ML20214Q985

Notice of No Significant Antitrust Changes & Time for Filing Requests for Reevaluation

ML20214Q985
Person / Time
Site:	Vogtle
Issue date:	11/26/1986
From:	Funches J Office of Nuclear Reactor Regulation
To:
Shared Package
ML20214Q974	List: ML20214Q972 ML20214Q985
References
A, NUDOCS 8612050334
Download: ML20214Q985 (34)

Text

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n 7590-01 1

NUCLEAR REGULATORY COMMISSION

' DOCKET NO. 50-424A '

GEORGIA POWER COMPANY, ET AL .

NOTICE OF NO SIGNIFICANT ANTITRUST CHANGES AND TIME FOR FILING REQUESTS FOR REEVALUATION The Director of the Office of Nuclear Reactor Regulation has made a findinginaccordancewithSection105c(2)oftheAtomicEnergyActof 1954,asamended,thatnosignificant(antitrust)changesinthe licensees' activities or proposed activities have occurred subsequent to the construction permit review of Unit 1 of Plant Vogtle by the Attorney General and the Commission. The finding is as follows:

"Section 105c(2) of the Atomic Energy Act of 1954, as amended, provides for an antitrust review of an application for an operating license if the Commission determines that significant changes in the licensee's activities or proposed activities have occurred subsequent to the previous construction permit review. The Commission has delegated the authority to make the 'significant change' determination to the Director, Office of Nuclear Reactor Regulation. Based upon an examination of the events since the issuance of the Vogtle 9

construction permits to Georgia Power Company (Georgia Power), the staffs of the Planning and Resource Analysis Branch, Office of Nuclear Reactor Regulation and the Office of the General Counsel, hereafter referred to as ' staff' have jointly concluded, after consultation with the Department of Justice, that the changes that have occurred since the construction permit review are not of the nature to require a second antitrust review at the operating license (0L)stageoftheapplication.

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8612050334 861126

, kDR ADOCK 05000424 PDR

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, , 7590-01 l 1

i "In reaching this conclusion, the staff considered the structure of

the electric utility industry in Georgia, the events relevant to the Plant Vogtle and Plant Hatch construction permit reviews, the events relevant to the Plant Hatch, Unit 2 operating license review and the events that have occurred subsequent to these antitrust reviews.

"The conclusion of the staff's analysis is as follow: s a

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'The generation and transmission of bulk power and energy in the state of Georgia has for many years been dominated by i the Georgia Power Company. During the construction permit review of Plant Hatch and Plant Vogtle, the staffs of the Department of Justice and the Atomic Energy Commission

identified several instances where Georgia Power Company abused its market position and its market power at the expense of smaller competing power systems in Georgia.

Georgia Power's activities had a stifling effect upon the competitive process in bulk power supply in Georgia and severely hampered the ability of competing municipal and cooperative electric systems to supply their customers with the most cost effective sources of power and energy available. After extensive negotiations' involving Georgia 8

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.* 7590-01 Power, intervening power systems and the staffs of the Department of Justice and the Atomic Energy Commission, Georgia Power agreed to a settlement agreement which included in the Hatch and Vogtle licenses a set of conditions designed to stimulate the competitive process in the Georgia bulk power services market.

'The license cor.ditions provided municipal and cooperative electric power systems, individually and through their broker representatives, ownership participation in Plant Vogtle and Unit 2 of Plant Hatch as well as ownership in the integrated transmission grid running throughout most of Georgia--heretofore controlled solely by Georgia Power Co.

Moreover, the license conditions provided these competing power systems the means to effectively implement their newly acquired power and energy options by requiring Georgia Power to: (1) file partial requirements rates with the Federal Power Commission; (2) coordinate and share energy reserves; (3) interconnect with qualifying Georgia power entities; (4) transmit bulk power over its transmission system, and generally treat all power. systems in the state more equally.

0 0

.9 7590-01

'The operating license antitrust review is concerned with changes in the licensee's activities since the construction permit review that may create or maintain a situation inconsistent with the antitrust laws. Staff has identified several groups of changes that have occurred since the construction permit review which are attributable to the licensees; however, these changes have largely been procompetitive and do not warrant remedial action by the Commission. Thevastmajorityofthesechangeshave materialized through the implementation of the antitrust license conditions attached to the Plant Vogtle and Plant Hatch Unit 2 construction permits. Through their purchases in portions of Plant Hatch and Plant Vogtle (and portions of Unit 1 of Plant Hatch and various Georgia Power Co. fossil fueledplantswhichwerenotsubjecttothelicensing commitments), as well as participation in the Georgia transmission grid, the municipal gnd cooperative power systems in Georgia are now active players in the Georgia bulk power market. Georgia Power has provided these systems with ownership in existing and planned future transmission facilities based upon each system's expected use of the transmission grid. Georgia Power has also

