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LMALL F p ef fs w el n,
May 4, 1984 h
Daniel Berkovitz, Esq.
Office of General Counsel Nuclear Regulatory Commission 20555 Washington, D.C.
The Dow Chemical Company v Re:
l.
Consumers Power Company
Dear Mr. Berkovitz:
losed Confirming our telephone conversation of Friday, enc that represen-are copies of various newspaper stories indicatingNRC personnel to tatives of The Dow Chemical Company met withdiscuss ma in the Company.
Midland County Circuit Court with Consumers Power liam Jentes Also enclosed is a statement given to us by WilMr. Jentes indicated that l'
of Kirkland & Ellis, counsel for Dow.
to inquiries.
this statement was read to the press in response indicat-
- tence, We particularly call your attention to the last sen h ge of ing that Dow "had cooperated with the NRC for an exc an ss in the information as a result of the current discovery proce Dow/CP suit."
NRC We understand the position of your office to be that entatives of staff personnel will not meet informally with represIf that is the position f;
ility of either Dow or Consumers Power Company.then we are concerned about the a Dow attorneys to discuss the issues and the ev of the NRC, fj j
with members of the NRC staff.
had an We look forward to hearing from you after you ve opportunity to review those materials.
Li q
Sincerel DN 1
/
{j Bg92840718 PDR
)
RICE 84-96 3]
Y Eugen a riker g y4 ED:mw I
Enciosures
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_3__________________-__;_-
k ag P
~~ + / iso f t t ~ ~
V-ea'd m food ffoort # ~f1DM l
i The documents in question refer to correspondence with
~
Dow and the NRC and relate to information Dow determined was germane to its riginal contention [ that Consumers l
withheld material
.om Dow prior to the conclusion of the 1978 contract negotiations between Dow and Consumers.
)
As you know, it's the withholding of this initial infor-a I
mation that led Dow to seek relief from the courts of its s
j
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1978 contract.
[
i These and other documents will be reviewed in normal l
discovery process as this issue proceeds through normal judicial h
- t.
i We really can't elaborate any further, the matter is currently in litigation.
Above statement given to Detroit Free Press and Booth Newspaper (lansing bureau) on p.m. of 4-26 Press calls from WNEM-TV 5, Saginaw, WDIV-4, Detroic, Booth Saginaw News, Midland Daily News & Detroit News received Newspapers, 4-27 as result of F.P. article...all told basically same as above...
y i
stressed that Dow initiated nothing, only that we hade cooperated with R
the NRC for an exchange of information as a result of the current discovery process in the Dow/CP suit.
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MDULIS, from Page 1A A13e tions referred to the cccusic.-
sico's hfice of Invts 1gatbas ususfly t wnthepossitaryw demnten (3
wSItsi vrr.medeing" by a st0!ty or. -
d contractor, Strasma said.
Strasma said the WYL= besas with faformadou pecuded by Dow..
8 based is md. mow fatormany C
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, en y GK1 pmvided informatsoo to ns and sm;9 sed mee h=ts" nhtina to the soGs Q,3,,,,b i
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V Dow is sr.Ing r====es to mdd
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paying a penalty foe cancelag its cco.
u.w.m:1v Agencygets Dow documents ing Dow owes more than $400 anDion.
WDAY10 EYEPETT sion's Off'ce of lavestigabens !a Wash.
l go,g m e m g Tinraday the doctnes ts w ers those his 0= 8'= w
- iagton.
The U.S. Nodest Regsla ory Com-If the test condiGocs werechanged, company condde"A toits orig-zission is investigaths new charges it ccuM IMcate that Cocsumers 1 sew inal coetendocs that re aers with- '
reistad to soil settle =est preWer:s at about the serleas scils proNem at the beM ma'ch! idormadcut frcm Dow" -
C==r =-s Power Co.'s EEand code-MM!and pla:t before it tom the ceu-W h suam contnctwas dA ar power projec:, the Free Press has missionaboeitfuIW8.consemershas l
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lagsted that it did not les n of the It was tMs "MthW d crtecal '
Theicyesegadencenurson charges estent of the scCs proMem actf1 mid-1 idormadoa* that led Dow to see hst learned.
that P=~s or its contractors may INB.
year. SchoeMe sam.
T1IE DiFROFf1 compactico d I.
have acted fa;ec9erty in IM7 tesths CON 54/MDtS SPOKEDtA.'s Jc.
dis has been the smst sems of sey.
sd!s compaction work at the MM!and chael Kosciik sam narsday that be eral makr cotstruction mistakes at the
- asta, "We're taDting_about1he possiNe__zzmM not respond to the ec'aunissico cdtitGBoo-dc11ar prekct, sow about c0a:324 of test condit5cas*In the scils favesept$on aitbcartdeta!!sof theaDe.
