ML17209A516

Fl Cities Reply Brief to Applicant 801203 Response to Fl Cities Answer to Joint Motion.Supports Prehearing Conference & Contends License Condition Clause Contrary to Public Policy.Certificate of Svc Encl

ML17209A516
Person / Time
Site:	Saint Lucie
Issue date:	01/08/1981
From:	Jablon R AFFILIATION NOT ASSIGNED, SPIEGEL & MCDIARMID
To:	Atomic Safety and Licensing Board Panel
Shared Package
ML17209A515	List: ML17209A514 ML17209A516
References
ISSUANCES-A, NUDOCS 8101090360
Download: ML17209A516 (173)

Text

BEFORE THE UNITED STATES NUCLEAR REGULATORY COMMISSION BEFORE THE ATOMIC SAFETY AND LICENSING BOARD In the. Matter of Florida Power & Light Company Docket No. 50-389A (St. Lucie Plant, Unit No. 2)

REPLY OF FLORIDA CITIES TO FLORIDA POWER & LIGHT COMPANY'S RESPONSE TO JOINT MOTION Robert A. Jablon Alan J. Roth Marta A. Manildi Attorneys for the Lake Worth Utilities Authority, New Smyrna Beach Utilities Commission, Sebring Utilities Commission, Gainesville Regional Utilities and the Cities of Alachua, Bartow, Ft; Meade, Key West, Lake Helen, Mount Dora, Newberry, St. Cloud and Tallahassee, Florida and the Florida Municipal Utilities Association January 8, 1981

>4~

s xo F090 '>4

TABLE,OF CONTENTS Pacae TABLE OF AUTHORITIES ~ ~ ~ ~ ~ ~ ~ ~ ~ o ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

INTRODUCTIONS' . ~ ~ . ~ ~ . ~ .. ~ ~ ~ .. ~ ~ ~ ... ~ ~ ~ .. ~ ~ ~ ~ ... ...

~ 2 ARGUMENT ~ ~ . ~ .o.. .. ..o

~ ~ ~ ~ ~ ~ ~ .. ...

~ ~ ~ ~ ~ ~ . ~ . ~ . ~ ~ ~ . ~ ~ ~ 4 I. The Board Has The Authority And Obligation To Assure That The Settlement Is In The Public Interest .................................. 4 II. The License Condition Clause Binding The Arbitrator Concerning Liability Is Contrary To Public Policy.................. 8 I II~ FP& L Should Not Be Able To Operate The Unit Contrary To The Interests Of The Other Participants Without Being Subject To Ameliorative Contract Provisions........ 19 IV. FP&L's Refusal To Offer A Reliability Exchange And Sellback Constitutes A Blatant Act of Discrimination............ ~ . 22 V. FP&L's Contention That Cities Are

" Insincere" Is Groundless and S purzous................................... 28 VI ~ The Correspondence Between The Intervenors And Florida Power & Light Demonstrates FP&L's Refusals To Deal And Confirms That Any Delay Results From FP&L's Actions: The Correspondence Is Admissible For These Purposes........... 43 VII. Miscellaneous.............................. 53 CONCLUS ION ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 54

APPENDICES Appendix A -'xcerpts from Midland and Crystal River Participation Agreements Appendix B Letter dated April 1, 1980 from Robert J. Gardner to Ewell Menge Appendix C Letter dated April 21, 1978 from George Spiegel to Harry A. Poth Appendix D Letters dated March 30, 1976 from Tracy.Danese to various Florida systems

~ ~

11

Table of Authorities Pacae COURT CASES Alabama a Vicksbur Railwa Co. v.

Mississi i Railroad Commission, 203 U.So 496 (1906).o..o.ooo.........oo..o.oo... 26 American Truckin Associations, Inc. v.

Atchison, To eka & Santa Fe Raz.lwa Co., 387 U.S. 397 (1967)................ ~ ~ ~ ~ ~ .. ~ 26 Associated Press v. U.S., 326 U.S. 1

( 1945) ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

- 24-25 Atlantic Ref inin Co. v. Public Service Commission of New York, 360 U.S. 378

( 1959 ) ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ o ~ ~ ~

B&B Investment Club v. Kleinert's, Inc.,

472 F.Supp. 787 (E.D. Pa. 1979)................. 48 Bratt v. Western Air Lines, 169 F.2d 214 (10th Cir. ), cert. denxed, 335 U. S. 88

( 1948) ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ o ~ ~ ~ ~ o ~ ~ 45 Conwa Cor . v. FPC, 510 F. 2d 1264 (D. Car. 1976), aff'd, 426 U.S.

2 71 (1976)......................................

.C 26 Drake v. Detroit Edison Co., 443 F.Supp 833 (W D Mich'978) ... ~ ~ ~ 17 Fedor v. Mauwehu Council, Bo Scouts of Amer>.ca, 21 Conn. Supp. 38, 143 A.2d 466 (Super. Ct. 1958)...........................

Fletcher v. Western National Life Ins.

Co., 10 Cal. App. 3d 376, 89 Cal.

Rptr 78 (1970)................................ 50 Ft. Pierce Utilities Authorit v. U.S.,

606 F.2d 986 (D.C. Cz.r. , cert. denied 444 U.So 842 (1979)..oooo..o.....o.... 26

Pacae Gainesville Utilities De artment v. Florida Power & Lx ht Co., 573 F.2d 292 (5th Car.),

cert. denied, 439 U.S. 966 (1978)............. 6, 30 Gamco v. Providence Fruit & Produce Buildin Inc., 194 F.2d 484 (1st Car.), cert.

denxed, 344 U.S. 817 (1952)................... 25 Hamlin Testin Laboratories v. U.S. Atomic Ener Commxsszon, 357 F.2d 632 (6th Car.

1 966 ) ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ o ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 14 L'Heureax v. Hurle , 117 Conn. 346, 168 A.

( 1933 ) ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 12 Hu hes v. Warman Steel Castin Co., 174 Cal. 556, 163 P.885 (1917).................... 12 ICC v. Delaware,Lackawanna & Western Railroad Co., 220 U.S. 235 (1911).......... ~ .. 26 Ins iration Consol. Co er Co. v.

Lumbermens Mut. Cas. Co., 60 F.R. D. 205 (ST DoN ~ Yo 973) ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ s ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 48 Ive Plants, Inc. v. FMC Cor ., 282 So.2d 205 (Fla. App. 1973)............. ~ . ~ ~ ~ .. 12 Jackson v. Shell Oil Co., 401 F.2d 639 (6th Cir. 1968)............................... 45 Janet Realt Cor . v. Hoffman's, Inc.,

154 Fla. 144, 17 So.2d 114 (1943).............

Johnston v. Far o, 184 N.Y. 379, 77 N.E. 388 (1906)..........,.................

Libert Mutual Ins. Co. v. Davis, 412 F.2d 475 (5th Car. 1969).................. 48 louisville & Nashville Railroad Co. v.

U~S ~ ( 238 U~ S ~ 1 (1915) ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 26 Missouri Pacific Railwa Co. v. Larabee Flour Mz.lls Co., 211 U.S. 612 (1909).......... 26 Munn v. Illinois, 94 U.S. 113 (1876)............ 26 Norlin v. Carr, 211 F.2d 897 (7th Cir.

1 954 ) ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 45 iv

Pacae Otter Tail Power Co. v. U.S., 410 U.S.

366 ( 1973 ) ~ ~ ~ ~ o ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

Overseas Motors, Inc. v. Im ort Motors, Ltd., 375 F.Supp 499 (E.D. Mich. 1974)g aaa d on other rounds, 519 F.2d 119 (6th Car.), cert. denxed, 423 U.S.

9 87 ( 1975) ~ ~ ~ ~ ~ ~ ~ o ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 48, 49, 50 Penns lvania Gas s Water Co. v. FPC, 463 F.2d 1242 (D.C. Cir. 1972)................

Pittsbur h, C.C. & St. L. R. Co. v.

~Kinne, 95 Ohio Et. 64, 115 N. E.

5 05 ( 1916 ) ~ ~ ~ o ~ ~ o ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 12 Reichenbach v. Smith, 528 F.2d 1072 (5th Car. 976 52 Scenic Hudson Preservation Conference v.

FPC, 354 F.2d 605 (2d Car. 1965), cert.

denied snh ncm. Consolidated Edison Cc.

of New York v. Scenic Hudson Preservation Conference, 384 U.S. 941 (1966)...............

Sn der v. Southern California Edison, 44 Cal. 2d 793, 285 P.2d 912 (1955)........... 14 Southern Steamshi Co. v. NLRB, 316 U S~ ~ 31 (1942) ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 16 S rin er v. Citizen's Cas. Co. of N.Y.F 246 F.2d 123 (5th Car. 1957).................. 48 Sternber er v. U.S., 401 F. 2d 1012 (Cto Cl o 1968) ~ ~ ~ ~ ~ ~ ~ o ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

Tarbell v. Rutland R. Co., 73 Vt.

347, 41 Ao6 (1901)o.oo....o....o.oo..oooooo...

United States v. Ca ital Transit Co.,

325 U~ S ~ 357 ( 1945) ~ ~ ~ ~ o ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 26 United States v. Griffith, 334 U.S. 100,

( 1948 ) ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 28 Western Union Tele ra h Co. v. Call Publxshzn Co., 181 U.S. 92 (1901)............ 26

Pacae AGENCY CASES Consumers Power Co. (Midland Units 1 and

2) g ALAB 452( 6 NRC 892 (1977) ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 17'8/ 20~ 22 Duke Power Co. (Catawba Nuclear Station, Units 1 and 2), LBP-74-47, 7 AEC 1158

.( 1974) ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 4-5, 23 Re Florida Power & Li ht Co., FERC Docket Nos. ER78-19 (Phase I) and ER78-81, Opin ion No. 57, 32 PUR 4th 31 (1979)............ 6, 27, 32 Florida Power & Li ht Co., FERC Docket No.

ER78-19 (Phase I), "Opinion and Order Denying Rehearing", Opinion No. 57-A (October 4, 1979)..................,.... 6, 32 Florida Power & Li ht Co. (St. Lucie Plant Unit No. 2), CLI-78-12, 7 NRC 939

( 1978 ) ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

Florida Power & Li ht Co. (St. Lucie Plant Unit No. 2), LBP-79-4, 9 NRC 164 (1979) . 52 Houston Li htin & Power Co. (South Texas Project, Units 1 & 2), NRC Docket Nos.

50 498A et al g Order (April 15'980) ~ ~ ~ ~ ~ ~ ~ 52 Vir inia Electric Power Co. (North Anna Power Station, Units and 2), Initial Decision, LBP-75 54~ NRCI 75/9 (Sept. 10, 1975)..... ~ .. ..

~ ~ ~ ~ ... ~ ~ ~ ~ ~ ~ ~ 13-14, 15 STATUTES Atomic Energy Act gl(a) ~ 42 U. S. C. 52011(a) (1973) 13 52(d) 42 U. S. C. 52012(d) (1973) 13 g2(e) 42 U. S. C. f2012(e) (1973) 13 52(g) 42 U.S.C. 52012(g) (1973) 13 52(i) 42 U. S. C. 52012(i) (1973) 13 53(d) 42 U.S.C. 52013(d) (1973) 13 5103(d) 42 U.S.C. g2133(d) (1973) 13, 17 5105(a) 42 U.S.C. g2135(a) (1973) 26 5105(c)(6) 42 U. S. C. f2135(c) (6) (1973) 25

Parcae MISCELLANEOUS Fed. R. Eir id. 408, and Comment.................. passim U ~ C ~ Cs g2 609 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 51 15 Williston 3d 51751................. ~ ~ ~ . ~ .. ..

~ 12

BEFORE THE UNITED STATES NUCLEAR REGULATORY COMMISSION BEFORE THE ATOMIC SAFETY AND LICENSING BOARD In the Matter of Florida Power & Light Company Docket No. 50-389A (St. Lucie Plant, Unit No. 2)

REPLY OF FLORIDA CITIES TO FLORIDA POWER & LIGHT COMPANY'S RESPONSE TO JOINT MOTION Florida Cities have been actively pursuing their rights to nuclear access, transmission and coordination for a long time.

Florida Power & Light Company ("FP&L") has entered into a settle-ment with the Government parties, which among other things grants some cities participation in St. Lucie 2. The Cities find the settlement unacceptable because it does not recognize their rights or satisfy their needs.

The settling parties seek what they call "immediate implemen-tation", that is, Board approval and an order granting immmediate effectiveness to the settlement. In a strongly worded pleading, filed December 3, 1980, FP&L seeks to prevent a substantive Board review of the settlement to determine whether it is in the public interest. By pressing its right to withdraw the settlement, if it is not accepted immediately and without conditions, the Company seeks to impose the terms of the settlement upon the Cities or to force years of expensive litigation in order to avoid modifica-tions or additional terms. The Company seeks to justify its position by attacking the Cities as being "less than sincere in

espousing interest in participation in St. Lucie Unit No. 2" and alleges that they "would pursue a strategy of prolonging nego-tiations over the terms of participation." FPGL Response, p. 9.

The following is in reply and opposition to FPGL's pleading of December 3, 1980.

INTRODUCTION

1. It is time to confront the obvious: Until the instant settlement with the Government, FP5L has resisted selling vir-tually ~an capacity from St. Lucie 2 or its other nuclear units.

For years, both in the context of the South Dade proceeding (Docket No. P-636-A) and this proceeding, the Company' openly declared position has been that, apart from very limited offers under the earlier St. Lucie license conditions, it was under no obligation to sell nuclear capacity to the Cities and would not do so. While FP&L professes "reason for believing that at least some of the intervening Cities are less than sincere in espousing interest in participation in St. Lucie Unit No. 2", it is aware that Cities have objected and continue to object that too little capacity is being offered at too unfavorable terms. However, nothing prevents the Company from offering more capacity, should it desire to test the Cities'sincerity". FP&L refuses to deal in greater amounts of nuclear capacity than are set forth in the Government settlement or under improved terms.

2. While FP&L claims that the Cities will not be hurt by immediate implementation of the license conditions, it seeks to impose legally binding contract terms which subsequent Board

orders could not change. Moreover, even if the contracts could be changed, under FPGL's legal theories it would take years of expensive litigation to change the terms. In a number of aspects the terms of fered are less favorable to the Cities than the NRC has approved in other nuclear participation agreements. The terms that FP&L would immediately impose lack a reliability exchange or sellback provision, provide questionable backup arrangements, include a liability clause under which FPGL would excuse itself from virtually any wrongful action that it may take in constructing or operating the plant, include onerous deposit requirements, and omit opportunities for transmission investment and other economic arrangements common to the industry.

3. FPGL does not want the Board to be able to rule any time soon whether the settlement is in the "public interest" or whether corrective conditions should be ordered. Thus, it seeks to impose the settlement without ~an substantive Board review.

4. The Florida Cities group has been litigating with FP&L s ince 1976 over these matters. If the only way that they can obtain any practical relief is to accept "immediate implementation" of the settlement and enter into St. Lucie participation contracts 1/ no matter how adverse the terms, at least some cities may feel constrained to do so. The present and antici-pated competitive situation gives them no choice. Indeed, the 1/ Contracts would probably be with the Florida Municipal Power Agency.

very point FPaL made in its various past attempts to acquire municipal systems was that it had access to economic generation sources and that smaller systems do not. The Cities simply can-not af ford the luxury of litigating forever to obtain reasonable terms.

5. Given this context, the Cities'osition is that:

(a) By threatening to withdraw the settlement offer, FPGL has the power to seek to coerce "immediate implementation" of its terms; however, use of such threatened or actual withdrawal to preclude Board consideration of the settlement would itself be coercive and anticompetitive. The Board has a review function to determine whether the settlement should be accepted upon reasonable conditions which the Cities seek; reaso-nable .conditions would include correction of those license con-ditions that would permit imposition of unfair and anticom-petitive contract terms or that might preclude practical relief after future proceedings.

(b) Reasonable time periods and procedures should be set for resolution of the entire proceeding or at least for simplification of issues and procedures.

ARGUMENT I. The Board Has The Authority And Obligation Public Interest.

To Assure That The Settlement Is In The As was recognized in Catawba, a Board order accepting a pro-posed settlement should not issue absent a reasonable likelihood

that the settlement is "within the public interest". Duke Power

~Com an (Catawba Nuclear Station, Units l and 2), UBP-74-47, 7 AEC 1158, 1159 (1974) . FP&L would have the Commission ignore these standards and issue an order accepting the settlement without concern as to whether it is in the public interest. This position is untenable.

As the Second Circuit states in Scenic Hudson Preservation Conference v. FPC, 354 F.2d 608, 620 (2d Cir. 1965), cert.

denied sub nom. Consolidated Edison Co. of New York v. Scenic Hudson Preservation Conference, 384 U.S. 941 (1966):

" In this case, as in many others, the Commission has claimed to be the represen-tative of the public interest. This role does not permit it to act as an umpire blandly calling balls and strikes for adversaries appearing before it; the right of the public must receive active and affirmative protection at the hands of the Commission."

In granting late intervention in this docket, the Commission recognized this policy:

"If a hearing is convened, we think it should encompass all significant antitrust implications of the license, not merely the complaints of intervening private parties. If no one else performs this function, NRC Staff should assure that a complete picture is pre-sented to licensing boards."

Florida Power & Li ht Com an (St. Lucie Plant, Unit No. 2),

CLI 78 12 g 7 NRC 939 g 949 ( 1978 ) ~

The fact that a proposed settlement is being considered does not detract from the Board's authority to attach conditions to approval of the settlement assure that it is in the public interest. Penns lvania Gas & Water Co. v. FPC, 463 F.2d 1242 (D.C. Cir. 1972). While FP&L may threaten not to accept public

interest conditions, at the least the Board should consider their appropriateness. See Atlantic Refinin Co. v. Public Service Commission of New York, 360 U. S. 378 (1959), where the Supreme Court admonished the Federal Power Commission to protect the public interest, without regard to threats by the applicants that they would withdraw proposed gas sales if the Commission ordered conditions.

FP&L argues that Florida Cities cannot be hurt by .immediate implementation of the settlement conditions, even if they are unreasonable, because the Cities receive certain benefits under the settlement and can litigate for more. This statement is true only to the extent that the Cities would not be bound by adverse present license terms or imposed contractual provisions, should the Board find that a "situation inconsistent with the antitrust laws" exists, 1/ and only to the extent that Cities'onfinement 1/ A "situation inconsistent" does exist as a matter of law: The Fifth Circuit has made a factual finding, which is binding on PP&L under doctrines of res judicata and collateral estoppel, that the Company has conspired with Florida Power Corporation to unlawfully divide Florida's wholesale power markets. Gainesville Utilities De artment v. Florida Power a Li ht Co., 573 F.2d the292 (1978), cert. denied, 439 U.S. 966 (1978). More recently, Federal Energy Regulatory Commission has found that "FPGL's pro-posals [refusing to deal in wholesale power] were unjust and unreasonable under the standards of Sections 205 and 206 of the Federal Power Act, particularly because of their anticompetitive effect." Florida Power 6 Li ht Com an , FERC Docket No. ER78-19 (Phase I), "Opinion and Order Denying Rehearing", Opinion No.

57-A, October 4, 1979, Slip Opinion at l. Indeed, in making this determination, the Commission relied in part upon "unrebutted Company documents in evidence" that FP&L's policy was to deny others access to nuclear generation. Re: Florida Power The terms of the settlement themselves demonstrate a refusal of FPaL to deal with utilities outside its service area in nuclear capacity and other services, thereby perpetuating the illegal territoriality found by the Fifth Circuit in Gainesville,

~su ra.

to such adverse license terms would be remediable later ~ Such is not the case here.

The Company recognizes that if the license conditions as proposed preclude or prejudice the Cities, then they could not be adopted as in the public interest. The Company states at p. 6:

"The decisive answer to the Cities'ear, however, is that immediate attachment of the Commission of the condition will not in any way prejudice the right of Cities unwilling or unable to participate in St. Lucie No. 2 under the settlement conditions to pursue their claim of 'rights'o participate under more favorable conditions.

An Order attaching the conditions imme-diately does not im air the ri ht of an intervenor to have its case heard on the mer ts and to avail itself of an different or addxtxonal condztxons re arden articx ation xn St. Lucre Un>,t No. 2 which mx ht ultima-tel be ordered. Thus, the Cities'rofessed fear that an intervenor which fails to par-ticipate in accordance with the settlement conditions would lose any opportunity for par-ticipation even if prevailed on the merits and obtained different conditions is groundless." (Emphasis supplied)

Indeed, consistent with the above, the Company supports a new condition assertedly designed to permit modification of par-ticipation contracts, should the Board order new "control" provisions. However, this additional FPGL commitment is limited solely to a conflict with the principles of Section VIII(i) and would be of limited value, if the new license conditions permit other adverse contractual terms. For example, if the condition permits a later reduction of nuclear capacity offered which in the context of the small amounts of nuclear capacity being

purchased and financed could have adverse financing impacts, the Cities could be precluded as a practical matter from taking advantage of the proposed clause. More importantly, on p. 6, n.

6, FPaL "questions" the NRC's "authority to amend a participation agreement" and "reserves its right to take any legal position on that question". The plain implication is that the Cities would be bound by participation agreements that they now enter into as a result of an order approving immediate implementation.

Immediate implementation should not be granted unless FP&L accepts as a condition its statement in the text of its pleading, without its footnote qualifications:

"The attached conditions 'do not impair the right of any intervenor to have its case heard on the merits'nd to avail itself of any different or additional conditions regarding participation in St. Lucie Unit No. 2."

Further, the license should be conditioned, as is discussed infra and in Cities'nswes to Joint Motion.

II. The License Condition Clause Binding The Arbitrator Concernin Liabilit Is Contrar To Public Polic FP&L has insisted upon a settlement term which states that

~an liability provision proposed by the Company must be accepted unless the arbitrator "determines that the provision proposed'by the Company constitutes an unreasonable proposal which renders meaningless the Company's offer of participation in St. Lucie Unit No. 2." License Condition,Section VII(E)1. The Company

defends this provision as cdmmercially reasonable, since "no rational firm would enter into a commercial arrangement which involves undertaking substantial potential liabilities without any prospect of profit..." Response, p. 19. The short answer is that if FP&L is so confident that its position is correct, it need not have the restrictive license condition language, language which to our knowledge appears in no other license conditions ordered or agreed to before the NRC.

FP&L argues that it is selling nuclear capacity "without any prospect of profit". The Company is selling nuclear capacity in an attempt to settle claims of nuclear monopolization. To the extent that it would violate antitrust principles for FP&L to be able to construct and operate nuclear units, while excluding smaller competing systems and their ratepayers from the economic advantages associated with such units, it would be against public policy for the Company to retain full ownership of the units.

Therefore, FP&L is not entitled to "profit" in the sense that the Company uses the term. 1/ Entitlement to a "profit" on nuclear construction would mean that large utilities, who are the only ones who can construct and operate nuclear plants, could be given a built-in competitive advantage over smaller competitors because of this ability. NRC licensing was designed to preclude such results.

1 In fact, FP&L zs wrong in its characterization. In the nor-mal use of the term, the return to the equity holders of a busi-ness is profit. In the sale of St. Lucie capacity FP&L seeks payment for equity costs associated with the construction of the plant. Traditionally, as a seller of monopoly services, utility services are sold at "cost", which includes return. Thus, the plant will actually be sold at a profit.

10 In negotiating the Government's withdrawal from litigation, FP&L will obtain valuable consideration. Furthermore, FP&L thereby increases the Cities'itigation burden. The settlement is "profit" enough to FP&L, without imposing an unduly restric-tive liability term.

As the sole possessor of the ability to construct and operate the nuclear plantg FP&L further states that the price to smaller systems of nuclear participation is that they must waive rights they would otherwise have under law.

If there were no license condition provisions with regard to liability and the contracts were silent, any liability to third parties would be borne in accordance with statutory and common law standards that have developed over centuries. To the extent that FP&L had defenses that under agency law or otherwise its liability should be limited, these contentions could be raised in defense of any claim. However, by imposing License Condition VII(E)(1), FP&L seeks to avoid having to make or prove defenses that it might have under agency and tort law and to force the Cities to agree to liability in advance, even where FP&L's actions cause a loss.

Under the license conditions, FP&L would have complete and absolute control over the operation of the plant. Even assuming that it would be justifiable to include a term similar to the one in the Midland agreements, immunizing FP&L from liability attri-butable to the Cities'hare of the plant for consequential dama-ges and for its negligent conduct except where the Company had

failed to use prudent utility practices, the question is whether the Company is entitled to even greater protection and, if so, what protection. Where one operates equipment that can cause great harm, there is more not less reason to insist on high levels of care. There is no reason in law or equity why FPGL should be legally excused from liability for its own imprudent conduct.

Under the law liability ordinarily follows fault. Insurance may cover such liability, but Cities should not, in effect, be forced into insuring FP&L. This is especially true where the release provision is part of a contract for something which one party (FPGL) controls and the other (Cities) cannot have other-wise than by the contract. In these circumstances, when the sub-ject of the contract (here, nuclear access) is tied to the release provision on a take-it-or-leave-it basis, it contravenes public policy. See, Fedor v. Mauwehu Council, Bo Scouts of America, 21 Conn. Supp. 38, 143 A.2d 466, 467 (1958) (Agreement signed by injured campers'arents relieving boy scout camp of liability unenforceable as against public policy: low income family had no choice other than to sign waiver in order to avail children of benefit of camp); Janet Realt Cor . v. Hoffman'sg Inc., 154 Fla. 144, 147, 17 So. 2d 114 (1943) (" Public policy favors competition in trade and opposes unreasonable restraints on useful commodities when the public welfare is injuriously affected."); See also, Tarbell v. Rutland R. Co., 73 Vt. 347, 41 A.6 (1901); Johnston v. Far o, 184 N.Y. 379, 77 N.E. 388 (1906);

12 Pittsbur h, C. C. 6 St. L. R. Co. v. Kinne, 95 Ohio St. 64, 115 N.E. 505 (1916); Hu hes v. Warman Steel Castin Co., 174 Cal .

556, 163 P. 885 (1917). Professor Williston has termed provi-sions avoiding liability in this context "peculiarly obnoxious".

15 Williston 3d 51751 at 148.

Where the party seeking to avoid liability has a public interest obligation, it cannot avoid the consequences of its neglect of that obligation. L'Heureax v. Hurle , 117 Conn. 346, 356, 168 A.8 (1933) (" Public policy requires that duties of this kind shall be discharged, and that all consequences of a failure to do so shall follow.") Courts have specifically refused to permit public utilities to avoid liability for even ordinary negligence in 'their performance of their duty of public service.

A Florida court has observed:

[Wjhere the relative bargaining power of the contracting parties is not equal and the clause seeks to exempt from liability for negligence the party who occupies a superior bargaining position, enforcement of the exculpatory clause has been denied. (citations omitted) 4/

4/ A typical situation involving such inequality for bargaining strength is one where a public uti-lity a

or a company precondition to serving some public function, doing business with them, as requires their customer to sign a stipulation exempting the company from liability for negligence.

Ive Plants, Inc. v. FMC Cor ., 282 So. 2d 205, 208-209 (Fla.App.

13 FP&L's important duties as an electric utility are made even more compelling because the construction and operation of a nuclear unit is at issue. The terms of the Atomic Energy Act and prior decisions by this Commission are unequivocal in this regard. The Act is replete with references to its 'purposes, which are above all to govern the use of nuclear power in a manner consistent with the common defense and security of the public and with the public's health and safety. See AEA 551(a);

2(d) (e) (g) (i); 3(d); 103(d) . Section 2(e) states particularly that:

Source and special nuclear material, produc-.

tion facilities, and utilization facilities are affected with the ublic interest, and re ulatxon b the United States of the produc-tion and utilizatxon of atomic energy and of the facilities used in connection therewith is necessar in the national interest to assure the common defense and securxt and to rotect the health and safet of the ublxc.

This Commission has already recognized the duty incumbent upon it to enforce the highest standards of care consistent with this public interest obligation. In analogous circumstances the Commission has refused to allow avoidance by a licensee of the consequences of negligent acts committed by independent contractors, precisely because it would be inimical to the public interest. Vir inia Electric Power Com an (North Anna Power Station, Units 1 & 2), Initial Decision, LBP-75-54, NRCI 75/9, Sept. 10, 1975. The issue in the North Anna case was whether construction permits should be suspended or revoked due to

14 omissions of material facts and material misstatements made in reporting to the Commission. The ASLB held that VEPCO could not delegate its xesponsibility to fulfill its reporting requirements, stating:

As the Act implies, the public health and safety is too vital to the national interest to permit such an avoidance [of responsibility] . Thus, the requixements of the Act and the Commission's regulations thereunder to protect the public health and safety, can be enforcd only if the applicant's

, reporting duties are non-delegable. This rule was applied in the case of Sn der v. Southern California Edison Co., 44 Cal. 2d 793, 285 P.

2d 912 (1955), where it was held that the State's regulatory scheme prohibited a utility fxom escaping liability for negligence on the grounds that the negligence was committed by an independent contractor.

2 NRC at 505.

Thus, it is required by FP&L's public duties, both as an electxic utility and as a nuclear plant licensee, that it assume liability for any harm which results from its negligence, and a fortiori from any more severe degree of bad behavior such as gross negligence or willful disregard for its public duties. As the Sixth Circuit observed, " . . . we can imagine no area requiring stricter adhexence to rules and regulations than that dealing with radioactive material, from the viewpoint of both public health and material security." Hamlin Testin Laboratories v. U.S. Atomic Ener Commission, 357 F.2d 632, 638 (6th Cir. 1966).

15 This Commission's decision in the North Anna proceeding,

~su ra, also reveals that it is against the public interest for FP&L to be held accountable (that is, liable) for even inten-tional wrongdoing only when it is done by one exercising "managerial responsibility". While the meaning of that phrase is far from clear, any intended limitation must be rejected:

[Tjhere is no merit in the Licensee's plea that its officers had no knowledge that the statements discussed herein were material false statements. If the Licensee were per-mitted to avoid responsibility because its agert'ts or its independent contractors failed to inform it of material information, it could thwart the purpose of this Act.

2 NRC 504-505. The same principle must apply to negligent acts of a licensee's agents.

FPGL cites no cases in support of its general claim that it has a presumed right to operate the plant unsafely without being subject to liability. The Company is stating that, if severe damage to third parties (for example, residents living near St.

Lucie) were caused by a failure of its employees to connect backup cooling equipment, in direct violation of NRC rules, others should bear the costs of its lack of safety. That propo-sition that it should be excused from wrongdoing as a matter of general commercial law has no support insofar as we are aware.

Nor does it have NRC case support that we know of. A common sense way to test the proposition propounded by FPsL that it should be freed of liability for its,own wrongdoing would be to ask whether FP&L would desire its position to be generally known.

