ML20031E139
| ML20031E139 | |
| Person / Time | |
|---|---|
| Site: | Palo Verde  |
| Issue date: | 02/08/1977 |
| From: | Blakeley G, Montoya R NEW MEXICO, STATE OF |
| To: | EL PASO ELECTRIC CO., PUBLIC SERVICE CO. OF NEW MEXICO |
| Shared Package | |
| ML20031E137 | List: |
| References | |
| 1216, NUDOCS 8110150137 | |
| Download: ML20031E139 (26) | |
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.e BEFORE THE NEW MEXICO PUBLIC SERVICE Co m IS$I6 f D.
'l IN THE MATTER OF THE PARTICIPATION
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OF PUBLIC SERVICE COMPANY OF NEW
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MEXICO AS TENANT IN COMMON IN AN
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ELECTRIC GENERATING STATION,
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CASE 30. 1216 PUBLIC SERVICE C01@ANY OF NEW MEXICO,
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- y. iT'M.
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PETITIONER,
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EL PASO ELECTRIC C,OMPANY,
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PETITIONER.
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FINDINGS OF FACT AND ORDER STATEMENT OF THE dASE:
On December 13, 1973, Public Service Company of New Mexico (herein named PNM) filed its Notice No. 291, pur-suant to the provi,sions of the New Mexico Public Service Com-mission's (herein named Commission) $scond Revised Genercl Order No. 10, stating its intention to participate in the i
Arizona Nuclear Power Project (herein named ANPP), also known as the Palo Verde Nuclear Generating Station (herein named PVNGS),
and attaching thereto, among other things, a copy of the ANPP Participation Agreement dated as of August 23, 1973.
On June 11, 1975, PNM filed with the Cor=11ssion its I Petition requesting a determination from the Commission as to whether or not the Commis,sion had jurisdiction over PNM's planned i
Participation in t'he PVNGS by an ownership interest in the pro-I posed generating units. The location of PVNGS is approximately 47 miles west of Shoenix, Arizona.
On Juneil7,1975, the Commission ordered that a public I
hearing should be held on the jurisdictional issue and set the matter for hearing on July 29, 1975.
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On July 7, 1975. El Paso Electric Company (hercin named El Paso) filed its Petition to intervene, which Petition was granted. Subsequent Petitions in Intervention were filed by Southwestern Po,blic Service Company (herein named SWPC) the ttorney Gener.a1 of the State of New Mexico.'(herein named AG), Southwest Re, search and Information Center (herein named Southwest Research) and New Mexico Citizens for Clean Air and Water, Albuquerque Chapter (herein named Citizens for Clean Air and Water) ali of which Petitions were granted by the Com-mission.
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OnJuly329,1975, the Commission held its hearing on the matter of the[ jurisdictional issue and subsequently requested that briefs be submitted by the parties.
On September 19, 1975, the Commission entered its Order, in which it stated that:
[ Findings):
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The Commission therefore concludes that i
the participation by PNM and El Paso in PNVGS will each constitute the construction and operation of a public utility system or plant l
within the meaning of $68-7-1, N.M.S.A. 1953 so that, prior to the construction and operation of the PVNGS plant, PNM and El Paso must each
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obtain from this Commission a certificate of Public Convenience and necessity for its g
participation."
The Commission further ordered PNM and El Paso to file i
no later than October 17. 1975, their petitions for certificates of public convenience and necessity with respect to their I
participation in PVNGS. The Commission also ordered that the exhibits in support of these petitions be filed no later that.
November 7,1975.'
On October 17, 1975, the Commission entered its 1 Case No. 1216 i
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2 Supplemental Order, clarifying the fact that the Petitions for Certificates of Public Convenience and Necessity were to be filed in NMPSC Case No. 1216, and not under a new case nunber.
The Commission also ordered that the Petitions, all hearings thereon, and any orders entered with respect thereto would be treated as a pontinuation of NMPSC Case No. 1216 and not as a separate, distinct or original administrative proceeding.
The Comission further stated that the order of f er rember 19, 1975 and other orders entered in the case would not be deemed final until Certificates of Public Convenience and Necessity were either issued or denied.
PNM and.El Paso filed their Petition for Certificates of Public Convenience and Necessity and exhibits pursuant to the Comission's Order. Subsequently, certain of the exhibits filed by PNM and testimony tendered by PNM were rrcognized by the Comission to be comon to both PNM and El Paso, and there-fore the hearings on the Petitions of PNM and El Paso were i
conducted on a consolidated basis. This order will cover the
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issue of granting certificates of public convenience and nee-essity sought by PNM and El Paso, respectively, k
On November 26, 1975, Larry E. Cable (herein named i
Cabic) pro se, filed his Petition for Leave to Intervene, which I
Petition was subsequently granted by the Comission.
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Discovery was donducted by the parties, and various procedural motions were filed and heard by the Co= mission. On January 23,1976,,the Comission entered its Notice of Procedural Dates, setting February 16, 1976 as the date by which the direct t
testimor.y and exhibits in support thereof in prepared form, g Case No. 1216
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i were to be supplied to the Commission by PNM and El Peso.
