ML20062H971
| ML20062H971 | |
| Person / Time | |
|---|---|
| Site: | Crane  |
| Issue date: | 09/05/1980 |
| From: | Sweeney L JERSEY CENTRAL POWER & LIGHT CO. |
| To: | Vollmer R NRC - TMI-2 OPERATIONS/SUPPORT TASK FORCE |
| References | |
| NUDOCS 8009110405 | |
| Download: ML20062H971 (94) | |
Text
Jersey Central Power & Ught Company
_IP I
E H
Madison Avenue at Punch BGwi Road Momstown, New Jersey 07960 (201)455-8200 September 5,1980 Mr. Richard H. Vollmer Director, Three Mile Island-2 Support Office of Nuclear Reactor Regulation U.S. Nuclear Regulatory Commission 7920 Norfolk Avenue Bethesda, MD 20014 Re:
NRC Ibcket No. 50-289 - TMI-l Restart Proceeding fear Mr. Vollmer:
By,your letter dated September 21, 1979, to R. C. Arnold, and Mr. J. C.
Petersen's data requests sent to C. W. Smyth on November 9,1979, you requested us to keep the NRC informed of significant regulatory developments affecting the GPU cocpanies. Accordingly, the enclosed material (8 copies) has been sent for that purpose.
Enclosed is a copy of the transcript for hearings held September 5,1980, in BPU Ibcket Nos. 804-285 and 807-488.
Very truly yours, AGWtiwo_ (
M4,u.Q Lawrence E. Sweeney y
Rate Eepartment rc Enclosure ec:
M. Karlowicz (w/ enc)
J. Petersen D. Carroll (w/o enc) l L. Gentieu 4
(b, g s
l Tills DorUi.iBJT CONTWIS P00i? QUAUTY !Ei.S l
3ooW0 W f
Jersev Central Power & IJght Company is a Memter of tre General Pubhc Ut hties System
861 I
I VOLU!t3 8 i
O t
S T JOR3nT DI? ART!t3!!T O? EM23GY
,i
~j DOARD OF PUBLIC UTILITIES i
3l' NEWARX, NZW JERSEY W3DNESDAY, SEPTEIG"R 3,1930 4
5, I
In tha l'atter of the Petition of
)
6f Jersey Central Power and Light Cosa-)
CAL DOCKET NO.
i l
pany for Approval of an Increa n 13)
PCC 3513-80 7
Rates for Electric Service and for )
A=endmont to the Lovelized Onorgy
)
DPU DOCKET NO.
l 3
Adjust:ssut C1suse and Factor for
)
804-285 Guch Service.
)
307-458 9:
. - - - _ _ _ _ _ _ _ _ _ _ _ _ _ _)
10 BEFORZs HON. STEPHEN G. FJLRSHALL AC?iINIST!ATIV: LA*7 JUDG3 11 l; 2
l 12 l 2
Ol ia l
^'"r^"'"=="'
j gl For the Fetitioner, Jersey Central Pcwer i
l
& Light Cosspany, appears i
15 l EIRSTEN, FRI3DMA!! & CHERIN, ESQS.,
j Dy JACK D. K!PC ON, ISO., and g
DOLORES DELABAR, ESQ.
17 Academy Straat
,7 Newark,11ew Jersey l
18 '
and 19 WILLIAM F. EYLAND, ESQ., of Counsel 20 21 22 J. E. DUEHRER & ASSOCIATES 24 Ccr.-merce Stroot
- 3 Newark, New Jersey (M1)
C23-1974 4
O 25
SG2
^
l l
APPCARA1 C 3
(Continued)
,, i For the Departz.ent of Public Advocate, Division of Rate Counsel, appears 3
ALFRED L. IIARCELLI, ESQ.,
Dsputy Director 4
RAY:@lD MAIRIL, E30., and DAVID PAUL, USC.,
5 Deputy Public Advocates 10 Comarca Court 6
Newark, blow Jersey 7 I on Behalf of the soard of Public Utilities, g
appears:
C7J1LA VIVIAli DELLO, 250.,
9 Deputy Attorney General 10 For the Doard of Chosen Freeholders of
,i Ocean County, appears:
11 53RRY, SU:DIEDILL, PISOAL, RACMI &
l
'*RIVRTERA, ESQS.,
o =:l Dy
.ma C. sAmam, zu.,
,3 34 Washington Street To:ss Rivor, New Jersey g
d 15 i 3
i 16 :
)
i 17 I 18 l
19 20 21 l
22
-23 24 25
663 JUOGE MARSUALL:
Cood =orning, ladies and gentlemen.
This is a continued hearing f
l I
in the natter of tho Petitions of Jersey Can-3l tral Power and Light co=pany, PUC-3519-80 with 4
E"*
"9 ""
5
- " 98' 6
!!ay I please have the appearacces of the 7
parties?
g
!!R. KIP.5 Tnt; Jack B. Kirsten and Dolores 9
celeF.ar for Kirsten, Friednan and Cheria, At=
10 torneys for the Petitioner, Jersey Central 11 P w r and Light Company.
Messrs. James S.
12 eman and Willian 7. nyland, of Counsel.
13
!"S. BILLO:
Carla vivian Dello, Deputy 14 Attorney Goneral for the Board of Public UtiJ1-4 15 t
j tius.
!!n. liARDELLI:
Alfrod L. Nardelli, Ray-17 t:end !!ahul and David Paul for the Public Advo-18 cato.
19 20 the firm of 3erry, Sumeril.
?iscal, Kagan 21 and Privatara for the County of Ocean.
122 23 4
O 25
l 564 1
1.
JUDGE MAnsttALL:
Defore we proceed with O
2i l
the witness, are there any procedural mettars?
3' (No response.)
4 okay.
I believe the purpoas of today's 5
hearing is for Mr. xirsten to present a re-6 buttal witness.
7 Ma. XI23T3M:
Yes, sir, Mr. Fred Hafer.
8 Juccs xanSUALL:
I don't believe Mr.
9 Hafer was sworn in previously.
10 MR. IIRST.'J' t:
Mr. Hafer, please take i
Il the stand.
12 g
fRSD D.
H A F E 2, sworn on behalf of Petitioner, 13 j
testifies as follows:
I4 l
DIR2CT EXAMINATIOM 15 ! 3Y MR. KIRSTI:U:
i I
16 Q
Mr. Hafer, will you pisase tell us your position 17 with the CPU Systas?
18 A
y, 19 I am Vice President roeponsible for all 20 the ratw matters on the retail and wholesale level for the 21 GPU System, and I am a member of the Board of Directors of 22 Jersey Central Powr and Light Company, of Metropolitan 23 ' Edison Compas?
and of Penelec.
t 24 Q
Mr.11afer, I show you a doctament which showe
' O 25 various scenarios in terms of the calculations of the LEAC l
Hafer-direct 865 I
factor in this proceeding.
Was this document prepared by you 2
or under your supervision?
3 g
- y.,
4l l
MR. KIRSTZM May we have that r.arXad 5l as JC-J7 6
JUDG3 MAIt3 HALL:
If there are no objec-I tions, it shall be so marked as JC-J for identification.
\\
9 (Document showing various scenarios 10 in terms of calculation of LEAC factor markad II '
g JC-J for identification.)
12 DY MR. KIRSTEN:
O-13 Q
Now, will you please describe generally, Mr.
I4 Hafer, what JC-J f or identification purports to show?
I 15 I A
JC-J is a comparative summary showing the major 16 cost elements and, adjustments to the Company's cost projection 17 under the Levelized Adjustment clause based en a six month 18 clause as proposed by the Public Advocate, based on the 19 Public Advocate's recommended adjustments; if a 12 yronth 20 clause is used, based on the Public Advocate's recosamended 21 adjustments, if a 12 month elause is used, but with certain 22 minor technical modificatione that my staff has discovered l
23 subsequent to the filing of Rate Counsel testimony, and then Q
finally, the numbers which weuld be developed if Jersey 24 95 Central were preparing this filing today, based on information
Itafer-direct 866 1
available to us today and based oa a reconsideration of each of the points raised by Mr. Knudsen in his testi:may.
This 3
reflects some of the adjustments suggested by the Public 4
Advocate and accepted by the Company.
5 6
7 8
9 10 l
~
11 12 O'.:
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14 2
5 15
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16 17 18 19 20 21 i
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22 23
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Jl Hafor - direct 467 l
i A
(Continuing)
L*hore are none minor itans o:2 O
I 2l this schedule which should be noted for clarification.
First all, in the accond colunn from the left, the column 3
headed "hta Counsol acflecting 12 Mcathu I:nded 0-31-31' 4
if w go @w t col m & ct a lit lo better than half 5
vay, the nu=bar 14.06 mila per hilovatt hour should not have 6
tha nrackot in front =f it on tho left-nand sida.
It's a 7
poa2.tiva n"""cr, not a no.;ativo.
3 If you go all the way down that column 9
9" **' "
"U "
10 i
on that colu=n, tho 0.340 mils per kilowatt hour in what 11 is used to generatu t a 10.4 million dollar nusher which 12 i
appearai elow.
The 534.1 million which would be baacd on 13 ;
j a 12 uonth recovory of all accumulated duforrod energy con-34 l
15 l sistant with the Company's tariff would requira 2.79 mils i
I j
E" 16 i
Likawisa, if you move ona column to the 17 right, the 16-1/2 million dollar nu::.bor relatos to the _
g 1.347 alla per kilowatt that's shown on that schedule di-39
- "" Y "
20 a 2.93 all per kilowatt hour adjuatment to the factor.
I should say that there is one other item on hora, and we can go through those various ones, g
and I will go tnrough then during the course of my testi-O
'4 mony.
In doing that I will indicate those which the Corepany
,2 Ucfor - dirtet 868 I
takes exception to.
But, we note that there is no adjustment I
1i i
(])
under the far-right hand column for the itam called Pc/ Sales l
2 Pricing Substitution.
This adjust: ant cones about because 3!
of a difference of opinion hetvean the Conpany's original I
4 ectinate of PJM running ratos and the osti:anto developed 5
by the PJM Interchange Office for PJM running ratos.
We 6
have, as late as lato last night, continued to review those 7
forecasts and revise our nu=bers, and we are prepared to 8
indicata at least the approximate level of adjustnants that 9
we believe might be appropriate based on conditions that 10 we see right now.
11 i Dofore doing that, however, I think it i
12 i
would be bettar if I began at the beginning of the rebut-({)
l 13 tal testimony and the su==ary of the Company's position i
14 l j
with regard to the LEAC and the principles that we have 15 l l
ensployed in making this filing.
I 16 I
O Mr. Hafer, befors you do that, would you please 17 tell us to what entsnt you personally, on behalf of Jersey 18 Central have been involved in the development of the LEAC 19 Clause for Jersey Central as it is presently in existence 20 on your tariff?
21 A
I was involved in the initini development of 92
~
the fusi clause 'for Jersey Contral back in early 1971 and 23 the ovolution of that clause to an anorgy clause, a redue-()
tion in the averaging period from 12 months to three months 25
CJ Hofor - direct 869 and then sore specifically in the mest recent ti=afrat:e, in I4 1977 and the Gonoric Proceedings which followed in 1978 and 2
i 1979, I was the principal witness for Jcrsey Central in those 3i proceedings regarding the development and i:nplementation 4
cf the Levelized Energy Adjustment Clause.
6 7
8 9
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11 12 i
Ol ia '
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15 l 16 l 17 '
18 19 20 l!
i 21 22 23 I
24 25 i
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Hofor-direct 373 I
Q Are you f amiliar with how the concept of that O
2 Lavalized Energy Adjustment Clause,which Jersey Central has 3
developed, came about?
l 4
A Yes, I am.
5 0
Nould you pleans describe that7 6
A Yes.
7 In the middle of 1977, the Soard of 8
Public Utilitics, which was at that time the Public Utility 9
commission, at the direction of then president Joel Jacobson, 10 issued a lottar to all of the electric utility companies in i~
11 the s tata.
That letter was dated June 1.
It arose a s a i
I*
12 result of a discussica among the commissionars at their publia
({}
13 meeting held on May 23th, I believe it was, directing all 14 the companies to file with the Board a proposed Levelized f
15 Energy Adjustment Clause.
i 16 And, ny recollection is that the term, 17 Leveliswd Energy Adjustment Clause, nay not have been used t
l 18 specifically.
But, we were directed to file with the Board 19 a clause which would provide for a smoothing of the energy 20 costs to customers rather than,having the monthly variations 21 which had been experienced in the recent past.
l 22 The southly variations were arising l
23 generally as a result of two things:
all companies were 24 experiencing tremendous variations in energy costs as a result l
25 of the instability of oil prices followingthe Arab 011 Znbargo.
871 1
Jersey Cantral ms particularly sensitiva 2
to variations and had larga variations because of the sddi-3 tional complication of having a algnificant piece of its 4
capacity represented by low cost nuclear-fired capacity.
5 I believs at the time I testified in the 6
Generic Proceedings so:nething like 44 percent of Jersey Con-7 trs1's energy had been derived from nuclear-fired capacity 8
which had a fuel cost of about 3 mils per kilowatt bour.
9 And, that capacity, when it's not running, 10 is replaced by interchange or oil-fired capacity which has 1i fuel costs ranging anywhere frca 35 to55 or even ore mils 12 per kilowatt hour.
