ML20116E202

Discusses City of Cleveland 2.206 Petition to Enforce Antitrust Conditions

ML20116E202
Person / Time
Site:	Davis Besse, Perry
Issue date:	08/02/1996
From:	Doris Lewis SHAW, PITTMAN, POTTS & TROWBRIDGE
To:	NRC OFFICE OF INFORMATION RESOURCES MANAGEMENT (IRM)
References
2.206, NUDOCS 9608050141
Download: ML20116E202 (16)

Text

- _. . _ .

l SHAW, PirrMAN, Porrs & TROWBRIDGE A PARTNERSM4P INCLUDINO PROFBBSIONAL CORPOMATIONS 2300 N STREET. N.W. 1601 FARM CREOfT DRIVE

( WASHINGTON. D.C. 20037 1128 MoLEAN. VIRGINIA 22102-5004 i

(202) 663-8000 (202) 6 3-8007 LEESBU G V G NtA 22075- 721 DAVID R. LEWIS ,

(202) 663-8474 l August 2,1996 l

By Hand Delivery 1

i U.S. Nuclear Regulatory Commission Att'n: Document Control Desk One White Flint North j 11555 Rockville Pike Rockville, MD 20852-2738 l

Re: In the Matter of Cleveland Electric Illuminating Company, Dockets Nos. 50-440 and 50-346 i (City of Cleveland's 2.206 Petition to Enforce Antitrust Conditions)

Dear Sir:

On July 31,1996, the Federal Energy Regulatory Commission (FERC) approved a draft order in connection with the wheeling transsetion that was raised as an issue in the City of Cleveland's 2.206 petition. FERC held inKr alla that the proposed transaction (wheeling of power from Ohio Power Company) is not prohibited by section 212(h) of the Federal Power Act. Cleveland Electric Illuminating Company is still in the process of evaluating this order and will inform you ofits response shortly.

Sincerely, David R. Lewis i Counsel for Licensee Enclosure y6 3 cc: Service List (w/ encl.)

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UNITED GTATES OF AMERICA FEDERAL FNERGY REGUI.ATORY COMMISSION l

Beforo cotamisaioners: I Cleveland Electric Illuminating ) Docket No. EL96 9-000 company . )

)

?, Cleveland Public Power of the City )

J Cleveland, Ohio )

s.

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v. ) Docket No. EL96-21-000 '

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Cleveland Electric Illuminating )

9 Company .

) .

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ORDER DENYING PETITICN FOR DECLARATORY h'. .he CRDER AND GRANTING COMPIAINT l 1- I. Introduction

~

These cases, a petition for declarato.y order and a 3 complaint, involve the same transaction. Cleveland Public Power -

1 of the City of Cleveland, Ohio (Clerveland) seeks transmission

?. marvice under an existing transmission agreement with Cleveland

%( Eleccrio Illuminating Coe.pany (Cleveland Electric) . Cleveland

~f plans to use the transmission to purchase power from a third party. It will then combine the purchased power with its other

.'l -

resources so that, beginning September 1, 1996', it can serve an

.i existing ( A 2.o,, through August /1, 1996) recall customer of

'5 Cleveland xlectric. Cleveland I.lectrio opposes the request.

j Each party asks us to decide the disputo.

)

j For the reasone discussed below, we agree with Cleveland -

j that Cleveland Riectric is obligated under an existing agreement

! to provida the requested transmission service. We further

] conclude that the requested transmission service does not v141 ate section 212 (h) of the Federal Power Act (TPA). Therefore, we.

l will deny the petition for a declaratory order and summarily decide the complaint in. favor of Clevela:ul. Finally, we dismise Cleveland Electric's request for stranded cost recovery, without j ,, prejudice to refiling and demonstrating that it meets the j T4h.p criteria for seeking recovery under our recent open Access Rule.

D, PHOPERTY OF THE PUBUC REFERENCE ROOM DO NOT REMOVE'

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NU!b- 2-56 PMI tH bt r, ua 4

, Docket Nos. EL94-9-000, 3% AL, -2 -

1

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ZZ. Baokground cleveland, a scunicipal utility, is dependent on Cleveland Electric for transmission service to reach alternate suppliers.

Cleveland and Cluveland Electric have engaged in door-to-door i competition for retail customers cince the early 1900's, and the instant controversy arises out of a retail customer's desire to

! change power suppla.orn. The Medical Center company (Medical l 1 Center) has been served at retail by Cleveland Electric for '

i approximately 60 years. Recently, however, Medical Center

! decided to switch to Cleveland upon the termination of its i existing five-year contract with Cleveland Electric (LL., as of september.1, 1996). .

i On March 1, 1995, Cleveland and Medical Center entered into j i che Electric Power Service Agree 1 ment (Cleveland / Medical Center.

