecast I
12 !
y a=ounc in the budget.
Could you explain in general terms or as specific as you find necessary why the actual prices camel
(,m) j 13 i
14 I in lower than the forecast?
I i
,j 15 '
A Uell, there are a couple of reasons.
No. 1, 16 l the fact that we utilized = ore gas than we predicted.
The I
i 17 !
cain significant reason for the six oil cost deviation is 18 l the decrease in the purchase price over those couple of I
19 '
=cnths, and as I said tne last time, these are the burned 20 t
- cogg, 21 If we look at the current power cost, the 22 current power cost for six oil in July is $30.
The current 23 purchase cost for 1 percent six oil is E25 50.
So en a pur-24 chase
..c.
~. asis, our Ocs; have core :han cauxh: uo wi:h,
/~'%
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(_)
25 have scre
- wa-
-- e back to the normal le'rel on a burned I
i
Golds tein-cro ss E77..
i 1
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- basis, 0i 1,
2 Cf course, becausa of the fact cf invenborr 3
roll-in, we are a dollar or two under.
4, My position hera is that tha rI rke; is c.cw I
5l fir::ing up.
The price decracce t? a ne Im; back ir. April i
t 6l and It.ay are n w, in fact,the circran level o." si:: 011 ccat 7ll roughly ecual to what we were pc.ying bach in January, ao 8
there was a deep in the price and now i: is Such up again.
9 q
You refer :s a price in January.
Could you 10 tell ne what that price was?
11 A
Can we 50 off the record?
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(*.~nereupon, Ne want off the raccrd for 1
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c s*. i.1 Janua.s-17 was three-tenths per ent sulph'r was' rou.-hly 18,
^31.
'2'.c cost
" l percent nulphir oil, this t
19
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.m 1i 20 here.
Tr.e ecs: of tha wa roughly.$23, and 21 t.$.e c s *r, a.e + %. e ~", 'u <
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478.
Goldstain-cross I
A
- he prices of residual oil are soft.
(]
2 Q
I wonder if you can amplify as to what the l
3' specific phenocenon in the marketplace, what specific cause i
4 caused the price of the residual to be soft?
5 A
Both distillate oil and residual fuel oil are 6
seasonal products.
The market price is traditionally soft.
7 In the spring of the year and the summer of the year, the 8
=arket price firms up and increases during the fall season 9
when there is a demand for that product.
10 11
.i 12 5
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17 18 19 20 21 I
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24 25
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Goldatein-cross 479 1
A (Centinuint!,. )
So, it's very cyclical, nb 2
Qs You're saying that the softness in the price 3
was nothing nere than a nor:A1 seasonal cyclical pricing phenomena which occurs with regularity.
4 5
A I'n saying that's one factor.
The other factor, 6
of cou se, is the back-out of a lot of the residual fuel 7
cil by gas.
So, that 's crested a surplus on the market.
8 Again, that surplus is, I believe, diminishing 9
cased on the firming up of the price.
10 Q
With recpect to these two factors, were either 11 or both of then predictable o.an the budget was cade in 12 ;
which you forecasted these prices?
r 13 i A
As I indicated, we started our forecasting 14 vork back in January and at that point there was no indica-i
,j 15 !
tion that there was any softening in the marketplace.
I I
16 Q
Well, the two factors you cited were seasonal 17 changes --
IS A
Seasonal changes, which are typical from year-19 to-year, and also the back-out, the extent of the back-out 20 by residual fuel oil by distillate -- excuse m, let me re-21 phrase that.
22 2ack-out of residual oil by gas.
23 Ihis is of course related to the -(ar= weather i 24 we had or :he really war: win:ar we had.
- !ctedy an;i: ipa:ed O
- 5 v
the amount of gaa that would be available, i
i i
l Goldstein-cross 480.
(])
The weather last year on a decree day basis 1
2 1:as rouchly a percent less than normal.
In 1977, the degree i
3 days were something like 10 percent greater than normal.
f 4
So, over the course of those two winters, we 5
saw a fluctuation of socething like 16 percent in degree 6l days, and that had a factor of about 30 percent on fuel i
-I usage, in other words.
8 Q
By degree days, which you're referring to, is 9
the local weather degree data or some sort of a national --
10 A
Those are local weather degree days in New Il !
Jersey.
10 g
Q Eut are not the oil =arkets national or inter-13 llnational in nature, so that weather variations strictly in 3
l i
14 l Usw Jersey night not be expected to have that kind of an
}
15 I effect on the worldwide price or OPEC price?
}
16 l A
Not true.
The east coast of the United States 17 and pri arily the New York harbor consure something like IS 75 percent of the residual fuel oil.
19 q
75 percent of -- what =akes up a hundred per-I o0 c ent?
75 percent of what, not the world residual fuel oil.
21 A
Of the United States residual fuel oil, and I
22 l approxi=ately 80 percent of that residual fuel oil is i=-
'3 I port ed.
l 24 j ge u311, wge we ha7a in 312 councry is a 7
(~s t
,5 two-tier carket.
Cne is the imported residual fuel 011 i
I l
I i
r-1 i
Goldstein-cross 461.
i eI!
where the residual fuel oil is cade out in the 0cribbean mU and Europe, and the other tiar is the disaillate which is 3
primarily =ade in the U.S..
i 4l How, both approu.ch *.orld carhet pricas; hcs-5l ever, strictly the residur.1 fuel oil is pri=crily a fuel i
6 that's used by utilities and it's strictly based on a i
7 seasonal usage, and to the ex;2nt ; hat the Winter weather 8
was mild, this usage was dcun son:What.
9 To the extent gaa was available, usage was i
10 down accewhat.
Now, 'c,oth of these, all cocncdities, all
.h petroleum prodacts, is really crude oil availability and II
,i 10 i
3 I
that 's the world carken.
.)
O I.
l Q
2e seasonal variations in price, ta':d ng the v
14 I
- j l
weather, the severity of the weather apart, because you t
15 I
~
l cited two components, nor=s. seasonal variations and core I
16l' gas being available than an;icipated, the nora:Cl saaconal 17 '
variation should be predictabla in making a forecast, in 18 that it's not cacessarily the entire ca6nitude, that is, as 19 summer follows winter, that has happened for years on end --
l 20 l I hope I'm not testifying, Mr. Kirsten -- that that is a
'l
~
phenomena which could be crcnked into O projection.
on A
2o the entent : hat Wa '.tnew tha; cc e the fall
'3 ;
~
season, late sanzar, tha; prica:.: ar: inc r 2:. ing,
h?.:' : :.
44
~
inown.
To the e205n: ~,ha lara.01 for r :sia;~.1 f 22' ti' is p
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,known, that 's a far.C:i n Of n2 Min;3r h 3a n3r.
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n.
1 G old stein-cross D32 l
1i Yes, dex.and increases, no question about it, O
2 but r.ne extent that that der.and increases is a function of 3
the clinatic conditions.
4 5
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l Goldstein-crocs 4d3.
2D 1
A (Centinuing.)
Back in 1977, we hac a savore 2
winter.
Demand was extremely high, set records.
This past 3
winter was a kind of mild winter, as I said, 6 percant 4
milder than the norcal.
So, there was less de.T.and.
5 This summer there has been a big decand for 6
residual fuel oil.
Residual fuel oil stccks are coming down.
l' 7
Inese are very hard to predict and they're really outside 8
the capability of most forecasters.
9 Now, in terms cf price differentiala, I have 10 tracked from 1977 to the current period the price differen-l 11 tials between the seasons, and between Decer.ber and Juno of 12 the year prices have gone up much hisaar, rather, nch 1 uar
(}
13 than June to December, f
14 Q
You stated that utilities are a prime par-i 15 '
chaser of residual oil.
16 A
Yes.
17 l Q
Is that true for the oil that goes to the :bW 18 York market?
Does prime purchase to you cean 50 percent or 19 more is being purchased directly or indirectly by utilities?
20 A
I don't have the exact figures here, but I 21 would say that for certain grades of residual fuel oil, I 22 would say yes, that =ajority is purchas ed.
23 Q
Do utilities purchase core fuel oil in tha f
24 su==er =0nths or in he Winter : n:ha?
(~N
's-)
25 A
Tb the extent : hat there is stor ga ::pcbility; l
i l
4S4..
Gcidst ein-cross i
i l
i utilities try and stock up some oil in the sn-er conths, but
(~N I
(_)
of the oil is purchased on the contracts and they try --
2 cost 3i
=ost oil co=panies try and levelize the a=ount dr.at's sold it l
t 4;
each =cnth so they can gauge and allocate production.
l.
I 5,
Q Referring to JCA.3C, Page 2 of 2, I'm lookin I in the upper right-hand corner, your total No. 6 cil pur-6 r
chases, and I see what I would characterize as a substantial l
Sl drop in purchases from January to February.
It dropped frc=
i 9
106,000 barrels to 35,000 barrels, and then purchases hit a i
low in April of 19,000 barrels, and then shot back up again,!
10 !
i cr is projected to shoot back up again.
j 11 I = having trouble uich the column here.
It 4
12 l
/~1 13 shot back up to 149,000 barrels, in July and are forecasted o
g-14 '
to remain well over 100,000 barrels a conth.
15 A
This is before gas adjustments were made.
'Je ;
i did not anticipate -- what order 30 Sas is, is gas that was !
16 I
=ade available to interstate pipelines to supply to end users.
17 It was duel IS :
Ihat order 30 gas had a finite life of one year.
i i
19 '
to end in May of 1930.
i 20 i To the extent that we thought it was ending, to the extent that our gas companies advised' us that it was 21 i.
22 ending, we did not have gas in the budget.
23 50, that's why the residual fuel oil numbers 24 inc reas ed, and tho se, as I said, are bef:re 513 adjus;:en:3.
(V~)
New, the extension of the order 30 gas, I n.5 q
I 4
Goldstein-cross 435.
O believe as you called it, hou long does that extensien run 1
2l darough?
3 A
The DOE just ruled it will be eligible --
4 extended for another year, through May.
5 Q
May of 19811 6
A
'81, but that alone does not say anything 7
about gas availability.
That just indicates that the ordar 8
30 gas can be sold to the interstate carket and intrastate 9
market.
10 Q
Uell, uc 'll talk about gaa later, I guess.
11 A
Right.
3 12 Q
Now, you indicate that neu you balieve that
()
13' based on your experience that recidual oil pricc have firmed a*:
14 up.
5 15 What specific factors can you point to that i
16 lead you to that conclusion other than possibly --- well, 17 has the price changed?
18 A
Yes, the price has changed.
The price has 19 changed.
We can att-* t -- there's a very good correlation, 20 a very positive correlation.
_ 21 As I said, we ge
= cat of our oil from the
/--
22 Caribbean.
To the extent that Venezuela is a very, very 23 large supplier of residual fuel oil to the U.S., if we 1:ch !
i 24 at 7enezuelan niniru= p::ted ;ri.:ss, there is ar. increase in :
O k/
25 '
the price of oil over :he las: two c:nths.
l l
i
E Goldatain-cro s 4c6.
1 A
(Continuing.)
Cur suppliers have all increased
(
l 2
price.
I 3
Q
?!1th respec: to, I think on Friday, you refer 4
to an official price and new today you talk about in i
5 I Venezuela an official price, and you cention a posted price.
6 Is that ene and the same?
7 A
Could you repeat the question?
8 Q
Is the posted price the same price that when 9
you refer to on Friday a Venezuela official price?
10 A
There is a Venezuela official price which
!j 11 Venc=uela sets.
There is a posted price which is the price 12 1
that is posted by the major oil companies in the New York
.)
('}
harbor which we buy from.
What I said is, there is a direct 13
%s*
l 14 relationship betueen the two.
3 15 As the Venezuela price goes up, the posted i
16 price in Ucw York harbor goes up, reflecting any increase 17 in costs.
18 Q
le t 's go badt to JCA3, page 2 of 3, which in-19 cludes your projections of oil prices on a burned rate, burned 20 cost, from September through August, and not citing any spe-21 cific numbers -- perhaps we shall cite some specific nu=bers.
/
22 Let's take a look under the.3 percent No. 6 23,
oil.
I see the price is projected to esculate overy renth i
24 until.iugust when you have a final price f 340.1 a barrel.,
(~%
(_)
25 Y
a-looking at the botto: group which says after gas l
I i
i Il
t i
i Goldstein-cross 437.
(_s) adjust cnc.
g i
2 t
)
I A
tihat is the +,thibit nutber, assin?
3 XR. MaKUL:
C uld we so off the record?
4 t
JUDGE lEiSHALL:
'Ics.
5 (Whoreupon, ue went off the record for 6li a cocent.)
4 i
I 7
JITM2 ERF/LLL:
Back on the record.
8 Q
Are you with te; the 6roup that had tha final 9
August 1981 price for.3 percent, $40.16 a barrel?
A Ycs, I have it.
.-~
11 i l
Q And uc 're starting at 1900, Zeptember, at i
i go I i
~l 32.73?
rx
(_)
13 A
That's correct.
i 14 and you have a very specific pri:2 listed for 5
Q 15 l each and every conch in between.
Could you e.Tplain to na I
16 hou you arrived at those pric33 for each and every =enth?
17 A
I make a faracast of the esculation rate.
18 There are tuo ucys of doing it.
One, I can end up with a 19 year-end price and then factor, deter =ine the esculation 20 rato based on that year-end price; and then uhat we do is,
- 1 1
~
for exa=ple, if a 12 percent esculatien rato, we assign no
~ ~,
1 percent per conth to the price of oil.
It is a vary nicple i
1 i
23 i linear =cdel tha; '4 3 use, cnd Oc th - in7an; i 062n';
i i
'4
(~N follow the nortal 2e:Sonnl dequences.
b 25 '
q Arc 70u telling se that what you f:retaated l
I
1 l G old::cin-c ro ss 438.,
i
()
was an end point as to where the prices uill go, and you I
,i
-l a arted froa a base and y:u assu=ed a linear increase in all 3
the intarvoning conths ?
4 A
That's exactly right.
5 Q
Uow, in ter=3 of establishing the year-end 6
price, what base are you using to esculate from the price 7
for what month?
8 A
I use a -- uell, this budget, we used a Decen-9 ber end point, Decenter 1979 end point.
However, since we 10 are dealing with the official 3-plus-9 budget, it means we i
11 l used three months of actual plus nine cenths of forecast, 12 so the three acnths of actual we esculated from the third g
13' month which is April.
a I4 Q
So then these are esculations from the April f
15 price 7 16 A
That's exactly riSht.
We take our April price 1I and we esculate en a linear basis from April onward.
Q To the extent that the prices in May, June and 18 19 July did not go up, to what extent would this affect the
'O projection?
21 A
Well, again, I don't expect _the_ price.to go j
22 up si6nificantly in May, June and July, and so I do expect
'3 the price to go up very significantly in the fall.
Ihere-f:r2, i; is a catter Of catch-up.
Yes, we are ':ehind May, 24 05 '!
June and July, bu we do catch up in Septe ber, Cctober,
~
l l
G:1dstain-crca:
uJ).
I Ilovember and Eccechar, und that 1 essa.iciall/ Jh-t rht
,s
(
2 budget is b:.ced on.
3 I; 3.ou 1;;n a- :;;e par,;23es, an.j e33 t 1.;
4 JCF, rather than barned basis :ihara ue can Oort cut the 5
effects of generation 21;; and gas adjan'; cnts, to just loch 6
at strictly purchac23 Inic wetid ':a Sage 1 of 3, JC7.
7 This is Pc,1e 4 of 5 There 12
?. d a t.t rec.uest c2dc.cd chis 8
ttcc in recponse :: it.
9
- d. P.A:GL:
0 0cid '.:
30 off the rocc.~d?
10 ggggg ;,*A3SEAiL:
Cff the record.
11 (Uhcrau?on, thers ia.1 an off-the-rec:rd, I
d13ct331Cn.)
I3 x
l JUDGE.*D.R.EULL:
3cck cn the r? cord.
J g
14 l
f 3
15 i
16 17 18 s
19 20 21 1
22 23 i
I.
24 I~T 25 '
l s_/
i
22 O cid:tcin-c rea s 489.
I a
Ecfora ue went off the record, we were talking
( )
I
\\_/
o:~j Obo it '.ho tr 2nds in 5:he purchaca c rices for the No. 6 oil 3l 2nd ue vero talkinc c. bout socething about the historical 4
t:2nde, and we had some problen in f.greeing on it, but you 5
taid nou, I think while we were off the record, we agreed 6
that we culd 30 over JOA-IC, Pige 2 of 2.
7
- Tould you continue on with the point you were 8
t.-M:in 37 9
A For the LIAC. period, in consideration, if we 10 take the snapshot uo were talking about three-tenths percent t
11 j
sulphur.
If No look at the Septc=her 1930 through December 19 of 1930, the increase is roughly $2.49 a barrel, or roughly i:
13
(~JT l
50 cents a month.
i 14 l
~
a j
How, traditienally or historically, the price j
15 l of the residual' fuel oil has never sone up 50 cents a conth.
16 It has gone up considerably more than that por conth.
In 17 the winter conths it has gene up $1.50 to $2; so to La ex-18 tent that we under-recover there, wa make up for it in the 19 summer months by allowing 50 cents per month, and that is 90
~
what the linear esculation does for us.
'l We_tay_ come cut ahead in the su=rer but in the l
22 wintertire we catch up and the price usually exceeds our 8
23
- fc73c33g, 24 4,
37 ;3g.,13 3 7 7, 3 33, 72 2333 33cg;3e7, ;3ng;77
(~%
o5 s_)
and February?
i i
l i
Goldstein-c ro s s L90.
1 1
A I as starting in Le tenbar than One pric as c
(s3 u
o:
firm up and they last, tnrou.gn.igt li.
_2,a ar.lin
- n h cw e ro:i I
i 3.!
cr cold Acril is, the p-* ^= "-a--ase vill last right througE i
6 4l th ere.
5l Q
Lo y0d recall that exhibit you cay have pre-t i
6 I pared that shows the actual burned rate of last year as cos.
6
-l pared to what had been projected?
l 8
A The burned rr.te from 19737 i
9l Q
By rate, I scan ths unit c32;.
I 10 A
The unit cost for 1979?
I 11 l Q
..e s.
z I
12 '
A I don ' t r ecall the e.-hibit.
('
13 Q
Off the record, during a brack, we can aj 14 straighten that out.
i 15 t Now, what specifically -- you talk about a I
16 :
50 percent or core a =onth accalation.
Are there any ape- ;
l 17 !
cific factors that we can lock at in tor:s of CPEC increases i
IS or whatever that we can tie this conthly iccrt-12 3 to, or is t
6 19 i this strictly a projection based en what has been observed i
I 20 ;
in prior years?
21 A
First of all, let ce correct your statenant.
on..
It is a 50 cents a conth increrae, r.
50 percent inerc2se.
23 '
q 50 cents, I'= sorry.
24 A
YO 3 s ih270 i; 2 li3Cif1100 diff320000-O(/
25 4
car 3.
+
l i
I
Goldctcin-crocs
- ugl, I
I r-
.\\
Tuo things.
One of our projections is based, k-2 Of course, on hictoric cost of 0F2C oil, and the second pro-f jection is based on where We think OPEC cil costs are going.
3 4
over tha 12.1C period.
In that case, we use the services of 5
rata 2ccource Incorporated, who has a worldwide energy model.