Dates were also set for the cross-examination of the witnesses of PNM and El Paso and'for the submission of direct testimon) by Intervenors and Staff and the cross-examination of such witn, esses. PNM and El Paso subsequently filed their prepared direct testimony in compliance with the Order of the Co=rission.
On February 23, 1976, the Commission entered its Order Vacating Setting of Procedural Dates and directed the Com=is-sion staff to res,et procedural dates at the earliest practical time.
On May 27, 1976, the Commission entered its Order of Hearing and of Notice. The Commission ordered PNM and El Pase to file their prepared direct testimony together with all exhibits and other records not later than June 7, 1976. The Commission ordered that a public hearing be held on July 6, 1976 at 9:00 A.M. at the offices of the Commission. during which time PNM and El Paso should present their prepared direct testimony and would identify their exhibits. The Commission staff and intervenors would subject such witnesses to cross-I.
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examination. The Commission also set August 24, 1976 at 9:00 A.M.
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as the date for resumption of the hearings at the offices of the Commission in order to allow PNM and El Paso to cross-examine the g
I witnesses of the Commission staff and intervenors. The Co= mis-i sion staff and intervenors were to submit prepared direct testimony togethe.r with exhibits and other records by not later 1 'than August 4, 19,76.
l On June 7, 1976, the Commission entered its Order on pre-certification, expenditures and commitments. The Commission
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ordered that expenditures and commitments made by Pm! and El Paso relative to ANPP had neither been approved nor dis--
approved. The Co pission fu'rther reserved its right to deter-mine whether or not to grant certificates of public convenience and necessity without regard to expenditures or' commitments made by PNM apd El Paso prior to the Commission's final i
decision.
On June 22, 1976, the Consniss/on issued its Order 1
on Inspection of Records. The Comission ordered that certain designated memberj of the Conunission staff be permitted to inspect certain proprietary contracts involved in the proceed-ing. The Consnission ordered such persons to sign no,-disc.losure agreements and not to make photostatic copies of the inspected documents. The designated staff members were to make a recom-mandation to the Consnission with respect to the inspection of the contracts by Intervenors under similar non-disclosure agreements.
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,l Under the Order, pubsequent forma?. applications for public disclosure of the contracts could be made by the Commission g
staff or intervenors.
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On May 25, 1976, the Nuclear Regulatory Commission (herein named NRC) issued construction permits for the construc-f tion of the three units of PVNGS. Construction com=enced shortly thereafter. During the hearing held on July 6, 1976, an oral I
i motion to cease and desist from construction was made by certain j
of the intervenors; the motion was denied by the Com:nission.
Pursuant to the order of May 27, 1976, additional direct 1
testimony, supplementary testimony, additional exhibits and revised exhibits were filed by PNM and El Paso. Hearings
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.commencedat9:00{A.H.onJuly6,1976,continuedthroughJuly15, Case No. 1216 f
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1976, reconvened on August 24, 1976 and continued through September 8, 1976. The matter was heard by Chairman Richard P. Montoya and Commissioners Clarence V. Lithgow and Gary Blakeley.
After[the hearings had been completed, but before the date of the iEsuance of this Order, Commissioner Clarence V. Lithgow resigned.
Ms. Eileen Grevey was subsequently appointed by 'the devernor to the Commission. Commissioner I
f Grevey has not adliressed herself to the record. However, her participation in reaching a decision in this matter is no:
required for the saw Mexico Public Utility Act, $68-4-11 states:
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"* * *A majority of the conunission shall constitute a quorum for the transaction of any business, for the performance of any duty or for the exercise of any power of the com-mission. No vacancy in the com:nission shall impair the right of the remaining commissioners to exercise all the powers of the commission.
The act of a majority of the concissioners i
shall be the act of the commission.
(Emphas$s added) i PNM is a New Mexico corporation whose principal office s
l is in Albuquerque, New Mexico. It is engaged in the business of generating, transmitting and distributing electricity to wholesale and retail customers in the State of New Mexico. At the present time PNM owns electrical generating facilities at Albuquerque, Sant. Fe and Las Vegas, New Mexico, having an f
approximate generating capacity of 354 MW.
In addition, PNM owns a thirteen percent (13%) interest in Units 4 and 5 at the Four Corners Plant in San Juan County, New Mexico, and such j
ownership entitles PNM to approximately 208 MW.
The remaining eighty-sevenperchnt (87%) interest in Units 4 and 5 at the Four e
Corners P]att is owned by five other entities. PNM is also the owner of an undivided fifty percent (507.) interest in the San JuanStation,SanfJuanCounty,NewMexicowithaninterestof 3
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i 165 MW in the present generating capacity of Unit ;o. 2 and certain interest of 163.MW in Unit No. 1, which was completed in December, 1976. The San Juan participants are increasing the capacity of the San Juan Station by adding Unit No. 3, sized at 466 MW for service in 1979 and Unit No.' 4 sized.it 466 MW for service in 1981, of which PNM will own a fifty percent (50%) interest. PNM received a Certificate of Public Convenience and Necessity for its fifty percent share of San Juan Units 3 and 4 from this Commission on September 2, 1975.
