ML20149J279
| ML20149J279 | |
| Person / Time | |
|---|---|
| Site: | Perry  |
| Issue date: | 02/19/1988 |
| From: | Albert K, Goldberg R GOLDBERG, FIELDMAN & LETHAM, P.C. |
| To: | NRC COMMISSION (OCM) |
| References | |
| OL, NUDOCS 8802220341 | |
| Download: ML20149J279 (186) | |
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O o UNITED STATES OF AMERICA BEFORE THE NUCLEAR REGULATORY COMMISSION O'
In the Matter of )
) Docket Nos. 50-440A, et al.
THE CLEVELAND ELECTRIC )
() ILLUMINATING COMPANY, et al. }
TO: Chief, Policy Development and Technical Support Branch, Office O Of Nuclear Reactor Regulation O ANSWER OF CITY OF CLEVELAND, OHIO, IN OPPOSITION TO OHIO EDISON COMPANY'S APPLICATION FOR SUSPENSION OF PERRY OPERATING LICENSE ANTITRUST CONDITIONS O
P Marilyn G. Zack Director of Law
!() June W. Wiener Chief Assistant Director of Law William M. Ondrey Gruber Assistant Director of Law City Hall, Room 106 601 Lakeside Avenue
'0 Cleveland, OH 44114
! Reuben Goldberg Kenneth M. Albert Goldberg, Fieldman & Letham, P.C.
- 1100 Fifteenth Street, N.W.
- (3 Washington, D.C. 20005 Attorneys for City of Cleveland, Ohio
.O 0
February 19, 1988 gg% k i
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1 800219 K 0500044o g
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- 5) PDR
O UNITED STATES OF AMERICA BEFORE THE NUCLEAR REGULATORY COMMISSION In the Matter of )
) Docket Nos. 50-440A, et al.
THE CLEVELAND ELECTRIC )
ILLUMINATING COMPANY, et al.
3 )
TO: Chief, Policy Development and Technical Support Branch, Office q Of Nuclear Reactor Regulation ANSWER OF CITY OF CLEVELAND, OHIO, IN OPPOSITION TO OHIO EDISON COMPANY'S APPLICATION FOR SUSPENSION OF g PERRY OPERATING LICENSE ANTITRUST CONDITIONS The City of Cleveland, Ohio ("Cleveland"), files this answer in opposition to the application submitted by Ohio Edison Company ("Edison") in which it asks the Director of Nuclear Reac-tor Regulation ("NRR") to suspend the antitrust license condi-tions imposed by the Nuclear Regulatory Commission ("NRC") in this proceeding. Edison asks that the suspension of the condi-tions apply only to it as co-owner of the Perry Nuclear Power Plant Unit 1 (Perry)l/ and remain in effect "until such time as o'
there may be a factual basis for imposing (the conditions)" (App.
80-81). Cleveland requests summary denial of the application.
o 1/ In addition to Edison, there are four co-licensees: Edison's
'J wholly-owned subsidiary, Pennsylvania Power Company ("Penn Power"), Cleveland Electric Illuminating Company ("CEI"),
Duquesne Light Company ("Duquesne"), and Toledo Edison Com-pany ("Toledo"). In 1985, CEI and Toledo merged and a public utility holding company, Centerior Energy Corporation, was g")
established which owns all of the stock of the two utilities.
For ease of reference, Edison's application is cited as "App." whenever specific pages are referred to. For example, page 8 of the brief is cited as "App.8".
\q J
I. PREAMBLE
)
Edison's application rests basically on its claim that the "exclusive basis for imposing the license conditions" was the purportedly universally held anticipation of the economic super-
)
iority of nuclear power which would provide Edison and its co-licensees (CEI, Duquesne, Toledo, Penn Power) an unattainable economic advantage individually and collectively as members of
) the Central Area Power Coordinating Group ("CAPCO") over other entities engaged in the electric business in their respective service areas (App. 2-3).2/
) Edison asserts that as matters have turned out, the "relative cost" of nuclear power has increased dramatically from the cost which the NRC purportedly assumed and relied upon when it imposed the antitrust license conditions. Consequently, ar-gues Edison, it is "neither necessary nor appropriate for the NRC to continue to restrict (Edison's] business activities" (App. 4).
) Indeed, Edison contends that the "NRC has no statutory basis for overseeing the licensee's business conduct" in view of the alleg-edly higher cost of nuclear power. Id.
) Edison's application seeks the requested relief on its own behalf in its status as co-owner of Perry along with CEI, Toledo, Penn Power and Duquesne. But if Edison were to prevail
) and secure suspension of the antitrust license conditions, its co-licensees, who are quietly watching and waiting in the wings, 2/ In the decisions of the Licensing and Appeal Boards, these co-
) licensees are collectively referred to as "Applicants". In this answer, Cleveland also sometimes refers to the five co-licensees as "Applicants". They are the only members of CAPCO.
D
D will be quick to file applications on their own behalf seeking "7
the same relief. The consolidated proceeding in which the anti-trust license conditions were imposed involved Perry as well as Davis-Besse Nuclear Power Station, Units 1, 2, 3 (906 megawatts 3 In short,
~
each). Davis-Besse is co-owned by CEI and Toledo.
this application is not merely an Edison application, affecting only Edison. Indeed, the NRC's treatment of Edison's applica-
[' tions could set a precedent applicable to other proceedings.
In Section III, below, Cleveland shows that the NRC l does not have the authority to suspend or amend the Perry anti-trust license conditions. Edison's application requests the NRC to conduct another review of the antitrust consequences of the licensed activity. However, Section 105(c) of the Atomic Energy q
" Act provides that an antitrust review can occur only in connec-tion with a pending construction permit application and, in a narrower fashion, to an application for an operating license.
o
Cleveland shows in Section IV, below, that even if the NRC finds that it hr.s jurisdiction to address Edison's application, the relief sought by Edison must be denied because it is barred by n"
the doctrine of res judicata, or, alternatively, collateral es-toppel. This is because the arguments made by Edison in its ap-plication here were made, or at least could have been made, dur-n U ing the construction permit and operating license proceeding. If these doctrines are for some reason not applied, laches bars Edi-son's application, as shown in Section V below.
$ Cleveland demonstrates in Section VI, below, that even if the NRC chooses to address the merits of Edison's application, O
O
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the application must still be denied. Among other things, Edison q
misinterprets the Atomic Energy Act and NRC precedent in arguing that the NRC cannot impose antitrust license conditions if nu-clear energy is not the cheapest source of power. Moreover, as Cleveland demonstrates, the events cited by Edison as the basis for its application do not undermine the legal or factual basis of the NRC's decision to impose the antitrust conditions. The
'l NRC based its imposition of the conditions on the finding that, unless the conditions were imposed, the substantial baseload power generated by the new plants and the expanded coordination O and wheeling services which would result as part of the associ-ated transmission lines would exacerbate the pervasive anticom-petitive conduct of the Applicants. Purported changes in the m
-' cost of nuclear power do not in any way undermine the NRC's analysis.
O n
l O ,
O
B II. BACKGROUND 9 A. THE CONSTRUCTION PERMIT PROCEEDING Both the decision by the Licensing Board 3/ and the Ap-peal Board 4/ provide comprehensive statements of the background 6 of this proceeding. Cleveland briefly reviews this background.
- 1. The applications q The five Applicants -- Edison, its subsidiary Penn Power, CEI, Toledo and Duquesne -- are investor-owned utilities engaged in generating, transmitting and distributing electric energy to wholesale, retail and industrial customers in a 14,000
)
square mile area of Ohio and western Pennsylvania. In 1967, the Applicants formed CAPCO. As members of CAPCO, the Applicants agreed to engage in operational and developmental coordination.
-)
As part of operational coordination, the Applicants agreed to coordinate their operations by, inter alia, exchanging power and sharing reserves. As part of developmental coordination, the
)
Applicants agreed to plan their future generation and transmis-sion facilities as if the pool's requirements were those of a y,
w single power system, The applications by the co-licensees at issue in this proceeding were an aspect of this developmental coordination rs plan. The Appeal Board described the applications in this ways o
! Commencing in 1969, the Applicants sought permits from the Commission to build a series of nuclear O 3/ LBF-77-1, 5 NRC 133, 138-40 (1977).
4/ ALAB-560, 10 NRC 265, 270-81 (1979).
lo .
F o
power plants with a combined generating capacity
() in excess of 5,000 megawatts. The first applica-tion, filed by CEI and Toledo Edison jointly, was for United (sic: Unit) No. 1 [906 megawatts) of the Davis-Besse facility in Ohio. The Attorney ;
General, while noting a dispute between CEI and l Cleveland pending before the Federal Power Commis- l
,-) sion over the City's request for an interconnec- l tion, did not request an antitrust hearing on l Davis-Besse 1. 36 Fed. Reg. 17,888 (September 4, 1971). The city of Cleveland did, however. In a petition filed on July 6, 1971, Cleveland stressed that MELP (its municipal power system)(5/) both q purchased power at wholesale from CEI and competed
' with it at retail. Cleveland alleged that the utility had exercised its control over generation and transmission facilities anticompetitively to block MELP's attempt to obtain bulk power at lower cost from other sources. In addition to other relief, the city asked for license conditions giv-() ing MELP access to power generated by the nuclear plant.
In March of 1973, the five applicants sought Com-mission permits to build Perry Units 1 and 2 in Ohio. This time the Attorney General's advice
() letter (dated December 17, 1973) recommended an antitrust hearing. The letter stressed activities of CEI, which was described as "engaged in intense competition with the city of Cleveland at the re-tail distribution level, and, to a lesser extent, with (the city of) Painesville." After observing O,
that "CEI controls all of the transmission facili-ties surrounding these two cities," the Attorney General portrayed CEI's objectives as being "to reduce and ultimately eliminate" the two municipal systems. The advice letter recounted a history of unsuccessful negotiations between CEI and the
() municipalities over interconnections, wheeling, coordination, and access to large-scale genera-tion, and characterized CEI's conduct in these matters as "inconsistent with the antitrust laws" 39 Fed. Reg. 2029 (January 16, 1974). The city of Cleveland also petitioned for an antitrust hearing
() on this application and asked leave to intervene and participate as a complaining party.
g-)
5/ At the time of the proceedings before the NRC, Cleveland's municipal electric system was known as Municipal Electric Light and Power System (*MELP"). The municipal system's pre-Bent name is Cleveland Public Power.
() a= -
In August 1974, the five applicants jointly re- {
quested construction permits for Units 2 and 3 of '
l the Davis-Besse facility (906 megawatts per unit).
The Attorney General again recommended an anti-trust hearing. His advice was based on the Appli-cants' refusal to admit the municipal systems into l l
the CAPCO pool and what he judged a pattern of anticompetitive dealings by the applicants with 3 the smaller systems. According to his advice let-ter, "[t]he Applicants' refusals to wheel power, to interconnect and to engage in coordinated op-oration with smaller utilities raise problems which should be considered in the perspective of their monopoly control of the transmission facili-3 ties surrounding the smaller systems of their com-
, petitors. Antitrust principles have evolved which place distinct limits upon a supplier's exercise of monopoly power at one level of distribution to adversely affect competition at another level,"
citing the Supreme Court's decision to that effect 3 in Otter Tail Power Co. v. United States, 410 U.SI 366 (1973). The Attorney General stated that a section 105c hearing was called for because the
"(clonstruction and operation of the Davis-Besse ;
Nuclear Power Station, Units 2 and 3, and market-ing of its power output would maintain such an
) anticompetitive situation. Granting the licenso t applied for without adequate antitrust conditions will generate new opportunities for the Applicants l l to engage in coordinated operation with each other t l and will provide them with a new source of rela- '
tively low-cost power and energy at the time they g are effectively foreclosing any possibility of i t
their competitors sharing in the benefits of coor-dinated operation and development." 40 Fed. Reg.
l 8395-96 (February 27, 1975). The city of Cleve-land petitioned to intervene in this proceeding as well.
)
l footnotes in original omitted; footnote in brackets supplied; 10 ,
i :
NRC at 275-76.
i l
f) 2. The Licensing Board decision l r The NRC consolidated the proceedings and directed the Licensing Board to conduct an evidentiary hearing to examine i O whether antitrust license conditions should be imposed on the .
4 construction permits. The Attorney General (represented by the
'(3 ,
f
9 8-Justice Department's Antitrust Division), Cleveland and the NRC
)
staff were admitted as complaining parties.
The Licensing Board comprehensively examined each of the antitrust allegations. The trial took place over seven months and resulted in a record of nearly 13,000 transcript pages with over 1,300 exhibits. The Licensing Board issued its initial decision on January 6, 1977. Briefly, the Licensing Board found U that the Applicants possessed monopoly power individually in the relevant markets within their respective service territories and jointly in the so-called Combined CAPCO Company Territories
,q' j" (CCCT)1/
Within their respective service areas, each in-dividual Applicant is dominant with respect to generation, trancmission, and sale of electric o, energy.
~
a) Generation. In 1973, CEI controlled 94.11% of all generating capacity in its service area Duquesne 99.90%; Ohio Edison 96.61%; Penn Power 100%; Ohio Edison and Penn Power 97.08%; TECO 95.68%. In 1973, Applicants controlled 95% or q more of all existing generating capacity in the CCCT.
b) Transmission. CEI controls 96.8% of all transmission facilities 66 KV and above within its service area; Duquesne 100%; Ohio Edison and Penn Power 99.8%; TECO 99.2%. On a combined basis, o Applicants control 99.3% of transmission facili-U ties 69 KV and above in the CCCT.
citations to record omitted; 5 NRC at 153.
Moreover, the Board found that Applicants used this m
l' control to engage in pervasive anticompetitive and unlawful con-i duct, both individually and jointly as members of CAPCO, to mono-1 O E/ The CCCT "refers to the region bounded by the outer peri- l meters of the present service areas of the five CAPCO mem- ~
l bers. . . "
5 NRC at 142, n. 8.
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polize the product markets. That 7oard summarized its findings in this way:
. . . each of the member companies of (CAPCO] had participated in actions intended or having the foreseeable effect of reducing the reliability and the economic viability of competing electric gen-7; erating and distribution entities within their re-spective service areas . . . . Applicants provided bulk power services to each other even as they avoided competition in the retail and wholesale power transaction market. This avoidance was not passive since several Applicants were parties to q affirmative agreements or understandings not to compete with one another. Moreover, each Appli-cant took actions intended or with the foreseeable effect of eliminating competition with non-Appli-cants in retail power transactions. These re-straints took the form of agreements in restraint o, of trade with municipal generating and distribu-
"' tion systems including territorial or customer allocations, attempts to fix prices for retail power transactions, and refusals to provide bulk power services where the refusals had the known effect of reducing the reliability and the eco-c) nomic competitive potential of these rival sys-tems. Thus, each Applicant has entered into agreements and understandings the effect of which is to create and maintain a situation inconsistent with the antitrust laws within its own service territories. These actions or policies have con-o tinued over a period of years and their cumulative
effect has been to reduce the level of competition within the CCCT or to prevent such competition from being as vigorous as it otherwise might have been.
f tn t s mitted; 5 NRC 223-24. The Licensing Board went on to O
find that CAPCO, from its very inception, was used as a tool to exacerbate the anticompetitive situation by excluding competing n utilities from access to the developmental and operational coor-J dination:
Although a primary purpose for the formation of CAPCO was to secure certain lawful advantages to o Applicants themselves, . . . a collateral and well U understood result of the formation of CAPCO was to deny to competitive entities in the CCCT access to coordinated operation and development.
O
O citations to record omitted; 5 NRC at 224. This unlawful ob-3 jective was effectuated in certain instances by simply denying requests by utilities, such as Cleveland, to join CAPCO. CAPCO g also accomplished the same result by imposing burdensome reserves requirements for membership which, in purpose and offect, dis-qualified competing utilities. 5 NRC at 223-237. Exclusion of mPeting utilities from the CAPCO transmission facilities and,
'O hence, the coordination and pooling services, was designed as one part of CAPCO's plan to undermine their ability to compete effec-
- " l Y' O
In addition, the CAPCO members rejected requests by Cleveland and others seeking to purchase either ownership inter-0 08t8 in the nuclear P ant l 8 r unit Power. Id. at 232-35.
The Licensing Board found that these anticompetitive l activities constituted violations of the federal antitrust laws.
That Board then determined that, in view of these findings, the criteria governing NRC authority to impose antitrust license con-l ditions -- "whether the activities under the license would create ;
or maintain a situation inconsistent with the antitrust laws" .-
had been met. The Licensing Board noted the significance of "the size of the five large generating stations involved in this 11-n8 Proceeding and the substantial contribution they will make i O
to the resources of the CAPCO pool and in particular to the sat-isfaction of its base load requirements" 5 NRC at 240. The B ard r gniz d that, in view of the Applicants' pervasive and O
coordinated anticompetitive conduct, any new electric generation O
4 by the CAPCO members would simply allow them to expand their mar-
)
ket power to serve exclusivoly the increased demands of present customers and the demands of new customers. Competing utilities would be foreclosed from competing for the load because of the Applicants' conduct.
Second, the Licensing Board noted that the con-struction of extensive, high voltage transmission lines in con-
) junction with the nuclear plants would exacerbate the Applicants' exclusionary tactics regarding access to these facilities for wheeling and coordination services:
) . . . there is a direct tie between the generating station construction program and the transmission program which Applicants describe as complementing it. As described in CAPCO memoranda, far more is contemplated than the more extension of a line from the site of the proposed nuclear station to
) the closest terminal of the Applicant in whose service area of [ sic) the plant is to be located.
Applicants are engaged in substantial planning studies and construction programs specifically in-tended to develop a plan for high voltage trans-mission at low cost among CAPCO members. There
) will be commingling, but the commingling will be on an extraordinary scale.
5 NRC at 239. The Licensing Board also noted that construction l
l of the new lines would heighten the barriers to construction of
)
l other lines by the non-CAPCO utilities l
l Although access to transmission facilities is a l necessary concomitant of reliable and economic energy production, small systems frequently find h it infeasible to construct duplicative transmis-I sion facilities. Both economic and environmental l considerations prevent such construction. Appli-cants' construction of the high voltage transmis-sion grid necessitated in large part by the Davis-Besse and Perry plant additions, together with the
) existence of excess capacity on their present sys-tems, render the construction of duplicative transmission lines essentially impossible.
3
)
citations to record omitted; 5 NRC at 156. At the same time, the Licensing Board noted that the new lines would facilitate even more extensive coordination services. Id. at 156-57. Thus, the Board recognized that construction of the new lines would exacer-bate the adverse competitive impact of the Applicants' exclusion-ary policies. I_d. at 239-41. This, in turn, would exacerbate the anticompetitive situation.
Finally, the Licensing Board found that the Applicants' policy of placing anticompetitive restrictions on access to nu-clear power also constituted an obvious nexus between the licens-ing of the facilities and the anticompetitive situation. 5 NRC at 241-43.
The Licensing Board imposed ten conditions. The condi-g tions required each of the Applicants:
1
- 1. to refrain from conditioning the sale or exchange l of wholesale power or coordination services to any en-tity(les)2/ on the purchaser's agreement lO l
(a) to restrict the use or alienation of such energy or services to any customer or territories, (b) to give up any other power supply alterna-tives or to deny itself any market opportunities, O or (c) to withdraw any petition to intervene or forego participation in any proceeding before the NRC or refrain from instigating or prosecuting any antitrust action in any other forum,
- 2. to offer interconnections on reasonable terms and conditions at the request of any other electric enti-1/ The license conditions define "entity" as meaning any elec-O tric generation and/or distribution system or municipality or cooperative with a statutory right or privilege to engage in either of these functions.
O
ty(les) in the CCCT, such interconnection to be available for operation in a closed switch synchronous operating mode if requested by the interconnecting en-tity(ies), subject to reasonable safety procedures that do not deprive purchasing entities of a means to effect additional power supply options.
- 3. to engage in wheeling 8/ with respect to any unused capacity on the Applicants' transmission lines, for and at the request of other entities in the CCCT, of eloc-tric energy from delivery points of the Applicants to the entity (les) and of power generated by or available to the other entity as the result of its ownership or entitlements9/ in generating facilities to delivery
' points of the licensees designated by the other entity, and to make reasonable provision for future require-monts for wheeling services in planning future trans-mission capacity.
- 4. to make available membership in CAPCO to any entity I
in the CCCT with a system capability of 10 megawatts or
. greater or to a group of entities as a single member-ship with the same capability on an aggregate basis, subject to certain specified conditions and restric-tions.
) 5, 6 and 7. to sell maintenance power, emergency power, or economy energy to requesting entities in the CCCT upon terms and conditions no less favorable than those the Applicants make available to each other or to other entities outside the CCCT.
) 8. to share reserves with any interconnected genera-tion entity upon request on an equal percentage basis or by use of the CAPCO P/N allocation formula or on any other mutually agreeable basis, at the requesting en-tity's choice.
) 9. to m.tke available to entities in the CCCT access to Davis Besse Units 1, 2 and 3 and Perry Units 1 and 2 nuclear units and any other nuclear units for which the licensees, or any of them, shall apply for a construc-tion permit or operating license during the next 25
)
8/ The license conditions define "wheeling" to mean transporta-tion of electricity by a utility over its lines for another utility, including the receipt from and delivery to another l system of like amounts but not necessarily the same energy.
l
) 9/ "Entitlement" includes but is not limited to power made available to an entity pursuant to an exchange agreement.
)
(3 years, either as an ownership share (up to 10% of capa--
city of the Davis-Besse and Perry Units and up to 20%
() of future units), unit participation, or contractual propurchase power basis, at the requesting entities '
option. Commitments for the Davis-Besse and Perry units must be made either two years after "this deci-sion becomes final" and for the future units, within ,
two years after a construction permit application is l
() filed with respect to such a unit or within two years after receipt by a requesting entity of detailed writ-ten notice of applicants' plans to construct the unit, whichever is earlier, subject to the 25 year limita-tion.
O 5 NRC at 256-59. Condition 10 states:
These conditions are intended as minimum condi-tions and do not preclude Applicants from offering additional bulk power services or coordination op-tions to entities within or without the CCCT.
() However, Applicants shall not deny bulk power ser-vices required by these conditions to non-Appli-cant entities in the CCCT based upon prior commit-monts arrived in the CAPCO Memorandum of Under-standing or implementing agreements. Preemption of options to heretofore deprived entities shall C) be regarded as inconsistent with the purposes and intent'of these conditions.
- 3. The Appvoi Board decision C) The Applicants submitted a 300 page brief challenging the Licensing Board's decision.10/ In its decision issued September 6, 1979, the Appeal Board rejected this challenge and C) affirmed the Licensing Board's findings. 10 NRC 265. The deci- [
sion had a somewhat unusual pedigree. Jerome Sharfman, the Ap-peal Board member who wrote the original draft of the decision, 33 resigned from the NRC before the draft was reviewed by the other {
1 members of the Board. The remaining Board members decided to '
"concur in [the] ultimate factual and legal conclusions (of Mr.
I) Sharfman's draft)'and the result it reaches except where indi- '
i
! 10/ Applicants' Initial Brief In Support Of Their Individual And !
Common Exceptions To The Initial Decision', filed April 14, l 1977. For ease of reference, the brief is cited as "App. Br.". ;
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l cated in our separate opinion." Id. at 270. Hence, analysis of ;
n the Appeal-Board decision requires examination of both the Sharf-I man draft and the Board's decision.
- a. The Applicants' anticompetitive activities g)
The Appeal Board adopted Mr. Sharfman's analysis of th anticompetitive acts committed by the Applicants individually and collectively in their status as CAPCO members. The Appeal Board
)
noted that the Applicants "control a 95 percent or greater share of the bulk power generation and transmission facilities in their r spe tive servi e areas. Id. at 273. The Appeal Board found O
that the CCCT is the relevant geographic market for purposes of antitrust review and that there were three relevant product mar-kets: (1) the retail market, (2) the wholesale power
)
market (which includes all firm bulk power production, whether retailed for 'in house' retail purposes or wholesaled 'outside' for independent retail distribution), and (3) the coordination services market. Id. at 301.
The Board then agreed with the Licensing Board's find-ing that the Applicants, both individually and as members of CAP-
)
CO, used their domination of generation and transmission to mono-polize each of these product markets. First, the Applicants pre-l cluded other utilities in their service areas from purchasing
})
power from alternative suppliers by refusing to provide the l
wheeling services on their transmission lines which provided the only interconnection with other suppliers. Id, at 327-34. The
,0 1
l Appeal Board pointed to the repeated refusals of Edison, CEI and i
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{
l i Toledo to wheel power for competing utilities. For example, the l k Appeal Board noted that Edison refused to whool power from Buck- t r
eye Power, Inc. to the Buckeye member cooperatives located in l
Edison's service area. M. at 331-33. Likewise, CEI refused to i O
wheel inexpensive power from the Power Authority of the State of New York (PASNY) to Cleveland. M. at 327-28. The Appeal Board noted that the competing utilities could not, as a practical mat- 1 O ter, construct their own transmission lines to duplicate the Ap-f plicants' facilities. Hence, the Appeal Board found that these refusals to grant access to these essential, or so-called bottle-O neck, transmission facilities violate Section 2 of the Sherman Act. M. at 328.
The Appeal Board agreed with the Licensing Board that O the Applicants' unlawful acts did not stop there. The Appeal Board determined that the Applicants not only excluded competi-tors from access to alternate suppliers but also imposed perva- !
'O sive restraints on their competitors' ability to resell the power [
bought from them. The Appeal Board found that these resale re-straints were designed to prevent the utilities from competing i
O for customers, especially industrial loads. Id. at 311-22.
These resale restraints included torritorial restrictions, cus- l tomer allocations and agreements not to resell power in the O wholesale market. M. at 313-14. The Appoal Board noted that these resale restraints constituted a per se violation of the antitrust laws. M. at 316. Edison and CEI were found to be as l 0 guilty as their cohorts in imposing resale restraints. For ex-l ample, Edison barred its utility customers from reselling power O
D 17 -
to industrial or wholesale customers and limited the geographic I areas in which the power could be resold. 5 NRC at 198-201.
The Appeal Board also found that the Applicants barred the utilities from receiving coordination services which, as O noted, are necessary in order for a utility to operate in the efficient manner needed to be competitive. The Applicants re-peatedly refused requests by the utilities to use the Applicants' O transmission facilities for coordination services. 'h1 Appli-cants also refused access to nuclear power unless the utilities granted Applicants a right of first refusal to repurchase excess 8 power for which the utilities had no immediate need. The prac-tical impact of this restriction was, again, to bar access to co-ordination services and to relegate the utilities to a continued 3 role as isolated utilities. 10 NRC at 313-14 (Edison); 321 4
(CEI).
To further consolidate control of retail and wholesale 3 markets, Edison, like the other Applicants, engaged in a panoply of anticompetitive acts and practices including (1) seeking to acquire municipal electric systems in their service areas (id, at
.O 376-378, 380-02), and (2) charging wholesale rates to municipal l
l systems which were higher than comparable industrial rates, thereby creating unlawful price squeezes (id. at 382-84).
[) In addition, the Applicants entered into numerous agreements among themselves dividing up service areas. Id. at i
369-75. Both Edison and CEI were parties to several such agree-O ments. Id. The Appeal Board found these agreements were 11-legal, per se, under the antitrust laws. Id. at 375.
O i
)
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The Appeal Board agreed with the Licensing soard that
' the Applicants, acting collectively as members of CAPCO, engaged in additional anticompetitivo and unlawful acts. CAPCO excittded competing utilities from access to CAPCO's coordinated operations
) and development. The Appeal Board found that the Applicants did this by repeatedly denying requests by utilities to join CAPCO.
Id. at 339-52. Cleveland was among the utilities whose requests
) were denied. Id. at 349-58. Again, the Board found that these refusals constituted concerted refusals to deal and, hence, woro illegal por so under the antitrust laws. Id. at 352. The Appeal
) Board noted that CAPCO also adopted burdensome reservo require-ments for membership in CAPCO in order to "provide a useful ex-cuso for refusing pool membership to municipalities" in CAPCO.
) Id. at 339.
Moreover, the Board agrcad with the Licensing Board that CAPCO's anticompetitive conduct extended directly to the
) CAPCO nuclear plants. The Scard found that CAPCO refused to ac-cept Cleveland's proposal to either purchase an ownership share in, or unit power from, CAPCO's nuclear units unless Cleveland
) agreed to "unreasonab' , anticompetitive terms." I_d,. a t 358-62.
- b. The nexus between the proposed nuclear plants and the anticompetitivo situation
) Armed with these findings of pervasive and pernicious 1
anticompetitive conduct, the Appeal Board then considered whether the nexus between the "activities under the license" and the
) "situation inconsistent" with the antitrust laws required by Sec-l l tion 105(c)(5) was present. The Appeal Board recognized the 3
a ,
, I
- s. ,
n d
0 ,.
s NRC's broad man ate in Section 105(c) to impose antitrust condi-
~ tions:
The provision conveys the message that Congress, did not want nuclear plants authorized,1.n circum-
stances that would create or maintain anticompeti-e tive situations without. license conditions de-signed to address.i. hem; 10 NRC at 291. s- - -
The Board' adopted the Licensing soard's finding that n
there was ari integral link between the activity to be licensed --
con'struction and operation of the nuclear plants -- and the s
anticompetitive situation extant in the CCCT. Id. at 384-85. -
Cl The Appeal Board summarizdd the Licensing Board's findingn: ,
~
Given Applicants' one-syster planning and coordi .-
nated operations, the unconditional addition of five large nuclear power plauts advantageous for g)
"baseload" (low operating cost) generation would increase the CAPCO system's bnik power generating capacity by nearly a third. This would exacerbate' the existing anticompetitive cituation, making it even more difficult for the iuolated public power systems to continue to compete with the Appli-cants, 73 v
Another linking factor was' discerned by the Board in those instances where Applicants had deigned to make nuclear power available to the municipal and cooperat ive systems . The Board found'that as s part of the price for furnishing that power, Ap-gJ plicants had insisted or. such anticompetitivo con-ditions as agreements not to compete, allocations of service territories and customers and Eining of prices. These factors (among others) satisfied the Licensing Ecu'rd that there was more than a sufficient "nexus" between the licenced activities C) and the situation it found to be inconsistent with the antitrust laws and, therefore, that remedia]
license conditions were in order.
footnote omitted; 10 NRC at 281.
.n v The Appeal Board found that "the Licensing Board em-ployed the correct legal standards in determining whether LD .
O licensing those plants 'would create or maintain a situation in-n" consistent with the antitrust laws'". 10 NRC at 285. Thus, by adopting the Licensing Board's reasoning and findings, the Appeal Board recognized the integral nexus between the proposed nuclear Ci facilities and the Applicants' pervasive and pernicious anticom-petitive and unlawful conduct. Therefore, the Appeal Board af-firmed the decision of the Licensing Board to impose antitrust O license conditions.
- c. The antitrust license conditions The Appeal Board approved the license conditions O
drafted by the Licensing Board with only minor modifications.
Significantly, the Appeal Board rejected Mr. Sharfman's proposal t restri t the scope of the conditions ensuring non-discrimina-O tory access to coordination and wheeling services to customers purchasing nuclear power or ownership interests in the plants.
g 10 NRC at 290-294. The Appeal Board noted that this restriction would allow the Applicants to continue their anticompetitive con-duct in connection with pooling and coordination services and to g
thereby undermine the competitive position of utilities which did not buy nuclear power. Id. at 291. That would be inconsistent I
with the clear "message" conveyed by Section 105 of the Act that "Congress did not want nuclear plants authorized in circumstances
()
l that would create or maintain anticompetitive situations without license conditions to address them", noted the Board. Id.
Therefore, the Appeal Board found that this restriction would be
})
1 l inconsistent with the NRC's broad mandate to impose antitrust l
l l
l O
l
~
)
l l-conditions if the license activity would cause or continue situa-tions inconsistent with antitrust requirements. I_ci . at 284.
r The Appeal Board also added Condition no. 10, which en-sured that non-CAPCO utilities could purchase any ainount of O wholesale power they needed from the Applicants:
Applicants shall sell wholesale power to any re-
! questing entity in the CCCT, in amounts needed to i meet all or part of such entity's requirements.
, The choice as to whether the agreement should V cover all or part of the entity's requirements would be made by the entity, not the Applicant or Applicants.
10 NRC at 408.
The Appeal Board rejected the Applicants' challenge or -
7J.
the appropriateness of a uniform set of conditions applicable to all of the Applicants:
Applicants forget that many of the violations.of O the antitrust laws which appear from the opinion below were the result of joint and concerted ac-tion by the applicants. Indeed, the CAPCO pool established a system whereby many of their activi-ties are conducted jointly, many of their deci-sions are made jointly and, where this is not so, an individual decision may sometimes require the consent of the other members. In this kind of situation, it was necessary to have a single set of conditions applicable to all Applicants.
footnote omitted; 10 NRC at 393-94.
lO l
- d. Subsequent review On October 22, 1979, the Applicants submitted petitions O to the NRC challenging the Appeal Board's decision.11/ They in-1_1_/ "Ohio Edison Company's And Pennsylvania Power Company's Peti-tion For Review Of ALAB-560"; "The Petition Of The Cleveland
.O Electric Illuminating Company And The Toledo Edison Company For Review Of ALAB-560"; "Petition Of Duquesne Light Company For Review".
O
corporated by reference their arguments in their brief challeng-
)'
ing the Licensing Board's decision.
The NRC declined to review the Appeal Board's decision.
Therefore, the decision became a final NRC action.
Penn Power and Duquesne filed petitions for review in the Third Circuit under the name Duquesne Light Co. v. NRC.12/
However, on September 26, 1980, the petitioners submitted a "Stipulation To Dismiss With Each Party To Bear Its Own Costs".
The Third Circuit dismissed the appeals on October 8, 1980.
B. THE OPERATING LICENSE PROCEEDING
)
The Applicants submitted an application for a full power operating license in 1980. The NRC staff asked the Appli-l l
cants to comply with Regulatory Guide 9.3 and to provide informa-l tion concerning any "changes that have occurred or are planned to occur since submission of the construction permit application".
The NRC staff also asked the other parties to the construction
)
permit proceeding to comment on the Applicants' responses to Reg-ulatory Guide 9.3. On November 7, 1983, the NRR Director deter-mined that, pursuant to Section 105(c)(2) of the Atomic Energy
)
Act, "the changes that have occurred since the antitrust con-struction permit (CP) review are not of the nature to require a second antitrust review at the operating license (OL) stage of
)
the application." 48 Fed. Reg. 52,992 (Nov. 23, 1983).
Hearings on the operating licensa application were con-
)
12/ Third Circuit Docket Nos. 80-1295 and 80-1296 (filed Feb. 29, 1980) and Docket Nos. 80-1307 and 80-1310 (filed March 4, 1980).