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.o' 7590-01 provided interconnections and filed partial requirements power rates allowing newly emerging power systems to shop for power supply alternatives within and outside of the Georgia Power territorial service area. An example of this new found independence is Og1~e thorpe Power Corporation's (Oglethorpe) energy exchange agreements with the Alabama Electric Cooperative and the South Mississippi Electric Power Association. Oglethorpe has also entered into negotiations to sell a portion of its Plant Scherer capacity to the Seminole Electric Cooperative of Florida. Both Oglethorpe and the Municipal Electric Authority of Georgia (MEAG) have set goals of generating self-sufficiency and are capable of achieving these goals in the near future given the marketing tools provided by the settlement agreement and the emergence of competitive alternatives in the state of Georgia since the completion i of the Vogtle construction permit review.

i on l 'The formation of Oglethorpe and MEAC in 1974 and 1975 coupled with the successful implementation of the antitrust license conditions has resulted in a vastly different Georgia bulk i

power market than was apparent during the construction permit review in Plant Hatch and Plant Vogtle. The changes which have taken place in this market have largely been procompetitive,

o 7590-01 A

allowing smaller competitors to mature and contribute to the competitive process ongoing in the Georgia bulk power services 4

market. Based upon the successful implementation of the antitrust license conditions to date and the lack of any significant negative

competitive activities by the licensees since the antitrust review at the construction permit stage, staff recommends that no affirmative significant change determination be made pursuant ,

to the application for an operating license for Unit 1 of Plant Vogtle.'

" Based upon the staff's analysis, it is my finding that there have been no 'significant changes' in the licensees' activities or proposed activities since the completion of the previous antitrust review in connection with the construction permit."

Signed on November 21, 1986, by Harold R. Denton, Director of the Office of i

Nuclear Reactor Regulation.

[ Any person whose interest may be affected by this finding, may file with full particulars, a request for reevaluation with the Director of Nuclear Reactor Regulation, U.S. Nuclear Regulatory Commission, Washington, D.C.

20555 within 30 days of the initial publication of this notice in the 4

Federal Register. Requests for reevaluation of the no significant I

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7590-01

• 4 changes determination shall be accepted after the date when the Director's finding becomes final, but before the issuance of the OL, only if they contain new information, such as information about facts or events of antitrust significance that have occurred since that date, or information that could not reasonably have been submitted prior to that date.

FOR THE NUCLEAR REGULATORY COMMISSION

.- Cs /

sse L. Funches, Director Planning and Program Analysis Staff Office of Nuclear Reactor Regulation e

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.P

.a PLANT V0GTLE, UNIT 1 GEORGIA POWER COMPANY, ET AL DOCKET NO. S0-424A FINDING OF NO SIGNIFICANT ANTITRUST CHANGES 4 01-

• 4 CONTENTS m

1.

Introduction..................................Page 1 II. Georgia Electric Power Industry................... 2 III. Previous Antitrust Reviews........................ 4 A. Plant Hatch CP Review B. Plant Vogtle CP Review C. Hatch /Vogtle Settlement D. Oglethorpe, MEAG and Dalton CP Review E. Hatch Unit 2 OL Review IV.

Chances Since the Voatie CP Antitrust Review..... 12 A. Formation dT Joint Action Groups B. Generation-Ownership Changes C. Transmission-Ownership Changes D. Formation of a " Joint Committee" E. Interconnections F. Wholesale Power Developments G. ReductionsinProjectedLoadGrowth V. Summary and Conclusions.......................... 21 Appendices

. c A. Department of Justice Advice Letter Dated May 1,1974.

B. Department of Justice Advice Letter Dated April 9,1976 e

I. Introduction A prospective operating licensee is not required to undergo a formal anti-l trust review unless the Nuclear Regulatory Commission (NRC or; Commission)*

determinesthattherehcvebeen"significantchanges"inthe51censee's i activities or proposed activities subsequent to the review by the Attorney General and the Commission at the construction permit (CP) stage. Concen-tration on changes in the applicant's activities since the previous antitrust j , review expedites and focuses the review on areas of possible competitive o conflict heretofore not analyzed by the Attorney General or the Commission.

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• • **n i In its Summer decision, the Commission has provided the staff with a set of criteria to be use'd in making the significant change determination foroperatinglicense(OL) applicants.

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i "The statute contemplates the change or changes (1) have t

I occurred since the previous antitrust review of the licensee (s);

(2) are reasonably attributable to the licensee (s) and (3) have i

' antitrust implicatiARA that would most likely warra;nt some Commission remedy."

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! The Commission has delegated the responsibility for.. making a .significant

an change determination to the Director of Nuclear. Reactor Regulation.

Virgil C. Summer Nuclear Station Unit 1, Docket No. 50-395A, June 26,

! man 1981 at 13 NRC 862 (1981).

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" Staff" hereinafter refers to the Planning and Resource Analysis Branch of the Office of Nuclear Reactor Regulation and the Office of the General i

.... Counsel.

Commission Me:norandum and Order, p. 7, dated June 30, 1980 (CLI-80-28).

