ML20148H849

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Lilco Response to ASLB 880107 Order & Request for Expedition.* PSC of Ny May Begin Pressuring Util Through Ratemaking Process to Drop Facility W/O Expedited Action on Motion.Certificate of Svc Encl
ML20148H849
Person / Time
Site: Shoreham File:Long Island Lighting Company icon.png
Issue date: 01/22/1988
From: Irwin D
HUNTON & WILLIAMS, LONG ISLAND LIGHTING CO.
To:
Atomic Safety and Licensing Board Panel
References
CON-#188-5417 OL-6, NUDOCS 8801270316
Download: ML20148H849 (51)


Text

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LILCO, January 22,1988 b;

00cKETEg USNRC UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION W M 26 All:25 YOCHY1hnY$bl,?'$'

Before the Atomic Safety and Licensing Board URANCH In the Matter of )

)

LONG ISLAND LIGHTING COMPANY ) Docket No. 50-322-OL-6

) (25% Power)

(Shoreham Nuclear Power Station, )

Unit 1) )

LILCO'S RESPONSE TO BOARD'S JANUARY 7 ORDER AND REQUEST FOR EXPEI>ITION In its January 7 Memorandum and Order this Board provided a mechanism for acting on LILCO's request to operate the Shoreham plant at 25% of rated power. The Board also recognized the need to apply additional resources to this matter and sought the parties' views on the most effective means of providing them.

LILCO's premises remain the same as when it originally filed the 25% power mo-tion nine months ago: that the motion contains a substantively valid request; that it represents a potentially more rapid means of enabling Shoreham's capacity to be ap-plied to meeting Long Island's power needs than completion of the ongoing emergency planning proceedings for a 100% power license; and that the means chosen to act on

'the application should be the most expeditious capable of yielding a sustainable result.

Based on these premises. LII.CO prefers the addition of a technically gaalified Board member to this Board, either as an alternate Board member or as part of the cppoint-ment of a separate Board whlen includes the Chairman and perhaps one additional l

technical member of the exist'ng Board. LILCO's remaining observations not only explain this preference in light of the Board's question, but also suggest means of l

activating this proceeding and underscore the need for expedition, i

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r-I. A_pplication of Additional Board Resources In response to the Board's request, LILCO provides the following observations on the relative effectiveness of the various means of amplifying the Board's resources sug-gested in its January 7 Order:

1. Technical Interrogator: A technical interrogator could assist the Board in conducting actual questioning in hearings on complex issues. However, as LILCO un-derstands the limitations on a technical interrogator's powers under S 2.722(a)(1), a technicalinterrogator has no independent authority to gather evidence, assist in prepa-ration of decisions, convene proceedings, and the like. As such, he can contribute to the soundness and fullness of a record, but (except by lancing confusion) not directly expedite the proceeding. Thus, while his function would be usefulit would not materi-ally enhance the goal of expedition. LILCO does not, therefore, favor this alternative (at least in isolation).
2. Special Master: A special master is empowered to hear evidentiary presen-tations, conduct proceedings and prepare reports. These functions could enhance the capacity of a Board. However, a special master suffers two drawbacks, as LILCO un-derstands S 2.722(a)(2).

First, his report is advisory and must be approved, following normal process, by the entire Board, thus apparently risking duplicate serial proceedings. Second, a special master can be appointed only by consent of all the parties; experience in this case sug-gests that anything dependent on consent cannot be counted on.

3. Alternate Board Member: An alternate Board member can, as LILCO un-derstands the provisions of 5 2.722(a)(3), provide much the same kind of additional help as a special master can, although' in his capacity as a trier of fact and in his other

actions respecting a proceeding - evaluating evidence, draf ting orders or opinions, for example - he operates with one or more members of the original Board rather than in-dependently. His functioning thus differs from that of a special master in that it re-quires the simultaneous particioation of members of the original Board;II however, pro-ceedings of which he is a part need not be replicated by the full Board. Use of an additional member does not raise the potential for loss of continuity or consistency in-nerent in appointment of a completely independent Board.

LILCO believes that a qualified additional technical member2 / of this Board could assist in expediting this Board's actions. The only question - one the Board is likely to know more about than LILCO -is whether the need for at least the Chairman (and perhaps one additional Board member) to devote their efforts to the 25% power motion together with the alternate Board member, will hamper either the progress of the 25% power motion or the emergency planning proceeding, or both. As to that mat-ter, LILCO believes the Board is perhaps in at least as good a position to assess its likely workload and operating constraints as is LILCO.

1/ Indeed, Appendix A to Part 2 suggests that an additional Board member serving in the capacity of a "special assistant" to a Board under S 2.722 sits with all of the orig-inal Board members. S_ee 10 CFR Part 2, Appendix A (1987)("As a special assistant, the

' alternate' sits with the three-member Board and not instead of the Board or any of its members."). In that event, while an additional Board member could assist in prepara-tion for hearings and writing of decisions, his presence would not produce any saving in the resource commitment of the original Board in terms of hearings.

However, if an "alternate Board member" were designated in a manner similar to that used previously in the OL-3 and OL-5 dockets, so as to produce two Boards with overlapping memberhips - so that the Chairman and perhaps one of the technically qualified members of the present OL-3 Board continued to sit on the OL-6 Board, with the additional Board member taking the place of the other technical member - then savings could be effected in Board resource commitments.

2/ LILCO believes that the type of additional member who could aid the Board in its consideration of the 25% motion would be one having expertise in plant cesign and ac-cident analysis.

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4. Separate Board: LILCO has advocated this alternative in the past, when alternatives under consideration did not include an alternate Board member. The obvi-ous advantage to a separate Board is that it provides totally independent capability to assess a proposal whose merits - if LILCO is correct on its theory of immateriality -

are essentially independent of those of emergency planning. The disadvantage of such a Board is the possible risk of confusion or conflict in the event of possible overlap (on schedule constraints, if nothing else) more easily reconciled by one Board, and a poten-tial loss of consistency on substantive issues.E As noted above, these risks could be re-duced by creating a separate Board with overlapping membership. See footnote 1.

On balance, LILCO prefers the addition of a technically qualified Board member, ideally as part of the appointment of a separate Board which includes the Chairman and perhaps one additional member of the existing Board, over the creation of an entirely new Board. This preference depends, however, on the presumption that it fosters the goal of maximum expedition. If the Board feels that (with one or more additional tech-nically quallfled members) its ability to administer both the OL-3 and OL-6 dockets would be threatened by having to manage both simultaneously, or that having to man-age the OL-3 proceeding would materially impede its ability to set and keep the 25%

pwer motion on an expedited course, LILCO would then prefer appointment of a total-ly new Board for the 25% power motion.

3/ For example, as the Board explains in it January 7 Order, Order at 10, if the additional Board conducted hearings on the technical aspects of LILCO's 25% filing and then found that one or more of the remaining emergency planning contentions had sub-stantive relevance to 25% operation, it would appear that the merits of those conten-tions would then need to be decided by this Board. Their resolution would, in turn, require an understanding of the technical aspects of LILCO's 25% application. Hence, there would be a potential for duplication of effort and a loss of continuity if two totally independent Boards were involved.

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, II. Additional Means of Expediting the 25% Proceeding The Board's January 7 Order makes clear that all parties will have an opportu-nity to review the Staff's evaluation, which 's the equivalent to an SER, upon its com-pletion. LILCO does not know how long the Staff's remaining work will take. However, in the meantime the fact remains that Intervenors have possessed LILCO's 25% power motion for nine months now, and that in an effort to expedite this proceeding last spring and summer, LILCO provided Intervenors with all of its work papers underlying the technical analysis in support of its 25% motion. Intervenors also attended all meet-ings between LILCO and the NRC Staff on the motion until the Staff ceased its work in mid-June 1987.0 Hence there is no reason why Intervenors should not be prepared to advance their criticisms, if any, of LILCO's motion now, prior to completion of the Staff's analysis.N Accordingly, LILCO moves that the Board take the following additional steps to assure that this proceeding begins to advance substantively:

4/ When the Commission ruled on LILCO's request for immediate authorization to operate at 25% power, CLI-87-04 (June 12,1987), it stated that it "presume (d) that staff will no longer need to expend resources to review the request, unless necessary to respond to a renewed request for such authorization at some future time." CLI-87-04,

p. 2 n.1. While the Staff has never informed LILCO in writing that it ceased reviewing LILCO's application, it is LILCO's understanding that review ceased at that time or shortly thereaf ter.

