ML19364A154

Applicants' Answer to Petition to Intervene and Request for Hearing of the Kansas Electric Power Cooperative, Inc

ML19364A154
Person / Time
Site:	Wolf Creek
Issue date:	03/01/1999
From:	Gaukler P, Lepre M, Silberg J Kansas City Power & Light Co, Kansas Electric Power Cooperative, Kansas Gas & Electric Co, NKC, Shaw, Pittman, Potts & Trowbridge
To:	NRC/OCM
SECY/RAS
References
50-482-LT
Download: ML19364A154 (19)

Text

UNITED STATES OF AMERICA OOC t<ETE D u9:r ,,

NUCLEAR REGULATORY COMMISSION

• 99 HAR - 3 P3 :18

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In the Matter of )

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W o If Creek Nuclear Operating ) Docket No. 50-482 Corporation, et. al. )

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Wolf Creek Generating Station, Unit No. 1 )

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ANSWER OF APPLICANTS TO PETITION TO INTER-VENE AND REQUEST FOR HEARING OF THE KANSAS ELECTRIC POWER COOPERATIVE, INC.

I. INTRODUCTION On October 27, 1998, Kansas Gas and Electric Company ("KGE"), Kansas City Power &

Light Company ("KCPL"), and NKC, Inc. ("NKC") (collectively referred to hereafter as the "Applicants") submitted an application 1 requesting the Nuclear Regulatory Commission' s

("NRC" or " Commission") consent under 10 C.F.R. § 50.80 to the transfer of KGE ' s and KCPL ' s possession-only interest in the Operating License for the Wolf Creek Generating Sta-tion, Unit 1 ("Wolf Creek") to NKC, which will later be renamed Westar Energy, Inc. (NKC and Westar Energy, Inc. will hereafter be collectively referred to as " Westar Energy"). The Applica-tion also requests the Commission to amend the Operating License pursuant to 10 C.F .R. § 50.90, in order to delete KGE and KCPL as licensees and to add Westar Energy in their place.

"Application to Transfer KGE's and KCPL 's Possession-Only Interest in Operating License No.

NPF-42 for the Wolf Creek Generating Station and to Amend Operating License No. NPF-42 to Re-flect Transfer of Ownership" (the "Application"). The Application was submitted under cover letter from the Wolf Creek Nuclear Operating Corporation (" WCNOC"), which joined the Application with respect to the purely administrative license amendment request under IO C.F.R. § 50.90.

KGE and KCPL each currently owns an undivided 47% interest in Wolf Creek; the re-maining 6% undivided interest in Wolf Creek is held by the Kansas Electric Power Cooperative, Inc. ("KEPCo"). KGE, KCPL, and KEPCo each own the stock of WCNOC, and are responsible for the costs of operating, maintaining and decommissioning Wolf Creek in proportion to their respective ownership interests in Wolf Creek. As the Application explains in detail, Westar En-ergy is the new company to be formed as a result of a transaction in which the electric utility op-erating assets of Western Resources, Inc. (KGE's parent), KGE, and KCPL will be combined.

Western Resources, Inc. ("Western Resources"), operating under its trade name KPL and through its wholly owned subsidiary KGE, is a public utility engaged in the generation, transmis-sion, distribution, and sale of electric energy in Kansas. 2 On February 18, 1999, KEPCo filed a Petition to Intervene and a Request for Hearing in this proceeding (the "Petition"). 3 As explained fully below, KEPCo's request that it be granted leave to intervene and its request that the NRC conduct a hearing on antitrust issues should be denied, because KEPCo ' s Petition fails to meet the NRC ' s requirements for hearing requests and intervention petitions set forth in 10 C.F .R. § 2.1306. Specifically, KEPCo ' s Petition is deficient because the issues raised therein are outside of the scope of this license transfer proceeding, and KEPCo's Petition does not make the necessary factual showing to support its position. Even if the NRC does not find KEPCo's intervention and/or request for hearing to be deficient under Section 2.1306, the NRC should reject KEPCo's request for hearing on antitrust issues because As noted in the Application, Western Resources has other business operations in addition to its elec-tric utility operations. See Application at 4 n.3.

