ML20070U444
| ML20070U444 | |
| Person / Time | |
|---|---|
| Site: | Seabrook  |
| Issue date: | 01/09/1991 |
| From: | Bardin D ARENT, FOX, KINTNER, PLOTKIN & KAHN, HOLYOKE, MA |
| To: | FEDERAL ENERGY REGULATORY COMMISSION |
| Shared Package | |
| ML20070U421 | List: |
| References | |
| NUDOCS 9104090056 | |
| Download: ML20070U444 (32) | |
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l Attachment 4 _
o UNTIED SI'ATES OF AMEIUCA BEFORE THE FEDFJtAL ENERGY REGUIATORY COMMISSION Northeast Utilities Senice Company) Docket Nos. LC9010 000 (Re Public Sonice Company of New) ER90143 000, ER90144-000 Hampshire) ) ER90145 000, and EL90 9 000 1:
BRIEF OF Tile CITY OF HOLYOKE GAS & ELECTRIC DEPAR'IMENT ON EXCEPTIONS a
DAVID J. BARDIN EUGENE J. MEIGHER 8'IEVFE R. MTIFR NOREEN M. LAVAN Areut, Fox, Kintner, Plotkin & Kahn 1050 Connecticut Avenum, N.W.
4 Washington, D.C. 20036 5339 (202) 857-6089 Attomeys for the City of Holyoke Gas Os Electric Department c
January 9,1991 t
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. E9tIEF .' 'fGkE ON FJCEP'110NS Table of Contents f_!'E Table of Contents . . . . . . . . .,................ 1 Table of Authorities . . . . . . . . . ................11 INTR O DUCTIO N . . . . . . . . . . . . . . . . . . . . . . , . . . . . 1
..................... 2 STATEMENT OF THE CASE A. City of Ilolyoke Oas & Electric Department ("IIG&E") . .. 2 HG&E As a Transmission Dependent Utility (*TDU*) of NU. 2 B.
C. HG&E's Vulnerability to NU's Direct Retail Competition with NU Through NU's Subsidiary liolyoke Water Power Company ('NU HWP'). . ................... 3 D. The App . cation and Procedurkl llistory . . . . . . . . . . . 5 LIST OF EXCM'lONS TAK'sN ........... ....... 5 5tEVIEW, . . 7 POLICY r'ONSIDERATIONS WARRANTING COMMIhO ARGUMENT ,..........,......... ........ 8
- 1. THE MERGER APPLICATION SilOULD DE DISAPPROVED ... 8 II. IF TfIE MERGER IS TO DE APPROVED. THE PUDIJC INTEREST REQUDIES AS A CONDITION TIIE DIVESTITURE OF NU's RETAIL DUSINE3S Wm(IN llG&E's SERVJCE TERRITORY AND NEW HAMIGIEDE CORRIDOR RELIEF . . . . . . . . . . . 9 A. Legal Stardards .......................11 B. Changen to HG&E NU Competition Resulting from the Merger 12 C. New Hampshire Corridor Plan ("NHCP") Relief . . . . . . . 16 III. IV THE MERGER IS TO BE APPROVED. THE TUDLIC INTERFST EEQUIRES AS A CONDmON THE IMPOSmON OF CONDmONS
'LiPLEMENTINO PROTECTIONS OF TDUs OF NU . . . . . . . . 16 IV. THE INmAL DECISION FAHS 'IO PROVIDE ADEQUATE TRANSMISSIOM ACCESS FOR ALL AND RELATED PROTECTIONS AS '10 TRANSMISSION TARIFF RATES . . . . . . . . . . . . . 17 A. Irehequacy of Transmission Rate Level Protection . . . . . 17 B. Inadequate Disclosure of Transmission Rates Borne by NU Native Load . . . . . . . . . . . . . . . . . . . . . . . 19 V. THE IhTTIAL DECISION FAIIS TO ASSFES ENVIRONMENTAL IMPACTS . . . . . . . . . . . . . ..............20 VI. 'ITIE INmAL DECISION TAKES TOO NARROW A VIEW OF 'ITIE COMMISSION'S CONDmONINO POWERS . . . . . . . . . . . . . 22 CONCLUSION .............................28 Chart A Organization Chart of NU and Operating Subsidiaries '
Chart D: HWP/HP&E Interaffiliate Transactions (1989)l5]
Chet C HWP/HP&E Interaffiliate Transactions (1989)[MWHI Chart D: Form 1 data used in Charts B and C
i TABLE OF AlmIORrmE JUDICIAL CASEE Aspen Skilnc Co. v. Aspen Highlands Skiing Corp., 472 U.S.
585 (1985). .,............................19 Brown Shoe Co. v. United States, 370 U.S. 2D4 (1962) . . . . . . . . . 15 Calife;nla v. American Stores Og, ,,_,,, U.S. 110 S. Ct.
1863 (1990) ..............................11 9),,y t of Chanute v. Kansas Gas & Electric Company, 564 F. ~
~
Supp.1416 (D. Kan.1983), aff'd on this issue, 754 F.2d 310 (10th Cir.1985). . ... ... .................19
,Qonsolidated Gas Co. of Florida v. O!.ty Gas Co., 880 F.2d 297 (11th Cir.1989). ............-............19 Delaware & Hudson Railway v. Consolidated Rail Corp., 902 F.2d 174 (2nd Cir.1990) ... . .. .........,...........19 FPC v. Conway Coro.. - 3 U.S. 271 (1976) . . . . . . . . . . . . . . . 10 Fort Pierce Utilities Av ority of the City of Fort Pierce
-v. FERC, 780 F.2d 778 (D.C. Cir.1984) . . . . . . . . . . . . . . 18 Culf States Utilities Co. v. FPC, 411 U.S. 747 (1973), r,ch'g demed. 412 U.S. 944 (1973). .....................11 Kg.n,,a, as Power ; & 1.irht Co. v. FPC. 554 F.2d 1178 (D.C. Cir.
l'J77). . . . . . ... . . . . . . . . . . . . . . . . . . . . . . .-. . . 11 Lorain Journal Co. v. United States, 342 U.S.143 (1951). . . . . . . . 11
. Pacific Power & Light Co. v. FPC,111 F.2d 1014 (9th Cir.
1940). . . . . . .-. . . . ... . . . . . . . . . . . . . . . . . . . . . . 1 United States v. E.I. duPont de Nemours & Co., %6 U.S. 316 motion dente5 366 U.S. 956 (1961). . .-. . . . . . . . . . . . . . 8, 11 1
United States v. i3 f iffith, 834 U.S. 100 (19481. . . ' . . . . .. . . . . 11, 15 Enited States v. Philadelphia National Bank .- 874 U.S. 321 (1968) . . . .' . . . . . . . . . . . . . . -. . . . . . . . . . . . . 11 Woods Exploration & Production Co. v. - Aluminum Co. of America.