16 Me suspect that if it were public knowledge that FP&L insisted-or that the NRC agreed that the only way smaller systems could obtain access to nuclear power would be to exculpate FP&L from liability for operating the plants unsafely, and even in viola-tion of NRC regulations, a national scandal would result. If we are correctf FP&L should not be able to bury its shocking propo-sition in the technical language of license conditions.

The law, of course, has purposes beyond recompensation for loss. One such purpose is encouragement of proper conduct. One can hardly imagine the Nuclear Regulatory Commission seeking to establish a principle that releases nuclear plant operators from liability for unsafe plant operations and indeed the Commission has refused to do so in the past. North Anna, ~su ra. Such policy plainly runs contrary to the purposes underlying the Atomic Energy Act. Apart from antitrust considerations, the Board has a responsibility not to ignore other purposes of its enabling statute. As the NLRB was admonished in another (but not too far removed) context, administrative agencies are not to con-centrate so "singlemindedly" on tasks before them that "they wholly ignore other and equally important Congressional objectives."

Southern Steamshi Co. v. NLRB, 316 U.S; 31, 47 (1942).

Moreover, FP&L's attempts to condition access to nuclear power by smaller systems on their agreeing to suffer the cost of the Company's imprudent operation of nuclear units is plainly against public policy. The Commission cannot approve any license (or condition) which "would be inimical to the common defense and

- 17 security or to the health and safety of the public." Atomic Energy Act 5103(d); 10 CFR 550. 40(c) . It is apparent that the purpose of the license requirement is to protect members of the public, Drake v. Detroit Edison, 443 F. Supp. 833, 840 (W.D.

f Mich. 1978), by providing adequate examination by the Commission of various factors, including "competent supervision and operation of nuclear facilities." Drake, at 837.

One would expect that commercial plant deals among larger and smaller utilities would reflect contractual provisions weighted towards larger ones, who af ter all control the plants in the first instance and who generally have more bargaining power.

In fact, however, most plant agreements are less restrictive to smaller participants than the proposed FP&L-Orlando agreement, which FP&L seeks to impose on the Cities. FP&L essentially admits that the liability provisions in the Midland agreement are more favorable to participants. Appendix A.

The Florida Power Corporation Crystal River Agreements make Florida Power liable for failure to use prudent utility practice.

Appendix A. While FP&L responds that the Cities paid 110% of Florida Power Corporation's cost, that cost was far less about one-third of the anticipated St. Lucie costs. 1/

1/ As might be expected, liabiity clauses in participation agreements vary in the extent to which owners may be liable to each other or third parties. For example, the liability clauses of the Duke Power Company and certain other participation agreements are relatively favorable to the operators, as FP&L states. However, those agreements include many favorable econo-mic terms. For example, the Duke agreements have a reliability exchange and sell-back opportunities, which FP&L would withhold (footnote continued on next page)

18 tVe doubt that any of the attorneys involved in this case, whether supporting or opposing the proposed settlement license conditions, would invest his or her own money in a venture where a prospective partner would have complete control of conducting a business, but would not be liable to co-owners for anything the partner did. Certainly, a municipality should not be treated in such a manner. Yet, under its proposed license conditions, FPSL could violate the agreement itself without penalty or a means of redress for those who are harmed as a result.

The proposed liability provision in paragraph VII.E(1) should be eliminated.

(footnote continued from previous page) here. If the Duke reliability exchange concepts were applied in Florida and St. Lucie Unit 2 were damaged or went out of service, co-owners would be treated as owning 1/4 of the share of their original purchase from the unit. By the same token, if St. Lucie Unit 1 or Turkey Point Unit 3 or 4 went out of service, co-owners would be reated as owning 1/4 of each of these units.

Anticipated costs of this arrangement were approximately half of St. Lucie.

Since Midland was the first fully litigated antitrust case and since Florida Power Corporation is FPGL's neighboring utility, the Midland and Crystal River agreements seem good guides as to appropriate liability clauses. However, ultimately the question is whether a settlement imposing (or permitting a company to impose) overly restrictive liability clauses can be said to be consistent with the public interest.

19 III. FP&L Should Not Be Able To Operate The Unit Contrary To The Interests Of The Other Participants Without Being Sub'ect To Ameliorative Contract Provisions.

Under the proposed license conditions, FP&L has complete control over construction, operation and decommissioning of the unit. Under these terms FP&L could delay the plant, fail to make the plant available for base load power, or prematurely cancel it for its own interests and directly contrary to the interests of other participants. FP&L recognizes that its complete control J

could create inequities for other co-owners and has proposed a corrective license provision that would permit contract modifica-tions in this one area, but only in the event the Board were to approve modifications of the license conditions and only if par-ticipants were subject to subsequent capacity reductions which they had already financed. There is no equitable reason that the Cities should be forced to accept the costs of FP&L's self-serving acts as a condition of City participation.

Florida Cities do not object to FP&L as majority owner, having g

control over the operation of the plant, as such. However, in the event that such control is exercised in FP&L's interests and against that of other participants, FP&L should make the other participants whole. A license condition granting FP&L such control, but stating that in the exercise of such control FP&L shall be obligated to take fair account of the interests of other co-owners or to redress the violation of such interests where this is impossible would suffice. Such provisions should

20 provide sufficient leeway so that in the event of dispute an arbitrator would not feel foreclosed from equitably balancing the interests of the parties in the event of contract disputes. 1/

Other contract conditions have such, proposals. For example, the Midland ownership and operating agreement (which is part of the settlement agreement in Consumers Power Com an , NRC Docket Nos. 50-329A, et al.) provides:

6.1 Authorit for 0 eration and Mana ement.

CONSUMERS shall have sole authority to manage, control, maintain and operate MIDLAND, and shall take all setps which it deems necessary or appropriate for that purpose. CONSUMERS shall discharge such authority in accordance with Good Utility Practice and the other provisions of this Agreement.

An accepta e condition would state:

"In accordance with license condition VII(i),

Company may retain complete control and act for the other participants with respect to the design, engineering, construction, operation and main-tenance of St. Lucie Unit No. 2, and make all deci-sions relevant thereto insofar as they deal with the relationship between the Company and the other participants, including (but not limited to) deci-sions regarding adherence to NRC health, safety and environmental regulations, changes in construction schedule, modification or cancellation of the unit and operation at such time and such capacity levels as it deems proper, all without the consent of .any participant. In exercising such authority Company shall give due regard to the reasonable interests and needs of other parties and shall act in accor-dance with Generally Accepted Electric Utility Practice, these license conditions and the par-ticipation agreement.. In the event the interests or needs of the parties conflict and FPL exercises its authority to take actions contrary to those interests or needs. FPL shall take reasonable steps to assure that the reasonable interests and needs of all parties are satisfied or shall appropriately compensate such other parties."

21 A city ought not to have to turn over money to a business competitor such as FP&L and to give that competitor complete control over a facility essential to it with no obliga-

~ tion on the part of the controlling party to consider the City' interests. Such license provision is anticompetitive on its face and against public policy.

It must be stressed that FP&L does not defend the need for such complete control. The only arguments it advances in favor of its position is (1) that the cited language was in the license conditions accepted by the Company in 1974 (not unsurprisingly) and is (therefore) included in its present construction permit and (2) that there are certain ameliorative provisions in the Orlando license conditions, which allegedly lessen Cities'isk.

The Orlando participation contract contains no requirement what-soever with regard to when the plant will go into service; it permits FP&L to operate the plant in any manner FP&L chooses; and it provides for the supply of substitute power to co-owners only when the Company fails to use the plant for base load because of economic, but not for operational, reasons 1/, and it permits the Company complete discretion with regard to additions or reconstruction as well as cancellation or retirement of the unit..

Thus, there is substantial reason to fear that if the present conditions are adopted, FP&L will interpret its right stated in proposed license condition VII " to retain complete control and 1 For example, FP&L may choose to base load future coal units in place of St. Lucie Unit' for reasons having to do with FP&L's total generation configuration.

22 act for other participants" as sanctioning such decisions without regard to the interests of such other participants.

IV. FP&L's Refusal To Offer A Reliability Exchange And Sellback Constitutes A Blatant Act of Discrimination.

As was explained by the Appeal Board in Midland, a problem for the electric utility industry is that any generation unit may be subject to forced outages or be taken out of service for repairs. Industry coordination and pooling arrangements are designed to permit utilities to construct large economic units, while militating against such risks. Consumers Power Com an (Midland Units 1 and 2)g 6 NRC 892 952 960'97 1005'062 1064 (1977).

A further means of mitigating the risks of such outages or other inefficient or expensive operations of units is to share ownership in units. For example, in operating four nuclear units, FP&L reduces the harm to itself if any one unit is out of service for disproportionate periods. Further, it suffers less economic harm when one particular unit is down for repairs.

Under a reliability exchange, Florida Cities would purchase allowed capacity in St. Lucie 2 at the St. Lucie 2 price, but immediately trade some of such capacity for capacity in FP&L's other nuclear units. Thus, if as a result of such trades each Florida city owned 25% of its total nuclear participation in each of FP&L's four nuclear units, when any one unit is down, a City would lose 25% of its nuclear entitlements; under such insurance concept total system reliability is increased. See p. 18, n.lg

23 shura. By the same token, FP&L would enhance the. reliability of its opertations. Because it would transfer an equivalent share of each unit to the Cities in exchange for St. Zucie Unit 2 capacity, it would equalize risks of outage among its units and it would receive the higher St. Lucie 2 price for all capacity.

A reliability exchange is an insurance concept which benefits all systems. FP&L has agreed to such concept in its settlements with Orlando and Ft. Pierce. This concept is embodied in the Catawba agreements.

FP&L has also agreed with Ft. Pierce and Orlando to a "sell-back" of capacity by the cities at their option under which FP&L would purchase a certain amount of capacity from the Cities out of their participation shares. Such concepts are embodied in many participation agreements. Because municipal financing is often less expensive than investor-owned util i ty financing, a "sell back" allows a purchasing utility ( i.e ~, FP&L) to buy electricity at less than that utility's own cost of constructing and operating the unit. On the other hand, it allows smaller uti-lities to "grow into" plant and to make a profit on the sale of electricity to the larger utility. Ql Thus, it plainly benefits both parties.

roughly the midpoint of the financing costs between the investor-owned and municipal utility. FP&Z would impose terms more favorable to it and condition the reliability exchange, which is beneficial to FP&L, on agreement of smaller systems to agree to its sell back proposal. Letter of Robert J. Gardner to Ewell Nenge, April 1, 1980, Appendix B.

24 In its answer at p. 17, n. 14, FP&L states that it will not offer the "reliability exchange and sell back provisions" that are "contained in an agreement between FP&L and the Ft. Pierce Utilities Authority". Thus, the terms of the offer would be discriminatory against Florida Cities. The stated reason is that the Cities have not agreed to "a'ettlement agreement with FP&L".

While FP&L may deem these provisions ancilliary to par-ticipation agreements or reserved for municipal systems who have settled their legal claims, such sell back and reliability exchange provisions are integral portions of other participation-contracts and directly affect the economics and the advantages and disadvantages of owning nuclear capacity. FP&L has sought appro-val by this Commission of the Orlando and Ft. Pierce agreements.

FP&L's limitation in not providing similar reliability and sell back provisions to the other cities is plainly anticompetitive and discriminatory. As monopoly owner of nuclear capacity available in Florida, FP&L should not be permitted to transfer capacity on less favored terms to some utilities than to others.

Indeed, it is illegal for FP&L as monopoly owner of nuclear units to discriminate against customers by offering to sell the same product to some on more favorable terms than to others.

As the Atomic Energy Act itself attests, especially in its antitrust review provisions, nuclear power is a valued and vital resource. See Otter Tail Power Co. v. U.S., 410 U.S. 366 (1973).

FP&L and others cannot enter into favored agreements which effec-tively exclude or discriminate against some potential owners to the advantage of others. Associated Press v. U.S., 326 U.S. 1

25 (1945); Gamco v. Providence Fruit & Produce Bld ., Inc., 194 F. 2d 484 (1st Cir. 1952), cert. denied, 344 U. S. 817 (1952) . Having agreed to make available nuclear capacity to Orlando and Ft.

Pierce, including options for reliability exchange and sell-back arrangements, FP&L cannot legally deny similar terms to other participants. 1/

FP&L's excuse is that, unlike Orlando and Ft. Pierce, the Cities have not agreed to give it an antitrust release (i.e.,

agree to cease litigation before the NRC in these proceedings and before the Federal district court) . An antitrust release may be valuable to FP&L. +2 However, the Company has no right to withhold making nuclear capacity available to systems on non-discriminatory terms just because they raise antitrust claims against it; certainly, the NRC should not approve such restrictions. Indeed, the Atomic Energy Act specifically creates the right of the Cities'o seek intervention and attempt to obtain license conditions in the "public interest" under 5105(c)6. Florida Cities had to litigate all the way to the Commission to obtain intervention in this proceeding.

Nor is FP&L entitled to secure a release against court liti-gation as the price for nondiscriminatory participation. It would plainly be against public policy to assert that the only way that the Cities are entitled to nondiscriminatory nuclear access is by agreeing to waive whatever antitrust claims they 1/ These provisions are beneficial to FP&L, as their inclusion 7n other agreements demonstrate, so that the refusal to make them available to other Cities (who continue to litigate) as punish-ment would itself constitute an abuse of FP&L's monopoly power.

2/ Given FP&L's conduct, Florida Cities would concede that the Company should view such release as extremely valuable.

26 have against FP&L. 1/ Section 105(a) expressly preserves the antitrust claims the Cities may have.

e It is of further significance that utility law supports and reaffirms antitrust law in condemning discriminatory dealings.

This is not surprising since utility law is concerned with abuse of monopoly power over vital services. Antitrust law is likewise concerned about monopoly control or practices in restraint of trade. Thus, industries "affected with the public interest" are subject to regulatory control. Munn v. Illinois, 94 U.S. 113 (1876). 2/

1 In successfully arguing against Section 186(a) application to FP&L's operating units, FP&L repeatedly pointed to the availabi-lity of a district court remedy. E.g., Ft. Pierce Utilities Acthorit v. U.S., 606 F.2d 986 (D.C. Cir. 979), cert. dented, 4 U.S. 842 ( 979), Brief of Intervenor Plorida Power & L&ght Co. (April 21, 1978) . For example, at p. 10, the Company states:

"Moreover, there is no question about the full application of the antitrust laws to FPL's activi-ties or of the Commission's ability to condition or revoke these licenses on the basis of a court finding of violation of the antitrust laws (Section 105(a), 42 U.S.C. g2135(a) (1973))."

8 The brief for the Commission and Department of Justice (April 21,,

1978) took the same position (Brief, p. 16, n. 6).

2/ Cases enunciating the well settled principles that utilities are obligated to deal on nondiscriminatory basis include Western Union Tele ra h Co. v. Call Publishin Com an , 181 U.S. 92,99-100 (1901); Alabama & Vicksbur Railwa Co. v. Mississi i Railroad Commissxon, 203 U.S. 496 (1906); Mxssourx Pacxfxc Raxlwa Co. v. Larabee Flour Mills Co., 211 U.S. 612, 619, 620 (1909); ICC v. Delaware, Lackawanna & Western Railroad Co., 220 U.S. 235 (1911); Louisville & Nashville Railroad Co. v. U. S.,

238 U.S. 1, 19 (1915); United States v. Ca xtal Transit Co., 325 U.S. 357 (1945); American Truckin Assocxat ons, Inc. v. Atchison, To eka & Santa Fe Ra& lwa Co., 387 U.S. 397 (1967) . See ~Conwa 271, holding that the Federal Power Commission must consider "price squeeze" issues created by differences in state and (footnote continued on next page)

27 Effectively then, FP&L's reason for denying Florida Cities nondiscriminatory contract terms is that the Cities might other-wise exercise their undoubted rights to seek protection before this agency and the Courts against the very same contractual terms that FP&L seeks to impose. Obviously, if FP&L can justify the imposition of discriminatory contract terms on grounds that the Cities retain the rights to contest the terms offered, FP&L (footnote continued from previous page):

regulated electric rates, even where rates were other-I'ederally wise "just and reasonable" under f205 of the Federal Power Act.

16 U.S.C. 824d(e) . A significant and typical example in this line ER78 19 g Opinion No ~ 57 g 32 PUR 4th g 313 ( 1979 ) ~

1/ After quoting the testimony of Otter Tail Power Co.'s Vice President and General Manager, explaining the basis for discriminatory rates, that "in any negotiation there is always a little give and take", the Commission states:

"This is clearly illustrative of the genesis and the vice of discrimination which regulatory commissions are almost uniformily directed to remove by the statutes under which they operate. As a matter of fact, the evil of discrimination was one of the prime moti-vating factors of the earliest regulatory statutes.... Ne need not go into the long history of abuses, discriminations, preferences, rebates, etc. which were the pri-mary cause of the inhibition against this former practice in the railroad regulatory s ta tutes . The inhibitions originally written into these statutes were substantially carried over into practically all other utility regu-latory statutes.... There is one other phase of discrimination which we should mention. Given a monopolist position and the right to discriminate, an electric utility company is in possession of strong and unfair weapons in its dealings with municipalities.

2 FPC at 142, 143.

28 is free either to effectively bar the Cities from pursuing their litigation rights or to discriminate in the sale of nuclear capacity. Such imposed terms are plainly contrary to antitrust law and should be rejected out of hand (e.g., United States v.

Griffith, 334 U.ST 100 (1948)p condemning a motion picture chain's willingness to deal with a supplier in towns where the chain had a monopoly only on condition that the supplier give the chain preferred treatment in areas where the seller ha'd alter-native outlets) . The condition by FP&L is illegal that Florida Cities must agree to an antitrust release in order to obtain typical contract terms.

FP&L's stated position at p. 6, n. 6 of its Response apparently seeks to separate what it defines as contract terms necessarily related to nuclear participation from other aspects of contractual arrangements. Such artificial separation is troubling. For example, transmission arrangements are necessary for all systems and backup arrangements from FP&L could be essen-tial for at least some. In view of FP&L's position stated at

p. 17, n. 14, these backup arrangements must be defined as a con-dition to immediate implementation. One would assume that, as is common to participation agreements, adequate transmission and backup would be available, but FP&L has not said that it agrees.

FP&L should be required to clarify such arrangements.

V. FP&L's Contention That Cities Are "Insincere" Is Groundless and S urious.

FP&L seeks to justify onerous settlement provisions and its own refusals to deal by asserting that it has reason to

29 believe "that at least some of the intervening Cities are less than sincere in espousing interest in participation in St. Lucie Unit No. 2, and would pursue a strategy of prolonging nego-tiations over the terms of participation." It then blandly sets forth a list of allegations, which it claims support a "basis for concern that at least some of the intervenors combine a lack of focused interest in participation in St. Lucie Unit No. 2 with a desire, due to tactical considerations of litigation or economic motives, to keep the issue open for as long as possible." FPGL Response, pp. 9-12; quotations at p. 9, 12.

Among other things, FPSL attacks the senior partner of Spiegel McDiarmid and quotes or references other materials in a manner which seem to be knowingly out of context and misleading. It is of more than passing note that FPGL does not suggest that the Cities do not desire additional St. Lucie or other nuclear capa-city to that which is offered, and FP&L does not state that it is willing to offer more.

FP&L's arguments are outrageous because, as the Company and its attorneys well know, FPGL has been refusing nuclear access to the Cities since at least 1976. Such access has been requested and continues to be requested and is refused, except for the recent settlement offer of small amounts to certain Cities and not to others. The present proposed settlement limits Cities'uclear opportunities and makes no allowance for participation

30 for some Cities. 1/ Further, to the extent that FP&L's pleading states or implies that it will not even consider Board ordered conditions, FP&L underscores its own strategy of delay. If FP&L can make it take long enough and make it sufficiently expensive for the Cities to obtain relief, it will have succeeded in nuclear monopolization and other violations of the antitrust laws, whatever the merits of this case. FP&L is plainly the source for delay, its attacks on the Cities notwithstanding.

While the Cities believe that FP&Z 's conduct speaks louder than its words, given the potential harm to leaving FP&Z 's attacks and innuendos unanswered, we respond to each:

(1) FP&L implies that George Spiegel, counsel to the Ft.

Pierce Utilities Authority, recommended a strategy of delay in negotiations with FP&L. As FP&L's counsel knows, and the Ft.

Pierce minutes show, when making the statement quoted by FP&L f George Spiegel was referring to a situation where a utility such as Florida Power & Light delays offering participation in a unit.

This strategy of delay by the utility backfires against its own interests. Nr. Spiegel was comparing utilities, such as those in New England and Florida Power & Light, on the one hand, which have refused to agree to deal with municipals or to agree to 1 To cure such unfairness Florida Cities may transfer some of the capacity that is offered among themselves. FP&L's proposed new license condition that could effectively create a subsequent divestiture of nuclear capacity as a condition for fair contract terms could act to inhibit such transfers. The settlement provi-des for illegal territoriality on its face. Gainesville Utilities v. Florida Power & Li ht Com an , 573 F.2d 292 (5th Cir. 1978), cert. denied, 439 U.S. 966 (1978).

31 participation, and others such as Florida Power Corporation and a utility in Kansas, which were ready to deal in good faith. In response to a question of how quickly Ft. Pierce would have to fund participation shares, Mr. Spiegel contrasted these situations and stated that in the latter situation a City would have to put up its money quickly, but in the former situation,

~

'e a delay in payment. Indeed, FP&L's Division Manager, J. K.

Daniel, was present at the meeting and warned Ft. Pierce that FPtL was not going to voluntarily agree to St. Lucie par-ticipation by the City.

The full text of the minutes show that Ft. Pierce was very concerned about dragged out litigation, such as that which FPGL has created in fact, and that George Spiegel. offered, if necessary, to work for reduced rates or even for nothing to combat the feared FPGL strategy of delay:

"If they [attorneys for Cities] find in their opi-nion that the Company is unreasonably dragging it out, then they begin working at lower and lower rates. They'e discovered the answer to what Mr.

Daniels [of FPGL] was implying, is to hang in as attorneys, even if they have to work for nothing.

He is never going to sit in a conference room withe any utility . . . and he's never going to be in a position where he says to his client that they'e got a rightous cause, but because they'e in a position to drag it out and make it expensive, you'd better give up. He'l work for nothing for as many years as necessary to try as best he can to right the balance between the small litigant with the limited resources and a major company, the fifth largest utility in the country, an unlimited litigation budget, which the customers are paying for. Mr. Spiegel stated that he would say this, that if this thing is going to be dragged out and the protection of your interest requires it, he'l work for nothing."

32 While the document is paraphrased from the meeting, any fair reading of it shows that it was Ft. Pierce who was concerned about delay and FP&L who was threatening extensive litigation rather than grant nuclear participation to Ft. Pierce.

FPaL has tried to use its out-of-context and misleading quotation from the minutes before; Mr. Spiegel had responded to FP&L counsel, which correspondence is attached as Appendix C.

Yet FPaL did not even make reference to such correspondence or response or to the fact that it has been previously unsuccessful in its attempts to create an issue.

FPSL's attempt to imply a recommendation to Ft. Pierce to drag out negotiations, when Ft. Pierce was obviously concerned about delay, is scandalous. The facts are that FP&L was seeking to force a sale of the system (as the minutes show), 1/ was 1 See FPaL's related refusals to sell Ft. Pierce wholesale power to enhance takeover opportunities, which were detailed in FERC Opinions 57 and 57-A. FPGL's hopes of taking over smaller systems are not a dead issue as its Vice President, Robert J.

Gardner's statements to Vero Beach show (Meeting of Jan.'3, 1980):

Gardner: I don't think there's much liklihood of the reactivation of the arrangement that we had in 1976 and 7 in that same form. I think that there is at least a glimmer of possibility that other arrangements might be worked out if depending on what y'all's objectives were and what your desire were. I'm saying accomplish is...

that depending on what you really wanting to I think that the in addition to the antitrust problems there was some vulnerability to the arrangement that we had before. I'm just speaking of my own personal assessment of that. The problem two standpoints. One is the substitution of pri-vate capital and its costs for municipals (footnote continued on next page)

33 refusing to permit participation in the plant at issue and was forcing and continues to force years of litigation. A lawyer who seeks to combat delay tactics by agreeing, if necessary, to work for nothing; cannot be accused of delay. At (footnote continued from previous page) capital may have cost. And the other was a merger of the rates of the two systems. If we could find acceptable ways around those problems, it may be possible to . . . and if Vero Beach's desires simply to not have the concer'ns of managing a system, I think it may be possible to put some arrangements together.

I have not given it a great deal of thought only a cursory thought, but if you want to explore it, we'd be happy to do so.

Vero Beach: Bob, what I thought I heard you say earlier was that every since our aborted day with Justice, Dave and I were there, so was Tom, everybody, that you have in fact been taking care of those so-called ten conditions that they said would be something you'd have to agree to in order for them to withdraw from the FERC proceeding. Now if what I'm hearing you say is that you have or are dealing with those ten conditions then the next question is if we went back to FERC tomorrow with a simi-lar arrangement by mutual agreement, would Justice stay out of itV Gardner: I don' know.- We haven' really talked to them directly about that question yet.

Vero Beach: Well, I wouldn't think that this would be the time to be talking about it.

34 the least, FP&L shold have had the courtesy of attaching Mr.

Spiegel's response. 1/

1/ Mr. Spiegel wrote the counsel for FP&L (Appendix C):

"It appears that two alternatives were being presented: that FP&L might'ppose participation over a long period of years like the New England companies, in which case financial commitment would be put off perhaps until the plant was completed; or FP&L might act forthrightly like Kansas City Power & Light Company and Florida Power Corporation, in which case financial commit-ment by the Authority would be a matter of six months to a year.

In this context, the reference to an "ideal situation". was meant to illustrate how counterproductive it would be for FP&L to be obdurate like the New England companies, in which case the Authority's decision as to whether to commit financially would be to made far down the road when many risks of the unknown had been eliminated. In short, my concern was with the possibility that FP&L would drag out the matter.

"The minutes go on to report the comments by Mr. Kenneth Daniels, FP&L District Manager (pp. 5-7), closing with the statement:

"Mr. Daniels said if he understands what has been said so far, in order to get involved in an anti-trust review of FP&L's application for a license, the City would have to bring about allegations of anti-trust to FP&L and be prepared to defend them, because, Mr. Daniels stated, 'I can tell you that FP&L will deny them and defend them vigorously.'e further stated he is just trying to clear the air here because he doesn't think the Board really understood it that way "In the give and take with Mr. Daniels, prior to his above conclusion, the minutes report me [George Spiegel] as stating (p.6):

'The reason there is on the face of it. The antitrust question which justifies intervention, is, as he understands it, because Florida Power & Light is refusing to permit the smaller systems to participate .

He thinks that is really the basic proposition. He thinks that is fundamental to it. The roblem can easil be resolved if Florida Power & Li ht, and he is sure the Department of Justice would support our position, offers an o ortunit to the various cities to artxcx ate . . . . T e pro em can e easily solved if Florida Power & Light offers some fair share, a relatively small share, by making a proposal to share the nuclear plant."

(footnote continued on next page)

35 (2) FP&L argues that negotiations with New Smyrna Beach were unduly prolonged. FP&L is absolutely correct. The reasons for the delay are well- illustrated by FP & L ' proposed Orlando agreement, which provides among other things, imposed terms whereby FP&L would maintain complete control of the unit without having any obligation to take into account the needs of others; and would be freed from liability to Cities even for its failure to use good utility practice in running the plant. A fair com-parison of FP&L's proposed agreement and the Consumers Power or Florida Power Corporation or other agreements would show the cause of "undue delay".

The fact is also that the parallel negotiations with Seminole have not yet to counsel's knowledge been completed or have been recently completed, and those negotiations have taken years.

(footnote cont nued from previous page)

Letter from George Spiegel, Esq. to Harry A. Poth, Jr., Esp.,

April 21, 1978 (Appendix C).

As the letter concludes, FP&L's apparent position that Ft.

Pierce's attorney advised delayed participation is "nonsense".

First, FP&L's representative made clear that FP&L would not agree to participation; second, the NRC itself would limit the period for negotiations. Further, as Mr. Spiegel's response to FP&L made clear: he would not be "(i) so injudicious as to give such advice and at a public meeting (at which an FP&L representative was present), and (ii) so public spirited as to give such advice in order to commit the firm to provide legal services at a loss of over a period of up to ten years." Id.

36 Simply stated, the cause for the delay is that FP&L is an unwilling seller of nuclear capacity, which hopes to sell nuclear capacity, if at all, only on its terms. In this context, Florida Cities believe it appropriate that the Board scrutinize the licensing condition terms which FP&L would impose. 1/

(3) FP&L implies that because no utilities entered into an with regard to its alleged.- proposal for a joint I'greement nuclear unit in Central Florida, that the Cities were not interested in nuclear capacity. But compare the fact that many of the Cities are participants in Florida Power's Crystal River Unit 3.

The alleged proposal by FP&L for participation in a Central Florida Unit was actually made in the context of FFaL's ~refusin to sell the Cities participation in the South Dade unit.

Moreover, the Company demanded that the Cities invest approxi-mately $1 million for a site survey for which FP&L would spend no 1/ It must be stressed that one advantage of municipal par-ticipation in nuclear units as opposed to power purchases from them (which FP&L also had not offered) is that they can commit their own capital, often at reduced costs. The cost of delay to municipals from failure to reach agreement can be high. Not only do municipal systems not have an interest in delay, but in their judgment, a fair order from this Board would penalize FP&L for the costs of its delay.

37 money of its own and would not negotiate on terms important to the Cities before such municipal investments were made, Finally, while the Company now professes that its pie-in-the-sky proposal had some tangibility, and that it was willing to construct such a plant for others, the fact is that it cancelled the South Dade Unit rather than offer participation in South Dade to Cities.

The background to FP&L's alleged nuclear joint venture offer is as follows: In early 1976, a number of utilities expressed interest in particpation in FP&L's proposed South Dade Nuclear Units. FP&L refused participation by letters dated March 30, 1976. These letters stated:

"While we appreciate your expression of interest, FPL has- decided to proceed independently with the develop-ment of the South Dade Project and to utilize the Project's electric generating facility to meet our own system needs. . . . [However,] FP&L is prepared to meet with representatives of those systems which are interested in commiting to the joint development of a nuclear project for a full discussion of this subject

[W] e do not feel that the term "discussion" as used herein should be construed as an offer to negotiate nor do we believe ourselves under any obligation to under-take the whole, or any substantial portion, of the responsibility to carry out such a project as envisioned here. What we do propose is the opening of talks and the development of a true joint nuclear power project."

Letter from FP&L to various systems, dated March 30, 1976.

Appendix D.

Thus the genesis of the "true joint nuclear power project" was in the context of FP&L's refusal to deal in the South Dade Nuclear Project.

The Cities told FP&L that they had certain needs in connec-tion with the project, including legislation that would permit municipal joint financing of the project, as well as various

38 transmission and backup arrangements. These needs were set forth in various correspondence, which is attached. Appendix D.

