ML20091C359
| ML20091C359 | |
| Person / Time | |
|---|---|
| Site: | Seabrook  |
| Issue date: | 04/01/1992 |
| From: | Bardin D, Miles S ARENT, FOX, KINTNER, PLOTKIN & KAHN, HOLYOKE, MA |
| To: | Murley T Office of Nuclear Reactor Regulation |
| References | |
| NUDOCS 9204030197 | |
| Download: ML20091C359 (7) | |
Text
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Arent Fox Kintner Plotkin & Kahn I-i April 1, lW2 i
Duki J. Hardin _
YlA IIAND DJ:1.IVERY Mrt/857 (O89 Thomas E. hiurley, Director Office of Nuclear Reactor Regulation U.S. Nuclear Regulatory Conunission Washington, D.C. 20$$$
j Re: Public Service Company of New llampshire, Docket No.5040A CITY OF llOlEOKE GAS & ELECTRIC DEPARThlENT REPIX TO CL&P/PSNil RESPONSE RELATING TO FINDING OF NO SIGNIFICANT CllWiiES REGARDING-ANTITRt'ST ISSUES
Dear hir. hiurley:
The City of Ilolyoke Gas & Electric Department ("IlG&E") hereby replies to the Response (" Response") tiled with the Commhslon by Connecticut Light -
& Power Company ("CLM') and Public Serdee Company of New llampshire
("PSNil") (collectively, " Applicants") on hfarch 27, lW2. Applicants' Response, and this Reply, relate to the Director % finding that no %ignificant changes" regarding antitrust bsues would result from the proposed transfer to two subsidiaries wholly-i owned oy Northeast Utilities ("NU") of PSNil's ownership interest in, and operating responsibility for, the Seabrook Nuclear Power Station, Unit 1 ('Seabrook").
-t 1.
The Commission % Antitrust Standant and Deferral in the FERC Applicants argue that "the antitrust inquiry provided for in Section 105(c) 1050 Connecticut Annue,hT I
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1 Tew. 202/as t.6000 apply" unless there is a significant change in the licensee's activities since the prior Cable:ARr0X -
T N s 672 review. Response at 34 The relevant hmmn test for a *significant change" is Facmimbe:202/837 6395 whether the changes "have antitrust implications that would be likely to warrant 7475 Wisconsin Annue l
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Thomas E. Murley, Director April 1,1992 Page 2 Conuulssion remedy.'T Applying thh test, the Applicants conclude that the existence of the FERC conditions renders any Conunission semedy unnecessaiy, and hence there 14 no "significant change." The flaw in this reacning is that the
- Commission in Dulldluw whether the FERC eonditions are adequate to sathly the AEA and therefore whether a Commission remedy would truly be unnecessary --
without examining those conditions and the anticompetitive situation that they are intended to mitigate in the context of the AEA standard) 1hus,it is the Applicants who engage in " circular reasoning" by arguing that no antitrust review is requited because there is no antitrust problem, but that the Commission should not examine-whether there really is no antitrust problem because no antitrust review is required.
Applicants assert that "it is not at all clear" that there is a
" material" difference between the FERC's and the Commission's statutory standatds because the FERC applied the standards enunciated in Section 7 of the Clayton Act." Response at 5 n.9. Although the FERC noted its duty to " consider the policies underlying the antitrust laws." neither of the two FERC orders approving the NU/PSNil merger ever discussed or even cited the Clayton Act) Moreover, the r South Carolintlilte. & das Co. and Sou_th Carohna P@, Serv Auth. (Virgil C.
Summer Nuclear Station. Unit No. IK 13 N.R.C. 862,872 (1981) (emphasis omitted);
P i in fact,it is not even clear what the final FERC conditions will be. On March 30,1992, the FERC issued an " Order Granting Rehearing for Purpose of Further Consideration" in the NU/PSNil merger case. Docket No. EC9010 006, raising the possibility that the FERC will further modify its conditions in response to several petitions'for reconsideration that have been filed in that proceeding.
1 -In fact, the only references to the Clayton Act appear in Commissioner Trabandt's dissent to Opinion 3M. in which he explains that FERC " adjudications under the Federal Power Act differ from those under the Sherman and Clayton Acts...' Dissent, slip op. at 17.
