ML20212M040
| ML20212M040 | |
| Person / Time | |
|---|---|
| Site: | Comanche Peak  |
| Issue date: | 03/06/1987 |
| From: | Burchette W HERON, BURCHETTE, RUCKERT & ROTHWELL |
| To: | Funches J Office of Nuclear Reactor Regulation |
| References | |
| CON-#190-9857, RTR-REGGD-09.003, RTR-REGGD-9.003 A, NUDOCS 8703110039 | |
| Download: ML20212M040 (13) | |
Text
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- Heron, Burchette, Ruckert&Rothwell Suite 700 s= m 10251homas Jefferson Street, N.W.
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Washington, D.C. 20007 (916%u s (202) 337-7700 E w E "s w
- IWX 710-822-9270 Ausna.n 7smi (512) 4994)f06 March 6, 1987 n
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Mr.. Jesse L. Funches Director Office of Nuclear Reactor Regulation United States Nuclear Regulatory Commission Washington, D.C.
20555 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:
The November 20, 1986 notice of the Office of Nuclear l
Reactor Regulation, 51 Fed. Req. 42,953 (November 26, 1986),
stated that antitrust.information had been filed by the joint owners of Comanche Peak, and asked any person who wished to l_
have their views considered on the antitrust issues to submit their views.
Texas Utilities Electric Company ("TUEC"),
ignoring the intended scope of this notice, elected to use it as an excuse to file, on December-22, 1986, reply" comments to the September 1986 comments filed by Tex-La Electric
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Cooperative of Texas, Inc. (" Tex-La") and Brazos Electric Power Cooperative, Inc. ("Brazos").
Although Tex-La wishes to remain within the scope of the NRC's November notice, TUEC's claims and further denial of its settlement obligations cannot go unanswered.
Furthermore, TUEC's December 22, 1986 " reply" contains a number of new TUEC policies directly relevant to the NRC's antitrust inquiry.
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a Mr. Jesse L.'Funches
' March 6,.1987 Page-2
SUMMARY
OF'NEW TUEC POLICIES As to TUEC's Settlement with Tex-La (the "May 6,1980-
. Tex-La/TP&L Settlement"), TUEC now offers detailed argument.
that the Settlement is, and always was, a non-binding letter of intent.
TUEC, for the first time, now claims that none of the
" definitive agreements" contemplated in that Settlement are currently effective, and will not be effective until Comanche Peak comes on line.
Therefore, TUEC claims that, since 1980, it has owed no specific obligations to Tex-La.
It is.thus
. undeniable that the purpose of the Settlement (to allow Tex-La access-to alternative and less costly sources of power) has been frustrated by TUEC.
'As to TUEC's September 14, 1980 Settlement with.the NRC Staff and the Department of Justice, TUEC, for the first time, claims that its: obligation to engage in joint planning and information sharing pursuant to Licensing Condition D(2)(b) is met entirely by TUEC's participation in the Electric 4
Reliability Council of Texas ("ERCOT").
Also, TUEC, for the first time, claims that its obligation under Licensing Condition D(2)(j)(a) tcrprovide transmission capacity.for bulk power exchange is limited solely to capacity to transmit firm power and energy.
Thus, TUEC further denies its obligations under the Licensing Conditions.
I I.
TUEC's REFUSAL TO ALLOW TEX-LA ACCESS
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TO ALTERNATIVE SOURCES OF POWER l-A.
TUEC's Refusal to Jointly Plan or Allow Tex-La Participation in Future TUEC Generation.
In its September 1986 comments, Tex-La described TUEC's apparently systematic effort to deny Tex-La access to i
j alternative sources of power.
Tex-La set forth TUEC's obligations to jointly plan and to allow participation in i
future TUEC generation under the May 6, 1980 Tex-La/TP&L Settlement and the Licensing Conditions.
Tex-La then explained how TUEC violated those obligations by (1) unilaterally planning future generation, (2) refusing to allow participation in proposed combustion turbine generation units, and (3) seeking to void the May 6, 1980 Tex-La/TP&L Settlement.
In its " reply" filing, TUEC makes two basic
-arguments:
(1) TUEC has no such obligations, and (2) it has, in any event, lived up to them.
Both arguments rest on misstatements of fact and are wholly without merit.
Mr. Jesse L. Funches March 6, 1987 Page 3 (1)
TUEC is obliged to Jointly Plan and Allow Tex-La Participation in Future TUEC Generation.
(a) TUEC is so obliged by the May 6, 1980 Tex-La/TP&L Settlement.
TUEC does not deny that the language of Article XII of the May 6, 1980 Tex-La/TPSL Settlement requires TUEC to jointly plan proposed facilities and permit " joint ownership of future facilities."
Instead, TUEC denies that the Settlement is a binding Settlement.
TUEC " reply" filing at 6-7.
TUEC argues that the Settlement was only a " letter of intent to the execution of ' definitive agreements.'"
TUEC
" reply" filing at 6.
The argument ignores the express language in the Settlement and TUEC's subsequent characterization of the document.
Article XIII of the Settlement specifically states that "[t]he understandings herein set forth were reached with the intention of settling the controversies between the undersigned and Tex-La before the Nuclear Regulatory Commission (Docket Nos. 50-445A and 50-446A) and the Federal Regulatory Commission (Docket No. E-9578)."
(Emphasis added).
Also, the first sentence of the document states that "[t]his letter of l'
intent will confirm recent discussions between your l
representatives.and those of Texas Power & Light Company concerning settlement of various controversies, and will serve to set forth the understandings reached to resolve these differences (Emphasis added).
Finally, in an April 6, 1982 filing before Administrative Law Judge Laurenson in NRC Docket Nos. 50-445A and 50-446A, TUGCO, a division of TUEC, stated that Tex-La and TUGCO had " entered into a letter of intent on May 6, 1980," and "[t] hat agreement was duly reported to the Licensing Board then presiding." at 7-8.
There can be no serious question that the Settlement is binding and enforceable by the NRC.
Article XV states that "the provisions of this agreement and of the definitive agreement (s) and the obligations of the parties thereto may be j
subject to continuing or further regulation by regulatory bodies having jurisdiction."
TUEC also argues that none of the five " definitive agreements" explicitly permit joint ownership of any of TUEC's i
future generation units.
Even if true, which it is not, the i
argument is irrelevant.
The May 6, 1980 Tex-La/TP&L Settlement addresses a number of obligations not covered by the
" definitive agreements."
TUEC's obligation to permit Tex-La participation in future generation is hardly the only
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obligation created solely by the May 6, 1980 Tex-La/TP&L Settlement.
Mr. Jesso L. Funches March 6, 1987-Page 4 For example, Art. XIII of the'May 6, 1980 Tex-La/TP&L Settlement obliged Tex-La to support the issuance of an order
-by the Federal Energy Regulatory Commission requiring the building of two asynchronous, high voltage direct current
("HVDC") interties between ERCOT and the Southwest Power Pool
("SWPP") instead of the four, synchronous alternating current interties.
This Tex-La olbligation, as well as a number of other obligations in Art. XIII, is not found anywhere in the
" definitive agreements."
Yet TUEC itself has stated to Tex-La that it believes that Tex-La is obliged to support the HVDC interties.
In fact, Tex-La has met all its obligations under the May 6, 1980 Tex-La/TP&L Settlement, but TUEC now wishes to dispense with its Settlement obligations.
(b)
TUEC is obliged to jointly plan generation by Licensing Condition D(2)(b).
Licensing Condition D(2)(b) obliges TUEC to " share information" with " Entities," defined to include such utilities as Tex-La, and to " conduct and/or participate in joint studies and planning of future generation, transmission and related facilities.".TUEC claims this obligation is " applicable only with respect to and through any electric utility planning organization (other than one involving only TUEC) of which TUEC is a member."
TUEC " reply" filing at 3.
The only organization fitting this description is ERCOT.
TUEC's argument is wrong for three reasons.
- First, nothing in Licensing Condition D(2)(b) so limits TUEC's obligation.
The " Entities" to which TUEC owes its obligation include entities that are not members of ERCOT or any other planning organization.
Second, at the time of the overall l
Settlement, ERCOT was already in existence and TUEC was a member.
Thus, by TUEC's absurd interpretation, Licensing Condition D(2)(b) was meaningless from the start.
- Finally, Tex-La, a joint owner in Comanche Peak and bound by the Licensing Conditions, was not a member of ERCOT at the time the l
Licensing Conditions were agreed to.
Thun, Licensing Condition D(2)(b) could not possibly have been ints.ded to merely lescribe the joys of membership in ERCOT.
(2)
TUEC has not met its obligations.
(a) TUEC has not met its obligations to share information and jointly plan.
F Mr. Jesse L. Funches-March 6, 1987-Page 5 On January 28, 1985, TUEC announced an updated " System Resource Plan" which outlined TUEC's planned generation additions for 1985-1999.
These additions included combustion turbine generating plants, lignite-fired base load plants, and purchases of 1,000 MW of cogenerated power.
TUEC.did not solicit. input from Tex-La regarding the preparation of this
. plan, nor did TUEC even advise Tex-La that such a plan was forthcoming.
When, on September 23, 1985, TUEC applied for a Certificate of Public Convenience and Necessity for the 4
combustion turbines, TUEC had not shared any specific information about the plants with Tex-La.
TUEC does not deny these specific facts.
- Instead, TUEC states generally that "it is TUEC's practice to respond to requests by any defined Entity and to conduct studies and joint planning when such requests have been made in a manner consistent.with License Conditions D(2)(b)(1), (2), (3) and (4)."
TUEC " reply" filing at 4.
This is a misstatement of fact.
Tex-La has had a series of substantive meetings with TUEC to discuss such matters as Tex-La participation in the Twin Oak lignite generation project, scheduling of power and.
energy from Denison Dam, and transmission of energy from HL&P.
Despite such discussions, Tex-La only learned about such things I
as a TUEC " System Resource Plan" after the plan was filed.
In l
addition, currently, Tex-La has sought discussion with TUEC for l
more than a year about TUEC's terms for a partial requirements tariff to apply when Tex-La's current power supply agreement with TUEC expires on June 30, 1987.
TUEC finally replied to Tex-La's November 3, 1986 formal request, Attachment (2), on February 17, 1987 with three pages of vague generalities and a i
proposed contract which would effectively negate the terms and conditions of the 1980 Power Supply Agreement TUEC executed with Tex-La on December 9, 1980.
Attachment (3).
The proposed contract is for a 20 year term, paragraph 5, thereby supplanting the 1980 Power Supply Agreement l
(effective.one year after commercial operation of Comanche Peak).
The proposed new contract has no provision for Tex-La's ownership share of Comanche Peak, or the terms and conditions for purchase of non-TUEC power contained in the 1980 Power Supply Agreement.
The proposed contract also limits, conditions and eventually eliminates TUEC's duty to serve Tex-La 1/, and severely limits Tex-La's ability to leave i
1/
For example, in paragraph 5 TUEC specifically proposes Tex-La agree to waive TUEC's duty to serve Tex-La at the end of the 20 year contract.