6 l
tia also :nilor the cunb rs based on the Departzen of Energy, i
7 l the EIA santaries, ani several oil companies ' outlooks.
8 These are all inputs into the final estication of where we 9
I think the coct of crude oil is goin3 i
10 '
q Y0u said that these are used to assist you in II i
determinins Uhcre the price of crude oil is goins.
I be-l~' i' j
i llave elrlier We had establish 3d that the.nethodology you
(~N')
{
usa is ces?ntially to predict uhat the price will be a year 13 fron now ond that you made a linear assumption to expect a i
3 15 l
=cnthl? inercaos between now and a year fron now.
16 l A
Ihat is consistent with what I just said.'
If 17 we esticato that the price of crude oil is going to increase:
1 I
by $8 a barrel over the next year, then our product prices 19 will be raised by $8 a barrel.
/
l 20 Q
'n'ould you agree, Xr. Goldstein, that if we
'l
~
accept the end point as to where the prices of crude oil are oo
~~
goins, that Jersey Central's cost will be greatly affected
'3 I whethe-
~
, by f
fnat increase all cones 1.7 the last conth, prices i
'~4 recain stable ;r.11 -.s! las 2 n;n, :: whe:her the whole l
(~l
's n
l
~
. increase takes placa at a very early day and recains stable i
i i
F 1
l Goldstein-cross h32.
t I
the entire seriad?
-~
(
ol A
Il che increas2. co.22 vary early '.cd we under-1 3l estimate those incrzases, then we -ay cat:h up.
If the in-4 creases come later, we h:ve all:wed a certain linear e:cula-5l tion in our forecast and we coincid3.
Ihe increases we are f
6i talking about, essentially the 0?IC increases, or the in-
'l creases that are affecting tha price Of crude oil, ara coc-l 81 ing every conth new.
i 9I i
Eecause of the fact that datestic cil is being l
10 decontrolled and it is being decentrolled every =0 nth, and
,i II l by October 1961 oil will be co=pletely decontrolled in the 3.
12 i
United States, and that ac leng as there is an upusrd pres-s i
13
(])
j sure on the tarket, because right now there is abou; a $10 l
I4 differential between the crice of de=estic cil, the averaga I3 l price of domestic 011 and the 0?SC crude oil prices, so that s
4 itself 16 l, by /
forces an upward pressure en the =arkst. If OFIC l
I' !
doesn't raise their price $1 between new and tha next year, I8 the price of oil will rise.
t 19 '!
Q When did this decontrol -- decentrolling of i
~O !
domestic crude oil prices begin?
i I
.o 1 A
I believe that is part o_f t_he Fuel Usa ___Act.
l i
on No, I take that back.
I think it began about a year ago.
I n"-
I
,. I'm not too certain on that.
I have Oc check.
I think i:
~
'4 was a year a.;o.
()
25 :
u 4
493 r1 ;
Goldstain - cross Uc11 than, even with that dacentrol, that
(])
If 0
I 2!
progressiva decentrol which you described, the May, June i.
and July pricas were still Icuer than budgeted and in fact, 3
4l did go down en un absoluto basis.
Yeah but, you sac, you're looking again at 5
A Distillate 6
two things.
Distillato prices have not gone up.
pricas have increased and that's a direct reflact of the 7
increase in cost of the U.S. crude oil -2s the decentrol is 8
9 phased in.
P.csidual fuel oil is primarily made 10 out in the Caribbean and that's affec'a4 by world market j
11 l 12 f prices.
So, the decontrol of the decastic crudo will i
(~)/
13 ;
Q s-an impact on distillate or No. 2 oil pricas, but not i:
14 hav3 have so much of an impact en the No. 5 cil pricas?
5 15 1
l That is prinarily correct, but there is very j 5
16 l A
i l
little six oil production in the United States.
17
\\
18 0
okay.
now, because the six oil prices are
- ore controlled by tha worldwide market, are you assuming 19 i in the that there vill be a monthly escalation / price of worldwide 20 crudes which with the cost pass through model will result 21 o.n. l in a =onthly escalation in the crice of resid?
l A
Yes.
Ua're projecting about a six --- an 23
$8 a barrel incr:asa in tha cost of crude oil.
24 Is that going to occur on a menthly basis O'
-25 Q
I
Gcid3t31n - cross 494 1
3 where every mon.h there will be 0/12ths of a dollar or
(~'T f
2 ut 67 cents a barrel cruda prica increasa?
a I-A Tha way wa f et r in ur escalation, that's 3
the way that would cccur.
4 Q
That's the way the model works, cut what o
6 about tha marketplace?
Ecw will it occur?
.i A
The markatplace could very uall react much
[
7 differantly.
For c::amplo, they'ra talking now about an 8
9 OPEC meetine in September and most observers expect the 9
"E 10 So, that means that if we're projecting g
3 l
an $8 increase, we're already seeing in one month's tima two 12 i
f that $8 cr roughly a quarter.
13 l
Q Isn't Saudi Arabian oil just one of several g
i OPEC oils?
15 ei A
That is correct.
16 O
And is'their oil not presently selling at a g
lower price as compcred to many of the other OPEC cils?
A That is correct.
Na buy considerably quantity 39 of Saudi Arabian oil and that has a botton price of $28 a barrel, however, most oil economists vill indicate that that prico is significantly under the market price.
22 The price right new between OPEC cil v aries an'pihara frcm 33 up to 333 a barrel with premiums.
24 O
O So just an increase in the price of Saudi oil d
25 l
I I
495 23 Ocidstain - Oross
()
1l by $2 a barrel is not tha equivalent of the prica of OPEC 2
oil going up $2 a barral because it's only one of the i
3l many oils that are a part of the overall CPEC supply?
i A
To the extent that Saudi Arabian oil makes up 6
4l probably 35 or 40 percent of our imports,it has a very sig-5 6
nificant impact on the refiners' acquisition costs.
7 A S2 increase in tha cost of Saudi 8
crude would probably raise the refiners' acquisition costs 9
by dollar.
10 JUDGE MARSHALL Encuse me.
When you 11 say 35 percent of our imports, did you mean l
12 American i= ports in general or the imports of
)
Jersey Central?
13 a
l 14 i TEE WITNESS The American importe.
l 5
15 We're just talking gensrically about the
!I 16 marketplace.
I 17 JUDGE !!APSBALI.:
Okay.
18 Q
If you source through the six oil that Jersey 19 Central purchases, what are the countries of origin and ap-1 20 proximately what proportions?.
You mentioned before a lot --- you were
~ ~ ' -
21 talking earlier about Venezuelan prices.
22 A
cur major supplier is Essa.
Hess gets oil 23,
from Saudi Arabia, very little frem Saudi Arabia.
Ecss 24
()
i 25 l gets most of their oil frca Libya, Nigeria and they get in 4
I i
i
F4 Goldstein - cross 496 l
North Slope oil.
Q 2
All these oils are the tc;, premium 3
oils, top premium being the highest priced 711, 4
Q Are they not top pra ium because they're 5
character -- you get a lot of what's called light products 6
rather than residual oil out of it?
7 A
It's a mix, yeah.
Nigerian oil is extremely 8
high priced because it does have a significant yield of 9
gasoline.
That is the top quality oil.
10 Q
So, it doesn't necessarily follow then that because the price is high of that particular crude, that tha 11 oil 12 price of the residual / coming out of it will be higher than Ol 13 if it ca=e out oz anothe= c=ude oit, c= does le2 14 A
I don't follow your question.
i 15 0
All right.
You indicated that the prica of these oils are high or higher than average and then in re-E 16 sponse to my question, you did state they result in a high 17 yield of gasoline or other --- peasibly heating oil also.
18 l 19 Is that also correct 2 A
Possibly.
20 Q
Is that possibly not the reason why these 21 erude oils are so high in price, that they deliver a higher 22 I
preportion of distillates rather than residual oil?
l 23 A
Well, in the whcle cil pricing scheme, this 24 historical way that prices were derived was there was a 25 1
i
497 75 Goldstein - c css i
I 1
=arker price.
l
(])
2l A =arker crude oil price is a Saudi Arabian price for crude cil for particular grades and every I 3l l
thing was paid to that grade.
4 The higher quality gradas, in other 5
J 6l words, the grades that were higher that offared more gaso-line were priced higher than that...These traditional re-7 lationships have fallen by the wayside.
S We now have militant or hawkish pric-9 10 l ing countries and we have what people tand to say are dov-l 33 l ish pricing countries, Saudi Arabia being one of the mora 3
l conservative of dovish pricing countries, however, in the 12 l end analysis Saudi Arabia has never icwerad their price.
()
)
13 i j-I They have always supported higher prices.
34 <
i The other OPEC nations are are hawkish
~
i 15 '
t i
have increased.
Every time Saudi Arabia has increased 16 I
their price, the other OPEC nations have increased their 37 prices more essentially because the supply of top quality 33 i
19 l crudes is getting scarcar, i
The crude quality slates are shifting l i
i 20 towards heavier and heavier crudes with less and less gaso-
)
,'3 line yields.
And m re and = re resid yields?
j Q
23 Residual yield is --- if you call anything A
'4 thae s moe ga.o11=e, residual yields, that is cerrect.
l
,--.,,,-,e
-..-...,-e-,-
n
---e
1 i6 GoldStain - CroDS
\\
498 1
Overall the yields are icwer.
1
(])
In a refinery, if you get a vary heavy 4
3l crude, you and up with sene gasoline, sc=e rosidual fuel
{
oil and a lot of coke.
To be explicit, coka has no valua 4
at all.
In other words, your overall~ yield for a barrel of-I 5
c rude oil falls off.
6 i
JUDGE.%VSIIJJ.L:
Off the record.
l i
7 i,
(A discussion was hold off the record.)
t (A recess was taken.)
I 9I I
i 10 I 2
11 ;
l 12 i
i l
()
14 I i
i i
1 3
15 I
i l
16,
i 17 l IS u
19 i
l 1
20 l I.
f' i
21 '
I i
I 24
()
25 I
4 l
1 G
G old:t cin-cros s 499.
1 JUDGE !123 HAIL:
Zack on the record.
3 (mw) 2 Q
I believe where we left off> we were discuss-3 ing a p asible incre20e in tha price of Saudf a Arabian crude and we were talkin.; about certain crudes that are = ore ex-4 5
pensive.
6 I believe where we left off, and please correc-;
7
- s if I at wrong, that is, crudes that were core expensive 8
provided high yield of distillate products or gasoline and 9
as a result these were tore valuable.
The question I had 10 asked you or was goins to ask you was: wouldn't that not i
33 seen to indicate that the crude that provides a lot of dis-
}
12 tillate are not geins, not distillate, provide a lot of 13 i residual are not as valuable and not possibly going to go
('/h f
\\-
34 up as fast?
A The.orojections we have on refiners' acquisi-3.,
l i
16 tion cost indicate that foreign crude over old co=posite 17 l foreign crude landed in the United States will go up from i
18 l 33 and 50.
This is mid-year, average price for 1930, $33 50 1
I to $37.h3.
To the extent that affects all crude, so=e are 19 20 going to go up more and some are going to go up less, but 21 the net effect is an upward =ovement of roughly $4 a barrel.
22 Q
There are crude oils that yield very high 23 percentages of residual.
Would Venezuelan crude be one of I
24 those?
(V~'g 25 '
A 7enezuelan crude w:uld yield higher percentage
Goldstein-cr:ss 500.
I residual fuel oil.
(/
\\_
2 Q
Ilow does Venezuelan c rude price compare to the 3
Higerian and Libyan prices?
A I think I have sone information.
You are talk 4
5 ing about strr.ctly crude oil, now?
6 4
Yes.
7 A
The latest price infor=ation I have is that 8
Venezuelan crude is comparable in price to Saudia Arabia 9
c>ude, and compared to Nigerian crude is about $6 or $7 10 lower in cost.
11 Q
If the push in the oil marketplace is to get i
12 Gasoline and distillate products, and the Venezuelan crude 13 yields a very large percentage of residual oil, how will the O-4 s
ai 14 Venezuelan crude be able to keep up in ter=s of the price d
15 with the lighter crude oil?
3i 16 A
As I said, the lighter crude oils are becoming 17 harder and harder to find.
The trend is toward heavier 18 crude oils.
In other words, a lot of the OPEC nations as 19 well as Venezuela are now requiring that for every barrel 20 that a company lifts of light crude, they lift a couple of 21 barrels of heavy crude.
22 Q
And the heavier crudes do not provide as great 23 a yield?
l 24 A
Of all pr:ducta.
()
25 1
Of distillate products in particular?
G old::cin-cros s 501 I
/^
A 5 ')
Of distillate products in particular, so there 2
fare a number of companies to develop prices for upgraded 3
heavy ends and take gasoline and lighter products out of tha :.
4 Q
Eut, in the ceantice, there will be a lot of 5
these heavy ends around?
6 A
Iiell, when you say heavy ends, what you are 7
really saying are what is on the bottom of the barrel, which 8
are unacceptable environcentally because they contain very 9
high sulphur and a considerable acount of cetal.
'ihey are 10 j
worthless as a fuel unless they are upgraded, and the up-11 gradin5 costs considerable dollars because of the fact *J1ey 12 1
i contain a lot of sulphur and cetals.
4 13 A
i Q
If an OPEC price increase does occur at so=e 14 point in Septe ber, is this a price based on the oil that is
}
15 ;
j loaded aboard tankers?
16 A
Ihat would affect -- yes, that would affect 17 I
the price of oil that is being loaded on tankers, not the 18 price of the tankers that are in transit.
19 Q
H:w long does it take a tanker to get frca 20 Saudia Arabia to the refinery?
21 A
It is variable in terms of whether there is an 22 ia=ediate demand for that barrel of oil or there is not a 23 d eta nd.
24 '*
q 3ased on present inventory conditions?
_)
25 i
- 3. XI3SIEN:
I didn't hear the question.
4
,e
--.--r-
l Goldstein-cross 502.
I I
j q
Lased On present inventory conditions which b
s/
2' y:u =igh desc ribe?
I 3
u:uld say 1: takes probably, and this has n
i 4{
to be a guess, I am not really familiar with it, abcut a 3
-i conth.
If y:a ask te about a barrel soving from Aruba to i
6 the U. S., it takes four days.
.l Q
Right nou we are still talking about from the 8
oil fialds to the refinery.
Have you read anywhere about i
9'j tankers 6cin3 slcwer than they used to in order to burn less 1
10 li fuel in transit?
Have you heard anything about that?
i II i
i MR..sIRSIE!!:
I object.
I dcn 't know i
l' i the relevance or cateriality of that question.
1 p) 13 l'
- 13. ?%KUL: 'Ihe rateriality is the
\\-
i 1
14 '-
cuestien about the transport tire > the effect t
15 i of the ohole thing we're locking toward is 16 '
at what ti=e will a September OPEC cil price I' l l
increase embark the burnt rate.
The speed at i
IS '
l uhich the tanker gees fret the oil field to i
19 the refinery is very cuch a part of the over-90 {
all calculation of lag, before the price in-
~
i 0]
~
crease winds up, before the ci2 at least winds on i
~~ i up at the burnt rate.
o3 i
~
JL*rGI IGRSHALL:
. ire there any further
'4 0 0:22 n:37
()
(7c res;= nee,)
}
5 t.
Goldstein-cross 503.
JUDGE PARSHALL:
Objection ~ denied.
g
(/b w
2
'Di2 *lIZIESS :
Yes, I have read about it.,
3 and ac I said the tanker speeds up or slows 4
down depending cn supply needs.
They're 5
probably in a position where they're slowing 6
down right now but, a6ain, for every increase 7
in OPEC, in the price of OPEC oil that in-8 crease is the refiner acquisition cost of 9
foreign components, of acquisition cost and 10 there is a proposed increase in domestic 11 acquisition cost; so while you might have a 12 lag of foreign oil, you don't have that lag 13 in domestic oil.
(1s) f 14 Q
Mr. Goldstein, I believe we established i
f 15 carlier that decontrolling of domestic oil could have an 3i 16 impact on No. 2 oil prices, but the six oil prices being 17 worldwide in nature would be somewhat less affected, if yg affectec at all; is that correct?
l 19 20 21 22 23 24 j l
()
5 l
Goldstein-cr:ca 504 1
A I aaid that, but I think you're carrying the 2
e::tansica tco f ar.
Sverything reacts to a world arkat 3
prica and thers is exchange of information en the market.
4 If the distillato pica was icver in ths 5
United Statas than it '<as overseas, then tha barrels uculd 6
flew overseas.
7 If residual fual oil prices were icvar 8
in the U.S., barrals would fleu overseas.
9 In other words, thora is an exchango, 10 and I don't want you to get the impressien that tha markat 11 is completely decouplad and that thars's an American market i
12 and an European market.
Q' 13 0
Well, for the tine being, all of my questions,
)
14 2ir. Goldcucin, are directed tcward 6 cil rathar than 2 oil.-
f 15 Now, the tankers, I think you agree ii 16 that the tankers are going sicwor.
37 A
Crude oil tankers ara going sicuer.
18 Q
So, as a result, does that ene a renth figura 19 get lengthaned by any extent?
20 A
Maybe it's a month and a half.
There ara a 21 lot of crude oil tankers that are beingused as storage right now f r storage.
Those are available at a eccent's notics.
22 23 l Q
Pr viding they could be e=ptied?
A
'le s, that'3 t!".J.
30*tS70s, crud 3 cil Jtech3 i
O a=e co=1=e ec =. is that'= wha = rou'== a=iv1=s ae.
i
)
25 I
l 1
l
305 h2 lColdstain-cress i
1l 0
Ncw,with respect to how icag it takas fer this V
o1
-l oil to gst through ns rofinary fron the ti:2 the tankar pulls 3i into the port at tha refiners' cad, how 1cng dces it taka 4
until it's loaded cnto another boat for ahipment to tha Nav i
5l
.lork Harbor?
6 A
n ors'a a ccncap". called "acenco. rsn t. "
,I'l A barrel of crude oil that geas up in prica and goes la*w a 8
refinery, and that refinery has no nany barrela in stcraga, 9f thosa barrels in storago ncy bocccs the now and are new I
10 l raised in price to whatsvar the prics has gone up to.
i 11 So, in other words, there's a prc=pt 12 oxchange of prico.
t O
13 l Idon't think I knew for a fact that V
i I
j I4 ;
rafiners do not segregata barrals based on this barrsl han f
f 15 a cost of $30 and this has a cost of $35.
Thay'rs all co-I i
16, minglod and I believs they used a pricing system whors what-1 l'T f evar tha prica is in effect that day is the price of all IS their invantory, i.e., econcmic rent.
I 19 l Q
Ars you telling ne that there's no pricing lag j i
i 20 '
at all with respect to refiners, that when the price of oil 21 that's coning in goes up, that they 1.m.ediatsly reflect that 22,
price in all their salos?
l 23 !
A
' dell, there are a let of cases pending before I
i 24 the -- wall, a let of :saes that the OCI ars iceking inte O
25 that invo1 ehat p=1nct 1..
i I
i l
Goldstain-cross 305 1!
I =ean, that is supposedly illegal, but-I really dnn' t -- ycu kn:v, I sally can't say what the 3:
refiners do except that I kncv that CCC is 1 coking vary I
4l seriously into a st=$or of casos that involve just that kind I
5 ',
of concept.
t 6l C
Ycu kncy apprcxi=ately how =any days at the 7!
present cruda running racos at rsfinarias - hcw sany days 8
inventory of cruda they night have in storago?
