ML19347D810

Application for Amend to CPPR-117,adding Piedmont Municipal Power Agency as co-owner & co-applicant of Facility.Related Documentation Encl

ML19347D810
Person / Time
Site:	Catawba
Issue date:	04/07/1981
From:	Parker W DUKE POWER CO.
To:
Shared Package
ML19240B474	List: ML19347D809 ML19347D810
References
NUDOCS 8104130576
Download: ML19347D810 (44)

Text

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v UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION In the Matter of )

DUKE POWER COMPANY ) Docket Nos. 50-413 (Catawba Nuclear Station ) 50-414 Unit Nos. I and 2 )

APPLICATION FOR AMENDMENT OF CONSTRUCTION PERMIT NO. CPPR-117 ADDING CO-OWNER AND CO-APPLICANT Duke Power Company (Duke) is presently the holder of NRC Construction Permits No. CPPR-116 for Unit 1 of the Catawba Nuclear Station (Catawba-1) and No. CPPR-117 for Unit 2 of the Catawba Nuclear Station (Catawba-2). On October 18, 1978, the NRC issued Amendment No. I to Construction Permit No. CPPR-117 to add the North Carolina Municipal Power Agency Number 1 (Power Agency) as a co-owner of Catawba-2 and co-applicant for the facility. On December 23, 1980, the NRC issued Amendment No. I to Construction Permit No. CPPR-116 to add the North Carolina Electric Membership Corporation (NCEMC) and Saluda River Electric Cooperative Inc. (Saluda River) as co-owners of Catawba-1 and co-applicants for the facility . By this application, Duke and Piedmont Municipal Power Agency (PMPA) respectfully request that the NRC further amend Construction Permit No. CPPR-117 to include PMPA as a co-owner of and co-applicant for Catawba-2, consistent with the agreements dated August 1, 1980 between Duke and PMPA as hereinafter described. Duke will retain exclusive responsibility for the design, construction and operation of Catawba-2. l

1. General Information

a. Name and Address of Co-Owner and Co-Applicant Piedmont Municipal Power Agency L Post Office Box 64 U Gaffney, South Carolina 29340 (8 ) 487-7171 8304330

b. Description of Business of Proposed Co-Owner and Co-Applicant PMPA is a public body corporate and politic and an instrumentality of the State of South Carolina, incorporated under South Carolina statutes on January 11, 1979. PMPA was created to plan, develop, construct, purchase and operate electric generation and transmission facilities. PMPA has been granted all of the powers necessary or convenient to carry out such purposes. PMPA has entered into contracts with ten (10) political subdivisions, listed in Appendix A, under which PMPA is to be the sole and exclusive bulk power supplier for each such political subdivision in excess of any allotment of federal power from Southeastern Power Administration. Each such political subdivision is obligated to take or pay for its entitlement share of power from any owned project, such as Catawba-2. The terms of said contracts are for the life of the project or so long as any of PMPA's bonds issued to finance the project are outstanding, but not exceeding 50 years

, from and after August 1,1985.

c. Corporate Data Relating to Proposed Co-Owner and Co-Applicant PMPA is a public body corporate and politic organized as a joint agency by its member municipalities in South Carolina pursuant to Act No.

473 of the Acts and Joint Resolutions of the General Assembly of the State of

South Carolina, Regular Session of 1978, as amended by Act No. 176 of the Acts and Joint Resolutions of the General Assembly of the State of South Carolina, Regular Session of 1979, known as the Joint Municipal Electric Powar and Energy Act. PMPA is not owned, controlled or dominated by an alien, a foreign corporation or foreign government. PMPA's office is located in the office of the Board of Public Works of Gaffney, South Carolina with the l 4

mailing address noted above.

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The names and business addresses of PMPA's Board o' Directors, all of whom are citizens of the United States, are as follows:

Chairman Jack E. Millwood 200 Baker Boulevard Gaffney, South Carolina 29340 Vice Chairman Joe Lanford Post Office Box 11706 Rock Hill, South Carolina 29730 Secretary Leon P. Gilbert Post Office Box 744 Clinton, South Carolina 29325 Sam P. Stribling Post Office Box 639 Abbeville, South Carolina 29620 Richard Stephen Hale Post Office Box 605 Easley, South Carolina 29640 Kenneth Smith Post Office Box 216 Greer, South Carolina 29651 Samuel R. Wallace Post Office Box 349 Laurens, South Carolina 29360 John C. Eargle, Sr.

820 Amelia Newberry, South Carolina 29108 T. D. Sherbert Post Office Drawer K Union, South Carolina 29379 Howard Adams Post Office Box 216 Westminster, South Carolina 296'93

2. Financial Qualifications

a. Purchase and Ownership Participation Agreements There are three basic elements of the purchase by PMPA of a portion of Catawba-2 from Duke. These are (i) the transfer of an ownership interest in assets currently owned by Duke and required for the construction

and operation of Catawba-2; (ii) provisions for payment by PMPA to Duke for additional equipment and material supplies for construction of Catawba-2, payment for Support Facilities services required for Catawba-2, and payment to Duke for its services of . personnel in the construction and completion of Catawba-2; and (iii) payment of fees to Duke as a profit for its design, licensing, and construction expertise. At closing, PMPA would pay Duke for its ownership share of the total costs of materials and construction completed to date which include direct and indirect labor and transferred assets. In addition , PMPA will pay Duke agreed upon fees and profit due at closing.