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i l To warrant a significant change finding, the particular change (s) must meet all three of these criteria. Staffhasreceiveddatasubittedby 4

the licensees in connection with Georgia Power Company's Plant Hatch 3

1 and Plant Vogtle construction permits as well as data pertaining to i

any changed circumstances since the completion of the Hatch and Vogtle t

review. After reviewing these and other pertinent data, staff has determined that none of the changes that were identified were significant l

, in an antitrust context, and consequently, staff is not recommending that a "significant change" finding be made pursuant to the antitrust operating j license review of Plant Vogtle, Unit 1.

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{ II. Georgia Electric Power Industry

]

Electric power in the state of Georgia is supplied largely by: two investor-owned utilities, Georgia Power Company (GPCo) and the Savannah Electric and Power Co.; a generation and transmission cooperative, i

Oglethorpe Power Corporation (Oglethorpe or OPC); the U.S. Army Corps i

n. ..

of Engineers through the Southeastern Power Admihistration (SEPA); and a municipal joint action agency, the Municipal Electric Authority of j Georgia (MEAG). (Three of the principal power supply systems in the t

state are co-owners of Plant Vogtle and Plant Hatch.)

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I Georgia Power Co. is the lead licensee, responsible for construction and ,

operation of both Plant Hatch and Plant Vogtle.

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.e A. Applicant Power Systems Plant Vogtle is a two unit (1,100 MW each) power plant located on the Savannah River in Burke, County Georgia. Theplantisjoint1hownedby the Georgia Power Co. (45.7%), Oglethorpe Power Corp. (30%), the '

Municipal Electric Authority of Georgia (22.7%) and the City of Dalton, Georgia (1.6%).

Georgia Power is an operating subsidiary of the Southern Company, a holding company organized under the Public Utility Holding Company Act of 1935. GPCo is the largest of the applicant systems (and the largest power supplier in the state) with over 11,500 MW in generating capability in 1985. GPCo's service area extends over 57,000 square miles, serving over 600 cities and towns and over five million in population. .

Oglethorpe Power Corp. is a generation and transmission (G&T) power cooperative organized in 1975 principally to furnish power and energy to 39 electric distribution cooperatives. Since its inception, OPC.has

acquired ownership shares in various baseload generating plants that

presently account for over 1,900 MW of generating capability. The 39 l membership customers serve primarily rural areas throughout the state, f covering 71 percent of the land area in the state of Georgia. Except for

{ power received under individual member contracts with the Southeastern  ;

t Power Administration, Oglethorpe acts as the sole supplier to its i l

l distribution cooperative members under a wholesale power supply contract

( 1asting until the year 2022.

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. The remaining Southern Company operating subsidiaries include: Alabama

, Power Co., Gulf Power Co. and Mississippi Power Co.  ;

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• 6 The Municipal Electric Authority of Georgia was created by the Georgia legislature in 1975, ,)

...for the purpose of acquiring, constructing, owning, operating and maintaining electric generation and transmission facilities to supply bulk electric power and energy to political subdivisions of the State whigh owned and operated electric distribution systems...."

MEAG serves its customers (46 municipalities and one county power commission) in much the same manner as Oglethorpe serves its distribution cooperatives. Sinceits/nception,MEAGhasacquiredownershipin various baseload power plants totaling over 1,000 MW of generating' capability. MEAG participants, formerly total requirements wholesale customers of GPCo, have begun supplying the needs of its members through purchase of interests in generating plants and partial requirements purchases from GPCo.

III. Previous Antitrust Reviews

! 6 GeorgiaPowerCompanyhasundergoneantitrustreviewsinconjunctionwith its CP and OL applications for Unit 2 of Plant Hatch and at the i

construction permit stage for Plant Vogtle.

. +

.. MEAG response to Regulatory Guide 9.3 dated October 14, 1983, p. 2.

The Crisp County Power Commission, a MEAG participant, generates its own power requirements; however, Crisp County still engages in certain interchange service with GPCo.

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A. Plant Hatch CP Review

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After an extensive review by both the Atomic Energy Commission and the-Department of Justice (Department or D0J), the Department issued an advice letter to the Atomic Energy Commission (AEC) on August 2, 1972 recommending that the AEC hold an evidentiary hearing associated with the Plant Hatch construction permit application. The Department's advice letter concluded that Georgia Power Company was the dominant electric power system in the state of Georgia and that GPCo had, for some time, abused its market power at the expense of smaller less integnated power systems within the state. The Department emphasized that access to transmission facilities in Georgia was i

an important factor in the smaller power systems' quests to actively enter the bulk power services market in Georgia.

"With control over all transmission, Applicant Georgia Power Company has been in a position to grant or deny access to coordination to actual or potential competitors at wholesale or at retail in most of the State of Georgia. It has in fact used that monopoly control so as to prpvent or impede development of competitive bulk power supply systems."ne A

The Department issued its initial advice letter in the Plant Hatch, Unit 2 CP proceeding on December 7, 1971, indicating that interested parties in the proceeding were involved in negotiations aimed at resolving outstanding competitive issues and that another advice letter would be forthcoming in the near future.