True, the contract can be extended beyond the 20 year term, but TUEC is under no obligation to do so.
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Mr. Jcess L. Funchos March 6, 1987 Page 6 TUEC's system in whole or in part. 2/
In other words, TUEC will not agree that it has a duty to serve Tex-La, nor will
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TUEC; allow Tex-La to leave TUEC's system.
The proposed contract also double and triple charges Tex-La in a number of particulars. 3/
As to TUE.C's unilateral planning of its combustion turbines, TUEC's further claim that " Tex-La made no such [ joint planning] request with respect to any issue raised in its
[TUEC's combustion turbine] filing" is misleading.
TUEC
" reply" filing at 4.
TUEC told Tex-La nothing in advance about its combustion turbine plans.
Apparently, what TUEC means is that, if an Entity does not specifically ask about what it does not yet know, then TUEC is not obliged to tell them.
TUEC finally boasts of its_"information sharing and joint planning" with Tex-La by pointing to load information Tex-La supplies TUEC, the Tex-La power factor data supplied by TUEC, and the successful negotiation of a 1984 scheduling agreement for delivery of SWPA power.
TUEC " reply" filing at 4.
TUEC neglects to mention the protracted battle over the terms of the 1984 agreement, but that hardly matters.
That these are the only specific examples of "information sharing and joint planning" TUEC can come up with is in itself proof that TUEC has violated its obligation.
2/
For example, in paragraph 13, TUEC explicitly reserves the right to deny standby, spinning reserve, backup, maintenance and other non-requirements power and provides no rate schedules, eligibility requirements, or tariffs for these services.
This paragraph strikes at the heart of partial i
requirements service, since such supplemental services are essential for obtaining service off the TUEC system.
See also the paragraph 11 restrictions on power purchases and paragraph 12 restrictions on transmission service.
3/
For example, in paragraph 6, decreases in contract
- demand at a point of delivery, irrespective of notice to TUEC, results in a charge for the current cost of transmission and distribution capacity idled.
This capacity, of course, has already been paid by Tex-La in its payment for the rolled-in capacity costs that make up part of TUEC's system rates.
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4 Mr. Jecco L.'-Funch32
-March-6, 1987 Page 7 (b)
TUEC has not met its obligation to Tex-La to permit joint participation in future generation.
TUEC does not deny that Tex-La.specifically asked to participate in TUEC's planned combustion turbines, and that TUEC_specifically refused such participation.
Instead TUEC argues (1) that intervention in TUEC's CCN applications was a precondition to any Tex-La right to joint participation in the units,.TUEC " reply" filing at 4, and (2) that Tex-La's request did not comply with the terms of the May 6, 1980 Tex-La/TP&L Settlement, TUEC " reply" filing at 8-10.
Both arguments are specious.
First, the May 6, 1980 Tex-La/TP&L Settlement says nothing about intervention in a CCN application as a precondition to Tex-La's right to joint participation in future generation.
Apparently, TUEC's unstated argument is that, since Tex-La'did not litigate to create a right to participate, whatever right Tex-La may have had was extinguished.
To state the argument.is to refute it.
Second, TUEC argues that, under the terms of the May 6, 1980 Tex-La/TP&L Settlement, Tex-La has not timely requested participation, and that the participation would not be mutually advantageous.
This is the first time TUEC responded to the merits of Tex-La's May 20, 1986 request to participate.
TUEC seriously argues that the requirement for a request to participate be made " prior to any significant development of the project" means the request must be made prior to the time the sites were developed in 1947, 1949 and 1971.
TUEC " reply" filing at 8-9.
TUEC did not announce its intent to build the combustion turbines at all until 1985.
As of the May 20, 1986 Tex-La request to participate, there was no physical development of the project.
Using a common sense definition of the phrase, Tex-La's request was made " prior to any significant development."
TUEC finally argues that Tex-La's 5% participation in the combustion turbines would not be " mutually advantageous,"
because the units are useful only to TUEC.
The argument is strained.
Tex-La has not demanded the units be run to meet Tex-La's base load power needs.
Joint participation is not inconsistent with running the units to meet TUEC's western area reliability needs or TUEC system peak demands.
The " mutual advantage" comes in Tex-La's assistance to TUEC in financing the units, Tex-La's payment for system peaking needs, and TUEC's credit to Tex-La for Tex-La's equity participation in the TUEC system.
F-l
'Mr. J62M L.' Funchcc
. March 6, 1987 Page 8 B.
TUEC's Denial of its Obligation to Provide Transmission Services.
Tex-La and TUEC reached an agreement on November 13, 1986 for TUEC to' transmit monthly economy energy from Houston Lighting and Power Company ("HL&P) to Tex-La.
TUEC maintains that it was under no obligation.to. provide such service, but did so anyhow.
TUEC's position, set forth for the first time in its " reply" filing, amounts to a renunciation of its 1980 Transmission Agreement with Tex-La and of the overall Settlement with'the NRC Staff and the Department of Justice.
2
.(1)
TUEC has renounced its Transmission Agreement with Tex-La.
4' TUEC owes an obligation to provide transmission services to Tex-La under both the May 6, 1980 Tex-La/TP&L Settlement (previously discussed) and Paragraph 11.03 of the 1980 Transmission Agreement, one of the " definitive agreements" contemplated by the May 6, 1980 Tex-La/TP&L Settlement.
In its
" reply" filing, for the first time, TUEC renounces the 1980 Transmission Agreement, claiming the agreement is not effective.
The claim is inaccurate.
Paragraph 17.01 of that agreement plainly states that "[t]his agreement shall be effective from and after execution by all parties and approval i
of Tex-La's execution by the Rural Electrification Administration.
The Agreement was signed on December 4
9, 1980.
Approval by the Rural Electrification Administration followed shortly thereafter.
(2)
TUEC refuses to honor Licensing Condition D(2)(i).
I i.
Having refused to honor the 1980 Transmission Agreement, TUEC then discusses how TUEC forced its terms and
[
conditions for a Scheduling Agent Agreement onto Tex-La.
TUEC
" reply" filing at 11-14.
These terms and conditions ignored l
TUEC's obligation under Licensing Condition D(2)(i) which i
requires TUEC to " participate in and facilitate the exchange of l
bulk power by transmission over the Applicants' [TUEC's]
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transmission facilities."
Thus, TUEC's discussion boils down to a simple proposition:
"If you can force them to agree, then they can't complain."
TUEC's negotiation tactics cannot be l
exonerated by their ultimate success.
TUEC defends its negotiations by setting forth the l
results of load flow studies of its transmission system in i
j great detail on pages 11-14.
By careful phrasing, TUEC invites the NRC to believe that the results of these studies were immediately conveyed to Tex-La.
See particularly, TUEC " reply" filing at 12.
This argument is misleading.
l l
Mr. Jccas L. Funchts March 6, 1987 Page 9 TUEC did not even claim that it had transmission capacity limitations until'its June 11 meeting with Tex-La, more than three_ months after Tex-La's March 20 formal request.
It is TUEC's June 11 transmission capacity claims that Tex-La
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" intuitively" analyzed in its September 23 comments to the NRC.
Given what TUEC had told Tex-La up to that point, Tex-La had a sound basis to doubt TUEC's claims.
Not until October 17, more than four months later, did TUEC reveal the results of its load flow studies performed subsequent to Tex-La's September 23 comments.
TUEC also neglects to reveal that these studies were performed in response to informal discovery questions.by Tex-La and the Federal Energy Regulatory Commission ("FERC") Staff in an entirely separate matter before the FERC concerning a proposed East High Voltage Direct Current Intertie.
Even then, Tex-La had to struggle to get TUEC to answer Tex-La's questions originally set forth two months earlier on August 30, 1986.
Finally, the load flow studies and TUEC's argument is premised on the existence of a series of firm power contracts by TUEC with cogenerators located in HL&P's service territory.
TUEC claims that it contracted for so much power from these cogenerators that, at times, TUEC could not even import all of the firm cogeneration power it had under contract. 4/
But Tex-La cannot verify that these contracts call for truly " firm" power or call for power purchases in relevant amounts and times.
In violation of Licensing condition D(2)(b), TUEC will not reveal the actual terms of the agreements.
Though TUEC's power purchase contracts must be filed before the Public Utility Commission of Texas 5/,
TUEC has not 4/
Firm power is ordinarily transported before economy energy; therefore, TUEC claimed to have virtually no transmission capacity left over for Tex-La.
5/
Section 32 of the Public Utility Regulatory Act
("PURA"),
3 Tex. Stat. Ann. art. 1446C (Vernon Supp. 1987),
requires every public utility to file " schedules showing all rates which are subject to the original.
. jurisdiction of the regulatory authority."
The word " rates" is defined to i
include " contracts."
Section 3(d), PURA.
The original jurisdiction of the PUCT includes electric rates and services.
Section 17(e), PURA.
includes the Public Utility Commission of Texas.The phrase " regulatory author Section 3(g),
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PURA.
Thus, every public utility must file before the Public Utility Commission of Texas schedules showing all l
jurisdictional power purchase contracts.
t
f Mr. J0003 L. Funch:2 March 6, 1987 Page 10 filed them.
Accordingly, on August.:22, 1986, Tex-La requested copies of TUEC's cogeneration contracts.
TUEC refused to furnish this.information and continues to refuse.
Later the same day, Tex-La requested basic information concerning the contracts.
Again, TUEC refused and continues to refuse.
TUEC has informed Tex-La that TUEC has contracted for major purchases of cogenerated power, but the details of these purchases remain TUEC's secret.
TUEC claims that its course of conduct "not only complied with the letter and spirit of License Condition D(2)(i), but has exceeded its obligations.
TUEC
" reply" filing at 11.
In reality, TUEC, without explanation, did not begin serious negotiation of the transmission agreement until after the 1986 summer peak, deliberately withheld key information about its system capabilities and power contracting, and demanded patently unreasonable terms and conditions for transmission service.
It is this course of conduct that TUEC claims meets its obligation to " participate in and facilitate the exchange of bulk power by transmission over the Applicants' [TUEC's] transmission facilities."
Licensing Condition D(2)(i).
(3)
TUEC refuses to honor Licensing Condition D(2)(j)(a).
Under Licensing Condition D(2)(j)(a), TUEC must include in its " planning and construction programs sufficient transmission capacity" to accommodate such transactions as Tex-La's energy transaction.
TUEC has not done so and, as shown by TUEC's own arguments, refuses to do so.
Tex-La sought discussions with TUEC about Tex-La's need to import economy energy from HL&P well in advance of its March 20, 1986 formal request to TUEC and its February 10, 1986 final agreement with HL&P.
Because the HL&P contract evolved from an earlier HL&P offer to sell firm system power to Tex-La, Tex-La sought discussion with TUEC about transmission of firm power and energy and then economy energy as early as 1984.
TUEC's statement that " Tex-La made no requests for information or joint studies or planning prior to signing the agreement with HL&P on February 10, 1986" is a misstatement of fact.