438 F.2d 1286 (5th Cir.1971), reh's oented,1973 Trade Cases 1 73,597, cert. denied, 404 U.S.1047 (1972) . . . . . . . . . 19 AmTNISTRA'!YVE ORDERS Columbia Gulf Tra umianlon Co..- 89 FERC 1 61,835 (1987). . . . . . . . -14 Customer Use of Sles 4. e-ice, 76 F.C.C.2d 61 (1980). . . . . . , . . 14 Northeast Utilities Service Co.. 52 FERC 1 61,336, 52 FERC ; 1 61,097 (1990), petition for rev. filed gb nom
- City of Holyoke Gas & Electric Department v. FERC, No.
901565 (D.C. Cir, appeal filed Nov. 26,1990) . : . . . . . . . 4 , 18 11 .
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Second Co[nputer inautry, 77 F.C.C. 2d 384 as modLfied on f.econsli, 84 F.C.C.2d 50 (1980), further modified on ;
recon. tid., 88 F.C.C. 2d 512 (1981),' afrd sub nom. l Computer and Communications industry Association v. FCC, ,
- 693 F.2d 198 (D.C. Cir.1982), cert. denied, 461 U.S. 938 !
(1983) . ... . . . . .........................14 i Southern California Edison Co., 49 FERC t 61.091 G989) . . . . . . . . 21 Texas Eastern Transmission Corporation. 37 FERC t 61,260 (1986) . . . . .. . . .........................14 Transcontinente.1 Gas Pipeline Corporation, 3d FERC t 61,165 (1987) . . . . .........................14 . 14 United Gas P_ipe Line Company, 39 FERC t 61.152 (1987) . . . . . . .
Utah Power & Light Qo , 45 FERC t 61,095, 47 FERC 161,209 (1989), petition for rev, filed p,3b nom Environmental Action et al. v. FERC, No. 891333 et al. . . . 17, 22 FI'ATU'IYE AND REGULA'!10NS 18 C.F.R. 5 380.46)(1) (1990) . . . . . . ...............22 18 C.F.R. t 385.711 (1990) ........................1 18 C.F.R. - l 385.711(b)(1)--(1990) . . . ...................1 Clayton Act -l 7,15 U.S.C. I 18 (1988) . . .......... . . . . 11 Federal Power - Act i 203,16 U.S.C. 6 824b (19881. . . . . . . . . 5, 17 6 203(a),16 U.S.C. I 824b(a) (1988) . ................22 6 203(b)i 16 U.S.C. $ 824b(b) (1986) . . . . . . . . . . . . . . . . .6, 7. 22 Federal Power. Act i _205,16 U.S.C. 6824d (1988) . . . . . . . . . 17 j
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UNTIED ErrATtE OF AMERICA BEFORE 'ITIE FEDERAL EMERGY REGULA'!ORY COMML9SION Northeast Utilities Service Company) Docket Nos. EC9010 000.
(Re Public Service Company of New) ER90143 000. ER90144 000
!!upshire) ) ER90145 000, and EL90 9 000 BRIEF OF 'IIIE CITY OF HOLYOKE OAS & ELECTRIC DEPARTMENT ON EXCEM10NS Pursuant to Rule 711 of the Rules of Practice and Procedure,18 C.F.R. $
Se3.711, the City of Holyoke Gas & Electric Department (*HG&E*) hereby files its brief on exceptions to the December 20, 1990, initial Decision (*1.D.*) of the Presiding Administrative Law Judge (*A1.1*).1/
- 1 INTRODUC'I10N Unregulated corporations may merga unless third parties initiate judicial antitrust proceedings to block the merger. Not so electric utilities. Conuess assigned responsibility to this Commission for prior approval of mergers fort the purpose of insuring against public disadvantare through. the reoutrement of a showing _that mergers ... will not result in detriment to consumers or investors or to other legitimate nutional interests. [ Emphasis added.]
Pacific Power & Light Co, v. PPC,111 F.2d 1014,1016 (9th Cir.1940). Applicant has not made that showing of no detriment to the consumers served by HG&E (or other New England consumers served by utilities other than NU and PSNH). The record does not support or justify a finding of no such detriment from the merger as proposed or as further cotiditioned by the I.D.
1/ To be reported at 531ERO 163,020. Citations herein are to the slip decision, cited as *I.D. at ,,_." In order to avoid needless duplication and simplify Commission consideration of these proceedings, HG&E is joining in four briefs on exceptions.
- 'Ihis brief involves HG&E alone: HG&E also joins in three other briefs, presented by multiple parties, as follows: BRIEF OF THE TRANSMISSION DEPENDENT UTILITIFE ON EXCEPI10NS, BRIEF OF PRINCIPAL NEW ENGLAND INTERVENORS ON EXCEPTIONS, and BRIEF ON EXCEPTIONS ON BEHALF 0F EIGHTMASSACHUSETTS UTILITYSYSTEMS. Asummaryof thisbrieflaseparatelyboundpursuanttoRule711(bXI).
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firATEM.ENT OF TIIE CATE A. City of 11olyoke Goe & Electric (kymrtment (*IIG&E')
IIG&E is a municipally owned electric and gas utility which serves over 20,000 electric customers (meters) in the City of liclyoke, Massachusetts. In 1988, IIG&E's peak load exceeded 57 MW and its sales exceeded 262,000 MWH. Operating reven <s of the Electric Division were $24,750,216 and operating expenses were
$22,783,263. Ex. 383.
HGkE maintains over 1100 miles of power lines, tr.cluding a 115 kV line interconnected at its two extremities with the transmissien network af Northeast Utilitics Company's (*NU's') operating subsidiaries.El llG&E's 115 kV ilno onrateo in parallel with NU's 115 kV lines tying the Mount Tom Generating Station (owned by SU subsidiary llolyoke Water Power Company, 'NU.HWP ' and located in the City of Ilolyoke) to the New England grid.El B. IIG&E As _ a 'Thmemlanton Thedent Utility ('TDU') of NU HG&E is not interconnected with any utility other than NU's operating subsidiaries (NU.HWP and Western Massachusetts Electric Company,'WMECO'), and is, therefore, totally dependant on NU for its electri' nl dealings with the rest of the world. Ex. 381 at 2. Accordingly, HG&E is a transmission dependent utility ("TDU')
of NU. See LD. at 50 61. HG&E has pumhased unit power transmission services from NU for about twenty years. HG&E clso buys and will continue to need 4
transmission services by Public Service Company of New Hampshire ('PSNH'), as explained below.
2/ As used herein, NU refers either to the parent holding company or, collectively, to the parent and/or the affiliated subsidiaries.
H/ Ex.127; Ex. 381 at 3; Ex. 383; Ex. 601.A.
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3 IIG&E generates only about 5 percent of its total energy supply. Economic efficiency dictates that it buy the rest from other utilities. These suppliers are located in New England, Canada and New York, with NITS generation accounting for only a small fraction of HG&E's supply at this time. Ex. 381 at 1, 2, 3; Ex. 383.
HG&E's resource mix is almost three quarters nuclear and pumped storage (73 percent, compared to 29 percent for New England as a whole),11 percent hydro (compared tc B percent for the region) and only 16 percent fossil fuel (compared to 66 percent for the region), as of 1989. Ex. 383 at 1. !!G&E relien on unit contract purchases. These encompass shares in units of NU, PSNH and other utilities.
