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| number = ML17209B114
| number = ML17209B114
| issue date = 05/27/1981
| issue date = 05/27/1981
| title = Brief,In Form of Motion,Requesting That Aslb Should Grant Res Judicata or Collateral Estoppel Effect to Listed Cases. Board Should Find Situation Inconsistent W/Antitrust Laws. W/Matl Facts Not Genuinely Disputed & Discovery Memo
| title = Brief,In Form of Motion,Requesting That ASLB Should Grant Res Judicata or Collateral Estoppel Effect to Listed Cases. Board Should Find Situation Inconsistent W/Antitrust Laws. W/Matl Facts Not Genuinely Disputed & Discovery Memo
| author name = JABLON R A
| author name = Jablon R
| author affiliation = FLORIDA CITIES (FLORIDA MUNICIPAL UTILITIES ASSOCIATE, SPIEGEL & MCDIARMID
| author affiliation = FLORIDA CITIES (FLORIDA MUNICIPAL UTILITIES ASSOCIATE, SPIEGEL & MCDIARMID
| addressee name =  
| addressee name =  
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| page count = 161
| page count = 161
}}
}}
=Text=
{{#Wiki_filter:Qi BEFORE THE UNXTED STATES NUCLEAR REGULATORY COMMZSS ION BEFORE THE ATOMIC SAFETY AND LZCENSING BOARD In The Matter Of                    )
                                          )
Plorida Power 6 Light Company        )    Docket No. 50-389A
                                          )
(St. Lucie Plant, Unit No. 2)        )
  ) ~
MOTION TO ESTABLISH PROCEDURES, FOR A DECLARATION THAT A SXTUATXON INCONSXSTENT WITH THE ANTITRUST LAWS PRESENTLY EXISTS AND FOR RELATED RELZEP bOCfQ7Eb ZI              tiSNRr MAY27)98)                        t Robert A. Jablon      0  Office of the g $ <+>ce Secreta'ocketfog Alan J. Roth                      Branch Daniel Guttman CO                      CP SPXEGEL    5 McDIARMXD Suite    312 2600  Virginia  Avenue N.W.
Washington, D.C. 20037 Attorneys for the Gainesville Regional Utilities, the Lake Worth Utilities Authority, the Utilities Commission of New Smyrna Beach, the Sebring Utilities Commission, and the Cities of Alachua, Bartow, Port Meade,    Key West, Lake Helen, Mount.
Dora, Newberry, St. Cloud, and Tallahassee, Florida and the Florida Municipal Utilities Association May 27, 1981 I
TABLE OF CONTENTS Pacae INTRODUCTION (1)  -
Immediate Procedures (2)  Discovery to Date (3)    Basis  for Findings of a "situation inconsistent" with the antitrust laws (4)  Separating the Issue of Relief (5)    Basis for limiting issues                        10 I. 
==SUMMARY==
OF    PRINCIPAL LEGAL ARGUMENTS                17 A. Refusals  By FPL To Deal  With Some  Cities in Florida  Power Corporation's Retail Service Area Are  Illegal                      17 B~    FPL's Dealing With Some Cities But Not Others Constitutes A Combination In Restraint Of Trade                              20 C ~    FPL's Refusals To Deal With Florida Cities  Are Directly Contrary To The Teachings Of Otter Tail And Consumers Power                                          23 STATEMENT OF FACTS                                        24 I. FPL's Planning, Construction and Operation Of Its Nuclear Facilities Has Benefitted From Coordination With Other Florida Utilities              24 Since the 1950's FPL engaged in joint nuclear activities with    TECO and  Florida Power  Corporation            26 2 0  Throughout the 1960's  FPL engaged in coordinated planning  and operations through the Florida Operating Committee/Florida Pool but without the Cities                                30
: 3. FPL relied on coordination with the Florida Operating Committee in constructing its nuclear units                                                                34 II ~ FPL HAS LONG DENIED CITIES ACCESS TO THE ECONOMIES OF COORDINATION AND SCALE g INCLUDING NUCLEAR POWER      ........oo....o.oo...oooo.....oo.....                                                  43 A. FPL Was On Notice That Smaller Systems, Such As Cities,'equired Access To Economies Of Size And Coordination, Including Access to Nuclear, In Order To Compete Effectively                                                                                44
: 1. Smaller systems require coordination to build large units
: 2. FPL knew that coordination and large units are essential to participation in nuclear power                                                                46 3 ~    From the start, FPL sought to use its size-based monopoly of nuclear generation as a lever to acquire smaller systems                                                                                47 B~  FPL Refused To Deal With Cities, And Denied Them The Means Of Dealing With 0 ther s  ~ ~ ~ ~ o ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ o ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~              54 C. Although      FPL    Xtself        Refused To Deal,                              Cities Still Sought          The    Benefits Of The    Ability To            Share Coordination,'ncluding In Nuclear U nits  ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~              74 l  ~  Study and discussion of possible pooling arrangements among smaller systems o ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~                      ~ ~ ~ ~ ~ ~ ~ ~ ~
2  ~  FMUA      committees                                                                          76
: 3. The    Gainesville litigation                                                                79
: 4. The    Tallahassee            experience                                                    80 D~  FPL Could Have            Built Large, More Economical Plants And Shared Them With Cities
Pacae ARGUMENT INTRODUCTION    ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ o ~ ~ ~ ~ ~ ~ ~ ~ o ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~  ~  90 I ~  FPL CANNOT LAWFULLY RESTRICT RELIEF TO "INSIDE" CITXES; THE RESTRICTXON CONSTITUTES AN UNLAWFUL COMBINATION ZN RESTRAINT OF TRADE AND A PERPETUATION OF A MARKET DXVISION                                                              93 II. THE CASE LAW CONCERNING ANTITRUST ABUSES BY ELECTRIC UTILITIES CONFIRMS THE UNLAWFUL NATURE OF FPL'S REFUSALS TO DEAL WITH FLORIDA CITIES ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~  99 III. STATEMENT CONCERNING RELIEF .                          ................                ~ .. 115 CONCLUS ION  ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~  ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 118 Attachments 1-5 Appendices, Volumes          I      III (separately                bound)
TABLE OF AUTHORITIES Pacae COURT CASES Admiral Theatre Cor . v. Dou las Theatre
    ~Cor , 585 F.2d 877                  8th Cir. 1978 American Truckin            Association, Inc. v.
Atchison,        To eka and Santa Fe Railwa                              Co.,
387  U. S. 397 1967                                                                            97 Ansul Co. v. Uniro              al, Inc.,          448 F.2d 1018 (1972)          e.s.e..ee..........ee......e.e....see.e                                      115 Associated Press v. United States,                              326 U.S.
1  1945      ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~  19, 93, 94, 110 Baltimore and Ohio Railroad Co. v. United States,        "Chicago Junction Case" 264 U.S. 258 (1924)                                                                                    114 Bell Tele hone Co. of Penns lvania v.
FCC, 503 F.2d 1250                  3d Cir. 1974),
cert. denied, 422 U.S. 1026 (1975) .....,..........                                                110 Berke Photo, Inc. v. Eastman Kodak Co.,
603 F.2d 263 2d Cir 1979, cert.      ~
denied, 444 U.S. 1093 (1980)
Borou h    of Ellwood Cit v.                    Penns lvania Power Co.,          D.C.Pa. 1979                462 F.Supp.
1 343  ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ e ~ ~ ~ ~ ~ e ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 103 Brulotte v. Th s Co., 379 U.S. 29 (1964)                                    ..............              115 California v. FPC, 369 U.S. 482 (1962) .                                  ~ ~ ~ ~ ..  ~ ~ ~ ~ ~ ~ ~ ~ ~  12 Cit of Anaheim v. Southern California Edison Co., C.D. Cal. No. CV-78-810-MML May 19,      1981)............;.........................                                          12 Cit of Bartow v. Florida                      Power Cor          oration 19 Cit of    La afette, La. v. SEC, 454 F.2d 941 D.C. Cir. 1971), affirmed, sub ncm. Gulf States, infra                                                                            108 iv
Pacae Cit of Mishawaka, Indiana v. American Electric Power Co., Inc., 560 F.2d                                          1314 7th Cir. 1977 , cert. denied, 436                                        U.S.
9 22  ( 1978)        ~ ~ ~  ~ ~ ~ ~  ~ ~  ~  ~  ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~  ~ ~ ~  ~  ~  ~ ~  ~  ~  ~  ~  ~  ~ ~ ~ ~ ~ 109 Conwa    Cor    oration v.              FPC, 426 U.ST 271                        (1976)                                  112 Eastman Kodak Co. v. Southern Photo Materials Co., 273 U.S. 359, 47 S.Ct. 400, 71 L.Ed 6 84 ( 1927)          ~ ~ ~ ~  e ~ ~  ~ ~  4  ~  ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ e ~ ~            100 Fashion Ori inators'uild of America v.
Federal Trade Commission, 312 U.S. 457 1 941      ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~                    93 FTC  v. National Lead Co.,                          350 U.S. 419 (1956.)                                                  100 Florida Power 6 Li ht Com                            an , Opinion No. 517, Docket No. E-760, 37                        FPC 544 (1967), reversed 430 F.2d 1377                (5th Cir. 1970), reversed, Florida power              5    Li ht Com an v. FPC, 404 U.S 53    1972      ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ e ~      ~  ~ ~ ~ ~ ~ ~ ~ ~ ~ ~                        22, 34, 48, 55, 56, 92 Florida    Power 6          Li ht        Co. v. FERC, CA5 No.
80-5259          April 4,            1980                                                                              59, 103 Ft. Pierce Utilities Authorit of the Cit of Ft. Pierce v. United States Nuclear Re ulator            Commission, D.C. Cir. No.
8 0>> 1099      ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ e ~ ~ ~ ~ ~ ~                  116 Gainesville        Re    ional        Utilities, et al. v.
Florida        Power 6            Li ht          Com an , U.S. District Court for the                Southern District of Florida, No. 79-5101-CIV-JLK t:October 31, 1979])
Gainesville        Utilities              De      artment v. Florida power    S  Li ht Com an , 573 F.2d 292 5th Cir. , cert. denied, 439 U.S.
9 66  ( 1978)        ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~                    4, 83 Gainesville Utilities De t. and Cit of Gainesville, Florida v. Florida Power
    ~Car ., 402 PPC 1227                          1968, affirmed, 402    U~ S  ~  515 (1971            )    ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~    ~  ~  ~ ~ ~  ~ ~  ~ e  ~ ~  ~ ~ ~  55, 107 Gamco,    Inc. v. Providence Fruit Produce Buildin , Inc., 194 F.2d 484 1st Cir cert. denied,                344 U.S. 817 (1952)                                                                        19, 93-94, 95
Pacae Gulf States    Utilities          Co.      v. FPC, 411 U.S.
7 47  1973    ~ ~ ~ ~ ~ ~  ~ ~ ~ ~  ~ ~ ~ ~ ~  ~ ~ ~ ~ ~ ~  ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 108 Hecht v. Pro-Football,              Inc., 570 F.2d 982                      (197 7)F cert. denied, 436 U.S. 956 (1976)                                                ~ ~ ~ ~ ~ ~ ~ ~ ~ 110 International Business Machines v. United States,    298 U.S. 131                1936        .......................                        113 ICC  v. Delaware Lackawana                  8  Western Railroad Co., 220 U.S. 235              1911                                                                97 International Railwa            s    of Central              America
: v. United Brands,            532 F.2d 231                certiorari denied,    50 L.Ed.2d 100 (1967)                        .....................                      106 International Salt          Co.      v. United States, 332 U.S. 392        1947        ...............................                                  113 Jerse    Central  Co. v.      FPC,      319 U.S. 61, 67 68    1943    ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ e ~ ~ ~ ~ ~ ~ ~ ~ ~ ~    ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 108 Klor's, Inc. v.      Broadwa -Hale Stores,                          Inc.,
359 U.S. 207        1959                                                                          93 Koninkli'ke Luchtuaart Maatscha pi'.V.K.LM
: v. Tuller, 292 F.2d 775 D.C. Cir. 1961, Burger    J.)                                                                                      15 Lorain Journal Co. v. United States,                                342 U.S.
143    72  S.Ct.. 181, 96 L Ed 162 (1951)                                                          100F  110F 112 Louisville    and  Nashville Railroad                      Co.      v.
United States,        238 U.S. 1                1915                                              97 Missouri Pacific Railwa Co. v. Larabee Flour Mills Co., 211 U.S. 612221909                                                        ~ ~ ~ ~  97 Monta ue & .Co. v. Lowr , 193 U.S. 38 (1904)                                                            97 Mullis v. Arco Petroleum Cor ., 502 F.2d 290
~7th        Cir. 1974 per Stevens, Cir. J.                                    )                        106 Munici al Electric .Association of Massachusetts
: v. SEC, 413 F.2d 1052 D.C. Cir. 1969                                                              106, 113 Munici al Li ht Boards of Readin and Wakefield Mass. v. FPC, 450 F.2d 1341  D.C.Cir.      1971 Vi
0 Pacae National Air Carrier Assoc. v.                              CAB, 436            F.2d 185    D.C.      Cir.      1970                                                                            16 North American Co. v.                  SEC,      327 U.S. 686 (1946)                          . ~ ~ ~ ~ ~ ~ ~ 108 Northern Pacific Railroad Co. v. United States, 365 U.S.        1    1958          .......oo......o..ooo.oo.o.....o.                                      113 Otter Tail      Power Co. v.                United States, 410 U.S. 366 1973)                                                                                        6, 110 Packa ed Pro rams,              Inc. v. Westin house Broadcastin            Co., 255 F.2d 708 3d                            Cir.
1 958    ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ o ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~        101 Peelers Co. v. Wendt, 260 F.Supp. 193 W.D. Nash.          1966)        .................................                                      115 Poster Exchan e, Inc. v. National Screen Serv., 431 F.2d 334 (5th Cir. 1970 cert. denied, 401 U.S. 912 (1971) ....                                        ~ ~ ~  . ~ ~ ~ ~ ~ ~ ~ ~ ~ 105 Radiant Burners v. Peoples Gas Li                                ht    6 Coke Co., 364 U.S. 656 1961                                                                                      93 Silver v. New      York Stock Exchan                      e      373 U.S.
341    1963        ~ ~ ~ ~  ~ ~ ~ ~  ~ ~ ~ ~  ~ ~ ~ ~ ~  ~                                                19, 93, 110, Six Twent -Nine Productions,                            Ines v.          Rollins Telecastin          ,  Inc.,        365 F.2d 4 78                (5th Cir.
1966    "~ ~ o ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~    ~ ~ ~  ~ ~ ~ ~ ~ ~  ~  ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 101 Stron    v. General Electric Co., 305 F.Supp 1084    N.D.Ga. 1969 , affirmed er curiam, 434 F.2d 1042 5th Cir. 1970),
cert. denied, 403 U.S. 906 (1971)                                              ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ o ~ ~  115 Union Carbide R Carbon Cor . v. Nisle 300 F.2d 561 10th Cir. 1962 , ~a eal dismissed, 371 U.S- 801 (1963)                                    ............                            114 United States v. Aluminum Co. of America, 148    F.2d 416          2d    Cir.      1945        ........................                          90, 112, 114 United States v. American Tele hone S Telegra h Co., 83 FRD 323 D.D.C.                                                                              o 1 979    ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ o ~ ~ ~ o ~ ~ ~ ~ ~        ~ ~ ~ ~ ~ ~ ~  5 United States v.            Ca    ital      Transit Co.,                325 U  ~ ST  357 (1945              ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~      ~    ~ ~  ~          97 0
                                                                                              ~ ~    ~  ~ ~ ~ ~
vl.3.
Pacae United States v. Florida Power Cor oration and Tam a        Electric          Com    any, CIV No. 68-297-T                                          19 United States v.          Griffith,            334 U.S. 100                                                  101F  110 United States v. Grinnell Cor .,                            384'.S.            563 (1966)                    99 United States v.            Klearflax Linen                  Looms, 63  F.Supp. 32            DeMinn. 1945                                                                  105 United States v. Loew's, Inc., 371 U.S.
38    1962      ~ ~ 4 ~  ~ ~ ~ ~ ~ ~ ~ ~ ~ ~  ~ 4 ~ e ~ ~ ~ ~ ~ ~  ~  ~ ~ ~ ~ ~ ~ ~ ~  ~ ~  ~  ~ ~ ~ ~ ~ 112, 113 United States v. National Lead Co., 332 U ~ ST  319      1947)        ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~    ~ ~ ~ ~ ~ ~  '  ~ ~ ~ ~ 114 United States v. Otter Tail                      -Power      Co., 331 F.S upp                  ~
                                                                                        ~  ~ ~  ~  ~ ~ ~ ~ ~ 100 United States v. Readin                    Co., 253 U.S.                26 1920    ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~  ~ ~
                                                                    'a
                                                                        ~  ~ ~ ~ ~ ~ ~ ~ ~  ~ ~  ~  ~ ~ ~ ~ e 114 United States v. Terminal R.R. Ass'n.
of St. Louis, 224 U.S. 383 1912                                                                            93, 101, 110 United States v. United Shoe Machiner                                    ~Cor
    ~su  ra,  110 F.Supp.              at 346                                                                106 United, States v. Utah Construction                              S 12 United States v. Yellow                  Cab    Co., 332 U.S.
2 18    1947      ~ ~ ~  ~ ~ ~ ~ ~ ~ ~ ~ ~ ~  ~ ~ \ ~ ~ ~ ~ ~ ~ ~  ~  ~ ~ ~ ~ ~ ~ ~ ~  ~ ~  ~  ~ ~ ~ ~ ~ 114 Woods Ex    loration        8    Producin Co.                v. Aluminum Co. of America,            438 F.2d 1286                (5th Cir.
105 Zenith Radio Cor          . v. Hazeltine Research, Inc.,  395 U.S. 100                1969                                                                115 viii
Pacae AGENCY CASES Consumers      Power Com an        (Midland Units                  1  and 2  (  ALAB-468'        NRC  465 (1978)                                                        9 Consumers Power Com an (Midland Units 1 and 2 , ALAB-452, 6 NRC 892 (1977)                                                            7-8P 113 Florida    Power 5 Li ht Com an , Opinion No.
57, 32 PUR 4th 313 Aug. 3, 1979),
      ~a  ~peal  dismissed,    Florida Power 6 Li ht      Com  an    v.'ERC, D.C. iCir. No.
79-2414      April 25, 1980)                                                                  4, 103 Florida Power Li ht Co. (St. Lucie Plant, S
Unit No. 2 , Prehearing Conference Order No. 1 (July 29, 1976)                                                                          13 Florida Power R Li ht Com any (South Dade Plant , NRC Docket No. P-636-A                                                                38 Florida Power S Li ht Com an, FERC Docket No. ER78-19, et al., Phase I, Tr. 843-44)                                    ~ ~ ~ ~ ~ ~ ~ ~ ~ 41 Florida Power S Li ht Co., Docket No.
Q      50-389A ALAB-420, July 12, 1977)                                                              89 Gulf States Utilities Co. (River Bend Station, Units 1 and 2), 7513 NRC 246 (Licensing Board Panel 1975, denying summary disposition)                                                ~ ~ ~ ~ ~ ~ ~ ~ ~
Houston    Li htin    S  Power Co. (South Texas Project, Unit Nos.        1 and 2, CCl-l-77-13, 5 NRC    1303  (1977)..................................                                      12 Indiana    a Michi    an Electric Ccm an, ~su ra 33 FPC 739      1966      ~ e ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~    ~ ~ ~ ~ ~ ~ ~ 34 Public Service Co. of New Ham shire (Seabrook Station, Units 1 and 2 , 7 NRC 1, (Commiss won Decision 1978)                                                                                13 Public Service Co. of New Ham shire (Seabrook
      ,Station, Units 1 and 2 , 6 NRC 33 (Appeal Board Decision 1977)                                                                          13 Tam a    Electric Com an , Federal Power Commission Docket No. 77-549, et al.                                                          40 ix
Pacae Toledo Edison Co., et al. (Davis-Besse Nuclear Power Station, Units 1, 2, and 3),  5  NRC    557 (Commission                  Decision 1977)                                        14, 40 Toledo Edison      Com    an (.Davis Besse Plant, Units    1  and    2  and 3), ALAB-560, 10 NRC  265 (1979)                                                                                        8, 19, 94 Vir inia Electric          & Power Co. (North Anna Nuclear Power Station, Units 1 and 2), ALAB-584,
( 1980 ) ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~
ll
                                        ~ ~  ~
NRC 451
                                              ~ ~ ~ ~  ~ ~ ~ ~ ~  ~ ~ ~ ~ ~  ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~
STATUTES AND REGULATIONS Atomic Energy Act Section    1, 42 U.S.C. $ 2011 Section    2, 42 U.S.C. $ 2012 Section    3, 42 U.S.C. $ 2013                                                                        91 Section    105, 42 U.S.C. $ 2135                                                                      9 Federal Power Act Section 202,          16    U.S.C. 824(b)                                                              18 Section 204,          16    U.S.C. $ 824c                                                            108 Federal Rules of          Civil      Procedure,              Rule 56 Federal Rules of Evidence, Rule 801(d)(2)(D)                                                              15 Federal Trade Commission Act Section    5                                                                                          93 Public  Utility Holding              Company          Act, Section 10@  15 UNSICK        $ 797    ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~    ~ ~ ~ ~ ~ ~ ~ ~ 107 49 Stat. 803-804, 847-848                                                                                108
Pacae MISCELLANEOUS HER. Rep. No. 91-1470 to HER. 18679 Atomic Energy Act of 1954, 91st Cong.,
2d Sess. (1970)                                                                                          12 H.R. Rep. No. 1318, 74th Cong.,                              1st Sess.,
3 p  7 8  ~ ~ ~ ~ ~ ~ ~ ~ ~ ~      ~ ~ ~ ~  ~ ~ ~ ~ ~  ~ ~ ~ ~ ~ 4  ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 108 S. Rep. No    ~  91-1247                                                                                      12 S. Rep. No. 621, 74th Cong.,                            1st Sess.,              1  4, 1 7~20  ~ ~ ~ ~ ~ ~ ~ ~ ~ ~  s  ~  ~ e ~ ~  ~ ~ ~ ~ 4 ~ ~  ~ e  ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 108 Deposition of Richard C. Fullerton, Gainesville Utilities De t. v. Florida Power 6 Li ht Co., M.D.Fla. No. 68-305-CIV-T                                                                            83 Federal Power Commission's 1964 National Power Survey \          ~ ~ ~  s  ~ ~ ~ ~ ~ ~ e ~ 4 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~    ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~
Re  ort of the National Commission for the Review of Antitrust Laws and P rocedures Moore's Federal Practice,                          Part El 1
Manual    for    Complex            Litigation)                .....................                    5 Antitrust Law Develo ments (American Bar Association 1975), p. 328 .......................                                                    ~ . 114 Note, Refusals to Deal b                        Verticall Inte rated Florida    Power 6 Light, Company 1979 Annual Re ort, page 14                                                                                          37.
Florida    Power a Light Company                          1980 Annual
    ~Re  ore, pages 8, 14-15                                                                                  37 Florida Operating Committee report, "Coordinated Plan    for the        1970 Generation                      and Transmission Re  uirements for the Electric                              Utilities of Florida            April          1960                                                                22-23 Xi
BEFORE THE UNITED STATES NUCLEAR REGULATORY COMMISSION BEFORE THE ATOMXC SAFETY AND LICENSXNG BOARD In The Matter Of                    )
                                    )
Florida Power & Light Company        )              Docket No. 50-389A
                                    )
(St. Lucie Plant, Unit No. 2)        )
MOTION TO ESTABLISH  PROCEDURES'OR A DECLARATION THAT A SITUATXON INCONSXSTENT WITH THE ANTITRUST LAWS PRESENTLY EXISTS AND FOR RELATED RELIEF INTRODUCTION On April 27, 1981,  this Board approved a settlement            of antitrust issues  between  Florida Power 8 Light Company ("FPL")
and the government parties. Cities contend that the license con-ditions do not cure or adequately remedy the alleged situations inconsistent with the antitrust laws. The Board's Order of April 27, 1981 provides that Cities should make appropriate motions with the Board for further proceedings. Cities file this motion for further procedures and for other relief.
(1)  Immediate Procedures.
Fl'orida Cities set fortn herein the principal factual and legal bases for their belief that there is a situation incon-sistent. 1/ They also set forth (Attachment 2) a report on discovery to date. Opposing parties should respond as to (1) factual issues that are genuinely in controversy, (2) legal defenses,    and (3)  identification of any further discovery needed.
In this manner, if additional "discovery is warranted, it can be ordered; if matters are ripe for decision, they can be decided; and  if hearings  are required, they can be held with dispatch as to issues genuinely in controversy.
The Cities demonstrate below that summary disposition is appropriate as to whether there is a "situation inconsistent with the antitrust laws". Parties have had extensive discovery against each other over a course of years. Pull evidentiary hearings, involving similar issues and virtually the same parties have been held in other dockets, resulting in opinions and orders, which have established facts which are binding here under the doctrines o8 res judicata and collateral estoppel. Internal PPL and public documents, as well as deposition testimony, further establish a basis for summary findings, unless FPL or other parties can "set forth specific facts showing that there is a genuine issue of fact". Huclear Regulatory Commission Regulations,    10 C.F.R.  $ 2.749(b).
1    The bulk of the factual materials are in a separate    appendix and referenced to Appendix pages with letter prefixes.
If the  Board should  rule that evidentiary hearings are required, they should be limited. Additional discovery, if necessary, should be based upon a showing of need in light of the discovery that has been provided and the facts still in controversy.
Within reasonable limits, parties should have the time they deem necessary to respond to this pleading, or such time as the Board deems reasonable. They should respond as to specific issues that they believe require trial. Because they cannot anticipate defenses or counter-arguments that may be raised, Florida Cities request time to respond to answering pleadings.
Because the outcome of these pleadings will shape all future proceedings,  they also request  a conference  before the Board as to  such future procedures.
After rulings on procedures and the scope of the issues that need to be tried and after consultation with the parties, the Board may wish to order the parties to discuss settlement and to report, to it after 30 days of the progress and likelihood of reaching agreement or partial agreement.      Under the Commission's rules, 10 CFR 52.759 (and as a matter of common sense), settlements are to be encouraged. Settlement would be encouraged if the Board either rules on summary judgment or guides the parties by stating its preliminary view as to whether a "situation inconsistent" exists. If there appears to be no hope of settlement, the Board should now order a schedule for any discovery and hearings that may be required.
(2)    Discove    to Date.
The  Cities    and FPL have each had an immense amount    of disco-very against each other. This case commenced in 1976, although discovery was intermittent due to appeals and settlement discussions. However, discovery    in the Miami District Court case began in late November 1979 (Gainesville Re ional Utilities, et al. v. Florida Power & Li ht Com an , U.S. District Court for the Southern District of Florida, No. 79-5101-CZV-JLK I.October 31, 1979]); the overlap of requests in that docket with those in this case is virtually complete. With perhaps limited exceptions, Cities have complied with document requests. The parties have had nearly two years of intensive discovery.
FPL has had an opportunity for comprehensive discovery of the cities of Homestead, New Smyrna Beach and Starke in Federal Energy Regulatory Commission Docket No. ER78-19 1/ and has used Florida's Public      Records Act to inspect,  city files in Lake Worth, New  Smyrna Beach, Gainesville and possibly other cities. FPL and  Gainesville have had discovery in the Gainesville District Court case (Gainesville      Utilities  De artment v. Florida Power  8 U.S. 966 (1978)).
1    See  Florida    Power  6 Li ht Com an , Opinion Nos. 57 and 57-A, 32  PUR  4t      g        Fe era Energy Regulatory Commission, 1979)    .
For the convenience of the Board, Opinions 57 and 57-A are .
The  Antitrust  Commission  Re ort  recommends    that Courts "establish a maximum of 24 months for the completion of pre-trial, not as a norm and extendable only in truly extraor-dinary cases." 80 FRD at 5l6. Discovery related to the antitrust issues in this proceeding has lasted for years. It is time to close discovery. 1/
(3) Basis for Findin s of a "situation inconsistent" with the  antitrust laws.
In this pleading, Cities    show  that  a  "situation inconsistent with the antitrust, laws" exists, based      upon FPL's historic and Courts an    commentators  are encouraging judicial bodies to take an active role in supervising discovery and other prehearing procedures, as the NRC boards, aided by the Staff and parties, often do. Indeed,. it  is now almost universally acknowledged that the absence of judicial intervention during discovery, and pre-trial procedures is inappropriate in complex antitrust litigation. United States v. American Tele hone & Telegra h Co.,
83 FRD 323, 327, n. 1 D.D.C. 1979        cxtz.ng both the Report of the National Commission for the Review of Antitrust Laws and Procedures ("National Commission Report: ) and the Manual for Com lex Liti ation). This is because "Perhaps the most  significant  problem with  antitrust litigation in complex cases is delay . . . . A, principal cause of unnecessary delay in antitrust and other complex litigation is the absence of judicial management and control . . . . 'I.T]he absence of strong judicial control permits discovery to mushroom and issues to go unfocused; delay and obfuscation are more likely to be adopted as litigation tactics; . . . As a result, excessive motion practice and other examples of dilatory and overly litigous conduct proliferate, while incen-tives for stipulation and other potentially expediting types of behavior are reduced.'"
United States v. ATILT, 83 FRD at 326-327 (quoting from National Commxssxon Report      citations omitted); Admiral Theatre Cor . v.
Dou las Theatre Cor , 585 F.2d 877, 889 ~8th Cir. 1978 .          Indeed, in its pretrial memorandum for the parallel civil case in which Cities seek relief from FPL, Gainesville Re ional Utilities v.
1980) had been comprehensive (p. 3 of Memorandum, attached as ), although it stated that it needed additional discovery, but that it. intended to proceed "expeditiously".
continuing anticompetitive acts      and practices. The  factual bases for  these conclusions,    as more fully described  below, are derived from (1)  FERC  Opinion No. 57 and  certain other findings and rulings by  FERC;  (2) the Fifth Circuit decision in Gainesville 292  (5th  Cir.), cert. denied, 439 U.S. 966 (1978); (3) internal FPL documents    (and/or documents transmitted to FPL), plus certain Florida Power Corporation documents attributable to FPL; (4) public documents; and (5) sworn testimony offered in hearings or depositions.
Among other things, Florida Cities contend that FPL has unlawfully restrained trade by dividing wholesale markets in  a Florida. This fact has been determined by the United States Court of Appeals for the Fifth Circuit. Gainesville Utilities Cir.), cert. denied, 439 U.S. 966 (1978). The Court's finding is binding.
Florida Power Corporation may have abandoned the conspiracy, when  it  entered into settlements with the cities in the early 1970's. However, FPL has continued to refuse to deal in impor-tant wholesale power services with Cities outside the perimeter of its retail service area, thereby perpetuating trade restraints against those Cities.
Florida Cities also contend that FPL has refused to deal in essential products and services contary to the requirements of Otter Tail Power Co. v. United States, 410 U.S. 366 (1973). As this Board knows, until FPL's settlements with the Government parties in this case, FPL had refused to deal with Cities in
nuclear power. It has a long history of refusing to deal in transmission and coordination services, as is discussed, infra.
It has refused to sell wholesale power to generating Cities at.
the same time    it was seeking to acquire such Cities and serve their  loads at  retail. 1/ Thus, the Company would sell wholesale power (generation and    transmission services) ~onl  if it could sell distribution services,      as well.
It is also demonstrable that while FPL was refusing to deal with Cities, it was engaging in beneficial power supply coordination with Florida Power Corporation ("FPC") and Tampa Electric Company ("TECO"), the second and third largest electric systems in Florida'. These facts are shown by jointly filed documents and public statements.
Under the standard contained in $ 105 of the Atomic Energy Act authorizing this Commission to correct "situations inconsistent with the antitrust laws", and in accordance with substantive antitrust standards for certain offenses, anticompetitive motive or "specific intent" need not always be proven. However, there is abundant evidence that FPL has been motivated in its dealings with Cities to weaken competition in order to preserve and expand its retail monopoly and its dominant position in wholesale power markets. FPL filings and documents show that FPL looks to Peninsular Florida for power supply interchange and backup arrangements.
The  controlling antitrust standards for this agency have    been established in Consumers and Toledo Edison. Consumers Power 1    Alternatively, it. has sought to condition dealings, with  a City on its coordination of FPL acquisition.
~Com an  (Midland Units  1  and 2), ALAR-462, 6 HRC 892 (1977);
Toledo Edison  Com  an  (Davis Besse Plant, Units 1, 2 and 3),
ALAB-560, 10  NRC  265 (1979). Cities'llegations    here are like those adjudicated in Midland and Davis Bassa and can he assessed by application. of the standards  set forth in those opinions.
The Commission has  recently noticed  a  proceeding to adopt regulations to  limit unnecessary  complexity in licensing proceedings. 46 Ped. Reg. 17216 (March    18, 1981). The Commission's goal is consistent with the purposes      of administrative agencies in general to provide a practical means of resolving problems.
As is no doubt obvious to the Board, however, in spite of the settlement between the NRC Staff, the Department of Justice and FPL, there remains a substantial dispute between the Cities and FPL. FPL has taken the position that it is not willing to grant further relief to the Cities unless compelled by a Board order and that the Board has no legal authority to issue such order without making a finding that a situation inconsistent with the antitrust laws exists.
Apart from the question whether a "situation inconsistent" exists at all, there would appear to be two basic unresolved issues dividing the parties: First, whether FPL has any obligations to deal with municipally owned utilities in Peninsular Florida other than those named in the NRC license conditions; second, the extent of FPL's obligations to deal in power supply services with smaller cities. There are other important
questions 1/; however,      if these issues could be resolved, the others should be less      difficult.
(4)  Se  gratin the Issue of Relief.
Assuming that relief is justified, the nature of the relief will necessarily require a balancing of interests. See Atomic Energy Act,    $ 105(c)(6), 42 U.S.C. 2135(c)(6). Further, the costs and benefits associated with specific areas of relief necessarily raise factual questions of parties'pecific needs, which may be affected by a spectrum of considerations.        It is preferable that relief be negotiated among affected parties.
Florida Cities believe that. it is likely that      if rulings or ten-tative rulings could be made on issues as to FPL's obligations to outside cities and upon its obligations to deal in power supply matters, or    if  limited hearings could be held as to these matters, settlement on the issue of relief would be encouraged. The issue of relief should therefore be deferred until after pre-trial rulings or after required hearings 2/ Cities set forth their 1    Among  these are issues whether FPL has acted to unduly restrict Florida Cities'ability to      buy and sell power or power supply (e.g., through actual or proposed resale restrictions on wholesale power); whether      it has unlawfully tied power supply services; whether the license conditions themselves are anticompetitive;    and appropriate relic f .
2/ The procedures suggested are consistent with Midland.
Consumers Power Com an (Midland Units        l and 2), ~su ra, 6 NRC at 1098-1100, where the Appeal Board determined issues relating to liability but remanded to permit the fashioning of remedies. After the Commission denied certiorari review, the parties determined to open settlement dz.scussxons, which ultima-tely proved successful. Once issues of liability are determined or narrowed, settlement as to relief is facilitated. See Consumers Power Com an (Midland Units 1 and 2), ALAB-468, 7 NRC 465  1978
10 basic case on these matters to permit the parties to focus on these issues. However, subject to scheduling, Florida Cities are now prepared to go to hearing either on limited issues or on the full case,  including    relief.
(5)  Basis  for limitin issues.
The core concern    of Congress in passing the antitrust provi-sions of the Atomic Energy Act was to prevent licensees, such as Florida Power R Light Company, from restraining trade by using the economic advantages of nuclear. power to place smaller systems at comPetitive disadvantage.        Zn the Gainesville case, ~su ra, Florida Power Light has been specifically found to have been S
"part of a conspiracy with Florida Power Corporation (Florida power) to divide the wholesale power market in Florida". 573 F.2d at 294. The Company has been    further found to have anticom-petitively restricted or sought to have restricted the availabi-lity of wholesale power and other power supply services.
Florida Power 5 Li ht Com an , Opinion No. 57, 32 PUR 4th 313 (August 3, 1979), ~aeal dismissed, Florida power a Li ht          Co.'.
FERC, D. C. Circuit No. 79-2414 (April 25, 1980) and Florida Power and  Li ht Co., Opinion No. 57-A (October 4, 1979). The Company has made written proposals to acquire independent electric systems and to renew franchises, citing the advantages of its  nuclear generation and coordination (with other large        utilities),
while at the same time refusing to sell the city wholesale power and transmission or to engage with it in coordination.        FPL has steadfastly refused to deal with Cities in either capacity or unit  power sales    from  its operating nuclear units. It has
offered St. Lucis 2 capacity to some Cities only under the pressure of Government litigation. 1/ Tt still refuses to deal with others. These facts establish that there is, at. the least, license would "create or maintain a situation inconsistent with the antitrust laws". Consumers Power, ~su ra ,6 NRC at '907-909.
Summary judgment procedures are, of course, available before courts and this Commission, where there are no genuine factual issues to be tried or when other equitable doctrines so warrant.
Nuclear Regulatory Commission Regulations,      10 CFR  $ 2.749(b);
Federal Rules of  Civil Procedure,  Rule 56; Munici    al Li ht Boards  of Readin  and  Wakefield Mass. v. FPC, 450  F.2d 1341, 1345-1346  (D.C.Cir. 1971); Virginia Electric 6 Power Co. (North Anna Nuclear Power Station, Units 1 and 2), ALAB-584, 11 NRC 451 (1980). 2/ Such objectives are especially to be encouraged before the Nuclear Regulatory Commission in antitrust cases, The settlement with the Government, of course, cannot be 1
taken as an admission of liability by FPL. On the other hand,              it does represent FPL' statement of what use the  settlement  or changed policies it to will do."situation deny a FPL may not inconsistent" that otherwise exists. For example, in Consumers, the Licensing Board rejected a Consumers Power statement of policy during the middle of a proceeding, as justification for avoiding an adverse finding or for limitation of relief.
Consumers Power Co. (Midland Units 1 and 2), LBP-75-39, 2 NRC 29, 91-92 (1975); reversed on other grounds, ~su ra6NR,C 892; See 6 NRC 1036, n. 537. Otherwise, any applicant could bypass the authority of the Commission to impose reasonable conditions through reliance upon settlements or statements of position.
2/  Accord, Gulf States  Utilities Co. (River Bend Station, Units, 1  and 2), LBP-75-10, 75  3 NRCX 246, 248 (1975) (denying summary disposition):
One  cannot avoid summary disposition on the mere hope that at  trial he will be able'goto discrediton the vague
                    . . . . One cannot      to trial    movants'vidence supposition that something may turn up.'"
12 where Congress has    specifically refused to apply the stricter standards applicable to a judicial grant of antitrust relief, but has given the Commission the      authority to correct probable, inci-pient harm. Houston Li htin    S  Power Co. (South Texas Project, Unit Nos. 1 and 2), CCI-1-77-13, 5 NRC 1303, 1314-1316 (1977).
Cf. California v. FPC, 369 U.S. 482, 488-490 (1962). As the Appeal Board held in Consumers:
          "The members of the Joint Committee agreed that proof of conditions which ran counter to the
          ~olicies underlying those Lantitrustj laws, even where no actual violation of statutes was made out',
would warrant remedial license conditions under Section 105(c)"
Accord, S.Rep. No.      91-1247 and H.R. Rep. No. 91-1470, 91st Cong., 2nd Sess.,    14-15 (1970) (" Joint Committee Report"  ) and see authorities collected at Consumers, ~su ra d ,NRC at 908.
It is accepted federal law that courts may bind a litigant to the prior adjudication of issues litigated and determined in the previous forum. It is now beyond doubt that prior determinations by an administrative agency may estop the parties from re-litigating  issues resolved  earlier.
          "When an  administrative agency is acting in a judicial capacity    and resolves disputed issues of fact that are properly before it which the parties have had an adequate opportunity to litigate, the courts 'have not, hesitated to enforce repose."
United States v. Utah Construction & Minin Co., 384 U.S. 394, 422 (1966) (footnotes omitted). Cit of Anaheim v. Southern California Edison Co., C. D. Cal. No. CV-78-810-MML (May 19, 1981, pp. 4-5 of Slip Opinion). Attachment 5.
13 It is  clear that  FPL has had ample  opportunity to  make its O case before,    e.g.,  FERC  and the  Fifth Circuit. It has  had every incentive to litigate, and has not ignored its opportunities to contest claims. A fortiori,        if agency adjudication is enforceable by a court with broad remedial powers, it should bind FPL  before another agency forum.
The NRC has    applied this principle to    its own  proceedings.
Public Service    Co. of  New Ham  shire (Seabrook Station, Units    1 and  2), ALAR-422, 6 NRC 33, 70 (1977) (~citin United States v.
Utah Construction and Minin Co., 384 U.S. 394, 421-22 (1966);
Public Service Co. of New Ham shire (Seabrook Station, Units 1 and 2), CLI-78-1, 7 NRC 1, 23-28 Accord, Florida Power S Light Co.  (St. Lucie Plant, Unit No. 2), Prehearing Conference Order No. 1 (July 29, 1976), pp. 3-6:
            "To prevail in the Gainesville case, the complainant was required to prove an explicit violation of Section 1 of the Sherman Act. Here, of course, the Staff and Cities face the lesser requirement of establishing. under $ 105 of the Atomic Energy Act that the activities under the license would create or maintain a situation inconsistent with the antitrust laws, including Section 5  of the Federal  Trade Commission  Act."
Tn Public Service of    New Ham  shire the Commission stated its reasons  for binding    itself  to the factual determinations pre-viously  made by  the EPA:
But perhaps the strongest, reason for accepting as conclusive the EPA determinations of aquatic impact is to avoid protracted relitigations of these factual issues. Where litigants have one full and fair opportunity to contest a particular issue, they need not be given a second opportunity to reopen the matter before another tribunal where the same issue is relevant.
14 7 NRC  at 26. See  also Toledo Edison Co., et al. (Davis-Besse Nuclear Power Station, Units 1, 2, and 3), ALAB-378, 5 NRC 557 (1977):
[A]s a general matter, a judicial decision is entitled to precisely the same collateral estoppal effect in  a  later administrative proceeding would be accorded    in a subsequent judicial as it proceeding.
5  NRC at 561. It is  thus clear that the Board can and should expedite this case by adopting findings of fact made by a sister agency, FERC, in Opinion No. 57, and by the Fifth Circuit Court of Appeals, in Gainesville.
Further,  FPL must, be  taken to be bound, as  a  matter of law, by  its public positions      and documents. For example,  FPL published an advertisement in the Vero Beach Press Journal (September    5, 1976) addressed    "An open  letter to  every Vero Beach resident    . . ." just before    a public vote  on sale  of the system.
That advertisement      compared FPL and Vero Beach's prospective rates, stating:
            "We expect to have a new nuclear generating unit at St. Lucie in service in the near future. This should bring annual fuel savings of more than $ 100 million that will be passed directly to our customers through a reduction in the fuel adjustment, which has been reflected above" "We  sincerely believe that the proposed sale will be a good    thing - good for Vero Beach electric customers and good for the City itself. If it is approved, we pledge to deliver you reliable electric service at the lowest possible cost. We hope you will give us the opportunity to keep this promise."    Appendix, p-  D12 ~
Thus, FPL used    its control over nuclear facilities to try      to extend  its retail market, simultaneously refusing to sell        any
part of its nuclear generated      power  to Vero Beach or others through wholesale sales.      Unless a  rule were established that  FPL is not  bound by the necessary    consequences  of  its  acts, there must be a finding that FPL was seeking approval of the sale of the Vero Beach system on the basis of FPL's nuclear advantage.
Similarly, when FPL enters into settlements that continue to deny nuclear access to some, dl it cannot deny that  it  is refusing to deal.
Moreover, the sheer cumulation of evidence from FPL's own internal  documents    of its anticompetitive activities, coupled with its external acts, support a summary judgment finding that a situation is inconsistent with the antitrust laws.
internal documents of a party opponent are admissible under Rule 801(d)(2)(D) of the Federal Rules of Evidence. United States v. American Tele hone and Tele ra h Co., CCH 1981-1 Trade Cases, 'K63,938 (D.D.C. 1981) . 8ee alee Kcninkli'ke Luchtuaart Maatscha i'.v.ELM v. Tuller, 292 F.2d 775, 782 (D.C.Cir.
1961, Burger J.). The Court in American Tele hone G Tele ra h Co. noted the enormous cost and burden of identifying the authors of  such documents    and otherwise laying a foundation. The Court also noted that control over the relevant foundational infor-mation remained with the opponent party. The Court held that such evidence was presumptively admissible,      but allowed the opposing party to, rebut the presumption of      admissibility. Xf FPL wishes to deny the    authenticity or veracity of    such documents,
the  means  to do so are  within its power. Otherwise, documents from  its  own files stand as admissions by the Company of matters stated in the documents. American Tele hone  8 Tele ra h Co.,
~su ra.
In a  recent order of May 19,  1981, in Cities of Anaheim v.
Southern    California Edison, ~su ra, (Attachment 5), Judge Lucas determined certain facts to be "without substantial controversy and deemed established for purposes of this action," determined that certain "principles of law are applicable to this action",
collaterally estopped Southern California Edison from disputing factual issues determined in FERC proceedings, and restricted discovery to issues remaining in controversy; but the Court denied a further limitation "without prejudice" and ordered further briefing and conference as to issues for trial. Florida Cities believe that a similar order will be appropriate here.
In the remainder of this pleading, Florida Cities place before the Board, court and administrative agency findincis that FPL has violated the antitrust law or policy or has acted inconsistently with them. Attachment. 1, Cities provide a statement of facts which they believe are not genuinely in dispute. Florida Cities submit that the judicial and administrative findings are determinitive that, a "situation inconsistent" does exist. Indeed, it is virtually inconceivable that the Commission could lawfully find a "situation
17 inconsistent"    does not  exist in light of these findings. They recognize, however, that FPL will disagree. If FPL cannot pro-vide a factual basis to deny a "situation inconsistent" exists or to contest the facts where FPL is not estopped from contesting them, then the issues are ripe for determination.        If FPL does provide a basis for controverting material facts or raises appli-cable defenses,    there should  be a  hearing. A hearing will be required as tc relief.. See pp. 115-17, indra. I8 specific addi-tional discovery is required, Florida Cities will cooperate in order to provide a basis for speedy resolution of the case.
However, FPL should set forth what facts remain in controversy to permit their early resolution.
I. 
==SUMMARY==
OF  PRINCIPAL LEGAL ARGUMENTS A. Refusals By  FPL To Deal With Some Cities in Florida Power  Corporation's Retail Service Area Perpetuate An Ille al  Market Division.
FPL  refuses to deal in various power supply resources with certain cities in Florida Power Corporation's retail service area
(" outside cities"), even where    it  is willing to deal with others in the  same  or similar matters. If there is any question regarding the matter, FPL need merely state its willingness to deal with such cities., This refusal constitutes a direct viola-tion of the antitrust laws; even      if FPL has technical defenses to a Sherman Act claim, its conduct is inconsistent with those laws.
In these dockets,    as the Board  is  aware, Florida Cities have been seeking    rights of  access  to FPL's nuclear generated power, transmission, wholesale power and pooling, among other things.
18 PPL'  settlement. license conditions expressly limit relief to certain designated "in and near" cities (i.e., within or near the perimeter of FPL's    retail service area) . PPL refuses to deal with the excluded    cities. Moreover, even if the  settlement were not considered,  PPL's  policy is the same. The only question is the legality of such refusals.
The facts, as are set forth below, plainly demonstrate that PPL entered into a territorial agreement with Florida Power to divide wholesale power markets in Florida, Gainesville Utilities De artment v. Florida Power a Li ht Com an, ~su ra      57,3 F.2d 292; that, this conspiracy was in effect at the time FPL's nuclear generation was planned; and that FPL has offered St. Lucie 2 capacity to at least three cities outside its retail service area Gainesville, Lake Helen and Orlando Utilities Commission.
Moreover, FPL has planned,    constructed and operated its nuclear generation in the context of electrical coordination with Florida Power, Tampa  Electric and to a lesser extent Orlando and Jacksonville; other Cities Cities in general have been excluded from equivalent coordination; FPL knows that such coor-dination is important to both FPL and the smaller cities; and the purpose and effect of such exclusion was to limit power supply opportunities of smaller systems, thereby reinforcing FPL's eco-nomic power in retail and wholesale markets.
Coordinated activity in the electric power industry is not only legal, but is encouraged. E.g., Federal Power Act, $ 202, 16 U.S.C. 824(b). However, where joint action is exclusionary, it
19 is  condemned. Cases  such as Associated Press v. United States, 326 U.S. 1    (1945); Silver v. New  York Stock Exchan e, 373 U.S.
341 (1963); Gamco, Inc. v. Providence Fruit produce Buildin Inc.,  194 F.2d 484 (1st    Cir.), cert. denied, 344 U.B. 817 (1952);
and the Commission's      own  Davis Besse decision (Toledo Edison
~Com  an  (Davis Besse Plant, Units 1,      2 and  3),  ALAB 56-0, 10 NRC 265 (1979)    establish that companies such as FPL cannot legally join together with other utilities for mutual advantage, to the exclusion of other smaller utilities in the same geographic area.
Moreover, FPL and Florida power, who along with Tampa Electric,    dominate  electric generation and transmission in Penin-sular Florida have      been found guilty of a market conspiracy in the Gainesville case, ~su ra. 1/ Thus, it was held that FPL and Florida Power could not lawfully agree to divide wholesale power markets in Florida. In the early 1970's Florida power settled the Gainesville case itself and other cases alleging anticom-petitive activities. Certainly, however, it is inconsistent with the antitrust laws for FPL to continue policies of "territoriality", which      have the same  effect  as  if there  were a formal agreement. 2/    Moreover, since the useful      life  of genera-tion is for    decades,  the effect, of the Gainesville conspiracy can 1    Florida power    and Tampa  Electric settled    a case  brought, by the Department of Justice alleging an illegal market division United States v. Florida Power Cor oration and Tam a Electric
~Com an , CXV Ho. 68-297-T.        The parties agreed not to agree to or enforce territorial or market limitations of the sale for resale of bulk power. Appendix I148-I153.
2/    A  territorial  agreement between the companies which was actually written, but not signed, is attached            as Appendix I89-I110-
20 hardly  be  said to have ended,    For example, FPL's operating nuclear units were planned during the mid-1960's 1/ heyday of the territorial "conspiracy" found in Gainesville.
B. FPL's Dealing With Some Cities But Not Others Constitutes A Combination In Restraint Of Trade.
FPL agrees  to grant  some  nuclear access and other relief to certain designated cities,    but not to others. tagore specifically, FPL offers nuclear access at least to St.        Lucie 2 whole-sale power, and limited transmission to Cities within its retail service area and offers some relief to the Orlando Utilities Commission, Gainesville and Lake- Helen, which are near but not within FPL's retail service area. Lake Helen purchases wholesale power from Florida Power Corporation. Orlando is one of the largest municipal generating cities. In this case,, the Commission has found that Orlando was "misled" as a result of actions by FPL- Gainesville, of course, won the Fifth Circuit territorial market division case. The Fifth Circuit also referred to Lake Helen by name, with regard to the territorial conspiracy. 573 F.2d at, 298.
While FPL may have business    or other motivations for offering St. Lucie 2 to some, having done so,      it cannot rightly exclude others similarly situated in Peninsular Florida. Of course, FPL had the choice to stand firm and not offer St. Lucie 2 to any-1    Deposit>.on of Robert J. Gardner, pp. 90-94, 98-108.
Appendix A. Affidavit and exhibit references are to affida-vits or deposition exhibits in Gainesville Re ional Utilities, et al. v. Florida Power Li ht Com an , S. D. Fla. No.
S
21 body or  to seek to limit it to non-generating systems or some other limited class. In doing so, it might have taken unaccep-table litigation risks. The FERC rejected FPL's position that it should not be required to sell wholesale power to generating systems except to supplement their generating capacity; the FERC found such refusals illegal under the Federal Power Act, prin-cipally because of "anticompetitive" effects. Florida Power 8 Light Com an, Opinion Nos. 57, 57-A, ~su ra. However, having made the choice to offer St. Lucie to some systems, which will help finance the plant and provide a market for its power, including systems in Florida Power's retail "territory", FPL can-not lawfully exclude others. Failure to offer similar. rights and benefits to others constitutes a group boycott, condemned under Section 1 of the Sherman Act. See cases cited at pp. 93-94.
Even assuming the possible validity of FPL's refusals to deal in nuclear power under Section 2, the cases are abundantly clear that joint exclusionary action is condemned. When a dominant company such as FPL, which controls substantial nuclear, transmission and other power supply facilities combines with others, thereby combining economic strengths, it cannot exclude some disfavored utilities. 1/
Having been found guilty of a territorial conspiracy to divide wholesale power markets with Florida Power in the 1    This Commission has considered in depth the'onsequences of exclusion of smaller systems from coordination arrangements. Of course, a favored smaller system has little choice but to prefer an opportunity to coordinate with a very large system as opposed to smaller ones. The inevitable result, however, is to weaken
~su ra, 6 NRC at 945-977, 997-1009,  1046, 1047-1090; Toledo Edison, ~su ra 10 NRC,at 334-358.
22 Gainesville case,      ~su  ra, 573 F.2d  at 299, 303, FPL has no basis for  an argument    either that it  did not benefit from the conspiracy or that its actions did not injure Cities within Florida Power' retail area. As the text of the decision in Gainesville illustrates, the condemned conduct did not take place in a vacuum, but was for the purpose of restraining competition by smaller systems.        Thus, by the same token, FPL has obligations to deal with such systems in what the Fifth Circuit called "wholesale power markets".        Accord, Opinion Nos. 57 and  57-A, .
As we  set forth extensively in the Statement of Facts, the Fifth Circuit finding of conspiracy is buttressed and            supported by proof of joint action among Florida's three major investor-owned    utilities    to the exclusion of municipal systems.
FPL planned, constructed and operated its nuclear units in the context of beneficial coordination with Florida's other utilities. As  the Federal Power Commission        specifically  found in 1967,  in rejecting FPL's claim that        it planned  and operated independently:
                  "FPL  is directly interconnected with four other Florida electric systems,      as follows: Florida Power Corporation (Corp), Tampa Electric Company (Tampa),
Orlando Utilities Commission (Orlando), and the city of Jacksonville ( Jacksonville ) . FPL, Corp, and Tampa form the Florida Operating Committee (Florida Pool) with Jacksonville and Orlando as associate members. Opinion
          -No. 517, Florida Power k Li ht Com an , Docket No.
5-760, 37 FPC 544, 547-548 (1967), reversed, 430 F.2d 1377 (5th Cir 1970.), reversedFlor,ada Power & Li ht Com an    v. FPC, 404 U.~S. 453    1972  . Opinion No. 517    is Attachment 3.
The  three companies themselves admit, in
                                      \
a  let ter introducing  an April 1960, Florida Operating Committee report. "Coordinated Plan for the 1970 Generation and Transmission Re uirements for the
23 Electric Utilities of Florida"            (emphasis added)  (App. B106):
treated electric as  ifanit were
                    ~corn served b~ one ~full integrated "This committee, though slow in getting out a report, feels that much has been accomplished; that this is a basic ~ste toward ~reducin the cost of electric service in this area.'hus, the companies    jointly recognize that        they treated Peninsular Florida    as a  single integrated area.          And, indeed,  FPL cited its competitive advantage over municipal systems, which resulted from such coordination. See text, pages 48-51.
Frankly, we are mystified how FPL can possibly argue, as it apparently intends, that relief is justified for Lake Helen, which purchases wholesale power from Florida Power Corporation, but not for other small generating systems, who do the same; or that relief justified for Gainesville, but not smaller Alachua or Dewberry, located in the same county; or for Orlando, but not Kissimmee and St. Cloud Cities that are smaller, but geographically and electrically not far from either Orlando or FPL C. FPL's Refusals To Deal With Florida Cities Are Directly Contrary To The Teachings Of Otter Tail And Consumers Power.
By any  test,  it is  plain that        FPL dominates  a  large retail power supply market    in eastern        and southern  Florida, that it controls essential transmission facilities for transactions among
24 various Florida Cities and that together with Florida Power    it controls most high voltage transmission in Peninsular Florida.
Further,  it owns three of Florida's four operating nuclear units and has the  only additional planned unit under construction.
Nor can there be any real question that FPL has refused to deal with smaller cities. The Gainesville case, ~su ra, establishes  FPL'  refusals to deal with systems in Florida Power's "territory";    if  there were any doubt, the NRC license conditions confirm this fact. In Opinion No. 57 the FERC found that FPL had engaged in various specific refusals to deal with municipal systems in its retail service area. 32 PUR 4th at 317-318, 327-335.
Under the standards  of Otter Tail and Consumers Power
~Com an , such refusals  mandate a finding that a "situation inconsistent" exists. The settlement is a ~artial cure od the "situation inconsistent", for the favored Cities. More is needed for  them, and much more  for the excluded Cities.
STATEMENT OF FACTS  1/
I ~  FPL S  PLANNINGg CONSTRUCTION AND OPERATION OF ITS NUCLEAR FACILITIES  HAS BENEFITTED FROM COORDINATION WITH OTHER FLORIDA UTILITIES.
As more  fully demonstrated  below, 1    The facts in this section (except for a few additions here) were presented  to the District Court in Gainesville Re ional Utilities, et al. v. Florida Power S Li ht Com an , S.D. Fla. No.
79-5101-CIV-JLK, in "Florida Cities'nswer to 'Motion of FPL For Summary Judgment of City of Tallahassee's Nuclear Access Claim'"
on May 15, 1981.
25'
: a. The  facts  show  that from about 1955 to 1965 FPL sought to develop nuclear power in Florida through joint action with Tampa Electric Company and Florida Power Corporation (but to the exclusion of municipal systems including, as discussed below, others that FPL knew to be interested in nuclear power). In addition to relying on taxpayers, government contractors and equipment vendors, FPL also relied on other utilities in Florida during the planning and construction of its nuclear units.
FPL also benefitted from membership in broader industry groups, from which Cities were excluded, such as Edison Electric Institute    committees on atomic power.
In its application to the AEC to build the Turkey Point units (App. C32-C44), FPL expressly and solely relied on these joint activities as evidence of its technical experience (App.
C39-C40).
: b. The  facts  show  that from at least 1959 FPL, Tampa Electric Company ("TECO"), and Florida Power Corporation, with the occasional participation of the Orlando and Jacksonville municipal systems (but to the exclusion of Tallahassee and the other intervenors) were engaged in joint and cooperative planning and  coordinated  their operations    so as to achieve efficiencies that would not otherwise be      available. This cooperation specifically included joint      study of nuclear generation, as well as  other matters.
r Furthermore,  FPL  relied  on the purchase  of power from, and the sharing of reserves with, other members      of the "Florida
Operating Committee", which included these systems, during the entire period in which its nuclear units were planned and under construction.
: 1. Since the 1950's FPL engaged in  joint nuclear activities with  TECO and Florida  Power Corporation.
When FPL  applied for the Turkey Point nuclear licenses in March 1966,    its participation in joint activities was the  sole evidence  of its "technical qualifications." As stated at    pages 7-8 of the application (App. C39-C40):
                "Beginning some ten years ago, Applicant [FPL]
participated with Florida Power Corporation and Tampa  Electric Company in a nuclear power plant study group, and has worked with others in the nuclear field. The objective was to be in a position to construct a nuclear plant when justified.
                "Mr. George Kinsman, Vice President in charge of engineering and power plant construction,. served as a founding member of the Southern Interstate Nuclear Board representing the power industry.
Currently he is the Board Member representing the State of Florida. He has been a member of the Florida Nuclear and Space Commission since 1956 and also serves on Atomic Industrial Forum, Edison Electric Institute, and Southeastern Electric Exchange committees."
As FPL  discovery documents show, FPL engaged in a number of nuclear activities with Tampa Electric Company ("TECO") and Florida  Power  Corporation in the decade before  it determined  to
27 build the Turkey Point nuclear plants. 1/        These included a Commission,  an  "atomic power committee" comprised of representa-tives of the three companies,    formed  in or about late 1961 (Gardner Exh. 4, 5, App. B73-B76)    and perhaps other projects (Gardner Exh. 8, App. B77-B78)  .
1    There is no evidence that any Cities were invited to participate in any of these groups, even though FPL was aware that both municipals and cooperative systems in Florida were then expressing interest in nuclear power (see Kinsman Exhibit Nos.
28-32, App. G8-G32, and Kinsman deposition in ~cit of Gainesville v. Florida Power Li ht Com an , S.D. Fla. No.
S 79-5101-CIV-JLK at 101-111 . The initial 1956 agreement among the three companies provided that "The  reports, proposals, documents or other data relating to the project shall not be disclosed without the unanimous approval of the parties to this agreement nor shall any press or publicity release relating to this agreement or the project be issued without such approval."      (Kinsman Exh. 3, at 2, App. G2)
By contrast, the evidence is that Cities were affirmatively excluded from the joint, activities of FPL, Florida Power and TECO. Most significantly, as discussed above, from 1959 until the early 1970's Cities were excluded from the Florida Operating Committee which sought to operate the systems of its members as "one system."
FPL documents show the exclusion of Cities was systematic and conscious. For example, in 1957, FPL was asked by a promoter of coal to put together a group of utilities to learn about coal.
FPL documents show that while the promoters wished that some Cities be included in the group, FPL did not want to include any municipal systems and arranged a meeting that included FPL, Florida Power, and TECO alone (see Kinsman deposition at 159-165; Kinsman Exh. 45-48, App. 957-961).
28 Further discovery documents show that above and beyond  com-munications concerning their own joint activities, FPL and Florida  Power Corp. officials  kept one another informed of  their communications with others regarding competitive developments    in nuclear power. For example, as shown at App. C45-C46, when rural electric cooperatives applied to the Federal government for a grant to build a nuclear unit in the early 1950's, they evi-dently asked Florida Power Corporation to provide the backup needed to construct the unit. Florida Power Corporation denied the request and sent, a blind copy of the denial to FPL officials. 1/
Ironically, as evidenced by FPL's 50-year corporate history, the joint efforts never bore fruit because the    com-panies were averse to the risks. 2/
1    Similarly, when FPL President. Robert Fite sent a 1959 letter to the Southern Company stating FPL's view that it did not believe nuclear power to be competitive with conventional plants, copies were sent to executives of other private utilities in Florida, although not to city officials (Gardner Exh. 16 to deposition in Gainesville Re ional Utilities, et al. v. Florida Power 5 Li ht com an, S. D. Pla. No. 79-5101-CIV-JLK, ~su ra App. B79-BSO . The Court of Appeals in Gainesville, ~su ra, relied upon such "routine" exchange of letters to support a finding of illegal conspiracy without remandin for a trial hearin . 573 F.2d at 295-297.
2/ "A Half Century of People Serving People" at 94-95, App.
Bl-B9. Following the death of this proposal Tampa and Florida Power Corp. continued their research, and attempted another pro-posal in 1967 (which was also rejected). FPL, however, did not participate (Kinsman deposition, Kinsman Tr. 44-45).
29 In 1961-62  when FPL, TECO and      Florida    Power formed an "atomic power committee," the release        announcing the Committee stated the three would "carry      on  continuing studies of nuclear reactor types" (Kinsman Exh. 17, App. G4-G7, and Kinsman deposition, Tr.
20-21). 1/ As Mr. Kinsman explained, however, no studies were done.
1    As zn the earlier venture, as a member of the "atomic power committee," FPL actively sought to share information with the other large utilities in Florida, but not Cities. As Mr. Kinsman, FPL's representative to the Committee, testified (Kinsman deposition, 56-57):
                  "Q. If a that information?
manufacturer    came    to FPL, would you share "A. Yes.
                  "Q.
                  "A.
                      .Who  did  you
                        ... If they share called iton with?
us, I would  make  sure they  called  on them [Tampa and Florida Power] too.
                  "Q. Would you make sure they called on Orlando?
                  "A. Yes-
                  "Q. What about    Gainesville?
                  "A. I don't  know.
                  "Q. Tallahassee?
                  "A. As  far as I know, none of them were interested in nuclear power.
                  "Q. What about Ft. Pierce?
                  "A. I don't suspect they were interested.            I didn't know they were "Q. Is it fair to say that you were following what was  going on out there, as opposed to doing your          own research?
Exactly. Oh  yes."    (Kinsman  deposition, Tr.
55).
In fact,  as shown by Kinsman      Exhibit os. 28-32, small interested in nuclear power in the fifties and early V~
systems were sixties. With the exception of Exhibit 29, an Atomic Energy Commission press release, all were obtained from FPL in discovery. While Mr. Kinsman did not recall Exhibits 28, and 30-32, App. GS-G32, he testified that "I'm sure I saw" Exhibit 29 (Kinsman, Tr. 101-110).
30
: 2. Throughout the 1960's FPL engaged in coordinated planning and operations through the Florida Operating Committee/Florida Pool but without the Cities.
In 1959 FPL  joined with Florida Power Corporation and TECO, 1/ utilities to which        it  was then and is now electrically interconnected, to form a group that the participants referred to as the "Florida Operating Committee" or the "Florida Pool." This group permitted    its  members  to obtain,    and plan for, greater reliability than      if each system had acted alone.
As R.H. Fite,  FPL  President,    explained to  FPL  stockholders on Hay 15, 1961 (Gardner Exh. 28, App. B103-B105)          (emphasis  added):
                  "Back  in 1959 .we joined with the Tampa Electric Company and    Florida Power Corporation in forming the Florida Operating Committee for the purpose of planning the most    eiticzent  and economical    results.
By coordinating our schedules of plant shutdowns for overhaul and through sharing the spinning reserve requirements of the individual companies, we are already effecting important operating economies plus providing greater protection to continuity of service by the greater diversity of backup reserves.
Coping efficiently with emergency situations, such unit, is only one of the many advantages to he gaaned Prom our coordination plans.          Coordination oK daily operations for greater economy and efficiency for each participant is a major objective dual  ~s stems and  facilities            e as though the    were one 1    Orlando and Jacksonville were also invited to participate in the group's activities.
Cities  were It permitted to join.
was not until the early 1970's that
31
          ~me"  This includes coordination of an individual plant in lower costs ~er
                                'oth Kw  for ~lant addations  and the e"
In April 1960, the Florida Operating Committee issued              a "Coordinated Plan for the 1970 Generation and Transmission Requirements  for the Electric Utilities of Florida."            (emphasis added)  (Gardner Exh. 29, App. B106-B220).            In introducing the plan prepared by FPL, TECO          and Florida Power Corp., the planning committee stated (App. B106) (emphasis added):
          "The entire state east of the A alachicola River is electric  ~corn an In short, FPL, and the others were planning for the entire peninsula Florida area served by Cities, but excluding them from the planning. 1/
In June  1961  the Operating Committee, with the cooperation of the Orlando  Utilities    Commission,      prepared a "Joint Planning Study 1964-65."      (Gardner Exh. 31, App. B237-B388).          As  the plan explains, (App. B241)    it. was:
originally initiated ... to determine the transmission system which would best, serve, as of the end of 1963, the individual and total needs of the Florida Power Corporation, Florida Power & Light Company and Tampa Electric Company including, of course, new generating capacity then planned or contracted....
In a      memorandum to Marshall McDonald, FPL's Chairman of the Board of Directors and Chief Executive Officer, and 17 other top officials of FPL, Vice President. Robert J. Gardner recognized:
FOOTNOTE CONTINUED ON NEXT PAGE
32 The subsequent    firming of additional projects of each  of the three  companies and the proposed integration of Orlando Utilities Commission into the 230 kv grid required changes in the study. This report shows how the  OUC [Orlando] facilities could fit into the integrated system planned for 1964."
In a 1963 report prepared by FPL, Florida Power and TECO 1/
for the Federal Power Commission's "National Power Survey," the three large utilities explained (App. B222-B223):
                "Coordinated planning of the generating and transmission facilities of the four major utliities
[evidently Orlando    as well as FPL, TECO, and Florida Power  Corporation] in the study area has been carried on by planning committees made up of personnel from Florida Power  S Light Company, Florida Power Corporation and Tampa Electric Company.      At the present, there is a general plan in effect which is serving as a guide for expansion up to the year 1970. This plan is based upon a "single system" approach, taking into consideration factors such as pooling of reserves, the sharing of units, area protection with inter-area transmission ties so that the expansion pattern would be one that is well coordinated among the participating companies."
FOOTNOTE CONTINUED FROM NEXT PAGE "The Public Service Commission has made      it clear that it feels there is an advantage to the State in requiring planning on a statewide basis. This feeling and the intent to follow through on it is reflected in the wording of the Power Plant Siting Act, the Grid Bill, comments from the staff on the ten-year site plans, and most recent, in an order instituting an investigation into and requiring public hearings on the subject of joint state planning."
Attachment  Illl-127-1/ Gardner Deposition Exh. 30, App. B221-B236. The report was to cover Federal Power Commission Study Area 24, which included all of Peninsular Florida. The report notes that "contacts were made with representatives    of the Orlando Utilities Commission, the City of Tallahassee and the City of Lakeland 'for obtaining their plans for the          period." (App. B222). Thus, such cities'ctions were studyrelevant for the report, but not for inclusion in the coordinated planning.
33 In 1964, FPL, along with Orlando and Jacksonville, as well as Tampa and Florida Power Corporation embarked on another "long range power supply study to be used as a guide for generating and transmission additions, as we grow with Florida It will develop the transmission system required to coordinate to mutual advantage, the present and projected plans of each participant for generating unit additions, and will point the way for licensed reserves and resultant savings in capital costs."        (Gardner Exh.
32  App. B390)    ~
This study, conducted during the period. in which, according to Mr. Gardner, FPL began to consider nuclear units, evaluated both nuclear and fossil units. The July, 1966 "Interim Report" considered investments in a range of nuclear units (Gardner Exh.
33, App. B392-B426).
To summarize,      in the period immediately prior to and including that in which FPL determined to build its nuclear
                  'I units, FPL was engaged in "joint" and "coordinated" planning of the "statewide" system with the other major utilities in the state.
Indeed, in its 1967 decision finding FPL subject, to its jurisdiction,  the Federal Power Commission (predecessor      to the Federal Energy Regulatory Commission) found:
                "FPL    is directly interconnected with four other Florida electric systems,      as follows: Florida Power Corporation (Corp), Tampa Electric Company (Tampa),
Orlando Utilities Commission (Orlando), and the city of Jacksonville      (Jacksonville). FPL, Corp, and Tampa form the Florida Operating Committee (Florida pool) with Jacksonville and Orlando as associate members.
Significantly, in re jecting      FPL'  claim tha  it acted independently,      the Federal Power Commission found in 1967:
                  "Consideration has been given to FPL's assertion that  because  of the unique peninsular nature of its service area self-sufficient, it  planned its system to be and that it possesses  sufficient generating capacity of its own to meet its loads without any dependence upon the spinning reserves or emergency power of other Florida or out-of-state systems.          We do not find this assertion persuasive.        The fact that FPL could operate as a self-sufficient. utility is not controlling because FPL simply does not operate its system in that manner. The record in this proceeding makes  it  plain that FPL receives substantial benefits from its participation in the Florida Pool in the coordination of spinning reserves, the arrangement of plant maintenance schedules, and the assurance of reliability of frequency control and from both the Florida Pool and ISG in the form of automatic assistance in the case of emergencies. As we stated in our in Indiana & Michi an Electric Ccm an, ~eu ra, L33opinion 739 (1966 ]  it  is the system's actual mode of operation, not how the system could operate, that is important.
FPC Moreover, the particular operating pattern actually used by FPL is consistent with sound operating practices and with the principles enunciated in the Commission's National Power Survey issued in December 1964 in which all segments of the electric      power  industry participated fully and cooperatively."
Florida Power & Li ht Com an , 37 FPC 544, 551-552 (1967),
affirmed, Florida Power Li ht Com an v. FPC, 404 U.S. 453 S
(1972).
: 3. FPL relied on coordination with the Florida Operating Committee in constructing its nuclear units.
FPL's membership in the Florida Operating Committee permitted it to  maximize economies      in constructing its own units. 1/
1    Cz.tres cannot state the specific coordination assumptions actually employed by FPL in constructing its nuclear units because as evidenced by the Gardner deposition, FPL has either lost underlying planning documents, or never put final plans and assumptions relating to the units on paper (Appendix A, Tr.
106-108; Tr. 8, 17)    ~  In general, as discussed in the Florida Operating Committee documents cited above, interconnections, as existed among Florida Operating Committee members, permit a variety of types of FOOTNOTE CONTINUED ON NEXT PAGE
35 For example, as stated above, members of the Florida Operating Committee engaged in the sharing of reserves.          As explained by the Federal Power Commission's 1964 National Power Survey  (at 170, App. D310 emphasis    added):
            "By sharing reserves through interconnections, a group of systems can reduce the combined reserve for unscheduled outages, since    it  is unlikely that maximum outages of units on all systems will occur at precisely the same times. Tha ~poling of reserves is based on the Thus, FPL,    in the period when  it planned and  built its nuclear units, and today, has acted in reliance        on risk sharing arrangements with other utilities.
FOOTNOTE CONTINUED FROM PREVIOUS PAGE:
economies.
by documents in Appendix      I'or The close working relationships, however, are shown example, in an August 1, 1962 letter from FPL Chief Executive MacGregor Smith to Florida Power President W. J. Clapp (Appendix I133-I134)., regarding the need for an interconnection to support FPL's planned Canaveral Plant, Mr. Smith explained:
One  of the main reasons for putting in a plant at Canaveral    is to be able to contribute more to you and Tampa Electric in return for what we would hope to get.
iMy feeling always has been that if we had any power, we would make it available to any of our neighbors and we have always found you and Tampa Electric to be equally agreeable.      I have never been particularly concerned with the rate'we would charge or pay for such emergency help. Any firm power could be negotiated in amounts and for the term contemplated For its part, as stated in a July 24, 1964 letter from Mr.
Clapp to FPL President Fite (Appendix I135), Florida Power believed that its operations included activities that were solely for FPL's benefit. As Mr. Clapp wrote:
    "For a number of years now we have been maintaining a 66,000 volt tie with you at Ft. White. This tie has been operated open, and closed in at your convenience.
This tie is of no value to us, but has been helpful to you on numerous occasions because we maintain a major source of supply in the area."
                              '36 As Mr. Kinsman,  the FPL Vice President in charge of overseeing nuclear developments,      put  it,  Tampa  Electric, Florida Power and FPL operated    their  systems during the 1960's as "one system." (Kinsman Tr. 293-294);. (emphasis added).
                "Q. Were you sharing reserves with Tampa and Florida  Power in 1965? Did you have reserve sharing arrangements?
                "A. I don't  know what you mean'.
                "Q. Of course, you know what generating electric reserves are.
                "A. Well, we ~oerate the three ~sstems as one If we  had ~ower and ~the    needed  it, ~the  clot it. And vice versa.
                "Q. This  was  in the 1960's?
yes In the period between its (1965-1966) decision to build nuclear units and the December 1972 initial operation date of the first (Turkey point) units, FPL actively relied on others for significant amounts of power, including the power that FPL required to serve all its customers. at the time of maximum (peak) load. As shown by FPL Form 12 submissions to the Federal Power Commission, for example, in 1970 FPL received 265 Mw at the time of the- FPL peak from TECO, Florida Power Corp., and Orlando; in 1971  it received 297 Mw at peak from TECO, Florida Power Corp.
and Jacksonville, and in 1972      it received 310 Mw from TECO, Jacksonville and Vero Beach. 1/
1    See App. C47-C49. The  filings also    show that FPL delivered power to the other large    utilities    at peak, but in amounts less than that received.
37 There  is every reason to believe that such coordination will continue. For example, in the Florida Power k Light Company 1979
                                                      ~"
in the deferral of two new 700 Mw coal units "was a contract signed with Tampa Electric Co. to purchase output from the coal unit now under construction at Tampa's Big Bend Plant. The agreement  covers purchase    of 292 Mw, 208 Mw and 104 Mw in 1985, 1986 and 1987, respectively."      The report covers other generation and operations coordination as well. Accord, Florida Power      S Light, Company 1980 Annual Re ort, pages 8 (" Energy Interchange Cuts Costs" ) (App. I137), 14-15 (" Generation Expansion plan" )
(App. I138-139). 1/
FPL has acted without reasonable basis to veto peninsular coordination efforts that    it  believed would benefit smaller systems. It did  so  in spite of credible evidence  which it did not reasonably challenge that the efforts were in FPL's own interest as well. In the early 1970's for example, the 1    In its Memorandum in Opposition to Plaintiff's Motion to Dismiss or for Summary Judgment, filed in Docket Ho.
79-5101-CIV-JLK, on September 30, 1980, FPL has described the Florida Coordinating Group, successor to the Florida Operating Committee:
    "The FCG is a non-governmental association of Florida electric utilities which have voluntarily joined to ensure reliable supplies of electric power and to engage in active coordination of planning, construction, and utilization of generation and transmission facilities in Florida. The FCG also serves as a liaison between the utilities and the Florida Public Service Commission.
Although not a governmental or quasi-governmental agency, the FCG is an influential organization for Florida  utilities."
38 Florida Coordinating Group formed a pooling task force. See pre-vious footnote. The report (App. C184-C298) of this task force found that centralized dispatch and joint generation and transmission planning and development among Florida utilities should provide additional benefits. As detailed in an affidavit of Mr. Harry Luff of the Orlando Utilities Commission, which had been filed in Florida Power 8 Light Com an (South Dade Plant),
NRC Docket  V~ o. P-636-A (App. C299-C305), FPL scuttled the efforts of the pooling task force. In a memorandum responding to this affidavit, Mr. Ernest Bivans, FPL Vice President for System Planning, admitted FPL's role.
