ML19343A653

Order Directing Consolidation of Instant Petitions for Further Hearing,Investigation & Consideration W/Petition Docketed as Dph 20055

ML19343A653
Person / Time
Site:	Seabrook
Issue date:	06/28/1979
From:	Bonsall J, Pote D, Sprague G MASSACHUSETTS, COMMONWEALTH OF
To:	CONNECTICUT YANKEE ATOMIC POWER CO., MONTAUP ELECTRIC CO., NEW BEDFORD GAS & EDISON LIGHT CO.
Shared Package
ML19343A648	List: ML19343A647 ML19343A650 ML19343A651 ML19343A653
References
NUDOCS 8011190396
Download: ML19343A653 (13)

Text

. _ _ _ -_ _ _ . _ _ _ .

PD 9 D W )I I

...,,,.~.,,o D3*yM eJ Rd o .

l ,

.@..- kl{ p hi Dillil10llfl10;t((51, Of c'E N IS G;!' Ijll50llG f:b.j )J. !O

. o,r ;T DEPAI!T. MENT OF PUGLIC UTILITIES

.,.y .//: J u.ne. 2 8..~,. 19 7 9 4 w.;wy ,

~

D.P.U. 19738 Joint Application of liontaup E]cctric Ccupany and No'.i Pedford Gas and Tdison Light Ccr.pany, and tie Ccnnecticut Light and Po.cr Cotpany, undcr G.L. c.164, 5S97 cr.d 101, an amenSS, for appro..il by the D:partw.:nt of Public Utilitics of the purclnse by Ibntaup Electric Ccnpany and t.bw relford Gas and Edison Light Ccupany cnd the sak bj Mie Ccnnecticut Light and Power Ccnpany of c.crtain prcpea:ty and a deter:ainatic.)

that the terrs thereof are consistent.with the public interest.

D.P.U. 19743 ,

Joint Ipplication of Fitchburg Gas and Electric Licht Ccrpany and '23 Connectic.u Light and Pct.ur Ccnpany, under G.L. c. 164, 5597 and 101, as nrended, for appror:

by the Dap m ant of P &lic Utilities of tha purchase by Fitchburg Gas and Elect.- .:

Light Ccrpany of certain prop:rty and a determination t! nit the ter::s thereof are consistent with the public interest.

APPEAR 7CICES : Robert S. Cur.mings, Erg.

Peabody, Droun, howley & Storey One P.oston Place Boutc , l'.A 02108 FOR: '. he Connecticut Light and Power Company I

Michael P. Donlan, Esq.

May, Bilodocu, Dondis & Landergan 294 Washington Street Docton, MA 02100 FOR: New Bedford Gas and Edison Light Ccmpany Richard L. Brichley, Sr., Esq.

Richard L. Brickley, Jr., Esq.

Brickley, Scars & Colo '

75 Federal Street Boston, l'.h 02110 and .

Gerald A. Maher, Esq.

. Patrick J. Scognamiglio, Esq.

Thomas E. Mark, Esq.

LcDocuf, Lamb, Leiby & MacRac  !

120 Droadway J New York, NY '

FOR: Fitchburg Gas and Elech ic Licht Cc'vpany j

' Andrew M. Wood, Esq. )

Gaston, Snow & Ely Dartlett

'One Federal Strent 80111003% neton, nn FOR: Montaup 02)lo Electric Co*T.pany

-p n-- -v._ , - - - -

OP 9 *D'Mi D

.D.P.O. ) 973!! o h.i\ o A, jj. j\

N2

. n.P.u. 19743 Page Two Jamen C. I'cManus, Esq.

Robert Dewees, Esq.