HG&E's largest single source of supply, which accounted for 36 percent of its energy supply in 1989, is the Point Lepreau nuclear power plant in New 11runswick, Canada, owned by New Brunswick Hydro Electric Commission. Ex. 383 at ,
- 1. Transmission of that economical power to HG&E requires transmission access via five utilities: two utilities in Maine, PSNH, New England Power Company ("NEPCO")
and the existing NU.
C. HG&E's Vulnerability to NLPs Direct Retail Competition with HG&E
'thr-L=h NITS Subsidiary Holyoke Water Power Company ("NU.HWP')
One of those NU operating companies, NU.!!WP, not only generates and transmits bulk power but also sells at ret.all to industrial customers in the City of Holyoke, in direct competition with HG&E.d/ Chart A, appended hereto, illustrates NU.HWP's corporate relationship to the parent NU holding company and to the present operating subeidiaries, including Holyoke Power and E16ctric Compey ('NU.
HP&E') a wholly. owned subsidiary of NU.HWP's.El Charts it, C and D show the il Ex. 376 (Leary) at 1, 2, 7 9; Ex. 380.
5/ NU HP&E transmits and sella for resale. NU.HWP generates, transmits and sells at both retail and for resale. This confusing corporate structure by which NU does (continued...)
4-circular web of inter affiliate transactions of NU IIWP and these other NU companies, as well as its retail sales, based on 1989 Form 1 data of which we ask the Commission to take official notice.5/
NU llWP's retail rates are neither regulated nor published. Ex. 376 at 7,8.
The retail revenues of NU HWP exceed $8 million a year. Ex. 378; Chart B.
This unusual situation, involving direct competition by NU.llWP for the l l
largest customers and high load factor loads in IIG&E's retail service territory, is l particularly dangescas sur HO&D A :y :.nhancement of NU's ability to squeeze !!G&E by raising its costs could have severe economic detriments to IIG&E, Ex. 376 (Leary)
I at 8. Such harm could ensue even if 11G&E eventually secured judicial or administrative relief, during lag periods before litigation and resolution. Id. at 9.
Past NU actions indicate a readiness to impose abrupt price increases on 11G&E, Ex. 381 (Allen) at 4 5; Ex. 376 (Leary) at 5 6. In 1988, on a very short notice, NU uralaterally quadrupled (almost quintupled) NU's transmission rate for its part of the transmission path for liG&E's Point Lepreau power supply. I,d. 2/
h/(... continued) business eludes explanation, much less justification. NU's transmission service bills to !!G&E come from Connecticut Light & Power Company, with which liG&E is not interconnected, as well as from Northeast Utilities Service Company.
9/ See Ex. 378 for 1988 Form 1 data. Commission ratemaking generally attempts to use a consolidated cost of service of all NU operating companies combined. Bec Ex.
Gil at 3 (Whitfield), Ex. 612 at 2U, Ex. 614 at 1U (Whitfield).
2/ Two yearo later, with these proceedinga pending before the Commission, NU
' moderated" its stand and "merely doubled' the pre 1988 rate. Ex. 376 at 6 (lines 19 22). In the interim, HG&E felt obliged to pay what NU demanded (even though NU did not file rate schedule amendments with the Commission) bewaust of the stiff NEPOOL deficiency assessments it. would otherwise face if it had no transmission contract with NU. 6e, e NEPOOL Agreement, Ex. 603, 6 9.4; Ex.123 (Schultheis) at 53 58, also 46 58; Tr. 2779 88; Ex.123 'IT. The Commission's orders accepting NU's 1990 rate schedule filing do not address the impact on IIG&E of the NEPOOL Agreement obligations if HG&E failed to sign a transmission agreement as tendered by NU. , Northeast Utils. Serv. Co., 52 FERC t 61,336 (1990), 52 FERC 161,097 (continued...)
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IIG&E's current contracts to purchase and transmit Point lepreau power will
. expire in 1994. See Ex. 381 at 3. !!G&E is negotiating for an extension with its Canadian supplier.1,d. Access to the PSNH *New Ilampshire corridor *' on reasonable terms will be critical to such negotiations.
D. 'Ihe Aoplication and Procedural IIIstory 11G&E adopts the AIJ's *PROCEDURAI,IIISTORY* (I.D. at 6). Docket No.
EC9010 000 involves review of the disposition of facilities owned by PSNH, under Section 203 of the Federal Power Act (the "Act" or 'FPA*),16 U.S.C. 6 824b (1988),
at the instance of Northeast Utilities Service Company, whbh is acting on behalf of its parent's plan of acquisition. As used herein, the " proposed merger
- encompasses such disposition.
IJ!fr OF EXCElmONS TAKEN HG&E excepts- to the following errors of the 1.11.1.
Failure to D' _.==ove the Prwd Jh A. The conclusions that the proposed mergar, as conditioned therein, would be concistent with the pu'olic interest and that the appilcation should be conditionally granted.
Failure to R==Am Divestiture of NU HWP Retail Sales or Provide Special
'Ordtsther' ReHer As to Continued PSNH's Trancisalon of Power from New Brw.ick Am== ting for 86% HG&E's Energy Ra-ly. upon Contract Renewal B. h conclualon that no " grandfather
- relief need be provided for existing PSNH transmission customers of power from New Brunswick beyond the cristing contract expiration date.
2/(... continued)
(1990), petition for rev filed s_ub u nom City of Holyoke Gas & Elec. Dept. v. FERO, No. 901565 (D.C. Cir, appeal filed Nov. 26, 1990).
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L 6-C. The conclusion that !!G&E seeks any condition that is not required to offset the anticompetitive effect of market power accruing to NU in consequence of the merger, in order to would better !!G&E's position as compared to the status ouo a,n}g the merger.
D. The conclusion that divestiture of NU's retail sales in direct competition L with HG&E is not necessary in this proceeding.
4 E. The conclusion that relief allegedly conferred by the J.D. on all the NU TDUs as a class would obviate the articompetitive impacts of the merger in relation to NU's direct retail competition with HGkE.
Failure to implement blief for TDUs F. The failure to implement for TDUs as a clan the relief necessary to overcome the anticompetitive effects found by the 1.D.
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G. We reliance on on going settlement negotiations between certain TDUs of NU and NU as a reason for failure to implement specific relief to their claat..
Failure to Provide Adeounte Transmisaloe Arvens for All H. The feiture to provide an assured machanism by which a merged NU/PSNH will render transmission services to all, consistent with the public interest.
L The failure to specify an interim tariff or to require that the merger not be consummated un'til NU has submitted tariff filings pursuant to Sections 203 and 205 of the FPA acceptable to the Commission and placed into effect, subject to refund.
J. The failure to specify that NU's transmission tariff rates be st.oject to refund without refund floor (or, at the most, to a refund floor equivalent to the transminion retes that would have applied if the transmission were conducted subject to the NEPOOL Agreement).
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7 K. The failure to provide an assured mechanism by which the Ccmmission and all interested parties can readily determine hew much NU retail native load customers pay for NU's transmission services, of various entegories of firmness.
