ML20004C269
| ML20004C269 | |
| Person / Time | |
|---|---|
| Site: | Fermi  |
| Issue date: | 05/22/1981 |
| From: | Rutberg J NRC OFFICE OF THE EXECUTIVE LEGAL DIRECTOR (OELD) |
| To: | Kaplan D JUSTICE, DEPT. OF |
| Shared Package | |
| ML20004C270 | List: |
| References | |
| ISSUANCES-A, NUDOCS 8106020460 | |
| Download: ML20004C269 (18) | |
Text
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g NI Ocnald A. Kaplan, Esq.
24 JUN 01 El 8
Chief. Energy Section u.a aammesm**
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Antitrust Division s
U.S. Departnent of Justice g
P. O. Box 14141 9
Washington, D.C.
20044 Re:
In the ftatter of Detroit Edison oktf 50 3 d Ocar !!r. Kaplan:
I ara enclosing for your review and corrent, pursuant to Section 105(c)(2) of the Atomic Energy Act and the Cornission's rules thereunder, a draft
" Operating License Antitrust Review Finding of flo Significant Change" for l
the captioned facility prepared by the Utility Finance Cranch of the Office of ituclear Reactor Regulation.
I If you should have any qtistions please give re a call.
Sincerely, Joseph Rutberg Assistant Chief Hearing Counsel / Antitrust Counsel
Enclosures:
As stated l
DISTRIBUTION:
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May 22, 1981 3
gefC&fo1 Donald A. Kaplan, Esq.
JUN 0J,198g,
-T Chief. Energy Section u.s, % 'spr a
%Is Antitrust Division
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U.S. Department of Justice g
P. O. Box 14141 t
Washington, D.C.
20044 Re:
In the Matter of Detroit Edison Company (Enrico Femi, Unit No.
2), Docket No. 50-341A
Dear Mr. Kaplan:
I am enclosing for your review and comment, pursuant to Section 105(c)(2) of the Atomic Energy Act and the Commission's rules thereunder, a draft
" Operating License Antitrust Review Finding of No Significant Change" for the captioned facility prepared by the Utility Finance Branch of the Office of Nuclear Reactor Regulation.
If you shculd have any qustions pleast 'ive me a call.
Sincerely, m
%(
o Js Ru rg A
'stant Chief Hearingl Counsel / Antitrust Counsel
Enclosures:
As stated i
l
{
I l
ENRICO FERMI UNIT 2 OPERATING LICENSE ANTITRUST REVIEW FINDING OF NO SIGNIFICANT CHANGE P.1 A.
Introduction P. 2 B.
Background
i P. 8 C.
Changes Since the Construction Percent Antitrust Review l
P. 8 1.
Amendment of Power Pooling Agreement.
P.11 2.
Withdrawal of Greenwood Application P.12 3.
Coordination Arrangements P.14 4.
Joint Participation In New Generation P. 15 D.
Summary and Conclusion Attachments 1.
Attorney General's advice, Aug. 16, 1971 2.
Attorney General's advice, Mar. 22, 1974 3.
Anti-Trust Filing for Enrico Fermi Unit No. 3, Jan. 9,1974 l
4.
Information For Antitrust Review of the Operating License Application Mar.17,1975 5.
Attorney General's Advice, Sept. 30, 1977 i
6.
Petition of Martha Drake, Oct. 3,1977 7.
Information For Antitrust Review of the Operating License Application, April, 1980 8.
Additional Antitrust Information, Feb. 20, 1981 9.
Excerpt From Agreement with Consumers Power Company
o ENRICO FERMI UNIT 2 l
OPERATING LICENSE ANTITRUST REVIEW j
FINDING OF NO SIGNIFICANT CHANGE l
A.
Introduction Section 105c(2) of the Atomic Energy Act of 1954, as amended, provides for an antitrust review of Operating License Applications if significant changes in the licensee's activities or proposed activities have occurred since the con-struction permit antitrust review.
