ML20069F945

Response Opposing B Stamiris 820824 New Contention Challenging cost-benefit Analysis of Fes.Production Cost Estimates Unrepresentative,Inconsistent & Untimely & Provide Inadequate Basis for Contention.Certificate of Svc Encl

ML20069F945
Person / Time
Site:	Midland
Issue date:	09/23/1982
From:	Mark Miller CONSUMERS ENERGY CO. (FORMERLY CONSUMERS POWER CO.), ISHAM, LINCOLN & BEALE
To:	Atomic Safety and Licensing Board Panel
References
ISSUANCES-OL, ISSUANCES-OM, NUDOCS 8209280298
Download: ML20069F945 (12)

Text

':

a 9

9/23/82 000KETED 6 USNRC UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION

.g g g g {g BEFORE THE ATOMIC SAFETY AND LICENSING BOARD CFRCE OF SEWTA:. '

W1 HG r.yW;C:

In the Matter of: ) Docket Nos. 50-329 OM

) 50-330 OM CONSUMERS POWER COMPANY ) Docket Nos. 50-329 OL (Midland Plant, Units 1 & 2) ) 50-330 OL APPLICANT'S RESPONSE TO NEW STAMIRIS CONTENTION BASED ON FES I. Introduction In a filing dated August 24, 1982, Intervenor Barbara Stamiris submitted a new contention challenging the cUdt-benefit analysis of the FES. The new contention states:

I contend that the new cost production, cost savings analysis of the FES, represented by re-vised table 2.1 (p. A-32) and the revised cost /

benefit analysis (p. 6-4) and revised economic statements derived therefrom do not accurately and fully represent the cost / benefit balance of the Midland plant to the public, and should therefore not be accepted as presented.

Applicant opposes admission of this new contention.

As a preliminary matter, it should be noted that.,

1/

with one exception,~ the Staff's assessments of costs in

-1*/ In Table 6.1 of the FES, the Staff assessed damages suffered by other water users due to surface water con-tamination (chemical) as small to moderate rather than small as in Table 6.1 of the DES. However, it would seem that this change was made for the purpose of con-forming the Table to the assessment set forth in S5.3.1 of both the DES and FES.

8209280298 820923 7 ADOcx OsOOO g .

g s e.

Table 6.1 of the FES did not change from assessments made in the DES. The submission of new estimates by the Applicant and the adoption of new data by the Staff were undertaken in order to update information in the DES and thereby comply with NEPA policy "to the fullest extent possible. " (See National Environmental Policy Act of 1969, S102, 42 U.S.C.A.

S4332(c) (1977); 10 C.F.R. SS1502.9, 1503). The Staff's assessments of benefits and costs of the Midland Plant are

~

the same whether the DES estimates or the FES estimates are used in the Benefit-Cost Summary of Table 6.1.

In note 3 to Table 6.1 of the FES (also note 2 to Table 6.1 of the DES), the Staff states that "[a]cceptance requires that large negative impacts should be more than offset by other overriding project considerations." The Staff found no large negative impacts for the Midland Plant under the data of the DES or FES. Indeed, in the cost-benefit analyses of the DES and FES, the Staff found large impacts only with regard to benefits to be derived from the plant. This fact demonstrates the futility of litigating Intervenor Stamiris' new contention.

i In terms of the bases for the new contention out-lined by Intervenor Stamiris, Applicant offers the following objections.

I i

s II. Objections to the Contention Basis I: Unrepresentative and Inconsistent Methodology in Production Cost Estimates.

The examples listed in this section of Intervenor Stamiris' contention are misleading and untimely and they provide an' inadequate basis for the contention.

Intervenor Stamiris is correct in her observation that Table 6.1 of the FES lists 1984 production cost data and 1984-1988 average cost savings data. However, Inter-venor Stamiris overlooks the fact that the NRC Staff had available data figures for all the years 1984-1988 for both production costs and cost savings. (Consumers Power Co.

comment letter, April 2, 1982 at A-32 of FES). Furthermore, to the extent that this contention challenges the method-ology employed by the NRC in constructing Table 6.1, this contention is untimely. The NRC employed the same approach in Table 6.1 of the DES as it did in Table 6.1 of the FES.