I 9!
I havs te cbject.
Ma-10 l teriality is a questien that the degree of i
I 11 '
prcbativa value is so small as to not warrant i
}
12 I tha tima and affort invcived, and I thinkthia
()
13 l 13 3 perfae exa pla og it, ai 14 j Speed' cf tankers, a cunt of Icading, i
15 l may havs sc=c effectcn the ti=ing, but what I
16 i i= pact it may have en this case is so insig-i 17 l nificant as co= pared to tha tira lag that vs l
IS j ars expariencing hors to go through theco i
19l!
questions and is certainly a parfact example 20 l of lack of =ateriality.
I 21 f
'la. MAKUL:
Mr. Kirsten is_apparently 22,
asticipating the answer. I den ' t think thers 's that 23 anything on the recerf/nacsssarily says that tha lag is si nificant or ins 1 sifi:nst.
24
- F 7
r~S l
+
l 25 The whols area that va're scing to is i
1
507 Goldstain-creas 1
tha =sthodology that was used to project scnth 2l by month increasos, and what we're generally i
3 testing la che validity of those assumptions, 4
and as a seccndary thing, what we think we're 5
doing is of value.
We're tasting Mr. Gold-6 i stein's qualifications as an expert in the l
7 petrolaum industry and what the dollar effect 8
por barrel will be for changes in Septe=ber, 9
if any, i
10.
JUDGE MARSHALL: Quld the Court Reportarl 11 read back the question?
12 y
(The Court Reporter read back the 2
13 followings.
14 Question:
You know approximately how 15 many days at the present cruds running ratas i:
16 l at refineries -- how many days inventory of 17 crude thoy might have in storago?)
18 A
I can answer that question.
19 MR. KIRSDIN:
Just a coment.
There's 20 an objection pending.
21 JUDGE MARSHALL:
I'll deny it.
Answer 22 the qusstion, please.
23 :
A As of May 31, 1930 there was 377.2 millien 24 barrels of :: de cil in storage at a utilisaticn rata of 25 13.6 =illion barrala a day going into the crude distillation
+
l
l 4
0 I
Goldstain-cross 508 1:
1, i
1 I
That cc=os cut to approximately 30 days, 27 2
days of supply.
l:
3 We are importing approximatsly 6. - 5.1 million 4
barrals of cruda oil at this rats.
i 5
[
i; t.
6 t
7 8
l 9
1 1
10 11 12 i
O; 14 t
3 15 i
16 l
17 18 19 20 21 22 23.
i i
24,
25 1
,c-,.-.--w-
-.-----,._n.---
,,.....,,--,--,,.~.--,,,,,,--n,ns.--,.,n-~
e,c
,. - - -, - -,----r,.---,
--w,
I 2hl Goldstein-cross 509 1
Q New, hov oftsn does OP2C =eet to raise pricca 2
normally?
3 A
They put decidad en quartarly meetings.
I 4
Q Qua.-+.arly meetings?
I 5
A The first meeting taking placs in Septerber, 6
Q Can you tell me whan the last OPEC meeting was 7
that affected crudo oil prices.'
i 8
A Yeah.
The last cacting of CPEC -- I think 9
June.
I believa June was a =eoting.
j 3 i 10 Q
Did that result in an increase in prices?
11 A
Yes, it did.
Saudi Arabia raised their price 12 of cruda oil by $2 a barrel.
All of the other OPEC countries O;
'3 rei=ea eaet e=i===
19#111===*17 aisner==<> *exe4== *seir-ii 14 prsmiums to bcot.
t 3
15 Q
And despita all of this, at least with respect i
16 to 6 cil, in the three month period or the period aftar that 17 nsating, at least June and July, pricos dd not go up.
In 18 fact, to acto extant they declined?
19 A
No.
I never said that.
20 Q
Well, I'm 1 coking at the --
21 A
_ Prices have_firmad up.
They have gene up.
22 They declined over, I guess, March, April, May, and they're 23 i firming up now.
I 24 Q
- hers was no i==ediata upward i= pact of these 25,
increases?
510 2h2 Goldatain-cross 1l A
We received a distillata increasa of $1.40 a O
i 2'
barro1.
3 0
My quos tion went to 6 cil.
4l A
Okay.
6 oil prices hava firmad up.
If we use 1
I tha minimum vienezuelan. costed prico, the prics of 6 oil has 5
6 gone up frcs two ncnths ago by about $1.50 and that's for ths 7
grade of 1 percanc sulfur fual oil.
8 Q
Co ths OPEC countries over sail beicw their 9
posted pricos?
10 A
The CPEC countrias sell belcw the posted pricos?
11 Q
or the official pricos.
j 12 A
Saudi Arabia, as far as I kncv, at this current i
s a
13 junction is not solling helcw their prices.
14 Some of the other c untries hava alimi-i 5
15 nated their premiums.
i 16 Q
So that, in offset, is a prico discount, a prios 17 reduction?
18 I A
Not off tha pcsted price.
19 Q
But it was in terns of :.arket prico?
20 A
It was a waiver of the premium.
Some of the 21 countries liks Algeria have a $3 premium en top of their 22
$37 a barral crude price.
Those premiums have now been 23 waived, so they're still insistir.; upcn their official price, l
but as far as I k cv, they hava not officially lcwered their 24 25 price.
i l
I
Goldstein-c css 511 1
Q Well, isn't ths trua markat price the postsd 2
prico plus any premium that might ba required and tho not 3
effect of elininating that pranium wculd raduce the prics 4
og oil?
5 A
Wej y c.c question you asked is whether they 6
give a discount off the postad price, and I'm saying they 7
do not give,a diacount off tha postad prics.
8 0
okay.
But you would agrco that going boyend 9
that questien, that if the true prics of the oil sold tha i
10 posted price plus the premium, that the act of eliminating i
11 the premium was, in effect, a reduction of the decksids price 12 of the oil?
O
^
To **
=t>== that **ar =cuta==*==rsort *a-i j
14 premium, they waived it, but they'ra still insisting upon f
15 the posted price, that's correct.
i 16 0
I think that abcut does it for our oil ques-17 tiens.
18 Now, I think we're coing to go en to 19 coal.
20 !
Now, for the LEAC period, Mr. Goldstein, 21 can you provide us with the assu=ptions that you made about 22 the coal market that would affect the average ecsts for a 23 ten of coal during the LEAC period?
24 A
I believe I provided an escalatica rats of 25 S percent a year for 1980 and 1981.
i s
,I i
l Goldstain-cross 512 i
1 Q
And that is starting vith what prico as a O
2 base?
3 A
Again, that startcd with our recorber price.
4 Q
Your actual Decarber 1979 prica?
5 A
Right, and that again was upgradod in April with' 6
cur curesnt budgat of 3 plus 3.
7 Q
What is the basa price right new for your pro-8 jections that you make in April?
I baliavo you said you 9
updatsd the base price to the one in April.
10 A
Ua use an April base prico, yeah.
The base I
11 prica in April was 20 >0.
12 Q
How 6-=
65 9 mest recently experienced burned l
13 prico for coal compars to the rest rocant forecast?
j 14 A
For the first six months of the year -- well, f*
15 let's take it from -- yes, for the first six months of the i
16 year we are under our budget.
17 O
By how much per ten?
18 A
Can I go off the record and find cut what 19 exhibit we're locking at?
20 I JUDG3 MAPSHALL:
Off the record.
21 (A discussion was held off the rscord.)
22 JUDGE MA2SHALL:
Back cn.
23 A
The cost for the six centh i.ctal actual was, 24 through June, was 324.32.
AV 25 i i
k I
\\
I i
I G olds tein7e ro::
513 I
A (Continuir.3. )
Excuse me, I have to go off p
V 2
a,3ain.
2.at 1: inc orrec t.
3 JUCGE l'ARSHALL:
Off the record.
4
(:Tnereupon, there wa:3 an off-the-re:ord 5
discussion.)
6 JUDGE IMRSHALL:
Back on the record.
7 la. KIRSTEIT:
In order to save tine, 8
would it be helpful if we put that information 9
in as an exhibit rather than just to read it?
10 I have extra cocies.*
i Il i
- 2. Flil?JL:
Fine.
I have no objection.
12 JUDGE 1%RSHALL:
If there are no objec-g
()
{
tiens, this exhibit will be marked JCA-6 for 8
14 i
identification.
15
(%hereupon, a one-page docunent entitled 16 Jersey Central Power and Light Analysis of II Coal Burned, Actual versus Budget, was marked 18 JCA-6 for Identification. )
19
!!R. KIRSTEU:
Can we have this narked 90 JCA-7?
Actually, it is the other half of the
\\
og co= paris on.
JCA-6 is the analysis of the coal
~
22 burned, and JCA, the other ites which I sug-23 gest we mark JCA-7, is the analysis of the
'4 0011 purchased.
C
\\
!V oS >
1 1
JUSGS :%3SHALL:
If there is no I
Goldstein-crose 514.
I objecolon, the one-page analysis of the coal 2
burned shall be so marked JCA-7 for identifi-3 cation.
4 (Uhereupon, a one-page docunent en=
5 titled Analysis of Coal Purchases was c.arked 6
JCA-7 for Idantificatien.)
7 3Y MR. :MTJL:
8 q
Mr. Goldstein, the caly place where Jersey 9
Central is burning coal is at the Keystone Station; is that 10 correct?
II
.i A
That's correct.
12 j
Q And.you said that the 8 percent esculation
()
{
which I daink ue established, is now off of an April 1980 1
14 i
pric e.
Is that 8 percent esculation, is that the prices a 15 year?
In the future it will be 8 percent higher or the 16 average prico during the life of the filings will be 8 per-17 cent higher than tha price experienced in April of 19807 18 A
It should be -- ue are forecasting en a yearly 19 basis, so I think the latter, the 8 percent over the life 20 of the period.
91 Q
So the avera5e price during the LEAC would be
~
2' esculated fron, it would be 8 percent higher than the April 23 i 10$0 cost?
i
'4 A
I beli27e thao would be correct.
~
/~)s t
'(,
25 q
Ihe reason why I ask is in the filing on e
i t'
1 l
l G olds tein-c ro cs 515 I
(v~)
JCA, Fago 2, Page 2 of 15, in the filing we see an average 2
cost of G29 37 per ton, at Keystone, and the unit cost that 3
I see here at JCA-5 in April, the actual was $24.51, and I 4
guess you have a calculated, but the difference seems to 5
be more than 3 percent.
6 A
Are you 1 coking at burned or purchased?
7 Q
Ihe filing on rage 2 of 15 are prices shown 8
as burned, and I ac comparing that to JCA-6 which shcus an 9
actual cost in April of 1980 of $24.51 actual as burned.
I would submit that 29.11 is much more than an 8 percent i
11 i
increase compared to the April actual figure, A
I have esculated this on a purchase basis, and i.
()
let te just check my esculation one core tite.
i 14 E
Q I am looking at the purchase, the second page 5
15 of JCA-6 of April unit cost per ton was $22.92, which r.eans I
16 that the 29 37 figure as found in the filing represents 17 approximately a 25 percent increase.
18 E::cuse to, I don't know about the 25 percent 19 but it represents what looks like substantially more than 20 8 percent.
21 A
_ _ 13. percent.
22 Q
Yes.
23 A
I will withdraw my comment, then.
The second 24 l
(~)T part of this is a 13 perc ent asculation.
,5 >
s_
Q Do you have, does Jers ey Central have a coal I
4i i
i
G oldc t ain-c ros:
516.
1 contract to Jupply this coal?
,_s 4
s V
2 la They have two centracts.
Jersey Central has 3
two c:a1 centracts.
4 Q
And how is the price determined under that 5
contract?
6 A
There are two coal contracts.
One coal con-7 tract which cupplies the najority of the ccal, rou6hly 90
~
perc ent, is that coat of prcduction plus profit esculation.
9 We pay all the costs of production plus profit which is 10 esculated.
II i
The second coal contract is a tarket contract 19
~
i uhere we pay the average coal price delivered to all of the 13
(~sJT {
partners in the station, excluding ninecouth plants, and 14 i
that supplies roughly 300,000 tons a year.
5 15 i
16 17 18 19 20 21 22 23 24 f
O 25 U
t i
I
2I Golds tein-c: ss 517 I
I Q
Iha esculation in prices which are predicted,
("T
)
s/
2 is that based on the seller's profic esculating or is it 3
pricarily based on projections on the cost of the products 4
esculating or, I wender if you could break that down for me?
5 A
We are projecting on a, I uould say a price f
I 6
that includes profit, because the profit is esculated by 7
the li?I.
8 Q
The wholesale price index?
9 3
- 7gg, 10 Q
At present, let's take the actual purchase 2
cost of 22.92 in April.
How does that 22 92 break dcwn into 11 12 costs of production and the profit conpenents?
g
()
13 A
I d1 ink the profits, I a= unsure about the i
14 exact anount of the profits, but I would say the profits in
.e 15 April is probably in the order of 01 or so.
I think the j
1 16 profits over the whole year is about $1, $1.20, $1.30.
17 Q
And the balance is the cost of the products?
18 A
The balance is the cost of the products.
Q So if the profit goes up by the wholesale 19 20 price index, and even if the wholesale price index goes up by 20 percent, that's 20 cents approximately of a dollar?
21 22 A
Yes; there is a bonus provision in there but,
- 3 okay, I assure ysu're correct.
i 24 >
0 Sces that r.can the talance of ycur projection
)
i s_/
95 '
is due to increases in costs of production?
i f
//I l
Gcidatein-crcss 513.
1 A
()
E::cerly, 2
Q iihat increase in the cost of production do 3
you anticipate?
4 A
The ceasure increase would be dae labor 5
charge, labor cocponents that is going to be deter =ined by 6
the U:W, United Mir.e ~2rkers Association contract renewal 7
talk: which are scheduled.
The United Mine Workers contrac b 8
terminates in : larch.
The thinking right now is that con-9 tract should be going up by about 15 percent.
10 Q
Does that mean that the wage rate will remain i
~
11 s table until :Garch?
3 12 A
lio; there are increases in there.
2 13 Q
Reflecting --
~-
14 A
Quarterly adjustments.
This is the standard 3
15 contract.
There is a cost-of-production, energy, explosives 2
E 16 bolts, nuts, reinforcing bars, anything that has to do with 17 underground mining.
We pay those costs.
We also pay in-18 surance costs for -- well, in' the labor component, we have 19 all of the costs that are associated with the mine workers,
'O the entire cost pass-throuSh.
We have environ = ental regula-21 tion pans-throughs.
We have all the cost of production' pass-22 throughs.
23 Q
Do you get regular con =unication from, I as 24 !
N l
speaking with respect to this contract that you get'90 per-l
(~)
\\
l
\\_)
o6 of the coal rgquirements, are there regular cot: uni-c ent i
- _ ~,
Goldstein-cross 519 I
(3 cations or forecasts provided by that coal supplier to indi-2 cate where the coal supplier thinks the cost of production 3
uill be coving?
4 A
Yes.
5 Q
To what extent were they relied upon in your 6
developcent of your projections?
7 A
To a large extent, I used what they had indi-8 cated as their incrcase in the cost of production.
9 Q
I did a little quickie analysis on the numbers 10 that were provided just now compared to the nutbers that are
~
11 i
in the filing, and the explanation you gave us that would 1
i account for approxicately $1 per ton as being the profit 2
13 4
r' co=penent.
(
.i 14 i
How, backing a dollar out of the 22 92 purchase 15 price in April vould indicate a cost of production of $2192 16 or apprositately $22, and if we take a look at the projected 17 average price for the 12AC period of 29.37 as is found in 18 the filing, I an assuming a 20 percent esculation rate on 19 profit which will be a 20 percent wholesale price index in-20 crease, which would back $1.20 out of the 29 37 figure, and
'l be left with a cost of production of $28.17.
22 Now, =aybe for convenience, we will write the 23 numbers down for you so you can look at them.
I think the 04 '
~
end result of this analysis is that you have assured that the f'T 25 '
(_)
cost of production will increase by alzost 30 percent and i
i l
Goldatein-cros:
520.
I 1
16 percent esculation of the production from the cost of
(~'/
t
\\
2 April would appear to give a yield to coal prices of abouw i
3
$26.40.
4 A
In April I have 3-clus-9 forecast.
I have a l
1 5
price of $26.83 as a forecast price.
That comes from the 6
budget.
7 4
Are you using the actual April coal prices as 8
the basis or the budgeted April coal prices as the basis 9
for making further esculations?
I believe we have been, 10 unless my ears were wrong, we had been saying it was the 11 actual not April costs..
~
12 A
I will have to check en that, t
13 JUDGE PARSEALL:
If we are goire to p
LO 14 break at 12:00, we will take a ten-ninuce d
15 recess now.
I 16
(*ihereupon, a recess was t1 ken. )
17 18 19 20 21 22 23 24 i i
25
i J
Goldstein-c ros s 521 I
r~T
(_)
JUDGE MARSHf.LL:
On the record.
2 IiR. KIRST3::I:
2here have been previously 3
distributsd to the parties a portion of the 4
budget uhich shous the station fuel costs fora-5 casts.
These are the figures which were con-6 tained in the budget before adjustment and 7
vere the basis for the filing before the 8
various adjustments that were testified to by 9
the witnesses.
10 Just so that the record is complete,
- .~
11 I thought it might be appropriate that that 12 8
document be marked as an exhibit so that it i s r~%
13 kJ f
a part of the record.
I would suggest it be i
14
{
carked JCA-8.
It has been previously dis-15 j
tributed to all the parties, sir.
16 JUDGE MA35'-L4LL:
If there's no objecti an, 17 it shall be so marked.
18 (Document entitled " Station Fuel Cost 19 Forecast-Suc:ary," referred to above by Mr.
20 Kirsten, is received for Identification and 21 carked Exhibit JCA-8.)
22 q
Prior to the break, we were asking you to 23 reconcile your asstaptions with respect to the esculation 24 in the cost of production of coal with What appears to be
(~}
\\-
25 the end results, and we asked you whether or not you base
Golds cin-c ross 522J I
{}
your esculations from the actual price for April 1980 or 2
come bud. gated price '1hich had been esti sted prior to April 3
- 1930, 4
A I j us t want to check something out here beforo 5
I answer that question.
6 If I use the actual March price, which is the 7
book price of 324.96, unich is in the budget, then the escu-8 lation is roughly 13 percent for ene year.
9 q
Mr. Goldstein, before your prior testimony we 10 vere told we're increcenting off April and that it was 8 per -
i f
II cent, and now it's off'of March and it's 13 percent.
12 3
You cave us a price of 24.96 and that appears
()
to be, I believe you just indicated, a March budgeted number 13 a
14 A
$24.96 is the cost of production and that f
15 Keystone and Canterbury coal coces out.
Now, to the extent
- r 16 there nave been inventory adjustments and dollar adjust =ents I7 the price is $21 96.
That does not appear in our budget.
18 Ue use the book price, the price that Keystone 19 and Canterbury charges us.
That's the weighted average pric e
'O of coal.
That's $24.96.
21 Q
And that was in March of 19807 no A
That was in March of 1980 Now, starting in
~'
23 April of 1980, ycu will see that we, for the rest of the
'4 '
year, we have abou; a 21 cents per ton increase in ccal which
/~N
\\~)
o5 i comes out to about an 3 percent annual rate froc the budget,
~
G olds t ei.'-c rcs s 523.
