ML20141E650
| ML20141E650 | |
| Person / Time | |
|---|---|
| Site: | Clinton  |
| Issue date: | 01/02/1986 |
| From: | Eisenhut D Office of Nuclear Reactor Regulation |
| To: | |
| Shared Package | |
| ML20141E648 | List: |
| References | |
| NUDOCS 8601080247 | |
| Download: ML20141E650 (12) | |
Text
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January 02, 1986 s
REEVALUATION AND AFFIRMATION OF UPDATED.
NO SIGNIFICANT CHANGE FINDING PUR5UANT TO CLINTON NUCLEAR UNIT 1 OPERATING LICENSE ANTITRUST REVIEW By letter dated October 9,1985, Dr. Roger Batz of Elsah, Illinois requested a reevaluation of my " Updated Finding of No Significant Antitrust Changes" pursuant to 'the captioned antitrust review which was published in the Federal Register on September 13, 1985 (50 Fed. Reg. 37451).
For the reasons set forth below, I have decided not to change my Finding of no significan.'.
antitrust changes.
BACKGROUND Illinois Power Company (IP) underwent an antitrust review at the construction pemit (CP) stage by the Atomic Energy Commission staff and the Department of Justice (Department) in accordance with Section 105c of the Atomic Energy Act of 1954, as amended (Act). Allegations of misconduct on the part of IP were uncovered during the CP antitrust review and as a result the construction pemit was issued with a set of antitrust license conditions designed to stimulate the competitive process in the Illinois bulk power market.
Illinois Power Company filed an application to amend its Clinton 1 construction permit on January 31, 1978, adding two new co-owners of Clinton 1.
Both of the new owners, Soyland Power Cooperative, Inc. (Soyland) and Western Illinois Power Cooperative, Inc. (WIPCO), were reviewed by the staffs of the
~
Nuclear Regulatory Commission (Commission), and the Department of Justice.
On August 11, 1978, the Department issued : "no hearing" advice letter concluding that the participation of the two new co-owners in Clinton I was a result of the CP license condition that required Illinois Power Company to. share ownership in Clinton and that the addition of the two-new owners did not create or maintain a situation incorsistent with the antitrust laws. On i
B601080247 860102 DR ADOCK O 1
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1.
i i
n.
February 23, 1982, I issued a finding which recommended that no formal l
operating license antitrust review was necessary for the Clinton 1 i
plant- (47 Fed. Reg.10655). My finding was based upon a thorough analysis of l
the changes (with competitive significance) that occurred since the completion l
of the CP antitrust review.* My staff reviewed the changes in activities of j
all three applicants--Illinois Power since the initial CP review in 1974 and the two cooperatives since their CP review in 1978. After reviewing the i
~
]
changes that occurred since the CP reviews, staff concluded that the changes j
for the most part resulted from.the implementation of the CP license conditions j
and had positive performance effects on the availability of bulk power supply and that said changes generally enhanced the competitive process in the applicants' service areas.
Since I issued my Finding in February of 1982, the fuel load date for Clinton was changed twice, from January of 1983 to January of 1984 and from January of 1984 to January of 1986. The original change in the fuel load date created a lc gap in staff's antitrust operating license review and necessitated an update
]
of the data used by my staff in the original review procedure. Consequently, j
my staff initiated a monitoring review of Clinton which was completed in January of 1983. The monitoring review made no recomendation to amend my l
initial " Finding of No Significant Antitrust Changes _".
l As a result of the most recent change in the Clinton fuel load date, to January of 1986, the applicants' original (and most comprehensive) data 4
i Section 105c, Paragraph (2) of the Atomic Energy Act of 1954, as amended, directs the Comission not to conduct a full scale antitrust review j
(similar to that required at the construction permit stage) "...unless the Comission determines such review is advisable on the ground that i
significant changes in the licensee's activities or proposed activities have occurred subsequent to the previous review by the Attorney General and the Commission under this subsection in connection with the i
construction permit for the facility." On September 12, 1979, by memorandum from Chairman Hendrie to William J. Dircks, Director, NMSS,
-and Harold R. Denton, Director, NRR, the Commission delegated its 4
"significant change" responsibility to the Director of the Office of Nuclear Reactor Regulation.
