ML20116B206
| ML20116B206 | |
| Person / Time | |
|---|---|
| Site: | Seabrook  |
| Issue date: | 07/09/1991 |
| From: | Green D CONNECTICUT LIGHT & POWER CO. (SUBS. OF NORTHEAST, NEWMAN & HOLTZINGER, PUBLIC SERVICE CO. OF NEW HAMPSHIRE |
| To: | Office of Nuclear Reactor Regulation |
| Shared Package | |
| ML20116B076 | List: |
| References | |
| FOIA-96-224 NUDOCS 9607290144 | |
| Download: ML20116B206 (13) | |
Text
l NEWMAN & HOLTZINGER, P.C.
I6IS L ST REET. N.W.
I wAS miNGTON. D.C. 20 0 3 6 202 95S+6600 July 9, 1991 U.S. Nuclear Regulatory Commission Washington, D.C.
20555 Attn:
Chief, Policy Development and Technical Support Branch Office of Nuclear Reactor Regulation Public Service Company oh New Hampshire Re:
Docket No. 50-443
Dear Commission:
)
The Connecticut Light & Power Company ("CL&P") and i
i Public Service Company of New Hampshire ("PSNH") (collectively
" Applicants") hereby respond to the reply filed in this i
proceeding by the City of Holyoke Gas & Electric Department 1
("HG&E") on June 13, 1991 ("HG&E Reply").
HG&E's Reply argues --
or, more precisely, reargues from its April 1, 1991 comments --
)
essentially two points:
first, that the Commission should institute its own antitrust proceedings to relitigate the same competitive allegations that HG&E has already argued, without 1
success, at both the Federal Energy Regulatory Commission
("FERC") and the Securities and Exchange Commission ("SEC"), and second, that Applicants' New Hampshire Corridor Plan, which, as found by the FERC Administrative Law Judge ("ALJ"),
3 11 /
9607290144 960716
/
('
PDR FOIA MCINTIR96-224 PDR C; ( ( g
i NEWN AN & HoLTz NGER, F.C.
U.S. Nuclear Regulatory Commission July 9, 1991 Page 2
" unquestionably produces greater potential for wheeling power l
from Canada and Maine to southern New England than ever existed before," 1/ is actually part of a " scheme" to cut off j
competition from Canada and Maine.
These arguments were addressed in Applicants' Reply Comments filed on April 22, 1991 (" Applicants' Reply"), where they were shown to be entirely without merit.
Applicants respond below to HG&E's latest reiteration of those allegations.
A few preliminary words are in order.
From the outset, HG&E has been adamantly opposed to this merger -- not because it will decrease competition, but because it will increase it.
HG&E pursues here contentions considered and rejected by the FERC, the antitrust enforcement agencies, and the SEC despite knowing, as the FERC recently stressed in finding that NU's transmission rates to HG&E were only half as high as could be charged as just and reasonable, 2/ that its contentions are groundless.
As its latest reply makes crystal clear, HG&E argues that those groundless, twice-rejected claims warrant redundant NRC proceedings with the full knowledge that such proceedings would delay and imperil the implementation of the Bankruptcy Court-approved Plan of Reorganization and would adversely affect the 1/
Northeast Utilities Service Co.,
53 FERC 1 63,020, at 65,227 l
(1990).
2/
Northeast Utilities Service Co., 52 FERC 1 61,336, at 62,317 (1990).
i NrwMAN Ex HoLTzmorn, P.C.
U.S. Nuclear Regulatory Commissica July 9, 1991 Page 3 interests of an entire region.
HG&E seeks to use the threat of l
l such delay to coerce concessions to which the federal agencies with expertise in such matters have held it has no creditable l
claim.
The NRC should reject these tactics.
I.
HG&E's Reply Provides No Justification For Instituting.
j
'Section 105 Proceedings In This case HG&E's reply makes clear that the sole basis for its claim that there is a nexus between activities under the Seabrook license and its alleged anticompetitive effects is that the mere existence of Seabrook as part of Applicants' generation mix transforms all of HG&E's bulk power and transmission claims into section 105(c) nuclear licensing issues. 2/
As the Atomic Licensing and Appeal Board observed in addressing a similar assertion, however, this argument " reads out the nexus requirement of section 105(c)(5) in its entirety."
Florida Power
& Light Co.,
(St. Lucie Plant, Unit No. 2), ALAB-665, 15 NRC 22, 34 (1982).
Indeed, both the Commission and the Appeal Board have 3/
HG&E's Reply raises only two specific factual allegations, neither of which bears any relationship to Seabrook.
- First, HG&E complains that the merger will'" reduce the number of competitors selling excess generation capacity," and second, HG&E alleges that the merged company will have. control over j
transmission lines needed to import power from outside New England.
HG&E Reply at 3-4.