PNM also owns a fifty percent (50%) interest in Western Coal Company. It owns.an( operates water divisions which serve Santa Fe and I.as Vegas, New Mexico. PNM is the largest i
investor-owned electric utility in tta State of New Msr.ico, serving in such aress as Deming, Albuquerque, Belen, Bernalillo, i
Santa Fe and Las Vegas, New Mexico.
El Paso is a Texas corporation with its principal t
f place of business in El Paso, Texas.
It is engaged in the business of generating, transmitting and distributing electricity ~;o
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wholesale and retail customers in the States of Texas and New Mexico. El Paso has generating facilities in Newman, Texas and
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Anapra, New M nico. It also has an 8% interest in Four Corners i
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Plant, Units 4 and 5.
Both PNM and El Peso are therefore public utilities subject to the jurisdiction of the Commission as set forth in I
the New Mexico Public Utility Act, as amended.
PVNCS is e proposed nuclear generating station consisting of thres units, each having a rated generating capacity of 1270 MW.
The three units will be constructed on a site located app roxi.aately
-47 miles west of downtown Phoenix, Arizona. Unit Number 1 is scheduled for commercial operation on May 1, 1982, Unit Number 2 7-Case No. 1216 f
on May 1, 1984 and Unit Number 3 on May 1, 1986. PV::GS will be owned in co-tenancy by five electric utility companies whose rights and obligations are governed by the ANPP Participa-tion Agreement executed as of August 23, 1973, as amended.
The p.articipants in PVNGS and their respeccive generation entitle-ment shares are as' follows:
Arizona Public Service Company 29.1%
Salt River Project Agricultural Improvement and Power District 29.1%
Southern California Edison Company 15.8%
El Peso Electric Company 15.8%
Public Service Company of New Mexico 10.2%
The ANPP Participation Agreement was executed as of August 23, 1973. Amendments No. One, Two and Three were aub-sequently executed by the participants. Pursuant to the Com-a mission Orders of September 19, 1975 and October 17, 1975. El Paso has sought the Commission's authorization to participate i
as a tenant in common in PVNGS.
t Arizona Public Service Company (herein named APS) i I
i is the Project Manager and the Operating Agent of PVNGS.
In that e
capacity, APS acts on its own behalf as a participant in IVNGS
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and as agent for all other participants. APS has the responsibility for all design, engineering, procurement,. quality assurance and construction activities asse,ciated with the Project and also i
l-will be responsible for its operation when construction and test-g ing are completed.
Bechtel Power Corporation was engaged to perform pro-l fessional engineering, procurement, quality assurance, startup and pre-operational testing, project management coordination, and to construct. erect and install PVNGS. Combustlon Engineering, Inc., is the contr'accor which is providing the nuclear steam supply system (herein named NSSS), and additionally will f abricate
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1:he initial core and first reload batch for each of the PWGS units. Fabrication of the second and subsc*quent reload batches will be provided by Westinghouse Electric Corporation. The uranium required (or the initial core and three reload batchea for e'ach unit will be furnished by Anaconda Comp'any. The f
i uranium required.for subsequent batches will be furnished by Westinghouse Electric Corporation. The turbine generator will be supplied by General Electric Company.
The total cost of construction of the plant is estimated at approximately $2.8 billion, excluding AFDC and initial nuclear fuel costs. This estimate includes escal.ition computed at a ra:e of eight percent (8%) for 1976 and seven percent (77.) per year thereafter. PNM estimates that its total j
project cash flow, including plant and fuel expenditures.hro 2gh i
1986, for PVNGS will be $398,026,600, including AFDC. El Paso estimates that its share of the project cost will be $571,000,000 s
l including AFDC; $660,000,000 including fuel.
El Paso, through its Senior Vice President R. E. York, presented evidence showing the basis upon which El Paso made its decision in 1973 to participate in PVNGS. In addition to the overall economic advantage of PVNGS over a coal fired alternative, f
PVNGS would enable El Paso to add additional generating capacity in incremental blocks which would coincide with El Paso's needs and would provide a diversity of fuel type. El Paso's 1976 j
estimate confirme the economic advantage of PVNGS. It showed a 1984 PVNGS per kilowatt-hour cost approximately 9 mills less than a coal alternative.
El Paso established by competent evidence that additional generating capacity in the time period 1982 through 1988.t Case No. 1216 8
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1 is required to meet El Paso's service obligations. Using the traditional method of historical trend analysis, El Paso projected a 7% ennual growth rate in system peak. Even includ-ing the 200 megawatt capacity increase which PVFCS will provide in each of the years 1982, 1984 and 1986, El Paso will need substantial additional generating reserves to meet its system peak.