In both cases, the NRC recorded 1984 production cost data and 1984-1988 average cost savings data. Intervenor Stamiris offers no justification for her late objection to the methodology employed by the NRC in the DES six months ago.

(See Memorandum and Order (Telephone Conference call of September 1, 1982) dated September 2, 1982 at p. 2 citing Duke Power Co. (Catawba Nuclear Station, Units 1 and 2),

ALAB-687, 16 NRC (August 19, 1982) (slip op. p. 16)).

Intervenor Stamiris' assertion that the NRC went

"beyond even accepting the new table 2.1 data at face value by enhancing its presentation in table 6.1" is unintelli-gible.

The assertion that 1984-1988 average production cost data should have been used by the NRC is a restatement and expansion of the methodology example considered above and therefore suffers from the same defect of untimeliness.

It is also apparent that Intervenor Stamiris has made an arithmetic error in calculating the 1984-1988 average value for operation and maintenance (O&M) costs. Rather than 12 mill /kwh, the 1984-1988 average O&M costs from Table 2.1 at A-32 of the FES should be 10 mill /kwh. This error is mis-leading in that it caused Intervenor Stamiris to state the 1984-1988 average production costs for Midland as 25.8 mill /kwh rather than 23.8 mill /kwh. The 23.8 mill /kwh is significantly less than the average cost of production without Midland Units 1 & 2.

Intervenor Stamiris' statement regarding the capacity factor also demonstrates confusion and misunder-i standing on her part. While Applicant did suggest using the I

54% capacity average to replace the 58% capacity average of l

the DES in Section 2, Applicant also suggested that, for purposes of Table 6.1, the NRC should use the new production 1

l cos t data for 1984 which was based on a capacity factor of i

56%. (FES at A-32, note (a) and A-47, #101). For purposes

of production cost data in FES Table 6.1, the NRC did not abandon an averaging approach since an averaging approach was never used for the production cost data in Table 6.1 of the DES.

Thus, Intervenor Starmiris' contention that the FES employs unrepresentative and inconsistent methodology in cost estimation must be dismissed for lack of basis, inade-quate justification for late filing, and confusion and misrepresentation of the facts.

Basis II: Lack of Supporting Data for Production Cost Estimates.

Intervenor Stamiris' assertion that there is no documentation or explanation in the FES concerning the change in Dow's steam reservation and the December 14, 1981 load forecast revision sufficient to justify revision of the average cost savings does not provide an adequate basis or adequate specificity to support her contention. In the FES, the NRC clearly states that the cost-benefit summary of Table 6.1 refects the Staff's assessment of costs and bene-fits. (FES at 6.4) . Intervenor Stamiris does not contend that the Staff made an incorrect assessment of the cost savings nor does she specify what type of explanation she believes is necessary. Moreover, Intervenor Stamiris did not object when the NRC made the original cost savings estimate in the DES with no more explanation of the basis s

for that assessment than the explanation given for the basis of the FES cost savings estimate. Finally, contrary to the assertion in " Basis II," Intervenor Stamiris advocated in her first " Basis" for this contention the adoption by the NRC of the 1984-1988 average production cost data suggested by the Applicant in revised Table 2.1.

Accordingly, Intervenor Stamirls' contention that there is a lack of supporting data for the production cost estimates must be dismissed for-lack of basis and speci-ficity as required by 10 C.F.R. S2.714(b).

Basis III: " Savings" as an Actual Benefit Is Invalid.

