ML20085B402
| ML20085B402 | |
| Person / Time | |
|---|---|
| Site: | Seabrook  |
| Issue date: | 04/01/1991 |
| From: | Roth A, Scobbo N SPIEGEL & MCDIARMID |
| To: | Office of Nuclear Reactor Regulation |
| Shared Package | |
| ML20085B400 | List: |
| References | |
| A, NUDOCS 9107310305 | |
| Download: ML20085B402 (7) | |
Text
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U.S.
Nuclear Regulatory Commission
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20555 ATTENTION:
Chief, Policy Development and Technical Branch office of Nuclear Reactor Regulation PL:
Public Service Co. of New Hampshire; Transfer i
of ownership Interests and Transfer of Management, 3
Docket No. 50-443; Federal Register Notices of February 28 and March 6, 1991
Dear Commission:
The Massachusetts Municipal Wholesale Company ("MMWEC"),
a joint owner of Seabrook and a Massachusetts joint action electric power agency, hereby submits its comments relating to the antitrust issues raised by the proposed transfer of the license for the operation of the Seabrook Station, as described in the Commission's notices published February 28, 19f1 at 56 Fed. Reg. 8373-75 and on March 6, 1991 at 56 Fed. Rec.
9372-74, 9384.
The transfers sought in this case are associated with Northeast Utilities' ("NU") proposed acquisition of Public Service Company of New Hampshire ("PSNH").
The Nuclear Regulatory Commiesion (" Commission") has declared that it will 910731co,2e -
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I 1 4 consider the FERC proceeding concerning this proposed acquisition "to the maximum extent possible."
The Administrative Law Judge
( "ALJ ")
in the FERC proceeding has already determined that the competitive structure of the New England electric utility industry would be changed as a result of the merger and the accompanying license transfer.
Northeast Utilities Service Comoany (RE: Public Service Company of New Hampshire), 53 FERC para. 63,020 et p. 65,215 (1990).
Such a change clearly constitutes a greater than da miDimis license modification warranting further antitrust review.
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)i The Director of the Office of Nuclear Reac.or Regulation f'
(the " Director") should find that significant changes in the licensee's activities and proposed activities, inconsistent with the policies of the antitrust laws, have occurred after the Attorney General's Advice Letter on Seabrook issued December 4, 1973.
Egg South Caroline Electnjr and Gas Company, (Virgil C.
Summer Nuclear Station, Unit No. 1), 13 NRC 862, 864, n.3 (setting forth critacia for a findino of significant changes).
Conditions imposed on the merger by the FERC ALJ will not resolve adequately antitrust issues for purposes of the
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Atomic Energy Act.
FERC's standard of review requires only that the applicant show that the merger is compatible with the public interest.
Utah Power & Licht Cot (Opinion No. 318), 45 FERC para. 61,095 at p.
61,278-279 and 61, 299 (1988).
Anticompetitive acquisitions are permitted undcr this standard.
Florida Power & Licht Co.,
8 FERC para. 61,121 at 61,457 (1979).
However, the Atomic Energy Act requires the NRC to guard against an Ocquisition creating or maintaining a situation
7
-3 inconsistent with the policies of antitrust laws, irlaspective of any compelling public interest.
42 U.S.C.
92135.
The Commission must independent evaluate the anticompetitive situation and impose appropriate conditions beyond those imposed by FERC.
The NRC staff has already recognized that conditions additional to those imposed by the FERC ALJ are required by the Atomic Energy Act.
In this regard, the NRC staft conditioned the proposed transfer to prohibit North Atlantic Energy Service Corporation
("NAESCO") from marketing or brokering Seabrook power.
NU's acquisition of PSNH's share of Seabrook is
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intertwined with and would exacerbate the anticompetitive situation, already found to exist by the FERC ALJ.
NU currently controls a substantial percentage of New England's power supply and surplus generating capacity.
The merger will further extend NU's control over the surplus generating capacity in New England, because NU will gain control of, inter alia, PSNH's 35.6% share of Seabrook capacity.
Egg 53 FERC at p.
65,215.
The rest of New England is or will be capacity deficient.
In addition, the merger will expand and in some ways perfect NU's. control over transmission and therefore its ability to control or stymie other
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New England utilities' access to power supply alternatives.
Thus, there is an important nexus between the Seabrook nuclear license and the anticompetitive situation sufficient to warrant independent NRC action.
Coppare Kansas Gas and Electric Company, 1 NRC 559, 569 (1975); Consumers Power Company, 6 NRC 892, 917 (1977).
As to Seabrook specifically, the FERC ALJ 's consideration was limited to synergies of NU's takeover of PSNH.
?
-4 The FERC ALJ did not address the anti-competitive aspects of NU's management and operation of Seabrook.
This issue should be addressed in the ccmmission's review of the requested license transfers.
