ML19317H433

Status Rept Re Settlement Negotiations' Progress. Discussions Are Continuing.Urges ASLB to Hold Prehearing Conference by 800514 & Requests Deferral of Ruling on Extension.Certificate of Svc & Supporting Documents Encl

ML19317H433
Person / Time
Site:	South Texas, Comanche Peak
Issue date:	05/09/1980
From:	Sampels M TEXAS UTILITIES CO., WORSHAM, FORSYTHE, SAMPELS & WOOLRIDGE (FORMERLY
To:	Atomic Safety and Licensing Board Panel
Shared Package
ML19317H432	List: ML19317H431 ML19317H433
References
NUDOCS 8006050561
Download: ML19317H433 (28)

Text

,

UNITED STATES OF AMERICA NUCLEAR REGUALTORY COMMISSION In the Matter of:

HOUSTON LIGHTING AND POWER CO., ) Docket Nos. 50-498A

_et _al. ) 50-499A

)

(South Texas Project, Units )

1 and 2) )

)

TEXAS UTILITIES GENERATING ) Docket Nos. 50-445A COMPANY, _et _al. ) 50-446A

)

(Comanche Peak Steam Electric )

Station, Units 1 and 2) )

STATUS REPORT

1. By letters dated March 31, 1980 and April 1, 1980, Houston Lighting & Power Company ("HL&P") and Central & South West Corporation -("CSW") , respectively, advised the Staffs of I

the Federal Energy Regulatory Commicsion ("FERC" ) and Nuclear Regulatory Commission ("NRC" ) as follows:

" Houston Lighting & Power Company, Texas Utilities Company and Central and South West Corporation have agreed on a basis for resolving the inter-connection dispute which contemplates the con- )

struction of two DC interconnections between ERCOT' I and SWPP. The three companies have disclosed the ,

substantive terms of the proposed DC interconnections l to the NRC Staff and the Department of Justice in an effort to try to reach an overall settlement l in advance of the scheduled trial date in the NRC proceeding." I

2. Subsequently, a motion for a 30-day stay of pro-cedural dates was filed and, after hearing, granted by the l

l 8006050ggj

,. _2_

Board with the direction that a further status report be made on May 9, 1980.

3. TUGCO, together with other interested parties, participated in a meeting on April 18, 1980, among represen-tatives of the Staff of the NRC, the Staff of the Department of Justice ("DOJ" ) and the Staff of FERC. Engineering, management and/or legal representatives of the Texas Utilities Company System ("TU") , CSW, HL&P , the Public Utilities Board of the City of Brownsville, Gulf States Utilities Company, City Public Service Board of San Antonio, and the City of Austin were present. A detailed explanation of the proposed settlement was outlined by representatives'of CSW, and thereafter TU, CSW and HL&P attempted to answer numerous questions propounded by representatives of the foregoing agencies. XJ considers the meeting to have been positive and the proposed settlement to have received favorable reaction from most of those present.

4. The following Monday, April 21, 1980, representatives of TU met with representatives of the NRC, DOJ and FERC in a further effort to explain the proposed settlement and to answer questions raised by the agency staff representatives.

The questions involved (a) ownership access to the direct 1/

~

In its order of April 10, 1980 the Licensing Board confirmed its oral ruling and entered as item (3) of its order the direction to file a written status report on or before May 9, 1980. On April 15, 1980, the Appeal Board directed (at page 4 of its order) that copies of the next status report to the Licensing Board be filed with the Appeal Board.

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current ("DC") interconnections, (b) exchanger of bulk power over the DC interconnections, (c) wheeling of power in con-

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nection with the utilization of.the DC interconnections, (d) availability of eme.rgency energy during outages of the DC interconnecti6ns and (e) policy commitments of TU.to be included in the operating license for the Comanche Peak Station.

TU delivered a written response addressing each of the inquiries of the respective Staff representatives of the foregoing agencies on Monday, April 29, 1980.

5. Following a series of meetings between engineering representatives of TD and Tex-La Electric Cooperative of Texas, Inc. (" Tex-La" ) over a period of several weeks, a meeting was held on Friday, May 2, 1980. Attending such meeting were the attorneys for Tex-La, TU and representatives of the member cooperatives of Tex-La. ' Attorneys representing Tex-Ia and TU conferred by telephone on" Saturday, May 3, Sunday, May 4 and Monday, May 5. On Tuesday, May 6, 1980, e further meeting was held among the representatives of Tex-La and TU and a settle-ment agreement was finalized and executed'on such date, a copy of which is attached hereto. The settlement agreement resolves any antitrust concern that Tex-La or its members may have had in connection with the issuance of an operating license for Comanche Peak.

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6. The number of telephonic conferences among TU, DOJ and NRC in connection with a settlement effort has been extensive. They.have been daily and in some instances hourly 1

since at least April 28th. TU believed as late as 6:00 p.m.  !

1 Thursday, May 8, 1980 that not only had considerable progress i been made but that' settlement was indeed a realistic goal.

Events occurring today however.make it presently impossible for TU to represent to this Board that settlement is achiev-able at this time. However, discussions with representatives of NRC and DOJ have'not ceased, and TU~is willing to continue discussions seeking a' satisfactory resolution of this proceeding.

We cannot represent to this Board at this moment that additional time will result in a settlement. On the other hand, TU believes that a prehearing' conference before this Board no later than Wednesday, May 14, 1980 would be helpful and requests the.. Board to defer ruling on an extension of time pending such conference.

t Respectfully submitted, l

b l

Merlyn D. Sampels WORSHAM, FORSYTHE & SAMPELS l

l l Date: May 9, 1980 i

I t

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l l.-----_____ _.. _ _ _ _ _ . . _ _ . . . _ _ _ . _ _ _ _ _ . _ . _ _ _ _ _ _ _ _

UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION In the Matter of:

HOUSTON LIGHTING AND POWER CO., ) Docket Nos. 50-498A

) 50-499A

_e t _a _l .