PNM presented competent evidence to show that in 1973, i
when PNM made the decision to join ANPP, PNM managsment weighed the alternative of coal-fired generation. The snalysis at that time showed that the cost of coal units would be slightly less than the cost of the ruclear units. However, PNM anticipated that energy production costs for coal would escalate faster than for nuclear, and that a mix of types of generation would be advantageous. Subsequent events proved that decision to be correct, as PNM's 1976 estimate showed that there would be an l
economic advantage for the PVNGS units over a coal alternative of 9.08 mills per kilowatt hour, resulting in a savings to PNM's g
customers of some $23 million per year.
PNM presented competent evidence consisting of testimony and exhibits to sh'ow that the capital costs and energy production I
l costs of the hypothetical coal-fired units used as a basis of comparison were valid.
I PNM offered evidence to show that in 1982, 1984 and i
i 1986 additional power will be required by its custo=ers. Using i
the traditional method of. historical trending analysis, PNM projected a firm peak load of 1,189 MW in 1982,1,304 MW in 1984, 1,504 MW in 1986 and 1,730 MW in 1988. This corresponds to
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s an average rate of, growth of 8.1%.
If PNM's participation in PVNGS is authorized,,the total generating capacity of P:M will be increased:by 130 MW 'in 1982, 130 MW in 1984 and 130 MW in 1986. With this generating capacity, PNM will have reserve margins of 22.3% in 1982 and 21.5% in 1984, Ass'uming approval by this Consnission and construction by 1985 of a 300 MW pumped a
storage project, PNM would have, in addition to PVNGS, res.erve margins of 33% in 1986 and 13.1% in 1988. Such reserve margins will not be excessive, and in fact, the reserve margins which would occur without PNM's participation in PVNGS would be in-adequate.
PNM established by competent evidence that sufficient
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flexibility was built into its current generation expansion plan such that PNM's customers would not suffer a financial I
penalty due to PNM's participation in PVNGS even if PNM's load projection is too high. PNM's ability to handle a higher load g
l than projected is significantly less than its ability to handle a lower load than projected without penalty to PNM's customers.
l Mr._S. M. Stoller, president of the S. M. Stoller i
Corporation, testified as an expert witness _on behalf of PNM
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and ::1 Paso.
Mr.' Stoller testified concerning availability and f
capacity factors of nuclear plants, and the availability and costs of nuclear fuel.
Mr. Stoller testified that he had examined I
the operating history of pressurized water reactor (PWR) systems, the type of system contemplated for use at PVNGS.
Mr. Stoller applied engineering analysis in examining each of the root causes of outage of nuclear plants, and then projected capacity dactors over expected plant life.
Mr. Sto11er's analysis indicated that 1
.a pressurized water reactor with a General Electric turbine and with all volatile,feedwater treatment might be expected tem have Case No. 1216
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a 797 lifetime average capacity factor.
Mr. Stoller testified that planning for SVNGS was based on a capacity factor of (.,87.
for the first three years and 757. thereafter which capacity factors he believed to be reasonable.
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With respect to nuclear fuel, Mr. Stoller testified that PVNGS is quite well protected from the possibility that unavailability of nuclear fuel might curtail its estimatec pla.nt i
life.
Mr. Stoller based his opinion on his analysis of the Anaconda and Westinghouse uranium supply contracts, as well as an analysis of national uranua supply and demand projections.
Mr. Stoller testified that the most appropriate fuel cost assumption for PVNGS would be 4.5 mills per kilowatt hour on a ten-year levelized basis fer Unit 1.
He also performed a sensitivity analysis which showed that the worst scenario for i
nuclear fuel costs, would result in a ten-year levelized cost for Unit 1 and 8.3 mills per kilowatt hour.
Dr. Kent P. Anderson, a senior consultant with !ational Economic Research' Associates, Inc. testified on behalf of PSM and El Paso as an expert witness concerning load forecasting.
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Dr. Anderson prepared an independent projection of PNM's and El i
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Peso's sales and peak load growth, using the econometric modeling g
technique.
Dr. Anderson's projections of PNM's annual system peak I
load fell within a range, from 1,277 MW to 2,812 MW in 1968.
These peak loads correspond to average annual growth rates of I
5.87. and 11.9% per year, respectively, over the period 1974-1988.
PNM's forecast fell well within the range of outcomes which Dr.
Anderson obtained, and Dr. Anderson concluded that PNM's fore-cast of sales and load growth were reasonable and prudent..
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Dr. Anderson al w prepared an independent projection of El Peso's sales and peak load growth, using the econometric modeling technique. He projected that El Paso's annual g:*owt's in peak demand would fall within the range of 6.2% end 11% over I
the 1974 through 1988 time period. El Paso's forecast fell near the lower end of the range of outcomes which Dr. Anderson obtained, and Dr.. Anderson concluded that El Pasn's forecast was,
conservative.
x Dr. Thomas H. Stevens, Assistant Professor of Resour'ee v ",
Economics at New Mexico State University appeared as an expert %%
witnc se on behalf of the Commission Staf(.