13 There was a tremendous volatility in the f
14 pricing.,The industrial customers objected to this because i*
15 there was no way for then to forecast and to budget their i
16 operations.
The residential custoamrs, of course, objected 17 to it because it meant a significant fluctuation in their 18 billings from month to month.
19 There was no meaningful way that they 20 could budget themselves.
And so the Board, by its latter of i
21 June 1977, directed all of the companies to file with the 22 aoard a proposal for is slementation of a Lavolised Energy l
23 Adjustment 01ause basec. on prospective costs.
l 24 The concept was to allow the cecapanies 25 to collect all of their costs incurred in supplying the l
i anfor-direct 377 i
1 electric power, that is, all of their fuel related costs, 4
O over a reasonable period of tium, but at the/tip to smooth i
3-out a lot of the volatility that occurs frctt uonth to month t
4 be cause, for instance, of you trying to aset conditions such and 5
I as planned / forced outages as well as nea:sonal variations and 6
usage patterns that occur in Company use.
7 The end rsault of those proceedings were the LEAC clauses that you now ses in pisce.
Public 9
Service 51ectric and Cas was the first to implement the 10 clause.
They wre the first to file the proposal with the t
11 Board.
They proposed a 12 r.onth clause with a review every 12 12 nonths.
O:
ehare i erovision within the es o1 ae 14 which provides for interits review in the event of adverse 15 !
developesents, unfereseen changas, that type of thing.
16 I have referred to that as the " good 17 faith clause" because it dcean't provide any guidance that 18 will mandate a change in the factor.
It meruly wls the I9 Company shall have the opportunity to request a change in 29 the factor.
21 In the case of Jersey Central, because 22 of the smaller size of the company, and because of tho l
23 exposure to this radical shift in energy costs as a result 24 of an outage of a nuclear station, we couldn't stand waiting O'
25 12 months in the event of such a change.
ai Hafor - direct 373 i
A (Continuing)
So, Jernoy Contral requested Il
()
]
that thora he a 12 r.onth averago cont pariod looked at that
~l l
would encompana all the acasonal variation and all the 3!
I scheduled outagna of gonerating stations but that that 4
period be ravicwed r,vory six nontha and at every six montha 5
there be a now 12 1cok ahead that would still accomplish 6
the levelizing offect the roard wanted to achiove but would.
7 provide there be a more tinely updating of the costs in the 8
ovent that the costs were gruster than had been anticipated.
9 Jcrsey contral also has an added factor 10 i
included in our clause that in addition to what I have refer-j 11 red to as the gccd faith review, in the ovent of unforesee.n 12 devolcp=ents that thero is a provi= ion which sandates a
'3,
(_)
j chango in the clause in thu ovent that the collections ex-14 caed costs by $5 million or in the event that collections 15 j l
fall behind costs by $20 nillion.
16 l The Atlantic 01ectric clause, by the 17 j
way, was proposed to bo handled in --- rathcr, initially 18 l proposed to be rather than a one-step 12 month clause to 19 be two periods.
Ity recollection is that Atlantic rieo*aio 20 wanted it to be sumer/ winter oriented, that there would 21
~
be a savon month period and five month period.
That never 22 l
came to pass and Atlantic Electric today also has a 12 l
month levelized clause.
o4
~
()
The importance of enorgy clauses in 25 l
2 Itafor - dirset g74 general can't be ovaretated because don't think that C:)
Jersey Central --- in fact I feel rather cortain that Jersey 2
Central couldn't havo existed through 1974 in the absence of a clause.
4 "Y
5 E""
i 6
i place, and I aunpoct much the saca can be said for all com !l 7
panios in the northcaat United States.
g Tha levelized cicusa by snoothing out 9
the variations which occur due to cha changes in price and 10 5
generation nix throughout tbe courna of the year provida 11 1 an opportunity for tha custonar to budget hinself, particu-l
()
7 "I
13 a
i of smoothing out the charguo to custemcro and avoiding monthly variations.
By the cans token, by being prospective, 15 a.
it is intended to provido a vubicle for the Company to re-16 ;i cover the costa incurred in providing service approxinately l,e consistent with the cars ti=a those costs are being incur-18 red rather tLcn having largo deferrals.
Q Will y u explai how the deferred encrgy 20 balance works and if you would explain how it works in 21 terr.s of the Jarsay Contral clause and as contracted with 22 the other utilitios that have 12 month clausas?
23 l
A Yes.
First of all, the doforrod anargy balance g) 24
\\
represents actual expenses incurred by the Company in the l
l l
l l
33 nafer - direct 875 generation of oluctricity which has aircady boon served to I
O(s/
custenars but for '4hich thG custonars have not yet raiaburned; tha Company.
It reproacnts, if you will, custer.or ICUn, 3;
l rcpresunta accounts receivablo, although they are not clas-
- E*"Y*
5 In L c casa orsey Contral, the pros-6 pectiva 12 months ecst for generation of electricity ara 7
added to the accumulatad deferrod energy balanco at the begin-8 ning of tho ;oriod to determina the levalized billing factor 9
9 10 the factor is in for ain zenths until it's again reviewed.
11 1
I l
The offcet of that is that the deforred g
I energy balance at thu end of six months, if everything was
({)
13 j
working perfectly, would be approxinctoiy half recovered.
,4 i
g At that time a new calculation la cade providing for recovery 15 I
I of the thua current balanco --- that is, half of the starting 16 i 1
l point, rccovery of tha then current balanca over the next 17 12 nonths.
Six month: later thcru is a new calculation 18 cade.
The effect of that in that in theory tha accunulated 39 1
defarrod sacrgy balance would never be recovered if all of the forecast worn exactly right.
i The practical matter is, of course, that the forccast vary from tima to tire and to that extent there I
will be debits and crodits to that account, but the smooth-~
of
(~
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ing over that is taking placo, the recovering of the deferred 25,;
i l
876 D4 Mafer - direct 1
energy by the workings of the Jorsey Central clause takes
()
P ace over a rather long period of time, sevaral 'icars.
l 2
now, in contrast would be tna Public 3
I tnink the ^tlantic ::lectric clausa is service clauso.
5 D*3 "" #9 6
mains in effect for 12 months rathar than being reviewed 7
the and rocalculated at thu cad of six and, therefore, I
g deferred energy balanco, again all other things bming equal, 9
than w uld be recoverad ovar tha 12 = cath period rathat 0
over the core extanded p4riod of Jorsey Ccatral.
11 !
12 3
13 E
I4 i
I 15 3-16 17 18 19 20 21 22 23
(^)
24 25
Raiar-direct 877 I
h.-
I a
now, have you nad an opportunity to review the 2
various adjust = ants to the filing which have been suggasted 3
by Rate Counsal?
4 A
Yes, I have.
5 0
And will you tall us tna resulta of that review 6
of mate counsal's adjustments?
7 A
Tas, sir, I would.
8 First of all, as a genersi matter, let 9
ne say that I think to recognize that coats will be increasing to in the futuro and yet not to recognize a change at some level i
II i
in the Levelized Adjustr.ent clause today at the expense of an.
12 3
istportant drastic change in tne future is generally incensis-13
~
j tent with the whole theory employed oy the Board in implenenting
.:I 14 j
the energy adjdatment clauses.
l Secondly, let me say with sorte of the 15 16 specific adjustaants I am concerned because the tine period, 17 the ti:ne period, rather than being based on any particular IO principle that I can find seems to be based on a phenoaane l
I which just by happenstance puta lower costs in the first six
'O nonths than are in the second six inonths.
21 when I look through the adjustments, they 22 are shown on Exhibit JC-J, the first adjustrent al there is a 93 recalculation of the level of sales and pricing of that amount, 24 and that's the S4.2 million.
'that's an adjuatment which we 95
~
have reviewed and have considered that not to be unreasonable
878 dafor-direct O
aa a r ri ce a it ta ta ce e ar r= itio"
' *at= ti=-
2 on tho f ar right-hand side.
3 The second adjustI ent la the adjustment 4
which relates to the P.E./ Salem pricing substitution.
This 5
is one that I referred to earlier that is a reflection of 6
the difference between the Company's original forecast of PJll running rates and the forecast of PJ:1 running rates which S
cane frem the inteerconnection of fice in Philadelphia.
9 j
It appears at this time as though we would agree that our forecast should be sodified by about I
g3 l
i S3 million.
I don't have a snore precisa deterstination of 1
i that, but as of late last night my people were acvising tse O:
ia that that number should be probably about $9 million as
.,i 14 i
the acceptchle adjustment in the right-hand column rather than the sero that is shown.
16 The next adjustment represents a reduced 17 sales forecast.
Again, this is an opinion which comes about, 18 as I understand it, of fir. Knudsen'a fleeling that there will be 19 a continued recession for six months, but thea perhaps a 20 l
recovery at some time atter that.
I 21 l
The $3.6 million that we have shown as acceptabla to the Company represents the loss of sales to the 23 Whippany Paper Company.
We have checked with that company O
a d to the ae t of our iafor atio= we have rea on *e de11ev-24 05 they won't be back on line and in production during the next
879 1
12 nonth period.
That's why the $3.6 million is shown there.
O i
2 The adjustztent for the split savings, 3
which would be the implecantation of the zaodification to j
1 PJM, is acceptable to us, as well as the line loss calculation.
i 5
I think rather than being more acceptable, it's a problem of 6
being an item which is so nebulous, so very small in terms of I
7 the total energy needs of the company, that it's difficult to 8 refine it r.uch further than tnat.
9 We have shown it as being acceptable.
10 The next iten which cornes down, however, 11 is the -- the next two items, I guess, are the two which trouble
}
12 me the most.
O ;I ia Ther are the oyster Cree
- oeeratia, rate f
'nd the Oyster Creek outage.
There has been considerable tes-14 a
timony pct into these proceedings and put into earlier pro-15 -
t, i
16 ceedings about the Oyster Creek station.
There is all kind of 17 evidence about the operating problems that Oyster Creek has had 18 as a result of the Three Mile Island accident, as a result of l
19 cracks which were discovered in the sparger at Oyster Creek, 20 had as a result of the accidest at 3rown's Ferry, which has 21 caused us to codify certain of our procedures and our testing 22 requirements in running that station.
t 23 As I read the testimony and the proposal i
21 ef the Public Advocate, I don't find any disagreement that l
25 P.here will be a significant outage at the Oyster Creek generating
i i
Itafar-dirset 880 1
station, but that outage will be at least five weeks, and in 2
fact, Hr. Finfrock indicated it could be six vr eight weeks 3
at the present time, and we are going to be required to shut-4l that station down before the and of this year.
)
5 We will be asking the Nnc for permissica l
I 6
not to shut it down, but rather to shut it down in early 1981.
7 The fact of the matter is that whether it is late this year 8
or early next year, it will be closed down.
There will be 9
a significant changs inths energy costs experienced by the 10 Company, and I think it's, as I said earlier, inconsistent 11 with the principios of the Levelized Energy Adjustment Clause, 12,
both in terms of six months versus 12 sionths, in terms of 13 just smoothing out the cost impact, torow take advantage of 14 a period of time whara it's pcesible that some of those d
15 costs won't be incurred.
I I
16 So, we do take exception to that, and 17 I do think it's wrong.
18 19 20 21 22 23 C:)
24 25
3d 1 Hafor - direct 381 t
A (Ccatinuiner)
I have the sana kind of cornant O
'l about the Oyster Crook esperating rato in sonoral.
07stor 2
l c moh has heen one of tho host perfor:crs in this nation 3
hist.orically.
The uavings have been substantial.
They have 4
boon passed through to the customars of Jorsoy Central.
5 They isill be passed througn to the customers of Jerssy Con-6, I
tral in the futura as this plant oporstus.
I think it is 7
unroulistic to continua to push up the operating rate of 8
Oystcr Crock under tha asau;:ption taac it can turn in over 9
"E
- * "' E##
- Y 10 I
Island, Drown's Porry, spargers and the ags of the station II,i
~i which is anothar phenoc.:na that Mr. Finfrock referred to.
I2 t
Tho n u.t iten on the paga which we I
13 l
uculd take onception in gas substitution, the assu=ption 34 thoro will be oven core natural gas available for the Com-g i
15 >
I pany t burn.
As I unloratand it, thers are those who are j
16 f gl now cbjecting to our uso of natural gno in general as a boilor fuoi and the availability ef that gas to Jersey 3g Contral is limitad by the tranacission capability of the gas 39 suppliers.
,,g Those are tho only substantivo changes in the cost productions.
The acxt najor difference of opinion, of course, cc=us in the acortisation rate of tha I
accumulated deferred energy.
It's my understanding that 24
~
the Advocato is advocating s=orti:stion of a portien of the 25
1
,,,1 2
Mafor - direct 332 g
accumulated deferred energy costs over 13 months and a I
2l small portion of it over 12 conths consistant with the I
tarif f that is on filo with the scard.
3' c
Again, I would stress that it's incon-i 4
5{.
sistant to do anything other than 12 2:onths.
The 12 =onth l
- 1. D.
6l amortization / fact turns cut to be much longer than that by the operation of the Jorsey Central clauao, aa I indicated 7
earlier, and I would urgo W Mga that hafore h des 8
recoassendations of any significant =,odifications to the 9
tariff of Jersey Contral and to the procedures which have been accepted by the Board of Public utilitics, that he 11 i
- r.ight want to recor.: send that the Board institute a new set 12 O
- g t
I of generic prococdings or reconsiders it, but'not issue a 13 4
i raccamended decision which could play havoc with the energy 14 clauses which have been so essential to the Co=pany.
i 5
15 !
