ML20079B320
| ML20079B320 | |
| Person / Time | |
|---|---|
| Site: | Seabrook  |
| Issue date: | 06/13/1991 |
| From: | Bardin D ARENT, FOX, KINTNER, PLOTKIN & KAHN, HOLYOKE, MA |
| To: | Office of Nuclear Reactor Regulation |
| References | |
| NUDOCS 9106140219 | |
| Download: ML20079B320 (10) | |
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Arent Fox Kintner Plotkin & Kahn !
t June 13,1991 Dnid J. Ilanhn was7m VIA IIAND DEI.IVMitY Anthony 'I'. Gody, Chief Policy Development and Technical Support liranch Office of Nuclear Itcactor llegulation :
U.S. Nuclear llegulatory Commission Washington, D.C. 20555 i Ite: Public Service Company of New llampshire, Docket No. 50 443 ILEPI,Y OF CITY OF ilOI. YOKE G AS & EIECTitlC DEPAll'IN ENT
'ID 'IllE IUMPONSE OF CONNEC'11 CUT IJGitT & POWElt COMPANY AND PUllIJC SEltVICE COMPANY OF NEW IIAMPSillitE ItMGAltDING AN'ITI'ItUh"P ISSUIE
Dear Mr. Gody:
The City of Ilolyoke Gas & Electric Department (*llG&E") hereby replies to the response of Connecticut Light & Power Company ("CL&P")l/ 1 and Public Service Company of New Itampshire ("PSNil") (collectively,
" Applicants") filed in the above referenced proceeding on April 22,1991 concerning antitrust issues ("Itesponse"). For the reasons stated below, the Commission should find that the proposed transfer of PSNit's interest in Seabrook Station, Unit 1, to NU constitutes a "significant change" and, after formal review by the Attorney General, deny the proposed transfer on the grounds that approval would create or maintain a situation incon.
- 1050Connectrut Avenue.NW sistent with antitrust laws and policies. In the alternative, the Commis-Tadde. con, DC 20036 5339 sion should condition its approval of the transfer upon NU and PSN!!
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llG&E's Comments filed April 1,1991,in this proceeding. Those conditions represent the minimum level of protection adequate to safeguard IIG&E P " " N "
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1/ CL&P is a wholly-owned affiliate of Northeast Utilities ("NU").
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1 drellt IIOX Nilltner }'}Olkin b NH!H1 Anthony T. Gody, Chief June 13,1991 Page 2
- 1. PSNil's Transfer of its Seabrook I.icenso to NU Constitutes a
'Significant Change,' Itcquiring iteview by the Commission and the Attorney General of the Anticompetitivo impact.a of the Transfer Applicants contend that past and future conduct in bulk power )
markets is irrelevant to the Commission's review under Section 105c of the Atomic Energy Act ("AEA"),42 U.S.C. (2135(c), and therefore the transfer of PSNil's Seabrook license to NU lacks "any connection" to the anticompetitive control which the merged firm will wield over wholesalo sales of generation and transmission capacity. Ilesponso at 18. Although nexus is an important element in the Commission's analysis, Applicants apply Ihe wrong legal etandard and attempt ta brush aside facts
, demonstrating the relationship between the transfer of PSNil's Seabrook licenso and the anticompt itive situation that results.
In support of their contention that bulk power activities are irrelevant to the Commission's responsibilities under Coction 105c, Applicants rely upon a 1973 decision of the Atomic Energy CommissionE/,
Applicants, however, ignore the 1982 ruling of the United States Court of Appeals in Alabama Power Co. v. N.It.C., 692 F.2d 13G2 (11th Cir.1982),
cert, denied 4G1 U.S. 816 (1983). In its decision (at pages 13G7 68), the Court of Appeals affirmed the Commission's imposition of conditions on a utility's nuclear license designed to remedy the utility's past and prospective anticompetitive actions including anticompetitive wholesale power sales not involving nuclear power (emphasis addedh 1 Applicant) contend!s' ti.at the NitC overstepped its authority in looking past the direct effects of the nuclear plant on the present or prospectivo competitive situation, and in considering actions of 2/ louisiana Power and I,ight Co., G A2.C. 619 (1973) ("Waterford II").
Arellt Fox Kintner Plotkin6:Kalin Anthony T. Gody, Chief Juno 13,1991 Page 3 l
Alahnma Power which preceded the license oppliention by mnny years.
We do not agree with this argument. j
....The amount of market power held by the applicant and_the wnys it has been used are relevant inquiries in determining whether j there is n " situation" to maintain, and whether issuing this licerae will mnintain it. The statute clearly enlis for n brand inquiry and I common sense does not allow interpret tions to the contrary.