Applicant received the Petition and one of the three exhibits by e-mail February 18, 1999; the other two exhibits it later received by regular mail.

the NRC has made no finding of significant change which, under NRC regulations, is a prerequi-site for holding a hearing on anti-trust issues.

II. DISCUSSION A. KEPCo's Request For Intervention And Hearing Fails To Meet NRC Requirements And Should Be Denied

1. NRC Requirements On December 3, 1998, the NRC promulgated new regulations governing the hearing pro-cess for NRC approval oflicense transfers. 63 Fed. Reg. 66,721. Section 2.1306 of new Subpart M to 10 C.F .R. Part 2 sets forth the standards a person must meet when submitting hearing re-quests and interventions in license transfer proceedings. According to Section 2.1306(b), hear-ing requests and intervention petitions must:

(2) Set forth the issues sought to be raised and (i) Demonstrate that such issues are within the scope of the proceed-ing on the license transfer application, (ii) Demonstrate that such issues are relevant to the findings the NRC must make to grant the application for license transfer, (iii) Provide a concise statement of the alleged facts or expert opinions which support the petitioner's opposition on the issues and on which the petitioner intends to rely at hearing, together with references to the spe-cific sources and documents on which the petitioner intends to rely to sup-port its position on the issues, and (iv) Provide sufficient information to show that a genuine dispute ex-ists with the applicant on a material issue of law or fact.

Id. The failure of a petitioner to comply with any one of these requirements is grounds for dis-missing the issue. 4 The requirements for the admission of issues under Subpart M are essentially the same as the Subpart G requirements in 10 C.F.R. § 2.714(b)(2) for the admission of contentions. Both sets of requirements serve to maintain the efficiency of proceedings by eliminating litigation over issues that simply have no bearing on the Commission's ultimate decision under its regula-tions. As stated by the Appeal Board in Philadelphia Electric Company (Peach Bottom Atomic Power Station, Units 2 and 3), 5 the purpose of 10 C.F.R. § 2.714 is to ensure "that the proposed issues are proper for adjudication in the particular proceeding." The same consideration applies with equal or greater force in Subpart M proceedings because Subpart M was promulgated spe-cifically to increase the efficiency and speed of license transfer proceedings. 6 Therefore, prece-dent under Subpart G on the admission of contentions should generally apply to Subpart M pro-ceedings regarding the admission of issues.

As explained fully below, directly relevant to considering KEPCo's Petition in this case are: (1) the first requirement of 10 C.F.R. § 2.1306(b)(2), because - notwithstanding KEPCo's claims to the contrary - the issues raised by KEPCo do not amount to antitrust concerns and thus 4

See Notice of Consideration of Approval of Transfer of Facility Operating License and Issuance of Confonning Amendment, and Opportunity for a Hearing; Wolf Creek Nuclear Operating Corpora-tion, Wolf Creek Generating Station, 64 Fed. Reg. 4,726 (1999) ("requests [for a hearing] must com-ply with the requirements set forth in 10 C.F.R. 2.1306"); 10 C.F.R. § 2.1306(b) (requirements are mandatory).

ALAB-216, 8 AEC 13, 20-21 (1974).

6 See 63 Fed. Reg. at 66,722.

are not within the Commission's scope ofreview here;7 and (2) the third criterion, which requires a factual basis for the admission of issues. 8

2. KEPCo's Issues Are Outside the Scope of This License Transfer Pro-ceeding KEPCo's Petition argues that, in this proceeding, the NRC must address certain issues which KEPCo claims are "antitrust" or "market power" concerns. None of those issues, how-ever, deal with the type of antitrust concerns that the NRC has traditionally addressed under sec-tion 105c of the Atomic Energy Act, such as restrictions on transmission access. In fact, an ex-amination of KEPCo's petition reveals that KEPCo's complaints amount to nothing more than its dissatisfaction with previously-negotiated business arrangements that are totally unrelated to competitive concerns or the license transfer proposed in the Application. Accordingly, the issues raised by the Petition are outside the scope of this license transfer proceeding. In addition, KEPCo's issues are speculative and unsupported by the facts. For these reasons, KEPCo ' s Peti-tion is deficient under Section 2.1306(b).