85 percent ccmplete. ne resulthg sei!,
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docs.bc11e"a!schtely"dec!cdtaat sef11eeent has causad at icest ooe stal tasdag, Jan Strasma the cEn:m*=i's p
MMwest spokesman.saidThursiay.He the stiSty knew the extent of sats safety building at the audear preject to said that the agency got docssants preNems before it was reported to the dek morein a few mceths than wzuid fran Dow Qendcal Co. and that they-et== % in I M S.
related to the allegatices last week ccitna2y be expected in 40 yests.
Ccesumers sadits Franary contnc-See WDLAND, Pags OA ter, Becitel Pow er Corp, are tvaselb s wm ginn IMs week to the cocunis-under many safety buiidags at the I-plant and resupporti:3 them with coo-creta.
The allegatfcas the Nudear Reich-tory C~-we% is invetigating !s.
volved the crisisat s:Gs wort.the com-pectisg -not the wwkthat's go6som:
now to As it.' Strassa sam.
He woeM sot say wbetter the aDe-ssdoo was about Cocsamers, Becital or anocker coctractw.
Wanstreet smalpts wy the,tock sac 4rr is endes' sering tAst the soww-g.
el diri/rs4 os Casenmers Fa-cr '
Co.'s commmon stock sin be elim*mee-i ed. !ste G.
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Dow gives NRC evidence against: Consumerp**
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h lir JUl,If:MORItl' ION wee forwarded this week ta the NRC's they do not know the'specince of doru-grreeland. enid questione ohnut alw poile the enmpany pumrected reteatms ene soile siten that faile<f previnue trate.
niente relceaad tothe NRC. A Midland pre,bleme and = hen Consumere were Mrs Stamirinesid tiw NRCeriticirni aniine Agantlated 1*rees O(nce ofInventientions in Weahington.
County Cirruit Court neder reats ute ac.
ewore of them were brought to the the procedure beceuw the ntilil y did ant Dnt ofnce unua!!y investigetce the ee.a to dneuments inndved in tk lew-NitC'e sttention se cerly se lg78.
slao reteat ereas that paaard in previous g
DETRolT-TheU S NuclearRegu.
Possibility of" deliberate er willfulwenngdoing" by a utihty or contractor,., suit only to perties immediately in.
learnel ef oolle problems when they teste.
Mrs. Stamirie sold NRC in=pectore t
5..Istory Commission is investigating.
charges that Consumere 1%=er Co. or
.volved-Cenemmers was swore of the soile Streama ssed.
A Conaumere spnkemmen this mnrn-were told by a worker that a surgert
), ite rentractori eltered the conditions of ing enid tlie utihty is not swere ef which g,enen le the administratien truilding prehleme tefore it besen constructing thw synkenmen Phi!!ip Schnchter;.
soil teste et the utility's Midland nu-eMd hinformation wee turned over t, cleer plant.enNRCtdficialneys, the NRC et that egency's request. Ile documente the NRC hen, adding the inited in 1977 hecouse of peerly. tho diesel fu'The NRC ie investigating euegations conipeny has not been notifwd of en in-,,npocted anil. Consumero did not re-esfter-related structure.she anid.
stelfmeinherewillgivede 'tionadur ;.ventigsten.
nnet the feiture te the NRC hecause the Consumere elan ecknowledged the
} ~Depection test conditlens wererniahed by DowChemicolCo thatsul " esid NftC elineneye =ented it twnu.e.
llawever.Tonillolliday alaone.d in e [,uikling io cat eefety-related end wee onile probleme in March l5,1tNil. find-s Prepared statement that Cohoumers t hrreinte not ensidered by b utdity le lage,mho osid, wlwn tha gempany weste changed in 1977,Jen Streeme, the Ingllw upcomingleneust tweenfkwi and Cannumern.
did smt know the estent as ame mettle-be en NitCennreen.ntw anide
'hindaight renfirme that evidence es.
- f
. agency's Midwest spokesmeni sold "We are merely cooperating is the snent problema et the Medland plant he-
"When they did find out by hep-lated in 1917, which II gIven ddferent
.f
- Thursday.
prece e of dancovery with other pedice- ' fare they were r-portal te the NRC in penntence,the NRCohould heveinvee. weight, would have revealed the
~
"We're talking shout the poenible lathe lawauit."Schneider nsid.
