ML20056G115
| ML20056G115 | |
| Person / Time | |
|---|---|
| Site: | River Bend  |
| Issue date: | 08/17/1993 |
| From: | Wetterhahn M ENTERGY OPERATIONS, INC., GULF STATES UTILITIES CO., WINSTON & STRAWN |
| To: | Grant G Office of Nuclear Reactor Regulation |
| References | |
| NUDOCS 9309020073 | |
| Download: ML20056G115 (6) | |
Text
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f WINSTON & STILW7N FREDERICK H WINSTON (18531886) 1400 L STREET, N W.
CH cAso orriCE SILAS H. STiiAWN (1Bn1946; WASHINGTON, D.C. 20005 3502 as wm wAcexR drive CHICAGO. ILLINOIS EKs001 (202) 371-5700
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FACSIMILE (202) 3716950 A ER WRITE R S DIR( Cl DI AL NUMBER August 17, 1993 em m-mo l
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l Mr. Geoffrey Grant Acting Chief Inspection and Licensing Policy Branch Program Management, Policy Development j
and Analysis Staff U.
S. Nuclear Regulatory Commission Washington, D.C.
20555 Re: NRC Docket No. 50-458
Dear Mr. Grant:
On behalf of Entergy Corporation ("Entergy") and Gulf States Utilities Company
(" Gulf States"), I am submitting this brief response to several issues raised by commenters in reply to the questions put to them by the NRC Staff in letters of inquiry dated July 7 and 9,
1993.
This letter is based on information supplied by Gulf States and Entergy. The letters of inquiry regard comments on the proposed transfer of control over Gulf States to Entergy.
In reply
- letters, the commenters explain their dissatisfaction with established Federal Energy Regulatory Commission
("FERC")
policy regarding transmission access and pricing.
For the most part, the commenters attempt to persuade this Commission that additional proceedings are needed to address their concerns that (1) Entergy's transmission services allegedly preclude members of the self-styled Transmission Intervenor Group
("TIG") from engaging in coordinated transactions among and between their member systems and (2) Entergy and Gulf States allegedly are operating in violation of existing NRC license conditions.
This letter corrects certain omissions or misleading statements contained in the commenters' letters, and clarifies a few factors relevant to the NRC's decision whether to pursue a further antitrust review.
While Entergy and Gulf States disagree with most of the commenters' responses, the statements contained below provide a brief response to the more salient points discusset.
in those responses.
Although the questions reprinted below were directed to Terrebonne and LEPA, identical questions were submitted to one or more of the other commenters, Municipal Energy Agency of i
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MTNSTON & STILOVN Mr. Geoffrey Grant August 17, 1993 Page 2 Mississippi ("MEAM"), Cajun Electric Power Cooperative, Arkansas Cities and Cooperative, Lafayette, Louisiana, South Mississippi Electric Power Assoc. and Brazos Electric Power Cooperative.
OUESTION 1 In the FERC " Order Accepting Rate Schedules, Accepting Amendment to Power Agreement, Conditionally Accepting Transmission Tariff With Modifications, Conditionally Accepting Service Agreements, Granting Waiver of Notice, and Denying Motion to Update Market Power Analysis,"
dated April 5,
1993, 63 F.E.R.C.
Paragraph 61,025, the l
FERC urged the Entergy customers (and the NRC staff l
presumes GSU's customers as well subsequent to the merger) who are eligible for certain benefits perceived to be broader than what is termed " point-to-point" transmission service over the Entergy system, to approach the FERC with specific objections in the context of a request to amend or approve a service contract with Entergy Corporation. Would Terrebonne and LEPA explain to the staff why this proposal would not be an acceptable option in resolving its transmission access dispute with l
GSU/Entergy?
l Enterav/ Gulf States Response:
The commenters complain about FERC's " actual case or controversy" approach to this issue.
Under the FERC approach, any disputes relating to so-called network service that are not resolved in the first instance by the affected parties through direct negotiation can be brought to FERC for resolution.
The l
commenters give the impression that their goal of obtaining system-wide network transmission service is somehow foreclosed by FERC.
To the contrary, the FERC has indicated that it has authority to I
order network transmission service under section 211 of the Energy Policy Act of 1992.