The first so-called "antitrust" issue raised in the Petition relates to Western Resources' authority over what KEPCo calls "after-the-fact accounting." 9 At the outset, KEPCo's concern apparently relates to certain provisions in existing transmission contracts between KEPCo and Western Resources regarding the accounting process under which Western Resources dispatches By virtue ofraising issues that are outside the scope of the NRC's review, KEPCo 's Petition also necessarily fails to "[d]emonstrate that such issues are relevant to the findings the NRC must make to grant the application for license transfer" as required by IO C.F.R. 2.1306(b )(2)(ii).

8 By virtue of its failure to provide a factual basis, the KEPCo petition also fails to "[p]rovide suffi-cient infonnation to show that a genuine dispute exists with the applicant on a material issue of law or fact" as required by IO C.F.R. § 2. I 306(b )(2)(iv). See Florida Power and Light Company (Turkey Point Nuclear Generating Plant, Units 3 and 4), LBP-90-16, 31 NRC 509, 512, 521 n.12 (1990).

9 Petition at 6-1 I.

its resources and KEPCo's resources. KEPCo alleges that, when dispatching resources, Western Resources currently "abuses its authority over after-the-fact accounting to deny KEPCo the full benefit of the economic dispatch ofKEPCo's resources." 10 KEPCo argues that the merger would increase Western Resources' alleged abuse of the accounting provisions, and appears to claim -

though far from clear - that retaining two sets of antitrust conditions will result in such abuse. 11 At the outset, whatever KEPCo claims to be the relationship - if any - between its ac-counting claims and the antitrust conditions, KEPCo's misconstrues the intent and effect ofre-taining and making Westar Energy the licensee with respect to both the KGE and KCPL antitrust conditions. 12 As set forth in the Application, Westar Energy would use the "more restrictive set of conditions for any given circumstances" as those conditions would apply to Westar Energy.

Thus, KEPCo can in effect choose which set of antitrust conditions would apply to its commer-cial relationship with Westar Energy, since by their very terms the more general KCPL condi-tions would apply to any entity in Westar Energy's service area- including KEPCo. This fact is specifically stated in the Application. See Application at 10 n. 8 (the "general KCPL conditions .

. . would be applicable to any 'entity' ... in Westar Energy ' s service area, including KEPCO to the extent KEPCO were to seek the application of these provisions"). KEPCo completely mis-construes this clear intent and effect of making Westar Energy the licensee with respect to both the existing KGE and KCPL conditions. As such, KEPCo's apparent attempt to bootstrap its af-10 Id. at 8.

II Id. at 9-10.

12 As explained in the Application, the KCPL antitrust conditions are broad conditions which apply to any entity within KCPL ' s service area whereas the KGE conditions mostly concern KGE's commer-cial relationship with KEPCo. See Application at 9-10, 12 and notes 7 and 9.