, changing ef tent eanditione* la the soile Ikw is suing Cunnumere for $ fig mil ' 1978. *,
tigated it right then," she meld. *But plant. wide seite condition in time im A citizen Intervennr in the Midlands lion and attempting to avoid pering at '. Improperly cornpacted enile are ern-they weit until someone pute lt in their have prevested the problemie which
( tenting.Stransne sold.
case chnetteed the NRC for its an. penalty for eenceling ita centractio buy eng se,eral constrxtion prol.leme et laper until the whole thing blowo up on new c The Coneuenere audit and written stearn freen the Midland ples). A the $3 95 billion twin reactor plant, theia.thavereelpreblemswithhtini. findlege are the "cleecet we've ever ingafthge *
' come te a emnking gun that Indiretad is
,., nouncement, eeying the ogency had in. countersuit by Canaumers seeke nece, new shout M percent compide.,
Mrs. Stemlrie sold the estent ef enile flechtel Power Corp., and other enn{ prutileme el.e weebrought to the etten-formation etent this ineue se long se 'then $400 million from Dow.
Consumere,its primary-rvetracter-block and white there were chansce in five years ago end should have'.aunchegg Ikw enntendsin the lawsuit.filaf lent Streams sold the NRC decided to summer, that Censumere relaely rep-struction firme are tunnehng beneath tiom olthe NRCby Coneumersin a 1977 soilotente"Mrs.Stemitiemaid.
d" eninwatigotionthen.
oudit ef the anile situation. She send the Streams said spacince of the laves-etart its investigation efter *Dow In. renented to the chemical company the e,veral buildlage et the site and will cocipeny concluded that a contractor.. tigeLion hewe not yetteen made by the entent of anile problems and entin sted pour new concrete to sopport buildings U S.TeeHag,anadeerrorein calculethat NRC,eddinghedesnat know howleng
,, formally provided information to usand completiendetenforW font pt the plant. Intervener Berbere Stamirle, oh and seethodotteetingthenoileendthat thelevestigation willeontinue.
supplied some documente' ebout the Doth Schneelder e Streams sold
..'teeting, adding that the informellen '
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NRC probinc Midland plantsoil':es -recorc clarces 8
. S'y DAVID SEDGWICK agency received documents from Dow Obemical Co.
If the allegatons are accepted as true by the NRC. diesel generstor buildleghad sunk severallnehes lle
. NewsLansing Suroau which detalleil aficgations of falsified test results.
the agency ?::: e eliscretmnary authority that said that was the first time the utility was aware the /
rarges from issulng heavy fines to waiv* ge==ttles.
sinking a flected a safet y-relaged butiding.
u Those lests allegedly took ptace before :97s.
.e CHICAGO - The Nuclear Regulatory Commission Allchael Koschik. a Consumers Power spokesman.
The records under N RC review are part of a legal fine l:!!Cs OlHee of Invest 6gstens in Washington la probing charges that construction related recerds said that officials at the Jackson based utillty have fight between Dow and Consumers. These records is handlingthc inquary, %r;? er saki.
t
- j of the kikfland Nuclear Plant mere falsined by always been forthrie,ht about the sell problems.
purportedly show that the results of soll tests were Krppler. NHCs top &Ildn est of ficial. said he per-j
- ConsomersPowerCo oroneofitssubcontractars.
"No otticial of Consumers Power either intention.-
rnisrepresented in the NitC. but it is unclear who sonally is unaware of any fraud that might have allegedly f alsified the information.
occurred Keppler also said he is not famdlar with i
The review centers on allegations that soil tests at ally er unintentionally ulthheld information at,oug 56nce 19;8. the unisty has tsern struggling to find a delallsof theprehe.
i the plant's construction site a ere intentionally falsi-soll settlement from the NRC." Koschik said.
solut ion to the so61s prot >tems involving s key budding "To the best of my knestledge there has been no fled. s top HRC of ficist said Thursday.
Ifewever. Koschik said he could not comment at the ss y h6llion nuctear piant. The company began falsificallon. flut if there was Ialsificatson. It uould Consumers is now spenefing hundreds of millions of.
dollars to prevent portions of the unfinished. twin. about possible actions taken by subcontractors work-reinforcing the urutcrpinn6ngs in !)ccember iss2 and be a matter that uould be dealt with strongly." he reactor plant itom sankingInte sort soil.
Ing on the massive constructnon project.
the comptea Iask is about one-th6rd completed.
said.
James Keppler. NRC administrator for Region III.
"At that time we were placing a lot more respenst-Kostt.tk said that Consumers reported the pro's-
- said the investigation was startediast week after the bt!Lly on the subcont ractors."he said.
lems to the NRC within 24 hours2.777778e-4 days <br />0.00667 hours <br />3.968254e-5 weeks <br />9.132e-6 months <br /> after learning the Please see CHARGES.Page A-2 o
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!on troubled Fermi
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mE A,m,_INC,.fmer assurance that the plant is being built 4
{CoWnud imm l' age 1 A ments did not detail any major prob-I, CLOSE LOOK pmpedy,"said strasma. If we,uncov.
i er construction probleins. then il could lems, he added.
t i
In t E
w. r.,he Consumers case, charg lead to delays or additonal costa "
l Agencyi..
