ML20054D972
| ML20054D972 | |
| Person / Time | |
|---|---|
| Site: | Wolf Creek  |
| Issue date: | 04/21/1982 |
| From: | Volger B NRC OFFICE OF THE EXECUTIVE LEGAL DIRECTOR (OELD) |
| To: | David Brown JUSTICE, DEPT. OF |
| References | |
| ISSUANCES-A, NUDOCS 8204230555 | |
| Download: ML20054D972 (11) | |
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My" 12 David W. Brown, Esq.
Acting Chief Energy Section d
g Antitrust Division
,N U.S. Department of Justice P. O. Box 14141 Washington, D.C.
20044 Re:
In the Matter of Kansas Gas and Electric Company, et al., (Wolf Creek Generating Station, Unit 1),
NRC Docket No. 50 482A
Dear Mr. Brown:
Pursuant to Section 105(c)(2) of the Atomic Energy Act, as amended and the Commissions Rules thereunder, I am enclosing for your review and comment a draft " Operating License Antitrust Review Finding of No Significant Change" for the captioned nuclear unit. This document was prepared by the Antitrust and Economic Analysis Branch of the Office of Nuclear Reactor Regulation.
If you have any questions concerning this document or the nuclear facility in question, please give me a call.
Sincerely, 1
1 Benjamin H. Vogler Deputy Antitrust Counsel
Enclosure:
As stated DISTRIBUTION:
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DATE : 4/R1/82 8204280 555m
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i WOLF CREEK GENERATING STATION, UNIT NO. 1 Operating License Antitrust :inding of No Significant Change A.
Introduction Section 105C(2) of the Atomic Energy Act of 1954, as amended, provides for an antitrust review of Operating License applications if significant changes in the licensee's activities or proposed activities have occurred since the construction pemit antitrust review.
Authority to make the significant change detennination was delegated to the Director, Office of Nuclear Reactor Regulation (NRR) (for reactors) and to the Director, Office of Nuclear Material Safety and Safeguards (NMSS) (for production facilities) as appropriate.
The Nuclear Regulatory Commission in a Memorandum and Order (CLI-80-28)
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dated June 30, 1980,1 set forth three criteria upon which to base l
a "significant change" determination as follows:
(1) The change or changes must have occurred since the previous construction pennit review; (2) The change or changes must be attributable to activities or proposed activities of the licensee; and 1 11 NRC 817, 824 (1980). See also 13 NRC 862 (1981).
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(3) The changed situation must have antitrust implications which would likely warrant a Commission remedy.
The staff,2 has reviewed the activities and proposed activities of the applicants, the Kansas Gas and Electric Company, (KG&E) the Kansas City Power and Light Company (KCPL) and the Kansas Electric Power Cooperative, Inc. (KEPCo) that have transpired since the issuance (and amendments) of the construction permits on January 18, 1977, for the Wolf Creek Generating Station, Unit No.1(Wolf Creek) Docket 50-482.
It is the staff's conclusion that no "significant changes" have occurred.
B.
Background
On December 10, 1974 the Attorney General advised the Atomic Energy Commission that no antitrust hearing would be necessary with regard to Wolf Creek if the license were to be conditioned in the manner agreed to by the Department of Justice (Department) and the applicants.
The license conditions were designed to alleviate the Department's concerns that KG&E was not granting KEPCo effective access to Wolf Creek.
In addition, the Department was also concerned that KCPL had refused to enter into interconnection and coordination agreements with other 2The Antitrust and Economic Analysis Branch, Division of Engineering, Office of Nuclear Reactor Regulation and the Antitrust Counsel of the Executive Legal Director in consultation with the Department of Justice.
3 utilities on reasonable terms and conditions; that KCPL repeatedly refused to wheel power on behalf of smaller utilities; and that some smaller utilities had been unable to secure any assurance of access to Wolf Creek on reasonable terms and conditions.
Notwithstanding the Department's advice letter, the Commission convened a Licensing Board which admitted KEPCo as an intervenor.
The Board accepted KEPCo's contentions that the proposed license conditions limited the transmission and wheeling services that KEPCo was to receive.