ter-the-fact accounting claims to the Wolf Creek antitrust conditions (presumably in an attempt to gain NRC antitrust jurisdiction) must be rejected. 13 Moreover, KEPCo's actual after-the-fact accounting claims are totally unrelated to any alleged anti-competitive effects of the merger, and are wholly outside the Commission's scope of review here. An antitrust review of the impact of a change in licensee is not the appropriate fo-rum for KEPCo to challenge the implementation of terms and conditions contained in transmis-sion agreements with Western Resources that are on file with- and have been approved by - the Federal Energy Regulatory Commission ("FERC"). 14 If KEPCo has a concern regarding whether such agreements are being administered in a just and reasonable manner, such a claim is properly raised elsewhere, such as in a complaint proceeding with the FERC under Section 206 of the Federal Power Act 15 - which has expertise in such matters - or a civil suit on the contract. It is the FERC and not the NRC that is charged with resolving such disputes. 16 KEPCo ' s other concerns similarly are outside the scope of this license transfer proceed-mg. KEPCo's Petition argues that Westar Energy ' s post-merger ownership of 94% of Wolf Creek would be anti-competitive vis-a-vis KEPCo, which only has a six percent ownership inter-13 Similarly, KEPCo ' s argument that, "at a minimum the KGE license conditions should be amended to state expressly that a license condition specifically applicable to KEPCo will not restrict KEPCo ' s rights or Westar Energy's duties to KEPCo under other, more general [KCPL] license conditions" see Petition at 10, should be rejected, for such an amendment is not necessary since KEPCo would have the ability to choose which set of antitrust conditions would apply to it, as explained above.

14 See Western Resources ' FERC Tariff No. 264.

15 Section 206 of the Federal Power Act perm its aggrieved parties to challenge the rates, terms and conditions implemented by public utilities for any interstate sale or transmission of electric power.

16 Indeed, KEPCo has previously raised concerns regarding the accounting treatment for KEPCo gen-eration dispatched in the Western Resources control area in Western Resources ' open access tariff filing, FERC Docket No. ER95- l 575-0000, which were addressed as part of the settlement in that docket.

est in the plant. 17 KEPCo states that, through its 6% ownership, KEPCo currently holds the de-ciding vote when the other two owners disagree. KEPCo is concerned that, because Westar En-ergy will have majority ownership of the plant after the merger, the proposed merger would cre-ate "market power" through Westar Energy ' s ability to control votes regarding the operation of WolfCreek. 18 The fact that the merged company would have majority control over the jointly-owned plant does not create concerns regarding market power. It is commonplace in the nuclear indus-try for a single entity to have a majority ownership in a jointly-owned plant. Moreover, the Ownership Agreement was intended to provide KEPCo with a six percent interest in the plant, 19 not the inalienable right to veto decisions by its co-owners with which it disagrees. When it en-tered into the Ownership Agreement, KEPCo knew that it was purchasing a minority interest in the plant, and thus could not reasonably have expected that, as part of its bargain, it would have the ability to control operating decisions. There simply is nothing anti-competitive or unusual about the majority owner of Wolf Creek having the power to control decisions regarding how the plant is operated.

KEPCo states that, assuming the Commission approves the license transfer application, "the only reliable way to prevent the potential anti-competitive injury to KEPCo" created by Westar Energy' s majority ownership in the plant (as well as injuries relating to KEPCo ' s other "antitrust" complaints) is for "KEPCo to be allowed to sell, on an unencumbered basis, its inter-17 Petition at 11-12.

18 Id. at 12.

19 See Wolf Creek Generating Station Ownership Agreement dated December 28, 1981 , Article 1.4.

Tne Ownership Agreement is contained as Attachment 3 to the Petition.

est in [Wolf Creek] to the applicants or a third party." 20 As explained below, KEPCo further ar-gues that a Right of First Refusal ("ROFR") contained in the Ownership Agreement frustrates KEPCo' s efforts to sell its interest to a third party. The Commission should not allow KEPCo to succeed in its attempts to extricate itself from a negotiated business arrangement that places rea-sonable restrictions on KEPCo's right to sell which KEPCo now finds unfavorable, merely by labeling -- incorrectly -- the effect of this provision as anti-competitive.