However, FP&L insisted that public funds be commited to a site survey study and that negotiations concerning the "hardware" and related aspects of the nuclear joint venture resume thereafter, deferring consideration of these other crucial matters until par-ticipants committed to a $ 1 million investment in the study.

While the above described discussions were taking place, FP&L decided to cancel the Dade County Units. The Cities imme-diately suggested that FP&L make available its existing contracts (on a confidential basis, if necessary) and that it commence development of a workable participa'tion agreement with other systems. Such arrangements would have given FP&L a meaningful interest in the units, would have permitted early construction of the units and would have eliminated most of the then current objections to construction before the NRC. Letter from Robert A. Jablon, Esq. to Tracy Danese, Esq., July 21, 1976. FP&L later withdrew the unit, but did not then or later respond favorably to municipal requests for pursuing participation.

FP&L now contends the Cities were insincere because a pro-ject did not come into being. The fact is that FP&L offered the project for "discussion" while it was refusing participation by the municipals in the more viable units at South Dade. FP&L insisted on municipal investments being made in advance of any agreements regarding participation terms or other major matters.

39 And FP&L itself resisted participating in the project. The tenor of FPGL's offer can be readily discerned from a document prepared by FP&L's Treasurer and Counsel member and discovered later by Cities (Document No. 280954):

"FPL financial exposure must be held to absolute minimum

~ ~ ~ ~

2 ~ c Participants must build and pay for their own reserves to back up the nuclear plant. FPL is to have no obliga-tion or liability with respect to backup, power 3.a FPL is not to be held res onsible for an thin

6. FPL should receive a substantial management fee (over and above costs and overheads) to compensate for resour-ces diverted from FPL business. A sui'table fee might be 2% of the project costs. [1/]

7. It would probably be best ownership in the plant.

if FPL did not have any

a. By not being an owner, FPL is further protected from any liability or risks connected with the plant.

b. If the plant were set up as a legal entity (such as a generating company) FPL would become subject to the Holding Company Act as a part-owner (1) If the plant were set up. as an unincorporated joint venture with the partners having undi-vided interest, partnership in the plant would not put FPL under the Holding Company Act.

(2) But joint venture would be difficult for the partners to finance since each partner would have to come up with its share of the money through its own resources; so we should pro-bably expect the participants will need to set up an entity such a generating company with its own financing capability."

(Emphasis in original.)

1/ FPGL in fact proposed 5%. See Appendix D.

The tone and contents of the memorandum, attached, contrasts with the "true joint venture" suggestion in FP&L's March 30 letter in which all participants would he ~re uired to make "full commitment", according to FP&L. The .fact that the financing arrangement proposed by FP&L "would be difficult for the partners to finance" was known to FP&L management, but it proposed such arrangement anyway. That tells it all.

(4) Florida Cities have cast their requests for relief before this agency in terms of giving smaller systems nuclear opportunities and of making nuclear access available in alter-nate forms (e.g., direct ownership, purchased power, par-ticipation through a power supply agency). They have also requested the availability of base load and wholesale power sales, which are partially nuclear generated.

FP&L criticizes this position and quotes from a statement by counsel for some of Florida Cities who are plaintiffs in City of Gainesville Re ional Utilities, et al. v. Florida Power & Li ht, No. 79-5101-CIV-JLK (S. D. Fla.), which was made in response to a claim by FP&L before the District Court that the Cities were engaging in sham litigation:

not to partxcipate that Cities have been denied.

Never having alleged that they would necessarily elect to participate in any particular unit, their position cannot be a sham."

This quotation is from page 23 of "Cities Motion to Dismiss, Or for Summary Judgment of Florida Power & Light Company's'mended Counterclaim" (June 26, 1980) . FP&L fails to quote the immediate following sentence:

41 "Florida Cities do not mean to imply that the denial of nuclear access has not greatly injured them or that they do not desire access, although the form of access may vary."

With the exception of the Gainesville affidavit, neither does Florida Power & Light call to the Board's attention the various affidavits of Cities'anagers that were filed in District Court attesting to the fact that they do indeed desire nuclear power access.

P FP&L also quotes from the affidavit of Richard Hester of the City of Gainesville and from Tallahassee city minutes again for the proposition that the Cities may not have a "focused interest" in St. Lucie 2 participation (p. 12). Of note is the fact that the Company does not allege nor does it have any basis for alleging a lack of interest on the part of the Cities. In the case of the Gainesville affidavit, Mr. Hester did state that Gainesville would have to study the specific proposal. As FP&L well knows, utilities generally arrange to secure power supply in anticipation of load growth, so that they often have more capacity than they need when they first obtain new power supply and must sell part of it. While FP&L complains that the Cities might delay negotiations, the fact is that FP&L blocked Gainesville's access to nuclear power plants or other joint municipal ventures, and Gainesville was forced to construct alternative generation in Gainesville and was damaged thereby.

Under these circumstances, having been forced to construct plant because of FP&L's anticompetitive refusals to deal, Gainesville would need to carefully consider whether and to what extent it

42 could now participate in St. Lucie 2. Such decision could we> ~

depend upon other relief, such whether there will be an integrated pool in Florida so that Gainesville could most effec-tively use its existing generation.

FP&L's position with regard to Tallahassee is even stranger.

FP&L refuses to sell to Tallahassee nuclear capacity, even under the settlement. In an affidavit not referred to by FP&L, the Tallahassee utilities manager stated that he would recommend direct ownership of St. Lucie to the City Commission.

Tallahassee City Manager Daniel Kleman explained that in addi-tion to seeking the right to own a share of the nuclear plants, the City had also requested relief before this Board so that it could buy cheaper base load power. Tallahassee has also sought improved transmission service. Of the City Commissioners who discussed the proposal, one stated that he opposed ownership in the name of the City of Tallahassee in the plant, but that he favored purchasing unit power . Another Commissioner stated only that she opposed ownership. One Commissioner, Mayor Wilson did seem to doubt the wisdom or policy behind the suit in the District Court. The City of Tallahassee has continued to par-ticipate in both the intervention and the District Court proceedings. Thus, the best that Florida Power & Light can do, after having had full opportunities for discovery in the District Court case, is to raise questions of whether two cities would participate in St. Lucie 2: one, because it was forced to make alternative power supply arrangements; a second, based upon

43 FP&L's reading of a city council discussion, where the City voted to continue participation in the District Court action, seeking such participation.

VI. The Correspondence Between The Intervenors And Florida Power

& Light Demonstrates FP&L ' f Re usals To Deal And Conf irms That Any Delay Results From FP&L's Actions: The Correspondence Is Admissible For These Pur oses.

On July 28, 1976, the Chairman of the Nuclear Intervenors Group and counsel for the Cities wrote FP&L a letter setting forth a nuclear proposal. FP&L responded negatively.

Understandably, FP&L seeks to erase the correspondence from the record since its response sets forth a clear refusal to deal.

FP&L thus seeks to have this Board ignore Cities'etter on the grounds that it is somehow privileged, and apparently then intends to assert that Intervenor's cannot prove that they sought access to nuclear resources.

As a matter of law, no privilege ever attached to the letters. They were admitted into evidence in FERC Docket No.

ER78-19, et al. without objection and formed a part of the evi-dentiary basis for the Commission's conclusion that FP&L had been acting anticompetitively. 1/ Thus, even if there once were any validity to FP&L's new found claims of privilege, the objection has been waived long since.

The letter on behalf of Cities (hereafter "Cities'etter" )

to FP&L clearly sets forth a proposal and a request for nuclear access by the Cities. Letter from Harry C. Luff, Jr. and FP&L xs estopped from raising this claim of privilege now, after it did not object to the use of these documents in the FERC proceeding, and after a decision adverse to FP&L in that docket.

The Company cannot pick and choose to admit to evidence when it thinks it will help, and object to it when it thinks the evidence will be hurtful.

44 Robert A. Jablon, July 28, 1977 to Mr. Marshall McDonald. FP&L's response was plainly one of rejection. Letter from Robert J.

Gardner, Vice President to Harry C. Zuff, Jr. and R. A. Jablon, September 16,. 1977. 1/

FP&L asserts that the July 28, 1977 letter on behalf of the Cities "constitutes a settlement proposal." FP&L Brief, p. 21.

It then concludes, without any case support, that the letter could not therefore be admitted into evidence under the Federal Rules of Evidence, R. 408. FP&L is just plain wrong, for the several reasons that follow.

Cities agree that their letter constitutes a settlement proposal, although'o negotiations were conducted, as the Cities sought. FP&L's responsive letter, however, which was an out and out refusal to deal, is not "[e] vidence of (1) furnishing or offering or promising to furnish, or (2) accepting or offering or promising to accept, a valuable consideration in compromising or attempting to compromise a claim . . ." R. 408. The policy behind 1/ FP&L now complains that the proposal was conditioned and the actual purchase of interest in nuclear units needed city appro-vals and, therefore, the terms were "economically unattractive to FPL". In fact, the'letter had been carefully considered by intervenors'anagement, including many of their political officials. However, it was sent at a time when FP&Z had been absolutely refusing to deal with the Cities concerning many of the matters expressed in the letter. Obviously, intervenors and FP&Z recognized that contractual arrangements would take nego-tiations and formal approvals. As stated:

"This proposal represents a combined effort of the Intervenor Group to provide a basis for agreement. We are prepared to consider any objections, modifications or counterproposals of FP&L."

However, FP&L's response was totally negative. Thus, there was nothing to be considered.

Rule 408 is to encourage settlements, not to encourage flat refu-sals of settlement of fers. Thus, regardless of the charac-terization of Cities'etter, FP&L's negative response certainly is admissible. FP&L does not appear to disagree, and has itself put this letter both before this Commission by its pleading (Appendix F thereto), and before the FERC by its failure to object to its admission in evidence in FERC Docket No. ER78-19.

The Company's argument that Cities'etter is inadmissible misses two essential, and interrelated points. First, even if Rule 408 had created a privilege for Cities'etter prior to the waiver of that privilege when FP&L acquiesced to its use in evidence, the privilege would belong to Cities: It would operate to prevent use of the letter in evidence against Cities at the request of FP&L Absent prior agreement to the contrary, it

~

would not preclude the Cities from making public or offering into evidence the ir own statement o f their posi tion, in se t tlemen t negotiations or otherwise. Thus, FP&L could not move a settle-ment offer into evidence in order to show, for example, that Cities valued their claims for a given amount, and therefore are not entitled to more in judgment (although Cities make no such claim of privilege in fact). See, e.g., Jackson v. Shell Oil Co., 401 F.2d 639 (6th Cir. 1968); Norlin v. Carr, 211 F. 2d 897 (7th Cir. 1954); Bratt v. Western Air Lines, 169 F.2d 214 (10th Cir.), cert. denied, 335 U.S. 886 (1948).

46 Assuming that Cities'etter is a settlement offer, arguably it could not be introduced by FP&L against the Cities as an admission that Cities did not have a supportable claim. The obvious reason is that offers made to compromise litigation indi-cate only a desire for peace, not an admission regarding the validity or amount of a claim. Sternber er v. U.S., 401 F. 2d 1012, 1018 ( Ct. Cl 19 68 )

~ ~

FPGL would turn the Rule inside-out. This is apparent if an analogous position is considered in the context of other privileges: FPSL is like a prosecutor who would prevent a witness from taking the stand in his own defense, because of the existence of the witness'ifth Amendment privilege. Cities doubt that FPaL would claim that Cities could not disclose correspondence passing between the Cities and their attorneys, if Cities so chose, because the attorney-client privilege prevents it. Yet the Company's present argument is no different. The fact that a document was sent by Cities to FPaL cannot prevent Cities from putting that document into evidence (absent technical objection, such as authenticity, or some agreement between the parties, which is not present here).

Cities know of no case which specifically holds that the recipient of a settlement offer cannot prevent the sender from putting it into evidence perhaps the argument has never been made before. However, all the cases of which Cities are aware involve situations in which the receiving party sought to have the settlement offer admitted against the sender, and the Rule

47 itself and the comments of the advisory committee are clearly stated in these terms. For example, the Congressional Conference Report on the Federal Rules of Evidence bill, P. L.93-595; 88 Stat. 1926 (Jan. 2, 1975) (quoted in the Fed. R. Evid ., Comments to Rule 408), states at 6:

The House bill was drafted to meet the objection of executive agencies that under -the rule as proposed by the Supreme Court, a party could present a fact during compromise negotiations and thereby prevent an o osin art from of ferin evidence of that fact at trial even though such evidence was obtained from independent sources. The Senate amendment expressly precludes this result.

(Emphasis added.) (The debate between the House and Senate ver-sions centered around whether facts stated in settlement nego-tiations should be included within the ambit of the rule: the assumption by both sides throughout was that the settlement offer might be excluded when offered by "an opposing party".)

That an offering party may put its own offer into evidence is a necessary part and parcel of the second essential point which FP&L has failed to comprehend: Rule 408 only excludes evidence of settlement negotiations offered for the specific, purpose of showing "either validity or amount" of a claim. The rule, by its own terms, does not require the exclusion of any evi-dence otherwise- discoverable merely because it is presented in the course of compromise negotiations.

This rule also does not re uire exclusion when the evidence x.s offered for another ur ose, such as proving ias or pregudzce of a wxtness, negativing a contention of undue delay, or proving an effort to obstruct a criminal investigation or prosecution.

(Emphasis added.) The cases are in accord. Evidence of settle-ment negotiations between a tort plaintiff and the defendant's

insurer is admissible in an action to show bad-faith failure to settle within policy limits on the part of the insurance company.

Libert Mutual Ins. Co. v. Davis, 411 F. 2d 475, 483-84 (5th Cir .

1969).

In BaB Investment Club v. Kleinert's, Inc., 472 F.Supp. 787 (E.D.Pa. 1979), the Court permitted evidence relating to compro-mise negotiations to show whether an individual defendant, who had settled claims of securities violations with the plaintiff class, had reached a "successful" settlement which would entitle him to indemnification from a corporate co-defendant. In ruling that evidence of the settlement process was admissible, the Court stated the obvious:

[Indemnitee's] objection is not well taken because the rule excludes evidence of a compromise only on the issue of the amount or validity of the claim which is the subject of the compromise. If the compromise negotiations are used for another pur-pose they are not inadmissible under Rule 408.

B&B Znv. Club, ~su ra at 791. The same principle was well established in the common law, which Rule 408 incorporates in this regard. E.g., Overseas Motors, Inc. v. Im ort Motors Ltd.,

Inc., 375 F.Supp. 499 (E.D.Mich. 1974), aff'd on other rounds/

519 F.2d 119 (6th Cir.), cert. denied, 423 U.S. 987 (1975);

Ins iration Consol. Co er Co. v. Lumbermens Mut. Cas. Co., 60 F.R.D. 205, 211 (S.D.N.Y. 1973); Ql S rin er v. Citizen's Cas. Co.

/

Consol. Co er, ~su ra, were decided prior to the passage by Congress of current Rule 408, they were decided after a similar rule, promulgated by the Supreme Court on November 20, 1972,of was sent to Congress on February 5, 1973. The Court's version the rule also stated that offers were inadmissible "to prove liabi-lity for or invalidity of the claim or its amount", and that

"[t]his rule does not require exclusion when evidence is offered for another purpose...." See Fed. R. Evid., Comment to Rule 408.

49 of N.Y., 246 F. 2d 123 (5th Cir. 1957) .

Although Cities might seek to show liability based on the refusal to deal (here they only seek to refute that their stated interest is insincere, or that they delayed) which the correspon-dence constitutes, this must be distinguished from trying to use an offer (or acceptance) as an admission of liability. It is the latter which Rule 408 prohibits.

In Overseas Motors, Inc. v. Im ort Motors Limited, Inc.,

~su ra, an automobile dealer sought to introduce into evidence correspondence between it and various manufacturers (defendants),

and correspondence among the manufacturers. The correspondence, which constituted settlement negotiations undertaken after the plaintiff had threatened a lawsuit, was not admitted by the Court to show conspiracy because of the unique requirements of conspiracy claims. 1/ However, the Court made reference to pre-cisely the situation with which Cities are faced now, indicating that settlement documents should be admitted when the correspon-dence itself gives rise to the claim at hand:

1/ 375 F.Supp. at 537:

"[P]ermitting proof of such activity could easily mislead a jury into finding a Sherman Act conspiracy based on the defendants'ooperation in def ending this suit."

50 It is generally recognized that of fers in compro-mise are inadmissible only when offered to demonstrate some element of liability in the case at hand. They may be received for other purposes such as proof of costs, due diligence, explanation for delay, etc. [footnote omitted] Although there is little authority on the point, it would also seem reasonable to admit such evidence whether the settlement ne otxatxons are themselves sub'ects of the lawsuit i.e., o erative facts.

Overseas Motors, ~su ra at 537 (emphasis added). The Court went on to explain, 375 F.Supp. 537, n. 128:

The principle is of course not the same as the other exceptions, for here the proof would go to liability. It is analogous, however, in that the liability in question would not be on the claim which was originally in dispute and which was nego-tiated . . . but on the distinct antitrust claim which grew out of it. See Fletcher v. Western National Life Ins. Co., 10 Cal. App. 3d 376, 89 Cal. Rptr. 78 (1970) (tort claim for emotional distress in which defendant's offer to settle insurance claim was part of the conduct allegedly causing the distress and was provable as such).

It is precisely the case here that the letters are themselves operative facts of an antitrust claim and a closer analysis shows not only the absurdity but the evil of FP&L's position.

Cities'etter and FP&L's negative responsive constitute a request by Cities for access to a vital good (i.e., nuclear power) over which FP&L clearly had (and has) a monopoly, and a corresponding illegal refusal to deal in that good by FP&L. Thus, a distinct antitrust claim arises from that request and refusal and the correspondence is admissible to show it. 1/

1 Certainly the letters are at least admissible to negative any inference, implied by FP&L, that Cities position in this docket/

that they desire fair nuclear access, is insincere, and, in the language of the Rule, for the purpose of negativing a contention of undue delay."

51 In this sense, Cities'equest to FPGL is like a demand for assurances of performance of a contract. Repudiation of a demand constitutes a breach of contract (e.g., Uniform Commercial Cede g 52-609) . The demand is admissible to show its own existence, and a refusal to comply with the demand is admissible as a breach of contract, although one could construe both the demand and the refusal as "settlement negotiations" in that, if the demand is complied with, no suit would follow. +1 Similarly, a request to deal and a refusal to deal must be admissible in the context of antitrust allegations to prove their own existence, even though compliance with the request would be a "settlement" and no antitrust claim 2/ would have arisen from that transaction. If it were otherwise, FPaL would be in the incredible position of =

being able unilaterally to prevent any evidence of requests to deal by others and of its own refusals to deal simply because a litigation context (prompted by earlier anticompetitive acts of FP&L) allows the probative documents to be characterized as 1 Or,, zf settlement negotiations culminate in an agreement which is subsequently breached, and the brea'ching party claims there was no agreement, evidence that an agreement did in fact exist would be admissible to establish the claim for breach.

2/ That is, no claim based on a refusal to deal on a fair basis, within the ambit fairly covered by the request. Cities do not mean to imply that all antitrust claims on any basis whatever would be foreclosed by such a dealing.

52 settlement negotiations. 1/ Clearly, no such result was intended by Rule 408, nor does a technical application of its

,terms require this conclusion. As this, Board stated in an earlier ruling in this docket, "... a party may not seize upon settlement negotiations as a device to defuse damning evidence against it." Order of February 9, 1979. 2/

Thus, the correspondence at issue here simply is not within the scope of Rule 408, which is designed to encourage settlement by prohibiting offers of compromise from being used either as admissions of liability or as admissions as to the value of a 1/ The point can also be made from a different perspective. If, as FP&L claims, Rule 408 does provide a privilege or basis for exclusion for the correspondence, it is a qualified one. E.9.,

Reichenbach v. Smith, 528 F.2d 1072, 1075 (5th Cir. 1976),

stating that with respect to evidence of settlement between a plaintiff and a co-defendant, a trial court must balance of the policy of encouraging settlements with the need for evaluating the credibility of witnesses. In this case, the policy behind Rule 408 would have to give way to the need to prove acts in violation of the antitrust laws, and acts which were intended to impede justice by delay.

2/ LBP-78-4, 9 NRC 164, 184. Contrary to FP&L's contention, Brief p. 21, that order did not rule on the letters at issue here. Zn that Order, the Board ruled, inter alia, that request directly seeking FF&L's settlement documents Cities'ocument should be rejected, in light of the policy behind Rule 408 and 10 C.F.R. 52.759. As explained above, the present situation is wholly different: Cities here seek to use their own offer and request; FPaL's response was a flat refusal and therefore not within either the letter of or the purpose behind R. 408; and the request and refusal themselves are operative facts, analogous to the offer and acceptance of a contract.

On another occasion, the Appeal Board has expressed "considerable doubt whether, as a general matter, there is any settlement privilege which might assist petitioners'resent endeavor to resist discovery". Houston Li htin a Power Co., et al. (South Texas Project, Units 1 & 2), NRC Docket Nos. 50-498A, et al., ASLAB Order April 15, 1980, at 3.

53 claim. Letters which, although written in the context of litigation, are offered by the author to show that a request was made, to show delay, or to show independent anticompetitive refu-sals to deal, are not contemplated by the Rule and are not required be to excluded from evidence. In short, Rule 408 is irrelevant.

VII. Miscellaneous.

As FP&L states (Response, pp. 20-21), the Cities attached certain correspondnece to show their exclusion from the nego-tiation process. They continue to believe and represent that while, as FP&L notes, they could "express their views forcefully at the highest levels", they were not allowed to be present at the negotiating sessions where the deal was essentially struck..

Certain correspondence, cited by FP&L, includes criticism of the Company's conduct, although the correspondence was not included to raise that issue. FP&L complains that Judge King's order (of the District Court) was not attached, which "ruled that FP&L's actions were proper in ever respect." If FP&L reads the order as giving it a clean bill of health as opposed to merely denying Cities'equested injunction, so be it. Cities disagree with the interpretation.

54 CONCLUSION For the foregoing reasons and those stated in "Florida Cities'nswer to Joint Motion" a prehearing conference should be ordered and procedures adopted to rule on all pleadings before this Board, including the requests for relief at pp. 8, 18, 20, 24 and 28 of this Reply.

Respectfully submitted, Ro ert A. J ion Alan J. Roth Marta A. Manildi Attorneys for the Lake Worth Utilities Authority, New Smyrna Beach Utilities Commission, Sebring Utilities Commission, Gainesville Regional Utilities and the Cities of Alachua, Bartow, Ft. Meade, Key West, Lake Helen, Mount Dora, Newberry, St. Cloud and Tallahassee, Florida and the Florida Municipal Utilities Association January 8, 1981 Law Offices of Spiegel a McDiarmid 2600 Virginia Avenue, N.W.

Suite 312 Washington, D.C. 20037 (202)333-4500

APPENDIX A Excerpts from Midland and Crystal River Participation Agreements

Excerpts from Midland A reement Good Uttv practice: At a particular time, any oz the practices, methods and acts, wnich, ~w the exercise or, reasonable ludgment '" the light or the facts teo~w at the t'me the decision cps made, wou'd have been expected to accomplish the desired result at a reasonable cos" cons'stent with reliability and safety and CONST&'5 obligations u"de.

the Dow General Agreement and all applicable Laws and governmenta'ules, regulations and orders perta'ning .to HTDLAÃ)~ Such pract'ces, methods and acts shall include, but sh~ not be Limited to, any oi the pract'ces, methods and acts engaged in or approved by a signi icant portion oi the electric ut'lity industry prior to the time the decision was made. Good UtiL~ty practice is tot intended to be Limited o the opt~~ um practice, method or act, to the exclusion oi all others, but rather to be a number of possible oractices, methods or acts.

54 ARTECL=. 6 OPTED ARRAÃGc~S 6.1 Authority "or Operation and Pena ement.

CONST~ sha11 have sole authority to manage, control, maintain and operate ~i

~

LA%i, and sha11 take all steps which it deems necessary or appropN~te d'or that purpose. CONSUiS shal'ischarge such authority in accordanc w'th Good Utility Practice and the other provisions ox this Agree'men't ~

~ICLE 15 Liabi'i~ to hird 2art'es Zo~zhstanding any provision to ehe contrazy M this Agr ement, any liab" ity oz any payment, cost, expense or obligation arising om a claim oz L~b~~ty (azter application thereto of any insurance coverage or proceeds) to a c".2 "d ~ y or ~rt" es against one or both of the 2ARZI"=S and arising from the ac~~sition oz ~23~%) oz'ny par- thereoz, the planning, eng~meering, desi~,

1'censing, procurement, construction, inst~ation or complet'on of ~L>%) or any part "".ereof, the operation, use, management, control, maintenance, replace-ment, altarat'on, mod~ "ication, renewal, rebuilding or repair of RELATE) or any part thereof, the retirement, decommissioning, disposal, nz'alvagi g oz KDLA'G) o- any part thereof, or from any other action or failure to act by CQNS~ (or

'ts employ s, agents or cont actors) 1n car=iing out any oz the provisions oz this Agreement in regard to &~LAND including, without limitation, the provi-sions or Rclear Fuel, shall be allocated to the electric property Deluded in M&LA%) 'n the ratio that the Allocated "=lectric Investment in YRLKG) bears to t"e Cost of Consc action oz ~LA%) and sha'~ be allocated to the st am oroperty included m~

~LAW) in the ratio that the AU.ocated Steam Investment in KZ)LAÃ)

bea s to the Cost of Const~ction of KZ)LAÃ).

170 The portion of any such 1iabi3.ity or any payment, cost, expense or

\

obligation arising from any such claim of liability (after application thereto oz any insurance coverage or proceeds) to a 'third party or parties which is allocated to the electric property in'.uded in i~LAND as aforesaid shall be shared by the PARTTES in proportion to their respective percentage ownership inter sts in the electric property included in K%LAND in all circumstances except where such liability or claim of liability is the result of failure by CONSEKRS to comply with Good Utility Practice or gross negligence or inten-tional wrongdoing on the part or CONSUMERS. Zf, by reason of any such liability or claim of liability (after application thereto of any insurance coverage or proceeds) to a third party or parties, either PARTY sha31 be called upon to make any payment or to Qxcur any cost, expense or obligation in excess of that for which it is responsible under the provisions of the preceding sentence, then the other PARTY shall reimburse the PARTY making such excess payment or incurring any such excess cost, expense or obligation to the full extant of the excess .

The portion of any such liability or any payment, cost, expense or obligation ar'sing from any such claim of liability (after application thereto of any ~msurance coverage or proceeds) to a third party or parties which is allocated to the steam property included in ~i LAiU3 as aforesaid shall be borne entirely by CONSUMERS and shall not be shared by. ~SPA.

15.2 Liabilit Between the PARTES.

CONSI2KRF sha13. not be liable to ~iA for any loss, cost, damage or expense incur.ed by KAPPA as a result oi any action or failure to act, under any circumstances, by CONS~iS (or its employees, agents or contractors) fn

171 carrying out any ox the provisions ox this Agreement in regard to xhe acquisi-tion ox MID'%) or any part thereox, the pLanning, engineering, design, licensing, procurement, construction, installation ox'ompletion of ~ALAÃ) ox any part thereof, the ope ation, use, management, control, maintenance, replace-ment, alteration, modification, renewaL, xebuilding'r repair of ~i LAÃ) or MIDLAND) any axt thereoz, the retirement, decommissioning, disposal, or salvaging of or any part, thereof, or any other matter concerning ~iLAND including, without limitation, Nuclear Puel, except that CONSUMERS shall be Liable to MPPA for any such'Loss, cost, damage or expense which is the result of (a) failure by CONSPJKtS to perform this Agreement in accordance with its terms, or (b) gross negligence or intentional wrongdoing on the pax't ox CONS~

In no event, however, sha11 CONSUMERS be Liable to MPPA with respect to any claim, whether based upon contract, tort (including negligence), patent, trademark or service mark, or otherwise, for any indirect, special, incidental or consequential damages, including, but not Limited to, loss of profits or revenues, loss of use of MIDLAND< or any part thereof, cost of capital, cost ox purchased or replacement power, claims of the Participants or other customers of MPPA for service interruptions, ox'laims of customers of the Participants for service interruption, but nothing in this sentence shall preclude Liability fox direct and punitive damages.

Purther, CONSUMERS shall uot be liable to KAPPA 1n any single occurrence unless the uninsured damages to MPPA resulting x'om the occurrence are in excess of $ 15,000 in terms oz the value of the dollar as ox January 1, 1979. In addi-tion, CONS~i shall not be liable to MPPA unless demand is made by ~i

1.72 writing and received by CONS~ within two (2) years after the occur"ence for which damages are being claimed becomes known to MPPA.

Zt is agreed by the PARTIES that in no event shall any of (i), (ii),

(Q.i) and (iv) below be considered as failure by CONSUMERS to per orm this Agreement ~ accordance with its terms or as gross negligence or intentional ongdoing on the part of CONS~

r (i) any decision by CONSUME%, for either of the reasons specified in (a) and (b) or the first and third senten-ces in the first paragraph of Section 5.3.2 and sub)ect to the 24~oath time limitation specified in said first and third sentences, not to have MIDLAND) 2 or KQ)LAÃ) l in commercial electric operation by their respective scheduled Commercial Electric Operation Dates (as said scheduled Commercial Electric Operation Dates may be extended by all intervening events of force majeure),

(ii) the entering ~mto this Agreement by CONSUMERS, or the continuation of construction of ~i'Ã) by CONSEKRS, under any conditions where CONSUMERS should have foreseen that there might be a decision by CONSUMERS, for either of the reasons specified in (a) and (b) or the first and third sentences in the first paragraph of Section 5.3 2, not to have MIDLAND 2 or ~i LA%) l in commercial electric operation by their respective sched-uled Commercial Electric Operation Dates (as said sche-

173 duled Commercial "='ctric Operation Dates may be ex ended. by'Ll intervening events of orce majeure),

(iii) ehe. enter~ Mta this hgreemene by CONS~, or the continuatian oz consecution of ~iLAND by CONS~i under any candit'ans Arete CONSUMERS should have for seen that it. aight ~wter suffer a f~~ial debility ta complete construction or ehe electric, property deluded.

in KZLhÃ), or (iv) 'ehe operation az ~LAW) by CONS~i in such manner thae the supply of Process Seeam to Oa~ fram MZ)LAÃ) ~m given priority over electric generation ae KZLA%).

Provided, however, that ~m. na event shall CONS~ be excused: om liability far ies ~udulent aces.

Excerpts from C stal River A'eement 2.2.2. Representations and Warranties (Section 6.)

As the Participants'rrevocable agent, the Company has the sole responsibility, to be discharged in a prudent manner in accordance with good utility practices, for the planning, licensing, design, con-struction and testing of CR-3. In the event the Company is financiaHy unable to complete the unit, then the Participants may provide the additional funds required; and under such conditions the generation entitlement shares will be adjusted accordingly.

