ML20041F019

Notice of Finding of No Significant Antitrust Changes & of Time for Filing Requests for re-evaluation.Findings Encl

ML20041F019
Person / Time
Site:	Clinton
Issue date:	02/23/1982
From:	Toalston A Office of Nuclear Reactor Regulation
To:
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ML20041F016	List: ML20041F015 ML20041F019
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NUDOCS 8203160097
Download: ML20041F019 (50)

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i NUCLEAR REGULATORY C0ft1ISSION DOCKET NO. 50-461A ILLIN0IS POWER COMPANY, SOYLAND POWER COOPERATIVE, INC. AtlD WESTERN ILLINOIS POUER COOPERATIVE, INC.

NOTICE OF FINDING OF NO SIGNIFICANT ANTITRUST CHANGES AND TIf4E FOR FILING REQUESTS FOR REEVALUATION The Director of Nuclear Reactor Regulation has made an initial finding in accord-ance with Section 105cf 2) of the Atomic Energy Act of 1954, as amended, that no significant (antitrust) changes in the licenseest activities or proposed activities have occurred subsequent to the previous constryction permit review of Unit 1 of the Clinton Nuclear Power Station by the Attorney General and the Comission.

The finding is as follows:

"Section 105c(2) of the Atomic Energy Act of 1954, as amended, provides for an antitrust review of an application for an operating license if the Comission detemines that significant changes in the licensee's activities or proposed activities have occurred subsequent to the previous construction permit review. The Comission has delegated the authority to make the "significant change" to the Director, Office of Nuclear Reactor Regulation. Based upon an examinction of the events since issuance of the Clinton 1 and 2 construction permitsto the I1Tinois Power Company, the staffs of the Antitrust and EconomicrAnalysis Branch. Office of Nuclear Reactor Regulation and the Antitrust Section of the Office of the Executive Legal Director, hereafter referred to as " staff," have jointly concluded, after consultation with the Department of Justice, that the changes that have occurred since the antitrust construction pemit review are not of the nature to require a secord antitrust review at the operating license stage of the application.

"In reaching this conclusion, the staff considered the structure of the electric utility industry in central and southern Illinois, the tcents relevant to the Clinton construction pemit review and the events that have occurred subsequent to the construction pemit review.

"The conclusion of the staff's analysis is as follows:

'The principal applicant, Illinois Power Company, represents the largest power system in the relevant marketing area. Additions of large baseload power plants and increases in accompanying transmission facilities generally tend to increase the oversight or planning role of the larger systems in a particular marketing area, i.e., usually enhancing any existing market power of the system.

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'By subjecting all nuclear applicants to an antitrust review at the CP stage, the NRC Vic its Section 105c charge, prevents the economies associated with large baseload nuclear plants from being captured by only the largest power systems throughout the country, there-by thwarting increases in existing market power.

During the Clinton CP antitrust review, it became apparent that Illinois Power had been less than cooperative with smaller power systems in its service area and adjacent areas.

Consequently, a set of antitrust license conditions was attached to the Clinton construction permit which was designed to implement greater coordination between Illinois Power and smaller municipal and cooperative systens in the relevant area - thereby furthering the competitive process among these same power systems.

'The economies associated with the Clinton nuclear plant and those linked to Illinois Power's integrated network of power supply were subsequently made available to smaller systems in the area.

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' Staff has identified a number of changes that. (1) have occurred since the construction permit antitrust review, and (2) are reasonably attributable to the licensee (s).

However, many of these changes are in conformance with the construction permit antitrust license conditions and have had positive performance effects on the availability of bulk power supply and on competition in the area generally. Other changes which have oc-curred have not had significant negative antitrust implications that would likely warrant a Commission remedy and therefore do not warrant a significant change finding.

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' Based upon the successful implementation of CP license conditions and the lack of any detrimental conduct or activity (to the competitive process in central and southern Illinois) on the part of Illinois

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Power Company, Soyland Power Cooperative or Western Illinois Power Cooperative, staff recommends that no affirmative significant change determination be made pursuant to the application for an operating license for Unit 1 of the Clinton Nuclear Power Station.'

" Based on the staff's analysis, it is my finding that a formal operating license antitrust review of the Clinton Nuclear Power Station, Unit 1 is not required."

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Signed on February 23, 1982 by Harold R. Denton, Director of Office of Nuclear Reactor Regulation.

1 Any person whose interest may be affected by this finding nay file with full particulars a request for reevaluation with the Director of Nuclear Reactor Regulation, U.S. Nuclear Regulatory Comission, Washington, D.C.

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i FOR THE NUCLEAR REGULATORY COMfi!SSION i

/s/ A, L.Tuatston Argil Toalston, Acting Chief Antitrust and Economic Analysis Branch Division of Engineering Office of Nuclear Reactor Regulation r

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CLINTON NUCLEfR POWER STATION, UNIT 1 ILLIN0IS POWER COMPANY, 50YLAND POWER COOPERATIVE, INC. AND WESTERN ILLINDIS POWER COOPERATIVE, INC.

DOCKET NO. 50-461 FINDING OF NO SIGNIFICANT ANTITRUST CHANGES

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INDEX I

I.

Introduction i

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II.

Structure of the Electric Power Industry in Illinois A.

Investor Owned Utility Systems 1.

Illinois Po'ser Company 2.

Central Illinois Public Service Company 3.

Central filinois Light Company 4.

Electric Energy, Inc.

B.

Municipal Electric Systems m C.

Cooperative Power Systems III.

The Construction Permit Antitrust Review

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Changes Since the Construction Permit Review f

A.

Changes; Resulting from License Conditions l

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- Changes Not Resulting from License Conditions i

V.

Summary and Conclusion

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Appendices 3

A.

Illinois Power Service Area Map B.. Municipal Generating Systems Located in Illinois u C.

Members of Soyland Power Cooperative l

Members of Western Illinois Power Cooperative O

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,.cL' E.

Clinton CP License Conditions and Department of Justice " Advice Letter" I

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FERC Litigation i

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Introduction e

Unlike the procedure established for review of' construction permits, prospective operating licensees are not required to undergo formal antitrust reviews unless the NRC staff 1 has made the determination that there have been "significant changes" in the licensee's activities or proposed activities subsequent to the review by the Attorney General and the Commission at the construction permit (CP) stage.2 The Commission in its recent Summer 3 decision has provided the staff with a set of criteria to be used in making the significant change determination for prospective ope' rating license (OL) applicants.

"The statute contemplates that the change or changes,-(1) have occurred since the previous antitrust review of the licensee (s);

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(2) are reasonably attributable to the licensee (s); and (3) have J ',<

antitrust implications that would most likely warrant some v

Commission remedy."4 I

To warrant an affirmative significant change finding, i.e., triggering a formal

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GL antitrust review, the particular change (s) must meet all three of these

. ' criteria.

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Staff has documented two groupings of " changes" in its analysis of the Clinton OL application that warrant analysis under Summer:

1) those resulting from the I This responsibility was officially delegated to the Director of Nuclear Reactor Regulation in a memorandum dated September 12, 1979 from Chairman Hendrie to the Directors of NRR and NMSS.

25ection 105c(2) of the Atomic Energy Act of 1954, as amended.

3 Virgil C. Summer Nuclear Station, No.1, Docket No. 50-395A, dated June 30, 1980.

4 Summer, p. 7

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applicant's CP license conditions; and 2) those not directly resultant from the CP license conditions.

Staff has found no change in either group that meets all three Summer criteria and consequently is not recommending a formal OL antitrust review.

To put these changes in prospective, it is helpful to first review the structure of the market pertinent to this review and the basis or benchmark from which change is measured.

II.

Structure of the Electric Power Industry in Illinois The electric power industry in Illinois can be segmented into two portions, that integral to the City of Chicago and its surrounding area, and the remainder l

of the state.

The Chicago area is serviced by one of the largest domestic electric power companies, Commonwealth Edison Company.

The terr. :inder of the state (i.e.,

from the north central portion, to the southern tip of the state) is serviced by a group of power companies including municipal, cooperative and private power companies.

The relevant marketing area for the Clinton Nuclear Power Station focuses on the central and southern portions of the State of Illinois, i.e., the area in which the incidence of any anticompetitive practices associated with the activities of the Clinton Applicants will nave the greatest impact.

This is the area in which the three applicants serve and the area where the use of the power and energy generated by the Clinton nuclear plant will be most concentrated.

l A.

Investor-0wned Utility Systems (IOU) l l

1.

Illinois Power Company (Illinois Power) l l

Illinois Power, the company responsible for constructing and operating the Clinton plant, is the largest electric utility system in the relevant marketing 2

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v area, in terms of owned or controlled generating capacity, high voltage transmission facilities and electric load served.

In 1979, Illinois Power had 3,749 Mw of generating capacity; 2,448 miles of transmission lines 69 kv or higher; and a (summer) peak load of 3,019 Mw.

Illinois Power's service area is concentrated in the central and southern portions of the state, where roughly 80% of its revenues are generated--the I

remainder of the Company's operating revenues comes from properties located

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in the northern portion of the state.

The three geographic service areas are non-contiguous, however they are all linked by company-owned high voltage t

transmission lines as well as with interconnections to other power companies in the area.

(See map of Illinois Power's service area, included as Appendix A.)

i Illinois Power's operating revenues for 1979 amounted to $752 million I

(approximately 65 percent from electric operations and 35 percent from gas facility operations), with net income of $91 million.

2.

Central Illinois Public Service Company (Central P linois)

Outside of the Chicago area, in the lower two-thirds of the State, Central Illinois is the second largest IOU following closely behind Illinois Power in generating and transmission facilities owned and electric load served.

In 1979 Central Illinois owned or controlled 2,581 Mw of generating capacity;

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3,581 miles of transmission line 69 kv or higher; and had a summer peak load of 1,818 Mw.

Central Illinois had operating revenues of $448 million for 1979 and net income of $67 million.

l Central Illinois and Illinois Power are the principal producers of electric power and energy in the southern two-thirds of the state.

Each system is i

fully integrated and the two systems are also interconnected extensively by high voltage and extra high voltage transmission ties.

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Central Illinois Light Company (Central Illinois Light)

Central Illinois Light's service area is primarily in the central portion of

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the state centering around the cities of Peoria and Springfield, Illinois.

I Although the Company is one of the smaller 10Us in the state, it has inter-connections with Central Illinois Public Service, Commonwealth Edison, Illinois Power and the City of Springfield electric system to provide for interchange i

of electric energy on an emergency and mutual help basis.

f In 1979 Central Illinois Light had generating capacity of 1,501 Mw, 339 miles of transmission line 69 kv or higher and a summer peak load of 1,055 Mw.

The Company's 1979 operating revenues amounted to $364 million with a net income of $53 million.

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Electric Energy, Inc.