Moreover he stated that FPL's veto was based on the percep-tion that the proposal would be of benefit to smaller systems, but not to FPL (App- C308-C309):
          "At the October 1975 meeting, it had become evident that the Pooling Task Force, chaired by Mr. Luff, was intent on pursuing a more formally structured pool, leading to centralized dispatch and operations, and centralized planning. While FPL could see that the other smaller utilities could possibly benefit by such a more formal pool, we did not then, and do not now, envision any benefits that would accrue to FPL's customers. In fact, pool operation with centralized dispatch of power, while possibly benefiting the smaller, less efficient utilities, would probably result in higher costs for electric power to the customers of FPL- FPL is large enough to achieve all of the economy of scale on its own without becoming part of a larger more structured organization.
Therefore, at the October 1975 meeting, I stated that FPL was withdrawing from any further effort to form a "Statewide" pool for the reasons previously given. I further stated at this meeting that FPL would encourage the other utilities to form a second pool which would
39 then be approximately equal in size to FPL, and the FPL would work out arrangements where feasibily possibly, for those municipal systems in its territory that would be isolated from the proposed pool, to join and participate."
Documents    obtained later through discovery    show  that FPL's policy of resistance to pooling came, it      now  appears,  from the highest levels. As stated in a February        20, 1976 FPL memorandum  from Power Supply Manager N.E. Coe  to H.L. Allen (Senior Vice President),      the policy reflected the instructions to FPL's top management by FPL Board Chairman Marshall McDonald:
                "My understanding of Mr. McDonald's directions following the Senior      Management Planning Council meeting on Regulatory Problems was that Power Supply was to secure uniform bilateral interchange contracts as a deterrent towards formal colin ." (App. 0310) emphasis supplied FPL  took the position that pooling and      joint generation planning that included smaller systems would        be adverse    to the Company and  its  customers:    The February 1976  presentation to Company seniormanagement      referred to at n. 1,  pp. 31-32, ~su ra:
    "Our  first  concern (and probably the most important one) is the possible severe restrictions which Government may place on our management prerogatives.        In the planning area, this could mean legislating us into a position of having our plans imposed on us. Anti-trust problems and the Florida Power Corporation sale of Crystal River <<3, jeopardize our right to our own generation facilities.
The wheeling issue may drastically affect our opera-tional practices.
All of these effects could have detrimental impact on our customers'ost. of electricty. This we feel would be unjust, since our customers and investors have had the foresight to plan progressively."
40 The  solution  was  to "study" the problem (Appendix I124-I125): p. 9):
      "Earlier, I mentioned that the issue of "pooling" is still  current and that we are not interested in it at this time. Unfortunately, while we may see no benefits to us, this does not mean that other utilities or governmental agencies are not interested in having us become a member of their pool. With this in mind, we believe that through the vehicles of the joint generation/transmission study and our educational actions we should, at least in house, become instrumen-tal in the development of the "pooling" issue for Florida. This way we will be in a better position to define, establish, and defend our position."
Id. at 13-4.
Later, when it entered into bilateral interchange contracts with Tampa Electric Company and Florida Power Corporation in Tam a  Electric  Com  an,  Federal Power Commission Docket No.
77-549, et    al.,  FPL  took the position that the FERC had no juris-diction to order pooling, and that:
    "In addition, FPL is participating fully in the Florida Electric Power Coordinating Group (FCG) coordination studies. Since 1976, the Technical Advisory Group of the FCG has been involved in three major studies: the Peninsular Florida Generation Expansion Planning Study, the Central Dispatch Study and the Power Broker Study.
The Company has supported each of these studies, and in fact took the initiative in starting the Central Dispatch study. These efforts are yielding positive results; on March 1, 1978, the power broker concept was implemented.      FPL maintains that consideration of addi-tional coordinating arrangements is properly before the FCG and not in this proceeding."
June 1, 1978 Reply Memorandum      of Florida Power S Light Company, Tam a  Electric  Ccm  an,  ~sn ra, Appendix Z85-X88.
While the Company sought to "get our story across" (Appendix I123, p. 12), Mr. Bivans subsequently testified that FPL had never undertaken a study to test the assumption that centralized dispatch and joint planning measures sought by smaller systems
41 would not      also  be  beneficial to FPL (see Bivans testimony, Florida  Power  8  Li ht Com an , FERC Docket No. ER78-19, et al.,
Phase  I, Tr. 843-44).    (App. C311-C312).
In fact, FPL's perception was in error. As early as 1960, the Planning Committee of the Florida Operating Committee concluded that the pooling of risks by FPL and others would result in savings:
TES)ubstantial savincas in investment would result throu h integrated lannin and ex ansion under the one ~astern ~area'coo~~avoictn          u rcatron of facilities. However, few of the pro jects considered could be accepted without further study involving alternate possibilities." (Emphasis added.) Gardner Exh. 29, page 3, App.        Bill.
The 1974-1975 FCG      study  itself,  which was submitted by,  inter alia,  FPL  official K. S. Buchanan,  specifically identifies  FPL as a  big winner from centralized dispatch.          Tables at App.
C294-C295 show      that, in the  two cases  summarized there, centra-lized dispatch would permit FPL to save 63,753 MMBTU and 116,064 MMBTU on a "typical peak load day." Assuming, quite conservatively,,oil prices at approximately $ 2.00 MMBTU, this would translate into (peak load day) daily savings in the
$ 130,000-$ 250,000 range for FPL alone.
The recently instituted statewide Power Broker experiment, which is a modest form of centralized dispatch, has demonstrably been beneficial to FPL. During February 1-April 11, 1979 alone, for example, FPL saved $ 577,115.78 (App. C313) and FPL's 1980 Annual  Re  ort at    8  (App. I137) proclaims the savings    it has achieved:
42 "Still other savings are accruing from the economy interchange of interchange with the 14 other generating utilities which participate in Florida's Energy Broker System. This automated exchange system works to the ultimate benefit of consumers by enabling participating utilities to take advantage of the most economical available generation."
In  a  recent deposition which    has been recessed,  Chief Executive Officer Marshall McDonald      testified that in  the 1972-1973 time period FPL was "so short        of generation that we didn't have a policy [as to adequate reserves]. We just had wha-tever happened to be there." Tr. 64. He testified further:
A. We didn't have any reserve.      My first experience with the company would be two days after I got here was that we got across the peak by four megawatts after we bought everything we could lay our hands on and after we had been on the radio to ask everybody to get off. We did not have any reserve.
Q. Who did you buy from when you A. Anybody who was  available to sell    us power.
Q. In the entire State of Florida?
A. Throughout our interconnections.
Q. That would be Tallahassee    and  Lakeland-A. Whoever.
Q. Do you recall  at the time you came to the company in 19711    did    they have a policy on what reserve would be the appropriate reserve for planning purposes?
A. Mo.
Tr. 65. He  also stated (Tr. 121-122):
Q. Were you actively seeking supplies to buy additional capacity or additional energy so you could meet your load?
Do you recall that?
A. There wasn't any long-term firm power source available within the State during that period of time.
We purchased power as we could get      it  depending upon the cir-cumstances of whatever other system might have access at that time, but during that particular period of time, there were no significant sources of surplus power available for the firm.
Q. Again, you  made an  effort to  look  all over the State2.
A. I think this was known to Mr. Bivans and the others who were working with the Florida Operating Committee because they knew independently the availability of all plants and what the maintenance schedules were and what the disposition of those com-panies were toward selling power for a period of time.
Q. What about  out of state'?  You mentioned    within the state.
A. We didn't have connections    that would allow  us to get any from out of state.
Thus, FPL  rejecting pooling with the municipals (and con-tinues to reject full pooling with them), even though it perceived that it needed additional capacity, which municipal systems could have supplied.
II. FPL HAS LONG DENIED CITIES ACCESS TO THE ECONOMIES OF COORDINATION AND SCALE, INCLUDING NUCLEAR POWER.
As shown  in Section  I ~su ra,  ppL has  relied  on other  utili-ties in its operations, including      those related to nuclear power, during the period    it  planned and constructed its nuclear units.
Even as coordination and cooperation was vital to FPL, FPL would have been well aware that      it was especially vital to smaller systems,    including Cities. In fact, FPL had specific actual notice that Cities sought access to the economies of size and coordination on which FPL relied. FPL both refused to provide these benefits itself to Cities and simultaneously acted to block their ability to gain them by alternative means.
FPL Was On Notice That Smaller Systems, Such As Cities, Required Access To Economies Of Size And Coordination, Including Access to Nuclear, In Order To Compete Effectivel As shown. in Part I  ~su  ra, FPL formed the Florida OPerating Committee in 1959 for the benefits it would achieve through interconnected operations, including the ability to build larger units. If the benefits of interconnected operations were evident for large systems like FPL (and the other members of the Florida Operating Committee), it is likewise evident that smaller systems, such as Cities, needed those benefits to compete effectively.
: 1. Smaller systems require coordination to build large units.
By the 1960's  it was  generally understood that there were great economies to be gained by building larger units, of sizes in the hundreds of megawatts. The Cities (but not FPL) were far too small to justify building units of these sizes. Their total loads, in most cases, 1/ were well under 100 megawatts. By comparison, FPL's 1965-1966 determination to build its Turkey 1    Tallahassee, among the largest of the Cities, had a peak load of about 58 megawatts in 1962 and 97 megawatts in 1967. Its March 1968 engineering report projected a load of 220 megawatts in 1975. As discussed above, by the early 1960's it was generally understood that loads of this size could not sustain a commercially viable nuclear unit. Indeed, since 1962 the smallest nuclear unit announced by ~an utility has been 330 megawatts (the Fort St. Vrain unit, in 1965). The vast majority of units have been over 500 megawatts. See, "U.S. Central Station Nuclear Generating Units," Gardner Exh. 1 at 2-20, App.
B12-B30  ~
Point nuclear units assumed peak loads of over 5,000 megawatts at the time of their completion in the early 1970's (Gardner Exh. 1, Requisition, Turkey Point, Plant, App. B50-B51).
Moreover, coordination permits substantial      savings in meeting reliability-of-service needs.        Utilities must plan  for the capa-bility to keep the lights on      when their largest unit is out of operation (including both scheduled outages for maintenance and unscheduled outages).      If a system were to invest in a large unit in order to maximize economies, that system would also need a comparably large "reserve" unit or units.
Xt was well understood, as stated ~su ra, that individual ut.i-lities could reduce their investment in reserves and render larger-- units possible by interconnections that permit the sharing of reserves with other systems.        As the Federal Power Commission's 1964 National Power Survey explains (at 170):
The use of large, economical units increases the importance of reserve pooling because each system should have access to a reserve at least as large as its largest unit." (App. D310).
As  shown previously, FPL through the Florida Operating Committee planned    its nuclear units in reliance    on the "p'ooling of risks"    engaged  in by that Committee. As discussed below, however, at the same time      (i.e. the 1960's) FPL and other Operating Committee members excluded Cities from participation in their  group.
Thus, from the    technical vantage alone, Cities were faced with two vast obstacles to building nuclear units: their small size and their exclusion from the Florida Operating Group.
46
: 2. FPL knew that coordination and large units are essential to participation in nuclear power.
FPL was  well aware that smaller systems needed the benefits of interconnections and size in order to build nuclear units.
In 1955-1956 the Seminole Electric Cooperative (in Florida) sought backup from Florida Power Corporation in order to'proceed with a proposal to the government to build a nuclear unit. In a December 7, 1955 letter, with a blind copy to FPL President Robert H. Fite, Florida Power informed Seminole that it would not provide the backup (App. C45). As stated by Seminole (in a document obtained from FPL's files in the Gainesville case) the inability to obtain backup killed the proposal (App. C46).
As further FPL documents show, FPL also followed Ft. Pierce's 1959 proposal to the AEC to build a nuclear unit (App.
'52-B55). 1/ This proposal was made following the AEC's announ-cement that, it would sponsor several "small" nuclear projects.
The AEC, however, did not make any awards because, as AEC offi-cials explained in a 1961 letter (App. D4):
                "Recent studies on the current status and economic potential of small size nuclear powerplants indicate plants based on, existing technology currently are not economically attractive to small utilities because of high capital costs and restrictive siting requirements."
1    Discovery documents show FPL followed the early interest of other small Florida municipal systems as well (App. Dl-D3)  ~
47 By 1966-1966,  i.e.,  when PPL decided  to build its nuclear units, the industry knew that large plants were economically attractive, but not small ones. The smallest size the equipment.
vendors offered FPL in 1965 was 800 Mw. 1/ Indeed, in the period since FPL announced its units in 1965, the smallest unit committed to by ~an ~utilit (other than the experimental Clinch River Breeder Reactor) has been 530 Mw.'App. B25)
In this context, the private utility industry was generally aware that smaller systems lacked the size and/or coordination they needed and desired to benefit from nuclear power, unless      and until joint participation with others could be arranged. For example, as summarized    in a speech  transmitted in  1968 by the Edison  Electric Institute to  members  of its atomic power committee, including FPL President Robert H. Fite (Gardner Exh.
47  at 3, App. B475):
          "The smaller utilities, principally those publicly and cooperatively owned, want a piece of the action they want to participate in the economies of scale associated with large-scale nuclear facilities. In many cases they don', have the energy demands or capital to permit construction and operation of larger plants, nuclear or conventional, and apparently in some cases have been rebuffed in their efforts to obtain participation in joint ventures being organized for this purpose in their region."
: 3. From the start, FPL sought to use its size-based monopoly of nuclear generation as a lever to acquire smaller systems.
As discussed below, FPL 'knew that smaller systems in Florida were specifically interested in gaining access to economies of 1    By contrast, the total load of all non-settling Cities ~toda 7s about 700-800 Mw. Tallahassee's load today is about, 240 Mw; the other cities'oads are smaller some less than 5 Mw.
48 scale and coordination, including access to nuclear power.      FPL did not volunteer to work with those systems, as      it worked with Florida Power Corporation and TECO. 1/ Instead, it used the promise of access to FPL's economies of scale in general and nuclear power in particular as a lever in its repeated attempts to acquire smaller systems.
For example, in 1966, as shown by FPL discovery documents, FPL turned down Homestead's request for access to the Turkey Point, nuclear units. (App. D7-DS) When Homestead in 1967 requested wholesale power, FPL countered with an offer to acquire the Homestead system.      (App. D10-Dll)  As an  internal FPL memorandum    on the pros and cons  of acquisition put it (Gardner I
Exh. 35,  at 2, App. B442):
                "FpsL Co. can provide lower rates  for the citizens. Mass  production and diversities provide greater economy. Small plants are not flexible ~"
Similarly, in 1965, when the City of Clewiston sought to buy wholesale power directly from FPL, FPL refused, and offered to acquire the system instead. 2/ See also Opinion No. 57 at 26-31, 32 PUR 4th at 331-35. An internal FPL discussion of the FPL purchase proposal listed, as a "disadvantage" of continued 1/ On the contrary, the provisions      of the 1956 agreement among TECO, FPL, and Florida Power Corp. provided that information developed by the group could be disclosed to others only on "unanimous" approval of the three large utilities. (On deposition, George Kinsman, FPL's representative to the group, said that he did not know why this provision was in the agreement. Kinsman Tr. 27.)
2/  FPL's refusal to deal with Clewiston was detailed in Florida Light Com an ., 37 FPC 544 (1967) reversed sub nom.
1, Power  S Florida Power 6 Light Com an v. FPC, 430 F.2d 137~7 5th Cir.
reverse an reman e ,        U.S. 453 (1972).
municipal ownership (emphasis added) (Gardner Exh. 34, at 12, App. B439):
                  "The  City must, in the near future, make decisions on the course    it will follow. to resolve its power supply problems. The cost of constructing and operating power generation facilities appears to be prohibitive; the alternative is purchasing power as you are presently
            ~cit are unthinkable when com ared to the economies of the enormous ~lants ~bein buxlt    ~b  ~ublic utilities. In the past two years, the Florida Power 8 Light Company      ~
has retired as uneconomical twelve plants ranging from 12,000 Kw to 33,000 Kw capability."
As  an "advantage" of sale to FPL, FPL listed (emphasis added) nuclear plants.
In  "An Open  Letter to Every Vero  Beach Resident  from Florida Power  S  Light  Company's Ralph Mulhullond",    referred to at p.
~su ra, published in that city in 1976 just be'fore a vote on the proposed sale of the Vero Beach municipal electric system, FPL stated:
            "We ~ex ect to have a new nuclear generating unit at St.
Lucie in service in the near future. This should bring annual fuel savings of more than $ 100 million that vill be passed directly to our customers through a reduction in the fuel adjustment, which has been reflected above."
Vero Beach, Florida, Press-Journal, September 4, 1976 (Emphasis supplied).      App. D12.
Similarly, in    a 1974  "financial presentation to the Commissioners    of  View Smyrna Beach" (July 5, 1974) (App. D20),  on behalf of FPL's proposal to acquire that system, FPL stated:
50 "Ne have a wide diversification of fuel sources.            We presently use residual oil; we, have natural gas under firm contracts extending through 1989; we have nuclear units on line at Turkey Point and two units under construction at Hutchinson Island near Ft. Pierce; we use distillate oil; and we are working on plans to include coal as a future fuel source. These diversified fuel sources and the ability to use large efficient power plants result in lower overall prices."
While continuing to assert the value of its nuclear power in its takeover campaigns, FPL has been acutely aware that    Cities'mall size precludes their building large units, including nuclear. In December 1973, FPL's financial planning office pro-duced a "Comparative Analysis of Municipal and Investor Owned Utilities and the Benefits to Their Customers." (App. D31-D33)
The analysis concluded that (App. D32):
              "The size of most municipal units is 1imited by the size of the city. This limit on size prevents the smaller municipal utilities from realizing many of the economies of scale available to larger utilities. This fact was clearly revealed in the analysis. The smaller, utilities had less efficient heat rates and higher fuel and operating costs per Kwh of power sold. These higher costs appeared to be the major contributing factors in the high cost of power to their customers."
The disadvantages of municipal systems were further spelled out by FPL Vice President Robert Gardner in a July 30, 1976 docu-ment entitled "Municipals and Co-operatives Situation Analysis."
As the memorandum stated inter alia (App. D34),
              "Too small to individually add economical generation..."
              "Fuel costs rising supply in jeopardy..."
              "Rely on oil and gas for fuel..."
              "Cannot support planning, project, procurement, nuclear organizations..."
                "Legal and procedural limitations on financing."
Since FPL's entry  into the nuclear business, in short, the message has been clear: Small systems can gain access to nuclear generation (and other economies) by selling out to FPL, but not otherwise. Even if FPL did not seek to acquire municipal systems in Florida Power's area, as the Gainesville case recites (Gainesville Utilities De t. 'v. FFL, ~su ra, 573 F.2d 292), it acted to aid Florida Power acquisition attempts or franchise efforts, by refusing to deal in Florida Power's "territory". FPL then cited its cost advantage over all Florida municipalities in seeking acquisitions or franchise renewals in its "territory" and, of course, through'ts transmission and coordination poli-cies otherwise prevented municipals in Florida Power's "territory" from serving in its "territory" and vice-versa. See
: p. 54,  infra.
FPL had a different  message for larger utilities in the Florida Operating Committee. In 1966, for example, 1/ Armour      S Company wrote to FPL stating that it wished to build a large che-mical plant near Tampa, and that its consultants had said the chemical plant would be feasible if served by a "large nuclear power plant." FPL Board Chairman Smith in a September 16, 1966 letter (App. B488) informed Armour that the proposed plant would be in Tampa Electric's territory, but that FPL would help Tampa Electric build the large plant needed to serve Tampa's customer.
1    Gardner Exh. 49; App. B483-B487.
52 As Smith  wrote  (Id.):
I called  Mr. MacInnes, President of Tampa Electric Company and told him that you folks would be getting in touch with him to discuss a 400,000 Kw load in his territory. I told Mr. MacInnes of our meeting and development that. the load apparently would be in Tampa Electric's territory, and I explained that we would be  willing to work with him by investing in a joint plant or purchasing a large block to help make    the project economically feasible."
While. providing an unsolicited offer to help Tampa build a large nuclear unit, FPL was refusing to deal with smaller systems, including Cities, as exemplified below.
The FPL/Florida Power effort to prevent alternative genera-tion and transmission systems in Florida was not limited to the prevention of nuclear power. In the early 1950's Seminole con-sidered building conventional plants. FPL worked actively to oppose this proposal, even though the plants evidently would have been built in Florida Power's territory. For example, an FPL official called on citizens and pointed out to all of these people that this pro-posed  power  plant will be a useless expenditure of federal  funds  since there is an abundance of power in the area at the present time, and that Florida Power's new Suwannee River plant will have sufficient capacity to serve the area for many years. It was also pointed out that there are transmission lines in this area of sufficient capacity to take care of the distribution of this power and to build additional transmission lines would be a duplication of facilities . . ." (Internal Memorandum,  Appendix I71-74)
In  a May  8, 1952  letter to Senator Smathers  (Cities appear to have been provided only the second of two pages),      FPL Vice President and General Manager Robert Fite explained:
53 "Although the plans being submitted by Seminole and Southeastern Power Administration at, this time do not appear to affect Florida Power S Light Company or its customers directly, we are vitally concerned because we believe  if  these two agencies get started    it will be only a short time until our territory becomes involved."
As  further  -FPL  discovery documents  show, FPL worked  actively to prevent Seminole from getting off the ground. In a January 16, 1953 memo to FPL Vice President Fullerton, FPL official Claude Smith stated "I suggest that we do all we can do to stop the Seminole now." Shortly thereafter FPL told at least one cooperative served by FPL that a new service agreement with FPL would be possible only if Florida Power reached successful agreement with the REA's it served.        As a June 16, 1953 letter from Robert Fite to the Lee County Cooperative put it:
    "In accordance with the understanding which we arrived at when you were in miami on June ll, this proposal is conditioned upon completion of the negotiations between Florida Power Croporation and the co-ops they serve. As soon as these negotiations are completed and the agreements fully executed and approved embodying the proposed schedule, we will immediately put into effect the proposal in    this letter." 1/
Thus, FPL  actively sought to frustrate efforts    by smaller systems to obtain the economies      of joint generation and transmission, even where those efforts admittedly were not directed immediately at FPL's own retail "service territory."
1    FPL's proposal to Lee County, to boot, contained a provision prohibiting resale to municipal systems.
54 B. FPL Refused To Deal With Cities, And Denied Them The Means Of Dealing With Others.
FPL has  long refused to deal with Cities, or has dealt with them only on unreasonable,    restrictive terms. FPL likewise impeded their access to the means of dealing with others.
FPL's activities may be grouped into several schemes that overlap in time and function. First, as found by the Fifth Circuit in the Gainesville case, FPL conspired with Florida Power Corporation to divide the wholesale power market in Florida.
Pursuant to this conspiracy, FPL would not deal with systems that were within Florida Power Corporation's territory. Second, FPL (a) refused to provide anything other than emergency power 1/ to Cities within the perimeter of its own retail territory and (b) simultaneously refused or endlessly delayed interconnection arid transmission arrangements which would have permitted systems within the perimeter of FPL's retail territory to deal with one another or with systems in Florida Power's territory. While doing this, moreover, FPL repeatedly sought to buy out systems, making proposals to, at least, Homestead, Ft. Pierce, Hew Smyrna Beach,  Starke, Clewi'ston, Vero Beach, and Lake Worth.
While FPL's monopolistic intent remained constant,      it was forced to modify    its methods by the 1972 Supreme Court decision that found  FPL  to  be subject to Federal  Power Commission 1    Which was priced higher than wholesale power sold by FPL to the REA Cooperatives (App. E76). As was generally known in the mid-1960's, i.e., the time at which FPL planned and committed to its first nuclear units, FpL was refusing to provide anything but emergency power to municipal utilities within its own service territory 8ee .App. 040-058, pp. 17-19; 30-33, ~su ra.
55 jurisdiction 1/      and a 1971 Supreme Court      decision that upheld the Federal Commission's authority to order Florida Power Corporation to interconnect with Gainesville. 2/
Following the FPC jurisdictional case, FPL was compelled to file  a  wholesale  tariff with    the Federal Power Commission. 3/
Even so,    in 1976-1977 FPL refused Ft. Pierce's repeated requests for tariff service and sought to abandon wholesale service to Homestead.      When Ft. Pierce persisted in its requests, FPL filed a new wholesale tariff under which for Cities it proposed to limit such service to New Smryrna Beach and Starke alone.
Following a hearing, the FERC rejected FPL's proposal as "anticompetitive" and the Company was compelled to continue tariff service to Homestead and Ft. Pierce. Opinion Nos. 57 and 57-A, ~su ra.
Article IX of FPL's settlement license conditions would restrict "wholesale firm power sales" to systems in or near its retail service area. Further, contrary to Opinion No. 57, 4/ the proposed license conditions permit a reduction in wholesale power availability,      if a  system obtains St. Lucie capacity or 1    F U.S. 453 orz  a Power 1972 S  Lz. t Co. v. Federal Power Commission, 404 2/  Gainesville    Utilities    De  t. v. Florida Power Cor ., 402 U.S.
515    1971) 3/  Xn  the 1960's    FPL had  limited municipal systems to emergency" power.        This power was, by definition, not power on which Cities could plan and, was higher priced than the "wholesale" power sold to cooperatives on a long term basis.
(App ~  E76) ~
4/  32 PUR    4th at 339-40.
56 capacity from any source that uses FPL's transmission system, thereby making the price of obtaining direct nuclear access or use of transmission a loss of wholesale power rights. Further, resale restrictions in Article IX(b) could effectively limit electric power coordination by systems purchasing wholesale power. 1/
The Company's policy of refusing wholesale power to municipa-lities is not, new. For example, such policy was detailed publicly before the Federal Power Commission in 1965-67 in a pro-ceeding concerning FPL's refusal to sell wholesale to Clewiston.
Florida Power 8 Li ht Co., 37 FPC 544 (1967), order reversed, 430 F.2d 1377 (5th Cir. 1970), reversed and remanded, 404 U.S. 453 (1972). The decision of the Administrative Law Judge, approved in pertinent. part by the Commission in 1967, detailed FPL's repeated refusals to sell wholesale to Clewiston. FPL's explana-tion was that the making of wholesale sales to municipalities was "contrary to public policy, that it would not sell to a municipal at wholesale except in the case of furnishing an emergency supply."
1    Article IX is unclear. It is  assumed that the use of the word "required" in Article IX(a) refers to a neighboring entity's retail load. However, systems actual or potential loads and reserves requirements increase gradually and systems acquire generation to meet future loads; reductions in present wholesale power availability based upon the exercise of generation options could force a system to either forego present options to meet future needs or lose valuable wholesale power rights. Apart from limiting competition in wholesale power markets, restraints on resale of wholesale power could limit the economic ability of systems to obtain power supply to meet future needs.
57 As  detailed in Cities'esponse to FPL's Initial Interrogatory No. 9, 1/ the FPL refusals to deal with Clewiston were not atypical. It was well known among Florida municipals that FPL would not, sell wholesale. For purposes here, it is exceedingly significant that both in the case of Clewiston and that of the Cities protesting wholesale power limitations in the context of Opinion No. 57, there was extreme pressure for them to sell their systems to FPL. See Cities'esponse to Interrogatory No. 21, App. D59-D87. FPL's application to the Federal Power Commission to acquire the Vero Beach electric system contained a report to the City prepared by Ernst 6 Ernst, which appended an examination of available power supply options to Vero Beach.
That report, filed as art, of FPL's a lication, listed among other things that no "wheeling" options (or, therefore, wholesale power supply options) were available. App. C403-C404.
FPL repeatedly wrote New Smyrna Beach that wholesale power would not be available on a long-term basis: For example, in an August 5, 1959 letter from Alan B. Wright, Vice President of FPL to the City (PL-65), Mr. Wright states:
          "In regard to your inquiry concerning the sale of whole-sale power on a long-term basis, this will confirm our previous statement in regard to this question; namely that we do not have any arrangement to sell wholesale to municipalities on a long-term basis and would not change our policy at this time."
1/  Served  in Gainesville Re ional Utilities, et al. v. Florida Power  S  Li ht Com an , S.D.Fla. No. 79-5101-CIV-JLK. App. D40-D58.
58 In  a November    25, 1970  letter from Mr. Wright to J.T. Bensley New Smyrna    Beach's  Director of Utilities, the Company states that its  provisions of power "should not        be  interpreted in  any manner as  firm power but rather as stated,        on the basis of availability."
As  is set forth in Cities'esponse to FPL Interrogatory No.
9 (App. D40-D58), various testimony of top FPL officials admitted the policy. The Company even went so far as imposing resale restrictions in REA wholesale power agreements to prevent sales to municipals. FPL's Chairman of the Board of Directors, Mr.
Richard C. Fullerton, gave one explanation for such policies:
            "And we were not ourselves      wholesaling to municipalities,    so why should we sell to somebody else and let him wholesale      it. I mean that is as good a reason as    I  can think of  if you want me to think one up." Deposition of Richard C. Fullerton, Gainesville Utilities    De  t. v. Florida Power R Li ht Co., M.D-Fla.
No. 68-305-CIV-T, App. I79 When,  in 1972-74    FPL finally agreed    to a full interconnection with Homestead,    it  conditioned the interconnection on Homestead's agreement to bear the full cost of interconnection. 1/ Then, when the interconnection was physically completed in 1977, FPL sought to use the completion of the interconnection as an excuse to abandon wholesale service. Moreover, even after agreeing to interconnections with Homestead and others, it refused to provide "wheeling" or transmission services so that Cities could use the interconnection to deal with others than FPL. While FPL has 1    On  the theory that FPL would not obtain any benefits from them, even though FPL        benefits from every exchange of power ender'hem (i.e.,
needed power as a it  makes a profit as a seller, or obtains buyer).
59 finally provided limited    transmission services,      it has  con-tinually refused to file    a  tariff commitment    to these services. 1/
In the early 1970's, with the forewarning of the Florida Power 5 Light v. FPC jurisdictional case and the Gainesville interconnection cases cited above, p.              , ~su ra  ,the Florida Operating Committee    was expanded    to permit Cities to join. In the interim since this expansion, however, FPL has resisted efforts by Cities and other utilities in Florida to achieve greater economies through further "pooling."              Insofar as    it has offered interconnection and transmission arrangements to Cities,  it  has consciously done so in hopes that        it  could fend
. off "pooling."    For example, as recorded      in the  1976 memorandum from FPL "power supply" chief W.E.        Coe to  FPL  Vice President H.L. Allen, at the direction of Board Chairman McDonald (App.
C310), FPL "was to secure uniform        bilateral interchange contracts as a  deterrent towards formal pooling."
1    Under FERC order          Docket Nos. ER78-19 et al.),        FPL has finally filed    a tariffFERC covering transmission associated        with "interchange" service. However, that  it                              it has appealed the requirement do so on the jurisdictional grounds that. the Commission has no statutory authority to order "wheeling." Florida Power S in that case, filed July    28, 1980 stated,    at  page 20 (App. 0323):
                  "As explained above,    the effect of the Commission's order requiring the filing of      a transmission tariff is to extend FPL's obligation to      provide transmission ser-vice beyond that which    it Such an order far exceeds the has voluntarily undertaken.
Commission's    limited authority to order FPL or any wheel."
other electric      utility to FOOTNOTE CONTINUED ON NEXT PAGE
60 The above summary        of FPL's behavior is supported by volumi-nous documentation (much of it from FPL's own files) and detailed court and agency decisions.
This documentation includes the following:
: l. The Fifth Circuit's decision in Gainesville, ~su ra, details the illegal territorial division between FPL and Florida Power Corp. As the Fifth Circuit held at 573 F.2d 294, "Ne hold that the evidence compels a finding that FPL was part of a conspiracy 4/ with Florida Power Corporation (Florida Power) to divide the wholesale power market in Florida."
4/    Section 1 of the Sherman Act makes every "conspiracy in restraint of trade or commerce" illegal (15 USCA
          $ 1) e e e FOOTNOTE CONTXNUED FROM PREVlOUS PAGE:
FPL  states further (pp. 17, 18):
FPL would be required to provide transmission service for any utility which qualifies for services under the tariff criteria ordered by the Commission....
[A]t the very least, FPL is required to provide service for additional customers which have not requested transmission service contracts." I.For example, those who disagree with their terms].
And  at pp. 19-20, the Company states:
    "Arguably, the Commission could change those provisions on the ground that t'e filed provisions are "unjust,,
unreasonable or unlawful," with the result that FPL could be required to provide a broader scope of services to a greater number of potential buyers than the Company had contemplated when        it  filed its individual transmission service agreements."
Regardless      whether FPL is correct on  the FERC jurisdictional issue,  it plainly      resists transmission.
61
: 2. Opinion Nos. 57 and 57-A of the    FERC  1/ detail both FPL's 1976-1977 efforts to limit wholesale service and FPL's relationship with Homestead and Ft. Pierce, including its acquisition practices and attempts at restrictive dealing.
Indeed, the Company's filing in that docket sought to eliminate the ability of municipal systems having generation to buy whole-sale power instead of generating, where wholesale power purchases would be cheaper.      Thus, municipal systems would be forced to operate  oil-fired units rather    than purchase wholesale power.
Further, wholesale service      was proposed  to be restricted to existing customers;      and those who could  obtain wholesale power, under the proposed      filing, were  to be disallowed full coor-dination. 2/
1    FPL  withdrew  its  appeal from FERC's decision.
2/  The proposed    tariff filing was  as follows:
Sale  for  Resale              Florida Power 6 Light Total Requirements            Company, FPC Electric Rate Schedule    SR-2        Tariff, Original Volume No. 1, Fourth Revised Sheet No. 5.
AVAILABLE:
delivery for total power requirements of electric utility systems for their own use or for resale. Such electric utility systems are Clay Electric Cooperative, Inc., Glades Electric Cooperative, Inc., Lee County Electric Cooperative, Inc., Okefenoke Rural Electric Membership Corporation, Peace River Electric Cooperative, Inc. and Suwannee Valley Electric Cooperative, Inc.
This schedule shall not a 1 as substitute or replacement ower to a enerating utility s stem for which interchan e power a reements are available or to which Sale for Resale Partial Requirements Rate Schedules PR is applicable."        (Emphasis supplied).
FOOTNOTE CONTINUED ON NEXT PAGE
: 3. Cities'esponse      to FPL's  initial  interrogatory requests  in the District Court case (Docket No. 79-5101-CIV-JLK,
~su ra) details the documentation supporting the following i/:
FOOTNOTE CONTINUED FROM PREVIOUS PAGE:
          "Sale for Resale                Second Revised Sheet Total Requirements              No. 7.
Rate Schedule  PR AVAILABLE:
To electric service supplied to electric utility systems for their partial power requirements at any point of delivery to com lement the insufficient eneratin          ca acit and/or firm ower 2"
systems are Florida Keys Electric Cooperative Association, Inc.,
Utilities  Commission    of the City of New Smyrna Beach, Florida, and the City of Starke, Florida. This schedule shall not a 1 as substitute or replacement        ower to a eneratin utility s stem for which full service interchan e ower a reements are The proposed    tariffs  showed  that:
: 1)    FPSL  refused to sell    total  requirements wholesale power to  new  customers.
: 2)    FPSL refused to sell wholesale power to systems having generation except to replace "insufficient capacity;" and
: 3)    FPSL  would not permit a "full service interchange power agxeement"    for  systems purchasing wholesale power.
These tariff changes would have prevented the potential sale of wholesale electricity to nearly every municipal system in Florida. The FERC rejected the tariff, stating (32 PUR 4th at 339):
    "The proposed    restrictive provisions are anticompetitive, we  find  no  countervailing reasons for their implementation, and they are to be deleted."
1/ Cities note that in the current discovery, they have obtained materials from FPL in addition to those available at the time of the interrogatory responses.
63
: a. FPL'  refusal to deal in wholesale power (see Cities'nswer to FPL interrogatory no. 9, App. D40-D58) 1/;
: b. FPL's refusal to interconnect and/or efforts to unlawfully condition interconnection (see Cities'nswer to FPL interrogatory no. 11, App. C137-C165).      FPL's actions are set forth in the interrogatory responses. Its conduct restricting pooling and its attempts to limit coordination availability, if a system is buying wholesale power, are evidence of FPL's anticom-petitive intent. Xt is significant that, while Section 2 of the license conditions requires parallel interconnection, no mention is made of any requirement that. FPL share in the costs on a reasonable basis.
: c. FPL's historic refusal to provide "wheeling" (transmission) and its more recent efforts to unreasonably limit wheeling (see Cities'nswer to FPL interrogatory 14, App.
C166-C183); as noted PPL still has not filed a PERC tariff for refuses to grant Cities reciprocal transmission rights        if they 1    An internal  FPL memorandum provided by FPL in discovery recorded  a meeting with Homestead City Manager, Olaf Pearson:
                "Mr. Pearson again would sell power to Homestead once Turkey Point was if I.illegible] we completed. I answered "No, power it is not our policy to for Municipal Distrib[ution]."
sell App. D7-DS.
And FPL specifically refused a 1966 request of      Homestead  for access to the Turkey Point units. Eee ~su ra.
64 invest in transmission;      l/;
: d. FPL's    historic  and  continuing efforts to deny Cities access to the benefits of coordination that FPL has obtained by virtue of size and participation in groups such as the Florida Operating Committee (see Cities'nswer to FPL interrogatory no. 15,    App. D59-087); See,      e.g., pp. 30-34, infra.
: e. FPL' re fusal to provide Cities access to its nuclear units (see Cities'nswer to interrogatory no. 17, App.
D88-D94); Such refusal is a primary subject matter of this case.
: f. FPL's attempts,      often repeated,  to acquire virtually all the municipal systems within its retail service territory. (See Cities'nswer to FPL Interrogatory No. 21, App.
D95-D121);
: 4. FPL  interfered with the gas supply of several Cities, as detailed in the Cross Motion of the City of Tallahassee, Florida For Summary Judgment of Tallahassee's Natural  Gas  Claims, and supporting memorandum        filed March 2, 1981,  filed in Gainesville Regional        Utilities, et al. v. Florida Power  & Li ht Com an, ~eu ra, Docket        No. 79 5101 CI-V  JLK--
: 5. FPL has even    sought to capture new technology in order to deter municipal competition.            For example, FPL has undertaken to obtain the benefits of          electricity  generated from waste, and    is currently    engaged  in  a venture in Dade County, 1    Large systems,    such as    Florida Power or Tampa Electric, which are  directly interconnected with        each other gain automatic use of each system's lines for transactions because of the mutual interconnection. With regard to Cities, however, FPL insists on separate, individual interconnection agreements to deter formal pooling. See App. C310      ~
Florida. In  a 1973 document,  FPL Vice President for Strategic Planning Robert Gardner outlined the considerations involved in FPL's determination to involve itself in generation from waste.
As the Gardner memorandum explained in its "Guidelines= for Power Generation from Municipal Solid Waste Operations"      (App. D123)
                        '2 (emphasis  added):
                  "The amount of direct benefit is small because 2'
1s solid waste can generate only a small fraction of our
: 1. Augment community and customer resources  by displaying corporate responsibilty in assisting the solution of a pressing local problem.
: 2. Gain experience and insight into the potential for profitable future increased involvement in waste processing.
1  ps another FPL internal document shows, FPL's interest in controlling solid waste, generation was not limited to its retail service territory, but extended "throughout Florida." (App.
D127) See also a March 25, 1974 memorandum from W.M. Klein, (currently an FPL Vice President) to Executive Vice President F.E.
Autrey. The memorandum explained that FPL had to control Dade County's solid waste in a manner that would prevent Dade County from using    it  to generate electricity. As the memorandum stated, in part (App. D129):
                  "We also feel that we cannot afford not to par-ticipate [in the Dade County project] since the County representatives seem determined that the 'fuel'ortion of the solid waste be used. They have on several occa-sions made reference to the fact that '.if FPL doesn' use this fuel or steam from the fuel, then they would build    and operate their own power plant.'"
                  "In view of this attitude on the part of  Dade County, FPL must work out a way to participate in the Dade County procedure for disposal of solid waste.
Therefore, while insuring that Dade County or the suc-cessful bidder doesn't generate electric we must at the same time avoid setting a precedence that would be completely unacceptable elsewhere on the system."
FPL'  refusals to deal were part of a more general program whereby FPL and FPC also conspired to (a) assure that existing or potential municipal systems in one utility's territory would not be able to obtain wholesale power from the other system (b) assist one another in the acquisition of existing municipal systems. 1/
For example,  in 1962 R.C. Fullerton, Executive Vice President of FPL received a letter (Appendix I37) from a citizen of Sebring regarding the potential acquisition of the Sebring muni-cipal system by FPL. Mr. Fullerton responded to the citizen that (Appendix I38):
            "Thanks for your note about electric service in Sebring. The utility company serving in that vicinity is the Florida Power Corporation of St. Petersburg. We have taken the liberty of forwarding your letter to them for consideration.
I appreciate your fine attitude and thank you for writing.
In forwarding the citizen's inquiry to a Senior Vice President of Florida Power Corporation, Mr. Fullerton's cover letter stated:
"(A)ttached correspondence is self-explanatory. Why don't you go in there and buy this property?" (Appendix I39).
The Sebring exchange, in turn, appears to be a repetition of an earlier exchange regarding Lake Helen.      (Appendix I40-I43). In a June 23, 1958 "
==Dear    Bill" letter  from "Bob,==
" (an exchange between FPL's President and General Manager Robert Fite and Florida Power Corporation's President William Clapp) 2/ "Bob" wrote:
1    T e  ocuments quoted in the text above includes some of those cited by the Gainesville court, 'at 573 F.2d, 297-299.            s 2/ As recognized by the Gainesville court, at 298.
==Dear  Bill:==
When we discussed the territorial question in Boston the other day, you mentioned that you were interested in buying the electric facilities in Lake Helen. Perhaps you have forgotten but back in 1956 we received an inquiry from Lake Helen and wrote them that they were not in our territory and we had no proposal to make. Alan B. Wright signed the letter and sent you a blind copy. I am enclosing reproductions of these letters for your information.
Here's hoping you get Lake Helen.
Bob" The  division of "acquisition rights" was accompanied by recognition that neither system would provide power supply alter-natives for an existing franchise that wished to consider munici-pal ownership. 1/
On  February 3, 1956, (Appendix I46-I48)  for  example,            the City of Arcadia wrote to Florida Power Corporation.      It stated            that its franchise with FPL was expiring and that the City was considering the purchase of the FPL distribution system. It asked whether "Florida Power Corporation would be interested in discussing the 1    Of special additional note is evidence of early awareness of the likelihood of private utility monopoly over nuclear power and the possibility that the express denial of smaller to nuclear power dates back nearly a quarter of a century.
systems'ccess By  letter -of December 7, 1955, FPL President Clapp wrote Seminole Electric Cooperative President Parks E. Baker that FPL would not provide backup services for a 40 MW nuclear reactor which Seminole proposed to build near Perry, Florida. A blind copy of the letter was sent to FPL's Robert Fite. See Appendix I44.
On early municipal recognition of the importance of atomic power, see Appendix I45, obtained from FPL in the Gainesville case. Thz.s document, an editorial applauding the decision of Lake City voters to reject municipal ownership,      records that the local citizens'ommittee stressed two main objections to public ownership. The second was that "A small city-owned plant could not provide dependable service and there was grave danger that  it  might even become obsolete in a few years due to atomic power developments."
wholesale of  electric current to  the City of Florida." By letter of February 7, 1956 (Appendix I46-I48) to "Bob" Fite, "Bill" Clapp enclosed the City's letter and wrote that:
          "I am asking Mr. A.V. Benson, our Division Manager in Lake Wales, to go by and talk to the author of the attached letter. By answering this letter verbally, I figure we might be of some assistance in pointing out to the City Attorney the error of their ways. You may be assured our answer is that we have no power facilities within this area.
Mr. Benson will point out to the City Attorney the fact that what they have in mind cannot possibly pay them as well as the renewal of your franchise.                    h We will give you a complete report of our contact."
In response to the February 7 letter Fite thanked Clapp for his help and stated that "I sure hope we have an opportunity to repay you." (Appendix I46-X48).
Gainesville documents show that FPL did repay Florida by refusing wholesale service to Florida Power franchises. In 1962-63, for example, the City of Winter Garden was considering the creation of a municipal system. In a telegram to a Citizens Committee (Appendix Z49) Mr. Fite stated that FPL did not pro-vide wholesale power, and, in any case, would not serve an entity not in its service territory:
FLORIDA POWER  5: LIGHT COMPANY HAS NO FORMAL 'OR INFORMAL REQUEST THAT  I KNOW OF TO SELL POWER TO WINTER GARDEN. WE DO NOT SUPPLY MUNXCXPAL SYSTEMS FIRM WHOLESALE POWER FOR DISTRXBUTXON THROUGH A MUNICIPAL DISTRIBUTZON SYSTEM.
WINTER GARDEN IS BEYOND THE LXMXTS OF OUR ECONOMIC SERVICE AREA WHICH~ IN ITSELF'OULD PRECLUDE A SUPPLY FROM OUR COMPANY EVEN IF THE OTHER CONDXTIONS CXTED ABOVE DID NOT PREVAIL.
As the discovery document shows,  a blind carbon copy of the telegram  was  sent to Mr. Clapp.
There can be  little question  that FPL/FPC's longstanding anticompetitive practices and    policies were well known to munici-pal systems, and to cities considering forming municipal systems, throughout Florida. Thus, not only were existing systems denied the opportunity to obtain benefits from wholesale purchases, but potential systems were deterred from considering entry into the electric business    (and thereby from providing a competitive  sti-mulus to FPL and FPC).
The  deterrence effect of knowledge of FPL/FPC practices and policies was evidenced, for example, in Haines City. There, in 1967,  citizens considered the possibility of replacing the Florida Power Corporation franchise service with municipal service. As a "Fact Finding Committee" reported to the City (Appendix I50-I54):
          "Extremely reliable sources lead us to believe the following:"
: 2. It would not be feasible at this time for us to con-tact-another source of power in the event we moved to distribute. Due to the interconnecting systems in existence between the various distributors and their reciprocal agreements for supplying each other as required during emergency periods and peak load in capacity, it could not be expected that any supplier would transgress."
          "It should  be stressed that in the event, it is decided that an attempt be made to distribute and/or generate and distribute, the Commission should prepare itself for lengthy legal and political negotiations to obtain any successful conclusion. The rewards of the sale of power are such that every endeavor by existing distributors will be made to assure their continuation in this field. A precedent would have far reaching effects on power companies as regards other municipalities in the event we were able to acquire the local facilities. It is believed that Power companies would not
70 submit to this without exhausting every means to preclude This stand has been acknowledged by Florida Power. In light it.
of the above and the considered opinion from several very reliable areas, the committee suggests that complete unani-mity of opinion of the Commission of the utmost importance.
The  "Fact Finding" report specifically noted that the Committee had      "(I)nvestigated thoroughly the recent decision of Winter Garden to grant a franchise rather than enter into munici-pal operation." There, as cited above, FPL had refused to pro-vide the city with a power supply alternative. Haines City' decision not to enter the electric business was undoubtedly influenced by knowledge of FPL's (unlawful) policy. Thus, in the case of Haines City, as well as Winter Garden, FPL's unlawful policy helped to prevent the entry of new- competitors and the stimulus of competition -- within the Florida Power Corporation retail  service territory.
In sum, the joint action of FPL and FPC action that took place throughout both the FPL aud FPC territories actively precluded and effectively deterred attempts to create viable public electric systems,      and viable competitors to  FPL (and FPC) .
As  its actions illustrate,    FPL's program was not  limited to affecting municipal      utilities within its retail  service area, assuming    such  limitation  would have been possible where there was peninsular-wide coordination.      FPL's recent campaigns to gain renewal of    its  Daytona Beach franchise and to acquire the Vero Beach system    provide compelling public testimony to FPL's percep-tion that    it  is in competition with public systems throughout Florida. As shown by  Appendix I55-I57, FPL's advertising
71 campaigns  focused on comparisons between FPL and municipal advertising provided the following information:
    "Florida Power 6 Light Company's bills traditionally are among the State's lowest, as documented by Jacksonville Electric Authority's monthly survey of 21 Florida electric utilities. Included in the JEA survey are investor-owned utilities, municipal systems and rural electric cooperatives." Appendix I55-I57.
    "Since 1947, You'e had one of the lowest          electric rates in Florida.
Back in '47, a statewide      survey showed that FP&L had the second lowest rates among 23        Florida electric companies.
Today,  we'e doing    even  better.
Because  now,  according to an April '77 survey      among 20 electric suppliers,    we  have the lowest rates.      And that group included municipally-owned power facilities.
In fact, over the past 30 years, Daytona        Beach has had one  of the lowest electric rates in the state.
Xn 1947,  costs averaged about 3.9 cents per kilowatt hour. Today,    it's actually a little lower, at about 3.5 cents.
And higher now, if you'e    been it's mostly  wondering why total monthly bills are because    the average home uses six times more  electricity    today than    it did then.
In your  own  interests, remember these facts      when you vote on the  electric franchise issue in June.
Because  it's the truth." (Appendix X55-I57)
    "DO CONSUMERS BENEFIT FROM LOWER WHOLESALE RATES CHARGED TO MUNXCIPAL UTILITIES2" "The money that a municipal        utility  saves by paying wholesale rates is more than offset by the costs of maintaining and operating the distribution system, along with the localized costs of administration, billing and other functions. The 28 non-hydro municipal utilities in Florida charge customers higher retail rates than FPSL does because the larger, investor-owned organization can gain greater economies of scale in all facets of its operation." (Id.)
72 In  a  revealing article for Electrical World (Appendix I58-I59),
FPL Communications Coordinator Anthony P.X. Bothwell dwelled on the importance of statewide rate comparisons in "The Daytona Campaign." As Mr. Bothwell explained:
The  fact that FPL bills ranked among the state's lowest was developed in a series of advertising messages that had signi-ficant impact even after the argument lost its news value.
Monthly  bill  comparisons were published in ads starting in December  and  continuing through May. Reinforcement was achieved by airing a companion radio spot each time a new bill  ad was placed in the paper."
When a  focus group of Miami,residents was shown one of the bill-comparison ads used in Daytona Beach, their unanimous reaction was that FPL must have juggled the figures. Yet through repetition and mutual reinforcement, Daytona Beach residents found out the facts about how FPL bills compared to others in Florida.
The receptivity    of Daytonans to the monthly bill comparisons was enhanced by    other FPL messages on a peripheral issue.
Although it's hard for consumers to think of an electric bill as low. by any standard, most people do believe private enterprise performs services at a lower cost than government.
The superior 'performance of private enterprise was developed both explicitly and implicitly in FPL ads, spots, and releases during Phase II of the campaign. Througn what might be called peripheral reinforcement, "cognitive dissonance" was made to work in favor of FPL on the bills issue."
In sum, FPL has historically been motivated by a desire to eliminate or render uneconomic public systems throughout Florida.
FPL has perceived that the denial of small systems'ccess      to the benefits of coordination with other utilities is critical to this effort.
73 FPL's desire to preserve  its  dominance  in bulk power genera-tion provides further motivation for anticompetitive behavior in the State bulk power market.      FPL has come to realize that control of the statewide market can provide an important, source of business in its own right.
As recognized by FPL Vice President for Planning Robert Gardner in a July, 1976 memorandum (Appendix I64, page 3),
"[D]evelopments in our relationships with other utilities require that we view our business differently than the traditional and "official" way." Rather than a "single tightly integrated busi-ness serving end use customers," Gardner explained, an "x-ray" of FPL "reveals the existence of two principal businesses:      a bulk power business  and an electric service business."    As explained by Mr. Gardner in a  further memorandum    (Appendix I72, page 12),
the former consists of wholesale sales regulated by the rERC, while the latter consists of retail sales regulated by the State Public Service Commission.
Mr. Gardner's memorandum was    written contemporaneously with a System Planning Department report (Appendix Il-I12), that analyzed the statewide bulk power market for the 1977-1985 period. As shown in this document, 1/ for example, in July, 1976 FPL's System Planning Department undertook to "appraise the potential market for firm interchange power in Florida during the period from 1977 to 1985." The analysis reveals FPL's perception that 1    See a so Appendix  I4, at 3.
74 generating systems tbrougbout peninsular Florida      public    and private  are    potential buyers  and sellers in the bulk firm power market. Most importantly, for present purposes, four of the five systems singled out by the analysis as competitors with FPEL in the sale of power are municipal systems located outside of FP&L's retail service territory      Tallahassee, Gainesville, Lakeland and Orlando. (page 3). Thus, FPL not only recognizes the exist. ence of a statewide market for firm bulk power, but views public systems in the northern part of the state as prime I
competition.
C. Although  FPL Itself  Refused To Deal,  Cities  Still Sought The  Benefits Of Coordination, Including    The  Ability To Share In Nuclear Units.
Rebuffed by the largest    utilities, Cities  searched  for coor-dination possibilities among themselves in the 1960's. Even so, FPL and co-conspirator Florida Power Corp.'s possession of vir-tually all transmission in peninsular Florida meant that the two companies could make joint efforts among Cities virtually impossible by limiting Cities 'ccess to the transmission grid.
In fact, FPL both resisted interconnection and, where it did interconnect, refused wheeling. It was not until 1975 that FPL first provided even limited wheeling for any of Cities, so that New Smyrna Beach could gain access to Florida Power Corp.'s Crystal River nuclear unit.
Thus, in their search for alternatives, Cities were forced to consider the construction of an entirely new electric grid, as an alternative to the grid operated by FPL (and the Florida
75 Operating Committee). That. Cities did consider such a costly alternative is strong testimony to both the strength of their interest in coordination and the strength of the resistance they faced from FPL to participation with FPL and Florida Power Corp.
As Cities proceeded, FPL was well aware of Cities'earch for these economies. Its position and that of co-conspirator Florida Power Corp. was one of anxious concern and deterrence, unlike the assistance    they gave each other.
Cities'fforts included the following:
: 1. Study and discussion of possible pooling arrange-ments among smaller systems.
Beginning in 1964, Robert E. Bathen, an engineering con-sultant to    some Cities advised the formation of a municipal power pool. (App. D131-D154) FPL and Florida Power Corporation were aware of, and concerned about, this possibility, even while suspecting that among themselves Cities could not compete with the Florida Operating Committee pool.
In a July ll, 1967 letter (App. D155), Florida Power Corporation President W.J. Clapp transmitted to FPL President R.H. Fite and executives of TECO and Gulf Power a map of the "Potential Florida Municipal Power Pool". In addition,'he letter enclosed a Florida Power Corporation analysis that showed that the municipal pool could not achieve the economies of scale to compete with "the presently existing and rapidly growing Florida Power Pool." (i.e., the Florida Operating Committee of the largest utilities). (App. D156) In 1971 just as he was arriving at FPL, current Board Chairman Marshall McDonald
received  a memorandum  from FPL Vice President H.W. Page 0
transmitting "a paper presented by one of the municipal con-sultants advocating a Florida municipal power pool. You may not wish to read it all, but the map is a must."      (App. D159)
In the latter part of the 1960's some Cities were also involved in the Yankee-Dixie project, which proposed to link systems in Florida with "mine mouth" coal plants in Appalachia (App. D160-D205), and the "twelve-city" study (App. D206-D222),
which considered the possibility for joint activities among muni-cipal systems primarily receiving power from Florida Power Corporation.
FPL followed these projects with concern as well. As a 1971 memorandum, by Vice President Ben Fuqua put    it (App. D224):
          "Let us suppose that the Yankee-Dixie project became a reality, with the Florida municipal electric cooperative grid as its southern anchor. It is readily seen what a problem that would pose for the investor owned electric companies  in Florida.
Similarly, a 1969 note evidently to FPL Vice President J.G.
Spencer regarding a clipping on the "twelve cities" study noted (App. 225):
                "The proposed 'system'ould really be 'stretched out'... However, the fact, that a study is to be made certainly is  a  matter of great concern."
: 2. FMUA committees.
In 1966-1967 the Florida Municipal Utilities Assocation (FMUA), to which Cities belonged, formed committees to consider ways in which smaller systems could join together to gain the benefits of coordination.
77 The documents    from these committees show  that Cities were aware  that larger systems would not permit the smaller ones to participate in the Florida Operating Committee pool and would likely oppose the municipals'fforts to "go it alone."
For example, in a June 9, 1966 letter announcing the for-mation of the "interconnection committee," a Jacksonville offical wrote (App. D227):
                "I think the committee should also weigh the advan-tages that can be gained by the smaller municipalities tying to the larger municipalities, such as Jacksonville, Orlando or Lakeland inasmuch as the larger ones are already tied with the private power companies and there would be no necessity then for the smaller municipals to chance the domination of their system by a direct interconnection with a private company.
                "I think, too, the committee should explore the attitudes of the officers and directors of the private companies in relation to our determination to have a municipal grid. Since collectively we would have strong support for our systems, it might make the private com-panies face the facts of life and accept us as a part of the statewide operating grid system. I have had some indication that there is a softening in their attitude.
As  the June 9, 1966    letter stated,  municipal access to nuclear power    was an  express hope in founding the committee. Id.
                "I think  the committee ought to consider jointly owned  large  nuclear generating plants and we should discuss the legal aspects of joint ownership of facilities."
In establishing the Committee      it was further observed that (App. D230):
                "(O)nly by being electrically interconnected through  a strong transmission system, owned and operated at least in part by the Municipal systems, can the true benefits of scale in large modern conventional and nuclear ~lants accrue tc Municipal systems." (emphasis
          ~added
78 Xn a July  1967 report, the FMUA Committee explained that the smaller systems had no alternative to coordination among them-selves, but that, the larger systems would make. municipal coor-dination difficult (App. D232-D233):
                "1. The municipal systems in Florida must tie or die o "2. Some  of the municipals  will be  required to commit themselves to generation and some of the munici-pals will have to commit themselves to purchase their wholesale power requirements from a Florida Municipal generation and transmission organized    as a  nonprofit corporation.
                "3. The committee feels that a generation and transmission system from the Lakeland area to the Gainesville and Jacksonville area is entirely practical and feasible, but that the same could not be accomplished within the next few years due to the pressures we may expect from the private power companies upon our local and state authorities."
As  evidenced by  FPL  discovery documents,  FPL  evidently kept continuing watch on  Cities'onsideration of    joint efforts.
Documents at App. D234; D235-D236; and D237-D238 are three of many reports, evidently submitted to FPL officials periodically, on New Smryna Beach. As the first report, dated December 1966, records (App. D234):
                "Little I.New  Smyrna Utilities Director  John  Little]
expected to attend a meeting in Jacksonville of the Municipal plant operators. He has wild ideas of tieing all municipal plants together in a grid for mutual help.
He thinks this would make them competive (sic] with pri-vate companies."
79 As  the second report, also evidently in 1966, records (App. D235):
                  "Little is proposing a 500 Mw atomic plant to supply  all municipal'plants in an emergency or peak load." 1/
: 3. The  Gainesville litigation.
If the smaller systems needed further proof of their inability to gain access to the statewide grid created by FPL and the Florida Operating Committee, it was dramatically provided in 1965-1966 by FPL's and Florida Power Corp.'s refusal of Gainesville's requests for interconnection.
Following these refusals Gainesville undertook costly and protracted litigation to establish its right and, by extension, the rights of other systems vis-a-vis FPL and Florida Power Corporation. This litigation, which other Cities followed closely (see App. D239-D240) resulted in a Supreme Court holding for Gainesville and a Court. of Appeals verdict for Gainesville in 1978.
By 1973,  as FPL was undergoing    its first antitrust review in connection with    a  nuclear license, 2/ FPL apparently knew, as    an FPL  discovery document records (Gardner Exh. 46, App. B471):
1    A  third  such report. records    App. D237):
                "City  Manager,  says FPEL has no spare power, could not and  will not wholesale power, so City could not buy power from them. Had a very hard time getting power for Samsula during the change over. Florida Power Corp.
does wholesale power but FP&L will not let them in territory, so there is nothing to do but install another engine."
2/ The Turkey Point and St. Lucie I units were licensed as "research and development" plants; they were not subject to pre-license antitrust review, as is the St. Lucie 2 unit.
80 "Cities  want to share ownership and wheeling; etc." 1/
: 4. The Tallahassee  experience.
As recorded in an internal Florida Power Corporation memoran-dum  (produced in the Gainesville case,    App. El-E3), in  1966 Tallahassee    sought access  to the Florida Operating Committee, but was  rebuffed. The September  8, 1966 memorandum,  concerning  a meeting between Florida Power Corp.      officials and  Tallahassee, including Tallahassee    consultant Robert Bathen, records, App.'2, that  Mr. Bathen stated that the City was interested in being a member  of the Florida Pool. Messrs. Dunn and Perez t:Florida Power Corp. officials] assured Mr. Bathen that there was no pool, that the Florida Operating Group carried no obligations but was predicated on faith and good will and a spirit of cooperation, and that the Company could not invite anyone into the Group without a willingness on the part, of other members to cooperate."
Tallahassee's request was not successful, at least not until 1971 when the Florida Operating Committee was generally expanded.
As discussed, ~su ra FPL,and Florida Power Corp. denied an interconnection to Gainesville in 1966. In that year, the smaller systems, including Tallahassee, began studying coor-dination and pooling among themselves. Tallahassee official Joe B. Dykes, Jr., worked on the Florida Municipal Utilities Association's power supply committees. (App. E4) As meeting minutes record, the municipal systems recognized that the big utilities would not let the smaller ones into their pool, and 1    Mr. Gardner was not familiar with the notes (Gardner Exh.
46), and Cities have requested further identification.
81 that the small    systems would need to hang together    in order to avoid hanging separately.
As  recorded in the June 15, 1967 minutes of the      FMUA  Power Supply Committee (emphasis added)        (App. E5):
                  "Mr. Dykes suggested    joint municipal and company transmission.'/
            "It was suggested that a municipally owned central generation and transmission system would be large enough for them to try to negotiate with the private companies on an equal basis,    it was pointed out that Florida Power Corp. was using the high wholesale rates to small muni-cipals to buy out the municipal systems."
Florida  Power Corp. and  co-conspirator.FPL actively sought to frustrate the ability of Cities to even consider alternatives to the Florida Operating Committee. In 1966 Tallahassee retained Robert E. Bathen,    who had  suggested  the'availabiity of coordination and of nuclear power for smaller systems.        As detailed below, Florida Power Corporation demanded that-Tallahassee    limit or  refuse Bathen's employment    if it wished to discuss interconnection with Florida Power Corporation. FPL promptly made parallel demands within its retail territory. 2/
Thus, FPL's conspiracy with Florida Power Corporation acted to deprive "outside" cities, as well as "inside" cities from access to nuclear generation and coordinated operations.
In April of  1967  Florida Power Corporation learned, through    a newspaper article, that Tallahassee was considering hiring R.W.
Beck R Associates to perform a study for Tallahassee (App.
1    FPL, at present, continues to refuse Cities'equests          for joint. transmission investment.
O 2/  FPL's actions are described,      infra.
82 ES-E9). Florida  Power Corp. had  previously warned Tallahassee not to use Bathen. App. E26-D29 and E74-E75. Mr. Bathen was the Florida head of Beck's Florida office.      As the article summarized,  (App. E9) (emphasis  added).
                "Acquisition of Florida Power Corporation's Lake Talquin power plant, participation in a vast regional power pool and eventually the development of a nuclear power plant are some of the long range possibilities that would be included in a proposed electric utility study for the City of Tallahassee."
R.W. Beck proposed a study that would include Tallahassee's participation in an alternate power pool and in nuclear power.
The April 1, 1967 R.W. Beck proposal stated in regard to nuclear power (at 5, App. E14):
units under the Base Case in the early years of the 20 year program no consideration will be given during at least the first 10 years to a nuclear power plant.
However, if in the latter years of the 20 year program the projected loads indicate base load generating units of a size sufficient for consideration of nuclear power as an alternate to fossil fueled generation, then a discussion will be included in the Report as to the pre-sent day relative economics of nuclear versus fossil fueled large generating plants. This discussion which would include comparative cost parameters will be useful to the City in guiding its thinking toward the problems and possibilities of this type of potential power supply in the latter part of the 20 year projected load period when loads may be in the neighborhood of 500,000 Kwh."
Florida Power Corp. promptly and repeatedly told Tallahassee that ongoing interconnection negotiation would cease if Tallahassee  proceeded  to employ Mr. Bathen, who had also raised the possibility of expanded municipal coordination. 1/ As a 1    Florida Power Corp.'s insistence that Tallahassee sever ties with R.W. Beck was not the only concession that Tallahassee had to make in order to gain an interconection. Florida Power, in parallel with FPL, insisted that small systems enter into terri-torial agreements as a precondition to interconnection (see App.
E29, E71-D73). Thus, Tallahassee was required to give up FOOTNOTE CONTINUED ON NEXT PAGE
83 June 9, 1967    Florida  Power Corp. memorandum,  recording  a  meeting of the prior day, described      (App. E23):
                  "At the opening of this meeting we expressed a strong unwillingness to continue negotiating with Tallahassee on an interconnection as long as there was any chance of Beck 6 Associates being in the Tallahassee power supply problem. ... We stressed that        if show up, we would call a halt to the negotiations."
Beck did While issuing the ultimatum to Tallahassee, Florida Power Corp. President W.J. Clapp sent a letter to top officials of the other private utilities, including FPL President Robert H. Fite, warning of the    "activities" of  R. W. Beck and  Associates    (and also of attorney George Spiegel).        Both Florida Power Corp. and FPL appeared    concerned  lest the Cities be advised of the possibi-lity of  greater coordination or participation than was then available.to them. As the July 11, 1967 letter stated in part (App. E30) (emphasis in original):
                  "I know each of you is familiar with the activities of George Spiegel,'ashington attorney, and R.W. Beck and Associates, engineers, in the furtherance of public power efforts in Florida. Perhaps you have already received copies of the enclosed map,'Potential Florida Municipal Power Pool," which Bob Bathen of Beck and Associates has been advocating among the municipal uti-lities of the state and about which he has made several speeches out of state.
FOOTNOTE CONTINUED FROM PREVIOUS PAGE:
territory. While seeking interconnection with Florida Power Corp., Tallahassee and other Cities kept informed of Gainesville's litigation against Florida Power Corp. and FPL. See, for example, the July 16, 1968 letter from Gainesville to Tallahassee, App. D239-D240). This litigation, which was ini-tiated in 1968, resulted in a 1971 Supreme Court decision upholding a Federal Power Commission order that Florida Power interconnect with Tallahassee (Gainesville Utilities Dept. v.
Florida  Power Cor ., 40 FPC 1227 1968 , affirmed, 402 U.S. 515 1972    and the 1978 Fifth Circuit finding that Florida Power Corp. and FPL were engaged in a conspiracy in violation of the Sherman Act. Gainesville Utilities De      t. v. Florida'Power 6 Li ht Co ~ , 573 F.2d 292 5th Cir. , cert. denied, 439 U.S..966 (1978 . This lengthy and costly litigation reaffirmed the understanding of Tallahassee and others that FPL and Florida Power Corp. would require Cities to spend time and money to fight for their rights to deal with the larger      systems.
                "All of this is being sent to  you so that you can be  alerted to the fact that  a concerted effort is being made by Spiegel and Bathen in the furtherance of public power and,'o doubt, they are going to make every effort to contact all communities whose franchise might be
          ~ex irin within the next tew years."    i/
The  resistance of the largest utilities to allow cities access to nuclear generation was again publicly confirmed when in 1968 Florida Power Corp. flatly rejected Gainesville's request to participate in its recently announced Crystal River 3 unit (App.
E38-E43). When Gainesville sought to press its claim at the Atomic Energy Commission,    it was denied on the grounds that the Crystal River unit (like the Turkey Point units and St. Lucie 1) was to be licensed as a research and development reactor and therefore was not subject to pre-licensing antitrust review by the  AEC. 2/
D. FPL Could Have Built  Large, More Economical Plants And Shared Them With  Cities.
FPL  could have but did not purchase larger nuclear units than it  did at a lesser cost per unit of power. Had Cities been offered that part of the larger units not    needed by FPL, the 1    As recorded in the July 27, 1967 Homestead City Council minu-tes (App. E34), two weeks after the letter from Florida Power Corp., FPL opposed Homestead's hiring George Spiegel. When Homestead officials did meet with FPL to request wholesale power and interconnection, FPL got the City council to agree, "without too much enthusiasm," as FPL put it, "to consider a proposal at the same time to purchase or lease your system." App. D10.
2/ In January 1965, Florida Power later offered limited Crystal River capacity to cities throughout Florida.
85 larger units could  have been  built  and the  cost to FPL's custo-mers would have been reduced. FPL likewise cancelled its South Dade  nuclear units (Docket- No. P-636-A), rather than accept Cities'articipation.
Internal memoranda to FPL's Senior Management Council show the anticompetitive reason for FPL's refusals to let the Cities have access to economical generating plants by, for example, FPL's building plants large enough to accommodate (Membership on the Council included the Chairman Cities'articipation.
of the  Board, President and Executive and Senior Vice Presidents.) As stated at the time of the Council's creation in 1973, one of the "strategy" areas to be considered was "Competition The Florida Electric System". (App. D256) A document to the Council generated by R.G. Gardner,'ice President for Strategic Planning, recognizes (App. D250):
          "The municipals-co-operative strategy: should have statewide generation planning, multiple-unit sharing and full coordination."
It listed as one of FPL's consequent "problems" with the municipals'trategy (id.):
          "FPaL may not be able to compete    if municipals and co-operatives can gain access to generation investment with their low-cost capital. Municipals presently having franchises with  FPL will be  encouraged to go public."
In 1976-1978 FPL was before the Federal Power Commission seeking to justify its proposed acquisition of the Vero Beach system. FPL had not previously served Vero Beach from its
nuclear units, nor had    it offered to provide nuclear access. 1/
Upon  acquisition, of course, Vero Beach, as all of FPL's retail customers, would be served, in part, from FPL's nuclear units.
In support of the application, FPL portrayed Vero Beach as a good investment because of its "growth" prospects (Docket No. E-9574, Tr. 56). It was in this context that Staff Counsel asked FPL official J. L. Howard whether the acquisition of such new load would adversely affect FPL's existing customers.      FPL, as Mr.
Howard made clear, indicated that any qualitative long-term effect would be beneficial to FPL's existing customers (App.
D326-D328):
                "BY MR. ROGERS:
In light of your most recent testimony that there will be some increase in the fuel adjustment charge as a result of the acquisition, some possible increase resulting from having to put on line new generating capacity,'ou have stated very emphatically that no, the last rate request was not predicated in any way on acquisition of Vero Beach, is  it not a pretty good conclusion for the Staff to draw that, that acquisition is bound to result in higher rates for the present customers of FPL?
A. No. Shall I explain the reasons?
Q ~  Yes, sir. I license to steal. fsic]
1    During the proceeding before the FERC, a "citizens" hearing was held at Vero Beach. At that hearing, a citizen testified that FPL had not offered nuclear access to Vero (App. C399-C402);
an assertion which FPL has never sought to contradict.      (Further evidence indicates that while proposing to acquire Vero Beach, FPL was also denying power (App. C405-C410).
it both wheeling (App. C404) and wholesale
87 A. When you  start to talk of future generation you are looking into the future,      it  will not change our generation expansion plans in the short run. I although adjustment.
it it don't believe      will change our base rates, will initially affect our fuel future it will be coal or nuclear. Given the ~re-sent situation in the country, to the extent we otherwise I believe it is consistent with the interest of the ~countr and that the coal genera-tion ~ma will be    cheaper than the present genera-tion.
So  in the long run I    am not sure  it will result in increases. There may be some back-and-forth. I think the net effect will not be negative."    (emphasis  added)
Thus, FPL denied    Cities nuclear access and wholesale purchases,    when  it had testified that it would benefit from      a larger market to support      new  coal and nuclear generation. In fact,  FPL's  industrial  development  staff is  seeking large new customers  (App. D259-D264). 1/
1    When FPL sought to deny wholesale service to Homestead and Ft. Pierce in 1976-1979, it attempted to justify its action by claiming lack of capacity. The Federal Energy Regulatory Commission considered the issue and rejected FPL's position (Opinion No. 57, 32 PUR 4th at 336):
          "FPL would'seek to justify its proposed limitations on full and partial requirements availability in terms of operational constraints. Specifically, it asserts that future power supply is too uncertain to allow unlimited access to its requirements service FOOTNOTE CONTINUED ON NEXT PAGE
88 Zn Opinion No. 57,  ~eu  ra,  32 PUR    4th 313 at 335, the Federal Energy Regulatory Commission found:
Limitations  on Alternative Sources of        Ca acit Unrebutted Company documents in evidence indicate that it  is FPGL's policy to retain full ownership of the nuclear generating plants which        it  constructs. The Company has stated  that    the  full capacity of these units is needed to serve  its  own  customers,    so sharing is not to be anticipated until FPEL        reaches  the optimum amount of nuclear capacity for its system (Exhibit 27).
However, no party disputes that joint ownership of such facilities would provide municipal and cooperative uti-lities (as well as other utilities in the region) with access to FPEL's economies of scale (Exhibit GT-1, at 6).
FOOTNOTE CONTINUED FROM PREVIOUS PAGE:
                "However, the difficulty with this        proposition is that a
it has virtually no record support few conjectural statements by Company and  is based on witnesses As  Opinion No. 57 records, FPL's contention in that case followed a prior attempt to use that strategem to deny service to Homestead in 1973-1974.      As the Opinion states (32 PUR 4th at 332, footnotes    omitted):
Homestead next requested power from FPL in August of  1973, proposing a firm purchase of 12-16 MW from 1975 through 1980. The City stated that          it  intended to use this capacity for base load, purchase interchange energy to meet its intermediate load and use its own generation only for peak load capacity and reserve (Exhibit GT-29, at 12).
The Company first decided to respond to Homestead's request with the so-called "Marshall Theory" [evidently FPL Board Chairman Marshal McDonald]: Homestead was to be told that FPGL had no firm power to sell. Company negotiators were advised to have load and reserve esti-mates available to substantiate this reponse (Exhibit GT-29, at 14). Immediately thereafter,'owever, the Company concluded that Homestead had been listed as a customer under all requirements schedule SR and was actually receiving firm      power  at committed intervals.
89 FPSL  is the sole owner  of three operating nuclear plants having aggregate  capacity of 2,188 MW. FPScL has agreed to share a portion of St. Lucie No. 2 nuclear plant with neighboring systems including Homestead and New Smyrna Beach; however, FPGL documents in evidence indicate that this was done at the insistence of the Justice Department and that FPSL has not committed itself to share the capacity of any future unit (Exhibit GT-71, at 22). 49/
49    In 1973 FP8L considered cancelling St. Lucie No. 2 because  of "escalating costs and Justice Department review of our antitrust status" (Exhibit 20). Then in 1976 the Company considered a shift. to coal-fired plants for future base-load generation "to eliminate the ATomic Energy Act as a route to municipals'nvestment in generation" (Exhibit GT-1, at 13). See also, the deci-sion of the Atomic Safety and Licensing Appeal Board, Nuclear Regulatory Commission, in Florida Power R Li ht Co., Docket No. 50-389A (ALAB-420, July 12, 1977 regarding antitrust review proceedings on St. Lucie    No ~
2 ~