The Commission's Atomic Safety and I.icensing Appeallionrd similarly imposed conditions upon a utility's operating license for a nuclear power plant for the purpose, in part, of remedying the licensee's anticompetitive actions in denying transmission service to smaller utilities in Consumers Power Co., Nuclear Heg. He; . (CCil) i 30,263 (1977). The Appeal lionrd ruled that an antitrust inquiry under Section 105c required consideration not only of the licensee's actions, but of the structural context of the market as well. The proper test for nexus, the Appeal llourd ruled, was whether award of the license would be " intertwined with" or would "exacerbatell" an anticompetitive situntion. Id. at p. 28,3G8 - 28,371.0/
There can be little question that the transfer of PSNil's share of Seahrook to NU will exacerhnte the anticompetitive altuntion between NU and ilG&E. IlG&E is dcpendent on purchased power from other entities.
Ily combining PSNil's share of Seahrook with NU's existing share, the merger will reduce the number of competitors selling excess generation capacity. The merged company, with its control over the Seabrook excess generation capacity (which NU hus been trying to and continues to try to g/ Even the Commission's decisions in Waterford I and 11, cited by Applicants, recognize that a proper nexus between anticompetitive actions and " activities under the license" "would not be limited to construction and operation" of the nuclear power plant. I,ouisinna Power and Light, Co., 6 A.E.C. 48 (1973) ("Waterford I"),
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Arent Fm Kintner Plolkin k Kalin I Anthony T. Gody, Chief June 13,1991 l' age 4 market throughout New England),l/ will possess the enpubility to limit access to and dictate terms for generation capacity.
Moreover, the merger will give NU control over the transmission I
lines needed to import power from outside New England. Currently, over 3fP4 of IIG&lTs total er.ergy supply is purchased from a cornpeting nuclear power plant in Cannda via transmission by PSNil. NU can be expected, if its acquisition of PSNil's Senbrook enpacity is approved, to restrict that transmission enpncity in order to increase its own control over the wholesale generation market in New I:nginnd and, therefore, expand its ability to force other utilities to purchase its excess Senbrook power.0/
1/ Applicants implicitly acknowledge in their itesponse (at 17) that Seabroch " contributes" to Applictmts' excess generating capacity, though they charneterize this surplus as " temporary."
D/ Appliennts claim that ilG&E declined to accept un invitution by the FEltC Al.1 to produce Dr. lleynolds for questioning at the hearing, llesponse at 2122 n.12. As the transcript of the FEllC hearing evidences, however, NU's counsel on at least one ocension argued strong;1y that Dr. lleynolds not be allowed to appear since NU walved cross examination of him:
Mit. PFUNDEll (Counsel for Montnup Elec. Co., joint sponsor of Dr.
Iteynolds' testimony with IIG&E and other partiesl: Dr. Heynolds is the expert economist for a number of parties, lie is our key witness on unticompetitive effects, lie is here in Washington.... We want to make him availabic here r.o he is nynilable for you Ithe Presiding Judgel to question him.
Mit, k' X l Counsel for NUl: Your lionor, the problem (with allowing Dr. Heynolds to appenrl is as to whether we are going to parnde through this hearing room witnesses whom the company and/or the supporting Interveners have concluded they do not want to have any cross-examination of.... As of today, we are 40'A of the way through the hearing.
PilESIDING JUDGE: I've heard enough.... Do you want these people to come in here, even though the company INUl says they don't want to cross them?
(con t inued... #
Arciit i?ox Kintner Plotkin & Kahn Anthony T. Gody, Chief June 13,1991 Page 5 As the testimony of Messrs. leary and Allen demonstrates (copies of which were lodged with the Commission with IIG&E's Comments), NU repeatedly has attempted to inflict competitive injury on llG&E in order to benefit NU's affiliate, llolyoke Water Power Company ("IlWP"), in its retail competition with IIG&E.6/ NU does not deny that it provides wholesale generation and transmission capacity both to its affiliate, llWP, and t IIG&E This relationship creates an inherent incentive and opportuni' disadvantago llG&E, both presently and in the future.
Given the past history of NU's anticompetitive conduct against ilG&E, the undeniable incentive for NU to continue to injure llG&E in the future, and the increased ability for NU to er. gage in such anticompetitive conduct D/(... continued)
Mll. PFUNDEll: The issue is whether the company should be allowed to, by waiving cross examination of a key witness like Dr lleynolds, to abort the opportunity for you to question Dr. Iteynolos.
P11FNb31NG JUDGE:....Do r.ot waste anybody's time bringing anybody in here whom you know is not going to be cross examined. Let's structure the schedule that way.