If the Company incurs any liability'o any third party for which all the Pa'rticipants and the Company are liable, the amount paid shall be shared in proportion to the generation entitlement shares unless (1) there is willfulmisconduct by the Company or any of its employees, or (2) the Company or any of its employees fail to fulfilltheir responsibilities as agent for the Participants, or (3) the Company or any of its employees fail to plan, license, construct, acquire, complete, maintain and operate CR-3 in a prudent manner in accordance with good utility practice.

19.6 Good Utility Practices. The COMPANY and PARTICIPANTS shall discharge any and all obligations under this Agreement in a prudent manner and in accordance with good utility practices.

, APPENDXZ B April 1, 1980 Letter to Ewell Menge from Robert J. Gardner

P.O. 8OX 529IOO, MIAMI, FL 33I52 FLORIOA POWER IL LIGHT COMPANY April 1, 1980

~ih'. Ewell Nenge Utilities Director Fort Pierce Utilities Authority P. O. Box 3191 Fort Pierce, Florida 33450

Dear Ewell:

This wiU. confirm our discussion to the effect that FPL is prepared to enter into a settlement with the Fort Pierce Utilities Authority on the same basis as the settlement between FPL and the Orlando Utilities Commission in which final settlement papers are now being prepared. In summary, settlement between FPL and FPUA would include the following:

l. FPL will make available to FPUA up to an approximate 1%

share 'n St. Lucie Unit No. 2, on the basis of a participation agreeme..t similar to that offered by FPL to the Orlando Utilities Commiss on. On the basis of a presently estimated net output of 802 It~, a, 1% share would amount to about 8IS.

2. FPL will provide transmission service to FPUA in connection with its share of St. Lucie Unit No. 2 in accordance with a trans-mission service agreement to be negotiated between us. In the event we cannot reach agreement, FPUA will consent to FPL's ~:ili:.'he agreement with the Federal Energy P..::gulatory Commission for. adjudi-cation.

3. FPL will provide backstand service to FPUA for its share of St. Lucie No. 2 for a limited period subsequent to St. Lucie Unit No. 2 commercial operation in accordance with a backstand agreement to be negotiated, should FPUA desire this service.

If FPUA is agreeable, FPL will make available an approximate additional 0.333% share in St. Lucie Unit No. 2 which 'FPUA i~ill sell back to FPL over the life of the unit. FPL will agree to pay FPUA 1/ over FPUA's cost of interest on bonds issued to finance such share, with payments by FPL to begin upon commercial operation of St. Lucie Un~ t No. 2 or on some mutually agreeable date certain if commercial ooeraton is delayed.

5. Subject to FPUA's acceptance of the provisions of paragraph "our above, FPL will, prior to St. Lucie Unit 2 f rst achieving co ,erci-1 operation and at the request of FPUA, negotiate an arrange-

~i'. Ewell Menge April 1, 1980 Page Two ment whereby FPUA can exchange a portion of FPUA's share in the output of St. Lucie Unit No. 2, for an equivalent portion of the output for each of FPL's other operating nuclear plants, such exchange to become effective upon St. Lucie Unit No. 2 first achieving commercial operation. Such exchange would not entitle FPUA to own any portion of the operating plants, but only to receive the output.

6. FPUA will release all of its claims against FPL, will withdraw as a Plaintiff in Civil Action No. 79-5101-CTV-JLK, will withdraw its intervention in the Nuclear Regulatory Commiss'on anti-trust hearing, and will withdraw its request for a Section 105(a) hearing before the NRC.

7. Should FPL enter a settlement with any other city under which the city will receive proportionately greater benefits than would be provided to FPUA under this settlement, FPL's obligation to FPUA will be increased in order to provide FPUA any such greate-benefits.

8. FPL is willing to reimburse FPUA for actual costs of litigation expenses in connection with FPUA's intervention in St.

Lucia 2 anti-trust hearings and in connection with pursuing the current anti-trust civil action against FPL with a maximum of

$ 35,000.00, By copy of this letter, I am requesting our attorney to forward to you a copy of the participation agreement presently being negotiated. with Orlando Utilities Commission, as that agreement now stands. FPL would negotiate participation agreements with FPUA generally in accordance with the above agreement. FPUA may join the FPL/OUC separately, negotiations as you desire.

i it wishes or we will negotiate 5Te wi11 appreciate being informed by FPUA of the acceptability of the above basis for settlement as soon as possible. Ue, of course, recognize that any oasis of settlement agreed upon would not be binding on eithe- of us until all agreements have been incorporated in executed contracts.

Ue look forward to hearing from you.

Very truly ours, Jg ]. ~.',.

~.P'L,Rob =rt'. Gardner

~ Vice President g!

?. G/smh

APPENDIX C (1) April 21, 1978 Letter to Harry Poth from George Spiegel.

(2) May 4, 1978 Letter to George Spiegel from Harry Poth.

(3) May 8, 1978 Letter to Harry Poth from George Spiegel.

LAW OPPICES SPxzGEL dh KGD~MD 2500 VIRGINIAAVENUE. N. W.

WASHINGTON, O. C. 20037 TELEPHONE IZ02l 333.4400 QKORQE SPIEGEL PETER IL MAT7 RCSERT C. McOIARMIO OANIELJ. QUTTMAN S*NORA J. STRESEL ROSERT A. J*SLON April 21I 1978 OAVIO R. STRAUS SONNIE S. SLAIR JAMES N. HORWOOO ROBERT HARLEY SEAR ALAN J. ROTH THOMAS C. 7RAUQER PRANCES E. PRANCIS OANIEL I. OAVIOSON JAMES CARL POLLOCK THOMAS N. MCHUQH. JR.

Harry A. Poth, Jr., Esq.

Reid & Priest 40 Wall Street New York, New York 10005 Re: Florida Power & Light Company FERC Docket Nos. ER 78-19 (Phase I) and ER 78-81

Dear Harry:

Reid & Priest, in a brief signed by you and three associates, characterizes my advice to a client city seeking to participate in Florida Power & Light Company's South Dade nuclear units as:

advice of counsel for Ft. Pierce that they offer to participate in these units but that they prolong negotiations until construction of the. plant is com-pleted." "/

The characterization is false.

Further, I would expect that, before a firm or Reid & Priest's national standing would so attack its humble brethren, any evidence would be thoroughly docu-mented and carefully evaluated, and the allegation made in a contex affording a fellow attorney ample opportunitv for reply. Instead, the characterization is made without supporting facts. or citation and in the Reply Brief of an Reply Brief of April 12, 1978, p. 32, footnote.

Harry A. Poth, Jr., Esq. April 21, 1978 expedited proceeding <</ rather than in the Opening Brief, so that there is no normal procedural opportunity to reply.

Ordinarily, we would ignore such characterization as unworthy of reply.<<*/ Here, however', the allegation is made by so prominent a law firm and apparently is intended to have a substantive impact, that we are constrained to defend both our reputation and the client's interests.

Reid & Priest and its client have had, under the Florida Sunshine laws, opportunity to read all the corres-pondence between this law firm and the client. The so-called "advice of counsel" is not taken from any such correspondence (Tr. 409-410) but apparently rests solely on FP&L Vices President Robert J. Gardner's characterization (Tr. 214-5, 1852) of a statement made by the undersigned (Exhibit 10 attached hereto, emphasis added) at a public joint meeting of the Fort Pierce Utilities Authority and the Fort Pierce City Commission on March 26, 1976, in the presence of the citizenry, FP&L repre-sentatives "**/ and the press. No verbatim transcript was made, and the remarks appear in the paraphrased minutes prepared by the Secretary of the Authority.

One quest'on presented at the meeting was whether the Authority should authorize a petition to intervene in Florida Power & Light Company's application for a construction permit for the South Dade nuclear plant (NRC Docket No. P-636A) to seek an opportunity to participate in the plant capacity.

There was also some related discussion of possible negotiation for the sale of the Fort Pierce electric system to FP&L. A question was put as to "at what point in time" would the Authority be required "to come up" with the money to finance participation (Exhibit 10, p. 3)? The response, as noted in the minutes, covered the following:

<< / Procedural Schedule as established pursuant to FERC Order of December 30, 1977:

Hearings completed - March 27, 1978 Simultaneous opening briefs April 7, 1978 Simultaneous reply briefs - April 12, 1978 initial decision - May

- June 1,1, 1978 (on or about)

Final decision by FERC 1978 (on or about)

<<"/ See, for example, FP&L's similar allegation (again in a final reply brief) made through two other law firms, Re Florida Power & Li ht Co., NRC Docket No. 50-389A, Reply Brief of 21, 1977, pp. 14-5. FP&L,'ovember

"**/ Mess s. Ken Daniels, Harry Schindehette

Harry A. Pot h, Jr., Esp. - 3 April 21, 1978 First. If the Company were to allow par-ticipation it would he necessary to make a close study of the Company's economic data and iron out the contract before, a financing commit-ment could be made (id. pp. 3-4).

Second. It was noted that there is "one company out, west that is moving along fast and if the company does that, the municipal is going to have to put up its money and come in on the ladder" (Kansas Cit Power & Li ht Com an , Wolf Creek nuclear, NRC Docket No. 50-482A ; and this was contrasted with the happenings in New England (Vermont and Maine Yankee nuclear plants) where "they [power companies] were arguing and litigating while the plant was being built. The result was that they [municipals] didn'0 have to put in any money until after the plant was operating and they already knew what they were getting into."

Third. The. minutes read "It depends on how the course of events go with the company" (meaning FP&L), and after discussion of the 1985-6 proposed commercial operation date and related financing, "Mr. Spiegel said the ideal situation is that you argue with Florida Power and Light up until the day the plant is ready to go into operation. At decide to o ahead with ou, they want to see our mone as fast as nossible. In any negotiations some people are pushing and some are pulling."

(Emphasis added).

Fourth. The minutes then discussed the matters that need to be negotiated and continues:

"He [Spiegel] stated he worked this out with Florida Power Corporation in 6 months which he felt was darn good considering first. It can be done in 6 months. was it a likel it More would take a ear before thxs rou would be resented and vote to saend the m~one ." (Emphasis added)

Harry A. Poth, Jr., Esq. - 4 April 21, 1978 presented:

It appears clear that two alternatives were being that FP&L might oppose participation over a long period of years like the New England companies, in which case financial commitment would be put off perhaps until the plant was completed; or FP&L might act forthrightly like Kansas City Power & Light Company and Florida Power Corporation, in which case financial commitment by the Authority would be a matter of six months to a year. In this context, the reference to an "ideal situation" was meant to illustrate how counter-productive it would be for FP&L to be obdurate like .the New England companies, in which case the Authority's decision as to whether to commit financially would be made faz down the road when many risks of the unknown had been eliminated..

In short, my concern was with the possibility that FP&L would drag out the matter.

The Minutes go on to report the comments by Mr.

Kenneth Daniels, FP&L District Manager (pp. 5-7) closing with the statement:

"Mr. Daniels said if he undezstands what has been said so far, in order to get involved in an anti-trust review of FP&L's application for license, the City would have to bring about allegations of anti-trust to FP&L and be. prepared to defend them, because, Mz. Daniels stated, can tell you that FP&L will deny them and defend

'I them vigorously.'e further stated he is just tzving to clear the air here because he doesn' think the Board really understood it that way."

(In a matter of days thereafter, FP&L did refuse the participation in South Dade and other nuclear units. Authority See Fort Pierce- recuest of March 31 and FP&L rejection of April 1, 1976, FERC ER 78-19, et al, Exhibits 30 and 31) .

In the give and take w'th Mr. Daniels, prior to his above conclusion, the minutes report me as stating (p. 6):

"The reason there is on the face of it, an anti-trust question which justifies intervention, is, as he understands it, because Florida Power and Light is refusing to permit the smaller systems to participate. He thinks that is really the basic proposition. He thinks that is fundamental to it. The problem could be easily resolved if Florida Power and Light, and he is sure the Depart-ment of Justice would support our position, offers an opportunity to the various cities to participate."

Harry A. Poth, Jr., Esq. - 5 April 21, 1978 The Minutes then report further (p. 8):

Daniels said the Mayor implied that we probably would not feel in the proper posture to tzy to buy the system while the Authority is litigating against us in an anti-trust matter which would further that anti-trust."

Mr. Daniels'tatements thus confirmed in my mind the view that the Authority was faced with protracted FP&L resistance and associated delay. Thus, the Minutes'eport my statements:

"The problem can be easily solved Florida if Power and Light offers some fair share, a relatively small share, by making a proposal to share the nucleaz plant." (p. 8)

And further, that there is the occupational hazard o his business when he [Mr. Daniels] said something to the effect that they'e not going to give up easily." (p. 8)

Thereafter, the Minutes report:

"Zf they [Spiegel & McDiazmidj find in their opinion that the Company is unreasonably dragging it out, then they begin working at lower and lower rates. They'e discovered the answer to what Mr.

Daniels fof PP&LJ was implying is to hang in as attorneys even if they have to work for nothing.

He is never going to sit in a conference room with any utility... and he is never going to be in a position where he says to his client that they'e got a righteous cause, but because they'e in a position to drag it it out and make expensive, you'd better give up. He'l work for nothing for as many years as necessary to try as best he can to right the balance between the small litigate with the limited resources and a major company, the fifth largest utility in the country, with an unlimited litigation budget, which the customers are paying for. "/

"/ Seemingly confirmed by subsequent events:

PP&L E'ERC Pozm 1 reports, for example:

Charges for Professional Services:

1976 1977 Covington & Hurling $ 12, 458 Lowenstein, Newman, et al 411,676 373,966 Matthews, Osborne, et al 87, 317 206, 304 Reid & Priest 260,781 552 I 635 St el, Hector & Davis 1 I 314 360 2 / 634 p 331

Har~ A. Poth, Jr., Esq. April 21, 1978 Mr. Spiegel stated that he would say this, that if this thing is going to be dragged out and the protestion of your interest requires it, he'l work for nothing.

"Commissioner Caynon said you'e got a deal" (p. 9).

Harry, Reid & Priest's conclusion that the Authority received "advice of counsel... that they offer to participate in these units but that they prolong negotiations until construc-tion of the plant is completed," is nonsense. Zn the first place, FP aL ' representative made clear that FP &L would not agree to City participat'on without a lengthy fight, and thus your predicate of FP&L entering into "negotiations" is hypothetical with nothing to prolong. Second, it is unrealistic to assume that we thought we could prolong the hypothetical negotiations some 10 years, i.e., 1976 through the 1985-6 commercial opera-t'on date, despite the ViRC allowance of one year limit for negotiations after an offer is made.

Finally, you must assume that I would be: (i) so in-judicicusas to give such advice and at a public meeting, and (ii) so public spirited as to give such advice in order to commit the firm to provide legal services at a loss over a period of up to 10 years. Our fifteen years of adversary association should disabuse you of the former, and submitted that even a firm with as large a "pro bono" budget it is as Reid a Priest must have is unlikely to propose the latter.

Nor does it appear credible that this comment of mine is a reason FPGL denied participation, as the Reply Brief now argues, and not to serve some deeper substantive purpose.

Zn view of the, short period available for Administrative Law Judge review, I am sending a copy to him and the service list.

Please feel free to reply in kind, while I must reserve my sur-rebuttal rights.

Sincerely yours, George Spiegel GS/nzb cc: Administrative Law Judge Curtis L. Wagner, Jr.

All parties to service list

EXHIBIT ~> (MG 10)

Oacjcot Ho. ER 78-'19 (Consists.of 12 sheets)

MINUTES OF A SPECIAL JOINT MEETING OF THE FORT PIERCE UTILITIES AUTHORITY AW THE FORT PIERCE CITY COMMISSION, FRIDAY, MARCH 26, 1916, AT 3x30 P.M.

Utilities Autharity Members Presentx Chairman, Ewell Mange; Vice Chairman Settle, Mayor Ben L. Bryan, Sam Reilly; Secretary, Havert L. Fenn; Ernest E.

Jre P Ex-Ofkicia Member Charles Jackson City Cammissianez's Prosentx Cammissioners Browning, Caynon, Leslie, Long and, Mayor-Commissioner Bryan.

Others presentx Director af Utilities, Walter Baldwin;U.A. Attorney, Charles R.P. Brown; City Clerk, Ines Lowery; Harry Schindohette and Ken Daniels of Florida Power and Light; Attorxxeys George Speigel and Bob Jablon; Fiscal Agent, D.C. Huskey; Suaerintondent of Electric Distribution, Glen Monnette; Administrative Assistant, John Litton; Director of Finance, Bill Bidle; Suyerintondent Electric Transmission, Troy Lee; U. A.Chief Engineer, Bob Skxnner; Electrical Engineer, Tam Moulton; Customer Service Manager, John Ptadd: Paver Plant HcparlntaadentJ,ack Halth; Atn Htlder ed the 'ltiami Herald Dan Turk, FMUA Dir. Cammunicatians.

Mr.Mange called the Utilities Authority meeting Co order.

Mayor Bryan called the City Cammission ta ordere Mr. Menge said we have with us today Mr. Speigel and Mr. Jablon fram Che firm in Washington Chat is presently representing us an the gas suits and sa forth. He thinks they have something. co bring us ac. this time. Mr. Mange turned the meeting aver to Mr. Spiegel. and Mr. Brown.

t Mr. Brawn stated he might say a word by way of introduction for those who do not know Mr. Speigel.. He has represented Che. City and Authority in the Gas Tmxsmission suit which is pending in the Distric" and Federal Court in Miami. It startoci in 19II. We had an initial settlement in 1972. He special-i=es in this kind of work or his firm does and, he is probably the most qualified attorney in the country in this particular kind of wozk involving Gas Transmission Companies and all facets of utilities.

Nr. Speigel said it is a pleasure ta be here. He has never visited here although he has represented the City for Eaur or five years. Althaugh his firm does work in gas perhaps the Largest part of his wark is dealing with electric problems. Their Iaw firm does almost nothing but represent municipal groups, municiyal utilities, authorities who own their awn electric, gas and municipal, operations. Their, woz'k basically is negotiating Eor them, arrangements with major power companies.in the cauntry and accasianally dealing with the Federal Powez'ommission and other agencies in order to protect their interests. The thing that strikes him. about the Fort Pierce situation is that it is like sa many things. They have a good operation here and something has hayyened. Hez'e they are losing their gas supyly which was producing energy at a fairly cheap rate situation and have had Co shift to ail. Every ut'lity faced with that, particular found that to be dane in evaluating the situation their rates were escalating. What. needsto operate your system a different way is first to evaluate whether you need wh:ch permitted in view of the change of economics There was a fuel supply che system to operate. base load. Tho fuel was coming in pretty cheaply. He cauld talk for an hour about why the price of Chat gas was kept down. There

'was a cay put on the price of gas and but for'that cay, the price would have gone uy. It no longer makos sense to aperate base Iaad. Naw the Ci.y wants ca oyerate under a very excellent agreement they have with FIarida. Pawer and Light. There is an intercannection agreement and. the first thing that shauld be studied is what the economics af the operation would be -- what basis kind of rates cauld be charged -- on a ful1y cannected, fully integrated with Florida Powez'nd Light. An operation Iiko that which isthe-contemplated industry, then by the. agreement and contemplated. as being done throughout the plant would ayerate as parr of a- combined, system made uy af FIorida Power and Light, this system and same of the othez'ystems that FIorida Power and..

Light disylay Ca them. The hours the plant would operate would be greatly decreaseci, tho amount of oil burned would be greatly decreased. He hasn'would looked at all che engineering aspects of the oyerations, buc, the plant probably operate as a peaking plant, a. flaw Eactor the cycling plant. The plant would be turned an and generate whenever it is in best interest af the On chat basis you would Eind combined systems in chat hour to generate.

that the total cost of power is considerably cheaper. That, is ane analysis Chat needs to be made..

The secanci analysis is the fact that with the new generator coming in,

Page Z 5/Z6/76 yau are temporarily surplus in capacity. Whar. you add generating'units you don't get just enough to taka care of this year and next year; you have co si=e it big enough so yau have a fairly efficient unit and,therefore, yau put in more capacity than is needed in the year in which it is installed.

It usually cakes 3, 4, or 5 years ca grow into chat capacity. What they do is sell chair excess capaciCy.

The analysis has to be made of what yau cauld sell that excess capacity

'or, what price, on a. short; lang or medium term basis. There are some 40 ar 50 separate electric utilities in Florida. An analysis needs ta be made as to what their relationships are between how much capacity they have and how much lead do they have. Some years ago the City of Lakeland vas selLing temporary excess capacity aver Florida Paver and Light's system, Co the City of Jacksonville. Florida Power and Light vas transmitting the power. The way thc arrangement, was semantically put together was a sale fram Lakeland to Florida Power and Light and a sale fram Florida Paver and Light to'Jacksanville.

In connection with the New Smyrna situation, FIorida Power and Light agreed to tzansmit power for New Smyrna Beach and he thinks they agreed to transmit power foz this capacity. He hasn't Looked at Florida Power and Light's balance between capacity and load. He daesn't Know yet whether they need it. If Chere is same other system that, needs it, it is salable. It seems, to him in talking with, Charlie Brawn last week, that a, study has to be made as to whether under a revised operating basis with Florida Power and Light, you would vant to see whether your rates in Fart Pierce might be reduced dawn. He daesn't know how far down. They might well get bolo~ Florida Power and Light.

Thcze is another theme- that needs to be struck here. Any business has gaad times and hard. times. Yau have a good business.. If you look back on Che history.

of the business , yau.wil1 sec that, it has been a good business. It has produced.

Zt has had a lot. of ecanomic benefits to the City. Like any business ic comes into hard. times. Those things dan't necessarily last forever. Today Florida

,Power and Light's rates azc lower than'ort Pierce's rates. There aze a number of reasons, a Iat of which are co the credit of Florida Power and Light.

They'e gene deeply into nuclear generation. They taak their chances. They

~ made their judgements and made the investments. As long as those nuclear generators are running and they don't zun into any special problems, great.

Yau don't know what cauli happen tomorrow. If (hey develop problems with same oE these nuclear generators, suddenly the situation cauld change and if and when they like the City are faced with running out of their fuel supply, ou might find in ax!other year or tvo= that the situation is reversed. He as seen a number of situations where systems veze sold because of the anti-cipation.of lower rates Ezom another company and two or three years maceziaL-later, yau find that because af situatians and circumstances, this daesn't ice. Hc doesn' mean'to underestimate thc problem that faces Fart Pierce, but he would say that as the owners of this business, it would seem to make sense co first scc if there is anather way of apezating it at a profit, at good. Low rates and. evaluate that along with everything else that. may be evaluated.

He said, hc would be happy to- answer questions because he's tried to say a Iot in a. relatively short time.

Mr. Mcnge said hc understands one- of the. actions this board. needs co take is to Eile our intentians to buy a piece of che nucleaz power plant that is to be built in Sauth Dade Caunty. He asked if that is in the pzacess of being dane ar are we waiting Eor direction on that. Mr. Baldwin said he is waiting or same word to go ahead. Wc have written them, asked Chem about it some time ago, but haven't gotten any Eurcher with it. Mr. Mange understands our intentions hve to be filed. in the early part af April. Mz. Baldwin confirmed.

this.

Mr. Settle asked Mr. Speigel if hc is going Co set into some of these alternatives. Mr. Speigel said he would at the ctizcctian of this Authority.

He said he is representing the Authority in gas matters and if they desire him .to represent Chemin electric mat ezs, he vill be. glad. to do it.

Mr. Settle asked him what same of the aLternativcs are. Mr. Speigel said to be spec'c, the Authority has a fine.interconnection agreement with Florida Power and Light. He remembers this very acutely because when he argued the case far Che City of Gainesville in the Supzeme Court, he brought that agreement up on Che day of the argument. He said that all Gainesville is asking for Ezam FIozida Power Corporation is what, Fort Pierce has Ezam Florida Power and Light-

Page 3 3/Z6/'T6 There The is first an agreement thing that but Fort Pierce is not utilizing it to its full extent.

needs to be done is to make an analysis which ultimately has ta be a joint study between Fort Pierce and Florida Power and Light, as to how the two systems can most economically benefit fram a combined operatian which generally will have centrali ed dispatch by Florida Power and Light.

Then an evaluation of the costs, charges and rates would be necessary. Mr.

Settle said Nr. Syeigel is speaking of peak load. Nr. Speigel said that is right He would have to know the characteristics of the generating unit.

Ideally this would be peaking and reserve capacity. Every electrical system has to have base load capacity, peaking capacity such as turbines and generally their older capacity which usually isn't worth very much, they hold in reserve In the event af autages of the good units, they have to bring in the older stuff.

We'e on a combined operation basis and, Port Pierce wouldn't be burning all the oil they'e burning, energy costs would'be reduced.

. Settle asked . Syeigel if he represents the FMUA. Ar. Speigel said he doesn't represent the FMUA as such. He represents a number of cities in, FMUA.

Wi Mr. Settle said he knows Nr. Speigel represents the so-called seven cities.

As Nr. SettLe understands it'he FMUA can go in together now and build their own nuclear plant. He asked if this is correct. Nr. Speigel said he dealt with the edges of that issue. He isn't sure and would have to turn to some Florida Lawyers an that. There was Legislation'assed in connection with the ChrystaL River generator. There,Florida Power Corparation sold 100 megawatts to a number of municipals in FIorida and there was special, legislation related.

to that. There was anather bi11. introduced which he believes was apposed by FIarida Po~er and Light under which the municipals could, have done what Nr.

Settle is saying. Mr. Settle asked Don Turk cauld probably te11 Mr. Settle.

if that bi11 was passid. Mr. Brown said.

Nr. Turk introduced himself. He stated he is Director of Communications Ear FMUA. He stated there were Z, bills intro-duced- in session last year. One was in response to the Constitutional Amendment approved in November, 1974, which wauld allow private companies and municipaLs to ba involved. together in generation and transmission facilities. There were Z introduced last year: One to allow participation in Florida Po~er Corporation's

'nuclear unit and another which became known sharc title-wise as joint power authority which FMUA introduced. The bill that allowed ten caoperatives go participate in Florida Power Corporations nuclear unit passed and the other is still an file in the House. of Representatives. There is some disagreement as to whether cities could get together with present. Legislation. It has not .

been tested. The bill FMUA filed. pertaining. to joint power is still in the Legislature. Nr. Settle, said so at this point the answer is na. Mr. Turk said. that probabLy would be the. quickest answer.

Nr. Settle- said that, would bring aut another questian in his mind. Lf we file.

intervention in the Dade Caunty'lant of FP5L someone has said, and he is going back in his mind and doesn't know who said it or where or when, that the bands could be sold on future revenue of. this participation in this plant.

He asked. if that is passible. Nr. Huskey-said that is'a possible means. If yau can shaw- a sufficient savings aver a. period of time, it is a passible way of financing.

Mr. Settle asked what the cost per megawatt was for this plant down here.

Mr. Schindehette stated that if he. recalls correctly it was around $ 1,000 to

$ 1,100 per kilowatt. Mayor Bryan. asked what he estimates the cost af the new plant to be. Mr. Schindehette saiL it would. bethat approximately 5800,000,000.

It <<ill be in the sama- area. per kilowatt, but Mr. Settle said L08 of that would. be $ 80,000',000.

doesn't include inflation.

Ifdollars we can show that we'e going to save enough money to pay off the 80'miLIion over a ZO. year petiod, we can sell the. bonds on that basis. Mr. Huskey said there are a number of cities that have done exactLy that in cannection with the FIorida Power Carparatian deal. The same. process could be faLLowed except thatthethis line is a Little bit different situation in that: they anticipate being on same-time Late this year. It wasn't an 8 or 10 year proposition. It was aItyear ta and a half befare. they couLd, start receiving those benefits. would be a'ear anci ove tart . i r. sett e said he is trying to picture this in his own mind. He asked Mr. SoeigLe how much lead time is involved. Suppose we intervene in the second plant and want to buy LOt of the plant in Dade County at what point in time, either in construction, aaplicatian or completion, da we have to come up with the 80 KLLion dollars. Nz. Speigel said it varies depending upon how the mat.er is resolved. If the camyany says they'are willing to Let, yau in as aparticiyant and say to let's sit dawn and get the contract drafted and the studies aut,the there are Z things you. need to do: You have to take a goad close look at acanamic data that anly the company has what is it really going to costT

R Page 4 5/Z6/76 SecondLy, you have to iron out the contracts. When you are putting your money aut for a plant somewhere else, you have ta make sure you have the transmissian and everything else. There is ane company out west that is moving along East and if the company docs that, the municipal is going to have to put up its money and come'n on the ladder. Same of these situations up in llew England, they were, arguing and litigating while the plant was being buiLt. The result was thar they didn't have to put in any money until after the plant was operating and they already knew what they were gott'ng into.

It depends on haw the course of events go with the.,cam~any. Nr. Settle said looking a itfrom our own particular s'tandpaint if we are lacking at lcadtime and he doesn't know how long it, takes-- Maybe Harry can answer this -- if we file intervention and are successful and they say they'IL sell us a percentage af the plant or regardless of whether we don', what poinr. in time is the Dade Cauntv plant going to be in operation. Are we talking ten years, five years or whatf Mr. Daniels said 1985-86. Mr. Settle said this is about IO cats.

e au s serxaus y x we coul pay xnterest on t e on s or at lengt ot time. Nr. Huskey said you wouldn't need to selL 80 million dollars worth of bands at one time.',Yau would se11 4 or S series of bonds. Yau aren.'t going to need to put up 80 million dollars. Mr. Settle said possibly we could wark it out like the company out west andnxt'it up after it is in aperation. Florida Power and Light's got all the money in the world. Mr. Huskey said he is sure that Florida Power and Light isn't going to barrow 800 million dollars. They'e going, to borrow it. as they need it..

. Spcigel said, the ideal situation is that you argue with Florida, Power an L'ight up until the day the plant is ready to go inta operation. At that time you finalLy get yaur cantract. Qnce. the .decide to o ahead with au thc want to sec our mone as fast as osszo c. n any negotxatxons some peop e are pushxng and same. are pullxng. T e way hc looks at it is'he petition to intervene is for the purpose of establishing your- right to,. have the opportunity to buy; When yau petition to intervene you'e not making your decision because yau can't make a decision until you have more of the facts and the whole legal relationship clarified. It costs money to do that. Yau're talking aboucmiIlions of dollars in investments. You'rc going to have ta spend money on consultants analy ing the thing befare you commit yourself.. Yau can study everything in the world, unless you know yau have something that is real. That's the position he has taken in every proceeding he's handled. The duty of the company to nake a propasaL, a defxnitive proposaL with the facts and, data is needed by City officials to make an intelligent determinatian. as. to whether or not they want to do it He remembers this in cannection with the Nahe Yankee plant where- the campany said dramatically before the FCC, "Nell, Mr. Speigcl, are .

your clients ready to put up their maneyf" He= said they are nat ready until you give us a proposaI, and wa knew we have an offer, the people. can spenL the-money needed to evalua e the of cr and get i . At thc first rtage you develop your right to have the proposal made definitively. Thereafter, yau make yaur studies and sit dawn to negotiate with the company., Everything may be fine except the price for some of tho back. up and things. LiRe that may be too much.