FPL's settlement license conditions would even permit restriction of the  amount  of nuclear capacity available to cities in units not yet sized to offset nuclear capacity that the cities might otherwise obtain. Condition VII grants those "neighboring entities and neighboring distribution systems", which are per-mitted St. Lucie 2 entitlements "the opportunity to participate in the ownership of all nuclear units for which the Company files a construction permit application with the NRC prior to January 1, 1990, provided, however, that no opportunity to par-ticipate need be afforded to any neighboring entity or neighboring distribution system in an amount, if any, which would, in the aggregate, result in its owning nuclear generating capacity, or enjoying direct access thereto by unit power purchase or participation through a joint agency, as a percentage of its peak load in excess of what Company's percent of same would be after the addition of the proposed plant."
90 Thus, FPL recognizes      the importance of nuclear capacity to Cities  and would assure      that Cities cannot obtain more than FPL, assuming    that this    were a  realistic hope.
ARGUMENT INTRODUCTION Unless FPL sets      forth genuine issues of facts, summary judgment should be ordered that a situation inconsistent with the antitrust laws exists; alternatively, a limited hearing should be held to resolve facts genuinely in dispute. Florida Cities believe the following facts are not reasonably subject to dispute 1/:
(1) FPL controls three out of four operating nuclear units in Peninsular Florida and it is constructing a fourth (St. Lucie Plant, Unit No. 2). It has an effective monopoly control of nuclear facilities. See United States v. Aluminum Co. of America, 148 F.2d 416 (2d Cir. 1945). FPL is refusing to grant access to those facilities, except for limited entitlement under settlement license conditions in this case.
Florida Power S Light can hardly dispute the importance of such facilities, since        it has cited its nuclear advantage in acquisition attempts and has sought to limit Cities'uture nuclear access in St. Lucie license conditions. 2/ See pp. 47-53, 1    Attachment      1 contains a statement of the material facts which Florida    Cities    believe  are not genuinely in issue, as required by 10 CFR  $ 2 ~ 749 '
2/  The Federal Energy      Regulatory Commission's finding of FPL's policy  against    sharing  nuclear capacity is quoted ~su ra.
91
  ~su  ra. Moreover, even    if it were  found that nuclear  facilities O do  not constitute    an economic    "market" under  strict, District Court Sherman Act analysis,        the Atomic Energy Act deals with "situations inconsistent" with the antitrust laws and unfair com-petition within the meaning of Section 5 of the Federal Trade Commission Act. The Atomic Energy Act's antitrust provisions must be read in the context of the entire Act. Sections 1-3 of the Act, 42 U.S.C. $ 2011-2013, establish that the benefits of nuclear power be broadly directed and that nuclear advantages not be used to    limit competition.
Under Section    2 of the  Sherman  Act, Otter Tail Power Co. v.
United States, 410 U.S. 366 U.S. (1973) and Consumers Power
  ~Com  an  (Midland Units    1  a 2),  ALAB 452-, 6 NRC 892  (1977), FFL's refusals to deal in nuclear power constitute anticompetitive restraints of trade.
(2)  The  interconnected systems generation and transmission facilities  in Peninsular Florida, as well as FPL's actions set forth in the Statement of Facts        and confirmed by Federal Power Commission and Federal Energy Regulatory Commission decisions on which    this Board can  rely, establish that      FPL has  dominance  in base load generation,      transmission and coordination.        FPL has acted to    restrict Cities    access  to base load generation, transmission and coordination.
(3) There is a Peninsular Florida geographic market for at least some wholesale and coordination power supply. Such market is confirmed    by FPL's actions, public documents,        and internal  FPL documents.      The Company has    acted jointly with others in that
92 market to  restrict. competition for wholesale power supply throughout peninsula Florida. The Fifth Circuit decision in Gainesville Utilities Dept. v. Florida Power Li ht Co., 573 S
F.2d 292, cert. denied, 439 U.S. 966 (1978) is determinitive that a wholesale territorial division existed,,that the division was illegal, and that it restrained trade.
(4)  FPL plans, constructs and operates its nuclear  and  other base load units in context of coordination with Florida  Power and Tampa  Electric. The  Federal Power Commission has so found in an order that  was  ultimately affirmed by the United States Supreme Court. Florida Power    S Li ht Co., 37 FPC 544 (1967), reversed, 430 F.2d 1377 (5th Cir. 1970), reversed, 404 U.S. 453 (1972).
Company documents and deposition testimony admit that FPL operates in light of such coordination. Indeed, FPL has publicly advertised coordination benefits. A. "situation inconsistent" exists because the Cities are excluded from the fruits of such coordinated activities (e.g., nuclear and wholesale power) as well as from coordination itself.
(5) Florida Power 6 Light has agreed to Orlando par-ticipation in St. Lucie 2 and has offered participation to some Cities in Peninsular Florida, but not to others. Such exclusion is a violation of Section 1 and is otherwise inconsistent with the  antitrust laws.
(6) FPL has a retail service monopoly in eastern and southern Florida and competes for wholesale power supply or coor-dination throughout peninsula Florida. FPL's refusals to deal in
93 nuclear and base load power, transmission and coordination help FPL to defeat competition and to preserve and extend its retail e monopoly and in competition at wholesale.      Such refusals to deal are in  violation of Sections    1 and 2 of the Sherman Act, as con-firmed by Otter Tail, ~su ra,  and the principles established by other acts  as well (including Section 5 of the Federal Trade Commission Act)  .
I. FPL CANNOT LAWFULLY RESTRICT RELIEF TO "INSIDE" CITIES'HE RESTRICTION CONSTITUTES AN UNLAWFUL COMBINATION IN RESTRAINT OF TRADE AND A PERPETUATION OF A MARKET DIVISION.
There is joint ownership for St. Lucie Plant, Unit No. 2.
Orlando is a participant and others have been offered participation. Under these circumstances, FPL's refusals to grant access to other Cities in Peninsular Florida is a group bottleneck and group boycott. Case law establishes that com-panies in the same business may not band. together to control important resources to the exclusion of smaller firms. Such "combination" is plainly a restraint of trade Under Section 1 of the Act. Such cases as United States v. Terminal R.R. Ass'n.,
244 U.S. 383,(1912); Silver v. New York Stock Exchan e, 373 U.S.
341 (1963); Radiant Burners v. Peo les Gas Li ht    S Coke Co., 364 U.S. 656 (1961); Klor's, Inc. v. Broadwa -Hale Stores, Xnc., 359 U.S. 207 (1959); Fashion Ori inators'uild of America v.
Federal Trade Commission, 312 U.S. 457 (1941); Associated Press
: v. United States, 326 U.S. 1 (1945); Gamco v. Providence Fruit Produce  Buildin  , Inc., 194 F.2d 484, 487  (1st Cir.), cert.
94 denied, 334 U.S.,817; Toledo Edison    Com  an  (Davis-Besse Units  1
, and 2), ALAS-560 10  NRC  265 (1979).
The  standards of Section  1 were recently enunciated by the Second  Circuit in Berke  Photo, Inc. v. Eastman Kodak Co., 603 F.2d 263 (2d Cir. 1979),  cert. denied,  444 U.S. 1093 (1980). The Court states that "the gravamen of a charge under Section      1  of the Sherman Act is conduct in restraint of trade; no fundamental alteration of market structure is necessary." 603 F.2d at      272.
Kodak is more restrictive than other antitrust cases in protecting firms against predisclosure of prospective marketing under Section 2, where such protection is required to protect innovation. However, the case applies a strict, standard where there is joint action (or where there is exclusionary conduct under Section 2):
There is a vast difference, however,'etween actions legal when taken by a single firm and those permitted for two or more companies acting in concert. . . . We have stated that we respect innovation, and we have construed $ 2 of the Act to avoid an interpretation that would stifle it. But this is toto caelo different from an agreement among a few firms to restrict to themselves the rewards of innovations."
603 F.2d at 301.
Nor must the product or service involved be essential in any absolute sense. Contractual relationships as well as facilities may be involved. For example, in Associated Press v. United States, 326 U.S. 1 (1945),'he Supreme Court found that the Associated Press by-laws "had hindered and restrained the sale of interstate news to non-members who competed with members." 326 U.S. at 13. The Court states (326 U.S. at 17-1S): "Zt is Q
95 apparent" that the    restrictive practices    complained of gave "many newspapers    a competitive advantage over their rivals";
"[cjonversely, a newspaper without AP service is more than            likely to be at a competitive disadvantage." 1/
A  classic  example  of the principle is    Gamco  v. Providence Fruit  Produce  Buildin, Inc.,    194 F.2d 484, 487    (1st Cir.), cert.
denied, 344 U.S. 817 (1952)    ~  There, lessors of a building housing wholesale    fruit dealers,    refused renewal of    a lease by Gamco,  but contended that access      was unnecessary  since one could sell fruit virtually    anywhere,  including at  a point adjacent to the building. 194 F.2d at 487. The Court found however, that the joint action to deny Gamco access to the building was an illegal exclusion (Id., citations and footnotes omitted):
a monopolized resource seldom lacks substitutes; alternatives will not excuse monopolization . . . . it is only at the Building itself that the purchasers to whom a competing wholesaler must sell and the rail facilities which constitute the most economic method of 1    Quoting the lower court opinion of Judge Learned Hand, the Supreme  Court noted:
monopoly  is  a  relative  word. If one  means the possession of something absolutely necessary to the by it conduct of an activity, there are few except the exclusive possession of some natural resource without which the activity is impossible. Most monopolies, like most patents, give control over only some means of production for which there is a substitute; the possessor enjoys an advantage over his competitors, but he can seldom shut them out altogether; his monopoly is measured by the handicap he can impose .        ~  ~ And yet that advantage alone may make a monopoly unlawful."
326 U.S. 17, n. 17  'ndeed,      there were newspapers      that survived without membership in the Associated Press.
bulk transportation are brought together. To impose upon plaintiff the additional expenses of developing another site, attracting buyers, and transhipping his fruit and produce by truck is clearly to extract. a monopolists'dvantage." The Act does not merely guarantee the right to create markets; the right of entry to old ones.
it also insures The Court concluded that:
          "the possibility of duplicating the physical facilities Lcannot] . . . of itself destroy the illegality of the asserted monopolization. Zt is clear... that exclusion from an appropriate market or business opportunity is actionable, notwithstanding substitute opportunities." 194 F.2d at 488.
Accord, Cities of Anaheim v. Southern California Edison, ~su ra, pp. 3-4 of Slip Opinion (Attachment 4).
Any arguments that FPL might make that it should not be forced to sell nuclear capacity to anyone are beside the point.
FPL is selling, selectively, and with a virtual certainty of an anticompetitive effect. Moreover, having offered such capacity to Cities outside its retail service area, FPL is foreclosed from making the market argument.
Even if the  Cities offered nuclear capacity which are not within FPL's retail service area along with FPL could be presumed to establish a new market area, FPL's refusal to deal would be no more than a blatant attempt to continue to unlawful wholesale territorial division found illegal in Gainesville Utilities De t.
: v. Florida Power li Li ht Co., 573 F.2d 292 (5th Cir.), cert.
denied, 439 U.S. 966 (1978) .. Moreover, there can be no rationale for making capacity available to Gainesville, Orlando and Lake Helen to the exclusion of nearby  cities.
FPL's proposed actions are very much  like Klor's, Inc. v.
Broadwa -Hale Stores,  Xnc., 359 U.S. 207 (1959). Zn Klor's
97 sellers would deal with          a  favored nearby        retail outlet to    the exclusion of Klor      ',  or would deal with Klor '            on less favorable terms . Such action        was  held to constitute          a group  boycott  and declared  illegal    ~
Earlier    NRC  St  e  Lucie    2 license conditions have provided for a fair share of the plant to be sold to Homestead and the Utilities Commission of New Smyrna Beach, as well as two coopera-tive uti1 ities . FPL has of fered each of these two systems 2 Nw under those conditions        ~    Others are being of fered participation under the recent se tt 1 ement .
deal with    some  cities but not others in Peninsular Florida with regard to essential        facilities    and    services    ~  Silver v. New  York Stock Exchan e,      ~su  ra;  Monta ue    &  Co. v. Low , 193 U.ST 3S (1904); Toledo Edison Co., ~su ra, (ordering offer of nuclear capacity by dominant electric companies to smaller systems af t er finding of violation of antitrust laws), 1/ and cases cited immediately ~su ra.
1  ~Com are Missouri Pacific Railwa                Co. v. Larabee Flour Mills Co., 2 1 1 U. S . 6 12, 6 19, 620 1909; Louisville and Nashville Railroad Co. v. United States, 238 U. S . 1 19 15; ICC v .
Delaware Lackawana 6 Western Railroad Co., 220 U S 235 ( 19 1 1 )  ~ ~
United States v. Ca ital Transit Co., 325 U S 357 ( 1945 )    ~ ~
Amer'. can Truckin Ass pc watson, Inc . v . Atchison, To eka and Santa Fe Railwa Co., 387 U. S . 397 ( 1967, confirming the obl iga-txon of utilities to deal fairly with al 1, inc luding competitors, once they engage in a particular service                ~
I f the carrier however, does not rest behind that sta-tutory shield Lpermitting refusals to other carriers to use its tracks or terminal facil itic s] but. chooses voluntarily to throw the Terminals open to many branches of traffic, it to that extent makes the Yard public Whatever may have been the rights of the carriers in the first. instance;          ~ ~  ~  the Appellants cannot open the Yard for most switching purposes and then debar a par-ticu 1 ar shipper from a privilege granted to the great mass  of the public.
Louisville    and  Nashville Railroad Co.,            ~su  ra~ 23S U.S,    at j,g.
98 In Toledo Edison, the NRC Licensing Board "characterized the principal issue as 'whether dominant electric companies in a relevant market area which do not compete with one another may make competitive benefits, including coordination and pooling, available to each other while denying these benefits to smaller actual or potential competitive entities within the market. 'he    Board judged this a matter of Commission concern because 'the benefits to be shared or denied include power generated from proposed nuclear stations relevant market." 5 NRC at 141  'n
[having] a substantial competitive impact . . . in the broad outline, the decision sustained in large measure the complaining parties'llegations, rejected applicants'egal defenses, concluded that licensing these five nuclear power plants would continue or worsen a situation incon-sistent with the antitrust laws, and imposed remedial conditions on their licenses to ameliorate those consequences."
Toledo Edison Co., 10    NRC at 277-278. After a thorough review of applicable legal standards, the Appeal Board affirmed the Licensing Board, largely on grounds that under the antitrust laws applicant utilities could not deny smaller systems benefits they enjoy themselves.
Moreover, to avoid obligations to other cities in Peninsular Florida, FPL must establish that its planning, construction and operation of nuclear capacity was done independently from other if utilities; not, it is engaged in a Section 1 and 2 conspiracy or combination to injure Cities by depriving them of essential resources. Klor's, Inc. v. Broadwa -Hale Stores, Inc., 359 U.S.
207 (1959); United States v. Terminal Railroad Association of St. Louis, 244 U.S. 383 (1912); Associated Press v. United States 326 U.S. 1 (1945). Gamco v. Providence Fruit Produce
99 (1952); Cities of Anaheim v. Southern California Edison Co.,
~su ra, pp. 3-4 of Slip Opinion (Attachment 4).
However, as
              . is manifest,  and has been determined by the Federal Power Commission, FPL's base load generation was planned in the context of and in light of extensive joint action with Florida  Power Company and Tampa      Electric  Company. See pp. 26-29,
~su ra. Its documents  admit. extensive    coordination throughout Peninsular Florida. See generally, Statement of Facts. It can-not. assert the absence of joint action of a nature that would create obligations to deal with all cities.
II. THE CASE LAW CONCERNING ANTITRUST ABUSES BY ELECTRIC UTILITIES CONFIRMS THE UNLAWFUL NATURE OF FPL'S REFUSALS TO DEAL WITH FLORIDA CITIES.
FPL would argue  that it  has no  obligation to grant Cities nuclear access, or at least      more than is provided by the sett,lement. 1/ A large body of case law confirms that a firm which controls essential facilities, such as the nuclear facili-ties in this case, has obligations under the ant,itrust laws to I As we have discussed ~su ra, PpL cannot legally hide behind the settlement to argue that a "situation inconsistent" does not exist,. Being contractual,      if  the settlement itself gives rise to potential anticompetitive effect.s this may be considered.
However, the Company cannot preclude relief that would be in the public interest under $ 105(c)(6) by asking the Board to consider the settlement as exonerat.ing it.s conduct. Otherwise, a party fearing  an adverse  finding  can always prevent. additional relief by adopting a minimally acceptable      policy.
As the Supreme Court said      in United States v. Grinnell    Cor 384 U.S. 563, 577 (1966):
FOOTNOTE CONTINUED ON NEXT PAGE
100 permit    fair  access  to them. Moreover, where a firm such as FPL has a  position of economic control in one market, it cannot leverage that control to advantage itself in competition in that or other markets such as retail and bulk power        markets.'he leading case is Otter Tail Power Co. v. United States, 410 U.S. 366 (1973), ~su ra. Like FFL, Otter Tail controlled ma jor transmission and generating facilities.        Otter Tail refused to transmit or to sell wholesale power to actual or potential smaller systems.
The  District  Court held, however, United States v. Otter Tail Power Co., 331 F.Supp.      54, 61 (D.Minn. 1971):
that defendant has a monopoly in the relevant market and has consistently refused to deal with municipalities which desired to establish municipally owned systems on the alleged justification that to do so would impair its position of
                          ~
dominance in selling power at retail to towns in its service area. The court concludes that this conduct is prohibited by the Sherman Act. Xt is well established that the unilateral refusal to deal with another, motivated h~ a ~ur ose to ~re-Southern Photo Materials Co., 273 U.S. 359, 47 S.Ct.
L.Ed 684 1927); Lorain Journal Co. v. United States, U. S. 143, 72 S.Ct. 181, 96 L. Ed 162 ( 19~61 400, 71 342 FOOTNOTE CONTXNUED FROM PREVXOUS PAGE:
            "We start from the premise that adequate relief in a monopolization case should put an end to the combination and deprive the defendants of any of the benefits of illegal conduct, and    it breaks up or renders impotent the monopoly power found to be in violation of the Act" Or as the Court said in Otter Tail (410 U.S. at 381), ~uotin FTC  v. National Lead Co., 350 U.S. 419, 431 (1956):
            "Those caught violating the act must expect some fencing 1ne Given the authority and responsibility of the HRC to fashion appropriate relief,      if a "situation inconsistent" had been established without the settlement, by entering into the settle-ment the Company cannot avoid broader        relief.
101 "Here Otter Tail refuses to sell power to municipalities which would thereby take retail power business from defendant and refuses to wheel power for others willing to sell to these municipalities. Because of its domi-nant position Otter Tail is able to deprive towns of the benefits of competition which would result from munici-pally  owned  facilities.
          "Pertinent to an examination of the law is a. reference to cases expressive of the 'bottleneck theory'f antitrust law. This theory reflects in essence that it is an illegal restraint of trade for a party to foreclose others from the use of a scarce facility.
Here the theory finds application in Otter Tail' use of its subtransmission lines. One authority believes:
                'The Sherman Act requires that where facilities cannot practically be dupli-cated by would-be competitors, those in possession of them must allow them to be shared on  fair  terms.
statement epitomizes the holdings in federal cases
                                        'This which have established the principle: United States v.
Terminal Railroad Assoc., 224 U.S. 383, 32 S.Ct. 507, 56 L.Ed. 810 1912 ; Gamco, Inc. v. Providence Fruit S Produce Buildin Inc., 194 F.2d 484 1st Cir. 1952 Packaged Pro rams, Inc. v. Westin house Broadcastin Co., 255 F.2d 708 3d Cir. 1958 ; Six Twent -Nine Productions, Inc. v. Rollins Telecasting, Inc., 3 5 F.2d 478 5th Cir. 1966).
          "The  bottleneck principle is applicable to Otter Tail.
Its control  over transmission facilities in much of its service area gives it substantial effective control over potential competition from municipal ownership. By its refusal to sell or wheel power, defendant, prevents that competition from surfacing." (emphasis supplied; foot-note omitted).
Except for remanding for reconsideration of the "sham litigation" issue, the Supreme Court affirmed on appeal:
                "The record makes abundantly clear that Otter Tail used its monopoly power in the towns in its service area to foreclose competition or gain a competitive advantage, or to destroy a competitor, all in violation of the antitrust laws. See United States v. Griffith, 334 U.S. 100, 107. The District Court determined that Otter Tail has 'a strategic dominance in the
102 transmission of power in most of its service area'nd that  it used this dominance to foreclose potential entrants into the retail area from obtaining electric power from outside sources of supply. 331 F.Supp., at
: 60. Use of monopoly power 'to destroy threatened competition's a violation of the 'attempt to monopolize'lause of $ 2 of the Sherman Act. Lorain Journal v. United States, 342 U.S. 143, 154; Eastman Kodak Co. v. Southern Photo Materials Co., 273 U.S. 359, 375 Otter Tail  Power Com an  v. United States,'sn  ra,  410 U.S. at 377 (1973).
The Cities'llegations    against  FPL  are like  those found determinitive in Otter Tail, including alleged refusals to deal, attempted acquisitions of municipal systems and foreclosure of new entrants. Cities'llegations have been vindicated by actual FERC findings made against, the Company.
Opinion Nos. 57 and 57-A of the Federal Energy Regulatory Commission have identified and criticized FPL's refusals to sell wholesale power and transmission as "unjust and unreasonable under the standards of Sections 205 and 206 of the Federal Power Act, particularly because of their anticom etitive effects".
Opinion No. 57-A ("Opinion and Order Denying Rehearing", October 4, 1979, page 1) (emphasis    supplied). In Opinion No. 57 the Commission found:
          "I:Tahe  record documents twenty years'orth of franchise competition between FP&L and the municipal utilities located within its service territory. At various times FP&L has promoted acquisition or willingly received municipal proposals. Most,      if  not all, of those incidents occurred when the municipal systems were arranging new bulk power supplies from the options of self-generation, wholesale purchase from FP&L, and retail purchase from FP&L after franchise disposition.
The Company has not, su'cceeded in many acquisitions, because the municipal candidates solved their supply problems by adding generation.      However, the record
103 strongly indicates that self-generation is becoming less and  less attractive to the point where FPGL's witness Gerber has described small scale generation as an anachronism. -Since FPtNL controls the remaining two options, we conclude that its wholesale monopoly power can only increase, and, thereafter, its retail power as well. See, Borou h of Ellwood Cit v.
Penns lvania Power Co., D.C.Pa. 1979 462 F.Supp.
1343, 1346.
Florida Power a Li ht Com an, FERC Opinion No. 57, ~su ra,32 PUR 4th at 330. Thus, like Otter Tail, FPL's refusals to deal aided its attempts to repress competition for retail sales.
Further, like Otter Tail, FPL has refused to provide transmission voluntarily for municipal utilities. Transmission is necessary for a utility to secure alternate power supplies.
Prior to 1975 FPL refused to transmit for Cities at all. Since then, it has agreed to limited transmission on restricted terms.
FPL's resistance is evidenced by FPL's continuing resistance to filing a transmission tariff. 1/ It has sought acquisitions. In short, it has engaged in similar monopolizing conduct to Otter Tail. See Statement of Facts, Part Zl, pp. 43-89, ~su ra, and Opinion No. 57, ~su ra.
After thorough examination of judicial authorities, the NRC cases hold  that  where a company uses  its dominant economic power "to preserve or extend an existing monopoly, to foreclose actual or potential competition, to gain competitive advantage, or to destroy competitors" it runs afoul of the law. Consumers Power 1/ The Company has appealed Federal Energy Regulatory Commission orders that still        it file its trans'mission policies in tariff form and has not filed a tariff covering other than "interchange" services. Florida Power R Light Co. v. FERC, CA5 No. 80-5259 (April 4, 1980 . See ~su ra
104
~Com an,  ~su  ra,  S  NRC  at 922, citinci Otter Tail    Power Co. v.
United States,    ~su  ra,  and United States    v. Griffith ,~su ra, 334 U.S. at 107. Accord ,Toledo Edison Co.,        ~su ra ,10 NRC at 376-378, holding      illegal  the exercise of power to control    a market, which results in barriers to competition and does not arise merely from superior business skills or business acumen.
In the context of resolving questions of legal entitlements of smaller systems'btaining access to nuclear units, the NRC's Appeal Board in Consumers held that a firm with a monopoly share was not "free of any obligation to deal with the small utilities."
To  begin with, there are circumstances        in which the antitrust laws impose an        affirmative  duty on business firms to deal with their competitors. As evidenced by decisions following Colcaate, unilateral refusals to deal by a firm with a dominant market position have regularly been held to constitute either 'monopolization'r an
          'attempt to monopolize'n violation of Section 2 of the Sherman Act. 501/ In Eastman Kodak Co. v. Southern Photo Co., ~su ra, for example, Kodak violated Section 2 by refusing to sell except at retail prices to the plaintiff, a former retail distributor of Kodak of products. 502/ (Kodak, already holding a monopoly 501/ Our discussion excludes cases arising under Sections 1 or 2 of the Sherman Act involving conspira-cies or concerted refusals to deal.
502/ The Court's decision is unclear on whether Kodak was  guilty of monopolization or an attempt to monopolize. The Court was affirming a jury verdict and its discussion was brief. It stated:
although there was no direct evidence - as there could not well be  that the defendant's refusal to sell to the plaintiff was in pursuance of a purpose to monopolize, we think that the circumstances disclosed in the evidence sufficiently tended to indicate    such purpose,  as a  matter of just and reasonable inference to warrant the submission of this question to the jury.
273 U.S.      at 375.
105 production and at. wholesale, was expanding into the retail market and had purchased other retail outlets in the area.) 503/ In Lorain Journal Co. v. United States, ~su ra, the sole newspaper xn a town was guilty of an attempt to monopolize by refusing to sell adver-tising space to those who advertised on the town's new radio station. In Packa ed pro rams, Inc. v.
Westin house Broadcastin , ~su ra, plaintiff, an adver-txsxng agency, averre that Westinghouse, owner of the only television station in pittsburgh, was attempting to monopolize the advertising market by refusing to air commercials produced by the    plaintiff.  (Westinghouse also produced commercials.) The court held that. this complaint stated a claim cognizable under Section 2 of the Sherman Act.. In a factual situation paralleling packa ed programs, the court in Rollins Telecastin
        ~su ra, reversed  summary judgment for the defendant tele-vxsxon station, and in Otter Tail Power Co. v. United States, ~su ra, the Surpeme Court held Otter Tail guilty of monopolization when that vertically integrated electric utility refused to wheel power for and to sell wholesale power to municipalities seeking to displace it.
as their retail distributor of electricity.
In  a word, as the Second Circuit recently ruled, cases such as Lorain Journal and Eastman Kodak 504/ are 503/  Two cases similar to Kodak, i.e., a wholesale supplier-monopolist found guilty of monopolization by refusing to deal with independent retailers in favor of an integrated system, are poster Exchange, Inc. v.
National Screen Serv., 431 F.2d 334 5th Cir. 1970),
cert. denzed, 401 U.S. 912 (1971) and United States v.
Klearflax Linen Looms, 63 F.Supp. 32 (D.Minn. 1945 See also, Woods Ex loration & producin Co. v. Aluminum Co. of America, 438 F.2d 1286, 1308 fn 9 (5th Cir.
504/ The common thread running through these and similar cases is the possession of a monopoly or a near monopoly in a relevant market by the company refusing to deal.
Thus, for example, Kodak possessed a monopoly at the wholesale level; the Journal was the sole newspaper in town and possessed a monopoly over advertising in Lorain until the radio station began broadcasting; Westinghouse Broadcasting and Rollins Telecasting possessed a mono-poly  - via FCC  licensing - in local television QUOTED FOOTNOTE CONTINUED ON NEXT PAGE
106 Supreme    Court decisions 'which do stand for the proposi-tion  that where a single trader refuses to deal in order to  enhance  its  monopoly  position, a t.Sherman Act]
Section    2  violation may be    found.'nternational Railwa s of Central America v. United Brands, 532 F.2d 231, 239, certiorari denied, 50 L.Ed.2d 100 (1967)        ~
505/
QUOTED FOOTNOTE CONTINUED FROM NEXT PAGE broadcasting;      and Otter Tail held a monopoly over retail distribution of electricity. In each case, through uni-lateral refusals to deal, the monopolist had used its        .
dominant economic power in efforts either to maintain its  current  mar ke't position (e.g., Otter Tail) or to companies    ran afoul of the Supreme Court's warning in Griffith that.    'use ot monopoly power, however lawfully acguxred, to foreclose competit.ion, to gain a com-petitive advantage, or to destroy a competitor is unlawful.'34 U.S. at 107. As Judge Wyzanski cogently observed: 'An enterprise that by monopolizing one field, secures dominant market power in another field, has monopolized the second field, in violation of $ 2 of the Sherman  Act.'nited        States v. United Shoe Machine
        ~Cor ., ~su ra, 110 F.Supp. at 346.
505/ Whether Consumers'efusal of access to its transmission lines presents a 'bottleneck'ituation is irrelevant in our analysis. Such denials may be treated as instances of refusals to deal.        Otter Tail Power Co.
: v. United States, ~su ra, 410 U.S. at 371; Nullis v. Arco Petroleum Cor ., 502 F.2d 290, 296 fn. 19 ~7th Cir.
1974) per Stevens, Cir. J.); see Note, Refusals to Deal b Verticall Inte rated Mono olists, 87 Harv. L. Rev.
1720 1974 . The Licensing Board's assumption, sup-ported by Consumers, that bottleneck cases must involve conspiracies (see 2 SRC at 76) is a misreading of Otter Tail.
6 NRC at 1026-1028.
Other cases  concerning the    utility industry strongly support the obligation of    electric utilities to deal with smaller competing systems.      In Munici al Electric Association of Massachusetts  v. SEC, 413 F.2d 1052, 1055 (D.C. Cir. 1969), the
107 basic issue  was  whether approval of an acquisition under the Public  Utility Holding  Company  Act, Section 10, 15 U.S.C. $ 79j, should be given "in a manner which would give Municipals an opportunity on reasonable terms to obtain access to this new lower cost [nuclear] power." The Court characterized the issue in terms of the utility's blocking access to nuclear base load power and " .  .  . low-cost bulk-power supplies and transmission services."    413 F.2d at, 1058-  It was held that the SEC could not grant the  utility's  request for an exemption from the Holding Company  Act without consideration of the claims of anticompetitive conduct raised by the Cities.
In Gainesville Utilities De t. and Cit of Gainesville, Florida v. Florida Power Cor ., 40 FPC 1227 (1968), affirmed,, 402 U.S. 515 (1971), Florida Power Corporation refused to interconnect with the City of Gainesville, at least absent a "standby" charge; the Company refused to supply backup power because the interconnection was more valuable to Gainesville than to Florida Power Corporation. In affirming a Federal Power Commission order in favor of Gainesville, the Supreme Court said:
          "It is certainly true that the same service or commodity may be more valuable to some customers than to others, in terms of the price they are willing to pay for it.
An airplane seat may bring greater profit. to a passenger flying to California to close a million-dollar business deal than one o flying west for a vacation; as a consequence, the former might be willing to pay more for his seat than the latter. But focus on the willingness or ability of the purchaser to pay for a service is the concern of the monopolist, not of a governmental agency charged both with assuring the industry a fair return and with assuring the public reliable and efficient service, at a reasonable price."
108 402 U.S. at 528. 1/    As  interpreted and applied by the District of Columbia Circuit, the Supreme Court's decision in Gainesville requires that municipals should not be treated discriminatorily "on terms more onerous than those required of other investor-owned utilities." Cit of La afette, La. v. SEC, 454 F.2d 941, 952 (D.C. Cir. 1971), affirmed, sub num. Gulf States, infra.
In Gulf States Utilities Co. v. FPC, 411 U.S. 747 (1973),
certain municipal systems alleged that Gulf States Utilities Company and. others had blocked their access to generation, transmission and pooling. They sought antitrust conditions to a Gulf States financing under Section 204 of the Federal Power Act, 16 U.S.C. $ 824c. The Supreme Court reversed the FPC's failure to consider these allegations of anticompetitive conduct. Citing the history of the Federal Power Act, the Supreme Court held This statute was enacted as part of Tits II of the Public Utility Act of 1935, 49 Stat. 803, 850. The Act had two primary and related purposes:
to curb abusive practices of public utility companies by bringing them under effective control, and to provide effective federal regulation of the expanding business of transmitting and selling electric power in interstate commerce. 49 Stat.
803-804, 847-848; S. Rep. No. 621, 74th Cong., 1st Sess., 1-4, 17-20; H.R. Rep. No. 1318, 74th Cong.,
1st Sess., 3, 7-8; Jerse Central Co. v. FPC, 319 U. S. 61, 67-68 (1943; see Nort American Co. v.
SEC, 327 U.S. 686 (1946~ The Act was passed in the context of, and in response to, great concentrations of economic    and even political power 1    The Comma.sszon  note  t at respondent had not included a com-parable [backup service] charge in any of tne contracts for interconnection voluntarily negotiated with members of the Florida Operating Committee." 402 U.S. at 523. Thus, Gainesville provides direct Supreme Court support for the propo-sition that FPL has obligations to deal with cities (including those outside its retail service area) on a similar basis to its dealings with other Florida utilities.
109 vested in power trusts, and the absence of antitrust enforcement to restrain the growth and practices of public      utility holding  companies. See S. Rep. No. 621, ~su ra, at 11-12;      Utility Corporations - Summary Report, 70th Cong., 1st Sess., S. Doc. Ho. 92, Part 73-A, pp. 47-54; 79 Cong. Rec. 8392 (1935)."
411 U.S. at 758.
As  the Mishawaka    District Court put it,
                    .[F]ederal antitrust law recognizes complementary obligations on persons possessing scarce resources or facilities that are essential to effective competition."
Cit of    Mishawaka, Indiana v. American        Electric  Power Co., Inc.,
~su ra,  465 F.Supp  at  1336 1/ ~
The problem here      is similar to that involved with the inter-connection of specialized common carriers to the American 6
Telephone 8 Telegraph network, where the Third Circuit upheld a Federal Communications Commission decision on the basis of pro-competitive principles, holding that:
1    Also,  a monopolist' "exclusion of its competitors from a f scarce] resource or facility is particularly condemned by the antitrust laws. United States v. Otter Tail, ~su ra, 331 F        ~
Supp at 61."
Id., 465 F.Supp. 1320, 1331 (N.D. Ind. 1979), affirmed in ~art, vacated in ~art, 616 F.2d 976 (7th Cir 1980.).
While FPL's operation in the context of the electric utility industry may be taken into account in some contexts, it is "now settled axiom" to quote the Court in Mishawaka, that the antitrust laws are fully applicable to the electric power industry. Cit of Mishawaka v. Indiana a Michigan Electric Power Co., 560 F.2d 1314, 1321 (7th Cir. 1977 , cert. denied, 436 UUS. 2  (1978) . Toledo Edison,    ~su  ra10  NR,C  at. BY-WE, 323-3270
110 where a  carrier  has monopoly control over essential facilities we will not condone any policy or practice whereby such carrier would discriminate in favor of an affiliated carrier or      show favoritism among competitors."
Bell Tele  hone Co. of Penns  lvania v. FCC, 503  F.2d 1250, 1262, 1271-1273    (3d Cir. 1974), cert. denied, 422 U.S. 1026 (1975).
And, of course, Plorida Power 8 Li ht Co., PERC Opinion No.
57, ~su ra, 32 PUR 4th 313, Provides a most recent affirmation of these principles.
Otter Tail, cited above, is consistent with and reinforced by other bottleneck monopoly cases. These cases 1/ confirm that a utility or other business concern that controls essential facilities is obligated to deal in those facilities on non-discriminatory terms and, further, that it is obligated not to take advantage of the strategic dominance resulting from control of such facilities to gain an advantage in other markets. Por example,  PPL may  not restrict access to its    nuclear generation or transmission facilities to others, while at      the  same time using the economic advantages    it obtains  from such  restriction in 1    E. .. Otter Taxi Power Co. v. United States, 410 U.ST 366 T1973 ; United States v. Terminal Railroad Association, 244 U.S.
Uo. v. United States, 342 U.S. 143 (1951); Silver v. Hew York Stock Exchan e, 373 U.S. 341 (1963) . Hecht v. Pro-Football, Inc.
570 F.2d 982 1977), cert. denied, 436 U.S. 956 (1978 ; Gamco Inc.,  ~su ra.
competition for retail, wholesale or coordination transactions.            1/
The bottleneck theory is in reality a shorthand expression for classic Section    1  and  2  analysis that firms having monopoly power may not use    that power to gain advantage in a second market, line of commerce or factor of production.            Cf.,
Consumers  power  Com  an,    ~su  ra,  6 RRC at 1028, n. 505, quoted at.
pp. 108-110,  ~su ra. And, as    the Appeal Board held in Consumers the use of the Company's monopoly power and            its potential com-petitive injury to smaller        systems  necessitated  antitrust license conditions. Consumers Power Com an , ~su ra, 5 BRC at 1095-1095.
The facts {discussed ~su ra) compel the conclusion that PBL has monopoly power, which FPL has used to enhance its competitive position in retail and wholesale markets.
However, the Supreme Court has held in Griffith that it is impermissible for a firm to use monopoly power to gain a competitive advantage, even where the acquisition of such monopoly power is innocent (as where the defendant owns the only movie house  in town):
ET]he use    of monopoly power, however lawfully acquired, to foreclose competition, to gain a com-petitive advantage, or to destroy a competitor, is unlawful."
334 U.ST  at 107 '
FPL, which controls three of Florida's four'uclear units and is planning  a fourth, can hardly deny their essential nature.
FPL's Board Chairman, Marshall McDonald has publicly characterized nuclear energy as "an essential and desirable source of electric power." App. D325.
112 As  the Second    Circuit said recently in    Kodak (603 F.2d at.
275), discussing Section 2:
          "This conclusion appears to be an inexorable interpreta-tion of the antitrust laws. We tolerate the existence of monopoly power, we repeat, only insofar as necessary to preserve competitive incentives and to be fair to the firm that has attained its position innocently. There is no reason to allow the exercise of such power to the detriment of competition, in either the controlled market or any other Thus, a  fabricator of ingots, who lawfully obtained a dominant position over the market for the sale of raw ingots could not use that position of dominance to improve its position in selling products  made  from the raw material through charging competitors higher prices for the raw ingots than the dominant transactional price to its own fabricating operations.
sellers'nternal United States v. Aluminum Com an of America, 148 F.2d.416 (2d Cir. 1945) . Accord, United States v. Loew', Inc., 371 U. S. 38 (1962); Lorain Journal Co. v. United States, 342 U.S. 143 (1951); Eastman Kodak v. Southern Photo Materials Co., 273 U.S.
359, 375 (1927). Cf., Conwa Cor oration v. FPC, 426 U.S. 271 (1976).
Similarly,  a  public utility that sells electric power at retail cannot refuse to sell such power at wholesale to a com-petitor in order to retain or improve its share of the retail electric market. Otter Tail Power Co. v. United States, 410 U.ST 366 (1973);    Florida  Power  S Li ht  Com an , Opinion No. 57, 32          PUR 4th  313 (1979)    (Attachment 3). See  Gulf States Utilities          Co. v.
FPC, 411 U.S.~
            ~    747  (1973). In this case, it is not a question of price:~ Except, as  provided for in the settlement license
113 conditions  FPL  refuses to deal with Cities concerning nuclear power supply at    all. 1/
The bottleneck monopoly theory is based upon ordinary prin-ciples of fairness. One who operates the only bridge at a river crossing; or the only inn, necessary to human comfort on a highway; or a stock market exchange, through which the bulk of the stock trading is done; or a movie theater chain with the only theater in town, may not, under the antitrust laws, take advantage of the situation to deny competitors access.          A company may be entitled to profit from that facility; but anticompetitive dealing and refusing to deal is wrongful, not only under the antitrust laws but also under regulatory statutes. See Gulf
                                          . 7 Electric Association of Massachusetts v. SEC, 413 F.2d 1052        (D.C.
Cir. 1969); Consumers Power Co. (Midland Units 1 and 2),
ALAB-452,    6 MRC  892 (1977).
1    FPL refused to deal in wholesale power even with systems
.considers in                              it its service area, until was forced to do so by it FERC order (Florida Power a Li ht Co., FERC Opinion 57, ~su ra32, PUR 4th 313) . That was anticompetitive, as the Federal Energy Regulatory    Commission    held. Such wholesale sales would include nuclear power, in diluted form as part of the wholesale power mix. However, FPL made numerous attempts to hold or acquire smaller systems on the promotional basis that FPL's nuclear power made FpL's electricity more economical.        See, pages 55-55, ~su ra.
Thus, FPL  would  have  sold electricity  to .the Cities'ustomers at retail (i.e., the generation and transmission ~lus the distributaon), but      it  would not sell at wholesale alone (i.e.,
generation plus transmission). This refusal to sell wholesale power is not only an act, of monopolization, but a classic tying arrangement, as well. International Business Machines v. United States, 298 U.S. 131 (1936, requzrxng un un xng o company transactions). Accord, International Salt Co. v. United States, 332 U.S. 392 (19~47; Northern Pacific Railroad Co. v. United States, 365 U.S. 1 (1958); United States v. Loew's, Inc., 371 U.S. 38 (1962).
114 Thus, the,law    is not blind to the inherent control which goes hand in hand with the domination of facilities necessary for business in a particular industry. For example, where railroads also own coal mines, if the railroads could price transportation to equalize market prices for coal, they would adversely affect competition at the retail level. United States v. Readin Co.,
253 U.S. 26  (1920). Accord, Baltimore and Ohio Railroad Co. v.
United States,    (" Chicago Junction Case" ) 264 U.S. 258 (1924);
1 United States v. Aluminum Co. of America,      148  F.2d 416 (2d Cir.
1945),    Similarly, an Otter Tail, Consumers Power or Florida Power  S Light may not legally refuse competitors access to nuclear power or to bulk transmission, especially in order to affect competition on the retail level or to preserve or extend wholesale power markets. 1/ The ultimate thrust of the "bottleneck" cases is that a monopolist may not use his position to extend that monopoly. Such a rule even applies to patents monopolies granted by the state. 2/
1/ If nuclear or base load generation were treated as a "factor of production" of electricity rather than the end product, it would still, be subject to the prohibition against the illegal use of monopoly gower. E.cC., Union Carbide 6 Carbon Cor . v. Nisle 300 F.2d 561, 585 (10th Cir. 1962,      ~a  eal dasmassed, 371 U.8.
801 (1963). See  United States v. Yellow  Cab  Co., 332 U.ST 218  .
(1947).
2/ "The test of misuse I:of a patent] is whether a patentee's agreements or other conduct expands the patent monopoly beyond the scope permitted by the Constitution or the Congress, regardless of whether there is any substantial lessening of competition or other effect necessary to a finding of antitrust violation." Antitrust Law Develo ments (American Bar Association 1975), p. 328. Thus, United States v. National Lead Co., 332 U.S. 319 (1947) upheld compulsory licensing of outstanding P atents in exchan g e for reasonable royalties to prevent use of FOOTNOTE CONTINUED ON NEXT PAGE
115 III. STATEMENT CONCERNING    RELIEF.
Unless a settlement can be reached based upon Board    rulings or other considerations, Florida Cities believe that a hearing will be required to determine appropriate relief. Cities would, of course, be willing to consider stipulations as to procedures for narrowing the scope of such hearing or supporting other pro-cedures  recommended  by the  parties.
Florida Cities believe that counsel for FPL is aware of the Cities'ettlement positions. However, since settlement has not been reached, it may,be useful for Cities to set forth principal areas of disagreement with the settlement license conditions in the context of a litigated proceeding.
: 1. The  settlement license conditions limit relief to cer-tain  named  Cities, and exclude relief to other Cities in Peninsular Florida, including those    who have actively pressed their rights before this    forum or the  District Court.
FOOTNOTE CONTINUED FROM PREVIOUS PAGE:
patents for monopolization. The patent cases hold that restrictive activities which would otherwise be lawful by those not having patents (i.e., those not having monopoly power), for example, a contract to require the buyer to buy all of certain goods from a seller, becomes monopolistic when engaged in by patent owners or other monopolists. E.g., Ansul Co. v.
Unirc al, lnc., 448 F.2d 872 (2d Cir. , cert. dented, 404 U.S.
1018 1972; Strcn v. General Electric Cc., 305 F.Supp. 1084 (N.D.Ga. 1969, affirmed er curiam, 434 F.2d 1042 (5th Cir.
1970), cert. denied, 403 U.S. 906 (1971). See Zenith Radio Cor . v. Hazeltine Research, Inc., 395 U.S. 100, 133-136 (1969);
Brulotte v. T s Co., 3 9 U.S. 29 (1964). Nor may a patent, holder discriminate in the license -terms offered to potential licensees, Peelers Co. v. Wendt, 260 F.Supp. 193 (W.D. Wash.
1966). Compare FPL's sale of nuclear capacity to Orlando, but not to Kissimmee or St. Cloud.
116
: 2. The amount  of total nuclear capacity available to Cities provides less than a nuclear load ratio share to the Cities as compared with FPL. It totally excludes Cities'ccess to the advantage of FPL's nuclear monopoly from its operating plants. 1/
1    Relief could be ordered which provides less than an ownership share from operating    units, such as unit power sales at a profit.
to FPL, additional capacity from St. Lucie 2, etc. Conditions could take into account factors such as FPL's need for capacity, FPL's refusals to deal with Cities, including after requests were made, and Cities late intervention here.        With regard to the latter, however, Florida Cities    deem  FPL's  subsequent can-cellation of its South Dade    unit  and refusals  to grant Cities access to St. Lucie 2    relevant. The situation  is similar to that in Consumers Power Com an (Midland Units 1 and 2), ALAB-452, 6 NRC  892, 1082    1977  where:
Events subsequent to 1971 confirm that the company's policy at the time the record closed was to deny the small utilities access to nuclear power. First in early 1971, just before the small utilities requested par-ticipation in Midland, Consumers'rojected peak load for 1980 was 7,790 MW: by 1973 its estimated demand for 1980 had dropped to 7,020 MW; and by mid-1974 it dropped further to 5,870.MW. Although in 1971 Consumers may have required use of the entire output from Midland to meet projected load growth on its system, the outlook changed drastically in a short period of time. Rather than engage in negotiations with the small utilities for sale of some of the excess planned capacity, however, Consumers voluntarily delayed construction of other generating units originally planned to come on line in 1978 and 1982. In other words, the company hjas con-tinued to plan its system as though it never received the requests  from the small systems.    (footnotes omitted)
In Ft. Pierce Utilities  Authorit of the Cit of Ft. Pierce
: v. United States Nuclear Re ulato Commission, D. C. Cir. No.
80-1099, the Nuclear Regulatory Commission took the position in brief and in oral argument that antitrust conditions in a Section 105(c) proceeding "is not limited to the facility that is the subject, of the proceeding." Brief, p. 26 (July 1980). While FPL opposed such position, the Commission's statement as to its authority is binding.
117
: 3. Wholesale power provisions are unclear. They permit resale restrictions and limitation of wholesale power rights,  if a city buys nuclear capacity or uses FPL transmission.
: 4. FPL is not required to file a transmission tariff at the Federal Energy Regulatory Commission. Xt can continue to econo-mically disadvantage Cities and impede municipal power supply by failing to provide for either a joint transmission rate or to provide for  full, non-discriminatory power pooling. Cities can be disabled concerning new transmission to Georgia.
: 5. The license conditions permit FPL to control certain terms of nuclear plant participation adverse to the Cities.
: 6. The license conditions limit Cities'ccess to future FPL nuclear plants based upon their nuclear load ratio share, including their share in third party nuclear plants.
: 7. No provision is made for sharing interconnection costs.
The above  statement is not intended to waive rights to other relief.
118 CONCLUSION 1~    Based upon the  foregoing, the Board should grant res judicata or collateral estoppel effect to (a) Gainesville Utilities De t. v. Florida Power & Li ht Co.,  573  F.2d 292 (5th  Cir. 1978), cert. denied, 344.U.S. 817 (1978);
(b)  Florida Power  5 Li ht Co., Opinion Nos  57 and 57-A, 32 PUR    4th 313 (August 3, 1979), a eal dismissed; Florida Power Li ht Co. v. FERC, D. C. Cir. No. 79-2414 (April 25, 1980);
and (c)  Florida Power  5 Li ht Co., 37 FPC 544  (1967),
reversed,    430 F.2d 1377  (5th Cir. 1970), reversed, 404 U.S. 453 (1972).
: 2. Based upon the  foregoing, the Board should find that a "situation inconsistent with the antitrust laws" exists unless FPL raises material, disputed factual issues that require hearings;    if  FPL does raise such issues, the Board should limit further discovery (a) to issues that remain in dispute and (b) to additional discovery fairly required in light of discovery that has taken place to date. Additional discovery should not. overlap discovery in Gainesville Re ional Utilities et al. v. Florida
: 3. The Board should permit, answers  by other parties and a reply  by Florida Cities.
                          -  119
: 4. The Board should convene    a prehearing conference to discuss matters raised by these pleadings and future scheduling.
In the event that settlement does not appear likely, a schedule should be adopted for further proceedings.        After rulings relating to motions for    summary  disposition and further discovery,  if required,  a  hearing schedule should be adopted.
Respectfully submitted, Robert A. Jablon Alan J. Roth Daniel Guttman Attorneys for the Gainesville Regional Utilities, the Lake Worth Utilities Authority, the Utilities Commission of New Smyrna Beach, the Sebring Utilities Commission, and the Cities of Alachua, Bartow, Fort Meade, Key West, Lake Helen, Mount Dora, Newberry, St.
Cloud, and Tallahassee,    Florida and the Florida Municipal    Utilities Association Robert A. J    ion May 27,  1981 Law  Offices of Spiegel  8  McDiarmid 2600  Virginia  Avenue, N. W.
Washington, D. C. 20037 (202) 333-4500
UNITED STATES NUCLEAR REGULATORY,COMMISSION BEFORE THE ATOMIC SAFETY AND LICENSING BOARD In the Matter of                              )
                                              )
Florida Power S Light Company                  )    Docket No. 50-389A
                                              )
(St. Lucie Nuclear Plant, Unit      1Vo. 2)  )
MOTION TO ESTABLISH PROCEDURES, FOR A DECLARATION    THAT A SITUATION INCONSISTENT WITH THE ANTITRUST LAWS PRESENTLY EXISTS AND FOR RELATED RELIEF Index  of Attachments ATTACHMENT 1      Material Facts Not Genuinely In Dispute ATTACHMENT 2      Memorandum Re:      Discovery Between Cities and FPL Exhibit A to Attachment 2  July July 2, 1980 Letter to E. Gregory Barnes from Marta A.
Manildi. and Joseph L. Van Eaton        Re: NRC Docket No. 50-389A  Discovery ATTACHMENT 3      Re Florida Power and Li ht Com an , Opinion No. 57, Federal Energy Regulatory Commission Docket Nos. ER78-19 (Phase I) and ER78-81 (August 3, 1979)
Florida    Power  &  Li ht  Com an , Opinion No.
57-A, Federal Energy Regulatory Commission Docket Nos. ER78-19 (Phase I) and ER78-81 (October 4, 1979)
ATTACHMENT 4      Memorandum    of Florida      Power & Light Company Concerning The Schedule For Further Gainesville, et al. v. Florida Power R Li ht
                  ~Com  any, S. D. Fla. No. 79 5101 C-ZV JL-K-ATTACHMENT 5      Order Specifying Certain Facts To Be Without Substantial Controversy, And Requiring Further Briefing On Other Issues, Cities of Anaheim, Riverside, Bannin , Colton and Azusa, California, v. Southern California Edison
                  ~Com  an,  D. C. Cal. No. CV-78-810-MML
ATTACHMENT 1 MATERIAL FACTS NOT GENUINELY IN DISPUTE
: l. FPL  controls three out of the four operating nuclear units in .Peninsular Florida and is constructing its fourth. FPL has an effective monopoly control over such facilities there, which it has used to advantage itself in competition. Except as provided under settlement license conditions in this case, FPL refuses to grant Florida Cities access to these      facilities.'.
FPL has (a) dominance in Peninsular Florida and (b) a monopoly in its retail service area over economic base load generation (including nuclear generation), transmission and coordination. See Statement of Facts and FERC Opinion Nos. 57 and 57-A.
: 3. FPL has  a  retail service  monopoly  in eastern and southern Florida. FPL's present or past refusals to deal in nuclear and base load power, wholesale power, transmission        and coordination have advantaged    it in competition to preserve    and extend .its I
retail  monopoly and  in competition for wholesale or coordination. Opinion No. 57, Statement of Facts.
: 4. FPL has acted to restrict or deny Cities access to base-load generation (including nuclear), transmission, wholesale power and coordination. See Gainesville Utilities De t. v.
Florida Power 8 Li ht Co., FERC Opinion No. 57, Statement of Facts and positions taken by FPL in this case.
: 5. A  Peninsular Florida geographic market exists for whole-sale and coordination power supply.        FPL  is interconnected with other electric systems in Florida, including Florida Power Corporation, Tampa Electric Company and other municipally and cooperatively operated utilities. FPL has received substantial benefit from its coordination with these other utilities in the operation or planned operation of its nuclear and other baseload generating units. See Statement of Facts, FPC Opinion Ho. 517.
    . 6. FPL was part of a conspiracy with Florida Power Corporation (Florida Power) to divide the wholesale power market in Florida. See Gainesville Utilities De t. v. Florida Power &
: 7. FPL and  the municipal  utilities    located within its retail  service  territory  engage  in franchise competition. At various times FPL has promoted acquisition and has been receptive to municipal proposals. Most., if not all, of those incidents occurred when. the municipal systems were arranging        new bulk power supplies from    among  the options of self-generation,    wholesale purchased  from FPL and    retail  purchases  from FPL  after franchise disposition    and  without the option of sharing in FPL's nuclear or other base load units. See Statement of Facts and Opinion No.
57.
: 8. In filings and public statements, FPL has advertised the economic benefits from its base load generation (including nuclear) and coordination. Such statements were of a nature to
induce franchise renewals for FPL or sales of municipal systems to  FPL.
9 ~  FPL has sought to acquire independent municipal systems.
See  Gainesville Utilities De t. v. Florida Power S Li ht Co.,
Opinion 5l7, Opinion 57, Opinion 57-A, Statement of Facts.
: 10. FPL cancelled its proposed. South Dade Unit after receiving requests for participation by municipally owned systems. See Statement of Facts.
  ~
ll. Florida Power R Light has agreed to sell the City of Orlando or the Orlando Utilities Commission participation in St.
Lucie Unit 2 and has offerred participation to some other Cities in Peninsular Florida which have requested such access, but has not offerred participation to utilities other than those listed in the St. Lucie Unit 2 license conditions. See Statement of Facts.
ATTACHMENT 2 MEMORANDUM RE:  DISCOVERY, BETWEEN CITIES AND FPL Extensive discovery has 'already been conducted between Florida Power & Light and the intervening Cities, over the course of years and in connection with this and other dockets. There remains little if 'anything in the Cities'iles which has not been made available to FPL already, or which will not soon be provided to FPL. Most recently, all the intervenors except Lake Helen have answered interrogatories and/or responded to voluminous document requests,    as more  fully described  below.
Cities note that although Homestead, Kissimmee and Starke are not named parties in Docket No. 50-389A, 1/ they have intervened in Florida Power R 'Li ht Co. (St. Lucie Unit No. 2), NRC Docket No.
50-389, and are plaintiffs in a district court suit against FPL in which they are seeking, among other things, the opportunity for access to FPL's nuclear units. Therefore, these three Cities are included in the discussion of discovery below.
References  below to  "district court"  discovery are to the antitrust case currently pending in the Southern      District of Florida,  Miami  Division, Gainesville  Re ional  Utilities v. FPL, No. 79-5101-Civ-JLK. That proceeding has as    plaintiffs Florida Cities, including all intervenors here except      Key West, Lake Helen, and  FMUA.
1/ Homestead, Kissimmee and Starke are represented      through  their membership in FMUA.
e
FPL DISCOVERY OF CITIES
: 1. District  Court Interro atories. Cities (except Key West and Lake Helen) have responded to two sets of interrogatories from FPL, totalling 40 separate interrogatories (not including sub-parts) and about 300 pages of answers. In addition, the City of Tallahassee has responded to a supplemental set of interrogatories. The answers to FPL's first set of interrogatories were served on February 22, 1980; answers to the second set were served August 1, 1980; and Tallahassee's      response to supplemental interrogatories was served September 17, 1980.
In addition, FPL served Cities with a third set of interrogatories and request for production of documents relating to Cities 'amage claims in the treble-damage suit. Answers are not relevant to this proceeding, where such damages are not being sought.
2 ~  District  Court Document Re  uests. Cities have also responded  to two sets of document  requests from FPL in the district court litigation. 'The response to the first set was largely completed in the summer of 1980, by which time defendants had copied from Cities'iles 98 shelf-feet of documents, selected from among hundreds of thousands of documents produced in the Cities. The district court document request, was, if anything, broader than the request filed by the company in this docket. Exhibit A hereto is a letter from Cities'ounsel to counsel for FPL, dated July 2, 1980, describing the overlap in
3 discovery requests and setting forth in detail the only areas of discrepancy between the two requests (see pp. 4-6 of the letter).
I Since the time of that letter, discovery was had at Key West, with the exception of a few files which can be. provided to FPL immediately.
Only Lake Helen has not produced documents to FPL in either  this or the district court docket. Cities note that in their letter of July    2, they stated:
We would be agreeable to your suggestion that we  search Lake Helen's files and provide you with a list of responsive files upon our receipt from you of notice that you wish to go to Lake Helen to inspect documents. We would require two weeks notice. Lake Helen can be made ready by July 18 I:1980], subject to such two-weeks'otice from you.
FPL has  not sought discovery of Lake Helen in the ten months since that    letter. Nor has FPL indicated any objection during that time to the representations    by Cities that they believe they have otherwise complied with the document request filed in the present docket.
Moreover, also  in connection with the district court case, FPL was provided with copies, after the initial document production, of supplemental documents which Cities were not able to locate at the time of initial production; FPL was afforded the opportunity to re-examine certain documents relating to fuel costs in Starke and Homestead; FPL misplaced all but a few of its copies of documents from the City of Newberry, and was allowed to re-examine all files in that City; and Tallahassee made available additional files which had been omitted initially.
FPL and  Cities disagree concerning the interpretation of, the initial district court document request as it relates to i>fount Dora; the parties have exchanged correspondence concerning this matter which involves, at most, a handful of documents.
Certain Homestead discovery remains to be completed for the district court suit. FPL notified Cities that responsive documents had apparently been overlooked in that City. Upon investigation, Cities found that this was true. A complete re-search of Homestead's files has now been completed, and production of documents to FPL will be made very shortly. Xn addition, Cities have re-checked their search in Starke, the Gainesville power plants, and Sebring. The re-checking established that the production had been correct and complete in these Cities, with perhaps a few oversights due to human error.
Of course, all responsive documents. found in these Cities during the re-search will also be provided to FPL very shortly. A re-search of Kissimmee'    files indicated  certai;n file cabinets and boxes nad been overloooked. Responsive  material from the City are  now being copied for production to FPL. A re-search of 4
View Smyrna Beach's files is now in progress.
All district court plaintiffs have also complied with a second wave document request by FPL.
Thus, the only outstanding matters from the various waves  of production of documents by Cities to FPL are (a) to complete production of Homestead and corrections from other Cities as noted above. Completion is expected by early June, and (h) completion of lists of documents withheld as privileged.
Cities and FPL have both produced 'one complete list of privileged documents as a result of discovery in the district court, case.
At FPL's request and upon      its representation that it would reciprocate, Cities are    revising their lists in order to provide a fuller statement of each privileged document.          Cities have produced more than half of this revised privileged list to FPL and expect to complete the remainder by June.        Cities have not yet received FPL's revised list.
: 3. Other discove    b  FPL  from  Cities.
(a)  FPL has had comprehensive    discovery of the Cities of  Homestead,  New Smyrna Beach  and  Starke as intervenors in    FERC Docket Ho. ER78-19, where a      full evidentiary  hearing  was held, culminating in    FERC Opinion No. 57; (b)  FPL has  availed itself of Florida's expansive Public Records Act to inspect files in Lake Worth, Hew Smyrna Beach, Gainesville, Homestead, and possibly other intervenors; (c) FPL has extensively discovered Gainesville in preparation for Gainesville Utilities De artment v. Florida Power which the  Fifth Circuit found that FPL had conspired in violation of the  antitrust laws to divide territory for sales of wholesale power  in Florida.
: 4. District court de ositions. In'ecent months,        FPL has deposed    officials. or former officials in Tallahassee, Kissimmee, Newberry, Mt. Dora, Homestead,        Starke, Ft. Meade and Lake Worth.
: 5. Consultant discover  . FPL has  also had extensive discovery from at least two of Cities'ajor consultants, R. W.
Beck  R  Associates,  Orlando, Florida, and Smith    S Gillespie, Jacksonville, Florida. Discovery is complete, with minor exceptions:
(a)  both Beck and Smith  S Gillespie  have yet. to produce lists  of privileged documents; (b) certain files and notes of Mr. Robert E. Bathen are being produced in installments; the first of three installments has been completed; and (c)  non-Florida offices of R." W. Beck have been reviewed  for responsive material; responsive files are being copied from offices in Denver, Colorado; Seattle, Washington        and Wellesley, Massachusetts, and will be produced shortly.
CITIES'ISCOVERY    OF FPL
: 1. Like FPL, Cities have had discovery through      FERC Docket Ho. ER78-19 and the Gainesville      litigation,  although not under sunshine laws.
: 2. In the  district  court antitrust proceeding, Cities have received answers and objections to one set of interrogatories and document requests (with FPL's revised list of privileged documents not yet received)- Cities have taken depositions of certain present or former FPL officials and a former official of Florida Gas Transmission Company.
Cities still have certain discovery matters outstanding from FPL: They nave provided FPL with a list of documents 1
apparently overlooked in FPL's initial production; they have requested permission from the court to serve a second set of interrogatories; they have sought documents from the files of FPL consultants; and they have noticed and intend to notice depositions of other FPL present or former officials'.
For purposes of this proceeding, Cities have nonetheless received ample discovery over the course of time from the Company, and they submit that FPL has had ample discovery of the Cities. There is no need to delay rulings until tail-end discovery matters in the  district court case are completed.
Exhibit    A  to Attachment      2 LAW OFFICES GEORGE SPIEGEI P.C.                  SPIEGEL 8 MCDIARMID                                BONNIE S. BLAIR ROBERT HARLEY BEAR BERT C. MCDIARMID                    2600 VIRGINIAAVENUE. N.W.                        THOMAS C. TRAUGER ORA J. STREBEL                                                                      JOHN MICHAELADRAGNA BERT A. JABLON                        WASHINGTON. O.C. 20037 O JAMES N. HORWOOD ALAN J. ROTH                              TELEPHONE I202I 333-4500 CYNTHIA S. BOGORAD GARY J. NEWELL MARC R. POIRIER F RANCKS E. FRANCIS                      TELECOPIER (202) 333.2974                      MARTA A. MANILDI DANIEL I. DAVIDSON                                                                      JOSKPH L. VAN EATON THOMAS N. MCHUGH. JR-DANIELJ. GUTTMAN PETER K. MATT DAVID R. STRAUS July 2,      1980 E. Gregory BarnesJ Esq.
Lowenstein, Newman, Reis
              & Axelrad 1025 Connectiout Avenue, N.W.
Washington, D.C. 20036 Re:    NRC    Docket No. 50-389A            Discover
==Dear'Greg:==
As you suggested in our recent phone call, and for your convenience, we are committing to writing certain details regarding discovery in the NRC case. Our purpose is to give your firm, Mr. Leon, and Covington and Burling an opportunity to review these points now so that any wrinkles can be ironed out early and our document production can proceed, efficiently, to our mutual advantage.
As we discussed on the phone, we have made a careful review of your NRC requests for production of documents, com-paring them to your requests in the Southern District of Florida case.      Our comparison confirmed that the district court document requests equal or cover corresponding requests for production in 50-389A, with a few exceptions discussed below. Enclosed is a listing of each NRC request, except those not allowed                      by Commission order,      and the  corresponding            district    court  request.
By using this list in conjunction              with      the  file  list  which will was provided to you prior to production              'in    the Cities,    you            be able to determine easily which          documents        are  respons  ive  to  which NRC requests.
Each NRC request listed has thus been fully- answered by our district court case production, with the limitations noted herein, for all NRC intervenors except Lake Helen, Key West, and FMUA. As to these, we propose the following:
d    b      dyf '
tion until July 18 x,n  NRC 50-389A. However, Key West has been searched and is ready    for inspection; subject to'lient approval we  would be  willing to  produce documents there  an'y time after July 10.
As was the case with other Cities, you will be provided with a list of files (or, as appropriate, storage boxes) con-taining responsive documents, and a list of assumptions we made during our search of City files prior to production in Key West
( the assumptions  will be the same assumptions as those made in other Cities) . Because  FP&Z questioned certain assumptions for certain Cities in the district court case, we will also send you copies of some documents which typify the assumptions we are making.'his will enable you to determine whether and tonon-    what extent you want to see any documents that we assume are responsive or irrelevant.
You should also be aware of four points:
: a. Although according to the NRC order on discovery we are only required to produce documents through October 31, 1978, we have searched Key West'      files through June 1, '980. Files containing documents through that date will be included on our list to you. We do not intend to modify obligations.
NRC order or our Memorandum of Understanding, under the but we assume that you may be interested in the more current documents and that it would be more convenient for you to inspect those at the same time you are in Key West to inspect pre-November 1978 documents.
And, frankly, it was easier to include than segregate the .more recent documents.
: b. Key West keeps tapes of its Utility Board meet'ings.
These will be available for your listening and/or copying in Key West. If you expect to make copies of the tapes, it would be helpful if you would so advise us in advance of scheduled production.
: c. We anticipate that it will take 10 days to two weeks to complete production, inspection, and copying in Key West.
: d. In addition to the responsive f ile list, organized according to document request numbers, we will also provide a list organized by the location of      the files, which can be our guide during production. This should make production and inspec-tion more efficient. We will provide this list the morning pro-duction begins in Key West. (This item may be classified under "learning from past experience." If you have other suggestions for streamlining procedures, they would be welcome. )
As  is the  case for Key West, the offices      of the  FMUA have been searched    and are ready for inspection.      We  would be amenable to producing these offices before July 18        if  a reaso-nable schedule can be worked    out. It took  us one  day  to search FMUA offices; we expect    it  will take you longer,    because  of copying.
: 3. Lake Helen:
You  indicated that during the last two weeks of July your office might be unavailable for inspection in Lake Helen, due to depositions and other matters.,      As we explained to you, it would be ill-advised for us to search Lake Helen's files too far in advance of your arrival there for inspection. The City uses its files daily, may need to reorganize them, and so on. The likelihood of changed locations of files and hence confusion and delay in the production process becomes greater as the inter-vening time between search and production increases.          We are, therefore, reluctant to proceed    with  our  planned  search  of Lake Helen's  files until  scheduling can  be  arranged more    definitely.
We  would be agreeable  to your suggestion that we search Lake Helen's files 'and provide you with a list of responsive files upon- our receipt from you of notice that you wish to go to Lake Helen to inspect documents.      We would require two weeks notice.. Lake Helen can be made ready by July 18, subject to such two-weeks'otice from you.
You are no doubt aware that in certain cases the w'ording of district  court and NRC requests do not correlate precisely, giving rise to the points listed below. We raise the points below in order to be complete and to avoid any possible misunderstanding.
At this time is appears unnecessary to us (and you ten-tatively indicated it seems unnecessary to you) to return to those Cities already produced, to inspect documents again. We shall protest if you ask us to produce copies of "Electrical World" or other trade magazines which FPGL itself receives, and which in any case were .available in our earlier production.
Nevertheless, although meter books were presented to you in every City in our earlier production, we would be willing to return to the Cities shortly after July 18 and produce them again for your inspection.
We  are confident that you have been presented all relevant,  responsive  material in Cities other than Key West or Lake Helen. Moreover, we believe that appli.cation of the prin-ciples stated in the Memorandum of Understanding supports the interpretation we have made of your requests.
The  particulars are:
: 1. NRC Document Requests 1-8 ask for all City organiza-tional manuals, job descriptions, etc. As we made explicit in earlier production, we did not search individual city departments that. are non-utility related, such as police and fire department files. Thus,. intradepartmental organizationalwerecharts  of such depart-ments, which in any event are not relevant,          not produced.
: 2. Documents responsive to NRC Document Request 45 were produced in response to district court request No. 30. Although the requests are different in their particulars, the- information sought is available from the same raw data (primarily meter books) already produced. All other extant records regarding the reasons large customers terminated their accounts have been provided. Thus, you have had access to the documents needed to answer your question. In every City, FP&L chose not to examine the raw data.
: 3. NRC Document Request 112A asks for bills for power purchased  from Crystal River 3. In the district court production, samples of such bills were provided. FP&L declined to copy or examine. such materials, although it
~
was made  explicit that such bills were available in all Cities.
: 4. NRC Document Request 183 seeks documents regarding each'"expansion or contraction of the Cities'ervice area." It is not clear what is meant by the question. If, as you indicated you thought was likely, this question is directed at changes in the geographical borders of the area served by each city, all responsive documents have already been provided. If, on the other hand, this request is intended to include a change in the number of meters served by the city, some documents may not have
  . been produced. For example, within the service area, if related an apartment complex was built documents may not have been produced. As we. made explicit during prior discovery, we did not search or produce every customer account file in every city.
: 5. NRC 'Document Requests  118 and 119 have been  fully responded  to, except that trade magazines, advertisements, etc.,
describing particular units were not provided, unless they were in files which also contained other responsive documents.
: 6. All documents      responsive to NRC Document Requests
,219 and 290 have been produced, except that certain industry-general documents were not produced in Gainesville, such as SERC, NERC, or NEPOOL reports, as exPlicitly set forth in "GAINESVILLE, I.A.1." of our introduction to the lists of responsive document files.
: 7. NRC  Document Requests 31 and 34 ask for certain very particular financial        and operating data, which conceivably may cover some document we overlooked.            However, in responding to your broader district court request for such data, we compiled comprehensively.      If  you believe we have not produced any item requested by NRC Document Requests 31 or 34, please advise us.
: 8. NRC  Document Request 238 refers to certain speci-fics with regard to lobbying        and related documents.      The district court request,    104,    is  worded  more  broadly. We  read  them to mean the same thing.
I
: 9. NRC  Document Request      320 asks for  all  material relating to environmental constraints            on coal plants. As noted in the preface to the district court lists, we provided documents regarding environmental considera tions insofar as they af fected the planning, design, costs, construction time required, etc.,
for development of any type of plant (including coal plants). In our district court response we also noted that some detailed environmental-related information, such as data on emissions as derived from a stack test, and environmental impact state-ments were available.        They were not requested.
: 10. NRC Document Requests 353, 357-358 ask questions specifically concerning the Jacksonville Electric Authority, Orlando and the Coordinating Generation StQdy Group. This material was provided insofar as          it  related to joint power -supply planning, pooling, and so on. However, we did not closely read a number of binders in the possession of Mr. Richard Hester con-cerning the Jacksonville Electric Authority which generally dealt with the organization of that system, and which were not them-selves responsive to the district court request. These documents have not been provided.
ll. Certain document requests require produce one copy od specific material, see e.cC.,
Cities to simply NRC  Document Request    394. These documents will be provided.
: 12. Cities'uty to produce documents in some instances, (for example, NRC Document Request 264) depends on the answer to the interrogatory. All such further documents will be produced.
give  us a Should call it and be we necessary will set for up a you to  return to the Cities, reasonable timetable for production.
NRC Interrogatories  and Document Requests 302-393 make reference to Harry Luff 's  affidavit and are directed at the Orlando Utilities Commission, which is no longer a party in the NRC case, and never was a party in the district court case.      All other Cities have already turned over to you all material relating to Orlando received through FCG, FMUA or FMPA, and all responsive correspondence between other Cities and Orlando. If you desire more information, please seek that information directly from Orlando, through its attorneys. As you know, we do not now represent the Orlando Utilities Commission.
Finally, in order to avoid duplication and waste, we propose  that consultants'ffices be searched and produced for the NRC case in the same time and manner as in the district court case.. You said tentatively that this seemed reasonable to you.
We hope this letter is helpful to you. Thank you for your cooperation, and we anticipate hearing from you soon.
Sincerely, Marta A. Manildi Joseph  L. Van Eaton cc:  Jack Leon, Esq.
Herbert  Dym, Esq.
CROSS-REFERENCE NRC  DISTRICT COURT DOCUMENT REQUESTS NRC Re  uest Number              District    Court Re  uest Number 8                                11 10                                12 ll 13 41 45 22A                              17, 45, 70 (from 1950) 23                              105
  .24                              105 29                                  4 30                                  5
: 32.                                6 33                                  7 35, 36                            61 36A                              13, 83 37                                46 38                                26 39                                26 40                                28 41                                27 42                                29 44                                13 44A                              14 45                                30 46                                30 47                                15 48                                15 49                                  1 50                                  1 51                                  1 52                                16 53                                  3 54                                  2 55, 56                            31  '3 57 59                                  8 61                                34 62                                42 63, 64, 65                        63 66                                pr'od uced as  generally res ponsive 67                                52 68                                52 69                                6'1 70, 71, 71A, 72                    9, 31, 53,    Int 9 72A                              61, Int 9 73                                57, 61 74                                61 75                                57 76                                57
NRC Re    uest Number            District  Court    Re  uest Number 77                              57 78                              57 79                              58 80, 81    82, 83                59, 60, Ent 12 84                              70 85                              64 86                              69 87                              65, 66, 67 88                              65-69,    Int  14 88A                              61 89                              71 90                              72, 73,    -Int  15, 16 92                              19,  31'4 93 94                              24 95                              24 96                              24 97                              23 98                              25, 29 99                              23 100                              25 101                              38'8, 103                                    76 103A                              38, 76 104                              76 104A                              76 106                              76 107                              76 108                              76 109                              76 113-119                          Int 3, Ent 37 121                              77, Int 17 1'23(g)                          9, 10 124 (11)                          9, 10 127(b)                            9, 10 128(8)                            10 130                              61 131                              79 132                              79 133, 134                          80 135                              81 136                              81 137                              81 138                              81 139                              81 140                              81 141                              81 142                              82 142m                              83 142C                              83-86,    Int  19, 20 142D                              82,  Int 18 82 142'46-47, 151  52'56 57/ 161    39~ 52~    56~  58~  61
NRC Re    uest Number District Court Re uest    Number 162                    Int 1 (in part) 163                    Int 1 164                    23/ Int 1 165                    Int 1 (in part) 166                    Int 1 167                    23/ Int 1 168                    23 169                    23/ Int 1 170                    23/ Int 1 172                    99, Int 30 173                    99, Int 30 174                    Int 30 175                    18, 99 176                    19 177                    44
        '78-180            44 181                    12 182                    44 183                    43 185                    87 187                    20 188                    12, 31 194                    20, 47, 51, 53, 59, 60, 88, 95, Int 6, 9, 12, 21, 26 196                    76, 78, 79,  Int 22 218                    43 221                    45  73 223                    71/  72 224                    72/ 74,  Int 15, 16 226                    62 228                    72/ 74/ 90/ 101/ 102/
Int  15, 16, 31-33 230, 231              74, Int 16 232                    103 233                    103 234                    103 236, 238              104 241(g)                92 243                    92 245                    91, 94,    Int 23, 25 248                    89, 92,    Int 22 251                    92 268                    37 /  Int  3 296                    49 297                    23/ 35/ 47 48/ 49/ 50/
55, 59, 62, etc.
304 / 305/ 306        79 317                    81 319                    79 321                    81
NRC Re  uest Number District        Court Re  uest Number 322                  81 324  325            81 327                  23 331                  23 334                  3S, 48, 49,          Int 2 336                  72 f 74 339 (in part)        61 341                  72          74 344                  61, 72 I 74 346                  27 352, 353, 354        61 355                  47, S9, 60, 61, 72, 74, 95 356                  61, 72I 74 359                  72 g 74 360                  72 / 74 361                  721 74 362                  7S, 104 369                  72 I 74,        Int 370                                        31 65, 68 373                  72 I 74 374, 375              72 I 74 376-380              71 381                  69 390                  23 392                  12, 87 393                  23 397                  20, 88
  '3 98 399 cf. 75 21 401                  17, 45, 70, and produced as gene rally responsive 404(c)                            45, 70~ 76~    77'8 405                  17, 45, 70'6J 77/ 78 409                  55, Int 10 412                  55, 92 415                  47, 59, 60, 95 50'7, 416                  47, 59, 60, 95 418                  40,              89 419                  17, 45, 70 420                  37 421                        '3}}