Environmental and Other Errors L. The failure to weigh, or even assess, the environmental impacts of the action of approving the merger (either es proposed or as furthe- conditioned), r including cumulative impacts concerning construction and operation of transmission and generation facilities.
M. The conclusion that Subsection 203(b) of the FPA is the only source of conditioning authority appilcable to this case.
N. The other errors of commission and omission recited in the exceptions in the other briefs on exceptions in which HG&E joins.
M)12CY CONSIDIGIA'ITONS WAIULAN'!1NG COMMISSION REVIEW NU, the largest utility in New England, proposes to become even larger and achieve new levels of strategic control with the acquisition of PSN11. %e I.D.
correctly concludes that the proposed merger, as proposed and modified by NU, would lead to concentration of control of critical transmission corridors and surplus generation capacity and likely lead to the exercise of mnrket power by the merged company, to the detriment of the other utilities in New England .. and the public they serve. %e I.D. also correctly concluded that TDUs of NU would be especially vulnerable to the exercise of such market power by the merged company as a result of the merger.
IIG&.E is particularly vulnerable to exercise of such market power because (a) It is a TDU with which NU competes directly at retail, for industrial loads within the City of Ilolyoke (including the largest, high load factor loads), in addition to the forms of competition with other TDUs (el, to acquire new power supplies; to I
8 attract large retall customers to the service territory), and (b) IIG&E depends on PSNil for transmission of IlG&E's largeet unit purchase, which accounts for 30 percent of !!GkE's total energy supply.
However, the !.D. fa!!cd to discuss, much less acknowldge, ilG&E's particular vulnerability and implemented no mitigation whateser for the TDUs as a class (even while finding that class to be more vulnerable than the rest of New England).
Moreover, the I.D. inadequately mitigated the harms to New England gene ally.
This is an unusually complicated merger case, having little in common with merger proceedings recently conaldered by the Commission. Abbreviated deadlines set for this case make it imperative that the Commission review the I.D. on exceptions.
ARGUMENT
- 1. TIUC MERGER APPUCA'nON SHOULD llE DISAPPROVED
'!he anticompetitive impacts of the merger established in the record, fcad by the A1.1 and amplified in the briefs on exceptions in which IIG&E joins, are so great that the merger should be disapproved. As explained in the PRINCIPAL NEW ENGLAND INTERVENORS' BRIEF ON EXCEPTIONS, Part 1.B., conditional epproval te unnecessary to get a viable PSNH out of bankruptcy, contrary to the !.D.'s finding.
The Comminshn has no duty to save this merger, and should so hold. As the Supreme Court has declared: 'It cannot be gainsaid that complete divestiture is peculiarly appropriate in cases of stock acquisitions which violate 6 7 lof the Clayton Act).'El NU has not met is burden of proving why the normal renedy of forbidding a merger that is against the public interest should not be imposed, g/ United Staten v. E.I. duPont de Nemours & Co.,366 U.S. 316,328, mot!an denied, 366 U.S. 956 (1961),
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II. IF TIIE MEltGElt B 'IO IlE APPROVED, Tl[E PUllLJC INTEltlNr HEQUIILES AS A CONDfnON TIIE DIV1STITURE OF NU's RETTAII,11USINini WITIIIN IIG&lTs SERVICE TERRTIORY AND NEW 11AMPSIIIRE CORIUDOft REllEF 11G&E prefers that the merger be disapproved and the etntun gug maintnined.
Ex. 376 at 2. In that event, NU would continue to compete with IIG&E for large industrial loads in the City of Holyoke but would not gain market power. If, however, the Commission decides to approve the merger conditionally (and NU decides to go ahead with the merger), ilG&E asks that this direct retail competition be taken out of the hands of the merged utility on which flG&E will be so dependent and shifted to a utility that would compete on equal terms with HG&E. In that event, the Commission should impose the following condition (Condition HG&E.8) which the AIJ erroneously rejected:
NU shall either (a) divest its subsidiary fiolyoke Water Power Company (HWP) as a whole or (b) dispose of all of the facilities and operations of IIWP for the retail sale of electricity (in which case, NU may cause the remaining facilities of liWP to be acquired by its subsidiary Western Massachusetts Electric Company). Within 3 months of the Commission's order herein, NU Companies shall file with the Commission notice of the divestiture plan selected and shall apply for all requisite regulatory approvals. %ereafter, NU Companies shall diligently prosecute such applications.
This condition is necessary because the merger woold greatly strengthen NU.HWP's hand against HG&E, as explained below.8/
Without discussing HG&E's reasons for that condition, the I.D. ruled agua,i HGkE 'llinsofar as' it ' seeks to bolster its own competitive posture,' and held that HG&E 'is covered by the protection given the TDUs, and is entitled to no more in 9/ HG&E has consistently advocated a condition of divesting NU of NU.inVP's electric retail business throughout the proceeding. S_ee Ex. 376 at 2 and 7 9, Ex.
378 at 1, Ex. 379 at 1-4, Ex. 380 at 123. %c condition recognizes that NU would have to gain approval of other agencies, notably the Securities & Exchana,e Commission ('SEC") under the Public Utility Holding Company Act of 1935, in order to implement the' condition and provides for promptly initiating that precess.
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10 this regard.' I.D. at 50. Unhappily, the latter point pro"ed chimerical because the A1J failed to implement any such protection for the TDUs as a class.1.D. at 50 51.
As to the first point, HG&E does not seek to bolster its " esent, pre merger competitive position; it preference is to preserve that posture rather than have the l'
Commission try ta devise mit!. gating r snditions to offset the detriments.M/ In the hurry to get out an initial decision, the A1J simply overlooked the devastating ways in which the merger would worsen llG&E's present competitive posture. Ses D.,
below, l
ne proposed merger would be no onerous to liG&E, and would impose so grossly unfair an advantage for l' competitor at retail, NU.HWP, as to be :
l inconsistent with the public interest. This competition, for large industrial loads, including high load factor, high margin customers, is sensittoa to the supplier's costs.
After the merger NU would be in a position to exploit market power to increase HGkE's costs (and presect NU's own retail and competitive interests in Holyoked.U
.. for example, by terms it offers or delays it imposes in rendering New Ilampshire Corridor transmission service. he Commission can promote the public interest by eliminating NU's incent',ve to t. ., )in improper self dealing. NU should be required to give up its NU.IIWP stronghold.
HG&E also asks that the merged company be required to continue to provide, out of its entitlement, transmission by PSNH on a " grandfathered
- basis of the New Brunswick unit power, which acconmte for 36 percent of HG&E's energy supply, even after the current contract expi-es in 1994 (as HG&E negotiates power renewals).
M/ Even if such conditions could be designed, implementation would inevitt.bly and most imperfectly depend on good faith of the merged company, ultimately subject to cumbersome and uncertain administrative or judicial proceedings.
JJ./ pf. PpC v. Conway Corp., 426 U.S. 271 (1976), as to like concerns even when there is no direct, head to head retail competition - as there is in Holyoke.