In that case if isn't economic. Hc stated he worked this aut with Florida Power Corporation in 6 months which he feLt was darn gaod considering it was a first. It can be done in 6 months. More likcl this rouo wou c rcscnte it would take a vear before an vote to s en t e mone . i ayor ryan saxI orxda Power Corporation was in a bin, were they notV Mr; Speigel said was partly that and it was partly that'here were some gaad relationships it developed between FLorida Power Carporation and the municipals and cooperatives they do business with. About: S or 4 years ago Litigatian and arguing terminated.

They are wi11ing to.do business an that basis.

Nr. Fenn said as long as Mr. Speigcl is saying that the Authority is not obligating itself to the olant itself and that we'e just going to use aur privilege- of intervening and letting, them know that we are. interested, hc doesn't sce why wc couldn't go ahead and 'ntervene. Nr. Menge said had. been done same five years ago on unit no. I wc would be in on that now.

if this Mayor Bryan asked what is involved in intervcntian in terms of what wc obligate ourselves to. Mr. Speigel said when yau're intervening, drafting the petition isn't too expensive a. prooosition, although document. The big question is, is it it is becoming a more expensive going to go to hearings and what kind of hearings are they going to be. It is difficult ta know. Very Ecw af them have gone to hearings. Some have gone to hearings and they!ve been 1ong and difficult.

There are a number of other cities in FIorida that are considering inter-vening. If that would happen, the cost would be split among them. Basicallv, you'e intervening. in good faith with intention of pursuing the matter.. Qn

Page 5 5/26/76 the other hand, realities being what they are, if you'e faced with a Iong, expensive hearing procedure, you have to re-evaluate how deeply you want to get into the proceedings. He would say they'e committing themselves to an intervention and to the cost of a relatively short hearing, not 100 days of hearings. Mayor Bryan asked how much Nr. Speigel is talking about. Nr.

Speigel said if there is a group it would cost about the same thing. Inter-vention is talking about 2 - 4 thousand dollars. There'd be some additional pleadings and then there'l be contracts. With all preliminaries and everything else, you'd probably get up to maybe $ 10,000 for all the cities participating.

Generally speaking, most of these cases have been resolved, depending upon the position the Justice Department takes. He can think offhand of three One cases that have gone to lengthy litigation, two of which his firm was involved. of them in Louisianna, they were able to confine to a relatively short hearing.

One in Michigan couldn't be confined and went to 10-80 days of hearings. What they did in that particular proceeding was to put testimony in and didn' appear at the hearings. They put in their case and told the Administrative Law Judge that it was fine if the Company and the Department of Justice wanted to go into an intellectual bit of research, but they just couldn't spend the money. If you go to a reasonably appropriate hearing you'e talking about costs in the order of 40 - 80 thousand dollars, legal and technical personnel.

He would. say , he should be. able to answer this question more briefly. Lawyers always expect other people to answer to the point. He- thinks in terms of immediate committment,, it's in the neighborhood of, 5 10 thousand dollars if spread among a. group of cities. Mayor Bryan said as an individual city, we decided to do this, could we pull out at any time we wanted to with no further obligation. He- asked.

he would think it's if that would be correct or not. Mr. Speigel saiL correct, subject to what lawyers know. YouThat's make a good faith representation but that as general, is the experience. the under-standing among the groups.

Mr. Settle said he. is not willin to concede a sale td Florida Power and even ow xz t e re xntereste . t In I g ot at an w at the Mayor as said, it over and over an w at, e tu y concurs with, tha- seems that atomic power

,is the only way we'e going to be able to go to get this rate down, hePlant would make a motion that we file for intervention in the South. Dade Atomic of E1 ardin~over end Ldtht. Nr Penn .stranded the natdan.

Nr. Baldwin asked tW. Speigel if it would be necessary to have a fairly com-prehensive study made before we intervene, deciding the amount of electricity we'l need. Mr. Speigel said this would not be needed. Generally speaking, we know enough facts. Mayor Bryan asked what the deadline on intervention is.

Mr. Speigel said.

too%

it is Apri1 14th Mr. Baldwin said that; is the last. he. heard, Commissioner Caynon asked if they should, have an appraisal made on the olant before they start out and, see what they have to work with.

Mr. Settle said right. drwe're talking about buying, not selling our

Ãenge said we'e talking about buying, them out now.

plane.'r.

Nr. Daniels of Flor'da. Power and Light asked,.hear.

comment. Mayor Bryan said he would like to if it is permissible to make a from him. Mr. Daniels said he.would like to bring'ut a coupler of things for his own clarification if for nobody else'. One thing is you isn't are talking about an intervention in some proceedings in Washington. He a lawyer so he asked everyone. to bear with him. It is his further understanding that what youanti-trust about would require bringing a suit essentially allegating are talking actions; that. is, that Florida Power and Light is having dealings that arecorrect. inconsistent with the anti-trust laws. <~fr. Speigel said that is onlybe-partly inconsistent with Basically, whether the situation and circumstances may the anti-trust laws -- you may not be doing anything, buteven you may have from though, personally, an economics point of view, the kind of monolopy, which you'e not doing anything, you shouldn't do, you have. obtained. such a. monolopy, woulL be an issue. There are a number, of ac.ions on occasion which they have taken an issue with, with Florida Power and, Light. Nr. Daniels said he knows intervention that. His point is that just a simple statement of voting for is, in his view, a Iittle bit more than signing a "me tooet FP6L petition. That is you are going to essentially bring those thoughts against with which says that they are in their dealings with Fort Pierce, inconsistent those laws

- dealing with anti-trust.

Mr. Penn said he didn't understand it that way.

Page 6 .

3/Z6/76 He Eelt Mr. Speigel was saying that. as a municipal owned utility, that vc have the privilege af buying. into the South Dade Nuclear Plant. Ãe missed that opportunity same years ago with the ane on Hutchinson Island. Sometime ago when we contacted a certain agency, they told us we were too late to negotiat to buy into the Hutchinsan Island plant. There is another nuclear plant which will be built in South Dade. As he understands i" wc have until April 14th to shaw aur interest in buying into this pLant. In order to do so wc have to go through the praceduxe of intervening, saying ta the Department that in goad faith we want, to buy inta this plant.

opportunxty of local utilities, smaller utilities, to participate In the awnership af a large nuclear generator is considered implicit in anti-tzust laws in these kind af circumstances. You have a dramaric example here today, where you aze suddenly faced with a situation where yourail costs have gane up and. you don't have any nuclear energy, you'ze put in a disadvantageous pasitian. This is not because you don't have a good system or because you didn't use foresight, but. total circumstances result. The concept, behind the nucLear act was that this new Eorm of cheap energy which had been developed at great cost by the government and taxpayers, would put large companies vho are in a. position to out together the tzemendous aggregate of capital necessary to build thc Turkey Paint oz St. Lucic, Qx a position where they could put every-body else. aut of business. He hears people say we have to sell aut the Fort Pierce system because- we. have aiL and not nuclear. This statute was design and; hc wasn't involved in the drafting, but was involved in its modifications, and. the concern was that smaller utilities like Fart Pierce should have an opportunity to participate in nuclear development with the big companies as a means oE being able to stay ixx business because it was felt that, basically, even in the utility business, competition is a Eundemental principal underlying this economic society. The concept. of courts have said that they have to preserve as much competition as passible, because if you wipe out the small systems and turn the state over to one or two big companies, then they don' have to camocte and the at.

e d 'ave be e ~ icnt. t0hat's involved here e rcasoxx there, is on the Ence of it, an anti-trust quest. on w xc justifies interventian, is,. as he understands it,, because Florida Paver and

Light is refusing to permit the smaller systems to participate. He thinks that is really the basic proposit'an.. He thinks that is fundamental to it.

The. problem af litigation cauld be easily resolved if Florida Power and Light,

'nd. hc is sure the Department oE Justice would support our position, af ers axx opportunity to the various cities to participate.

Ma or 8 an said what concerns him in light oE Mr. Daniels'emarks is that e t xn s we'e approaching. this intervention more- in an effort to obtain information on this as a comparison. If it costs 80 miL1ion dollars to acquirc the portion oN the- plant that was needed, and we'e sitting with 30 miLLion dollars worth'f bonds on a plant ve, already have and ve have mare power than vc need, that it might ve11 be that aEter intervening for a vhiLe, that would, be eliminated. as an alternative or as a reasonable alternative or.

somewhere aLang the way ve might'ind out that we couldn'. What the Mayor would hate to sec happen then is to have same other parties take aur own pleadings if we have to allege anti-tent action ot same sort to gct Qx there, and use that to block the negatiatians Eoz the sale of the system which ve nav have,to Florida Power and Light. This business af buying power is certainly something that needs to be explored, but ve'rc sitting here with a plant that can at least far the conceivable Suture- as soon as the generator goes on line, make morc pover than what we can use. It is an expense that's going to be there regardless af whether '<<e. azc going to be able to come up with solutians to buy po~er at a cheaper rate Exam Florida. Paver and light. '>le'vc still gat thc bonds on the plants, the empLoyees at the plant and the plant to maintain-.

As hc undezstoad thc proposal that was being made, was that we needed to explore- alternatives and, he agrees with that, but he doesn't want to explore an alternative which is going to knack us out of thc ballpark then an what may welI. be the mast xcasanable salutian ta the roblcm and that would be ta He would hesitate to vate or a matxon that waul ave a chance of knacking us aut of the negotiatians ta sell the plant based an our intervention and pleadings we might make relative ta anti-wast violations by Florida Power and l.ight. He is wondering if it might be better, because Is awfuL hard to talk in the abstract abaut pleadings, to have something it draftccl, a proposal as to what wc can do in the Eorm oE intervention and what vc wauld be saying in the intervention, what position we would be taking, and look at that and have it to us in time that wc could see it and Look it over Ear a day at least. ance have a special meeting and then vote an what ta do.

Page 7 5/26/76 The Mayor doesn't want to get hung on the sale of Chc system in an effort to get alCernatives by expLoring an avenue Chat's reasonable to explore, but he doesn't think it' reasonable to explore something that might knock us out- of what looks like a reasonable solution at this point depending on thc way negotiations goa Nr. Daniels asked for a clarification of what Mr. Speigel said as to your r

implicit rights to someone else's nuclear unit. Hc staCed ChaC understanding that the law does not say that. It may be implied but it it is his isn' in thc law that anyone has a right of access for somebody else's property.

He asked if that is true. Mr. Speigcl said Chc Law does not say that. As far as he knows the only people, private companies Chat have access to other people's property areutilitics excrcizing the right of eminent domain. A utility which has this right is exercizing some of the rights of the sovereign.

In order for competitor.on to survive, it needs access to this new form of energy which is only available. in rather Large plants.. The conclusion which has been drawn and applied in, many cases is in order to maintain a situati.on consistent with the anti-trust laws, a. Portion of the plant should be offered to other utilities. Nr. Daniels stated chat isn't the law docs not say chat, that the. implications are chat it if really true chat since I'utility is in fact inconsistent under the anti-trust. laws, then. the Justice Ihparcment may try to get a settlemcnt to have the other party gain access rather than having a direct right to just. say, "Hey, I want a piccc of your unit over here," and that's all there.is to it. Nr. Soei el said he a rces with Mr. Daniels this is not che Iaw. i r. anne s sax z e un erstan s w at ras been in'hat sax so car, xn or er to get involved in an anci-trust review of FP5L's application. for license, the City wouLd have. to bring about allegations o'.

anti-trust to FP5L and be prepared to defend them, because, Mr. Daniels

'tated, "I can Cell you that

'e FP4L will deny them and defend them vigorously."

further stated he is just trying, to clear the air herc because ho doesn' think the Board really understood it that, way.

Mr. SettLe would like to take. opposition to what thc Mayor has said. ObviousLy, Florida Power and Light objects strenuously Co us filing this intervention proceeding according Co what Nr:. Daniels is saying., tele thinks ic would ut us in a much better os o

'ecce s to Florida Power and Li ht if we o f Ic this inte ~ . He is not willing to say at t n.s tame teat that is the best thing to do. He doesn't think any of us can take that position at this point. Me have no idea Chat Florida Power and Light wants Co buy 1'(c this plant and if we do, what they'e willing Co offer us for this plant.

do know wc're putting some $ 600,000 a year out of this plant. into the Gcncral Fund at this point.. Mayor Bryan. said $ 462,000 plus a $ 70,000 credit. Nr.

Settle said alright.- $ 56$ ,000. It is close to $ 600,000. It seems to Mr.

Settle that if we gct compared to what they offer thc City of Vera Beach which he believes was six and a half million if he recalls, and if Chat, could be -- noC will 5e -- b7'ome future City Commission, scenyou'e as a windfall to pave streets and so forth and Chen the money is gone, then got to go into taxes to. raise bonds for the generaL fund'. Always 20'4 of the people pay 80" of the taxes. It would seem co him this is going to have to be studied long and hard as Co whether wc're- really interested we'rc in selling . Hc for one is not willing Co take the position at. this point Chat interested in selling.

He might also point out that Mr. Little was a former employee of FLorida Power and Light for many years and is now the- City hfanager of Vere Beach. Nr.

Settle can see ~here. Florida Power and Light would definitely Like Co buy Port pierce and Vcro Beach and get rid of this pocket of competition. Hc would have to Cake a very, very 1ong hard. Look at it before he would. vote for selling it., Mr. Settle would prefer to vote on the motion on the. floor.

Mayor Bryan said the point he was trying to make was possibility if of we by passing. this selling this planC motion, take a chance on ta Florida Power and Light by eliminating alleging.

the anti-trust action, chen obviously if we go into court, and prove anti-trust action on the part of Floridapc.cent of Power and Light in an effort to win Chc oppoMnity Co purchase 104 or some the plant down in Miami, then che next answer purchase by anyone else who wanted co intervene, ation were if after getting the opportunity to made that it were bet er not to spend 80 that plant, the detcrmin million dollars to have a portion of a plant in Miami and that. it would be better to proceed to sell the plant to Florida Power and Light or at least have that alive as an alternative, that any interested party opposed to that for whatever reason would then bc able co take the position che City had taken in che intervention City's pleadings Chat Florida Power and Co establish Chat based Light should not bc allowed on the to negotiate own with the City because it would further the anti-trust violations which wc had allcgcd Florida Power and Light were committing.

~'

3/$ 6/76 His suggestion was that we defer action on this until we can see what is actually going to be pled in this intervention and have sometime Eor consider-ation of this matter to determine what effect the intervention would have, if any, on the continuing efforts to negotiate with Florida Po~er and Light. He isn't prepared to say that we will sell to Florida Power and Light either. He is prepared to say that he ~ants to see an offer fram Florida Power and Lighthe.

so that we can and the of this community can consider that offer and isn't prepared to vote peoplein favor of a motion that might eliminate tho choice of the people of this community to have the opportunity to consider whether or not they want to sell this plant to Florida Power and Light. He is prepared to proceed further to ask Nr. Speigel or whoever is appropriate to submit to us for consideration'at a special meeting before the 14th, whatever effect inter-vention might have so that we can see. He is sitting here being asked to vote on a motion to file pleadings that hc hasn't seen to raise issues that he isn't sure of, but apparently one of them is anti-trust, and without being effect advised of the ramifications to us of raising the anti-trust issue and thc that would have on our negotiations with Florida Power and Light and he isn' going to vota in favor of that.

r Nr. SettLe asked if we could ask Nr. Daniels that question.

said he would like to clear up one point. He isn't herc today to try to get Nr. Daniels this'body not to intervene -- no way -- that is your choice. His only. point in being here is to make sure- this body understands what is involved. As he said, he isn'. a. lawyer, but is trying to say what he knows of thc situation. 't Mr. Dan als said FP L <<as asked to come a d tal. w th tie Aut o a d, a ro osaI or the os a CY They will do that it if that is still what is desired. They are going to look at it very carefully for 3 points One is, is holders and is it it good for Fort Pierce, is good for FP6L and its share-good Eor thc customers and employees of Fort Pierce.

things don't jive up, as Ear as FPOL is concerned iEthey can't make a proposal If those suitable to those points, they will probably come and say," Sorry, wc don' think we can do, business with you."

Nr. Settle asked. Nr. Daniels if he could ask him a question with a ycs or no answer. Nr. Daniels said he can. Nr. Settle asked if filing an intervention uiIX. cease negotiations . Nr. Daniels said he thinks the Mayor ans>>ared that already. Mr.'aniels can', answer that because he isn't an officer of the didn' company and that decision will have to be made by one. Nr. Settle said ha get thc Mayor's- answer. He asked what it was. Nr. Daniels. said the Na or implied that we orobabi would not Eeel in the ro er osture to t to u tw e xcs stem w x e t e Aut orat s lofti atin a ainst us in an anti-trust matter wou ld Nr. SettIe said as he, understands it, if there is such a thing as a fr'endly anti-trust suit; this auld be one of them. Nr. Daniels said hc isn't aware of any of that type. Mr. Settle said, FPCL is creating a monopoly in the south Florida area. He thinks it would. be argued. on that basis, especially if Vera is sold to FPtlL. Hc.understands Daytona Beach is considering at this point going back into their own system since- their contract has expired. Nr.

it will expire. Nr. Settle said it will expire next year. Personally if if Daniels said from his own standpoint, as a businessman and not as an attorney, hc were intervention was Florida Power and. Light, he might negotiate more anxiously filed Mayor Bryan said there are if you are in a dangerous position relating to anti-trust and civil and crhaiaaI actions which can be taken against you for anti-trust and. allegations are made that you. already have too much of an area,, you might very well feel that you can~t negotiate for anymore of nogotiating. that area once that allegation is made by the party with whom you are supposedly Mr. Settle said he understood. there would - be no criminal charges, and simpIy a civil charge; could bfayor Bryan said Eor anti tmt there, are civil criminal charges that be made. Mr. Settle said there are but in this oarticular e <<ou d the e be criminal char cs? br. pelage the or sa'x no. as ca principal, why ly, what we they'rc would be stating facts which show on grounds doing may be inconsistent with the guidelines of the anti-trust laws. This is altogether different from a casa in court. The problem can bc easily solved if Florida Po~er and Light offers some fair shar~, a relatively small share, by making a proposal to sharc the nuclear plant.

There was one comment Mr. Speigel noticed earlier by Nr. Daniels. This is the occupational,. ha ard of his business when he said something to thc effect that they'e not going to give up easily.

Page 9 5/Z5/T6 Mr. Speigel would like to have 504 for. evcrytime he's heard that from a majar ucilities company. Many major companies have succeeded in carrying their point just by impressing upon somcbady that disagrees with them cha fact that. it may be long and expensive and difficult to prevail.

has been surprised, how rapidly the situation.changes very quickly.When Mr. Speigei you ga ahead and do it it all of a sudden yau find that happens. Hc thinks he can probably probe his memories when he's heard this even from Florida Power and Light before. That's an occupational. haaard. hfr. Speigel Cakes his wark very seriously.

"is unreasanably dragging itIf they find xn Chair apinion Chat the company aut, Chen they begin working at lower and lower races. They'e discovered the answer to what hfr. Daniels was implying, is to hang in as attorneys even if they have to work for nothing.. He is never going ta sit in a canferenc'e zoom with any utility -- he reprcsentcd a small city in Florida same 10 years ago when they looked Florida Power and Light in the eye-- and, he's never going Ca be in a position whore he says Co his client that they'e got a righteaus cause, but because they'e in a position to drag it aut and make. it expensive, you', better give up.

nothing far as many years as necessary co try as best hc can to right the He'l work Eor balance between the small litigate with the limited resources and a major

.company, the fifth largest. utility in the, country , with an unlimited litigation budget, which, the customors are paying for. Mr. Speigol stated that he wauld say this, that if this thing x.s going to be dragged out and the protection of your interest requires it, he'l. work foz nothing.

Commissioner Caynon said yaugvey got a. deal.

htr. Speigel thinks this is very impoztant when a private utilicy comes before a public agency and makes what, he thinks was clearly implicit. in what. her.

Daniels said.

Mayor Bryan said what concerns him is not dragging ic out or. how long going Co Cake. He's concerned about the initial it' action and the cffccc that ic would have. If we were noc in the recess of considcrin to F1orida Power and Li ht an sale of Che plant we were determined co o ahea or sure vxc out considerin this as an alternative a munxcx a anc, o wou n t e concerne if we were to a ahead. and oacrate a out c e zocc urc o encor-

~ ~

van ton. tn, osc or raw we ve stt goc a p ant, to e p e r a t a Hc c inks one of tha choices being considered at this time by the city and Utilitias Aathority is the potential of che sale to Florida Power and Light, Purchase by cham ancL thc sale by the City. He is concerned that the papers filed in this inter-vention would have an effect on thccother choice which mighc or might'oc prove to be the best solution far the city, by eliminating it-as a choice.

He is concerned that might get all dane wit'g if it we prove our, case coo gaad in the intervention, we and determine it is not economically feasible Co go ahead and. get a piece af the plant, and so then we say we don't want to do that. and. decide co go back, ta "go" and talk to Florida Power and Light and they say, "Sozzy, we can't talk to you. You'e proven so well the anti-trust allegations you'e. made that. you don't have chat; as a choice anymore.

Me can't af ord. to get inta that."

Rr. Speigel said. he is very often glad he's not a Mayor who has to be faced wieh tough decisions. He recognires there are some cough elements in ic.

One pzablem is that you'e got a. deadline. That's che zeal problem. Xf yau didn't Wave ta face the zeality that Florida Power'nd Light, unless yau

. do intervene by April 14th, is going to say as they said: about Che ocher units, that you'ze aut---if Florida Power and Light's representative is willing to say that even if Fort'ierce does not intervene, they willnonetheless be given che same opportunities co participate in the plant as any ocher intervener has; then they cauld. get: Port Pierce off the hook in Chat fashion.

If they are wi1ling to work out same ocher interim arrangement that would, do it. If they'ze not-, Fare, Pierce is faced with the problem.

Mayor Bryan said if we could in time. to meet chc dcadlinc, have a copy of the proposed. pleadings and a letter from legal counsel advising us that if chase pleadings are filed, chac this would noc prohibit, win, lose or draw, or effect aur ability co negotiate a sale to Florida Power and Lighc, we could at chat e if we had that advice and a copy of the pleadings so we cauld actually see che aQegacians relating Ca anti-trust, be in.a position Co /mow what' being filed and have expert akvice as to cho speci ic effect of filing those specifics, on the alternative of selling the plane co Florida Power and Light.

~ ~

Page LO 3/Z6/76 Hr. Speigel said they know what it is ta have deadlines. If the Commission and Authority desire it, they certainly will get this thing drafted as East as they can.

prefer whenever He would expect that they could get it it to the bodies. He would is possible that thc pleadings be reviewed by the City itself befare they arc filed, because He doesn't know if it is the city's action, not his.

they will be able to answer precisely the question being placed before them.

bfayor Bryan said that is the question he's interested in, because iE filing of those pleadings is gaing ta eliminate the passibility of ncgotia'ting with

.Florida Power and Light, we aught to know that on the Eront end of that filing and not file it, rather than came in on the bacR end and be told we'vc knocRed ourselves out of thc passibility of negotiating with Florida Power and Light.

Hr. Mange said hc is sorry to say that we'e got a couple of members wha have prior engagements and they'rc going ta have to Leave us. There'is a question an the-floor. Nr.'Fenn called. for thc question.

Mayor Bryan said he wauld LiRc to offer a substitute motion.

Mr. Settle said Hr. Penn called thc question. Mr. Menge said the Mayor could offer his motion.

Mayor Bryan said he would like to move that the Authority authori=e thc preparation of pleadings for intervention in the procedure involving thc plant xn Dade County Eor submission to the Authority at thc earliest possible date and that a special meeting be called to consider those pleadings and thatalong with the pleadings, advice be sought as to the effect of filing. these pleadings on any potential or prospective negotiations with Florida Power and Ligfct concerning the sale of the electriC system.

This motion died for lack of a second.

Hr. Mange asked that the roll be called on the question.

Mr. Fenn, Mr. Rcilly, Mr. Settle- and Mr. Mange voted yes. Mayor Bryan voted no.

Motion carried.

Nr. Penn ex'.tcd, at this point Commissioner Caynon siid nobody ever we were to sell it.

said, what this plant wauLd bc worth if Hr. Menge said. that is true anl, that is thc next thing we'rc going ta take up. He is glad to have the City Commission here today because hc thinks important to have them know what's going. on because they'e going to be it' involved in any final decision made.

Xe have herc - at the present time a resolutian -- one that was presented and one that the Mayor has revised that now gets involved in the sale of the plant+

Mr. Nenge asked Mr. Baldwin if there is any particular disagreement wi.th the revised resalutian. Nr. Baldwin sajd he hasn't had time to compare them. He doesn't think there wouLd be. any prablem. Mr. Nengc said. basically it's thc same thing. Thore is same change in warding. Mr. Baldwin said he thinks thc Nayar has essentially required an estimate of cost. Mr. Mange said it we will. proceed to bring aboard some expert pcrsans, engineers, accounts and states sa forth, to make an evaluation of aur plant so we can Eind aut what we own.

You can't scil anything unless yau knaw what you have. Right naw hc doesn' think any of us know what we do have. 1fe need to knaw the nct worth, market value, potential value, what will happen Eive or tcn years down the road.

Mr. Baldwin said Mr. Brown indicated there was no quarrel. with the Mayor' resolution. Mr. Settle said the anly thing he notices that has bean changed is rather than hiring people, that we get proposals. He is in agreement with this. Mr. Baldwin said he thinks Nr. Bryan also excludes the attorneys in the last Line. Nr. Bryan said he was assuming, maybe hc was assuming wrong, that. it would be Mr. Brown. He gathers that may have been an error.

Page ll 3/26/76 Mr. Settle moved that Resolution U. A. 70-S be adopted.

Nr. Baldwin said so there will be no question, this is the substitute resolution prepared by Mayor Bryan. Mayor Bryan said hc has an original here.

The roll was called with Nr. Reiiiy,.Nr. Settle, bfr. Bryan and hfr. Nenge voting ycs. Notion carried.

There being no further business hfr. Nenge adjourned the Utilities Authority Special Meeting..

Mayor Bryan adjourned the City Commission Special hfeeting.

ATTEST:

ecretary airman

H.E I D (9 PRIEST 40 WALL STREET VEW YORK, V. Y. 10005 313 34 nn33 h'kSBZNOTOV OFFICE N1QTC>N OA'ICE R PLAZ* OLDE ADDR? SS: RLIDAIW" 1201 K STREET. N. W.

30 ROCK Z L INTLRNAX1ON~TELEX: 22019$ WASHTBOTON, D. C. 0006 NEW YORE. N. Y. 10020

'2 844 202 221 11D2 May 4, 1978 George Spiegel, Esq.

Spiegel G McDiarmid 2600 Virginia Avenue, N.H.

Nashington, D.C. 20037 Re: Florida Power 6 Light Company FERC Docket Nos. ER78-19 (Phase I) and ER 78-81

Dear Mr. Spiegel:

This is to acknowledge receipt of your puzzling letter of April 21, 1978 which was received on April 26.

Since that time I have been trying to discern its purpose, other than to supplement improperly your reply brief of April 12, 1978, in the above captioned proceeding. You begin by quoting the following excerpt from our reply brief of April 12 and stating that it falsely characterizes your advice to your client, Ft. Pierce:

advice of counsel for Ft. Pierce that they offer to participate in these units but that they prolong negotiations until construction of the plant is completed."

You then, however, go on, at page 3 of your letter, to quote from Exhibit 10 in this proceeding, the origin of the statement in our brief:

"Mr. Spiegel said the ideal situation is that you argue with Florida Power and Iight up until the day the plant is ready to go into operation. At that time you finally get your contract."

Exhibit 10, as you are well aware, is a copy of the minutes of a joint meeting of the Ft. Pierce Utilities Authority and the Ft. Pierce City Commission on March 26, 1976, despite your gratuitous assertion "No verbatim trans-cript was made, and the remarks appear in the paraphrased can ml lutes prepared by the Secretary of the Authority." I only assume that tnis comment is intended to suggest that the Secretary did not accurately summarize what you said at the

meeting. If that is so, I am completely at a loss as to waited for more than two years without calling the why you supposed error to the attention of the Secretary of your client.

Of a substantially more serious nature is your accusation that the language you complain of appeared in our reply, rather than in our opening, brief so that there was "no normal procedural opportunity to reply." The reason that such language appears in the reply brief is obvious.

It was in reply to charges, in your initial brief, as to the accuracy of Florida Power a Light Company's evidence as to why it had cancelled two proposed nuclear plants, including the South Dade plant you refer to.

More importantly your charge that you had "no normal procedural opportunity to reply is completely belied by the transcript. in this proceeding. At pages 1851-52 the following collocgxy took place between your associate, Mr. Guttman, and Mr. Robert J. Gardner, Vice President of the Company and a major witness in this proceeding:

"Q Now, Mr., Gardner, could you look at the bottom paragraph,. page 29 of your erebuttal

[sic] testimony?

A Yes.

Q- In that paragraph you refer to Exhibit 10, which are the exhibits of a meeting of the Ft:. Pierce Utilities Commission, which you state reflects, the advice given to Ft. Pierce by George Spiegel,, attorney for the Ft.

Pierce Utilities Authority, in which he recommendecL that. Ft. Pierce'ffer to partici-pate in FP&T.'s South Dade nuclear plant but that the completion of negotiations relating to that plant. be delayed until the plant commenced operation so the participation and financing could be deferred as long as possible Have I read., that correctly?

A. Yes Q. 'Is Exhibit 10 the. sole document you rely on for the statement I just read? 1 A. Yes."

If Mr. Guttman thought that Mr. Gardner's testi-Exhibit 10 inaccurately portrayed your advice to mony and your client, he had full opportunity to raise the issue at that point in the hearing. On the contrary, he then shifted to a line of questioning involving a centralized economic dispatch study being conducted by the Florida Coordinating Group, and no further reference was made, as far as I am aware, to your advice to Ft. Pierce.

e y trul y r Ha y . P Jr.

HAP/geg cc: Administrative- Law Judge Curtis. L., wagner, Jr.

A11. parties

LAW OFFICES Srrxozx. 8n McD~xm 2EOO VIRGINIAAVENIJE, N. W.

WASHINGTON, D. C. 20032 TELEPHONE I202I 333~00 GEORGE SPIBGEI PETER K. MATT ROBERT C. MCDIARMID DANIELJ. QUTTMAN SANDRA J. STREBEL ROBERT A. JABLON May 8, 1978 DAVID R. STRAUS BONNIE S. BLAIR JAMES N. HORWOOD ROBERT HARLEY BEAR ALAN J. ROTH THOMAS C. TRAUGER FRANCES E. FRANCIS DANIELI. DAVIDSON JAMES CARI POLLOCK THOMAS N. MCHUGH. JR.

