ML17303A268

Forwards Response to Plains Electric Generation & Transmission Cooperative,Inc 861128 Comments on Antitrust Info,Request for Finding of Significant Change,For Antitrust Hearing & for Imposition of License Conditions

ML17303A268
Person / Time
Site:	Palo Verde
Issue date:	02/06/1987
From:	Gad R EL PASO ELECTRIC CO., ROPES & GRAY
To:	Funches J Office of Nuclear Reactor Regulation
References
A, NUDOCS 8702120121
Download: ML17303A268 (254)

Text

REGULATOR NFORNATION DISTRIBUTION;S EN (RIDS>

ACCESSION NBR: 8702120121 DOC. DATE: 87/02/06 NOTARIZED: NO DOCKET ¹ FAC IL: STN-50-530 Palo Verde Nuclear Station> Uni t 3~ Ari zona Pub li 05000530 AUTH. NANE AUTHOR AFFILIATION GAD, R. K. El Paso Electric Co.

GAD'. K. Ropes Zc Gray REC IP. NANE RECIPIENT AFFILIATION FUNCHESz J L. Planning 8( Program Ana ps s I i Sta ff (post 851 125)

SUB JECT: Responds to "Comments o0 Transmission Cooperatives Inc on Plains Electr

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Finding oF Significant, Changers Request For Imposition o~

License Cond i ti onset " submitted on 861128.

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RoPEs 8c GRAY 225 FRANKLIN STREET BOSTON, MASSACHUSETTS 02IIO IN PROVIDCNCC (6I7) 423-6IOO IN WASHINGTON 30 KENNEDY PLAEA TELEX NUMBER 940519 ROPGRALOR BSN IOOI TWENTY.SECOND STREET, N.W.

PROVIDENCC, R.I. 02903 TELEX NUMBER BSI973 ROPES GRAY BSN WASHINGTON, D.C.20037 (40I) S2I-6400 TELECOPIERS: (6I7) 423-2377 ~ (6I7) 423 764I (202) 429-1600 TELECOPIER: (401) 52I 09IO INTERNATIONAI'(6I7)423.6905 TELCCOPICR:(202) 429 l629 February 6, 1987 Mr. Jesse L. Funches, Director Planning and Program Analysis Staff Office of Nuclear Reactor Regulation U. S. Nuclear Regulatory Commission Washington, D. C. 20555 Re: Arizona Public Service Company et al.

Palo Verde Nuclear Generating Station, Unit 3 Docket No. 50-530A

Dear Sir:

In accordance with the request made by your letter of December 12, 1986, to Mr. E. E. Van Brunt, Jr. and reiterated in a conversation between Mr. Lamb of your staff and Messrs. Royer and Wasiak of El Paso Electric Company, we submit herewith the Response of El Paso Electric Company to "Comments of Plains Electric Generation and Transmission Cooperative, Inc., on Antitrust Information, Request for Finding of Significant Change, Request for Antitrust Hearing and Request for Imposition of License Conditions" submitted by Plains on November 28, 1986.

If any additional information is required, please do not hesitate to contact, either myself or Mr. Bodner at, the address and telephone number indicated above.

ery uly y R. K. Gad II RKG/ajp Enclosure cc: Benjamin J. Vogler, Esquire w/enc.

. Arthur C. Gehr, Esquire w/enc.

Frederick LE Miller, Jr., Esquire w/enc.

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..8702120121 RESPONSE OF EL PASO ELECTRIC COMPANY TO "COMMENTS OF PLAINS ELECTRIC GENERATION AND TRANSMISSION COOPERATIVE, INC.,

ON ANTITRUST INFORMATION, REQUEST FOR FINDING OF SIGNIFICANT CHANGE, REQUEST FOR ANTITRUST HEARING AND RE UEST FOR IMPOSITION OF LICENSE CONDITIONS" On October 29, 1986, this Commission announced consideration of an additional antitrust review concerning an aspect of the Palo Verde Nuclear Generating Station

("PVNGS") ~ 51 Fed. Reg. 39,599. The occasion for this assessment is the imminent issuance of an operating license for PVNGS Unit 3.~ On November 28, 1986, Plains Electric The Commission undertook a full-scale antitrust review in connection with the PVNGS construction permits in 1975; that review covered all of the proposed PVNGS units. The result of that review was a determination that "antitrust conditions" were warranted in the case of certain of the owners of PVNGS other than El Paso, but that no conditions were warranted in respect of El Paso. Arizona Public Service Co. -et al., 40 Reg. 17,349 (NRC Staff 1975) (receipt of Attorney General's antitrust advice). On three subsequent occasions, the Staff has considered the issue of whether sufficient changes in the activities or proposed activities of the PVNGS applicants/permittees rendered another antitrust review "advisable." See Arizona Public Service Co. et al., 48 Fed. Reg. 6,060 (NRC Staff 1983)

(finding of no significant changes for PVNGS-1 -2 and time Ec for filing of requests for reevaluation); 46 Fed. Reg.

44,110 (NRC Staff 1981) (receipt of additional antitrust information -- proposed additional ownership participants -- and time for submission of views on antitrust matters); 45 Fed. Reg. 860 (NRC Staff 1980)

(receipt of operating license application for-PVNGS-1, -2 and -3 and request for antitrust information). On each of these occasions a negative determination was rendered.

El Paso is a 15.8% owner of each of the PVNGS units, and

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Generation and Transmission Cooperative, Inc. ("Plains" )

filed a document entitled "Comments of Plains Electric Generation and Transmission Cooperative, Inc., on Antitrust Information, Request for Finding of Significant Change, Request for Antitrust Hearing and Request for Imposition of License Conditions" (hereinafter "Comments" ), in response to this notice. Submitted herewith is the response of El Paso Electric Company ("El Paso" ) to the Comments.

I. Introduction In its "Comments," Plains maintains that El Paso has recently taken a number of actions that would create or maintain a situation inconsistent with the antitrust laws.

Accordingly, Plains seeks an antitrust hearing, prior to the granting of the PVNGS-3 operating license, pursuant to section 105c of the Atomic Energy Act, 42 U.S.C. 5 2135c.

In order to obtain a hearing at the present operating license stage, Plains must demonstrate it to be "reasonably apparent" (rather than simply allege), South Carolina Electric 6 Gas Co. (Virgil C. Summer Nuclear Station, Unit 1), CLI-81-14, 13 NRC 862, 873 (1981), that there has been a change that (1) has occurred since the last antitrust review, (2) is reasonably attributable to El Paso, and (3) it has been an owner since the original antitrust review.

El Paso has entered into a sale-leaseback transaction with regard to a 15.8% interest in PVNGS-2. Plains filed no comments with respect to any of the prior reviews.

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would warrant imposition of Commission relief because (a) the changes, when viewed on the merits, present a situation inimical to the antitrust laws that (b) has a substantial connection to PVNGS-3. In order to remain consistent with "the statutory intent that antitrust review at the operating stage be the exception not the rule," Central Electric Power Coo erative Inc. (Virgil C. Summer Nuclear Station, Unit No. 1), CLI-81-26, 14 NRC 787, 790 (1981), Plains must carry its burden as to each of these criteria. As is demonstrated herein, Plains has not done so.

These responses to Plains'omments are organized with respect to each of the four anticompetitive "changes" alleged by Plains and, for each "change," with respect to each of the "significant changes" criteria. However, this matter can be fully and properly disposed of by reference to a single authority precisely on point: Florida Power 6 22, '33-34 (1982). Whether Plains'llegations are viewed separately or collectively, it is true in this case just as it was in ALAB-665 that:

"[o]ur focus here, for purposes of deciding whether

[Plains] has satisfied the statutory nexus requirement, must therefore be on what way [Plains]

claims operation of [PVNGS-3] will harm it, competitively, not whether access to [El Paso's transmission] grid is an appropriate form of relief to remedy [an alleged] Sherman Act, Section 2, violation. All that [Plains] offers on this score is the claim that [license conditions are required to] cure the anti-competitive situation of [El Paso's supposed] monopolistic hold on the 3

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transmission grid for [the geographic area]. But this is insufficient. . . . There is simply no explanation by [Plains] of how [El Paso's] bringing

'[PVNGS-3] on line . . . will act to maintain or entrench [El Paso's] alleged transmission monopoly.

In essence, [Plains'] argument reduces to the proposition that, where an applicant for a nuclear power plant enjoys a monopoly position, this Commission can take the licensing of-the plant as the occasion for remedying the anticompetitive situation, despite the fact that the nuclear. power plant has no influence on that situation. That position reads out the nexus requirement of Section 105c(5) [of the Atomic Energy Act] in its entirety. Whatever may be the merits, as a matter of antitrust policy, of [Plains'] position that, this Commission should exercise such wide-ranging antitrust authority, Congress has not seen fit extend NRC's antitrust jurisdiction that far."

to Id. For precisely the same want, Plains'omments should be dismissed as insufficient to trigger an Operating License antitrust review under the Atomic Energy Act.

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II. Allocation of Capacity Entitlements on the Parallel Transmission Lines A. Factual Back round As the Comments note (at 6-7), one of the lines comprising one of the two existing north-south transmission systems in New Mexico is Plains'est Mesa-Dona Ana Line.

See Exhibit A.~ Plains maintains that the physical capacity of this 115 kV line is 60 mW and that El Paso has (i) heretofore recognized and admitted that capacity and (ii) recently nonetheless asserted without basis that Plains is entitled to employ only 35-40 mW of power importation capacity. Plains asserts that El Paso's "recent" contentions are both a breach of section 7(c) of the governing Interconnection Agreement (Contract No.

14-06-500-1605) (" Contract 1605") (Comments, Exhibit ll) and a product of an anticompetitive effort to limit transmission access into southern New Mexico. As shown below, however, El Paso's actions were entirely consistent with the terms of Contract 1605 and with the requirements of the antitrust laws.

Although the actual, stand-alone physical capacity of Plains'est Mesa-Dona Ana line is a matter of dispute Attached hereto as Exhibit A for convenience is a schematic representation of the transmission lines that are discussed in this Response.

Dona Ana substation and the It Las should be noted that the Cruces substation are adj acent.

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between the parties, it is not the principal bone of contention. This line was originally built by the United States Bureau of Reclamation ("Bureau" ) in the 1930's or 40's; it was declared available for sale in 1971 and purchased by Plains in 1978.

Running parallel to Plains'est Mesa-Dona Ana line is El Paso's 345 kV Nest Mesa-Arroyo line. On the same scale on which Plains claims its line to have a capacity of 60 mW, the physical (continuous thermal) capacity of El Paso' West Mesa-Arroyo line is approximately 700-800 mW. The El Paso line was constructed in 1968, and in that year the two lines were electrically interconnected.~ Plains .acquired the 115 kV line ten years later.

Plains contends that the physical capacity of its West Mesa-Dona Ana Line is 60 megawatts. El Paso believes that, were it important,, an engineering analysis of the line would revea'l a physical capacity somewhat less. However, the precise measure of the physical capacity of the West Mesa-Dona Ana line is a subject that has never been determined between the parties or by any third party. Nor is that line's physical capacity the reason why system curtailments are required.

As a result of the electrical interconnection, power scheduled by either company to flow over its own line can in fact flow over both lines, as electrical conditions dictate.

In fact, because (among other things) the physical capacity of El Paso's line is so much greater than that of virtually all (in excess of 90%) of the power Plains'ine, transmitted by Plains will actually flow over the El Paso line. This fact was recognized by El Paso and the Bureau when the lines were interconnected, and things, to accommodate the "inadvertent it was, among other flow" phenomenon that section 7 of Contract 1605 was written.

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Both El Paso's West Mesa-Arroyo line and (by virtue of its electrical interconnection with it) Plains'est Mesa-Dona Ana line operate as parts of the interconnected and coordinated New Mexico transmission system. This system is operated by members of the New Mexico Power Pool

("NMPP"), consisting of the Western Area Power Administration ("WAPA"), Public Service Company of New Mexico ("PNM") and Texas-New Mexico Power Company, as well as El Paso and Plains. The NMPP has been in existence since 1956. Under the NMFP approved operating procedures, the interconnected transmission system in New Mexico must be operated according to an "N-minus-1" reliability criterion, viz., the system must be operated in a manner capable of withstanding the loss of the most critical transmission facility.~ Although Plains is a member of NMPF, it appears An agency of the United States Department of the Interior. (WAPA is the successor to the Bureau.)

Reliability of an electrical transmission system is a complex subject. Insofar as it involves capacity, the "N-minus-1" criterion specifies that the maximum load that can be placed on a transmission system may not exceed the capacity of the system with its most critical single element out. of service: by so limiting load,,a failure of any single component of the system can be tolerated without either causing other components to trip out or requiring that, load be shed. The "N-minus-1" operating criterion is the transmission system functional equivalent of the single failure design criterion required of nuclear power plant safety systems by 10 C.F.R. Part 50, Appendix A, Criterion 17.

One way of visualizing the concept is by analogy to a

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that Plains does not subscribe to this "N-minus-1" criterion for its own 115 kV West Mesa-Dona Ana transmission line. Presently the "N-minus-1" reliability criterion truck with a large number of wheels enabling it to carry large loads. If the truck is loaded to the maximum capacity available with all wheels and tires intact, a single blowout causes an overload (and probably an accident). If, however,

,a limit is imposed at that load that could be carried with the most critical (most highly loaded) wheel missi'ng, then the truck can sustain a blowout of any tire without, causing it to be overloaded.

In neither the electric transmission business nor the truck business, however, does such reliability come without a cost: the cost is that larger systems than can be, used must be constructed (or, stated a different way, a portion of the load-carrying capacity for which construction and maintenance costs are incurred must be held in reserve and not, used for ordinary operations).

When originally constructed, the Bureau's (now Plains' West Mesa-Dona Ana line operated with no backup, transmission path (sometimes referred to as "N-minus-zero" reliability);

consequently, any loss of the line would cause its capacity to diminish to zero and load would be lost. By virtue of its. interconnection, however, the Plains line enjoys complete "back up," both because in theory any load it be carrying at the time of failure could (and would) shift might to the El Paso line and because in practice virtually all of the load scheduled by. Plains over its line at any time is in fact already flowing over the El Paso line. Moreover, by virtue of the interconnection of the El Paso line to the balance of the New Mexico system, Plains enjoys that reliability enhancement even if the El Paso line should be unavailable. El Paso provides Plains with this backup service without compensation and without reciprocal benefits. Whereas El Paso's 345 kV line can accommodate the additional load should Plains'15 kV line suddenly shut down (it already carries more than ninety percent of that load because of inadvertent flow), the reverse is not true.

The Operating Nomograms were only based on the 345 kV system.

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requires that the aggregate of power imported into southern New Mexico be limited to approximately .550 mW; even though the maximum .physical capacity of the system's components exceeds 1400 mW.

This 550 mW safe importation limit has been established by Operating Nomograms, which, as Plains notes (Comments. at 7-8), are empirically derived through a series of computer simulations to measure performance at given load and generation levels with the critical facility removed from service. As the applicable Nomogram demonstrates (see Plains Comments, Exhibit 5), if imports to southern New Mexico were to exceed 550 mW, the transmission system would not be capable of .maintaining a minimally acceptable voltage level (should the critical facility be lost) without overloading and damaging the remaining New Mexico import system.

,This governing Nomogram,was prepared andis, administered by Public 'Service Company of New:Mexico for and on behalf of all members of NMPP.. As a result, whenever transmission levels threaten to exceed 550 mW, PNM issues a warning requiring power importation to be curtailed (reliability curtailments) ~ This curtailment is accomplished- by reducing The members of NMPP have agreed that, the maximum reliable importation limit into southern New Mexico is 550 mW under the best operating conditions. In actual practice, El Paso has been required by PNM to curtail importation at levels as low as 470 mW.. Such curtailment requires El Paso to increase 'local, more expensive gas and oil fired, generation.

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scheduled power flows on the transmission system and replacing that power with local generation. In that way, operating reliability can be maintained or re-established.

