ML20247H996
| ML20247H996 | |
| Person / Time | |
|---|---|
| Site: | Limerick  |
| Issue date: | 05/15/1989 |
| From: | Lambe W Office of Nuclear Reactor Regulation |
| To: | Hunger G PECO ENERGY CO., (FORMERLY PHILADELPHIA ELECTRIC |
| References | |
| A, NUDOCS 8906010003 | |
| Download: ML20247H996 (45) | |
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May 15, 1989 o
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Mr. George A. Hunger, Jr.
Director--Licensing Philadelphia Electric Company Correspondence Control Desk P.O. Box 7520 Philadelphia, PA 19101 Re: Limerick Generating Station, Unit 2, Docket No. 50-353A: Antitrust I
Operating License Review--No Significant Change Finding
Dear Mr. Hunger:
Pursuant to the antitrust review of the captioned nuclear unit, the Director of the Office of Nuclear Reactor Regulation has made a finding in accordance with Section 105c(2) of the Atomic Energy Act of 1954, as amended, that no significant antitrust changes have occurred subsequent to the antitrust operating license review of Unit I of the Limerick Generating Station.
This finding is subject to reevaluation if a member of the public requests same in response to publication of the finding in the Federal Register. A copy of the notice that is being transmitted to the Federal Register and a copy of the Staff Review pursuant to Unit 2 of the Limerick Generating Station are enclosed for your information.
Sincerely, 1
Original signed by/
William M. Lambe Sr. Antitrust Policy Analyst Policy Development and Technical Support Branch Program fianagement, Policy Development and Analysis Staff Office of Nuclear Reactor Regulation
Enclosures:
As stated Distribution
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LIMERICK GENERATING STATION UNIT 2 PHILADELPHIA ELECTRIC COMPANY DOCKET NO. 50-353A FINDING OF NO SIGNIFICANT ANTITRUST CHANGES Y
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CONTENTS I.
Introduction........................ Page 1 II.
Pennsylvania Electric Power Industry.
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III. Previous Antitrust Reviews................... 4 u
A.
Limerick CP Review B.
Alton Generating Station CP Review C.
District and Appeals Court Proceedings D.
Limerick 1 OL Review IV.
Changes Since the Limerick 1 f>L Review.............
9 A.
Interconnections if B.
Transmission Services t
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C.
Wholesale Power Developments i
V.
Summary and Conclusions 12 Appendices A.
Department of Justice Advice Letter dated May 20, 1974.
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l B.
Limerick Generating Station Unit 1 Significant Change Analysis j
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I.
Introduction A prospective operating licensee is not required to undergo a formal antitrust review unless the Nuclear Regulatory Commissior. (NRC or Commissionji determines that there have been "significant changes" in the licensee's activities or proposed activities subsequent to the review by the Attorney General and the Commission at the construction permit (CP) stage.
Concentration on changes in the licensee's activities since the previous antitrust review expedites and focuses the review on areas of possible competitive conflict heretofore not analyzed by the Attorney General or the Commission.
In its Summer decir. ion,2 the Commission has provided the staff 8 with a set of criteria to be used in making the significant change determination for operating licens. (OL) applicants.
The statute contemplates the change or changes (1) have occurred since the previous antitrust review of the licensee (s); (2) are reasonably attributable to the licensee (s); and (3) have antitrust implications that would most likely warrant some Commission remedy.'
2The Commission has delegated the responsibility for making a significant change determination to the Director of the Office of Nuclear Reactor Regulation.
2 Virgil C. Summer Nuclear Station Unit 1, Docket No. 50-395A, June 26, 1981 at 13 NRC 862 (1981).
8" Staff" hereinafter refers to the Policy Development and Technical Support Branch of the Office of Nuclear Reactor Regulation and the Office of the General Counsel.
4 Commission Memorandum and Order, p. 7, dated June 30,1980 (CLI-80-28).
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1 To warrant a significant change finding, the particular change (s) must meet
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each of these criterion.
l The staff conducts separate antitrust operating license reviews of multiunit nuclear production facilities when the second or successive unit is scheduled to be licensed eighteen months after the previous unit has been licensed.5 The antitrust operating license review of Unit 1 of the Limerick Generating Station (Limerick 1) was completed on July 11, 1984, and the operating license was issued on August 8, 1985.
The issuance of an operating license for Unit 2 of the Limerick Generating Station (Limerick 2) is scheduled for early August of 1989 -- four years after licensing of Unit 1.
As a result of this lapse of time, the staff conducted a separate antitrust operating license or "significant change" review for Liinerick 2.
The staff requested updated Regulatory Guide 9.3 information from the licensee, Philadelphia Electric Company (PEco), and reviewed the data submitted by PEco in conjunction with the CP reviews of the Limerick and Eulton Generating Stations as well as the OL review for Limerick 1.
After reviewing these and other pertinent data, the staff has determined that none of the changes that were identified were significant in an antitrust context.
Constouently, the staff is not recommending that an affirmt ive "significant change" finding be made pursuant to the antitruct operating license review of Limerick 2.
SCf., " Procedures for Meeting NRC Antitrust Responsibilities",
NUREG-0970, p. 9.
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II.
Pennsylvania Electric Power Industry The electric bulk power industry in the state of Pennsylvania has not changed significantly since the staff conducted its operating license review of Limerick 1.
Although the Philadelphia Electric Company, the sole owner of Limerick 2, is a major factor in the eastern segment of the Pennsylvania bulk power services market (i.e., those products and services associated with the production and utilization of power and energy for use primarily at the wholesale or non-retail level of consumption), operation of the Pennsylvania-New Jersey-Maryland (P-J-M) power pool has enabled many power systems to directly (through membership in the pool) or indirectly (through i
transactions with a pool member) share in the economies and benefits associated with baseload generation and transmission of power and energy throughout the three state area.
As indicated in the staff's Limerick 1 operating license antitrust review, l
P-J-M operates as a single control area with free-flowing ties among members.
Generation and transmission are centrally dispatched to meet overall pool requirements according to economic and reliability criteria, regardless of owner-ship.8 I
SStaff operating license antitrust review entitled, " Limerick Generating Station Unit 1 Significant Change Analysis", p. 7 (hereinafter, Limerick 1 OL Review).
4 Though membership in the P-J-M pool is restricted to power systems that generate power and energy, non generating systems can realize the benefits associated with baseload generation and centralized dispatch indirectly, through a vast transmission interconnection network that has been established by the pool over the years since its inception in 1927.
Implementation of P-J-M policies and operations has effectively decentralized many of the individual, localized service areas of its member systems, thereby opening up competitive alternatives to those systems with access to the pool.7 III.
Previous Antitrust Reviews Philadelphia Electric Company has undergone antitrust reviews at the construction permit stage for Limerick 1 and 2 and for Fulton Generating Station, Units 1 and 2 (Fulton).
The most recent antitrust review of PECo was a "significant change" or antitrust operating license review for Limerick 1 which was completed on July 11, 1984.
h A.
