ML20141M860

Forwards Draft Fr Notice of Finding of No Significant Antitrust Changes & Time for Filing Requests for Reevaluation

ML20141M860
Person / Time
Site:	Seabrook
Issue date:	02/21/1986
From:	Funches J Office of Nuclear Reactor Regulation
To:	Harrison R PUBLIC SERVICE CO. OF NEW HAMPSHIRE
References
NUDOCS 8602280477
Download: ML20141M860 (72)

Text

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ES 21 !986 Mr. Robert J. Harrison President and Chief Executive Officer Public Service Company of New Hampshire P.O. Box 330 Manchester, New Hampshire 03105 Re: Seabrook Station, Unit 1 Antitrust Operating License Review--No Significant Change Finding (Docket No. 50-443A)

Dear Mr. Harrison:

Pursuant to the antitrust review of the captioned nuclear unit, the Director of the Office of Nuclear Reactor Regulation has made a finding, in accordance with Section 105c(2) of the Atomic Energy Act of 1954, as amended, that no significant antitrust changes have occurred subsequent to the antitrust review at the construction permit stage.

This finding is subject to reevaluation if a member of the public requests same in response to publication of this finding in the Federal Register.

A copy of the notice that is being transmitted to the Federal Register and a copy of the Staff Review are enclosed for your information.

Sincerely, g g SM asse M Jesse L. Funches, Director Planning and Program Analysis Staff Office of Nuclear Reactor Regulation

Enclosures:

1. Federal Register Notice

2. Staff Review Distribution PRAB Plant File

Docket Filet (Nor50-443&)* ~

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l DATE $2/11/86 $2/l3/86 $2/6/86 $ $ $  :

1 0FFICIAL RECORD COPY u

7590-01 NUCLEAR REGULATORY COPNISSION DOCKET NO. 50-443A PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE ET AL .

NOTICE OF FINDING OF NO SIGNIFICANT ANTITRUST CHANGES -

AND TIME FOR FILING REQUESTS FOR REEVALUATION The Director of the Office of Nuclear Reactor Regulation has made a finding in accordance with Section 105c(2) of the Atomic Energy Act of 1954, as amended, that no significant (antitrust) changes in the licensee's activities or proposed activities have occurred subsequent to the construction pemit review of Unit 1 of the Seabrook Nuclear Station. 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 licer.se if the Commission determines that significant changes in the licensee's activities or proposed activities have occurred subsequent to the previous construction permit review. The Commission has delegated the

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authority to make the "significant change" finding to the Director, Office of Nuclear Reactor Regulation. Based upon an examination of the events since issuance of the Seabrook 1 construction permit to Public Service Company of New Hampshire, et a_1., the staffs of the Planning and Resource 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 review are not of the nature to require a second antitrust review at the operating license stage of the application.

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l 7590-01 "In reaching this conclusion, the staff considered the structure of the electric utility industry in New England, the events relevant,to the Seabrook construction permit reviews and the events that have occurred subsequent to the constru_ction permit reviews.

"The conclusion of the staff's analysis is as follows:

'Public Service Company of New Hampshire (PSNH), on behalf of itself and all other owners (applicants), has applied for an operating license for the Seabrook 1 nuc. lear unit. Pursuant to the Commission's "significant change" criteria, the staff has conducted an antitrust analysis of the applicants' activities and proposed activities since the Seabrook construction permit (CP) antitrust review was completed in January 1974. In performing

. this analysis, the staff has examined (1) activities undertaken by the applicants with respect to bulk power services, including coordination, tu nsmission, and wholesale services, (2) antitrust issues raised in two separate federal court proceedings involving New England Power Company (NEPCO) and Connecticut Light and Power Company (CLP), and (3) the New England Power Pool (NEP00L) which governs bulk power interrelationships among nearly all New England utilities.

'In the staff's view, none of the new and/or revised bulk arrangements entered into by any of the ar,plicants present any significant consequences of an antitrust nature. Such f

arrangements, in fact, appear to promote access to a wide range

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I 7590-01 l of alternatives for all New England utilities, regardless of size or type of ownership. ,

'The antitrust comp.laints against NEPC0 were mitigated after a settlement among the parties permitted the Town of Norwood to switch wholesale suppliers. A District Court decision dismissing all antitrust complaints against CLP was affirmed by an Appeals Court on all but two counts. Those two counts both dealt with price-squeeze and were remanded to the lower court for reconsideration. Staff notes further that the Federal Energy Regulatory Commission (FERC) is required to explicitly consider price-squeeze issues when raised with regard to new rate filings.

Consequently, staff has concluded that the price-squeeze issues do not warrant Commission remedy and therefore do not represent

. "significant changes" under the Commission's criteria.

' Finally, NEP00L, which was only two years old at the time when the CP antitrust review was performed, appears to have evolved into a framework ensuring access to reliable and economical bulk power supply for all New England utilities. Two provisions of the original pool agreement were found to be discriminatory against smaller utilities and have since been removed. Further, because Seabrook 1 has been designated as a pool planned unit, access to Seabrook 1 over pool transmission facilities of members is guaranteed for all participants under the term of NEP00L.

7590-01

'Thus, the changes in the activities of all of the applicants since the completion of the Seabrook 1 construction permit antitrust review do not represent significant changes of an ,

antitrust nature and, therefore, do not require a further, formal antitrust review at the operating license stage.'

" Based on the staff's analysis, it is my finding that a formal operating license antitrust review of Seabrook Station, Unit 1 is not required."

Signed on January 22, 1986 by Harold R. Denton, Director of the Office of Nuclear Reactor Regulation.

f Any person whose interest may be affected by this finding may file with full i

particulars, a request for reevaluation with the Director of Nuclear Reactor Regulation, U.S. Nuclear Regulatory Commission, Washington, D.C. 20555 for 30 days from the date of the publication of the Federal Register notice.

Requests for a reevaluation of the no significant changes determination shall be accepted after the date when the Director's finding becomes final but before the issuance of the OL only if'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.

FOR THE NUCLEAR REGULATORY.COWilSSION i

Jesse L. Funches, Director Planning and Program Analysis Staff Office of Nuclear Reactor Regulation

g SEABROOK STATION, UNIT 1 PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE, ET AL DOCKET NO. 50-443A FINDING OF NO SIGNIFICANT ANTITRUST CHANGES N

SEABROOK STATION UNIT 1 SIGNIFICANT CHANGE ANALYSIS TABLE OF CONTENTS Page I. Introduction ................................................. 1 II. Background

.................................................. 2 A. Construction Permit Antitrust Reviews of Seabrook ...... 3 B. New England Power Pool Agreement ....................... 12 III. Changes in the Activities of Seabrook Applicants ............ 16 A. Public Service Canpany of New Hampshire . . . . . . . . . . . . . . . . 16 B. Un i ted Il l um i n a ti ng Com pa ny . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 C. New En g l a nd Po we r C om pa ny . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

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D. Connec t ic ut Lig h t a nd Po we r Com pa ny . . . . . . . . . . . . . . . . . . . . 25

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E. Central Maine Power .................................... 35 F. Mo n tau p El ec t r ic Com pa ny . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 G. Fi tch bu rg Ga s and El ectric Compa ny . . . . . . . . . . . . . . . . . . . . . 40 H. Central Vermon t Public Service Corpo ra tion . . . . . . . . . . . . . 41 I. Ma i ne Pu bl ic Service Compa ny . . . . . . . . . . . . . . . . . . . . . . . . . . .

43 J. Bangor-Hyd ro El ec tr ic Compa ny . . . . . . . . . . . . . . . . . . . . . . . . . . 45 K. Ca n al El ec tr i c C ompa ny . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 L. Massachusetts Municpal Wholesale Electric Company ...... 48 l

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. Pace M. Ind ividual fiunici pal El ectric Systems . . . . . . . . . . . . . . . . . . 49 N. Ru ral El ec tric Coope ra tiv e s . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

0. Revi s ions o f NEP00L Agreemen t . . . . . . . . . . . . . . . . . . . . . . . . . 54 IV. Conclusion ................................................. 55 O

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Electric Utility Symbol Designation Bangor - Bangor-Hydro Electric Company BECO - Boston Edison Company Canal - Canal Electric Company CMP - Central Maine Power Company CVPS - Central Yemont Public Service Company CLP - Connecticut Light and Power Company CMEEC - Connecticut Municipal Electric Energy Cooperative GMP - Green Mountain Power Corporation FGE - Fitchburg Gas and Electric Company MPS - Maine Public Service Company MMWEC - Massachusetts Municipal Wnolesale Electric Company Montaup - Mountaup Electric Company NBEPC - New Brunswick Electric Power Commission

, NEPC0 - New England Power Company

_ NHEC - New Hampshire Electric Cooperative NU - Northeast Utilities PSNH - Public Service Company of New Hampshire UI - United Illisninating Company VEC - Vemont Electric Cooperative VEGT - Vemont Electric Generation and Transmission Cooperative VELCO - Vemont Electric Power Company WEC - Washington Electric Cooperative l

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4 SEABROOK STATION UNIT 1 -

SIGNIFICANT CHANGE ANALYSIS I. Introduction Section 105c(2) of the Atomic Energy Act of 1954, as amended, provides for a fonnal antitrust review of an operating license application if significant changes in the licensee's activities or proposed activities have occurred since the construction permit (CP) antitrust review. Authority to make the significant t

change determination has been delegated to the Director, Office of Nuclear Reactor Regulation (NRR) (for reactors) and to the Director, Office of Nuclear Material Safety and Safeguards (NMSS) (for production facilities) as appropriate.

The Nuclear Regulatory Conmission (NRC) (Commission) in a Memorandum and Order 1

(CLI-80-28) dated June 30, 1981 , set forth three criteria upon which to base in "significant change" determination as follows:

(1) The change or changes must have occurred since the previous 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 Connission remedy.

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n connection with the Seabrook I operating license applicat'fon 2 the 3

s ta ff has reviewed the activities and proposed activities of the licensees that have transpired since the previous construction permit reviews. It is the staff's conclusion based on a review of the facts contained herein no "significant changes" have occurred since the CP reviews.

II. Background The background serving to examine changes of the Seabrook applicants since f

undergoing CP antitrust review may be viewed as consisting of two inportant components.

A natural starting point is to examine the findings by the Department of Justice (Justice) at the CP stage. These findings may be found in the various Seabrook advice letters that Justice has provided to the Commission.

The second important component in the analysis is to examine the

' structure and organization of bulk power supply in the market arena in which the Seabrook applicants participate.

In New England, the region containing all Seabrook applicants, this examination directly implies an inspection of the New England Power Pool (NEPOOL), whose members virtually account for the total generation capacity in the 6 New England states.

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P A.