In.as.d insp-mons at -,-m, We b,os.ev,n our work.can stand up to eli e
- n r.s-to d-._nt.
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obta.med last week from Dow Chemi-j j
plant mean that NitC personnel are
- , The William II Zimmer plant in e
y now deeply involved in both major i
.' Ohio was not so fortunate. Some $1.7 cal Co., a former partner in the Alid.
}
land project NilC officials want to 8
nuclear power construction projects in
('was.on had been spent and the plant billi Zer0S 1ns hiichigan.
97 percent complete when the know if the sods problem could have been detected in 1977 and not in 1978 Agency officials knid yesterday they l NitC, citing a litany of quality control as Consumers has maintained.
- p.mblems, halted construction in No.
On e1,1ni are,,. investigating new allegations of i
.v. nd._ t. 2.
e _..n,n$ tw.s.n,,,.d h, Con.
i m
.td.m.nl prom.ms.t Consum.
sumers, pulled out of the hlidland j ers Power Co.'s hlidland nucient pow- {
STitASM A SAID the hal't came program last July and is suing Con-o plant.The invcatigation focuses on NrObe COUld 103d Wrauvms umt consumus muy Imve nRer a puiod of heavy NitC involve-sumus for more than $G0 million in 10 neW delay!.
hr6 ' improperly in 1977 when soils menit at Zimmer, which included a
. m,worwork was tested at the
- $200.000 fine slapped on the project l
' j hecause of safety problems. The Zim-
,U,e af C 100l21flg [Of*
nile..?-
sy Michael A.Ilobinson Conemirs contends it did not
[ mer plant is now being converted to a filrfllCF* GSSilt"GilCe t
t.nd Charlie Cain Ito.J the soils problem, which still t coal-l' ired facility.
News t.nneing tlureau threatens completion of the $5.7 bil..
I.. "In any large (nuclear) construction bCIIIK IIIII Ui"OECi'I e b
Y LANSING - The federal Nuclear hem project until 1978 - after Dow ;
- project, the last few months are a time llegulata.7y Commission (NitC) is in.
j signed a contract to buy steam from.
l When problems may suface,' said tensifying inspections of Detroit Edi.
the Klidland plant.
- Strasmen. *llut we are confident that damnges. Consumers in turn seeks to mn Co.'s Fermi 11 nuclear power plant, i there is nothing of the magnitude of recover some $160 million it says Dow SOIL DENEATil some of the which is nearing completion in blon.
i Zimmer at Fermi.
owes in enncellation fees.
liuge complex sunk excessively, and
,,,hithough no quality cmcol prob.
undu m,dns Imm the NitC the utility
,. ~*We have not imposed any fines or A DOW SPOKESMAN nald the lems have been discov?ed, the in.
is workmg on a costly project to rmajor stop work orders at Fermi. Information was requested by the creased attention could lead to new re, move the defective soil and replace it
,'.I' heir record has been fairly good." "NRC. lie further stated that the infor-with concrete foundatmns.
..: lie said that.the new effort will niation is part of documents the com-delays and cost overruns at the $3.07 Meanwhile, Echson officials sa,id,
- bdg inspectors from the NilC's Chi, pany prepared for its suit against billi<m Fermi facility, NitC spokesman
{
Jan Strasma confirmed yesterday.
'"t"jj'tl
! cogo regi nnl office to the plant to lend nte o in ist iat C0"85"'I8-e, w
,t ca r
!g;"88' stance to mapectors already at the l
"We contend in our sult ihnt Con.
The agency usually steps up,ts as a result of the NItC's inspection i
onme County constniction site.
sumers withheld material about the
- s scrutiny of nuclear plants as they near program.
smi sarnphng from us at the time we
.F the finil stages of construction, said
.We have said the plant is a good
' "WE MAY IIAVE a dozen differ-entered into an agreement with them b
Strasmm. Fermi 11 is 98 percent com-safe plant "nn Edison spokesman said.'
plete and is slated to begin operating
, ent.mspectors at one time or another in 1978," said Phil Schneider.
L carly next year - 11 years later than Continued on Page d A t,or even more," he said.
Consumers' spokesman Thoma_s
- {! origin lly planned.
p Strasma said his, agency has re-Ifolliday said the company still stands
$v,newed copics of 10hson's "safeteam" by its original statement that it was
. l exit interviews of all construction unaware of the soil pmblems until Morkers leaving the site. Those docu-1978.