)

(South Texas Project, Units )

1 and 2) ) l

) i TEXAS UTILITIES GENERATING ) Docket Nos. 50-445A l COMPANY, et al. ) 50-446A

)

(Comanche Peak Steam Electric )

' Station, Units 1 and 2) )

CERTIFICATE OF SERVICE

~

I hereby certify that copies of " Status Report" in the above captioned matters, were served upon the following persons by deposit in the United States mail, first class postage prepaid this 9th day of May, 1980 and, as indicated by an asterisk, placed in the hands of a messenge'r service for hand delivery. ,

• Marshall E. Miller, Esq. Mr. Jerome D. Saltzman U.S. Nuclear Regulatory Chief, Antitrust and Commission Indemnity Group Washington, D.C. 20555 Nuclear Reactor Regulation U.S. Nuclear Regulatory

• Michael L. Glaser, Esq. Commission 1150 17th Street, N.W. Washington, D.C. 20555 Washington, D.C. 20036 J. Irion Worsham, Esq.

• Sheldon J. Wolfe, Esq.. Merlyn D. Sampels, Esq.

U.S. Nuclear Regulatory Spencer C. Relyea, Esq.

Commission Worsham, Forsythe & Sampels Washington, D.C. 20555 2001 Bryan Tower, Suite 2500 Dallas, Texas 75201 Atomic Safety and Licensing Appeal Board Panel Jon C. Wood, Esq.

U.S. Nuclear Regulatory W. Roger Wilson, Esq.

Commission Matthews, Newlin, Macfarlane &

Washington, D.C. 20555 Barrett 1500 Alamo National Building Chase R. Stephens San Antonio, Texas 78205 Docketing and Service Branch U.S. Nuclear Regulatory Dick Terrell Brown, Esq.

Commission 800 Milam Building Washington, D.C. 20555 San Antonio, Texas 78205

.,Rangeley Wallace, Esq.

Charles G. Thrash, Jr., Esq. Susan B. Cyphert, Esq.

E.W. Barnett, Esq. Frederick H. Parmenter, Esq.

Theodore F. Weiss, Esq. David A. Dopsovic, Esq.

J. Gregory Copeland, Esq. Robert Fabrikant, Esq.

Baker & Botts Nancy Luque, Esq.

3000 One Shell Plaza Kenneth M. Glazier, Esq.

Houston, Texas 77002 U.S. Department of Justice Antitrust Division Steven R. Hunsicker, Esq. P.O. Box 14141 R. Gordon Gooch, Esq. Washington, D.C. 20044 John P. Mathis, Esq.

Baker & Botts Jerry L. Harris, Esq.

1701 Pennsylvania Avenue, N.W. Richard C. Balough, Esq.

Washington, D.C. 20006 City of Austin P.O. Box 1088

' Michael B. Blume, Esq.

Fredric D. Chanania, Esq. Robert Lowenstein, Esq.

Ann P. Hodgdon, Esq. J.A. Bouknight, Jr., Esq.

U.S. Nuclear Regulatory William J. Franklin, Esq.

Commission Douglas G. Green, Esq.

Washington, D.C. 20555 Lowenstein, Newman, Reis, Axelrad and Toll Mr.'Roff. Hardy 1025 Connecticut Avenue, N.W.

Chairman and Chief Executive Washington, D.C. 20036 Officer Central Power and Light Company John W. Davidson, Esq.

P.O. Box 2121 Sawtelle, Goode, Davidson &

Corpus Christi, Texas 78403 Tioilo 1100 San Antonio Savings Bldg.

Mr. Perry G. Brittain San Antonio, Texas 78205 President Texas Utilities Generating Douglas F. John, Esq.

Compan'y McDermott, Will and Emery 2001 Bryan Tower 1101 Connecticut Ave., N.W.

Dallas, Texas 75201 Suite 1201 Mr. R. L. Hancock, Director City of Austin Electric Utility Bill D. St. Clair, Esq.

P.O. Box 1086 Morgan Hunter, Esq.

Austin, Texas 78767 McGinnis, Lockridge & Kilgore Fifth Floor, Texas State Mr. G. W. Oprea, Jr. Bank Building Executive Vice President 900 Congress Avenue Houston Lighting & Power Austin, Texas 78701 Company P.O. Box 1700 David M. Stahl, Esq.

Houston, Texas 77001 Isham, Lincoln & Beale 1120 Connecticut Avenue, N.W.

Don R. Butler, Esq. Suite 325 211 East Seventh Street Washington, D.C. 20036 Austin, Texas 78701

. . . ~ _ . _ .

. Mr. G. Holman King Sara Welling, Esq.

Michael I. Miller, Esg, West Texas Utilities Co.

P.O. Box 841 James A. Carney, Esq. Abilene, Texas 79604 Isham, Lincoln & Beale One First National Plaza Kevin B. Pratt, Esq.

Suite 4200 60603 Attorney General's Office Chicago, Illinois State of Texas P.O. Box 12548 Mr. Don H. Davidson Austin, Texas 78711 City Manager City of Austin Frederick H. Ritts, Esq.

P.O. Box 1088 William H. Burchette, Esq.

Austin, Texas. 78767 Northcutt Ely Watergate 600 Building Mr. W.S. Robson Washington, D.C. 20037 General Manager South Texas Electric Cooperative, Inc.

Post Office Box 151 (

Nursery, Texas ~ 77976 / [ z 6 Y-t i Joseph B. Knotts, Jr.

George Spiegel, Esq.

Robert C. McDiarmid, Esq.

Robert Jablo , Esq.

Marc Poirier, Esq.

Spiegel & McDiarmid 2600 Virginia Ave., N.W. Ste. 312 Washington, D.C. 20037 W.N. Woolsey, Esq.

Dyer and Redford 1030 Petroleum Tower Corpus Christi, Texas 78474 Mr. Donald M. Clements Gulf States Utilities Company Post Office Box 2951 i

Beaumont, Texas 77704 Marc J. Wetterhahn, Esq. .

Robert M. Rader, Esq.

Conner & Moore 1747 Pennsylvania Avenue, N.W.

Washington, D.C. '0006

(

Mr. William C. Price Central Power & Light Co.

