ML20133C368
| ML20133C368 | |
| Person / Time | |
|---|---|
| Site: | Hatch, 05000000 |
| Issue date: | 09/14/1971 |
| From: | Adams L, Duncan C DUNCAN & ALLEN (FORMERLY DUNCAN, ALLEN & TALMAGE, HEARD, LEVERETT & ADAMS |
| To: | Schur B US ATOMIC ENERGY COMMISSION (AEC) |
| Shared Package | |
| ML20133C325 | List: |
| References | |
| FOIA-85-320 NUDOCS 8507200477 | |
| Download: ML20133C368 (12) | |
Text
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$ $ A0006 (son) ass-asoo September 14, 1971 Bertram H. Schur, Esquire Associate General Counsel U. S. Atomic Energy Commission Washington, D. C.
20545 Re: Georgia Fower Company Edwin 1. Hatch Nuclear Plant Unit No. 2 AEC Docket No. 50-366A Department of Justice File 60-415-37
Dear Mr. Schur:
By various letters dated August 1971, Assistant Attorney General Richard W. McLaren requested the comments of certain Georgia Power Company customers regarding antitrust aspects of the operations of the Georgia Power Company in conjunction with his investigation of the Company's application to the Atomic Energy Commission for a nuclear fueled electric The Power Section of the Georgia Municipal power generating plant license.
Association has undertakego rcspond to that letter and to you directly on in the State of Georgia which currently operate behalf of 48 municipalities-their own electric power systems and purchase electric energy at wholesale A copy of this letter is being forwarded from the Georgia Power Company.
to Mr. McLaren.
If The Cities of Acworth, Adel, Albany, Barnesville, Blakely, Braselton, Brinson, Buford, Cairo, Calhoun, Camilla, Cartersville, College Park, Commerce, Covington, Doerun, Douglas, East Point, Elberton, Ellaville, Fairburn, Fitzgerald, Forsyth, Fort Valley, Grantville, Griffin, Hogansville, Jackson, Lafayette, LaGrange, Lawrenceville, Mansfield, Marietta, Monroe, Monticello, Moultrie, Newnan, Nor-cross, Palmetto, Quitman, Sandersville, Sylvania, Sylvester, Thomas-igham.
ton, Tho.casville, Washington, West Point, o y / 5...
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As demonstrated below, the Georgia Power Company has ach k
i and maintained its monopoly position in the electric energy supply m We, therefore, request that the Georgia in violation of the antitrust laws.
Commission schedule a full hearing on this matter and pre-condition a it nuclear plant license on the Company's termination of its unlawful restr on trade in the power supply market in Georgia.
The Electric Energy Industry in the State of Georgia 1.
The supply of electric energy in the State of Georgia is totally The Company, y operating dominated by the Georgia Power Company.
l ti affiliate in the Southern Company holding company system.._. sells e power in Georgia at wholesale to 50 municipalities and 39 ele As the sole ahip corporations and at retailto customers-in 645 communities.
has a complete monopoly on the State's-bulk ively controls the sale of electric energy to all consumers of elect The Company also monopolizes the generation of electric energy It has acted in concert with.its sister operating companies sinc the 1920's to coordinate the development of.nearly all sources of stea in Georgia.
i t al electric energy generation facilities and since 1930 has engaged n cen load dispatching, creating what is commonly referred to as "the So Pool. "
During the 1940's the federal government began developin i d States. In of hydro electric generating facilities in the Southeastern Un te lus power accordance with federal " preference laws" (16 U. S. C. 825s) the surp t
generated at these government dams was made available b Power Admmistration (SEPA) to publicly owned electric system Due to the lack of municipally owned trans nd tracts were entered into between SEPA,. the municipally sup-and remains that the Company delivers to the pubile systems a fi the Georgia Power Company.
t to ply at rates which take cognizance of the municipal systems' e The Southern Company owns all of the common stock of G d Georgia any, Mississippi Power Company. Alabama Power Company an 2/
Power Company. The latter two companies each own 50% o 1,000,000 KW Electric Generating Company which owns and operates a l
steam electric generating plant in Alabama.
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Ni mt.I//eweedI N.nptzmb2r 14,1971 I
low cost 3 EPA energy. In return, the Company receives all non-firm capa-biliths of the facilities and is also allowed to schedule and take the energy output of the SEPA dams to suit its overall system needs.
The Georgia Power Company remains today as the sole entity in bulk power supply industry in Georgia. It controls all facilities to generate and transmit electric energy in the State. As is demonstrated below, its monopoly position is maintained by the contractual details of its arrangements with SEPA and the municipal systems which purchase wholesale energy from the Company.
2.
Competitive Implications of Georgia Power Company Activities Beyond the assumption of its-role as sole firm.in the bulk power supply market in Georgia, the Georgia Power Company has continually pur-sued an active policy to maintain its monopoly position. Through its critical role as the delivery agent for SEPA power, the Company has imposed many anti-competitive restraints on publicly owned systems which are unrelated to its transmission function. These anti-competitive restraints have had the effect of not only preventing municipal. systems from developing facilities to reduce their own energy costs or develop alternative sources of energy but also of makmg the consequences of an attempt to develop such alternatives so catastrophic as to preclude their consideration..
These anti-competitive restraints have been imposed upon the municipal systems by various contractual arrangements over a span of years.
They are presently contained in four contracts which are attached hereto as exhibits:
Erhibit 1:
SEPA-Georgia. Power. Contraet (June 19,.1970)
Exhibit 2:
SEPA-Municipal Contract (June 20,1970)
Exhibit 3:
"WR-4" Rate Schedule _/
3 "WR-6" Rate Schedule,/and other 3
Exh bit 4:
excerpts from Tariff filed June 1, 1970, FPC Doc. No. E-7548 3,/
These are rate schedules under which the Company sells energy to publicly owned systems. The Company has proposed a rate increase pending now before the FPC (Doc. No. E-7348) which would supplant the WR-4 Schedule with higher rates contained in the WR-6 Schedule.
'Amt MM.,4. 44 8 dIptember 14, 1971
~
Should a public system breach any of the following contractual provisions, the Company may, within 20 days, cease all electric service to that system.
a.
" Full Requirements" Clause. The most onerous anti-competi-tive restriction to which thegunicipal systems have been subjected is the
" full requirements" clause.-
It essentially disables municipal systems to the point where they cannot seriously compete with the Company for new in-dustrial customers at the retail level.
The full requirements clause precludes municipal systems from looking to any alternative sources of wholesale power which include self generation or purchase from TVA and power companies in South Carolina, Florida and Alabama. The terms of the interlocking SEPA-Company and SEPA-Municipal contracts would cause the municipalities to lose their SEPA allocations.should they in any way seek to improve their power costs by ob-taining.any portion of their system requirements from a source other than the-Georgia Power Company. Thus, under the contracts, the municipalities may neither separately or together generate energy to meet future loads nor " peak shave" to reduce their current energy costs.
b.. "Ratcheted' Demand. The company employs a ratchet.5,/ n its i
rate. schedules to determine the municipal customers' peak demand which compounds the burden of the prohibition against " peak shaving. " We note that such a ratchet was viewed as a potentially dangerous anti-competitive device by the Justice Department in its letter to the Atomic Energy Com-mission of August 2,1971, relating to the Duke Power Company. We believe it u equally serious implications in this case.
c.
Restricted Voltages and Delivery Points. The Company has restricted the voltage level it will deliver energy to municipal purchasersb which further limits any cornpetitive force that municipal systems might otherwise exert.. The Company supplies energy at no more than 12. 5 KV to wholesale cusMmers at multiple delivery points. Due to the distance limita-tion on the transmission of large blocks of energy at such low voltages, when additional service is needed for a large new customer or for genera 11oad growth new delivery points become necessary. New industrial customers 4_/ Exhibit 1, p.13, 54.2; Exhibit 2, p. 5 51(a)(3); Exhibit 3, p.1; Exhibit 4, First Revised Sheet No. 23 and Second Revised Sheet No. 35.
{/
Exhibit 3, p. 2 Exhibit 4, First Revised Sheet lio. 24.
6)
Exhibit 3, p.1; Exhibit 4, First Revised Sheet No. 23.
. S Ismber 14, 1971
' b m,'d',an/d 2 often demand service at higher voltages, from 34.5 KV to 69 KV, and this voltage restriction severely limits the Company's wholesale purchasers from competing for these new industria11oads. The Company has also been reluc-tant to establish new delivery points further impairing the municipal systems' ability to serve their customers.
These practices create three additional burdens on the municipali-First, they force the municipalities to sectionalize their systems and ties.
operate them in isolation for each delivery point because no single delivery point is capabl e of handling the load of any other delivery point in the event of Thus, a. municipality is prevented from providing effective internal outages.
service protection. Second, the proliferation of delivery points creates an excessive capital cost burden on wholesale service which is directly charged to-the municipalities. Third, as a municipality grows and delivery points pro-liferate,.the municipal system becomes completely surrounded by the Company's distribution facilities which are then used to serve new areas which would rmrrndly constitute the anticipated growth areas of the municipal system.
- d. Resale Limitations. Finally, the Company further restricts its wholesale customers by p ohibiting them fro reselling any energy beyond the_ Georgia Power Company service area.7 Thus a municipal system has very little, if any, opportunity to successfully achieve coordination with another energy source beyond the Georgia service area since it would be prohibited from selling. energy.
3.
Conclusion When the effects of these anti-competitive restrictions are analyzed l
against the background of the electric energy industry which now exists in Georgia. one is compelled to conclude that the Georgia Power Company not only possesses monopoly power but has willfully maintained that power through the imposition of anti-competitive contractual restrictions on its wholesale hibited by S ction 2.of the Sherman Act.8.7arly within the scope of conduc customers, Such conduct is c1 Freedom of access into and out of the market e
place is a prime yardstick for measuring competitive performance, and we 7/
Exhibit 4, First Revised Sheet No. 23.
United United States v. Grinnell Corporation, 384 U.S. 563, 571 (1966);
,8]
States v. United Shoe Machinery Corporation,110 F. Supp. 295, 344,345, (D. Mass.,1953), affirmed per curiam 347 U.S. 521.
r
, 7.. kratAk/erswes. M September 14, 1971 L
Power Company must be seen as aimed a ces of the Georgia from entering the electric energy generatio eventing municipal systems has pursued a policy of restricting its wholesa voltage the Company what they are currently doing.
3 Thus, the Company faces no test of it the electric coown ability to compete in meeting the energy need l
performance, nsumer of any yardstick by which to me i
e ing-(FEC Docket No. E-7548) all of these coUnder ng rate proceed-continued.
the. Company would again be barred fromThe munici the Company.
a e power from offa municipal system's request to gain access to y the Company market; rather, the municipal system is prevented be bulk pow of:the Company from even seeking any such arran y contract and practices gement.
burdensome as the Company constructs new ex facilities.
es even more whereby applicants for nuclear generation facilitiT i
their. activities are in the best interests of es an opportunify t
es must demonst scale hearing under the Act is required to det We sub-s test and that a full be made to the Company's current policies t ne what modifications must characterize its current operations.the Company wo egal restraints on trade which Respectfully submitted,
-DUNCAN, ALL N and MITCHELL By:
E C. Emerson Duncan,11
^
HEARD, LEVERETT & ADAMS By:_
l W
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L. Clifford Adams, Jr.
3 Attachments Attorneys for Power Section, Georgia Municipal Associat8-
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'4 ens (775 fdma }k,msf T/$dsylonc$$ 20006 (202) 833-2300 September 14, 1971 Bertram H. Schur, Esquire Associate General Counsel U. S. Atomic Energy Commission Washington, D. C.
20545 Re: Georgia Power Company Edwin I. Hatch Nuclear Plant Unit No. 2 AEC Docket No. 50-366A Department of Justice File 60-415-37
Dear Mr. Schur:
By various letters dated August 1971, Assistant Attorney General Richard W. McLaren requested the comments of certain Georgia Power Company customers regarding antitrust aspects of the operations of the Georgia Power Company in conjunction with his investigation of the Company's application to the Atomic Energy Commission for a nuclear fueled electric The Power Section of the Georgia Municipal power generating plant license.
Association has undertakego respond to that letter and to you directly on in the State of Georgia which currently operate behalf of 48 municipalities-their own electric power systems and purchase electric energy at wholesale A copy of this letter is being forwarded from the Georgia Power Company.
to Mr. McLaren.
The Cities of Acworth, Adel, Albany, Barnesville, Blakely, Braselton, 1/
Brinson, Buford, Cairo, Calhoun, Camilla, Cartersville, College Park, Commerce, Covington, Doerun, Douglas, East Point, Elberton, E11aville, Fairburn, Fitzgerald, Forsyth, Fort Valley, Grantville, Griffin, Hogansville, Jackson, Lafayette, LaGrange, Lawrenceville, Mansfield, Marietta, Monroe, Monticello, Mouhrie, Newnan, Nor-cross, Palmetto, Quitman, Sandersville, Sylvania, Sylvester, Thomas-igham.
ton, Thomasville, Washington, West Point, o - y/ S... 5 1 -
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- sav s ta I
'14' SEP 15 71 E
1 R.
MilIRusi A
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lptember 14, 1971 b e m.' b en/ 2 6 Y i l
As demonstrated below, the Georgia Power Company has achiev k
in and maintained its monopoly position in the electric energy supply Georgia in violation of the antitrust laws.
Commission schedule a full hearing on this matter and pre-condition any i
nuclear plant license on the Company's termination of its unlawful res on trade in the power supply market in Georgia.
The Electric Energy Industry in the State of Georgia 1.
The supply of electric energy in the State of Georgia is totally The Company, g operating dominated by the Georgia Power Company.
i affiliate in the Southern Company holding company system,-. sells e power in Georgia at wholesale to 50 municipalities and 39 elec As the sole ship corporations and at retailto customers in 645 communities.
Company supplier of electric energy to wholesale purchasers in Georgia, the has a complete monopoly on the State's bulk power supply system ively controls the sale of electric energy to all consumers of electri The Company also monopolizes the generation of electric energy It has acted in concert with.its sister operating companies sinc ft the 1920's to coordinate the development of.nearly all sources o s eam in Georgia.
t l
electric energy generation facilities, and since 1930 has engaged in cen load dispatchmg, creating what is-commonly referred to as "the So Pool. "
During the 1940's the federal government began developin In of hydro electric generating facilities in the Southeastern United Sta r
accordance with federal " preference laws" (16 U. S. C. 825s) the t
generated at these government dams was made available by Power Admmistration (SEPA) to publicly owned electric system Due to the lack of municipally owned transm d
tracts were entered into between SEPA, the municipally o y sup-the Georgia Power Company.
and remains that the Company delivers to the public systems a firm ply at rates which take cognizance of the municipal systems The Southern Company owns all of the common stock of Gu t
i any, Mississippi Power Company. Alabama Power Compa 2/
The latter two companies each own 50% of Southern 1,000,000 KW Power Company.
Electric Generating Company which owns and operates a J
steam electric generating plant in Alabama.
J
MMnun/d M aptember 14, 1971 low cost SEPA energy. In return, the Company receives all non-firm capa-bilities of the facilities and is also allowed to schedule and take the energy output of the SEPA dams to suit its overall system needs.
The Georgia Power Company remains today as the sole entity in bulk power supply industry in Georgia. It controls all facilities to generate and transmit electric energy in the State. As is demonstrated below, its monopoly position is maintained by the contractual details of its arrangements with SEPA and the municipal systems which purchase wholesale energy from the Company.
2.
Competitive Irnplications of Georgia Power Company Activities Beyond the assumption of its-role as sole firm in the bulk power
~
supply market in Georgia, the Georgia Power Company has continually pur-sued an e policy to maintain its monopoly position. Through its critical role as relivery agent for SEPA power, the Company has imposed many anti-com, aitive restraints on publicly owned systems which are unrelated to its transmission function. These anti-competitive restraints have had the effect of not only preventing municipal systems from developing facilities to reduce their own energy costs or develop alternative sources of energy but also of makmg the consequences of an attempt to develop such alternatives so catastrophic as to preclude their consideration..
These anti-competitive restraints have been imposed upon the municipal systems by various contractual arrangements over a span of years.
They are presently contained in four contracts which are attached hereto as exhibits:
Erhthit 1:
SEPA-Georgia Power.Contraet (June 19,.1970)
Exhibit 2:
SEPA-Municipal Contract (June 20,1970)
Exhibit 3:
"WR-4" Rate Schedule _/
3 Exhibit 4:
"WR-6" Rate Schedule,/and other 3
excerpts from Tariff filed June 1, 1970, FPC Doc. No. E-7548 3_/
These are rate schedules under which the Company sells energy to publicly owned systems. The Company has proposed a rate increase pending now before the FPC (Doc. No. E-7548) which would supplant the WR-4 Schedule with higher rates contained in the WR-6 Schedule.
h aasar.58/em4 4. d,8 $sptember 14, 1971 Should a public system breach any of the following contractual provisions, the Company may, within 20 days, cease all electric service to that system.
a.
" Full Requirements" Clause. The most onerous anti-competi-tive restriction to which thegunicipal systems have been subjecteo is the
" full requirements" clause.-
It essentially disables municipal systems to the point where they cannot seriously compete with the Company for new in-dustrial customers at the retail level.
