ML20247H398

Forwards 890228,0308 & 15 Ltrs on No Significant Change Finding Re Antitrust OL Review

ML20247H398
Person / Time
Site:	Vogtle
Issue date:	03/21/1989
From:	Patrizia C PAUL, HASTINGS, JANOFSKY & WALKER
To:	Nash D Office of Nuclear Reactor Regulation
Shared Package
ML20247H205	List: ML20247H196 ML20247H398
References
NUDOCS 8905310229
Download: ML20247H398 (46)

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w..,c -s o.ar c, O* As N vN .c a March 21, 1989 Ova r c NC DX HAND Mr. Darrel A. Nash Office Of Nuclear Reactor Regulation United States Nuclear Regulatory Commission Room 12E-5 11555 Rockville Pike Rockville, Maryland Re: Plant Vogtle, Unit 2, Docket No. 50-425A;

, Antitrust Operating License Review --

No Significance Chance Findina

Dear Mr. Nash:

Pursuant to your request for a copy of certain correspondence between our client, Oglethorpe Power Corporation, and Georgia Power Company, I am enclosing the following:

(1) A February 28, 1989 letter from A. W.

Dahlberg, President and Chief Executive Officer of Georgia Power Company, to F. F. Stacy, President and Chief Executive Officer of Oglethorpe Power Corporation; (2) A March 8, 1989 letter from F. F. Stacy to A. W. Dahlberg; and (3) A March 15, 1989 letter from A. W. Dahlberg to F. F. Stacy.

l As noted in our comments to Mr. Murley, Oglethorpe has been seeking to put in place the necessary scheduling agreement to use the Georgia Integrated Transmission System

("ITS") for off-system transactions. Negotiations with Georgia Power Company to accomplish that had been ongoing.

In the February 28, 1989 letter, Georgia Power stated that "Oglethorpe does not have the right to use the ITS to

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( Mr. Darrel A. Nash l March 21, 1989 Page 2 transport power to off-system loads unless and until ,

Oglethorpe Power has met all contractual conditions '

therefor 3 including owning generating resources in the State of Georgia sufficient to satisfy the requirements of its custccers." (Feb. 28, 1989 letter at p. 3). The letter also stated that Oglethorpe would only have the right to use interconnection points between the ITS and other systems on a "first come, first served" basis, once it had " satisfied the conditions precedent to acquire the right to use the ITS for off-system transactions." Id. The letter purported to terminate all discussions and negotiations between the parties.

In response, Oglethorpe's Chief Executive Officer by letter (dated March 8) requested Georgia Power and its parent, The Southern Company, to recognize, and take all necessary action promptly to facilitate, Oglethorpe's right to immediate access to the ITS -- including the interconnection points with other systems, such as the Georgia-Florida interface -- for all purposes, including  ;

off-system purchases and sales.

Georgia Power responded in the March 15 letter.

There, Georgia Power states that Oglethorpe can satisfy the energy "self-sufficiency" condition on ITS use imposed by Georgia Power either through actual ownership of generating facilities or through firm bulk power purchases "in Georgia." (March 15, 1989 letter at p. 2.) Despite Oglethorpe's ownership and continuing construction and maintenance of its pro-rata share of the ITS, Georgia Power maintains that (1) oglethorpe has no immediate right to use the ITS to sell power off-system, before it attains "self-sufficiency" in the manner acceptable to Georgia Power; and (2) even after Oglethorpe attains such "self-sufficiency,"

Oglethorpe would only acquire the right to use the interconnection points between the ITS and other systems on a "first come, first served" basis to be determined by Georgia Power. Moreover, Georgia Power's " clarified" position regarding "self-sufficiency" would preclude Oglethorpe from attaining such "self-sufficiency" through purchases from outside the state of Georgia.

Oglethorpe is prepared to discuss the terms of a generic scheduling agreement with Georgia Power (as suggested in its March 15 letter), and a meeting bras been tentatively set for early April. Nevertheless, numerous past meetings have failed to produce the necessary I

resolution of the fundamental issue of Oglethorpe's right to use the ITS for off-system transactions. Oglethorpe does m___________

k Mr.-Darrel A. Nash March 21, 1989

.Page 3 not believe these latest discussions will ultimately lead to an agreement unless the Commission has confirmed and clarified oglethorpe's right, under the existing antitrust.

license conditions and ITS agreement, to immediate access to the ITS.for off-system transactions.

By this letter, oglethorpe would also like to correct two minor typographical errors in its Comments. -on page 29, line 11,.the word "thereafter" should be changed to "therefore," and later on the same page (in the fourth line of the quotation from Summer I),-the word " licensees" should

~be changed to " licensee (s)". A copy of the corrected page is enclosed.

If'the Staff desires any further information or documentation on any of the subjects raised in the Comments, please contact me, and we will respond promptly, as it continues to be in oglethorpe's interest that the license be timely issued with an appropriate record and clarification'of conditions.

C uly yours e .

harles A. Patrizia of PAUL, HASTINGS, JANOFSKY & KER cc: William M. Lambe, Sr.

Antitrust Policy Analyst, NRC >

Joseph Rutberg, Esq. ,

Deputy Assistant General Counsel, NRC Robert P. Edwards, Jr., Esq.

Troutman, Sanders, Lockerman & Ashmore (Counsel to Georgia Power Compeny)

L. Clifford Adams, Jr. , Esq.

Hurt, Richardson, Garner, Todd

& Cadenhead Glen L. Ortman, Esq.

Verner, Liipfert, Bernhard,

(

McPherson and Hand, Chartered (Counsel to the Municipal Electric Authority of Georgia) 4

[ Mr. Darrel A. Nash March 21, 1989 Page 4' Bruce' Churchill Shaw, Pittman,.Potts

& Trowbridge (Counsel to Georgia Power Company)

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Pebruary 28, 1989 Mr. P. P. stacy l President and Chief Executive Officer Oglethorpe Power Corporation 2100 East Exchange Place P. O. sox 1349 Tucker, Georgia 30065-1349

Dear sud:

Por the past several years Georgia Power Company and i Oglethorpe Power Corporation have been engaged in discussions to develop a successor vehicle to the partial requirements tariff ("PR Tariff").

One goal of the discussions has been to develop an arrangement in which Oglethorpe Power becomes self-sufficient C. in generating resources and provides additional or future resources to the Georgia territory as necessary to serve  !

Oglethorpe Power's load. Another goal of the discussions has been to resolve Oglethorpe Power's concern as to the existing PR Tariff's notice provisions, which Georgia Power understands to be Oglethorpe Power's basis for not signing a PR Tariff service contract.

• In January 1988, the intensity of the discussions increased and on May 27, 1988, Georgia Power and Oglethorpe Power signed a contract evidencing certain agreements, often referred to as the " Principles of Agreement." This. contract sets forth the basic structure of the successor arrangement to the PR Tariff that both Georgia Power and Oglethorpe Power agreed was the most appropriate successor in light of the goals to be achieved. Georgia Power and Oglethorpe Power reaffirmed their respective commitments to the Principles of Agreement contract on February 10, 1989, and agreed that this contract will provide a strong foundation for each of them to )

provide for the requirements of their respective customers.

Georgia Power intends to abide by its obligations under this ,

contract and expects Oglethorpe Power to do likewise.

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Mr. F. P. Stacy

( February 21, 1989 Page 2 Since May 27, 1988, Georgia Power and oglethorpe Power have been engaged in new discussions to develop a detailed mechanism for meeting their respective customers' requirements consistent with the Principles of Agreement contract. At times, particularly in August 1988, Georgia Power perceived substantial progress in developing this detailed mechanism and believed the parties to be near agreement. Georgia Power was disappointed when oglethorpe Power reconstituted its negotiating team and reassessed agreements made by oglethorpe Power's original negotiating team. Since that reassessment and the resulting reformation of oglethorpe Power's negotiating posture, it has become evident to Georgia Power that it and oglethorpe Power are really now far apart it .

developing this detailed mechanism and that the likelihqg['et resolving the differences is small. .. v .

Therefore, and with regret, Georgia Power has concidded #

that it is in the mutual interests of Georgia Power and -

oglethorpe Power to discontinue their discussions to deftlop ..-

this detailed mechanism for meeting their respective - o c.stomers' requirements consistent with the Principles of-63reement contract. Accordingly, Georgia Power hereby cerninates those discussions and withdraws all proposals, both

( in concept and in detail, which have been made, accepted or discussed by Georgia Power in the course of those discussions.