4 .

Agreement). Medical Center will purchase up to 50 MW of power

] ~ and energy from Cleveland for a period of flve years, commencing

Cleveland will deliver the power and energy j , september 1, 1996. l 3 to Medical center over a 135 kV transmission line owned by I s! .,

Cisveland.

, s. .

i

• on August 11, 1995, Cleveland sent a letter to Cleveland j .

[g._,..?, Elcetric requesting transmission service under the pa. ties' i

, 0...*f:u existing agreement for up to 50 MW of power and energy from Ohio '

1 . Power Company * (Ohio Power) . By letters dated November 2 and 3, 1995, Cleveland Electric refused because = [t]his transaceien,

) .: although contractually described as a wholesale sale from Ohio t '! Power to [ Cleveland], sill be the functional equivalent of a sale

I (from Ohio Power] 'directly to an nitimate consumer'P prohibited *'

l by section 212 of the FPA, 16 U.S.C. S 824k (1994). 1/

Cleveland Electric clarified that its refusal to provide 1

transmission for the proposed Ohio Power / Cleveland transaction is i .fi not due to any limitation on the cleveland Electric transmission

j system. 2/

4 g .j Petition and_Comnlaint

! i On November 3, 1995,. in Docket No. mL94-9-000, Cleveland i Electric filed a petition for a declaratory order. Cleveland y Electric requests that the commission citrify that Cleveland j Electric cannot be required to provide transmission service that

,I N

• 1,' 1/ Asa cleveland Protest in Docket No. EL96-9-0CO, Attachment 5 at 1 (November 2, 2995 Letter from Cleveland Electric to

'I Cleveland).

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. Docket Nos. ELS6-S-000, etAL, '

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. *. is retail wheeling prohibited under sect,lons 211 and 212 of the l

FFA, 16 U.S.C. 55 s24j, X (1994) 3/

On December 13, 1995, in Docket No. EL96-21-000, Cleveland filed a complaint, motion for summary disposition and motion for

. expedited procedural schedule. Cleveland states that Cleveland

• Electric already is obligated to provide the requested transmission service under the parties' existing transmission service agreement .1/ and under certain antitrust conditions in a Nuclear Regulatory Commission (KRC) license.1/ Cleveland requeste that the Commission expedite the resolution of this .

matter so that the proposed power sale may commence as sche.duled l (en September 1, 1994). 1/,

j, Notices and.Jtemnonsen

s. 1. Docket No. EL96-9-0J},Q l

g Notice of Cleveland Electriesa petition in Docket No. EL96-Q 9-000 was published in the Federal Register, 1/ with commente,

- i

.s  ;

'l 3, 1/ We note that a proceeding is pending in state court in

(!?.PJ4f....

which Cleveland Electrie argues, among other things, l

'" that the Ohio Power / Cleveland transaction ale,o would violate state law. I i

i/ Cleveland Electric provides transmission service to Cleveland under Clovolknd Electric's FERC Electric ,

Tariff, First Revised Volume No. 1. Egg C1t;veland

?

Electric Illuminating Company v. City of Cleveland,

('

Chio, 31, AL,, 72 FBRC i 61,040 M 61,250 (1995i , reh'cr daghi.ed, 75 FBRC 1 81,250 (1996). '

0 1* 1/ The license conditione eten from a licensing proceeding in which the NRC granted licenses to Clevelhad Electrie ,

, and Toledo Edison coupany (Toledo Edison) for the 2

' Davis-Besse Nuclear. Power Station, Units 1, 2 and 3, ,

and to Cleveland Electrio for the Perry Nuclear Power

Station, traits 1 and 2. gag Toledo Edison Company and

, at al , 5

the Cleveland NRC 133 (1977)Electric Illuminating

, aff *l in company nart, 10 NRC 288 (1979) .

I

.6/ On December 1, 1995, Ohio Power filed (in Docket No. ER96-i 501-000) the Ohio Power /Clevaland Agreement. Under that

( agreement, Cleveland will purchase up to 50 IGr of pcwor and l energy from Ohio Power for t. five-year period, commencing on

or about September 1, 1996. Docket No. ER95-501-000 is

g. . currently pending.

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• 1/ so Fed. Reg. 58,065 (1995).