Construction Permit Antitrust Reviews of Seabrook

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The Seabrook CP antitrust reviews are considered in two parts, one dealing with the initial CP review in 1973, the other with reviews of subsequent applicants.

j 1. Initial Construction Pennit Antitrust Review 4 i

a. Proposed Initial Owners At the time of the construction pennit review nine privately-owned

) utilities had firmly conmitted to participate in Seabrook 1 but also had agreed to offer part of their ownership shares to 13 municipal electric systems and rural electric cooperatives. The firmly-committed utilities and their respective ownership shares were as follows :

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Public Service Company of New Hampshire (PSNH)........ 50.0000 P.

The Uni ted Ill umina ting Company (VI) . . . . . . . . . . . . . . . . . . 20.0000 l Cen tral Ma ine Power Compa ny ( CHP) . . . . . . . . . . . . . . . . . . . . . 2. 5505 The Connecticut Light & Power Company (CLP)...........11.9776 i

Fi tchbu rg Ga s & Electric Compa ny ( FGE) . . . . . . . . . . . . . . . . 0.1716 Montaup El ectric Company (Mon tau o) . . . . . . . . . . . . . . . . . . . . 1. 9064

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New Bed ford Ga s & Edi son Light Company (NBGE) . . . . . . . . . 1. 3539 New England Power Company (NEPC0) . . . . . . . . . . . . . . . . . . . . . , 9.9430 Vermont Electric Power Compa ny, Inc. (VELC0) . . . . . . . . . . 3.0070 100.0000 %

The 13 municipal and cooperative systems and ownership shares available to each were as follows:

Ashburnham Munici pal Ligh t Plant. . . . . . . . . . . . . . . . . 0.01195 %

Burlington Electric Light Department.. ... . . .. .. .. 0.22175 Eastern Maine Electric Cooperative, Inc.......... 0.00256 Holyoke Ga s & Electric Depa r tment. . . . . . . . . . . . . . . . 0.09946 Hudson Ligh t & Power Depa rtment. . . . . . . . . . . . . . . . . . 0.05 700 Hull Munici pal L ighting Plant. . . . . . . . . . . . . . . . . . . . 0.01345 Ma rblehead Municipal Light Depa rtmen t. . . . . . . . . . . . 0.95565 Middleborough Gas and Electric Department........ 0.05598 Middleton Municipal Light Depa rtmen t. . . . . . . . . . . . . 0.02563 New Hampshire Electric Cooperative, Inc.......... 2.41542 North Attleborough Electric Department........... 0.03648 South Norwal k Electric Works. . . . . . . . . . . . . . . . . . . . . 0.00855 Templ eton Munic i pal Ligh t Plan t. . . . . . . . . . . . . . . . . . 0.03023 At the time the Seabrook application was filed, the legal authority of the publicly-owned systems to become owners of Seabrook was in question, but subsequent legislation enacted in Nassachusetts enabled nunicipal electric systems to participate in the New England Power Pool (NEP00L) and in ownership of NEP00L planned units, such as Seabrook. It was uncertain at the time Justice issued its initial Seabrook advice which systems would

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utilize the opportunity to jointly own Seabrook. l I

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Results of Initial Construction Permit Review

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The foundations of the initial Seabrook antitrust advice rest in 3

the analysis undertaken in two earlier CP antitrust reviews by t

Justice, involving the Millstone 3 and Pilgrim I nuclear units.5 The Pilgrim 1 advice letter noted that in the prior decade a group of municipal electric utilities in Massachusetts had sought to

intervene in various regulatory proceedings at the Federal Power Commission (FPC), Securities and Exchange Commission, and the Atomic Energy Comnission to present evidence of alleged anticompetitive behavior among large New England Utilities. Essentially, the municipalities alleged that certain New England utilities had prevented them from gaining access to bulk power mJpply on the same basis as available to other investor-owned utilities.

While the municipal systems had gained access to the Vermont Yankee and Maine Yankee nuclear units through the pressure of litigation, t

similar efforts to participate in Pilgrim 1 on a unit power basis failed, even while investor-owned systems were making unit power purchases from Pilgrim 1.

4 Somewhat interrelatedly, the nunicipals i

had also been denied the opportunity to join with investor-owned utilities in the planning of the region's bulk power supply.

Based on its review of these allegations, Justice concluded that "a hearing on the antitrust issues appears to be necessary h'ere."6

i Notwithstanding the failure of the nunicipal systems to obtain access to Pilgrim 1, over the latter half of the 1960's and early 1970's intensive efforts were underway to establish a regional power pool with the objective of dispatching and planning generation on a one-system basis. While publicly-owned systems were initially excluded from these efforts, ultimately all electric utilities, regardless of type of ownership, were pennitted to join in the discussions.

By the tiene Justice rendered its Millstone 3 antitrust advice7 ,

substantial progress had been made in the negotiations. Most systems had in 1970 signed the New England Power Exchange (NEPEX) agreement, establishing centralized dispatch of generation on a regional basis. A broader power pooling agreement involving the development of future generation on a region-wide one-system basis

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was submitted to the Federal Power Commission in November,1971 as the New England Power Pool (NEP00L) agreement.8 While most New England utilities endorsed the original NEP00L agreement, many municipal systems refused to sign it for various rea sons. The FPC ordered a hearing to examine the issues raised and ultimately, in mid-1973, a settlement resolved most differences among the parties.

As the result of settlement, the NEP00L agreement assured that every system m the region., irrespective of size, ownership type or location could participate in the planning of bulk power supply on the same basis and that such planning would be on a regional basis. In addition, the settlement agreement provided that no signatory would intervene in the issuance of a license for any of the 11 pool-planned units and that privately-owned systens would support legislation in Massachusetts enabling municipalities to own NEP00L-planned units and 1 -

to participate in NEP00L.

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! Among the utilities which refused to sign the NEP00L settlement 1

i agreement and join NEP00L were 6 Connecticut municipal systems. On February 13, 1973, this municipal group filed a treble danage anti-trust suit against Connecticut Light and Power Company (CLP) and its

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Northeast Utilities (NU) affiliates. Many of the allegations dealt with the rates, tems, and conditions of CLP's wholesale service which were also being considered in a FPC proceeding relating to increased wholesale rates. It was also alleged that certain provisions of NEP00L were restrictive and had prevented the cities from joining NEP00L.9 However, Justice was particularly concerned about a whole-sale rate schedule provision stating that " energy supplied under this rate is not available for redelivery or economy interchange." The "redelivery" restriction appeared on its face inconsistent with the antitrust laws. Faced with Justice's concern, CLP agreed to strike "rede11very or" from the wholesale rate schedule provision.

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Summarizing its Millstone 3 advice, Justice noted that ankicompeti-i tive behavior had ceased in most respects and that the fomation of NEPOOL reduced the chances that such behavior would reoccur. This factor together with the planning of Millstone 3 under the principles of the NEP00L agreement eliminated the need for an antitrust hearing with respect to Millstone 3.

Thus, by the time Justice advised the Commission on the antitrust impact of licensing Seabrook, the key features of the NEP00L agreement were settled. Planning regarding bulk power supply in the entire New I

England system was to occur under the tems of NEP00L and all systems were to have an opportunity to participate both in planning and util-izing new bulk power supplies. In this regard, the Seabrook units

, were considered to be pool-planned and pool-supported units and, as such, the capacity excess to the needs of the lead sponsors, Public Service Company of New Hampshire (PSNH) and United Illuminating Company (01), was to be allocated on a region-wide basis according to a NEP00L fonnula. Additionally, legislation pennitting Massachusetts municipals to participate fully in NEP00L and to own NEP00L planned units had becue law by December,1973.

1 These developments led Justice to conclude that all New England utilities could have access to a non-exclusive NEP00L so as to obtain economical and reliable bulk power supply on non-discriminating tems.

i As a result, Justice recommended that a hearing was not necessary at the

construction pemit stage on the antitrust impact of Seabrook.

The Attorney General's advice was published in the Federal Recister.

No petitions to intervene were received, thus concluding the initial construction permit review.

2. Subsequent Construction Pennit Antitrust Reviews of Additional Seabrook Applicants Since the initial construction pennit review was empleted early in 1974, the Seabrook application has been amended several times to reflect ownership transfers both among current existing applicants and to new or additional applicants. Consistent with Commission rules and regu-

, lations, most of the changes in ownership have undergone antitrust reviews by the Department of Justice and the Commission. A list of major changes in ownership accmpanied by a summary of Justice's antitrust advice follows in chronological order.

a. On January 17, 1975, PSNH applied to amend the CP application so as to transfer a 1.7971 percent ownership interest from Vemont Electric Power Company (VELCO) to Central Vennont Pablic Service Corporation (CVPS) and a 1.1673 percent ownership interest to Creen Mountain Power Corporation (GMP). Justice noted that as recently as January 8,1975, it had advised the Cmmission that a hearing was not necessary with respect to CVPS's participation in the Montague Nuclear Power Station. The inquiry by Justice on participation by CVDS and CNP

in Seabrook revealed no change in the competitive situation and, thus, Justice recommended no hearing on this change in ownership.10 Prior to the issuance of the construction pemit on July 7,1976, Grip transferred its ownership to New England Power Company,

b. On May 15, 1978, PSNH requested NRC to approve partial transfer of ownership shares from eight current owners to the Massachusetts Municipal Wholesale Electric Company (MMWEC), Town of Hudson, Massachusetts and Vemont Electric Cooperative (VEC) and from the Connecticut Light and Power Company (CLP) to the Montaup Electric Company, New Bedford Gas and Electric Company, Maine Public Service Company (MPS) Bangor Hydro-Electric Company, Taunton (nunicipality) and VEC. Based on an internal legal decision by NRC staff, the Commission requested the Attorney General's antitrust advice only with respect to the participation of MPS and MMWEC. Advice on the other new owners as deemed unnecessary because of their de nininis shares (less than 20 MW) in the plant.II In the interim between the request for advice and the time Justice rendered its advice, PSNH also asked NRC to approve a partial transfer of ownership from CLP to Fitchburg Gas and Electric Company (FGE), a current owner, and a total transfer of interest from VELCO to VEC. On December 19, 1978 Justice advised the Commission that a hearing would not be necessary with respect to MMWEC and MPS.12 ,

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c. On June 4, 1979, the C amission requested the Attorney i  !

1 General's advice on the Seabrook participation of Bangor Hydro- f t

Electric Company (Bangor). This request was necessary after it was recognized that the previous proposed amendments to the CP application would raise Bangor's share to 50 MW, exceeding the 20 tN t

de minimis threshold level earlier noted. Again, Justice recommended i no hearing.13 '

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d. Four additional changes in ownership of Seabrook occurred subse-

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quent to the Bangor advice letter. Three of these were the acquisitions of a 2.17391 percent interest by New Hampshire Electric Cooperative (NHEC), a 0.08261 percent interest by Washington Electric Cooperative I

(WEC) from CLP, and a 0.41259 percent interest by Vemont Electric Generation and Transmission Cooperative (VEGT) from VEC. While l

NHEC's share exceeded 20 MW, thus requiring antitrust review under the previously existing NRC policy, the Canission had enacted new j rules and regulations, specifically 10 CFR Part 50.33(a)(3),

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3 exempting applicants owning less than 200 MW of generation capacity from being required to submit infomation responsive to Appendix L, 10 CFR Part 50. Absent such infomation and unless otherwise requested by Justice, the Commission does not conduct, or ask Justice

] to conduct, an antitrust review. NHEC, WEC, and VEGT all fall into i 4

this exempt category. .