Again Georgia Power intends to abide by its obligations as stated in the Principles of Agreement contract between it and oglethorpe Power and expects that oglethorpe Power will also abide by such contract.

Georgia Power will of course continue to provide service to Oglethorpe Power as a partial requirements customer under the existing PR Tariff. Georgia Power is, for your information, in the process of developing a new partial requirements tariff and expects to file such new tariff with the appropriate regulatory authorities in the near future.

Georgia fewer expects that the PR Tariff, in its present form for now and as it may be amended by such a new tariff and other future partial requirements tariffs, will continue to define the power supply arrangement between Georgia Power and oglethorpe Power.

As far as transmission is concerned, the AEC Settlement conditions as incorporated in the Integrated Transmission System Agreement (in Section 5.20 thereof) between Georgia Power and oglethorpe Power's predecessor-in-interest,

} oglethorpe Electric Membership Corporation, dated January 6, 1975, authorize oglethorpe Power to use the Georgia Integrated Transmission. system ("ITS") to transport power to its I

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( Pebruary20,if89 Page 3 customers in Georgia. However, Oglethorpe does not have the right to use the ITS to transport power to off-system loads unless and until oglethorpe Power has met all contractual conditions theref'or, including owning generating resources in l the State of Georgia sufficient to satisfy the requirements of its customers.

Furthermore, Georgia Power is not prepared at this time j to enter into negotiations with oglethorpe Power to develop an agreement that gives Oglethorpe Power any new rights with regard to use of the ITS for transmission of off-system transactions. Georgia Power has already expended its best efforts, without success as described above, to negotiate a detailed mechanism with oglethorpe Power for meeting the respective requirements of Georgia Power's and Oglethorpe Power's customers and, in' light of this, Georgia Power does not see any point in undertaking new negotiations at this time on another complex issue. Georgia Power will however continue to fulfill its obligations under the AEC Settlement conditions and other existing contracts to provide coordination services to which oglethorpe Power is entitled thereunder.

When Oglethorpe Power has satisfied the conditions C1 '

precedent to acquire the right to use the ITS for off-system transactions, Oglethorpe Power will also acquire tne right to use the interconnection points between the ITS and other systems on a "first come, first served" basis. As Oglethorpe Power is aware, there is no provision in the Integrated Transmission System Agreement allowing the reservation of capacity of the ITS or any portion thereof for the singular use of one entity. The ITS has always been intended for the use of all parties participating therein and Georgia Power does not see any need for, and thinks it would be inappropriate to allow, one party to gain exclusive control over any portion, including the interconnection points.

Again, it is with great reluctance that we must withdraw from these discussions to which both parties have devoted much time and effort.

Very truly yours,

/W.

A. W. Dahlberg f

4

. Oglethorpe Power Corporation . . . .

F.F. (Bud) Stacy .!!00 East Exchange Place i: March 8, 1989 Premdent and Chief Executive Orncer Po. Box 1149 Tucker. timrma ;3a o%.):149 e404)4 M G n DX HAND l Mr. A. W. Dahlberg President Georgia Power Company 333 Piedmont Avenue, N.E.

Atlanta, Georgia 30308

Dear Bill:

In light of certain issues raised in your letter to me of February 28, I am writing to state clearly Oglethorpe Power Corporation's position.

Oglethorpe Power and Georgia Power have been engaged in discussions for some time to develop new arrangements that would take into account changes in 1 circumstances which have occurred and would better implement the original understandings between the parties relating to jointly-owned facilities. By your letter of February 28, you have purported to terminate all discussions and

, negotiations. Oglethorpe Power remains ready to resolve the  !

outstanding issues by appropriate agreements, but if that is not possible, intends to take the steps necessary to protect its rights.

Oglethorpe Power is also compelled to address several additional issues that you raised in your letter, j Oglethorpe Power and Georgia Power have been engaged in discussions for some time to develop new arrangements between the parties relating to jointly-owned facilities. As part of those discussions, we developed several " principles of agreement" that would serve "as a basis for beginning the detailed negotiations" (May 27, 1988 letter from F.F. Stacy i to R.W. Scherer, at 1 1), but obviously were not themselves binding contracts. As Georgia Power is well aware, Oglethorpe Power cannot enter into binding contracts relating to power supply and similar issues without the consent and approval of the REA. Oglethorpe Power regrets that Georgia Power has chosen to terminate gli further discussions and negotiations, and is surprised by Georgia '

Power's unilateral suggestion that negotiating arrangements were not satisfactory.

Georgia Power, of courne, may develop and file a new Partial Requirements ("PR") tariff, rather than joining us in the development and implementation of unit entitlement

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Mr. A. W. Dahlberg March 8, 1989.

Page 2 and similar arrangements. .oglethorpe will review any new proposed tariff,.and determine its response in light of its rights and interests. You should be-aware that Oglethorpe Power Corporation will not accept inclusion in PR rates of any costs not prudently incurred and Georgia Power will bear the burden of demonstrating prudence.

We also do not agree with your characterization of issues pending before the Securities and Exchange Commission relating to SOFOPCO. We believe the formation of SONOPCO

.will adversely' affect Oglethorpe Power's rights and the publi interest and that Georgia Power's use of SONOPCO to perform' essentially all tasks is a breach of its obligations under the' agreement. Oglethorpe Power will oppose the formation of SONOPCO under these circumstances and will continue to seek to resolve the issues, either through discussion or more formal steps.

With regard to transmission,-Oglethorpe Power has the present right, pursuant to the AEC Settlement Agreement

and the Integrated Transmission System ("ITS") Agreement, to

(.- immediate access to the ITS -- including the interconnection points with other systems such as the Georgia-Florida interface -- for all purposes, including off-system purchases and sales. Oglethorpe Power has requested confirmation by Georgia Power and the Southern Company of this right in a document presented to you and Fred Williams (a copy of which is enclosed with this correspondence).

Georgia Power's position on ITS access, as set forth in your February 28 letter, contradicts assurances Georgia Power has previously made to Oglethorpe Power; is inconsistent with the positions Georgia Power has taken before regulatory j authorities to obtain the licenses to construct and operate Plants Hatch and Vogtle; and raises serious federal antitrust concerns.- Oglethorpe Power must insist on its rights, and therefore demands that Georgia Power and Southern take all necessary action promptly to facilitate Oglethorpe Power's utilization of the ITS for any transmission requirements, including the transmission of power for off-system transactions to Florida utilities.  ;

Georgia Power's past and continuing actions and statements limiting oglethorpe Power's access to the ITS (and the Georgia-Florida interface, in particular) for off-system transactions, and Georgia Power's and Southern's exercise of exclusive control over the scheduling of all 4

I Mr. A. W. Dahlberg March 8, 1989 Page 3 off-system transactions, have effectively precluded Oglethorpe Power from competing fairly and effectively with Georgia Power and Southern Company for off-system transactions to Florida and other markets. Among other things, Georgia Power and Southern have stymied Oglethorpe Power's efforts to negotiate and irplement a generic scheduling agreement to facilitate its off-system transac-tions, have demanded that Oglethorpe Power's sales be interrupted prior to the interruption of sales under certain Southern agreements, and have taken the position that Oglethorpe Power may not use the ITS for off-system transactions until it becomes "salf-sufficient" by having aggregate generating (or purchased) capacity in excess of its load requirements.

Given these Georgia Power actions and statements, Oglethorpe Power has sought confirmation of its immediate right to use the ITS, including a reasonable amount of the Georgia-Florida interface capacity approximating Oglethorpe Power's investment obligation in the ITS, and without regard

( to whether Oglethorpe Power is generational "self-sufficient." As a practical matter affording Ogicthorpe Power this pro rata usage of the interface capacity is needed to assure the full and fair access to these essential ITS facilities to which Oglethorpe Power is contractually and legally entitled for its competitive off-system transac-tions. Such gro rata usage also comports with the practice of the parties in similar situations of restricted capacity elsewhere on the ITS.