Harry A. Poth, Jr., Esq.

Reid & Priest 40 Wall Street:

New York, New York 10005 Re:, Florida Power & Light Company FERC Docket Nos. ER78 (Phase T) and ER78-81

Dear Mr. Path:

lt may be "puzzling" to Reid and Priest, as stated in your letter of- May 4, 1978, that an attorney believing himself falsely accused by Reid & Priest on the basis of an out-of-context quotation would defend his reputation, as I did in my extended reply of April 21, 1978. This perhaps indicates that our standards differ as to the importance of an attorney's reputation and the courtesies and responsibilities. owed by one member of the bar to another.

I This appears to be confirmed by the fact that your letter does not consider the, many specific points in my letter, which place the single quotation into the context:

of the lengthy public discussion. Zn context, the quotation demonstrates that it would be counter-productive for Flori:da Power & Light Company to oppose over a long period of time what I believe is the inevitable establishment of the right of Fort Pierce to participate in, FP&L's nuclear generation.

Et will be counter-productive to FP&L because Fort Pierce would not begin ta share financial risks until FP&L admits Fort Pierce into participation.

4

Hazry A. Poth, Jr.> Esq. May 8, 1978 Your letter appears further to confirm the accuracy of my prediction, that FP&L, by refusing voluntarily to grant nuclear participation, would, ironically, force upon Fort Pierce a situation under which Fort Pierce will not be recpxized to put up its money until FP&L. is compelled to grant participation, by which time construction will be far advanced and many risks already resolved.

Answering specifically the only point made in your letter, once it was established that FP&L's witness was re-lying solely upon the minutes of the public meeting, we were satisfied that no further. response was necessary. We could not, and still do not, believe that any responsible attorney would. place, upon the out-of-context quotation, the interpre-tation chosen by Reid &. Priest once the lengthy context is reviewed.

Very truly yours, George Spiegel GS/nzb cc: Administrative Law Judge Curtis L. Wagner, Jr.

All parties

APPENDIX D (1) Z'etters dated March 30, 1976 from Tracy Danese to various Florida municipal systems Re: South Dade nuclear project.

(2) Letter dated April 14, 1976 from George Spiegel to Tracy Danese Re: South Dade nuclear project.

(3) Letter dated April 29, 1976 from Tracy Danese to George Spiegel (4) Letter dated July 21, 1976 from Robert A. Jablon to Tracy Danese Re: South Dade nuclear units.

(5) Letter dated July 28, 1976 from R. J. Gardner to Robert A. Jablon.

(6) Letter dated August 3, 1976 from J. T. Blount to Robert A. Jablon Re: South Dade nuclear units.

(7) Joint Participation Agreement, Generating Plant Study.

(8) September 10, 1976 Draft Florida Joint Nuclear Facilities Steering Committee Meeting Minutes.

(9) Letter dated October 21, 1976 from Robert A. Jablon to Tracy Danese Re: Joint Venture Project.

( 10) Letter dated November 12, 1976 from Robert A. Jablon to Robert J. Gardner Re: FPGL's Proposed Joint Venture

-Project.

(ll) Letter dated December 16, 1976 from Robert A. Jablon to Robert J. Gardner Re: FP&L's Proposed Joint-Venture Project.

(12) February 21, 1977 Statement. released by Mr. Marshall McDonald, president and chief executive Officer of FP&L, relative to the decision announced in Tallahassee by the Florida Public Service Commission.

~ 0~

P. 0 SQX OI31CO, JNIAhll, fLQRIOA 33)OI I

, ~ I O

p 'I g%

R.QRlOA PQWER 5 UGHT CQi'APAiMY

. March 30, 1976 Hr. Joe B. Dykes, Jr.

~

Di ector Flectric Department City of Ta3.lahassee City Eall Tallahassee, Florida 32304.

Dea H . Dykes:

This responds to you~, inauiry regarding our Company's South Dade nuclear project. While we appreciate your expression of interest, has decided .to proceed. independen ly with development of the 'PL South Dade project'. and to utilize the project's electric generating, capability to meet our own system's energy needs.

Florida Power & Light Company recognizes the widespread interest within Florida in the joint. development of'uclear, power facilities.

En that regard, FPL would consider being part of a joint venture to construct a nuclear facility somewhere. in the Centra3. Florida area so as to be conveniently. located. for potential participants.,

Such a project would be a true joint venture from its initial inception through completion and would. recuire full commitments of all participants commencing with the planning stages. We would be prepared to utilize the experience and expertise of FPL in the nuclear, environmental and engineering areas in coordination with those of participating systems . FPL would, at th' stage, consider various alternatives as to utilizing the output of such a facility depending on the overall participation. For example, it might be desirab3.e from the viewpoints of all concerned for participants other than FPL to own the entire output and FPL in turn to purchase unit power in decreasing cpzantities as the needs of the ownership participants inc ease This would be only one of many possible approaches.

Accordingly, FPL is prepared to meet with representatives of those systems which are interested in committing to the joint development of a nuc3.ear project. for full discussion of this subject. We feel Continued...

Mr.. Joe: B. Dykes, Zr.

March 30, 'L976 ge Two.

that'or. such discussions to be- real'stic, all participating systems-would have to,. exe cise proportionate- degrees of initiative and responsibi3.ity in an, atmosphere of mutual cooperat'on. In that context, we do not feel, that the term "discussion".as used herein should, be construed's an offer to negotiate. nor do we be3.ieve our-selves- under any obligation to undertake the who3.e,, or any sub-stantial portion, of'he responsibility to carry out such a project as envisioned here. What we do propose is the opening of talks on the development of. a true joint. nuc3.ear power. project.

Ve y truly urs.,

Vice President Public: A+fairs

+~6!$

4$ %l'a~~>

(@

March 30, 1976 Hr Rodney Newton Director- of Utilities St. Cloud Public Utilities St. Cloud, Florida 32769

Dear Nr. Newton:

This responds to you incui y regarding our Company's South Dade nuclear project. While we appreciate your expression of interest, FPL has decided to proceed independently with. development of the South Dade project and'o utilize the project's electric generating capability to- meet our; own system's energy needs.,

Florida- Power 6 Light Company recognizes, the widespread interest within Florida. in- the joint development of nuclear power facilities.

Xn that regard, FPL would consider. being part of a joint venture to construct a nuclear facility somewhere in the Central. Florida area so as to be conveniently located 'for potential participants.

Such a project would be a true joint venture from its initial inception through compLetion and would require full commitments of alX participants commencing with the planning stages. We would be, prepared to utilize the experience and expertise of FPL in the nuclear, environmental and engineering areas in coordination with those of participating systems. FPL would, at this stage, consider various alternatives as to utilizing the output of such a facility depending on the overall participation. For example, it might be desirable from the viewpoints of all concerned for participants other than FPL to own the entire output and FPL in turn to purchase unit power in decreasing quantities as the needs of the ownership participants increase. This woul'd be only one of many possible approaches.

Accordingly, FPL is prepared to meet with representatives oE those systems which are interested in committing to the joint development of a nuclear project for full discussion of this subject. We feel Continued...

Hr. Rodney Newton March 30, 1976

'age Two that for such discussions to be realistic, all participating systems would have to exercise proportionate degrees of initiative and responsibility in an atmosphere of mutual cooperation.. 1n that context, we do not. feel that the term "discussion" as used herein should be construed as.- an offer to negotiate nor do we believe our-selves under any obligation to 'undertake the whole, or any sub-stantial portion, of the responsibility to carry out such a project as envisioned. here. What. we do propose is the opening of talks on the development of a true joint nuclear. power proj ec t.

Very truly yours,

• ~ 1

~ ~

I Tracy Da>>ese Vice President Public Affairs TD: mh

R.OAIOA POWVjR 5 LIGHT COMPANY Ma ch 30, 1976 H-. Wa3.ter Baldwin Director o Util'ties Fort Pierce Utilities Authority P.O. Box 3191 Fort Pierce, Florida 33450 Dear Kr. Baldwin

'I This responds to your inauiry regarding our Company's South Dade nuclear project. While we appreciate your expression of interest, FPL has decided to proceed independently with development of the South Dade project and to utilize the px'oject's electric generating capabi3.ity to meet ouz own system's. energy needs.

Florida Power & Light Company recognizes the widespread interest within Florida in the joint development of nuclear power facilities.

Xn that regard, FPL would consider being part of a joint venture to construct a nuclear facility somewheze in the Central Florida, area so as to be conveniently located for potential pax'ticipants.

Such a project would be a true joint venture from its initial inception th"ough completion and would zecpxire full commitments of a3.1 participants commencing with the planning stages. We would be prepaxed to utilize the experience and expertise of FPL in the nuclear, env'ronmental and engineering areas in coordination with those of part'cipating systems. FPL would, at this stage, consider various altexnatives as to utilizing the output of such a facility depending on the overall participation. For example, it might be desirable from the viewpoints of all concerned for participants other than FPL to own the entire output and FPL in turn to purchase unit power in decxeasing cpxantities as the needs of the'wnership participants incx'ease. This would be only one of many possible appx'oaches...:

/

Accozdingly, FPL is prepared to meet with repxesentatives of those systems which a e interested in committing to the joint development of a nuclear pr'oject for fu3.1 discussion of this 'subject. We fee3.

~

Continued...

HFt. Pl "t<y sill<.Q 'R:fib

Hr. Walter Baldwin March 30, 1976 Page Two that for such discussions to be realist'c, all pa ticipat'ng systems would have to exercise proport'onate degrees of in'tiative and.

responsibility in an atmosphere of mutual cooperation. In that context, we do not feel that the term "discussion" as used herein should be construed as an offer to negotiate nor do we believe our-selves under any obligation to undertake the whole, or any sub-stantial portion, of the responsibility to carry out such a project as envisioned here. What we do propose is the opening of talks on the development of a true joint nuclear power project.

Very..truly yours~

r&7 Tracy Danese Vice. Presid'ent Pub3:ic Affairs

P.O. SOX OIDICO, MIA/Al. ROIIIOA X?IIII C

R.cnlQA POVN=R 5 UQHT OOVIPAi4Y March 30, 1976 Mr. H. C. Luff Assistant Gene al Manager Orlando Utilitiea Commission P.O. Box 3193 Orlando, Florida 32802

Dear Mr. Luff:

This responds to your inquiry regarding ou Company's South Dade nuclear project. While we appreciate your expression of interest, FPL has decided to proceed independently with development of the South Dade proj'ect and to utilize the project's elec-r'c gene ating capability to meet our own system's energy needs.

Florida Power & L'ght Company recognizes the widespread inte est within Florida in the joint development of nuclear power- facilities Zn that regard, FPL would consider being part of a joint. venture to construct a nuclear facility somewhere in the Centra Florida area so as to be conveniently located for potential participants.

Such a project would be a true joint venture f om its initial inception through completion and would recpxire full commitments of all partic'pants commencing with the planning stages. Ne would be prepared to utilize the experience and expertise of FPL in the nuclear, environmental and engineering areas in coordination with those of participating systems. FPL would, at this stage, consider various alternatives as to utilizing the output of such a facility depending on the overall participation. For example, desirabI.e from the viewpoints of all concerned, it for participan s might be other than FPL to own the entire output and FPL in turn to pu-chase unit power in decreasing auantities as the needs of the owne ship par icipants increase. This would be only one of many possible approaches'ccordingly, FPL is prepared to meet with representatives of those systems which are interested in committing to the joint development of a nuclear project for full ciscussion of this subject. We feel Continued...

r. H. C. Luff inarch 30, l976 Page- Two that for such discussions to be realistic, a13. participating systems would have to exercise propo tionate degrees of initiative and respons'b'l'ty in an atmosphere of mutual cooperation. Xn that context, we do not feel that the term "discussion" as used, herein should be construed as an offer to negotiate nor do we believe our-selves under any obligation to undertake the whole, or any sub-stantial portion, of the responsibility to carry out such a project

~

as envisioned here. What we do propose is the opening of talks on the development of a true joint nuclear power project Ve .truly yo~

Cji'.

Tracy anese V'ce President Publ'c Af airs TD: mh

~ ~

LAW OFFICK5 S P I EGz L 8r McD IARMID 25OO VIRGINIA AVKNIJS. N. VV.

WASHINGTON. O. Cc 'ROOQ7 TtlAtH4NC I 141l 111~144 OKORQK 5PISCiKL OANISI I.'OAVI45ON ROSSRT O. M44IARMIO PRANC55 5. PRANCI5 5ANORA J, 5TRSSSI ROSSRT A JASLON April L4, 1976 THOMAS N. MCHUGH. JR PSTSR K.

• CMTTMCM MATT'CMICI JAMS5 N. HORWOOO ALAN J. ROTH 4AMCC CCAI CCMMCCÃ 4P 44Urc4CL Tracy Danese Vice President. Public Affa'rs P. Q. Box Ol3l00 Miami, PLorida 3310l Re: PLorida'Power 6 Light Company,

Dear T acy:

South Dade nuclear oro'ect This is with reference to your Lettem of March 30, 1976 to a number of municipal ut'Lities in Plorida in which you decline, on behalf of Plorida Power a Eight Company, to.

afford the opportunity of these utilities to participate in the Company's, proposed'outh Dade nuclear project. You also indicate that the Company "would conside " being a part of a joint venture to construct a nuclear fac'lity somewhere in Central Plorida and that it is prepared to meet for "full discussion" in an "atmospnere of mutual cooperation." 'You point out that this is not "an offer to negot'te" nor does the Company consider that it has "any obligation" along these Lines.

These Lette s have been referred to me for replv by some cf the recipients. We are pleased with this proposal and are hopeful that discussions along these Lines may develop and ultimately prove helpful. l w'l certainly recommend to our cLients that these discussions be init'ated at a convenient and appropr ate time.

You, of course, recognize that this does not affect the immed'ate economic and legal auestions which have motivated many of the municipal uti,lities to intervene at the Nuclear Regulatory Commission with reference to PPSZ 's application for a construction permit for its South Dade Nuclear project, to obtain

Tracy Danese April L4, 1976 essen~ a'eau pcwe., The current circumstances have manv facets, part of which is the Company's pxogram invol'ving the ac-cuisition. of a number. of municipal utilities whose cur ent economic situat'on stems in. Large part from past and current Company policies. This matter wilL be developed in some detail in the joint petition to intervene in the NEC proceedings.

In this regard, you wi3.1 reca3.1, duxing the period in which you represented, as attorney, the Florida i>unicipal Utilities Association, that Florida municipal utilities had two principa3. objectives:. (a) legislation to authorize municipal utilities to establish an authority for joint municipal ownership of Large plants such as your letter suggests; and (b) the develop>>

ment of a ful3.y integrated Florida Power Pool (which wou3.d provide immediate benefts and. is an essential predicate to the type of joint venture suggested in your letter). I bel'eve that both of these objectives would have been attained by now but for the opposition. or FPK, and i,t. is believed that FPK is cont'nuing its opposition.

'The evistence of such a poo3. would greatly ame3iorate the economic saueeze on municipal utilities such as, for example, Pierce and hiero Beach. Those systems 'nave good gene ating plants but are under an interim pressure because, operating thei-generation at system-load capacity factors, they must pass into thei- retail rates a Large proportion of high cost oil. Unde a proper, fu3.ly integrated, F3.orida Power Poo3., there would be single-system ope ation of a13. F3.orida e3.ectric uti3.ities and in every given hour, on3.y the lowest cost units would be onerating statewide in order to serve the statewide 3.oad at the Lowest totaL cost.. The smaller un's, having higher heat rates and ope at ng costs, and the units bea ing the larger pe centages of highe priced oiL, would operate only when necessary; they would become the cycling, pea3cing and reserve units for the integrated system.

The energv needs or such systems would be supplied generaLLy on the basis of economy energy priced on a split-the-savings basis, or some other secondary energy basis, such as, for example, the F3.orida Power Corporation sales to the City of Sebring. This would immediately reduce the leveL of the fuel adjustments in the rates of cities Li!<e Ft Pierce and. Vero Beach and thus educe the

Tracy Danese April LA, 1976 differen'tials between their retail rates and those of'P&L.

Such'ransactions would also benefit PP&E and other large util'ities because of the. additiona3. prozit they would earn on sales of economy energy. PP&E would juzther benej' during peri.ods of nucl'ear shutdown, when, with its Low-cost. nuclear energy un-availabLe, it would be able to draw upon the Lowest cost sources available in genera.tors of other systems.

Such a pool would also inc3.ude arrangements for state-wide transmission o bulk powe~ on a joint rate basis that wou3.d enabLe systems such as Pt.. Piezce and Vero Beach to sell the'r interim excess capacity to other systems which .may be temporari.'v short of capacity. With a proper- pool,, these arrangements are made on a jointly planned and coordinated basis so that the timing of the installat'on of new capacity by each member syst: em is arranged so as to minimize the total generation investment necessary to serve the total Florida Load'. With the revenues that Ft. Pierce and Vero Beach would receive from such tzansactions, it appears that they wou3.d then. be in a position to reduce their retail rates to. a level current3.y competitive with PP&E and survive as independent entities.

E)reover, such coordinated pool. operations would be benefi.cial to PP&E, since it would. help it minimize its investment in'eneration, it would provide it with additional revenues from its transmission investment, and, in the event PP&E is unable 'to solve the current spent-fuel, tank-3.eak, problem oj Turkey Point, enabLe it to keep its retail rates competitive despite any Long-term shut-down oz the Turkey Point generators.

A third area to be considered is r P&E 's historic pol'cy concerning its refusal, or strict reluctance, to sell firm wholesale power to munic'paL util'ties. Z enclose, for example, a copy oz a Letter of November 28, 3.967 which PP&L sent to the City Comm'ssion of Vero Beach, in wh'ch the Company stated that "we are reluctant" to go further into the matter of selling wholesaLe power to the City because of the need to study three other alternatives, two oz which involved the takeover. by PP&E of the City's business by "outright purchase" or "30-year lease" of the system.

Tracy Danese April 14, 1976 This palicy has contributed to the proliferation of relatively small, generators on munic'pal systems in the area served by FPEZ as compaxed wi& the many mun'cipa3. utilit'es in the area served. bv Florida Powe Carporation which pu chase power at wholesa3.e. Municipals. connected to Florida Pawe Corporation's transmission system have cached basic agreements with that Corporation cavexing system-wide. transmission, back-up and related arrangements which now enable them to plan the coordinated develop-.

ment of ef ic'ent gene ating units. Thus, for example, within 6 manths w 3.975, participation w= 3.00,000 kw in the Crystal River nuclear p3.ant was marketed to a. number of municipa3.s and one co-op, complex pa ticipatian- agreements were negotiated, ar ange-ments were made for transmission and. back-up and the necessary financing steps were taken..

F?&L, however, appears to be continuing its historic po3.icy against transmission, generaLLy of bulk pave, although there have been a few recent statements as to its willingness to provide 'transmission in a few tightly limited circumstances.

Zn summary', there are important areas of immediate concern and-impact which you shouLd take up with management so that tne municipal ut lities receiving your Letter vill be abLe to operate ta their fu13. efficiency and remain in business 3.ang enough to accompLish the lang-term objective of your March 30, 1976 Letter.

3:n addition,. as a predicate to that objective, the municipals need assurance naw that- FPSZ. wi13. provide bulk power transmission throughout its system, that ' will take a3.L steps in its power to bring a fuLLy-integrated F3.orida Po~er Poa3. into be'ng, and that it will support'he 3.egisLa,tion which i,t has. prev'ous3.y successfu'Ly opposed, which the municipals. ar stiLL seek ng, to authorize forma-tion af an authority for the joint municipal ownersh'p of large generating units.

I laok back vith aLeasure to ocr f iendly association as ca-counse1 to the Florida Municipal Uti3.ities Association and trust that you vill recognize that the rapport ve established

Tracy Danese 5 Apzi3.. 14, 1976 then should'e helpful, now that. this firm, wil3. be representing.

a, number of separate, mun'cipals with reference: to PP&L's Sout:h Dade units. thus s'mplifying foz PPSZ the matter of dealing with a number of separate mun'cipals. Quz past relationship should enable us to resolve. the foregoing matters in an amicab3.e manner in the interest, of all pities concerned.

Please- do not. hesitate to ca13. me- with ze ezence to any of the foregoing matte s.

Sine ely yours, GS/nzh George Spiegel Mr. NiLLiam T. Mayo,. Chairman, Florida Public Service Comm'ssion CLients Mr. Mac Cunningham, Executive Vice President, PNUA Charles R., P. Bzown, Esq., City Attorney, Vt. P~erce Qsee Pagan,, Zscr., City Attorney, Gainesville Mr. John R. Kel'Ly,. Director of Utilities, New Smyrna Beach Thomas Gurney, Esc., Attorney., Orlando Utili;ties Commission Mz. Zames E.. Phi13.ips, Genera3. Manager; Sebring Mr., Glen DuBois, City Potager, ALachua Mr Don S.. Baldwin. Superintendent of Utilities, Ba, tow Joseph Minotti, Zsq., C'ty Attorney, Bushnell Mz. Clyde Eopkins, C'y Super'ntendent, Chattahoochee Zohn C. Chew, City Attorney, Daytona Beach Mr. Fvezett. B. Eowe, City Manager, ct. Meade Eonorable Zrston Royal, Mayor, Lake Eelen Mr. Clifford C., Blaisde13., Zr., Utilities Di ectoz, iake North Mr. Calvin Z.. Glidewell, City 8~ger, I.eesbuzg Mr.. Cecil Barks, Director of Utilities, Mount Dora Mr.. Z. N.. Caldwell, D'zector of Uti3.it'es, Hewberzy Fe. Z. C. Shreve, J ., Director o Utilit'es, Qcala 8 ., Nilliam;. Zohnson, City Manager, Quincy Mr.. C. R.. Bevezly, President, N'liston Mr. C. E Corn, Superintendent, Tallahassee

Tracy Danese April. l4, l976 cc Other add essees oz'P&L April l, l976 letter re South Dade site:

Mr .. R W'ochxan, Supt. Planning &, Engineering, Lakeland, Fw. Zohn. T. Doughtxy, Manager, Utility Boaxd of City oz Key Nest Nr.. william R. Snow, City i>~ager, City of Green Cove Springs Mr.. C.. P Blai-, City Manager, Clewiston Mr. Rodney Hewton, Director of Utilities, St. Cloud Mr. Eenxv C'eters, Sr., Dixectoz'f Utilities, homestead Mr Q. H'.. Sykes, President, Glades E3.ectxic Cooperative,. Tnc.

Nr; Peter J". Gibson,, Manager,,Qkezenoke ~~

Mr., Zedra H.. hamilton, President, Clay Z3.ectric Cooperat'e, Znc.

Mx Arnold E. Smith,'eneral Manager, Suwannee Valley Electric Cooperative, Xnc

. Mr; Karl M.. Allison, Zr., w+ ecutive i<mager, Lee County Electric Cooperative Mr. Richard; Maenpaa, P~ager, Peace R'ver Electric Cooperative, Znc Mx. Pmion E Sweet, Chaixzan,. Jacksonville Electric Authority Fred Kxay, General Manager, Florida Keys Flee xic Cooperative Association

P. O. SOX 010100, NIAAII,.FIORIOA 3510I FLORIOA POWER 5 UGHT COMPANY April 29, 1976" George Spiegel, Esp..

Spiegel & McDiarmid 2600 Virginia. Avenue, N.. W..

Washington, D.. C;.

20037'ear George:

I. am in receipt of your letter of April 14 wherein you have expressed interest, on behalf of various municipal clients, in our. suggestion- that. we jointly engage in talks looking forward to a true joint; venture in a nucleaz facility in.

the central part: of the state..

i In addition to those municipalities on behalf of. which you responded, the Jacksonville ELectric Authority and Florida Power Corporation have- also expressed interest in this con-cept; Subseauently, I have talked'ith Mr. Ron. Kuether of the Jacksonville Electric Authority and have set a meeting date for" May 13, L976,, in-, JacksonviLle.,

In view of the large number of clients which.you represent, I would think that it might be helpful if some of your clients could send system representatives so that individual needs and time frames can be initially discussed. The meeting will be held at 1:30 PM at the Jacksonville Electric Authority building, 233 W.. Duval St., Jacksonville, Florida.. An agenda will be forwarded. to you promptly.

Very,.truly yours,

/ .

Tracy Da ese.

Vxce P zesident Public Affairs TD:mh cc: Mr. Ron Kuether Mr. George C. Moore Clients of Spiegel S McDiarmid HKLPIiVG BUILO PLO RIOR

~W. OPRICZS SPIEGEL 8o McDl&RMID 2SOO VIRCINIA AV ENVOI. N. W.

WASHINGTON, O. C. 2OOST CSORCS SPISOSL AOSSRT C. MCOIARMIO TZLZPIICHC' 24SI 4QSM544'AHISI I. O*VIOSOH PRAHCKS IL PRAHCI5 5AHORA 5TRSSSL ROSSRT A JASLOH TIIOMAS N. MCIIIICILJR.

~

PCTSR IL MATT JAMSS N. HOIIWOCO OAHISL, J ALAN ROTA CP COIIII5N

5. SLllR CVTTMAN"'OletflS JAMSS CARt, POLLOCK

21. July 1976 Tracy Danese,, Fsauira Vice President fox Public A fairs Florida Power & Light Company P.O. Box OI,3100 KLami, Florida 33101; Re:: South Dade Nucleax Un'ts Dear Tracy.

This letter concerns reports that Florida, Power 6 Light Company plans to cancel or defer its construction and nuclear s earn supply'ystem contracts for the South Dade nuclear= generating units..

3 number of my clients have requested par 'cipat'on in these proposed. nuclear units. By letter of 30 March 1976, you stated:

FPT has decided to proceed independently w.'th-davelopment of the South Dade pxoject and. to utilize the project's electric generating capability to meet our own systemts energy needs.

You. did indicate m~ . that 1'et ar, however, that:

. FPT would consider being part of a join venture to const~ a nuclear facility somewhere in the Central. Florida a~a On 14 April 1976, George Spiegel, Zsq., responded with a letter stating that he was pleased with the proposal for a new joint venture and setting forth elements necessary for its consideration. Hithout responding substantivaly, you

Pm. Dane se 2L Ju3.y 1976 scheduled a meeting on the 13th 'of Nay, 1976, in Jacksonville, ta consider such joint venture. At th's meeting, you reiterated that P3.axi.da Power & Light Company did not wish to sha e South Dade capacity, since such capacity was necessary to meet the rangements of the Company's awn customex's. At that time you discussed load growth estimates. PP&L anticipated that by the.

end'f the century it would need to add to i s system a new nuc3.eax unit annually. At the 22 June '1976 meeting oz the Steex'ing Committee for the proposed Central Plorida joint ven-.

ture, needs for. new nucleax capacity were- again discussed, eluding PP&L's needs for a number. af new plants. At this time,.

Bab" Gaxdner again. stated that:. Florida Power & Light Campany was unwil3.ing to, share South, Dade nuc3.ea capacity.

Purther, in PP&L's "Response to Joint Petition of P3.arida Cities," filed with the Nuclear Regulatory Commission in. Docket Ho. P-636-A (South. Dade Plants), .P&Z states that (p- 6)-

"Applicant's prim~ concern is that the merits of the case be reached and xesolved in a. timely manner so that construction of tMs vitally needed genex'ating caaacity is not threatened with de3.ay."

Zt was, the efore, with some surprise that Z learned 1ate on Monday afternoon, thxough press reports, that Plorida Power & Light Company was cansidex3ng postponement of the South Dade units. Z was fuMer sumrised to learn that at a meeting at Tampa Electric Company yesterday>>-to. which neithex' nor apparently many ox my clients were invited Bob Gaxdner stated that because of presently prajected lack of future load suf-ficient to support the units, PP&L intended to defer plans to constmct the South Dade units and ta possibly ternate the westinghouse contract in ten days and, further, that, others w'shed to assume the Hestinqhouse cent act for construc-if tian at another plant site, the decision would have to be made wi~ said ten day period. Bob Gax'dner a3.so said that Plorida Pawer & Light Company's participation in such construction cou3;d not be counted on. however, he appaxently indicated that PP&L would be willing ta sell its ownersh.'p interest to others, pro-vided that a decision was made w'thin ten days.

The following thoughts came to mind. =irst, consider-ing new capacity needs and escalating capital costs, be unfortunate if it would the planning that has gone into South Dade, and the casts assaciated with that planning, were lost. As-suminq PP&L's proposed cancellations or deferrals do result

. f om an ant'cipated decxease in load growth, steps should be

Hx . Danese 21 July 1976 taken to assure tnat the invesMent made in the project may be utilized by others whose 3.oad growth when combined with that of PPa3'ould suxely be sufficient to support. the project..

Xn this regard, were. PPaZ or athers ta .build substitute nuc-Lear capacity without. taking advantage of your investment, the substitute plants might well caine 'on Line two ar more years Later than the South Dade units, at much highe associ>>

ated casts.

1't is virtuaLly. impossibLe for other systems to maRe a f.xm decisian whether to utilize the South Dade contracts.

and to maRe the associated commitments within ten days because of the myriad of engineering, financing and Legal decis'ons involved. Xndeed, the only hope for a cruick decision would involve FPGL's agxeemea to sell a substantial portion ox the units for canst~ction at the planned Sauth Dade site and the Company's immediate agxe ment in principLe to the necessary back-up arxangements, inc3.uding those discussed in .George Spiegel's 14 April 3.etter.. Before committing themselves to the types of invesMent invo3.ved, systems wou3.d have ta be assured of the availability ax transmission an reasanable terms for both South'Dade power and necessary back-up and other powe sau ces. Pmy- systems would need joint financing Legislation~ an integrated power poa3. and other appropriate bacR up.

Florida Power & Light- Company's reduced Load growth would apaear ta afford the realistic possibility fo- a join participat'on agreement that would bene it Lax'ge segments of Florida's population ta the detriment af none. Participants cauld seLL capacity fxom the'r ownership share to each other in a manner that best fits total electricaL and economic neecs of the participants from yeax to year. Certainly, if de3.ay af the units is nec ssa~, when built, they must be join ly owned units.

3: therefore suggest the falLowing:

(1) Plox'ida Powe a Light Campany should provide i"s existing contracts to aLL systems (on a canfidentia3: basis, if necessary), including details of costs ar pena3.ties assaci-ated with going forward, ta a3.1aw such sys ems, on an intex'im basis, to detexmine the feasibility of their cantin~dng the pro ject.

(2) Florida Power a Light Company and others cauld seek agreement from Nestinghouse to allow time for all system

Kr. Dane se 4 21. July 1976 to decide whether to participate.

