ML20196K799
| ML20196K799 | |
| Person / Time | |
|---|---|
| Site: | Wolf Creek  |
| Issue date: | 07/06/1999 |
| From: | Bishop R MORGAN, LEWIS & BOCKIUS, NUCLEAR ENERGY INSTITUTE (FORMERLY NUCLEAR MGMT & |
| To: | |
| References | |
| CON-#299-20628 LT, NUDOCS 9907120094 | |
| Download: ML20196K799 (13) | |
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DOCFElfD UNITED STATES OF AMERICA U7%
BEFORE TIIE l
NUCLEAR REGUL.ATORY COMMISSION 99 JUL -9 L :55 In the Matter of
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CU tL Docket h. 50-482-LT Kansas Gas and Electric Co. Corp., et al.
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(Wolf Creek Generating Station, Unit 1)
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COMMENTS OF TIIE NUCLEAR ENERGY INSTITUTE,INC.
ON THE TREATMENT OF EXISTING ANTITRUST CONDITIONS IN LICENSE TRANSFER CASES Robert W. Bishop Nuclear Energy Institute, Inc.
1776 I Street, N.W., Suite 400 Washington, DC 20006-3708 Tel: (202) 739-8139 Fax: (202) 785-1898 e-mail rwb@nei.org Janet E. B. Ecker John E. Matthews Morgan, Lewis & Bocklus LLP 1800 M Street, N.W.
Washington, DC 20036-5869 Tel:(202) 467-7000 Fax: (202) 467-7176 e-mail: ecke7458@mlb.com Attorneys for the Nuclear Energy Institute, Inc.
Dated: July 6,1999 g5h 9907120094 990706 PDR ADOCK 05000482 0
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1 UNITED STATES OF AMERICA BEFORE THE i
NUCLEAR REGULATORY COMMISSION 1
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In the Matter of.
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Kansas Gas and Electric Co. Corp., et al.
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Docket No. 50-482-LT
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(Wolf Creek Generating Station, Unit 1)
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COMMENTS OF THE NUCLEAR ENERGY INSTITUTE,INC.
1 ON THE TREATMENT OF EXISTING ANTITRUST CONDITIONS IN LICENSE TRANSFER CASES In its Memorandum and Order docketed in this case on June 18,1999, the Nuclear Regulatory Commission ("NRC" or the " Commission") invited the principal parties in the case, j
l together with other interested parties, to submit comments regarding the Commission't treatment of existing antitrust conditions in license transfer cases. The Nuclear Energy Institute, Inc.
("NEI"), on behalf of the nuclear industry, supports the Commission's initiative to review this matter of significant importance to the industry and submits these comments to assist the Commission in determining how to treat existing NRC antitrust license conditions.
The applicants in the pending case have stated that they are willing to accept the continuation of the existing license conditions by substituting the new licensee's name, where appropriate, throughout the conditions. While NEI has no objections to the applicants' position regarding the disposition of the antitrust license conditions in the pending case, NEI believes that the Commission should establish some basic guidelines for evaluating the disposition of antitrust conditions on a case by case basis.
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I.
NEI'S INTEREST IN THIS CASE j
l NEI is a not-for-profit organization whose nearly 300 members include all the utilities
' licensed to operate commercial nuclear power plants in the United States and other organizations and individuals in the nuclear industry. NEI establishes unified policies on matters affecting the nuclear industry, including the regulatory aspects of generic operational and technical issues, and represents its members on issues ofimportance to the industry. It is in this latter capacity that NEI submits these comments on behalf of the nuclear industry.
The generic issue being considered in this case is an issue of growing importance to the nuclear industry. The number oflicense transfer applications reviewed by the NRC increased from two or three per year in past years to 20 license transfer applications in 1998. F NEI expects this trend of significant license transfer activity before the NRC to continue in future l
years. Moreover, there have been significant changes in the electric utility industry resultmg j
from the passage of the Energy Policy Act of 1992, the issuance of Federal Energy Commission (FERC) Orders No. 888 F nd 889 F imposing transmission open access requirements, other a
i 11 Information provided by Robert Wood, NRC Senior Financial Policy Advisor (March 29, 1999).