1 -
submission will be almost six years old at the time of fuel load and not an adequate reflection of the current status of the applicants' activities in central and southern Illinois. For this reason updated information was requested from all applicants regarding changed activity since the original operating license data response in May of 1980. After analyzing the updated data responses and contacting members of the electric power industry in Illinois, my staff concluded that, "The changes that have been identified since the construction permit review have by and large provided momentum for greater coordination, and consequently increased competition, between all groups of power supply systems in central and southern Illinois." Based upon my staff's analysis, I issued an " Updated Finding of No Significant Antitrust Changes" pursuant to the Clinton antitrust operating license review.
By letter dated October 9, 1985, Dr. Roger Batz, of Elsah, Illinois, requested a reevaluation of my updated Finding.
DISCUSSION The Commission delegated its authority to make significant change findings to the Staff and established a definite set of criteria the Staff must follow in making the determination whether or not a significant change has occurred.*
The change or changes, (1) must have occurred since the previous antitrust review of the licensee (s); (2) are reasonably attributable to the licensee (s);
and (3) have antitrust implications that would likely warrant some form of Commission remedy.
It is within this framework established by the Commission that I made my initial " Finding of No Significant Antitrust Changes" in The Commission delegated its authority to make significant change findings to the Staff by memorandum dated September 12, 1979 (see previous footnote). The Commission included in this delegation of authority specific procedures the Staff should follow in conducting its significant change reviews.
In its Summer decision (CLI-80-28 and CLI-81-14), the Commission outlined the criteria the Staff must employ in making a finding as to whether or not there have been significant changes (with competitive significance) since the previous antitrust review.
_ _ _ _ ~ - _ _ _. - _ _ _. _..
l
\\
s~ l j
1982 and it is within this framework that I have analyzed Dr. Batz's request i
to reevaluate my Clinton significant change Finding.
In his request for reevaluation, Dr. Batz raises concerns pertaining to the
)
fiscal viability of the Clinton applicants as well as the distribution cooperatives served by the Clinton applicants. 'He indicates that, (1) the distribution cooperatives served by WIPC0 and to a lesser extent by Soyland are in "... dire fiscal crises..." and "...it is highly likely that one or more j
of the 22 distribution coops will go into chapter 11 bankrup[t]cy soon..."; (2) j the 1984 power coordination agreement between Clinton and co-applicants WIPC0 l
and Soyland adversely affects Illinois Power customers and the coop customers l
' served by WIPCO and Soyland; (3) the Nuclear Regulatory Comission should l
conduct an investigation of the financial records of WIPCO and Soyland and l
J all of the twenty-two distribution cooperatives; and (4) some of the coops
)
may sell out to investor-owned utilities or reorganize into new entities, j
]
thereby adversely affecting Illinois Power's fiscal status regarding power sales from the Clinton plant.
In applying the Commission's significant j
change criteria to each of Dr. Batz's concerns, I have found no reason to i
[
conclude that there has been a change in the applicant's activities that would cause me to amend my " Updated Finding of No Significant Antitrust I
s
+
l Changes." The activities described by Dr. Batz in his request for j
reevaluation and accompanying testimony do not depict any type of l
anticompetitive behavior that would likely warrant a remedy by the Nuclear Regulatory Comission, i
1 I
l j
The common thread running throughout Dr. Batz's request for reevaluation is a l
concern over the wholesale rate increase expected to accompany Clinton's j
commercial operation and the impact such an increase may have on the j
)
distribution cooperatives served by WIPC0 and Soyland. The Federal Energy Regulatory Commission (FERC) has a policy requiring utility companies i
j engaged in capital intensive construction projects to phase in the costs associated with the particular project over a period of years, with no more 1
I i
w
i
~5-than fifty percent included in the rate base during the first year of the plant's commercial operation. Even though utilities are allowed to phase in only fifty percent of a particular project the first year, the sums can be substantial when associated with a large nuclear power plant. This " rate shock" is what Dr. Batz seems to be referring to in his request when he indicates that some of the distribution coops, i.e., those most likely to be affected by increases in wholesale power rates, in Illinois are fiscally unstable and any large rate increase could cause these coops to declare backruptcy, reorganize or merge with other power systems.
I have found no evidence to indicate that the Clinton owners acted in an anticompetitive fashion by including Clinton construction costs in their rate bases. If Dr. Batz believes that the wholesale rates projected for the distribution cooperatives in Illinois are in any way inequitable or may result in competitive injury to sellers or consumers of electric power and energy in Illinois, he should petition the FERC and/or the Illinois Commerce Commission for rate relief. The Nuclear Regulatory Commission does not have jurisdiction over tariffs for electric power and energy and consequently, could not remedy any inequities (if found) in such tariffs.