Thomas E. Mulley, Director April 1,199
Page 3 J
FERC emphasized that its decision hioked beyond application of those laws toward I
different goals:
...lTjhc competition inues addressed by the antitrust laws are only one j
facet of the l Federal Power Act's ("FPA*)) *public interest" standard.
The "public interest" under the FPA is not limited to the goals of the l
antitrust laws and instead is directed piimarily to the broader goal of i
- the orderly production of plentiful supplies of electric energy.. at just and teasonable rates?
Opinion 364 at 19 (citing NA ACP v. FPC. 425 U.S. 662,670 (1976)). Since it is i
unclear to what extent, if any, FERC applied the Clayton Act standatds, the l
Commlulon cannot nuume that the Clayton Act standards are satistled. Yet, the Notlee falls to mention either the Clayton Act or the Department of Justice (*DOJ")_
l Mergei Guidelines, a fact that Applicants do not dispute.
Applicants also contend that antitrust review should be denied because r
"five agencies have reviewed the antitrust implication 6 of the me.scr...." Resiunse at f.. De fact is that only one agency the FERC - has publicly examined the l
anticompetitive implications of the merger. The SEC and the NRC Director (in the Notice) both defer to the FERC analysis and imposition of conditions. _ Neither j
agency examined whether those conditions are adequate. The DOJ and Federal Trade Commission ("ITC") have never conducted a public review of the merger. To support its proposition that the DOJ and ITC have sanctioned the mesger, i
Applicants refer twice to their own liart Scott.Rodino ("lI.S.R") tiling, but that tiling is a notice filing only; lack of action by the DOJ and ITC does not constitute l
n approval of the merger. Clayton Act # 7A(i)(1),15 U.S.C, # 18a(l)(1). Applicants' l
[
reasoning is (onec again) circular, since to argue that the DOJ should not conduct a public review because the DOJ has not " determined that the meiger... would
Thomas E. Murley, Director April 1,1992 Page 4 present any competitive problem in the region" (llesponse at 6) is to assume the outcome of that resiew before DOJ conducts it.
Finally Applicants argue that there is no nexus between the transfer of the PSNil ownership and operating interests in Scabrook and the anticompetitive injury that would be suffered by 110&l1 and others.
IIG&li has previously demonstrated the nexus between NU's obtaining control over Seabrook's generation and transmission facilitics and the matket power that NU would obtain over generation and transniiulon in New England. IIG&li June 13.1991 Comments at 2 6.1lG&E will not repeat those arguments here, and indeed, need not, because Applicants present a compelling picture of the nexus betwren NU's acquisition of PSNil, whose principal asset is Seabrook (indeed. Applicants' have previously described the Seabrook license transfer as an " integral part" of the merger), and the impacts on llGkE at pages 7 M & nn.1314 ofits Response.
2.
N U's Claimed $527 Million in Susinn Inun Ellicient Nuclear Operations Applicants do not dispute that the Comtniwion is in a better position to judge NU's claims of managerial " excellence" in operating nuclear plants and therefore in a better position to judge the likelihood of NU achieving the hundreds of millions of dollars of benefits NU alleges. Sn: IlG&E Request for Reevaluation at 7 8.
However. Applicants imply that the issue is not relevant because (they contend) the FERC did not offset benetits of tne merger against anticompetitive harm. The FERC concluded, however, that the 'ltlhe metger\\ benefits. add the miligdling effect of the conditions adopted herein. Hjake the mergrLeonsistent with m
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Thomas E. Murley, Director April 1,1992 Page 5 s
thy pablic intetnt...d Since the FERC conditions only " mitigate"f - rather than climinate - the anticompetitive harm of the merger, the FERC could only have found the merger to be " consistent with the public interest" if the FERC concluded that the remaining anticompetitive impact was outweighed by the benefits claimed by NU. This Commission should, therefore, apply its resources and experience to determine if the. x.imed benelits f rom NU's 'nnagerial execilence" in nuclear operations are suppodable.
3.