Authority to make the significant change determination was delegated to the Director, Office of Nuclear Reactor Regula-tion (NRR) (for reactors) and to the Director, Office of Nuclear Material Safety au Safeguards (NMSS) (for production facilities), as appropriate.
The Nuclear Regulatory Co.nmission in a Memorandum and Order (CLI-80-28) dated June 30, 1980,1 set forth three criteria upon which to base a "significant change" determination.
These criteria are:
l 1.
The change or changes must have occurred since the previous construction permit (CP) antitrust review.
2.
The change or changes must be attributable to activities (or proposed l
l l
activities) of the licensee (s).
I 1The Virgil C. Summer Nuclear Station Unit No. 1 (Docket No. 50-395A) operating license (OL) antitrust proceeding began before the Commission delegated the significant change determination to the staff.
t 3.
The changed situation must have antitrust implications which could be curable by Commission remedy.
2 Utilizing these criteria, the staff has conducted a review of the activities r d proposed activities of the Applicants of the Fermi 2 Nuclear Plant, Docket Number 50-341A.
Based upon analysis of the activities of the Detroit Edison Company, the Northern Michigan Electric Cooperative and the Wolverine Electric Cooperative that have transpired since the issuance (and amendments) of the construction permits for the captioned nuclear units, it is the conclusion of the staff that no "significant changes" have occurred.
The following will discuss the antitrust reviews conducted in connection with the licensing of Fermi 2.
B.
Background
On August 16, 1971 the Attorney General advised the Atomic Energy Commission that no antitrust hearing would be necessary with regard to the Enrico Fermi Unit 2 and that proper accommodation of antitrust policy and power needs would be effectuated by imposition by the Commission of a license condition requiring the applicant to fulfill certain assurances set forth in its August 13, 471 letter to Mr. Harold L. Price of the AEC.3 The Department of Justice was concerned that Paragraph 8 of Article 1 of the " Electric Power Pooling 2The Antitrust Section of the Utility Finance Branch, Division of Engineering, Office of Nuclear Reactor Regulation and the Antitrust Counsel of the Executive Legal Director in consultation with the Department of Justice.
35ee Attachment 1.
2
Agreement" between Consumers Power Company and the Detroit Edison Company might be construed to restrict interconnection arrangements between Detroit Edison and third parties (other than the Consumers Power Company).
r f
No intervention requests were received in response to a notification of the Attorney General's antitrust advice in the Federal Register.
i On September 26, 1972, the Commission issued a construction permit CPPR-87 with the;following antitrust condition:
" Applicant agrees to abide by the agreements and interpretations between it and the Department of Justice relating to Article I, paragraph 8 of the Electric Power Pool Agreement between the Applicant and Consumers' Power Company as specified in a letter from Applicant to the Director of Regula-tion dated August 13, 1971, and the letter from Richard W. McLaren, Assistant Attorney General, Ar.Litrust Division, U.S. Department of Justice, to Bertram H. Schur, Associate General Counsel, Atomic Energy Commission, dated August 16, 1971."
Subsequently, antitrust advice received from the Justice Department on March 22, l
1974 with respect to its antitrust review of Detroit Edison's Greenwood Nuclear 4
Plant concluded:
i "On the strength of these policy commitments and Applicants agreement that the Commission include them as conditions to the License, we conclude that 1
4See Attachment 2.
3
an antitrust hearing will not be necessary with respect'to the instant l
application."
The policy commitments required Detroit Edison to interconnect and coordinate with other electric utilities in Southeastern Michigan.
No intervention requests were received in response to a publication of the Attorney General's advice in the Federal Register.
i Shortly after a limited work authorization was issued for Greenwood in December of 1974, Detroit Edison deactivated its 9.pplication and a Construction Permit was i
never issued.
On July 14, 1980 the Greenwood application was officially withdrawn and the proceedings terminated.
The effect of the Greenwood termination is discussed subsequently under the changes since the construction permit review.