In its Petition, KEPCo claims that the proposed merger's impact on how parties to the Ownership Agreement will exercise their ROFR is another form of "market power" that the Commission must address as part of the license transfer. 21 As KEPCo points out, under Section 5.4 of the Ownership Agreement, an owner wishing to sell its share of Wolf Creek must give the other owners at least one year to exercise a ROFR following receipt of a bona fide offer. KEPCo complains that it "has asked the other owners to waive this ROFR prerequisite, because it makes a sale of KEPCo ' s share extremely unlikely; to date, they have refused." 22 KEPCo ' s suggested remedy is for the Commission to alter the Ownership Agreement by requiring the following as conditions on approval of the license-transfer: (1) deletion of the ROFR provision from the Ownership Agreement; and (2) requiring that the Applicants cannot sell, lease, or otherwise transfer all or a part of their interest in WCNOC to any third party unless KEPCo is provided reasonable notice of the transaction and an opportunity to participate in the transaction. 23 20 Petition at I 1-12.

21 Id. at 13-14.

22 Id . at 13.

23 Id. at 13-14 The fact that the other owners of Wolf Creek may choose to enforce an agreed-upon ROFR provision in Wolf Creek's Operating Agreement does not amount to an anti-competitive act. Clearly, KEPCo is seeking to use this proceeding in a rather transparent attempt to avoid the impact of a perfectly legitimate contract provision to which it agreed more than 17 years ago but now no longer finds beneficial. Moreover, the ROFR provisions in the Operating Agreement are not unique in the industry, nor to the Applicants' knowledge have they been found to be anti-competitive. In fact, the Ownership Agreements for KGE's other jointly-owned plants contain identical ROFR provisions. 24 For these reasons, the issues raised by KEPCo's Petition are not within the scope of this license transfer proceeding, and the NRC should deny KEPCo's intervention and request for hearing.

Moreover, the NRC should not be concerned that any potential anti-competitive effects of the proposed merger will not be addressed or will go unreviewed. As pointed out in the Appli-cation, both Western Resources and KCPL have tariffs on file with the FERC that comply with the FERC's open access requirements in Order No. 888. In addition, Westar Energy will file its own open access tariff with FERC that will allow access to the combined transmission network of Westar Energy at a single transmission rate rather that the cumulative charges that currently apply to these lines. The effect of open access transmission - which requires that the transmis-sion owner provide service to all other entities utilizing the same rates, terms, and conditions that it applies to itself - will be to increase access to competitively priced power within the service 24 See Agreement for the Construction and Operation of Jeffrey Energy Center (dated January 13 ,

1975), Article 19; La Cygne Station Ownership Agreement (dated April 19, 1971 ), Article 5 .4.

areas of Western Resources and KCPL, potentially decreasing purchased power costs for cus-tomers in those areas.

In addition, the FERC and the Kansas State Corporation Commission ("KCC") will re-view the competitive effects of the merger. In fact, in proceedings before the FERC and the KCC, KEPCo has raised issues similar to those raised by the Petition. Likewise, under the Hart-Scott-Rodino Antitrust Improvement Act, the U.S. Department of Justice ("DOJ) and the Fed-eral Trade Commission will scrutinize such issues as well. Furthermore, the NRC can reasona-bly defer to the FERC's pending anti-trust review of the merger in FERC Docket No. EC97 000, since the FERC 's Policy Statement regarding mergers emphasizes evaluating the effect of mergers on competition as its primary concem. 25 As the NRC's Regulatory Guide 9.1 26 regard-ing antitrust matters recognizes:

In general, reliance will be placed on the exercise of the Federal Power Commission [now the FERC] and State agency jurisdiction regarding the specific terms and conditions of the sale of power, rates for transmission services, and such other matters as may be within the scope of their jurisdiction.

63 Fed. Reg. at 66,731. Thus, the NRC need not strain to consider KEPCo's so-called antitrust issues as part of this license transfer proceeding given that other federal and state agencies will assess any alleged anti-competitive effect of the merger.

25 Order No. 592, Inquiry Concerning the [Federal Energy Regulatory] Commission's Merger Policy Under the Federal Power Act: Policy Statement, 77 FERC ,r 61 ,263 ( 1996).