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. Docket Nos. EL96-9-000, it al. -4

. ..J i l proteste, 1995.

or motions to intervene due on or betere December 13,

(

i On November 24, 1395, Ohio Power filed a motion to intervene l

and a motion for expedited summary disposition. On December 7, 1995, Cleveland Electric filed an answer to Ohio Power's ttotion to intervene. Cleveland Electric states that it has no objection i

to the intervention of Ohio Power. However, Cleveland Electric

! does object to, among other things, Ohio Power's assertion that there are no material facts in dispute. ,

on December 13, 1995, Medical Center filed a protest against What Medical Center characterizes as " Cleveland Electrio's continuing attengpt to interfere with (Medical Center's] right under chio law to contract with an alternative supplier of

<; electric service.' 3/ On December 13, 1995, Cleveland filed a l

protest, motion to intervene and motien for summary disposition.

i

,! On December 28, 1995, Cleveland Electric filed an answer to

$ Cleveland's pleading. On January 11, 1996 Cleveland filed an l .'. answer in opposition Cleveland Electric

• s r,equest for an

, evidentiary hearing or, alternatively, a motion for leave to fLla

' 8'

.. opposition. On January 26, 1996, Cleveland Electric filed an j  ! iffe.'. answer in opposition to Cleveland's January 11, 1995 motion for

,, ,g. - leave. ,

i r l

' 1 On December 12, 1995, Southern Calf.fornia Edison Company

.: (Edison) filed a motion to intervene. On December 15, 1995, Long -

,l Island Lighting conqpany (LILco) filed a motion to inte.rvene out-

of-time. On December 22, 1995, Ohio Power filed an answer *

opposi.ng the motions to intervene of Edison and LILCO. On i .

Jenuary 3, 1996, Cleveland filed a motion for leave to answer

',j out-of-time and an answar in opposition to the motions to j

intervene filed by Edison and LILCO.

.s

2. pocket No. ELes-21-000 f

Notica of Cleveland's complaint in Docket No. EL96-21-000 was published in the Federal Register,1/ with coments, 4 pzetests, or motions to intervene due on or before January 16, j.

1996.

E on January.16, 1996, Cleveland Electric filed An answer in 4

3 l  ;

A/ Msdical center Protest at 2. -

i

! '4 1/ so red. Reg. 64,429 (1995). In response to a notion for j ..g ,

extension of time filed by Cleveland slectria, the tioe by Eg.,.A which Cleveland Electric's answer was due was extended from j i' N.9 January 12, 1ssa to January is, 1995.

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. Docket Nos. EL96-9-000, At & -5

. opposition to Cleveland's complaint. On December 22, 1995, Ohio

' Power filed a motion to intervene. Chio Power states that it

• supports "whatever commission action is necessary for Cleveland Electric to provide transmission service for chio Power's sale of power to (Cleveland] . " 19./

3. Motipp to Exnadite on April 4, 1996, Cleveland filed a motion for an expedited

. ruling in the proceedings in Docket Nos. EL96-9-000, EL96-21-000 and ER$6-501=000. On April is, 1998, Ohio PCwer filed an answer to Cleveland's April 4 motion supporting Cleveland's motion for expedited treatment.

III. Discussion A. Precedural Issues

.)

..'* Pursuant to Rule 214 of the Cetamission's Rules of Practice and Procedure, le C.F.R. 3 395.214 (1995), the ti:nely, unopposed -

motion to intervene filed by Cleveland in Docket No, ELS6-3-000

), and the timely, unopposed motions to intervene filed by Ohio J~ Power in Docket Nos. Efe96-9-000 and EL96-21-000 serve to make h them parties to the respective proceedings.

Edison ahd LILCO concede in their filings that they have no direct interest in this case, but wish to intervene because of the industry-wide implications they see arising from a ruling

, . here. Cleveland argues that Edieon and LILCO should not be

) allowed to intervene because the Ohio Power / Cleveland transaction involves ths parties' local, case-specifie circumstances and will e

' not esthblish precedent for the entire industry. Ohio Power also opposes intervention, on the grounds that exploring the generic -

i implicat?.ons of this case would delay the start of service to Medical Center. The controversy in this proceeding involves not

?

only case-specific issues, but also the Cemmission's

interpretation of section 212 (b) . Accordingly, we find it in the i public interest to grant the motions to intervene of Edison and LILCC.