)
I
(
l l
)
1 ducted in 1983 and 1985. The record was closed on May 3, 1985.
On November 7, 1986, the NRC issued a final order granting a for-ty year full-power operating license effective November 13, 1986.
The license incorporated the antitrust license conditions imposed
) during the construction permit proceeding. Because of a pending petition for review before the Sixth Circuit challenging an NRC order denying intervention by a party, the court stayed implemen-
) tation of the license. The court consolidated the petition with other petitions challenging the
'suance of the license. On March 17, 1987, the court af f12 aed the NRC's intervention order
) as well as the decision to grant the full-power operating li-conse. State of Ohio v. NRC, 814 F.2d 258 (6th Cir. 1987)13/
)
D D
D l
13/ The court decision summarizes the events accompanying the NRC review of the operating license application. That summary is not repeated here.
Q L
III. THE NRC DOES NOT HAVE JURISDIC-TION TO GRANT EDISON'S APPLICATION Edison is seeking suspension of the antitrust license conditions pursuant to Sections 2.101 and 50.90 of the NRC's reg-ulations. In order to show that the NRC has the statutory au-thority to grant the requested relief, Edison cites cercain language by the Licensing Board and Appeal Board in this proceed-ing. Edison also argues that this authority is a corollary of the NRC's authority to modify license conditions in entirely dif-ferent settings.
As shown below, Edison's arguments are flawed. As shown in subsection A, Edison simply canvasses NRC decisions ad-dressing the NRC's authority in contexts entirely different than that at issue here. Edison chooses to overlook the pertinent NRC
)
decisions in which the NRC has recognized that Congress, in en-acting the 1970 amendments to the Atomic Energy Act (Act), pre-
! cludes the NRC from exercising the sort of continuing jurisdic-
)
tion over antitrust aspects of an operating license requested by Edison. Hence, the NRC has already recognized that it does not have the authority to provide the type of relief requested by l Edison. Consequently, the precedent cited by Edison is inap-posite. In subsection B, Cleveland shows that the NRC decisions cited by Edison undermine Edison's argument. In subsection C, Cleveland shows that the language cited by the Licensing Board and Appeal Board in this proceeding is dicta and is misconstrued by Edison.
)
1 A. THE NRC HAS RECOGNIZED THAT THE 1970 AMENDMENTS PRECLUDE IT FROM MODI-
) FYING ANTITRUST CONDITIONS SUBSEQUENT TO ISSUANCE OF AN OPERATING LICENSE Edison begins its analysis by citing NRC precedent ad-dressing Section 105 of the Act and suggests that NRC authority
)
to grant the relief requested by it is a direct corollary of this precedent. Edison's reasoning, in its entirety, is as follows (App. 49-50):
Subsequent to the issuance of an OL for a nuclear power plant, no further antitrust evaluations ordinarily take place unless a license amendment is sought which is determined would result in "significant [ antitrust) changes" to the licensed activities. In such circum-stances, the NRC undertakes another antitrust review.
footnotes omitted; Edison goes on to draw the following inference from this statement (App. 50):
3 The regulatory scheme described above ensures that sig-nificant changes in the competitive environment are taken into account in the NRC regulatory process. If an antitrust remedy is warranted subsequent to the ini-tial antitrust review of the application that takes place when a construction permit is sought, the NRC O Staff is expressly authorized by its organic statute to impose it. Similarly, if (as we believe is the case here) a previously imposed antitrust remedy no longer is warranted, then the NRC Staff also must have author-ity to remove the unjustifiable conditions.
O Edison's reasoning is undermined by the very precedent cited by it. In footnote 111 of its application, Edison cites (1) Houston Lighting & Power Co., et al. (South Texas Project, O Unit Nos. 1 and 2) ("South Texas"), CLI-77-13, 5 NRC 1303 (1977),
(2) Detroit Edison Co. (Enrico Fermi Atomic Power Plant, Unit No.
2), ALAB-475, 7 NRC 752 (1973), and (3) S_puth Carolina Electric O and Gas Co., (Virgil C. Sumner Nuclear Station, Unit No. 1)
("South Carolina II"), CLI-81-14, 13 NRC 862 (1980). Edison also 10 l
0-cites Section-50.90(b) of the NRC's regulations.
O ~
South Texas and the related subsequent decision in Florida Power & Light Company (St. Lucie Plant, Unit Nos. 1, 3,
- 4) ("Florida Power"), ALAB-428, 6 NRC 221 (1977) (which is not O even mentioned by Edison) are the seminal NRC decisions on the statutory limits of the NRC's authority to modify antitrust con-ditions. In South Texas and Florida Power, the NRC reviewed the O legislative history and objectives of the antitrust review pro-visions of the Act. As discussed below, the NRC concluded that it cannot conduct an antitrust review outside the context of a O construction permit or operating license proceeding and, hence, cannot impose or modify antitrust conditions outside these con-texts. Because Edison is seeking suspension of antitrust licence O conditions outside these contexts, South Texas and Florida Power show that the NRC lacks the statutory authority to grant the re-quested relief. Because of the direct applicability of South :
0 -Texas and Florida Power here, the decisions are described in de- ;
tail below.
- 1. South Texas South Texas, 5 NRC 1303 (1977), stemmed from an ap-plication for construction permits jointly filed by Houston Lighting & Power Company (Houston), Central Power and Light Com-
- O pany (Central) and the Cities of San Antonio and Austin, Texas.
The Attorney General reviewed the application for the permit and recommended that an antitrust hearing was unnecessary. Id. at 1305. No person submitted a petition to intervene or a request ;
l i
1 O
e . - - - - - - - - . - - - - - - . _ .-. -- . -- . -..
D-for a hearing on the antitrust aspects of the proposed project.
O Hence, no antitrust hearing was conducted. The construction per-mits were issued in late 1975.
In 1976, Central established for the first time an in-O torconnection between its distribution facilities and those of certain out-of-state utilities. Houston responded by breaking off interconnections between its distribution system and the sys-O tems of certain other utilities, including Central. These ac-tions led to a flurry of judicial and administrative actions in which both Central and Houston challenged the actions of the O other in various judicial and administrative forums.
Pertinent here is Central's filing before the NRC of a petition seeking intervention and an antitrust hearing. Central O argued that Houston's termination of interconnections was a supervening development which warranted the imposition of anti-trust conditions. The petition was addressed, in turn, by the 10 Licensing Board, the Appeal Board and the NRC. By that point, l
all parties agreed that an antitrust hearing should be held at the earliest opportunity but differed as to the appropriate pro-O cedure for conducting the hearing.14/
l The NRC began its analysis by noting that this osten-sibly procedural dispute raised "significant issues" concerning O the NRC antitrust review authority:
. . . resolution of this dispute requires a defi-nition of the scope of our responsibility in en-0 14/ The position of each of the parties and the NRC staff is described in the decision. 5 NRC at 1307-08.
O
i l
0 i
I forcing the antitrust laws and the policies under-O . lying them in relation to the enforcement respon- !
sibilities of other agencies, particularly the Department of Justice. Some of the parties' argu-ments would assign to us a broad and ongoing an-titrust enforcement role; they envision that we would have a continuing policing responsibility O over the activities of licensees throughout the lives of operating licenses. As we shall show, we believe that the Congress envisioned a narrower role for this agency, with the responsibility for initiating antitrust review focused at the two-step licensing process.
O 5 NRC at 1309.
The NRC first examined the legislative history of the 1970 amendments to the Act which established pre-licensing anti-trust review pursuant to Section 105. The NRC found that Con-O gress deliberately limited antitrust review to the construction permit proceeding.and, in a more narrow fashion, to the operating O license proceeding. The NRC noted that "[c]oncern with the com-petitive aspects of licensing in the nuclear area . . . goes back to the original legislation enacted in 1946." Id. at 1313. The 1946 Act provided for anticipatory, antitrust review in the li-
- O censing context coupled with referrals to the Attorney General.
The Act was rewritten in 1954 and a two-stage licensing process for privately owned reactors was set up. But antitrust review
()
applied only upon a demonstration of the "practical value" of the facilities for industrial or commercial use. The NRC never made a "practical value" finding. In the 1970 amendments, Congress O
responded by finding that nuclear power has commercial value, thereby eliminating the need for a NRC finding of "practical val-ue .
O The NRC noted that the legislative history of the 1970 O
m
)
l
- i amendments indicated that antitrust review was to take place only in limited circumstances. The NRC quoted a statement by the l
Chairman of the Joint Committee on Atomic Energy in which he noted that the Committee "sees no sense" in plenary antitrust O review as part of both the construction permit and operating license proceedings. Id. at 1316. The Chairman noted that plen-ary antitrust review would be inequitable to a utility which had O
invested immense sums in a nuclear facility on the basis of the construction permit. Hence, limiting antitrust review to the prelicensing stage was necessary to encourage investment in nu-O clear facilities, he stated, Id.
The Joint Committee also noted that prelicensing anti-trust review was advantageous because the utility would have "a O time-related incentive to expedite the entire process and to com-ply with reasonable antitrust safeguards before any competition is damaged."15/
O The NRC observed that these concerns shaped the revi-sions to Section 105 enacted in the 1970 amendments. Pursuant to Section 105(c) of the Act, whenever an application for a con-O struction permit is submitted to the NRC, the NRC is required to submit a copy of the application to the Attorney General. 42 U.S.C. S2135(c)(1). Within 180 days, the Attorney General must O advise the NRC as to whether "there may be adverse antitrust as-pects" to the application which would warrant a hearing to more 1
'0 15/ Id. at 1314, quoting statement of Charles A. Robinson, Jr.,
I Staff Counsel to the General Manager, National Rural Coopera-tive Association.
- O
O fully evaluate these aspects. Id. If the Attorney General finds that there may be adverse antitrust aspects, the NRC must conduct a hearing.16/
Alternatively, if the Attorney General does not recom-O.
mend a hearing, the NRC must still conduct the hearing if an in-tervenor challenges the antitrust impact of the application and requests a hearing.17/ If neither the Attorney General nor an O intervenor requests an antitrust hearing, the NRC cannot conduct a hearing.18/
If an antitrust hearing is conducted, the NRC must re-O view all the evidence and "make a finding as to whether the ac-tivities under the license would create or maintain a situation inconsistent with the antitrust laws. . .
19/
n On the basis of its findings during the hearing, the NRC has the authority to refuse to issue a license, or to issue a license with such conditions as it deems appropriate.20/
O The NRC noted that there is a much narrower antitrust review in connection with an application for an operating license for a commercial facility. Section 105(c)(2) of the Act, 42
- O U.S.C. S 2135(c)(2), states that the antitrust review procedures l 16/ Kansas Gas and Electric Co., (Wolf Creek Generating Station l
Unit 1), ALAB-279, 1 NRC 559, 565 (1975).
(O 17/ Id.
I 18/ Florida Power & Light Co. (St Lucie Plant, Unit No. 2), LBP-82-21, 15 NRC 639, 640 (1982).
19/ Section 105(c)(5), 42 UsC s2135(c)(5).
O 20/ Section 105(c)(6), 42 USC S2135(c)(6).
i l
lO l
)
! l applicable to an operating license application apply only if:
. . . . the Commission determines such review is advisable on the grour:d that significant changes in the licensee's activities or proposed activi-ties have occurred subsequent to the previous re-view by the Attorney General and the Commission
[) under this subsection in connection with the con-l struction permit for the facility.
"Significant changes" are changes which "(1) have occurred since the previous antitrust review of the licensee, (2) are reasonably attributable to the licensee, and (3) have antitrust implications that would likely warrant some NRC remedy".21/
The NRC recognized that Congress, by setting up this O
two-step review process, intended to limit antitrust review to this process:
We find the specificity and completeness of Sec-O tion 105 striking. The section is comprehensive; it addresses each occasion on which allegations of anticompetitive behavior in the commercial nuclear power industry may be raised, and provides a pro-cedure to be followed in each instance. The Act links Commission antitrust review with the licens-O ing process, demanding a thorough antitrust review at the stage of application for the construction permit and allowing a narrower second review at the operating license stage, if such a review is deemed advisable on the basis that significant changes have occurred in the licensees activities.
O The clear implication of the "significant change" language is that the holder of a construction per-mit is not subject to a second antitrust review at the operating license stage unless "significant changes" in the proposed project with antitrust implications have occurred in the interim.
O footnote omitted; Id. at 1312. The NRC went on to notes l 21/ South Carolina Electric and Gas Co. (Virgil C. Summer Nuclear L station, Unit 1) ("South Carolina I"), CLI-80-28, 11 NRC 817,
'O 824 (1980). Note that the purpose of the antitrust review at
- the operating license stage is to add -- not delete -- anti-l trust conditions.
iO
9 But even among those who argued in favor of preli-cense review, no evidence emerges that anything more than license connected review was considered.
There is no hint in the legislative history that anyone -- advocate or foe of prelicensing review
--- anticipated anything more. Indeed, the rea-sons underlying support for the bill as enacted indicate the importance of anticipatory review to 3 its advocates.
emphasis in original; Id. at 1314. The NRC summarized its find-ings:
In summary then, we conclude that Congress had no intention of giving this Commission authority which could put utilities under a continuing risk of antitrust review. Had Congress agreed with the proposition.that this Commission should have broad antitrust policing powers independent of licens-9 ing, the statute that emerged from these discus-sions would have looked quite different. Little attention would have been paid to defining a two-step review process. The terminology of all par-ticipants in the drafting process would not have been focused so directly on "prelicensing" review.
g Id. at 1317.
The NRC also observed that the limits on the NRC's au-g thority in the one instance in which post-licensing review of antitrust matters is permitted also reflected the desire by Con-gress to proscribe such review in all other circumstances. Sec-ti n 105(a) of the Act permits the NRC to modify antitrust condi-O tions if a court finds that the licensee has violated any of the federal antitrust laws "in the conduct of the licensed activ-ity."22/ Referring to this language, the NRC noted:
O
. . . . if a broad, ongoing police power in the antitrust area had been assumed, the language in 105(a) authorizing the Commission to act with re-pJ 22/ Here, again, observe that the NRC action contemplated is the addition, not deletion, of conditions consistent with the court's findings.
O ,
)
spect to licenses already issued, in light of the antitrust findings of courts would have been, if
}- not superfluous, certainly redundant.
Id. at 1317.
The NRC also rejected the argument that Sections of the D Act other than Section 105 could give the NRC "general antitrust police powers in the nuclear industry" which would justify re-opening licensing proceedings. Id. Again, the NRC noted that D the carefully circumscribed and detailed antitrust review process set forth in Section 105 was intended to alone govern the anti-trust review process. Hence, other sections of the Act which O' deal in a general way with the NRC's authority -- such as Section 161, 42 U.S.C. S2201, and Section 186, 42 U.S.C. 52236 -- do not govern this process. Id.
m The NRC found that in the special circumstances at is-sue in . South Texas, antitrust review prior to the filing of the i operating license application would not conflict with the poli-O cies underlying Section 105 of the Act. The NRC noted that all
! of the parties favored an antitrust review. The NRC then stated:
. . . if antitrust review is found necessary in l the period between issuance of a construction per-y, P' mit and application for an operating license, we l
can fashion remedies to expedite the review. This I necessary flexibility can allow us to resolve an-titrust allegations in a timely fashion, without unduly delaying the licensing process.
lO Id. at 1318.
The NRC recognized that, due to the special circum-stances in the proceeding, it did not need to address whether O antitrust review would be warranted in certain other circum-stances:
O
1 Thus, we need not and do not decide whether anti-trust review may be initiated in case of an appli-cation for a license amendment which would result in a "new or substantially different facility," or where an application for transfer of control of a license has been made, or where "significant changes" occur after an operating license is is-sued. We note, however, that the report of the Joint Committee explicitly refers to our authority to conduct a review in the first situation, H.R.
Rep. No. 91-1470, 91st Cong. 2d Sess., 3 U.S. Code Cong. and Adm. News, 4981, 5010 (1970). Authority in the second situation, not explicitly referred to in the statute or its history, could be drawn as an implication from our regulations. 10 CFR 550.80(b). The third situation presents the is-sues pending in the Florida Power and Light pro-ceeding, n. 1 supra, which we do not have before us and need not resolve to decide this case. We go no further than to conclude that Section 186 can have at best limited application, in light of the "significant changes" restriction of Section 105(c)(2) and its relation to the overall scheme of Section 105.
Id. at 1318.
Remarkably, Edison in its terse discussion of South Texas simply cites the portion of the above statement in which the NRC notes that it did not decide whether an antitrust review can be justified where "significant changes" occur after an oper-ating license is issued. Edison does not even acknowledge, much less attempt to address, the NRC's finding that Congress did not intend that the NRC "should have broad antitrust policing powers independent of licensing". Id at 1317.
Moreover, Edison chooses to overlook the second portion of the NRC's statement in which it notes that this situation "presents the issues pending in the Florida Power and Light pro-coeding." As shown below, this omission is not surprising.
Florida Power reinforces the finding in South Texas that anti-
).
I
l trust review can only occur in the context of a construction per-
) Moreover, Florida Power mit or operating license proceeding.
clarifies that this statutory bar on antitrust review applies even if there are significant changes in circumstances subsequent to the license proceedings.
)
that involving St Lucie Plant, Units 1 and 2 and Turkey Point Plant, Units 3 and 4 in Docket Nos. 50-335A, et al. In that pro-ceeding, numerous municipal electric power utilities sought to L intervene 31 months. late in a proceeding and petitioned for an antitrust hearing. The NRC had already issued operating licenses j in the proceeding for three of the four plants at issue pursuant to Section 104(b) of the Act: St Lucie Plant, Unit 1 and Turkey Point Plant, Units 3 and 4. For ease of reference, these are re-ferred to as the Turkey Point plants. No requests for an anti-
)
l l
trust hearing had been filed during the construction permit pro-coeding. _
l The Cities pointed to an array of allegedly anticorapet-itive practices of the applicants subsequent to the issuance of the operating licenses. Ici at 798. These activities included refusals to (1) enter into an integrated power pool, (2) sell
! wholesale power, and (3) wheel power.2_3,/ Among the sections cited by the Cities as a basis for their request for relief were
) 23/ See "Joint Petition Of Florida Cities For Leave To Intervene Out Of Time; Petition To Intervene; And Request For Hearing",
pp. 49-85 (Aug. 6, 1976).
3
J i
)
1 l Section 105 of the Act and section 2.206 of the NRC's regula-b l tions.24/
The Licensing Board rejected the petition. LBP-77-23,
. 5 NRC 789 (1977). The Board pointed to the Appeal Board's deci-
) sion in South Texas (then pending before the NRC) in which it found that neither the Licensing nor the Appeal Board has the 1
"authority to reopen a terminated construction permit proceeding
) by ordering a hearing on supervening antitrust questions." 5 NRC at 791. The Board noted that this finding applied with full force to the Cities' joint petition despite the allegations of
) anticompetitive activities subsequent to the issuance of the op-erating licenses. Id. "Therefore," stated the Board, "the Joint Petition must be and is dismissed." Id.
) The Licensing Board found that this same reasoning in-dicated that there was no jurisdictional bar to establishment of an antitrust hearing in connection with the remaining plant: St Lucie Plant, Unit No. 2. For ease of reference, this plant is referred to here as the St Lucie plant. The Board noted that the construction permit proceeding regarding that plant was still D pending before the Licensing Board. The Board went on to find that the Cities had satisfied the standards governing interven-tion in Section 2.714 of the NRC's regulations by showing that (1) they had a sufficient interest in the proceeding due to con-corns about alleged anticompetitive conduct by the applicants, 24/ See "Notice of Appeal and Appellate brief of Florida Cities",
pp. 11-12 (April 29, 1977).
3
~O and (2) they had good cause to file late because (1) the Cities
~O-and applicants had agreed to allow the construction permit to issue subject to certain conditions ensuring that the Cities had access to, or at least the opportunity to purchase access to, the O nuclear capacity, (ii) the applicants had failed to meet c.htse commitments, and (iii) the fossil fuel shortage which began in 1973 exacerbated the impact of the applicants' monopoly of nu-
- O clear power.
The Appeal Board affirmed the Licensing Board's deci-sion regarding the Turkey Point plants, on one hand, and the St Lucie Plant No. 1, on the other, in two separate decisions. 6 NRC 8 (1977) (St Lucie No. 1); 6 NRC 221 (1977) (Turkey Point).
Most significant here is the Appeal Board's decision affirming O the denial of the petition seeking post-operating license anti-trust review of Turkey Point. The Appeal Board noted that the NRC had decided to not review the Board's finding in South Texas O that it could not order an antitrust hearing "'in the absence of a pending construction permit or operating license proceeding.'"
Id. at 223.25/ Hence, the Appeal Board agreed with the Li-O censing Board that South Texas was fully applicable and precluded l the Licensing Board from directing a hearing on antitrust issues despite the allegations of anticompetitive acts by the licensee O subsequent to the issuance of the operating licenses.
However, the Appeal Board noted that the NRC had, sub-25/ The NRC decision was issued on March 31, 1977 and was not reported. ,I d . at 223.
iO
D sequent to the Licensing Board, directed the Appeal Board to con-O sider a related issue: whether the NRR Director could address the antitrust issues raised by the petitioners. The Appeal Board first noted that the Turkey Point units received construction O permits prior to the 1970 amendments to the Act requiring preli-censing antitrust review. Id. at 224. The Board observed that Congress, in enacting the 1970 amendments, decided to exclude O from antitrust review under Section 105(c) plants, such as Turkey Point, which had received construction permits under Section 104(b) before 1970. Id. at 224-225.
O Directly pertinent here is the alternative justifica-tion given by the Appeal Board for its decision. The Board pointed to the NRC's finding in South Texas, 5 NRC 1303, that S) post-operating license antitrust review is precluded by the Act and found that this reasoning applied even where significant changes had occurred 26/:
!O In its own South Texas decision, the Commission l
recently considered at length the extent of its authority to hold antitrust hearings. The precise issue in that case involved when an antitrust pro-ceeding under Section 105(c) may be ordered after a nstruction permit has been issued but before O the necessary additional license to commence oper-ations has been granted. The Commission did not confine its South Texas opinion to that relatively narrow question; instead it chose to address the l
l broad spectrum of NRC antitrust responsibilities.
In so doing, it manifested the judgment in no un-() certain terms that the NRC's supervisory antitrust jurisdiction over a nuclear reactor license does O
26/ 6 NRC at 226.
O
not extend over the full 40-year term of the oper-ating license but ends at its inception.12/
12/ Except perhaps as necessary to enforce the terms of a license or to revoke one fraudu-lently obtained, or in circumstances where a plant is sold or so significantly modified as to require a new license. See CLI-77-13, supra, 5 NRC at 1318.
The NRC declined to review the Appeal Board's decision. The Cities submitted a petition for review in the D.C. Circuit. The court affirmed the NRC's decision. Ft. Pierce Utilities Au-thority v. NRC, 606 F.2d 986 (D.C. Cir.), cert. denied, 444 U.S.
L 842 (1979).
l 3. South Texas and Florida Power in-
! dicate that the NRC does not have y
the statutory authority to grant the relief sought by Edison The reasoning in Florida Power is directly applicable here. By requesting a suspension of the antitrust license condi-tions, Edison is asking the NRC to conduct yet another antitrust review. Edison recognizes this. In its application (App. 42),
Edison states that "[t]he critical fact, . . . for purposes of
) Section 105(c) review, and the fact at issue today, was the low cost of nuclear power." (emphasis added). Moreover, Edison rec-ognizes that the relief it seeks opens the door for yet addition-
) al antitrust reviews. In its prayer for relief (App. 81), Edison asks the NRR Director to suspend "the license conditions in ques-tion until such time as there may be a factual basis for imposing k them."
As the NRC recognized in South Texas and Florida Power,
)
- _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ . . _ _ _ _ _ _ _ _ ._ _ _____ _ _ _____ ___ _ __ .. \
O an antitrust review can only take place oursuant to Section G'~'
105(c) of the Act. 5 NRC at 1317. Section 105(c) permits this review only in connection with a construction permit or operating license proceeding. In the situation here, the construction per-
'O '
mit and operating license proceeding terminated long ago. Conse-quently, as shown in South Texas and Florida Power, the NRC does not have the statutory authority to consider Edison's applica-O tion. Hence, Edison's application must be summarily rejected.
Indeed, Florida Power represents, in effect, a sort of flip side of the circumstances here. In Florida Power, the NRC 3
found that it could not conduct an antitrust review even in the face of changes in economic conditions which exacerbated the Ap-plicants' monopoly power despite the allegation that the appli-n V cant had also engaged in specific, anticompetitive conduct.
Here, one of the Applicants (Edison) argues that supervening cir-cumstances have eliminated the need for antitrust license condi-O tions.
The antitrust review sought by Edison is even less jus-tifiable than the review sought in Florida Power. Edison merely C) points to changes in economic conditions which purportedly reduce
, the Applicants' monopoly power.
l The changed circumstances cited by Edison to support n
v suspension of the antitrust conditions are not the type of cir-cumstances which could even support antitrust review at the oper-(
ating license stage pursuant to Section 105(c)(2) of the Act.
O Edison asserts that subsequent to the issuance of an operating license, antitrust review is available pursuant to the standard l
l 10
)
in Section 105(c)(2) (App. 49). As noted earlier, Section D~
105(c)(2) states'that' antitrust review is available at the opera-ting license stage to determine whether additional antitrust con-ditions should be. imposed only if "significant changes in the O- licensee's activities or proposed activities have occurred subse-quent to the previous review by the Attorney General and the NRC" during the construction permit proceeding. "Significant changes" O' are limited to changes which (1) have occurred since the previous antitrust review of the licensee, (2) are reasonably attributable to the licensee, and (3) have antitrust implications that would
'O likely warrant some NRC remedy. South Carolina I, 11 NRC at 824-25.
Even putting aside the fact that Section 105(c)(2) an-() titrust review is limited to imposition of additional conditions, i
l Edison has not met the Section 105(c)(2) standard. The primary l
factor cited by Edison in trying to justify another antitrust O review -- a change in the economic attractiveness of nuclear power -- is obviously not "attributable to the licensee". Thus,
~
if this factor had been raised during the operating license pro-ceeding, an antitrust review would not have been justified.
Moreover, the policy concerns underlying the decision by Congress in the 1970 amendments to limit antitrust review to El the construction permit and operating license proceeding are directly applicable here. As noted above, the NRC in reviewing the legislativo. history of the 1970 amendments in South Texas O observed that Congress recognized that strict limits on the fro-quency of antitrust reviews were needed to ensure that utilities O
O could rely on NRC licensing decisions. 5 NRC at 1314-16. The NRC cited statements by the Chairman of the Joint Committee on Atomic Energy and others during the congressional hearings oppos-ing an unlimited reopening of antitrust review in the operating O"
license proceeding.. Id.
These same concerns about encouraging reliance on the findings in the construction permit proceeding apply with n'
equal force here to protect the competitive positions of benefi-ciaries of the license conditions. In the situation here, the relief sought by Edison -- elimination of the license condition
() restraints as to it -- would have the sort of disruptive impact which Congress acted to prevent by limiting antitrust review to the construction permit and operating license proceeding. Prior O to the imposition of the antitrust license conditions, Cleveland Public Power faced extinction due to the anticompetitive activi-ties of CEI, in particular, and its sister members of CAPCO. See O 5 NRC at 165-76. Cleveland Public Power was dependent entirely on power purchased from CEI for its continued existence. Cleve-land Public Power had a single interconnection with CEI, and only O the ability to purchase firm and emergency power from CEI.
Imposition of the license conditions provided Cleveland Public Power access to transmission and coordination services, a 3 variety of wholesale purchase power sources, and to various agreements between the Applicants and between them and other utilities. Because of the license conditions, Cleveland Public 0 power has been able to add a second interconnection and plans to
- O
)
add a third. Cleveland Public Power has also made use of CEI
) transmission services to buy and transmit low cost-hydroelectric power from (1) PASNY, (2) Buckeye Rural Electric Cooperative, Inc. ("Buckeye"),2_7/ and (3) Big Rivers Electric Cooperative
("Big Rivers"). Cleveland Public Power has also been able to diversify its power supply, and take advantage of the variety of surplus power available as short-term, limited term, emergency
) and even "dump" power. These arrangements provide Cleveland Pub-lic Power and, in turn, its customers with substantial reductions in costs from what would have been paid to CEI without such com-O petition.
Cleveland Public Power's first firm power purchase from l an alternative supplier began in 1980 as a direct result of the O license conditions and involved a purchase from PASNY. This pur-chase involved inexpensive hydroelectric power. Cleveland Public Power continues to buy this power. Cleveland Public Power had Q applied for an allocation of PASNY energy back in the late .
l l 1970's, and was allocated a share of the power. But Cleveland Public Power could not take advantage of this cheap power source until CEI was forced by the license conditions to transmit the lO power to Cleveland Public Power.
As the PASNY Power Bargaining Agent for the State of O ohio, Cleveland Public Power has represented the entire State and has fulfilled its responsibility to facilitate making PASNY Nia-gara Power available for transmission to municipally-owned elec-
.O 21/ Buckeye is now known as the Ohio Rural Electrical Coopera-tives, Inc.
O
D' ;
tric systems throughout the State. Cleveland Public Power could
- O' not have obtained low cost Niagara Preference Power for the 75 municipal electric systems in Ohio receiving the power without the ability to have the power actually transmitted from New York 3 to each municipal system through the transmission facilities of Edison and CEI. Indeed, all but two of the 75 recipient munici-pal systems receive the power by having it transmitted at some o'
point over the systems of Edison and CEI.
Cleveland Public Power's purchases in October 1987 11-lustrate the way the license conditions have permitted Cleveland
() Public Power to diversify its supply sources to procure the chea-pest power available. During that month, Cleveland Public Power purchased more than 60 million kwh of power from five sources.
O Cleveland Public Power bought 34.86 percent of its power from .
Dayton Power and Light, 25.79 percent from PASNY, 23.97 percent from Ohio Power, 15.14 percent from Big Rivers, and .24 percent
() from CEI. During Cleveland Public Power's peak months of July and August, 1987, when it provided its customers approximately 70 l
million kwh of energy, Cleveland Public Power purchased power 13 from ten different sources: Dayton Power and Light Company, PASNY, Ohio Power, Big Rivers, CEI, American Electric Power Company ("AEP"), Toledo, Duquesne, Michigan Electric Coordinated O Systems and PENELEC. Cleveland Public Power also purchased power from Edison, Ontario Hydro and Buckeye during the past eight years.
() In entering into these transactions, Cleveland Public Power has relied on its access to wheeling services and coordina-O
O tion service provided by the CAPCO members pursuant to the li-O cense conditions. These power purchases obviously are a key com-ponent of Cleveland Public Power's supply plans.
Moreover, even if the license conditions were suspended O and later reimposed, Cleveland Public Power and other utilities in the CCCT would still not be able to rely on the services available pursuant to the license conditions in planning its O power supply.28/ Cleveland Public Power could not assume that the services available pursuant to the antitrust license condi-tions would continue to be available. Therefore, Cleveland Pub-O lic Power's ability to make advantageous purchase power arrange-monts with other power suppliers, and thus its ability to compete with CEI, would be impaired. As noted, Congress, in enacting the
() 1970 amendments, intended to prevent that sort of continuing un-certainty regarding the conditions governing a nuclear facility.
B. NRC PRECEDENT REGARDING ANTITRUST RE-
- O VIEW IN CONNECTION WITH CHANGES IN THE NATURE OF A PLANT'S OPERATIONS OR OWNER-SHIP IS INAPPLICABLE HERE In its application, Edison cites other decisions be-l() sides South Texas in its attempt to show that the NRC has the authority to suspend the license conditions. These decisions are no more helpful to Edison than South Texas. Edison cites (App.
13 49, n. 111) Detroit Edison Co. (Enrico Fermi Atomic Power Plant, Unit No. 2) ("Detroit Edison"), LBP-78-13, 7 NRC 583 (Licensing Board), aff'd, ALAB-475, 7 NRC 752 (1978). Detroit Edison in-
'O 28/ As noted, Edison argues that antitrust conditions can be sus-ponded and reimposed by the NRC at any time.
O
)
volved an application by the permittee subsequent to the issuance
) of a construction permit to add new co-owners to the permit. The applicant cited South Texas and argued that the NRC did not have the jurisdiction to conduct an antitrust review of the proposed D amendment. The Licensing Board rejected this argument. It noted that this finding was consistent with Congressional intent re-garding the meaning of the term "license application" in Section 105(c). The Licensing Board cited the Joint Committee report on the 1970 mnendments in which the Committee stated:
The Committee recognizes that applications may be amended from time to time, that there may be ap-3 plications to extend or review a license, and also that the form of an application for a construction permit may be such that, from the applicant's standpoint, it ultimately ripens into the applica-tion for an operating license. The phrases "any license application", "an application for e. 11-
) conse", and "any application" as used in the clarified and revised subsection 105(c) refer to the initial application for a construction permit.
(
footnote omitted; emphasis in original; Id. at 588. The Board
[ also noted that this interpretation was necessary to ensure that
- the NRC's antitrust review authority was not circumvented
As to the two cooperatives, the present applica-tion for an amendment to add them as co-owners of o
O Fermi 2 must be approved by the Commission before i an ownership interest is acquired, and the cooper-atives will be required to submit applications to become co-licensees of the facility prior to the
! issuance of an amendment allowing change in owner-L, ship. Without exalting form over substance, it HJ is clear that these applications are within the scope of the phrase "any license application' for antitrust review purposes within the meaning of S105c(1), supra, and trigger an opportunity for intervention raising antitrust isnues as to the two p rativ s. T n true the statute other-O' wise would permit a utility with no antitrust problems to undergo an antitrust review and obtain an unconditioned construction permit, and then O
u O '
sell an ownership interest to c. nether monopolizing utility. Under the~ Licensee's' argument, there Oc could then be no antitrust reviaw unt,11 the later operating-license stage, which,itself could be a more limited review than the normal prelicensino antitrust review contemplated F ihe statute.
Such an unequ T Ereatdent of Applicants, insula- '
tin 9 fr m prelicunsing' antitrust review those who
- O came in later by way of amendments'to construction ,
permits, would subvert the Congressional intent ,
and purpose of S105c.
footnotes omitted; emphasis supplied; M2 at 587-88.
jO The appliennt.did not raise.this jurisdictional issue in its appeal to the Appeal Board._ Hence, the Appeal' Board ob-served that it did not need to reach this issus. -7 NRC 752, 756, O n.7. Nonetheless, the Appeal Board said that it is "sufficient simply to note our essential agreement with the decision below on this point." M at 755, n. 7.