1 2I Promoting Wholesale Competition Through Wholesale Open Access Non-Discriminatory
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Transmission Services by Public Utilities; Recovery ofStranded Costs by Public Utilities and Transmitting Utilities, FERC Stats. & Regs.131,036 (1996) (" Order No. 888"), order on reh 'g, FERC Stats, & Regs.131,048 (1997) (" Order No. 888-A"), order on reh 'g, 81 FERC 161,248 (1997) (" Order No. 888-B"), order on reh 'g, 82 FERC 161,046 (" Order No.
888-C").
11 Open Access Same-Time Information System (formerly Real-Time Information Networks) and Standards of Conduct, (" Order No. 889") III FERC Stats. & Regs., Regulations Preambles,131,035 (1996); order on rehearing, (" Order No. 889-A") III FERC Stats. &
Regs.,131,049 (1997), order on rehearing,81 FERC 161,253 (1997)(" Order No. 889-B").
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FERC rulings, and state legislative and regulatory initiatives. These changes raise questions l
l concerning the continued need for many of the current antitrust conditions existing in NRC 1
licenses, and this is particularly true in a case where a license is transferred in connection with generation divestitures resulting from state mandated restructuring. In order to enhance the predictability and consistency of Commission action in connection with its continued oversight and disposition of antitrust conditions, NEI urges the Commission to adopt basic principles and i
guidelines for evaluating existing antitrust license conditions.
II.
BASIC PRINCIPLES Currently,36 U.S. commercial nuclear power reactors have conditions added to their licenses which address economic implications of nuclear power plant ownership and operation.
These license conditions fall into five general categories: (1) transmission service provisions; I
(2) contractual provisions; (3) unit access provisions; (4) operational provisions; and (5) planning provisions. Although generally referred to as " antitrust conditions" because they typically arose as part of the Commission's consideration of the implications oflicensing under Section 105(c) of the Atomic Energy Act, as amended, many of these provisions do not relate directly to antitrust considerations. However, for ease of reference, those conditions will be referred to throughout as " antitrust" conditions.
In that the Commission decided in its Memorandum and Order dated June 18,1999, that an antitrust review was not necessary or appropriate in a license transfer context, the l
Commission has requested comments concerning the appropriate Sposition of antitrust license l
conditions in a license transfer proceeding.
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The nuclear industry agrees that the Commission should consider whether antitrust conditions should be modified or eliminated on a case by case basis, based upon the request of an applicant in connection with a license transfer or otherwise upon the request of a licensee. For example, in the instant proceeding the applicants have stated that they are willing to accept the continuation of the existing license conditions through substituting the new licensee's name, where appropriate, throughout the conditions. The Commission should approve the requested action under its ministerial authority and no fmther proceeding would be required.
If, however, the applicant for a license transfer requests the elimination or modification of license conditions, those matters should be addressed by the NRC in accordance with the guidelines provided under Section III. below. Consistent with the Commission's decision of i
June 18,1999, the transfer of a license is not an occasion to fashion new antitrust conditions.
III.
GUIDELINES FOR EVALUATING ANTITRUST CONDITIONS NEI respectfully requests that the Commission adopt the following guidelines for purposes of evaluating antitrust license conditions in connection with a license transfer or a request from an existing licensee that the Commission evaluate and disposition NRC antitrust license conditions. These guidelines should be used in evaluating antitrust conditions where requested by an applicant.
j A.
NO ANTITRUST CONDITIONS SHOULD BE EXTENDED TO APPLY i
TO A FERC AUTHORIZED EXEMPT WHOLESALE GENERATOR The NRC should eliminate or rescind all existing antitrust conditions from a license in any case where a license for a nuclear power plant, or a license for the relevant ownership interest in a nuclear power plant, is transferred to an entity that qualifies to be an Exempt 4
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Wholesale Generator (EWG) under Section 32 of the Public Utility Holding Company Act of l
1935 (PUHCA), as amended by the Energy Policy Act of 1992. 15 U.S.C. 79z-Sa. This same i
principle should apply if through restructuring or other reorganization, an existing licensee l
becomes an EWG.