I f'l from the official budge, from the 3-plus-9 a
2 Q
An 8 percant annual rate from the budget?
3 A
R13ht.
4 Q
Which ceans that you did not make an escula-5 tien at all off of the actual prices but, rather, off the 6
budsot prices.
7 A
It's the actual price that's booked in the 8
budget.
It's the actual -- uhat I'm saying is it's the 9
actual price --
Q The actual estimate?
5 11
.i A
It's the actual price of Keystene and Canter-I bury coal withcut any inventory adjustments or dollar adjus-:-
(~T 13 N/
d
- cents, i
i 14 i
Q and that price is wha;?
5 15 A
$24.96, and if you use that number, then it g
I 16 beco=es a 13 percent esculation through the end of the year.
17 I The end-of-the-year p rice would be $23.31.
I 18 Q
All right.
19 A
Nou, what I'm saying is that if we start with 20 the month of April, there is only a 21 cents per conth in-91
~
crease, 21 cents per-ton per -month increase.
22 That comes out to an annual esculation of 23 3 percent.
So, there is a jump here between March and April.
l i
l 94 gs Q
You jus: quo:ad me a figure of -- a calculated
~
\\-
25 i
'igure of.323.31 at year end, I believe.
1 l
l
G:ldstein-cross 524.,
1 A
Yeah.
o Q
How does that reconcila with the f tling which 3
2 cows the price of Keystone of over $29 on the average dur-4 ing the 1EA0 period?
5 A
h' ell, don't forsat the average -- that's the 6
avera3e throu3h August of 1930.
In other words, the final 7
price of Keystone coal, Kaystone and Canterbury coal, the 8
price of delivered coal to the station la $29 95 in our 9
budget.
10 Q
Uhat does the 23.3 run represent; that's the 2
11 price of coal when?
12 A
Ihat is the price of coal December,1980.
g:
13
(~)'
How, in the budget, the prics of coal in April of 1980 is i
14 i.
$26.33.
15 Q
So, what you have done is, you have esculated 16 the old budgets to come up with the new budgets?
17 A
I don't a.3ree with that.
18 19 20 21 22 23 24 l
/~
(_T 45 l
)
i l
T.
G oldstain-cros c 525.
I r3 Q
hos did the actual price of coal in April of
\\/
9' 1930 factor into the derivation of the 29.37 figure which 3
lo the projected fuel cc t of Keystone for the LEAC period?
4 A
17nat i am talling you is that between April 5
and tne end of the year, wa had a 13 percent esculation.
6 Now you want to know for the whola LZAC period,, and our esculation goes from 24 96 to a price of $30 30 which comes 8I out to a rate of 21 percent over the entire LEAC period.
9 Q
Now, you cited a possible wage settlement in 10 March in the order of 15 percent.
II
.i A
I caid that is a posoibility.
l ~'
i Q
It could be lower?
(')
9 A
It could be higher.,
a 14 j
Q And it could be lower?
l 15 A
I would suspect it to be higher based on the
- r 16 UMWA position.
17 Q
Is this contract not affected by wage and 18 price guidelines?
19 A
I do not believe so.
I don't know.
Let ne 20 withdraw that.
There have been settlements outside of the
'l industry for 13 percent which have violated the guidelines.
2'~
I believe the rubber workers had a 13 percent increase.
23 Q
Do you believe that the last tine that there os I
was a wage se: ler.ent -- hcw icng ago was that?
I'T
\\
'S
~
i A
Ihree years ago.
Goldstein-c ross 526.
1 Q
And what happened prior to that settlement?
O' 2
isas there a long strik3?
3 A
There.uas a 100-day strike.
4 Q
Do you view the UMW as being in a relatively 5
strong or weak bargaining position with respect to this 15 6
percent that you are projecting?
7 A
I think they are in a strong bargaining posi-8 tien.
I think historically the UMW has never had a settle-9 ment without a strike.
I believe that their negotiating 10 position this year is even more firm with a new leader who i
11 seems to have the cine 'wcrkers behind him.
There is no 12 3
derisiveness which characteriz e the last round of negotia-13
(~')
l tiens.
I think this time the issues are going to be more s-I4 in centrol of 'tha mine working force than ever before.
.I f
15 think the make-up of the bituminous workers, the bituminous 16 cuner:3 bargaining commitsee is very strong, very militant.
17 We have Consolidated Coal, which has a very 18 large say in the negotiations, and if you read the papers 19 you wculd kn0W that the few wildcat strikes that we have hat.
20 so far, that Censo11 dated Ccal Mines have had them all.
I
'l believe that the ground the issues are being looked upon 22 and wage increases arc signific.antly -- wages will be one s
23 cf the issues.
og i Q
Co you consider yourself to be an expert in i
(')M
,5'l
\\~
labor, in the status of labor negotiations ?
v
r G olds tein-c ros s 527.
I A
Well, I follow the statements that are issued
_s
\\-
2 by both the cine union and the unions and the owners and try 3
to piece then together as part of our scenario.
4 Q
Do you know what the present help is of the 5
UMW strike fund?
6 A
I believe it may be fairly low.
That is why 7
we are expecting -- that is why cost industry people are 8
expecting a short-term strike of up to a conth, 9
Q And wouldn't that tend to put the coal nine 10 owners in a cuch stronger bargaining position than they cay 11
.i have been had there not been such a long strike the last i
tine around?
}
13 A
Coal mine owners are suffering from under-
/
14 g
capacity right nou.
They are not financially healthy.
They d
15 can either not take a long strike and neither the union, so 16 that is why I say the strike will be really short, possibly of a conth 's duration.
18 For the record, I would like to say that --
Q I don't think there is a question pending.
20 A
All right.
21 Q
Eas there been any assumptions on your part or no
~~
would it be in your area of expertise in this case to dis-93
~
cuss the fall utilization rate at Keystone, the BTU burn-per-oz >
~
l kilownt h:ur rec eived?
I I")
25 !
x-I A
- to.
l
'i.
?.;b is no-in your experg13gg 2
d
?io, I dcn't b311 eve it uculd be in my ex-3
- 73rtise, 4
5 6
7 8
9 10 II 12 O
13 4
9
~
e 14 15 i
16 17 18 19 20 21 l
l 22 23 l
24 :
f 25,
i l
i
}
4 1
I l
l
Goldstoin-cross 509 t
1 Q
I won't ask you any questions about that, then.
O i
2 New, moving over in the area of natural gas purchases.
Tha 1
3 Company, I take it, has becn purchasing quannities of natural 4
gas for usa at Sayrevillo and Gilbert over the last faw =cnths been 5l perhaps higher than what had/ originally budgatod?
6 A
That's correct.
7 i Q
For the projection for this Levelised Energy S
Adjustment Clause, what are the assu=ptions with rospect to 9
gas availability over the next four conths, or to put it i
10 another way, !n your exhibit en oil pricos, JCA-3, page 2 ij 11 of 3, in the upper part of the worksheet we see sc=a budgetod 12 l figures and in the lever part of the worksheet we see af ter i
()
13 l gas adj us t=e s ts.
I ii 14 I wonder what the assumptiens' were on i
5 the upper part of the workshcot prior to the gas adjustment, 15,I t:
i 16 ;
as to how much gas was going to be burned.
I 17 A
As I indicated, I believe I said that in certain l
IS stations gas would not be available af ter May.
Tho adj ust=ent --
19 Q
After May of what year?
20 l A
1980.
21 Q
And does the upper part of that page prior to 22 gas adjus Mant, does that reflect no additional gas avail-23 '
ability?
A The upper part does.
24 25 Q
In actuality, there has boon additienal gas I
I I
l l
l
- Goldstein-cross 330 l
Q ll availability through the sur=or, is that net correct?
V l
2 A
That's correct.
i 3;
Q And what does, what is the prospect for an 4
ability to get this additional quantity of gas into the fall l
5 and September or October, Noverber, December, through that 6
period?
i i
at 7'
A We have been told by our suppliars/Ee Sayrovillo 8
station that we uo:21d probably have gna'dth an exception of 9
about 30 days during the wintor.
10 We have been told by our supplier:s at i
i 11 Gilbert station that we would probably have gas with the 12 exception of 60 days during the winter.
Gas quantity is
{;
13 going to be a functica of temperature.
When the tamparaturs 14 gets below 30 degrses.
We have contracta, and those cen-3 15 tracts are en a best effort basis.
i 16 l In other words, the best efforts of the i
17 gas ccmpany to get us gas, and we have an interruptible supply.
18 Q
Did the budget figuros in the upper half of i
19 page 2 of 3, I take it that did not raflect any nsw infor=a-i 20 tion about additional gas being available?
21 A
That's correct.
I 22 I Q
The after gas cdjust=ent in the lower part of I
23 f the page, cid that reflace the f act that some gas would be 24 available this vinter where you had thcught that th2sa 25 quantitics would not be availablo?
l t
Goldstein-cross 531 l
1l A
That's correct.
Tha gas af ter adjustnant, 2j we rsflect the additional quantity of gaa that would be 3
available.
4 0
Available this vinter?
5 A
This winter.
6 Q
I wonder if you might compara the budgated barrula 7.
of oil?
Is it not true that when the gas ccmes in that it 8
displacss oil?
9, A
To a cartain extent, yo.s.
I 10 We cannot burn pure gas in our boilers ij 11 without doing significant da, age, so we havo to use so=a 12 cil.
O;
=*r " * * **227 32'S "** ***
'2' 14 A
It will displace so=a of it.
j 15,
Q It will displar,a another fusl which, in the i
I I
16 case of Jersey Central, is oil?
17 A
It would displace seca oil.
IS Q
I am looking at the months of Septanbor, October, 19 l November and December for 2 cil, for
.3 percent 6 cil, for 20 l 1 percent 6 oil, and it would appear from my looking. at it l
l 21 that both the purchased budget and after sas adjust =ent oil 22 usage numbers are identical both bafore gas adjustment and 23 af ter gas adjustment.
24
_/
25 i
h
l L
Golds t ain-c rou s 532.
1 (J~)
Q (Continuing.)
Do you agree witn that observa-2 tien? Am I reading it properly?
3 A
I don't see it that way.
4 Q
All rLght.
5 A
I see that our total No. 2 cil before budget 6
adjustment, we had 1.4 clllion, and after gas adjustcent we 7
have 1.0 million.
8 Q
If I might cut you off --
9 JLOGE MARSHALL:
Off the record.
20 (A discussion was held 'off the record. )
i II i
Q Look at September 1930 for two cil, and I see j
there was burned 135,000 barrels.
If you look at the after-()
{
32s adjustments of Septecter 1930, two cil, it's 135,000 I
14 i
barrels.
5 15 g
Apparenti.y th'.s gas that is coming in is not I
16 displacing any two oil in September.
17 A
That's correct; a very small a=ount of two 18 oil.
19 Q
Is six oil burned at Sayreville?
20 A
3 percent sulphur.
91 Q
Looking at September 1980, I see 122,000
~
no barrels before the gas ad'justnent; 122,000 barrels after the
~~
23 gas adjustment.
If you get gas in September, where do we 24 '
see a reducticn in the 011 turchas e in the same conth?
(O
._/
25 l j
A I sea the redue:1ons tcwards the latter part
i i
.I Golds t ein-c ros c 533.
1
(~]
of the year.
I see a significant reducjtion
(
2 4
3at this is --
3
- 13. KIRS Ei:
Let the witness finish 4
his ansuer, pleasa.
5
- 13. "AKUL:
Well, the answer is not 6
responsivo.
7
- 12. KIRSISf:
I'm sorry, but until we 8
determine whether it's responsive or not, I 9
think we're entitled to have an answer on the 10 record.
~~
11 JUDGE MARSHALL:
I think I would like 12 i
the witness to finish the answer.
()
f A
I see that for the LEAC period we budgeted 1.6 i
14
~
million barrels of oil,.3 percent sulphur oil, and with gas 5
15 j
adjustments we're down to roughly.78, 700,000 barrels.
I 16 Ihat, to ne, reflects a back-out of oil.
17 Q
?.'. Goldstein, I agree with you that the nus-r 18 bers are different after Deccaber which affects the total, 19 but you indicated that your goal was to be getting additional 20 quantities of gas this fall and that this was reflected in 21 the lower port.'.on of the page called "Af ter gas adjustment,"
22 and I'm pointing out to you that the numbers from September 23 through December are identical, both per budget and per i
24
{ budget aft 3r.3as adjus tnent, and that does not seem to be s_-
consistent with your aarlier testimony that gas will be coming
Goldstein-cross 534.
1 in through the fall period ance?t possibly for 30 or 60 days nQ i
durins the wintor, depending on the source of supply, and 2
a 3
that that Gas would be displacing c41 I
f 4
SR. KI?.SEN:
I obj ect to the forn of 5
the question.
I don't know where the question 6
is.
7
- 13. ISITL:
2.e question is: cen he i
8 explain that inconsistency.
2he only explana-l tion we have gotten is that the total numbers l
9 10 I
are diffarent, but I think the witness would
,:~
11 agree --
12 i
!3. KIRSEU:
I move to strike the O) 13 charac te ri::ation.
Let's leave it to questions; 4
t
=
i 14 i
if we will, Mr. Makul.
E 15 JUDGE :!ARSHALL:
An objection han ';n>n i
I 16
=ade to the form of the question.
I 17
?G. ?MKUL:
Well, I think to save time, 18 why don't ue. let the witnes s try to respond.
19 G. KIRSEU:
'21ank you.
20 A
What ue have essentially done is taken the available 21 We have been told
. gas and_ divided it through the period. -
on how nuch gas we're going to have, 7 million MCF, and we have
^~
23 divided it through the period at Sayreville.
Ihat's the way 1
24 l it appears ;c me.
q\\s 25 i l
q Well, if it was divided through the period, l
Goldstein-cross 535 I
r^T V
uould that not indicate that each and every scnth you wculd 2'
see core lessor oil utili:stion in the after-gas adjustcent:
3 than betsre-gas adjustments?
4 A
It depends how you divide it.
The net effect 5
is a reduction in oil.
4 6
Q Didn't you say you divided it equally?
7 A
Not necessarily equally.
We've backed out the 8
requisite accunt of oil by the 7 =1111cn cubic feet that 9
they have offered us, or thereabouts.
10 Q
You didn't back any Out from Septenber to
,i 11 i
December, inclusive.
Is that correct?
l'
^
i A
That's the way the adjustments look over here, 2
i
()
and thereafter we backed it all out.
We backed out a signi-a 1
i 14 l g
ficant portion.
15 Q
Why did you not back any out in the September I
16 l through Dec ember period?
17 A
Let ce just check my notes.
18 Part of the reason is that we're having an 19 outage in Unit No. !4 in Septe=ber through November.
I be-20 !
lieve the entire Unit No. 4 is down.
21 22 23 24
-m I
s.s 25 i i
2L Goldstein-cros s 536.
1
-m I)
Q Unit :io. 4 at Sayreville?
v 2
A Yeah.
3 Q
Uell, doesn't Jarscy Cantral burn the cheapest 4
fuel it can, whenever it can?
5 A
Yes, it does.
6 Q
Well, if gas is available in September and one 7
particular section of a generating station is out of service, 8
I take it that the oil is more expensive than the gas; isn't 9
it?
10 g
A I would say yes.
11 Q
Why wouldn't we see the impact of an outage 12 i
or a partial cutage of a generating station show up in a
(~)
13 4
\\-
3 reduction in the oil burned rather thad -- we haven't seen i
14 i.
that offect, at least I don't see it, and correct =e if I'm 15
- j wrong.
I 16 A
I think if we're going to be ek out more ex-17 pensive fuels, and we have already offered to you the opinica 18 that the price of oil is going to increase in the future, 19 then you would be wiser to back cut the oil as it increases.
20 rather than nou.
21 The price nou is low; the price in the future 22 is going to be higher.
23 q
If you turn back gas in September, doesn't it 24 '
i
{}
recain there someplace for you so obtain it in 1981, or is it permanently lost?
Goldstein-eroc2 537.
1 A
I think it 's permanently lost.
I don't be-2 lievs it's available to be recovered.
3 q
geli, if it c permanently lost, that means i
4 there's no point in -- or maybe you could expand on this as 5
to why it might be uorchwhile to burn oil earlier and back 6
it out later when the price is still higher, 7
A
'lell, I would suggest that the price of oil 8
is increasin3 The availability of gas, depending upon the 9
uinter, cay be more plentiful in the spring.
10 Q
Mr. Goldstein, in Septe=ber of 1980, which II g
will be core expensive, gas or.3 percent sulphur fuel?
10 g
A 3 percent culphur oil.
3 1
(~)D l
13 l Q
And if, therefore, if there is no need to --
s.
a 14 if a cortion of the generating station is down but the over-15 all requirements for fuel in that Eenerating station are re-16 l duced, would it not be logical then, may I ask, to back the 17 oil out rather than the gas in that conth, given your pre-18 vious tes timony that if you do not take the gas in the fall 19 period, that it's permanently lost to the Company?
20 A
I would believe it would be more logical.
I'd 21 like to go over a record and check some information.
no Q
You said you believe it would be more logical
- 3 to do something.
To do what?
'4 A
Under the scenario that you're proposing, I I)
'5 would believe that it would be more logical to back cut the I
i
Goldstein-crocs 533.
l
[~)D cil.
x 2
E And the scenario. I'm proposing, is the realis-i 3I tic scenario as you understand it?
g 4
A Realistic if we get the gas.
5 Q
- dell, you believe you will get the gas?
6 A
My own personal beliefs are not what the gas l
7 i
company accribes to all the tine.
2 8
Q Uell, the gas company has told you that the gaa 9
l would be available throughout the winter except, I believe, 4
10 from New Jersey natural, ycu said, for 30 days, which you
=
i
11 i
testified is the coldest days, and they don't occur in Sept-12
,j enber, the coldest days, do they?
rs 13 k-)
f.
A No, but we don't have, as I say, a fixed con-i 14 i
tract for gas with New Jersey natural.
It's on a best efforts 5
15 j
basis.
They have indicated to us that they will supply us 16 with the gas uhen it is available.
17
- 51. KIRSTSN:
F.ay I suggest that we take 18 a recess for lunch?
I think the colloquy be-19 tween Counsel and the witness is not getting 20 anyplace.
21 Ine witness has indicated that he would no
~~
like to have an opportunity to check with his 23 back-up people as an explanation for the ques-24 !
tion that Mr. Makul criginally proposed, and r3
%-)
25 i
that is the lack of the gas adjustment --
1
)
)
G olds t ain-c rosa 539 I
apparent lack of the gas adjustment during a O
2 cartain period in the figures.
3 I thinh that information can be pro-4 vided for hin directly without goins through 5
this exercise in futility.
6
- G. :GrJL:
If I =ay say something, 7
Judge Marshall.
I disagree with Mr. Kirsten.
8 I think rather than getting nowhere, we're 9
gatting quite far.
10 JUDGE MAREEALL:
Without making any 11 ruling upon any ec cents regarding the =erits 12 of the colloquy, I will note that one of the
{)
parties asked ze if we could break at 12:00 13 a
i 14 o' clock.for lunch and it 's now 12:00.
So, d
15 we'll break for lunch.
.i 16 Off the record.
17 (A discussion was held off the record.)