The bottom line on this would be for I
16 the Company's position would bu the 8 01 - well, let me back up a little bit because I have to do a recalculation.
The adjustud energy costs would be the g
$398.7 million less the 33 million that I referred to as looking like a reasonable number for the adjustment of the PJM running rate.
And, the bottosa line, instead of the 22 6.625 mils per kilowatt hour would than be 5.303 mils per 23 kilowatt hour.
The dollar equivalent inctead of the 81.9 l
million dollars would be 471.8 million.
25
,3 hcier - direct 383 I
I I would say in closing, Mr. Kirsten, that O
I 2)l Jersey Central continues to have on its books well in excess 3l of $100 sillion of accumulatud duferrod energy ccats.
A1ro{st l
l 595 million of that are a raflaction of the workings of this' 4i clause, and it dowsu' t necessarily indicate that the clause 5
hasn't functioned well, it indicatos that the costs incurred 6
were in excess of the billing ratas that have been employed 7
over the last many contha.
So that while we may have dis-8 agreements about the future costa for the next six nonths 9
or 12 months, in torns of whether the line losses will be 10 g
a million dollars higher or a million dollars lover, it's l
11 i
important to remember in addition to whatever thosa. costs 12 j
are, there is $95 million.of accumulated IOU 2 on the books today as a result of the workings of this clause and another i.
14 j
$40 million or better on the books which is being amortized 15 '
j to base ratos.
16 Q
Does that completa your statencent?
17 A
Yes.
18 MR. KIRSTCis Mr. Hafer is available for 19 cross-examination.
20 l 21 22 l
23 1
0 24 25
~
12fer-croJ3 384 1
JUDG3 MAR 3iiALL Ok ty.
Eccid the othar 2
parties like to take a oroak to rnview their 3
fi.;;rma and sucn?
4 MR. 4ARD2LLI:
Ona second, please, 5
Judgu Aarsha11.
6 JUDG; fiah3:: ALLS Ouro.
Let's go off 7
the record.
8 (vihe re upon, thera waa an of f tha record 9
discuJsion.)
10 JUDG MARSL'ALL :
Uack on the racord.
11 C3&IS l!XA9UIATIOJ 12 M MR. !ARDOLLI:
3 13 Q
Mr. Hafar, you gave us a hi= tory of tha LL'AC f
14 in Nsw Jersey.
Let's go back ence again and review more of 15 the spucific applications of the LSAC in Now Joraey since --
E 16 wall, let's say since the cccident at TMI.
17 An I corract in thinking that Jersey 18 Contral receivsd an incrosse in its L.7AC on July 1, 1979?
19 A
Yes, it did.
20 0
And, in fact, itasn ' t tha t a change in the 21 LEAC in less than six months than the previous change to 22 July 1, 19797 23 I'll rephrase that quan tion.
The in-l 24 crease that we have aurned that Jersey Cantral got in its 25 L3AC on July 1, 1379, that was a chango in tha 527.C whien i
035 dJfor-croJ3 I
()
occurrad ic33 than six nonths n" tar the previouu chango in the LCAC, correct?
3 A
tea.
4 Q
And also, did not Jersey Contral roccive yet 5
anotner increaJe in its LEAC the first week in Coptevaar of 6
19 7'J 7 7
A Yes, it di.l.
8 O
And in fact, that incraane was a chango in its 9
LEAC less than six cenths af ter the previous change in the 10 LEAC7
,i j
A The provicus being the July chango?
12 i
0 Yes.
~/
13 4
A Yes,. that 's corrset.
=
14 i
Q Then the next change in Jersey Central's LEAC 5
15 was an increase on March 1,1330, was it not?
16 A
Yes, it wa s.
17 Q
And in fact, that was the six centh dif ference 18 that we have talked about.
I mean, that was the regular 19 l
six month review?
20 A
Nell, if September 1 became the *requiar*,
21 then tiarch I would nave been the regular six ecnth review, 22 yes.
23 0
- ro will agree that :tarch 1 is six months af ter
\\~)
septerher 1, correct?
25 A
Sure.
ilafer-cross 896 Q
And then there was yet another change in the 2
Jersey Central's LEAC on April 1, 1980, was there not?
3 A
Yes, there was.
4 Q
And that was an increase too, was it not?
5 A
Yes.
h i
6 Q
And, of course, we can agree that change was i
7 only one month af ter the previous change?
8 A
That was only one conth, af ter the previous 9
ch ange, ye s.
~
10 Q
And now the Company is asking for another change l
11 in its LEAC to be effective sometime in September of 1920, 12 correct?
()
4 13 A
Correct.
- j 14 2
And> that would be about five conths after the 15 previous change?
16 A
It'you use the April 1 date, yes.
Those dates i
j 17 are minisading, though,. Wr. Nardelli.
But once you finish 18 your question,I'll be happy to explain that to you.
19 0
And, ther* !s no reason to think that this 20 Company would not be filing another application for an in-l 21 crease in its LI:AC to be effective March 1,1981, is there, 22 given your previous history that we have just gone through?
23 A
'411, the ta' riff itself provides that we will I
24 file every six e nths and we will use a 12 month forecast of
)
25 energy costs, so that is certainly a gives.
I l
l
safer-cross 587 1
Ospending on the assumption you nahe for 2
future energy coats and the availabilitytof Three Mile 3
Island Unit :iuaber 1, in particolar, you can calcutate whether 4j that will be an increase or not, or more specifically, whether 5
it will be a significant increase or not.
6 The current forecast of the Company in-7 dicates trsat if TMI Unit sauber 1 is on lins July 1,1931, i
8 that yes, thora will be an increase, but hopefully it will be 9
a modest increase.
10 Q
11ut an increase, nevartheless?
II A
An increase, navortheless.
12 Q
And you put a proviso there that TMI 1 would Ol 13 be c= 3 17 1, 1>31 wwich ou1d axe it a noe.st.in<.rease.
-j 14 Easn't the Company said in one of its 15 exhibits that a rare likely estimate at this point im Septon-e:
16 l ber 1,1981 for T:1I-17 I
17 A
I don' t recall.
If that's in ene of.ta ex-18 hibits, I'll accept it.
t l
t 19 l I will certainly admit that the July r
l 20 i, l'/21 date particular1y in light of the inactivity of l,
clir. ate i
21 the tfRC and the political / appears to be unduly optimistic.
l' -
22 1 don't think it's possible', but it l
23 may be probable.
24 0
well, can't we agree that it's probable that 1
it's probable that the Company will be seeking an increase 25
i I
itsfor-croso gas t
1 in ito LXAC to be offectiva :< arch 1, IM17 i
2 A
Yns.
3 4
5 i
t i
6
)
8 9
10 i
I I
2 i
11
.s 12
' 's 13 e
i 14 i
d 15 B
Z 16 17 18 l
19 20 21 22 l
23 24 25 l
,o 1 USfCr - Cross 359 j
-Q Now given the history we have just gone through',
()
isn't it fair to say that the life of Jersey Central's 2j LEAC has, in recent times, not been for r. ore than six months?
I 3l l
l A
Woll, I think it's fair to say that.
That's 4
exactly what it was.
I c.can that$a exactly consistent with 5ll J
the clauso as approved by ths Scard.
Bct, there is some-6l 7l thing misleading as you go through your calendar of dates l
8l of changos, ifr. Nardo111.
Jorsey Central had a fina). rate i
i order and a setting of tha LC7.C in ?obruary of 1979.
9 The acci* cat occurred the normal j
f revision date for the Oncrgy Adjustment Clauss, the six II {
2 month ravision date would have been effective August 1, 1979.
12 i
O Tha accidant occurrod at T':I in March.
And, the Board in-kV 13 l 4
5 dood did nilow an incroace in Jersey Central's energy clause 14 i
factor in July, five conths af ter the accident.
15 Q
uow, you don't r.ean to may five months, do you, t
16 Ur. 11sfor?
17 A
Fivo months aftor tha previous change, rather 18 than six.
However, tho f act of the natter was that Jersey 19 Central's onargy cost did chango dramatically.
Unforeseen 20 developcosts did occur.
And, that change was totally con-21 sistant with the tariff as anticipted.
However, the change 22 was not made to reflect Jersey Central's then enrrent esti-23 9
mate of anergy costa.
It was only made to raflect the
()
4 effect of losing TH: Unit No. 1 or TMI Unit No. 2, I'm 25 I
l
2c 2 Hafor - crona 890 sorry - wall, T.4I-1 and 2, I quass.
It was to rofloct
.O the inpact of the outago at rfI.
And, it was limitad to
' #U" l
- ~
3 crenzo, spread out the anount of incroans to the custoners.
4 It would have been cenrictoly consistant with the tariff 5
and with the principion bahind it to ask for an increase in 6
Jorsey Contral'a 2norgy Adjust =unt Clause to reflect the
(
7 to l
full oncrgy costs anticipatod- [bc incurrod by the Company.
8 Eut, that van not dono.
9
"*8 "I
E "#**
10 5
Then, rather than a change in August which would have been 11 the normal six :aonth nviou, there was a changa in Septem-12 ber, a nonth after the six conths, seven months prior to 3
13 the tir.e it had been set -- I mean following the time it j
34 hGd bOCn sSt.
That! Change was limited to the non-TMI portion.
And, that was to try to C=coth out thQ 1Epact to the Custo=
tears.
l.,
e Rather than have this nasaiva change in 18 l
July wo had a smaller change in July and waited a month 39 and had another changs in Septamber.
The normal change 20 date would have been March,1930 if we now accept Septenhar which as being the review period rather than August /would have been the regular six nonth review.
And again in March of 1930, the Loard allowed an increase but not an increase to reficot Jersey Contral's total energy costs but merely an 5
l
$91
(
3 IInfer ~ cross s
increase to reflect enorgy costs unrelated to the TMI acci-3 o
dent.
And then in April of 1930 it fina'ly al-3 loved an increase to recover those other costs, those TMI 4
related costs and did so at the same time that they were 5
ordering a reduction in base rates to remove the costs of 1
6 that unit.
So, it's unfair to look at a March-April change i'
7 and to look at a July-September 1979 change and count them 8
as four changes because what it really was, was taking 9
changes which should have been made earlier in the period 10 and smoothing them out to try to provide more stability to
,y custoner charges.
1 12 I
Q Yes, but in ary case, Mr. Hafer, it is true that
\\
13 l
the customers of Jersey Central Power and Light have had many 34 changes in their Energy Adjustment Clause in the past 13 i
15 months, correct?
16 It is true that there have been many changes in A
j7 the past 18 months just as it is true that even with the 18 changes, the recovery of costa has fallen $95 million short 39 of the actual cost.. incurred.
20 Q
And it's also fair to say given the frequent 21 changes in the LEAC in the last 18 months, that to a definite degree any policy to smooth out energy costs to Jersey Cen-3 tral cust mers has been mitigated - I mean it hasn't been 24 accomplished, has it?
25 t
I to 4 ilater - croco 892 1
A Well, imagine this if you wills when the O
i 2
clause was set in February of 1979 it was 7/10ths of a mil.
L 3
Now suppose the 2 card and the company and the Public Advo-l 4
cate had been able to opt not to have any change in the 5
factor until January 1 or February 1, 1980 The factor to-6 day is about 31 mils.
I haven't done the calculation but I
7 that factor would have been significantly higher than 31, j
8 reflecting the accumulated deferred energy costs.
l 9
And, that's assu:aing that Jersey Central 10 could have financed that up to that point.
So you know, i
11 if going from 7/10ths of a mil to 35 or 40 or 50 mils is E
l 12 uncothing, as conpared to going up gradually from 7/10ths to 3
O:
ia at av r a 9 = icd or la =:on=h i= <=== or riva== 9, 1* -
f 14 escaping me.
I think the Board in their actions and in f
d 15 splitting apart TMI/non-TMI in those early stages to step l
3 i
into it, was more consistent with the philosophy of levelis-l 16 i
17 ing than they would have been to try to hold an arbitrarily 10* A*"D r*
18 19 e
e 20 21 22 23 24 25 I
l
.h fer-c rona 693 1
.Mr.11af er, do you recall the 4 card'n order of' O
2 Juno 13, 19797 3
A Ganorally, yes.
4 Q
And am I not corruct in rer.tncering that the 5
a-ard provided for an la nonth period to collect the deferred 6
cnergy charges when it sot that clause?
7 A
Tha !Joard tock a look at the svorage costs 8
anticipetad for the unsaing la nonths md added to thosa 9
costs, I b411evs, the accumulated dsferred anorgy costs.
10 But, it took a lock at all costs in-
!j 11 cluding prior accueulations on average for sn la mcnth 12 period in setting that facter.
13 0
Dut it set the factor, really, for an 13 month 14 period unen it was deternining over what period those costa 15 could be collected?
16 A
I don't recall that it said anything about 17 setting it for an 13 month period.
I recall that it looked 18 at averago costs for an 18 nonth period in establishir.g the 19 then appropriate level of the billing factor.
20 Now, there was also reference cada to 21 the anticipated return of T:4I-l being July or January 1, 22 1980.
I think that and various other elettents came into 23 play in the 3 card's consideration.
24
.)