Limerick CP Review The Department of Justice in its advice letter to the Atomic Energy Commission dated August 16, 1971, pursuant to PEco's application to construct
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7Although the City of Phi 1adelphia and its suburbs represent 95% of PEco's i
service area, PEco is actively involved with other power systems in the l
Pennsylvania-New Jersey-Maryland area in both joint generatica and trans-mission projects that enable PEco to fully utilize and tenefit from the P-J-M Interconnection -- e.g., as a joint owner of the Peach Bottom and Salem nuclear facilities and as a participant in the design, planning and construction of the Lower Delaware Valley 500 kV transmission system.
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' Limerick 1 and 2, concluded that, After examination of the application and review of relevant data, we conclude that the activities
-proposed under the~ license applied for by Phila-delphia Electric Company, as described in the application, would not create or maintain a situa-tion inconsistent with the antitrust laws.s From the time the Limerick CP antitrust review was completed in 1971 until the time the Department of Justice issued its advice letter pursuant to PEco's application to construct the Fulton Generating' Station in 1974, a dispute
- materialized between PEco and a wholesale cu:tomer, the Borough of Lansdale, l
Pennsylvania (Borough or Lansdale).
B.
Fulton Generating Station CP Review q
Lansdale alleged during the Fulton CP review that PEco had refused to provide access to its transmission grid -- access, according to Lansdale, that was
,r l;f necessary to effectively compete with PEco.
During the mid-1970's the Borough g
of Lansdale was a full requirements wholesale customer of PECo..In the late
- 1970's in an effort to assert more control over its electric system and reduce costs to its customers, Lansdale began to " shop" for alternative power supply sources in anticipation of a significant rate increase by PEco when the f
sDepartment of Justice advice. letter dated August 16, 1971, p.1.
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PEco/Lansdale wholesale requirements contract was due to + aire in 1978.
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i Discussions between PECo, Lansdale, the Department of Justice and' Atomic Energy Commission staffs during the Fulton CP antitrust review.resulted in a set of commitments agreed upon by PEco that would not only grant access to the Fulton Generating Station, but specifically grant the Borough of Lansdale access to i
1 PEco's transmission grid.
(A copy of the Fulton CP advice letter is attached as Appendix A.) The Fulton. nuclear facility was subsequently cancelled by PEco
. in December of 1980. ~As a part of the withdrawal of the application and cancellation of the facility, the commitments made by PECo to the Department of Justice to grant access to Fulton as well as access to the PECo transmission 1
grid never became license conditions per se and are not within the Commission'~s jurisdiction.
Consequently, any enforcement of these commitments (if deemed necessary) would not be warranted by the Commission.'
C.
District and Appeals Court Proceedings l
.o As indicated supra, during the mid-1970's Lansdale and PEco became embroiled in a dispute revolving around access to PEco's transmission grid. The genesis of the dispute was in large part due to the oil embargo of 1973.
PEco's fuel i
costs in the 1970's were closely tied to oil and the volatility of the cost of oil as a generating fuel. When faced with the rapidly escalating cost of oil as a result of the 1973 embargo, PEco attempted to escape from its five l
'This proceeding was dismissed'by the Atomic Safety and Licensing Board on October 23, 1984 (20 NRC 1333 (1984)).
See also ALAB-657 (14 NRC 967 (1981)).
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7 year, fixed-rate all requirements contract with the Borough of Lansdale which was scheduled to expire in 1978.
Lansdaleprevailedincourtandhhe contract remained intact until its expiration in 1978. When the contract expired, PEco attempted to increase the rate of the new contract to Lansdale by over 200 percent.
As a result of the proposed rate increase, Lansdale's efforts aimed at securing another source of wholesale power intensified.
Ultimately, Lansdale secured a series of cohemitments for a block of hydro power from the New York Power Authority.
In order to consummate the transaction, Lansdale needed access to PEco's transmission grid for the last portion (one-to-two miles) of the tie into the Borough's electric system. When PEco refused to wheel the power, Lansdale filed an antitrust suit against PEco in 1978 in the U.S. District Court for the Eastern District of Pennsylvania.
In brief, Lansdale's suit alleged that PECo was a monopolist, had abused its monopoly power and enhanced its monopoly position in generation and trans-mission by refusing to allow a competitor to secure an alternative source of power.10 The District Court ruled against Lansdale, stating that PECo did not I;
possess monopoly power in the relevant geographic market and consequently could F
g not abuse any alleged monopoly power.
Lansdale appealed the decision to the U.S. Court of Appeals for the Third District which ultimately upheld the lower Court's decision.
i 10Lansdale alleged that these. activities represented a violation of Section 2 l
of the Sherman Act.
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8 The District and Appeals Court proceedings revolved around the interpretation of what the " relevant geographic market" was and whether or not PECo possessed monopoly power in this market.
Lansdale posited the relevant geographic market as PECo's service area and alleged that PEco possessed monopoly power (in l
generation and transmission) in its service area.
Moreover, Lansdale further alleged that PEco enhanced its monopoly position by refusing to wheel for the Borough.
PECo contended that the relevant geographic market was much broader than its service area and that even if the market was considered to be its service area, Lansdale could build its own transmission line the remaining one-to-two miles to Pennsylvania Power & Light Company (PP&L) to consummate its purchase agreement with the New York Power Authority.
PECo further stated that.
the cost of building this line would be less than it would cost PECo to wheel the power for Lansdale. As a result of the court rulings, Lansdale began builting a 69kV transmission intertie to PP&L in 1984 and completed the tie in i
1985. As of July 1,1985, Lansdale stopped receiving power from PEco and now purchases its wholesale power requirements from PP&L (85-90%) and the New York Power Authority (10-15%).
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3 D.
Limerick 1 OL Review i
As required by Section 105 of the Atomic Energy Act of 1954, as amended, the i
i staff conducted an antitrust operating license review of Limerick 1 to deter-
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mine whether or not any significant changes in the licensee's activities had occurred since the antitrust' review at the construction permit stage.
On July 11, 1984, the Director of the Office of the Nuclear Reactor Regulation l
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9 (Director) made a " Finding of No Significant Antitrust Changes" pursuant to PEco's operating license application for Limerick 1.
The staff analysis (attached as Appendix B) supporting this finding concluded as follows:
a Philadelphia Electric Company (PEC) has applied for a license to operate the Limerick Generating Station, Unit 1 (Limerick 1).
Staff has examined the activities and proposed activities of PEC since the Limerick I construction permit (CP) antitrust review was completed in 1971 to determine if any "significant changes" of an antitrust nature have occurred.
In its analysis, staff has considered changes by PEC with respect to its participation in the Pennsylvania, New Jersey, Maryland (P-J-M) power pool and its coordination and wholesale arrangements outside of the pool.
None of these changes appear to be [of] a "significant" antitrust nature.11 IV.
Changes Since the Limerick 1 OL Review From the data provided by PECo in response to the staff's updated Regulatory Guide 9.3 request,12 as well as contact with members of the industry and a review of relevant public data, the staff has identified a number of changes in PEco's activities since the previous antitrust review -- in this instance, since the antitrust operating ifcense review of Limerick 1 which was completed I
22 Limerick 1 OL Review, p. 22.
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22 Notice of receipt of the Regulatory Guide 9.3 data was published in the Federal Reaister on September 19, 1988 (Vol. 53, p. 36381).