The Company was incorporated in Illinois in 1950 by four private utility companies to supply a specified amount of firm power to an Atomic Energy l

6 Commission project near Paducah, Kentucky.

Electric Energy Inc. is interconnected with the four sponsoring companies and with the Tennessee Valley Authority (TVA).

Electric Energy, Inc. does not represent an integral competitive system in the area primarily because all power in excess to that supplied to the Federal installation in Paducah is contracted to each of the sponsoring companies in amounts equal to their ownership shares.

i In 1979 Electric Energy, Inc. had generating capacity of 1,100 Mw, and 55 miles of transmission lines above 69 Kv.

Of the total generating capacity available, t

735 Mw has been contracted to the government facility through December 31, 1989.

Operating revenues amounted to $124 million with $3 million net income j

for 1979.

j 6The sponsoring companies are:

Central Illinois Public Service Company, 20%

ownership; Illinois Power Company, 20% ownership; Kentucky Utilities Company, 20% ownership and Union Electric Company, 40% ownership.

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Of the 12 investor-owned utilities doing business in Illinois, those mentioned above represent the largest in terms of load served and the most relevant for purposes of assessing competition in the electric power industry in the state outside of the Chicago area.7 B.

Municipal Electric Systems Twenty-Three of the thirty eight municipally owned electric systems in the state possess some degree of self generation.8 Of these twenty-three systems, the largest is that owned and operated by the City of Springfield, Illinois with 530 Mw of capacity in 1979.

Most of the remaining generating municipals are very small and typically supply only portions of their loads, purchasing the remainder from other suppliers -- usually the larger IOU's throughout the State.

(This is typical of the structural format for the industry nationwide, I

with the larger private investor-owned companies supplying varying amounts of partial requirement service to the smaller self generating utilities and full requirements service to those municipals or cooperatives with no generation.

There are however, pockets throughout the industry where very large municipal or government systems, e.g., in the City of Los Angeles or the TVA throughout the State of Tennessee respectively, where the private systems do not represent the predominant source of power and energy, but these areas represent exceptions to the norm.) None of the municipal systems in Illinois is a co-owner of the Clinton nuclear plant, however, many of the systems have benefited from the j

license conditions attached to the Clinton construction permit.

See section J'

entitled, " Changes Since the Construction Permit Review."

i 7The other 10U's operating within the state are:

Cedar Point Light and Water Company, Mt. Carmel Public Utility Company, Sherrard Power System, South Beloit Water, Gas and Electric Company, Interstate Power Company, Union Electric Company and Iowa-Illinois Gas and Electric Company.

(Though most of Electric Energy, Inc.'s load is outside of the state much of the excess capacity produced by the Company goes to members operating in the relevant area.)

sSee Appendix B for a listing of all municipal generating systems located in the State of Illinois.

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C.

Cooperative Power Systems (Coops)

There are thirty rural electric coops in the state of Illinois, two of which are co-owners of the Clinton nuclear plant, i.e, Soyland Power Cooperative, Inc. (Soyland) and Western Illinois Power Cooperative, Inc. (WIPCO).

The majority of the coops are distribution coops and have no generation or trans-mission facilities of their own.

They are characteristically supplied by the private IOU's or larger generation and transmission (G&T) coops serving in the area.

Presently, there are two G&T coops in the state, WIPC0 and the Southern Illinois Power Cooperative (SIPCO).

SIPC0 had generating capacity of 280 Mw in 1979 with 100 miles of transmission line supplying its three distribution cooperatives at wholesale.

In 1979 WIPC0 had generating capacity of 57 Mw and 545 miles of transmission line.

Soyland is an organization (which presently has no generation or transmission facilities) set up to acquire a 10.5% interest in Clinton Unit 1.

It is com-prised of fifteen member distribution coops 9 located in the central and southern portions of the State of Illinois -- essentially, the non-Chicago area of the State.

Once Soyland Power Coop (Soyland) begins taking Clinton nuclear power, it too will function as a G&T coop supplying its member systems with wholesale bulk power.

III.

The Construction Permit Antitrust Review In order to make a "significant change" determination it is necessary to have some benchmark from which to measure " change." A brief resume of the results of the CP review should provide an adequate framework in which change can be measured.

3See Appendix C for names and addresses of Soyland members, and Appendix 0 l

for names and addresses of WIPCO members.

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Illinois Power Company, the principal applicant and operator of the Clinton Plant, applied for a construction permit to build its first nuclear power plant in 1973.

Like all other non grandfathered nuclear applicants (those applicants seeking cps or OLs after the 1970 amendment), Illinois Power had to undergo an antitrust review at the CP stage to insure that its activities in connection with the construction of the plant did not " create or maintain a situation inconsistent with the antitrust laws" -- as prescribed by Sec. 105c J

of the amended Atomic Energy Act of 1954.

During the review process, the staff's of the Department of Justice (D0J) and the AEC/NRC became aware of certain allegations of misconduct by Illinois Power in conjunction with its dealings with cooperative and municipal power systems in or adjacent to Illinois Power's service area.

These concerns were addressed by the Department in a letter to the AEC requesting additional information from the Applicant:

"Among the alleged matters with possible antitrust implications which the Department [of Justice] seeks to clarify by means of the requested documents are:

refusals of the Applicant to inter-connect with other electric utilities on reasonable terms; efforts to p eclude development of alternative bulk power supply sources by others; acquisitions of other electric utilities; refusals to wheel power for small systems; allocation of territories and restrictions on end use of purchased power."10 After submitting additional clarifying data in response to 00J's document request and after the anticompetitive concerns were aired, the Applicant agreed to a set of policy commitments that were attached as license conditions to its construction permit for Units 1 and 2 of the Clinton nuclear plant.

1 Letter dated January 24, 1974 from Thomas Kauper, Assistant Attorney General, (signed by Joseph Saunders) to Howard Shapar, Assistant General Counsel, AEC.

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Generally, the policy commitments addressed the following areas: 11 a.

Illinois Power (Company) will interconnect with any neighboring entity and will assist in coordination of reserves and the sale of emergency and maintenance power to interconnected entitites; b.

Interchange arrangements between the Company and neighboring entities will not include restrictive provisions which would preclude a party from engaging in interconnection and coo'dination arrangements with others; c.

Interconnectons will be available for a neighboring electric system on any of the Company's installed transmission and subtransmission facilities; d.

The Company will afford an opportunity to participate to any neighboring electric system that makes a timely request therefor in the ownership (or unit power purchase) of the Clinton nuclear plant or any other nuclear plant owned by the Company which is scheduled for commercial operation prior to January 1, 1989; e.

The Company will sell bulk power to any neighboring electric system with no restriction upon use or resale; f.

The Company will wheel power over its transmis ion facilities; and, g.

The Company will include in its planning and construction programs sufficient transmission capacity to provide for the wheeling requirements of neighboring electric systems.

Subsequent to Illinois Power agreeing to the antitrust policy commitments listed above, the Department of Justice issued its CP advice to the Commission by letter dated April 29, 1974.

The letter concluded as follows:

llSee Appendix E for complete listing of all of the antitrust conditions attached to the Clinton construction permit.

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"In our opinion, these policy commitments should provide competitors of Applicant with competitive alternative sources of bulk power supply and substantially eliminate the grounds on which complaints made to the Department by smaller systems were based.

On the strength of these policy commitments, and with the expectation that the Commission will include them as conditions to the license, we conclude that an antitrust hearing will not be necessary with respect to the instant application."12 The Attorney General's advice letter was published in the Federal Register in

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May of 1974.

Since no petitions to intervene were received, the CP antitrust review effectively ended with the publication of the Attorney General's advice letter, although the construction permit was not issued until February of 1976.

IV.

Changes Since the Construction Permit Review The Commission's Regulatory Guide 9.3 for OL applicants requests data pertaining l

to changed activities since the CP antitrust review:

l "This regulatory Guide identifies the type of information that j

the Regulatory staff conside s germane for a decision as to whether a second antitrust review is required at the operating license stage."

By letter of May 23, 1980 the principal applicant, Illinois Power Company, i

submitted on behalf of itself and as agent for the co owners, Soyland Power Coop.'and Western Illinois Power Coop., responses to the Commission's 9.3 data request.

From staff's review of the 9.3 data response and analysis of various public information sources, two distinct types of " changes" since the CP review l

" Appendix E, 00J " advice" letter dated April 29, 1974, pp. 4-5.

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1) changes resultant from imnlementation of CP license conditions; and 2) changes not directly related to the CP license conditions.

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Changes Resulting from License Conditions l

l Many of the changed activities which have occurred in the Illinois electric power industry since tne CP antitrust review have resulted from extensive negotiations between the larger IOU's, the smaller municipal and cooperative systems and various governmental agencies concerning various forms of coordin-ation and power supply.13 The fruits of these negotiations have been realized by many of the smaller systems in the area.

For example:

1)

Several municipal generating systems have obtained interconnection agreements with Illinois Power Company, agreements that were similar to those Illinois Power already had with its neighboring investor-owned electric systems.

Although the interconnection agreements were imple-mented after the CP review terminated in 1974, they were directly related to requirements imposed by license conditions negotiated i

during the CP antitrust review; l

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2)

The same municipals which sought interconnection agreements from l

IllinoisPowehhaverecentlyoptedtotakepartialrequirement i

wholesale service rather than taking service under the provisions of l

the previously negotiated interconnection agreements.

This represents I

a new option for these systems; 3)

Illinois Power entered into an interconnection agreement with the I

electric system operated by the City of Springfield, Illinois; l

4)

Two smaller power companies, Soyland and Western Illinois Power Coops, have purcnased ownership shares of the Clinton Nuclear Plant, thereby sharing in the benefits of a large, fuel efficient baseload power plant; i

Lolllinois Power is also currently involved in several rate proceedings with various Illinois municipals before the FERC.

These issues were current during the CP review and consequently do not involve changes since that review.

For a brief description of these proceedings, see Appendix F.

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5)

The City of Waterloo, Illinois opted for a partial requirement wholesale power agreement rather than agreeing to an offer of purchase (of its electric system) by Illinois Power; 6)

Illinois Power received interconnection requests from the Villages of Flora and Chatam, Illinois and from the Farmer City, Illinois electric system; 7)

The City of Springfield, Illinois has approached WIPC0 regarding possible participation in a joint generating plant; and, 8)

As a result of WIPCO's 138 kv tie with Illinois Power in 1978, the Coop became a member of NAPSIC (North American Power Systems Inter-connection Committee) a data gathering organization formed to ensure acceptable levels of operation and reliability of its members.

Although the above changes have occurred subsequent to the CP antitrust review, they were anticipated during that review as reflected in the CP license condi-tions.

Thus, in so far as the changes are consistent with those license conditions, they do not connote changes in the " proposed activities" of the Applicant.

Consequently, staff needs only to assure itself that these changes are indeed consistent with the license conditions.