P.O. Box 2121

( Corpus Christi, Texas 78403

_ . . _ . _ _ _ _ _ _ _ . ._ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ - _ _ _- _ _ _ _ . ~ . _ _ - - _

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V TEXAS POWER & LIGHT COMPAuNY 1511 Bryan Street

• F. O. Box 226331

• Dallas. Texas 75266 May 6,1980 Tex-La Electric Cooperative of Texcs, Inc.

P. O. Box 398 -

Guitman, Texcs 75783 Gentiemem This letter of intent will confirm recent discussions between ycur representatives cnd those of Texcs Power & Light Compcny cencerning settlement of various centroversies, cnd will serve to set forth the understcndings recched to resolve. these differences, including the sale by Texcs Power & Light Compcny 1 (TP&L) to Tex-La Electric Cocperative of Texcs, Inc. (Tex-Lc) of en undivided Es ownership interest in the Comcnche Peck Stecm Electric Station under construction in Hood cnd Somervell Counties, Texcs, including both Units I cnd 2, nuclect fuel cnd csscciated 345 kv trcnsmission fccilities (Project).

Subject to the execution of a Joint Ownership Agreement cnd Power Supply Agreement, hereinciter eclied " definitive cgreements," between the vericus affected pcrties, the undersigned intend that such cgreement(s) shcIl :nclude the following terms cnd conditions:

1.

TP&L will sell cnd Tex-La will purchese es a tencnt in common en undivided intere:..' not to exceed 4.35% in the Project. The purchese price will be the scme undivided percentcge es the ownership percentcge of the totcl ecsts of construction cnd fuel for the Project to the date of closing (Censtruction Costs), plus interest' cciculated monthly, on Construction Cests incurred from the Icst dcy of the mcnth in which the pcrticulcr Ccnstruction Cost: were paid to the dcte of closing, compounded cnnucily, et c rete equci to TP&L's weighted ecst of ccoital for ecch

( .

s such year (including the cost of the Compcny's most recent long-term debt cnd preferred stock issues and the cctual rate of return on average commen equity, each determined for each calendar year, es of the prior eclender yect), plus TP&L's cetual federal income tax licbility cssociated specifically with the gain realized on the interest cnd development cost component of the purchese price on the sale to Tex-Lc. Tex-La will also pay TP&L ct closing $326,250 (based upon a 4.35%

undivided ownership interest), 'rgpresenting its shore of costs in developing the Project which cre properly alloccsle but not specificcily charged to the Project.

1 After closing, Tex-La shcIl pay its undivided ownership interest percentage of costs thereafter incurred for the Project, including without limitation, costs of construction, fuel, operation and mcintencnce.

II.

On and after commercial operation of Unit #1 of the Project, Tex-Lc shcIl receive a percentcge, equel to its undivided ov nership percentege, of the net power and net energy genercted by the Project (Generation Entitlement), less trcnsmission losses. Tex-La expects and is expected to have utility respcnsibility for its own system, cnd recognizes its responsibility to provide instclied reserve ccpccity cnd spinning reserves to firm up its Generation Entitlement. For the considerations hereinciter set forth, TP&L shcil make availcble from its system resources reserve ccpccity and backup energy to provide Tex-Lc's reserves for its Generation Entitlement-from the Project.

c. Tex-Lc shall maintain reserve cgccity ennucify in en crnount equct to Tex-La's Retcined Ccpecity (cs defined in Pcrt 111 herein) times the percentcge of reserve egocity which the Texcs Utilities System compcnies ,

maintcined on their collective Systems during the preceding yecr.

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b. TP&L shcIl provide end Tex-La shcIl pcy ecch month for such cmounts of reserve ccpccity ct a price bcsed on the embedded weighted  ;

cvercge cost per kw for cil TP&L generation investment including its interest in generation fccilities owned jointly with others multiplied by TP&L's cppropriate fixed chcrge rate, ecch determined es of the end of the prior eclender yecr, divided by twelve. In cddition, Tex-La shcil pay fer operating costs cssociated with its spinning reserve requirement.

c. When bcekup energy is required by Tex-La to repicce loss of Retained Ccpccity from the Project, the price of such bcckup energy to be paid to TP&L by Tex-La shcIl be Tex-Lds pro rate shcre of TP&L's cctual cost incurred to repicce the cggregate of TP&L's cnd Tex-Lds simulteneous Icss of generction from the Project for a given time period.

111.

During the ectly yects of ecmmercici operation of the Project, it is enticipcted ther Tex-Lds Generation Entitlement will exceed its ennuci bcse locd power cnd energy requirements. Therefore, TP&L cnd Tex-La intend to estcblish a schedule of cnnuci cmounts of cgacity from the Project to be retained by Tex-La for its own use (P,etcined Ccpacity) cnd cnnuct cmounts of surplus cepecify to be purchcsed from Tex-Lds Generation Entitlement from the Project by TP&L (Surplus Ccpecity), generally in cccordcnce with Exhibit A ctteched hereto cnd mcde a pcrt hereof. Tex-Lds Retained Ccpccity will be credited continucusly cgeinst its Iced, in ccccrdcnce with 11 cbove. TP&L shcli be cbligated to pcy '

annucily for such scheduled Surplus Cgccity regcrdiess of the net output of the Project. TP&L will ciso purchese frem Tex-La cil energy cetucity genereted with Surplus Ccpccity (Surplus Energy). The price of such Surplus Cccccity cnd Surplus

Energy during ecch yect shcIl be ccmputed in cecordcnce with Exhibit 8 cttcched hereto cnd mcde a part hereof.

IV.

During the periods of trict operation of either generating unit of the Project, TP&L will purchase the energy cssociated with Tex-Lds Generation Entitlement at a price equel to the evercge of TP&L's avoided energy costs end Tex-Lds costs of energy cssociated with its Generation Entitlement during ecch hour of test operations of the Project.

V.