Department of Justice advice letter dated August 2, 1972, p. 3.

The Department suggested in its advice letter that any license to construct Unit 2ofPlantHatchbeconditionedtoproviderelieffromtiefollowing anticompetitive activities: -

"(1) refusal to transfer wholesale power except at relatively low voltages, in order to preclude competition from existing wholesale customers for large industrial loads, and to prevent the development and expansion of coordinated subtransmission systems among wholesale customers; (2) territorial allocation schemes with adjacent utilities (including Georgia Power's affiliates) in other states who might otherwise be available as alternative sources of bulk power supply; (3) territorial restrictions, customer restrictions on the resale of power delivered by Georgia Power under its wholesale contracts; (4) requiring of excessive reserves as a condition for interconnection between Georgia Power and other electric utilities; and (5) inclusion of unreasonable restrictions in SEPA power contracts in order to forestall development of new generation by other electric utilities."

B. Plant Vogtle CP Review The Commission received Georgia Power's construction permit application for Plant Vogtle, Units 1-4 on August 1, 1972. On May 9, 1973, the a

Ibid., pp. 11-12.

Department issued another advice letter to the AEC pursuant to the Vogtle CP application, again recommending that a hearing be held to determine whether or not Georgia Power's activities would create or maintain a.

situation inconsistent with the antitrust laws.

The applicant and affacted parties were the same in both the Hatch and Vogtle proceedings and as a result, the Department's Vogtle advice letter referenced the Hatch CP advice letter, indicating that the industry structure and Georgia Power's conduct with respect to smaller power systemsinthestateofQporgiawasunchangedsinceitslastletter of advice to the AEC.

"Accordingly, the facts upon which our advice regarding the Vogtle units must be based, are identical to those stated in our letter on the earlier application [ Hatch except that changes in the fossil fuel supplies appear]to increase the importance of nuglear power generation as a source of bulk power supply." ..

i, . '

The Department concluded its Vogtle advice lette'r by suggesting that the similarities of issues and parties in both the Hatch and Vogtle proceedings warranted consolidation of the two proceedings for purposes of conducting an evidentiary hearing before the Atomic Energy Commission. The AEC staff agreed with the Department and filed a motion before the Commission on September 25, 1973 to consolidate the Vogtle and Hatch proceedings.

Department of Justice advice letter dated May 9, 1973, p. 1.

o Hatch /Vogtle Settlement C.

TheAECstaff,theDepartment,theapplicantandseveralintepvenors

, conducted extended negotiations aimed at resolving the competitive concerns raised by the Department in its August 2, 1972 Hatch advice letter. In April of 1974, the parties agreed to a settlement agreement that contained a set of proposed license conditions to the Hatch (Unit 2) and Vogtle nuclear units designed to remedy the applicant's alleged misuse 1

of its dominant position in the Georgia electric bulk power industry.

The Department's advice 17 tters in Hatch and Vogtle expressed concern over Georgia Power's dominance in generation ar.d transmission capabilities in the state'of Georgia and the apparent abuse of this market power at the expense of and to the detriment of smaller power systems and the competitive process in the Georgia electric bulk power supply industry. The license conditions proposed in the settlement agreement provided many new competitive alternatives and options to l

power systems which had heretofore been dependent upon Georgia Power for all of their electric power supply needs. Georgia Power agreed to AA sell full and partial requirements power to any " entity" A

Subsequent to publication of the Hatch and Vogtle advice letters in the Federal Reaister the AEC received petitions to intervene in both proceedings repre,senting both municipal and cooperative power interests l' in the state of Georgia. (The Georgia Municipal Association and the City of Acworth, Ga., in both proceedings and the Georgia Electric Membership i Corp., the City of Dalton, Ga., and the Mitchell County Electric Membership Corp. in the Hatch proceedings.)

I Entity is specifically defined in the license conditions.

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in the state, to transmit bulk power over its system to entities it is connected to, to interconnect with entities and offer ownersh,ip interest inUnit2ofPlantHatchandPlantVogtleUnits1-4. .

As a result of the settlement agreed upon by Georgia Power and the intervenors, the Department of Justice issued another advice letter dated May 1, 1974 to the AEC pursuant to both the Hatch and Vogtle construction permit proceedings. The Department concluded in its advice letter that the licensing comitments agreed upon by Georgia Power would provide compe,titors and potential competitors of Georgia Power the means to effectively compete in the Georgia bulk power services market. '

"On the strength of these commitments and with the expectation that the Commission will include them as conditions to the licenses involved here, we conclude that it will not be necessary to proceed with antitrust hearings on the instant app cation and that the existing  !

proceeding may be terminate l -

on -

Subsequent to the settlement and the 1974 advice' letter of the Department recomending that the Hatch and Vogtle proceedings be terminated, the AEC n  !

