ML20235T050

Requests That Util Be Included on Distribution List for All Documents Transmitted to & from NRC Re Plant.Encl Reflects Util Significant Interest in Plant

ML20235T050
Person / Time
Site:	Rancho Seco
Issue date:	09/28/1987
From:	Locke R PACIFIC GAS & ELECTRIC CO.
To:	Parler W NRC OFFICE OF THE GENERAL COUNSEL (OGC)
References
NUDOCS 8710090243
Download: ML20235T050 (5)

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PACIFIC GAS AND E LE C T RI C 'C O M PANT 77 DEALE STREET, SAN F R AN CISCO, C ALtFO R N I A 94106' TELEPHONE (415) 977 0615 l

P. O. Box 744 2, S A N F R A NCISCO, C ALIFORNI A 94120 lELECCPIER (415) 543 7813 RICHARD P. LOCKE AttuantY AT law

,I September 28, 1987 Mr. William C. Parler, General Counsel Office of'the General Counsel U. S. Nuclear Regulatory Commission Washington, D.C. 20555 Re: Docket No. 50-312 Rancho Seco Unit 1

Dear Mr. Parler:

Pacific Gas and Electric Company (PGandE) hereby requests that it be included on distribution for all documents transmitted to and from the Commission related to the Rancho Seco Nuclear Power Station, Docket No. 50-312. PGandE currently has a significant interest in the Rancho Seco facility as reflected in the attached letter dated September 3, 1987.

Please forward all future documents on this docket to:

Mr. Barclay S. Lew.

Pacific Gas and Electric Company 77 Beale Street (333/A613)

San Francisco, CA 94106 Thank you for your assistance in this matter.

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.........,.....w September 3, 1987 President Sacramento Municipal Utility District 6201 S Street Sacramento, California 95817

Dear Mr. president:

pacific Gas and Electric company and several other organizations have received requests for proposals from the Sacramento Municipal Utility District. One request solicits bids for a wholesale power supply. The second seeks offers for ownership or operation of the Rancho Seco Nuclear Power Plant.

We have thoroughly reviewed these requests with the objective of developing proposals that would assure the most reliable and cost-effective electric service to the Sacramento area. Our conclusion is that we can meet the District's need for a competitively priced wholesale power supply and our proposal will be submitted by September 15, as you have requested. Also, we have carefully analyzed the Rancho Seco situation. In view of the i comparatively high cost of power from the plant and the financial j and regulatory uncertainties of start-up, we believe that the i restart program should be terminated and that the plant should be '

permanently closed. We have no interest in participating in Rancho Seco as either owner or operator.

Our analysis indicates that the many issues facing SMUD at the present time require a more profound and far-reaching solution than the wholesale power supply and Rancho Seco proposals would provide.

We believe your evaluation should include the comprehensive solution of consolidating the District's electric operations with PGandE's gas operations in Sacramento. This approach merits full I

and careful consideration by your Board and SMUD's customer-owners, and could be the standard by which the alternatives are tested to determine if they address all the major issues facing SMUD.

The consolidation of SMUD with PGandE would resolve many of the critical issues with which you have been struggling, including:

(1) rapidly escalating customer rates; (2) the cost of restarting Rancho Seco; (3) the financial and regulatory uncertainty at Rancho

s Mr. president September 3, 1987 Seco; (4) SMUD's credit problems and its lower credit ratings; (5) significant turnover and instability within senior management at SMUD; (6) substantial liability to PGandE for power purchased and capacity arrangements; and (7) the overriding need for development of lowest-cost resources to meet long-term electric growth in the Sacramento area.

A consolidation which addresses those issues most effectively would include these concepts and produce these benefits:

1. PGandE would purchase all of SMUD's properties and facilities.

2. PGandE would terminate the restart program at Rancho Seco and close the plant permanently. PGandE would assume l responsibility for decommissioning the plant.

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3. SMUD customers would benefit because, as part of the consideration, PGandE would agree to freeze electric rates for several years. The existing surcharge on rates for Folsom customers would be eliminated.