As discussed earlier, the license conditions attached to the Clinton construction permit were structured to remedy certain allegations of anticompetitive conduct by Illinois Power.

Generally, the license conditions were designed to increase the alternatives and opportunities of smaller systems in central and southern Illinois in their quest in seeking and obtaining sources of power supply, and specifically to facilitate both the sharing of nuclear power and the ancillary functions of power supply that make baseload nuclear desirable.

By increasing coordination between the various industry participants (notably the large and small systems), the newly acquired competitive alternatives listed above, have become significant (beneficial) determinants in the planning processes of smaller power systems in central and southern Illinois.

Moreover, the implementation of the license conditions has had positive performance effects 11

on the availability of bulk power supply in central and southern Illinois, and should any antitrust significance be attributed to these activities, it would be constructive, i.e., not requiring any remedial action by the Commission.

B.

Changes Not Resulting from License Conditions There have been changes in the electric power industry in central and southern Illinois not directly attributable to the Clinton CP license conditions.

These changed activities, documented by the 9.3 response, have not detrimentally affected the competitive process among electric power systems in the relevant marketing area.

Moreover, these changed activities have had no negative anti-trust implications that would trigger a "significant change determination" as interpreted by the Commission in Summer.

The changes are as follows:

1)

The addition of new members to the Mid-American Interpool Network (MAIN):

a)

The Municipal Electric Utilities of Wisconsin, b)

Soyland Power Cooperative, Inc., and c)

Western Illinois Power Cooperative, Inc.

Normally, the addition of new members to operating power pools directly increases the coordination and cooperation among power systems in common or adjacent marketing areas.

Even though the MAIN pool is basically a regional planning organization with little or no control over the operating practices of its members, the addition of the three new systems will enable them to participate in periodic planning sessions among regional systems and generally become more familiar with new generation and transmission planned for the area.

The admission of these new members to MAIN is a change since the CP review, however, this change is procompetitive and consequently does not satisfy the remaining two Summer criteria, i.e., attributable to the applicant and having negative antitrust implications; 12 t

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2)

Joint planning among Soyland Power Coop., Western Illinois Power Coop. and Southern Illinois Power Coop.:

These three G&T cooperatives (Soyland will become a G&T once it begins to receive Clinton power) have joined together to disucss the possibility of constructing various size coal-fired generating plants in the late 1980s.

Soyland has already contracted with the Peabody Coal Company for a one billion dollar, thirty year supply of coal for its plant to be built in Pike County, Illinois in the late 1980s.14 This type of joint planning and development is indicative of competitive forces at work within the bulk power market.

By joining forces, these relatively small power suppliers are able to build a generating plant that will provide the benefits of large baseload power normally reserved for the large IOUs in the industry.

The increase in coordination, and cooperation among these firms has provided more meaningful competition between the large and the not so large power generating systems in central and southern Illinois.

Only the first Summer criterion is met by this change, i.e., the planning has occurred since the CP review.

The joint planning is not attributable to the applicant nor does it carry any negative antitrust implications that would likely be remedied by the Commission.

3)

Illinois Power's new retail rate structure was redesigned to encourage off peak usage on its system.

Many systems throughout the country have instituted this retail rate structure in an attempt to ward off or delay construction of costly new generating plants and to level their system loads throughout the year.

The Commission has no jurisdiction over retail rate structure and would not likely impose any remedy if a dispute over retail rates arose.

(Certain rate conflicts may fall within the purview of the Commission, e.g., when a wholesale rate and a retail rate are manipulated by an applicant to impose a " squeeze" on customers, however, this is not the case with the change instituted by Illinois Power);

14See the April 10, 1981 issue of the Wall Street Journal.

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4)

Illinois Power has made offers to acquire three electric power systems since the completion of the CP review:

the City of Waterloo, the Village of Ladd and the private system supplying the City of Mt. Carmel (all Illinois systems).

In view of Illinois Power's history of acquiring smaller electric systems in its area, it is important to fully consider these proposals, particularly in the context of the third Summer criterion, i.e., negative antitrust implications.

Prior to the institution of the CP license conditions, Illinois Power's prospective acquisition partners did not have the option of purchasing partial requirements power and thereby remaining more viable, independent power entities while at the same time meeting the future needs of their customers.

The Clinton license conditions provided the smaller systems in the relevant marketing area with an alternative to acquisition.

The municipal systems located in central and southern Illinois can now conduct feasi-bility studies and determine if they can provide efficient and reliable service to their customers with various forms of sup-port available from Illinois Power Co., without being acquired by Illinois Power.

(Support Illinois Power has offered other interconnected systems in its area for years.)

However, if these studies indicate that remaining in the electric power industry is no longer feasible for the municipal, they may then choose to sell out to Illinois Power.

The systems serving Mt. Carmel and the Village of Ladd are very small and the City of Waterloo has exercised its recently obtained option and requested a partial requirement service agreement from Illinois Power, in lieu of being acquired, under the negotiated

" Agreement for Purchase of Power," dated May 1, 1979.

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Illinois Power's recent overtures to purchase the electric facilities in Ladd, Waterloo and Mt. Carmel do meet the first two Summer criteria -- the activity has occurred since the CP review and is attributable to the Applicant -- however, the proposed acquisitions do not appear to detrimentally affect the competitive process in central and southern Illinois -- thereby failing to meet the third Summer criterion dealing with significant antitrust implications capable of being remedied by the Commission.

Consequently, these overtures of acquisition do not invoke a significant change determination; and lastly, 5)

A group of time-related changes has been documented since the CP antitrust review.

This grouping of changed activity is characterized by variations in system load and individual growth patterns and is largely dependent upon economic conditions within the service area of each individual system.

These changes are as follows:

a)

Western Illinois Power Coop (WIPCO) has planned to add new generating capacity to its system by adding a new 100 Mw coal plant in 1988; b)

WIPC0 reduced the size of a newly planned turbine plant from 75 Mw to 72 Mw and slipped the planned on line date from 1985 to 1986; c)

WIPCO's projected annuai load factor for 1979 was projected in 1973 at 53, however, the actual load factor for the system for 1979 was 50.9; d)

WIPCO's peak load increased from 42 Mw in 1978 to approximately 45 Mw in 1979; e)

Illinois Power's peak load and generating capability have changed since 1976.

Net generating capability increased from approximately 3,400 Mw in 1976 to approximately 3,800 Mw in 1980, while peak load increased from 2,570 Mw to 3,150 Ms over the same period; and, 15

f)

Soyland Power Cooperative has announced plans to construct a baseload coal-fired plant in Pike County, Illinois to go on line in the late 1980s.

The above changes meet the first two Summer criteria but not the third, i.e.,

the changes have occurred since the CP review and are attributable to the Applicant (s), however, none of the changes has negative antitrust implications and would not require Commission remedy.

In sum: within the two groups of changes, those related and those unrelated to CP license conditions, staff has not identified any instances that satisfy all three of the Summer criteria.

Consequently, it is the staff's opinion that no affirmative significant change determination be made pursuant to Applicants' application for an OL for the Clinton nuclear plant.

V.

Summary and Conclusion The principal applicant, Illinois Power Company, represents the largest power system in the relevant marketing area.

Additions of large baseload power plants and increases in accompanying transmission facilities generally tend to increase the oversight or planning role of the larger systems in a particular marketing area, i.e., usually enhancing any existing market power of the system.

By subjecting all nuclear applicants to an antitrust review at the CP stage, the NRC via its Section 105c charge, prevents the economies associated with large baseload nuclear plants from being captured by only the largest power systems throughout the country, thereby thwarting increases in existing market power.

During the Clinton CP antitrust review, it became apparent that Illinois Power had been less than coaperative with smaller power systems in its service area and adjacent areas.

Consequently, a set of antitrust license conditions was attached to the Clinton construction permit which was designed to implement greater coordination between Illinois Power and smaller municipal and cooperative systems in the relevant area - thereby furthering the competitive process among these same power systems.

The economies associated with the Clinton nuclear plant and those linked to Illinois Power's integrated network of power supply were subsequently made available to smaller systems in the area.

16

~

Staff has identified a number of changes that, (1) have occurred since the construction permit antitrust review, and (2) are reasonably attributable to thelicensee(s).

However, many of these changes are in conformance with the construction permit antitrust license conditions and have had positive perfor-mance effects on the availability of bulk power supply and on competition in the area generally.

Other changes which have occurred, have not had significant negative antitrust implications that would likely warrant a Commission remedy, and therefore do not warrant a significant change finding.

Based upon the successful implementation of CP license conditions and the lack of any detrimental conduct or activity (to the competitive process in central and southern Illinois) on the part of Illinois Power Company, Soyland Power Cooperative or Western Illinois Power Cooperative, staff recommends that no affirmative significant change determination be made pursuant to the application for an operating license for Unit 1 of the Clinton Nuclear Power Station.

r i

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17

APPENDIX A:

ILLIN0IS POWER CO. SERVICE AREA "AP

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Appendix B - Municipal Generators in Illinois

• Altamont Municipal Electric Light Plant Batavia Municipal Electric System Breese Water and Light Department Bushnell Municipal Electric Light and Power Utility Carlyle Municipal Utilities Carmi Water and Light Department Fairfield Municipal Electric Department Farmer City Electric System Freeburg Municipal Light Plant a

]

Geneseo Municipal Utilities Highland Electric Light Department Marshall Water and Light Department Mascoutah Municipal Light Department 4

I McLeansboro Municipal Light and Water Plant Peru Municipal Electric 7

Princeton Municipal Utilities Department i

j Rantoul Light and_ Power Department Red Bud Municipal Power Plant Rochelle Municipal Utilities j

Springfield Water, Light and Power Department j

Sullivan Electric Department j

Waterloo Light and Power

)

Winnetka Electric Department r

I ll 1

)

A Source:

Electrical World Directory of Electric Utilities, 1979-80, i

8th Edition.

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APPENDIX C 1

SOYLAND POWER COOPERATIVE, INC.

1 Coocerative M3 goers Name Address Clay Electric Co-operative, Inc.

P. O. Box 517 Flora, Illinois 62839 s

Clinton County Electric P. O. Box 40 Cooperative, Inc.

475 N. Main Street Breese, Illinois 62230 Coles-Moultrie Electric P.

O. Qox 709 Cooperative, Inc.

East Route 316 and Logan Street Mattoon, Illinois 61938 Corn Belt Electric Cooperative, P. O. Box 816 Inc.

1502 Morrissey Drive Bloomington, Illinois 61701 Eastern Illinois Power P.

O. Box 96 Cooperative 330 West Ottawa Street Paxton, Illinois 60957 Edgar Electric Co-operative P. O. Box 190 Association RFD 6 Paris, Illinois 61944 Farmers Mutual Electric Company P.

O.

Box 43 1004 S. Chicago Street Geneseo, Illinois 61254 Illini Electric Cooperative P.

O.

Box 637 1605 S. Neil Street Champaign, Illinois 61820 Illinois Valley Electric P.

