ML20210B960
| ML20210B960 | |
| Person / Time | |
|---|---|
| Site: | Comanche Peak  |
| Issue date: | 09/03/1986 |
| From: | Burchette W HERON, BURCHETTE, RUCKERT & ROTHWELL, TEX-LA ELECTRIC COOPERATIVE OF TEXAS, INC. (FORMERLY |
| To: | Funches J Office of Nuclear Reactor Regulation |
| References | |
| CON-#190-9850, RTR-REGGD-09.003, RTR-REGGD-9.003 A, NUDOCS 8609180206 | |
| Download: ML20210B960 (59) | |
Text
..
Heron, Burchette, Ruckert&Rothwell Suite 700 sui = nw 1025 Thomas Jefferson Street, N.W.
O c4,5si4 Washington, D.C. 20007
<9i6 4* 4n (202) 337 7700 EwNdE TWX 710-822-9270 Aggi September 3, 1986 Hand Delivered Mr. Jesse L. Funches, Director Planning and Program Analysis Staff Office of Nuclear Reactor Regulation United States Nuclear Regulatory Commission Phillips Building, Room 433 7920 Norfolk Avenue Bethesda, MD 20814 Re: Comanche Peak Steam Electric Station, Unit 1, Docket No. 50-445A; Antitrust Operating License Review; Responses to Regulatory Guide 9.3
Dear Mr. Funches:
In your letter of May 19, 1986, you requested responses to the Commission's Regulatory Guide 9.3 pertaining to the applicants' changed activity since the September 15, 1980 settlement.
The " changed activity" at issue relates to "whether the activities under the permit or license would create or maintain a situation inconsistent with the antitrust laws."
Your letter of July 24, 1986, more specifically asked for responses to the Commission's Regulatory Guide 9.3 from all of the co-owners of Comanche Peak.
You further stated that
"[t]o the extent Tex-La... is aware of other co-owners' changed activities, we would appreciate being so advised."
By letter of August 13, 1986, we advised you that Tex-La Electric Cooperative of Texas, Inc.
(" Tex-La") would provide its own data response directly to the Commission.
Accordingly, set forth below is Tex-La's response.
It consists of a factual description of the changed circumstances relevant to Regulatory Guide 9.3.
To facilitate an understanding of how the changed activities relate to each other and to the 1980 antitrust settlement, the description of the changed activities is preceded by a Summary, as well as a section containing relevant background information.
8609100206 860903
$q DR ADOCK 05000 S
I t
s Mr. Jesse L. Funches September 3, 1986 Page 2
SUMMARY
Since the basic terms of the antitrust settlement were agreed upon in September, 1980, there have been the following fundamental changes relevant to this inquiry in the activities of Tex-La and Texas Utilities Electric Company ("TUEC").
Perhaps the most fundamental category of changed activities concerns TUEC's closing off Tex-La's access to alternative sources of power by ignoring the Licensing Conditions for Comanche Peak, by refusing to honor, and then specifically renouncing, the 1980 Tex-La/TUEC settlement, and by violating TUEC's 1980 agreement with Tex-La relating to transmission services.
Notwithstanding the terms of the settlement, TUEC has refused to engage in joint planning with Tex-La, refused to share generation and transmission facility information with Tex-La, refused to allow Tex-La participation'in TUEC-planned combustion turbine generating plants or other planned generating facilities, and effectively refused to transmit bulk power from Houston Lighting and Power Company to Tex-La.
Tex-La, on the other hand, has continuously lived up to every term of the settlement.
Second, Comanche Peak, projected by TUEC at the time of the settlement to cost $1.7 billion and to come on line in 1981 for Unit 1 and 1983 for Unit 2, now is estimated to come on line no sooner than late 1988 for Unit 1 and sometime after that for Unit 2, and is estimated by Tex-La to. cost close to $8 billion.
(TUEC has abandoned its last " firm" estimate of project cost of
$5,465,461,000, made in November, 1985, and currently declares the project's final cost to be indeterminate.)
This extreme cost increase and delay have reversed a fundamental assumption in the 1980 settlement regarding Tex-La's competitive position vis a vis TUEC, in that Tex-La's participation in Comanche Peak, rather than making Tex-La more competitive with TUEC, as the settlement intended, now is directly undermining Tex-La's ability to compete with TUEC.
This adverse effect on competition has been exacerbated by TUEC's 1984 filing with the Public Utility Commission of Texas ("PUCT") requesting a change in TUEC's wholesale rate to effectively require Tex-La to pay twice for Tex-La's ownership share of Comanche Peak.
i The cost increase and delay also have lead to lawsuits i
among TUEC and all the plant's minority owners in Texas state l
court.
The litigation was initiated by TUEC, represented by attorneys who represent all the applicants in the NRC licensing 1
l proceeding.
In the litigation, Tex-La and the other two minority q
owners seek substantial monetary damages from TUEC resulting from i
I
J Mr. Jesse L. Funches September 3, 1986 Page 3 its failure to bring the plant on line in accordance with its obligations,' and further seek rescission of the agreement pursuant to which they became minority owners of the project.
BACFGROUND Tex-La currently owns a 2-1/64 share of Comanche Peak.
The other two minority owners are Brazos Electric Power Cooperative, Inc. ("Brazos"), with 3.8%, and Texas Municipal Power Agency
("TMPA"), which_ owns 6.24.
The balance of 87-5/64 is owned by TUEC.
4 On December 12, 1974, the Commission issued a construction l
permit for Comanche Peak, Units 1 and 2, without holding an antitrust review.
On June 15, 1977 and June 26, 1978 the NRC found " changed circumstances" in Comanche Peak and, on the advice of the Attorney General, ordered antitrust hearings (NRC Docket l
Nos. 50-445A & 50-446A).
Tex-La became a part-owner of the i
project as a result of the settlement which in 1980 arose out of i
the NRC's antitrust review.
On May 6, 1980, Tex-La and Texas i
Power & Light Company ("TP&L"), now a division of TUEC,l/
reached a separate settlement of the NRC antitrust proceedings.
(Hereinafter, this settlement, a copy of which is attached hereto as Appendix 1, will be referred to as the "May 6, 1980. Tex-La/TP&L Settlement.")
This settlement, among other things, allowed Tex-La to purchase from TP&L a 4-1/34 ownership share of Comanche Peak, nuclear fuel, and associated 345 kV transmission facilities.
The i
settlement alno contained provisions for participation by Tex-La in future resources developed by TUEC.
i i
Then, on September 14, 1980, all the applicants, the Department of Justice ("DOJ"), and the NRC Staff submitted proposed Settlement License conditions (hereinafter, the " License Conditions"), representing a comprehensive settlement of the 4
antitrust issues.
The License Conditions, among other things, required TUEC to allow participation in Comanche Peak by certain other North Texas utilities (including the three current minority i
owners), to support membership in planning or operating organizations, to participate in joint studies and planning of
~
1/
TUEC was formed on January 1, 1984 from the merger of TP&L, Dallas Power & Light Company and Texas Electric Service Company.
These former operating company subsidiaries now are
]
divisions of TUEC.
1 l
--r~*
-y.-y--v--w-m,w,yy-y,wwg----,--,-i,w-,-p,---.w,-~_.e,ym
--mr-,-
.,.,,,.p--,
,-93 3
99-%,,,,y,m
.-,.p,,,-
,-,-p-r*T*' - "***vw'"'-i-yT='n-vvew'---"--
-F--
wi-=
i Mr. Jesse L. Funches September 3, 1986 Page 4 future generation, transmission and related facilities, to provide emergency and maintenance power and spinning reserves, to facilitate the exchange of bulk power by transmission over TUEC's transmission facilities, and to p capacity for bulk power exchange._5/vid* ""i l'"' "'*"*"i"*i "
(The term "1980 Settlement" will be used hereinafter to refer jointly to the May 6, 1980 Tex-La/TP&L Settlement and the License Conditions.)
As provided in the May 6, 1980 Tex-La/TP&L Settlement, Tex-La and TP&L executed on December 9, 1980 a series of j
agreements which provided for Tex-La's ownership participation in Comanche Peak, new power supply arrangements after Comanche Peak
~
became commercial, and various transmission and distribution a
services before and after commercial operation of Comanche Peak.
On February 12, 1982, the Joint Ownership Agreement, which governs all minority owners' participation in comanche Peak, was amended j
to reduce Tex-La's ownership interest in Comanche Peak from 4-1/34 to 2-1/64.
The License Conditions were finalized and approved by the Presiding Administrative Law Judge in his Order of May 6, 1980.
i 2/
Prior to the submission of the License Conditions, on June 9, 1980, a settlement was reached also in FERC Docket No.
i EL79-8.
This docket arose from the May, 1976 attempt of Central and Southwest Corporation ("CSW") to synchronously interconnect i
j its operating companies located in the Southwest Power Pool
("SWPP") with its operating companies located in the Electric Reliability Council of Texas ("ERCOT").
The FERC EL79-8 settlement, among other things, substitutes two, proposed, l
asynchronous, high voltage direct current interties between ERCOT i
and SWPP for the four, proposed, synchronous alternating current interties originally proposed by CSW.
}
^
1 i
mN*.
+we,---r-w.
+w.pyy-e.ryyge,-w a,,,,,.--7--
,,w.y,,
, 9p
%.9%,,.-_.%-y.--.
_9,_
_.-,,. -,,,pe,%%_
s Mr. Jesse L. Funches September 3, 1986 Page 5 CHANGED ACTIVITIES I.
CHANGED ACTIVITIES RELATED TO TUEC's DENIAL OF ACCESS TO ALTERNATIVE SOURCES OF POWER FOR TEX-LA Perhaps the most egregious form of changed activity by TUEC which has had an adverse effect on Tex-La's ability to compete has been TUEC's apparently systematic effort, rotwithstanding the clear intent and terms of the 1980 Settlement, to deny Tex-La access to alternative sources of power, TUEC has refused to engage in joint planning of future generation with Tex-La, refused to allow Tex-La participation in other generation resources, and refused to provide transmission services essential to Tex-La's acquisition of other resources, all in violation of provisions of the 1980 Settlement.
At the same time, Tex-La has fully complied with all terms-and obligations imposed.on it by the settlement.
TUEC's effort to deny Tex-La alternate power resources finally has culminated in TUEC's request to a Texas state court to have the May 6, 1980 Tex-La/TP&L Settlement, which forms a vital part of the overall settlement reached in 1980 at the NRC, declared to be not a binding and enforceable agreement conferring any rights on Tex-La or imposing any obligations on TUEC.
However one may view the authority of a Texas state court to issue binding interpretations of an NRC settlement, little doubt can exist about TUEC's intent and desire to thwart the obligations imposed on it by that settlement.
A.
TUEC's Refusal to Jointly Plan or Allow Tex-La Participation in Future Generation 1.
TUEC's Obligation Regarding Joint Planning a"d Tex-La Participation i
The May 6, 1980 Tex-La/TP&L Settlement provides in section XII as follows:
l
" Tex-La expects to meet its public utility 1
responsibilities by the construction of generation i
and transmission facilities including joint ownership of future facilities with TP6L and other electric' utilities, or by the purchase of power and energy.
l In view of the agreement (s) contemplated herein, and i
possible agreements between Tex-La and others, it is l
intended that both Tex-La and TP&L shall be free, subject to provisions of XI herein, to plan, t
construct, and own such generation and transmission T
I i
i
Mr. Jesse L. Funches September 3, 1986 Page.6 facilities as it may elect.
TP&L and Tex-La will consult and advise as to proposed facilities and Jointly plan such facilities as seems appropriate to achieve economies and avoid unnecessary duplication of facilities and in keeping with each Party's plans and responsibilities.
"It is intended that Tex-La's requests for participation in any project to be constructed by TP&L shall be made prior to any significant development of the project.
Where such a timely request for participation is made, and where io:.nt ownership in such project is determined to be mutually advantageous, Tex-La's participation shall be on a mutually agreeable basis that fully com >ensates TP&L for its costs.
In connection with suct participation, TP&L will also interconnect with and offer firm transmission service as may be required for delivery of such power to Tex-La at points on TP&L's system on a basis that will fully compensate TP&L for its costs, including a reasonable return on its investment."
(Emphasis added.)
Under Licensing Condition D(2)(b), TUEC again has the obligation to cooperate in generation planning with other
" Entities," defined to include a generation and transmission cooperative such as Tex-La.
Licensing Conditions, Section D(1) (c).
Specifically, TUEC must " share information" with Tex-La and " conduct and/or participate in joint studies and planning of future generation, transmission and related facilities."
In fact, as the following shows, TUEC has shared no information and, once Tex-La asked, TUEC refused to participate in any joint studies or planning of the combustion turbines.
2.
TUEC's Unilateral Plan for Future Generation On January 28, 1985, TURC announced an updated " System Resource Plan" which outlined TUEC's planned generation additions for the 1985-1999 time period.
TURC did not solicit input from Tex-La regarding the preparation of this plan, nor did TURC even advise Tex-La that such a plan was forthcoming.
In general, the plan calls for TURC to construct a number of combustion turbine generating plants beginning in 1988, and to construct several thousand megawatts of lignite-fired base load generating units during the 1991-1994 time period.
In addition, TUEC states in the plan that it will rely on purchases of 1000 MW of cogenerated power by 1991.
l l
Mr. Jesse L. Funches September _3, 1986 l
Page 7 i
3.
TURC's Refusal to Allow Tex-La Participation in combustion Turbines On September 23, 1985, TUEC applied for a Certificate of 4
Public Convenience and Necessity ("CCN") from the PUCT for the i
construction of 960 MW of combustion turbine generation capacity at Persian Basin, Morgan Creek, and DeCordova.