Well, we can agree that the proceeding that 25 culminated in tao Soard's Order of Juno 13, 1973 was not a
.:a'ar-cross 2)A 1
t;anaric hearing, can w,2 not?
2l j
3 y,,,
inat a' cut the inclusion of decand chargas on 3
q e
4 tha purchcen of energy?
Jaan't that also acco;tplished in ono 5
of your Jersoy CentraA LJAC preccedinga?
6 A
Tea, it was.
r 7
a And that was a caanga in the clausa, was it 8
not?
9 MR. nIR5Tri:
Just a coment.
I have to 10 raise an objection here.
You said, LEAC pro-i f
Il coedings.
And, you have gens over a numbor of 12 g
proceedings.
()
13 The one which was filed in April of 1979 14 waa not an L2AC proccoding although it asked
}
15 for a change in the L2AC Cector.
It was a i
16 base rate case.
17 Ha. NARDELLI:
All right, lat sa briofly 18 respond, Judge Marshall, cecause I think we 19 could really got into it, if we let it.
- 3ut, 20 it's not that important to my question.
21 The fact is wison tir. Kirsten says that 22 the April 1979 proceeding was a base rate case 23 proceeding, the costpany did not ask for a base
(")
24 rate incrosos.
It specifically said _it did v
'5 not wint a base rate increase, andyot it did
~
i
Umfar-cress 895 1
ask for an jacreaan in its L2AC.
IIcw, if that's 2
not an LOAC proceedisg, I don't knew what is.
3 Not caly did it ask for an increase in 4
its LEAC, but it got an incrasse in its L AC.
5 MR. KIRSTENs I'm surprised that Mr.
6
- tardelli --
7 Jt;DG3 MARS 11ALL Just a moment.
Has 8
Nr. Wardelli finished his state =ent?
9 MR. IIARDCLLI:
Yes, I'm finished, Judge 10 Marshall.
i j!
11 MR. XI2STmt Basically, the reason that 2
12 it was filed as a base rate case was, Mr.
O; 13 ua,d.111 has taken a po.ition consi.t.ntir i
14 that a proceeding merely to change the LEAC d
15 factor is not a rate case proceeding and, f
i 16 therefore, it is limited in terms of scope.
i 17 A base rate case proceeding, even though 18 it asked for caly a change in the LEAC factor, 19 provides the Board with an opportunity to do 20 anything that they choose in terms of the i
21 adjustment of the tariff of the Company.
22 And, that is exactly the kind of distinction 23 which I think is significant to the question 24 that he poses here.
We are in a LEAC pro-25 coeding here in which the Petition asks for
hafar-crosa 896
- serely an implementation of the existing i
2 clause.
i 3
m ceas at was filed in the spring 1
4 of 1379 asked for a review of their entire 5
tariff in which tha company requested only a 6
changu in thu MAC factor.
I think the 7
differance in the natuce of those proceedings 8
is extrar aly significant.
9 M. NARDSLt.I Let me ask a question of 10 W. Hafar, Judge Marshall.
E Q
We can agree that the proceeding that resulted g;
in a change in the co:apany's tarif f.1 rack in 1979 to allow the 12 i
O:
i==2= i== ar a a aa ca rs
>====
aat = = = 12=
13 j
34 proceeding, can we not?
I A
ifall,first of all, the change was not a general 15 inclusi n of md charges, ht racer, spacine demand 16 charged for purchases that were speelal, if you will.
We can 37 ayrea that that proceeding was not a Generic Proceeding, 18 39 that's correct.
20 Q
And in the proceeding wnich resulted in an increase in wya AC to be eueetM April 1,12, 21 did that not - tnah LEAC proceeding continue the Board's 22 Policy of allo. ring tne inclusion of demand charges or pur~
23 cnases?
O 24 A
,s on1r on oo.e poch..e. ehich were in... red and l
~
l
j Mofor-croco 397 3
which wore to have the net effoct -- including what we have 2
called demand charges, the not effect of rnducing custoner e sta.
3 4
The testincny which gave support to the 5
inclusion of thora indicated that they were not " demand 6
charges" as we norr. ally think of t! tam in terms of our on-7 going PJM trans:sctiona or the densad charges that one would 3
include in cost of nervice, rate design type studies.
But 9
rather, they were charges which the selling companies, for 10 ne rsas n or an thor, chose to classify as -- I don't think f
they even called the= dinand charges, but us refer to them as 33 a
derand charges.
12 2
Ol 13
'* r 1
=o ca==s e
it ee
- s =
14 any enargy.
They aru clearly energy related sa opposed to i
15 l capacity related.
3,
)
16 17 18 19 20 21 22 23 24 i
l 25
es 1 Hefer - croca
$98 A
(Continuing)
Dut, for reasons best known to I
the selling company, they wanted to have a portion called 2
demand chargos as opposed to energy charges.
They are 3l l
unique in that sense and they are unique in that these are i
4 i
purchases being made to offset the tremendous loss of l
energy from TMI-l and 2, purchases being made outside of l
6 PJH where the not effect is to hold down custorer costs.
t It was in recognition of all of those events that, yes, 8
the 3 card allowed the inclusion of those energy related 9
\\
demand charges as part of the costs recoverable in Jersey i
Central's IIAC.
I think this was a roccamendation - in j
11 fact I know it was a recommendation which came initially l
12 5
from Itr. Madan who at one time had been your witness in O:
13 i
some of our proceedings.
14 l
Q In Pennsylvanla?
(
15 ^
i A
In Pennsylvania and, of course, he was your
~
16 witness in the Generic LEAC Proceedings in this State as l
17 well.
18 l
Q And this proceeding that resultad in that 19 April 1, 1980 Order, that was definitely an LEAC proceed-20 ing and not a base rate proceeding, correct?
21 A
well, it's funny that we got our base rates 22 changed as a result of that April 1,1980 order.
23 Q
Are you referring to the reduction strike ON i
tt.t.
24 i
25 i
syv
.o 2 nafor - croco b
You got your base rates changed as a re-
[
O suit of the April 1, 1930 Order?
Could you explain that 2
further?
3 L
A My recollection is that the base rates of Jor-4 soy central were modified on April 1,1980 to exclude costs 5
sesociated with TNI Unit No. 1.
t 6
Q Mr. Hafer, is it not true that that was purely 7
a paper transaction because, as they were reduced for the 8
costs associated with TatI-1, they were increased by accelerat-9 f
ing the amortization of the deferred energy account in base 10 l rates so that base rates remain the sa:se on April 1, 19807 j
11 l JUDGE MARS 3.%L Excuse me, when you 2
l 12 i Q
f say, they romain the same, what are you refer-5 ring to?
j 14 I
MR. NARDr.LLI:
Let me try that question 15 l l
again, Judge Marshall.
16 Q
Mr. IIafer, ny recollection of what happened on 17 April 1, 1930 is that base rates were unchanged.
The Board 18 ordered a reduction of base rates because of the costs as-19 sociated with TMI-1 but in exact conjunction ~with that re-20 duction, they ordered an increase in base rates that came 21 about by accelerating the amortization of the deferred l
(
22 energy that was being amortized in base rates.
And so l
23 base rates remained the same on April 1, 1980.
There was no change.
25 1
l
3 Hafer - cross 900 A
Well, it certainly is true that there were two concomitant calculations made by the Board which in aggre-2 gate caused no change in charges to custonars..In arriving 3
at m t, however, the 3 card had to co=e up with a rate of
,3 raturn, a rata base, an incces statement, seine basis for 5
their decision.
Now whether that constitutes a rate change 6
7 or not, I will have to rely upon Counsel to argue.
g Q
one more thing on this lino,!tr. Hafer.
You just said that there was no change in the charges to custo-9 mers on April 1, 1980.
10 A
No.
As a result of those two actions which 3g you are referring to, yes.
12 O
Decause in fact there was a change of some 34.2 13 Q
million dollars in the LEAC.on April 1, 1980, was there 3,3 i
"**I d
15 l
A That's the portion e t I was referring to 16 that was deferred that should have been decided in' March, 37 I***
18 Q
Well now, a couple of times you have made 39 reference to. should have been decided.
I mean the Board 20 decided not to give you that money on March 1, 1980 and 21 to give it to you on April 1, 1930 Where is the basis for your statement, should have ha dadded?
23 A
well, I don't recall the Board deciding not to,1.e us m t.
m.a s.y e t I a. not criticisi.g ee 2s
I 4
Hafar - cross 901 l
Doard but I'm simply saying that there is a provision that 1
I 2,
says the costs incurred in providing the service are re-r coverable and should be recovered from the customers.
It's 3
been the principle of the energy clause to try to recover 4
i 5
those costs on a timely basis.
No one has taken exception to the fact 6
i that the oosts were in fact incurred and should be recovered 7
i 8
from tha customers.
Now in the case of the March-April
{
I 9
split,/think the problem was just ons of time, that there i
had to be more time for the parties to get into the TMI 10 r
calculation.
The energy clause proceedings as opposed to j
l ti 2
being merely reviews and nini-proceedings, if you will, 12 13 have turned into full-blown semi-rate cases.
That's what 14 happened in March.
i E
15 i:
16 17 18 19 20 21 l
9.a.9 a
23 O
24 25 l
ilafer-cross 902 1
A (Continuing)
I think'is was predominantly be-2 cause the parties and the Staff and the Judge just couldn't 3
get the proceeding finished in ti:ne for the Daard to ade-l 4
quately consider it in March.
5 It may have been that the Doerd wanted 6
to step the increase over March and April rather than in one 1
7 big jump.
f 8
It may have been because the Board wanted 1
\\
9 to be able to come out with thebase rate change as a result of j
i 10 removing Tt4I-1.
And, I am not finding fault with that.
I'm 11 si:cply saying that that is a fact.
Sut, no one talies excep-l 12 tion to the fact that those costs were incurred or should be O!
V 13 recovered.
i a
f 14 Now, I don't think that in some way the 5
15 Company should be criticized for having a two step increase, t
16
- 4 arch and April, rather than a step change in March.
i 17 C
The intention was not to eiticize the Company 18 for that, 31r. Hafer, but just to point out how the customers 19 of Jersey Central have been subjected to many changes in the i
20 last 18 months.
21 A
Indeed they have.
22 Q
And some of those changes had been in time l
t 23 periods - some of those changes in the I.EAC occurred in 24 periods even less than six months, correct?
25 A
Yes.
~
i Hafar-cross
$03 1
Q Now, you have alluded to at least Public Service O
i 2
and Atlantic City Electric in your direct rebuttal testimony, i
3 Since Public Service has instituted its 1
l 4
Levolised Energy Adjustmont Czause which, as you have des ~
f l
5 cribed, provides for a 12 r. cath review, has Public Servica 6
ever changed its LEAC in less than 12 months?
7 A
To the best of my recollection, no.
i 8
Q will you accept, subject to check, that since 9
the Levolized clauses have been instituted Public Service has 10 never changed its Energy Adjustm nt Clause for electric or I
3 11 its raw materials adjustment claume for gas in less them a E
l 12 12 month period?
O
- S is o.umm.
my z ha,a. c1 ruication i
j 14 I undsratand that the deferred e:)ergy 15 account which was nomally handled thrcugh f
3:
16 the Energy Adjuatment Cinuse may have been 17 handled in the base rate case.
Would you 18 consider that a modification of your 2 ssponse?
19 MR. MARDELLIe I will accept enat modi-
}
i 20 fication.
,i 21 Q
My question, to make it clear, only goes 22 specifically to the LEAc of Public Service and thei RMA of 23 Public service and does not include roll-ins, any roll-ins 4
O 25 MR. MIRSTEM:
That's not my point.
My I
l
l Hafer-cross 904 1
point is that thore was prevision nade for the 2
deferred energy accountin the base casa anel 3
that ncrmally would have been nado in tas LUAC 4
proceeding.
5
.,. in effect, there was a change, a 6
recovery of cos ta in addition to the normal l
7 L"AC recovery.
8
.43. IIARD3LLI:
All right, let ne change 9
ny quastion to rearl --
10 Hn. KInsTE.t a Tha t happened twice, did 11 it not, Al?
12 MR. NASD1LLI:
I don't know how wany
()
13 timos it happened, but it ce.rtainly happened f
14 at least once.
5 15 V
I'm just referring to changes in the LSAC fac-
!r 16 tor and in the RMA factor.
l 17 tiill you accept, sabject to check, that 18 l'ublic Service f actors havo re:nained the same for 12 ronth l
19 periods with the e:tception of roll-ins,sinca the inception of f
i l
20 that levolised concept?
21 A
I would accept that factor for that pertion of 22 charges to custotors and say that it has rzmained the same 23 for the 12 conths.
24 Q
And vill you accept, subject to check, that the
{
l 25 sa:r.o la true for Atlantic City Electric, that it has never
!!a far-cross 905 I
changed its LnAC in less than a 12 month period exclusive of 2
roll-ins?
3 A
I would accept that that's a matter of public 4
record.
I just can't recall it now.
I have no reason to 5
disagree wit.L it.
6 Q
And then it's true that the - when we speak 7
of Public Service and Atlantic City Electric, when we speak 8
of their clauses, their 12 month look, when they set forth 9
their prospective costs, that that prospective icok has co-10 incided, in fact, with the life of their clauses?
31 A
Well, to the extent that a factor has been j
12 g
established and the factor itaalf has not been changed for a Ol 13 12 month,e,iod, I wean, that.s. fact.