Dr. Batz also expresses concern over the Ownership Participation Agreement and accompanying Power Coordination Agreement signed by the Clinton owners in October of 1984. These two Agreements changed the manner in which ownership shares of Clinton were divided among the three owners, allowing WIPC0 and Soyland to participate in Clinton on a sliding scale based upon an absolute
. dollar expenditure ($450 million) by the two Cooperatives rather than a percentage ownership share as provided for in the original agreement among the Clinton owners signed in August of 1976. Dr. Batz contends that these Agreements hurt both Illinois Power customers and the customers of WIPC0 and Soyland by requiring Illinois Power customers to assume more of the capital costs associated with the construction of Clinton and at the same time require I
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l i WIPC0 and Soyland customers to pay more for fewer kilowatt hours of electricity as the percentage of ownership allotted to WIPC0 and Soyland decreases. The Clinton owners have jointly decided that a new ownership arrangement would be beneficial to all three parties.
I have no evidence to indicate that WIPC0 and Soyland were in'any way coerced into reducing their ownership shares in Clinton (from a combined twenty percent share to a sliding scale share) and see no anticompetitive effect upon bulk power supply in Illinois as a result of this change in ownership shares.
I believe the issues raised in the request for reevaluation concerning Clinton wholesale power rates as well as the terms and provisions of the Ownership Participation Agreement and the accompanying Power Coordination Agreement would be more appropriately addressed by the FERC, where both Agreements have been filed, or the Illinois Commerce Commission, where, as Dr. Batz notes, there is an open docket pending.
For the reasons stated above, I have decided not to change my " Updated Finding of No Significant Antitrust Changes" pursuant to the antitrust operating license review of the Clinton Power Station, Unit 1.
Orici..
,j Darre11 G. Eisenhut Darrell G. Eisenhut, Acting Director Office of Nuclear Reactor Regulation Distribution:
DocketFiles(50-461A)
W.-Lambe PRAB Plant Files B. Vogler H. Denton B. Siegel D. Eisenhut NRC PDR J. Funches LPDR L. Solander
- See previous concurrence OFC :PPAS:PPAB* :PPAS:PPAB* :PPAS*
- 0 ELD *
- ACT DIR NRR :
NAME :W. Lambe:js :L. Solander :J. Funches :B. Vogler
- D.
t:
0....:.______...._: _____...__.:....________:......___...:___...______:_.-......__:_______....
DATE :12/04/85
- 12/06/85
- 12/10/85
- 12/16/85
- 01/ JR/86 0FFICIAL RECORD COPY
4'
. 'WIPC0 and Soyland customers to pay more for fewer kilowatt hours of electricity as the percentage of ownership allotted to WIPC0 and Soyland decreases..The Clinton owners have jointly decided -that a new ownership arrangement would be beneficial to all three parties.
I have no evidence to-i indicate that WIPC0 and Soyland were in any way coerced into reducing their ownership shares in Clinton (from a combined twenty percent share to a sliding scale share) and see no anticompetitive. effect upon bulk power supply in Illinois as a result of this change in ownership shares.
I I believe the issues raised in the request for reevaluation concerning Clinton wholesale power rates as well as the terms and provisions of the Ownership Participation Agreement and the accompanying Power Coordination Agreement would be more appropriately addressed by the FERC, where both Agreements have been filed, or the Illinois Commerce Commission, where, as Dr. Batz notes, there is an open docket pending.
For the reasons stated above, I have decided not to change my " Updated Finding of No Significant Antitrust Changes" pursuant to the antitrust operating license review of the Clinton' Power Station, Unit 1.
Orig 2a _
q Darrell G. Eisenhut Darrell G. Eisenhut, Acting Director Office of Nuclear Reactor Regulation Distribution:
' Docket'FilesL(50461A)
W'. Lambe PRAB Plant Files -
B. Vogler H. Denton B. Siegel-D. Eisenhut NRC PDR J. Funches LPDR L. Solander
- See previous concurrence OFC :PPAS:PPAB* :PPAS:PPAB* :PPAS*
- 0 ELD *
- ACI DIR NRR :
NAME :W. Lambe:js :L. Solander :J. Funches
- B. Vogler
- D.
t:
DATE :12/04/85
- 12/06/85'
- 12/10/85
- 12/16/85
- 01/ JR/86 0FFICIAL RECORD COPY L
January 02, 1986 REEVALUATION AND AFFIRMATION OF UPDATED NO SIGNIFICANT CHANGE FINDING PURSUANT TO CLINTON NUCLEAR UNIT 1 OPERATING LICENSE ANTITRUST REVIEW By letter dated October 9, 1985, Dr. Roger Batz of Elsah, Illinois requested a reevaluation of my " Updated Finding of No Significant Antitrust Changes" pursuant to the captioned antitrust review which was' published in_the Federal Register on September 13,1985(50 Fed. Reg.37451).