It is understcod thct TP&L shcIl have sole discretion for the scheduling cnd dispatching of Tex-Lds Generation Entitlement from the Project in cecordcnce with the undersigneds scheduling and dispatching precedures. In the event TP&L voluntcrily cecses to cpertte or reduces the outpuf from the Project beccuse of the cvcilcbility of lower cost energy from other sources, TP&L will mcke cvcilcble to Tex-Lc tFe cmount of energy which the Project would recsoncbly be enticipcted to provide to Tex-La hcd its cutput not been reduced, at q cost equct to the ccst thct would have been incurred by Tex-La if the unit hcd centinued to opercte at as recsoncbly enticipated cperating level.

VI.

In order to effect the scle of en undivided interest in the Project, it will be necesscry to cmend the-3oint Ownership Agreement between Oclics Power & Light Compcny, Texcs Electric Service Company, Texcs Power & Light Ccmpcny, Texcs Inc. fer Municipal Power Agency end Brczes Electric Power Cooperctive, It will Comanche Peck Stecm Electric Station, cnd such sole is subject thereto.

clso be necessscry fer Tex-La to join in such cgreement, er c similcr cgreement, to

5 cssume its responsibilities cnd obligations cs en owner. The Project Mcncger engaged in the picnning, construction end operction of the Project is Texas Utilities Generating Compcny, subject to the direction of cn Owners' Committee composed of one representative from ecch owner of the Project. As en owner of the Project, Tcx-La will pay to the Project Mcnager a management fee equel to 5% of its portion of all costs of operation cnd fuel related to Retained Ccpacity cs covered in the Joint Ownership Agreement.

Vll.

In all respects not sepcrately addressed in this Letter of Intent, it is the intent of Tex-La and TP&L to structure cny subsequent cgreement(s) related to the ownership, construction and/or operation of the Comenche Peck picnt consistent with the provisions of the aforescid Joint Ownership Agreement.

Vill.

The undersigned contemplete that definitive cgreement(s) shcil contcin provisions through which TP&L will provide Tex-La with bulk trcnsmission cnd distribution services to Tex-Lds points of delivery (or its Perticipcnts' points of dalivery) from TP&L for delivery of Tex-Lds Retained Ccpccity from the Project, including bcckup power end energy from TP&L System rescurces when genercting _

unit (s) at the Project cre out of service. Such trcnsmissicn end distribution services shcIl be provided on terms that fully compenscte TP&L for its costs, including a recsoncble/ return on investment, cnd line losses; such terms will recognize Tex-Lds partici ownership of trcnsmission fccilities common to the needs of Tex-La cnd TP&L cnd will further recognize Tex-Lds use end oblisction to pcy for use of trcnsmission fccilities jointly owned by the other opercting compcnies of the Texcs Utilities System cnd others.

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- - 7-cny entity with which it maintcins a connection from estcblishing or maintcining a connection with, fccilities used for the trcnsmission of electric energy in interstate commerce, by recson of the interstate chcrecter of such fccilities, unless it determines thct cny such connection or the intended use thereof is not fecsible under sound engineering practice or that TP&L's costs in connection therewith will exceed its benefits therefrom, or such connection or the intended use thereof would impair TP&L's system relicbility or emergency trcnsmission ecpacity. This is not to imply that TP&L must benefit from a connection; a refusci is vclid, however, where TP&L's net costs exceed its net benefit. In the event that Tex-Le or cny entity with which it is connected desires to establish, meintcin or modify a connection with fccilities used for the trcnsmission of electric energy in interstcte commerce, it shcil first obtcin a non-Jurisdictional order, cppliccble to TP&L cnd other members of the Texcs Utilities Compcny System, under Section 204 of the Public Utility Regulatory Policies Act of 1978.

X11.

Tex-Lc expects to meet its public utility responsibilities by the construction of generation cnd trcnsmission fccilities including joint ownership of future facilities with TP&L cnd other electric utilities, or by the purchese of power cnd energy. In view of the cgreement(s) contempleted herein, cnd possible cgreements between Tex-La cnd others, it is intended that both Tex-La cnd TP&L shcil be free, subject to provisions of.XI herein, to picn, construct, cnd own such generction cnd trcnsmission fccilities cs it mcy elect. TP&L cnd Tex-La will consult cnd cdvise es to proposed fccilities cnd jointly plan such fccilities cs seems cpprcpricte to cchieve economies cnd avoid unnecesscry duplicction of fccilities cnd in keeping with ecch Pcrty's picns cnd responsibilities.

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. -8 It is intended that Tex-Lc's requests for participation in cny project to be constructed by TP&L shcil be made prior to cny significent development of the project. Where such c timely request for porticipation is mcde, cnd where joint ownership in such project is determined to be mutucily cdventegecus, Tex-Lc's participation shcIl be on a mutucily cgreecble bcsis that fully compensctes TP&L for its costs. In connection with such porticipation, TP&L will ciso interconnect with cnd offer firm trcnsmission service es mcy be required for delbery of such power to Tex-Lc at points on TP&L's system on a bcsis that will ft:ily ccmpensate TP&L for its costs, including a recsoncble return on its investment.

XIll.

The understcndings herein set forth were recched with the intention of settling the controversies between the undersigned cnd Tex-Lc befcre the N>;clect Regulatory Commission (Docket Nos. 50-445A cnd 50-446A) cnd the Federci Energy Regulatory Ccmmission (Docket No. E-9578). In this connection Tex-Lc desires to l cnd will coopercte with cnd use its best' efforts to cssist TP&L in securing cn l

operating license for the Comenche Peck nuclecr units et the earliest possible date end the avoidcnce of cn entitrust becting before the Nuclect Regulaterf Commission in Docket Nos. 50-445A cnd 50-446A, such efforts to include, without limitation, prompt cmendment of its petition to intervene before the Nuclect Regulatory Commission cnd cppecrcnces in full suppcrt of TP&L cnd other members of the Texcs Utllities Company System cnd such other cssistence cs TP&L mcy recsoncbly request. Further, Tex-La will cooperate with cnd use its best efforts to cssist TP&L in securing dismissel, on terms satisfcctory to TP&L, of the proceeding in t-ERC Docket No. E-9578. In cdcition, Tex-La will fully suppert the

' issucnce of cn order by FERC, in form cnd substence satisfcctory to TP&L, under Sections 210 or 211 of the Federci Power Act requiring construction of two direct 1

9 l current interconnections cs proposed by the foer operating subsidicries of Centrei and South West Corporation, provided Tex-La is efforded a recsonable cpportunity to purchase a three-yect cption to participate in the ownership of such fccility from the owner (s) upon recsoncble terms cnd conditions. TP&L will cgree to cnd I

Tex-Lo will fully support conditions in the opercting license of Comenche Peck in form cnd substcnce cttcched hereto cs Exhibit C.