"O Detroit Edison only. served to further undermine Edi-i son's position. Detroit; Edison highlights the NRC's concern about ensuring.against ploys to circumvent the antitrust review O needed to determine whether cntitrust license conditions should !
be imposed. The NRC recognized that a change in ownership of a nuclear facility introduces a new owner which has never been the lO subject of an antitrust review. Hence, this sort of change war- [
i i rants t.he comprehensive antitrust review provided for in connec. [
r Lion with construction permit applications to determine whether
{O antitrust license <:onditions should bo imposed. ,
+
1 The situation presented in the application here in en- ;
tirely different. Edison it seeking suspension, not addition, of ,
- O tho antitrust conditions. In addition, the antitrust review of j the Perry owners has already occurred. Coasequently, there is 10 p
e l
simply no need to repeat this review.
) C. THE DICTA IN THE APPEAL BOARD DECISION IN THIS PROCEEDING DOES NOT AND CANNOT SUP-PORT POST-OPERATING LICENSE ANTITRUST REVIEW Edison makes much ado about certain dicta in the Appeal j
Board decision approving the imposition of comprehensive anti-trust conditions on the Applicants because of their anticompeti-tive conduct. Edison cites the separate opinion written by Ap-g peal Board member Sharfman who, as noted, resigned from the NRC while the Board was reviewing his then-draft opinion. . In his draft pini n, Mr. Sharfman affirmed the license condition re-O quiring the Applicants to provide wheeling services and to not reduce these services in the event of a capacity shortage until the capacity allocated to-the other Applicants is reduced by at O
least five percent. But Mr. Sharfman went on to find that a waiver of this condition might be granted if it caused an "ex-tr m hardship":
O However, should this license condition confront the Applicants with a situation of extreme hard-ship or impossibility at some time in the future, they may petition the Licensing Board for relief from it. We hereby vest the Licensing Board with O continuing jurisdiction to entertain such a peti-tion.
Id. at 392. Mr. Sharfman also went on to voice his approval for waiver of any license condition that causes an "extreme hard-ship":
If compliance with a request authorize'd by one of the license conditions would cause extreme hardship, an applicant may seek relief from the Licensing Board.
t We iO vest that Board now with continuing jurisdiction to entertain such a request. But the burden will be on O .-
()
the Applicants to demonstrate a right to relief. Up to now, no such demonstration has been made.
()
Id. at 398.
In its separate opinion, the Appeal Board said this about Mr. Sharfman's reasoning:
3 In a number of instances Mr. Sharfman would, for an indefinite period, "vest the Licensing Board with continuing jurisdiction" to relieve the Ap-plicants from conditions that might prove an ex-treme hardship or impossible of compliance. See, q) e.g., pp. 392 and 398, infra. We agree that license conditions seemingly fair today may prove inequitable tomorrow. It is not necessary, how-ever, to extend the Licensing Board's jurisdiction to provide for the possibility of such modifica-tions. Ccmmission regulations give the Director I) of Nuclear Reactor Regulation -- who is assisted by an able antitrust staff -- authority to modify license conditions where necessary and provide as well as means for review of his determinations.
10 CFR Sections 2.00-2.204 and Section 2.206. In-deed, the Director has already acted to modify one
,l) of the license conditions imposed in this case (albeit not at the applicant's request). We therefore see no occasior ', :ntinue the
!. Licensing Board's juristLeth . vver aspects of the case. Accordingly, we ca .c. join in the portions of Mr. Sharfman's opinion that would do so.
O Id. at 294-95; footnotes omitted, i
Edison errs in interpreting this statement as a blanket endorsement of any sort of modification of antitrust license con-
- O ditions. First, this statement is mere dicta. Nowhere in the licensing conditions approved by either the Licensing and Appeal Boards is there any mention that the conditions can be modified lO l in the event circumstances change.
l Moreover, the Appeal Board's statement does not go as 1
far as Edison suggests. Again, the Board simply says that the NRR Director has the "authority (pursuant to Section 2.200, et O
i
A) >
i al. of the NRC's regulations) to modify license conditions where C' necessary". Those sections of the Regulations authorize the Director authority "to modify, suspend or revoke a license-or to ;
i take other action for alleged violation of any provision of the
) Act or this chapter or the conditions of the license" (emphasis supplied).
The only decision cited by the Board to support its
- () contention highlights the limits on the NRC's authority to modify
-antitrust license conditions. The Board cites the June 25, 1979 decision by the NRC in the consolidated proceeding enforcing one ,
13 of the license conditions in view of CEI's failure to comply with the condition.29/ The June 25 order was in response to a request j by Cleveland on January 4, 1978, asking the NRC to take enforce-3 ment action pursuant to Section 2.201, et al., of the NRC regula-tions against CEI for violations of antitrust license condition i
, no. 3 in its construction permits and operating license. License l d3 condition no. 3 requires the joint Applicants to provide wheeling for entities in the CCCT. Cleveland argued that the transmission
! schedule filed by CEI with the Federal Energy Regulatory Commis- !
3 sion (FERC) did not comply with this license condition. On June !
28, 1978, the Acting Director of the NRR Office responded to Cleveland's motion by issuing a Notice of Violation to CEI pur-
, E suant to Section 2.2011 of the liRC's regulations. In the Notice, (43 29/ "Order Modifying Antitrust License Condition No. 3 of Davis- [
Besse Unit 1, License No. NPF-3 And Perry Units 1 and 2, '
O CPPR-148, CPPR-149" (unreported). The order (but not the at-tached appendices) is reproduced in Appendix A at the end of this pleading.
1 l - - - . . .
O the Director reviewed CEI'a January 27 transmission schedule and O CEI's response to a Staff questionnaire concerning Cleveland's motion and stated that "it appears that CEI has not complied with antitrust license condition No. 3 of the subject license and con-O struction permits. . . .-30/
Cleveland, CEI and the NRC Staff met in an unsuccessful attempt to address the concerns raised by Cleveland's filing. On O June 25, 1979, the Director found that CEI had not complied with license condition no. 3:
CEI has approached its responsibility to file a g wheeling schedule for the City as if it had not
- been required as a condition of its operating license and two construction permits to comply with Antitrust License Condition no. 3.
mimeo. at 6. The Director noted that an April 27, 1979 initial O decision by a FERC administrative law judge (ALJ) addressing CEI's transmission schedule "deals effectively with most items cited by the NRC Staff to be in violation of Antitrust License O Condition No. 3" (mimeo, at 4). With respect to the matters not resolved by FERC, the Director ordered CEI to file an amendment to its transmission tariff to ensure compliance with the anti-C) trust license condition. Consistent with these findings, the Director exercised his authority pursuant to Section 2.204 of the NRC's regulations and modified license condition no. 3 to add O language requiring CEI to file a revised transmission schedule reflecting the changes ordered by the NRC and FERC.
Thus, the Board's citation to the director's enforce-0 30/ The Notice is reproduced in Appendix A of the June 25 order.
O
'O ment order merely reflects the Board's recognition that a license O condition can be modified to ensure that it is not circumvented by the Applicants. Significantly, the Board does not even men-tion the NRC decisions in South Texas and Florida Power. In view
.O of this, it is clear that the Board was not saying that the anti-trust conditions could be suspended in the circumstances here.
O O
- O 4
10 i
4 1
!O 4
0 l
l 10 l
l iO
)
IV. THE RELIEF SOUGHT BY EDISON IS BARRED BY RES JUDICATA OR, AL-
) TERNATIVELY, COLLATERAL ESTOPPEL As just shown in Section III of this answer, the NRC does not have the statutory authority to conduct an antitrust
) review subsequent to the issuance of an operating license. The NRC, therefore, simply cannot grant the relief sought by Edison.
But even if the NRC finds that an antitrust review can
) occur at any time and that the NRC has the statutory authority to grant this relief, the NRC should still deny the relief and can do so without reaching the merits of Edison's arguments.
)
l This is because these arguments involve issues raised in the con- :
struction permit and operating license proceeding and were or could have been raised in those proceedings. Therefore, the
) arguments are precluded by the doctrine of res iudicata or, al-l ternatively, collateral estoppel.
l l In subsection A, below, Cleveland reviews the policies 1
3 underlying the doctrines of res iudicata and collateral estoppel.
t In subsection B, Cleveland examines the criteria used by the NRC in applying these doctrines. In subsection C, Cleveland shows 13 that res judicata is the pertinent preclusion doctrine in the circumstances here and that the doctrine precludes the arguments
! raised by Edison in its application. Consequently, res iudicata f
3 bars consideration of these arguments at this late stage. In subsection D, Cleveland shows that if the NRC finds that this proceeding is a different proceeding than that in which the con-9 struction permit and operating license were issued, collateral estoppel would come into play and bar Edison's application.
O
)
A. RES_ JUDICATA AND COLLATERAL ESTOPPEL AND THEIR APPLICA-
) BILITY TO NRC PRCCEEDINGS In a decision affirmed, in pertinent part, by the NRC, the Appeal Board cited Supreme Court precedent and set forth the
) basic policies underlying res iudicata and collateral estoppel:
Res judicata and collateral estoppel are judi-cially formulated doctrines founded upon "consid-erations of economy of judicial time and (the) public policy favoring the establishment of cer-
) tainty in legal reletions". Commissioner v. Sun-nen, 333 U.S. 591, S97 (1948). These considera-tions dictate that those who have contested an issue shall be bound by the result of the contest, and J that matters once tried shall be considered forever settled as between the parties.
Baldwin v. Iowa State Traveling Men's Assoc., 283 U.S. 522, 525 (1931). They further require that a party who is given the opportunity to present his 3 case before competent judicial authority must then put it forth in toto, rather than advance it piecemeal in multiple proceedings. Cromwell v.
County of Sac, 94 U.S. 351, 358 (1877).
Alabama Power Co. (Joseph M. Farley Nuclear Plant, Units 1 and 2)
("Farley"), ALAB-182, 7 AEC 210, 212, rev'd on other grounds, CLI-74-12, 7 AEC 203 (1974).
The Appeal Board in Farley cited the "general princi-J ples relating to the application and effect of" res iudicata:
Res judicata comes into play in circumstances where (1) there has been a final adjudication of the merits of.' a particular cause of action, claim, J or demand by a tribunal of competent jurisdiction; and (2) one of the parties to that adjudication (or a persor in privity with such party) subse-quently seeks to advance or defeat the same cause ,
of action, claim or demand in either (a) the same suit or (b) a separate suit involving the parties
) to the first action or their privies. [ citations omitted). Given those circumstances (and subject to the qualifications to be discussed below), the O
c ,
3 '
-earlier adjudication is deemed to conclude the ;
"parties and those in privity with them, not only :'
) as to every matter which was offered and received to sustain or defeat the claim or demand, but as to any other admissible matter which might have been offered for that purpose".
7 AEC at 212. .The Appeal Board distinguished collateral estop-pel:
For its part, collateral estoppel does not require an identity between the two causes of action, de-mands or claims. It is enough that the issues of
[) law or fact previously receiving final adjudica-l tion are the same as those being now asserted --
l and that that adjudication was by a. tribunal em-l powered to consider and decide those issues. Un-like res judicata, however, collateral estoppel can serve to conclu'de only "those matters in issue
.)
' or points controverted, upon the determination of l
which the (earlier) finding or verdict was render-ed."
citations omitted; Id. at 213. The criteria governing collateral O estoppel have also been summarized by the NRC:
In order to apply collateral estoppel several re-quirements must be met: The prior tribunal must have had jurisdiction to render the decision, there must have been a prior valid final judgment O on the merits, the issue must have been actually litigated and necessary to the outcome of the first action, and the party against whom the doc-trine is asserted must have been a party or in privity with a party to the earlier litigation.
l() Commonwealth Edison Co. (Braidwood Nuclear Power Station, Units 1 l
and 2) ("Braidwood"), LBP-85-11, 21 NRC 609, 620 (1985).
B. APPLICATION OF RES JUDICATA O AND COLLATERAL ESTOPPEL IN NRC PROCEEDINGS The NRC has recognized and applied the doctrines of res judicata and collateral estoppel in NRC proceedings. In Parley, the Appeals Board noted:
0
As the Court of Appeals for the Fifth Circuit ob-i served in Painters Dist. Coun. No. 38 Etc. v.
Edgewood Contractino Co., 416 F.2d 1081, 1084 (1969):
The policy considerations which underlie res iudicata -- finality to litigation, prevention i
of needless litigation, avoidance of unneces-sary burdens of time and expense -- are as relevant to the administrative process as to the judicial. [ citations omitted).
And any doubt that the doctrines of res iudicata
)
and collateral estoppel are not strictly confined I to the judicial arena has been laid totally to rest. In United States v. Utah Construction and Minino Co., 384 U.S. 394, 421-22 (1966), the Su-preme Court acknowledged that
[o]ccasionally courts have used language to
)
the effect that res iudicata principles do not apply to administrative proceedings, but such language is certainly too broad. When an ad-ministrative agency is acting in a judicial capacity and resolves disputed issues of fact
)
properly before it which the parties have had an adequate opportunity to litigate, the courts have not hesitated to apply res iudi-cata to enforce repose. . . .
I 7 AEC at 214.
) The Appeal Board also observed that the "exceptions to l the application of res iudicata and collateral estoppel which are found in the judicial setting are equally present when adminis-
) trative adjudication is involved -- namely, changed factual or legal circumstances and overriding competing public policy con-siderations." citations omitted; Id. at 215.
) In its order, the NRC approved the finding that res i
judicata and collateral estoppel apply to NRC proceedings subject l
) ;
to certain limits 31/ -
)
. . . . we are in full agreement with the conclu-sion reached by the Appeal Board that "res iudi-cata and collateral estoppel should not be entire-ly ruled out of our proceedings, but rather ap-plied with a sensitive regard for any supported
) assertion of changed circumstances or the possible existence of some special public interest factors in the particular case. . . . "
citation omitted; 7 AEC at 203.
) Changed circumstances can justify an exception to res judicata only if there is a cogent and compelling new evidence (showing) that the situation has changed substantially" subse-quent to the prior stage of the proceeding. emphasis supplied;
)
Schieber v. Immigration and Naturalization Service, 520 F.2d 44, 47 n. 11 (D.C. Cir. 1975).
) The NRC has repeatedly applied the doctrines of res judicata and collateral estoppel to preclude relitigation of is-
! sues. Most of these situations have arisen in the context of issues raised both at the construction permit and operating
)
! license stages of an NRC proceeding. The NRC in Parley pointed out that "an operating license proceeding should not be utilized to rehash issues already ventilated and resolved at the construc-
}
tion permit stage". 7 AEC at 203. Thus, the intervenor in an operating license proceeding was barred from relitigating an is-sue -- the environmental impact of the supplementary cooling
}
31/ The NRC remanded the proceeding because, inter alia, the petitioner against whom the Appeal Board invoked res judicata was not specifically "afforded an opportunity to make a par-
) ticularized showing of such changed circumstances or public interest factors as might exist with respect to this particu-lar proceeding". 7 AEC at 204.
)
)
water system of the nuclear facility -- because the intervenor "did not mention any changes or new information that has come to light in this regard since the construction permit was issued."
Philadelphia Electric Co. (Limerick Generating Station, Units 1
) and 2), ALAB-804, 21 NRC 587, 590 (1985).
A party cannot escape the grasp of res iudicata and collateral estoppel simply by concocting a new argument in the
) operating license proceeding regarding an issue litigated in the construction permit proceeding. As noted, res iudicata applies
"'not only as to every matter which was offered and received to D sustain or defeat the claim or demand, but as to any other admis-sible matter which might have been offered for that purpose'".
emphasis added; Farley, 7 AEC at 212.32/ Collateral estoppel
) has the same preclusive effect regarding arguments which could have been made in the prior proceeding 33/:
l
[t]he analogy to the rule against splitting a single cause of action is striking. Like a cause
[)
l of action, "an issue may not be . . . split into pieces. If it has been determined in a former action, it is binding notwithstanding the parties litigant may have omitted to urge for or against it matters which, if urged, would have produced an
[] opposite result." Any contention that is neces-sarily inconsistent with a prior adjudication of a material and litigated issue, then, is subsumed in j) 32/ See also Ness Investment Corp. v. United States, 595 F.2d 585, 588 n. 6 (Ct. C1. 1979) ("The assertion of different legal theories in a second suit will not defeat application of res judicata . . . nor will the fact that different types of relief are sought. . . . ").
g 33/ Carolina Power and Light Co. (Shearon Hurris Nuclear Power Plant) ("Shearon"), ALAB-837, 23 NRC 525, 537 (1986), quoting IB J. Moore, J. Lucas & T. Currier, Moore's Federal Practice 10.443[2] at 761 (2nd ed. 1984), footnotes omitted.
O
Y that issue and precluded by the prior judgment's
) collateral estoppel effect.
Moreover, the NRC has recognized that res iudicata ap-plies in a situation (similar to that involved here) in which a
) party seeks to'relitigate an issue subsequent to the issuance of the operating license by asking the NRR Director to modify the license. Consolidated Edison Co. of New York, Inc. (Indian
) Point, Unit Nos. 1, 2, & 3), ("Indian Point"), CLI-75-8, 2 NRC 173, 177 (1975). In Indian Point, the NRC observed
. . . parties must be prevented from using 10 CFR 2.206 procedures as a vehicle for reconsideration
) of issues previously decided, or for avoiding an existing forum in which they more logically should be presented.
2 NRC at 177.34/
) C. APPLICABILITY OF RES JUDICATA TO EDISON'S APPLICATION In view of these principles, Edison's argument is
) barred by res iudicata. In subsection 1, below, Cleveland shows that because Edison submitted its application in the same pro-ceeding as that in which the construction permit and operating license were issued, res iudicata, not collateral estoppel, is 3
the applicable foreclosure doctrine. Cleveland shows that Edison raised the argument regarding the high cost of nuclear power in D 34/ In Indian Point, the NRC permitted litigation in a pending Appeal Board review of an operating license application of an issue raised cagarding the safety of a license nuclear plant.
The NRC noted taat the issue was based on "recently developed seismic data" and raised "substantial safety" concerns. Id.
at 174, 177. The NRC also pointed out that the licensee, 3 staff and the intervenor "all agree that the subjects raised warrant hearing in an adjudicatory proceeding." Id. at 177.
l
- 60 -
its appeal of the Licensing Board decision during the construc-tion permit proceeding. Edison does not show why it should be able to reargue the issue. In subsection 2, Cleveland shows that even if the NRC looks at the circumstances cited by Edison, res iudicata should still apply. Each of the purported changed circumstances occurred well before the conclusion of the opera-ting license proceeding. Therefore, Edison had the opportunity
) at the operating license proceeding to make the arguments it pre-sents in its application. Consequently, Edison is foreclosed from seeking the relief requested in its application.
)
- 1. Res judicata is the applicable preclusion doctrine here As noted in section III above, both res iudicata and
) collateral estoppel preclude a party from relitigating issues and are based on the same fundamental policy: "economy of judicial
! time and [the) public policy favoring the establishment of cer-
) tainty in legal relations." Farley, 7 AEC at 212. Both doc-trines come into play where there has been a final adjudication of the merits of a particular cause of action by a tribunal of
) competent jurisdiction.
These criteria are met here. In the construction per-l mit proceeding, the NRC reviewed all aspects of the Perry Unit 1 5 facility and the other nuclear plants at issue and imposed the antitrust license conditions. In the operating license proceed-ing, the NRC again looked at the antitrust ramifications of the nuclear plants at issue and determined pursuant to Section 105(c) of the Act that there were no "significant changes" that would
)
l :
)
t warrant an additional antitrust review to impose additional an-D titrust conditions on the licenses. Edison and the other Appli- l r
i cants actively participated in this aspect of the proceeding and l s
urged the NRC to find that there were no significant changes.
O Edison's application arises in the same "cause of ac-tion" as the construction and operating permit proceeding. The NRC has indicated that all regulatory acts in connection with a p O nuclear facility are part of the same proceeding or "cause of action" as the proceeding in which the operator of the facility originally sought authorization to construct and operate the fa- ,
O cility. For example, in the seminal decision in Farley on res iudicata and collateral estoppel, the Appeal Board observed:
It seems to us that, for the purposes of the ap-plication of res judicata, there is a sufficient
() basis for treating an operating license proceeding as involving the same "cause of action" as the '
construction permit proceeding relating to the same reactor. See Section 185 of the Atomic Ener-gy Act of 1954, as amended, 42 U.S.C. 2235. There is, however, no need for a definitive decision on o that question here.
7 AEC 210, 215, n. 7. Likewise, the Licensing Board in its de-cision in South Texas noted that, as a practical matter, the O various stages of NRC action on an application for NRC authoriza- ,
tion are part of the same proceeding:
. . . the application to NRC for a license in '
this, as in other cases, requests the issuance of
'O both a construction permit and an operating li-cense for the proposed nuclear facility. It is l hardly reasonable to act as though there is a rig- ,
l idly circumscribed construction permit proceeding, I
which terminates when the permit is issued even for nontimely but permissible antitrust proceed- :
lz) ings, and assume that the Applicants will spend l
millions of dollars to construct a plant and then !
decide later whether or not to seek an operating !
. . l 0 l
l l
! license. The Applicants undoubtedly view the NRC licensing procedure as an integrated and continu-ous process from the inicial license application to the ultimato issuance of a license. It is un-realistic tc rigidly define two separate insulated boxes, one defined as a-construction permit pro-ceeding and the other as an operating license pro-ceeding . . .
4 NRC 571, 575 (1976).35/
The same reasoning applies with equal force here. Edi-son filed its current application in the same consolidated pro-ceeding -- Docket No. 50-440A, et al. -- in which the joint Ap-plicants originally sought authorization for the construction permit and operating license in connection with Perry Unit 1 along with Perry Unit 2 and Davis-Besse Units 1, 2 and 3. Doc-ket No. 50-440A is also part of the same proceeding in which the i
NRC issued the construction permit and operating license subject to the antitrust conditions at issue here. Hence, Edison's ap-I plication is part of the Docket No. 50-440A proceeding.
In view of this, res iudicata is triggered here. In
)
its application here, Edison is seeking to defeat the judgment regarding antitrust issues in the prior stages of the same cause of action. That is, Edison is trying to show that the antitrust conditions imposed an part of the construction permit and opera-ting license should be suspended. This satisfies the second criteria for res judicata. Parley, 7 AEC at 212.
35/ As noted in subsection III(A)(1), above, this decision was 3
reversed by the Appeal Board which found that the licensing
/ board erred in finding that it has jurisdiction to direct a hearing on antitrust issues in the absence of a pending con-struction permit or operating license proceeding.
)
t
- 2. Res iudicata bars the argu-monts made by Edison Because res judicata applies here, Edison is barred from seeking to rely on "every matter which was offered and re-ceived to sustain or defeat the claim [as well as) any other ad-
)
missible matter which might have been offered for that purpose."
Farley, 7 AEC at 212. Again, for purposes of this analysis only, Cleveland is accepting Edison's contention that the NRC can ys f
modify or remove antitrust conditions at al.y time, including dur-ing the operating license proceeding. Given this premise advanced by Edison, Cleveland shows in this section that each of the arguments raised by Edison in its application to support the contention that the antitrust conditions should be suspended was an admissible matter which was or might have been offered for u
that purpose during the construction permit and operating license proceeding. Hence, res iudicata bars Edison from making these
., arguments at this late date.
IL )
I Cleveland also shows that, even putting aside Edison's 1
failure to make these arguments during the operating license pro-g ceeding, Edison has not put forth "cogent and compelling evi-o dence" that there are any "substantial changes" in the circumstances reviewed and relied on by the NRC in imposing the antitrust 11 cense conditions. Thus, there is no basis for pro-g viding an exception to res judicata here.
- a. Edison already made its arguments here during the construction permit procee_ ding In the joint brief submitted by the Applicants in their
-~ .. .
appeal of the Licensing Board's decision to impose antitrust con-ditions as part of the construction permit, the Applicants made l an argument remarkably similar to that contained in Edison's ap-plication here. The Applicants challenged the Licensing Board's
) finding that there was a nexus between the licensed activity and the anticompetitive situation sufficient to justify imposition of antitrust conditions pursuant to Section 105(c)(5) of the Act.
) The Applicants argued that the requisite nexus could only exist if nuclear power was cheaper than any other type of power 36/:
It should be understood that such a finding is an ab-
. solute prerequisite to the Licensing Board's "structur-O- al" analysis. As Dr. Pace testified, there first must l
be made a "determination of whether or not the nuclear
- plant offers to its owners cost advantages of such a magnitude that those excluded from access to the nu- l clear unit in question or to similar units are at a significant competitive disadvantage"; if that is not i C) the case, the analysis need be carried no further.
i The Applicants challenged the Licensing Board's finding l that "the pronounced effect (of nuclear generation) on the over-1 O all economics" of power generation would mean that the Applicants l
"will derive a competitive advantage by virtue of the Perry and l
Davis-Besse facilities" (App. Br. at 125-26). The Applicants
[) pointed to various exhibits and testimony showing that the cost advantage of nuclear power had just about disappeared 31/
We would initially observe that, what appeared to Applicants several years ago to be "the superior ,
[3 base load choice" may no longer be nearly so at-tractive from an economic standpoint.
The Applicants went on to note that a small coal-fired plant i
'O 36/ citations omitted; App. Br. at 127, n. 147.
- 32/ citations omitted; App. Br. at 127.
l) ,
r
,e-w-
could generate cheaper power than the proposed nuclear facili-n v
ties 38/:
(The testimony of Mr. Kampmeier on cross-examina-tion] indicates that, given a municipal or cooper-ative system's lower cost of money, due to both c,
tax and financing advantages conferred on such electric entities, a single or small group of such systems may well be able to build a amall coal-fired plant in Ohio or Pennsylvania and get power at a total cost equal to, or closely approxi-mating, the cost of power to Applicants from the laroe nu lear fa ilities being licensed. Mr. cor-O ber was even more confident that such could be the expected result. The availability of such an op-tion provides the non-Applicant CCCT entities with the ability to obtain an independent power re-source on a cost basis that would permit wholesale g) competition with Applicants -- if that is really desired. It would, moreover, require these "wholesale competitors" to assume much the saru planning, managing and operating responsibilities that Applicants presently undertake, thereby pro-viding the stimulus for greater efficiencies that O
mu8t X18t if mPetition is to be viable.
In their October 22, 1979 petitions asking the NRC to review the Appeal Board's decision, the Applicants incorporated by reference the arguments in the joint brief.
In its application here, Edison is trying to resusci-tate the same argument. True, Edison's current version of this g argument is based on events subsequent to the construction permit proceeding. But for purposes of applying res iudicata, this makes no difference. Edison is asserting the same proposition:
nuclear power has no cost advantage and, as a result, the requi-
)
site nexus between the licensed activity and the anticompetitive situation is lacking. Curiously, Edison does not even mention O
38/ Emphasis in original; citations omitted; App. Br. at 132, n.
155.
'O
)
that it made this argument in its appellate brief. Nor does Edi-
) son try to distinguish the original and revised version of the arguments. Thus, it appears that Edison is seeking a second bite at the apple. The basic policy underlying res judicata -- pro-
) tection of litigants from the vexation and expense of repetitious litigation -- applies with full force here.
- b. The events cited by Edison could
) have been raised during the op-erating license proceeding Even putting aside the fact that Edison already raised the argument in its application here in its appeal of the Licens-
)
ing Board decision, each of the events cited by Edison could have been raised during the operating license proceeding.39] Conse-quently, res judicata bars consideration of these arguments at this late stage.
- 1. Increased cost of nuclear power 3 Edison's principal argument is that recent events have undermined what Edison asserts was the only basis relied on by the NRC to impose the license conditions, namely, the economic 3 superiority of nuclear power from Perry Unit 1. As shown below, each of the events occurred well before the termination of the operating license proceeding and, hence, could have been cited by O Edison in that proceeding. Also, Edison was aware of the cummu-lative impact of each of the events on the cost of Perry Unit 1 power well before the termination of the operating license pro-O 39/
9 Again, this analysis accepts, arguendo, Edison's contention that antitrust issues can be raised at any time.
D
) :
ceeding and could have cited that cumulative impact in the opera-
) ting license proceeding.
In addition, Edison has not provided "cogent and com- [
pelling evidence" that these events caused substantial changes in :
- 2) the previous circumstances. Consequently, Edison has not justi-fled and exception to res iudicata. ,
- New statutory requirements
)
Edison refers to new, more stringent federal environ- .
mental laws adopted in the 1970s as one of the reasons for the increased cost of Perry Unit 1 (App. 62). Edison refers specif- j
)
ically to several statutes: the National Environmental Policy Act of 1969, the Clean Air Act Amendments of 1970 and 1977, the
[
Federal Water Pollution Control Act Amendments of 1972 and the ;
C) ;
Endangered Species Act of 1973. l There are two flaws in Edison's arguments. First, Edi-son does not argue that it could not have made the same arguments i during the course of the operating license proceeding. Again, most of the statutes cited by Edison were enacted in the early 1
1970's. By the time the operating license proceeding was under-way, CAPCO had already increased the projected cost of the Perry project twelve times to reflect additional costs.40/ New statu- !
tory requirements were one of the factors cited by CAPCO in ex-
- plaining the increased cost projections. Thus, Edison had al- i l
ready anticipated the impact of the new statutes and could have ,
l raised these arguments at the operating license proceeding. Edi- !
C) r 40/ These revised cost projections are described in Appendix B.
l
() !
l i s l
I son does not contend otherwise.
) Even putting aside Edison's failuro to raise this argu-ment during the operating license proceeding, Edison also does not provide detailed evidence regarding the extent to which these
) new requirements may have changed the economic status of Perry Unit 1. Edison merely says (App. 62) that the statutes "signifi-cantly affected nuclear plant siting, design and construction --
) and hence cost." Edison cites a page from the study of the Perry projects prepared for state regulatory proceedings by Pickard, _
Lowe and Garrich, a nuclear engineering firm, on behalf of CEI.
) Id. However, the study is not provided or even quoted.
Therefore, Edison has not satisfied its burden of sho-wing that the 1970's statutes constitute "cogent.and compelling
) evidence" that new legislation caused the economic status of the nuclear plants to "change substantially" subsequent to the opera-ting license proceeding.
)
- Regulatory chances Edison cites new technical regulations adopted by the NRC as another reason for the increased cost of nuclear power from Perry Unit 1. Edison says that "[t]he regulatory climate at the NRC between 1975 and 1981 can best be described as highly unstable" (App. 64).
But the flaws in Edison's argument regarding the new l statutes adopted in the 1970's also undermine this argument.
i Again, Edison does not show why it could not have raised this argument during the operating license proceeding. As noted in 1
k
- Appendix B, Edison was aware of the cost impact of the new regu-
) lations during the operating license proceeding and repeatedly revised its cost projections for-the Perry project. For example, in a March 23, 1983 press releasen/, CEI announced, on behalf of the joint Applicants, a revision of the estimated cost of the l : Perry Units 1 and 2 plants from $3.23 billion, to $3.6 billion, La f which represented an increase of 10 percent. CEI noted that the increased cost of the Perry "is the result of implementation of regulatory requirements that affeet the final design and con-struction activities. All nuclear power plants under construc-
) tion have been greatly affected by these conditions [and) time schedules and budgets must regularly be reviewed." Consequently, Edison clearly could have cited these increased costs during the 3 operating license proceeding and opposed the continued imposition of tne antitrust license conditions. Instead, Edison's position was that no significant changes had taken place subsequent to the
) antitrust review at the construction permit stage.
- Adverse economic conditions Edison also makes much ado about adverse economic con-ditions which purportedly increased the costs of ccastructing Perry. Edison says that "(p]lants like Perry that were begun in the early 1970s had to cope with sustained high inflation and high interest rates in the 1970s and early 1980s, which drama-tically increased plant costs" (App. 65). Edison also points to l
k H/ Appendix C.
O
) ' ' '
the reduced growth rate in demand for electricity which emerged
)' beginning in the mid-1970s due to conservation and the economic recession.
The flaws in Edison's argument regarding the impact of
) new statutes and NRC regulations on Perry Unit 1 undermine Edi-son's argument regarding adverse economic conditions. Edison does not show why it did not raise this argument in the operating
) license proceeding. Again, as reflected in Appendix B, Edison had repeatedly increased the projected costs of the Perry pro-ject. For example, in the March 23, 1983 press release, CEI
) pointed out that the interest costs associated with constructing the project had increased. Consequently, Edison could have raised this argument during the operating license proceeding.
3 Edison could also have raised in the operating license proceeding its concerns about the reduced growth rate in demand for electricity. For example, in its January 23, 1980 press re-O lease cancelling construction of Units 2 and 3 of the Davis-Besse l
Nuclear Power Station and the 1260 megawatt Units 1 and 2 of the Erie Nuclear Plant and delaying construction of Perry Units 1 and C) 2 and the 833 megawatt Beaver Valley Unit 2 plant, CAPCO cited, inter alia, a decrease in the average growth of electricity de-mand from 3.3 percent to 2.8 percent 42/. CAPCO said that the re-
,0 duced growth rate is "attribut[able) mainly to a showdown in in-dustrial growth, the increased availability of natural gas in the CEI service area, and conservation efforts by customers."43/
G 42/ The press release is reproduced in Appendix D.
43/ Id. at 3.
O
i
)
I -
I In addition, Edison fails to provide any "cogent and compelling evidence" of any "substantial changes" in economic conditions subsequent to the operating license proceeding which might have caused a "substantial change" in the cost of Perry
]
Unit 1. !
l
- Overall costs of Perry Unit i l
After citing the events discussed above, Edison goes on to compare the projected cost of power from Perry Unit 1 and a coal-fired plant (1) in 1976 and (2) under current conditions.
Edison states:
OE's comparison shows that in 1976 it would have been anticipated that the 30-year levelized cost (including capital, operations and maintenance, ;
and fuel) for a nuclear power plant would be about
) $27 per MWh. The actual 1987 30-year levelized cost for Perry (including capital, operation and l
maintenance, and fuel) is $184 per MWh, or 580%
higher than the $27 per MWh projected in 1976. By contrast, the projected 30-year levelized cost of a coal plant in 1976 would have been $38 per MWh,
) or 41 percent higher than the then-estimated cost for Perry. Based on a recent Electric Power Re-search Institute survey, the current levelized cost estimate of a 300 megawatts coal-fired unit ;
with a 1987 in-service date, which represents OE's [
approximate onership share in Perry, would be ap-3 proximately $92 per MWh -- one-half of the cost of i Perry, footnotes omitted; App. 70.
But, once again, Edison misses the mark. Edison fails to mention that it has been continuously monitoring the projected l cost of Perry Unit 1 throughout the construction process and has ;
I repeatedly revised the costs upward beginning in 1976. As the r cost projections in Appendix B demonstrate, the bulk of the in-1 .
r
?