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i The remaining change in ownership involved the transfer of a 3.52317 percent interest from New Bedford Gas and Electric Company to Canal Electric Company (Canal), its sister affiliate in the New England Gas and Electric Association. On Narch 26, 1982, Justice advised the Commission that a hearing was unnecessary with respect to this trans fer.I4 The resulting ownership structure of Seabrook at this time is as follows:

1. Public Service Company of New Hampshire 2.

35.23497 percent United Illuminating Company 17.50000

3. Massachusetts MJnicipal Wholesale Electric Company 4 11.59340 New England Power Company 9.95766

5. Central Maine Power Company

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6. 6.04178 i

Montaup Electric Company 2.89989 7 Canal Electric Company 3.52317

8. Connecticut Light and Power Company

9. 3.97724 New Hampshire Electric Cooperative 2.17391

, 10 Bangor Hydro-Electric Company 2.17391

11. Central Vemont Public Service Corporation 1.59096

12. Maine Public Service Company 1.46056 l

13. Fitchburg Gas and Electric Company 14 0.86519 Taunton Municipal Lighting Plant Commission 0.43479

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Vemont Electric Generation and Transnission Coopera tive ,

0.41259

16. Washington Electric Cooperative 0.08261 17  ;

Hudson Light and Power Department 0.07737 i B. New England Power Pool Agreement 15 <

In 1967 the nine largest utilities in New England set out to fom a pool

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with the objectives of attaining economy and reliability in power supply

) through joint planning, central dispatching, and coordinated operation 1 and maintenance, of providing for equitable sharing of the resulting I

benefits and costs, and of achieving the means for more effective 6

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coordination with other power pools 10 An agreement was drafte'd that year and was revised in 1968 by a drafting cmnittee, composed of representatives of small ' investor-owned utilities, publicly-owned systems and the nine originating utilities.I7 A central dispatch function, an early objective of the group, was implemented through the New England j Power Exchange (NEPEX) and became operational in June 1970, followed by l the signing of the New England Power Pool (NEP00L) agreement in September, 1971.18 The signatories have since amended the agreement over 15 times.

1 The NEP00L agreement reflects the diversity of the electric utility industry in New England. Participating in NEP00L are 45 utilities with diverse foms of legal ownership (private, cooperative, nunicipal), size, management goals and philosophies.19 These members account for over 21.000 MW of generation capacity 20 and over 99 percent of all power sold in the six New England state.21 Among New England utilities, only Maine l Public Service Company and three Connecticut runicipal electric utilities have not joined NEP00L.22 Probably because of NEP00L's diverse membershi,1, 1

its agreement is among the most complex and most comprehensive of all power pools and no attempt is made here to more than merely highlight a few of its key features,23 These features include as follows:

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l 1. tiembership

• Membership in NEP00L is open to any utility engaged in the electric l

t utility business in New England upon compliance with reasonable conditions l set forth by the Management Committee of NEP00L. Mostly, all that is required is payment of a membership fee. Provision is even made for utilities outside New England to join NEP00L.

2. Capacity Responsibility NEP00L applies the one-day-in-ten-years loss-of-load criterion in detemining the pool's total capacity responsibility (and hence total reserve requirement) and, as such, considers generation reliability, maintenance requirements and interconnections with adjacent pools, among other factors. Each member's share of that capacity responsibility is

, effectively detemined by the relative magnitude of its peak load compared with the total pool peak load and the reliability of its generation.

Members whose capacity responsibility exceeds their generation capability are deficient and make payments to the pool which are then shared by members whose generation capacity exceed their responsibility.

3. Coordination Services  !

NEP00L centrally dispatches all generation on an economic basis so as to minimize the cost of meeting load and operating reserve requirements.

t in addition, NEP00L coordinates maintenance schedules, ensuring the '

availability of scheduled outage service at pool established rates.

l Likewise unscheduled outage service is available to all members with gen-l' eration capacity at pool established rates.

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) 4. Pool-Planned Generation .

NEP00L facilitates the access of its members to generation to meet i

l long-tenn power needs by developing a generation pool expansion plan, t

The planned future units of members which are included in the total i

NEP00L plan are designated as " pool-planned." Although NEP00L does not 4  !

1 require its members to offer ownership interest in a " pool-planned" unit, i

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i the burden of a large unit on an individual utility usually results in an j

offer of access to others. NEP00L members have priority on access '

I i over non-New England utilities. Further, NEP00L members have infomally I

• j agreed to make available 20 percent of each new " pool-planned" unit on a

) subscription basis.

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5. Transmission Services '

The transmission facilities, 69 kV and above, of pool nembers are i t j - -

designated as pool transmission facilities (PTF) and are available for i

the use of all members at pool-established rates which do not vary with

! distance. Each member can use PTF to obtain short-tem coordination services or to obtain ownership interests or unit power in off-system i

NEP00L-planned units. While many smaller members are not directly i

j connected to PTF, they can use intervening facilities of members at

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negotiated rates to obtain pool services and interests in pool-planned ,

} units. PTF may also be used, if capacity pemits, to receive power

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from non-member generation and to transfer to non-members power in pool-planned units. Thus, access to PTF at a pool-wide transmission rate 4

I practically eliminates the possibility that intervening systems between i 1

buyers and sellers of generation entitlements can deny access or nake the purchase uneconomical by imposing high transnission rates.

l III. Changes in the Activities of Seabrook Applicants Subsequent to the i

Construction Pemit Antitrust Reviews On July 21, 1981, Public Service Company of New Hampshire, on behalf of all owners at that time, submitted Regulatory Guide 9.3 antitrust infomation

, in connection with the Seabrook operating license application. To detect and assess changes for competitive consequences in the activities of the Seabrook applicants since undergoing review at the CP stage, staff has exanined, in addition to the 9.3 infomation, the findings of Justice advice letters associated with the subsequent participation of Seabrook applicants in other

, nuclear units, changes in bulk power supply arrangements since 1973, and the

_ outcomes of judicial proceedings involving Seabrook applicants.

A. Public Service Company of New Hampshire Public Service Company of New Hampshire (PSNH),15 percent owner and lead sponsor of Seabrook, is an investor-owned utility with approxi-I mately 1550 MW of generation capacity and 970 miles of transnission !ines, serving a peak load of 1200 MW.24 A menber of NEP00L, PSNH is inter-connected with several major adjacent utilities, including Central Maine Power Company (CMP), New England Electric System (NEES), Yemont Electric Power Company (VELCO), and Northeast Utilities (NU). Since being l

l

reviewed at the CP stage in December,1973, PSNH has undergone Justice's review for its participa. tion in Pilgrim 2 and 3 and entered into numerous new or modified existing bulk power supply arrangements with other utilities. None of these events, reviewed separately below, appear to possess any significance from an antitrust standpoint.

1. Participation in Pilgrim 2 and 3 On June 26, 1974, Justice delivered its antitrust advice with respect to Pilgrim 2 and 3.25 Although the advice principally addressed the activities of Boston Edison Company (BECO), the lead sponsor, Justice noted the continual improvements in relations among the diverse systems in New England.

As a result, Justice raised no antitrust issues with respect to PSNH's ownership of 3.47 percent of Pilgrim 2 and 3.

2. Changes in Bulk Power Supply Arrangements 1

a. Wholesale Firm Power Service PSNH has served at wholesale the full requirements of four small utilities since 1965 and last amended its wholesale rates in 3

1981.26 Just recently, in 1983, it contracted to supply the full requirements of Citizens Utilities until that firm has Canadian power available, with only a 60-day notice required to teminate service.27 PSNH also has provided partial requirements poiver to Wo1feboro since 1973 and New Hampshire Electric Cooperative since 197?.

Rates for both of these contracts have been amended in 1978 and 198

Staff's review of the changes in all of these contractsidoes not reveal any stjnificant antitrust implications.

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b. Transmission Services Since Decerber,1973, PSNN has provided both fim and,non-finn transmission services not only to major investor-owned neighbors, ,

but also smaller municipal and rural electric cooperative systems.

Most of these arrangemen.s have been carried out within the NEP00L framewo rk. Up until 1982 virtually all of the transmission service was classified as fim wheeling. Some fim wheeling pemitted the transfer of system power from pr!vate New England utilities to municipal and cooperative systens (on at least seven separate occasions involving four different recipients).29 Other fim wheeling allowed unit power to be delivered fran either Canada's New Brunswick Electric Power Commission (NBEPC) or from large private New England systems to sma'll private and municipal systems (on 3 occasions).30 It was with this service by PSNH that- Massachusetts MJnicipal Wholesale Electric Company (MMWEC) was able to obtain specific NBEDC unit power. Finally, in 1982 PSNH filed a tariff for non-/im transnission services to supplement NEP00L transmission services, i

specifically for transmission of non-fim entitlements in generating units over PSNH pool transnission facilities.31 Rased on sta ff's review of these transmission schedules, the offering of wheeling on both a fim and non-fim basis facilitates access to bulk power opportunities for smaller systems. Thus, changes in PSNH's transmission service arrangements appear devoid of any antitrust problems. i

B. United Illuminating Company United Illuminating Company (UI) is an investor-owned utility primarily serving New Haven and other smaller cities along the southern coast of Connecticut. In 1982 UI owned 1250 Mll of generation capacity, and about 100 miles of transmission lines, serving a peak load of 950 MU.

Also a NEP00L member, UI's only major interconnections are with Connecticut Light and Power Company (CLP) at 115 kV and 345 kV, Like PSNH, UI subsequently became a participant in Pilgrim 2 and 3 after December, ~1973 and also has modified or entered into new bulk power supply transactions.

', /

y These changes in activities, discussed below, appear to be insignificant in an antitrust context.

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1. Participation in Pilgrim 2 and 3 As was the case with PSNH, UI became a Pilgrim 2 and 3 participant subsequent to becoming a Seabrook owner. Since Justice did not reconnend a hearing on the participation of any of the owners of Pilgrim 2 and 3, UI's participation in 1974 would not appear to represent a significant change of an antitrust nature.

2. Changes in Bulk Power Services UI did not provide wholesale service to any system at the time of the CP review and has added no wholesale firm power customers since.

Changes in its other bulk power services have been few. UI did provide, i

for 6 months in 1974, unit power to New Bedford Gas and Electric Comoany.

In 1976 UI and CLP agreed to exchange oil-fired capacity from specific

units under certain conditions.34 A similar agreement was reached in 1981 with respect to UI oil-fired units and Northeast Utilities gas-fired units. 5 In 1983 UI contracted to sell New England Power Company (NEPCO) specific oil-fired unit power in certain circunstances.36 Owing to its relatively small control of transmission facilities and its heavy reliance on oil as a fuel, UI appears unlikely to exert substantial influence on the bulk power supply options of other utilities. Further, in staff's view, the changes in bulk power arrangements described above display a cooperative attitude on UI's part and do not pose any significant antitrust consequences.