5/ This is simply consistent with the normal structure of NRC proceedings on a licensing application, under which Intervenors are required to file contentions on a license application in a relatively brief period af ter publication of the initial notice of hearing on the application, and before the NRC Staff has prepared its SER. See 10 CFR S 2.714 and Part 2, Appendix A 5 li.(b) n.3.

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1. The Board should require Intervenors to file contentions, within 21 days, on the aspects of the 25% motion the Board considers potentially relevant, as defined in the January 7 Order. Intervenors should be provided leave to amend upon a showing of good cause following the Staff's completion of its evaluation /SER on the 25% motion.
2. The Board should order LILCO La respond to the contentions within 10 days, and the Staff to respond within 15, as prescribed by 10 CFR S 2.714(c).
3. The Board (as augmented, or its successor) should convene a prehearing conference promptly af ter receipt of LILCO's and the Staff's replies to Intervenors' contentions. The purpose of the prehearing conference would be to hear detailed argu-ment on the contentions and render, from the bench if possible or as soon thereaf ter as possible, a decision on the admissibility of the Intervenors' contentions.
4. Further discovery, given the completeness of document discovery that LILCO has already provided, should await rullogs on the contentions.

III. Need for Expedition This proceedbg was born out of the dire need for a faster means to enable Shoreham to begin to supply electricity than apparently can be obtained through the 100% emergency planning licensing proceedings. While the loss of the past nine months is essentially water over the dam, the need that existed then has only been exacer-bated. The need for power on Long Island, documented in the original motion and sup-plements to it,6/ has only increased, to the point where LILCO's implementation of i

6/ See Affidavit of Adam M. Madsen in Support of Request for Authorization to In-crease Power to 25% (May 11,1987) attached to "LILCO's Reply to Intervenors' Opposi-tion to Expedited Consideration of LILCO's 25% Power Request"(May 12, 1987); Affida-vit of Adam M. Madsen in Support of Motion fcr Authorization to increase Power to 25% (July 14,1987) attached to "LILCO's Motion for Designation of Licensing Board and Setting Expedited Schedule to Rule on LILCO's 25% Power Request"(July 14, 1987).

e.

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time-of-use rates as a deliberate means of damping energy demand has become a topic in recent open meeting of the New York Public Service Commission. See Transcript of Public Session of NYS Public Service Commission, pp.95-100 (December 9,1987) (At-tachment I hereto).

Further, the New York PSC has recognized this need for capacity on Long Island, and also the need to end the thralldom of Shoreham soon for the benefit of Long Island, in a decision dated December 3,1987 (Attachment 2 hereto). That PSC decision also contains a direct threat to LILCO: if LILCO cannot demonstrate visible progress in 11-censing Shoreham by April 1,1988, the Order states that the PSC may begin pressuring LILCO through the ratemaking process to force it to drop Shoreham. See Attachment 2, pp. 6-8.E In short, LILCO needs expedited action and decision on the 25% motion, and out-lines the proposa s above with that goal in mind.

Respectfully submitted, v S W. Mylor Reveley, Ill Donald P. Irwin Lee B. Zeugin Counsel for Long Island Lighting Company Hunton & Williams 707 East Main Street P.O. Box 1535 Richmond, Virginia 23212 DATED: January 22,1988 7/ The PSC Order would require LILCO to demonstrate by April 1988 "a clear basis for high confidence that Shoreham will operate to meet the 1989 peak season and be-yond." Id. at 8.

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Attachment 1 g

1 NEW' YORK STATE PUBLIC 9ERVICE COMMISSION i um 3 PUBLIC SESSION 4 of the 5 PUBLIC SERVICE COMMISSION 6

7

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10 ~

10:40 a.m. '

11 Wednesday, December 9, 1987 I 12 -

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PRESIDING:  ;

14 PETER A. BRADFORD, 15 Chairman.

16 '

PRESENT:

17 '

, HAROLD A. JERRY, JR.

13 GAIL GARFIELD SCHWART2 ELI M. NOAM 19 JAMES T. McFARLAND EDWARD M. KRESKY .

20 HENRY G. WILLIAMS '

21 Commissioners.

22-23 24 Parson: Reporting Sertice, Inc.

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l c' 95 1 MR. LIBERTY: Right.

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2 CHAIRMAN BRADFORD: -

but I think  !

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3 as to the buy-back service rate and the 4 supplemental backup and maintenance service rates, 5 it would be wise to hold those and make sure that 6 we do them on a common footing with the restricted 7 9 demand or interruptible rate at the*next session.

8 Is that agreeable?

9 COMMISSIONER Mc'ARLAND: Well, is 10 there a reason why you do not want them in now or 11 why they should not be put in now? Is there a 12 danger they would be inaccurate?

13 CHAIRMAN BRA'?ORD: Well, it is noti 14 so much they would be inaccurate. You just want 15 to be sure that you are evaluating a quality of i

16 capacity next summer the same way for both 17 purposes. I assume that in fact the papers will 18 wind up doing that, but until we have seen the l

19 calculation with regard to the interruptible rate,!

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20 we cannot be sure.  :

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21 COMMISSIONER SCHWARTZ: Are you '

i 22 proposing to put the whole thing off or have the ,

23 discussion now? Now?

24 CHAIRMAN BRADFORD- I would just as l

l Parsont Reporting Service, Inc.

c' ' 96 1 soon approve the time-of-use rates and the items 3 l

2 listed on page 2 at this point, if no one has any,l e

3 problem, because they do not overlap the others.

4 Go ahead, Lisa.

5 MS. ROSENBLUM: I was just going to mention, on the time-of-use rates piece, as they

'l 6

e 7 plan an expansion of the rate, the7 could also be , '

1 8 thinking about their outage efforts in this 9 regard.  ;

'f 10 CHAIRMAN BRADFORD: Yes.

11 MS. ROSENBLUM: Previously these i

'l 12 generated a number of complaints. They could

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_ 13 submit that as well at the time.

14 CHAIRMAN BRACTORD: Not that they  !

15 will not generate complaints again.

16 M5. ROSENBLUM: But maybe we can do; 17 a little to soften --

18 CHAIRMAN BRADFORD: Yes.

19 i COMMISSIONER McFARLAND: People are 20 complaining that they do not want to pay 21 l time-of-use rates?

22 MS. ROSENBLUM: Mandatory, right.

23 i This was when they --

24 j COMMISSIONER McFARLAND: And the i

Parsont Reporting Ser"ice, Inc.

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97 1 company is insisting they have to implement the 1

2 time-of-use rate just because of energy shortage 3 rites?

4 MS. ROSENBLUM: This goes back --

5 MR. LIBERTY: We had a proceeding 6 on this, quite an extensive proceeding, when we 7 first established time-of-day rates. We got 8 initially a lot of complaints, particularly in the 9 residential and where we had a temperature-10 sensitive kind of a rate. We have since removed 11 that feature and the complaint level has gone done 12 considerably, but there still is some 13 misunderstanding, misapprehension.

14 COMMISSIONER McFARLAND: On the 15 part of the ratepayer.

l l 16 MR. LIBERTY: On the part of the l 17 ratepayer. Lisa is right: a good outreach progran

! I j 18 is important, especially when you expand the i l

19 rate --

20 COMMISSIONER McFARLAND: What would i l

21 this outreach effort do? k '7 a t would it say to the 22 ratepayer? Would it say son ething to the l 23 ratepayer? '

24 MR. LIBERTY: We hope that it wouldi Parsont Reporti.ng S e r .' i c e , Inc.

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98 q 1 indicate the benefits of time of day and how you l 2 can save money --

3 COMMISSIONER McFARLAND: And the  !

l 4 need for it?  !

5 MR. LIBERTY: And the need for it.

6 MS. ROSENBLUM: Right.  !

i 7 MR. LIBERTY: Customers need to l 8 understand why it is there. It is not just an  ;

9 arbitrary thing. It is there.to reflect the cost 10 differences. t 11 COMMISSIONER McFARLAND: In other  ; ,

12 words, we soften up the ratepayers for this i

. 13 sacrifice. Right? Except, what is it, 14 necessary --

15 MS. ROSENBLUM: I would say more s 16 that we inform them so they can buy into the ,

17 program instead of fighting it. I think they may 18 be able to change their usage habits so that the 19 rate is beneficial to them.