'14
!!cv, what the estinates wars, what esti-f 15 mates were used, what assumptions were made when the costs i
16 were developed in setting that factor, I have no way of know-
{
17
- ing, l
l 18 I do know that Public Service, nor 19 Atlantic City Electric own any portion of Thres !!ile Island.
20 Nor did they have the proportion of nuclear power providing 21 energy to their customers that Jersey central did which ex-1 22 plains why Jersey Central's rates historically have been 23 among the lowest in the state.
24 And even today they continue to be lower 25 than Public Service.
Yet, it's a shan:e that the costs have
4 Ifafar-cross 30s I
had to go up so dramatica111y.
But, that's just because of 2
the fact'that we don't have those savings availabla at the l
3 present ti:ne.
i 4
JUDGE MARS!!ALL:
Off the rsoord.
5 (Whereupon, there was an off the record 6
discussion.)
7 8
9 10 11 I
i 12 I
O:
i3 l
E f
i 14 I
t 8
15 1
r 16 l
17 18 f
19 t
20 21 22 23 O
'4 25 l
1
i Hafer-cross 907 1
(After the recess.)
2 JUDGE MA2SUALL:
Gack on the record.
3 FURTdIR CRCSS EXAMINATIO:2 4
AT MR. NARDELLI:
5 Q
Mr. Hafer, when we were discussing the Company" s 6
situation earlier this rorning, I believe you alluded to the 7
uniqueness of the accident at T!II.
Do you recall making a 8
couple of allusiona as to why the accident at TMI :nakes 9
Jersey Contral different than perhaps Public Service or 10 Atlantic City Electric?
I 11 A
Y8s*
l.
12 0
co you also recall when you were discussing l
3 l
O:
13 i with e so. c1 th aca=d r sronses *o the Co r==r's a 911ca-l 14 tiens since the accident that you ' indicated that some of the i
15 Iloard's respenses were unique because of the situation?
Is ii 16 that a fair characterization?
17 A
Well --
18 0
For exar.ple, this inclusion of demand charges 19 on purchases, the la month look, the breaking down between 20 TMI replacernant costs and the regular LEAC7 21 A
It certainly was unconventional and was so as 22 a result of the accident at TMI.
23 Q
And another example, I guess, of the uniqueness 24 or the unconventionality of the Board's response is the 25 accelerated proceedings that the Company has had.
You
ilafor-croco 908 I
wouldn't cali them everyday proceedings, would you?
O 2
A I dcn't think the proceedings which gave rise 3
to a change in the energy clause were -- energy clause factor 4
were much different in time than the more normal proceedings, 5
Q Ifow about the fact that the cmemissioners sat 6
on a few of them the:nselvas as opposed to sending it to the 7
Administrative Law Judge 7 8
A I think that certainly indicates the seriousness in view the situation of Jersey Central, and an effol rt, 9
which they 10 I guess, on their part to expedite the proceedings, yes, in 11 that they were afraid that having to wait for it to go throerh 12 the Administrativa Law Judge and then the recomendations, 5
O; 13
- =
a=1d ***
2 =5 r-14 Q
Eo we can agree that thecaccident at TitI had i
5 15 to some extent set Jersey Central apart froe its sister ii 16 utilities in New Jersey and has also had an impact upon the 17 soard's response to Jersey Central's situation.
18 A
$ure.
19 Q
Mow, you testified that the Levelized Energy 20 Adjustment Clause, the concept, was established when?
21 A
The concept of the Levelised Energy Adjustment Clause was
-- come about se a results of.the Public Utility 22 23 Comission June 1,1977 letter to the four electric utilities yl in the state which they regulate.
O
~
25 Q
I believe you said that Public Service had the
Hafs:-cross 909 1
j first levelized clausa?
2 A
Public Usrvice's levelized clause went in first 3
and went in July 1,1977, as I recall.
Jersey Central's 4
went in Septs:nber 1,1977.
Atlantic tiectric and Rockland 5
followed sometim.e thereafter.
6 Q
Now, everything we have discussed to date, 7
the impler.antation of the concept of the levelized clause,
[
8 Public Service's implementation of its first levelized claust 9
and Jersey Cantra'l's implementation of its first levelized 10 clause, all of that predated the accident at T!!I, did it 3;
not?
E 12 A
The initial implementation?
13 Q
Yed.
i 4j 24 -
A Yes.
5 15 Q
Mr. Hafer, I know I have seen you some days 3i 16 here at these LEAC proceedings, but I also know you havn had 17 other business elsewhere.
Have you had an opportunity to.
18 review the transcripts of this proceeding?
19 A
Yes.
t 1
20 Q
You are familiar, then, wita Mr. Finfrock's testimony?
21 l
A T***
l 22 23 Q
And you are familiar then with the statement that the Company -- of course, you might be independently 24 25 aware of this too -- the Company is intending to send a
Hafer-cross
$10 Q
1atter to the Nuclear Regulatory Comission regarding keepinq 2
the plant at oyster Creek operating, correct?
3 i
A Yes.
l b
Q Am I correct in af recollection that Mr. Finfrock l
5 l
said that the request would he to keep Oyster Creek operating 6
until April of 19817 A
My recollection is that that is accurate, yes, 8
and I can't racember whether it was March or April.
Dut, it 9
was the early spring, 1911.
Q We can agree, then, that, he it March or April, 2
~
11 j
the company is requesting that Oystor Creek operate throughout 12 i
the first six r.onths of any new L3AC period?
O 13 A
Well, we can agree that the Co:apany intends to 14 i
rsquest such permission from the Nac.
f 15 0
Yes, I think that's my question, Mr. If afer, so i
16 if you are answering yes to that, that's very satisfactory 17 to me.
A Yes.
19 Q
sow, Mr. Finf rock has, I think the record will 90 '
~
show, kept pushing. back when a draft of this request to the
'l
~
MAC will be available.
His last wordus that the draft would 22 be available tomorrow, Thursday, Saptember 4th of this year.
93
~
Is that still your best estimate?
'4 '
O
^
t='
r==4 r==
eias, r sir-25
I 2f 1 IIsfer - croco l
O Iaving reviewed the testimony of Mr. Finfrock, i
O i
is there any change to your knowledge es to what that draft 2
- I
- I
- i 3
hearing that he appeared?
4 A
The best I can recall his testimony, no.
5 xx. !!ARDELLIs Judge thrshall, I would i
6 i
like to reserve an exhibit nsaaber for this 7
draf t letter to the :lRC and I wouL also re-g quest that the record not be closed until it 9
10 JUDGE NATJntALL Dy the record not olos-II i
}
12 l ing, do you mean that it just be submitted or 8
that it be submitted with the proviso that you 13 or other parties can cross-examine or present g
ma ra n av dance?
l 15 l
MR. HARDELLI:
No, I would not request 16 P
"" "I "" " "
- U"f" 1***** **I" 17 scmething different than we have been told gg i
it wuld say in esseme.
Wen I say W remra i
19 N
i 20 i
initial decision until you receive it.
That's l
21 I
what I meant when requesting that.
l 22 r
MR. KIRSTEN I have no objection.
I 23 JUDG3 MAR 311ALL Okay, there is no objec-l
{g 24 troo xu ri,ht, th.re being no ou3ection, so 23 l
l
,f 2 unter - croco 912 l
that is acceptable.
MR. 2iARDELLI:
30, do you want to re-I serve a number?
3 JUDGE MARSHALLS How about JC-K7 MR. NARDF.LLIs JC-K is fine.
5 JUDGE MARS 11ALL:
All right, that exhibit 6l nur.ber shall be so reserved for a copy of the I
7l Petitiener's lettor to the :1uclear Regulatory 8l l
Comission regarding the timing of the outage 9!
of the Oyster Croak Nuclear Plant.
I (Whereupon, an Exhibit JC-X reserved
.:~
11 i
for copy of letter from Petitioner to Nuclear 12 Regulary Comission regarding ti: sing of outage Oj 13 l 4;
j at Oyster Creek.)
i 14 l i
f 15 l ER CM EMNION BY Ict. IIARDELLI:
16 Q
- h. Hafar, I w m now h as & g you 2 duk 17 at JC-J which you marked this morning and JC-It.2 which is 18 an exhibit that Mr. Gentieu put in on Friday.
Do you have 39 a un of that?
20 A
I will get one.
g (Witness is handed docussent.)
- I 23 l
marked on Friday, August 28th and it was prepared under his
,4,
i
~
l 25 !
2f 3 Ifafor - croco 913 A
Yes, that's my recollection.
j Q
Are you generally familiar with JC-H.2, par-2 ticularly tha first page?
3
,, l A
Well, you know, I am familiar with it to the extent that I have seen it before and I am aware that Mr.
5 Gentieu prepared it and put it in on Friday.
6 7
Q Well, I am not going to get too detailed about 8
that.
My question is, if we accept Page 1 of 4, tha numbers on Page 1 of 4 of JC-II.2,.is it not correct that there would 9
be a further change to the numbers you have for Rate Conn-10,
i l
sel's position on JC-J7 l
jg I
l A
Yes.
12 l 13 Q
And could we agree that for example the column which roads Rate Counsel Reflecting 12 Months Ended August j
j:
31, 1981, that instead of $10.4 million, if we incorporate 15 the material on JC-H.2, it would be $10.4 minus $2.7 adjusted 16 I
for taxes which would give you a number for the Rate Counse j7 recommendation of $7.7 million?
33 A
well, except the $2.7 -
the $10.4 is gross 39 including taxes and the $2.7 is not.
But, I understand 20 what you are saying, yes, if that were your position that 21 would be the effect on that $10.4 million number.
22 Q
And anoner change hat would have to be made 23 t
JC-J just to reflect Rate Counsel's true position is 24 that the negative $2.3 million in the column entitled Rate f
25 l
4
s l'
4 Itafer - cromo 914 j.
L Counsel as Piled Six Xonths Ended February 20, 1381, dould i
O y u accept subject to check that that number would now ba -
2 C =* approximate-y $4.5 million?
3 A
I don't recall when thaza changes occur, 4
whether they are six raonths or 12 months.
j-5 6
Q Okay A
But, I have got to assme Mr. mdeu's j
7 8
schedules will provida this support for whatever adjustmonts 9
you tend to makt.
O I am asking you to accept subject to check that 10 !
I the $2.7 million adjustment is a 12 month figuro and of 11
}
that seen $2.2 million cecurs in the first six months, which 12 3
0;
.*= "'r 2
- ro" *o
- == >= ** * **
==='*r ra' "** -
ia ccunsel's six renth po'sition would be approximately a roll-34 i
ba s of $4-1/2 million.
15
~
- j A
Subject to a check of the arithzsetic, yes, 16 that's the way. it would go,.
le 18 19 l
20 21
)
g' i'
23
~
O 25
\\
+
l-
/
Ifafar-cross 915 1
0 And the number under the column Rate Counsel 2
As navised 12 Months Endad August 31,19 C1, that would go 3
from $16.5 million to something belev -- well, to about 4
514.2 million - $13.8 million, excuse me.
5 A
Roughly, yes.
6 CROSS EXAMDIATION 7
3 Y H 2. E W I,a 8
a
- w. Hafer, we went over earlier some of the 9
history of the clauses and the development of the 12 month 10 period, and you reviewed the desirability to have stable 11 ratas over a longer period of time.
12 If that is a policy which is to be pur-O':
13 a
su.d why is it not a,, rov =iate to save cza se which 1oo=.
14 ahead and is intended to stay in effect for something longer f
15 than 12 months, say, 24 inonths7 i
16 A
Racause the financisi position of the Company 17 doesa't allow us to finance the accumulated deferred energy 18 costs'that would result.
19 0
would it also -- well --
20 A
The alternative would be that the rates charged 21 today would have to be high enough so in the first part of 22 the period it would provide for a credit balance in the 23 accumulated deferred energy cost.
If you will, it would 24 provide for over collaotion in the early part and while the 25 economies of that might work out in the longrun to be to the
Hofor-crcos 916 1
1 benefit of the custosers, the politics of it would be very j
O 2
difficult to make acceptable.
3 Q
So to an extent, aren't we facing the same 4
problem in your present 12 nonth application in that particu~
5 larly, if you reflect the philosophy or belief that the Oystar l
6 Creek outage will be postponed until April, but there will be 7
a -- as the Company has requested its increase, there would 8
he an over-recovery intha first six months and an under-9 recovery in the second six sonths?
10 A
If, in fact, the oystar Creek outage is put ij 11 off to April, that would be the necessary result, yes.
e 12 Q
Sut in addition, I believe you said the Company 3
C 13 would centemplate coming in filing for a now clause for next 14 March, is that not also true?
}
15 A
Yes.
The tariff specifically provides for that i
16 and, yes, we would expect to be filing car cost data next 17 March looking ahead for the next 12 month period.
18 Q
And'if the Oyster Creek o'utage is indeed post-19 poned until April, we dll see the impact of that outage in 20 the 12 month figures that are projected for next March, is 21 that not correct?
22 A
That has got several parte to it.
If provision 23 is made in the factor which goes into effect as a result of i
24 these proceedings, as I believe it.should, then to the 25 extant that the oyster Creek outage occurs next spring or
\\
t!afer-crosa 917 I
this fall or half and half, it will have been already pro-O 2
vided for ca a secothing basis.