But Tex-La's discussions with TUEC concerning transmission of HL&P power were meaningless.
TUEC would make no commitments.
TUEC would not even state the grounds for making a commitment.
As to its future regard for Licensing Condition D(2)(j)(a), TUEC is clear.
In its " reply" filing, for the first time, TUEC claims that Licensing Condition D(2)(j)(a)
Mr. Jesco L'.- Funchtc
-March'6, 1987 Page 11
" involves facilities for the transmission of firm power and energy only."
TUEC " reply" filing.at 11.
No such distinction is. contained in the words that comprise this Licensing condition.
No such distinction is made in ordinary utility practice'either.,
It is simply not true that "[e]conomy energy transactions, by definition, are those which take advantage of das available' capacity only."
TUEC " reply" filing at 11.
' Utilities that are not self-sufficient in generation may well wish to arrange firm transmission for.their economy energy purchases.
TUEC, however, was not above demanding pa reserving transmission capacity to be offered on an "yment for avai4able" basis.
as Condition 6 of TUEC's June 30, 1986 response letter, included as Appendix 6 in Tex-La's September 3 comments.
-(4)
TUEC refuses to honor Licensing Condition D(2)(b).
Under Licensing Condition D(2)(b), TUEC must " share information" with Tex-La and " conduct and/or participate in joint studies and plannin and related facilities." g of future generation, transmission 6/
TUEC's violation of this requirement as to future generation has already been discussed.
TUEC's violation of this requirement as to transmission and related facilities is manifest.
In addition, in its " reply" filing at 13, TUEC-adds a
" Catch 22" interpretation of its obligations under Licensing Condition D(2)(b).
As to Tex-La's March 20 re transmission services for HL&P economy energy, quest for TUEC claims that it "could have limited its consideration to the specific request made by Tex-La and could thus have denied the request outright for the [ transmission capacity limitation] reasons l.
i outlined above."
limitations until its June 11 meeting with Tex-La.TUEC did not reveal its trans Thus, TUEC is arguing that it can deny specific j
requests for joint studies and planning of transmission on the L
basis of transmission information not yet shared with the requesting utility.
Indeed, TUEC appears to go further by
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implying that it need not share transmission information unless it receives a specific request for joint studies and planning l
)
of transmission. 7/
Thus, there is no joint planning without 6/ This obligation is in addition to its joint planning and information sharing requirements of Article XIII i
of the May 6, 1980 Tex-La/TP&L Settlement.
2/
See TUEC " reply" filing at 11, where TUEC claims it did not violate Licensing condition D(2)(b) because Tex-La did not request joint studies or planning of TUEC transmission capacity prior to signing the economy energy purchase agreement with HL&P.
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.s Mr. Jesp.L. Funchra March 6, 1987 Page.12 information sharing, and there is no information sharing without joint planning.
II.
TUEC's FRUSTRATION OF PURPOSE OF THE 1980 SETTLEMENT A.
The High Cost and Delay of Comanche Peak Defeats the.
Purpose of the 1980 Settlement As explained and_ updated in Tex-La's comments, the extreme cost increase and delay in Comanche Peak has reversed a fundamentalfassumption in the 1980 Settlement.
Tex-La was permitted access in Comanche Peak to aid in making Tex-La competitive with TUEC.
Now, Tex-La's Comanche Peak participation and TUEC's refusal to honor the spirit and intent of the May 6, 1980-Settlement Agreement prevents Tex-La from being competitive with TUEC.
Tex-La brought these " changed circumstances" to the NRC's attention as requested by the NRC.
TUEC reacted by pointing'to the Texas litigation between TUEC and the other joint owners of Comanche Peak and then denouncing Tex-La's discussion as "so completely inappropriate and improper that we will not dignify this request with a response.'"
of course, it is the NRC's'right and_ responsibility to decide whether an antitrust inquiry is.appro brought to its attention. priate or not based on the facts In this' regard, it is worthy to note that TUEC does not deny the facts alleged.
Moreover, TUEC does not argue that
-exclusive or primary jurisdiction over the 1980' Settlement lies with the Texas courts.
Any implication to that effect is plainly wrong, as a matter of law.-
If the NRC decided that the-reversal of a fundamental assumption of the settlement of its previous antitrust inquiry is grounds for opening a new antitrust inquiry, then the NRC has every right and concomitant responsibility to make such a decision.
B.
TUEC Has Exacerbated This Adverse Effect on Competition by Forcing Tex-La to Pay Twice for Comanche Peak.
In its 1984 general rate case, TUEC filed a rate design change that forced Tex-La to pay twice for its share of Comanche Peak.
As a rate design change, the continuation or elimination of the "CWIP Credit" cost TUEC no money one way or the other.
Nevertheless, TUEC chose to seek elimination of the credit and filed testimony and briefs to that end.
Since the credit was removed from TUEC's rates in November 1984, Tex-La, until May 1986 has paid its share of Comanche Peak costs plus an additional $1,800,000 per year in wholesale power charges to TUEC based on a test year ending March 3, 1986.
- r-Mr. JOcco L. Funches March 6, 1987 Page 13 In its " reply" filing at 14-19, TUEC offers a lengthy recitation of the history of the "CWIP Credit," concluding that the issue was fully litigated before the Public Utility Commission of Texas.
TUEC misses the point.
Whatever the merits of the issue, there was no legitimate business justification for TUEC's actions.
Continuation of the credit would have cost TUEC no money.
TUEC does not deny that fact.
Rather than let intervenors fight over the issue, which they did, TUEC chose to take the affirmative step of actively litigating for the elimination of the credit.
Tex-La regrets the necessity for having to file additional information correcting TUEC's misrepresentation of fact and explaining TUEC's new violations of the 1980 Settlement.
But TUEC's " reply" filing is itself a changed circumstance relevant to the NRC's antitrust inquiry.
Sincerely yours, l}$ '.
/,
3 William H. Burchette WHB/bmb Enclosures cc:
Mr. William G. Counsil Mr. Robert A. Wooldridge, Esq.
Thomas G. Dignan, Jr., Esq.
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UNITED ~ STATES OF" AMERICA
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NUCLEAR REGULATORY COMMISSION
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BEFORE ADMINISTRATIVE LAW JUDGE1..,x4AURENSON.'P.
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In the Matter of:
HOUSTON LIGHTING AND POWER CO.,
)
_'et. _al.
)
et Nos. M m (South Texas Project, Units 1
50-499A l
1 and 2).
.)
i
)
l TEXAS UTILITIES GENERATING 1
COMPANY,'et al.
1
)
Docket Nos. 50-(Comanche Peak Steam Electric
)
f p
Station, Units 1 and 2)
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l S
pliCcyiG
~g 4?N.gISB2.F 0 STATEMENT OF TEXAS UTILITIES GENERATING
' COMPANY, 'e't al'.~ ~
ess8
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'By Notice of Conference of Counsel dated March
- 1982,
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the Administrative Law Judge ordered that'each party f.t statement of not more than fifteen pages (including appendices and attachments) covering:
(1) the pertinent history of this proceeding.and its status; (2) the issues to be resolved; and (3)
~ recommendations as to how each issue should be-resolved.
I.
SUMMARY
In this statement, Texas Utilities Genered ng 'ompany, et al
(
'("TUGCO"), Applicant in~ Comanche Peak, recome.nds T.at the Comanche
!I' Peak' antitrust proceeding be terminated by authorizing the impo-sition of the license conditions heretofore agreed to.
A p arties l-to Comanche Peak, including the Department ef Justice and the NRC Staff,have entered into a settlement which resulted in a withdrawal of the requests for hearing pursuant to 5105.c. of the Atomic g
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.2-Energy Act and a. stipulation that tha licensing of the Comanch'e Peak Steam Electric Station under' the proposed license conditions will not. create or maintain a situation inconsistent with the antitrust laws or the~ policies thereunder ~in accordance with the 1/
~
standards set forth~in the_ Atomic' Energy Act.
The Presiding Officer need not make detailed findings with regard to the settle-ment' or the' license conditions, but rather should approve the settlemen't includi.tig the proposed license conditions as being fair and reasonable, authorize the Staff to impose the license conditions in the operating licenses for~ Comanche Peak, and ter-O I Q minate the proceeding.
In terminating the' Comanche ~ Peak proceed-ing, the Presiding Officer should, in recognition that no hearing j
is required, rescind the order of consolidation heretofore entered by the Board.
In its capacity as an intervenor in the South Texas proceed-i -
ing,-TUGCO would defer to the views of the applicants therein.
l II.
HISTORY OF THE PROCIEDING A.
The' Construction Permit Review In accordance with subsection 105.c. of the Atemic Energy l
l Act, there was an antitrust review of the Comanche Peak appli-cation prior to the issuance of the construction pe'rmit.
The l
Attorney General did not recommend an antitrust hearing.on the r
i j
construction permit inasmuch as TUGCO had made certain policy commitments after negotiations with the Department of Justice which TUGCO was willing to have included in the construction per-l.
mit as antitrust-license conditions. No interested persen sought to inter-vene and request a hearing when the Attorne'y General's advice i
1/ See TUGCO's September 12, 1980 Status Report and attachments.
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was publichtd in the Federal ~Rnrihter.
Tha construction parmit license conditions were' imposed, and, pursuant thereto, Texas Municipal Power Agency and.the Brazos. Electric Power Cooperative he.ve purchased ownership interests in'.the Comanche Peak units.
The constr.uction-permits have been d'uly amended to reflect their
'y interests.
B.
The Operatin# Li'cen's'e Antitrust' Proceed'in'es At the instance of Central Power & Light Co. ("CP&L") one of the co-owners of the South Texas project, an operat'ing license 4/
hearing was ordered'in that case on issues involving inter-connection between utilities ~ in the Southwest Power ' Pool ("SWPP")
(made up of utilities connected to the Eastern grid) and utilities 4
in the Electric Reliability Council of Texas ("ERCOT" which is a reporting organization to which utilities in Texas not connected to either the Eastern er Western grids belong).
The intercen-nection issues were triggered when the SEC commenced an inquiry into the status of Central and Southwest Corporation ("CSW"),
CP&L's parent corporation, as an integrated electric public util'ity system as defined in the Public Utility Holding Company lo
~
i l
l 2,
See " Joint Motion of NRC Staff and Applicants.
~
May 2, 1978, at 1.
~
3j 44 Fed. Reg. 76893 (December 28, 1979).
4_/
In the South Texas proceeding, which was also. subject to an antitrust review on the issuance of the construction permit, the Attorney General did not recommend a hearing, no license t
conditions were imposed, and there was no antitrust inter-vention at the construction permit stage.
See the Commission's Memorandum and Order, 5 NRC 1303, 1305 (1977).
l l
O I
y Act of 1935.=
This NRC procasding is based on the' Commission's
^
determination that the' interconnection dispute constituted "significant changes" under section 105~c.2 of tha' Atomic Energy-
- C y
Act.