These peaking plants are the first new generation TURC has planned since i
Comanche Peak.
At an anticipated cost of $450/kw for reliable, proven technology, the plants represent an economical source of power that Tex-La could share in financing.
~
i i
TUEC did not share any advance information about the plants with Tex-La nor did TUEC suggest any joint planning of this l
l generation with Tex-La.
The PUCT granted the TUEC a CCN. Texas Utilities Electric Co., Docket No. 6526 (March 26, 1986).
i i
Before TUEC had begun any substantial work on the combustion turbines, Tex-La decided it would like to participate in ownership of the plants.
On May 20, 1986, Tex-La wrote a letter to TUEC (Appendix 2 hereto) proposing a detailed plan for an undivided 5 percent participation in the plants.
Tex-La's i
letter also pointed out TUEC's obligation to allow such participation under the May 6, 1980 Tex-La/TP&L Settlement.
TUEC did not respond.
On July 14, 1986, Tex-La again wrote l
to TUEC (Appendix 3 hereto) requesting ownership participation in the plants.
TUEC's only " response" to date, described below, has been its request to a Texas state court to have the May 6, 1980 1
Tex-La/TP&L 8ettlement declared non-binding and unenforceable.
l 4.
TUEC's Effort to Void the May 6, 1980 Tex-La/TP&L Settlement i
f In response to Tex-La's request that it be allowed to participate in certain combustion turbine projects being planned l
by TUEC, as required by the 1980 Settlement, TURC, on July 14, i
i 1986, in the Comanche Peak-related litigation which TUEC had I
initiated in Texas state District Court (see Part III C, below),
I filed an amended complaint which containe37 as a separate cause of I
action against just Tex-La (but not Brazos or TMPA), a request for a declaratory judgment.
The allegations read in relevant part as i
follows:
l "26.
TEX-LA's acquisition of an ownership interest in comanche Peak was the culmination of the settlement of various disputes between TEX-LA and TP&L.
In connection with that settlement, TEX-LA and i
-4_
a i
_._,_2._.
n_.-._____4_
AM4mA~_w_:_an.,
A
-_4
__~__m
__m m
,4 u- _ __.u.
6 Mr. Jesse L. Funches l
September 3, 1986 L
j Page 8 TP&L executed the May 6, 1980 letter of intent attached hereto as Exhibit B.
The letter of intent i
provided for TEX-LA's acquisition of a joint ownership interest in comanche Peak and, in addition, the potential for acquisition of a joint ownership interest in other future generating stations to be t
constructed by TP&L provided that significant development of same had not occurred and that it was mutually advantageous to both TP&L and TEX-LA for 1
TEX-LA to acquire a joint-ownership interest in those i
future generating stations.
The letter of intent was
~
not a binding agreement, but rather contemplated the r
execution of a formal definitive binding agreement, which was executed, and which provided for TEX-LA's acquisition of an interest in Comanche Peak only.
i l
"27.
In addition to asserting various claims under the Joint ownership Agreement, TEX-LA has claimed that, pursuant to the May 6, 1980 letter of I
intent (Exhibit B), it is entitled to an interest in certain generating capacity which TUEC plans to install in the future.
i "28.
Actual controversies exist between TUEC I
and TEX-LA with respect to whether the May 6, 1980 l
letter of intent (Exhibit B) is a binding and l
enforceable contract which confers any rights upon j
TEX-LA or imposes any obligations upon TURCr and if so, whether that letter of that (sic) intent confers upon TEX-LA any right to an ownership interest in the (sic) any generating station other than comanche Peak.
l "29.
TUEC contends and requests the Court to 2
declare that (a) the May 6, 1980 letter of intent (Exhibit B) is not a binding and enforceable contract l
which in and of itself confers any rights upon TEX-LA j
or imposes any obligations upon TUEC; and ( 2) the said letter of intent does not confer upon TEX-LA a i
right to acquire an ownership interest in any other l
TURC generating station as claimed by TEX-LA.*
(Emphasis added.)
i l
l One must question the authority of a Texas state court to i
i issue any such declaration respecting the validity and enforceability of a settlement reached as part of the NRC's f
1 antitrust review process.
Indeed, Article XV of the May 6, 1980 Tex-La/TP&L Settlement states that "the provisions of this i
[
r
Mr. Jesse L. Funches September 3, 1986 Page 9 agreement and of the definitive agreement (s) and the obligations of the parties thereto may be subject to continuing or further regulation by regulatory bodies having jurisdiction."
(Letter of May 6, 1980, at 9.)
There can be no doubt, however, of TUEC's intent to defeat the letter and spirit of the settlement by resisting to its fullest ability any joint participation by Tex-La in other TUEC generation projects.
Nor can there exist any doubt that the May 6, 1980 Tex-La/TP&L Settlement is in fact a binding agreement.
While the May 6, 1980 letter clearly contemplates the entering into of certain additional agreements, those agreements were to
~
supplement the letter, not replace it, and the May 6, 1980 letter itself constitutes a permanent part of the settlement of antitrust issues in the NRC proceeding.
B.
TUEC Has Refused Defacto to Transmit Bulk Power from Houston Lighting and Power Company to Tex-La 1.
TUEC's Obligation Regarding Transmission The December 9, 1980 Transmission Agreement between Tex-La and TUEC's predecessor companies, one of the agreements entered into pursuant to the May 6, 1980 Tex-La/TP&L Settlement, provides in relevant part:
"11.03 Tex-La anticipates that it may desire Companies to transmit power and energy through the HV transmission system in connection with power and energy transactions between Tex-La and others, in addition to transmission service,s provided in Section 8.06.
Subject to the provisions of this agreement, Companies will provide such transmission services provided that (1) Tex-La makes arrangements therefor with other entities whose facilities are involved in such transmission, (ii) such transmission services can be functionally and technically accommodated, and (iii) Tex-La gives Companies reasonable advance notice of its schedule and requirements.
Such transmission services shall be on terms that fully coapensate Companies for their costs including a reasonable return on investment, but such transmission services and the charges therefor shall be subject to any regulatory body having jurisdiction thereof.
Companies shall not refuse to provide such services solely because the charges therefor are the subject of dispute.
Companies shall not be required I
Mr. Jesse L. Funches september 3, 1986 Page'10 to provide'any such transmission services which would unreasonably impair the reliability of Companies' system or emergency transmission capacity.
Companies shall not bear any losses associated with such transmission."
Other provisions of the 1980 Settlement likewise impose obligations on TUEC regarding transmission services for Tex-La.
Under Licensing Condition D(2)(b), TURC must " share information" with Tex-La and " conduct and/or participate in joint studies and planning of future generation, transmission and related facilities."
Under Licensing Condition D(2) (j) (a), TUEC must include in its " planning and construction programs sufficient transmission capacity" to accommodate Tex-La's economy energy transaction.
Under section D(2) (i) of the Licensing Conditions, TUEC must provide transmission, coordination, and scheduling services for Tex-La.
Specifically, subject to certain conditions, TURC is obligated to " participate in and facilitate the exchange of bulk power by transmission over the Applicants' [TURC's) transmission facilities."
s Additionally, Article XII of the May 6, 1980 Tex-La/TP&L settlement, quoted earlier herein, which provides for joint planning of facilities, applies to transmission facilities, not just generating facilities.
2.
TUEC's Defacto Refusal to Provide Bulk Power Transmission Services Notwithstanding the obligation imposed on TURC by the 1980 settlement, TURC has effectively refused to provide transmission services essential to Tex-La's acquisition of alternate power sources.
As the cost and delays at Comanche Peak continuously increased, Tex-La began to search for less expensive alternative sources of power.
On February 10, 1986, Tex-La reached an agreement with Houston Lighting & Power Company ("HL&P") for the sale of economy energy on a month-to-month basis.
The contract i
specifies that any HL&P offers of economy energy will not exceed 150 MW instantaneous delivery.
The contract also was conditioned upon Tex-La's arranging for all necessary transmission and coordination services.
h
.. _ _ =.
d Mr. Jesse L. Funches September 3, 1986 Page 11 I
On March 20, 1986, Tex-La sent a letter to TUEC (Appendix 4 hereto), which is directly interconnected with HL&P, requesting a scheduling agent agreement whereby TUEC would provide for the scheduling, coordination, and delivery'of HL&P economy. energy to Tex-La.
Tex-La proposed a specific set of terms and conditions.
Pointing to the August 10, 1986 cutoff date for arranging transmission in the HL&P contract and the upcoming summer peak season, Tex-La also requested a written response from TUEC by 4
April 7, 1986.
Receiving no response, Tex-La, on May 20, 1986, i
again wrote to TUEC (Appendix 5 hereto) and requested a scheduling agent agreement with TUEC and requested also a written response as soon as possible.
On June 30, 1986, more than three months after Tex-La's original request, TUEC responded with a letter (Appendix 6 hereto) stating that TUEC was willing to negotiate a scheduling agent agreement but that any such agreement should include ten 4
specified " terms and conditions."
jt The ten " terms and conditions" essentially leave Tex-La as the last on and the first off TUEC's transmission systum.
They limit available transmission capacity for Tex-La's transaction to that left over after any TUEC transactions (condition 2), specify i
that Tex-La's transaction would be interrupted first (condition l
4), and intimate a need for Tex-La to pay for transmission system additions while specifically disavowing any higher Tex-La priority as to transmission availability or interruptibility of service (condition 5).
t Furthermore, at the parties' first meeting to discuss the s
contract, on July 11, 1986, TUEC, for the first time, stated that it had almost no available transmission capacity for the Tex-La transaction.
Specifically, TUEC claimed that, although it had 4
adequate intertie capacity between itself and HL&P, it lacked sufficient intrasystem capacity to move HL&P economy energy from South to North.
The limitations were said by TUEC to be such that, if Tex-La tried to transfer power on an as-available basis, l
then, assuming HL&P's Limestone generation plant was not running, f
Tex-La could expect to be interrupted 80% of the time.
The reason for this alleged lack of capacity, according to TUEC, was that TUEC had recently contracted for so much firm power from cogenerators located in HL&P's service territory that it had j
virtually no transmission capacity left over for Tex-La.
TUEC's claims of insufficient transmission capacity appear dubious.
Ordinarily, intrasystem transmission capacity is l.
considerably stronger than intertie capacity.
If TUEC has sufficient intertie capacity with HL&P to move TUEC's cogeneration j
power plus Tex-La's economy energy, then TUEC should have I
l i.
HMr. Jesse L. Funches j
September 3, 1986 Page-12 l
sufficient intrasystem transmission capacity to handle the j
transfer.
It is difficult to believe that TUEC's system, with a i
total load of approximately 16,000 MW, is incapable at any given i
time of accommodating a mere 150 MW additional power.
TUEC's i
lack-of-capacity claim is particularly questionable in light of i
the fact that TUEC currently supplies all of Tex-La's power needs.
TUEC claims that it is not the transmission capacity per se l
that is the problem, but rather the heavy Souch to North direction of the flow that taxes its system.
However, the known 463 MW of cogeneration power under contract to TUEC transmitted South to North pursuant to firm transmission service (PCW), should be more
~
j
'than balanced by j
4 i
(1) the 200 MW of economy energy transmitted North to 4
South over the North HVDC intertie from CSW's SWPP i
operating companies to CSW's ERCOT operating companies (mostly Central Power and Light Company);
(2) the 100 MW of power to be transmitted North to l
South over the North HVDC intertie expansion j
planned by CSW and Valley View Electric Corporation; (3) the 500 MW of power and energy that potentially could be transferred from East to West over the proposed East HVDC intertie terminating at TURC's i
Monticello plant; and l
l (4) the unknown megawatts of power and energy that TUEC is celling to San Antonio.
i on August 11, 1986, TUEC further added to the terms and conditions it demanded of Tex-La by forwarding a TUEC-drafted a
scheduling agent contract.
The' draft contract adds numerous barriers to Tex-La's proposed transaction.
The minor barriers j
{
cumulatively bar the transaction, and any one of the major l
barriers alone would stop the transaction.
First, the draft l
j contract places numerous transactions ahead of Tex-La's monthly economy energy transaction.
Second, TUEC demands compensation for additional TURC spinning reserves said to be required by the economy energy transfer.
Third, TUEC reserves the right to l
4 enforce a Tex-La obligation.to finalize all arrangements for i
l Tex-La payment of third party impact charges to all ERCOT members as a precondition to any TUEC transmission service. Fourth, TUEC requires a series of onerous noti 1:e requirements and limitations
)
on scheduling of the energy. Finally, TUEC demands Tex-La agree to pay thousands of dollars and additional unspecified charges for j
basic scheduling information, undefined computer and hardware
]
changes, and unknown " Scheduling Agent" services.
J
.. _ ~ _
~
5
)
Mr. Jesse L. Funches September 3, 1986 Page 13' Additionally, TUEC refuses to share information or participate in joint studies.
TUEC proposes to charge Tex-La an
'l unspecified amount for access to Tex-La's own load information t
4 necessary for Tex-La to schedule HL&P power.
TUEC's various l
charges for load information, computer changes, and " Scheduling
' Agent" services have not been justified by TUEC.
TUEC further reserves to its " sole judgment" whether there.is sufficient transmission capacity available.
?
Moreover, in TUEC's June 30, 1980 letter to Tex-La, TUEC alluded to Tex-La's paying for "necessary system additions or l
improvements on TUEC's system," but promised nothing more than available capacity transmissions even if Tex-La did pay for such additions, j
Currently Tex-La and TUEC continue their negotiations.
i TUEC, however, continues its policy of never saying "no" directly, i
but of effectively frustrating Tex-La's goal through the cumulative impact of its contract demands.
i j
- 3. The Effect on Tex-La of TUEC's Defacto Refusal to l
Provide Bulk Power Transmission Services t
i l
As shown in Appendix 7 hereto, TUEC's effective refusal to provide transmission services has resulted in major financial losses for Tex-La.
