ML19344A139
| ML19344A139 | |
| Person / Time | |
|---|---|
| Site: | Midland |
| Issue date: | 11/04/1977 |
| From: | Deline D, Howell S CONSUMERS ENERGY CO. (FORMERLY CONSUMERS POWER CO.), DOW CHEMICAL CO. |
| To: | |
| References | |
| NUDOCS 8008060413 | |
| Download: ML19344A139 (14) | |
Text
. _,
~
q o
c$,uac g $il I c
UNITED STATES OF AMERICA I
d'Y s
cylh 9
NUCLEAR. REGULATORY COMMISSION
\\
i Before the Atomic Safety and Licensing Board In the Matter of
)
CONSUMERS POWER COMPANY
)
)
Docket Nos. 50-329_
Midland Plants, Units 1 and 2)
)
F0-330
)
)
SUPPLEMENTAL RESPONSE OF CONSUMERS POWER COMPANY AND THE DOW CHEMICAL COMPANY TO INTERROGATORIES OF INTERVENORS OTHER THAN DOW Consumers Power Company (" Licensee") and The Dow Chemical Company
("Dow") submit the following supplemental answer to that portion of Intervenors' 'other than Dow ("Intervenors'") Interrogatory No.1 related to the status of negotiations between Licensee and Dow.
Intervenors '
Interrogatory was directed to both Licensee and Dow.
QUESTION 1.
Testimony in this proceeding thus far has indicated a dispute between Consumers and Dow Chemical Company (Dow) relating to the con-struction of the Midland Nuclear Facility and sale and purchase of steam and electricity from said facility. All or a portion of the Dow-Consumers contracts have.been identified or attached in written testimony of Consumers' witnesses in this proceeding, Messrs. Keeley and Howell.
'With respect to any dispute concerriing such contracts between Consumers and Dow please state the following:
(a)
Describe in detail the nature of the dispute and the status of any negotiations to resolve said dispute.
If
~it 'is your position that no dispute exists, please state the 8008060 g3
c
, the basis therefor. in light of the cross-examination testimony
-of. Dow witness Temple, including but not limited to the disclosures.
made by Mr. ; Temple of meetings between Consumers and Dow and their
. representatives in September,1976'whereir. suggestions of 1awsuits were made _ as well as correspondence' between Youngdahl and Temple
~
during 1975 and 1976 which has already been produced by Consumers.
ANSWER On October 24,1977,' A. H. Aymor.d and J. D. Selby representing j
Licensee met with Paul F. Oreffice and D. Dick DeLine representing-Dow.
The purpose of this meeting was to review the status of the Midland nuclear plant and to discuss concerns and problems between the respec-tive companies.. At this meeting, Licensee and Dow decided to resume negotiations to determine if some cf the concerns and problems could be i
resolved.
Licensee selected Stephen H. Howell as Chaiman of its
}
negotiating comittee and Dow selected D. Dick DeLine as Chaiman of-its negotiating comittee.
Subsequent to the meeting, the. respective chairmen decided to meet with their committees on November-2,1977, at Licensee's offices in Jackson, Michigan. Attached to this Supplemental Interrogatory Response as Exhibit "A" is a sumary report of that meeting.
DD Stephew H. Howell, Vice President Projects, Engineering and Construction Consumers Power Company H
~0. Dick DeLihe ~ '
Acting General Manager
-Michigan Division 5:
Dow Chemical U.S.A.
. Stephen H.. Howell,.being' duly sworn, deposes and says that the foregoing Supplemental Response of Consumers Power Company and The Dow a.
c 3-i Chemical Company to Interrogatories of Intervenors Other than Dow is true to the best of his knowledge 'and belief.
~
DM,,3 ; u 4 Lf.
StepheW H. Howell i
i STATE-0FMICHIGAN).
ss.
COUNTYOFJACKSON-)
Subscribed and sworn to before me, a' Notary Public, this day-of November,- 1977.
~
Notary Public Jackson County, Michigan My Commission Expires:
i D. Dick DeLine, being duly sworn, deposes and says that the fore-going Supplemental Response of Consumers Power Company and The Dow Chemical. Company to Interrogatories of Intervenors Other than Dow is true to the best of his knowledge and belief.