The interconnection dispute ' erupted when Central and Southweist Corporation, in an effort to protect its status as' a holding company 'in the above-refer'ent:ed SEC proceeding, made a self-help attempt to bring about electrical integration of its four operating subsidiaries.
This action and defensive counter-actions' led to a temporary bifurcation of electric utility systems witihin Texas and a flur y of litigation among affected utilities in Texas, Oklahoma, Lousian'a and elsewhere
~
l Despite its earlier conclusion at,the construction permit' stage, the Department of Justice in 1978 recommended a further antitrust l
review-in connection with the application for operating licenses.
for Comanche Peak (having previously made such a recommendation-4 l
in South Texas).
l In response to the Not: ice of Hearing, Tex-La Electric Cooper-ative (later replaced by Tex-La of Texas Electric Cooperative) and Central and Southwest Corporation and its subsidiaries petitioned f
b__
for and were. granted intervenor status.
5/
Id, and Order 7 NRC.397 U.978).
The SEC Order initiating
+
g the proceeding was published at 41 Fed. Rec.'5310 (February 5, 1976).
The SEC proceeding was recently terminated.
See
" Memorandum Opinion and Order Terminating Proceeding", SEC Administrative Pr.oceeding File'No. 3-4951.
The basis for termination was the FERC Order in FERC Dockets EL79-8 and E-9558 discussed infra.
Copies are not provided herewith in view of the 15-page limit, but are available upon request.-
See Appendix A hereto.
5/
5 NRC 1303 supr'a at 1319-20; Nexas Utilitien Generatine Company (. Comanche Peak Steam Elec? tic 5tarlon) 7 NRC 950 (1978).
7_/
See Appendix A 3/
Order Granting Intervention Petitions..." (October 19, 1978).
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Following the tric1 of the antitruct action brought by CSW against TU and E&P in a United States District Court, which. con-cluded that TU and E&P's conduct in defense of their respective
'9./
. jurisdictional status did not violate the' antitrust laws, the parties in the Comancha Peak proceeding and the South Texas pro-caeding prepared for evidentiary heirings in the operating license j
antitrust proceeding.
Initially, the Comanche' Peak and South Texas 10/
proceedings were consolidated for discovery.-- Beginning in
~
1978 until early 19.80, scorer of. depo'sitions were taken, I
numerous motions and other pleadings were filed and many thousands of documents examined with the' trial being scheduled for the late spring of 1980.
on the eve of' trial, settlement discussi,ons among the parties had progressed to such a stage (agreement in principle among CSW, ESP and TUGCO was followed by definitive agreement,
~
which was followed by agreement with other parties) that the Board postponed the trial date to give the. parties time to arrive j
11/
~
at a settlement.
C.
RESOLUTION OF THE INTERCONNECTION DISPUTE I
The core issue in these proceedings concerned interconnections between the SWPP and ERCOT.
Settlement in the Comanche Peak 7
l 9/
West Texas Utilities Co. v. Texas Electric Service Co. et al
^-
470 F.Supp. 798 (.19 7 9 ).
See Appendix A.
l g
Prehearing. Conference Order Regarding Issues, Discovery, and Consolidation (December 5, 19781 at 6-7.
Subsequently, the Licensing Board sua sponte consolidated the two proceedings l
for trial.
Order Extending Procedural Dates'and Directing l
Consolidation (April 10, 1980).
i 11/
See April 10, 1980 " Order Extending Procedural Dates..."
l (n. 10 supra);. TUGCO Status Reports of May 9, June 9, and
~~~
July 11, 1980; "Prehearing Conference Order..." of July 17, 1980; and TUGCO's September 12, 1980 report, (n.1 supra. )
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...._..r proem ding was premicsd en the assumption that FERC would req $2 ire the'. construction of asynchronous interconnections between ly
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SWPP and ERCOT.
Tho'se connections have now been ordered and related conditions approved by FERC in'a series of orders which have become final, thei tima for. appeal having, expired. y
- T The FERC order covers, among' other things, the. terms and ' conditions under which. utilities may participate in the ownership of and use the d.c. connections as well as futura additions thereto.
The FERC order lik5 wise governs rates and service for wheeling transactions to, from and over the d.h connections.
FERC has thus ruled on all issues regarding interconnect' ion, disconnection,
~
wheeling service 'and rates and other economic regulatory issues, and has facilitated purchase, sale, wheeling and exchange trans-actions between SWPP and ERCOT.
Disposition of the interconnection controversy has been supported by more than 25 utility systems --
virtually every electric utility in Texas, Oklahoma, Louisiana and Arkansas - as well as the Texas Public Utilities Commission, 12/
See~the attachments to TUGCO's September 12, 1980 Status Report.
See also the FERC notice of the amended application seeking approval of asynchronous d'irect current connections between SWPP and ERCOT, 45' Fed. jeg,. 46868 (July 11, 19 80 ).,
I 13/ FERC Docket Nos. EL 79-8, E9558, Order of October 28, 1981 (adopting settlement); related Errata Notice (November 5, 1981) and Order on Rehearing (January 29, 1982) (incorporating parties' proposed form of order by reference).
The first two were transmitted by the Staff to the Licensing Board by letter of October 17, 1981.
The last order and material it
)
incorporated by reference will be supplied on request.
See Appendix A.
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the FERC,lthe D partment of Energy, the Department of Justica and the Nuclear Regulatory Commissich.
Whatever uncertainties there may' have been at an earlier stage of this proce'e' ding as to who'ther FERC would in fact order the exempt. direct ' current asynchronouir connection of the utilities in SWPP with' utilities in ERCO'T, and as; to what course these pro -
ce'e'ings would take if it did not so order, such interconnection d
has now been ordered and the time for appeal.has-expired.
The-matters which were 'at the heart of the'intere'onnection dispute and 'he "significant changes" giving rise to these proceedings t
s.
have been resolved by the FERC.
With the finality of the FERC order, and with the. resolution of the controversies in the other proceedings (see Appendix Al, the time has come to terminate L
the NRC Comanche Peak. proceeding.
l D.
OTHER TSSUES IN COMANCHE PEAK WERI PREVIOUSLY RESOLVED 1
Tex-La Electric Power Cooperative, Inc. was permitted to intervene in the Comanche Peak operating license proceeding 15/
seeking, inter 'alia, ownership participation.'-- Subsecuently, that entity was replaced as a party by a newly formed one, Tex-La of. Texas, Inc. Call of whose members were among the original seventeen member cooperativesl, with whom TUGCO entered into a l
letter.of intent on May 6, 1980.
That agreement was duly reported
/
On several prior occasions, TUGCO has"given notice of its 14 intent to move at the appropriate time (which with the finality of FERC order discussed below, has now come) for an order terminating'the Comanche Peak proceeding.
See, e.g.
Tr. 1257-58; Response of TUGCO to Brownsville's September 25, 1980 Motion (October 6, 1980) at 4-5; TUGCO's Response to Brownsville's November 12, 1980 Comments (December 3,1980) at 3.
Q, n.9, supra Em I
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to'tha Licencing Bocrd then prssiding.
It*provided for owner-
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. chip _ participation By Tcx-La of T xas in 'Comancho Paak as wall lf/.
as related-arrangements.
The: construction permit has.been duly amended to-reflect Tex-La's planned 4-1/34 ownership
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participation.17f Subsequently, Tex-La of Texas opted to purchase-i only a 2-i/64 interesii, which has been duly reflected in
' 1_8f another construction pe.rmit amendmeilt.
l III.
TSSUES AND RECOMMENDATIONS:' COMANCHE PEAK The only
- ssue in' Comanche Peak is whether it should be l-j terminated by authoriziniJ the NRC Staff to incorporate the proposed-license conditions into the operating liiienses and rescindiniJ th~e order consolidating.it with the South Texas pro-cpeding.
Since all parties to the Comanche Peak' proceeding 19/
support termination and since no evidentiary proceeding is 16 /
Tex-La of-Texas Status Report of May 9, 1980; TUGCO Status Report of May 9, 1980 at 3, para. 5.
Q/
46 Fed. Rec. 49692 (October 7, 1981).
l 18f 46 Fed. R_eg.14~634.(April 5, 19 82).
19/ The Public Utilities Board of Brownsville Texas, which is a party in South Texas but not a party in Comanche Peak, at one point purported to ob;)ect to the Comanche Peak
,4, settlement license conditions.
The history of Brownsville's 1
non-party status in Comanche Peak and pertinent authorities e
regarding the lack of standing of a party to only one of 4
two consolidated proceedings to object to settlement of the other proceeding are set forth in " Motion of Texas Utilities 1
Generating Company to Strike References to " Comanche Peak..."
dated-October 6, 1980.
See especially Johnson v. Manhattan Railway Company, 289 U.S.
479, 496-97 (1932) (consolidation does not make party to one proceeding party to the other l
proceeding with which it has been consolidated), and State Mutual Life Assurance Company of America v. Deer Creek Park, 612 F.2d 259 (6th Cir. 1979) (agreement to stipulation of settlement of one action by parties to other action with which first was consoldiated not required because each of the consoldiated proceedings maintains its independent status with respect to rights of the parties thereto).
The Licensing Board advised TUGCO at the October 24, 1980 l'
Prehearing Conference that we could assume our motion to strike would be granted.
(Tr. 1258-59; 1266).
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-9 required, wa recommend thia ection in fairnGea to tha parties,
-as' conducive to the' proper dispatch ~of Commission business and I
to the ends of. justice and in the. pub 1'ic interest.
since an operating license for fuel loading for the first unit of Comanche Peak.will be required by June 1983 while an operating license for the'southCTexas project may not otherwise be ripe for issuance for some years hence, it is essential that the Comanche Peak proceeding be terminated and in connection therewith that the order 'for consolidation in south Texas be rescinded.
In at least two prior antitrust proceedings pursuant to Sui >section 105.c. of the Atomic Energy Act, the proceedings were terminated without line-by-line approval of license conditions by the Presiding Officer.
In the St. Lucie proceeding, the parties entered into agreements satisfactory to themselves; the intervenors withdrew; and the NRC Staff and the Department of Justice advised the Presiding Officer that there was no further need'for hearing and that the proceeding could be and should be O
1 t
20/
Florida Power & Light Co. (St. Lucia Plant, Unit 2), Lican-sing Board " Memorandum and Order" (March 24,1982) (not yet published).
We do not subscribe to the portion of the order which refers to the Tunney Act and the Clayton Act, i
however.
i
_lo-
' ' tOrminctcd.
Thic cetion rofarancid tha tOrmination of tha Hatch proceeding in 1974. 1/
2 sp ctfully submitted, M^b i
ose B. Knotts,iTr.
EBEV SE & LIBERE$
1 eventeenth Street, N.W.
Washington, D.C.
20036
~
Merlyn D. Sampels WORSHAM, FORSYTHE & SAMPELS 20G1 Bryan Tower Dallas, Texas 75201 Date:
April 6, 1982 O
i O
21/
Georcia Power Co. (Edwin I. Hatch Nuclear Power Plant, Unit 2) 8 AEC 107 (1974).