NU has used its market power to insulate and exculpate itself from liability associated with its acquisition of PSNH's Seabrook interest and its takeover as Managing Agent to operate Seabrook.
Unlike PSNH, which owned and operated Seabrook as part of its overall utility operations, NU proposes to sever both the ownership function and management function of Seabrook from each
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other and from its acquisition of PSNH's non-Seabrook assets.
It proposes to amend facilities license No. NPF-86 to permit:
(1) ownership of PSNH's Seabrook interest by a ubsidiary, North Atlantic Energy Corporation (NAECO) with no assets other than the former PSNH Seabrook interest; and (2) management of Seabrook through the newly created NAESCO, a subsidiary with no assets at all.
NU's anticompetitive market power is demonstrated by the July 19, 1990 Agreement which, among other things, provides for NAESCO to take over as Managing Agent to operate Seabrook.
See
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j Exhibit 1 to the application.
NU won support for the July 19, 1990 Agreement from other joint owners, United Illuminating Company ("UI") and New England Power Company ("NEP"), by entering into settlement agreements, which provide UI and NEP with special transmission benefits in exchange for UI and NEP acquiescence in NU's acquisition of PSNH.
The July 19, 1990 Agreement exculpates NAESCO and its affiliates from liability for breach of the Joint Ownership Agreement and related agreements except for their willful
.nisconduct.
The exculpatory clause purportedly would not only free NAESCO and its affiliates from harm done directly to MMWEC but also from responsibility for third party claims by others against MMWEC for any harm related to Seabrook.
MMWEC cannot insure any reckless or negligent conduct of the Managing Agent or its affiliates.
When MMWEC has objected to the exculpatory clause contained in the various agreements presented to the joint owners for approval, NU has repeatedly responded that the clause was agreed to in the July 19, 1990 Agreement.
Yet MMWEC and 7
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certain other joint owners (whose Seabrook ownership shares total approximately 30%) are not signatories to the July 19, 1990 Agreement.
Undoubtedly, the Joint Ownership Agreement is the seminal document governing Seabrook.
The July 19, 1990 Agreement is predicated on the provision in the Joint Ownership Agreement permitting a change in Managing Agent based on a vote of at least 51% of the ownership shares, which NU has been able to muster through settlements with UI and NEP.
Amendment of the Joint Ownership Agreement requires an affirmative vote of joint owners i
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owning at least 80% of the ownership shares, a percentage NU has m
been unable to achieve.
NU has neverthelese proceeded to install NAESCO as Managing Agent (including this application to the NRC).
NU is executing a plan whereby it has separated the Seabrook management function and the ownership function from each other and utilized its market power to insulate itself, those functions and its other affiliates from any liability, except liability imposed by willful misconduct.
NU does not seek to
6-execute this plan through the Joint Ownership Agreement.
- Rather, NU relies on the July 19, 1990 Agreement which was entered into by other Seabrook joint owners which settled their anti-competitive complaints in the FERC case.
MMWEC contends that the unrestricted transfer of the license, as proposed by NU, merely furthers this anticompetitive scheme.
The Commission must act to prevent NU from maintaining a situation inconsistent with the policies of the antitrust laws.
At a minimum the Commission should condition approval of the license transfer to require appropriate amendment of the Joint
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Ownership Agreement and to prohibit NAECO, NAESCO and their affiliates from freeing themselves from liability for misconduct.
Sincerely, bh
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Alan J.
Ro Scott H.
Strauss David E.
Pomper SPIEGEL & McDI ARMID 1350 New York Avenue, N.W.
Suite 1100 Washington, D.C.
20005 (202) 879-4000 a
YlicWa^ f d u% 'p. 4"M
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Nicholas J.
- Scobbo, Jr.,
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Robert Granger FERRITER, SCOBBO, SIKORA, l
CARUSO & RODOPHELE One Milk Street Boston, MA 02100 i
Attachments l
l April 1, 1991 l
l cc: Mr. Ted C.
Feigenbaum New Hampshire Yankee Seabrook Station Route 1, Lafayette Road P.O.
Box 300 Seabrook, New Hampshire 03874
t Mr. John F. Opeka Northeast Utilities Service Company P.O.
Box 270 Hartford, Connecticut 06141 Mr Thomas T. Martin Regional Administrator l
United States Nuclear Regulatory i
Commission Region I 475 Allendale Road King of Prussia, Pennsylvania 19406 Mr. George L.
Iverson, Director Office of Emergency Management State Office Park South 107 Pleasant Street Concord, New Hampshire 03301
[ )
Mr. Victor Nerses
'N/
Senior Project Manager Project Directorate I-3 Division of Reactor Projects U.S.
Nuclear Regulatory Commission Washington, D.C.
20555 Mr. Noel Dudley NRC Senior Resident Inspec*nr P.O.
Box 1149 Seabrook, New Hampshire 03874 e
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