-M /3.
U, UTCk DeLine' STATE OF MICHIGAN )
~
ss.
COUNTY _0F MIDLAND )
Subscribed and sworn to.before me, a Notary Public, this 4th day of November, 1977.
0 M/ /x< >
m,,,
. Cimnie K. Miner
/
No'tary Public.
3' Midland County, Michigan.
My Commission Expires:
8/16/81 1
>q r-T
EXHIBIT "A"
^
l.$
~
CONSUMERS POWER-DOW REOPENED NEGOTIATIONS-Date of Meeting: _ November 2,.1977 i
Subject:
Minutes of Nuclear Contracts Negotiation Meeting at. Jackson, Michigan
+
i' Present:
Dow Chemical Company:_ DDDeLine,-LWPribila, JMBurroughs Consume'rs Power: SHHowell,_GSKeeley i
Consumers _ Power proposed the~ attached agenda which was agreed upon.
i-Agenda Items i
1.
Revised and approved attached " Statement of Purpose."
j
' 2; Housekeeping Items I
a.
Team The negotiating teams consist of the following:
I
.)
-Dov - DDDeLine,. Chairman Consumers Power - SHHowell, Chairman
'LWPribila LBLindemer 1
1 JMBurroughs GSKeeley b.
Minutes 4
+
The~ parties agreed to draft joint meeting notes to summarize-the j
discussions at each meeting.
J i
.c._
Reports to ASLB 1
The parties agreed to submit--the joint meeting notes to the ASL3 and i
the parties'to the licensing hearing as soon as the notes'are' avail-able after each meeting.
'd. & - e.o Place 1 of Meetings. and Schedule The palt'ies agreed to.the attached schedul,e for negotiations.
f.
~ Report to Management' i
The parties. agreed that each would keep.its management informed of
.the'ne6otiation' status.
s.: Target Completion-The parties agreedito try to complete the negotiations by December 31, 197
L d
- h. - Trans1'ation of Agreements.to Contractual Language The parties agreed that an attempt vill be made to translate any agreements to contract language by the next meeting.
3 Presentation of Objectives l
Each party' presented its objectives as shown in the attached outlines.
The purpose of the presentation was for each party t;o fully inform the other party of problems and/or concerns with the existing contracts.
t No attempt was made to negotiate or resolve these problems.
1
. Establish Sequence of Negotiations 4
4
)
It was agreed that'at the next negotiating meeting scheduled for-November 10, 1977, the parties vould concentrate on the General A6ree-
~
ment, Electric Contract, and Water Contract in that order.
Specifically all Dov items contained on its outline for Electric and Water Contracts vill be covered as well as Consumers Pover's items 1.a.,1.b., 2.b.,.
~3.c., 3.d., and h.d.
I l
DOW CHEIECAL, USA i
, /).
, /%
~D D DeLine ~
j
~
j CONSUMERS POWER COMPANY
-l W1-Dh Q H.Howell e
1 e,
c
(-T
~
~
STATE!ENT 'OF PURPOSE CONSUMERS POWER-DOW REOPENED NEGOTIAT. IONS Consumers Power must meet the anticipated needs of its -electrical system.
Dov needs and desires process steam and electricity for its Midland Plant.
The ' completion of the Midland Nuclear Plant is a' vay to.falfill the require-ments of both companies.
~
Each party desires some changes in the existing contracts to reflect. changed
~
circumstances.
Therefore, they have agre'ed'to negotiate respecting those
~
changes and attempt,to arrive at a..mut11 ally beneficial solu' tion. _Each com-pany is free to propose itr;ms.not raised in previous negotiations and previous tentative agreements may be set aside. -Although tentative a'greements vill-i have to be reached on various issues as negotiations proceed,.they vill not' i
be' binding until the; entire package has been negotiated and agreed upon.
4
)
I SHH/sjb --
November.2,:1977_
9
' W D
4
.M S
-__m.,
+
y y.
