ML20077P673
| ML20077P673 | |
| Person / Time | |
|---|---|
| Site: | Davis Besse, Perry  |
| Issue date: | 09/13/1988 |
| From: | Goldberg R CLEVELAND, OH, GOLDBERG, FIELDMAN & HJELMFELT |
| To: | NRC COMMISSION (OCM) |
| Shared Package | |
| ML20077P653 | List: |
| References | |
| A, NUDOCS 9108190075 | |
| Download: ML20077P673 (50) | |
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^ UNITED STATES OF AMERICA BEFORE Ti!E NUCLEAR-REGULATORY COMMISSION In the Matter of )
)
THE CLEVELAND ELECTRIC ) Docket Nos. bO-440A i ILLUMINATING COMPANY )
and 50-346A
)
and )
)
TOLEDO EDISON COMPANY. )
(Perry Nuclear Power Plant, )
Unit 1, and Davis-Besse )
Nuclear Power Station, Unit 1) )
i' TO: Chief, Policy Development and Technical Support Branch, Office
. Of Nuclear Reactor Regulation
(
COMMENTS OF CITY OF CLEVELAND, JIIIO, IN OPPOSITION TO APPLICATION FOR SUSPENSION OF OPERATING LICENSE ANTITRUST CONDITIONS Reuben Goldberg Kenneth M. Albert Goldberg, Fieldman & Lotham, P.C. -
1100 Fifteenth Street, N.W.
Washington, DC 20005 Telephone: (202) 463-8300 Marilyn G. Zack Director of Law June W. Wiener Chief Assistant Director of Law William M. Ondrey Gruber Assistant Director of Law City Hall, Room 106 601 Lakeside Avenue Cleveland, Oli 44114 Telephone: (216) 664-2800 Attorneys for City of Cleveland, Ohio e
September 13, 1988 9108190075 910730 PDR ADOCK 05000440 M PDR
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- , . 4 TABLE OF CONTENTS PMl!'
I. CENTERIOR'S APPLICATION........................... 2 II. OVERVIEW OF TilESE COMMENTS........................ 3 III. CENTERIOR'S APPLICATION IS A TilINLY-VEILED ATTEMPT TO RENEW PERVASIVE ANTI-COMPETITIVE CONDUCT.......................... '.
IV. Tile NRC LACKS Tile STATUTORY AUTiiOR-ITY TO GRANT Tile REQUESTED RELIEF................. 11 V. NRC REGULATIONS DO NOT AUTHORIZE SUSPENSION OF ANTITRUST LICENSE CONDITIONS................... 14 VI. CENTERIOR'S ARGUMENTS ARE PRECLUDED............... 18 A. Res Judicata Bars The Relief Sought By Centerior........................... 18 B. Alternatively, Collateral Estoppel Bars The Relief Sought By Centerior........... 23 C. Laches Bars The Relief Sought By Centerior........................... 24 VII. THE ANTITRUST PROVISIONS OF TIIE AEA WERE NOT BASED ON AN EXPECTATION THAT NUCLEAR POWER WOULD BE LOW COST........................... 28 A. Le g i s l a t iv e 111 s t o ry . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 k B. Judicial And NRC Precedent.................... 32 VIII. Ti!E EVENTS CITED BY CENTERIOR DO NOT UNDERMINE THE BASIS OF TIIE ANTITRUST LICENSE CONDITIONS...................... 34 A. Increased Cost Of Nuclear Power............... 35 B. Emergence Of AMP-Ohio And Other Cor4petitore......................... 38 IX. IF THE NRC DOES NOT SUMMARILY REJECT CENTERIOR'S APPLICATION, TiiE APPLICA-TION SHOULD BE SET FOR llEARING AND SIIOULD NOT BE PERMITTED TO GO INTO EFFECT DURING Tile HEARING.............. .......... 42 VII. CONCLUSION................................... .. . 45
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UNITED STATES OF AMERICA BEFORE THE NUCLEAR REGULATORY COMMISSION In the Matt r af )
)
THE CLEVELAND ELECTRIC ) Docket Nos. 50-440A ILLUMINATING COMPANY ) and 50-346A
)
and )
)
TOLEDO EDISON COMPANY )
(Perry Nuclear Power Plant, )
Unit 1, and Davis-Besse )
Nuclear Power Station, Unit 1) )
TO: Chief, Policy Development and Technical Support Branch, Office Of Nuclear Reactor Regulation COMMENTS OF CITY OF CLEVELAND, OHIO, IN OPPOSITION TO APPLICATION FOR SUSPENSION OF OPERATING LICENSE ANTITRUST CONDITIONS The City of Cleveland, Ohio (" Cleveland"), files these comments in opposition to the application submitted by The Cleve-1 d Electric Illuminating Company ("CEI") and Toledo Edison Com-pany (" Toledo") in which they ask the Director of Nuclear Reactor Regulation ("NRR") to suspend the antitrust license conditions imposed by the Nuclear Regulatory Commission ("NRC"). For ease of reference, the two applicants are referred to as Centerior Energy Corporation ("Centerior"). Centerior is a holding company created in July 1985 as a result of the merger of CEI and Toledo.
Centerior owns all of the common stock of the two utilities.
Centerior asks that the suspension of the conditions apply only
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4 to it as co-owner of the Perry Nuclear Power Plant Unit 1
(" Perry")1/ and the Davis-Besse Nuclear Power Station Unit
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(" Davis-Besse"). As shown below, the application should be sum-marily rejected.
I. CENTERIOR'S ?.PPLICATION Centerior says that its application is submitted pur-suant to 10 C.F.R. SS50.90 and 2.101. Centerior asks NRR to amend the l'erry and Davis-Besse operating licenses "by suspending the antitrust conditions imposed therein" (App. 1). At the out-set of its application, Centerior cites (App. 3) the companion application submitted by Ohio Edison on September 18, 1987 seek-ing the same relief and says that " Ohio Edison's arguments apply with equal force to CEI and TE.' Relying heavily on Ohio Edi-son's arguments in its application, Centerior argues that there are two grounds for suspension of the antitrust conditions.
First, Centerior says that both (1) the 1970 Amendments to the Atomic Energy Act ("AEA"), Pub. L. No.91-560, clarifying the NRC's authority to impose antitrust license conditions,. and (2) the decision by the NRC to impose the antitrust conditions in this proceeding, were based on the expectation that nuclear power would be low cost and would, thereby, exacerbate the market power of nuclear licensees. Centerior argues that nuclear power is 1/ In addition to Centerior, there are three co-1icensees:
Ohio Edison Company (" Ohio Edison"), Ohio Edison's wholly-owned subsidiary, Pennsylvania Power Company ("Penn Power"),
and Duquesne Light Company ("Duquesne"). For ease of refer-ence, Contorior's application is cited as " App." whenever specific pages are referred to. For example, page 8 of the brief is cited as " App. 8'
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high cost and, hence, there is no statutory basis for continued imposition of the antitrust conditions. Centerior asks the NRC to summarily grant its request for relief on this ground.
Centerior states that if the NRC rejects this argument, the requested relief should be granted because the " competitive environment in which TE and CE1 operate has substantially and materially changed in the years since the antitrust license con-ditions were imposed" (App. 4). Centerior argues that (1) "the electric industry Vithin the ecmbined CAPCO service territories has been completely restructurod", (2) "[njuelear generation has proven to be vastly more costly than anyone did foresee or could have foreseen ten years ago", and (3) "[t]he emergence of a major independent power withi n CEI's and TE's service territories has created power supply opportunities that did not exist ten years ago" (App. 22-23).2/ Centerior argues that the NRC can and should issue the requested relief immediately pending completion of an evidentiary hearing to address the material factual issues raised by this alternative basis for relief (App. 42-46).
II. OVERVIEW OF THESE COMMENTS Cleveland operates Cleveland Public Power ("CPP"). CPP is primarily an electric distribution system which supplies elec-2_/ CAPCO is an acronym for the Central Area Power Coordination group formed in 1967 by CEI, Toledo, Ohio Edison, Duquenne and Penn Power. The CAPCO members agreed to engage in (1) operational coordination by, inter alia, exchanging power and sharing reserves, and (2) developmental coordination by planning their future generation and transmission facilities as if the pool's requirements were those of a single power system.
tric power in approximately 3S percent. of Cleveland's area and to approximately 22 percent (about 50,000) of the electric consumers in Cleveland. CEI is the only utility to which Cleveland is in-terconnected.
Cleveland actively participated in all stages of t.he prolonged NRC proceeding which culminated in the imposition of the antitrust conditions challenged by Centerior. The background of this proceeding is described in detail in Cleveland's answer to Ohio Edison's application filed in September 1987 in which Ohio Edison seeks the same relief -- suspension of the antit. rust license conditions applicable to Perry -- as sought by Centerior in connection with Perry and Davis-Besso. Briefly, the antitrust.
conditions stem from a proceeding in which the NRC consolidated construction permit applications by the CAPCO members to con-struct Perry 1, 2 and 3 and Davis-Besse 2 and 3.3/ The Atomic Safety and Licensing Board (" Licensing Board") found that the CAPCO members had engaged in pervasive anti-competitive conduct.
5 NRC 133 (1977). Therefore, the Board concluded t. hat antitrust.
license conditions should be imposed to require the CAPCO members to (1) permit other utilities to purchase nuclear power or a share of the nuclear plants, and (2) provide coordination, pool-ing and wheeling services. These findings were af firmed by t.he Atomic Safety and Licensing Appeal Board (" Appeal Board"). 10 NRC 265 (1979). The Appeal Board modified the Licensing Board 3/ On January 22, 1980, the CAPCO companies cancelled Davis-Besse 2 and 3. Construction of Perry 2 was indefinitely suspended in 1985.
! , J 5-f decision by imposing additional antitrust conditions. As a direct result of the antitrust license conditions challenged here, Cleveland and other municipally-owned systems in Ohio have for the first time been able to purchase power from alternative power suppliers and wheel this power over Centerior's facilities.
In its answer to Ohio Edison's application, Cleveland showed that there is no legal or factual basis for the relief sought. Specifically, Cleveland showed that the NRC does not have the statutory authority to suspend an antitrust license con-dition subsequent to the conclusion of the operating license pro-ceeding (pp. 24-52). Cleveland went on to demonstrate that even putting aside this statutory bar, the requested relief is unjus-tified. Cleveland noted that res iudicata and collateral estop-pel preclude the application because Ohio Edison raised, or could have raised, the arguments in its suspension application during the operating license proceeding (pp. 53-81). Cleveland also showed that laches bars the relief sought by Ohio Edison because (1) Ohio Edison unjustifiably delayed seeking the relief, and (2)
Cleveland would suffer severe and undue prejudice because of the delay if the relief were granted (pp. 82-86).
Cleveland then demonstrated that the events cited by Ohio Edison do not undermine the legal or factual basis of the NRC's decision to impose the antitrust license conditions.
Cleveland noted that the provisions in the AEA authorizing the NRC to conduct a prelicensing antitrust review were based on con-corns of Congress that operation of a nuclear plant would in-crease the licensee's control of both generation and transmis-
sion (pp. 89-88). Congress was aware t. hat a nuclear plant. gen-erates a vast amount of power and that extensive high voltage transmission facilities would be constructed in conjunct. ion wit.h a nuclear plant to transmit this power. Congress wanted to on-sure that this increase in market power could not be exploited by a licensee to engage in anti-competitive conduct, especially be-cause federal funds were used to develop nuclear power technol-ogy. Thus, the antitrust review provisions of the AEA were not.
based on expectat' ions regarding the relative cost of nuclear power.
Cleveland then showed that the events cited by Ohio Edison do not undermine the concerns underlying the NRC decision _
to impose the antitrust conditions in this proceeding (pp. 110-17). The Perry and Davis-Besse plants have expanded the control which their owners enjoy over power generation and transmission facilities. Cleveland pointed to the extensive transmission facilities constructed by the CAPCO members to connect Perry and _
Davis-Besse to their existing transmission network. Consequent-ly, the antitrust conditions are still needed to ensure that this control is not used by the CAPCO members to renew t. heir anti-com-pet.itive conduct which ceased only because of the imposit. ion of the conditions.
On July 5, 1988, Ohio Edison filed a response to the comments filed by Cleveland and other parties in opposit lon to Ohio Edison's application.
Again, Centerior relies heavily on Ohio Edison's argu-monts in its application and response t o comment s Cent erior
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makes it clear that the two applications represent a coordinated effort to defeat the antitrust conditions. Consequently, in order to provide a comprehensive response to Centerior's applica-tion, Cleveland responds to the arguments prebented by Cente.fior as well as the arguments by Ohio Edison in its response to the comments. To avoid repetition, Cleveland incorporates by refer-ence its response to Ohio Edison's application. The arguments by Cleveland in its answer to Ohio Edison's application apply with equal force here.' This answer addresses only new arguments raised by Centerior and Ohio Edi. son.
III. CENTERIOR'S APPLICATION IS A THINLY-VEILED ATTEMPT TO RENEW PERVASIVE ANTI-COMPETITIVE CONDUCT The relief sought by Centerior would suppress the com-petitive forces which were only able to emerge because of the antitrust conditions. The express goal of the AEA, as stated in Section 1 of the Act, is to " strengthen free competition". 42 U.S.C. 52011. The 1970 Amendments were designed to offectuate
-this goal by clarifying the mechanism for prelicensing antitrust review to ensure that activities by a licensee do not " create or maintain a situation inconsistent with the antitrust laws." 42 U.S.C. S2135(c)(5).
In implementing this goal, the NRC has reviewed the activities of over ninety licenseen. Antitrust license condi-tions have been imposed in thirty-six licenses. Prior to imposi-tion of the condi.tions, most of the licensees, including the CAPCO members, refused to provide whouling or other bulk power
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-antitrust conditions gave smaller utilities interconnected with i
the licensee access for the first time to purchase power from alternative suppliers. In its answer in opposition to Ohio Edi-son's application, the American Public Power Association notes (p.- 3):
[ Antitrust license] canditions benefit several hundred public power systems across the country.
'n Ohio alone, at least 76 locally owned electric utilities depend on the antitrust conditions con-tained in the Perry and Davis-Besso nuclear plant licenses.
In its answer to Ohio Edison's application, Cleveland outlined the numerous contractual commitments it has made to purchase power from alternative suppliers in reliance on the access to wheeling services guaranteed by the antitrust conditions (pp. 42-45).
This, in turn, has introduced competitive forces in
-electric markets. Competition is needed to effectuate the goals of the AEA and to provide incentives for efficient operations.
As one commentator has noted:
Every scholar who has analyzed the structure and performance of the electricity industry has con-cluded that effective competition cannot exist in the bulk. power market without mandatory equal ac .
cess to transmission fccilities.
(citations omitted) R. Pierce, A Proposal To Deregulate The Mar-kot For Bulk Power, 72 Va.L.Rev. 1183, 1215 (1988) (hereinafter referred to as " Bulk Power").
The pervasive anti-competitive conduct by the CAPCO j members which justified imposition of the antitrust license con-i
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ditions demonstrates the importance cf the conditions to mainten-ance of competition. In its answer to Ohio Edison's application, Cleveland reviewed the findings of the Licensing Board and Appeal Board regarding the anti-competitive activities by the CAPCO mem-bers (pp. 7-21). Not surprisingly, both Ohio Edison and Con-terior, in arguing for suspension of the antitrust license condi-tions, do not focus on the NRC's findings. Ohio Edison buries these findings in an appendix. Centerior does not even mention the findings. The Applicants also conveniently fail to mention that only as a result of the antitrust conditions have the CAPCO members permitted Cleveland and other similarly situated munici-pal systems access to wheeling and other services.
Indeed, Centerior and Ohio Edison make it plain that they do not like dealing with the competitive forces unleashed by the antitrust conditions. In its application, Centerior decries the purported injury to the public caused by the decision by municipal systems to purchase the cheapest power available, even if sold by sources other than the CAPCO members (App. 15, 23, 32-33). Centerior tells us that competitive forces "will lead to an erosion of [its] municipal sales markets" (App. 23). Centerior also proclaims that suspension of the antitrust conditions would mean that Cleveland could no longer " avoid the cost burdens of nuclear power". Thus, the Applicants state in a clear and un-equivocal manner that the purpose of their applications is to put an end to competition and to restore the Applicants as the ex-clusive power suppliers in their respective geographic areas.
Recent actions by the CAPCO members reflect. their de-
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sire to renew anti-competitive activities. In April 1988, Ohio Edison submitted a filing to the Federal Energy Regulatory Com-mission ("FERC") in Docket No. ER88-329 purportedly to implement a settlement agreement with AMP-Ohio concerning the terms under which Ohio Edison would sell power to AMP-Ohio.4/ FERC found that Ohio Edison was trying to impose unilaterally restrictions on the sales service agreed to by the parties as a result of the antitrust conditions. 43 FERC 561,316 (1988). Specifically, Ohio Edison sought to renege on its agreement to offer the whole-sale customers a choice of full or partial requirements service.
Id., pp. 61,882-883. Ohio Edison also sought to unilaterally preclude the purchasers from selling the power to wholesale cus-tomers. Id. Consequently, FERC rejected the filing.
In its answer to the suspension application submitted by Centerior and Ohio Edison, AMP-Ohio points to other efforts by the utilities to frustrate efforts by municipal systems to in-crease their purchase options.EN Thus, the relief sought by Centerior and Ohio Edison is 4/ AMP-Ohio was incorporated in 1971 as a non-profit corpora- ,
tion for the purposes, among others, of generating, pur-chasing, acquiring, transmitting and selling electric power and resources to, and promoting the interests of, municipal electric utility systems in Ohio. It is operated on a coop-erative basis for the mutual benefit of its members, each of which is a political subdivision of the state of Ohio that owns and operates an electric utility system. Of the eighty-four municipal electric utilities in Ohio, seventy-five are AMP-Ohio members, including Cleveland. All twenty-one of the municipal electric systems in the Ohio Edison service territory are members of AMP-Ohio.
5/ AMP-Ohio answer to Centerior's suspension application, pp.
7, 11 (filed July 13, 1988); AMP-Ohio answer to Ohio Mdi-son's suspension application, pp. 15-16 (filed Apri1 6, 1988).
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part of a thinly-veiled attempt to renew the-anti-competitive >
conduct found by the-NRC to be repugnant to the goals of the AEA.
The arguments in their applications must be read in light of
'these objectives.
IV. THE NRC LACKS TiiE STATUTORY AUTilOR-ITY TO GRANT THE RE, QUESTED RELIEF In its answer to Ohio Edison's application, Cleveland reviewed the legislative history of the 1970 Amendments and showed that Congress limited the NRC's authority to review the antitrust impact of a nuclear license to two occasions: the con-struction permit proceeding and operating license proceeding (pp.
, 25-48). Cleveland discussed the decisions in which the NRC pointed to the-legislative history and recognized that it cannot modify the antitrust conditions in any way subsequent to the op-erating-license proceeding.E Centerior (App. 10-14) and Ohio Edison (pp. 12-15) re-spond by arguing that Congress was only concerned about ensuring tlurt nuclear utilities, not their customers, could rely on anti-trust-license conditions imposed by the NRC. As a result, they argue, Congress only intended to preclude imposition, not l . deletion, of additional antitrust conditions outside the purview I
l of an antitrust review during the construction permit and opera-L l ting license proceeding.
1/ See, e.g., Houston Lighting & Power Co., et al. (South Texas Project, Unit Nos. I and 2) (" South Texas"), CLI-77-13, 5 NRC 1303 (1977); Florida Power & Light Co..(St. Lucie Plant, Unit Nos. 1, 3, 4 (" Florida Power"), ALAH-428, 6 NRC 221 (1977).
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Centerior and Ohio Edison overlook the plain meaning of AEA Section 105(c) and the policies underlying the 1970 Amend-monts. An " antitrust review" within the meaning of AEA Section 105(c) occurs whenever the NRC reviews whether there is a "rea-sonable probability" that activities by an applicant pursuant to a license would "contraven[e). . . the antitrust laws or the policies clearly underlying these laws." li . R . Rep. No. 91-1470, 91st Cong. 2d Sess., reprinted in 1970 U.S. Code Cong, & Ad.
News 4981, 4994 (1970) (hereinafter referred to as "1970 llouse Report"). AEA Section 105(c) provides that the NRC can conduct an antitrust review only at two stages. An antitrust review can occur during the construction permit proceeding. A second, more limited, antitrust review can take place during the operating license proceeding to determine if activities by the applicant subsequent to the construction permit proceeding justify imposi-tion of additio. antitrust conditions.
The relief sought by Centerior and Ohio Ediron would require an additional antitrust review. Analysis of the impact of the supervening events cited in the requests for relief would require an analysis of whether there still exists a " reasonable probability" that the licensees will engage in conduct which would "contraven[e] the antitrust laws or the policies clearly underlying these laws." That is just the type of review which AEA Section 105(c) limits to the construction permit and opera-ting license proceeding.
Contorior and Ohio Edison also err by arguing that Con-gress was not concerned about the disruptive impact of elimina-
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tion of antitrust-license conditions.- Again, the express goal of the AEA is to " strengthen free competition", 42 U.S.C. 52011, and to ensure that activities by a licensee do not " create or main-tain a situation inconsistent with the antitrust laws", 42 U.S.C.
S2135(c)(5).
A-utility cannot engage in the long term planning needed to ensure' reliable service unless the conditions governing its access to supply options are stable. Consequently, adoption of the position advocated by Ohio Edison and Centerior that the AEA permits suspension of antitrust conditions at any time would' mean that the conditions could not be relied upon by Cleveland or the other entities interconnected with the CAPCO members. That interpretation-would defeat the very purpose of the AEA to pro-mote competition in electric markets.2 The only NRC decision Centerior can come up with to try to support its position is Radiobiology Research Institute ("Re-search Institute"), LBP-82-24, 15 NRC 652 '1982) (App. 16, n.17).
Centerior cites-Research Institute as support for the proposition
.that "(1]n applying Section 187 to license amendments effected by generic rule, the'NRC has taken for granted its authority under Section 189 to effect license amendments by case-specific adjudi-2/- Cf. FERC v. Martin Exploration Management Co., 486 U.S. __,
100 L.Ed.2d 238,-246 (1988) (rejects interpretation of Nat-ural Gas Policy Act, 15 U.S.C. S3301, et seq., which would l base maximum lawful price on market price of gas, subject to i change on a daily _ basis; notes that "[w]e see no reason for l inferring that Congress intended such a regulatory regime or the disuniformity and administrative difficulties it would entail"); see AMP-Ohio's answer to Ohio Edison's suspension application, p. 20.
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cation." The Research Institute decision addressed a proceeding in which a.llcensee sought renewal of its license to store radio-active material _ pursuant to-10 C.F.R. S30. The issue arose as to whether to grant a- motion to intervene and request for hearing pursuant to AEA Section 189(a), 42 USC S2239(a). Apparently, Centerior-interprets this to mean that the NRC can modify an antitrust condition.
Centerior misinterprets Research Institute. AEA Sec-tion _103(c), 42 U.S.C. S2133(b), expressly provides that a license "may be renewed upon . . . expiration". Thus, the NRC's statutory authority to renew the license was c3 ear and was not disputed. Centerior does not show what possible bearing this provision has on the NRC's authority pursuant to AEA Section 105 to modify or suspend an antitrust condition.
Thus, the NRC lacks the statutory authority to suspend' the antitrust license conditions. Cleveland goes on to show that even if the-NRC has the statutory authority to grant the-relief requested by Centerior, Centerior has not justified the grant of this relief.
V. NRC-REGULATIONS DO NOT AUTHORIZE SUSPENSION 0F ANTITRUST LICENSE CONDITIONS In their suspension applications, Centerior and Ohio SS2.101 and 50.90 as the basis of-JRR's
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- . Edison cite 10 C.F.R.
authority-to suspend the antitrust conditions. As shown below, neither of these NRC regulations grant this aut.hority.
In citing 52.101, Centerior and Ohio Edison refer to
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the Appeal-Board decision in this proceeding. Specifically, they refer to the Board's discussion of the draft of the decision pro-pared by Board member Jerome Sharfman, who resigned prior to the issuance of a decision:
In a number of instances Tur.-Sharfman would, for an indefinite period, " vest _the Licensing Board with continuing jurisdiction" to relieve the Ap-plicants from conditions that might prove an ex-treme hardship or impossible _of compliance. See, e.g., pp. 392 and 398, infra. We agree that li-cense conditions seemingly fair today may prove inequitable tomorrow.- It is not necessary, how-ever, to excend the Licensing Board's jurisdiction to provide for the possibility of such modifica-tions. Commission regulations give the Director of Nuclear Reactor Regulation -- who is assisted by an able antitrust staff -- authority to modify Atcense conditions where necessary and provide as well means for review of his determinations. 10 CPR Sections 2.200-2.204 and Section 2.206. In-deed, the Director has already acted to modify one of the license conditions imposed in this case (albeit not at the applicant's request). We therefore see no occasion to continue the Licen-sing Board's-jurisdiction over aspects of the case. Accordingly, we do not join in the portions of Mr. Sharfman's opinion that would do so.
(footnotes-omitted) 30 NRC at 294-95.
In its comments on Ohio Edison's application, Cleveland quoted Section 2.201 and noted that the sections of the regula-tions cited by the Appeal Board (SS2.200-2.206) simply authorize NRR'"to modify, suspend or revoke a license or to take other ac-tion.for alleged violation of any provision _of the Act or this chapter or the conditions-of this license" (emphasis added).
In its response to comments (p. 11), Ohio Edison ac-cuses Cleveland of " quoting from the wrong section of the Commis-sfon's regulations". Ohio Edison says that Section-2.200 gives NRR the authority to modify antitrust conditions. Section
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2.200(a) states 1, ,,*tinent part: ,
This subpart proscribos the procoduro in casos initiated by the staff, or upon a request by any person, to imposo requirements by ordor, or t< '
inodify, surpend, or revoko a licenso, or to tako other action as may bo proper, against any person subject to the jurisdiction of the Commission.
Cor.torlor asserts that Section 2.206 gives th28 authority to NRR ;
(App. 17, n. 18). Section 2.206(a) states in portinent parts Any person inay filo a request for the Director of Nuclear Roactor Regulation, Director of Nuclear Mhtorial Safety and Safeguards, Director, Offico of. Inspection and Enforcement, as appropriato, to instituto a proceeding pursuant to S2.202 to mod-ify, suspend or revoko a licenso, or for such other action as may be proper.
. Boch Ohio Edison and Centorior misconstrue the NRC reg-ulations. The language of Sections 2.201-2.206 (roferred to here as S2.200, et seq.) clearly indicatos that those regulations on-compass action taken by the NRC to enforce a license against a licensee. Ohio Edison omits the last phrano of Section 2.200 whica clarifjos that the proceduros described in Section 2.200, et Acc., refer to NRC " action as may be appropriato against any person subject to the iurisdiction of the Commission." In prom-u1 gating this r?gulation, the NRC notad that tha regulation
" authorizes enforcement actions against [ licensees and) non-licensed persons who fall within the scope of the Commission's >
statutory authorit y. "O This means that Sections 2.200, et sog.,
do not provido procedures for a licenseo to seck modification of -
I l a license.- This interpretation is supported by Section 2.201 l
l 8/ " Authority to Issue Noticob of Violat1on to Non-Licensees and Delegation of Authority to Regional Administrators", 40 Fed. Reg. 44170, 44171 (Sept. 28, 1983).
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i which requires NRR to issuo "a written notico of violation" to .,
the licensee before taking action pursuant to Sections 2.200, at sog.
Section 2.206 is subject to the samo limitations. The proceduros outlined in Section 2.206 are availablo to "mombers of the public", not licensees.E Moreover, the proceeding must bo ato modify, suspend or revoke a licenso or tako_other onforcement
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Thus, Seetions s 2.200, et seq., of the NRC's regulations do not authorizo NRR to grant the rollof requestod by Contorior and Ohio Edison. In its anewer, Ohio Edison concedes (p. 12) t that "[1)n commenting on the Director's authority, the Appeal Board majority was not creating any now authority. It was simply confirming that authority which already oxisted under the Commis-sion's rulos' (p. 12). Hence, in discussing Mr. Shariman's l draft, the Appeal Board simply clarified that enforcement action can be taken against a licenseo pursuant to Sections 2.200, et sea. !
Section !v.F0 of the NRC regulations also does not au-thorize NRR to grant the relief requested by Conterior and Ohio Edison. Sections 50.90-50.92 (Section 50.90, et seq.) outline 4
the procedures to be uead in reviewing an application by a ))<.on-see to amend a licenso provision. However, those regulati'ans 9/ " Requests To Impose Requirements by Order on a Licensoo, or MN) Modify, Suspend or Revoke a Licenso", 39 Fod. Reg. 12353 (Apr. 5, 1974).
M/ (emphasis added) *Potitions for Review of Director's Donial of Enforcement Roquests", 42 Ped. Reg. 36239 (July 14, 1977).
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4 only encompass amendments involving technical aspect.s of opera-tion of a nuclear plant. In promulgating the regulations, the NRC reforrod to its authority pursuant to AHA Section 103, 42 ,
t U.S.C. S2133, Section 104, 42 U.S.C. S2134, and Soct.lon 161, 42 l J
U.S.C. $2201, Section 102, 42 U.S.C. S2232 and Section 183, 42 U.S.C. S2233. The NRC did not. mention AEA Section 105, which ad- r dressus the NRC's authority to review the antitrust. ramif ications l of a licenso. b In addition, S50.91 requires the NRC to dator- l mine whetP'- the ,amondmont could causo "significant hazards".
This determination clearly has no rolovance to an application to
-amend an antitrust-licenso condition.
Thus, neither S2.100, pt sog., nor S50.90, pt seq., au- i thorize-NRR or the NRC to amend or suspend an antitrust licenso i condition.
VI. CENTERIOR'S ARGUMENTS ARE PRECLUDED A. Hos Judicata Bars The Re-lief Sought By Contorior i
In its answer to Ohio Edison's application, Cleveland ,
showed that the doctrino of res judicata bars the rollef sought by Ohio Edison (pp. 53-78). The Appeal Board has roted t.he ap-plicability to NRC procoadings of the "gonoral principios rela-ting to the application and offact ofa ros judicata:
l Ros judicata,comes into play in circumstancos whero (1) there has baen a-final adjudication of the merits of a particular cause of action, claim, or demand by a tribunal of competent jurisdiction; and (2) one of the parties to that adjudication (or a person in privity with such party) subso-11 / 21 Pod. Reg. 355 (Jan. 19, 1956).
I_..___.____.__.-~..--_.._.._____._....-_.,_....-,...__.-._._-_, . , _
r quantly sooks to advance or defeat the same causo l of action, claim or demand in eithor (a) the samo i suit or (b) a separato suit involving the parties to the first action or their privios. Givon thoso !
circumstances (and subject to tho qualifications to bo discussed below), the earlier adjudication '
is deemed to preclude the " parties and thoso in privity with them, not only as to ovary mattor which was offorod and received to sustain or du-font the claim or domand, but as to any other ad-missible matter which might have been offorod for that purposo".
(citations omittod) Alabama Power Co. (Joseph M. Parley Nuc. lear Plant, Units 1 and 2) ("Farley"), ALAB-182, 7 AEC 210, 212, rov'd on other grounds,'CLI-74-12, 7 AEC 203 (1974). Cleveland showed (pp. 60-62) that res judicata is the applicablo preclusion doc ~
trino hero because Ohio Edison's application arises in the samo proceeding as that in which the antitrust licenso conditions woro i
imposed in connection with both Perry and Davis-Bosso. Cleveland ;
went on to show (pp. 66-78) that Ohio Edison, as a member of CAPCO along with Centorior, presented, or could have presented, during the antitrust review which occurred during the construc- !
tion permit or operating license proceeding all of the factual arguments now made in'its suspension application.
Cleveland noted that CAPCO has continuously monitored the rising costs of Perry and could have cited this data during the cortificate permit and operating license proceeding. The i owners of Davis-Besse had even more information about the cost of-
- operating that plant than Perry. Davis-Besse was placed in ser-I vico in 1977. Perry did not go into service until November 1987.
L Hence, sufficient cost data was available to the CAPCO members during the construction permit and operating license proceeding
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to raino the arguments in tho suspension applicat. ions.
Cleveland pointed to the brief submittod by CAPCO chal- lt longing the Licensing Board's finding that. thoro was a auf ticient l noxus botwoon the licensed activity and tho anti-competit.1vo sit- i untion caused by the CAPCO membora porvasive a nt i-compu t.i t.ivo conduct to justify imposition of antitrust condit.lons pursuant t.o AEA Section 105(c)(5).12/ In the brief, CAPCO st.ated that "what.
f appeared to Applicants savoral years ago to be the superior baso l load choico may no longer be nearly so at tractivo from an eco- ;
nomic standpoi nt.. " (App. Dr. at 127). The portinent port lons of J
the CAPCO briof aro quoted on pago 63 to 66 of Clovoland's answer.
In its answer, Ohio Edison says (pp. 18-19) that. Its ,
argument in its-appeal brief rogarding the rising costs of nuclear power cannot serve as the baulu for applicat. ion of ren judicata. Ohio Edison st.ates that the argument was modo in order t.o support a proposition not raised by it.s suspensjon applica- ,
tions- that thoro was not a sufficient. noxus betwoon CAPCO's anti-competitivo activities and the licensed activit.y_ to just.if y
-imposition of the antitrust 11conso conditions. Ohio Edison sayn (p. 19)_that its argument in its suspension application is dii-forent because it "is in the nature of a jurisdictional at. tack." ,
This purported distinction is specious. In both it.s appeal brief and suspension application, Ohio Edison challengos 12/
- Applicant Appeal Brief In Support of Their Individual And Common Exceptions To The I n i t. i a l Deciolon", submit.ted April
- 14 , 1977 (horoinafter referred to as " App. Br.").
l'
., a . ..
- 21 -
t i
the NRC's authority to imposo antitrust conditions. !
I In any event, the purported distinction is irrolovant. [
The purpose for which CAPCO raised the argument does not matter.
{
Again, ros judicata applies "not only as to every matter which j was offored and received to sustain the claim or demand, but as i to any other admissible matter which might have been offered for f that purpose." Farley, 7 AEC at 212. At tho timo of the con- ;
struction permit proceeding, CAPCO knew that the cost of its i
nuclear power was rapidly rising. Consequently, CAPCO could have i cited this factor during the construction permit procooding to show that the antitrust licenso conditions woro inappropriato.
As a result, ros judicata precludes both Ohio Edison and Con-terior from raising the argument now.
Another purportedly new event cited by conterior -- the emergence of AMP-Ohio as a " major player in the electric utility industry in Ohio" and the emergence of new municipal systems -- ;
also does not prevent application of ros judicata. Imposition of the antitrust licenso conditions gave AMP-Ohio and municipal sys-tems the ability for the first time to purchase power from alter-native sources and to become aggressive power marketers. The emorgence of these competitors was a direct and foreseeable re-As a result, this factor could I sult of the antitrust conditions.
have been raised by CAPCO during the construction permit and op-erating 11censo proceeding.
In its answer to Ohio Edison's suspension application,
, Cleveland went on to show (pp. 66-78) that the other events cited i
by Ohio Edison (and again cited by Centerior) could also have i _ ._ _ _ _ .. _ . _ . _ , _ _ _ _ _ _ _ _._. _ = _._ - ~._ _ . _ _ _ _ . _ . . __
, 1 .e n boon rained during the operating liconnu proconding.
Ohio I:dison noton in it s answer (pp. 21-24 ) that AEA Section 105(c)(2) 11mits ant.itrunt. review at t.ho operating license procooding to ovaluat.lon of whethor "signliicant. changon in the licensoo's act.1vition or proposed activition have occurred sequent. to the [ construct.lon permit. proconding)" which might war-rant imposit.f on of additional antitrust. conditJc us. Ohio Edison arguos that, the oventa cited in itn auspension applicat. ion could not just.ify imposition of additional antitrust conditions during the operating licenso proceeding. According to Ohio Edison, thin means that it had no obligat.lon t.o raiso thoso concerna during the operating licenso proconding.
Ohio Edinon cannot havo it both ways. Ohio Edicon tolla us that tJRR can sunpond an antitrust. condition at. any time. _If so,- t.ho operating licenso procooding must be viewod as t
an appropriato forum to seek auspension of exlating antitrust.
conditions. -If t.ho CAPCO members had sought. -t.his rollof at t.ho timo of the-' operating licenso review, the NRC could have reviewed the requent. In conjunction with the AEA Section 105(c)(2) a n t.1 -
trust. ruview.
i Ohio Edinon also says that, ron judicatg1 cannot apply l
l because "t.hore was no hoaring or formal administrativo procooding l
that considered antitrust. iaaues at the operating licenso atago" (p. 22). There was a proconding at tho operating'llcense ut. age to consider ant.itrust issues. NHR solicited comments f rom int.or-
- onted pornons to uso in ovaluating whether significant changes in l
l - tho-licenson's activition had occurred ouhsoquent to t ho ant i-
_ . . _ _ _ _ _ _ _ - - . . ~ . . - - . . - _ _ _ . ~ _ -
i trust review during the construction permit proconding. Soo 10 4
C.F.R. 52.101(o)(4). There was no need for further procondings Locauso llRR dot.ormined that "the changos that havo occurred sinco .
3 the antitrust construction permit review are not of the naturo to
(
- require a second antitrust review at the operating licenso stago of the applicat. ion." 48 Fod.-Fog. 52992 (Nov. 23, 1983).
Again, accepting, for the purpose of arguNont., Ohio Edison's promiso that a 11consoo can request modification of
~
antitrust conditions at-any timo, the only reason the oporating
- licenso antitrust review did not go furt. hor was because the CAPCO members chose to not make the request at that time. A pa rt.y can--
not escape the grasp of n m judicata by withholding an argument. _
which would.havo led to a full blown hearing and then arguing that the Iallure of the NRC to conduct such a hearing precludes application of ros judicata, soo r,arley, 7 AEC at 212.
Consequantly, ros judicata applies with full force to tho arguments raieod by-Centorlor and Ohio Edison in support of i
. suspension of the antitrust conditions.
B. Alternatively, Collateral Estoppel Dars The Helief Sought ny centoriqr Cleveland showed in its answer to Ohio Edison's app 11- -
cation that, alternatively, collateral estoppel precludos Ohio Edison from making the arguments in the suspension application
_ (pp. 79-81). .
The NRC has-noted the critoria for application of collateral est.oppel In ordor to apply collateral estoppel several re-quirements must be met Tno prior t.ribunal must havo had jurisdict. ion to render the decision, i
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4 24 -
thoro munt have boon a prior valid final judgment on the merita, the issuo munt havo boon actually litigated and nocoanary to the outcomo of-the first act.lon, and the party against whom the doc-t -ino in assorted must havo boon a part.y or in privity with a party to the earlier litigation.
Commonwoalth Edison Cox (11raidwood 14uclear Power Stat.lon, Unit.o 1 and 2) ("Braidwood"), LDP-85-11, 21 flRC 609, 620 (1905).
Clovoland demonstrated (pp. 58-59) t. hat collateral on-toppel procludes raining an argument in a subsequent. procooding i if the argument could have boon raised in the prior proceeding. j Clovoland pointed out. that the antitrust conditions woro the focus of review during the oporating licenso procooding end that the CAPCO niembers could have rained their susponsion arguments (PP. 79-81).
Ohio Edison says that collateral ontoppel cannot apply $
t here becauso " thoro was no f ormal administrat.1vo procooding t hat ;
considorod antitrust inaues at the operating licenso stage" (p.
24). Ilu t , agaln, there was a formal procooding at. the operating :
i license stage.- The only reason for the limit.ed nature of this proceeding was the decision by the CAPCO members to not raise their argument'for suspension of tho.licenso conditions. Conno- 4 quently, collateral ontoppel in fully applicable despite the lim-ited scopo of the operating licenso procooding.
C. Laches Bars The Relief Sought Hy Contorior In its answer to Ohio Edison's suspension application, Clovoland showed that the doctrine of Inchen bara the relief cought by t.hu utility ' (pp. 82-86 ) . 1, aches is an equitable doc- -
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- 25 -
trino which bars the lato filing of a claim if a part.y weald bo ;
prejudiced because of its actions during the interim in relianco ,
on the right being challenged in the claim. A part.y invoking lachos must show that thoro was (1) a dolay by another party in assorting a right or claim, (2) the delay was not oxcusablo, and l
(3) the party sufforod undue prejudico as a result of the dolay. '
Enviropmontal_ Defenso Funda Inc. v. Alexander, 614 F.2d 474, 478 (StF. Cir.), cort. denied, 449 U.S. 919 (1980); soo Costello v.
United E ,atos, 365'O.S. 265, 282 (1961).
Clovoland noted that the CAPCO members could havo t
raised the arguments in its suspension application no lator t.han at the timo of the operating licenso procooding in 1981. Clovo-land also showed that it would bo unduly prejudiced by suspension <
of the antitrust conditions. Clovoland not.ed that it has mado
- substantial and long-term financial commitments to purchase power .
t
- irom alternativo suppliers in reliance on the antitrust condi-tions (pp. 42-45). Cleveland would add that it has entored into long term firm' power purchaso arrangements with AMP-Ohio and tho Power Authority of the State of Now York (PASNY") . Transmission through a number of intervoning utilitios is necessary for those arrangements to continue. AMP-Ohio has purchased a power plant (the Gorsuch Station) based upon its relianco on the antitrust conditions. The conditions ensure that AMP-Ohio will be able to ,
soll and doliver the power produced at the Gorsuch Station to the municipal systems which own portions of t.he plant. or havo long term power purchase contracts with AMP-Ohio.
Even moro critical to Cleveland than npeciiic long term t
i t
f i
power purchase arrangemonts in tho fact. that Clovoland has issued
$50 million in bonds in ordor to expand it.s electric system, and j han rolled in this issuanco on the continued ability of the ayu-tom to obtain tno most economical power available. Thus, Clovo- ;
land ro11od hoavily on the antitrust conditions when it mado long-term financial and capital improvement. commitments which l require access to the purchaso power markot. In their answers to ;
Ohio Edison's application, AMP-Ohio and the Cit.y of Clyde, Ohio pointed to the iihancial commitments they, too, mado in rollanco l on the antitrust conditions. Suspension of the ant.itrust condi-
- t. ions would cause thoso partlos to dof ault. on those commitmonta.
In its answor, Ohio Edison asserts that it _ did not. do-lay filing its suspension application (pp. 27-28). Ohio Edison ,
notes that (1) the "NRC did not issue a full-power operating licenso for Perry until the fall of 1986", (2) "[j)udicial review of that licenso was not completed until the spring of 1987", and (3) "Porry was not placed into commercial operation until Novem-
, bor 1987." Thoso assortions are t. rue. But they are also irrolo-t .vant. The antitrust conditions have been in offact since 1981, l
well before Perry went into service. The events cited by Ohio Edison and Contorior to support their suspension applications occurred years ago. Honco, thoro is simply no reason why delays in completion of Perry could justify withholding an application to suspond the antitrust conditions.
This reasoning applies with even greater force to Davis-Desso. Again, that, plant received an oporating licenso and wont into commercial operation in April 1977. Thus, 11 (as Ohio
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a i - Edison suggest.8) the suspension applicat. ion had t.o await the i I
plant servico dat.e, the cloven year delay cannot bo justified.
i Ohio Edison also says that it *had a logitimato inter- j ost in waiting until all 11consing action for Perry was com-plated, so that the pondoney of this amendmont application would j not unduly complicato or dolay the licensing of Perry" (p. 28, n.
1 36). This concern could not possibly justify Ohio Edison's dolay in seeking suspension of the applicability of the antitrust, con-ditions to Davis-Dosso. As noted, the Davis-Bosso operating licenso was issued in April 1977.
