ML19337A634
| ML19337A634 | |
| Person / Time | |
|---|---|
| Site: | Crane  |
| Issue date: | 09/10/1980 |
| From: | Sweeney L JERSEY CENTRAL POWER & LIGHT CO. |
| To: | Vollmer R Office of Nuclear Reactor Regulation |
| References | |
| ISSUANCES-SP, NUDOCS 8009290357 | |
| Download: ML19337A634 (11) | |
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Jersey Central Power & Ught Company 3h_Okl_
SN!l Madison Avenue at Punch Bowl Acad Mornstown, New Jersey 07960 (201)455-8200 September 10, 1980 Mr. Richard H. Vollmer Director, Three Mile Island-2 Support Office of Nuclear Reactor Regulation U.S. Nuclear Regulatory Commission 7920 Norfolk Avenue Bethesda, MD 20014 Re: NRC Ibcket No. 50-289 - TMI-l Restart Proceeding
Dear Mr. Vollmer:
By your letter dated September 21, 1979, to R. C. Arncid, and Mr. J. C.
Petersen's data requests sent to C. W. Smyth on November 9,1979, you requested us to keep the NRC informed of significant regulatory developments affecting the GPU co@anies. Auordingly, the enclosed material (8 copies) has been sent for that purpose.
Enclosed are the position papers of Jersey Central Power & Light Company in the matter of the Petition of JCP&L for approval of an increase in LEAC factor, BPU Ibcket No. 807-488.
Very truly yours,
.l;.. **
Lawrence E. Sweeney Rate Department
!*c Enclosure cc:
M. Karlowicz (w/ enc)
J. Petersen h bbg D. Carroll (w/o enc)
L. Gentieu
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8609290 357 P
Jersey Central Po ver & Lgnt Company 's a Member of :ne General Puche Utd t es System
September 8, 1980 The lio n o r a b l e Stephen Marshall Administrative Law Judge Office of Administrative Law 185 Washington Street Newark, New Jersey 07102 Re:
In the Matter of the Petition of Jersey Central Power & Light Co.
for an Increase in its Levelized Energy Cost Adjustment Charge BPU Docket No. 807-488 OAL Docket No. PUC 3518-80
Dear Judge Marshall:
In response to your request for a statement of issues from the parties in this proceeding, in Jersey l
Central's view they are as follows:
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Twelve-month Average Cost Period.
The purpose of the LF.AC is to levelize charges to customers while permitting JCP&L to recover incurred energy costs on a current basis.
Tho use of a 12 month period for 1
projection of costs tends to minimize seasonal variartons and spread the costs associated wit'h outages of base load plants and other variations in generation mix.
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The Honorable Stephen Marshall Page Two September 8, 1980 Because of Jersey Central's exposure to radical shifts in energy costs resulting from outages of nuclear stations, it was provided with a 6 month review.
Such a review also was included to relieve Jersey Central of the burden of financing accumulated deferred energy balances for extended periods.
Rate Counsel's suggestion of a 6 month forecast period is inconsistent with the purposes of the ciause and l
i such suggestion will result in a temporary reduction in
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charges during the current LEAC period and will create a i
leveraging to any increase in future LEAC periods.
Such reduction is not related to lower energy costs, but a non-recognition of the outage of Oyster Creek until April 1981.
Such suggestion by Rate Counsel to use a 6-month period is defined solely to shift the outage of Oyster Creek out of the period during which average costs are estimated.
Such a change is inconsistent with the provision which is designed to spread the costs which may occur; the cost of such an outage over an annual period so as to eliminate sharp changes in the level of charges to customers.
It should also be noted that th*s sugg'estion is inconsistent with the present clause and all of the Orders of the Commis-sion which have established the LEAC concept.
This pro-ceeding is a summary one to implement the existing LEAC
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<l The Honorable Stephen Marshall i
Page Three September 8, 1980 i
tariff provision.
There is no hasis for changing that tariff in the context of these proceedings, nor has Mr.