20 COMMISSIONER McFARLAND: Oh, okay.

21 That I can understand, but I think as far as a 22 necessity for a mechanism to dampen consumer 23 demand for electricity, I tnink that is necessary, 24 that the public has to understand that there is l

Parson: Reporting S e r'/ i c e , Inc.

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1 . limited generating capacity right now. That was 2 one of the thrusts of our famous decision as 3 rIhorted in the Schenectady Gazette -- (laughter) 4 -- that there are going to be some energy 5 shortfalls. -

6 MS. ROSENBLUM: Exactly.

7 COMMISSIONER McFARLASD: The public 8 has got to be aware of it. So this vould go hand 9 in hand with alerting the public to ways that they 10 can restrict their demand, and at the same time it 11 paves the way for the company to take an 12 affirmative approach by way of --

I hate to use 13 the word rate design because I am not sure what it 14 means, but increasing the price in order to dampen 15 that demand and meet its goals of serving 16 absolutely necessary needs with the ave,ilable 17 energy it can generate and produce, right?

18 MS. ROSENBLUM: Right. l l

19 COMMISSIONER McFARLAND: -Th a r k  ;

l l 20 you. <

l 21 CBAIRMAN BRADFORD: Okay. I i

22 Resisting all temptation to refer further to the j o

23 Schenectady Gazette at this time

( --

24 COMMIfSIONER McFARLAND: he are l

Parsont Reporting Service, Inc.

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100 I s

1 going to take Doc Rivett, send him over with big

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2 gloves. (Laughter) I do not think he will hurt ,

em>

l 3 anybody. i 4 CHAIRMAN BRADFORD: All right. The >b 5 next item is the environn. ental management and -

6 construction plans for the river crossings-having  !

7 to do with the Adirondack 115-kv tf'nsmission a I 8 facility.

9 COMMISSIONER JERRY: Chairman? I i 10 have always tried to minimize interdepartmental l i

11 disagreements, having been in several departments  !

12 and having always admired their integrity. We 13 have here a reprise, almost word for word, of a 14 disagreement that occurred ten years ago when we  ;

15 ordered New York State Electric and Gas to  ;

16 underground the Boquet River because it was a -

17 cirssified recrea:ional stream.

18 I can say, trying to be fa:: to 19 both sides --

and I think this is an accurate l 20 statement --

the fisheries people in DEC put fish 1

i 21 at the top of their priori ties, as they should.

22 They take, I believe, a short-run point of view, l

l 23 I and they were considerably d;sturbed by our 24 l proposals to underground the Boquet.

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Parsont Reporting Ser ice, Inc.

e 101 1 ActuaIly, we tried to bore under 2 the Boquet and it was a disastrous affair. The 3 b57e broke out in tne middle of the stream and we 4 then had to cross by trench. Many ameliorative 5 measures were taken to avoid siltation, 6 sedimentation, tubidity, words that all have 7 specific meanings which I am not fapiliar with 8 exaccly.

9 While all of this was goi'ng on, 10 there was tremendous activity at the site. All 11 sorts of people were there. I was there a few 12 days later, and to make a long story short, we 13 crossed the Boquet in basically the- same manner as 14 it is now proposed to cross the Schroon and the 15 Hudson.

16 I made a special point of making 17 sure that our Office of Environmental Planning 18 went back and reviewed the site that year and the i

19 following year to make sure there was no permanent 20 damage, and there was none.

21 Now we have on both of these ,

22 crossings, at the Hudson and the Schroon, almost l

i 23 -

-- act almost, exactly the same argument surfacing 24 again. DEC is asking for the construction of a i

Parsont Reporting Service, Inc.

e 7

i

, 102

- I cofferdam and measures that we think, based on our 2 experience of the Boquet, are unnecessary.

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3 We think --

and I have gone into 4 this at great length with Mr. Vessels --

that by l s

5 applying the same ameliorative measures that we  !

6 did on the Boquet crossing, we will minimize but l

7 not eliminate --

we will minimize Pat not j 8 eliminate --

the temporary damage, but that there I

9 will be no permanent damage. l i

10 I have been following this now for i

11 months, and surely there is nothing impetuous i i

i 12 about this action. I began to wonder when we i t.

. 13 would ever resolve it because of the long delay, 14 and the delay has been caused by this disagreement '

15 and by our trying to reach an agreement, but based; 16 on our experience on the Boquet, for which 17 Mr. Vessels was here and followed carefully and so 18 did I, I urge that we proceed and approve the 19 plans for the areas specified,.

20 You will notice that the terminals 21 ,

on the Schroon crossing are still not included, 23 the transition structures.

l There remains still a 23  ; problem there with one housenolder, I believe.

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l 24  ;

COMMISSIONER WILLIA 33: 3, l

i Parsont Reporting Service, Inc.

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. Attachrent 2 1

-e STATE OF NEti YORK PUBLIC SERVICE COMMISSION OPINION NO. 87-26 CASE 29484 - Proceeding on Motion of the Commission as to the rates, charges, rules and regulations of Long Island Lighting Company for electric service.

l OPINION AND ORDER DETERMINING REVENUE REQUIREMEST t

0 ll Issued: December 3, 1987

CASE 29484 TABLE OF CONTENTS l

Page APPEARANCES INTRODUCTION 1 THEORY OF THE CASE AND CASB FLOW ISSUES 3 COST OF SERVICE ISSUES 10 CONCLUSION 14 ORDER 15 APPENDICES CONCURRENCES l

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O CASE 29484 Page 1 of 2 STATE OF NEW YORK PUBLIC SERVICE COMMISSION APP EARANCES Richard C. King, Esq. and Glenn D. Haake, Esq., of Counsel, Three Empire State Plaza, Albany, New York 12223, for the Department of Public Service.

Anthony F. Earley, General Counsel, Victor A. Staffieri, Assistant Genecal Counsel, Joy Johnson, Esq., Richard A.

Rapp, Jr., Esq., Jeffrey L. Futter, Esq., Robert Fernandez, Esq. and Roberta B. Kotkin, Esq., 175 East Old Country Road, Hicksville, New York 11801, for Long Island Lighting Company.

LeBoeuf, Lamb, Leiby & MacRae (By: Samuel Sugden, Esq.),

520 !!adison Avenue, New York, New York 10022, for Niagara Mohawk Power Corporation.

Robert Abrams, Attorney General (By: A.drian Johnson, Assistant Attorney General, Charlie Donaldson, Esq. and Alfred L. Nardelli, Esq.), 120 Broadway, New York, New York 10271, for une New York State Department of Law.

Richard Kessel, Executive Director (By: Joel Blau, Director of Utility Intervention, Alfred Levince, Esq., Utility Intervenor and Rafael Epstein, Esq.), 99 Washington Avenue, Alcany, New York 12210, for the State Consu=er Protection Board.

Steven E. Katz, M.D., Commissioner (By: John B. Carroll, House Counsel), 44 Holland Avenue, Albany, New York 12229, for the NYS Office of Mental Health.

Edward T. O'Brien, County Attorney (By: Jack Olchin, Deputy County Attorney), County Executive Building, One West Street, Mineola, New York 11501, for the County of Nassau.

Paul, Weiss, Rifk<,nd, Uharton & Garrison (By: Brad S. Karp, Esq. and Douglas !!cKeige, Esq.), 1285 Avenue of tne Americas, New York, New York 10019, and Kirkpatrics &

Lockart (By: Alan R. Dynner, Esq. and Jonathan Eisenberg, of Counsel), 1800 M Street N.W., South Locoy, Washington, D.C. 20036, for Suffolk County.

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CASE 29484 Page 2 of 2 Brown, Olson & Wilson (By: Peter W. Brown, of Counsel), 21 Green Street, Concord, New Hampshire 03301, for the Independent Power Producers of New York.

Howard Rapaport, Proprietor, 210-09 67th Avenue, Bayside, New York 11364, for the In-Novo Engineering & Development Co=pany.