(

1 B. Cleveland Electric's Oblication to Provide the 3 l Tranamission Service at_Insue in This Proe*EM ne I

! 1. We find that cle'valand Electric is obligated to provide i the requested t ransmission service under Cleveland Electric's

i currently effective transmission service agrese.ent. n/ The i

1

,, 111/ chio Pcwer Motion to Tntervene at 2. -

11/ S.cz agara noea 4.

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, Docket Nos. EL96-9-000, AL AL. - 6-l f./ relevant sections of this agreement require Cleveland Electric to provide for the transmission of electric power:

i (B)etween delivery (interconnection) points of

[ Cleveland Electra.c] to, from, between, or among rural 4

electric cooperatives or municipalities located within the combined CAPCO (Central Area Power Coordination j Group) Company Territories (CCCT) . . . . (M/]

l It further providea that s i

! (Cleveland Electric] shall provide

Transmission Service within the limits of the

!- ' capacity of its bulk transmission facilities, and l

related facilities, . . . to the extent that such

1, Transmission Se'rvico does not impose a burden upon j [. the system of [ Cleveland Electric]. (M/)

! .. The language of the parties' agreement thus states that 4

d Cleveland Electric will transmit to

• municipalities located 1 0 within . . . CAPco," which includes cleveland, if Cleveland i Electric has sufficient transmission capacity and doing so will

!  !)j not impose a burden on Cleveland Electric's transmission system.

S '6M ,.k 11/ Nere, there is no question that Cleveland Electric has the

• J d$;? necessary capacity, and the requested transmission would impose

. no burden on its system. Cleveland Electric stated in its

} '. :, -

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'j W C1cvoland Complaint in Docket No. ELS6-21-000, Attachment S ,

3 at 2.

s

. n/ W '

{ d 11/ Egg Yankee Atomic Electric Company, Opinion No. 390, 67 i

' 'f . FERC 1 61,318 at $2,113 & n.00 (Commission has an obligation under the FPA to enforce the provisions of

. parties' contracts, citina, L.g , United Gas Pipe Line 1

company v. Mobile oss Service Corporation, 350 U.S. 332 ,

!  : (1956) and FPC v. sierra Pacific Power company, 350 4 *

U.S. 344 (1958)) , zah'.g (pnied, opinion No. 3SO A, 68 i y PERC i 61,364 (1994), aff'd in relevant eart sub nom.

i i Town of Norwood,. Massachusetts v. PERC, 80 F.3d 526 j j (1996) a = = d City of Lebanon, Ohio v. Cincinnati Gas j i 4: Electric h=y, 64 FERC 1 61,341 at 63,445 (1993)

J l (commission will hold parties to the language they I &*

drafted and to which they agreed); Public Works I Commissien of the City of Fayetteville, North Carolina

! i v. Carolina Power & Light Company, 60 FBRC 1 61.283 at i m., 51,960 (1992) (Commission is obligated to enforce n

contracts as written consistent with the public interest).

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Docket Nos. EL95-9-000, gg & 7 .

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2I November 2 and 3, 1995 letters rejecting Cleveland's request that lack of system capacity pla in the utility's refusa1r Cleveland Electric stated, yed no part"(p] Lease be further advised that

[ Cleveland Electric's) refusal to provide the requested tranumission services is not due to any limitation on the

[ Cleveland Electric] transmission system . . . .a 11/ In addition, Cleveland Electric has not claimed in any of its i I

pleadings that the transmission at issue here would impose a I burden upon its system. Therefore, pursuant to the terms of the  ;

transmission service agreement, Cleveland Electric must provide i the transmission service necessary to implement the Ohio Power / Cleveland Agreement.

2. We next address Cleveland Electric's arguments that we may not require it to provide the requested transmission service because that would violate sections 212 (h) of the FPA, 16 U.S.C.

, S 82ek(h) (1994). Cleveland Electric argues that while, on 4 paper, Ohio Power will make a wholesale sale to Cleveland, which, 3 in turn, will serve Medical Center at retail, the reality belies y, that description. In support, Cleveland Electric argues that the 1 price Cleveland will charge Medical Center is directly tied to

.'. the oosts of the power and energy chio Power will supply to 1 , Cleveland. Cleveland Electric also cites to the legislative

', NJf- histo of the Ener Policy Act of 1992 (BPAct), and argues that k?P the o o Power /Clev and trc.nsaction is precisely the kind of j transaction that section 212(h) prohibits. Af/ Finally, n

Cleveland Electric argues that it should not be required to l provide the requested transmission under its transmission service i agreement since "(ilmplicit in any transmission tariff intended

! to provide for wholesale transmission is a legitimate wholesale '

j sale." n /

('i In response, Cleveland argues that sections 211 and 212 are-4, irrelevant since the Commission 'has aushority to order a utility to comply with its filed tariff . . . totally independent of any l limitations upon its enhanced E:nergy Policy Act authority.' '

13/ In support, Cleveland cites an order in which the

/j cotanission held that the utility was required by an existing

• j _

4 n / 233 Cleveland Electric Petition in Docket No. EL96-9-000, l 5

Attachment D at 1.