D ;
I I
l b.
creased costs were projected well before the close of the opera-
) ting license proceeding. This is not surprising because, as noted, the events cited by Edison as the basis for the increased l
! costs also occurred well before May 1985. Therefore, Edison could have argued during the operating license proceeding that l
l these cost increases justified suspension of'the license condi-tions. Edison chose to not do so. Res _iudicata bars raising
) this issue now.
In addition, Edison has not even tried to quantify the extent, if any, to which the increased costs occurred subsequent
) to the operating license proceeding. Consequently, Edison has failed to provide the "cogent and compelling evidence" of "sub-stantial changes" in the economic status of Perry subsequent to
) that proceedieg needed to justify an exception to res iudicata.
Moreover, Edison's contentions regarding the cost bur-den of Perry Unit 1 are erroneous. The comparison offered by
) Edison of the projected cost of nuclear power and coal-fired power in 1976 and at present is flawed. Edison has omitted vital information. For example, Cleveland cannot determine what mega-
) watts capacity was assumed in connection with the derivation of the cost of the nuclear power. Was it capacity equivalent to the total capacity of the nuclear units or was this total capacity of
) the megawatts capacity of Perry Unit 1 alone? Or was the assumed capacity simply the capacity represonted by Edison's ownership share of Perry Unit I? Edison does not tell us. But Edison does
)
l tell us that the cost per megawatt hour for the coal-fired power
[ was based on capacity equal only to its ownership share of Perry.
D
2)
If the cost per megawatt hour for the nuclear power was derived on the same basis, the comparison is worthless because the cost per megawatt or megawatt hour for Perry must be based on its to- F tal capacity. If the cost derived for the nuclear power is based ;
O on the total capacity of the nuclear unit, then the comparison with the coal-fired power costs is egregiously invalid since cost per total capacity is being compared to a fictitious cost based O on a fraction of the total capacity. Srch a comparison is the equivalent of comparing apples and oranges.
Edison's contentions are also contradicted by recent C) actions by it and the other Applicants. Perry Unit 1 and Davis- j Besse Unit 1 are in full commercial operation and provide sub-stantial base load power. Obviously, if the plants were as inef-C) ficient as Edison suggests, it would be imprudent to use the f
plants for base load power. CEI recently stressed the importance 1
of Perry as a source of base load power in urging the Public
() Utilities Commission of Ohio (PUCO) to recognize for rate pur-poses the operating expenses of Perry Unit 1 for its first full year of commercial operation beginning when Perry was placed in ,
C) commercial operation on November 18, 1987.44/ The PUCO agreed !
r with CEI and noted:45/
I [
i (3 !
44/ "In the Matter of the Application of the Cleveland Electric [
Illuminating Company for Authority to Amend and Increase Cer- i tain of Its Filed Schedules Fixing Rates and Charges for !
Electric Service", Case No. 86-2025-EL-AIR (Dec. 16, 1987). i
- (Appendix E). Cleveland and several other parties have filed ,
O rehearing requests which are now pending before PUCO. !
45/ Id. at 55.
i
)
i The Perry plant did generate substantial amounts of electricity during the test period and the com-
)- pany has incurred substantial costs in generating that electricity.
And in a recent interview, CEI spokesman Rick DeChant noted46/
I don't necessarily know if (the power generated
)-
. by Perry 1 is) going to be cheaper but it's going to help to stabilize rates -- down.the road it will, specifically in fuel savings.'
Indeed)CEIrecentlydecommissioneda223 megawatt.
) coal-fired generating station because it "was probably the least cost-efficient unit in the company'e system."i7] Nowhere did CEI suggest that its nuclear power was high cost.
) Moreover, as shown in Section VI(c), belov, the changes in the cost of Perry, regardless of its scope, would not under-mine the NRC's reasoning in imposing the license conditions. As
) discussed in more detail in Section VI(c), both Perry Unit 1 and Davis-Besse Unit 1 are now in full commarcial operation and pro-vide substantial base load power. Tha NRC recognized the possi-
) bility that this power may be more expensive than anticipated.
But the NRC found that the availability of this substantial new source of base load power, per se, would exacerbate the anticom-
) petitive situation in the CCCT absent the antitrust license con-ditions. Consequently, the increased cost of this power does not represent the sort of "substantial change" in the prior circum-
) stances necessary to justify an exception to res iudicata.
l i
i 46/ Interview on WFCN radio in Cleveland, Ohio, Dec. 21, 1987.
47/ Pruzinsky, "Avon Lake capacity cut as CEI retires generator",
Crain's Cleveland Business (Jan. 4, 1988) (Appendix F).
D l
O
- 11. The reduction of the CAPCO nuclear program U Edison also points to the reduced scope of the CAPCO nuclear program as.another basis for suspending the antitrust license conditions. Edison contends that (1) condtruction of O Perry Unit 2 has been "indefinitely suspended", (2) Erie Units 1 and 2 have been cancelled, (3) Davis-Besse Units 2 and-3 havo been cancelled, (4) Perry Unit I reached full power in June 1986,
~
O and (5) Davis-Besse Unic 1 returned to service in December 1986 following an 18 month outage.
But, again, Edi. son fails to mention that.the plant can-
.O cellations end suspensions occurred well before thc oporating license proceeding. As early as November 1978, the status of Davis-Besse Units 1 and 2 was uncertain.M/ On January 22., 1980, O the CAPCO conpanies cancelled Erie Units 1 and 2 and Davis-Besse Units 2 and 3.4_9/- The indefinite suspension of construction of Perry Unit 2 was announced in September 1984.50/ 0 Again, Edison O had ample opportunity to cite these events during the operating license proceeding as part of an argument against continued impo-sition of the antitrust license conditions.
O Moreover, even putting asida rdison's failure to raise this argument during the operating license proceeding, Cleveland l
l shows in Section VI(c), below, that the changes in the scope of M/ See Edison Securities and Exchange Coranission Form 10-K for 1978, pp. 37-38 (Appendix G).
M / See Appendix D.
lO 50/ See Edisen 1984 Form 10-K, p. 11 (Appendix H); Cost Estimate l
Revised For Cleveland Electric Perry-1", Nucleonics Week, p.
l 7 (Sept. 20, 1984) (Appendix I).
O t
O the CAPCO nuclear program do not represent the sort of substan-tial change in circumstances necessary to justify an exception to res judicata. As explained in more detail in Section VI(c), the full commercial operation of Perry Unit 1 and Davis-Besse Unit 1, J especially in conjunction with the new transmission lines con-structed to connect the plants to the Applicants' existing trans-mission network, is sufficient to justify continuation of the li-cense conditions.
The delays in the construction of Perry Unit 1 and Davis-Besse Unit 1 also do not change the applicability of res O judicata. True, Davis-Besse Unit 1 did not return to service until December 1986 and Perry Unit 1 did not reach full power until 1987. Edison, however, has not made the requisite showing O that these two events change substantially the circumstances at issue in the operating license proceeding. Starting well before the operating license proceeding, CAPCO repeatedly announced de-O lays in the completion dates for the nuclear plants. For exam-ple, on November 15, 1978, CAPCO announced a delay in the comple-tion date for three plants: a 16 month delay in construction of U Perry Unit 1 to 1983, a 22 month delay in construction of Perry l
Unit 2 to 1985, and a 24 month delay in construction of Davis-Besse Unit 2.51/ On January 22, 1980, CAPCO announced another 1 0 year delay in the construction of Perry Unit 1 to May 1984, a3 year delay construciton of Perry Unit 2 to May 1988 and two year delay in construction of Beaver Valley Unit 2 to May 1986.52/
'O 5]./ Edison 1978 Form 10-K, p. 37 (Appendix G).
52/ Appendix J contains a complete list of these delays.
C -
Thus, in the operating license proceeding, Edison and the NRC were undoubtedly aware of the potential for additional delays in the completion date of the nuclear plants. Consequent-ly, the fact that additional delays have occurred certainly can-not be viewed as a substantial change in the circumstances con-templated by the NRC during the operating license proceeding.
iii. Termination _of the CAPCO pool Edison also points to the termination of the CAPCO pool as another event which justifies suspension of the antitrust con-ditions (App. 73-76). The following events are cited:
- 1. On December 31, 1979, the CAPCO companies ceased mandatory purchases and sales that were required to be made among them under prior agree-ments.
O 2. On September 1, 1980, the CAPCO companies terminated the CAPCO Memorandum of Understanding (dated September 14, 1967) and certain other agreements. The companies also agreed to imple-ment pool restructuring principles, the most sig-
_ nificant of which was the abandonment cf the "one-U system" planning concept. Each company is now responsible for future capacity planning, authori-zation of additional generating units, and estab-lishing acceptable reserve margins.
- 3. The CAPCO Base Operating Agreement was V amended on September 1, 1980, August 1, 1981, September 1, 1982 and July 1, 1984. As a result, the companies no longer have unqualitied entitle-ments to replacement capacity and energy. Instead more limited and qualified rights to "back-ups and emergency power have been established.
- 4. In addition, numerous other (less signifi-cant) administrative and operating principles have been revised or eliminated.
g At the outset, it must be noted that the certain of a
changes in the operating terms and conditions stem directly from O
03 L
the NRC decision imposing the antitrust license conditions. It O. 1s, therefore, somewhat disingenuous for Edison to portray the changes as voluntary.
Also, because those same license conditions were part O of the overall set of antitrust conditions, CAPCO's compliance with the conditions can hardly be viewed as a changed circum-stance justifying suspension of all of the license conditions.
O Even putting this concern aside, however, consideration of these events involving the CAPCO pool is barred by res iudi-cata. Once again, these events occurred well before the close of O the record in the operating license proceeding. Clearly, Edison had the opportunity to raise this argument during the operating license proceeding.
O Moreover, even if one overlooks Edison's failure to raise t'is argument during the operating license proceeding, Clevelan.a shows in Section VI(c) that termination of the CAPCO
- O pool does not affect the NRC's analysis in imposing the antitrust license conditions. Consequently, the termination cannot justify an exception to res iudicata.
- O Thus, res judicata applies here to bar Edison's chal-lenge of the antitrust license conditions. As shown, Edison made or could have made its arguments during the construction permit 13 and operating license proceedings. Moreover, application of res judicata is necessary to ensure that Cleveland is not harmed as a result of the extensive business commitments it has made in reli-
- O ance on the antitrust license conditions (as outlined in Section III(A)(3), above).
l
!O 1
O
- 3. Alternatively, collateral estoppel is appli able and bars Edison's arouments O
As noted in subsection C(1), above, Edison's applica-tion arises in the same "cause of action" as the operating
- license proceeding. Hence, res iudicata encompasses the situa-U tion here.
But preclusion is still warranted even if the NRC finds that the application arises in a different "cause of action".
In that instance, collateral estoppel would apply to the circum-stances here. As noted above, collateral estoppel applies if four criteria are met:
(1) The prior tribunal must have had jurisdiction I to render the decision, (2) there must have been a prior valid final judgment on the merits, (3) the i
i issue must have been actually litigated and neces-sary to overcome of the first action, and (4) the
.O party against whom the doctrine is asserted must have been a party or in privity with a party to the earlier litigation.
Braidwood, 21 NRC at 620.
Each of these criteria is satisfied here. First, the lO NRC clearly had jurisdiction to issue the operating license deci-sion. Second, there was a valid final judgment on the merits of lO the antitrust conditions. Third, the antitrust issue was actually litigated and was necessary to the outcome of the pro-ceeding. As noted, the antitrust issue was addressed both in the l
O construction permit and operating license proceeding. During the latter proceeding, the NRC addressed the antitrust issue in the context of determining pursuant to Section 105(c)(2) of the Act 10 whether there were any significant changes in the licensee's ac-tivities or proposed activities subsequent to the antitrust re-O
O view during the construction permit proceeding. Edison and the C) other joint Applicants actively participated in the proceeding and urged the NRC to find that there were no significant changes.53/ And, again, only for purposes of this analysis, O Cleveland accepts Edison's contention that the NRC can review the appropriateness of a license condition at any time, including during the operating license proceeding. Therefore, Edison had O the opportunity to argue then that the antitrust conditions should be eliminated. Finally, Edison was obviously a party to the earlier litigation.
O Becddse each of these criteria are met, Edison cannot now raise arguments it failed to raise during the operating license proceeding. As noted, the NRC has recognized that col-O lateral estoppel precludes a party from raising in a subsequent proceeding any argument that it neglected to raise during the prior proceeding. "If [an issue] has been determined in a former O action," the NRC has observed, "it is binding notwithstanding the parties . . . may have omitted to urge for or against it matters which, if urged, would have produced an opposite result."
O Shearon, 23 NRC 525, 537 n. 37. As shown in Section IV(c)(2),
above, virtually all of the arguments raised by Edison in its application could have been raised during the operating license C) proceeding. Thus, these arguments cannot be raised now. Like-wise, as shown in Section VI(c) below, the events cited by Edison 53/ See March 6, 1984 letter from CEI to Harold R. Denton, NRR Director.
'O
)
L L do not constitute significant changes and, therefore, do not jus-O tify an exception to collateral estoppel.
,j 3
O O
O O
O O-O
D V. THE RELIEF SOUGHT BY EDISON g IS BARRED BY LACHES If the NRC finds for some reason that neither res iudicata or collate::a1 estoppel apply here, laches should be ap-g plied to bar the relief sought by Edison. Laches is an equitable doctrine which barn the late filing of a claim if a party would be prejudiced because of its actions during the interim in reli-an e n the right being challenged in the claim. Three indepen-O dent criteria must be met before laches can be invoked to bar litigation. A pa.rty must show that there was (1) a delay by g another party in asserting a right or claim, (2) the delay was not excusable, and (3) the party suffered undue prejudice as a result of the delay. Environmental Defense Fund, Inc. v. Alexan-der, 614 F.2d 474, 476 (5th Cir.), cert. denied, 449 U.S. 919 (1980); see Cor.tello v. , United States, 365 U.S. 265, 282, (1961).
Beca'Ise laches is an equitable defense, "the doc-trine . . . is flexible" and "all the particular circumstances of l each case must be considered, including the length of the delay,
! the reasons for it, its effeet on the defendant, and the overall fairness f permitting the plaintiff to assert his or her ac-O tion." Citizens and Landowners Against The Miles City /New Under-l l wood Powerline v. Secretary, U.S. Department of Energy ("Under-wood"), 683 F.2d 1171, 1174 (8th Cir. 1982).
The NRC has recognized that the policies underlying laches are fully applicable in administrative proceedings. In g finding in South Texas that the antitrust review at the operating license stage can only encompass "significant changes", the NRC O
)
cited laches:
D . . . a limited review at the operating license stage is consistent with the well established con-siderations consolidated in the doctrines of res-judicata and laches. Although these judicially developed doctrines are not fully applicable in g_ administrative proceedings, particularly where, as here, there was no adjudicatory proceeding at the construction permit stage, the considerations of fairness to parties and conservation of resources embodied in them are relevant here. We see no reason why the Attorney General, our staff, and g possibly a hearing board should plow the same ground twice. Nor, in fairness to utilities en-gaged in long range planning, should a potential petitioner for antitrust intervention be able to stand on the sidelines at the construction permit stage and raise a claim at the operating license stage that could have been raised earlier.
e) 5 NRC 1303, 1321.
In view of the flexible nature of laches, there is no g fixed rule regarding the length of the delay necessary to support laches. Likewise, there is no rigid formula governing the type of explanation which can justify delaying the filing of a claim.
But the explanation must provide a rational and satisfactory O
basis for the delay. Underwood, 683 F.2d at 1175-77.
One type of prejudice which typically supports the de-fense of laches arises when a party makes financial commitments g
which it would not have made if the plaintiff had not delayed.
Lingenfelter v. Keystone Consolidated Industries, Inc. ("Lingen-felter"), 691 F.2d 339, 342 (7th Cir. 1982). This detrimental g
reliance has been summarized in this ways 4/:
l l
d) 54/ footnotes omitted; 27 Am.Jur.2d (Contracts) S171, p. 717 (1966 & 1987 Supp.).
O
O Proof of prejudice or injury consists frequently 9 in evidence showing the expenditure of money or the incurring of obligations by the defendant in the belief that he had a clear or unencumbered right. The suit.will be dismissed where it ap-pears that the complainant stood by and permitted the defendant to expend sums of money in improving
.O the property. The showing of injury is especially plain where it appears that the defendant has un-dertaken a public improvement.
Numerous types of pecuniary loss may be considered in weighing the prejudice suffered by a party as a result of the delay.
-O Lingenfelter, 691 F.2d at 342.
Each of the criteria for laches is interwoven. For g example, the extent of the delay necessary to support the laches defense depends, in large part, upon the extent of the prejudice suffered by the defendant:
'g' If only a short period of time has elapsed since the accrual of the claim, the magnitude of preju-dice require before the suit should be barred is great, whereas if the delay is lengthy, prejudice is more likely to have nccurred and less proof of prejudice will be required.
3 citations omitted; Goodman v. McDonnell Douglas Corp., 606 F.2d 800, 807 (8th Cir. 1979), cert, denied, 446 U.S. 913 (1980).
Laches has repeatedly been found to bar a claim not 3 diligently pursued by the claimant when another party incurred financial obligations during the delay because of a reasonable reliance on the rights challenged by the claimant. For example, K3 laches was found to bar a challenge of the construction of an electric transmission line because the plaintiffs delayed three years before filing suit. Underwood, 683 F.2d at 1175-77. The O court noted that the plaintiffs could not justify the delay and that the delay prejudiced the defendant because it had construc-
- O ;
O ted the transmission line at substantial expense by the time the suit was filed. Id. Similarly, a suit challenging a municipal ordinance rezoning certain property was barred by laches because the plaintiff waited 21 months to file suit and the owner of the
~
property had during that period incurred substantial expenses to improve the property. Richards v. Ferguson, 479 S.W.2d 852 (Ark. 1972); see also Lundgren v. Lundgren, 54 Cal.Rptr. 30 (Cal.Dist.Ct. App. 1966). Likewise, a court held that a challenge of a property use was barred by laches because the plaintiff de-layed three years and the property owner spent over $282,000 on o"
Bresnahan v. City of Pasadena, improvements during that period.
121 Cal.Rptr. 750 (Cal.Ct. App. 1975).
This reasoning applies with equal force here and bars o" Edison's application. As noted in Section V(c) above, each of the events cited by Ediso.n as the basis for its application --
changes in regulatory requirements, adverse economic conditions, O the reduction in the scope of the CAPCO nuclear program and ter-mination of the CAPCO pool -- occurred no later than 1981. But Edison did not file its application until September 18, 1987.
U Nowhere in its application does Edison even try to justify this l
l delay. Moreover, as shown in Section III(A)(3), above, Cleveland l
l has made significant financial commitments during that period in lo' reliance on the antitrust conditions by purchasing power from l
l alternative suppliers. This reliance was justified at the very l
latest by October 1980, when the Third Circuit granted the Appli-
.O cants' motion to withdraw their petition for review of the NRC decision imposing the license conditions. Ifence, in view of (1)
!O
)
Edison's lengthy and unjustifiable delay in submitting its re-7 quest for relief, and (2) the severe prejudice to Cleveland which would result if the antitrust license conditions were suspended, laches bars Edison's application.
O O
O O
O O
O O
O
O VI. THE EVENTS CITED BY EDISON DO NOT UNDERMINE q
THE LEGAL OR FACTUAL BASIS FOR IMPOSITION OF ANTITRUST LICENSE CONDITIONS The premise of Edison's application is that events sub-sequent to the NRC decision to impose the antitrust license con-J ditions undermine the basis of the NRC decision. Therefore, ar-gues Edison, the antitrust license conditions are not needed in current circumstances and, hence, should be suspended.
O Specifically, Edison argues that Congress' adoption of mandatory prelicensing review as part of the 1970 amendments was based on its assumption that nuclear power would be far cheaper n
v than any other source of power. Consequently, according to Edi-son, the only concern of Congress was to ensure that all utili- -
ties had fair access to this low cost power source. Therefore, O according to Edison, antitrust license conditions cannot be jus-tified if nuclear power does not have cost advantages over other power sources.
O Edison then points to the NRC decisions imposing anti-trust license conditions and argues that these decisions were based exclusively on the assumption that the nuclear power would O be low cost.
Next, Edison turns to the decisions in the consolidated proceeding in which the antitrust license conditions were imposed
'() on Perry. Edison argues that the NRC's decision to impose the antitrust license conditions in the consolidated Perry proceeding was, again, based exclusively on the assumption that this power O would be low cost. Because circumstances have changed subsequent to the NRC decision, argues ddison, continued imposition of the O
. t
O antitrust license conditions is unjustified and the conditions n
should be suspended.
As shown below, Edison's argument is flawed. In sub-section A, below, Cleveland demonstrates that Congress, in enact-O ing the 1970 amendments, was not exclusively concerned about the anticipated low cost of nuclear power. Congress was equally con-corned about the immense size of nuclear generating units and the o
v Congress recog-transmission facilities that accompanied them.
nized that a nuclear facility and the associated transmission facilities could enhance a utility's ability to exercise market O power in the retail and wholesale power markets and the coordina-tion services market unless conditions were incorporated into the license.
O These concerns apply regardless of the cost of nuclear power. Hence, Congress did not intend to limit antitrust license conditions to plants which produce nuclear power that is cheaper O than any other power source.
In subsection B, Cleveland showe that, consistent with this Congressional mandate, the NRC has repeatedly recognized O that a utility which has a dominant role in the generation and transmission of power will be able to exercise even greater mar-ket power if it operates a nuclear facility along with the asso-
- O ciated transmission lines and coordination services. The NRC's l
l analysis reflects its understanding that this exacerbation of an I
anticompetitive situation occurs regardless of whether the power O is low cost. As a result, the NRC has consistently imposed li-l conse conditions requiring non-discriminatory access to nuclear l
- O
O power as well as the coordination and wheeling services needed to O obtain non-nuclear power.
Turning to the decisions in this proceeding, Cleveland shows in subsection C that the NRC, in imposing the antitrust C) license conditions on Perry, did not base its decision on the assumption that the nuclear power would be low cost. The NRC was concerned about the Applicants' pervasive control of generation
-O and transmission facilities and, moreover, their use of this con-trol to discriminate against other utilities in connection with access to coordination, wheeling and other related services. The O NRC recognized that the additional generation and transmission facilities which would accompany the Perry and Davis-Besse plants would exacerbate this anticompetitive situation. A change in the 13 relative cost of nuclear power would not alleviate this condi-tion.
l A. THE 1970 AMENDMENTS WERE BASED i ON FACTORS OTHER THAN THE ANTI-13 CIPATED COST OF NUCLEAR POWER Edison argues that the adoption by Congress of the pre-licensing antitrust review procedures in section 105 as part of 13 the 1970 amendment was based solely on the assumption that nu-clear power would be the lowest cost source of power. Edison points to certain statements made during the hearings before the O Joint Committee and during Congressional debate of the legisla-tion.
The analysis below of the legislative history of the O 1970 amendments, especially the Joint Committee report, indicates that Congress was not concerned only with the anticipated cost of lO
O nuclear power. Instead, Congress recognized.that in view of the O large scale of a nuclear facility, and the associated transmis-sion facilities and coordination services, operation of the facility by a utility with a dominant role in generation and O transmission of electricity in a market could enhance the utili-ty's market power. Therefore, Congress intended the NRC to im-pose antitrust license conditions regardless of the cost of the O nuclear power to ensure that neighboring utilities have access to the transmission facilities, and the associated coordination and wheeling services, which accompanied the nuclear plant.
O This analysis must start with the language of section 105 and the Joint Committee's explanation of thir. language. Sec-tion 105(c) states that the NRC in the prelicensing antitrust O review "shall make a finding as to whether the activities under l
the license would create or maintain a situation inconsistent l
l with the antitrust laws as specified in subsection 105a." If the l) NRC finds that an anticompetitive situation would result, the NRC has the authority pursuant to Section 105(c)(6) to refuse to is-j sue a license or to issue a license with such conditions as the 13 NRC deems appropriate.
The Joint Committee emphasized the broad scope of the type of activities under the license which would justify imposi-33 tion of antitrust conditions if the activity would "create or maintain" an anticompetitive situation 55/:
The standard pertains to the activities of the lO 55/ H. Rep. No. 91-1470, 91st Cong., 2d Sess., reprinted in 1970 U.S. Code Cong. & Ad. News 4981, 5011 ("Joint Committee Report").
O i
.O license applicant. The activities of others, such as designers, fabricators, manufacturers, or sup-O pliers of materials or services, who, under some kind of direct or indirect contractual relation-ship may be furnishing equipment, materials or services for the licensed facility would not con-stitute "activities under the license" unless the li en8e PPlicant is culpably involved in activi-O ties of others that fall within the ambit of the standard.
The Joint Committee also noted that the NRC need only find that there was a "reasonable probability of contravention of the an-O titrust laws or the policies clearly underlying these laws" 51/2 The legislation proposed by the committee provides for a finding by the Commission "as to whether the activities under the license would create or main-O tain a situation inconsistent with the antitrust laws as specified in subsection 105(a)." The con-cept of certainty of contravention of the anti-trust laws or the policies clearly underlying those laws is not intended to be implicit in this standard; nor is mere possibiJity of inconsisten-10 cy. It is intended that the finding be based on reasonable probability of contravention of the antitrust laws or the policies clearly underlying these laws. It is intended that, in effect, the NRC will conclude whether, in its judgment, it is reasonably probable that the activities under the
_O license would, when the license is issued or thereafter, be inconsistent with any of the anti- !
trust laws or the policies clearly underlying ,
these laws.
. In the hearings conducted by the Joint Committee on the
.O 1970 amendments, there were certain statements alluding to the anticipated cost of nuclear power. But Edison overlooks the Com-mittee's recognition that the relative cost of nuclear power was
)
far from certain. Indeed, in a report prepared for the Joint Committee, Philip Sporn, former president of the American Elec-tric Power Company, noted that the cost of nuclear power was
.O 56/ Joint Committee Report at 4994.
40
u) rapidly rising 51/:
During the past two years there has taken place a remarkable and ominous retrogression in the eco-nomics of our nuclear power technology. The light water moderated reactor, which two years ago of-fered potentials for nuclear power generation com-
, petitive with fossil fuel at 22c to 24.8c per mil-lion Btu has today lost position where it is com-petitive at 28c to 29.Sc per million Btu fousil fuel cost.
This in turn makes it difficult to accept without something more than a grain of salt the statement O of the Atomic Energy Commission (that] "the out-look for the future for nuclear power continues to be very promising [because) of the continuing eco-nomic competitiveness of nuclear power in spite of increasing costs as prices for both nuclear and fossil plants increase."
g How did this come about? The reasons for that are many. Among the most important, but nowhere near all, are higher costs of nuclear components, higher cost of turbines, higher construction costs, continuing escalation during the entire O construction period due to the inflationary cycle, longer construction time which results in higher interest and overhead charges, higher capacity charges in view of the current coupon rate of ap-proximately 9.5% on AA utility bonds which brings the necessary capital charge to give an adequate O return up to 16% lower capacity factor due to the recognition that with the growth of atomic power which will take place between now and 1980 no atomic plant can, except for the shortest time, be expected to operate at a capacity factor as high as 80% and that, therefore, a more rational capa-O city factor is one five points lower, or 75%.
Moreover, Mr. Sporn noted that nuclear power was rapidly losing its competitive position vis-a-vis power generated by fossil C) fuels 58/:
52/ Prelicensing Antitrust Review of Nuclear Powerplants, Hear-ings Before the Joint Comm. on Atomic Energy, Part 1, 91st Cong., 1st Sess. 300 (1970) ("Joint Committee I").
58/ Joint Committee I at 300.
O
0-It is true that fossil fuel costs also have gone g up, but even so, nuclear power has lost position vis-a-vis fossil fuel (mainly coal). This can be seen very clearly in Table 1, which shows costs of both coal-fired and nuclear-fueled plants, the former in terms of an 800-megawatts unit and the latter in terms of an 1100-megawatts unit, as of p" July 1, 1969, for completion in the case of nu-clear in 1976, and in the case of coal in 1975.
All the figures in that tabulation are significant and striking but two stand out in particular --
the cost of switchboard delivered nuclear energy of 7.00 mills per kwh as against 6.65 mills for g coal-fired energy with coal at 256 per million Btu. On the basis of these figures, the competi-tive break-even point for nuclear power is 29.7c por million Btu cost.
Table 1 is reproduced in Appendix K of this pleading.
O Mr. Sporn noted that, in view of the increasing costs of nuclear power, the growth of nuclear power had virtually stopped 59/:
It is not surprising that all these developments g"
have already had a significant effect on the re- >
cent experience of the nuclear industry. It has caused cancellation of one or two previously an-nounced projects, delay in scheduling of other units committed for; it has brought about inter-position of fossil fuel units to be completed ahead of what might have been scheduled atomic 13 units, and in some cases it has brought about plain decision (s) to go fossil when, if things had gone differently, atomic units would have been l
ordered. In connection with the last, it needs to be pointed out that every time a fossil-fueled unit is ordered for whatever reason, when an
!)
'I atomic unit might have been ordered under condi-tions more favorable to nuclear power, the parti-cular nuclear unit is lost for approximately 30 years.
Such developments obviously go beyond the loss of j
O domestic orders. Their effect can be and most i likely will be worldwide, but this will be dis-cussed in more detail later. Regardless of the effect, it is obvious that we have had a slowdown in the ordering of atomic generating capacity. As against a peak of 25,780 megawatts placed on order
)
59/ Hearings at 300-01.
l O
I O
94 -
1 in- 1967 and 19,159 raegawatts average capacity n placed on order in the three years 1966-1968, or-
-V ders declined in 1968 to 16,044 megawatts and in 1969 to 7,190 megawatts. This, of course, does not mean that the figures for orders will not be better in 1970 than they were in 1969, but the utility industry, being young, has as yet not n taken to heart the fact that in the long run it cannot safely order more capacity than is repre-sented by its growth plus the necessary reserve.
Thus, Congress, in adopting the mandatory prelicensing review
, requirement, was well aware that nuclear power might not be low cost power. Consequently, there is no basis for Edison's as-sertion that Congress based the antitrust review provisions on the assumption that nuclear power would be low cost.
Indeed, in testimony during the hearing, several key witnesses supporting the antitrust review provisions focused not on the cost of nuclear power but on the fact that a nuclear fa-cility could create or nairit ain an anticompetitive situation by enhancing the cost efficiencies which can be achieved through coordination services, thereby increasing the anticompetitive im-pact of a discriminatory exclusion of access to these services.
The NRC has noted the important efficiencies which can be achieved by a utility which has access to coordination ser-vices.60/ In their testimony, two key officials of the Anti-trust Division of the Department of Justice noted that the NRC IO j0/ There are innumerable types of coordination services, includ-ing reserve p)oling. The NRC has noted that "(a)11 are in essence variations on one leitmotif: the utilities' attempt
! to reduce their production cost by either purchasing or i selling "surplus' power, or to put it more accurately, power O from the surplus generating capacity inherent in the indus-try." Consumers Power Co. (Midland Plant, Units 1 and 2), 6 NRC 892, 956-57 (1977).
O m -,-v y
O can use its antitrust review authority to require non-discrimina-() tory access to the coordination and other services associated with the plant. They recognized that, absent non-discriminatory access, the plant would exacerbate the market power exercised by O a license. For example, in his testimony on behalf of the anti-trust division of the Department of Justice, Ronald W. Donnem, the Director of Policy Planning said 11/:
O So far, we have been focusing on the disposition of the power of a single nuclear plant. However, the largest generating plants now being planned are apparently in the neighborhood of 1,000 megawatts. "Today, only a few individual systems can by themselves undertake 1,000 megawatts O- units." However, pools may be created in which even such large units may be coordinated. Such pools have a number of economic advantages:
reduction in number of plants necessary to be held ir>2 aerve to be used in case of plant breakdown,-
e nce of excess capacity by staggering
.O const:uction of plants to more closely parallel load growth, and permitting economic loading of the generating plants depending on size and location of load demands on the system. These pooling arrangements reach substantial size.
13 Because they can afford those efficiencies, and are so common, the AEC will undoubtedly encounter pooling arrangements forming the necessary support for some of the plants it will license. And it will need to determine whether such arrangements tend to create or maintain a situation incon-13 sistent with the anti-trust laws. In doing this it will need to apply the same standards I have already discussed. There may be circumstances in which it would be necessary to determine whether i parties seeking participation in pools are re-quired to do so because they are unable to enter 13 into other similarly beneficial and less restric-tive arrangements. It will need to determine whether the efficiencies gained by a pooling ar-l rangement outweigh the reduction in diversity,
- rivalry, and innovation created by the joinder of a number of competitors in a common program. If
$1/ citation omitted; Joint Committeo I at 11.
l 1
lC
. . , - . , . . . - . . . .a
D participation in the pool is justified, the AEC must insure fairness of the terms along the lines O. previously discussed. In particular, pooling ar-rangements which reserve major benefits to some companies and exclude others, with the result that the favored companies gain a decisive competitive advantage, would be inconsistent with antitrust policy. And we would not be inclined to accept O 7 the view that some companies should be excluded, or the terms of their entry made unduly burden-some, solely because their participation givea them substantial benefits but offers relatively little to other participants. Although there may sometimes be a basis for urging small utilities to C) join with others before joining the pool in order to bring more economies to the pool it is still true that a small company affords to the pool the same proportional advantages as any equally sized portion of any of the larger companies in the pool.
Likewise, Walter B. Comegys, acting Associated Attorney General in charge of the Justice Department's Antitrust Division, recognized that any service which "would be an intricate part of lO j the (licensed) facility" should be subject to antLtrust re-1 l view 6_2/:
Mr. England. One further brief question: If the O smaller utility were only looking to share power from the pool but were not looking for ownership participation in the nuclear power plant, would the AEC have jurisdiction to entertain his peti-tion?
O Mr. Comegys. I could not answer that question, sir, until I saw the entire arrangement. I think that you do not license the pool. The license would be the facility but maybe the pool would be an intricate part of the facility or vice versa.
C) I am sure you know that one type of pooling ar-rangement is where one of the joint venturers builds a plant this year and it serves all for a time and as demand grows, another aspect of the pooling provision would require another joint ven-O 62/ emphasis added; Joint Committee I at 134.
O
.O turer to add to a pool a second plant that he did n t have to build up to that time. So the various
~O types of pooling arrangements or other arrange-ments are myriad.
Thus, the Justice Department officials recognized that if pooling or coordination services are utilized by a utility in an anticom-
)
petitivo manner in connection with a licensed facility, requiring non-discriminatory access to these services is essential in order to ensure that the facility does not "create or maintain" an an-ticompetitive situation. The cost of the nuclear power is irrel-evant. Likewise, it does not matter whether the neighboring utility actually purchases any nuclear power.