The estimated date of closing is December 1,1981. However, consummation of '

the proposed transaction is subject to approval by the NRC of this application for the required amendment to Construction Permit No. CPPR-117, the arranging by PMPA of financing acceptable to it, and approval of the transactions by PMPA's Board of Directors. Under separate cover, additional financial information for PMPA is being forwarded.

PMPA an'd Duke have entered into agreements dated August 1,1980 for the sale to PMPA of a 25% ownership interest in Catawba-2. The principal elements of the agreements between Duke and PMPA are as follows:

(1) Duke will sell to PMPA an undivided 25% ownership interest, as tenant in common, without right of partition during the life of the plant , in Catawba-2. PMPA will not purchase an ownership interest in the Support Facilities, which are described as the administration building, nuclear service water pond, waste treatment facilities , switching station , cooling water discharge system , shops and laboratories, roads, parking , railroads, other improvements for common use, and land, including a controlled exclusion area having a radius of 2500 feet around the Station.

Duke will provide PMPA with all Support Facilities services required in connection with the construction and operation of PMPA's ownership interest in Catawba-2. Transfer of ownership will occur at closing, which is anticipated to take place on or before December 1, 1981, subject to receipt of regulatory approvals and other specified conditions.

(2) At the closing, PMPA will pay to Duke an amount equal to 25% of the aggregate of all costs, plus interest, incurred by Duke in connection with the planning, design, licensing, acquisition and construction of Catawba-2, including direct and indirect labor and transferred assets. In addition, PMPA will pay Duke agreed upon fees and profit due at closing.

(3) After the closing and until the commercial operation of Catawba-2, PMPA, on a monthly basis, will pay to Duke an amount equal to 25% of the aggregate costs thereafter incurred in connection with the planning, design , licensing, acquisition ,

construction and completion of Catawba-2.

(4) Duke will have sole responsibility for the planning, design, construction, operation, maintenance and decommissioning of Catawba-2 and is to be authorized by PMPA to act on its behalf in such capacity , including the pursuit of required authorizations ,

permits and licenses from the NRC and other regulatory authorities.

b. Interconnection and Operating Agreements Af ter commercial operation of Catawba-2, PMPA will be entitled to 25% of the capacity and energy from such unit, provided that Duke must purchase back from PMPA specified portions of its 25% share of the capacity and energy from Catawba-2. PMPA will pay to Duke on a monthly basis a 1

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share of the operating costs of Catawba-2 equal to the percentage of its entitlement to the capacity and energy from such unit. Such costs will include costs for Support Facilities services required for operation of PMPA's ownership interest in Catawba-2. In addition, PMPA will pay Duke certain fees for services rendered in operating and maintaining Catawba-2, for services rendered in connection with making capital additions to Catawba-2 and for services rendered in connection with the provision of nuclear fuel material, nuclear fuel services and fuel management for the Catawba Nuclear Station.

c. Sources of Payments for Ownership Participation in Catawba-2 by PMPA PMPA intends to issue and sell electric revenue bonds in amounts sufficient for PMPA to pay to Duke 25% of the cost of the planning, design, licensing, acquisition, construction and completion of Catawba-2. The obligations of the political subdivisions to PMPA under power sales agreements between PMPA and such political subdivbions are take-or-pay obligations payable solely from the revenues of the electric system of such political subdivisions, and the revenues from such contracts will be pledged as security for such bonds.

3. Security Agreement PMPA agrees that it will not permit any individual to have access to Restricted Data until the Civil Service Commission shall have made an investigation and a report to the NRC on the character, associations and loyalty of such individual, and the NRC shall have determined that permitting such person to have access to Restricted Data will not endanger the common defense and security.

4. Communications e, Duke will continue to be solely responsible for communications with the NRC related to Catawba-2. Accordingly, all communications to-D[;ke or PMPA pertaining to Catawba-2 should continue to be sent to:

William O. Parker, Jr.

Vice President, Steam Production Post Office Box 33189 422 South Church Street Charlotte, North Carolina 28201 DUKE POWER COMP RY a i-- & . 40 .

William O. Parker, Jr. /)

Vice President Steam Prouuttion Sworn to and subscribed before me, this '? A day of AgtL , 1981.

My Commission expires: iz[3fg9 WR Notary Public

PIEDMONT MUNICIPAL POWER AGENCY By -

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Sworn to and subscribed before me, this 7'E day of //w. / , 1981.

'l My Commission expires:

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Notary PubHc "

APPENDIX A LIST OF SOUTH CAROLINA MUNICIPAL SYSTEMS City of Abbeville City of Clinton City of Easley City of Gaffney City of Greer City of Laurens City of Newberry City of Rock Hill City of Westminster City of Union T

LIST OF COUNSEL DUKE POWER COMPANY Steve C. Griffith, Jr.