26 Regulatory Staff Position Statement on Antitrust Matters ( 1973).

3. KEPCo Has Failed To Adequately Support The Issues Raised In Its Petition In addition to raising issues outside the scope of this proceeding, KEPCo' s allegations are speculative and not adequately supported. Under 10 C.F .R. § 2.1306(b)(2)(iii), a petitioner seeking to intervene in a license transfer proceeding must:

Provide a concise statement of the alleged facts or expert opinions which support the petitioner' s position on the issues and on which the petitioner intends to rely at hearing, together with references to the specific sources and documents on which the petitioner intends to rely to support its position on the issues.

63 Fed. Reg. at 66,731. This requirement is virtually identical to that of Section 2.714(b)(2)(ii) of Subpart G. 27 Under these rules, a petitioner may not file vague, unparticularized contentions or is-sues.28 Nor may it base a contention on mere speculation,29 or a bald, conclusory allegation. 30 Thus, a statement "that simply alleges that some matter ought to be considered" is also not suffi-cient.31 Furthermore, the mere citation of an alleged factual basis for a contention or issue is not sufficient. Rather, a petitioner is obligated "to provide the [technical] analyses and supporting 27 10 C.F.R. § 2.714(b)(2)(ii).

28 Baltimore Gas & Electric Company (Calvert Cliffs Nuclear Power Station, Units 1 and 2), CLI 25, 48 NRC _ , _ ,s lip op. at 25 (1998).

29 See, Yankee Atomic Electric Company, (Yankee Nuclear Power Station), CLI-96-7, 43 NRC 235, 267 (1996).

30 Private Fuel Storage, L.L.C., (Independent Spent Fuel Storage Installation), LBP-98-7, 47 NRC 142, 180 (1998) (citing Connecticut Bankers Ass'n v. Board of Governors, 627 F.2d 245,251 (D.C. Cir.

I 980)).

31 Sacramento Municipal Utility District (Rancho Seco Nuclear Generating Station), LBP-93-23 , 38 NRC 200, 246 (1993), review decl., CLI-94-2, 39 NRC 91 (1994).

evidence" or other information "showing why its bases support its contention." 32 Where a peti-tioner has failed to do so, "the licensing board may not make factual inferences on [the] peti-tioner's behalf." 33 Similarly, expert opinion alleged to provide the basis for a contention "is not to [be] accept[ ed] uncritically:"

[A]n expert opinion that merely states a conclusion (e.g., the appli-cation is "deficient," "inadequate," or "wrong") without providing a reasoned basis or explanation for that conclusion is inadequate because it deprives the Board of the ability to make the necessary, reflective assessment of the opinion as it is alleged to provide a ba-sis for the contention. 34 KEPCo's allegations regarding anti-competitive harm do not meet these standards.

With respect to KEPCo ' s claims regarding "after-the-fact accounting," KEPCo states that Western Resources currently "abuses its authority over after-the-fact accounting . . . ." 35 In order to support this allegation, KEPCo cites expert testimony which states that " [t]he proposed merger would enhance this market power, because Western Resources ' present authority over after-the-fact accounting would be extended to encompass the KCPL area in addition to the KPL [WRI]

and KGE areas."36 The cited testimony adds: "Thus, it is likely that Westar would exercise the 32 Georgia Institute of Technology (Georgia Tech Research Reactor, Atlanta, Georgia), LBP-95-6, 41 NRC 281 , 284, vacated in part and remanded on other grounds, CLI-95-10, 42 NRC 1, aff din part, CLI-95-12, 42 NRC 111 (1995).

33 Id., citing Arizona Public Service Company (Palo Verde Nuclear Generating Station Units I, 2, & 3),

CLl-91-12, 34 NRC 149 (1991).