Ohio Edison's concern also does not apply to Perry.
The NRC considors antitrust issues in separato procoodings during its review of bot.h construction pormit and operating 11conso ap-pld. cations. Consequently, review of the ro11of sought by Con-torior would not have af fected the Perry operating licenso pro-
,- ceeding.
Ohio Edison also states in its answer (p. 26) that Clovoland assumos that Ohio Edison would act in an anti-compet.1-tivo mannor if the. antitrust, conditions are suspended and that this assumption is " wholly unsupportada. This allegation is dis-ingenuous, at best. As shown in Section III of-those comments, contorlor and Ohio Edison mako it clear in their suspension ap- !
plications that. they want to provent Clevoland and t.he other municipal systems from buying power from alternativo suppliers.
Actions by CAPCO both beforo and after imposition of the anti-
' trust conditions indicate that CAPCO is already trying to Jimit competition. Consequently, thoro is a sound basis for the con-
= . J
^
corns expressed by Cleveland and tho other customora of the CAPCO members. [
VII. THE ANTITRUST PROVISIONS OF TlfE AEA WERE ,
NOT BASED ON AN EXPECTATION T11AT NUCbEAR POWER WOULD DE LOW COST -
A. Legislative History In its answer to Ohio Edison's application, Clovoland ;
reviewed the legislativo history of the AEA and the 1970 Amend-ments, in particular, and showed that the AEA antitrust provi-sions woro not based on an expectation that nuclear power would bo low cost (pp. 89-98). Clovoland pointed to a study prepared for the Joint Committee on Atomic Energy by Philip Sporn, formar president of the American Electric Power Company, in which Mr.
Sporn noted that the cost of nuclear power was rapidly rising and construction of nuclear plants was slosing (pp. 91-94) . Clovo-land also pointed to statements by Justice Department officials during the Joint Committee hearings in which they noted that the ,
NRC would be able to order a licensee to provido access not only to nuclear power but also to transmission facilities and coordi-nation and pooling servicos associated with the nuclear plant (pp. 94-98).
In its answer, Ohio Edison argues that the " unique" feature of nuclear power that distinguished it from other power i sources and which underlies the 1970 Amendments was the expecta-tion that it would be low cost (p. 38).
Ohio Edison overlooks the background of the concern by Congress for ensuring that nuclear power would bo developed in a
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. pro-competitivo mannor. In onacting the AEA in 1946, Congress
- noted that research on the development of nuclear enorgy would be j funded by tho federal government. AEA Section 2(g) 42 U.S.C. l S2012(g). The government was concerned that the fruits of this f research not be exploited in an anti-competitive manner. Thus, )
in onacting the AEA, Congress stated that. an overriding policy ,
-was to
- strengthen froo competition". AEA Section 1(b), 42 U.S.C. 2011(b). At tho time, "the gonoration of useful power {
from atomic onorgy was a distant goal, a very distant goal. "13/ -
t consequently, there was no way of knowing the cost of this power.
Significantly, the prolicensing antitrust review provi-sions of the AEA woro introduced by the Amendments onacted in j 1954. At that timo, the development and regulation of commercial j users of nuclear power *were matters for the distant future."
1970 House Report, p. 4994. Thus, the prelicensing antitrust mechanism was not based on an expectation that nuclear power would be low cost.
! The 1970 Amendments were designed simply to "clarif[y]
l the antitrust review standard and explicitly dcscrib[e] the Com-i-
mission's authority and renponsibility in relation to advice from L the-Attorney General." Id., p. 4994. Congress again noted that
" Government funds are extensively devoted to the research and s development aspects of atomic energy." Id., p. 4995. As a re-sult, Congress admonished the NRC to "be mindful of the general objective of strengthening competition". Id.
13/ S. Rep. No. 1699, 83d Cong., 2d Sess., reprinted in 1954 ,
U.S. Code Cong. & Ad. News 3456, 3458.
?
.0 ..l 1
In its answer, Ohio Edison says that "all the Congros-sional reports (in connection with the 1970 Amendments) con-sistently rofor to an expectation that nuclear power would bo low costa and "[tJhus it appears that Mr. Sporn's prognosos were not accepted by congress" (p. 37, n. 57).
Ohio Edison's reasoning is flawed. Ohio Edison does not deny tha t Mr. Sporn's report provided a comprehensive analy-sis of the rising cost of nuclear power. The Joint Committoo's decision to attach the report as an appendix reflected that the report drew the attention of the Committoo. In addition, Ohio Edison cannot reconcilo its posicion with the statomonts by the Justico Department officials quoted by Clevoland. <
Ohio Edison also fails to recognize that the 1970 ,
t Amendments stemmed from the bollof at that time that there would be a surgo in construction of power plants generated by nuclear power and other sources to moet a severo capacity shortago. Con-gress felt that, to eccommodato growth in nuclear power, the pro-licensing antitrust review process "need(od) to be clariflod and
~
revised". 1970 Houso Report, p. 4992. Congressman llollfieid introduced the 1970 Amendments on the floor of the llouse and noted:1A!
MR. HOLIFIELD. At this point I want to depart from my prepared script to say that this country is facing a crisis in electrical energy. We must double the electrical generating capacity of this country within the next 10 years, and then double that again in the succeeding 10 years. We Members in this Capitol know that just a week ago we had i half of the lights turned off in the Capitol be-14/ Cong. Hec. 34313 (Sept. 30, 1970).
{. _ _ _ _ . _ _ _ _ _ .
cauno of reduced availability of power in this area. I am telling you that this whole country faces that situation; wo are facing brownouts and blackouts unless wo got those olectrical plants into operation those now additional generating capacities. Now, I am [not) speaking today for nuclear power alone. I am saying that we are going to have to havo olectricity from uranium, from coal, from oil, and from gas. We are going to need ovary kilowatt wo can produce from all of thoso substances, and we are going to havo to re-viso our methods so that present contaminating offluent are removed.
Mr. !!olifield stated that nucioar power was expected to play a more prominent rdlo for two reasons, each of which was unrelated to the anticipated cost of the power. First, thoro woro serious shortages of natural gas and coal (id.):
MR. HOLIFIELD. The gentleman will agree with me, coming from a gas-producing aroa, that there is going to be a shortage of gas this winter. Thoro is already a shortage of cool and delays in tho
. delivery of coal. You cannoe got a contract today for coal longer than 1 or 2 years. The customary timo used to bo 5 and.10 years for coal contracts for delivery at a speciflod time. .On tho averago, the cost of coal has gono up about 56 percent in the last 18 months. The cost of imported residual low sulfur content oil nas almost doubled. So those are some of tho-factors that are building up to an actual and serious scarcity of energy. The fact that the coal is not being delivered, pur-suant to contracts to thoso electrical plants, as it has boon in the past, is another factor. Those are the factors that make me believo wo are going to have serious blackouts and brownouts in this country beforo we real.1ze it.
Second, now fedaral air pollution standards favored development of non-polluting fuels such as nuclear power (id.):
MR. HOLIFIELD. I toll you, we will never -- never solvo the problem of pollution itself without ado-I do not caro whether quato nonpolluting energy.
the problem is cleaning up our water, or taking the particulatos out of smokestacks so we can have clean air, or whether it is solidif ying old auto -
mobiles into small masses to be disposed of pro-
i
..4 ....'
l t
perly or recyclod for some rouse of matorial -- it does not make any oifference what field of pollu- i tion we face, we are going to have to have ado- !
quate, economical, and clean electricity to solve that problem. We are just kidding ourselves if :
we overlook this basic fact. This is one of the reasons wo are here on the floor of the Houso today to soo, in connection with this bill I am '
explaining, that we do have an adoquato chance to '
[
got those plants into oporation without a lot of interference from people who do not have a suffi-clont understanding of the technical problems involved or about the technical safeguards that have been engincored into nucioar plants.
True, co'rtain members of Congress may have believed that nucioar power would bo low cost and that this would be yet another factor which would favor development of this power. But clearly this was not the primary basis for the bellof underlying the 1970 Amendmonts that development of nuclear power would be rapid and that, as a resc1t, the prolicensing antitrust review procedures nooded to be clarified.
- p. Judicial And NRC. Precedent '
Cleveland, in its answer to Ohio Edison's suspension application, provides a comprehensive analysis of the court and NRC decisions in which antitrust 11conne conditions were ad-dressed (pp.99-110).1E Cleveland showed that in each of those i decisions it was recognized that a nuclear license could exacer-bate.a licensee's control of electric power as well as transmis-l l
15/ Louisiana Fower and Light Co. (Waterford Steam Electric Gen-erating Station, Unit 3) ("Waterford"), Docket No. 50-382A, 6 AEC 619 (1973); Kansas __ Gas J Electric Co. (Wolf Creek Generating-Station, Unit No. 1) (" Wolf Croek"), ALAD-279, 1 NRC 559 (1975); consumer Power Co. (Midland Plant, Units 1 and 2) (" Midland"), ALAB-452, 6 NRC 092 (1977).
- 33 -
sion facilition and coordination and pooling services. Clovoland pointed, in particular, to the Elovent h Circuit decision af firm-ing the NRC's imposition of conditions in the operating licenso sought by Alabama Power Company (* Alabama Powor*).16/ The condi-tions required Alabama Power to provido whooling survices oven to thoso customers who woro found to be not entitled to an ownorship share in the nuclear plant. The NRC explained t. hat the purpose of this condition was "to enablo [the customors] to deal with ,
other suppliers of bulk power" . 13 NRC at 1109-110. Thus, antitrust - licenso conditions woro found-to be necessary to ensure access to the wheeling, coordinat.f on and other services provided by the licensoo, indopondent of accosn to the nuclear power it-sol f, t
Ohio Edison responds by dismissing Clovoland's analysis with a few torno comments (p. 41). Ohio Edison mentions only the Waterford decision and points to references by the NRC in that decision to the anticipated low cost of t.ho power, ,
Again, Clovoland recognizes that. many members of the electric industry expected nuclear power to be low cost. 11ut at the same time, Congress recognized that the pro-competition goals of the AEA required antitrust licenso condit. ions to be imposed to ensure access to wheeling, coordination and other services which could be provided by the licenseo antirely independent of access to the, nuclear power itself. The NRC implomonted this mandato by 16/ Alabama Power _Co. (Joseph M. Parley Nuclear Plant,- ~ Unit.s 1
.. and 2) ("Farley"), ALAll- 6 4 6, 13 NRC 1027 (1981), a_ff'd, Ala-bama Power Co. v. NRC, 692 F.2d 1362 ( 11 t.h Ci r . 1982), corb
[lenied, 464 U.S. 816 (1983).
i . . . .
i
- 34 -
I repeat.edly imposing whooling and other conditions unrelated to f r
acconn to the nuclear power. Ohio Edinon does not. ovon t.ry to :
I reconcilo those declaions with itn position that antitruct condi-tions are appropriato only if nuclear power in low cont..
VIII. Tile EVENTS CITED BY CENTERIOR DO NOT UNDERMINE Tile BASIS OF Tile ANTITRUST LICENJE CONDITIONS Conterior argues t. hat "
the competit.1ve environment in i which TE and CEI operate has substantially and materially changed j in the years since the antitrunt liconno conditions woro imposod" (App. 4). Contorlor citos (1) the high coat of nucioar power, f (2) the terminat. ion of CAPCO's "ono nyatom" planning -concept, and (3) the emorgence of AMP-O an a major indopondent power sup-plior*.
The NRC's decision to impose the ant.itrust licenso con-ditionn would not be undormined by any of thoso events. An noted in Cleveland's responso to Ohio Edison'a application, the NRC'n docinion was based on its concern about the way the substantial
'- power generated by t.he nuclear plants and the construction of a network of associated transmission linos connected to the plants would holghten the market power of the CAPCO membera and encour-ago t.hom to expand their porvanivo anti competitivo conduct. i (pp. 111-117). Cleveland noted that. Perry and Davis-Desso are now in full commercial operation and ext.onnivo transminalon facilition have been constructed to connect. to those facilities.
l Consequent.ly, as discussed in detail in Clevoland's answer (Id.),
1.
the ant _it. rust conditions are still needed.
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Maroover, as shown below, Contorfor's analysin of the I
supervening events is distorted.
A. Incronsed Cost Of Nuclear _ Power Contorlor argues that unanticipated increases in the cost of constructing and operating i nuclear plant have under-mined the basis for the imposition of the antitrust liconno con-ditions.
Contarlor distorts the meaning of the factual matorial it citos and misconstruos the NRC decision imposing the antitrust conditions. Industry-wido cost studios are of dubious value un-loss Contarlor can show that the data is representativo of its nuclear plants. Conterior has not tried to show this. It is
- noteworthy that Contarlor has touted the ef ficiency of its nuclear plants. On June 9, 1985, Davis-Dosse was_ shut down duo to_ failures in its main and auxiliary foodwater systems. Con-torlor claims that during the o.lghtoon month shutdown "substan-tial changos wore made and about $179,000,000 was spent to re-pair, enhanco, and upgrado the-equipment to make Davis-Besso a-current state-of-the-art plant and to improva its oporation.*17/
Contarlor does not explain whether industry-wido cost studios apply to a state-of-the-art plant.
Turning to the studios cited by Contorlor, they_ provide little support for Contnrior's arguments. Contorior citos a finding in a report by the U.S. Dopartment of_ Energy which simply 1
17/ FERC Form 1 (annual report ) filed by CEI for 1986, Schod.
108-C, p. 2.
l l
l
., 4 ,
i unya that. " continued oscalation operat.ing coats coul i lorodo any coat advac.tago that operating nuclear plants may have" (emphasin r
added; App. 24). Conterlor alno citon the finding that the cost advantage of nuclear plant s "may not" paraist "if oporating conta continuo to escalato.* Thono tontativo findinga hardly provido a basis for Contorlor'n arguments.
Contarlor also citos a 1986 study by t.ho Electric power Rononrch Instituto ("EPRI") which, according to Contarlor, shows that (1) " plant investment in a 1100 MW nuclear plant had jumped ;
to $2071-por kWo versus $1260 por KWo for a comparablo coal-firod plant", (2) "[t)otal Ot.M conta including fuol jumpod t.o 14.2 milla por kWh for the nucloar plant voraun 22.4 millo por kWh for t.ho coal-fired plant,* and (3) "ca p i t.a 1 costs of nuclear plant.n I
as of 1985 oxceeded t.hoso of coal-fired plants by 1261," (App. 27-28). Contorlor does not identify the EPRI study. Honco, Clovo-land can noit. hor analyze the methodology used by t.he at udy, nor
' dot.ormine whether the study applion to Perry and Davin-Benso.
Interestingly, the study doos show that nuclear planta are cheaper to operate than coal planta.
. Contorior also falla to reconcile its allegations about the high coat of Porry and Davin-Bonne with its uno of t.hono plants to supply baae load power. Nuclear gonoration comprinos ,
22 porcont of CEI's gonorriion capacity and 39 percent. of Toledo'n-generation capacity.18/
1 Moreover, imprudent activit.los by Contorlor appear to
_11] / Contorior 1987 l'orm 10-K, pp. 35-36. ,
l have subatantially increased ita nuclear construction and opora- l ting costa. In an ordor innued January 12, 1988, the Public l Utilities Comminolon of Ohio (PUCO) disallowod $627.8 million, or ;
15.12 porcont., of tho $4.135 billion const.ruction conta of Perry
- 1. In 1987, the PUCO found that tho 18 month outago at Davin-Ilonso in 1985 and 1986 wan a result of imprudenco in the manago- -
mont and maintenance of the plant by Toledo. The PUCo ordorod Toledo and C1:1 to provido refunds of $33,595,000 and $32,563,000, respectively, which reprenonts cortain replacement fuol and pur-chased power cost.a-collected from customorn during the outage.
Thus, contarlor's claims about t.ho high cont. of ita nuclear plant.n fail tu ako into account the imprudent. conduct.
which caused many of thoso costa.
Moreover, nasuming arquendo that nuclear power in high cost, that in avon more reason for maintaining t.he antitrust con-ditions. In imposing the whooling conditions, the HitC recognized that whooling in nooded to ensure that the nuclear utility cannot t i
uno its control over transmission f acilit.los t.o provent. Its cuo-Ob-tomors from procuring the most economical power availablo.
vjauol.y, a custo.nor in unlikely to need to uno whooling norvices j
- tao. n; clear utility of fers the most econonilcal power. Thun, inhcrent in the m1C docialon to impoco t.ho whooling condition in
~
ita recognition that this norvico is nooded when t.ho prico of nuclear powoe in abovo market levels. The nood for this ac,ans obviously am n isos as t.ho nucioar power becomen more oxponnivo compared - to otner t.ypos of power. In addit.lon, in those circum-ntancos, t he compet.it.1vo injury caused by donial of access to
I transmission facilities is exacorbated.- For examplo, ono measure i
of damages resulting from a violation of the federal antitrust laws in which tho monopolist provents its customers from pur-i chasing a commodity from alternativo suppliers is tho extent to j i
which the prico charged by the monopolist excoods tho market
- price of the commodity. itanover Shoo, Inc. v. United Shoo Mach.
Co., 392 U.S. 481, 491 (1968); noll v. Chorokoo_ Aviation _ Corp.,
660 F.2d 1123, 1133 (6th Cir. 1981). Moreover, an increase in [
ratos makes it oven more important that competitivo forces (in l-the form of access to alternativo suppliers) exist to give tho-nuclear utility the incentive to maintain competitive ratos.
Consequontly, the increase in nuclear power costs increases the importanco of the antitrust conditions.
B. Emergence Of AMP-Ohio And Other Competitors Contorlor makes much ado about the omorgence of AMP-Ohio and other municipal systems in the wake of the antitruct licenso conditions. Centorior argues that competition is undo- ;
sirable because it "will load to an erosion of CEI's and TE's sales markets" and increase the rates charged by Contorior to its remaining customers (App. 23, 33).
Contorior's argument turns the pro-competition objec- i One of the objectivos of the anti- ;
tivo of the AEA on its head.
l trust conditions was to ensure that municipal systems in the L
CAPCO service area have access to wheeling services so that_they can purchase the most economical power available. The emergence of AMP-Ohio simply shows that the antitrust conditions are work-ing.
4 t
I i
Contarlor also f ails to recognize that t.he primary bonofit of competition is that. It provides incontivos for a ut.il-ity to reduce its power costs. Philip R. O'Connor, former chair-man of thu 1111nois Commerco Commission, has observed i
Arguably, from a traditional utility regulat. ion standpoint, allowing whooling to specific custom- '
ors within a utility's torritory will nocessarily result in higher pricos for the romaining custom-ors, sinco it loavos the utility's undiminished rate base to be covered by a smallor cust.omor base . . . . If rato base regulation continues f or the local utility's dist.rlbution and t.ransmis-sion system (sinco it remainn a monopoly t.ranspor-tor of power), but its generating capacity is sold .
at. market pricos, the other customers will not bo '
disadvantagod. In fact,__ importation of___ lower priced electricity _into the area will forco tho _
local utility olther to lower _its pricos or_ forego the opportunity to_soll its oloctric_ power to_somo, largo customern.
Moreover, loss of load by Contorior will not nocessari-ly result in a rato increase. Conterior would have t.o submit. a rato increase filing pursuant to section 205 of the Fodoral Power Act, 16 U.S.C. 6024d. FERC has mado it clear that it will reject this typo ci proposal if the load loss resulted from imprudent.
- marketing or other practicos by the utility. Tonnosseo Gas Pipo-l lino _Co., 21 PERC 561,004, p. 61,009 (1982). FERC can also mako l
the utility's recovery of it.s f ull return on equity " cont.ingent on the utility's success in avoiding load loss." J_d .
1,9/ (omphasis added) P. O'Connor, et al., The Transition To Com- _
petition _In _ The Electric Utilit_y_ Industry, 8 J. Energy Law &
Policy 223, 240 (1988).
l l- 20/ The Supromo Court has endorsed t.his p-inciple:
If the establishing of now linos of b reportation should cause a diminution in the number of thoso who nood to use a turnpike road,-ard, consequently, a dimit.ut. ion in the t olls
- - . . . . _ - . . . . - . - _ - - - _ _ . - . - . _ . _ . _ . . - - . - - . - ~ . . , - - - - - -
.. , e4 ,.'
Contorfor also suggests that AMP-Ohio and the municipal systems no longer nood access to the CAPCO transmission system.
Cantorlor points to the decision by the City of Clyde, Ohio to form a municipally-owned distribution system and to build trans-mission facilitios linking the City with, among others, Ohio Power Company (" Ohio Power") (App. 31-32). Centorior claims that
"[t]ho Clyde situation . . . demonstratos that municipalities are able to build their own transmission lines to access power sup-pliers" (id), i Clydo's ability to build _a trancmission lino stems from its proximity (two milos) to Ohio Power. Cleveland is not as fortunato because the only nearby transmission system is owned by CEI. Contarlor fails to recognizo the significant barriors to construction of a transmission line by Cleveland and other sim-ilarly situated municipal systems. A recent analysis of electric markets notos Tranumission of electricity is a classic natural monopoly, subject to largo economios of scale through the entire range of output rolovant to any market. For this reason, the transmission lines available to deliver cloctricity to any particular distributor or consumer aro-almost invariably owned by a singlo firm. That firm has monopoly power over all distributors and consumers con-nocted to its transmission ~ facilities.
(footnoto continued) collected, that is not, in itself, a sufficient reason why the corporat. ion, operat.ing the road, should be allowed to _
maintain rates that would be unjust. to those who must _ or do Tho public cannot properly be subjected
- uso its propert y.
to unreasonablo rates in order simply that stockholders may earn dividonds. ,
I' Covington & l.oxingt.on Turnpike Road Co. v. Sandford, 164 L U.S. 578, S96 (1896).
i
.._.---._.-..,--.,....__......--_,._.-..-..-._r - -
_ 41 A market cannot be contestable when thoro are t largo sunk costs acting as barriors to entry and to oxit. Under present regulatory policios, the bulk power market is not contestablo at all. The nood for largo, immobile investments, in the form of transmission lines accessible only to their owners, excludes new ontrants from virtually every bulk power market.
(footnote omitted) Hulk Power, 72 va.L. Rov. at 1216, 1220.
Thoro are also formidable regulatory barriors to con-struction of a now transmission facility:
Today it is extremely difficult to obtain regula~
tory approval to construct a new high voltage transmission llev- Construction of a new fifty-mile transmission lino now requires the approval of as many as fifty to one hundred stata and local agencies. This cumbersome and timo-consuming reg-ulatory process has created costly transmission bottlenocks.
(footnote omitted) Id. at 1233.
Those insuperable obstacles to coristruction by a cap-tive customer of a dup 11cativo transmission system have led to the finding by courts that an unreasonable denial of access to this type of facility violates the federal antitrust laws. Otter Tail Power Co. v. U.S. (*0tter Tail"), 331 P.Supp. 54, 59-61 i
(D.Minn.1971), aff'd in portinent part, 410 U.S. 366, 377 (1973).
Indeed, the NRC cited Otter Tail and rejected CEI's contention during the construction permit procooding that "it has been feasible for Cleveland to construct a transmission facility from its bake Road Generating Plant to any one of four intercon-nection points with utilities other than CEI." The bicensing Board stated:
, . - . . . _ __ _ . _ _ . _ , _ _ . . . . _ . . _ . _ _ _ _ . _ _ . _ . _ . _ . _ _ - . . . _ _ _ _ . . _ - - - - ~ . . . .-
Cleveland did study the problem. Its studios showed that Cleveland was completely surrounded by high density residential and commercial areas and that construction of separato transmission lines from Clovoland was simply not feasible, particu-larly in view of the fact that it would dupilcato already oxisting and operating CEI facilitlos.
Existing CEI transmission facilities have surplus capacity availablo.
(citations omitted) 5 NRC at 175. The Appeal Board affirmed those findings and noted that "[ijt is thus clear that CEI's re-fusal to whool PASNY power to Clovoland was a violation of Sec-tion 2 of the Sherman Act." 10 NRC at 328.
IX. IF Tile NRC DOES NOT SUMMARILY REJECT CFNTERIOR'S APPLICATION, Tile APPLICA-TION SIL.JLD llE SET FOR llEARING AND SilOULD NOT BE PERMITTED TO GO INTO EFFECT DURING TIIE ilEARING _
If the NRC finds that it has the statutory authority to suspend the antitrust conditions, Clovoland requests that an evidentiary hearing be scheduled to ovaluate the numerous materi-al' issues of fact which surround Conterior's argument that the antitrust conditions are no longer nooded. Contorior agrees that an evidentiary hearing would be necessary in those circumstances (App. 41).
liowever, Contorlor erra in asserting that the NRC can immediately suspend the antitrust conditions pending completion of the hearing (App. 42-43). Contorior points to the so-called Sholly amendment to-AEA Section 189(a)(1), 42 U.S.C. S2239(a)(1),
which states, in portinent part:
The Commission may issuo and mako immediately of-foctive any amendment to an operating licenso, upon a datormination by the Commission that such amondment involves no significant hazards consi_-
.. ,,,e oration, not. withstanding the pondency before the Commisalon of a request for a hoaring f rom any j person. Such amendment may bo inauod and mado ;
immediately offactivo in advanco of the holding and completion of any required hearing. In detor-mining under this noction what. hor such amendmont '
involvos no algnificant hazards conaldorat. ion, the Commianlon shall connuit with the Stato in which the facility involved in locatod. In all other :
respecto such amendmont shall moot the requiro- ;
mont.a of this chaptor. ;
Contorlor misinterprotn the acopo of the Sholly amend- i mont. The Sholly amendment applica only t.o proposor'
-conao ,
amendmonta dealing with technical anpocts of oporat.lon of thu plant,. Consequently, Sholly does not. apply to the suspension of an antitrust condition. The amendmont atommed irom the D.C. Cir-cult. decision in Sholly v. NJg., 651 F.2d 780 (D.C. Cir. 1980),
roh'a doniod, 651 P.2d 792 (D.C. Cir. 1981), vacated and romand-or'. , 454 U.S. 1194 (1983), vacated, 706 P.2d 1229 (tablo) (D.C.
Cir. 1983). Sholly involved an NRC order which modified an operating licenso to permit t.ho 11consoo to rolonso radioactivo gan from-its reactor building at a fastor rato than pormitted by the oxisting specifications in its licenso. The Court hold t. hat the NRC cannot amend a liconao prior to completion of an eviden- '
tiary hearing if a party has requented a hearing, even if the NitC a
datorminoa that the amendment involvoa no significant hazards conalderat.lon . "
The NitC asked Congroan to enact legislation to overrule the docialon. This recommendation was based on the NitC's concern that delaying implementation of certain licenso amendments which - ,
involvo no significant hazard consjdoration until after a hearing-
"could result.-in unnoconnary disruption or delay in the opera-l- _._._._.____._,_._.__.,2 -
2
l
_44_
tione of nuclear power plants by-imposing regulatory burdens un-related to oignificant safety matters." Ell In enacting the Sholly amendment, Congress embraced the NRC's c;.2ern: ES!
By including this provision, .3a Committee seeks to address the concern expresscd by the Commission that a requirement that the NRC grant a requested hearing prior to making effective a license amend- .
ment-involving no significant hazards considers-tion could result in unnecessary disruption or delay in-the operation of a nuclear preer plant and could impose unnecessary regulatory burdens upon the NRC that are not related to significant safety honefits.
Significantly, each of the examples of license modifications dis-cussed by Congress and the NRC in describing the impact of the Sholly amendment involved changes in technical aspects of the operation of the nuclear plant. 51 Fed. Reg. at 7750.
Thus, the Sholly amendment was not intended by Congress or the NRC to encompass a proposed license modification, such as the suspension of antitrust conditions, which has nothing at all to.do with the operation n' a-nuclear plant. Consequently, the Sholly amendment does ra at ;y to Centerior's suspension appli-cation. As a result, the NRC cannot suspend the antitrust L license conditions prior to the evidentiary hearing.
l l
, 21/ " Final Procedures and Standards on No Significant Hazards p Considerations", 51 Fed. Reg. 7744, 7746 (March 6, 1986).
22/- S. Reo. No.97-113,-97th Cong. 2d Sess. 14, reprinted in 1982 U.S. Code Cong. & Ad. News 3592, 3598.
t . - . . _ . _ _ .__ - _ -
If 4
VII. COfLCLUS I.ON For each of the foregoing reasons, Centerior's suspen-sion application should be denied.
Respectiully submitted, Marilyn G. Zack Director of Law June W. Wiener Chief Assistant Director of Law William M. Ondrey Gruber Assistant Director of Law City liall , Room '.06
- 601 Lakeside Avenue Cleveland, 0 11 41114 Telephone: (216) 664-2800
-/Y$eb<Whef' hen
?h! ?,( [ <
?f'f,Y(. ?T' Reuben,It,Goldberg ' '~ '"
Kenneth M. Albert Goldberg, Fieldman & Lotham, P.C.
1100 Fifteenth Street, N.W.
Washington, DC 20005 Telephone: (202) 463-8300 Attorneys for City of Cleveland, Ohio September 13, 1988
- i,<* q CERTIFICATH OF SERVICE 1 hereby cortify that I have this day served a copy of the foregoing document upon the participanta in thin proceeding.
Dated at Washington, D.C., thin 13th day of September, 1988.
ddf& _%
Konnoth M. Albert I
h l
l 1
I
. ( j '*
1 I
l SJ:RVICE LIST ]
1 Mr. Thomas E. Murley Director of Nuclear Reactor Regulation U. S. Nuclear P.egulatory Commission Washington, DC 20555 Benjamin H. Vogler, Esq.
O.tfice of the General Counsel U. S. Nuclear Regulatory Commission Washington, DC 20555 Doborah B. Bauser, Esq.
Counsel for Ohio Edison Company and Pennsylvania Power Company Shaw, Pittman, Potts & Trowbridge 2300 N Street, N.W.
Washington, DC 20037 David R. Straus, Esq.
Coursel for American Municipal Power-Ohio Spiegel & McDiarmid Suite 1100 1350 New York Avenue, N.W.
Washington, DC 20005-4798 Janet R. Urban, Esq.
Antitrust Division / TEA U. S. Department of Justice 555 Fourth Street, N.W.
Room 9816 Washington, DC 20001 C. E. Chancellor, Esq.
Secretary and General Counsel The Cleveland Electric Illuminating Company Post Office Box 5000 Cleveland, 011 44101 Alan P. Buchmann, Esq.
Squire, Sanders & Dempsey 1800 Huntington Building Cleveland,OR 44115 Michael M. Briley, Esq.
Counsel for Toledo Edison Company Shumaker, Loop & Kendrick North Courthouse Square 1000 Jackson Toledo, OH 43624-1573
-, v. 4, .t ,
Office of the General Counsel Duquesne Light & Power Company 1 0xford Centre
, 301 Grant Street Pittsburgh, PA 1S279 Victor F. Greenslade, Jr.
General Counsel Centerior Energy Corporation 6200 Oak Tree Boulevard Independence, OH 44101 James P. Murphy Squire, Sanders & Dempsey 1201 Pennsylvania Ave., N.W.
P. O. Box 407 Washington, DC 2,0044
Y b 4
UNITED STATES OF AMERICA Bl: PORE Tile NUCLI:AR REGULAT'TRY COMMISSION 3 In the Matter of )
if 7 ) Docket Nos. 50-440A, et al.
THE CLEVELAND ELECTRIC )
ILLUMINATING COMPANY, et al. ) .
~.
TO: Chief, Policy Development and 'Q cn$@ %
, Technical Support Branch, Office 6L; a t~~7 Of Nuclear Reactor Reoulation r
e ANSWER OF CITY OF CLEVELAND, 0 11 I 0 , IN OPPOSITION TO 01110 EDISON COMPANY'S APPLICATION FOR SUSPENSION OF PERRY OPERATING LICENSE ANTITRUST CONDITIONS
.N Marilyn G. Zack
.g Director of Law June W. Wiener Chief Assistant Director of Law William M. Ondrey Gruber Assistant DI. rector of Law City llall, Room 106 601 Lakeside Avenue q Cleveland, 011 44114 Reuben Goldberg Kenneth M. Albert s
Goldberg, Fieldman & Letham, P.C.
1100 Fifteenth Street, N.W.
Washington, D.C. 20005 Attorneys for City of Cleveland, Ohio February 19, 1988
-a er y n* ~~k s ., I
.=. ~ _ _ _ _ _ _ _ . _ _ __
TAlmE OF CONTENTS Page 2
I. PREAMBLE...........................................
5 II. BACKGROUND.........................................
( A. Ti!E CONSTRUCTION PERMIT PROCEEDING............. 5
- 1. The app.lications........................... 5 The Licensing Board decision............... 7 2.
- 3. The Appeal Board decision.................. 14
- a. The Applicants' anticompetitive activities............................. 15
- b. The nexus between the proposed nuclear plants and the anticom-petitivo situation............... ..... 18
- c. The antitrust license conditions....... 20
- d. Subsequent review...................... 21 B. THE OPERATING LICENSE PROCEEDING............... 22 III. THE NRC DOES NOT HAVE JURISDICTION TO GRANT EDISON'S APPLICATION......................... 24 A. THE NRC HAS RECOGNIZED THAT THE 1970 AMENDMENTS PRECLUDE IT FROM MODIFYING ANTITRUST CONDITIONS SUBSEQUENT TO ISSUANCE OF AN OPERATING LICENSE............... 25
- 1. South Texas................................ 26 l 2. Florida Power.............................. 35
.n 3. South Texas and Florida Power indicate (j-( that the NRC does not have the statutory l
authority to grant the relief sought l 39 l
by Edison..................................
l l
t
, TABLE OF CONTENTS (continued)
Pago D. NRC PRECEDENT REGARDING ANTITRUST RE-VIEW IN CONNECTION WITil CilANGES IN TiiE
\ NATURE OP - A PLANT'S OPEllATIONS OR OWNER-OWNERSIII P 1S INAPPLICADI.E IIERE . . . . . . . . . . ... . 45
(
C. TIIE DICTA IN TIIE APPEAL DOARD DECISION IN TilIS PROCEEDING DOES NOT AND CANNOT SUPPORT POST-OPERATING LICENSE ANTITRUST REVIEW..................................... 48 IV. TIIE RELIEP SOUGliT DY EDISON IS DARitED BY RES JUDICATA OR, ALTERNATIVELY, COL-LATERAL ESTOPPEL.................................... 53 A. RES JUDICATA AND COLTATERAL 1;STOPPEL"A5D THEIR APPLICA-DILITY TO NRC PROCEEDINGS.................. 54 B. APPLICATION OF RES JUDICATA AND COLIATERAL ESTOPPEL IN NRC PROCEEDINGS............................ 55 C. APPLICABILITY OF RES JUDICATA TO EDISON'S APPLICATION.................... 59
- 1. Res judicata in the applic-abic preclusion doctrine here.......... ti0
- 2. Ros hdicata bars the arguments made by Edison......................... 63
! a. Edison already made its arguments here during the construction per-mit proceeding..................... 63
- b. The events cited by Edison could have been raised during the opera-ting licensing proceeding.......... 66 k
(' ' ' i. Increased cost of nuclear power.......................... 66 1
4
. 4 TABLE OF CONTE!PPS (continued)
Page
- New statutory require-ments....................... 67 Regulatory changes . . . . . . . . . . 68
( -
Adverse economic condi-tions....................... 69
- Overall costs of Perry Unit 1...................... 71
- 11. The reduction of the CAPCO nuclear program................ 75 111. Termination of the CAPCO pool..................... 77
- 3. Alternatively, collateral estoppel is applicable and bars Edison's arguments.............................. 79 V. THE RELIEF SOUGHT BY EDISON IS BARRED BY LACHES................................ 82 VI. THE EVENTS CITED BY EDISON DO NOT UNDERMINE THE LEGAL OR FACTUAL BASIS FOR IMPOSITION OF ANTITRUST LICENSE CONDITIONS................................. 87 A. THE 1970 AMENDMENTS WERE DASED ON FACTORS OTHER THAN THE ANTI-CIPATED COST OF NUCLEAR POWER.................. 89 l
l B. NRC PRECEDENT REFLECTS THE NRC'S
, RECOGNITION THAT FACTORS OTHER THAN THE COST OF NUCLEAR POWER CAN BE THE BASIS FOR IMPOSITION OF ANTITRUST LICENSE CONDITIONS................ 99 (7 C. THE EVENTS CITED BY EDISON DO NOT UNDERMINE THE CONCERNS UNDER-LYING THE NRC'S DECISION TO IMPOSE THE ANTITRUST LICENSE CONDITIONS................ 110 VII. CONCLUSION.......................................... 117 l
- iii -
j-1 ;
L'
! TABLE OF APPENDICES t-A. The Toledo Edison Company, et al (Davis-nosso Nuclear l
- Power Station,-Unit 1, et al.), Docket Nos. 50-440A, gt ;
p al., " Order Modifying Antitrust License Condition No. 3 j i of Davis-Bosso Unit 1, Licenso No. NPP-3 and Perry l j Unita 1-and 2, CPPR-148, CPPR-149" (June 25, 1979) i
) (cited on p. 50 of-this answer) {
[k B. Pub]ic Utilitics Commission of Ohio, Investigation'Into The_ Perry Nuclear Power Station, Case No. 85-521-BL~
- COI, " Comprehensive Assessments of The Perry Nuclonr
!_ Power Plant", prepared for the Commission by Toucho l
Ross, The Nielson Wurster Group and Chapman & A3soci-atos, p. I-7 (Aug. 1986) (cited on p. 67) l:
[ C. Cleveland Electric-Illuminating Co. News Rolense, if - "Porry Budget'Revisod"-(March 23, 1983) (cited on p. ;
j 69)
D. CAPCO News Releaso (Jan. 23, 1980) (cited on p. 70)
E. 'Public Utilition Commission of Ohio, "In the Matter of the Application of The Cleveland Electric illuminating Company for Authority to Amend.and Increaso Certain of Its-Pilod-Schedules Fixing Ratos and Charges for Elec-tric Service", Caso-No. 86-2025-EL-AIR (Dec. 16, 1987)
(cited on p. 73)
F. Prizinsky, "Avon Lake capacity cut as CEI retiros gen-orator", Clevoland Business, lp. 3 (Jan. 4, 1988) (cited on p. 74)
G. Ohio Edison Co., Securities and Exchange Commission (SEC) Form-10-K for 1978, pp. 37-38 (cited on p. 75)
H. Ohio Edison Co., SEC Form 10-K for 1984, p. 11-(cited on p.-75)
I. " Cost Estimato Revised For Cleveland Electric's Perry-1",-Nucleonics Week, p. 7 (Sept. 20, 1984) (cited onlp.
. 75) ,
J. List _of delays announced during construction of CAPCO
? r.uclear plants (cited lon p. 76) l_ {
'K. Prehearing Antitrust Review of Nuclear Powerplants, Hearings Before The Joint Comm. on Atomic Energy, Part 1, 91st Cong., 1st Sess. 310 (testimony of Philip Sporn) (cited on p. 93)-
- iv -
1
l
- e TABLE OF APPENDICES (continued) l l
L. Contorlor Enorgy Corp., "Long-Torm Forecast Report --
Electric -- Submitted To The Public Utilities Commis-sion of Ohio, Forecast And Power Sitting Division (May 15, 1987)" (cited on p. 115)
M. Clovoland Electric Illuminating Co., 1986 Annual Report
() (Form 1) filed with the Fodoral Energy Regulatory Commission (PERC), p. 216 (cited on p. 115)
N. Ohio Edison Co., Response to NRC Regulatory Guido 9.3, item C (May 12, 1981) (cited on p. 115)
O. Ohio Edison Co., 1986 Annual Roport (Form 1) filed with FERC, p. 422 (cited on p. 115)
P. Ohio Edison Co., 1985 Form 10-K, pp. 4-7 (cited in App.
J) t 1
-v-
UNITED STATES OF AMERICA BI: PORE Tile NUCLEAR REG'JLATORY COMMISSION In the Matter of )
) Docket Nos. 50-440A, et al.
Tile CLEVELAND ELECTRIC )
ILLUMINATING COMPANY, et al. }
TO: Chief, Policy Development and
-Technical Support Branch, Offico Of Nuclear Reactor-Regulation ANSWER OF CITY OF. CLEVELAND, 0111 0, IN OPPOSITION TO 01110 EDISON COMPANY'S APPLICATION FOR SUSPENSION OF PERRY OPERATING LICENSE ANTITRUST CONDITIONS The City of Cleveland, Ohio ("Clevoland"), filoa this answer in opposition to the application submitted by Ohio Edison Company (" Edison") in which it asks the Director of Nuclear Reac-tar Regulation ("NRR") to suspend the antitrust licenso condi-tions imposed by the Nuclear Rogalatory Commission ("NRC") in 1 - this proceeding. Edison asks that the suspension of the condi-tions apply only to it as co-owner of the Perry Nuclear Power
!: Plant Unit l'(Perry)1/-and romain-in effect "until such time as a
thero may be-a factual basis for' imposing [the conditions]" (App.
80-81). Cleveland requests summary denial of the-application.
y
=
) 1/_ In addition to Edison, there arc-four co-licenseos:
wholly-owned subsidiary, Pennsylvania Power Company ("Penn Edison's o
Power"), Cleveland Electric Illuminating Company ("CEI"),
i Duquesne Light-Company ("Duquonno"), and Toledo Edison Com-pany (" Toledo"). In 1985, CEI and Toledo morged and a public i utility holding company,-Contorlor Energy Corporation, was L established which owns all of the stock of the two utilities.
- For_oase of reference, Edison's application is cited as
" App." whenover specific pages are referred to. For examplo, page'8 of the brief is cited as " App.8".
I E
e9 ,,- -- , , , , ep.,. w ,, --- ,c--y v.-.,, -.,wr--- ,-.-.,w c--+-,.r ..-.---e---- - . -
I. PREAMBLE t
Edison's application rests basically on its claim that
)
j the " exclusive basis for imposing the-license conditions" was the purportedly universally held anticipation of the economic super-t (( } lority of nuclear power which would provide Edison and its co-4
- licensees (CEI, Duquesne, Toledo, Penn Power) an unattainable economic advantage individually and collectively as members of
^
the Central Area Power Coordinating Group ("CAPCO") over other i
j entities engaged *in the electric business in their respective service areas (App. 2-3).1/
i Edison asserts that as matters have turned out, the
- " relative cost" of nuclear power has increased dramatically from i
- the cost which the NRC purportedly assumed and relied upon when
- it imposed the antitrust license conditions. Consequently, ar-i gues Edison, it is "neither necessary nor appropriate for the NRC
! to_ continue to restrict (Edison's] business activities" (App. 4).
i.
1 Indeed, Edison contends that the "NRC has no statutory basis for overseeing the licencee's business conduct" in view.of the alleg- '
q edly higher cost of nuclear power. Id .-
Edison's application seeks the requested relief on its own behalf in its status as co-owner of Perry along with CEI,
[(((
2 Toledo, Penn Power and Duquesne. But if Edison were to prevail and secure suspension of the antitrust license conditions, its i
co-licensees, who are quietly watching and waiting in the wings,
! 2/ In the decisions of the Licensing and Appeal Boards, these co-l licensees are collectively referred to as " Applicants". In l this answer, Cleveland also sometimes refers to the five co-
, licensees as " Applicants". They are the only members of CAPCO.
l-4
I 1
t' I t
( will be quick to file applications on their ow'1 behalf seeking the same,relie . The consolidated proceeding in which t.he anti-trust license conditions 0pre imposed involved Perry as well as
\
\ ~,.
p Davis-Besse'NuclearPowerptation, Unita 1, 2, 3 (906 megawatts g __ .
)
each). Davis-Besso is co-)wned by CEI and Toledo. In short, this application is inot merely an Edison application, affecting b
,_ only Edison. I deed', the N C's treatment of Edison's applica-tions could set! ' precedent 4pplicable to other proceedings.