Georgia Power's recent actions and statements limiting Oglethorpe Power's access to the ITS are contrary to Georgia Power's specific representations to the Nuclear Regulatory Commission ("NRC") staff on this subject. These include, for example, Georgia Power's August 11, 1986 letter confirming that " access by Oglethorpe Power Corporation to transmission owned by [ Georgia Power) is not an issue because of the Integrated Transmission System Agreement, which allows eaual access by each party to the transmission facilities of the other party." Letter from Robert P.

Edwards, Jr. , to William Lambe, Planning and Program Analysis Staff, Office of Nuclear Reactor Regulation, NRC (August 11, 1986) (emphasis added). The letter also confirmed previous Georgia Power representations to the NRC in February 1986 plainly suggesting that executJ:r. of any

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Page 4 "necessary" scheduling agreements regarding off-system transactions was. imminent.

Georgia Power actions and statements also contradict Georgia Power's previous acknowledgment of oglethorpe Power's rights to full use of the ITS. For example, in your October 12, 1983 letter to Stan Hill, Georgia Power expressly agreed "that [Oglethorpe Power) is not' restricted by the PR-7 tariff, or any contractual relationship between the parties,-from making off-system sales, including Unit Power Sales, and that Georgia Power will work with.[Oglethorpe Power] to resolve.any operating, scheduling or dispatching arrangements required to facilitate such sales in a timely fashion." Georgia Power's recognition that neither the PR tariff nor any other contractual agreement' restricts Oglethorpe Power.from engaging'in off-system transactions was'also repeated in a

' January 13, 1988. letter from William J. Smith to John Johnson, Oglethorpe Power's Manager of Power Contracts.

The generational "self-sufficiency" and "first-C'. come, first-served" positions asserted in Georgia Power's February 28 letter violate Oglethorpe Power's rights under the ITS Agreement. The.ITS Agreement between Oglethorpe Power and-Georgia Power (in 5 3.01) grants each party equivalent rights to use the ITS to transmit capacity and energy both supplied from their own generating plants and pu' chased from other electric suppliers. Any right which Gaurgia Power has to use the system is matched by an Oglethorpe Power right, since the ITS Agreement gives each party the same rights. The Agreement also expresses the clear intent that a party's use of transmission facilities (including facilities used to effect sales and net interchange-out to any third party located outside Georgia) is to be proportional to ity ownership and investment in such facilities. Since both Georgia Power's and Oglethorpe Power's investment responsibilities include the cost of all transmission facilities (including the Georgia-Florida interface), neither party can be unreasonably foreclosed from using a given facility -- particularly key facilities such as the Georgia-Florida interface, which provides the t

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m 1 Mr. A. W. Dahlberg j March 8, 1989 l Page 5 1 i

only access to the Florida market, or other critical f interconnection points.*/

Moreover, as Georgia Power recognizes, the ITS Agreement must necessarily be construed in a manner ,

consistent with the 1974 AEC Settlement Agreement and the  !

, antitrust objectives underlying that settlement Agreement.

A principal concern of the Department of Justice in the NRC licensing process for Plants Hatch and Vogtle related to Georgia Power's power to exercise control over all transmission facilities in the State of Georgia so as to ,

grant or deny access to potential competitors and prevent or impede the development of competitive bulk power supply (

systems. Specifically included in the Justice Department i concerns were Georgia Power's efforts to restrict access for  ;

sales of power into Florida. (Eng the Justice Department's August 2, 1972 letter to the AEC, at pp. 6-7.)

Indeed, the AEC Settlement Agreement and the joint ownership of the ITS were designed specifically to afford oglethorpe Power and the other ITS participants the

(' capability of entering into bulk power supply arrangements with other electric systems and to provide alternative means forfwheeling power of other systems. As the Justice ,

Department's letter to the NRC recommending the. conditional grant of.the Hatch and Vogtle licenses stated:

• / In other situations of system disturbances or contingencies requiring ITS members to reduce load on the system, the load-shedding programs agreed'to by the parties require ITS members to be treated " equitably" through identification of critical and non-critical loads and reduction of load in equal percentage increments for each party. Georgia Power has recognized that it enjoys no greater rights to available capacity under such programs than any other ITS member. The long-term contingency that presently restricts the incoming transmission capability over the Georgia-Florida interface to approximately 3200 MW should be treated no differently. The parties have equivalent rights to the available capacity and must allocate the available capacity on a fair and equitable basis, as they do under the load-shedding programs.

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I Mr. A. W. Dahlberg March 8, 1989 Page 6 "MEAG and Oglethorpe Power, in addition to the. purchase of ownership in the Hatch unit and Vogtle units, will purchase partial ownership of and the use of the high voltage transmission grid previously owned and controlled exclusively by the Georgia Power Company. Ag a result, thgy will have the caoability 91 enterina IL12 bulk oower sucolv arrangements with other electric systems. ID addition, this immediate access 12 thi transmission crid will orovide alternative E2Mrces for wheelina arrangements 12r electric systems in Georcia."

(Letter from Department of Justice to NRC, April 9, 1976, at page 3 (emphasis added)). The Settlement Agreement also specifically provides that Georgia Power shall not have the unilateral right to defeat Oglethorpe Power's intended

( access to the ITS for bulk power supply arrangements.

Consistent with this intent, the parties' ITS rights must be interpreted in a manner that preserves Oglethorpe Power's capability to engage in wheeling and bulk power supply arrangements over the ITS and prevents Georgia Power from exercising monopolistic control over transmission facilities used for off-system transactions to Florida.

Both Georgia Power's asserted "first-come, first-served" position and its asserted generational "self-sufficiency" position would frustrate these overriding objectives, particularly given Georgia Power's past and continuing course of anticompetitive conduct.

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Georgia Power's suggestion that Oglethorpe Power's intended use of the Georgia-Florida interface should be based on "first-come, first-served" priorities (to be determined by Southern and Georgia Power) would only continue effectively to preclude Oglethorpe Power's competitive access to these essential ITS facilities.

Georgia Power and Southern have already exploited their unreasonably restrictive interpretations of the ITS Agreement, as well as their refusal to enter into a generic scheduling services agreement, to lock up most of the interface capacity through 1994. Having successfully used their control of these essential facilities to deny i

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_ e Mr. A. W. Dahlberg March 8, 1989 Page 7 Oglethorpe Power an q portunity to compete for these transactions, Georgia Power and Southern now effectively seek to lerk in the advantages derived from this conduct by reliance on a "first-come, first-served" principle that is ostensibly, but not actually, neutral in effect. This approach merely exacerbates Georgia Power's and Southecn's d=minance of relevant markets, while effectively precluding oglethorpe Power from consummating proposed transactions in competition with Georgia Power and Southern.

Georgia Power itself concedes in its February 28 letter that "[t]he ITS has always been intended for the use of all parties participating therein," and that "it would be inappropriate te allow.one party to gain exclusive control over any portion, including the interconnection points."

(Letter from A. W. Dahlberg to F. F. Stacy, February 28, ,

1989, at p. 3.) Yet it is precisely such." exclusive  !

control" over the interconnection points on the Georgia-Florida interface which Georgia Power has managed to obtain by effectively precluding oglethorpe Power's competitive

{ access to these essential facilities.

Georgia Power's position that the NRC License Conditions somehow precleda Oglethorpe Power's right to use the ITS for off-system transactions until oglethorpe Power owns " generating resources in the State of Georgia sufficient to satisfy the requirements of its customers" is equally at odds with the fundamental purposes of the AEC Settlement.. Contrary to Georgia Power's contentions, Oglethorpe Power's use of the ITS for off-system transactions before becoming generational "self-sufficient" does not in any way " violate" any of the license conditions.

(ITS Agreement il 3.01, 5.20.) The correct interpretation of the NRC-imposed license conditions must be one that will ensure the "immediate access" to the ITS necessary to

" provide alternative-sourecs for wheeling arrangements" over those facilities, including the critical Georgia-Florida interface. As the NRC has since reaffirmed, the Hatch and Vogtle license conditions were " designed to stimulate the competitive process in the Georgia bulk power services market" by providing Oglethorpe Power and other power systems with the marketing tools necessary for effective competition. 51 Fed. Reg. 43,253-54 (Dec. 1, 1986). Egg AlA2 54 Fed. Reg. 8852-53 (March 2, 1989).