Vice President and General Counsel Duke Power Company Legal Department Post Office Box 33189 Charlotte, North Carolina 28242 (704) 373-4380 William L. Porter '

Associate General Counsel Duke Power Company Legal Department Post Office Box 33189 Charlotte, North Carolina 28242 (704) 373-4825 Ellen T. Ruff Assistant General Counsel Duke Power Company Legal Department Post Office Box 33189 Charlotte, North Carolina 28242 (704) 373-7102 PIEDMONT MUNICIPAL POWER AGENCY O. Wayne Corley McNair, Glenn, Konduros, Corley, Singletary, Porter & Dibble Attorneys and Counselors at Law Post Office Box 11390 Columbia, South Carolina 29211 (803) 799-9800 James N. Horwood Spiegel and McDiarmid 312 Watergate Building 2600 Virginia Avenue, N.W.

Washington, D.C. 20037 (202) 333-4500

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CATAWBA NUCLEAR STATION-UNIT 2 l

Information Requested by the Attorney General for Antitrust Review Piedmont Municipal Power Agency Duke Power Company (" Duke") and Piedmont Municipal Power Agency ("PMPA") are applicants for an amendment to the Construction Permit for Catawba Nuclear Station Unit 2 ,

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(" Catawba Unit 2"), CPPR-ll7. Applicants seek to have the Construction Permit previously granted on August 7, 1975 for Catawba Unit 2, as amended on October 19, 1978, amended further to include PMPA as co-owner of Catawba Unit 2 with North Carolina Municipal Power Agency Number 1.

This request is submitted by Duke on behalf of PMPA in support of their application for amendment to the Nuclear Regulatory Commission and in response to the information requested by the Attorney General for antitrust review pur-suant to Title 10, Code of Federal Regulations, Part 50, Appendix L.

A. The Project Duke proposes to sell to PMPA a 25 percent undivided ownership interest in the 1,145 MW Catawba Unit 2 (the

" Project"). The Project would be owned by PMPA and operated by Duke for the benefit of the municipal electric systems which have elected to participate in the Project (the

" Participants").

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INTRODUCTION B. General Background There are 22 municipalities in South Carolina which own and operate their own electric distribution systems.

Thirteen of these systems are served at Wholesale by Duke Power Company.

On October 21, 1975, before the formation of PMPA, Duke Power Company, the Wholesale supplier to ten of the eleven members of PMPA, made a proposal for the sale of Duke Power Company's Catawba Nuclear Station to all its Wholesale power customers Which include municipalities, cooperatives and investor-owned utilities in North and South Carolina. In its proposal for the sale of Catawba, Duke indicated that during the period in Which Catawba is being built, Duke's construction schedule for additional generating resources to meet requirements in the 1980's would impose financing demands on the Company that were unprecedented in the Company's history. Therefore, as an alternative Which had not been considered before, Duke offered to sell the Catawba Station to its Wholesale customers.

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l t o On April 17, 1978, the Joint Municipal Electric Power and Energy Act (the "Act") was approved and made effective by the Governor after prior passage by the Senate and House of Representatives of Sotith Carolina. The Act is codified as Chapter 23, Title 6, Code of Laws of South Carolina, 1976. 1/ The Act provides that two or more municipalities having established electric distribution systems may form a joint agency for the purpose of planning, financing, developing or acquiring (by purchase, construction, reconstruction, improvement or enlargement, ownership, operation and maintenance of) a project or projects to supply electric power for such municipalities' present and future needs as a method of obtaining the benefits and assuming the responsibilities of a project. A joint agency has the authority, among other powers, (i) to issue revenue bonds for the financing of projects; (ii) to apply for all permits, licenses, certificates or approvals as may be necessary to develop a project; (iii) to negotiate and enter into contracts for the purchase, exchange, interchange and wheeling of electric power and for pooling arrangements with any municipality, joint agency, electric cooperative, public or private utility or any state, federal or municipal agency that owns electric generation, transmission or distribution 1/ The Act was enacted through Act No. 473 of the Acts and Joint Resolutions of the General Assembly of the State of South Carolina, Regular Session of 1978, and was amended I through Act No. 176 rd 5e Acts and Joint Resolutions of the General Assembly of ,"s State of South Carolina, Regular l

Session of 1979.

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facilities; and (iv) to negotiate and enter into contracts with any of such entities for the sale and use of electric power within the area generally served by the electric supplier from which the joint agency has purchased a project.

PMPA was incorporated under South Carolina statutes on January 11, 1979. By state law, PMPA may be composed only of South Carolina municipalities. PMPA currently has as members thirteen municipal electric systems, twelve of which are among Duke's thirteen wholesale municipal customers in South Carolina. 1/ The City of Due West was invited to join PMPA but declined. The cities of Greenwood and Properity joined PMPa but are no longer members. As of March, 1981, all of PMPA's present members except Seneca had voted to become Participants in the Project.

An action was instituted on October 8, 1980 to test the validity of the Joint Municipal Electric Power and Energy Act of 1978 (the quoted Act) and the project agreements by and between PMPA and Duke. The case was tried in the Court of Common Pleas in South Carolina on stipulated facts before the Honorable Francis B. Nicholson on March 20, 1981. Judge Nicholson ruled, in an Order dated April 3, 1981, that the Act and the project agreements do not offend the Constitution or 1/ One member of PMPA, the City of Union, is a wholesale customer of Lockhart Power Company, which itself purchases a substantial portion of its power requirements from Duke. See Appendix A for a list of PMPA's members.

t the statutory laws of South Carolina. Judge Nicholson's Order and the Plaintiff's Notice of Intention to Appeal have been filed. Also, a petition to expedite the appeal has been filed with the Chief Justice of the South Carolina Supreme Court.

