ML20058B098
| ML20058B098 | |
| Person / Time | |
|---|---|
| Site: | River Bend  |
| Issue date: | 11/19/1993 |
| From: | Guttman D LAFAYETTE, LA, SPIEGEL & MCDIARMID |
| To: | Lambe W Office of Nuclear Reactor Regulation |
| References | |
| 2.206, NUDOCS 9312010392 | |
| Download: ML20058B098 (6) | |
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e S PI EG EL & McDI A lt M I D 4350 NEW YORK AVENUE, N.W W ASHINGTON. D C 20005-4798 i
T E LE PHON E 1202)879-4000 TELECOP!ER (2021393-2866 November 19,1993 Yia Hand Delivery Mr. William M. Lambe i
l Antitrust Policy Analyst Inspection and Licensing Policy Branch Program Management, Policy 1
Development and Analysis Staff Office of Nuclear Reactor Regulation Nuclear Regulatory Commission Washington, D.C. 20555 Re: Docket No. 50458; River Bend Station, Unit 1: Post Operating License Antitrust Review - Request for Reevaluation of Lafayette. Louisiana
Dear Mr. Lambe:
Pursuant to the Commission's Rules of Practice ant. Procedure, and the Federal Register notice of October 20,1993, Lafayette, Louisiana seeks reevaluation of the October 20,1993 finding that competitive questions "should be addressed in the context of a petition pursuant to 10 CFR Section 2.206 requesting initiation of an antitrust compliance proceeding, not in the instant significant change proceeding."
With due respect, this conclusion does not address, and is not responsive to, the showings of Lafayette and others that "significant changes" have occurred which require the Commission's attention - independent of any violations of preexisting license commitments.
As further stated below, therefore, Lafayette requests that the Commis-sion:
(1) reevaluate its failure to find a "significant change";
(2) address the evidence which shows that there has been a "significant change"; and (3) fm' d that "significant change" has occurred which requires further proceedings.
M 9312010392 931119 PDR ADOCK 05000458 2 TTE C
T Mr. William M. Lambe November 19,1993 Page 2 In addition, Lafayette requests that the Commission urge its Staff to reevaluate its analyses of the showing of Lafayette (and others) that its license conditions have been siolated.'
I.
LAI'AYETTE'S INTERVENTION On April 26,1993 Lafayette filed comments, a petition to intervene, and a reques, for hearing. Lafayette asked that the Commission:
(1) act to impose license conditions which clarify that Entergy as a whole must provide transmission service for competitors on a par with that which it provides for itself - i.e., network service; (2) confirm that the proposal to impose stranded invest-ment costs in the Entergy transmission tariff violates prior license conditions entered into before the NRC-and (3) address the opportunity and incentive for generation affiliate preference and self-dealing embodied in Entergy's control of the transmission network.
l On behalf of these requests Lafayette provided, inter alia, evidence of significant change. This included, for example, the admission by Entergy's Chairman that the operations of the Entergy " companies" (eg., GSU, LP&L) will now be con-ducted by "one organization." Thus, license conditions crafted when the companies operated separately must be modified to reflect present reality. See Lafayette pleading at6-7.
1.
Lafayette presumes that the analyses do not constitute findings or holdings by
- the Commission. In the event they do, they would be, as stated herein, deficient.
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Mr. William M. Lambe November 19,1993 Page 3 IL Tile COMMISSION FALS TO ADDRESS TIIE SilOWINGS OF SIGNIFICANT CilANGE, As REOUESTED BY LAFAYE'ITE AND OTIIERS As quoted above, the Commission's Order urges I.afayette and others to file a complaint to address claims of license violation. In doing so, the Commission fails to address the essential point made by Lafayette and others -i.e., that a "signifi-cant change" requires the revisiting of prior license conditions.
Most significantly, and as quoted above, Entergy now proposes to operate its member companies (including GSU) as a single entity. At the time the license conditions (for GSU, LP&L, et al.) were entered into, however, the world centered around individual companies.
i There can be little question that this fundamental change in the way in which Entergy will do business meets the "significant change" criteria identified by the Commission in the Summer decision.2 The recent decision to operate the Entergy companies: (1) has occurred since the previous antitrust review; and (2) is obviously attributable to the licensee.
The very license conditions which were previously applied by this Commission confirm that the change has " antitrust implications that would be likely to warrant Commission remedy." Summer, at 825. The existing conditions for, eg., the LP&L Waterford unit, were crafted to ensure that LP&L not make smaller competitors pay multiple charges for transmission where LP&L charges itself only once. Because of the significant change, the individual operating companies will now be operated as a single unit.
Where it once was necessary for the Commission to act to ensure that the individual units will not unfairly price transmission service, the Commission must now act to ensure that the far larger combine will not similarly take unfair competitive advantage of its transmission monopoly.