Tr. 3218, 3223 225. In addition, Applicants neither supply nor quote the pages of Prof.11ay's testimony that they claim "devastattel" Dr. Itcynolds' testimony, ilG&E, which supplied this Commission with a complete copy of Dr. lleynolds' testimony on April 1,1991, would be willing to provide copies of Dr. Ilay's prefiled and cross examination tes',imony if desired by the Commission. Applicants' self congratulatory r.ssertions do nothing more than point out the factual controversy regardi.ng the anticompetitive impact of the license transfer and merger which t'nis Commission needs to resolve, either through analysis of the FEllC record er otherwise.
6/ Applicants claim that FEllC found NU's transmission rates tollG&E to be below NU's cost of service for transmission. Ilesponse of 17. The FEllC's decision, which was based on the rolled in cost of N U's transmission facilities, is the subject of a pending appeal filed by llG&E on the ground (in part) that no evidence of NU's rolled on costs was introduced on the record by any party to the proceeding. City of fiolyoke Gar, & Elec. Dept, v. FEllC, Case No. 90-1565 (D.C.Cir., filed Nov. 26, 1990) (oral argument echeduled for Oct. 25, 1991).
drellt fox NilltIler Plotkin kNubH l
j Anthony T. Gody, Chief June 13,1991 l' age G if the transfer of I'SNil's Seabrook interest is approved, there can be no doubt that the proposed transfer is, "significant" and bears a strong nexus to the likely expansion of NU's anticompetitive actions against ilG&l .
II. 'lho Comminsion may Not Abdicato ita Authority to the FEllC nad SEC to iteview the Antitrust lasues of the Nuclear 1.icenso hmsfer Applicants urge that this Commission surrender its responsibility and authority to review the antitrust issues of the proposed license transfer to other federal agencies, principally the Federal Energy llegulatory Commission ("FEllC") and the Securities and Exchange Commission (*SEC").
Response at 19 29. Applicants, however, ignore the clear directive of Section 105c of the AEA, which prescribes that when there is a significant change in the licensee's proposed activities, the Commission "shnli make a finding as to whether the activities under the license would create or maintain n situation inconsistent with the antitrust laws" specified in Section 105a of the AEA. Although the Commission may in its investigation rely upon the fa-tual record developed by another agency, the statute does not allow the Commission to delegate to another agency the Commission's responsibility to analyze the information presented and to render a finding.
Moreover, as the Court of Appeals emphasized in Alabama Power, the Commission's review of antitrust issues is far broader in scope than the traditional antitrust analysis underteken by FERC and other federal agencies:
The NltC is t. look only for
- reasonable probability" of violation. This command may result in the conditioning of licenses in anticipation of situations which would not, if lef t to fruition, in fact violate any antitrust law. Ilut Congress intended this broad inquiry to prevent infringement on the antitrust laws in the nuclear power field.
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Arent Fox Kintner Plotkin & Kahn Anthony T. Gody, Chief June 13,1991 Page 7 We als; not thnt the Joint Committee lleport did not limit the NitC's inquiry to probable contravention of the antitrust laws, but included "or the policies clearly underlying these inws.* Ilere ngnin, n traditionni antitrust enforcemenj scheme is not envisioned, and a wider one is put in pince.
692 F.2d at 1368 (emphasis addedL Although the Commission may rely upon the record developed at the FEllC, it ultimats 'nuti reach its own conclusions applying the broader legal standard pres. , bed by the AEA.
111. Applicant # Tranumirmion Proposal Will 1.onvo llG&E Without itight to Meaningful Transmiasion Accous to its largest Supplier NU's response that ilG&E can bid for transmission capacity under NU's "New llampshire Corridor Plan" (llesponse nt 26 27) is no r.olution at all to the anticompetitive problems create <l by the proposed transfer and merger. Under NU's New linmpshire Corridor Proposal, llG&E's right to continue using PSNil transmission ecpacity to purchase 12.2 mW of [awer from Pt, Lepreau in Canada would be tern,innted after October 1991, thereby depriving IIG&E of access to its largest supplier. Although NU claims that 100 mW of transmission capacity would be made available to replace this lost transmission capacity, the fact is that one half of any available capacity (200 mW) is already allocated to another utility, New England Power (*NEP'). Since NU proposes to allocate the remaining 200 mW on the basis of each utility's share of regional peak lond, llG&E's share of guaranteed transmission capacity could be as low as 1 mW. This would make it virtually impossible for llG&E to continue purchasing needed low cost power from Pt. Lepreau or elsewhere in Canada or Maine. The sine gun non behind this scheme is NU's need to cut off competition to sales of excess power, which will arise if the transfer application is approved.