If TUEC had allowed Tex-La to purchase economy energy under contract from HL&P for the months April through July, 1986, Tex-La could have saved its members at least $400,000, given an expected adjustment in TUEC's fuel factor amounts.
l TUEC, by insisting on patently unreasona.ble terms and i
I l
conditions and by claiming that it lacks transmission capacity, t
refuses to participate in and facilitate the exchange of bulk t
{
power to Tex-La's benefit.
It's refusal to live up to its i
obligations under the 1980 Settlement seriously impairs Tex-La's l
ability to meet its members' power needs in a cospetitive manner.
l r
l l
II.
CHANGED ACTIVITIES RELATED TO COMANCHE PEAK'S COST f
INCREASE AND DELAY
(
i A.
The High Cost of Comanche Peak Defeats the Purpose of the 1980 Settlement to Improve Competition The NRC antitrust hearing and 1980 Settlement were necessitated in large part by the fact that the Texas l
Interconnected System, which covers most of Texas and within which i
TUEC operates, was electr.ically isolated from the rest of the i
i t
l l
I
]
~
l Mr. Jesse L. Funches September 3, 1986 Page 14 nation's electric transmission systems and the fact that TUEC and HL&P sought to preserve the exclusively intrastate nature of their operations.
In the August 7, 1978 letter to the NRC advising on the competitive implications of issuing an operating license for Comanche Peak, the Assistant Attorney General for the Antitrust Division, Department of Justice, stated:
"In our view, the use by HLEP and TU of their dominance to enforce an ' intrastate only' policy through the threat of disconnection, could injure other electric systems in the area and foreclose
~
competition from utilities now operating in interstate commerce, and, thus, constituted a situation inconsistent with the antitrust laws warranting an antitrust hearing."
(Letter of August 7, 1978, at 2.)
The letter also noted that "the present situation in Texas renders participation in nuclear generation and increased coordination among utilities both within and outGide the state of critical importance to the competitiYe ability of the other systems with which TU now competes or could compete.
(Id. at 3.)
Specifically, one of the primary purposes of the 1980 settlement was to allow certa?n smaller utilities corpet-ing with TUEC, Inc.luding Tex-La, to participate as co-owners in the then 1
relatively inexpensive Comanche' Peak, and thereby to improve their competitive position vis a vis TUSC over what it would be if TUEC retained the full benefit of this cheap resource for itself.
Since the settlement was entered into and Tex-La became part owner of the project, the fundamental premise of the Cettlement, concerning the price of Comanche Peak, has proven completely wrong, or the cost of Comanche Peak has escalated dramatically since that time, with the end of the cost increase still not in si0ht.
As a result, Tex-La's ownership share of comanche Peak, rather than improving Tex-La's ability to compete with TUEC, severely undermines Tex-La's competitiveness and places Tex-La in a far worce position competitively than if Comanche PeaA were wholly-owned by TUEC.
In short, the severe escalation in the cost of Comanche Teak is helping to defeat the very purpose of the 1980 Settlement.
f e-wn
+
.c
-s*
w-
.-_g 9%.o-y-m.--
,e e.-
p y
.s-gow----+.--e'r
--r--=-
Mr. Jesse L. Funches T
September 3, 1986 Page 15 As shown by Table 1, below, and Figure 1 (attached hereto at Appendix 8), compared to the estimate of $1.7 billion when the settlement was entered into in 1980, and $3.345 billion when Tex-La's agreement to buy a share of Comanche Peak became final in early 1982, the projected final cost of Comanche Peak how stands at well above TUEC's most recent estimate of $5,465,461,000, made in November 1985.
While TUEC currently declares the final cost of i
Conanche Pehk to be indeterminate, Tax-La's consultants estirante it at close to $8 billion.
i Table 1 1
i HISTORY OF TUEC PROJECTED COST ESTIMATES AND COMMERCIAL OPERATION DATES FOR COMANCHE PEAK i
Commercial i
Cperation Date Date Qtr.
Cotal Cost Unit 1 Unit 2 Source l
12/31/72 4
80 82 10E 12/31/73 4
80 82 10K 12/31/74 4
4 764,000,000 80 82 10K 12/31/75 4
987,000,000 80 82 10K 10/16/76 4
1,389,000,000 81 82 Prospectus 12/31/76 4
1,350,000,000 81 82 10K 5/03/77 2
1,380,000,000 81 82 Prospectus 12/31/77 4
.1,700,000,000 81 83 10K 5/14/78 2
1,700,000,000 81 83 Prospectus 12/31/78 4
1,700,000,000 81 83 10K l
1/23/79 1
1,700,000,000 81 83 Prospectus 12/31/79 4
1,700,000,000 81 83 10K 12/31/80 4
2,212,000,000 1/82 1/84 10K 12/31/81 4
3,345,000,000 1/84 1/85 10K 3/17/82 1
3,345,000,000 1/84 1/85 Prospectus 12/31/33 4
3,772,000,000 1/85 7/86 10K 1/12/84 1
3,885,614,000 1/85 7/86 Official Cost Estm.
1/09/85 1
4,564,046,000 1/86 7/07 Official Cost Estm.
11/18/85 4
5,465,461,000 6/87 12/87 Official Cost Estm.
l 4/18/86 2
unknown unknown unknown 8-K filing 7/14/86 3
unknown late 88 unknown 8-R filing I
L i
i j
1,
~ _. _, - -
_ _,. - _ _, _. - - _. - ~,..., _...,, - - _,,. _ - _ - _ -
(
Mr. Jesse L. Funches September 3, 1986
~
Page 16 TUEC's projected commercial operation date for the p.roject, which by 1980 had risen only once, to 1981 for Unit 1 and 1983 for Unit 2, by now has been repeatedly pushed back to the present estimate of late 1988 for Unit 1 and sometime thereafter for Unit 2.
Thus, the project now is further away from completion than it was at the time of the settlement, six years ago, The cost of Tex-La's share of the project has increased correspondingly.
At the end of 1980, the cost of Tex-La's then 4-1/3 share in Comanche Peak was projected by Tex-La to be
$135,000,000.
By February 12, 1982, when Tex-La halved its ownership percentage to 2-1/6 percent, Tex-La's share of the plant was estimated by Tex-La to cost $120,000,000..
Based on Tex-La's current projections and expectation for commercial opetation l
dates, Tex-La estimates its 2-1/64 share of the plant to cost in excess of $265,000,000, i.e.,
220 % of the 1902 estimate, and 393%
of the 1980 estimate.
l 1
Tex-La has financed its share of the plant with debt.
On August 3, 1981, Tex-La received a $180,000,000 loan commitment from the Rural Electrification Administration ("REA") to finance Tex-La's share and, in REA's words, to " cover any unforeseen circumstances which may result in increased cost to the project.#
'2hrough July 1986, Tex-La has utilized approximately $164,000,000 of this $180,000,000 commitment.
As a result of the dramatic cost escalation of Comanche Feak, Tex-La's part ownership of the project, which resulted from the NRC's antitrust review, has the effect of diminishing, rather than enhancing, Tex-La's ability to compete with TUEC.
Tex-La is a generation and transmission rural electric cooparative currently parchasing all of its electric pcwer and energy at wholesale from
+
TUEC for resale to Tex-La's menber cooperatives.
Tex-La's seven member cooperatives sell the electricity acquired from Tex-La and other suppliers to their approximately 151,000 customer / members in a 34 county region of Northeast and East Tegas.
TUEC is an investor-owned electric utility operating company, one of the largest in the United States.
It is vertically integrated into production, transmission and distribution, and serves approximately 91 counties in Northeast and Central Texas.
As a buying agent for its member copperatives, Tex-La would be in a position similar to that of many distribution-level t
competitors of vertically integrated electric utilities throughout the United States, but for the fact that it is located in Texas.
1 i
Mr. Jesse L. Funches September 3,'1986 Page 17 Because the Texas Interconnected System (" TIS") is electrically separate from the rest of the United States' transmission networks, Tex-La's power supply alternatives are sharply limited.
Further, because Tex-La is located in the eastern corner of TUEC's load control area, all non-TUEC power supply alternatives must be wheeled over TUEC's transmission system to Tex-La.
Despite these handicaps, Tex-La competes with TUEC at the wholesale and retail levels.
Tex-La engages in head-to-head competition (for loads in uncertificated or dually certificated areas), franchise competition (competition for the right to serve areas singly certificated to Tex-La), customer competition
~
(competition for existing or new industrial or commercial customers with significant loads), and yardstick competition (provision of a standard for comparison of utilities and their costs of service).
At the time of the 1980 Settlement, it appeared that Tex-La's cost of power through ownership of a share of Comanche Peak would be less than Tex-La's cost of power as a full-requirements customer of TUEC.
Given the unique electrical isolation of TIS and Tex-La's location in the eastern corner of TUEC's load control area, it appeared that, had Tex-La not been allowed participation in what then seemed to be a unique low cost power source, Tex-La would have been placed at a competitive disadvantage. Now, however, the competitive considerations that lead to Tex-La's purchase of an ownership share in Comanche Peak have been reversed.
Comanche Peak is not a unique low cost source of power within TIS, but rather has become the opposite.
Tex-La's relatively heavy reliance on Comanche Peak, through its direct ownership participation, now is disadvantaging Tex-La competitively, and will disadvantage Tex-La even more once Comanche Peak ultimately is placed into commercial operation.
B. TUEC has forced Tex-La to pay twice for Tex-La's Ownership Share of Comanche Peak.
The adverse impact of the cost increase at Comanche Peak on Tex-La's ability to compete with TUEC has been exacerbated by a rate filing by TUEC before the PUCT.
This requested change in rate design cost TUEC no money one way or the other, but has forced Tex-La to pay twice for Tex-La's share of Comancho Peak.
In essence, TUEC has forced Tex-La into the so-called " double whammy" situation condemned by the United States Court of Appeals for the District of Columbia Circuit. See Mid-Tex Electric Cooperative, Inc. v. FERC, 773 F.2d 327~TD.C. Cir. 1985).
Mr. Jesse L. Funches September 3, 1986 Page 18 Since its inception in 1976, the PUCT has allowed a utility to include in its rate base part of its cost of Construction Work in Progress ("CWIP").
This allows a utility to earn a return on a portion of a generating plant prior to its commercial operation.
In its 1982 rate case, TP&L, as part of a settlement, agreed to design its wholesale rates so that co-owners of TP&L generation plants would not have to pay twice for the.same plant, once through financing the co-owner's share of the plant (including direct construction payments to TP&L and interest costs), and again through the return on CWIP'in TP&L's wholesale rates.
See Texas Power & Light Company, 8 P.U.C. Bull. 41 (1982).
This i
agreed upon "CWIP Credit" removed from TP&L's wholesale rates for co-owners of its plants that portion of TP&L's return on CWIP associated with the co-owned plant and allocated to the co-owner / ratepayer.
By the time of its next rate filing, TP&L was a division of 5
TUEC.
When TUEC filed its first rate case in 1984, TUEC deliberately excised the "CWIP Credit" from its wholesale rates, then presented testimony and legal argument attacking the concept.
TUEC's actions were entirely gratuitous; as a rate design issue, the presence or absence of the CWIP Credit in TUEC's wholesale rate cost TUEC nothing.
The practical effect of TUEC's action was to force Tex-La to pay a penalty for its participation in Comanche Peak.
TUEC was ultimately ordered to decrease its rates by some $30 million, but Tex-La ended up with a $1,120,279 4
rate increase (test year ending September 30, 1983) attributable to the loss of the CWIP Credit.
i TUEC's tactic forces Tex-La not only to pay directly for its 2-1/6% ownership share of Comanche Peak, but also to pay wholesale rates to TUEC which support part of TUEC's 87-5/64 share i
of project costs.
Therefore, Tex-La currently pays for approximately 2.5% of the cost to construct and finance Comanche Peak, when its load amounts to only about 1% of TUEC's system load.
Table 2 illustrates the effect.
i l
t
~
- ~ - -
Mr. Jesse L. Funches September 3, 1986 Page 19 Table 2 TEX-LA CONTRIBUTION TO COMANCHE PEAK FINANCING DURING CONSTRUCTION PERIOD Cost through TUEC Rates TUEC Ownership....................
87.833%
CWIP in Rate Base (Yr. end 1985) x 40.000%
Tex-La Load Ratio Share x
1.000%
Cost through TUEC Rates.................
0.351%
Cost through Tex-La Ownership...........
2.167%
Total Cost to Tex-La....................
2.518%
i Since the "CWIP Credit" was removed from TUEC's rates in November 1984, Tex-La has paid an additional $1,800,000 per year in wholesale power charges to TUEC based on a test year ending March 3, 1986.
Once Comanche Peak becomes commercial, TUEC still may force' Tex-La to pay twice for Tex-La's share of the plant, thereby-undermining still further Tex-La's ability to compete.
Had Tex-La not purchased a share of Comanche Peak, then, when the plant became commercial, Tex-La would pay a certain amount for its allocated share of the cost of the plant by purchasing power from TUEC at its all-requirements wholesale rate.
Rather than pay that amount for purchased power, Tex-La chose to pay it for an ownership share of Comanche Peak.
However, if TUEC charges Tex-La l
both an allocated portion of the cost of Comanche Peak in TUEC's partial requirements rate to Tex-La and charges Tex-La an amount for an ownership share of the same plant, Tex-La effectively would pay twice for Comanche Peak power.