C. New England Power Company New England Power Company (NEPC0) acts as the principal generating subsioiary of the New England Electric System (NEES), a holding company operating primarily in Massachusetts, although one subsidiary is located in Rhode Island. NEPC0 owns a total generation capacity of 3650 Mil and over 1500 miles of 115 kV transmission and greater. A member of NEP00L, NEPC0 is interconnected with several adjacent utilities. Since the CP review, NEPC0 has amended, and added to, its bulk power arrangements with other utilities, planned to participate in additional nuclear units after Seabrook, and also became the subject of antitrust litigation.- Staff has considered each of these events, and as indicated below, concluded that none of the changes are significant from an antitrust standpoint.

1. Participation in Nuclear Units Subsequent to Seabrook Subsequent to its CP. review in Seabrook in December,1973, NEPC0 underwent antitrust review at the CP stage in connection with its planned participation in Pilgrim 2 and 3, Montague 1 and 2, and New England Power 1 and 2.

While NEPCO received favorable reviews by Justice in all three applications, the New England Power advice letter observed that the town of Norwood, Massachusetts had filed an antitrust suit against NEPC0 and Boston Edison Company (BECO), alleging among other things, that BECO and NEPCO had entered into a territorial agreement.37 However, Justice also noted it could find no evidence of the existence of such an agreement, and recommended no hearing. Justice did advise the NRC to remain aware of the District Court proceeding in case discovery would produce evidence supporting Norwood's allegations. The Montague and New England Power 1 and 2 units were ultimately cancelled.

2. Changes in Bulk Power Services

a. Wholesale Service Since the CP review, NEPC0 has revised its wholesale tariff in three respects.38 First, in 1974, NEPC0 added partial requirements service so as to pemit its customers to become composite members in NEP00L with NEPCO. This service was terminated by mutual agreement in 1976.

Second, in 1975, NEPC0 revised its tariff to require a 7-year notice of termination of service reflecting longer construction t'imes.

Third, in 1975, NEPC0 added contract demand service, which set forth how customers could become self-standing members in NEP00L while

continuing to purchase partial requirements power from NEPC0 through October 1981. While seven former municipal wholesale customers have altered their status from full-requirements to partial-requirements, NEPC0 has added Wakefield and Norwood as full-requirements customers.39 Staff does not view the changes in tariff provisions as significant in an antitrust context.

b. Transmission Services

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Since December,1973, NEPC0 has entered into several transmission contracts affording access of smaller utilities to generating units of other systems. Among these arrangements are the transmission of Pilgrim 1 unit power to Fitchburg Gas and Electric Company and several Massachusetts municipal systems,40 the transfer of Vermont Electric Power Company's interest in PSNH Merrimack 2 to Braintree,41 and the wheeling of unit power from the New Brunswick Electric Power Commission to Montaup Electric Company, Newport Electric Corporation and nir.e municipal systems.42 At times, these services were timed according to the expected introduction of other generation of the buyers. Most of these arrangements occur within the NEP00L framework and, in staff's review, reflect an increase in both the number and variety of bulk power options available to smaller utilities lying within the NEPC0 bulk power system. As such, staff does not consider these changes as significant in an antitrust context.

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c. Unit Power and System Power Transactions On several occasions since 1973 NEPC0 har agreed to provide unit power from fossil-fired units or pumped storage hydro-capacity to smaller systems, including Montaup, Green Mountain Power (G'IP),

Massachusetts Municipal Wholesale Electric Company and individual municipal systems.43 Similarly, NEPC0 has made available non-fim unreserved system power to several runicipal electric utilities as well as to smaller private utilities.44 Again, these arrangements promote and reflect increased coordination opportunities to smaller utilities and as such, do not suggest any significant antitrust

consequences .

3. Antitrust Litigation On August 21, 1974, the Town of Norwood, Massachusetts (Norwood) filed an antitrust suit in the U.S. District Court of Massachusetts against Boston Edison Company (BECO) and NEPC0.45 Among other acts, Norwood alleged that NEPCO and BECO had in combination imposed unreasonable restraints on the sale of electric power in violation of Section 1 of the Sheman Act and had monopolized and attempted to monopolize the supply of bulk power

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at both wholesale and retail in violation of Section 2 of the Sherman Act.

Norwood, historically a full-requirements customer of BECO, argued that flEPC0, while agreeing to supply full-requirements service to N6rwood, had refused to arrange and pay for wheeling services for such power (NEPCO and Norwood are interconnected only through BECO) despite providing these services for other similarly situated wholesale customers, and had imposed

~24-restrictive conditions on the sale of wholesale power, including refusing to supply less than 100 percent of Norwood's load.

Norwood further O

alleged that both NEPC' and BECO had (1) jointly entered a restrictive NEP00L agreement designed to preclude wholesale competition in New Eng for purchases of firm power and wheeling thereof, and (2) in combination structured their policies for wholesale sales and whe: ling in their respective service areas so as, in effect, to agree to divide mar kets and to not take action adversely affecting each other's bargaining with wholesale power customers.

The case did not go to trial until early 1983 and after only a few trial days, the judge urged the parties to settle their differences.

In fact.

NEPC0 and Norwood did achieve a settlement, pursuant to which a wholesale

~ service agreement was executed on April 1, 1983.46 Apart from monetary relief to Norwood, the settlement provided that NEPC0 would pay 50 percent of the cost of transmission across BECO lines. Under the wholesale service agreement, NEPC0 is to supply 40 percent of Norwood's requirements until 1985 and 100 percent thereafter until 1998.

In view of the settlement of differences between Norwood and NEPC Norwood's ability to switch wholesale suppliers, staff views the antitrust allegations of Norwood as no longer germane. Staff further notes that the Justice inquiry into this matter at the tine of the New England Power 1 and 2 advice letter was not able to substantiate the existence of a territorial division agreement. Therefore, staff has concluded there are no outstanding issues to remedy and the above described criteria. events do not represent significant changes under the Commission's

D. Connecticut Light and Power Company Connecticut Light and Power Company (CLP) is a wholly owned subsidiary of the Northeast Utilities (NU) holding company system.

With over 3000 MW of generation capacity and over 2000 miles of high voltage transmission lines, CLP serves a peak load of nearly 2300 MW. A NEP00L member, CLP is interconnected directly or indi-rectly through its NU affiliates with NEES, PSNH, Eastern Utility Associates (EUA), UI, Consolidated Edison Company, Niagara Mohawk Power Corporation and Long Island Lighting Compay. Since the con-clusion of its Seabrook antitrust review in early 1974, CLP has undergone additional antitrust scrutiny in connection with its planned

, participation in Pilgrim 2 and 3, Montague 1 and 2, and New England Power 1 and 2. CLP has revised and added to its bulk power arrange-ments with other utilities. Further, like NEPCO, CLP has been the subject of antitrust litigation introduced in 1973. As described below, none of these events appear to represent significant changes of an antitrust nature.

1. Participation in Nuclear Units Subsequent to Seabrook The Justice advice letters with respect to Pilgrim 2 and 3, New England Power 1 and 2, and Montague 1 and 2 all gave a favorable "no hearing" recommendation regarding CLP's participation. However, in its Montague advice Justioenoted that in February 1973, six municipal systems in Connecticut filed an antitrust suit against CLP and NV.

The 6 CLP wholesale customers focused their allegations on thd rates, terms and conditions of CLP's wholesale service. This litigation caused the group not to participate in the NEP00L negotiation. Yet, none of the 6 systems chose to intervene in the unconditioned grant of the CP to CLP. Further, Justice declined 9 judge the merits of the allegations. Thus, the proposed partu 'oation in these subsequent nuclear units by CLP does not represent a "significant change" in an antitrust context.

2. Changes in Bulk Power Services

a. Wholesale Service At the time of the CP review in 1973 CPL was supplying wholesale fim power to 6 municipal systems en a full require-

, ments basis.48 It was doing so under a tariff known as the R-1 rate filed in 1972. The R-1 rate represented a change from the previous contract rates, based on average costs of all genera-tion to a system, to rates based on the demand costs associated with plants actually providing the power to meet demand. However, R-1, which was a total requirements rate, did contain Rider A, which provided for situations whereby a wholesale customer could elect to participate in NEP00L, to have NEP00L centrally dispatch its genera-tion or to participate in generating units of others on either a unit power or ownership basis. In these situations CLP would agree to supply partial requirements power.

I

The municipals objected to the stratified rates of R-1, but by the time the matter was resolved at the FPC, CLP sub-sequently filed R-2 'in 1974, R-3 in 1975 and R-4 in 1978, all based on the concept of stratified costs. The municipals protested all of these filings at the FPC or its successor, Federal Energy Regulstory Commission (FERC). The Rider A pro-vision of R-1 was omitted from R-2, R-3 and R-4 because none of the systems had opted to use it. R-2 did express CLD's willing-ness to negotiate a partial requirements rate whenever a customer .

expressed a desire to purchase from outside sources.

With regard to R-4, the municipal customers raised the issue of price-squeeze both at FERC 'ind in its court litigation. FERC did explicitly consider the prite-squeeze allegation. In addition, after the cities had appealed a District Court ruling on price-squeeze and other issues, the Appeals Court remanded the price-soueeze contention to the District Court. Staff's approach on the issue of price-squeeze is that it is a matter best resolved by rate-making regulatory agencies and does not warrant a Commission remedy.

Therefore, Staff does not view a change in CLP's wholesale service with regard to an alleged price-squeeze as representing a significant change.

Other than price-squeeze and rate design, CLP achieved settlement on all other issues raised in the R-4 tariff filing.

CLP has now filed a rate design to comply with FERC's rate l

i design order and is awaiting FERC approval. That rate design

[

]

provides two rates, one for partial requirements service and one for total requirements service. All of the CLP municipal wholesale customers have opted to take partial requirements service. This change in the R-4 tariff appears to increase the options to its customers and enchance their ability to I participate in the variety of supply arrangements available in the New England region. Thus, it would not appear to represent '

a significant change of an antitrust nature.

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b. Transmission Services 1

i Since 1973 CLP, both by itself and with the assistance of its NU affiliates, has supplied transmission service on both a finn and non-firm basis on numerous occasions to smaller investor-owned and municipal utilities in New England. A com-plete listing of all such arrangements is not practical here, but some examples of the classes of transactions which have occurred are presented. Finn wheeling service has enabled uc1 r un ts or f f ss -f capa it of bot n tor- 4 owned utilities and other municipal systems or groups in New

! England 50 , from generating units of the New Brunswick Electric Power Cannission,51 from hydro-electric capacity sources both in New England and Canada.52 CLP has 6;rther sJpplied non-firm wheeling service to several smaller municipal electric systens enabling them to obtain unit power from both nuclear units and hydro units of other utilities.53

. - . .. . .- ,-.. , _ . _ . . ,- -,,,,.m.y _.,.m -. , ,.... ,._ _.__ . -,_, . . . - _ _r. ,

,y_ . ., ,.,., _ ,m, , , , . .