It is clear that Plains is both aware of and benefits from this "N-minus-1" operating criterion and the governing PNM Operating Nomogram. See Comments at 7-8. Moreover, as is explained above, the interconnection of Plains'15 kV line to El Paso's 345 kV line assures Plains of a reliable "back-up" in the event that Plains'ine were suddenly to cease functioning, a service El Paso provides without compensation. Nevertheless, Plains contends, with regard to the Plains-El Paso parallel 1'ines, that El Paso is lega'lly obligated to bear the entire- transmission capacity sacrifice that. must be made in order. to assure overall system reliability. El Paso respectfully disagrees.

Although this dispute over. transmission" entitlements has been implicit in the interconnected system since the Operating Nomograms were promulgated,, it became especially pressing once import load's approached the 550 mW limit. As reliability curtailments became a reality, Plains asserted in effect that it is exempt from any such cut-backs, notwithstanding its benefits from the "N-minus-1" operating norms. El Paso, however, has maintained that it should not absorb one hundred percent of the transmission sacrifices at West Mesa because such a result is neither fair nor legally required. Plains now responds that El Paso's position 10

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constitutes a Section 105c significant change. It does not for the reasons set forth below.

B. The Si nificant Chan es Determination Plains must survive a "significant changes determination" before any section 105c hearing is permissible at the operating license stage. Subsection 105c(2) states explicitly that the antitrust review required at the construction permit stage "shall not apply" to an operating license application unless the Commission determines that "significant changes in the licensee's activities or proposed activities have occurred subsequent to the previous review by the Attorney General and the Commission under this subsection in connection with the construction permit for the facility."

42 U.S.C g 2135c(2).

This threshold determination of significant changes consists of three criteria, all of which must be met before a further antitrust review may be undertaken. "The change or changes [must] (1) have occurred since the previous antitrust review of the licensee(s); (2') [be] reasonably attributable to the licensee(s),; and (3) have antitrust implications that would likely warrant some Commission remedy." South Carolina Electric & Gas Co. (Virgil C.

Summer Nuclear Station, Unit 1), CI I-80-28, 11 NRC 817, 824 (1980). Nith regard to Plains'llegations in the present context, each of the criteria must be addressed separately.

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1. Occurrence since the revious antitrust review.

As appears in the above-mentioned facts, the allegations relevant here concern the parties'isputed proportionate entitlements to the limited reliable transmission capacity available to the entire NMPP for importing power into southern New Mexico. That situation has existed since the decision by the members of NMPP to operate the interconnected transmission, system subject to reliability constraints. The "N-minus-1" operating criterion was first utilized in 1968 in northern New Mexico with the installation of the second 345 kV transmission line from the Four Corners Generation 'Station to the West Mesa Switching Station. During outage conditions of one of these lines, members of the NMPP were required to curtail imports into New Mexico. In 1978, with completion of the Southwest New Mexico Transmission Line (the second 345 kV transmission line in southern New Mexico), the "N-minus-1" operating criterion was extended into southern New Mexico, which occurred subsequent to the Construction Permit full-scale antitrust review for the Palo Verde project. (The Attorney General's letter is dated April 8, 1975.)

If the Staff were to take the position that the operative date for assessing whether a "change" has occurred must run back to that construction permit review, then the situation of which Plains complains is a "change."

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(Regardless, however, it is not a "significant change-" as defined in CLI-80-28.)

On the other hand, El Paso respectfully submits that a more appropriate approach looks to the policies underlying the temporal "change" requirement. It is important to the policy objectives intended to be achieved by treating CP

- antitrust reviews and subsequent OL antitrust assessments differently that intervenors raise potential antitrust matters as early in the licensing process as possible, so as to assure "fairness to utilities engaged in long range planning." Houston Li htin 6 Power Co. (South Texas Project, Unit Nos. 1 and 2), CLI-77-13, 5 NRC 1303, 1321 (1977). Without such a policy, a potential exists for employment of last-minute "antitrust" assertions to gain negotiating leverage (even on matters unrelated to the nuclear facility itself) once licensing for. the nuclear unit has become a critical path item. In the instant case, the situation regarding the NMPP operating reliability criteria, and all of the arguments Plains now raises regarding system importation capacity entitlements, were fully capable of being raised and considered during the 1983 significant changes determination for PVNGS-1 and -2, in which Plains filed no comments.~

See Arizona Public Service Co. et al., 48 Fed. Reg.

6,060 (NRC Staff 1983) (negative significant changes 13

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To allow Plains to inject its Comments at this late date (fuel load for PVNGS is set for March, 1987) would work the very sort of inequity that was intended to be foreclosed in CLI-77-13. (South Texas Pro'ect, ~su ra ,5 NRC at 1321.)

These "considerations of fairness to parties and conservation of resources," id., are especially cogent where the allegations have no connection to the nuclear facility being licensed (discussed later).

2. Reasonabl attributable to licensee s In order to warrant a further antitrust, review, the asserted recent change must be attributable to the "licensee" (permittee), i'n this case El Paso, for otherwise reopening the question of antitrust considerations previously considered and resolved at the construction permit stage is neither fair nor consistent. with Congressional intent. 'South Carolina Electric and Gas Co.

(Virgil C. Summer Nuclear Station, Unit 1), CLI-80-28, 11 NRC 817, 834 (1980.). Accordingly, pursuant to legislative intent, this second criterion "provides the latitude for a common sense determination of when it is or is not fair to subject particular licensees to a second review." Id.

determination). Of course,'ne of the principal reasons why Plains'llegations could have been raised just as easily with regard to PVNGS-1 and -2 as to PVNGS-3 is that actually have no connection whatsoever to ~an of Plains'ssertions these nuclear facilities. This separate issue of "nexus" is discussed infra.

Cn As appears from the foregoing discussion, that which Plains asserts to be a change flows not from conduct unilaterally undertaken by El Paso, but rather from the coordinated decision by all of the members of the NNPP that the interconnected transmission system should be operated at the "N-minus-1" reliability level, and from the resulting limitations on the ability of any of the member utilities to employ the full physical capacity of the transmission system. As a member of the Pool, Plains participated in that decision and enj oyed the resulting benefits, in terms of system reliability, no less than any of the other members of the Pool ~

Where the advanced complaint of one member of a power pool, seeking a reopening of antitrust review in connection with nuclear plant licensing stems from a systemwide operating decision made by the pool, for the benefit of the pool and the customers of all the members, El Paso doubts that the concern for fairness underlying the "attributable-to-the-licensee" requirement has been met even if the complainant could show that, it actively opposed the systemwide decision. Where, as here, however, the complainant has supported the decisions -- and enjoyed the resulting benefits -- its complaint as to a side consequence of the decision deserves to be regarded with skepticism.

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3. Antitrust implications that would be likely to warrant Commission remed Plains fails to meet this f'inal significant changes criterion for two reasons -- first, Plains has not and cannot establish the requisite nexus between the "-activities under the license" and any "situation inconsistent with the antitrust laws;" second, Plains simply has no case on the antitrust merits.

a. The Nexus Re irement Because 'Plains has not mentioned this statutory requirement, it deserves some elaboration. The specific standard for .NRC .antitrust review .under section 105c of the Atomic Energy Act, 42 U.,S.C. $ 2135(c), is "whether the activities under the license would create or maintain a situation inconsistent with the antitrust laws as specified in subsection [105(,a)]." (Emphasis added.) The Commission has recognized that this standard has inherent boundaries:

"[Section 105c] does not authorize an unlimited, inquiry, into all alleged anticompetitive practices in the utility industry. The statute involves licensed activities, and not the electric utility industry as a whole. If Congress had intended to enact a broad remedy against all. anticompetitive practices throughout th'e electric .utility industry, it would have been anomolous to assign review responsibility to the [then]'Atomic Energy Commission, whose regulatory jurisdiction is limited to nuclear facilities. It is the status and role of these faciliti'es which lie at the heart of antitrust proceedings under the Atomic Energy Act Louisiana Power Sc Li ht Co. (Waterford Steam Electric Generating Station, Unit 3), 6 AEC 619, 620 (1973'.)'emphasis 16

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in original). Accordingly, "alleged anticompetitive practices -- however serious -- which have no substantial connection with the nuclear facility, are beyond the scope of antitrust review under the Atomic Energy Act." Id. at 621.

According to the Appeal Board's .interpretation of section 105c, "the licensed activities must play .some active role in creating or maintaining the anticompetitive situation. Put another way, the nuclear .power plant must be an actor, an influence, on the anticompetitive scene." Florida Power Sc Li ht.Co. (St. Luci'e Plant, Unit No. 2), -ALAB-665, 15 NRC 22 (1982).

Because of this clear statutory limitation on the NRC' S

jurisdiction, an intervenor seeking a section 105c hearing must plead (with particularity and specificity) and prove "a meaningful nexus. between the activities under the nuclear license and the 'situation'lleged to be inconsistent with the antitrust. -laws." Waterford; ~su ra, 6 AEC at 621 & n.2.

If that nexus cannot be established, "there is no need; for a hearing.... " Id.

In the instant case, Plains has failed. to show (in fact has not even plead) any nexus between El Paso's activities under the operating license and the disputed .allocation of transmission entitlements on the West Mesa parallel line system. Rather, the anticompetitive "act" alleged here, like the other three "acts" alleged by Plains and addressed 17

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individually below, relates exclusively to El Paso's transmission system and reflects no "active anticompetitive role" of PVNGS-3 itself, the nuclear facility being licensed. As the cases establish, that is insufficient.

ALAB-665, ~su ra, 15 NRC at 33-36.

The absence of nexus in this case is especially apparent in light of those Appeal Board decisions that have found the nexus requirement met. See Alabama Power Co. (Joseph M.

Farley Nuclear Plant, Units 1 and 2), ALAB-646, 13 NRC 1027

.(1981), aff'd sub nom. Alabama Power Co. v. NRC, 692 F.2d 1362 (1982), cert. denied, 104 S.Ct. 72 (1983); Toledo Edison Co. (Davis-Besse Nuclear Power Station, Units 1, 2 and 3), ALAB-560, 10 NRC 265 (1979); Consumers Power Co.

(Midland Plant, Units 1 and 2), ALAB-452, 6 NRC 892 (1977);

Kansas Gas 6 Electric Co. (Wolf Creek Generating Station, Unit 'No. 1), ALAB-299, 2 NRC 740 (1975); Kansas Gas Sc Electric Co ~ (Wolf Creek Generating Station, Unit, No ~ 1),

Thus, while it is well settled that under certain circumstances, denying transmission access to a competitor may violate the antitrust laws, e.g., Otter Tail Power Co.

v. United 'States, 410 U.,S 366 (1972),

settled that in order to invoke the it is equally well Commission' antitrust jurisdiction, an intervenor must link the alleged anticompetitive situation created by the denial of transmission services with the nuclear facility being licensed. ALAB-665, ~su ra15 NR,C at 33-36. Even had portrayed a situation within the ambit of Otter Tail if Plains Power (which, for the reasons set, forth in the next section, it. has not), establishing only half ofwhat is required to trigger (or permit) an OL-stage antitrust review is to fail to carry one's burden.

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ALAB-279, 1 NRC 559 (1975). All of the above-cited cases involve facts and circumstances that are very different than any of the allegations advanced here and elsewhere by the Comments.

Referring to its ~Parle ,Davis-Bassa and Midland decisions, the .Appeal Board in ALAB-665 declared that "in each of our cases the focus has been on the claim that the cheaper power of the nuclear plant being licensed would actively support the dominant competitive position of the license applicant." 15 NRC at 32. Yet Plains has not made any contention that El Paso's share in the power generation from PVNGS-3 (whether or not cheaper) would create, or maintain, in any way, an El Paso monopoly either in the wholesale power market or in north-south transmission services'n the Wolf Creek cases (ALAB-299 .and ALAB-279, sunra),

the intervenor succeeded'n establishing a section 105c nexus'etween the'pplicant' anticompetitive refusal to "wheel"'nd activities under the nuclear license. Unlike the present situation,:however, the intervenor in Wolf Creek was able to demonstrate that the applicant's refusal to wheel power related substantially to the nuclear 'facility Wheeling is the "transfer by direct transmission or displacement [of] electric power from one utility to another over the facilities of an intermediate utility." Otter Tail Power Co.. v. United States, 410 U.S. 366, 368 (1973).

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being licensed. In Wolf Creek, the applicant, which was the dominant utility and controlled all essential transmission facilities in the area, offered the intervenor-cooperative an opportunity to obtain an ownership interest in the Wolf Creek nuclear plant. But the applicant refused to agree to wheel supplemental power to the cooperative. Without assured access to a source of supplemental power, which only the applicant could provide, the, intervenor could not obtain the .necessary backing from the financial community to secure an interest in the nuclear facility. The .practical effect of the applicant's refusal to wheel, therefore, was "to "prevent the cooperative from gaining access to the nuclear faci'lity, and accordingly, from competing with the

.applicant." ALAB-279, ~su ra, l NRC at 563.

Plains can present no such argument linking El Paso's actions (e'ither .as alleged here or in the other three contexts below) with any inability on Plains'art .to "participate in the PVNGS project. Plains declined earlier offers to purchase an interest in the nuclear facilities; thus Plains'articipation in, and access to, the PVNGS-3 facility is not and has never been a factor..~~ Nor does It should be noted that access to, and participation in the entire PVNGS project has been made genuinely available since the beginning. As the Attorney General concluded during the antitrust review at the construction permit, stage, "'PVNGS was initially planned as a joint venture between APSC [Arizona Public Service Co.], TGEcE [Tucson Gas 20

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Plains contend that the current shortage of transmission

.capacity is the result of bringing PVNGS-3 on Plains'equest f'r a Section 105c review line.'ccordingly, and hearing should be denied on the ground that, inter alia, Plains cannot establish the "overriding requirement,"

Waterford ~su ra, 6 AEC at 621, of a meaningful tie between the activities under the license (here, operation of PVNGS-3) and the alleged anticompetitive situation (in this case, El Paso's claimed monopolistic control over the and Electric Co.] and SRP [Salt River Project Agricultural Improvement and Power District.]. Access was offered to other GEcTs and eventually to all electric systems' utilities in Arizona and New Mexico. . . . No complaints were received and no other evidence was found of any refusal by any of the joint applicants '"to provide coordinating services to the smaller Arizona Public Service Co. et al., 40 Fed. Reg. 17,349 (NRC Staff 1975) (quoting Attorney General's antitrust advice letter to Commission regarding construction permit for PVNGS-1, -2 and -3).

Any such argument would be belied by the very facts of which Plains complains -- namely, that there is a shortage of transmission capacity today, before the Unit is even on line. Furthermore, if Plains were to attempt (albeit unsuccessfully) to establish nexus by attributing capacity shortage to PVNGS-3, it would foreclose the possibility of any case on the merits, for Plains would then be unable to claim that there is transmission capacity in excess of El Paso's own legitimate needs (to which excess Plains might assert a right of access). It is fundamental to the antitrust doctrine of "essential facilities" that, the owner of the asserted essential facility is not required to curtail his own use in order to make the facility available to others. Hecht v. Pro-Football Inc., 570 F.2d 982, 993 (D.C. Cir. 1977), cert. denied, 636 U.S. 956 (1978); Cameo Inc. v. Providence Fruit and Produce Buildin , Inc., 196 F.2d 484, 487-88 6 n.3 (1st Cir. 1952), cert. denied, 344 U.S. 817 (1952). See also Seesen v. Professional of America, 358 F.2d 165 (9th Cir. 1966), cert. Golfers'ssociation denied, 385 U.S. 846 (1966).

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transmission of electric power from northern to southern New Mexico). ALAB-665, ~su ra ,15 MRC at 31.

b. The Antitrust, Merits Plains has failed not only to establish the statutory nexus requirement but also to make any case on the merits.

Plains attempts to establish an anticompetitive "situation" regarding the disputed allocation of transmission entitlements on the West Mesa system by making an argument that sounds in contract, not antitrust law. More importantly, Plains'rgument of contract interpretation misses the factual mark -- it does not even address the very facts that have precipitated the entitlement dispute.