Q,.
Another indication that Congress was not focusing sole-ly on the relative cost of nuclear power was the repeated refer-ence during the Joint Committee hearings to the need to ensure that licensees which dominated the transmission facilities in a service area provide non-discriminatory access to wheeling ser-vices on their transmission facilities. Numerous witnesses tes-
,O tified during the Joint Committee's hearings about instances in which dominant utilities were not permitting competing utilities to use wheeling services.s3/ As a result, the competing utili-ties had no choice but to purchase power from the dominant utili-l l ty. The Committee was referred to litigation in which the Jus-l tice Department alleged that a dominant utility's refusal to pro-lO vide wheeling services violated the antimonopoly provisions of (O
63/ Remarks of Mr. Donnem, official in the Department of Justice l Antitrust Division (Joint Committee I at 9-10).
i l
O ,
O >
the Sherman Act, 15 U.S.C. SS1 and 2.64/ The Committee also re-O printed a court decision which held that the Securities and Ex-change Commission, in evaluating a proposal by a dominant utility to acquire a utility operating a nuclear facility, must take into O account the anticompetitive effects of a dominant utility's re-fusal to wheel.65/ Because wheeling is needed to buy third party power, the concern of Congress about the need for non-discrimina-O tory access to wheeling services was not based on an assumption of low cost power.
Indeed, the concerns underlying the 1970 amendments O indicate that an increase in the relative cost of nuclear power heightens the need for continued imposition of the antitrust con-ditions. Again, antitrust conditions which require access to O coordination and wheeling services make it possible for a utility to buy power from an alternative supplier. If the licensee is the dominant utility in a geographic area and its rates rise, 0- anticompetitive practices by the dominant utility which preclude accass to coordination and wheeling services would force compet-ing utilities to buy this more expensive power. Hence, an in-
'I) crease in nuclear costs exacerbates the anticompetitive situation to an even greater extent.
O l
64/ Joint Committee I at 79-80. This litigation culminated in l the Supreme Court decision in Otter Tail Power Co. v. United l States, 410 U.S. 366 (1973), in which the Court held that the utility violated thase provisions of the Sherman Act.
lO l
65/ Joint Committee I at 259-69.
O l
0-B. NRC PRECEDENT REFLECTS THE NRC'S RECOG-NITION THAT FACTORS OTHER THAN THE COST O OF NUCLEAR POWER CAN BE THE BASIS FOR IMPOSITION OF ANTITRUST LICENSE CONDITIONS Edison goes on to argue that NRC precedent supports its position that antitrust conditions are appropriate only if nu
- clear power is low cost. Edison points to the handful of NRC decisions in which an antitrust review was litigated and the scope of the NRC's authority pursuant to section 105 was at is-sue. As shown below, the NRC decisions indicate that the NRC recognizes that its authority to impose antitrust conditions re-quiring non-discriminatory access to coordination and other ser-vices associated with a nuclear facility does not depend on the relative cost of the nuclear power.
The antitrust proceeding in Louisiana Power and Light Co. (Waterford Steam Electric Generating Station, Unit 3)
("Waterford"), Docket No. 50-382A, presented the NRC with its first opportunity to discuss the scope of Section 105. Waterford addressed an application for a permit by Louisiana Power and Light company authorizing construction of a 1,065 megawatt nu-clear plant. The Attorney General negotiated an agreement with the applicant pursuant to which the applicant agreed to antitrust conditions an part of the permit. The conditions ensured that competing utilities had access to coordination arrangements.
According to the Attorney General, the antitrust conditions would provide "prompt relief against many of the alleged anti-competi-tive practices of the applicant". CLI-73-7, 6 AEC 48 (1973).
Several competing utilities petitioned for permission to inter-O
s O-
- 100 -
vene and asked the NRC to conduct an antitrust hearing. In eval-O uating these petitions, the NRC analyzed the scope of its anti-trust review authority. The NRC said that the standard in Sec-tion 105(a):
o V requires that: (1) the allegations raised by petitioners describe a situation inconsistent with the antitrust laws or the policies clearly under-lying these laws, and (2) the specified situation be "created" or "maintained" by "the activities under the license". Thus, it would be insuffi-O cient for a petitioner simply to describe a situa-tion inconsistent with the antitrust laws, regard-less of how grievous the situation might appear to be. A meaningful nexus must be established be-tween the situation and the "activities under the license". In this connection, the relationship of O the specific nuclear facility to the applicant's total system power pool, e.g., size, type of own-ership, physical interconnection, may need to be evaluated. Generally, "activities under the license" would not necessarily include all the applicant's generation, transmission, and distri-O bution of electricity. on the other hand "activi-ties under the license," in most circumstances, would not be limited to construction and operation l of the facility to be licensed. Careful analysis
! of the facts in each case is necessary, particu-larly in view of the ground breaking nature of the O initial decisions in this new area of the Commis-sion's responsibility.
6 AEC at 49. The NRC granted the petition which sought imposi-tion of an antitrust condition requiring the applicant to provide non-discriminatory access to the facility. The NRC found that the other intervenors, who sought to challenge the Applicants' allegedly discriminatory practices regarding interconnections, wheeling and sales of power, had not specified "the relationship, l if any, between these practices and the "activities under the license" involved in this proceeding." Id. The NRC remanded the
,0 l proceeding to the Licensing Board and gave the intervonors the
,O
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- 101 - ,
I opportunity to provide the missing information.
O' The Licensing Board applied this criteria and granted the hearing petitions. LBP-73-46, 6 AEC 1168 (1973). The Li-censing Board began its analysis by summarizing the intervenor's O allegations 66/:
The petitions, fairly read, encompass a common complaint as to the nature of the anticompetitive acts alleged and the effect on the competitive
() situation alleged to flow from Applicant's con-struction of Waterford Station Unit 3 (Waterford 3), a 1,065 megawatta nuclear facility. They al-lege a monopoly in and an attempt to monopolize the construction and ownership of large, low cost, electric generating units in Applicant's area.
O This alleged monopoly of generational facilities is maintained, it is further alleged, by a monop-oly by Applicant of bulk power transmission facil-ities. It is further alleged that petitioners' cost disadvantage is exacerbated due to Appli-cant's alleged refusal to enter into coordinated peration agreements. In the absence of such O agreements or transmission facilities that could permit petitioners to coordinate among themselves, the petitioners claim their only option is to op-erate as isolated power producers. This results l
in even higher unit costs, thus increasing their
.<3 competitive disadvantage and lessening incentives ,
to compete in the production or sale of electric power.
The Licensing Board recognized that the operation of j9 the proposed nuclear facility would exacerbate the anticompeti-tive sitration by (1) encouraging the applicant to expand its an-ticompetitive practices to ensure markets for the nuclear oower,
() and (2) expanding the scope of coordination services and, therefore, the adverse impact of the applicants' exclusionary practices:
i O
66/ Id. at 1169-70.
l 0
O
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(1) Applicant has or is attempting to acquire a O monopoly of large low cost electrical generating units in the relevant geographic market; (2) Control over the bulk power transmission sys-tem in the relevant geographic market is fundamen-tal to the creation ~or maintenance of such a mon-O opoly, and Applicant has a monopoly of facilities for the transmission of bulk power and power for system coordination; (3) Applicant has or is attempting to acquire a monopoly in coordination reserve power sales; O
(4) Applicant alone or in combination with others attempted to hinder or prevent efforts by the petitioners to constructctheir own transmission systems for bulk power and coordinating power.
This conduct of Applicant, whether legal or illegal, was intended to maintain its monopoly O positions; (5) ConstructionofWaterford3wobldmaintainor strengthen Applicant's monopoly position by pro-viding Applicant with the ability to serve the
.(3 increasing demands _of present customers and the demands of new customers while foreclosi.7g peti-tioners from the ability to serve these demands; (6) Construction of Waterford 3 would materially l assist Applicant in providing for its own coordi-nation and reserve sharing needs without entering 49 into agreements with intervenors.
Id. at 1169-70.
Thus, the Licensing Board recognized that the increase in market power which would accompany operation of the nuclear facility would occur regardless of whether the nuclear power was low cost because the applicant was excluding its competitors from 10 access to alternative suppliers, l
i The NRC affirmed this decision. CLI-73-25, 6 AEC 619 l (1973). In doing so, the NRC again clarified the scope of its O antitrust review authority:
O
4 q.. ,
- 1 q
- ? y
. ,. - 103 -
/
In our view, the proper scope of antitrust review
.O turns upon the circumstances of each cose. The relationehip'of the specific nuclear > facility to the appliunt's total system or ' power pool should be evaluated in every cese. Denial of. access to trar.umission systems would be more appropriate for consideration where the systems wore built in con-O nection wit.h a nuclear unit than w,here the systems solely-linked non-nuclear. facilities and had been
, constructed long before application for an AEC
. > license,.. While.the p?copriety of pooling arrange-
.msnts and physical interconnectionn could certain-
'ly be conaidared in appropriate cases, such mat-ters in most circumstances could not bo dealt with
- )e by this Commission where no meaningful tie exists with nuclear facilith -
IA. at 621.
g Significantly, nowhere in its analysis does the NPC suggest that thaa relative cost of nuclear power would affect either (1) the nexus between the nuclear facility and the alleged
- O di riminat ry Practices regarding interconnection and other ser-vices, or (2) the importance of access to these services. In-stead, the NRC recognized that the need for non-discriminatory 8CC&88 t the86 8ervi 08 18 independent of the relative cost of
!O the nuclear power.
This rame reasoning underlies the NitC's anal,ysis in Kansas Gas & Electric Co. (Wolf Creek Generating Station, Unit No. 1) ("Wolf Creek"), ALAB-279, 1 NRC 559 (1975). Wolf Creek
(
involved review of an application for a permit seeking authoriza-l ti n t natruct a 1180 megawatt nuclear facility. The O
Attorney General recommended that cortain conditions be imposed on the permit and the applicant agreed. The conditions imposed three obligations on the applicant
.O First, the applicant must offer the cooperative f the right to purchase an ownership interest with a .
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share in the power generated by the Wolf Creek facility or, at the cooperative's option, to sell
() it a portion of that power. Second, in the event of the partial or total unavailability of the co-operative's share of the Wolf Creek power, the applicant must, at the cooperative's option, either (a) supply the cooperative with an equiva-lent am unt f power; or (b) transmit across its O lines, i.e., "wheel", that amount of power ob-tained by the cooperative from some other source.
' Third, the cooperative may elect to have a portion of its Wolf Creek power "wheeled out" by the ap-plicant; i.e., transmitted to some third party.
If the cooperative makes this election, the appli-O cant must "wheel in" an equivalent amount of power at the cooperative's request.
footnotes omitted; Id. at 562-63.
The cooperative filed a motion to intervene and re-z) quested an antitrust hearing. The cooperative wanted to purchase an ownership interest in the facility pursuant to the license conditions recommended by the Attorney General. But the coopera-q) tive argued that this option was "illusory" absent the access to transmission services on applicant's transmission lines needed to be able to purchase supplemental power from other suppliers. Id.
)
at 567.
L The applicant objected. It argued that its refusal to wheel supplemental power was an existing policy and, hence, has
)
no "causal connection" with its proposed operation of the nuclear l
plant." Id.
The Appeal Board rejected the applicant's contention
)
L and affirmed the Licensing Board's grant of the petitions. The '
i Appeal Board noted that "the Commission's antitrust mandate ox-tends only to anticompetitive situations intertwined with or ex-acerbated by the award of a license to construct or operate a
@ t L
O.
- 105 -
nuclear facility." Id. at 569. The Board observed that this.
O could include activities associated with operation of the facili-ty:
The words of the statute upon which the applicant n relies direct the Commission to consider not only v whether granting a license would "create" an anti-competitive situation but also whether it would "maintain" one. Thus, to the extent the appli-cant's argument suggests that the Commission's cognizance under section 105c is limited to anti-
. competitive consequences directly attributable to
'd applicant's use of the nuclear plant and its out-put, it makes no sense. As the staff points out, for activities under a license to "maintain" a pre-existing situation inconsistent with the an-titrust laws, some conduct of the applicant apart from its license activities must have been the O "cause" for bringing about those anticompetitive conditions. Nothing in Section 105c suggests that Congress wanted the Commission to focus on an ap-plicant's extra-license conduct when determining whether an anticompetitive situation would be "maintained," but to close its eyes to that con-
,O duct in deciding whether such a situation would be r
"created." Indeed, were we to accept the dichot-omy inherent in the applicant's position, we would be at a loss to perceive how a licensing board should proceed when it is alleged -- as it is in this case -- that granting a construction permit O would both create and maintain an anticompetitive situation, footnotes omitted; emphasis in the original; Id. at Sud.
Moreover, the Board observed that Congress contemplated
)
that antitrust review should consider whether the applicant domi-nates transmission facilities and excludes competing utilities from the access to these facilities needed for wheeling services.
Id. at 571.
Thus, Wolf Creek, too, emphasizes that the NRC's anti-trust review authority encompasses any services associated with a nuclear facility -- including coordination and wheeling service -
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- if the applicant's anticompetitive practices in performing this service "is intertwined with or exacerbated by the award of a li-conse to construct a nuclear facility." The impact of such an-ticompetitive practices is wholly independent from the relative cost of the nuclear power or, indeed, whether a competing utility intends to buy nuclear power.67/
This reasoning was applied once again by the Appeal O Board in its subsequent decision in Consumers Power Co. (Midland Plant, Units 1 and 2) ("Midland"), ALAB-452, 6 NRC 892 (1977).
Midland is especially instructive because, unlike waterford and
'O Wolf Creek, this decision addressed the merits of an antitrust review subsequent to an evidentiary hearing. In this construc-tion permit proceeding, the Attorney General recommended that an U antitrust hearing be conducted. Several competing utilities in-tervened and urged adoption of antitrust conditions. The Appeal Board found that the licensed facility would enhance the appli-O cant's existing domination of generation and transmission facili-ties and, hence, exacerbate the applicant's anticompetitive prac-tice of excluding its competitors from access to bulk power sup-C) plies. Specifically, the Board found that the market for coor-dination services was a distinct market for antitrust analysis O 67/ Although the Appeal Board found that it had the authority to grant the type of relief requested by the cooperative, it found that the cooperative had failed to (1) show why the practices of the applicant were inconsistent with antitrust policies, and (2) describe the relief it sought. Id. at 575-c 76. As a result, the Board remanded the proceeding and gave v the cooperative the opportunity to file an amended pleading to correct these deficiencies. Id. at 577.
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pursuant to Section 105. The Board noted that the applicant con- l l
trolled 80 percent of generating capacity, 85 percent of all !
transmission lines and 98 percent of lines 138 kV or higher in the relevant geographic market. 6 NRC at 1005. The Board found that the applicant used its dominant role to exclude competitors from wheeling and coordination services and power pools. Id. at 1036-89. The Board also noted, that, as a practical matter, the
) competing utilities could not construct a large generating facil-ity absent such services and could not construct duplicative transmission lines. Id. at 933, 1095. The Board recognized that
) the applicant's anticompetitive conduct prevented its competitors "from turning to the most economical sources (of power) and mak-ing the most efficient uses of baseload power." Id. at 1095. ;
) Moreover, the NRC found that these anticompetitive ac-tivities had a sufficient nexus to the proposed nuclear genera-ting facility to justify imposition of antitrust license condi-
) tions:
Now Consumers wishes to increase its efficiency by installing large nuclear powered generating units.
Manifestly, this will exacerbate the anticompeti-tive situation.
)
To be sure, the Board did emphasize the need for non-discriminatory access to bulk power as a way of ensuring access
) to nuclear power. But this is understandable because the inter-venors were seeking access to the nuclear power. The Board's l
l emphasis on the impact of the facility on the applicant's domina-tion of generation and transmission in the relevant geographic l
highlighted its concern that the addition of this new power and
)
l l -
108 -
l the associated facilities would "exacercate the anti-competitive situation" regardless of whether the power was low cost.6_8/
The most recent litigated decision involving the NRC's antitrust review authority confirms this analysis. In Alabama Power Co. (Joseph M. Farley Nuclear Plant, Units 1 and 2) ("Far-ley II"), ALAB-646, 13 NRC 1027 (1981), the Appeal Board cited Midland and found that the coordination services market and re-
) tail service markets are distinct markets for purposes of anti-trust analysis. The Appeal Board in Parley II noted that the applicant had the dominant share of generation and transmission
) in the relevant area and used this domination in an anticompeti-tive manner to control the coordination services and retail mar-kets service and discriminate against its competitors. Id. at
) 1069-70.
The Board recognized that the nuclear plant would in-crease the cost efficiencies achievable through the coordination
) services market and, hence, increase the anticompetitive impact of the applicant's discriminatory practices. The Board also recognized that the new transmission facilities which would ac-
) company the nuclear plant would exacerbate the applicant's mono-poly power over transmission services. Hence, the Board ordered the applicant to provide non-discriminatory access to transmis-O sion services. M. at 1108-10.
68/ The Appeal Board remanded the proceeding to the Idcensing l Board because of the applicant's apparent willingness to sell ownership interests in the plant. M. at 1098-99. The par-ties reached a settlement which was approved by the NRC. 12 NRC 177 (1980),
r C
I
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P Moreover, the Board recognized that access to these- i
) services was not tied to actual purchase of the nuclear power.
The Board found that one of the intervenors -- Municipal Electric -
Utility Association of Alabama (MEUA) -- did not compete with the
)' applicant in the retail market and, therefore, was not entiitled to be able to purchase an ownership interest in the plant. Ld .
at 1109-10. But the Board found that, because the facility would ,
) heighten the applicant's domination of transmission facilities, this would exacerbate the existing anticompetitive practices of the applicant regarding access to the facilities regardless of the cost advantages, if any, of nuclear power. Consequently, the l Board found that MEUA was entitled only to non-discriminatory access to transmission services.
The NRC declined to exercise its discretionary review l authority over the Appeal Board's decision and the decision be-came the final action of the NRC. ;
The Eleventh Circuit rejected the applicant's petition l for review and affirmed the NRC decision. Alabama Power Co. v.
l NRC, 692 F.2d 1362 (llth Cir. 1982), cert denied, 464 U.S. 816 (1983). The court affirmed the NRC's consideration of prior an-ticompetitive conduct of an applicant to determine whether an .
l unconditional license for the nuclear facility would allow the
) applicant to "maintain" an anticompetitive situation. Ld. at 1367-68. The court also affirmed the NRC's finding that the t
wholesale retail and coordination service markets represent sepa- (
) rate markets which were dominated by the applicant and that the license would exacerbate the anticompetitive situation in each r
i 3 l i
'O
- 110 -
market. Id. at 1369. Consequently, the court found that the O NRC's imposition of antitrust conditions dealing separately with (1) the ability to purchase an ownership interest in the facili-ty, and (2) access to the applicant's transmission facilities,
- O was "not an abuse of nor beyond [the NRC's) delegated discre-tion." Thus, the court recognized that the cost attractiveness of nuclear power has nothing at all to do with the NRC's author-
=O ity to impose antitrust conditions to ensure non-discriminatory access to an applicant's transmission facilities to use coordina-tion and wheeling services.
() Hence, NRC precedent undermines Edison's argument that the sole, lawful basis for the imposition of antitrust license conditions is the assumption that nuclear power is low cost.
!O C. THE EVENTS CITED BY EDISON DO NOT UNDERMINE THE CONCERNS UNDERLYING THE NRC'S DECISION TO IMPOSE THE ANTITRUST LICENSE CONDITIONS In arguing that the key factor underlying the NRC's ;
, decision to impose the antitrust license conditions in this pro-l coeding was the anticipated low cost of the nuclear power gener-ated by the CAPCO plants, Edison points to statements in which
- O the Licensing and Appeal Boards refer to the anticipated cost of the nuclear power.
Edison goes on to review the evidentiary record in the l0 l antitrust proceeding and points to certain evidence which pur-portedly reflects the expectation that nuclear power would be lou ,
cost base load power (App. 33-36).
Edison also notes other aspects of the CAPCO program as
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presented to the NRC in the antitrust proceeding. These include O- the substantial scope of the proposed nuclear generation, the plan to build substantial transmission-lines to transmit the nu-clear power and the CAPCO pool arrangement to provide coordina-O tion services (App. 41-42).
But, again, Edison argues that "(t]he critical fact, however, for purposes of Section 105(c) review, and the fact at 13 issue today, was the low cost of nuclear power" (App. 42).
Edison argues that, in view of subsequent events, the ;
underlying basis for the imposition of the antitrust conditions 43 -- the low cost of nuclear power -- has been nullified. As noted, Edison cites the (1) increased cost of nuclear power, (2) the shrunken CAPCO nuclear program resulting from the cancella- r O tion of Davis-Besse Units 2 and 3 and the indefinite suspension of Perry Unit 2, and (3) termination of the CAPCO pool.
However, Edison totally mischaracterizes the Licensing H3 and Appeal Boards' reasons for imposing the antitrust licenso conditions and impact of the events it cites. As noted in the summary of the Boards' decisions, the Boards' concerns were not !
O based on the assumption that nuclear power would be the cheapest source of base load power. Instead, the Boards were concerned i
! about th6 way in which this new generation and the associated lO transmission facilities would heighten the Applicants' market
! power and the incentive to continue their pervasive anticompeti-tive conduct. The Licensing Board noted "the size of the five 13 large generating stations involved in this license proceeding and the substantial contribution they will make to the resources of
'O
O-
- 112 - i the CAPCO pool and in particular to the satisfaction of its base O load requirements" 5 NRC at 240. The Licensing Board recognized that, in view of the Applicants' pervasive and coordinated anticompetitive conduct, any new power generation by the Applicants would simply allow them to expand their market power to exclusively serve the increased demands of present customers and the demands of new customers. Moreover, the Licensing Board O realized that the new generation would give the Applicants even greater incentive to prevent the CCCT utilities from purchasing power from alternative suppliers and to thereby ensure a market O for the new generation.
The NRC's recognition that the anticipated cost of ,
nuclear power, per se, was not the basis for the imposition of ,
O the antitrust license conditions is reflected in the Appeal r
Board's decision to reject Mr. Sharfman's proposal to restrict the scope of the conditions ensuring non-aiscriminatory access to O coordination and wheeling services to customers purchasing nu-clear power or ownership interests in the plants. 10 NRC at 290-294. The Appeal Board noted that this restriction would allow C) the Applicantn to continue their anticompetitive conduct in con-nection with pooling and coordination services and to thereby undermine the competitive position of utilities which did not buy I) nuclear power. Id. at 291. That would be inconsistent with the clear "message" conveyed by Section 105 of the Act that "Congress did not want nuclear plants authorized in circumstances that O would create or maintain anticompetitive situations without ;
i license conditions to address them", noted the Board. Id.
i P
O 1
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Therefore, the Appeal Board found that this restriction would be inconsistent with the NRC's broad mandate to impose antitrust conditions if the license activity would cause or continue situa-tions inconsistent with antitrust requirements. Id. at 284.
O Thus, the NRC was not looking at the relative cost of <
the nuclear power but at the competitive impact of the presence of a new and substantial baseload power generation source for the
- O CAPCO members alone with the associated new transmission facili-ties.
This concern applies with full force now. As noted,
- O Perry unit i and Davis-sesse Unit 1 are in full commercial op-eration and provide substantial base load power. Edison and the other Applicants have repeatedly indicated that the plants are
- O important parts of their overall generating program and will i remain in full commercial operation. '
Likewise, the second factor reviewed by the Boards --
!O the impact of the construction of the transmission facilities j associated with the plants -- had nothing to do with any assump-tions about the relative cost of nuclear power as a source of lO base load power. The Licensing Board noted that the construction i of extensive, high voltage transmission lines in conjunction with i
the nuclear plants would exacerbate the Applicants' exclusionary ;
O tactics regarding access to these facilities for wheeling and l
- coordination services l
- . . . there is a direct tie between the generating station construction program and the transmission
- O program which Applicants describe as complementing }
it. As described in CAPCO memoranda, far more is !
I contemplated than the mere extension of a line !
r i
lo :
01
- 114 -
from the site of the proposed nuclear station to the closest terminal of the Applicant in whose-O service area of (sic) the plant is to be located.
Applicants are engaged in substantial planning studies and construction programs specifically intended to develop a plan for high voltage transmission at low cost among CAPCO members.
There will be commingling, but the commingling
() will be on an extraordinary scale.
5 NRC at 239. That-Board also noted that construction of the new lines would heighten the barriera to construction of other lines
() by the non-CAPCO utilities:
Although access to transmission facilities is a necessary concomitant of reliable and economic energy production, small systems frequently find it infeasible to construct duplicative transmis-() sion facilities. Both economic and environmental considerations prevent such construction. Appli-cants' construction of the high voltage transmis-sion grid necessitated in large part by the Davis-Besse and Perry plant additions, together with the existence of excess capacity on their present sys-C) tems, render the construction of duplicative transmission lines essentially impossible.
citations omitted; 5 NRC at 156. At the same time, the Licensing Board noted that the new lines would facilitate even more extensive coordination services. Id. at 239-40. Thus, the Board recognized that construction of the new lines would exacerbate the adverse competitive impact of the Applicants' exclusionary policies. Id. That would exacerbate the anticompetitive I
l situation. This concern about the impact of the construction of i
- the new transmission lines had nothing at all to do with any jO l assumptions about the cost of nuclear power.
l This concern is fully applicable now. Several ex-I tensive, high voltage transmission lines have been constructed to
- O i connect the nuclear plants with the Applicants' transmission not-
{
1 l
lO 1
l
- 115 - i l
work. These include at least four 345 kV transmission lines 3 connecting Perry Unit 1 and the rest of the CAPCO transmission
-system 69/ and at least one 345 kV line between Davis-Besse and l
Beaver Valley.10/ These new transmission lines have increased
[) the scope of the transmission network owned and operated by the Applicants. Therefore, construction of these new lines heightens the cost efficiencies and the competitive advantage associated 3 with access to these lines. Thus, these new facilities would exacerbate the anticompetitive impact of the exclusionary policies pursued by the Applicants prior to imposition of the C) antitrust conditions.
Indeed, the increased nuclear power costs cited by Edi-5 son increase the need for the antitrust conditions to prevent re-O emergence of"the anticompetitive activities. Prior to the im-position of the antitrust conditions, the Applicants, including Edison, unlawfully refused to provide the wheeling services ,
O needed by their customers to purchase power from alternative sup-pliers. The need for access to such services in a competitive market is obviously heightened if the rates of the traditional 1
() supplier are higher than the rates of alternative suppliers.
The same analysis applies to the other events cited by 69/ "Long-Term Forecast Report -- Electric -- Submitted To the
() Public Utilities Commission Of Ohio, Forecast And Power
. Siting Division (May 15, 1987)", filed by Centerior Energy l Corp. (Appendix L); CEI 1986 Annual Report (Form 1) filed with the Federal Energy Regulatory Commission (FERC), p. 216 (Account 107) (Appendix M); Edison's response to Regulatory Guide 9.3, item C (May 12, 1981) (Appendix N).
O 10/ Edison 1986 FERC Form 1, p. 422 (Appendix 0).
i O i
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- 116 -
Edison. As just shown, despite the reduced scope of the nuclear O plant construction program, the Perry and Davis-Besse plants are in full commercial operation and produce substantial base load power. Hence, the Appeal Board's concern about the way which the O new generation would motivate the Applicants to maintain their anticompetitive acts is still applicable even though not all five plants were built.
C Likewise, these plants are tied to the new transmission lines. Consequently, the Boards' concern about the way an ex-panded transmission network would heighten the competitive harm lO of the Applicants' exclusionary policies still applies despite the reduced scope of the plant construction program.
The final event cited by Edison -- the termination of O the CAPCO pool -- also does not undermine the Appeal Board's l analysis. The Board found that both before and after l
establishment of the CAPCO pool, the Applicants denied competi-O tors access to transmission facilities to preclude the other utilities from using the coordination and other services needed to compete effectively. The Board recognized that construction O of the proposed facilities and the associated transmission fa-cilities would heighten the Applicants' market power absent ac-cess to these services. Therefore, the Board ordered non-dis-O criminatory access to coordination services to ensure that the utilities could compete effectively.
The purported termination of the CAPCO pool does not O affect the Boards' analysis. Despite the termination of the pool, the Applicants' transmission facilities are still used and O
i
[1 l,
- 117 -
r needed for coordination servi-r.. Therefore, the importance of
() access to these servicse '., not changed. The antitrust condi- ,
tions are still needed ' Te that the Applicants do not re- ;
vive their pervasive anticompetitive conduct which, again, ter- [
O minated only because of the imposition of the antitrust condi-tions. ';
VII. CONCLUSION ,
() For each of the foregoing reasons, Edison's application should be summarily dismissed or denied.
Respectfully submitted, O
Marilyn G. Zack i Director of Law !
June W. Wiener i Chief Assistant Director of Law William M. Ondrey Gruber
() Assistant Director of Law City Hall, Room 106 '
601 Lakeside Avenue Cleveland, OH 44114 l' l Telephone 216) 664-2000 O hchr>{$(W/+ ,
ruk h.Ok Reu en Goldberg !
Kenneth M. Albert l Goldberg, Fieldman & Letham, P.C. ,
1100 Fifteenth Street, N.W. :
C) Washington, D.C. 20005 f Telephone: (202) 463-8300 i
Attorneys for '
City of Cleveland, Ohio 0 -
i l
l h
O h February 19, 1988 I
I O r
D 3
J
)
) APPENDIX A D
,' Q O
O O
l 1
0
l i
k UNITED STATES 0- 3:M NUCLEAR REGULATORY C;hM!SS Cu In the Matter of
) NRC Okt. No. 50-346A
) THE TOLEDO EDISON COMPANY and THE CLEVELAND ELECTRIC ILLUMINATING )
i COMPANY )
(Davis-Besse Nuclear Power- Station. )
l Unit 1)
THE CLEYELAND ELECTRIC ILLUMINATING ) NRC Okt. Nos. 50-440A COMPANY. ET AL. ) 50-441A
)
(Perry) 1&2 Nuclear Powe.- Plant, Units )
ORDER MODIFYING ANTITRUST LICENSE CONDITION NO. 3 OF DAVIS-BESSE. UNIT 1. LICENSE NO. NPF-3 AND PERRY UNITS 1 AND 2. CPPR-148. CPPR-149 The Cleveland Electric Illusinating Company ("CEI") is the co-holder of l
) an operating license for the Davis-Besse Unit 1 (License No. NPF-3) and a co-permittee of construction permits for Perry Units 1 and 2 (CPPR f48, CPPR-149) issued by the Nuolear Regulatory Comission ("NRC"). The Davis-Besse 1 oper-
) ating license was issued on April 22, 1977. The Perry 1 and 2 construction permits were issued on May 3,1977. CEI is also a co-applicant for construction permits for the Davis-Besse Units 2 & 3. An Atomic Safety and Licensing Board-
) ordered inclusion of antitrust if cense conditions in the license and permits I for the Davis-Besse and Perry units. Toledo Edison Co. & Cleveland Electric Illuminating Co._, LBP-77-1, 5 NRC 133 (1977).
l
) II On January 4,1978, the City of Cleveland ("City") requisted the NRC to D take enforcernent action against CEI for violations of Antitrust License Condition No. 3 in its c;erating license and construction pemits. By letter dated February 28, 1978, the Assistant Attomey General, Antitmst
) Division, advised the NRC of the Depart: rent of Justice's support for the City's request.
Operating License No. NPF-3 and Construction ?ernits CPPR-148 and CFPR-149
) estn contain antitrust conoitions. Antitrust Condition tio. 3 in each of these
O 2
" * * " * " P
- i " "***
O
'(3) Applicants _ shall engage in wheeling for and at the request of other entities in the CCCT:
a) of electric energy from delivery points of Appiteants to the
'"*I *# (I *' I ' "'d '
O ^
b) of power generated by or available to the other entity, as a result of its ownership or entitlements if in generating. facilities, to delivery points of Applicants designated by the other entity.
'Such wheeling services shall be availabl.e with respect to any unused O capacity on the transmission linesInof theApplicants, the use event Applicants mustofreduce which will not jeopardize < Applicants' system.
wheeling services to other entities due to lack of capacity, such reduction shall not be effected until reductions of at least 5 perce and thereafter shall be made in proportion to reductions imposed upon other O Applicants to this proceeding. 2/
"App 1tcants shall rnake reasonable provisions for disclosed transmission requirements of other entities in the CCCT in planning future istransmission By "disclosed" meant either the givingindi.vidua11y or within the CAPCO grouping.f reasonable advance
- O
~ entities utilizing wheeling services to be mde available by Applicants."
This license condition was ordered to be included in all the licenses involved by an Atomic Safety and Licensing Board that concluded, a.fter a fuit evidentia lO
' hearing, that the activities under the licenses, of CEI (and others) violated each
' of the antitrust laws specified in .Section 105a of the Atomic Energy Act of 1954 as amended, 42 U.S.C. 52135(a), 5 NRC 133 (January 6,1977). The Licensing lO l
Board's decision is now on appeal before the Atemic Safety and Licensing A Board.
- }/ Entitlement includes but is not (Footnote ifmited to power mai available to an enti in License Condition).
pursuant to an exchange agreement."
O "2/ The objective of this requirement is to prevent the the transmitting Applicant deems nonccmpetitive.
to be allowed opportunity to develop bulk power services options even if O this results in reatlocation of CAPCo (Central Area Power C transmission channels. (Footnote in of the effects of Applicants' illegally sustained dominance."
License Condition).
O i
CEI's :otien (filed with other Applicants) for a stay, pending appcal, 7 of the ordered antitmst license conditions, including license condition No.
3, was denied by the Licensing Board,' 5 NRC 452 (1977) and' subsequently by the Appeal Board, 5 NRC 621, ALA8-385 (1977).
O -
III Upon receipt of the City's request for enforcement action, the NRC Staff O undertook an investigation of CEI's recently filed transmission service schedule and wheeling policies. As a result of (t) the NRC Staff investigation, (ii) an analysis of the transmission service schedule filed by CEI with the Federal O Energy Regulatory Connis'sien on January 27, 1978, and (iii) a review of CSI's Answer of March 17, 1978 to the NRC Staff's questiennaire, the Acting Director cf the Office of Nuclear Reactor Regulation on June 28, 1978 issued a Notice O of violation to CEI pursuant to 10 CFR S2.201 of the Cc=iission's Rules of Practice. The Notice also stated that, inter alia, Civil Penalties would be censidered in order to assure ccmpliance. A copy of that Notice is attached lm -3/
hereto as Appendix A. On July 14, 1978, CEI responded to the Notice of lU Violatien aitd generally denied that it had not complied with'Antitmst License l Condition No. 3 as set forth in the Notice.