O. Box 70 Cooperative, Inc.

Princeton, Illinois 61356 McDonough Power Cooperative P.

O. Box 352 West Jackson Road Macomb, Illinois 61455 Monrce County Electric P.

O. Box 128 Co-operative, Inc.

Illinois Route 3 and Country Club Lane Waterloo, Illinois 62298

.~

i l

I i

Name Address Shelby Electric Cooperative P.

O. Box 368 Route 128 and North 6th Street Shelbyville, Illinois 62565 i

Southwestern Electric Cooperative, P.

O.

Box 409 Inc.

South Elm Street and Route 40 Greenville, Illinois 62246 Tri-County Electric Cooperative, P. O.

Drawer 3C9 Inc.

3906 N. Broadwar Mt. Verndn, Ill'inois 62864 Wayne-White Counties Ele'ctric P. O.

Drawer E Cooperative West Highway Fairfield, Illinois 62837 F

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I

l APPENDIX D l

WESTERN ILLINOIS POWER COOPERATIVE, INC.

1

~~

Coooerative Members Name Address Adams Electrical Co-Operative P.O. Box 247 Camp Point, Illinois 62320

.i Illinois Rural Electric Co.

2-12 South Main Street i

Winchester, Illinois 62694 M.J.M.

Electric Cooperative, Inc.

P. O. Box 219 j

Carlinville, Illinois 62626 Menard Electric Cooperative P. O. Box 279 Petersburg, Illinois 62675 i

Rural Electric Convenience P. O. Box 9 Coooerative Co.

Auburn, Illinois 62615 1

l Spoon River Electric Co-operative, 930 South Fifth Street Inc.

Canton, Illinois 61520 Western Illinois Electrical Coop.

P. O. Box 338 Carthage, Illinois 62321 1

l I

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,15S98 - -

NLTICES f.

Sectica nyJ3 Whcf far.bu. All ctha return en investment f;und htrein to be ArrtenuxwT 1 gj property, r:a1 or personti, is cubject to tasa. reasonable. 1116,000. Th3 combined total tion in thy manur prsscribed, tad this sec. 1s 4391.033.

.tran. 29,.1974.

• e

• tion is also intended to embrace!

As already stated, the total revenues re.

IU1nols ' Power Company, Clinton Power

1. Ferry franchises and toll bridges, which, ceived in 1972, both frotn highway and from Stat *on, t7 nits 1 and 2; AEC Docket Nos. 50-ls~

Tor the purpose of this chapter are consid. rauroad tous, as well as miscellaneous in.

461A and 50462A; Department of Justice

' j1 ered real property.

come, amounted to only $359.947, and that Fue No. 60-415-67.

I' Reading all cf the quoted provisions of the sum was insumclent o provide the return You have requested our advice pursuant to Iowa Code in context, it seems clear that found herein to be reasonable. Accordingly, the provisions of section 105 of the Atomic the Code in erect gives the City the discre. M must be considered that the present toll Energy Act, as amended. in, regard to the l

tion to permit taxation of a bridge if nca structure is not excessive, a v gp on.

bridge is otherwise exempt from taxaucr.,

Upon all the evidence I Sud that the as.

g but the Code does not exempt bridges which sailed rates of toll for the transit of the Mis.

struct two nuclear electric generating unita

)

are held for proSt; rather the Code specia. sissippi River via the Keckuk bridge have not each with a nominal rating of 950 megawatts cally includes as taxable real pri.,perty all been shown to be unjust or unreasonable of capacity, to be :ocated at a site in Harp bridges except those municipally owned and within the meaning of the General Bridge Township, DeWitt County, H11nois. Units 1

, not held for proat. I conclude that the taxes Act of.1906.

and 2 are tentatively scheduled to commence paid to Lee County constitute an item that commercial operation in 1980 and 1962, re.

is properly chargeable as a bridge expense.

(FR Doc.74-10335 F11ed 6-3-74;8:45 am) spectively. Ths. units are to be integrated l,

Although the tax is clearly chargeable as with Applicant's electric bulk power supply a bridge cost, the amount of the expense ATOMIC ENERGY COMMISSION system and the power marketed as a portion abould be reduced to the extent that th of its system output.

tax was actually refunded to the City. For

[ Docket No. 50--412A]

APphcant. Applicant is the second largest it la shown in the City brief that 32.5 per-electric *c.t111ty in the state of Illinois. Its 1972 cent of the 1972 levy was paid over to the DUQUESNE LIGHT CO., ET AL peak load was 2,127 mw: ;ts generating espac.

I*

d City, thereby constituting an erective re. Assignment of Members of Atomic Safety Nc)e Ng'r' fund of that much of the expense. Accord.

and Ucensmg Appeal Board ble cap wit of h ingly, the claimed expense should be reduced sources and 2.193.6 mw dependable capacity in the amount of $14.239.

In the matter of Beaver Valley, Unit 2.

of thermal generating sesources, Other expenses. The claimed expenses M.

Notice is hereby given tlE in accordance Applicant's peak load is expected to double eu an te f 3 w

was ata with the authority in 10 CFR 2.787(a) in the next to years and it has planned or the Chairman of the Atomic Safety and under cons etion additional generating ca.

an expense properly chargeable to the bridge. Licensing Appeal Panel has assigned the {*p*]gy g,3j3[, y 3,d'[*"dg'n bit 8

t' The Federal Highway Administration also following panel members to serve as the g

and 2 form the major part of this projected entietzed an expense item of 36.042 in at.

Atomic Safety and Licensing Appeal increased capacity, torney's fees. 'Ito record does not show how Board for this anti-trust p1Veeeding!

Applicant has high voltage or extra high much. If any, of said fees were for the non.

recurring expense of prosecuting this case.

. an & Rosenmal. Chatrman voltage (ehr) interconnections to a num.

No other basis is shown for excluding what Luchas1C.Farru Member ber of tnajor systems adjacent to its service is otherwise uncontested as an actual ex.

P embu area. Including Commonwealth Edison Co penditure; I conclude that it is properly Un!on Electric Co., Central Ullnois Public etargeable as an expense.

Dated: April 30,1974.

service Co. (CIPS), and Central U11 nots Light Co. Together with Union E!ectric The complainants argue generany what MAnaart E. DU FLo, Co, and Central niinois Public is unammUmble in theory, i.e. that funds ScCrefary to the Appeal Board.

• ~ervice spent for non-bridge purposes cannot be

~

Co Applicant partictpates in the E11nois.

considered as expenses when axing rates.

[FR Doc.74-10285 Filed 5-3-74;8145 am]

Liissour1 Poot (IU.Mo). Through Ul-Lio and However, with the exceptions already listed.

other interconnection and coordinsition complainante pointed to no item of the agreements, Applicant engages in a sfgnia.

claimed, expenses in Exh* bit A-1 which con *

[ Docket Nos. 50-461A and 50-462A]

cant degree of coordinated planning, cpera.

st!tute such an expenmture for non-bridge ILLINOIS POWER CO.

tion, and development of its bulk power sup.

ply system.

[

yeu 97 e for in o Petit on To nterven 00 k

i on Antitrust Matters Claimed expense.

4282.587 Sirteture of the Bulk Potter Afarket Dt Add: Depreciation expense...

13,28s The Commftsfon has rece'ived. pursu. nnnois. Commonwealth Edison. sersmg prm.

i ant to section 105c. of the Atomic Energy cipally in the northern one third of nunols.

1 Total 295,872 Act of 1954, as amended a letter of ad. is by far the targest supp!!er of electricity in I

vice from the Attorney General of the the state. With a 1972 peak load of 11,750 IAss! Refun'd of Lee County.......

17,839 United States, dated April 29,1974, a mw. Commonwealth Edison is more than are Tar paid... _

14.239 Copy of which is attached as Attachment t mu as arge as AppHCant.1 s nearest E!!..

nois competitor.

Recreation fund 3,600 Appucant and Central Hunois Pub!!c Serv.

Any person whose interest may be ice Co. (peak load 1.394 mw) through a Total bridge related eosts. 278,033 affected by this proceeding may, pur. patchwork design of servlee areas, are the The City introduced an exhibit summa. sunnt to i 2.714 of the Commission's dominant suppuers of electricity, both at riang its claimed costs during recent re.rs " Rules of Practice," 10 CFR Part 2, file wholesale and retan,in the lower two-thirds and points out that those oosta have been a petition for leave to intervene and re. of Blinois. Each system is fuuy integrated incremaing steadily while revenues have re.

quest a hearing on the antitrust aspects with high voltage and ehr interconnections mained almost constant. On the basis of this of the application. Petitions for leave to wtth each mu and with neighboring sys.

showing, the City argues thst in azing rates intervene and requests for hearing shall io[L g nerat1N Nd transm for the future, it is not reasonable to con

• sider only past costs and that some consider.. be filed by June 5,1974, either (1) by their service areas. A smaner private!7. owned.

on ation abould be given to anticipated in.

delivery to the AEC Public Document creases. Accordingly, the City accounting Room at 1717 H Street, NW., Washing-utility, Central n11nois Light Co. (peak load witness projeced future costs based upon ton. D.C.. or (2) by mail or telegrarn 791mw), serves in two areas in the central part of the state, an assumed continuing of the same rate of addressed to the Secretary, U.S. A*4mic inervase as has been experienced in the recent Energy Commttsion, Washington, D.C.,

.a See the Department,s Lette s of Adytee to past. In my opinion this pmjection is t 20545. Attn 1 Chief, Public Proceedings speculative to be given efeet in deanite and. Brancg the Commission concerning Commonwealth Edison's LaSane County Units 1 end 2..GC ings herem.

For the Atomic Energy Cornmi"fon.

Docket Nos. 50-373A and 50-374A. Depsrt.

mzAsornaturss er Totts ABRAltAM BRAITm ment of Justice File No. e0-415-41. December 20, 1972 and Byron Station. Unit 1 sud 2.

The total, reasonable bridge revenue needs Chic /, OMee of Antitrust & I'n.

Braidwood station. Units 1 and 2.

AEC of the City for the present are ascertained by dtmnstar, Directorate of Li.

Docket Nos. 50-454A. 50-455A, 50-556A, and adding to the Utal 1972 costs. 3278.033, the cC71 sin 9, 50-557A, March 4,1974.

f, V

,7O _

W..c d

' Octe C FEDERAL REGISTER, YOt. 39, NO. 88-McNDy, GAY 6,1974 rre

~

NSTiC ME

. Union Electric Co. (31arge Missouri-based hErtng will ntt be nicessary wi'A respect malnunance 6xpenses. capital costs tnd &

utpty). Interstate Power Co Sherrard Power to the instant applicitlin.

reasonib1) return on invntmtnt which are properly rpp11 cable to tha pirticular trans.