Latest revision as of 15:58, 4 February 2020

Brief,In Form of Motion,Requesting That ASLB Should Grant Res Judicata or Collateral Estoppel Effect to Listed Cases. Board Should Find Situation Inconsistent W/Antitrust Laws. W/Matl Facts Not Genuinely Disputed & Discovery Memo
ML17209B114
Person / Time
Site: Saint Lucie NextEra Energy icon.png
Issue date: 05/27/1981
From: Jablon R
FLORIDA CITIES (FLORIDA MUNICIPAL UTILITIES ASSOCIATE, SPIEGEL & MCDIARMID
To:
Atomic Safety and Licensing Board Panel
Shared Package
ML17209B115 List:
References
ISSUANCES-A, NUDOCS 8105290149
Download: ML17209B114 (161)
v • d • e


Text

Qi BEFORE THE UNXTED STATES NUCLEAR REGULATORY COMMZSS ION BEFORE THE ATOMIC SAFETY AND LZCENSING BOARD In The Matter Of )

)

Plorida Power 6 Light Company ) Docket No. 50-389A

)

(St. Lucie Plant, Unit No. 2) )

) ~

MOTION TO ESTABLISH PROCEDURES, FOR A DECLARATION THAT A SXTUATXON INCONSXSTENT WITH THE ANTITRUST LAWS PRESENTLY EXISTS AND FOR RELATED RELZEP bOCfQ7Eb ZI tiSNRr MAY27)98) t Robert A. Jablon 0 Office of the g $ <+>ce Secreta'ocketfog Alan J. Roth Branch Daniel Guttman CO CP SPXEGEL 5 McDIARMXD Suite 312 2600 Virginia Avenue N.W.