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ByJULIE310RRISON JACKSON-Unit 2 of the Slidland
,DailyNews staffwriter nuclear plant i.s now expected to cost mw.. $3.95 billion and should be in com-
- w e
- d ~ -.n-e - w k % # 1. g @ v mercial operation by December 1986.
6mv,3a e.
Consumers Power Co. officials said
[
Tuesday.
1 The cost is almost as much as the
~
. Selby said the cost and schedu!e revis-l company's last estimate of the total tab ton wen nece ssitated primarily by Dow for the twin-reactor nuclear project, g
Chemical Co. a decision to terminate its now more than a decade behind sched.
ule and billions of dollars over budget.
contract to buy process stean. from Unit Total cost of the projectis now estimated 1 of the plant as well as the implemen.
tation of a Construction Completion at about S5.5 billion.
Plan for the site. Approved by the feder.
Consumers also announced it was al Nuclear Regulatory Commission.the cutting its quarterly common stock i
dividend to 35 cents, down 23 cents or 44 CCP outlines a method for completing the plant an' assuring quality. The d
percent from 63 cents. The dividend cut l
P an requires a reinspection of work is expected to raise $100 million a year to fund construction of the Slidland alaady completed before new work can continue.
project.
Consumers currently has a S7 6 mil-Consumers President John D. Selby announced the revised cost and sched, lion rate hike request pending before ule for shareholders at the utility's an-the Stichigan Public Service Com-nual meeting. Consumers previously mission. If approved. S564.2 million or t
had estimated the whole project would 27.7 percent of that amount would be cost $4.43 billion and be completed by charged to electric customers when Unit 2 goes on line and would represent mid.1956.
the company's first return on its in-The company'slatest estimate did not
--w,: --
.* --e -- - -% - plant, and the utility said its fate is on vestment in the project. The rate hike includo an update about Unit I cf the request does not include costs fer Unit 1.
-~
"indctinite hold."
Thedividendreduction announcedbv The announcement raises the ecst of Consumers applies only to' common Unit 2 from the 52 billion has already stock. Dividends on preferred and pref.
invested in it and marks the fifth major erence stock wi!!be paidin fu!L Selby said the dividend reduction is revision in cost the company has made
~
since the plant was announced in the "in recognition of the uncertainty over 311dland, the need to conserve cash and late 19 tics.
Consumers spokeeman 31ichael Ko--
maintain a dividend that will in the fu-schik said the company has invested ture allow access to equity markets."
S3.2 billion in both units to date.
With the reduction in dividend.4.Can-In announcing the schedule. Selby sumers common stock now will pay said Consumers will continue building yearly dividends of $1.40 per share in-the plant because of 31ichigan's future stead of 32.52.
cner.:yneeds. '
Selbyalmoannounced Consumers'nct "Weat Consumers Powerhave theob-income increased 33 percent in the first i
ligation not only to provide the power to quarter of 1984, the result of an un-
. turn the wheels of tod tyiindustry but usua!!y cold winter.
to meet the demands of the future as well.* Selby said. "While ceonomic fore-castmg is far from an exact xtence, by even the most modest forecasts.
1 31ichigan will need.\\lidlandi powcr be-fore the end of this decade."
t Selby said rates imttally will have to increase to cover 31idland's con-4 struction costs, but he added de -
.;g.c.:
~,~
~. ? preciation tax benetits in 10 years will
~ 3,.
~ reduce the price of cicetricity trem the 2
~
clant be 25 recent.
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BY KEITH N AtJGHTON m C t.d $"U.A O i
News Staff Writer 1 11,1994
~
MIDLAND - Because of the in-crease in the cost of one reactor at 1
Plant, Con-
}VW.'+. MO.... 4s d.M.. the Midland Nuclearsumers Power Co. may have t f**-7^
M2M;2:LhW~ %' ' %g~3
- 8.. u....
~ ' increase a record rate hike request e-by almost60 percent.
At a press conference at the Howell said it will not cost as plant today, a utility executive said much to complete Unit t thanitwill h
- Consumers' 5776 million rate in-to complete the other reactor be-crease request will have to rise in d
cause they share comr.on proportion to the new cost of one of systems.
the plant's reactors.
Consumers announced Tuesday "We're keeping our options open l
thecostof justoneunitof theplant on Unit 1...(but) concentrating on will total 33.95 billion and be com.
one plant reduces the financial pleted in December of 1986. The strain," he said.
Howellsaid financingtheplantis utility's rate hike request, now be.
the utility's " major hurdle" for fore the state Public Service Com-completing it. noting that ob t aining mission. Is based on that reactor financing from Wall Street has costing $2.5 billion.
been difficult for utilities building "There will have to be a propor.
I tionate recovery in rates," said nuclear plants.