, 16/ Age. Cleveland Electric Petition in Docket No. IL96 i 000 at 1-2, 4-5, 12-21.

} '

12,/ Cleveland Electrie Answer in Docket No. EL96-21-000 at 4.

t j n/ cleveland January 11, 1995 Answer in Opposition to Answer

'k.g], and Motion for Summary Disposition of Cleveland Electric in a

1 Td, Docket No. EL95-9-000 at 4.

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Docket Nos. EL96-S=000, 11 AL. -

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contract to provide transmission service to a customer, stating that ano expansion of a utility's commitment to wheel is being ordered, but rather a utility is being required to perform the service it voluntarily obligated itself to perform by entering into the [ contract) . " 19) ,

l Cleveland also responds to cleveland Electric's argument that ths Ohio Power / Cleveland Agreement is not a legitimate wholesale sale. Cleveland states that the power it will purchase from Ohio Power is not oprmarked for any particular retail oustomer, and that the power it supplies to Medical Center will l be commingled with power from other sources. Cleveland argues that the fact that the pricing of Cleveland's retail sale to Medical Center is tied to the pricing of Cleveland's purchase

from Ohio Power does not transform the requested transraission for

. power under the Ohio Power / Cleveland Agreement into retail

. wheeling. In support, Cleveland states that upon the termination of Medical Center's current contract with Cleveland Electric, l "i Cleveland will be undertaking the obligation to sezve Medical i

/ center. Ceveland adds that it will have the obligation to serve j t Medical eni.er aven if the power to be purchased from Ohio Power l ; should become unavailable. Additionally, Cleveland states that l '. the price, Medical center will be charged is assured, regardless I

i (f..L or the actual sources from which Cleveland will purchase the

. N <- power.12/ ,

e We re joet cleveland Electric 8s argurnents that the Comrtission

, is prohibited by section 212(h) of the FPA from ordering the

.; sequested service for two reasons. First, we conclude that i section 212(h) does not preclude us from enforcing contractual '

i commitments o:2 file with the Comission. second, we conclude

) that, even if section 212(h) applies, on'the facts of this case

the requested transmission does not violate 212(h) . -

There is nothing in the lenguage of section 212 (h) or its legislative history to indicate that the Comission cannot

enforce contracts that are on file as rate schedules. While section 212(h) prohibits the Commission from issuing any order I 11/ Amnrican Municipal Power-ohio, Inc. , 31 AL., 19 FRRC 1 J 61,158 at 61,300, reh'a denied, 20 FERc T 61,018 (1982),

fureher ern4mv inmeirneina h==rinn nrec=Aures, 23 FERC 1 61,439 (19s2), ordar danvine motions anA settina ash-dule, j 27 PRRC T 61,021, Ish'.g Asnied, 27 FERC 1 61,256 (1986),

, oninian and _ order reauirine servina, opinion No. 259, 37 FERC 1 61,311 (1986), ordar on rehndrinu, Opinion No. 259-A, (j 38 FERC 1 61,175 (1987).

19/ 23g Cleveland Protest in Docket No. EL96-9-000 at 7-10;

$ 'ff."U 9 Cleveland Complaint in Docket No. EL96-21-000 at 8-9.

i 1

i l ea.: en.n me on tr 1nr k

no c o c.o m. x *w

,, Docket Nos. EL96-9-000,.el aL ,

under the FPA that is conditioned upon or requires the transmission of electric energy dizectly to an ultimate co:sumer or to certain entities that.will sell the electric energy directly to an ultimate consumer, we do not interpret section 212 (h) to prohibit the Comission frum requiring public utilities to fulfill their contractual transmission obligatiens on file with this commission -- including contractual transmission obligations which we could not otherwise order. 11/ The Commission clearly has the authority to anforce parties' ,

I transmission agreemt:nts and rate schedules filed under the FPA.

22/ That is the circumstance before us.