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A. Icen1 St.andartis The Clayton Act anticompetitive standard applicable to federal reviews of mergeralEl is not whether NU's proposed acquisition willlesen competition. Rather, the relevant standard is whether the effect of the merger 'm,,,,,n,y be substantially to lessen competition, or to tend to create a monopoly *12/ The proposed combination would enable NU to increase IIG&E's costs of doing business, would dimiaish IlG&E's competitive effectiveness and would strengthen NU.liWP's opportunities to earn unregulated profits. The result "mny be substantially to lessen competition.'
NU's propensity to increase market dominence is not speculative. The record demonstrates a past attempt by NU's subsidiary in liolyoke to take over ilG&EMI and a current interest in taking over any and every utility in the region.
Ex. 370, p. 8, lines 1314; p.e_s Principal New England Intervenors' Brief on Exceptions, Part H. The FERC should not stand by and waten as the merger further strengthens NU's- dominant hand.lEl Those anticompetitive effects should be neutralized by a suitable antitrust remedy. Divestiture is the classical antitrust remedy.lS/Separating NU.IIWP's retail business from the merged company will eliminate NU's incentive to extend market power to this retail market. See United States v. Griffith, 334 U.S.100 (1948).
1.2 / Gulf States Utils. Co. v. FPC, 411 U.S. 747, 758 60 (1973), reh'c denied, 412 U.S. 944; Kansas Power & 1Arht Co. v. FPC, 554 F.2d 1178,1184 (D.C. Cir.1977).
lal Section 7 of the Clayton Act,15 U.S.C. 618 (emphasis added). S,,,e,e United States v. Philadelphin National Bank, 374 U.S. 321 (1963).
14/ 'Itat take over attempt occurred shortly before NU.IIWP joined the then.new NU holding company system, with NU absorbing NU liWP's managers.
Ig/ See lerain Journal Co. v. United States, S42 U.S.143 (1951).
13/ Un'.ted States v. E. I. Du Pont de Nemours & Co., suprn; California v. American Stores Co., U.S. _ , 110 S. Ct. 1853, 1859 1861 (1990).
- 12 -
B. Changes, to IIG&E NU Competition flesultihr fmm __the Mercer Continuation of retail competition within the City of liolyoke by a different utility that lacks market power would appropriately prevent the harm that ilG&E foresees. Leaving IIG&E exposed to retail competition by the swollen and strengthened NU would impose a great detriment on ifG&E's customers.
Combining NU and PSNH will cut ilG&E's competitive options significantly.
The impact will be severe becauae llG&E depends on purchased power for 95% of its total suppi"(Ex. 371 at 7) and relics heavily on PSNII transmission of delit tries from non.NEPOOL units in New Brunswick and Maine. The severe impact on ilG&E will be compounded by NU'a ownership of NU.IIWP, a utility unregulated as to retail rates (Ex. 376 ct 7; Ex. 370), which competes directly with IIG&E at the electric retail load level within the City of liolyoke.El The New Ilampshire Corridor Plan ("NilCP*) confers very limited
" grandfather" rights with respect to transmission of 36 percent of IIG&E's total enerty suppls. Once the PSNH contract for such transmission expires, even if New Brunswick Hydro Electric Commission (*NBHC") were willing to extend tha sale on attrac.tive terms beyond 1994, the merged NU/PSNH could exercise market power to HG&E's detrime.nt. The A14's rigid limits (g, the arbitrary 10. year increments, I.D.
at 415 72, and the constrained size, I.D. at 38 39) are liable to deny HG&E direct benefit. (for example, if NBHC is amenable to a 4. year extension, but not to a renewal lasting for the 10 years of the NHCP). As a result, HG&E may have to i
U/ 'Ihat unique head on. head electric sales competition for loads w thin the City of Holvoke is additional to three other forms of competition by HG&E: yardstick competition in electricity retail sales *vith other NU subsidiaries limited to retail service territories outside Holyoke; natural gas sold as fuel for cogeneration and self generation by NU.HWP retail electricity customers; and gas sales to con utility generators (*NUGs') who may compete with NU's marketing of surplus power at the wholesale level. See, e.g., Ex,383 at 2; Ex. 380, Item 1, memorandum dated June 18, 1987, to Cagnetta et al.
l
- - - _ _ _ . . - . . ._ - - =-- .- - . . _ . . - - - _ - - . _ - -
l l
1
- 13 - l l
I depend on the merged company's implementation of purchases from NU/PSNH of part of their entitlement or of waiting for problematical expansions. NU's retall-competition interest in aqueer.ing !!G&E will be added to the merged company's stake in selling excess generating capacity at above. market rates as incentives to oppress i
HGkE, neithe,r of which could have motivated PSNH absent the merger, or, in fact, in past negotiations.
Yen for monopoly rents and fear of ynrdstick competition may spur NU to in, jure any nearby electric utility's competitive position, llowever, llG&E's head to-head competition with NU HWP gives NU even stronger incentives to act against ,
HG&E. Ex. 376 at 7.
IIG&E's Manager, George E.1,cary, testified to ways the merger would make matters worse. Ex. 376 at 8 9. HG&E's ability to provide aconomical electricity supplies to its customers depends on competition among suppliers of electricity and of transmission service. Ex. 383 at 2. IIG&E buys over 95% of the electricity it delivers from other utilities and expects to continue to purchase power. Ex. 381 at 13; Ex. 383 at 2. Today, it can and dues buy from either NU or PSNH, and it plans to continue doing so in the future. Ex. 383 at 1; Ex. 376 at 5, lines 20 23. As power supply contracts expire, HGdE must extend or replace them, whether or not it experionces load growth.
NU and PSNH, the two largest suppliers of surplus power in New England, dominate power supply and are expected to continue to do so for years to come.
Their merger will thus restrict HG&E's competitive options for bulk powee purchases.1El Indeed, witness Reynolds, who served in the Justice Department's
!!/ Ex. 372 at 22, lines 313 (Wilson direct); Ex. 520 at 6, lines 18 22 (Reynolds direct); Ex. 265 at 33. lino 24 p. 34, line 10 (Kamerschen direct). Ex. 261 at 23, line 25 24, line 7 (Bigelow); Ex. 381 at 7, lines 22 24 (Allen).
4 14 Antitrust Division, suggested that divcatiture of surplus generating capacity (as by an auction, without restrr:4 might be necessary to remedy anticompetitive effects of the merger. Ex. 520 t' A lines 1112.
NU's refusal to continue supplying peaking capacity unten llG&E also buys bundled base load service (via
- Slice.of System
- sales) illustrates the way in which a strengthened NU may be expected to take advantege of weaker entitice such as llG&E, Ex. 376 at 4 5. FERC experience in naturni gas regulation illustrates the anticompetitive effects of bundling a variety of utility services (such as sales, storage, and transportation), as does other regulatory experience.19/ NU's recent bundling of services previously offered gnbundled (b, unit.by. unit) by NU (and other New England utilities) exemplifies a regressive devalognent which NU is likely to extend to PSNH as well, if the merger is approved. S3c Ex,376 at 5, lines 19 23.