If, on the other hand, it's 3
ignored, then you are absolutely right, cosa next ifarch one 4
way or another, either as a result of a very large inersase 5
in the accumulated deferred energy costs, those custcoor 6
IOUs, or as a result of a large increase in projected enargy 7
costa for the 1:cediate. future, the oyster Creek impact w111 8
be falt.
9 Q
Mr. Hsfer, let's take it a piece at a time.
10 I take it it's your position that we j
i j
11 should be looking at 12 months of costs at this time for f
12 developing the ciause that will exist bateeen acw and 11 arch i
i
~3 O;
la of in1.
Is eat.orrect2 j
14 A
lt's my position, it's the tariff's position i
f 15 and it's apparently the Doard's position, yes.
l i
4 16 o
well, we will let the Board speak for itself 17 when the time comes.
18 And, in that position, it's really 5
l 19 irrelevant in terms of the developing of the LRAC factor l
20 in deciding whether - in determining whether the Cyster l
21 Creek outage occurs in October or in April because both fall l
22 within the 12 month period.
Is that correct 2 l
1 23 A
That's correct.
24 Q
You said you are planning on filing again in 25 March which will cover your projected costs from the spring
Hafer-cross 313 1
of 1931 until the opring of 1002 in terms of the financial O
i 2
criterion that will be locked at in deterraining whatever 3
MAC factor is to be set next March.
Is that correct?
4 A
That's correct.
I 5
0 Now, let's assur.e that the oystar Creek outage 6
is postponed frem October until April.
That outage will be 7
refiscted in the 12 ucnth figures - assu: sing the Ccapany 8
prevails, that cutage will be reflectsd in the 12 month 9
figures that are used to determine this IJ1AC factor, correct?
10 A
Yes.
!j 11 0
And in addition, the outage will also be re-12 flected in the 12 nonth figures presented at tha next MAC 3
O; 13 ri11ns, 1 that errec=7 f
14 A
Yes.
d 15 Q
So the company will have been recovering costa, 1
16 replacement power costs associated with this outage between ~
17 they will have been recovering the costs between the prssent 18.
or 3eptenbar and next March, is that correct?
19 A
That's correct.
20 Q
aut they will not be incurring its costa until 21 next April.
22 A
There is a chance that they may not be incurring 23 the costs until next April, and if they are not, then'.those 24 collections will be used to reduce the S95 million of 25 accumulated deferred energy costs that are already on the books.
i
.1 Ecfor - croco l
919 Q
That's precisely the point, Mr. Hafer.
If the f
1 l
O outage is postponed but it's reflected in the figures that 2'
i are set at this time, will not that excess revenue that is 3
collected or revenue that is collected during the next six 7
4 zonths, won't it be applied to paying down the deferred i
l energy balance?
A All expenses and collections go through the deferred eneryy account, so to the extene there is ever an inbalance at any point in time between the expenses in l
9 t
revenues that imbalance is reflected in the deferred energy 10 j
account, so that statement can be made for any single event 11 or any single item of expense or revenues.
i Q
Won't this have the effect of, once again as-j i
su:aing this postponement is accomplished, won't the effect l
14 1
be rather than collect that deferred energy balance of some f
3 15 l
3
$90 million evenly over the next 12 months, won't the offsct 16 be with a 12 month amortisation and the possibility of 17 postponing the Oyster Creek outage, if that is accomplished, 18 l
would not the end effect be rather than an even collection '
19 of the under-recovery over 12 months, would be an accele-20 rated collection in the first six months?
21 A
If all of those good things take place, yes, 22 but as I pointed out earlier, the effect of the Jersey f
23 central LEAC is not to have an even collection over 12 i
24 l
O months in the way Public Service's works.
Jersey Central's i
25 i
l l
.2 2 IIcfor - croco i
I normally works in that there is a collection of accumulated 2
deferred energy over a longer period than that.
If we ars I
3 lucky enough to not have to put off - not have to take Oyster Creek out of service, and we are fortunate enough not 4
l l
5 to have the outage take more than five weeks, all those I
I 6
other good things, yes, there will be an opportunity to pay 7
off some of the 100s currently on the books in the form of I
8 accumulated deferred energy costs.
But, there will still l
9 be an amount there owing from prior periods.
10 Q
hre will be an amo-nt there, Mr.11afer, I 11 agree with you, but is it not true that that would be an 12 at::ount substantially less than one-half of the $90 million j
]
O]
13 which I heueve 1. presenuy under-recovered, 14 i A
Well, I guess, you know, you can make up what-I 5
15 ever assumptions you want.
If the Company's factor is al-I i
16 lowed to go into effect as requested and the Company's i
9nses are less than the company anticipated, then there 17 I
18
.1 be less than half of the current balance remaining at i
3 and of six ncnths, but there are all kinds of conditions elated with it.
The theory behind the clause is never
. ave a balance at the end of the period.
21 never There should/be an accumulated deferred 22 23 e
gy by definition.
We take a forecast of the costs we r
i expct to incur and we set a factor which is the average 24 of those costs to the end of the period and everybody is 25 i
3 IInfer - croco 921 aven.
The fact that there is an accumulation of deferred O
energy costa just indicates that the clause did not func-tion as intended.
3 Q
Now, furthermore, assuming - I realise you probably disagree with this philosophy as not being respon-sive to your pcreeption of Board policy - however, let's assume that someone did want to have greater assurance that the deforred energy balance would be collected more evenly 8
over the 12 months rather than the bulk of it or more than 9
half in the first six months and less than half in the second 10 i
six anonths, would it not be easier to accomplish that by 11 p roviding for two six month. clauses and having each of the:m 12 l
h calculated in such a way as to recover one-half of the defar-Y i
red energy balance?
14 A
Yes, but the Board didn't want six a:onth 5
15
.i clasmes because then by definition one clause picks up cer-16 tain outages, normal maintenance outages of stations, while 17 another one doesn't and you get involved in seasonal varia-18 tions and things like that.
That's exactly what the Atlan-tic city position was at the time the generic proceedings 20 were begun and that fell by the wayside.
21 Q
Mr. Hafer, would you agree that one problem 22 with having clauses longer than 12 months is tnat it becomes l
23 sore and more difficult to accurately estinate what the 24 level of cost will be late in the clause period or late in 25 i
i
,f 4 Umfar - cross 922 l
r the review period?
j O
i MR. KIRSTENs When you say longer than 3
12 months -
3 HR. MAKUL Yes.
I had asked a question 4
initially about clauses, theoretical clauses 5
6, that night be reviewed longer than 12 months for or in existence / longer than 12 months.
{
7 8
TIIC WITNESS:
I think there are elements 9
that could go both ways.
i Q
Would not one of the problems be estimating the l
10 i
level of the costs incurred late in the IA\\C period?
l 3g i
i A
Any time 12 O
"a
"'as*="'
=*==* -
2"-
13 13 Problem with the form of the question.
He i
said longer than 12 months.
Is that 20 years, f
15 i
50 years?
16 MR. MAKULs We were talking earlier 37 about a Possibility of a 24 month clause or a l
18 l
theoretical -
l 39 t
MR. KIRSTEN Well, the question is would 20 it be more difficult to forecast on a 24 l
21 i
month basis than on a 12 month basis, I have 23 Q
That's the question, Mr. Hafer.
Would it be
,,4
~
mor. difficult to f recast n a 24 month h. sis than on a 12 25 :
I i
?
5 Itafor - cross O
month basin?
1 A
F r s me items, yes.
2 3
4 5
6' 7
8 9
1 10 ij 11 12 i,
13 3
w"i 14 l
15l!
~
16 l 17 18 19 20 21 22 23 24 J
25
f IIafer-cross 924 L
l 0
What specific items might that be?
2 A
I think, for example, it's probably aasier to 3
forecast weather on average over a longer period of time than 4
a short period of time.
It's probably easier to forecast 5
plant availability over a longer period of time than a short 6
period of time.
But, I don't knew whors'the autoff is.
It's t
7 easier for me to tell what might happenas average over six 8
l months than what will happen next week.
But, when that be-9 comes more dif ficult or less precise, I really don't know.
I i
10 don't know that you can make a general kind of statement that l
11 24 renths is easier to forecast or more difficult to forecast 12 g
than 12 months with these many eleoants to taka into account 13
~
I do know there are avents thnt take i
14 l
place within a 12 month period which would have a significant l
15 impact on any segmentof that 12 months, such as plant l
i 16 maintenance schedulas which shouldn't really be related, let' s 4>
17 say particularly nuclear plants, shouldn't be related to a f
18 summer customer or winter customer necessarily.
They are 19 fit in based on a lot of criteria.
20 Q
Mr. Hafer, would it be f air to say that the 21 further one projects into the future costs, the more dif ficulty 22 one has in developing accurate fuel ecsts?
23 A
Farther than what?
You know, farther than 24 tomorrow?
Yes.
25 Q
Cenerally the farther ~
l 2
i ilater-crose 925 1
A It may be easier to predict what the average 2
cost will be during the next 12 months than what they will 4
1 I
3 he during the next three months because while we Lay be able i
4 to agree that oil prices will go up and will go up at some 5
rate en average, we :may not be able to agree they will go 6
up on a straight line and perhaps someone will hold an 4
7 opiniont that it might stay stable or even decline slightly 8
for the next several months, naybe as much as six months, j
9 and then af terward take a step change.
10 0
With regard to TMI, would it not be a reasonable 11 statement that we will have more availability in March of j
i j
12 1991 -- that we would have a clearer kncwledge as to when 13 TMI-l might return 'to service than we might have today?
14 A
I would hope so.
I s
15 Q
And whether or not TMIis available or not t
i f
16 available has a substantial impact onthe energy costs of 17 Jersey Central, isn't that correct?
1 18 A
That's correct, and it would have a substantial l
impact on the clause that we wouldla looking at setting next 19 I
20 March, a'nd to the extent an increase which is needed today i
l 21 is avoided, the impact would be compounded.
I 22 Q
I believe you made a statement, and I don't 23 take shorthand, so forgive ne if I didn't get it word for 24 word correct, that one of the theories behind the clauses 25 is an opportunity to recover costs in a similar timeframe
nafur-creas
$26 O
i=
aica taa r
i===rr a-2
- a-*==r c'>
2 A
Yes.
3 Q
Dy looking at the six month period and six does 4
month clause,/that not give you an opportcnity to rscover 5
costs in the amne tir.afrau in which they ars incurred?
6 A
The same as a ene month clause would, sure, 7
but ths 3 card r.ada a judgeant on that.
8 When we started the whole proceeding, 9
it was my position that the costs should be recovered 10 currently.
There was a judgutent by the Board that that was g
11 not ccanistent. with their thinking in the matter.
12 O
And that's prior to the TM1 accident?
O :t 13 A
sure, that was -- we11, the proceeding carried
.i 14 i
over to a point af ter the TMI accident, but, you know, the 5
15 3
Doard has spokea on that in setting the various clauses.'
S 16 sir.ce the accident.
One month would be more timely than six 17 l
months, and six sonths would ce more timely than 12 ronths, and 12 months would be more timely than two years, but the 19 Doard's policy has been there will be a 12 month clause.
20 I f
l Q
But you would agree as a matter of policy the j
ol
~
aoard is free to revise its own judgments as it sees fit, no l
as it seems appropriate for the times?
(
~~
l 23 i
A I guess certainly consistent with all the due 4
O ero
- =ir at ta aa ra
- ta ris**==
- sti
- 25 rates and to change those from time to time.
l Hafer-cross 927 1
Q
- low, !1r. ::ardelli referred to an Exhibit JC 'd.2 0
2 that Mr. Gentieu provided on the 29th and what that exhibit 3
was was a response to our request to prepare a non-computer 4
estimate of the overali impact of substituting PJM estimatas 5
of the PJM running rate for Jersey Centrai's estimate of the 6
PJM running rate, and I believe you indicated that you are 7
familiar with the transcripts.
Is that so?
8 A
Generally.
9 b
10 11 12 8
.j 14 5
15 16 17 l
l 18 I
t 19 l
20 l
21 22 I
23
'4 25 I
i I
of 1 113for - croco
- 928, O
I asked let. Contiou at Pages 751 and 752, sud 1
O let ne read this to you I am starting at Line 16 on Page 2
t 751:
" Question:
Mr. Gentieu, we did ask you to do a.non-3 computer estimate to save time and also I be2ieve we heard 4
you :say today that in doing this you assumed that the level 5
d' purchases from interchange would remain unchanged.
Answe.?:
6 l
Yes.
Question:
Does this effectively mean that all of the 7
other sources are assumed to remain. unchanged as well?
I Answers It does.
Questions In reality even though it has 9
not been quantified, is it possible that with repricing that 10 3
the interchange power begins to icok more attractive vis-a-11 E
vis certain hours of the year, vis-a-vis, sources such as 12 1
Central Iludson? Answer That's entirely possible.
Ques-h' tions If that is, indeed, so, is it possible that there I
14 3
could be additional savings that are at present unquantified 15 l
l due to a different generation or source mix 7 Answers That 16 I
could be, yes."
17 t
Now, Mr. Hafer, assuming that the Publio 18 Advoosta adjustment of substituting PJ11 estimates of the l
19 PJM running rate for Jersey Centrale s estimate, if that 20 were to be rerun through the PCP Program, do you agree that 21 there would be most likely some change in the energy 22 source mix that would result in an additional savings as 23 yet unquantified?
24 25 i
l
i:
Uafer-cross 929 1
A I would agree that there is a possibility that 2
that could happen, yes.