.,.,s..-.
s
4 PROPOSED AGEIIDA CONSUMERS POWER-DOW !!EETIIIG
. November 2, 1977 Statement of Purpose
- l'.
2.
Housekeeping Items a.
Team b.-' Minutes-c.
Reports to ASLB
- d. ' Place of Meetings
.. e.
Schedule of Meetings.
f.
Report.to Management - Oreffice/Selby g.
Target Completion
'~
h.
Translation of Agreements to. Contractual Language 3.
Presentation of Ob.iectives a.
Dow b.
-Consumers Power.
k.
Establish Sequence of. Negotiations
-5 Start Negotiations i
SHH/sjb.
November 2, 1977
, 1
. I 9
SCHEDULF OF MEETIIIGS CONSUMERS POWER-DOW REOPENED NEGOTIATIONS
. At our meeting on November 2,1977, the following schedule was agreed upon
- for future negotiation meetings.
All meetings will start - at 9 AM.
Thursday, November 10 Midland
' Thursday, November 17 Jacison Wednesday, November 23 - Mic11 and Wednesday, November 30 - Jackson -
Thursday, December 8 Midland Tuesday, December 13 Jackson-Thursday, December 22 - - Midland Wednesday, December 28 - Jackson SHH/sjb
.To: DDDeLine LWPribila
'JMBurroughs GSKeeley LBLindemer
- November 2, 1977.'
e
+
g-
+
e, ;
o 5
00W'S' PROBLEMS FOR' RESOLUTION-DURING NEGOTIATIONS.
~
Electric Contract
-- Effective date precedes that of the steam contract
- Requirement to pay for minimum contract demand power even though our. existing cogeneration' facilities are
~
being.used to' produce steam
- Five-year term of contract is too long
- No provision to change demand from year to year
- Contract _ demand is higher than our anticipated demands
- Excl0 des Dow from generating ~ power except in existing cogeneration facilities Water Contract
- Fif ty year obligation to supply water regardless
~
of whether we are purchasing power or s team
- Continuing liability for failure to' perform even if failure _to-perform..is beyond Dow's. reasonable control
- Water prices are~ fixed;uno escalation clause
-Contract does not' reflect nuclear plant design changes Steam-Contract
- Contract imposes restrictions on Dow's ability to
-generate--and/or utilize steam Contrac.t imposes restrictions on the use of steam purchasedidrom. Consumers' including reselling and
~ haring s
..s n
c 3
L
- I HIf regulatory agencies have jurisdiction over steam-
~
contract, Dow cannot' rely on the_ steam rates provided
]
therein
. Contract-provides for severe penalties in the event R
Dow takes more than the contract demand or less than
' I the contract minimum
- Six-year notice requirement to. change reserve steam capacity does not recognize Dow's forecasting diffi-culties
--Dow does not have an option to purchase steam for the life of the' plant.
Consumers' right to cancel I
af ter twenty years prevents Dow f rom making longiterm plans for the use of steam
- Dow.cannot terminate. the c.ontract for at leas t.
seven years; i
- Capacity charge continues during periods of extended non-performance-by Consumers.
- Continued uncertainty as to when a reliable source offprocess steam will'be available presents Dow with
~
critical problems in view of the present situation with.its existing cogeneration facilities
--The term " commercial operation" as used in the Steam Contract.and elsewhere' is not well defined-
- Indemnification.and hold ha,raless provisions are broad and-it-is. unclear what risks are being assumed by Dow
'LWP
.,,no,,.
T CONSUMERS POWER'S OBJECTIVES
~;
4-1.
Consumers Power needs the flexibility to sell portions "of the plant _ or its output to others.
Removal ~ of' Dov's right of first refusal 'on sale of the land.
'a.
b.
Removal of a:r/ right Dow might have to the plant beyond the design steam capacity (4.05 x 10 #/hr).
r Right to sell or use' steam Dow does not take.
c.
t 2.1 Consumers Power needs to be fully and~ fairly reimbursed for costs incurred
~
in order to serve Dow.
. Capital Costs a.
Full recovery of all costs due to the plant being located at Midland
- i and providing steam to Dow.
(1) Steam, site sensitive and allocated costs of plant.