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. STATE OF NEW YORK PUBLIC SERVICE COMMISSION COMMISSIONERS:

Peter Bradford, Chairman Harold A. Jerry, Jr., concurring Gail Garfield Schwartz Eli M. Noam James T. McFarland, concurring Edward M. Kresky Henry G. Wiliams CASE 29484 - Proceeding on Motion of the Commission as to the rates, charges, rules and regulations of Long Island Lighting Company for electric service.

OPINION NO. 87-26 OPINION AND ORDER DETERMINING RIVENUE REQUIREMENT (Issued December 3, 1987)

BY THE COMMISSION:

I NTRODUCTION On November 26, 1986, the Long Island Lignting Company (LILCO or the company) filed revised tariff leaves designed to produce an increase in base electr .' c rates (i.e.,

rates exclusive of fuel adjustment clause chargts) of s102.3 million for a rate year ending September 30, 1986. The filing would result in ratepayers paying rates that are acout 5.2% higher than in the year before the rate year. (The gross increase--6.54--was expected to be offset by S19 million of fuel savings associated with the Nine Mile 2 nuclear

.- CASE 29484 plant.) The filing envisioned that Nine Mile 2 would commence commercial operation on June 1, 1987 and that Shoreham would commence commercial operation on September 1, 1987, although it proposed to remove the effects of Shoreham's operation from the rate year revenue requirement.

We suspended operation of the proposed leaves through October 24, 1987.

During the course of the proceeding, as it became apparent that Nine Mile 2 would not achieve commercial operation on the date assumed by LILCO, the company revised its presentation, and now seeks a base rate increase of 383 million. In consideration for the opportunity to update its filing, the company agreed to extend the suspension period by about six weeks, to December 5,1987.

Public statement hearings were held on February 4, 1987 in Mineola, February 5, 1987 in Hauppauge, and February 17, 1987 in Riverhead, before Commissioner Gail Garfield Schwartz, Secretary John J. Kelliher, and Administrative Law Judge William C. Levy.1 Prehearing conferences were held before Judge Levy on January 13 cnd April 2, 1987, and nine days of evidentiary hearings were held during the period March 3, 1987 to June 25, 1987. The record comprises 2,451 pages of testimony and 76 exhibits.

1 The interoffice memorandum from Judge Levy summarizing the public statement hearings is Appendix C to the recommended decision.

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CASE 29484 The active parties to the case include the company; the Department of Public Service staff (staff); the Ratepayer Coalitica, comprising the State Consumer Protection Board, Suffolk County, Nassau County and the Town of Hempstead (the Coalition); the Department of Law (DOL); the Independent Power Producers of New York State, Inc. (Power Producers or IPPNY); and In-Novo Engineering and Development Company (In-Novo). Briefs to the Judge were filed by all of the active parties as well as the New York State Office of Mental Health (OMB) .

In his recommended decision, which was issued on September 2, 1987, Judge Levy recommends staff's position, that LILCO be pernitted increased annual electric revenues of 850 million (3.1%). The Judge also rec:mmends the Coalition's proposal that LILCO not be allowed to make dividend payments during the rate year without our consent.

Briefs on exceptions and briefs opposing exceptions have been filed by each of the active parties; a brief on exceptions was also filed by OMH. CPB, Suffolk, and DOL have requested oral argument, but we find the issues to be adequately developed in the record and deny the request.

THEORY OF THE CASE AND CASH FLOW ISSUES This rate case, like all LILCO rate cases in recent years, is dominated by the company's continuing struggle to license its Shoreham power plant. One need not take sides in tP* Shoreham decate to see that the long deadlock threatens 0

CASE 29484 Long Island's future power supply, as well as the company's survival.

The record in this proceeding will not suppert a rate increase using conventional ratemaking principles. In fact, traditional rate setting practices would not include the substantial revenues provided through the financial stability adjustment (FSA), the vehicle designed by the Commission to enhance LILCO's cash earnings.1 The Commission used its discretion in recent past cases to supplement rates derived through conventional rate-making with extraordinary rate increases for the purposes of avoiding bankruptcy, improving the company's financial health, and smoothing rate increases over time. But the grant of such cash flow is intended to be a temporary mechanism with ,

the prospect of discontinuance when the plant under construc-tion is completed and enters service. It is justified when the costs to customers are less than those resulting from not allowing the increased cash flow. That fundamental test cannot be met convincingly as the uncertainty of Shoreham's operation mounts. Furthermore, it is now clear that the continued provision of extraordinary cash flow has had unintended and unfortunate consequences.

1 We first applied the FSA in LILCO's penultimate rate case and continued it in the most recent proceeding. Case 28553, Long Island Lighting Company - Electric Rates, opinion No. 84-22 (issuec August 27, 1984); case 29029, Long Island Lighting Company - Electric Rates, Opinion No.

86-1 (issued January 24, 1986). The FSA differs in its operation from the inclusion of construction work in progress in rate base, but it achieves a similar result.

- 1 CASE 29484 l

Specifically, the continued provision of cash flow j enhancement has prolonged a financially debilitating deadlock l over Shoreham. That deadlock and uncertainty have jeopardized the fundamental goal of electric utility regulation--the. assurance of a reliable and reasonably priced power supply. The uncertainty raises costs, saps LILCO's financial resources, inhibits power supply planning, consumes the attention of top management, and poisons the company's relationship with its customers and the government that they elect. It is in no one's interest for this situation to continue.

The ratemaking policies over which we have discretion must be designed to bring stability to the price and supply of electricity on Long Island. We have, as noted, used the FSA as the principal mechanism for providing LILCO with cash flow assistance. This adjustment makes rates higher now and lower in the future than they would be under normal ratemaking practices. The adjustment is entirely discretionary and can be increased, reduced or eliminated if any such change is rational and in the public interest. In this case, LILCO and staff urge that we increase cash revenues; other parties urge a decrease'.1 But neither course is now in i

the public interest.

1 More specifically, LILCO seeks a revenue increase of s83 million, while staff proposes allowing 850 million. The

  • ' ~~

Coalition would reduce revenues by 860 million, and DOL would reduce them by 3385 million. -

CASE 29484 The record shows no compelling need for any increase' !

in cash revenue at this time. Unlike the last two LILCO rate cases, the company faces neither an imminent threat of bank-ruptcy nor a strong need to support financing with a cash j 1

flow enhancement. Since the need is not compelling, an  ;

1 increase in the cash revenue at this time would imply our acceptance of the continuing uncertainty flowing from the deadlock over Shoreham.

Shoreham cannot be counted on to be in operation before the 1989 summer, peak, and it is conceivable that the plant may never operate. Acceptance of the proposed increase in the FSA at this time would do nothing to encourage LILCO's serious attention to the development of alternative means to satisfy Long Island's need for power in the short- and long-term future.

The power supply planning proclem is particularly acute, for LILCO's reserve margins are already below desirable levels, and its dependence on oil is excessive.

While the company deserves credit for the high reliability of its units during the record 1987 summer peaks, the situation remains precarious. Furthermore, the company cannot proceed equally vigorously in preparing for Shoreham and non-Shoreham futures.

In a future without Shoreham, the amounts to be paid to buy generating capacity or to encourage energy con-servation and load management will be higher than in a future in which Shoreham is assumed to come on line soon and operate C

CASE 29484 reliably. To find the equivalent of 820 megawatts by the early 1990s will not be easy, and the task cannot be sensibly pursued in an atmosphere of prolonged uncertainty over Shoreham.

The extraordinary level of public opposition to this plant is a real and consequential force under our system of government. It will continue whatever actions we or the company may take. The company may feel deeply justified in its past pursuit of the plant, but its foremost duty is to supply power on reasonable terms that are acceptable to the public that it serves as well as to its stockholders.

For these reasons, we find no basis for increasing cash revenues while the deadlock over Shoreham continues, But neither sheuld rates now be reduced, for LILCO should be given a reasonable period of time to re-evaluate and read]ust its goals. We therefore will review this matter again in April 1988 to see if any rate revision upward or downward is then in order.

During the period between now and April, we trust the parties to the Shoreham =atter will break the long deadlock so that the Long Island community can look to the future with assurance that their power supply will be safe, adequate, and reasonably priced.

