ML20196H151
| ML20196H151 | |
| Person / Time | |
|---|---|
| Site: | Wolf Creek  |
| Issue date: | 06/30/1999 |
| From: | Lambe W AFFILIATION NOT ASSIGNED |
| To: | |
| References | |
| CON-#399-20613 CLI-99-19, LT, NUDOCS 9907060095 | |
| Download: ML20196H151 (10) | |
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USPRC UNITED STATES OF AMERICA
, g.2 P 2 :32 NUCLEAR REGULATORY COMMISSION
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OF In the Matter of l
Docket No. 50-482 g,
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Kansas City Gas & Electric Company, et l
al. (Wolf Creek Generating Station, I
Unit 1) l RESPONSE OF WML ASSOCIATES TO COMMISSION MEMORANDUM AND ORDER CLI-99-19 f
The Nuclear Regulatory Commission (Commission or NRC)in its Memorandum and Order dated March 2,1999 (CLI-99-05) in the captioned proceeding sought comments from the Parties in the proceeding and interested nonparties as to whether it should eliminate antitrust reviews in connection with license transfers and thereby terminate the proceeding originated by Kansas Electric Power Cooperative (KEPCo). The Commission received comments from the Parties and several interested nonparties. In its Memoranduni and Order dated June 18,1999 (CLI-99-19), the Commission dismissed Kansas Electric Power Cooperative, Inc.'s (KEPCo) petition seeking an antitrust review in conjunction with the transfer of the Wolf Creek Generating Station, Unit 1 (Wolf Creek) operating licer'se to a newly fonned entity, Westar Energy, Inc. CLI-99-19 also provided the opportunity for the Parties and other interested persons to respond by letter pursuant to the " appropriate disposition of the existing antitrust license conditions due to the planned changes in the Wolf Creek ownership and operation." CLI-99-19, p.35.
WML Associates would like to provide the following comments on the Commission's Memorandum and Order and any proposed disposition of existing antitrust license conditions i
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attached to the Wolf Creek license being transferred to the new owner.
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I. Initial Brief of WML Associates I
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. The Commission's characterization of our initial Brief did not capture the thrust of the argument against cessation of post-operating license reviews. Indeed, we do believe [as emphasized by the Commission in CLI-99-19,'p. 5] that the Commission has had a significant role in promoting competition in electric bulk power markets resulting in " disadvantaged" entities saving millions of dollars in monopoly rents. However, the thrust of WML Associates' argument was that the Commission's reading of the Act and its legislative history is incorrect.
The Commission interpreted its antitrust review authority to terminate with the issuance of the nuclear operating license. We disagree, as stated in our Amicus Curiae Briefin the captioned proceeding:
i If the NRC believes that its mandate to conduct competitive reviews of new owners is limited to owners at the construction permit or combined construction operating license stage and not new owners resulting from license transfers, it should seek clarification from Congress concerning its review responsibilities under Sec.105c(2) of the Atomic Energy Act of 1954, as Amended
. (Act). Amicus Curiae Brief of WML Associates, p.'2.
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- The Commission's reading of the Act as well as its interpretation of the legislative history of the Act appear too complex. The Act requires a competitive review at the 3
construction permit (CP) stage, and the operating license (OL) stage if. "significant changes" are identified, of all prospective new owners of nuclear power production facilities.' The Act does j
'In many instances, nonowner operators can wield the same type of market control as an Towner operator and should be reviewed for any anticompetitive activities that may impact the markets in question. However, relatively small, or de minimis, applicants are excluded from the
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not preclude review of new owners after issuance of an OL. A " reasonable man" or common sense reading of the Act requires review of all new owners-to do otherwise could lead to
" sham" reviews and circumvention of the competitive review process intended by Congress.2 l
To read the Act as precluding the review of a new owner because the ownership change occurred after issuance of an OL, would contradict the simple, direct requirement of conducting f
reviews of prospective owners called for in the Act. The simple interpretation seems obvious, i.e., review all new owners, while the complex interoretation appears contradictory, i.e., review new owners at the CP/OL or COL, but not post-operating license. Nowhere does the Act state or imply that new post-operating license owners would undergo a review at the Federal Energy Regulatory Commission, Department of Justice, Federal Trade Commission or in any otherfora.
The Commission should draft legislation eliminating whatever competitive review function (s) it feels it has performed in the past and is no longer required to perform and forward said draft legislation to the House Judiciary Committee and the House Commerce Subcommittee on Energy and Power for their review. Congress intended for all new owners to be reviewed and it is Congress who should provide the public with the rationale as to why all new owners, as proposed by the Commission, should not undergo a competitive review.
normal antitrust review procedures.
2As envisioned by the Commission in CLI-99-19, prospective owners could undergo a l
license review at the OL stage, fully intending to sell, merge or transfer in some way the facility I
to another entity afler issuance of the OL, thereby completely circumventing the review process for the new entity. The Commi.;sion's ruling in CLI-99-19 may have the unintended effect of stimulating a variety of machinations by licensees and potential licensees seeking to avoid competitive scrutiny of their marketing activities.