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2.
South Carolina Electric & Gas Company and South Carolina Pub!ic Service Authority (Virgil C. Summer Nuclear Station, Unit 1), CLI-80-28,11 NRC 917, 824 (1980).
3.
See, eg., the discussion of the "between two entities" condition at 12 of the Lafayette intervention."
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4.
Mr. William M. Lambe November 19,1993 Page 4 The Staff Recommendation on which the Notice relies does not seek to respond to the evidence of "significant change" produced by Lafayette and others.'
Thus, for example, there is no reference to Entergy's assertion that, it will now operate the previously distinct operating companies as a unit. Similarly, there does not even appear to be a reference to I;tfayette's request that the Commission address the opportunity for self-dealing and affiliate preference.
Rather than address the evidence of"significant change," the Staff Anal-ysis appears to presume that Lafayette and others are essentially alleging that Entergy (and/or GSU) have violated already existing license conditions and, therefore, a complaint for enforcem(nt is in order. Lafayette has alleged license violations. But it has independently, and, indeed, primarily, made claim to, and showing of, "significant change." The Notice (and underlying Staff analysis) do not address this claim and showing.
To be sure, the Staff Recommendation does refer to consideration of the merger in proceedings before other agencies, particularly the FERC. However, this Commission's obligations are hardly negated by the existence of oversight authority in other agencies. This is especially so where:
(1) the Staff analysis does not relate the standards used by the other agencies to the "significant change" stan-dard of this Commission; (2) the Staff analysis does not consider the adequacy of the NRC's preexisting license conditions (which recognize the importance of imposing restrictions on multiple transmission charges) in light of the signifi-cant changes; and (3) the Staff analysis asserts that the FERC action is dispositive because "the concerns raised by ' com-menters appear to be enforcement issues and not issues that address changes in licensee's activities" (Staff, at 27). Once again, the primary concern raised 4.
Lafayette notes that, curiously, the Staff analysis also fails to treat prior NRC analyses of GSU. See Appendix A, which notes past analyses of GSU, but does not discuss them. GSU's longstanding history of anticompetitive conduct, as documented before this Commission, underscores the need for Commission action here.
Mr. William M. Lambe November 19,1993 Page 5 by Lafayette was that "significant change" requires a new review.
IIL TIIE STAFF ANALYSIS OF TIIE STRANDED INVESTMENT LICENSE CONDITION REOUIRES REEVALUATION Lafayette, among others, pointed out that Entergy's request that transmis-sion customers reimburse Entergy for stranded generation investment violates this Commission's license conditions (as well as antitrust lawl The October 20 Notice counsels those who believe that the license conditions have been violated to file a complaint. Lafayette therefore presumes that 5
the Commission has not ventured to construe the license conditions at this point.
In any event, Lafayette notes that the Staff analysis of the standed investment claims requires reevaluation. Staff states its " opinion" that the license conditions at issue treats " opportunity costs," and not " stranded investment." Staff Analysis, at 29-30. Staff provides no support, in the hearing record of that licensing proceeding or elsewhere, for that "opinian." Staff ascerts, as did the FERC, that issues regarding stranded investment are " case specific." Therefore, " staff believes that if someone has specific examples where costs of particular transactions are in any way exorbitant or discriminatory, the proper forum for such a determination is the FERC (in a rate proceeding) and not the NRC." Id.
With due respect, the Staff analysis is non-responsive to Lafayette's showing on stranded investment. In contrast to other transmission users, Lafayette has not purchased generation from the Entergy companies. It has not caused these companies to build generation. In this context, the imposition of stranded generation costs (which, all agree, are the stranded costs that will be at issue) can have no discernible basis incost of service or public policy. To the contrary, under well-established antitrust precedent, the requirement that a competitor / purchaser of one product (here, transmission) pay for a product that it has no use for (generation) is per 5.
Through such authority as may have been delegated to the Director of the Office of Nuclear Reactor Regulation.
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i Mr. William M. Lambe November 19,1993 Page 6 l
i se anticompetitive. The Staff does not suggest any set of facts' under which the requirement that a transmission only customer pcy for generation would be lawful.
To conclude, as the Staff does, that the NRC cannot address the stranded investment issue raised by Lafayette is, in sum, tantamount to saying that the NRC cannot address the very issues of competition which, all agree, it is statutorily obliged to address.
WIIEREFORE, in view of the foregoing it is respectfully requested that:
(1) the October 20, decision be reevaluated; (2) the Commission find that a "significant change" has taken place which requires further antitrust review in the above-captioned proceeding; and (3) the Commission take such further action as is appropriate.
Respectfully submitted,
[
Daniel Guttman Attorney for 12fayette, Louisiana DG/kah i
6.
Absent, of course, separate contractual commitment, as is not at issue in the case of Lafayette.
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