The 1980 Tex-La/TP&L Settlement specifically recognized this problem and provided for a partial requirements rate that credited Tex-La for its ownership share of Comanche Peak.
Once Comanche Peak becomes commercial, Article IX of the settlement provides for a TUEC sale of Supplemental Power and Energy to Tex-La under a partial requirements wholesale tariff.
The article then states that in " developing this tariff, TP&L's objective shall be to allocate costs based on TP&L's generating resources which are to be used to provide Supplemental Power and Energy 1
after crediting Tex-La's generating resources against TP&L's generating resources which are utilized on a comparable basis."
l i
I e
,m.
a Mr. Jesse L. Funches September 3, 1986 Page 20 In discussions with TUEC over the last two years, Tex-La has repeatedly reminded TUEC of its settlement obligation to develop a partial requirement rate that properly credits Tex-La for Tex-La's share of Comanche Peak.
To date, TUEC has not acknowledged this obligation.
C.
Litigation Between TUEC and the Minority owners In late 1985, Tex-La began discussions with TUEC concerning Tex-La's claims against TUEC stemming from TUEC's failure to complete the plant in a prudent manner.
By the end of April, 1986, the discussions had reached an impasse.
Tex-La advised TUEC by letter that, effective immediately and until notified otherwise, Tex-La would discontinue making any further payments to TUEC under the Joint ownership Agreement ("JOA"). Tex-La explained that the reason for its action was that TUEC had materially breached the JOA, thereby relieving Tex-La of any further obligation to continue payments thereunder.
Tex-La also prepared to take legal action against TUEC.
However, on May 29, 1986, TUEC filed an action against Tex-La and the two other minority owners of Comanche Peak, TMPA and Brazos.
The lawsuit, filed in Texas State District Court for Dallas County (No. 86-6808), alleged that Tex-La had anticipatorially repudiated and breached the JOA and asked the court for a declaratory judgment inter alla that:
(1)
Tex-La was not relieved of its obligation to pay its share of the remaining costs of construction of Comanche Peaks (2)
TUEC had not failed to act with due diligence in performing its obligations under the JOA; (3)
TUEC had not failed to construct Comanche Peak or to obtain a license for its operation in a timely manner; (4)
TUEC had not failed to employ Prudent Utilities Practices in connection with its obligations under the JOA; and (5)
TUEC~had not violated the Texas Deceptive Trade Practices Act.
~
On June 18, 1986, Tex-La and TMPA sued TUEC in Texas State District Court in Travis County (No. 399,336).
The following day, Brazos filed a separate suit'against TUEC also in Travis County (No. 399,482).
The Tex-La/TMPA complaint alleged, among other things, that:
l 1
O' e
Mr. Jesse L. Funches September 3, 1986 Page 21 (1)-
..TUEC failed to carry out its duty to plaintiffs under
-the JOA to design and construct Comanche Peak in accordance with Prudent Utility Practice and to complete-the plant's construction and have it licensed in'a timely fashion; (2)
TUEC failed to disclose to the minority owners certain problems.that TUEC had encountered in designing and constructing the plant, and thereby the minority owners were fraudulently mislead into becoming co-owners of the project; and (3) the problems caused by TUEC that arose in the design and construction of the plant caused the cost of the project to be far in excess of what it should have been.
The plaintiffs have requested damages from TUEC, including the difference between the actual and the prudent completion cost of the plant, replacement power and lost opportunity costs, treble damages under the Deceptive Trade Practices Act, and punitive damages.
The suits of all three minority owners also ask that the-JOA be rescinded.
If the minority owners are successful in their lawsuitscagainst TUEC, they would cease being co-owners of Comanche Peak and also would recover substantial damages from TUEC.
It is noteworthy also that the suit against the minority owners was filed on TUEC's behalf, and TUEC has been represented in all three Texas state court actions, by the law firm of Worsham, Forsythe, Wooldridge and Sampels, of Dallas, Texas, which until now has served as counsel for all applicants -- including the minority owners -- in the proceedings before the NRC to obtain an operating license for Comanche Peak.
is We appreciate this opportunity to provide you this-information.and hope that it proves useful.
Tex-La intends to submit further comments to the NRC after it has had the opportunity to review the response to be submitted by.TUEC.
, Sincerely yours, A
4d William H. Burchette WHB/bmb
58 EWb&A
' f.
)
'~
n R
ig#
TEXAS POWER & LIGHT COMPANY 1511 Bryan Street
- P.O. Box 226331
- Dallas. Texas 75266 May 6,1980 t
Tex-La Electric Cooperative of Texas, Inc.
P. O. Box 398 Guitman, Texcs 75783 Gentlemem This letter of intent will confirrn recent discussions between your
(
., representatives and those of Texas Power & Light Co.w.7 concerning settlement of various contrwersies, and will serve to set forth the understandings recched to resolve these differences, including the sole by Texas Power & Light Company (TP&L) to Tex-La Electric Cecr istive of Texas, Inc. (Tex-La) of an undivided ownership interest in the Comenche Peak Stecm Electric Station under construction in Hood and Somervell Counties, Texas, including both Units I and.2, nuclect fuel and associated 345 kv transmission facilities (Project).
Subject to the execution of a Joint Ownership Agreement and Power Supply Agreement, hereinafter colled " definitive agre.c.
.iw" between the various.
<(
offected parties, the undersigned intend that such agreement (s) shcIl include the following terms and conditions:
1.
TP&L will sell and Tex-La will purchase as a tenant in common an undi rided interest not to exceed 4.35% in the~ Project. The purchase price will be the same undivided percentage as the ownership percentage of the total costs of construction and fuel for the Project to the date of closing (Construction Costs), plus interest, calculated monthly, on Construction Costs incurred from the last day of the month in which the particular Construction Costs were paid to the dcte 'of closing, compounded annually, at a rate equel to TP&L's weighted cost of c=pital for each APPENDIX 1
~~,
such year (including the cost of the C
..,.,cny's most recent long-term debt and a
preferred stock issues and the actual rate of return on average common equity, each determined for each calendar year, as of the prior calendar year), plus TP&L's octual federal income tax liability associated specifically with the gain realized on f
the interest and development cost component of the pu d.e-price en the sale to i
Tex-La. Tex-La 'will c!so pay TP&L at closing $326,250 (based upon a 4.35%
l undivided ownership interest), rgpresenting its share of costs in developing the b(-:
Project which are properly allaedle but not specifically c v.4 to the Project.
After ciasing, Tex-La shall pay its undvided ownership interest percentage i
of costs its fier incurred for the Project, including without !!mitation, carts of I
construction, fuel, operation and maintenance.
~
II.
On and after commercial operation of Unit #1 of the Project, Tex-La sha!!
receive a percentage, equal to its undivided ca 4.!p percentage, of the net power and net ' energy wsced by the Pr.;.c: (Generation Entitlement), less transmission lasses. Tex-La expects and is expected to have utility responsibility for its own system, and recognizes its responsibility to provide installed reserve capacity and spinning reserves to firm up its Generation Entitlement. For the considerations hereinafter set forth, TP&L shall make availdie from its system I
resources reserve capacity cmd backup energy to provide Tex 4.a's r,eserves for its Cw. ; ion Entitlementwfrom the Project.
a.
Tex-La shall maintain reserve coacity annually in an crnount equal to Tex-La's Retained Coacity (as defined in Part 111 herein) times the p.ic o. of reserve ceccity which the Texas Utilities System companies maintained on their collective Systems duriturthe pr Mng year. -
.s e
..._,w.,
,_._e,,..___
- A.,
o b.
TP&L shall provide and Tex-La shall pay each month for such amounts of reserve capacity at a price based on the embedded weighted average cost per kw for all TP&L generation investment including its interest in generation facilities owned jointly with others multiplied by TP&L's appropriate fixed charge rate, each determined as of the end of the prior calendar year, divided by twelve. In addition, Tex-La shall pay for operating costs associated with its spinning reserve requirement.
~
c.
When backup energy is required by Tex-La to replace loss of Retained h
Ccpacity from the Project, the price of such backup energy to be paid to i
TP&L by Tex-La shall be Tex-Lds pro rato share of TP&L's actual cest incurred to replace the aggregate of TP&L's and Tex-Lds simulteneous loss of W=iGion from the Project for a given time period.
111.
During the early years of commercial operation of the Project, it is anticipated that Tex-Lds Generation Entitlement will exceed its annual base load power and energy requirements. Therefore, TP&L and Tex-La intend to establish a
(,
schedule of annual amounts of egocity from the Project to be retained by Tex-La for its own use (Retained Coacity) and annual amounts of surplus cweci,ty to be purchased from Tex-Lds Generation Entitlement from the Project by TP&L (Surplus Capacity), generally in accordance with Exhibit A attached hereto and made a part hereof. Tex-Lds Retained Coacity will be credited continuously against its load, in accordance with !! above. TP&L shall be obligated to pay '
annually for such scheduled Surplus Cgocity regardless of the net output of the Project. TP&L will also purchase from Tex-La oil energy actually wied with Surplus Ccpacity (Surplus Energy). The price of such Surplus Capacity and Surplus m
?
.i Energy during each year shall be computed in accordance with Exhibit B etiMe j
hereto and made c part hereof.
IV.
During the periods of trial operation of either psiing unit of the Project, TP&L will purchase the energy associated with Tex-Lds Generation Entitlernent at e price equal to the overage of TP&L's avoided enerTy costs and Tex-Lds costs of i
t J
I energy associated with its Generation Entitlement during each hour of test operations of the Project.
V.
j lt is understood that TP&L shall have sole discretion for the scheduling and dispatching of Tex-Lds Generation Entitlement from the Project in accordance e
with the undersigneds scheduling and dispctehing procedures. In the event TP&L voluntarily ceases to coerate or reduces the output from the Project because of me availability of lower cost energy from other sources, TP&L will make avellable to
- Tex-La the amount of energy which the Project would reasonably be anticipated to
- provide to Tex-La had its output not been reduced, at a cost equal to the cast that
(
would have been incurred by Tex-La if the unit had continued to operate at its i
reasondly anticipated operating level.
(
i VI.
l In order to effect the sale of e undvided interest in the Project, it will be i
necessary to amend tha-Joint Ownership Agreement between Dallas Power & Light g
i Company, Texas Electric Service C...,,wf, Texas Power & Light Cw.,,saf, Texas i
Municipal Power Agency ed Brazas Electric Power C+stive, Inc. for j
Comanche Pe& Steam Electric Station, and such sale is subject thereto. It will also be necessaary for Tex-La to join in such agreement, or a similar agreement, to
_.m,
1 assume its responsibilities and obligations as an owner. The Project Manager engaged in the planning, construction and cperation of the Project is Texas Utilities C#w. ting Company, subject to the direction of an Owners' Committee composed of one representative from each owner of the Project. As an owner of the Project, Tex-La will pay to the Project Manager a management fee' equal to 5% of its portion of all costs of operation and fuel related to Retained Capacity as covered in the Joint Ownership Agreement.
Vll.
(.
in all respects not +wiely addressed in this Letter of Intent, it is the intent of Tex-La and TP&L to structure any subsequent agreement (s) related to the ownership, construction and/or operation of the Comanche Peak plant cor.sistent with the provisions of the aforesaid Joint Ownership Agreement.
Vill.
The undersigned centemplate that definitive agreement (s) shall contain provisions through which TP&L will provide -Tex-La with bulk t.e.eT.ission end distribution services to Tex-Lds points of delivery (or its Participants' points of 1
l
(
delivery) from TP&L for delivery of Tex-La's Retained Capacity from the Project, including backup power and energy from TP&L System resources when generating unit (s) at the Project are out of service.
Such transmission and ' distribution services shall be provided on terms that fully compensate TP&L for its ecsts, including a reasonable. return on investment, and line losses; such terms will recognize Tex-Lds phal ownership of transmission facilities cornmon to the
~
needs of Tex-La and TP&L and will further recognize Tex-Lc's use and obligation to pay for use of transmission facilities jointly owned by the other operating ce.+cnies of the Texas Utilities System and others.
___m_
~
IX.
TP&L and Tex-La amicipate that Tex-Lds Retained Capacity will satisfy only a portion of TexN total monthly power and energy requirements. For the life of the contemplated definitive agreement (s), at Tex-Lds request, TP&L intends to provide Supplemental Power and Ere w in eneses of Tex-Lds Retained Capacity and other we iing resources in amounts necessary to satisfy the remaining load t
l requirements of Tex-La's parti 4.i., subject to reasonable provisions as to I
k~
advance notice cmd payments associated with added facilities similar to the
~
i l~
' provisions in the existing agreement between Tex-La and TP&t Such j f Supplemental Power and Energy will be provided under a partial requirements i
> wholesale tariff te be promulgated by TP&L subject to coproval by the Public Utility Commission of Texas and/or any other regulatory authority having Jurisdiction. In developing this tariff, TP&L's objective shall be to allocate costs based on TP&L's r,ere oting resouress which are to be used to provide Supplemental Power and Energy after crediting Tex-Lds generating resouress against TP&L's
" generating resources which ars utfilzad an a -..,, sle basis. All additional cost
(
allocations wi.Il be consistent with the methodology most recently eproved by the Public Utility Commission of Texas and used by TP&L in developing other j
wholesale and retail tariffs during the some time period.
X.
TP&L and Tex-La recognize that the Agreement between Tex 4.a and TP&L
}
dated October 20,194, as amended, will require amendment and/or renegotiation pursuant to any definitive %..,_cr ds) that may be executed in conjunction with joint ownership by Tex-La in the Project as contemplated herein.
XI.