Knudsen provided any compelling reasons to justify such a change.
2.
Amortization of the Accumulated Deferred Energy Account.
The operation of Jersey Central's LEAC provides for the amortization of its accumulated deferred energy balances over a 12 month period.
The estimated energy costs forecast for the next 12 nenths is added to the accumulated deferred energy balance to determine the level-ized billing factor for the 6 month LEAC period.
The theoretical effect is that the deferred energy balance at the end of 6 months would be half recovered.
Then at the beginning of the next 6 month period a new 12 month forecas; is calculated and includes provision for recovery of the such balance over the next 12 months.
Thus, the accumulated deferred energy balance would never be recovered if fore-casts are exact.
However, forecasts vary causing debits and credits and the levelization takes place over a period of several years.
The Public Advocate has recommended that a portion l
of the deferred energy balance related to the extended l
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s The lio n o r ab le Stephen Marshall Page Four September 8, 1980 outage of Oyster Creek be amortized over an 18 month period.
This is inconsistent with the Company's tariff.
Mr. Knudsen relies upon the Order of the Commis-sion in June, 1979, providing for an 18-month amortization i
period for the recovery of the TMI replacement power costs.
Because of the tremendous change in Jersey Central's energy costs, as a result of the TMI accident, the Company filed a base rate came asking for s review of the LEAC factor.
In the context of a base rate case and in light of the tremen-dous increase in energy costs incurred by the Company, the BPU did provide for an 18-month amortization period.
Although Mr. Knudsen recognizes the significant differences and financial ability of Jersey Central with other New Jersey utilities, he ignores the fact that the Commisston tn April of the year provided for the acceleration of the emortization of a deferred energy balance recognizing the need of Jersey Central for additional cash flow.
In light of the fact that Mr. Knudsen is providing for a reduction in energy costs curing this 6 month period, and an increase in the next 6 month period, the deferral of amortization of the deferred energy balance would on1'y have the effect of reducing customer charges now, while increase such charges later; an effect which is inconsistent with the levelized clause concept.
The Company b,elieves that such em-
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The Honorable Stephen Marshall Page Five September 8, 1980 proposal is inappropriate and unreasonable and would create greater variations in energy costs to customers r a ':h e r than the stabilization sought by the LEAC.
3.
PCP Recalculation of Sales Change The Company's filing incorporated a sales reduc-tion of 468 Cwh (JC-A, page 3 of 15) below the sales fore-casted by the 1980 "3 + 9" budget.
The annual dollar impact of this sales reduction was calculated, using a manusi method, to be $22.2 million (JC-A, page 3 of 15 and JC-A.5).
A latter Production Coct Program (PCP) computer evaluation indicated that the annual dollar impact of the sales reduc-tion should have been $26.4 million.
The Company considers the additional $4.2 million annust dollar impact indicated by the PCP computer evaluation to be appropriate and has included this energy cost reduction in the last column of Exhibit JC-J.
4.
P.E./ Salem Pricing Substitution The Company's filing priced the electricity projected to be purchased according to the P.E./ Salem agreement at the Company's estimate of the PJM runnin'g rate.
Rate Counsel has suggested that t h e' pricing of the subject purchase should have been at the PJM estimate of the PJM running rate.
In accordanct with Rate Counsel's request, e
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t The Honorable Stephen Marshall Page Six September 8, 1980 the Company quantified the difference resulting from these two pricing methodologies to be $20.9 million annually (the total of JC-H.1 and JC-H.2).
The Company does not agree that the PJM estimate of the PJM running rate is the appropriate rate to use for such pricing.
As indicated in the rebuttal testimony of F.
D.
Hafer, the Company's latest information indicates that a new calculation of the Com-pany's estimate of the PJM running rate might at a maximum yield a S9 million reduction in annual energy costs related to the P.E./ Salem purchase.
To the extent that all numbers and assumptions are being updated, it would be appropriate that this value be substituted in the last column of Exhibit JC-J (this was indicated by F.