34 Private Fuel Storage, LBP-98-7, 47 NRC at 181 .

35 Petition at 8.

36 Id. at 9.

enhanced market power that it would gain through the proposed merger to arbitrarily raise KEPCo's costs."37 This testimony does not create a sufficient basis for KEPCo's allegation. First, KEPCo has provided no information supporting its claim that Western Resources currently "abuses its authority over after-the-fact accounting," which is the necessary predicate for KEPCo's expert's conclusion that this abuse would be "enhanced" after the merger. Second, it is nothing more than mere speculation for KEPCo's expert to state that Westar Energy "is likely" to exercise en-hanced market power. KEPCo has not provided- nor could it provide - any analysis or evi-dence supporting its assumption regarding what Westar Energy is likely to do regarding the eco-nomic dispatch of power. In fact, it must be presumed - given the complete absence of any par-ticularized showing to the contrary by KEPCo - that Westar Energy will perform the dispatch of power in a manner that is consistent with the terms and conditions contained in FERC-approved power supply agreements. See General Public Utilities Nuclear Corporation (Oyster Creek Nu-clear Generating Station), LBP-96-23, 44 NRC 143, 164 (1996) ("to gain the admission of a contention founded on the premise [a licensee] will not follow [regulatory] requirements, ... Pe-titioners must make some particularized demonstration that there is a reasonable basis to believe

[the licensee] would act contrary to [the regulations '] explicit terms") (emphasis added). KEPCo has made no such particularized demonstration here to support such a claim.

KEPCo's claims that it will be harmed by Westar Energy's majority ownership and/or its enforcement of the ROFR provisions similarly are speculative. Although it is true that Westar Energy will have the majority vote regarding operating decisions, KEPCo has not pointed to one 37

[d.

concrete example of how such decisions will create harm that would justify the NRC's denial of the license transfer or the imposition of the conditions proposed by KEPCo. Rather, KEPCo merely quotes vague, speculative and unsupported statements of its witnesses such as, "[w ]e will lose the healthy situation of no one party being able to dictate outcomes, with the result being the loss of action by discussion and consensus. KEPCo would in my view be better served by not being a co-owner of Wolf Creek in such a scenario," and, " [w ]ithout any balance in Wolf Creek decision-making, the merged company alone would effectively control KEPCo's Wolf Creek costs, potentially causing injury to KEPCo and KEPCo members." 38 Such vague, unsupported assertions are insufficient to support the admission of a contention. See cases cited supra. 39 KEPCo's argument regarding the anti-competitive aspects of the ROFR likewise are "supported" by similar statements in which its expert speculates that, without the merger, both Western Resources and KCPL may want to purchase KEPCo's share, but because the merger will eliminate one of two buyers there will be lesser competition for KEPCo's share, "potentially injuring KEPCo and its members." 40 KEPCo again provides no analyses or support for its con-clusion that KEPCo may be injured by Westar Energy's legitimate exercise of a contractually agreed-upon right.

In short, KEPCo' s allegations are based on mere speculation - not fact - and must there-fore be dismissed.

38 Petition at 12.

39 This argument also flies totally against reason by ignoring that Westar Energy would be responsible for 94% of the costs of operating and maintaining Wolf Creek and therefore has a very strong incen-tive to ensure the effective management and control of Wolf Creek's costs.

40 Id. at 13.

B. The NRC Should Re.ject KEPCo's Request For Hearing On Antitrust Issues Because The NRC Has Not Made A Finding Of Significant Change Even if the NRC finds that the Petition meets the standards for hearing and intervention petitions set forth in Subpart M, the Applicants respectfully submit that the NRC must reject KEPCo ' s request for the NRC to hold an anti-trust hearing in this proceeding because the NRC has not made - nor should it make - a finding of significant change.

According to NRC regulations governing the procedures for antitrust reviews of facility license applications, upon receipt of antitrust information submitted in connection with an appli-cation for a facility operating license under Section 103 of the Atomic Energy Act, the Director of Nuclear Reactor Regulation or the Director of Nuclear Material Safety and Safeguards shall publish in the Federal Register a notice inviting persons to submit comments or information con-cerning antitrust aspects of the application. 41 These comments will be used to assist the Director in determining whether significant changes in the licensee ' s activities have occurred since com-pletion of the previous antitrust review. 42 If the Director makes a finding of no significant change and no request for reevaluation is filed or a request for reevaluation is denied, that find-ing becomes a final Commission determination and no antitrust hearing is held. 43 If the Director concludes that significant changes have occurred, then the provisions of 10 C.F.R. § 2.102(d) apply. 44 Under Section 2.102(d), the Director is then required to submit the application to the Attorney General for the Attorney General ' s advice. The Director will subse-41 10 C.F.R. § 2.10I(e)(l).

