ML20206J334

Informs That on 990501,ISO New England & New England Power Pool Implemented Restructured Wholesale Electricity Market. Summary of Util Action as Result of Implementation of Subject Market,Encl

ML20206J334
Person / Time
Site:	Seabrook
Issue date:	05/05/1999
From:	Feigenbaum T NORTH ATLANTIC ENERGY SERVICE CORP. (NAESCO)
To:	NRC OFFICE OF INFORMATION RESOURCES MANAGEMENT (IRM)
References
AL-96-02, AL-96-2, NYN-99050, NUDOCS 9905120193
Download: ML20206J334 (6)

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,, w The Northeast Utilities Sptem May 5,1999 NYN-99050 United States Nuclear Regulatory Commission Attention: Document Control Desk Washington, D.C. 20555 Seabrook Station Notification of North Atlantic Energy Service Corporation Action As a Result ofImplementation of Independent System Operator New England Wholesale Electricity Market On May 1,1999 the h.iependent System Operator (ISO) New England and the New England Power Pool implemented a restructured wholesale electricity market. This restructured market involved changes in how generating units, including Seabrook Station, are dispatched. As a

, result, the operator of Seabrook Station, North Atlantic Energy Service Corporation (North Atlantic), has been designated by the Joint Owners of Seabrook Station to perform certain duties involved in the administration of the bidding process. North Atlantic is performing those duties to support Seabrook Station's return to service following this current refueling outage.

In performing this function, North Atlantic has been given specific unanimous direction by the

- Joint Owners of Seabrook Station. 4.ny changes to that direction also require the unanimous consent of the Joint Owners. Consist.nt with this direction, North Atlantic will not be performing any active, discretionary bidding. North Atlantic has evaluated its role as the bidding entity and ha; detennined that it is consistent with its licensing basis. Further detail regarding North Atlantic's role as the bidding entity is contained in Enclosure I to this letter.

Since these changes are a result of the restructuring of the electricity market, voluntary notification is being provided by _ North Atlantic in accordance with the NRC's desire, as

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described' in Administrative Letter 96-02: . Licensee Responsibilities Related to FinanrN1 /

- Qualifications, to be informed of changes in the electricity market u 1er deregulation. -

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9905120193 990505 I PDR ADOCK 05000443 P PDR x i

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. . U.S. Nuclear Regulatory Commission NYN-99050 / Page 2 If you have any questions regarding this matter, please contact Mr. Anthony M. Callendrello at (603) 773-7751. .

Very truly yours, NORTH ATLANTIC ENERGY SERVICE CORP.

, W/

ted C. Feigenbau[ident Executive Vice Pres and ChiefNuclear Officer cc: ' H. J. Miller, NRC Region I ' . nistrator

- J. T. Harri on, NRC Project aager, Project Directorate 1-2 R.' K. Lorson, NRC Senior Lesident Inspector c

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l ENCLOSURE TO NYN-99050 ,

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Enclosure 1 ,

i North Atlantic Energy Service Corporation Action as a Result of implementation of Independent System Operator New England Wholesale Electricity Market l

Changes in the'New England Electricity Market

- The New EnglarrJ Power Pool (NEPOOL), formed in 1971, is a voluntary association of electric utilities in New England who established a single regional network to direct the operations of the

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major' generating and transmission (bulk power system) facilities in the region. NEPOOL j centrally dispatched the bulk power system using the most economic generating and L transmission equipment available at any given time to match the electric load of the repm.

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NEPOOL will continue to exist as the entity representing not only traditional electric utilities but also? companies that will participate in the emerging. competitive wholesale electricity

- marketplace. ISO New England has a services contract with NEPOOL to operate the bulk power system and to administer the wholesale marketplace.

Prior to May 1,1999, the utilities in New England made their generating units available for dispatch and the generation and load was balanced by NEPOOL. Pre-established contracts

~ proceeded on the agreed upon cost basis, with NEPOOL providing a backup source of power at the then-current composite cost. NEPOOL determined the NEPOOL average cost, which served as the basis for the billings to buyers of pool power.

- Effective May 1,1999, ISO New England became a " day-ahead - hourly" marketplace. This means that wholesale electricity suppliers and generators bid their resources into the market the day ~before and submit separate bids for each resource for each hour of the day. Those generators that have firm contracts for their power will ensure that they are operating to honor

- such contracts by bidding as "self-scheduled."

Each unit must provide a bid to ISO New England, which indicates the lowest price its owner is willing to dispatch it for. These bids only affect the dispatching of a generating unit if the unit is not self-scheduled (the residual market) or during light load period 1 when demand is below the

- self-scheduled total load. The ISO New England Operations stai will then determine the least

- cost dispatch sequence for the next day, based on the bide. The highest bid resource ,

dispatched to meet actual load sets the market clearing price for electricity. This is the price that

' will be paid to all suppliers by buyers who purchase power from the residual market for the

- specified period.