For the' reason:: set forth below, I have cecided not to change my Finding of no significant antitrust changes.
BACKGROUND Illinois Power Company (IP) underwent an antitrust review at the construction permit (CP) stage by the Atomic Energy Comission staff and the Department of Justice (Department) in accordance with Section 105c of the Atomic Energy Act of 1954, as amended (Act). Allegations of misconduct on the part of IP were uncovered during the CP antitrust. review and as a result the construction permit was issued with a set of antitrust license conditions designed to stimulate the competitive. process in the Illinois bulk power market.
Illinois Power Company filed an application to amend its Clinton 1 construction permit on January 31, 1978, adding two new co-owners of Clinton 1.
Both of the new owners, Soyland Power Cooperative, Inc. (Soyland) and Western Illinois Power Cooperative,~ Inc. (WIPC0), were reviewed by the staffs of the Nuclear Regulatory Commission (Commission), and the Department of Justice.
On August 11, 1978, the Department issued a "no hearing" advice letter concluding that'the participation of the two new co-owners in Clinton I was a result of the CP license condition that required Illinois Power Company to share ownership in Clinton and that the addition of the two new owners did not create or maintain a situation inconsistent with the antitrust laws.- On
a
~
s
. February 23, 1982, I issued a finding which' recommended that no formal operating license antitrust reviet was necessary for the~Clinton 1 plant (47 Fed. Reg. 10655). My finding was based upon a thorough analysis of the changes (with competitive significance) that' occurred since the completion of the CP antitrust review.* My staff reviewed the changes in activities of all three applicants--Illinois Power since the initial CP review in 1974 and the two cooperatives since their CP review in 1978. After reviewing the
~
changes that occurred since the CP reviews, staff concluded that the changes for the most part resulted from the' implementation of the CP license conditions and had positive performance effects on the availability of bulk power supply and that said changes generally enhancedithe' competitive process in the applicants' service areas.
1-Since I issued my Finding in February of 1982, the fuel load date for Clinton was changed twice, from January on 1983 to January of 1984 and from January of 1
1984 to January of 1986. The original change in the fuel load date created a gap in staff's antitrust operating license review and necessitated an update of the data used by my staff in the original review procedure. Consequently, my staff initiated a monitoring review of Clinton which was completed in January of 1983. The monitoring review made no recommendation to amend my 1
f attial " Finding of No Significant Antitrust Changes".
As a result of the most recent change in the Clinton fuel load date, to January of 1986, the applicants' original (and most comprehensive) data 4
. Section'105c, Paragraph (2) of the Atomic Energy Act of 1954, as amended, directs the Commission not to conduct a-full scale antitrust review (similar to that required at-the construction prec<t stage) "...unless S
the Commission determines such review is adviritU on the-ground that significant changes ~in the licensee's acti'-1t e:
r proposed activities have occurred subsequent to the previous rt.F3r 4, the Attorney General and the Commission under this subsection s., coinwetion with the construction permit for the facili+y," On September 12, 1979, by memorandum from Chairman Hendrie to William J.-Dircks, Director, NMSS, and' Harold R. Denton, Director, NRR, the Commission delegated its "significant change" responsibility to the-Director of the Office of Nuclear Reactor Regulation.
a
/
. ~.
v,,--,r n
submission will be almost six years old at the time of fuel load and not an adequate reflection of the current status of the applicants' activities in central and southern Illinois. For this reason updated information was requested from all applicants regarding changed activity since the original operating license data response in May of 1980. After analyzing the updated data responses and contacting members of the electric power industry in Illinois, my staff concluded that, "The changes that have been identified since the construction permit review have by and large provided momentum for greater coordination, and consequently increased competition, between all groups of power supply systems in central and southern Illinois." Based upon my staff's analysis, I issued an " Updated Finding of No Significant Antitrust Changes" pursuant to the Clinton antitrust operating license review.
By letter dated October 9, 1985, Dr. Roger Batz, of Elsah, Illinois, requested a reevaluation of my updated Finding.