O Subsequently, Representatives of CEI, the City, and NRC Staff met on August 10, 1978, in an attempt to resolve problems concerning compliance identified in l the Notice of Violation. At the meeting, CEI stated that many provisions of lO its January 27, 1978 transmission service schedule to which the City, NRC Staff.
and Department of Justice objected were necessary because the transmission service m
schedule was meant to apply to the Combined CAPCO Company Territories (CCCT)
U 3f Attacnec to the Notice of Violation as Acpendix 3 was CEI's January 27, 1973 I
transmission tariff with suggested cfianges by the NRC Staff. Appendix 3 is also attached hereto.
lC
f' O ,n rather than just the City. Since the City (and Painesville, Ohio) were the only O entities located in CEI's service area, the Staff si>ggested that CEI draft a more specific transmission service schedule. On September 15, 1978, CEI submitted to -
the Staff a revised transmission schedule. As to the deficiencies found in the O ,
January 27, 1978 schedule, CEI drafted its new schedule so as to ameliorate some.
of the specific objections of the Staff, and City. However, CEI's revised draft contained new anticompetitive restrictions which, in part, form the basis for ,this O Order in i; hat it shows CEI's intent no.t to comply with the 1.icense conditions. A copy of CEI's September 1978 transmission schedule is attached hereto as Appendix C. On November 28, 1978, the NRC Staff met with CEI and the City in a continuing effort to reach agree ent or to narrow the issues concerning CEI's second draft transmission schedule'. However, the participants were unable to agree or narrow the issues at. this r.eeting.
IV l
During the same time period that- the NRC Staff was attempting.to work l
'O out a mutually satisfactory transmission schedule with CEI, the Federal Energy l
i 27,1978 Regulatory Comission (FERC) conducted its own inquiry of CEI's January -
l l
transmission schedule under FERC Docket No. ER 78-194. Evidentiary hearings were
[O held by the FERC on December 19-20, 1978 and an Initial Decision (I.D.) was rendered by the Administrative Law Judge (ALJ) on April 27, 1979. The changes ordered by.
- the ALJ to CEI's January 27, 1978 transmission schedule are attached hereto as O While the ALJ noted that the FERC does not have jurisdiction to enforce Appendix 0.
NRC license conditions, the Initial Decision deals effectively with most items ef ted Those by the NRC Staff to be in violation of Antitrust License Condition No. 3.
O matter 2 not completely covered by the FERC Initial Decision are 1isted as items 3 and 5 in the NRC Notice of Violation (See Appendix A).
Itm 3 c:ncerns the preemotion of available :ransmission capacity by CEI, Tne FE.'tC Admints:ritive '.aw Juoge : aid there was ir.acecua:a --::rd
O 5
support to justify the NRC preemption requiremnt of a five percent reduction O in transmission allocations to other CAPCO members before reducing such services
~
to other entities. However, CEI in its separate negotiations with the NRC
~
Staff and the FERC has expressed a willingness to comply with the NRC five n"
N In view thereof, the NRC Staff has determined percent preemption requirement.
that CEI should file an amendment to the CEI transmission tariff as modified by the FERC Initial Decision to include. the five percent reduction requirement O set forth in Antitrust License Condition No. 3.
In Item 5 of the Notice of Violation, the Acting Director found unreasonable CEI's requirement of filing a separate supplemntal schedule for each wheeling O The FERC Administrative Law Judge noted at pages 23-25 of the Initial request.
Decision that such a requirement in and of itself was not unreasenable under FERC filing requirements and that the filing of contracts governing wholesale.
- O
- service is randated by Section 205(c) of the Federal Pcwer Act. However, the Administrative Law Judge found that CEI's tariff language was redundant and un.
necessarily complica5id and could lead to unnecessary delays in pr6vi'ing:a d re -
O qtJested service. The Administrative Lt.w Judge thereupon modified and simplified the language of the supplemental schedule requirement and allcwed it to remain in the tariff. In view of the modifications an'd simplificatien of the tariff O
language, the NRC Staff isf of the opinion that its concerns set forth f.) Item 5 of the Notice of Violation have been satisfied. Therefore, the NRC Staff will not object to the modified requirement of filing supplemntal schedules for
- O wheeling transactions.
l l 4f sm ine cleveland Electric Illuminat'vf Ccmoany, FERC Occket No. ER 78-194,
- O Initial Decision on Preposed Transmission Tariff, slip op., p.12, (April 27,1979). Letter from William Singham, Principal Rata Engineer, CEI, to Jerom salt =an, Chief, Antitnas. A Indemity Group, Nuclear Reactor Regulation, dated Far .h 17, 1978 i
10 l
l
3 -5 Another matter raised by the FERC Initial Decision pertains to wheeling O .,f po,,7 for.,7.among entities within the Combined CAPCO Company Territories (CCCT). Although the FERC Administrative Law Judge clarified the extent of the transmission service requirement with respect to the municipais and O cooperatives within the CCCT, he did not include other entities or other delivery points as required by the NRC license conditions. NRC License Condition No. 3 requires CEI to wheel power for other entities in the CCCT from delivery points of applicants to the entities and to delivery points of applicants designated by the other entities. Further, entity is defined as any electric generation and/or distribution system or municipality or cooperative with a O statutory right or privilege to engage in either of these functions. Thus , 'the NRC Staff has determined that the CEI should file an amendment to the CEI transmission tartff, as raodified by the FERC Initiai Decision, to expand the- .
' O transmission services to include delfveries for all entities within the CCCT as required by Antitrust License Condition No. 3. .
O y ,
! Frem the foregoing, the Staff has determined that CEI has been in non-compliance with Antitrust License Condition No. 3 of its- operating license and construction permits at least since January 27, 1978, in that CEI has maintained and engaged in a policy and practice of noncompliance with Antitrust conditiort No. 3 of its license and permiN. CEI has approached its responsibility to file a wheeling schedule for the City as if it had not been required as a condition of its operating license and two construction permit: to comply with Antitrust License Condition No. 3. In view of thf t, and the public intarest, the Director of Nuclear Reactor Regulation has determined that, pursuant to 10 CFR 52.204, t.icanse No. NPF-3 and Construction ?er nit Nos. CPPR-148 and 149 snall be U ended L
O
O cff;ct.ive imm:diately to require CEI to file a transmission tariffs 4
ordered by the FERC (Appendix D) and an attached amendment thereto iden tifi d as App ndix E W with the Federal Energy Regulatory Commission O
within twenty-five (25) days after the Order and so file this tariff in conformity with applicable FERC filing requirements.
Accordingly, pursuant to the Atomic Energy Act of 1954, as amended, and the O
Comrnission's regulations in 10 CFR Parts 2 and 50, IT IS HEREBY ORDERED THAT:
Antitrust License Condition fio. 3 of License fio, fiPF-3 and Construction O
Permit' flos. CPPR-148 and 149 shall be amended with the following language added as paragraph (3)c):
The Cleveland Electric Illuminating Company shall file within twenty-five (25,) days of the Order of the Director of fluclear O Reactor Regulation dated June 25 - 1979, the transmission
- service tariff and amendment attached as appendices D and E to the Order in conformity with the applicable filing re-quirements of the Federal Energy Regulatory Commission.
O In view of the matters discussed herein, the Director of fluclear Reactor Regu-l lation has determined that the public interest requires this Order be made effective ir.Tediately, pending further order of the Commission.
)O CEI may, within twenty (20) days after the receipt of this Order, request However, any a hearing with respect to all or any part of this Amendment.
O request for a hearing will not stay the immediate effectiveness of this Order.
If a hearing is requested, the Commission will issue an Order designating the f
time and place of hearing.
In the event a hearing is requested, the issues to O be considered at such hearing shall be:
O $/ Appendix E is CEI's January 27,1978 draf t transtr.ission
~
schedule as modified ER 78-194 and further modi fi ed
- t. ; the FERC on April 27,19/9 in Docket flo.forth in Antitrust Lici,se Condition I by the NRC to toplement requirements set
! fio . 3.
O l
l -S-(1) uhether CEI has been in noncompliance with Antitrust License I j
' Condition No. 3 since January 27, 1978, the date it filed its first trans ,
mission tariff with FERC; and (2) if so, whether this Order should be sustained.
l
)' FOR Tile NUCLEAR REGULATORY COMMISSION wrYWf
[a o T Denton, Dl rector
_~
)- Oft' ice of Nuclear Reactor Regulation
- Dated at Bethesda, Maryla'nd
)this 25th day of June,1979
) Appendices
Enclosures:
A-E l
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3 3
3 D
APPENDIX B O
O O
O O
O
O r
PUBLIC UTILITIES COMMISSION OF OHIO O_.
AN EXECUTIVE
SUMMARY
OF THE RESULTS OF THE REVIEW OF COSTS OF THE PERRY NUCLEAR POWER PLANT TOUCHE ROSS & CO./ NIELSEN-WURSTER GROUP /
CHAPMAN & AS1QCIATES O
AUGUST.1986 O
O O
O l
D -
COST AND SCHEDUI.E HISTORY Over the duration of PNPP, there have been twelve (12) estimates of project cost and schedule. Total project cost estimates increased from O $1.234 billion in February 1973 for the total project (including Unit 2) to
$4.153 billion * (excluding Unit 2) as of December 31,1985. The commercial operation is not anticipated prior to fourth quarter,1986 for Unit 1. The following table summarizes these estimates:
_ PNPP COST AND SCHEDULE ESTIMATES g
Total Cost) Project In-Service Number Estimate Date (1 Billion) Basis Date (Unit 1) 1 2/73 1.234 Total Project 4/79 O 2 10/74 1.444 Total Project 4/79 3 6/75 1.547 Total Project 6/80 -
4 8/76 2.023 Total Project 12/81 lO 5 8/77 2.127 Total Project 12/81 6 2/78 12/81 7 1/79 2.552 Total Project 5/83 0 8 4/80 3.890 Total Project 5/84 9 10/81 2.150 Unit 1 & common 5/84 10 5/83 2.770 Unit 1 & common 5/85 l lO 11 4/84 3.470 Unit 1 & common . 12/85 12 9/84 3.945 . Unit 1 & common 12/85 13 12/85 4.153* Unit 1 & common O
- This figure represents the expenditures incurred through December 31, 1985. CEI estimates additional project costs, including AFUDC, to accumulate at the rate of $2 million per day until the plant is in-service
- The February 1978 definitive estimate of $2.125 billion prepared by gal O was never officially adopted by CEI.
O t
1-7 0
W h
)
)
) APPENDIX C
)
)
)
) ..
)
3
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E 1CE 23, 1933, 8 a.n.
.L.3 622. 9303, ext. 2231 (
Pl?.?? 5 D"Ei EECSED pa
' The Clevelend D.ectd c T15-::.1. . f Co:pe.ny tof.ay emnounced a revision in the estinated cost of co pletion of the Fer:.y Genere',.dng Plant h-oject.
E=;ineering e.nd constru: tion are now estincted tc coat $3.6 tillien, an in:reese ,
.O of $d70 - ' on fron ec.:-liur estin.ates ,
Fe.--y is a joint p o.ieut of CIJC0 (Central Area Power Coo:-dination Gro 7) which inc1* Jer CEI, CTsio Ed sen e.nd its wholly-ovned setsidde..y, hnnsylva .it; 6'v Pen.er, Coledo Edisen e. .d 34uer:n Light-In e.dtition to th ! constraction tud6 t, CII 'says in'.,erest e.nd relt.ted costs of funds nay add et least .M.6 Milion, for e tote.1 esticated cost of $3 2
- O di111ca. n e p r e vi o ; s t o t a 1 , e cts z a t e d i n 1 9 8 3 , w a s p tv. i ti o n .
Iast weet, CLI en:: :ed a delcy of sp to one yer.r in plass to load fuel at Pear / Unit 1, with that activity now pret.icted to take p~ ace in late 1904.
- O zhe $1.6 tillion interest is de. sed on e.
- ist'.r4 trectrent of interest
' chargas e.s p:ovided under Ohio law and Public Utilities Cv ission of Ohio (PJJ0) r.linss. Proposed legiciation in the Ohio legislat.:re could increase interest
~O charses on nrn by as m:anh as $400 -m on. .
CEI says the revised schedule and increased cost of the Perry Project is the ~ result of inplanentation of regulatory require::c*:ts that .%fect the 'inel
.O design an6 construction activitie s. All nccleer power 121r.nts und-r constructio; have been greetly e*fected .by these conditions neaning tine schadulet end tudge s cutt regularly be reviewed.
.*.*eg. .
4 0 ,
' , 9 . , , , -_ . . . , _ .
~.
O
. 2-3e _^ Ja1 loca date for Unit 2, late 1987, e-r'ns unchexe:! at this ti .e.
(
O raaver, as von progresses on vait 1, the Unit 2 schedule vin de evuunted, ne five CANO com-iec are dedicated to ircring that Pem is a safe, reliable facility, according to CEI, stich is im char ,e e of build.ing the tvin O 1205-segavatt gerera+wrs.
CII o.nz 31.n% of the project and win receive a correcpond'.r percentage of the electricity generated. Chio Edison and its Pe=nrylve.nia Ptmer subridiary est 35 2Vp; Toledo Edison,19 91%, and I>cesne Light,13 74%.
10 .
The five co=panies serve sone 7 H194cn people in an industrial crescent across northern and cestral Ohio and veste.-n W'1varia.
- O 0 :.
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APPENDIX D O
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I O
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9 I-5
??.CM : Fublic Info::r tion Department The Cleveland Electric Illur.inating Cc ;eny 622 0300, .?.xt. 27L5 P. O. Eox 5000, Cleveland, Ohio LL101 Or 623-1060 (2L-hou yhene)
FOR RE*EI CTS 133W, A.Mr '
JNT!A.7Y 23y 1950
- c CAPCO 1E45 P2~. EASE The Co .panies in the Centrsl Area Power Coordinating Group (CAPCO) todsy
, ennounced the terr:ination of pisns to build four additional nuclear units presently v
in the desi Cn stage. The estimated cost to bcild those units was $7.3 billion.
- -!c.:ever, construction vill coatinue under en extended schedule on two nuclear units c3 near :Jorth Ferry, Ohio, and another at Shipy;ngpo.-t, Pennsylvania, v
. e rer.ain convinced after considerirq all of the options, that nuclear power is e safe, econo _icel and environmentally superior cethod of generating electricity" seid the statenen- issued by Robe-t
!*. Ginn, President of the v
..b' Clevelend Electric Illu .inating Co:peny, Justin T. Rogers, President of Ohio Edisen, J:' r. F. t:illie: son, C* 4 --an of Toledo Eiison, and John M. Arthur, g3 Chairmen el l'uquesne Light Company. "Accordingly, ,ve are co :pletire three nu: lear v
u.its alreedy well alors in construction."
A::orling to the CAPCO chief executives, the estir.eted dates for co:pletir6
.the three CAPCO nuclear units now under constm: tion have been extended between O,
12 and 36 nonths. Unit 1 at tha Ferry Nuclear Per.cer Plant near I' orth Ferry, Ohio has been rescheduled fro: !'ey 1983 to May 193h; Unit 2 at the Beaver Valley Power s Station et Snippingport, Fennsylvanic from ".sy 1984 to May 1986; and Unit 2 at the Ferry F1snt fro: :'.ay 19c5 to May 1986. Const ruction of these units rarge fro = 32 to 52 per cent co :plete. The new target dates reflect e core realistic time frame m
Tor the construction and licensing of nuclear plar.ts.
U i
(sc re )
m
g s
(
() L e ion.:e.ni e r e::p'_s i n .i , "The politi:a1 end reguletory uncerteinties 1.J u tin; tia ut :rc- construe:. ion of nucles. plar?. hat intenciried folicr. in;
' .c cc:ia?n. 26 .'nree :lle Isler.d. !!c:le:r cor.struction scheduled further ir, n
kJ the future corries greater un:ertainty of etentusi cost. In spite of our
.on d :tiov, res:re.ing nucle:r po.:ct, this uncertainty has conpelled the C/JCO
';o panics to ',errinete those nucler units not yet under actual construction in
() Order to redu:e the futt.e costs to our customers and shareowners," they said.
"T. ese decisions are not vdthout rish,' the joint statement said. "Eecisions ,
.sde .o a.a; .-ill .'fe:t adequa:y of electri:21 supply in the future. The compe..ies I) are cen:c.ned about the reliability of electric ser'.-ice to their customers in the ti.i-l',i'20's - p rtirula rly by the 1993's. These concern: cre beinc continuelly sdd.e:sai as ee h :ompan;. oni . ors the G.-ovth in customer de=and in relation to
.O ,e .pe :it:,," -he enc euti zes can;inued.
The Cf.iC0 Co:penies' plenn for 905 IT.? each of the Units 2 and 3 at the 1
Covis-Desne liueleer Po..er Ste ; ion near Port Clinton, and the 1200 ff. each of C) the E.-ie 1:u:1c:t Plant U. its 1 and 2 at a site nor'$h o.' 3erlin Hei C hts, all l p.-csently in the Ge:ign :t:ce, were terminated.
".he .'. P';O Compenies--Cle celand Electric 111uninating, Duquesne LiSht ,
lC) Ohio 2di:on, Pennsylis iie Pover, e.nd Toledo Edison--serve so=e 2.5 million customers in en industri:1 crescent in northern and cent.-al Ohio snd western Pennsyltenic. The revised projected rate of g.ovth in custo:er denand for
() electricity f or the D'.PCO Companies in the 1930's is in the ran6e of tVO to four per cent each year.
The statenent also ennounced snother decision reached by members of the O '
.. Arco croup. .ne le eelane :lectrie niininotinc company (CII) vill incre sse g its o'.:nership share in the Perry P1. ant, now well along in const ruction. CII,
() (core)
)
3 D-wnich ein build and oper: .e the plant, vill increase its ownership of Perry 1 and 2 by 60 mecevstts per unit. Ohio Edison ownership of each unit trill be reduced by 60 no .,euetts .
CEI will increase its ovnership in each of the two 1205 !G Ferry Units frc: 595 !. (21..b f,) to 375 C.: (31.u%), Ohio Edison (and Penn Pove.-) vin redate their ovnership from 505 IS! (41.880) to 425 24' (35.245). There vill be O no chan6e in the ~ucuesne Light ownership of 165 IE (13.7b%), or in the Toledo Idison o.tnership of 240 E: (19 916) in each unit.
The parcenteges o,' ownership in the 633 !fr: Seaver Vaney liuelear Unit 2, 0 under construction at Shippincport, Pennsylvania, is as follows: CEI,24.h75, Duquesne li,;ht 13.746, Ohio Idison bl.88%, and Toledo Edison 19 91G.
The construct. ion s:hedule and percentages of ownership of the 825 IG h Bruce !*.ansfield Unit 3, also at Shippingport, Pennsylvania, a coal-fired CAP 00 l
unit to be completed later this year, are un:henced.
"Tne In :.tinating Compe.ny's decision to increase our ownership share in 10 the Ferry ?.ueleer Pover Plant, refler.ts CII's be'.ief in and to.__itmen . to n:.: clear power," scid Ginn. "This purchese of en additional 160 mega.catts of the Perry Plant cive us the cepa:ity ve need to meet our customers erpe ted demands for O electrie.1'.; throcGhoat the decede o' the 80's."
l 'lhe I'.lu .instinc :;oupuny said its re vised .'orecast anti:ipetes an averege i
(
l inerecse in .'. emend for electricity oJ 2.65 e year for the nent ten years. As
- O re:en'.~-: et sne year age, in December of 1976, the Company was ferecesting er.
everece annoni Crouth rate o.' 3 3%. The decrease in the growth rete is attributed
.cinif to a r.lovdown in industrin1 growth, the increased evailability of naturel
,0 l
CPS in the '? I service 8:*er , and conser/otion ellorts by customers.
l (acre )
.O .
D L.
D "3y 1)?G e e:ge et to h: te c. ;- r desmar' of L,750 stca.retts," Ginn teid.
.'ith or pe_ches: o.' en in:reese.i sbre of tna terry Ple .t, our Cenerating esp:ity vi] .i he :pp. r:17 '.ely 5301..e:r...ette by 1390. 'le are confident that this increased 0- 'cene.-atin; cepanity will provide adequate supp11es of electricity in our se.-vice area throu-h 1??O."
l.::or:in- to "*= -'luniaeting Company, all o ? the decisions cade have esused
) r.one do. nve-5 re rision in th- monst.uction bud6et. The p-e71ous construction budget for the .?i e ye:r'.1979 to 1933 ver 01.7 bi111on. Prior to the decisions being mede end eith en addition.1 o.ne year's in.*1etion, the 1980 to 19SL construction
- 5) inize; un ** time ted. to be .71.?h billion. Terninstion of the four future nuclear unit: e-i e;-tensi:n o the constrnetion schadules of the three others results in e l
l e:I :onstra:iio) Sufget for 1950 through 190k estimated to be sacewhat less tha.,
() (,, -
31.7 bil11on. The company piens to deteil its 1980-1984 constru: tion progrs= at
. a icler date. -
The Illu..insting Conpany also said it did not expect to lay off any construe-
-ion v3.^crs ce:.ent1y huit,;tre the rerry su:1 ear power rient.
lO l
The e:Gension of the const.uction schedule ui11 permdt the Co:peny to const.u-t the plant rithout a prior enticipated increase in the nu=ber of workers
(() and el the er.no time reduce enticipeted overtime.
l
?ne !iluminating Compar.y reported that it had in fested epproximately $60 nillion in preliminery work for the four nuclear units thst vere terminated. Claims l
' C) Tor cdditienel chsrces may be =ade by contractors. Although the amount of the elet=s cannot net be estimated, the Company believes their resolution should not have a naieriel ed/ erst impact. The compeny piens to ask the Publie Utilities Co==d ssion
' C) o' Ohio .'or euthority to a=ortise these costs over e suitable nu=ber of years.
I Until these amounts can be re:sonably estimated end the PUC0 acts, none of the char 6er dil be re"lected in eernines or rates.
c>
(mo-e)
-O' 1
5 I
i O In e final co=,ent CEI fresident Gir... said, "*
- u=insting.Co.. par.y is
(.iseppoir.ted that the four planned nuclear units cast be te:._-inated. F.o ever, we belie /e this action to be pruf.ent and in the best interests of our custo .ers O' end shareomers while maintaining our co=r.itment to nuclear power through our lercer share of new plants already well along in const.metion. L' hen the uncertainties sre resolved, ve e).pect nuclear power to be e viable alternative in our future plant O construction progre=."
- O t.
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lO APPENDIX E ,
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'M90 2 .
() l' BEFORE
- THE PUBLIC UTILITIES COMMISSION dF OHIO -
0 In the Matter of the Application )
)
of The Cleveland Electric Illumi- Case No. 86-2025-EL-AIR nating Company for Authority to )
)
Amend and Increase Certain of Its Filed Schedules Fixing Rates and )
Charges for Electric Service. )
O OPINION AND ORDER The Commission, coming now to consider the above-entitled application filed pursuant to Section 4909.18, Revised Code; the a Staff Report of Investigation issued pursuant to SectionR. 4909.19, Rossell
" Revised Code; having appointed its attorney examiners, Gooden and Paul J. Duffy, pursuant to Section 4901.18, Revised Code, to conduct a public hearing and to certify the record directly to the Commission; having re' viewed the testimon'y and exhibits introduced into evidence at the public hearing commenc-4, 1987; and being ing July 6, 1987 and concluding September
{) otherwise fully advised in the premises, hereby issues its Opinion and Order..
. APPEARANCES:
Messrs. Alan D. Wright, Vice President - Governmental and Greenslade, Vice President and
. n" Public Affairs, and Victor F.
General Counsel, Centerior Energy Corporation, P.O. Box 94661, Chancellor', Secretary Cleveland, Ohio 44101-4661; Messrs. Carl E.
and General Counsel, and Craig I. Smith, Senior Corporate Counsel, i
The Cleveland Electric Illuminating Company, 55 Public Square,
- f, P.O. Box 5000, Cleveland, Ohio 44101, and Messrs. Squire, Sanders McLaren, V and Dempsey, by Messrs. Alan.P. Buchmann, Richard W.
Jr., and Charles R. McElwee, II, 1800 Huntington Building, Cleveland, Ohio 44115, on behalf of the applicant, The Cleveland Electric Illuminating Company.
Mr. Anthony J. Celebrezze, Jr., Attorney General B.of Gainer,Ohio, by O Champion, James Messrs. Robert S. Tongren, David C.Henkener, Assistant Attorneys Thomas W. McNamee, and Ms. Ann E.
General, '180 East Broad Street, Columbus, Ohio 43266-0573, on behalf of the staff of the Public Utilities Commission of Ohio.
Mr. William A. Spratley, Consumers' Counsel, by Mmes. Beth Robinson, and Messrs.
O Ann Burns, Victoria L. Mayhew, Evelyn R. James Van Heyde, Michael McCord, Richard P. Rosenberry, and G.
Associate Consumers' Counsel, 137 East State Street, Columbus, Ohio 43266-0550, on behalf of the residential customers of The Cleveland Electric Illuminating Company.
O Messrs. Bell & Bentine, by Messrs. Langdon D. Bell and John W. Bentine and Ms. Judith B. Sanders, 33 South Grant Street, O
O 86-2025-EL-AIR result of the at it claims would occur as a the cost savingsMr. DeVore believes the company can evaluate the iisavi lation.
achieved in a mannersavings similar to that the from used by the company affiliation for the or g na SEC o ly to estimate the The Senior Citizens argue that the Commis-(Staff Ex. 12, at 7).
sion should not allow recognition of the the cosu affiliation costs in savings to the rates until the company can establish company's customers. it-O The Commission finds that before the company will be i t perm d with ted to include the start-up and it relocation must costs assoc a eprovide the Commis the formation of Centerior, information of the achieved savings and benefits thatsuch Until havetime, from the affiliation. its books occurred to its customers the company will be permitted to defer these costs onWe are not persuaded by
~
g until its next rate case. to quantify the achieved savings argument that it is impossible the existing situation with If because one cannot accurately compare l the what would have occurred if no affiliation had taken p ace.through a hypot the company could savings to be achieved estimate, by the affiliation prior to its initia- some O see why the company cannot quantify with tion, we fail to it has achieved and the degree of reliability the cost savings from the affiliation after the benefits received by its customers fact.
Accordingly, the>ciated Commission will exclude with Centerior fromtheoperating relocation and start-up cost t If the company wishes to include expense in this proceeding.
O those costs in its next ratesavings case, andit should benefitsbe toprepared to its customers quantify the achieved costas recommended by the staff in this proceeding.
Perry Operating Revenue and Expense Adjustment:
O Sections 4909. lS (A) (4) and (B), Revised Code, require that the. commission, when fixing just and reasonable rates, shall determine the cost to the utility of rendering public utility service for the test period and that its determination of that i h cost shall be used to compute the gross The applicant annual revenues to wh chas prop the utility is entitled.
O ment of .approximately the costs $70 million to test year of operating operating the Perry plant,expenses which to recognize that have been charged to a capital account during the test year, in is placed would be charged to expense accounts once the plant commercial operation by the company (CEI Ex. lA, Sched. C-3.S; The staff recommended that in the Perry operating operating income if CEI Ex. 21).
O revenue and expense effects be recognizedof its generating end of thecapacity by th Perry reached 40%
test year (S.R., at 12).
There appears to be little Subt that Perry was generating electricity during the test perica theand test that it did period, reach which 40%July ended of O its generating capacity during O
-LL-AIR Kaplan testified that Perry firctand 1987, 31, 1987. Company Oitnesslevel for a 24-hour period on.May 1987, 18,rious periods 40% On June 30, O cxceeded thethat it has exceeded that level for va3 and Attachment B). ac that date (CEI Ex. 26, at full reactor power.
while in test condition 6, the plant reand was operating atPerry genera or 96% net generation,six months of (Tr. 1987, II, 9-10).
At the end of the During the first dition 6. Mr.
kilowatt hours theofPerry electricity plant was still in test con be completedhe O
tCat period, that test condition 6 would not Kaplan testified Following the completion of that test,h test conditions 7 until mid-September.etated that the plant would proceed througUpon compl 8, followed by a 100-hour the warranty. plant would be placed in commercial and the warranty run, On November 20, 1987,the CEIPerry served a plant (Tr. II, 12). i s that November 18,.1987.
operation D notice upon the Commission and all part e had been placed into commercial operation the on expenses of The company's adjustment to recognizefull first year of commer-rating and maintenance operating the Perry plant during its cial operation is based upon estimated opedate that the plant is O (0&M) expenses for the year following theCEI's f 1986 toregular develop budgeting the Perryprocess Company placed in commercial IV, 150; V, 14-17).followed (Tr.operation.was the during th first-year operating budget witness Solanics explainedlast quarterthat the1986 of wouldi be lsimilar to the (Tr. IV, 150, during the plant performed when the believes that the budget
'O work V, 144). Theplant became applicantwas operat prepared by ona employees who 157, 189; Tr. ocess and because is reliable because it estimateassigned to Perry'during the budgeting prunits which are were the different operating V, 14). Because costs were it was developed by Perry plant (Tr the first-year Perry nerating budget elec-
!O associated with included in the similar incurred to those during the test period when Perry was gethe company's CEI argues of tricity that for the benefitthose test period costs should be norma test period expenses in this case. the Commission does 1
in this case argue thatthe type of post-test-year The intervenors lO They cite
)
not have the legal authority to grant the staff. t their adjustment requested by the companythe andin their briefs Commission is notwhich they to numerous cases in rate case proceedings, incurred by a utility subsequent position that, although the data empowered to consider costs Intervenors contend thatmonths actual and nine O the test period. h submitted by the company estimated," it isisactually labeled "ttwelve ree months (Tr. IV, 121, of 122).
estimated months The company did not contest this pointthe company has not data. intervenors point out that Further, various costs during the testwere period, but capital-expensed any Jerryassociated operating with the Perry plant O rather all costs O
86-2025-EL-AIR 3 e g3 3
ized. Cert'ain intervenors have also argued that the company's fully forecasted cost data is unreliable, includes non-recurring start-up costs, and exceeds the operating costs of other com-parable nuclear plants. ,
O The company argues that it is merely transforming Perry costs that were capitalized during the test year into' expense items to represent what will occur during the time that the rates approved in this case will be in effect. In support of its' position, CEI cited Ohio Bell Telephone Company, Case No. 81-1433-TP-AIR (December 22, 1982), at 41, where the Commission allowed O as test period operating expenses the station connection charges which had been capitalized costs during the test period. Although the case was appealed to the Ohio Supreme Court and reversed for the reason that the Commission failed to justify its inconsistency with an earlier Commission decision on the same subject, CEI g argues that the Court did not reverse based upon.the Commiscion's decision to allow the inclusion as test period expenses the costs which had previously been capitalized. The Commission justified its action in that case as follows:
It is important to note that the Company actually incurred all of the expenses at n" '
issue during the test period. The added revenue requirement is not a result of recognizing certain additional costs, but of expensing these items rather than capitaliz-ing them. The issue that we must decide is what treatment should be given known and
- O measurable expenses, not what the expenses -
are. Thus, the argument set forth by oCC on the issue of post-test-year. expense really misses the point. These are not post-test-year expenses. They are known and measurable lO exp nses that were booked during the test
! year. (Emphasis added.)
The company has also cited Bd. of Commrs. v. Pub. Util.
Comm., 1 Ohio St. 3d 125 (1982), in support of its argument that the costs incurred by the company in operating the Perry plant during the test period should be normalized. In that case the g Commission allowed, and the Ohio Supreme Court affirmed, a post-test-year inclusion of line clearing costs because of the l danger of power outages and safety hazards and because the Commission ordered Dayton Power and Light Company to clear the lines. The court found in that case, as it had in others, that, "in certain circumstances, inclusion of costs not incurred in the O test year is proper." The tree trimming costs would be incurred in the period when the rates would be in effect and thus the Commission, and the court, found it appropriate that the costs be normalized. Similarly, in this case, the company contends that the costs not only will be incurred in the future, but also were O
.O
O bf g-2025-EL-AIR incurred during the test period, and thus it is appropriate that they be normalized.
O In response to OCC's contention that Bd. of Commrs. is not applicable and ' that the Commission should not create a new exception to the rule against post-test-year expense adjustments, CEI argues that what it is proposing that the Commission author-ize in this case is not an exception to existing ratemaking b, principles. The company contends that the Commission has previ-ously recognized and normalized operating expenses for a new generating unit which was generating electricity during the test period, but was not used and useful as of the date certain. See Cleveland Electric Illuminating Company, Case No. 80-376-EL-AIR (May 10, 1981), at 29. In that case, the Commission approved a 13 normalization adjustment to include the expenses associated"with operating the Bruce Mansfield Plant, Unit No. 3, which was placed into service during the test period, but after the date certain in the case. The adjustment was made to recognite the major change in the company's plant in service and the impact it had upon operating income. The Commission did not extend its ruling O to other minor projects because it found that, unless the impact of the addition was significant, it would violate the test year concept to make adjustments for every addition to plant in service.
The Commission finds that the recognition of the Perry 13 operating revenues and expenses is proper in this case. The Perry plant did generate substantial amounts of electricity during the test period and the companyThe hasCommission incurred substantial agrees with costs in generating that. electricity.
the company that those costs should be normalized and recognized for rate making purposes in this case. If we fail to include 13' those costs in ratee at this time, they will either not be recovered by the company or they will be deferred and be recovered from future ratepayers. Inasmuch as the costs are being incurred for the benefit of the company's existing customers, then it is
, appropri' ate that those customers bear the costs.
!O The fact that the costs were capitalized on the company's books during the test period, rather than expensed, does notas i preclude their inclusion in test period operating expenses, the intervenors contend. The company has established that the level of costs capitalized during the test period would be comparable to the level of expense incurred during the first year 13 that the plant is in commercial operation. Because the level of expense is seemingly both known and measurable, in addition to being comparable to the level of expense that was booked during the test period, as in Ohio Bell, supra, it is only appropriate that the costs be normalized and included as test period expenses because we are setting rates for a prospective period and the 10 company will be actually expensing all such costs on its books during the time that these rates will be in effect. We do not lO
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O O O O o o o y- g O O velandBusiness. January 4. !%9 '
...Avon
~
Avon Lake capacity cut -
clear plants and a coal-burning
"== -e as CEI retires enerator cess to nuclear power from the Perry plant in Lake action would have no impact on utility rates,and that no layoffs are expected as a result ol the move. In late December, the company re-By DAVID PfiIZINSKY County and the Beaver Valley plant in Pennsylvania. ceived approval for a two-step.
CEI doesn't expect to decommission any additional 22% rate hike;a 1.7% increase was Cleveland Electric illuminating Co. has reduced the operating capacity of its Avon Lake power plant by units over the near term. Mr. Lorton said.