(See Policy Statement Regarding Good Faith l
Requests for Transmission Services and Responses by Transmitting Utilities, FERC Docket No. PL93-3-000, issued July 14, 1993, 58 Fed. Reg. 38,964 (July 21, 1993).)
Moreover, Entergy has assured the complaining parties and the FERC that it will give good faith j
consideration to any proposal for system-wide
" network" i
transmission service.
(See Affidavit of Jerry J. Saacks; attached to Supplemental Response of Entergy Services, Inc., filed at FERC j
on January 22, 1993.)
The TIG members' efforts to circumvent the FERC process should be rejected.
Each of the TIG members has existing contractual arrangements with Entergy -- entered into after the l
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WINSTON & STILOVN Mr. Geoffrey Grant August 17, 1993 Page 3 Waterford 3 and other nuclear operating license conditions were in effect -- that contain provisions very beneficial to TIG members and provide " network" transmission service over the operating company system within which the TIG member is located. Apparently, TIG would like to have all the benefits of the existing contracts and simply add on system-wide features of its choosing.
- However, FERC, in approving Entergy's open access transmission tariff, gave entities like LEPA and MEAM the choice of continuing to operate under existing contracts or transferring service to the open access tariff, which contains significant features that not even LEPA or MEAM could contend are required by any NRC license conditions.
The TIG members, however, would like to straddle the two arrangements and take the best of both, while avoiding the limitations.
This preferential treatment sought by the TIG members would be unfair to Entergy's and Gulf States' native load customers.
In short, FERC has expressed its willingness to entertain requests for network service.
The difficult issues involve the
)
interrelationship among existing contracts, Entergy's open access tariff, and any new or expanded network transmission arrangement.
These issues clearly are within the jurisdiction of the FERC to which the NRC antitrust license conditions themselves defer.
OUESTION 2 In terms of Terrebonne's and LEPA's access to the i
GSU/Entergy transmission grid, what is Terrebonne's and LEPA's understanding of the significance, if any, of the presence of a
specific sentence requiring one transmission rate for a group of entities (i.e.,
"For each coordinating group of entities there shall be a single transmission charge.") in the Waterford 3 nuclear license (antitrust license condition 5) and the lack of a similar sentence in the River Bend and Grand Gulf nuclear licenses?
Enterav/ Gulf States Response:
There is no colorable basis for an argument that the River Bend or Grand Gulf license conditions address the pricing of transmission service.
However, the issue need not be reached in this case.
As the January 22, 1993 affidavit of Jerry J.
- Saacks, in FERC Docket No.
ER92-806-000, makes clear, Entergy already provides network transmission service over the systems of its individual operating companies for the loads of transmission dependent utilities located within each operating company's service
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WINSTON & STRAWN 4
Mr. Geoffrey Grant August 17, 1993 i
Page 4 area.
Whatever reach the license conditions may have, they cannot l
reasonably be read to impose obligations that extend beyond the individual operating company to which each set of license conditions applies.
Failure to provide network transmission service over the entire Entergy system is not a violation of existing license conditions, and, if there were any legitimate l
issue of violation, it would properly be dealt with in a 10 C.F.R.
l S 2.206 enforcement proceeding.
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Moreover, it would be a serious mistake to read the j
Waterford 3 license conditions as creating transmission pricing standards that may be in conflict with the transmission pricing policies of the FERC.
The statement that there be "a
single l
transmission charge" does not dictate the level of that charge, and the NRC should not strain to read a set of license conditions, formulated more than twenty years ago, as creating a set of transmission pricing rules different from those formulated by the FERC under nationally applicable legislation adopted in 1992.
l OUESTION 3 Are there currently any specific power transactions underway or currently being negotiated which Terrebonne or LEPA will have to forego if the GSU/Entergy merger is l
consummated and Terrebonne or LEPA is not granted l
" network transmission" or parallel meaningful access to the newly created GSU/Entergy regional transmission network?
Enterav/ Gulf States Response:
As the commenters tacitly acknowledge, there are no transactions currently underway or being negotiated which TIG members would have to forego if the merger is consummated and i
network service is not available over the merged company's l
transmission network as a result of the merger.
Instead, the commenters argue that the absence of system-wide network service precludes TIG members from engaging in unspecified transactions among and between their member systems.