XIV.

Notwithstanding cny provision of this Letter of Intent or otherwise, the Confidemiclity Agreement dated Octcber 5,1979, shall govern the disclosure of cny discussions between the parties of the subject matter.

XV.

It is furthy understood that the provisions of this cgreement cnd of the definitive cgreement(s) cnd the obligations of the pcrties thereto mcy be subject to continuing or further regulation by regulatory bodies having jurisdiction.

If the foregoing correctly sets forth our understcndings, piecse sign cnd return a copy of this letter. Upon receipt thereof, the undersigned will be prepcred to enter negotiatiens so es to complete the definitive cgreement(s) cnd c!cse es soon es prccticcble with the view of completing the scme not later then November I,1980. By the execution of this cgreement, you cgree to use your best efforts to secure (i) cpprovcl of this cgreement by your member systems on or before Mcy 8, 1980, (ii) interim fincncing on or before October 30,1980, (iii) permcnent fincncing by the Rurci Electrificction Agency, (iv) certifi'cetion cnd/or recertificction by the Public Utility Commission of Texcs cnd (v) such other matters es mcy be necesserf to ccrry cut the intent of the pcrties cs expressed herein.

TEXAS POWER & LIGHT COMPANY By. . _ . - .

, , . President ACCEPTED THIS - 5 - day of

. ,1980:

TEX-LA Fi FCTRIC COOPERATIVE OF TEXAS, INC.

By

/

M For and on Behcif of:

Deep Ecst Texas Electric Cooperative, Inc.

Jesper-Newton Electric Cooperative, Inc.

Rusk County Electric Cooperctive, Inc.

Som Houston Electric Cooperative, Inc.

Cherokee Ccunty Electric Cooperctive Association Wood County Electric Cooperative, Inc.

Houston County Electric Ccoperative, Inc.

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x- SIT 3 T?E' S ENTI"". INT TO TII-LA CA?ACITY AND ENERGY .

0.1 T?E shall purchase Tex-La's Sc:plus Capacicy in de

?:cject in accc dance with the schedule is 'edbi: A with the fellcwing basis of charges :

Cacacitr Charze. T?E shall pay Tex-La fc

-le capacity 1.1 encicianent so purchased a =enthl7 capacity charge calculated as Monthly Charges will be calculated p:cvided i: Seccice 1.5 below.

and billed using a cal fixed charges detec=ined as of -la end cf te pric: 7 ear.

The =cuchly capacity charge shall be a fixed c~-* ge payable regardless of the a:vailability of capacity.

1.2 Ocara-4-s Charzes. T?E will pay into de Opera-' g Acccus: fc: the acccus: of Tex-La that par ice of Tez ~a's share

-lan

(

l cf -le Cperad g Costs of Cer.anche ?eak Units 1 a=d 2,c-le:

fuel ar.creiration, allecable to the energy enciclacene asscciated j

with de. Surplus Capacity being bcugh: back b7 I?E f c: Tex-La.

If any c*-a ges inc2,uded in Operacing Cests,other -lan fuel

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ano::i:2 d_ce, a e aisc included as fixed charges under Sec ices 1.3 and 1.6 belcw, Oc avcid d=clica:icn such charges shall be ::skan i=:c acccun: c=17 as Cpera d g Ccscs . Fuel a=c::ima: ice will be ccusidered a fixed charge.

e

2-I--~ = 1 Fixed Charge Race ic: purposes cf this l.3 T? E ' s

~zhibi: shall be:

^ " CG + FG + IGGIG

+ AVTG a CO?G 1.4 Tex-La's Arm-=1 Fixed Charge Ra:4 for purposes of dis c_, : sca3 A .c e:

3 = DC + FC + ICGIC+ A7TC + ITC 1.5 ?c-- 1a for Calc.r.lacice of Mccch17 C- = ge :

Mon hly Charge = A 3 (C)(GIC) + ST 1.6 ?c: purposes of the calcula: ices 'cder Sec-dens 1.3,

,4, &Ed .

,..J c: Cu._as EX *.c.a ::

A = T?E ' s Am_ =_1 Fixed Charge Race, fc the ?:cj ect, calculated as provided in See:ics 1.3 cf -dis a:e' 'bi:.

3 = Tex-La's >* _=1 7tzed Chr:ga Ra:4, fc: che ?:0j ec ,

calcula:Ed as p:cvided in Section 1.1 cf -lis exhibi:.

C = Percen: cf Sc plus Capacity being bcught back by T?E per Tedbi: A 6. ring de sen h fc: which the .

calcula: ice is =ade.

EG = T?E 3cek Ceprecia-den fc: :he ?:cj ec: facili:ies during such =-m =T period.

IG = T?E tuclear fuel a=c::ication d=ing such =-- _ =1 pericd.

IG = I?E Insurance fo: -de ?: ject facili:ies during nuch ac=nal pericd.

~

.AVTG = T?&L Ad tTalorem and 7:anchiso Tazas and othc=

-=1 * =d cazes allecab1e :: -de ?:o.i,ac:

c. cc. er:7 facilities d=ing such a :nal peried.

COFG = T?!i's Tc =T Cost of Funds in percent, calcula:ed as p;cvided in Section 1.7 below C:a=aly (13)],

tir.as T?&L's weighted average set depreciated i=vesc=e== in de ?rej ec: facd 13 -d as d=ing such annual pericd.

GIG = I?&L's average Gross ?lar hves==en in the ?:oject facilities.