Washington, D.C. 20037 Attorneys for the Gainesville Regional Utilities, the Lake Worth Utilities Authority, the Utilities Commission of New Smyrna Beach, the Sebring Utilities Commission, and the Cities of Alachua, Bartow, Port Meade, Key West, Lake Helen, Mount.

Dora, Newberry, St. Cloud, and Tallahassee, Florida and the Florida Municipal Utilities Association May 27, 1981 I

TABLE OF CONTENTS Pacae INTRODUCTION (1) -

Immediate Procedures (2) Discovery to Date (3) Basis for Findings of a "situation inconsistent" with the antitrust laws (4) Separating the Issue of Relief (5) Basis for limiting issues 10 I.

SUMMARY

OF PRINCIPAL LEGAL ARGUMENTS 17 A. Refusals By FPL To Deal With Some Cities in Florida Power Corporation's Retail Service Area Are Illegal 17 B~ FPL's Dealing With Some Cities But Not Others Constitutes A Combination In Restraint Of Trade 20 C ~ FPL's Refusals To Deal With Florida Cities Are Directly Contrary To The Teachings Of Otter Tail And Consumers Power 23 STATEMENT OF FACTS 24 I. FPL's Planning, Construction and Operation Of Its Nuclear Facilities Has Benefitted From Coordination With Other Florida Utilities 24 Since the 1950's FPL engaged in joint nuclear activities with TECO and Florida Power Corporation 26 2 0 Throughout the 1960's FPL engaged in coordinated planning and operations through the Florida Operating Committee/Florida Pool but without the Cities 30

3. FPL relied on coordination with the Florida Operating Committee in constructing its nuclear units 34 II ~ FPL HAS LONG DENIED CITIES ACCESS TO THE ECONOMIES OF COORDINATION AND SCALE g INCLUDING NUCLEAR POWER ........oo....o.oo...oooo.....oo..... 43 A. FPL Was On Notice That Smaller Systems, Such As Cities,'equired Access To Economies Of Size And Coordination, Including Access to Nuclear, In Order To Compete Effectively 44
1. Smaller systems require coordination to build large units
2. FPL knew that coordination and large units are essential to participation in nuclear power 46 3 ~ From the start, FPL sought to use its size-based monopoly of nuclear generation as a lever to acquire smaller systems 47 B~ FPL Refused To Deal With Cities, And Denied Them The Means Of Dealing With 0 ther s ~ ~ ~ ~ o ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ o ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 54 C. Although FPL Xtself Refused To Deal, Cities Still Sought The Benefits Of The Ability To Share Coordination,'ncluding In Nuclear U nits ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 74 l ~ Study and discussion of possible pooling arrangements among smaller systems o ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

2 ~ FMUA committees 76

3. The Gainesville litigation 79
4. The Tallahassee experience 80 D~ FPL Could Have Built Large, More Economical Plants And Shared Them With Cities

Pacae ARGUMENT INTRODUCTION ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ o ~ ~ ~ ~ ~ ~ ~ ~ o ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 90 I ~ FPL CANNOT LAWFULLY RESTRICT RELIEF TO "INSIDE" CITXES; THE RESTRICTXON CONSTITUTES AN UNLAWFUL COMBINATION ZN RESTRAINT OF TRADE AND A PERPETUATION OF A MARKET DXVISION 93 II. THE CASE LAW CONCERNING ANTITRUST ABUSES BY ELECTRIC UTILITIES CONFIRMS THE UNLAWFUL NATURE OF FPL'S REFUSALS TO DEAL WITH FLORIDA CITIES ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 99 III. STATEMENT CONCERNING RELIEF . ................ ~ .. 115 CONCLUS ION ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 118 Attachments 1-5 Appendices, Volumes I III (separately bound)

TABLE OF AUTHORITIES Pacae COURT CASES Admiral Theatre Cor . v. Dou las Theatre

~Cor , 585 F.2d 877 8th Cir. 1978 American Truckin Association, Inc. v.

Atchison, To eka and Santa Fe Railwa Co.,

387 U. S. 397 1967 97 Ansul Co. v. Uniro al, Inc., 448 F.2d 1018 (1972) e.s.e..ee..........ee......e.e....see.e 115 Associated Press v. United States, 326 U.S.

1 1945 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 19, 93, 94, 110 Baltimore and Ohio Railroad Co. v. United States, "Chicago Junction Case" 264 U.S. 258 (1924) 114 Bell Tele hone Co. of Penns lvania v.

FCC, 503 F.2d 1250 3d Cir. 1974),

cert. denied, 422 U.S. 1026 (1975) .....,.......... 110 Berke Photo, Inc. v. Eastman Kodak Co.,

603 F.2d 263 2d Cir 1979, cert. ~

denied, 444 U.S. 1093 (1980)

Borou h of Ellwood Cit v. Penns lvania Power Co., D.C.Pa. 1979 462 F.Supp.

1 343 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ e ~ ~ ~ ~ ~ e ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 103 Brulotte v. Th s Co., 379 U.S. 29 (1964) .............. 115 California v. FPC, 369 U.S. 482 (1962) . ~ ~ ~ ~ .. ~ ~ ~ ~ ~ ~ ~ ~ ~ 12 Cit of Anaheim v. Southern California Edison Co., C.D. Cal. No. CV-78-810-MML May 19, 1981)............;......................... 12 Cit of Bartow v. Florida Power Cor oration 19 Cit of La afette, La. v. SEC, 454 F.2d 941 D.C. Cir. 1971), affirmed, sub ncm. Gulf States, infra 108 iv

Pacae Cit of Mishawaka, Indiana v. American Electric Power Co., Inc., 560 F.2d 1314 7th Cir. 1977 , cert. denied, 436 U.S.

9 22 ( 1978) ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 109 Conwa Cor oration v. FPC, 426 U.ST 271 (1976) 112 Eastman Kodak Co. v. Southern Photo Materials Co., 273 U.S. 359, 47 S.Ct. 400, 71 L.Ed 6 84 ( 1927) ~ ~ ~ ~ e ~ ~ ~ ~ 4 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ e ~ ~ 100 Fashion Ori inators'uild of America v.

Federal Trade Commission, 312 U.S. 457 1 941 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 93 FTC v. National Lead Co., 350 U.S. 419 (1956.) 100 Florida Power 6 Li ht Com an , Opinion No. 517, Docket No. E-760, 37 FPC 544 (1967), reversed 430 F.2d 1377 (5th Cir. 1970), reversed, Florida power 5 Li ht Com an v. FPC, 404 U.S 53 1972 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ e ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 22, 34, 48, 55, 56, 92 Florida Power 6 Li ht Co. v. FERC, CA5 No.

80-5259 April 4, 1980 59, 103 Ft. Pierce Utilities Authorit of the Cit of Ft. Pierce v. United States Nuclear Re ulator Commission, D.C. Cir. No.

8 0>> 1099 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ e ~ ~ ~ ~ ~ ~ 116 Gainesville Re ional Utilities, et al. v.

Florida Power 6 Li ht Com an , U.S. District Court for the Southern District of Florida, No. 79-5101-CIV-JLK t:October 31, 1979])

Gainesville Utilities De artment v. Florida power S Li ht Com an , 573 F.2d 292 5th Cir. , cert. denied, 439 U.S.

9 66 ( 1978) ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 4, 83 Gainesville Utilities De t. and Cit of Gainesville, Florida v. Florida Power

~Car ., 402 PPC 1227 1968, affirmed, 402 U~ S ~ 515 (1971 ) ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ e ~ ~ ~ ~ ~ 55, 107 Gamco, Inc. v. Providence Fruit Produce Buildin , Inc., 194 F.2d 484 1st Cir cert. denied, 344 U.S. 817 (1952) 19, 93-94, 95

Pacae Gulf States Utilities Co. v. FPC, 411 U.S.

7 47 1973 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 108 Hecht v. Pro-Football, Inc., 570 F.2d 982 (197 7)F cert. denied, 436 U.S. 956 (1976) ~ ~ ~ ~ ~ ~ ~ ~ ~ 110 International Business Machines v. United States, 298 U.S. 131 1936 ....................... 113 ICC v. Delaware Lackawana 8 Western Railroad Co., 220 U.S. 235 1911 97 International Railwa s of Central America

v. United Brands, 532 F.2d 231 certiorari denied, 50 L.Ed.2d 100 (1967) ..................... 106 International Salt Co. v. United States, 332 U.S. 392 1947 ............................... 113 Jerse Central Co. v. FPC, 319 U.S. 61, 67 68 1943 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ e ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 108 Klor's, Inc. v. Broadwa -Hale Stores, Inc.,

359 U.S. 207 1959 93 Koninkli'ke Luchtuaart Maatscha pi'.V.K.LM

v. Tuller, 292 F.2d 775 D.C. Cir. 1961, Burger J.) 15 Lorain Journal Co. v. United States, 342 U.S.

143 72 S.Ct.. 181, 96 L Ed 162 (1951) 100F 110F 112 Louisville and Nashville Railroad Co. v.

United States, 238 U.S. 1 1915 97 Missouri Pacific Railwa Co. v. Larabee Flour Mills Co., 211 U.S. 612221909 ~ ~ ~ ~ 97 Monta ue & .Co. v. Lowr , 193 U.S. 38 (1904) 97 Mullis v. Arco Petroleum Cor ., 502 F.2d 290

~7th Cir. 1974 per Stevens, Cir. J. ) 106 Munici al Electric .Association of Massachusetts

v. SEC, 413 F.2d 1052 D.C. Cir. 1969 106, 113 Munici al Li ht Boards of Readin and Wakefield Mass. v. FPC, 450 F.2d 1341 D.C.Cir. 1971 Vi

0 Pacae National Air Carrier Assoc. v. CAB, 436 F.2d 185 D.C. Cir. 1970 16 North American Co. v. SEC, 327 U.S. 686 (1946) . ~ ~ ~ ~ ~ ~ ~ 108 Northern Pacific Railroad Co. v. United States, 365 U.S. 1 1958 .......oo......o..ooo.oo.o.....o. 113 Otter Tail Power Co. v. United States, 410 U.S. 366 1973) 6, 110 Packa ed Pro rams, Inc. v. Westin house Broadcastin Co., 255 F.2d 708 3d Cir.

1 958 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ o ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 101 Peelers Co. v. Wendt, 260 F.Supp. 193 W.D. Nash. 1966) ................................. 115 Poster Exchan e, Inc. v. National Screen Serv., 431 F.2d 334 (5th Cir. 1970 cert. denied, 401 U.S. 912 (1971) .... ~ ~ ~ . ~ ~ ~ ~ ~ ~ ~ ~ ~ 105 Radiant Burners v. Peoples Gas Li ht 6 Coke Co., 364 U.S. 656 1961 93 Silver v. New York Stock Exchan e 373 U.S.

341 1963 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 19, 93, 110, Six Twent -Nine Productions, Ines v. Rollins Telecastin , Inc., 365 F.2d 4 78 (5th Cir.

1966 "~ ~ o ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 101 Stron v. General Electric Co., 305 F.Supp 1084 N.D.Ga. 1969 , affirmed er curiam, 434 F.2d 1042 5th Cir. 1970),

cert. denied, 403 U.S. 906 (1971) ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ o ~ ~ 115 Union Carbide R Carbon Cor . v. Nisle 300 F.2d 561 10th Cir. 1962 , ~a eal dismissed, 371 U.S- 801 (1963) ............ 114 United States v. Aluminum Co. of America, 148 F.2d 416 2d Cir. 1945 ........................ 90, 112, 114 United States v. American Tele hone S Telegra h Co., 83 FRD 323 D.D.C. o 1 979 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ o ~ ~ ~ o ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 5 United States v. Ca ital Transit Co., 325 U ~ ST 357 (1945 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 97 0

~ ~ ~ ~ ~ ~ ~

vl.3.

Pacae United States v. Florida Power Cor oration and Tam a Electric Com any, CIV No. 68-297-T 19 United States v. Griffith, 334 U.S. 100 101F 110 United States v. Grinnell Cor ., 384'.S. 563 (1966) 99 United States v. Klearflax Linen Looms, 63 F.Supp. 32 DeMinn. 1945 105 United States v. Loew's, Inc., 371 U.S.

38 1962 ~ ~ 4 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 4 ~ e ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 112, 113 United States v. National Lead Co., 332 U ~ ST 319 1947) ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ' ~ ~ ~ ~ 114 United States v. Otter Tail -Power Co., 331 F.S upp ~

~ ~ ~ ~ ~ ~ ~ ~ ~ 100 United States v. Readin Co., 253 U.S. 26 1920 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

'a

~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ e 114 United States v. Terminal R.R. Ass'n.

of St. Louis, 224 U.S. 383 1912 93, 101, 110 United States v. United Shoe Machiner ~Cor

~su ra, 110 F.Supp. at 346 106 United, States v. Utah Construction S 12 United States v. Yellow Cab Co., 332 U.S.

2 18 1947 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ \ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 114 Woods Ex loration 8 Producin Co. v. Aluminum Co. of America, 438 F.2d 1286 (5th Cir.

105 Zenith Radio Cor . v. Hazeltine Research, Inc., 395 U.S. 100 1969 115 viii

Pacae AGENCY CASES Consumers Power Com an (Midland Units 1 and 2 ( ALAB-468' NRC 465 (1978) 9 Consumers Power Com an (Midland Units 1 and 2 , ALAB-452, 6 NRC 892 (1977) 7-8P 113 Florida Power 5 Li ht Com an , Opinion No.

57, 32 PUR 4th 313 Aug. 3, 1979),

~a ~peal dismissed, Florida Power 6 Li ht Com an v.'ERC, D.C. iCir. No.

79-2414 April 25, 1980) 4, 103 Florida Power Li ht Co. (St. Lucie Plant, S

Unit No. 2 , Prehearing Conference Order No. 1 (July 29, 1976) 13 Florida Power R Li ht Com any (South Dade Plant , NRC Docket No. P-636-A 38 Florida Power S Li ht Com an, FERC Docket No. ER78-19, et al., Phase I, Tr. 843-44) ~ ~ ~ ~ ~ ~ ~ ~ ~ 41 Florida Power S Li ht Co., Docket No.

Q 50-389A ALAB-420, July 12, 1977) 89 Gulf States Utilities Co. (River Bend Station, Units 1 and 2), 7513 NRC 246 (Licensing Board Panel 1975, denying summary disposition) ~ ~ ~ ~ ~ ~ ~ ~ ~

Houston Li htin S Power Co. (South Texas Project, Unit Nos. 1 and 2, CCl-l-77-13, 5 NRC 1303 (1977).................................. 12 Indiana a Michi an Electric Ccm an, ~su ra 33 FPC 739 1966 ~ e ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 34 Public Service Co. of New Ham shire (Seabrook Station, Units 1 and 2 , 7 NRC 1, (Commiss won Decision 1978) 13 Public Service Co. of New Ham shire (Seabrook

,Station, Units 1 and 2 , 6 NRC 33 (Appeal Board Decision 1977) 13 Tam a Electric Com an , Federal Power Commission Docket No.77-549, et al. 40 ix

Pacae Toledo Edison Co., et al. (Davis-Besse Nuclear Power Station, Units 1, 2, and 3), 5 NRC 557 (Commission Decision 1977) 14, 40 Toledo Edison Com an (.Davis Besse Plant, Units 1 and 2 and 3), ALAB-560, 10 NRC 265 (1979) 8, 19, 94 Vir inia Electric & Power Co. (North Anna Nuclear Power Station, Units 1 and 2), ALAB-584,

( 1980 ) ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

ll

~ ~ ~

NRC 451

~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

STATUTES AND REGULATIONS Atomic Energy Act Section 1, 42 U.S.C. $ 2011 Section 2, 42 U.S.C. $ 2012 Section 3, 42 U.S.C. $ 2013 91 Section 105, 42 U.S.C. $ 2135 9 Federal Power Act Section 202, 16 U.S.C. 824(b) 18 Section 204, 16 U.S.C. $ 824c 108 Federal Rules of Civil Procedure, Rule 56 Federal Rules of Evidence, Rule 801(d)(2)(D) 15 Federal Trade Commission Act Section 5 93 Public Utility Holding Company Act, Section 10@ 15 UNSICK $ 797 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 107 49 Stat. 803-804, 847-848 108

Pacae MISCELLANEOUS HER. Rep. No. 91-1470 to HER. 18679 Atomic Energy Act of 1954, 91st Cong.,

2d Sess. (1970) 12 H.R. Rep. No. 1318, 74th Cong., 1st Sess.,

3 p 7 8 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 4 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 108 S. Rep. No ~ 91-1247 12 S. Rep. No. 621, 74th Cong., 1st Sess., 1 4, 1 7~20 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ s ~ ~ e ~ ~ ~ ~ ~ ~ 4 ~ ~ ~ e ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 108 Deposition of Richard C. Fullerton, Gainesville Utilities De t. v. Florida Power 6 Li ht Co., M.D.Fla. No. 68-305-CIV-T 83 Federal Power Commission's 1964 National Power Survey \ ~ ~ ~ s ~ ~ ~ ~ ~ ~ e ~ 4 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

Re ort of the National Commission for the Review of Antitrust Laws and P rocedures Moore's Federal Practice, Part El 1

Manual for Complex Litigation) ..................... 5 Antitrust Law Develo ments (American Bar Association 1975), p. 328 ....................... ~ . 114 Note, Refusals to Deal b Verticall Inte rated Florida Power 6 Light, Company 1979 Annual Re ort, page 14 37.

Florida Power a Light Company 1980 Annual

~Re ore, pages 8, 14-15 37 Florida Operating Committee report, "Coordinated Plan for the 1970 Generation and Transmission Re uirements for the Electric Utilities of Florida April 1960 22-23 Xi

BEFORE THE UNITED STATES NUCLEAR REGULATORY COMMISSION BEFORE THE ATOMXC SAFETY AND LICENSXNG BOARD In The Matter Of )

)

Florida Power & Light Company ) Docket No. 50-389A

)

(St. Lucie Plant, Unit No. 2) )

MOTION TO ESTABLISH PROCEDURES'OR A DECLARATION THAT A SITUATXON INCONSXSTENT WITH THE ANTITRUST LAWS PRESENTLY EXISTS AND FOR RELATED RELIEF INTRODUCTION On April 27, 1981, this Board approved a settlement of antitrust issues between Florida Power 8 Light Company ("FPL")

and the government parties. Cities contend that the license con-ditions do not cure or adequately remedy the alleged situations inconsistent with the antitrust laws. The Board's Order of April 27, 1981 provides that Cities should make appropriate motions with the Board for further proceedings. Cities file this motion for further procedures and for other relief.

(1) Immediate Procedures.

Fl'orida Cities set fortn herein the principal factual and legal bases for their belief that there is a situation incon-sistent. 1/ They also set forth (Attachment 2) a report on discovery to date. Opposing parties should respond as to (1) factual issues that are genuinely in controversy, (2) legal defenses, and (3) identification of any further discovery needed.

In this manner, if additional "discovery is warranted, it can be ordered; if matters are ripe for decision, they can be decided; and if hearings are required, they can be held with dispatch as to issues genuinely in controversy.

The Cities demonstrate below that summary disposition is appropriate as to whether there is a "situation inconsistent with the antitrust laws". Parties have had extensive discovery against each other over a course of years. Pull evidentiary hearings, involving similar issues and virtually the same parties have been held in other dockets, resulting in opinions and orders, which have established facts which are binding here under the doctrines o8 res judicata and collateral estoppel. Internal PPL and public documents, as well as deposition testimony, further establish a basis for summary findings, unless FPL or other parties can "set forth specific facts showing that there is a genuine issue of fact". Huclear Regulatory Commission Regulations, 10 C.F.R. $ 2.749(b).

1 The bulk of the factual materials are in a separate appendix and referenced to Appendix pages with letter prefixes.

If the Board should rule that evidentiary hearings are required, they should be limited. Additional discovery, if necessary, should be based upon a showing of need in light of the discovery that has been provided and the facts still in controversy.

Within reasonable limits, parties should have the time they deem necessary to respond to this pleading, or such time as the Board deems reasonable. They should respond as to specific issues that they believe require trial. Because they cannot anticipate defenses or counter-arguments that may be raised, Florida Cities request time to respond to answering pleadings.

Because the outcome of these pleadings will shape all future proceedings, they also request a conference before the Board as to such future procedures.

After rulings on procedures and the scope of the issues that need to be tried and after consultation with the parties, the Board may wish to order the parties to discuss settlement and to report, to it after 30 days of the progress and likelihood of reaching agreement or partial agreement. Under the Commission's rules, 10 CFR 52.759 (and as a matter of common sense), settlements are to be encouraged. Settlement would be encouraged if the Board either rules on summary judgment or guides the parties by stating its preliminary view as to whether a "situation inconsistent" exists. If there appears to be no hope of settlement, the Board should now order a schedule for any discovery and hearings that may be required.

(2) Discove to Date.

The Cities and FPL have each had an immense amount of disco-very against each other. This case commenced in 1976, although discovery was intermittent due to appeals and settlement discussions. However, discovery in the Miami District Court case began in late November 1979 (Gainesville Re ional Utilities, et al. v. Florida Power & Li ht Com an , U.S. District Court for the Southern District of Florida, No. 79-5101-CZV-JLK I.October 31, 1979]); the overlap of requests in that docket with those in this case is virtually complete. With perhaps limited exceptions, Cities have complied with document requests. The parties have had nearly two years of intensive discovery.

FPL has had an opportunity for comprehensive discovery of the cities of Homestead, New Smyrna Beach and Starke in Federal Energy Regulatory Commission Docket No. ER78-19 1/ and has used Florida's Public Records Act to inspect, city files in Lake Worth, New Smyrna Beach, Gainesville and possibly other cities. FPL and Gainesville have had discovery in the Gainesville District Court case (Gainesville Utilities De artment v. Florida Power 8 U.S. 966 (1978)).

1 See Florida Power 6 Li ht Com an , Opinion Nos. 57 and 57-A, 32 PUR 4t g Fe era Energy Regulatory Commission, 1979) .

For the convenience of the Board, Opinions 57 and 57-A are .

The Antitrust Commission Re ort recommends that Courts "establish a maximum of 24 months for the completion of pre-trial, not as a norm and extendable only in truly extraor-dinary cases." 80 FRD at 5l6. Discovery related to the antitrust issues in this proceeding has lasted for years. It is time to close discovery. 1/

(3) Basis for Findin s of a "situation inconsistent" with the antitrust laws.

In this pleading, Cities show that a "situation inconsistent with the antitrust, laws" exists, based upon FPL's historic and Courts an commentators are encouraging judicial bodies to take an active role in supervising discovery and other prehearing procedures, as the NRC boards, aided by the Staff and parties, often do. Indeed,. it is now almost universally acknowledged that the absence of judicial intervention during discovery, and pre-trial procedures is inappropriate in complex antitrust litigation. United States v. American Tele hone & Telegra h Co.,

83 FRD 323, 327, n. 1 D.D.C. 1979 cxtz.ng both the Report of the National Commission for the Review of Antitrust Laws and Procedures ("National Commission Report: ) and the Manual for Com lex Liti ation). This is because "Perhaps the most significant problem with antitrust litigation in complex cases is delay . . . . A, principal cause of unnecessary delay in antitrust and other complex litigation is the absence of judicial management and control . . . . 'I.T]he absence of strong judicial control permits discovery to mushroom and issues to go unfocused; delay and obfuscation are more likely to be adopted as litigation tactics; . . . As a result, excessive motion practice and other examples of dilatory and overly litigous conduct proliferate, while incen-tives for stipulation and other potentially expediting types of behavior are reduced.'"

United States v. ATILT, 83 FRD at 326-327 (quoting from National Commxssxon Report citations omitted); Admiral Theatre Cor . v.

Dou las Theatre Cor , 585 F.2d 877, 889 ~8th Cir. 1978 . Indeed, in its pretrial memorandum for the parallel civil case in which Cities seek relief from FPL, Gainesville Re ional Utilities v.

1980) had been comprehensive (p. 3 of Memorandum, attached as ), although it stated that it needed additional discovery, but that it. intended to proceed "expeditiously".

continuing anticompetitive acts and practices. The factual bases for these conclusions, as more fully described below, are derived from (1) FERC Opinion No. 57 and certain other findings and rulings by FERC; (2) the Fifth Circuit decision in Gainesville 292 (5th Cir.), cert. denied, 439 U.S. 966 (1978); (3) internal FPL documents (and/or documents transmitted to FPL), plus certain Florida Power Corporation documents attributable to FPL; (4) public documents; and (5) sworn testimony offered in hearings or depositions.

Among other things, Florida Cities contend that FPL has unlawfully restrained trade by dividing wholesale markets in a Florida. This fact has been determined by the United States Court of Appeals for the Fifth Circuit. Gainesville Utilities Cir.), cert. denied, 439 U.S. 966 (1978). The Court's finding is binding.

Florida Power Corporation may have abandoned the conspiracy, when it entered into settlements with the cities in the early 1970's. However, FPL has continued to refuse to deal in impor-tant wholesale power services with Cities outside the perimeter of its retail service area, thereby perpetuating trade restraints against those Cities.

Florida Cities also contend that FPL has refused to deal in essential products and services contary to the requirements of Otter Tail Power Co. v. United States, 410 U.S. 366 (1973). As this Board knows, until FPL's settlements with the Government parties in this case, FPL had refused to deal with Cities in

nuclear power. It has a long history of refusing to deal in transmission and coordination services, as is discussed, infra.

It has refused to sell wholesale power to generating Cities at.

the same time it was seeking to acquire such Cities and serve their loads at retail. 1/ Thus, the Company would sell wholesale power (generation and transmission services) ~onl if it could sell distribution services, as well.

It is also demonstrable that while FPL was refusing to deal with Cities, it was engaging in beneficial power supply coordination with Florida Power Corporation ("FPC") and Tampa Electric Company ("TECO"), the second and third largest electric systems in Florida'. These facts are shown by jointly filed documents and public statements.

Under the standard contained in $ 105 of the Atomic Energy Act authorizing this Commission to correct "situations inconsistent with the antitrust laws", and in accordance with substantive antitrust standards for certain offenses, anticompetitive motive or "specific intent" need not always be proven. However, there is abundant evidence that FPL has been motivated in its dealings with Cities to weaken competition in order to preserve and expand its retail monopoly and its dominant position in wholesale power markets. FPL filings and documents show that FPL looks to Peninsular Florida for power supply interchange and backup arrangements.

The controlling antitrust standards for this agency have been established in Consumers and Toledo Edison. Consumers Power 1 Alternatively, it. has sought to condition dealings, with a City on its coordination of FPL acquisition.

~Com an (Midland Units 1 and 2), ALAR-462, 6 HRC 892 (1977);

Toledo Edison Com an (Davis Besse Plant, Units 1, 2 and 3),

ALAB-560, 10 NRC 265 (1979). Cities'llegations here are like those adjudicated in Midland and Davis Bassa and can he assessed by application. of the standards set forth in those opinions.

The Commission has recently noticed a proceeding to adopt regulations to limit unnecessary complexity in licensing proceedings. 46 Ped. Reg. 17216 (March 18, 1981). The Commission's goal is consistent with the purposes of administrative agencies in general to provide a practical means of resolving problems.

As is no doubt obvious to the Board, however, in spite of the settlement between the NRC Staff, the Department of Justice and FPL, there remains a substantial dispute between the Cities and FPL. FPL has taken the position that it is not willing to grant further relief to the Cities unless compelled by a Board order and that the Board has no legal authority to issue such order without making a finding that a situation inconsistent with the antitrust laws exists.

Apart from the question whether a "situation inconsistent" exists at all, there would appear to be two basic unresolved issues dividing the parties: First, whether FPL has any obligations to deal with municipally owned utilities in Peninsular Florida other than those named in the NRC license conditions; second, the extent of FPL's obligations to deal in power supply services with smaller cities. There are other important

questions 1/; however, if these issues could be resolved, the others should be less difficult.

(4) Se gratin the Issue of Relief.

Assuming that relief is justified, the nature of the relief will necessarily require a balancing of interests. See Atomic Energy Act, $ 105(c)(6), 42 U.S.C. 2135(c)(6). Further, the costs and benefits associated with specific areas of relief necessarily raise factual questions of parties'pecific needs, which may be affected by a spectrum of considerations. It is preferable that relief be negotiated among affected parties.

Florida Cities believe that. it is likely that if rulings or ten-tative rulings could be made on issues as to FPL's obligations to outside cities and upon its obligations to deal in power supply matters, or if limited hearings could be held as to these matters, settlement on the issue of relief would be encouraged. The issue of relief should therefore be deferred until after pre-trial rulings or after required hearings 2/ Cities set forth their 1 Among these are issues whether FPL has acted to unduly restrict Florida Cities'ability to buy and sell power or power supply (e.g., through actual or proposed resale restrictions on wholesale power); whether it has unlawfully tied power supply services; whether the license conditions themselves are anticompetitive; and appropriate relic f .

2/ The procedures suggested are consistent with Midland.

Consumers Power Com an (Midland Units l and 2), ~su ra, 6 NRC at 1098-1100, where the Appeal Board determined issues relating to liability but remanded to permit the fashioning of remedies. After the Commission denied certiorari review, the parties determined to open settlement dz.scussxons, which ultima-tely proved successful. Once issues of liability are determined or narrowed, settlement as to relief is facilitated. See Consumers Power Com an (Midland Units 1 and 2), ALAB-468, 7 NRC 465 1978

10 basic case on these matters to permit the parties to focus on these issues. However, subject to scheduling, Florida Cities are now prepared to go to hearing either on limited issues or on the full case, including relief.

(5) Basis for limitin issues.

The core concern of Congress in passing the antitrust provi-sions of the Atomic Energy Act was to prevent licensees, such as Florida Power R Light Company, from restraining trade by using the economic advantages of nuclear. power to place smaller systems at comPetitive disadvantage. Zn the Gainesville case, ~su ra, Florida Power Light has been specifically found to have been S

"part of a conspiracy with Florida Power Corporation (Florida power) to divide the wholesale power market in Florida". 573 F.2d at 294. The Company has been further found to have anticom-petitively restricted or sought to have restricted the availabi-lity of wholesale power and other power supply services.

Florida Power 5 Li ht Com an , Opinion No. 57, 32 PUR 4th 313 (August 3, 1979), ~aeal dismissed, Florida power a Li ht Co.'.

FERC, D. C. Circuit No. 79-2414 (April 25, 1980) and Florida Power and Li ht Co., Opinion No. 57-A (October 4, 1979). The Company has made written proposals to acquire independent electric systems and to renew franchises, citing the advantages of its nuclear generation and coordination (with other large utilities),

while at the same time refusing to sell the city wholesale power and transmission or to engage with it in coordination. FPL has steadfastly refused to deal with Cities in either capacity or unit power sales from its operating nuclear units. It has

offered St. Lucis 2 capacity to some Cities only under the pressure of Government litigation. 1/ Tt still refuses to deal with others. These facts establish that there is, at. the least, license would "create or maintain a situation inconsistent with the antitrust laws". Consumers Power, ~su ra ,6 NRC at '907-909.

Summary judgment procedures are, of course, available before courts and this Commission, where there are no genuine factual issues to be tried or when other equitable doctrines so warrant.

Nuclear Regulatory Commission Regulations, 10 CFR $ 2.749(b);

Federal Rules of Civil Procedure, Rule 56; Munici al Li ht Boards of Readin and Wakefield Mass. v. FPC, 450 F.2d 1341, 1345-1346 (D.C.Cir. 1971); Virginia Electric 6 Power Co. (North Anna Nuclear Power Station, Units 1 and 2), ALAB-584, 11 NRC 451 (1980). 2/ Such objectives are especially to be encouraged before the Nuclear Regulatory Commission in antitrust cases, The settlement with the Government, of course, cannot be 1

taken as an admission of liability by FPL. On the other hand, it does represent FPL' statement of what use the settlement or changed policies it to will do."situation deny a FPL may not inconsistent" that otherwise exists. For example, in Consumers, the Licensing Board rejected a Consumers Power statement of policy during the middle of a proceeding, as justification for avoiding an adverse finding or for limitation of relief.

Consumers Power Co. (Midland Units 1 and 2), LBP-75-39, 2 NRC 29, 91-92 (1975); reversed on other grounds, ~su ra6NR,C 892; See 6 NRC 1036, n. 537. Otherwise, any applicant could bypass the authority of the Commission to impose reasonable conditions through reliance upon settlements or statements of position.

2/ Accord, Gulf States Utilities Co. (River Bend Station, Units, 1 and 2), LBP-75-10, 75 3 NRCX 246, 248 (1975) (denying summary disposition):

One cannot avoid summary disposition on the mere hope that at trial he will be able'goto discrediton the vague

. . . . One cannot to trial movants'vidence supposition that something may turn up.'"

12 where Congress has specifically refused to apply the stricter standards applicable to a judicial grant of antitrust relief, but has given the Commission the authority to correct probable, inci-pient harm. Houston Li htin S Power Co. (South Texas Project, Unit Nos. 1 and 2), CCI-1-77-13, 5 NRC 1303, 1314-1316 (1977).

Cf. California v. FPC, 369 U.S. 482, 488-490 (1962). As the Appeal Board held in Consumers:

"The members of the Joint Committee agreed that proof of conditions which ran counter to the

~olicies underlying those Lantitrustj laws, even where no actual violation of statutes was made out',

would warrant remedial license conditions under Section 105(c)"

Accord, S.Rep. No. 91-1247 and H.R. Rep. No. 91-1470, 91st Cong., 2nd Sess., 14-15 (1970) (" Joint Committee Report" ) and see authorities collected at Consumers, ~su ra d ,NRC at 908.

It is accepted federal law that courts may bind a litigant to the prior adjudication of issues litigated and determined in the previous forum. It is now beyond doubt that prior determinations by an administrative agency may estop the parties from re-litigating issues resolved earlier.

"When an administrative agency is acting in a judicial capacity and resolves disputed issues of fact that are properly before it which the parties have had an adequate opportunity to litigate, the courts 'have not, hesitated to enforce repose."

United States v. Utah Construction & Minin Co., 384 U.S. 394, 422 (1966) (footnotes omitted). Cit of Anaheim v. Southern California Edison Co., C. D. Cal. No. CV-78-810-MML (May 19, 1981, pp. 4-5 of Slip Opinion). Attachment 5.

13 It is clear that FPL has had ample opportunity to make its O case before, e.g., FERC and the Fifth Circuit. It has had every incentive to litigate, and has not ignored its opportunities to contest claims. A fortiori, if agency adjudication is enforceable by a court with broad remedial powers, it should bind FPL before another agency forum.

The NRC has applied this principle to its own proceedings.

Public Service Co. of New Ham shire (Seabrook Station, Units 1 and 2), ALAR-422, 6 NRC 33, 70 (1977) (~citin United States v.

Utah Construction and Minin Co., 384 U.S. 394, 421-22 (1966);

Public Service Co. of New Ham shire (Seabrook Station, Units 1 and 2), CLI-78-1, 7 NRC 1, 23-28 Accord, Florida Power S Light Co. (St. Lucie Plant, Unit No. 2), Prehearing Conference Order No. 1 (July 29, 1976), pp. 3-6:

"To prevail in the Gainesville case, the complainant was required to prove an explicit violation of Section 1 of the Sherman Act. Here, of course, the Staff and Cities face the lesser requirement of establishing. under $ 105 of the Atomic Energy Act that the activities under the license would create or maintain a situation inconsistent with the antitrust laws, including Section 5 of the Federal Trade Commission Act."

Tn Public Service of New Ham shire the Commission stated its reasons for binding itself to the factual determinations pre-viously made by the EPA:

But perhaps the strongest, reason for accepting as conclusive the EPA determinations of aquatic impact is to avoid protracted relitigations of these factual issues. Where litigants have one full and fair opportunity to contest a particular issue, they need not be given a second opportunity to reopen the matter before another tribunal where the same issue is relevant.

14 7 NRC at 26. See also Toledo Edison Co., et al. (Davis-Besse Nuclear Power Station, Units 1, 2, and 3), ALAB-378, 5 NRC 557 (1977):

[A]s a general matter, a judicial decision is entitled to precisely the same collateral estoppal effect in a later administrative proceeding would be accorded in a subsequent judicial as it proceeding.

5 NRC at 561. It is thus clear that the Board can and should expedite this case by adopting findings of fact made by a sister agency, FERC, in Opinion No. 57, and by the Fifth Circuit Court of Appeals, in Gainesville.

Further, FPL must, be taken to be bound, as a matter of law, by its public positions and documents. For example, FPL published an advertisement in the Vero Beach Press Journal (September 5, 1976) addressed "An open letter to every Vero Beach resident . . ." just before a public vote on sale of the system.

That advertisement compared FPL and Vero Beach's prospective rates, stating:

"We expect to have a new nuclear generating unit at St. Lucie in service in the near future. This should bring annual fuel savings of more than $ 100 million that will be passed directly to our customers through a reduction in the fuel adjustment, which has been reflected above" "We sincerely believe that the proposed sale will be a good thing - good for Vero Beach electric customers and good for the City itself. If it is approved, we pledge to deliver you reliable electric service at the lowest possible cost. We hope you will give us the opportunity to keep this promise." Appendix, p- D12 ~

Thus, FPL used its control over nuclear facilities to try to extend its retail market, simultaneously refusing to sell any

part of its nuclear generated power to Vero Beach or others through wholesale sales. Unless a rule were established that FPL is not bound by the necessary consequences of its acts, there must be a finding that FPL was seeking approval of the sale of the Vero Beach system on the basis of FPL's nuclear advantage.

Similarly, when FPL enters into settlements that continue to deny nuclear access to some, dl it cannot deny that it is refusing to deal.

Moreover, the sheer cumulation of evidence from FPL's own internal documents of its anticompetitive activities, coupled with its external acts, support a summary judgment finding that a situation is inconsistent with the antitrust laws.

internal documents of a party opponent are admissible under Rule 801(d)(2)(D) of the Federal Rules of Evidence. United States v. American Tele hone and Tele ra h Co., CCH 1981-1 Trade Cases, 'K63,938 (D.D.C. 1981) . 8ee alee Kcninkli'ke Luchtuaart Maatscha i'.v.ELM v. Tuller, 292 F.2d 775, 782 (D.C.Cir.

1961, Burger J.). The Court in American Tele hone G Tele ra h Co. noted the enormous cost and burden of identifying the authors of such documents and otherwise laying a foundation. The Court also noted that control over the relevant foundational infor-mation remained with the opponent party. The Court held that such evidence was presumptively admissible, but allowed the opposing party to, rebut the presumption of admissibility. Xf FPL wishes to deny the authenticity or veracity of such documents,

the means to do so are within its power. Otherwise, documents from its own files stand as admissions by the Company of matters stated in the documents. American Tele hone 8 Tele ra h Co.,

~su ra.

In a recent order of May 19, 1981, in Cities of Anaheim v.

Southern California Edison, ~su ra, (Attachment 5), Judge Lucas determined certain facts to be "without substantial controversy and deemed established for purposes of this action," determined that certain "principles of law are applicable to this action",

collaterally estopped Southern California Edison from disputing factual issues determined in FERC proceedings, and restricted discovery to issues remaining in controversy; but the Court denied a further limitation "without prejudice" and ordered further briefing and conference as to issues for trial. Florida Cities believe that a similar order will be appropriate here.

In the remainder of this pleading, Florida Cities place before the Board, court and administrative agency findincis that FPL has violated the antitrust law or policy or has acted inconsistently with them. Attachment. 1, Cities provide a statement of facts which they believe are not genuinely in dispute. Florida Cities submit that the judicial and administrative findings are determinitive that, a "situation inconsistent" does exist. Indeed, it is virtually inconceivable that the Commission could lawfully find a "situation

17 inconsistent" does not exist in light of these findings. They recognize, however, that FPL will disagree. If FPL cannot pro-vide a factual basis to deny a "situation inconsistent" exists or to contest the facts where FPL is not estopped from contesting them, then the issues are ripe for determination. If FPL does provide a basis for controverting material facts or raises appli-cable defenses, there should be a hearing. A hearing will be required as tc relief.. See pp. 115-17, indra. I8 specific addi-tional discovery is required, Florida Cities will cooperate in order to provide a basis for speedy resolution of the case.

However, FPL should set forth what facts remain in controversy to permit their early resolution.

I.

SUMMARY

OF PRINCIPAL LEGAL ARGUMENTS A. Refusals By FPL To Deal With Some Cities in Florida Power Corporation's Retail Service Area Perpetuate An Ille al Market Division.

FPL refuses to deal in various power supply resources with certain cities in Florida Power Corporation's retail service area

(" outside cities"), even where it is willing to deal with others in the same or similar matters. If there is any question regarding the matter, FPL need merely state its willingness to deal with such cities., This refusal constitutes a direct viola-tion of the antitrust laws; even if FPL has technical defenses to a Sherman Act claim, its conduct is inconsistent with those laws.

In these dockets, as the Board is aware, Florida Cities have been seeking rights of access to FPL's nuclear generated power, transmission, wholesale power and pooling, among other things.

18 PPL' settlement. license conditions expressly limit relief to certain designated "in and near" cities (i.e., within or near the perimeter of FPL's retail service area) . PPL refuses to deal with the excluded cities. Moreover, even if the settlement were not considered, PPL's policy is the same. The only question is the legality of such refusals.

The facts, as are set forth below, plainly demonstrate that PPL entered into a territorial agreement with Florida Power to divide wholesale power markets in Florida, Gainesville Utilities De artment v. Florida Power a Li ht Com an, ~su ra 57,3 F.2d 292; that, this conspiracy was in effect at the time FPL's nuclear generation was planned; and that FPL has offered St. Lucie 2 capacity to at least three cities outside its retail service area Gainesville, Lake Helen and Orlando Utilities Commission.

Moreover, FPL has planned, constructed and operated its nuclear generation in the context of electrical coordination with Florida Power, Tampa Electric and to a lesser extent Orlando and Jacksonville; other Cities Cities in general have been excluded from equivalent coordination; FPL knows that such coor-dination is important to both FPL and the smaller cities; and the purpose and effect of such exclusion was to limit power supply opportunities of smaller systems, thereby reinforcing FPL's eco-nomic power in retail and wholesale markets.

Coordinated activity in the electric power industry is not only legal, but is encouraged. E.g., Federal Power Act, $ 202, 16 U.S.C. 824(b). However, where joint action is exclusionary, it

19 is condemned. Cases such as Associated Press v. United States, 326 U.S. 1 (1945); Silver v. New York Stock Exchan e, 373 U.S.

341 (1963); Gamco, Inc. v. Providence Fruit produce Buildin Inc., 194 F.2d 484 (1st Cir.), cert. denied, 344 U.B. 817 (1952);

and the Commission's own Davis Besse decision (Toledo Edison

~Com an (Davis Besse Plant, Units 1, 2 and 3), ALAB 56-0, 10 NRC 265 (1979) establish that companies such as FPL cannot legally join together with other utilities for mutual advantage, to the exclusion of other smaller utilities in the same geographic area.

Moreover, FPL and Florida power, who along with Tampa Electric, dominate electric generation and transmission in Penin-sular Florida have been found guilty of a market conspiracy in the Gainesville case, ~su ra. 1/ Thus, it was held that FPL and Florida Power could not lawfully agree to divide wholesale power markets in Florida. In the early 1970's Florida power settled the Gainesville case itself and other cases alleging anticom-petitive activities. Certainly, however, it is inconsistent with the antitrust laws for FPL to continue policies of "territoriality", which have the same effect as if there were a formal agreement. 2/ Moreover, since the useful life of genera-tion is for decades, the effect, of the Gainesville conspiracy can 1 Florida power and Tampa Electric settled a case brought, by the Department of Justice alleging an illegal market division United States v. Florida Power Cor oration and Tam a Electric

~Com an , CXV Ho. 68-297-T. The parties agreed not to agree to or enforce territorial or market limitations of the sale for resale of bulk power. Appendix I148-I153.

2/ A territorial agreement between the companies which was actually written, but not signed, is attached as Appendix I89-I110-

20 hardly be said to have ended, For example, FPL's operating nuclear units were planned during the mid-1960's 1/ heyday of the territorial "conspiracy" found in Gainesville.

B. FPL's Dealing With Some Cities But Not Others Constitutes A Combination In Restraint Of Trade.

FPL agrees to grant some nuclear access and other relief to certain designated cities, but not to others. tagore specifically, FPL offers nuclear access at least to St. Lucie 2 whole-sale power, and limited transmission to Cities within its retail service area and offers some relief to the Orlando Utilities Commission, Gainesville and Lake- Helen, which are near but not within FPL's retail service area. Lake Helen purchases wholesale power from Florida Power Corporation. Orlando is one of the largest municipal generating cities. In this case,, the Commission has found that Orlando was "misled" as a result of actions by FPL- Gainesville, of course, won the Fifth Circuit territorial market division case. The Fifth Circuit also referred to Lake Helen by name, with regard to the territorial conspiracy. 573 F.2d at, 298.

While FPL may have business or other motivations for offering St. Lucie 2 to some, having done so, it cannot rightly exclude others similarly situated in Peninsular Florida. Of course, FPL had the choice to stand firm and not offer St. Lucie 2 to any-1 Deposit>.on of Robert J. Gardner, pp. 90-94,98-108.

Appendix A. Affidavit and exhibit references are to affida-vits or deposition exhibits in Gainesville Re ional Utilities, et al. v. Florida Power Li ht Com an , S. D. Fla. No.

S

21 body or to seek to limit it to non-generating systems or some other limited class. In doing so, it might have taken unaccep-table litigation risks. The FERC rejected FPL's position that it should not be required to sell wholesale power to generating systems except to supplement their generating capacity; the FERC found such refusals illegal under the Federal Power Act, prin-cipally because of "anticompetitive" effects. Florida Power 8 Light Com an, Opinion Nos. 57, 57-A, ~su ra. However, having made the choice to offer St. Lucie to some systems, which will help finance the plant and provide a market for its power, including systems in Florida Power's retail "territory", FPL can-not lawfully exclude others. Failure to offer similar. rights and benefits to others constitutes a group boycott, condemned under Section 1 of the Sherman Act. See cases cited at pp. 93-94.

Even assuming the possible validity of FPL's refusals to deal in nuclear power under Section 2, the cases are abundantly clear that joint exclusionary action is condemned. When a dominant company such as FPL, which controls substantial nuclear, transmission and other power supply facilities combines with others, thereby combining economic strengths, it cannot exclude some disfavored utilities. 1/

Having been found guilty of a territorial conspiracy to divide wholesale power markets with Florida Power in the 1 This Commission has considered in depth the'onsequences of exclusion of smaller systems from coordination arrangements. Of course, a favored smaller system has little choice but to prefer an opportunity to coordinate with a very large system as opposed to smaller ones. The inevitable result, however, is to weaken

~su ra, 6 NRC at 945-977, 997-1009, 1046, 1047-1090; Toledo Edison, ~su ra 10 NRC,at 334-358.

22 Gainesville case, ~su ra, 573 F.2d at 299, 303, FPL has no basis for an argument either that it did not benefit from the conspiracy or that its actions did not injure Cities within Florida Power' retail area. As the text of the decision in Gainesville illustrates, the condemned conduct did not take place in a vacuum, but was for the purpose of restraining competition by smaller systems. Thus, by the same token, FPL has obligations to deal with such systems in what the Fifth Circuit called "wholesale power markets". Accord, Opinion Nos. 57 and 57-A, .

As we set forth extensively in the Statement of Facts, the Fifth Circuit finding of conspiracy is buttressed and supported by proof of joint action among Florida's three major investor-owned utilities to the exclusion of municipal systems.

FPL planned, constructed and operated its nuclear units in the context of beneficial coordination with Florida's other utilities. As the Federal Power Commission specifically found in 1967, in rejecting FPL's claim that it planned and operated independently:

"FPL is directly interconnected with four other Florida electric systems, as follows: Florida Power Corporation (Corp), Tampa Electric Company (Tampa),

Orlando Utilities Commission (Orlando), and the city of Jacksonville ( Jacksonville ) . FPL, Corp, and Tampa form the Florida Operating Committee (Florida Pool) with Jacksonville and Orlando as associate members. Opinion

-No. 517, Florida Power k Li ht Com an , Docket No.

5-760, 37 FPC 544, 547-548 (1967), reversed, 430 F.2d 1377 (5th Cir 1970.), reversedFlor,ada Power & Li ht Com an v. FPC, 404 U.~S. 453 1972 . Opinion No. 517 is Attachment 3.

The three companies themselves admit, in

\

a let ter introducing an April 1960, Florida Operating Committee report. "Coordinated Plan for the 1970 Generation and Transmission Re uirements for the

23 Electric Utilities of Florida" (emphasis added) (App. B106):

treated electric as ifanit were

~corn served b~ one ~full integrated "This committee, though slow in getting out a report, feels that much has been accomplished; that this is a basic ~ste toward ~reducin the cost of electric service in this area.'hus, the companies jointly recognize that they treated Peninsular Florida as a single integrated area. And, indeed, FPL cited its competitive advantage over municipal systems, which resulted from such coordination. See text, pages 48-51.

Frankly, we are mystified how FPL can possibly argue, as it apparently intends, that relief is justified for Lake Helen, which purchases wholesale power from Florida Power Corporation, but not for other small generating systems, who do the same; or that relief justified for Gainesville, but not smaller Alachua or Dewberry, located in the same county; or for Orlando, but not Kissimmee and St. Cloud Cities that are smaller, but geographically and electrically not far from either Orlando or FPL C. FPL's Refusals To Deal With Florida Cities Are Directly Contrary To The Teachings Of Otter Tail And Consumers Power.