Dr. Stevens testi-h A
j fied concerning the sales and load f(,racasts of PNM and El Pago.
Using an econometric model differenti~froin the one usea by J
Dr. Anderson, Dr. Stevens made his own forecast of future electric.
consumption by PNM and El Paso consuc.ers.
Dr. Steveng projected a
a 1988 peak load for PNM ranging boctaien 1,338 MW and 2 4157 !G.
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l This represented a projected PN:. growth. rate of'1'e. tween 3.0% and 8.5%.
Dr. Stevens concluded that PN11's.+ forecast fell within the' 1
range forecast by his study, and that JNM's' forecast was reason-l
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able and prudent.
k Dr. Stevens' independent econ'ometric forecast of El-Paso's sales and load projected an annual growth in peak' load of s
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I between 4% and 9%.
Dr. Stevens concluded thet El Paso's fore;-
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cast was reasonable and prudent.
2 Both PNM and El Paso offered substantial ev3dence to I
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establish that installation of additional generating, units in;,
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the period 1982-1986 would be required to meet PNM's and Eb Paso's 1egal obligations,. PNM showed that an adequate transmiss'icn r>ystem would be available in time to deliver the PVNGS power to PNM and the other participants. The net result of FNM's participation in
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PVNGS would be to reduce the power flow and hold losses between
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.the Phoenix area and the Four Corners area, s-s El Paso also established that an adequate transmicsion
' system would be available in time to deliver the PVNGS power to u
' 'El Paso and the other participants. El Paso further established
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c' that the cost'of transmission facilities for PVNGS would be xs 3;
, approximate 1'y equal to the cost of transmitting power from an altern5tive. coal-fired generating source in northern New Mexico.
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Mr. B. E. Bostic, Vice President, Finance for El Peso, testified
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that El Paso's participation in PVNGS would be financed in the 3,
s traditional manner, with a portion to be generated internally
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from current operations, and the balance from external sot rees s
obtained'through tha issuance of long term securities, preferred stock and common stock.
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Mr. Charles Komanoff, Enargy Projects Director of u
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'- a the Conocil on Economic Priorities, appeared as an expert
,s witness ent behalf of Intervenor Attorney General of New Mexico.
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..,4 Mr. Komanoff testified concerning the capacity factors of nuclear t
and' coal-fired' generating units, capital costs, fuel costs and Nx
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. record shows that Mr. Komanoff has little or no engineering g
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' s I training and experience. His only college degree is a B./. in s.
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.g l Applied Mathematics. Mr.,Komanoff's analysis of coal and nuclear capacity factors depends almost exclusively upon the I results of his statistical analysis of existing unit.
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l Komanoff's' projections of nuclear unit capacity factors relative to coal unit capacity factors were contradicted by Mr. Sto11er's results, in which engineering judgment was combined with
' statistical analysis.
Mr. Komanoff's results were also negated by the testimony of Dr. Martin Becker, Professor of Nuclear Engineering and Director of the Center for Technclogy Assessment i i l
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at Rensselaer Polytechnic Institute, who appeared as a consultant on behalf of the Commission staff.
Dr. Beckcr testified that an economic capacity' factor of about 687. would be a prudent projection, and that he consi'dered a mature' capacity factor of 807. and an econ'omic average of about 737, to be attainable.f On cross-exxninatic Dr. Becker testified that Mr. Komanoff's approach was not a sound basis on which to make projections.
The credibility of Mr. Komanoff's testimony in other areas was considerably weakened by his demonstrated lack of engineerias exper.'tise or training, lack of familiarity with the i
specific details of PVNGS, demonstrated lack of familiarity with conditions in New Mexico pertaining to coal and coal costs, and numerous unsupported assumptions and calculations. For example, r
Mr. Komanoff's claimed expertise in the area of nuclear fuel costs vau largely based upon his attandance at a one-week g
summer course at.the Massachusetts Institute of Technology.
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Dr. Becker also tesaified on the question of fuel resource availabi,lity and concluded that there would be adequate l
fuel resources available for PVNGS.
Dr. Becker further testified that there would be a substantial nuclear energy production cost
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i advantage ulative to the coal alternative, even correcting for a
what were in his opinion consistently optimistic assumpt.ons about nuclear fuel cycle costs made by Mr. Stoller. Overall, Dr.
I BeckerconcludedthatpeI1nittingPNMtocontinueitsparticipa-I j
tion in PVNGS would oe in the best interest of New Mexico rate-j payers.
Dr. Becker submitted supplemental testimony, in which' i
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he considered the implication of assuming a more economical source I
of coal than had,been assumed by PNM. '1his analysis did not
. change Dr. Becker's conclusions. A Case No. 1216
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Dr. Becker also testified that in his judgment the Komanoff results leaned much more heavily on statistical evaluation then on technical evaluation. Fe indicated forther that he did not think regression analysis ccald be done reliably for capacity facter evaluation, and that he thought that the Komanoff results demonstrated this lack of reliability.