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APPENDIX A Securities and Exchange-Commission Admin. Proc. File No. 3-4951~
~
On February.16, 1945, the SEC issued a decision in which it determined that the electric utility system of CSW was an inte-
-grated electric public utility system as defined in the Public Utility Holding Company Act of 1935. ' The' Middle' West Corporation, et'al, 18 SEC 296 (19451.
On March 26, 1974, certain Oklahoma iiiunI2iipalities and cooperatives filed a inotion challenging this i
status and requesting that the SEC undertake a review thereof.
On December 31, 1975, CSW filed a memorandum reporting on the conclusion of an initial engineering study undertaken by PTI j
Technologies, Inc. which evaluated several alternative modes of future operation of its system, including interconnecting facili-ties of the subsidiaries of TU and adjacent facilities with existing and proposed interstate facilities of CSW.
On January 30, 1976, the SEC issued a Notice'of and Order for Hearing relating to the economical operation of the electric utility facilities of the i
subsidiaries of CSW as a single integrated and coordinated system i
j under the 1935. Act and the various plans referred to in the memo-randum,' Hearings on the issues raised in the SEC Notice, as subsequ'ently amended, were held from time to time commencing in September, 1976.
On April 1, 1982, the SEC issued a Memorandum Opinion and Order Terminating Proceeding, finding that the issues j
which' led to the institution of this proceeding have been disposed of and resolved by the Settlement Agreement by and among CSW, TU and E&P, as approved by the FERC by Order dated October 28, 1981, and that the commission's decision and order of February 16, 1945 continues to remain in effect.
Federal Energy Regulatory Commission (FERC)
Docket No. E-9558 On May 4,~1976, CSW filed a petition with the FPC (now FERC)
{
stating that on that date WTU commenced interstate operation through interconnection with PSO.
The petition further alleged j
that, because such interconnections resulted in the transmission l
of electric energy at wholesale in interstate commerce by all members of ERCOT and SWPP, TU and E&P were thus subject to the 4
jurisdiction of the FPC and sought permanent interstate inter-i connections involving CSW, TU and other electric utilities in L
On July 21, 1976, the FPC issued an order which, among other things, found that the TU Companies and E&P were not public utilities as defined in the Federal Power Act and dismissed the i
CSW petition.
CSW thereafter appealed this decision to the U.S. Court of Appeals for the District of Columbia Circuit, and on April 10, 1978, the Court of Appeals remanded the July 21, i
1976 order to the FERC for clarification..On August 24, 1978, the TU Companies filed with the U.S. Supreme Court a petition for writ of certiorari to review the judgment and opinion of the Court of Appeals, requesting that the appellate court be directed
- /
To April 6, 1982 Statement of Texas Utilities Generating Company, et al.
i
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to cuctcin tho FERC'o datermination that it was without juris-diction over the TU Companies, which petition was denied in
-. Novkaber, 1978.
This proceeding was dismissed as a part of the settlement approved by the FERC by Order dated October 28, 1981, as subsequently corrected and clarified, in FERC Docket EL79-8.
West Texas Utilities Company and Central Power & Light Company
- v. Texas Electric Service Company and Houston Lighting & Power Company U.S. District Court:for the Northern District of Texas on May 3, 1976, WTU and CP&L filed a complaint against TESCO and EEP, seeking a decree that continued operation under the intra-state covenant of the TESCO-WTU 1938 contract, as amended, was in
(
violation of the federal antitrust laws and generally to require TESCO and E&P to operate interconnected with the interstate facilities of WTU and CP&L.
Trial took place during October and November, 1978.
On January 30, 1979, the Court issued a Memo-randum Opinion and on February 27, 1979, rendered judgment holding, among other things, that TESCO and EEP had not violated the federal antitrust laws and that it would not be in the public interest to force them to intarconnect in interstate commerce.
The Court also entered judgment on E&P's counterclaim, permanently enjoining CP&L from permitting power it receives from the South Texas Project to enter interstate commerce as long as CP&L remains a participant in the STP agreement.
Plaintiffs thereafter appealed this judg-ment to the U.S. Court of Appeals for the Fifth Circuit, which appeal has been held in abeyance pending implementation of the Settlement Agreement.
In this connection, WTU and CP&L will dismiss their appeal on or about April 6, 1982, thereby permitting the judgment of the District Court to become final.
In addition, effective upon dismissal of this appeal, the District Court will enter a Modified Judgment on E&P's counterclaim so as to permit construction and operation of the interconnections required by-the FERC Order of October 28, 1981, as corrected and clarified.
Public Utility Commission of Texas Docket No.~14' After being informed that WTU had interconnected with PSO'on May 4, 1976 resulting in a bifurcation of TIS, the PUC called an emergency hearing for May 7, 1976, at which all members of TIS were represented.
On May 24, 1976, the PUC issued an order
- finding no emergency but permitting each system to operate as it chose, provided any such operation did not put the intrastate system into interstate commerce.
On January 7, 1977, TU and E &P filed a motion with the PUC requesting that the PUC enter an order requiring, among other things, WTU and CP&L to appear and show cause why they should not be ordered to return to the pre-May 4,1976 mode of operation.
At a hearing held on May 2, 1977, the PUC entered an interim Order which, in effect, required all parties to return to the pre-May 4, 1976 mode of operation and WTU to sever its interstate tie into Oklahoma.
On June 2, 1977, the PUC Issued Its Final Order which, among other things, con-firmed its Interim Order.
Following a hearing on various motions l
2:
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-3 for rahamring, the PUC f on July'll, 1977, entered an Amended Fina*1 Order which clarif.ied but did not substantially change its June 2 Final Order.
CP&L and WTU thereafter instituted a statutory appeal to tha' District court of Travis County, Texas, seeking to set aside the Amended Final Order and the Interim Order as incorporated therein.
Oral argument was held before the Court on December 4, 1978, and the appeal has been held in abeyance pending implementation of the Settlement Agreement.
In this connection, CP&L and WTU will dismiss this appeal on or about April 6, 1982, thereby permitting the PUC Amended Final l
Order to become final.
Federal Energy Regulatory Commission Docket No. EL79-8 l
On February 9, 1979, CSW filed an application, pursuant to the Public Utility Regulatory Policies Act of 1978, for exemption from three orders of the Texas PUC which allegedly prevented CP&L and WTU from voluntarily establishing or maintaining an electrical interconnection with any utility other than those comprising ERCOT, and also seeking an order requiring interconnection, wheeling and related relief.
On July 29, 1979, the FERC issued an l
order, among other things, instituting an investigation granting in part and denying in part motions by TU and the Texas PUC to i
dismiss and establishing hearing procedures.
On August 27, 1979, the Texas PUC appealed this order to the U.S. Court of Appeals for the Fifth Circuit (79-30541.
In connection with implementation of the Settlement Agreement, this appeal will be dismissed by the Texas PUC in April 1982.
On October 3, 1979, the FERC dis-l missed CSU's request for relief under Section 205 of PURPA, and l
CSW appealed this decision, which appeal was transferred and con-solidated with the Texas PUC appeal mentioned above.
In connection I
with implementation of the Settlement Agreement, CSW will dismiss
(
its appeal on or about April 6, 1982.
On June 9, 1980, CSW, the e
TU Companies and HL&P entered into the Settlement Agreement which
(
involves, among other things, the construction of two high voltage O
direct current asynchronous interstate interconnections between ERCOT and SWPP and was contingent upon, among other things, an order from the FERC exempting the TU Companies and HL&P from i
additional federal regulation.
As provided in the Settlement Agreement, CSW on June 27, 1980,, filed an amended application in this proceeding requesting the order specified'in the Settle-ment Agreement as an alternative to the relief requested in its original application, and on July 28, 1980, CSW, TU and EL&P jointly submitted an Offer of Settlement which would effectuate the proposals set forth in CSW's amended application.
The Offer of Settlement was supplemented on two occasions -- first by agree-ment dated September 11, 1980, executed by the FERC staff, CSW, EL&P and TU, and then on June 22, 1981, when CSW advised the Commission that an agreement had been executed by it and th'e Department of Justice under which DOJ agreed not to contest the Offer of Settlement, as supplemented.
The Offer of Settlement, as supplemented, was certified by the Administrative Law Judge to
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to the commission as an uncontested' offer of settlement on July 10, 1981, on October 28, 1981, the FERC issued an Order approving the settlement, which.~was corrdcted by Errata Notice issued November 5, 1981 and clarified by Order on Rehearing issued January 29, 1982.
On February 25, 1982, CSW, TU and HL&P withdrew their previously filed joint petition for rehearing, thereby permitting the FERC Order of October 28, 1981, as corrected and clarified, to become final.
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UNITED STATES OF AMERICA NUCLEAR REGULATORY, COMMISSION 9
In the Mattag of:
ROUSTON LIGHTING AND POWER CO.,
)
Docket Nos. 50-498A i
_et _al.
)
50-499A
)
(South Texas Project, Units
)
1 and 2)
)
i
)
TEXAS UTILITIES GENERATING
)
Docket Nos. 50-445A
)
50-446A COMPANY, et'_a1.
)
(Comanche Peak Steam Electric
)
i Station, Units 1 and 2)
)
CERTIFICATE OF SERVICE I hereby certify that copies of " Statement of Texas Utilities Generating Company, et al" in the above captioned j
matters, were served upon the E1 5 wing persons by deposit in the United States mail, first plass postage prepaid this 6th day of April, 1982.
i Administrative Law Judge Mr. Argil L. Toalston James A. Laurenson Acting Chief, Utility Finance Atomic Safety and Licensing Branch Board Panel Nuclear Reactor Regulation i
U.S. Nuclear Regulatory U.S. Nuclear Regulatory Commission Commission Washington, D.C.
20555 Washington, D.C.
20555 Atomic Safety and Licensing Merlyn D. Sampels, Esq.
Appeal Board Panel Robert Wooldridge, Esq.
U.S. Nuclear Regulatory-Spencer C. Relyea, Esq.
l Commission Worsham, Forsythe & Sampels j
Washington, D.C.-
20555 2001 Bryan. Tower, Suite 2500 Dallas, Texas 75201 Scott Stucky
^
Docketing and Service Branch
,Jon C. Wood, Esq.
1 U.S. Nuclear Regulatory W. Roger Wil, son, Esq.
l Commission Matthews, Nowlin, Macfarlane &
Washington, D.C.
20555 Barrett 1500 Alamo National Building San Antonio, Texas 78205 4
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2-Dick Terrel'1 Brown, Esq.
Mr. G.E Oprea, Jr.
Executive Vice President 800 Milam Building '78205 Houston Lighting & Power San Antonio, Texas i
. Company E. W. Barnett, Esq.
P.O. Box 1700 j
J. Gregory Copeland, Esq.
Houston, Texas 77001 Michael Baldwin, Esq.
Baker & Botts Don R. Butler, Esq.
3000 One Shell Plaza 211 East Seventh Street
[
'Bouston, Texas 77002 Austin, Texas '78701
[
R. Gordon Gooch, Esq.
Nancy E. McMillen, Esq.