In addition to PMPA, other wholesale customers of Duke have negotiated with Duke to acquire ownership interests in the Catawba Nuclear Station, and three groups of Duke's wholesale customers have acquired such ownership interests. '

On March 6, 1978, North Carolina Municipal Power Agency Number 1 purchased a 75 percent undivided ownership interest in Catawba Unit 2 and a 37.5 percent undivided ownership interest in the support facilities at the Catawba Nuclear Station. On February 6, 1981, the North Carolina Electric Membership Corporation purchased a 56.25 percent undivided ownership interest in Catawba Unit No. 1 and a 28.125 percent undivided ownership interest in the support facilities at the Catawba Nuclear Station. Also on February 6, 1981, the Saluda River Electric Cooperative, Inc. purchased an 18.75 percent undivided ownership interest in Catawba Unit 1 and a 9.375 percent undivided ownership interest in the support facilities at the Catawba Nuclear Station. At the present time, Duke is not conducting discussions of further sales of ownership

! interests in the Catawba Nuclear Station. .

C. The Project Agreements The acquisition and use of the Project and other power resources together with delivery of these resources over

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l Duke's transmission system for PMPA and its Participants, would be provided for under three agreements between PMPA and Duke.

These are:

1. The Purchase, Construction and Ownership Agreement (the Sales Agreement). This Agreement provides for: (a) the transfer of PMPA's ownership interest in assets and completed construction currently owned by Duke and required for completion and operation of the Project; (b) payment.by PMPA to Duke for additional equipment, material and supplies for construction of the Project and payment to Duke for services of its personnel in completing construction of the Project; and (c) payment of amounts to Duke as profit and fees for its design, licensing, and construction expertise.

2. The Interconnection Agreement. This Agreement provides for: (a) interconnection between the Duke System and the Project; (b) exchange of power between Unit 1 and Unit 2 of the Catawba Nuclear Station; (c) Duke's provision of backstand services for the Project, including Reserve Capacity and Deficiency Energy; (d)

Retained Capacity from the Project; (e)

Purchased Capacity and Energy and Surplus Energy sales from the Project; (f) the purchase of Supplemental Capacity and Energy; (g) transmission service and (h) other matters relating to accounting and costing, and provisions relating to the use of the Project by PMPA and other power supply resources that may be acquired or constructed by PMPA for the benefit of the Participants.

3. Operating and Fuel Agreement (Operating Agreement). This Agreement provides for:

(a) operation, maintenance and fueling of the Project; (b) making of renewals, replacements and capital additions; and (c) the ultimate decommissioning of the Project at the end of its useful life.

Under the Agreements, PMPA would acquire a 25 I percent undivided ownership interest in the 1,145 MW Catawba Unit 2, presently scheduled to begin commercial operation in

September, 1985. Through the principal features of the Interconnection Agreement, including the Catawba and McGuire Nuclear Reliability Exchanges, described below, PMPA would actually start receiving the output of 12.5 percent of Catawba Unit 1 when that unit begins commercial operation, Which is presently scheduled to occur in March, 1984. Pursuant to Article 11 of the Interconnection Agreement, PMPA also has the option of utilizing a portion of the capacity of Duke's McGuire Nuclear Station through the ficGuire Exchange prior to the commercial operation of the Catawba units.

PMPA's ownership interest is in excess of its nuclear base load requirements in the initial years of the Project. The Interconnection Agreement provides that the balance of Project output not retained in any year for the load requirements of the Participants will be sold to Duke on a "take or pay" basis, as Purchased Capacity and Energy, on a declining schedule for 15 years after the date of commercial operation of each unit. PMPA's minimum retained capacity obligation is set forth in Article 6 of the Interconnection Agreement, Which provides that PMPA may increase the amount of retained capacity at its election. Because the Project will ,

i be dispatched by Duke as part of the combined Duke-PMPA j i

territorial requirements (including the territorial l l

requirements of the other owners of the Catawba Nuclear l l

Station) the divinion between Retained Capacity and Purchased l Capacity will not affect the operation of Catawba Unit 2 which .

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s will continue to serve the same total loads for which'the unit was planned and licensed.

PMPA Participants' requirements (Resource Demand) will be met, in part, through the use of capacity from the Project not sold as Purchased Capacity and Energy to Duke (Retained Capacity) combined with the nuclear exchange provisions. These provisions result in an essentially equal exchange of capacity between the two Catawba units and further between PMPA's retained Catawba capacity and Duke's McGuire Nuclear Station. Through these exchange arrangements, PMPA's base load resources are provided from a pool of four units of a

similar size. Surplus Energy from Retained Capacity would be purchased by Duke or could be sold to other utilities.

The balance of PMPA's requirements not met by its Retained Capacity from the Project (or other generating projects which PMPA may acquire or construct) together with the backstand thereof, would be purchased by PMPA from Duke as Supplemental Capacity and would be equal to the annual peak Resource Demand (100% peak load) of the PMPA Participants less Retained Capacity. Supplemental Capacity and Energy will be supplied from a mix of all of Duke's resources. When any of I

the Catawba or McGuire units is operating at less than capability, Catawba backstand purchased from Duke would be used to meet the shortage. Backstand resources include I Reserve Energy and energy associated with Unused Supplemental

Capacity, to be supplied by Duke from a mix of Duke's resources, and Deficiency Energy, to be supplied essentially at Duke's incremental energy cost plus 10 percent.