4 II. WolfCreek Antitrust License Conditions l
We do not believe the destiny of antitrust license conditions should be determined by Commissionflat. The antitrust license conditions attached to over one half of the operating reactor licenses were developed after close examination ofindividual competitive environments
-throughout the country. The Wolf Creek license conditions, and indeed all of the NRC's antitrust license conditions, were developed primarily from case specific data and focused to lessen abuses or potential abuses of market power by applicants or licensees of nuclear power production facilities. Any suggestion of eliminating or modifying any antitrust license conditions without a careful consideration of the competitive implications of such action
.'seems incredulous.
I Antitrust license conditions, unless specifically developed as time-sensitive, are a part of i
i the nuclear license and do not expue until the license expires. Although many conditions grant access to various aspects of the nuclear facility and ancillary services on a one-time basis, the i
majority _ involve continuing obligations with accompanying competitive benefits in various bulk power services markets. Eliminating, rescinding or modifying antitrust license conditions which
- were developed after careful analysis of the competitive structure, conduct and performance of site specific data'and markets, would not be in the public interest; moreover, such a policy would seem to contradict the intent of Section 105c.
Although we do not support changes in existing antitrust license conditions without a factual basis of support, we do believe that if competitive circumstances change, the ki
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5 Commission can, as it did in Ohio Edison Co.,3 conduct hearings to determine iflicense I-conditions should be modified. If there were a need to modify these license conditions based on
" changed circumstances", we would envision, as in Ohio Edison Co., the licensee or another interested entity, making the request for such a hearing. The Commission seems to agree,
- We do not believe it is possible in the abstract to generically preordain any one solution for all conceivable cases. The license conditions on their face, the nature of the license transfer, and perhaps the co.mnetitive situation as well, would need to be
- considered to determine what action were warranted in a given case. CLI-99-19, p. 33. [ Emphasis added]
However, in the very next sentence of the same passage, the Commission considers three scenarios in which license conditions'may be modified "without regud to the competitive situation" Indeed, any post-operating license change in the Wolf Creek antitrust license i
conditions or any antitrust license conditions, should not be determined "without regard to the i
competitive situation", as implied by the Commission, but only in conjunction with an analysis of the existing competitive situation addressed by the conditions and the effect on the 3Ohio Edison Co. (Peny Nuclear Power Plant, Unit 1), CLI-92-11,36 NRC 47,54-59
- (1992) In this proceeding, the Licensees requested suspension of the antitrust license conditions attached to the Peny Nuclear Power Plant, Unit 1. Their request was denied by the staff and ultimately by the Licensing Board and the Commission. The Licensees originally agreed that if they prevailed on an initial " bedrock" legal issue, then the Licensing Board would hold a factual evidentiary proceeding. The City of Cleveland challenged the Commission's authority to suspend antitrust license conditions and appealed the decision to the Circuit Court of Appeals
- for the District of Columbia.- The Court upheld the Commission's order and denied the City's appeal on October 27,1995. Consequently, there was no need to conduct a factual proceeding in
~ his case; however, we view this case as a test case and would expect any subsequent requests to t
. modify license conditions to be based on the factual circumstances unique to the entities
, involved.
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competitive situation from a modification of the license conditions.
Antitrust license condit. bus are not the "boilerplate" license conditions often imposed by other Commission regulations. Antitrust license conditions are sensitive to both product and geographic parameters and have usually been developed and made a part of a panicular license after contentious debate concerning the licensee's conduct and performance in specific markets.
. Modifying or eliminating antitrust license conditions without ample " sunshine" on all of the relevant issues that led to their original imposition would be irresponsible. We suggest that any requests to change the Wolf Creek antitrust license conditions, or any other antitrust license
' conditions, be examined in the context of a factual, evidentiary hearing before the Commission.
Moreover, any such hearing should only be convened at the request of the panies involved or other interested entities and should not as a matter of policy or procedure accompany all license
- transfers.
'lli.c Rulemakings The Commission indicated that it will direct the stafTto " initiate a rulemaking to clarify the terms' and purpose of section 50.80(b)". CLI-99-19, p.28.- Given the Commission's leanings and stated policy objective to reduce, and eliminate in certain areas, its role as antitrust d
adjudicator for its licent es, we must assume that any rulemaking process will reverse a Commission policy to ensure that all new owner's activities do not " tend to create or maintain a situation inconsistent with the antitrust laws." The Commission's rules and regulations, dReferring to its prior practice of post-operating license antitrust reviews, the Commission has stated that, "we would abandon it as largely duplicative...and not a sensible use
- of our limited resources..." CLI-99-19, p. 29.
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' 7-primarily 10 CFR 50.33(a),10 CFR 50.80(b), Regulatory Guides 9.1-9.3, and its Standard Review Plan for conducting antitrust procedures and reviews,~ have historically been interpreted by the Commission to require reviews of all new owners. Prior to making this shift in policy, we suggest that the Commission undertake its rulemaking process with the following two corollaries in mind:
- a. the Commission has interpreted the legislative history of the Atomic Energy Act with short-run policy objectives in mind, and
- b. there has been no concrete proposal put forward by the Commission to shift this review responsibility to another federal agency.