By letter dated January 9, 1974, Detroit Edison submitted antitrust information in advance of the remaining parts of its application for Fermi Unit 3.
The 5
letter itemized changes subsequent to the submittal of antitrust information for Greenwood.
Although the antitrust information was sent to the Attorney General for advice, no advice letter was ever received because the proposed Fermi Unit 3 was postponed and later cancelled.
i 5See Attachment 3.
l 4
O 6
On March 17, 1975, the Licensee sutmitted antitrust information with respect to its Fermi 2 operating license application, in response to AEC Regulatory Guide 9.3.
This response describes the positive steps that have been taken by the applicant to remove the previous antitrust concerns of the Department of Justice.
The original Electric Power Pool Agreement has been replaced by a new agreement which commits the parties to admit third parties to the pool pro-vided such parties meet certain prescribed utility responsibilities.
New third party agreements (other than with Consumers Power Company) have been entered j
into and other agreements have been amended to conform with recent reviews by the Justice Department and to conform with license conditions accepted by the
, Detroit Edison Company in connection with the Greenwood Nuclear Plant-application.
l l
In Feoruary 1977, the Detroit Edison concluded a sale of a 20 percent interest in Fermi 2 to the Northern Michigan Electric Cooperative, Inc. and Wolverine Electric Cooperative, Inc.
Antitrust information on these two additional owners was transmitted to the NRC on May 6, 1977 and to the Attorney General for anti-7 trust advice on June 2, 1977.
Advice was received by the NRC from the Attorney General on September 30, 1977 and subsequently noticed in the Federal Register on October 11, 1977.
The advice letter stated that the Attorney General's review disclosad no antitrust problems which would require a hearing by the NRC.
After publication in the Federal Register of the Attorney General's advice with respect to the Michigan cooperatives, a petition to intervene, postmarked 65ee Attachment 4 See Attachment 5.
5 l
e October 14, 1977, was received from Martha G. Drake of Petoskey, Michigan.0 The petition alleged that cortracts between herself and the Top 0' Michigan 9
Rural Electric Company and between Top O' Michigan and Northern Michigan Electric Cooperative v',olated the antitrust laws because each of the contracts prohibited purchase cf electricity from other sourca.
Further, she alleged that the contract between Northern Michigan and Detroit Edison to purchase a portion of Fermi 2 would preclude the purchase by Northern Michigan of cheaper power.
An Atomic Safety and Licensing Board was established to rule on the petition.
The petition to intervene was opposed by Detroit Edison and the NRC staff.
Detroit Edison opposed the intervention primarily on the basis of lack of jurisdiction by the NRC whereas the NRC staff opposed the intervention primar-ily on the basis that Ms. Drake's interest and alleged injury was too far removed and disconne cted from the interests protected by Section 105c of the Atomic Energy Act.
After various cross-filings by the interested parties and a pre-hearing conference, the Atomic Safety and Licensing Board denied the petition to intervene by Ms. Drake.10 8See Attachment 6.
9Top 0' Michigan is a distribution cooperative served by Northern Michigan Electric Cooperative, Inc.
10April 7, 1978, LBP-78-13, 7 NRC 583.
6
_. _-~-
The Board stated:
"The casual connection between the activities under the license and any purported increase in rates to the Petitioner is too remote and tenuous to constitute a cognizable ' injury in fact' before the NRC."
After an appeal by Ms. Drake of the ruling by the Atomic Safety and Licensing Board, an Atomic Safety and Licensing Appeal Board affirmed the Licensing Board's ruling, stating:
"we agree with the Licensing Board's holding that Mrs. Drake lacks standing before this Commission to litigate the matters she W shes heard" However, the Appeal Board emphasized a " relation" basis for reaching its decision rather than the " remoteness" issue used by the Licensing Board:
the Appeal Board stated:
"... her asserted injuries stem from sources unrelated to the denial of access to, or competitive advantage flowing from the use of nuclear power.