D. Agreements Between PMPA and the Participants, Currently, PMPA's members individually contract with Duke Power Company for the provision by Duke of wholesale power services. Upon the commencement of the provision of services under the Interconnection Agreement, this relationship between the Participants and Duke will terminate, and a new contractual arrangement will be effectuated between each Participant and PMPA for the supply by PMPA of all of the Participant's power needs.

This arrangement will be structured through two power sales contracts: the Project Power Sales Agreement and the supplemental Power Sales Agreement. Under these agreements, PMPA will be obligated to provide all of the bulk power supply requirements of the Participants. This all requirements bulk power supply will be in excess of any allotments of power which a Participant may receive from the Southeastern Power Administration ("SEPA"). The power sales agreements obligate PMPA to provide two basic types of bulk power supply to the

Participants:

project power and supplemental power.

Each Participant covenants in the power sales agreements that it will fix and charge rates for electric service supplied from its electric system sufficient to meet all of its obligations under both power sales agreements and

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to pay any and all other amounts payable from such revenues, including its costs of operation and its obligation to pay principal and interest on any bonds, notes or evidences of indebtedness heretofore or hereafter issued by the Participant to finance its electric system.

RESPONSES TO SPECIFIC INFORMATION REQUESTS */

Ouestion 1 State separately for hydroelectric and thermal generating resources applicant's most recent peak load and dependable capacity for the same time period. State applicant's dependable capacity at time of system peak for each of the next 10 years for which information is available. Identify each new unit or resource. For hydroelectric generating capacity, indicate the number of kilowatt hours of use associated with each kilowatt of capacity during the " adverse water year" upon which dependable capa-city is based. Indicate average annual kilowatt-hour loads per kilowatt, associated with each system peak shown (exclusive of interchange arrangements).

RESPONSE

At this time PMPA does not own any generation (either hydroelectric or thermal) resources. Except for the City of Union, the Participants currently purchase all of their power supply at wholesale from Duke Power Company except for allocations of hydroelectric power received by certain of the Participants from the Southeastern Power Administration and except for approximately two MW of hydroelectric generation owned and operated by the City of Abbeville. Union presently purchases all of its power supply from Lockhart Power Company, which generates a portion of its requirements and purchases the balance at wholesale from Duke Power Company.

• / The information supplied in these responses to Specific Information Requests is with reference to PMPA only.

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PMPA does not expect to generate or sell power until Catawba Unit 1 achieves commercial operation. Under Duke's current schedule, Catawba Unit 1 is expected to achieve commercial operation in March, 1984. However, under Article 11 of the Interconnection Agreement, PMPA may elect to begin receiving power from Duke's McGuire nuclear units on July 1, 1983 or such later date as PMPA may designate up to the date of commercial operation of Catawba Unit 1. The decision as to whether PMPA will elect to receive power from the McGuire units under the provisions of Article 11 of the Interconnection_

Agreement will depend upon PMPA's evaluation of relevant economic and engineering factors at the time such election may be made.

Estimated system peak loads, annual load factor, dependable capability, Retained Capacity and new generating resources for the Participants for the next 10 years are as follows:

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Minimum Peak Annual PMPA Retained '

l Demand (1) Load Factor (2) Entitlement (3) Capacity (3)

(MW) (%) (MW) (MW) 1979 Actual 217 .525 - -

1980 Projected 222 .526 - -

1981 227 .526 - -

1982 233 .526 - -

1983 240 .526 - -

(4) ,

1984 247 .526 -

(5) - (4)(5) 143.125(6) 71.6 (6) 1985 256 .526 143.125(7) 76.4(4)(7) 286.25 (8) 148.0 (8) 1986 265 .527 286.25 157.5 1987 275 .527 286.25 167.0 1988 287 .527 286.25 176.6 1989 299 .527 286.25 186.1 1990 313 .527 286.25 195.6 (1) The Participants' noncoincident peak delivery point requirements net of SEPA allocations and Abbeville's self-generation.

(2) Relates Peak Demand to Participants' energy requirements net of SEPA. allocations and Abbeville's self-generation.

(3) Based on Catawba Unit 1 and Unit 2 currently scheduled commercial operation dates in March 1984 and September 1985, respectively. Reflects the Catawba Reliability Exchange that provides for PMPA entitlement to 12.5% of the output of each Catawba Unit. Minimum Retained capacity as determined pursuant to Article 6 of the Interconnection Agreement. Assumes expected maximum net dependable capability (MNDC) of 1145 MW for each Catawba Unit and 2360 MW for the McGuire Nuclear Station will be achieved.

(4) Schedule shown assumes initiation of the McGuire Nuclear Reliability Exchange at commercial operation of the Catawba Units. Initiation of the McGuire Exchange at the option of PMPA prior to commercial operation of the Catawba Units, pursuant to Article 11 of the Interconnection Agreement, would result in additional Retained Capacity of 71.6 MW during the periods July 1983 through February 1984 and January 1985 through

, August 1985 based on the considerations outlined in

! footnote (3).

l (5) Applies to the period January 1 through February 29, 1984.