System, tnd INC11mois Gas act Eectria g,,gg 3* gg74*

tctun and th3 facilities involved in thnt m serve small geographical areas along th)

Dunois Power Company. Clinton Power transaction.

wesurn bordu of nunois.

Station. Units 1 and 21 AEC Docket Nos. 50-

- 1(c). " Neighboring electric system" means ftural electric cooperatives cover all of IHg.

461A and 50-462A1 Department of Justice (1) a ananciaUy responsible business corpora.

tots geograph1CaUy but serve mainly in rurag File No. 00-415-67.

tion, not-for-profit corporation, rural etee.

areas in the southern three-quarters of the We set forth as Appendix A to this letter tric cooperative, municipal corporation or-state. Twenty.seven distribution cooperatives a statement of policy of Ininois Power Com* ganized under the laws of the State of D11 cnd two generr.tton and transmission co. pany concerning bulk power supply arrange

• nols, company, asseclation, joint stock com-operatives (Western nunols Power Coop-ra.

ments with neighboring electric systems pany, Arm, partnership or person owmn.g tive and Southern n11 nota Power Coopera. which it is prepand to make Ln connection or operating, or proposing bona "dely and in give) comprise the membership of the Asso. with its Clinton Power Station Units 1 and good faith to own or operate, facilities for cistion of niinois Electric Cooperatives.

2. (The deSnitions contained in the state

• the generation transmission or distribution Western D11nois Power Cooperative serves ment are intended to apply also to the text of electricity for bulk power supply, til) several distribution cooperatives in the west. of this letter.) This commitment is made by whose facillttes are or wiu be located in the (rn central portion of the state. Its geners. the Company with the understanding that State of D11nois, (111) whose facilities are tion is suf".clent to supply approximately 20 the Department of Justice will recommend interconnected, or are proposed to be inter-25 percent of its Icad. De remainder is pur. to the Atomic Energy Commission that an connected, for the purpose of carrying out i

chased at wholesale from Applicant and CIPS antitrust hearing will not be require 41n con

• one or more of the transactions referred to in approximate ratios of 40 percent and 60 nection with the licensing of the Company,a herein with fac111ttes of the Company ipro-percent respectively.

Cunton Power Station Units 1 and 2. On this vided that any proposed interconnection Southern D11nois Power Cooperattre gen. basis, the Company agrees that its po11cy shan be lawful and fessible), and (17) which trates roughly 100 mw from three units. This statements may be included as conditions is or will be a pubue utility under the laws G&T serves exclustrely the three southern. to the construcuon permits and operating of the State of n11nois or the Federal Power most cooperatives with their entire supply licenses to be issued by the Atomic Energy Act and is or will be providing electric serv-of bulk power.

Commission with respect to these unita.

ice under a contract or rate schedule on Sie Other distribution cooperattres purchase The Company believes anc maintains that with and subject to the regulation of the bulk power entirely from App!! cant, entirely it.s rate and service policies and pracuces D111nois Commerce Commission or the Fed-from CIPS. or partiauy from both.

have been and are consistent with anutrus, eral Power Commission. The requirement nnnois contains a number of municipal laws as they may be app!!ed to the Company. that a neighboring electric system shan (lectric systems, many of which are located no Company understands that certain in-be a public utt11ty does not apply to a rural IU#

t!ons ve mad to the

' bu wu apply to a 1e t c co-pp ca t upplies e tota bulk power r -

hE the Og es y Light d o Dep anti ut uestio e om i

da 1 ts in ddw e e n1 and the V1Hage of Ladd Electric Depart-conadent that any such questions can be tion of "public utility" under the Clinois ment.' S, veral other municipal systems pres-sausfactorily answered, the Company desires Public Utilities Act or under a similar act.

e ently operete on an isolated basis, each sup-to avoid the possibtuty of having to seek (The deanition of neighbormg electric sys-plying its total requirements from small their resolution in an antitrust hearing. It tem includes systems which meet the above generating units-therefore has determined to make the state-requirements either now or in the future.)

Results of Antitrust Review. In the course ment of policy and commitment. exprM 1(d). " Neighboring entity" means a neigh-of our antitrust review, certain allegations herein.

boring electric system owning or operating.

• were received by the Department the general Paragraph 7 of the statement of polley or proposing bona Sdely and in good faith to import of which was that Applicant has used applies to any additional nuclear generating own or operate, facilities for the generation its dominant position in generation and unit of the Company which.in an application of electricity for bulk power supply, transmission in its service area to restrain to the Atomic Energy Commission is sched.

2. De broad purposes of any interchange g

the competitive opportunities df smaller sys" u!ed to commence commercial operation or other arrangement for bulk poTer supply tems. For its part. Applicant has denied that prior to January 1.1989. De Company does tramartions between the Company and a j

its policles and practices have been or are not, however, have any present plans for neighboring electric system are to != prove inconsistent with the antitrust laws. How-any nuclear generating units in addition to the reliability and quality of service, to avoid ever. in order to e!!minate any questions as Clinton Power Station Units 1 and 2.

the duplication of facilities, and to minimize to the policies that it intends to follow dur.

A question has been raised concerning the costs. Any such arrangement s".11 invoire ing the period of the Clinton 11oense. Ap-application of the Company's Service Clasat* planning by the parties and should be tech-p n b om Scation 40 (Wholesale Dectric Service for nically and economicany feasible and prac-n to em clude i Resale). De Cornpany does not regard a tical. The arrangement should also be recip-as e nd to 11 1 wholesale customer to be limited by that roqal as nearly as may be although it is g

at' hme t letter rate as to the areas in which it furnishes recognized that. In any particular arrange-of Applicant's vice president, dated April 5 electric service r as to the number and ment, the benents may not be equal or iden-1974' which is attached hereto.

location of delivery points for receiving sert. tical for each party and that a smaller elec-In our opinion, these polley commitments ice. If the Company were to receive a re-tric system may realize beneats which are should provide competitors of Applicant with quest from a neighboring electric system for greater than those realized by a larger system.

competitive alternative sources of bulk pow-the purchase of electric service for resale No party should be obligated to enter into an er supply and substantiany enminate the which is not presently a customer of the arrangement if it wculd realize no net bene-grounds on which complatnts made to the company, the company would sell power to ats from the arrangement. or if the arrange-Department by smaller systems were based. that system either pursuant to Service ment would result in net burdens to the On the strength of these po11cy commit-Classincation 40 as it may be arnended in party. De policies herein expressed cannot me and wth e expectation that a

the particular circumstances or pursuant to be implemented unilaterally by the Com-new rate schedules as may be accepted or pany. If an arrangernent between the Com-to the license, we conclude that an antitrust approved by the Federal Power Commission pany and a neighboring electric system is to and any other regulatory authority having be successful and ts to operate in the public e Applicant also supplies the entire bulk jurisdiction.

interest. It must be negotiated and performed in good faith and with full cooperation by power requirements of the Cedar Point 1.1ght Arrumx A the parties to it. No party should capriciously and Water Co a small privately-owned ems towta cowT reject a proposal submitted by another party

- utility (peak load 378 kw).

and the Company and neighboring electric

' These municipal systems include the Statement of Policy Concerning Bulk Power systerns should gin reasonable consideration C1ttee of Peru. Altamont Breese. BushneLI.

Supply Arrangements with Neighboring to proposals made by each other.

Carlyte. Freeburg. Highland. Mascoutah.

Eectric Systems in Connection with Clin-Princeton, Red Bud. Su111ran, and Waterloo.

ton Power Station Unita 1 and 2

3. The Company will interconnect with any neighboring entity in order that the parties 1111nois, which are presently complatnants Arau.5.1974.

may seek and realize all benects peseticable in a proceeding before the Federal Power Commission (City of Peru, et al. FPC Docket 1(a). " Company" means E11nois Power to be effected through the coordination and No. E-7514. Aled December S.1969) in which Company and includes each present oc fu.

developrnent of their respective systems and they are seeking an order from the FPC ture wholly-owned subsidiary of the Com-in carrying out various interconnection serv-directing Applicant or CIPS to interconnect pany and any successor to it.

Ices and transactions. The Company will as-with their facilities.

1(b). " Costs" means mal operating and sist to the fullest extent feasible any neigh-Y FEDERAL REGisitt, VOL 39, NO. 88-MONDAY, MAY 6,1974

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boring entity !n th> coordinntion cf reservis conditions and 'on a basts that Trill fully 11(2). This statement of policy is not &

t' through tha sal) and purchase of emirgency compenatte th3 Compt.ny for its costa tended to affect in any way th) frachig 1j energy and maintenance power upon terma incurred and to be incurred and that will not certiacates of public convenience and necG that win provide for the full compensation adversely afect the dnancing of such power saty, or other rights of the Company or f1-of the Company's costs. No party shall be re.

station. The request shall be deerned timely any neighboring electric system to rens

.I quired to provide emergency energy or main.

with respect to Clinton Power Station Units electric service in the State of IHinois,

• ~

i tenance power if to do so will impair the 1 and 2 if received by June 30.1914, and 11(b). Nothing herein shall be constr6

)I supplying party's abutty to render adequate with respect to any additional generating as a waiver by the Company of its right I

f and reliable service to its customers or to unit if received within a reasonable period contest whether or not and the extent

<tischarge its prior com.nitments. If any, to of time from a planning and operating which a partteular factual situation may It other electric systems, standpoint after the public announcement covered by this statement of policy or pp 3*

4. De Company and the neighboring en.

by the Company of the proposed installation clude the Company from contesting j,

tity shall each provide suScient es paetty of any such unit. As a part of any arrange. alleged act of unfair competttton.

(which may include Arta contracted for ca. ment that may be reached with respect to 11(c). The Company recognizes that t pacity) in its system to enable it to carry its such participation. the Company win inter. carrying out of some of the policies o' piar_ned for peak demand plus an adequate connect with and dettver any ruwer to which pressed hereta in particular circumstand reserve. An adequate mJnimum reserve re.

the neighboring electrte system may be er may. not be in the mutual interest of t' quirement shall be mutually determined titled under such arrangement at a deuvery Company and a neighboring electric systed from time to time as a percentage of planned point or points on the Company's systezu Nothing herein is intended to preclude t for peak demand (unless otherwise agreed) on a basis that win fuDy compensate the Company and a netthboring electrte ses9d and shan take into account such reserve crt. Company for its costs.

from reaching an agreement which extend teria sa the nature of the respective systems

8. The Company win sell bulk power to vartee or supplements the provisiccs of t' and planned for peak demand reqiaire in any neighboring electric system in accord. forego 22g paragraphs in a manner not ince order to aasure reliabuity of service and an ance with rates. terms and conditions which sistent with the broad purposes expresesd equitable sharing of reserve responsibuity. fully compensate the Company for its costs. paragraph 2 and applicable law.