The notice provided an opportunity for public comment on antitrust matters that have i
l arisen since the completion of the Limerick 1 antitrust operating license review.
No comments were received.
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10 in 1984.
The focus of the significant ch.tnge review is on changes that have competitive significance. To address all of the changes in the licensee's activities, regardless of whether or not said changes could reasonably affect the competitive prou ss, would not conform to the spirit or tenets of Lection 105, nor would such an exemise contribute to the efficiency of the overall licensing process. With this focus as background, the staff has identified the following changes in the licensee's activities:
A.
Interconnections The Borough of Lansdale severed its interconnection with PEco on July 1,1985.
As indicated supra (see III. B. and C.), Lansdale had been searching for alternative sources of wholesale power since the 1970's. The construction of a transmission intertie to PP&L and the severance of its tie with PEco represent a culmination of this lengthy effort by Lans ile.
Lansdale exer-cised a competitive or market-base ( option and made the decision to change its wholesale supplier.
Staff views this change as an e,xample of the competitive 4
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process at work in the P-J-M pooling environment.
B.
Transmission Services Over the period from 1983 through 1987, PEco made various additions and upgrades to its transmission system and interconnections servicing a wholesale customer, conowingo Power Company (Conowingo).
These actions were taken primarily to
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' wh'olly-owned subsidiary.
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C.
Wholesale Power Developments Sales and purchases of bulk power are common among large integrated electric systems.
Negotiations pursuant to prospective sales and purchases are obviously even more common place in the day-to-day working environment of most utility systems.
PECo and neighboring electric systems in the P-J-M pooling area have been no exception to this rule.
In December of 1987, Atlantic City Electric Company, Delmarva Power & Light Company and General Public Utilities Corporation contacted PECo and expressed interest in purchasing capacity and energy from PEco subsequent to the commer-cial operation of Limerick 2.
PEco offered to sell system capacity and energy in the amounts requested by these power systems in June of 1988.
Contractual g.
- negotiations were initiated as a result of the discussions among the interested parties.
,3 Similarly, in December of 1987 the Public Service Electric and Gas Company, Baltimore Gas and Electric Company and Potomac Electric Company were notified by PEco of the availability of capacity and energy subsequent to the commercial operation of Limerick 2; however, there was no expression of interest by any of these entities.
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On December 31, 1984, in accordance with a contract filed with the Federal I
Energy Regulatory Commission, PEco ceased sales to Jersey Central Power and j
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Light Company.
Staff views the changed activity described above as representative of normal business dealings and operations among utility systems that are engaged in coordination and competition to better serve the needs of their customers.
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Staff has no reason to believe, or data to indicate, that any abuse by PEco of i
its market power or mar $et posit'on played a significant role in these negotiations or tr.. actions.
V.
Sumary and Conclusions Section 105c of the Atomic Energy Act of 1954, as amended, provides for pre-licensing antitrust reviews of comercial power reactors at the construction
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permit and operating license stages of the licensing process. The antitrust
- i operating license review is not intended as a de novo review but is focused.
only on those activities of the licensee (s) that have occurred since the completion of the construction permit review.
This concept of reviewing only significant changes in the licensee's activities at the operating license s_tage has been applied by the staff to reviews of multiunit plant applications. For those plants with multiple reactor licenses, the staff conducts separate antitrust reviews for each reactor when the reactors
.are licensed on a delayed or staggered schedule, i.e., when the reactors are scheduled to be licensed eighteen months or more apart.
13 Hu As indicated supra, the antitrust operating license review of Unit 1 of the Limerick Generating Station (Limerick 1) was completed in July of 1984 and the reactor was licensed in August of 1985. Unit 2 of the Limerick Generating Station (Limerick 2) is scheduled to be licensed in August of 1989 and in light of the five years since the completion of the previous review of the licensee and four years since Limerick I was licensed, the staff initiated a separate antitrust review of Limerick 2 -- with the focus of the review on any significant changes in the licensee's activities since the completion of the previous review in 1984.
The changes in the licensee's activities identified by the staff since the previous antitrust review have largely been associated with the normal business operations of a fully integrated and multi-interconnected utility system such as the licensee, Philadelphia Electric Company (PECo). PECo has been actively involved with other interconnected power systems in the Pennsylvania-New Jersey-Maryland (P-J-M) power pool and adfacent areas in an effort to improve I
the reliability and efficient operation of its power system. PEco has approached and has been approached by several P-J-M members and adjacent systems pursuant to the possibility of initiating various capacity and energy transactions associated with the commercial operation of Limerick 2.
Though not all of these negotiations have proven to be fruitful to all of the parties concerned, the staff has no reason to believe that any undue (anticompetitive) pressure was exerted by PECo in any of these negotiations.
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14 A dispute between PEco and one of its wholesale customers, the Borough of Lansdale, Pennsylvania (Borough or Lansdale), that developed as a hesult of the oil embargo of the 1970's, culminated in 1985 when Lansdale severed its ties with PECo and began taking its power and energy requirements from sources other than PECo. The staff reviewed the history associated with this dispute and determined that there was no basis to conclude that PEco's actions, which precipitated Lansdale's changing pcwer suppliers, were inconsistent with the antitrust laws.
Staff believes that PECo's activities since the Limerick 1 antitrust operating license review, considered in conjunction with the overall P-J-M pooling environment, do not represent "significant changes" in the licensee's ac'tivities since the previous antitrust review and recommends that no' affirmative signi-ficant change determination be made pursuar.t to the operating license for Limerick 2.
3.
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I APPENDIX A S
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PHILADELPHIA A El.ECTRIC COMP / HY i
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'"" U Honarc.ble Thoch E. K.tuper 7
Assistu:a A* torney Gcr. oral Antitru:t Divisica Ucp2::rimt cf Justice.
Wenhing:nn, D. C. 20530
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Re:
Philadelphia Elcetric Cc=pany -
t Fulton Generating Station Units 1 and 2 AEC Docket Nos. 50-463A cnd 50-466A Depercent c^~.!u_ctic_e Fik 60-415-54 ge Doar Mr. F.aupes.:
pan.j mmp giki Attached to this letter is a statetent of corporate policy k-.
of Philudelnhir. Electric Cce::.nv.
This sr. star.ent is c.ade with r
qp che uuers;ancing ths: the Lep.*rt:.e:tt of.!ustice will recorune f
to the e.:cmic Energy Comission that no antitrust hearing will 4
be retuired and, on that basis, Philadelphia Electric Cc pany agrc27 Int:0 the c:,m.itments contained in the stat e.cnt cay be incia. ice! c.; condicio.u to the AEC construction permit cnd
'oper.:.ing licenses for the Fulton Generacing Station,.
Ti.e underibnmi he bsten cuthorii:ed by Phils.dciphia Bicct ric Ccmpany to act en its behalf dnd to subrait thin letter and the et:c.:ht.d seetcwcnt.