(6) Applies to the period March 1 through December 31, 1984.

(7) Applies to the period January 1 through August 31, 1985.

Applies to the period September 1 through December 31, (8) 1985.

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Question 2 State applicant's estimated annual load growth for each of the next 20 years or for the period appli-cant utilizes in system planning. Indicate growth both in kilowatt requirements and kilowatt hour requirements.

Response

Estimated annual load growth

• for 1982 through 1999 is as follows:

Kilowatts x 103 Kilowatthours x 103 1982 233 1,074,533 1983 240 1,105,690 1984 247 1,140,897 1985 256 1,180,373 1986 265 1,223,907 1987 275 1,271,797 1988 287 1,324,802 1989 299 1,382,837 1990 313 1,446,283 1991 327 1,509,727 1992 340 1,573,169 1993 354 1,636,609 1994 368 1,700,047 1995 381 1,763,482 1996 395 1,826,915 1997 409 1,890,350 1998 422 1,953,781 1999 436 2,017,212 Average Annual Growth Rate: 1982-1999 3.75% 3.77%

• PMPA Participants' delivery point requirements net of SEPA allocations and Abbeville's self-generation.

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' Question 3 State estimated annual load growth in kilowatts and kilowatt hours of companies or pools upon which the economic justification of the subje ct unit is based for each of the next 20 years or for the period applicant utilized in system planning. Identify each company or pool member.

Response

Economic justification for PMPA's participation in the Project is based solely on the growth in native loads on the Participants' systems and Purchased Capacity and Purchased Energy sales to Duke in the initial years of the Project.

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. . Question 4 For the year the subject unit would first come on line, state estimated annual load growth in kilowatts and kilowatt hours of any coordinating group or pool of Which the applicant is a member (other than the coordinating group or pool referred to in the applicant's response to Item 3) which has generating and/or transmission planning functions.

Identify each company or pool member Whose loads are indicated in the response thereto.

Response

PMPA has executed an Interconnection Agreement with Duke dated August 1, 1980. This agreement will be submitted to the Federal Energy Regulatory Commission for its approval or acceptance for filing without suspension. Duke's projected annual load (including the Participants' requirements) for the years 1984 and 1985 is as follows:

1984 12,212,000 KW 1985 12,692,000 KW t

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Question 5 State applicant's minimum installed reserve cri-terion (as a percentage of load) for the period When the subject unit will first come on line. If the applicant shares reserves with other systems, iden-tify the other systems and provide minimum installed reserve criterion (as a percentage of load) by contracting parties or pool for the period When the proposed unit will first come on line.

Response

Under the terms of Section 8.3 of the Inter-connection Agreement, PMPA will satisfy its reserve obligation by purchasing reserve capacity equal to 15% of PMPA's Retained Capacity. In addition, under the terms of that Section 8.3, PMPA will pay for spinning reserves proportional to that required for the Duke system. PMPA does not presently plan to shrpe reserves with any other system.

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- , Question 6 Describe methods used as a basis to establish, or as a guide in establishing the criteria for applicant's and/or applicant's pool's minimum amount of installed reserves (e.g., (a) single largest unit down, (b) probability methods such as loss of load one day in 20 years, loss of capacity once in 5 years, (c) other methods and/or (d) judgment. List contingencies other than risk of forced outage that enter into the determination).

Responset The Interconnection Agreement between Duke and PMPA requires PMPA to purchase Reserve Capacity equal to 15 percent of PMPA's Retained Capacity in each year. This contractual provision was negotiated between Duke and PMPA and is con-sistent with generally accepted practice for interconnected 4

systems. The reserve requirement is based on abnormal weather conditions, forced outage of the largest unit on the Duke system during the peak period and capacity reductions due to

outages of auxiliary equipment.

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2 Question 7 Indicate whether applicant's system interconnections are credited explicitly or implicitly in establishing applicant's installed reserves.

Responses:

PMPA's system interconnections are credited impli-citly in establishing installed reserves.

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Question 8 List rights to receive emergency power and obliga-tions to deliver emergency power, rights or obliga-tions to receive or deliver deficiency power or unit power, or other coordinating arrangements, by reference to applicant's Federal Power Commission (FPC) rate schedules (i.e., ABC Power and Light Co.,

FPC Rate Schedule No. 15 including supplements 1-5),

and also by reference to applicant's state commission filings. Where documents are not on file with the FPC, supply copies, or where not reduced to writing, describe arrangements. Identify for each such arrangement the participating parties other than applicant. Provide one line electrical and geographic diagrams of coordinating groups or power pools (with generation or transmission planning functions) of which applicant's generation and transmission facilities constitute a part.

Response

The Interconnection Agreement between Duke and PMPA provides for power supply and backstand services sufficient to meet the Participants' power and energy requirements. In addition, Ehe Interconnection Agreement provides for wheeling by Duke of purchased and owned power supply resources to the Participants' delivery points. A copy of the Interconnection Agreement is attached hereto as Exhibit 1.