HG&E now depends on transmission by NU and, in many instances, other utilities, notably PSNH. However, the pdces it pays and o.her terms for transmission service in a competitive market may be more favorable to the purchaser than terms the Commission would permit a provider to impose. 'Ihat has been the experience in the past. So long as PSNH remains an independent firm. HG&E may be able to negotiate favcrable trknamission service in the future (as MMWEC has done for PSNH transmission of the Point lepreau power Ex. 269 at 24; Tr. 5157 5158, 19/ See, e&, Columbia Gulf Transmission Co.,39 FERC 161,335 at 62,042 43 (1987);
United Gas Pipe Line Company,39 FERC 161.152 at 61.579 (1987); Transcontinental Gas Pipeline C,rporation, 38 FERC 161,165 at 61,510<* ' (' 687); Texas Eastern Transmission Corporation 37 FERC161,260 at 61,714 (191/.: Customer Use of Telex Service, 76 F.C.C.2d 61 (1980) (international record carrwrs' unitary service rate structure); Second Computer Inautry,77 F.C.C. 2d 384, as modified on reconsid.,84 F.C.C.2d 50 (1980), further modified on recoj),sg, 88 F.C.C. 2d 512 (1981), aff'd sub gom. Computer and Communications industry Ass'n v. FCC,693 F.2d 198 (D.C. Cir.
1982), cert, denied, 461 U.S. 938 (1983).
l 1
c
j i
15 comprising 36% of IIG&E's energy supply. Ex. 381 at 2. lines 19 20.). NU control of PSN!! transmission would reduce llG&E's competitive opportunities to do so.
11G&E also competes with NU and PSNil from time to time to purchase electricity. The merger will make an expanded NU a much more formidable competitor for purchased power generated in areas dependent on PSNH transmission (such as Maine and New Brunswick). In this regard, ilG&E has an interest in NUG development, particularly in llolyoke or nearby in western Massachusetts, as a source l of power supply. In order that nearby NUGs may be built at optimal scale, however.
. hey will need access to other markets, especially in Eastern REMVEC, since llolyoke and other small western Manachusetto utilities can offer only a limited increrrental demand for any one project.
In all these respects, HGkE neeks a level playing field in which to compete with NU as a whole and NU.liWP in particular. NU's increased economic concentration and leverage will tilt the field in its favor unfairly and illegally.
Furthermore, the merger will augment NU's already. awesome economic / political power, to the detriment of local control and local interests such as HG&E's, and will threaten values that antitrust principles have been held to protect. Brown Shoe Co.
- v. United States. 870 U.S. 294, 31516 (1962).
HG&E (which is a purchaser in several relevant markets) is also concerned that the merger will allow NU and NU.HWP to extend NU's post merger market-power as a supplier in those snarkets to exploit HG&E's vulnerability in the retail l 1
industrial market withis the City of Ilolyoke.2,,p/ HG&E is vulnerable because it is ;
l unintegrated and small whereas NU is vertically. integrated and very large.
20/ See United States v. Griffith 334 U.S.100 (1948).
l
i 16 C. figw flampshire Corridor Plan (*NilCP') Relief HG&E's unique reliance on PSNil for New llampshire Corridor transmission for SG percent of its energy supply demands special relief. The AI.I shrugged off expiring " grandfather
- rights to transmission of power from the Pt. LePreau units in New Brunswick, Canada.1.D. at 08 39, in the case of flG&E, however, special relief is warranted. %ls highly reliable, low cost source is a mainstay of !!G&E's supply which is vital to HG&E's operating efficiently in competition with NU.
Such relief would require to PSNH to transmit, on a
- grandfather *. type basis, any extensions beyond 1994 of HG&E purchases from the New Brunswick Ilydro Electric Commission ("NBilC*). Rese llG&E rights should not be subject to arbitrary limitations, such as the 10. year increments provision (I.D. at 41), but rather should allow HG&E to obtain the transmission service it needs from PSNH to match extensions offered by NBilC, After all, NBHC may offer extensions for different periods. HG&E's rights would come out of NU/PSNH's share of the Corridor, and could be wholly spart from allocations to utilities throughout New England.U/
Absent the merger, HG&E would be negotiating to extend transmission arrangements with PSNilin step with power supply negotiations with New Brunswick.
And PSNH would have no incentive to collude with NU m conducting those negotiations. Indeed, as explained above, past negotiations with PSN!! have resulted in a very beneficial transmission agreement now in effect. %e merger would alter PSNH's incentives to HG&E's detriment, necessitating the relief in question.
III. IF 'mE MEROER E '!O BE APPROVED, MIE PUBIJC IN'IEREST REQUIRES AS A OONDmON 'ITIE IMPOSmON OF OONDmONS IMPLEMEN'!1NG PRO'IEC'I10NS OF TDUs OF NU l
HG&E's arguments are set forth in other briefs in which it joins.
M/ here is no need to implict.te NEPCO in this special relief.
L l
17 IV. 71[E INITIAL DECEION FAI1B TO PROVIDE ADEQUATY: TRAN5MISEION ACCESS FOR ALL AND RE1ATED PitOTYL'110NS AS TO TRANSMISEION TARIFF RATES The 1.D. erred by inadequately providing for an aamured tariff mechanism by which a merged NU/PSNH will render transmission services to all, consistent with the public interest. Although the 1.D. requires NU to file a trasmission tariff, it falls to go further to provide either of the following remedies which are necessary to make tariff relief meaningful and timely:
(1) It fails to specify provisions of an interim tariff; and (2) it falla, to require that the merger not be consummated until NU has submitted tariff filing 9 pursuant to Sections 203 and 205 of the FPA acceptable to the Commisalon and placed such tariff into effect, subject to refund. The foregoing issues are argued in other briefe in which HG&E joins.
A. Inadocng.cv of Tranamlasion Rate Icvel__ Protection in addition to the foregoing, the 1.D. fails to provide adequato protection as to NU's transmission tariff rate levels. %ese rates should be subject to refund
'without refund floor,' as the Commission prescribed in Utah Powge_& licht Co.,45 FERC 161,095 at 61,303 (1988),47 FERC 161,209 (1989), petitita mr rev. filed sub ngyn Environmental Action et al. v. FEHC, No. 89 1333 ej gl. (D.C. Cir., argued October 16, 1990).2,2/
The need for, and sophistication about, adequate NU transmission rate conditions has grown acute during the course of this case. We merger tariff, as 2J/ If the Commission concludes there are grounds here to reject its Utah Power &
Licht precedent, supra, it should, at the most, establish a refund floor equivalent to the transmission rates that would have applied if the transmission were conducted .