These same allegations were previously shown by Applicants to be meritless (Applicants' Reply at 19-27) and, in any event, they are being addressed exhaustively by the FERC, the agency having direct expertise l
over such matters.
NewxAs & Hot.Tz1Nora, P.C.
U.S. Nuclear Regulatory Commission July 9, 1991 Page 4 repeatedly and consistently rejected this argument in the past. 1/
Moreover, HG&E attempts to sidestep Applicants' nexus arguments entirely by creating and attacking a straw man argument of its own.
HG&E argues, citing Alabama Power, 5/ that Applicants were wrong to contend that "past and future conduct in bulk power markets is irrelevant to the Commission's review under section 105(c)
HG&E Reply at 2.
Applicants, however, A/
Egg Applicants' Reply Comments at 15-18.
In addition, the Appeal Board's decision in St. Lucie 2 is particularly instructive on this point.
There, to respond to a contention similar to HG&E's, the Appeal Board reviewed all of the Commission's relevant case law on the nexus requirement and concluded that:
As we construe (the nexus requirement), and as we have construed it throughout, the licensed activities must play some active role in creating or maintaining the anticompetitive situation.
Put another way, the nuclear power plant must be an actor, an influence, on the anticompetitive scene.
Wherever we have found the nexus requirement met, that fundamental linkage has existed.
Our focus here
. must therefore be on what way P&W claims operation of St. Lucie 2 will harm it competitively, not whether access to FPL's grid is an appropriate form of relief to remedy-a Sherman Act, Section 2, i
violation.
]-
15 NRC at 32-33 (emphasis added).
5/
Alabama Power Co.
v.
NRC, 692 F.2d 1362 (11th Cir. 1982),
cert, denied, 464 U.S. 816 (1983).
1 i
i l
i NEwns & HOLTZ3NOER, P.C.
l U.S. Nuclear Regulatory Commission July 9, 1991 Page 5 have made no such claim.
Applicants' point is not that bulk l
power markets are1 irrelevant, but that the Commission's review j
cannot be premised on generalized bulk power issues alone where i
there is no direct relationship to the nuclear facility.
- Indeed, in Alabama Power, the court stated that the most important condition. ordered by the Appeal Board was that the Alabama Electric Cooperative ("AEC") be granted an ownership share in the l
Farley nuclear plants. 1/
692 F.2d at 1366-67.
Nothing in i
Alabama Power, or any other relevant case law for that matter, even comes close to suggesting that section 105 proceedings are
)
appropriate where access to the subject nuclear plant is not even an issue in the case. 2/
HG&E also argues that section 105(c)(5) requires that f
.the Commission brush aside the fact that the.FERC and the SEC are 1/
In addition, the Appeal Board explained in its decision in Alabama Power, affirmed by the court of appeals, that the transmission access it ordered was necessary for AEC "to make effective use of its share of the output from Farley."
Alabama Power Co.,
(Joseph M. Farley Nuclear Plant, Units 1 and 2), ALAB-646, 13 NRC 1027, 1108 (1981), aff'd, 692 F.2d 1362 (1982), cert. denied, 464 U.S. 816 (1983).
2/
HG&E's suggestion that they did not voluntarily withdraw Dr.
Reynolds as a live witness is inaccurate.
HG&E Reply at 4, n.5.
Counsel sponsoring Dr. Reynolds told Judge Nelson
"[I]t's critical and vital to us that Dr. Reynolds
.. be heard."
Tr. 5362-63.
Judge Nelson stated:
"My ruling is that we're going to hear those people" [i.e., Dr. Hay and Dr. Reynolds].
FERC Tr. 5579.
After Dr. Hay testified, however, HG&E and Dr. Reynolds' other sponsors decided not to let him appear:
"Dr. Reynolds is not coming.
l
.FERC Tr. 6092.
l Newx As & Hoi.Tz1NGER; P.C.
l U.S. Nuclear Regulatory Commission July 9,.1991 Page 6 l
comprehensively reviewing the competitive effects of this same transaction, and make separate and independent competitive findings of its own.
This is simply wrong.
The statutory requirement HG&E relies upon is triggered only after the Commission has made a "significant changes" finding and received an advice letter from the Attorney General.
Since the Commission l
is only now considering the threshold question of'whether the license transfer causes a significant change, this argument is inapplicable.
Moreover, as the commission apparently concluded in the Utah Power & Light /PacifiCorp merger, based upon its-Staff's recommendations, changes are not'"significant" where a sister agency is addressing the competitive situation in a manner calculated to assure that the merged company's activities post-merger will not detrimentally affect the competitive process.
Applicants' Reply at 19.
This same analysis should lead to the same result here. H/
Thus, HG&E's Reply presents no. legal, factual, or logical explanation why this Commission should institute H/
HG&E also argues that a separate antitrust review is mandated because section 105 requires a "far broader" review of antitrust issues than is undertaken by FERC.