The rules' pertaining to the bidding of generating units are contained in une restated NEPOOL

. Agreement that took effect on May 1,1999.

The New ISO Markeh ' ace and Seabrook Station After May 1,' 1999, Seabrook Station is being bid into ISO New England under the new " day-ahead - hourly" marketplace. This wi!! first be implemented when Seabrook Station resumes power generation during the second week of May 1999 after completing its current refueling outage,

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Under the NEPOOL agreement, if a generating unit has multiple owners then they shall

~ designate a single owner to submit bids for the unit. The Seabrook Joint Owners (JOs), acting individually,'have unanimously agreed to designate North Atlantic Energy Service Corporation (North Atlantic) as the sole entity authorized to submit bids and generating asset information to ISO New England for Seabrook Station on behalf of the Joint Owrnrs.

The Joint Owners of Seabrook Station have also unanimously agreed upon a protocol to be used to bid Seabrook Station. Under normal conditions, North Atlantic has been directed to self-schedule all of the output of Seabrook Station. Furthe.', North Atlantic has been given standing direction from the Joint Owners as to the specific amounts to be bid for all other bid categories. This bidding protocol will remain in place and will change only upon the direction of the Joint Owners representing 100 percent of the ownership of Seabrook Station. Although we refer to

• bids" submitted by North Atlantic, that is only ISO New England terminology and the Joint Owners have not authorized active, discretionary bidding by North Atlantic.

Finally, as it does today, North Atlantic will continue to provide to ISO New England the plant status information so that ISO New England will have the unit's availability information.

North Atlantic's Role as the Bidding Entity is Consistent with its Licensing Basis The Seabrook Station Operating license (NPF-86) contains a license condition (21), added by amendment No.10, prohibiting North Atlantic from marketing or brokering power. The condition states:

NAESCO is prohibited from marketing or brokering power or energy from the plant. In addition, all licensees other than NAESCO are responsible and accountable for the actions of their agent to the extent said agent's actions effect the marketing or brokering of power and energy from Seabrook Station, Unit 1.

The NRC imposes conditions such as this one to addms3 potential antitrust impacts arising from the establishment of a new operator. This is consistent with the guidance contained in NUREG-1574, Standard Review Plan on Antitrust, Draft which states in section 3.3.3:

If a licence condition is included in the operating license prohibiting the new operator ... from marketing or brokering of power and energy produced from the facility and holding the existing owners responsible and accountable for the actions of the operator, the staff normally will not conduct a formal antitrust review of the proposed new facility operator.

The bidding function is distinctly different from the marketing and brokering of power described in the license condition. In the case of Seabrook Station, the function of providing bids pre-established by the Joint Owners to the ISO New England is purely an administrative reporting function.

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. The NRC has not defined " marketing" or "brokering," but definitions of these functions are contained in the NEPOOL standard membership conditions. There, a " power marketer" is defined as "an entity that purchases as a principal or as a principal and a broker at wholesale

- electric energy and capacity for resale to wholesale customers and resells such energy and capacity to wholesale customers." A " broker" is defined as "an entity that acts from time to time for purchasers and sellers in New England in arranging the purchase and sale at wholesale of electric energy and/or capacity." In executing its function of submitting the Joint Owners' ,

bidding information, North Aticntic will not purchase, own or have any right to electrical energy l

. or capacity. Further, North Atlantic will not be arranging the purchase or sale of electric energy or capacity. Those functions will remain with the Joint Owners of Seabrook Station or others that they may designate. -

i As can be seen from the above discussion, providing bids is distinctly different from the function 1 of a broker or marketer of power and therefore is not prohibited by the current license condition. 1 in addition, there is no change in the ownership or control of the output of Seabrook Station associated with the ISO New England bidding process that would affect the antitrust conclusions ,

reached by the NRC in the issuance of Amendment 10 to the Seabrook Station operating license. As a result, North Atlantic's role as the bidding entity to Seabrook Station is consistent with its licensing basis With the designation as the bidding entity by the Joint Owners of Seabrook Station, North Atlantic is presently performing those duties.

North Atlantic's Role as Bidding Agent Does Not Affect Financial Qualifications, Decommissioning Funding or Effect a Transfer of Control I North Atlantic's role as the bidding entity is solely an administrative function. This function will not affect the existing responsibilities of the Joint Owners for funding of project costs under current agreements. As a result, there is no impact on the ability of the licensees of Seabrook Station to fund the operations and maintenance of the unit or on the ability of the licensees to provide decommissioning funding. In addition, there is nothing associated with this function that would, either directly or indirectly, effect a transfer of control of any license.

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