1r. becker cited the chahge in size coefficient from 3.368 to 2.3 (first number 50% higher than second) with Falisades Nuclear Plant removed from data base. He stated that it did not seem logical, l
had Consumers Powgr not built Palisades Nuclear Plant to project capacity factors l'0 points higher, as the regression would imply.
Dr. Becker indicated that if the Zion units in Zion, Illinois had been treated on a, dependable capacity basis (allowing for derat-ing) that the size coefficient would likely drop further.
In general as already noted Dr. Becker felt that the Komanoff approach was not a sound basis for judgment. The pro-i cedure forces the analyst to oversimplify and to force choices l
on data treatment that should not be made.
As already noted, the issue of capacity factors was raised in the hearings.
Mr. Stoller had indicated that the average capacity factor reduction of five percent caused by the use of Westinghouse turbines would not be present in PVMCS, which I,
would use General Electric turbines. General Electric turbines I
had not experienced poor, performance because of design deficiency.
Mr. Komanoff took, issue with this claim because of the limited I
e::periences, six enit years, with General Electric turbines.
in pressurized wa,ter reactors (herein named PWR), Mr. Komanoff indicated that the steam conditions in a PWR may differ from those in boiling water reactor (herein named BWR) resulting.
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1 in a matching nrob.lem. He indicated that he did not know what differencer there were in the steam condition, or whether the same type of turbine problem-(with Westinghouse turbines) had occurred on fossil units.
Dr. Becker explained the nature of the turbine problem. In essence, the problem is' associate d wi th characteristics of the low pressure end of the turbine. These characteristica are determined primarily by ambient conditions, such as the temperature of the sewage treatment plant effluent water. This is the reason that Westinghouse turbines have had performance problems in both nuclear and fossil plants.
The criterion as to whether the ratepayer could be clearly worse off as between the coal alternative and ANPI' governs, t
according to Dr. Becker. Therefore, Dr. Becker believes that since the ANPP construction has already begun, the use of ANPP is the better method. Even if construction had not begun for ANPP. Dr. Becker still believed that the ANPP alternative was l
superior.
Dr. Becker indicated awareness of Coumission policy relative to lack of consnitment on costs incurred, but exp?.ain2d g
that delays as.sociated with changing to the coal alternative at 4
i this point also provide penalties (also, supplemental testimony).
Indeed, both Mr. van Brunt and Mr. Bedford testified that coal
,i alternatives could nct be built to be operational at the same r
time as the first unit of PVNGS.
Mr. Bedford, based on 121y 1976 I
commitment, indicated that the earliest a Bisti coal unit could be on line would be 1984 (rather than 1982)..
Dr. Charles L. Hyder appeared as an expert witness for Intervenors Southwest Research and Information Center and New Mexico Citizens for Clean Air and Water, Albuquerque :hapter, Inc.
The testimony tendered by Dr. Hyder. covered a broad Case No. 1216 z.
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range of subject matter, from a critique of Dr. Anderson's econo =etric modeling technique to the costs of uranium. After voir dire, PNM and El Paso moved to exclude from the evidence all of the testimony tendered by Dr. Hyder. The grounds given fcr the Motion included lack of expertise, testimony'outside the issues in the, case, inclusion of voluminous hearsay materials within the tendere'd testimony, and presentation of an unproven scientific theory. After argument by all parties, and deliberation by the Commission, the Commission ruled thtt a substantial number of the exhibits tendered by Dr. Hyder would nct be ad-natted and that a substantial portion of his testimony world be stricken.
Dr. Hyder submitted an Addendum to his testimony, which was completely stricken from the record by the Commis-sion.
Dr. Hyder's remaining testimony and conclusions are contradicted by the testimony of the witnesses of FN>1 and El Paca, and by the testimony of the independent consultants re-1 i
tained by the Commission.
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APPEARANCES:
For Public Service Company of New Mexico, Petitioner:
William B. Keleher, Esq.
Charles L. Moore, Esq.
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Albuquerque, New Mexico
,1 For El Peso Electric Coapany, Petitioner:
r Ben Phillips, Esq.
i C. Emery Cuddy, Esq.
Santa Fe,'New Mexico e
For Southwest Research and Information Center and I
New Mexico Citizens for Clean Air and Water, Intervenors:
Steven Asher, Esq.
Albbquerque, New Mexico For the ' Attorney General of New Mexico, Intervenor:
Harvey Fruman, Esq.
Paul Biderman, Esq.
Ted Hopkins, Esq.
Nick Gentry, Esq.
Santa Fe, New Mexico 18-Case No. 1216 g. - -.-
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i For Larry E. Cable, Intervenor:
Larry E. Cable, pro se Las Cruces, New Mexico For Southwestern Public Service Company. Intervenor:
a Paul W. Eaton, Jr., Esq.
Roswell, New Mexico For the Commission:
Leonard A. Helmar Esq.