As Applicants explained in their reply comments, however, the l
FERC applies the same Clayton Act " reasonable probability" standard in reviewing mergers as does the NRC under section 105(c).
Applicants' Reply at 40 n.31.
Indeed, if HG&E l
truly believed its own argument, one wonders why it devoted j
so much effort to litigating competitive issues before FERC whose jurisdiction, it claims, is so narrow.
NEWMAN & HotTzz8orn, P.C.
U.S.
Nuclear Regulatory Commission July 9, 1991 Page 7 j
duplicative antitrust proceedings in this case.
It merely repeats the same allegations that have been twice rejected by other agencies, and that in any event, bear no relationship whatsoever to the Seabrook license.
Apparently, HG&E reasoned that, having lost its case before both the FERC ALJ and the SEC, it had nothing to lose by refiling its FERC case with the Commission and seeking anothe,r bite at the apple.
In the context of this critical bankruptcy reorganization, such self-serving, wasteful, and time-consuming tactics are nothing short of irresponsible.
II.
The Corridor Plan Guarantees HG&E A Fair Share of Existing Transmission Capacity To Maine And Canada, And The Ability To Expand That Share In The Future HG&E's principal complaint is that Applicants have failed to provide it with " vested rights" in PSNH's transmission system to continue to purchase 12 MW of power from Pt. Lepreau, in Canada, after its existing contract expires in 1994.
It scoffs at NU's transmission commitments -- which require, among other things, that the merged NU/PSNH offer-up for sale, subject to enforcement by FERC, every megawatt of transmission capacity that is not required to serve its native load customers, and which establish a 452 MW transmission corridor extending through PSNH's system down to southern New England -- because they fail to " guarantee" that this specific 12 MW of transmission service will be available to HG&E after 1994 on the terms it seeks.
l
i
- NrwxAN & HOLT 21NGEH. P.C.
U.S. Nuclear Regulatory Commission l
July 9, 1991 Page 8 l
As Applicants demonstrated in their reply comments, j
however, the real reason !!G&E is unhappy with these commitments is that it does.not want to compete with other utilities to obtain transmission rights over a capacity limited transmission i
corridor.
Applicants' Reply at 24-27.
As the record in the FERC merger proceeding amply demonstrates, the transmission corridor I
from Maine to southern New England is becoming constrained.
NU's l
l 452 MW commitment to make capacity available to others involves all but.the merged company's load ratio share of the uncommitted transmission capacity on this corridor.
Because the New Hampshire Corridor Plan will provide more New England utilities L
than ever before with access to PSNH's transmission system, HG&E l
=will now have to' compete for the available capacity with a l
greater number-of potential purchasers.
Thus, according to HG&E, l
l if every utility-in the region were to request New-Hampshire l
l Corridor' transmission service, its load-ratio allocation could be-l as small as 1 MW. 1/
The gravamen of HG&E's argument is that i
because it is currently using more than its. load-based share of the available transmission capacity on this corridor under a soon-to-expire contract, it has some kind of vested preference to this capacity for the long-term that permits it to bump other New 2/
Even if NU were to increase its offering to include every l
megawatt of available capacity across New Hampshire --
j leaving nothing for PSNH's own native load customers --
- i HG&E's share would not rise above 2 MW if every utility in i
the region were to request this' service.
- - - \\
=
1 Newn4x & Hot.Tzmora. EC.
U.S. Nuclear Regulatory Commission July 9, 1991 Page 9 i
]
England utilities that may wish to use the corridor in the l
future.
HG&E made the same overreaching preference argument at the FERC, which has rejected it as groundless.
j In any event, were the Corridor oversubscribed, HG&E would have the option either to purchase transmission capacity-from other New Hampshire Corridor Plan participants or pay a 4
share of'the cost'of new transmission construction. lA/
j Apparently, HG&E is simply unwilling to accept either of'these 2
options.
In fact, from HG&E's participation in the FERC case, it is perfectly obvious that HG&E is only interested in getting i
j subsidized transmission and will not even consider options that require it to pay the true economic cost of transmission service.
)
Moreover, HG&E's challenge to the rates and terms of
]
the New Hampshire Corridor Plan raise issues that are peculiarly within FERC's jurisdiction and area of expertise.
All of the l
l 1D/
Because the corridor is becoming constrained, the New j
Hampshire Corridor Plan includes a commitment by NU and the New England Power Company ("NEP") to build new transmission facilities to expand the corridor if needed in order to meet i
regional demand.
The decision to seek expansion is reposed to the rest of NEPOOL, with NU and NEP having no vote.