Moreover, even if section 212(h) applied, the Commission's order would not be prohibited under either 212 (h) (1) or

,' 212 (h) (2) . Cection 212(h) provides that ,

' No order issued under this Act shall be conditioned upon or require the transniission of .

g electric anergy: ,

1

] (1) directly to an ultimate consumer, or i

$ (2) to, or for the benefit of, an entity if such 1* g). .,{;. electric energy would be sold by mch entity directly W./ to an uitimate consumer, unless:

4 (A) such entity is . . . a State or any g' political subdivision of a state (or an 1

ascucy, authori'ty, or instrutaentality of a  !

State or a political subdivision)i . . . and ,

(B) such entity was providing electric l r

service to such ultimate consumer on (October 24, 1992] cr would utilise transmission or

{ distribution faci 11tian that it owns or controlo to deliver all such electric energy to such  !

l

, 21/ our decision here pertains <mly to enforcing the terms 3 of contractual corme.itments, including those that may be

undertaken voluntarily or pursuant to state retail programs. The Commission clearly cannot expand contractual commitments in a manner that would violate section 212 (h) .

.22/ dag, mA , Duke Power Company v. FERC, 864 P.2d 823, 829 (D.C. Cir. 1989) (enforcement of filed rate schedules is a t1atter distinctly within the comission's statutory mandate and the Commission has an independent regulato..y duty to fh-- remedy a utility's'violatione of its filed rate schedule);

accord angrg note 14.

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.. Docket Nos. BL96-9-000, et, AL. *

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• - electric consuirer.

• e

• 3 16 U.S.C. 55 824k(h) (1sye) .

Here, section 212 (h) (1) is not violated because the transmission will be over Cleveland Electric's lines to cleveland. Cleveland's sale to Medical conter will be over cleveland's 138 kV line. n / Thus, this case simply does not involve the transmission of electric energy by Cleveland Electrie directiv to an ultimate consumer.

Nor is section 212 (h) (2) violated. Under section 212 (h) (2) ,

• the commission may not require the transmission of energy to, or 4

for the benefit of, an entity if such electric energy would be 4

3 sold by such entity directly to an ultimate consumer 21/ ,

unlesa certain conditions are met. Here, cleveland meets those

.Ij conditions. Clavaland is an instrumentality of a stato or a i

y' political subdivision thereof and it will utilize transmission or distribution lines that it owns or controls (i . e . , the 138 kV i i

)

line) to deliver all the electric energy to Medical Center. -

4

[ 1 Additionally, M (k.kf/:,,

"i that would be inconthere sistenc is nothing with in the of the intent facts of thisascase congress

~~'

S expressed in kPAct's legislative history. Congress was primarily

'si concerned that the commission be prohibited from issuing orders  :

.i which require wheel. tog where the substance of the transaction is: a:nounts to retail wheeling because the wholesale sale is, in

.: fact, a subterfuge intended to circumvent the han on retail .

.} wheeling, as in the came where mere ' paper purchasing u

T4 d

.j 22/ cleveland states that it "will utilize its own 1 facilities to serve (Medical Center)," Cleveland F. Protest in Docket No. EL95-9-000 at 11, and Cleveland

'y 31ectrio does not dispute this, gas cleveland Elect.ric d Petition in Docket No. EL96-3-000 at 15 (stating that 9

i the Cowedseien should not be "sisicd by the mere fact that [ Cleveland] would serve [ Medical Center) through l distribution facilities owned and controlled by j [ Cleveland] ") .

1,

( 21/ We note that whether the transmission of electric j energy is directly to an ultimate consumer is a different issue than whether a 3314 of electrie energy

( is dizectly to an ultimate consumeri h , a retail sale.

i. . .

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Docket Nos. BL96-9-000, rf. al  : s

,,, k :$ ." corporationa* are interposed in front of the ultimate consumer. l

, 21/ However, Congress also clearly intended that wheeling to an entity which meets the criteria in section 212 (h) (2) (B) nga be considered a prohibited sham wholesale transaction. M / Thus, the Commission may not order transmission to paper intermediaries used as a vehicle for and users to bypass their local utilities.

t Nero, in contrasti Cleveland clearly is not a paper entity. ' It l ,, has for many years both owned and operated generation, transmission and distribution facilities, and competed with cleveland Electric.

Given the above findings, there 10 no need to respond to Cleveland Electric's arguments that Ohio Power's sale to cleveland is not a legitimats wholesale sale. We need only find that the transmission service meets the criteria of section l

212 (h) , and we have done so.