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d I Mr. A. W. Dahlberg March 8, 1989 Page 8 Georgia Power's and Southern's actions and failures to comply with prior assurances have seriously injured Oglethorpe Power's business. It took almost two years of discussions and negotiations with Georgia Power for Oglethorpe Power to consummate a 1986 sale to Seminole, resulting in lost revenue to Oglethorpe Power and impairing Oglethorpe Power's customer goodwill and reputation as a reliable source of electric power. Oglethorpe Power was unable to complete successfully its power sale to Seminole in 1988, thereby further impairing its reputation for reliability in an industry where such reputation for reliability is critical. Oglethorpe Power has also lost other business opportunities for off-system transactions, including potential transactions with Alabama Electric Cooperative, Inc. and South Mississippi Electric Power Association of which Georgia Power l'. aware, because of Georgia Power's and Southern's unwillingness to negotiate promptly a generic scheduling agreement with Oglethorpe Power and otherwise to afford Oglethorpe Power reasonable access to the ITS. Oglethorpe Power cannot and will not accept a situation in which its use of the ITS for off-C'e system transactions is dependent on Georgia Power's or Southern's arbitrary and essentially ad has consideration of individual transactions -- rather than a generic scheduling arrangement and reasonable assurance of access to these essential fucilities, sufficient to afford Oglethorpe Power the necessary commercial leeway and capability to partici-pate in these transactions.

Such exclusionary conduct by Georgia Power and Southern substantially and adversely affects consumers throughout the region. As Georgia Power's NRC submissions recognize, the ITS is the only means by which Oglethorpe Power is able to transmit power for such off-system transactions, and cannot practicably or reasonably be duplicated. If customers that wish to purchase power and transmission services from oglethorpe Power cannot do so, their only alternative may be higher cost purchases from Georgia Power or another of the Southern Companies or from Florida utilities supplied by the Southern Companies.

There are financially advantageous transactions presently available to Oglethorpe Power. Oglethorpe Power has been exceedingly patient, and has repeatedly attempted to work with Georgia Power to implement its ITS access rights. In lignt of Georgia Pnwer's February 28, 1989

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( Mr. A. W. Dahlberg March 8, 1989 Page 9 letter, had its continuing frustration of Oglethorpe's rights to use the ITS for off-system transactions, oglethorpe Power is compelled now te insist on immediate and definitive action. As Georgia Power is aware, the NRC has requested public comments and requests for reevaluation of its "no significant changes" antitrust determination in the Plant Vogtle proceeding by March 17. Accordingly, Oglethorpe Power expects a response from Georgia Power and Southern on these issues no later than March 15, 1989.

ry truly yours, F.F. S y C

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Oglethorpe Power expects Georgia Power Company ("GPC") and the .

Southern Company (" Southern") to confirm the following principles regarding use of the Georgia Integrated Transmission System

("ITS"):

1. That Oglethorpe Power has the present right, in its discretion, to use the ITS, including interconnection points.with other systems such as the Georgia-Florida interface, without regard to whether Oglethorpe Power is generational "self-sufficient." This right is on precisely the same basis as GPC's right to use the ITS for any transmission requirements, including the transmission of power obtained f rom of f-syster. purchases and for off-system sales.

2. That GPC and Southern will use their best efforts to accomplish the rapid and successful conclusion, of negotiations regarding the terris of the generic Interchange Scheduling Agreement, and any appropriate amendments to existing agreements. The successful conclusion of these negotiations.will result in a binding agreement containing scheduling, operating and accounting procedures to ensure Oglethorpe Power's access to the ITS for wheeling and for. transmitting power for other off-system transactions on a fair and C- competitively equal basis.

3. That Oglethorpe Power is entitled to use all interconnection points-between the ITS and other systems in a manner consistent with and equivalent to its use of the ITS within Georgia, and is entitled to use approximately 640 megawatts of transmission capacity at .

the Georgia-Florida interface for off-system transactions.

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A. W. Dahlberg E e5 0tel l

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March 15, 1989 l

Mr. F. F. Stacy President and Chief Executive Officer oglethorpe Power Corporation 2100 East Exchange Place Tucker, Georgia 30085-1349

Dear Bud:

Fifteen' years ago Georgia Power and the predecessor to Oglethorpe Power Corporation set out to create a jointly-owned power supply system without precedent in concept or size. Our mutual success is shown by the reasonable rates and excellent service our customers enjoy and by the health of our companies today. These successes are the direct result of art'ngements embodied today in FERC tariffs and agreements. .y February 28, 1989 letter was intended to confira Georg_a Power's commitment to continue to implement these arrangements that gave birth to Oglethorpe and made it o the nation's largest generation and transmission cooperative.

You have expressed the desire to replace or supplement these arrangements. Georgia Power has been and continues to be willing to do this out of deference to you and your institution. Perhaps we all should have expected that the renegotiation of our complex relationship would have its ups and downs and would take a long time to conclude--certainly longer than we at Georgia Power would like.

The fact that Georgia Power and Oglethorpe do not entirely agree on all matters of interpretation of the existing tariffs and agreements adds to the difficulty of the task of formulating new arrangements. The frustration expressed in my February 28, 1989 letter results from my perception that Oglethorpe was insisting as a precondition to further discussions that Georgia Power abandon its own sincerely held interpretations of those tariffs and agreements. I felt that Oglethorpe was insisting on obtaining the benefits that would arise from some interpretations of the existing arrangements without shouldering any of the burdens, including the risk of being wrong in planning for its own future needs. Because the lodgment of this risk in Oglethorpe is a fundamental attribute of the existing agreements, I hope you understand why I reacted so strongly. It was not my intention to

(

MAR 151989

Mr. F. F. Stacy 1 March 15, 1989 Page Two establish any ultimatum which oglethorpe must satisfy in order to resume negotiations. We are willing to resume discussions. .Also, Georgia Power will work with oglethorpe in the me&ntine to accomplish specific transactions that oglethorpe brings to our attention and do so.in a way that results.ln no prejudice to either of our positions on the ultimate issues.

I do want to clear up one misunderstanding here:

Georgia Power agrees that oglethorpe Power Corporation can become self-sufficient by acquiring reliable, firm bulk power in Georgia through contractual power purchases as well as through tne actual ownership of generating facilities.

Notwithstanding the "self-owned" language in the License conditions, we have repeatedly advised oglethorpe that, as far as we are concerned, it has the ability to become self-sufficient by purchasing power. Without excluding other-alternatives which may be available.to you, we have said an arrangement like the unit entitlement sale we have.been discussing would result in oglethorpe's self-sufficiency. or indeed if you were merely to sign the prescribed contract for finite quantities of power under the existing partial J{j- requirements tariff--rather than taking what you choose on an instant-by-instant basis--you would be self-sufficient for this purpose. The only power Georgia Power delivers off-system to others is power that is in excess of Georgia Power's requirements. Regardless of how it chooses to attain self-sufficiency, oglethorpe will then also be able to export power that is in excess of its requirements.

As to your sales to the seminole cooperative in Florida: In the first Seminole transaction, Oglethorpe undertook to sell output fros. a jointly-owned plant (scherer) operating outside of econoste dispatch. The plant agreements between us call for Plant scherer to be operated in accordance with the principles of economic dispatch, of course, and make Georgia Power the agent of the other owners, as well as oglethorpe. These other owners had to be convinced that their interests were not being prejudiced by the operation of the unit out of dispatch to facilitate ,

oglethorpe's sale. In addition, there were difficulties in L

accounting for the transaction at the plant. These complexities ultimately led to a reshaping of the transaction to avoid the out-of-dispatch problems. This was also the first scheduling agreement between us. Since Georgia Power's earlier unit power sales from Plant Scherer to Florida utilities took an even longer time to conclude, you should not have been surprised at the duration of our negotiations.

I

E 5

Mr. F. F. stacy

( March 15, 1989 Page Three l Georgia Power was not trying to impede your transaction, a fact that should be obvious.since we agreed to provide power to back up your sale, improving oglethorpe's product.

The second and simpler seminole transaction was put in place in three weeks. The only service reduction not anticipated by our contract with you lasted only two hours and resulted from an operator error we fully disclosed to

, oglethorpe.

I hope upon reflection you will realize our record of cooperation is much better than your correspondence indicates. Georgia Power has worked hard to facilitate Oglethorpe's transactions. In both Seminole situations, we put oglethorpe's project ahead of other system projects. In neither Seminole situation was Georgia Power or its affiliates seeking or making competing sales. The difficulties experienced in implementing these transactions did not arise from anticompetitive interests.