PMPA's use of the various power supply resources available under the Interconnection Agreement for meeting its Participants' needs will be measured against the sum of the Participants' requirements individually metered at each Participant's delivery point. This sum will be determined on an after the fact basis from recording meters at each delivery point. These metered requirements will be increased by the average transmission losses on the Duke system to develop the

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O e demand devel and energy use of PMPA at the production level.

The demand so determined is termed " Hourly Resource Demand." 1

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To meet this Hourly Resource Demand and the associated energy requirements of the Participants, PMPA will have available Retained Capacity and associated output, Supplemental Capacity and Energy and backstand services.

Supplemental Capacity in any year will be the Peak Resource Demand (i.e., the Hourly Resource Demand which occurs, in any month or year at the time of Duke's system peak) less Retained Capacity. Supplemental Energy in any hour will be the energy requirements of PMPA above the level of Retained Capacity.

Because PMPA's ownership entitlement of 286 MW is initially in excess of its projected base load requirements, the Interconnection Agreement provides for the purchase of excess capacity by Duke, referred to in the Interconnection Agreement as Purchased Capacity. In the initial year of operation, PMPA plans to sell approximately 50% of its entitlement to Duke as Purchased Capacity. The amount sold back to Duke will decline over a fifteen year period until, in the sixteenth year, the Agency will retain its entire entitlement. Therefore, Retained Capacity in any year is PMPA's entitlement less the Purchased Capacity paid for by Duke. The Interconnection Agreement allows PMPA to increase its Retained Capacity in any year, but not to decrease it from the previous year's level.

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. . l With respect to PMPA's ownership interest in Catawba Unit 2, the Interconnection Agreement provides for a reliability exchange between the two units of the Catawba Nuclear Station and between the Catawba units and the two units of Duke's McGuire Nuclear Station. The McGuire units are similar in many technical and physical respect to the Catawba units and are currently scheduled to be in commercial operation in 1981 and 1983. These reliability exchanges entitle PMPA to receive Retained Capacity and associated output as a result of its ownership entitlement in Catawba Unit 2 in essentially equal amounts from four similar nuclear units on the Duke system. They are intended to reduce PMPA's economic risk in ovnership of one nuclear unit and to diversify PMPA's resources for meetings its power and energy requirements.

The Interconnection Agreement provides for backstand of PMPA's Retained Capacity in the event of a forced outage or reduction in output of one of the Catawba or McGuire units.

These backstand resources consist of (a) Reserve Capacity and Energy, (b) energy associated with one-half of Unused Supplemental Capacity, and (c) Deficiency Energy. These resources would be dispatched in such order against any shortage up to the level of Retained Capacity.

PMPA will pay for Reserve Capacity in the amount of 15% of PMPA's Retained Capacity in any year at Duke's average system capacity cost. Unused Supplemental Capacity is the difference between Peak Resource Demand and Hourly Resoarce

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Demand above the level of Retained Capacity. Reserve Energy and energy associated with Unused Supplemental Capacity will be provided at Duke's average system energy cost, while Deficiency Energy will be at Duke's incremental energy costs

, plus 10%.

In light of Duke's commitment to provide Supplemental Capacity and Energy and wheeling, the Interconnection Agreement imposes certain coordinating requirements (including reasonable advance r.otice) on PMPA's purchase or construction of other electric generating facilities.

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Question 9 List, and provide the mailing address for non-affiliated electric utility systems with peak loads smaller than applicant's Which serve either at wholesale or at retail adjacent to areas served by the applicant. Provide a geographic one line diagram of applicant's generating and transmission facilties (including subtransmission) indicating the location of adjacent systems and as to such systems indicate (if available) their load, their annual load growth, their generating capacity, their largest thermal generating unit size, and their minimum reserve criteria.

Response

At the present time, PMPA does not generate or sell electric power 1/; therefore, there are no non-affliated electric utility systems with peak loads smaller than applicant's Which serve either at Wholesale or at retail adjacent to areas served by applicant.

PMPA does not have any generating or transmission facilities and therefore the request for a geographic one line diagram of its existing facilities is not applicable.

1/ As noted in response to Item 1, one of the Participantr, the City of Abbeville, owns and operates approximately 2 Mw of hydroelectric generation.

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Question 10 List separately those systems in Item 9 which purchase from applicant (a) all bulk power supply and '

(b) systems which purchase partial bulk power supply requirements. Where information is available to I applicant, identify those Item 9 systems purchasing part or all of their bulk power supply requirements from suppliers other than applicant.

Response

None.

Question 11 State as to all power generated and sold by appli-cant the most recent average cost of bulk power supply experienced by applicant (a) at site of generating facilities, (b) at the delivery points from the pri-mary transmission (backbone) system, (c) at delivery points from the secondary transmission system, and (d) at delivery points from the distribution system, in terms of dollars per kilowatt per year, in mills per kilowatt hour, and in both the kilowatt costs and kilowatt hour costs divided by the kilowatt hours. If wholesale sales are made at varying voltages, indicate average costs at each voltage.

Response

At the present time, PMPA does not generate or sell power.

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Ouestion 12 State (a) for generating facilities and (b) for transmission sub-divided by voltage classes, the most recent estimated cost of applicant's bulk power supply expansion program of Which the subject unit is a part, in terms of dollars per kilowatt per year, in mills per kilowatt hour and in both the kilowatt costs and kilowatt hour costs divided by the kilowatt hours. Also state separately the most recently estimated cost of subject unit (s).