DC = Tex-I.a.'s Sock Depreciation for the Pro ~i ec facili:ies \

f during such e _.ual eericd. -

1 FC = Tex-I.a's Nuclear Fuel A=c::icarice d=ing such 1 I

a--cal period.

IC = Tex-I.a's hsurance for de ?:oj ec: 'fac.2.icies d=ing such s--"*1 period.

AVTC = Tex-I.a's Ad Valorem Taxes and any c:her p: per:7-rela:ed cames paid bv. Tez-I.a a=d reascrablv. allecable to de ?:oj ece fac ' -d as for such --"*1 peried.

IIC = Tex-I.a's :::21 cc si: of long-ta== dabc during such

-= .1 c.eried.

GTC = Tem-I.a's weightec average G :ss ?le-: Inves- a"c in

-de ?: jact facili ies .

ST = Menchly Sales Tazes paid by Tex-I.a as a result of de sale of capaci:7 and energy :: ??E., if ar7 1

- , - - - - - - - . _ - _ _ _ _ . . . _ _ _ , . , . _ _ _ _ '* ^""7 w- w--wm _ , , _ _ _ _ , __

o

?c: pur:csas cf dis sac:icn "C-ross ?lan: Invesenen:" cf T?E arc sex-1.2 :.:

u.e r:0 ect :ac:._, _, :., es shall -a =- i:s :: 21 he ci=a cf cc==e:cial cpera:ic:

i=ves =en: in such facdid-d=s a .

(including ::ansmissic . facilities , nuclear fuel s:cck, racerials ,

-dere-s== plies , and c her wc king capital) plus its invescen:

afta in the ces:

cf cceplatices, renewals, additicus, raplac-ar:s and =cdificaticus Oc the ?:cjec: facili:ies. "'Tec Deprecia:ed Invescent" of T?&L c: Tex-I.a in the. ?:cj ect facilities shall laced near its Grcss ?lan: Inves cen: in such fac413-d=s less ace-back depreciatien.c: a=c :izacien, as app;cp-ia:e .

1.7 T?&L's Cos: cf Funds vid cespec: cc 3: css inves =en in the ?:oject facilities as cf 6e da:e ef eccre:cial operacion sca_, _, ,ce ca_, cn_ated pursuant :: :ue :0,__,cw:.:g :c- +

• casec en I?E's actual seighted average cost of de capi:al specifically inc.c.: ed in financing the ?:cjac facili:ies. The Ccs: cf Funds facilicies after wi h :sspect Oc g css inves=en s in de ?:ojec:

ec such. data cf ccc:=ercial. cpera_ien shall be. calcula:ed pursuan:

' such fc__.c.la based en I?E.'s acecal weigh ad capi:al ecs:s inc= ed I

l in -*d g such inves=er:s .

l

?arcen: Wei dead.Ces: Te:al Co s t. c f Tu=ds (Q I Rats 1

(Is) (7) = (1) I (4) (10) = (7) 2 cg-Te== Debt (l;

~~

(5) (8) = (2.) x (5) (11) = (5) + (1 - C~?.)

Frederrad 5 cek - (2)

= (9) + (1 - CT3.)

Ic.ui:1 (3) (6) (9) = (3) I (6) _(12)

(U)

,00w,.

1 I

l l

l l

I 1

- -- - __ _ . _ _ _ , , _. p---+,%,

where: (1) and (2) = weighted. 2 - smi- average percent races (3) = =cs: racer rate of rect = cc T?E cet:===

equi:7 allowed in the =cs: recent race case prio: Oc -de date of Cec =arcial Opera ice c ,

as app cpriate, -de date of the se~csequen:

inves==ent.

(4.), (5) and (6) = cceponents di capital s :te:: e using I?E capi =1 struc:::e c Dec -her 31 of the prio: 7 ear.

?ercent (10) + (11) + (12) = (13) Octal cos: of Funds i CTA = Corpcrate Federal and Sace Inccce Tax ?.a:e, as where:

in effect f:ca &~* co ci=e.

gm e

y, , , - ,y .m.. . _ . _ , . _ _ . _ _ , , _ , - . _ . . . _ _ _ - . . _ _ , . . , , - . - - , . - -

laAFT OF a/28/GO cAhlbli L License Ccnditiens Fer Cemenche Peck Steem Electric Statien Nuclect Units Nos. I cnd 2 kiinitiens I. "Cempcny" mecns severcily cnd jointly Texcs Utilities Genercting

cmpcny, Oclics Power & Light Ccmpcny, Texcs Electric Service Ccmpcny, Texcs

'cwer & Light Ccmpcny, Texcs Utilities Ccmpcny cnd ecch other subsidicry, dfilicta er successer ecmpcny engcged in the genercticn, trcnsmissien cnd/cr the listributien of electric pcwer in the State of Texcs.

2. "Nor+h Texcs Arec" mecns the fcilewinc Texcs counties: Andersen, Andrews, Angeline, Archer, Bestrep, Scyler, Bell, Scrden, Ecsque, Brown, Eurnet, th rckee, Clcy, Ccke, Collin, Cemenche, Cccke, Ceryell, Crcne, Culbersen, Sciles, Ocwsen, Delte, Centen, Ecstlcnd, Ecter, Ellis, Erath, Fclls, Fcnnin, Fisher, F

reestene, Qines, Glcssecck, Grcysen, Hendersen, Hill, Hecd, Hcpkins, Hcusten, icwcrd, Hunt, Jcck, Jchnsen, Kcufmcn, Kent, Lcmer, Lcmpcscs, Leen, Limestene,

.oving, Lynn, Mcrtin, McLennen, Midicnd, Milem, Mitchell, Mentcgue, 4ccogdeches, Neverre, Nelcn, Pele Pinte, Pcrker, Peces, Reins, Recgen, Red River, Reeves, Reckwell, Rusk, Scurry, Schcckelferd, Smith, Semervell, Stephens, 5tcriing, Terrent, Terry, Tem Green, Trevis, Ur- . '/cn Zcndt, Wcrd, Wichite, Vilbcrger, Willicmsen, Winkler, Wise, Weed end Yeung.