The NAESCO Exeulpatory Clause and,ae Separation of Seahn>ok Operation In>m Ownership i
Applicants assert that the prior culpatory clause applicable to PSNil was "less favorable" than the one adopted on July '19,1990 for NU's attiliate North Atlantic Energy Service Co. ("NAESCO").F There are two critical differences, however. First, PSNH owned assets (principally Seabroola that could be placed at risk if it incurred liaHlity through its own malfeasance, NAESCO owns no assets.
thereby leaving to others the responsibility to pay for any darnags caused. Second, 5 Opinion 364 at 45 (emphasis added). Moreover, Opinion 364 reveals that the FERC considered it its responsibility to weigh the total benefits against the total anticompetitive costs of the merger: "It is sufficient if the ' probable merger benetits. add up to substantially more than the costs of the merges.'" hl. at 16 (eiting Utah Power & Light Co.,47 FERC S 61,209 at 61,750).
F " Mitigate" is detined as "1. to cause. to become more gentle or less hostile:
Mollify 2, to make less severe, violent, cruel, intense, painful. < disasters can be, if not prevented, at least mitigated...>." Webster's Third New International Dictionary.
F Applicants incorrectly claim that IIG&E did not include MMWEC's arguments in HG&E's initial comments or reply comments. Reply at 8 n.16. HG&E stated in its April 1,1991 Comments (at I n.1) that "HG&E hereby supports and incorporates herein the Comments being filed with the Commission today by
[MMWECj, of which HG&E is a member"
~. __ -
. Themis E. Mulley, Director April 1,1992 Page 6 the' NAESCO exculpatory clause, unlike PSNil's, purports to exculpate not only NAESCO, but all of its artiliates, including NU and North Atlantie Energy Corporation ("NAEC"), the would-be owner of Seabrook.
Applicants contend that " financial realities" of the merger dictate that ownership of Seabrook be transferrca to an (ntity other than PSNil (k, NAEC),
Assuming this Saic avertion were true (and assuming it were relevant a the Commission's rmiew), it provides no justification for NU's proposal to segregate Seabrook eperatians into another, i)uct less subsidiaty (k. NAESCO).
If t
Applicants are implying that the alleged " benefits" of the merger should allow NU to escape scrutiny by the Commission of NU's exercise ofinarket power through the separation of operation and ownership, then the Commission should at least investigate whether the benefits alleged by NU of owning and operating Seabrook will likely accrue, 4.
IIG&E's Request for Clarifica:mn Applicants do not respond to llG&E's request for clarification.1-lG&E renews its request that the Director clarify that the Commission's approval of the-license transfer is conditioned upon NU and PSNil complying with all current and future conditions that may be imposed as a result of agency reconsideration, rennnd from judicial review, or otherwise in connection with the propotat merger.
Conclusio i WilEREFORE, for the reasons stated above, HG&E requests that the Director reevaluate the Notice's linding of no significant antitrust changes and, after
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. Domas E. Murley, Director
- April 1,1992 Page 7 reevaluation, reverse the finding and initiate a formal antitrust review of the proposed transfers of PSNil's ownership aad operating lic.nses.
Respectfully submitted, ndA &
at David J. Bardin Eugene J. Meigher Steven R. Miles Arent Fox Kintner Plotkin & Kahn 1050 Connecticut Ave., N.W.
Washington, D.C, 20036 5339 (202) 857 4089 Attorneys for the City of Holyoke Gas & Electric Department ee: Anthony T. Gody, Chief, Policy Development and Technical Support Dranch, NRC Office of Nuclear Reactor Regulation Gordon Edison, Senior Project Manager, Project Directorate 1-3 Division of Reactor Projects Ull, NRC Ortiec of Nuclear Rcactor Regulation Joseph Rutberg, Esq., NRC Deputy Assistant General Counsel Thomas T. Martin, NRC Regional Administrator, Region i Noel Dudley NRC Senior Resident Inspector George L Iverson, Director, Office of Emergency Management NRC Document Control Desk Ted C. Feigenbaum, President and Chief Executive Officer, New Hampshire Yankee Division of PSNH John A. Ritscher, Erl.
Douglas G. Green, Esq., Newman & Holtzinger, P.C.
Alan J. Roth, Esq., Spiegel & McDiarmid
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