Briefly recapped, Plains notes that Contract 1'605, originally made between the Bureau and El Paso, remained in force after Plains purchased the Bureau's West Mesa-Dona Ana line in 1978. Plains argues. that El Paso's refusal to recognize Plains'ull 60 mM of Bhhrsical transmission capability violates Clause 7(c) of Contract 1605 (Comments, Exhibit 11 at 12), which allegedly assures Plains'though presumably not El Paso's) "right to the full use and enjoyment of its line." Comments at 13-14. Plains then maintains that El Paso ' "breach" i s based on an improper business reason -- in essence that it is so colorless as to be pretextual -- and therefore manifests El Paso's monopolistic intent to restrict competition for new load in southern New Mexico.

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Plains'rgument lacks foundation as a matter of contract interpretation, let alone as a basis for a second full-.scale antitrust review. The full text of Clause 7 of Contract 1605, upon which Plains makes its argument, reads as follows:

"7. (a) The parties hereto recognize and acknowledge that the 345-kV line of El Paso normally will be interconnected at Alburquerque, New Mexico, resulting in a parallel operation of the transmission systems of El Paso and the United States between the Alburquerque and Las Cruces areas.

"(b) The. United States and El Paso each agree, except during emergencies or as otherwise mutually agreed upon, to limit quantities of power normally scheduled for delivery over their respective transmission facilities so as not .to exceed the nominal capability of such facilities; Provided however, that while .it is not the intent of either El Paso or the United States to provide transmission service for the other between the Alburquerque and Has Cruces areas, it is recognized that from time to time power and energy may flow inadvertently over the system of either party

.between these areas, and for such inadvertent flow no transmission charge shall be made by either party to the other; Provided further, that in the interest. of achieving the maximum system

'eliability available under the interconnected system operations recognized by this contract, the United States and El Paso each agree that in the event of a breakdown, emergency, or planned outage on the transmission system of either party, the other party shall without, charge make every, effort to furnish, during the period of such breakdown, emergency, or planned outage, .any and all transmission requirements of the, party affected; however, the owner of. the transmission facilities to be so utilized shall .be the .sole judge, of its ability to furnish the required transmission service.

(c) Nothing herein contained shall obligate either El Paso or the United States to reserve a portion of their respective transmission 23

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capability for the use of the other, or restrict the, party owning the paralleling line from enjoying its full usage and capability."

The intent of the above provision, when it is read in its entirety, is clear enough. Clause (a) recognizes that the parties'ransmission lines are to be interconnected and operated in parallel between Alburguerque and Las Cruces.

Clause (b) limits each party's use to the nominal capability of its own line. Clause (b) recognizes that, in the character of interconnected operations, inadvertent flows of one party will occur on the lines of the other party.

Clause (b) further commits each party to use its best efforts to provide backup transmission service in an emergency to the extent that it deems itself able to do so.

Neither party is to charge for inadvertent .flows or

.emergency backup service. The final clause, Clause (c),

provides that nothing in the contract -- the reference obviously is particularly to the immediately preceding Clause .(b) --. is to create a reservation or dedication of a portion of the capability in either party's line for the use of the other party or is to prevent either party from enjoying. the. full usage and capability of its own line.

These provisions are typical of arrangements for interconnected operations of electric transmission systems

.in parallel. It is usual for such systems to permit inadvertent flows without charge; it is also usual for such systems to provide emergency backup service to each other

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without charge. But such exchange of services does not reserve or dedicate capability in either system.

Clause (c) is explicitly cast to take .precedence over any provisions of the contract that. might,,produce a contrary result. This intent is expressed in the opening words of the clause, "Nothing herein contained shall," etc. By reason of those words, in the event of a conflict between the claims of one party under Clause (b) and those of the other party under Clause (c), the Clause (c) claims prevail.

In Clause (b) the parties "recognize". that, inadvertent power flows will occur on the lines of the other party and agree not to charge one another for such flows. But, under

'Clause (c), the obligation to accommodate the inadvertent flows of the other. party is conditional: it ceases when the first party has to reserve capabi:lity r

on its line to accommodate the inadvertent. flows or if the flows interfere with full usage of the line. Clause (c), it will be observed, is perfectly evenhanded in its proscription against encroachment on usage and capability. Plains, no less .than El'aso, is subject to its strictures.

Under Cl'auses (b), and (c), so long,"as permitting one party's "inadvertent flow"'oes not require that capacity on the other party's line be, reserved, each party may enjoy access to the other party's line for inadvertent flows without, encroaching upon that party's full usage of its line. But once the total capability of the interconnected 25

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lines is limited under the Operating Nomograms to less than

,the sum of their individual capabilities, the situation reverses. In that case, El Paso must limit its usage of its line in the interest of regional reliability, and flows on El Paso's line prevent El Paso from Plains'nadvertent making full usage of the line that it otherwise might make.

In effect, to accommodate Plains'nadvertent flows, El Paso today must reserve capability on its line for Plains'sage and reduce its own usage of the line. Under Clause (c), El capability or to accept such restriction in usage. While the Operating Nomogram limitations apply, if Plains were to propose to increase its inadvertent flows over El Paso's lines, it lies within El Paso's prerogative under the contract to decline to accommodate the flows.

Because of Clause 7(c), Plains'uggestion that El Paso must sacrifice the transmission capability of its line so that Plains can realize the full capability of its line deeply offends the terms of the contract. The very heart of Plains'ssertion is that El Paso is required to (1) reserve a portion of its line for the use of Plains and (2) restrict its enjoyment of the full usage and capability of its line to accommodate Plains. All of this is claimed so that Plains not only will have the full usage of its line in the face of the region-wide constraints imposed under the Operating Nomograms, but will have the benefit of the 26

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reliability .conferred under those Nomograms without bearing any burden whatsoever -- either in terms of constrained use or payment. Plains thus reads the contract .as making El Il" But nothing

"

in the contract imposes on El Paso any such role. To the contrary, Clause 7(c) explicitly forecloses that role. Even Plains seems to recognize that its reading a Section 7(c) is tenuous. Comments at 14-15 n.3. As a matter of contract law, then, Plains has no foundation for its position.

Nor does its position have a foundation as a matter of equity. Both Plains and El Paso benefit from, and as members of NMPP have agreed to, the increased system reliability effected and maintained by the ".N-minus-1" operating criterion. This benefit, however, can be achieved only by operating the system at less than its maximum capacity. It. is. eminently fair that Plains, like every

,other member of 'NMPP, should bear its respective fair share of the concomitant costs. Plains'osition that it should enjoy the full, stand-alone capacity, of its line while .El Paso incurs all the costs of effecting system reliability (including those attributable to Plains), is hardly reasonable. Plains seeks to att'ain ful'1, stand-alone capacity while, at the same time, reaping the reliabil'ity benefits of being part of an integrated transmission 27

lpga system.~" It has no claim to this right as a matter of law and has no claim to it, as a matter of equity, either.

In yet a third respect, Plains'osition lacks foundation: quite aside from its merits as a matter of law or equity, the claim is advanced in the wrong forum.

Plains'ontentions relate to the allocation of capability in parallel transmission lines under an interconnection contract. At core, the matter is one of applying the words of the contract, to the facts posed. The issue has nothing to do with the Palo Verde project or El Paso's operations as a joint owner of the project. While the legal and equitable points against Plains are telling, the most telling point of all, for the purposes immediately at hand, is the jurisdictional point -- just as ALAB-665 establishes that the Commission was not intended by Congress to police aspects of the antitrust laws that manifest no nexus to nuclear facility licensing, a fortiori the Commission was not intended to "be the forum in which all manner of

~4 Of course, there is a means by which Plains could maintain the original capacity of its line it insists is its due despite the passing of the original conditions of operation. That would be for the interconnection between Plains'ine and the El Paso line to be severed, which, incidentally, would also re-establish the original lack of redundancy and line reliability under which the Plains'ine was constructed and operated at the time Contract 160S was drafted. See id., section 7(b) (last clause).

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contractual and power-pool-related disputes might be settled.

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III. 'The Potential Sale to Rio Grande A. The Facts Plains'econd allegation of anticompetitive activity by El Paso relates to a prospective sale of power by Plains to Rio Grande Electric Cooperative (."RGEC"). Comments at 11-15. Once again, Plains oversimplifies the relevant facts.

RGEC is a long-standing wholesale customer of El Paso' for full requirements power supply for RGEC's Van Horn and Dell City service areas. These servi'ce areas are remote, sparsely populated agricultural districts which depend. on pumping water from 100 to 300 feet underground for surface irrigation. RGEC's load in these service areas consists largely of irrigation pumping load. The general depression in the prices of agricultural products has adversely affected farming operations at Dell City and Van Horn. :Many farming operations may no longer be economic, regardless of the..price of,pumping power. Others will be affected by rate increases for pumping power.

Facing major wholesale rate increases,,RGEC approached

'El Paso with a plea for rate mitigation. The basis for RGEC's plea was that its pumping load was highly price-elastic and possibly would virtually disappear if wholesale rates were significantly raised. This would leave RGEC with substantial sunk investment in transmission and distribution facilities no longer needed.

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In maki'ng its approach, RGEC made clear to El Paso that it was interested in either lower rates from El Paso or lower cost power purchases from other utilities to be delivered by El Paso. In so doing, RGEC was using, as it was entitled to do, competitive considerations to induce -El Paso to lower its wholesale rates below the cost of service level. RGEC requested that El Paso provide service at a rate of 4.7g per kilowatt-hour, but indicated that a rate of 5g per kilowatt-hour would be acceptable. It also requested El..Paso to advise whether it would provide transmission service from Plains to the Dell:City service area. RGEC was interested in transmission service. to Dell City because its power supply contract with El Paso for that area was terminable as. of the beginning-of-year 1987. By contrast, its power supply contract .for the Van .Horn service. area was not terminable before 1989.

El Pa'so has a history of cooperation with other

,utilities in the provision of transmission services and power supply services. As the Staff itself noted in its negative significant changes determination for PVNGS-1 and- -2:

"El Paso [has] continued to offer and provide to small utilities wholesale power service, wheeling service and various other coordinated services on a scale comparable to, and perhaps even larger than, that undertaken prior to the construction permit stage."

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Arizona Public Service Co. et al., 48 Fed. 'Reg. 6,060 (1983). In responding to RGEC's request, for transmission service, El Paso was mindful of its policy to offer transmission service to any utility of available capacity within the transmission system under transmission rates filed at the Federal Energy Regulatory Commission. The question was whether there was any transmission capacity available on the transmission path from Plains to Dell City.

In assessing this question there were two separate segments of the transmission. system that were separately considered.

The first segment, was from West, Mesa to Las Cruces, the segment in which Plains and El Paso operate parallel transmission lines, as previously described. The second segment was from Las Cruces to Lane, a segment in which only El Paso operated transmission facilities.

El Paso concluded that there was no available capacity on either segment of these transmission facilities. El Paso

,utili'zes any available transmission capacity in the West Mesa to Las Cruces 345 kV line to supply imported power that is less expensive than the locally generated power. If El Paso were to transmit power for RGEC from Plains over this 345 kV line, the consequence would be to preempt these imported power deliveries. That would necessitate the operation of higher cost generation in the El Paso area and thereby would result in a higher cost of power to El Paso's 32

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retail and wholesale customers than if the transmission service were not rendered.

The situation was similar with respect to the second segment, Las Cruces to Lane. There, too, the transmission capacity was limited, so that, even if Plains were able to deliver the power to Dona Ana (the southern terminus of its 115 kV line) without interfering with El Paso's use of its 345 kV line, the costs of power supplied to El Paso's remaining wholesale and retail customers would be higher than otherwise. In the case of the second segment, as in the case of the first segment, the provision of such transmission service would necessitate the operation of higher cost generation in the El Paso area and thereby would result in a higher cost of power to El Paso's retail and wholesale-customers than otherwise would be experienced.~~

El Paso thus had need of the limited capacity on both segments -of the facilities between Plains and Dell City to provide economic service to its power supply customers. In The load exists on the transmission system because the power being delivered at the Lane end of the system is generated at or east of the Las Cruces end. Generation capacity between the two points (notably El Paso's Rio Grande station) is not used because the incremental cost of the imported power is lower. However, when the reliable capacity of the importation system is reached, generating power at the intermediate station reduces the aggregate power the import transmission system is required to carry and hence reduces the extent to which prudent reliability constraints are exceeded. "Ordinary" wheeling charges do not include the costs of such local generation.

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its letter of October 21, 1986 .responding to RGEC's request for transmission service (Comments, Exh. 10), El Paso noted that the requested transmission service would cause El Paso to replace energy transmitted over the affected lines with generated energy at a significantly higher cost and therefore declined to provide the service "in the circumstances which you have proposed."

This letter was given to counsel for RGEC at a prehearing conference on October 23, 1986 at the Federal Energy Regulatory Commission in the wholesale rate increase proceeding. Immediately following the prehearing conference, counsel for RGEC discussed the response with representatives of El Paso. Counsel for RGEC understood the letter to mean that El Paso was willing to provide transmission service if RGEC was willing to pay a rate that would recover El Paso's additional generation costs as well

.as its transmission costs. El Paso had previously determined that the. service would be offered under such make-whole rates if it were requested. RGEC made no such request. Plains itself never requested transmission service to RGEC.

El Paso continued its negotiations with RGEC over a mitigated power supply rate. It reached an agreement to supply service to RGEC at a maximum of 5Q per kilowatt-hour at both Van Horn and Dell City for a period of not less than one year from October 7, 1986. This rate is well below El

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Paso's fully allocated cost of service but above its variable cost .of service. El Paso further agreed that RGEC could terminate its power supply at Dell City on October 6, 1987 by giving 30 days'otice prior to that date. This agreement both met the rate level that RGEC had indicated would be acceptable to preserve its pumping load in the short term and allowed RGEC a further opportunity to consider its power supply options at Dell City in the fall of 1987. The above arrangements were incorporated in a settlement agreement between El Paso and RGEC,in the wholesale rate case and have been submitted to the Federal Energy Regulatory Commission for its approval. See Exhibit B. There are no outstanding disputes between El Paso and RGEC.

El Paso did not, as Plains claims, "flatly refuse[)" to provide transmission service to RGEC. Comments, at 12. El Paso's policy was, and is, to offer transmission service on its transmission lines if capacity is available. In the case at hand, there was no transmission capacity available for the service requested, and El. Paso therefore was within i'ts rights in declining to,supply the service. Nonetheless, it stood prepared, and RGEC understood that it stood prepared, to render the -service under a make-whole transmission rate should RGEC so request. RGEC never requested.

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B. Si nificant Chan e (1) Occurrence of Change Since Last Antitrust Review.

Insofar as Plains uses the RGEC episode as a restatement of the NMPP importation entitlements dispute, for the reasons set forth above El Paso submits that no "change" has been shown. Insofar as it involves the question of the willingness of El Paso to wheel Plains'ower through the Las Cruces-Lane system, El Paso submits that there has been no substantive change, but acknowledges that the precise set of facts could not have been raised at any earlier antitrust assessment stage.

(2) Attributable to El Paso.

Insofar as Plains uses the RGEC episode as a restatement of the NMPP importation entitlements dispute, for the reasons set forth above, El Paso submits that it is unfair to attribute that situation to El Paso. Insofar as it involves the question of the willingness of El Paso to wheel Plains'ower through the Las Cruces-Lane system, El Paso believes that there has been no substantive change, but acknowledges that the precise set of facts re'late only to the capacity of its own system and the conditions under which El Paso is able and willing to make that system available to others.

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(3) Likel to Warrant Commission Remed (a) Nexus. As with the entitlements matter discussed above, Plains abjures even the attempt at, demonstrating that anything of which it complains bears even the remotest nexus to PVNGS-3. Consequently, regardless of all other considerations, invocation of an additional antitrust. review on the basis of the RGEC assertions of Plains is barred.