I n S + tcion I I I , below, Cleveland shows that the NRC does not hav he authority to suspend or amend the Perry anti-C trust 1.i cen . conditions . Edison's application requests the NRC to conduct nother review of the an\t.itru s t consequences of the licensed tivity. [However, Section'105(c) of the Atomic Energy s
(,
Act pro ~ es that an antitrust review can occur only in connec-tion wi a pending construction permit application and, in a narrJr fashion, to an application for an operating license.
below, that even if the NRC finds g)'leveland shows in Section IV, tflat it has jurisdiction to address Edison's application, the re9ief sought by Edison must be denied because it is barred by the\ doctrine of res judicata, or, alternatively, collateral es-s l toppel. This is because the arguments made by Edison in its ap-1 plication here were made, or at least could have been made, dur-l 0
l l
D' ing the construction permit and operating license proceeding. If these doctrines are for some reason not applied, laches bars Edi-son's application, as shown in Section v below.
Cleveland demonstrates in Section VI, below, that even if the NRC chooses to address the merits of Edison's application, 9
-me ,
c
- the application must still-be denied. Among other things, Edinon misinterprets the Atomic Energy Act and NRC precedent in arguing that the NRC cannot impose antitrust licence conditions if nu-clear energy is not the cheapest source of power. Moreover, as
{ (( ) Cleveland demonstrates, the events cited by Edison as the basis for its application do not undermine the legal or-factual basis of'the NRC's decision to impose the antitrust conditions. The
{
NRC based its imposition of the conditions on the finding that, un.'ess the conditions were imposed, the substantial baseload poirer generated by the new plants and-the expanded coordination ani wheeling services which would result as part of the associ-ated transmission lines would exacerbate tha pervasive anticom-petitive conduct of the Applicants. Purported changes in the cost of nuclear power do not in any way undermine the NRC's analysis.
P f
4 L(O e
t i
b
L 5-II. BACKGROUND
['
A. THE CONSTRUCTION PERMIT PROCEEDING Both the decision by the Licensing Board 3/ and the Ap-( () peal Board 4/ provide comprehensive statements of the-background
( of this proceeding. Cleveland briefly reviews this background.
- 1. The applications
- The five Applicants -- Edison, its subsidiary Penn Power, CPI, Toled,o and Duquesne -- are investor-owned utilities engaged in generating, transmitting and distributing electric p energy to wholesale, retail and industrial customers in a 14,000 square mile area of Ohio and western Pennsylvania. In 1967, the Applicants formed CAPCO. As members of CAPCO, the Applicants p agreed to engage in operational and developmental coordination-.
As part of operational coordination, the Applicants agreed to coordinate their operations by, inter alia t exchanging power and sharing reserves. As part_of developmental coordination, the-Applicants agreed to plan their future generation and transmis-sion facilities as if.the pool's requirements were those of a single power system.
j- The applications by the co-licensees at-issue in this proceeding were an aspect of this developmental coordination l ) plan. -The Appeal Board described the-applications in this way:
Lt l
Commencing in 1969,-the Applicants sought permits '
from the Commission to build a series of nuclear 3/ LBP-77-), 5 NRC 133, 138-40 (1977).
4/ ALAB-560, 10 NRC 265, 270-81 (1979).
power plants with a combined generating capacity in-excess of S,000 megawatts. The first applica-tion, filed by CEI and Toledo Edison jointly, was for United [ sic Unit] No. 1 [906 megawatts] of the Davis-Besse facility in Ohio. The Attorney General, while noting a dispute between CEI and Cleveland pending before the Federal Power Commis-y _() sion over the City's request for an interconnec-( tion, did not request an antitrust hearing on Davis-Besse 1. 36 Fed. Reg. 17,888 (September 4, 1971). The city of Cleveland did, however. In a petition filed on July 6, 1971, Cleveland stressed that MELP (its municipal power system)[5/] both I
purchased power at wholesale from CE1 and competed with it at retail. Cleveland alleged that the ility had exercised its control over generation ut,d an transmission facilities anticompetitively to j
block MELP's attempt to obtain bulk power at lower cost from other sources. In addition to other
, relief, the city asked for licenso conditions giv-ing MELP access to power generated by the nuclear plant.
- In March of 1973, the five applicants sought Com-
, mission permits to build Perry Units 1 and 2 in Ohio. This time the Attorney General'a advice letter (dated December 17, 1973) recommended an
! antitrust hearing. The letter stressed activities i: of CEI, which was described as " engaged in intense l competition with the city of Cleveland at the re-i tail distribution level, and, to a lesser extent, with [the city of] Painesville." After observing that "CEI controls all of the transmission facili-i ties' surrounding these two cities," the Attorney
, General portrayed CEI's objectives as being *to-4- reduce and ultimately eliminate" the two municipal systems. The advice letter recounted a history of
, unsuccessful negotiations between CEI and the 3
municipalities over interconnections, wheeling.
coordination, and access to large-scale genere-tion, and characterized CEI's conduct in these
- . matters as " inconsistent with the antitrust laws" 39 Fed. Reg. 2029 (January 16, 1974). The city of
- s Cleveland also petitioned for an antitrust hearing b on this application and asked leave to intervene and participate as a complaining party.
5/ -At the time of the proceedings before the NRC, Cleveland's municipal electric system was known as Municipal Electric
- Light and Power System ("MELP"). The municipal system's pre-sent name is Cleveland Public Power.
4
-.- - ,-a . , , , - , -
In August 1974, the five applicants jointly re-quested construction permits for Units 2 and 3 of the Davis-Besse facility [906 megawatts por unit).
The Attorney General again recommended an anti-trust hearing. His advice was based on the Appli-cants' refusal to admit the municipal systems into the CAPCO pool and what he judged a pattern of anticompetitive dealings by the applicants with
(- the smaller systems. According to his advice let-tor, "{t]he Applicants' refusals to wheel power, to interconnect and to engage in coordinated op-eration with smaller utilities raiso problems which should be considered in the perspective of their monopoly control of the transmission facill-ties surrounding the smaller systems of their com-petitors. Antitrust principles have evolved which pla'ce distinct limits upon a supplier's exercise of monopoly power at one level of distribution to adversely affect competition at another level,"
citing the Supreme Court's decision to that offect in Otter Tail Power Co. v. United States, 410 U.S. 366-(1973). The Attorney General stated that a section 105c hearing was called for because the
"[c]onstruction and operation of the Davis-Besse Nuclear Power Station, Units 2 and 3, and market-ing of its power output would maintain such an anticompetitive situation. Granting the license applied for without adequate antitrust conditions will generate new opportunities for_the Applicants to engage in coordinated operation with each other and will provide them with a new source of rela-tively low-cost power and energy at the time they are effectively foreclosing any possibility of their competitors sharing in the benefits of coor-dinated operation and. development " 40 Fed. Reg.
8395-96 (February 27, 1975). The city of Cleve-land petitioned to intervene in this proceeding as well.
footnotes in original omitted; footnote in brackets supplied; 10 NRC at.275-76.
( 2. The Licensing Board decision The NRC consolidated the proceedings and directed the Licensing Board to conduct an evidentiary hearing to examine whether antitrust license conditions should be imposed on the construction permits. The Attorney General (represented by the
Justice-Department's Antitrust Division), Cleveland and the NRC staff wore admitted as complaining parties.
The Licensing Board comprehensively examined each of j l
j} .the antitrust allegations. The trial took place over seven
( months and resulted in a rncord of nearly 13,000 transcript pages with over 1,300 exhibits. The Licensing Board issued its initial decision on January 6, 1977. Briefly, the Licensing Board found that-the Applicants possessed monopoly power individually in the l
j' relevant markets'within their respective service territories and
?
I jointly in the so-called Combined CAPCO Company Territories l'
l (CCCT)6/:
Within their respective service areas, each in-dividual Applicant is dominant with respect to s generation, transmission, and sale of electric
! energy.
a) Generation. In 1973, CEI controlled 94.11% of
, all generating capacity in its service area Duquesne 99.90%; Ohio Edison 96.61%; Penn Power
! 100%; Ohio Edison-and Penn Power 97.08%; TECO d
95.68%.- In 1973, Applicants controlled 95% or more of all existing generating capacity in the I CCCT,
! b) Transmission. CEI. controls 96.8% of all l' transmission facilities 66 KV and above within its service area; Duquesne 100%; Ohio Edison and Penn Power 99.8%; TECO 99.2%. On a combined basis, Applicants control 99.3% of transmission facili-j ties 69 KV and above in the CCCT.
- citations to record omitted; 5 NRC at 153.
Moreover, the Board found that Applicants used this II control to engage in pervasive anticompetitive and unlawful con-
- 'uct, d both individually and jointly as members of CAPCO, to mono-6/ The CCCT " refers to the region bounded by the outer peri-meters of the present service areas of the five CAPCO mem-4 bers. . . " 5 NRC at 142, n. 8.
1 i
-- . . - _ - - - - ~ - - -, -- - - _ . . . - -
(;
9-polize the product markets. That Board summarized its findings in this way
. . . each of the member companies of [CAPCO) had participated in actions intended or having the foreseeable effect of reducing the reliability and
, _ the economic viability of competing electric gen-f erating and distribution entities within their re-( spective service areas . . . . Applicants provided bulk power services to each other even as they avoided competition in the retail and wholesale power transaction market. This avoidance was not passive since several Applicants were parties to affirmative agreements or understandings not to compete with one another. Moreover, each Appli-cant took actions intended or with the foreseeable effect of eliminating competition with non-Appli-cants in retail power transactions. These re-straints took the form of agreements in restraint of trade with municipal generating and distribu-tion systems including territorial or customer allocations, attempts to fix prices for retail power transactions, and refusals to provide bulk power services where the refusals had the known effect of reducing the reliability and the eco-nomic competitive potential of these rival sys-tems. Thus, each Applicant has entered into agreements and understandings the effect of which is to create and maintain a situation inconsistent with the antitrust laws within its own service territories. These actions or policies have con-tinued over a period of years and their cumulative effect has been to reduce the level of competition within the CCCT or to prevent such competition from being as vigorous as it otherwise might have been, footnotes omitted; 5 NRC 223-24. The Licensing Board went on to find'that CAPCO, from its very inception, was used as a tool to
. exacerbate the anticompetitive situation by excluding competing
( )f utilities from access to the developmental and operational coor-dination:
Although a primary purpose for the formation of CAPCO was to secure certain lawful advantages to Applicants themselves, . . . a collateral and well understood result of the formation of CAPCO was to deny to competitive entities in the CCCT access to coordinated operation and development.
citations to record omitted; 5 NRC at 224. This unlawf.ul ob-joctive was ef fectuated in certain instances by simply denying requests by utilities, such as Cleveland, to join CAPCO. CAPCO
- . also accomplished.the same result by imposing burdensome reserves ik j requiroments for membership which, in purpose and effect., dis-h qualified competing utilities. 5 NRC at 223-237. Exclusion of 4
competing utilities-from the CAPCO transmission facilities and, I
n hence, the coordin. ation and pooling services, was designed as one I
(
part of CAPCO's plan to underuine their ability to compote effoc-4
- j. tively, t
i In addition, the CAPCO members rejected requests by l Cleveland and-others seeking to purchase either ownership inter-t-
l eats in the nuclear plants or unit power. Id. at 232-35.
+
! The Licensing Board found that those anticompetitivo i
F activities constituted violations of the federal antitrust laws.
That Board then determined that, in view of those findings, the
[ criteria governing NRC authority to impose antitrust license con-i ditions -- "whether the activition under the license would creato i -- -
( or maintain a situation inconsistent with the antitrust laus" --
!. had_been met. Tho Licensing Board noted the significance of "the g_ -size of the fivo large generating stations involved in this li-conse proceeding and the substantial contribution they will make l .1( f i- : _
to the resources of the CAPCO pool and in particular to the sat-isfaction of its base load requirements" 5 NRC at 240. The
- , Board recognized that, in view of the Applicants' pervasive >
i j coordinated anticompetitive conduct, any new electric generation 1
i i
I r-,,,-ma-,y- ev,- +---r--e~ , - - -y--
r by the CAPCO members would simply allow them to expand their mar-ket power to serve exclusively the increased demands of present customers and the demands of new customern. Competing utilities would be foreclosed from competing for the load because of the
(
(}_ Applicants' conduct.
Second, the Licensing Board noted that the con-struction of extensive, high voltage transmission lines in con-junction with the nuclear plants would exacerbate the Applicants' exclusionary tact'ics regarding access-to these facilities isc wheeling and coordination services:
, , . there is a direct tie between the generating station construction program and the transmission program which Applicants describe as complementing it. As described in CAPCO memoranda, far more-is contemplated-than the mere extension of a line from the site of the proposed nuclear station tv the closest terminal of the Applicant in whose service area of (sic) the plant is to be located.
Applicants are engaged in substantial planning studies and construction programs Epecifically in-tended to develop a plan for high voltage trans-mission at low cost among CAPCO members. There will be commingling, but the commingling will be on an extraordinary scale.
5 NRC at 239. The Licensing Board also noted that construction of the new lines would heighten the barriers to construction of
- other-lines by the non-CAPCO utilities:
Although access to transmission facilities is a necessary concomitant of reliable and economic energy production, small systems frequently find d( it infeasible to construct _duplicative transmis-sion facilities. Both economic and environmental-considerations-prevent such construction. Appli-L cants' construction of the high-voltage transmis-l sion grid necessitated in large part by the Davis-Besse and Perry plant additions, together with the
+
existence of excess capacity on their present sys-tems, render the construction of duplicative
( transmission lines essentially impossible.
y- ---4 2- -.--- _.p ,---- g- --m -
9 .i,.. ., y- - - - . - --
i 12 -
citations'to_ record omitted; 5 NRC at 156. At the same time, the Licensing Board noted_that the new lines would facilitate even more extensive coordination services. Id. at 156-57. Thus, the Board recognized that construction of the new lines would exacer-i bate the adverse competitive impact of the Applicants' exclusion-ary policies. Id. at 239-41. This, in turn, would exacerbate the anticompetitive situation.
Finally, the Licensing Board found that the Applicants' policy of placing anticompetitive restrictions on access to nu-clear power also constituted an obvious nexus between the licens-ing of the facilities and the anticompetitive situation. 5 NRC at 241-43.
The Licensing Board imposed ten conditions. The condi-tions required-each of the Applicants:
- 1. fto refrain from conditioning the sale or exchange of wholesale power or coordination services to any on-tity(les)2/ on the purchaser's agreement
-(a) to. restrict the use or alienation of such energy or services to any cusiimer or territories, (b) to give up any other power supply _alterna-tives or to deny itself any market opportunities, or (c) to withdraw any petition to intervene or forego participation in any proceeding-before the-
!<RC or refrain from instigating or prosecuting any antitrust action in~any other forum.
( -
- 2. to nffer interconnections on reasonable terms and conditione at tjhe request of any other electric enti-1/ The license conditions define " entity" as meaning any elec-tric generation _and/or distribution system or municipality or cooperative with a statutory right or privilege to engage in either of these functions.
/
/
(~
13 -
ty(les) in the CCCT, such interconnection to be
, available for operation in a closed switch synchronous operating mode if requested by the interconnecting en-tity(les), subject to reasonable safety procedures that do not deprive purchasing entitles of a means to effect additional power supply options.
- 3. to engage in whooling8/ with respect to any unused i capacity _on the Applicants' transmission lines, for and at the request of other entities in the CCCT, of elec-tric energy from delivery points of the Applicants to the entity (les) and of power generated by or available to the other entity as the result of its ownership or entitlements9/ in generating facilities to delivery points of the licensees designated by the other entity, and to make reasonable provision for future require-monts fbr wheeling services in planning future trans-mission capacity.
- 4. to make available membership in CAPCO to any entity in the CCCT with a system capability of 10 megawatts or greater or to a group of entities as a single member-ship with the same capability on an aggregate basis, subject to certain specified conditions and restric-tions.
5, 6 and 7. to sell maintenance power, emergency power, or economy energy to requesting entities in the CCCT upcn terms and conditions no less favorable than those the Applicants make available to each other or to other entities outside the CCCT.
- 8. to share reserves with any interconnected genera-tion entity upon request on an equal percentage basis or by use of the CAPCO P/N allocation formula or on any other mutually agreeable basis, at the requesting en-tity's choice.
- 9. to make available to entities in the CCCT access to Davis Besse Units 1, 2 and 3 and Perry Units 1 and 2 nuclear units and any other nuclear units for which the licensees, or any of them, shall apply for a construc-tion permit or operating license during the next 25
.(O 8/ The license conditions define " wheeling" to mean transporta-tion of electricity by a utility over its lines for another utility,' including the receipt from and delivery to another system of like amounts but not necessarily the same energy.
9/ " Entitlement" includes but is not limited to power made available to an entity pursuant to an exchange agreement.
/
n -
,i
/
/
I years, either as an ownership share (up to 10% of capa-p city of the Davis-Besso and Perry Units and up to 20%
of future units), unit participation, or contractual propurchase power basis, at the requesting entities option. Commitments for the Davis-Besse and Perry units must be made either two years after "this deci-sion becomes final" and for the future units, within
_O two years af ter a construction -permit application is
( filed:with respect to such a unit or within two years after receipt by a requesting entity of detailed writ-ten notice of applicants' plans to construct the unit, whichever is earlier, subject to-the 25 year limita-tion.
5 NRC at 256-59. Condition 10 states:
Th'ese conditions are intended as minimum condi-tions and do not preclude Applicants from offering additional bulk power services or coordination op-
. tions to entities within or without the CCCT.
However, Applicants shall not deny bulk power ser-vices required by these conditions to non-Appli-cant entities in the CCCT based upon prior commit-ments-arrived in the CAPCO Memorandum of Undor-standing or implomonting agreements. Preemption of options to heretofore deprived entities shall be regarded as inconsistent with the purposes and intent of these conditions.
- 3. The Appeal Board decision The Applicants submitted a,300 page brief challenging the Licensing Board's decision.10/ In-its decision issued September 6, 1979, the Appeal Board rejected this challenge and r
affirmed the Licensing Board's findings.- 10 NRC 265. The deci-sion had a somewhat unusual pedigree. Jerome Sharfman, the Ap-peal Board member who wrote-the original draft of the decision, (O resigned from the NRC before the draft was reviewed by the other members of the Board. The remaining Board members decided to-
" concur in (the] ultimate factual and 3agal conclusions (of Mr.
I Sharfman's draft) and the result it reaches except where indi-10/ " Applicants' Initial Brief In Support Of Their Individual And Common Exceptions To The Ini,tial Decision", filed April 14, 1977. For ease of reference, the brief is cited as " App. Dr.".
- _ - . -_,/.
cated in our separate opinion." Id. at 270. Hence, analysis of the Appeal Board decision requires examination of both the Sharf-
-man draft and the Board's deciaion.
- a. The Applicants' anticompetitive activities
- (_ .
'The Appeal Board adopted Mr. Sharfman's analysis of the anticompetitive-acts committed by the Applicants individually and i
j collectively in their status as CAPCO members. The Appeal Board i
f noted that the Applicants " control a 95 percent or greater share j of the bulk power generation and. transmission facilities.in their j- respective service areas." Id. at 273. The Appeal Board found j that the CCCT is the relevant geographic market for purposes of 1
antitrust review-and that there-were three relevant product mar-
)i
- kets
- (1) the retail market, (2) the wholesale power
!~ . market _(which includes all firm bulk power production, whether 4
l retailed for 'in house' retail purposea or wholesaled 'outside' i for independent retail distribution), and (3) the coordination services market. Id. at'301.
l :The Board then agreed-with the Licensing Board's find-i
__ing that the Applicants, both individually and as members of CAP-l CO, used~their domination of generation and~ transmission to mono-l l polize each of these product markets. First, the Applicants pre-cluded other_ utilities-in their service areas from purchasing
(() power from alternative suppliers by refusing to provide the -
} wheeling. services on their -transmission lines which provided the j only interconnection with other suppliers. Id. at 327-34. The 4
I Appeal Board pointed to the repeated refusals of Edison, CEI and i
t
/
. - .- -, , -. ,- ~.
T Toledo to wheel power for competing utillties. For example, the I
Appeal Board noted-that Edison refused to wheel power from-Buck-nye Power, Inc. to the Buckeye member cooperatives located in Edison's servjce area. Id. at 331-33. Likewise, CEI refused to
}
( wheel inexpensive power from the Power Authority of the L to of New York (PASNY) to Cleveland. Id. at 327-28. The Apptal Board noted that the competing utilities could not, as a practical mat-ter, construct their own transmission lines to duplicate the Ap-plicants' f acilit'les . Hence, the Appeal Board found that these refusals to grant access to these essential, or so-callod bottle-neck, transmission facilities violate Section 2 of the Sherman Act. Id. at 328.
-The Appeal Board agreed with the Licensing Board that the Applicants' unlawful acts did not stop there. The Appeal Board determined that the Applicants not only excluded competi-tors from access to alternate suppliers but also imposed.perva-
. sive restraints on their competitors' ability to resell the power bought from them. The Appeal Board found that these resale re-straints were designed to prevent the-utilities from competing for customers, especially industrial loads. Id. at 311-22.
These resale restraints included territorial-restrictions, cus-l tomer allocations and agreements not to resell power in the u(O wholesale market. Id. at 313-14. The Appeal Board noted that
~
these resale restraints constituted a per se violation of the antitrust laws.- Id. at 316. Edison and CEI were found to be as guilty as their cohorts in imposing resale restraints. For ex-
[ ample, Edison barred its utility customers from reselling power l
.E i
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17 -
to industrial or wholesale customers and limited the geographic areas in which-the power could be resold. 5 NRC at 198-201.
The Appeal Board also found that the Applicants barred
(} the utilities from receiving coordination services which, as
-( noted, are necessary in order for a utility to operate in the efficient manner needed to be competitive. The Applicants re-peatedly refused requests by the utilities t; use the Applicants' transmission facilities for coordination services. The Appli-cants also refused access to nuclear power unless the utilities granted Applicants a right of first refusa) to repurchase excess power for which the utilities had no imradiate need. The prac-tical impact of this restriction was, again, to bar access to co-ordination services and to relegate the utilities to a continued role as isolated utilities. 10 NRC at 313-14 (Edison); 321-(CEI).
To further consolidate control of retail and wholesale markets, Edison, like the other Applicants, engaged in a panoply
-of anticompetitive acts and practices-including (1) seeking-to acquire municipal electric systems in their service areas (id. at 376-378, 380-82), and (2) charging wholesale rates to municipal' systems which_ wore higher than comperable industrial rates, f
thereby-creating unlawful price squeezes (id, at 382-84).
{ In addition, the Applicants entered into numerous agreements among themselves dividing up service areas. Id. at
'369-75. Both Edison and CEI were parties to-several such agree-ments. Id. The Appeal Board found these agreements were 11-
-legal,.per so, under the antitrust laws. Id. at 375.
J m n- , g n - , - ,e -- , - . , w - --
4 m -h
(
- :n -
The Appeal lloard agreod wi t h t he biconning lioar d ' nat the Applicantn, act..ng collect ively an trembor n of CAPCO, engagod in additional anticompetitivo and unlawful actn. CAPCo oxcluded conc t. i ng u t. i l i t i on from accoon t o CAPCO'n coordinat ed operationn and dovolopment. Tho Appeal lloard f ound t hat tho Applicanto did thin by s opoat.edly donying requent o by ut.ilition to join CAPCO.
Id. at 339-52. Clovoland was among the ut.ilit ion whono roquent.n worn dotilod. Id. a t. 349-511. Again, the lloard iound t hat thoro ref unala connt.it.uted concerted rof unals to dual and, henco, woro illegal par: ng undor tho ant it. runt lawn. Id. a t. 352. The Appeal 11oard noted t hat. CAPCO alno adopted burdonnomo renorvo requiro-monta tor membernhip in CAPCO in ordor t.o "provido a unoful ox-cuno for refuning pool membornhlp to municipalition" in CAPCO.
1d. a t. 339.
Moreover, the 11oard agrood with tha 1,1 conning lioard that CAPCO'n articompetitivo conduct extended direct _ly tu the CAPCO nuclear plant.n. The lloard found t. hat CAPCO refunod to ac- j copt Clovoland'n propotal to olt. hor purchane an ownornhlp nharo in, or unit powor f rom, CAPCO'n nuc] oar uni t.n unloan Clovoland agreed to "unronnonablo, anticompot.i tivo torma . " Id. at 358-62.
- b. The nexun butwoon the proponod nuclear p~l ant.n and t he anticompet.i t.1vo n i t.uation
' O Armed with thono findings of porvanivo and pornicioun ant.icompetitivo conduct , the Appen) lloard thun conuidorod whothor the noxuc botween tho "act.ivit ion under t.ho liconno" and t.ho "nituation inconnintont" with tho antit runt lawn required by Soc-
- t. i o n 105(c)(5) wan pronont. The Appeal board rocognized the
/
/
/
/
l I,
- 19 -
l l
NitC's broad mandato in Sect. ion 105(c) t o imposo antit. runt. condi- i i
tions:
The provialon convoyn t.hu monnago t. hat. Congroan did not want nuclear planta authorized in circum- !
stancos that would croato or maint.ain ant.icompoti-tivo situations without. liconao condit2ona do-(O- nigned to addrons them.
10 HitC at 291.
The Board adopt.od the Licensing floard's finding that thoro was an intogral link betwoon the act.ivity to bo liconnod ~~
construction and 6poration of t.ho nuclear planta -- and t.ho [
anticompetitivo situation extant in the CCCT.--Id. at. 304-05.
r
~
The Appeal Board summarized the Licensing Board's findingas Givon Applicants' ono-system planning and cocrdi-nated operations, the unconditional addition of
-fivo large nuclear power planta advantageous for "basoload" (low operating cost) generation would increaan t.ho CAPCO system's bulk power gonorat.ing capacity by nearly a third. This would oxacorbato the oxisting anticompetitivo situation, making it avon moro difficult for the isolated public power ayatoma to continuo to compete with the Appli-o canta.
Another linking factor was discerned by the Doard in those instances where App 11canta had doigned to mako nuclear power available to tho municipal and cooperativo ayatema. The Board found that au part of the prico for furnishing that power, Ap-
' plicanta had insisted on such anticompetitivo con-ditions na agreementa not to compoto, allocations of service torritorios and customera and fixing of 1 prices. These factora (among othera) patisfied the Licensing Board that thoro was more than a aufficient "noxus" betwoon the licensoo activition (O.
and the situation it found to be inconsistent with the antitrust laws and, thorofore, that remedial liconao conditions woro in order.
iootnote omit.ted; 10 NitC at-281.
Tho Appeal Board found that "the Licensing Itoard em-played the correct legal standards in datormining whether
,* . i
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- 20 -
. 11consing those plants 'would croato or maintain a situation in-i consistent with the antitrust. laws'". 10 IJRC at 285. Thus, by I adopting t.hu Licensing Board's reasoning and iindings, the Appeal Board recognized the intogral noxus betwoon the proposed nuclear
( facilities and the Applicants' porvasivo and pornicious anticom-petitivo and unlawful conduct.. Thorofore, t.ho Appeal Board af- ,
firmed the decision of the Licensing Board to imposo antitrust i i
licenso conditions.
i .
l- l i c. The antitrust licenso conditions F The Appeal Board approved the license conditions l drafted by the Licensing Board with only minor modifications, e
. Significantly, the Appeal Board rejected Mr. Sharfman's proposal
- to rostrict the scope of the conditions ensuring non-discrimina-tory access to coordination and whooling services to customers purchasing nuclear power or ownership interests in the plants.
10 11RC at 290-294. . The Appeal Board noted that this rostriction.
would allow the Applicants to continuo their anticompetitivo con-duct in connection with pooling and coordination services and to thoroby undormino the competitive position of utilit.ios which did not buy nuclear power. d J_d. at 291. That would bo inconsistent with the clear " massage" convoyed by section 105 of the Act that I
" Congress did not want nuclear plants authorized in circumstancos
, that would croato or mai.ntain anticompetitive situations without licenso conditions to address them", noted the Board. Jd.
Thorofore, t.he Appeal Board found that this rostriction would be inconsistent with the !JRC's broad mandate t.o imposo antitrust 1
1 b
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I conditions if the licenso activity would causo or cont.inuo sit.ua-tions inconsistent. wit.h antitrunt requirements. Id. at 284. l The Appeal Board also added Condit. ion no. 10, which on-sured that. non-CAPCO utilitios could purchaso any amount of
( wholosalo powor they needed from the Applicants:
Applicants shall ,oll wholosalo power to any re-questing entity in the CCCT, in amounto necdod to moet all or part of such entity's requirements. i The choico as to whet. hor tho agreement should cover all or part of the entity's requiremont.s ,
would be made by the entit.y, not the Applicant or ApD11 cants. !
10 NRC at. 408.
The Appeal Board rojected the Applicants' challongo of the appropriato 1ss of a uniform set of conditions applicable to ,
all of the Applicants:
Applicant.s forgot that many of the violations of l the antitrust laws which appear from the opinion below woro the result of joint and concerted ac-tion by the applicants. Indeed, the CAPCO pool :
established a system whereby many of their activi-tion are conducted jointly, many of their deci-sions are mado jointly and,_whero this in not no,
- an individual docinion may sometimos require t.ho consent of the other members. In this kind of situation, it was necessary to have a single not of conditions applicable to all Applicants. ;
footnoto omitted; 10 NRC at 393-94.
r i
- d. Subsequent review On October 22, 1979, the Applicants submitted petitions l
i t.o tho NRC challenging the Appeal Board's decision.11/ They in-l 11/ " Ohio Edison Company's And Ponnsylvania Power Company's Pot.1- :
tion For Review Of ALAD-560"; "The Petition Of The Cleveland .
Electric Illuminating Company And The Tolt.do Edison Company For Review Of ALAD-560"; " Pot.ition of Duquesno Light Company For Revfow".
j
- 22 - t l
corporated by-roforence their arguments in their brief challong-ing the Licensing Board's decision. 5 i
The NRC declined to review the Appeal floard's decision.
l Thoroforo, tho docision became a final NRC action. i
( Penn Power and Duquonno filed petitions for review in l the Third Circuit under the namo D_liquonno Licht Co. v. NRC.j 2/ ,
i llowever, on September 26, 1980, the petitioners submittod a
" Stipulation To Dismiss With Each Party To near Its own Costs".
The Third Circuit' dismissed the appeals on October 8, 1980.
B. Tite _ OPERATING LICENSE PROCEEDING The Applicants submitted an application for a full !
power operating 11conso in 1980. The NRC staff asked the Appli- ,
cants to comply with Regulatory Guide 9.3 and to provido informa-tion concerning any "changos that have occurred or are planned to occur sinco submission of the construction permit application".
The NRC staff also asked the other parties to the construction ,
permit proceeding to comment on the Applicants' responses to Rog-
- ulatory Guide 9.3. On November 7, 1983, the NRR Director deter-mined that, pursuant to Section 105(c)(2) of the Atomic Energy Act,-"the changos that have occurred since the antitrust con-struction permit (CP) review are not of the nature to requiro a
. Second antitrust TOV 10W at the operating 11COnse (OL) stage of the application." 48 Fed. Rog. 52,992 (Nov. 23, 1983). .
Hearings on the operating licenso application were con-l l ~12/ Third Circuit Docket Nos. 80-1295 and 80-1296 (filed Feb. 29, 1980) and Docket Nos. 80-1307 and 80-1310 (filed March 4, 1980),
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i i
ducted in 1983 and 1985. The record was closed on May 3, 1985, r
On November 7, 1986, the NitC issued a final order granting a f or-i ty yonr full-power operating licenso offoctivo November 13, 1906. [
i The licenso incorporated the antitrust licenso conditions imposed i during the construction permit procooding. 11ocause of a pending pot.ition for review before the S.ixth Circuit challenging an NitC order denying intervention l'y a p,rty, .ho court stayed imp]omon- i tation of the licenso. The conrt .;risolidated the putition with :
other petitions challenging the 'sauanco of t.ho 11conuo. . On March 17, 1987, the court af firmed the NRC's intervention order as well as the decision to grant. the full-power operating 11-conso. Stato of Ohio v. NitC, 814 P.2d 258 (6th Cir. 1987),1_3/
s
(
)
t i
i 10 .
i
! ,13/ The court decision summarizos the events accompanying the NitC [
l review of the operating license application. That summary is L not repeated hero.
I
,~ . ,.. . -__ -......_.~._. _ .-. _ _ ~_....~ _ ,,._ __ _ ._._,. _ .. _ ._ _ _ . . , _ _ . . _ .
C. -
III. Ti!E NRC DOES NOT llAVE JURISDIC-TIO!J TO GilAt1T EDISON ' S Al'I'I.ICAT10!J Edison is seeking suspension of the antit. rust licenso conditionn pursuant to Sections 2.101 and 50.90 of the NRC's reg-ulations. In order to show that. the NRC has the statutory au-thorit.y to grant the requestod ro.11of, Edison citos cortain language by the Licensing 11oard and Appeal Board in this proceed-ing. Ediscn also argues that this authority is a corollary of the NRC's authority to modify licenso conditions in entirely dif-foront. settings.
As shown below, Edison's arguments are flawed. As shown in subsect. ion A, Edison simply canvasses NRC decisions ad-dressing the NRC's authority in cont.oxts entirely dif ferent than that at issue here. Edison chooses to overlook the portinent NitC decisions in which the NRC has recognized that Congress, in on-acting the 1970 amendments to the Atomic Energy Act. ( Ac t. ) , pre-cludes the NRC from exorcising the sort of continuing jurisdic-tion over antitrust aspects of an operating license requested by Edison. llence , the NRC has already recognized that it does not have the authority to provido the type of relief requested by Edison. Consequently, the procedent cited by Edison is inap-posite. In subsection B, Cleveland shows that the NRC decisions O citea uv eate # #aaer tee edie a'e eroeme#t- 2" e=deectio" c.
Cleveland shows that the language cited by the Licensing Board and Appeal Board in this proconding is dicta and is misconstrued by Edison.
l A. Tile NRC llAS IlECOGNIZED TilAT Tile 1970 AMENDMENTS PitECLUDE IT ritOM MODI-FYING ANTITRUST CONDITIONS SUBSEQUENT TO__ ISSUANCE OF AN OPERATING LICENSE Edison begins its analysis by citing NitC procodont. ad-O/ drossing Section 105 of the Act and suggests that NItc authority to grant the relief coquested by it is a direct corollary of this i
procedent. Edison's reasoning, in its entirety, is as follows (App. 49-50):
Subsequent to tho issuanco of an OL for a nuclear power plant, 'no further antitrust evaluations ordinarily take place unless a licenso amendment is sought which is determined would result in "significant (antitrust) changes" to the licensed activities. In such circum-stances, the NRC undertakes another antitrust review.
footnotes omitted; Edison goes on to draw the following inference from this statomont (App. 50):
The regulatory schemo described above ensures that sig-nificant changes in the competitive environment are taken into account in the NRC regulatory process. If an antitrust remedy is warranted subsequent to the ini-tial antitrust review of the application that takes placo when a construction permit is sought, the NRC Staff is expressly authorized by its organic statuto to impose it. Similarly, if (as wo believe is the caso here) a previously imposed antitrust remedy no longer is warranted, then the NRC Staff also must have author-ity to remove the unjustifiable conditions.
Edison's reasoning is undormined by the very precedent cited by it. In footnote 111 of its application, Edison cites (1) llouston Lighting & Power Co., et al. . (South Texas Project, O Unit Nos. 1-and 2) ( " South Texas ") , CLI-77-13, 5 NRC 1303 (1977 ) ,
4 (2) Detroit Edison Co. (Enrico Formi Atomic Power Plant, Unit No.
4 - 2 ), AbAB-475, 7-NRC 752 (1978), and (3) South Carolina Electric and Gas Co., _(Virgil.C. Sumner Nuclear Station, Unit No. 1)
(* South Caroli _na II"), CLI-81-14, 13 NRC 862 (1980). Edison also
- __._.u-_
(
citou Section 50.90(b) of t. h e IJRC 's regulationn .
Sout.h Texas and the related subsequent. decision in Florida Power (, Light Company (St.. Lucie Plant, Unit IJon. 1, 3,
- 4) ("Plorida_ Power"), ALAB-428, 6 NHC 221 (1977) (which la not even mentioned by Edison) are the seminal NRC decisions on the statutory limits of the NRC's authority to modify antitrust. con-ditions. In South Texas and Florida Power, the NRC reviewed the legislative hist.ory and objectives of the ant.itrust review pro-visions of the Act. As discussed below, the NRC concluded that it cannot conduct an antit. rust review outside the context of a construction permit or operating license proceeding and, hence, cannot impose or modify antitrust conditions outside these con-texts. Because Edison is seeking suspension of antitrust license conditions outside these contexts, South Texas and Florida Power show that the NRC lacks the statutory authority to grant the re-quested relief. Because of the direct applicability of South Texas and Florida Power here, the decisions are described in de-tail below.
- 1. South Texas South Texas, 5 NRC 1303 (1977), stemmed from an ap-plication for construction permits jointly filed by llouston h Lighting & Power Company (llouston), Central Power and Light Com-pany (Contral) and the Cities of San Antonio and Austin, Texas.
The Attorney General reviewed the application for the permit and recommended that an antitrust hearing was unnecessary. Id. at 1305. No person submitted a petition to intervene or a request
1 r
1 i
t for a hearing on the antitrust aspects of the proposed project.
lionco, no antitrust hearing was conducted. The construction por- !
mits were issued in lato 1975. !
In 1976, Contral established for tho first timo an in- i I
}
torconnection betwoon its distribution facilition and those of !
i certain out-of-stato utilities. Ilouston . sponded by breaking l i
off interconnections between its distribution system and the sys-tems of cortain other utilition, including Contral. Thoso ac-tions lod to a flurry of judicial and administrativo actions in which both Contral and flouston challenged the actions of the other in various judicial and adiainistrative forums.
Portinent here is contral's filing beforo the NRC of a petition seeking intervention and an antitrust hearing. Contral argued that liouston's termination of interconnections was a supervening development which warranted tho imposition of anti-trust conditions. The petition was addressed, in turn, by the Licensing Board, the Appeal Board and the NRC. By that point, all parties agrood that an antitrust hearing should be held at the earliest opportunity but differed as to the appropriato pro-cedure for conducting the hoaring.11/
The NRC began its analysis by noting that this oston-sibly procedural dispute raised "significant issues" concerning
-(() the NRC antitrust review authority:
. . . resolution of this dispute requires a defi-nition of the-scopo of our responsibility in on-11/ The position of each of the parties and the NRC staff is described in the decision. 5 NRC at 1307-08.
.e-
forcing the antitrunt lawa and the policios under-lying them in relation to the enforcement roupon-nibilities of other agencien, particularly t.hu Department. of Justico. Somo of the partion' argu-monto would ausign t.o un a broad and ongoing an-titrust. onforcement rolo; they envision that wo would have a continuing policing rouponnibility
[O over the activition of liconocon throughout tho lives of operating 11conuos. As we chall show, we bollevo that the Congrous envioloned a narrower role for thin agoney, with the responalbility for initiating antitrust review focused at the two-ntop liconaing procona.
5 NRC at 1309.
'The NRC ,firnt. examined the login1ativo hintory of t.ho 1970 amendments to the Act which outablichod pro-licensing anti-trunt review pursuant to Section 105. The NRC found that Con-grosa doliberately limited antitrunt review to the construction permit proceeding,and, in a more narrow fashion, to the operating 11conne proceeding. The NRC noted t. hat "[c)oncirn with the com-petitive aspecta of licensing in the nuclear area . . . goes back to the original legislation enacted in 1946." 11.
1 at 1313. The 1946 Act provided for anticipatory, antitrust review in the 11-consing context coupled with referrain to the Attorney General.
The Act was rewritten in 1954 and a two-st. age licensing process for privately owned reactors was set up. But antitrust review applied only upon a demonstration of the " practical value" of the facilities for industrial or commercial use. The NRC never mado c0 e eracticei ve1ue" f.indine. in the 1920 emendmente, Con 9rees responded by finding that nuclear power has commercial value, thereby eliminating the nood for a NRC finding of "pract.ical val-00".
The NRC noted t. hat the legislative history of the 1970
(
amendments indicated that antitrust review was to take place only t
in limited circumstances. The NRC quoted a statomont by the Chairman of the Joint Committee on Atomic Energy in which he
^
()
i noted that the Committoo "seos no sense" in plonary ant (trust review as part of both the construct.lon permit and oporating licenso procoodings. Id. at 1316. The Chairman noted that plon-ary antitrust review would bo inequitable to a utility which had i'
investod immonso sums in a nuclear facility on the basis of the construction permit. Honco, limiting antitrust review to the prolicensing stage was necessary to encourage investment in nu-q~
clear facilities, ho stated. Id. .
The Joint Committee also noted that prolicensing anti-trust review was advantageous because the utility would have "a ,
timo-related incontive to expedito the entiro process and to com- :
ply with reasonable antitrust safeguards beforo any competition is damaged."15/
1' The NRC observed that those concerns shaped the revi-sions to Section 105 enacted in the 1970 amendments. Pursuant to 1 Section 105(c) of the Act, whenever an application for a con- i struction permit is submitted to the NRC, the NRC is required to submit a copy of the application to the Attorney General. 42 U.S.C. S2135(c)(1). Within 180 days, the Attorney General must
({ } advise the NRC as to whether "there may be adverso antitrust as-poets" to the application which would warrant a hearing to moro 15/ Id. at 1314, quoting statomont of Charles A. Robinson, Jr.,
Staff Counsel to the General Manager, National Rural Coopera-tivo Association.
A
. . . . . . _ _ . - . . , _ _ . _ . - _ _ . . . . - _ . - - _ _ _.-.-....--._._u.-.,_,,,, ...,..__m,-,._,-,_
I fully evaluato thoso aspects. Id. If the Attorney General finds i
that thoro may be adverno antitrust aspects, the NRC must conduct a hearing.16/
1 i
O ^1ternetiveiv, if the ^tternev Geaerei deee not rec -
mond a hearing, the NRC must still conduct the hoaring if an in-torvonor challengos the antitrust impact of the application and requests a hearing.11/ If neither the Attorney Gonoral nor an intervenor requests an antitrust hvaring, the NRC cannot conduct a hearing.18/
If an antitrust hearing is conducted, the NRC must re-view all the evidence and "mako a finding as to whether the ac-tivities under the licenso would croato or maintain a situation inconsistent with the antitrust laws. . . ."19/
On the basis of its findings during the hearing, the NRC has tho authority _to refuse to issue a license, or to issue a license with such conditions as it dooms appropriato.20/
t The NRC noted that thoro is a mach narrower antitrust review in connection with an application for an operating licenso for a commercial facility. Section 105(c)(2) of the Act, 42 U.S.C. S 2135(c)(2), states that the antitrust review proceduros 16/ Kansas Gas and Electric Co., (Wolf Crook Generating Station Unit 1), ALAB-279, 1 NRC 559, 565 (1975).
'[ } 17/ Id.
IB/ Florida Power & Li.ght Co. (St Lucio Plant, Unit No. 2), LBP-82-21, 15 NRC 639, 640 (1982).
19/ Section 105(e)(5), 42 USC S2135(c)(5).
20/ Section 105(c)(6), 42 USC S2135(c)(6).
I
-. - - . - . - - . . - - . - - - - - - ~ . . - - . _ _ . _ _
L i
- 31 -
l t -
I applicable to an operating license application apply only if t l
. . . . the Commission determines such review is i advisable on the ground that significant changes j- in the licensee's activities or proposed activi-ties have occurred subsequent to the previous re-( view by the Attorney General and the Commission !