One Ashburton Place Boston, MA 02100

• FOR: Francis X. Dellotti, AttQrney General ,

STATEMENT OF THE CASE On September 22, 1978, New Dodford Gas & Edison Light Company

("New Bedford"), Montaup Electric Company (" Mon taup" ) and The Connect -'

Light & Power Company ("CL&P") filed a petition for approval of the sale by CL&P of a portion of its ownership interest in seabrook Unit-I and II to New Bedford and Montaup (D.P.U. 19743). A similar petit an was filed by CL&P and Fitchburg Gas & Electric Light Company ("Pitchburg")

on September 25, 1979 (D.P.U. 19738).1/

On October 13, 1978, the Department ordered all of the Petitioners to file direct testimony in support of the applications by November 9, 1978.

On November 16, 1978, the Department issued an order of notice scheduling a pre-hearing conference for December 11, 1978.

At this pre-hearing conference, the Attorney General filed a petition for intercention, which was subsequently granted. Information requests were submitted to the Petitioners by both the hearing officer and the Attorney General on December 4, 1978, and December 15, 1978, respectively.

Responses to the information requests were filed by January 15, 1979, and the first hearing was scheduled for /c'cuary 13, 1979. At that hear-ing, a motion by Fitchburg to conso;1' 50 two proccedings was granted.

Pourteen anyn of hearings vere ne]d, concluHng on ,'pril .1.1, ]97'1 11riefs and Reply Dricfs were filed by all parties with the P etitioners' Reply Dricfs roccived on June 1, 1979.

1/ licreinalter, New 13cdford, Montaup, CL&P and Pitchburg arc referred 4.,, e.n 1 1. . ,. : . . s . . ._,.i.- u.... ..

l D. P . tl. 19'i a D.P.U. 19//3 rage Three

, STAUDAnD FOR m:VII:M i .

As the caption of this proceeding, indicates, the companion' petitions have boon brought pursuant to General Laus, Chapter 164, sections 97 and #

11, as amended. Section 97 provides in pertinent part:

...any such domestic or foreign corpor'ation or association may... sell any or all of its property to said first mentioned electric company, or merge and consolidate its capital stock and property with said first mentioned electric company; but, no such purchase and sale of any property exceeding thirty-fiv.-

thousand dollars in value or merger and consolidation shall be valid or binding until the same and the terms thereof,shall ha.

been approved, at meetings called therefor, by vote of the i

holders of at least two-thirds of each class of stock outstand-ing and entitled to vote n the cuestion of each of the con-tracting parties, and uncal the department, after notice and a public hearino, shall have nonroved the snre and the tormt thereof as consistent with the public interest. . . . (emphasis supplied)

Section 103 of Chapter 164 cf the General Law Provides:

All applications for the approval by the department of purchases and sales or consolidation under sections twent.y-six, ninety-six, ninety-seven and o..? hundred shall be filed with the department within four months after the passage by the contracting companies of votes authorizing such purchase and sale or consolidation.

No issue has been raised concerning the timeliness of the companics' petitions as required .in section 101. Therefore we are left with the

solo issue of deciding whether the proposed tra.nsfer is " consistent with the public interest" (G.L..c. 164, S97).

i Not surprisingly, the parties urge us to apply widely differing standards in making our determination of consistency with the public in' rent. The Attocnoy General would have un t e t. n .m .manni ve e .4 . '

and thus connider such factors as the need for power, availabic alterna-tiven, ability to' finance and the public health and safety issues

+

J D.P.O. )9733 ,

Sl)(? Elf ($\b) i 3'

m. {1l{q,:$

.@ j p\ '3 ,

. D.P.U. 19743 ~ '

Page Four surrounding nuclear power. The nuclear power issues raised by the Attorney General include the possibilit,y of a unit malfunction and concomitant off-site release of radicadtivity,,the problem of storage and disposal of spent fuel and the decommissioning process. On the other hand, the Petitioners urge a very narrow interpretation of public interest. They argue that we are constrained to approve the transfe.

absent an affirmative showing of harm to the interest of the public.

. They find the, record totally lacking of such evidence.