Department of Justice advice letter dated May 1, 1974, unnumbered p. 2.

Attached as Appendix A.

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staff filed a motion before the Commission in June of 1974 requesting dismissal of the Vogtle proceeding. Asimilarpleadingwasfiledbefore the relevant Atomic Safety and Licensing Board (established to rule on the Hatch proceeding) to terminate the parallel Hatch proceeding which had entered the early stages of the hearing process.*

D. Oglethorpe, HEAG and Dalton CP Review The license conditions agreed upon by Georgia Power provided for access to all of the Vogtle nucipar units and Unit 2 of Plant Hatch.

Oglethorpe, MEAG and the City of Dalton all opted to exercise their options to purchase a portion of Vogtle and Hatch and as new owners had to undergo an antitrust review at the construction permit stage of an review.

On April 9,1976, the Department of Justice provided the Nuclear Regulatory Commission with advice pursuant to the addit. ion.of ,

Oglethorpe, MEAG and Dalton as prospechive new o'wners in Unit 2 of Plant Hatch and Units 1 and 2 of Plant Vogtle. The Department a

j The dismissal of the two proceedings mooted staff's request for i

t na consolidation.

Certain smaller ,(d_e niinimis) power systems are no longer required to ur.dergo the same stringent antitrust review procedure required of the

... large fully integrated prospective licensees.

l .... The Department's April 9,1976 advice letter is attached as an Appendix B.

Units 3 and 4 of Plant Vogtle had been cancelled since the 1974 j commitments were agreed upon.

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Department concluded that the addition of these sthree new co the result of extensive settlement negotiations between n Geor therepresentativesofsmallcompetingsystemsthroughoutth Georgia. '

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...the addition of MEAG Oglethorpe and the City Vogtle units will not create or maintalr. a situationo inconsistent with the antitrust laws."

Through Oglethorpe and MEAG, any interested electric cooperativ municipal electric system may participate in the ownership of 01 ant Hatch and Vogtle. ,

I Moreovy, Georgia Power provided small electric i

systems direct ownership

• in these units (note the City of Dalton's participation)shouldtheyprefernottoparticipatethroughajoint

brokering agreement.

The new co owners were also offered ownership in

)

portions of Georgia Power's high voltage transmission system-i owned and controlled exclusively by Georgia Power.

s The smaller power systems now have the capability to seek out alternative power sup sources,acompetitiveoptionvirtuallyforeclosedtothembeforethe consummation of the settlement agreement.

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E. Hatch Unit 2 OL Review l

Georgia Power filed its operating license for Unit 2 of Plant Hatch in!

i the fall of 1975 and submitted in'ormation responding to the Commis l

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! Department of Justice advice letter dated April 9,1976, p. 3.

4

.o Regulatory Guide 9.3 (identifying changes in the applicants'. activities since the CP review) in January of 1976. The bulk of the licensees' responsedescribedchangesinGeorgiaPower'sactivitieswhicswere directly associa % d with and resulted largely from the 1974 settlement 1

agreement between Georgia Power and the municipal and cooptrative power systems in Georgia. The review indicated that there were several rate proceedings before the Federal Power Commission (FPC) pursuant to rates for wholesale customers involving price squeeze issues. The review found that the bulk of the changes in the itcensees' activities were attributed to the settlement agreement and were procompetitive in nature and that the rate or price squeeze issues were under the jurisdiction of the FPC.

e The significant change review concluded that the changes in the licensees' activities since the CP antitrust review were not of a nature to require an operating license antitrust review.

IV. Chances Since the Vontle CP Antitrust Review 1

As indicated supra, the Commission does not initiate a formal ant'itrust i

i review at the operating license state unless "significant changes" in the licensee's activities have taken place since the completion of the I

construction permit antitrust review. The Commission's antitrust review

! at the CP review stage for Plant Vogtle (and Plant Hatch) was effectively I

j completed when the Commission terminated the proceeding on June 28, j 1974.

Staff has identified several groups of changes (with potential  !

i competitive significance) since the completion'of the Vogtle CP review.  :

A. Formation of Joint Action Groups DuringtheHatchandVogtleCPreview,manydifferentmuniciph1 electric and cooperative power systems in Georgia raised concerns'over Georgia Power's competitive practices involving bulk power supply through-out the state. As these concerns surfaced and many of the municipal and cooperative systems realized they had a commonality of interests, they ultimatelyjoinedtogethertoformtwolargejointactionagencies--

Oglethorpe Power Corporation and the Municipal Electric Authority of Georgia.

t Oglethorpe was formed in August of 1974 and acts as the power broker for its 39 electric distribution cooperative members. None of Oglethorpe's members actually owns generating facilities. Oglethorpe has been empowered by its members to seek out the most cost effective source of power supply (either through ownership of generating capacity itself or through purchase of power and energy) for its members and;has set a goal of self-sufficiency in baseload generation for the.1990's.