CEI owns 31% of Perry and 24% of Beaver Valley.The immediate, and the remainder wi!! go into effect over the next 18 about 20% with the decommissioning late last month of two nuclear plants began producing electricity months.
in one 233-megawatt unit at the coal-fired generating sta- November. CE! now has access to 375 megawatts at tion. The closing of Avon No. 8 didn't The move reduced the Avon Lake plant from four to Perry and 204 megawatts at Beaver Valley. come as a surprise to Douglas Fox.
The Avon Lake unit went into operation in 1959. Mr.
three cperating units including Avon No. 9, a 680- associate vice president of l megawatt unit. Two smarter units also remain in opera- Lorton said that it was designed as a prototype Mcdonaldunit& Co. and Securities, a lochi tion with a capacity of 86 megawatts each. The com- incurred more than its share of maintenance costs over brokerage firm.
pany keeps an additional unit on standby; four 40- theMr. years-brton said Avon No. 8 was probably the least ' Tie company has been saying-megawatt units were decommissioned in 1983, and a cost-efficient unit in the company's system, forwhich in. to five years that it about four another unit is mothballed. cludes coal-buming plants in Cleveland. Ashtabula.
Steve Lorton, a spokesman for Centerior Energy . tends to decommission some of in Corp., which owns CE!. said the plant's No. 8 unit was Eastlake and Avon Lake, as well as interests in three 'ts older nu.units." Mr. Fox said.
taken out of service to avoid $4 million in maintenance See AVON.Page 22 costs this year and because the company now has ac- -
h
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APPENDIX G
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J
l SECURITIE5 AD EXCPECE COCCSSICM Washir4 ton . C. 20$49 d f Mh 6 Jy3 fdo a '""" '
s.ca 4h
~
.PR05 ' E mvAI. RErm: r.nzm TO SEen0:: 13 m 15(d) 0F
- 3((g t 11E SECU7.E EXCF.UCE ACT OF 1934 For cal yeer eMed December 31, 1978 Cocmission File Number 1-2578 q7 Celo EDIS03 Cof7A*.Y (Exact care of reg:strar.t as specified in its charter)
]
Ohio 3L-04377f6 (State or other ,4urisdiction of (I.R.S. Eepicyer incorporation or organi:ation) Identificatien No.)
76 South "n! . Street. Akroc Cht: IJ43C6 j ( Address of ;rtne;;al execu .1.e ;ffice) (7,ip Coue)
Registrant's tele; bone number, imeludir4 area code (216) 384-5100 l
Securities registered pursuant to Jeetion 12(b) of the Act:
Eame of each exchange on M tle of earh eltsr which registered
)
Cocnon Stock, $9 par value New York Stock E.rehe.nga Kidvest Stock Excha.nce Cu n11stive Preferred Stock
$100 par value ,
3 90% Series ( )
k.LO% Series ( )
L.lde% Series ( )
O k.5M Series 7.24% Seri-s (New York Stock Exchange)
( and )
7 36% Series (Kidvest Stock Exch.ange )
8.20% Series (
10.76% Series (
10.k9% Serie: ( )
8.6k% Series ( )
9 1M Series ( )
First .vortss ;e !ct.is 9-1/0$ Series due 2006 ( )
6-3/S$ Series due IC<r7 ( )
8-1/25 :eries due ICC6 ( )
9-1/25 Series due 2CC6 (New York Stock Exeta ge) 10 5 Series duc 1981 ( )
2-7/05 series due ledo ( )
O Securitie, reci,tered yu,,ma,s to Section 12(g) er ue et.
L' . .
None ..
Inileate bi cheek trrk whether the registrant (1) has flied all re;crts required to t e
~ ~
filed by Section 13 cr 15(d) of the Securities Exchary;e Act of 1934 durira the precedir.;
12 smot.th: (or for such shorter periM that the registrant was required to file such reports), and (2) has been subject to such filief requirements for the p at 9C days.
Te s_r_. No .
Inti.cate the nu.zber of shares outsta.Mir4 of each of the issuer's cle.sses of roccon stock, a.s of the close of the pricd covered by this reycrt.
C1 Ass Cutstandire at Der e tter 31,1W8 O Ce< eon Stock, 29 rar value 52,120,230 Sharu 1
1 O .
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ITD4 3 FROIERTIES The Co=pany owns 9 coal-fired generating plants which, together with ,
the ca;e. city of one coal-fired plant (the New Castle Plant) owned by Pennsyl- '
l vania, have a total net de=onstrated capability of 3,504,000 kv. The Co=pany O an'd Fennsylvania alsc own oil-fired generating units having a net demonstrated capability of 423,C00 kv. Together with one or more of the other CAICO co=panies, the Co pany and Pennsylvania own, as tenants in coccon: Sacmis Unit No. 7, a coal-fired ger.erating unit at Stratton, Ohio, which has a net demonstrated espability of 650,000 kv. and which vent into commercial operation in 1971; Bruce Mansfield Unit No.1,' a coal-fired generating unit vitb a net demonstrated capability of 825,0C0 kv., which .ent into full co=mercial operation in June 1976; Bruce O Mansfield Unit No. 2, an 825,000 kv. coal-fired generating unit which vent into full c:nmercial geration on October 1,1977; and Beaver Valley Unit No.1, a j nuclea- unit which has full demonstrated reactor capability of 810,000 kv. and ;
which vent into full reactor co=mercial operation en April 30, 1977. With their '
ownership interest in Sam .is Unit No. 7 (aggregatir.g 447,200 kv.), Bruce Mansfield i Units Nos.1 and 2 (aggregatirs 909,800 kv.) and Beaver Valley Unit No.1 (aggre- '
! catire h25,2f C kv.), the total capacity owned by th! Company and Pennsylvania as O of rece-ber 31,177S was 5,709,250 kv. (See "Item 1 - Business-CAFC0 Prcgram" regarding other capacity and energy entitlements.) Bere is also available to the Ccgany under conditions existirs at the date of this Form 10-K approxicately 66,000 kv. of power under contracts with other utilities. For a description of arrangements involving Chio Valley Electric Corporation ("0VEC"), see Note (2) of Notes to Ocnsolidated Financial Statements.
O seaver valley unit No.1 was taken out of service March 9,1779 and, pursuant to crder of the Nuclear Regulatory Co=:issien ("fu~tC"), will rer.ain out of service rendinc s reaanlysis of the adequacy of safety-related pipe and pipe supports shculd an earthquake occur. Moreover, the length of the study and the length of the outage is nct determinable at this tite. The cost of purchat ed ,/
power required because of the outace of the unit, having taken into account the unavailabili y of cther units during the period in question, averas.ed approxi-O cately uc,cce per day durire the reriod from March 9,1979 to March 31, 1979 cf which apprcximately 8b,C00 relates to costs attributable to Tennsylvania, but the Cogany carnot predict that such costs will remain at that level. Due to l :easensi vari .tiens the lead durirg this period was at a leval substantially lever l than that vr.ith can occur in subsequent months. In the future, fluctuaticns in l
lead 2.3 the svailability of other units will affect the amounts of pcver the
! Cogarv tes t ;urcha.se as a result of the outage of leaver Vall,ey Unit No.1 and O t3, c:,t tuer,cf y111 w;,nd on t3e rates associatei with the.sourec a .d elassi-ficati:n of ;;ver that is available.vhen purcha.ses are recuired.
~he CAKC cer;snies , as further discussed under "Item 1 - Business-CAFCC Progrn", have undertaken a progra.1 for the joint develc'pcent of pcver enera, ion and transmissica facilities. All of the cajor additions to the generatir4 etyacity of the Co=pany and Fennsylvania presently planned er O being :onstructed are a part of this program as shown below. On November 15, l?8, the CAICc cog.anies, citing present economic, environ = ental and regulatory u . ertainties, together with reduced load forecasts, announced the deferral tf cor.structicn schedules f r three cenerating units and the l co menceM nt O f iet2iled studies with respect to four other units. Ferry 4
'! nit M.1 vil be ieferred 16 :onths; Perry Unit No. 2 vill be deferred 22 men-hs; an: Ecaver Valley Unit No. 2 vill be defe.* red 24 months. The O statt: of Davi:-se:se unite sos. 2 and 3 and Erie Units nos. ,1 c_nd 2 is une artsin re-iirs ecqletien of studies , but it is cu?rently conte = plated that these Mits -ay be delayed by an averace of three years. Rese studies will addres :crtain cf the CATCO capacity planning concepts and will develep a definitive rogra with respect to these four units. The resultant cot-pletien hte: and est: .ated total cost are reflected in the table below:
O -
p p-O
U U U U U v v v v v -
l t
l Estimated Estic:ated Co=panies E:ticated Tocal Cost Total Cost as of In-Scrvice to the per recember 31, Site (a) -._e "h- C: rsbility (b) Data Coganics (c) Kilowatt (c) 1978 He ver iniley I:t: clear 833 ::c;-initial 16 $ 590,836,000 $1,636.66 $214,662,000 rtatica,il.it 2. in 862 IO-ultimate J.1;pircncrt, ?a.
- ci:- b :e Scation, Itaclear 90613 each Unit 2 - 1985 $1,h52,36h,000 $1,911.01 $ 45,742,000
'Jnitt 2 :::1 3, in Unit 3 - 1990 Cit c. 1 County, Chio ru:e ?t : field Coal-fired 825 I.~.f 1980 $ 2h7,h60,000 $ 715.20 $166,007,000 F1.::." . 9.'t 3, in ri-i , it;;er . Pa.
Fn rr 71:. ., Units 1 Eacles- ' ,205 :"J each Unit 1 - 1983 $1,02h,076,000 $1,013 94 $290,772,c00 rc 2, ir.i.crth Ferry . Unit 2 - 1935 7i112;3 Chic b03 Zrie ..;:1 car Plant, !!uclear 1,16o IG eich Unit 1 - 1989 $1,593,0h9,000 $1,513.30 3 35,587, coo
' sit .1 nn! 2, in tinit 2 - 1991 l
= >r ? :r. !:::i ;ht s , chio i h93,h7d5.000 S752,790foo i-
]t (2; ..nn ::.2 excer. tion cf 2 caver Vclley I; nit 2, in which Fennsylvania no longer has any interest, the Co gany and 10 -- vini .111 have un.11 tided intercato c.s tenants in ce==.cn with ene or ciore of the other CAPCo cecanies ~
l ir ed.: 2. t!.c un t: listel ciste. Exc2pt for 42' er Valley Unit 2, their interests vill te 35.6% and 6.289,
! rn:::tively. 'dith resycct to g aver Valle; Unit 2, the Ccepany's interent 1 h1.88/..
(b) Tc 2 ri hts of the o::.cr: of the ve.ric.i: units to the en:r;y produced by such units are cubject to the ccyacity a c.: cncr.; c entitle-:2nt: dc:cri:,2d inder 'Itra 1 - Du ine :-CAFCo Frc3 ram". See "Item 1 - Busines:-Enviro:cental
.tterf ::ith rc:pect to the effect on eqability that the pollution control equipment presently bein;; installed I
nt the 3. ace ".an:ficld Fltnt ::111 hve.
I l (c) The coste lirted do not include the ecs t of fuel for the nuc1cer plants ("Iteta 1 - Dosiness-Fuel Supply") not do t'.cy c inclusi the ec:t2 ($28,C33,000 of .hich $1,266,000 ::s spent prior to 1979 c.nd $1,146,0C0 has been or vill
-ee expenue.1 during 19'/9) cf ::tJp-t.1, trancfor:ers ascociated with the various unit: (except t' nit: at the Terry 112nt) ara related eqt ipment nc:c:: cry to pre ride connection to the syste:. The listed ecsts do include costs
'n connection with tt.e air nnd ::nter pellution contre,1. equipment presently kncun to be required.
1 i
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> = = w - - ----ms-wms;wnsymew r,ympaques
b J
J D APPENDIX H l
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PAGE 1 SECURITIES AND EXCHANGE COMMISSION
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HASHINGTON, D.C. 20549
-FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) 0F THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1984 COMMISSION FILE NUMBER 1-2578
]j OHIO EDISON COMPANY (EXACT NAME OF REGISTRAtlT AS SPECIFIED IN ITS CHARTER)
OHIO 34-0437786 l (STATE OR OTHER JURISDICTICN-CF (I.R.S. EMPLOYER i INCORPORATION OR ORGANIZATIO!1) IDENTIFICATION NO.)
m 76 SOUTH MAIN STREET, AKRON, OHIO 44308 J ( ADDRESS OF PRINCIPAL EXECUTIVE OFFICE) (ZIP CODE)
REGISTRANT'S-TELEPHONE NUMBER, INCLUDING AREA CODE: (216) 384-5100 SECURITIES REGISTERED PURSUAt1T TO SECTION 12(B) 0F THE ACT:
NAME OF EACH EXCHANGE ON TITLE OF EACH CLASS WHICH REGISTERED
) Common Stock, $9 par value New York Stock Exchange l
Midwest Stock Exchange Cumulative PreferHqe Stock, no' par value
$1.80 Series New York Stock Exchange
$3.92 Series flew York Stock Exchange Cumulative Preferred 9tock, $100 par value 3.9dh Series 8.20% Series
[) 4,40% Series 10.76% Series All series registered on 4.44% Series 10.48% Series New York Stock Exchange 4.56% Series 8.64% Series and 7.24% Series 9.12% Series flidwest Stock Exchange 7.36% Series Cumulative Class A Preferred Stock, $25 par value flew York Stock Exchange
$3.50 Series Convertible Adjustable -- Series A flew York Stock Exchange
() 11-7/8% Series due 2010 First Mortgage Bonds 8-1/2% Series due 2006 15-1/2% Series due 2010 9-1/2% Series due 2006 All series registered on 9-1/2% Series due 2006 15-1/4% Series due 1987 New York Stock Exchange 8-3/8% Series due 2007
,, SECURITIES REGISTERED PURSUANT TO SECTION 12(G) 0F THE ACT: None
() Indicate by check mark whether the registrant (1) has filed all reports re-quired to be filed by Section 15 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been sub$ect to such filing requirements for the past 90 days:
Yes X No 75 tate the aggregate market value of the voting stock held by non-affiliates of
() the registrant: $1,653,141,474 as of January 31, 1985 I.
'l O
Indicate the nunber of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable datei CLASS OUTSTAtlD1;1G AT MARCH 7, 1985 l
l Common Stock, $9 par value 123,879,292 Documents incorporated by reference (to tho
)()
1 extent indicated herein):
P ART OF FORM 10-K IllTO WHICH I DOCUMENT DOCUMENT IS INCORPORATED l Annual Report to Stockholders for the fiscal year ended December 31, 1984 (Pages 18-37) Part II (Page 39) Part I Proxy Statenont for 1985 Annual Meeting of Stockholders to be held April 25, 1985 Part III 1
( .
PAGE 11 A number of safety modifications required by the NRC to be made on all
(.
nuclear units operating in the United States have been completed at Beaver Valley Unit No. 1, in addition to routine maintenance work and equipment inspections in connection with a scheduled refueling outage of the unit which began on October 11, 1984 and ended January 5, 1985. The currently estimated
( cost of anticipated remaining modifications is included in the Companies' construction program (see "Financing and Construction Program").
The construction and operation of nuclear generating units are subject to
( the regulatory jurisdiction of the NRC including the issuance by it of con-struction permits and operating licenses. The NRC's procedures with respect to application for construction permits and operating licenses afford opportu-nities for interested parties to request public hearings on health, safety,
( environmental and antitrust issues. In this connection, the NRC may require substantial changes in proposed operation or the installation of additional equipment to meet safety or environmental standards with consequent delay and added costs and the possibility exists for denial of licenses or permits. The
(-
construction permits for Beaver Valley Unit No. 2 and for Perry Units Nos. 1 and 2 have been issued, and a full power operating license for Beaver Valley Unit No. I was issued on July 1, 1976. See "Item 2. Properties" for a description of the status of the application for a full power operating
( license for Perry Unit No. 1.
l i4O In September 1983, the Ohio Office of Consumer's Counsel, The City of Cleveland, the Board of County Commissioners of Geauga County, Ohio and three
(' local public interest corporations filed a petition with the PUC0 and the Ohio Power Siting Board (the "0PSB") requesting that each of those bodies investi-gate the public need for the construction of Unit No. 2 at the Perry Plant.
The petition alleges that completion of Unit No. 2 will result in an undesir-(- able and unreasonable level of excess capacity for each of the Ohio utilities in CAPCO and that the rates charged or proposed to be charged by those compa-nies will therefore be unjust, unreasonable and unjustly discriminatory. The petition asks that construction of Unit No. 2 be halted and that no further
( AFUDC be accrued with respect to that Unit (approximately $3,600,000 of AFUDC is currently being accrued monthly by the Companies and that amount will gradually increase each month as construction continues). The petition fur-ther requests a declaration be issued stating that the issuance of securities,
( the proceeds of which will be used to finance construction of Unit No. 2, will I not be approved. The Company is contesting the petition. In another
! proceeding, the OPSB has denied a request to delay hearings on the siting of the Perry-Hanna transmission line, which will serve Unit No. 2, until the PUC0 I' -
( completes its investigation of Unit No. 2.
The CAPCO companies are continuing to review the. status of Perry Unit No.
- 2. Until this review has been completed, there will be no defined schedule
( for the completion of Unit No. 2. Possible alternatives being reviewed with
) respect to Unit No. 2 include temporary cersation of work on the Unit and
_ termination of the Unit. In accordance with the CAPCO Agreement, none of these alternatives may be implemented without the approval of each of the
(- CAPCO companies. Presently, the only significant work being performed on Unit No. 2 is that necessary to enable Perry Unit No. I to be placed in service.
This work is expected to be completed sometime in 1985. Under those circumstances it is not likely to be appropriate to continue capitalizing
( AFUDC (as described in Note 1 of Notes to Consolidated Financial Statements)
) ,,to Unit No. 2. Accordingly, if the CAPCO companies do not decide to resume
.significant construction, the Companies do not expect to be able to include
( this AFUDC in net income. Instead, a reserve would be provided for AFUDC capitalized to Unit No. 2 prospectively. This would not affect cash flow but
(
) I f
l
)
)
it would cause a corresponding reduction in net income.
As of December 31, 1984, the Company and Penn Power nad invested approxi-( mately $348,700,000 and $57,300,000, respectively, applicable to Perry Unit No. 2. Delays in the completion of the Unit can be expected to increase its total cost by amounts which are not presently determinable. If a decision
) were made to terminate Unit No. 2, certain costs which are currently assigned
( to Unit No. 2 would be reassigned, where appropriate, to Unit No. 1. However, cancellation charges payable to contractors and other costs of termination could be incurred. Pending completion of the CAPCO review, the Company is
(
unable to predict whether the construction on Perry Unit No. 2 will continue or, if continued, on what basis such continuation will proceed. If con-struction of Perry Unit No. 2 is terminated, the Company would seek to recover its investment as it is presently doing with respect to previously terminated
) (
units (see "CAPCO Program") but cannot now predict whether its investment in Perry Unit No. 2 applicable to its PUC0 jurisdictional customers will be recoverable. If no means of recovery of the costs of Unit No. 2, in the case of termination, were available to the Company from its PUC0 jurisdictional customers and no other basis for recovery could be found or anticipated, the
( Company would be required to write off the portion of its investment applicable to its PUC0 jurisdictional customers. Based upon the Company's investment in Unit No. 2 as of December 31, 1984, the Company estimates that
- this write-off could be in the range of $205,000,000, net of income tax (2 effect. The Company 11
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. 3 funding for government programs that have not received FY-85 fimding yet through separatelybenacted ;ll v '.
appropriations bills. That continuing resolution will be taken up by Congress before it adjourns 1in early 2 h'
October. An amendment to increase funding for the IAEA is expected to be offered, at least in.the Sen.[j ;i q ate, sources saya . {rja .g , , 3 mu . ,; .a g , a % . ,,,.
g,., ..
r pB J
.y . J coopera-4 g :The U.S.'s voluntary contribution goes primarily to the IAEA's technical assistanc.- ' csuch . ,
g ,
tion fund and to the program of technical assistance to safeguards. Money also goes to pq . , pJ 9 things as fellowships fo'r foreign specialists studying in the U.S. and other technical assistance projects, ; ,
the soolled footnote A projects, which are not funded through the IAEA's regular program but
[ h(
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,_ . 1.
which are judged.to have technical merit). .
i i '! .
T
., . - A reduction,in funding in the U.S.'s voluntary.contributi.on would,'says the administrat on, ses -[ '
o.usly undermine U.S. efforts to put forth a ' positive record of compliance with Article IV of the ;. L Non- ]g Proliferation Treaty (NPT),",which calls for cooperation,with nonnuclear weapons states in exchange j!
g b
O (for,their agreement n'ot.to' acquire nuclear weapons. This funding.is particularly important h at jthis,. time says the admimeration'.because of the' NPT review conference scheduled US d lfor 1985. "Clearly,;a gcut ini . .
- ;k - our. technical asststance ((this'preparato'ry period.would seriously impair the . credibility of- . .; ec ar; .
l b
' story policies in support;of the NPT and make.it more W difficu't to Mpromote.a ['[ jhconstructive outcome y to b '
'the resiew conferenci,"!tlEe'5hninistiation,says.,. fp.. dij_. ..N,~'.
~
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W COST ESTIMATE; REVISED,FOR, CLEVELAND; ELECT.RIC'S_ PERRY 1 mc.c. ,yyyd.Wm nri . g@
!O 1
[ . . . . ,
{h l'.%ClevelaixtElectric Illuminating Co.,,(CEI) has revised its_ cost estimate ,
f* for, completion:of.
l 3 p Pe d
- .,to 53.94-billion frour $3.47-biluoru Utility sources said.that the total estimated cash, construction Perry-1 hadM raised;to $2.76 billion from S2.4-billion. In.ad,dition, they n.- estimated
[
an increase.in f g cost o the 1 .
allowancs for funds.used during construction to $1.18 billion from St.07 billion.i
' .l ': 1
. E [p
' ~
[
.,h$ !Utilitisources said'.th.t the'redsed estimate (nc.uded b h units. $218-millio'n % for ad j
O costs and $147-million for costs previously budgeted for Perry. 2 or.for facilities common to ot :
%ey said that the costs of co_mmon. facilities such as fuel handling equipment and emergency j. [ diesel .
generators had.been. reassigned o t, Perry-1,on advice from the company's auditors. A utilityt spokesman j
said that Price Waterhouse had recently. completed a four: month review of the project's costs to deter-mine.(vhere urtain expenses should.be properly assigned..,... . .y.;, .
.g. ,,i j ' j j[ ~
y 1, ;The reapportionment of costs has fueled speculation that the utility will eventually egneel [ : j'[. Perry-2; however, the company. spokesman denied that there was any connection between the two.;sHe t said .
O ' .
that the company.was considering four. options for Perry ,2,.w hich include cancellation, but he denied suggestions that any_decisionyoujd be made soon. Construction at Perry-2, which is 44% complete. l [k'
( }j Jvas. virtually, stopped,in April, but, the company said that itsld comptetion be made "some-schedule and 4budget are sti
,p@
.'ynder. review," .The spo,kesman said that a decision on the future of Perry 2.wou 1 hich is [
. time between.now and the completion.of unit t ".The company has estimated that Perry , w
~ j , ', . -
O '95% co'mpie'te, Aill[begin c'ommercial' operation I6 the end of 1985[They emphasiNd that "absolutely & y' i j
- no" changes.have. been made in_the. schedule.for Perry-1. . .. .., ; ,;g.g .
i'y _
8 ip Sta,ndar,d,,, W,s;.Cogp sai,d that_ iitis, rev, ewing the debt ratings of CEI and the four other g q t utih,.
- 'the Per
'g(ties in the Central Area Power Coordination. Group.(CAPCO),.which own
' ' ~
~ ' ~
' P e
S
~
.an. a5yItEI[th.d tlfe N.Ma.s in'it'ist3f...a.f.t.
. - .. .i.i i er C._EI,an. nounced. .its .e. t n ate. l
. . . ..m ,
d
+'
1because of th"e "substantial fmancial' stress". incurred by simultaneous construction of three nuc ear
- O' . units. The:CAPCO , utilities.are31sibuildiiig"Beaver'Vailey l. ,arid.
l ,. 2.T
' ;' [
lir
- l M Each' Perry. unit is a 1,205-megawatt BWR. The architect-engineer at Perry is Gilbert Common- h
^
i '
.T; t
w'ealth' ca.s. ie r. .a m n M &@c:. . m +. . .0 :.:./wra , m . s ~ eh si .i ma ( li j
i RESPONSE TO SEAL TABLE. LEAK AT. TROJAN RAISES EYEBROWS AT NRC . . } q\
3 Q[;
t-y
- Utility response to a reactor coolant leak found in the seal table room at Portland General
.tric Co.'s Trojan last week while the unit was at'an elevated pressure and temperature has NRC raising Tliy ,y3 Elec-erence between this in-
'- questions Mut whether the response was proper. While there is a "world of difr {.{ j ; 8 .iy h
! cident and what happened at Sequoyah,".where the Tennessee Valley Authority's (TVA) plant staff .:g itried to perform seal table maintenance while the unit was at 30% power (NW,23 Aug., Special Is- N- ,
- sue) NRC sources said that workers at Trojan "probably should not have done what they did." !i lL While the plant was retuming to service after a refueling outage. a leak was obser ed in the seal table room at Trojan. Workers determined that it was being caused by an improperly seated compres- , l, [P
-Qt sion fitting and attempted to fix it. The reactor continued to opgrate at 2,235 pounds per square inch,l!
and the coobnt temperature remained at 550 degrees F. while workers attempted to adjust the fitting .
In their attempts, however, worken ended up hmening the two bohs and bracLet that functioned as jl [
y the primary support devices holding the fitting in pbce. As a result, the entire fitting broke ori, causing . , ..
h'! j ,
i 7 NUCl LONICS WEEK - Sepumtwr 20,199 Ql f i . ..
p' J
O O
o O APPENDIX J D
l
- O l
l 10
!O O
O
/
) '
APPENDIX J
^
\ m DELAYS IN CONSTRUCTION OF, AND CANCELLATIONS ,
OF, THE CAPCO NUCLEAR PLANTS November 15, 1978 -- CAPCO announces dethrral all of construction schedules for three pl..nts: (1) Perry Unit 1 (16 month delay to 19831. (2) Perry Unit 2
) (
(22 month delay to 1965 , and (3) Beaver Valley Unit 2 (24 month de).ay). CAPCO saye that "[t]he status of Davis-Besse Units Nos.
2 and 3 and Erie Units No9. 1 and 2 is un-certain pending completion of studics, but it is currently contemplated that these
)!
units may be delayed by an average of three years." (Edison 1978 Fonn 10-K, p. 37, re-produced in Appendix G).
i January 22, 1980 -- CAPCO announces termination of plans to con-struct Davis-Besse Units 2 and 3 and Erie
[)
s Units 1 and 2. Construction of three plants is delayed: (1) Perry Unit 1 (12 months to Mayc1984) (2) Perry Unit 2 (36 months to May 1988), and (3) Beaver Valley Unit ? (24 months to May '.986). CAPCO says that "[t]he political and regulatory uncertainties af-3 fecting the a*"re construction' of nuclear plants has i~ esuifi.ed followirrp the [1977 )
accident at Puee Mile Island". CAPCO also points.to the dramatic decrease in projected growth rate of demand'for electricity "at-tribut[able) mainly to a showdown in indus-l D trial growth, the increased availability cf ,
natural gas'in the CEI service area,l and l conservation efforts by customers.'" (CAPCO January 23, 1980 news release,' reproduced in Appendix D).
[] March 8, 1983 -- CEI announces "a delay of up to 12 months in the fuel load date of Unit #1 of thts Perry generating plant." (CEI press relGase, re-
, < produced in Appendix C).
May 1983 -- CEI reschedules Perry Unit 1 fue'l load date C) to May 1985 (Public Utilities Commission of
' Ohio, "Comprehensive Assessment Of The Perry Nuclear Power Plant", study prepared for PUCO by Touche Ross, The Nielsen-Wurster I Group and Chapman & Associates ("PUCO f
Study"), vol. I, p. III-11 (1986)).
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CEI announces delay in m:c}pletion of con -
February 1984 --
..f struction of Perry Unitf1,to 3tay '1985 (PUCO
!O '
study, vol. I, pp.III-201
'M April 1984 .. Construction of Perry' Unit'2, which was 44-percent complete, is terminated and indefi-nitely suspended. CEI says-that.the status of plant is under,, review. =(Ohio Edison 1985
.O rorm to-x, p. 6, reproduced;ln Appendix P).
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I l
10 APPENDIX K l
lG l
1 i
i O '
G O
I lO t
f t -
l O l, f
1
V %NV 310 QW W _l l belog nuclenr). Thla in turn will inske possibla the generation, transminston. and '
. utillr.ation of all energy without polluting soll, water, and nir. ,*$
h#-P., It will solve the probleta of the utillr.ation of the three great OX? national nlaboratories. With these much enlarzed terms of reference, they will no longer f m mete to carry. oat their diragat%ets into stranse arven of public health, educa. ,
tia a, agronoenics.itransportatif ; s er*Isatloa,etc.:They will have a ansjor tank 9 C #6 rationalisins our energy eco . 15 v4With broadened authority,b. .JOAE and the'IEC would be.tegonsible for
%F w .
i guldtug aud; reviewing the coni.try's energy planning. enerzy trencerch, t enerzy
' conversion"and.ltransportation,'and energy utilisation. Reflew and .remodelluz.
6 ,
d.of the entire decialon.inaking proccan wille respect to energy in the governinental- J
' _.*f and private.-seectors la reluired. At a time when our arquirements are rephily *A .-
sccelerating..the. decision. making pruceein les belag extended rather than short.
n eced. This tenects the tnany lastitutional Intereatm which onll for balancing and . ~ .
v g..sremolution. Failure to Imlance or Irreveolution hella no one. i?M ',
W p .W.h .
.h % . %.. . . ....
TAKE 1.6 VERSUS COAT 4DititATED EECittC ffl018Y A3 0F NLY 1,1988,F08
,M
_. h. . COMPLETiofl (NUCt EAR. ltM--70$38t,1975) .q w ...-
- *; , :.g : J .j p'. : At 14 pescent.1.000 ' At 16 porteet 6.570
.ggg-
- hears per year beers pu yeer j O ., =.y- -
noses, Coe, n se, Co,i 1 og u
$$ed charges pe -
$27,30
$28. 54 . $21te - $32.56 y n=d c* urn. edrper *"'kw. + ... .... ... ....... . . ... 4. e7 t si 4. n 4. it i j Feel chuset, amies per kwAt. . . .... . . .. . .... . . . ... . .. 1. 79 e 2.19 1.70 e 2.19
,10perstms and sneintenesce. mists per keAr......... . . . .30 . 30 .30 . 30 l
tesmeste. mits per 6 w.-hr.... .. . .. . . . . .. . . . ... . .10 .. . ....... . II , ......
. .,, Total sw:tchbeerd cest. unes .. . 4. IF i 90 7.06 L 65
'' "' '" per k wA r... ...........
I 0 . ~ i; c
d - - - - - - ' 28 ' - - -- ' 2' 7 -
l D8 At 25 cents. .
l
. .a y7,/.t. 8 Ces per miMies Bis.
d.2 heen: C4tal coe4-1,100 WW audsar. 3203.5 per kw.! 000 IrW cost, IM.6 per k w. j
.ft, t T% TA8tE 2.-CROWTH IN DEWAND AND IN CEMCRATING CAPAttLITY. ntCTtic UTIUTY INDUSTRY O '
- w% e . Cap =ay w be 4 , ordwed os bnN et M s .fA..
t.
ic
& Year Grcesle demand Generetingcoombe'ry (pertset) trWX10e 3.peceet pose Acteam, ordered etWX108 8tWX10 8 Q y '
- ~;' 7 *'ISEf.. . .. . . .. ... .... e(7 170.6 jg *r 1951 .... .............. 4. 8 8 84. F . .. .. . . .
. . .. 4
? . 2952..... .. ............. 15 191.6 ....... ... ..... ... . . . .
{ w .. . ISE3.. ... ..... ..... . L7 20L 3 ...... .
.. .. ... . 3 .. . p 1964.. ....... ......... 89.7 Pit 5 c '.*b.:p i 2985 ................. 4. 4 8 228.9 IL il 21.94
. Tri
- 19 5 .. ........ ... S. 2 240 F 19.15 42.57 -
% t957...................... 4. 9 257,95 2a 6 54.79 "
.h Ms Ses.. ............ . ... .. . ii.6 m.s5 22.2 m 40
, , i *.i- 1989....................... t Q, t 4 300,0 2t 0 a 32.46 n
'." Tets'. . . 73.$ ................... 10( l ItiI5 Aewese . .......... ..... .. ....
.... 1. ....... ............. ... . . ..... . In 10 Ser.. . . . . . .. 8 . ........ ......,........ . .... 91. 05X104 W W oress C8pedt?
I 8 Decem6w peek.
8Somew 8 Meace> seemer peak 106,No ItW. Reserve evetabee. 23.5 percent.
e (seisessed.
, 8 f tpetes eveldsWe es of Osc. 4, IM9.
l~ Sosses: (disse Doctric issotsts statista.el Yestteek fw 1968.
(C'
.P. m; W
1M,CG 4
.o j
Q O
O
@ APPENDIX L i
O O
f b
O s t
i G [.
O P
(
I 9
l,
g
~E
/%
%s' LONG-TERN FbNECAST REPORT o ELECTRIC SUBMITTED TO
() THE PUBLIC UTILITIES COMMISSION OF OHIO FORECASTING AND POWER SITING DIVISION May 15, 1987
- C)
{
O By: Centerior Energy Corporation 6200 Oak Tree Blvd.
' Independence, Ohio 44131 Telephone: (216) 447-3100 l C) 1 Mail Address:
j P.O. Box 94661 I
Cleveland, Ohio 44101-4661 Fred J. Lange, Jr.
Assistant General Counsel
( C) Centarior Energy Corporation P.O. Box 94661 Cleveland, Ohio 44101-4661 Telephone: (216) 447-3248 O
O 1
1 O
l -
O C O O O O C _ V O O THE CLEVELAND ELECTRIC ILLUMINATING COMPANT 000E FCaM *E3-1: CMARACTERISTICS OF EXISilNG IRANSMISSION LINES O
M Transmission Voltage (kV) Right of-Way type of Number Substation hk M
Lfnq Point of Origin Operating Design Length Supporting of Names on mo 1 Name and Terminus Levet tevel (Mlles) Structure Circuits the line -.