It would seemingly be more prudent for the Commission to have its interpretation of the legislative history of the Act validated by Congress before it changes its rules and procedures that have worked so well since the Commission's inception. Even though the domestic commercial nuclear power industry has developed into a mature industry, regulators should not cloud the competitive landscape for nuclear power, which may have beneficial effects on our power mix in the future, with rules and regulations designed to limit, not promote, competition in bulk power services markets.
The Commission in CL1-99-19, has decided to narrow the regulatory scope over its licensees' competitive activities. We believe the Commission's rulemaking process should not only include input by all interested entities, but include coordination with the other federal
- agencies that the Commission expects to accede its current regulatory oversight role. As we
- stated in our Amicus Curiae Brief, To do otherwise would create a regulatory gap or " grey area" of review because no other agency has exolicit jurisdiction to review the competitive effects associated with a change in I
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-g-nuclear plant ownership. Amicus Curiae Brief of %NL Associates, p. 7.
1 For the foregoing reasons, we strongly urge the Commission to reconsider its decision in CL1-99-19 and seek Congressional input pursuant to the Commission's review responsibilities for all new owners of nuclear power production facilities, including ownership changes after i
a issuance of an operating license, in the next five years, there may be many new hybrid owner operator and nonowner operator changes invohing nuclear plant licensees-requiring an even more diligent oversight oflicensees' competitive activities. Any future rulemaking should duly
' consider, not ignore, this trend. Moreover, we feel any attempt to modify existing antitrust license conditions must occur in a setting where all of the requisite facts are considered by the Commission and not in an environment where short-run policy objectives may temper the ultimate benefits that accompany increased competition in the electric bulk power industiy.
Respectively submitted,
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William M. Lam, Principal WML Associates i
4834 Chesy Chase Blvd.
Chevy Chase, MD 20815 301-951-7050
' June 30,1999
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00ChETED W H.C.
99 Ji -2 P 2 32 UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION ADA ?
In the Matter of l
Docket No. 50-482-LT l
Kansas City Gas & Electric Company, et
[
al. (WolfCreek Generating Station,
'l Unit 1) '
l l
CERTIFICATE OF SERVICE 1 hereby certify that I have provided copies of the foregoing document, Response of WML Associates To Commission Memorandum and Order CLI-99-19, in the captioned i
proceeding to the following persons by deposit in the U.S. mail (*) or by e-mail ("), as indicated.-
Office of the Secretary * "
Douglas Smith, Esq.**
l U.S. Nuclear Regulatory Commission General Counsel L
Washington, DC 20555 Federal Energy Regulatory Commission j
(E-mail: secv@nrc. gov) 888 First Street, N.E.
Washington, DC 20426 l
OtTice ofCommission Appellate *'
(E-mail: douglas. smith @ferc. fed.us) l Adjudication L
U.S. Nuclear Regulatory Commission Robert W. Bishop **
i
. Washington, DC 20555 Vice President and General Counsel l
Nuclear Energy Institute l
Harold Haun" 17761 Street, N.W.
Vice President of Administration Washington, DC 20006) l and General Counsel (E-mail: rwb@nei org)
Kansas Electric Power Cooperative, Inc.
5990 SW 28' Street Jay Silberg, Esq."
P.O. Box 4877 Shaw, Pittman, Potts & Trowbridge Topeka, KS 66604 2300 N Street, N.W.-
(E-mail: hhaun@keoco org)
Washington, DC 20037 (E-mail:inv silberg@shawoittman com) a
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j, L-L Richard Geltman, Esq.**
Daniel I. Davidson, Esq.**
L General Counsel Ben Finkelstein, Esq.**
l American Public Power Association Spiegel & McDiarmid 2301 M Street, N.W.
1350 New York Avenue, N.W.
Washington, DC 20037 Suite 1100 (E-mail: rgeltman@annanet.org)
Washington, DC 20005 (E-mail: dan.davidson@spienelmed.com)
William T. Miller, Esq.**
(E-mail: ben finkelstein3soiegelmed com)
Miller, Balis & O'Neil, P.C.
Suite 700 Charles A. Acquard, Executive Director
- 1140 Nineteenth St., N.W.
National Association of State Utility Washington, DC 20036 ConsumerAdvocates (E-mail: Emjller@mbolaw.com) 113315* Street, N.W., Suite 550 j
Washington, DC 20005 Wallace Tillman, Esq.**
General Counsel Albert A. Foer, President **
National Rural Electric Cooperative Assoc.
The American Antitrust Institute 4301 Wilson Boulevard 2919 Ellicott Street, N.W.
Arlington, VA 22203 Washington, DC 20008 (E-mail: wallace.tillman@nreca.org)
(E-mail: bfoerGaol.com)
- Joel I. Klein, Esq.**
Assistant Attorney General
- U.S. Department of Justice Antitrust Division, Rm. 3109 10* St. and Constitution Ave., N.W.
Washington, DC 20530
- (E-mail: antitrust @usdoi.ccv) l i
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$fV f,,7 William M. Lambe,[rincipal j
WML Associates 4834 Chevy Chase Blvd.
Chevy Chase, MD 20815 '
301-951-'7050 June 30,1999 i
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