(,3) Plarida. Power & Ligh< Company should immediately inform all systems of- its investments, including siting plans, and provide access to complete cas< and engineering studies re3.ating to South Dade, so that construction may go forwa d as planned. at pxesently selected sites.

(4) Florida Power & Light Company and other systems should commence development af a workable participation agree-ment for the planned South Dade nuc3.ear units.

Florida. Power & Light Company should proceed with the South Dade plant with a substantially 3esser awnexship interest.

This would accomplish seve al. worthy objectives.

(a) This would. recognize PP&L's current 1'awered es imate of recpxired capacity.

(b) This would eliminate most of the curxent objections to construction in the Huclear Regula.atary Commission proceeding.

(c) This would give PP&L a meaningful interest in units that would se~ future recuirements within the state.

(d) This would. permit ea 3y cans~ctian of the units without undue de3.ay at a reduced capital cost cam-pared with a later unit, as we3,1 as substantially reducing FP&L's current capital requi ements for sole awnexship.

To the extent these steas are not taken, increased costs will be created fax my clients and, their citizens and ratepayers and, Z believe, for Plarida Powex & Light Company as well. Such unnecessary costs may hopefully be avoided through mutual. cooperation. . Moreover, such agreement can help limit, or elimina, e, further controversy concerning rights to joint South Dade participation and back-up arrange-ments or as .to. >>lorida Power & Light Company's possible lega3.

rights to withdraw its plan fox'hese units at this time.

Mr; Danese. 21 Ju3.y 1976 Sincerely you~

Robert A. J'ahlon Attoxney'ar the Plorida- Munic~al Utilities Association, the Port Pierce UMlities Authority. of the City of Fort Pierce, the Gainesville-Alachua County Regional Electric Water and Sewer Utilities, the Lake War&

Utilities Authority, the Utilities Cammissian of the City. of'ew- Smyrna Beach, the Orlando Utilities Commission and the Sehring and the Cities of A3.achua, Bartaw, UMlitie'ommission, Bushnell, Chattahaochee, Daytona Beach,

.Port Meade, Homestead, Key Wes , Lake Helen, Leeshurg, Mount Dora, Nevhe~, Ocala, Quincy, St Cloud, Williston and Ta3.3.ahassee, Plorida cc. J. A Bauknight, Jr., Esture [By handl John E Mathews, Jr., Esture Mr. Mac.H. Cunningham Charles R., P. Brawn, Esca.re Osee R. Pagan, Esquire Mr. Clif ard C. Blaisde13., Jr..

Mr. John R. Kel3.y.

Thomas Gurney, Sr., Esqui e Mr.. James H Phillips Mr. Glenn DuBois Mx . A W. Kelly Joseph Minotti, Zsauire Mr. Clyde. Hopkins John C. Chew, Esquire Mr. Everett B. Howe Honarah3.e Erston Raya3.

Mr. Ca3.vin E. Glidewell Mr. Ceci3. Barks-Mr. J. W. Caldwell Michae3. Watkins,, Zscpzire Mr. E. C. Shreve, Jr.

Mr. William P. Johnson Mr. C R. Beverly Mr. C. H. Corn Mr. John T. Daughtxy Mr. Radney Newton Mr. Robert Z. Bathen Blind cc: Dan McZntosh Joe Jacobs

e.o. aox o>a>co, w~t, acro~ auoi

'mari;~<sx.

Fi ORiOA POWER 5 IJGHT CQ<VPAT;Y July 28, 1976 Mr;, Robert A. Jablon Spiegel 5, Mc0ianrid 2600 Virginia. Avenue, H. W..

Washington, 0. C. 20037 Oear Mr. Jablon:

I This is in response to your letter of July 8, T976, addressed to Nr. Tracy Oanese who is out. of the office for an extended period..

With regard to Florida Power 5 Light Company's participation in the joint venture which was proposed by Mr. Oanese's letter of April 29, 1976, and upon which we

.elaborated in the two Jacksonville meetings, you have incorrectly charact rized-FPL's position. We think there is little to be gained by writing letters back and forth paraphrasing what was said at this meeting or that in an attempt to create a record to the advantage of one entity or the other.

We believe we described our position quit openly and clearly at those and subsequent meetings. A subcommittee of the Steering Corrmittee is at work drafting an overall project participation agreement. That agreement will constitute the final intent of all the signatory parties. Speculations concerning the motives, intent, policies, and the like of'ny of the parties are premature, until such agreement has been finalized.'n the meantime, the Steering Committee is proceeding on an ad hoc basis with their plan to investigate the feasibility of and to define the ultimate project.

The other matters referred to in your letter are at issue in other forums. Our respective positions have and will be revealed and advocat d in due course and this response shouId not be regarded as an indication of agreement on our part with any of your coaments or observations on such issues. We do not believe these issues, have any necessary connection with the. ultimate feasibility of the proposed joint venture.

Very truly.yours, R. J. Gardner Vice President RJG:std H BLPIN g 9 VI(.A PLQP io;

P. O. SOX 010100, AIIAMI, FlQRIDA MIOI I

I; PLQRIOA POWER 4 LIGHT COMPANY August 3, 1976 Mr. Robe Spiegel &

tMcDiaxmid A. Jahlon 2600 Virginia Avenue, N. W.

Washington, D. C.. 20037 Re:. South Dade Nuclear Units

Dear Mr. Jahlon:

In Mr. Danese's ahsence, I am xesponding to your letter to him of July 21,. 1976.

Your letter reflects a serious misunderstanding of the nature of FPL.'s announcement xegarding development of the South Dade project. FPL has not cancelled, but intends to proceed with that project. While exploring'ertain modifications of our contract with Westinghouse, Mr.. Gardner did discuss with others the possibility of their interest in. the unit in the event obtaining such. contract modifications were unsuccessful.

Howevex, we. have now worked out desired contract modifications and the contract. will remain in force. Thus, FPL still plans to develop the South Dade project independently and to utilize the project's generating capability to meet- our system's energy needs.

of the remainder of your letter relates to matters in NRC Docket No. P-636-A, and 't would not be Much.

in contx'oversy appropriate for me to comment on these matters.

Sincex'ely,

/-/

T. Blount

=

. anager of Tegal Affairs JTB:dt HELPING 8VILO RLOPIIOA

ADDRESSEES':

Nr.. George Moore. Mr., Ray Welch F Lorida. Power Corporation Tampa Electric Ccmpany P.O. Box 14042 .P.O. Box, llL St- Petersburg,. Floxida. 33733 Tampa, Flaxida 33601.

. Mz. Stan Mr., Ralph Bowers Livengoad'ainesville-Alchua County Bartow Municipal Zlectric Dept.

Regional. Utilities Boazd P.O. Box 1069 P.O. Box 490 Baztow, Florida 33830 Gainesville, Florida 32602 Nr'.. C. F. Blair Mr. R.. C. Zuethe Clewiston Electzic S Water System Jacksonville Electric. Authority P.O. Box 698 P .O. Box 53015 Clewiston, Florida 33440 Jacksonville, Florica 32201' Mr. Fred K"ay Mx. Robert W.. Cochran Florida c(eys Elect ic Caope ative Dept. af Electric & Water Utilit'es P.O.. Box 377 C'ty of Lakeland Taverniez, FLorida 33070 E. Parker Street= '00 Lakeland, Florida 33802 Nr. Walte Baldwin Fort Pierce Utilities Authority Nr', Harry Luff P.O Box 3191, Orlando Utilities Commission Ft. Pierce,, Florida 33450, P.O. Box- 3193 Orlando, Florida 32802 Mr.., L. Addison Gulf Power Company Nr. Radney Newton P.O. Box 1151 St. Cloud Utili ies Commission Pensacola, Florida 32520 New York a 9th Street St. Cloud, Florida 32769 M-. Hen=y C. Peters, Jr.

Homestead Municipal Electric Dept.

Nr. Harry Wright P;O.- Drawer 429 Seminole Electric Cooperative Homestead, Florida 33030 24LO E. Busch BLvd Zeith Roberts

'r.

Tampa, Florida. 336L2 Dept. of Flectric Utilities Nr. Jae Dykes City o f Jacksonville B each Tallahassee Flectzic Dept. Jacksonville Beacn, Florida 32250 2602 Jackson Bluff Road Tallahassee, Flaxida. 32304

ADDRESSEES CQiViiiVuu3:=

Mr. O. Rober s, Ouincy .Municipal Electr c Light Dept..

404 W'. Ze~ferson. Street.

Quincy, Florida 32351 Mr.. J.. K. Phillips-Sehring Utilities Commission 213. S. Commerce St=eet Sehring, Plozida 33870 M '. G.. Graudon Stazke Light &, Water PLant

.Drawer C Stazke, PL'orida 3209L

~ Mr G Buz is

~ ~

Wauchula MunicipaL Ligh~. Plan .

~

P.O. Box 818 Wauchula, PLorida 33873 Mr. D. J Tanner Williston Municipal, Electric Dept..

P.O.. Box 160 Williston,, Florida 32696 7 Kr. N. Z. Parish, XZZ Choctawnatchee Elec ic Cooperative 700 W. Baldwin Avenue DePuniak Springs, Florida 32433 M . H. P. Pruett Escamhia River Electric Cooperative P.O. Box 428 Jay, Plorida 32565 Mr., M. V.. Truitt, Jz.

Gulz Coast Electric Cooperative P.O. Box 217 Wewahitcnka,. Florida 32465 Nr. E. Franklin West Florida Elec zic Cooperative Association P.O. Box 127 Graceville, Plozida 32440

INFORMATION= FOR THOSE SYS~i MHICH HAVE PREYIOUSLY O'PRESSED INTEREST IN THE JOINT PROJECT The following- schedule shows. the proportionate share 'of each utili.y system which has thus far expressed an interest in the joiN. project if no other systems participate. Tne formula is the same as that used to derive propor-tionate shares of each utility sys~ in the State of Florida if all to participate. This, schedule is being furnished only to those utility utilities'ere systars named therein.

Includinc Others Excludino Others l.

Util it A Factor Share A

Fac.or Share Sartaw, City of .0052. $ 58059. 60 .0055 $ 5,351.50 Clewiston, City of .0019 1,848.70 .0020 1,946.00 Florida Power Corporation ,2358 229,433.40 .2520 245,196.00 Ft. Pierce Utilities Authority .0099 '9,632.70 .0106 10,3'l3.80 Gainesville/Alachua County Regional Utilities Soard .0221 21,503.30 .0236 22.,962.80 Gulf Power Company .1124 109,365.20 .1202 116,954.60 Homestead, City of .0057 5',546.10 .0061 5,935.30 Jacksonville Ele~c. Authority .1192 115,981.60 .1274 123,960.20 Key Mes , City of .0116 11,286.80 ~

.0124 12,065.20 Lake Morth Utilities Authority .0083 8,075.90 .0088 8,562.40 Lakeland, City of .0306 29,773.80 .0327 31,817.10 Leesburg$ City of .0066 6,421.80 '0070 6,811. 00 Ocala, City of .0142 13,816.60 .0152 14,789.60 Orlando Utilities Commission .0540 52,542.00 .057? 56,142.10 St. Cloud, City of .0026 2,529.80 '.0027 2,627.10 Seminole Electric Cooperative . .0725 70,542.50 .0775 75,407.50 Tallahassee, City of .0308 29,968.40 . 0329 32,011.70 Tampa Elec ric Company .1832 178,253.60 ..1959 190,610.70 Vero Seach, City of .0091 8,854.30 .0097 9,438.10

J FLORIDA ELECTRIC UTILITIES QOINT PARTICIPATION AGREEMENT'ITH FLORI.DA POHER & LIGHT COMPANY Generating Plant: Site Study'p The. electric utilities, whose separately signed letters signifying their agreement to participate are attached hereto, (Participants) hereby

)ointly. agree to participate in a. study to identify and evaluate electric power generatin'g sites in northern peninsular Florid. The- scope, general criteria, and terms and conditions of such study are set forth in a document entitled "A Proposal from Florida Power & Light Company to Flori'da Electric Utilities for an Electric Power Generating Site Study. 9-15-76", which document is signed by Florida-Power & Light Company (FPL) and is attached hereto and made a part hereof as. Exhibit A. The Participants accept such proposal from FPL and agree that'PL acting on behalf of the participants will manage the study,, contract for outside services, and do all such work and coordination which is necessary to complete the study as defined in Exhibit A.

The Participants agree to share, in accordance with the terms of p

this Agreement, the costs of such study and to reimburse FPL for such costs in accordance with the terms and conditions of Exhibit A.

No party to this Agreement shall be liable for any damages, costs, or other expenses resulting from any act, omission, determination, or recommen-dation made by such. party in connection with or arising out of performance of this agreement or as a result of any consequences resulting ,rom such performance.

The total cost of the study shall not exceed the amount of $ 973,000, except by the express mutual agreement of the Participants, which amount. shall h known herein as the "Maximum Authorized Cost". ~ ~ ~ 1

~

Each Participant shall be liable to FPL for that share or proportion of the costs incurred by FPL in carrying out the study up to the Maximum Autho-rized Cost, which is set forth opposite its name in Exhibit 8 entitled "Schedule of Participant Shares" which is attached hereto and made a part hereof.

I~

Qfw This- agreement shall become effective upon the receipt: by FPL of the last signatory letter from the group of participants who have previously indicated their- intent to participate in the study.

FPL may terminate. this agreement with 30 days notice after non-receipt of any invoiced amount due under the terms and conditions of Exhibit A.

FLORIDA POWER 5 LIGHT COMPANY Sy Yance Pres>dent Date

~ \

~

\ C

Exhibit "A"' ~

A PROPOSAI FRON'LORIDA POWER'.& LIGHT CDHPNY TO'LORIDA ELECTRI C'TILITIES'OR' AN ELECTRIC POWER'EHEKTIHG SITE STUDY 9-15-76' Florida Power & Light Company (FPL) proposes, as'a part. of a work-p1an intended to lead to a joint nuclear generating plant 'ontinuing project,, to conduct'n electric power generating..site. location s.udy on behalf of a group of'lorida. utilities (Participants) in accordance with the following terms and conditions:

A: ~Sco e The general area of the. study. will'e the northern half'of peninsular Florida; that is,, the area lying generally'orth and west of Flori'da Power &, Light Company service territory. The rough boundaries of the.

study are-

- north of'a line running from.,Piney Point.to Cocoa

- east. of'he Apalachicola River.

2. Candidate site, locations will be selected by reference to existing and future electrical load distributions in the .above area,'ggregated geographically in 5,000 td 10,000 mw amounts. Approximate load centers will be located. Such load centers will be consistent with the Florida Electric. Power Coordinating Group,, Inc. Peninsular Florida Generation Expansion Study, 1976-,1990.

~ 3. Siting resources such as existing transmission, water sources, and transportation facilities will be identified in relation to the above load centers. Such resources and load, centers will be grouped into siting areas o

4. An advisory group of state and local officials and representatives of concerned citizen groups- will be formed to advise on relevant siting

'riteria and ratings.

5. Specific tracts wil'J be.'identified in each of the siting areas using the resources of FPL and other Florida utilities. The tracts will be such as to support total generation additions of 2,000 to 10;000 nr.

6.. A set of criteria-will be developed to- screen the candidate sites N

'to approximately three in each load area.,

7. A fur.her- set: of criteria will be developed to perform a detailed evaluation of each of the sites.

8.. Oata will be collected..on each of the remaining sites using published sources or information in the possession of Florida utilities, public, agencies, and other institutions.. Consultants will be retained to

, collect and evaluate certain specialized data areas.

9. A rating will be established for each site by applying the developed information to the evaluation criteria.

10.. Suitable reviews of the process +ill be made to advisory groups and Florida Utilities- Steering Committee.

11. A report shall be prepared and submitted to the Participants setting forth the. results of'he. study which shall contain recommendations of preferred sites in each of'he designated. load areas.

General Criteria

.1. Sites should be capable of supporting different land-based fuel and

'eneration types such as coal, nuclear, combined cycle.

2. Sites shouTd be away from population centers and out of the path of future development.

3.'ites should be capable of supporting generation additions for an extended period, say ten to twenty years.

4. S'ites should have the capability for some multi-purpose development or alternatively have substantial area's of undeveloped buffer zone.

S. The process of site selection should be open and accessible to responsible agencies,'nterested members of the public, and the media, 6, The process of site selection should stress early J identification and resolution of policy and problem areas.

7.. The process shall make maximum use of existing information in the hands of'lorida utilities and other groups-.

8. S'tudy shall be fully coordinated with FCG Generation Planning Study.

Schedule Identify load areas.. . . . .. Start to 4 weeks Identify siting areas........'-... ~ ~ e 4 weeks to 8 weeks-Identi fy. tracts... e ~ ~ ~ ~ ~ e" ~ 8 weeks to 20 weeks Oevelop criteria ~ ~ e et4 mn' ~ e ~ Start to 20 weeks Screening . . . . . . ... .. ~ ~' ~ ~ ~ e ~ ~ ~ 20 weeks to 24- weeks Information collection ~ ~ ~ ~ ~ ~ ~' ~ ~ 24 weeks to 36 weeks Evaluation ~ ~' ~ ~ ~ ~ ~ 36 weeks to 40 weeks Recommendations . . . . . . ~' e e ~ ~ ~ ~ ~ ~ 40 weeks to 42 weeks

~Hud et

\

FPL'ime and overhead:,

System Planning . . . 7 man-weeks Project Management . 8 man-weeks Environmental . . . .60 man-weeks Land Hanagement . . 12 man-weeks-Contract Administration . . 1 man-week Strategic Planning . 8 man-weeks 96 man-weeks 9 $ 1,500 $ 144,000 Expenses .- travel, 60 weeks 9 $ 200 . . . , ~ ~ ~ ~ ~ 12,000 Reports:- .printing . . r' ~a ~ 10,000

~ I Outside Services:

.Land . . . , . . $ 57,000 Engineering ' . 250,000 Environmental . 500 000 507 000 Total Eudget ........................ $ 575,000

. Terms and Conditi~n

1. Florida Power 5 L;ght Company will be reimbursed for the costs of the study as follows:

a. Time spent on the project by FPL exempt, salaried, professional, technical, and administrative personnel will be accounted for to the nearest hour.

b. FPL will be reimbursed for all time accounted for on the basis of $ 1,500/week for each forty hours or major. fraction ".hereof,

c. Actual travel expenses incurred by the above FPL personnel will be accounted for. Florida Power & Light Company will be. reimbursed for such actual travel expenses spent on project. business plus 105 of such expenses.

d. The actual cost of outside services spent on the project and billed to FPL. plus 5C of such services will be reimbursed to FPL.

2. FPL will render monthly invoices at the end of each calendar month for costs incurred during such ~leadar month to each participant which will become due on the 10th of the following calendar month.

Such invoice sha11 be rendered on the 10th of the month following the first full ca)endar month after the effective date of the partici-pation agreement.

FLORIQA POMMER & LIGHT CONPNY By

>ce res dent

'ate

RQG 9/14/76 Exhibit "8" FlORIDA ELECTRIC UTILITIES JOINT PARTICIPATION AGREEiMEilT WITH FLORIDA POWER Ec LIGHT COHPNY Schedule of Partiripant. Shares Util it Share

COPIES TO:

Members of: Florida Utilities Steering Cotnaittee-Nr. George Power Corporation Moore.'1orida P. 0., Box 14042 Str Petersburg, R. 33733 R. J.. Gardner (Temporary Chairman)

FIorida Power 5 Light Company P. 0. Box 013100 Miami, FL 33101 Nr. Stan Livengood Gainesville-Alachua County Reg. Util Sold P.. 0. Box 490'ainesville, FL 32602 Nr. R.. C. Kuethor Jacksonvi.lie Electric Authority P. 0. Box 53015 Jacksonvi1 I e, FL 32201 Nr. Robert H. Cochran CiLy ol'akolanIl Unapt. of Eloc. 8 Mater Util.

100 E. Parker Street, LakeIand, FL. 33802 Nr. Harry Luff Orlando UtiIities Commission P. 0. Box 3193 Orlando, FL 32802 Mr. E. C. Shreve, Jr.

City of Ocala'Iec. Utility Oept.

P. 0. Sox 1270 Ocala, FL 32670 Nr. Rodney Newton Cloud Utilities Catmnission

't.

New York 8 9th Street St. Cloud, FL 32769 Nr. Harry Wright SeminoIe EIectric Co-Operative 2410 E. Susch Soulevard Tampa, FL 33612 Mr. Joe Oykes Tallahassee Electric Oepartment 2602 Jackson Bluff Road Tall'ahassee, FL 32304 Mr. Ray klelch Tampa EIectric Company P. 0. Sox 111, Tampa, FL 33601 (Continued ne..t sheet)

~I

COPIES TO: (continued)

Mr. Nichehl R. Gent Florida Electric Power Coordinating Group 402 Reo Street Tampa, FL 33609 Hr.. Oon Turk Florida Municipal Utilities Association P. 0. Box 2402 Lakeland, FL 33803 Mr. J. 0. Denkins Florida Public Service Commission ~

700 South Adams Street Tallahassee, FL 32304 FPL Personnel-E. A. Adomat

3. T. Blout E. L. Bivans

~

Tracy Oanese H. M. Kloin

0. F. Poarson

~

~ ~

DRA FT FLORIDA JOINT NUCLEAR FACILITIES STEZRlNG COMiVIITTEE MEETQTG MINUTES Date: September IQ, 1976 Place: Lakeland Utilities Offices, Conference Boom Attending: See attached list.

'. The minutes from the last meeting were taken by Mr. Joe Dykes of Tallahassee and have not been distributed to members.

2 The Chairman described the events since the Miami meeting to

~ .

bring everyone to the same point in time for this meeting of September 10:

a) The Miami meeting was ca,lied to move forward with a nuclear project as soon as possible.

b) The plan, as of that. meeting, was to meet and review the proposals received from engineering companies. There was a tie vote which was then broken, by the Chairman in favor of moving forward, consistent with the philosophy of obtaining a joint nuclear-project as quickly as possible.

c) Discussed with Mr. Gardiner the ramifications of moving forward and requested that another vote be taken.

d) Telephone poll was taken which resuLted. in five votes against receiving the proposals and moving forward xvith an economic study. of floating versus land nuclea.r power plants. The vote was as follows: .

In favor of continuing the. study:. JEA St. Cloud

~

egxinole ainesville Against continuing the study: Tallahassee Orlando Tampa Florida. Power Corp.

Lakeland Florida Power Cc Light did not vote.

e) Florida Power Cc Light advised consultants to postpone their presentation and did not cancel. should the group desire to change its position.

FLORIDA JOINT NUCLEAR FACILITIES STEERS G COMiVTTTZE ME ET' MINUTES September 10, 1976 page 2.

f)'dvised- St; ClouL.of the canceling of plans and also advised of the plans to meet in a one-day'meeting and discuss the new approach of moving forward . ~vith just a land siting study..

g) Gilbert & United. Engineers have volunteered to give summaries of the status of the floating nuclear plant license hearings;

3. Florida Power & Xight is proposing to do a siting study and the proposaL willinclude the foLLowing basic points:

a) Identify load areas outside of Florida. Power & Light's service territory.

b) Examine siting: resources.

c) Dram conclusions'to arrive at basic siting areas.

d) Develop a tract search from available land records.

e) Develop screening, evaluation criteria as required by' permitting agencies and come forth with three,approximate sites. '

f) DeveLop a detailed rating analysis which is necessary to-study each site in detail, but: not necessarily'erform on-site studies.

g) Develop, recommend, and present the site. report to.the

'roup.

P h). Florida Power & Light proposes to do this under a fee.

arrangement plus an adder plus out-'of-pocket expenses plus a 5'.fee plus. outside consultants'ees.

i) The time schedule for the study would be approximately six to nine months.

j) The proposal will be in the mail on the 15th of September.

k) Would like to get back and review and discuss the proposed

'roposal by the 20th to 27th of September.

1) A sharing formula was then discussed in general and that which appeared acceptable was the adjusted net energy for system for 1975... This formula was to be worked out by.

the Florida Electric Power Coordinating Group and is included herein as Exhibit I.

FLORIDA JOINT NUCLEAR FACILITIES STEERING CONMITTE E MEETBTG- MI:NUTES Segtember. 10, 1976 Page.3; .

4. Lakeland presented its thoughts on the subject of moving forward as a.group in areas= which definitely need work for. a. joint project-ta proceed., Their; thoughts were outlined on a sheet which is in-cluded herein as Exhibit II. A general discussion was held with severaL motions being offered for corisideration. Philosophical problems which were addressed'ncluded risk sharing, trans-mission wheeling agreements, and one system versus two systems

'within Florida. The consensus of the group was to allow utilities interested to get* together with Lakeland and present their view-points.to FCG for'consideration of establishment'.oi committees to address these specific. problems.,

6. Florida Power &. Light a~in'stated their proposal to the group which is understood. as; .

')

Their wLLLingness to assist; in the project by offering the resources of the- company

'I b) To operate the facility, if desired by the group c) To share in temporary purchases of power from the joint, project. to assure that it would move forward.

6. Florida Power &. Light stated that they would not share in the

~,..'ble cost of the land site study since it has identified all sites avai'-.

in.its service areaand their proposal is to identify sites of their service. area. which could be considered as joint'utside sites.-

7. The next meeting was scheduled for September 30 at the oQices of Tampa Electric Company at 10:00 a. m. The agenda is basically as follows:

a) To discuss the Florida Power 5 Light Company proposal b) ~eke amendments where necessary c) Reach agreement on the amount of participation by each utility 8..An expression of interest wiLL soon be needed so that all parties can understand what their cost of the study may be and also how much power they could expect from such a joint project, if it were to proceed.

HCK:fc Enc.

cc: Committee Members 8c Others on Mailing List

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EXHIBIT I (Page 1)

FI.QAIOA EI.ECTAIC FOYER CQQROINATINC'CRQUP (FCC) ~0

>1 ~

l(fO "tA(KT. SUI(f io's blaAPA. FLOIHO- ~r> ~ ISI3I ol'I.Mal

~

September 13, 1976 I

Mr. R. C. Kuether ~

j Associate Managing Director /

Jacksonville Elect=ic. Au&ority P. O. Box 53015

. Jacksonville, Florida 32201 Joint Nuclear Facilities'Stud 'ud et Allocation

Dear Ron:

Enclosed are the allocation .factors for the Florida Utilities Steering Committee as requested at their meeting on Septem-ber 10, 1976. The allocations are based on the 1975 Adjusted Net Energy for System (NES) and are intended for study cost assessment..

Table 1 lists the factors for each of the twenty participating utilities 'he factors on Table 2 were calculated to show the assessments for the siting study which is being proposed by Florida Power a Light Company.

~ Since. the NES for Seminole Co-op. is zero,. the 2,744,352 Mt/H indicated. on the enclosed tables represents. the total 1975 NES of Seminole's eleven 'member co-ops.

Please Seel free to call me if'ou hav'e any questions concerning

~ ~

.these allocations.

I Sincerely,.

DONALD M. BEN JAHXH Staff Engineer ~ ~

DMB/tmb Encl.

FLOnIDA JOINT N..ff;An FACILITXHS TABLE. 1 STUDY COST ALLOCATION f ACTOf\S Based on.1975 Adjusted Nct Hner y for S stem 1975 Net Energy 1975 Adjusted Net for System l/ Energy for System Allocation

~0tillt MHH MHfl Fcctct 1 City of Bartow '147;910 147,910 . 0035 2 City of Clewiston 53,682 53,682 .0013 3 Florida Power f'ight Company 35,547,659 '156839,064 .3725 4 Florida Power Corporation 12,763,303 6,725,321 ,1582 5 Ft. Pierce Utilities Authority .. 282,639 2&2,639 .0066 Gainesville/Alachua County RUB 638,698 630',958 .0148 7 Gulf Power Company 4,644,120 3,206,472 .0754 8 City of llomestead 162,376 ~ '62,376 .0038 9 Jacksonville Electric Authority '4,965,642 3,399,385 ~

. 0799 10 City of Key Hest '331,009 331,009 .0078 M ll'ake North Utilitiesi Authority .236,132 . 236,132 .0056 4

12 City of Lakeland 940,917 872,734 ;0205 13 City of Leeshurg 187,111 187,111 .0044 aq.

e 14 City of Ocala 404,-659 404;659 .'009 5

.15 Orlando Utilities Commission 1,867,410 1,540,446 .0362 16 City of St. Cloud ~

73,036 73,036 .0017 17 Seminole Electric Co'-op. 2,.744,352 2,066,611 .0486 18 City of Tallahassee '2/'47,025 877,620 .0206 19 Tampa Electric Company 9,014,873 5,225,949. .,1229 20 City of Vero Beach 258,611 258 611 .0061

- Total '6,211,164 42,521,725 .9999 t

~

f Firs t

~

1/ Source,. 1975 FPC Form 12/12A NES Adjusted Method:, 100% o 600, 000 off 80% of Next 900,000 MHfl 2/ NES of member Co-ops. 6 04f, of Next . 4,500,000 MWfl 40't of all Ovei 6,000,000 MHfl 4

~ ~ 4 4

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FLORIDA JOINT NL i.EAR FACILITIES TABLE.2 STUDV COST ALLOCATION FACTORS Based on 1975 Ad'usted Net Ener for S stem

(.Florida Power 6 Light: Co'mpany Excluded) 1975 Net Energy . 1975 Ad)usted Net for System l/ Energy for System 'Allocation

~L'tilit HWll ~ l'1WH Factor 1; City of. Bartow 147,910 147,910 ..0055 2 City of Clewiston 53,602 ~ . 53,602 .0020 3 Florida Power a Light Company 4 Florida Power Corporation- 12,763,303 6,725,321 .2520 5 Ft. Pierce Utilities Authority 2024639 .202,639 .0106 6 Gainesville/Alachua County RUB 638,698 630,958 .0236 7 Gulf Power Company 4,644,120 '- .. 3,206,472 .1202 0 City of Homestead 162,376 162,376 .0061 9 Jacksonville Electric Authority . 4g965,642 . ~

. 3,'399,305 ,1274 10 City of Key West 331,009 33lc009 ..0124 11 Lake Worth Utilities puthority 236,132 236,132 .0000 12 City of Lakeland 940,917 072,734 .0327 13 City of Leesburg

" City of Ocala 107jlll 107,111 .0070 14 404,659 ~

404,659 .0152 15 Orlando Utilities Commission 1;067,410 1,540,446 .0577 16 City of St. Cloud 73,036 73,036 .0027 17 Seminole Electric Co-op. 2,'744,352. 2/ 2;066,611 .0775 10 City of Tallahassee ~

947,025 877,620 .0329 19 .Tampa Electric Company . 9,014,073 5,225,949- .1959 20 City of Vero Beach 250,611' 250,611 .0097 Total 40,663,505 ~

26,602,661 .9999

,I l/ Source: 1975 FPC Form 12/12A NES Adjusted Hethod: 100% of First '00>000 HWll of Next 80% 900,000 HWH 2/ NES of member Co-ops. ~, 60% of Next 4,500,000 HWll ..