The nunicipal systems also have obtained non-fim wheeling to exchange power among themselves 54 and to acquire system power from private utilities.55 The availability of non-fim and fim transmission services effectively enlarges the bulk power supply options of adjacent utilities. Thus, changes in transmission service arrangements by CLP are not significant in an antitrust context.

c. Unit Power and System Capacity / Energy Exchange Arrangements Since 1973 CLP has made unit power available on both a long-tem and short-tem basis to smaller cooperative, municipal and investor-owned utilities. These transactions have dealt with fossil-fired, hydro, and nuclear capacity 56 . Recently CLP has arrived at exchange agreements with several smaller municipal

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and private systems which call for the exchange of specific capacity under certain circumstances between the parties.

The effect of all of these arrangements is to broaden both the number and nature of bulk power alternatives for smaller, adjacent utilities. Therefore, staff concludes these arrange-ments do not constitute significant changes.

3. Antitrust Litigation In February 1973, a group of six Connecticut municipal electric systems brought an antitrust complaint against CLP, two NU affiliates and NU, the holding company.58 These six systems included Groton,

a_

1 Jewett City, Norwich, Wallingford, South florwalk II and $outh Norwal k III. The cities' claims of anticompetitive behavior by CPL and its sister affiliates fell into two general classes. The first related to tems and conditions of earlier wholesale contracts and the R tarriffs. Some of these tems dealt with ratchet and reserve

! requirements, territorial resale restrictions, and methods of calcu-lating rates. The second class alleged a refusal to wheel, partici-pation in an anticompetitive flEP00L agreement, delay in offering partial-requirements service and price-squeeze. After the District 2

Court decision dismissed all allegations in August,198059 , three of the cities, Groton, Jewitt City, and Norwich reached a settlement with CLP. However, the other three municipal systems carried the case to the Appeals Court, which issued a decision in October,1981 60 ,

, The settlement and court decisions are considered separately below.

a. Settlement Between CMEEC and CLP In September,1980, Groton, Norwich, and Jewitt City, acting through a joint power agency they had fomed, the Connecticut tbnicipal Electric Energy Cooperative (CMEEC) agreed o'1 a "tiemorandum of Understanding" with CLP (and its affiliates).

The parties arrived at an understanding on several general and specific points:

(1) In recognition that CMEEC systems are directly inter-connected only through transmission system of CLP and its NU affiliates and in awareness that CMEEC may obtain future l

l

4 j generation capacity not located on the NU systen, NU shall continue to be , obligated to provide transmission for those CMEEC systens historically served by CLP until CMEEC secures I

alternative transmission services or facilities.

i (2) CMEEC and CLP have achieved a transnission agreement

! sufficient to pennit CMEEC to participate in NEP00L and this agreement is to be filed at FERC.

(3) CLP is to transmit PASNY power.

(4) CLP is to provide capacity to CMEEC on a unit contract i ba sis .

(5) CLP and CMEEC are to exchange internal gas turbine com-l bustion capacity free of capacity or transnission services charges.

(6) CMEEC is to be offered access to fiillstone 3 on an ownership or life of unit contract basis, CLP implemented these understandings through filings at FERC in October,1980 and October, 1981.62 Since the initial filings, many of these contracts have been amended to permit ' changes in

, contract capacity. In staff's view, the vastly increased array of options open to CriEEC member systems as a result of the i

i,

.s settlement and rate filings greatly enhance their o'ptions for schieving lower-cost bulk power supply.

As such, these changes in activities by CLP cannot be considered significant within an antitrust context.

b. Court Decisions As noted earlier, the cities had made two general groups of antitrust allegations.

The first dealt with various tems

~ and conditions of wholesale contracts, some found only in pre-1972 contracts and others in post-1972 R tarriffs. For the most part the District Court noted that the rates, tems and conditions were subject to regulatory review by FPC and FERC.

Even if certain aspects of the tarriffs were later rejected e

after filing, CLP was not guilty of anticompetitive behavior by filing such tarriffs, since by law CLP was entitled to operate under the contractual tems filed.63 Further, the FDC, upon review, permitted a modified demand ratchet proposed by the cities to take effect. Also, the P. tarriffs did not prohibit resale of power to other cities.64 Thus, the District Court, upheld by the Appeals Court, ruled against all of the municipals' allegations concerning the rates, tems, and conditions of service.

Contained in the second group of allegations were the refusal l to wheel, the anticcrnpetitive tems of the NEP00L agreement , the refusal to provide partial requirements service and the price-soueeze

)

l claims. The District Court ruled that the evidence clearly did not establish.exclusionary conduct or conduct in restraint of trade on any of these claims.65 CLP had never refused a specific request to wheel power and was (and is) not required by law to include a wheeling provision in their contracts.66 In fact, CLP has wheeled on several occasions for other utilities.

Concerning the NEP00L agreement, the municipals alleged that (1) the agreement's failure to provide for wheeling of finn power es anticompetitive, and (2) the so-called "30 percent" rule and " capability responsibility" term were discriminatory against smaller systems.67 Both the District Court and the Appeals Court noted that the FPC and an Appeals Court had previously considered both arguments and relied heavily on those

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decisions, agreeing with the FPC and the Appeals '.ourt that omission of finn power wheeling was not anticonpetitive, but that the other two provisions were discriminatory.68 The FPC required the latter two provisions to be modified.

The cities had also argued that CLP refused to provide partial requirements service, essentially that CLP forced the cities to take all power requirements from CLP or none at all.

Again, both the District Court and the Appeals Court found that l i

the cities had not acted conditionally on offers of access to the Maine and Vennont Yankee nuclear units and noted that the

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FPC had concluded that the partial requirement provisions in the R-1 tarriff as premature 69 Thus, the cities failed to show a refusal to provide partial requirements service.

Finally, the District Court rejected the price-squeeze claims of the cities in two specific instances.70 In one case, even if the price differential existed, its short duration minimized possible injury to the cities. In the other case, the District Court took a very narrow view of competition and detennined that no cmpetition existed and, thus, no ham occurred. On both counts, the Appeals Court reversed and remanded to the District Court.7I The District Court a s directed to examine and rule on the efficts of the short dura-tion of the alleged price differential in one case and to adopt a broader view of competition and determine if price-soueeze did exist in the other situation.

The staff finds the court rulings on this litigation to be dispositive of the issues raised. None of CLP's behavior and conduct seems to reflect an unreasonabless which would be considered inconsistent with the antitrust laws. Therefore ,

to the extent that such behavior reflects a change in activi-ties since 1973, staff does not view these changes a's "significant" in an antitrust context.

E. Central Maine Power Company Central Maine Power Company (CMP), the largest electric utility serving Maine, operates over 1000 MW of generation capacity and 1200 miles of transmission lines,115 Kv and above, to meet a peak load I

of approximately 1200 MW. A NEP00L member, CMP is interconnected with Public Service Company of New Hampshire (PSNH), Bangor Hydro-Electric Company (Bangor) and Maine Public Service Company (MPC). CMP supplies s

full or partial requirements service to five smaller utilities. Since undergoing the Seabrook antitrust review in 1973, CMP planned to participate in other nuclear stations and has also entered into new or revised bulk power supply arrangements. As is indicated below, none of these events appear to represent significant antitrust changes in the activities of CMP.

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1. Participation in Nuclear Units Subsequent to Seabrook CMP was a minor participant in Pilgrim 2 and 3, Montague 1 and 2 and Millstone 3 at the time these units were subject of CP anti-l 1

trust review. In Sears Island 1, CMP was the lead sponsor, expected to own ab'out 60 percent.

As with the Pilgrim, Montague, and flew England advice letters, Justice noted the great strides that had been made in

, improving the access of small New England utilities to large-scale economical and reliable generation as well as to transmission service.

Thus, Justice recommended that a hearing would not be necessary with t

respect to CMP's participation in Sears Island 1.72 i

2. Changes in Bulk Power Services

a. Transmission services Since December,1973, CMP has entered into finn wheeling arrangements with several smaller utilities, both public and private systems. One such arrangement allows transnission over CMP's 345 KV system and has been made available to several small Massachusetts municipal and private utilities as well as

. the large New England utilities.73 Another arrangement permits the participants in CMP's Wyman 4 to obtain ownership or unit contract shares.74 These participants include a group of Massachusetts municipal systems, two Vermont municipals and five smaller private utilities. The same group of Massachusetts

, municipal systems have also obtained firm wheeling of their share of New Brunswick Electric Power Conmission's Point lePreace new nuclear unit.75 In staff's view, the continued availability

. of transmission service from CMP suggests that C!iP has not nisused its strategic position in transmission, particularly as regards access to Canadian power. Thus, changes in CHP's activities in the supply of transmission services are not deemed "significant" fran an antitrust perspective.

b. Unit power and other bulk power transactions .

Since its CP review CMP has provided unit power to several smaller systems from both gas turbine and steam capacity. The

recipients have included a Vennont nunicipality and a Vemont private utility as well as a Massachusetts private system. O In addi-tion, CMP entered into a system sales agreement with CMEEC, a group of Connecticut municipal systems.77 These agreements appear to demonstrate a continued willingness to coordinate with smaller utilities and, thus, are not interpreted by staff to be "significant changes" in CMP's activities since the CP review.

F. Montaup Electric Company Montaup Electric Company (Montaup), located in Massachusetts, is essentially the generation and transmission arm of Eastern Utilities Associates (EUA). Much of Montaup's operation capacity comes from units jointly-owned with others. Of Montaup's total generation capacity of 370 MW, 270 MW represents 50 percent of Canal 2. jointly owned with Canal Electric Company. Montaup has just under 200 miles of transmission lines and serves a peak load of about 650 MW. A NEP00L member, Montaup is interconnected with flew England Power Company, Boston Edison Company, Connecticut Light and Power Company, Newport Electric Corporation, and the City of Taunton, fiontaup supplies full requirements power to a Rhode Island public utility and partial requirements power to one small Rhode Island pri-1 l

vate system, a Massachusetts municipal and a Maine municipal.

Subsequent to Seabrook, Montaup chose to participate in the three additional nuclear plants. As have the other Seabrook participants, l

4 Montaup has engaged in new or revised existing bulk power arr nge-ments with other utilities since the CP review. None of these events constitute "significant changes" in staff's opinion, as described below.

1. Participation in Nuclear Units Subsequent to Seabrook Like CMP, Montaup also decided to participate in the proposed Pilgrim 2 and 3, Montague and New England Power nuclear plants, None of the Justice antitrust reviews made express mention of b

Montaup's activities,.but came to the aforementioned conclusion that an antitrust hearing was unnecessary with respect to any of the applicants.