Boiled down, Mrs. Drake's arguments amount to dissatisfaction with the cooperatives' management decision to satisfy an expected need for more baseload power by acquiring part of the Fermi Nuclear Plant."
The Fermi Construction Permit was amended to include the Northern Michigan Electric Cooperative, Inc. and the Wolverine Electric Cooperative, Inc. as co-owners on July 5, 1978.
7
,0n April 30, 1980, the Detroit Edison Company updated its operating license 11 antitrust information in response to an NRC staff request.
Additional information was furnished on February 20, 1981 in response to a further NRC request.12 C.
Changes Since the Construction Permit Antitrust Review 1.
Amendment of Power Pooling Agreement The August 16, 1971 advice letter from the Attorney General with respect to the Fermi 2 construction permit antitrust review recom-mended "no hearing" based on assurances from Detroit Edison that its Power Pooling Agreement with Consumers Power Company did not restrict interconnection between the pool members and a third party and did not restrict coordinated planning and operations with third parties.
In this regard, Detroit Edison agreed that certain clarification of rights and responsibilities under paragraph 8 would be made by the l
Detroit Edison Company and that Detroit Edison would use its best l
efforts to induce Consumers Power Company to delete paragraph 8 or l
l to make clarifications regarding third party coordination.
l On May 1, 1973 the Electric Power Pooling Agreement was cancelled and a new agreement entered into called the " Electric Coordination 115ee Attachment 7.
12See Attachment 8.
8
o Agreement between Consumers Power Company and Detroit Edison. Company."
The new agreement contained under a paragraph entitled " Connections with Others" a provision as follows:
"This Agreement shall be revised, amended, modified or replaced in order to admit third parties, having public utility f6nctions i
and responsibilities, to this or an amended, revised, modified or new agreement."
To be eligible, the third party was required to meet certain electric utility responsibilities.13 In general, staff consioars such electric utility responsibilities as reasonable so as not to impair the relia-bility or economics of the integrated electrical system operations.
However, staff considered item (f) of the responsibilities to be j
vague.
Item (f) read as follows:
"(f) Ability to have sufficient financial standing so as to reasonably assure that it can 9erform fully the various provisions of this agreement."
On January 5, 1976 a new agreement was entered into between Consumers l
Power Company and Detroit Edison Company which eliminated the above paragraph (f).
This mooted sta Tf's concerns as to the vagueness of that paragraph.
The new agreaments with Consumers Power Company, both the 1973 and 1976 versions, specifically provide for future 13Pages 1 and 2 of Attachment 9 O
O interconnections with third parties.1 This would presumably have removed some of the concerns of the Assistant Attorney General regarding third party coordination. However, in his advice letter of March 22, 1976 for Greenwood, the Assistant Attorney General did not directly express his opinion as to whether the May 1, 1973 agreement between Detroit Edison and Consumers Power Company removed his con-cerns with respect to third party provision of the agreement.
The Greenwood advice letter stated:
"In 1971 we informed the Commission that no antitrust hearing would be necessary in regard to Detroit Edison's Enrico Fermi
,l Unit No. 2.
At that time, Applicant submitted a commitment to eliminate or revise a provision in the 1952 Michigan Pool Agree-ment which might have unreasonably restricted entrance of third parties i;,co the pool or the negotiation of independent coordi-nation arrangements.
In the course of our antitrust review of the instant license application, several additional questiont concerning anticompetitive conduct by Applicant were raised.
For its part, Applicant denied that its policies and practices have been or are inconsistent with the antitrust laws.
- However, in order to eliminate any questions as to the policies that it.
intends to follow during the license period nf the Greenwood Nuclear Units, Applicant indicated its willingness to formalize 14See Attachment 9 for excerpt on " Connection with Others" from the Electric Coordination Agreement Between Consumers Power Company and the Detroit Edison Company.
10
~.-
e these policies and to have them included as conditions to the license."