.f.. ' '

j,' In conclusion, we do not interpret section 212 (h) to

e. preclude the Cormaission from enforcing contractual commitments f and tariffs on file with the commission. Moreover, even if

. E5 l

c,x M/ Senator Johnston, the floor manager of the EPAct in the (e [43$, Senate, explained that section 212(h) prohibited the i

/* %f":u commission from orde, ring transmission of elaotrio jd energy to an entity for resale to an ultimate consumer

'j'; "in instances in which the substance of the transaction amounts to retail wheeling because the who2esale sale

',: to the entity is in fact a subterfuge incanded to

.. circumvent the ban on retail wheeling.* 138 cong. Roe.

f! 817612-14 (daily ed. Oct. 4, 1992) (statement of

, senator Johnston). However, Senator Johnston

'., distinguished sales for resale to an ultimate consumer j( which are permissible under section 212 (h) (2), stating that:

( It is important to note, however, that

' ,1 the "for the benefit of' language [ sic] does

, not reach behind the " entity" referenced in

section 212 (h) (2) . .. . [A] transmitting i

o entity can only be required under the Federal Power Act to deliver transmitted electric energy to an entity described in section 312 (h) (2) . At that point such entity may . .

l . deliver such electric energy to ultimate

consumers over transmission lines that it

owns or controls. . ..

i a i ; . ISL.

i

21/ IL.

}

i j . , , . , 2,. 2 : em ea.1c ine i

i i ___ . - _

~

Huu- d-80 rat 8;U1

.. . r. u i_

Docket Nos. E96-9-000, et al., -

12 -

section 212 th) applied here, our order is not inconsistent with Congress' 212 (h) .

intent in prohibiting sham transactions under section C. Clevei nd Electd e's Recuent for Stay judicialwe will deny Cleveland Electrio's request for a stay pending review.

is that ClavalandCleveland Electric's justification for a stay ,

Electria a'nd its remaining native lond customers will be " irreversibly harmed.* U / However, Cleveland Riectric provides no specificity as to either the granted.or the extent of the hazu it anticipates if a stay is not nature Tndeed, the harm would appear to be only monetary, and that is not adequate justification for a stay. 1&/

e;

.',. Therefore, we find that Cleveland Electric has failed to

.i present sufficient grounds to grant a stay.

,j, D. Miscallaneous Mat urg J.

.1, .

Cleveland also argues that Cleveland Electric is y ' obligated under License Condition No. 3 of the NRC licence i

/s,'.[h'i conditions to provide the requested service. 21/ Cleveland

( .. '

J 9 n/ Cleveland Electric Petition in Docket No. EL96-9-000 at 23.

21 / dag omrier=11v, A.,g , Holyoke Water Company, 30 FERC 1 61,203 at 61,575 (1985).

M/ License Condition No. 3 provides, in relevant part, that:

'f 8(a]pplicants shall a i requestofotherentiNageinwheelinbinedCAPCO for and at the -

eo in the (Com j

company Territories):

3 (1) of electric energy from deliver

, Applicants to the entity (ies); and,y points of j (2) of power generated by or available to the other j entity, as a result of its cwnership or antitlements in 4

generating facilities, to delivery points of Applicants designated by the ot.her entity.

j.

, such wheeling services shall be available with respect

'. to any unused capacity on the transmission linas of j Applicants, the use of which will not jeopardize the Applicants' system.

.I 8 6;[.s-.W.$,:. J.m.e Cleveland Complaint in Docket No. EL96-21-000, 1

Attachment 6 at 1 (footnote omitted) .

es.n ocu c.e-w nne

y , _ _ _ _ - . _ - _ _ _ _ _ _ = _ ~ - _ __

,. . 1

,, Docket Nos. EL96-9-000, ah AL. ,

.Q.

(f, Y,. contende that this comission has the authority to require cleveland Sleocric to comply with the AIRC license conditions, regardless of whether Cleveland Electric has filed the conditions with this Commission. 19/ Because we have found that Cleveland Electric's transmission service agreement provides a sufficisnt basis to decide this dispute, we need not reach the issue of whether the requested service also may be required under I NRC Licensing condition No. 3.

.l,

2. Because we are dismissing as moot Cleveland Electric's I petition (in Docket No. EL96-9-000) , we will dismiss Cleveland's request to consolidate the proceedinge in Docket No. EL96-5-000 and Docket No. ELp6=31-000.