By any test, it is plain that FPL dominates a large retail power supply market in eastern and southern Florida, that it controls essential transmission facilities for transactions among

24 various Florida Cities and that together with Florida Power it controls most high voltage transmission in Peninsular Florida.

Further, it owns three of Florida's four operating nuclear units and has the only additional planned unit under construction.

Nor can there be any real question that FPL has refused to deal with smaller cities. The Gainesville case, ~su ra, establishes FPL' refusals to deal with systems in Florida Power's "territory"; if there were any doubt, the NRC license conditions confirm this fact. In Opinion No. 57 the FERC found that FPL had engaged in various specific refusals to deal with municipal systems in its retail service area. 32 PUR 4th at 317-318, 327-335.

Under the standards of Otter Tail and Consumers Power

~Com an , such refusals mandate a finding that a "situation inconsistent" exists. The settlement is a ~artial cure od the "situation inconsistent", for the favored Cities. More is needed for them, and much more for the excluded Cities.

STATEMENT OF FACTS 1/

I ~ FPL S PLANNINGg CONSTRUCTION AND OPERATION OF ITS NUCLEAR FACILITIES HAS BENEFITTED FROM COORDINATION WITH OTHER FLORIDA UTILITIES.

As more fully demonstrated below, 1 The facts in this section (except for a few additions here) were presented to the District Court in Gainesville Re ional Utilities, et al. v. Florida Power S Li ht Com an , S.D. Fla. No.

79-5101-CIV-JLK, in "Florida Cities'nswer to 'Motion of FPL For Summary Judgment of City of Tallahassee's Nuclear Access Claim'"

on May 15, 1981.

25'

a. The facts show that from about 1955 to 1965 FPL sought to develop nuclear power in Florida through joint action with Tampa Electric Company and Florida Power Corporation (but to the exclusion of municipal systems including, as discussed below, others that FPL knew to be interested in nuclear power). In addition to relying on taxpayers, government contractors and equipment vendors, FPL also relied on other utilities in Florida during the planning and construction of its nuclear units.

FPL also benefitted from membership in broader industry groups, from which Cities were excluded, such as Edison Electric Institute committees on atomic power.

In its application to the AEC to build the Turkey Point units (App. C32-C44), FPL expressly and solely relied on these joint activities as evidence of its technical experience (App.

C39-C40).

b. The facts show that from at least 1959 FPL, Tampa Electric Company ("TECO"), and Florida Power Corporation, with the occasional participation of the Orlando and Jacksonville municipal systems (but to the exclusion of Tallahassee and the other intervenors) were engaged in joint and cooperative planning and coordinated their operations so as to achieve efficiencies that would not otherwise be available. This cooperation specifically included joint study of nuclear generation, as well as other matters.

r Furthermore, FPL relied on the purchase of power from, and the sharing of reserves with, other members of the "Florida

Operating Committee", which included these systems, during the entire period in which its nuclear units were planned and under construction.

1. Since the 1950's FPL engaged in joint nuclear activities with TECO and Florida Power Corporation.

When FPL applied for the Turkey Point nuclear licenses in March 1966, its participation in joint activities was the sole evidence of its "technical qualifications." As stated at pages 7-8 of the application (App. C39-C40):

"Beginning some ten years ago, Applicant [FPL]

participated with Florida Power Corporation and Tampa Electric Company in a nuclear power plant study group, and has worked with others in the nuclear field. The objective was to be in a position to construct a nuclear plant when justified.

"Mr. George Kinsman, Vice President in charge of engineering and power plant construction,. served as a founding member of the Southern Interstate Nuclear Board representing the power industry.

Currently he is the Board Member representing the State of Florida. He has been a member of the Florida Nuclear and Space Commission since 1956 and also serves on Atomic Industrial Forum, Edison Electric Institute, and Southeastern Electric Exchange committees."

As FPL discovery documents show, FPL engaged in a number of nuclear activities with Tampa Electric Company ("TECO") and Florida Power Corporation in the decade before it determined to

27 build the Turkey Point nuclear plants. 1/ These included a Commission, an "atomic power committee" comprised of representa-tives of the three companies, formed in or about late 1961 (Gardner Exh. 4, 5, App. B73-B76) and perhaps other projects (Gardner Exh. 8, App. B77-B78) .

1 There is no evidence that any Cities were invited to participate in any of these groups, even though FPL was aware that both municipals and cooperative systems in Florida were then expressing interest in nuclear power (see Kinsman Exhibit Nos.

28-32, App. G8-G32, and Kinsman deposition in ~cit of Gainesville v. Florida Power Li ht Com an , S.D. Fla. No.

S 79-5101-CIV-JLK at 101-111 . The initial 1956 agreement among the three companies provided that "The reports, proposals, documents or other data relating to the project shall not be disclosed without the unanimous approval of the parties to this agreement nor shall any press or publicity release relating to this agreement or the project be issued without such approval." (Kinsman Exh. 3, at 2, App. G2)

By contrast, the evidence is that Cities were affirmatively excluded from the joint, activities of FPL, Florida Power and TECO. Most significantly, as discussed above, from 1959 until the early 1970's Cities were excluded from the Florida Operating Committee which sought to operate the systems of its members as "one system."

FPL documents show the exclusion of Cities was systematic and conscious. For example, in 1957, FPL was asked by a promoter of coal to put together a group of utilities to learn about coal.

FPL documents show that while the promoters wished that some Cities be included in the group, FPL did not want to include any municipal systems and arranged a meeting that included FPL, Florida Power, and TECO alone (see Kinsman deposition at 159-165; Kinsman Exh. 45-48, App. 957-961).

28 Further discovery documents show that above and beyond com-munications concerning their own joint activities, FPL and Florida Power Corp. officials kept one another informed of their communications with others regarding competitive developments in nuclear power. For example, as shown at App. C45-C46, when rural electric cooperatives applied to the Federal government for a grant to build a nuclear unit in the early 1950's, they evi-dently asked Florida Power Corporation to provide the backup needed to construct the unit. Florida Power Corporation denied the request and sent, a blind copy of the denial to FPL officials. 1/

Ironically, as evidenced by FPL's 50-year corporate history, the joint efforts never bore fruit because the com-panies were averse to the risks. 2/

1 Similarly, when FPL President. Robert Fite sent a 1959 letter to the Southern Company stating FPL's view that it did not believe nuclear power to be competitive with conventional plants, copies were sent to executives of other private utilities in Florida, although not to city officials (Gardner Exh. 16 to deposition in Gainesville Re ional Utilities, et al. v. Florida Power 5 Li ht com an, S. D. Pla. No. 79-5101-CIV-JLK, ~su ra App. B79-BSO . The Court of Appeals in Gainesville, ~su ra, relied upon such "routine" exchange of letters to support a finding of illegal conspiracy without remandin for a trial hearin . 573 F.2d at 295-297.

2/ "A Half Century of People Serving People" at 94-95, App.

Bl-B9. Following the death of this proposal Tampa and Florida Power Corp. continued their research, and attempted another pro-posal in 1967 (which was also rejected). FPL, however, did not participate (Kinsman deposition, Kinsman Tr. 44-45).

29 In 1961-62 when FPL, TECO and Florida Power formed an "atomic power committee," the release announcing the Committee stated the three would "carry on continuing studies of nuclear reactor types" (Kinsman Exh. 17, App. G4-G7, and Kinsman deposition, Tr.

20-21). 1/ As Mr. Kinsman explained, however, no studies were done.

1 As zn the earlier venture, as a member of the "atomic power committee," FPL actively sought to share information with the other large utilities in Florida, but not Cities. As Mr. Kinsman, FPL's representative to the Committee, testified (Kinsman deposition, 56-57):

"Q. If a that information?

manufacturer came to FPL, would you share "A. Yes.

"Q.

"A.

.Who did you

... If they share called iton with?

us, I would make sure they called on them [Tampa and Florida Power] too.

"Q. Would you make sure they called on Orlando?

"A. Yes-

"Q. What about Gainesville?

"A. I don't know.

"Q. Tallahassee?

"A. As far as I know, none of them were interested in nuclear power.

"Q. What about Ft. Pierce?

"A. I don't suspect they were interested. I didn't know they were "Q. Is it fair to say that you were following what was going on out there, as opposed to doing your own research?

Exactly. Oh yes." (Kinsman deposition, Tr.

55).

In fact, as shown by Kinsman Exhibit os. 28-32, small interested in nuclear power in the fifties and early V~

systems were sixties. With the exception of Exhibit 29, an Atomic Energy Commission press release, all were obtained from FPL in discovery. While Mr. Kinsman did not recall Exhibits 28, and 30-32, App. GS-G32, he testified that "I'm sure I saw" Exhibit 29 (Kinsman, Tr. 101-110).

30

2. Throughout the 1960's FPL engaged in coordinated planning and operations through the Florida Operating Committee/Florida Pool but without the Cities.

In 1959 FPL joined with Florida Power Corporation and TECO, 1/ utilities to which it was then and is now electrically interconnected, to form a group that the participants referred to as the "Florida Operating Committee" or the "Florida Pool." This group permitted its members to obtain, and plan for, greater reliability than if each system had acted alone.

As R.H. Fite, FPL President, explained to FPL stockholders on Hay 15, 1961 (Gardner Exh. 28, App. B103-B105) (emphasis added):

"Back in 1959 .we joined with the Tampa Electric Company and Florida Power Corporation in forming the Florida Operating Committee for the purpose of planning the most eiticzent and economical results.

By coordinating our schedules of plant shutdowns for overhaul and through sharing the spinning reserve requirements of the individual companies, we are already effecting important operating economies plus providing greater protection to continuity of service by the greater diversity of backup reserves.

Coping efficiently with emergency situations, such unit, is only one of the many advantages to he gaaned Prom our coordination plans. Coordination oK daily operations for greater economy and efficiency for each participant is a major objective dual ~s stems and facilities e as though the were one 1 Orlando and Jacksonville were also invited to participate in the group's activities.

Cities were It permitted to join.

was not until the early 1970's that

31

~me" This includes coordination of an individual plant in lower costs ~er

'oth Kw for ~lant addations and the e"

In April 1960, the Florida Operating Committee issued a "Coordinated Plan for the 1970 Generation and Transmission Requirements for the Electric Utilities of Florida." (emphasis added) (Gardner Exh. 29, App. B106-B220). In introducing the plan prepared by FPL, TECO and Florida Power Corp., the planning committee stated (App. B106) (emphasis added):

"The entire state east of the A alachicola River is electric ~corn an In short, FPL, and the others were planning for the entire peninsula Florida area served by Cities, but excluding them from the planning. 1/

In June 1961 the Operating Committee, with the cooperation of the Orlando Utilities Commission, prepared a "Joint Planning Study 1964-65." (Gardner Exh. 31, App. B237-B388). As the plan explains, (App. B241) it. was:

originally initiated ... to determine the transmission system which would best, serve, as of the end of 1963, the individual and total needs of the Florida Power Corporation, Florida Power & Light Company and Tampa Electric Company including, of course, new generating capacity then planned or contracted....

In a memorandum to Marshall McDonald, FPL's Chairman of the Board of Directors and Chief Executive Officer, and 17 other top officials of FPL, Vice President. Robert J. Gardner recognized:

FOOTNOTE CONTINUED ON NEXT PAGE

32 The subsequent firming of additional projects of each of the three companies and the proposed integration of Orlando Utilities Commission into the 230 kv grid required changes in the study. This report shows how the OUC [Orlando] facilities could fit into the integrated system planned for 1964."

In a 1963 report prepared by FPL, Florida Power and TECO 1/

for the Federal Power Commission's "National Power Survey," the three large utilities explained (App. B222-B223):

"Coordinated planning of the generating and transmission facilities of the four major utliities

[evidently Orlando as well as FPL, TECO, and Florida Power Corporation] in the study area has been carried on by planning committees made up of personnel from Florida Power S Light Company, Florida Power Corporation and Tampa Electric Company. At the present, there is a general plan in effect which is serving as a guide for expansion up to the year 1970. This plan is based upon a "single system" approach, taking into consideration factors such as pooling of reserves, the sharing of units, area protection with inter-area transmission ties so that the expansion pattern would be one that is well coordinated among the participating companies."

FOOTNOTE CONTINUED FROM NEXT PAGE "The Public Service Commission has made it clear that it feels there is an advantage to the State in requiring planning on a statewide basis. This feeling and the intent to follow through on it is reflected in the wording of the Power Plant Siting Act, the Grid Bill, comments from the staff on the ten-year site plans, and most recent, in an order instituting an investigation into and requiring public hearings on the subject of joint state planning."

Attachment Illl-127-1/ Gardner Deposition Exh. 30, App. B221-B236. The report was to cover Federal Power Commission Study Area 24, which included all of Peninsular Florida. The report notes that "contacts were made with representatives of the Orlando Utilities Commission, the City of Tallahassee and the City of Lakeland 'for obtaining their plans for the period." (App. B222). Thus, such cities'ctions were studyrelevant for the report, but not for inclusion in the coordinated planning.

33 In 1964, FPL, along with Orlando and Jacksonville, as well as Tampa and Florida Power Corporation embarked on another "long range power supply study to be used as a guide for generating and transmission additions, as we grow with Florida It will develop the transmission system required to coordinate to mutual advantage, the present and projected plans of each participant for generating unit additions, and will point the way for licensed reserves and resultant savings in capital costs." (Gardner Exh.

32 App. B390) ~

This study, conducted during the period. in which, according to Mr. Gardner, FPL began to consider nuclear units, evaluated both nuclear and fossil units. The July, 1966 "Interim Report" considered investments in a range of nuclear units (Gardner Exh.

33, App. B392-B426).

To summarize, in the period immediately prior to and including that in which FPL determined to build its nuclear

'I units, FPL was engaged in "joint" and "coordinated" planning of the "statewide" system with the other major utilities in the state.

Indeed, in its 1967 decision finding FPL subject, to its jurisdiction, the Federal Power Commission (predecessor to the Federal Energy Regulatory Commission) found:

"FPL is directly interconnected with four other Florida electric systems, as follows: Florida Power Corporation (Corp), Tampa Electric Company (Tampa),

Orlando Utilities Commission (Orlando), and the city of Jacksonville (Jacksonville). FPL, Corp, and Tampa form the Florida Operating Committee (Florida pool) with Jacksonville and Orlando as associate members.

Significantly, in re jecting FPL' claim tha it acted independently, the Federal Power Commission found in 1967:

"Consideration has been given to FPL's assertion that because of the unique peninsular nature of its service area self-sufficient, it planned its system to be and that it possesses sufficient generating capacity of its own to meet its loads without any dependence upon the spinning reserves or emergency power of other Florida or out-of-state systems. We do not find this assertion persuasive. The fact that FPL could operate as a self-sufficient. utility is not controlling because FPL simply does not operate its system in that manner. The record in this proceeding makes it plain that FPL receives substantial benefits from its participation in the Florida Pool in the coordination of spinning reserves, the arrangement of plant maintenance schedules, and the assurance of reliability of frequency control and from both the Florida Pool and ISG in the form of automatic assistance in the case of emergencies. As we stated in our in Indiana & Michi an Electric Ccm an, ~eu ra, L33opinion 739 (1966 ] it is the system's actual mode of operation, not how the system could operate, that is important.

FPC Moreover, the particular operating pattern actually used by FPL is consistent with sound operating practices and with the principles enunciated in the Commission's National Power Survey issued in December 1964 in which all segments of the electric power industry participated fully and cooperatively."

Florida Power & Li ht Com an , 37 FPC 544, 551-552 (1967),

affirmed, Florida Power Li ht Com an v. FPC, 404 U.S. 453 S

(1972).

3. FPL relied on coordination with the Florida Operating Committee in constructing its nuclear units.

FPL's membership in the Florida Operating Committee permitted it to maximize economies in constructing its own units. 1/

1 Cz.tres cannot state the specific coordination assumptions actually employed by FPL in constructing its nuclear units because as evidenced by the Gardner deposition, FPL has either lost underlying planning documents, or never put final plans and assumptions relating to the units on paper (Appendix A, Tr.

106-108; Tr. 8, 17) ~ In general, as discussed in the Florida Operating Committee documents cited above, interconnections, as existed among Florida Operating Committee members, permit a variety of types of FOOTNOTE CONTINUED ON NEXT PAGE

35 For example, as stated above, members of the Florida Operating Committee engaged in the sharing of reserves. As explained by the Federal Power Commission's 1964 National Power Survey (at 170, App. D310 emphasis added):

"By sharing reserves through interconnections, a group of systems can reduce the combined reserve for unscheduled outages, since it is unlikely that maximum outages of units on all systems will occur at precisely the same times. Tha ~poling of reserves is based on the Thus, FPL, in the period when it planned and built its nuclear units, and today, has acted in reliance on risk sharing arrangements with other utilities.

FOOTNOTE CONTINUED FROM PREVIOUS PAGE:

economies.

by documents in Appendix I'or The close working relationships, however, are shown example, in an August 1, 1962 letter from FPL Chief Executive MacGregor Smith to Florida Power President W. J. Clapp (Appendix I133-I134)., regarding the need for an interconnection to support FPL's planned Canaveral Plant, Mr. Smith explained:

One of the main reasons for putting in a plant at Canaveral is to be able to contribute more to you and Tampa Electric in return for what we would hope to get.

iMy feeling always has been that if we had any power, we would make it available to any of our neighbors and we have always found you and Tampa Electric to be equally agreeable. I have never been particularly concerned with the rate'we would charge or pay for such emergency help. Any firm power could be negotiated in amounts and for the term contemplated For its part, as stated in a July 24, 1964 letter from Mr.

Clapp to FPL President Fite (Appendix I135), Florida Power believed that its operations included activities that were solely for FPL's benefit. As Mr. Clapp wrote:

"For a number of years now we have been maintaining a 66,000 volt tie with you at Ft. White. This tie has been operated open, and closed in at your convenience.

This tie is of no value to us, but has been helpful to you on numerous occasions because we maintain a major source of supply in the area."

'36 As Mr. Kinsman, the FPL Vice President in charge of overseeing nuclear developments, put it, Tampa Electric, Florida Power and FPL operated their systems during the 1960's as "one system." (Kinsman Tr. 293-294);. (emphasis added).

"Q. Were you sharing reserves with Tampa and Florida Power in 1965? Did you have reserve sharing arrangements?

"A. I don't know what you mean'.

"Q. Of course, you know what generating electric reserves are.

"A. Well, we ~oerate the three ~sstems as one If we had ~ower and ~the needed it, ~the clot it. And vice versa.

"Q. This was in the 1960's?

yes In the period between its (1965-1966) decision to build nuclear units and the December 1972 initial operation date of the first (Turkey point) units, FPL actively relied on others for significant amounts of power, including the power that FPL required to serve all its customers. at the time of maximum (peak) load. As shown by FPL Form 12 submissions to the Federal Power Commission, for example, in 1970 FPL received 265 Mw at the time of the- FPL peak from TECO, Florida Power Corp., and Orlando; in 1971 it received 297 Mw at peak from TECO, Florida Power Corp.

and Jacksonville, and in 1972 it received 310 Mw from TECO, Jacksonville and Vero Beach. 1/

1 See App. C47-C49. The filings also show that FPL delivered power to the other large utilities at peak, but in amounts less than that received.

37 There is every reason to believe that such coordination will continue. For example, in the Florida Power k Light Company 1979

~"

in the deferral of two new 700 Mw coal units "was a contract signed with Tampa Electric Co. to purchase output from the coal unit now under construction at Tampa's Big Bend Plant. The agreement covers purchase of 292 Mw, 208 Mw and 104 Mw in 1985, 1986 and 1987, respectively." The report covers other generation and operations coordination as well. Accord, Florida Power S Light, Company 1980 Annual Re ort, pages 8 (" Energy Interchange Cuts Costs" ) (App. I137), 14-15 (" Generation Expansion plan" )

(App. I138-139). 1/

FPL has acted without reasonable basis to veto peninsular coordination efforts that it believed would benefit smaller systems. It did so in spite of credible evidence which it did not reasonably challenge that the efforts were in FPL's own interest as well. In the early 1970's for example, the 1 In its Memorandum in Opposition to Plaintiff's Motion to Dismiss or for Summary Judgment, filed in Docket Ho.

79-5101-CIV-JLK, on September 30, 1980, FPL has described the Florida Coordinating Group, successor to the Florida Operating Committee:

"The FCG is a non-governmental association of Florida electric utilities which have voluntarily joined to ensure reliable supplies of electric power and to engage in active coordination of planning, construction, and utilization of generation and transmission facilities in Florida. The FCG also serves as a liaison between the utilities and the Florida Public Service Commission.

Although not a governmental or quasi-governmental agency, the FCG is an influential organization for Florida utilities."

38 Florida Coordinating Group formed a pooling task force. See pre-vious footnote. The report (App. C184-C298) of this task force found that centralized dispatch and joint generation and transmission planning and development among Florida utilities should provide additional benefits. As detailed in an affidavit of Mr. Harry Luff of the Orlando Utilities Commission, which had been filed in Florida Power 8 Light Com an (South Dade Plant),

NRC Docket V~ o. P-636-A (App. C299-C305), FPL scuttled the efforts of the pooling task force. In a memorandum responding to this affidavit, Mr. Ernest Bivans, FPL Vice President for System Planning, admitted FPL's role.

Moreover he stated that FPL's veto was based on the percep-tion that the proposal would be of benefit to smaller systems, but not to FPL (App- C308-C309):

"At the October 1975 meeting, it had become evident that the Pooling Task Force, chaired by Mr. Luff, was intent on pursuing a more formally structured pool, leading to centralized dispatch and operations, and centralized planning. While FPL could see that the other smaller utilities could possibly benefit by such a more formal pool, we did not then, and do not now, envision any benefits that would accrue to FPL's customers. In fact, pool operation with centralized dispatch of power, while possibly benefiting the smaller, less efficient utilities, would probably result in higher costs for electric power to the customers of FPL- FPL is large enough to achieve all of the economy of scale on its own without becoming part of a larger more structured organization.

Therefore, at the October 1975 meeting, I stated that FPL was withdrawing from any further effort to form a "Statewide" pool for the reasons previously given. I further stated at this meeting that FPL would encourage the other utilities to form a second pool which would

39 then be approximately equal in size to FPL, and the FPL would work out arrangements where feasibily possibly, for those municipal systems in its territory that would be isolated from the proposed pool, to join and participate."

Documents obtained later through discovery show that FPL's policy of resistance to pooling came, it now appears, from the highest levels. As stated in a February 20, 1976 FPL memorandum from Power Supply Manager N.E. Coe to H.L. Allen (Senior Vice President), the policy reflected the instructions to FPL's top management by FPL Board Chairman Marshall McDonald:

"My understanding of Mr. McDonald's directions following the Senior Management Planning Council meeting on Regulatory Problems was that Power Supply was to secure uniform bilateral interchange contracts as a deterrent towards formal colin ." (App. 0310) emphasis supplied FPL took the position that pooling and joint generation planning that included smaller systems would be adverse to the Company and its customers: The February 1976 presentation to Company seniormanagement referred to at n. 1, pp. 31-32, ~su ra:

"Our first concern (and probably the most important one) is the possible severe restrictions which Government may place on our management prerogatives. In the planning area, this could mean legislating us into a position of having our plans imposed on us. Anti-trust problems and the Florida Power Corporation sale of Crystal River <<3, jeopardize our right to our own generation facilities.

The wheeling issue may drastically affect our opera-tional practices.

All of these effects could have detrimental impact on our customers'ost. of electricty. This we feel would be unjust, since our customers and investors have had the foresight to plan progressively."

40 The solution was to "study" the problem (Appendix I124-I125): p. 9):

"Earlier, I mentioned that the issue of "pooling" is still current and that we are not interested in it at this time. Unfortunately, while we may see no benefits to us, this does not mean that other utilities or governmental agencies are not interested in having us become a member of their pool. With this in mind, we believe that through the vehicles of the joint generation/transmission study and our educational actions we should, at least in house, become instrumen-tal in the development of the "pooling" issue for Florida. This way we will be in a better position to define, establish, and defend our position."

Id. at 13-4.

Later, when it entered into bilateral interchange contracts with Tampa Electric Company and Florida Power Corporation in Tam a Electric Com an, Federal Power Commission Docket No.77-549, et al., FPL took the position that the FERC had no juris-diction to order pooling, and that:

"In addition, FPL is participating fully in the Florida Electric Power Coordinating Group (FCG) coordination studies. Since 1976, the Technical Advisory Group of the FCG has been involved in three major studies: the Peninsular Florida Generation Expansion Planning Study, the Central Dispatch Study and the Power Broker Study.

The Company has supported each of these studies, and in fact took the initiative in starting the Central Dispatch study. These efforts are yielding positive results; on March 1, 1978, the power broker concept was implemented. FPL maintains that consideration of addi-tional coordinating arrangements is properly before the FCG and not in this proceeding."

June 1, 1978 Reply Memorandum of Florida Power S Light Company, Tam a Electric Ccm an, ~sn ra, Appendix Z85-X88.

While the Company sought to "get our story across" (Appendix I123, p. 12), Mr. Bivans subsequently testified that FPL had never undertaken a study to test the assumption that centralized dispatch and joint planning measures sought by smaller systems

41 would not also be beneficial to FPL (see Bivans testimony, Florida Power 8 Li ht Com an , FERC Docket No. ER78-19, et al.,

Phase I, Tr. 843-44). (App. C311-C312).

In fact, FPL's perception was in error. As early as 1960, the Planning Committee of the Florida Operating Committee concluded that the pooling of risks by FPL and others would result in savings:

TES)ubstantial savincas in investment would result throu h integrated lannin and ex ansion under the one ~astern ~area'coo~~avoictn u rcatron of facilities. However, few of the pro jects considered could be accepted without further study involving alternate possibilities." (Emphasis added.) Gardner Exh. 29, page 3, App. Bill.

The 1974-1975 FCG study itself, which was submitted by, inter alia, FPL official K. S. Buchanan, specifically identifies FPL as a big winner from centralized dispatch. Tables at App.

C294-C295 show that, in the two cases summarized there, centra-lized dispatch would permit FPL to save 63,753 MMBTU and 116,064 MMBTU on a "typical peak load day." Assuming, quite conservatively,,oil prices at approximately $ 2.00 MMBTU, this would translate into (peak load day) daily savings in the

$ 130,000-$ 250,000 range for FPL alone.

The recently instituted statewide Power Broker experiment, which is a modest form of centralized dispatch, has demonstrably been beneficial to FPL. During February 1-April 11, 1979 alone, for example, FPL saved $ 577,115.78 (App. C313) and FPL's 1980 Annual Re ort at 8 (App. I137) proclaims the savings it has achieved:

42 "Still other savings are accruing from the economy interchange of interchange with the 14 other generating utilities which participate in Florida's Energy Broker System. This automated exchange system works to the ultimate benefit of consumers by enabling participating utilities to take advantage of the most economical available generation."

In a recent deposition which has been recessed, Chief Executive Officer Marshall McDonald testified that in the 1972-1973 time period FPL was "so short of generation that we didn't have a policy [as to adequate reserves]. We just had wha-tever happened to be there." Tr. 64. He testified further:

A. We didn't have any reserve. My first experience with the company would be two days after I got here was that we got across the peak by four megawatts after we bought everything we could lay our hands on and after we had been on the radio to ask everybody to get off. We did not have any reserve.

Q. Who did you buy from when you A. Anybody who was available to sell us power.

Q. In the entire State of Florida?

A. Throughout our interconnections.

Q. That would be Tallahassee and Lakeland-A. Whoever.

Q. Do you recall at the time you came to the company in 19711 did they have a policy on what reserve would be the appropriate reserve for planning purposes?

A. Mo.

Tr. 65. He also stated (Tr. 121-122):

Q. Were you actively seeking supplies to buy additional capacity or additional energy so you could meet your load?

Do you recall that?

A. There wasn't any long-term firm power source available within the State during that period of time.

We purchased power as we could get it depending upon the cir-cumstances of whatever other system might have access at that time, but during that particular period of time, there were no significant sources of surplus power available for the firm.

Q. Again, you made an effort to look all over the State2.

A. I think this was known to Mr. Bivans and the others who were working with the Florida Operating Committee because they knew independently the availability of all plants and what the maintenance schedules were and what the disposition of those com-panies were toward selling power for a period of time.

Q. What about out of state'? You mentioned within the state.

A. We didn't have connections that would allow us to get any from out of state.

Thus, FPL rejecting pooling with the municipals (and con-tinues to reject full pooling with them), even though it perceived that it needed additional capacity, which municipal systems could have supplied.

II. FPL HAS LONG DENIED CITIES ACCESS TO THE ECONOMIES OF COORDINATION AND SCALE, INCLUDING NUCLEAR POWER.

As shown in Section I ~su ra, ppL has relied on other utili-ties in its operations, including those related to nuclear power, during the period it planned and constructed its nuclear units.

Even as coordination and cooperation was vital to FPL, FPL would have been well aware that it was especially vital to smaller systems, including Cities. In fact, FPL had specific actual notice that Cities sought access to the economies of size and coordination on which FPL relied. FPL both refused to provide these benefits itself to Cities and simultaneously acted to block their ability to gain them by alternative means.

FPL Was On Notice That Smaller Systems, Such As Cities, Required Access To Economies Of Size And Coordination, Including Access to Nuclear, In Order To Compete Effectivel As shown. in Part I ~su ra, FPL formed the Florida OPerating Committee in 1959 for the benefits it would achieve through interconnected operations, including the ability to build larger units. If the benefits of interconnected operations were evident for large systems like FPL (and the other members of the Florida Operating Committee), it is likewise evident that smaller systems, such as Cities, needed those benefits to compete effectively.

1. Smaller systems require coordination to build large units.

By the 1960's it was generally understood that there were great economies to be gained by building larger units, of sizes in the hundreds of megawatts. The Cities (but not FPL) were far too small to justify building units of these sizes. Their total loads, in most cases, 1/ were well under 100 megawatts. By comparison, FPL's 1965-1966 determination to build its Turkey 1 Tallahassee, among the largest of the Cities, had a peak load of about 58 megawatts in 1962 and 97 megawatts in 1967. Its March 1968 engineering report projected a load of 220 megawatts in 1975. As discussed above, by the early 1960's it was generally understood that loads of this size could not sustain a commercially viable nuclear unit. Indeed, since 1962 the smallest nuclear unit announced by ~an utility has been 330 megawatts (the Fort St. Vrain unit, in 1965). The vast majority of units have been over 500 megawatts. See, "U.S. Central Station Nuclear Generating Units," Gardner Exh. 1 at 2-20, App.

B12-B30 ~

Point nuclear units assumed peak loads of over 5,000 megawatts at the time of their completion in the early 1970's (Gardner Exh. 1, Requisition, Turkey Point, Plant, App. B50-B51).

Moreover, coordination permits substantial savings in meeting reliability-of-service needs. Utilities must plan for the capa-bility to keep the lights on when their largest unit is out of operation (including both scheduled outages for maintenance and unscheduled outages). If a system were to invest in a large unit in order to maximize economies, that system would also need a comparably large "reserve" unit or units.

Xt was well understood, as stated ~su ra, that individual ut.i-lities could reduce their investment in reserves and render larger-- units possible by interconnections that permit the sharing of reserves with other systems. As the Federal Power Commission's 1964 National Power Survey explains (at 170):

The use of large, economical units increases the importance of reserve pooling because each system should have access to a reserve at least as large as its largest unit." (App. D310).

As shown previously, FPL through the Florida Operating Committee planned its nuclear units in reliance on the "p'ooling of risks" engaged in by that Committee. As discussed below, however, at the same time (i.e. the 1960's) FPL and other Operating Committee members excluded Cities from participation in their group.

Thus, from the technical vantage alone, Cities were faced with two vast obstacles to building nuclear units: their small size and their exclusion from the Florida Operating Group.

46

2. FPL knew that coordination and large units are essential to participation in nuclear power.

FPL was well aware that smaller systems needed the benefits of interconnections and size in order to build nuclear units.

In 1955-1956 the Seminole Electric Cooperative (in Florida) sought backup from Florida Power Corporation in order to'proceed with a proposal to the government to build a nuclear unit. In a December 7, 1955 letter, with a blind copy to FPL President Robert H. Fite, Florida Power informed Seminole that it would not provide the backup (App. C45). As stated by Seminole (in a document obtained from FPL's files in the Gainesville case) the inability to obtain backup killed the proposal (App. C46).

As further FPL documents show, FPL also followed Ft. Pierce's 1959 proposal to the AEC to build a nuclear unit (App.

'52-B55). 1/ This proposal was made following the AEC's announ-cement that, it would sponsor several "small" nuclear projects.

The AEC, however, did not make any awards because, as AEC offi-cials explained in a 1961 letter (App. D4):

"Recent studies on the current status and economic potential of small size nuclear powerplants indicate plants based on, existing technology currently are not economically attractive to small utilities because of high capital costs and restrictive siting requirements."

1 Discovery documents show FPL followed the early interest of other small Florida municipal systems as well (App. Dl-D3) ~

47 By 1966-1966, i.e., when PPL decided to build its nuclear units, the industry knew that large plants were economically attractive, but not small ones. The smallest size the equipment.

vendors offered FPL in 1965 was 800 Mw. 1/ Indeed, in the period since FPL announced its units in 1965, the smallest unit committed to by ~an ~utilit (other than the experimental Clinch River Breeder Reactor) has been 530 Mw.'App. B25)

In this context, the private utility industry was generally aware that smaller systems lacked the size and/or coordination they needed and desired to benefit from nuclear power, unless and until joint participation with others could be arranged. For example, as summarized in a speech transmitted in 1968 by the Edison Electric Institute to members of its atomic power committee, including FPL President Robert H. Fite (Gardner Exh.

47 at 3, App. B475):

"The smaller utilities, principally those publicly and cooperatively owned, want a piece of the action they want to participate in the economies of scale associated with large-scale nuclear facilities. In many cases they don', have the energy demands or capital to permit construction and operation of larger plants, nuclear or conventional, and apparently in some cases have been rebuffed in their efforts to obtain participation in joint ventures being organized for this purpose in their region."

3. From the start, FPL sought to use its size-based monopoly of nuclear generation as a lever to acquire smaller systems.

As discussed below, FPL 'knew that smaller systems in Florida were specifically interested in gaining access to economies of 1 By contrast, the total load of all non-settling Cities ~toda 7s about 700-800 Mw. Tallahassee's load today is about, 240 Mw; the other cities'oads are smaller some less than 5 Mw.

48 scale and coordination, including access to nuclear power. FPL did not volunteer to work with those systems, as it worked with Florida Power Corporation and TECO. 1/ Instead, it used the promise of access to FPL's economies of scale in general and nuclear power in particular as a lever in its repeated attempts to acquire smaller systems.

For example, in 1966, as shown by FPL discovery documents, FPL turned down Homestead's request for access to the Turkey Point, nuclear units. (App. D7-DS) When Homestead in 1967 requested wholesale power, FPL countered with an offer to acquire the Homestead system. (App. D10-Dll) As an internal FPL memorandum on the pros and cons of acquisition put it (Gardner I

Exh. 35, at 2, App. B442):

"FpsL Co. can provide lower rates for the citizens. Mass production and diversities provide greater economy. Small plants are not flexible ~"

Similarly, in 1965, when the City of Clewiston sought to buy wholesale power directly from FPL, FPL refused, and offered to acquire the system instead. 2/ See also Opinion No. 57 at 26-31, 32 PUR 4th at 331-35. An internal FPL discussion of the FPL purchase proposal listed, as a "disadvantage" of continued 1/ On the contrary, the provisions of the 1956 agreement among TECO, FPL, and Florida Power Corp. provided that information developed by the group could be disclosed to others only on "unanimous" approval of the three large utilities. (On deposition, George Kinsman, FPL's representative to the group, said that he did not know why this provision was in the agreement. Kinsman Tr. 27.)

2/ FPL's refusal to deal with Clewiston was detailed in Florida Light Com an ., 37 FPC 544 (1967) reversed sub nom.

1, Power S Florida Power 6 Light Com an v. FPC, 430 F.2d 137~7 5th Cir.

reverse an reman e , U.S. 453 (1972).

municipal ownership (emphasis added) (Gardner Exh. 34, at 12, App. B439):

"The City must, in the near future, make decisions on the course it will follow. to resolve its power supply problems. The cost of constructing and operating power generation facilities appears to be prohibitive; the alternative is purchasing power as you are presently

~cit are unthinkable when com ared to the economies of the enormous ~lants ~bein buxlt ~b ~ublic utilities. In the past two years, the Florida Power 8 Light Company ~

has retired as uneconomical twelve plants ranging from 12,000 Kw to 33,000 Kw capability."

As an "advantage" of sale to FPL, FPL listed (emphasis added) nuclear plants.

In "An Open Letter to Every Vero Beach Resident from Florida Power S Light Company's Ralph Mulhullond", referred to at p.

~su ra, published in that city in 1976 just be'fore a vote on the proposed sale of the Vero Beach municipal electric system, FPL stated:

"We ~ex ect to have a new nuclear generating unit at St.

Lucie in service in the near future. This should bring annual fuel savings of more than $ 100 million that vill be passed directly to our customers through a reduction in the fuel adjustment, which has been reflected above."

Vero Beach, Florida, Press-Journal, September 4, 1976 (Emphasis supplied). App. D12.

Similarly, in a 1974 "financial presentation to the Commissioners of View Smyrna Beach" (July 5, 1974) (App. D20), on behalf of FPL's proposal to acquire that system, FPL stated:

50 "Ne have a wide diversification of fuel sources. We presently use residual oil; we, have natural gas under firm contracts extending through 1989; we have nuclear units on line at Turkey Point and two units under construction at Hutchinson Island near Ft. Pierce; we use distillate oil; and we are working on plans to include coal as a future fuel source. These diversified fuel sources and the ability to use large efficient power plants result in lower overall prices."

While continuing to assert the value of its nuclear power in its takeover campaigns, FPL has been acutely aware that Cities'mall size precludes their building large units, including nuclear. In December 1973, FPL's financial planning office pro-duced a "Comparative Analysis of Municipal and Investor Owned Utilities and the Benefits to Their Customers." (App. D31-D33)

The analysis concluded that (App. D32):

"The size of most municipal units is 1imited by the size of the city. This limit on size prevents the smaller municipal utilities from realizing many of the economies of scale available to larger utilities. This fact was clearly revealed in the analysis. The smaller, utilities had less efficient heat rates and higher fuel and operating costs per Kwh of power sold. These higher costs appeared to be the major contributing factors in the high cost of power to their customers."

The disadvantages of municipal systems were further spelled out by FPL Vice President Robert Gardner in a July 30, 1976 docu-ment entitled "Municipals and Co-operatives Situation Analysis."

As the memorandum stated inter alia (App. D34),

"Too small to individually add economical generation..."

"Fuel costs rising supply in jeopardy..."

"Rely on oil and gas for fuel..."

"Cannot support planning, project, procurement, nuclear organizations..."

"Legal and procedural limitations on financing."

Since FPL's entry into the nuclear business, in short, the message has been clear: Small systems can gain access to nuclear generation (and other economies) by selling out to FPL, but not otherwise. Even if FPL did not seek to acquire municipal systems in Florida Power's area, as the Gainesville case recites (Gainesville Utilities De t. 'v. FFL, ~su ra, 573 F.2d 292), it acted to aid Florida Power acquisition attempts or franchise efforts, by refusing to deal in Florida Power's "territory". FPL then cited its cost advantage over all Florida municipalities in seeking acquisitions or franchise renewals in its "territory" and, of course, through'ts transmission and coordination poli-cies otherwise prevented municipals in Florida Power's "territory" from serving in its "territory" and vice-versa. See

p. 54, infra.

FPL had a different message for larger utilities in the Florida Operating Committee. In 1966, for example, 1/ Armour S Company wrote to FPL stating that it wished to build a large che-mical plant near Tampa, and that its consultants had said the chemical plant would be feasible if served by a "large nuclear power plant." FPL Board Chairman Smith in a September 16, 1966 letter (App. B488) informed Armour that the proposed plant would be in Tampa Electric's territory, but that FPL would help Tampa Electric build the large plant needed to serve Tampa's customer.

1 Gardner Exh. 49; App. B483-B487.

52 As Smith wrote (Id.):

I called Mr. MacInnes, President of Tampa Electric Company and told him that you folks would be getting in touch with him to discuss a 400,000 Kw load in his territory. I told Mr. MacInnes of our meeting and development that. the load apparently would be in Tampa Electric's territory, and I explained that we would be willing to work with him by investing in a joint plant or purchasing a large block to help make the project economically feasible."

While. providing an unsolicited offer to help Tampa build a large nuclear unit, FPL was refusing to deal with smaller systems, including Cities, as exemplified below.

The FPL/Florida Power effort to prevent alternative genera-tion and transmission systems in Florida was not limited to the prevention of nuclear power. In the early 1950's Seminole con-sidered building conventional plants. FPL worked actively to oppose this proposal, even though the plants evidently would have been built in Florida Power's territory. For example, an FPL official called on citizens and pointed out to all of these people that this pro-posed power plant will be a useless expenditure of federal funds since there is an abundance of power in the area at the present time, and that Florida Power's new Suwannee River plant will have sufficient capacity to serve the area for many years. It was also pointed out that there are transmission lines in this area of sufficient capacity to take care of the distribution of this power and to build additional transmission lines would be a duplication of facilities . . ." (Internal Memorandum, Appendix I71-74)

In a May 8, 1952 letter to Senator Smathers (Cities appear to have been provided only the second of two pages), FPL Vice President and General Manager Robert Fite explained:

53 "Although the plans being submitted by Seminole and Southeastern Power Administration at, this time do not appear to affect Florida Power S Light Company or its customers directly, we are vitally concerned because we believe if these two agencies get started it will be only a short time until our territory becomes involved."

As further -FPL discovery documents show, FPL worked actively to prevent Seminole from getting off the ground. In a January 16, 1953 memo to FPL Vice President Fullerton, FPL official Claude Smith stated "I suggest that we do all we can do to stop the Seminole now." Shortly thereafter FPL told at least one cooperative served by FPL that a new service agreement with FPL would be possible only if Florida Power reached successful agreement with the REA's it served. As a June 16, 1953 letter from Robert Fite to the Lee County Cooperative put it:

"In accordance with the understanding which we arrived at when you were in miami on June ll, this proposal is conditioned upon completion of the negotiations between Florida Power Croporation and the co-ops they serve. As soon as these negotiations are completed and the agreements fully executed and approved embodying the proposed schedule, we will immediately put into effect the proposal in this letter." 1/

Thus, FPL actively sought to frustrate efforts by smaller systems to obtain the economies of joint generation and transmission, even where those efforts admittedly were not directed immediately at FPL's own retail "service territory."

1 FPL's proposal to Lee County, to boot, contained a provision prohibiting resale to municipal systems.

54 B. FPL Refused To Deal With Cities, And Denied Them The Means Of Dealing With Others.

FPL has long refused to deal with Cities, or has dealt with them only on unreasonable, restrictive terms. FPL likewise impeded their access to the means of dealing with others.

FPL's activities may be grouped into several schemes that overlap in time and function. First, as found by the Fifth Circuit in the Gainesville case, FPL conspired with Florida Power Corporation to divide the wholesale power market in Florida.

Pursuant to this conspiracy, FPL would not deal with systems that were within Florida Power Corporation's territory. Second, FPL (a) refused to provide anything other than emergency power 1/ to Cities within the perimeter of its own retail territory and (b) simultaneously refused or endlessly delayed interconnection arid transmission arrangements which would have permitted systems within the perimeter of FPL's retail territory to deal with one another or with systems in Florida Power's territory. While doing this, moreover, FPL repeatedly sought to buy out systems, making proposals to, at least, Homestead, Ft. Pierce, Hew Smyrna Beach, Starke, Clewi'ston, Vero Beach, and Lake Worth.

While FPL's monopolistic intent remained constant, it was forced to modify its methods by the 1972 Supreme Court decision that found FPL to be subject to Federal Power Commission 1 Which was priced higher than wholesale power sold by FPL to the REA Cooperatives (App. E76). As was generally known in the mid-1960's, i.e., the time at which FPL planned and committed to its first nuclear units, FpL was refusing to provide anything but emergency power to municipal utilities within its own service territory 8ee .App. 040-058, pp. 17-19; 30-33, ~su ra.

55 jurisdiction 1/ and a 1971 Supreme Court decision that upheld the Federal Commission's authority to order Florida Power Corporation to interconnect with Gainesville. 2/

Following the FPC jurisdictional case, FPL was compelled to file a wholesale tariff with the Federal Power Commission. 3/

Even so, in 1976-1977 FPL refused Ft. Pierce's repeated requests for tariff service and sought to abandon wholesale service to Homestead. When Ft. Pierce persisted in its requests, FPL filed a new wholesale tariff under which for Cities it proposed to limit such service to New Smryrna Beach and Starke alone.

Following a hearing, the FERC rejected FPL's proposal as "anticompetitive" and the Company was compelled to continue tariff service to Homestead and Ft. Pierce. Opinion Nos. 57 and 57-A, ~su ra.

Article IX of FPL's settlement license conditions would restrict "wholesale firm power sales" to systems in or near its retail service area. Further, contrary to Opinion No. 57, 4/ the proposed license conditions permit a reduction in wholesale power availability, if a system obtains St. Lucie capacity or 1 F U.S. 453 orz a Power 1972 S Lz. t Co. v. Federal Power Commission, 404 2/ Gainesville Utilities De t. v. Florida Power Cor ., 402 U.S.

515 1971) 3/ Xn the 1960's FPL had limited municipal systems to emergency" power. This power was, by definition, not power on which Cities could plan and, was higher priced than the "wholesale" power sold to cooperatives on a long term basis.

(App ~ E76) ~

4/ 32 PUR 4th at 339-40.

56 capacity from any source that uses FPL's transmission system, thereby making the price of obtaining direct nuclear access or use of transmission a loss of wholesale power rights. Further, resale restrictions in Article IX(b) could effectively limit electric power coordination by systems purchasing wholesale power. 1/

The Company's policy of refusing wholesale power to municipa-lities is not, new. For example, such policy was detailed publicly before the Federal Power Commission in 1965-67 in a pro-ceeding concerning FPL's refusal to sell wholesale to Clewiston.

Florida Power 8 Li ht Co., 37 FPC 544 (1967), order reversed, 430 F.2d 1377 (5th Cir. 1970), reversed and remanded, 404 U.S. 453 (1972). The decision of the Administrative Law Judge, approved in pertinent. part by the Commission in 1967, detailed FPL's repeated refusals to sell wholesale to Clewiston. FPL's explana-tion was that the making of wholesale sales to municipalities was "contrary to public policy, that it would not sell to a municipal at wholesale except in the case of furnishing an emergency supply."

1 Article IX is unclear. It is assumed that the use of the word "required" in Article IX(a) refers to a neighboring entity's retail load. However, systems actual or potential loads and reserves requirements increase gradually and systems acquire generation to meet future loads; reductions in present wholesale power availability based upon the exercise of generation options could force a system to either forego present options to meet future needs or lose valuable wholesale power rights. Apart from limiting competition in wholesale power markets, restraints on resale of wholesale power could limit the economic ability of systems to obtain power supply to meet future needs.

57 As detailed in Cities'esponse to FPL's Initial Interrogatory No. 9, 1/ the FPL refusals to deal with Clewiston were not atypical. It was well known among Florida municipals that FPL would not, sell wholesale. For purposes here, it is exceedingly significant that both in the case of Clewiston and that of the Cities protesting wholesale power limitations in the context of Opinion No. 57, there was extreme pressure for them to sell their systems to FPL. See Cities'esponse to Interrogatory No. 21, App. D59-D87. FPL's application to the Federal Power Commission to acquire the Vero Beach electric system contained a report to the City prepared by Ernst 6 Ernst, which appended an examination of available power supply options to Vero Beach.

That report, filed as art, of FPL's a lication, listed among other things that no "wheeling" options (or, therefore, wholesale power supply options) were available. App. C403-C404.

FPL repeatedly wrote New Smyrna Beach that wholesale power would not be available on a long-term basis: For example, in an August 5, 1959 letter from Alan B. Wright, Vice President of FPL to the City (PL-65), Mr. Wright states:

"In regard to your inquiry concerning the sale of whole-sale power on a long-term basis, this will confirm our previous statement in regard to this question; namely that we do not have any arrangement to sell wholesale to municipalities on a long-term basis and would not change our policy at this time."

1/ Served in Gainesville Re ional Utilities, et al. v. Florida Power S Li ht Com an , S.D.Fla. No. 79-5101-CIV-JLK. App. D40-D58.

58 In a November 25, 1970 letter from Mr. Wright to J.T. Bensley New Smyrna Beach's Director of Utilities, the Company states that its provisions of power "should not be interpreted in any manner as firm power but rather as stated, on the basis of availability."

As is set forth in Cities'esponse to FPL Interrogatory No.

9 (App. D40-D58), various testimony of top FPL officials admitted the policy. The Company even went so far as imposing resale restrictions in REA wholesale power agreements to prevent sales to municipals. FPL's Chairman of the Board of Directors, Mr.

Richard C. Fullerton, gave one explanation for such policies:

"And we were not ourselves wholesaling to municipalities, so why should we sell to somebody else and let him wholesale it. I mean that is as good a reason as I can think of if you want me to think one up." Deposition of Richard C. Fullerton, Gainesville Utilities De t. v. Florida Power R Li ht Co., M.D-Fla.

No. 68-305-CIV-T, App. I79 When, in 1972-74 FPL finally agreed to a full interconnection with Homestead, it conditioned the interconnection on Homestead's agreement to bear the full cost of interconnection. 1/ Then, when the interconnection was physically completed in 1977, FPL sought to use the completion of the interconnection as an excuse to abandon wholesale service. Moreover, even after agreeing to interconnections with Homestead and others, it refused to provide "wheeling" or transmission services so that Cities could use the interconnection to deal with others than FPL. While FPL has 1 On the theory that FPL would not obtain any benefits from them, even though FPL benefits from every exchange of power ender'hem (i.e.,

needed power as a it makes a profit as a seller, or obtains buyer).

59 finally provided limited transmission services, it has con-tinually refused to file a tariff commitment to these services. 1/

In the early 1970's, with the forewarning of the Florida Power 5 Light v. FPC jurisdictional case and the Gainesville interconnection cases cited above, p. , ~su ra ,the Florida Operating Committee was expanded to permit Cities to join. In the interim since this expansion, however, FPL has resisted efforts by Cities and other utilities in Florida to achieve greater economies through further "pooling." Insofar as it has offered interconnection and transmission arrangements to Cities, it has consciously done so in hopes that it could fend

. off "pooling." For example, as recorded in the 1976 memorandum from FPL "power supply" chief W.E. Coe to FPL Vice President H.L. Allen, at the direction of Board Chairman McDonald (App.

C310), FPL "was to secure uniform bilateral interchange contracts as a deterrent towards formal pooling."

1 Under FERC order Docket Nos. ER78-19 et al.), FPL has finally filed a tariffFERC covering transmission associated with "interchange" service. However, that it it has appealed the requirement do so on the jurisdictional grounds that. the Commission has no statutory authority to order "wheeling." Florida Power S in that case, filed July 28, 1980 stated, at page 20 (App. 0323):

"As explained above, the effect of the Commission's order requiring the filing of a transmission tariff is to extend FPL's obligation to provide transmission ser-vice beyond that which it Such an order far exceeds the has voluntarily undertaken.

Commission's limited authority to order FPL or any wheel."

other electric utility to FOOTNOTE CONTINUED ON NEXT PAGE

60 The above summary of FPL's behavior is supported by volumi-nous documentation (much of it from FPL's own files) and detailed court and agency decisions.

This documentation includes the following:

l. The Fifth Circuit's decision in Gainesville, ~su ra, details the illegal territorial division between FPL and Florida Power Corp. As the Fifth Circuit held at 573 F.2d 294, "Ne hold that the evidence compels a finding that FPL was part of a conspiracy 4/ with Florida Power Corporation (Florida Power) to divide the wholesale power market in Florida."

4/ Section 1 of the Sherman Act makes every "conspiracy in restraint of trade or commerce" illegal (15 USCA

$ 1) e e e FOOTNOTE CONTXNUED FROM PREVlOUS PAGE:

FPL states further (pp. 17, 18):

FPL would be required to provide transmission service for any utility which qualifies for services under the tariff criteria ordered by the Commission....

[A]t the very least, FPL is required to provide service for additional customers which have not requested transmission service contracts." I.For example, those who disagree with their terms].

And at pp. 19-20, the Company states:

"Arguably, the Commission could change those provisions on the ground that t'e filed provisions are "unjust,,

unreasonable or unlawful," with the result that FPL could be required to provide a broader scope of services to a greater number of potential buyers than the Company had contemplated when it filed its individual transmission service agreements."

Regardless whether FPL is correct on the FERC jurisdictional issue, it plainly resists transmission.

61

2. Opinion Nos. 57 and 57-A of the FERC 1/ detail both FPL's 1976-1977 efforts to limit wholesale service and FPL's relationship with Homestead and Ft. Pierce, including its acquisition practices and attempts at restrictive dealing.

Indeed, the Company's filing in that docket sought to eliminate the ability of municipal systems having generation to buy whole-sale power instead of generating, where wholesale power purchases would be cheaper. Thus, municipal systems would be forced to operate oil-fired units rather than purchase wholesale power.

Further, wholesale service was proposed to be restricted to existing customers; and those who could obtain wholesale power, under the proposed filing, were to be disallowed full coor-dination. 2/

1 FPL withdrew its appeal from FERC's decision.

2/ The proposed tariff filing was as follows:

Sale for Resale Florida Power 6 Light Total Requirements Company, FPC Electric Rate Schedule SR-2 Tariff, Original Volume No. 1, Fourth Revised Sheet No. 5.

AVAILABLE:

delivery for total power requirements of electric utility systems for their own use or for resale. Such electric utility systems are Clay Electric Cooperative, Inc., Glades Electric Cooperative, Inc., Lee County Electric Cooperative, Inc., Okefenoke Rural Electric Membership Corporation, Peace River Electric Cooperative, Inc. and Suwannee Valley Electric Cooperative, Inc.

This schedule shall not a 1 as substitute or replacement ower to a enerating utility s stem for which interchan e power a reements are available or to which Sale for Resale Partial Requirements Rate Schedules PR is applicable." (Emphasis supplied).

FOOTNOTE CONTINUED ON NEXT PAGE

3. Cities'esponse to FPL's initial interrogatory requests in the District Court case (Docket No. 79-5101-CIV-JLK,

~su ra) details the documentation supporting the following i/:

FOOTNOTE CONTINUED FROM PREVIOUS PAGE:

"Sale for Resale Second Revised Sheet Total Requirements No. 7.

Rate Schedule PR AVAILABLE:

To electric service supplied to electric utility systems for their partial power requirements at any point of delivery to com lement the insufficient eneratin ca acit and/or firm ower 2"

systems are Florida Keys Electric Cooperative Association, Inc.,

Utilities Commission of the City of New Smyrna Beach, Florida, and the City of Starke, Florida. This schedule shall not a 1 as substitute or replacement ower to a eneratin utility s stem for which full service interchan e ower a reements are The proposed tariffs showed that:

1) FPSL refused to sell total requirements wholesale power to new customers.
2) FPSL refused to sell wholesale power to systems having generation except to replace "insufficient capacity;" and
3) FPSL would not permit a "full service interchange power agxeement" for systems purchasing wholesale power.

These tariff changes would have prevented the potential sale of wholesale electricity to nearly every municipal system in Florida. The FERC rejected the tariff, stating (32 PUR 4th at 339):

"The proposed restrictive provisions are anticompetitive, we find no countervailing reasons for their implementation, and they are to be deleted."

1/ Cities note that in the current discovery, they have obtained materials from FPL in addition to those available at the time of the interrogatory responses.

63

a. FPL' refusal to deal in wholesale power (see Cities'nswer to FPL interrogatory no. 9, App. D40-D58) 1/;
b. FPL's refusal to interconnect and/or efforts to unlawfully condition interconnection (see Cities'nswer to FPL interrogatory no. 11, App. C137-C165). FPL's actions are set forth in the interrogatory responses. Its conduct restricting pooling and its attempts to limit coordination availability, if a system is buying wholesale power, are evidence of FPL's anticom-petitive intent. Xt is significant that, while Section 2 of the license conditions requires parallel interconnection, no mention is made of any requirement that. FPL share in the costs on a reasonable basis.
c. FPL's historic refusal to provide "wheeling" (transmission) and its more recent efforts to unreasonably limit wheeling (see Cities'nswer to FPL interrogatory 14, App.