In 1992, Congress added Section 32 of PUHCA, which provides an exemption for l
EWGs, so that EWGs are not considered public utility companies for purposes of PUHCA.
EWGs are entities engaged, directly or indirectly, exclusively in the business of owning and/or operating " eligible facilities" used (1) for the generation of electricity exclusively for use at wholesale, or (2) for the generation of electricity and leased to one or more public utility l
companies, provided that any such lease is treated as sale of electricity at wholesale, 15 U.S.C.
Q 79z-Sa (2). A company obtains EWG status by applying to FERC, which must act within 60 days and notify the Securities and Exchange Commission (SEC) ofits determination.
Obviously, the NRC has no responsibility for the application, administration or l
l enforcement of PUHCA. However, EWG status is a useful guideline for the NRC in considering a request to eliminate existing antitrust conditions on a license, where a plant is to be operated by an EWG. An EWG, by definition, is " exclusively" engaged in generation activities for purposes of the sale of energy at wholesale. Thus, an EWG is not an integrated electric utility company l
which engages in the types of activities that NRC antitrust conditions were designed to address i
(e.g., transmission services, wheeling, interconnection services, coordination, system planning).
4 For example, an EWG does not own transmission facilities, with the possible exception of L
limited FERC jurisdictional transmission facilities associated with a generating units 5
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interconnection to the grid. Therefore, it would be impossible for an EWG to provide the transmission and interconnection services contemplated by many existing antitrust conditions.
~ Antitrust conditions were designed to apply to traditional fully integrated public utility companies, and an EWG is virtually incapable of meeting any number of the antitrust conditions in existing licenses.
- Continuation of any aspect of such antitrust conditions would serve no practical purposes, even if an EWG were capable of complying with limited aspects of them. For example, some existing antitrust conditions require the licensee to coordinate in the planning of new generation, transmission and associated facilities or the sharing ofload projections and system development plans with a neighboring utility. These requirements make no sense when applied to an EWG, which by definition does not operate an integrated system that includes transmission and associated facilities. Such conditions are simply inapplicable in the current competitive market-place, where EWGs are participating exclusively in the bulk power market.
The FERC authorized EWG status of a current or proposed nuclear power plant licensee is a particularly useful criterion for the NRC, because EWG status must be approved pursuant to
' Section 32(a)(1) of PUHCA and Part 356 of the FERC's Rules of Practice and Procedure.
See 15 U.S.C. 79z-Sa(a)(1); 18 CFR Part 356. Moreover, any conversion of an existing rate-based nuclear facility to become an " eligible facility" to be owned by an EWG is regulated by the state public utility commissions. See 15 U.S.C. 79z-Sa(c). Thus, EWG status is reviewed
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Even if an EWG had affiliates that provide the various senices traditionally provided by an integrated utility, such affiliates would be subject to FERC requirements that such services be provided to third parties on a comparable and non-discriminatory basis.
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and approved by both FERC and one or more state public utility commissions. This eliminates any need for duplicative analysis by the NRC in order to disposition antitmst conditions.
B.
NO ANTITRUST CONDITIONS SHOULD BE EXTENDED TO APPLY TO AN ENTITY WHICH HAS OBTAINED MARKET-BASED RATE AUTHORITY FROM FERC NRC should rescind or eliminate all existing antitrust conditions from a license in any case where a license for a nuclear power plant, or a license for the relevant ownership interest in a nuclear power plant, is transferred to an entity that has obtained authorization from FERC, pursuant to Section 205 of the Federal Power Act, as amended,16 U.S.C. Q 824d, and Rule 205 of FERC's Rules of Practice and Procedure,18 CFR Q 385.205, to engage in wholesale bulk power sales at market-determined prices, including the sale ofits entitlement to the output of the nuclear power plant at issue. This same principle should apply if an existing licensee obtains such authority.