In arguing his broad view of consistency with the public inter. .,

the Attorney General relies heavily on Udall v. Federal Poucr Cormir Jyl, 387 U.S. 428 (1967). In that case, the Supreme Court, in dealing w ;h an FPC decision involving a license for a hydroelectric project in the Pacific Northwest, indicated that the issues relevant to the "public interest" for the purposes of the Federal Water Power Act of 1920, as amended by the Federal Power Act, 49 Stat. 842, include:

future power demand and supply, alternative sources of power, the public interest in preserving reaches of wild rivers and vilderness areas, the preservation of anadromous fish for commercial and recreational purposes, and the pro-tcction of wildlife (at 450). .

The Attorney General argues that the similarity of the issues in-volved in the granting of a license for the construction of a hydroelectric facility and-those associated with the acquisition of a portion of a nuclear generating station require us to examine the same issues arti-culated by the Court in Udall. While we agree that the issues associated with the need for power, related alternatives and ability to finance may i

L.: : 4.ailbr, uo canne t agree that consist ency uith th. j u:;11e int es usi.

l

1 p

l D.P.U. 19730 h D.P.U. 19713 Piage Five 2/

l requirci us to consider tlic public health and safety issues surrounding 1

t nuclear power. Specifically, we do not find any support in Udall for the Attorney General's position because the Federal Unter Powe'r Act as i

amended _ specif : ally provides that the project

,shall be such as in the judgment of the Commission will be best adapted to a comprehensive plan for improving or developing a-waterway or waterways for the use or benefit of interstate or foreign commerce, for: the improvement and utilization of water-power development, and for other beneficial public uses, including recreational purposes, t1G USC 563 (a)) (emphasis supplied).

Thus, it appears that the Federal Power Commission was specifically required by its statute to extend its consideration beyond need for power, alternative sources of power and ability to finance and addre s such issues as water resource management and recreation. Ir. the instant proceeding, G.L. c. 164, S97 does not require us to specifically address public. health and safety, and we decline to do so in these cases.

In so holding, we do not intend to preclude consideration of health and safety issues in all proceedings brou,ght pursuant to G.L. c. 164, S97, llowever, we do believe that the scope of this and similar proceedings should be limited to those issues over which the Department has some demonstrable jurisdiction. We believe that a serious question exists

.i l

as to whether the regulation of nuclear.. power and its concomitant radio-logical healt'h and safety issues have been tota-lly pre-empted by the l

Federal Government through the Atomic Energy Act of 1954 as amended J/ Indeed wo question whether we have any authority at all to regulate in the area of radiological health and safety. Soc Northern Staten

r. Sta1:. of IHnnnnot.a, <i 17 I'. . 11.' 3 ~ m/s ~ r./t),

?nuar cr.:.many . .

~~

40'i'U.S. 1035 (1972).

r e

s

.-y

gi I s b.P.U. l'Ti 3 8 ._, z, j

@D" 9713 gp i

j;, g;u , .g (42 USC S2011'et seq) and the regulations of the Nuclear Regulatory Commission (10 CPR 5S0-199). (See fn. 2 supra). In light of this question and the silence of our statute',on this ma<'cr, uc decline to address the nuclear health and safety issues argued by the Attorney General at this time.

Turning now to the standard of revicw argued -by the Petitioners, e find ourselves in disagreement with their narrow interpretation of

" consistent with the public interest." The Petitioners assert that tP 1

Department must approve the proposed transfer unless we have before affirmative evidence of some sort of harm to the public interest. D re-over, they disassociate themselves from any notion that they bear the burden of proof in this proceeding, asserting instead that it is the Attorncy General.who bears the burden of proving harm to the public flowir.g from the proposed transaction.