( under this subsection in connection with the con-a struction permit for the facility.
j "Significant changes" are changes which "(1) have occurred since the previous antitrust review of the licensee, (2) are reasonably
, attributable to the licensee, and (3) have antitrust implications that would likely' warrant some NRC remedy".21/
The NRC recognized that Congress, by setting up this i two-step review process, intended to limit entitrust review to 4
this process:
We find the specificity and completeness of Sec-tion 105 striking. The section is comprehensive; it addresses each occasion on which allegations of i anticompetitive behavior in the commercial nuclear power industry may be raised, and provides a pro-cedure to be followed in each instance.- The Act links Commission antitrust review with the licens-ing process, demanding a thorough antitrust review at the stage of application for the construction permit and allowing a narrower second review at the operating license stage, if such a review is deemed advisable on the basis that significant changes have occurred in the licensees activities.
The clear implication of the "significant change" language is that the holder of a construction per-mit is not subject to a second antitrust review-at the operating license stage unless *significant changes" in the proposed project with antitrust
{} footnote omitted; Id. at 1312.
implications have occurred in the interim.
The NRC went on to notes 2
21/ South Car, lina Electric and Gas Co. (Virgil C. Summer Nuclear Station, Unit 1) (" South Carolina I"), CLI-80-28, 11 NRC 817, 824 (1980). Note that the purpose of the antitrust review at the. operating license stage is to add -- not delete -- anti-trust conditions.
l But even among those who argued in favor of proll-censo review, no evidence emerges that anything more than licenso connected revi v was considered. I There is no hint in the legis1r history that anyono -- advocato or foe of prc..conuing review
--- anticipated anything moro.- Indood, the rea-()
sons undorlying support for the bill as onacted
< indicato the importance of anticipatory review to I
its advocatos. ,
emphasis in original; Id. at 1314. The NRC summarized its find-ings: ,
In summary then, we conclude that Congress had no intention of giving this Commission authority wh'ich could put utilitios under a continuing risk of antitrust review. Had Congress agreed with the proposition.that this Commission should have broad antitrust policing powers independent of licens-ing, the statuto that omorged from thoso discus- l sions would have looked quito different. Little attention would have boon paid to defining a two-step review process. The terminology of all par-ticipants in the drafting process would not have been focused so directly on "prolicensing" review.
Id. at 1317.-
The NRC also observed that the limits on the NRC's au-thority in the one' instance in which post-licensing review of antitrust matters is permitted also reflected the desire by Con-gross to proscribo such review in all other circumstancos. Soc-tion 105(a) of the Act permits the NRC to modify antitrust condi-tions if a court finds that the licensoo has violated any of the federal antitrust laws "in the conduct of the licensed activ-ity."22/ Referring to this language, the NRC notod
. . . . if a broad, ongoing polico power in the antitrust area had boon assumed, the languago in 105(a) authorizing the Commission to act with re-22/ llore, again, observe that the NRC action contemplated is the addition, not deletion, of conditions consistent with the court's findings,
l l
l l
i spect to licensos already issued, in light of the I antitrust findings of courts would have boon, if ;
i not superfluous, cortainly redundant.
Id. at 1317.
The NRC also rojected tho argument that Sections of the l
( Act other than Soction 105 could give the NRC "gonoral antitrust polico poworn in the nuclear industry" which would justify re- i opening 11consing proceedings. Id. Again, the NRC noted that the carefully circumscribed and dotalled antitrust review process set forth in Sect' ion 105 was intended to alone govern tho anti-trust-roview process. Honco,-other soctions of the Act which dealTin a gonoral way with the NRC's authority -- such no Soction 161, 4 2 U.S.C. S2201, and Section 186, 42 U.S.C. S2236 -- do not govern this process. Id.
The NRC found that in the special circumstancos at is-suo in South _Toxas, antitrust review prior to the filing of the ,
operating liconon application would not conflict with the poll-clos underlying Section 105 of the Act. The NRC noted that all of the parties favored an antitrust review. The NRC than stated
. . .Lif antitrust review is found nocessary in the porlod betwoon issuance of a construction por- ,
mit and application for an operating 11conso, we can fashion remedios to expedito the review. This ,
necessary flexibility can allow us to resolvo-an-titrust allegations in a timely fashion, without unduly delaying tho' licensing process, b Id. at 1318. ,
The NRC recognized that, due to the special circum-stancos in the proccoding, it did not nood to address whether antitrust review would be warranted in cortain other circum-stancos:
-__.- ~ . , _ _ _ _ _ .._.._ _ . . _ . - _ - _ _ ._._._._._,_,...__.__._;.__...-_.__._,-,;
T Thus, wo nood not and do not doeldo whether anti-( trust review may be initiated in caso of an appli-cation for a licenso amendment which would result in a "now or substantially difforent. facility," or where an application for transfer of contrcl of a licenso has boon mado, or whero "significant I
()
(
changos" occur aftor an oporating licenso is in-suod. We noto, howevor, that the report of the i
Joint Committoo explicitly refors to our authority to conduct a review in the first situation, N.R.
Rep. No. 91-1470, 91st Cong. 2d Sons., 3 U.S. Code .;
Cong. and Adm. Nown, 4981, 5010 (1970). Authority in the second situation, not explicitly referred *
[
to in the statuto or its history, could be drawn as an implication from our regulations. 10 CPR S S,0. 8 0 ( b) . The third situation prosents tho in-suas pending in the Llorida Power and Ligh_t pro-cooding, n. 1 supra, which wo do not have before un and nood not resolve to decido this caso. Wo r_ go no further than to conclude that Section 106 can have at boat limited application, in light of the "significant changes" rostriction of Section 105(c)(2) and its relation to the overall scheme of Section 105.
1 J,d. at 1318.
Remarkably, Edison in its torso discussion of Soutil Texas simply citos the portion of the above statement in which 1
the NRC notes that it did not decide whether an antitrust roview can be justified where "significant changes" occur after an oper- ;
ating licenso.is issued. Edison does not oven acknowledge, much
(
loss cttempt to address, the NRC's finding that Congress did not intend that the NRC "should have broad antitrust policing powers indopondent of licensing". Id at 1317.
j Moreover, Edison chooses to overlook the second portion of the NRC's statement in which it notes that this situation
" presents the issues pending in the Florida Power _and LigltJ pro-cooding." As shown below, this omission is not surprising.
Florida Power reinforcos the finding in South Texan that. anti-1
l
- 35 -
trunt review can only occur in the cont ext of a construction por-mit or oporating licenne procooding. W)toovor, l.jlorida 1pwor clarillon that thin ntat.ut on y bar on antit. runt review applion O ev"" it ta"r" er<> "to"tiic""' cne"9"" i" circ" "te"c"" """""""""'
I to the 1icenso procoodings.
- 2. Florida l' owe r The Florida Pcser proceeding roierred to by tho 'JitC wan that involving St, Lucio Plant, t)nita 1 and 2 and Turkey Point Plant, Units 3 and 4 in Docket. lio n . 50-335A, ot z al. In that pro-conding, numeroun municipal oloct.ric powor utilition nought to intervene 31 monthn lato in a procooding and pot.itioned ior an antitrust hearing. The ImC had already innued operating liconnon in the procooding for three of tho four planto at innuo purnuant to Section 104(b) of the Act: S t. Luc io P l a nt. , U ni t. I and Turkoy Point Plant, Unita 3 and 4. Por caso of reference, theno aro re-f orred to an the Turkoy Point plant.n. !Jo requent.n for an ant.1-trust hearing had boon filed during the construction permit pro-cooding.
The Cit.los pointed t.o an array of allegodly anticompot-itive practicon of the applicanta subsequent to the innuance of the operating licennon. Id at 798. Those activition included refusein to <13 enter into an integreted power peoi, <23 eo11 (O
wholonalo power, and (3) whool power.2_3/ Among the sectionn cited by the Cition an a basin for their requent for relief woro 23/ Soo " Joint Pot.ition Of Florida Cition Por 1,oave To Intervono Ou t. O f T i mo ; Polition To Int orvono; And lloquent For lloaring",
pp. 49-85 (Aug. 6, 1976).
l
i I
Section 105 of the Act and Section 2.206 of the NRC's regula-tions.24/ .
The Licensing Board rejected the petition. LDP-77-23, O 5 "ac 789 (1977>- 'he no rd n ieted t the ^ eve 1 a ra' deet-I sion in South Texas (thon pending before the NRC) in which it found that neither the Liconalng nor the Appeal Board has tho
" authority to reopen a terminated construction permit procooding l by.ordoring a hearing on suporvoning antitrust questions." S HRC at 791. The Board noted that this finding applied with full l force to the Cities' joint petition despite the allegations of ,
anticompetitivo activition subcoquent to the issuance of the op-orating licenson. Id. "Thoroforo,* ntated the Board, "the Joint Potition must be and in dismissod.* Id.
The Licensing Board found that this namo reasoning in-l dicated that there was no jurisdictional bar to establishment of ;
an antitrust hearing in connection with the remaining plants dt bucio Plant, Unit No. 2. For caso of referenco, this plant la i
referred to horo as the St Lucio plant. The Board noted that the construction permit procooding rogarding that plant was still
- ponding before the Licensing Doard. The Doard wont on to find ;
that the Cition had satisflod the standards governing intervon-tion in Section 2.714 of the NRC's regulations by showing that .
I - (1)'they had a sufficient interont in the procooding due to con- ;
corna about allogod anticompetitivo conduct by the applicanta, +
u l
24/ See "Notico of Appeal and Appollato brief of Florida Cition",
pp. 11-12 (April 29, 1977).
e wee.e = = ., s w e ~ e w - we-m e.g w w ww w v
I
- 37 -
and (2) they had good cause to filu late becauso (1) the Cition i
and applicants had agrood to allow the construction permit to isaua subject to cortain conditions onsuring that the cities had i
I -f O ecce to, r et te t the voort="ity te n"rca e ecce t , ta" :
\ nuclear capacity, (11) tho applicanta had failed to moot thono l i
commitmonts, and (iii) the fossil fuel shortage which bogan in 1
-1973 oxacorbated the impact of tho applicants' monopoly of nu-f-
cloar power.
The Appeal Daard affirmed the Licensing Board's deci-sion regarding the Turkey Point plants, on one hand, and the St. ,
i Lucio Plant tio. 1, on the otho', in separato decisions. 6 11RC 8 (1977) (St Lucio 11o. 1- % , (1977) (Turhoy Point).
Most significant horo is the Appun Board's decision af firming f the denial of the petition seeking post-operating licenso anti- !
trust review of Turkey Point. The Appeal Board noted that tho !
11RC had decided to not review the Board's finding in South Texas that it could not order an antitrust-hearing "'in the absence of ,
a pending construction permit or operating licenso proceeding.'" <
Ld. at 223.25/ Honco, the Appeal Board.agrood with the Li-censing Board that South Texas was fully applicable and precluded the Licensing Board from directing a hearing on antitrust issues despite the allegations of anticompetitive' acts by the licensee subsequent to the issuance of the operating licenses.
Howevor, the Appoal- Board noted that the NRC-had, sub- .
I 1
25/ The NRC decision was issued on March 31, 1917 and was not i reported. Id. at. 223.
1 4
---weenw.-.w.rw~wmw~,v=r-m------e-...-,m mw,,m,.e.., ,e,,.we, . w -e - = eryv, - r , - ,,. - - 4,v, =-m -me w-w-rm wc -, =ww w e,m v
I sequent to the 1.icensing Iloard, directed the Appc_'al ik>ard to con-sidor a related issues whet. hor t ho 14ftit Director could address the antitrust. Issu w ro wed by the potitionors. The Appeal Doord f i rs t. noted t.ha t. rna m :, 6 Point units recoived construction
( permits prior to J N i W. N:wdmontu t.o the Act requiring proll-consing ant.itrust. rev sm J.d . .it 224. The lloard obsorved that.
Congress, in onact ing the 1970 amendments, decided to excludo from antitrust review under Section 10S(c) plants, such as Turkey Point, which had received const.ruction permit.s under Sect. ion 104(b) before 1970. Id. at, 224-225.
(
Directly portinent hero is tho alternative just.ifica-tion given by the Appeal floard for its decision. The lloard pchnted to the 111tC's finding in South T9xas, 5 tillC 1303, that.
( post-operating licenso antitrust review is precluded by the Act.
and found that this reasoning applied even whero significant changos had occurred 26f
( In its own South Texas decision, the Commission recently considorod at length the extent. of itt.
authority to hold antit. rust hearings. The procico issue in that case involved when an antitrust. pro-conding under Section 105(c) may bo ordered after a construction permit has been issued but before the necessary additional licenso to commence opor-ations has boon granted. The Commission did not.
confino its South Texas opinion to that relatively narrow question; instead it. chose to address the l n broad spectrum of liitC antitrust responsibilities.
I t In so doing, it manifestod the judgment in no un-f( certain terms that the I4itC's supervisory antit. rust.
j jurisdiction over a nuclear react.or licenso does j 26 / 6 14Itc a t 226.
i 4
39 -
not oxtoint over t he iull 40-year torm of the opor-at.ing 1 S cotu;o but endn at itn ineoptlon.J2/
tho 12/ Except pothapn an nocennary to oliforco termn of a liconno or to revoko ano fraudu- a l ant.l y obt.a i ned , or in ci rciunnt ancon whore plant in nold or no nignificantly modiflod an
!;oo Cl.1 - 7 7- 13, ta requiru a now 1iconno.
nupra, 5 f1RC at 13' The The IJitC declinod to review tho Appool lloard'n docinion.
Circuit. The Cition nubmit.tod a polit. inn f or roview in t ho D.C.
3 court af firmed th5 hitC* n docinion. I't. . li o rco _ tit. i l ;i_ t;i gn Au-tinyri_t y v . IJI4C , 606 P.2d 986 (D.C. Cit.), oort , dpnlod, 4 4 4 ll.ti .
j 042 (1979).
- 3. !;out b Texar and I'lorida l'owor in-dicato that the liitC doon not. havo the ntatutory authority to grant tlin rol in f nought _1 y_ 2 Edi non The reanoning in I'lorida Power in directly applicablo hore. By requenting a nunponnion of the antit. runt licenne condi-
- t. i onn , Edinon in anking tho IJi<C to conduct. yot. another antitrunt.
review. Edinon recognizon t.hin. In ita application ( App. 42),
Edinon ntaten t. hat *(t]ho crit.ical f ac t. , . . . ,for_purponon of Section 105Lc) _ review, and the fact at innuo t.oday, was the low (emphanin added). Moroover, Edison roc ~
cont of nuclear power."
ognizon that the rollet it nookn openn the door f or yet addit.lon-l al antit. runt reviewn. In ita prayor for relief (App. 81), Edison anka the tillit Direct or to nunpond "the liconne conditionn in quon-tion until auch timo an thoro may be a fact.ual banin for imponing them."
i An lIlo IJitC roCogillZe?d i ll llollt h _Tt)X a n alld l[l(?!? .dit lloWf) l' ,
L~ - - - -- _ _
I an antitrust review can only take place pursuant. to Section 105(c) of t.he Act. 5 NitC at 1317. Section 105(c) perinit s this review only in connect. ion with a conntruction permit or operat.ing Q license proceeding. In the situation here, the construct. ion per-mit and operating license proceeding terminated long ago. Conse-quently, as shown in South Texas _ and lilorida Power, the NRC does not. have the statutory authority to consider Edison's applica-tion, llenco , Edison's applicat. ion must be summarily rejected.
Indeed, Florida Power represents, in effect, a sort of flip side of the circumstances here. In Florida Power, the NRC f.ound that it could not conduct an antitrust review even in the face of changes in economic conditions which exacerbated the Ap-plicants' monopoly power despite the allegation that the appli-cant had also engaged in specific, anticompetitive conduct.
Itere, one of the Applicants (Edison) argues that supervening cir-cumstances have eliminated the need for antitrust license condi-tions.
The antitrust review sought. by Edison is even less jus-tifiable than the review sought in Florida Power. Edison merely points to changes in economic conditions which purportedly reduce the Applicants' monopoly power.
The changed circumstances cited by Edison to support I
O suspension of the antitrust conditions are not the type of cir-cumstanced which could even support antitrust review at the oper-ating license stage pursuant to Section 105(c)(2) of t.he Act.
Cdison asserts that subsequent to the issuance of an operating license, antitrust review is availanle pursuant to 1.he standard 6
_ __ _ __--_ --__ __ __- _ _ __ _ _ _ _ _ _ _ _ _ _ _ _-- 'e
r
- 41 -
in Section 105(c)(2) (App. 49). As noted earlier, Section 105(c)(2) states that antitrust review is available at the opera-ting licenso stago to determine whether additional antitrust con- !
(
() ditions should be imposed only if *significant changes in tho l licensoo's activities or proposed activities have occurrod subso-quant to the previous review by the Attorney General and the NHC" during tho construction permit proceeding. "Significant changes" -
aro limited to changes which (1) have occurred since the previous antitrust review di the licensoo, (2) are reasonably attributable to the licensoo, and (3) have antitrust implications that would likely warrant some NRC remedy. South Carolina I, 11 NRC at 824-
- 25. l Even putting asido the fact that Section 105(c)(2) an-titrust review is limited to imposition of additional conditions, Edison has not mot the Section 105(c)(2) standard. The primary factor-cited by Edison in trying to justify another antitrust review -- a chango in the economic attractiveness of nuclear power -- is obviously not " attributable to the licensoo". Thus, if this factor had been raised during the operating licenso pro-ceoting, an antitrust review would not have boon justiflod.
Moreover, the policy concerns underlying the decision by Congress in the 1970 amendments to limit antitrust review to (O Lthe construction permit and operating licenso proceeding are directly applicablo hore. As noted above, the NRC in reviewing the legislativo history of the 1970 amendments in South Texas observed that Congress recognized that strict limits on the fro-quency of antitrust reviews worr nooded to ensure that utilitics
.---.a..-.--_-----..--,-.-.-.. ....
2 could rely on NRC licensing decisions. 5 NRC at 1314-16. The I
NRC cited statements by the Chairman of the Joint Committoo on Atomic Energy and others during the congrosnional hearings oppon-ing an unlimited rooponing of antitrust review in the operating i 11censo proceed <g. Id.
Thoso same concerns about encouraging rollance on the findings in the construction permit proceeding apply with equal force here to protect the competitivo positions of benefi-c claries of the 11'onse conditions. In the situation hero, the roliof sought by Edison -- olimination of the licenso condition I
restraints as to it -- would havo the sort of disruptive impact which Congress acted to provont by limiting antitrust review to s
the construction permit and operating licenso proceeding. Prior to the imposition of the antitrust licenso conditions, Cleveland Public Power faced extinction due to the anticompetitivo activi-ties of CEI, in particular, and its sister members of CAPCO. See S NRC at 165-76. Cleveland Public Power was dependent entirely on power purchased from CEI for its continued existence. Clevo-land Public Power had a single interconnection with CEI, and only the ability to purchase firm and emergency power from CEI.
Imposition of the license conditions provided Cleveland Public Power access to transmission and coordination services, a (v varloty of wholesale purchaso power sources, and to various agreements between the Applicants and between them and other utilities. Because of the licenso conditions, Cleveland Public Power has been able to add a second interconnection and plans to
1 f )
l l
i add a third. Clovoland Public Power has also mado uso of CE1 transmission services to buy and transmit low cost hydroelectric l power from (1) PASNY, (2) Buckeye Rural Electric Cooperativo, Inc. ("Buckeyo"),27/ and (3) 13 19 Rivers Electric Cooperativo (s
(" Big Rivers"). Cleveland Public Power has also boon able to !
diversify its power supply, and take advantago of the variety of i
surplus power available aa short-term, limited term, omorgency i
and even " dump" power. Those arrangements provide Clovoland Pub-lic Power and, in' turn, its customors with substantial reductions ,
in costs from what would havo been paid to CEI without such com-petition.
Clevoland Public Powor's first firm power purchase from l an altornativo. supplier began in 1980 as a direct result of the j license conditions and involved a purchase from PASNY. This pur-chase involved inexpensivo hydroelectric power. Clevoland Public Power continues to buy this power. Clevoland Public Power had i applied for an allocation of PASNY energy back in the lato l 1970's, and was allocated a share of the power. But Cleveland-Public Power could not take advantage of this cheap power source until CEI was forced by the licenso ccndit!.ans to tranumit the l power to Cleveland-Public Power.
, As the PASNY Power Bargaining Agent for the State of .
7
( ohio, Cleveland Public Power has represented the entire State and ,
i has fulfilled its responsibility to facilitate making PASNY Nia-gara Power available for t*.ansmission to municipally-owned elec-E i
27/ nuckeye is now known as the Ohio Rural Electrical Coopera-a tivos, Inc.
I_ . . -. . - -... - ..- -, . - - . - - . - . - . - . . .. . , , . - . - . . - . . - - . _ . , . . - . - . . - - . _ .
(
. 44 .
t ric systems throughout the State. C]oveland Public Power could I
not. have obtained low cont. tilagara Proforenco Power f or t he 75 municipal olectric nyntoma in Ohio receiving the power without the ability to have the powor actually trannmitted from tiew York Q
to each municipal system through the trannminnion facilities of Edi son and CI:1. Indeed, all but two of tho 75 rocipient munici-pal nystemn receive the power by having it transmitt.ed at. bomo point over the nyatoms of Edinon and CEl.
Cleveland Public Power'n purchases in October 1987 11-lustrato the way the 11conno conditions have permitted Cleveland Pablic Power to divornify its supply nourcon to procure the choa-post power available. During that month, Clevoland Public Power purchased more than 60 million kwh of power from fivo sourcon.
Cleveland Public Power bought. 34.86 porcent of it.s power f rom Dafton Power and Light, 25.79 porcent irom PASNY, 23.97 percent.
from Ohio Power, 15.14 percent from Big Rivora, and .24 porcent from CEl. During Clevoland Publi: Power's peak months of July and August, 1987, when it provided its cunt.omorn approximately 70 mi.11lon kwh of energy, Clavoland Public Power purchased power from ton different sources Dayton Power and bight Company, PASNY, Ohio Power, Big Rivern, CEI, American Electric Power Company ("AEP"), Toledo, Duquesno, Michigan Electric Coordinated O Systems and PENELPC. Cleveland Public Power also purchased power f rom Edinon, Ontario liydro and Buchoyo during the past eight yearn.
In entoring into thono t.ransac t i ona , Cleveland Public Power han relied on its accean t.o whooling nervicon and coordina-
- . . ~ . . . . - - . . . - - - . - -
tion service provided by the CAPCO members pursuant to the 11-
-conso conditions. Those power purchases obviously are a key com-ponent of Cleveland Public Power's supply plans.
Moreover, even if the licenso conditions were suspended I
{} and lator reimposed, Cleveland Public Power and other utilities in the CCCT would still not be able to rely on the services available pursuant to the license conditions in planning its power supply.28/ Clovoland Public Power could not assume that the services available pursuant to the antitrust 11censo condi-tions would continuo to be available. Thorofore, Clevoland Pub-lic Power's ability to make advantageous purchase power arrange-monts with other power suppliers, and thus its ability to compoto with CEI, would be impaired. As noted, Congress, in enacting the 1970 amendments, intended to provent that e. ort of continuing un-certainty regarding the conditionn governing a nucioar facility.
B. NRC PRECEDENT REGARDING ANTITRUST RE-VIEW IN CONNECTION WITH CHANGES IN THE
, NATURE OF A PLANT'S-OPERATIONS OR OWNER-SHIP IS INAPPLICABLE HERE In its application, Edison citos other decisions be-
! sidos South Texas in its attempt to show that the NRC has the authority to suspend the license conditions. These decisions are no more helpful to Edison than South Texas. Edi. son cites (App, b 49, n. Ill): Detroit Edison Co.- (Enrico Fermi-Atomic Power Plant, Unit No.- 2)-("Dotroit Edison"), LBie-78-13, 7 NRC 583 (Licensing Board), aff'd, ALAB-475, 7 NRC 752 (1978). Detroit Edison in-28/ As noted, Edison argues that antitrust conditions can be sus-ponded and reimposed by the NRC at any time.
.I
volved an applicat.lon b,v t.he lu rmittee subsequent, to the issuance of a con'truction permit to add new co-ownera to the permit. The applicant cited South Texas and argued that the HitC did not have the jurisdict.lon to conduct. an ant.itrust review of t.he proposed
( amendment. The Licensing Board reject.ed this argument., It noted that this finding was consistent with Congrossional i n t.o n t. re-garding the meaning of the term "licen: appli c a t. i on " in Sect. ion 105(c). The Licensing Board cited the Joint Committee report on the 1970 amendmerits in which the Committee stated: .-
The Commistoe ocognizes that applications may be l3 amended from t a to time, that there may be ap- (
plications to v ,end or review a license, and also !
that the form c. an application for a construction I permit may be such that, f rom t.he applicant.'s l standpoint, it ultimately ripens into the applica- l tion for an operating licensc The phrases "any =
license _ap,olication", "an applicetion for a li- l conse", and "any application" ac used in the clarified and revised subsection 105(c) refer to the initial application for a construction permit..
footnote omitted; emphasis in original; Id. at 588. The Board also noted that this interpretation was necessary to ensure that -
the NRC's antitrust review authority was not circumvented:
As to the two cooperatives, the present applica-tion for an amendment to add them as co-owners of Fermi 2 must be approved by the Commission before an ownership interest is acquired, and the cooper-atives will be required to submit applications to become co-licensees of the facility prior to the issuance of an amendment allowing change in owner-jh ship. Without exalting form over substance, it s is clear that these applications are within the scope of the phrase "any license application" for antitrust review purposes within the meaning of S105c(1), supra, and trigger an opportunity for intervention raising antitrust issues as to t.he two cooperatives. To conutrue the statute other-scise would permit a ut.ility with no antitrust problemn to undergo an antitrust review and obtain an unconditioned construction permit, and then
(
sell an ownership interest to another monopolizing
< utility. Under the Licensee's argument (Sere could then be no antitrust review unti: t: later operating license stage, which itself cq c be a more limited review than the normal prolicensing antitrust review contemE l ated by the statute.
Such an unequal treatment of Applicants, insula-O, ting from prelicensing antitrust review those who came in later by way of amendments to construction permits, would subvert the Congressional intent and purpose of S105c.
footnotes omitted; emphasis supplied; Id. at 587-88.
The applicant did not raise this jurisdictional issue in its appeal to the Appeal Board. llence, the Appeal Boarc ob-served that it dio not need to reach this issue. 7 NRC 752, 756, n.7. Nonetheless, the Appeal Board said that it is " sufficient simply to note our essential aceeement with the decision below on this point." Id at 755, n. 7.
Detroit Edison only serves to further undermine Edi-son's position. Detroit Edison highlighta the NRC's concern about ensuring against ploys to circumvent the antitrust review needed to determine whether aistitruct license conditions should be imposed. The NRC recognized that a change in ownership of a nuclear facility introduces a new owner which has never been the subject of an antitrust review. Hence, this sort of change war-rants the comprehensive antitrust review provided for in connec-tion with construction permit applications to determine whether
<O antitrust license conditions should be imposed.
The situation presented in the application here is en-tirely different. Edison is seeking suspension, not :ddition, of the antitrust conditions. In addition, the antitrust review of the Perry owners has already occurred. Consequently, there is
I E
simply no need to repeat this review.
7 C. THE DICTA IN THE APPEAL BOARD DECISION IN THIS PROCEEDING DOES NOT AND CANNOT SUP-PORT POST-OPERATING LICENSE ANTITRUST REVIEW
- /'
Edison makes much ado about certain dicta in the Appeal
.j f Board decision approving the imposition of comprehensive anti-trust conditions on the App. snts because of their anticompeti-1 tive conduct. Edison cites the separate opinion written by Ap-7 j peal Board membet- Sharfman who, as noted, resigned from the NRC while the Doard was roviewing his then-draft opinion. In his l
j
-draft opinion, Mr. Sharfman affirmed the license condition re-quiring the Applicants to provide wheeling services and to not I
reduce these services in the event of a capacity shortage until the capacity allocated to the other Applicants is reduced by at least five percent. But Mr. Sharfman went on to find that a i
a waiver of-this condition might be granted if it caused an "ex-treme hardship":
However, should this license' condition confront 4
the Applicants with a situation of extreme hard-ship or impossibility at some time in the future, they may petition the Licensing Board for relief
. from it. We hereby vest the Licensing Board with
(
continuing jurisdiction to entertain such a peti-tion.
Id. at 392. Mr. Sharfnan also went on to voice his approval for
) waiver of any license condition that causes an " extreme hard-j ship":
If compliance with a request authorized by one of the
- license conditions would cause extreme hardship, an L applicant may seek relief from the Licensing Board. We vest that Board now with continuing jurisdiction to entertain'such a request. But the burden will be on-p
(
l the Applicants to demonstrate a right to relief. Up to now, no such demonstration has been made.
Id. at 398.
In its separate opinion, the Appeal Board said this about Mr. Shariman's reasoning:
In a number of instances Mr. Sharfman would, for an indefinite period, " vest the Licensing Board with continuing jurisdiction" to relieve the Ap-plicants from conditions that might prove an ex-treme hardship or impossible of compliance. See, e.g., pp. 392 and 398, infra. We agree that license conditions seemingly fair today may prove indquitable tomorrow. It is not necessary, how-ever, to extend the Licensing Board's jurisdiction to provide for the possibility of such modifica-tions. Commission regulations give the Director of Nuclear Reactor Regulation -- who is assisted by an able antitrust staff -- authority to modify license conditions where necessary and provide as well as means for review of his determinations.
10 CPR Sections 2.00-2.204 and Section 2.206. In-deed, the Director has already acted to modify one of the license conditions imposed in this case (albeit not at the applicant's request). We therefore see no occasion to continue the Licensing Board's jurisdiction over aspects of the case. Accordingly, we da not join in the portions of Mr. Sharfman's opinion that would do so.
Id. at 294-95; footnotes omitted.
Edison errs in interpreting this statement as a blanket endorsement of any sort of modification of antitrust license con-ditions. First, this statement is mere dicta. Nowhere in the licensing conditions approved by either the Licensing and Appeal
() Boards is there any mention that che conditions can be modified in the event circumstances change.
Moreover, the Appeal Board's statement does not go as far as Edison suggests. Again, the Board simply says that the NRR Director has the " authority [ pursuant to Section 2.200, e t;
l' j al. of the NRC's regulations] to modify license conditions where necessary". Those sections of the Regulations authorize the Director authority *to modify, suspend or revoke a license or to take other action for alleged violation of any provision of the
}
( Act or this chapter or the conditions of the license" (emphasis supplied).
The only decision cited by the Board to support its contention highlights the limits on the NRC's authority to modify antitrust licenso conditions. The Board cites the June 25, 1979 decision by the NRC in the consolidated proceeding enforcing one of the license conditions in view of C3I's failure to comply with the condition._29/ The June 25 order was in rrsponse to a request by Cleveland on January 4, 1978, asking the NRL o take enforce-ment action pursuant to Section 2.201, et al., of the WRC regula-tions against CEI for viclations of antitrust license condition no. 3 in its construction permits and operating license. License condition no. 3 requires the joint Applicants to provide wheeling -
for entities in the CCCT. Cleveland argued that the transmission schedule filed by CEI with the Federal Energy Regulatory Commis-sion (FERC) did not comply with this license condition. On June 28, 1978, the Acting Director of the NRR Office responded to
- Cleveland's motion by issuing a Notice of Violation to CEI pur-( V- suant to Section 2.2011 of the NRC's regulations. In Mle Notice, 29/ " Order Modi.fying Antitrust License Conditior. No. 3 of Davis-Besse Unit 1, License No. NPF-3 And Perry Units 1 and 2, CPPR-148, CPPR-149" (unreported). The order (but not the at-tached appendices) is reproduced in Appendix A at. the end of this pleading.
the Director reviewed CEI's January 27 transmission schedule and CEI's response to a Staff questionnaire concerning Cleveland's motion and stated that "it appears that CEI has not complied with antitrust license condition No. 3 of the subject license and con-i struction permits. . . . "30/
Cleveland, CEI and the NRC Staff met in an unsuccessful attempt to address the concerns raised by Cleveland's filing. On June 25, 1979, the Director found that CEI had not complied with license condition no. 3:
CEI has approached its responsibility to file a wheeling schedule for the City as if it had not been required as a condition of its operating license and- two construction permits to comply ,
with Antitrust License Condition no. 3.
mimeo, at 6. The Director noted that an April 27, 1979 initial decision by a FERC administrative law judge (ALJ) addressing CEI's transmission schedule " deals effectively with most items
-cited by the NRC Staff to be in violation of Antitrust License Condition No. 3" (mimeo, at 4) . With respect to the matters not resolved by FERC, the Director ordered CEI to' file an amendment to its transmission tariff to ensure compliance with the anti-9 trust license condition. Consistent with these findings, the Director exercised his authority pursuant to Section 2.204 of the NRC's regulations and modified license condition no. 3 to add (0: language requiring CEI to file a revised transmission schedule reflecting thel changes ordered by the-NRC and FERC.
Thus, the Board's citation to the director's enforce-
_3,0/ The Notice is reproduced in Appendix A of the June 25 order.
t ment order ruerely reflects the Board's recognition that a license condit. ion can be raodified to ensure that it is not circumvented by the Applicants. Significantly, the Board does not even men-tion the NRC decisions in South Texas and Florida Power. In view of this, it is clear that the Board was not saying that. the ant i-trust conditions could be suspended in the circumst.ances here.
- ~ - - ., , _.-_ - .- - - . - . - .
IV. Ti!E RELIEF SOUGliT BY EDISON IS !
BARRED BY .RES JUDICATA OR, AL-TERNATIVELY, COLLATERAL ESTOPPEL
, As just shown in Section III of this answer, the NRC 4
does not have the statutory authority to conduct an antitrust
[( review subsequent to the issuance of an operating license. The i
l N P' ' +5erefore, simply cannot grant the relief sought by Edison.
[ But even if the NRC finds that an antitrust review can L
- e cur at any time and that the NRC has the statutory authority 1- to grant this relief, the NRC should still deny the relief and 1
l can do so without reaching the merits of Edison's arguments.
! This is because these arguments involve issues raised in the con-struction permit and operating license proceeding and were or could have been raised in those proceedings. Therefore, the.
i.
arguments are precluded by the doctrine of res judicata or, al-i tornatively, collateral estoppel.
In subsection A, below, Cleveland reviews the policies underlying the doctrines of res judicata and collateral estoppel.
In subsection B, Cleveland examint.s the criteria used by_the NRC in' applying these doc:rines. In subsection C, Cleveland shows l
that res judicata is the portinent preclusion doctrine in the circumstances here and that the doctrine precludes the arguments raised by Edison ir. its application. Consequently, res judicata 1
(~
([ bars consideration of these arguments at this late stage. In I subsection D, Cleveland shows.that if the NRC finds that this proceeding is a different proceeding than that in which the con-struction permit and operating license were issued, collateral estoppel would come into play and bar Edison's application.
I
-. _ _ ,_ ._ _ , . . . . , , - - _ _ . _ . . - , . - .- , , - . _ _ , _ _ , . - . _ , _ . , . . _ _m ., , _ . _ , , .
(
S4 -
A. IljS dtIDICATA AND COLI.ATERAL ESTOPPEL AND TilEllt APPLICA-I BILITY TO_NRg PitOCEEDINGS In a deciolon a f firmed, in pertinent part, by the Ni(C, t.he Appeal Board cited Supreme Court precedent and not. forth the basic policies underlying ren judicata and collateral estoppel:
lien judicata and collateral entoppel are judi-cially formulated doctrines founded upon "conald-erations of economy of judicial time and (the]
public policy favoring the entablishment, of cor-tainty in legal relations". Comminsioner v. Sun-non, 333 U.S. 591, S97 (1948). These connidera-tions dictate that. those who have contented an issue shal.1 be bound by the result of the contest, and
, that matters once tried shall be conaldered forever nettled an between the part.ies.
Baldwin v. Iowa St. ate Traveling Men's_ Assoc., 283 U.S. 522, S25 (1931). They further require that a party who la given the opportunit.y to present his
( case before competent, judicial authority must. t.he n put it fort.h i n tot o, rather t.han advance it piecemeal in multiple proceedings, promwell v.
County of Sac, 94 U.S. 351, 358 (1877).
A_labama Power Co. (Joseph M. Farley Nuclear Plant, Unita 1 and 2) s
("Farley"), ALAll- 18 2 , 7 AEC 210, 212, rev 'd on ot.her grounds ,
The Appeal Board in Parley cited the " general princi-ples relating to the application and effect of" rea judicata:
R_es judicata comes into play in circumstances where (1) there has been a final adjudication of
'g the merits of a particular cause of action, claim, or demand by a tribunal of competent jurisdiction; and (2) one of the parties to that adjudication (or a person in privity with such party) subse-quently neoka to advance or defeat the same cause of action, claim or demand in either (a) the same suit or (b) a separate suit involving the parties t.o the f irst act. ion or thei r privion. ( c i ta t. ions omitted). Given those circumstancen (and subject to the qualitications to be discunned below), the
earlier adjudication is deemed to conclude the
' parties and those in privity with them, not only as to every matter which was offered and received to sustain or defeat the claim or demand, but as to any other admissible matter which might have been offered for that purpose".
! 7 AEC at 212. The Appeal Board distinguished collateral estop-pel:
For its part, collateral estoppel does not require an identity between the two causes of action, de-mands or claims. It is enough that the issues of law or fact previously receiving final adjudica-tion are the same as those being now asserted --
and that that adjudication was by a tribunal em-powered to consider and decide those issues. Un-like res iudicata, however, collateral estoppel can serve to conclude only "those matters in issue or points controverted, upon the determination of which the (earlier) finding or verdict was render-ed."
citations omitted; I d_ . at 213. The criteria governing collateral estoppel have also been summarized by the NRC:
In order to apply collateral estoppel several re-quirements must be met: The prior tribunal must have had jurisdiction to render the decision, there must have been a prior valid final judgment on tl.e merits, the issue must have been actually litigated and necessary to the outcome of the first action, and the party against whom the doc-trine is asserted must have been a party or in privity with a party to the earlier litigation.
Commonwealth Edison Co. (Braidwood Nuclear Power Station, Units 1 and 2) ("Braidwood"), LBP-85-11, 21 NRC 609, 620 (1985).
O B. APPLICATION OF RES JUDICATA f\J AND COLLATERAL ESTOPPEL IN NRC PROCEEDINGS The NRC has recognized and applied the doctrines of ree judicata and collateral estoppel in NRC proceedings. In Parley, the Appeals Board noted:
F 56 -
As the Court of Appeals for the Fifth Circuit ob-served in Painters Dist. Coun. No. 38 Etc. v.
,Edgewood Contracting Co., 416 F.2d 1081, 1084 (1969):
The policy considerations which underlie res judicata -- finality to litigation, prevention
(( ) of needless litigation, avoidance of unneces-sary burdens of time and expense -- are as relevant to the administrative process as to the judicial. [ citations omitted).
And any doubt that the doctrines of res judicata and collateral estoppel are not strictly confined to the judicial arena has been laid totally to rest. In United States v. Utah Construction and Minino Co., 384 U.S. 394, 421-22 (1966), the Su-preme Court acknowledged that
[o]ccasionally courts have used language to the effect that res judicata principles do not apply to administrative proceedings, but such language is certainly too broad. When an ad-ministrative agency is acting in a judicial capacity and resolves disputed issues of fact properly before it which the parties have had an adequate opportunity to litigate, the courts have not hesitated to apply res judi-cata to enforce repose. . . .
7 AEC at 214.
The Appeal Board also observed that the " exceptions to the application of res iudicata and collateral estoppel which are found in the judicial setting are equally present when adminis-trative adjudication is involved -- namely, changed factual or legal circumstances and overriding competing public policy con-siderations." citations omitted; Id. at 215.
In its order, the NRC approved the finding that res judicata and collateral estoppel apply to NRC proceedings subject
l l
- 1 1
- 57.-
to certain limits:31/
.. . . we are in full agreement with the conclu-sion reached by the Appeal Board that "res judi-cata and collateral estoppel should not be entire-ly ruled out of our proceedings, but rather ap- ,
plied with a sensitive regard for any supported
- assertion of_ changed circumstances or the possible existence of some special public interest factors in the particular case. . . . "
citation-omittod; 7 AEC at 203.
Changed circumstances can justify an exception to res iudicata only if there is " cogent and compelling new evidence
[ showing) that the situation has changed substantially" subse-quent to the prior stage of the proceeding, emphasis supplied;
- Schieber v. Immigration and Naturalization Service, 520 P.2d 44, 47 n. 11-(D.C. Cir. 1975).
Tho NRC has repeatedly applied the doctrines of res iudicata and collateral estoppel to preclude relitigation of is-sues. Most of these situations-have arisen in the context of issues raised both at the construction permit and operating
. license stages of an NRC proceeding. The NRC in Farley pointed out'that "an operating license proceeding-should not be utilized to-rehash issues already-ventilated and resolved at the'conctruc-tion permit stage". 7 AEC at 203. Thus, the intervenor in an
-operating license proceeding was barred from relitigating an is-sue.-- the environmental impact of-the supplementary cooling l
31/ The NRC remanded'the-proceeding because, inter alia, the petitioner against whom the Appeal. Board invoked res iudicata i was not specifically " afforded an opportunity to make a par-ticularized showing of such changed circumstances or public l interest factors as might exist with respect to this particu-l lar proceeding". 7 AEC at 204.
water system of the nuclear facility -- because the intervenor "did not mention any changes or new information that has come to light in this regard since the construction permit was issued."
(
() Philadelphia Electric Co. (Limerick Generating Station, Units 1 and 2), ALAB-804, 21 NRC 587, 590 (1985).
A party cannot escape the grasp of res judicata and collateral estoppel simply by concocting a new argument in the operating license proceeding regarding an issue litigated in the construction permit proceeding. As noted, res ludicata applies
"'not only as to every matter which was offered and received to sustain or defeat the claim or demand, but as to any other admis-sible matter which might have been offered for that purpose *".
emphasis added; Farley, 7 AEC at 212.32/ Collateral estoppel has the same preclusive effect regarding. arguments which could have been made in the prior proceeding 33/:
(t]he analogy to the rule against splitting a single cause of action is striking. Like a cause of action, "an issue may not be . . . split into pieces. If it has been determined in a former action, it is binding notwithstanding the parties litigant may have omitted to urge for or against-it matters which, if urged, would have produced an opposite result." Any contention that is neces-sarily-inconsistent with a prior adjudication of a material and litigated issue, then, is' subsumed in f
32/ See-also Ness Investment Corp. v. United States,-595 F.2d
~
\ 585, 588 n. 6 (Ct. C1. 1979) ("The assertion of different legal theories in-a second suit will not defeat application of res judicata . . . nor will the fact that different types of relief are sought. . . .").
33/ Carolina Power and Light Co. (Shearon Harris Nuclear Power Plant) ("Shearon"), ALAB-837, 23 NRC 525, 537 (1986), quoting IB J. Moore, J. Lucas & T. Currier, Moore's Federal Practice 50.443[2) at 761 (2nd ed. 1984). footnotes omitted.
that issue and precluded by the prior judgment's collateral estoppel effect. ,
Moreover, the NRC has recognized that res-judicata ap-plies in a situation (similar to that involved here) in which a
-(0 party seeks to relitigate an issue subsequent to the issuance of the operating license by asking the NRR Director to modify the license. Consolidated Edison Co. of New York, Inc. (Indian Point, Unit Nos. 1,.2, & 3), (" Indian Point"), CLI-75-8, 2 NRC 173, 177 (1975). .In Indian Point, the NRC observed:
. . . parties must be prevented from using 10 CFR 2.206 procedures as a vehicle for reconsideration of issues previously decided, or for avoiding an existing forum in which they more logically should be presented.