While HG&E characterizes this commitment as " specious,"
claiming that its terms are too vague and that it provides i
NU and NEP with too much discretion, these arguments were i
flatly rejected by the FERC ALJ, who found that the New i
Hampshire Corridor Plan provided a reasonable and appropriate mechanism for expansion of the Corridor.
53 FERC at 65,229.
Further, as the FERC ALJ pointed out, any attempt by NU to abuse its discretion under this commitment, or any of its other transmission commitments, would be subject to FERC enforcement procedures.
Id.
l l
Nrws4N & Hoz.TzrNorn, R C.
U.S. Nuclear Regulatory Commission July 9, 1991 1
Page 10 provisions of the New Hampshire Corridor Plan were litigated thoroughly at the FERC -- the agency with direct authority to l
determine whether the rates, terms, and conditions of transmission service are just and reasonable -- which will ultimately rule upon the reasonableness of these provisions.
Thus, there is plainly no merit in suggesting that this l
Commission should reassess the terms and conditions of that l
service for itself, l
Finally, HG&E's assertion that it will be forced to buy power from NU unless it is able to retain its current level of 1
transmission access over PSNH's system to Pt. Lepreau is patently l
ridiculous in the climate that exists in New England.
The severe economic recession has left most of the utilities in the region 1
l with a substantial surplus for the coming years.
There are currently so many potential alternative power suppliers in the region that when another New England utility, UNITIL, recently issued a request for proposals seeking just 75 MW of long-term power, it received 80 offers from 54 separate bidders totaling over 3000 MW. 11/
Moreover, NU has committed at the FERC to provide any transmission dependent utility located within its service territory with comprehensive transmission service, provided that that utility is willing to commit to pay a load ratio share of 11/
Northeast Power Report, June 14, 1991, 1, col. 2.
l
~
NEWM AN & IIOLTZWOER, P.C.
U.S. Nuclear Regulatory Commission July 9, 1991 Page 11 system transmission costs on an equivalent basis with NU's retail customers.
These beneficial commitments allow such utilities to obtain power supply on a level-playing field.
Thus far, the Connecticut Municipal Electric Energy Cooperative ("CMEEC") has signed up for this service, and NU is very near agreement with HG&E's neighbor, the town of Chicopee.
In contrast, HG&E is s
paying far less than a load ratio share for its current transmission, and it appears to NU that HG&E has no interest in taking advantage of NU's comprehensive offering if it would require HG&E to pay its fair share of transmission costs.
In sum, NU's merger-related transmission commitmento are liberal and fair to HG&E and similarly situated utilities.
The fact that HG&E would like NU's FERC-regulated transmission tariffs to go beyond this and directly subsidize HG&E, and that the FERC has so far deemed this without merit, hardly creates a need for redundant proceedings before the Nuclear Regulatory Commission.
4
NewxAx & Hon.Tzmorn, P.C.
U.S. Nuclear Regulatory Commission July 9, 1991 Page 12 Conclusion Wherefore, Applicants respectfully request that the
' Commission reject HG&E's contentions and approve the requested license amendment as expeditiously as possible.
pektfull
- ubmitted,
^'\\ hCbkva Odt Dbuglas GC Green-Richard L. Roberts NERMAN & HOLTZINGER, P.C.
'1615 L Street, N.W.
Suite 1000 Washington, D.C.
20036 (202) 955-6600 C. Duane Blinn Gerald Garfield Day, Berry & Howard CityPlace Hartford, Connecticut 06103 (203) 275-0100 Attorneys for THE CONNECTICUT LIGHT AND POWER COMPANY and PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE c c.:
Chief, Docketing and Service Section U.S. Nuclear Regulatory Commission Joseph Rutberg, Esq.
Deputy Assistant General Counsel U.S. Nuclear Regulatory Commission Mr. Thomas T.
Martin Regional Administrator U.S. Nuclear Regulatory Commission Region I
1 NewxAN & Hotrzmoza, P.C.
U.S. Nuclear Regulatory Commission July 9, 1991 Page 13 l
Senior Project Manager Project Directorate I-3 Division of Reactor Projects U.S. Nuclear Regulatory Commission l
Mr. Noel Dudley NRC. Senior Resident Inspector Seabrook, New Hampshire 03874 Mr. George L.
Iverson, Director Office of Emergency Management Concord, New Hampshiro 03301 David J.
Bardin, Esq.
Steven R. Miles, Esq.
)
Arent, Fox, Kintner, Plotkin & Kahn j
Robert C. McDiarmid, Esq'.
Daniel I. Davidson, Esq.
Spiegel & McDiarmid Alan J. Roth, Esq.
i Scott H.
Strauss, Esq.
Spiegel & McDiarmid Mr. H. Huehmer, Manager Light and Power Department Town of Hudson, Massachusetts l
Mr. Joseph M. Blain, General Manager l
Taunton Municipal Lighting Plant i
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