During the course of hearings on the alleged antitrust violations of the applicants, KEPCo and the applicants proposed a settlement agreement to which the staff and the Department of Justice had no objections. The settlement provided that KEPCo could purchase a 17% ownership interest in Wolf Creek plus additional transmission services. On July 27, 1976 the Licensing Board approved the settlement agreement.3 The specific license conditions are attached as Appendix A and Appendix B to construction permit CPPR-147 issued May 17, 1977.
3In the matter of Kansas Gas and Electric Company and Kansas City power and Light Company (Wolf Creek Generating Station, Unit No.1) Docket No. 50-482A, LBP-76-27, July 27,1976.
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4 C.
Changes Since the Construction Permit Antitrust Review (1) The Addition of KEPCo as an Owner Participant and Antitrust Advice by the Department of Justice On July 17, 1979 the staff requested KG&E to provide antitrust infomation on any additional ownership participants in the Wolf Creek plant, and on July 30, 1979 the company filed to amend the construction pemit allowing KEPCo to become a participant in Wolf Creek.4 On September 11, 1979 KG&E subnitted the antitrust infomation regarding KEPCo which was transmitted on September 25, 1979, to the Departnent of Justice for its advice.
The Department rendered its advice on the antitrust implication of KEPCo's participation in Wolf Creek on March 28, 1980, stating that "The purchase of an ownership interest in the Wolf Creek Generating Station, Unit 1, by KEPCo is pursuant to the license conditions agreed to in 1974," and that it had no basis to conclude that an 4
antitrust hearing regarding KEPCo's ownership was necessary. This advice letter was published in the Federal Register on April 9,1980 providing for petitions for leave to intervene and requests for hearings to be filed by May 9, 1980.
No petitions or requests for hearings were received.
40n December 22, 1981 a construction permit amendment was issued providing for the addition of KEPCo as an applicant.
5 (2)
Subnission of Antitrust Infomation in Connection wf th the Operating License Application On May 6,1980 KG&E acting for itself, KCPL, and KEPCo, submitted infomation for " Antitrust Review of an Operating License Applica-tion." The receipt of this infomation was published in the Federal Register on July 23, 1980. The notice stated that any person who wished to have his views considered with respect to significant changes related to antitrust matters which occurred in the licen-see's activities since the construction permit antitrust review were to submit their views on or before September 22, 1980.
No responses to this notice were received.
The infomation submitted by the applicants revealed that several changes had occurred which could have affected the competitive relationship between the applicants and several nunicipalities.
Thus the staff requested the applicants to supplement the antitrust infomation they had previously submitted.
In addition the staff invited comments from the Kansas Municipal Energy Agency regarding their negotiations for access to the Wolf Creek Plant.
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6 D.
Analysis of the Changes in the Licensees' Activities Since the Construction Pemit Antitrust Review KEPCo KEPco has acquired a six percent undivided ownership interest in Wolf Creek. Although the license conditions specified that KEPCo could acquire a 17 percent interest, available financing has limited KEPCo's interest to six percent.5 KEPCo has entered into a contract with KG&E for the purchase of fim partial requirements bulk power for KEPCo members in the KG&E power supply area.
KEPCo has also obtained all-requirenents bulk power supply from KCPL to supply KEPCo's members in the KCPL power supply area.
KEPCo has entered into a contract with KG&E providing for coordination and transmission services and mutual consultation on transnission planning.
KEPCo has also obtained coordination and transmission services from KCPL, and expects to obtain additional coordination and transmission services from both KG&E and KCPL in the future.
As a result of the Wolf Creek license conditions, KEPCo has entered into a contract with KG&E which KEPCo anticipates will provide its members with a secure and reliable electric power supply for future Sletter to Stephen S. Skjei, Chief, AEAB, NRC fron Joseph W. Mulholland, Manager of Power Supply and Engineering, KEPCo, dated February 22, 1982.
9 loads in the KG&E power supply area. This same contract also provides reserves for power received from the Wolf Creek unit.
Kansas Municipal Energy Acency In 1979, both the Northwest Kansas Municipal Energy Agency and the Eastern Kansas Municipal Energy Agency inquired of KG&E and KCPL as to the availability of ownership participation in Wolf Creek and other power services. Those two agencies later merged to fonn the Kansas Municipal Energy Agency (KMEA) consist-ing of thirty-two cities.