MEAG serves its municipal electric " participants" in much the same manner as Oglethorpe does its cooperative distribution systems. Prior to its formation in 1975 and up until 1977, all of the MEAG participants were dependent upon Georgia Power Company for all power and energy needs not supplied by the federally-owned Southeastern Power Administration .

A Crisp County Power Commission supplies much of its own power requirements

, through its own generating ft 111 ties and also engages in certain inter-change service with Georgia wer Co.

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"Since 1977, MEAG has furnished all of the' Participants' requirements formerly supplied by GPC, except for certain interchange service which GPC continues to provide Crisp.J .

County. MEAG has done so through a combination of ownership interests in generating units and purchases from GPC." -

The creation of Oglethorpe and HEAG enabled many smaller electric power systems in the state of Georgia to participate in the benefits associated with baseload generation and transmission.

B. Generation - Ownership Changes W

$1nce the completion of the Vogtle CP review, Georgia Power has sold substantial portions of its baseload generating capability, both nuclear and non-nuclear, to Oglethorpe, MEAG and the City of Dalton, Georgia.

• The following ownership shares have been sold to these three power entities:

MEAG OPC , s. DALTON PlantHatch(nuclear) 17.7% 30.0% 2.2%

PlantVogtle(nuclear) 22.7% o30.0% .

1.6%

Plant Wansley (fossil) 15.1% 30.0%

1.4%

PlantScherer(fossil) 30.2% 60.0% 1.4%

Units 1 and 2 a

.. HEAG response to Regulatory Guide 9.3 dated October 14, 1983, p.2.

Georgia Power has agreed to buy back specific portions of the output from portions of Plant Vogtle sold to MEAG and OPC. The buy back arrangements were intented to provide the new owners the opportunity to purchase portions of large generating facilities at one point in time, yet receive the output from their ownership shares on a schedule commensurate with the gradual increaseprojectedintheirrespectiveloadrequirements.

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These shares represent substantial portions of Georgia Power's baseload capacity additions since 1975. '

C. Transmission - Ownership Changes ,7; As a result of the settlement agreement in 1974, Georgia Power made available portions of its transmission system to power entities in Georgia that wished to take equity positions in Georgia Power's existing transmission grid as well as planned future additions to the transmission grid. Tofacilitatethemovementofpowerandenergyfromitsjointly owned generating plants and at the same time provide the means to shop foralternativepowersupplysources,anIntegratedTransmissionSystem (ITS) was formed (in 1975-76) among Georgia Power, MEAG, OPC and Dalton.

As the ITS is envisioned,'each participating entity has an investment responsibility in the total Georgia territorial transmission system relative to its expected use of the transmission system. Prior to the formation of the ITS agreement,

... there were numerous electric membership corporat. ions and municipalities in Georgia takin -

electric service from the Company.Now g full onlyrequirements Acworth and Hampton municipal systems take full requirements .

service while participants in the ITS use that system for delivery of power from the Company and power generated from self-owned resources and can use the ITS for off-system transactions...,. Members of the Integrated Transmission System are required to maintain investment parity in the system and this is accomplished primarily by the construction or purchase of transmission facilities.a a

r wer Company response to Regulatory Guide 9.3 dated October 14, 1983, 9

An example of off-system usage of the ITS invol Oglethorpe to transfer energy to the Seminole Elves a proposa ectric Cooperative, Inc.

(Florida) from Plant Scherer. Y Although this agreement has not been finalized, Georgia Power has agreed to schedule O l .

g ethorpe's energy to the Georgia-Florida border where Florida Powe transmit the energy to Seminole. r Corporation will in turn This type of transaction was not a competitive option open to Oglethorpe prior to the settl and the accompanying ITS agreement. ement agreement

! D. Formation of a " Joint Committee" e

As a direct result of the participation by Ogleth of Dalton in the Hatch and Vogtle nuclear e eorgia plants and th G Integrated Transmission System, a Joint Committee wa s formed by these three power entities and the Georgia Power Co .

Though not a power pool pg se, the joint committee acts like and affords its parti i c pants many of the benefits associated with powerThe. .

pool.-

Joint' membership Committee was formed to implement and admin (ster th '

e agreements and contracts between Oglethorpe, MEAG, Dalton and Georgia P ower that have evolved with joint ownership of generation and transmissi since the antitrust settlement agreement inon .

facilities 1974 "An important function of the Joint Committee e is th system planning by the parties Agreement. s onto the Joint Co Accordingly, the four parties to the Agreement I

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e 17 exchange load forecasts, future generation and transmission expansion plans, and all other available data regarding specific planned facilities."

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The formation of this Joint Committee is an example of Georgia Power's I

willingness to afford greater participation in the planning of future generation and transmission facilities,'an option crucial to newly 4

emerging power systems.  !

E. Interconnections GeorgiaPowerhaspartici$atedinregionalreliabilitystudiesthatfrom I

! time-to-time have required interconnections to the ITS whenever needed.

Connections to the ITS provided by Georgia Power since 1974 include the following: '

(1) Connections for federal hydroelectric projects in 4

1974 and 1975 (9 115 and 230 kV respectively); ,' .