18 JUDGE 'SRSEALL:
5'e 'll meet back here 19 at 1:30, 20 (A luncheon recess was taken. )
21 22 23 24 i
/^-
l C
25 l
540 f
i 1l A?TERNOON S2SSI0:i o
2i J 3GI MAPsEALL:
We are ready to go en 3,
the record new.
. r. Kirstan, would you liks I
4 to introduce your witness.
5 Ma KI?sT.m.a:
nr. Finfrock.
6 IVAN R.
?INP2OCK, J P., sworn on behalf of the 7!
Petitioner, testifies as follcws:
(
I 8
DIP 3CT E:GMINATION 9
aY Ma. KIpsTIN:
10 Q
Mr. Finfrock, will you plaasa give us your 11 l position with the GPU System and Jersay Cantral Pcwer & Light i
l 12 ! Co=pany, in particular, in a brief resu=a of ycur backgrcund?
1 13 A
I am a Vice Prosidant of Jersey Central Pcwer &
O
.4.
i 14 !
Light.
My exact title is Vice President-Generatien.
l 15 l Currently I am responsible for the 16 { operatica and maintenanca of all the Compey's generating r
I I
facilitics.
17 I
I IS In additica, I currently oversas the i
l 19 ;
activitics of our 2nviron= ental A' fairs Departrent.
I am l
1 a member of the Board of Directors of the Cc=pany.
I have 20 l
l 21 l been employed by one of the Operating Companios in the GPU 22 System for the last 28 years.
23 i Essentially all of my experience has 24 been in the area of design, ccnstructien, start-up, b eting l
4 O
25 ane >==e==1aan=1r the cPe=seien =e c== =ue1e== < citizz e
i i
(
i j Finfroc'<-direct 341 0
' i, or= tar C==ah.
Q Ncw, in thasa procasdings thors has been a
~
3 rafarenca to a schaduled outage at Cyatar Croek in'he fall 4l of 1980, I beliavo, cc==encing in October.
Are you familiar 1
t 5I with that schedulad cutage?
l 6'
A Yas, I am.
7 8
9 4
10 :
11 12 O>;
13 i j
i 14 '
i j
15 l i
16 l 17 IS 19 20 '
1 21 9
22 23 i
I 24 O
i 25 i
i l
l i
i
Finfreck-direct 542 Q
Would you tell us the reasons for that schedulod
\\
l 2 i outaga?
I 3i A
All right.
As a rsault of the accident at 4
Thrse Milo Island, the Nuclear acgulatory Corr:isaica oventually 5
published a docu=snt which is known sa Nou Rog 05073, which i
6 net forth the things that needed to be done which we generally 7
charactorize as T!!I lessens learned.
8 These ito=a wors put into two categoriaa 9
by NRC.
The one group was kncvn as Cat 2 gory A, the second 10 group as Category D.
i 11 l Tho Category A items woro requirsd to I
I 12 ; be cc= plated by January 1,1980, and the Catogory B ite=s O'
13 lcu==e=e17 are verceivea to de cc=g1 t e 37 3a=u==7 1 1981-l 14 When the currantly schedulad outage in a
f 15 l the fall of this year was established, it was dons with the i
16 j porceptica that we would be able to be prepared to ce=plota
/
17 the catagery B ita=s at that time.
18 Subsequent davalcp=ents have told us I
19 '
because of a lot = ors engineering work than we had anticipated, l
20 !
in some areas, the criteria was not fully dafined and we're i
21 now finding in sona areas also that it's going to be diffi-22 cult to obtain all of the equip =ent that needs to be precured l
I 23 f in order to =cet all of the Catagory B cancerns, hcwo rar, we i
I 24 new then find curselves in a pcsition whernby vs will be O
25 asking the Nuclear Regulatory Ccenission for sc=o relief l
li l
Finfrock-direct 543 O
i <=== **= 3=====7 1, 1>a1 e=*
==a z==v c= --
* **1
i=
oi l
~l
=7 cwn judg=ent ncv -- that wo will be succusaful in chtaining 3
i some reliof, but car *sinly not all of it.
4 In oths: words, I believe that the 5!
i Nuclaar Ragulatory Ccerdssion wculd requ re us to do all of 6l
! those things that we can do prior to January 1,1981 and if not, shortly thereafts: as we can.
8 I think the situation would b3 cna in 9
which we have to do what we can do and will ba required to 10 clearly dezenstrate some kind of a hardship why we can't do i
f II it any sooner.
I l' I y
l So, it would be air plan to cbtain sera i
q I
8 13 j partial defar==ent of Catsgery 3 ite=s until perhaps, in the b
i I
I4 i early part of next year, but in my judg=ent, if the NRC i
i l'
15 l continues with the policy that they did for the category A I
16 items, within the next six conths it willbs necessary *w 17 l have one, if not parhaps two, shutdewns to perform as much 18 of that work as we can do.
19 Q
When you say cne or perhaps two shutdeuns, is 20 this a changa in what had been indicated previously to the 21 parties, that the Octcber scheduled outage was to be post-s 22 poned until soretime in 1981.
23 A
Yes.
Ithink so, yes.
24 Q
All right.
Mr. Finf rock, is there so=e
-a-O I
25 ;
striction abcut shutting down Cystar Creek during the win'ar?
l t
l s
i Finfrock-direct 544 1
A Yes, thara is.
We have with the Federal Govern-2
=ent, and thic is the Fadaral Depart =ent of Environmantal 3i Protaction, what is known as an UPC2s per.it, which has a i
4 conditien in it that does not par-.it us to plan a scheduled
-I 3
j outags between the 1st of Cace=bar and the lot of !? arch.
6 That ec=ea about becausa of the cold
-i'l weather and the cold watar and the potential for causing 8l some fish =otalities from shutting d:mn in the wintor.
9 i
So, what we do has to be sandwichod 10 between that, if you will, unleas, of course, and I'm not i
else j
11 an attorney, but if we were ordered by sc= acne /to chut dcwn 12 in those winter months, than I guess we'd do that.
i Oi
'3 o
vou ata aut ac = i= 3 au =v er 19aov i
\\
14 l A
That's right.
f 15 Q
How did you manags that, in light of those 1
l 16 ;
restrictions?
i 17 A
Okay.
At that time we had an order from the 18 Nuclear Regulatory Con =ission to cenplate the Category A 19 items by January 1 We got a little relief from that order 20 which caly extended to January the 5th, and we shut down.
21 22 23 l 24,
l 3
25 i i
i l
0 Finfrock-direc s 545.
(}
Q So thac, in effect, the IIRC requirements took 2
precedence over that winter rastrictian?
3 A
Thst's correct.
4 Q
And 13 it your testimony that if the NRC re-5 quires a shutdown for the other items in the winter of 1930-6 31, that it would also affect those restrictions in the sace 7
way1 8
A Yes, it would.
9 Q
As of this point in ti=e, sir, what is your best estimate of the effects of these requirements on a
planned outages for Cyster Creek frc= new through, say, of i
August of 193'*
13 4
s A
I guess that depends a bit en whether we will 14 i
need to have one or tuo, and we do not knew that at this 5
15 g
point in time because we do not knew the extent of the re-I 16 lief froc the January 1 dcte, I would think that like most anything the longer One could delay it, the more one can get 18 acco=plished.
However, there are things that we do per-19 ceive that we can accomplish later this year and I do be-20 lieve in ny judgment would be required to do them because 21 we will not be able to demonstrate that we're not ready to no
~~
do the=.
23 l
If we need to do it in pieces it may well I
24 a=ount to three weeks or scre:hing like that for the first
~3
\\_)
25 {
l piece and another three weeks or so in the second piece.
I 71nfroch-diro :
546.
j 1
r~~
q Do you recall testifying last year, or was it
(.)T 2
this year, anyuay, at acce previous date, in respect to the capacity of Oystar Creek?
A Y3s.
l I
5l Q
At that time you refer to the history of l
6 Oyster Creek.
Could you summarise just briefly your view r
7 as to the esticated capacity ra e of Cyster Creek based on 8
that history?
9 A
What we have been doing in dae last several O
years in makins not generation estimates for the output of
~
11 j
the plant is to, first of all, determine how long scheduled i
outages or an Outage would be normally in the course of a
<~s 13
(,)
{
year, and then we have assuced that for all the rest of the
.i 14 i
time when ue perceive the plant to be running, that the
~
5 15 capacity factor will be 85 percent.
We have done that t
16 strictly based en past performances of the station.
That 17 takes into account fluctuations in the output of the plant i
18 that are dependent upon the cir':alating water temperature.
19 It takes into account the reduction in load 20 on the weekend to change the control blade and the reactor 21 l
around so we can core efficiently burn fuel, and it takes 99 into account the tines that the plant is simply forced out
~~
23 cf service for seversi days for whatever techanical dif-og,
~
l ficulties that ca r ccer.
~
O) 25 l
(_
4 Has this recent prolonged outage of Cyster Il
71nfroc %-direc t 347 I
Creak aff ected your judg=en: in respect to your es tiaate of
-]
2 the capacity of the plant in the future?
3 A
Ouring the, I :hink you called it a prolonged 4
outage, we did determine some ce:hanical difficulties withia 5
the plant and uithin one of the plant's safety systems.
6
- ! hen I add that to the leesons that have been learned fro
7 Chree Mile Island, and when I also add to that the fact thaa 8
Oyster Creek is One of ten or cleven plants which the 'NRC 9
has involved in its systecatic evcluation program, those 10 tan or eleven plants are the older plants, and I put all
,i II j
those things together, it would be my judgment that over to y
the coains years it would be necessary to have longer out-("')
ages than we have previously had up until this year,
%_/
J 14 j
In order to perform the modification work Unat I believe we would want to do and I taink would also be 15 16 required in order to continually enhance the safety of the plant, kaaping in tind that a lot of things have happened 18 in the last 15 years in terns of design criteria which guide i
19 the building of nuclear plants and Oyster Creek.
20 Although it can operate for ten years, it was 21 designed perhaps 15 years ago, and I think we would need to 20
~
back fit over the years what I have oftentices said would 23 be everything that is back fitable, a s i
k 21anh yOu 3ir.
3123d OpOn 7 hat, do y:u have I T'
(- T 05
/
any opini:n as to the 35 perc en: capacity factor other than
~
i
Finfrock-direct 543.
1
(
scheduled outcsos with respect to Oyster Creek as far as the 2
future is concerned?
3 A
I believe that over the cosing years we will 4
find the 35 perc ant nu=ber to be too high; that we are in a 5
mode today as no have been in for a nu=ber of years and that 6
=cde will certainly accelera:e by the T:.E accident where the 7
regulatory require cnts are escalating rapidly.
The net 8
result of that is the fact that there is core things to do 9
and more testing to do and Eoce of which tay not permit the 10 plant to achiave its last ten-year history of an 85 percent 11 capacity factor.
12
()
I i
14 i
5 15 l 16 l i
17 I 18 19 20
[
t 21
. 22 23 24 A\\J 25 <
i I
l I
1 2infrock-dirset 549 1
Q What has been the experianca in generaticn O
2l for Oyster Crcok, say, for the month of August, sines it is 3l back in service?
4 A
It has not been 35 percent.
It has been =cre 5
like 60 percent for tho =cnth of August.
Ne go t a briaf shut-6 dcwn.
Ua had to go through a lot of new startup tasting pre-7l! cadurt.s.
8 As an example of the escalat.ed regulatory 9i concern area,when the people at Brcwn's Ferry plant and TVA l
I systan had difficultios with their centrol reds, all of them 10 l 11 !
going into the reactor that is spread across the wholo I
i 12 I nuclear business, particularly the boiling water reactor s
13 l segcent of it, like ws have at Cyster Creek, we were requirod O<
l 14 i to then perform a lot of different testing to docenstrate our i'
5 15.
control rods were working prcperly.
That is an example of n
i 16 l the kinds of things that the track from that pravious 85 17 '
porcent capacity facter.
18 MR. KIRSTSN:
Thank you, sir.
The witness is available for cross 13 ;
examination.
20 JUDGE MARSHALL:
Do the parties wish gg to have a few minutes to review their notes?
22 23 l MR. MAKUL:
I think we are ready to go.
24 25 1 i
l
l "infrock-cross 550 I!
C203S EXAMIBIATIO:I O
2 37 gp,,333g3, 3l 0
Mr. Finfrec'c, you referred to a pcssibility
!4' that because all of the engineering is not complete or not 5
fully developed that there may be soms equipment which may 6
he unavailable, that it aould not be physically possible to 7
do all of the CatsgeryB, TMI lesson learned modification, 8
in October, is that correct?
9 A
That's correct.
10 Q
And one of the alternate possibilities you ij 11 !
outlined was that you might have to take a shutdown in 2
1 12 f Occober to do whatsven: you are prepared to do and then take g:
i 13 l another eno at a futura data to cenpleta the remainder of 14 l the lesson learned?
a 1
I f
15 f A
Yes, that is a possibility.
I I
16 l Q
When would that second shutdown occur under 17 that scenario?
IS A
I thbk that that second shutdcwn, should we 19 l be abla to get into the ocda whersbywe have to shut down, I
l 20 '
because I think it is very clear new we will not be able 1
21 to completa everything in Octcher, the second one would be 22 determined by the availability of the equip =ent, the com-l 23 l plation of tho angineering.
24 l
O i
25 i
i i
8
1 pl
! 71nfrock-cross 551 i
1 A
If we ara able to cbtain tha kind of r311af tha,t i
~!
I've bean addressing, it eculd bo that tha no::t ordar that ws-1 3[
get frc= the liuclear Regulatory Cornission will rsquiro that i
4l everything be dens by the 1.st of January or chut dcwn.
5l We would lika to avoid that.
That cer-l 6I tainly is not in the best interest of anybody.
O But with respect to tha two shutdcwns to complata 8
the lessons learnad, barring the :1RC ordering you to shut dcwn 9
completaly, if you were to havo an outage in ectober to ccep1 ta whatever could be cc= plated in October, when in your estimatilcu 10 II l I
h.
would the sacond shutdown occur to cenplata the rc=ainder of l' j itoms that ara en the Taw Rag 0578 list?
~
3 2
O:
' l A
nased on uhat we re=ceive*=dar, I a',k the 14 outago, if requirsd in October, wculd be maybo throe or four 15 l weeks.
When we have the next ene would then dopend upcn 16,
what kind of an orfer or direction thatm get frem the Nuclear 17 Regulator ( Commission which I do not knew at this time, but 18,
if we'ro going to do it in pieces, I think wa could safsly l
l 19 l say anothar 3 or 4 weeks in the early part of the year.
l 20 Q
So the and result of doing it in two steps 21 I would be 3 or 4 weeks to cceplats stap 1 and another 3 or 4 22 weeks to complate step 2?
23 !
A That's right.
)
{
24 a
- s i: not the original es-"ats shnt cergle*&g
' O
,5 averything in ene shutdevn would take five weeks?
~
i
552 l Fin! rock-cross i
Il 3
- yes, O
So, the result of tha two shutdcun route vculd 2
3 be a total cutage of six weeks to oight uenks?
I-4l A
It could well be, kooping in =ind that there is raadf 5l a lot of head end work in simply ahutting devn and getting/to 6
work and ones you have tha work, there's tallend work to get 7
it ready to s tart again.
8 If you have to do that twice, then you I have two ticos the tail end and the head and work to do and 9
10 that's why two cc:as out lenger than ene.
3 11 Q
When is Cyster Creek scheduled to have its i
l 12 ! mixed cutage for refueling?
A Okay.
- de had, I believe, the last official 13
- j I4 ij tima was in Cetober of 1981.
ife are new getting ready to i
j 15 change ' hat, if you will, se that that outage for refueling I
. will begin shortly af tar Thanksgivingl9 31, close to tha first 16 l 17 l of December -- hcw about Ncyc=ber the 30th, t
18,
O I see. That particular outage, is that the I
f 19, time in which thare's going to be an a= cunt of verk dcne en i
20 the sparger in the er.ergency cera cooling systen which had-l 21 the crack probisms?
l 22 A
Yes.
23 i JUDGE MARSHALL:
I'm sorry, how do you b
24 sgoll that?
O v
25 MR. MA.CL:
I think it's 3-p-s-r-g-e-r.'
1 l
l i
+
l
j Finfroc't-cross 553 t
q 1l m 37 :E:SS:
That's correct.
O 2 i JUCCE MAPS 3ALL:
Ckay, thank you.
i 3j 0
As a racult of having to do those repairs in i
4 addition to a normal refueling, would that cutage bo expectad' 5
to be a lengthy ena?
6l A
Are you asking me do I expect it to be lengthy?
-l
't Q
W211, how 1cng, approxinatoly?
I 8
A WEll, wo have not ecmpleted all of the scheduling 9l and critical path plan and manpcwor levels that's involved in 10 planning such a major outage.
11 I would think that the mini =un will be i
12 f 3 months.
.i l
O.:
13 l 0
I see.
The uAC h=ohe<hwn ehe exI 1e==cns 14 learnod work into Category A and Cat 3 gory B.
What is the 2
l 15 '
distinction between Category A and Catogery 37 l*
l 16 What was the MRC's philosophy in putting 17 work itams in two different categories?
18 l A
Let me try to si=plify that as much as I can.
19 l The items that were in Category A were tie items that the NRC l
20 perceived could be achieved in a very short ti=efra=e, lika 21 by the end of last year.
22 The Category 3 items are generally those 23 that, if you will, ta'<e = ors work, taka core engineering, l
24 i ::icra dasign, ars = ora dif ficult to cenpleta and, therefore, N
25 in sc:a reccgnition of practicality, a icnger peried cf tiro r l
f, Finfrech-crec 554 Ii was permitted for these.
i 2!
Q
- Tc'r, did Jersey Contral cc= plats all of the 3li Catogory A items by tha Janua:y 1, 1930 daadlins?
4i A
11 0.
As I provicusly testified, we didn't stard 5
=any of them until January the 5 th, but they were all ec=-
6l l
plated before we restarted the plant, 7
Let =e clarify that --
S O
I think I undarstand what ycc mean.
I 9,
i 10 11,
2 l
12 l 1
'I O!
I 14 i
15 l 1
1 16 !
17 18.
19 20 l 21 e
22 23 j a
i 24 mU 23 i
i i
I Finfreck-cross 555 I !
A The ords: vas to have the itans compleced by mU
,l!
January 1 or, in our cace, January 5 was i:llo rod, or shut dcv:2 i
3i the plant and completa them.
l 4l So, we woro in the latter part of the 5
case.
6l l
Q Co you knew of any other licencees, plant 7!
licensass, who had to ccaform to Category A and whether they 8
all ec=plotcd the work by tha January 1, 1900 deadline?
9l A
I think that we all get the sa=a ordor.
I'm 10 }
I not personally aware of whether overybody got everything dena.
i j
11 l There may havs been e:ctannating circumstances of ens kind or 12 l other for sonebody else, but I'm not aware of that.
g 13 Q
So, you're unawars as to whether, first of j
14 i all, whether anybody was unabis to meet that deadline and 1
e 13(
if they, indeed, were unable to ceat it, what happened en e
t 16 the NRC front.
You have no knowledge of.that in that nrsa?
17 f A
Nothing specific.
I i
18 j Q
Okay.
Do you knew the rosson why you wero t
I 19 unable to complete the work prior to January 5,1930 on i
20 the Category A items?