KMEA will provide base load power and energy while the cities will utilize their own small oil and gas fired generation for peaking purposes.
KMEA has been negotiating with KG&E and KCPL to purchase an undivided ownership interest in Wolf Creek, four and one-half percent from each company. The transaction is expected to close by August 31, 1982.6 KMEA is also seeking an ownership interest in KG8E's and KCPL's LaCygne Generating Station, two coal-fired units with capacity of 1370 megawatts.
A " Memorandum Agreement" dealing with KMEA's Wolf Creek and LaCygne ownership specifies the purchase prices, the option for KMEA to purchase reduced ownership percentages and the temporary buy back of 6Letter to Stephen S. Skjei, Chief, AEAB, NRC from Gilbert E. Hanson, General Manager, KMEA, dated February 22, 1982.
8 Wolf Creek and Lacygne capacity and energy by KG8E and KCPL.
Coordinating agreements effecting interconnections, sales of fim and non-fim bulk power, and transmission services are still in the draf ting stages. According to KMEA " Wolf Creek has played an important role in KMEA's planning for the future load growth of its participaing cities."7 Other Changes in the Applicants' Activities A review of the antitrust infomation submitted by KG&E and KCPL indicates that the relationship between the applicants and several municipalities were in the process of change even before negotiations with KEMA had begun.
Several cities either established intercon-nections and began to receive wholesale service during this period or upgraded their existing interconnections.
For example, in 1977, the City of Oxford, Kansas reached an agreement with KC&E whereby the City purchases all of its requirements at wholesale from KG4E via d 12.5 Ky connection; in 1978, the 34.5 Kv interconnection between KCPL and the City of liarshall was upgraded from 34.5 Kv to 161 Kv; in 1979, KCPL and the City of Baldwin City, Kansas established a 34.5 connection; and in 1980 and 1981 the Cities of Higginsville, Missouri and Ottawa, Kansas are expected to replace their existing interconnections.
Higginsville is expected to replace a 12 Ky connection with a 161 Kv connection.
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9 In addition to the changes in the size of interconnections with their wholesale customers, the applicants have changed some provisions and conditions in their rate schedules.
KG&E, under order from the Federal Energy Regulatory Commission (FERC) in Docket No. ER 77-578, changed its agreements with municipalities from a declining block demand and energy rates to a customer charge, demand and energy concept.
In addition the use of a 75 percent demand ratchet on non-generating municipals was eliminated. Additionally, a new schedule between KG&E and its rural electric cooperative customers went into effect in September 1979. This new schedule eliminates the ratchet pro-vision of the old rate schedule, and is changed from being basically an energy step rate, to one of a custoner charge, demand and energy concept.
Changes in KCPL wholesale schedules in 1976 and 1979 resulted from an agreement with the Department of Justice during the construction pemit antitrust review to eliminate certain provisions in their Company's FERC Rate Schedules.
Similarly, KCPL changed some provisions in its retail schedules including the elinination of the fuel adjustment clause in its agreements with its Missouri customers.
In addition, both KCPL and KGAE established a summer-winter differential for their retail customers.
As a result of these changes KG&E and KCPL should be able to serve their customers more efficiently.
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10 Conclusion The activities of KG&E and KCPL subsequent to the construction permit antitrust review have been primarily focused on implementing the license conditions attached to the Wolf Creek construction permit.
Kansas Electric Cooperative, Inc. (KEPCo) has acquired a six percent undivided ownership interest in the Wolf Creek plant.
KEPCo has also entered into a contract with KG&E for the purchase of firm partial requirements bulk power for KEPCo members in the KG&E power supply area.
KCPL will supply KEPC0's members in the KCPL power supply area with all reuqirements bulk power. Both KG&E and KCPL have contracted to provide KEPCo with coordination and transmission services.
Kansas Municipal Energy Agency (KEMA) has been offered a nine percent undivided ownership share by August 31, 1982.
KEMA also expects to have agreements with KG&E and KCPL which will provide for the sales of firm and non-firm bulk power, transmission, and other services.
Thus, the changes in the applicants' activities since the completion of the Wolf Creek construction permit antitrust review do not have any antitrust implications and therefore, do not require a further, formal antitrust review at the operating license stage.
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