Steven R. Hunsicker, Esq.
U.S. Department of Justice Baker & Botts Antitrust Divisien 1701 Pennsylvania Ave.,'N.W.
P.O. Box 14141 Washington, D.C.
20006 Washington, D.C.
20444 Stephen E. Lewis, Esq.
Jerry L. Harris, Esq.
Ann P. Hodgdon, Esq.
Richard C. Balough, Esq.
Michael B. Blume, Esig.
Cit'y of Austin
~
U.S. Nuclear Regulatory P.O. Box 1088 Consnission Austin, Texas 78767 Washington, D.C.
20555' J.A. Bouknight,~Esq.
4 Mr. Roff Hardy' Douglas G. Green, Esq.
}
Chairman and Chief Executive Loitenstein, Newman, Reis, i
Officer Axelrad and Toll Central Power & Light Company 1025 Ccnnecticut Ave., N.W.-
t P.O. Box 2121 Washington, D.C.
Corpus Christi, Texas 78403 20036 s
John W. Davidson, Esq.
3 Mr. Perry G. Brittain Sawtelle, Goode, Davidson &
I President Tioiolo l
Texas Utilities Company 2001 Bryan Tower 1100 San Antonio Savings Bldg.
San Antonio, Texas 78205 Dallas, Texas 75201 i
Douglas F. John, Esq.
Mr. R.L. Hancock, Direc. tor City of Austin Electric Utility McDermott, Will and Emery 1101 Connecticut Avenue, N.W.
P.O. Box 1086 Suite 1201 j
Austin, Texas 78767 Washington, D C.
20036 Bill D. St. Clair, Esq.
l Morgan Hunter, Esq.
McGinnis, Lockridge & Kilgore Fifth Floor i
Texas. State Bank Building L
900 Congress Avenue l
Michnol I. Miller, Esq.
KGvin B. Pratt, E2q.
D3vid M. Stahl., Esq.
AttornOy General's Office Isham,.. Lincoln 5..Beale State of Texas One First-National Plaza P.O. Box 12548 Suite 4200 Austin, Texas 78711 Chicago, Illinois 60603 William H. Burchette, Esq.
Mr. Don H. Davidson Karon, Haggart, Pord, Burchett City Manager and Ruckert City of Austin 1200 New Hampshire Ave. N.W.
P.O. Box 1088 Ste. 420 Austin, Texas 78767 Whshington, D.C.
20036 Mr. W. S. Robson J.K. Spruce, General Manager General Manager
_ City Public Service Board South. Texas Electric P.O. Box 1771 Cooperative, Inc.
San Antonio, Texas 78296 Post Office Box 151 Nursery, Texas 77976 George Spiegel, Esq.
. l O
Robert C.,McDiarmid, Esq.
~
.y Robert Jablon, Esq.
- * '/' '
Marc ^Poirier, Esq.
ose'.1 S. Knotts, yr.
Spiegel & McDiarmid
/
2600 Virginia Ave., N.E Suite 312 Washington, D.C.
20037 L
W.N. Woolsey, Esq.
Dyer and Redford 1030 Petroleum Tower Corpus Christi, Texas 78474 Mr. Donald M. Clements Gulf States Utilities Company I
Post Office Box 2951
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Beaumont, Texas 77704 l
Mr. William C.
Price Central Power & Light Company P.O. Box 2121 Corpus Christi, Texas 78403 i
Mr. G. Holman King West Texas Utilities Co.
P.O. Box 841 Abilene, Texas '79604 i
i i
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GDS W k O< ' ATTACHMEN o
V Suite 450 2525 Cumbertand Parkway November 3, 1986 Ananta. Georgia 30339 404 431 0151 Mr. Mike Greene Director of Special Projects Texas Utilities Generating Company Skyway Tower 400 North Olive Street, L.B. 81 Dallas, Texas 75201 Daar Mike:
In light of the recent discussions between Tex-La Electric Cooperative of Texas, Inc. (Tex-La) and TUEC regarding Tex-La's efforts to obtain Other Power Supply Resources as provided for in i
the December 1980 Power Supply Agreement between Tex-La and TUEC, Tex-La would like to begin to discuss the criteria by which Tex-La's transactions will be credited against Tex-La's purchases from TUEC.
A number of power supply opportunities have recently arisen l
which make it imperative that Tex-La and TUEC come to a clear l
understanding as to what arrangements need to be made to l
accommodate potential transactions which Tex-La may enter into.
l A specific example is that Tex-La has been approached by several cogenerators, both within Tex-La's service area (i.e. behind the meter) and in other service areas which would necessitate TUEC providing wheeling services to Tex-La.
Another example is the possibility of Tex-La obtaining resources in the Southwest Power Pool and utilizing a portion of the proposed East HVDC Tie or the reserved portion of the North HVDC Tie to access these resources.
In this regard, Tex-La requests that TUEC provide Tex-La with a response in each of the following areas:
Partial Requirements Tariff I
TUEC has an obligation under Section 3.6 of the December I
1980 Power Supply Agreement to promulgate a partial requirements wholesale rate applicable to Tex-La's supplemental purchases from TUEC.
Further, the currently effective Power Supply Agreement (s) between Tex-La and TP&L expire on June 30, 1987.
Given TUEC's obligations in this regard, the need for a new power supply agreement, and the likelihood that Tex-La will enter into
i
'Mr. Mike Greene Texas Utilities Generating Company November 3, 1986 ll
- Page 2 l
arrangements with an off-system power supplier sometime in the I
near
- future, Tex-La requests TUEC to promulgate a Partial Requirements Tariff as soon as possible.
L With regard to a Partial Requirements Tariff,- there are at I
l least three issues which need to be addressed.
We would l
appreciate your advising us of TUEC's position on these issues:
p 1.
Demand Ratchets.
How will demand ratchets be applied in the event Tex-La reduces its purchases from TUEC because of Tex-La's ' receipt of power I
from Comanche Peak or an Other Power Supply
- Resource, including a cogenerator in Tex-La's service area or in another service area.
2.
Cost Allocation Methodology.
Please address how
[
TURC's proposed methodology satisfies the requirement of Section 3.6 of the December 1980 l
Power Supply Agreement that the tariff " allocate i
(TUEC]'s costs based on its resources used to provide Supplemental Capacity and Supplemental Energy after crediting the Firm Capability of Tex-La's Other Power Supply Resources and Tex-La i
Retained Capacity against (TUEC]'s generating resources utilized on a
comparable basis"
[ Emphasis supplied].
i -
3.
Credits For Specific Resources Obtained By Tex-La.
The language of Section 3.1 of the December 1980 l
Power Supply Agreement contemplates only base-load j
resources being obtained by Tex-La.
The Partial i
I Requirements Tariff, should provide for a method i
by which Tex-La can receive credit for intermediate and peaking type resources, as well l
as base-load resources.
Wheeling Services Generally
\\
There have been a number of discussions between Tex-La and TUEC in recent months regarding TUEC wheeling services for Tex-La.
Tex-La would like for TUEC to p mvide Tex-La with the j
specific terms and conditions for TUEC wheeling of Tex-La's transactions.
TUEC has stated on several occasions that any j
wheeling charges to Tex-La will necessarily be based on recovering the " fully allocated costs" of the transmission j
system.
Tex-La is of the opinion that the Section 10.03 of the
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1 Mr. Mike Greene Texas Utilitics Generating Company
. November 3, 1986
- Page 3 December 1980 Transmission Agreement between Tex-La and TUEC provides the specific method for calculating a transmission wheeling rate applicable to - Tex-La, through which TUEC will recover the fully allocated transmission costs.
Tex-La woul'd also like to go on the record as being interested in participating in future transmission system additions which TUEC may have planned.
Specifically, Tex-La is interested in participating in the 345-kV Limestone-Navarro-South Watermill transmission line planned for service in 1989.
Section i
i-10.06. of the December 1980 Transmission Agreement provides for a
" percent reduction" in the wheeling rate applicable to Tex-La, based on Tex-La's investments in the transmission system.
Please provide Tex-La with a response regarding TUEC's position, including the following specific information related to wheeling:
1.
Outline of the general terms ' and conditions for firm wheeling of Tex-La's power supply resources obtained from other sources within ERCOT, and the calculation of the proposed charge for ' firm service.
If firm service cannot be provided, please specify the level of service which can be
- provided, and the calculation of the costs to provide the specified level of service.
2.
Information pertaining to the planned Limestone-Navarro-South Watermill 345-kV transmission line, l
including:
a detailed description of the proposed facilities, the projected costs and cash flows associated with construction and operation of the facilities, and the schedule for obtaining the necessary regulatory approvals and constructing i
i the line.
3.
The terms and conditions for Tex-La participation f
in the ownership of the planned facilities.
l Specifically, please address the level of Tex-La ownership which TUEC will consider, the costs for l
Tex-La to obtain an ownership interest, and the benefits which Tex-La can expect to receive from j,
i-ownership in this line (i.e.
transmission i
equalization credits and firm transmission guarantee).
(
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I
i
'Mr. Mike Greene Texas Utilities Generating Company
' November 3, 1986 Page 4 i
4.
A calculation of the transmission costs to Tex-La, i
given current system data, consistent with Section 10.03, Schedule C, Schedule D, and Schedule E of the December 1980 Transmission Agreement.
-5.
A calculation of the " percentage reduction" in the wheeling charge to Tex-La, consistent with Section i
j 10.06 and Schedule F of the December 1980 Transmission Agreement, based on current trans-s mission replacement costs, and assuming Tex-La participation in the _ planned transmission l
l
. facilities on the terms and conditions proposed by TUEC pursuant to the response to item 4 above.
I Wheeling Services for East HVDC Tie l
l
.As we discussed with TUEC representatives on Thursday, October 30, Tex-La desires to wheel power from the East HVDC Tie to -Tex-La delivery points.
We plan a meeting soon to discuss l
TURC's proposals.
To aid in reaching agreement, Tex-La requests the following additional information:
1.
Please calculate present and reasonably anticipated future fully allocated transmission costs as defined in paragraph 6 of the Valley View Electric Corporation Transmission contract.
2.
Please show the basis for the allocation of those costs and a breakdown of the calculation of billing units.
3.
Does TUEC anticipate telemetering will be required?
If so, how much at what cost?
4.
If Tex-La were to purchase backup power for the contingency of the Monticello-Dallas / Fort Worth 345 kV lines, what would be the rate, terms and conditions?
Backup and Reserve Arrangements Tex-La would like to determine what backup and reserve criteria TURC will require in order for Tex-La to obtain credit for a particular transaction against Tex-La's purchases of supplemental capacity and energy from TUEC.
Tex-La is also
i-Mr. Mike Greene Texas Utilities Generating Company November 3, 1986 Page 5-interested in TUEC's ability and willingness to supply the necessary reserve capacity, spinning reserves, and backup energy for Tex-La's off-system transactions.
Please provide Tex-La with a response which-includes the following information:
1.