This argument, however, has nothing to do with the merger of Gulf States and Entergy and the related transfer of the River Bend operating license.
- Rather, it is a generic complaint regarding FERC-approved transmission policies. In fact, the merger actually expands purchase and sale opportunities for these entities.
Under Entergy's open access transmission tariff, TIG j
i nembers will be able to cross the combined systems of Gulf States and Entergy for only one wheeling charge.
In addition, these l:
l WINSTON & STRAWN i
l Mr. Geoffrey Grant August 17, 1993 Page 5 l
utilities will obtain direct access to additional systems located within the area of Entergy's operating companies and Gulf States, as well as direct access to other interconnected systems.
FERC already addressed the issue of whether system-wide network service was needed and determined that network service was unnecessary and inappropriate in the context of the merger.
The NRC should defer l
to the FERC on this issue.
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OUESTION 4 At page 11 of Terrebonne's " Comments, Petition For Leave To Intervene, And Requests For A Finding Of Significant Change And A Hearing Of Terrebonne Parish Consolidated Government," Terrebonne states that the " Elimination of the second largest utility [GSU) in the region as a l
potential coordinating partner will reduce substantially the potential for coordinated development of generation available to Terrebonne and LEPA."
Please provide more specific examples of how the elimination of GSU as an independent power entity would adversely impact competition in the bulk power services market in which Terrebonne and LEPA participate.
j Enterav/ Gulf States Response:
It is a truism that this merger, like any merger, reduces the number of firms in the market by one.
The question of whether this has a significant effect on competition (and the related questions of alternative transaction partners in the relevant l
market and the definition of that market and competition therein) l has already been ruled on by the FERC.
It found that, following the merger, all firms with access to Entergy's transmission system would have access to a number of other existing utilities with which they could transact.
Entercy Services. Inc., 62 F.E.R.C.
5 61,073, at 61,375-76 (1993).
- Moreover, consistent with its findings in the decisions approving Entergy's open access tariff, the FERC noted that non-traditional generators are entering the market in large numbers and that there are no barriers to their continued entry into the market relevant for analysis of this merger.
Entercy Services. Inc., 58 F.E.R.C. 5 61,234, at 61,759-60 (1992).
Again, the NRC should defer to this analysis.
Finally, in response to a different question 4,
MEAM gives the misleading impression that the Entergy system has changed significantly from the days when the original NRC license conditions were adopted, and that the addition of Gulf States as an operating company exacerbates this change.
Specifically, MEAM asserts that the Entergy nuclear units are now operated by a single l
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VINSTON & STILUVN Mr. Geoffrey Grar.t August 17, 1993 Page 6 entity (EOI) for the benefit of the Entergy system, and implies that the system in the early 1970s did not operate on the basis of centralized, economic dispatch.
This is incorrect.
The Entergy System Agreement, which is the Agreement among all of the Entergy operating companies to coordinate electric generation and transmission, has a long history dating back to the late 1960s.
From the beginning, there was system-wide operating control of the operating companies' individual units, including nuclear units, and l
all such units were centrally dispatched.
Major transmission l
facilities also were planned and operated on a system-wide coordinated basis.
The NRC and Department of Justice were fully aware of these arrangements.F Therefore, there has been no change which would invalidate the license conditions.
1 Site.erely, 4
Mark J. Wetterhahn Counsel for Gulf States Utilities Company cc:
Mr. William M.
Lambe Earle H. O'Donnell, Esq.
Joseph Rutberg, Esq.
Wallace E. Brand, Esq.
Eugene Holler, Esq.
Robert Weinberg, Esq.
I Donald M.
Clements, Esq.
Robert A.
O'Neil, Esq.
Robert B. McGehee, Esq.
Daniel Gutman, Esq.
Zachary D. Wilson, Esq.
James D. Pembroke, Esq.
Robert C. McDiarmid, Esq.
5 See Attorney General's antitrust letter for Grand Gulf dated May 24, 1973, at 2:
From an operational standpoint, each subsidiary comprising the Middle South System constitutes a
component of a
totally i
integrated bulk power system.
A central dispatcher controls all facilities in the Middle South System and from moment to moment satisfies the System's demand l
Comprehensive coordinated planning of i
generation, transmission and integration of the integrated system with its large load enables each subsidiary to achieve the benefit of economies of scale.
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