42 Id.

43 10 C.F.R. § 2.10l(e)(2) and (3).

44 10 C.F.R. § 2.IOl(e)(4).

quently publish a notice in the Federal Register either containing the Attorney General's advice or stating that the Attorney General has not rendered any advice. The notice will also include a notice of hearing, if appropriate, or will state that any person whose interest may be affected by the proceeding may file a petition to intervene and request a hearing on the antitrust aspects of the application.

Based on these procedures, in order for an antitrust hearing to be held, the Director must first make a finding of significant change. No such finding has not been made in this case, nor should such a finding be made for the reasons stated in the Application. 45 For this reason, the NRC should reject KEPCo's request that an antitrust hearing be held in this proceeding. 46 Ab-sent a finding of significant change, the NRC cannot grant KEPCo' s request for a hearing, nor can it impose the conditions suggested by KEPCo's petition as a remedy for KEPCo's alleged antitrust concerns.

III. CONCLUSION Wherefore, for the reasons set forth above, Applicants respectfully request that the NRC deny KEPCo' s petition to intervene and request for hearing because it fails to meet the require-ments set forth in Section 2.1306(b) of the NRC regulations. Furthermore, the NRC should re-45 See Application at 9-14 . As discussed in the Application, Westar Energy would be subject to com-prehensive antitrust conditions and therefore, under well established and enunciated NRC precedent discussed in the Application, no further antitrust review is required. KEPCo's misconstruction of the effect of these antitrust conditions (see pages 6-7 supra) cannot give rise to significant changes, con-trary to its arguments otherwise.

46 At most, KEPCo ' s Petition should be treated as comments on antitrust issues and, for the reasons already discussed, should be rejected as providing an insufficient basis for a finding of significant change.

ject KEPCo' s hearing request because the NRC has not made a finding of significant change in this proceeding.

Respectfully submitted, Jay E. Silberg Paul A. Gaukler Michael G. Lepre SHAW, PITTMAN, POTTS & TROWBRIDGE 2300 N Street, N.W.

Washington, DC 2003 7 (202) 663-8000 Counsel for Applicants CERTIFICATE OF SERVICE I hereby certify that on the 1st day of March 1999 a copy of the*9]fe~ g_:M'5~ ¢'

Applicants to Petition to Intervene and Request For Hearing of the Kans.as ElectrkPower Coop-Ul 1 *- ,

FiU : .

erative, Inc." was served upon the persons listed below by e-mail witl+.l~lcd:b.forming copy de~-:

posited in the U.S. mail, first class, postage prepaid.

Office of the Secretary Office of Commission Appellate Adjudication U.S. Nuclear Regulatory Commission U.S. Nuclear Regulatory Commission Att'n: Rulemakings and Adjudications Staff Washington, D.C. 20555 Washington, D.C. 20555 (E-mail: jfc@NRC .gov)

(E-mail: SECY@NRC.gov)

Office of the General Counsel Harold Haun U .S. Nuclear Regulatory Commission Vice President of Administration and Washington, D.C. 20555 General Counsel (E-mail: SGB1 @NRC .gov) Kansas Electric Power Cooperative, Inc.

P.O. Box 4877 Topeka, KA 66604 (E-mail: hhaun@kepco.org)

William T. Miller, Esq.

Miller, Balis & O 'Neil, P.C.

1140 Nineteenth Street, N.W., Ste. 700 Washington, D.C. 20036 (E-mail: wmiller@mbolaw.com)

Paul Gaukler ~

Document #: 724680 v. l