(b) Antitrust Merits. Assuming for purposes of analysis that the El Paso Las-Cruces-Lane system could be considered an "essential facility," no violation of any duty owed to others by the owner of the .facility can be established since (i) El Paso did not deny RGEC access to the system but, rather only insisted that the costs associated with that access be paid; and (ii) given that

.that system is already operating at capacity for El Paso's own purposes, El Paso is,not obligated under the "essential facilities" doctrine to curtail its own use in order to provide access to others. See Hecht v. Pro-Football, Inc.,

570 F.2d 982, 993 (D.C. Cir. 1977), cert. denied, 436 U.S.

956 (1978); Gamco Inc. v. Providence Fruit. and Produce Buildin , Inc., 194 F.2d 484, 487-88 n.3 (1st Cir. 1952),

Ec cert. denied, 344 U.S. 817 (1952); see also Seesen

v. Professional Golfers'ssociation of America, 358 F.2d 165 (9th Cir. 1966), cert. denied, 385 U.S. 846 (1966).

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IV. 'The S rin erville-Luna Line El Paso is in the process of constructing a new 345 kV line running from the Springerville substation. in eastern Arizona to the Luna substation in southern New Mexico. This line is presently scheduled to be in service by June, 1989, assuming prompt and favorable regulatory action.. Once completed, the Springerville-Luna line will be used, in part, to transmit El Paso's share of power generation from Four Corners Units 4 and 5 and PVNGS-l, -2 and

-3:.'lains contends that El Paso has denied Plains any access to this new line. This denial, Plains asserts, violates the Sherman Act, because it is "a simple and improper refusal to grant access to an essential, facility."

Comments at 22.

Even assuming that the Springerville-Luna line is .an "essential facility", an assumption El Paso rejects, Plains has .not, in fact, demonstrated a cognizable "denial." of access. El Paso'.s position, which it reiterates here, has been (and continues to be,) that it is will'ing to make any

,excess capacity on its .lines -- 'including Springerville-Luna -- available to any utility desirous of taking it up. Thus, regardless of whether The mere fact, that, once built, 'Springerville-Luna will carry some of the power generated by,PVNGS-3 does not, of course, supply the required nexus. See supra note 13 and accompanying text.

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Springerville-Luna might properly be considered to be an "essential facility," there has not and never will be any "denial" of the facility to any extent beyond that needed to meet El Paso's own needs.

Whether or not excess capacity will exist on the new line will depend upon such factors as (i) the resulting New Mexico system importation limits in 1989, given the availability of Springerville-Luna plus any other enhancements to the system that may be in place at that time, (ii) the load and capacity situations of El Paso and the other members of the NMPP then, (iii) commitments made to others for capacity on the line and (.iv) the availability from time to time of economy energy to El Paso from areas north and west of southern New Mexico. Plains is apparently confident that there will be available capacity in the line; El Paso is less certain. But, in any case, if there is available capacity, it will,be made available to Plains and other uti'lities.

Second, even were El Paso not willing to commit to making excess capacity available, predicating a Commission OL-stage antitrust review thereon would be precluded because of the lack of any '"meaningful tie" between PVNGS-3 itself and the anticompetive situation alleged by Plains.. As pointed out earlier, Plains has made demands solely on El Paso's existing or proposed transmission facilities; it has not attempted to (and indeed cannot) establish any nexus 39

0 between those allegations and the operation of PVNGS-3.

Plains can make and has made no assertion showing how the nuclear facility itself will actively promote or sustain any alleged anticompetive situation, either in the electrical transmission market or elsewhere. Accordingly, ALAB-665

(~su ra, 19 NRC 22 (1982)) must control.

V. Coo erative Transmission Enhancements Finally, Plains asserts that in late August, 1986, it suggested to El Paso that system studies be conducted to see if additional apparatus could be installed or modified on the transmission system either on the proposed or existing lines to increase the import capability to southern New Mexico. Plains maintains that El Paso to date has not responded to its sytems-studies proposal or expressed any desire to explore the need for such studies. Nhat Plains then characterizes as a refusal to cooperate is claimed to reveal El Paso's scheme to perpetuate Plains'eliance on El Paso and to limit effecive competition for new load in southern New Mexico.

Once again, Plains'allegations relating exclusively to El Paso's proposed and existing transmission systems does not .address or satisfy the statutory nexus requirement,.

'Prescinding from this defect, Plains'isportrays El Paso' willingness to engage in cooperative studies. The entire NMPP exists because of the efforts of El Paso (among others) to engage in such studies and bring their potential to fruition. El Paso for some time has been engaged with PNM in joint studies of the effect of the proposed Springerville-Luna line and the OLE line on transmission conditions in New Mexico. El Paso believes that its joint studies with PNM have been taken as far as is feasible and that a wider participation among New Mexico utilities is

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necessary for the studies to be brought to a,satisfactory conclusion. As set out in the letter included herewith as Exhibit. C, El Paso has proposed that the studies be transferred to the auspices of the NMPP with participation by all New Mexico utilities and an Arizona utility, Tucson Electric Company, in its role as a participant in the Springerville-Luna line. If this proposal is accepted, Plains and all other affected utilities would be included in the further studies. One potential use of the studies would be to determine the effect of the Springerville-Luna line upon the Operating Nomogram.

El Paso's preliminary .analysis suggests that the line will increase capacity to transmit power from north to south by over 70%, from 550 mW to 950 mW. The Springerville-Luna line is scheduled for service in .June 1989. Thus, the limitations on north-south transmission capacity in New Mexico, which lie at the base .of Plains'omplaint, are expected to '.be resolved within 30 months.

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Conclusion For the foregoing reasons, the Staff should determine that no significant changes in El Paso's activities or proposed activities have occurred and that no operating license antitrust review is advisable.

Res ectfully submitted, R. K. Gad III Randall W. Bodner Ropes Sc Gray 225 Franklin Street Boston, Massachusetts 02110 (617) 423-6100 George F. Bruder Bruder 6 Gentile 1350 New York Avenue, .N.W.

Washington, D.C. 20005 (202) 783-1350 Royal Furgeson, Jr,.

Kemp, Smith, Duncan .Ec Hammond Post Office Drawer 2800

'El Paso, Texas 79999 (915) 533-4424 William W. Royer El Paso Electric .Company Post Office Box 982 El Paso, Texas 79960 (915) 543-573:1

~Comban

• Person upon whom service should be made.

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Ichor) Exhibit A to El Paso Response Alhguerqu <~k Springerville gFuV HEx le.O Hsbdgo l(SKY Cnc 4'o

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BRUDER 8c GENTILE 1350 NEW YORK AVENUE, N. W.

. SUITE 600 OEORUE F DRUDER WASHINGTON, D. C. 0005 CARMEN L. OENTILE ALDERT R SIMONDS, JR (303) m3-I350 IIOWARD E. WAIIRENDROCK J. MICIIEL MARCOUX UNACTIVS)

JAMES E. IIICKET, JR JAMES II~ RcOREW January 13, 1987 The llonorable Kenneth F. Plumb Secretary Federal Energy Regulatory Commission

. 825 North Capitol Street, N.E.

washington, D. C. 20426 Regarding: Hl Paso Electric Com any, Docket Nos.

HF.86-.368, HR86-638 and HR86-709

Dear Air. Plumb:

Pursuant to Rule 602 of the Commission's rules of practice and procedure, El Paso Electric Company submit's as an offer of settlement the enclosed executed Settlement Agreement dated January 9, 1986 between itself and Rio Gi ande Electric Cooperative, Inc. The Settlement Agreement should be transmitted to Presiding Judge Charles E. Bullock.

The Settlement Agreement resolves all issues in these proceedings between HI Paso and Rio Grande. Upon approval of the Settlement Agreement, the proceedings may be terminated between Hl Paso and Rio Grande.

Enclosed are an original and 14 copies of the following documents:

1. A motion to Judge Bullock asking him to transmit the Settlement Agreement and certify'he record to the Commission.

2. The executed Settlement Agreement.

3. A statement explaining the Settlement Agreement.

4. A proposed letter accepting the Settlement Agreement.

Exhibit Sheet: l Bofto30.El Paso Response

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The Honorable I(enneth F. Plumb

'anuary 13, 1987 Page 2

5. A copy of a letter to the parties to be served with these settlement materials advising them of the date on which comments are due.

6. A list of the parties served with these settlement materials.

Please let me 1:now if other information or materials are required in connection with this Settlement Agreement.

Very truly yours, Albert R. Simonds, Jr.

Attorney for El Paso Electric Company Enclosures cc: Attached List Exhibit B to El Paso Response Sheet 2 of 30.

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.UNITED -STATHS OF AMERICA BEFORE THH FEDERAL ENERGY REGULATORY COMMISSION

.) Docket Nos. ER86-368 Hl Paso Electri'c Company ) HR86-638

) and ER86-709 HL PASO ELECTRIC COMPANY's MOTION'O TRANSMIT SETTLEMENT. AGREEMENT'ND TO CERTIFY RECORD Attention: The Honorable Charles E. Bullock El Paso Electric Company ("EPE") today filed with the Secretary of the Commission for transmission to the Presiding Administrative Law Judge an executed. Settlement Agreement resolving all issues between itself and

'Rio Grande Electric Cooperation, Inc., in the above dockets.

Any comments on the Settlement Agreement are due to be filed with the .Commission on or before February 2, 1986, pursuant to Rule 602(f)(2) of the Commission's rules of practice and procedure. The settlement between. Rio Grande and the Company is not contingent on settlements with either of the other wholesale customers, Texas-New Mexico Power Company and Imperial Irrigation District.

Hl Paso and Rio Grande desire to have the Settlement Agreement.

between themselves approved by the Commission and placed into effect as promptly as possible. They therefore request the Judge to certify the Exhibit B to El Paso Response Sheet 3 of 30.

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Settlement Agre'e'ment to the Commission independently of any other settlement agreements submitted in this proceeding.

V/HEREFORE, El Paso. Electric Company requests that the Presiding Judge, upon receipt of comments, transmit the Settlement Agreement to the Commission and certify the record to the Commission.

Respectfully submitted, BRUDER a GENTILE Albert R; Simonds, Jr.

Bruder a Gentile

'1350 New Yorl- Avenue, N.N.

Suite 600 washington, D. C. 20005 Telephone: (202) V83-1350, Attorneys for El Paso Electric Company January 13, 1987 Exhibit B to El Paso 'Response Sheet 4 of 30.

0 CERTIFICATE OF SERVICE I hereby certify that I have this day served a copy of the foregoing EL PASO ELECTRIC COMPANY's MOTION TO TRANSMIT SETTLEMENT AGREEi'~IENT AND TO CERTIFY RECORD upon each person designated on the official service list compiled by the Secretary in this proceeding in accordance with the requirements of Rule 2010 of the Commission's Rules of Practice and Procedure.

Dated at V/ashington, D.C. this 13th day of January, 1987.

Albert R. Symonds, r.

Bruder 5 Gentile 1350 New York Avenue, N.N.

Suite 600

)Vashington, D. C. 20005 Telephone: (202) 783-1350 Of Counsel for:

El Paso Electric Company Exhibit B to El Paso Response Sheet 5 of 30.

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UNITED STATES OF AMERICA FEDERAL ENERGY REGULATORY COMMISSION El Paso Electric Company Docket No. ER86-368 ER86-638 and ER86-709 SETTLEMENT AGPEHMENT BETV/HEN EL PASO ELECTRIC COMPANY AND RIC GRANDE ELECTRIC COOPHPATIVE, INC.

This Settlement Agreement is made and entered into by and between El Paso Electric Company .("the Company".) and Rio Grande Electric Cooperative, Inc. ("Rio Grande" )

INTRODUCTION On August 5, 1986 the Company fled increased rates for service to Rio Grande in Docket No. ER86-638-000. The Company proposed an increase of approximately 56 0,000 based on the 1986 test year cost of service submitted'ith the Sling.

On September 29, 1986 the 'Commission accepted the increase for filing, permitted it to become effective subject to refund on October 7, 1986, ordered a proceeding, consolidated the proceeding with the proceeding previously ordered in Docket No. ER86-368 and ordered EPH to file compliance rates within 30 days reducing the rates to reflect the sale leaseback of Palo Verde No. 2 and a delay in that unit's scheduled service date.

On October 28, 1986 the Company tendered its compliance filing as required by the Commission's order of September 29, 1986. The Company Exhibit B to El Paso Response Sheet 6 of 30.

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requested that the filing be made effective subject to refund on October 7, 1986. The Commission has taken no action on the filing.

The Company and Rio Grande each filed petitions for rehearing of the Commission's.order of September 29, 1986. The Commission has not acted on either petition.

The Company and Rio Grande 'have agreed in settlement of all issues in the present proceeding to a settlement rate to be effective from October 7, 1986 through October 6, 1987 and thereafter until that rate is changed by the Company pursuant to Section 005 of the Federal Power Act. In order to implement the settlement rate the parties have executed amendments,to the agreements for the Company's service to Rio Grande at Dell City and Van Horn and have attached-those amendments to this Settlement Agreement together with rate schedule supplements containing the settlement rate.

As a result of the settlement discussions, but subject in every particular to the conditions set forth 'n this Settlement Agreement, including acceptance of this Settlement Agreement in its entirety and without change or condition by the Commission, with the understanding that each term of the Settlement Agreement is in consideration and support of every other term, the parties have agreed as follows:

ARTICLE I The parties agree in settlement of all issues in this proceeding, including those raised in the pending petitions for rehearing, that the attached amendments and rate schedule supplements are to become effective for service beginning October 7, 1986. The Commission's order r

accepting the Settlement Agreement will serve as acceptance of those Exhibit B to. El Paso Response Sheet 7 of 30.

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amendments and rate schedule supplements for service as of that date C

without the need for any further filing by the Company.

ARTICLE II The Company will refund aH amounts collected for service to Rio Grande from October 7, 1986 in.excess of the amounts that would have been collected under the settlement rates together with interest calculated according to Section 35.19 of the Commission's regulations. The refunds will be made within 30 'days after the Commission issues the order accepting this Settlement Agreement.

ARTICLE III 3.'1 -

The making of this Settlement Agreement shall not be deemed in

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any respect to constitute an admission of'any party that any allegation or contention. in this proceeding is true or valid.

3.2 The making of this Settlement Agreement establishes no princi-ples 'and shaH not be deemed to foreclose any party from making any contention in any proceeding or investigation except that (a) the parties shall be bound by the agreements in Articles I and II, (b) the attached amendments and rate schedule .supplements shall not be subject to challenge before any administrative agency or court and (c) Rio Grande agrees not to raise price squeeze contentions before the Commission or the courts pertaining to the rates provided for in those amendments and rate schedule supplements or in previous filings in the captioned dockets.

3.3, The acceptance of this Settlement Agreement by the Commission shall not in any respect constitute a determination by the Commission as to the merits of any allegation or contention made in this proceeding.

Exhibit B to El Paso Response Sheet 8 of 30.

if' 3.4 The Settlement Agreement is submitted on the condition that, in the event the Commission, does. not by order accept it in its. entirety, without change or condition, it shall be deemed withdrawn and shall not constitute any .part of the record in this proceeding or be used for any other purpose.

3.5 The discussions between the parties which have produced this Settlement Agreement have been conducted on the explicit understanding that all offers of settlement and discussions relating thereto are and shall be privileged, shall be without prejudice to the position of any party or participant presenting any such offer or participating in any such dis-cussion~ and,are. not to be used in any manner in connection with this proceeding or otherwise.

This Settlement Agreement's. entered into in washington, D.C. this

~ th day of January, 1987 by and between the undersigned parties.

EL PASO ELECTRIC COI"IPANY By RIO GRANDE ELECTRIC COOPERATIUE, INC.

Hy.

Exhibit B to El Paso Response Sheet 9 of 30.

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AMENDMENT TO AGREEMENT DATED NOVEMBER 27, 1967 BETWEEN RIO 'GRANDE ELECTRIC COOPERATIVE AND EL PASO ELECTRIC COMPANY This Amendment to the Agreement for the Purchase of Electric service between El Paso Electric Company ("the Company" ) and Rio Grande Electric Cooperative, Inc. ("Rio Grande" ) dated November 27, 1967 ("the Agreement" ) is entered into by and between the Company and P.io Grande, this ~ day of+~~~ 1987.