Characterizations of oglethorpe's disappointments as resulting from anticompetitive activity are inaccurate.

I hope we can put this exchange behind us and move C forward as we have always done to make our companies better suppliers of electricity for our customers. I as pleased that oglethorpe wants to resume discussions. I have attached a list of issues Ceorgia Power is prepared.to discuss at our scheduled meeting. If I have omitted any subject you wish to discuss, add it. We will resume discussions on these topics without insisting on agreement on any of the basic FERC tariff issues as a precondition and hope you will do likewise. I ata no inherent reason that we cannot reorder our relationship on all of these power supply issues--

transmission, power purchases, joint planning, scheduling and coordination--if that is what oglethorpe wants to do. You have my commitment to a dedicated effort to bring these discussions to a mutually satisfactory con;lusion and to do so as expeditiously as practicable. It w;il take time, however, and whatever we end up with will have to make economic sense. In the meantime, we will work with you to accomplish specific transactions that oglethorpe brings to our attention and do so in a way that results in no prejudice to either of our positions on the ultimate issues.

Very tru yours, A. W. Dahlberg l'

\.',

,(-

• Discussion Issues

• Integrated Transmission System Agreement amendment concerning off-system transactions

• Generic scheduling and coordination agreement (s)

• Joint planning of future capacity additions

• Unit entitlement or other capacity purchases Oglethorpe may wish to make Timely information exchange

• Interface with Southern System Planning and Power System Operations

• A more active role in management of jointly-owned plants c

I

+

1 9glethorpe Power Corporation May 27, 1988 Mr. R.W. Scherer Chairman Georgia Power Company P. O. Box 4545 Atlanta, Georgia 30308

Subject:

tiew Power Supply Arrangement Georgia Power Company and Oglethorpe Power Corporation are currently working on a new power supply arrangement. As a basis for beginning the detailed negotiations, we identified four

" Principles of Agreement" at our May 23, 1988 meeting. Oglethorpe Power Corporation is committed to these principles.

PRINCIPLES OF AGREEMENT l- o Each party will be responsible for its future growth capacity. To the extent either party plans to meet some of its needs with purchases from the other, those purchases will be made by firm contracts of fixed quantities and duration.

o Generation resources of the parties will be cperated for the economic benefit of the Georgia territory.

o A territorial load forecast will be produced each year and this forecast will be the sum of forecasts made by parties responsible for serving the load growth in Georgia.

o Future resources will serve the needs identified by the territorial forecast.

We would like to have the new " Power Supply Agreement :cmpleted by tiovember 1, 1988 and will dedicate the necessary resources to achieve that goal. In any event, both parties agree to support these principles in our future relationships.

Inter office An Electnc Membership Coopegnve L--___-__________-______

4 A

Mr. R.W. Scherer i Page 2 May 27, 1989 If the foregoing constitutes a mutually acceptable statement of the agreement of both parties, please indicate your agreement by signing the appropriate space below.

Sincerely,

'h.

F. F. Stacy  ;

' resident a nief Exec ive Officer FFS:sg

~

Oc: Mr. G. Stanley Hill Mr. Grady Baker Mr. Fred Williams

/ ,

• J \

R .W .' Scherir I Chairman l Georgia Power Company .

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I Oglethorpe Power Corporation 2100 East Exchange Place P.O. Box 1349

'Ibeker. Georgia 300651349 (404)496 7600 August 4, 1986 Mr. Bill Smith .

Georgia Power Company Post Office Box 4545 Atlanta, Georgia 30302

Dear Bill:

As you know, we would like to establish a scheduling service arrangement and procedures as necessary to enable Oglethorpe to transact off-system sales and purchases (interchange).

In order to form a basis for negotiating contractual and procedural matters we need to have a written agreement for four general issues.

These are:

o Oglethorpe, Georgia Power, and Southern Company intend to establish the contractual and procedural mechanisms to enable Oglethorpe to transact a full range of off-system sales and purchases, ireluding transmission service.

o All necessary contractual and procedural mechanisms will be in place by June 1, 1987 to' enable.at a minimum, Oglethorpe to buy and sell multi-hour economy, short-term, and transmission services.

o Any scheduling charges by Georgia Power and Southern Company will be reasonable and represent the actual incremental increase

, in work load and changes to softw'are resulting from Oglethorpe transactions.

o Oglethorpe, Georgia Power, and Southern Company management will expeditiously resolve any obstacles, enc'ountered by their staffs, to meeting the June 1,1987 target date.

We believe that agreement on these issues will form an effective framework for negotiating the details necessary to implement an interchange operation ,

at Oglethorpe. j We would like to reach an agreement on these issues by September 11.

An Electric Membenhlp Coopedtive

is, 3.

6 1 Mr. Bill Smith

, *7 ', Page Two ,

1 August 4, 1986 Bill, we appreciate your attention to this matter and look forward to our discussions.

Very truly yours, l'yys George B. Taylor, Jr.

Manager, Power Contracts GBTsjsn .

xc: G. Stanley Hill Fred D. Williams 1

9 e

O O O O 9

O a00* b 'O 6 i P

I

.N j Oglethorpe Power Corporation 2100 East Exchange Place  ;

November 20, 1987 P.O. Box 1349 1

'hicker, Georgia 30085-1349 ]"

(404)496 7600 Mr. Bill Smith  ;

Georgia Power Company ,

Post Office Box 4545 Atlanta, Georgia 30302 Dear Bills subject: Interchange Scheduling Services Agreement I regret that you were unable to keep our meeting on November 11, 1987, for lthe purpose of discussing the Interchange Scheduling Services Agreement outline that was sent to you on April 9, 1987.

As you know, we have been trying to discuss the necessary details to implement an interchange operation at Oglethorpe Power Corporation since late last year.

By not having such an agreement in place, Oglethorpe Power has missed- several opportunities over the years to realize economic benefits for our Member Systems.

As "a reminder, by a memorandum dated October 12, 1983, Mr. A. W.

Dahlberg indicated to Mr. G. Stanley Hill that "GPC agrees 1) that_ OPC is not restricted by the PR-7 tariff, or any contractual relationship between the parties, for making off-system sales, including unit power sales, and that GPC will work with Oglethorpe Power Corporation to resolve any operating, scheduling or dispatching arrangements required to facilitate such sales in a timely fashion."

Since that time, Oglethorpe Power has been making the necessary arrangements to facilitate such interchange transactions. '

Therefore, it is with a great deal of interest that we move forward with the successful implementation of the Interchange Scheduling ,

Services Agreement.

We look forward to meeting with ' jou at the next meeting scheduled for November 24, 1987.

Sincerely, p8/~

John A. nson Manager, Power Contracts Department JAJ vs ,

cc: 'Mr.'G.' Stanley Hill ,

Aiobeme Bootric Cooperative.inc.

Post office Box 560 Ant'alusia Alabame36420 (206)222 2571 B.R. Ray *' Clausen i civision ueneger Engineering and operations W '

00T 3 0 BS7 October 28, 1987 POWER CON J,3 Mr. John Johnson Oglethorpe Power Corporation  :

P. O. Box 1349 Tucker. GA 30085-1349

Dear John:

• It is unfortunate that due to tangled interchange agreements with Georgia Power Company you could not supply the energy that AEC purchased recently. Perhaps an opportunity to assist each other will present itself in the near future.

Sincerely yours, v

B. Clausen Ma ger. E&O Division LDA/mjf k

~

Georgia Power Comoany

' 133 P4cmont Avenue

- *- Atenta. Georgia 30308 y.), ' c :;

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t, i tmonone 404 526 7211 g .; . .

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' J ,d y e-Atlanta, Georgia 30302 I hh@ !J .i !

Gu6fif]jg [] eorgiaPower F,ed D. WHeisme . " w" + <!T f . 7 l Vice President sulk 1%wer Markets l

May 3, 1988 )

Mr. G. Stanley Hill l Senior Vice President Planning & System Operations Division ,

Oglethorpe Power Corporation j 2100 East Exchange Place '

P. O. Box 1349' Tucker, Georgia 30085-1349

Dear Stan:

The purpose of this letter is to memorialize several commitments each of our companies has made to the other as a basis for redefining our-future relationship to the mutual benefit of each of us and our customers. This proposal anticipates the simultaneous execution of several agreements as set forth below:

1. Power Sumply Principles Agreement. In this agreement OPC will commit to lecome self-sufficient. OPC will assume future responsibility for serving all of its growth capacie- (capacity requirements in excess of its maximum capacity purchai,e from GPC l under PR during 1987). To the extent OPC plans to serve some of its requirements with purchases from GPC, those purchases will be made pursuant to firm contract (s) with fixed quantities of the types of capacity to be purchased. The contract (s) will be for a term which reflects a reasonable planning horizon for capacity additions and GPC will be relieved of any obligation to provide any capacity in excess of that contracted for.