Yours very truly, h
' ED'.1ARD C. i!AUER, JR.['
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69 Statement c! Yoiic:
1, Ph!!adelphia Electric company (" Company") will nf ford an opportunity to gt.iiipe.tc in the Fulton Generatirm h::'
5 Lais.c.0,.__Q.9.5_c5...Liind 2, for Clirt'erm of the-li~c'ciisc, OFIi'7 n
c.< tension er reneval t!.ereof, to nt the genercting, transmissico and/g's,hpr,antjty engagitig 10 j
or di t.rlbution of electric g; ;'
Ipower ir, the C'ty of 1 philadelphia, and in'the counties of Bucks, y,',
l Mont go:. cry, Delaware. Chester and Lancaster in, Pcnnsylvaril.a f
1 ond in the enan:les of Cecii and Harford in Maryland which
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has onde a written request for participation in the Fulton Cenerating 5tt.tir.n. i! nits 1.ind '!, by February 28, 1974, 52 throuif.h a reasensb10 ownr-W a--ix areer !A such unit (s @
throuSh contractuzi purchases cf unit power sublect to re.ason-O!"p"; able t.erms ' ann conuiticns anri on a'i.iasis that will fully ccm-M
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po::Jate Cc=pany in: lits covi.s (in:1udios a recsonable return o.-
in /e.c ta.:e.n:1.
- .iuch opportunity to participate shall include
,,,y arr:n,cet. tents for reasonable reservu prot.cetion and associated hj-transmission service by Cn: pany, on a basis that. will iully L.g ec:pensate C =pany for its costs (includine a reasonnbic return i
.n on inwesta e.ot).
Any such entfty musc enter into executory iliv agree.a*nts to accr:.piish the foregoint; no lat.e: than May 31, 1973.
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2.
Cc=pany shn11 facilitate the transminion of bulk o
power over its transainsion f ccilities betucin the. F.orcur,h of Ldii::cni. una a.ny m.6t-r i. sulk poiidr entTt7prDVi'dET'tii'If (1) perm 15ct,n to uM Lisc the t.ranr. mission lines of other electric pow *r syster4s necessary to the effectuation of the transactiva has been obtr.ined,.1od (2) the.trrange.ments reasonably can he occo:rmedated frc:. a functional and technical standpoint.
Such transid ssion ur.ull be on termo that fully ec=pensat e Co=pany f or Its c0 u (includin;; a r6asonable return on investecnt), and thn neu apprN*d by the sppropriata reg.ulacory ugencies.
The Borough of !.ansdela'shall give reasonable advars::e not. ice of its schedule an.1 requircmene.<.
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Limerick, Generating Station Unit 1 Significant Change Analyses i
I.
INTRODUCTION II.
BACKGROUND A.
Construction Pemit Antitrust Review of Limerick 1 and 2 B.
Participation in the P-J-M Power Pool III.
CHANGES !INCE THE LIMERICK CONSTRUCTION PERMIT ANTITRUST REVIEW A.
Fulton Construction Permit Antitrust Review B.
Alleged Refusal to Wheel 1.
Antitrust Litigation Lansdale versus PEC 2.
Significance of the Refusa.] to Wheel C.
Changes in Coordination and Wholesale Arrangements 1.
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Amer.dments to' the P-J-M Interconnection Agreement 2.
Other Coordination Arrangements
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3.
Changes in Wholesale Arrangements IV..
CONCLUSION 1
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SIGNIFICANT CHANGE ANALYSIS I.
INTRODUCTION 1
l Section 105c(2) of the Atomic Energy Act of 1954, as amended, provides for an antitrust review of an operating license (OL) application if signifi-cant changes in the licensee's activities or proposed activities have occurred since the construction pemit. Authority to make the significant change determination has been delegated to the Director, Office of Nuclear Reactor Regulation (NRR) (for reactors) and to.the Director, Office of Nuclear Material i
Safety and Safeguards (NMSS) (for production facilities), as appropriate. The i
. Nuclear Regulatory Commission (Commission) in a Memorandum and Order (CLI l I
- 28) dated-June 30, 1981, set forth three criteria upon which to base a t
"significant change" determination as follows:
(1) the change or changes must have occurred since the previous construction pemit. review, (2) the change or changes must be attributable to activities or '
proposed activities 'of the licensee, and (3) the changed situation must have antitrust implications which would likely warrant a Comission remedy.
I 11N.tC817,824(1980).
See also 13 NRC 862 (1981).
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2 In connection with the Limerick 1 operating license application the 3
staff has reviewed the activities and proposed activities of the applicant, Philadelphia Electric Company (PEC), that have transpired since the previous construction permit review.
It is the sta,ff's conclusion that no "significant
' change" has occurred subsequent to the CP review.
II.
BACKGROUND A thorough assessment of the antitrust significance of changes in the activities (and proposed activities) of Philadelphia Electric Company (PEC) sinct the construction pemit antitrust' review of Limerick quite naNrally requires first understanding the specific situation existing at the time the CP review of Limerick was conducted. To some degree, this situation is revealed by examining the antitrust review conducted by the Department of Justice at the construction pemit stage.- Staff has supplemented this examination with an analysis of the Pennsylvania-New Jersey-Maryland (P-J-M) power pool, in which PEC participates.
2 Although the OL submittal refers to the two-unit Limerick Generating Station, this analysis applies solely to Limerick 1, with an expected OL issuance in 1985.
Limerick 2 is not expected to receive its OL until 1988; In cases where a second unit is not expected to be licensed prior to 18 months after the first unit, the staff's procedure is to conduct a second and separate review at the OL stage for the second unit.
3 The Site Analysis Branch, Office of Nuclear Reactor Regulation and the Antitrust Counsel of the Office of the Executive Legal Director.
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A.
Construction Pemit Antitrust Review of Limerick 1 and 2 -
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PEC tendered the Limerick construction pemit application to the Atomic Energy Commission in early 1971. The antitrust infomation included as part of the CP application indicated that PEC controlled approximately 5400 MW of capacity and served a peak load of 4700 MW.#
Over the next 10 years PEC expected to more than double its generating capacity to serve a correspondingly increased load. Apart from Limerick 1 and 2, the capacity additions were expected to include shares in four nuclear units, Peach Bottom 2 & 3 and Salem 1 & 2.
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Although PEC identified seven smaller utilities which were serving loads at wholesale or retail in areas adjacent to areas served by PEC, four of the seven systems were full members of the P-J-M power pool.5 Two of the seven systems Delmarva Power and Light Company (Delmarva) and Atlantic City Electric Company (Atlantic City), had partial repre-l[
sentation through PEC in~the P-J-M pool.
The remaining. system, th,e
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g Borough of Lansdale, Pennsylvania, was partially served at wholesale.
Lansdale's total peak load was 24 mi, 8 MW of which was supplied by PEC.
Apart from its participation in the P-J-M pool, subsequently discussed, infra, pp. 6-8, PEC had entered into several bulk power. coordination and l
4 Limerick Generating Station License Application, Exhibit D (hereafter referred to as Exh bit D), response to Question 1.
5 Exhibit D, responses to Questions 4 ond 9.
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interconnection arrangements with several investor-owned utilities
, with which it was directly or indirectly interconnected.
For txampic, two such agreements dealt with faci,11, ties for interconnecting at 132 kV and 220 kV with Public Service Electric and Gas Company (PSEG).6 These agreements essentially pemitted services to be exchanged over the inter-connections as were contemplated in other agreements between PEC and PSEG. Similarly, a 220 kV interconnection agreement with Baltimore Gas and Electric Company (BGE) provided for the rendering of services called for in the P-J-M power pool.7 PEC further mis a party to several ownership arrangements involving generation and transmission with other investor-owned utilities.8 Together with PSEG, Atlantic City, and Delmarva, PEC owned the proposed Peach Bottom 2 and 3 and Salem 1 and 2 nuclear units.
These utilities along with BGE, Pennsylvania Power and Light Company (PPL) and Jersey t
Central Power and Light Company (JCPL) also owned the Keystone Electric Generating Station. At the time of the Limerick CP application. PEC had further agreed with Atlantic City, Delmarva, JCPL and PSEG on the planning, design, and construction of the Lower Delaware Valley 500 kV transmission system.
6 Federal Energy Regulatory Commission (FERC) rate schedule (R/S) filings Nos. 20 and 25 of PEC, noted as PEC FERC R/S Nos. 20 and 25.
I PEC FERC R/S No. 22..
8 Exhibit D-1 of License Application.
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The foregoing infonnation was available to the Departmeat of Justice (Justice) during the CP review.
In its advice letter, Justice noted the absence of antitrust problems and adivsed the Commission that an antitrust hearing would be unnecessary with respect to Limerick.I Thus the Limerick CP antitrust review was completed in the Fall of 1971, although the construction permit itself was not issued until June 19, 1974.
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l I Letter from Richard McLaren, Assistant Attorney General U.S. Department of Justice to Bertram Schur, Associate General Counsel, U.S. Atomic Energy Commission, August 16, 1971..
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B.
Participation in the P-J-M Power Pool The other key feature of the bulk power supply framework in which PEC operates is its participation in the Pennsylvania-New Jersey-Maryland (P-J-M)interconnectionagreement.10 PEC, PPL, and PSEG had fonned a pool in 1927 principally to exchange capacity arising from seasonal load diversities, but in 1931 began operating on a single-system basis and soon found that the greatest revings occurred through the central economic dispatch o,f generation. With the addition of BGE and the four subsidiaries of GPU, the basic P-J-M agreement was executed in September,1956.
Potomac Electric Power Company joined in 1965.
DPL, ACE, and UGI also participated in P-J-M through separate agreements with a P-J-M member but had no voting power in decision-making.
In 1980, P-J-M's peak load of 34,400 MW was served with 45,000 ffW of generation capacity and nearly 6000 circuit miles of 230 kV, or greater, transmission lines, including c
1500 miles of 500 kV transmission.
The pool has 55 intrapool inter-connections among the members and 27 interpool ties.
In 1979 participa-tion in P-J-M saved in the aggregate over $400 million above costs that would have been incurred in individual system operation.
10 PEC FERC R/S No. 21. The discussion of this agreement is based on an examination of the rate schedule and on two publications by the FERC, Power Pooling in the United States, December 1981, and Power Poolino
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in the Northeast Region, February,1981, and a publication by the Economic Regulatory Administration Power Poolino: Issues and Approaches, January, 1980. With the exception described at pp. 16-18 this discussion does not distinguish between the agreement as it existed at the time of the Limerick CP review and the amendments made since then.
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P-J-M operates as a single control area with free-flowing ties among members.
Gener& tion and transmission are centrally dispatched to meet j
overall pool requirements according to economic and reliability criteria, regardless of ownership. The planned outages of generation and trans-mission facilities of individual members are coordinated and detemined by the pool.
The pool further detemines the pool's capacity responsi-bility and allocates it among the members, based largely, but not wholly, on peak load.
Other factors considered are unit size and the forced outage rate of a member's generation capacity relative to the average forced outage rate of all pool units.
A member can meet its capacity obligation through its own units, from purchases from other members or non-members, or by paying a pool-established capacity-deficiency charge.
The P-J-M agreement does not define any specific access rights to transmission facilities, though members are obligated to make available to-the pool transmission capacity excess to the member.'s needs.
- Yet, the use of central dispatch and operation of free-flowing ties guarantees I
in effect all members access to transmission to meet short-tem power needs through economy interchange, emergency service, and short-tem capacity purchases to meet capacity deficiencies in the short run. No transmission charge is ass'essed for these transactions.
Likewise, the pool agreenent does not specifically address long-tenn transmission needs.
However, most major transmission facilities are built to transfer power from major generating projects. Transmission expansion, ownership and cost allocation are detemined through separate agreements among the members.
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III. CHANGES SINCE THE LIMERICK CONSTRUCTION PERMIT ANTITRUST REVI In the period since the Limerick CP review s completed PEC has i
increased its generation capacity by over 40 percent to approximately 7800 M!.
With almost 900 miles of transmission lines, PEC serves a peak load of 5700 'tW.
PEC remains a participant in the P-J-M interconnection agreement. As at the
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construction permit stage, PEC provides firm wholesale power to only one other utility, the Borough of Lansdale, a full-requirements customer with a peak load of 27'MW in 1982.I1 Several changes in the activities &nd proposed activities of PEC have occurred during the period following the Limerick CP antitrust review.
Among these were PEC's planned participation in the Fulton Generating Station and PEC's activities with regard to wheeling and changes in coordination and whole-sale arrangements between PEC and other ut.111 ties. The antitrust significance of these changes is considered below.
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II Electrical World Directory. 1982-83 Electrical World,1982.
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A.
Fulton Construction Pemit Antitrust Review In November,1973 PEC applied to the Commission to construct and operate two additional nuclear generating units known as the Fulton Generating Station. Justice's advice letter with respect to Fulton noted the extensive current and planned participation of PEC in nine operating and planned nuclear units.12 It additionally reviewed the high degree of coordination PEC enjoyed through membership in the P-J-M power pool and through bilateral or multilateral arrangements with other systems.
4 Justice's study of the Fulton CP. application revealed antitrust problems only with respect to the relationships of PEC with the Borough ofLansdale,. Pennsylvania (Lansdale). Lansdale alleged that PEC was attempting to force certain rates on-it.
Prior to 1971, Lansdale had purchased partial requirements service from PEC.
In 1971 Lansdale i
decided to shut down its own generating plant and to seek wholesale power to serve all of its needs.
It opted to receive full-requirements service from PEC for five years at fixed rates, beginning in November, 1971.
In May,1972 PEC filed at the Federal Power Commission (FPC) for
.an increase in rates.
PEC had not filed the November 1971 contract at the FPC, and, consequently., was ultimately pemitted by the FPC to put its filed May,1972 rates into effect.
12 Letter fr omas Kauper, Assistant Attorney General, U.S. Department of Justice to Howard Shapar, Associate General Counsel, U.S. Atomic Energy Comission, May 20, 1974.
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. 4 44 s Lansdale raised these activities to Justice during the course of the Fulton CP review but in March,1974, the U.S. Court of Appeals
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ordered PEC to file the November,1971 contract with the FPC and held that the 1971 rates were presently effective.
Thus, Lansdale's concerns in this regard were alleviated.
Lansdale also had raised to PEC, by letter dated September 26, 1973, the possibilities of purchasing power from Fulton and of obtaining wheeling services from PEC.
Ultimately, PEC responded to these requests both by letter to Lansdale and by agreement with Justice as to proposed license conditions.
PEC agreed to offer participation in Fulton to Lansdale, to wheel power between Lansdale and other electric utilities and to permit these two conditions to be included in the Fulton construc-tion pemit. -
Coincident with, and attached to, the Fulton advice letter from Justice to the Commission was a statement of corporate, policy of PEC
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reflecting the ' commitment to wheel power to and from Lansdale and to' offer participation in Fulton.13 The commitment to wheel power appeared to be general with respect to the type of bulk power, stating: " Company shall 13 Letter from Edward Bauer, Vice President and General Couns'el, Philadelphia Electric Company to Thomas Kauper, Assistant Attorney General, U.S. Depart-ment of Justice, May 20, 1974..
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. facilitate the transmission of bulk power over its transmission facili-ties between the Borough of Lansdale and any other bulk power [ entity.
provided that (1) pemission to utilize the transmission lines of other electric power systems necessary to the effectuation of the transaction has been obtained, and (2) the arrar.gements can reasonably be accommodated frm a functional and technical standpoint."
PEC offered this statement of corporate policy with "the understanding that the Department of Justice would recommend to the Atomic Energy Commission that no antitrust hearing would be required (for Fulton]....". Justice did, in fact, make such a recommenda, tion and, thus, PEC's conditional statement of corporate policy became effective.
Further, PEC agreed in the letter to Justice, that the comitments con-tained in the-statement of corporate policy could be included as conditions to the AEC construction pemit and operating licenses for the Fulton Gene-rating Station. This agreement, to include the commitments as license conditions, became moot when PEC cancelled its plans for the Fulton station in 1980.I4 14 PEC sought to withdraw the CP application in December 1980, without a CP having been issued.
Subsequently, in February 1981, an ASLB dismissed the proceeding with prejudice, but the ALAB overruled the ASLB in November 1981, and remanded the matter to the ASLB to have a hearing on whether the proceeding should be teminated with prejudice or with-out prejudice.
In February 1984, the ASLB conducted a conference with the applicant, staff and intervenor. A decision by the ASLB is expected
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B.
Alleged Refusal to Wheel 1.
Antitrust Litigation: Lansdale versus PEC In July,1978, Lansdale filed a civil antitrust suit against PEC alleging that PEC had monopolized or attempted to monopolize wholesale and retail electric power markets in violation of Section 2 of the Shennan Act.
The primary allegation made was l
that PEC had exercised its monopoly power in the wholesale market by refusing to wheel power.15 In anticipation of the end of its fixed-rate five year whole-sale contract with PEC, Lansdale began to search for other possible wholesale power supplies. Apparently, it had reached tentative agreement with PASNY to supply preference hydro power and with Pennsyl-vania Power and Light Company (PPL) to supply wholesale power.
However, it was alleged that PEC refused to wheel the firm wholesale p.
power.
15 Lansdale also alleged that a price-squeeze had occurred. Given that FERC and the courts both consider the price-squeeze issue and that FERC and the State Public Utility Commission have the jurisdiction to order the obvious remedy, i.e., adjusting rates, the price-squeeze allegation is not addressed in this analysis.
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3 At trial, PEC offered as defense for its refusal to wheel whole-sale power that the individual PEC official who drafted the letter to Lansdale agreeing to wheel mistakenly failed to indicate in the letter that the wheeling applied only to participation by unit power or owner-ship in the generation of other utilities.
At trial Lansdale attenpted to show that the relevant market for wholesale power was PEC's service area, that PEC possessed monopoly power in the market, and,that PEC had exercised its mono-poly power by refusing to wheel.
PEC countered that the relevant market included an area encompassing several utilities and that in this market PEC had a low market share and otherwise possessed no monopoly powe'r.
Further, Lansdale needed only to construct three miles of transmission lines to connect to PPL and therefore really did not need wheeling from PEC.
Finally PEC stated it had refused to wheel only firm power and was willing to wheel unit. power or ownership shares of generation.
In response, Lansdale argued that environmental constraints would hinder the construction of trans-mission and that, in any event, PEC's letters to Lansdale in 1974 e
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comitted PEC to wheeling without regard to the type of power,
being wheeled.
The case was tried before a jury which was asked to answer a series of interrogatories.
However, unless the jury answered affirmatively to the interrogatory dealing with the possession of monopoly power in the relevant market, there would be no need to answer the other interrogatories.
In fact, the jury responded that PEC did not possess monopoly power in the relevant market.
Lansdale asked the District Court judge to set aside the verdict, but as refused, whereupon Lansdale appealed to the Circuit Court of Appeals. The Appeals Court upheld the jury verdict, agreeing with PEC that a broad wholesale market existed and that PEC lacked monopoly power in that market.16 Even accepting Lansdale's definition of a narrower market, the Appeals Court js concluded that Lansdale could have built a line to PPL and thus the s
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jury was reasonable in finding that PEC lacked monopoly power in I
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this market.
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Significance of the Refusal to Wheel
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The factual situation involved here appears relatively clear and may be corroborated by correspondence between Lansdale and PEC j
16 692 F. 2d 307
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.n, and by a review of the transcript in the antitrust proceeding and the Fulton advice letter.
It is clear that during this. time period PEC had made a commitment to provide some type of wheeling l
to Lansdale and that there was a misunderstanding between them as to the exact type of service tha.t was to be performed.
Ultimately, PEC made clear what type of service it was willing to provide.
However.-in view of the advice letter provided to the Commission in connection with the Fulton facility, the staff believes the refusal to wheel wholesale power represents a change in the activities of PEC during the period subsequent to the Limerick CP review.
However, the Commiss' ion's criteria for a significant change detennination requires that the change has antitrust implications that would likely warrant a Commission remedy.
In this instance, the staff does not find any significant antitrust implications.
In addition to the District Court and Appeals Court findings that PEC lacks monopoly power in the relevant market, staff notes that PEC has not refused to provide wholesale
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service to L'ansdale at rates subject to FERC jurisdiction.
I Although PEC's rates may be higher than those of PPL, Lansdale has the option of building about three miles of transmission to connect with PPL.
The annual cost associated with such an effort would be small compared to Lansdale's annual revenues.
If the building of the transmission were not permitted because of regulatory restraints *, Lansdale still has the option of participating in other generating units by using PEC's transmission for delivery win a telephone conversation on May 15,1984, with Mr. E. W. 01andero Suprintendgnto
j of the power.