WHEREAS, the 'Company fQed a rate increase for service to Rio Grande with the Federal Energy Regulatory Commission ("FERC") on

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August 5, 1986 in Docket No ER86-638-000; I

WHEREAS, on September 29, 1986 the FERC accepted the filing to become effective subject to refund on October 7, 1986, ordered a pro-ceeding on the lawfulness of the increase and consolidated that proceeding with one previously ordered in Docket No. ER86-368-000 in which Rio Grande had already intervened; WHEREAS, the Company and Rio Grande have achieved a settlement of all issues between them in the consolidated proceeding based on a settlement rate schedule to be effective at least through October 6, 1987 and thereafter until the rate schedule is changed by the Company pursuant to Section 205 of the Federal Power Act.

Exhibit B to El Paso Response Sheet l0 of 30.

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VPHEREAS, the Company and Rio Grande plan to use the period when the settlement rate schedule will be in effect to negotiate concerning issues involving Rio Grande's power supply requirements.

NOSY THEREFORE, the Company and Rio Grande agree to amend the Agreement between them in two respects:

First, they agree to add the following provisions as a new Article XIII:

1. The Company will bill Rio Grande under the rate schedule attached as Appendix A for service from. October 7, 1986 through October 6, 198V and thereafter until that rate schedule is changed by the

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Company pursuant to Section 205 of the Federal Power Act.

Notwithstanding the Company's general right to Qle rate changes under Article IV as amended by letter agreement of June 11, 1984, the Company may not file any change in the rate schedule in Appendix A to be

'effective 'for service prior to October 7, 1987. Ilowever, the Company is not'prevented by this Amendment (a) from Qling a change in that rate schedule prior: to October 7, 198V as long as the Company does not propose that the change become effective prior to that date or (b) from requesting that a change in that rate schedule be assigned an effective date prior to October 7, 1987 as long as it requests that the change be suspended until at least until that date. In the event that the Commission fails to suspend any change under clause (b) above until at least October 7, 1987, the filing resulting in such suspension shall be considered not authorized under this Amendment.

2. Any demand ratchet contained in any rate schedule increasing the demand charge provided in Appendix A shall not refer back to Rio Sheet ll ofto 30.El Paso Exhibit, B Response

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Grande's peak demands occurring during the period >vhen the demand charge provided in Appendix A is in effect.

3. Any change filed by the Company in the rates provided in Appendix A. will be subject to the requirement of Article 4.2 of the 1984 settlement agreement between the Company and Rio Grande in Docket No.

ER84-236-000 concerning El Paso's obligation to file a rate moderation plan.

'Second, they agree t'o amend Article I to read as follows:

The term of this Agreement shall be for a period of 5 years from'anuary 1, 1968 and shall continue

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thereafter from year to year, unless a written notice

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to the contrary is given by either party to the other at .least thirty (30)'ays prior to the expiration of the original term, or any renewal thereof; provided, however, that Rio Grande may terminate the Agreement as of midnight October 6, 1987 by giving

" such 'notice to the Company, by September 7, 1987.

IN WITNESS WHEREOF, the parties hereto have executed this Agree-ment as of this day of January 1987.

EL PASO ELECTRIC COMPANY By RIO GRANDE ELECTRIC CGOPERATIVE, INC.

By Exhibit B to El Paso Response Sheet 12 of 30.

~li APPENDIX A PASO ZLECTRiC COMPANY RATE SCHEDULE Fr&C NO. l8 SUPPLLfENT NO. 10 Wholesale Electric Service to Rlo Grande Electric Cooperative at Dell"Ch.ty, Texas, for Resale Purposes Exhibit B to El Paso Response Sheet 13 of 30.

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EL PASO ELECTRIC COMPANY SPECIAL CONTRACT AVAILABILITY:

To Rio Grande Cooperative, Inc., Dell City, Texas, for resale purposes; service to be at Company-approved location and delivery voltage.

MONTHLY RATES!

Customer Charge 785.63 per month Demand Charge 13.24 per kilowatt of billing demand Energy. Charge 5 0.02008 per kilowatt-hour The total monthly bill to be paid shall not exceed an equivalent billing rate of 50,05 per KRH. Total monthly bill is the. summation of monthly rates, Fuel C3.ause and Power. Factor A'd)ustment Clause as billed to the customer. The, equivalent billing rate is 50.05 as determined by dividing the total monthly bill by the total .monthly kilowatt-hour. hhen the equivalent b'illing rate of 50..05 .is. exceeded, the, demand charge shall be ad)usted to the ne'arest cent- until the equivalent b'lling rats of 50,05 is achieved.

Interest penalties as a result of delinquent payment or any prior delinquent payments will not be included in the deter=inst"on of the equivalent bi13.ing rate.

BILLING DEMAND:

By measurement, highest 60-minute integrated KV demand during the month, but nDt less than SO% of the highest demand established during the twelve months ending with the current bi13.ing month.

MINIMUM CHARGE:

The customer charge plus the demand charge.

FUEL CLAUSE!

(1) The fue'lause sha3.3. be of the form that provides for periodic ad)ustments per KRi of sales equal to the difference between the fuel cost per Zkd of sales in the base period and in the current period!

,Fuel in Base 50.01674 Ad)ustment Factor Sm Sb l~."

s the expense of fossil and nuclear fuel 'n the base (b) t

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and current (m) periods; and "S" 's the P~d sales 'n the base and current periods, all 'as defined below.

Exhibit B to El Paso Response Sheet 14 of 30.

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(2) Fuel costs (F) shall be the cost oft Fossil and nuclear fuel consumed in the uti'ity's own planta, and'he utity's share of xossi3. and nuclear "uel consumed in

)ointly owned or leased plants.

(ii) The actual identifiable fossil and nuclear fuel costs

, associated with energy purchased for reasons other than

'dentified in paragraph (a)(2)(iii) oz this section.

(iii) The net energy cost of energy pux'chase, exclusive oi capacity or demand charges (irrespective of the designation assigned to such transaction) when such energy 's purchased on an economic dispatch basis. included therein may be such costs as the charges for economy enezgy purchases and the charges as a result of,scheduled outage, all such kinds ox energy being purchased by the'buyer to substitute fox its own higher cost energy; and less (iv) The cost of fossil and nuclear fuel recovered through inter-system sa3.es inch.uding the fue3. costs related to economy energy sales and other energy sold on an economic dispatch basis ~

(3) Sales (S) shall be all KWH's sold, erc3.uding inter-system sales.

Where for any reason, billed'ystem sales cannot be coordinated with fuel costs for the billing per" od, sales nay be equated to the sum of (i) generation, (ii) purchases,, (iii.) interchange-in, less (iv)'nergy associated with pumped stox'age operations, 3.ess (v) 'nter-system sales referred to in paragraph (a)(2)('v) aoove, less (vi) total system losses.

(4') The ad)ustment factoz developed according to this procedure sha3.1 be modified to properly allow xor losses (presently estimated at 2.49K) associated only with wholesale sa3.ea for resale.

(5) The adjustment factor developed according to this px'ocedure may be further modified to.allow the x'ecovezy of gross receipts and other simi3.ar revenue based tax charges occasioned by the fuel ad)ustment revenues.

(6) The cost of fossil fuel shall include no items other than those listed,'n Accounts 151 end 120 of the Commission's Uniform S'stem of Accounts fox'ublic Utilities and Licensees; provided that whenever the foregoing determination would be affected by energy pxoduced from facilit'es undergo'ng operational tests prior to being placed in commercial operation, the, components ox P shall be ad)usted so that

'ts value. 's the same as it would have, been, if not avai'able except to the extent that the 'nvestment in such test energy were construction work in progress ("CVTP") in those facilities 's included in wholesale rate base auppo t'ng rates n ef ct during the cur" nt per'od. The; cost of uclear fuel shall be that as shown in Exhibit. B to El Paso Response Sheet 15 of 30.

41 II

Account 518, except that if Account 518 also contains any expense for ossil fuel which has already beea inc3.uded in the cost fossi'uel, t shall be deducted rom this account. (Paragraph C of Account 518

'acludes the cost of other fuels used for anc'llary steam facilitiea.),

POP& FACTOR ADJUSTMBFZ CLAUSE:

if the power factor is below 90K laggiag, a charge of 00.05 per KVAR ~ill.

be made for"each KVAR by which customer's computed V/AR demand exceeds 48.432K of the KH billing demand.

T~~S OF PA%PNT:

All bills under this schedule are due and payable when rendered and become del'iaauent ten days thereafter. An interest penalty will be a'ssessed'a bills exceeding the payment date, interest will be based oa the floating prime rate at Chase Manhattan Bank prorated daily from the due date to the date of payment.

T~S AND CONDITIONS!

The Company's rules and regulations apply to service under this schedule.

Service under this schedule shall be for customer's entire demand, and eaergy requirements and sha3;1 not be used for supplementary or standby servi'ce. A written contract is required for this service.

El Exhibit B t;o 30. Paso Response Sheet, l6 of

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AMENDMENT TO AGREEMENT DA'TED MARCH 2, 1977 BETWEEN RIO GRANDE ELECTRIC COOPERATIVE AND EL PASO ELECTRIC COMPANY This Amendment to the Agreement for the Purchase of Electric Service between El Paso Electric Company ("the Company" ) and Rio

.Grande Electric Cooperative, Inc. "("Rio Grande" ) dated March 2, 1977

("the Agreement" ) is. entered into by'and between the Company and Rio Grande this 7 day oM~~ 1987.

WHEREAS, the Company filed a rate increase for service to Rio Grande with the Federal Energy Regulatory Commission ("FEP.C") on August 5, 1986 in Docket No ER86-638-000; V)HEREAS, on September 29, 1986 the FERC accepted the filing to become effective subject'o refund on October 7, 1986, ordered a pro-ceeding on the lawfulness of the increase, and consolidated that proceeding with one previously ordered in Docket No. ER86-368-000 in which Rio Grande had already intervened; WHEREAS, the Company and Rio Grande have achieved a settlement of all issues between them in the consolidated proceeding based on a settlement rate schedule to be effective at least through October 6, 1987 and thereafter until the rate schedule is changed by the Company pursuant to Section 205 of the Federal Power Act or until the Agreement is terminated.

Exhibit B to El Paso Response Sheet l7 of 30.

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V(HEREAS, the Company and Rio Grande plan to use the period when the settlement rate schedule will be in. effect to negotiate concerning issues involving Rio Grande's power supply requirements.

NOIU THEREFORE, the Company and Rio Grande agree to amend the Agreement. by adding the following provisions as a new Article IX:

1. 'he Company wiQ bill Rio Grande under the rate schedule attached as Appendix A for service from October 7, 1986 through October 6, 1987 and thereafter until that rate schedule is changed by the Company pursuant to Section 205 of the Federal Power Act.

'Notwithstanding the Company's right 'to file rate changes under Section 205 pursuant to Article IV as amended by letter agreement of June 11, 1984, the Company, may not file- any change in the rate schedule in Appendix A,to be effective" for service prior to October 7, 1987.

However, the Company is'ot prevented by this Amendment (a) from filing a change in that rate schedule prior to October 7, 1987 as long as the Company does not propose that the change become effective prior to that date or (b) from* requesting that a change in that rate schedule be assigned an effective date prior to October 7, 1987 as long as it requests that the change be suspended until at least until that date. In the event that the Commission fails to suspend any change under clause (b) until at least October 7, 1987, the filing resulting in such suspension shall be considered not authorized under this Amendment.

2. Any demand ratchet contained in any rate schedule increasing the demand charge provided in Appendix A shall not refer back to Rio Grande's peak demands occurring during the period when the demand charge provided in Appendix A is in effect.

Exhibit B to El Paso Response Sheet l8 of 30.'

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3. Any change filed by the Company in the rates provided in Appendix A will be subject to the requirement of Article 4.2 of the 1984 settlement agreement between the Company. and Rio Grande in Docket No.

ER84-,236-000 concerning El Paso's obligation to file a rate moderation plan.

IN WITNESS WHEREOF,.the parties hereto have executed this Agree-ment as of this F@ day of January 1987.

EL PASO ELECTRIC COMPANY By RIO GRANDE ELECTRIC COOPERATIVE, INC.

Exhibit B to El Paso Response Sheet 19 of 30.

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APPENDIX A EL PASO ELEC~rQC CO~LPMNY RATE SCHEDULE PERC NO. 19 SUPPLE./~MT NO. 10 Wholesale Electric Service to Rio Grande Electric Cooperative at. Van Horn, Tezas; for Resale Purposes Exhibit B to El Paso Response Sheet 20 of 30.

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EL PASO ELECTRiC COMa PALY SPECLM CONTRACT RZO GRANDE COOP~KTZ'sr., 3:NC.: VP2f HOR.'J. T"- ~-'.S AVAEL&3:LITv.

To Rio Grance Cooperative, 3:nc., Van Horn, Tezas, for resale pu poses; service to be at Company-approved location and de3.ivery voltage.

HONTHLY RATES'ustomer Charge 988.98 per month Demand Charge 10.64 per kilowatt of billing demand Energy Charge 0 0.02166 per kilowatt-hour The total monthly bill to be oaid shall not ezceec an equiva'e"t billing rate of'0.05 per KWH; Total month1y bill is the summation o =onthly rates, Fuel Clause and Power ."actor Adjustment Clause as customer.'he eauivalent bilng rate is b0.05, as dete inca by divid ng bil'o the the total'onthly bill by the total monthly kilowatt-hour. bren the equiva3;ent bil3.ing rate of 50.05 is ezceeded, the cemanc charge shall be adjusted to the nearest cent until the equivalent billi g rate of $ 0.05 is achieved.

3:nterest penalties as a result of delinquent pa~ ent o" any pr" or delinquent payments will not be included in the dete m'ation of the equivalent bi3.ling rate.

BlM~iNG DE~L4%):

By measurement,. highest 60-minute integrated:i~v" de a d curing t.-.e month, but 'not less than 50:.'r'he highest demand estaol'shed dur'ng the twelve months ending with the current billing month.

HLMlNUif CHEZ:

The customer charge plus the demand charge.

FUEL CLAUSE:

(1) The fuel clause shall be of the form that provices =or per'odic adjust=ents per K<vH of sales equal to the difference bet<<-een the fuel cost per Kiri of sales in the base period and in the curre,t period:

Fuel in Base 80.01722 Fm "b Adjust"ent Factor =

Sm Sb re: "=" s the ezpense or foss 1 and nuclear 'n the tahe and cu""e..t (m) .periods; and'-S" is the k~"~ sales

=

'"el the base base znc (b) current periocs all as defined below.

Exhibit. 8 to El Paso Response Sheet 21 of 30.

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(2) Fue3. costs (F) shall be the cost oz:

(i} Fossil a nd n u clear ~ue 1 consumed <<n the uti'ity's own plants, and the utility's share oz- fossil and nuc3.ear fuel consumed in jo<<ntly o~wed or 'eased plants.

(ii) The actual identifiaole fossil and nuc3.ear fuel costs associated with energy purchased for reasons othe" than identified in paragraph (a)(2)(ii<<) oz this section.

(iii) The net energy cost o energy purchases, exclusive of capacity or demand, charges (irrespective oz the designation assigned to such transacti'on) when such energy is purchased on an economic dispatch basis. Included therein may be such costs as the charges for economy energy purchases and the cnarges as a result of scheduled outage, all such kinds of energy being purchased by the buyer to substitute for its own higher cost energy; and less (iv) The cost of fossil and nuclear fuel recovered through inter-system sales including"the fuel costs re'atad to economy

, energy sales and other energy sold on an economic c'spatch basis.