Intervenor Stamiris' contention that the average reduced generating costs of $279 million per year should not be considered as a benefit in the cost-benefit analysis is objectionable for lack of basis and for untimeliness. First of all, the NRC included reduced generating costs as a benefit in Table 6.1 of the DES. Therefore, to the extent that Intervenor Stamiris contends that consideration of reduced generating costs is improper in a cost-benefit an-l l alysis this contention is untimely, and Intervenor Stamiris l

has failed to show good cause for late filing of this con-tention. (See Memorandum and Order (Telephone Conference l

• Call of September 1, 1982) dated September 2, 1982 at p. 2 citing Duke Power Co. (Catawba Nuclear Station, Units 1 l

. \

and 2) , ALAB-687, 16 NRC (August 19, 1982) (slip op. p.

16)).

In addition, Intervenor Stamiris' contention lacks basis. When Intervenor Stamiris states that "the dollar figure of $279 million per year actually represents the projected costs of not operating the Midland plant" (empha-sis deleted), she mischaracterizes the meaning of the figures involved. The $279 million per year is an average amount by which production costs for replacement energy would exceed production costs for Midland Units 1 & 2 operating at an average capacity of 54%. (FES at p. A-32, Table 2.1). As a result, the benefits of operating the Midland Plant would include both the energy produced from the operation and the amount by which production costs for replacement energy exceed Midland production costs.

In considering a proposed derating license amend-ment, the Court of Appeals for the District of Columbia found that

[a]n alternative to be considered is complete abandonment of the project, just as it was at both the construction and full-power operating license stages. (Citation omitted). As at those stages, sunk costs are not appropriately considered costs of abandonment, although replacement costs may be if construction of a substitute facility could reasonably be expected as a consequence of aban-donraent.

Union of Concerned Scientists v. Atomic Energy Commission, 499 ?.2d 1069,.1084 n. 37 (D.C. Cir. 1974). Consistent with this view, replacement costn were properly taken into account in the Midland DES and FES.

Cost savings from the production of electricity from Midland as opposed to the produ'ction of replacement energy represents a real, not a hypothetical, benefit. To the extent that Intervenor Stamiris may be contending that the savings are hypothetical because replacement energy may not be produced if Midland does not operate, she raises a need-for-power issue not properly cognizable in the op-erating license hearings. (See FES at p. 9-4, #4 and Pre-hearing Conference Order, August 14, 1982 at p. 30, citing 47 Fed. Reg. 12940 (March 26, 1982)).

As a consequence, Intervenor Stamiris' contention challenging the inclusion of reduced generating costs in Table 6.1 of the FES must be denied admission for lack of basis and untimeliness.

Basis IV: Cost Savings Increase Is Not Justified.

The first two paragraphs of this " Basis" raise the same issue as " Basis II" and therefore should be dismissed for the reasons given above in Applicant's response to

" Basis II."

Basis V: Cost Considerations Allowed One

, Party Cannot Be Denied Another Party.

In " Basis V," Intervenor Stamiris does nothing s

k more than reassert her proposed contention 1.a. which this Board rejected in its Prehearing Conference Order of August 14, 1982. (p. 25-26). As the Board stated, "' sunk costs' are as a matter of law not appropriately considered in an operating license cost-benefit balance. " (August 14 Order at p. 25). Furthermore, as the Staff has pointed out, sunk costs include final costs of construction even if those costs exceed original projections. (FES at 9-34, #1).

Accordingly, Intervenor Stamirls' claim that the cost-benefit analysis does not consider construction costs must 2/

once again be rejected as a basis for an OL contention.-

i Basis VI: NEPA Requirements.

Intervenor Stamiris' general assertion that the FES cost-benefit analysis is deficient in light of NEPA

-2/ Applicant's Counsel incorrectly stated at prehearing conference that the costs considered in the cost-benefit analysis at the OL stage of review include costs of construction. Applicant apologizes for any confusion or inconvenience this representation may have caused. Ilowever, Applicant reasserts that construction costs are not an appropriate consideration in an OL cost-benefit analysis. (August 14 Order at p. 25 citing 47 Fed. Reg. 12940, 12942 (March 26, 1982) and Public Service Company of New Hampshire (Seabrook Station, Units 1 and 2)7 CLI-77CE, 5 NRC 503, S34 (1977)).