40% of all Over 6,000,000 HWll

'XHIBIT II'ROPOSED CHANGES TO FLORIDA JOINT NUCLEAR STEERING COMMITTEE 3;.. Reexamine, identify and restate the object-ives of the committee I.to inclu'de coal fired i

and; o ther fos s 1- fue le d generation) .

2. Rename corn'mittee some appropriate name (such as F'.C G. Joint Power Supply Committee), and request F..C.G., Executive. Committee to embrace this committee as a committee oE F.C.G.

5.. Define- scope of comnittee activities, such as:

l .. Si.tin g

.2 . Contracts and working agreements

3. Financin g 4.. Construction

'S. Interface with governmental" agencies In general the purpose of the Committee would be to im lement the fin'dings of the Planning Committee', to evelop power supply projects as indicated by the Planning Committee. Stan Livingood has suggested that an appropriate name might', be the "FCG Implementa-tion Committee".

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OAHICL QUTTXIAH eaeeie ~. eeeie ROSCKT A JACLOH 4AMCS H. )IORWOOO JAMCS. CARI RCLLOCX ALAN A ROTII FRAHCCS C. RRAHCI5 OAHICL I. OAVIO5CH TIIOMAS H. MCIIUCII. jR November 12, 1976 Px. Robert J. Gardner Florida Power & Light Company P.O. Box 013100 Miami, Florida 33101 Re: PPGZ,'s Proaosed Joint Venture Pro'ect

Dear Bob:

This, letter is w-'ttan on behalf o" the Zntarvenor Group in asponse to your Oc ober 26 letter. Ls that lette vou state " . . ., [Tjhe Steering Committee has suggested that letters of intent- be orwardad to the undersigned. no later than Novembe 22,. 1976". While individual systems may desire= to respond separately or to supplement this letter, it is intended that, this letter respond generally for the Zntarvanors.

. You recuest that public moneys now be comm'ted to a joint venture nL'.clear project. however, before committing funds to such project, a city would have a fiduciary obligation to i"s citizens and ratepayers to carefully evaluate ~he engineering, economic and legal aspects of the projec" suff'iently to just'y the expend'ure of present and future moneys involved. While the Cities do not bel'eve that final agreement must be necessarily cached on all 'ens, at the Least there should be agreements in principle on matters that could have a subs antial impact on their decision whether to participate.

Xn, my October 21, 1976 le" ar X stated:

"A memorandum of understanding w'l he necessary to meet a number of t2 eshold concerns in conjunction with agreement to a site study. The items that must be agreed upon before systems, can commit funds to the project include, leg'lation o permit join" financing; transmission and backup arrangements; an'ntegrated powe pool; use of sites best adapted for new generation regardless of tarritorv,.

procur ment of nuclear fuel and, E'PaL's participation

Robert J. Gardner November 3.2, 1976

'n the project. Ia. addition, the reLationship between the South Dade Plant and the Central Plor'da Plant should be clari 'ed.... " "/

Since PP&L has not yet: responded ta this lette , there is no basis for the Cities now det rmining whether they should commit to the project at this time, a3.though I recognize that PP&L may stiLL be cansidering the 'tems raised therein."*/

To put,this Letter in its proper context:,

appropriate ta review the history of negotiat'ons. The it is possibi3.'y of a joint venture project was f'rst. proposed by Tracy Danese '~ his letter of March 30, 1976, in response to numerous recuests for par icipation 'n. the proposed South Dade Nuclear Units., In that letter, Tracy refused reauests for pazt'cipation in South. Dade. However, he stated:

PP&Z, would consider being par of a joint venture ta construct a nuclear faci3.itv somewhere in the central. Plorida area so as to be conveniently 3.ocat d. for potential partic'pants.

Such a project would be a true joint ventu e from its. initia3. inception thzough completion.

Tracy a3.so stated that h's letter should not "be construed as an offer to negotiate" $ outh Dade participation.

Since Plorida Power & Light had refused ta recognize theiz rights to joint participation, the Joint Intervenor Group intervened before. the .'nuclear Regulatory Commission to seek enforcement of their r'ghts to nuclear participat'on. However, cantemporaneous3.y, George Spiegel resaonded ta Tracy's letter:

"We are pleased with this proposal and are hopefu3. that discussions along these 'ines may develop and ultim Letter of Geo ge Spiege1, to Tracv Danese, tely prove he'pfu3.."

April 14, 1976.

other things, he cited as necessary, matters for ag cement, Among legislation to authorize municipal utilities au horities for joint municipaL ownership of large plants toandestab3.ish the development of a fully integrated power pool.

PP&E did not respond to these concerns.

On April 29, 1976, Tracy announc d that PP&L had arranged a meeting in Jacksonville for i<Lay 13 to d'scuss pp&E,'s jo-'nt venture proposal and, stated: "I would think that helpful if it might be some of vour clients could send system representatives so that individual needs and time fzames can be initially d'cussed."

For you

~/ I un'd ~

mat~~ re ~ conve~c, I ta.

en~se apies oz car esponcence and wr't" a

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vou of ~i' Harry Luff t~~t you a intmd'g a r sponse to 5, 1976, renxsmg a wr't~a response an the positions took at the Nm~ber 4, Tata ~~~g. I i~ that such response wi3~

address the ~mms exnressed I

Robert J;. Gardne~; November 12, 1976 J'iately I although both he replied (Lett and; upan receiving knowledge af the Let"er, were. out to T acy Danese, of tawn, George Saiegel.

May 6, 1976):

"Ne will. make everv effort to arrange for representatives. of our clients to attend the, meeting in Jacksonville... As I stated in, my letter of'4 April,,' will also be necessary ta d'scuss the following 'matters: . the early formation. of a fully integxated "-Lorida power pool, including PLarica ~ce transmission sexvce and planning caordinat'on, as well as Legislat'on enabling the formation of joint municipaL acencies wi;th the abil'ty to finance, cons -uct and to own generation and transmission facilities.

We CMnk the meeting will serve a constructive purpose. The e is na question that the early establishment or a Florida Power ?ool is a prerecuisite for the ability of municipal u ilit'es to make finn estimates and commitments concerning the planning and development of a nuclear. plant which would. come into operation many years in the futu e".

A" the meets~ g; chaired by Tracy Danese, PP&L.

made a prepared, presentation, including slides, in accordance with a previously supplied PP&L agenda. Eowever, other than ta state it was willing to d'cuss such matters subsequently, PP&L aid not address the concerns expressed 'n George Sa'egel's Lette . At that meeting, these concerns r ere ra'sed bv both mv clients and. myself.

Tracy did state tha" the casts for a proposed new unit would be in the. "same general rance" and "time frame" as South Dade. Eowever, he stated that South Dade was PLanned for P?&L's needs.. Thus, PP&Z refused. to mitigate risks to all systems including itsel by sharing South Dade capacity in, exchange for capacity in passible add'ional units.

I'n subsequent meetings and. thxough subsecuent cor- spondence, I and the svstems that I represent have t ied to convey that they need subs ant've responses to questions that had been ra'ed from the outset and that were summarized in my October 21, L976 Letter. Thus, for exampLe, at the June 3, 1976 meeting of the Steering Committee, Ea xy Luff stated that the issues raised by me at. the previous meetinc and bv George Spiegel in his letters to PP&L needed to be discussed because of the importance of the issues to some systems who mav desire to participate 'n this project. Tracy Danese adMowledged th's statement, but there was no willingness expressed. bv P?&L to discuss the issues.

Robert Z. Gardner ~ilavemher 12, 1976 On Zuly 8 on behalf of certain members oz the Steering Comm'tee, i. wrote to Tracy Danese:

"'U. yau do not envision d'xec ownership gaxmcipatian. by Ploz'ida Power & Light Company in. the proposed units, we feel it incumbent upon. you ta Let. us know at this time. We have been surprised by youx apparent unwillingness.

ta share South Dade (or other)'apacity and joint ventuxe capacity. Assuming cost camparahil'y, hy'educing risks to individual systems of a

- part:icula gzohLem un't,, such shazinq should be advantaqeous to all concerned. Such. sha inq also appears to have advantages in

'n qa'ning flexibility in the timing oz.

financing'nd placing new blocks of nuclear capac'y on.

Line . . . Zn his letter of 14 Apr', . . .'eorge Spieqel points- aut the immediate concerns of obtaining a fully integrated'ower gaol, Legislation'uthorizing-the formation oz and appropr"ate transmission mun'ipal'uthorities arrangements'. This 14 April Lett r has neve been. responded to, other than hy your 29 April letter (setting up the Jacksonville meeting) .

Since these. items would affect the ecanomics of

'new capacity, they must. be addxessed, by the Legal committee as paxt of. joint venture alarming".

On July 13, Harry W. Wright of Seminole Electric Coop'e"ative sent a copy ta you of a letter ezpressinq similar concerns:

"There is no douht that we were all cuite disappointed to observe the dimin'shed interest oz Plaxida Power & Light Company in ownership participation of the proposed Central Plorida Unit. Et is oux opinion that for the Cent al Plorida. Unit to be viable and- successful, is absolutely necessary that Plor da Power &

it Light company awn a participating interest in the plant... Ne are oz the fixm opinion that certain'ollateral arrangements must. be made with Plorida Power & L'ight Company for the successful and reasonable use, oz nucleaz capacity f om any new units".

At a July 21 meeting, you announced that because of presently projected lack of future load. suf icient to suppozt the units, PP&L intended to defer glans to construct the South Dade Units and to possibly term'nate the Westinghouse contrac in ten days. However, far the irst time, vou indica ed that PP&L wauld be wiLLing to sell, its owne sh'p interest 'n South Dade contracts to othe s.

Robert. J; Gardner Navember 12, 1976 Zn a letter. that same day ta Tracy Danese, stated:

"It is v~ dually impossible. for othe systems- to mme a firm decision whether to ut'lize the South Dade. contracts and to make the associated commitments with'n ten, days because of the myriac of engineering, inancing and legal deci,sicns involved. Indeed, the only hope for a auick dec sion would involve PP&E 's agreement to sell a substantial portion of the units for construction at;- the: planned Sou h- Dade site and the Company's ediate agreement i. priaciple to the necessa~

back-up ar ancements, includinc those discussed in George Spiegel's 14 Apri3. letter. Before committing themselves to the types af investment involved, systems would. have to be assured of the--

availability af transmission on reasonable terms for both South Dade power and, necessary back-up and, other power so~~ ces. Many systems would need joint. financing legislat'on, an integrated power

~

pool and other'-appropriate back-up".

Without stating in what regard, you responded that I had incorrectly characterized ZP&L's position. Letter of July 28, 1976..

Nr.. Blount stated: "Your letter reflects a ser ous misunderstanMg of PP&Z's announcement recarding development of the Soutn Dade Project. ZP&L has not cancelled, but intends to proceed with the project. . . . Much of the remainder of your letter relates to matters in cont=oversy in NRC Docket No. P-636-A, and it would not be appropriate

"'or me to comment- on these mat ers". Letter or" August 3, 1976.

- Neither letter discussed the matters of concern raised from the beginninc w'th regard to a joint nuclear venture and you withdrew the possibility of participation in South Dade. 5 On October 15, 1976, Seminole cruestioned the appa ent attempt of FP&L to limit construction of the proposed.

joint un't "to an area in Plarida norm of a line rmning fram Piney Point to Cocoa". Letter of Barry W. Wright to Tracv Danese, October 15, 1976.

The history cited above of repeated attempts bv myself and'y clients ta. obtain response ta concerns raised by them that affect thei.'r ability ta participate in your.

proposed joint venture projec led to my October 21 let e specifyi.ng i,tems necessary for resolution. A meeting of the Stee ing Committee was held. on november 4 at the recues of Gainesville. Representatives from Gainesv'lie, Orlando and others recuested specific response to th items 1'sted in my

Robert J. Gardne: November 12, 1976 letter so that they could eva3.uate whether they could par"'cipate in the jo'nt ventuze.

The cities Z represent. are faced. with an obvious dilemma,, but one that "-P&L', can resolve, to the benefit of all F3.orida consumers of- electricity.

Cities aze operating in. an economic environment wheze foss'. fuels a"e in short o" uncertain supply, are of high and- uncertain pr'ce, or both. Moreover, because of FP&L's unwillingness to agree to necessary legislation, appropriate transmission z'hts, and a s atewide power poo3.,

the problems created bv the fuel. markets are compounded in that-PP&Z, 'nhibits Cities'bilities. to obtain the Lo~west cost powez supplv through being able to maximize the mose eff'cien use of their generation and integrate that generation. with optimal off-system powe supply sources.

Nor has PP&Z, indicated a willingness to sell unit power. from its exis ing units or wholesa3.e power to meet base load generation recuirements. Such ag cement by PP&L would make available bM~ power supplv to municipal sysiems based upon, nuc3.eaz fuel costs and at prices to FP&Z, equiva3.ent to those it could expect, to receive. from reta'1 sales.,

The other half of the d'ilemma, as is stated above, is that. you aze asking Cities to 'nvest. substantial sums in a nuclear project without having specific answers to cuestions that vitally affect its economics. The unwillingness of

>>P&Z to discuss these matters creates added difficulties. Under the circumstances, if they invest now in the project, cities cannot assume future cooperation concern'ng these items specified above. Thus, even though a system might believe that in view of the current state of the fuel markets, far it it is vital to pursue a joint generation project, ' cannot do so.

The dilemma is compounded by PP&L's expressed desize to accuire independent systems as demonstratec by Ralph Hulholland's recommendation to the voters of Vero Beach to approve a sale o'f that- svstem as a means of accui 'ng access to'&L's reduced power costs anticipated from use of its St. Zucie nuclear capacity. Letter of R. G. Hulho3.land to Vezo Beach residents, September 4, 1976.

e Zn light of the above, the letters require response to the items stated in my October 21 letter and e'sewhere.

Rohez Z. Ga fldner, November 12, potent'pl participants 1976'pec'fically, must know.

whethe F9&I is'repared to assume a shustanti 3. ownezship share and. under what-, te~ and conditions Zf the response is negative, other potential part:icipants wil3 find themselves in; the potentially awkward position of having substantial investments in. a p3.ant aver which FPGI is in charge af construction and, operations vithout having any economic interest.. Under these circumstances, it vauld he difficult far the Cities to meet their fiduciaxy ahl'ations to thei-citizens absent a mechanism to assure protection of their investments which PPaZ may have independent priorities of construction and apezatian fram the joint. venture un'.

2. Absent 3.egal ah'3.ity for systems ta join together to finance thei interests through a. joint agency, municipaL svstems may he 1~ted m their abilities to finance and. manage. theiz awnership shares. Examples. in. other states show that. even the smallest systems can participate in joint generation projects th-ough puxchas'ng from a joint. agency, therehv mak'ng their par,"icipation ana3.agous to purchasing wholesale power. Zf this optian is foreclosed, many systems vill undoubtedly he unable to participate.

3. - Wlhat arrangements would be contemplated with regard to fuel? Zf fue3. is ta be purchased and, financed separately he each participant to take one example the risks are far different. than if. -P&L proooses to take responsihi3.ity for fuel accuis'ian. Zf fuel is to he procured independently af South Dade, then the risks and costs o" th's project would. not: he comparable ta South Dade..

4. There must be provision made for capac'y and energy, for times when it is out of service, and 'f the un' is de3.ayed. Zu ther,.participants must knov hov the unit vill.

he operated. These concerns can be partially met by the establishment of a statewide paver pool to assure ope ation of the lowest incrementa3. cast generation at any one time.

There have been no specific discussions or back-up resources for the unit, of transmission availability and af operations.

Such subjects have had imoortant bearings on negatiatians for nuclea". capacity elsewhere in the United States and would affect the economics hexe.

5. Zs PPGL willing ta agree to use of the most economically and environmentally compatible site? (e.g.,

South Dade). Again, the ansver to this cuestion wou3.d have a substantiaL bearing on the decision a system would make whether and. to vhat extent the proposed joint ventuxe unit.

it is willing to participate '

Robert J. Ca dner November 12, 1976 6.- Es FPGL willing to min~~ ze risks by agreeing to sharing capacity in South Dade?

As is- stated initially, as. a general. matter, the systems that E represent cannot now recommend to their.

governing boards that public funds be committed to your proposed joint venture project:, absent agreement on these cpxestions. The position of the Cities is not that .there is no room for negotiation on the substance of these matters, or to meet FPGL's needs.. However, they have not hacK substantive response from you concerning them. Since these matters vitally affect economics of part'cipation, as a general matter., the Cities cannot go fozwazd with the project, although for particular cities ind'vidual factors may modizy this response Whether separately or as part of the same lett ",

any response to Harry Luff's November 5 lette shou3.d include substantive response to the matte s raised he e.

Shit.e the Cit'es cannot agree to part'ipation in the joint venture project= withou receiving such response to the'r concerns, they maintain an interest in exploring the project. This assumes, of co~~ se, that your response provices a basis whereby the projec' can. be commenced on a sound economic. and legal, basis.

The Cities wou3.d cer ainly wish to consider later pazticipation in any project resulting from a siting study, although the method, of desixed participation might vary among sys ems (for example, dixect ownezship, participation thxough joint agency or authority, un'. powez purchase, etc.)

E have outlined the history of considezat'on of the proposed joint unit so that you may understand the However, E efez back to Cworae Spiegel's April 14 if Cities'osition.

letter. He stated, that se ious discussions take place concerning the matters- that divide PP&L and the Cit'es, any problems should be capable of resolution. E hooe for an affirmative response so that the Cities and PP&L can= work together to meet the needs of a3.l their" customers.

Sincerely, Robert A. Jablon BAZPcg Enclosures

Rober J'. Gardner Hovember l2, 1976 Coo J.A., Boukaight, Jr., Esp.

John E. Mathews, Jr., Esc.

Nr. Nac H. Cunningham, Esa Charles R. P. Brown, Esc.

Osee R. Pagan, sc..

Nr. Clif ord C. Blai*sdell, Jr..

Yw. John R. Kelly Thomas Gu~ey, Sr., Esp.

James H. Phillips Glenn DuBois Nr. A. Ã. Kelly Joseph Ninotti, Esc.

Clyde Hopkins John C. Chew, Esc.

Nr.. Everett B. Howe Honorable Erston Royal Calvin E. Glidewell Nr. Cecil Ba~ks Mr. J., H. Ca>dwell Michael Watkins, Esp.

Mr. Ãi13.iam F. Johnson C. R. Beverly Nr. C. H. Corn Nr.. John T. Daught~

Mr. Rodney New on Mr. Rober E. Bathen Mr. Tracy Danese

~EX TO ATTIC~:HTS Letter of'0-26-76 from R. Ga dner.

Letter of 10-21.-76 from R.. A. Jablon to Tracy Danese Letter of 3-30-76 from Tracy Danese. to C. Blaisdel'1 Letter of 4-14-76 from George Soiegel, to Tracv Danese Let e- of 4-29-76 from'racy- Danese to George Spiegel Letter of 5-6-76 from George Spiegel to Tracy Danese Letter of 7-8-76 from Robe t. Zablon to Tracy Danese .

Lette of 7-13-76 from, Earry alright to R. A. Jablon eit "of 7-21-76 from R. A. Jablon, to Tracy Danese Lette . of 7-28-76 from R. Gardner to R. A, Jablon Letter of 8-3-Z6'rom J T. Blount to R. A. Jablon Letter o 10'-15-76 f om -E. N. Fright to Tracy Danese Letter of 9-4-76 from R. G.. Mulholland to Ve o Beach residents

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• QUTTMAH ROSCRl' JAdtA7H JAMCS H. IIORWOOQ JAlleS ckRL POILCICIC ALAN J. ROTM IIRAHC55 5, RRAHCI5 QAHISI I, QAVIQ5ON TIIOMA5 H. MC?IVON. JR. December 16, 1976 Robe~ J. Gardner Florida Power a Light Company P.O. 3ox 013100 Mia~, Florida 33101 Re: . FP&L's Proaosed'oint Venture'r'o'ect

Dear Bob:

Th's letter 's in response to your November 16, 1976, letter to Ea ry Luff. As Chai~ of the Steering Group of Municipal Zntervenors in P-636-A, Earry Luff referred your lette to me. ZndividuaZ. systems may supplement this response.

This letter deals with FPaL's joint participation proposal to manage a siting study to evaluate electric power generating sites suitable for the construct'on of one or more nuclear units in which FPSL would have no ownership interest.

FPGL first suggested s'uch "joint development of a nuclear

'roject" in a letter from Tracy Danese, March 30, 1976. Zn George Spiegel's letter of April 14, 1976, he set forth as to the joint venture the need for legislation to a'redicate allow for joint municipal f'nanc'ng and for an integrated power pool, including transmission.

Your let er of November 16 sets forth your first writ en statement of FP&L's position concerning legislation power pooling and related matters. You= position. is that you will manage the unit for a ee, but, except for the pu-chase of nom'nal amounts of power,.'you are unwilling to pa t'cipate in it.

As a preliminary mat. er, you auestion the relationship between the areas =of concern raised by Stan Livengcod and those raised in my October 21 and Novembe 12 letters. Stan and E both have expressed similar concerns. Stan reauested the November 4th meet'ng because you had not responded to the Cities'revious reauests for agre .ent on partic'pat'on, leg'slation, power aooling transmission and other stat d matters set forth in my November 4th lette

Mr. Robert J. Gardnex December 16, 1976 Zn your November; 16 Letter you, state, first, that the items of concern in my October 2l and November 12 letters a e not "germane to conducting a site study and proceeding ahead to develop a joint .nuclear powex project as soon as possible" (pages 1-2); second, that PPGX has- offered sufficient resouxces to justify affirmative municipal decisions regarding. the proposed joint venture (page 5, last parag aph); and third, that the joint venture can provide equivalent capacity to. South Dade (page- 4, lash paragraph).

Your letter rejects Cit'es'equests for favorable consideration of most, if not all,, of the substantive concerns that they have raised about going forward with the joint venture project.

The- major thrush of your letter appears to be that. the joint venture project should proceed before agxeement on the items. of concern raised'y the Cities. .You state (page 1),

"Z remain in a state of confusion about the status of these matters in relationship to oux offer to conduct a siting study."

As Stan Livengood expressed, specific individual items would be more important. to some systems than others depending upon their individual circumstances. While final agreements on all matters are not necessa~ to proceed, there must be. agreements in principle with suffi'cient specificity to satisfy systems that dollars committed to the siting survey can result in an economic pxoject. These agreements must provide sufficient assuranc that there 's- a commonality of purpose on important matters to permit a sufficient number of systems to invest fox the project to be economically viabLe.

From the time of H'al.'s first suggestion that there should be a joint venture, I and the systems that X represent have been attempting to obtain affirmative answers concerning matters of cen~a3. importance to the Cities. Your cormnents at the November 4th meeting and your November 16th letter provides PP&L's first response. The Subcommittee in charge of drafting a joint participation agreement could not go forward absent agreement on what to draft and PPGT has been reluctant to state positions at all, much Less to consider seriously the

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Cities concerns.

A major implicit in your sentence (page 2): "...

misunderstanding of the Cities problems is

[WJe do not feel that the subject matter of the various points discussed is gexmane to conducting a site study an'd proceeding ahead to develop a, joint nuclear power project as soon as possible."

Mr. Robert Z. Gardner December 16, 1976 This sentence implies. that the C'ties should invest public funds in a project hefore having any commi tment from puef, concerning items necessary for their participation. Cities cannot spend mon y in such a manner.

Concerning your, second point, since PP&L refuses.to address prerecuisites to the joint venture unit, the Cities simply disagree that. your November 16 response provides a sufficient basis for their going foxward absent further agreement.

if I have suggested that the joint venture project unit(s) could be reasonably antic'pated to be comparable ~v'osts and timing to the South Dade Units, there is obvious advantage 'n systems 'haring capacity and coordinating development in both the South Dade and, joint. venture units. Such sharing would mitigate isis and allow systems greater flexibility in adding increments of capacity. Apparently, t.'.e paragraph beginning at the bottom oz page 4 oz your letter addresses these questions. You imply that the two add'tional Westinghouse units do provide equivalent capacity to South Dade. However, if this is the case, I still do not un'derstand why PP&L refuses to treat the units as one project, why it is apparently unwilling to use South Plorida sites for additional units and why it is unwilling to pool fuel resources, a major item of cost and uncertainty of nuclear units.

Prom the inception of discussions we have raised that many systems would not .be able to subscribe to the concerns joint venture projec" absent agreement on PP&L pa ticipat'on, coordination, transmission, legislation to allow j oint municipal financing and other stated matters. PP&L has treated these concerns as peripheral. If your November 16 letter is a refusal to attempt to reach. agreement on these matters, there can be no further discussions. However, if it is meant to imply possible agxeement, I shall be pleased to submit an agenda for serious negotiations concerning these points. If PP&L is not interested in reaching such agreements, it is purposeless to spend time and effort in negotiations that cannot be fruitful.

I address below some of'our specixic responses to Cities concerns. in the order stated by you:

l. Transmission: You s ate that PP&L would "negotiate a transmission service agreement" to transmit any partic'pant's "share of power from any joint projec we agree on." In view

Robert Z. Qardner. December 18,, 1976 of the large capacity costs associ.ated with. mxclear units, systems .should be assured of. the abili.ty to integrate power generated as a result: of their nuclear investments with their other power resources (both on and off system) to meet their system loads in the most optimal manner. They need to be assured of transmission. of backup power. and the ability to buy, sell and exchange power resources among other utili.ties.

Your lette states only that it will transmit power from any joint project for a participating utility. Are you'willing to commit to transmit power resources generally for utils in Florida un'der "individually. negotiated transmission serv'ce contracts?"

You state that:

Re feel that individually negotiated transmission service contrac s are the most equitable kinds of arrangements in that they can comprehensively reflect all of the conditions and particular circumstances that each party finds themself in. A general. wheeling tariff could result in inequities to one of your utilities or FPL. You could pay more for transmission under an across-the-board tariff than under a transmission service agreement in. some circumstances."

To what specif'c inequities do you refer?

suggesting that under certa'n situations, if it If you are were beneficial to other utilities, you would agree to point-to-point pricing for transmission service or investment ownership in Lines, filed transmission tar'ffs at the FPC do not preclude such particularized arrangements. In any event, there are areas concerning rates, terms and condi.tions. for s'ervices which can be worked out now in general terms to assure that the service will be provided on an economic basis.

2. Legislation: The absence of -legislation to allow municipals to joint finance limits the feasib'lity of participation for some systems and increases costs to others. The fact that some systems could participate in Crystal River Nuclear Unit No.

3 att s s to the importance. of nuclear availability to those systems; it does not justify FPaL's position in opposition to such legisLation. I accept your statement that you are "simply ignorant of the technicalities, complexities, requirements, issues and practices of municipal finance." Eowever, these statements could not apply to Dick Jones and Tracy Danese who are thoroughly familiar with the munic'pals efforts to obtain joint financing legislation and, who (I. am informed. by Qsee Fagan and others)'

Mr. Robert Z. Gaxdner'ecember 16, 197&

vehemently insisted. at: PCG meetings that joint f'nancing be deleted. from 1975'oint ventura legislation. Tracy Danese would,. of'ourse, be familiar with municipal. needs xor. such legis3.ation. <</

3. Power. Pooling: X am p1.eased- that you appear to recognize. the existence of. a power pool in Plorida. Zn PP&L's brief to the, United States Supreme Court in the jurisdiction case, (Federal Power Commission v. Plorida Power & Light, 404 U.S. 453 (1972)), PP&L stated:

"The Plorida Qpexating Committee interchanges energy among themselves fox a 3.imited purpose.

,". -..(Tahe connections. among the members of the Operating-. Committee do not exist so, that these utilities may assist each other i".. meeting the anticipated load recpxixements, but only emergency or temporary needs...

"This means that the Florida, Operating Committee is not a 'power pool's the Court belo~ so stated (App 373.) and as- the Commission recognizes in, (Comm Brief p.5 fn 2) .."

its'rief You recognize that Florida's power, pool" could be improved,. However, X am informed by Harry Luff that even refused to put in writing the agreements to-FP&L'as commit to the t~es. of transactions that are now taking place.

PP&L has refused to participate in the pooling task force of the Technical Advisory Group 'to generate a proposed, power pool and, has still not agreed to the release of the TAG power pooling studv. Thus, considering PP&L's lack of support for a progressive s atew'de .pooling aqreemen within =CG, X am not certain of'he basis for your statement, "The PCG structure provides a basis for continuous change and improvement."

Ultimately, the lack of an integ ated powe pool prevents the leas expensive avai3.ab3.e capac'y in the state being 'used to meet each incxementa3. need for power. Thus,

~/ You state that you did not xeceive a'copy of'y October 21 letter to Tracy Danese of PP&L. X apologize for any discourtesy, but assumed that FP&L cooXdinated matters internally concerning the joint venture project. Xf you let me know who shou'd, receive copies of'uture correspondence, X shall. mark copies for each named person..

Mr. Robert Z. Gaxdnex December 16, 1976 for example, Vero Beach and others have available capaci,ty that FP&I is willing to purchase in conjunction with acquiring such systems. Under an integrated pool ar angement such capacity can be used economically to the benefit of both the mun'cipal systems and FP&Z and its ratepayers. In conjunction with expensive nuclear capacity investments, there must be sufficiently sophisticated pooling to utilize available intermediate and peaking capacity, thereby avoiding unnecessary additional capacity investments and achieving efficient use or.

'xisting capacity.

4. Location: You refuse use of the Sauth Dade sites.

My und'erstanding is that power in Florida tends to flow towards Miami making a south Florida site for new capacity electrically advantageous. Your letter appears. to imply FP&L would'uppor const~cting the units at a less advantageous location from an engineering standpoint to avoid entering into necessary transmiss'on and pooling ag eements.

I am conformed that Florida Power Corporation has done extensive work in locating sites in northern- Florida.

5. Participation: Fxcept for "nominal amounts of power on a take-or-pay basis", you reject FP&Z part cipation in the joint project. The need for FP&L participation is not "as a performanc bond for [y]our good fa'th" or because you "can't be trusted." Eowever, whex'e there may be conflicts of interest involved, Cities question the appropr'ateness of FP&L's managing their investments without its having an interest in those investments. FP&L should be reimbursed for services it px'ovides, as should any joint venture part'ipant, but I question the appropriateness of a "management fee,"

thereby increasing the costs of municipal nuclea capacity. I have not made the statements you att ibute to me that FP&L "can't be twsted because we a=e in compet'tion" or that my "objective is to el~ate competition."

Hx. Rober ~ J. Gardnex Decemhex, 16 > 1976 En conclusion, assuming your wi11ingness to do so, Z suggest that serious negotiations begin concerning Ne.

items Listed in my October. 21 and November 12 letters. Ne axe, of couxse, willing to consider any concerns Mat .you may have.

Sincerely, Rohert A.. