ML20135G176
| ML20135G176 | |
| Person / Time | |
|---|---|
| Site: | Hope Creek  |
| Issue date: | 09/11/1985 |
| From: | Cleary D Office of Nuclear Reactor Regulation |
| To: | |
| Shared Package | |
| ML20135G155 | List: |
| References | |
| A, NUDOCS 8509180242 | |
| Download: ML20135G176 (17) | |
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l September 11, 1985 7590-01 ,
NUCLEAR REGULATORY COMMISSION DOCKET NO. 50-354A PUBLIC SERVICE ELECTRIC AND GAS COMPANY AND ATLANTIC CITY ELECTRIC COMPANY NOTICE OF FINDING 0F NO SIGNIFICANT ANTITRUST CHANGES AND TIME FOR FILING REQUESTS FOR REEVALUATION The Director of Nuclear Reactor Regulation has made an initial finding in accordance with Section 105c(2) of the Atomic Energy Act of 1954, as amended, that no significant (antitrust) changes in the licensees' activities or proposed activities have occurred subsequent to the previous construction permit review of the Hope Creek Nuclear Generating Station by the Attorney General and the Comission. The finding is as follows:
"Section 105c(2 of the Atomic Energy Act of 1954, as amended, provides for an antitrust review of an application for an operating license if the Commission determines that significant changes in the licensee's activities or proposed activities have occurred subsequent to the previous construction pemit review. The Comission has delegated the authority to make the "significant change" detemination to the Director, Office of Nuclear Reactor Regulation. Based upon an examination of the f
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2-events since issuance of the Hope Creek construction permit to the Public Service Electric and Gas Company, and Atlantic City Electric Company, the staffs of the Antitrust and Economic Analysis Section of the Site Analysis Branch, Office of Nuclear Reactor Regulation and the Antitrust Section of the Office of the Executive Legal Director, hereafter referred to as " staff",
have jointly concluded, after consultation with the Department of Justice, that the changes that have occurred since the antitrust construction permit (CP) review are not of the nature to require a secondantitrustreviewattheoperatinglicense(OL)stageofthe application.
"In reaching this conclusion, the staff considered the structure of the electric utility industry in New Jersey, the events relevant to the Hope Creek (formerly Newbold Island) construction permit review and the events that have occurred subsequent to the construction permit review.
l "The conclusion of the staff's analysis is as follows: ,
'Since the construction permit antitrust review, there have been 1
several changes in the plans and activities of the Public Service Electric and Gas Company (PSE&G) and Atlantic City Electric Company (ACE), co-owners of Hope Creik, but none of these changes indicate J
any anticompetitive actions by PSE&G or ACE. The changes have i
involved a decrease in load growth and the accompanying changes in generation and transmission requirements, including a delay in Hope Creek Unit No. I and cancellation of Unit No. 2. Other changes have involved changes in rates and rate structure, particularly at the retail level, and some wholesale load changes. These types of changes were common to the electric utility industry following the Further, there have been inquiries and studies 1973 oil embargo.
by smaller electric utilities as to the costs for participation in Hope Creek, but none of these studies have led to actual participa-tion in the unit. Based on the NRC staff review, neither PSE&G nor ACE has unreasonably restrained these utilities from further partici-pation in Hope Creek, Unit 1.
" Based on the staff's analysis, it is my finding that a formal operating license antitrust review of the Hope Creek Nuclear Generating Station is not required."
4 Signed on September 4,1985 by Harold R. Denton, Director of Office of Nuclear Reactor Regulation.
Any person whose interest may be affected by this finding may file with full particulars a request for reevaluation with the Director of Nuclear Reactor Regulation, U.S. Nucleer Regulatory Commission, Washington, D.C. 20555 within f
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1 30 days from the date of this notice. Requests for a reevaluation of the no significant change determination shall be accepted after the date when the Director's finding becomes final but before the issuance of the OL only if l
! they contain new information, such as information about facts or events of '
antitrust significance that have occurred since that date, or information that :
could not reasonably have been submitted prior to that date. i d) M Donald P. Cleary, Acting C Site Analysis Branch Division of Engineering '
Office of Nuclear Reactor Regulation t ,
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HOPE CREEK GENERATING STATION a i Operating License Antitrust Analysis b
A. INTRODUCTION 1'
Section 105c(2) of the Atomic Energy Act of 1954, as amended, provides for an antitrust review of Operating License applications if significant changes in .
the licensee's activities or p.oposed activities have occurred since the construction permit antitrust review. Authority to make the significant d change determination was delegated to the Director, Office of Nuclear Reactor ij! '
Regulation (NRR) for reactors and to the Director, Office of Nuclear I' t
Material Safety and Safeguards (NMSS) for production facilities, as '
appropriate.
The Nuclear Regulatory Comission in a Memorandum and Order (CLI-80-28) dated June 30, 1980, I set forth three criteria upon which to base a "significant change" determination as follows:
(1) the change or changes must have occurred since the construction permit -
review.
(2) the change or changes must be attributable to activities or proposed activities of the licensee, and (3) the changed situation must have antitrust implications which would likely warrant a Comission remedy.
I 11 NRC 817, 824 (1980). See also 13 NRC 862 (1981).
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2-I The staff,2 has reviewed the activities and proposed activities of the I
applicants, Public Service Electric and Gas (PSE&G) and the Atlantic A Electric Company (ACE) that have transpired since the issuance (and sub-subsequent amendments) of the construction permits on November 4,1 the Hope Creek Generating Station (Hope Creek)3, Docket 50-354. It is the staff's conclusion that no "significant changes" have occurred.
B. BACKGROUND i
1.
_ Electric Utilities in the Region The applicants, Public Service Electric and Gas Company (PSEAG) and Atlantic City Electric Company (ACE), are members of the Mid-Atlantic Area Council (MAAC), a regional reliability council.
Other members of MAAC are Philadelphia Electric Company, Metropolitan Edison C Pennsylvania Electric Company, Jersey Central Power and Light ,
New Jersey Power & Light Company, Pennsylvania Power & Light C Baltimore Gas and Electric Company, Potomac Electric Power Com i Delaware Power & Light Company.
l In addition to the 11 member systems, 2
of Engineering, Office of Nuclear Reactor Regulatio Counsel of Justice. of the Executive Legal Director in consultation with the Depar 3
permit antitrust review. Hope Creek was called Newbold Island at the ti
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k municipals, electric cooperatives, and the small investor-owned i electric systems operating in the MAAC Region may participate in r i
activities under the agreement through associates. r Each associate i is a representative of the interests of groups of these systems in their respective states. Presently there are five associates in MAAC.
The MAAC member systems operate on .t "one system" basis under the Pennsylvania-New Jersey-Maryland (PJM) Interconnection Agreement.
Under this agreement, the NAAC systems participate in economy and emergency power interchange within the region and, under additional interconnection agreements, interchange power with systems in adjacent regions.
PSE&G maintains high-voltage transmission inter-connections with Delaware Power & Light, Philadelphia Electric, Pennsylvania Power & Light, Jersey Central Power & Light, Metropolita Edison, and ACE.
ACE, in turn, has high voltage interconnections with .
Philadelphia Electric, Delaware Power and Light, Jersey Central Power and Light, and Public Service Electric and Gas, a.
Public Service Electric and Gas Company (PSE&G)
PSE&G serves over 1,700,000 electric customers in an area of approxi-mately 260 square miles running diagonally fr'om northeast to southwest across the State of New Jersey.
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About three-fourths of the state's population, 5.5 million people, live in PSE8G's service area. This territory encompasses New Jersey's six largest municipalities. Newark, Jersey City, Paterson, Elizabeth, h Trenten, and Camden, plus approximately 300 suburban and rural connuni-ties.
I PSE&G serves 223 of these connunities, providing retail service [
j to a population of 4.7 million. The company also provides wholesale .
r service to the three towns of Milltown, South River, and Park Ridge which distribute electricity at retail to their 30,000 residents,
- b. Atlantic City Electric Company (ACE)
ACE, with 400,000 electric customers, is approximately one-fourth the size of PSEAG.
ACE serves approximately 70 cities and towns at retail including Atlantic City. ACE has no wholesale-for-resale customers but does engage in econorny, emergency and other electric power inter-changes with MAAC members.
2.
Construction Permit Antitrust Review On August 4, 1971 the Department of Justic advised that the applica-tion by PSE&G to construct the Hope Creek plant (previously named Newbold Island) would not create or maintain a situation incon with the antitrust laws. The Attorney General's advice was published m-
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in the federal Register on September 4,1971 (V.36 N.173). No petitions j
to intervene or requests for hearing regarding the antitrust aspects of I the application were received, and on November 4, 1974, construction J permit, CPPR-120, was issued.
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CHANGES SINCE THE CONSTRUCTION PERMIT REVIEW 1.
_The Addition of Atlantic Electric Co. (ACE) as an Owner Participan In September 1972, about a year after the Attorney General's advice regarding the construction of the plant Atlantic City Electric Company (ACE) expressed in writing its desire to own a portion of the plant, originally named Newbold Island.
Originally, ACE planned to own 110 MW each of Newbold Unit 1 and Newbold Unit 2 whic scheduled to be in service in 1978 and 1979, respectively.
Since that time the Newbold units have been renamed Hope Creek Un and Unit 2.
In December 1981, PSE&G announced its decision to abandon '
the construction of Unit 2 due to lower estimates for the d electricity.
Previously, in 1976 PSE&G and ACE supplemented the Owners Agreement which effected a change in ownership from 90 percent b and 10 percent by ACE to 95 percent for PSE&G and 5 percent for ACE l
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1 ACE had requested this change in ownership as a result of ACE's lower h 4
load growth projection and its concern over the amount it would be [
required to spend. With the estimated installed capacity of Hope Creek (
i to be 1067 M . ACE's 5 percent ownership totals approximately 53 W i'
rather than the 220 W it had envisioned as partial owner of Newbold Island. ?
- 2. PSE&G Changes Since the construction permit antitrust review several changes in PSE&G's plans and activities have occurred:
As noted above, changes in the company's generating capacity include the fact that Unit 2 has been cancelled; and, at the request of ACE, its ownership of Unit 1 will be reduced from 10 percent to 5 percent. The decrease in load growth has also led the company to cancel the 1300 W Kittatinny Pumped Storage Hydro Unit scheduled for service in 1982.
With regard to the company's transmission facilities, plans to construct a new 500 kV transmission line from the Hope Creek Generating Station to the Tuckerton, New Jersey area were can-celled; a 345 kV interconnection between PSE8G and Consolidated
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1 l Edison, parallel to both the existing 345 kV Hudson-Farragut and Waldwick-South Mahwah interconnections, was added; a 230 kV cable I' t
l circuit between the applicant's Fairlawn and Waldwick switching
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stations was added; two Sewaren-Essex 230 kV lines were cancelled; and an additional interconnection was estaolished in 1983 with Jersey Central Power & Light.
l PSE&G has received several indications of interest with regard to power from the Hope Creek station since the construction permit antitrust review. During the years 1977-79, PSEAG provided the city of Vineland with information on Hope Creek. In May 1982, the company supplied Stone and Webster Engineering Corp., consultant to the city -
of Vineland, with updated information regarding the selling price based on a two percent ownership of Unit 1. According to the manager 1
of Vineland's electrical department, although the consultant reconnended that participation in Hope Creek would be economical, the city council .
i decided to withhold its approval.
In 1977, PSE4G offered to sell Allegheny Power System a share l
of Hope Creek, but the offer was not accepted. During the l
period 1976-1979 PSE&G and Philadelphia Electric Company (PE) studied, both separately and jointly, the feasibility of sharing the ownership and output of the Hope Creek and Limerick nuclear units. During 1980 and 1981, joint studies between PSEAG, PE, and Pennsylvania Power and Light Company (PP&L) were made to I
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i-plant. The three companies agreed that the alternatives con- 1 f
s d idered would not be implemented, and discussions between PSE4G and PE on possible joint ownership arrangements of thi. .. ope Creek
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e and Limerick units were discontinued in 1983.
i PSE&G had discussions regarding purchases of Hope Creek with 9 Delaware Municipal Electric Corporation in 1980, and in 1981 i responded to requests for information from the city of Dover, Delaware, and the Easton Utilities Connission of Easton, Maryland.
However, both these cities have decided to pursue alternatives.
Dover is planning to convert an oil unit to coal, and Easton is <
seeking sources of econo g power. Both cities have not ruled out purchases of Hope Creek power in the future. Also in 1981, in response to inquiries by the New Jersey Board'of Public Utilities, Jersey Central Power and Light Company indicated that it did not appear likely that ,
Jersey Central required Hope Creek capacity.
Since the construction permit review, PSEAG has effected some changes among its customers.
In September 1976, it began to serve at wholesale the Borough of Park Ridge which previously purchased power from Rockland Electric Company. And in May 1980 ACE became a partial requirement wholesale customer of PSE4G when PSEAG began supplying energy from its Southampton Substation to serve ACE's customers in the Tabernacle area. .
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I Other changes occurred when the New Jersey Board of Public J
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'tilities approved a new set of electric and gas tariffs effec-tive March 23, 1984. 4 According to PSE&G, changes in these tariffs
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are based on the cost of providing service, and in general has I resulted in a simplification of rates and the establishment of new customer classes. Where appropriate these changes include the establishment of time-of-day electric rates, increased seasonal rate differentials, and a change in sumer/ winter definition.
- 3. ACE Changes As noted above, ACE has been interested in participating in the applicant's nuclear plant since 1972.
Since that time the plant has been delayed several times, but since ACE's peak load growth rates have declined greatly during this same period, capacity .
shortages have not developed. However, based on present load forecasts, a capacity deficiency would occur in the spring of 1989 if power from Hope Creek is not available by that time.
ACE has offered, verbally, to the city of Vineland an oppor-tunity to purchase capacity from ACE's 53 MW share but, as noted above, the city of Vineland has decided not to pursue the matter.
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i Since the construction permit review, ACE became a full member k
of the PJM power pool in June 1981. Before that time ACE had participated in PJM as an associate member through an agreement 1 with Philadelphia Electric Company. ACE has also been a member of MAAC, the regional coordinating group, since it was formed. i With regard to changes in transmission. ACE has established additional 230/69 kV interconnections with Jersey Central Power and Light and PSE&G.
These interconnections help to supply ACE's load in certain areas and also increase its ability to import power and energy from other utilities.
ACE continues to have no wholesale customers, but did become a partial requirement wholesale customer of PSE8G in May 1980 as noted above.
Since the construction permit review there have been changes in ACE's rate schedules.
On October 1, 1981 the New Jersey Board of Public Utilities ordered ACE to institute a separate rate schedule for casino-hotels. Rate schedules HCS (Hotel-Casino Service) and MA (Marginal Adjustment) were developed to place the casino-hotels on a marginal energy basis. On December 14, 1982 ACE implemented two new rate schedules.
Direct Distribution e
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Connection, DDC, and Contributed Street Lighting, CSL. DDC applies
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to constant small loads such as phone booths, cable TV amplifiers , !
and traffic signals.
i CSL applies to a new class of street light-ing customers who provide a capital contribution for the cost of light fixtures.
On November 5,1984, ACE initiated the Small Power Purchase (SPP) and Standby Service Rider (STB) tariffs.The SPP tariff includes capacity payments to qualifying facilities with a capacity greater than 100 kW.
The STB tariff includes standby demand rates for service at various voltage levels.
D.
ANALYSIS OF CHANGES SINCE THE CONSTRUCTION PERM The staff's analysis of changes since the construction permit review h disclosed no changes that would suggest anticompetitive action by PS or ACE.
The changes in load growth, generating capacity additions and associated transmission changes are a result of reduced electrical e .
demands that occurred throughout the electric industry following the oil embargo in 1973.
Changes in electric rates and rate structures are the results of increasing production costs and the desires of regulatory
- agencies to change rate structures so as to promote conservation o and efficiencies in energy production.
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ACE's ownership participation in the Hope Creek nuclear plant is consis- 4
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tent with the interpretation by the Department of Justice and the NRC of Congress' desire to allow smaller electric utilities to share in the t benefits of nuclear power.
Similarly, PSE&G and ACE have positively '
responded to inquiries by still smaller electric utilities such as the city of Vineland, the Delaware Municipal Electric Corporation, the Alleghany Power System, and the city of Dover regarding the costs of participation in Hope Creek.
Although none of these inquiries have thus far led to further ownership change, the staff has received no indication of anticompetitive conduct on the part of PSE&G or ACE.
E.
SUMMARY
AND CONCLUSION The antitrust review by the Department of Justice and the Nuclear Re Comission of the construction permit application for the Hope Creek (formerly Newbold Island) nuclear plant raised no antitrust, concerns and -
there were no requests by the public for antitrust hearings in response to the Federal Register notice of the Attorney General's advice.
Since the construction permit antitrust review, there have been several changes in the plans and activities of the Public Service Electric and Gas Company (PSE&G) and Atlantic City Electric Company (ACE), co-owner Creek, but none of these changes indicate any anticompetitive actions by
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PSE&G or ACE.
The changes have involved a decrease in load growth and the accompanying changes in generation and transmission requirements, including a delay in Hope Creek Unit No.1 and cancellation of Unit No. 2.
'I Other changes have involved changes in rates and rate structure, particu-larly at the retail level, and some wholesale load changes. These types of changes were common to the electric utility industry following the 1973 oil embargo. Further, there have been inquiries and studies by smaller electric utilities as to the costs for participation in Hope Creek, but none of these studies have led to actual participation in the unit.
Based on the NRC staff review, neither PSE&G nor ACE has unreasonably restrained these utilities from further participation in Hope Creek, Unit 1.
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