The full requirements clause precludes municipal systems from looking to any alternative sources of wholesale power which include self generation or purchase from TVA and power companies in South Carolina, Florida and Alabama. The terms of the interlocking SEPA-Company and SEPA-Municipal contracts would cause the municipalities to lose their SEPA allocations should they in any way seek to improve their power costs by ob-taining any portion of their system requirements from a source other than the Georgia Power Company. Thus, under the contracts, the municipalities may neither separately or together generate energy to meet future loads nor " peak shave" to reduce their current energy costs.
b.. "Ratcheted' Demand. The company employs a ratchet / in its 5
rate. schedules-to determine the municipal customers' peak demand which compounds the burden of the prohibition against " peak shaving. " We note that such a ratchet was viewed as a potentially dangerous anti-competitive device by the Justice Department in its letter to the Atomic Energy Com-
-mission of August 2,1971, relating to the Duke Power Company. We believe it has equally serious implications in this case.
c.. Restricted Voltages and Delivery Points. The Company has restricted the voltage level it will deliver energy to municipal purchasers $.I which further limits any competitive force that municipal systems might ctherwise exert. The Company supplies energy at no more than 12. 5 KV to wholesale customers at multiple delivery points. Due to the distance limita-tion on the transmission of large blocks of energy at such low voltages, when additional service is needed for a large new customer or for general load growth new delivery points become necessary. New industrial customers 4_/ Exhibit 1, p.13, $4.2; Exhibit 2, p. 5 $1(a)(3); Exhibit 3, p.1; Exhibit 4, First Revised Sheet No. 23 and Second Revised Sheet No. 35.
f/
Exhibit 3, p. 2; Exhibit 4, First Revised Sheet No. 24.
6_/
Exhibit 3, p.1; Exhibit 4, First Revised Sheet No. 23.
. S
.cmber 14,1971 f
b M M Wed d. 2 often demand service at higher voltages, from 34.5 KV to 69 KV, and this voltage restriction severely limits the Company's wholesale purchasers from competing for these new industrial loads. The Company has also been reluc-tant to establish new delivery points further impairing the municipal systems' ability to serve their customers.
These practices create three additional burdens on the municipali-ties. First, they force the municipalities to sectionalize their systems and operate them in isolation for each delivery point because no single delivery point is capable of handling the load of any other delivery point in the event of Thus, a municipality is prevented from providing effective internal outages.
service protection. Second, the proliferation of delivery points creates an excessive capital cost burden on wholesale service which is directly charged to the municipalities. Third, as a municipality grows and delivery points pro-liferate, the municipal system becomes completely surrounded by the Company's distribution facilities which are then used to serve new areas which would norrnally constitute the anticipated growth areas of the municipal system.
d.
Resale Limitations. Finally, the Company further restricts its wholesale customers by prohibiting them fro reselling any energy beyond the_ Georgia Power Company service area.2.
Thus a municipal system has very little, if any, opportunity to successfully achieve coordination with another energy source beyond the Georgia service area since it would be prohibited from selling. energy.
3.
Conclusion When the effects of these anti-competitive restrictions are analyzed against the background of the electric energy industry which now exists in Georgia, one is compelled to conclude that the Georgia Power Company not only possesses monopoly power but has willfully maintained that power through the. imposition of anti-competitive contractual restrictions on its wholesale ibited by S~ ction 2.of the Sherman Act. 8yarly within the scope of cond customers. Such conduct is cl e
. Freedom of access into and out of the market place is a prime yardstick for measuring competitive performance, and we 7/
Exhibit 4, First Revised Sheet No. 23.
i United United States v. Grinnell Corporation, 384 U.S. 563, 571 (1966);
8]
States v. United Shoe Machinery Corporation,110 F. Supp. 295, 344,345, (D. Mass.,1953), affirmed per curiam 347 U.S. 521.
^
\\
. September 14, 1971 Power Company must be seen as aimed ats e practices of the Georgia from entering the electric energy generati preventing municipa has pursued a policy of restricting its wh lgene
\\
From very voltage the Company what they are currently doing.
I Thus, the Company faces no test own ability to compete in meeting the energy n the electric co performance nsumer of any yardstick by which to m l
s ing-(FPC Docket No. E-7548) all of theseUnder the pending rate proceed-continued.
the. Company would again be barred fromThe munic the Company.
o esale power from of.a. municipal system's request to gain accesThe is of:the Company from even seeking any such a
y the Company y contract and practices rangement.
burdensome as the Company constructs newThe e comes even more facilities.
whereby applicants for nuclear generation facilit rovides an opportunity their. activities are in the best interests es must demonstr scale hearing under the Act is required to det i
We sub-s test and that a full be made to the Company's current policie rmine what modifications must the Company would not further pursue th s to insure that as an AEC licensee characterize its current operations.
e illegal restraints on trade which t
Respectfully submitted, i
DUNCAN, ALL N and MITCHELL A
By:
t T
y"#
C. Emerson Duncan, II
~
HEARD, LEVERETT & ADAMS By:_
A 8
L. Clifford Adams, Jr.
Attachments Attorneys for Power Secti f
Georgia Mumet al
-