If the Greenwood license conditions had been imposed, presumably the Assistant Attorney General's antitrust. concerns would have been resolved.
However, the Greenwood application has been withdrawn and the conditions have not been imposed.
2.
Withdrawal of the Greenwood Application Staff does not consiuer the actual application or withdrawal by Detroit Edison of the Greenwood application to represent a significant antitrust change since the construction permit review with respect to the Fermi 2 application.
Quite simply, this is because there was no mention and presumably no expectation of Greenwood during the Fermi 2 review.
Thus, the Greenwood advice letter is only relevant to the extent that the Justice Department may have detecteo and des-l cribed some significant antitrust changes in Detroit Edison's conduct.
l The Greentood advice letter does refer to "several additional questions concerning anticompetitive conduct by the Applicant" as being raised.
The advice letter does not indicate whether these " additional ques-tions" are changes since the Fermi 2 antitrust review or whether they were present at that t'ae, but not detecced.
Nor does the Greenwood advice letter discuss or describe the " additional questions." The advice letter does suggest, however, that the questions regarding Detroit Edison's conduct will be resolved if Detroit Edison adheres n.
to the policy commitments attached to its letter of March 21, 1974.15 These commitments would require Detroit Edison to (1) interconnect and share reserves with other electric utilities in the area, (2) provide emergency and maintenance service, (3) coordinate in the planning of new generation, transmission and related facilities, (4) participate in new nuclear generation, (5) provide transmission services and (6) sell power for resale.
Although these commitments were not inct.porated as conditions in any license, failure by Detroit Edison to adhere to them could, but would not necessarily, indicate a significant change with respect to the " additional que.stions" raised by the Assistant Attorney General in the Greenwood antitrust advice letter.
Conversely, if Detroit Edison is abiding by these comm tments, i
then presumably hry changed circumstances that may have been raised by the " additional questions" would be remedied.
Thus, staff finds itis relevant to consider the March 21, 1974 commitments in this significant change evaluation.
3.
Coordination Arrangements In addition to the revised pooling agreement with Consumers Power Company discussed previously, the Detroit Edison Company has amended its agreements or entered into new coordination or service arrange-ments with several others.
In the January 9, 1974, filing of antitrust information,16 Detroit Edison indicates amendments to its 15See Attachment 2.
s 16Attachment 3.
e t -
joint agreements with (1) Consumers Power and Indiana and Michigan Electric Company, and (2) Consumers Power and Hydro Electric Power of Ontario. The Indiana and Michigan agreement was amended in 1975 and 1979 and the Ontario agreement in 1975 and 1980.17/18/ Detroit Edison also amended its agreement with the Ford Motor Company in 1973 and 1979.
The amendments were basically price changes reflecting increases in co ts brought about by equipmen'; and labor escalation and increases in fuel costs.
Staff does not consider these changes as significant in an antitrust context.'.
New interconnections with the Village of Sebewaing and Thumb Electric l
are listed in Detroit Edison's January 9,1974 response.I9 Amendment t
l to the inter-utility power exchange agreement with the City of 20 Wyandotte is listed in the March 17, 1975 response and again in the April 1980 response.21 Staff has reviewed these amendments and has concluded that they are primarily price os fonnat changes for the purpor a of ebtaining consistency with other agreements and have negligible antitrust significance.
17 Attachment 4.
18 I9 Attachment 3.
20 Attachment 4.
21 Attachment 7.
l '4
In its April 1980 submittal, Detroit Edison also listed a new inter-utility power interchange agreement with the City of Detroit and a new inter-utility power interehange agreemin5 with the City of Wya dotte Staffs review of these agreements have disclosed no n
antitrust concerns.