Each party shall provide such amount of and which do not restrict use or resale e=*

11(d). The Company does not intend j spinning reserve as ahan avoid the impoet. cept as may be necessary to protect the tell* this statement of policy to become a co tion of an unreasonable demand on the sys. ability of the Ccmpany's system, and as are mon carrier, tem of the other party. Howeser, such spin. accepted or approved by the appropriato

12. The foregoing policies are to be impf ning reserve requirement shalknot exceed the regulatory body or bodies. The Comp ay mented and applied in a manner consiste mLutmum instancd reserve. requirement. If shall not be required to make any such sale over a reasonable period, a party has failed if the conspany does not have avattable suf* with Federal. State and local laws, regul to deliver emergency energy, or if a party has Attent generation to provide the requested tions and orders. All rates. charges, cod appeared to make excessive calls for emer. service or if the sale would impair the Com* ditions, terms and practices are and till subject to the acceptance or approval of as gency energy, the parties shau jotatly study pats ability to render adequate and rella.

the matter for t*te purpose of determining ble.arvice to its customers or to discharge regulatory agencies or courts hartniir jud the adequacy or Anadequacy of the reserre its prior commitments if any, to other elec. diction over them. To the estent that sud generating capacity and transmission facili. trte systems.

action may at the time be required in ord ties being provided to meet the requirements

9. The Company win work with neighbor. to effect any such changes, the Compan a*

of the interconnected systems and of deter. ing electric systems to facilitate the ex.

any neighboring ewe mtm g any the foregoing polletes reserve the r!

mtntng the manner of correcting any dea.

'h""fe of bult power by transmission over ciencies.

Its transmission fact 11ttes between or among recourse to the appropriate forum to a

5. De agreement for the interchange ar.

two or more neighboring electrte systems and such changes therein as may at the time rangement between the Company and a between any neighboring electrte system and appropriate in accordance with law, the pu neighboring entity will not include restric. any other. electric system engaging in bulk 11c interest. or good Industry prsctices, tive provisions which would preclude a party Power supply outside the Company's service

[FR Doc.410372 Filed 5-3-74;8:45 aml from engaging in interconneetton and coor, aren between. whose faculttee the Com.

dtnation arrangements with othera, but may pany's trenamtssion lines and other trans.

include appropriate provisions to samure (1) mission lines would form a continuous elec.

[ Docket No. PILW50-lo}

that the Con peny.eceives adequate notica og trical path, provided that (t) pe2 mission to such additional interconnection or coordina, utilize such other transmission lines has STATE OF NEW JERSEY-NUCLEAR tion. (11) that the parttee wt11 jointly con. been obtained by the proponent of the ar.

ENERGY COUNCIL sider and agree upon such measures. If any, rangement, and (u) the arrangements res-Fi!!ng of Petition for Rule Making as are rea,sonably necessary to protect the sonably can be a6commodated from a func.

Notice is hereby given that the Sta reliability of the interconnected systems and tional and technical standpoint. Such of New Jersey through its Nuclear

.to prevent undue burdens from teing im.

transmisalon shall be on terms that tuuy posed on any system, and (tu) that the Com. compensate the Company for its costa. Any ergy Council, by letter dated March 0 pany wul be tuuy compensated fcr sta costa.. netchboring electrio system requesting such 1974, has filed with the Atomic Ene Good Lndustry practice as developed in the tranntn=1on arrangements shall gtve res* Commission a petition for Ytlle makin ares from time to tLme (if not unreasonably sonable advance notice of its schedule and restrictive) wu! satisfy this provtston.

requirementa. De Company shall not be re.

The petitioner requests that the r-

6. Interconnections will be arallable for a quired to enter into any arrangemont which quirements in Appendix E of 10 C neighbortng electric system on any of the would impair system rettabuity or emer. Part 50 for emergency planning and company's instaued tranuntulon and sub. gency tranimtuson capacity, it being ree. terfacing by Commission Ucensees wid tranamtssion factuues if the proposed inter.. ognized that whue some tran=mtalon facau. State and local governments be adapt 9 connecuon is technicaur and econonuenay ties may be opented fuuy loaded, other and appned to Commission !!censees wh feasible and the Company is fully compen. tranetuton faculties may be for emergency are not otherwise subject to Appeng sated for its costa. Interconnections wiu not use and operated either unloaded or par.

be limited to low voltages when higher volt. usur tonded.

E and who receive, store, process, and ages are available from the company's in.

10. ne company shall include in its plan. distribute large quantitles of radioacti stalled faciuties in the area where the inter, ning and construction programs sufneteng materials toutinely ( e. g. firms whic,

- connection is desired. Control and telemeter, transmiamson capacity as required for the process radioactive drugs or kilocur$

ing iaciuttes shan be provided as required transactions referred to in paragraph 9, pro. irradiators). The petitioner requests the for the safety and reliablitty of the inter. vided any neighboring electric system gives rules be developed which will reqid connected systems.

• he company sufncient advance nottee as clear identification of critical nuchded

ne company will acord an opportu. may be necessary to accommodate its re*

nity to participate to any neigtboring elec. quirements from a functional and technical critical pathways, and critical zegmend trte system that makes a timely request standpoint and that such neighboring elec. of the population potentially at risk Wl'9 therefor in the ownership of, or purchase of tric system fuity compensates the company provisions made for chemical form an, unit participatton power from, cunton for its costs. ne company shall not be re.

Variabluty of critical nuclides as a fund Power Stauon Units 1 and 2. and any ad.

quired to construct transm!ssion faculttes if tion of varying product mix. The pett diuonal nuclear generating unit which the it ands construction of such faculties in.

tioner requests that the requiremene @

company may construct, own, and operate feasible, or if its costs in connection there. the Commission's " Reactor Site Cd and which in the appucation nled with th*

modified and incorporated into th teria." 10 CFR ~ Part 100 be suitab1 wtth would exceed its benects therefrom, or Atomic r.ncrgy commiss:on, or any succes.

sor agency, is scheduled for commercial op.

If it finds such f actuttes would impair system erauon pr.*or to January 1.1989, to a ren, re11sb111ty or emergency transmiaston posed rule, and that the zone definitio4,

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aonable extent and on reasonable terms and capacity.

be reviewed and Protective Action Leve$

U FEDERAt RfD$ Tit, Vot. 3f, NO. 88-MONDAY, MAY 6,1974

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APPENDIX F:

FERC Litigation Involving Illinois Power Company Wholesale Rate Proceedings Illinois Power and several municipalities in Illinois have been involved in various rate proceedings before the Federal Energy Regulatory Commission (FERC) and its predecessor agency, the Federal Power Commission (FPC).

Many of the issues raised by the cities originated in the late 1960s and early l

1970s and were resultant in part from Illinois Power's reluctance to offer power and back-up services to many smaller systems in its service area and also as a result of the oil squeeze beginning in the winter of 1973.

It is staff's opinion that the issues raised during these proceedings to date were current at the time of the CP antitrust review and for this reason do not represent changes (in activities or proposed activities) since the CP review.

I Moreover, the issues raised by the intervening parties addressed rate matters and would be more properly aired before the FERC, i.e., any negative antitrust implications would be more likely remedied before the FERC than the NRC.

Consequently, the issues pending before the FERC do not satisfy all of the criteria established by the NRC in Summer and no matter what the outcome before the FERC, these issues would not trigger an affirmative significant change finding and an ensuing OL antitrust review.

However, the issues and contentions raised by the intervening parties before the FERC do shed light on competition among members of the electric power industry in Illinois Power's service area and for this reason a brief discussion seems in order.

In the late 1960s a group of Illinois (self generating) municipal electric systems comprised of the Cities of Breese, Carlyle, Highland, Mascoutah, Peru, Princeton, Waterloo and the Village of Freeburg, petitioned the Federal Power Commission, "for an order under Section 202(b) of the Federal Power Act requiring Illinois Power Company to interconnect its facilities F-1

and exchange capacity and energy with them on the same terms as those prevailing in interconnection agreements between the Company

[ Illinois Power] and its neighboring utilities."1 This case was settled in 1974 after Illinois Power agreed to the municipals' request for interconnection agreements.

At about the same time, Illinois Power agreed to a set of policy commitments (which later became formal license conditions attached to the Clinton construction permit) with the Department of Justice which required Illinois Power, inter alia, to offer interconnections to neighboring power systems.

Subsequent to the municipalities' obtaining interconnections with Illinois Power, the oil embargo reached its peak and placed intense capacity and cost burdens on their systems.

(Their systems were largely comprised of oil-fired i

peaking facilities.) The municipal systems requested long-term power supply arrangements under existing interconnection agreements with Illinois Power, to assure continuous operation and reliability of their systems and to limit radical upward movements in their costs of supplemental power requirements in future years.

At issue before the FERC at present is the rate at which the

~

municipals would pay for the partial requirements power only recently offered by Illinois Power.

According to Illinois Power, the rate schedule under which the municipals had been taking service was not designed for long-term continuous reservations of capacity, i.e., the type of service proposed by t'.a municipals, because energy charges were unpredictable due to the incremental nature of the costs attribu-table to said reservations -- Illinois Power alleged that energy charges were a function of hour-by-hour load conditio'ns and capacity availability.

The incrementa,1 cost issue was resolved when Illinois Power agreed to offer the municipals a partial requirement power agreement (also required by the license ILetter from S. L. Swarthout, Illinois Power Co., to Kenneth F. Plumb, Secretary, FERC, dated May 25, 1979, p. 2.

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conditions ~ attache,d to the Clinton nuclear plant) for renewable five year 4

periods and based upon fue? costs incurreu by the company's plants during the period the contract is in force.2 N

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1 In a separate proceeding, two municipal electric systems (Cities of Ladd and

]

Oglesoy) and one small private distribution system (Cedar Point, Light and Water

[

Company) (til total requirements customers of Illinois Power) have intervened before the FERC to protest a }976 wholesale rate increase by the Company (Dkt. E-9520).

The principal contention of the intervenors was that Illinois j

Power could not unilaterally rai,se rates under their existing contracts with the Company.

Ultimately, the D.C'.

Court of Appeals ruled in favor of the two l

Cities and against Cedar Point Light stating that Illinois Power's contract j

with Cedar Point Light permitted unilateral raising of rates Ly Illinois Power.

j

.This decision reversed the FERC order regarding Cedar Point.

The FERC has

]

yet to respond to the Court of Appeals decision which was issued on August 21, 1979.

1 i

In a similar rate pro'ceeding involving the same parties (ER77-531), the intervenors petitioned the FERC requesting relief from another wholesale rate j

increase by Illinois' Power in 1977.

The FERC recently ruled upon this inter-l vention3 by granting Illinois Power a two-tier rate increase.

Here again, the i

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issues in dispute were FERC issues and riot NRC related issues and they were j

resolved accordingly.

l.

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Generic Interconnection Rate Proceedings l

j Illinois Power has instituted new wheeling rates with all of the power systems 1

it has interconnection agreements with - as required by FERC Order No. 84.

t There has b,een no intervention by parties in the relevant marketing area.4 r.

o.