I L
21 '
A Some of the Category A items involve procedural l
22 j changes which were cc=pletaly prior to January 1.
Other l
23 I cues involve nachanical system or electrical syste= changes 24 that could net be dene,hile the plant was running.
O 25 Q
In c he= we=es.== heve cc=gleted th=ee Ceteso=2 l
l
l Finfrech-cress 556 1 I A itams prior to January 1st would have requirad taking tha plant out of cervica to cenplate them all?
3 That's cor$ect.
A i
4, O
Assuning the "aC allcwedpu to do so, I realizo I
5 that's a big assumptien, would the Category B ite=s he c om-6 pletable in the timeframe of the next Cystar Creek rafueling I
which I baliave you caid would start around December of 19317 8
A Yeah.
Should the N2C permit that, I thin's it 9
was my testirony, howsvar, in my judgment, that will not be 10 '
permitted.
II
.i O
W311, you stated in your direct testimony that 12
-- you mentioned something about damenstrating hardship in j
t i
O:
i e==== oz=== = etius eaa =caeaute-i 1
I4 l What kind of hardship are you referring I
j 15 l to as a possibis ressen for requesting the NRC to be mors i
i 16 !
lonient with regard to this deadline?
17 A
I think it wculd be nacassary to detenstrate IS !
to the NRC, in ordar to obtain delays, that it is impossible 19 for us to obtain the materials such as new valvos that will i
20 !
be required to maka so=e of the Category 3 items in the ti=e-21 frame set forth for the January 1, 1931 data.
22 It will also be necessary to demonstrate l
23 :
that we have been forthright and effielent in cur engineerine i
i l
24 endeavors and cur specificatien endeavors :nd precurament 25 andeavors to try to get it, but if it's not availabla in the 1
i l
i Finfrock-cress 557 l
1, country and you have to wait for someone to mako it, that's 2;
l it.
That's the hardship that I was referring to.
3 Q
It does not refar to any kind of financial 4 ;i hardship?
5 A
No, sir.
'6 Q
Now, Mr. Kirsten asked you about the plant capacity factor in August, and I beliove you respondad that 8
it was in the 60 percent range, but didn't that August period --
9 I can't that be viewed as a accewhat atypical poriod in that 10 the plant was returning frem an extended outags, and that you I
f II i
had to go through ths Brown's Forry related centrol rod testo?
I i
A WB11, I think what you're addressing is the case 2
O he=e wherehr our assu=9tio= ce 85 re=ce=t is eco hish.
.I 14 i g
l Q
No.
The question I'm asking is whether or not
{
15 the factors that led to 60 percent were semewhat atypical
't i
16 I in that August represented centh where the plant was being
{
l 17 l returned to service, and it's my understanding it's not like I8 a light switch, that you just turn it en or off, you have to i
19 ease it into service.
20 A
That's correct.
I 21 l Q
And also, it was necassary to do these tests 22 to make sure that the centrol rods would go in and out 23 l pursuant to the Brown's Ferry incident?
24 A
Ckay, buti=plicit in the August 60 percent O
V
'25 nc=ber, the plant tripped off the line.
It was off for l
. _ ~
'q Finfrock-cr:ss 558 !
l eIi saveral days.
{
2 O
And what caused that trip out of servies?
t 3*
A Ch, gas, my mind is blank for the =oment. Us i
4 had at that tins ac:a difficultias with the ccnventional 1
5-sacendary part of the plant in the turbine system and in the i
6!
cendansato systam in which the aute=atic centrol sys:cm I
7 precipitatad a series of ovants which in turn tripped the i
8' rsactor, which required rsadjustrant of a let of the 9l sacendary systam controls.
10 ;
Q Could that trip-out in any way havs been viewed i
11 i by the fact that that incidant occurred, the fact that tha
~
i 12 ' plant had just returned frem service from a lengthy outage 2
13 as centributing in any way --
4 l
14 A'
No.
I believe the root causa of tha problam, 15
- as I rocall it, was a ralay failura, which could happen most
- i 16 anytimo, whether tha plant is returning frem an outage or 17 l vhother it's running as it is today.
t IS :
That's part of the censiderations that i
l 19 '
are in the 95 percent number that we received.
i 20 These things do, indeed, occur from time i
I 21 to time.
22 Q
But the fact that the capacity factor was in 1
23 j the 60 percent range frem that menth, it was very definitely l
24 1 centributed to by the fact that the plant was returning back O
25.; '===== ="
5
- =d **= ***=5
=*=21 "*==r
=x=* ""cx i
1 1
l l
Finfrock-cross 559 e
I
- service, and also the fact that it was necascary to do a q
b o
3rown's Ferry type tast?
3:
A We had already done the Brown's Forry typs 1
4l tasting prior to ths :nonth of August.
Tha requirs=ents today 5'
now are that when the plant trips off tha line, you do a 6l larga part of the Brcwn's Ferry :mquired testing every ti=e t
7 befors you restart.
8 9i I
10 i
11 !
12 l 8
3 I
O:
23 :l I,'.
14-1 5
15 I I
16 l l
17 l l
l l
1s l 19 l
20 i i
l 21 li l
l 22 j 23 !
i
-l 1
24 j O
25l l
l I
t 4
I i
l
,m e
.-,g---------n
,,w
,-----r,-----,--..n-~~,-
--e-re,-
e---"-----or w-w--
-,--w----
~
-v-*w-
q Finfrock-cross 560 I
li
(~)
l A
(C:ntinuing.)
3o 1 believe that is censistant 2i j
uith my testimony that I still think the 85 percent is too 3!
{
high, and it may well turn cut to be shorter or s= aller in 4
the future.
5 1
You centioned 3 0ce:hing about circulating 6
water temperature limitations.
Could you explain core fully 7'
what those are?
8 A
Ihe net output of the electricity from that 9
plant depends on the temperature of the circulatin6 water 10 that cools the cain ecndenser for the turbina.
2 11 Q
If I =cy interrupt for a second, is this water 12 l
that is takan from the bay?
N 13 A
Yes, it is.
If the water taken out of the bay x:
14 i
10, let to just use a general ters, very warm, its ability 5
15 y
. hen to cool the condenser is soccuhat decreased.
The stea:
16,
l Going through the turbine and into the condenser just doesn't 17 i l
get condensed ;oo fast when the water is very warm.
That 18 establishes a condition that engiae:rs call back pressure 19 or higher back pressure on the =achine and, therefore, it 20 jus t doesn't rake as much electricity.
21 Lhen the circulating water coming into the 22 condenser is colder, like it is in the winter, then that 23 '
I colder water h23 the ability to condense the stea: cocing cut 24 l
cf the turbine ccre rapidly and so the back pres sure On :he }
(^s.
t-)
25 i
1 turbine is 1:ver and therefore the sa:e arount of stea= going l
I
Eintroch-cros s 561.
into it can maka core alectricity.
That is a ce==on pheno -
s
(_)
~
cna of any generating stati:n.
3 Q
It is now late Au3us t; 13 the a=bient tempera-i 4
ture, the water in the bay, at Or close to the maximum at 5
this time?
6 A
I did not have time dais corning to look.
7 3ack in July, uhen Ne had the hot weather, the bay te=pera-8 ture uns very high.
In fact, the inlet temperature got, I 9
believe, as high as about 86 degrees and normally there has been a 20-degrca increase in temperature as that unter goes 11 i i
i through the condenser.
i 1*~ ;1 Ihere is an absolute uccar li=1t en the allow-(_-)sj 13 ;l able te:peratura of the outlet water of 106 degrees, and i
14 I i
for a Nhile in July we were forced to operate at a reduced 15 l i
capacity se that we would not violate the absolute tempera-I 16 l ture of 1.e d'ocharged water.
17 q
Do you know what the te=perature was, s ay, 18 '
within the last week of water going into the Oyster Creek 19 l
station?
i 20 ;
A I;o, I'm not certain.
Sotewhere between 75 to
'l
~
80, I would guess.
no f Q
I take it that if it is lover now than it was
~~
I l
23 in July, that at least for the next six months this circu-24 lating water :amperature limitation sh:cid not be a pr:ble:;
s i
)
25
'~'
which causes you :o derste Oyster Creek in any way?
I l
I i
562.
Finfrock-c ros s I
(m)
A As lon.; as the weather stays the way it is.
2 Q
You centi: nod somethins about, as another ex-3 ampic, as to the reason why a plant cannot operate that flat 4
cut all the time, somatning about a control blade adjustment; and you cention that dais adjustment is cade on the weekend.
6 Why is it made on the weekend?
7 A
We usually do it on the weekends when the 8
syste= load is lower than Monday corning, for example, and 9
we reduce the plant output to 60 to 70 percent so that the i
10 nuclear engineers have a lot of margin in the power distri-11 bution pattern within the reactor core so they could put in 12 i
blades, take scma blades out and set the power distribution
()
adjusted to.what it needs to be so we can officially burn 13 j
14 the core and the power is rais ed again to the full capacity.
5 15 j
Q Fould it be a fair statement that the reason 16 why this planned reduction in output occurs en weekends is 17 that the replacement power cost is Inwer en a weekend d an 18 !
the average replacement pouer costs, if it were to be done 19 randomly at some point in the week?
20 A
I as not an expert on replacement power costs.
21 Q
You did say it was because the system load is 22 lower?
23 ll l
A The systea load is lower, so I think what you 24 13 say is probab' cor ec:.
Q
(_)
25 '
l Q
With respec
- o :he additional work that night
i i
71nfrock-cross 563 I
{}
have to be donc bcccuse Oyster Creek is becc=ing an older 2
plant, whicn I believe you indicated the NRC for varicus 3
reacons are looking at more closely, how would that fact 4
impact on the plant capacity fcetor7 ilould the planned out-5 ages tend to be longer or would there be r. ore than planned 6
cutasas?
Ex?.ctly how does that vork to reduce the capacity 7
factor of the plant?
8 A
In cy judgcent, over the next several years 9
the pla..ned outages will be longer in order to accomplish 10 the uork that we will need to do as compared to the five or 11 s
six-wack outages that we normally have had over dae last 12 j
nine or ten yearc.
(
Q It will not result in an overall rerating of i
14 i
the plant?
8 15 j
A I don't anticipata that it will.
I 16 Q
Other than the lesson learned outage which 17 we talked about earlier, there are no planned outages be-18 tueen now and August of next year; is that correct?
19 A
That's correct.
20 Q
The 35 percent figure that you quoted, does 21 that take into account plcnned outages?
22 A
Ho, sir.
23 Q
It does take into account, shall we say, a 24 pro rated share of forced outages?
(_)
25 A
Yes.
i
Fintro f.:-c ross 564.
{ l 0, Iloaldn't ths plant also operate at its capacity factor if wo exclude the effects of these forced outages and 3 planned cutages but only for things such as the weekend 4 control blade work, for enacple? 5 A Let ce preface ny concents. I find nyself in 6 an unfortunate way. I live in the real world and when no-7 thing goes wrong, when there is no forced cutages, when 8 there is no need to reduca pouer for One reason or another, 9 then the plant runs at 100 percent, but that sinply is not 10 the world that wo are living in. i k II JtEGE IGRSHALL: 17e vill take a ten-12 i ninute recess and be back here at 2:30. () (Whereupon, a recess was taken.) 1 j 14 s 5 15 I 16 17 18 19 20 21 22 23 24 25
3 ?inrock-cross
- 965, I
(3 JUDG2 2'idiSHALL: Eack en the record. \\-) ,~ 3Y M2. MAKUL: 3 Q 2r. Finr ch, as things stand right now, the 4 TMI lessons learned oucase, which is ccming up, has that 5 l been fornally scheduled by the Ccepany? 6 A tie have presently scheduled it starting in 7 Cctober of this year fornally. 8 Q Lhat day in October? 9 A Ch, I's corry, I dcn't know if I have that in 10 ny eclendar or not. I think in about the niddle of Octoberm a 11 Q And for how long will that be out? 12 l A I think it's scheduled new for five weeks. I () { Q And this is in spite of the fact that the i 14 i engineering work is not complete and not expected to be 15 j complete for that outaga? 2 16 A Very early in September we intend to make a 17 submittal to the Nuclear Regulatory Commission explaining 18 to then that we cannot accomplish all of the things that 19 would be desired by January 1,1931, and that submittal is 20 now being prepared and will not only explain that we cannot 21 do it, but why we cannot do it. Q So, the Company la going to formally be asking 23 for so=e scrt of relief? 24 A Yes. (# 25, Q '4 hen do you expect a response to that petition i i
i l Finrock-cross 566. 1 (~/) Or requaso that is suppoed to go cut in early September? 2 A I would certainly hope before the end of 3 3eptenber. 4 CROSS-ELMC!ATIC!i 5 BY IG. :TA2DELLI: 6 4 Mr. Finrock, as part of the submission you "s are =nking to the !!cclear Replatory Com ission, will you 8 be requesting that this cutage, which is ccheduled for some-9 tice around the ciddle of October, be delayed until 1981 so 10 that you could accomplish everything during cne cutage .~ 11 rather than tuo? 12 j A The ecst desirable thing frc= the Company's () f point of vieu would be to defer everything until the end of i 14 l i i 1981. 15 ' i. Q That's what I was getting to, and will that be 16 part of your request to the IIRC7 17 A I doubt very =uch cecause our posture has al-18 ways been ens to take a very positive stand with die NRC be-19 cause very clearly there are things that can be done before 20 January 1, 1961, and it's been my experiene <er the last 21 20-some years with the old AEC d.nd new the Iluclear Regulatory ho Cot =ission, that it's not in the best interest of anyone to 23 ask for things that are perceived to be unreasonable, and 24 so I think we 7:uld point out, and there say very well te (~'/\\ n-3 sote 1:eos which simply cannot be done until the end of 1981, s_ t i I i
I Finrock-crcs s 567. I but there uro it scs hat can be d:ne this year and ite=s 3 2 that can be d:ne in the early fall of ne. t year which we'll 3 be prepared to 60. 4 We are certainly not reluctant to do the things 5 that the Nuclear Regulatory Cc::13sion has perceived not to 6i be dene, because I think it's in the best interest in en-7 hancing the ability to cperste tha plant better, but I dcn't 8 think I would ask for the noen when I don't really expect 9 o 3g3 it, 10 Ihat's not been our posture with the NRC in 2 11 the past and I do not perceive that we would change it now. 12 Q C0uld you be = ore specific about what you are I (') 13 l going to ask for? You've nentioned that as of now, you're a 1 14 l scheduling for c five-teek outage, but you have also testi-15 l fied earlier today that if you went out in two stages, this 1 i 16 i first outage cculd be as short as perhaps three weeks. 17 Is that one of the things you'll be asking 18 for, to reduce the 01:a of the cutage, this first outage 19 occurring in Cetober? 20 1 I 21 22 23 i 24 A(_) 25 ' i i l l
i j Finfrock-cross 563 1 A O Wa may ask to defar things until very early i2i 1981. If ths posture of the Nuclear Kagulatory Cc:rtission I 3 remains the same as it did with the Category A items, in 4 which we really got no rallef excapt for a coupla of days, 5 it is :rfindgment that we will be roquested to do overything 1 6! that we're prepared to do before this year is out, and then 7 possibly some things deferrod to aftar January 1, 1931. s till 8 Q Mr. Finfrock, there/see=s to ho some doubt in 9 your mind as to what the Company's submissica to the NRC will 10 ! consist of. 11 You've tastified that this submission 1 12 ; will be made in earlySeptember of 1980. It is new August y i 13 1 25, 1980. When will you and the Administrative I.aw Judga 14 know what the subnission will censist of? j 15 l A Well, we started out with a target date of i i 16 l having that submittal completed by Friday, and it is -- 17 Q Is that this Friday? 18 A No, this past Friday. i 19 i I hope to be able to have it completed I 20 by the and of the week, hopefully by about Wednesday, 21 Thursday. 22 Q Wednesday, Thursday of what week? 23 I A This week, but whatsver happens, based en =y i 24 Iexperience, I cannet foresee a nechanis= whereby within the i 25 ll next six =caths c'.: so it will not be necassary to have perhaps l 4 --,,,r----v-, -n. e --e
?infrock-cro3s 569 i i p Ii four waeks, five wee *cs, =aybe si:c weeks, depending, a:s I J 2f proviously taccified, it ec=ing frem two placss to ene picco. 3' lin. IIARCELLI; !!r. Kirston, could you 4 supply the parties with tha 1sttar to tho : tac 5 when it becc=us available? i 6j na. xIastgN: Yos. 7 !G. 2GKUL: I believe that ec=pletas our-8, questicus for Mr. Finfrech. i 9 JUDGE !!A3SHALL: Okay. Miss Bello? l 10 l MS. SELLO: Wa havs no questicns. 11 4 JUCGE MARSHALL: Ifr. Sahradnik? ~ i 12 ! MR. SAHRAI"1IX: Just eno question. q 13 l C2C33 EXAMINATION V f l 14 ! 3Y M2. SA3RACNIKa I i 15 : 0 You had. =entioned when you were initially talking t i 16 i about capacity facter, chat during the outage there wara 17 cartain mechanical difficulties that were observed on the i IS l safety system. 19 l Is that something above and beycud the \\ 20 ! spargar problams? 21 A The sparger situatien that we encountarod was n.o ! certainly the most major one. Any other ite=s that we i 23 l encountered during the cutage vore of a =crs =inor nature and acce=plished within the ti=efrs=n of the sparger werk 3] 25, needsd to ha done. i
Finfrock-cross 570 i O 1l 0 All right. So, these probloca or difficultias i 2 that were cbuarved have in fact at this point be.en corrected? 3 A Yes. They have been corrected to the point 4 whors we as well as tha NRC are confidcnt that the plant can 5 be safoly cperstad today. 6l 0 All right, thank you. Il JUDGE MARSIIALL: Any quoctions on re-l 0 direct? 9 MR. KIRSTEN No. 10 JUDGE MARSHALL: Okay. Thank you verf 11 much, Mr. Finfrock. 12 Do you want Mr. Goldstein to take the ] 13 stand now? i 14 l i i MR. MAKUL: Yes. i f 15 LAWRENCE G 0 L D S T E I N, previously sworn, I i 16 resuces the stand. 17 I MR. KIRSTEN: With your permissicn, sir, 18 so=e of the questions that were asked of Mr. 19 j Goldstein before the lunchacn recess referred i 20 j to schedules which were not prepared by hi n, I i 21 i but by Mr. Furlong, who is en Mr. Preis' l 22 l staff. 23, some of the questions that were asked .!4 cf Mr. Goldsrein were to recencils certain 25 figures which he submitted dth those schedules. i i -,, - -. - ~ -, -
Finirock-cross 571 I I have Mr. Furicng here, who was ,, 1 directly involved in preparing those schedulos, 3' and I thought it might expedita further cross 4l examination of Ifr. Makul if he's going to pur-t 5l sua that lins, which I assu=o he will. I 6l Mr. Furlong might be availabla to discuss t ., i d the schedules. b JUDGE MARSHALL: All right. Do you want 9 to have him sworn in and sitting thors also? 10 MR. KIRSTEN: If that vculd be permissible. i II l JUDGE MARSHALL: Any cbjections? g i I2 ! MR. MAKUL: No. 3 \\ 13 f DANIEL M. FURL 0NG, sworn en behalf of Jersey i l l 14 l Central Power ELight Co=pany, tastifies as folicws: I f 15 l MR. KIRSTEN For the record, will you i 16 l please stats your position with Jeracy Central i 17 ! or GPU System? I, 18 l MR. FURLONG: Yas. I'm a staff accountant 19 with Jersey Central Pcwer & Light in the 20 t Special Accounting Capartment. 21 MR. XIRSTEN And you report to Mr. Paul 22 Preis? i i 23 j MR IURIENG: Y33, I do. 24., i l 25 ] l I j i
3 Furlong-Gold::tein-cress 572. 1 O '2. KIRSEli: And some of the questions v 2 which were referred to by the Counsel, by 24r. 3 Goldstein this corning, were prepared by you 4 or in your department? 5 IEl. FURIGIIG: Yes, they were. 6 I2. KIRSTIII: Diank you, sir. 7 MR. 2/AIUJL: I take it that we have two 8 uitnesses now, and whoever feels more com-9 fortable with the ques tions vill handle it; 10 co I uill just generally direct the questions. 11 12 i. CCI!TII.7JED CROS3-EXAIIINATICH p 13 4 V BY I!R. IGKUL: i 14 i Q ITnere we left off this morning, as I recall, d 15 j I recall that a recent change in assumptions that gas which 16 was thought to not be available from I!ew Jersey Naticnal for 17 its Sayreville Station is now going to be available for at 18 least the majority of the winter, except possibly for the 19 coldest day? 20 A (Mr. Goldstein.) Let =e back up and explain 21 oy error this corning. Looking at the budget here, I got 22 confused by the previous budget. me gas will be available 23 and the gas is in the budget through the end of the year, 24 through Dececber. V 25 i l Q So therefore, the budget that was at the upper i 1
Furl:ng-Ocidst ain-cross 573 (') portion of that page, I was referring to Page 2 of 3, JCA-3, l I us 2 that badge; already includ23 these additional gas availability 3 at Scyreville; is that nou your position? 4 A (Mr. Goldstein.) Tact's correct. i I Q By die cost recent budget, would that be this 5 6 budget uhich are fuel cost forscasts, which has been carked 7 JCA-8? 8 A (Mr. Goldstein.) Yes. That uculd be what we 9 refer to as 3-plus-9 Q Are these facts and figures which appear in 10 i f II JCA-8, which appear on F36e 2 of 37 12 A (Mr. Goldstain.) Yes. That's correct. I'T 13 (_/ j Q And these numbers in JCA-8, are they before a 14 as adjustnents or after gas adjastsents? 15 A (Mr. Furlong.) The top section is before gas j 16 adjustnents. Q What does this conform to, the top half? 17 I8 A (Mr. Furlong.) The upper section, yes, the 19 before gas adjustments. 90 MR. KIRSIEN : Are you referring to the ~ 'I upper secticn of JCA-87 ~ 29 MR. FURLONG: The upper s ecticn of ~ '3 JCA-3 i of - I uender if you right de a sangle reconcilia-Q ~ 73 k) n5 i j tien for ce? It is :y understanding that the.3 percent ~
Furlong-Golds tein-c res c 574. I No. 6 cil is cnly burned at the Sayreville Station and the (~h \\# 2
- !srner Station; is that correct?