D.
Hafer during his rebuttal testimony of September 3, 1980).
5.
Reduced Sales Forecast The Company believes that Rate Counsel's one percent reduction in the sales forecast related to customer conservation and price elasticity effects is inappropriate.
The Company feels that its sales forecast has adequately captured conservation trends, including customer usage reductions in the first half of 198,0 relative to correspond-e 4g s>w
The Honorable Stephen Marshall Page Seven September 8, 1980 ing periods of prior years.
There is no quantitative basis for further reductions.
The Company contacted Whippany Paperboard Company on September 2, 1980, and was informed that there is no scheduled date for production to resume.
For this reason, the company has accepted Rate Counsel's suggestion to eliminate 64 Gwh from the LEAC period sales forecast.
The
$3.6 million annual impact of this adjust =ent is reficcted in the fourth column of Exhibit JC-J.
6 Split Savings At the time of the Company's filing, the PJM " Cost plus 10%" arrangement between CPU and the other PJM Com-panies was still in the negotiation stage. This agreement has since been finalized.
Assuming a September 1, 1980 effective date, the Company agrees that the annual energy cost savings associated with this agreement ($1.7 million as quantified on JC-H) should be reflected in this LEAC pro-ceeding.
7.
Line Losses Rate Counsel has suggested that the Companys line loss factor has been overstated by'S1.1 million annually."
The Company accepts this reduction in energy costs primarily because it is so small in relation to the total energy
e The Honorable Stephen Marshall Page Eight September 5, 1980 requirements of the Company and.that it is difficult to refine it much further.
This adjustment appears on Exhibit JC-J, column four.
8.
Oyster Creek Operating Rate The Company's filing incorporated an operating rate of approximately 85%.
Rate Counsel has proposed that this operating rate should be increased to approximately 91%.
The Company feels that it is inapprop-iate to increase this operating rate in view of increasing NRC involvement as a result of the Three Mile Island incident and the Brown's Ferry incident, the problems associated with the sparger system at Oyster Creek and the vintage (1969) of the Oyster Creek generating station.
9.
Oyster Creek outage The Company has assumed a five week outage in the fall of 1980 to complete the "TMI-Lessons Learned, Category B"
items before January 1, 1981.
The need for an outage during the LEAC period (September 1, 1980 through August 31, 1981) has not been questioned during the subject pro-ceeding.
The timing of the outage has been an issue as a result of Rate Counsel's proposal t'o use a six-month period for estimating the Company's energy costs rather than the l
twelve-month period specified by the tariff.
The Company l
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l The Honorable Stephen Marshall Page Nine September 5, 1980
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rejects the position of Rate Counsel on the use of a six-month period, as previously stated in this position paper, thus, negating the $17.7 million adjustment made by Rate Counsel.
It is important to note that the Company's esti-mate of the dollar impact of the Oyster Creek outage is conservative.
If the outage is shifted to early 1981, or if the outage must be perfor=ed in two periods of three to four weeks each, the Company's total energy costa for the LEAC period would increase.
10.
Cas Substitution The Company disagrees with Rate Counsel's adjust-ment to reduce annual energy costs by $4.8 million to reflect an additional availability of natural gas for a boiler fuel.
The Company contends that there are those who are already objecting to the use of natural gas as a boiler fuel and that the availability of natural gas is limited by the transmission capability of the gas suppliers.
11.
Coal Prices The Company accepts Rate Counsel's adjustment to reduce annual energy costs by $1.4 million primarily
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The Honorable Stephen Marshall Page Ten September 5, 1980 because the amount of the ad j u s tme n t is so small in relation to the Company's total energy costs.
Very truly yours, KIRSTEN, FRIEDMAN & CHERIN A Professional Corporation
-r By JACK B.
KIRSTEN t
JBK/mcc Of Counsel:
Jamec B.
Liberman
'u William F.
Hyland cc:
Attached Service List I
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