We could not disagree more. The Petitioners have come to the Depart-ment seeking our approval of the proposed. sale of interests in Seabrook Units I and II. They are the moving parties in this proceeding. The governing statute requires that the Department conduct a public hearing and approve the transaction only if we find it to be consistent with the i public interest. Clearly the burden of establishing " consistency" rests with the moving parties. Sec Pryor v. Department of Public Utilitics, i

373 N.E. 2d 977 . (1978) ; and Metropolitan District Commission v. Department j of Public Utilitics, 352 Mass. 18, 224 N.E. 2d 977 (1967). While we could i not require the Companics to prove a negative, i.e. that there would be no h..a to Lhe_ pub'.le, Prat.tinethar.i v. Deprirt u 'nt of Pitbl J e Utilit 1: ;, 5%

i l Mass. 138 '(1969) , we can and will require them to establich through crndibic evi&~

. l L . I

O D . P . ti . 19738 d\,

L D.P.U. 19743 Page Seven that i.is proposal is consistent with the intercots of the public in a rollable supply of electric power at ju',st and reasonable rates.. There-fore, before the Department can find that this transaction is consistent with the public interest, cach of the Petitioners must demonstrate that there is a need for the amount of capacity sought to be acquired, th-the acquisition represt us the most economical available alternative and tnat the purchasing company has the ability to finance the propos -

acquisition without imposing an undue burden upon its ability to pr Le service currently-and in the future.

APPLICATION OF THE STANDARD TO THE PROPOSED PURCHASES l The combined additional investment in scabrook I and II which would i

be assumed by the three Massachusetts utilities as a result of this trans-action totals-133 million dollars. This entire amount will, with the approval of the Department, eventually be passed on to Massachusetts consumers. The impact of such increases on the ratepayers of these three companies will be substantial.

! This places upon the Commission the obligation to consider very care-4 fully the proposed transactions and to grant its approval only if persuaded that the Ittitioners' cvidence in this prococding satisfies the standard for review set forth above.

Our examination of the record in this case has convinced us that the evidence presented by each of the companics does not provide a sufficient trirA r for m.ihing such a determination at thi., tiu . - - - - - i )) dim- a in more detail later, additional information is needed from cach of the 1

.-r- - . m

I p.P.U. 19730 .

n F}

!!' tge P ' UEight

- 19743 D

)1

( j h-% .

three Massachusetts companics before an ituormed judgment on the merits of the transactiom can be made. .

- Moreover, one major issue has boon,left largely unsolved; namely, the ability of Public Service Company of Ucw Hampshire ("PSN!!") to com-plete the Seabrook project. The importance of a satisfactory answer to this question can hardly be overstated. ,

We do no'more than state the obvious when we say that the ratepayers receive no benefit from these

. transactionsunless the project is completed. In fact, should Seabrook ;

and II not be built, ratepayers would most likely be asked to bear the costs of both the unfinished Seabrook project and the construction of any new capacity needed to meet demand in the 1980's. ,

In this proceeding, there was no. opportunity to question PSNH directly about the viability of the Seabrook project. We have only the assurances of the four applicants that the two units will be completed. In general, we would be most reluctant to rely solely on such assurances given the huge sums of money at stake. To do so nou would be totally inappropriate since PSNH itself has petitioned this Department for approval of proposed sales of portions of its ownership interests to tuo of the Massachusetts utilities involved in this case.1/

d 3/ Joint application of Montaup Electric Company,and New Bedford Gas

& Edison Light Company, and of Public Service Company of New Hampshire, under G,.L. c. 164, SS97 and 101, as amended, for approval by the Department of Public Utilitics of the roadjustment of certain interests in such property by Montaup Electric Company and New Bedford Gan and Edison Light Company and the corresponding reduction of the interest therein of Public Service Company of New Hampshire and a determination that the terms thercof are consistent with the public interest.

t.P.U. 20055) 4 8

4

• 3

? D.P.U. 19730 D yjN D  :

D.P.O. 19743 CO * - ~"