However, Justice did explicitly consider Montaup in 1977

• when it applied to increase its ownership in Millstone 3. ' Again, Justice found no basis on which to recommend a hearing.78 1

2. Bulk Power Services

a. Transmission services 4, Although Montaup is a party to a transmission arrangement involving the delivery of power from a New England nuclear unit,79 the limited transmission facilities of Montaup likely constrain its transmission offerings. However, it did provide finn wheeling in connection with delivery of Pilgrim 1 unit power from Boston Edison Company (BECo) to a Massachusetts municipal and for unit power to a Maine municipel and_ a small

39-f Rhode Island priva te utility.80 In several other instances it has provided both finn and nonfirm wheeling and in 1975 filed a general transmision tarriff, which was made available to nmnerous New England i utilities, both large and small, from every segment of the industry.

Montaup appears to have opened its transmission to other utilities sufficiently so they can explore a wide range of power options.

, b. Unit power and other interchange transactions Since the CP review in 1973 Montaup has made many unit

power sales, both from its onsystem generation and from its

entitlements in offsystem generation. Although some trans-actions have occurred with large private systems, most j recipients of the unit power sales have been municipal systems

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in Maine, Vermont, and Massachusetts and also two small pri-vate systems in Rhode Island and Massachusetts. In staff's opinion, these transactions are consistent with enhancing the j access of all utilities to a wider range of power supply alternatives. Thus, none of the transactions are considered to be a "significant change" in Montaup's activities since the CP review.

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- - . . - . - . - . _ . . - . - _ . - - _ . - . . , , - . - , .,--4.- _._ . . . .,--y .-. -y ,. . ._ _ -,p .,, -

G. Fitchburg Gas and Electric Light Company Fitchburg Gas and Electric Light Comany (FGE) is a small Massachusetts investor-owned utility in north central Massachusetts.

i FGE owns about 50 MW of generation capacity, including participation in CMP's Wyman 4 units and CLP's N.H. Harbor station. It has little transmission of its own and serves a peak load of approximately 55 MW.

A NEP00L member, FGE is directly interconnected with New England Power Compa ny.

1 Subsequent to Seabrook, FGE planned to participate in the Pilgrin 2 and 3, Montague, New England Power and Sears Island nuclear units in small shares. In its review of FGE, as well as the other par-ticipants in those units, Justice found no cause to recommend a hearing.

The small-scale, localized character of FGE's generation and trans-nission resources make it unlikely that any activity by FGE could constrain to any substantial extent the power mJpply choices of other utilities. At times, it has acted as a bulk power supplier to adjacent larger systems, providing specific unit capacity to both NEPCO, Montaup and Bangor-Hydro.81 It has also supplied unit power to a 'iassachusetts municipality.82 On other occasions, FCE has bien a recipient of bulk power services from others, i.e.; the purcha e of unit power 83 and of transmission services to obtain unit

power, fossil-fired, nuclear and hydro.O Staff does not view these activities of FGE since the CP review as having antitrust significance.

H.

Central Vermont Public Service Corporation (CVPS) j Central Vermont Public Service Corporation (CVPS), the largest 4

electric utility in Vermont, owns on-system generation capacity of i

85 MW, participates to the extent of 19 MW in four operating nuclear units and owns a 11 MW interest in a CMP plant. Together with firm power purchases, CVPS meets a peak load of 95 MW. The CVPS generation is transmitted through the lines of its subsidiary, Vernont Flectric l Power Company (VELCO), which owns and operates nearly all of the j

high voltage transmission in Vermont. A NEP00L member, CVPS is interconnected with NEPCO, PSNH, and Green Mountain Power Corpora-tion (GMP). CVPS supplies partial requirements to 9 smaller electric systems.

Since becoming a Seabrook participant in 1975, CVPS has not opted to participate in other planned nuclear units and, thus, has not undergone AJrther CP reviews by Justice. CVPS, however, has altered its bulk power arrangements with other utilities since November,1975.

As discussed below, none of the changes in arrangements appear to constitute a "significant change" in CVPS's activities from an antitrust perspective.

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p .__ ,_y ..._.,_e v.--rm- y . - -

• y.. _r.-.,-.-. r,.-

, 1. Transmission Services "

Just prior to the receipt of Justice's advice on the par-ticipation of CVPS in Seabrook, CVPS and Vemont Electric Cooperative (VEC) agreed on a power transmission contract, pro-4 viding fim wheeling for powr obtained by VEC frm sources other than VEC, including off-systen generation capacity owned by VEC.85 The contract has been amended twice since to reflect changes in rates, tenns and conditions and in 1981 was assigned i

to VEC's affiliate, Vennont Electric Generation and Transmission Cooperative (VEGT).86 Similar finn wheeling services have also been afforded to four municipal electric systens and two small i

private distribution systems.87 In staff's opinion, the wheel-ing fosters access to an increased number of power supply alternatives to smaller systems. Thus, the addition of trans-l -

l mission services by CV'PS does not reflect an adverse "significant change" of an antitrust nature.

3 2. Wholesale Services Since 1975, several of CVPS's partial requirements whole-I h sale customers have transferred from CVPS's wholesale power rate schedule to new systen power contracts.88 The customer is required to designate blocks of systen capacity not previously reserved for an initial period of five years, extended annually for one year, and requiring four years cancellation notice.

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Transmission charges are added to the system power rate and pursuant to the aforementionhd transmission contracts, CVPS nakes its trans-mission system available to the custoner for the power delivery.

Further, the customer may resell the powr it obtains which is in excess to its requirements. In the case of VEC, this con-tract as assigned to VEGT in 1981.89 The rates and charges for system power were revised in 1982. In staff's view , the tran-sition from wholesale power service to system power service and the accompanying revisions of partial requirements service are reasonable and consistent with naintaining access to low-cost bulk power supply. Thus, this change in activity by CVPS does not appear to be "significant" in an antitrust sense.

I. Maine Public Service Company Maine Public Service Company (MPS) is an investor-owned utility operating in northern Maine. Its on-system generation capacity of 35 MW is supplemented by entitlements in two nuclear units to serve a peak load of 100 MW through approximately 400 miles of transmis-sion lines. MPS is the sole Seabrook applicant which does not belong to NEP00L, but is interconnected with Bangor-Hydro Electric Company (Bngor) and the New Brunswick Electric Power Commission (NBEPC).

Also, MPS is a part-owner of the Maine Electric Power Company (MEPCO)

(primarily owned by CMP) which owns and operates a 130-mile 345 KV

line connecting NEP00L with NBEPC and which permits New England utilities to acquire power from NBEPC generating units. MPS presently supplies fim wholesale powr to three municipal systems and one cooperative.

At the time of its initial participation in Seabrook l and 2 in 1978, MPS was required to undergo antitrust review because its 34 Mi interest exceeded the 20 MW de minimis standard applied in 1978. Staff's review of changes in MPS's bulk powr arrangements since the CP review suggests that no "significant changes" have occurred.

The only contractual changes revealed in an examination of the MPS FERC filings are related to changes in rates, tenns and conditions of service to its three wholesale customers.90 MPS continues to remain a party to the 1972 and 1973 transmission agreements involv-ing delivery of entitlements from New England nuclear units.9I None of the contractual changes appear to represent "significant changes" of an antitrust nature.

[

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J. Bangor-Hydro Electric Company Bangor-Hydro Electric Company (Bangor) is an investor-owned utility operating in eastern Maine. Bangor operates 165 MW of on-system generation capacity and has a 61 MW entitlement in Maine Yankee.

It serves a peak load of 230 MW through 600 miles of transnission lines.

A NEP00L member, Bangor is interconnected with Central Maine Power (CMP),

MPS, and Maine Electric Power (MEPC0), a partly owned subsidiary of Bangor, which is interconnected to NBEPC. Bangor supplies full recuire-ments power to four small systems, one private utility, one municipal, and two cooperatives. Although Bangor has periodically received inquiries concerning its interest in participation in Pilgrim 2 and Millstone 3, it has no present plans to participate in those units and, therefore,

. has not been the subject of a Justice antitrust review since becoming

__ an owner of Seabrook in 1980. Staff has focused its review of changes in Bangor's activities subsequent to the CP review on Bangor's bulk power arrangements with other utilities. As indicated in the following discussions, none of the changes in these arrangements appear "significant" in an antitrust context.

1. Transmission Service For some years prior to 1980 Bangor was a party to the Maine Yankee transmission agreement which pernits participants i

to obtain delivery of their entitlements.92 Likewise, Bangor

.r and MEPC0 had arranged for the transmission of power from NBEPC to various New England utilities, including both smaller private systems and electric cooperatives.93 These arrangements con-tinue in force today and have not been amended since 1980. A new agreement with CMP in 1983 allows CMP to purchase over 100 MW fran NBEPC until 1991.94 This change has no antitrust implications.

2. Unit power arrangements In 1981 and 1982 Bangor arranged to sell for a short period its interest in a Boston Edison Company unit to FGE on two occasions and to %'EC, the Massachusetts group of municipal systems on another occasion.95 It had made similar arrangements with larger private utilities.96 In staff's view, the changes in activities associated with these transactions are not "significant" in an antitrust sense. '

3. Wholesale finn power service 1

Under contracts entered into in 1967 Bangor provides partial requirements finn power service to five systems. The rates, tenns, and condition of these contracts have been amended twice i since 1980. A review of these amendments suggest they do not constitute a "significant change" in the activities of Rangor.

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K. Canal Electric Company Canal Electric Company (Canal) functions as a wholesale gene-ration subsidiary of Canmonwealth Energy System, located in Kassachusetts, and nJpplies power to Cambridge Electric Light Company (Cambridge) and Canmonwealth Electric Company (Canmonwealth) 5 (fomerly New Bedford Gas and Edison Light Company). The latter two firms are primarily distribution system;. In turn, the Commonwealth Energy System is owned by the New England Gas and Electric Association.

I Canal's total generation is approximately 800 MW, all of which lies in Canal 1 and 2. Canal 1 is wholly owned by Canal, but unit power

. contracts for the life of the unit dispense the power to BECO, NEPCO, Montaup, Cambridge, and Canmonwealth. Canal 2 is jointly owned with Montau p.

Justice's CP antitrust review of Canal raised no antitrust questions.97 Since March 1982, Canal has altered few of its bulk power arrangements with other utilities. The lone exceptions are that the Commonwealth Energy System has entered into short-tern unit sales agreenents with Vermont Phrble-Company and Massachusetts Municipal Wholesale Electric Company.

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V _ . __ _ .__ . . _- .

s both NEP00L members. Staff has no information befora it to suggest that these changes are of a "significant" antitrust cha racter.

L. Massachusetts Municipal Wholesale Electric Company Created in 1976, Massachusetts MJnicipal Wholesale Electric Company (MMWEC) acquired its Seabrook interest in 1978 and received a no hearing recommendation from Justice on Decenber 19, 1978.

MMWEC also received favorable antitrust reviews from Justice in 1977 and early 1978 in connection with its acquisition of ownership interests in Millstone 3 and Pilgrim 2.