". '. ". ; 1. --- ~;
Stephen H.Howell, Consumers' ex.
"Certainly the climate is bad ecutive vice president in char;;e of now," he said.
Howell said obtaining a license the Midland plant.
Howell said the utility is read.
from federal regulators to operate justing its figures and will change the plant also will be a sigmficant i
its request to the PSC in "a couple step the utility must make to com-of months."
plete the plant.
The utility will not predict the The utility is confident it can fate of the plant's other moth.
balled reactor, but now says it is receive that !! cense by the time it
+. 9.....a.. -
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plans toloadnuclest fuelon July 1 I
butldmg a 'one unit project.
1986. Its confidence is based on an
,We are now a smgle plant with intensive, government ordered re-which Con. '
construction going toward comple-Inspection program'll cause 40 tion, said James W. Cook, a Con-sumers expects wi 4
sumers vice president, percent of the plant to be re-The utility continues to maintain worked
- Cook said*
that electricity generated from the reactor that is on hold - called 600 acres bum Unit !-willbe needed by !D94.
l Unit 1was originally designed to atCamp Grayl,ing provide steam to the Dow Chemi-By Booth News Service cal Co. of Midland. Dow pulled out of its contrnet to purchase the J
steam last summer and filed suit I
GEAYLING - Dry conditions i.
were blamed for a fire Monday againstCor.sumers.
The utility counter-sued. and is that burned 600 acres of grasslands at Camp Grayling, and state fire seeking a settlement in excess of l
cff!cials are warning that the po-5460 million. Howell did not predict tential for forest fires will remam the suits will be settled uut or court, high in Michiganuntilmid May.
"We are not talking 4with The Monday fire wasignited by a 14 Dow)," he smd. "They have not shell that was being destroyed on wanted to talk directly."
In figuring the new cost of the the mortar range.
x; 1
plant, Consumers has " set aside" f
4 the $210 million it spent to build equipment that would have sup.
r plied steam for Dow. It hopes to recover double that amount
-w-amiaman linwell5atd.
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m 54 Th3Saginaw NEC'S SATURDAY, APRit.38,1964 s
Consumers star':s'
)4 ad campaign:on TV Consuniers will pay for the cam-l BY DAVID SEDGWICK paignwithcorporate fundsandwill Nows 1.ansing Bureau not charge ratepayers, Koschtk LANSING - Consumers Power said. '.
Both ads have a nostalgic note, Co., which is (!ghting to save the showing a domestic scene from the Midland Nuclear Plant, is mount-turn of the century and an office ing a televised advertising cam-setting in the 1930s. They allude to paign emphasizing iuture Consumers Power's approaching electricaineeds.
centennial in 1986, said Thomas The company has hired the Bir-mingham-based advertising firm Eicher, the ad agency's supervi-Stone, August & Co. to run the ad sory manager who is handling the-f-
campaign. The agency developed campaign.
"Our approach is softer and less two, one-minute spots.
aggressive.They have a bit of nos-Consumers is embroiled in a de-bate with state officials over the talgia, leading into the (com-need for the $5.7-billion nuclear pany's) centennial,"he said.
The ads will run at least three plant. However, the ads do not ac-weeks, and perhaps much longer.
tually mention the power plant or "It takes awhile to change p'ublic the company's financial troubles.
attitudes,"Eicher explained.
One top state official claimed The agency developed the cam-Consumers' ad campaign is a paign after conducting an opinion waste of money.
"I am getting awfully weary of survey of Michigan, residents.
i this,"said Attorney GeneralFrank Eicher declined to disclose the sur-j Kelley, a longtime critic of the vey's results.
Consumers has hired a second utility.
f>
"It is ' imprudent, especially advertising agency to place ads in since most of this is propaganda newspapers throughout the Lower that is trying to convince people Peninsula.Those ads contain more that managementis not at fault for specific information about the alltheir problems,"he added.
state's energy needs, according to -3
. Kelley said the campaign will Koschik.
In the past, Consumers and other cost roughly 5600,000. Company of-utilities have donated funds to pro-ficials dec!!ned comment on the nuclear advertising campaigns.
campaign's cost.
Company spokesman Michael Last year, the company ear-Koschik, however, said the TV ads marked more than 5100,000 for the do not deal directly with the issue Committee for Energy Awareness, an industry group based in Wash-of theMidland plant.
"The basic point is that Consum-ington, D.C.
The firm produced ads contend-ers Power has supplied' energy to Ing that nuclear energy is essential Michigan for nearly 100 years.
We've always been able to plan for for a' guaranteed supply of electric-energy growth, and we can do soin Ity. Those ads were aired on net-the future," he said.