It is expected that OPC and GPC will have negotiated a new Power pply Agreement embodying these principles by December 31, 1988 That agreement is also expected to provide that all exist ng and future generating resources of OPC and GPC will be operated for the economic benefit of the Georgia territory. OPC and GPC will agree to coordinate the planning of future pesource pin the additions for the economic benefit of the territory.

event the parties have not executed such an agreement by hecember 31, 1988 or any mutually agreed extension, GPC will have the right to file a new PR or other tariff with the FERC based upon the principles contained in the Power Supply Principles Agreement. OPC will be free to oppose the details of such a tariff, but will agree to support the principles contained in the Power Supply Principlee Agreement in any such FERC proceeding or other proceeding.

____i_____________________________________ _. .___ i

4 t Mr. G. S. Hill May 3, 1988 Page 2

2. Scheduling Services Agreement. 4PC will agree to schedule non-firm energy transactions by OPC out of its retained ownership interest in Plant Vogtle and Units 1 and 2 of Plant Scherer.- It is expected that this agreement will be similar to the Seminole At,reement of 1986. This agreement will terminate by its own terms on December 31, 1988, anc. it will provide that OPC will not schedule any transactions under the agreement after that date.

It is expected that future scheduling arrangements will be agreed upon in connection with the new Power Supply Agreement described above. Specifically, upon execution of the Power Supply Agreement, GPC will acknowledge OPC's right to utilize the ITS for off-system transactions.

3. ITSA. OPC, GPC and the other ITS participants (MEAG and Dalton) will execute a mutually acceptable amended and restated ITSA. It is expected that this new ITSA will be in substantially the form of the currently negotiated draft that we all have been negotiating for several years.

Stan, please be assured that GPC is committed to reaching agreement on the new Power Supply Agreement by year-end. My staff and I are prepared to adjust our priorities as necessary to meet this goal. Lest there by any misunderstanding, however, I want to make it clear that if the parties are unsuccessful, my present intention is to file a new tariff with FERC governing our future relationship. My intent is that the Power Supply Principles Agreement referred to above will bind OPC to support those principles after December 31, 1988, in any future PR or

. other proceeding.

Yours very truly, 0 hlb Fred D. Williams FDW/jdg l xc: H. G. Baker, Jr.

E. B. Harris C. B. Harreld

.m

,9 CnrIZENS

, POWER & LIGHT w CORPORATION July 29, 1988 Mr. Douglas Calvert System Coordinator Oglethorpe Power Corporation 2100 East Exchange Place P.O. Box 1349 Tucker, Georgia 30085-1349 Daar Mr. Calvert:

Wa would like to thank you for having given us the opportunity to meet with you and your colleagues on July 20, 1988.

Following up on our meeting, Citizens Power & Light would like to request your consideration of the following bulk power transactions. This letter does not constitute a binding offer on our part, but an expression of our strong interest and our intent to proceed in the development of a commercial transaction.

I. Power Purchase. Purchase five years of winter power, starting in November, 1988 through March, 1989 and ending in 1993.

1. ouantitv. 50 MW of firm energy.

2. Sale and Deliverv. Oglethorpe Power Corporation agrees to sell and CPEL agrees to purchase firm power which is scheduled and delivered as provided herein.

Capacity would be subject to minimum and maximum delivery rates and would be rescheduled.

3. Point of Deliverv. To the Georgia-Florida border ITS interface. This would probably entail Oglethorpe delivering power to one of the 230kV lines going into Florida.

4. Pricino. Capacity charge of $3.25/kW/ month plus an energy charge of 23.50 mills, with possible escalation of energy charge to 30 mills by the last year of the transaction, 1993. This pricing is in response to our discussions and Oglethorpe's interest in increasing the energy price from 20 mills, while slightly decreasing the capacity charge.

5. Oun11tv. System contingent firm.

s m no m e e n. ., a com 9nm asua re A M ct . m nuo a L. a mG.,nn M707/[N G

1 II. Power Purchase. Purchase five years of summer power starting in June, 1989 through the end of September, 1989 and ending in September, 1994.

1. Quantity. 50 MW of firm of energy.

2. Sale and Deliverv. Oglethorpe Power Corporation agrees to sell and CP&L agrees to purchase firm power which is scheduled and delivered 'as provided herein.

Capacity would be "take or pay", energy would be subject to minimum and maximum delivery rates and would be rescheduled.

3. Point of Deliverv. To the 500kV Hatch /Thalman intertie on the Florida-Georgia border.

4. Pricino. Capacity charge of $7.50/kW/ month plus an energy charge of 24.5 mills, with possible escalation of the energy charge after the first year of the transaction.

5. Quality. System contingent firm.

III. Wheelina Power A. Summer months only, for five years, starting in June i through the end of September, 1989 and ending in 1994.

1. Quantity. 50 MW of firm power.

2. Qualitv. Around-the-clock, system contingent firm.

With an estimated 3.8-6.8 % losses, being higher in the summer months, adjusted based on actual losses.

3. Poin't of Pickuo and Deliverv. Oglethorpe Power Corporation agrees to arrange for the receipt of the power at one of the desitnated interties connected to TVA and deliver to the point where Georgia connects to-the Florida 500kV Hatch /Thalman intertie. This entails making appropiate arrangements for scheduling purposes with Georgia Power Corporation as per the ITS agreement.

4. Pricina. Demand charge of $2.50-$3.00/kW/ month in the first year, thereafter escalating at a negotiated rate.

k

m. - _ _ . -

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B. Winter months only, for twenty years, starting in November, 1988 through March, 1989 and ending in the year 2008. . Citizens would pay for the demand charge

$2.50-$3.00/kW/ month in the first year with appropiate  !

escalators thertafter. This transaction would involve-the same capacity and path (s) as the five year transaction, above.

As we discussed at cur meeting, a component of the net margins.

cssociated with power we purchase or wheel via Oglethorpe Power Corporation would be used to create an electric assistance program for the low-income and elderly people within OPC's service territory. As' you know, Citizens is corumitted to its goal of assisting the needy, and we are especially pleased when

.these services can be coupled with good business economics to produce a transaction of benefit to all.

Sincerely, rkw ad*4& -

Larry Kellerman President ec: Luis Molina t

4 1

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'/ 2 CITIZENS

} ' POWER & LIGHT .

? CORPORATION '

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'd October 26, 1988 Oglethorpe power Corporation

' Charles Nash.

2100 East Exchange Place p.0. Box 1349-Tucker, Georgia 30085-1349

Dear Charles:

We would like to thank you for the effort you and your company has made in order to make possible a transaction between our respective companies.' We very much understand the enormous

~ difficulties involved in getting a power agreement and service schedule through Southern Company. But we remain optimistic that if a bulk power transaction is not possible in November or December of 1988, that in 1989 it may be possible. At this point CpsL has two interested buyers of winter power in Florida i as well as a wheeling agreement in glace with TVA to deliver power to the Tennessee-Georgia border.

From our phone conversation of October 26, 1988 it appears that we vill be pushing towards 1989 as a starting date for any possible power transaction. If in the meantime you and your people are able to work anything out by mid-December we would appreciate letting us know, in order to fira up our agreements with TVA and our buyers in Florida. If further negotiations are needed to fira up an agreement between Oglethorpe and CP&L_ we would be willing to come down to Georgia in late November or early December; please let us know at your convenience.

Sincerely, Lus A.Ho power Market Analyst nm wn~_ #___m_. fa . _ nn_. _u.. .s c o a &ne. I 19 n- nn n IP A 6' G . 2NO 9. lm u nMG u d flE!kIkN

SENT'BY:0glethorpe Power, i 5- 9-89'i 2M6PM ; 202m8202M 2 l,

-. sa) e.en-ca: Ans.