(2) An interconnection (0 230 kV) with the. Savannah

! Electric and Power Co. in 1975; 1 .

i (3) An interconnection with the South Carolina Electric and Gas Co. (G 115 kV) in 1975; -

k (4) An interconnection with Duke Power Co. (9 500 kV) in i 1977; a .

! n jl Georgia Power response to Regulatory Guide 9.3 dated October 14, 1983, pp.

13-14 t i  :

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o (5) An interconnection with Florida Power and Light Co.

(9 230 kV) in 1979; '

(6) Two interconnections (each 9 500 kV) with Florida Power and Light Co. and the Jacksonville (Fla.)

Electric Authority in 1982;

. (7) An interconnection with the City of Tallahassee, Fla.

(9 230 kV) in 1983; and (8) An interconnection with the South Carolina Gas & Electric Co. (9 230 kV) in 1986.

t Oglethorpe Power Corp. has also entered into bilateral agreements with i

the Alabama Electric Cooperative and the South Mississippi Electric Power Association. The service schedules attached to the agreements provide for a wide range of power and energy options including, emergency, economy and maintenance energy, wheeling services and 1

short-term power and energy exchanges.

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Georgia Power Co. has also entered into new interconnection agreements with other affiliates of the Southern Company system and has been involved in discussions concerning power and energy exchanges with electric systems in surrounding states. These new interconnections .

together with those involving Georgia Power and smaller competing power systems in Georgia have enhanced the reliability of the transmission grid in Georgia and stimulated the competitive process in bulk power supply throughout the state of Georgia.

-- -,-e v - , . --_. - , ,-_-.__ ._,- -y, y - --__ ,,_, ,, - -,-- _ .-,,. , y,- ..-,--,-g_m.__- - , ,,_ , , ,y-_ _ - - -,, -. -----.-w-, - - _ . .- . . . , -_ --

t F. Wholesale Power Developments .

?

Subsequent to the settlement agreement in 1974, Georgia Power filed rate i schedules with the Federal Power Commission that allowed its wholesale  ;

customers to take partial requirements power. As a result of the filing, 1 the smaller competing power systems in Georgia, which heretofore had been full requirements wholesale customers of Georgia Power, can now more effectively shop for alternative power sources in Georgia and surrounding states. The institution of the partial requirements rate by Georgia Power coupled with the cyning up of access to Georgia Power's transmission grid and baseload generation has enabled these smaller systems to move away from being full requirements customers of and fully dependent upon the Georgia Power Co.

Since July 1,1930, MEAG has been providing supplemental power to the Crisp County Power Commission. Prior to July 1, 1980, Crisp County (a MEAG participant) had been taking its supplemental power requirements from Georgia Power. -

Georgia Power Co. has also began serving new wholesale loads, largely through the allocation procedure scheduled by the Southern Company system.

Oglethorpe Power Corp. converted to Georgia Power's partial requirements I (PR) rate on July 1,1975; MEAG, in February of 1977; and the City of Dalton on June 1, 1977.

1 1

"Several new wholesale customers situated outside of the Georgia territerial service area have been added through contracts for dedicated unit sales (" Unit -

Power Sales") and interruptible sales. The contracts )

7 were negotiated by the operating subsidiaries of the Southern Company and Southern Company Services, Inc. .

Georgia Power Company has a resulting assigned load ratio share of interruptible sales and specific capacity allocations of dedicated unit sales. The Company's new wholesale customers under interruptible sales contracts are:

Florida Power and Light Company; Jacksonville Electric Authority; Florida Power Corporation; the City of

- Tallahassee, Florida; Savannah Electric and Power Company; and Mississippi Power and Light Company. Customers added by dedicated unit sales contracts are Florida Power and Light Company, Jacksonville Electric Authority, and Gulf States Utilities (beginning in 1984)."

Georgia Power has not onfy provided partial requirements wholesale service to in-state, comp 9 ting power systems, but has responded to requests from out-of-state systems with rate schedules for supplemental power and energy needs as well. ~

G. Reductions in Projected Load Growth I

System load requirements in the state of Georgia have not met the projections reported by Georgia Power during the antitrust construction l permit review for Plants Hatch and Vogtle. Georgia Power has experienced a declining rate of increase for power and energy in its service territory since the mid-1970's. Georgia Power projected a territorial peak demand for 1987 of slightly over 34,000 MW in 1974. In its 1986 Regulatory Guide 9.3 update, Georgia Power projected a 1987 territorial peak demand of l

A Georgia Power response to Regulatory Guide 9.3 dated October 14, 1983, pp.