C166-C183); as noted PPL still has not filed a PERC tariff for refuses to grant Cities reciprocal transmission rights if they 1 An internal FPL memorandum provided by FPL in discovery recorded a meeting with Homestead City Manager, Olaf Pearson:

"Mr. Pearson again would sell power to Homestead once Turkey Point was if I.illegible] we completed. I answered "No, power it is not our policy to for Municipal Distrib[ution]."

sell App. D7-DS.

And FPL specifically refused a 1966 request of Homestead for access to the Turkey Point units. Eee ~su ra.

64 invest in transmission; l/;

d. FPL's historic and continuing efforts to deny Cities access to the benefits of coordination that FPL has obtained by virtue of size and participation in groups such as the Florida Operating Committee (see Cities'nswer to FPL interrogatory no. 15, App. D59-087); See, e.g., pp. 30-34, infra.
e. FPL' re fusal to provide Cities access to its nuclear units (see Cities'nswer to interrogatory no. 17, App.

D88-D94); Such refusal is a primary subject matter of this case.

f. FPL's attempts, often repeated, to acquire virtually all the municipal systems within its retail service territory. (See Cities'nswer to FPL Interrogatory No. 21, App.

D95-D121);

4. FPL interfered with the gas supply of several Cities, as detailed in the Cross Motion of the City of Tallahassee, Florida For Summary Judgment of Tallahassee's Natural Gas Claims, and supporting memorandum filed March 2, 1981, filed in Gainesville Regional Utilities, et al. v. Florida Power & Li ht Com an, ~eu ra, Docket No. 79 5101 CI-V JLK--
5. FPL has even sought to capture new technology in order to deter municipal competition. For example, FPL has undertaken to obtain the benefits of electricity generated from waste, and is currently engaged in a venture in Dade County, 1 Large systems, such as Florida Power or Tampa Electric, which are directly interconnected with each other gain automatic use of each system's lines for transactions because of the mutual interconnection. With regard to Cities, however, FPL insists on separate, individual interconnection agreements to deter formal pooling. See App. C310 ~

Florida. In a 1973 document, FPL Vice President for Strategic Planning Robert Gardner outlined the considerations involved in FPL's determination to involve itself in generation from waste.

As the Gardner memorandum explained in its "Guidelines= for Power Generation from Municipal Solid Waste Operations" (App. D123)

'2 (emphasis added):

"The amount of direct benefit is small because 2'

1s solid waste can generate only a small fraction of our

1. Augment community and customer resources by displaying corporate responsibilty in assisting the solution of a pressing local problem.
2. Gain experience and insight into the potential for profitable future increased involvement in waste processing.

1 ps another FPL internal document shows, FPL's interest in controlling solid waste, generation was not limited to its retail service territory, but extended "throughout Florida." (App.

D127) See also a March 25, 1974 memorandum from W.M. Klein, (currently an FPL Vice President) to Executive Vice President F.E.

Autrey. The memorandum explained that FPL had to control Dade County's solid waste in a manner that would prevent Dade County from using it to generate electricity. As the memorandum stated, in part (App. D129):

"We also feel that we cannot afford not to par-ticipate [in the Dade County project] since the County representatives seem determined that the 'fuel'ortion of the solid waste be used. They have on several occa-sions made reference to the fact that '.if FPL doesn' use this fuel or steam from the fuel, then they would build and operate their own power plant.'"

"In view of this attitude on the part of Dade County, FPL must work out a way to participate in the Dade County procedure for disposal of solid waste.

Therefore, while insuring that Dade County or the suc-cessful bidder doesn't generate electric we must at the same time avoid setting a precedence that would be completely unacceptable elsewhere on the system."

FPL' refusals to deal were part of a more general program whereby FPL and FPC also conspired to (a) assure that existing or potential municipal systems in one utility's territory would not be able to obtain wholesale power from the other system (b) assist one another in the acquisition of existing municipal systems. 1/

For example, in 1962 R.C. Fullerton, Executive Vice President of FPL received a letter (Appendix I37) from a citizen of Sebring regarding the potential acquisition of the Sebring muni-cipal system by FPL. Mr. Fullerton responded to the citizen that (Appendix I38):

"Thanks for your note about electric service in Sebring. The utility company serving in that vicinity is the Florida Power Corporation of St. Petersburg. We have taken the liberty of forwarding your letter to them for consideration.

I appreciate your fine attitude and thank you for writing.

In forwarding the citizen's inquiry to a Senior Vice President of Florida Power Corporation, Mr. Fullerton's cover letter stated:

"(A)ttached correspondence is self-explanatory. Why don't you go in there and buy this property?" (Appendix I39).

The Sebring exchange, in turn, appears to be a repetition of an earlier exchange regarding Lake Helen. (Appendix I40-I43). In a June 23, 1958 "

Dear Bill" letter from "Bob,

" (an exchange between FPL's President and General Manager Robert Fite and Florida Power Corporation's President William Clapp) 2/ "Bob" wrote:

1 T e ocuments quoted in the text above includes some of those cited by the Gainesville court, 'at 573 F.2d, 297-299. s 2/ As recognized by the Gainesville court, at 298.

Dear Bill:

When we discussed the territorial question in Boston the other day, you mentioned that you were interested in buying the electric facilities in Lake Helen. Perhaps you have forgotten but back in 1956 we received an inquiry from Lake Helen and wrote them that they were not in our territory and we had no proposal to make. Alan B. Wright signed the letter and sent you a blind copy. I am enclosing reproductions of these letters for your information.

Here's hoping you get Lake Helen.

Bob" The division of "acquisition rights" was accompanied by recognition that neither system would provide power supply alter-natives for an existing franchise that wished to consider munici-pal ownership. 1/

On February 3, 1956, (Appendix I46-I48) for example, the City of Arcadia wrote to Florida Power Corporation. It stated that its franchise with FPL was expiring and that the City was considering the purchase of the FPL distribution system. It asked whether "Florida Power Corporation would be interested in discussing the 1 Of special additional note is evidence of early awareness of the likelihood of private utility monopoly over nuclear power and the possibility that the express denial of smaller to nuclear power dates back nearly a quarter of a century.

systems'ccess By letter -of December 7, 1955, FPL President Clapp wrote Seminole Electric Cooperative President Parks E. Baker that FPL would not provide backup services for a 40 MW nuclear reactor which Seminole proposed to build near Perry, Florida. A blind copy of the letter was sent to FPL's Robert Fite. See Appendix I44.

On early municipal recognition of the importance of atomic power, see Appendix I45, obtained from FPL in the Gainesville case. Thz.s document, an editorial applauding the decision of Lake City voters to reject municipal ownership, records that the local citizens'ommittee stressed two main objections to public ownership. The second was that "A small city-owned plant could not provide dependable service and there was grave danger that it might even become obsolete in a few years due to atomic power developments."

wholesale of electric current to the City of Florida." By letter of February 7, 1956 (Appendix I46-I48) to "Bob" Fite, "Bill" Clapp enclosed the City's letter and wrote that:

"I am asking Mr. A.V. Benson, our Division Manager in Lake Wales, to go by and talk to the author of the attached letter. By answering this letter verbally, I figure we might be of some assistance in pointing out to the City Attorney the error of their ways. You may be assured our answer is that we have no power facilities within this area.

Mr. Benson will point out to the City Attorney the fact that what they have in mind cannot possibly pay them as well as the renewal of your franchise. h We will give you a complete report of our contact."

In response to the February 7 letter Fite thanked Clapp for his help and stated that "I sure hope we have an opportunity to repay you." (Appendix I46-X48).

Gainesville documents show that FPL did repay Florida by refusing wholesale service to Florida Power franchises. In 1962-63, for example, the City of Winter Garden was considering the creation of a municipal system. In a telegram to a Citizens Committee (Appendix Z49) Mr. Fite stated that FPL did not pro-vide wholesale power, and, in any case, would not serve an entity not in its service territory:

FLORIDA POWER 5: LIGHT COMPANY HAS NO FORMAL 'OR INFORMAL REQUEST THAT I KNOW OF TO SELL POWER TO WINTER GARDEN. WE DO NOT SUPPLY MUNXCXPAL SYSTEMS FIRM WHOLESALE POWER FOR DISTRXBUTXON THROUGH A MUNICIPAL DISTRIBUTZON SYSTEM.

WINTER GARDEN IS BEYOND THE LXMXTS OF OUR ECONOMIC SERVICE AREA WHICH~ IN ITSELF'OULD PRECLUDE A SUPPLY FROM OUR COMPANY EVEN IF THE OTHER CONDXTIONS CXTED ABOVE DID NOT PREVAIL.

As the discovery document shows, a blind carbon copy of the telegram was sent to Mr. Clapp.

There can be little question that FPL/FPC's longstanding anticompetitive practices and policies were well known to munici-pal systems, and to cities considering forming municipal systems, throughout Florida. Thus, not only were existing systems denied the opportunity to obtain benefits from wholesale purchases, but potential systems were deterred from considering entry into the electric business (and thereby from providing a competitive sti-mulus to FPL and FPC).

The deterrence effect of knowledge of FPL/FPC practices and policies was evidenced, for example, in Haines City. There, in 1967, citizens considered the possibility of replacing the Florida Power Corporation franchise service with municipal service. As a "Fact Finding Committee" reported to the City (Appendix I50-I54):

"Extremely reliable sources lead us to believe the following:"

2. It would not be feasible at this time for us to con-tact-another source of power in the event we moved to distribute. Due to the interconnecting systems in existence between the various distributors and their reciprocal agreements for supplying each other as required during emergency periods and peak load in capacity, it could not be expected that any supplier would transgress."

"It should be stressed that in the event, it is decided that an attempt be made to distribute and/or generate and distribute, the Commission should prepare itself for lengthy legal and political negotiations to obtain any successful conclusion. The rewards of the sale of power are such that every endeavor by existing distributors will be made to assure their continuation in this field. A precedent would have far reaching effects on power companies as regards other municipalities in the event we were able to acquire the local facilities. It is believed that Power companies would not

70 submit to this without exhausting every means to preclude This stand has been acknowledged by Florida Power. In light it.

of the above and the considered opinion from several very reliable areas, the committee suggests that complete unani-mity of opinion of the Commission of the utmost importance.

The "Fact Finding" report specifically noted that the Committee had "(I)nvestigated thoroughly the recent decision of Winter Garden to grant a franchise rather than enter into munici-pal operation." There, as cited above, FPL had refused to pro-vide the city with a power supply alternative. Haines City' decision not to enter the electric business was undoubtedly influenced by knowledge of FPL's (unlawful) policy. Thus, in the case of Haines City, as well as Winter Garden, FPL's unlawful policy helped to prevent the entry of new- competitors and the stimulus of competition -- within the Florida Power Corporation retail service territory.

In sum, the joint action of FPL and FPC action that took place throughout both the FPL aud FPC territories actively precluded and effectively deterred attempts to create viable public electric systems, and viable competitors to FPL (and FPC) .

As its actions illustrate, FPL's program was not limited to affecting municipal utilities within its retail service area, assuming such limitation would have been possible where there was peninsular-wide coordination. FPL's recent campaigns to gain renewal of its Daytona Beach franchise and to acquire the Vero Beach system provide compelling public testimony to FPL's percep-tion that it is in competition with public systems throughout Florida. As shown by Appendix I55-I57, FPL's advertising

71 campaigns focused on comparisons between FPL and municipal advertising provided the following information:

"Florida Power 6 Light Company's bills traditionally are among the State's lowest, as documented by Jacksonville Electric Authority's monthly survey of 21 Florida electric utilities. Included in the JEA survey are investor-owned utilities, municipal systems and rural electric cooperatives." Appendix I55-I57.

"Since 1947, You'e had one of the lowest electric rates in Florida.

Back in '47, a statewide survey showed that FP&L had the second lowest rates among 23 Florida electric companies.

Today, we'e doing even better.

Because now, according to an April '77 survey among 20 electric suppliers, we have the lowest rates. And that group included municipally-owned power facilities.

In fact, over the past 30 years, Daytona Beach has had one of the lowest electric rates in the state.

Xn 1947, costs averaged about 3.9 cents per kilowatt hour. Today, it's actually a little lower, at about 3.5 cents.

And higher now, if you'e been it's mostly wondering why total monthly bills are because the average home uses six times more electricity today than it did then.

In your own interests, remember these facts when you vote on the electric franchise issue in June.

Because it's the truth." (Appendix X55-I57)

"DO CONSUMERS BENEFIT FROM LOWER WHOLESALE RATES CHARGED TO MUNXCIPAL UTILITIES2" "The money that a municipal utility saves by paying wholesale rates is more than offset by the costs of maintaining and operating the distribution system, along with the localized costs of administration, billing and other functions. The 28 non-hydro municipal utilities in Florida charge customers higher retail rates than FPSL does because the larger, investor-owned organization can gain greater economies of scale in all facets of its operation." (Id.)

72 In a revealing article for Electrical World (Appendix I58-I59),

FPL Communications Coordinator Anthony P.X. Bothwell dwelled on the importance of statewide rate comparisons in "The Daytona Campaign." As Mr. Bothwell explained:

The fact that FPL bills ranked among the state's lowest was developed in a series of advertising messages that had signi-ficant impact even after the argument lost its news value.

Monthly bill comparisons were published in ads starting in December and continuing through May. Reinforcement was achieved by airing a companion radio spot each time a new bill ad was placed in the paper."

When a focus group of Miami,residents was shown one of the bill-comparison ads used in Daytona Beach, their unanimous reaction was that FPL must have juggled the figures. Yet through repetition and mutual reinforcement, Daytona Beach residents found out the facts about how FPL bills compared to others in Florida.

The receptivity of Daytonans to the monthly bill comparisons was enhanced by other FPL messages on a peripheral issue.

Although it's hard for consumers to think of an electric bill as low. by any standard, most people do believe private enterprise performs services at a lower cost than government.

The superior 'performance of private enterprise was developed both explicitly and implicitly in FPL ads, spots, and releases during Phase II of the campaign. Througn what might be called peripheral reinforcement, "cognitive dissonance" was made to work in favor of FPL on the bills issue."

In sum, FPL has historically been motivated by a desire to eliminate or render uneconomic public systems throughout Florida.

FPL has perceived that the denial of small systems'ccess to the benefits of coordination with other utilities is critical to this effort.

73 FPL's desire to preserve its dominance in bulk power genera-tion provides further motivation for anticompetitive behavior in the State bulk power market. FPL has come to realize that control of the statewide market can provide an important, source of business in its own right.

As recognized by FPL Vice President for Planning Robert Gardner in a July, 1976 memorandum (Appendix I64, page 3),

"[D]evelopments in our relationships with other utilities require that we view our business differently than the traditional and "official" way." Rather than a "single tightly integrated busi-ness serving end use customers," Gardner explained, an "x-ray" of FPL "reveals the existence of two principal businesses: a bulk power business and an electric service business." As explained by Mr. Gardner in a further memorandum (Appendix I72, page 12),

the former consists of wholesale sales regulated by the rERC, while the latter consists of retail sales regulated by the State Public Service Commission.

Mr. Gardner's memorandum was written contemporaneously with a System Planning Department report (Appendix Il-I12), that analyzed the statewide bulk power market for the 1977-1985 period. As shown in this document, 1/ for example, in July, 1976 FPL's System Planning Department undertook to "appraise the potential market for firm interchange power in Florida during the period from 1977 to 1985." The analysis reveals FPL's perception that 1 See a so Appendix I4, at 3.

74 generating systems tbrougbout peninsular Florida public and private are potential buyers and sellers in the bulk firm power market. Most importantly, for present purposes, four of the five systems singled out by the analysis as competitors with FPEL in the sale of power are municipal systems located outside of FP&L's retail service territory Tallahassee, Gainesville, Lakeland and Orlando. (page 3). Thus, FPL not only recognizes the exist. ence of a statewide market for firm bulk power, but views public systems in the northern part of the state as prime I

competition.

C. Although FPL Itself Refused To Deal, Cities Still Sought The Benefits Of Coordination, Including The Ability To Share In Nuclear Units.

Rebuffed by the largest utilities, Cities searched for coor-dination possibilities among themselves in the 1960's. Even so, FPL and co-conspirator Florida Power Corp.'s possession of vir-tually all transmission in peninsular Florida meant that the two companies could make joint efforts among Cities virtually impossible by limiting Cities 'ccess to the transmission grid.

In fact, FPL both resisted interconnection and, where it did interconnect, refused wheeling. It was not until 1975 that FPL first provided even limited wheeling for any of Cities, so that New Smyrna Beach could gain access to Florida Power Corp.'s Crystal River nuclear unit.

Thus, in their search for alternatives, Cities were forced to consider the construction of an entirely new electric grid, as an alternative to the grid operated by FPL (and the Florida

75 Operating Committee). That. Cities did consider such a costly alternative is strong testimony to both the strength of their interest in coordination and the strength of the resistance they faced from FPL to participation with FPL and Florida Power Corp.

As Cities proceeded, FPL was well aware of Cities'earch for these economies. Its position and that of co-conspirator Florida Power Corp. was one of anxious concern and deterrence, unlike the assistance they gave each other.

Cities'fforts included the following:

1. Study and discussion of possible pooling arrange-ments among smaller systems.

Beginning in 1964, Robert E. Bathen, an engineering con-sultant to some Cities advised the formation of a municipal power pool. (App. D131-D154) FPL and Florida Power Corporation were aware of, and concerned about, this possibility, even while suspecting that among themselves Cities could not compete with the Florida Operating Committee pool.

In a July ll, 1967 letter (App. D155), Florida Power Corporation President W.J. Clapp transmitted to FPL President R.H. Fite and executives of TECO and Gulf Power a map of the "Potential Florida Municipal Power Pool". In addition,'he letter enclosed a Florida Power Corporation analysis that showed that the municipal pool could not achieve the economies of scale to compete with "the presently existing and rapidly growing Florida Power Pool." (i.e., the Florida Operating Committee of the largest utilities). (App. D156) In 1971 just as he was arriving at FPL, current Board Chairman Marshall McDonald

received a memorandum from FPL Vice President H.W. Page 0

transmitting "a paper presented by one of the municipal con-sultants advocating a Florida municipal power pool. You may not wish to read it all, but the map is a must." (App. D159)

In the latter part of the 1960's some Cities were also involved in the Yankee-Dixie project, which proposed to link systems in Florida with "mine mouth" coal plants in Appalachia (App. D160-D205), and the "twelve-city" study (App. D206-D222),

which considered the possibility for joint activities among muni-cipal systems primarily receiving power from Florida Power Corporation.

FPL followed these projects with concern as well. As a 1971 memorandum, by Vice President Ben Fuqua put it (App. D224):

"Let us suppose that the Yankee-Dixie project became a reality, with the Florida municipal electric cooperative grid as its southern anchor. It is readily seen what a problem that would pose for the investor owned electric companies in Florida.

Similarly, a 1969 note evidently to FPL Vice President J.G.

Spencer regarding a clipping on the "twelve cities" study noted (App. 225):

"The proposed 'system'ould really be 'stretched out'... However, the fact, that a study is to be made certainly is a matter of great concern."

2. FMUA committees.

In 1966-1967 the Florida Municipal Utilities Assocation (FMUA), to which Cities belonged, formed committees to consider ways in which smaller systems could join together to gain the benefits of coordination.

77 The documents from these committees show that Cities were aware that larger systems would not permit the smaller ones to participate in the Florida Operating Committee pool and would likely oppose the municipals'fforts to "go it alone."

For example, in a June 9, 1966 letter announcing the for-mation of the "interconnection committee," a Jacksonville offical wrote (App. D227):

"I think the committee should also weigh the advan-tages that can be gained by the smaller municipalities tying to the larger municipalities, such as Jacksonville, Orlando or Lakeland inasmuch as the larger ones are already tied with the private power companies and there would be no necessity then for the smaller municipals to chance the domination of their system by a direct interconnection with a private company.

"I think, too, the committee should explore the attitudes of the officers and directors of the private companies in relation to our determination to have a municipal grid. Since collectively we would have strong support for our systems, it might make the private com-panies face the facts of life and accept us as a part of the statewide operating grid system. I have had some indication that there is a softening in their attitude.

As the June 9, 1966 letter stated, municipal access to nuclear power was an express hope in founding the committee. Id.

"I think the committee ought to consider jointly owned large nuclear generating plants and we should discuss the legal aspects of joint ownership of facilities."

In establishing the Committee it was further observed that (App. D230):

"(O)nly by being electrically interconnected through a strong transmission system, owned and operated at least in part by the Municipal systems, can the true benefits of scale in large modern conventional and nuclear ~lants accrue tc Municipal systems." (emphasis

~added

78 Xn a July 1967 report, the FMUA Committee explained that the smaller systems had no alternative to coordination among them-selves, but that, the larger systems would make. municipal coor-dination difficult (App. D232-D233):

"1. The municipal systems in Florida must tie or die o "2. Some of the municipals will be required to commit themselves to generation and some of the munici-pals will have to commit themselves to purchase their wholesale power requirements from a Florida Municipal generation and transmission organized as a nonprofit corporation.

"3. The committee feels that a generation and transmission system from the Lakeland area to the Gainesville and Jacksonville area is entirely practical and feasible, but that the same could not be accomplished within the next few years due to the pressures we may expect from the private power companies upon our local and state authorities."

As evidenced by FPL discovery documents, FPL evidently kept continuing watch on Cities'onsideration of joint efforts.

Documents at App. D234; D235-D236; and D237-D238 are three of many reports, evidently submitted to FPL officials periodically, on New Smryna Beach. As the first report, dated December 1966, records (App. D234):

"Little I.New Smyrna Utilities Director John Little]

expected to attend a meeting in Jacksonville of the Municipal plant operators. He has wild ideas of tieing all municipal plants together in a grid for mutual help.

He thinks this would make them competive (sic] with pri-vate companies."

79 As the second report, also evidently in 1966, records (App. D235):

"Little is proposing a 500 Mw atomic plant to supply all municipal'plants in an emergency or peak load." 1/

3. The Gainesville litigation.

If the smaller systems needed further proof of their inability to gain access to the statewide grid created by FPL and the Florida Operating Committee, it was dramatically provided in 1965-1966 by FPL's and Florida Power Corp.'s refusal of Gainesville's requests for interconnection.

Following these refusals Gainesville undertook costly and protracted litigation to establish its right and, by extension, the rights of other systems vis-a-vis FPL and Florida Power Corporation. This litigation, which other Cities followed closely (see App. D239-D240) resulted in a Supreme Court holding for Gainesville and a Court. of Appeals verdict for Gainesville in 1978.

By 1973, as FPL was undergoing its first antitrust review in connection with a nuclear license, 2/ FPL apparently knew, as an FPL discovery document records (Gardner Exh. 46, App. B471):

1 A third such report. records App. D237):

"City Manager, says FPEL has no spare power, could not and will not wholesale power, so City could not buy power from them. Had a very hard time getting power for Samsula during the change over. Florida Power Corp.

does wholesale power but FP&L will not let them in territory, so there is nothing to do but install another engine."

2/ The Turkey Point and St. Lucie I units were licensed as "research and development" plants; they were not subject to pre-license antitrust review, as is the St. Lucie 2 unit.

80 "Cities want to share ownership and wheeling; etc." 1/

4. The Tallahassee experience.

As recorded in an internal Florida Power Corporation memoran-dum (produced in the Gainesville case, App. El-E3), in 1966 Tallahassee sought access to the Florida Operating Committee, but was rebuffed. The September 8, 1966 memorandum, concerning a meeting between Florida Power Corp. officials and Tallahassee, including Tallahassee consultant Robert Bathen, records, App.'2, that Mr. Bathen stated that the City was interested in being a member of the Florida Pool. Messrs. Dunn and Perez t:Florida Power Corp. officials] assured Mr. Bathen that there was no pool, that the Florida Operating Group carried no obligations but was predicated on faith and good will and a spirit of cooperation, and that the Company could not invite anyone into the Group without a willingness on the part, of other members to cooperate."

Tallahassee's request was not successful, at least not until 1971 when the Florida Operating Committee was generally expanded.

As discussed, ~su ra FPL,and Florida Power Corp. denied an interconnection to Gainesville in 1966. In that year, the smaller systems, including Tallahassee, began studying coor-dination and pooling among themselves. Tallahassee official Joe B. Dykes, Jr., worked on the Florida Municipal Utilities Association's power supply committees. (App. E4) As meeting minutes record, the municipal systems recognized that the big utilities would not let the smaller ones into their pool, and 1 Mr. Gardner was not familiar with the notes (Gardner Exh.

46), and Cities have requested further identification.

81 that the small systems would need to hang together in order to avoid hanging separately.

As recorded in the June 15, 1967 minutes of the FMUA Power Supply Committee (emphasis added) (App. E5):

"Mr. Dykes suggested joint municipal and company transmission.'/

"It was suggested that a municipally owned central generation and transmission system would be large enough for them to try to negotiate with the private companies on an equal basis, it was pointed out that Florida Power Corp. was using the high wholesale rates to small muni-cipals to buy out the municipal systems."

Florida Power Corp. and co-conspirator.FPL actively sought to frustrate the ability of Cities to even consider alternatives to the Florida Operating Committee. In 1966 Tallahassee retained Robert E. Bathen, who had suggested the'availabiity of coordination and of nuclear power for smaller systems. As detailed below, Florida Power Corporation demanded that-Tallahassee limit or refuse Bathen's employment if it wished to discuss interconnection with Florida Power Corporation. FPL promptly made parallel demands within its retail territory. 2/

Thus, FPL's conspiracy with Florida Power Corporation acted to deprive "outside" cities, as well as "inside" cities from access to nuclear generation and coordinated operations.

In April of 1967 Florida Power Corporation learned, through a newspaper article, that Tallahassee was considering hiring R.W.

Beck R Associates to perform a study for Tallahassee (App.

1 FPL, at present, continues to refuse Cities'equests for joint. transmission investment.

O 2/ FPL's actions are described, infra.

82 ES-E9). Florida Power Corp. had previously warned Tallahassee not to use Bathen. App. E26-D29 and E74-E75. Mr. Bathen was the Florida head of Beck's Florida office. As the article summarized, (App. E9) (emphasis added).

"Acquisition of Florida Power Corporation's Lake Talquin power plant, participation in a vast regional power pool and eventually the development of a nuclear power plant are some of the long range possibilities that would be included in a proposed electric utility study for the City of Tallahassee."

R.W. Beck proposed a study that would include Tallahassee's participation in an alternate power pool and in nuclear power.

The April 1, 1967 R.W. Beck proposal stated in regard to nuclear power (at 5, App. E14):

units under the Base Case in the early years of the 20 year program no consideration will be given during at least the first 10 years to a nuclear power plant.

However, if in the latter years of the 20 year program the projected loads indicate base load generating units of a size sufficient for consideration of nuclear power as an alternate to fossil fueled generation, then a discussion will be included in the Report as to the pre-sent day relative economics of nuclear versus fossil fueled large generating plants. This discussion which would include comparative cost parameters will be useful to the City in guiding its thinking toward the problems and possibilities of this type of potential power supply in the latter part of the 20 year projected load period when loads may be in the neighborhood of 500,000 Kwh."

Florida Power Corp. promptly and repeatedly told Tallahassee that ongoing interconnection negotiation would cease if Tallahassee proceeded to employ Mr. Bathen, who had also raised the possibility of expanded municipal coordination. 1/ As a 1 Florida Power Corp.'s insistence that Tallahassee sever ties with R.W. Beck was not the only concession that Tallahassee had to make in order to gain an interconection. Florida Power, in parallel with FPL, insisted that small systems enter into terri-torial agreements as a precondition to interconnection (see App.

E29, E71-D73). Thus, Tallahassee was required to give up FOOTNOTE CONTINUED ON NEXT PAGE

83 June 9, 1967 Florida Power Corp. memorandum, recording a meeting of the prior day, described (App. E23):

"At the opening of this meeting we expressed a strong unwillingness to continue negotiating with Tallahassee on an interconnection as long as there was any chance of Beck 6 Associates being in the Tallahassee power supply problem. ... We stressed that if show up, we would call a halt to the negotiations."

Beck did While issuing the ultimatum to Tallahassee, Florida Power Corp. President W.J. Clapp sent a letter to top officials of the other private utilities, including FPL President Robert H. Fite, warning of the "activities" of R. W. Beck and Associates (and also of attorney George Spiegel). Both Florida Power Corp. and FPL appeared concerned lest the Cities be advised of the possibi-lity of greater coordination or participation than was then available.to them. As the July 11, 1967 letter stated in part (App. E30) (emphasis in original):

"I know each of you is familiar with the activities of George Spiegel,'ashington attorney, and R.W. Beck and Associates, engineers, in the furtherance of public power efforts in Florida. Perhaps you have already received copies of the enclosed map,'Potential Florida Municipal Power Pool," which Bob Bathen of Beck and Associates has been advocating among the municipal uti-lities of the state and about which he has made several speeches out of state.

FOOTNOTE CONTINUED FROM PREVIOUS PAGE:

territory. While seeking interconnection with Florida Power Corp., Tallahassee and other Cities kept informed of Gainesville's litigation against Florida Power Corp. and FPL. See, for example, the July 16, 1968 letter from Gainesville to Tallahassee, App. D239-D240). This litigation, which was ini-tiated in 1968, resulted in a 1971 Supreme Court decision upholding a Federal Power Commission order that Florida Power interconnect with Tallahassee (Gainesville Utilities Dept. v.

Florida Power Cor ., 40 FPC 1227 1968 , affirmed, 402 U.S. 515 1972 and the 1978 Fifth Circuit finding that Florida Power Corp. and FPL were engaged in a conspiracy in violation of the Sherman Act. Gainesville Utilities De t. v. Florida'Power 6 Li ht Co ~ , 573 F.2d 292 5th Cir. , cert. denied, 439 U.S..966 (1978 . This lengthy and costly litigation reaffirmed the understanding of Tallahassee and others that FPL and Florida Power Corp. would require Cities to spend time and money to fight for their rights to deal with the larger systems.

"All of this is being sent to you so that you can be alerted to the fact that a concerted effort is being made by Spiegel and Bathen in the furtherance of public power and,'o doubt, they are going to make every effort to contact all communities whose franchise might be

~ex irin within the next tew years." i/

The resistance of the largest utilities to allow cities access to nuclear generation was again publicly confirmed when in 1968 Florida Power Corp. flatly rejected Gainesville's request to participate in its recently announced Crystal River 3 unit (App.

E38-E43). When Gainesville sought to press its claim at the Atomic Energy Commission, it was denied on the grounds that the Crystal River unit (like the Turkey Point units and St. Lucie 1) was to be licensed as a research and development reactor and therefore was not subject to pre-licensing antitrust review by the AEC. 2/

D. FPL Could Have Built Large, More Economical Plants And Shared Them With Cities.

FPL could have but did not purchase larger nuclear units than it did at a lesser cost per unit of power. Had Cities been offered that part of the larger units not needed by FPL, the 1 As recorded in the July 27, 1967 Homestead City Council minu-tes (App. E34), two weeks after the letter from Florida Power Corp., FPL opposed Homestead's hiring George Spiegel. When Homestead officials did meet with FPL to request wholesale power and interconnection, FPL got the City council to agree, "without too much enthusiasm," as FPL put it, "to consider a proposal at the same time to purchase or lease your system." App. D10.

2/ In January 1965, Florida Power later offered limited Crystal River capacity to cities throughout Florida.

85 larger units could have been built and the cost to FPL's custo-mers would have been reduced. FPL likewise cancelled its South Dade nuclear units (Docket- No. P-636-A), rather than accept Cities'articipation.

Internal memoranda to FPL's Senior Management Council show the anticompetitive reason for FPL's refusals to let the Cities have access to economical generating plants by, for example, FPL's building plants large enough to accommodate (Membership on the Council included the Chairman Cities'articipation.

of the Board, President and Executive and Senior Vice Presidents.) As stated at the time of the Council's creation in 1973, one of the "strategy" areas to be considered was "Competition The Florida Electric System". (App. D256) A document to the Council generated by R.G. Gardner,'ice President for Strategic Planning, recognizes (App. D250):

"The municipals-co-operative strategy: should have statewide generation planning, multiple-unit sharing and full coordination."

It listed as one of FPL's consequent "problems" with the municipals'trategy (id.):

"FPaL may not be able to compete if municipals and co-operatives can gain access to generation investment with their low-cost capital. Municipals presently having franchises with FPL will be encouraged to go public."

In 1976-1978 FPL was before the Federal Power Commission seeking to justify its proposed acquisition of the Vero Beach system. FPL had not previously served Vero Beach from its

nuclear units, nor had it offered to provide nuclear access. 1/

Upon acquisition, of course, Vero Beach, as all of FPL's retail customers, would be served, in part, from FPL's nuclear units.

In support of the application, FPL portrayed Vero Beach as a good investment because of its "growth" prospects (Docket No. E-9574, Tr. 56). It was in this context that Staff Counsel asked FPL official J. L. Howard whether the acquisition of such new load would adversely affect FPL's existing customers. FPL, as Mr.

Howard made clear, indicated that any qualitative long-term effect would be beneficial to FPL's existing customers (App.

D326-D328):

"BY MR. ROGERS:

In light of your most recent testimony that there will be some increase in the fuel adjustment charge as a result of the acquisition, some possible increase resulting from having to put on line new generating capacity,'ou have stated very emphatically that no, the last rate request was not predicated in any way on acquisition of Vero Beach, is it not a pretty good conclusion for the Staff to draw that, that acquisition is bound to result in higher rates for the present customers of FPL?

A. No. Shall I explain the reasons?

Q ~ Yes, sir. I license to steal. fsic]

1 During the proceeding before the FERC, a "citizens" hearing was held at Vero Beach. At that hearing, a citizen testified that FPL had not offered nuclear access to Vero (App. C399-C402);

an assertion which FPL has never sought to contradict. (Further evidence indicates that while proposing to acquire Vero Beach, FPL was also denying power (App. C405-C410).

it both wheeling (App. C404) and wholesale

87 A. When you start to talk of future generation you are looking into the future, it will not change our generation expansion plans in the short run. I although adjustment.

it it don't believe will change our base rates, will initially affect our fuel future it will be coal or nuclear. Given the ~re-sent situation in the country, to the extent we otherwise I believe it is consistent with the interest of the ~countr and that the coal genera-tion ~ma will be cheaper than the present genera-tion.

So in the long run I am not sure it will result in increases. There may be some back-and-forth. I think the net effect will not be negative." (emphasis added)

Thus, FPL denied Cities nuclear access and wholesale purchases, when it had testified that it would benefit from a larger market to support new coal and nuclear generation. In fact, FPL's industrial development staff is seeking large new customers (App. D259-D264). 1/

1 When FPL sought to deny wholesale service to Homestead and Ft. Pierce in 1976-1979, it attempted to justify its action by claiming lack of capacity. The Federal Energy Regulatory Commission considered the issue and rejected FPL's position (Opinion No. 57, 32 PUR 4th at 336):

"FPL would'seek to justify its proposed limitations on full and partial requirements availability in terms of operational constraints. Specifically, it asserts that future power supply is too uncertain to allow unlimited access to its requirements service FOOTNOTE CONTINUED ON NEXT PAGE

88 Zn Opinion No. 57, ~eu ra, 32 PUR 4th 313 at 335, the Federal Energy Regulatory Commission found:

Limitations on Alternative Sources of Ca acit Unrebutted Company documents in evidence indicate that it is FPGL's policy to retain full ownership of the nuclear generating plants which it constructs. The Company has stated that the full capacity of these units is needed to serve its own customers, so sharing is not to be anticipated until FPEL reaches the optimum amount of nuclear capacity for its system (Exhibit 27).

However, no party disputes that joint ownership of such facilities would provide municipal and cooperative uti-lities (as well as other utilities in the region) with access to FPEL's economies of scale (Exhibit GT-1, at 6).

FOOTNOTE CONTINUED FROM PREVIOUS PAGE:

"However, the difficulty with this proposition is that a

it has virtually no record support few conjectural statements by Company and is based on witnesses As Opinion No. 57 records, FPL's contention in that case followed a prior attempt to use that strategem to deny service to Homestead in 1973-1974. As the Opinion states (32 PUR 4th at 332, footnotes omitted):

Homestead next requested power from FPL in August of 1973, proposing a firm purchase of 12-16 MW from 1975 through 1980. The City stated that it intended to use this capacity for base load, purchase interchange energy to meet its intermediate load and use its own generation only for peak load capacity and reserve (Exhibit GT-29, at 12).

The Company first decided to respond to Homestead's request with the so-called "Marshall Theory" [evidently FPL Board Chairman Marshal McDonald]: Homestead was to be told that FPGL had no firm power to sell. Company negotiators were advised to have load and reserve esti-mates available to substantiate this reponse (Exhibit GT-29, at 14). Immediately thereafter,'owever, the Company concluded that Homestead had been listed as a customer under all requirements schedule SR and was actually receiving firm power at committed intervals.

89 FPSL is the sole owner of three operating nuclear plants having aggregate capacity of 2,188 MW. FPScL has agreed to share a portion of St. Lucie No. 2 nuclear plant with neighboring systems including Homestead and New Smyrna Beach; however, FPGL documents in evidence indicate that this was done at the insistence of the Justice Department and that FPSL has not committed itself to share the capacity of any future unit (Exhibit GT-71, at 22). 49/

49 In 1973 FP8L considered cancelling St. Lucie No. 2 because of "escalating costs and Justice Department review of our antitrust status" (Exhibit 20). Then in 1976 the Company considered a shift. to coal-fired plants for future base-load generation "to eliminate the ATomic Energy Act as a route to municipals'nvestment in generation" (Exhibit GT-1, at 13). See also, the deci-sion of the Atomic Safety and Licensing Appeal Board, Nuclear Regulatory Commission, in Florida Power R Li ht Co., Docket No. 50-389A (ALAB-420, July 12, 1977 regarding antitrust review proceedings on St. Lucie No ~

2 ~

FPL's settlement license conditions would even permit restriction of the amount of nuclear capacity available to cities in units not yet sized to offset nuclear capacity that the cities might otherwise obtain. Condition VII grants those "neighboring entities and neighboring distribution systems", which are per-mitted St. Lucie 2 entitlements "the opportunity to participate in the ownership of all nuclear units for which the Company files a construction permit application with the NRC prior to January 1, 1990, provided, however, that no opportunity to par-ticipate need be afforded to any neighboring entity or neighboring distribution system in an amount, if any, which would, in the aggregate, result in its owning nuclear generating capacity, or enjoying direct access thereto by unit power purchase or participation through a joint agency, as a percentage of its peak load in excess of what Company's percent of same would be after the addition of the proposed plant."

90 Thus, FPL recognizes the importance of nuclear capacity to Cities and would assure that Cities cannot obtain more than FPL, assuming that this were a realistic hope.

ARGUMENT INTRODUCTION Unless FPL sets forth genuine issues of facts, summary judgment should be ordered that a situation inconsistent with the antitrust laws exists; alternatively, a limited hearing should be held to resolve facts genuinely in dispute. Florida Cities believe the following facts are not reasonably subject to dispute 1/:

(1) FPL controls three out of four operating nuclear units in Peninsular Florida and it is constructing a fourth (St. Lucie Plant, Unit No. 2). It has an effective monopoly control of nuclear facilities. See United States v. Aluminum Co. of America, 148 F.2d 416 (2d Cir. 1945). FPL is refusing to grant access to those facilities, except for limited entitlement under settlement license conditions in this case.

Florida Power S Light can hardly dispute the importance of such facilities, since it has cited its nuclear advantage in acquisition attempts and has sought to limit Cities'uture nuclear access in St. Lucie license conditions. 2/ See pp. 47-53, 1 Attachment 1 contains a statement of the material facts which Florida Cities believe are not genuinely in issue, as required by 10 CFR $ 2 ~ 749 '

2/ The Federal Energy Regulatory Commission's finding of FPL's policy against sharing nuclear capacity is quoted ~su ra.

91

~su ra. Moreover, even if it were found that nuclear facilities O do not constitute an economic "market" under strict, District Court Sherman Act analysis, the Atomic Energy Act deals with "situations inconsistent" with the antitrust laws and unfair com-petition within the meaning of Section 5 of the Federal Trade Commission Act. The Atomic Energy Act's antitrust provisions must be read in the context of the entire Act. Sections 1-3 of the Act, 42 U.S.C. $ 2011-2013, establish that the benefits of nuclear power be broadly directed and that nuclear advantages not be used to limit competition.

Under Section 2 of the Sherman Act, Otter Tail Power Co. v.

United States, 410 U.S. 366 U.S. (1973) and Consumers Power

~Com an (Midland Units 1 a 2), ALAB 452-, 6 NRC 892 (1977), FFL's refusals to deal in nuclear power constitute anticompetitive restraints of trade.

(2) The interconnected systems generation and transmission facilities in Peninsular Florida, as well as FPL's actions set forth in the Statement of Facts and confirmed by Federal Power Commission and Federal Energy Regulatory Commission decisions on which this Board can rely, establish that FPL has dominance in base load generation, transmission and coordination. FPL has acted to restrict Cities access to base load generation, transmission and coordination.

(3) There is a Peninsular Florida geographic market for at least some wholesale and coordination power supply. Such market is confirmed by FPL's actions, public documents, and internal FPL documents. The Company has acted jointly with others in that

92 market to restrict. competition for wholesale power supply throughout peninsula Florida. The Fifth Circuit decision in Gainesville Utilities Dept. v. Florida Power Li ht Co., 573 S

F.2d 292, cert. denied, 439 U.S. 966 (1978) is determinitive that a wholesale territorial division existed,,that the division was illegal, and that it restrained trade.

(4) FPL plans, constructs and operates its nuclear and other base load units in context of coordination with Florida Power and Tampa Electric. The Federal Power Commission has so found in an order that was ultimately affirmed by the United States Supreme Court. Florida Power S Li ht Co., 37 FPC 544 (1967), reversed, 430 F.2d 1377 (5th Cir. 1970), reversed, 404 U.S. 453 (1972).

Company documents and deposition testimony admit that FPL operates in light of such coordination. Indeed, FPL has publicly advertised coordination benefits. A. "situation inconsistent" exists because the Cities are excluded from the fruits of such coordinated activities (e.g., nuclear and wholesale power) as well as from coordination itself.

(5) Florida Power 6 Light has agreed to Orlando par-ticipation in St. Lucie 2 and has offered participation to some Cities in Peninsular Florida, but not to others. Such exclusion is a violation of Section 1 and is otherwise inconsistent with the antitrust laws.

(6) FPL has a retail service monopoly in eastern and southern Florida and competes for wholesale power supply or coor-dination throughout peninsula Florida. FPL's refusals to deal in

93 nuclear and base load power, transmission and coordination help FPL to defeat competition and to preserve and extend its retail e monopoly and in competition at wholesale. Such refusals to deal are in violation of Sections 1 and 2 of the Sherman Act, as con-firmed by Otter Tail, ~su ra, and the principles established by other acts as well (including Section 5 of the Federal Trade Commission Act) .

I. FPL CANNOT LAWFULLY RESTRICT RELIEF TO "INSIDE" CITIES'HE RESTRICTION CONSTITUTES AN UNLAWFUL COMBINATION IN RESTRAINT OF TRADE AND A PERPETUATION OF A MARKET DIVISION.

There is joint ownership for St. Lucie Plant, Unit No. 2.

Orlando is a participant and others have been offered participation. Under these circumstances, FPL's refusals to grant access to other Cities in Peninsular Florida is a group bottleneck and group boycott. Case law establishes that com-panies in the same business may not band. together to control important resources to the exclusion of smaller firms. Such "combination" is plainly a restraint of trade Under Section 1 of the Act. Such cases as United States v. Terminal R.R. Ass'n.,

244 U.S. 383,(1912); Silver v. New York Stock Exchan e, 373 U.S.

341 (1963); Radiant Burners v. Peo les Gas Li ht S Coke Co., 364 U.S. 656 (1961); Klor's, Inc. v. Broadwa -Hale Stores, Xnc., 359 U.S. 207 (1959); Fashion Ori inators'uild of America v.

Federal Trade Commission, 312 U.S. 457 (1941); Associated Press

v. United States, 326 U.S. 1 (1945); Gamco v. Providence Fruit Produce Buildin , Inc., 194 F.2d 484, 487 (1st Cir.), cert.

94 denied, 334 U.S.,817; Toledo Edison Com an (Davis-Besse Units 1

, and 2), ALAS-560 10 NRC 265 (1979).

The standards of Section 1 were recently enunciated by the Second Circuit in Berke Photo, Inc. v. Eastman Kodak Co., 603 F.2d 263 (2d Cir. 1979), cert. denied, 444 U.S. 1093 (1980). The Court states that "the gravamen of a charge under Section 1 of the Sherman Act is conduct in restraint of trade; no fundamental alteration of market structure is necessary." 603 F.2d at 272.

Kodak is more restrictive than other antitrust cases in protecting firms against predisclosure of prospective marketing under Section 2, where such protection is required to protect innovation. However, the case applies a strict, standard where there is joint action (or where there is exclusionary conduct under Section 2):

There is a vast difference, however,'etween actions legal when taken by a single firm and those permitted for two or more companies acting in concert. . . . We have stated that we respect innovation, and we have construed $ 2 of the Act to avoid an interpretation that would stifle it. But this is toto caelo different from an agreement among a few firms to restrict to themselves the rewards of innovations."

603 F.2d at 301.

Nor must the product or service involved be essential in any absolute sense. Contractual relationships as well as facilities may be involved. For example, in Associated Press v. United States, 326 U.S. 1 (1945),'he Supreme Court found that the Associated Press by-laws "had hindered and restrained the sale of interstate news to non-members who competed with members." 326 U.S. at 13. The Court states (326 U.S. at 17-1S): "Zt is Q

95 apparent" that the restrictive practices complained of gave "many newspapers a competitive advantage over their rivals";

"[cjonversely, a newspaper without AP service is more than likely to be at a competitive disadvantage." 1/

A classic example of the principle is Gamco v. Providence Fruit Produce Buildin, Inc., 194 F.2d 484, 487 (1st Cir.), cert.

denied, 344 U.S. 817 (1952) ~ There, lessors of a building housing wholesale fruit dealers, refused renewal of a lease by Gamco, but contended that access was unnecessary since one could sell fruit virtually anywhere, including at a point adjacent to the building. 194 F.2d at 487. The Court found however, that the joint action to deny Gamco access to the building was an illegal exclusion (Id., citations and footnotes omitted):

a monopolized resource seldom lacks substitutes; alternatives will not excuse monopolization . . . . it is only at the Building itself that the purchasers to whom a competing wholesaler must sell and the rail facilities which constitute the most economic method of 1 Quoting the lower court opinion of Judge Learned Hand, the Supreme Court noted:

monopoly is a relative word. If one means the possession of something absolutely necessary to the by it conduct of an activity, there are few except the exclusive possession of some natural resource without which the activity is impossible. Most monopolies, like most patents, give control over only some means of production for which there is a substitute; the possessor enjoys an advantage over his competitors, but he can seldom shut them out altogether; his monopoly is measured by the handicap he can impose . ~ ~ And yet that advantage alone may make a monopoly unlawful."

326 U.S. 17, n. 17 'ndeed, there were newspapers that survived without membership in the Associated Press.

bulk transportation are brought together. To impose upon plaintiff the additional expenses of developing another site, attracting buyers, and transhipping his fruit and produce by truck is clearly to extract. a monopolists'dvantage." The Act does not merely guarantee the right to create markets; the right of entry to old ones.

it also insures The Court concluded that:

"the possibility of duplicating the physical facilities Lcannot] . . . of itself destroy the illegality of the asserted monopolization. Zt is clear... that exclusion from an appropriate market or business opportunity is actionable, notwithstanding substitute opportunities." 194 F.2d at 488.

Accord, Cities of Anaheim v. Southern California Edison, ~su ra, pp. 3-4 of Slip Opinion (Attachment 4).

Any arguments that FPL might make that it should not be forced to sell nuclear capacity to anyone are beside the point.

FPL is selling, selectively, and with a virtual certainty of an anticompetitive effect. Moreover, having offered such capacity to Cities outside its retail service area, FPL is foreclosed from making the market argument.

Even if the Cities offered nuclear capacity which are not within FPL's retail service area along with FPL could be presumed to establish a new market area, FPL's refusal to deal would be no more than a blatant attempt to continue to unlawful wholesale territorial division found illegal in Gainesville Utilities De t.

v. Florida Power li Li ht Co., 573 F.2d 292 (5th Cir.), cert.

denied, 439 U.S. 966 (1978) .. Moreover, there can be no rationale for making capacity available to Gainesville, Orlando and Lake Helen to the exclusion of nearby cities.

FPL's proposed actions are very much like Klor's, Inc. v.

Broadwa -Hale Stores, Xnc., 359 U.S. 207 (1959). Zn Klor's

97 sellers would deal with a favored nearby retail outlet to the exclusion of Klor ', or would deal with Klor ' on less favorable terms . Such action was held to constitute a group boycott and declared illegal ~

Earlier NRC St e Lucie 2 license conditions have provided for a fair share of the plant to be sold to Homestead and the Utilities Commission of New Smyrna Beach, as well as two coopera-tive uti1 ities . FPL has of fered each of these two systems 2 Nw under those conditions ~ Others are being of fered participation under the recent se tt 1 ement .

deal with some cities but not others in Peninsular Florida with regard to essential facilities and services ~ Silver v. New York Stock Exchan e, ~su ra; Monta ue & Co. v. Low , 193 U.ST 3S (1904); Toledo Edison Co., ~su ra, (ordering offer of nuclear capacity by dominant electric companies to smaller systems af t er finding of violation of antitrust laws), 1/ and cases cited immediately ~su ra.

1 ~Com are Missouri Pacific Railwa Co. v. Larabee Flour Mills Co., 2 1 1 U. S . 6 12, 6 19, 620 1909; Louisville and Nashville Railroad Co. v. United States, 238 U. S . 1 19 15; ICC v .

Delaware Lackawana 6 Western Railroad Co., 220 U S 235 ( 19 1 1 ) ~ ~

United States v. Ca ital Transit Co., 325 U S 357 ( 1945 ) ~ ~

Amer'. can Truckin Ass pc watson, Inc . v . Atchison, To eka and Santa Fe Railwa Co., 387 U. S . 397 ( 1967, confirming the obl iga-txon of utilities to deal fairly with al 1, inc luding competitors, once they engage in a particular service ~

I f the carrier however, does not rest behind that sta-tutory shield Lpermitting refusals to other carriers to use its tracks or terminal facil itic s] but. chooses voluntarily to throw the Terminals open to many branches of traffic, it to that extent makes the Yard public Whatever may have been the rights of the carriers in the first. instance; ~ ~ ~ the Appellants cannot open the Yard for most switching purposes and then debar a par-ticu 1 ar shipper from a privilege granted to the great mass of the public.

Louisville and Nashville Railroad Co., ~su ra~ 23S U.S, at j,g.

98 In Toledo Edison, the NRC Licensing Board "characterized the principal issue as 'whether dominant electric companies in a relevant market area which do not compete with one another may make competitive benefits, including coordination and pooling, available to each other while denying these benefits to smaller actual or potential competitive entities within the market. 'he Board judged this a matter of Commission concern because 'the benefits to be shared or denied include power generated from proposed nuclear stations relevant market." 5 NRC at 141 'n

[having] a substantial competitive impact . . . in the broad outline, the decision sustained in large measure the complaining parties'llegations, rejected applicants'egal defenses, concluded that licensing these five nuclear power plants would continue or worsen a situation incon-sistent with the antitrust laws, and imposed remedial conditions on their licenses to ameliorate those consequences."

Toledo Edison Co., 10 NRC at 277-278. After a thorough review of applicable legal standards, the Appeal Board affirmed the Licensing Board, largely on grounds that under the antitrust laws applicant utilities could not deny smaller systems benefits they enjoy themselves.

Moreover, to avoid obligations to other cities in Peninsular Florida, FPL must establish that its planning, construction and operation of nuclear capacity was done independently from other if utilities; not, it is engaged in a Section 1 and 2 conspiracy or combination to injure Cities by depriving them of essential resources. Klor's, Inc. v. Broadwa -Hale Stores, Inc., 359 U.S.

207 (1959); United States v. Terminal Railroad Association of St. Louis, 244 U.S. 383 (1912); Associated Press v. United States 326 U.S. 1 (1945). Gamco v. Providence Fruit Produce

99 (1952); Cities of Anaheim v. Southern California Edison Co.,

~su ra, pp. 3-4 of Slip Opinion (Attachment 4).

However, as

. is manifest, and has been determined by the Federal Power Commission, FPL's base load generation was planned in the context of and in light of extensive joint action with Florida Power Company and Tampa Electric Company. See pp. 26-29,

~su ra. Its documents admit. extensive coordination throughout Peninsular Florida. See generally, Statement of Facts. It can-not. assert the absence of joint action of a nature that would create obligations to deal with all cities.

II. THE CASE LAW CONCERNING ANTITRUST ABUSES BY ELECTRIC UTILITIES CONFIRMS THE UNLAWFUL NATURE OF FPL'S REFUSALS TO DEAL WITH FLORIDA CITIES.

FPL would argue that it has no obligation to grant Cities nuclear access, or at least more than is provided by the sett,lement. 1/ A large body of case law confirms that a firm which controls essential facilities, such as the nuclear facili-ties in this case, has obligations under the ant,itrust laws to I As we have discussed ~su ra, PpL cannot legally hide behind the settlement to argue that a "situation inconsistent" does not exist,. Being contractual, if the settlement itself gives rise to potential anticompetitive effect.s this may be considered.

However, the Company cannot preclude relief that would be in the public interest under $ 105(c)(6) by asking the Board to consider the settlement as exonerat.ing it.s conduct. Otherwise, a party fearing an adverse finding can always prevent. additional relief by adopting a minimally acceptable policy.

As the Supreme Court said in United States v. Grinnell Cor 384 U.S. 563, 577 (1966):

FOOTNOTE CONTINUED ON NEXT PAGE

100 permit fair access to them. Moreover, where a firm such as FPL has a position of economic control in one market, it cannot leverage that control to advantage itself in competition in that or other markets such as retail and bulk power markets.'he leading case is Otter Tail Power Co. v. United States, 410 U.S. 366 (1973), ~su ra. Like FFL, Otter Tail controlled ma jor transmission and generating facilities. Otter Tail refused to transmit or to sell wholesale power to actual or potential smaller systems.

The District Court held, however, United States v. Otter Tail Power Co., 331 F.Supp. 54, 61 (D.Minn. 1971):

that defendant has a monopoly in the relevant market and has consistently refused to deal with municipalities which desired to establish municipally owned systems on the alleged justification that to do so would impair its position of

~

dominance in selling power at retail to towns in its service area. The court concludes that this conduct is prohibited by the Sherman Act. Xt is well established that the unilateral refusal to deal with another, motivated h~ a ~ur ose to ~re-Southern Photo Materials Co., 273 U.S. 359, 47 S.Ct.

L.Ed 684 1927); Lorain Journal Co. v. United States, U. S. 143, 72 S.Ct. 181, 96 L. Ed 162 ( 19~61 400, 71 342 FOOTNOTE CONTXNUED FROM PREVXOUS PAGE:

"We start from the premise that adequate relief in a monopolization case should put an end to the combination and deprive the defendants of any of the benefits of illegal conduct, and it breaks up or renders impotent the monopoly power found to be in violation of the Act" Or as the Court said in Otter Tail (410 U.S. at 381), ~uotin FTC v. National Lead Co., 350 U.S. 419, 431 (1956):

"Those caught violating the act must expect some fencing 1ne Given the authority and responsibility of the HRC to fashion appropriate relief, if a "situation inconsistent" had been established without the settlement, by entering into the settle-ment the Company cannot avoid broader relief.

101 "Here Otter Tail refuses to sell power to municipalities which would thereby take retail power business from defendant and refuses to wheel power for others willing to sell to these municipalities. Because of its domi-nant position Otter Tail is able to deprive towns of the benefits of competition which would result from munici-pally owned facilities.