In summary, aithough Lansdale may be marginally dis-advantaged by PEC's refusal to transmit certain types of power, this disadvantage is not, in staff's estimate, sufficient to sig-nificantly affect competition.
Therefore, staff does not believe that this refusal has antitrust implications that would likely warrant a Commission remedy.
C.
Changes in Coordination and Wholesale Arrangements 1.
Amendments to the P-J-M Interconnection Agreement PEC has participated continuously in the P-J-M power pool since its,fomal organization in 1956.
The members of P-J-H have amended the original agreement over 80 times since 1956 and on almost 40 occassions since the Limerick construction pemit review
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was completed in September, 1971.17 A substantial revision occurring in 1974 served to strengthen the coordination of planning and operation among P-J-M companies by refining the determination of capacity requirements for the pool and individual members and of the methods and tems by which members can meet their capacity I
requirements.18 Among other modifications,1^ also set forth the allocation within P-J-M of payments to or receipts from other systems outside of P-J-M with respect to certain capacity a,nd transmission services transactions. A second major revision occurred in 1977 and further refined and amended the rights and obligations of P-J-M members with respect to coordinating the installation and operation II The staff has reviewed all of the amendments and has chosen to specifically coment only on the ones discussed below.
Those not specifically. receiving comment were found to pose no significant antitrust consequences.
18 PEC FERC R/S No. 21, Supplement No. 48
O9 of generation capacity and transmission facilities.II Provisions for sharing the costs and benefits of coordinated operations were also modified.
Staff's review of both major revisions in 1974 and 1977 has revealed no significant changes of an antitrust nature in
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the activities of PEC in this regard.
In March,1981 DPL and ACE were pemitted to join as full participants in P-J-M.20 On this same occassion, the P-J-M agreement was modified so as to set forth, for the first time, membership requirements for joining the pool. To qualify, an entity must be (1) engaged primarily in the generation and sale of electric energy either directly or indirectly, for the.~use of the general public; (2) directly interconnected with a member of P-J-M; and (3) accept the concepts and obligations embodied in the agreement. The pro-cedures for seeking membership were also defined.
In view that the P-J-M agreement previously stated no explicit requirements for membership, the addition of a specific membership provision j
serves to better infos all other interested utilities what is required if they are contemplating joining P-J-M.
Staff recognizes that the membership provision still prevents partial-requirements and full-requirements wholesale customers from joining in the pool.
On the other hand., the P-J-M agreement appears specifically II PEC FERC R/S No. 21, Supplement No. 52.
j 20 PEC FERC R/S No. 21. Supplement No. 62.
Previously, DPL and ACE indirectly participated in P-J 'M through a current member.
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structured for self-sufficient utilities.
Should a utility which is presently a wholesale customer of a current P-J-M member ultimately become self-sufficient, the utility will be able to join P-J-M, if it wishes, regardless of the ownership type of the utility.
One other interesting change contained in the amend-ment adding DPL and ACE to the pool is that unanimous consent is required to effect a change to the agreement, including the creation of a new service schedule.. Only changes to existing service schedules requiring less than a stated sevel of investment or annual operating expens'es.would be pennitted with less than unanimous consent.
In staff's opinion none of the changes in PEC's activities with respect to the membership provisions or unanimity of agreement on changes to the agreement are "significant" in an antitrust context.
2.
Other Coordination Arrangements As indicated earlier, the P-J-M power pool agreement does not j
establish terms and conditions for long-tenn access to generation and transmission.
Instead, coordinat' ion of new generation and transmission by P-J-M utilities has primarily been dealt with in separate agreements.
l' Staff's discussion of these separate agreements below does not suggest that the activities of PEC in participating in such new arrangements since the Limerick CP review are "significant" in an antitrust sense.
In 1967 and 1970 PEC and several other P.J-M members had joined t(M; ether to construct and operate the Keystone - Conemaugh (K-C).
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500 kV transmission system.21 This agreement and its ameindment pemitted the delivery of output from the large-scale Keystone and-3 Conemaugh generating plants to the owners.
In 1976, PEC and other i
members of P-J-M augmented the K-C agreement by agreeing to develop the Susquehanna.. Eastern (S-E) 500 KY transmission system.22 Besides supporting the K-C system, the S-E transmission facilities l
would pemit Metropolitan Edsion Company (ME) to deliver the output of Three Mile Island 2 into the ME loads. The S-E agreement also set forth the tems and conditions, and charges for use of the facilities by the individual P-J-M members which would exceed the
. members' use entitlement.
In 1977, PEC, ACE, DPL, JCPL, and PSEG entered into the Lower Delaware Valley Transmission System (LDVT) agreement.23 The LDYT system would intt ' connect the Salem and Peach Bottom nuclear plants, owned by ACE, DPL, "PSEG, and PEC, with the Forked River 1 nuclear -
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unit owned by JCPL. As with the S-E agreements, the utilities are pemitted to use the system beyond their relative entitlement in the system, subject to certain tenns, conditions, and charges.
Il PEC FERC R/S No. 30 22 PEC FERC R/S No. 43 23 PEC FERC R/S No. 45 4
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In 1979 PEC agreed *to sell energy to JCPL from its share of the Salem 2 nuclear unit being built by PSEG.
This transaction pemitted JCPL to substitute a lower cost supply for part of its economy energy purchases from the P-J-M pool.24 In the staff's view, none of the foregoing arrangements re/ lect a "significant change" in the activities of PEC since the construc-tion pemit review was completed in 1971.
3.
Changes in Wholesale Arrangements Since 1956 the Borough of Lansdale has been served at whole-sale by PEC. At the time of the Limerick CP review in 1971 PEC was providing partial-requirements services, but shortly thereafter in November,1971, entered into a five year full-requirements, fixed-rate wholesale contract with Lansdale.25Under the contract PEC upgraded and raised the capacity of the interconnection between the two systems. As discussed earlier, PEC failed to file the 1971-contract at the Federal Power Commission (FPC) and in May,1972 -
filed a new contract at the FPC reflecting an increase in rates.
Ultimately the Court of Appeals held the original 1971 contract to be valid and PEC was prevented from raising its rates and changing contract tems prior to the end of the contract.
24 PEC FERC R/S No. 46 25 Since staff has not yet obtained a copy of the contract for review, these decision relating to the Borough of Lansdale versus Philadelp Company, 692 F. 2d 307 (1982).
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Subsequent to the end of the 1971 contract PEC filed, two successive wholesale rate increase requests with the Fede'ral Energy Regulatory Commission (FERC).
These filings included a 40 percent ratchet and 60-day cancellation notice on Lansdale's pa rt. PEC also added an auxiliary service provision under which PEC would be compensated if Lansdale obtained an alternative power source. Lansdale contested the auxiliary service provision as well as the proposed rates, which Lansdale alleged were discriminatory and created a price-squee... A FERC administrative law judge disapproved of the auxiliary service provision but approved the rate increases.
In recent years PEC has sought and obtained in part several rate increases at FERC.
Witfi regard to the price-squeeze allegations, the staff has I:
long taken the position that the determination of whether a prfee-squeeze exists is a matter best resolved by FERC, which h s t
jurisdiction in aspects of rate-making.