O Do
- 1. Avon seaver Avon 345 kV Station - 345 345 6.4 S.C.T. 1 gj (Ohio Edison) Point of Interconnection m with Chio Edison, Sheffletd yj Township ,<
n O
345 0.6 D.C.T. 25 II. Juniper-Star Juniper substation - 345 1 (Chlo Edison) Point of Interconnection 1.5 S.C.f. o with chio Edlaon, Richtletd 9.2 D.C. M-frame g Town 2 hip -g s
O 2:
Ill. Juniper-Canton Juniper Substation - Point 345 345 54.6 S.C.f. 1 Manne-Chlo Edison (Chlo Power) of Interconnection with Station Ohio Power, Osnaburg Town-ship 7 IV. Ashtabula Erle Ashtabuta 345 kV Station - 345 345 14.9 S.C.T. 1 as West (Penetec) Interconnection Point with Pennsylvania Electric Co.,
Chlo-Penn State Line V. Perry-Eastlake Perry Station - Eastlake 345 345 345 17.9 S.C.T. I kW Station 2.6 D.C.T. --
en tn
~~
VI. Juniper Easttake Juniper Substation - Eastlake 345 345 30.8 S.C.T. 1 .
345 kV Station 6.1 D.C.T. e T
o vil. Avon Juniper Avon 345 kV Station - Juniper 345 345 1.0 D.C.T. 1 )(
Line Substation 12.9 D.C. M-frame na 20.9 0.C.P. H-frame )[
9.2 S.C.T.
v vill. Marding Supply Juniper Substation - Harding 345 345 0.9 D.C.T. 2 Substation 2.1 D.C. H-frame 5.0 D.C.P.
TME CLEVELAND ELECTRIC ILLUMINAllNG COMPANY 000E FORM FE3-12 CNARACTERI5ilCS OF EXISTING TRANSMIS$10N LINES c) m z
- 4 M
fransmisalon Voltane (kV) Rieht-of-Way Type of Number Substation h Point of OriglD operating Dealgn Length Supporting of Names on H
& Nase end Terminus Level tevet (Miles) structure Circuits the Line $
m i z lx. Harding-Fox Line Marding substation - Fox 345 345 5.1 D.C.P. 2 cm substation 0.1 0.C.T. $
o
- x. Catente supply Foulea substation - Galaxle 132 132 1.8 0.C. M Frame 2nd Circuit O substation 345 11.8 0.C.P. H Frame Q o
XI. Avon Beaver Avon 345 kV station - Point 345 345 3.6 D.C. H Frame 2nd Circuit ri (CE) Line of Interco.nnection with OE $
z Avon Seaver ROW, Lorain County xtl. Perry Macedonta- Perry JLation - Intend 345 345 43.8 D.C.T. 2 Inland Line Substation 11.4 D.C.S.P.
7 xtst. Intend Marding Point on Perry-Macedonia- 345 345 1.3 0.2 D.C.s.P.
0.C. 2P Structure 2
w Line Intend Lin's - Harding substation 0.1 D.C.f.
IfV. Perry-Ashtabula "ferryylon Top Point 345 345 1.1 D.C.T. 1 tWAshtabula founship, 22.1 S.C.T.
Ashtabula County tn v
xv. Juniper Mansfield Juniper substation - Point 345 345 0.6 D.C.T. 1 ",
(CE) Line of Interconnection with OE, 1.5 D.C. H-Frame 3 Sagamore Hilla "j" o
m a
O n
as v
CENTERIOR ENERGY CORPORATION 1551:1-1-03(E)(1)(b)
THE CLEVELAND ELECTRIC ILLUMINATING CO.
ODOE FORX FE3-2:
SUMMARY
OF EXISTING SUBSTATIONS Line
} Line Association Existing (TE3-1 or FE3-3 or Symbol Substation Name Voltage Notation) Proposed MX Maxwell 132-13.2 kV 11 E
) NB Newburgh Substation 132-66-11 kV 22 E NE Newell Substation 132-13.2 kV 26 E NF Northfield Substation 132-33 kV 11 E
) NL Nelson Substation 132-13.2 kV 11 E NP Newport Substation 132-13.2 kV 24 E NS Nash Substation 132-13.2 kV 26 E
[) NT Nathan Substation 132-33 kV 26 E NW Norway Substation 132-13.2 kV 11 E NY Nursery Substation 132-33-13.2 kV 26 E PG Pinegrove Substation 132-13.2 kV 27 E
{}
PV Pleasant Valley 132 kV 11 E Switching Substation 12 E 13 E 20 E PY Perry Plant 345 kV V E Transmission Substation XII E XIV E 108 P SN Sanborn Substation 132-33 kV 25 E SP Spruce Substation 132-13.2 kV 25 E ZN Zenith Substation 132-13.2 kV 29 E O
O C-22 O
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/ [f*/ x / : OPEN LINE De$CO8eNECTS U Mf Yx / DIAGRAna seOT TO SCALE TT n ci gh E'( ,,
Y r , THE CLEVELAND ELECTRIC ILLUMINATNG COMPAN)
'g r ,, g' g, SCHEMATIC DsAGRAM OF 345KV AND eas q
, 132KV TRANSMISSX)N SYSTEM
- r. o E EXISTING SYSTEM ASOF JAPa!ARY f.19 8 7
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APPENDIX M I
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December 31, 1986
- The Cleveland Electric Illuminating company Line (b)
.O No.- (a) 1 Davis-Besse - Cont 'd !!2,143 l 2 783 Emergency Diesel Generator 235,240 3 899 - 1983 General Project .1,239,930
'4 916 - Contamination Containment 274,276 ;
5 933 - Reactor Coolant Pump 988 - 1984 General Project 695.858 '
6" 122,990 O 7 991 - 2 Space tetdown Coolers 8
9 Eastlake Plant 724,919 10 7 - Oil Ignitor System 136,787 11 24 - Coal Belt and Dumper Samplers 236,260 12 56 - Modify 3asement Sump 655,285 Q 13 133 - Steam Seal Conversion 101,270 14 145 - Replace Coal Burner Lighters 761,767 15 169 - Low Pressure Turbine Reblade 113,452 16 582 - Turbine Buckets 11,011,227 17 918 - Balanced Draft Conversion 18 l-19 Perry Plant .
1,930,228,353 1 0 20 35 - Construceton of New Nuclear Plant :
21 107 - New 345 kV Transmission Station Lines 6,624,183 !j 22 and Equipment '
f 23 a 24 I 25 Various Plants 117,082 [
26 707 - 1981 Project for Fossil Fuel Plants O 27 977 - 1984 Project for Fossil Fuel Plants 188,814 748,189 28 66 - 1985 Project for Fossil Fuel Plants 918,547 [
29 141 - 1986 Project for Fossil Fuel Plants 270,673 i 30 733 - 1981 Project for Nuclear Fuel Plants 505,836 31 65 - Various Replacement Projects, All Plants (1985) 315,458 !
32 140 - Various Replacement Projects. All Plants (1986) 400,484 :
l0 l 33 178 sajor General Project for rossii Fuel Plants .
i 34 r l 35 Transmission-Substations 3,943,690 ,
! 36 108 - Rainbow - South RON 2,244,246
!- 37 370 - Juniper - Construct 345 kV Circuit 2,078,859 l 38 377 - Northfield - Automate 1.183,225 '
jQ 39 512 - Newburgh - Automate 896,132
- 40 525 - Clinton - Automate i l
41 i 42 Miscellaneous Transmission Projects 837,868 i
43 33 - New Automatic System, SOC l 146,543 44 129 - New 11 kV UC Service at St. Alexis Hosp. ,
y 45 146 - take Shore & Newburgh, Upgrade Relays and 551,334 jO 46 Optic Cable 362,569 47 157 - PCB Capacitor Replacement for 1986 t
t l0 j i
216-A i
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3 3
3 APPENDIX N O
O O
O O
O
n t. g 4
1 I
jO a
l )
I QUO EDISCN CCb!PANY lO ,
1 Nuclear Regulatory Ccemissien I
I Licensing of Production and Utilization Facilities lO i
l lO I PEPAY SUC1. EAR PCh"ER PLANT tNITS NCS.1 ANT) 2
'O l9 -
1 iO i
i
~
Infomatien Needed by the Nuclear Regulatory Com-
'O mission for Antitrust Pcview of Ooerating License Applications for Nuclear Power Plants as detailed _
-! in Ren11storv Guide 9.3 l
!O i
O O
O
O Item 1.c. (Cont'd)
- 2. W following changes in interconnections have occuma or will ocar O within the Ohio Edison Systsn (CES).
- 1. The Samis (OES) - South Canton and South Canton Star (OES) 345 kV interconnections with Ohio Power Company were previously metered together and considered a single interconnection. Today they are separately metered and have been classified as separate interconnections.
- 2. The 345 kV Beaver Valley - Shenango (OES) interconnection with Dtquesne Light Ccxpany has been replaced by 2 - 345 kV interconnections. At the hbnsfield Plant, this was changed to fom the Beaver Valley - thnsfield (OES) and the Crescent - bbasfield (CES) interconnections with Duquesne Light Cocpany.
- 3. A 345 kV transmission interconnection with GI is scheduled to be put in service in 1981. W circuit will extend between the Avon Power Plant (GI) and the Beaver Substation (CES).
- 4. A 345 kV transmission interconnection with GI is scheduled to be put into service between 1982 and 1984. W circuit will extend betwen O the bhnsfield Power Plant (CES) and the Juniper Substation (GI).
- 5. N 345 kV Ohio Edison Fhnsfield - Hanna line, which currently passes near Ebquesne Light's Beaver Valley Nuclear Plant, is scheduled for codification in 1986. The line will be changed to fcm a second Beaver Valley (DL) - Fhnsfield (OES) 345 kV interconnection (the first O discussed in Item 2 above) and a Beaver Valley (DL) - Hanna (CES) 345 kV interconnectim.
into service in 1988. 'Ihe circuit will extend between the Perry Nucicar Power Plant (GI) and the Ibnna Substation (CES). ,
'O These changes are reflected in the following table: -
Ohio Edison System Interconnections (In Service and planned [
Year 345 kV 13,8 kV 69 kV 34.5 kV Total O 1976 9 14 5 1 29 !
I 1980 11 14 5 1 31 l 1981 12 14 5 1 32 1984 13 14 5 1 33 1986 15 14 5 1 35 1988 16 14 5 1 36 O
O O , ., ..
O-0 l
'O O
O APPENDIX O O
O O
O O
O
lInts Recert ist i fate ?f Petert i tear of Rteort : I
<he"ofRessengent C10 ED!SCN CCP.PN !!!) l1: An CrtE16al l GC. Ea. Yrl l ; [ l l12) l l A Aesd elssten : Dec. 31. 1996 : >
.........................-~~~~...-~~a..~...~....~.~~~~-~....-~~~..~.~-..~~-.~.~~~.............:
IRanSN!!$1CN t,lhE ifAflSilCS :
..........................".~~~~~~~.--~~~~~.....~~-~~~~~--.~~~~-~.."~..~..~~....~.~........:
transatssten llee nas sore than one tvce of sues:rtine struc- l l
5 1
- 1. Recott infersatten concernian transatssica lines. cost of ture, teficate the ellette of each tv:e of constuction av the gets and ergesses f er the year. List each transatssion line having l
- cataal voltage of 132 tilovolts er treater. Res:rt transatssten use of tracyts ont entra lines, mn:r certicas of a transsissten l ges teles these voltages in ;rcus totals caly for each voltage, line of a ditierent tv:e of constructt:n need n:t te distinautshed:
W Transelssion tiers include all lines covered by the deitnttt: 5 free the reestater of the line. :
tf transatssten systes slants clven in the Unifers Systes of 6. Pe: rt in celuans (f) and (t) the total cele sites of each : .
- cceunts. to act re: rt substatt:s ccsts and es:entes en this case, traisetssten line. Shes in c:luen til tre cole elles of line en l
- 3. Pee:rt data by tedivitual !!nes ver all veltages tf 50 re:utred structures the test cf enten is ren: rte: f r the !!ne dest:natest :
tv a State C:estssi n, converselv, sace in celuen tai the cele atles of line en struc- : 3
- 4. Enci':de free this svt av transsissten lines f or inich tures the c:st of smith is ree:rted f or nether line. Reecrt sole l A tlant costs are inclu:eo in Account 121, w utt!!ty Preserty, sites :f liet en leased or part!v cased struttures in coluen Int. l
- 5. Initcate ehetlier the tyre of sus:ertteo structure ree:rted in la a (c:ta:te. enslata the basis of sacn ectu:ancy and state
^ sn (e) ist (1) stacle ::le, seed. cr steel (2) N-frase so:$. seether escenses eith rescect t3 such structures'are included
-steel soles: 13) t:eerl er (41 undergrouns c:nstructien. IF 4 in the eisenses resortes fer the line testenate:. . E
- : LEE TH IPele alles) l :
5
! l VCt!ASE
!!SINilCh !!!ndicate = Sere :ther l ! ila the case of ur:ercrcund l l l
lthan H cycle. 3 chase); h :e of : !ines, re::rt circuit stles) l l
. tat: ~~--.--~------~~------------~--~~~-l--~~~~~-~~--~~~--;
Su::ortlnn ; ~ - -- - ~ ~ -- ~ . - -- ~ ~ ~ -- - -- -~~ ; % s t er ! l 40.l ! ! ! : Strutture l . I cf l y
- Free
- To : C:eratine : Cestenef l lCn Structures et Ci Structures Of lCtrcutts:
! . l l1.tne Cett:nate: ' : An ther Line :
I tt) ; (c) ! ($) l tel l If) is) l tM :
O'..:!
(a) l 9.74 l I tAvon (CEI) : leaver 11 345 KV : 345 tv l Steel Teser l 1 l 2 l Avon (Cell (1) l leaver 12 : 345 KV ! 345 KV l Steel f:eer l 1.29 l 9.74 1 :
3 l Ares (Cill !!eaver 12 l 345 KV : !45 EV l3 teel P:le l 1.3 l -
l 1 :
,1:!eaver lCarlisle : 345 KV l 345 8V iSteel T:ver l 17.50 l - ! ! :
(2) Cavis-itsse (TEl 345 tv l 345 KV l Steel. icier : 39.02 l 3.55 1 l
' 5 l tearer l 345 KY : 345 KV l$ teel F:le : 1.66 -
l ! 't leaver l Carts lesse (TE)
. !!eaver Yaller th) (3) lHanna l 345 IV : 345 IV l Steel T:ser . .
l 52.02 l 1 l 8 !! raver Valler (R) lHuna ! !45 tv : 345 tv ::::d H freie : 0.69 : .
9 !!eaver Valley (El (4) l!asets : 345 KV 345 TV lt::1 H Frase : 0.:1 l -
1 l $
10 tieaver Yaller (R) $4ssis l 345 KV : 345 tv l Steel Tener : 0.17 : . : 1 3 11 :Cuten Central tCP) i*una 345 KV : 345 tv ISteel iceer 0.H : - ! ! :
12 !Carlisle :!!ar l 385 tv : 345 tv l Steel T:eer '
3.:9l 1.73 l 1 !
13 lCarlisle Star : 345 av : !45 IV lsted M Frase '
1.14 : - . ! :
14 IXanna lNt:hland l 345 EV : 345 tv !ssed H Frase 23.76 . . . t :
- l lHuna lFighted
- 345 tv l 345 tv : Steel T:=er . 0. 4 . - . 1 .
16 lHana l Marting (CE!) : 345 KV : 245 tv l Steel T:ser l -
0.0 7 l 1 l 17 lMarding (Cell (5) l?nsfield !45 tv ! !45 tv : Steel Tener . <!.1: ; 0.70 . !
II : Par st r. ICE!) l?nstield ! 345 tv 345 EV !! teel Fele . 3.03 l -
- 1 !
19 !Rarstna (CEI) ?nsfiels : 345 KV l !a5 (V ::: a M Frase : 2.21 . - i ! ;
20 l%ichland (il !? n sfield 345 tv : 345 (V l Steel T:ser . 49.61 : -
- I :
21 lHtqnl ud !?nsiteld : !45 LV l 245 IV l Steel F:le l 0.!! . - . ! !
- l l
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- l : .
3 h! Ince:tten Teres :f Yearly '
l g
23 Nase c! lessee cate Lease Fent . l
- g ; ................................ ........ ........... ........... , ,
?? l (11 CE! TE. R. FF 9/01/!! 540 ::5. I 661.175 tetereine fr:s CMC 0 <reestet cate: 9/14/67 :
OS l 12)'CEl. TE. K 10/01/75 540 ::s. 1.163.011 Ceteretnet f ree CMC 0 A:rteteet intec 9/14/67 l ! E 29 (3) CE!. TE. R. f' 9/01/60 540 ::s. 1,139,1 5 tetersoed fr:s WC0 <reettet catec 9rt4/67 :
L 20 : (4) (E!. TE. R. FF 12/01/70 14) e:5. 56.140 Cetersleet frcs C#C0 4retecat :stes 9!!4/67 .
31 l 15) CE! TE. R . FP 10/0!/77 540 a:s. 6.5!6.735 Cete stret f t:e CPC0 4rtemt cate: '/14/t7 .
():
M (6) CEI. TE. R. F? o/01/77 50 :5. 1. l ? 3. ! D :eteriired frce CWC -:rtemt cate: 9!!4/67 l
- 4 : N2TE: the tereinals cf all 345 tY n: :39 PV lises ve testenates tv
- 5 : Trussissten instatten case unless :tarretse sh: n. l T3TAL : . E
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' PAGE i SECURITIES AND EXCHANGE COMMISSION
]
G WASHlNGION, D.C. 20549
) _
FORM 1 0 -l' O
ANNUAI-~ REPORT PURSUANT 10 SECTION i3 OR iS(D) 0F
-) THE SECURITIES EXCHANGE ACT OF 1934 -_
y DECEMDER 31, 1905 CONMISSION FILE NUNDER i-2578
, FORTHEFISCALYEARENDE{s- # /
0 GHIO EDISON COMPANY (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER.)34-043??u6 OHIO - . . . . - - - _
.vI
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.O INCORPORATION OR ORGANIZATION)
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U -. . --. - - - . . . . . . . . . . . - - - . . . . - . . . . . . - -.
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--OH M-EDHtHW.MiiPA N Y-: '-Cih* AH P ---H nf--Gh6 A N 9 . D -UN D t*~*E--EM S--tn----
THE S':.TL OF OHIU IN 1930 AND DWNS PROPERTY ANO t 'l a UUIliESS AS d AN CLECThji ia
~
t ."T s - v + -
.. PUM:H? -Wib1Tr IN -Tiin;--STATE . - - TH E--60PP AN h-- AL.M H b - OvHEi-MH Ir
'EtMS f L GN I n ,
O CERTAlN GENERATION FACILITIES LOCATED 1N THE CDH.iUN WE AL T H D
-THE--E-ON F4tN Y '-S -F R i-NE+FM L- EXEC U H V E MF F I CE S- m FP LO CNtE l+ - A T ,W l-v Hi' H- H A I+F - - -
STREET, AKRCN, OH10 * '1 3 0 0 , TELEPHONE NLiuf: (?i6) 3a
- -5 ; 0:'
THE COMPANY FL!RNISHES ELECTCIC SERV 3CE IH Oc CCi,H! N Il li ' Ao UJa --
-inP--hr Mtm At--A ret #- cF- uH 1O . ---fi -5t+PPL ii- 5 -hWS M hS f ON c E W 1_W-i U - ~ w*n Ar-O COOPERATIVES, ELECTRIC ENERGY FOR RESALE TO J. MUNIC]FALITlLS AND L T!Is
, -i-RnHFHi S910N -S-EiWf C-EE-*1+D-EL-Ee.1 Ri+ eHEne # -FOR -+:es+ize--4 o-u.-4 eu+EienL+sE+1+--
OHIO. THE COMP'ANY ALSO ENGAGES IN THE SALE, PURCHASE AND INTERCHANGE OF EL' CTis C ENER&Y - UI T!! OTHER-EbEMkIE--COMP AHiES r--+HE-*REA-4T-EERVEF i, ,5 A POPULA1 ION OF APPROXIMATELY 2,500,000. _ ._
O v THE COMPANY OWNS ALL OF THE QU ISTM DING COMh0N STOCi OF
-f ENN EYW AN M--PG WE R-C-GMPA N Y-4. ! PEN N PG HER ') ,--ME N N S-YMA N M -GGRPORAMGS---WH ICH -
FURNISHES ELECTRIC SERVICE IN 13Y COMMUNITIEL AS WELL M .T N RURAL AREAS OF
--HE-STEi J iiNHSYLVANIA, A N D-WHIEH ML-Se-9Ebi.-E- r. L%i+ -E9:9-Y-Wi-4!H64-E McE+ ~--
, MUNICIPALITIES. THE AREA SERVED BY PENN FouEN HAS 6 POPULM 1UN OF APPROXI-i A-TEin-isMW99--
n U - -
w.. Cv_eeHe-vi 4ts I u N P w c as------- .
r IN SEPTEMBER 1967, THE CENTRAL AREA POWER C00RDI'hATION GROOF
(
('CAPCO') COMPANIES, CONSISTING OF THE COMPANf, PENN POWER, THE CLEVELAND -
L L t C i iil C ILLUMINhT1NLUD'FiFnift C'IET' 7, TiUG.TETTTC Thn i cune Al) ( DUQut.5 NES AND 1HE T O L E D O E D I S O N C O M P A__N_Y._.(. ' T O L E D 0 ' ) , A__N_h0UNCED A PROGRAM FOR JOlNT--.
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O Pace 6 3 - E L P R L J L n , A i .h' tis - 1.c .;LHE DULttJ-Ttt-tius A HGRING in C0iiNEC iiuN Wiiii AN E ARTii-QUAKE WHICH DCCURRED ON JANUARY 31, iYG6 AND WHICH WAS CENTERED ABOUT 1O l 3
iiiLE , ;."fMWt-Cr*-TtiL+-PtT. itiP--Ce r %; :TTATED THa i -I T , TiiE NRt,, AttU THE ADV150Ri ,
COMtiITTEC FOR REACTOR SAFEGUARDS (AN INDEPENDENT GROUP OF SCIENTISTS), ALL TTAVE T tTNU iiE'iW &r t'L ANT TLT D t3NAFFc. LIED D r iME EaKiHQUnKE.
O F Lim i unit 2 -
') inE CnPLu LOMMtIES T,ist CONTTNUIh !O'REVlbW i rD .s 6 e i LT0i- t'tMRY~
UNIT 2, UHICH IS ABOUT 44% COMPLETE. THE ONLY SIGNIFICANT WORK THAT HAD
--fdCStritP-OEftt--ftRFtRt1Et-Ott--tJttPT 2-N A?-TMai TiCCttt$nt& To-rttra i_ PC1CT-t1NTP T- - -
O TO DE PLACED IN SERVICE. THAT WORK WAS ESSENTIALL) COMPLETED IN THE SECOND -
--t:ttA N T E a s. i h .s . K 0; Jitet i , T985--itiE COnfttNIES STGPFEu Irtet-tJ Di m AcudL y RELATED TO PERRY UNIT 2 IN NET INCOME AND INSTEAD BEGAN CREDITING AFUDC -- '
CAF li AL-M*.CD "TC-PCWr tjNIT-? TTP- A -RETERVE- ACCottttT aa hat-rSitED-1*t7FThn 6 PURPOSE. PRIDR TO THIS CHANGE, THE COMPAN1ES' AFUDC RELATED TO PERRY UNIT
"~2" HiiD"IICCM ~~INCCCUED Iti-"NET ~ TNCOME AT"TTiE ^RATC2 0F APPRDk711/iTECT U3:7 TilLLIOtr -
,O PER MONTH. THIS CHANGE HAS NOT AFFECTED CASH FLOW BUT HAS CAUSED NET INCOME
- "PO-1 E LGt!!'tr-1tinti-rP UtttCRttfSC"uGUt:D -H AV E-Itt'Ets .
I Utt?it-fcE-tiftP 6F-THE -?YM US -OF* PEnfef-tf N-Ittiter-itCrt-COMPLBTffi*,
POSSIBLE THERE WILL DE NO DEFINED SCHEDULE FOR THE COMPLETION OF UNIT 2. - -
-+t-4EPHMtpE5' B E1M-f(EV-IEHE D UI TH -REtPE-C F 1+ UN H-2-I-Het-t+DE- f NDEMN I PE--- --
O SUSPENSION OF CONSTRUCTION OF THF UNIT, NESUMPTION OF UDRh GN THE UNIi A?iD T ERnl.d . . art-P-MiE-UFrPf--- -IN- ACCORD ANCE- H ITH-it1E-iMPctr nMcANSEtstitS-------
DISCUSSED BELOW, NONE OF THESE ALTERNATIVES MAY DE IMPLEMENTED WITHOUT THE l
I -nPPPOV A!; OP -E ACii -OF-THE -tAPCO - COMi pttIEe .
n3 UtN.CEttMfr-3?; 7Y8'57"TH:'--CUMT-nNT-AT&T!Trt-POutr- ttnU-1NW:7TTU"-~ ;
O APPR0xInATEty s3To,o nItLIoH AND no.4 nItt10N, nESeEcT1vEty, nPPLICnPLE To ~ -
<; E ;~; i i ti -.~. 4. ~ , nt-t 'B-COMPT:9 PION t*ttiE vrtif C5.s _a_ s . ._ J i ._ a -10 IF 3
INCREASE n~.- ,..,s ITS TOTAL
. . < - . _ .,a-COST M AMOUNTS g .s ~ . g_p( A T WHICh ARE NOT PRESENTLY
,- < n ,- ~. -e z - . , :..-,--
I m ..,v: DETERhlNABLE.
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1i. e t i s W L., .rLI- a6 s . . 4 t h i 6 7. . . , us it i n Ais vww
__ M _ u ._ w w A Ua w a t a. i ASSIGNED TO UNIT 2 WOULD BE REASSIGNED, WHERE APPROPRIATE > TO UNIT i .
-HOWE-Y E R , C A -C'JLL /iT ION-StMPGES .W ABLE '.6-59H4 R ACTORS ANL G T H E R c .1SW-+
'O TERti1 NATION COULD BE I NCURI:E D .
iiNDINC COMPLET10N CF THE Cf.PCO REJIEU, TSE
- dt-t---
-C 1 " Mm - t%M-f+ **tM M -+-'-- -- iM-feHME#-itt"+ '
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CONTINUE OR, IF L DN O tPL' N N .. 'Il t
It COM JL. o .
1 . . l$ TERhlNATED, THE CCM > / ma_.
-mew-T O -RESO VE 5: 1 v tt&ESi nt-itT PUr Com8T- NOld-PREDIe1--kHETHEMI-TS- 1NVif Y M t '
C IN UNIT .' MPL1CM!LE TO I f S PUBLIC Ul lt ii 1ES COMhlSSIUti 0F UH10 (*PUCO*) -
-JUM N E H O NM-- C-U S f 6MftS- Wii.L - BE bi C N- (+ LE - -Wr--E-9H H e t - H^d--W - -- - ---
, WiC0VERING COSTS UF PREV iab 'LY ! Lc:MiNM CP CONSiRUCIJON F F 9 J f' C i S i o'UULF M
- :tq E p E w r. rq .m,p. q L.gu E p. . .. . .- t,c . 9 3 y;, a_ _: N 4 E T A 1 L--R A T F % F6 . - Sh
'REGULTYIGN ;ND NATE HaTt - iM . f r m_ 4 i tW.i l 0.t T ERM rm t LD Coa-i: . . . - e i
g +[rQ-F (F i- * - - j FH &-M(N'. -C.- M i' O'.9 9 J , T- T 7.g. - Cij F} fJ . iiF --9 %-+r- 9 -i +J Er . U i4 !
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'.,uut . !i i:tiQU t UL i iu WP1if. Uf iHL Pt #R i l uti Ut t 4 .. io<tJi. ti i d 'i .
) 00t)PAta i cable i6t 11: HiCU JUl<'lSD1C110NAL L U S T U ti L R 5 . AS UF DLCUd:Lk 7,1, '
, 6ill ,
COhPANY L ST I rin ! E S THM iHL tiAX1 hun Ahuhut UF SUCH A URIfr-oFf u ui3. o ut 4 APPROX] nA l t l3 10 1'- t11 L L I O N , NET OF INLunE IAX EFFECT. lHL C U MP Arn ou r.S Nui
'O PRESENiLY nu llc 1PM L inM A wailE-uFF UF EVEt1 IHIS tiAGNi l upt , If hGtuiktD, e
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PAGE T O -
) - WQutD ATTCC i i TS nDILATi 70 iu r C0ttttOti TTOCK v 17IM'Tw o AT CURRETTT tEvrE;T, AND STUDIES INDICATE THAT THE tiAGNITUDE OF ANY SUCH URITE-OFF COULD DE MUCH
,SMALLLR. IF, DESPITE ITS E.E S T CURRENT INFORhAT10W, A nUCH LARGER WRITE-OFF WERE REGUIRED, DEPENDING UPON THE TIMING INVOLVED, SUCH A WRITE-OFF COULD
) i un- ur : ATii t 1 AFFEU1 1 lit LUllP,*i777' I 74I'IETTY-~T O~ r o i t u, mon aiuun v 1 TITE 7 h o i UNDER THE COMPANY'S INDENTURE, lW P0tWANY'S CONSOLIDATED O CURRENT L EVELS.
- TET7iTTEIT EATmITiGTIT?!RETTRTU i L U F OR r a r n tat-~OF ' CiiSFT'DI',FIliENDTOTF TFit COMPANY'S COMMON STOCK UERE $31;7 tiILL10N M DECEtGER 31, 1985.
4 BASED ON THEIR EXPERIENCE TO DATE, THE COMPANIES UQULD EXPECT TO -
3
--- k CC U VETMttri n 1,w E 5 i dEttTT Ttt"Uti1 ~. .: WIin m_orECT iu i i n_ i n c L u e.LTC~EN L n u i a
v REGULATORY COhMISSION (*FERC') JURISDICTIONAL LUST 0hERS IF THE UNIT iu.# UERE
- i LRiilNs . L u . i Eiv Punts stav EXPErir This i O Tic Ti1C%-SE Wi i a REa r tu i 3
PENNSYLVANIA FUDLIC UTILITY COMMISS.'ON (*PPUC') JURISDICTIONAL CUSTOMERS,
- ALih0UG;i i ;s ?OOCh a ni_uGVeni GP iME CliJTT GF-TERinitTrrCTTTh0,.n L i a t uhUumi SEE ' REGULATION AND RATE.
) RATES IS STILL BEFCRE THE COURTS IN PENNSYLV@I A. "~ ~
p
- 7m i i ERTC- mTTE TRE7iT. FTETri"Di~~TERiTIN ATED' CDNSTRECTIO" 'P RDliECTS .
- v 'r'" ~+'v7_ m~ ~s. n i ~r r' i . 'u r4*- 1c'e- ' ' n' ' ~~u' rn C 'r_-~.u~
3 aut
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a a i c i i_,C n P P4 v 1 '1* --'o' n v 'n' E a c n e t a *~*e ING FENDING DEFORE THE PUC0 SEEKING A uALT T O CUN TRUCT 10N OF PERRY UN
-3 DEAVER VALLEY UNIT 2 - _._ - . _
i' > ldLETE. IN JnNUARY O DEAVER VALLA UNIT 2 1: APP.00- lM T LL T FM, TIE 7;APCu"-COMP ('NIEF nNNUUMD A l'EL iY !N IT'i UUM LE!.!UN 01- D J r \"_t END OF 19 <?. ESI.1hnfES 0~ THE VALLEY IJNIl 2 FROM LATE 1986 10 AbUUl F .-Fc '&:t UF 'h: 4 CO:M " it!CRCATEP-~nf n
--T OY71r~t-S17 "l m- -'. tit tt t:ND -1 t'E Cifv ANY
i RESUL) 0F T M . DELAY. _
THE CCr: M- !"' ^D- G DY U UE NL. 1M 60i;-
IN CC'iOBER '
0 .' L' ' '
O C' '- PN!Y , 1:!Al Il? REvitu IN 'L: 9: mLLLY U
) -- W :t M t7 Nt. l; Q .- . :. T m o , MC UF Uc irc CUF.n ^ .i COST A P P R O'G H AT ELY $4.2 DILL 10N U":.1 I '. -
G '592 f-lt-+-etMri. tP&.--M:-t-d M NM e 5 E OF - a M .- :- 1 L L 1 tm o V ER -Pn t-V-10 unt ESTIM Al EI) COSTS. THE COMPANY'S SHARE OJ THE INCREASL JS NEFLECTED IN THE
)
T Wt-t-4tt W,W ".*- -5ttE~ rSTdhATED-CUST eW CiX ' 4".' IIt?" SCHE DULtc FOR M ANER
^ 7 U ;i . UM Ch _ E G ELT -:L VALLEY Un]T 'J IS CCRENTLf THE ' u e J O. - ,
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)
- O CERTIFICATE OF SERVICE l
I hereby certify that I have this day served a copy of the foregoing document upon the participants in this proceeding.
Dated at Washington, D.C., this 19th day of February, 1
1988.
lo l
Movh ~
Kenneth M. Albert f
O O
O O
O O
O O
b) SERVICE LIST Mr. Thomas E. Murley Director of Nuclear Reactor Regulation gy U. S. Nuclear Regulatory Commission Washington, D.C. 20555
' Benjamin H. Vogler, Esq.
Office of the General Counsel U. S. Nuclear Regulatory Commission O -Washington, D.C. 20555 Deborah B. Bauser, Esq.
Counsel for Ohio Edison Company and Pennsylvania Power Company Shaw, Pittman, Potts & Trowbridge I) 2300 N Street, N.W.
Washington, D.C. 20037 David R. Straus, Esq.
Counsel for American Municipal Power-Ohio
,0 Spiegel & McDiarmid Suite 1100 1350 New York Avenue, N.W.
Washington, D.C. 20005-4798 Janet R. Urban, Esq.
.)I Antitrust Division / TEA U.S. Department of Justice 555 Fourth Street, N.W.
Room 9816 Washington, D.C. 20001 C. E. Chancellor, Esq.
() Secretary and General Counsel The Cleveland Electric Illuminating Company Post Office Box 5000 Cleveland, Ohio 44101 Alan P. Buchmann, Esq.
() Squire, Sanders & Dempsey 1800 Huntington Building Cleveland, Ohio 44115
, Michael M. Briley, Esq.
Counsel for Toledo Edison Company
() Shumaker, Loop & Kendrick North Courthouse Square 1000 Jackson Toledo, Ohio 43624-1573 office of the General Counsel
() Duquesne Light & Power Company 1 0xford Centre 301 Grant Street Pittsburgh, Pennsylvania 15279 O