I
~
TP&L will not disconnect from, refuse to connect with, or prevent Tex-La or s
e
---..--w-
7 any entity with which it maintains a cc,nn.ction from establishing or maintaining a ce.r ction with, facilities used for the transmission of electric energy in interstate commerce, by reason of the interstate character of such facilities, unless it determines that any such connection or the intended use thereof is not feasible under sound engineering practice or that TP&L's costs in connection therewith will exceed its benefits therefrom, or such connection or the intended use thereof would impair TP&L's system relis!!!ty or emergency transmission capacity. This is not to imply that TP&L must benefit from a connection; a refusal is valid, however,
(
where TP&L's net costs exceed its not benefit. In the event that Tex-La or any entity with which It is connected desires to establish, maintain or modify a connection with facilities used for the transmission of electric energy in interstate i
commerce, it shall first obtain a non-jurisdictionc! order, appliccble to TP&L and other members of the Texas Utilities Company System, under Section 204 of the Public Utility Regulatorf olicies Act of 1978.
P Xil.
Tex-La %L to meet its public utility responsibilities by the construction of generation.and transmission facilities including joint ownership of future facilities with TP&L and other electric utilities, or by the purchase of power and energy. In view of the agreement (s) contemplated herein, and possible agreements between Tex-La and others, It is intended that both Tex-La and TP&L shall be free, subject to provisions of.XI herein, to plan, construct, and own such generation and transmission facilities as it may elect. TP&L and Tex-La will consult and advise as to proposed facilities and jointly plan such facilities as seems gpropriate to achieve economies and avoid unnecast.c.y duplication of facilities and in keeping with each Party's plans and responsibilities.
.e-
-.--.,,..--w--,
1
}
8-i I
1 it is intended that Tex-Ld requests for participation in any project to be j
constructed by TP&L shall be made prior to any significant devel+. n of the j
project. Where such a ' timely request for participation is made, and where joint -
ownership in such project is determined to be mutually advant-a, Tex-Lds participation shall be on a mutually 4 sie basis that fully compensates TP&L l
for its costs. In connection with such participation, TP&L will clso interconnect
{
with and offer firm transmission service as may be required for delivery of such i
power to Tex-La at points an TP&L's system on a basis that will, fully w..w.eate b
5 TP&L for its costs, including a reasondie return an its ir.w;.. r.t.
XIll.
l i
The understandings herein set forth were rend.ed with the intention of i
settling the controversies between the undersigned and Tex-La before the Nuclear i
Regulatory Commission Cocket Nos. 5044SA and 50 ^':fA) and the Federal Energy Regulatory Commission Cocket No. E-9578). In this connection Tex-La desires to and will wise with and use its best efforts to assist TP&L in securing an 5 operating license for the Comeche Peak nuclear units at the earliest possible date
(.
avoidance of an antitrust hearing before the Nuclear Regulatory and the Commission in Docket Nos. 50 445A ed 50446A, such efforts to include, without limitation, i,.c..i I amendment of its petition to intervene before the Nuclear i
l Regulatory Commission ed appearances in full support of TP&L and other members of the Texas Utilities C..wrf ystem and such other assistance as TP&L S
may reasonably request. Further, Tex-La will cooperate with and use its best efforts to assist TP&L in securing dismissal, on terms satisfactory to TP&L, of the i Mng in FERC Docket No. E-9578. In addition, Tex-La will fully suoport the issuance cf an order by FERC, in form and substance-satisfactory-to-TP&L, under-Sections 2!O or 211 of the Federal Power Act requiring construction of two direct
.--,------,--,----------m
e---
_9 current interconnections as proposed by the four operating subsidiaries of Central and South West Corporation, provided Tex-La is afforded a reasonable opportunity to purchase a three-year option to participate in the ownership of such facility from the owner (s) upon reasonable terms and conditions. TP&L will agree to and Tex-La will fully support conditions in the operating license of Comanche Peak in form and substance attaded hereto as Exhibit C.
XIV.
Notwithstanding any provision of this Letter of Intent or otherwise, the Confidentiality Agreement dated October 5,1979, shall govern the disclosure of any
(-
discussions between the parties of the subject matter.
XV.
It is further understood that the provisions of this agreement and of the i
definiti~e agreement (s) and the coligations of the parties thereto may be subject to continuing or further regulation by regulatory bodies having jurisdiction.
If the foregoing correctly sets forth our understandings, please sign and return a copy of this letter. Upon receipt thereof, the undersigned will be prepared to enter negotiations so as to complete the definitive agreement (s) and close as
, (
soon as practiccble with the view of completing the some not later than November I,1980. By the execution of this agreement, you agree to use your best efforts to 1
secure (i) approval of this agreement by your member systems on or before May 8, 1980, (ii) interim financing on or before October 30,1980, (iii) permanent financing by the Rural Electrification Agency, (iv) certifrection and/or reeertification by the Pubile Utility Commission of Texas and (v) such other matters as may be necessary to carry out the intent of the parties as expressed herein.,
e 6
9
.._.--n- -,,
10 TEXAS POWER & LIGHT COMPANY By s
'9 D=
1.
Mc.L%esident V
A CESTED day of TEX-LA 2 FCTRIC COOPERATIVE OF TEXAS, INC.
I N..
By Al s-
/
For and on Behoff of:
Deep East Texas Electric Cooperative, Inc.
Jasper-Newton Electric Cooperative, Inc.
Rusk County Electric Cooperative, Inc.
Sam Houston Electric Cooperatiw, Inc.
Cherokee County Electric Cooperative Association Wood County Electric Cooperative, Inc.
Houston County Electric Cooperative, Inc.
O C
4 m
e l
e e
-,7
rms-A r.
e M-LA 32".*AI3ED CAPACM ED SURFLUS CAPAC 1"!
AS PIE:lllTE" OF m *.A GENZ3.CION,___ M
~
tRCT 1 CN""'
2 Taz-Ea Su=plus capacity Taz-La Suplus r*=y=* :7 Retained Casaci -r to "'P SL Ratained Ca=aci--r to ""Ptc.,
.361 0 4 100.0%
- 982 0
100.0 3_s3 0
100.0 0 4 100.0%
12.5 87.5 12.5 87.5
-( 1 L985 12.5 87.5 12.5 87.5 l
1986 25.0 75.0 25.0 75.0 1987 37.5 62.5 37.5 62.5 198a 37.5 62.5 37.5 62.5 50.0 50.0 50.0 50.0 1990 62.5 37.5 62.5 37.5 1391 75.0
'25.0 75.0 25.0 (2
75.0 25.0 75.0 25.0 1993 and a5ta=
100.0 0
100.0 0
~.
3ased upon c=uses= ial ope.h datas of August 19815c Cnit 1 and Nosa:
Janua=7 1983 So= Uni 2.
C.-....s'ci eperation detes are projections enly and cre subject to ci enge for a variety of recsons, including, but not limited to, cetions teken by the Nuclecr Reguictery Commission in connection with TUCCO's cpplic=tien_for.e _
se cI'ng license, delays cssociated with construction, etc. The dates en the foregoing tchie cre subject to chcnge cc==rdingly.
I l
I
~
l l
l m IT 3 I
i T?E' S ww ' N TO TII-La t'i?ACITY AND ENE3.GT t
0.1 T?E shall pu= chase Taz-La's Su=plus capacicy i= da l
?:cject is aceWes wi-d the schedula i= N d'ai: A with da i
fo11cwi=g basis of cha. gas :
i-1.1 Canaciev Charsa.
TPE shall pay Taz-La f== da capaci:7
'{
i antitlemme se pu= chased a man.hly espacity cha-ga cal==larad as p==vided i= Section 1.f below.
Monthly Cha= gas will be calcula:ad i
a=d billad usi=g ammual fixad cha= gas daca-ad as of da and i
cf the pri== yea =.
The men-y capacin cha=ga shall be a fixad charge 'payabla taga=ilass of the availabili:7 of capacity.
l.2 Oce=a-d - e Cha= ras.
T?E will pay i= n the Ope =a d g Accou== fc=
ha account of Taz-La that po:-ics of Tez-La's tha=a
-(
cf da ope =sti=g Costs of Comancha Peak Units 1 and 2, ether tha=
faal an:m= ization, allocable to the ana=gy enei. lame: associated vid cha. Su=plus capacity being bcugke back by TPE f=== Taz-La.
If a=y.hargas i=c.kudad in Opers i=g Cases, ocha: -han feal
,=
i ame: d =ation a=a also included as fixed chargas anda Sac =i==s 1.3 a=d 1.4 below, cc avoid duplica d =n such cha= gas shall be cake i==m ac=cu== only as Operati=g Cests' Tual.r
'es= den will be
!j' -
c=usidared a fisad cha=ga.
i i
1.3 T? E ' s 1"-" = 1 Fixed Charge Ra a fc purposes of this
~
- 'dbi: shall be:
A = DG-+ 7G + IG + AVTG a COFG GIG 1.4 Taz-La's 1*-"$1 Fixed Charge Ra:a for pu= poses of +ds
?*'dhi: shall be:
3 = DC + FC ' IC + AVTC + ITC GIC 1.5 Fo==nt.la for Cale=lacion of Manchly Charge:
h Mon =hly Charga = A (I (C)(GIC) + ST g
1.6 For purposes of the calculatic=s u=da See: ices 1.3, 1.4, and 1.5 of this azhibic:
A = T?E's A
=' Fixed Charge Rats, for the P cjac:,
calcula:ad as p;cvidad i= Sec icn 1.3 of -"d s azhibi:.
3 = Taz-La's ***"=' 'Tized Charga Ra:a, for the P cj act, calcula ad as p;cvided in Section 1.4 cf -dis azhibi:.
,(
C'= Percen: cf Su=plus Capaci=y bei=& bought back by TPE pe
- hdkit A during the manch fe; which -la calculation is mada.
DG = T?E 3cek Dep;ncia-den for the ?:cjec: facili ins durd$g such az:zn a1 period.
FG = TPE nuclear fuel amortiza d =n d =i=g such =--"m1 period.
IG = T?E Insura=ce f== the Proj ac: fard 13.ias d=ri=g such at:=ual-period.
9 b
.m a-AVTG = UE Ad Valorum md 7:anchisa Tazas a=d ccha:
,..epe==y-rala:ad casas allecabla em che ? cj ec:
f=ed ' d ties d:=t=g s" - a== cal paried.
C07G = UE's Total Case of Fu=ds 6 parcent, caledacad as p=svidad. 6 Sectics 1.7 below Cus=aly (W],
timas DE's weigh:ad avarage nec deprecia:ad invest =s=t is -da ?:cj ect fac tias d:=d=g such 1
- =1 pe=iod.
II GIG = UE's average Gross ?lant Invest =an: i= cha ?:cjec:
f-
,. -,. m as.
DC = Taz-La's Icek Dep=aciation for cha ? cj ac: facili:ias d:=i=g such sh pa: icd.
TC = Taz-La's Nucles: ? cal Acc. " a:1c= A -i=g s" ^
-=1 paried.
IC = Taz-La's I=su=z=ca fc da ? cjac: fac' ' ' =ias A -i=g meh a d pe='od.
AVTC = Taz-La's Ad Valeram Tazas and any echar p cpar:7-7.
(-
=alacad. cazas paid by Taz-La and reasonably allocabla to the Proj ac: *= ' Hsias fc= such -=1 yariod.
s ITC = Taz-La's total cost of long-ca=m de*cc du=1=g such ammal paried.
GIC = Taz-La's weighead average G css Pla== Invas=ns=c i=
\\
che Projec: "= 'i ' :iss.
ST = Monthly Sales Tazas paid by Taz-La as a ras-de of the sala of capaci:7 and ans=gy c UE, if a=7 i'
l 4
' her pur;esas ef this sac:ics " Gross Pla== I= vast =a= " of T?E a=d Taz-La i= tha ? cjec: faricias shall =sa: 1:s cecal i= such facili:ias ac the ci=a of c.
arcial opera:ics
' =vas =en:
(i=c1' Ad g cra=s=iissLer facilicias, nuclear faal seeek, macaM als,
supplias, and othe: verki=g capital) plus i:s i=vaseman charn-af a i= the ecs: of ceumlations, ranawals, addi icus, replacaman:s
. a=d =cdificacious ce tha Projac: far#'icias.
" Nae Dep=acia:ad 1= ras =an " of T?E or Taz-La. i= tha ? cj ec: facilities shall maan i s G =ss Plan I=vas mant is such fsed id =ias less ac--i s:ad
~
b beok dapracia:ics.or anc :tzard on, as app==priaca.
1.7 T?E's Cost cf Fu=ds with raspect ce gress i=ves=en:
i= -da ?:cj ect facilicias as of the da a cf cet=narcial epara:icn shall be calculatad pursua== := the f=11cw_=g fc=cla based cu
"'?E's ace =al weighead averaga ces of -de capi.a1 specifically i=c== rad 4 -
- -=+d g tha Proj act facili.ias.
The cesc of ?=ds wi.h respec: cc 3 ess i=vasc=an.s in tha Projec: facili d es af:a s" r'- data of cen=arcia.1 operation shall be calculated pt...sua== =c b
such fc=cla' based on T?E.'s actual weighead capi:a1 cos:s i=currad i= -=Ld g such irresca= s.