3 A (Mr. Goldstain.) That's correct, and only 4 Sayreville gets gas. 5 Q Cn JCA-3, the oil to be burned at Sayreville 6 and 'derner are stated separately, is that correct, on a 7 canth-by-conth basis? 8 A (:Ir. Goldstein.) That's correct. 9 Q Then you have combined this number to come up 10 with an overall barrel requirement on a centh-by-month ~ 11 basis? 12 A (Mr. Furlong.) That's correct. ~ (~T Q I wonder if we can look at June of 1981 for 13 R a 14 the Sayreville Station? 15 HR. KIRSIEN: Are you looking at JCA-81 i 16 MR. MAKUL: I an looking at JCA-8, 17 Page 6.1. 18 !R. GOLDSISIN: June of 19817 19 Q Yes. Now, is it correct that Une number of 20 Gallons of oil that is projected to be burned at Sayreville i 21 in June of 1981 13 5,262,282 gallons? 22 A (Mr. Furlong.) No, that is incorrect. The 23 fuel ecst is in dollars, the line above that which is the i 24 gallons, 5,711,553. () 25 Q I think tha: nay have ar.swered =y cuestion. t l l l
=. E i i-j Furlong-Gol:is t oin-cros s 575. I So, th2 numb 2r of gallons that would be burne,1 2 -at Sayr?7111e ticuld be 5,711,000 gallons; is that correct? 3 A' (l'e. Fur 1* q.)
- Yes, x
4 J 5 1 6 l l 7 3 I 8 [ 4 9 4 1 i 10 i I k 4 11 12 4 i O /- 14 i, ) T* l 15 s 1 1 I 16 i l 17 1 18 19 20 I 21 22 23 24 ! i 25 i "Vft M-r*W+W evv WWree wE99'W-m--ge W g M ww@ N WT rehig eo We 'WDT** N W WFW6WW T-T@*- .,wr.- W h
- N** M W,
,.8$ WW W D T 4 W g N* *4*"T D W W T M "WM TW T
l Furicng/Goldstein-creas 576 l 1 p i Q Tha cc=censurate figure for ths same nonth at O ,i Uerner would be found en -- l 3 A (Furlong) Paga 10.1. 4 Q Page 10.1. And that would be 1,372,000 gallens? A (Furicng) That's correct. 6 Q For a total gallenage cf 7,083, approximately. l i Mcv, this has to be convarted to barrala Sli to be consistant with the other e::hibit? 9 A (Furlcng) That's =crrect. 10 Q And that is the derivation of that nu=ber that i 11 is in Mr. Goldstain's c::hibit? 12 l A (Furicng) Yes. g 2 O o ze wo=x= cut to 99==xt==* 17 159,ooo 32== 1=2 14 A (Furlong) Righ t. 15 l Q Now, with respect to the gas that is burned at i i 16 l Sayreville, what is the quantity of gas that is expectad to i 17 ~be available frem Maw Jersey Natural Gas? 18 l A (Goldstein) Over what period cf time? 19 l 0 On a per month basis, f 20 i A (Goldstain) On a per month basis? 21 Q Not taking into account, cbviously, the scnth 22 whers the system require: tents caused them to interrupt tha 23 ' flow to Sayraville. 24 A (Goldstain) They tendar gas as they have it. 25 There is sub=ittals, cen tracts, letters of agroenent when 4 l,
ruricag/ Golds tain-cross 577 l they hava a tencativa quantity of gas on a 60 day c=ergency O i basis. That varies, depending en what they ara abla to cb-2i sh so I nally cannot say eat we get a consisunt met 3 i of gas every month. 4 0 Is thers a new budget or updated figuro that 5 raflecta your best estimata as to how much gas will be 6 availabls to Sayreville en a month by conth basis? i A (G Idstein) I think JCA-4D has cur best 8 estimate of gas available. 9 0 " " ~ ~ " " "I 10 E basically as follcws: Augus t 19 30, 600,000 MCF or parhaps 11 1 600,000 MCF, Septanbar, 600, Ochcber, 600, Nove=bar, 300, g, a i December, 300, January of '01, 300, February, 300, March, 13 j 700, April, 700 and continuing at 700 a month through August?' g I A (Goldstain) 3ssentially, they are the nurbers. 15 16 j I thir.k you have got scre nu=bers ccnfused there. 0 Uhich cne did I confuso? A (Goldstein) I think that in March it is 500, l not 700. The total gas here that I add up is 6.8 million 9 MCF over a 12 month LEAC period. l MR. MAKUL: May we go off the record? l 21 JUDGE MAliSEALL: Off the record. 22 ; l (Whereupca, there was an off the racerd 23 ; I l discussion.) 24 i JCOGZ MAPS 3ALL: 3ack enthe record. x 25 l l l i t l l
l Furlong /Goldatain-cross 578 l 1 Q Mr. Goldstein, the highest figure in any mcnth ,l that 40 seo is 700,0002CF3. Thia represents a linit that 3 New Jersay Natural cannot daliver any mers or is this the b 4l maximum which can be utilized at the Sayrovilla plant? l 5! A (Goldstain) No. Nov Jersey Natural can da-II 6 liver about 850,000 MC? per mcnth when they have it. 7 0 Uell, why then ara you purchasing or projecting 8 to purchase only 700, if they are capable of delivering 850 9 in so=o cenths, and I note that the 700 appears in the next 10 summer's figuros. j 11 A (Goldstain) That is based on our perceptien 12 of availability. 2 O: 13 ! Q rhat isinsed en 20== sercegtson of what wist I 14 be available at that time? 15 I f A (Goldstain) New Jersey Natural has indicated i 16 that they will probably have up to 7 million ECF availabis. 17 We show 6.3 =illion MCP available. 18 0 I wonder if you could compara that 700,000 19 MCF figure to what was actually purchased in April, May, 20 l June and July of this year? l 21 A (Golds tain) Well, let's see. 22 Q For Sayreville and how that cccpt. red to your 23 budget. 24 A (Golds tain) In April, they canderad 733 2nd 25 we had 600. These are all thousands. i i I I
Furicng/Goldstain-cross 579 l Q 1f Q They tendered 733 which pu consu=ed, but the 1 2' budget -- 3 A (Golds tain) Indicated 600,000. For May and 4 June we also weIs above our budget. 5 Q Specifically, Mr. Goldstein, am I correct that 849,000 w5 en the budget shows 600,0007 6 in May you burned t i 7 A (Goldstein) Corrset. 8 9 10 i~ 11 12 l ~ O 13 w*i 14 i 5 15 :. i E 16 I 17 18 19 ' 20 Il 22 23 l 24 - 0 l 1 25 [ 1 i i I l l ll.-.
33 Furlons-0cidstain-cross 580. I Q In June you burned 762,000 when the budget O 2 showed only 300.,000? 3 A (Mr. Goldstein.) That's correct. The 300,00C 4 reflects an cutage of three months that we anticipated would 5 cecur. That never did occur because of Oyster Creek being 6 cut of service. 7 Q And in July of this year, 890,000 was burned 8 ccapared -- 9 A (Mr. Goldstein. ) Versus 300, because again we 10 anticipated that outage, and that cutage has slipped down tc II September, October, November. Now, the signific nt point of 12 g that is that represents excess gas on the Texas eastern pipe - ~ ~ 13 I~) line which New Jersey Natural has a take, or gets on a take \\ms I I4 l or pay basic, and they pass it en to us at a very low cost. f 15 Q Are you projecting any more purchases as a re-r 16 cult, in the next 12 scnths, as a result of si:11ar circut-17 s tances ? l 18 A (Mr. Goldstein.) No. In fact, the end of tha; 19 inexpensive gas occurred about three weeks ago or four weeks 20 ago. 'l Q What about the quantity of gas? I believe you 22 indicated that New Jersey Natural can deliver 850,000 and I 23 see in July it was 890,000. i 24 l A (Mr. Goldctein. )
- Tss, 5
Q That is over the 850,000 figure? i l i l
Furlong-Golds t ain-cros s 581. () A (Goldstein) I'n sure that we have a plus or 2 minus 10 perc nt in there. line capacity is 1200 MCF per 3 hour and to the extent you cacnot exceed it, that represents 4 the capacity. ITou, it might be instead of 850, it might be 5 8'30. 6 (Furlong) I balleve it is about 893,000, which 7 would be the canimum on a 31-day month. 8 Q Iiow, it would appear, then, that so long as 9 this gas is available, you can burn it? A (Goldstein) Ihat's correct. 11 Q At the rate of 8907 12 A (Goldstein) Uhatever they can tender it at. () 13 If they can tender it at 890, that's what we can burn. If i 14 l ' hey only tander it at 890 in one conth -- as I said, that 15 j represents special gas. That is surplus gas. 16 Q Can we generally say, then, so long as gas is 17 available, you can burn up to the 890 rate? 18 A (Goldstein) That's correct. But as I told you., 19 New Jersey Hat.iral indicated that through August of next yea: 20 we will be getting approxicately at cost 7 million IM. 21 Q And what do they base that on? 22 A (Goldstein) I'm in no position to say. 23 q How much was received over the last calendar i 24 (~N period? N-) 25 A (Goldstein) From 19797 Is that the que stion: l
Furlon;I-Colds tein-c ross 582 I r-you are aaking? \\ 2 Q Yes. 3 A (Goldstein) I don't know if I have that in-4 for:ation available. 5 Q It cay not be crucial. 6 Now, a gas pipeline is being put into the 7 Gilbert Cocplex; is that correct? 8 A (Goldstein) That's co. rect. 9 Q And that is from S11zabethtown Gas? A (Goldstein) That is from Elizabethtown Gas. 11 Q Is it correct that that a5reement provides that 12 i that sas will be priced at a price of $6 per MCF? 13 () f. A (Goldstein) Ihat's correct. i 14 i Q And is it also correct that of that $6 price, 5 15 3 about $4.33 is actually for the cost of gas and the balance 16 is soce sort of a payment for facilities charged? 17 A (Goldstein) That is a pay back on the 18 facilities that are being installed. 19 l Q And once Elizabethtown Gas fully recovers its 20 l out-of-pocket cost of installing that facility, the Co=pany, 21 Jersey Central, can buy that facility for $17 A (Furlong) I believe that is correct. 23 Q And so actually of the $6 cost, $1.67 of it l 24 is going for the gallen and not for fuel, per se; is that a ! (~') 25 fair character 1:ation? l l
Furlon.3-Golds t ein-cros s 583 1 .1 (Goldstein) That's correct. Let me clarify U 2 tha t. Ihat gl charge, not for the pipeline. That $1 is 3 for the improvements, the improvement in the combus tion 4 turbines that allous us to use dual fuel. 5 Q I sec. Chose improvenents, are they being 6 financed out of the $1.67? 7 A (Goldstein) Th1t's correct. 8 Q Uhat is the status uf those purchases frca 9 Elizabethtown under this new contract? About when are they 10 supposed to co=cence and at what quantities? !j 11 A (Goldstein) The new contract start in April 12 when Elizabethtown anticipates having their pipeline and
- i 13
~' (G conbus tion turbines completely modified for gas. They will i a 14 tender h.2 billion cubic feet of gas over a seven-month 15 period running from April to October, i: 16 17 ) 18 19 20 21 22 23, 24 o.5.I ~)
1 Furlong /Goldstein - cross 5 34 } 1 A (Goldstein) (Continuing) And the cost wor'd '] i g3 V 2 he $6 per MCF. 3 Q I wondar if you could explain the basis upcn 4 which you estimated the ecst of gas that would be burned at ] :. I I 5' Sayreville over the next 12 =onths. By cost I mean the 6 price per MCF, i I 7 A (Goldstein) Price per MCF was again based on j S a budget escalation of 12 percent. Mcv, that prico in light-I 9 of what we now know is low. That price over the L"AC period 10 is 3.52, as per the schedulo n"-bar JC-A.4D. f The more realistic price would be ap-33 I proxi=ately in the range of $3.30 to S4 per MCF. 12 I 13 MR. MA.~UL: lir. Kirste., it was my im-() i 14 I prosaion --- I don't know how you feel ---- i s 15 l it was my impression that the record this morn-i 16 l ing was left sc=ewhat confused as to exactly how much the price of coal was escalated by 17 I MR. Goldstein off of what base and whether IS - that base was actual or from a budget, which 19 I would characteriza as an estimated price. 20 ; If you wish, perhaps Mr. Goldstein l 21 could have an opportunity to let us have it 22, ,3l one more ti=c as to what the basis was of the coal forecast. 24 na. "IR3CI:I: I think Mr. Furlong is 25 f 1 i l i 1 i l I i
r2 Furicng/Coldstein - cros3 585 in a nosition to answer that question. I e y C) i 2l had a note that there was some confusien that j uu e I was Scir.; to try to cicar/cn rsdirect. Do 3 you want ne to ask him a question? 4 ^ 8* E **"** 5l M2. KIEST7M-Thers was scre discussion 6 this corning chout how the calculation of the 7 8 coal price increases were figured in the schedules, Mr. Furlong. 9 10 M2. KIR3 TEN: Ceuld you clarify that 11 f r "*' E e" ? l 1 2 i WIT'TESS FURLGiG: Well, this budget 13 I i is a three plus nine budget and I believe the 14, s i i coal prices were escalated on the March 5 15 -
- i actual cost for coal at Keystons, which Mr.
16 Goldstein referred to this morning. 1., If You look in the fuel forecasts on 18 Page 13.1 under March, you will see on Line 9 29 the coal costs eer ten of $24.96, which 20 was referred to this morning. That is the base cost on which this budget was escalated. Now, for the vear 1930 from March to i 23 ll l 1 the end of the year, the cost was escalated. 24 l _) at a rate cf 13 cercent. 25 I I i
..I , Furicag/Goldstain - cross 586 f I 3Y MR MAEUL3 i v 2 Q By 13 percent, do you mean that the price esti-cated for March of 19::1 uculd be 13 percent higher than the 3 actual prico experiencod? 4 5 A (Goldstain) This would be calendar to the end l \\ I 6 of the year to Decemb3r of 1930. 7 Q I sea. Thirteen percent through the end of 8 19807 9 A (?urlong) Right. 10 Q Is that 13 percent an annualized rate or the price will go up 13 percent in a nine month period? 2 33 i A (Goldstain) Thirteen perc2nt over a nine month 12 -8 O; 13 v'=1 *- Y Q And than what is the assumption for the con-34 tinued escalation in 1931? f 15 A (Goldstein) Tfolve percent. 16 O By 12 porcent? 37 A (G Idstein) An annual basis. IS Q .Tuelve parcent on an annual basis? 39 A (Goldstein) From January through December of 20 981. 21 O So that if we're covering an eight month '3 l peri d, that neans on an absoluta basis you forecasted an l i eight percent increase? l G j C/ ^ IU Id** 1") I! th*" "h** th* ***b'#* * "k 25 ! l l l
4 Furlong /Goldstoin - cross 587 1 out. + Q I c. S that vould be frem the prices that 2 E" u*
- 'I
~ ~
- ^^"*
- 3 13 percent increase to the and of the year?
A (G ldstein) Correct. 5 Q And then upon that new base, which if we start 6 out with a hundred, an inden baced on a hundred percent, a by the end of the year it's up to 113, and then that 113 8 is raised by an additional cight percent to give you, let's 9 see, roughly 122 by the end? i A (Goldstein) That's correct. 11 Q So essentially would it be~ fair to say that g i you'Ve aS3uned that the price of Coal in August of 1991 g j will be approxi=ately 22 percent more expensive than coal 34 in March of 19807 15 A (Goldstein) That's correct, if those numbers 16 come out. 17 Q But in actual e::perience, the coal prices in April, May and June are lower than budget? 20 21 22 ~ 23 f a 24 25 i I i I i
Furicng/Goldstain-cross 533
l s
i i
i 1
F
,4 Goldstain - cross 500 i
/3 1I when is the work schedule for naintenance at Savrov111e U
2 I that will reduce its ability to tako gas?
l I
3' A
Yes.
I bolluve/can ans**er that.
Cayreville 4
Boiler No. I is cc=ing down for a threo month inapection, 5
Septc=ber, October and tiove.=ber.
Sayreville 3oilar no. 5 6I is coming down for a three rcath inspection January, Fobru-7 I ary and March.
I 8
0 I think parhaps tha nent qucations are = ore 9
appropriato for ::r. Furlong.