(3) Sales (S) shall be all klvH sold, excluding, inter-system sales. W'narc for anv reason billed system sales cannot be coordinated with zue3.

costs zor the billing period, sales may be eauatad to the sum or (i) generation, (ii) purchases, (iii) interchange-'n, 'ss

. (iv) energy associated with pumped storage operations, 'ess (v) inter-system sales referred to in paragraph (a)(2)('v) aoove less (vi) total system 3.osses.

(4) The adjustment factor devalooed according to th's proce'ure shall be modified to properly allow for losses (presently est'=ated at 5.41K) associated on3.y with wholesale sales for resale.

(5) The adjustment. factor developed according to th<<s procedure may be further =odif<<ed to allow the recovery of gross receipts and other similar revenue based tax charges occasioned by the uel adjust-ent revenues".

The cost oz fossil fuel shall include no items other than those listed in Accounts 151 and 120 of the Commission's Un'rm System of Accounts =or Public Utilities and Licensees; provided that whenever the foregoing determination. would be affected bv energy produced from fact'as undergoing operat<<onal tests prior to being placed 'n cowercia" operation, tha'components of F shall be ad',usted so .that

<<ts value 's the same as it would have been if not avai'able except to the extent that the invest=ant in such test energy ware const". ction,work in progras's ("Cv3:P") in those fac<<1't'as is

<<ncluda'n who'asala rata base supporting rates <<n a==act cur ng the currant "eriod. The cost o= nuclear fuel shal'a that as shown in Exhibit B to El Paso Response Sheet 22 of 30.

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Account 518, ezcept that if Account 518 also contai~s any ezpense fo" fossil fuel which has already been included in the cost fossil fuel, it shall be deducted zrom this account. (Parag aph C oz Account 518 incluces the cost of other fuels used for ancillary stea fact'es.)

POWER FACTOR ADJUSTIVE'.IT CLAUSE:

lf the power factor be made for each is below

'by 90% lagging, which'ustomer's a charge oz 50;06 oer HVAR will

%VAR computed EVAN demanc ezceeds 48.432" oz the KW bilU.ng demand.

T~>S OF L4P.'~MT:

All bills, under this schedule are due and payable wnen rendered and become delinquent ten davs thereafter. An interest penalty vi be assessed on bills ezceeding the payment date. interest vill be based on the, floating prime rate at Chase Hanhattan Bank. prorated daily from the due date to th'e date oz payment.

TH~!S A%) COiND1TZO.IS:

The Company's rules and regulations apply to se v'ce under th's schedule.

Service uncer this schedule shall be for customer's ent're de and and energy reouirements and shall, not be used zor supplementary or stanch ~

service. A wr'ten contract is required zor this se vice.

Exhibit B to El Paso Response Sheet 23 of 30.

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UNITHD STATES OF AMHRICA FEDERAL HNERG Y RHGULATORY COMMIS SION Hl Paso Electric Company . Docket No. ER86-368-001 ER86-638 and HR86-709 EXPLANATION OF SETTLEMENT BETWEEN EL PASO ELHCTRIC COMPANY

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AND RIO GRANDE" EL'ECTRIC COOPERATIVE, INC.

On August 5, 1986 Hl Paso Electric Company ("the Company" ) filed increased rates for service to Rio Grande Electric Cooperative, Inc.,("Rio Grande" ) in Docket No. ER86-638-000. The Company proposed an increase of approximately $ 650,000 based on the 1986 test year cost of service submitted with the Qling.

On September 29, 1986 the Commission accepted the increase for filing., permitted it to become effective subject to refund on October 7, 1986, ordered a proceeding, consolidated the proceeding with a proceeding previously ordered in Docket No. ER86-368 and ordered EPE to file compliance rates within 30 days reducing the rates to reflect the sale leasebacl- of Palo Uerde No. 2 and a delay in. that unit's scheduled service date.

On October 28, 1986 the Company tendered its compliance filing as required by the Commission's order of September 29, 1986. The Company requested that the filing be made effective subject to refund on October 7, 1986., The Commission has taken no action on the filing.

Exhibit. B to El Paso Response Sheeh 24 of 30.

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The Company and Rio Grande each filed petitions for rehearing of the Commission's order of September 29, 1986. The Commission has not acted on either petition.

The Company and Rio Grande have agreed in settlement of all issues in the present proceeding to a settlement rate to be effective from October 7, 1986 through October 6, 1987 and thereafter until that rate is changed by the Company pursuant to Section 205 of the Federal Power Act.,In order to implement the, settlement rate the parties have executed amendments to the agreements for the Company's service to Rio Grande at Dell City and Van Horn and have attached those amendments together with rate, schedule supplements containing the settlement rate to the Se'ttlement Agreement. The rate schedule supplements reduce the demand charges and put a ceiling of $ .05 per kilowatt hour on the total amount that the Company can charge under all components of the rate. The amendments provide that .if the Company increases the demand charge contained in the rate schedule supplements the demand ratchet will not refer back to demands imposed while the supplements were in effect.

Respectfully submitted, BRUDER 5 GENTILE Albert R. Symonds, Jr.

January 13, 1987 Exhibit B to El Paso Response Sheet 25 of 30.

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DRAFT LETTER APPROVING SETTLEMHNT AGREEMHNT Albert R. Simonds, Jre s Esquire 13ruder fh Gentile 1350 New York Avenue, N.$V.

Suite 600 Washington, D. C. 20005 Regarding: El Paso Electric Com any, Docket Nos.

ER86-368, ER86-638 and ER86-709

Dear Mr. Simonds:

On January 13, 1987 a Settlement Agreement between El Paso Electric Company ("Hl Paso" ) . and Rio Grande Electric Cooperative, Inc. ("Rio Grande" ) was filed in the above referenced dockets to dispose of all issues in this proceeding between El Paso and Rio Grande. The Commission. Staff filed comments in support of the settlement on No other comments were filed. The Presiding Administrative Law Judge certified the uncontested Settlement Agreement to the Commission on 198 The offer of settlement is in the public interest and is hereby approved. The Commission's approval of this settlement does not constitute approval of, or precedent regarding, any principle or issue in this proceeding; The contract amendments and rate schedule supplements appended to your Settlement Agreement as Appendix A are accepted for filing effective October 7, 1986 and are designated as shown on the attached enclosure.

Exhibit B to El Paso Response Sheet 26 of 30.

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,, Albert R. Simonds, Jr., Esquire January , 1987 Page 2

',Within thirty (30) days from the date of this letter order, any amounts collected in excess of the, settlement rate levels shall be refunded together with interest computed under Section 35.19a of the Commission's Regulations. Within fifteen (15) days after making such refunds, the Company shall file with this Commission a compliance report showing monthly, billing determinants, revenue receipt dates, and revenues under the prior, present and settlement rates,, the monthly revenue refund, and the monthly interest compute'd, together witlr a summary of such information for the. total refund period. El Paso shall furnish copies of such report to Rio: Grande and to the state commission within whose jurisdiction Rio Grande distributes and sells electric energy at retail.

By direction of the Commission.

Kenneth F. Plumb Secretary cc: To All Parties Exhibit B to El Paso Response Sheet 27 of 30.

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DRUDER 8C GENTILE 1350 NEW YORE AVENUE) N. W.

SUITE BOO OEOROE F. DRUDER WASHINOTON, D. C ~ 0005 ChIQIER L. OEBTILE hLDERT R. SIMONDS, JR. (Roe) mo-ISDO HOWhBD E WhHREIIDBOCK J. MICHEL NhBCOUK O'NACTIYE)

J*MES E. HICKEY, JB JhMES H. BcOBEW January 13, 1987 To the Attached List Regarding: El Paso Electric Com any, noel-et Nos.

HR8G-368, HR8G-638 and HR86-709 Gentlemen:

In accordance with Rule 602(d) of the Federal Hnergy Regulatory Commission's rules of practice and procedure, I enclose copies of a Settlement Agreement between El Paso Electric Company and Rio Grande Electric Cooperative, Inc. filed this. day in the above-docketed proceedings.-- Under- the Commission's regulations, any comments on the Settlement Agreement must be filed with the Commission on or before 1"ebruary 2, 1987 which is 20 days from the date of filing.

Very truly yours, Albert R. Simonds, Jr.

Attorney for El Paso Electric Company Enclosures Exhibit B to El Paso Response Sheet. 28 of 30.

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LIST OF RECIPIENTS l ~

'onald R. Allen, Esquire Robert A. O'Neil, Esquire Gregg D. Ottinger, Esquire ~!ilier, Balis and 0'yfeil, P.C.

Duncan, Allen 5 lfi'tchell 1101 14th Street, N.H.

1575 Eye Street Suite 1400 Washington, D.C. 20005 Hashington, D. C. 20005 John Penn Carter III, Esquire Hr. Larry Lauz llorton, Knox, Carter'and Hanager Hholesale Rates Foote Texas-Nev ~fexico Power Comoany Law Building, Suite 101 Tower II 895 Broadway 4100 International P~ive El. Centro, California, 92243 Fore Horth, Tezas 76113 Roger if. Roberge, Ph.D. Arnold Fieldman, Esquire Hr. Hilliam C. Petty Joshua L. ~fencer, Esquire R. H., Beck S Associaces Goldberg, Fieldman and Suite 1507 Lethan, P.C.

3003 '.f. Cencral Avenue 1100 15th Street, Phoenix, Arizona 85012 Hashington, D.C. 20005

~fr. Henry Legaspi R D Gvartnev lfanager-Po~~er Depar tment Manager Imperial irrigation Disrrict Rio Grande Electric Cooperarive, Inc.

333 E. Barioni 101 Spring Street Imperial, California 92251 Brackettville, Texas 78832

'.fr. David T. Helsby Hr. Roberc L. Cor'oin R. H. Beck 6 Associates Assisranc Vice President Fourch and Blanchard Building El Paso Electric Comoany "121 Fourch Avenue 303 North Oregon Streec Seat cle, Hasningcon 98121 El Paso, Texas 79901 Exhibit B to El Paso Response Sheet 29 of 30.

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LIST OF RECIPIENTS

, e ~r Sheila S. Hollis, Esquire Joanne Reuter, Esquire ~

Robert Y. Hirasuna, Esquire New Mexico Public Service Commission roadhurst, .Brook, Mangham & Hardy 224 E. Palace Avenue uite 300 Santa Fe, New Mexico 87503 1730 Pennsylvania Avenue, N.W. ~ ~

Washington, D;C. 20006 Gary A. Norgans, Esquire Mr. Carl N. Stover federal Energy Regulatory Commission C. H. Guernsey & Company Room 8604-A. 3555 N. W. 58th Street 825 North Capitol Street, N.E. Oklahoma City, Oklahoma 73112 Washington, O.C. 20426 Mr. C. Dwight Slough Mr. Dennis Duf fy Federal Energy Regulatory Commission 2456 18th Avenue 400 First Street, N.W. Columbus, NE 68601 Room 602-A Washington, D.C. 20426 Mr. Neil Romero Thomas L. Blackburn. Esquire 3710 Grant, Suite G Federal Energy Regulatory Commission Reno,. Nevada 89.513 825 North Capitol, N.E.. Room 8606-C Washington, D.C. 20426 Hs. Camile Lucas Federal Energy Regulatory Commission

-"00 First Street, N.W.

Room 408-0 Washington, 0.C. 20425 Exhibit. B to El Paso Response Sheet 30 of 30.

8 Peso Electrtc Co~pony P.O. Sox 982 Kl Polo, Texas 79960 (915j 543 5711 January 28, 1987 Mr. Allan S. Davis Chairman, Planning & Engineering Committee New Mexico Power Pool Texas-New Mexico Power Company 4100 Zntarnational Plasa Ft, Worth, Texas 76109 Dear Allan~

Two mafor transmission pro)ec<<a in tho Now Mexico EHV grid, the Springerville-Luna 345Kv line and the OM Pro)oct,. are scheduled to ba placed in service in 1989. These projects will affect all of the electrical utilities Qa New Mexico. A study currently being performed )ointly by El Paso Electric Company, (EPE) and Public Service Company of New Mexico (PNM) ie well along in further documenting and providing additional evaluation of these impacts.

However, to provide a broader perspective and input with regard to individual company future <<ransmkssion capabilities and requirements, EPE proposes to expand the study and place it under the direction of the New Mexico Power Pool (NMPP). We also feel that Tucson Electric Power Company (TEP), as a participant in the Springerville-Luna Pro]ect, should bo included.

If you approve, we vill be pleased to host a meeting in February of the members of the NMPP Planaing & Engineering Committee and a representative from TRP in El Paso to discuss the basis and scope of the expanded study.

If you believe the study ~ boold include otharog please let me know, If you have other suggestions or need more information, please contact me at (915)543-5746 yours, 'incerely James P. Maloney Vice President cci NMPP Executive Cosssittee Members NMPP Planning & Engineering Comaittee Me'mb'era Mr. Thomas A. Delawder, Tucson Slectric Power Company Exhibit C to El Paso Response

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CERTIFICATE OF SERVICE I, Robert K. Gad III, hereby certify that on February 6, 1987, I made service of the within "Response of El Paso Electric Company to 'Comments of Plains Electric. Generation and Transmission Cooperative, Inc , on Anti'trust Information, Request for Finding of Significant Change, Request, for Antitrust Hearing and Request for Imposition of License Conditions'," by mailing, copies thereof., postage prepaid, to:

Benjamin J. Vogler, Esquire Office of the General Counsel U.S. Nuclear Regulatory Commission-Washington, D.C. 20555 Frederick L. Miller, Jr., Esquire Duncan, Weinberg Sc Miller, P.C.

Suite 800 1614 M Street, N.W.

Washington, -D.C. 20036 Arthur C. Gehr, Esquire Snell Wilmer Ec 3100 Valley Bank Center Phoenix, Arizona 8 R. K. Ga II

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Enclosure 1

.8702250036 PALO VERDE EDG MEETING JANUARY, 20, 1987 Attendees Affiliation Manny Licitra NRC/NRR/PBD7

.Michael J. Davis NRC/NRR/PBD7 Charles Yiiller NRC/NRR/PEICSB

,Robert Wright NRC/NRR/EB Randy Buckhalter APS Bill guinn .APS, MGR Licensing Edwin E. Van Brunt, Jr. APS - Executive Vice President Jerry Haynes APS - Vice President David Dinger PNL - DIESEL, Team E. B. Tomlinson NRC/h! RR/PE I CSB Dean Houston NRC/ACRS Harold Gray NRC -RI - M&PS Section Walter P. Haass NPC -IE - VPS

.Deborah Boe Stone & Webster/NMP2 Surjit S. Pabby Niagara Mohawk/NMP2 Kei:th D. Ward Niagara Mohawk Donald S. Brinkman NP.C/, I E/D I James A. Isom NRC/I E/DI A. B. (Burt) PNL/Reactor Tech, Center Johnson'arry Puth NRC/NRR/TAMB Jeff Harper NRC/IE/VPB

, P.

ilk 1'.

E. H. Trottier NRC - Vendor Branch E. W. Yierschoff NRC - IE-VPB W. E. Ide APS - Director, Corp QA/QC P,. H. Butler. APS - Director Technical Services W. 0. Ferguson Cooper-Bessemer - Mgr. 'Materials Engr.

J. M. Horne Cooper-Bessemer - Vigr. Analyt. & Compr. Eng.

Harold W. Yakos Cooper-Bessemer - Yarketing Allen Lambert Cooper-Bessemer - Ngr. Quality Control Paul J. Lowzecky Consul'tant to PNL Wallace L. Johnson V. P. Reynolds 'French, 5 Co.

Don French President, V. P. Reynolds French 5 Co.