We emphasize that we are not now taking sides as to the merits of the company's effort to license Shoreham, nor

> ', . =aking any decision as to the f uture rate treatment of innresolved Shoreham issues. Indeed, L LCO may seek in April CASE 29484 to demonstrate a clear basis for high confidence that Shoreham will operate to meet the 1989 peak season and beyond.

Such confidence does not now exist, and unsuccessful pursuit of this option could retard alternative power supply planning in unacceptable ways.

Just as IILCO needs to re-evaluate its goals, it is also important to realize that denying recovery of prudent Shoreham invest: ment or some equivalent if the plant does not operate has the effect of forcing LILCD to continue its efforts to license the plant. LILCO wil.1 not abandon Shoreham if doing so precipitates its own demise. While it is too soon to ccm. tit ourselves to specific ratemaking treatment, the underlying need for principles that harmonize the company's aconomic self-interest w;:h the desires of its -

customers must:be recognized if the deadlock is to be b';oken in the context of our regulation of 1:2.CO short of bankruptcy.

With these understandings, and with the Shoreham struggle over, it abould be possible to address Long Island's power supply needs and LILCO's financial health on a con-structive basis lavalving all relavant governmental entities.

We remain ready to assist--through med.iation .'r other means--in the rusolutlen of these problems.

We have referred to our plan to review the case in April. Some words are in order about the nature and scope of that proceeding.

.g.

CASE 29484 First, the reopened proceeding will be primarily a revisitation of the justification for increased or decreased cash flow. It will include as well several other matters concerning which judgment now is reserved: the proposed partial pass-through fuel adjustment clause: dividend restrictions; executive compensation agreements; payments for certain lobbying expenses;1 and the recovery of extraordinary costs related to Hurricane Gloria. We also leave unresolved the rate design issues before us in this case, but we expect to take those up well before April.

Second, the April proceeding will incorporate and take as its starting point the record compiled thus far.

Further hearings will be limited to facts arising since this record was closed.

Finally, we direct LILCO to address itself, as part of its pre-filed testimony, to the following concerns:

1. The company must show that it has developed and will put into effect reasonable plans to provide reliable electric service without generation from Shoreham. A significant part of that plan should be an ambitious conservation / load management effort and a pursuit of' cost-justified independent power production or other sources.

1 This item is the subject of a pending petition by the Consumer Protection Board, designated Case 29664.

CASE 89484 9

2. The company should provide evidence of progress in carrying out the recommendations for improved productivity set forth in the recent management audit by Arthur Young, Inc. Following many of these 215 recommendations--in consultation with our staff--should permit the company to improve the efficiency of its operations.
3. The company should demonstrate progress toward establishing its Board of Directors as a significant oversight body in a manner consistent with LILCO's broad public service obligations.

For the reasons discussed earlier, we have decided

  • to allow no additional cash flow relief now. We turn next to our basis for concluding that no increased revenues are warrantea by our analysis of the cost-of-service issues.

COST OF SERVICE ISSUES This proceeding is driven primarily by the cash-flow and Shoreham-related issues discussed above.

Nevertheless, the parties litigated numerous cost of service .

issues, and the Judge has resolved them in his recommended decision. We have reviewed his recommendations and the exceptions to them, and we find them, by and large, to be sound and to yield an overall result that is just and reasonable.

CASE 29484 We adopt the Judge's recommended resolutions, subject to the following necessary modifications and updates.

To begin, we find unpersuasive LILCO's arguments concerning the proper federal income tax rate to be used to determine operating income. The slip in the suspension period has extended a greater portion of the rate year into 1988, the tax rate in which is lower than in 1987 pursuant to the Tax Reduction Act of 1986. LILCO would ignore this slip in determining the proper "blended" rate.1 Staff's positien, endorsed by the Judge, would reflect the lower rate and reduce the blended figure from 35.5% to 34.5%.

We agree with staff. The tax rate is different from more controversial projections of rate year costs, which are not being changed, and is more ministerial the known rate is simply applied to other numbers to get to the end result. In these circumstances, a more accurate tax rate that reflects the slipped suspension date is acceptable.

We also shall not adopt the Coalition's proposal to decide now the criteria for determining the commercial operation date of Nine Mile 2. We have not taken such action with respect to other generating units.

The Judge's analysis, favoring an informed, after-the-fact review, is adupted.

r 1

A rate reflecting, pro rata, the different (calendar year) tax rates for the rate year, which spans two calendar years. Additionally, we note that there will be a further reduction in 1988. If the company does not file a rate case in which those savings can be reflected, we shall

. defer them for later disposition.

CASE 29484 The Coalition also has failed to provide the kind of evidence needed to reach an informed decision on manage-ment salaries, and we reject its proposal that rates reflect no increase. Staff's proposal to limit the increases to the GNP price deflator for 1987 and 1988 provides a reasonable middle ground, which we adopt. A similar rationale applies to our resolution of whether the company should be allowed "normal" research and development expense or whether some lesser, austerity-based allowance should be continued. Staff and the company have agreed to an allowance less than the company initially proposed, the Coalition regarded even this as excessive. The record does not require adoption of any party's position, and staff's middle ground represents, for '

now, a reasonable conclusion.1 Next, DOL has raised several issues that were not discussed by the Judge. These include challenges to the company's practices concerning various executive and legal costs and political activities. We have reviewed DOL's arguments--both to the Judge and on exceptions--but shall not now make the adjustments it proposes. However, we share the concerns raised by DOL. The company should, for example, develop guidelines for the various executive costs along the lines suggested by DOL. We shall, moreover, direct our staff 1

Cur decision implies no acceptance of the reasonableness of the overall compensation for LILCO's senior executives, a subject over which we are reserving Judgment pending

further review in April 1988.

l l

1

0 CASE 29484 to monitor closely these aspects of the company's operations, placing special emphasis on insuring that the company does not take ratepayer-funded legal actions for improper ends.

We shall, for present purposes, adopt the Judge's--and staf f 's--recommended 14.2% cost of equity.

Staff's method is a valid approach in these circumstances 1

(where the company does not pay a dividend) and we shai.'

adopt it for now.

Additionally, there are other instances where the record warrants further examination in April. The most obvious such issue, of course, is the right level of cash-flow and we shall revisit that issue then. In the same vein, we shall consider the propriety of a dividend payment restriction and of the company's execu:;ve arrangements at that time. We shall retain the full record of this pro-ceeding for such review in April.

On the other hand, enere are several instances where the record may be updated and a decision reached now.

First, we shall make various adjustments to reflect information not available until now. These adjustments are listed in Schedule 5 of Appendix A and largely represent the traditional updating of the record that is our practice.

Second, we shall determine property tax expense using the company's method and the updated information it supplied. That method is appropriate inasmuch as it reflects actual additions and is likely to reflect the company's actual coss.

CASE 29484 Third, we shall not include dividend taxes in rate year expenses. Although we have allowed such costs as an expense in the past, such action now is inconsistent with the uncertainties that face LILCO. We shall, however, allow the company to defer any such costs it incurs and petition us for their recovery.

Fourth, we adopt staff's p;oposal to use the Tax Reduction Act benefits as a rate base offset until their final disposition is determined. '

Fifth, as staff proposes, we shall require the company to defer, for future disposition, any property tax refunds not reflected in the revenue requirement determined today. i Finally, we shall require that the company reset '

the earnings cap as of May 1, 1987, as proposed by staff.

Staff's proposal will isolate the effects of possible earlier overearnings. By resetting the cap as of May 1, overearnings for the period before that date would not be offset by sub-sequent underearnings.

CONCLUSION Our :esolution of the issues presented in this case leads us to conclude that Long Island Lighting Company requires no additional annual revenues from electric service.

Our detailed computations are set forth in Appendix A.

4 CASE 29484 The Commission orders:

1. Long Island Lighting Company (the company) is directed to cancel the tariff leaves and supplements listed in Appendix B on or before December 5,1987.
2. The company is directed to file amendments to its tariff schedules consistent with this opinion and Order.