3. " Entity" mecns e persen, e privete er public carpercticn, e pvernmentcl cgency cr cuthcrity, c municipciity, e cecperctive, er en cssccicticn swning er cpercting er prepcsing in gecd fcith to cwn er cpercte fccilities fer

,entretien of electric power in the Ncrth Texcs Arec for rescle.

4. " Sulk Pcwerd mecns the electric pcwer cnd cTiendent energy succlied er

mcde evcilcble et trcnsmissien er subtrensmission voltege.

5. " Costs" mecn cli coprepricte cpercring cnd mcintencnce expenses cnd all ownership ccsts where ccpliccble.

Policy Ccmmitments

1. The Ccmpcny shclI, subject to existing rights of first refuse! of entities not effiliated with the Ccmpcny, cfford en cppertunity to pcrticipcte in the Cemenche Peck nuclect units, threugh cwnership in such unit (s) en recsencble I/

tcrms cnd conditiens, for the term of the instcnt license, or cny extensien er renewel thereof, to cny Entity (ies) new withcut generatien, who mcde a request thtrefer prior to December I,1979, to the extent of en cggregcte totcl of 100 Mw, en a bcsis thct will fully ecmpenscte the Ccmpcny fer its ecsts cnd reflect the vclue of units in en cdvcnced stcte of ecnstructien. Any joint ownership cgreement implementing the feregoing must be concluded by .Nevember I,1980. In connectien with such pcrticipcticn, the Compcny clso will (1) connect with cnd citer trcnsmissicn service cs mcy be required fcr delivery of such power to such Entity (ies) et a peint er peints en the Ccmpcny's system cnd (2) in the ecse of Ccmpcny whciescle custcmers ccquiring ownership under these conditiens, previde (c) pcrtic! requirements wholescle service for the difference between the eccccirf o ccquired in Cemenche Peck cnd the lecd of thct Entity wnich the Ccmpcny wculd otherwise hcve served at ,wholescle end (b) emergency cnd scheduled n:cintencnce power cnd energy to firm up the eccccity ccquired in Cemenche Peck, ;.ending deveicpment by the ccquiring Entity of instelled resenes er diemete purchcsed reserves, cil en c bcsis thct will fully c:mpenscte the Ccmpcny fer its ecsts, including a recscncble return en investment.

2. The Ccmpcny will support requests by Entities fer membership in the l/ Previsiens substenticily the scme cs these in the existing joint cwnership cgrtement emeng the Ccmpcny, Texcs Municipcl Pcwer Agency, cnd Srczes Electric Pcwer CcepercTive shcil be deemed to be recscn61e.

Texcs Intercennected Systems (TIS), including requests by cny such Entity hcving a smaller peck iced then cny of the present TIS memcers, so lcng cs such Entity hcs sufficient gener ticn cepccity to mcke o recscncble centribution to the relicbillry of bulk pcwer supply. The Compcny will prepose, cnd cetively suppert, the crecticn of ena er more cdditienci cicssificatiens of T15 memcership (which mcy include non-voting membership) bcsed en retienci criteric to efferd cecess to dcte, studies cnd recommendcticns to cil Entitles who desire it, including these hcving no genercticn er insufficient genercticn to mcke such c recsencble centributien to rcilcbility. The Compcny will ciso supper requests by quclified Entities fer membership in cny other electric utility picnning crgcni:ctien er pcwer peci of The which the Compcny is a member (other then ene involving enly the Ccmpcny).

Compcny shcil shcre infcrmatien with other Entities with respect to, cnd shcil pcrticipcte with other such Entities through TIS, ERCOT cr other electric utility future generciten, plcnning orgcnizcticns in, joint studies end picnning of trcnsmission end relcted fccilities; provided, however, this cendition shcil not obligete the Ccmpcny to pcrticipcte in such Jcint studies er jcint plcnning (1 requested cnd conducted in gecd fcith cnd bcsed en recscr :bly reclistic cnd recsencbly ecmplete date cnd projections, (2) unless involving cis ether electric -

utility systems whcse pcrticipction in such joint studies cnd joint picnning is recsencbly required for valid cenciusiens thereef, (3) unless recsencbly justified e esineering principles, (4) unless cpprcpricte protecticn is tha bcsis of scund ceccrded preprietcry er other cenfidentici business end fincncici infermetien, (S) unless the ecsts fer such studies cre elleccted en c fcir end equitchie bcsis.

3. (c).

The Ccmpcny will cennect with end c erdincte erserves thrcugh I the scle end purchese of emergency cnd/cr scheduled meintencnct bulk pc l

L _- _. _. . - _ . __ ___ __ _ _ _ _ _ _ _ _ __- __

cny Entity (les) if end when pcwer is evcilcble en terms that will fully ecmpensate

tha Ccmpcny for its ecsts, including c recsencbie return en inve::tment to the extent it een do so withcut impciring the service relichility of the Ccmpcny cnd )

other electric systems to which it hcs firm ecmmitments.

(b). The Ccmpcny cnd cny other Entity (ies) who cre pcrties to en crrcngement described in (c) chove shcIl frem time to time icintly estchlish the minimum reserves to be instclied end/cr provided by ecch pcrty under centrcctuci sufficient to previde cdecuate errengements to mcintcin a reserve mergin rclicbility of power supply in cecordence with gecd industry prcetice cs deveicped in the crec. Unless otherwise cgreed upen, minimum reserve requirements shcil be cciculated cs a percentcge of ecch such Entity's(les') estimated net peck lecd demcnd (teking into ccccunt firm scles cnd firm purcheses). In no event shcil the Ccmpcny be required to mcintcin grecter reserves then the percentcge which results frem the cforescid cciculatien.

(c).

Ecch Entity who is a party to en crrengement described in (c) cbove shcil provide such cmcunts of spinning reserves es mcy be equitcble end '

cdequcte to cvoid the impesitien cf unrecscncble demcnds en the other pcrty(

meeting the ncrmel centingencies of opercting its (their) system (s). However, in <

circumstcnces shcil such reser/e requirement exceed the instclled reser/e requirement.

4. (c).