I subject to Section 13 of the NEPOOL Agreement (Ex. 603). Ex. 368 (Russell) at 9, Ex. 477 (Moskovitz) at 29,1518, and Ex. 479 (C. Lee) at 2122 recommend the PTF EHV rate of 613.4 alone. The present, alternative recommendation, would allow as n l refund floor the rates arising under 613.4 plus 6613.3,13.5 and 13.6, watch could ,
be higher, i l
I s
1 i 1 .
y'! -
18 l_
l supported by some of the intervenors and Staff, initially provided a rate of $22.89
' per kW. year for firm r,crvice and over $11 for non. firm service, it th now clear that firmness of service by NU is not a black or white matter. The record establishes, for example, that NEPCO's *non. firm" tariff provides a firmer service than NU offers L as ' firm
- or
- preferred
- service.M/ There are several gradations of firmness. The
- Trial Staff has recently presented testimony recommending that proposed NU ' cost. l based" rates of $26 and $24 per kW. year be reduced, respectively, to $15 and $11 as the appropriate, cost. based rates for those supposedly
- firm" NU transmission services.M/ hese disparities presage the extent of the disputes to be anticipated as i to the correct rate levels under transmission tariffs.
In this proceeding, NU and an intervenor, CMEEC, recently filed (on November 29,1990) a renegotiated contract (gte I.D. at 50) with a cost based rate; that contract represents at least as firm a service as NU prosides to any unaffiliated customer, and is priced at $14.79 per kW. year. %e unit costs computed by NU and Staff witnesses in this case were much higher.
he issues as to appropriate transmission tariff rates were not definitively explored on this record. Moreover, New England presents the kind of
- tight' power
~
pool that may require a distinct approach to transmission rate making. Egg Chief Judge Wald's opinion in Fort Pierce U',ils. Authority of the City of Fort Pierae v.
SEQ, 780 F.2d - 778, 784 (D.C. Cir.1984),
d g/ - NEPCO witness Bigelow indicated that NEPCO providec 4 higher quality (b.-
F firmer) afirm' service than NUs ' firm
- or ' preferred
- service (Tr. 466162) even though NU charges roughly three times NEPCO's price. Comparing Ex.123 RR at 2, NO'IT,2 (' Preferred Service *] rates ($24.27 per kW. year) with Tr. 4596 (48 9; Bigelow cross).
'24J See prepared direct testimony of Donald J. Zero filsd November 1,1990,' in-Northeast Utils. Serv. Co., Docket Nos. ER90 390 000 gt 13. at 19, 20.
t L . _-.,_ _. _ .a...___-...._. .. , _ . . _ _ , . . _ . _ _ _ _ - . . _ _...-_ _.._ 2._...
19 Yet the anticompetitive irr. pacts of this proposed merger cannot be mitigated adequately unless appropriate transmission tariff service is made available, on known and reasonable terms, before consummation of the merger. Et. 381 at 6; Ex. 477 at 27 29. As llG&E witness Roger Allen testified:
- Transmission access can be denied or constrained by excetsive transmission rates. .... Efficient planning should be based or. reasonable and predictable transmission rates. Ex. 381 at 8. And as NU witness Kalt admitted (Tr. 2148; Ex. 55.F), post. merger transmission rates that are too high will discourage or block efficient transmission, having an anticompetitive effect directly comparable to dental of transmission service.2,fg . 1 If the merger is conditionally approved, a subsequent rate proceeding will be I necessary to test and implement NU's tr . , mission tariff. Such a proceeding should j be conducted promptly, but carefully and thoroughly, with no pre. conceptions as to appropriate rate methods or levels, and with no refund floor.
B. (nadamate Disclosure of Transminalon Rates Borne by NU Native lonc!
One of the most troublesome issues is avoidance of discrimination against NU's FERO vruMeted transmission service customers. Much has bee.'. anid !r. this record in the abs ract about how much NU's native load customers pay for 25/ Anpen Skiing '.'.o. v. Aspen litchlands Skilne Corp.,472 U.S. 585,592,594 (1985)
(denial of accesa, found despite defendant's offer to grant access if plaintiff would accept 12.5% split of multi. mountain lift ticket revenues); Consol. Gas Co. of Florida
- v. City Gas Co., 880 F.2c' 297, 299 (11th Cir.1989), aff'g 665 F. Supp.1493,1512 (S.D. Pla.1987) (refusing b transport gas except at prices in excess of cost amounted to a refusal to deal); Woods Exploration & Prod. Co. v. Aluminum Co. of America. 438 F.2d 1286,1801,1806 99 (5th Cir.1971), reh'r denied,1971 Trade Cases 1 73,597, cert, denied, 404 U.S.1047 (1972) (pipeline's refusal to transport natural gas unless an overriding royalty was pold held equivalent to be an absolute refusal);
City of Chanute v. Kansas Gas & Elec. Company,564 F. Supp.1416,1419,142344 (D.
Kan.1983), aff'd on this issue, 754 F.2d 310 (10th Cir.1985) (refusal to wheel unless customer agreed to new contract that provided increased rates treated as a refusal to whee:); Delaware & Iludson Ry. v. Consolidated Rail, 902 F.2d 174,179180 (2d ,
Cir.1990)(applying the essential facilities doctrine, the court held that 'there need not be en outright refusal to deal in ord ir to find that dental of an essential facility occurred. It is sufficient if the offer to deal are unreasonable.*).
l 20 transmiulon service (tre !.D. at 29); however, nothing has actually been demonstrated I
4 about the real payments by such retail customers and the bases foi their calculation.
A practical disclosure mechanism is ese ital. Divestiture of the NU j transmission facilities in a separate NU operating compnny (or companies) would assure total
- transparency' of the transmission service rates that NU rei.lly charges its native load customers. T at is beccuse the local distribution utilities would enter into contracts, to be fined as PERC rate schedules, for those services. The !.D.
rejected that solution (at 49 50). It failed to discuss, however, llG&E's fall back position: At the very least, the Commission should pren.cribe a reporting requirement by which NU would demonstrate exactly how its native load customers are charged for the tra.wmlu.lon components (presumably bundled) of the various firm and non.
firm retail services offered to them. Then Staff and all interest parties could be 1
appropriately guided in FERC transmiarian rate cases. 'Ihis is vital information which the largest utility in New England should be required to provide annually in easily comprehensible and readily available form.
This merger poses a problem of saarket power. Transmission access, at eppropriate pro competitive, nondiscriminatory rates is one of the essential ingredients to solve that problem. - Accordingly, the Commission should not hesitate to isnpose conditions on NU (if it chooses to merge) that do not apply to other public utilities.-
V. THE'INmAL DEQBION FAllE '!O ASDES ENVIRONMENTAI IMPACf!S Availability (or unavailability) of transmission will have environmental impacts and costs. NU rebuttal witnesses Sawhill and Kalt called attention to impacts of the decision to be made herein on alting of transmission and location of
l -
- 21 -
t c generation facilities.2SI And, at oral argument, counsel for NU called attention to environmental costs related to construction of transmission facilities; he qualified a commitment that NU be b,und by cost estimates for transmission facility
-enhancements if state agencies later imposed costly environments! conditions
- (between the time of the e2timate and the time of construction).EII
'Ihe evidentiary recoel and the 1 .D. reveal that the issues presented by the application and being decided-in this case, including transmission access, hVs commitment to construct transmission facilities, pricing principles for transmission enhancement and sales of excess generation by the merged company, may profoundly affect the location of new generation facilitica and the construction of high. voltage transmission facilities in a large region. Ee.g. g ,l.D. at 28, 30 35, 37, 40, 43.
Construction of such facilities, and their location, are bound to have significant cumulative environmental impacts.