28-29.

slightly more than 13,300 MW. Though Georgia Power's load has increased since1974,itcertainlyhasnotgrownasrapidlyasanticipa(edinthe mid-1970's. (These demand projections include the operations of MEAG, Oglethorpe, Dalton and Georgia Power's two full requirements customers, all of which have experienced similar reductions in the rates of growth of their systems.) As a result of these load growth projections, Georgia

~

Power has had to curtail its expansion in generating capacity plans since the mid-1970's. The reduction in planned capacity additions was achieved in part by cancellation of the Vogtle 3 and 4 nuclear units as well as various coal-fired units,,the deferral of other baseload capacity, changes in ratings of existing generating capacity, additional sales of unit capacity from existing pla'nts and adjustments in contracted exchanges a

with wholesale customers. The cancellation and deferral of new baseload generating facilities has made access to existing generation and transmission facilities all the more meaningful to smaller competing power systems in Georgia Power's service area.

r V. Summary and Conclusions -

l The generation and transmission of bulk power and energy in the state of Georgia has for many years been dominated by the Georgia Power Company.

l a

i l

"In Addition to reductions in installed capacity, the Company (through its parent, The Southern Company) is marketing bulk power from available capacity l~ to neighboring electric systems. For example, the company has agreed to sell the output from approximately 1,500 MW of its capacity in 1987 in connection with output sales from other Southern Company power plants." (Georgia Power response to Regulatory Guide 9.3 dated October 14, 1983, p. 8.)

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I i

During the construction permit review of Plant Hatch and Plant Vogtle, the staffs of the Department of Justice and the Atomic Energy Commission identified several instances where Georgia Power Company abused its '

i market position and its market power at the expense of smaller competing l

power systems in Georgia. Georgia Power's activities had a stifling effect upon the competitive process in Dulk power supply in Georgia and severely hampered the ability of competing municipal and cooperative electric systems to supply their customers with the most cost effective sources of power and energy available. After extensive negotiations involving Georgia Power, intervening power systems and the staffs of the Department of Justice and the Atomic Energy Commission, Georgia Power agreed to a settlement agreement which included in the Hatch and Vogtle licenses a set of conditions designed to stimulate the competitive process in the Georgia bulk power services market.

2 The license conditions provided municipal and cooperative electric power systems, individually and through their broker representatives, ownership participation in Plant Vogtle and Unit 2 of Plant Hatch as well as ownership in the integrated transmission grid running throughout most of Georgia--heretofore controlled solely by Georgia Power Co. Moreover, the license conditions provided these competing power systems the means to

effectively implement their newly acquired power and energy options by requiring Georgia Power to

(1) file partial' requirements rates with '

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o i l

the Federal Power Commission; (2) coordinate and share energy reserves; (3) interconnect with qualifying Georgia power entities; (4) transmit bulk power over its transmission system, and generally treat all power systems in the state more equally.

The operating license antitrust review is concerned with changes in the licensee's activities since the construction permit review that may create or maintain a situation inconsistent with the antitrust laws.

Staff has identified several groups of changes that have occurred since the construction permit review which are attributable to the licensees; however, these changes have largely been procompetitive and do not warrant remedial action by the Commission. Thevastmajorityofthesechanges have materialized through the implementation of the antitrust license conditions attached to the Plant Vogtle e.nd Plant Hatch Unit 2 construction permits. Through their purchases in portions of Plant Hatch and Plant Vogtle (and portions of Unit 1 of Plant Hatch and various Georgia Power Co. fossil fuele,d plants which were not subject to the licensing commitments), as well as participation in the Georgia transmission grid, the municipal and cooperative power systems in Georgia are now active players in the Georgia bulk power market. Georgia Power has provided these systems with ownership in existing and planned future transmission facilities based upon each system's expected use of the

! transmission grid. Georgia Power has also provided interconnections and filed pertial requirements power rates allowing newly emerging power i

systems to shop for power supply alternatives within and outside of the Georgia Power territorial service area. An example of this new found

independence is Oglethorpe Power Corporation's (Oglethorpe) energy exchangeagreementswiththeAlabamaElectricCooperativeand$UheSouth Mississippi Electric Power Association. Oglethorpe has also entered into negotiations to sell a portion of its Plant Scherer capacity to the Seminole Electric Cooperative of Florida. Both Oglethorpe and the Municipal Electric Authority of Georgia (MEAG) have set goals of generating self-sufficiency and are capable of achieving these goals in the near future given the marketing tools provided by the settlement agreement and the emergence of competitive alternatives in the state of Georgia since the completion of the Vogtle construction permit review.

The formation of Oglethorpe and MEAG in 1974 and 1975 coupled with the successful implementation of the antitrust license conditions has resulted in a vastly different Georgia bulk power market than was apparent during the construction permit review in Plant Hatch and Plant

. Vogtle. The changes which have taken place in this market have 1.argely been procompetitive, allowing smaller competitors to mature and contribute to the competitive process on going in the Georgia bulk power services market. Based upon the successful implementation of the antitrust license conditions to date and the lack of any significant negative competitive activities by the licensees since the antitrust review at the construction permit stage, staff recommends that no affirmative significant change determination be made pursuant to the application for an operatin'g license for Unit 1 of Plant Vogtle.

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