FERC traditionally has permitted an entity - whether a public utility, an independent power producer, or a power marketer -- to engage in wholesale sales of power and energy at market-based rates if the entity can demonstrate that neither it nor any ofits affiliates have market power in the relevant markets for generation service and transmission service (or have adequately mitigated such market power) and that neither erects barriers to entry. See, e.g.,
Heartland Energy Service, Inc.,68 FERC 161,223 at 62,060 (1994). In evaluating requests for market-based rates, FERC also considers whether there is any evidence of, or potential for affiliate abuse or reciprocal dealing between the applicant and its affiliates. Id. The FERC has established criteria that must be satisfied in order for an entity to obtain authorization to charge I
market-based rates for wholesale power sales. Id. The FERC uses these criteria to evaluate the 7
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market-based rate applications of traditional electric utilities and power marketers.
See Southwestern Public Service Co.,72 FERC 161,208 (1995); Maine Public Service Co.,
71 FERC161,249 (1995).
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With respect to its market power concerns, FERC requires that an entity seeking authorization to transact at market-based rates (1) demonstrate that the entire output ofits or any ofits affiliates' generating facilities is committed under long-term contracts; (2) demonstrate that the applicant and its affiliates already are authorized to sell power at market-based rates; or (3) submit a market analysis that indicates that neither the applicant nor its affiliates have generation dominance in the relevant markets. LG&E Power Marketing, Inc., et al.,68 FERC 161,247 at 62,121 (1994). The FERC has explained its market power criteria as follows:
When evaluating generation dominance for a traditional investor-owned electric utility, an affiliated power producer or an independent power producer that proposes to sell at market-based rates on an open-ended basis, the Commission defines the geographic markets as those utilities directly interconnected to the seller (first tier markets). Affiliated power marketers may sell in these same markets or in other markets. To guard against the possibility that an affiliated marketer's rates would be affected by the generation dominance of an affiliated public utility, the affiliated power marketer needs to provide a market analysis of the relevant market ofits affiliates that own generating assets. If the market analysis shows no generation dominance for the affiliates, there would be no reason to ascribe generation dominance to the affiliated power marketer in the same market or in any other (more remote) markets.
Heartland,68 FERC at 62,061 (footnotes omitted); see also Detroit Edison Co.,77 FERC 161,279, slip op. at 2 (Dec.19,1996); PacifiCorp.,77 FERC 161,280, slip op. at 2 l
l (Dec.19,1996); Progress Power Marketing, Inc., 76 FERC 161,155, at 61,919 (1996);
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Northwest Power Marketing Company, L.L.C.,75 FERC 161,281, at 61,889 (1996).
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In order to ensure that applicants for market-based rate authority do not possess transmission market power, FERC generally requires the applicant, or its affiliated public utility, to file or have on file open access transmission tariffs for the provision of comparable services.
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See, e.g., Southern Indiana Gas & Electric Company,77 FERC % 61,021 (1996); Heartland Energy Service, Inc.,68 FERC 161,223 (1994). If an entity only has very limited and discrete transmission facilities and does not expect to receive any request for transmission service, FERC may waive this requirement so that filing of an open access transmission tariffis deferred until a request for transmission service is actually made. See, e.g., CentralMinnesota MunicipalPower Agency, et al.,79 FERC % 61,260 (1997); Pacific Northwest Generating Cooperative, 78 FERC 161,018 (1997); Black Creek Hydro, Inc., 77 FERC 161,232 (1996).
j Given the FERC review and approval required to obtain market-based rate authority, NRC should accept that any entity with such authority should not be subject to any NRC antitrust l
license conditions.
C.
ANY ANTITRUST CONDITION (S) THAT IS SUPERSEDED BY OR DUPLICATIVE OF STATE OR FEDERAL STATUTORY OR REGULATORY REQUIREMENTS SHOULD BE ELIMINATED NRC should rescind or eliminate any antitrust condition (s) where an existing licensee or prospective transferee can establish that the condition is superseded by or duplicative of federal l
or state statutory or regulatory requirements. For example, where a licensee or prospective transferee has been required to file or have on file an open access transmission tariff pursuant to l
l FERC Order No. 888, antitrust conditions relating to access to transmission and interconnection I
services have been superseded and are duplicative of existing FERC requirements, which in many ways go beyond the scope of the NRC's antitrust conditions. As another example, FERC 9
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rules requiring open access to power pool arrangements or independent system operator (ISO) l arrangements eliminate the need for existing NRC antitrust conditions relating to restrictive membership provisions on entry into a power pool. Similarly, FERC orders, state restructuring legislation and the orders of state public utility commissions designed to promote the development of competitive power markets (at both wholesale and retail) through the unbundling of transmission and generation services eliminate the need for many existing NRC antitrust conditions, which were established in the context of an integrated electric utility's proposal to construct and operate a nuclear power plant.