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June 8, 1984 Honorable Trank J. Kelley Attorney General State of Michigan Lansing, MI 48913
Dear Mr. Kelley:
support completion of one Your letter of June 1, in which you said you cannotis disappointing in its analysis of the unit of the Midland nuclear plant, 800 reasonable proposal we have made to finish that unit to provide the state megawatts of power needed for future growth.
despite your opposition, we are free to complete Midland.
As we have been saying since Harch, we need your You state that, support and the support of other appropriate state officials in order to That is not the casa.
To allow this investment obtain the financing required to complete Midland.for the st' ate's f You cite the study you received from Energy Systems Research Group (ESRG) as is not acceptable. While ve our proposal to finish one unit is key reason that are currently analyzing that study, our initial conclusion is that it biased and a totally unreliable analysis on which to base future energy policy decisions of this state.
According to its own promotional material. ESRG has long been a favorite organization for anti-nuclear groups to use to obtain favorable studies.
Among past contributors to ESRG are the Clamshell Alliance, the major in New Hampshire; Ralph Nader intervenor against the Seabrook plant anti-nuclear public interest groups and opponents of the Shoreham nuclear plant on Long Island.
In 1980, it As you vell know. ESRG is not neutral on the subject of Midland.eith into told the media that ESRG has testified against this company and for you at a fossil-fuel plant.
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t the Public Service Commission in the past and vill do so in our current ra e It has been issuing negative opinions about Detroit Edison's Fe case.
nuclear plant since at least we obtain power to replace Midland.
at the news conference you held for ESRG, I find it of special interest that, for which it supported its spokesman could not cite one nuclear plantthat over its quarter-century of operating completion.
This despite the fact jun 2 0 ES4
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". Frank J. Kalley i
l June 8, 1984 cxperience, nuclear electricity is estimated to have saved Americaniconsume from $30 to $40 billion and is now saving about $3 billion a year over the
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Furthermore, cost likely alternative power sources that would have been used.
cn ESRG report last year urged that two operating nuclear plants in New York These plants, Indian Point 2 and 3, have been successfully The ESRG study calls for New State be closed.
gsnarating electricity for more than 10 years.
The current situation in York to instead rely on oil-generated electricity.
G to make reasonable the Persian Gulf makes us wonder about the ability of ESR dscisions f or anyone's energy futura.
Let me take You have made five statements about Midland in your letter to me.he record this opportunity to answer them, hoping in the process to set ton s straight statements.
(1) The projected rate increase you cite is, as you are perhaps not aware, not Midland Unit 2, as we have explained to your associates id c11 due to Midland.
repeatedly, will increase rates 36 percent ever a three-year phase-in per o beginning in 1987. The first year Midland is operational, the averageFuel savings could residential customer's bill might rise $5.79 per month.The second and third year make that bill $1.50 lover.After that, we look. forward to a long period of stability,
$3.62 per month.
partly because we simply will not need to add generating capacity.
While we do not like adding these costs to the average customers' bill, we continue to stress that we currently sell our e16ctricity to residential customers at a price lower than 88 percent of other investor-owned utilities Even with Midland race increases, our residential rates will remain in the lower 50 percent nationwide and would not rise above Detroft in America.
it is much that increase, put in this context Edison rates. While we regret less devastating than the enormous percentage increases t'.at members of the coalition have claimed.
l (2) Your letter fails to take into account the enormous sacrifices our 1
shareholders have made and will be asked to make if we abando first under our proposal.
unit and, therefore, our shareholders will lose a $92 million return the year alone and some $700 million during the 15-year amortization period.
and their Already shareholders have seen their dividend reduced by 45 percent stock value decrease 60 percent.
As you well know, we are asking customers to pay for only five-eighths of Un Plus, our Shareholders are also being asked to pay for three-eighths.
customers vill not be charged for $210 million in equipment in that unit that 1.
would have helped provide steam for the Dow Chemical Co.
r Tou say that our electric customers were not responsible for our decision to l
We take pride in the 98-year history of meeting our build Midland Unit 1.
responsibility to our customers in providing reliable electric service atThe decision t aff3rdable prices around the clock in all seasons.
I was prudent and a good faith commitment to meet our Midland Unit responsibilities.
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- r. Frcnk J. Kolley
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June 8, 1984 We have a clear The answer is an emphatic Yes.
(3) Can we complett.We have a detailed completion plan that has been approved Midland?
Nuclear Regblatory Commission and that allows us to meet all government path.
The base design of Midland is complete; nur regulatory requirements. The training has been accomplished and we have a The Nuclear procedures are in place. enthusiastic and committed team there to do the job.can be comp Regulatory Commissien has stated it believes this plant competent, licensed.