In addition, Detroit Edison refers to a new interconnection agreement with the Ford Motor Company, a 40 kv interconnection with the City of Sebewaing with autocatic throwover of the circuit to the Southeastern Michigan Rural Electric Coop for reliability improvement; and a strengthening of transmission to the City of Pontiac, City of Croswell and the Thumb Electric Coop. Also, wholesale for resale power sales is available to the Michigan Municipal Cooperative Power Pool, the Southeast Michigan Rural Electric Cooperative, the Thumb Electric Cooperative, the l
Villages of Clinton and Sebewaing and the City of Croswell. The 1
above additions and improvements appear to be consistent with the type of coordination commitments made by Detroit Edison to the Justice Department during the Greenwood antitrust review and do not suggest any significant changes in an antitrust context.
4.
Joint Participation in New Generation Detroit Edison has sold a 20 percent ownership interest in Fermi 2 to the Michigan Electric Cooperative Inc. and Wolverine Electric i
Cooperative, Inc.; and offered the Michigan Public. Power Agency and the City of Lansing up to 200 MW ownership in Fermi 2 and in the Belle River ' nits 1 and 2.
These actions represent positive steps J
by Detroit Edison consistent with its commitments to the Justice 14
d f
Department during the Greenwood antitrust review, thus removing possibilities of significant antitrust changes in this regard.
22 Staff has reviewed changes in the activities of the Michigan and Wolverine Electric Cooperatives since the completion of the previous antitrust review in 1978, and has not discovered any changes of antitrust significance.
D.
Summary and Conclusions During the construction permit antitrust review of Fermi 2, the Attorney General was primarily concerned with a provision in the pooling agreement bet-ween Detroit Edison Company and Consumers Power Company which could have been construeo so as to restrict interconnection and coordination arrangements with third parties.
A "no hearing" advice letter by the Attorney General was condi-tioned on a commitment letter by Detroit Edison to use its best efforts with Consumers Power Company to eliminate or revise the questionable provision.
No intervention requests were received from the public in response to the publication of the advice letter in the Federal Register.
Consistent with Detroit Edison's commitment letter, a new pooling agreement was entered into between Detroit Edison and Consumers Power Company which eliminated the offensive provision and expressly provided for coordiantion with third parties.
However, such coordination was conditioned on the third partys' ability to meet certain power supply and financial responsibilities.
22See Attachment 8.
15
e Later, in connection with the construction permit antitrust review of Detroit Edison's proposed Greenwood Nuclear Plant, the Assistant Attorney General's antitrust advice letter did not specifically indicate whether the Justice Department was satisfied or not with the actions taken by Detroit-Edison regarding third party coordination opportunities.
Instead, the "no hearing" advice letter was conditioned on the acceptance by Detroit Edison of certain i
i commitments which would become conditions in the Greenwood licenses - condi--
tions requiring Detroit Edison to interconnect and share reserves, provide emergency and maintenance service, allow joint participation in Greenwood and future nuclear units, coordinate in the planning in future transmission and generation, and provide transmission and wholesale for resale service.
- Again, no intervention petitions were received from the-public.in response to the publication of the advice letter in the Federal Register.
Later, the Greenwood application was withdrawn and therefore the expected antitrust conditions did not go into effect.
Staff does not consider the with-drawal of the Greenwood application as a significant change with respect to the Fermi 2 construction permit antitrust review, since there was no mention or apparent expectation of the Greenwood plant during the Fermi 2 construction permit review.
Still, the expected antitrust conditions resulting from the Greenwood review may have been intended to remedy certain other changes detected by, but not disclosed bysthe Justice Department during the Greenwood review.
Presumably, adherence by Detroit Edison to the antitrust conditions would therefore moot any such undisclosed significant changes.
Staff'sreview of actions and policies taken by the Detro t Edison Company since i
the Fermi 2 construction permit antit ust review has disclosed no "significant 16
s
. changes" nor any actions inconsistent with.its antitrust commitments made during the Greenwood review.
Therefore, the staff, including the antitrust. division of the Office of the Executive Legal Director, after consultation with representatives of the Department of Justice, recommends that the Director of Nuclear Reactor Regulation make a finding of "no significant change" for Fermi 2.
17
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