The Cerhpeny shcil werk with other Entities to fccilitete the exchcnge of bulk pcwer by trcnsmissien ever its trcnsmissien fccilities between er cmong two er more Entities with which it is cennected; cnd between cny su Entity (ies) cnd cny entity (ies) engcging in bulk power supply cutside the N Texcs Aree between whose fccilities, the Ccmpcny's trcnsmissicn lines cnd other h-

trcnsmission lines form c centinuous electriccf pcth, provided that (c) permission to utilize such other trcnsmission lines hcs been obtcined by the preponent of the errengement end (b) the crrengements recsoncbly ccn be ccccmmedcted frem a functienci cnd technicci stendpoint. Such trcnsmission shcil be en terms rhet fully compensate the Ccmpcny fer its ecsts, including a recsencble return en investment.

Any Entity (les) requesting such trcnsmissicn crrengements shcil give recsenchie cdvance notice of its (their) schedule end requirements. The Ccmpany shcil not be required to enter into av crrcngement which wculd impair system relicbility er emergency trcnsmissior, ecpecity, it being recesnized that while seme trcnsmissien mcy be cperated ful:y leaded, other trcnsmissien mcy be fer emergency use end cperated either unlocded er pcrticily Iceded. (The foregoing ccplies to cny Entity (les) to which the Compcny mcy be cennected in the future es well cs these to which it is now cennected.)

(b). The Ccmpcny shcIl include in its picnning cnd censtructicn progrcms sufficient trcnsmission ecoccity es required fer the trcnscetiens referred to in (c) cheve, provided cny Entity (ies) gives the Ccmpcny sufficient cdvcnce notice es mcy be necesscry to cecommcdcte its (their) requirements frcm c

! functienci cr.J technicci stendpoint cnd that such Entity (ies) fully ecmpensctes the Ccmper.y for its ecsts, including a recsencble return en investment. The Ccmpcny I shcil not be required to censtmet trcnsmissien fccilities if it finds censtruction cf

~

such fccilities infecsible, cr if its costs in cennection therewith would exceed its benefits therefrem, er if it finds such would impair system reliccility er emergency

( trcnsmissien ecpecity.

j (c). In cennecticn with the perfermence of its cbligctices in (b) cheve, the Ccmpcny shcIl not be feree!csed frem requiring a centributien in cid of

.

l l

-3=

A construction er frem mcking crrcngements fer coercincted constructicn of future trcnsmissicn lines such thct ecch of the pcrties to the trcnscetien wculd own en interest in er c segment of the trcnsmissien cdditien in prcportien to its shcre of the ecst of the cdditicn. If the Ccmpcny in the future engcges in icint cwnership cf trcnsmission lines with cny other Entity, it shcil not refuse to engcge in simiicr trcnscetiens in c:mpcrcbie circumstcnces with cther Entities, subject to the previsiens limiting the Ccmpcny's cbligcticns in peregrcph 4(b).

5. In connecticn with the performcnce of its cbliscticns in pcregrcphs 3 cnd 4, the Ccmpcny will not discennect frem, refuse to cennect with, er prevent cny entity with which it mcintcins connections frem estchlishing er meintcining a cennecticn with, fccilities fer the trcnsmissien of electric energy in interstcte ecmmerce, by recscn of the interstete chcrecter of such fccilities unless cny such cennecticn er the intended use thereof is not fecsible er its cests in cennecticn

~

2/

' herewith will exceed its benefits therefrem cr such cennecticn er the intended use therecf wculd impcir system relicbility er emergency trcnsmissicn eccccity, it is provided, hewever, thct cny Entity seeking to estcblish, mcintcin er modify a cennecticn with fccilities fer the trcnsmissicn of electric energy in interstcte ecmmerce shcil hcve first cbtcined a ncn-jurisdictienci crder, c=plic ble to the Ccmpcny, under Secticn 204 ef the Public Utility Regulatcry Pelicies Act of 1978, er such other exemptien es mcy be centcined in the Federci Power Act.

~

6. The foregeing cenditiens shcil be implemented in c menner censistent with the ccpiiccble federci, stcte end lecci statutes, rules, requictices cnd judgments cnd crders prcmulgcted thereunder. Nothing herein shcil preclude the Ccmpcny frem seeking en exemptien er other relief to which it mcy be entitied under ccpiicile Icw.

This is cet to imcly ther the Ccmpcny must benefit frem c cennecticn; c

_2/ refusci is vclid, however, where the Ccmpcny's net cests exceed its net benefits.

? REC CA?ACI-"! A33 SU?2I."5 CA?AC.. '

A5 ?!3.CECAGI 0F d A GrTE3rION CCTr.E UNI"' L CNIT 2 Tax-r.,a Sc plus capacirl Tex-?.a Scplus Capacir!

.= S C  ?.ee= ' aed Ca=aci--t to S G

?.se=d -ed Cacaci:-r 0  % 100.0%

.981 0 100.0 L982 l

0  % 100.0%

1 0 100.0 L983 37.5 12.5 57.5 4984 12.5 87.5 12.5 87.5 1985 12.5 25.0 75.0 25 .0 75.0 1986 72.5 37.5 62.5 1987 37.5 37.5 62.5 37.5 62.5 1988 50.0 50.0 50.0 50.0 1909 2 62.5 37.5 62.5 37.5 1990 75.0 25 .0 75.0 25.0 1991 75.0 25 .0 75.0 25.0 1992 100.0 0 100.0 0 1903 a=d afts:

i 1981 Sc Crit 1 and Neta: 2ased. cpen --- -cial cpers:ica datas of Acre.s ,

1.

Janua:f 1982 5c: C=1 1 Ccmmercici cpercticn detes cre ;:rejecdens cnly cnd cre sub,iect ic chcrge fer c vcriety cf recsens, including, but not limited te, cctiens icken by $e Nuclecr ,

i Reguictery Ccmmissien in cennectien wie TUCCO's cepliccticn fer en ccercting license, delcys essccicted with ccnstnetien, etc. The dctes en be feregeing tchie cre subject te chcnge ccccrdingly.

.