4. Current SMUD employees would be assured of job security.

' S. Government entities in the area would receive approximately $15 million of additional tax and franchise payments each year if PGandE owns the electric system.

These government agencies are the County of Sacramento; cities of Sacramento, Galt, and Folsom; the school j districts in the area; and other taxing authorities.

6. The substantial amounts SMUD owes PGandE because of the District's failure to meet its contractual obligations to PGandE would be considered in establishing the purchase price rather than being the cause of further SMUD rate increases. SMUD's law suit to acquire PGandE's electric distribution facilites in Folsom would be abandoned by l SMUO.

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7. To assure the continuing involvement of Sacramento customers in establishing and implementing electric service policies, PGandE would create a consumer affairs group to advise PGandE management. 'PGandE's extensive conservation and customer service programs would be available to Sacramento electric customers,

, 8. PGandE has a diverse electric generating system with l

sufficient capacity to meet the area's growth for the next decade.

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Mr. President September 3, 1987 At its inception, SMUD served a small number of customers who 4 enjoyed the benefits of low-cost electric energy, in large part I because of SMUD's tax exempt status. Customer-owners then had a major voice in establishing SMUD's policies and direction for a relatively simple electric distribution system. However, today the electric business has become increasingly more complex as a result of new technologies, greater competition, and changing government policies. Sacramento itself is changing as it becomes a major metropolitan area undergoing sustained growth and development.

Therefore, we believe this is an appropriate time for citizens to 1 addrenc the fundamental numation of whether the advantanae cMiln ]

once offered still exist today, or whether the greater community good would be served by the more advanced, consolidated utility system that we are suggesting.

PGandE has been established as a company in Sacramento for a l century. Customers in the area give us high ratings for gas service, and we are confident that with a consolidation we could provide efficient, reliable, and competitively priced electric {

service as well. As a corporate citizen, our company has l demonstrated in numerous ways our commitment to the welfare and economic well being of the community. PGandE customers throughout our system and the Company's shareholders would also benefit from a consolidation. In our view, everyone would benefit, which is the foundation for a successful consolidation.

SMUD is at a critical point in its history. A number of major decisions are required. The SMUD Board should not be pressed into hastily making fundamental decisions that have long-term consequences. We are advancing the concept of consolidation now so that it can be seriously considered when solutions to the l District's problems are evaluated by SMUD's Board, its I consumer-owners, and the community at large. I Today, more than ever, business combinations are occurring throughout the American economy as companies face financial and J management problems, competitive pricing, deteriorating customer l service, and other issues. This is occurring among the nation's electric utilities as well. Through such consolidations, additional resources of capital, equipment, and management are combined to create more efficient. more market-sensitive, better managed, financially stronger and more competitive organizations.

Customers are the beneficiaries through bette,r, more economically priced energy service.

I realize that the Board feels the necessity to resolve the major issues facing SMUD in a timely manner. Therefore, I would welcome the opportunity to meet with the Board as soon as possible so that we can discuss more fully the concept of a business consolidation.  !

I will phone you in a few days to arrange a mutually convenient l time. J l

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Mr. President. September 3, 1987 -

! look forward to working together with you and your associates in a constructive manner toward achieving a resolution that serves the vital best interests of the customers and communities of the Sacramento area. ,

Sincerely. l i

e, ,i.h 'V RAC:cch cc SMUD Board Members CPUC Commissioners CEC Commissioners Senator Alan Cranston i Senator Pete Wilson Congressman Robert Matsui Congressman Vic Fazio Senator Leroy Greene Senator John Doolittle i Assemblyman Lloyd Connelly 1 Assemblyman Phti Isenberg Assemblyman Tim Leslie Assemblyman Norm Waters Chairman Johnson and Members of the Sacramento County Board of Supervisors Mayor Rudin and Sacramento City Council Members Mayor Kipp and Folsom City Council Members Mayor Sekelsky and Galt City Council Members i Chairman Lando Zech, NRC l John Martin, Region V, NRC 1 C. K. McClatchy, Sacramento Bee Bruce Winter, Sacramento Union l

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