2 NRC at 177.34/
C. APPLICABILITY OF RES JUDICATA TO EDISON'S APPLICATION In-view of these principles, Edison's argument is barred by res judicata. In subsection 1, below, Cleveland shows
-that because Edison submitted its application in the same pro-coeding as'that in which the construction permit and operating license were issued, res iudicata, not collateral estoppel, is the applicable foreclosure doctrine. Cleveland shows that Edison raised the argument regarding the high cost of nuclear power in k
-( )
34/ In Indian Point, the NRC permitted litigation in a pending Appeal Board review of an operating license application of an issue raised regarding the safety of a license nuclear plant.
The NRC noted that the issue was based on "recently developed seismic data" and raised " substantial safety" concerns. Id.
at 174, 177. The-NRC also pointed out that the licensee, staff and_the intervenor "all agree that the subjects raised warrant hearing in an adjudicatory proceeding." Id. at 177.
(
its appeal of the Licensing Board decision during the construc-i Lion permit proceeding. Edison does not show why it should be able to reargue the issue. In subsection 2, Cleveland shows that O eveo it the "ac 1oexe et the circe steecee cited 'v coie e. n"1 judicata should still apply. Each of the purported changed circumstances occurred well before the conclusion of the opera-ting license proceeding. Therefore, Edison had the opportunity at the operating license proceeding to make the arguments it pre-sents in its application. Consequently, Edison is foreclosed from seeking the relief re'uested q in its application.
f
- 1. Res judicata is the applicable preclusion doctrine here As noted in section III above, both res iudicata and collateral estoppel preclude a party from relitigating issues and are based on the same fundamental policy: " economy of judicial time and [the] public policy favoring the establishment of cer-tainty in legal relations." Farley, 7 AEC at 212. Both doc-trines come into play where there has been a final adjudication of the merits of a particular cause of action by a tribunal of competent jurisdiction.
These criteria are met here. In the construction per-mit proceeding, the NRC reviewed all aspects of the Perry Unit 1 facility and the other nuclear plants at issue and imposed the antitrust license conditions. In the operating license proceed-ing, the NRC again looked at the antitrust ramifications of the nuclear plants at issue and determined pursuant to Section 105(c) of the Act that there were no "significant changes" that would i
__m_._ _ _ _ . _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ . . _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
l l
warrant an additional antitrust review to impose additional an-(
titrust conditions on the licenses. Edison and the other App 11-cants actively participated in this aspect of the proceeding and
() urged the NRC to find that there were no significant changes.
Edison's application arises in the same "cause of ac-tion" as the construction and operating permit proceeding. The NRC has indicated that all regulatory acts in connection with a nuclear facility are part of the same proceeding or "cause of action" as the pr'oceeding in which the operator of the facility originally sought authorization to construct and operate the fa-cility. For example, in the seminal decision in Parley on res judicata and collateral estoppel, the Appeal Board observed:
It seems to us that, for the purposes of the ap-plication of res ludicata, there is a sufficient basis for treating an operating license proceeding as involving the same "cause of action" as the construction permit proceeding relating to the same reactor. See Section 185 of Lne Atomic Ener-gy Act of 1954, as amended, 42 U.S.C. 2235. There is, however, no need for a definitive decision on that question here.
7 AEC 210, 215, n. 7. Likewise, the Licensing Board in its de-cision in South Texas noted that, as a practical matter, the various stages of NRC action on an application for NRC authoriza-tion are part of the same proceeding:
. . . the application to NRC for a license in 3
O this, as in other cases, requests the issuance of both a construction permit and an operating li-conse for the proposed nuclear facility. It is hardly reasonable to act as though there is a rig-idly circumscribed construction permit proceeding, which terminates when the permit is issued even for nontimely but permissible antitrust proceed-(
ings, and assume that the Applicants will spend millions of dollars to construct a plant and then decido later whether or not to seek an operating i
0 62 -
license. The Applicants undoubtedly view the NRC r ' licensing procedure as an' integrated and continu-ous process from the initial license application to the ultimate isauance of a-license. It is un-realistic to rigidly define two separate insulated boxes, one defined as a construction permit pro-1()
p- y .
coeding and the other as an operating license pro-coeding . . .
4 NRC 571, 575 (1976).35/
The same reasoning applies with equal force here. Edi-son filed its current application in the same consolidated pro-ceeding -- Docket No. 50-440A, et al. -- in which the joint Ap-plicants originally sought authorization for the construction-permit and operating license in connection with Perry Unit 1 long with Perry Unit 2 and Davis-Besse Units 1, 2 and 3. Doc-ket No. 50-440A is also part of the same proceeding in which the NFC issued the construction permit and operating license subject to the antitrust conditions at issue here. Hence, Edison's ap-plication is part of the Docket No. 50-440A_ proceeding.
In view of this, res judicata is triggered here. In its application here, Edison is seeking to defeat the judgment regarding antitrust issues in_tne prior stages of the same cause of action.- That is, Edison is trying to show that the antitrust conditions imposed as-part of the construction permit and opera-ting license should-be suspended.- This satisfies the second
) criteria for res judicata. Farley, 7 AEC at 212.
l35/ As noted in subsection III(A)(1), above, this decision was
- reversed by the Appeal Board which found that the licensing board erred in finding that it has jurisdiction to direct a hearing on antitrust issues in the absence of a pending con-struction permit or operating license proceeding.
I i
- 2. Res judicata bars the argu-monts made by Edison Because _res judicata applies here, Edison is barred from seeking to rely on "overy matter which was offered and re-f O ceived to sustain or defeat the claim (as well as] any other ad-missible matter which might have been offored for that purpose."
Farley, 7 AEC at 212. Again, for purposes of this analysis only, Cleveland is accepting Edison's contention that the NRC can modify or remove antitrust conditions at any time, including dur-ing the operating license proceeding. Given this promise advanced by Edison, Cleveland shows in this section that each of the arguments raised by Edison in its application to support the contention that the antitrust conditions should be suspended was an admissible matter which was or might have been offered for that purpose during the construction permit and operating license proceeding. Hence, res judicata bars Edison from making these arguments at this late date.
Cleveland also shows that, even putting aside Edison's failure to make these arguments during the operating license pro-ceeding, Edison has not put forth " cogent and compelling evi-donce" that there are any " substantial changes" in the circumstances reviewed and relied on by the NRC in imposing the
() antitrust license conditions. Thus, there is no basis for pro-viding an exception to res judicata here.
- a. Edison already made its arguments here during the construction permit proceedinq In the joint brief submitted by the Applicants in their
f-appeal of the Licensing Board's decision to impose antitrust con-(
ditions as part of the construction permit, the Applicants made an argument remarkably similar to that contained in Edison's ,ap-The Applicants challenged the Licensing Board's i /
O plicati n here.
finding that there was a nexus between the licensed activity and the anticompetitive situation sufficient to justify imposition of antitrust conditions pursuant to Section 105(c)(5) of the Act.
i The Applicants argued that the_ requisite nexus could only exist if nuclear power'was cheaper _than any other type of power 36/:
It should be understood that such a finding is an ab-g solute prerequisite to the Licensing Board's "structur-al" analysis. As Dr. Pace testified, there first must be made a " determination of whether or not the nuclear plant offers to its owners cost advantages of such a magnitude that those excluded from access to the nu-clear unit in question or to similar units are at a significant competitive disadvantage"; if that is not L
the case, the analysis need be carried no further.
The Applicants challenged the Licensing Board's finding that "the pronounced effect [of nuclear generation] on the over-I all economics" of power generation would mean that the Applicants "will-derive a competitive advantage by virtue of the Perry and Davis-Besse facilities" (App. Dr. at 125-26). The Applicants pointed to various exhibits and testimony showing that the cost advantage of nuclear power had just about disappeared 37/: -
We would initially observe that, what appeared to L ,
Applicants several years ago_to be "the superior
> !' base load choice" may no longer be nearly so at-tractive from an economic standpoint.
l l-l- The Applicants went on to note that a small coal-fired plant L
36/ citations _omitted; App. Br. at 127, n. 147.
37/ citations omitted; App. Br. at 127.
1 -
r could generato cheaper power than the proposed nuclear facill-I ties 33/:
[The testimony of Mr. Kampmeier on cross-examina-tion) indicates that, given a municipal or cooper-
,() ative system's lower cost of money, due to both tax and financing advantages conferred on such i electric entities, a single or small group of such systems may well be able to build a small coal-fired plant in Ohio or Pennsylvania and get power at a total cost oqual to, or closely approxi-mating, the cost of power to Applicants from the large nuclear facilities being licensed. Mr. Ger-I bor was even more confident that such could be the expected result. The availability of such an op-t16n provides the non-Applicant CCCT entities with the ability to obtain an independent power re-source on a cost basis that would permit wholesale competition with Applicants -- if that ja really I.
desired. It would, moreover, require these
" wholesale competitors" to assume much the same planning, managing and operating _ responsibilities that Applicants presently undertake, thereby pro-viding the stimulus for greater efficiencies that must exist if competition is to be viable.
In their October 22, 1979 petitions asking the NRC to review the Appeal-Board's decision, the Applicants incorporated by reference the arguments in the joint brief, t-In its application here, Edison is trying to resusci-tate the-same argument. True, Edison's current version of this argument is based on events subsequent to the construction permit t
proceeding. But for purposes of applying res iudicata, this makes no difference. Edison is asserting the same proposition:
s t
.[} nuclear power has no cost advantage and, as a result, the requi-
- site nexus-between the licensed activity and the anticompetitive situation is lacking. Curiously, Edison does not even mention A
3_H/ Emphasis in original; citations omitted; App. Br. at 132, n.
- j. 155.
i L J
r that it made this argument in its appellate brief. Nor does Edi-I son try to distinguish the original and revised version of the arguments. Thus, it appears that Edison is seeking a second bite
' 'I (J at the apple. The basic policy underlying res judicata -- pro-tection of litigants from the vexation and expense of repetitious litigation -- applies w3th full force Pero,
- b. The events cited by Edison could l
have been raised during the op-erating license proceeding Even putting aside the fact that Edison already raised the argument in its application here in its appeal of the Licens-ing Board decision, each of the events cited by Edison could have been raised during the operating license proceeding.39/ Conse-quently, res judicata bars consideration of these arguments at this late stage.
- i. Increased cost of nuclear power L Edison's principal argument is that recent events have undermined what Edison asserts was the only basis relied on by the NRC to impose tFe license conditions, namely, the economic
! superiority of nuclear power from Perry Unit 1. As shown below, each of the events occurred well before the termination of the operating license proceeding and, hence, could have been cited by C t
_O . Edison in that proceeding. Also, Edison was aware of the cummu-lative impact of each of the events on the cost of Perry Unit 1 power well before the termination of the operating license pro-(
39/ Again, this analysis accepts, arguendo, Edison's contention that-antitrust issues can be raised at any time.
(.
f coeding and could have cited that cumulative i.apact in the opera-ting license proceeding.
In addition, Edison has not provided " cogent and com-pelling evidence" that these events caused substantial changes in the previous circumstances. Consequently, Edison has not justi-fled and exception to res judicata.
- New statutory requirements Edison refers to new, more stringent federal environ-mental laws adopted in the 1970s as one of the reasons for the increased cost of Perry Unit 1 (App. 62). Edison refers specif-ically to several statutes the National Environmental Policy Act of 1969, the Clean Air Act Amendments of 1970 and 1977, the Federal Water Pollution Control Act Amendments of 1972 and the Endangered Species Act of 1973.
There are two flaws in Edison's arguments. First, Edi-son does not argue that it could not have made the same arguments during the course of the operating license proceeding. Again, most of the statutes cited by Edison were enacted in the early 1970's. By the time the operating license proceeding was under-way, CAPCO had already increased the projected cost of the Perry i project twelve times to reflect additional costs.40/ New statu-tory requirements were one of the factors cited by CAPCO in ex-plaining the increased cost projections. Thus, Edison had al-ready anticipated the impact of the new statutes and could have raised these arguments at the operating license proceeding. Edi-40/ These revised cost projections are described in Appendix B.
c son does not contend otherwise.
Even putting aside Edison's failure to raise this argu-ment during the operating license proceeding, Edison also does not provide detailed evidence regarding the extent to which these
(} new requirements may have changed the economic status of Perry Unit 1. Edison merely says (App. 62) that the statutes "signifi-cantly affected nuclear plant siting, design and construction --
and hence cost." Edison cites a page from the study of the Perry projects prepared'for stato regulatory proceedings by Pickard, Lowe and Garrich, a nuclear engineering firm, on behalf of CEI.
Id. Ilowever, the study is not provided or even quoted.
Therefore, Edison has not satisfied its burden of sho-wing that the 1970's statutes constitute " cogent and compelling evidence" that new legislation caused the economic status of the nuclear plants to " change substantially" subsequent to the opera-ting license proceeding.
- Regulatory changes Edison cites new technical regulations adopted by the NRC as another reason for the increased cost of nuclear power from Perry Unit 1. Edison says that "[t]he regulatory climate at the NRC between 1975 and 1981 can best be described as highly
,() unstable" (App. 64).
But the flaws in Edison's argument regarding the new statutes adopted in the 1970's also undermine this argument.
Again, Edison does not show why it could not have raised this argument during the operating license proceeding. As noted in
1 Appendix B, Edison was aware of the cost impact of the new regu-lations during the operating license proceeding and repeatedly revised its cost projections for the Perry project. For example,
(} in a March 23, 1983 press release 41/, CEI announced, on behalf of the joint Applicants, a revision of the estimated cost of the Perry Units 1 and 2 plants from $3.23 billion, to $3.6 billion, which represented an increase of 10 percent. CEI noted that the increased cost of the Perry "is the result of implementation of e
regulatory requir'ments that affect the final design and con-struction activities. All nuclear power plants under construc-tion have been greatly affected by these conditions [and) time schedules and budgets must regularly be reviewed." Consequently, Edison clearly could have-cited these increased costs during the operating license proceeding and opposed the continued imposition of the antitrust license conditions. Instead, Edison's position was that no significant changes had taken place subsequent to the antitrust review at the construction permit stage.
- Adverse economic conditions Edison also makes much ado about adverse economic con-ditions which purportedly increased the costs of constructing Perry. Edison says that "[p]lants like Perry that were begun in
( ) the early 1970s had to cope with sustained high inflation and high interest rates in the 1970s and early 1980s, which drama-
- tically increased plant costs" (App. 65). Edison also points to 41/ Appendix C.
p the reduced growth rato in demand for_ electricity which emerged E beginning in the mid-1970s due to conservation and the economic recession.
The flaws in Edison's argument regarding the impact of new statutes and NRC-regulations on Perry Unit 1 undermine Edi-i son's argument regarding adverse economic conditions. Edison does not show why it did not raise this argument in the operating
_licenso proceeding. Again, as reflected in Appendix D, Edison- '
'had repeatedly increased the projected _ costs of the Perry-pro-joct. For'examplo, in the March 23, 1983 press release, CEI pointed out that the interest costs associated with constructing the project had increased. Consequently, Edison could havo .
raised this argument during.the operating licenso proceeding.
- Edison could also have raised in the operating license proceeding its concerns about the reduced growth rato in domand '
for electricity. For examplo, in its January 23, 1980 pro'sa re-lease cancelling construction of Units-2-and 3 of-the Davis-nesse-Nuclear Power. Station and the 1260 megawatt Units _1 and 2 of_the Erio Nuclear Plant and delaying construction of Perry-Units.1 and
'- 2 and the 833 megawatt Beaver Valley Unit 2 plant, CAPCO cited, inter alia, a decrease in the averago growth of electricity do-mand from 3.3 percent to 2.8 percent 42/. CAPCO said that the re-
< O duced growth rate in "attribut[able) malnly to a showdown in.in-dustrial growth, the increased availability ofinatural gas'in the CEI service area, and conservation efforts by customers.*43/
142/ The press-release is reproduced in Appendix D.
43/ Id. at 3.
o
_ _ _ _ . ._ . _ . . - . _ _ . . . . _ _._ _. _ ___m _ . - - _. _ _ .
T In addition, Edison fails to provide any " cogent and compelling evidence" of any " substantial changes" in economic conditions subsequent to the operating license proceeding which might have caused a " substantial change" in the cost of Perry
} '
i Unit 1.
- Overall costs of Perry Unit 1
-After citing the events discussed above, Edison goes on to compare the projected cost of power from Perry Unit.1 and a coal-fired plant (1; in 1976-and (2) under current conditions.
Edison states:
OE's comparison shows that in 1976 it would have been anticipated that the 30-year levelized cost (including capital, operations and maintenance, and' fuel) for a nuclear power plant would be about
$27 per MWh. The actual 1987 30-year levelized cost for Perry (including capital, operation and maintenance, and fuel) is $184 per MWh, or 580%
higher than the $27 per MWh projected in 1976. By contrast, the projected 30-year levelized cost of a coal plant 1.' 1976 would have been $38 per MWh,-.
or:41 percent higher than the then-estimated cost for Perry. Based on a recent Electric Power Re-search Institute survey, the current levelized cost-estimate of a 300 megawatts coal-fired unit with a 1987 in-service date, which represents OE's-approximate ownership share in Perry, would bo ap-proximately $92 per MWh -- one-half of the cost of Perry, footnotes omitted; App. 70.
() But, once again, Edison misses the mark. Edison fails to mention that it has been continuously monitoring the projected cost of Perry Unit 1 tnroughout the construction process and has repeatedly revised the costs upward beginning in 1976. As the -
cost projections in Appendix B demonstrate, the bulk of the in-
1 I
(
_ 77 _
creased cost.s woro projected well before the close of the opera-ting licenso proceeding. This is not surprising because, as noted, the events cited by Edison as t.he basis for the increased costs also occurred well before May 1985. Thorofore, 1:di son could have argued during the operating 11censo procooding that those cost. increases justifled suspension of the licenso condi-t_ i on s . Edison chose to not do so. 130s judicatgi bars raising this issue now.
In addition, Edison has not even tried to quantify 1.ho e x t e n t. , if any, to which t.he increased costs occurred subsequent.
to the operating license proceeding. Consequently, Edison has failed to provido the "cogant. and compelling evidence" of "sub-stantial changes" in the economic status of Perry subsequent. to that proceeding nooded t.o just.if y an except. ion t.o res ludicata.
Moreover, Edison's content. ions regarding t_ho cost bur- ,
don of Perry Unit 1 are orroneous. The comparison offorod by Edison of the project.ed coat. of nuclear power and coal-fired -
power in 1976 and at. present is flawed. Edison has omit.tod vit al information. For examplo, Clovoland cannot datormine what mega-watts capacity was assumed in connection with the derivation of the cost of t.he nuclear power. Was it capacity equivalent to the total capacity of the nuclear units or was t.his total capacit.y of (O t.ho megawatts capacity of Perry Unit 1 alono? Or wau the assumed capacity simply the capacity represented by Edison's ownership share of Perry Unit I? Edison does not. toll us. But. Edison does toll us t. ha t. the cost por megawatt. hour for the coal-fired power was based on capacity equal only to i t.s ownership share of Perry.
- - ..- . . - . . _. .~ . - _ - _ -- - .. -- _ --
1 l
If the cost per megawatt hour for the nuclear power was derived on the same bants, t.he comparison is wort.hless because the cost per megawatt or megawatt hour for Perry must be based on its to-tal capacity. If the cost derived for the nuclear power is based on the total capacity of the nuclear unit, then the comparison with the coal-fired power costs is egregiously invalid since cost
, per total capacity is being compared to a fictitious cost based ,
i on a fraction of the total capacity. Such a comparison is the equivalent of comparing apples and oranges.
Edison's contentions are also contradicted by recent actions by it and the other Applicants. Perry Unit 1 and Davis-Besse Unit 1 are in full commercial operation and piovide sub-stantial base load power. Obviously, if the plants were as inef-ficient as Edison suggests, it would be imprudent to use the plants for base load power. CEI recently_ stressed the importance of Perry as a source of base load power in urging the Public Utilities Commission of Ohio (PUCO) to recognize for rate pur-poses the operating expenses of Perry Unit 1.for its first full year of commercial operation beginning when Perry was placed in commercial operation on November 18, 1987.44/ The PUCO agreed with-CEI and noted:45/
44/ "In the Matter _of the Application of the Cleveland Electric Illuminating Company for Authority to Amend and Increase Cer-tain of Its Filed Schedules Fixing Rates and Charges for Electric Service", Case No. 86-2025-EL-AIR (Dec. 16, 1987).
(Appendix E). Cleveland and several other parties have filed rehearing requests which are now pending before PUCO.
45/ Id. at 55
l l
I i
l i
The Perry plant. did gonorato nubst. ant.lal amount.n l of cloct.ricity during tho tout. porlod end t.he com- !
pany han incurrod nubstantial coats in generat.ing '
I that. olectricity.
\
And in a recent interview, CBI spokosman itick Dochant not.ed4_6/:
I don't noconnarily know if [t.no power gonorated by Porry 1 in) going to be chenpor but. It'n going to help to stabilizo raton -- down the road it will, upocifically in fuel navinga.
Indood, Clu recently decomminaionod a 223 megawat.t.
coal-firod genorsting ntation bocanso it. "was probably t.ho loant.
cont-officient unit in the company's syntem."41/ Nowhora did CIM ;
auggest that its nuclear power was high cost.. .
Moreover. as shown in Section VI(c), bolc,w, t ho changes in tho cost of Perry, regardless of ita scopo, would r.ot under-mino NRC's reasoning in imposing the licenso conditions. As discus. 1 in aioro dutail in Section VI(c), both Perry Unit 1 and !
Davis-Dosso Unit. I are now in full commorelal'oporation and pro-vido substantial bano load power. The NRC recognized the poani- ,
U bility that. this power may be more expansive than anticipated. }
!sut the NRC found that the availability of this substantial now source of baso load power, por so, would exacerbato the anticom-petitivo situation in the CCCT absent t.he antitrust 11conuo con-ditions. Consequently, the increased cost of this power doos not !
represent the nort of " substantial chango" in the_ prior circum-O stances necessary to justify an exception to y judicata. 1
.t 46/ Interview on NPCN radio in Clevelind, Ohio, Dec. 21, 1987.
- t 41/ Pruzinsky, "Avon Lako capacity cut an CEI rot. ires generator", i Crain's Clovoland 11usinous -(Jan. 4, 1988) (Appendix F). ,
i
- 11. The reduction of the CAPCO nuclear _ Igograrn Edison also points to the reduced scopo of the CAPCO nuclear program as another basis for suspending the antitrust
} 11censo conditions. Edison contends that (1) construction of Perry Unit 2 has boon " indefinitely suspended", (2) Erio Unita 1 and 2 havo boon cancelled, (3) Davis-Bosso Unita 2 and 3 have boon cancelled, (4) Perry Unit I reached full power in June 1986, ,
and (5) Davis-Bosso Unit I returned to servico in December 1986 following an 18 month outage.
But,-again, Edison fails to montion that the plant can-L co11ations and suspensions occurred well before the operating licenso proceeding. As early as November 1978, the status of Davis-Bosse Units 1 and 2 was uncertain.48/ On January 22, 1980,
( the CAPCO companies cancelled Erio Units 1 and 2 and Davis-Bosso Unita 2 and 3 19/ The indefinito susponsion of construction of Perry Unit 2 was announced in September 1984.50/ Again, Edison
- had ample opportunity to cite these events during the oporating licenso procooding as part of an argument against continued impo-sition of the antitrust-licenso conditions.
Moreover, even putting aside Edison's failuro to raise this argumont during the oporating license proceeding, Clovoland shows in'Soction VI(c), below, that'the changos in the scope of L.O o
18/ See Edison Securities and Exchange Commission Form 10-K for 1978, pp. 37-38 (Appendix G).
4_9_/-Soo Appendix D, t- 50/ Soo Edison 1984 rorm 10-K, p. 11 (Appendix H), " Cost Estimato Rovised For Cleveland-Electric Perry-1", Nucleonics Week, p.
i 7 (Sept. 20, 1984) (Appendix I).
f 76 -
the CAPCO nucionr program do not. repronont t.ho nort. of nubstain-tial chango in circumstancon noconnary t o junti f y an oxcopt ion to run judicata. An explained in more det.all in Sect.Jon VI(c), t.ho Iul1 commorcial oporat. ion of Porry Unit 1 and Davia-Ilonno Unit 1, onpocially in conjunct. ion with the now trannminnion linen con-ntruct.od to connect. the plant.n to the Applicantn' oxisting trann-minnion network, in aufficient to junt.1iy continuntion of tho 1i-conno conditionn.
The dolhya in the connt.ruction of Porry tini t. I and Davin-Honso Unit 1 alno do not chango tho applicability of ron judicata. Truo, Davin-Bonno Unit. I did not roturn t.o norvico until December 1986 and Perry Unit. I did o L reach full power until 1987. 1:dinon, howevor, han not mado the requinito ohowing
- t. hat t. hone two ovonto chango nubstant.ially the circumstancon at issuo in the operat.ing 11conno procooding. Start.ing well bef ore the oporating liconno proccoding, CAPCO repeatedly announced do-layn in the complution daten f or t.ho nuclea r plant.n . For exam-plo, on November 15, 15,0, CAPCO announced a dolay in the comple-tion dato for throo planta a 16 month dolay in construct. ion of Porry Unit 1 to 1983, a 22 mont.h dolay in construct.lon of Perry Unit 2 to 1983, and a 24 month delay in conntruction of Davin-Denno Unit 2.,51_/ On January 22, 1980, CAPCO announced another 1 O year delay in the construction of Perry Unit. I to May 1984, a3 year delay construciton of Perry Unit. 2 to May 1988 and two year delay in conntruction of Ileavor Valley Unit. 2 to May 1986.52/
'21/ l:d i non 197 8 Form 10-K , p. 37 (Appendix G).
$2/ Appendix J containn a complot.o lint of those delayu.
,,e
(
f Thus, i n the operating licenso procooding, Edison and [
the NHC woro undoubtedly aware of the potential for additional dolays in the completion dato of the nuclear plants. Consequent- ,
ly, the fact. that additional dolays havo occurred cort.ainly can-
! not bo viewed as a substantial change in the circumstancos con-templated by the NRC during the operating licenso procooding.
I 111. Termination of the CAPCO pool.
Edison also points to the termination of the CAPCO pool as anot. hor ovent which justifies susponsion of the antitrast con-ditions (App. 73-76). The following events are cited:
- 1. On December 31, 1979, the CAPCO companies coaned mandatory purchases and sales that were required to be made among them under prior agroo-ments.
I
- 2. On' September 1, 1980, the CAPCO companies terminated t.ho CAPCO Memorandum of Undoratanding (dated September 14, 1967) and certain other agreements. The companies also agreed to imple-mont pool restructuring principios, the most sig-
, nificant of which was the abandonmont of the " ono- '
system" planning concept. Each company is now :
rorponsible for futuro capacity planning, aut.hori-zation of. additional generating units,_and estab-lishing acceptablo reserve margins.
- 3. The CAPCO Dase Operating Agrooment was amended on September 1, 1980, August 1, 1981, September 1, 1982 and July 1, 1984. As-a result, the companies no longer havo unquallflod entit.10-monts to replacement capacity and energy. Instead moro limited and qualified rights to "back-up" and emergency power have boon ostablished, s
- 4. In addition, numorous other (loss signifi-cant) administrativo and operating principles have boon revised or 013minated. '
At the outsot, it must be noted that the cortain of changes in the operating terms and condi Jons -stem directly Irom e
y *'v y
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the NRC decision imposing the ant.itrust licenso conditions. It is, therefore, somewhat disingenuous for Edison to portray the changes as voluntary.
Also, because those samo licenso conditions wore part of the overall set of antitrust conditions, CAPCO's compliance with the conditionn can hardly be viewed as a changed circum-stanco justifying suspension of all of the licenso conditions.
f Even putting this concern asido, however, considerat. ion of those ovonts involving the CAPCO pool is barrod by ros judi-cata. Once again, those ovonts occurred well boiore the closo of the record in the operating licenso procooding. Clearly, Edison had the opportunity to raiso this argument. during tho operating licenso procooding.
Moreover, even if one overlooks Edison's failuro to raise this argument during the operating licenso procooding, Clovoland shows in Section VI(c) that termination of the CAPCO pool does not. affect the NRC's analysis in imposing the antitrust licenso conditions. Consequently, the termination cannot justify an exception to ros judicata.
Thus, ros judicata applies hero to bar Edison's chal-longo'of the antitrust licenso conditions. As shown, Edison mado
-or could havo made its arguments during the construction permit.
(o and operating license procoodings. -Moreover, application of ros judicata is necessary to ensure that Cleveland is not harmed as a result of the ext.onsive business commitments it has made in reli ance on t.ho antitrust licenso conditions (as outilnod in Sectlon III(A)(3),.above).
l 1
- 3. Alternatively, collateral est oppol is l
- applicable and bara Edison's arguments l As noted in subsection C(1), above, Edison's applica-a tion arinos in the samo cause of action" as the operating licenso procooding. Honco, ros judicata encompasses the situa-tion hore.
But preclusion is still warranted even if the NRC finda that the application arinos in a different "cause of action".
In that-instanco, collateral ostoppel would apply to the circum-stancos here. As noted above, collateral estoppol applion if .
- four critoria are mot t :
(1) Tho prior tribunal must have had jurisdiction to ronder the decision, (2) there must have boon a-prior valid final judgment on the merits, (3) the issue must have been actually litigated and nocos-sary to overcomo of the first action, and (4) the party against whom the doctrine is asserted must have been a party or in privity with a party to the earlier litigation.
Braidwood, 21 NRC at 620.
- Each of these critoria is satisfied hero. First, the NRC clearly had jurisdiction to issue the operating license deci-
- sion. Second, there was a valid final judgment on the merits of the antitrust conditions. Third, the antitrust issue was actually litigated and was necessary to the outcome of the pro-coeding. As noted, the antitrust issue was addressed both in the
+-( O construction permit and operating license proceeding. During the latter proceeding, the NRC addressed the antitrust issue in the context of determining pursuant to Section 105(c)(2) of the Act whether there were any significant changes in the licensee's ac-tivities or proposed activities subsequent to the antitrust re-
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l l
view during the construction por:mit proceeding. Edison and the i other joint Applicants actively participated in the procooding and urged the NRC to find that there woro no significant ,
changos.53/ And, again, only for purposos of this analycis, Clovoland acceptu Edison's contention that the NRC can review the appropriatonoss of a licenso condition at any timo, including r
during the oporating liconan procooding. Thorofore, Edison had the opportunity to argue then that the antitrust conditions should bo 011minated. Finally, Edison was obviously a party to the earlier litigation.
Because each of thoso critoria are mot, Edison cannot now raise arguments it failed to raise during the operating licenso procooding. As noted, the NRC has recognized that col-lateral catoppel prec19 dos a party Irom raising in a subsequent proceeding any argument that it noglected to raiso during the prior proceeding. "If [an issue) has boon datormined in a former action," the NRC has observed, "it is binding notwithstanding the [
parties . . . may have omitted to urgo for or against it matters which, if urged, would have produced an opposito result."
Shearon, 23 NRC 525, 537 n. 37. As shown in Section IV(c)(2),
above, virtually all of the arguments raised by Edison in its application could have been raised during the operating license
- procooding. Thus, those arguments cannot be raised now. -Liko-wise, as shown in Section VI(c) below, the events cited by Edison 53/ See March 6, 1984 letter from CEI to liarold R. Denton, NRR Director.
. . . . - . . . . - - - - - . . _ - - - - _ . _ ~ - _ - - - . . - - . - - . - - - _ - - . . -
81 -
do not corint.itut.o tilgn111 cant changos and, t.horo f ore , do tiot. jun-tify an exception to collateral ontoppel.
O e
O
~- - . . . _ _ _ _ _ . _ _ _ _ . _ . _ _ _ _ _ _ _ _ _____ ._
l 82 -
V. Till: REl.1El' SOUGilT llY 1: DIS 0!J IS IIAldlED llY 1.ACill:S If t he 11RC finda for r,omo reanon that. noit. hor run judicata or collateral ontoppol apply hero, lachon ohould be ap-plied to har the rollef cought. by 1:dinon. 1.achon in an equitablo doctrine which barn the lat.o filing of a claim if a party would bo prejudiced becauno of itn act.lons during tho interim in roll-anco on the right being challonged in the claim. Throo indepen-dont critoria must be mot beforo lachon can be invoked to bar litigation. A party must show that. thoro was (1) a dolay by anot. hor party in annerting a right or claim, (2) the delay waa not. excunablo, and (3) the part.y nuf f orod unduo prejudico an a result of the delay. 1:nvi ronment al Dofonno_ Fund, Inc. v. Alexan-dor, 614 F.2d 474, 478 (5th Cir.), cort . donied, 449 U.S. 919 (1980); 800 Cost.ollo v. United Staton, 365 U.S. 265, 282, (1961).
Because lachon in an equitable dofonso, "the doc-trino . . . is flexible" and "all t.he particular circumnt.ancon of eac h caso must be considered, including the longt.h of the delay, too reasona for it, its offect on the defendant, and the overall s fairnons of permitting the plaintiff to annert. his or her ac-tion." Citirons and Landownern Against The Milon City /th>w Under-wood Power 11no v. Secretary, U.S. Department of Ener_gy ("Undcr-O ~ a-), coa e 2o 1171, 11>4 (8ta cir. 1982).
The 11RC has recognized that t.he policios underlying laches are fully applicable in administrat.1vo proceedings. In finding in South Texan that t.ho a n t. i t r u s t. review at the operating 1iconno stage can only encompass "signi f icant changen", the imC
l 1
cited lachos:
. . . a limited review at the operating licenso stage is consistent with the well outablished con-siderations consolidated in the doctrinos of ros-Judicata and lachos. Although those judicially O developed doct.rinos are not fully applicable in administrativo proceedings, particularly whore, an here, thoro was no adjudicatory proceeding at the construct. ion permit stage, the considerations of fairness to parties and conservation of resources embodied in them are rolovant here. Wo seo no reason w'.3y the Attorney General, our staff, and possibly a hearing board should plow the same ground twico. Nor, in fairness to utilities on-gaged in long range planning, should a potent.ial po'titioner for antit;ust intervention be able to stand on the sido11nos at the construction permit stago and raise a claim at the operating licenso stage that could have boon raised earlier.
!. NitC 1303, 1321.
In view of the flexible nature of laches, there in no fixed rulo regarding the longth of the delay necessary to support laches. Likewise, there is no rigid formula governing the type of explanation which can justify delaying the filing of a claim.
But the explanation must provido a rational and satisfactory basis for the delay. Underwood, 683 F.2d at 1175-77.
One type of prejudico which typically nupports the de-fense of laches arises when a party makes financial commitments which it would not have made if the plaintiff had not delayed.
Lingenfelter v. Keystone Consolidated Industries, Ir.c. ("Lingen-() folter"), 691 F.2d 339, 342 (7th Cir. 1982). This detrimontal reliance has been summarized in this ways 4/:
54/ footnotes omitted; 27 Am.Jur.2d (Contracts) S171, p. 717 (1966 & 1987 Supp.).
i Proof of prejudico or injury consists frequently
, in evidence showing the exponditure of money or the incurring of obligations by the defendant. . in the bo11of that ho had a clear or unencumborod right. The suit will bo dismissed where it ap-pears that the complainant stood by and permitted ,
the dofondant to expend sums of money in improving O
, the property. The showing of injury is ospecially plain where it appears that the defendant. has un-dortaken a public improvement.
Numerous types of pecuniary loss may be considered in weighing the prejudico auf forod by a part.y as a result of tho delay.
Lingenfoltor, 691 F.2d at 342.
Each of the criteria for lachon is interwoven. For ,
examplo, the extent of the delay necessary to support the lachos defonso depends, in largo part, upon tho-oxtent of the prejudice sufforod by the dofondant If only a short period of timo has olapsod sinco i
the accrual of the claim, the magnitudo of preju-dico requiro before the suit should be barred is great, whereas if tho delay is longthy, projudico ;
is moro likely to havo occurred and loss proof of projudico will be required.
f-citations omitted; Goodman v. McDonnell Douglas Corp., 606 F.2d 800, 807 (8th Cir. 1979),-cort. doniod, 446 U.S. 913 (1980).
Laches has repeatedly boon found to bar a claim not diligently pursued by the claimant when another party incurred financial obligations during the delay because of a reasonable relianco on the rights challonged by the claimant. For examplo, L laches was found to bar a challonge-of the construction of an oloctric transmission lino because the plaintiffs delayed throo.
years before filing suit. Underwood, 683 P.2d at 1175-77. The court noted that the plaintiffs could not justify the delay and that the delay prejudiced the defendant because it had construc-I'
- m. . _ _ .- _. . _ _ _ . _ _ . _ _ _ _ _ . _ _ _ - - - _ _ . _ . _ _.
_ a5 -
tod the transmission lino at substantial expenso by the timo the 4
suit was filed. IJ . Similarly, a suit challenging a municipal ordinanco rozoning cortain property was barred by Jachos bocauno the plaintiff waited 21 months to filo suit and the owner of the property had during that period incurrod substantial expenson to 1mprove the property. Itichards v. Porouson, 479 S.W.2d 852 (Ark. 1972); soo also Lundaron v. Lundgren, 54 Cal.Rptr. 30 g (Cal.Dist.Ct. App. 1966). bikcwiso, a court hold that a challongo
- of a property use'was barred by laches because the plaintiff do-layed throo years and the property owner spont over $282,000 on improvemonts during that porlod. nrosnahan v. City of Pasadena, 121 Cal.Rptr. 750 (Cal.Ct. App. 1975).
This reasoning applies with equal forco here and bara Edison's application. As noted in Section V(c) above, each of the events cited by Edison as the basis for its application --
changes in regulatory requirements, adverse economic conditions, the reductior: in the scope of the CAPCO nuclear program and ter-mination of the CAPCO pool -- occurred no lator than 1981. But Edison did not filo its application until:Soptember 18, 1987.
Nowhere in its application does Edison even try to justify this delay. Moreover, as shown in Section III(A)(3), above, Clevoland has made significant financial commitments during that period in t :
L' reliance on the antitrust conditions by purchasing power from alternative suppliers. This reliance was justified at the very latest by October 1980, when the Third circuit granted the Appli-cants' motion to withdraw their petition for review of the NRC decision imposing the 11censo conditions, lionco, in view of (1) l i
.+,.--,,,,-~,c-,..,,.r.,.m.,,..-gw.-w,,,r,.na<g.-wv-g--r ceg-,--,,,-,-a,w,we,-%,.w.y..ngwwmeew,-3,,*-..e--em-mm-m.-yg-,,,,-..,,r-,y g-y,+ p
- i Edison's longthy and unjustifiable dolay in submit. ting its re-quest for rollof, and (2) the novoro prejudico to Clovoland which would result if the antitrust licenso condit. ions wore auspended, lachos bara Edison's application.
i L
a f
[
- O b
. _ . _ . . . - . . _ . . _ _ _ . _ _ _ . ~ . _ . _ - . . . _ . _ _ _ . _ _ . - _ . - . _ . . _ _ _ _ _ _ _ _ _ .
i
- 87 -
VI. THE EVENTS CITED BY EDISON DO NOT UNDERMINE 7
THE LEGAL OR FACTUAL BASIS FOR IMPOSITION OF ANTITRUST LICENSE CONDITIONS The premise of Edison's application is that events sub-sequent to the NRC decision to impose the antitrust license con-ditions undermine the basis of the NRC decision. Therefore, ar-gues Edison, the antitrust license conditions are not needed in current circumstances and, hence, should be suspended.
Specifically, Edison argues that Congress' adoption of mandatory prolicensing review as part of the 1970 amendments was based on its assumption that nuclear power would be far cheaper than any other source of power. Consequently, according to Edi-son, the only concern of Congress was to ensure that all utili-ties had fair access to this low cost power sourco. Therefore, according to Edison, antitrust license conditions cannot be jus-tified if nuclear power does not have cost advantages over other power sources.
Edison then points to the NRC decisions imposing anti-trust license conditions and argues that these decisions were based exclusively on the assumption that the nuclear power would be low cost.
Next, Edison turns to the decisions in the consolidated proceeding in which the antitrust license conditions were imposed O on Perry. Edison argues that the NRC's decision to impose the antitrust license conditions in the consolidated Perry proceeding was, again, based exclusively on the assumption that this power would be low cost. Because circumstances have changed subsequent to the NRC decision, argues Edison, continued imposition of the
- s. =+
1-_ _ _ - _ - - - - - . - _ - _ _ _ . - _ - - -
(
antitrust licenso conditions is unjustifled and thu conditions
(
should be auspended.
As shown below, Edison's argument is flawod. In sub-section A, below, Clovoland demonstrates that Congress, in onact-
}
ing tho 1970 amondmonts, was not exclusively concernod about the anticipated low cost of nuclear power. Congress was equally con-corned about the immenso sizo of nuclear generating units and tho transmission facilition that accompanied them. Congress recog-nized that a nucloar facility and tho associated transmission facilities could enhance a utility's ability to exerciso market power in the retail and wholesale power markota and the coordina-tion servicos market unless conditions woro incorporated into the liconso.
f Those concerns apply regardless of the cost of nuclear power. Hence, Congress did.not intend to limit antitrust licenso conditions to plants which produco nuclear power that is cheaper -
1 than any other power sourco.
In subsection B, Cleveland shows that, consistent with this Congressional mandato, the NRC has repeatedly recognized that a utility which has a dominant role in the generation and transmission of power will be able to exerciso even greator mar-kot power if it operates a nuclear facility along with tho.asso- '
t ciated transmission lines and coordination services. The NRC's analysis reflects its understanding that this exacerbation of an anticompetitivo situation occurs regardless of whether the power p is low cost. As a result, the NRC has consistently imposed li-conso conditions requiring non-discriminatory access to nuclear r
l I
power gel wol..l. En the coordination and whooling servicon needed to obtain non-nuclear power.
Turning to the decisionn in thin proceeding, Clovoland shows in nubsoction C that the liitC , in imponing the antitrunt
( 11conuo conditionu on Perry, did not bano its decision on the ausumption that the nuclear power would bo low cost. The filtC won concerned about t he Applicants' porvasivo control of generation and transmission facilition and, moreover, their uno of this con-trol to discrimin'ato against other utilition in connection with access to coordination, whooling and other related services. The 1111C recognized that the additional generation and transmission facilition which would accompany the Perry and Davin-Bosso planta would exacerbate this anticompetitivo nituation. A change in the relativo cost of nuclear power would not alloviate this condi-tien.
A. Ti!E 1970 AMENDMENTS WERU BASED ON FACTORS OTilER TilA!1 Tile ANTI-CIPATED COST OF NUCLEAR POWER Edison argues that the adoption by Congress of the pro-licensing antitrust review procedures in section 105 as part of the 1970 amendment was based solely on the assumption that nu-clear power would be the lowest cost sourco of power. Edison points to cortain statomonts mado during the hearings before the
( Joint Committeo and during Congressional debate of the legisla-tion.
The analysis below of t he legislativo history of the 1970 amendments, especially the Joint. Committee report, indicaten tl.at Congress was not. concerned only with the anticipated cost at .
t.
90 -
nuclear power.
Instead, Congrenn largo nealo of recognized that in view of t iu-a nuclear facility, and tho annoclased tr ansmiu-nion facilities and coordination neroporation v con, i of the facility by a utility with a domi trannminnion of cloctricity in a nant. rolo in generation and t.y 's market. power. market could enhance the ut111-Thoroforo, pone antit. runt Congrenn int ended tho !Jite t o im-liconno conditionn regardigan of nuclear power to tho coat of the i
the transmianion'facilitiononnuro that nolghboring ,
accoun tutilition o have
(
whooling servicon, and the annociated coordinat.lon and which accompanied the nuclear plant This analynin munt ..