Page Ninc On June 7, 1979, the Commission oldered PSNil to filo direct te.ti-many on the subject of the viability of the Scabrook project. Thus, the Commission will have the opportunity t,o explore this matter ip the most recently opened proceeding involving P5i!Il itself without causing u.74ne delay to any of the Pctitioncrs.-! This PSN!I proceeding also afford: a convenient forum for examining the additional evidence we deem to bu necessary before a finding can be made on 0hether these proposed trc actions are consistent with the public interest. Accordingly, defer:

a decision on the present petition and consolidating this case wit:- ac aforementioned petition of PSNH, Montaup and New Bedford is, in ou; i

judgment, the most reasonable course of action.5/ -

REQUESTS FOR ADDITIONAL INFO!GATION Each of the three areas included in the standard for review formulated by the Commission in this proceeding contains a myriad of complex and difficult issues. For example, demand forecasts require projections of many factors including population growth,, economic trends and patterns of energy use.- Lithough extensive testimony and exhibits have already been filed in this proceeding, a significant number of important issues have not been resolved to our satisfaction. These issues, about which addi-tional information is sought, vary by company and are set forth belou:

4/

~

The Commission is aware that the present hgreements for Transfer of Ownership Shares are scheduled to terminate on June 30,.1979.

Ilowever, we also note that the initial of fering letter sont by 6 CL&P to the other Pctitioners was dated December 22, 1975. In addition, the present Agrc'ements were recently extended from December 31, 1970 to June 30, 1979.

[/ We previonn11 denied a Motion for c.r. ol:e 'im 1 - He- A t h.n m" General because we believed that wo should OLLempt to reach a decision on the merits of this petition if poasibic. We have now examined the record in detail and have found that it is not ade-quate for that purpose. -

,9, - . - - - - - , - --- ,. -. , - , -

D.P.U. 19 't . .

D.P.O. 19'i i .

Page Ten 1 i A FITCllDURG

\ A. Forecast: Please provide addi tional information to support the Company's assumptions in the following areas:

1. average annual kilowatthour consumption of existing i non-space heating residential customers:

4

2. average annual kilowatthour consumption of new non-space-heating customers;

3. number of new re" gular and space heating residential customers;

4. , commercial energy forecast:

~5. industrial energy forecast; and

6. peak load forecast.

1

n. Alternatives: Please recompute Ey,hibit F-4 using the Gencrr.1 Electric Production Costing Model and the most current

assumptions. 6/

C. Financial: Update Exhibit F-3 with most recent projections of income and construction expenditures. The new exhibit i

should reflect the current schedule for commercial production of each nuclear unit in which the Company has an interest.

Adjust long-term and short-term interest expense to reflect the current market realitics for such financing. Correct 4

return on equity to reflect currently allowed levels. Pro-vide schedule of carned return on equity and allowed return for the period 1975 to present. Adjust interest cost of preferred stock to reflect the current market realities for such financing. Explain methodology employed in forecasting i internal funds, including forecast of' operating expenses and incomo and associated assumptions. Itemize all other t

construction expenditures forecast in the exhibit and explain '

methodology employed.

. s i

t.

1 .

i 1

g/ Mr. Garlick testified that this program is available to ]

l Fitchburg (Tr. 1758).

l 4

9

":!::ll: ME Page Eleven

?HP $$bn .

1;O;;TAUP

~

A. r, recast: Please provide additional information to support the Company's assumptions in the following arcas: ,

~

1. penetration _ rates, conversion rates and saturation rate increases of:

a. space heating

b. hot water heaters -

c. clectric ranges

d. electric dryers .

~

e. freezers -

f. air conditioners;

2. growth of " base use" for new and old customers;

3. growth in annual kilowatthour consumption due to unforeseen appliances;

4. effect of energy efficient appliances;

5. effect of time-of-use rates and load management;

6. effect of price elasticity;

. 7. future commercial / industrial consumption ratios; and

8. future annual load factors.