"Pertinent to an examination of the law is a. reference to cases expressive of the 'bottleneck theory'f antitrust law. This theory reflects in essence that it is an illegal restraint of trade for a party to foreclose others from the use of a scarce facility.

Here the theory finds application in Otter Tail' use of its subtransmission lines. One authority believes:

'The Sherman Act requires that where facilities cannot practically be dupli-cated by would-be competitors, those in possession of them must allow them to be shared on fair terms.

statement epitomizes the holdings in federal cases

'This which have established the principle: United States v.

Terminal Railroad Assoc., 224 U.S. 383, 32 S.Ct. 507, 56 L.Ed. 810 1912 ; Gamco, Inc. v. Providence Fruit S Produce Buildin Inc., 194 F.2d 484 1st Cir. 1952 Packaged Pro rams, Inc. v. Westin house Broadcastin Co., 255 F.2d 708 3d Cir. 1958 ; Six Twent -Nine Productions, Inc. v. Rollins Telecasting, Inc., 3 5 F.2d 478 5th Cir. 1966).

"The bottleneck principle is applicable to Otter Tail.

Its control over transmission facilities in much of its service area gives it substantial effective control over potential competition from municipal ownership. By its refusal to sell or wheel power, defendant, prevents that competition from surfacing." (emphasis supplied; foot-note omitted).

Except for remanding for reconsideration of the "sham litigation" issue, the Supreme Court affirmed on appeal:

"The record makes abundantly clear that Otter Tail used its monopoly power in the towns in its service area to foreclose competition or gain a competitive advantage, or to destroy a competitor, all in violation of the antitrust laws. See United States v. Griffith, 334 U.S. 100, 107. The District Court determined that Otter Tail has 'a strategic dominance in the

102 transmission of power in most of its service area'nd that it used this dominance to foreclose potential entrants into the retail area from obtaining electric power from outside sources of supply. 331 F.Supp., at

60. Use of monopoly power 'to destroy threatened competition's a violation of the 'attempt to monopolize'lause of $ 2 of the Sherman Act. Lorain Journal v. United States, 342 U.S. 143, 154; Eastman Kodak Co. v. Southern Photo Materials Co., 273 U.S. 359, 375 Otter Tail Power Com an v. United States,'sn ra, 410 U.S. at 377 (1973).

The Cities'llegations against FPL are like those found determinitive in Otter Tail, including alleged refusals to deal, attempted acquisitions of municipal systems and foreclosure of new entrants. Cities'llegations have been vindicated by actual FERC findings made against, the Company.

Opinion Nos. 57 and 57-A of the Federal Energy Regulatory Commission have identified and criticized FPL's refusals to sell wholesale power and transmission as "unjust and unreasonable under the standards of Sections 205 and 206 of the Federal Power Act, particularly because of their anticom etitive effects".

Opinion No. 57-A ("Opinion and Order Denying Rehearing", October 4, 1979, page 1) (emphasis supplied). In Opinion No. 57 the Commission found:

"I:Tahe record documents twenty years'orth of franchise competition between FP&L and the municipal utilities located within its service territory. At various times FP&L has promoted acquisition or willingly received municipal proposals. Most, if not all, of those incidents occurred when the municipal systems were arranging new bulk power supplies from the options of self-generation, wholesale purchase from FP&L, and retail purchase from FP&L after franchise disposition.

The Company has not, su'cceeded in many acquisitions, because the municipal candidates solved their supply problems by adding generation. However, the record

103 strongly indicates that self-generation is becoming less and less attractive to the point where FPGL's witness Gerber has described small scale generation as an anachronism. -Since FPtNL controls the remaining two options, we conclude that its wholesale monopoly power can only increase, and, thereafter, its retail power as well. See, Borou h of Ellwood Cit v.

Penns lvania Power Co., D.C.Pa. 1979 462 F.Supp.

1343, 1346.

Florida Power a Li ht Com an, FERC Opinion No. 57, ~su ra,32 PUR 4th at 330. Thus, like Otter Tail, FPL's refusals to deal aided its attempts to repress competition for retail sales.

Further, like Otter Tail, FPL has refused to provide transmission voluntarily for municipal utilities. Transmission is necessary for a utility to secure alternate power supplies.

Prior to 1975 FPL refused to transmit for Cities at all. Since then, it has agreed to limited transmission on restricted terms.

FPL's resistance is evidenced by FPL's continuing resistance to filing a transmission tariff. 1/ It has sought acquisitions. In short, it has engaged in similar monopolizing conduct to Otter Tail. See Statement of Facts, Part Zl, pp. 43-89, ~su ra, and Opinion No. 57, ~su ra.

After thorough examination of judicial authorities, the NRC cases hold that where a company uses its dominant economic power "to preserve or extend an existing monopoly, to foreclose actual or potential competition, to gain competitive advantage, or to destroy competitors" it runs afoul of the law. Consumers Power 1/ The Company has appealed Federal Energy Regulatory Commission orders that still it file its trans'mission policies in tariff form and has not filed a tariff covering other than "interchange" services. Florida Power R Light Co. v. FERC, CA5 No. 80-5259 (April 4, 1980 . See ~su ra

104

~Com an, ~su ra, S NRC at 922, citinci Otter Tail Power Co. v.

United States, ~su ra, and United States v. Griffith ,~su ra, 334 U.S. at 107. Accord ,Toledo Edison Co., ~su ra ,10 NRC at 376-378, holding illegal the exercise of power to control a market, which results in barriers to competition and does not arise merely from superior business skills or business acumen.

In the context of resolving questions of legal entitlements of smaller systems'btaining access to nuclear units, the NRC's Appeal Board in Consumers held that a firm with a monopoly share was not "free of any obligation to deal with the small utilities."

To begin with, there are circumstances in which the antitrust laws impose an affirmative duty on business firms to deal with their competitors. As evidenced by decisions following Colcaate, unilateral refusals to deal by a firm with a dominant market position have regularly been held to constitute either 'monopolization'r an

'attempt to monopolize'n violation of Section 2 of the Sherman Act. 501/ In Eastman Kodak Co. v. Southern Photo Co., ~su ra, for example, Kodak violated Section 2 by refusing to sell except at retail prices to the plaintiff, a former retail distributor of Kodak of products. 502/ (Kodak, already holding a monopoly 501/ Our discussion excludes cases arising under Sections 1 or 2 of the Sherman Act involving conspira-cies or concerted refusals to deal.

502/ The Court's decision is unclear on whether Kodak was guilty of monopolization or an attempt to monopolize. The Court was affirming a jury verdict and its discussion was brief. It stated:

although there was no direct evidence - as there could not well be that the defendant's refusal to sell to the plaintiff was in pursuance of a purpose to monopolize, we think that the circumstances disclosed in the evidence sufficiently tended to indicate such purpose, as a matter of just and reasonable inference to warrant the submission of this question to the jury.

273 U.S. at 375.

105 production and at. wholesale, was expanding into the retail market and had purchased other retail outlets in the area.) 503/ In Lorain Journal Co. v. United States, ~su ra, the sole newspaper xn a town was guilty of an attempt to monopolize by refusing to sell adver-tising space to those who advertised on the town's new radio station. In Packa ed pro rams, Inc. v.

Westin house Broadcastin , ~su ra, plaintiff, an adver-txsxng agency, averre that Westinghouse, owner of the only television station in pittsburgh, was attempting to monopolize the advertising market by refusing to air commercials produced by the plaintiff. (Westinghouse also produced commercials.) The court held that. this complaint stated a claim cognizable under Section 2 of the Sherman Act.. In a factual situation paralleling packa ed programs, the court in Rollins Telecastin

~su ra, reversed summary judgment for the defendant tele-vxsxon station, and in Otter Tail Power Co. v. United States, ~su ra, the Surpeme Court held Otter Tail guilty of monopolization when that vertically integrated electric utility refused to wheel power for and to sell wholesale power to municipalities seeking to displace it.

as their retail distributor of electricity.

In a word, as the Second Circuit recently ruled, cases such as Lorain Journal and Eastman Kodak 504/ are 503/ Two cases similar to Kodak, i.e., a wholesale supplier-monopolist found guilty of monopolization by refusing to deal with independent retailers in favor of an integrated system, are poster Exchange, Inc. v.

National Screen Serv., 431 F.2d 334 5th Cir. 1970),

cert. denzed, 401 U.S. 912 (1971) and United States v.

Klearflax Linen Looms, 63 F.Supp. 32 (D.Minn. 1945 See also, Woods Ex loration & producin Co. v. Aluminum Co. of America, 438 F.2d 1286, 1308 fn 9 (5th Cir.

504/ The common thread running through these and similar cases is the possession of a monopoly or a near monopoly in a relevant market by the company refusing to deal.

Thus, for example, Kodak possessed a monopoly at the wholesale level; the Journal was the sole newspaper in town and possessed a monopoly over advertising in Lorain until the radio station began broadcasting; Westinghouse Broadcasting and Rollins Telecasting possessed a mono-poly - via FCC licensing - in local television QUOTED FOOTNOTE CONTINUED ON NEXT PAGE

106 Supreme Court decisions 'which do stand for the proposi-tion that where a single trader refuses to deal in order to enhance its monopoly position, a t.Sherman Act]

Section 2 violation may be found.'nternational Railwa s of Central America v. United Brands, 532 F.2d 231, 239, certiorari denied, 50 L.Ed.2d 100 (1967) ~

505/

QUOTED FOOTNOTE CONTINUED FROM NEXT PAGE broadcasting; and Otter Tail held a monopoly over retail distribution of electricity. In each case, through uni-lateral refusals to deal, the monopolist had used its .

dominant economic power in efforts either to maintain its current mar ke't position (e.g., Otter Tail) or to companies ran afoul of the Supreme Court's warning in Griffith that. 'use ot monopoly power, however lawfully acguxred, to foreclose competit.ion, to gain a com-petitive advantage, or to destroy a competitor is unlawful.'34 U.S. at 107. As Judge Wyzanski cogently observed: 'An enterprise that by monopolizing one field, secures dominant market power in another field, has monopolized the second field, in violation of $ 2 of the Sherman Act.'nited States v. United Shoe Machine

~Cor ., ~su ra, 110 F.Supp. at 346.

505/ Whether Consumers'efusal of access to its transmission lines presents a 'bottleneck'ituation is irrelevant in our analysis. Such denials may be treated as instances of refusals to deal. Otter Tail Power Co.

v. United States, ~su ra, 410 U.S. at 371; Nullis v. Arco Petroleum Cor ., 502 F.2d 290, 296 fn. 19 ~7th Cir.

1974) per Stevens, Cir. J.); see Note, Refusals to Deal b Verticall Inte rated Mono olists, 87 Harv. L. Rev.

1720 1974 . The Licensing Board's assumption, sup-ported by Consumers, that bottleneck cases must involve conspiracies (see 2 SRC at 76) is a misreading of Otter Tail.

6 NRC at 1026-1028.

Other cases concerning the utility industry strongly support the obligation of electric utilities to deal with smaller competing systems. In Munici al Electric Association of Massachusetts v. SEC, 413 F.2d 1052, 1055 (D.C. Cir. 1969), the

107 basic issue was whether approval of an acquisition under the Public Utility Holding Company Act, Section 10, 15 U.S.C. $ 79j, should be given "in a manner which would give Municipals an opportunity on reasonable terms to obtain access to this new lower cost [nuclear] power." The Court characterized the issue in terms of the utility's blocking access to nuclear base load power and " . . . low-cost bulk-power supplies and transmission services." 413 F.2d at, 1058- It was held that the SEC could not grant the utility's request for an exemption from the Holding Company Act without consideration of the claims of anticompetitive conduct raised by the Cities.

In Gainesville Utilities De t. and Cit of Gainesville, Florida v. Florida Power Cor ., 40 FPC 1227 (1968), affirmed,, 402 U.S. 515 (1971), Florida Power Corporation refused to interconnect with the City of Gainesville, at least absent a "standby" charge; the Company refused to supply backup power because the interconnection was more valuable to Gainesville than to Florida Power Corporation. In affirming a Federal Power Commission order in favor of Gainesville, the Supreme Court said:

"It is certainly true that the same service or commodity may be more valuable to some customers than to others, in terms of the price they are willing to pay for it.

An airplane seat may bring greater profit. to a passenger flying to California to close a million-dollar business deal than one o flying west for a vacation; as a consequence, the former might be willing to pay more for his seat than the latter. But focus on the willingness or ability of the purchaser to pay for a service is the concern of the monopolist, not of a governmental agency charged both with assuring the industry a fair return and with assuring the public reliable and efficient service, at a reasonable price."

108 402 U.S. at 528. 1/ As interpreted and applied by the District of Columbia Circuit, the Supreme Court's decision in Gainesville requires that municipals should not be treated discriminatorily "on terms more onerous than those required of other investor-owned utilities." Cit of La afette, La. v. SEC, 454 F.2d 941, 952 (D.C. Cir. 1971), affirmed, sub num. Gulf States, infra.

In Gulf States Utilities Co. v. FPC, 411 U.S. 747 (1973),

certain municipal systems alleged that Gulf States Utilities Company and. others had blocked their access to generation, transmission and pooling. They sought antitrust conditions to a Gulf States financing under Section 204 of the Federal Power Act, 16 U.S.C. $ 824c. The Supreme Court reversed the FPC's failure to consider these allegations of anticompetitive conduct. Citing the history of the Federal Power Act, the Supreme Court held This statute was enacted as part of Tits II of the Public Utility Act of 1935, 49 Stat. 803, 850. The Act had two primary and related purposes:

to curb abusive practices of public utility companies by bringing them under effective control, and to provide effective federal regulation of the expanding business of transmitting and selling electric power in interstate commerce. 49 Stat.

803-804, 847-848; S. Rep. No. 621, 74th Cong., 1st Sess., 1-4, 17-20; H.R. Rep. No. 1318, 74th Cong.,

1st Sess., 3, 7-8; Jerse Central Co. v. FPC, 319 U. S. 61, 67-68 (1943; see Nort American Co. v.

SEC, 327 U.S. 686 (1946~ The Act was passed in the context of, and in response to, great concentrations of economic and even political power 1 The Comma.sszon note t at respondent had not included a com-parable [backup service] charge in any of tne contracts for interconnection voluntarily negotiated with members of the Florida Operating Committee." 402 U.S. at 523. Thus, Gainesville provides direct Supreme Court support for the propo-sition that FPL has obligations to deal with cities (including those outside its retail service area) on a similar basis to its dealings with other Florida utilities.

109 vested in power trusts, and the absence of antitrust enforcement to restrain the growth and practices of public utility holding companies. See S. Rep. No. 621, ~su ra, at 11-12; Utility Corporations - Summary Report, 70th Cong., 1st Sess., S. Doc. Ho. 92, Part 73-A, pp. 47-54; 79 Cong. Rec. 8392 (1935)."

411 U.S. at 758.

As the Mishawaka District Court put it,

.[F]ederal antitrust law recognizes complementary obligations on persons possessing scarce resources or facilities that are essential to effective competition."

Cit of Mishawaka, Indiana v. American Electric Power Co., Inc.,

~su ra, 465 F.Supp at 1336 1/ ~

The problem here is similar to that involved with the inter-connection of specialized common carriers to the American 6

Telephone 8 Telegraph network, where the Third Circuit upheld a Federal Communications Commission decision on the basis of pro-competitive principles, holding that:

1 Also, a monopolist' "exclusion of its competitors from a f scarce] resource or facility is particularly condemned by the antitrust laws. United States v. Otter Tail, ~su ra, 331 F ~

Supp at 61."

Id., 465 F.Supp. 1320, 1331 (N.D. Ind. 1979), affirmed in ~art, vacated in ~art, 616 F.2d 976 (7th Cir 1980.).

While FPL's operation in the context of the electric utility industry may be taken into account in some contexts, it is "now settled axiom" to quote the Court in Mishawaka, that the antitrust laws are fully applicable to the electric power industry. Cit of Mishawaka v. Indiana a Michigan Electric Power Co., 560 F.2d 1314, 1321 (7th Cir. 1977 , cert. denied, 436 UUS. 2 (1978) . Toledo Edison, ~su ra10 NR,C at. BY-WE, 323-3270

110 where a carrier has monopoly control over essential facilities we will not condone any policy or practice whereby such carrier would discriminate in favor of an affiliated carrier or show favoritism among competitors."

Bell Tele hone Co. of Penns lvania v. FCC, 503 F.2d 1250, 1262, 1271-1273 (3d Cir. 1974), cert. denied, 422 U.S. 1026 (1975).

And, of course, Plorida Power 8 Li ht Co., PERC Opinion No.

57, ~su ra, 32 PUR 4th 313, Provides a most recent affirmation of these principles.

Otter Tail, cited above, is consistent with and reinforced by other bottleneck monopoly cases. These cases 1/ confirm that a utility or other business concern that controls essential facilities is obligated to deal in those facilities on non-discriminatory terms and, further, that it is obligated not to take advantage of the strategic dominance resulting from control of such facilities to gain an advantage in other markets. Por example, PPL may not restrict access to its nuclear generation or transmission facilities to others, while at the same time using the economic advantages it obtains from such restriction in 1 E. .. Otter Taxi Power Co. v. United States, 410 U.ST 366 T1973 ; United States v. Terminal Railroad Association, 244 U.S.

Uo. v. United States, 342 U.S. 143 (1951); Silver v. Hew York Stock Exchan e, 373 U.S. 341 (1963) . Hecht v. Pro-Football, Inc.

570 F.2d 982 1977), cert. denied, 436 U.S. 956 (1978 ; Gamco Inc., ~su ra.

competition for retail, wholesale or coordination transactions. 1/

The bottleneck theory is in reality a shorthand expression for classic Section 1 and 2 analysis that firms having monopoly power may not use that power to gain advantage in a second market, line of commerce or factor of production. Cf.,

Consumers power Com an, ~su ra, 6 RRC at 1028, n. 505, quoted at.

pp. 108-110, ~su ra. And, as the Appeal Board held in Consumers the use of the Company's monopoly power and its potential com-petitive injury to smaller systems necessitated antitrust license conditions. Consumers Power Com an , ~su ra, 5 BRC at 1095-1095.

The facts {discussed ~su ra) compel the conclusion that PBL has monopoly power, which FPL has used to enhance its competitive position in retail and wholesale markets.

However, the Supreme Court has held in Griffith that it is impermissible for a firm to use monopoly power to gain a competitive advantage, even where the acquisition of such monopoly power is innocent (as where the defendant owns the only movie house in town):

ET]he use of monopoly power, however lawfully acquired, to foreclose competition, to gain a com-petitive advantage, or to destroy a competitor, is unlawful."

334 U.ST at 107 '

FPL, which controls three of Florida's four'uclear units and is planning a fourth, can hardly deny their essential nature.

FPL's Board Chairman, Marshall McDonald has publicly characterized nuclear energy as "an essential and desirable source of electric power." App. D325.

112 As the Second Circuit said recently in Kodak (603 F.2d at.

275), discussing Section 2:

"This conclusion appears to be an inexorable interpreta-tion of the antitrust laws. We tolerate the existence of monopoly power, we repeat, only insofar as necessary to preserve competitive incentives and to be fair to the firm that has attained its position innocently. There is no reason to allow the exercise of such power to the detriment of competition, in either the controlled market or any other Thus, a fabricator of ingots, who lawfully obtained a dominant position over the market for the sale of raw ingots could not use that position of dominance to improve its position in selling products made from the raw material through charging competitors higher prices for the raw ingots than the dominant transactional price to its own fabricating operations.

sellers'nternal United States v. Aluminum Com an of America, 148 F.2d.416 (2d Cir. 1945) . Accord, United States v. Loew', Inc., 371 U. S. 38 (1962); Lorain Journal Co. v. United States, 342 U.S. 143 (1951); Eastman Kodak v. Southern Photo Materials Co., 273 U.S.

359, 375 (1927). Cf., Conwa Cor oration v. FPC, 426 U.S. 271 (1976).

Similarly, a public utility that sells electric power at retail cannot refuse to sell such power at wholesale to a com-petitor in order to retain or improve its share of the retail electric market. Otter Tail Power Co. v. United States, 410 U.ST 366 (1973); Florida Power S Li ht Com an , Opinion No. 57, 32 PUR 4th 313 (1979) (Attachment 3). See Gulf States Utilities Co. v.

FPC, 411 U.S.~

~ 747 (1973). In this case, it is not a question of price:~ Except, as provided for in the settlement license

113 conditions FPL refuses to deal with Cities concerning nuclear power supply at all. 1/

The bottleneck monopoly theory is based upon ordinary prin-ciples of fairness. One who operates the only bridge at a river crossing; or the only inn, necessary to human comfort on a highway; or a stock market exchange, through which the bulk of the stock trading is done; or a movie theater chain with the only theater in town, may not, under the antitrust laws, take advantage of the situation to deny competitors access. A company may be entitled to profit from that facility; but anticompetitive dealing and refusing to deal is wrongful, not only under the antitrust laws but also under regulatory statutes. See Gulf

. 7 Electric Association of Massachusetts v. SEC, 413 F.2d 1052 (D.C.

Cir. 1969); Consumers Power Co. (Midland Units 1 and 2),

ALAB-452, 6 MRC 892 (1977).

1 FPL refused to deal in wholesale power even with systems

.considers in it its service area, until was forced to do so by it FERC order (Florida Power a Li ht Co., FERC Opinion 57, ~su ra32, PUR 4th 313) . That was anticompetitive, as the Federal Energy Regulatory Commission held. Such wholesale sales would include nuclear power, in diluted form as part of the wholesale power mix. However, FPL made numerous attempts to hold or acquire smaller systems on the promotional basis that FPL's nuclear power made FpL's electricity more economical. See, pages 55-55, ~su ra.

Thus, FPL would have sold electricity to .the Cities'ustomers at retail (i.e., the generation and transmission ~lus the distributaon), but it would not sell at wholesale alone (i.e.,

generation plus transmission). This refusal to sell wholesale power is not only an act, of monopolization, but a classic tying arrangement, as well. International Business Machines v. United States, 298 U.S. 131 (1936, requzrxng un un xng o company transactions). Accord, International Salt Co. v. United States, 332 U.S. 392 (19~47; Northern Pacific Railroad Co. v. United States, 365 U.S. 1 (1958); United States v. Loew's, Inc., 371 U.S. 38 (1962).

114 Thus, the,law is not blind to the inherent control which goes hand in hand with the domination of facilities necessary for business in a particular industry. For example, where railroads also own coal mines, if the railroads could price transportation to equalize market prices for coal, they would adversely affect competition at the retail level. United States v. Readin Co.,

253 U.S. 26 (1920). Accord, Baltimore and Ohio Railroad Co. v.

United States, (" Chicago Junction Case" ) 264 U.S. 258 (1924);

1 United States v. Aluminum Co. of America, 148 F.2d 416 (2d Cir.

1945), Similarly, an Otter Tail, Consumers Power or Florida Power S Light may not legally refuse competitors access to nuclear power or to bulk transmission, especially in order to affect competition on the retail level or to preserve or extend wholesale power markets. 1/ The ultimate thrust of the "bottleneck" cases is that a monopolist may not use his position to extend that monopoly. Such a rule even applies to patents monopolies granted by the state. 2/

1/ If nuclear or base load generation were treated as a "factor of production" of electricity rather than the end product, it would still, be subject to the prohibition against the illegal use of monopoly gower. E.cC., Union Carbide 6 Carbon Cor . v. Nisle 300 F.2d 561, 585 (10th Cir. 1962, ~a eal dasmassed, 371 U.8.

801 (1963). See United States v. Yellow Cab Co., 332 U.ST 218 .

(1947).

2/ "The test of misuse I:of a patent] is whether a patentee's agreements or other conduct expands the patent monopoly beyond the scope permitted by the Constitution or the Congress, regardless of whether there is any substantial lessening of competition or other effect necessary to a finding of antitrust violation." Antitrust Law Develo ments (American Bar Association 1975), p. 328. Thus, United States v. National Lead Co., 332 U.S. 319 (1947) upheld compulsory licensing of outstanding P atents in exchan g e for reasonable royalties to prevent use of FOOTNOTE CONTINUED ON NEXT PAGE

115 III. STATEMENT CONCERNING RELIEF.

Unless a settlement can be reached based upon Board rulings or other considerations, Florida Cities believe that a hearing will be required to determine appropriate relief. Cities would, of course, be willing to consider stipulations as to procedures for narrowing the scope of such hearing or supporting other pro-cedures recommended by the parties.

Florida Cities believe that counsel for FPL is aware of the Cities'ettlement positions. However, since settlement has not been reached, it may,be useful for Cities to set forth principal areas of disagreement with the settlement license conditions in the context of a litigated proceeding.

1. The settlement license conditions limit relief to cer-tain named Cities, and exclude relief to other Cities in Peninsular Florida, including those who have actively pressed their rights before this forum or the District Court.

FOOTNOTE CONTINUED FROM PREVIOUS PAGE:

patents for monopolization. The patent cases hold that restrictive activities which would otherwise be lawful by those not having patents (i.e., those not having monopoly power), for example, a contract to require the buyer to buy all of certain goods from a seller, becomes monopolistic when engaged in by patent owners or other monopolists. E.g., Ansul Co. v.

Unirc al, lnc., 448 F.2d 872 (2d Cir. , cert. dented, 404 U.S.

1018 1972; Strcn v. General Electric Cc., 305 F.Supp. 1084 (N.D.Ga. 1969, affirmed er curiam, 434 F.2d 1042 (5th Cir.

1970), cert. denied, 403 U.S. 906 (1971). See Zenith Radio Cor . v. Hazeltine Research, Inc., 395 U.S. 100, 133-136 (1969);

Brulotte v. T s Co., 3 9 U.S. 29 (1964). Nor may a patent, holder discriminate in the license -terms offered to potential licensees, Peelers Co. v. Wendt, 260 F.Supp. 193 (W.D. Wash.

1966). Compare FPL's sale of nuclear capacity to Orlando, but not to Kissimmee or St. Cloud.

116

2. The amount of total nuclear capacity available to Cities provides less than a nuclear load ratio share to the Cities as compared with FPL. It totally excludes Cities'ccess to the advantage of FPL's nuclear monopoly from its operating plants. 1/

1 Relief could be ordered which provides less than an ownership share from operating units, such as unit power sales at a profit.

to FPL, additional capacity from St. Lucie 2, etc. Conditions could take into account factors such as FPL's need for capacity, FPL's refusals to deal with Cities, including after requests were made, and Cities late intervention here. With regard to the latter, however, Florida Cities deem FPL's subsequent can-cellation of its South Dade unit and refusals to grant Cities access to St. Lucie 2 relevant. The situation is similar to that in Consumers Power Com an (Midland Units 1 and 2), ALAB-452, 6 NRC 892, 1082 1977 where:

Events subsequent to 1971 confirm that the company's policy at the time the record closed was to deny the small utilities access to nuclear power. First in early 1971, just before the small utilities requested par-ticipation in Midland, Consumers'rojected peak load for 1980 was 7,790 MW: by 1973 its estimated demand for 1980 had dropped to 7,020 MW; and by mid-1974 it dropped further to 5,870.MW. Although in 1971 Consumers may have required use of the entire output from Midland to meet projected load growth on its system, the outlook changed drastically in a short period of time. Rather than engage in negotiations with the small utilities for sale of some of the excess planned capacity, however, Consumers voluntarily delayed construction of other generating units originally planned to come on line in 1978 and 1982. In other words, the company hjas con-tinued to plan its system as though it never received the requests from the small systems. (footnotes omitted)

In Ft. Pierce Utilities Authorit of the Cit of Ft. Pierce

v. United States Nuclear Re ulato Commission, D. C. Cir. No.

80-1099, the Nuclear Regulatory Commission took the position in brief and in oral argument that antitrust conditions in a Section 105(c) proceeding "is not limited to the facility that is the subject, of the proceeding." Brief, p. 26 (July 1980). While FPL opposed such position, the Commission's statement as to its authority is binding.

117

3. Wholesale power provisions are unclear. They permit resale restrictions and limitation of wholesale power rights, if a city buys nuclear capacity or uses FPL transmission.
4. FPL is not required to file a transmission tariff at the Federal Energy Regulatory Commission. Xt can continue to econo-mically disadvantage Cities and impede municipal power supply by failing to provide for either a joint transmission rate or to provide for full, non-discriminatory power pooling. Cities can be disabled concerning new transmission to Georgia.
5. The license conditions permit FPL to control certain terms of nuclear plant participation adverse to the Cities.
6. The license conditions limit Cities'ccess to future FPL nuclear plants based upon their nuclear load ratio share, including their share in third party nuclear plants.
7. No provision is made for sharing interconnection costs.

The above statement is not intended to waive rights to other relief.

118 CONCLUSION 1~ Based upon the foregoing, the Board should grant res judicata or collateral estoppel effect to (a) Gainesville Utilities De t. v. Florida Power & Li ht Co., 573 F.2d 292 (5th Cir. 1978), cert. denied, 344.U.S. 817 (1978);

(b) Florida Power 5 Li ht Co., Opinion Nos 57 and 57-A, 32 PUR 4th 313 (August 3, 1979), a eal dismissed; Florida Power Li ht Co. v. FERC, D. C. Cir. No. 79-2414 (April 25, 1980);

and (c) Florida Power 5 Li ht Co., 37 FPC 544 (1967),

reversed, 430 F.2d 1377 (5th Cir. 1970), reversed, 404 U.S. 453 (1972).

2. Based upon the foregoing, the Board should find that a "situation inconsistent with the antitrust laws" exists unless FPL raises material, disputed factual issues that require hearings; if FPL does raise such issues, the Board should limit further discovery (a) to issues that remain in dispute and (b) to additional discovery fairly required in light of discovery that has taken place to date. Additional discovery should not. overlap discovery in Gainesville Re ional Utilities et al. v. Florida
3. The Board should permit, answers by other parties and a reply by Florida Cities.

- 119

4. The Board should convene a prehearing conference to discuss matters raised by these pleadings and future scheduling.

In the event that settlement does not appear likely, a schedule should be adopted for further proceedings. After rulings relating to motions for summary disposition and further discovery, if required, a hearing schedule should be adopted.

Respectfully submitted, Robert A. Jablon Alan J. Roth Daniel Guttman Attorneys for the Gainesville Regional Utilities, the Lake Worth Utilities Authority, the Utilities Commission of New Smyrna Beach, the Sebring Utilities Commission, and the Cities of Alachua, Bartow, Fort Meade, Key West, Lake Helen, Mount Dora, Newberry, St.

Cloud, and Tallahassee, Florida and the Florida Municipal Utilities Association Robert A. J ion May 27, 1981 Law Offices of Spiegel 8 McDiarmid 2600 Virginia Avenue, N. W.

Washington, D. C. 20037 (202) 333-4500

UNITED STATES NUCLEAR REGULATORY,COMMISSION BEFORE THE ATOMIC SAFETY AND LICENSING BOARD In the Matter of )

)

Florida Power S Light Company ) Docket No. 50-389A

)

(St. Lucie Nuclear Plant, Unit 1Vo. 2) )

MOTION TO ESTABLISH PROCEDURES, FOR A DECLARATION THAT A SITUATION INCONSISTENT WITH THE ANTITRUST LAWS PRESENTLY EXISTS AND FOR RELATED RELIEF Index of Attachments ATTACHMENT 1 Material Facts Not Genuinely In Dispute ATTACHMENT 2 Memorandum Re: Discovery Between Cities and FPL Exhibit A to Attachment 2 July July 2, 1980 Letter to E. Gregory Barnes from Marta A.

Manildi. and Joseph L. Van Eaton Re: NRC Docket No. 50-389A Discovery ATTACHMENT 3 Re Florida Power and Li ht Com an , Opinion No. 57, Federal Energy Regulatory Commission Docket Nos. ER78-19 (Phase I) and ER78-81 (August 3, 1979)

Florida Power & Li ht Com an , Opinion No.

57-A, Federal Energy Regulatory Commission Docket Nos. ER78-19 (Phase I) and ER78-81 (October 4, 1979)

ATTACHMENT 4 Memorandum of Florida Power & Light Company Concerning The Schedule For Further Gainesville, et al. v. Florida Power R Li ht

~Com any, S. D. Fla. No. 79 5101 C-ZV JL-K-ATTACHMENT 5 Order Specifying Certain Facts To Be Without Substantial Controversy, And Requiring Further Briefing On Other Issues, Cities of Anaheim, Riverside, Bannin , Colton and Azusa, California, v. Southern California Edison

~Com an, D. C. Cal. No. CV-78-810-MML

ATTACHMENT 1 MATERIAL FACTS NOT GENUINELY IN DISPUTE

l. FPL controls three out of the four operating nuclear units in .Peninsular Florida and is constructing its fourth. FPL has an effective monopoly control over such facilities there, which it has used to advantage itself in competition. Except as provided under settlement license conditions in this case, FPL refuses to grant Florida Cities access to these facilities.'.

FPL has (a) dominance in Peninsular Florida and (b) a monopoly in its retail service area over economic base load generation (including nuclear generation), transmission and coordination. See Statement of Facts and FERC Opinion Nos. 57 and 57-A.

3. FPL has a retail service monopoly in eastern and southern Florida. FPL's present or past refusals to deal in nuclear and base load power, wholesale power, transmission and coordination have advantaged it in competition to preserve and extend .its I

retail monopoly and in competition for wholesale or coordination. Opinion No. 57, Statement of Facts.

4. FPL has acted to restrict or deny Cities access to base-load generation (including nuclear), transmission, wholesale power and coordination. See Gainesville Utilities De t. v.

Florida Power 8 Li ht Co., FERC Opinion No. 57, Statement of Facts and positions taken by FPL in this case.

5. A Peninsular Florida geographic market exists for whole-sale and coordination power supply. FPL is interconnected with other electric systems in Florida, including Florida Power Corporation, Tampa Electric Company and other municipally and cooperatively operated utilities. FPL has received substantial benefit from its coordination with these other utilities in the operation or planned operation of its nuclear and other baseload generating units. See Statement of Facts, FPC Opinion Ho. 517.

. 6. FPL was part of a conspiracy with Florida Power Corporation (Florida Power) to divide the wholesale power market in Florida. See Gainesville Utilities De t. v. Florida Power &

7. FPL and the municipal utilities located within its retail service territory engage in franchise competition. At various times FPL has promoted acquisition and has been receptive to municipal proposals. Most., if not all, of those incidents occurred when. the municipal systems were arranging new bulk power supplies from among the options of self-generation, wholesale purchased from FPL and retail purchases from FPL after franchise disposition and without the option of sharing in FPL's nuclear or other base load units. See Statement of Facts and Opinion No.

57.

8. In filings and public statements, FPL has advertised the economic benefits from its base load generation (including nuclear) and coordination. Such statements were of a nature to

induce franchise renewals for FPL or sales of municipal systems to FPL.

9 ~ FPL has sought to acquire independent municipal systems.

See Gainesville Utilities De t. v. Florida Power S Li ht Co.,

Opinion 5l7, Opinion 57, Opinion 57-A, Statement of Facts.

10. FPL cancelled its proposed. South Dade Unit after receiving requests for participation by municipally owned systems. See Statement of Facts.

~

ll. Florida Power R Light has agreed to sell the City of Orlando or the Orlando Utilities Commission participation in St.

Lucie Unit 2 and has offerred participation to some other Cities in Peninsular Florida which have requested such access, but has not offerred participation to utilities other than those listed in the St. Lucie Unit 2 license conditions. See Statement of Facts.

ATTACHMENT 2 MEMORANDUM RE: DISCOVERY, BETWEEN CITIES AND FPL Extensive discovery has 'already been conducted between Florida Power & Light and the intervening Cities, over the course of years and in connection with this and other dockets. There remains little if 'anything in the Cities'iles which has not been made available to FPL already, or which will not soon be provided to FPL. Most recently, all the intervenors except Lake Helen have answered interrogatories and/or responded to voluminous document requests, as more fully described below.

Cities note that although Homestead, Kissimmee and Starke are not named parties in Docket No. 50-389A, 1/ they have intervened in Florida Power R 'Li ht Co. (St. Lucie Unit No. 2), NRC Docket No.

50-389, and are plaintiffs in a district court suit against FPL in which they are seeking, among other things, the opportunity for access to FPL's nuclear units. Therefore, these three Cities are included in the discussion of discovery below.

References below to "district court" discovery are to the antitrust case currently pending in the Southern District of Florida, Miami Division, Gainesville Re ional Utilities v. FPL, No. 79-5101-Civ-JLK. That proceeding has as plaintiffs Florida Cities, including all intervenors here except Key West, Lake Helen, and FMUA.

1/ Homestead, Kissimmee and Starke are represented through their membership in FMUA.

e

FPL DISCOVERY OF CITIES

1. District Court Interro atories. Cities (except Key West and Lake Helen) have responded to two sets of interrogatories from FPL, totalling 40 separate interrogatories (not including sub-parts) and about 300 pages of answers. In addition, the City of Tallahassee has responded to a supplemental set of interrogatories. The answers to FPL's first set of interrogatories were served on February 22, 1980; answers to the second set were served August 1, 1980; and Tallahassee's response to supplemental interrogatories was served September 17, 1980.

In addition, FPL served Cities with a third set of interrogatories and request for production of documents relating to Cities 'amage claims in the treble-damage suit. Answers are not relevant to this proceeding, where such damages are not being sought.

2 ~ District Court Document Re uests. Cities have also responded to two sets of document requests from FPL in the district court litigation. 'The response to the first set was largely completed in the summer of 1980, by which time defendants had copied from Cities'iles 98 shelf-feet of documents, selected from among hundreds of thousands of documents produced in the Cities. The district court document request, was, if anything, broader than the request filed by the company in this docket. Exhibit A hereto is a letter from Cities'ounsel to counsel for FPL, dated July 2, 1980, describing the overlap in

3 discovery requests and setting forth in detail the only areas of discrepancy between the two requests (see pp. 4-6 of the letter).

I Since the time of that letter, discovery was had at Key West, with the exception of a few files which can be. provided to FPL immediately.

Only Lake Helen has not produced documents to FPL in either this or the district court docket. Cities note that in their letter of July 2, they stated:

We would be agreeable to your suggestion that we search Lake Helen's files and provide you with a list of responsive files upon our receipt from you of notice that you wish to go to Lake Helen to inspect documents. We would require two weeks notice. Lake Helen can be made ready by July 18 I:1980], subject to such two-weeks'otice from you.

FPL has not sought discovery of Lake Helen in the ten months since that letter. Nor has FPL indicated any objection during that time to the representations by Cities that they believe they have otherwise complied with the document request filed in the present docket.

Moreover, also in connection with the district court case, FPL was provided with copies, after the initial document production, of supplemental documents which Cities were not able to locate at the time of initial production; FPL was afforded the opportunity to re-examine certain documents relating to fuel costs in Starke and Homestead; FPL misplaced all but a few of its copies of documents from the City of Newberry, and was allowed to re-examine all files in that City; and Tallahassee made available additional files which had been omitted initially.

FPL and Cities disagree concerning the interpretation of, the initial district court document request as it relates to i>fount Dora; the parties have exchanged correspondence concerning this matter which involves, at most, a handful of documents.

Certain Homestead discovery remains to be completed for the district court suit. FPL notified Cities that responsive documents had apparently been overlooked in that City. Upon investigation, Cities found that this was true. A complete re-search of Homestead's files has now been completed, and production of documents to FPL will be made very shortly. Xn addition, Cities have re-checked their search in Starke, the Gainesville power plants, and Sebring. The re-checking established that the production had been correct and complete in these Cities, with perhaps a few oversights due to human error.

Of course, all responsive documents. found in these Cities during the re-search will also be provided to FPL very shortly. A re-search of Kissimmee' files indicated certai;n file cabinets and boxes nad been overloooked. Responsive material from the City are now being copied for production to FPL. A re-search of 4

View Smyrna Beach's files is now in progress.

All district court plaintiffs have also complied with a second wave document request by FPL.

Thus, the only outstanding matters from the various waves of production of documents by Cities to FPL are (a) to complete production of Homestead and corrections from other Cities as noted above. Completion is expected by early June, and (h) completion of lists of documents withheld as privileged.

Cities and FPL have both produced 'one complete list of privileged documents as a result of discovery in the district court, case.

At FPL's request and upon its representation that it would reciprocate, Cities are revising their lists in order to provide a fuller statement of each privileged document. Cities have produced more than half of this revised privileged list to FPL and expect to complete the remainder by June. Cities have not yet received FPL's revised list.

3. Other discove b FPL from Cities.

(a) FPL has had comprehensive discovery of the Cities of Homestead, New Smyrna Beach and Starke as intervenors in FERC Docket Ho. ER78-19, where a full evidentiary hearing was held, culminating in FERC Opinion No. 57; (b) FPL has availed itself of Florida's expansive Public Records Act to inspect files in Lake Worth, Hew Smyrna Beach, Gainesville, Homestead, and possibly other intervenors; (c) FPL has extensively discovered Gainesville in preparation for Gainesville Utilities De artment v. Florida Power which the Fifth Circuit found that FPL had conspired in violation of the antitrust laws to divide territory for sales of wholesale power in Florida.

4. District court de ositions. In'ecent months, FPL has deposed officials. or former officials in Tallahassee, Kissimmee, Newberry, Mt. Dora, Homestead, Starke, Ft. Meade and Lake Worth.
5. Consultant discover . FPL has also had extensive discovery from at least two of Cities'ajor consultants, R. W.

Beck R Associates, Orlando, Florida, and Smith S Gillespie, Jacksonville, Florida. Discovery is complete, with minor exceptions:

(a) both Beck and Smith S Gillespie have yet. to produce lists of privileged documents; (b) certain files and notes of Mr. Robert E. Bathen are being produced in installments; the first of three installments has been completed; and (c) non-Florida offices of R." W. Beck have been reviewed for responsive material; responsive files are being copied from offices in Denver, Colorado; Seattle, Washington and Wellesley, Massachusetts, and will be produced shortly.

CITIES'ISCOVERY OF FPL

1. Like FPL, Cities have had discovery through FERC Docket Ho. ER78-19 and the Gainesville litigation, although not under sunshine laws.
2. In the district court antitrust proceeding, Cities have received answers and objections to one set of interrogatories and document requests (with FPL's revised list of privileged documents not yet received)- Cities have taken depositions of certain present or former FPL officials and a former official of Florida Gas Transmission Company.

Cities still have certain discovery matters outstanding from FPL: They nave provided FPL with a list of documents 1

apparently overlooked in FPL's initial production; they have requested permission from the court to serve a second set of interrogatories; they have sought documents from the files of FPL consultants; and they have noticed and intend to notice depositions of other FPL present or former officials'.

For purposes of this proceeding, Cities have nonetheless received ample discovery over the course of time from the Company, and they submit that FPL has had ample discovery of the Cities. There is no need to delay rulings until tail-end discovery matters in the district court case are completed.

Exhibit A to Attachment 2 LAW OFFICES GEORGE SPIEGEI P.C. SPIEGEL 8 MCDIARMID BONNIE S. BLAIR ROBERT HARLEY BEAR BERT C. MCDIARMID 2600 VIRGINIAAVENUE. N.W. THOMAS C. TRAUGER ORA J. STREBEL JOHN MICHAELADRAGNA BERT A. JABLON WASHINGTON. O.C. 20037 O JAMES N. HORWOOD ALAN J. ROTH TELEPHONE I202I 333-4500 CYNTHIA S. BOGORAD GARY J. NEWELL MARC R. POIRIER F RANCKS E. FRANCIS TELECOPIER (202) 333.2974 MARTA A. MANILDI DANIEL I. DAVIDSON JOSKPH L. VAN EATON THOMAS N. MCHUGH. JR-DANIELJ. GUTTMAN PETER K. MATT DAVID R. STRAUS July 2, 1980 E. Gregory BarnesJ Esq.

Lowenstein, Newman, Reis

& Axelrad 1025 Connectiout Avenue, N.W.

Washington, D.C. 20036 Re: NRC Docket No. 50-389A Discover

Dear'Greg:

As you suggested in our recent phone call, and for your convenience, we are committing to writing certain details regarding discovery in the NRC case. Our purpose is to give your firm, Mr. Leon, and Covington and Burling an opportunity to review these points now so that any wrinkles can be ironed out early and our document production can proceed, efficiently, to our mutual advantage.

As we discussed on the phone, we have made a careful review of your NRC requests for production of documents, com-paring them to your requests in the Southern District of Florida case. Our comparison confirmed that the district court document requests equal or cover corresponding requests for production in 50-389A, with a few exceptions discussed below. Enclosed is a listing of each NRC request, except those not allowed by Commission order, and the corresponding district court request.

By using this list in conjunction with the file list which will was provided to you prior to production 'in the Cities, you be able to determine easily which documents are respons ive to which NRC requests.

Each NRC request listed has thus been fully- answered by our district court case production, with the limitations noted herein, for all NRC intervenors except Lake Helen, Key West, and FMUA. As to these, we propose the following:

d b dyf '

tion until July 18 x,n NRC 50-389A. However, Key West has been searched and is ready for inspection; subject to'lient approval we would be willing to produce documents there an'y time after July 10.

As was the case with other Cities, you will be provided with a list of files (or, as appropriate, storage boxes) con-taining responsive documents, and a list of assumptions we made during our search of City files prior to production in Key West

( the assumptions will be the same assumptions as those made in other Cities) . Because FP&Z questioned certain assumptions for certain Cities in the district court case, we will also send you copies of some documents which typify the assumptions we are making.'his will enable you to determine whether and tonon- what extent you want to see any documents that we assume are responsive or irrelevant.

You should also be aware of four points:

a. Although according to the NRC order on discovery we are only required to produce documents through October 31, 1978, we have searched Key West' files through June 1, '980. Files containing documents through that date will be included on our list to you. We do not intend to modify obligations.

NRC order or our Memorandum of Understanding, under the but we assume that you may be interested in the more current documents and that it would be more convenient for you to inspect those at the same time you are in Key West to inspect pre-November 1978 documents.

And, frankly, it was easier to include than segregate the .more recent documents.

b. Key West keeps tapes of its Utility Board meet'ings.

These will be available for your listening and/or copying in Key West. If you expect to make copies of the tapes, it would be helpful if you would so advise us in advance of scheduled production.

c. We anticipate that it will take 10 days to two weeks to complete production, inspection, and copying in Key West.
d. In addition to the responsive f ile list, organized according to document request numbers, we will also provide a list organized by the location of the files, which can be our guide during production. This should make production and inspec-tion more efficient. We will provide this list the morning pro-duction begins in Key West. (This item may be classified under "learning from past experience." If you have other suggestions for streamlining procedures, they would be welcome. )

As is the case for Key West, the offices of the FMUA have been searched and are ready for inspection. We would be amenable to producing these offices before July 18 if a reaso-nable schedule can be worked out. It took us one day to search FMUA offices; we expect it will take you longer, because of copying.

3. Lake Helen:

You indicated that during the last two weeks of July your office might be unavailable for inspection in Lake Helen, due to depositions and other matters., As we explained to you, it would be ill-advised for us to search Lake Helen's files too far in advance of your arrival there for inspection. The City uses its files daily, may need to reorganize them, and so on. The likelihood of changed locations of files and hence confusion and delay in the production process becomes greater as the inter-vening time between search and production increases. We are, therefore, reluctant to proceed with our planned search of Lake Helen's files until scheduling can be arranged more definitely.

We would be agreeable to your suggestion that we search Lake Helen's files 'and provide you with a list of responsive files upon- our receipt from you of notice that you wish to go to Lake Helen to inspect documents. We would require two weeks notice.. Lake Helen can be made ready by July 18, subject to such two-weeks'otice from you.

You are no doubt aware that in certain cases the w'ording of district court and NRC requests do not correlate precisely, giving rise to the points listed below. We raise the points below in order to be complete and to avoid any possible misunderstanding.

At this time is appears unnecessary to us (and you ten-tatively indicated it seems unnecessary to you) to return to those Cities already produced, to inspect documents again. We shall protest if you ask us to produce copies of "Electrical World" or other trade magazines which FPGL itself receives, and which in any case were .available in our earlier production.

Nevertheless, although meter books were presented to you in every City in our earlier production, we would be willing to return to the Cities shortly after July 18 and produce them again for your inspection.

We are confident that you have been presented all relevant, responsive material in Cities other than Key West or Lake Helen. Moreover, we believe that appli.cation of the prin-ciples stated in the Memorandum of Understanding supports the interpretation we have made of your requests.

The particulars are:

1. NRC Document Requests 1-8 ask for all City organiza-tional manuals, job descriptions, etc. As we made explicit in earlier production, we did not search individual city departments that. are non-utility related, such as police and fire department files. Thus,. intradepartmental organizationalwerecharts of such depart-ments, which in any event are not relevant, not produced.
2. Documents responsive to NRC Document Request 45 were produced in response to district court request No. 30. Although the requests are different in their particulars, the- information sought is available from the same raw data (primarily meter books) already produced. All other extant records regarding the reasons large customers terminated their accounts have been provided. Thus, you have had access to the documents needed to answer your question. In every City, FP&L chose not to examine the raw data.
3. NRC Document Request 112A asks for bills for power purchased from Crystal River 3. In the district court production, samples of such bills were provided. FP&L declined to copy or examine. such materials, although it

~

was made explicit that such bills were available in all Cities.

4. NRC Document Request 183 seeks documents regarding each'"expansion or contraction of the Cities'ervice area." It is not clear what is meant by the question. If, as you indicated you thought was likely, this question is directed at changes in the geographical borders of the area served by each city, all responsive documents have already been provided. If, on the other hand, this request is intended to include a change in the number of meters served by the city, some documents may not have

. been produced. For example, within the service area, if related an apartment complex was built documents may not have been produced. As we. made explicit during prior discovery, we did not search or produce every customer account file in every city.

5. NRC 'Document Requests 118 and 119 have been fully responded to, except that trade magazines, advertisements, etc.,

describing particular units were not provided, unless they were in files which also contained other responsive documents.

6. All documents responsive to NRC Document Requests

,219 and 290 have been produced, except that certain industry-general documents were not produced in Gainesville, such as SERC, NERC, or NEPOOL reports, as exPlicitly set forth in "GAINESVILLE, I.A.1." of our introduction to the lists of responsive document files.

7. NRC Document Requests 31 and 34 ask for certain very particular financial and operating data, which conceivably may cover some document we overlooked. However, in responding to your broader district court request for such data, we compiled comprehensively. If you believe we have not produced any item requested by NRC Document Requests 31 or 34, please advise us.
8. NRC Document Request 238 refers to certain speci-fics with regard to lobbying and related documents. The district court request, 104, is worded more broadly. We read them to mean the same thing.

I

9. NRC Document Request 320 asks for all material relating to environmental constraints on coal plants. As noted in the preface to the district court lists, we provided documents regarding environmental considera tions insofar as they af fected the planning, design, costs, construction time required, etc.,

for development of any type of plant (including coal plants). In our district court response we also noted that some detailed environmental-related information, such as data on emissions as derived from a stack test, and environmental impact state-ments were available. They were not requested.

10. NRC Document Requests 353, 357-358 ask questions specifically concerning the Jacksonville Electric Authority, Orlando and the Coordinating Generation StQdy Group. This material was provided insofar as it related to joint power -supply planning, pooling, and so on. However, we did not closely read a number of binders in the possession of Mr. Richard Hester con-cerning the Jacksonville Electric Authority which generally dealt with the organization of that system, and which were not them-selves responsive to the district court request. These documents have not been provided.

ll. Certain document requests require produce one copy od specific material, see e.cC.,

Cities to simply NRC Document Request 394. These documents will be provided.

12. Cities'uty to produce documents in some instances, (for example, NRC Document Request 264) depends on the answer to the interrogatory. All such further documents will be produced.

give us a Should call it and be we necessary will set for up a you to return to the Cities, reasonable timetable for production.

NRC Interrogatories and Document Requests 302-393 make reference to Harry Luff 's affidavit and are directed at the Orlando Utilities Commission, which is no longer a party in the NRC case, and never was a party in the district court case. All other Cities have already turned over to you all material relating to Orlando received through FCG, FMUA or FMPA, and all responsive correspondence between other Cities and Orlando. If you desire more information, please seek that information directly from Orlando, through its attorneys. As you know, we do not now represent the Orlando Utilities Commission.

Finally, in order to avoid duplication and waste, we propose that consultants'ffices be searched and produced for the NRC case in the same time and manner as in the district court case.. You said tentatively that this seemed reasonable to you.

We hope this letter is helpful to you. Thank you for your cooperation, and we anticipate hearing from you soon.

Sincerely, Marta A. Manildi Joseph L. Van Eaton cc: Jack Leon, Esq.

Herbert Dym, Esq.

CROSS-REFERENCE NRC DISTRICT COURT DOCUMENT REQUESTS NRC Re uest Number District Court Re uest Number 8 11 10 12 ll 13 41 45 22A 17, 45, 70 (from 1950) 23 105

.24 105 29 4 30 5

32. 6 33 7 35, 36 61 36A 13, 83 37 46 38 26 39 26 40 28 41 27 42 29 44 13 44A 14 45 30 46 30 47 15 48 15 49 1 50 1 51 1 52 16 53 3 54 2 55, 56 31 '3 57 59 8 61 34 62 42 63, 64, 65 63 66 pr'od uced as generally res ponsive 67 52 68 52 69 6'1 70, 71, 71A, 72 9, 31, 53, Int 9 72A 61, Int 9 73 57, 61 74 61 75 57 76 57

NRC Re uest Number District Court Re uest Number 77 57 78 57 79 58 80, 81 82, 83 59, 60, Ent 12 84 70 85 64 86 69 87 65, 66, 67 88 65-69, Int 14 88A 61 89 71 90 72, 73, -Int 15, 16 92 19, 31'4 93 94 24 95 24 96 24 97 23 98 25, 29 99 23 100 25 101 38'8, 103 76 103A 38, 76 104 76 104A 76 106 76 107 76 108 76 109 76 113-119 Int 3, Ent 37 121 77, Int 17 1'23(g) 9, 10 124 (11) 9, 10 127(b) 9, 10 128(8) 10 130 61 131 79 132 79 133, 134 80 135 81 136 81 137 81 138 81 139 81 140 81 141 81 142 82 142m 83 142C 83-86, Int 19, 20 142D 82, Int 18 82 142'46-47, 151 52'56 57/ 161 39~ 52~ 56~ 58~ 61

NRC Re uest Number District Court Re uest Number 162 Int 1 (in part) 163 Int 1 164 23/ Int 1 165 Int 1 (in part) 166 Int 1 167 23/ Int 1 168 23 169 23/ Int 1 170 23/ Int 1 172 99, Int 30 173 99, Int 30 174 Int 30 175 18, 99 176 19 177 44

'78-180 44 181 12 182 44 183 43 185 87 187 20 188 12, 31 194 20, 47, 51, 53, 59, 60, 88, 95, Int 6, 9, 12, 21, 26 196 76, 78, 79, Int 22 218 43 221 45 73 223 71/ 72 224 72/ 74, Int 15, 16 226 62 228 72/ 74/ 90/ 101/ 102/

Int 15, 16, 31-33 230, 231 74, Int 16 232 103 233 103 234 103 236, 238 104 241(g) 92 243 92 245 91, 94, Int 23, 25 248 89, 92, Int 22 251 92 268 37 / Int 3 296 49 297 23/ 35/ 47 48/ 49/ 50/

55, 59, 62, etc.

304 / 305/ 306 79 317 81 319 79 321 81

NRC Re uest Number District Court Re uest Number 322 81 324 325 81 327 23 331 23 334 3S, 48, 49, Int 2 336 72 f 74 339 (in part) 61 341 72 74 344 61, 72 I 74 346 27 352, 353, 354 61 355 47, S9, 60, 61, 72, 74, 95 356 61, 72I 74 359 72 g 74 360 72 / 74 361 721 74 362 7S, 104 369 72 I 74, Int 370 31 65, 68 373 72 I 74 374, 375 72 I 74 376-380 71 381 69 390 23 392 12, 87 393 23 397 20, 88

'3 98 399 cf. 75 21 401 17, 45, 70, and produced as gene rally responsive 404(c) 45, 70~ 76~ 77'8 405 17, 45, 70'6J 77/ 78 409 55, Int 10 412 55, 92 415 47, 59, 60, 95 50'7, 416 47, 59, 60, 95 418 40, 89 419 17, 45, 70 420 37 421 '3

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