3 0
And thathas not been quantifi'ad in any of the 4
figures in JC-J nor in Mr. Knudsen's testimony, is that 5
correct?
6 A
Just like a lot of other possibilities have 7
not, yes.
8 Q
To the extent that these things have not been 9
quantified and would result in possible additional savings, 10 does this not provide Jersey Central with some cushion, so ij 11 to speak?
e 12 A
cushion to offset the other unknown, unforeseen 13 developoents like a coal strike as a result of the coal
.i 14 miners' contract coming due next spring.
It would have d
15 a substantial impact on our costs and on PJM costs.
E 16 0
But this would be the revision of the mix?
17 I mean, would that not be an additional modification in 18 calculating the overall costs that logically follows from 19 substitution of the estimate of the PJM running rate?
l 20 A
You're being very selective abcut which particu-21 lar itsas you want changed as a result of a particular l
22 assumption that you're making.
23 Yes, I guess.it would, except that it O
24 r a
$=
- 1=ei= 1 *=
ta * ** r i
e 2
'5 probability that the availability of other units on the PJM
~
l
Hafer-cross 930 I
system will not be quite as good as anticipated.
Thuro are a nillion things that take 3
place, and it requires that the people who are expert in the various fields use their best judgnant to taake the estimates.
5
. lad, that'a exactly what it gets down to when all of these 6
things get put togsthor.
l 7
l Now, you may go through the individual 8
i cost elewsnta and ask the question, if I put in a 1cwer cost,,
9 doesn't that requirn a smaller change?
And, the answer is 10 yes.
.~
11 i
It doesn't make it valid just because i
we agree that a lower cost requires a icwor fuel factor (Q_s $
13 increase, though.
e i
14 i
0 Mr. Hafer, with regard to the fourth column 15 I g
en JC-J, the original figure that was at the bottom of that i
16 column was 81.9 million.
Is that correct?
17 A
Yes.
18 o
Did you indicats that there is a new figure of 19 71.8 million that night go'into that space?
20 A
Yes.
I 91 Q
And what's the source of tha difference between 99 the 71.8 and the 81.9?
l 23 A
In the process of continuously updating the
t estimates of running rates, I was advisedrather late last 95
~
night that while we didn't agree with the 18.2 million dollar I
II
Hofer-cross 931 k
I suggested adjustrant of Rate Ocunsel, it did appear as though O
2 our assumption for running rates in the originnl filing was 3
too high.
And, I em aot able to quantify that with a great 4
deal of precision, but it's my understanding that the estimate r
5 is approximately 39 million for that adjustmeat rather than 6
the 18.2.
7 Sy sir. ply using the 09 nillion figure o t_.
1 8
j in the fourth colu:an, inserting it in place / the dash that's 9
there and going back through the calculatior., the milage 10 figure becor.os 3.303 which would provide 71.8 million dollars 11 of annual revenues.
12 So what I'm saying is that if I were Q
13 putting together this filing today, on the best information a
l 14 now available to me, Iwould be asking for the 71.8 million 5
15 dollar figurs rather than the 81.9 millica dollar figure that 3i 16 I had indicated when I first put together this schedule.
17 Q
Now, the 9.1 million dollar figure, does that 18 relate strictly to a difference in the cost estimate of the 19 price in the PE-Salem purchase or does
't. hat carry the overall 20 impact of all accounts that would be af facted by a change-21-in the PJM running rate?
22 A
well, it is the combination.
It's unfortunate 23 we keep calling this the PE-Salam phersonena, and that's where 24 a lot of the dollars are, but that's not the total.
It is O
25 the ef fect of all pure.'utaas from PJM plus the purchases from j
Mafor-cross 932 1
Philadelphia Electric since that rate is geared to the PJM running rate.
O Dut does it include the other factors that were in JC-H.2 which includes, for example, the effect of a change 5
l Ln the PJM running rate on the sales adjustr, ant and the Riegel adjustment and the cost of PJM purchases?
i 7
A It is my understanding that that is the best estimate of the adjustment including those changes, but I'm 9
not certain.
I don't know that it has been refined far enough to really give you a definitive answer.
1 k
II And, by the way, Mr. Makul, I think that j
the supporting documentation for this kind of adjustment probably wouldn't be available in total for another month.
14
[
aut, it's as a result of my discussions with Mr. Steger I
and his estimate of what will happen that causes as to bring 5
16 it to light now.
17 18 19 20 21 22 23 04 25
l 21 1 Esfor - crosa 933 i
O Mow, I believa in cross-a::amining Mr. Steger I,
O i
he indicated that he developsd his projections of the PJ;it 2
running rate and that ena of his courecc, so to speak, was 3
thu Cc:.pany's outinates developed by Mr. Goldstein of escala-4 tions in the prico of fuel.
Do you recall that?
5 A
Y88*
6 E
0 "he fact that the Co=pany is now conceding 7
that the running rate will not he growing or escalating g
as fast :s it initially thought, can we ocduce from that, 9
that the Ccapany is also assuming or concoding that the 10 price of feel will not esenlate as fast as was originally
=
l 33
- "Sht?
12 3
Ol
^
==, z coa's **i=x c=a-13 0
tic 11 hev doca Mr. Steger wind up with a f
14 I
7 #*
"' t f
15 i 5
a I can t w a r cat questi n.
Md, I ao not 16 sure that I'r. Stegar can give you sufficient dutail or has 17 mn umloped sumcient detail u 'a ampletaly respon-18 sive to it.
I was trying, in bringing that cut voluntarily 39 a wrning, to indicate to you that I had had a piece 20 inf r: nation as of late last night that indicated that 21 1
would be tha effect.
I can't give you any more than that.
^^ '
- E 23 that into any larger nu tor any ir. ore thaa I said.
G 24 O
"" "' Y " did "*'i*" "'
8* 5" **'ti" "Y 0
I 25 l
934 j
and the cross-examination, did you not?
L l
I A
Yes.
O r
2 Q
And Mr. Steger did testify that he uses the 3
i PJM running rate with the price of fual as an input in his 4
equation, correct?
5 A
That would speak for itscif.
If it's in the r
6 I
transcript, it speaks for itself.
l 7
Q Well, would it not logically follow that if 8
i the price of the PJM electricity 'is now acuuned to be lower that it naturally follows that nr. Steger is using a lower 10 mix of fuel pricos?
f
~,
11 A
A lower mix, but it doesn't necessarily follow 10 g
that the price of oil or the price of coal la any different.
O; o
A 1. war overa11 cost iar i
i i
I4 A
It assumes that there is a different that l
15 there are different characteristica which give rise to a 16 different PJM running rate.
They are subject to availability 17 i
of all the stations on PJM and they are subject to the demand 18 characteristics of the PJM individual ccmpanica also.
It's 19 not fair to draw a conclusion that that represents a re-20 i
evaluation of the price of oil or the price of coal or tha i
21 price of gas or the availability or the absence or presence i
22 of a coal strike or the availability of the Susquehanna units 23 in Pennsylvania or anything else.
Much as yo.e would like to 24 see that number get bigger, I just cannot do it for you.
25 l
si 3 Hefer - croc3 935 0
I believe you indicated that the 09.1 nillion
(~-)
figure at present --- thore is no back-up material availa-2 ble to substantiato that number, correct 7 3
A Yes, I used the figurs of $9 million.
4 Q
I see.
So there vill bo nothing that ws can 5
mark as enhibits in this roccrd which could ha used to in-6 vestigate how the $1 million figure was Joveloped?
A That's corract.
8 j
Q Mr. nafar, I wonder if you could cnI. lain, look-l ing at JC-J onco again in Column 2 for Oyster Crock's operat-10 i
ing rate, the nate Counsel figura in Colur.n 2 which is, Rata 11 Counsel noflecting 12 Montha Ended 3/31/01, the figuro 12 i
there is a minus 17.7 millica Oc11arn.
The third colunn O3 13 a.
i that you prepared or aro sponcoring is, Rate Counsel as 20-14 viood and shows 16.2 nillion dollars.
3 15 Uhat accounta for tho 01.5 million dif-t 16 feronco?
17 A
My roco11ection is, it's a difference between 18 whether or not the outage is eli-dnated at the Itate Counsel capacity factor or at the Company's capacity factor.
Tha second column is apparently tahon out at a 51 percent capacity 21 i
factor and the third column is taken out at 35 porcent.
22 Q
Did you ma%c any changes in the assumptiens 23 as to what tha cost of replacement energy would be as a result 24 of the six percoat differential.
x-25 i
i
1
,1 4
!!afsr - croso 936 l
A I don't believe so, no.
O Q
Now the third column under Retail Energy Cost 2
' "'~
~
3 l
factive date of LEAC increase, there is a figure in there 4
f 77.6 million dollars.
And, there is a footnote, Foot-5 note No. 2, at the bottom and it states:
' Reflects replace-l 6
ment cost estimates appropriate for base load, i.e. nuclear 7
i generation."
I wonder if you could explain wnat that 8
5 u ans?
9 x
xe are,cing to sa e to do it 1ater.
I,11 I
have to do it at the break because I can't explain it to 11 yunv.
But, I'11 get the work papers and do it later.
12 I
It was a re-evaluation by !!r. Cantion concerning the outage 13
{
of Oyster Creek during the early part of this year and the 34 y
assignment of those costs.
j JUDGE MARSHALL:
Off the record.
(whereupon, there was an off the record 37 18 JUDGI MAR 3 HALL:
Back on the record.
l 39 I*#
20 (Whereupon, a recess was taken.)
22 23 0
24 25 t
t I
3afer-cross 937
[
I JUDGE MARSIIALL:
Back on the record.
O l
2 Q
Mr. 11sfer, I believe when we went off the i
3 record you were going 'to get some materials frosa one of your 4
assistants and read:.into -the record the figures.
Would you 5
go ahead and do that, pisame?
6 A
Yes.
I was going to get an explanation of the l
difference, how we came. up with the dif ference between the 7
8 73.7 million dollars of accumulated deferred energy costs to i
9 he amortized during the ensuing 12 month period and the 77.6 10 million dollars to be amortized.
i I
j 11 The 73.7 million dollars was calculated l
12 g
by fir. Knudsen using the 43s month period - well, the 4 month Ol
,eriod,eo u c ag tse e ddis or narch and con c uding the and 13 i
I j
I4 of July when Oyster Creek was unavailable, but should have 5
15 heen available, but for the sparger problem,' assuming a 90.7 e
i i
16 percent capacity factor, and also assuming replacement costs 17 at 37 mils per kilowattlour.
l i
18 After applying all that, the resultant 19 i
cost was $61 atillion of accumulated deferred energy associated 90
~
under Mr. Knudsen's assumption with the Oyster Creek outage.
21 The total accumulated deferred energy 99
~~
had been 394 hillica astimated at that point.
So, there was 23 61 million associated with oyster creek and 33 nillion I
O i
- a t's 21 =*a 25 under the Rate counsel proposal, the 33
Hafor-croco 933 I
million vould be amortized over the 12 months, but the 61
()
nillion would be amortized over la r.onths.
3 Therefore, at the and of the 12 month 4
period there would have been 40.7 million renaininJ.
The 40.7 'plus the 33 million gives you the total of 73.7 in the 5
6 second column.
7 In the third column, we went through a 8
similar analysis using the same months, but using instead i
9 the 35 percent capacity factor rather than the 91 and using 10 the actual average PJM purchase rata during the period instead i
I 11 1
.g of 37 mils and reducing that purchase rate by about 15 percent 12 to reflect the fact that the actual purchases made passed on
()
an east and west running rate split and that historically, 13 14 cur purchases run about 85 percent of the PJM running rate.
j 15 That differential was than further reduced by 4 mils to ir 16 eliminate the oyster Creek feel cost which would have had 17 otherwise been incurred.
l 18 So, the true differential is the price 19 you paid PJM less the prics you would havn otherwise incurred 20 to generate fuel from the nuclear plant or energy from the 21 nuclear plant.
22 Whos those calculations are all made, 23 the result is accumulated deferred energy on that basis of 24
$51 million.
O 25 The actual deferred anergy balance rathor 1
I uafer-crosa 939 i
~
O
- a = *
$4
" a
- i=
- a
> '4 5-3
- vo===**r =*
the 51 million fro:n the 94.6, it leaves 43.6 million of other 3
i deferred energy to be recovered over the 12 month period.
4 Ar.d. if you then use an la month recovery factor for the 51 million of recalculated Oyster creek deferred energy, it 6
leaves a balance of 34 million 'at the and of the 12 months.
The sum of the 34 million and the 43.6 8
millica gives us the total of 77.6.
That pretty much fully l
9 i
descritas, I think, the difference in the two basis and how l
10 I
those numbers were arrived at.
i i
11 j
Q Nr. Hafar, I'm going to go back to your testi-12 j
mony this morning and,you liken the deferred fuel account O:
13 to accounts receivable or an amount that the customers, in l
14 i
essence, owed Jersey Central Power & Light for service ren-5 15 dered.
Is that a fair characterization?
17 A
Yes.
18 Q
In the Rate Counsel's opening state: rent, we 19 characterized the magnitude of the deferred fuel account as 20 the Company was presenting it at that time to be largely -
'l the bulk of.it being largely due to the extended outage at 99
'~
Oyster creek.