105 and the Joint Committoo's explastart with the language of no nation of t.hin language.
tion 105(c) staten t. hat Soc-review "shall make a finding anthe IJitC in the unt proliconning ant the liconno would creato or maintto whether the activit.ie with t.no antitrunt ain a nituation inconsintent.
lawn an specified in nubnoction 105a "
IJitC finda that an anticompotitiv .
If the han the authority purnuant o nituation would renult, t h e IJftC to Section 105(c)(6) to rotune to in-nuo a wliconno or to innue a licenso 111tC de appropriat.o. with nuch conditions as tho The Joint Comnittoo emphanized th type of activition under the . e broad ucopo of the tion of antitrust conditions license which would justify imponi-if the activity would
- create or maintain" an anticompet.itivo nituation Sji/
The utandard portains to the
'2 5 / II . itop . IJo ,
act.ivition of the U.S. Code Cong. 91-1470, 91st Cong., 2d Sonn.,
A Ad. tJews 4981, 501) _ropr i n t ed in 1970
(" Joint Committoo ik*por t " ) .
licenso applicant. The activition of others, auch as designers, fabricators, manufacturers, or sup-pliers of matorials or services, who, under somo kind of direct or indirect contractual relation-ship may bo iurnishing equipmcot, matorials or services for thu licensed facility would not con-p O stituto "activition under the licenso* unless the licenso applicant is culpably involved in activi-tion of others that fall within tho ambit of the standard.
The Joint Committoo also noted that the NRC nood only find that there was a "roasonablo probability of contravontion of the an-titrust laws or tho policios clearly undorlying theso laws" SE/:
The legislation proposed by the committoo providos for a finding by the Commission "as to whethor the activition under the liconno would croato or main-tain a situation inconsistent with the antitrust laws at specified in cubsection 105(a)." The con-copt of cortainty of contravention of tho anti-trust laws or the policios cloarly undorlying those laws is not intended to bo implicit in this standard; nor is more possibility of inconsiston-cy. It is intended that the finding be based on reasonable probability of contravention of the antitrust laws or the policios clearly undorlying those laws. It is intended that, in offect, the NRC will conclude whether, in its judgment, it in reasonably probable that the activities under the licenso would, when the license is issued or thoroafter, be inconsistent with any of the anti-trust laws or the policios clearly underlying those laws.
In the hoarings conducted by the Joint committee on the 1970 amendments, there woro certain statomonts alluding to the anticipated cost of nuclear power. But Edison overlooks the Com-() mittoo's recognition that the relativo cost of nuclear power was far from certain. Indood, in a report prepared for the Joint Committoo, Philip Sporn, former president of the American Elec-tric Power Company, noted that the cost of nuclear power was j
56/ Joint Committ.co Report at 4994.
l-
c
- 92 -
rapidly rining 57/:
During the pant two yearn thate han taken placo a romarkable and ominoun rot.rogrounion in t.ho oco-nomien of our nuclear power technology. The l i g h t.
water moderated reactor, which two yearn ago of-fcred polontialn for nuclear power generat.Jon com-O- pot.i t.1ve wi t h f ou n i l tuol at 22c to 24.0c por mil-lion intu han today lont. ponition whoro it. In com-petitivo at 20c t.o 29.5c por million litu f oun11 tual cont.
Thin in turn makon it difficult to accept without something more than a grain of nalt t.hu ntatement.
of the Atomic I:norgy Comminnion [that ) "the out-look for '.ho f ut.uro for nuclear power continuon to bo' very promining [bocauno) of the continuing eco-nomic competitivononn of nuclear power in npit.o of incronning contu au pricon ior both nuclear and ionni1 pl ant.n i nernaso. "
llow did thin como about.? The rounona for that are many. Among tho most important, but nowhoro noar all, aro higher conto of nuclear component.n, higher cont of t.urbinon, higher conut.ruction contn, cont.inulug oncalat. ion during 1.ho ent.i ro construct. ion period due to the inflationary cyclo, longer construction time which resultu in highor interont and overhead chargon, higher capacity chargou in view of the current coupon rate of ap-proximately 9.5% on AA utility bonds which bringn the noconnary capital chargo to give an adequat.o return up to 16% lower capacit.y factor duo t.o tho recognition that with tho growth of atomic power which will tako place betwoon now and 1980 no atomic plant can, except for the shortont timo, be expect.ed t.o oporato at a capacity f actor an high an 80% and that, thoroforo, a more rational capa-city f actor in one fivo point.n lower, or 75%.
Moreover, Mr. Sporn noted that. nuclear power was rapidly loning its competitivo position vin-a-vin power generated by fonall
- O fueln 5_8/
57/ Proliconning Antitrust Itoview of Nuclear Powerplantu, lloar-ings Bofore the Joint Comm. on Atomic 1:norgy, Part 1, 91st Cong., lat. Sonn. 300 (1970) ( "Jo i nt. Commi t t.oo I").
50/ Joint Commit.t oo J at 300.
1
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It is true that fossil fuel costs also have gono up, but even so, nuclear power has lost position vis-a-vis fossil fuel (mainly coal). This can be soon very clearly in Tablo 1, which shows costs of both coal-fired and nuclear-fueled plants, the former in terms of an 800-megawat.ta unit and the O latter in terms of an 1100-mogawatto unit, as of July 1, 1969, for completion in the caso of nu-clear in 1976, and in the caso of coal in 1975.
All the figuros in that tabulation are significant and striking but two stand out in particular --
the cost of switchboard delivered nuclear onorgy of 7.00 mills por kwh as against 6.65 mills for coal-fired energy with coal at 25c por million Btu. On the basis of those figuros, the competi-tivo broax-even point for nuclonr power is 29.7c por million Btu cost.
Tablo 1 is reproduced in Appendix K of this pleading.
Mr. Sporn noted that, in view of the increasing costs of nuclear power, the growth of nuclear power had virtually stopped 59/:
It is not surprising that all those developments have already had a significant offect on the re-( cent experience of the nuclear industry. It has caused cancellation of one or two previously an-nounced projects, delay in scheduling of other units committed for; it has brought about inter-position of fossil fuel uni.to to be completed ahead of what might have boon scheduled atomic
( units, and in some cases it has brougnt about plain decision [s] to go fossil when, if things had gono differently, atomic units would have boon ordered. In connection with the last, it noods to be pointed out that ovary time a fossil-fueled unit is ordered for whatever reason, when an atomic unit might have boon ordered under condi-tions more favorable to nuclear power, the parti- ,
cular nuclear unit is lost for approximately 30 years.
Such developments obviously go beyond the loss of
.(
i domestic orders. Their effect can be and most likely will be worldwide, but this will be dis-cussed in more detail later. Regardless of the effect, it is obvious that we have had a slowdown in the ordering of atomic generating capacity. As against a peak of 25,700 megawatts placed on order M / llearings at 300-01.
(
I in 1967 and 19,159 mogawat.ts averago capacity placed on order in the t.hree years 1966-1968, or- :
dora declined in 1968 to 16,044 megawa ts and in 5 1969 to 7,190 megawatts. This, of courso, doos ,
not mean that the figuros for ordors will not bo bottor in 1970 than they woro in 1969, but t.ho '
utility industry, being young, has as yot not.
- taken to heart the fact. that in t.ho long run it ,
! cannot safely ordor moro capacity than is repro-sented by its growt.h plus the necessary resorvo.
Thus, Congress, in adopting t.he mandatory prolleonsing review requiremont, was well awaro that nuclear power might. not. bo low l cost power. Consequently, thoro is no bauls for I;dison's as-sortion that Congress based t.ho antit. rust review provisions on 2 the assumption that nuclear power would bo low cost, i
Indood, in testimony during the hearing, sovoral key ;
wit.nossos supporting the antitrust. review provisions focused not.
on the cost of nuclear power but on the fact that a nuclear fa-cility could croato or maintain an anticompetitivo situation bv enhancing the cost officienclos which can be achieved through >
coordination services, thoroby increasing the anticompetitivo im-L pact of a discriminatory exclusion of access to t. hose services.
The 14Itc has noted tho important of ficiencies which can be achloved by a utility which has access to coordination sor-
-vices.M/ In their testimony, two key of ficials of the Ant.i- t trust Division.of the Department of Justico noted that the NitC
<O '
M / There are innumerable typos of coordination services, includ-ing reservo pooling. The NRC has noted that "(alll are in ossenco variations on one loitmotif: the utilitics ' attempt.
to-reduce their production cost by either purchasing or solling " surplus' power, or to_put it moro accurately, power f rom the _ surplus generating capacity inhoront in t.ho indus-try." Consumers Power Co. (Midland Plant., Units 1 and 2), 6 NRC 892, 956-57 (1977).
I can use its antitrust review authority to require non-discrimina-tory accons to the coordination and othor services associated with the plant. They recognized that., absent non-discriminatory access, the plant would exacerbat.o the market. powor exorcised by a licenso. For example, in his testimony on behalf of the ant.1-trust divls. ton of the Departmont of Justico, itonald W. Donnom, t.he Director of Policy Planning said 61/:
So far, we have boon focusing on the disposition of the power of a single nuclear plant. Iloweve r ,
the largest gonorating plants now being planned are apparently in the neighborhood of 1,000 megawatts. "Today, only a few individual systems can by themselvou undertake 1,000 megawatts units." lloweve r , pools may be croated in which ovon such large units may be coordinated. Such pools have a number of economic advantages reduction in number of plants necessary to bo hold in reserve to be used in caso of plant breakdown, avoidance of excess capacity by staggering construction of plants to more closely parallel load growth, and permitting economic loading of the generating plants depending on size and location of load domands on the system. Those pooling arrangements reach substantial sizo.
Because they can afford these officiencies, and are so common, the AEC will undoubtedly encounter pooling arrangements forming the necessary support for some of the plants it will licenso. And it.
will nood to dotoririne whether such arrangements tend to create or maintain a situation incon-sistent with t.he anti-trust laws. In doing this it will nood to apply the same standards I have already discussed. Thoro may be circumstances in which it would be necessary to datormine whether parties seeking participation in pools are re-
.O a"ireo t o e 'ece ee taer ere "#e'1e e eeter t into other similarly bonoficial and loss rostric-tivo arrangements. It will nood to datormino whether the officiencies gained by a pooling ar-rangement outweigh the reduction in diversity, rivalry, and innovation created by tho joinder of a number of competitors in a common progran. If f1/ Citation omittod; Joint Commit.too ] at 11.
participation in the pool la just.iflod, the AEC must innuro fairnoan of the terms along the linos previously discussed. In particular, pooling ar-rangement.s which rouervo major bonolita to some companies and exclude ot. horn, with the result that the favored companies gain a decisive competitive advantago, would bo inconsistont with antitruct O policy. And we would not bo inclined to accept the view t. hat some companies should be excluded, or the terms of their entry made unduly burdon-nomo, sololy becauno their participation gives them substant.lal bonoiits but of fors relatively little to other participants. Although there may sometimen be a basis for urging small utilition to join with othorn before joining the pool in ordor to bring more economies to the pool it in still true that. a small company affords to the pool the namo proportional advantages as any equally sized portion of any of the larger companies in the pool.
Likewise, Waltor B. Comogyn, acting Annociated Attorney Gonoral in chargo of the Justico Department's Antitruct Division, recognized that any norvice which "would be an intricato part of the [licensod) facilitya should be subject to antitrust re-view 62/:
Mr. England. One further brief question: If the smaller utility were only looking to share power from the pool but woro not looking for ownership participation in the nuclear power plant, would the AEC havo jurisdiction to entertain his peti-tion?
Mr. Comogys. I could not answer that question, sir, until I saw the entiro arrangement. I think that you do not licenso the pool. The licenso would be the facility but maybe the pool would bo ,
an intricato part of the facility or vice versa.
(O I am suro you know that one type of pooling ar-rangement is whero one of the joint venturers builds a plant this year and it servos all for a timo and as demand grows, another aspect of the pooling provision would require another joint von-
_62/ omphasis added; Joint Committoo I at 134.
1
! - 97 -
turer to add to a pool a second plant that ho did
, not have to build.up to that time. So the various !
l types of pooling arrangements or other arrango-monts are myriad.
a 3
Thus, the Justico Dopartmont officials recognized that. if pooling or coordination services are utilized by a utility in an anticom-
"(
- petitivo manner in connection with a licensed facility, requiring 4
l non-discriminatory access to those services is essential in order I
to-ensure that the facility does not "creato or maintain" an an-
. ticompetitivo situation. The cost of the nuclear power is irrel-
! ovant. Likewise, it doos not matter whether the neighboring utility actually purchases any nuclear power.
Another indication that Congress was not focusing solo-4 ly on the relativo cost of nuclear power was the repeated refer-ence during the Joint Committee hearings to the need to ensure that licensees which dominated the transmission facilities in a service area provide non-discriminatory access to wheeling ser-l vices on their transmission facilities. Numerous witnossos tos-tified during_the Joint Committoo's hearings about instances in which dominant utilities woro not permitting competing utilities to uso wheeling services.13/ As a result, the competing utili-ties had no choice but to purchase power from the dominant utili-ty. Tho Committee was referred to litigation in which the Jus-(f tico Department alleged that a dominant utility's refusal to pro-vide wheeling services violated the antimonopoly provisions of d
4 E3/ Remarks of Mr. Donnem, official in the Department of Justice Antitrust Division (Joint Committee I at 9-10).-
w . - .~- # -,--1 . - , . , ,..~~m _ - . - , ,.,,.e_ ,_,-.sc .,-#,. -.,_ . . . - . , r. w<-. i g. ,,..,, ,,- <-y,,-m.,n . , 1--m,--..w
f f ,
l l
the Sherman Act, 15 U.S.C. SS1 and 2.6.4/ The Committoo also ro- ;
I- printed a court decision which hold that the Securities and Ex- .
i chango Commission, in ovaluating a proposal by a dominant ut.111ty to acquire a utility operating a nucloor facility, must tako into l
account the anticompetitivo offects of a dominant ut.111ty's re- >
fusal to whool.65/ Ilocauso whooling is needed to buy third party power, the concern of Congress about the nood for non-discrimina- !
- -tory access to whooling services was not based on an assumpt. ion of low cost powor'. ,
i Indood, the concerns undorlying the 1970 amendmonto L -indicate that an increaso in the relativo cost of nuclear power I
heightons the nood for continued imposit. ion of the antitrust con-ditions. Agait, antitrust conditions which require access to I coordination and whooling services make it possiblo for a utility to buy power from an alternativo supplier. If the licensoo is the dominant utility in a geographic area and its ratos rise, I anticompetitivo practicos by the dominant utility which precludo access to'coordingtion and whooling services would forco compet-Ing utilities to buy this more expansivo power. Ilonco, an in-creano in nuclear costs exacorbates tho anticompotitive situation to an ovon oroator extent.
- O
\
64,/ Joint Committeo I at 79-80. This litigation culminated in the Supremo Court decision in Otter Tail' Power Co. v. United States,;410 U.S. 366 (1973), in which the Court hold that-the utility violated those provisions of the Sherman Act.
F 6_5/-Joint Committ.no I at. 259-69.
_ _ . _ . _ . _ _ _ - _ _ _ _ _ . _ _ _ _ . - ~ _ _ _ _ _ _ . - _ _ . . . . _ . _ , _ _ _ . . _ _ . _ . _ _ _ . . _ . _ , . . . . . _
1 B. NRC PRECEDENT ItEFLECTS Tile NRC'S RECOG- ;
NITION TilAT PACTORS OTilER TilAN Tile COST
(
OF NUCLEAR POWER CAN DE Tile BASIS FOR IMPOSITION OF ANTITRilST LICEt4SE CONDITIONS i
Edisten goes on to arguo that NRC procodont supports its position that untitrust conditions are appropriato only if nu-clear power is low cost. Edison points to the handful of NitC decisions in which an antitrust review was litigated and the scopo of the NRC's authority pursuant to section 105 was at is-suo. As shown below, the NRC docinions indicato that the NitC rocognizes that its authority to imposo antitrust conditions re-quiring non-discriminatory access to coordination and other sor-vicos associated with a nuclear facility does not dopond on the relativo cost of the nuclear power.
The antitrusc proconding in Louisiana Power and Licht f
RC o . (Watorford Steam Electric Generating Station, Unit 3)
("Watorford"), Docket No. 50-382A, presented the NRC with its first opportunity to discuss the scopo of Section 105. Waterford
(
addressed an application for a permit by Louisiana Power and Light Company authorizing construction of a 1,065 megawatt nu-clear plant. The Attorney General negotiated an agroomont with
(
the applicant pursuant to which the applicant agrood to antitrust conditions as part of the permit. The conditions ensured that j}
\
competing utilitios had access to coordination arrangements.
According to the Attorney General, the antitrust conditions would provide " prompt relief against many of the alleged anti-competi-tivo practicos of the applicant". CLI-73-7, 6 AEC 48 (1973).
ft Soveral competing utilities petitioned for permission to inter-1
_. -, _.. ~- ___ ._ _ _ _ . _ _ - _ _ _ _ _ _ . _ , _ _ _ _ _ _ . . _ .
i
- 100 -
vano and an:tod tho tiltC to conduct an antitrust. hoaring. In oval-I unting thoso pot.it. ions, the NHC analyzed the scopo of its anti..
trunt review authority. The NRC unid that tho standard in Soc-tion 105(a):
i i requires that: (1) the allegations raised by i petitionora describo a nituation ir. consistent with the antitrust lawn or the policion clearly undor-lying theso laws, and (2) the specified situation i.
be "croated" or "maintainod" by "the activitics under the 11conno". Thus, it would be insuffi- '
l clont for a petitioner almply to describe a situa-tion inconalatent with t.ho antitrust laws, rogard-less of how grievous t.he situation might-appear to :
be. A meaningful noxun must be establiehod be- -
twoon the situation and the " activities undor the 11conno". In this connection, the relationship of the specific nuclear facility to the applicant's total ayatom power pool, e.g., size, type of own-orchip, physical interconnection, may nood to be ,
ovaluated. Generally, "activition under the 11conso" would not necessarily include all the i applicant's generation, transmiusion, and distri-l bution of electricity. On the other hand "activi-ties under the 11conso," in most circumstancos, would not bo limited to construction and operation of the facility to bo licensed. Careful analysis '
of the facts in each caso is nocessary, particu-larly in view of the ground breaking nature of the ,
l- Initial decisions in this now area of the Commis-sion'a ranponsibility.
6 AL'C at 49.- The NRC granted the petition which sought imposi-tion of an antitrust condition requiring the applicant to provido i non-diacriminatory access to the facility. The NRC found that the other intervonora, who sought to challengo the Applicants' allegodly discriminatory practicos rogarding interconnections, wheeling and salos of power, had not specifiod "the relationship, if any, between thoso practicos and the "act.ivities under the licenso" involved in this proconding." d Id. The NRC romatided the
(
- proceeding to the Licensing Board and gave the intervonors t.he I
l
-._, ~_ . . _ . , , , _ _ _ . . - . . , _ _ , . , _ . . . _ . . . _ . , . - . . _ . - - . _ _ _ - _ _ . _ , _ . _ , _ .
_ . . _ _ . - . _ . _ _ _ _ . _ _ . _ _ _ _ _ _ _ _ _ _ . ~ . _
101 -
opportunity to provide the missing information.
The Licensing Board applied this criteria and granted the hearing petitions. LDP-73-46, 6 AEC 1168 (1973). The Li- i
/
O ce 1#2 a ro de9 # it eee1v 1 er ri 1 e <"e 1 terveeer'-
allegations 66/:
The petitions, fairly road, encompass a common ,
complaint as to the nature of the anticompetitive acts allogod and the offect on the competitivo situation alloged to flow from Applicant's con-struction of Watorford Station Ur.it 3 (Watorford 3),, a 1,065 megawatts nuclear facility. They al-logo a monopoly ir and an attempt to monopolize the construction and ownorship of largo, low cost, electric generating units in Applicant's area.
This allegod moncpoly of generational facilities is maintained, it is further allogod, by a monop-oly by Applicant of bulk power transmission facil- "
ities. It is further alleged that petitioners' cost disadvantage is exacerbated due to Appli-cant'r alleged refusal to entor into coordinated operation agrooments. In the absence of such agreements or transmission facilitios that could permit petitioners to coordinato among themselves, the petitioners claim their only option is to op-orato as isolated power producers. This results in even highor unit costs, thus increasing their competitivo disadvantago and lessening incentivos to compoto in the production or salo of electric power.
The Licensing Board recognized that the operation of
, the proposed nuclear facility would exacerbate the anticompeti-tivo situation by (1) oncouraging the applicant to expand its an-ticompetitivo practicos to ensuro markets for the nuclear power,
,(f
\
and (2) expanding the scopo of' coordination services and, i
therefore, the adverso impact of the applicants' exclusionary practices:
i-l 66/ Id. at 1169-70. ,
C'
- 102 -
(1) Applicant has or is attempting to acquire a o monopoly of largo low cost = electrical gonorating units in the relevant geographic markot; (2) Control over the bulk power transmission sys-tem in the relevant geographic market is fundamon-tal to the creation or malotonance of such a mon-7 opoly, and Applicant has a monopoly of facilities for the transmission of bulk power and power for system coordination; (3) Applicant has or is attempting to acquiro a monopoly in coordination reservo power sales; 4
(4) Applici.nt alono or in combinat.Jon with others at,tompted to hinder or prevent efforts by the petitioners to construct their own transmission systems for bulk power and coordinating power.
This conduct of Applicant, whether legal or illegal, was intended to maintain its monopoly positions; (5) Construction of Waterford 3 would maintain or strengt hon Applicant's monopoly position by pro-viding Applicant with the ability to serve the
, increasing demands of present customers and the demands of now customers while foreclosing peti-tioners from the ability to servo these demands; (6) Construction of Waterford 3 would materially assist Applicant in providing for its own coordi-nation and reservo sharing r?sda without entoring into agreements with intervonors.
Id. at 1169-70.
Thus, the Licencing Board recognized that the-increase in markot power which would accompany operation of-the nuclear facility would occur regardless of whether the nuclear power was low cost because the applicant wau excluding its competitors from
( access to alternative suppliers.
The NRC affirmed this decision. CLI-73-25, 6 AEC 619 l
I (1973). In doing so, the NRC again clarified the scopo of its
(
antitrust review author 1.ty:
l l
\ - -.
i 103 -
l In our view, the proper scope of antitrust review turns upon the circumstances of each case. The relationship of the specific nuclear facility to the applicant's total system or power pool should be evaluated in every case. Denial of access to transmission systems would be more appropriate for consideration where the systems were built in con-
) nection with a nuclear unit than where the systems solely linked non-nuclear facilities and had been constructed long before application for an AEC license. While the propriety of pooling arrange-monts and physical interconnections could certain-ly be considered in appropriate cases, such mat-ters in most circumstances coold not be dealt with by this Commission where no meaningful tio exists with nuclear facilities.
Id. at 621.
Significantly, nowhere in its analysis does the NRC suggest that the relative cost of nuclear power would affect either (1) the nexus between the nuclear facility and the alleged ot.scriminatory practices regarding interconnection and other ser-vices, or (2) the importance of access to these services. In-stead, the NRC recognized that the need for non-discriminatory access to these services is independent of the relative cost of the raclear power.
This same reasoning underlies the NRC's analysis in Kansan Gas & Electric Co. (Wolf Creek Generating Station, Unit No. 1) (" Wolf Creek"), ALAB-279, 1 NRC 559 (1975). Wolf Creek involved review of an application for a permit seeking authoriza-() tion to construct a 1180 megawatt nuclear facility. The Attorney General recommended that certain conditions be imposed on the permit and the applicant agreed. The conditions imposed three obligations on the applicant:
First, the applicant must offer the cooperative the right to purchase an ownership interest with a
.. ._ . .~ . . - - - - -- - - - - . . .. - - -
E-
- 104 -
share in the power generated by the Wolf Creek facility or, at the cooperative's option, to soll it a portion of that power. Second, in the event of the partial or total unavailability of the co-operative's share of the Wolf Creek power, the applicant must, at the cooperative's option, either (a) supply the cooperative with an equiva-lent-amount of power; or (b) transmit across its
-t linet,, i.e., " wheel", that amount of power ob-tained by the cooperative from some other source.
Third, the cooperative may elect to have a portion of its Wolf Creek power " wheeled out" by the ap-plicant; i.e., transmitted to some third party.
If the cooperative makes this election, the appli-cant must " wheel in" an equivalent amount of power at the cooperative's request, footnotes omitted; Id. at 562-63.
The cooperr+.ive filed a motion to intervene and re-
-quested an antitrust hearing. The cooperative wanted to purchase an ownership interest in the facility pursuant to the license conditions recommended by the Attorney General. But the coopera-tive argued that this option was " illusory" absent the access to transmission services on applicant's transmission lines needed-to be able to purchase supplemental power from other suppliers. Id.
at 567.
The applicant objected. -It argued that its refusal to-wheel supplemental power was an existing policy and, hence, has no-" causal connection" with its proposed operation of the nuclear plant." Id.
The Appeal Board rejected the applicant's contention
- (( p; and affirmed the Licensing-Board's grant of the petitions. The-LAppeal Board noted that "the Commission's antitrust mandate ex-
- tends-only to anticompetitive situations intertwined with or ex-r acerbated by the award of a license to construct or operate a
3 105 -
nuclear facility." Id. at 569. The Board observed that this could include activities associated with operation of the facili-ty:
The words of the statute upon which the applicant relies direct the Commission to consider not only g'
whether granting a license would " create" an anti-competitive situation but also whether it would
" maintain" one.
Thus, to the extent the appli-cant's argument suggests that the Commission's cognizance under section 105c is limited to' anti-competitive consequences directly attributable to applicant's use of the nuclear plant and its out-put, it makes no sense. As the staff points out,-
fo'r activities under a license to " maintain" a pre-existing situation inconsistent with the an-titrust laws, some conduct of the applicant apart from its license activities must have been the "cause" for bringing about those anticompe titive conditions. Nothing in Section 105c suggests that Congress wanted + .e Commission to focus on an ap-plicant's extra-lacense conduct when determining whether an anticompetitive situation would be
" maintained," but to close its eyes to that con-duct in deciding whether such a situation would be
" created." Indeed, were we to accept the dichot-omy inherent in the applicant's position, we would be at a loss to perceive how a licensing board should proceed when it is alleged -- as it is in this case -- that granting a construction permit would both create and maintain an anticompetitive situation, footnotes omitted; emphasis in the original; Id. at 568.
Moreover, the Board observed that Congress contemplated that antitrust review should consider whether_the applicant-domi-l nates transmission-facilities and excludes competing utilities
) from the access to these facilities needed for wheeling services.
Id. at 571.
. Thus,-Wolf Creek, too, emphasizes that the NRC's anti-trust review authority encompasses any services associated with a nuclear facility -- including coordination and wheel *g service -
- 106 -
- if the applicant's anticompetitive practices in performing this service *is intertwined with or exacerbated by the award of a li-censo to construct a nuclear f acility. " The impact of such an-() ticompetitive practices is wholly independent from the relative cost of the nuclear power or, indood, whether a competing utility intends to buy nuclear power.67/
This reasoning was applied once again by the Appeal ,
Board in its subsequent decision in consumers Power Co. (Midland Plant, Units 1 and 2) (" Midland"), ALAB-452, 6 NRC 892 (1977).
Midland is especially instructive because, unlike Waterford and Wolf Creek, this decision addressed the merits of an antitrust review subsequent to an evidentiary hearing. In this construc-tion permit proceeding, the Attorney General recommended that an antitrust hearing be conducted. Several competing utilities in-tervened and urged adoption of antitrust cord '.tions . The Appeal Board found that the licensed facility would enhance the appli-cant's existing domination of generation and transmission facili- -
ties and, hence, exacerbate the applicant's anticompetitive prac-tice of excluding its competitors from access to bulk power sup-plies. Specifically, the Board found that the market for coor- t dination services was a distinct market for antitrust analysis
! 67/ Although the Appeal Board found that it had the authority to grant the type of relief requested by the cooperative, it found that the cooperative had failed to (1) show why the practices of the applicant were inconsistent with antitrust policies, and (2) describe the relief it sought. Id. at 575-
- 76. As a result, the Board remanded the proceeding and gave the cooperative the opportunity to file an amended pleading to correct these deficiencies. Id. at 577.
l
F
--107 -
pursuant to Section 105. The Board noted that the applicant con-trolled 80 percent of generating capacity, 85 percent of all
. transmission lines and 98 percent of lines 138 kV or higher in the relevant geographic market. 6 NRC at 1005. The Board found
{
I that the applicant used its dominant role to exclude competitors from wheeling and coordination serv. ices and power pools. Id. at 1036-89. The Board also noted, that, as a practical matter, the competing utilities could not construct a large generating facil-ity absent such dervices and could not construct duplicative transmission lines. Id. at 933, 1095. The Board recognized that the applicant's anticompetitive conduct prevented its competitors "from turning to the most economical sources [of power) and mak-ing the most efficient uses of baseload power." Id. at 1095.
Moreover, the NRC found that these anticompetitive ac-tivities had a sufficient nexus to the proposed nuclear genera-ting facility to justify imposition of antitrust license condi-tions:
Now Consumers wishes to increase its efficiency by installing large nuclear powered generating units.
Manifestly, this will exacerbate-the anticompeti-tive situation.
Id.
To be sure, the Board did emphasize the need for non-discriminatory access to bulk power as a way of ensuring access (O
to nuclear power. But this is understandable because the inter-venors were seeking access to the nuclear power. The Board's emphasis on the impact of the facility on the applicant's domina-tion of generation and transmission in the relevant geographic highlighted its concern that the addition of this new power and l
l
.. _____ __ _ _ - _ _ _ _ _ _ _ _ - _ _ - - - _ - - - - -a
c
- 108 -
the associated facilities would " exacerbate the anti-competitive situation" regardless of whether the power was low cost.68/
The most recent litigated decision involving the NRC's
(} antitrust review authority confirms this analysis.
Power Co. (Joseph M. Farley Nuclear Plant, Units 1 and 2) ("Far-In Alabama ley II"), ALAB-646, 13 NRC 1027 (1981), the Appeal Board cited Midland and found that the coordination services market and re-tail service markets are distinct markets for purposes of anti-trust analysis. The Appeal Board in Parley II noted that the applicant had the dominant share of generation and transmission in the relevant area and used this domination in an anticompeti-tive manner to control the coordination services and retail mar-kets service and discriminate against its competitors. Id. at 1069-70.
The Board recognized that the nuclear plant would in-crease the cost efficiencies achievable through the coordination services market and, hence, increase the anticompetitive impact of the applicant's discriminatory practices. The Board also recognized that the new transmission facilities which would ac-company the nuclear plant would exacerbate the applicant's mono-poly power over transmission services. Hence, the Board ordered the applicant to provide non-discriminatory access to transmis-sion services. Id. at 1108-10.
68/ The Appeal Board remanded the proceeding to the Licensing Board because of the applicant's apparent willingness to sell ownership interests in the plant. Id. at 1098-99. The par-ties reached a settlement which was approved by the NRC. 12 NRC 177 (1980).
1
- 109 -
Moreover, the Board recognized that access to these services was not tied to actual purchase of the nuclear power.
The Board found that one of the intervenors -- Municipal Electric
(} Utility Association of Alabama (MEUA) -- did not compete with the applicant in the retail market and, therefore, was not entitled to be able to purchase an ownership interest in the plant. Id.
at 1109-10. But the Board found that, because the facility would heighten the applicant's domination of transmission facilities, this would exacerbate the existing anticompetitive practices of the applicant regardino access to the facilities regardless of the cost advantages, if any, of nuclear power. Consequently, the Board found that MEUA was entitled only to non-discriminatory access to transmission services.
The NRC declined to exercise its discretionary "eview authority over the Appeal Board's decision and the decision be-came the final action of the NRC.
The Eleventh Circuit rejected the applicant's petition for review and affirmed the NRC decision. Alabama Power Co. v. -
NRC, 692 F.2d 1362 (11th Cir. 1982), cert denied, 464 U.S. 816 (1983). The court affirmed the NRC's consideration of prior an-ticompetitive conduct of an applicant to determine whether an unconditional license for the nuclear facility would allow the (O applicant to " maintain" an anticompetitive situation. Id. at 1367-68. The court also affirmed the NRC's finding that the wholesale retail and coordination service markets represent sepa-rate markets which were dominated by the applicant and that the license would exacerbate the anticompetitive situation in each l
(
4
- 110 -
market. Id. at 1369. Consequently, the couict found that the NRC's imposition of antitrust conditions dealing separately with (1) the ability to purchase an ownership interest in the facili-ty, and (2) access to the applicant's transmission facilities, was "not an abuse of nor beyond [the NRC's] delegated discro-tion." Thus, the court recognized that the cost attractiveness of nuclear power has nothing at all to do with the NRC's author-ity to impose antitrust conditions to ensure non-discriminatory access to an applicant's transmi onien f acilities to use coordina-tion and wheeling services.
Hence, NRC precedent undermines Edison's argument that the sole, lawful basis for the imposition of antitrust license conditions is the assumption that nuclear power is low cost.
C. THE EVENTS CITED BY EDISON DO NOT UNDERMINE THE CONCERNS UNDERLYING THE NRC'S DECISION TO IMPOSE THE ANTITRUST LICENSE CONDITIONS In arguing that the key factor underlying the NRC's decision to impose the antitrust license conditions in this pro-coeding was the anticipated low cost of the nuclear power gener-ated by the CAPCO plants, Edison points to statements in which the Licensing and Appeal Boards refer to the anticipated cost of the nuclear power.
j Edison goes on to review the evidentiary record in the antitrust proceeding and points to certain evidence which pur-portedly reflects the expectation that nuclear power would be low cost baso load power (App. 33-36).
Edison also notes other aspects of the CAPCO program as
t
- 111 -
presented to the NRC in the antitrust proceeding. These include the substantial scope of the proposed nuclear generation, the plan to build substantial transmission lines to transmit the nu-(} clear power and the CAPCO pool arrangement to provide coordina-tion services (App. 41-42).
But, again, Edison argues that "[t]he critical fact, however, for purposes of Section 105(c) review, and the fact at issue today, was the low cost of nuclear power" (App. 42).
Edison a'rgues that, in view of subsequent events, the underlying basis for the imposition of the antitrust conditions
-- the low cost of nuclear power -- has been nullified. As noted, Edison cites the (1) increased cost of nuclear power, (2) the uhrunhen CAPCO nuclear program resulting from the cancella-tion of Davis-Besse Units 2 and 3 and the indefinite suspension of Perry Unit 2, and (3) termination of the CAPCO pool.
However, Edison totally mischaracterizes the Licensing and Appeal Boards' reasons for imposing the antitrust license conditions and impact of the events it cites. As noted in the summary of the Boards' decisions, the Boards' concerns were not based on the assumption that nuclear power would be the cheapest source of base load power. Instead, the Boards were concerned about the way in which this new generation and the associated O transmission facilities would heighten the Applicants' market power and the incentive to continue their pervasive anticompeti-tive conduct. The Licensing Board noted "the size of the five large generating stations involved in this license proceeding and the substantial contribution they will make to the resources of
- 112 -
the CAPCO pool and in particular to t.he satisfaction of its base load requirements" 5 NRC at 240. The Licensing Board recognized that, in view of the Applicants' pervasive and coordinated
/~T anticompetitive conduct, any new power generation by the d
Applicants would simply allow them to expand their market power to exclusively serve the increased demands of present customers and the demands of new customers. Moreover, the Licensing Board realized that the new generation would give the Applicants even greater incentive' to prevent the CCCT utilities from purchasing power from alternative suppliers and to thereby ensure a market for the new generation.
The NRC's recognition that the anticipated cost of nuclear power, per se, was not the basis for the imposition of the antitrust license conditions is reflected in the Appeal Board's decision to reject Mr. Sharfman's proposal to restrict the scope of the conditions ensuring non-discriminatory access to coordination and wheeling services to customers purchasing nu-clear power or ownership interests in the p]ints. 10 NRC at 290-294. The Appeal Board noted that this restriction would allow the Applicants to continue their anticompetitive conduct in con-noction with pooling and coordination services and to thereby undermine the competitive position of utilities which did not buy nuclear power. Id. at 291. That would be inconsisteF with the clear " message" conveyed by Section 105 of the Act that " Congress did not want nuclear plants authorized in circumstances that would create or maintain anticompetitive situations without license conditions to address them", noted the Board. Id.
l I
- 113 -
Therefore, the Appeal Board found that this restriction would be inconsistent with the NRC's broad mandate to impose antitrust conditions if the license activity would cause or continue situa-
) tions inconsistent with antitrust requirements. Id. at 284.
Thus, the NRC was not looking at the relative cost of the nuclear power but at the competitive impact of the presence of a new and substantial baseload power generation source for the CAPCO members along with the associated new transmission facili-ties.
This concern applies with full force now. As noted, Perry Unic 1 and Davis-Besse Unit 1 are in full commercial op-eration and provide substantial base load power. Edison and the other Applicants have repeatedly indicated that the plants are important parts of their overall generating program and will remain in full commercial operation.
Likewise, the second factor reviewed by the Boards --
the impact of the construction of the transmission facilities associated with the plants -- had nothing to do with any assump-tions about the relative cost of nuclear power as a source of base load power. The Licensing Board noted that the construction of extensive, high voltage transmission lines in conjunction with gs the nuclear plants would exacerbate the Applicants' exclusionary l
i' tactics regarding access to these facilities for wheeling and coordination services:
. . . there is a direct tie between the generating station construction program and the transmission program which Applicants describe as complementing it. As described in CAPCO memoranda, far more is contemplated than the mere extension of a line
- 114 -
s) from the site of the proposed nuclear instation whoseto the closest terminal of the Applicantservice area of Applicants are engaged in substantial plannin intended to develop a plan for high voltagelow cost amon
,O}.
\-
_ transmission at There will be commingling, but-the commingling will be on an extraordinary scale.
5 NRC at 239. That Board also noted that construction of the new lines lines would heighten the barriers to construction of other by the non-CAPCO utilities:
Although access to transmission facilities is a necessary concomitant of reliable and economicsmall energy production, it infeasible to construct duplicative transmis-Both e sion facilities.
considerations prevent such construction.
Appli-cants' construction of the high voltage transmis-sion grid necessitated in large part by the existence of excess capacity on their present sys-tems, render the construction of duplicative transmission lines essentially impossible, At the same time, the Licensing citations omitted- 5 NRC at 156. e Board noted that the new lines would facilitate Thus, the even mor Board Id. at 239-40.
extensive-coordination services. cerbate recognized that construction of the new . tines would exa exclusionary the adverse competitive impact of the Applicants' i
Id.
That would exacerbate the anticompetitive policies. f This concern about the impact of the construction o situation. do with any
,f g V the new transmission lines had nothing at all to 1
assumptions about the cost of nuclear power.
Several ex-This concern is fully applicable now.
nstructed to tensive, high voltage transmission lines have been co transmission net-connect the nuclear plants with the Applicants' 4
_. __ -n-,
C 115 -
work. These include at least four 345 kV transmission lines f
connecting Perry Unit 1 and the rest of the CAPCO transmission systems 9/ and at least one 345 kV line between Davis-Besse and Beaver Valley.20/ These new transmission lines have increased the scope of the transmission network owned and operated by the Applicants. Therefore, construction of these new lines heightens the cost efficiencies and the competitive advantage associated with access to these lines. Thus, these now facilities would exacerbate the anticompetitive impact of the exclusionary policies pursued by the Applicants prior to imposition of the antitrust conditions.
Indeed, the increased nuclear power costs cited by Edi-son increase the need for the antitrust conditions to provent re-emergence of the anticompetitive activities. Prior to the im-position of the antitrust conditions, the Applicants, including Edison, unlawfully refused to provide the wheeling services needed by their customers to purchase power from alternative sup-pliers. The need for access to such sa: vices in a competitive ma ket is obviously heightened if the rates of the traditional supplier are higher than the rates of alternative suppliers.
The same analysis applies to the other events cited by s9/ "Long-Term Forecast Report -- Electric -- Submitted To The (S Public Utilities Commission Of Ohio, Forecast And Power Siting Division (May 15, 1987)", filed by Centerior Energy Corp. (Appendix L); CEI 1986 Annual Report (Form 1) filed with the Federal Energy Regulatory Commission (FERC), p. 216 (Account 107) (Appendix M); Edison's response to Regulatory Guide 9.3, item C (May 12, 1981) (Appendix N).
20/ Edison 1986 FERC Form 1, p. 422 (Appendix 0).
p 116 -
Edison. As just shown, despite the reduced scope of the nuclear
-plant _ construction program, the Perry and Davis-Besse plants are in full. commercial operation and produce substantial base load power. Hence, the Appeal Board's concern about the way which the U
}
( new generation would motivate the Applicants to maintain their anticompetitive acts is still applicable even though not all five plants were built.
E Likewise, these plants are tied to the new transmission lines. Consequently, the Boards' concern about the way an ex-panded transmission network would heighten the competitive harn t
of the Applicants' exclusionary policies still applies despite-the reduced scope of the plant construction program.
The final event cited by Edison -- the termination of the CAPCO pool -- also does not undermine the Appeal Board's analysis. The Board found that both before and after establishment of the CAPCO pool, the Applicants denied competi-I tors access to transmission facilities to preclude the other utilities from using the coordination and other services needed to compete effectively. The Board recognized that construction i
of the-proposed facilities and the associated transmission fa-cilities would heighten the Applicants' market power absent ac-t
_g cess to these services. Therefore, the Board ordered non-dis-
-[ - .criminatory access to coordination services to ensure that the utilities could compete effectit -y.
-The purported termination of the CAPCO pool does not i'
affect the Boards' analysis. Despite the termination of the pool, the Applicants' transmission facilities are still used and
r
- 117 -
needed for coordination services. Therefore, the importance of access to these services has not changed. The antitrust condi-tions are still_ needed to ensure that the Applicants do not re-vive their pervasive anticompetitive conduct which, again, ter-( minated only because of the imposition of the antitrust condi-tions.
VII. CONChilSION For each of the foregoing reasons, Edison's application should be summarily dismissed or denied.
Respectfully submitted, Marilyn G. Zack Director of Law June W. Wiener Chief Assistant Director of Law William M. Ondrey Gruber Assistant Director of Law City IIall, Room 106 601 Lakeside Avenue Cleveland, Oli 44114 Telephone: (216) 664-2000 (bru kW,
- w K{ % Ctkit lieuben Goldberg Kenneth M. Albert Goldberg, Fieldman & Letham, P.C.
1100 Pifteenth Street, N.W.
Washington, D.C. 20005 Telephone: (202) 463-8300 Attorneys for City of Cleveland, Ohio February 19, 1988
APPENDIX A 8
UNITED STATES OF 3: .
NUCLEAR REGULATORY C2M!SS :M in the Matter of )
)
) HRC Dkt. No. 50-346A THE TOLEDO EDISON COMPANY and THE CLEVELAND ELECTRIC ILLUMINATIllG )
CDMPANY )
(Davis-Besse Nuclear Power Station, )
Unit 1) )
)
> THE CLEVELAND ELECTRIC ILLUMINATING ) HRC Dkt. Nos. 50-440A COMPANY, ET AL. ) 50-441A (Perry Nuclear Power Plant, Units 1 & 2)
ORDER MODIFYING ANTITRUST LICENSE CONDITION NO. 3 0F QAVIS-BESSE. UNIT 1. LICENSE NO NPF-3 AND PERRY UNITS 1 AND 2, CPPR-148, CPPR-149 The Cleveland Electric Illuminating Company ("CEI") is the co-holder of an operating license for the Davis-Besse Unit 1 (License No. NPF-3) and a co-permittee of construction permits for Perry Units 1 and 2 (CPPR-[48, CPPR-143) issued by the Nuclear Regulatory Commission ("NRC"). The Davis-Besse 1 oper-ating license was issued on April 22, 1977. The Perry 1 and 2 construction permits were issued on May 3,1977. CEI is also a co-applicant for construction permits for the Davis-Besse Units 2 & 3. An Atomic Safety and Licensing Board-ordered inclusion of antitrust license conditicns in the license and permits for the Davis-Besse and Perry units. Toledo Edison Co. & Cleveland Electric Illuminating Co._, LBP-77-1, 5 NRC 133 (1977).
l II On January 4,1978, t.he City of Cleveland (" City") requdsted the NRC to
[g d take enforcement action against CEI for violations of Antitrust License Condition No. 3 in its operating license and construction permits. By letter dated February 28, 1978, the Assistant Attorney G2neral, Antitrust Division, advised the NRC of the Depart:nent of Justice's support for the City's request.