Uhan you first came up to testify with respect to soms of the confusion that a::isted 10 this norning on the additional gas going into Sayrovilla, 11 12 l I take it, is it your position that the budgot that was Ol 13 v=eva==a 1= ^e=11 or 198o at==e.az tactuaea exi= ea=>
I j
14
.\\
(Furlong) No.
What I said is that the budget d
15 l the three plus nine budget assu=es being burned at each of j I
' I i
the four units that burn gas through December of 1980.
I r
16 17 0
IICW s since this budget has been prepared is it true that still greater quantitics of gas will be availa-18 ble over and above the quantities projected in tha budget?
19 i
i A
(Furlong)
That is really a question for Mr.
20 i Goldstein as to what quantity vill be available.
21 Q
Mr. Goldstein, is there going to bc = ore gas 22 available than appears in the budget?
I 23 :
A Ue are shewing appre::i=ately 6.3 =illion MCP.
,,4
~
I believe that is the nu=bar that IIew Jersey :;atural has 25 i
i i
s
601 s3 Ccidataia - croca I
said they could dalivar to us during that period.
l 2
Q Cces the 5.3 nillion I*C7 figure reprascat the most likely figura in your viaw or is it the abacluta cani-3 4
cu.: figure?
5l A
I would say the 6.3 million I;CF represents would what New Jerse.y Natural says, so I would imagine that/repre-6 7
sont their ost likely tendar.
8 9
10 i
11 12 13 4
1.
=
14 i
i:
15 16 17 i
18 19 I
I 20 l
21 i
22 23 I
24 i i
i' 25 l i
I i
...m.,
..._,--..__~-----..-_._.-,.._.-._.-__-_.=_..-_.--..-m
602 Furicng/Goldstain-cress i
1 1l Q
And what quantity of purchaas fres :Tew Jersoy O
2f
!atural appearad in the budgot, the original 3 plu.3 9 budgat?
I A
(Furlenq)
In the 3 plus 9 budget you ars refarring 3l l
4 to just the I2AC. pericd?
5 Q
Yes.
6 A
(Furleng) 2,100,000 cubic foot.
7 Q
That is budgated 2,100,000?
8 A
(Furlong)
Yos.
9 Q
And the adjustad budget ncv includos how much?
I 10 '
A (Furlong) 6,800,000.
!j 11 Q
Aro there any gas supplies which now based en 12 current kno.<1sdga which you new belia te you are going to I
adiusted 13 receiva which did not appear anywhere in ths/ budget?
f 14 l A
(Goldstein)
Of the I2AC period, no, I dcn' t i believe thors is any gas available that are not covered by i
15 i i
I t
16 i tha schedule.
I 17 0
With rsspect to tha timing of the gas prica 13 l increase, did you assume that they went into effect en a i
19 month by month basis in a manner similar to your projection l
20 l for oil pricas7 i
A (Goldstain)
Yes.
Ha put them in on a renth gg I
22 l by menth basis.
23 0
With a linear escalation?
A Yes, that is raflected in the schodule.
24 O
25 Q
aow a=e those >=1=es actue112 dete= mined 32 i
, ?uricag/Goldstain-cross 603 I
New Jersey :Tatural?
O 2
A I don' t undarstand your question.
t 3'
Q Uoll, the price you assumed, thora would be an
\\
4 !
escalatien rats or an a= cunt of inersase over the LEAC period, 5
if I understand you properly, is that correct?
6 A
Right.
i 7
Q And you assu=ed that it would escalata en a 8
month by month basis linerally?
a 9
A 703.
10 Q
And anyt gas purchased from New Jersey Natural?
jg l A
Correct.
5 I
12 i Q
How do they set the prica?
Q 13 f Do they change it en a month by month 4
i 14 ;
basis?
I 5
15 l A
Nav Jersey Natural buys gas for our account en 16 l a cost plus transportation basia.
Whatever their cost is, they pass on to 17 is us plus a 40 cent per million F.C?, plus a 40 cant 11CF trans-19 portation cost.
Q Aad in terms of getting this gas for Jersey 20 Central Power & Light, is Jersey Central having New Jersey 21
- atural go out and line up special centract supplies or does 22
! F; tis represent a surplus over and beyond New Jersey Naturs1's 23 t naed drcn the scr=al supply? ,4 i A NOV JGrse'f.* :tural Contracts additional gas for
604 Furicng-Coldstain/ cross I g Jsraey Central above their nor=al sys cm capacity. The cnly V ti=a we got their gas, their sys:cm capacity gas is when it 3 is in surplus. 4 Q Nc:r, the centracts that Naw Jersey Natural 5 enters into in ordar to provida gas beyond this special 6 dump gas, do these centracts have a timo duration and if so, 7 what i.: their time duration? 8 A The centracts hava a tina duration of approxi-9 matoly 60 days right ncv. They are gatting what they call 60 10 days omsrgency gas forair account and to the extent that they 11 can find gas out in the field, g that'a 'tni they hander it. r t 12 g Q Dc they meet your requirements by assigning ene i 13 60 day contrace of ena supplier or several centracts with s 14 aovaral suppliars to meet your requirementa from several 5 15 sources? i 16 Uhich do they do? ~ 17 A They do both or ena. 18 MR. EMUL I think we have no more 19 quastions for the time being from Mr. Goldstein. 20 JUDGE MARSHALL: Of this witness, then? 21 MR. MAKUL; Yes. 22 JUDGE MARSHALL: Ms. Bello? 23 MS, BELLO: No questions. 24 ' JUCC MARSHALL: Mr. Sahradnik? 25 Ma. 3AH3AcNIK: No, Ycur Hencr. I i
i 2 i j 605
- f i
i JU4 1 l I think Mr. Makul has thorcughly coverad ths J-L i - I o arsa.
- (
3 1 3 MC2 PrdN: Ib. Kirsten? - t a: MR. KI2 STEN: I have ons or two. I: 1-4 l 's e j 6 1 j 7 1 8 o j 9 l 10 11 } 12 t i 1 2 i d g; 13 I 14
- b i
15 16 3 I L 17 i 18 19 I f l i 20 21 i i t 22 \\ ? 23 i 24, 25 {- l i l i i i' i t l
Furlong /Coldstain-redirect 505 i I I R2 DIRECT 3:CetI:fATIO:1 2 3Y MR. XIRST211: I 3i 2 Iir. Makul acked you about availability of gas. I 4 The period that you referrad to, I think, fas 6,300,000 cubic feet; is that the arount of gas that you are budgeting for 5 6 the so-callad LEAC peried? A That's corract. 7 8 Q Is thet amount of gas based upen the maximum 9 amount of gas that is available to you? A That's correct. That is what New Jersey Natural 10 has indicated is available. 11 i 3 Q T dotarmina availability, are you limited not 12 only by the gas being' for sale, but that there are facilitics (]) 13 { to deliver it to your generators? 34 i A That's correct. f g tj Q Are y u limit d by the facilities that can 16 deliver gas to your generators? l,e 18 l ^
- Y l
Q To what extant dces the G,300,000 cubic feet. 19
- *** """ ##E" I
- E E*
I 20 gas to your generation? 1 A That represents about 65 percent of the line 22 capacity. Q And what is the relationship of the line cacacity l 24 () for the period of time when you would be able to burn gas 1 i i
Goldstein-radirect 607 1 ecencmically, when ycu need that ganaracien? 2;l A About 70 percanc excluding usekind.1. l 3l Q Parden 237 l 4l A About 70 percent excluding weekends. I 5i Q Excluding weakanda? 6l A
- ye3, 5
7 0 Ara you saying, therefore, that if tharc. ucra 8 additional supplies available it would caly represent that o 9 additional 30 percent? i 10 l A Approximately because the units art at rsduced ij 11 loads during the wookend so gas uculd not be burned. 12 C I am trying to get, Mr. Goldstein, to, in i i 13 ' (N) ycur projectien, is there any period of tir.e whan you could 14 l uso gas which are not budgeted because the gas is not avail-s. 15 able or are you in effect saying that you are budgating all l 16 the gas you can possibly use taking into censideration ths 17 availability of the units and the availability of the trans-18 { mission to the units? l 19 A We are budgating all the gas we can, that vc 20 have been tendered. 21 Q So that whether or not other factors veuld in-22 crease the availability of gas in the national market, it 23 would not incroaca the availability of gas to you? 24 t A That's ccrrect. I f () 25 l 0 Mr. Makul r2farred to deragulation. Could you ! i l
l Goldstain-racross 609 ^ / Q And what does that due to? oi 'j A That has bacn due to a warm vintor s.iveral i 3! years ago, rathor a war:n winter and also partially due to 4 increased cost and incraased pricas. 5 l 0 Increased prices draw out new supplies? 6 MR. KIR3 5N: I thought I was still on 7 redirect. 8 JUDGI: MARSHALL: I::cuse to? 9 MR. 1(IRSTEU: I don't =aan to interrupt 10 Mr. 21akul -- II [ MR. M.UUL: I didn ' t knew !ir. Kirs tan \\ l '") 4 y wasn't done. I ' I t e ur 1:i==* = *1=1=a ata =eeir ce-O I l I4 MR.-KIPiiTEN: Thank you, rj 15 JUDGE NAMHALL: Excuse ce. In view i i 16 l of the f act that thers is sr.ill sc=s r2 direct 17 and recross and in visw of the fact that we IS have baen going en for an hour and a half new, 19 maybe we ought to taka a break. 20 MR. MAKUL: I think if we go en we will 21 probably be done in 10 minutes. 22 JUDGE ARSHALL: All right. 23 MR. KIIGTEN: I have no further ques-I i 24 -dens. 25 ' r i 4 m.---7 r y y y-
Goldstein-recross 610 1 ~CCROSS 0:CM 'ATIO t O 2 3'l I12. PldWL: 3 0 I think ny inst question that was. ending is t would you agree then, :t. Coldstain, tha higher pricos ha n 4 l 5 drawn out new supplies? 6 A In ona instanco, no.
- 4igher pricas -- tha 7
Algerians ara trying to gat higher 9:icas for their lac and 8 that is being backed out of the.markstplaco. That r2precantu 9 one percent of our supplies. 10 i~ 11 12 8 13 i k s 14 a t* 15 i 8 16 17 18 19 l l 20 t 21 l 22 23 i i I 24 l l i 25 l 1 i i -..,,,--,y e ,-,-4 ,.y--,., _. <. - -, -,,,,,, - - ~ , _ ~ .c,,.,-. -.,,-.,e.-.-.--..-...v- ---y4~ .,w4
4e 1 Gcidstain - recross 611 I Q Mr. Goldstain, I an sure we can always find (~}> s-2 examples and cacaptions but gen 2 rally you just stated that 3 one of the reasons why vc have a bubbla is higher prices. 4 Do you disagree that tha higher pricos have generally drawn 5 out additional supplies? 6 A Yes. Thera ara generally corrolations. Higher 7 prices havo increased well drilling activity. 8 Q Mr. Kirsten was asking you quastians about not whether or/you were burning all the gas at Sayreville which 9 you can econcaically handle and your responsa was we're 10 burning all the gas that we are being tendared. Is that { 11 12 ono in the sama that what you ara baing tenderad is all you 13 can burn economically? What if more is being tandered at (]) the same prica, do you have that capability of using it? 14 Uo cannot use 100 percent of our line capacity. 5 15 A t 16 Technically, no. If sonebody Van to tender us the maximum, oxtend our line capacity, we cannot burn it. 17 18 Q Uhy not? 19 A For technical reasons. The boiler would not f 20 l be able to handle it. What is the upper limit ascuming no pipelina 21 Q limitations or even economic considerations, what in the 22 greatest amount of gas that can be burned at Sayrevillo in, 23 l i any given month? 24 I A Right now 890 MCF goes into Sayreville, 890,000 25 i l f -. ~ e wm
Goldstain - recros3 612 i rs 1 !!CF ' s. That is divided 50/50 between the two boilers. Cna 'A-) 2 boiler can handla the entira loal but tachnically you vould 3 burn the boilar out so no split it 50/50. 4 Q Tha enl result than is what fuel mix is being 5 burned at Sayrovillo as a mixture of gas and oil? 6 A Ccrrect. i 7' Q Uhat is that pcrcentsge, that minturo? 8 A To the antent that we split the gas, 50 parce.7t I 9 goes into one boiler and 50 in the other and 50 parcent repre-10 sents cil, you can go an high as G5 percent in one boiler. t 11 Q Sinty-fiva percent gas and 35 percent oil, is 12 that the responso? 8 (]) 13 A That vould bo my bact guestinate. ~ l 14 Q Uhat has happenad to the gas supply pictura that caused JCPSL to increase its gas consumption estinate 15 i 16 botacon the time of the three plus nino and three plus nine 17 adjcated budget at the Sayrevil'lo Station from the iperiod 1 l is frca January to August of 19317 19 A We have been told that additional gas would l 20 I be availablo by our supplier. 1 21 MR. MAZULt That's all for Mr. Gold-l stein. 22 i JUDGE MARSEAIJ : Any further questions? i 23 i I l '4 i l l l FURTHER REDIRECT 3:CD1INATICU i I s_) 25 l 3Y M2* EIESIEU3 i I
613 .l a 3 , Gollstein - redirect 1 Q ?.r. Cold:tcin, a= I clear chat in response to 7-2 your quastions frem M. Mahul, that it is fair to say that your present budget cente.:platas burning all the gas that you 3 can rassenably uca in theco stations? 4; I 5 A That's correct. 6 Q An I also clear that gas in general has a 7 finita availability? 8 A That's corract. 9 Q That if there ucra mora gas available, if this availability of gas increased by sena magic, by some explors-10 l 11 l tion, by acme now find, it uculdn't chango your ability to nahe uso of it? 12 13 A That's correct. (]) l a MR. KIRSTI:i: Thank you. I have no j 14 I'#Uh*# E"*3DICU8' f 15 MR. UM: One m re. gg 17 FURTHER RECROSS EXAMIliATION BY MR. MAKUL: 18 19 Q You are saying that you are interrupted some 'O days on some supplies from New Jersey Natural, is that not ~ 21 true? oo A That's correct. ~~ I 23 i l. l, 24 ' 25 ' i 4
5u 1 Goldstein - recrosu 614 1 Q If ore gas were generally available, might O) this not raduce the n =bor of days of interruption? (.- 2 3 A h*culd you reycat the question? 4 Q If mora gas ver2 available in the interstate 5 carket, might this not increa:e New Jeracy natural's supply 6 and thereby have the eff:ct of reduce the nn-ker of days 7 of interruption to Joracy C ntral? 8 A We cculd nct get any more gas. We uculd not 9 receive any moro gas under that scenario. f 10 Q If the nu=bor of days of interruption went l 31 down yea would not receive any more gas? I M2. KIF.OTEU: I think the witness 19 I l 13 has testified that the budgat does not con-(:) ,i 14 ta= plate any interruption. Therefors, if hypothetically there was an intorruption f 15 s it wouldn't changa the a= cunt that he is 16 I 17 budgeting. It certainly would change in a hypothetical ticrld the arount of gas tha.t he 18 would get but that has no relevance to the 19 a=ount of gas they are budgeting. 20 Q Mr. Goldstain, is that true, the budgst antici-91 pates no service interruption? 22 I A We are ass==ing an interruption. We are ,3 l 1 assu=ing a 30 day interruption at Sayreville. 7 Q And a 50 day interruption at Gilbert? (J~S 25 ; f i i i I i i 7
a2 Goldstein - recross 615 1 A That is what Elizabethtown has told us. O 2 MR. MA"UL Sack into Mr. 31rston's 3l court. 4 JUCGE MARSIIALL: I presuma that is a 5 statement, that he has no nore questions and 6 I'm looking to see if anybody else has any l 7' oro questions. 8 M2. SA3nADnIX: After reviewing my 9 notas during radirect, I have sc=e. There 10 was one quastion I ovorlooked that I would = f 11 like to pose to Mr. Goldstein. 12 i: CROSS EXAMINATION G 13 By na. SAIIRADNIK: k,_) ' 14 potential Q Mr. Goldstsin, you testified about a/new coal 2 15 contract which you anticipate would take effect in March 16 and a potential 30 percent increase in production cost'is 17 innident'- from that, is that correct? 18 A 'les, that was the best guestimate of our 19 supplier. 20 Q Am I correct in assiming that that 50 percent 21 -~ figure has already been anticipated and is-in--fact-factored 22 into your coal escalation prices for the LEAC period? 23 A No, it is not. So tha 13 percent increase that you mentioned l: 24 Cs j Q 25 ' l \\ i - -, -, ~ -.
Gcidstain - cross 616 Su 3 ; l I 1l does not take into account any type of settlement with re- ._) '/ 2l spect to the coal strihe? 3 ! A No. That tas an estimato of the cost of pro-4 duction increases due to the connection of one mine to an-5 o ther. I also escalated the 1981 ccal costs by 12 percent 6 which does not includs the 15 percent settlement. I I 7 Q So in essence I take it then there is no 8 factor whatsoever with respect to any potential settlement 9 at all? 10 A No. MR SAHRADNIK: Thank you. gg l 5 12 l JUDGE MARSEALL: Any further questions? i 13 (No response.) {} j , g4 : JUDGE MARSHALL: I would like to thank 1 Mr. G idstein for testifying. We will now f 15 a adjourn this hearing to meet at Sparta High 16 School at 7:30 this evening'and we will be 37 here back in Neirark at one o' clock tor.orrow 18 afternoon. 19 20 j Ar2 there any further things that the l parties wish to bring up before we adjeurn g right now? y, 23 l (No response.) I JUDGE MARSHALL: Thank vou. 24 ! O) (WHEREUPON, THE HEARING WAS ADJOURNED \\_ 25 i TO 7:30 P.M., AUG. 25, 1980 AT SPARTA HIGH SCHOOL.) l i l l
4 617 I EXHI3ITS 2' ZO. ECSC.4IPTICII PAGE 3 JCA-5 Cna-pga document entitled 4 Jersey Cantral Power and Light Analysis of Ccal Zurned, Actual I 5 '*ersus Eudset 513 6 JCA-7 Cne,0ne document entitled Analysis of C:a1 Purchases 514 7 JCA-3 Decu=en entitled "Statien Fuel 8 Cost Forecast-Summary"
- 521, 9
f 10 ~ 11 12 I 13 4 4 s i 14 15 O E 16 I 17 18 1 19 20 21 22 f 23 r 24 ' 25 .l 4 . - - -, -, - - -,, - _.. -.,.. -., - -, _.,,, -. - -. -, - -, _, - -,... -,,,,,,. _,..,, -., ~,.
618 3 I li D E X 2 " fitness Direct Cross Radirect 3 4 L% IRE 1 ICE GOLDS CIN 5 By :fr. Makul 474 572 6 608 610 7 s13 By Mr. Kiratan 607 8 612 9 By Mr. Sahradnik 615 IVXI R. FINFROCK 10 i By Mr. Kirsten 540 k 11 Sy Mr. ?!akul 550 12 By Mr. Nardelli 56G 13 O4 Sy Mr. Sahradnik 569 l 14 5 15 l DNTIEL M. FUK' Olig 16 I 3y Mr. Makul 17 572 Sy fir. Kirsten 607 18 19 20 21 22 23 1 24 I .O 25 ' I l ---,,ra,-,- - - - - - - -,.-,,-,,,-,-,.,,,,,,,--.-es, .}}