Arent Fox Kintner Plotkin &Kahn 4
Anthony T. Uody, Chief June 13,1991 Page 8
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Likewise, NU's claim that ilG&8 can purchase "brokered" te m smission capacity from winning hidders is hollow. Since many other utilities likewise will be short of transmission capacity, allowing them to resell their limited capacity at even higher prices offers little benefit. Nor are sales by NEP likely to be of much help. If NEP, the only utility likeiy to receive a sizeablo entitlement of NU transmission capacity, offered its entire 200 mW entitlement for onle to other utilities based upon each utility's share of regional peak load, IIG&E's transmission rights would
!ncrease to a negligible 2 mW, an amount so small as to force llG&E to replace its Pt. Lepreau power with power from NU.
Moreover, the restrictions placed on the 200 mW NU plans to " offer" are onerous and make it unlikely that this offer will in reality provide much assistance te llG&E. For example, al.nough the offer claims to extend up to th. ty years, the restrictions imposed by NU cffectively limit the duration of its transmission " offer' to less thar ten years (e.g.,
utilities requesting service beyond the year 2000 are obligated to pay on a pro rata basis for construction of new transmission lines, whether or not the requesting utility 'vould ever need or use those new lines).
Thereafter, llG&E and other utilities in New England will be entirely at the mercy of N'O which will control virtually all transmission capacity from Canada and Maine to southern New England.
Finally, NU's contention that HG&E can share in the construction of new transmission lines is specious. NU's plan commits it to do nothing more than use their "best efforts" to support new lines and to preparc studies if a majority of NEPOOL members request such a study. This leaves too much discretion in NU's hands. What is carticularlv unsettling
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Arw. Fox Kintner Plotkin & Kalui Anthony T. Gody, Chief June 13,1991 Page 9 is that NU and NEP reserve for themselves rights to 50% of the capacity ;
on any new transmission line. While utilities which purchase longer term capacity from NU will be required to pay niuch of the cost rf any new liner (without necessarily obtaining any increase in entitlement), NU and NEP will
- roll in" their share of the costs into the total average transmission costs charged for all other transmhsion services. This will j likely cesult in utilities who have already contributed directly to the cost of the new transmission line also paying part of NU's share through higher rates on other transmission services. Moreover, as recent decisions rejecting transmission line coristruction in Maine and elsewhere in New Enginnd demonstrate, it is uncertain when (and if) additional high voltage transmission lines will be approved in region. In short, the only guaranteed transmission capacity wHeh HG&E can count on under the NU plan is approximately 1 mW of capacity- and even that is for a limited number of years.1/
Conclusion Wherefore, for the reasons stated herein and in HG&E's Comments, HG&E respectfully requests that the Commission fin.1 that ' e proposed license transfer constitutes a "significant change" in the licensee's activities ond, following formal review by the A+torney General and a .
2/ As this debate shows, the NiiCP is a complex document, drafted by NU and NEP, which provides many " escapes" and ambiguities which NU can use to avoid providing meaningful transmission access. Moreover, tne FERC AIJ recommended char ges to the NIlCP which NU is now opposing before the FERC. If nothing else, the debate over the meaning and usefulness of the NHCP demonstrates the need for this Commission to investigate (either by using the FERC record or through its own hearings) the irnpact of the NHCP in relation to the anticompetitive dangers that would be created by transfer of the Seabrook license and the merger.
o Arent Fox Kintner Plotkin & Kalin Anthony T. Gody, Chief June 13,1991 Page 10 hearing hto the antitrust issues ra:eed by the proposed transfer, deny the proposed transfer or, in the alternative, impose on the grant of the transfer the conditions stated on pages 910 of IIG&r:'s Comments.
Respectfully submitted,
~
y u ;
David J. Ba m My Steven R. A iles -
Arent, Fox, Kintner, Piotkin & Kahn 1050 Connecticut Ave., N.W.
Washington, D.C. 20036 5339 (202) 857-6089 Attorneys for the City of Ilolyoke Gas & Electric Department cc: Gordon Edison, Senior Project Manager, Projact Directorate 1-3, Division of Reactor Projects IllI, NitC Offico of Nuclear Reactor Regulation Joseph Rutherg, NRC Deputy Assistant General Counsel Thomas T, Martin, NRC Regional Administrator, Region I George L. Iverson, Director, Office of Emergency Management Noel Dudley, NRC Senior Resident inspector Ted C. Feigenbaum, President and Chief Executive Officer, New Ilampshire Yankee Division of PSNil John A. Ritscher, Esq.
NRC Document Control Desk
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