Operating License No. NPF-3 and Construction Nmits CPPR-148 and CPPR-149 eacn contain antitrust canditions, Antitrust Concition Mo. 3 in esca of these
-i I
l licenses provides as follows:
"(3) Applicants _ shall engage in wheeling for and at the request of other entities in the CCCT:
a) of electric energy from delivery points of Applicants to the
[]
U entity (ies); ard, b) of power generated by or available to the other entity, as a result of its ownership or entitlements if in generating. facilities, to delivery points of Applicants designated by the other entity.
"Such wheeling services shall be availabl.e with respect to any unused capacity on the transmission linesInofthe Applicants, the use event Applicants of which must reducewill not jeopardize Applicants' system.
wheeling services to other entities due to lack of capacity, such in transmission capacity allocations to other Applicants in these proceedings and thereafter shall be made in proportion to reductions imposed upon other Applicants to this proceeding. 2]
" Applicants shall make reasonable provisions for disclosed transmission requirements of other entities in the CCCT in planning future transmission either individually or within the CAPCO grouping. By " disclosed" is meant the giving of reasonable advance notification of future requirements by entities utilizing wheeling services to be made available by Applicants."
This license condition was ordered to be included in all the licenses involved by an Atomic Safety and Licensing Board that concluded, after a full evidentiary.
hearing, that the activities under the licenses of CEI (and others) violated each of the antitrust laws specified in Section 105a of the Atomic Ener1y Act of 1954, as amended, 42 U.S.C. 5213S(a), 5 NRC 133 (January 6,1977). The Licensing Board's decision is now on appeal before the Atomic Safety and Licensing Appeal Board.
includes but is not limited to power maife available to an entity
- 8 "If Entitlementpursuant to an exchange (Footnote in License Condition).
agreement."
"2] The objective of this requirement is to prevent the preemption of unused capacity on the lines of one Applicant by other Applicants or by Competitive entities entities are the transmitting Applicant deems noncompetitive.
to be allowed opportunity to develop bulk power services options even if this results in reallocation of CApCG (Central Area Pcwer Coordination Group)
This relief is requirM in order to avoid prolongation transmission channels.
o f the ef f ects o f Appl i cants ' illegally sustained dominance." (Fcotnote in License Condition) .
- - - ____-____ - ______ __________ _ ___ '----"~----u~__ _
I .:.
CEI's cotion (filed with other Applicants) for a stay, pending apccal, f .of the ordered antitrust license conditions, including license condition No.
3, was denied by the Licensing Board,' b NRC 452 (1977) and' subsequently by he Appeal Board, 5 NRC 621, ALAB-385 (1977).
(
III -
Upon receipt of the City's request for enforcement action, the NRC Staff undertook an investigation of CEI's recently filed transmission service schedule and wheeling policies. As a result of (i) the NRC Staff investigation, (ii) an analysis of the transmission service schedule filed by CEI with the Federal Energy Regulatory Cocmis'sion on January 27, 1978, and (iii) a review of CEI's Answer of Msrch 17. 1978 to the NRC Staff's questionnaire, the Acting Director of the Office of Nuclear Reactor Regulation on June 28, 1978 issued a Notice
! of Violation to CEI pursuant to 10 CFR 52.201 of the Commission's Rules of l
Practice. The Notice also stated that, inter alia, Civil Penaltiies would be considered in order to assure compliance. A copy of that Notice is attached hereto as Appendix A. ~~3/ On July 14, 1978, CEI responded to the Notice of Violation ahd generally denied that it had not complied with Antitnist License Condition No. 3 as set forth in the Notice.
~
Subsequently, Representatives of CEI, the City, and NRC Staff met on August 10, 1978, in an attempt to resolve problems concerning compliance identified in the Notice of Violation. At the meeting, CEI stated that cany provisions of its January 27, 1978 transmission service schedule to which the City, NRC Staff.
and Department of Justice objected were necessary because the transmission service schedule was meant to apply to the Combined CApCO Company Territories (CCCT) l 3f Attacnec to the Notice of Violation as Aopendix B was CEI's January 27. 1978 transmission tari ff with suggested changes by the NRC Staff. Appendix 3 is {
al so a ttached hereto.
l .n f
f 1
l rather than just the City. Since the City (and Painesville, Ohio) were the only entities located in CEI's service area, the Staff suggested that CEI draft a more specific transmission service schedule. On September 15, 1978, CEI submitted to h Staff a revised transmission schedule. As to the deficiencies found in the i
danuary 27, 1978 schedule, CEI drafted its new schedule so as to ameliorate some of the specific objections of the Staff and City. However, CEI's revised draft contained new anticompetitive restrictions which, in part, fom the basis for ,this Order in that it shows CEI's intent not to comply with the license conditions. A copy of CEI's September 1978 transmission schedule is attached hereto as Appendix C. On November 28, 1978, the NRC Staff met with CE1 and the City in a continuing effort to reach agreement or to narrow the issues concerning CEI's second draft transmission schedule'. However, the participants were unable to agree or narrow the issues at. this meeting.
IV During the same time period that- the NRC Staff was attempting.to work out a mutually satisfactory transmission schedule with CEI, the Federal Energy 27,1978 Regulatory Cocraission (FERC) conducted its own inquiry of CEI's January _
Evidentiary hearings were transmission schedule under FERC Docket No ER 78-194 held by the FERC on December 19-20. 1978 and an Initial Decision (I.D.) was rendered by the Administrative Law Judge (ALJ) on April 27, 1979. The changes ordered by, the ALJ to CEI's January 27, 1978 transmission schedule are attached hereto as Appendix 0. While the ALJ noted that. the FERC does not have jurisdiction to enforce NRC license conditions, the Initial Decision deals effectively with most items cited Those by the NRC Staff to be in violation of Antitrust License Condition No. 3.
matters not c apletely covered by the FERC Initial Decis' ion are listed as items 3 and S in the NRC Notice of Violation (See Accendix A).
It-a 3 c:ncerns the pretsotion of avaiiable :rans. inian xpacity by CEI. Tne FERC Administruive Law Jucg* a.d _% re e i r.a c eau 2 : - r n a rd
1 support to justify the NRC preemption requirecent of a five percent reduction in transmission allocations to other CAPCD members before reducing such services to other entities. However, CEI in its separate negotiations with the NRC OStaff and the FERC has expressed a willingness to comply with the NRC five (J
! percent preemption requirement. 4) In view thereof, the NRC Staff has determined that CEI should file an amendment to the CEI transmission tariff as modified by the FERC Initial Decision to include the five percent reduction requirement set forth in Antitrust License Condition No. 3.
In Item 5 of the Notice of Violation, the Acting Director found unreasonable CEI's requirement of filing a separate supplemental schedule for each wheeling request. The FERC Adminiptrative Law Judge noted at pages 23-25 of the Initial Decision that such a requirement in and of itself was not unreasonable under FERC filing requirements and that the filing of contracts governing wholesale.
service is mandated by Section 205(c) of the Federal Power Act. However, the Administrative Law Judge found that CEI's tariff language was redundant and un-necessarily complicatSd and could lead to unnecessary delays in providing:at re-quested service. The Administrative Law Judge thereupon modified and simplified the language of the supplemental schedule requirement and allowed it to remain in the tariff. In view of the modifications arid simplification of the tariff language, the NRC Staff is'of the opinion that its concerns set forth in Item 5 of the Hotice of Violation have been satisfied. Therefore, the NRC Staff ~ will not object to the modified requirement of filing supplemental schedules for wheeling transactions.
F hq The cleveland Electric Illuminating Campany, FERC Docket No. ER 78-194, Initial Decision on Proposed Transmission Tariff, Slip Op., p.12, ( April 27,1979). Letter from William Singham, Principal Rata Engineer, CEI, to Jerome Saltzman, Chief, Antitnis. 7, Indennity Group, Nuclear Reactor Regulation, dated R1rch 17,1978.
-c.
Another matter raised by.the FERC Initial Occision pertains to wheeling L
~o f power for' or 'among entities within the Combined CAPCO Company Territories (CCCT). Although the FERC Administrative Law Judge clarified the extent of
%e transmission service requirement with respect to the municipals and I
cooperatives within the CCCT, he did not include other entities or other
~
delivery points as required by the NRC license conditions. NRC License Condition No. 3 requires CEI to wheel power for other entities in the CCCT from delivery points of applicants to the entities and to delivery points of applicants designated by the other entities. Further, entity is defined as any electric generation and/or distribution system or municipality or cooperative with a statutory right or privilege to engage in either of these functions. Thus , 'the NRC Staff has determined that the CEI should file an amendment to the CEI transmission tariff, as raodified by the FERC Initial Decision, to expand the transmission services to include deliveries for all entities within the CCCT as required by Antitrust License Condition No. 3.
V . :
From the foregoing, the Staff has determined that CEI has been in no,n-compliance with Antitrust License Condition No. 3 of its operating license and construction permits at least. since January 27, 1978, in that CEI has maintained and engaged in a policy and practice of noncompliance with Antitrust Condition bo tb . 3 of its license and permits. CEI har approached its responsibility to file a wheeling schedule for the City as- if it had not been required as a condition of its operating license and two construction permits to comply with Antitrust
-License Condition No. 3. In view of thir, and the public interest, the Director of Nuclear Reactor Regulation has determined that, pursuant to 10 CFR 52.20s, License No. HPF-3 and Conscruction Pe:mit Nos. CPPR-iaa and 149 :nall be amended
I offective immediately to require CEI to file a transmission tariffs 9
ordered by the PERC (Appendix D) and an attached amendment. thereto iden tified an Appendix E W with the Foderal Energy Regulatory Commission within twenty-five (25) days after the Order and so file this tariff in conformity with applicable FERC filing requirements.
O Accordingly, pursuant to the Atomic Energy Act of 1954, as amended, and the V
Commission's regulations in 10 CFR Parts 2 and 50, IT IS HEREBY ORDERED THAT:
Antitrust License Condition No. 3 of License No. HPF-3 and Construction Permit' flos. CPPR-148 and 149 shall be amended with the following language added as paragraph (3)c): ,
The Cleveland Electric illuminating Company 'sha'.' file within twenty-five (25) days of the Order of the Director of Nuclear Reactor Regulation dated June 25 1979, the transmission I service tariff and amendment attached as appendices 0 and E to the Order in conformity with the applicable filing re-quirements of the Federal Energy Regulatory Commission, in view of the matters discussed herein, the Director of nuclear Reactor Regu-lation has determined that the public interest requires this Order be made effective immediately, pending further order of the Commission.
CEI may, within twenty (20) days o fter the receipt of this Order, request However, any a hearing with respect to all or any part of this Amendment.
request for a hearing will not stay the immediate effectiveness of this Order.
If a hearing is requested, the Commission will issue an Order designating the time and place of hearing. In the event a hearing is requested, the issues to be considered at such hearing shall be:
Sf Appendix E is CEI's January 27 ,1978 dra f t transmission schedule as modi fied by the FERC on April 27, 1979 in Docket flo. ER 78-194 and further modi fi ed by the fiRC to implement requi rements set forth in Antitrust Lict :se Condition fio . 3.
-S-l whether CEI has been in noncompliance with Antitrust License (1)
' Condition tio 3 since January 27, 1978, the date it filed its first trans-mission tariff with FERC; and (2) if so, whether this Order should be sustained.
FOR Tite liUCLEAR REGULATORY C0!" MISSION
/ A >
flaroTd Denton, Director Of fice of fluclear Reactor Regulation Dated at Bethesda, Maryland this 25th day of June,1979
Enclosures:
Appendices A-E
1 - + --- ..J.A --M- -.s s A .- a a b u-- ~ - - a -
- Y l
e APPENDIX B S
- v(}
i e
PUBLIC 1]ILLIIJES COMMISSION OF OHIO AN EXECUTIVE
SUMMARY
OF THF EESWJS OF THE R_E_ VIEW OF COSTS OF THE PERRY RUfLEAR POWER PLAMI TOUCHE ROSS & CO./ NIELSEN-WURSTER GROUP /
CHAPMAN & ASSOCIATES AUGUST.19 36 8
m*, *4
C COST AND SCilEDULE IllSTORY Over the duration of PNPP, there have been twelve (12) estimates of project cost and schedule. Total project cost estimates increased from
$1.234 billion in February 1973 for the total project (including Unit 2) to
? *.153 billion * (excluding Unit 2) as of December 31,1985. The commercial ugeration is not anticipated prior to fourth quarter,1986 for Unit 1. The following table summarizes these estimates:
PNPP COST AND SCIIEDULE ESTIMATES Total Cost) Project in-Service Number Es1Lm_ ate Date ($ Billion) Luis Date (Unit _U 1 2/73 1.234 Total Project 4/79 2 10/74 1.444 Total Project 4/79 3 6/75 -
1.547 Total Project 6/80 4 8/76 2.023 Total Project 12/81 5 8/77 2.127 Total Project 12/81
" 12/81 6 2/78 7 1/79 2.552 Total Project 5/83 8 4/80 3.890 Total Project S/84 9 10/81 2.150 Unit 1 & common 5/84 10 5/83 2.770 Unit 1 & common 5/85 11 4/84 3.470 Unit 1 & common 12/85 12 9/84 3.945 Unit 1 & common 12/85
~ ,
13 12/85 4.153' Unit 1 & common This figure represents the expenditures incurred through December 31, 1985. CEI estimates additional project costs, including AFUDC, to accumulate at the rate of $2 million per day until the phnt is in-service
- The February 1978 definitive estimate of $2.125 bilhan prepared by gal
- 0 was never officially adopted by CEl.
1-7
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! 6tr-9b3D, cri. P231 (
TiL5 ITJ.GU T.D HIED The Clevele.nd Drct:d e Illu-ir.titirc Con;3r.ny
- oday tr.ncunced e revis. ion in the estirete:' cost of co pletion of the Ir:~y Ge.nerttire T1 tnt Project.
Erg-ince:i::4 c.nd construction tre nmi estierted to cotet $3.6 bill. ion, e.n in:rcere of $370 t '"' on fron erzlier c otire.tec.
Tx:~y it a joint project of CJ.ICO (Centre.11. ret. Fover Copriinttion G:onp) which ircluder CEI, Oxf o TEsen t.nd $t . vbolly-v. :ed c.:bcidiery, Ivnncylvanic
( Tt'vt.r, Coledo Tiiton 43.6 leque c:e 24.ht.
10 t.6dition to the constraction buket, CD r. eye interest c.nd reltted coste of fando nny e6d e.t 1 cert $1.6 billion, for e. tote.1 entirtted cor. of $.2 billi on. "'ae previous total, estirated in 1930, vu $14 billion.
lect veet, CD e.nnounced a delcy of un to one yee.r in pir.ns to Iced tac 1 at Ivrry Unit 1, with tekt activity n:r. predicted to tele place in late 1934.
The $1.6 til' ion :.aterect ic be. sed cxn erictir4 treetwnt of intereat chtr6es e.s provided under Ohio law and lublic It'ilities Co ist. ion of Ohio (I'JCO) rclingc. Propot.e6 legicletion in the Ohio I, gishture could inerence 1.nterect
( charsec on Ierry by ar. n:ach ac $1400 rdliion.
CD r.cyc the reviced ccbedule and increased cost of the Terry 3*roject is the recalt of 1::nimtation of regulatorf reouirrt:entt that affect the Nnel de sign end co:a truction activitie t.. /dl nucleer pcuer pie.nts. under construction have been greetly :rfected by thee.e conditions tennite time schedu3et e.nd L .* dg e . r.
txti r egle rly be r e vi ewe d.
l 2
T ir .^.tel loc 6 dr.te f or U..it 2, late 1987, :t-t ' r s im: .t:te:' tt tN. c 5.c .
(
T.r Tvc:, ac wth Trocreot.er on Unit 1, the Ur.112 c:hecule stil le evrlueteL.
'"ce five C/JC0 etga-ic t e.re dediccted to innednc t' tt 7tra is a t tf e, A reliable facility, tecerdirt to CI*I, stiet it in ehtrge of Wildir,c the tsin
{U 12%-=Ecvett Ecnerators.
CEI ovac 31.115 of the project and vill :tceive e correcpondint percene.ge of t.he electricity gemereted. Chio Tdison e.sd its 7terylvtnia 7tner rubridia y evn 35 2 Vp; Toledo Liir.cn,19 91%, and D.squecne Light,13 7b%.
The five ec=paniet cen*e co:e 7 Mm on people in c.s induct:1,s.1 cre ccert ,
n:ross northern e.no ce.ntrs1 Cr:.io sua vecte= Tv:nty1renie.,
1 9
k
- e i
I O
APPI:fJDIX D 0
7 1's
,I TER:: Nt li: Infor- .ation De;6rteent The Cleveland Dec ric Ulut.inating Cen;ery 622-93CC . T.xt . EM T. O. Iox 5D00, Cleveland, Ohio LL101 Cr 623-1CC ,(EL-to.:. p.:ne )
703 FIL~/.51 '.:27E5 MY
- A .:;.
r J/J.*JA2Y 23,' 1950 (v
CAFC0 hTa'S ItI~ IATI The Co p.enies in the Central Area Power Coord.instir.c Group (CAPCD) todey en sounced the t rn.instion of plans to build four edditional nuclear units presently in the desicn stage. The estimated cost to build those units vas $7.3 billion.
Mo.:e v e r , cent.* ruction vill continue under en extended sebedule on two nuclear units nest 'lorth Fe.ry, Ohio, and enother at Shipp.nc;crt , Tennsyl.tnia.
"'le rer.ein convinced e2ter considerinc an of the options, thet nuclear pover is e sefe, econo icel and enviro:nente.Uy su;erint method of generatinc ele:tri:ity" zeid the statenen; issued by Robe-t M. Ginn, Tresident of the '
Clevelend Electric Illu-inatinc Co:peny, Justin T. Eocers, President of Ohio I.dison, J: .. F. Utilie : son, Chairmen o* Tcledo Iid son, and John P. Arthur, Chair en of 1*.:quesne Licht Co:pany. " Accord.ir.cly, ye are cc. pletir.c three nu: leer units elreedy veu elen;; in construction."
A::oruing to the C;~-C0 chief executives, the estineted dates for co:pletinc
.the three CA!CO nuclear units now under constra: tion have been extended between 12 end 36 nonths. Unit i at the Perry Nuclear Fcr.cer Plant near North Terry, Ohio
! hes been rescheduled from Msy 1983 to Msy 193L; Unit 2 at the Beaver veney Tower l
Station et Snippincport, Tennsylvanic from May 195L to May 1936; and Unit 2 at the Terry ?lsnt fro: : ay 19E5 to May 198B. Const ruction of these units .-ance froa 32 to 52 par ce nt t onplete. The new target dates reflect e core realistic time frame Tor the con-truction and licensing of nuclear plarts, i
( c.o re )
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- . m pe r,ie.r e rp;t i*. i , '?nt poli t i r tl c r. . r e c ai c t or;> ur.r e r t e i nt i e :.
3 . m i n; t..t it ire canst: m :.i on ni nucle s. ;1tt/.:. has intensi"ied folltr. i n;
- :.e c e . '. J?n. 2. .'n r e e U.i l e 1:1 r r.<1 ::u:le:r cor.:,t uctior, s:heduled fu-ther it.
I t'c.e future c:rries creeter un:ert:11nty or eventus1 : ort. In spite of ou*
.an ri -tio tr, . ta:rri nc nucle r po.:ct, this, urcertainty has :onpelled the CMCO "o.peniet to *.e - .inete those nucle:
- unitt not yet under ectual construction in Order to reia:e the .*utc..c cos'.s to cue customers and shareownert," they suid.
"Ta?se de ti tio:is ert not vithout rich,' the joint stttecent said. "Iceitions
.sh *.o'.r;* .-in s.'Je:L ndequo y of tiectri::1 supply in the future. The compe.r.ies
- 3. e cen:c.-:ed ebcat the relic'cility of electric se -ice to their customers in the
-.i.i-1.Q' r ::rticule rly by the 19N's. Tnese co...ern: cre beinc continuelly t di. r: a i nr < e:h :enpe.rr, noni*. ors the Croeth it: eustoaer den.anc in relation to
, c ge :it;r , " *he e;;ctuti es con;inued.
The C/.P00 Co penic s ' plen . for 9% !!.: ek;h of the Units 2 and 3 et the i.o.-is-Desr.e Jiu;1etr Poter Ct2. ion neer Port Clinton, end the 1200 'f.? ea ch of the Erie Eu:1cer Plant Uaits ; cad 2 et e site north o.' berbt hei C htt, al1 presently in he i.esi;;n rtese, vere teru.insted.
he .tT00 Co penie s--Cle. eland Elcet.-ic illuninating, Duquesne Light, Ohio Cii:en, Penn:rlie .ie Pover, rnd 'roledo Edison--rerve some 2.5 nillion customers in en industri:1 crescent in northern and centrel Ohio and vestern Tennsylvenic . Tne revised projected rate of crcrwth in customer derend for
( electricity .'or the C/.PCO Cooper.ies in the 1930's is in the range of two to Tour pe r c e n'. e a c h ye a r.
The statenent alto ennounced another decision reached by tnembers of the
'.AICO Croup. Jhe "IcVeland Dect rie D1tr.inating Compeny (CEI) viD incrc use g i t s orne r ship s ha r e in the Perry Plant, new vell nionC in const ruction. C61,
., (corr)
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i v..ic t. vill bui'.d e nd o;e r: e the 1 4 e-1, vill in rence its o' en'. r s h i p o f l e r ry '.
)
eni ? b/ M necevsttr. yer unit. Onio Edison ovnership of en:h unit vill be reduced b;. (R) 7:;euctts ,
i CEI vill increese its o.mership in each of the two 1205 17. Terry Unitt Tren ;.75 ;t: (2L.L77,) to 375 0l (31.115), Ohio Edison (and Penn Pow?r) vill reduce their ovnership from 5?5 lt: (bl.B3G) to L25 n! (35.04). There vill be no chence in the ~uouesne Licht ovnership of 165 !?? (13.7L%), or in the Toledo Idison o. nership of 2L$ IU (IC'.916) in each unit.
The p-reenteges 0 7 oenership in the 833 $l Seaver Valley liuelear Unit 2, under const.metion at Shippincport, Pe nnsyln ni e , is as follovs: CEI, Ph .L77, S.: uesne Licht 13.7L$, Ohio Idison Ll.8&3, end Toledo Edison 19.olG.
he construction schedule and percentaCes of ocership of the 625 !?i
~~
b- rrure :'.anslield Unit 3, na so at Shippincport, Fennsylvania, a coal-Tired C/J'00 unit to be completed later this year, are un:herced.
"Tne Illninsting Comp:ny's decisior. to increase our ovnership share in the Terry ..::letr Pouer Plant , re 'lects CEI's belief in en6 or ._itzer3; to nuclear po"er," scid Cinn. "Tnis purchese 01 en edditionel 160 meceratts of the Perry T1 tnt cives us the enpncity ve need to meet our custoners expected de . ands for el e ct ri r.1' ; th roccho at the f e ce 6 e o ' t he BO's . "
'! be Illa .inatinc Co: pun;/ said its re cised forecast enti:1 peter, en everece increcse in f. emend for electri:ity el 2.E'$ e yeer for the ne.xt ten years. As 8 .-e :e nt'; 2: :.ne ;'eer ego, in l>ecember or 1976, the Company was rerecestinc e.n e tcrece ennun1 Crmth rat e of 3 3$. The decrease in the crowth rete is attributed
-cin1 to e c.lovf.m n in industrin1 grovt h, the increased evniinbility or naturel Cet in the "I se rvi ce ere", and consercntion eJJorts by custo,ers.
i (more)
- _ _ ____ ____________ __ _ _ _ _ _ - _ _ - _ _ _ _ __ _________f_
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'3y - l.?G e e:g< c t to ;r te r. p- r c e-W c ? L ,7 $D ne c e. e t t s , ' C i n n :.e r ,
. '11.. c ;. p.t. c u t ? of e. . in:rees*J tMrc of int i c t ry Pl e r.1, ou* c e ne re t i r4 e t :ity vi) .i he :7pr r:1 W.el; ;,2, . ;r. e t t L;' 1)?D. * 'e t.re cor..*ident that thi t in teered cene.-atin nps-ity vill pro-i0e adequate supplies ol electri:ity in ocr seriiee tree
'.b r o.c h l ?. "
'.::om in- t o
- nt ~11u ;' actinc Conpeny, eil o' ine de cision! tude he te et asc i r.ont M. n e -J. re . i s i on i n t.h onstruction bu4et. The y*e tious construction bud .et l e . '. h e T '. ' ye:rt 197') t o 193 ver 01.7 billion. Prior to the decisions beir(
rue tm' "ith en tdditiont:1 one yeer's in.*1stion, the 19BO to 19St construct
- or.
wQ::. c:. v.tinriet t o ht 01.)b til'ior.. Temination of the four future nucleer
.:.i;; r.:. tr.er.rien o t he contdruction schet.ules o.' the three others resultt in e
.2I .ons .r u.ic s Wcci. lor 1)50 th.rouch 194 estir.eted to be t.coe bat les t t ha.,
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11.7 billion. *ine conpnny ple.ns to deteil its .L9BD.19Bk construction procret et a 1c'..:t i c '. e .
T he Illu-ineting Co . pay clso s.eid it did riot expect to lay off any cons.ru -
.f on voc :e: s cu : enti:' buil'iir.c, the Terry Su: leer Pover Plent.
The e:Gention or the const.uction r ehedule e111 pemit the Co:peny to construat the pltnt t-ithout a prior enticipted intrenze in the n"aber of vorhers end et the tr.ne tine redu e enticipeted overtime.
7.e L.lu-dneting Co .por.;; eeported thet it hec in /ested epproxiretely $60 r:illion in preli _inery work for the Jour nuclear units that vere teminated. Cleins
.'or c Mitionel charces ney be nede by contree. tors. 1.1thou6b the amount of the cittas cennot ncre be estinated, the Company belle es their resolution should not have e naieriti ed erst impact. The compny plans to esk the Public Utilities Co:.i!.sion o ' Onio /or euthority to nnorti:e t hese cos'.!, over a suitable nu:ber of yeers.
I Until these e moun*. s c o n be re a s ona bl y e s t i ra t e d e rd t he PC n e t s , none o r t he c u r i.c !
. rill ce :v %ct ed in ee rni nc t. or retes.
Ny e )
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In t finni ecce nt CE] 2 re r,1 d e r,t Gi r.n t o l d , "".t.e 111u inh' i nt C o -; 3 '
' it Ep.e.or, c'i st ypir.t e o t h:1 the rout planned nuclear t.nitt tatt t.e te.v.intted.
, [3 ue telle e this. netion to be prueent end in the best interettr. of our castrers
<~
v) e nd 5.he re orne r t whil e mi nt e:ini nr, our c or. .i t:te nt t o nucl e b t powe r t hr oaEL out
- c rc,e r t hart of r.ev plant s alfendy well clorf, in conttruction. Uhen the u*,certaintiet.
are recol'/ed, ve enpect nucleer power to be e vintle cite:nritive in our futu-e ;1ent censtruction pro (;tt. ."
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O I
APPE!JDIX E S
[ Y w 10 g DEPORE THE PUBLIC UTILITIES COMMISSIO!J OF 01110 In the Matter of the Application )
)
of The Cleveland Electric 111umi- Case llo . 86-2025-EL-AIR nating Company for Authority to )
)
Amend and Increase Certain of Its Filed Gehedules Fixing Rates and )
(
O Charges for Electcic Service. )
OPIl11011 A11D ORDER The Commission, coming now to consider the above-entitled application filed pursuant to Section 4909.18, Revised Code; the Staff Report of Investigation issued pursuant to SectionR.4909.19, Rossell Revised Coder having appointed its attorney examiners, Gooden and Paul J. Duffy, pursuant to Section 4901.18, Hevised Code, to conduct a*public hearing and to certify the record directly to the Commission; having reviewed the testimony and exhibits introduced into evidence at the public4, hearing commenc-1987; and being ing July 6, 1987 and concluding September otherwise fully advised in the premises, hereby issues its Opinion and Order.
APPEARAl:CES:
Messrs. Alan D. Wright, Vice President - Governmental and Greenslade, Vice President and Public Affairs, and Victor P.
General Counsel, Centerior Energy Corporation, P.O. Box 94661, Chancellor', Secretary Cleveland, Ohio 44101-4661; Messrs. Carl E.
Smith, Senior Corporate Counsel, and General Counsel, and Craig I.
The Cleveland Electric Illuminating Company, 55 Public Square, P.O. Dox 5000, Cleveland, Ohio 44101, and Messrs. Squire, Sanders and Dempsey, by Messrs. Alan P. Buchmann, Richard W. McLaren, Jr., and Charles R. McElwee, II, 1800 Huntington Building, Cleveland, Ohio 44115, on behalf of the applicant, The Cleveland Electric Illuminating Company.
Mr. Anthony J. Celebrezze, Jr., Attorney General of Ohio, by Messrs. Robert S. Tongren, David C.lleChampion, nke ne r ,
James n. Gainer, Assistant Attorneys Thomas W. McNamee, and Ms. Ann C.
General, 180 East Broad Street, Columbus, Ohio 43266-0573, on behalf of the staf f of the Public Utilities Commission of Ohio.
Mr. William A. Spratley, Consumers' Counsel, Robinson, by Mmes. Beth and Messrs.
' Ann Durns, Victoria L. Mayhew, Evelyn R. James Van lleyde, Michael McCord, Richard P. Rosenberry, and G.
Associate Consumers' Counsel, 137 East State Street, Columbus, Ohio 43266-0550, on behalf of the residential customers of The Cleveland Electric Illuminating Company.
Messrs. Bell t. Dentine, by Messrs. Langdon D. nel1 and John W. Hentine and Ms. Judith B. Banders, 33 South Grant Street,
A 7 I 86-2025-EL-AIR the at the cost savings it claims would occur as a result of the savi Mr. DeVore believes the company can evaluate company origina intion.
achieved in a manner sinilar to that used by the ly to estimate the savings The from the Senior affiliation Citizens argue for that the theSEC Commis-(Staff Ex. 12, at 7).
sion should not allow recognition of the affiliation costs in rates until the company can establish the cost savings to the company's customers.
The Commission finds that before the company will be permit-start-up and relocation costs associated with ted the to include of formation theCenterior, it must provide the commission with information of the achieved savings and benefits thatsuch Until havetime, occurred to itr customers from the affiliation. i the company will be permitted to defer these costs on its books We are not persuaded by the company's until its next rate case.
argument that it is impossible to quantify the achieved savings the existing situation with because one cannot accurately compare If what would have occurred ifthrough no affiliation had taken a hypothetical place.
situation, the the company could estimate, affiliation prior to its initia-savings to be achieved by the company cannot quantify with some tion, we fail to see why the degree of reliability the cost savings from it has the achieved affiliation and afterthe the benefits received by its customers fact.
Accordingly, the Commissica will exclude the relocation and start-up cost associated Ifwith the Centerior company wishesfrom operating to include expense in this proceeding.
those costs in its next ratesavings case, and it should be to benefits prepared to its customers quantify the achieved as recommended by thecoststaff in this proceeding.
Adjustment:
, Perry Operating Revenue and Expanse Sections 4909. lS ( A) (4) and (B), Revised Code, require that the. Commission, when fixing just and reasonable rates, shall determine the cost to the utility of rendering public utility service for the test period and that its determination of that the gross annual revenues to which cost shall be used to compute The applicant has proposed an adjust-the utility is entitled.
ment of.approximately $70 million to test year operating expenses to recognize that the costs of operating the Perry plant, which have been charged to a capital account during the test year, in is placed would be charged to expense accounts once the plant commercial operation the company (CEI Ex. lA, Sched. C-3.5:
by recommended The staff that the Perry operating i 8 CEI Ex. 21).
revenue and expense effects be recognized in operating income if Perry reached 40% of its generating capacity by the end of the test year (S.H., at 12).
There appears to be little doubt that Perry was generattnq s
electricity during the test period and that it did reach 401 of its generating capacity during the test period, which ended July
-nie AIR Kaplan testified that Perry firstand 1987, 31, 1987. Company sitness 40s level for a 24-hour periodonon May since 18,1cvel for vario exceeded the June 30, 1987, that it has exceeded that 3 and Attachment n), icvel of 1,151 MW,.
I that date (CEI Ex. 26, at the plant reached afull reactor power.
million while or 96% in nettest condition generation,first six6,and months was operating atPerry generated 6*A of 1987,
,-m During the (Tr. II, 9-10). condition 6. Mr.
/ )ilowatt hours of electricitythe Perry plant test condition was still 6 would not inbe test completed tost period, that test, he Kaplan testified that rollowing the completion ofh test conditions 7 and until mid-September, stated that the plantplaced wouldinproceed commercial througUpon comple 8, followed by a 100-hour run, the warranty. plant would1987, be CE1 served a and the warranty (Tr. II, 12).
On November 20, that the Perry plant operation ber 18,.1987.
notice upon the Commission and all parties had been placed into commercial operation on Novemof recognize the expenses The company's adjustment to full year of commer-its first ting and maintenance operating the Perry plant during that the plant is cial (Or H) operation is based upon estimated operaexpenses fo 86 to develop the Perry Company placed in commercial operation.was (Tr. IV, work V,followed 150;being 14-17). during performed at the the last qua first-year operating budget witness Solanics explained that the1986>would be similar to the during the last quarter ofbecame operational (Tr.the IV,budget 150, plantwork perfonned when the Theplantapplicant believes that who 157, 189; Tr. V, 144). it was prepared by employees estimate is reliable because the budgeting process and because are were assigned to Perry'duringdifferent operating units which Because costs it was developedthe by Perry the plant (Tr. V, 14).Perry budget were associated with in the first-year similar to those included period when Perry was generating elec-CEI argues incurred during the test of the company's customers,lized and included as tricity for the benefitthat those test period costs should be norma test period expenses in this case. the Commission does The 'intervenors in this case argue thattype of post-test-year They cite not have the legal authority company to grant the and the staf.. their adjustment requested by thein their brief s which they contend supportthe Com to numerous cases in rate case proceedings, tility subsequent data position that, empowered Intervonorsto consider contendcosts thatincurred by a and ths actual u although nine the
[9 the test period.
submitted by the company is labeled "three monmonths estimated," it is actually twelve (Tr. IV,of121, estimated 122).
months The company did not contest this pointthe company has not Further, various intervenors costs point out thatthe test period, but data.
during were capital-expensed any , Perry operating associated with the Perry plant rather all conts
86- 20 ? 5-EL- Al H ge s.
( V ized. Certain intervenors have alro argued that the company's fully forecasted cost data is unreliable, includes non-recurring start-up costs , and exceeds the operating costs of other com-parable nuclear plants.
The company argues that it is merely transforming Perry costs that were capitalized during the test year into expense items to represent what will occur during the time that the rates approved in this case will be in effect. In support of its position, CEI cited Ohio _ Bell Telephone Company, Case !Jo. 81-1433-TP-AIR (December 22, 19821, at 41, where the Commission allowed as test period operating expenses the station connection charges which had been capitalized costs during the test period. Although the case was appealed to the Ohio Supreme Court and reversed for the reason that the Commission failed to justify its inconsistency with an earlier Commission decision on the same subject, CEI argues that the Court did not reverse based upon the Commiscion's decision to allow the inclusion as test period expensen the costs which had previously been capitalized. The Commission justified its action in that case as follows:
It is important to note that the Company actually incurred all of the expenses at issue during the test period. The added revenue requirement is not a result of recognizing certain additional costs, but of expensing these items rather than capitaliz-ing them. The issue that we must decide is what treatment should be given known and measurable expenses, not what the expenses are. Thus, the argument set forth by OCC on the issue of post-test-year. expense really misses the point. These are not post-test-year expenses. They are known and measurable expenses that were booked during the test year. (Emphasis added.)
The company has also cited Bd. of Commrs. v. Pub. Util.
Comm., 1 Ohio St. 3d 125 (1982), in support of its argument that the costs incurred by the company in operating the Perry plant during the test period should be normalized. In that case the Commission allowed, and the Ohio Supreme Court affirmed, a post-test-year inclusion of line clearing costs because of the danger of power outages and safety hazards and because the Commission ordered Dayton Power and Light Company to clear the lines. The court found in that case, as it had in others, that, "in certain circumstances, inclusion of costs not incurred in the
( test year is proper." The tree trimming costs would be incurred in the period when the rates would be in of feet and thus the Commission, and the court, found it appropriate that the costs be normalized. Similarly, in this case, the company contends that the costs not only will be incurred in the future, but also were
c !
w Af 2 0 ? S-1:L- Al lt Incurred during the tent period, and thun it in appropriate that
/ they be normalized. -
In response to OCC ' '. contention that lid , of Commrn. i: not applicable and that the Comminnion should not eteate a new exception to the rule against pont-tent-year expenne adjustmentn,
' CEI argues that what it in proponing that the Commi: nion author-ize in thin cane is not an exception to exinting ratomaking The company centendo that the Commincion han previ-principles.
ously recognized and normalized operat.ing expennen for a new generating unit which van generating electricity during the tent period, but was not uned and useful an of the date certain, fie n Cleveland _ Electric _ Illuminating Company, Cane fio . 0 0 - 3 7 6 - 1;L- 5Tii~
(May 10, 1981), at 29. In that cane, the Commincion approved a normalization adjuntment to include the expennen ar.nocia ted 'wi t h operating the Druce Mannfield Plant, Unit !;o . 3, which wan placed into service during the test period, but. after the date certain in the case. The adjustment was made to recognize the major change in the company'n plant in nervice and the impact it had upon operating income. The Comminnion did not extend itn ruling to other minor projects becaune it found that, unienn the impact of the addition van significant, it would violate the tent year concept to make adjuntments for every addition to plant in nervice.
The Comminaion finds that the recognition of the Perry operating revenuen and expennen in proper in thin cane. The Perry plant did generate substantial amounta of electricity during the tent period a'nd the company han incurred substantial coats in generating that electricity. The Comminnion agreen with the company that those conto nhould be normalized and recognized for rate making purponen in thin case. If we fail to include those costs in raten at thin time, they will either not be recovered by the company or they will be deferred and be recovered from future ratepayern. Inasmuch as the conta are being incurred for the benefit of the company's existing customern, then it in appropriate that those customers bear the conts.
The fact that the costs were capitalized on the company's bookn during the tent period, rather than expenned, doen notan preclude their inclusion in tent period operating expennen, the intervenoro contend. The company han established that the l
IcVel of conta capitalized during the test period would be comparabic to the level of expenne incurred during the first year i8 that the plant in in commercial operation. Because the level of expenne is neemingly both known and measurable, in addition to i being comparable to the level of expenne that van booked during the test period, an in Ohio nell, ~nupra, it in only appropriate that the costs be normalized and in61d3Bd as test period expennen because we are netting rates for a pronpeetive period and the company wil1 be actually expenning a11 such costn on itn bookn l durinq the time that thene raten wi1' he in effect. We do not l
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$1(.C } at value f g ).10L Series ( ) k.LC4, 0eries ( ) L.LL% Series ( ) L.56% Octies ( New Yor k S t oc k I's c he.u,c ) 7.24% Se r&s ( and ) I 7.305 Series (Midwest ;tock f acharge )
- 8.PM Serses i 10.701 teries (
10.Ll*J Cerie: ( S.6k% Series ( ) 9.) 4 Certes ( ) ; first W itta;e ie.f r 9-1/?1 series due 2006 ( ) 6-3/f4 Series dt.e 7(417 ( ) 6-1/?'1 Certes due 70C6 ( ) e 9 1/c1 series due 2c(6 (sev Yor k ctc.-k trct. ave ) ~ 10 T Oeries dae 1%1 ( ) P-7/31 teries due 1540 ( ) Securitjes registered yursuuit to tection U(g) cf the 4-t 4 Nor.e , Jrv11cate tr/ ched :.Lik wt ether the registrant (1) has filed all reports required '.o 1-t filed by Secticri 13 or 15(d) of the Securities Exchance /et of 1934 derire. the g recedire 8 12 act.ths (or for auch shorter Ter M that the reCistrant was requirer! to file such rfyort4), aM (2) hAs been sMhject to such fillhg Ftquirements for the r 41 % days. Yes _z_ . N . Iss14.cate tt e euzt>cr of sharer ou'.starw11rc. of each of the issuer's cle.sses of v omnon stock, as of the close of the ytrini etwered ty this report. c l a_t,s, outa t arvii rv at f+r e ater yuy7p l f Ccemn 0tod , 29 3 er value $2,120,93) mie s I f A i _ _ _ _ _____m_ ___ - - - - - - - I ( l l j ITm 3 11tolutTIr3 I i Tr.e corr} aqv owre 9 roal-fired Eeneratire, plants which, together with l the ce;ecity of one coal-fired flant (the New Castle llant) ovned by knrtsyl- i vania, have a totsl net demorutrated capability of 3,504.000 kv. The Coq.any ; and le insylvant:n als( own oil-fired generating units havirr a tiet demoruttated j i c apability o f le? 3.(tV kv. Torether with one or more of the other CAICO co'rpanics, l i the Co 2;4ny and lerr.sylvania ovn, as tenants in common: Saattis Unit No. 7, a coal-1 fired ger.erating unit at Stratton, Ohio, which has a net deruotatrated espability of 650,000 kv. and vnich vent Anto cornn.eref al crperation in 17/1; Itruce Mar.sfield , Unit No. 1. ' n coal-fired rencr ating unit vitb a net demorutrated capability of . . 82$,KO tv., which ' ent into full commercial operation in June 1776; hruce l 6 Maruff tid Ur.it N. 7, an 825, Orc kv. coal-fired gerieratire unit which went into full c:rwrcial o;cration on October 1,1977) and Never Valley Unit No. 1, n , nuclear unit which has full demortstrated reactor caj ability of 010,000 kv. arid , which vent into full reactor corriercial oyeration cn April 30,17/7. With their i ovnerrhip irterest in Jamis Unit Nc. 7 (argregatir:g 1447,000 kv.), Bruce .varv.fl ei d i Units Nws. I and 2 (ntgregatirp 90'),800 kv.) and beaver Valley Unit No. 1 (eccre-
- cating k?>,2!C kv.), the total rapacity owned by thr Company and pennsylvania as of Neetier
- 1,1776 was 5,709,P50 kv. (See " Item 1. lustriess-CAICO hrtram" regarding other caraelty and energy entitlements.) There is also available to j the Cc~pany under ecoditions existing at the date of thic porm 10-K a;Tromicately 86,000 kv. of power under contricts with other utilities. For a description of arrantemsntr involvire Ohio Valley Electric Corporation ("0VIC), see hte (2) l of Notes to Tcnr.olidated Fir ancial Statements.