Reserve Capacity, Spinning Reserve, and Backup Energy Arrangements necessary for 1) base-load i
resources obtained by Tex-La, 11) intermediate resources obtained by Tex-La, and lii) peaking resources obtained by Tex-La.
2.
Terms and conditions for TUEC providing the reserve capacity, spinning reserves, and backup energy to Tex-La.
3.
Criteria for third-parties to provide the reserve capacity, spinning reserves, and backup energy to Tex-La.
For example, Tex-La may be able to obtain standby service f rom another utility, or the off-system. supplier may be able to provide reserve l
capacity, spinning reserves, or backup energy from its own sources.
i l
Tex-La would appreciate a response to these issues as soon l
as possible.
In addition to those specific areas listed above, i
please address any other concerns which TUEC may have which must l
be considered by Tex-La.
As mentioned above, Tex-La is evaluating - a number of potential power supply opportunities;
- however, Tex-La finds it difficult to fully evaluate these c
l opportunities without knowing TUEC's position on these issues.
Please feel free to give me a call if you have any questions or if you wish to schedule a meeting to discuss this matter.
Tex-La looks forward to your response.
Sincerely, Hugh D. Baker Jr.
HDB/fc cc:
John Butts i
Bob Gross Bill Burchette-Hewitt Rose
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a fewc$ %/1*7 a'.
ATTACHMENT 3
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1EIELECTRIC m.s c a -,,..s, Fwbruary 11, 1987 Mr. Hugh D. Baker, Jr.
GDS Associates, Inc.
i Suite 450 2525 Cumberland Parkway Atlanta, Georgia 30339 Dear Hught This letter is written in response to your letter of November 3,
1986.
As we have discussed on several occasions since you wrote this letter, it is still impossible at this time to give you a definitive answer to all of the inquiries contained in your letter because of the fact that we have either not begun to analyze, or we have not completed an analysis. of all the matters you have inquired about and because of the absence of important specifics in some of your inquiries.
We hope that this response will be sufficient for your purposes and provide a basis for further dialogue.
At the outset, it should be noted that the December 1980 Power Supply Agreement to which you repeatedly refer is not currently in effect.
That Power Supply Agreement, of course, is one of the several contemporaneous contracts executed in connection with Tex-La's participation in the Comanche Peak Steam Electric Station.
As you know, TU Electric and Tex-La i
are currently in litigation concerning Tex-La's participation in Comanche Peak, each contending that the other has breached and is in default under the Joint ownership Agreement as amended.
Without in any manner attempting to argue the merits of that litigation in this letter, we are sure that you understand that it is TU Electric's position in that litigation that Tex-La i
had anticipatorily breached the Joint ownership Agreement by reason of its refusing to make the payments required by the l
Joint ownership Agreement, thus, the December 1980 Power Supply l
Agreement may never become effective.
In any event and regardless of the final outcome of that litigation, the December 1980 Power I
Supply Agreement, if it does become effective, will not do so until the beginning of the second year of commercial operation of Comanche Peak Unit No.
1.
Therefore, it is appropriate that our discussions focus upon the currently effective power supply agreements and any modifications thereto that may be mutually beneficial.
/
400 No,th Olive Street L8. 81 Dallas. Texas 75201 5
V
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+m Fchruary 11, 1987 hga 2 With regard to your request that TU Electric promulgate a stratified " partial requirements tariff", our current Wholesale Power tariff, Rate WP, is designed to be appropriate for any and all load factors
- and, therefore, should work equitably.
We are enclosing a draft of an "Agrpement for Electric Service" for your consideration that addresses such matters as deletions and reductions in the load served by TU Electric.
The enclosed draft is patterned af ter a recent contract with one of our other wholesale customers.
Concerning your inquiry about wheeling, it should be pointed out that, like the December 1980 Power Supply Agreement, the December 1980 Transmission Agreement is subject to the litigation previously mentioned and does not, in any event, become effective, from a wheeling standpoint, until after completion and commercial operation of either of Units 1 and 2 of the Comanche Peak S.E.S.
In the
- interim, should 'TU Electric and Tex-La negotiate modifications to the currently effective power supply agreements, wheeling charges will depend upon the type of wheeling involved.
For example, TU Electric has a tariff applicable to wheeling for qualifying facilities, Rate TWC, that is based upon the Public Utility Commission's Substantive Rule 23.66.
- Also, TU Electric has a tariff applicable to firm transmission wheeling service, Rate TW, that is in compliance with the Public Utility Commission's Substantive Rule 23.67.
You are also familiar with the methodologies employed for wheeling of economy energy and the FERC settlement tariff recently approved by the Federal Energy Regulatory Commission which governs wheeling to, from and over certain HVDC Interconnections.
You have also inquired about the level of firm transmission service that TU Electric is currently able to provide.
This inquiry also cannot be answered in terms of generality, but depends upon the location of the generation source.
Until you give us specific information concerning the location of the generation source and the amount of capacity involved, we cannot advise you as to whether sufficient transmission capacity currently exists or not.
You have also inquired concernin'g the currently planned 345 kV Limestone-Navarro-Watermill transmission line.
Our studies are nearing completion on this transmission line and current plans are to file for a CCN with the Public Utility Commission of Texas in the next few weeks.
At that time, the information s
you have requested should be in final form and available as a part of that filing.
However, we do not see any reason for participation by other parties in this line.
TU Electric does stand ready to work with Tex-La to provide wheeling service through the TU Electric system subject to any capacity limitations which currently or may exist in the future and on a basis which fully compensates TU Electric for its costs plus a reasonable return on investment.
Your request pertaining
Mr. LEffb). LD3Cr, Mr.
Fcbruary 11, 1987 POg3 3 to the reduction provided for in section 10.06 from the December 1980 Transmission Agreement, which has been previously discussed and will not be repeated here, pertains to the annual transmission charges specified in Section 10.03, which relate to the wheeling of power f rom. the Comanche Peak S.E.S.
to Tex-La and are not applicable to other transactions.
Since we have. previously discussed wheeling services for the East HVDC tie and since the proposed modification of FERC Order EL79-8 is still being discussed among the parties, we will not respond specifically. in this letter to the questions posed by Tex-La on wheeling from the East HVDC tie.
With regard to Tex-La's questions on backup and reserve arrangements, assuming appropriate modifications to the currently-effective power supply agreements are negotiated, Tex-La would be expected to provide full back-up and reserve.
- Moreover, in such
- event, TU Electric would enter into negotiations to provide that back-up and reserve for Tex-La.
- Again, we have not undertaken enough analysis to respond to your inquiries concerning specifics of the methodologies or costs of TU Electric's providing such back-up or reserves.
Our current Rate WP, as previously stated, is designed to equitably provide service for any load factor.
In summary,
- Hugh, there are still just too many unknowns to address all of your inquiries in specific detail at this time.
The enclosed draft " Agreement for Electric Service" does provide a vehicle that we believe responds to your inquiries which are of a more immediate concern from Tex-La's point of j
view.
We suggest that you study the ' enclosed draft and find a time when we can visit in person to explore if we are headed j
in a mutually beneficial direction.
We look forward to hearing l
from you.
Sincerely, NL MSGreene/jb l
Enclosure c - John H. Butts i
Robert M. Gross, Jr.
i William H. Burchette l
A.HewittRose/
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AGREEMENT FOR ELECTRIC SERVICE Tex-La Electric Cooperative of Texas, Inc. (hereinafter called
" customer") and Texas Utilities Electric Company, a Texas Corporation (hereinafter called " company"), in consideration of the mutual covenants and agreements herein contained, and of the mutual benefits to be derived herefrom, hereby covenant and agree as follows:
1.
Purpose. The purpose of this agreement is to set out tems and condi-tions under which company will provide electric power and energy to each of the points of delivery listed on Exhibit A, attached hereto and made a j
part hereof.
Said terms and conditions apply to each such point of deliv-ery separately and individually and any action taken hereafter by either l
party hereto under said tems and conditions shall apply only to the points of delivery specifically covered by such action and no others.
Tems and conditions contained in Paragraphs 8 through 14 pertain only to transac-4 i
1 j
tions when customer acquires power and energy as described in Paragraph 11, and do not relate to transactions described in Paragraph 6.
i 2.
General Duty of Parties. Company agrees to provide and customer agrees l
to purchase and pay for the electric power and energy required by customer
- for the operation of customer's distribution systems at the locations described on Exhibit A, unless otherwise specifically provided in this agreement.
Electric power and energy provided under this agreement will be j
furnished by company to customer under and pursuant to such applicable Rate l
Schedule and Service Regulations of company as may from time to time be j
I fixed and approved, in company's Tariff for Electric Service, by regulatory i
authorities as may have jurisdiction at the locations described in i
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Exhibit A.
SAID RATE SCHEDULE AND SERVICE REGULATIONS ARE PART OF THIS I
AGREEMENT TO THE SAE EXTENT AS IF FULLY, SET OUT HEREIN AND ARE ON FILE AND AVAILABLE AT COW ANY OFFICES.
i-3.
Description of Power Available. Company will provide electric power up to the maximum electrical load (contract kW) specified for each point of delivery, respectively, shown on Exhibit A.
The electric service to be l
delivered hereunder will be of the character commonly described as three-phase, 60 herth, at a voltage for each point of delivery as specified on Exhibit A, and with reasonable variation in voltage and frequency to be l
allowed.
4.
Rate Schedule. The electric power and energy to be delivered by com-pany to customer will be provided in accordance with tems and conditions i
of the appropriate rate schedule and/or rider as indicated for each point l
l of delivery on Exhibit A.
Such rate schedules and/or riders may from time i
to time be amended or succeeded by regulatory authorities as may have
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l jurisdiction at the locations described in Exhibit A.
5.
Tem of Agreement. The tem of this agreement will be for twenty years from Unless written notice is given by either party hereto to the other not less than five years before expiration of the l
aforesaid term of this agreement, it will be continued thereafter untti teminated by written notice served not less than five years before the desired temination date.
Both parties specifically agree and acknowledge that company has no obligation or duty to continue providing electric serv-Ice to customer beyond the expiration of this agreement.
',1
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1.
A 6.
Chtnging Maximum Electrical Loads.
The maximum electrical loads (contract kW) spectfled in Exhibit A for each point of delivery may be s
hadjusted for normal load variations by mutual agreement from time to time only by written amendment to this agreement. However, both parties agree i
that an upward adjustment in the maximum electrical load (contract kW) for any point of delivery is wholly dependent upon company's ability and the
' time required to provide for such increased maximum electrical load (contract kW) and is subject to company's extension policy in its Tariff
)
for Electric Service in effect at that time. The maximum electrical load (contract kW) for any point of delivery may be adjusted downward by written amendrint to this agreement; however, in such event, customer agrees that t
i
,any applicable minimum billing demands (including any rat.1ets) resulting from prior usage will continue as specified in the appitcable rates without regard to such reduction and, in addition, customer agrees to pay company the then current cost of any transmission and/or distribution facilities is.
rendered idle plus removal costs less salvage value of the idled facili-
^
1 jJ ties, all such costs to be estimated in accordance with company's standard procedures then currently in practice; said payment is due company whether i
or not facilities are actually removed.