Rata Parcan:
Weightad.Ces:
Total Coss of Tu=ds C Leng-Ta:=n Debe (1)
(i)
(7) = (1) x (4)
(10) = (7)
?:afarrad Secek -I2)
(5)
(8) = (2) x (5)
(11) = (8) + (1 - CT?J Icui:7 (3)
(6)
(9) = (3) x (6)
- 12) = (9) + (1 - CT'i 1007.
i
. e
~ -
\\
~
i
-a-4 I
O l
- s=a:
(1) ed (2) = weighead a==.a1 ava age perca== ra:as I
(3) = mes racs== :sta of ras--- en UE coc=en i
equi =7 allowed i= the mes recan ra:a cass e
pric: em de da a of c-=~cial Ope =a:ics c,
i as app =pria:a, :ha data of da sobsagan:
invas1:2an:,
(4.), (5) ed (6) = compensnes of capi al s==ue==a usi=g UE capital secm en Decemba: 31 i([
~
i of =ha pric: year.
N i
(10) + (11) + (12) = (13) :ocal.cos: o f Ft= ads 1: P a= c a= =
?
f
- s=a:
CD. = Cc=pora:a Fadaral and 5:a:a --=ma Taz 3a:a, as j
in effec: frem ci=a =c ad..
i e
I L
e O
I ii
D#tAFT OF 4/28/80 EXHIBIT C License Conditions For Comanche Peck Steam Electric Stetion Nuclear Units Nus. I and 2 D'efinitions 1.
"Co...,srf" means severally and jointly Texas Utilities Genercting Co...,srf, Dallas Power & Light Company, Texas Electric Service Co...,. 7, Texas
~
Power &. Light Co...,srf, Texas Utilities Company and each other subsidiary, cffiliate or successor company er.vov.4 in the v.-. ion, trcnsmission and/or the
_(
-distribution of electric power in the State.of Texas.
2.
" North Texas Area" means the following Texas counties: Anderson, Andrews, Angelina, Archer, Bestrop, Baylor, Bell, Borden, Bosque, Brown, Burnet, 4
Cherokee, Clay, Coke, Collin, Co..w.d.e, Cooke, Coryell, Crane, Culberson, Dalles, Dawson, Delta, Denton, Eastiend, Ector, Ellis, Erath, Falls, Fannin, Fisher, Freestone, Caines, GI -+, Crcyson, Henderson, Hill, Hood, Hopkins, Houston, l
Howcrd, Hunt, Jack, AJc
., Kcufman, Kent, Lamar, Lampasos, Leon, Limestone,
- Loving, Lynn,
- Martin, McLennan,
- Midland, Milam,
- Mitchell, Montague,
(
Nacogdeches, Navarro, Nolan, Polo Pinto, Parker, Pecas, Rains, Reagan, Red River, Reeves, Rockwall, Rusk, Scurry, Schockelford, Smith, Somervell, Stephens, Sterling, Tarrant, Terry, Tom Green, Travis, Upton, Van Zendt, Ward, Wichita, Wilbarger, Willicmson, Winkler, Wise, Wood and Young.
3.
" Entity" means. a person, a private or pubi!c corporation, a governmental agency or authority, a municipality, a cooperative, or an association owning or operating or proposing in gocd faith to own or operate facilities for generation of electric power in the North Text.s Area for rescle.
4.
" Bulk Power" mecns the electric power cr.d attendant energy supplied or l
y.,---
v
-.. m_
I j
I made availcble at transmission or subtrensmission voltege.
5.
" Costs
- mean all appropriate operating and meintenance expenses end all ownership costs where cypliedle.
l 1
PoIIev Ccmmitments 1.
The C..
.7 shall, subject to existing rights of first refusal of entities I
not affiliated with the Company, afford an w,,
iunity to participate in the Comanche Peak nuclear units, through wT.w !.ip in such unit (s) on reasenchie Il
{
terms and conditions, for the term of the instant license, or any extension er renewal thereof, to any Entity (ies) now without v elon, who made a request f
therefor prior to Decamber 1,1979, to the extent of an aggregate total of 100 Mw, en a basis that will fully compensate the C.T.w.y for its costs and reflect the value of units in cn advanced state of construction. Any joint ownership egreement imolementing the foregoing must be concluded by.Nc....!.4r I,1980. In connection
~;.
with such particioation, the C
..w.y also will (1) connect with and offer trensmission service as may be required for delivery of such power to such l
(-
Entity (ies) at a point or points on the C.., sTi system and (2) in the c=se cf i
7 C
..-.7 wholesale customers acquiring ownership under these conditions, provide (a) partial requirements wholesale service for the differenes between the cepacity
,I i d in C T.s.c4 Peck and the load of that Entity which the Campany would
, acqu re otherwise have served at wholesale and (b) emergency and scheduled maintenance power and energy to fitm up the ecpocity acquired in C.T~. 34 Peck, pending development by the acquiring Entity of installed reserves or citemate pu.J.
d reserves, oil on a basis that will fully te the C r.,.,sTi for its costs, l
including a reasoncble return on investment.
2.
The C r.WTi will support requests by Entitles for.T Trip in the L/
Provisions suostantially the same as those in. the existing joint ownership agreement among the Company, Texas Municipal Poww Agency, enc Srazos Electric Power Cocoerative shall be deemed to be rocsondie.
---.,_ _- - ---., -, -, -. - - - - - - - ~. - -.
- - - -. - - - _. -, -. - - - - -. -,,,. - - - ~ -
~ _. _. _..
Texcs Interconnected Systems (TIS), inclui.ing requests by cny such Entity having c smaller peak load than any of the present TIS members, so long as such Entity has sufficient generation c@ccity to make a reasondie contribution to the relicbility of bulk power supply. The C..wi will propose, and actively support, the crection of one or more addtionci class!fications of TIS. m.ht.ip (which may include T
non-voting me.h J.ip) based on rational criteria to afford acesss to detc, studies and recommendations to all Entitles who desire it, including those having no generation or insufficient generation to make such a reasonable contribution to The C.gf will also support requests by qualified Entities fcr
(.
reliability.
.T.hJ.ip in any other electric utility planning organization or power pool of which the Comperrf s a.T
.hr (other than one involving only the CompcnyL The i
Company shall share information with other Entities with respect to, cnd shc!!
participate with other such Entities through TIS, ERCOT or other electric utility planning organizations in, joint studies and planning of future generaiton, transmission and related facilities; previded, however, this condition shall not obligate the C.;wf to participate in such joint studies or joint planning (1) unless
(
requested and conducted in good faith and based on re.e.. sly realistic end reasonably complete date and projections, (2) unless involving all other electric i
l utility systems whose participation in such joint studies and joint picnning is reasonably required for valid conclusions bereof, (3) unless reasenchly justified on 4
the basis of sound engineering principles, (4) unless appropriate protection is cecorded proprietary or other confidentici business and financial information, and (S) unless the costs for such studes cre alloccted on a fcir and equitable basis.
The C-..gf will connect with end coordincte reserves through
- 3. '
(ch the sale end purchese of ernergency and/or scheduled maintenance bulk; power with _
any Entity (ies) if and when power is available on terms that will fully centpe.:: cts the Company for its costs, including a reasonable retum en investmerrt to the extent it can de so without impairing the service reilsility sof the Ca...w.f cnd other electric systems to which it has firm commitments.
(b). The C-.gf and any other Entity (ies) who cre parties te e errengement described in (c) cbove shall from time to time jointly estchlirsh 17e minimum reserves to be insteiled and/or provided by ecch party under c=ntr==ned crrangements to maintcin a reserve margin sufficient to provide odeg ate
,e 1.
relichi!!ty of power supply in accordance with good industry practica es devoicoed in the cree. Unless otherwise agreed upon, minimum reserve requirements sheli be cdculated as a iwc..suw. of each such Entity's(ies') estimated net peck locd
' demand (teking into ac= aunt firm sales and firm purchases). In no event shell the Cs..i.,m.7 be required to maintain grecter reserves then the percentege which results from the aforesaid cciculation.
=
(c). Each Entity who is a party to an arrangement described in (c)
?cbove she!! provide such amounts of spinning reserves as may be equitchie crd
(
adequcre to avoid the imposition of unreasandle demands on the other perTy(ies) in meeting the normal contingencies of % 6ing its (their) 7;i...(s). 'Hcw;=, in no circumstances shall such reserve requirement exceed the installed reserve requirement.
4.
(a). The C.pf shell work with other Entities to fceilitate the exchange of bulk power by transmission over its transmission facilities between or among two or more Entities with which it is connected; ed between eny such Entity (ies) cnd any entity (ies) engcging In bulk pcwer supply outside the Nor*h Texas Aree between whose fccilities, the Cw.,4 f's_trensmission_ lines end.cfmer
(
l 6
s 4
r-----
---w----ew-
,w-+------v-
r-
,m-
- -- - = -
e w-e e e
i i
e
,. r, i
trans nission iiner fern c continuocs electriccf pcth, proviced t ct (c) permission te f
uti:lzs such cther transrnission lines hcz been obtcined by the preponent of the arrangement and (b) the arrangements reasoncoly can be swi.. Mated from a d
functienc! cnd to:Miec! stmipoint. Such transmissien she!! be on terms that fully cemcensate the Cer.p. cry for its costs, including a reasenchle return on invesenent.
Any Entity (ies) requesting scch t ansmission arrangements shcil give recsoncoie caverice notice of its (their) schedule and rem irerne.tri. W Comeany shell not be requifed te enter into any crrw,g.s.1 which would impair sy: tem relicoliity o-
~
I h emergan:r/ tr::rdnission c::pecity, it being recognized that *while some transmission may be oberstid N!!y loaded. other treamission mcy be for em-g-rf use and epercaed either unloaded et partially lesded.
(The foregeing cpplies to cny l
ENity(ies) fc which the Company rd:y Se connected in me futurar as well es + hose to which I'r is new connectiecQ
\\
(bh The Company shcil ini.:!ude in its pjenring and ecnst Jcticn
[
progrerns suffici46t trengroission ocp: city es required for the i.estions referred to in (c) abcve.. petvided any Entity (ies) gives the C..yairi sufficient cdvance 1
(
notice as 19.cy.be n"- m io e s. gree its (their) requirements from a l
functional and technical stentoint and that such EntityCes) fully corr.pensetes the Gompany fer its casts, including c reasand.le return on irre.~.. i. The Company stoil nct be required to constru..t frunsinia'6c fecilities if it firv.fs construction of such fccilitle infeas!bia; cr if its costs in conneciton therewith would exceed its
(
befits hierefrom, or if it finds such would irrgoir syttom relidiiiry or emerpncy I
l trmsmi.uion eepecity.
l (c).
In connec*icn wiirh the perf:armeen cf its obligatiens in (s) sove, 5
the Compe.rty shall et be foreciosed frern requiring = contrikotion in old of I lW
T I
i i
construct!on or from rneking.~.r..ents for eccrdincted constmetion of fut.re fransmission Ilnes such that occh of the pT'ies to 'he transcetion would ewn an 1
inte est in or a y...., of the transmission odcition in propertion to Its snare cf l
l' the cost of the addition. If the C.py in the future engages in loint ownertip of s
transmission lines with any emer Entity, it.shcil not refuse to engege in similar i
t anecetions in comparaole circumstances with etter Entities, subject to the f
i pecuisions ilmiting the C.., sT/s obligctions in 7 w@ Mb).
l 5.
In wston with the perfomer.ca of its ekligaties in purogr=phs 3 l-I eci 4, tne C-.emi will not discomect from, refase te =enneer with, c arevent cny entity with which it mainteirs connections from establishing or meintaining a connection witn, fccilities for the transmission cf electric energy in 'r;terstete
[ commerce, by reason of the Interstcte 6.crer of zJeh f acil ties unles: any such l
connection er the intended use thereof is not feczible or its costa in connection l
2/
, therewith will exceed its benefits therefrom or such connection or the intended 9
i use therecf would imocir system relichility or emergency tresmission c=occity, it
-is provided, however, thct any Entity seeking to eart bilsh, maintain or modify o
(
connection with fe::ilities for the transmission of electrie energy in interrrata commerce Acil have first obtained a rWurisdictional order, oplicchie to the l
C +w,'under Section 204 of the Public Utillry Regulatory Pol!cies Act of !?78, or such other exemption as may be contcined in the Federci Power.Act.
4.
The foregoing condtions.shcil be implan eted in a menner consistent with the appliechie federal, stcte and loc =i srcrutos, rules, regulctions and j
judgrr.ents and orders promulgeted thereunder. Nothing herein shcIl preciuce the Compcny from seeking m exemption or ether relief to which it may be antitled under coplic.iale law.
.J Tais is not to irroly ther the Company must benefit fror, o connection; a refusal is vcile, however, where the C..,.7/s not costs enc:eed its nef benefits.
N '
e'.
[
,r..
~,
,a;.z -
~
.a tex.La ELECTRIC COOPERATIVE OF TEXAS,INC.
May 20, 1986 Mr. T. Mic'nael'Ozymy Director, Special Projects Texas Utilities' Electric Company 400 N. Olive Street Skyway Tower L.E.
81 Dallas, Texas 75201 Re:
Tex-La Request for Participation in TUEC's Proposed Combustion Turbine Genera _ ting Units
Dear Mike:
As you know, Texas Utilities Electric Company (TUEC) has been granted a Certificate of Convenience and Necessity for the construction of 960 megawatts of Combustion Turoine generation capacity at Pernian Basin, Morgan Creek, and DeCordova.
By this letter, Tex-La Electric Cooperative of Texas, Inc. (Tex-La) fcrmally requests TUSC to allow Tex-La a five percent ownership interest in these proposed Combustion Turbines.
We believe that Tex-La has the right to participate in TUEC's Combustion Turbine project under the provisions of the May 6, 1980 settlement agreement entered into between Tex-La and TUEC in connection with the HRC review of anti-trust issues in the Comanche Peak licensing proceeding.
Section XII of the settlement agreement expresses Tex-La's expectation of " joint ownership of future facilities with TP&L," and states that "TP&L and Tex-La will consult and advise as to proposed facilities and jointly plan such facilities as seems appropriate to achieve economies and avoid unnecessary duplication of facilities...".