DISCUSSION The Commission delegated its authority to make significant change findings to the Staff and established a definite set of criteria the Staff must follow in making, the determination whether or not a significant change has occurred.*
The change or changes, (1) must have occurred since the previous antitrust review of the licensee (s); (2) are reasonably attributable to the licensee (s);
and (3) have antitrust implications that would likely warrant some form of Commission remedy.
It is within this framework established by the Commission that I made my ~ initial " Finding of No Significant Antitrust Changes" in The Commission delegated its authority to make significant change findings to the Staff by memorandum dated September 12, 1979 (see previous footnote). The Commission included in this delegation of authority specific procedures the Staff should follow in conducting its significant change reviews.
In its Summer decision (CLI-80-28 and CLI-81-14), the Comission o~utlined the criteria the Staff must employ in making a finding as to whether or not there have been significant' changes (with competitive significance) since the nrevious antitrust review.
1982 and it is within this framework that I have analyzed Dr. Batz's request to reevaluate my Clinton significant change Finding.
In his request for reevaluation, Dr. Batz raises concerns pertaining to the fiscal viability of the Clinton applicants as well as the distribution cooperatives served by the Clinton applicants. He indicates that, (1) the distribution cooperatives served by WIPC0 and to a lesser extent by Soyland are in "... dire fiscal crises..." and "...it is highly likely that one or more of the 22 distribution coops will go into chapter 11 bankrup[t]cy soon..."; (2) the 1984 power coordination agreement between Clinton and co-applicants WIPC0 and Soyland adversely affects Illinois Power customers and the coop customers served by WIPC0 and Soyland; (3) the Nuclear Regulatory Commission should conduct an investigation of the financial records of WIPC0 and Soyland and all of the twenty-two distribution cooperatives; and (4) some of the coops may sell out to investor-owned utilities or reorganize into new entities, thereby adversely affecting Illinois Power's fiscal status regarding power sales from the Clinton plant.
In applying the Commission's significant change criteria to each of Dr. Batz's concerns, I have found no reason to conclude-that there has been a change in the applicant's activities that would cause me to amend my " Updated Finding of No Significant Antitrust Changes." The activities described by Dr. Batz in his request for reevaluation and accompanying testimony do not depict any type of anticompetitive behavior that would likely warrant a remedy by the _ Nuclear Regulatory Comission.
The common thread running throughout Dr. Batz's request for reevaluation is a concern over the wholesale rate increase expected to accompany Clinton's commercial operation and the impact such an increase may have on the distribution cooperatives served by WIPC0 and Soyland. The Federal Energy Regulatory Commission (FERC) has a policy requiring utility companies engaged in capital intensive construction projects to phase in the costs associated with the particular project over a period of years, with no more
than fifty percent included in the rate base during the first year-of the plant's commercial operation. Even though utilities are allowed to phase in only fifty percent of a particular project the first year, the sums can be substantial when ~ associated with a large nuclear power plant. This " rate shock" is what Dr.' Batz seems to be referring to in his request when he indicates that some of the distribution coops, i_., those most likely to be affected by increases in wholesale power rates, in Illinois are fiscally unstable and any large rate increase could cause these coops to declare backruptcy, reorganize or merge with other power systems.
I have found no evidence to indicate that the Clinton owners acted in an anticompetitive fashion by including Clinton construction costs in their rate bases.
If-Dr. Batz believes that the wholesale rates projected for the distribution cooperatives in Illinois are in any way inequitable or may result in competitive injury to sellers or consumers of electric power and energy in Iliinois, he should petition the FERC and/or the Illinois Commerce Commission for rate relief. The Nuclear Regulatory Commission does not have jurisdiction over tariffs for electric power and energy and consequently, could not remedy any inequities (if found) in such tariffs.
Dr. Batz also expresses concern over the Ownership. Participation Agreemant and accompanying Power Coordination Agreement signed by.the Clinton owners in October of 1984. These two Agreements changed the manner in which ewnership i
shares of Clinton were divided among the three owners, allowing WIPC0 and Soyland to participate in Clinton on a sliding scale based upon an absolute dollar expenditure ($450 million) by the two Cooperatives rather than a percentage ownership share as provided for in the original agreement among the Clinton owners signed in August of 1976.
Dr. Batz contends that these Agreements hurt both Illinois Power customers and the customers of WIPC0 and j
Soyland by requiring' Illinois Power customers to assume more of the capital costs associated with the construction of Clinton and at the same time require i
-