Response

I. Estimated Cost of Bulk Power Supply Expansion Program <

Costs Variable Fixed Costs Costs Total Costs

$/KW/ Year Mills /KWH Mills /KWH Generating Facility Additions

• 156.55 8.73 38.56 II. Estimated Cost of 25% of Catawba Unit 2 (including initial fuel core)

Cost

$326,167,000

• Generation facility additions consist of 25%

ownership share (286 MW) of Catawba Unit 2. The cost includes fixed charges on capital investment, i operation and maintenance costs and fuel costs for the first full year (1987) of debt service (interest only) net of revenues from Purchased Capacity and Purchased Energy sales to Duke and credit for Rate ,

Stabilization Fund withdrawal. The costs Ehown are at bus bar.

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Question 13 List and describe all requests for, or indications of interest in, interconnection and/or coordination and purchases or sales of coordinating power and energy from adjacent utilities listed in Item 9 since 1960 and state applicant's response thereto.

List and describe all requests for, or indications of interest in, supply of full or partial require-ments of bulk power for the same period and state applicant's response thereto. ,

Responses Not applicable to PMPA.

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• Question 14 List (a) agreements to Which applicant is a party (reproducing relevant paragraphs) and (b) State laws (supply citations only) which restrict or preclude coordination by, with, between, or among any electric utilities or systems identified in applicant's response to Items 8 and 9. List (a) agreements to Which the applicant is a party (reproducing relevant paragraphs) and (b) State laws (supply citations only) which restrict or preclude substitution of service or establishment of service of full or partial bulk power supply requirements by i an electric utility other than applicant to systems identified in Items 8 and 9. Where the contract provision appears in contracts or rate schedules on file with a Federal agency, identify each in the same form as in previous responses. Where the contract has not been filed with a Federal agency, a copy should be supplied unless it has been supplied '

pursuant to another item hereto. Where it is not in writing, it should be described.

l Response.

PMPA has no knowledge of any State laws and PMPA is not a party to any agreements Which restrict or preclude coordination by, with, between or among any electric utilities, or Which restrict or preclude substitution of resale service or establishment of resale service of full or i partial bulk power supply requirements by an electric utility,  !

other than PMPA, to systems identified in Items 8 and 9. l Article 7 of the Interconnection Agreement between l

l PMPA and Duke, supplied in response to Item 8, requires l PMPA to give eight years prior written notice to Duke if PMPA }

f desires to reduce the amount of its Supplemental Capacity l I

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• l obligation. However, that Article 7 permits PMPA to reduce its Supplemental Capacity obligation to a limited extent by constructing or acquiring generating resources in the nature of a low-head hydroelectric unit, a windmill or a small garbage-burning plant.

Section 3 of the Supplemental Power Sales Agreement between PMPA and each Participant, the form of which is attached hereto as Exhibit 2, providas for PMPA to sell and the Participants to purchase all requirements bulk power supply. Pursuant to the provisions of Section 2 of that agreement, a Participant may terminate the agreement on ten years prior written notice to PMPA.

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l Question 15 State, at point of delivery, average future costs of power purchased from applicant to adjacent systems identified in applicant's response to item 9 in terms of dollars / month /kw for capacity, mills /kwh for energy and mills /kwh for both power and energy at purchaser's present load factor (a) at present load, (b) at 50 percent increase over present load, (c) at 100 percent increase over present load, and (d) at 200 percent increase over present load. (All costs should be determined under present rate schedules.)

Where sales are made under contracts or rate schedules on file with a Federal agency and not included in the response to Item 9, identify each in the same form as in previous responses. Where the contract has not been filed with a Federal agency, a copy should be supplied.

Response

Not applicable.

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Question 16 State whether applicant has prepared, caused to be prepared, or received engineering studies for generation and transmission expansion programs which include loads of each system in Item 9.

j Responses No.

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Question 17 List adjacent systems to which applicant has offered to sponsor or to conduct system surveys in con-templation of an offer by applicant to purchase, merge or consolidate with said adjacent system, sub-sequent to January 1, 1960.

Responses None

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Question 18

! List applicant's offers or proposals to purchase, 4

merge or consolidate with electric utilities, sub-sequent to January 1, 1960.

Response

I None.

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• Question 19 List all acquisitions of or mergers or con-solidations with electric utilities by applicant, subsequent to January 1, 1960, including:

(a) The name and principal place of business of the system prior to acquisition, merger or consolidations (b) The date the acquisition, merger or con-solidation was consummated; (c) Gross annual revenue and most recent peak load, dependable capacity and the largest thermal generating unit of the system, prior to the date of consummation.

Responses None l

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Question 20 State applicant's six (or fewer if there are not six) lowest industrial or large commercial rates for firm electric power supply in terms of cost for power and energy in mills per kilowatt hour (and separately, the demand and energy components) and indicate the portion of the charge attributed to bulk power supply. State the rates or rate blocks applicant utilizes for its six (or fewer if there are not six) promotional services such as electric space heating, electric hot water heating, and the like, in terms of mills per kilowatt hour for power and l energy and indicate the portion of the rate or rate blocks attributed to bulk power supply.

Responses None. PMPA does not serve retail customers.

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