2See " Wholesale Electric Service Agreement;" Exhibit A,.between Illinois Power j

and the municipals, attached to Appendix F.

3 j

See FERC orders dated April 10, 1981 and June 8, 1981.

4 Docket N0s. ER 80-595 (Illinois Power / Commonwealth Edison); ER80-674 (Illinois

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l Power /CityofSpringfield, Illinois);ER80-675(IllinoisPower/WesternIllinois Power Coop); and ER 80-731 (Illinois Power / Central Illinois Public Service Co.,

i TV'A'and Union Electric Company.)

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Moreover, the nature of these proceedings rests solely on justificat'on of

, wheeling rates and it is staff's position that the actual determination of rates rests more within the jurisdiction of the FERC and not the NRC.

Conse-quently, staff believes that the issues raised in the generic Order No. 84 proceedings would not invoke antitrust implications that would warrant remedy by the NRC.

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AGREEMENT FOR PURCl!ASE OF POMER

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FROM ILLINOIS POWER COMPANY This is an agreement dated this 1st day of May,1979, between ILLINOIS POWER COMPANY (" Utility" or " Company"), and the

(" Customer").

~

Utility is an Illinois corporation with its business office at 500 South 27th Street in Decatur, Illinois, is engaged in the gener'ation, transmission, distribution and sale of electric energy to the public in various municipalities and areas in the State of Illinois, and is a public utility within the' meaning of an Act entitled "An Act Concerning Public Utilities,"

approved June 29, 1921, as amended, set forth in Chapter 111-2/3, Fection 1 et; seg, of the Illinois Revised Statutes, and now in force.

Customer owns and operates an electric generating and distribution facility and provides electric public utility service to customers located in and about Customer desires to purchase electric energy for municipal uses and for resale to its customers, and Utility

{(

desires and is willing and able to supply Customer with electric energy for these purposes, on the terms and conditions herein-after set forth.

In consideration of the mutual agreements herein con-tained, the parties agree as follows:

I.

General Terms Utility shall supply electric energy and Customer shall accept and pay for service rendered under the terms of Exhibits A and D, attached hereto, entitled Wholesale Elect Service for Resale to Agreement shall control if there is any conflict between the provisions of Exhibits A and D, except for the determination of. contract capacity.

II.

Conditions of djrvice 1.

Customer requires and Utility agrees to supply a minimum amount of capacity according to the following five year schedule, beginning with commencement of the Agreement under~Section X.

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b II.

Conditions of Service (continued) l 1

lst year Kva 2nd year Kva 3rd year Kva 4th year Kva 5th year Kva This capacity will be the initial " contract capacity".

governed by the provisions of Section 5(a) of

[

Exhibit A.

At the expiration of each year, Customer l

will specify a new contract capacity for the i

fifth year following.

In the absence of such specification, the contract capacity specified.

for the-fourth year shall carry over to become the contract capacity for the fifth year.

e 2.

Customer shall provide a volt substation J

at the point of delivery to transform energy received from Utility at volts to the

. I volts required by Customer.

(See Exhibit B.)

3.

Utility requires an automatic circuit switcher or oil circuit brcaker and lightning arresters at o.

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the point of delivery to prote=t its system from 1 \\_

any faults on Customer's system.

If Customer elects

~

to install at its expense a Kv oil circuit breaker satisfactory to Utility, Utility shall control, operate, and maintain at Customer's expense t

such oil circuit breaker te assure satisfactory oper-ation with its electric system.

Customer shall either i

install or pay Utility the non-salvable cost of installing such lightning arresters plus a monthly,

rental for the salvable cost of the lightning arresters, all as provided in Exhibit C.

4.

Utility shall extend its line to the point of delivery to Customer and shall furnish and install meters,-

1 recording devices and other apparatus necessary for the purpose of measuring the energy received by Customer at the point of delivery.

The point of _

delivery shall be at the Ky bus installed in the KV substation referred to i'n the preceding

~!

paragraph 2 located on Customer's propsrty.

t 5.

Customer agrees that any existing towers, poles, wires ~

or equipment placed by Utility on the streets, avenues, alleys and public places in the shall be exempt from any special tax assessments, license or rental fee to Customer during the term of this Agreement.

. l

II.

Conditions of Service (continued) 6.

Customer agrees to use reasonable care to design its circuits so that loads of the individual phases on its lines at the point of delivery will be balanced as nearly as practicable.

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7.

Customer and Utility agree to maintain and operate their syst' ems in accordance with sound utility practices, so as to minimize the likelihood of a disturbance in either system which might cause impairment of service to the other party's sys, tem.

III.

Rates and Charges 1.

Customer agrees to pay Utility monthly for electric service rendered during the preceding month at the rates and charges due and payable therefor as provided in Exhibit A, attached, or as subsequently revised under Section X, paragraph 3.

2.

Utility shall add to all charges under this Agreement and those provided for in Exhibit A the amount of any tax or charge of any kind levied, assessed,. or charged by any municipal, state, or federal government, or

(

authority becoming effective after the execution date of this Agreement, measured by but not included in the purchase price paid or revenues received by Utility on account of the service rendered under this Agreement.

IV.

Meter Reading and Billing 1.

Utility shall read meters and render bills monthly.

Bills will be rendered at a gross charge using the rates and charges contained in Exhibit A in effect at the time, including other charges in this Agreement increased by two percent.

Payment shall be due thirty days from the date of rendering the bill, and if made within that period, Customer shall be entitled to a.

two percent prompt payment discount from the gross charge.

The gross charge shall be payable with respect to each bill paid after the due date.

2.

Should either over-billing or under-billing occur due to causes other than inaccurate meter registration, it shall be corrected by proper allowance or payment upon written notice by either party to the other,'by mail or by personal delivery, provided that such notice must be given within one year following the date on which the bill to be corrected is rendered.

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IV.

Meter Reading and Dilling (continued) l i

3.

If Customer has failed to pay any bill accruing under this Agreement on or before the thirtieth 4

day after day of billing, Utility may discontinue delivery of electric energy provided at least fifteen days prior written notice has been given to Customer.

Utility will not be liable in any manner for any loss or damage arising from such discontinuance of electric i

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l service.

V.

Metering, Testing and Billing Adjustments j

l'.

Utility shall own and maintain the number of meters,

and relatei netering equipment necessary to measure the demand and energy delivered to Customer by Utility at the point of delivery.

2.

Utility shall test and calibrate the meters by com -

parison with accurate standards at approximately twelve month intervals.

3.

Utility shall make special meter tests at the written request of Customer.

If a special test made at g (-

Customer's requesr shall disclose that meters are Q~

registering within 2 percent of 100 percent accuracy, Customer shall bear the expense of the test; otherwise, 4

the cost of such test shall be borne by Utility.

Utility!

shall give Customer three days advance notice of its intention to test.and calibrate meters when such test is,

requested in writing by Customer.

Customer shall be pere mitted to witness any neter tests nade by Utility.

l 4.

Meters found by test to be registering inaccurately shall be restored to a condition of accuracy.

If the inaccuracy exceeds two percent, the meter readings taken during the period of 90 days preceding (or during i

such shorter period as may have intervened since the previous test) shall be corrected by the percentage of inaccuracy found by the test and payment adjusted accordingly.

No prior readings will be corrected.

VI.

Rights of Access t

Duly authorized representatives of either party he'reto shall be permitted reasonable access to the premises of the other party if required to carry out the pro-t visions of this Agreement.

Each party shall have access to the facilities of the other party at a mutually agreed-upon time for the purpose of removing

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its own facilitics from the facilities of the other party where such' removal is permitted under this i

Agreement.

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VII.

Continuity of Service

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1.. Utility agrees to provide adequate and reliable j

service to Customer.

However, Utility shall not l

be liable to Custoce'r for. interruption or inadequacy, of service, loss or damage to property, or injury (including death) to any person caused by act of God, public enemy, vandalism, strikes and other labor j

i troubles or their equivalent, legal process, state, municipal or other governmental regulation, windstorm, flood, fire or explosion, or other matter or. thing beyond Utility's control, whether the same shall affect or o'ccur in connection with the operations i

or property of Customer, Utility or any other person.

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2.

Utility shall not be responsible for damages due to any r

f ailure to supply electricity, or for interruption, or reversaI of the supply, if such failure, inter-i ruption, or reversal is without willful default or i

negligence on its part, nor for interruptions, by l

underfrequency relays or otherwise, to preserve the

.t integrity of Utility's system or interconnected systems.

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3.

Utility may interrupt service to make necessary repairs l k

or to make changes in equipment or to install new i

equipment, but only for such reasonable times as may

)

be unavoidable.

If the nature of the situation permits, ;

reasonable advance notice of these interruptions shall j

be given by Utility.

j VIII.

Liability

^

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Customer shall not be liable for end Utility shall save Customer harmless against any and all clains, damages, liability or expense, resulting from or occasioned

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f by the presence, use or maintena'nce of any electrical conductor or other type of' equipment owned or maintained

' I by Utility or Customer or by the escape of electric' '

i energy in or from any such conductor or equipment, provided that such claims, damages, liability or expense i

shall be caused by Utility's negligence or, misconduct..

i Utility shall not be liable and Customer shall save Utility harmless against any and all claims, damages; liability _ or expense resulting from or occasioned by the presence, use or maintenance of any electrical L

conductor or other type of equipment owned or maintained by Utility or Customer, or by the escape of electric l

i energy in or from any such conductor or equipment, 4((

provided that such claims, damages, liability or expense l

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,,i VIII.

Liability (continued) f~-

shall be caused by Customer's negligence or misconduct.

Negligence or misconduct, as used herein, shall include but not be limited to f ailure to comply with all General Orders of the Illinois Commerce Commission applicable to the furnishing of electric service by Utility or Customer, all regulations of the United States Occupa-tional Safety and Health Administration and the Structural Work Act of the State of Illinois, or failure to meet any standard of care derived from any of such orders, regulations or statute.

IX.

Annexed Areas and Other Services 1.

Utility shall be permitted to continue to provide retail electric service on a non-exclusive basis to its existing' customers or existing' customers' premises served by Utility within the munic.ipt.1 limits as of the effective date hereof.

2.

Whenever, af ter the date of this Agreement, C"stomer annexes an area in which Utility is providing electric service, the parties shall meet and shall negotiate in good faith as to the party to provide and the manner of providing electric service to present and. future g (.

electric customers in the annexed area.

Such negotia-(i "

tions shall be conducted by the parties in the light of all relevant matters, and any agreements made and procedures established by them shall be in the public interest and in accordance with then prevailing law and applicable regulatory authority.

3.

Neither party to the detriment of the other party shall require any person to take electric service from it as a condition to, or in combination with, any other commodity or service, including but not limited to gas, sewer, water, or any other municipal or utility service.

X.

Term of Agreement 1.