The obvious remedy
- to price-squeeze is the adjustment of wholesale rates relative 'to retail rates. As for other tems and conditions of the wholesale contracts the staff recognizes that FERC has reviewed such tems and conditions for reasonableness and ultimately approved or disapproved of the tems and conditions.
Thus, staff does not view changes in the ra'tes and tems of the wholesale contracts and amend-ments thereto as "significant" in an antitrust context.
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IV.
CONCLUSION Philadelphia Electric Company (PEC) has applied for a license to operate the Limerick Generating Station, Unit 1 (Limerick 1).
Staff has examined the activities and proposed activities of PEC since the Limerick 1 construction per-mit (CP)' antitrust review was conpleted in i971 to detemine if any "significant
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changes" of an antitrust nature have occurred.
In its analysis, staff has considered changes by PEC with respect to its participation in the Pennsylvania, New Jersey, Maryland (P-J-M) power pool and its coordination and wholesale arrangements outside of the pool.
None of these changes appear to be a "significant" antitrust nature.
Staff has further considered PEC's activities with regard to the Fulton Generating Station nuclear plant application, the outcone of the Fulton CP antitrust review (ind the subsequent conduct cf PEC that is pertinent
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to that review. As a result of the Fulton CP review, PEC obligated itself to provide transmission services to the Borough of Lansdale fLansdale).
- The comit-ment to the Department of Justice (Justice) was conditioned on a reconmen-dation of "no hearing " by Justice to the Comission with regard to the Fulton CP antitrust review. Justice, in fact did so advise the Commission and the Justice advice letter tes published in the Federal Register.
Subsequently, PEC refused a wheeling request from Lansdale, and Lansdale brought an antitrust action in the U.S District Court against PEC based on its refusal to, wheel.
After a trial on the merits the Court found for PEC and dismissed Lansdale's conpla f st.
On appeal, the U.S. Court of Appeals for the Third Circuit also l
' decided in favor of PEC and dismissed Lansdales appeal.
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t' wn, In view of the advice letter by the Department of Justice to, t'he Commission in connection with the Fulton facility, the staff 1elieved that the refusal to wheel wholesale power represented a change in the activities of PEC during the period subsequent to the Limerick CP antitrust review. However, staff has found that the refusal does not have significant antitrust implications. This finding is based on an analysis by the staff of the options still available to Lansdale to receive wholesale power, and is supported by decisions of the U.S. District Court and the U.S. Court of Appeals regarding the same satter.
From the foregoing, staff does not believe the changes in the activities of Philadelphia Electric Company since the CP antitrust review for Limerick 1 represent a "significant change" under the Commission's criteria.
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j 7590-01 NUCLEAR REGULATORY COMMISSION
_D_0CKET NO. 50-353A PHILADELPHIA ELECTRIC COMPANY 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 finding in accordance with Section 105c(2) of the Atomic Energy act of 1954, as amended, that no significant (antitrust) changes in the licensee's activities or proposed activities have occurred subsequent to the previous antitrust operating license review of Unit 1 of the Limerick Generating Station by the Attorney General and the Comission. 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 tLe 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 Limerick Generating Station Unit 1 (Limerick 1) operating license to the Philadelphia Electric Company, the staffs of the Policy Development and Technical Support 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 Limerick 1 antitrust operating license review are not of the nature to require a second antitrust review at the operating license stage of the application.
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-2 In reaching this conclusion, the staff considered the structure of the electric utility industry in eastern Pennsylvania and the Pennsylvania-New Jersey-Maryland pooling area, the events relevant to the Limerick 1 operating license review and the events that have occurred subsequent to the Limerick i operating license review.
The conclusion of the staff analysis is as follows:
Section 105c of the Atomic Energy Act of 1954, as amended, provides for relicensing antitrust reviews of commercial power reactors at the construction permit and operating license stages of the licensing process. The antitrust operating license review it not intended as 6 de novo review but is focused only on those activities of the licensee (s) that have occurred since the completion of the construction permit review,
,4 This conce'pt of reviewing only significant changes in i
the licensee's activities at the operating license stage has been applied by the staff to reviews of multiunit plant applications. For those plants with multiple reactor licenses, the staff conducts separate antitrust review.; for I
each reactor when the reactors are licensed on a delayed or staggered schedule, i.e., when the reactors are scheduled to be licensed eighteen months or more apart.
-- As indicated supra, the antitrust operating license review of Limerick I was completed in July of 1984 and the reactor was licensed in August of 1985. Unit 2 of the Limerick Generating Station (Limerick 2) is scheduled to be licensed in August of 1989 and in light of the five years since the completion of the previous review of the licensee and four years since Limerick I was licensed, the staff initiated a separate antitrust review of Limerick 2 -- with the focus of the review on any significant changes in the licensee's activities since the completion of the previous review in 1984.
The changes in the licensee's activities identified by the staff since the previous antitrust review have largely been associated with the normal business operations of a fully integrated and multi-interconnected utility system such as thelicensee,philadelphiaElectricCompany(PEco). PEco has been actively involved with other interconnected power systems in the Pennsylvania-flew Jersey-Maryland (P-J-M) power pool and adjacent areas in an effort to improve the reli-ability and efficient operation of its power system. PEco has approached and has been approached by several P-J-M members and adjacent systems pursuant to the possibility of initiating various capacity and energy transactions associated with the comercial operation of Limerick 2.
Though not all
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of these negotiations have proven to be fruitful to all of the parties concerned _the staff has no reason to believe that any undue (anticompetitive) pressure was exerted by PEco in any of these negotiations.
A dispute between PEco and one of its wholesale customers, theBoroughofLansdale, Pennsylvania (BoroughorLansdale),
that developed as a result of the oil embargo of the 1970's, culminated in,1985 when Lansdale severed its ties with PEco.
The staff reviewed the history associated with this dispute and determined that there was no basis to conclude that PEco's actions, which precipitated Lansdale's changing power suppliers, were inconsistent with the antitrust laws.
Staff believes that PEco's activities since the Limerick 1 antitrust operating 11:ense review, considered in conjunction with the overall P-J-M pooling environment, do not represent "significant changes" in the licensee's activities since the previous antitrust review and recommends that no affirmative significant change determination be made pursuant to the operating license for Limerick 2.
Based upon the staff analysis, it is eqy finding that there have been no "significant changes" in the licensee's activities or proposed activities since the completion of the previous antitrust review.
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- Signed on May 12, 1989, by Thomas E. Murley, Director of the Office of Nuclear Reactor Regulation.
Any person whose interest may be affected by this finding, may file, with full particulars, a r2 quest for reevaluation with the Director of the Office 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 Federal Register.
Requests for reevaluation of the no significant change 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.
Dated at Rockville, Maryland, this 15th day of May 1989.
.a FOR THE NUCLEAR REGULATORY COMMISSION
.$. 0 J pf4 W' Cecil 0. Thomas, Chief Policy Development and Technical Support Branch Program Management, Policy Development and Analysis Staff Office of Nuclear Reactor Regulation 0
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