Harold A. Pcberts, Esq.
Sants Fe, New Mexico Other Appiarance,s Bruce Norton, Esq., Attorney for the Project Manager of the Arizona Nuctant Power Project Having heard the testimony of the witnesses, received the exhibie.s and being otherwise fully advised in the premises, i
The Commission F I N D S:
1.
The Statement of the Case, above, is adopted by these Findings of Fact and are incorporated herein.
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2.
Petitioner, Public Service Company of New Mexice i
is a New Mexico corporation, engaged in the production, discribu-
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tion, and sale of electricity to the public gen 3 rally in various localities within the State of New Mexico, it is a public
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utility cubject to the jurisdiction of this Commission to re-i
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gulate and supervise its rates, service regulations and all
, matters as provided in the New Mexico Public Utility Act, as
,, amended.
l 3.
Petitioner, El Paso Electric Company, is a Texas corporation engage,d in the generation, transmission and distri-bution of electricity to wholesale and retail customers ir the States of Texas and New Mexico and as such is a public utility t
subject to the jurlsdiction of this Commission, pursuant to the i
New Mexico Public Utility Act, as amended.
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4.
El Paso has filed with this Commission a certified copy of its Articles of Incorporation, as amended to date.
PNM has filed a certified copy of its Restricted Articles of in-corporation, as amended.
5.
PNM and El Paso propose to participate in the Pelo Verde Nuclear, Generating Station, a project owned jointly by five electric util'icies as tenants in common.
6.
The -participants in the project, along with their respective generation entitlement shares are as follows Arizona Public Service Company 29.1%
o Salt River Project Agricultural Improvament and Power District 29.1%
Southern California Edison Company 15.8%
El Paso Electric Company 15.8%
i Public Service Company of New Mexico 10.2%
7.
PVNGS will consist of three nuclear ger.erating units, t
each unit having a generating capacity of 1,270 MW.
The three f
units will be constructed at a site located approximately 47 miles west of downtown Phoenix, Arizona. Unit No. 1 is scheduled for commercial operation on May 1,1982, Unit No. 2 on May 1,
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1984, and Unit No. 3 on May 1, 1986. All three units will sharc i
certain common facilities.
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8.
PNM's generation entitlement from each unit will l be approximately 130 MW.,
9.
El P'eso's r,eneration entitlement share from each k unit will be approximately 200 MW.
'10.
The proposed generation facilities will cost an estimated.cotal of $2.8 billion, excluding AFDC and initial nuclear fuel cost or an estimated $3.6 billion dollars, includ-
'ing Advances for Funds During Construction (herein named /.rDC).
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t El Paso's share of the cost of PVNGS will be approximately
$660,000,000 including costs of plant fuel, and AFDC.
PNE's estimated total pr,oject cash flow for its participation in the project through 1986 is $398,026,600, which estimate includes costs of both plant, fuel and AFDC.
- 11.. Participation in the project will enable PNM and El Paso to avail itself of a source of low cost power relative to other available alternatives, and to obtain the economies incident to participation in a very 'large genernt-j ing plant.
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12.
Participation in the project will also enable PNM and El Paso to achieve a desirable mix of generation type s, i
i rather than becoming significantly more dependent on any one
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fuel for generation.
I 13.
Purchased power is not available to El Paso in g
sufficient quantities during the 1982-1988 time period to en-able El Paso to meet its system peak requirements and maintain an adequate reserve capability.
14,_ No significant amount of additional genera:ing capability can be achieved through modifications of El Paso's existing plant.
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- 15. The proposed facilities are system improvenents and are required to provide PNM and El Paso with firm generating facilities to enable it to meet its own anticipated firm load j
commitments at a date when the anticipated commitments will be f
actual requi;tements.
16.
The three PVNGS nuclear units share certain common facilities, and participation was offered to PN'i and El Paso on the basis of the construction of all three units as a single,
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I proj ec t. No valid reason exists to grant a certificate for less than three units; this conclusion was supported by the testimony of Dr. Martin Becker, staff witness. Further, no evidence exists that under the ANPP' participation Agreement, PNM and El Paso would'be contractually permitted to participate in less than the entire project.
17.
PNM and El Paso are financially able to participate in the project as requested.
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- 18. No showing was offered that either PNM or El l
l Paso, their stockholders, or the holders of their senior securities will be adversely affected in any way by the issu-i ance of the Certificate of Public Convenience and Necessity.
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19.
The present energy shortage in the United States, the growing decrease of gas supplies, and the growth of the l
Southwest, in particular, New Mexico, necessitate the additioral supplies of energy to be made available by the PVNGS. The g
l consumers of PNM and El Paso will be protected against energy shortages when ANPP's first unit starts operating in 1982.
- 20. - The public interest, convenience and necessity require that a Certificate issue and authority be granted to PNM and El Paso, subject to the conditions imposed by the Order f
below which the Commission finds to be reasonably necessary and proper and required by public convenience and necessity.
1 21.