Applicant also questions Intervenor Stamiris' assertion that the construction cost estimate considered at the '

construction permit stage of the Midland proceedings was only $265 million. In the FES for the construction permit stage of review, the estimate of construction cost was $554 million. (January 1977 FES at XI-6).

i requirements must be dismissed for lack of basis and speci-ficity. Intervenor Stamiris does not indicate in " Basis VI" how she believes the FES cost-benefit analysis fails to meet NEPA standards. Assuming that her reference to Mr. Bishop's statements at the prehearing conference refer to the ten lines at the top of page 8390 of the transcript, there remains inadequate basis and specificity on which to found a contention. Intervenor Stamiris' new contention challenging the FES cost-benefit analysis must be dismissed.

Respectfully submitted, Y. .i l# Oc.

One of the Attorneys for Consumers Power Company IS!!AM, LINCOLN & BEALE Three First National Plaza Suite 5200 Chicago, Illinois 60602 (312) 558-7500 Dated: September 23, 1982 l

l i

- - - m--- -. -

t UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION i

BEFORE THE ATOMIC SAFETT AND LICENSING BOARD i

In the Matter of: ) Docket Nos. 50-329 OM

) 50-330 OM CONSUMERS POWER COMPANY ) Docket Nos. 50-329 OL (Midland Plant, Units 1 & 2) ) 50- 330 OL CERTIFICATE OF SERVICE I, Michael I. Miller, hereby certify that copies of Applicant's RepLase To New Stamiris Contention Based On 4

FES in the above-captioned proceeding have been served upon all persons shown in the attached service list by deposit in the United States mail, first-class postage prepaid, this ,

23rd day of September, 1982.

]

Y u f, . 4 Michael I. Miller i

Isham, Lincoln & Beale Three First National Plaza Suite 5200 Chicago, Illinois 60602 (312) 558-7500 1

I

o SERVICE LIST Frank J. Kelley, Esq. Steve Gadler Attorney General of the 2120 Carter Avenue State of Michigan St. Paul, Minnesota 55108 Carole Steinberg, Esq.

Assistant Attorney General Atomic Safety & Licensing Environmental Protection Div. Appeal Panel 720 Law Building U. S. Nuclear Regulatory Comm.

Lansing, Michigan 48913 Washington, D.C. 20555 Myron M. Cherry, Esq. Mr. C. R. Stephens One IBM Plaza Chief, Docketing & Services Suite 4501 U.S. Nuclear Regulatory Comm.

Chicago, Illinois 60611 office of the Secretary Washington, D.C. 20555 Mr. Wendell H. Marshall 4625 S. Saginaw Road Ms. Mary Sinclair Midland, Michigan 48640 5711 Summerset Street Midland, Michigan 48640 Charles Bechhoefer, Esq. William D. Paton, Esq.

Atomic Safety & Licensing Counsel for the NRC Staff Board Panel U.S. Nuclear Regulatory Comm.

U.S. Nuclear Regulatory Comm. Washington, D. C. 20555 Washington, D.C. 20555 Dr. Frederick P. Cowan Atomic Safety & Licensing 6152 N. Verde Trail Board Panel Apt. B-125 U.S. Nuclear Regulatory Comm.

Boca Raton, Florida 33433 Washington, D.C. 20555 James E. Brunner, Esq. Jerry Harbour Consumers Power Company Atomic Safety & Licensing 212 West Michigan Avenue Board Panel Jackson, Michigan 49201 U.S. Nuclear Regulatory Comm.

Washington, D.C. 20555 Mr. D. F. Judd Lee L. Bishop Babcock & Wilcox Harmon & Weiss P. O. Box 1260 1725 "I" Street, N.W. #506 Lynchburg, Virginia 24505 Washington, D.C. 20006 i Barbara Stamiris 5795 North River Road Route 3 l

Freeland, Michigan 48623 l

l l

..