, ~ A'.sa.ta Gects e 30308

' YeDrone d*J 526000 '

Vai *.; Acess.

• ost C'oce Sox d545 A: ate.Goet;e30302 I

p,, W , wt% n ,w er, q. ,*,.n OP ef Esent ye O?Ccer May 8, 1989 Mr. F. F. Stacy Oglethorpe Power Corporation P. C. Box 1349 Tucker, Georgia 30085-1349

Dear Bud:

In response to your letter of May 4', 1989, let ma assure you Georgia Power Company has not intentionally interfered with oglethorpe's contractual relationships with anyone.- Georgia Power has the existing contractual right and obligation to provide the servios you describe in your letter.

The transmission service _provided by Georgia Power to SEPA is described in sections 7 and 8 of our existing contract with SEPA which has been'in effect since February 1, 1985. .This

., contract has mads SEPA power availpble.to oglethor members on advantageous terms for over four years.pe's Prior to May 31, 1989, pursuant to the transmission provisions cf the contract we provide all transmission service to SEPA in Georgia. Effective June 1, 1989, Oglethorpe, MEAG and Dalton assume responsibility for transmission of the SEPA power which is allocated to their distribution members and systems.

The contract clearly provides that Georgia Power will continue to deliver SEPA power to the cities of Hampton and Acworth, Georgia, and will continue to transmit the excess power from the Georgia SEPA projects to its interconnections' with Alabama Power Company and Gulf Power Company for further delivery to non-Georgia SEPA customers. Oglethorpe participated in the negotiation of this contractual relation-ship and advised the Federal Energy Regulatory Commission that it represented a satisfactory compromise of competing interests. This contract was approved by the FERC.in Docket No. ER85-350-000 on June 5, 1985.

We have been advised by SEPA that it intends for us to continue providing this service for Hampton, Acworth and non-Georgia customers after June 1, 1989. Even with the rate reduction we filed with the Federal Energy Regulatory Commission on March 30, 1989, SEPA's payment to Gegrgi will cover all of doorgia Power's costs and will darksap,yggr ,, *

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SENT BY:0glethorpe Power i 5- 0-89 ; 2:18PM i

• 9-120278582021# 3 Mr. F. F. Stacy May 8, 1989 Page 2 contribution toward the recovery or tne rixea costs or Georgia Power's service, which will provide a not benefit to Georgia Power's utility customers.

At a meeting in our offices on April 5, 1989, BEPA for the first time mentioned that oglethorpe had proposed providing .

this Georgia Power transmission service and had quoted a price one cent per kilowatt month less than Georgia Pover's rate.

Even if it made business sense for oglethorpe to provide this service, we do not believe oglethorpe has the legal authority to provide this service or to require that Georgia Power provide a transmission service to Oglethorpe for Oglethorpe to resell to SEPA. Georgia Power's transmission service tariff and the Atomic Energy Commission License conditions you refer to provide that Georgia Power "shall transmit over its system from (oglethorpe) ... bulk power which results from (oglethorpe) owned generating resources in the stette of Georgia, to the extent such excess necessarily results from economic unit sizing or from failure to forecast load accurately...." oglethorpe, of course, does not own any SEPA power resources. oglethorpe also does not have any excess capacity. Instead, Oglethorpe currently purchases from Georgia Power over one million kilowatts of capacity in order to meet its members' requirements. Under these circumstances when SEPA generates power in excess of its requirements for its Georgia customers and capacity and energy in those amounts are to be credited to customers off of the Georgia Territory for SEPA's account, the power that is available for export is not attributable to oglethorpe having met the conditions established by the Atomic Energy Commission License Conditions.

On April 10, 1989, Georgia Power advised SEPA that Georgia Power still planned to provide the transmission service described in its existing contract with SEPA. We also requested that SEPA consider our opinion that oglethorpe could not legally provide the service, as we understood oglethorpe's offer.

l .

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SENT SY:0gletnerpe Poner i 5- 9-89 1 2:20PM i

• 9-1202'iB582921# 4 Mer e r e r atacy" l May a, 1989 1 Paga 3

)

I Even ir you casagree with our interpretation of the License I Conditions and transmission tariff, we hope you will agree that it is appropriate for Georgia power to perform the

(~'gg'servicesithaspreviouslycontractedwithSEPAtoprovide g ecause Georgia Power's contract substantially predateu your gy',aroposal,becausethissamecontracthasgreatlybenefited

. oglethorpe's members over the years, and because it makes economic sense for coorgia Power to provide this service at the price provided for in its contract with SEPA.

Very ly yours, M%

A. W. Dahlberg 1

9

fsesih:ogietnerne_ece. 2{

s-1s-8s : 2:40PM 0-12027858282

" l ogletnorpe Power Corporetlen- -

q F.F.(Bud) Stacy 220 East Exchange Place .

Presidem and Chief Executive Officer - P.o. Box 1349 Tucl:er, Georgia 300851849 1 (404)496 7000  !

l May 4, 1989 l 4

BY liAND ,

{

Mr. A'. W. Dahlberg, President Georgia Power Company 1 333 Piedmont Avenue, N.E.

Atlanta,_ Georgia 30308

Dear Bill:

4 Oglethorpe Power Corporation 10 informed that Georgia Power 1 Company staff recently sought to prevent consummation of a proposed wheeling transaction between Oglethorpe Power and the o Southeastern Power Administration ("SEPA"). By this letter, Oglethorpe Power demands'that Georgia Power refrain from any i further interference with Oglethorpe Power's contractual  !

relationships and rights to use the Georgia Integrated l Transmission' System ("ITS") for competitive off-system '

transactions.- Georgia Power'should immediately inform SEPA that' Georgia Power will not interfere with or block Oglethorpe Power's use of the ITS for transmitting SEPA power, whether to Oglethorpe 1 Power's members, or to other SEPA customers ,

The proposed transaction contemplates that, offactive June 1, 1989, Oglethorpe power would use the ITS to transmit SEPA power to Oglethorpe Power's members, and to transmit SEPA power to the Georgia-Alabama border for delivery to Alabama Electric Cooperative or its members. Oglethorpe Power understands, however, that a Georgia Power representative telephoned SEPA officials on April 10, 1989, and asserted that Oglethorpe Power cannot wheel SEPA power to the Georgia-Alabama border.

Oglethorpe Power has the present right, pursuant to the 1974 Atomic Energy Commission ("AEC") Settlement Agreement and the ITS Agreement, to immediate use of the ITS (including the interconnection points with other systems) for all purposes, l including off-system sales and wheeling transactions. Georgia {

Power's effort to block such use in the proposed SEPA  !

transaction, if confirmed, would be a breach of its obligations j under these agreements. It would also be anticompetitive.

Georgia Power's denial of Oglethorpe Power's right to use the essential ITS facilities for competitive off-system transactions i

. such as this one effectively precludes Oglethorpe Power from {

competing with Georgia Power and The Southern Company in the  ;

relevant markets. My March 8 letter and Oglethorpe Power's i l

I An sectnc Memoennip cooperative l

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.. SEVTjBY:0glethorpe Power i 5-16-88 i 2:42PM i

• 9-12027858292:# 3 Mr. A. W. Dahlberg, President Page 2 l May 4, 1989 March 17 comments to.the Nuclear Regulatory Commission provide-greater detail on these points.

Despite Georgia Power's effort to preclude consummation of this valuable opportunity for Oglethorpe Power, Oglethorpe Power presently is attempting to salvage the proposed wheeling agreement with SEPA. There also are other financially advantageous transactions available to Oglethorpe Power. In light of the' immediacy of these transactions and in order to reduce further injury to its business, I seek your prompt assurance that Georgia Power will desist from interfering with Oglethorpo Power's use of the ITS for wheeling and other off-system transactions, and confirmation that SEPA has been informed of oglethorpe Power's equal right to immediate us:e of the ITS for off-eystem transactions.

Accordingly, Oglethorpe Power expects a response and corrective action by Georgia Power no.later than May 8, 1989. Oglethorpe can only regard a failure to respond as Georgia Power's adherence to the unjustifiable position that Georgia Power has expressed to SEPA.