PNM and El Paso should be required to file with j
theCommissionsemli-annualreportsofconstructionprogrets showing percentage, completion of engineering design and con-struction.
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22.
PNM,and El Paso should be required to file with
- the Commission within one hundred eighty (180) days following Case No. 1216 8
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t their receipt from the Project Manager of final project costs of the generating facili. ties herein authorized, a statement by plant account of the original cost installed of the facilities.
- 23. Parpicipation in PVNGS is a reasonable generation
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alternative to PNM and El Paso.
24.
If the PVNGS units are not constructed and placed in commercial operation, PNM and El Peso will have in-adequate reserve margins.and will not be able to meet thei r projected load growth.
25.
If PNM and El Paso do not have an adequate supply of electric power and energy, they will be unable to fulfill their statutory duty, as set forth in 568-6-2, N.M.S. A.
1953, to provide adequate, efficient and reasonable service.
- 26. PNM's and El Paso's participation in the con-struction of PVNGS as commenced by the Project Manager in May, 1976, pursuant to the construction permits issued by the Nuclear i
l Regulatory Commission, is hereby approved by this Commission.
- 27. No evidence was offered on the issue of cot.struc-tion work in progress (CWIP) as it appears to PVNGS. The Com-mission does not find it appropriate to approve or disapprove CWIP for PNM or El Paso at this time.
PNM will appear before f
this Commission at hearings beginning April 19, 1977 on its rate method known as " Indexing". At that time, the Commission will I
consider any evidence if offered as to the matter of CWIP for the l
With respect to El Paso, the Commission will consider the matter of CWIP;when El Paso next applies for rate consid-eration.
Based upon the foregoing Findings of Feet and upon the entire record,,.
Case No. 1216 T
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The Commission O R D E R S that:
A.
The public convenience and necessity require that PNM and El Paso provide adequate, efficient and reasonable service.
B.
It is reasonable and prudent for PNM and El Paso to participate in ANPP.
C.
There shall be, and hereby is, granted to PNM a Certificate of Public Convenience and Necessity to authorize PNM to participate in the Arizona Nuclear Power Project as a j
tenant in connon,'to own and operate and maintain an undivided 10.2% interest in each of the three units of the Palo Verc.e Nucl. ear Generating Station, each unit having a generating capacity of 1,270 MW, together with all common facilities in-t i
cident to these units.
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D.
There shall be, and hereby is, grar,ted to El Paso 4
a Certificate of Public Convenience and Necessity to authorize f
El Paso to participate in the Arizona Nuclear Power Project as a tenant in ccanon, to own, operate and maintain an undivided
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15.8% interest-in each of the three units of the Palo Verde Nuclear Generating Station, each unit having a generating l
capacity of 1,270 MW, together with all co= mon facilities in-1 i
t cident to these units.
E.
The Commission recognizes that construction and installation of th,e facilities authorized by this Order hr.ve l already connanced; PNM and El Paso shall continue such construc-tion and installation with reasonable diligence.
F.
PNM and El Paso respectively shall file semi-annual
,.p.
reports as to construction progress which will show:
(1) the Case No. 1216 l
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i percentage of the engineering design completed; (2) the percertage of the construction accomplished.
G.
PNM and El Paso respectively shall file with this Commission within one hundred eighty days (180) following PNM's and El Ps: J's. receipt from the Project Manager of the final project costs of the generating units herein authorized, a statement by plant account of the original cost installed in these facilities.
H.
The Certificate and authority granted by this Order shall not be transferable and shall be and remain effective from and after the date of this Order, as shown below, and sh.411 be subject to modi,fication from time to time as the public interest may require or warrant, by Order duly entered upon application by PNM'and El Paso or upon the Commission's own i
Motion.
i I.
Nothing herein contained shall be construed as an expression of approval by the Commission of the valuation of the plant and facilities to be constructed or purchased b,r PNM and El Paso for ratemaking purposes, or as affecting in any l
way the jurisdiction of the commission to exercise at all times
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hereinafter its full authority pursuant to law with respect to l
rates, service and other matters.
J.
Nothing herein contained shall be construed as an I
expression of approval by the Commir
- of construction work in progress being made a part of the rat
_se for either PN.4 or I
El Paso, until such times as formal hearings are held in this l
Qatter.
K.
This Order shall constitute appropriate evidence and the only evidence required of the issuance to Public Service.
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Company of New Mexico of the Certificate of Public Convenience and Necessity, hereby granted.
L.
This Order shall constitute appropriate evidence and the only evidence required of the issuance of El Paso Electric Company of the Certificate of Public Covenience and Necessity, hereby granted.
I S S U E D under the Seal of the Commission at Santa Fe, New Mexico, this 8th day of v bruary,1977'.
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i NEW MEE,ICO PUBLIC SERVICE COMMISSION
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p HARIT P. MONTOYA, CHAIRMAN '
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EILEEN GREVEY, COMMISSIONER
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GARY BLAKELEY, COMMISSIONER' t'
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