]

3 '. Cleveland Electric asks that, if we decide it must

provide the requested transmission service, we allow the company I

.. to recover the "unrecovered costs of the facilities that were installed to provide service to Medical Center." 31/

1} claveland Electric filed its petition prior to the issuance of ,

W the open Access Rule. 22/ There, the connission set forth the 9 1 criteria recover and procedures stranded costs. 22 by/which a public we Accordingly, utility willmaydismissseek to i j

Cleveland Electric's request without prejudice to making a filihg '

in a separate proceeding demonstrating that it meets the

, Q(.y[.%

fA!

requirements for seeking stranded coat recovery set forth in our j regulations. 24/ 4

- 12/ Cleveland Complaint in Docket No. EL96-21-000 at 7, i citina City of Cleveland, Ohio v. Cleveland Electric

'};

Illuminatig Company, 11 FERC 1 61,324 at 62,266-69 i: (1995) , rah a nandir.cr.

,s il 21/ Cleveland Electric Petition in Docket No. EL96-9-000 at 3 21.

22/ Promoting Wholesale competition Through Open Access 9} Non-discriminatory Transmission Services by Public j Utilitiae and Recovery of stranded Costs by Public g Utilities and Transmitting Utilities, Order No. 888, 61

Fed. Reg. 21,540 (May 10, 1996) , FERC Stats. f,Rege. 1 4 31,036 (1995) (Open Access Rule).

! 23/ agg m u ra11v 14,,. at 31,785-551. '

t j 21/ Egg 18 C.F.R. 5 35.26. The commission makes no

. datemination here as to whether Cleveland Electric, under the criteria of the en Access Rule, may seek

, , stranded cost recovery in t e circumstances of this l g/. case. Cleveland Electric must show that it falls (continued...)

,,,, tw.71 n:w cs-tr ior

nuu c co rat e.uc i...

i, .

. Docket Nos. ILs6-9-000, at AL. '

The Commission ordern:

(A) The motions to intervene of Edison and LILCO are hereby granted.

(B) Cleveland's complaint is hereby granted, as discussed in the body of this order.

(C) clevela.nd Electric's petition for a declaratory order is hereby denied, as discussed in the body of this order.

(D) Cleveland's request for consolidation of Docket Nos.

EL96-9-000 and RL96-21-000 is hereby dismissed um moot.

(E) Cleveland Electric's request for a stay is hereby

c. denied.

(F) Cleveland Electric's reques't for stranded cost recovery

. is hereby dismissed without, prejudice, V

f By the commission. -

..%, . .w. .yy. .:. . , ...",...i.--..i Secretary til;l."t.:..v:- . W;r.,O$g. j'I :d. .*f.

u . . . n .f:: . . @.; :!34.

. ' 4. . . .

i' . NNj.;.. " . ':: 't.

j,.;.gs::w:..w..l.h&.'i$...ik.)

' P.

=.

d t

.S

't .

s?

4 1

J

, j 2.1/ ( . . . continued) .

I within'the circumstances under which the commission will entertain reque' ate for stranded cost recovery'and,

! if .it does, ala~o inust meet the other requiatements for <

j (.k,d(., seeking recovery. ats & ; FERC StaLs. & Regs. RE '

Mjfp(;- 31,814-851.

l es *J hh T W 00~W~W

I SERVICE LIST David B. Matthews David R. Straus Chief, Generic Issues and Environmental Speigel & McDiarmid Projects Branch Suite 1100 Office of Nuclear Reactor Regulation 1350 New York Avenue, N.W.

U.S. Nuclear Regulatory Commission Washington, D.C. 200005-4798 Washington, D.C. 20555 John B. Hopkins, Sr. Project Manager Sharon Sobol Jordon, Director of Law Project Directorate III-3 William T. Zigli, Chief Ass't Director of La l

Division of Reactor Projects - III/IV City of Cleveland, Ohio Office of Nuclear Reactor Regulation 106 City Hall U.S. Nuclear Regulatory Commission 601 Lakeside Avenue Washington. D.C. 20555 Cleveland, Ohio 44114 Steven R. Hom, Esq. Glenn S. Krassen Office of the General Counsel Climaco, Climaco, Seminatore, Lefkowitz U.S. Nuclear Regulatory Commission and Garofoli, Co. L.P.A.

Washington, D.C. 20555 The Halle Building, Suite 900 1228 Euclid Avenue Cleveland, Ohio 44115 Regional Administrator, Region III U.S. Nuclear Regulatory Commission 801 Warrenville Road Lisle, IL 60532-4351 l

r I

3)R25941/ DOCSDCI j