03 Was that a fair characterization?
4 O
^
^ < ir =a r =* ri
- to or r===
9e=i=9
- = -
95
~
nant or of the facts?
I l
Hafer-cross 940 Q
Well, a fair character 1'sation of the' facts.
1 2
A I always have a lot of difficulty assigning 3
dollars and assuming that certain dollars wees never collected 4
during the period, and others wors.
5 0
If the sparger problem had not existed and 6
that the refuellag of oyster Creek would have been a nornal refueling, the Company would not have been incurring replace-7 8
raent power costs for. the additional length of the outage, i
9 correct?
\\
10 A
That's corre ct.
And, my pcint is that the Il total energy co sts incurred over the period would have been s
I2 g
lower.
13 j
Q
'So to the extent that the Oyster Creek outage
'i l
I4 l
had to be extendsd, what was the timeframe of that extensica?
{
15 l 3
16 17 l
18 19 20 21 22 23 t.
24 q
25 1
Y
1 ilater - croco 941 4
A The Oyster Creek outage initially - well
[
O initially ws anticipated the plant to be back some time in j
2 four l
mid-March and it didn't coca back until mid-July, about 3
i months.
4 is And in terms of coming back,3 t also true that 5
Q i
there was a heat spell which occurred in July which caused 6
t salas to be higher than forecasted which caused additional 7
r tes in the deferred fuel balance?
8 9
A I don't know.
If there is something on the record by m ene from the company about that, I'll accept 10 i
l tj [
it.
I think that's too general though a statement just to assunse that all of those things happen.
12
- = i ta ri===1 1 i=9== =< or
- cr
- O; 13 o
f or what was the financial impact of Oyster Creek having to j4 he off from mid-March until late July?
15 l
5 The financial impact was, the Company incur-i A
16 red more energy cost'during the period than it had antici-17 pated.
13 i
And abos,t what was the magnitude?
Q 19 We are estimating the magnitude of increased A
20 i
costs to be as much as $51 million.
21 l l
Q
$51 million.
Now earlier in my cross-examina-
-t 22 tion of you, I asked you to accept as a given, that the
,23 Cyster Creek outage for the TMI lessons learned would be I
l
,,4 O
postponed until April.
And, I believe you agreed with me 25 1
l ':
2 IIcfor - croso N2
/
i that if that indeed doea come to pass and the Company's 3
O figures and philosophy in this case are accepted, that more j 2
t l
than half of the deferrad'fual balance would be paid in the 3
first six ::onths.
Do you recall that?
4 5
A The estinate that I made was that if the Con-pany's factor is allowed to be put into effect and if all 6
7' of the costs occur as the Corepany had anticipated, then we would expect that about half would be paid down, haif of 8
the deferred energy balance would be paid down in the first 9
half of the period.
10 However, if one then makes further assump=
11 tions that certain costs are not incurred even though the 12 8
factor was set anticipating those costs, or that the out-13 14l age of Oyster Creek is delayed until-the second half of the l
period, than the necessary effect would be that in the first l
s 15 l
half the deferred energy balance would he less than it 16 othezvise is anticipated to bei less than half.
17 Q
Now it could be substantially less than half, 18 19 correct?
A 1 don't know what substantially means, but 20 certainly when there is $95 million on the books, there is 21 an aw ul lot of running room without having to really be 22 in any fear of collecting nore money than you are entitled 23 to.
There is also a provision that the Company gets credit 24 O
for interest in the event that we over-collect.
25
41 3 Hafor - cronc 343 I
l o
troll, what ny question goes to. is, to ths O
I extent that you have characterized the deferred fuel balance 2l as an amount which is owed by the custoners for service, 3
you would agree that there are customers who, we would call 4
for instance, predominantly sumner users, co=mercial and resi-dential custo=cre, who nay have a significant amount of air-conditioning but they don't have electric heat so their load tends to be tilted towards using a lot of their usage g
in the semner period, correct?
A Yes.
10 j
0 5thich would include the nid-March to late 11 July period?
12 3:
A Well, I have a little trouble with mid-March
/^)T 13 l
\\_
g i
j being the succer, but it certainly would include July.
14 O
Dut mid-March really represents the tail-end 15 i
of the heating season, doesn:t it?
16 A
Yes, but not the beginning of the air-con-17 ditioning so.. son.
Cortainly not the opening of the beaches.
18 Sa=mer homes are not in too grsat a une in mid-!! arch.
20 21 22 l
23 4
V 25
uafar-crosa 944 I
Q Now, to the extent that this ar.ount that's due
! O for service rendered la 2mcovered e.nder the scenario where 3
the Oyster Creek outage la postponed until April, who wilt be paying the deferred fuel balance that may amount to more than half of the overall fuel balance?
Wouldn't it be 6
customers on the line from October through March?
A The cost rate being charged will take into 8
effect that the outage will, in fact, occur.
9 That's not even disputed.. But, it will 10 not give preferential treatment to any customer in any
,i II i
particular season of the year, g
The outage at Oyster Creek will occur O;
sa ad on the avaitaui11tr f es ig n= and the de ands of 14 the NRC.
The fact that it occurs during the heating season 15 l
or during the air-conditioning season or between the two is 16 not reflective of any particular characteristic of those I7 customers, but rather, on other elemente.
And, the charges 18 being made to all the customers throughout the 12 month period would reflect that outage averaged across the usage.
20 Q
hr. !!afer, you had indicated that it's your 21 supsetation that the Cospany would be back with a new filing 22 l
9 for a change in.the clause in March, is that correct?
l 23 y,,,
24 Q
And if for some combination of circumstances O
'S the whole deferred balance is paid off in the next six months,
2cfor-croom 945 l
then tb-re will be no deferred fuel balance shown in that
'O 2
- ! arch clause, is that correct?
3, A
That's correct.
4 Q
Which will have maant that the whole deferred 5
balance was paid off by the winter users, is that correct?
6 3
y..,
7 Q
So to the extent that -- while I cited an 8
extreme case, while there la no deferred fuel balance left, 9
to the extent that that deferred fuel balance might be less 10 than half of the overall deferred fuel balance, is nok the 5
11 end effect that the whole deferred fuellalance is being paid 12 disproporticoately by winter users?
(:)
'3
!4 15 i
l 16 I 17 18 19 l
20 21 22 23 24 O
25
61 1 Itafar - cross 945 l
A Many, = ny tiros there is a lot less than half.
I d
And is fact the only reason thoro is a deferred feal balanca 2
is because particular users in the past didn't pay the full 3
I cost of providing servico.
- ow, it's an impreciso science, 8
I" 5
6 experts who are retainod for the purpose of making thena osti=ates.
7 8
C And, it juct so happenn at thn time this spargar cutage occurred, that that was much rcre in the su:mor con-9 10 '
- E"
"^
"U 2
" E"#
A Well, they weren't yn ing rates baced on Fm f
11 c feet of the outugo at that ti=c.
I mean, the cutage of 12 sj Oy: u m
occurd wanticipated but the charges being 13 O:j made to tha customer in tho e montha stayed the ss=o, g
i O
Would it be your pccition that the sparger 15
- j utago r pr23ents the type of cutage which would be er 16 should to paid more or less ovonly regardiens of the sessen?
37 A
Tho sparger outsge is not a su:ntr-winter phanc=enon.
Tho answer would bo, yes.
39 0
- ##8 20 not be paid disproportionatoly by a sum =er group or by a winter group't A
The costs should not be paid disproportion-ately on a kilowatt hour consumed in the s==mert1=u or wintertice.
I would say thct is riensrally truo, yes.
l
347 Gi 2 Ifafor - crona t
l 112. IUC.UL I have no further queations.
1 O
I'll dufur now to any other party and if socc-2 l'
thing olso cocou up, I'll reserve my right to j
3 i,
ask moro questions at that ti:ne.
l' i-4 JUDGO 1AR31ALL:
Loos the Doard have any 5
6 questions?
113. B::LLO:
The board has no questions.
7 8
JUDGE ttAI!SiIALLs Mr. Sahradnik?
9 M2. SAhRTGli1K:
No questions.
JUDG3 1%RSUALL:
Are there any questions 10 os redir d 11 I
11R. KI2STC3:
No, Your 11onor.
12 23 '
3coce i:^=ss^ = '
wa=1a *a a rei a=
O; a few more minutes to go over their notas or 14 does that conclude with Mr. IIafor?
15 MR. MAKUL We have concluded.
16 17 18 19 20 21'
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22 23
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25
948 1
JUDG:: MAR 0h! ALLS Thank you very much, O
l 2
- 4r. Hafer, for your testi=ony.
3 Does the Company favo any other witnesses 4
now?
5 HR. IIRSTEN:
We have no further wit-6 nesses.
7 ggpq; MARSHALL:
Okay, shall we go off 8
the record, then, to discuss the briefing period?
9 (Whereupon, there was an off the record 10 discussica.)
i 11 JUDG3 MARSHALL:
Back on the record.
e 12
~
g The parties have set up a briefing date c
13
, herein th6 briefs on the issue of the LEAC w
14 will be due on the morning of September 4th 15 at 12:00 o' clock.
The parties have agreed to i
16 stipulate that there should be a period of 17 several weeks sufficient to give the Board 18 time to consider exceptions to the interim 19 ruling on the LEAC, such that the Board could 20 act by the end of the month, September 30th.
21 And, I have agreed to accept the 22 stipulation and believe that it does not 23 contravene the office of Administrative Law 24 Act or the ATAC.
O 25 The hearing will not be held tomorrow l
l
i 949 I
because we have concluded the presentation of O
the witnesses dealing with the LEAC.
i 3
i The next hearing is scheduled for i
4 October 1, 1930 at 9:00 o' clock in the morning.,
1 5
MR. NARDSLLI I raight add, Your ifonor, f
6 that the parties have agreed to file exceptions 7
to your initial decision in five calendar days 8
from the date of that initial decision.
9 And also, the parties have agreed to 10 waive any reply to exceptions, i
s II
.i MR. KIRSTEN That's right, and also I
g one other thing.
O i
- bers wa= on the record a provossi hr the company with respect to making the ISAC I4 t*
15 factor effective for service rendered from and 16 after Septater 1.
We have since agreed because 17 of the difficulty of doing that, that the LEAC 18 factor would be effective for smervice rendered I
for the October matar reading cycle, whenever 90 that day begins.
And, whatever factor was determined would be adjusted to reflect the 21 22 recoveryarer the estimated five months sales 23 rather than the estimated six months sales.
24 And, the parties would agree to the O
1 o5
~
mathematics as to how to make that adjustment 1
l
f l
950 I
at an appropriate ti=a.
O
,i 213. DI:LIa n Jtidge Marshall, when Hr.
~
3j Kirsten said the parties having agreed, I 4
want to taake it clear that the Staff has not 5
taken any position on this proposal.
6I 7
8i l
i 9!
10 ij 11 12 8
1 i
14 :
3 15 i I
16 l 17 18 19 20 21 22 23 24 1 D V
25 I i
951 1
- Ct. KIRSTEN:
I'n sorr/, by the partiea e i
l 2l I meant -- I don't think I have heard from 3
Ocean County either.
I.=eant there was an 4
agreement between Rate counsel and the Company 5
that that would ba the approgariate way to do 6
it, subject, of course, to working out the 7
arithmetic.
8 Jt;m 3 tan 3nALL:
Okay.
9 MR. G A3RADNIJC :
Just for the record, I 10 am not authorized to agree to anything on ij 11 behalf of Ccoan County at this tira.
- However, 12 we will consider the proposal of the Ccmpany.
,i 13 MR. KIItSTEN:
Thank you.
i 14 JUDGE MAEHALL:
Okay.
Anybody have i
15 anything further that they wish to add 7 i
16 MR. NA2 CELLI:
The final thing would 17 be that the Company has represented that this 18 draft lattar to the NRC would be available 19 tcoorrow and we'll be filing it both with 20 you and the parties, Judge Marshall, and we 21 have reserved an exhibit for it.
22 JUDGE MARSHALL:
Okay.
Just in case 23 there are circumstances wherein the letter 24 isn't available until Monday, does that O
25 throw off the whole briefing schedule?
952 1
MR. RIRSTENs I don't think it's necessary O
2 to go through that exercise.
I am quite sure
[
3 we will have it tomorrow.
4 JUDG3 74ARSUALL Okay.
Are there any 5
further matters that any of the parties wish 6
to bring up?
7 (No respcase.)
8 JUDCE ttARSUALLs Okay, there being no 9
further mattars, we will adjourn the hearing 10 until October 1st at 9:00 o' clock in the i.
morning.
Thank you for attending.
3 (ADJCUIrn:D TO UED3ESDAY, OCTOBER 1, O
isso AT ucxx== ar > oo x.x.)
j 14
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y 15 l
Z 16 17 l
18 19 20 21 l
22 23 24 n.a-
953 i
I yXHIBITS 2
Number Description Page 3
JC-J 4
Document showing various scenarica in terms of calcalation of LEAC factor 865 5
ac.K Reserved for cooy of latter from Petitionor to :Inclear Ro<iulatorv 6
Commission regarding timing of out=
age at Oyster Cronk.
912 1
8 9
10 i~
11 INDE% TO WIT 33::S 12 a
3
'Jama Direct Cross i' RED D.11ATER 14 l-BYs MR. KIRSITN 864 la, BY MR. HARDELLI S34 16 912 17 gy, gg,ggggg 915 l
18 l
19 20 21 22 23 24 25
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