Very truly yours, F. F. Stacy President and Chief Executive Officer FFS:brm t

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. Department of Energy Southeaster Power Administration Elberton, Georgia 30635 April 25, 1989 Mr. George Taylor Senior Negotiator Oglethorpe Power Corporation Post Office Box 1349 2100 East Exchange Place Tucker, Georgia 30085-1349

Dear Mr. Taylor:

Enclosed is a copy of the minutes of a meeting on April 5,1989, between Southeastern Power Administration and Georgia Power Company. Also enclosed is a copy of the minutes of a phone call between Mr. Leon Jourolmon of Southeastern and Mr. Gary Rakestraw of Georgia Power Company 6n April 10, 1989.

Sincerely, C3 U2on urolmon, Jr. l Dir oor, Power Mar eting Division Enclosures t

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= Department of Energy Southeastern Power Administration Elberton, Georgia 30635 April 24,1989 Memorandum To: Files

Subject:

Meeting with Georgia Power Company on April 5,1989, regarding Georgia-Alabama Wheeling Arrangements On April 5,1989, we met with Georgia Power Company concerning the whccling arrangements af ter June 1,1989. The attendeer were as follows:

Irby Ballard Georgia Power Company James Wynn Gary Rakestraw Ken Rucker Southeastern Leon Jourolmon Jim Lloyd "

Lee Rampey We described the current negotiations with Oglethorpe Power Corporation (OPC); Municipal Electric Authority of Georgia (MEAG), Alabama Power Company and Alabama Electric Cooperative (AEC).

i We stated that the contract between Southeastern and Georgia Power Company allows OPC and MEAG to assume responsibility of whccling to their members.

Southeastern, OPC, and MEAG are negotiating contracts to allow this I

wheeling to take place effective June 1,1989. There arc no major issues lef t to be agreed upon, and contracts have been drafted. Southodstern believes that this is allowed by the Georgia Power Company-Southeastern contract.

However, there are four main issues to be discussed with Georgia Power as follows:

1. We stated that Acworth and Hampton are not members of MEAG; however, MEAG is willing to whccl the power to them. We understand there is a problem with MEAG wheeling to Hampton because MEAG does not own any of the facilitics at the distribution level that Hampton receives delivery.

HEAG has told Southeastern that it is willing to rent the distribution level equipment from Georgia Power in order to deliver to Hampton.

2. We stated that Southeastern did not want to deliver power to a customer at the bus bar. Therefore, we have asked MEAG to wheel l Southeastern power to Dalton.

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3. We stated that AEC is building an interconnection to West Point.

At the time that the line is complete, Southeastern will not be willing to pay to have anyone wheel power to the Alabama-Georgia border for the 78 megawatts at the West Point Project.

4. We stated that OPC had expressed an interest in wheeling all of Southeastern power to the borders of Alabama and Florida. ,

Mr. Rakestraw stated that of the four issues the biggest issue is the 78 mw at West Point not flowing to the border after the AEC interconnection is

, made. He stated that the arrangements appeared to take Georgia Power completely out of wheeling for Southeastern.

We stated that we understood that Georgia Power preferred to be out of all wheeling arrangements.

He said that there would be a meeting with Fred Williams and Bob Forry in the afternoon. He will need to discuss the issues with Mr. Williams and Mr. Forry. He said he would get back to Southeastern by phone by Monday, April 10, with their comments.

We discussed the Thompson-Weinman arrangement briefly. We requested a copy of the current Georgia Power Company-Thompson Weinman contract.

k= /m Lo rolmon, Jr Di or, Power Marketing Division t

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Departriant of Energy Southeaster Power Administration Elberton, Georgia 30635 F April 25, 1989 k

Hemorandum To: Files

Subject:

Phone Call from Georgia Power Company on April 10 Regarding Georgia-Alabama Wheeling Arrangenients Mr. Gary Rakestraw called to discuss the whccling arrangements that Southeastern had presented at the April 5,1989, meeting.

lie stated that he had met with Mr. Fred Williams and Mr. Bob Forry to discuss South 3 astern's proposal. He stated that Mr. Williams had already discussed these issues with Mr. Geisinger.

.F Georgia Power's position is that a 1974 settlement agreement between Georgia Power and the preference customers allows OPC and MEAG to only provide transmission services to their members until the proforence customers become self suf'icient. Therefore, HEAG cannot wheel to Acworth, q Hampton, and Dalton; and OPC cannot whcci to the border.

In addition, Mr. Rakestraw stated tilat Georgia Power does not aDree that there will be no wheeling charge to the border for West Point's 78 ma's after the AEC interconnection is made at the West Point Project.

Lc6n olmon, Jr.

Direc r, Power Marketing Division l

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. Oglethorpe Power Corporation 2100 East Exchange Place P.O. Box 1349 Tucker. Georgia 300851349 (404)496-7600 May 2, 1989 Mr. Fred D. Williams Vice President, Bulk Power Market Georgia Power Company 333 Piedmont Avenue - 19th Floor Atlanta, GA 30302

Dear Mr. Williams:

This letter is to advise Georgia Power Company that Oglethorpe Power Corporation is entering into an interchange transaction whereby Oglethorpe will be purchasing 200 megawatts of firm capacity and energy. The transaction is to begin on June 1, 1989, and is expected to continue through May 31, 1992.

After all agreements have been executed,.Oglethorpe Power will

, provide Georgia Power with the information necessary to implement I the interchange.

Oglethorpe Power Corporation will notify Georgia Power Company if the amount, timing or duration of the transaction is changed.

> Oglethorpe Power will be using the northern ITS interconnection points to accommodate this transaction.

Also please be aware that Oglethorpe Power will be pursuing other interchange activities of firm (and non-firm) nature using this same (and other) contract path (s).

Should Georgia Power be aware of c2.y reliability problems or other impediments which will adversely impact Oglethorpe Power's ability to conduct these transactions, please advise.

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' An Electric Memoership Cooperat,ive i

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Mr. Fred D. Williams Page 2 '

1 May 2, 1989 Please sign below and return to my attention no later than 3:00 pm, May 5, 1989, to signify Georgia Power's agreement to implement this transaction by June 1, 1989.

Since y A .,

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To W. (Tom Siegrist r ram Director stem Operations AGREED TO BY:

Georgia Power Company TITLE:

DATE:

TWSabjn cc F. F. Stacy A. W. Dahlberg Tom Kilgore Grady Baker Hand Delivered

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I PedrrE AM T At n1 Georga 30308 Teleonone 404 526 7211 Mailing Address-t Post office Box 4545 Atlanta, Georgia 30302 ,

GeorgiaPower Fred D. Williams ""# ' ' " ~ ~ " ' '~ ~ "

Vice President Bulk Power Markets May 4, 1989 Mr. Thomas W. Siegrist Program Director System Operations Oglethorpe Power Corporation 2100 East Exchange Place  ;

P. O. Box 1349 Tucker, Georgia 30085-1349

Dear Mr. Siegrist:

As to your letter dated May 2, 1989, advising Georgia Power Company of Oglethorpe's entering into a purchase of 200 megawatts of firm capacity and energy for the period June 1, 1989 through May 31, 1992, we have several comments.

The current effective Partial Requirements ("PR") tariff requires Oglethorpe to give Georgia Power Company no less than two (2) years notice for their intent to reduce PR l purchases by 200 megawatts. Since this is a filed tariff at the FERC, Georgia Power Company would be unable to give Oglethorpe credit under the tariff for this capacity purchase. Oglethorpe can receive credit for the energy.

f If Oglethorpe wishes to purchase the 200 megawatts of capacity under the above condit1ons or decides to purchase energy only, Georgia Power Company is prepared to expeditiously negotiate an agreement to implement or schedule this transaction.

Georgia Power Company is concerned that this transaction is ,

to end in 1992 with no statement as to Oglethorpe's plans to l replace the 200 megawatts.

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Mr. Thomas W. Siegrist May 4, 1989 Page 2 Just over one week ago at the April 24th meeting of the Joint Committee, each company was to present its generation expansion plans. Oglethorpe made no mention of its plans to pursue off-system capacity purchases. In fact, Oglethorpe said its plan was still under review but stated its forecast and the territorial forecast showed a possible need as early as 1993, and that its combustion turbine project could possibly meet this date.

As far as any reliability problems or other impediments, i

Georgia Power is unable to address this Question without more knowledge of the types of transactions and sources c" the purchases (transmission systems to cross, generation type, contracts, etc.)

Sincerely, vb _

Fred D. Williams 7

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