The company shall serve copies of this compliance filing on all parties filing exceptions or replies to exceptions in this proceeding. Any comments on the compliance filing must be received at the Commission's e.ffices within ten days of service of the company's proposed amendments. Amendments

] specified in the compliance filing shall not be:ome effective on a permanent basis until approved by the Commission. The company is directed to file the amendments within 30 days of this Opinion and Order, on not less than one day's notice, subject to further revisions if any showing is made that the tariff amendments are not in full compliance with this Opinion and Order. The requirement of 566(12) of the Public 4

Service Law and 16 NYCRR 136.70, that newspaper publication must be completed before the effective date of the amendments l authorized in this paragraph, is waived; but the company

, shall file with the Commission, no later than March 5, 1988, .

proof that a notice to the public of the ch:nges proposed by the amendments and their effective date has been published '

1 once a week for four successive weeks in a newspaper having general circulation in the counties affected by the amend-ments.

j

)

I . - . .. ._. .

t CASE 29484

3. The Financial Stability Adjustment (FSA) j revenues, equal to 8322.2 million of the rate year electric '

revenues here authorized, will be terminated in the event the

-company files a petition for relief in a voluntary case under the Bankruptcy Act or if a final order of relief is entered j in an invcluntary case under such Act and any right of appeal of such order has been exhausted. In that event, alternative i l

cates which exclude the FSA revenues will become effective on one day's notice. Those alternative rates, embodying a

, reduction in the customer and minimum charges on an equal percentage basis and in the demand and energy charge on a uniform per unit basis, shall be designed to yield only the conventional revenue requirement determined in this Opinion "

and Order, except that the convention 1 revenue requirement ,

shall be deemed to include those Nine M.ile 2-related revenues granted herein once the plant enters cemmercial operation.

l The company's compliance filing shall include, on each appropriate tariff leaf, a provision specifying the rate reduction that would take effect in the event of such above-described bankruptcy proceedings.

l

4. The Nine Mile 2-related revenues, equal to about $113.2 million of the rate year electric revenues here l

authorized, will be terminated in the event the company files  ;

a petition for relief in a voluntary case under the Bankruptcy 1

i

] Act or if a final order of relief is entered in an involuntary l case under such Act and any'right of appeal of such order has i

I been exhausted prior to the commercial in-service date of j ' \

)

CASE 29484 Nine Mile 2. In that event, alternative rates which exclude the Nine Mile 2-related revenues will become effective on one day's notice. Those alternative rates, embodying a reduction in the customer and minimum charges on an equal percentage basis and in the demand and energy charge on a uniform per unit basis, shall be designed to yield only the conventional revenue requirement determined in this opinion and order.

The company's compliance filing shall include, on each appropriate tariff leaf, a provjsion specifying the rate reduction that would take effect in the event of such above-described bankruptcy proceedings.

5. The conventional revenue requirement, equal to

$1,189.4 million of the rate year electric revenues here authorized, shall be subject to an equ.:y earnings cap. The earned equity return will be computed acnthly starting May 1, 1987 and any excess will be deferted. The deferrals will ce accumulated and subject to future disposition for the benefit of ratepayers. In the event the company earns less than' its allowed return in any month, the accumulated deferral will be reduced by the shortfall, but the amount in the deferral account shall at no time be less than :ero.

6. The company shall defer, for disposition in accordance with the determination to be reached by the l 1

Commission, the property tax refunds referred to in the foregoing opinion to the extent that they have not yet ceen reflected in the revenue requirement.

CASE 29484

7. The company shall submit to the Commission, by February 1, 1988 evidence demonstrating the reasonableness of costs it incurred in restoring service and repairing damage ,

to its system after Hurricane Gloria.

8. By April 1, 1988, the company shall submit to the Commission material as described in the foregoing opinion, and supporting any assertion that it should be allowed to continue collecting FSA revenues.
9. Except as here granted, all exceptions to the Administrative Law Judge's recommended decision are denied.
10. To the extent it is consistent with thiu Opinion and Order, the recommended decision of the Administrative Law Judge is adopted as part of this Opinion and Order.
11. This proceeding is continued.

By the Commission, (SIGNED) JOHN J. KELLIHER Secretary s

b I

c,294g4 LONG !!LMD L!CNf!NG COMPMY A;pendix A C037 0F f ttV!CI

SUMMARY

ELICTRIC Pti CCMM!$3lCN Schedule 1 FOR THE TVIL73 NONfM3 INDING SEPT. 30, 1988

$(000)

A3 AS CCMMIS$!CN A3 ADJU37tD Adj. CCW!$$!0N ADJUfft0 ttVENUt P!NELY BY EJ No. ADJU3fMENf3 af Com it0V!!!MDf ADJU$f!D Of ttAf!NG BAWNVt3 SE83 of ELECft!CIff $1,628,756 81,624,756 to $1,624,756 0?Htt ofttAf!NC ttVINUt3 4,465 (1) ($73) 7,892 7,892

?0TE $1,633,221 ($$73) #1,632,648 to 81,632,644 CPERAf!NG IIPD$ts CFERAf!0N MD MAINT. IIP. f639,308 (2-6) (fl,031) 8638,270 80 1638,270 CXAllfAER CCNft!BUf!0NS 0 0 0 CEPitCIAf!0s 65,711 65,791 65,711 fut! OfMtt fMM INCOME TAIT 3 255,227 (7) (1,852) 253,375 0 253,371 AMCtf!!Af!CW CF PICPERff LC3323 32,899 (4) (29,107) 3,792 3,792 MCt?!2Af!CN OF NICAf!YI A/UDC 0 0 0 TCTE 1993,225 (831,1971 1961,228 to $161,228 CPERAf!NG !NCOME BEFCit F!? $639,996 $31,424 3671,420 $0 1671,420 FtttJE INCCMI faits $19),586 (t) 85,023 8200,608 to 200,608 N!Nt *.'L2 2 RELAf!D RJVENUI ADJUSTMty? 65,478 (10) 5,278 70,756 70,756 FINM;;M STA8!L!?! ADJU3fMDT 201,475 201,475 201,475 Nt? CPt1Af!NG INCCMt $177,457 $21,123 5196,580 to $196,580 Raft Bast Ntf Vf!LITY PLAff $1,264,792 to fl.264,792 80 81,264,792 CCN3ftVCTION VCt1 IN Pt00t233 405,700 (11) '

(188) 405,512 0 405,512 90tt!NG CAP!?E 164,178 (12-14) 29 164,20' 0 164.207 ORFttitD Coffs 120,211 (15 11) (72,927) 47,364 0 47,364 ACC'.%f.AftD DEFritID F.I.T. 198,875) (19) (17,324) (116,119) 0 (116,119)

TOTE 81,156,016 (810,410) *1,765,676 80 81,765,676 ItfUtX CN 1175 BASI t.56% 11.25% 11.25%

C.2)(84 LONG !$LMD LIGHTING CCMPMI A;pendix A ELICTE!C CPERAf!CI MD MAINfDMCI IIPINSES PER CCMM!!3!CN 3enedle 2

, FCI THE TWELVI Mos?H,9 850!NG SEPf. 30, 1988

$(000)

PROFCitMA AS COMMI!!!CN AS PIB AdJ. CCitt!!$105 CCMMI!!!CN ADJU37tD REVtXVI F!NAl.:

Ot33!Pf!CI ALJ No. ADJU$fMDTS INFLAf!CN If COMM ttCUIRENDf A0 Jus' FVEL $316,921 $316.121 $316.

LABot 115,711 (2) (81) 115,630 115.

Fl!NCE latF!?$ 16,161 (63) 16,898 16.

INSUtMCI 6,210 (3) (56) 6,154 6 MAfst!E3 MD SUPPL!ss 17,412 (65) 17,347 17.

CONTRAC?0t3 24,702 (12) 24,610 24 LICAL, ACC?C. 4 SPIC. SVC3. 7,232 (221 7,210 7, POSTACI 2,050 (!) 2,042 2 INYO!CE3 3,053 (10) 3,043 3,'

!NJVa!83 MD DAMActs 2,363 (t) 2,354 2.

Cff.!UPPL. STAT. MD Pl!It!NG 1,340 (5) 1,335

$?otM CAMAct 2,500 2,500 2 UNCOLLICT!ILE3 7,103 7,103 10  ?,

TELDHCNES 5,865 (22) 5,443 5.

RDt3 5,720 5,699 (21) 5,.