R. J. Sorenson PNC Bill Simko APS - Viech Engr. Supv.

Dan. Sachs APS Metallurgist Dave Sellers NRC/NRR Jose Calvo NRC/NRR/PEICSB George Knighton NRC/NRR/PBD7 Jim Raleigh NRC/NRR/PBD7

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Enclosure 2 DIESEL GENERATOR FAILURF. REPORT AGENDA INTRODUCTIONS

'Introduction of NRR/NRC Staff (G. Knighton)

'Introduction of Plant Staff (E.F.. Van Brunt)

'Introduction of Vendor Staf f (A. I.ambert)

FVENT SU~DIARY (J,. Haynes)

'Plant Status At Failure

'Action Taken On Shift

'Recovery Plan INITIAL INVESTIGATION (R. Buckhalter)

'Quarantine and Access Control

'Initial Inspection "Clean-up/Internal Inspection

'Categorization of the Damage ENGINEERING OVERVIEW (W. Simko)

'Diesel Structure and Operation

'Sequence of Events

'Sl,ide Presentation Of Damage FAILURE ANAL'YSIS (D. Sachs, W. Ferguson)

'Investigative Techniques

'Root Cause Conclusions

'Failure Boundaries

'Manufacturing Specifications

'Evaluation of Other Units REPAIR WORK (R. Buckhalter, W. Johnson, D. French)

"Categories of Damage/Repair

'Repair Techniques OPERABILITY VERIFICATION (J. Horn, R. Buckhalter)

'Cooper's Engineering Analysis Retesting Program

()UALZTY PROGI4V1 REVIEW (W. Ide, A.. I.aml)ert)

D/G I'al)! l ca t3.on Re vie'w

~(equality I'rogram Impl lent iona Con t rol of. Rework SCHEDIILE (R. Buckhalter) 0 h

Diesel Generator Rework Unit Startup RAR I /'O/B7

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L4TRODUCTlO>> OF PLANT STAFF E. E. Van Brunt E<ecutive Vice President Nuclear Operations J. G. Haynes Vice President Nuclear Production R. H. Butler Director Technical Services 4'. E. id e Director Corporate Quality Assurance M, F, Quinn Hanager Licensing R. A. Buckhalter Unit III Superintendent 'Outage ".lanagement 4l. Simko Hechanical .Supervisor Operations Engineering D. Sachs Hetallurgist Operations Engineering INTRODUCTION OF VENDOR STAFF AD Lambert Cooper Energy Services Quality H. Hakos ,Cooper Energy Services Harketing J. liorne Cooper Energy Services Engineering 4'. Ferguson Cooper Energy Services Hetallurgy.

DE French Reynolds French President M; Johnson Reynolds French Vice -President RAB I/20/87

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EVENT

SUMMARY

PLANT STATUS

'Integrated 'Safeguards T'esting in progress.

Two,remaining major sections:

1. The twenty four (24) hour run followed by a full load rejection and subsequent hot start (within five (5) minutes) by an SIAS/CIAS/LOP actuation.,

-2. Full flow injection to SG 81'nitiated by AFAS-1/LOP.

Diesel Generator "B"'oaded to 100% for approximately 2.5 hours5.787037e-5 days <br />0.00139 hours <br />8.267196e-6 weeks <br />1.9025e-6 months <br />. Load increased to 110% within ten (10) minutes the engine failed.

'CTION TAKEN ON SHIFT

'Metallic noise and alarms received.

'Emergency;stop push button actuated.

'Determined diesel experienced mechanical damage and still running.

'Manually, shut air intake butterfly valve.

'Fuel racks shut speed reduced to 295 RPM.

'Contacted Cooper Field Services from engine room.

'Isolated fuel oil, starting air', electrical power .to stop engine, prevent fire.

'Sprayed foam into crankcase.

'Isolated lube oil.

'Engine stopped approximately 50 minutes after event.

'RECOVERY PLAN

'Engine Room Secured

'Meeting With Plant Manager

'Recovery T<am Organized RAB 1'/20/87'

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.C. After the Recovery Team was established. a review of the initial information identified 'the following immediate actions.

1. Maintain the area quarantined and restrict access.

2. Appoint an inspection crew to survey the damage and map out the area.

3. Determine the extent of the damage to the diesel and supporting systems.

4. Determine the cause of the diesel engine failure.

5. Evaluate the impact to Units I and II.

6. Evaluate the impact to ISG Testing and Project .Schedule.

RAB 1/20/S7

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PL'ANT MAN'AGER J. 8YNUM OA/QC LICENSING W.F. QUINN COORDINATOR R. BUCKHALTER ENGINEERING WORK CONTROL PLANNING/SCHED. TEST/RET" ST J 'DONAHUE 'E HAMMERSLAG W. SIMKO M. BRIGHT ~

NUCLEAR ENG. DIV. DUTY OMD COORDINATOR OMD SCHcDULER

~

STARTUP ENG.

OPS MECH. ENG. STARTUP (D.G.) ENG. OPS ENG.

OPS METALURGY CONSTRUCTION REP. OMD ELEC. LEAD OPS ELcC. ENG COOPER FI.D. 'SER.

COOPER ENG. PARSONS-PEEPLES BECHTEL RES ENG, FLD. S" R.

COMMUNICATIONS PROCUREMENT WARRANTY S. RYAN J. TENCH R. F UL' hI E R DUTY STA. ,MATERIAL QC PURCHASING N.T.A.

RAB 1/20/87

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ANPP DIESEL GENERATORS

'Diesel Generator Ratings

'Diesel Generator Layout

'Failure Events

'Engine Description

'Connecting Rod Construction

'.Description of Damage

'Failure Location RAB 1/20/87

IATT RATING ( SHoRT TE:RM- 6050 2 HOUR MAXIMUM)

CYLINDER PEAK FIRING PRESS, Psl 1600 CYLINDER COYiPRESSION PRESS, PsI 560 CYLINDER 'EXHAUST TEMP., 'F 980 LUBE OIL PRESS:

NOR<VL, PSI 50

'LOW'LARM"I. PS I 35 LOW'HUTDOWN, Ps I 30 i&i S 1/20/87

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Forward End 1L 1R 2L

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2R'ntermediate Main 3 Bearing (11 Total) 3L 4L 4R

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5 SL Vide Main Bearing (1 Total)

GL GR 7L 8 ~

SL Intermediate Main Bearing (ll Total) 9L 9R 10 10L 10R Thrust Bearing Faces Left Bank 12 Right Bank Rotation Aft End VMS 1/20/87

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. SEQUENCE OF EVENTS

( APPROX. T I t"IES )

06:39 DG B Sl'ARTED FOR 24 HOUR RUN.

09:00 DG 8 LOADED To 110'OR 2 HOUR RUN.

00'07'56 DG 'D STATUS-TP,I'P. GENERA'TOR OFF, CONN CTING ROD BRO!'E AIR CONTROL LINE ON SIDE OF ENGINE CAUSING CONNECTING ROD HIGH TEMP. ALARM, No AIR To SHUT OFF F;UEL RACK. AT 600 RPH.

09:07:58 DG i" ENERG. t4AN TRIP-TRIP, ACTUATE BY SU ENGR "

09:07:58 DG 8 LO PRIORITY TRBL-TRBL, LOFTI. LUBE OIL PRESS-50 PSI.

09:09:56 DG 8 OVERSPEED-TRIP. OVERSPEED TRIP, MANUALLY IMIT'IATED BY CLOSING AI.R INTAKE BUTTERF'I Y VALVE.

DROPPED TO 295: RPN ~

09:10 FIRE DEPT. NOT IF I ED'. THOUGHT IT, WAS CRANK CASE EXP Los I Oi'J ~

09: 12 START I NG A I R I SOLATED.

09:13:52 DG I3 LUBE oiL Lo PRESS-TRIP, 30 Psi, s~iLL 295 RP;~.

09:13:54 DG 8 FO DAY TK LEvEL-LQ-LO, sHUT QFF FUEL 01-L UPsTAIRs.

09:30 CoiNTROL Po"i'ER ISOLATED-STOP ANYTHING ELECTRICAL BUT ENGINE STll L AT 295 RPYi DRIVEbl BY LUBE OIL SELF PRli11NG, COOPER CONTACTED, 00 55 LUBE OIL ISOLATED.

09 'Q DG STOP P ED BY I NJ ECT I NG FOAt1 BY F I RE DE PART t! ENT .

PASl HISTORY: RUN To CHECK I'tlTERLOCKS VARIOUS IDLE - SLIP RING CHECK 6 HRS, 35 STARTS - 50'~ OP, 110RE 50 HRS.

97 'HRS.

LAsT RUN: 2.3 ~ou~s - 100'l 9 t<INUTFs - 110/

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Water Outlet Header Turbo Exhaust Exhaust Manifold coakuscion Air Piping

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Base and Oil Sump Lube Oil Header Counterweight i ~

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and Intercooler Cylinder Head tt

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14.

Centerframe Master Rod Water Inlet deader

6. Cylinder Block ll 15 Camshaft

7. Piston .)16 Fuel In)ection Pump Cranks+f t

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CONNECTING ROD Piston P in Oi'1 Passage Articulated I Connecting Master Rod I 'onnects

) Rod rticulated Rod Pin Oil Passages Bearing Shell Bearing Cap WMS 1/20/87

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CONNECTING ROD ENDEARING Ar ti-Rodcu..ared .fas "er Rod i" ush- ng o~els Oil Passage to Piston 3o~e1 Upper Bearing Shell

" ocr l'ang Oxl Groove C=anksha"z, Rod Jo" na" Lover Sear Sh High :eaperature ohu =own Sensor Hole Rod Cap

.

WMS 1/20/87

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CONCLUSIONS OF METALLURGICAL INVESTIGATION OF DIESEL GENERATOR CONNECTING RODS AT PVNGS FAILURE WAS CAUSED BY THE USE OF CRACK-PRONE IRON PLATING FOR REPAIR WORK MASTER ROD I RACTURE MODE l/AS HIGH CYCLE FATIGUE.

WITH VERY LOW OVERSTRESS MASTER'OD BASE METAL MET ALL. CHEMICAL AND MECHANICAL REQUIREMENTS

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TABl.E 1 RESULTS OF TENSILE, CHE'lICAL AND HARDNESS TESTING

lASTER ROD iilATERIAL '('ASTil A521, CI ASS CG)

'Ultimate Yield Tensile Strength Strength .2X Offset Elongation of KSI KSI 19'eduction 70 Area, Tensile Testing- 114 64.7 19 46.8 (0.25" dia. specimen)

ASTN Requirements 48 82 36 (min. )

C t'in S P Si Cr Ni Cu ~ilo Al

.48 .71. .043 .011 .25 .10 .15 ..19 .025 .03 liICROHARDiNESS TESTI'NG (500 GRAN LOAD)

Knoop Hardness 258 (Equivalent RC) 21 (Equi valen t Brinell) 231 TABLE 2 RESULTS OF CHEHICAL AND 'i'iICROHARDNESS, TESTING OF IRON PLATING-C i~in Si Cr Ni Cu Ho Al Chemical 03I7 .003 .001 .015 .04 . 043.

Analysis None Detected tiICROHARDNESS TESTING (500 GRAi~l LOAD)

Knoop Hardness 192 (Fquivalent RB)

Brinell) 17688'Equivalent

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RESULTS OF LIQUID PENETRANT, ULTRASONIC EXAMINATIONS AND REPAIRED ROD LOCATIONS DIESEL GENERATOR NUMBER CONNECTING ROD CYLINDER NUMBER 1A 1B 2A 2B 3A 3B UT No CRACKS NS UT No CRACKS UT No CRACKS UT No CRACKS UT No CRACKS IP CRACKS NS NO CRACKS" UT NO CRACKS UT NO CRACKS UT NO -CRACKS UT NO CRACKS UT No CRACKS UT No CRACKS UT NO CRACKS UT NO CRACKS No CRACKS UT No CRACKS UT No CRACKS PT 7 UT NO CRACKS UT NO CRACKS UT NO CRACKS 8 UT NO CRACKS UT NO CRACKS UT NO CRACKS 9 IP NO CRACKS NS UT NO CRACKS IP FAILED 10 UT NO CRACKS UT NO CRACKS UT NO CRAGKS SOME DISBONDED NICKEL SPRAY IP - IRON PLAT ING NS - NICKEL SPRAY UT ULTRASONIC"'EST PT - DYE PENETRANTTEST

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LIQUID PENETRANT EXAMINATION RESULTS OF llASTER RODS REMOVED FROM ENGINES PVNGS UilIT ~ ENGINE ROD LOCATION IRON OR ANY 13ASE ANY Rl'.PAIR NUH13ER NUH13ER (CYLINDER NICKEL REPAIR METAL CRACl'S? I HATER A I, PROI31.F.'1S?

NUHI3ER) 1'1ATERIAL IRON YES YES (Fracture) (cracks)

IRON YES Yl s Approximately. (ciacks) 1" x 3/8n IRON NO NO NICKEL NO Yl',S (Sma 1 l are;is ol dishondment)

NOilE NO N/A

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OVERVIE'8 OF ALL DEFECTS IDENTIFlEDITH THE PVNGS DIESEL CONNECTING RODS FAll ED ROD - UNIT 3, "B" ENG-I'NE - 09 CYLINDER FATIGUE FRACTURE CAUSED BY .IRON PLATING - ORIGINATED AT LARGE OIL HOLE Si'lALLER FATIGUE CRACK ALSO CAUSED BY IRON PLATING - ORIGINATED AT 'SMALLER OIL HOLE CRACKED ROD - UNIT 3.,

"B" ENGINE - 02 CYLINDER LIQUID PENETRANT INDICATIONS IN IRON PLATING LARGEST IS 1" x 3/8" - EXTENDS INTO BASE MFTAL SMALLER INDICATIONS AT SMALL OIL'OLE AND AT APPARENT DEFECT .IN PLATING ROD WITH DISBONDED NICKEI SPRAY - UNIT 2, "A" ENGINE - N3 CYLINDER NO BASE METAL PENETRANT I,NDI:CATIONS DISBONDED AREA HAS SMALL PERCENTAGE OF TOTAL SPRAYED AREA PILY ClIE rlALF BITIFE FACE OF BAIL '4'AS HOT SPRAYH3

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LOCATION OF REPAIR MATI'.RI A L IN MASTER ROD RANKSllh TYPE OF EARING REPAIR IIATERIAL ORE ARTICULATED PIN 130RI AREA I

PVtlGS ENGINE ROD IRON NICKEL ENTIRE INSIDE I NSI DF. SIDE OF I IS ALL i"' T 'I'IBI R LOCATION PI,ATED SPRAY INSIDE DIAML"I'ER OF DI AI IETER BAIL (BAIL REPAIR (CYL. DIAMETER BORE, NFAR OF BAILS FACE) 'QTERI Al.

NPil13ER ) OIL IIOLES OiMLY (iNO TPAPPED OIL HOLES) BEHIND BUSHING,

'4ITII NO I'.SCAPI PATII TO I'.NCI Nl'.

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YES YES YES YES YES YFS 13 YES YIS 13 YES YES 13 YES YES YES

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INITIAL INVESTIGATION

1) QUARANTINE AND ACCESS CONTROL Security Officers were stationed -at the entrances to the building.

2) INITIAL INSPECTION A. Inspection Crew

'Engineering

'Maintenance

'Work Control Startup

'Cooper Field, Services B. Inspection Results-

'Oil and Foam Mixture of 'Floor Produced. a Hazardous Condition

'Damage Centralized to Number 9 Cylinders

Numerous Large Parts were Ejected'rom the Engine

'Crankshaft Sustained Damage Initial Indications t

0 the Extent of Damage was Repairable C. Mapping of the Area

1. Process Used

'Polaroid snapshots

'35mm prints

'Video Tape D. Parts Collection All parts m were collected in regards to .their relative position in the engine and palletized in a locked room in the maintenance facility.

RAB 1/20/87

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3) CLEANUP/INTERNAL INSPECTION A. Oil was cleaned from floor and diesel externals.

B. Crankcase was pumped down.

C. Parts in the crankcase were mapped and removed.

D. Crankcase was wiped down.

4) CATEGORIZATION OF THE DAMAGE A. Parts Requiring Replacememt

',2 Pistons

/

'1 Power Piston Rod

'1 Articulated Rod

'1 Crankshaft Connecting Rod Bearing

'2 Cylinder Liners

'2 Jacket Water Expansion Seals

'2 Counter Weights

'Miscellaneous Tubing and Instrumentation B. Parts/Components Requiring Repair

'Crankshaft

'Right Side Block

'Center Frame

'Generator

'Supporting Systems RAB 1/20/87

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CATEGORIES OF REPAIR Crankshaft and Reciprocating Parts.