D.
THE COMMISSION SHOULD REJECT ANY PROPOSAL TO EXPAND THE NATURE AND/OR SCOPE OF THE REMEDY AVAILABLE UNDER EXISTING ANTITRUST LICENSE CONDITION (S)
Having determined that the NRC will not conduct antitrust reviews in connection with l
license transfers or other licensing actions subsequent to the issuance of the initial operating license, there is no basis for the NRC to expand or extend the nature and/or scope of any existing NRC antitrust license condition. The Commission has continuing authority to enforce antitrust conditions as long as they remain on the license, which includes the authority to remove such conditions from the license. However, the imposition of any new remedy by expanding the nature or scope of an existing condition conflicts with the notion that the NRC's statutory authority to conduct an antitrust review and fashion such remedies is limited to the initial construction permit and initial operating license stages. Moreover, because there will be no antitrust review conducted as part of a license transfer proceeding, the Conunission will have no l
record or other basis upon which to fashion an expanded remedy. Any entity seeking to have 10 o-
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license conditions modified may file an appropriate request under Section 2.206 of the NRC's regulations.
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CONCLUSION -
For the reasons stated above, NEI respectfully requests that the Commission consider the proposed principles articulated herein and adopt the foregoing guidelines for purposes of evaluating the disposition oflicense conditions in connection with a license transfer or a request from an existing licensee that the Commission modify or eliminate current NRC antitrust license
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conditions.
J Respectfully submitted,
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Robert MBishop Nuclear Energy Insti c.
1776 I Street, N.W., Suite 400 Washington, DC 20006-3708 Janet E. B. Ecker John E. Matthews Morgan, Lewis & Bockius LLP 1800 M Street, N.W.
Washington, DC 20036-5869 Attorneys for the Nuclear Energy Institute, Inc.
Dated: July 6,1999 i
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CERTIFICATE OF SERVICE g -9 No 55 99 l
I hereby certify that I have this day served the foregoing Comments of The Nuclear Energy Institute On the Treatment of Antitrust Conditions In License Transfer Cases on the i
following persons by electronic mail, with conforming copy served by U.S. Mail, first-class, E
postage prepaid:
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Office of the Secretary Jay E. Silberg U.S. Nuclear Regulatory Commission Shaw, Pittman, Potts & Trowbridge Attn: Rulemakings and Adjudications Staff 2300 N Street, N.W.
Washington, DC 20555-0001 Washington, DC 20037-1128 e-mail: secy@nrc. gov e-mail: Jay _Silberg@shawpittman.com Office of the General Counsel Harold Haun U.S. Nuclear Regulatory Commission Kansas Electric Power Cooperative, Inc.
Washington, DC 20555-0001 P.O. Box 4877 e-mail: sgbi@nrc. gov Topeka, KA 66604 e-mail: hhaun@kepco.org Office of Commission Appellate Adjudication U.S. Nuclear Regulatory Commission William T. Miller Washington, DC 20555-0001 Miller, Balis & O'Neil, P.C.
e-mail:jfc@nrc. gov 1140 Nineteenth Street, N.W., Suite 700
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Washington,DC 20036 e-mail: wmiller@mbolaw.com Dated at Washington, DC, this 6th day of July,1999.
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sn E. Matthews 10RGAN, LEWIS & BOCKIUS LLP 1800 M Street, N.W.
Washington, DC 20036-5869 Tel:(202) 467-7524 Fax: (202) 467-7176 e-mail: matt 7524@mlb.com