CEP. FROM CLEAT!NG 2,516 2,516 2, DUt3 4 MIMI!I!WIPS 2,302 (t) 2,294 2, PSC A33233 MENT 3,951 til 316 4,267 4,:

CCRP. MD P!3CE IIPEN323 2,203 (4) 2,195 2, INFO. 4!N37. E Vtt?!!!NG 1,228 1,228 3 1, Mott!!Af!0NS 15,847 (5) (144) 14,963 14,

?RM3F. 4 METER !N3 FALL.33. (2,404) (2,404) (2,-

OtNst EMPLOT12 COMPDIAf!CN 33 33 FRODUC*IV1ff ADJU$fMINT (1,511) (1,511) (1,t TOTE $63),308 16) (8705) '.8333) 1638,270 to si38,;

I I

C.2940( LONG !$LMD LIGHTING COMPMY Appendix A COMPUTAf!CN OF RLRCTRIC FIDERAL INCOME TAIES Pit COMMISS!CN Schedule 3 FOR fit TVELVI MONTHS JNDING SEPT. 30,1988

$(000)

AS AS COMMIS$!CN AS ADJUSTIO Adj. COMMISSION ADJUSfl0 RgVENUE FINALLY BY ALJ No. ADJUSTMDf3 BY COMM REQUIRIMDT ADJUSTED TOfE OPERATING INCOMI BEF083 F!t $639,996 331,424 $671,420 $0 $671,420 fotAL IffERST CHARGES 409,912 (5,263) 404,649 404,649 INCOME BEF0tB 71113 $230,084 $36,687 $266,771 $0 8266,771 PtJtMMBT O!FF./FLOV THROUCH ADJ.

INTEt1ST ADJUSTMD T $303,012 $303,012 5303,012 LIEN DATI PROPttfY TAX NON NUC. (7,300) (7,300) (7,300)

JMESPot? ABMDONMENT 22,128 (22,1281 0 0 P0tf JEFFEISON C0AL CONVIISION 1,056 1,056 1,056 BOOK OVII TAI DEPT. - NON NUC. 43,979 23,979 23,979 UNCOLLECT!RLES ACCIUE 1,646 1,646 1,646 ttMOVE COSTS (2,100) (2,100) (2,100)

OfjtER ITEMS MD ADJUSTMDTS 207 207 207 TOTE PDMMENT O!FF./FLOV THROUCH ADJUSTMENTS $342,628 ($22,128) $320,500 10 $320,500 300K INCOME SUBJECT ?0 TAX $572,712 $14,559 $587,271 $0 $587,271 FICitE INCOME TAI f 34.5% $197,586 $5,023 s202,608 $0 $202,608 ITC Uf!L!!ID LIABIL!ff 0 0 0 CITERRID ITC 0 0 0 EICESS CEFInto TAI C11DITS (2,000) (2,000) (2,000)

TOTAL P.I.T. PROVIS!0N $195,586 (9) 85,023 $200,608 $0 $200,603 33333333333 33333333333 33333333333 33333333333 33333333333 I

C.29484 LONG !$LMD LIGHf!NG MANT Appendix A Raft BASE SUMMMY ELECTRIC PER COMMISSION Schedule 4 FOR fMI TVELVI MoufMS INDING SDf. 30, 1988 Page 1 of 2

$(000)

AS AS COMMIS$!0N AS ADJU$ftD Adj. COMISSION ADJU$ftD RIVt1FJE FINELY BY EJ No. ADJU$fMENTS BY COMM REQUIREMENT ADJUSTED Nrf Vf!L!?? PLMT $1,264,792 80 $1,264,792 $0 $1,264,792 N!NI MILE 2 TM Tel'TEF175 0 $0 80 ACCUMULAft0 DEFERRED FI? '51,ti5) (19) (17,324) (116,199) (116,199)

NIGAf!VI AFUDC UNAMORf!!ED BALMCI J 0 0 NCN !NTEREST BEARING CV!P ION-SNotIHAM 50,700 (11) (188) 50,512 50,512 SHottRM 355,000 355,000 355,000 WORX!NG CAP!?E ALLOVMCI 72,303 (12) (111) 72,192 0 72,192 MAf! RIES ISUPPLIFS FOSS!L FUEL !)F'iDif0RY 26,422 26,422 26,422 OTHER 29,490 29,490 29,490 PRDAYMENTS PROPERff TAI 27,792 (13) 225 28,017 28,017 MTA 5,072 5,372 5,072 ofMER 3,099 (14) (85) 3,014 3,014 UNAMCRf!!!D CEFERRED Co$fS HURRIC M E GLORIA 0 0 0 0BFIRRED FUEL (16,351) (16,351) (16,351)

HIECA 1,875 (15) (130) 1,745 1,745 0887 IIPENSI 57,222 57,222 57,222 CONSERVAf!Clf (650) (16) 293 (357) (357)

R&D OVERArw Yttr (412) (17) (322) (734) (734)

MMACIMINT 4 POWER PLANT AUDIT COSTS 1,652 1,652 1,652 JAMESP0tf 72,768 (18) (72,768) 0 0 PCRf JEFFERSON C0AL CONVERSION 1,896 1,196 1,896 ACI INVEST./Uf!L!!!!S MUTUE ODOS!? 1,120 1,120 1,120 MCRf!!Af!CN OF AFC ADJUSTMENT 1,171 1,171 1,171 TOTE RATI BASE $1,856,086 (890,410) $1,765,676 30 $1,765,676 33333333333 33333333333 33333333333 33333333333 33333333333

I C.29484 LONU IIIE D LIGHTING COMPANY Appendix A  !

WORKING CAPITE- ELECTRIC Ptt COMMISSION Schedule 4 l FOR THE TWELTR NO M S INDING SEPf. 30, 1988 Page 2 of 2

)

f(000) 13 AS COMMIS$!0N AS ADJIIffED Adj. COMMISSION ADJUSTID R M NUE FINAL l,Y Bf ALJ No. ADJUSTMINTS SY COMM RBQUIREMENT ADJU$f!D OPERAf!0N & MAINT. IIP. $L39,JH ($1,038) 8638,270 10 638,270 ADO: CHARITABLE CONTRIBUTIONS 0 0 0 0 0 LESS: 3/4 PURCHASED POWER (60,640) (60,640) (60,640)

CAS BURNID UNDER BOILIRS (52,901) (52,909) (52,9091 WUCLEAR FUtt 0 0 0 I:! JURIES & DAMActs (2,363) '

9 (2,354) 0 (2,3541 UNCOLL8CTIBL83 (7,103) 0 (7,103) 0 (7,103)

DIPRECIAf!ON FROM CLEARING ACCOUNTS (7,514) 0 (2,516) 0 {l,516)

MORT. OF Sf0RM COSf3 (2,500) 0 (2,500) 0 (2,500)

MORT. OF HIECA COSTS (1,802) 252 (1,550) (1,5501 -

AMORf. OF CONSERVAf!ON COSTS (4,045) (4,045) (4,045)

M0ff. OF MANACIMENT 4 POWER PLANT AUDIT COSTS (367) [367) (267)

ELECT. PROD. STANDARD TRAR VS. ACTUE, NET 1,060 1,060 1,060 NTT IIPENSES $505,123 ($777) $505,346 $505,346

$0 WORKING CAP!fE 01/7 $72,303 '12) ($111) $72,192 $0 $72,192 3333EEEWW13 33333333333 33333333333 33333333333 33333333333 i

_ ~ . .

C. 29484 Appendix A Schedule 5 Page 1 CF 3 LONG ISLAND LIGHTING CCMPANY Summary of Commission Adjustments Twelve Months Ending Secte=cer 30.' 2933

$(000)

Ad _f . Descriction Ameun-

1. Other Revenues Decrease to reflect latest known Ccnservation balances. $( 573)
2. Labor To reflect latest known inflatten rates. $( 5')

3 Insurance To .eflect revisec infla:icn and la:est known premiums. $( is) 4 PSC Assessment To reflect lates: kr.cwn assessmer.: ra:es.  ! I'd

). Amorticatiens a) Revise H:I"A te reflect lates: known ca.ance. t 252) b) Revised ?&D to reflect latest krewn balance. ( 632)

$l 55-)

6.  :-f'ation Tc reflect decrease in inflation rate frem *.5% to 7.25. $( 333)
7. Taxes Otner Than !necee Taxes a) To eliminate dividend taxes. $( 3.22L).

c) 'Jpdate precerty taxes to reflect revisec inflation and la:est known assessments. ' ?2

$( '.552

3. Amer::ca::en :r Precerty Lesses Tc remove Jamesper; acerti:atier.. $(29.'C7

Appencix A C. 29484 Senecule 5 Page 2 CF 3 LCNG !SLAND LIGHTING COMPANY Summary of Commission Adjustments Twelve Men:hs Ending Sep;e=cer~30, 1988

$(000)

Descriptien Amcun:

Ad1

9. Federal Inecme Taxes To acjus: F!? prevision per Sen. 3 $ 5.023
10. Nine Mile 2 Related Fevenue Actustment To reflect the Commission's allcwance for Nine Mile 2 ces:s and excenses censistent w :n the ALJ's methodology. $ 5.2*3 Fate Base 11 Non-Interes: 3 earning CN!?

$( 133)

To reflect cecrease in inflatten ra:e frem 7.6% to 7.2%.  :::::::

12. Casn Werkir.; Cacital Adjus: Cash Worging Capi:a1 per Sen. 4 $( )
13. Precaid Precerty Taxes Upcate property tax prepayments :o reflect revised prcperty : axes.

$ 225

-la. Precaid :nsurance To reflect updates of the Commission's excense allowance and latest known balances. ${ 35)

Rate Base :eferr-ed Cests .

15. .:evise HIECA :o reflect lates: Known talance. $( '30)
16. Revise Conservation to reflect la:es; kncwn calance. $ 243
17. Revise R&D to reflect la:est known calance. $( 322)
13. To remove Janesecr: unamerticec talance. $( 72. 763 )

C. 29484 A;;er.cix A Senecule 5 Page 3 0F 3-LCNG ISLANO LIGHTING COMPANY Su= mary of Commission Adjus: en:s T',elve Mon:ns Ending Sep;em:er 30, 1933

$(000)

Ad!. Descri:: ion Ancun:

19. Accumulated Oeferred FIT a) To re=cve 'amesport AOFIT Salance. $ 7,339 b) To reflect 1987 TRA-86 ceneft:s as a ra:e case offset. $f25.2'3)

$ ( 17,32-)

9

i C. 29484 APPE!O:X 3 LONG ISLAND LIGHTING CCMPANY Amendments to Schedule P.S.C. No. 7 - Electricity Seventh Revised Leaves Nos. 28Z and 3 0B Nineteenth Revised Leaf No. 47 Twenty-fourth Revised Leaves Nos. 26A and 28C Twenty-sixth Revised Leaf No. 33I Thirty-third Revised Leaf No. 3 8 Thirty-eighth Revised Leaves Nos. 31A, 42 and 43 Forty-first Revised Leaf No. 45 Forth-eighth Revised Leaf No. 33F Fif ty-fif th Revised Leaves Nos. 30 and 34 Fifty-sixth Revised Leaf No. 28 Supplement Nos. 115, 129 and 125 to Schedule P.S.C. No. 7 -

Electricity

STATE CF NEW YORK FUBLIC SERVICE COMMISSICN CASE 29484 - Proceeding en Motien of the Cccmission as to the rates, charges, rules and regulations of Long Island Lighting Company for electric s e rv ic e .

James T. McFarland, Ccmmissioner, concurring :

I want to underscore the clear signal the ccmmission is sending to the parties in the dispute ever the licensing of Shoreham that Long Island consumers will face drastic energy shortages in the near future cecause of a lack of LILCO generaring caphcity, a lack of transmissicn facilities to import suf ficient energy to Long Island, and daily increases in demand by new censu=ers to the system.

Che parties to the deadicek as well as all ccesumers en Lcng Island should cons; der the fact that the energy needs of Long Island would be satisfied for scme tine to come if the 820 MW of capacity frem Shcreham came en line.

Inde ed , it is conceivable that if the license were granted now, Shoreham would be in full production to meet the peak energy demands of the sum =er of 1988. (I am fully aware that any licensing decision rests not with this agency but with the Nuclear Regulatory Cemmission. ) Shoreham would join the five other nuclear plants in this state that have been genera ting saf e, r eliable , and econceic energy f or nany years.

STATE CF !;EW YORK PUBLIC SERVICE CCMMISSIO!;

CASE 29484 - Proceeding en Motion of the Ccemission as to the rates, charges, rales and regulatiens of Long Island Lighting. Company for electric s e rv ic e .

Harold A. Jerry, Jr., Cercissioner, concurring :

I join in Cce.missioner McFarland's ccncurrence.

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, LILCO, January 22,1988 4

00LKETE0 UaNFC CERTIFICATE OF SERVICE

'88 JAN 26 41:25 In the Matter of ODicE OF SEgwy LONG ISLAND IIGHTING COMPANY 00CHEllNG A SE9vicE (Shoreham Nuclear Power Station, Unit 1) 8 RANCH Docket No. 50-322-OL-6 I hereby certify that copies of LILCO'S RESPONSE TO BOARD'S JANUARY 7 ORDER AND REQUEST FOR EXPEDITION were served this date upon the following by Federal Express as indicated by an asterisk, or by first-class mail, postage prepaid.

James P. Gleason, Chairman

  • George E. Johnson, Esq.
  • Atomic Safety and Licensing Board Richard G. Bachmann, Esq.

513 Gilmoure Drive U.S. Nuclear Regulatory Commission Silver Spring, Maryland 20901 11555 Rockville Pike One White Flint North Dr. Jerry R. Kline

  • Bethesda, MD 20814 Atomic Safety and Licensing Board Herbert H. Brown, Esq.
  • U.S. Nuclear Regulatory Commission Lawrence Coe Lanpher, Esq.

East-West Towers, Rm. 427 Karla J. Letsche, Esq.

4350 East-West Hwy. Kirkpatrick & Lockhart Bethesda, MD 20814 South Lobby - 9th Floor 1800 M Street, N.W.

Mr. Frederick J. Shon

  • Washington, D.C. 20036-5891 Atomic Safety and Licensing Board Fabian G. Palomino, Esq.
  • U.S. Nuclear Regulatory Commission Richard J. Zahnleuter, Esq.

East-West Towers, Rm. 430 Special Counsel to the Governor 4350 East-West Hwy. Executive Chamber Bethesda, MD 20814 Room 229 State Capitol Secretary of the Commission Albany, New York 12224 Attention Docketing and Service Section Alfred L. Nardelli, Esq.

U.S. Nuclear Regulatory Commission Assistant Attorney General 1717 H Street, N.W. 120 Broadway Washington, D.C. 20555 Room 3-118 New York, New York 10271 Atomic Safety and Licensing Appeal Board Panel Spence W. Perry, Esq.

  • U.S. Nuclear Regulatory Commission William R. Cumming, Esq.

, Washington, D.C. 20555 Federal Emergency Management l Agency Atomic Safety and Licensing 500 C Street, S.W., Room 840 Board Panel Washington D.C. 20472 U.S. Nuclear Regulatory Commission Washington, D.C. 20555 i

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.i Mr. Jay Dunkleberger Ms. Nora Bredes New York State Energy Office Executive Coordinator Agency Building 2 Shoreham Opponents' Coalition Empire State Plaza 195 East Main Street Albany, New York 12223 Smithtown, New York 11787 Stephen B. Latham, Esq.

  • Gerald C. Crotty, Esq.

Twomey, Latham & Shea Counsel to the Governor 33 West Second Street Executive Chamber P.O. Box 298 State Capitol Riverhead, New York 11901 Albany, New York 12224 Mr. Philip McIntire E. Thomas Boyle, Esq.

Federal Emergency Management Suffolk County Attorney Agency Building 158 North County Complex 26 Federal Plaza Veterans Memorial Highway New York, New York 10278 Hauppauge, New York 11788 Jonathan D. Feinberg, Esq. Dr. Monroe Schneider New York State Department of North Shore Committee Public Service, Staff Counsel P.O. Box 231 Three Rockefeller Plaza Wading River, NY 11792 Albany, New York 12223 O

Lee B. Zepin/

Hunton & Williams 707 East Main Street P.O. Box 1535 Richmond, Virginia 23212 DATED: January 22,1988 l

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