I i !cever Valley Unit No I was trken out of service March 9,17/9 and, f urcutt.t to e.rder of the Duclear Peculatory Comissien ("NitC"), vill rtmain out I of service rendinc s recalysis of the adequacy of safety-related pipe arvi pi}e su1Totts stedd an eerthqude occur. Moreover, the length of the study and the [ 1ength of tl
- outare le net deterrr.inable at this tic.e. The cost of purchaced /
, }cver rec'. ire J Icce se of the outace of the unit, havirvt taken into account the #
- unavai;nt.111.y of cther units durf te, the period f ri cuestion, averaged alTroxi. ;
tr.at 1979e cfly kwhich C C Caf" tt ercxicately r $ny durirp14tLe , , COOperiod relatesfrom to costs Mnrchattributable o,1779 to March 31, to pennsylvanin, l ; I but the Company caract predict that such costs will remain at that Icvel. Due to I reteensi veri' .irns the load during this Jeriod v.u at a leval substantially Ic.er ! than that vr.! h can occur in subsequent months. In the future, fluctuaticns in I lead 2nd tha svailtnility of other units vill affect the amounts of ic.er the Co~r ee.y r ur ' ;urchaae as a result of the outage of Icaver Vall,ey Unit No. I atx] the ente thereof .111 %;end en the rates associate 3 vith the , source cal clansi-i ficati:n of ;cver trat is availtble,when purchanes are reouired. ' i Tne CAMC ccc7st.ien, as furIher; discussed under " Item 1 Nsiness. CAICC Trotra.", nave undertaken a f rocram for the joint develerment of pcVer I renerr. tion end trar.nissien facilities. All of the msjor additions to the l ceneratinc cy acity of the Conrany and pennsylvania presently planned or being :ont.tr;eted are a part of this 1.rogram au shwn below. C.n November 4 45,1PD, the CATCC ccgantes, citing present econo-ic, environmental and I reEulatory '.neertainties. together with reduced load forecasts, announced ) the deferral ,f cor.struction rchedules for three cenerating units and the l coven:ewnt :f ietsited studiec with respect to f our other units. Ierry
- Hr.it 2. I vili be ieferred 16
- mnths; Itrry tinit No. 2 vill be deferred j P2 v ths; in: */ aver Valley Unit No. 2 vill be defe. red 2h tr>nths. The j i statt.r of Davir-Letse Unitr Nos. P and 3 and Erie Un!Ls Ws. ,1 t nd 2 is
! ure srtain 1 +niir; ec.:'pletien of studies , but it is cu rently conterplated I that these eits .ay be delayed by an averace of three years, nece studies
- vill sidretr f erthin of the CAICO capacity plannine conce} tc and will develop a j a defiutin ; rogre with req ect to these four units. The resultant coe.
y le t!c t e t r. : and esti ,ated total cost are reflected in the table beloc . . . . . - - - , , , , , i.----ii.i i i-l 4 l n-,.---,------ww-e- T . o y o (p e n n n. H *) (J (3l 49 M O L_J DJ ()* O() e O. e 4 41 ee 8'1 u ,1 e e4 44 S. to el N (1) N 4f ( '- O N + t- ) D]e 0 '{1 M *= )., 4 e e i 44 6: #+ 4 e4 n 8 l'l O et e nb t. (~* ()* - 0. 4 T t% ; U .ee in n (c rl ea.- l ={ 4 (,e 4e; ), ne li e4
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- v. n rJ s 48
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/ ( e.) ;: o .o, i n- t. u v ri. . nn ,..e .: .' osse. < b u o. .o s O boaofl . o<> > !)n pA. ae isi r, e.. s e4 a .s 4J jn a y) ** () art f8 A* 4 & t* fJ 4J O kl c . "* :1<* o d g fi
- s'. .c: c; v a c e ci N ;* s .. 9H e. 4 o t. e L/4 8. O t..i e c4 e ,i 4: + ' 'J 'i t! ti=# 3e 14 4: , <J t-* 42 /J ts e u 4 I1 41 O 4' ,4 * *, N ri e5 *6.
! *4 8 {)eJ., U. 4 f,a u. .: e h, a4 + A n nu.i l lic e t i n9 of Liockholdor- to be leld Aptil . ' ' , , 19 6 S l'a r i JII 1 ( ( PAGli 11 g A number of e,afety modifications required by the IJRC to be made on all nuclear units. operating in the United States have been completed at Beaver Valley Unit No. 1, in addition to routano maintenance work and equipment inspections in connection with a scheduled ref uelino outat,e of the unit which ( began on October.ll, 1984 und ended January 5, 1985. The currently estimated i cost of anticipated remainina modifications is included in the Companion' conutruction prouram (sco "financinu and Construction Prouram"). ( The construction and operation of nuclear ueneratino uniin nro nubicci to the reuulatory jurisdiction of the flRC includinu the issuance by it of con-niruction permits and operatinu licenses. The NRC's procedures with respect to application for construction permitu and operatinu licenson afford opportu-V ( nities for interested partion to roquest public hearinus on health, safety, f i onvironmental and antitrunt it.nues. In thin connection, the NRC may require nubstantial chanuco in proposed operation or the installation of additional equipment to meet r.af ety or environmonial standards with consequent delay and ( ndded costs and the possibility exists for denial of licensen or permito. The construction permits for heaver Vallov Unit No. 2 and for Perry Untin Hon. I and 2 have bonn issued, and a full power operatinu licenso for Beaver Valley Unit No. I was inuuod on July 1, 1976. See altem 2. Propertion" for n ( doucription licenno for Perry Unit No. of the statuu of the application for a full power operatina 1. In September 1985, tho Ohio Of fico of Consumer's Counnol . Ihn City of ( Cleveland, the Doard 9f County Commissioners of Geauun County, Ohio and three local public interont corporationn filed a petition with the PUC0 and the Ohio Power Sitinu Doard (the "0PSD") requestino that cach of those bodien invouti-nato the public nocc8 for the construction of Unit No. 2 at the Perry Plant. ( 1he petition alleuen that completion of Unit No. 2 will renui t in an undesir-able and unroanonable level of execus capacity fa cach of the Ohio utilitics in CAPCO and that the rates charund or proposed to be charuod by those compa-nics will therefore be unjust, unreasonablo and unjuutly discriminatory, lho ( petition ar.ks that construction of Uni t Ho, 2 bo halted and that no further AfDDC be accrued with respect to that Unit (approximately C5,600,000 of AFUDC in currently beino accrued monthly by the Companies and that amount will uradually increaso each month an conntruction continuou). 1he petition fur-( ther requents a declaration bo isnued statino that the innuance of necuritien, the proceeds of which will be used to finance construction of Unit Ho. 2, will not be approved. 1ho Company in contcuting the petition. in another proccodinu, the OPSD has denied a requent to dolay hearinou on the sitino of ( the Perry-Hanna transmission line, which will nerve Unit Ho. 2, until the PUC0 completes its inventication of Unit No. 2.
- 2. The CAPCO companies a re continuino to review the status of Perry Unit Ho.
( Until this review han been comploted, there will bo no defined schedule for the completion of Unit No. 2. recrect to Unit IJo. 2 include temporary Possible alternatives cessation of workbeinu reviewed on the Unit andwith ~~ termination of the Unit. In accordance with the CAPC0 Aurcement, nonn of ( those alternativen may bo implemented without the approval of each of the CAPCO companies. Presently, the only s.iunificant work beino perf ormed on Uni t Ho, 2 in that noconsary to enablo Perry Unit No. I to be placed in service. 1his work in expected to be ccmpleted sometino in 1985. Under those ( circumstances it is not likely to be oppropriate to continuo capitalizinu AluDC to Unit (as No.doncribed in Hote if1the
- 2. Accordingly, of Hotes to Consolidated financial Statementn)
CAPCO companien do not decido to resumo 79ionificant constructior , the Companies do not expect to ho able to includo ( this AIUDC in not income. Inntead, a rencrve unuld be provided for Af0DC capitalized to Unit No. 2 prospectively. This would not offect cash flow but 8<i l ( ( i t would causo a correr.oonding reduction in not income. 4 As of December 31, 1984, the company and Penn l'ower had invested approxi-mately $348,700,000 and $57,300,000, roupectively, applicable to Ferry Unit flo . 2. Delays in the completion of the Unit can be expected to increase its ' total cost by amounts which are not presently determinable. If a decision ( were made to terminate Unit flo. 2, certain costs which are currently assigned to Unit flo . 2 would be reassigned, where appropriate, to Unit tio. 1. However, cancellation charues payable to contractors and other cosin of termination could be incurred. Pending completion of the CAPCO review, the Company is ( unable to predict whether the construction on Perry Unit ilo. 2 will continuo n or, if continued, on what basis such continuation will procond. If con-( x l i ntruction of Perry Unit flo. 2 is terminated, the Company would seek to recover i ts 1.tvestment as a t is procently doino wi th respect to previously terminated t units (sco "CAPCO Proornm") but cannot now predict whether its investment in ( Perry Unit tio. 2 applicable to its PUC0 jurisdictional customers will be recover.ible. If no means of recovery of the costs of Unit flo. 2, in the caso of termina tion, were available to the Company from its PUC0 jurisdictional (' customers aad no other basis for recovery could be found or anticipated, the Company would be required to writo off the portion of i t t, investment applicable to its PUC0 jurisdictional cuntomorr.. liased upon the Company's investment in Unit flo. 2 as of December 31, 1984, the Company estimates that ( this write of f could be in the ranue of $205,000,000, not of income tax effect. The Company 11 ' ( ( ( ( ( ( - ( ( W i ( < O APPETIDIX 1 8 M , . p .y - g'g;.g . b, ,- . , ? ' O ' funding for government programs that hate not teceived 19( 85 funding yd through separately enacted [ 1 ' appropriations bills. That continuing resolution will be taken up by Congress before it adjourns in ca ly ' C October. An amendment to increase funding for the I AEA is expected to be offered, at least in the Sen- ;' K g . .u. , g ;.g p. ,.a m y 3 s.,, .,,.,.,g..,,. ate, sources saya , s ., p] *" The U.S.'s yoluntary contribution goes primailly to the IAEA4 technical assistance and coopera- , l I 1 tion fund and to the prograrn of technical assistance to safeguards, Money also goes to pay for such . , l h I things as fellowships fo'r foreign specialists studying in the U.S. and other techttical assistance projects, ' the so called footnote A projects, which are not funded through the IAEA's segular program but t , . . , s which are judged to have technical merit).. . "seri- i ; redtiction.in fundilig in the U.S.'s voluntary contributi.oin would. says the administration, ,,.f A ously undermine U.S. efforts to put forth a positive record of compliance with Article IV of the Non- } t
- ;! ?
proliferatiori, Treaty (NI,T)/;,,which calls for. cooperation with nonnuclear weapons states in cacha;nge h j g (
- for;their agreement notfo acquire nuclear weapom.11;is funding aiscut i
latticularly in . impoitant at.this.3 j says the administration..because of the NPT review conference scheduled for 1985. " Clearly,iS ~ i l i l i) i the c'edibity r of:U , l , B r Jou'stechnical assis t ti tcome to ' - , l ; ' storypolicies pport'of;the NPT and in ' make it more difficult to su,tance frilthisVreparafori .hddi.,.,..l[. . s . U:. . , r.>,a n s.. t , eriod }, s..w m mmraw .u.. l -jl , v .. J ~l C COST ESTIMATE;REV,lSEDJ08, CLEVELAND ELECTRIC'S PERf!Y imon ydlRyelMaari . , y ' . [,S,hi!CbvelajalElectricjl.1,uminating Co((CEI) has revised its, cost, estimate for,l completio T,to 53 a 94-billion fromj3,4kbilliorp Utility r.ources said.that the total, estimated je cash construcuon k1 lPeryy.,1._had peu raiseddo;$.2.76.billiori,from,52.4. bill y_ ion. f ,1,,',' In ad,dition, f ~ if . .:. they} estimated ll' l J,allowanciford 3funds;used during cons,truction ,to 51.,18. billion frorn . costs and 5147,million f for costs previo,usly. budgeted 3 for Perry 2 or for facilities common d emergency diesel . " topathj y units. > _The'y said that the costs of co,mmon. facilities such as fuel handling equipment an ; ; yy > generators had.been. reassigned to Perry 1,on, advice fromjhe corppany's auditors. A utility , l Jyokesma said that Price Waterhouse had recently. completed a four. month;:eview of the project's costs to deter-j[h .+. ,f ] mineAvhere certain expenses should.be properly assigned.g... . ;;g;r . c g ,qThe resp;iortionment of costs h,as fueled speculation that the utility will eventual!y cancel ;: Perry ! } . 2; however, the company,, spokesman denied that there was any connection between the ! twi. ' lie m . that the company,was considering four. options for Perry 2,.which include cancellation, but he; ;denied 'k " suggestions that any.,decisionyould be made soon. Construction at Perry.7, which is 44% jcomplete, ' ,1l' . b the companyiaid, that its completion schedule and budget are still 4 ; 7.WaOvir.tually, .qunder, revi,ew " The, spokesman sa stopped,lh Apr,il ut,idjhat a decision on the future of Perry.2.would f ] @$ be " ' . time between.now.and the completion pf unit.l."'llic company has estimated that Perry.1, whichi is,@ [9)% com' pie'te, yill tSgkcEmmercial'o;\erati[orilythe end of 1985,[They emphasiipt that " absolut d
- ny,, changes have been_ mad,e in ilje schedule;for Perry
' l....t.,, g,c.;.f.,< ,, . gt , , ,. . , ' ' ,j; l t'
- Sta,ndNd Moofs,,,grp g said, thatjt i,s reviewi,ng the debt, ,
ratings .s of CEI andi the f , a :I a . , 'M(tieQ. a.p .a r[~the C,en, -. ~m trit.l A, r,ea.ij. owe.r C.,oo.rd. at . s. . . .- i.n.d.io. n...G.roup.,(C..A... . , g g , M.an.,alyst said t.h.at,the r.e. view wa.s uutiate.. aft.e.r C. EI..an. n.ounced..i.ts .e..su.. mat . . . . , ,. .. + . j ibocause of Ihe " substantial financial.-stress". Incurred by s,imultaneous construction of three nuclear g Lunits. The.'i cal CO,utili,tieslare',ilsEbuildiijg"Incave'r VaII,'ey ljaid '2[ ..[. [. ) l ({ (( g.,, , i ,t ?.g.' Eacti Perry,
- unit is a 1,205.
- a n, , , ; s
- r; ':e t . . ' t megawatt 11WRJThe
. , . . .+ n - architect. engineer *~~- at Perry is Gilbert;1 u 1 Com ' 1.u n - l. .
- ,d',.ygLu;e. . w -en .riiM nw r%Gr 6.t nintren M.wr& <e.JW,. o s
f > M RESPONSE TO SEAL. TABLE. LEAK ATtTROJAN RAISES EYEBROWS AT NRC : /I NO> Utility response to'n reactor coolast leak'found in the seal table room at Poittand General lifec- Vt} 4 Jtric Co.4 Trojan last week while'the unit was at'an elevated pressure and temperature has NRC raising
- j.
e questions about whether the response was proper..While there is a j'world of difference between h tiiis ~ '{ cident and what happen'ed at Sequoyah,";where 1 the Tennessee Valley Authority's (TVA) plani staff hile the unit was at 30% power (NW,23 Aug., Special Is- {, p 4'tried to perform seal table maintenance w t 1 l, sue), NRC sources sid that workers at Trojan "pmbably should not have dohe what they did "- ' While the plant was retuming to service aher a refueling outage, a leak was observed in heff seal 'l table room at Trojan. Workers determined that it was being caused by an improperly seated er mpics- _l ,i. L sion litting and attempted to fix it. The teactor continued to opyraint at 2,235 pounds per squatr inch, liI and the coobnt temperature remained at $50 degrees l'. while workers attempted to adjmt the fating, ' in their attempts, however, workets ended up tecning the two te and braclet that funcom ed as the pdmary suppott devices holding the fitting in pbce, As a result. the entire fittmg bmte ort, cau>ing [l[h
- t. ; e lt i;
-l- 7 twet romcs wt tX - Seramtwe 20,im - I i ' l . - r -,--,..-.w,.-._--,--.,,.,.,, .miwr,~,.-,,-,,,,, n mym,-n=.mm.,- m ,wm m wry y, . . . - , , . -,y. ,,y..r-,w,w.,,ei y-m --,+-w---,,,,_,,rm.-~%4 - - . _ - . _ - . - ~ _ _ - - - _ . - - - _ _ . - _ . _ _ . . - - - - - - - ~ . . - - - _ _ - . . - . . _ _ . - - I AI'l'EllDIX J 4 8 - - - - , - - . - - . - ,, ,a .--., , - . . . . ,--, ., - . _ - - --,,.v., ( Al.'P! M D.I L M l del.AYS IN CONSTRUCTION Ol', AND CAIJCEl.l.ATIONS Ol',____T!!!' CAPCO _ NUCl. EAR Pl. ANTS Novemb9r 15, 1978 -- CAPCO announcos defonra1 a11 of connt.ruct ; on achedulos for t.hroo plantn (1) Perri Un 1 (16 mont.h delay to 1983), (2) Porry Unit 2 ( (22 month delay to 1985), and (3) Honvor Valloy Unit. 2 (24 mont.h delcy) . CAPCO nayn that "[t]ho ntatun of Davin-lienne Unita Non. 2 and 3 and Erio Unito Non. I and 2 in un-cort.ain pending complet ion of ntudien, but i t. in currently contemplated that theno
- t. nits may be delayed by an averaga of t.h roo yearn." (Edison 1978 Form 10-K, p. 37, re-
, produced in Appendix G). January 22, 1980 -- CAPCO announce'n termi nat.lon o f plano to con-struct Davin-Honne Unit.s 2 and 3 and Erio Unita 1 and 2. Conntruct. ion of three planta in delayed: (1) Perry Unit 1 12 months t.o May 1984) (2) Perry Unit. 2 (36 montha to May 1988), and (3) Boavor Valley Unit 2 (24 months to May 1986). CAPCO naya that [t.]ho political and regulatory uncertaint.lon af-focting the f utura construct.icn of neclear planta han intonnified followirg tho (1977) accident at Three Mile Inland". CAPCO also p ' a to the dramatic decreano in projected growth rate of domand for elect.ricity "at-tribut[able) mainly t.o a showdown in indun-trial. growth, the increased availability of natural gan in the CEI carvice area, and conservation effort.n by customern." (CAPCO January 23, 1980 nown releano, reproduced in AppendLx D). = Martn 8, 1983 -- CEI announcon "a delay of up to 12 mont.hn in the fuel load dato of Unit #1 of the Perry generat.i ng plant. . " (CEI prenn releano, re-produced in Appendix C). May 1983 -- CEI ronchedulos Purry Unit 1 fuel load dat.o (8 _ to May 1985 (Public Uti.11 tion Comminnion of Ohio, "Comprohonnive Annonament. Of The Perry Nuclear Power Plant", at.udy prepared for PUCO by Touche Ronn, The Nielsen-Wurator Group and Chapman & An n oc i a t.o n ("PUCO Study"), vol. 1, p. 111-11 (1986)). T February 1984 -- CEI announcen delay in completion of con-struct. ion of Perry Unit I to May 1985 (PUCO Study, vol. I, p. III-10) April 1984 -- Construction et Perry Unit 2, which was 44 percent complete, in terminated and indef1-(% nitely suspended. CEI says that the statun (') C of plant is under review. P6rm 10-K, p. c. reproduced in Appendix P). (Ohio Edison 1985 t 4 l O i l APPENDIX K j i = I I 8 1 9 " Q 310 @ "' O Y" being nuctenr). This in turn will snake swesible the generation, transminalon, and .f utillution of nil energy without twilluting s<oll, water, a nd nir. V*1. . It will solve the problein of the utillr.ation of the three great OM sintional ? / I hplaboratories. With thew inuch enlaravd tenna of n fervre, they will no longer N
- d. aced to carry.out their ditagations into mirange anen of public liculth, educa.
tion, agronoat)cni.iranqiortation2 n rationalisingourenergy emnoop)artmanisatloa, y.% ynN'y g4c.'Ibey ' "P. willVhave a rasjor tai <k %Witle bniadesie4 authority / the40AE and flac AEC woiild he;rwgionalble for . gulding and, reviewing the osantry's energy 'planator., energy'naererrh, cocrgy - 9J heonverslots"and) transportation,'ahd (ncrgy titillsation. Iterlew and retiusdeling $of the entire dwlalon. making proccan wills tregiect to energy in the gurcrnenental* and private. sectors in twtuired. At a ilu.e winen our revlulevenenta nn rnpidly 'acwlerating. the decision-rusking pnwsw la helag extended rather than short. esel. This reftwta.the utany leastitutional Interenta wisich ndl for balancing nnd resoluthatt Failure ta bala nce or'irrreolution leel la no one. o . 4.,kK 4:.% . ' w y.. ' .* e,Q TAmti. lAescitAA VIRSUS COAL 4tNfRAi!D fifCTSIC fM(ACY AS Or Ntf 1. Itse FOR $r.~ .r> .- [;g [$.[ ~ .A, COM Ptf T1081 (NUC1 IAR. 19 M --f0$$8 L, 1975) 5 J ' ) ,<w .,, ,
- . J s.7 "v,. ,- fi.,. e,, y . At 14 percost. 7,000 ~Atlepercok6,570 ; .
-i-u, u;gQS, i w . hears per pas beers per par l q.(.,' ,y w flecteer Coal netteer - . - - . a
- d.
j , Casi 28 s a 4 Fiend charps smer park.;..... . . ............_.. .. . 328. 5 8 121 88 E12. 56 127.30 'T,g Feel chasps. enns par kw,4f .. .. ..mhord narpt. eius per4 e7 . ... ......,,... kw.4v.. 1 41 4.95 4.16
- i0perabag eed ensint
....... ..... . . . ... .... 1.70 1 2.19 1.70 #2.19
- 9mi .. . win pe eneste, sides per k v.4t...........6w.4r.............,......... . .. 30 . 30 .30 . 10 i . .Tetal switct.imerd cost mWis per 6 e 4r.... ........... ......
.to ... ... _ . .n. - . G. Il S.90 ......6 65 g th' co'epetdeve et $150... ... . . ... .. ........ ,,, n ;g, g , , ,7,. ,y 06 l o ,, j , s7f.1Cests
- gEf ' 'I Atper25 . ceets sailis>e B to.
h Noen: C44;tal test-8,100 MW ownsu, 3203 5 per kw.; 800 Itw cost,170.4 per a w. Y. ,h.t,4 TA8tt 2,.-Cit 0WDI IN D(WAND AND IN CEN[ RATING CAPAgtuTV, [t(Cit!C UTitlTV IMOUSTRY 8 [dL% . .s 4
- Capacity to be erdered om be .s et s',?j,4 Crownle 6===a Generstlescosebsity
.M' I.'"' (M' tee 0
- 3. percent go.e ordered 88WV10' M x10a ActeeghwX10s s.,a z. .
{; Q. . .--. . .... . .. s 5. 7 170.6 . .. .. e . .................. 4.3 iu y ... . .. . . , , . 1 L,g. . ... 15 ,,,, ,, ,,,, ,, j leu. -. .. ... ... . .. 191 6 .....
- 6. y , ....
g p g ... ..... a3 . ,, .... .. is 7 r n s :':::. :' - ,7, .g,. ,.;. . ......... .... . . s. 4 r23. s ..:...:.. ais :':..2 . ,. . 4. : - g.. .4 ,,,,.... .................. ............. ... s. ,2 ( . ,rea s,. , ,i,s,, is e s,i m& leer.... ...... . ...... .. i.6 m,53 ,,., m, 3, ma a 3Ro ao au Mq. ,' g otst.......... ..... ri s . . . . . . . .. . . . . . . . . . . . mi m is .. . ~ ... . r.4........................... ....... m i, ser- . . . . .. , , ,,,,,,,,,,,,,,,,,,,,,,,, 9 - , , ,,, m ,,, w W eecess capecity s or i . peek, s geramer essenen peek 186.300 j , ,,,,g anr, seeegy, e,egeg4,, g3 g ,,,c.,g,
- 76eosos sysheide es of Dec. 8,1961.
seesce: E4een Hectric gesutete $tstHtkal teehoek ter 1968. { i t #7@2+ ..f, l ( APPENDIX L 8 ,o
- 1 LONG-TERM FORECAST REPORT p/ r ELECTRIC SUBMITTED TO T!!E PUBLIC UTILITIES COMMISSION OF OHIO
/ORECASTING AND POWER SITING DIVISION May 15, 1907 By: Centerior Energy Corporation 6200 Oak Tree Blvd. Independe nen , Ohio 44131 Telephone: (216) 447-3100 Mall Address: P.O. Box 94661 Cleveland, Ohio 44101-4661 Fred J. Lange, Jr. Assistant General Counsel Centerior Energy Corporation P.O. Box 94661 Cleveland, Ohio 44101-4661 Telephone: (216) 447-3240 (8 1 TME CLEVELAND ELECTRIC ILLUMINAflNG CCMPANT COCE FCSd FE3 1t CHARACTER!$f!CS OF Ex!$flNG TRAN! MISSION t!NES O m Substation 3 Voltene (kV) Pftht r Vey T ype of kuater N transmission Operetleg Design Length Supporting of menes en Line Point of Crfgin (ultes) Structure Circuits tSe tire 3 uc. Naas and ferrinus tevel level o x E" 345 345 6.4 s.t.T. 1
- 1. Aven Beaver Avon 345 kV station - E (Chio Edisen) Point of Interconnectlen y with Chlo Edison, Sheffleid .<
fownsSlp n o g? Juniper Substetton - 345 345 G.6 D.C.T. 1 !!. Juniper-Star 1.5 S.C.f. 6 (Ohio Edisen) Point of Interconnectlen 7.2 D.C. M-Fre-e y with Chlo Edison, Richf aid H w Township O z 3(5 345 54.6 s.C.T. t wenne.chte Edisen !!I. Juniper-Centen Juniper Substatlen
- Point Station (C5fo Power) of Intercennection Wlth Chlo Power, Osneburg Town-ship 345 345 14.9 S.C.I. T Ashtabg[a-Erle Ashtabula 343 kV $tetlCM
- 7 IV.
Intercennection Point with c' West (Penetee) l Pennsylvente Electric Co., Chlo-Penn State Line l Eastteke 345 345 345 17.9 s.C.T. 1 V. Perry-Eastlake Perry Stetten 2.6 c.C.f. sn kV stetten . un 30.5 5.C.f. t Juniper Substetton
- Easttake 345 345 T v1. Juniper E sa t t ek e f.; D.C.T.
3t5 kV station T o D.C.T. 3( Avon 345 kV Stetten - Juniper 345 345 1.0 1 pg vt!. # von-Juniper 12.9 0.C. e-Fre e ;; tine substetten 20.9 0.C.P. M Fre e __ 9.2 S.C.t. v e 2 345 0.9 D.C.T. 2 Juntper Subetetten - Nording 345 vii1, Marding Supply 2.1 0.C. M Fre-e Substation 5.0 D.C.P. 1 .. ,e l l l iME CLEVELAND ELECitic ILLUMINAflNG COMPANY n / DOE FC#M FE3-1: CMARACTERISTICS OF EXISTING TRANSMISSIO4 LfMES r-2: H Transmission vetta;e (kv! p l e'1 t - o f -W av Type of Nu-ber Substatien y Polnt of Orlgtp Operatin2 Design Length Supportin2 of Ne es en - Line j m Nase end fermin;s Levet level (Miles) Structure Circufts the Line C 345 l345 5.1 D.C.P. 2 hi l Ir. Psedin2 fox Line Herding Substation - fcz Substellen 0.1 D.C.f. [ $.< n 132 1.8 D.C. M Frn-e 2nd Circuit c
- u. Catarle Supply fewtes substation - catsale 132 5
Substetton 345 11.8 D.C.P. M 7 e-e d h -4 Aven 345 kV station - Point 345 345 3.6 c.C. F-Fra-e 2nd Cltcuit II. aven-Beaver of interconnection with CE y (OE) Line z Aven-Seaver POW, Lorain County Perr,y $1stien - Intend 345 345 43.8 D.C.T. 2 ril. Perry-Ms:edenla- 11.4 D.C.S.P. Intend Line substation Intand Harding Point en Perry-Macedonle- 345 345 1.5 D.C.S.P. 2 s!!!. 0.2 0.C. 2P Stru:ture N Li-e Inland Lire - Nordin2 0.1 D.C.f. Substation ~ *,erry D .len - Tap Polnt 345 3f5 1.1 C.C.f. 1 i!. Perry Ashtabula 22.1 S.C.f. t W s'htabula icwnship, Ashtabute Ccunty v 345 345 C.6 D.C.T. 1 1~_ tv Jun?per Mansfield Juniper St.bs t a t i on - Point a of Interconnection with CE, 1.5 D.C. H-Fra-e (CE) Line Sogneore M1184 O M t-v a. M A != c, g m.4,.
- pg4
$ %hI CENTER 10R ENERGY CORPORAT]Oti 15 51 : l- l-03( E )( l)( ti) Tile CLI:VELAND I L1:CTHIC ILLUM] NATJ )iG CO. ODOE l'ORM FI:3-2: SilMMAny or 1.:XIST)NG SUBSTATIONS L1 rie Line Ancociation 1 xi st inq (ID- 1 08- TE3-3 or Sgbol Sutistation Name_ , Voltage Not at ion) P ro]>o r, e d MX Maxwell 13?-13.2 kV 11 1: ( llB Newburgh substation 13 2 - f>6 - 11 kV 22 C NE Newell Substation 132-13.2 kV 2 f, E NP Northfield Substation 132-33 kV 11 E NL Nelsor. Substation 132-13.2 kV 11 E NP Newport Subst.ation 132-13.2 kV 24 L NS Nach Substation 132-13.? kV 26 E NT Nathitn Substation 132-33 kV 26 E NW Norway Substation 132-13.2 kV 1) E FY Eurnery Substat. ion 132-33-13.2 k V 26 E PG Pinegrove Substation 132-13.2 kV 2 '1 PV Pleasant Valley 132 kV 11 0 Switching Substation 12 E 13 E 20 C PY Perry Plant. 345 kV V U Transmission Substation .11 E F. I V E 100 P SN Sanborn Substation 132-33 kV 2l E SP Spruce Substctioti 132-13.2 kV 2h E ZN Zenfth Substation 132-13.2 kV 29 E 8 9 g v m v A1 A S N DQ d JO 11v19 h *b M k k4 b { ou omc vo aavis o
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kdMM8IQ% YN M ii December 31, 4986 The Cleveland Electric Illuminating Company Line (b) No. (a) 1 Davis-Besse - Cont'd 112.143 2 783 - Eme rgency Diesel Generator 235,240 3 d99 - 1983 General Project 1,239,930 4 916 - Contamination Containment 274,276 5 933 - Reactor Coolant Pump 695,858 6 988 - 1984 General Project 112,990 , 7 991 - 2 Spare Letdown Coolers 8 9 Eastlake Plant 724,919 10 7 - 011 Ignitor System 136,787 11 24 - Coal Belt and Dumper Samplers 236,260 12 56 - Modify Basement Sump 655,285 13 133 - Steam Seal Conversion 101,270 14 145 - Replace Coal Burner Lighters 761,767 15 169 - Low Pressure Turbine Reblade 113,452 , 16 582 - Turbine Buckets 11.011,227 17 918 - Balanced Draft Conversion 18 19 Perry Plant 1,930,228,353 20 35 - Construction of New Nuclear Plant 21 107 - New 345 kV Transmission Station Lines 6,624,183 22 and Equipment 23 24 25 Various Plants 117,0S2 26 707 - 1981 Project for Fossil Fuel Plants 188,814 27 977 - 1964 Project for Fossil Fuel Plants 748,189 28 66 - 1985 Project for Fossil Fuel Plants 918,547 29 141 - 1956 Project for Fossil Fuel Plants 270,673 30 733 - 1981 Project for Nuclear Fuel Plants 505,836 31 65 - Various Replacement Projects, All Plants (1985) 140 - Various Replacement Projects, All Plants (1986) 315.458 32 400,484 " Major
- General Project for Fossil Fuel Plants 33 178 34 35 Transmission-Substations 3,943,690 36 108 - Rainbow - South R0W 2,244,246 37 370 - Juniper - Construct 345 kV Circuit 2,078,859 38 377 - Northfield - Automate 1,183,225 39 512 - Newburgh - Automate 896,13" 40 525 - Clinton - Automate 41 42 Miscellaneous Transmission Projects 837,868 43 33 - New Automatic System, 50C 146,543 44 129 - New 11 kV UG Service at St. Alexis llosp.
45 146 - Lake Shore & Newburgh, Upgrade Relays and 551,334 (8 46 47 157 - PCB Capacitor Replacement for 1986 Optic Cable 362,569 216-A 1 i 1 s i d I i 4 4 5 i 4 i i i d APPENDIX N i 1 t I t J l t [ 9 k 4 i e d 4 4 t f 8 - - . . . - . - - - - . . - . - . - - . . - . - . ~ . . . - . . . . . . . . _ . . - . i C. . r i l A i i- I I-i i i 0110 T.DISCE CG5%W 1 ' 4 i i i Nbelear Regulatory Ca:nission i (10CFR Part 50) l Licensing of Production and Utilization racilities l l , t i 5 I PERRY NUCLEAR poler PIR.T !. ! NITS NOS.1 NJD 2 i i i s 6 l I D . i Infomation Needed by the hbclear Regulatorv Cayn-i mission for Antitrust Pgiew of Operating License Aydications for hbc1 car Pnwer Plants as detailed l i ir Seculatorv Guide 9.3 i8 ' l i I i - i lO i i a Item 1.c. (Cont'd)
- 2. The following changes in interconnections have occurred or will occur within the Ohio Edison System (CES).
l 1. "Ihe Samis (OES) - South Canton and South Canton - Star (OES) 345 kV 4 interconnection 5 with Ohio power Cornpany were previously metered together
- fq and considered < singic interconnection. Today they are separately
- f ,/ metered and havo been classified as separate interconnections.
- 2. 'Ihe 345 kV Beaver Valley - Shenango (OES) interconnection with Duquesne Light Company has been replaced by 2 - 345 kV interconnections. At the Rusfield Plant, this was changed to fom the Beaver Valley - Rmsfield (OES) and the Crescent - Fhnsfield (OES) intertonnections with Duquesne Light Company.
in service in 1981. 'the circuit will extend between the Avon Power - Plant (GI) anti the Beaver Substation (CES). 1 j 4. A 345 kV transmission interconnection with GI is scheduled to be put into service between 1982 and 1984. The circuit will extend betwen the Fbnsfield Power Plant (OES) and the Juniper Substation (GI).
- 5. The 345 kV Ohio Edison bbnsfield - !! anna line, which currently passes near Duquesne Light's Beaver Valley Ruc1 car Plant, is scheduled for codification in 1986. The line will be changed to fom a second Beaver Valley (DL) - Mansfield (OES) 345 kV interconnection (the first discussed in Item 2 above) and a Beaver Valley (DL) - Ibana (OES) 345 kV interconnection.
- 6. A 345 kV transmission interconnection with GI is scheduled to be put into service in 1988. *the circuit will extend between the Perry Nucicar Power Plant (GI) and the Ibnna Substation (CES).
These changes are reflected in the following tabic: - Ohio Edison System Interconnections (In Service and Planned) Year 345 kV 138 kV 59 kV 34.5 kV Total 1976 9 14 5 1 29 l 1980 11 14 5 1 31 1981 12 14 5 1 32 1984 13 14 5 1 33 1986 15 14 5 1 35 1988 16 14 5 1 36 O APPENDIX 0 1 8 ., _....................-.....-- Date of Recott : tear of Frecrt l l Ih15 Aeoort ist : Ce of Rescencent - :f!! *a: An Ortennal : (80. Ca. Irl [ CHID EDISCH COPPM) :(2) : A Fesuteission Cec. !!. 1996 : . .._ z....................--.-----.-..~.---....-....--....~-... TM NS"lSSION LikE STAllSilCS .-..-.-.......-..... ~ .--..... .................... l ...................--...--..---...-...----------..------.-------.------...-------------.-----.---------.-....------..----.: transetssion line has acre than one tyce of succorties strut. l 3 . I!ecort inforsation tenteregno transsission lines, cost of : tare. Indicate the elleace of each tvce of constuttion tv the aes and expenses for the tear, last each transetssten line flavino use of trackets ard entra lines, hner cortions of a transatssion : canal voltate of 132 kilovolts or creater. Report transatssion line of a dif ferent type of construttton need not be distinuutshea! 'ies belos these voltages in group totals only for each voltane, f ree the retaineer of the line. ; . Transsission lines include all lines covered by the definitten 6. Fe ert in toluans til and (c) the total cole sites of each : . transetssion systes plants citen in the (Milors Systte of tranteission line. Shes in toluen (f) the cole sales of line on : c:unts. Do eat recort substation costs and escenses en this once, struttures the test of which is reoorted f or the line destenatedt , . aPecort State c:saission, data tv individual lires ter all voltants if so recutred converselv. show in coluen (c) the cole attes of line onl strut-W . Estlude free thts oace any transsistion lities for which tures the cost of stitch is reoorted f or another line. (1ecort sole g ant $r are included in 4toent 121. Fonutility Procerty, stles of line on leased or cartiv eened structures in colten (c). : nhether the type of succortino structure reported in in a f ootnote. exclain the basis of such octuaanty and state ! . (( =hether eroenset =tth rescett to such struttures'are incluSed : 'cp ist (!) stacle cole mecd. or steelt (21 H-f rase. noo1. in the escenses reported f or the line testanated. I E st\ Jolesi (3) tenert or (41 underoround construttton. If a ... .............. ...................... ... .........--..--......-..---...-- .............-.. ...........- ...-............-......:: g VOLTAGE : : LEn1H (Pole miles) i iln the case of undercound . : DESIMailCN !!!Pdicate =here otter : :
- than 60 Cycle. 3 chase?: Ivoe of : !tnes, recort artutt elles) . I g;................__........-............---.:---.-.....-.-..-.-: : :
Succortino : - - - - - -- - - - - - - - --- --- - - . ~ ~ . . W a t e r ; Struttur e : , of : l y a.i
- l0n Structures et ;0n Structures of :Ctreutts:
- Free : 10 : Oceratino : Destened
- : . . :Line festonatec : Another Line l !c t : (dl : tel : til : tal : th! :
1 (a) : q.... .. .............:.: .........;......~ (tl
- teaver et : 345 rv l 345 tv : Steel ioner ; 9.74 : 1 1 !Avon (Celi '; 345 KV 345 KV : Steel To er : 1.29 : 9.74 : 1 :
! lAvon (Cell (1) ; Beaver 12 345 KV 345 iv : Steel Pole : 1.52 l - : 1 : 3 lAvon (Cell Eeaver (2 t!!eaver Carlisle : 345 KV : 345 DV Steel iceer : 17.50 1 :
3 ISeaver (2) : Davis-iseste (TE) 1,66 - ! ! ':
- 345 KY : 345 BV l Steel icier . - : 52.02 : 1 :
. : Beaver Valley (DL1 (3) lHanna - : 1 : ! 345 tv ! 345 tv lycod H Frase : 0.69 9 l Beaver Valley (DL) ? Beaver Valley (DL) (41 151 sts Hanna
1 : $ 0 leaver Valley (DL) :SA:sts : 345 KV : 345 IV Steel Tower 0.17 : I : 3 ! 345 EV i 345 TV ! Steel Tener ; e.07 : - : 1 : 1 : Canton Central (CPI l Manna 345 KV : 345 LV l Steel To er : 33 ;9 1.73 : 1 : 2 :Carlisle Star 1 Carlisle : Star : 345 IV : !45 tv bacd H Frase : 1.14 : - . ! ! 4 ;Nanna Michland ; 345 kV 345 tv hod H Frase : 23.!6 i - . I : 345 kV : 345 LV l Steel Ic er . 0.70 ; . : 1 . . lHanna Htchland - '
- 345 RV : 345 LV l Steel foner u.07 : I 6 !Hanna lHardino (CEl)
(5) lMansfield : 345 KV : 345 KV : Steel laser 78.!! : 0.70 . ! 7 lHardina (CE!) 3,03 l - : : 9 l Harding (CE!) :Pansfield : 345 LV : 345 KV l Steel foie : 1 lMansfield 345 KV : 345 KV :Dod H Frase : 3.?! ! - 1 9 lHarctna (CEI) 40.61 : - : I : 3 l Highland (6)Mansfield ; 345 tv 345 (V l Steel Toner : 1 lHignland :Pansiteld : 345 KV : 345 tv : Steel Pole : 0.!6 l - . t ii : : .! !nteotton feras of Irarly . 5: Nase cf lessee Date lease Pent . 3; . 540 nos, . 7 (1) CII. TE. ft. PP 9!01/81 s 661.175 De'ereines f res CAFC0 hreesent dated 9/14i67 ; 3: (2) 'CEl. TE. nl 10/01/75 540 sos. 1.163,011 ti *stred f ree CAFC0 Nrtesent dated 9/14/6i : sined fres CAPC0 Mrenent dated 9r14/67 : : ?! f3) CE! IE. DL. FP 9/01/60 540 tos. 1.139.115 Os , )! tal CEl. TE. UL. IP 12/01/70 540 sos. 56.149 hm ained f rts CVC0 Acreesent dated 9/14/si . 1: (5) CEl. TE. OL, FP 10lul/77 540 ses. 6.556.M5 Octeritnee f res CAPC0 Mreeient dated 9/l4/d . tel CE!. TE, DL. FP 6/01/77 540 nos. 1.193.130 Detersic d frts CEO hrment dated 9!!4/67 : i - 4: NOTEt the tereinals of all 345 tv and 138 RV lines are desionated hv . 5: Itaississten Substation nase unless otherutse shavn. ___...____...............__......................._........................:..._.............g...............,........: IDIAL .
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) -n g , , 4 , . f .- o .. + ;m i i ; GL s; { : ,3 i < .i , -{' +-{} "p y ' * --g -e .-.. . - .. . . - . ,p. ef(t ) __ a .~ .~~.y, . - - - . ( CERTIFICATE OF SERVICE I hereby cortify that I have this day served a copy of the toregaing document upon the participants in this proceeding. Dated at Washington, D.C., this 19th day of February, 1988. l EYvid .. . I' . . - . - - Kenneth M. Albert <8 SERVICE LIST Mr. Thomas E. Murley Director of Nuclear Reactor Regulation U. S. Nuclear Regulatory Commission Washington, D.C. 20555 Benjamin H. Vogler, Esq. Office of the General Counsel l U. S. Nac' ear Regulatory Commission Washingtc3, D.C. 20555 Deborah B. Bauser, Esq. Counsel for Ohio Edison Company and Pennsylvania Power Company Shaw, Pittman, Potts & Trowbridge 2300 N Street, N.W. Nashington, D.C. 20037 i David R. Straus, Esq. Counsel for American Municipal Power-Ohio Spiegel & McDiarmid Suite 1100 1350 New York Avenue, N.W. Washington, D.C. 20005-4798 Janet R. Urban, Esq. Antitrust Division / TEA U.S. Department of Justice 555 Fourth Street, N.W. Room 9816 Washington, D.C. 20001 C. E. Chancellor, Esq. Secretary and General Counsel The Cleveland Electric Illuminating Company Post Office Box 5000 Cleveland, Ohio 44101 Alan P. Buchmann, Esq. Squire, Sanders & Dempsey 1800 Huntington Building Cleveland, Ohio 44115 Michael M. Briley, Esq. i 8 Counsel for Toledo Edison Company Shumaker, Loop & Kendrick North Courthouse Square 1000 Jackson Toledo, Ohio 43624-1573 Office of the General Counsel Duquesne Light & Power Company 1 Oxford Centre 301 Grant Street , Pittsburgh, Pennsylvania 15279 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ - _ _ - _ _ _ _ - - _ _ -____- _ _ -_}}