B. Alternatives: Pleanc submit a study which employs a computerized production costing model and the Company's most current assump-tions, including load growth, to estimate the costs of each of the following combinations of capacity:

7/

1. baseline capacity plus purchase of CL&P's Seabrook share; 2' . baseline capacity plus Scmcrset I and II;

3. baseline capacity plus Somerset III and IV; and

4. anyothercombinationsofcapacithwhichtheCompany believes are relevant.

C. Financial: Update Exhibit M-3 with most recent projections of incomo and construction expenditurcs. The new cxhibit T/

Da::cli n.: c.ipacity has bcon defin.;d au t.:. cc ~..; .my ' a c.. .. c t o !

generation mix cxcluding Somerset I and II, Somerset III and IV, CL&P owned Scabroah and other proposed .Scabrook purchaces.

b

I D.P.U. 3 "7 3f; ^

D.P.U. J '.! 7 4 3 q 9 0

'=vD j j(

D b Page Twelve gj ,

should reflect the current schedule for commercial production of each nuclear .unj t in which the Company

'has an interest. Adjust long-term and short-term interest c:< pense to reflect the current market realities for such financing. Correct 'cturn r pn equity to reflect .

currently allowed levels. Provide schedule of carned return on equity and allowed return for the period 1975 to present. Adjust-interest cost of preferred stock to reflect the current market realitics for such financing.

Explain methodology employed in forecasting internal funds, including forecast of operating cxpenses and in-come associated assumptions. Ite:aize all other constructic a expenditures forecast in the exhibit and explain methodolo: f i

employed. Sources and uses of funds statement for Brockto:<

Edison for same period as that forecast in Exhibit M-3 vitP all supporting documentation requested above for Montaup's forecast..

i NEW HEDFORD A. Forecast: Please provide additional information to support the Company's assumptions in_the follo:ing areas:

1. number of new residential' customers;

, , 2. number of new residential space heating customers;

3. average annual non-space heating residential consumption;

4. average annual new residential space heating consumption; 5.- effects of conservation, load management, and time-of-use rates;

6. effect of price elasticity;

7. commercial energy consumption;

8. New Bedford " extreme weather" load factor; and

9. Cambridge " extreme condition" , coincidence factor.

D. '

Provide all requested information for both Now Dodford and Canal Electric.

4

-- g- ---m p- yeeFT - y .

t t

m D.v.t..

D . P .11 3 'r: 3u J '.n ', 3 gmm 9 9 (9 y7 4

ww * '

Page Yni r t een -~-

l'inanci al : Updato Exhibit AC-10G with mont recent pro-rjectionc of incor,ic and constru,ction c::penditurcs. The new exhjbit should reflect the current schedule for com-mercieil production of cach nuc] car unit in which the Company has an interest. Adjuct long-term and short-term interest expense to reflect the current market realitics for such financing. Correct return on equity to reflect currently allowed Jovels. Provide schedule of carned return on equity and allowed return for the period 1975

! to present. Adjust interest cost of preferred stock to reflect the current market realitics for such financing.

Explain methodology employed in forecasting internal funds, including forecast of operating expenses and income and associated assumptions. Itemize all other constructic:

expenditures forecast in the exhibit and explain methodolot employed.

ORDER Accordingly, after duo notice, hearing, investigation and consideration, it is . .

ORDERED: thht the instant pet,itions be consolidated for further hearing, investigatio* and consideration with the petition docketed as D.P.U. 20055 By Order of the Department,

,, o' ' %.,  % e r

/ 1. ,

y

. Doris R. Pote', - Chair man r 7 e >

t' b a.

( )

~  %

Job N.

.'b e nXP onsall, Conc:iissioner

<; .)

L J' .

L s -

1. ~

5 / bf -

\t (11 VV George R. Spraguc, Commissioner Comni:u:iour rn p;iet i .:i pa t i nc; ia decision of U.l'.U. 1973ti and

. D.P.U. 19743 were: Chairman Pote, Commissioner Bonsall and Commissioner Sprague.

, .- , . , .