HMWEC represents 32 Massachusetts municipal electric utilities and

. seeks to acquire sources of bulk power for its members. Apart fron

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its anticipated nuclear capacity, MMWEC also has 80 MW of ownership in Sears Islard 1, a coal-fired unit sponsored by Central itaine Power Company (CMP). On behalf of its members, MMWEC has made unit power purchases from Montaup Electric Company's Somerset 6 and share of Canal 2, jointly owned with Canal Electric Company.98 MMWEC also entered into a three-year contract with New England Power Company (NEPCO) to receive unit power from specific NEPC0 units and from NEPCO's share of Canal 1.99 Central Maine Power Conpany and Public Service Company of New Hampshire recently agreed t'o pro-vide transmission services to MMWEC to permit wheeling of Point Le Preau No.1 power from the New Brunswick Electric Power Commission.

i

Lacking transmission resources of its own, MtiWEC must rely on the transmission systems of larger systems which interconnect indirectly with MMWEC members in order to transfer power fro, acoufred sources to points of end-use or for resale. As long as membership in MMWEC 8

is open to any municipal electric utility in Massachusetts

• highly unlikely that MMWEC could undertake actions to deny bulk power supply alternatives to others. The staff has no knowledge of any such actions by PHWEC and concludes, therefore, that changes in

, the activities of MMWEC since the CP review have no antitrust significance.

M. Individual Municipal Systems

. 1. Taunton Municipal Lighting Plant Taunton tiunicipal Lighting Plant (Taunton) acquired its interest in Seabrook in 1978. Because its share was de nininis (less than 20 MW) it was not required to submit 10 CFR Part 50, Appendix L, antitrust infomation and the NRC did not request fonnal antitrust advice at the CP stage.

Even under 10 CFR Part 50.33(a)(3) Taunton is exempt from filing antitrust infonnation. Taunton owns 135 MW of genera-tion capacity, a very small amount of high voltage transmission, and serves a peak load of 65 MW. A participant in NEP00L, Taunton also has purchased system power fron Vemont Electric

i Power Company for which Public Service Company of New Hamp-shire (PSNH) has provided wheeling.101 With the aid of 4

wheeling by Connecticut Light and Power Company (CLP), Taunton purchased for a period of time a Green Mountain Power Company entitlement .in the Vernant Yankee nuclear unit.102 However, Taunton's closest coordination, within the context of NEP00L, lies with the Montaup Electric Company (Montaup), with which it has a 115 KV interconnection. Prior to NEP00L, the two systems had entered into an interconnection agreement, providing economy interchange, emergency assistance and purchase by Montaup of Taunton's temporary surplus capacity.103 This agreement was amended in 1977 to allow Taunton to buy capacity from Montaup's Somerset Station and from Montaup's interest in Canal Electric Company's Canal 2 for two years, beginning in

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1982.104 All of these arrangements reflect the dependence of Taunton on its larger neighbors for access to the region's coordinated bul k power supply system. Thus, changes in the activities of Taunton since becoming a Seabrook owner are not significant in an antitrust context.

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2. Hudson Light and Power Department Although a member of Massachusetts Municipal Wholesale Electric Company (MMWEC), Hudson Light and Power Department (Hudson) chose to separately own its interest in Seabrook. As with Taunton's interest, the share owned by Hudson was de ninimis and, thus, Hudson received no formal CP antitrust review and also would not be required to file information under the present rules and regulations (10 CFR Part 50.33(a)(3)).

A NEP00L member, Hudson owns 21 MW of diesel generation capacity and no transmission capacity and meets a peak load of 30 MW with purchases from New England Power Company (NEPCO) and Boston Edison Cor piny. Beginning in 1977 NEPC0 supplied system power and in 1982 began making unit sales fran its Brayton Point 4 to Hudson.105 Boston Edison Company (BECO) also provides unit power to Hudson from Pilgrim 1.106 Based on its limited on-system resources and its dependence on off-system bulk power sources, changes in the activities of Hudson since its inclusion in Seabrook appear to have no significance in an antitrust context.

N. RJral Electric Cooperatives New Hampshire Electric Cooperative (NHEC), Vermont Electric Generation and Transmission Cooperative (VEGT), and liashington Electric Cooperative (WEC) are Seabrook participants which, at the time of their respective acquisitions of interest, were

exempted from providing antitrust infomation prescribed in 10 CFR Part 50, Appdndix L. Thus, none of these systems under-went a fonnal antitrust review at the CP stage.

VEGT very recently acquired its ownership share from Yemont Electric Cooperative (VEC), its affiliate. VEC had originally obtained its interest in 1978, but since this interest was less than 20 MW, infornation was not required to be submitted and the Attorney General's advice was not requested. VEGT essentially acts as the bulk power supply am for VEC and presently owns a very limited amount of generation capacity outside of its planned Seabrook capacity. However, as a result of contracts .

entered into by Central Vemont Public Service Corporation (CVPS) and VEC in 1975 and assigned to VEGT in 1981, VEGT may obtain unreserved system capacity from CVPS, and the necessary transnis-sion service to sell any excess capacity not required by VEC or to obtain power from sources outside the VEGT system.106 The relatively small scale of generating and transmitting resources controlled by VEGT negate the possibility that VEGT actions can have any significant anticanpetitive impact in the area. Staff is not aware of any change in the activities of VEGT since becoming a Seabrook participant that could be viewed significant in an antitrust context.

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Uashington Electric Cooperative (WEC) obtained its interest in 1981 from Connecticut Light and Power Company. A small Vemont system (peak load of 15 MW) not affiliated with VEGT, WE:

obtains power from several New England systems in Yemont, Massachusetts, New Hampshire and New York, as well as from Canadian systems. Its membership in NEP00L facilitates the transnission of these off-system power sources. Apart frm its small scale, WEC owns only a small amount of very low voltage transmission. Thus, no changes in the activities of WEC since joining in Seabrook participation appear to be significant in an antitrust context.

New Hampshire Electric Cooperative (NHEC) acquired its owner-

. ship in 1980. Like WEC and VEGT, NHEC directly owns little generation capacity and has virtually no transmission capability.

However, NHEC does belong to NEP00L and thus has been able to obtain power from several sources in New England to serve a peak load of 105 MW. For Example, NHEC has obtained partial recuire-ments service from Public Service Company of New Hampshire (PSNH) which also at times has provided wheeling of power fran New Brunswick Electric Power Commission to NHEC.108 PSNH also has transmitted power from the Yankee Atomic nuclear unit to NHEC.

Based on the dependence of NHEC on NEP00L and NEP00L sys-tems for bulk power supply services, changes in the activities of NHEC since becoming a Seabrook participant lack any sianificance in an antitrust context.

O. Revisions of NEP00L Aareenent

.s After the NEP00L acreement initially took effect in late 1971, the FPC conducted a hearina to consider the aareement's leaality. Su b-secuently, the FPC ordered a revision of one provision and elinina-tion of another provision in Section 9 of the aareement.110 The Acceals Court later affirmed the FPC decision.III

. Oriainally, the aareement contained the so-called 30 percent rule (Section 9.5) which prohibited any utility from takina nore than 30 percent of its oeak capacity from a sinole unit. The FPC ruled that this orovision discriminated aaainst smaller utilities and ordered it stricken.

Section 9.4(d) in the oriainal aareement exacted a " deficiency charae" if a member system's capability was below its capability responsibility by more than one percent. The amount of the charge was directly oroportional to the percentaae difference between the caoacity responsibility and the system capability. Thus, for the same number of kilowetts deficiency, the deficiency charae for a small system would be areater than that for a larae system. The FPC cured this discrimination by orderina that the section be modi-l fied to tax deficiency charaes on the basis of the actual kilowatts of deficiency.

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With these changes NEP00L assumed its present day form, though'the a

agreement has been amended on more than 15 occasions. Many of the

^

transactions described in.the previous sections have been facili-tated by the NEP00L framework. For example, short-term unit power purchases often occur for the purpose of meeting.the capacity responsibility. Since the agreement calls for postage-stamp wheeling of non-firm power over pool transmission facilities, buyers can search for alternative sources without regard to distance as a factor and, thus, will likely have more sources to consider. Similarly, the wheeling service afforded by NEP00L promotes access to pool-planned f units.

4 The NEP00L agreement offers to all New England systems, regardless of size or type of ownership, the opportunity to achieve access to

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alternative sources of various kinds of bulk power so as to serve load in a reliable and economical manner. The continuance of the NEP00L framework greatly reduces the likelihood that any one system or even group of systems will be able to substantially restrict bulk power supply options to others.

III. Conclusion Public Service Company of New Hampshire (PSNH), on behalf of itself and all other owners (applicants), has applied for an operating lice'nse

, for the Seabrook 1 nuclear unit. Pursuant to the Commission's "significant  !

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F change" criteria, the staff has conducted an antitrust analysis of the applicants' activities and' proposed activities since the Seabrook con-struction permit (CP) antitrust review was completed in January 1974.

In performing this analysis, the staff has examined, (1) activities under-taken by the applicants with respect to bulk power services, including coordination, transmission, and wholesale services, (2) antitrust issues raised in two separate federal court proceedings involving New England Power Company (NEPCO) and Connecticut Light and Power Company (CLP), and (3) the New England Power Pool (NEP00L) which governs bulk power inter-relationships among nearly all New England utilities.

In the staff's view, none of the new and/or revised bulk arrangements entered into by any of applicants present any significant conse-quences of an antitrust nature. Such arrangements, in fact, appear to

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promote access to a wide range of alternatives for all New England utili-ties, regardless of size or type of ownership.

The antitrust complaints against NEPC0 were mitigated after a settlement among the parties permitted the Town of Norwood to switch wholesale suppliers. A District Court decision dismissing all antitrust complaints against CLP was affirmed by an Appeals Court on all but two counts. Those two counts both dealt with price-squeeze and were remanded to the lower court for reconsideration. Staff notes further that the Federel Energy Regulatory Commission (FERC) is required to explicitly consider price-squeeze issues when raised with regard to new rate filings.

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i l Consequently, staff has concluded that the price-squeeze issue's do not l warrant Commission remedy and therefore do not represent "significant

{ changes" under the Commission's criteria, a

Finally, NEP00L, which was only two years old at the time when the CP anti-trust review was performed, appears to have evolved into a framework ensuring access to reliable and economical bulk power supply for all New f

England utilities. Two provisions of the original pool agreement were found to be discriminatory against smaller utilities and have since been removed. Further, because Seabrook I has been designated as a pool-i planned unit, access to Seabrook I over pool transmission facilities of members is guaranteed for all participants under the terms of NEP00L.

Thus, the changes in the activities of all of the applicants since the completion of the Seabrook I construction permit antitrust review do not represent significant changes of an antitrust nature and, therefore, do not require a further, formal antitrust review at the operating license i

stage.

f

References 1.11 NRC 817, 824 (1980). See also 13 NRC 862 (1981).

