ML20041D539
| ML20041D539 | |
| Person / Time | |
|---|---|
| Site: | Wolf Creek  |
| Issue date: | 02/22/1982 |
| From: | Hanson G KANSAS MUNICIPAL ENERGY AGENCY |
| To: | Skjei S Office of Nuclear Reactor Regulation |
| References | |
| NUDOCS 8203050390 | |
| Download: ML20041D539 (3) | |
Text
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/s Mr. Stephen S.
Skjei, Chief
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Division of Engineering WI Office of Nuclear Reactor Regulation U.
S.
Nuclear Regulatory Commission Washington, D.
C.
20555 Re:
Review of application for Wolf Creek operating license
Dear Mr. Skjei:
I have received your letter dated February 1, 1982, concerning the above-mentioned application of Kansas Gas and Electric Company
("KGE") and Kansas City Power and Light Company ("KCPL").
Your letter contained essentially six inquiries, to which the Kansas Municipal Energy Agency ("KMEA") responds as follows:
1.
Access to Wolf Creek KMEA has been negotiating with KGE and KCPL to purchase an undivided ownership interest in Wolf Creek (plus a similar, although smaller, ownership interest in KGE's and KCPL's LaCygne Generating Station, which consists of two operational coal-fired units with, at presenL, combined capacity outputs of 1370 megawatts).
KMEA's ownership interest in Wolf Creek will not exceed nine percent (4 1/2%
from each company).
It is our understanding that KCPL's Board of Directors has formally approved a Wolf Creek sale to KMEA which does not exceed this (4 1/2%) amount; however, to our knowledge, KGE's Board has not yet done so.
The transaction is currently anticipated to be close by August 31, 1982.
The final level of KMEA's Wolf Creek (and LaCygne ownership interest (s) will be ascertained when thirty-two cities, which have participated in the first two phases of KMEA's initial power supply program, decide to what extent (if any) they individually want to purchase base load power and energy from KMEA.
KMEA's k$ '
initial power supply program involves the participating cities' designating a percentage of their projected peak demands to be
/O supplied by KMEA.
Thus, KMEA will, in essence, be providing base load power and energy, while the participating cities will utilize their own amall oil and gas fired generating units primarily for peaking pu: poses.
The 32 participating cities have funded a " Member P.O. Box 1026 1106 East 27th Suite 4 Hays, Kansas 67601 8203050390 820222 PDR ADOCK 05000482 A
Mr. Stephen S. Skjei Page 2 February 22, 1982 Power Supply Comparative Cost Study", prepared by R. W.
Beck and Associates and dated January 1982, which (from the standpoint of KMEA's power supply) encompasses KMEA's purchases of (i) Wolf Creek and LaCygne ownership interests, (ii) certain output of a coal-fired generating unit (for the life of the unit) of another municipal system in Kansas, and (iii) periodically, firm power (and other supplemental services) from six electric utilities in Kansas, including KGE and KCPL.
The Wolf Creek (and Lacygne) negotiations have progressed to the stage where the parties have finalized (but not yet signed) a
" Memorandum Agreement", which specifies the various elements of the transaction, including purchase prices, income tax protection for the companies, the option for KMEA to purchase reduced ownership percentages, the possibility of the companies' temporarily buying back portions of the Wolf Creek (and LaCygne) capacity and energy from KMEA, and entering coordinating agreements to effect the necessary interconnections, and transmission and other services.
The coordinating agreements, and other documents to be executed by KMEA, KGE and KCPL, are still in the early stages of drafting.
2.
Sale of Firm and Non-Firm Bulk Power Sales by KGE and KCPL of firm and non-firm bulk power to KMEA will be implemented pursuant to the previously-mentioned coordinating agreements and to service schedules to be attached to, and made a part of, such agreements.
Most, if not all, of said service schedules will be subject to the scrutiny of, and approval by, the Federal Energy Regulatory Commission (the "FERC").
Notwithstanding such review by the FERC, it is somewhat disturbing to note that, although KGE's
" Antitrust Conditions" (particularly Item 6a) seems to impose on KGE an unqualified obligation to " sell power at its filed and effective rates (for total or partial requirements) ", Item 6 of KCPL's " Antitrust Conditions" qualifies KCPL's obligation in this regard by conferring higher priority on service to KCPL's retail electric customers.
3.
Coordination, Planning and Transmission Services Transmission services and coordination of system operations of KMEA, KGE and KCPL will similarly be covered in the coordinating agreements and related service schedules; however, the parties (and the " Memorandum Agreement") have stated only generalities and there has not yet been agreement upon any specific elements or conditions.
Nor have the planning and construction of additional transmission facilities by KGE and KCPL been topics of discussion among KMEA, KGE and KCPL.
KMEA has provided to KGE and KCPL (through R. W.
Beck and Associates) "best estimates" of amounts, paths and locations for the companies' transmission and delivery of power and energy from Wolf Creek and LaCygne to KMEA's participating cities.
To date, neither KGE nor KCPL has voiced any concern about a lack of avail-able capacity in existing transmission facilities.
4.
KMEA's Reliability The question relating to the reliability of KMEA's system is somewhat premature at this point because KMEA is not yet in the
Mr. Stephen S. Skjei Page 3 February.22, 1982 wholesale power supply business.
As I previously indicated, KMEA's ownership interest in Wolf Creek (plus that from LaCygne, the unit participation from the Kansas municipal system, and the purchases from " area" utilities) comprises a portion of KMEA's initial power supply program.
On the other hand, Wolf Creek will be one of the
" multiple shafts" on which KMEA (and, ultimately, its participating cities) will be depending to enhance or improve KMEA's system reliability.
i 5.
KMEA's Planning for Future Load Growth l
In implementing its initial power supply program, KMEA has sought, from the 32 participating cities, some indication of the levels of their expected or desired purchases of base load power and energy from KMEA, stated in " letters of intent" in terms of percentages of the cities' annual peak load demands for 1982, 1983, 1984 and 1985 and thereafter.
The inquiry to the participating cities was so structured for the several years (i) to reflect the fact that Wolf Creek, the capacity from which will represent roughly half of KMEA's initial power supply program, will not be commercially operable until early 1985, and (ii) to enable the participating cities to specify lower percentages of their peak load demands to be met by purchases from KMEA prior to this significant influx of generating capacity into KMEA's system in 1985.
To this extent, Wolf Creek has played an important role in KMEA's planning for the future load growth of its participating cities.
6.
KMEA's Acquisition of Firm and Non-Firm Power Supply Absent the planned purchase by KMEA of an undivided ownership interest in Wolf Creek, KMEA would obviously have to look elsewhere to obtain firm power supply commitments (i.e., purchases) so as to satisfy the base load requirements of its participating cities.
Insofar as non-firm purchases are concerned, the Wolf Creek license conditions (and the anticipated Wolf Creek sale to KMEA) have probably had a beneficial impact upon KMEA's negotiations (although presently embryonic) with KGE and KCPL regarding coordinating' agreements, and transmission and other supplemental power and energy services.
The very concept of a joint action agency like KMEA is beneficial in negotiations because the selling utility (or utilities) will be dealing with only one entity which is the single voice for a multitude of smaller entities whose cumulative power and energy requirements are considerable from both capacity and income (pur-chase price) standpoints.
I trust that this letter is fully responsive to and satisfies your inquiries but, if you need any further information, please feel free to contact me again.
Yours truly,
/
ilbert E. Hanson General Manager GEH/dj