Yet the !.D. falls to weigh, or even assess, the environmental impacts of this major recommended action approving the merger (either as proposed or as further conditioned). On a case by. case basis, the Commission may, and does, conduct appropriate environmental reviews in connection with major merger proposals; such
- reviews may follow the A1.I's decision ,C,,f. Southern California Edison Co.,49 FERC 161,091 at 61,361 63 (1989); Approval of the application in this proceeding calls for such a review, because approval of this merger will redraw the future transmission gg/ E Ex. 226 at 16 20, including 17 (lines 21 22),19 (lines 22 23); Ex. 91 at 178 74,177.
27/ - 1.'D. at 33; Tr,- 7264, 7306 7307, 7308, 7313 7316.
i-
---v ..-a., v.w.., :-v,. w.,h w . ,..,.m.,y%..#m, , . , , , . . , , ,,p.., p . , . . , so e 'm._-
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o 22 -
and generation maps of New England.M/ Now is the opportunity to select an environmentally V.nsitive and efficient program, with adequate mitigation.
VI. 'IIIE INITLA1, DECISION TAKES 'IDO NARROW A VfEW OF 'I1IE COMMISSION'S CONDITIONINC POWERS The AIJ identified Sobt.ection 20'J b) of the F'PA as the only source of conditioning nothority applicable to this case.1.D. at 24. That provision is limited to such terms and conditions as the Commission " finds necessary or appropriate to e,ecure the maintenance of adequate service and the coordination in the public interest of facilities subject to the jurisdiction of the Commission.* !!owever, in addition to Subsection 203(b), the Commission has held that it rin.y save a merger that is not consistent with the public interest by imposing whatever conditions are needed to satisfy the test of Section 203(a) even if not based on adequar.y of service or coordination. Utah Power &_ Licht Co., 45 FERC t 61,095 at 61,280 83 (1988),47 FERC 161,209 (1989), petition for rev. filed sub nom Environmental Action et al. v. FERC, No. 89 1333 g M. (D.C. Cir., argued October 16, 1990). The I.D.'s rejection of intervenor conditions reated on too crabbed an understanding of the Commission's conditioning power.
El Indeed, Commission regulations provide for formal reviews in just such unusual instances. 18 C.F.R. 6 380.4(bX1). At the time that NU filed its application, it was probably not readily apparent to the Commission how significantly approval (conditional or unconditional) of the proposal might impact the environment. The i development of the record now makes that clear. In the circumstances, the
- Commission should address ther.e impacts. Q Utah Power & Licht Co.,47 FERC 1 l 61,209 at 61,734 88 (1989), petition for rev. filed sub nom Environmental Action et al.
i v. FERC, No. 89 1333 g aj. (D.C. Cir., argued October I.G.1990). The Utah opinion l
does not address the question of timeliness; in contrast, the separate ainion of l Trabandt, Commissioner, distinguised between the timeliness of environmen6alissues raised as to the merger application itself and the lasues arising as a result of l
additionn! conditions developed during the proceeding. Ld. at 61,770 771. Here, both sets of impacts are properly before the Commission in the unusual circumstances of this case. Moreover, here, in contrast to Utah, NU's own commitments, as well as their expansion by the I.D., ' require construction.' id, at 61,735.
I
-4
+ 23 -
CONCLtHON For the foregoing reasons, these exceptions should be granted and the proposed merger should be disapproved or, if the Commission decides to approve the merger, the conditions set forth herein and those incorporated in other briefs on exception in which HGkE joins should be imposed, etfully subm ted 1 1& .
DAVID J. BARJ$1N EUGENE J. MEIGHER STEVEN R. MILES NOREEN M. LAVAN
- Arent, Fox, Kintner, Plotkin & Kahn Connecticut Avenue, N.W.
Washington. D.C. 20036 5339 (202) 857 6089 Attorneys for the City of Holyoke Gas & Electric Department Dated: January 9,1991 I
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- CHART B iHWP/, HP&E INTER-AFFILIATE!
TRANSACTIONS (1989)
ELECTalc PURCIIASES,' SALES AND INTERCliANGES
($)
h inter Affiliate Transactions
$30,235,000 Unamliated Utilities &
NEPEX : IlWP llP&E _
Unamilated
$7,6 S11,967,000 Utilitics Exchange (Net) , -
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$5,944,000 56,767,000 y -
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+
- TRANSACTIONS-(1989) 4 .
ELicTalc PURCHASES, SALES AND INTERCHANGES (MWH),
4 1
Inter-Affiliate Transactions
, w s A 1,098,759 4 "
Unaffiliated 'i _
Utilities &
- NEPEx ?' HWP HP&E _ Unarfiliated
- 153,238 ' '417,996 Utilities Exchange (Net) 9
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FERC FORM 1 DATA RELIED ON FOR CHMtTS B AND C
^ ~
HWP 1989 FERC FORM 1 FORK 1 SOURCE
$ MWH [PAGE;LINE]
Sales to HP&E Sale 796,508 3,961 310-111; 4 :
HP&E'Interchance 29,438,051 1,094,798 328 329; 6 l TOTAL HP&E 30,234,559 1,098,759 NU Interchange 5,943,952' 381,816 329-329; 4-3 .tuaffiliated Utilities:
City of Chicopee- 7,505,945 153,545 310-311; 10 NEPEX Exchange (Net) (14,964) (307), 328-329; 12 a
- TOTAL ~ 7,490,981 153,238 Retail Customers 8,979,830 119,485 300-301; 11
- Purchases from:-
$ MWH ,[IAGE;LINE]
l Sales-tos
=;
-HWP. Interchange 11.,599,958 429,957 328-329; 2 s
4 UMk:CO.; Interchange 6,766,642 250,806 328-329; 5 7
.(Unaffillated Utilities- 2796,508 3 961. 310-311; 3
, 1 Town'.ofrSouth Hadley
'NEPCO Interchange 11,170,346 _ 414,035 328-329;-12
. TOTAL 11,966,854- 417,996- .
300-301; 11 g.q JRetail-Customers '
PurchasesIfrom:
1 HWP 796,508 3,961 326-327; 3 :
HWP': 29,438,051 1,094,798 325-327; 5
-TOTAL HWP- 30,234,559 1,098,759 326-327; 11 1 i
1 i
1 i
- -y , e g
)
4 CERTIFICA'IE OF SFRVICE I hereby certify that I have this day caused.to be served the- foregoing BRIEF OF 'IHE CITY OF HOLYOKE GAS & ELECTTRIC DEPAR'IV"NT ON EXCEPTIONS upon all persons on the Nestricted Service List in accordance with the requirements of Rule 2010 of the Commissic,n's Rules of Practice and Procedure (18 C.F.R. I 885.2010).-
Dated at Washington, D.C., this 9th- day -of- January 1991,-
Lavid ARENT,'J. Bardin FOX,K {INTNER, Pl.OTKIN & KAHN
.1050 Connecticut Ave., N,W,
- Washington, D, C. 20036 5339 Counsel to City of Holyoke Gas & Electric Department e
3 9
b 6
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