This Agreement shall be for a term of five years commencing on the first date that Utility completes construction and installation of facilities necessary to provide service contracted for in Section II, paragraph 1.

Such date shall be stated in a letter of understanding to be effected between the parties after.

service is commenced.

The Agreement shall continue thereaf ter from year to year unless cancelled by either '

party at the expiration of the primary or extended

. term upon.not _less_th'an..two years. pri6r iritten notice.

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X.

Term of Agreement (continued) 2.

During the period prior to the beginning of the term of this Agreement as specified in Section X, paragraph 1, which is the interim period beginning May 1, 1979 and ending when Utility has completed the construction and installation of facilities necessary to provide the service contracted for in

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Section II, paragraph 1, Utility will supply service to Customer pursuant to the terms and provisions of the Interim Wholesale Flectric Service Agreement which is attached hereto as Exhibit D.

3.

All provisions of this Agreement which are obligatory upon or shall inure to the benefit of Utility shall inure to the benefit of all successors and assigns of Utility.

4.

Nothing contained herein shall be construed as

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affecting in any way the right of either party under this Agreement to unilaterally make appli-cation to the Federal Energy Regulatory Commission or any successor agency for a change in rates set forth in Section 3 of Exhibits A and D hereof under Section 205, or any similar provision, of the Federal Power Act and pursuant to the Commission's Rules and Regulations promulgated thereunder or under any other applicable federal law or commission.

It is further provided, however, that in the absence of agreement by Customer no change shall be made in any term or condition of this Agreement for Purchase of Power, or in any term or condition in Sections 1, 2, 4 or 5 of Exhibits A and D, until it has been finally approved by the Federal Energy Regulatory Commission (or any successor agency) under Section 206 of the Federal Power

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1 IN WITNESS WIICREOF, the parties hereto have duly entered into this Agreement the day and year first above mentioned.

ILLINOIS POWER COMPANY By By Title Title Date Date Attest:

Attest:

As to Illinois Power Company As to (Secretary (Village Clerk)

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Wholesale Electric Service Agrecment 1.

Availability Service hereunder is available to the

(" Customer") subject to the following conditions:

That Customer is engaged in the distribution and sale of a.

electricity to the general public within the service terri-tory served by Utility; b.

That Customer is located adjacent to Utility's lines having a capacity adequate to supply Customer's requirements in addition to the requirements of other customers already receiving service from such lines or that Utility shall have sufficient time before Customer shall require service to construct such lines.

Prior to commencement.of service hereunder, Utility will construct additional f acilities to provide service to customer, provided the cost of such facilities does not exceed one and one-half times annual revenue estimated by Utility to be received from Customer.

Any costs in excess of one and one-half times this esti-L mated annual revenue shall be paid by customer to Utility; That prior to the commencement of service hereunder, Customer c.

shall execute and shall thereafter keep in full force and effect a written agreement with Utility with a primary term of five years.

'2.

Conditions of Service Service hereunder shall be provided to Customer subject to the following conditions:

a.

Should Customer desire to receive electric ~ energy from any source other than capacity owned and operated by Customer and to operate in parallel with the power supplied by Utility to Customer under this schedule, it shall, in the absence of existing arrangements with Utility for the delivery of such power, giv.e the Utility reasonable notice of such desire, specifying the requirements involved and the date when it desires such transfers to commence.

Reasonable notice shall be defined as notice sufficient to allow Utility to continue safe and efficient operation of its system and shall be interpreted in an engineering context considering the facilitics and requirements involved;

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re 2;

Conditions of Service (continued) l b.

Utility shall be reimbursed for any expenses incurred by it by reason of the transfer of electric energy require-monts referred to in subsection 2(a);

c.

Service hereunder will be initially delivered to Customer

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for a volt three phase electric line having capacity sufficient to serve Customer's energy require-l ments.

Utility. retains discretion to select the supply j

line or lines from which service will be rendered to Customer.

The supply line selected shall be the best available source with adequate capacity based on good i

engineering practices.

Utility also retains discretion to change such supply line or lines and to change the voltage of the supply line or lines or other conditions i

of service.

If such change is initiated by Utility, the cost of providing service under the new conditions including- !

the cost of transformation shall be borne by Utility.

In l

all other cases, except for changes caused by an increase

.i in Customer's electric energy requirements which shall i

be governed by subsection 1(b), costs of changes shall l

be borne by Customer; I

I d.

Customer shall provide and maintain all transformers and l

related facilities necessary for handling and utilizing i

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the energy delivered hereunder; l

i e.

Utility will provide and maintain one three phase voltage l

connection, provided Customer will make available, without charge to Utility, space required for Utility's lines and delivery facilities, and; i

f.

Utility will provide and maintain one point of delivery and metering equipment therefor.

Such metering equipment.shall be located on the high voltage side of Customer's trans-formation.

Utility, at its discretion, may elect to install such metering equipment on the low voltage side of trans-

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formation (whether or not for the convenience of Utility l

or Customer) and in such case, both the demand and energy I

consumption will be increased to compensate Utility for transformer losses as measured by such metering equipment, or in the absence of such measurement, by computing such losses based on the manufacturer's data pertaining to the specific transformers installed.

3.

Rates and Charges The gross charge shall-cqual the sum of the charges below and any other applicable charges increased by two percent.

a.

Customer Charge:

Delivery voltage Charge 4160 or 12,470 volts

$ 80.00 per month 34,500, 69,000 or

$110.00 per month 138,000 volts

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Rate and Charges (continued)

Charge par Kva of Billing Demand iE b.

Demand Charge:

Delivery Voltage Any one Month f 4160 or 12,470 volts

$3.73 per Kva 34,500, 69,000 or

$3.18 per,Kva 138,000 volts c.

Energy Charge:

1.25& per Kwh for all Kwh delivered by Utility in any one month d.

Cost of Power Adjustment:

(1)

A Cost of Power Adjustment (CPA) will be applied to each Kwh of energy billed hereunder during.the.

" billing period" as defined herein.

(

+ ECPP + ECIP - FCIS) X 100

.834d (2)

CPA =

(CG + PP + IP - IS) X LF Where:

CPA = Cost of Power Adjustment.

The. amount rounded to the nearest.001C per Kwh to be charged fc each Kuh billed hereunder during any monthly

" billing period" as defined herein.

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FCCG = Fuel Cost of Company Generation.

The cost oj fossil fuel as included in Account 151 and t1 cost of nuclear fuel as included in Account 518, according to the FPC Uniform System of Accounts, consumed in " Company's plants" dur:

the " determination period."

ECPP = Energy Cost of Purchased Power.

Yhe-net ene:

cost of energy purchased on an economic dis-patch basis from other utilities under pur-chased power agreements during the "determini tion period," exclusive of capacity or deman<

charges, otherwise, the actual identifiabl@

fuel cost associated with such energy purcha ECIP = Energy Cost of Interchange Purchases" The energy cost of energy purchased on an econou dispatch basis from other utilities during 9

" determination period" under interchange or interconnection agreements irrespective of %

designation assigned to such transactions.

Otherwise, the actual identifiable fuel cost associated with such energy purchased.

FCIS = Fuel Cost of Inter' change Sales.

The cost o2 d-fuel consuced in " Company's plants" to geneg energy sold to other utilities during the

" determination period" through all inter-system sales.

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Rates and Charges (continued)

CG = Company Generation.

All Kwh generated during the " determination period" in Company's plant PP = Purchased Power.

All Kuh purchased, except interchange purchases, from other utilities during the " determination period" irrespectiw of the designation of such purchases.

IP = Interchahge Purchases.

All Kuh purchased or received from other utilities during the

" determination period" under interchange or interconnection agreements irrespective of the designation of such purchases.

IS = Interchange Sales.

All Kuh generated in

" Company's plants" which were sold or furnish

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to other utilities during the," determination period" through all inter-system sales.

LF = Loss Factor.

The estimated ratio of Kwh sal @

at the average delivery voltage of wholesale sales for resale to the Kwh generated for sus sales.

This ratio is.97.

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(3)

Definitions (a)

The " determination period" is defined as the calendar month immediately preceding the billing month.

(b)

The " billing period" is defined ar the period beginning with the 4th billing cycle of the month following the " determination period" and ending with the 3rd billing cycle of the next month.

(c)

" Company's plants" is defined as Company's fossil and nuclear generating plants and Company's share of any jointly owned or leased fossil and nuclear i

i generating plants.

4.

Determination of Demands a.

Maximum kilovolt ampere (Kva) demand will be the highest average Kva delivered during any fifteen minute period.

b.

Billing demand for any billing month shall be the greater of:

(1) 50% of the maximum Kva demand measured for the billing month, or

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Determination of Demands (continued)

(2) the contract capacity 5.

Additional Conditions and Contract Provisions A capacity (called " contract capacity" herein) shall be a.

as provided in Article II, Section 1 of the Agreement.

In the event Customer's maximum Kva demand during the 13' consecutive hours of 10:00 a.m. through 11:00 p'.m. on weekdays occurring during the period June 15 through September 14, in any one year, exceeds the conttact capacity in effect at that time during any 3 fifteen minute intervals, no two of which shall be selected in any one calendar day the contract capacity shall be increased, without notice or other action by the amount by which the average of the three highest measured Kva demands exceeds the then existing contract capacity, and any existing contract shall be deemed to have b.een amended to include such increased capacity.

b.

Customer may reduce Customer's contract capacity upon providing Utility with twelve months' prior written notice.

However, in no event shall Customer be permitted to reduce Customer's contract capacity to a level below that speci-fied under Article II, Section 1 of the Agreement.

c.

If Customer requires service at the delivery point sp'ecified herein for existing, new or added capacity of 500 Kva or more in excess of the contract capacity which requires Utili9 to install special apparatus, Customer shall execute and keep in full force and effect a written contract with Utilitg for service which shall specify a contract capacity and othes terms and conditions of service not inconsistent with. those provided for herein.

The primary term for such written agreement shall be five ' ear's.

y d.

The primary or extended term of any agreement provided for herein shall be automatically extended from year. to year with the privilege of either party to terminate the agreement at.the end of the primary term, or any exte.nded term, on not less than two years' prior written notice.

Nothing contained herein shall be construed as affecting e.

in any way the right of either party under this rate schedule to unilaterally make application to the Federal Energy Regulatory Commission or any successor agency for a change in rates set forth in Section 3 hereof under Section 205, or any similar provision, of the Federal. Power Act and pursuant to the Commission's Rules and Regulations j

promulgated thereunder or under any other applicable federal H

law or commission.

It is further provided, however, that i

rU, Additional Conditions and Contract Provisions (continued)

S5..

in the absence of agreement by Customer no change shall be made in any term or condition or service specified in sections 1,2,4, or 5 hereof until it has been finally approved by the Federal Energy Regulatory Commission or any successor agency under Section 206 of the Federal Power Act.

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