(a), Revised' arid updated and clearly defined. allocation system.
(b) Decommissioning costs.
- (2) Reflect cost of capital.
b; Recovery of. unused investment made to serve Dow's electrical needs.
Operating Costs-Fair and equitable portion of taxes, insurance, operating cost;, fuel,
- a.-
depreciation, etc, as they are incurred.
b.
Recovery for operating inefficiencies -under low steam take both at-normal and stretch ratings.
Cost Savings a.0 ;Sbaring of.savingh benefits to be fairly allocated'in~ relationship to
= the_ type of operations which. produce.them and~ the assumptions of
- financial risks.-
+
7' e
~
Steam Rate
.a.
-Should be structured so.as to be truly reflective of the situation,
.' easy to administer, equitable to the parties, equitable to electrical customers, and easy.to justify.-
..3
'ConsumersPowerneeds_tobeprotectedagainstundue$isk.
[
- a.,, Remove possibility of future.Dov-liti6ation over dates of steam service or other potential claims on account of costs, delays, or
.i other events to'date.
b.
Full recovery of-portion of investment made for Dov's benefit.if plant
-is not. built or operated.
c.
Firm commitments:for electric and stean quantities must be made in a time frame that allows. proper planning.
d.
Protection against limitations on usability of the Tittabavassee River
- in conjunction with the plant.
m 4
L Consumers Power needs' updating and clarification of out--of-date centract
.o provisions, such as:
_ i
\\
i a.
Commercial' operating. dates o'f the units.
b'. ILead times for notices.
..c. ; Backup boiler _ provisions.-
4 d.
Water contract.
e.: Physical boundaries-of responsibility.
t f.
Bases of e.llocated steam investment.
SHH/sjb c"
? ""...
-I s
+
r
~
November 4, 1977 UNITLD STATES.OF AKI.RICA' NUCLEAR REGULATORY' COMMISSION Before the Atomic Safety and Licensing Board
)
In:the Matter of
. )
4
)
i CONSUMERS POWER COMPANY.-
)
Docket Nos. 50-329
) 330 Mf.dland Plant, Units 1 and '2
)
)
4
't CERTIFICATE OF SERVICE I hereby certify ~that copies of the enclosed " Supplemental Re-sponse of ' Consumers Power Company and The Dow Chemical Company to Inter-rogatories of Intervenors Other Than Dow" dated November 4, 1977, in the 6
above-captioned proceeding, have been served upon the following by deposit
~
. in the U.S.. mail, first class, postage prepaid, - this 4th day of November, 1977:
Frederic J. Coufal, Esq Atomic Safety and Licensing
- Chaionan Appeal Board
-Atomic Safety and Licensing U.S. Nuclear Regulatory Commission
- Board Panel Washington, D.C.
20555 U.S. Nuclear Regulatory Commission 4.
Washington,'. D.C. 20555 Mr. C. R. Stephens, Chief Docketing and Service Section Dt. Emmeth A. Luebke
- 0ffice of the Secretary of p
Atomic Safety and Licensing the Commission
' Board Panel
. Washington, D.C.
- 20555
. Was hington,J D. C.
20555 Richard Hoefling, Esq Dr. J..Venn Leeds, Jr., Esq ~
Counsel'for the NRC Staff 10807 Atwell' U.S. Nuclear Regulatory Commission-Houston, Texas 77096-Washington, D.C.
~20555
- Atanic Safety and Licensing
~ Atomic Safety and Licensing Board.Panell
-Appeal Board Panel U.S. Nuclear Regulatory. Commission U.S. Nuclear Regulatory Commission Washington,, D.C. ~ 20555 Washington,'D.C.
20555 f
+
y
.+-r-
-r.
4
=
-j l
L. F. Nute, Esquire Myron M. Cherry The Dow Chemical company Suite 4501-Michigan Division Legal Department Cne IBM Plaza P.O. Box 271 hicago, Illinois 60611 Midland, Michigan 48640 I
'Judi L."1Facon One, of the' Attorneys for Consumers Power Company 2'
West Michigan Avenue ackson, Michigan 49201 (517) 788-1366 A
b e
-2.