2. Although the operating license application submittal refers to the two-unit Seabrook Station, this analysis applies solely to Seabrook 1.

Seabrook 2 is not expected to be completed until 1990. In cases where a second unit of a given nuclear plant is not expected to be licensed within 12 months of the first unit, the staff's procedure has been to conduct a separate review for the second unit.

3. The Site Analysis Branch, Office of Nuclear Reactor Regulation and the Antitrust Counsel of the Office of the Executive Legal Director.

4. This discussion is based on the December 4,1973 advice letter from Thomas E. Kauper, Assistant General Counsel, U.S. Department of Justice to Howard Shapar, Associate General Counsel, U.S. Atomic Energy Commission.

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5. The Pilgrim 1 and Millstone 3 units were to be owned by many of the same applicants involved with Seabrook. Letter from Thomas Kauper, Assistant Attorney General, U.S. Department of Justice to Howard Shapar, Associate General Counsel, U.S. Atomic Energy Canmission, Augus t 10,1973(Millstone 3 advice letter); Letter from Richard W.

McClaren, Assistant Attorney General, U.S. Department of Justice to Bertram Schur, Associate General Counsel, U.S. Atomic Energy Commission, August 2,1971 (Pilgrim advice letter).

6. Pilgrim advice letter, p. 4. Subsequent developments involving the fonnation of NEP00L and a settlement between the Massachusetts munici-pals and Boston Edison Company caused Justice to later advise the Comnission that an antitrust hearing as no longer necessary. Letter from Sanford Litvak, Assistant Attorney General, U.S. Department of Justice to Howrd Shapar Executive Legal Director, U.S. Nuclear Regulatory Commission, March 17, 1980.

7. Seven investor-owned utilities which were original owners of Millstone 3 are also owners of Seabrook.

8. The key features of NEP00L are summarized, infra, at pp.12-16.

9. In 1980, three of the 6 municipal systens settled their differences with CLP, while the other three systems fully litigated the case.

Both the settlement and the results of litigation are set forth at pp. 29-34

10. Letter from Thomas Kauper, Assistant Attorney General, U.S. Department of Justice to Howard Shapar, Executive Legal Director, U.S. Nuclear Regulatory Conmission, November 13, 1975.

11. Initially, de mininus applicants were determined by their ownership share in the nuclear facility. Later, this determination was based on their total system generation. See 10 CFR 50.33a.

12. Letter from John Shennefield, Assistant Attorney General, U.S.

Department of Justice to Howard Shapar, Executive Legal Director, U.S. Nuclear Regulatory Commission, December 19, 1978.

13. Letter from Sanford Litvak, Assistant Attorney General, U.S. Depart-ment of Justice to Howard Shapar, Executive Legal Director, U.S.

Nuclear Regulatory Canmission, March 17, 1980.

14. Letter from William Baxter, Assistant Attorney General, U.S. Depart-ment of Justice to Guy Cunningham, III, Executive Legal Director, U.S. Nuclear Regulatory Commission, March 26, 1982.

15. This discussion of NEP00L provides a brief review of its origins and of its present state and does not attempt, with two exceptions,

. to specifically set forth changes that have occurred since the initial CP review of Seabrook was conpleted in early 1974. The two exceptions are changes mandated by the Federal Power Commission and the courts and are discussed at pp. 54-55.

16. The 1970 National Power Survey, Parts III-IV (hereafter referred to as N15), Federal Power Commission, December 1971, p. I-17-26.

17. Power Pooling in the Northeast Reaion, Federal Energy Regulatory Commission, February,1981 (hereafter referred to as Power Poolino-NE).

o. 37.

18. Lhid.

19. Power Poolino: Issues and Acoroaches. U.S. Denartment of Enerov.

January.1980 (hereaf ter referred to as Power Poolino-Issues), p. iii.

20. Power Poolino-NE. o. 38.

21. Power Poolino-Issues. D. viii.

22. Power Poolino-NE, p. 38: Review of NEP00L FERC rate schedule (R/S) Nos.1-2.

23. This summary is based on a review of the NEP00L FERC rate schedules, of Power Poolino-NE. Power Poolino-Issues, and Power Poolino in the United States, Federal Energy Regulatory Commission. December.1981 (hereafter referred to as Power Poolino-U.S.)

24. The source of electric utility statistics for PSNH and all other owners is Electric World Directory. 1982-83. Electrical World,1982 and the responses of each utility to 10 CFR Part 50.33 filed as part of the OL aoolication.

25. Letter fran Thomas Kauper. Assistant Attorney General. U.S. Depart-ment of Justice to Howard Shapar. Assistant General Counsel. U.S.

Atomic Enerav Cannission. June 26. 1974. *

26. PSNH FERC R/S Nos. 24, 28, 29. and 35,

27. PSNH FERC R/S No.110,

28. PSNH FERC R/S Nos. 71 and 72.

29. PSNH FERC R/S Nos. 81. 82. 87. 88. 91. 94. 96 and 101.

30. PSNH FERC R/S Nos. 77. 95 and 106.

31. PSNH FERC Electric Tarriff.

32. UI response to Reaulatory Guide 9.3. iten e.

33. UI FERC R/S No. 31.

34. UI FERC R/S No. 36.

35. UI FERC R/S No. 39.

36. UI FERC R/S No. 41.

37. Letter from Thomas Kauper. Assistant Attorney General. U.S. Depart-ment of Justice to Howard Shapar. Executive Leoal Director. U.S.

' Nuclear Reaulatory Commission. November 10. 1975. The outcome of this litigation is described at pp. 23-24.

38. NEPC0 response to Reaulatory Guide 9.3. item e.

39. The addition of Norwood is discussed at op. 23-24.

40. NEPC0 FERC R/S Nos. 262 and 265-274.

41. NEPC0 FERC R/S No. 284.

42. NEPC0 FERC R/S Nos. 290-301.

43. NEPC0 FERC R/S Nos. 278, 307, 310, 311 and 313.

44. NEPC0 FERC R/S Nos. 286-289 and 308.

45. Complaint. Town of Norwood v. Boston Edison Company and New England Power Company, Civil Action No. 74-104-T, August 21,1974 (hereaf ter referred to as Complaint).

I

46. NEPC0 FERC R/S No. 315.

47. The litigation is discussed at pp. 29-34.

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48. This disussion is based 'on CLP's response to Regulatory Guide 9.3,

item Ex, 497 F Supp.1040 (1980), a U.S. District Court decision on antitrust litigation between three of the systems and CLP, and 662 F. 2d 921 (1981), the Appeals Court decision in the same case.

49. CLP FERC R/S Nos. 106-7,113,139,146, and 295.

1 i 50. CLP FERC R/S Nos. 141-43, 148, 153-56, 159, 282, 284, 296-97.

51. CLP FERC R/S No. 291.

52. CLP FERC R/S Nos. 271, 301, and 302.

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53. CLP FERC R/S Nos. 132,176-183,185-189,192-96, and 234.

54. CLP FERC R/S Nos. 151,153-56,159, 216 and 235. '

55. CLP FERC R/S No. 132.

! 56. CLP FERC R/S Nos. 115, 119, 124-25, 131, 134-38, 220, 221-229, 231-32, 240, 269.

, 57. CLP FERC R/S Nos. 197, 202, 213, 219 and 243.

58. City of Groton v. Connecticut Light and Power Company, Northeast

, Utilities, Hartford Electric Company, and Northeast Utilities Service Company, Civil Action No.15609 (hereaf ter referred to as Groton Conolaint) February 13, 1973.

l 59. 497 F. Supp.1040 (1980).

60. 662 F. 2d 921 (1981).

61. This "Memorandtri of Understanding" was filed at FERC as part of CLP FERC R/S No. 215.

[ 62. CLP FERC R/S Nos. 217, 221-233 and 256.

a

63. 497 F. Supp. 1050-51.

64. 497 F. Supp.1052; 662 F. 2d 932. -

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65. 497 F. Supp.1052.

l 66. 497 F. Supp.1053.

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67. 497 F. Supp.1053-54.

68. Ibid. The "30 percent rule" and " capability responsibility tern are discussed in some detail at p. 54.

69. 497 F. Supp.1055.

70. 497 F. Supp.1056.

71. 662 F. 2d 934-35.

72. Letter from Thomas Kauper, Assistant Attorney General, U.S. Depart-ment of Justice to Howard Shapar, Assistant General Counsel, U.S.

Nuclear Regulatory Commission, March 1,1976. The Sears Island 1 unit is now planned as a coal-fired unit.

73. CMP FERC R/S No. 54.

l 74. CMP FERC R/S No. 60.

75. CMP FERC R/S No. 67.

76. CMP FERC R/S Nos. 51, 52, 64 and 74.

77. CMP FERC R/S No. 70.

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78. Letter from John Shenfield, Acting Assistant Attorney General, U.S.

Department of Justice to Howard Shapar Executive Legal Director, i U.S. Nuclear Regulatory Commission, August 25, 1977.

79. Montaup FERC R/S No. 26.

80. Montaup FERC R/S Nos. 37, 40 and 52.

81. FGE FERC R/S Nos. 15,16,17,18,19 and 20.

82. FGE FERC R/S No. 22.

83. Bangor-Hydro Electric Cm1pany FERC R/S Nos. 32 and 35.

84. CLP FERC R/S No. 274, PSNH FERC R/S No. 95, and NEPC0 FERC R/S No. 301.

85. CVPS FERC R/S No. 89. -

86. CVPS FERC R/S No. 88.

87. CVPS FERC R/S Nos. 93, 97,101,102,107 and 110. 1

88. CVPS FERC R/S Nos. 88, 92, 96, 106, and 111.

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89. CVPS FERC R/S No. 88. ,,

90. MPS FERC R/S Nos.10, ll, and 12.

91. MPS FERC R/S Nos. 5 and 8.

92. Bangor FERC R/S M. 20.

93. Bangor FERC R/S No. 20.

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94. Bangor FERC R/S No. 41.

95. Bangor FERC R/S Nos. 32, 33, and 35.

. 96. Bangor FERC R/S Nos. 34, 39 and 40.

97. See footnote 4. -

98. Montaup FERC R/S Nos. 66 and 73.

99. NEPC0 FERC R/S No. 310.

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100. MMWEC response to Regulatory Guide 9.3, item h.

, 101. PSNH FERC R/S No. 96.

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102. CLP FERC R/S No.132.

j 103. Montaup FERC R/S No. 15.

104. Montaup FERC R/S No. 70.

I 105. NEPCO FERC R/S Nos. 308 and 313.

106. BECO FERC R/S No. 84.

107. CVPS FERC R/S Nos. 88 and 89.

108. PSNH FERC R/S Nos. 50 and 65.

109. PSNH FERC R/S No. 70.

110. New England Power Pool Agreement, F.P.C. Opinion No. 775 '

(September 10, 1976).

111. Municipalities of Groton v. Federal Energy Regulatory Comnission, 587 F.2d 1296 (D.C. Cir. 1978).

.