" Current cost" as used herein i
means the reproduction cost new less an allowance for age and condition.
L b
In lieu of paying company for the factitties rendered idle, customer may, i/
at the sole option of company, purchase the idled facilities or pay company i
annually the reasonable carrying costs of the idled facilities.
In the i
event.that customer gives company written notice not less than three years I
in advance of its desire to adjust downward at a specific point of delivery I
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the maximum electrical load (contract kW) for normal load variations as f
described above, company will waive any applicable minimum billing demands (1ncluding any ratchets) resulting from prior usage which would have become due after the effective date specified in customer's written notice to com-pany, which effective date shall in no event be earlier than three years
. after company's receipt of such written notice.
7.- Change of Voltage in Company Facilities. Company will provide power 4
and energy to customer at each point of delivery at the delivery voltage specified in ExhibitzA as long as'such delivery voltage is available.
If company, at its sole option, converts its facilities providing power and l
energy at any point of delivery to a different operating voltage, customer l
j agrees to take power and energy at the changed voltage then available or bear'all cos'ts to transform the voltage from the changed voltage to that which customer may require. Company will give customer written notice at least two years in advance of such voltage change.
8.
Early Deletion or Reduction. Customer may delete or reduce electric service to any or all of the points of delivery on Exhibit A under certain l
l circumstances and under certain terms and conditions as described in Paragraphs 8 through 14 hereof. However, early deletion or reduction at any or all points of delivery does not terminate this agreement, which can l
only be teminated as specified in Paragraph 5.
In the event of a deletion or reduction of electric service to any or all of the points of delivery on Exhibit A pursuant to Paragraphs 8 through 14 hereof, customer shall make t
the payments for idled facilities as provided in Paragraph 6 hereof.
l l
9.
Required Notice.
In all cases of early deletion or reduction, customer must give company written notice four years in advance of its desire to delete or reduce electric service at any point of delivery. However, com-pany agrees to reduce the four yaars advance notice for circumstances.
involving qualifying facilities as described below in' Paragraph lla, but in no event shall the required advance notice be less than six months. The term " qualifying facility" as used in this agreement means and is defined in Title 18, Code of Federal Regulations, Sections 292.201 through 292.207, or successor regulations.
- 10. Re-Serving Early Deleted or Reduced Loads.
When customer has exer-cised its option hereunder to early delete or reduce electric service, and later, during the original er extended term of this agreement, customer desires company to re-serve the deleted load or increase service to the point of delivery which has been reduced in accordance with terms and con-ditions contained in Paragraphs 8 through 14, company will re-serve the j
deleted load or increase service to the reduced point of delivery only if sufficient capacity is or can be made available by company. 'Both parties recognize that, in case of a substantial increase in load, notice should be several years in advance in order to allow for construction and installa-l tion of appropriate facilities.
If company'does not have sufficient capa-city and transmission facilities for such increase, or if such increase I
would impair its ability to render full and reliable service to its custo-mers or impair its ability to discharge prior commitments, it may defer supplying the same until sufficient capacity and facilities are available.
If company re-serves such deleted load or increases service to such reduced
, L point of delivery, customer agrees to pay company a contribution-in-aid of construction, according to company's extension policy then in effect, including a production cost component co'nsisting of the estimated cost of the next base load production unit expected to be in service on or after the date customer desires its deleted load to be re-served or service to its reduced point of delivery to be increased.
Said cost to customer will be as determined above but shall, in no event, be less than $750 per kW of added contract kW. However, company agrees to waive the contribution-in-aid of construction by customer specified above in this paragraph for that part of any change relating to qualifying facilities as described below in Paragraph lla, but in no event will the contribution-in-aid of construction required by company's normal extension policy in its Tariff for Electric Service, if applicable, be waived.
- 11. Circumstances Qualifying for Early Deletion or Reduction. Customer I
may exercise its option for early deletion or reduction only if customer l
acquires power and energy to replace power and energy provided by company' L
in one of the following ways:
a.
Customer purchases power from a qualifying facility located in l
customer's certificated service area of one of its distribution systems i
served hereunder by company, where such qualifying facility is con-nected directly to customer's distribution system; or b.
Customer purchases power from a. qualifying facility located outside customer's certificated service area of its distribution systems served hereunder by company, where such qualifying facility is not connected directly to customer's distribution system; or y
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Customer installs its own production plant or purchases power and energy from others.
- 12. Wheeling.
If customer desires comp'any to wheel-power and energy
- acquired as described above in Paragraph lib and/or lic, company will pro-vide wheeling services in accordance with its Tariff for Elec+,ric Service, the rules of the appropriate regulatory authority, or under other mutually agreeable arrangements. Customer agrees to pay company monthly, in addi-tion to all other costs applicable to wheeling and wholesale service, a charge to cover the administrative costs associated with adjusting and maintaining records at each involved point of delivery to reflect power and energy consumption exclusive of the wheeled power and energy, which addi-i tional charge shall be equal to the customer charge at the point of deli-very applicable to wholesale customers or $1,000 per month per involved point of delivery, whichever is greater.
- 13. Standby and Other Electric Service.
If customer desires standby l
and/or-other types of electric service in connection with power and energy i
acquired as described above in Paragraph 11, company will provide.such services in accordance with its Tariff for Electric Service and the rules of the appropriate regulatory authority if same obligate company to do so I
or, if same do not obligate company to do so, company may at its option l-provide such services under mutually agreeable arrangements.
'14.
Billing Demand. When customer acquires power and energy as described above in Paragraph 11, has complied with the other provisions of this agreement, and has reduced by at least 20% the firm maximum electrical
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demand by amendment to this agreement for the point of delivery, then in such event, prior recorded demand history (kW) will be reduced in propor-tion to said reduction in firm maximum electrical demand in determining future monthly billing demands (billing kW).
- 15. Customer Provides Electric Service to Company. When company requires a source of electric power and energy in customer's service area of one of its distribution systems served hereunder by company, customer agrees to provide such service, if feasible, under one of the following arrangements, t'o be chosen by company:
a.
' Subtract Meter Service.
Company installs necessary facilities, including metering equipment, to take electric service through the lines owned by customer at a mutually agreeable point of delivery and agrees that any required. investment in facilities by customer would be subject to customer's extension policy in its approved tariff; pro-vided, however, that the maximum electrical load (contract kW) for any individual subtract meter service will not exceed 5% of customer's maximum electrical load (contract kW) at the company's point of deliv-ery to customer from or through which such subtract meter service is provided, or 500 kW, whichever is greater, and, in addition, the sum of all such subtract meter services will not exceed 8% of customer's maxi-mum electrical load (contract kW), at the company's point of delivery to customer from or through which such subtract meter services are pro-vided, or 1000 kW, whichever is greater.
The energy (kWh) thus delivered and registered by company's metering equipment is increased
e
. 27, for losses and customer's usage (kW and kWh) at its point of deliv-ery from company is adjusted monthly as follows: (1) deduct the kWh, incroased for losses, registered by company's metering equipment from customer's kWh,'and (2) reduce customers's kW by the amount of kW that the kWh, increased for losses, registered by company's metering equip-ment represents at the load factor of customer's usage; or b.
Resale Service. Company takes resale service under customer's applicable resale rate and service regulations as may from time-to time 4
be fixed and approved by regulatory authorities as may have jurisdic-tion, with customer providing the metering equipment.
16.
Intrastate Operations.
The provisions of this paragraph apply only to the facilities of customer which are, directly or indirectly,:intercon-nected with the facilities of company, and a reference in this paragraph to customer shall be limited to such facilities.
Except in compliance with the Orders of the Federal Energy a.
Regulatory Commission in FERC Docket No. EL 79-8 and E-9558 issued on October 28, 1981, November 5,1981, and January 29, 1982, the parties f
herein represent and warrant to each other that they do not, either directly or through connections with other entities, transmit electric energy in interstate commerce or sell electric energy in interstate commerce or own or operate any facilities therefor and each party i
hereto agrees that it will not, except in compliance with such Orders, hereafter engage, directly or through other entities, in any such l
interstate activities or operate, establish, maintain, modify, or uti-lize, directly or through other entities, any connection or facility
used or to be used for the sale or transmission of electric energy in interstate commerce without one year's prior written notice to the other party; provided further, that such party desiring to commence
[
. interstate operation agrees to file an application with, and use its
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'best efforts to obtain an order from, the Federal Energy Regulatory Commission, applicable to the other party, under Sections 210, 211 and 212 of the Federal Power Act, requiring the establishment, maintenance, l
modification, or utilization of any such connection which may be involved; provided, however, that compliance with such Orders shall not l
require further notice to the parties or application to the FERC pursu-ant to this Paragraph 16.
b.
It is understood and agreed that the failure of the party, electing to commence interstate operations, to comply with any provision of this Paragraph 16 or said Orders shall entitle the other party to disconnect its facilities.
c.
The parties hereby agree that it will be impossible to measure in terms of money the damages which may or will accrue by reason of any breach of the representation and warranty above set forth, or any fail-ure in the performance of any of the obligations contained herein and, for that reason, among others, the parties agree that, in case of any such breach or failure, the non-breaching party will be irreparably damaged if this agreement is not specifically enforceable, and accord-l l
ingly, the parties agree that the non-breaching party is entitled to specific performance of the provisions of this Paragraph 16, in addi-tion to any other remedies which may exist.
If the non-breaching party should institute proceedings to enforce the provision hereof, the breaching party hereby waives any claim or defense that an adequate remedy at law exists.
.1 11 d.
Nothing contained in this Paragraph 16 shall preclude the utiliza-tion of connections for the transmission of electric energy in inter-state commerce under bona' fide emergencies pursuant to the provisions of Section 202(d) of the Federal Power Act.
e.
This Paragraph 16 shall supersede any and all prior intrastate operation provisions in interconnection agreements between the parties hereto.
- 17. Paragraph Titles. The paragraph titles herein are included only as.a convenience in reviewing the terms and conditions and have no effect on the meaning or interpretation of this agreement.
I
- 18. This agreement supersedes all previous agreements, written or verbal,-
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between company and customer and shall inure to the benefit of, and be binding upon, the respective successors and assigns of the parties hereto, but no assignment by customer shall be binding upon company until accepted in writing by company. This agreement is subject to all laws and govern-.
l mental regulations and to the provisions of company's certificates of. con-
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venience and necessity and franchises now in effect or which may hereafter become effective.
This agreement shall be governed by and construed in accordance with the laws of the State of Texas including all matters of construction, validity, and performance.
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l
_12 IN WITNESS WHEREOF, the parties hereto have caused cis agreement to be exe-cuted by their respective authorized officers on this the day cf l
l 1986.
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l TEXAS UTILITIES ELECTRIC COMPANY Attest:
By:
l
Title:
Secretary TEX-LA ELECTRIC COOPERATIVE OF TEXAS, INC.
l Attest:
By:
Title:
Secretary l
I L
1.
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