Whenever Tex-La requests participation in a TP&L project before any significant development has occurred, and if joint ownership "is determined.
to be mutually advantageous", the settlement agreenent states that Tex-La's participation "shall be on a mutually agreeable basis that fully compensates TP&L for its Cont."
While tnese provisions of the settlement agreement may not be a model of clarity, we have no doubt that it was the intent of both parties, in entering into the settlement, tnat Te:c-La have the right on an appropriate basis to participate in any future T?&L power projects, excluding only those which at that time already were in the developmental stage.
Tex *La's participacion rights under the cettlement agreement unquestionably cover the proposed Combustion Turbines.
APPENDIX 2 P.O. BOX 1623
- NACOGDOCHES, TEXAS 75962
- 409i5c0 9532
3 q
1 Mr. T. Michael Ozymy May 20, 1986 Page 2 i
I In addition, we view Tex-La as legally having the right to participate in the Combustion Turbines quite independently of the 1980 settlement agreemer_t, and regardless of how one may interpret its terms.
Tex-La specifically proposes that Tex-La and TUEC enter into a Joint Ownership Agreement.
The general terms and conditions of the proposed agreement are set forth below.
1.
Ownership Interest of Tex-La.
Tex-La will purchase from TUEC a 5 percent, undivided, joint' interest in Combustion Turbine generating units planned for construction at TUEC's existing Permian Basin, Morgan Creek, and DeCordova plant sites.
Ownership will include a 5 percent,-undivided, joint interest in switchyard facilities and any other transmission facilities necessary to interconnect the Combustion Turbine generating units to TUEC's integrated transmission system.
Tex-La's five percent interest in these units will be allocated as shown below:
CAPACITY PLANT SITE PROPOSED TEX-LA SHARE Permian Basin 300 MW 15 MW Morgan Creek 400 MW 20 MW DeCordova 260 MW 13 MW TOTAL 960 MW 48 MW 2.
Expected Commercial Operation Dates.
The Combustion Turbine generating facilities at the three existing plant sites referred to in Paragraph 1 above are expected to be placed into commercial operation in March of 1988 and March of 1990.
TUEC will make every reasonable effort to place these units into commercial operation on the following schedule:
March 1988 190 MW March 1990 770 MW 3.
Tex-La Payment to TUEC.
Tex-La will pay TUEC a purchase amount equal to 5 percent of the actual costs incurred by TUEC in connection with construction of the Combustion Turbine generating units and l
1
3 q
Mr. T. Michael Ozymy May 20, 1986 Page 3 associated transmission facilities, plus a construction management fee equal to 5 percent of Tex-La's purchase amount.
These payments will be made to TUEC as costs of construction are incurred by TUEC.
To the extent that any costs have been incurred by TUEC prior to the date of closing, Tex-La will pay to TUEC, at closing, 5.25 percent of those costs.
Further, to the extent that any costs are incurred by TUEC as a result of the sale of an interest in Combustion Turbine generating facilities to Tex-La, Tex-La shall reimburse TUEC for said costs in a manner which'will make TUEC whole, provided that TUEC acts in a timely manner to negotiate the sale of an ownership interest in the facilities.
l 4.
Operational Management.
TUEC will schedule, operate, and maintain Tex-La's ownership share of the Combustion Turbine generating facilities on Tex-La's behalf.
Tex-La will reimburse TUEC for TUEC's actual out-of-pocket costs associated with scheduling, operating, and maintaining Tex-La's share of the Combustion Turbine Generating Facilities plus 5 percent of this reimbursement amount as a management fee.
5.
TUEC Capacity Credit to Tex-La.
TUEC will credit Tex-La in each monthly billing to Tex-La for an amount of firm capacity (adjusted for appropriate losses) calculated using the below formula:
C=S/ (1 + R)
Where:
C = Firm Capacity Credit in Megawatts S = Tex-La's Ownership Share in the Combustion Turbine generating units in Megawatts R = TUEC's system reserve margin expressed as a percentage Such credit will be on a megawatt-for-megawatt basis.
6.
TUEC Energy Credit to Tex-La.
Mr. T. Michael Ozymy May 20, 1986 Page 4 TUEC will credit to Tex-La, in each monthly billing to Tex-La, an amount of energy-equal to Tex-La's pro rata share of the total energy produced by the Combustion Turbine generating facilities during the given billing month as adjusted for appropriate losses.
7.
TUEC Transmission Services.
Tex-La will pay TUEC a wheeling charge based on the same-terms and conditions applicable to wheeling Tex-La's entitlement in the Comanche Peak Steam Electric Station pursuant to the Transmission Agreement between Tex-La and TUEC dated December 9, 1980.
Tex-La is motivated in this matter by its desire to lower the cost of power to its members.
The proposed ownership participation would also benefit TUEC by easing the strain of financing on TUEC and lowering the rate shock to TUEC Customers.
Tex-La would appreciate a written response to this proposal 30 days from the receipt of this letter.
We look forward to hearing from you soon.
Sincerely,
, _I
_ ! f.
I hD John
. Butts Manag r, Tex-La Electric Cooperative of Texas, Inc.
t JBH/
cc:
Tex-La Board of Directors Mr. Robert M.
Gross, Jr.
Mr. William H.
Burchette Mr. Don Adams l
l l
i
O 7
4,W n 4 --:v w,
tex.LA ELECTRIC COOPERATIVE OF TEXAS,INC.
July 14, 1986
~Mr. M. S. Greene Director, Special Projects Texas Utilities Electric Company 400 North Olive Street Skyway Tower L. B. 81 Dallas, Texas 75201 Re: Tex-La Request for Participation in TUEC's Proposed Combustion Turbine Generating Units
Dear Mr. Greene:
More than a month ago, on May 20, 1986, we forwarded a letter requesting Texas Utilities Electric Company (TUEC) to allow Tex-La Electric Cooperative of Texas.
Inc. (Tex-La) a five percent ownership interest in TUEC's proposed 960 megawatts of Combustion Turbine generation capacity at Permian Basin, Morgan Creek, and DeCordova.
In that letter, Tex-La proposed an outline of a Joint Ownership Agreement that would provide for such Tex-La equity participation.
Tex-La requested a written response from TUEC within 30 days from TUEC's receipt of the May 20 letter. To date. Tex-La has received no response, written or oral, to the May 20 request.
l l
As I pointed out. Tex-La has a right to participate in the Combustion Turbine project under the provisions of the May 6, 1980, settlement agreement entered into between Tex-La and TUEC in connection with the NRC review of antitrust issues in the Comanche Peak licensing proceeding. Thus, TUEC's failure to even respond to the May 20 request is most disturbing.
Tex-La requests that TUEC respond to its May 20 request as soon as possible.
Since TUEC presumably has studied Tex-La's request over the past month, we hope this matter can be expedited.
Very tryly yourgr7 g
/-
7 t
,{
4m dohnH.Butta jManager cc: Tex-La Board of Directors Mr. Bob Gross Mr. Bill Burchette Mr. Richard C. Balough l
Mr. Don Adams APPENDIX 3 P.O. BOX 1823
- NACOGDOCHES, TEXAS 75963
- 409/560 9532
\\
l l
tex.LA ELECMic COOPERATIVE OF TEXAS,INC.
Q(
March 20, 1986 Mr. T. Michael Ozymy Director, Special Projects Texas Utilities Electric Company 400 N. Olive Street Skyway Tower L. B. 81 Dallas, Texas 75201
Dear Mike:
Tex-La Electric Cooperative of Texas, Inc. (Tex-La) and Houston Lighting and Power Company (HL&P) have entered into an agreement for the sale of Economy Energy from HL&P to Tex-La.
A copy of this " Agreement for Sale of Economy Energy" (HL&P Agreement) is enclosed.
Pursuant to Article 4.2 of the HL&P Agreement, Tex-La is obliged to " negotiate, maintain, and effect a Scheduling Agent Agreement with TUEC providing for the safe, economic, and reliable coordination of the parties' scheduling and delivery agreement hereunder with TUEC's system dispatcher."
Therefore, Tex-La hereby proposes that Tex-La and TUEC enter into a Scheduling Agent Agreement for the purpose of facilitating the transaction between Tex-La and HL&P.
The general terms and conditions of Tex-La's proposal for a Scheduling Agent Agreement are as follows:
~
1.
Tex-La vill have the right to exercise its option to buy Enargy from HL&P, pursuant to the terms and conditions set forth in Article II of the HL&P Agreement.
2.
Tex-La will provide TUEC with a copy of all schedules and notices required in Article III and Art 1cle III of the HL&P Agreement.
Tex-La vill provide a copy of notices to TUEC as soon as possible after any notice'is transmitted or received by Tex-La, except that Tex-La will provide TUEC with a copy of Tex-La's hourly energy schedule for a schedule l
period before auch schedule is transmitted to HL&P.
3.
TUEC will accept into TUEC's system on Tex-Le's behalf all Energy scheduled by Tex-La in accordance with the I
guidelines set forth in Article III of the HL&P Agr.sement.
Preliminary daily schedules currently contemplated by Tex-La are attached to this letter.
Tex-La reserves the right to make modifications or changes to these schedules; further,
}fpf( jl)N APPENDIX 4 Ta FEBOX 1623
- NACDGDOCHES, TEXAS 7591hs;W& W:9t se, ea wnr
~
~
~
~
^
l
~
\\
Tex-La reserves the right to schedule Energy in any manner Tex-La chooses, so long as the conditi'ons in Article III of the HL&P' Agreement are met.
.4
.TUEC may at its sole option increase the amount of hourly energy up to the limits set forth in Article 2.1 of the HL&P Agreement, scheduled,from HL&P by Tex-La, said increased quantities of energy being scheduled for use by TUEC.
TUEC will schedule increased quantities cf energy'for its own use in such a-manner that the combined schedules of 1
Tex-La and TUEC are consistent with the scheduling parameters set forth in Article III of the HL&P Agreement.
TUEC shall compensate Tex-La for the actual costs (as billed to Tex-La by HL&P) of such increased energy scheduled by TUEC for use by TUEC.
5.
It is recognized by TUEC and Tex-La, that TUIC can realize significant economic. benefits by scheduling Energy from HL&P into the TUEC system on behalf of_ Tex-La and by.
exercising TUEC's option under the Scheduling Agent Agreement to schedule increased energy for TUEC's own use.
6; Tex-La wil1 continue to buy all of its energy requirements from TUEC pursuant to the ap'plicable Power Supply Agreement with TUEC.
However, for each TUEC monthly billing period, TUEC will credit Tex-La in an amount equal to the energy scheduled into TUEC's system on behalf of Tex-La pursuant to the HL&P Agreement (adjusted for energy-related transmission losses) times the billing rate for energy delivered to Tex-La by TUEC at the transmission voltage level.
The billing rate includes all applicable components of TUEC's energy related charges approved by the PUCT and in effect for the given billing period, including, but not i
limited to:
the transmission level fuel factor, non-fuel energy adder, and purchased cogeneration adder.
This credit should be applied on a pro rata basis to all Tex-La points of delivery based on the total energy metered at each delivery point during the monthly billing period.
7.
In applying the credit of paragraph 6 above, Tex-La recognizes that not all of its delivery points are at the transmission voltage level.
Therefore, Tex-La shall compensate TUEC for the difference between.TUEC's total energy rate at transmission voltage level and TUEC's total energy rate at the primary voltage level for primary voltage level delivery points.
8.
For purposes of this transaction, Tex-La will pay TUEC all demand charges which would otherwise be applicable to Tex-La's points. of. delivery _ pursuant-to-the -provisions of Rate WP, or its successor rate.'
2*d l'8SMSA:n-X31 TP:Pt 99, EO Nnf
~
9.
Tex-La and TUEC recognize that Tex-La comp'ensates TUEC for the use of TUEC's transmission system through the wholesale demand rate applicable to Tex-La's delivery points.
Therefore, TUEC. agrees not to collect any additional transmission charges from Tex-La in connection with any Energy scheduled into TUEC's system on behalf of Tex-La pursuant to the HL&P Agreement other than. capacity charges for expanded transmissiont facilities shown by TUEC to have been necessarily expanded to accommodate the Energy scheduled into TUEC's system on behalf of Tex-La pursuant to the HL&P Agreement.
- 10. Tex-La agrees to pay all lawfully assessed third party impact charges associated with Tex-La's pro rata share of Energy scheduled into TUEC's system on behalf of Tex-La pursuant to the HL&P Agreement.
Likewise, TUEC agrees to pay all lawfully assessed third party impact charges associated with TUEC's pro rata share of energy delivered into TUEC's system pursuant to the HL&P Agreement for use by TUEC.
Tex-La is motivated in this matter by its desire to lower the cost of power to its members.
Tex-La feels that this transaction offers significant economic benefits to TUEC as l
well, and is therefore worthy of serious consideration.
As you know, in the 1980 Transmission Agreement and in Section D(2) of the Comanche Peak Licensing Conditions, TUEC has already agreed to provide bulk power transmission service to Tex-La.
Tex-La would appreciate a written response to this proposal before April 7, 1986, so that we might move forward with serious discussions and negotiation of a Scheduling Agent Agreement within the next few weeks.
The HL&P Agreement requires Tex-La to make such final arrangements by August 10, i
1986, and we look forward to completing the arrangements in April, prior to the summer.