The $3.5 billion rate base cap we have proposed for Unit 2 does several It provides a predictable situation for regulators and for Wall It places the risk for bringing the plant in at its propos things.
Street.
billion.. We project that shareholders will have to sacrifice more than $6 the company.
million in this portion of our compromise proposal.
is We have consistently assured your representatives that the Abandonment will do no one any good.This is the largest on firm.
remain in effect.
will be lost immediately.The plant pumped $175 million in salaries into the Sag in area in 1983 and Consumers Power Company paid $12 million in property taxes Michigan.
Midland County.
The badly needed power the Midland plant could have provided would hav replaced -- if we can get it -- by expensive purchases of replacement power.
Six of our coal units are more than 30 We have an aging generation system.Four other coal units are more than 25 years old We have only ong coal unit less than years old.
these units are at least 20' years old.More than three-fourths of the company') ge five years old.A college student today would find that all but three of our units At approximately 800.000 kilowatts, pre-1964.
were built before his or her birth.the same amount of electricity as the Midland Unit 2 will produce about company's seven oldest units.
J Without Midland Unit 2. I fear for Michigan's economic future.
1 But this is a (4) We share your concern for industrial rates in Michigan.In this state the rates a regulatory, not a utility problem. favor of residential customers, to the detrim We have long opposed this practica.
If you sincerely fear for Michigan's industrial future, we ask you to join us dify in requesting that the state's Public Service Commission take action to mo this rate skewing.
You say our industrial rates are 20 percent higher than the average for the The Great Lakes region and 10 percent higher than the national Electric Inseitute's Typical Bill Survey, lower than rates c Edison and Ohio Edison.
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Mr. Frcnk J. Kolicy June 8, 1984 tochargerateshigherthanDetroiE Edison In our proposal, we offered notWe currently are the low-priced major electric supplier until at least 1990.
in the state, selling our power at rates 10 percent less than Detroit Edison.
Some Michigan utilities charge rates almost double those charged by Consumers We anticipate remaining the low cost generator of power Power Company.
through the rest of this century.
You mention in your statement that there will be a 60 percent rate increase Might I remind you again, che' figure is 36 percent.
because of our proposal.
t Our neighboring industrial states face even higher rate hikes, as Congress zeroes in on the "scid rain" situation and corrective legislation is passed.
We have made a wise decision by not putting all our power dependency into coal.
despite the high capital costs of constructing Midland, We are convinced that, the lower operating costs over the lifetime of the plant will save our This is the savings to be industrial and other customers billions of dollars.
realized by completing Midland as opposed to stopping the project now and using other sources of generation -- oil, coal, gas and purchasing any available power until, and if, financial considerations would permit the company to add an additional generating plant sometime in the future.
Our industrial demand was up 13.9 percent in the first quarter'of 1984, compared to 1983. The potential impact a shortage of electricity would have on industry, and Michigan employment, is devastating (5) Your statement is misleading since yetroit Edison and Consumers Power, Company are not one company.
Without 2 increases our own generating capacity'by 12h percent.
Midland Unit From that base-load unit, we foresee possible electric shortages by 1990.
1971 to 1983, by the way, an average of 26 percent of Consumers Power's capacity was not available at the time of annual peak demand due to planned This resulted in my company not maintenance, forced outages and deratings.
The having enough capacity on-line to meet its peak demand in 11 of 13 years.
shortfall was made up through purchases of power from.other utilities.
Your use of figures from 1973-1983,$s-an example of using statistics to make That does show an annual compound growth rate of
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the point you vant to make.
in electric usage, because sales were high in 1973, the last year 0.15 percent prior to the enormous effects on all purchasing decisions caused by the Arab oil embargo. Look at the peak demand growth rate from 1974-1983, a 10-year period.
It is 1.7 percent per year, more than 10 times the growth rate you cite in your letter.
We simply cannot accept your projections that Michigan will stagnate and we will not need additional electric capacity. We already are seeing strong Our central lo, cation, providing manufacturers signs of a resurging economy.
immediate access to half of America's retail' sales, plus the availability here of skilled workers, a diversified manuf acturing.cipability an2 an abundant freshwater supply make our advantages as a state convincing.
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l 4r. Frcnk J. Kellcy
.June 8, 1984 1
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You say that you will continue to give serious and careful attention to any We are counting on you to do just Midland proposal this company presents.The " survival plan" your coalition has pre is simply a road map to bankruptef and, therefore, is that.
Midland's abandonment, unacceptable.
I We have presented what we are confident is a sensible prr>pos for the Midland Unit sacrifices of more than $1 billion - and we continue to believe that, 2
best interests of Michigan, your coalition should address ways to possibly modify our proposal so that it is acceptable.
Tours very.:ruly, e
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J. D. Selby
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