Right Side of Power Block.

Centerframe.

The Generator.

Support 'Systems RAB 1/20/87

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REPAIR WORK CATEGORIES OF REPAIR I) Crankshaft .and Reciprocating Parts

a. Milling of 89 connecting rod bearing pin.

b. Removal of counterweight bolts-

c. Machining counterweight landings

d. Machining counterweight lobes

e. Other damaged reciprocating 'parts will be replaced.

RAB 1/20/87

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2) Right Side Power Block

a. Two cracks inthe //9 outside shell.

b. A crack in the block .housing at the jacket water glange.

c. Two cylinder liners and expansion seals broken.

RAB 1/20/87

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3) Centerframe a., Casting around upper inspection cover on 9L and 9R cylinders will be metal locked.'.

The archway between 9L and 9R cylinders will be replaced by metal locking.

c. 'The hole in the web between cylinders 8 and 9 will be cut out and new metal installed.

RAB 1/20/87

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4) The Generator a; The generator was disassembled and inspected.

b. The oil and foam removed by solvent .and dry rag cleaning.

c. A polarization indez was performed.

d. The generator was reassembled and space heater energized.

• Note: All work was performed at the direction of the Parsons-Peebles Field Representative.

RAB 1/20/87

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5) SUPPORT SYSTEMS

a. Broken tubing and a damag'ed 3" pipe will be replaced in'he starting air system.

b. Damaged tubing in the control air system above 9R cylinder will be replaced.

c. The following systems will be inspected for internal contamination.

They were not damaged externally:

'Fuel Oil System

'Lube Oil System

'Air Intake and Exhaust System

'Jacket Water System

'Cooling Water System RAB 1/20/87

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OPERABILITY VERIFICATION

'Supplier Engineering Analysis

'Supplier Recommended Operational Test

'One Time Design Verificati'on RAB 1/20/87

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SUPPLIER RECOMMENDATIONS FOR OPERATIONAL TEST

1) Measure and Record Cold Web Deflection

2) Perform Hydrostatic Test of Jacket Water System

3) Initial Start Test

4) Break In Run

5) Interim Inspection

6) Final Run Note:~

These tests will be incorporated into planned site testing activities.

RAB 1/20/87

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INITIAL START

1) Start No Load

2) Run 15 Minutes. Make Continuous Visual Observations.

3) Shutdown. Remove crankcase doors and inspect.

a. Peel around all .bearing caps. (main,and rods) for unusual hot spots.

If any observed'emove bearings involved for detailed inspection.

b. Visually check for signs of water leaks.

c. Hand check tightness of exposed chains.

d. Look for apparent distress.

4) If all o.k. refit crankcase doors and proceed.

RAB'/20/87

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BREAK IN

1) Start no load.

2) Run two (2) hours observing all engine parameters and maintain og on an hourly basis. (This logging applies throughout test).

3) Load up to a max. of 25% and hold for two (2) hours.

4) Load up to a max. of 50% and hold for two (2) hours.

5) Load up to a max. of 75% and hold for two (2) hours.

6) Load up to a max. of 100% and hold for two (2) hours.

7) Normal Shutdown.

RAB 1/20/87

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T INTERIM INSPECTION (MINIMUM REQUIREMENTS)

1) Check for external leaks and distress.

2) After thirty (30) minutess following shutdown remove crankcase doors and immediately check the crankshaft web defection per C-3 manual.

3) Visually check inside of crankcase for anomalies.

4) Review log for anomalies.

5) If all o.k. replace crankcase doors.

RAa 1/20/87

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FINAL RVN

1) Start - no load.

2) Gradually increase load to 100% over a two (2) hour period.

3) Increase load to 110% and hold for two (2) hours.

RAB 1/20/87

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RETESTING PROGRAM PHASE I Component Level 'Testing and Inspections, PHASE II Supplier Recommendations for Operational Test and Site Testing to Meet Reg. Guide 1.9'.C.5.

PHASE III Integrated Safeguards Testing RAB'I20/87

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PHASE I TESTING COMPONENT LEVEL TESTS

'73 Instrumentation and Controls Test

'9 Mechanical 'Test

'Class C Cleanliness..Inspections 0

Rm 1/20/87

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PHASE II TESTING SUPPLIER'ECOMMENDATIONS FOR OPERATIONAL TEST Site Specific Test

'35 Consecutive Starts with Load to 50% Power

'Other Load Tests to Verify Generator Performance RAB 1/20/81

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PHASE III TESTING FSAR/RG REQUIREMENT TEST CONTENT FSAR 8. 3. 1. 1. 4. 1 (b) SIAS/CIAS FSAR '6. 3. 1. 3. A (4)

FSAR 7. 3. 1. 1. 10. 7 TABLE 7. 3-6 FSAR 8. 3. 1. 1. 4. 6. A LOP R.G. 1.9.C.4 'SINGLE L'ARGEST R.G. 1.108.C.2.A (1) & (2) LOAD REJECTION R.G. 1.108.C.2.A (3) 2 HR RUN 110% LOAD 22 HR RUN 100% LOAD R.G. 1.108.C.2.A'4) FUEL LOAD REJECTION R.G. 1.108.C.2.A (5) SHUTDOWN/HOT START (WITHIN 5 MINUTES)

SIAS/CIAS/LOP FSAR 5.1.5.G 6 ~ AFAS-1/LOP FSAR 5.1.5.G.7 FSAR 7.3.1.1.10.7 TABLE 7'.3-7 FSAR 8.3.1.1.4.1 (c)

FSAR 8.3. 1'..1.4.6 (b)

RAB 1/20/87

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W.E. I.

j.116/87 QUALITY ASSURANCE REVIEM REVIEW OF DIESEL 'GENERATOR, FABRICATION QUALITY PROGRAN INPLI CATIONS CONTROL OF REWORK

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CONTROL OF DIESEL GENERATOR FABRICATION o INITIAL EVALUATION o TECHNICAL o QUALITY PROGRAN o REQUIRED SUBNITTALS/ENGINEERING REVIEWS o DRAWINGS o ASNE CODE CERTIFICATION

'(PUNPSr VALVES HEAT EXCHANGERS) o SEISNIC ANALYSIS REPORTS o ANAI YSIS 'OF CONPLIANCE WITH IEEE STANDARDS o SHOP TESTING PLANS AND CERTIFIED PERFORNANCE DATA

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CONTROL QF'DIESEL Itf. E, I, GENERATOR FABRICATION 1/16/87 PAGE 2 OA PROGRAfI1 o QA PROGRAH SUBNITTED AND APPROVED o S-LECTED FABRICATIQf'! PROCEDUPES APPROVED o SURFACE PREPARATION/

PA I l'lT I NG o 'HELD IN 6 o IilELD ROD COflTROL HEAT TREATI f'~G NDE o PROJECT OVERVIEW.

o 16 PROJECT AUDITS/PEAUDITS QF GROVE CITY o a AUDITS HAD APS PARTICIPATION AND 1 CONDUCTED BY APS o  ? PROJECT AUDITS/REAUDITS OF rn . VERNON o 255 VENDOR SURVEILLAflCES OF GROVE CITY o 004 SURVEILLANCES OF 13 SUBSUPPLIERS o HO SIGNIFICAflT DEFICIENCIES A'

INSTALLED AND YAINTAINED Il'!, ACCQRDAl'CE WITH BECHTEL QA PROGRAN, o TESTED ON-SIT .

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QUALITY P?GCRAi'~ Ii.PLICATIO"S HAVF THE,,E BEEii OTHER SIGf'JIFICAi'iT FAI.LURES IN COOPER SUPPLIED DIESEL GENERATORS THAT HERE DESIGNED, FABRICATED OR REPAIRED USINC THE S'ANE PPOCESSES AS USED ON PVNGS DIESELS?

WHAT IS THE AFFECT ON, ALO VERDE?

ARE THE t'ETHOD'S UTILIZED TO PERFORN i'lETAL REPAIR ADEQUATE?

HAS COOPER NAINTAINED TRACEABILITY TO THE EXTENT THAT THE LOCATION OF ANY POTEi'~TIALLY AFFECTED CONPO>>ENT IS KHOHN,

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QUALITY PROGRAf~ IflPLICAT, IONS N,E, I.

PAGE 2 1/16/87 HAVE THERE BEEf) OTHER SIGNIFICANT FAILURES IN COOPER SUPPLIED DIESEL GENERATORS THAT MERE DESIGNED. FABRICATED OR 'REPAIRED 'USING THE SAf'iE PROCESS AS USED ON THE PVNGS DIESEL?

o NO, PER CORRESPONDENCE MITH CES.

ARE THE NETHODS UTILIZED TO PERFORfl NETAL REPAIR ADEQUATE?

o APPROACH:

o REVIE';f FAB,,I CATIO:"3 RECORDS FOR CRITICAL CONPONENTS TO DETERI"lINE AREA:AND NETHOD OF REPAIR, o CONNECTING RODS o ART I CULAT I f!6 RODS o PISTON o CRANKSHAFT o REVIEW'ROCEDURES FOR REPAIRS FOR ADEQUACY.

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AUAI.I I Y Pf'i.'6R'""'i IP)LICATIO'5

'6'- 3 o KSULTS:

o 3 COiliNECI ING RODS - I f99 PLATI fIG o 0 Cm'tIECTING B3DS - NICKEL SPRAY o 1 CRANKSHAFT NICKEL SPRAY o 1 PISTON NICKEL SPRAY o 4 PISTONS TIN PLATING o NICKEL SPRAY PRXESS ADEQUATELY SPECIFIED Af'I CCNTBOLLED o TIN PLATING o ACCEPTABlF, IF USED IN LO(-STRESS AREAS, o ACCEPTABLE FOR USE CN BEARING SURFACE tVTERIALS, o CONCLUSIOi5:

o HITH THE EXCEPTION OF IRN PLATII!, HHIOl HAS DISCUSSED EARLIEP, f'ETHODS OF PEPAIP. PEttIEI".ED AT VBJDOR'S FACILI fY HERE DETERNIf'8) TO BE ADEQUATE FOR THE SPECIFIC APPLICATIQ.

NS TRACEABILITY BEEN i'%INTAINED?

o YES, EASED Of'> A C%'ARISON OF FABPICATION RECOPl5 HITH SERIAL NU'SERS At6 LOCATIONS OF 20 RODS ACTUALLY LOCATED IN UiNITS 2 AND 3 DIESELS.

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1/16/87 CONTROL OF REI'IORK SOURCE If'fSPECT IONi 'PECEIPT I NSPECTIOiil Al'JD SOURCE SURVEILLANCE FOR j":ATERIALS SUPPLIED o CONNECTING RODS o .PATCH REPAIRS PERFORf'ED Uf'!DER PVHCS SITL QA PROGRAh AND PROCEDURES, REPAIR PROCEDURES o APPROVED BY CES 0 ACCEPTED BY RESIDENT ENGINEER o COflVERTED TO STEP-BY-STEP MORK PLAfJS/

I >fSPECT IOf'J PLAf'JS llORK PLAflS/INSPECTION PLAi'!S o APPROVED BY:

o COOPER EflERGY SERVICES o PROJECT QUiALITY. CONTPOL ENG I,"!EER o PROJECT QUALITY ASSURANCE ENGINEER o QUALITY Ef'lGI;"lEERIilC o 'OPERAT IGNIS Ef'JC I I'lEER I NG o COYPLETION OF EACH STEP SIGflED BY COOPER Ei'lERGY'ERV I CES..

o EACH INSP CTIO.'J POINT ACCEPTED BY QC INSPECTOR.

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CONTROL OF REWORK N,E, I,.

PAGE 2 1/16/87 QUALITY ASSUPANCE OVERVIEW

,o PROCEDUPE REVIEM o HONITOR IH6 o HOUSEKEEP If'l6 o tlATERIAL COHTROL o I HSPECT I 0"j o PROCEDURAL COfdPLI A!ACE

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UNIT III DIESEL SCHEDULE DG. VENDOR REPAIR BY R. FRENCH CRANKSHAFT 01/-13. to 01/28

'BLOCK 01/24 to 02'/12 CENTER FRAME AND CRANKCASE 01/30 to 02/14 REASSEMBLY OF DIESEL GENERATOR BY COOPER

'20 DAYS ACTUAL WORK

'PART AVAILABILITYPROBLEMS

'OVERSIZE. BEARING ETA 03/19

'MAIN POMER RODS FTA 02/15

'DG REASSEMBLY POST VENDOR REPAIRS 02/18 tn 03/23 DIESEL GENERIC AND'OST REASSEMBLY TESTING

'POST ASSEMBLY GENERICS AND VENDOR RECERTIFICATION TEST 03/25 to 04/15 INTEGRATED SAFEGUARD TESTING AND RETEST ON DIESEL GENERATOR '"B" 05/02 .to 05/07 RAB 1/20/87

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5AFETY S I Gil'I f' Cr'iHCE

SUMMARY

THE PROBABILITY OF OCCURRiNCE OR THE CONSEQUiNCES OF AN ACC I DENT QR MALFUNCT ION OF EQU I'PMENT IMPORTANT TO SAr" ETY PREVIOUSLY EVALUATED IN THE SAFETY ANALYSIS REPORT WILL NOT BE INCREASED ~

EVENTS WHICH ASSUME A LOSS OF OFFS ITE POWER 'DO NOT OCCUR DUR ING IN I T I AL NODE'S 5 OR 6 ~

PRIOR TO SIGNIFICANT FISSION PRODUCT INVENTORY BUILD-UP.

(1) RADIOLOGICAL HAZARDS DO NOT- EXIST (2) THERE IS NO SOURCE OF DECAY HEAT SO THAT THE SAFETY SYSTEMS NORMALLY RFQUI RED TO DISSIPATE THIS HEAT WILL NOT BE REQUIRED ~

CONSEQUENCES IN UNIT 3, DUE TO A RADIOLOGICAL RELEASE IN UNITS 1 OR 2. IS NOT INCREASED FROM THAT DURING THE CONSTRUCTION PHASE.

THE POSSIBILITY OF AN ACCIDENT OR MALFUNCTION OF A DIF-FERENT TYPE THAN'NY EVALUATED PREV'IOUSLY WILL NOT BE CREAT""

ED'HE OPERABILITY OF THE MINIMUM SPECIFIED AC AND DC POWER SOURCES AND ASSOCIATED D.ISTRIBUTION SYSTEMS DURING SHUT-=

DOWN AND REFUELING ENSURES THAT ( 1) THE FACILITY CAN BE MAINTAINED IN THE SHUTDOWN OR REFUELING CONDITION.

FOR EXTENDED TIME PERIODS AND (2) SUFFICIENT INSTRUMENTA-TION AND CONTROL CAPABILITY IS AVAILABLE FOR iiONITORING AND MAINTAINING THE UNIT STATUS

'HE MARGIN QF SAFETY AS DEFINED IN BASIS FOR A'Y TECHNI-CAL SPECIFICATION WILL NOT BE REDUCED FOR MODES 5 AND 6. TECHNiCAL SPECIFICATION BASES RECOGNIZE THAT A MINII'fUM QF ONE 0!iSEL GENERATOR AND ONi OFrSITE POWER SOURCE PROVIDES A SUFFICIENT SAFETY MiARGIN.

FOR INITIAL PLANT NODES 5 AND 6, ONE OPERABLE DIESEL ( ENERATQR IS ACCEPTABLE>

1/16/87-Nr 0

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The Unit startup envelopes the diesel work as follows .with no impact to the startup schedule.

'Fuel 03/15/87 Load'Reactor Head Assembly Complete 04/19/87

'Train "B" Work Window Complete 05/02/87

'DG/ISG Retest 05/02/87 to 05/07/87

'Train "A" Work Window Complete 06/02/87

'Mode 4 Entry 06/10/87 RAB 1/20/87

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