DaVery truly youry, l l f,ut
'b dohn B
Mana g'e r v Enclosures JHB/vw cct Mr. Bill Burchette Mr. Bob Gross Mr. Richard Balough Mr. Juan Nichols i
f
,,em.--,,,,---
t W"**~*
~ ' ' ' ' * ' ' ~ " ' ' " ' " - ' '
'"n""w-v'*-----~-r,-
---,m-
,~m-w--
TEX-LA ELECTRIC COOPERATIVE OF TEXAS, INC.
Economy Energy Purchase from HL&P Preliminary Daily Schedule SUMMER WINTER SPRING / FALL (June-Sept. )
(Dec.-Feb.)
(March-May/Oct.-Nov.:
HOUR MWH MWH MWH 0000-0100 60 40 25 0100-0200 55 40 25 0200-0300 50 40 25 0300-0400 50 45 25 0400-0500 50 50 30 0500-0600 50 60 33 0600-0700 50 70 40 0700-0800 55 80 45 0800-0900 65 80 45
~
0900-1000 75 70 45 1000-1100 85 60 45 1100-1200 95 55 45 1200-1300 100 50 45 1300-1400 100 50 45 1400-1500 100 50 45 1500-1600 100 55 45 1600-1700 100 60 45 i
1700-1800 100 70 45 1800-1900 100 80 45 1900-2000 100 80 45 2000-2100 100 70 45 2100-2200 95 60 40 2200-2300 85 55 30 2300-2400 75 50 20 l
TOTAL 1,895 1,420 925 6
P*d l'ESMS/t:n-X31 pp:PT 99, E2 Nnt
. 3 ;-
tex.LA ELECTRIC COOPERATIVE OF TEXAS, INC.
May 20, 1986 Mr. T. Michael Ozymy Director, Special Projects Texas Utilities Electric Company 400 N. Olive Street Skyway Tower L.B.
81 Dallas, Texas 75201 RE:
Tex-La's Request for a Scheduling Agent Agreement with TUEC for the Receipt of HL&P Economy Energy.
Dear Mike:
On March 20, 1986, I sent you a letter notifying you of an " Agreement for the Sale of Economy Energy" from Houston Lighting and Power Company (HL&P) to Tex-La Electric Cooperative of Texas, Inc. (Tex-La).
In that letter, Tex-La proposed a Scheduling Agent Agreement with Texas Utilities Electric Company (TUEC).
The proposed agreement would integrate HL&P economy energy into TUEC's system for the account of Tex-La.
Tex-La requested a written response from TUEC before April 7, 1986, pointing out that the Tex-La agreement with HL&P required Tex-La to make such final arrangements with TUEC by August 10, 1986.
Your letter of March 26, 1986, noted that a copy of the Agreement for the Sale of Economy Energy had inadvertently been omitted from Tex-La's March 20, 1986, letter.
On March 31, 1986, by Federal Express, we forwarded you a copy of that contract.
l As you are aware, we have not pressed this proposal in light of our ongoing negotiations with TUEC concerning Tex-La's ownership share in Comanche Peak.
Now that such negotiations t
have reached an apparent impasse, I am writing to advise you l
Tex-La wishes to receive the HL&P economy energy as soon as l
possible, irrespective of the ou'tcome of the Comanche Peak negotiations.
l l
APPENDIX 5 P.O. BOX 1623
- NACOGDOCHES, TEXAS 75963
- 4091560 9532 i
c Mr. T. Michael Ozymy May 20, 1986 Page 2 Tex-La's request for a Scheduling Agent Agreement with TUEC still stands.
As we have previously pointed out, in the 1980 Transmission Agreement and in Section 'D(2) of the Comanche Peak Licensing Conditions, TUEC agreed to provide bulk power
' transmission service to Tex-La.
Due to the approaching August 10 deadline, the urgency for a TUEC response and any needed negotiations regarding this matter is now greater than before.
Tex-La requests TUEC respond to its March 20 request for a Scheduling Agent Agreement as soon as possible.
Since TUEC presumably has studied Tex-La's request over the past months, we hope this matter can be expedited.
~
Sincerely yours, uj h 0
- JXy,
~
L ~ (A/
John H/ Butts Manager, Tex-La Electric Cooperative of Texas, Inc.
cc:
Tex-La Board of Directors Mr. Robert M. Gross, Jr.
Mr. William H.
Burchette Mr. Richard C.
Balough Mr. Don Adams O
e
XEMX TELECOPlER 296 3 7-2-06 10:06 AM:
CCITT GA*
4044331813 ; o 2
-g.RL 02 '86 10:10 TD4-t_
RG&T
.j 4 l
TEXAS UTILITIES GENERATING COMPANY amTWAY TOWee. 4AS SIOeTH eEJVe areest. La, Sg. DALLea. T5xAS TSSS1 4
es.a.eassus June 30, 1986 4
Mr. John M. Butts Manager Tex-La Electric Cooperative of Texas, Inc.
- 7. O. Box 1623 Nacogdoches, TX 75963 Dear Mr. Butta 1
After ' studying your request regarding the negotiation of a Scheduling Agent Agreement and after considering the terms appropriate for such a Scheduling Agent Agreement, this letter is to inform you that, without regard to whether or not there is any legal obligation to do so, Texas Utilities Electric Company (TUIC) is agreeable to pursuing the development of a Scheduling Agent Agreement with Tex-La Electric Cooperative of Texas, Inc. (Tex-La) for Tex-La's proposed purchase of economy energy from Houston Lighting a Power Company (NL&P).
Cf course, ' any such Agreement must be i
conditioned upon assuring that our system reliability and emergency transmission capacity will be unimpaired by the proposed transaction and that TUEC is fully compensated for all of its costs, including a reasonable return on investment to ensure that our other customers are not adversely impacted.
TURC sees no economic benefit in purchasing energy for its own account l
through Tex =La's Agreement with ELEF because of other available Avenues.
l Therefore, TURC respectfully declines your offer to participate se a l
prehener in Teu-La's proposed ener;.; transe.ctica.with ELtp.
As stated above, however, TURC is willing, subjeat to the anscution by Tex-La and TURC of a definitive scheduling Agent Agseement, to provide for scheduling the energy and handling administrative details associated with metering and billing attendant to the proposed transaction.
?
such definitive Scheduling Agent Agreement should include, but not be limited to, general terms and conditions covering the following concepts:
1.
Tex-La will assume full responsibility for such economy energy transaction from NL&P and idemnify TURC against all claims, causes of action, litigation, liability, losses, costs, damages, injuries and empenses of every kind and character, including legal fees, arising in -f avor of -any third pareyr NLa -or -Tez-T.4 which -may be or alleged to be caused by the scheduling under the proposed transaction.
'J U L C. r 3 6 APPENDIX 6 4 savemow or Tuus urst.rnas st.acrate cownuer
-,n.__,___.____n
cumru= w m2;T n.4T-W D W W,.+
4044331813 ; e 3 p.A. iiE '85 10:11 TEX-LG
!G&T P.3 Mr. John H. Butts
)
June 30, 1986 Page 2 j
2.
Scheduling of energy by TUEC for Tex-La will be done consistent with the operating procedures and principles established by the Electric Reliability Council of Texas (ERCOT) in order to maintain system reliability and provide for emergency : capability.
The economy energy transaction between Tex-La and' EL&P will also be subject to the availability of sufficient transmission capacity for TURC's own economy energy transfers and other transfers for the benefit of all of its customers.
3.
Tem-La will compensate TuEC for all additional costs incurred to accommodate Tex-La's proposed transaction with HL&P.
4.
Tex-La's proposed economy energy transaction will, if necessery, be interrupted before TUEC customers are interrupted.
5.
The proposed economy energy transaction will be subject to interruption or curtailment for outages on, or shortage of, transmission capacity on the TUIC system or any third party's system providing transmission service for the transaction.
Tex-La shall have the right to provide for, through. full compensation to TURC, the necessary system additions or improvements on TUIC's system if the subject transaction cannot be scheduled due to a shortage of TUEC transmission capacity.
TUEC, however, Will not be responsible for any transmission limitations imposed by EL&P or any third party and it shall be Tex-La's responsibility to resolve such matters if system additions or improvements are needed to accommodate the transaction.
6.
TUEC will not compensate Tex-La for any scheduled energy that exceeds Tex-La's hourly load.
7.
Scheduling will only be made with proper advance notice, and necessary limitations will be placed on the frequency with which the schedule can be changed.
8.
TUFC will ocat1*ue tr. hin Tct -T.s beef c-en mete'aad aamrgy and demand at sech point of delivery.
To provide for credit for Tex-La's proposed purchase of energy from HL&P, TURC proposes to adjust each Tex-La member cooperative'.s total monthly bill as follows:
a.
The total Rwn of economy energy actually delivered. during the month shall be ne ptn nsmi..i s 1pases and any scheduled energy that exceeds tex-La's hourly load.
b.
Each member cooperative's total monthly bill will be adjusted by prorating the monthly economy energy on. the basis of a ratio of the member cooperative's total monthly RWN consumption to Tem-La's total monthly NWH consumption.._This. raticL should.. ---.
not be subject to later reconciliation to adjust for only minor metering errors.
,-.-,4
,-..-,--,,,,-,,..-~--e--
e WdfW~kko 4044331313 ; O4
..]l.L '02 '55 10811 TEA-u
%&T i
p.4 e..
- l Mr. John R. Butta
.7une 30, 1985 Page 2 c.
The not monthly economy energy as determined above shall he credited to each member cooperative's total monthly bill at the energy component of TUEc's Wholesale Rate WP less 0.1 cent per RWH for the demand related costs included in the Rate WP energy step. A credit per RWH will also be applied for the transmission ' oltage base rate fuel component.
9.
Tex-La will provide for necessary transmission service contracts with other utilities associated with Tex-La's proposed energy transaction from EL&P and will indemnify TUEC against any and all liability, expense, attorneys fees, litigation or controversy arising from failure to pay such charges.
- 10. Such additional scheduling principles, details and deadlines as deemed necessary for proper system operation will be determined between RL&P and TURC system Operation Centers and incorporated in the proposed Scheduling Agent Agreement between TURC and Tex-La.
Tusc recognises Tem-Le's desire to lower the east of electric service to its members.
TURC shares this same commitment to its customers, including Tex-La.
The general terms' and conditions as outlined above are necessary to prevent TUIC's other customers from subsidization of costs, reduced reliability of service or reduced ability by TUEC to provide them electric service at the lowest achievable cost.
We are prepared to discuss the aforementioned terms and conditions and provide for development of a definitive Scheduling Agent Agreement with Tex-La at your earliest convenience in order to provide for your proposed energy transaction with HL&P in a timely fashion.
Yours very truly, MsGreene/ma
_,,.,-r-
.-,-.,--,,.--.,,,_my_-,.,,
,-..m.
._..,-.__,...-.._m
_,._-m-,,,-
m,,,,. _, - -
s I
r a
TEX-LA ELECTRIC COOPERATIVE OF TEXAS. INC.
l l
teenthly Savings If Ten-La ited Purchased Econoov E6erev Frem HL&P l
l FEB ISAR APR MAY JUNE y
1 G
i
~
Energy Purchase Fress HL&P teWH 18.460 28.675 21,750 28.675 56.850 51.925 TUEC Enerov Rete i
~
$/Mme 23.544 23.544 23.544 23.544 23.544 23.544
/3 Fuel Factor 33
- c Can Fuel Energy Charge
$/MuH 5.200 5.200 5.200 5.200 5.200 5.200
/4
'O
~
$/bmet gg 0.003 0.059 0.198 0.200
_D.200 Cageneration Recovery Facter 3
Total TutC Energy Rate
$/ test 29.931 28.747 28.803 28.942 28.944
,28.944 4
HL&P Enerev Rate U
Gooted Energy Reto
$/88WH 25.500 25.000 23.250 20.500 19.750 22.850 ift Loesso and Impact Cheroes
$/enet 3.785 1.750 1.625 1.435 1.383 1.600 LI Schedul1og Agent Fee TUEC
$/taet 1.000 1.000 1.000 1.000 t.000 t.000 Total Price er NL&P Energy
$/Imet 28.295 27.750 25.878 22.935 22.133 25.450
]
Savinos Savings Per seet
$/smsH 0.646 0.997 2.925 6.007 S.811 3.494 Not Tes-l.a Savings
$11.925
$25.589
$51.169
$172.251
$357.206
$151.426 NOTES:
U Contract was esecuted on February 16 1986.
I g
Assumes noramal schedule from HL&P of 1.895 MWH/Doy f or June-Septeedser. 1.420 IIWH/ Day for December-February. 925 WWH/ Day for search-80ey and October-Novesdser. except due to transmission Itmitations July 1986 schedule would tse approstmately 1.875 Sash /0ey, t
G TUEC Current Fuel Facter. Adopted in Docket No. 6677. Order Ne. 2. February 27 1996.
/4 Cogeneration Recovery Facter, actuel for February through Issy. estimated for June and July.
,/_5 Actual quoted price for HL&P Economy Energy for sech month escept alarch HLEP did not quote a acerch price, merch 5
price would have been approutsetely 25 $/MWH according to Quinn Edmondson at HL&P (Ney 15 1986 phone i
conversation).
f6 Losses estimated at 5%: Impact Cherses Esttriated at 21 s.
c.....
s.% m.eeg.
5 e_
a e-
.ms Figa<eI
?
~
f
$5-a M
o e
som.
e-q n
a o
?
(s#3-ra.a
~
E
- YX?
.v_,6
?. 4-
//--
@y;. iauIe 172173111I trl 76 [17 I 7s I 71lro Iit I rt its Isvi erl e6!
va a...t so -
Zl -
Unif Wo.2 n-
9 I
gy -
L---__
p l
6 u-t_
1 es-L _ __
3.a b,yh l
n-m iL.T 88 -
1 I
89 -
APPENDIX 8
~
s
.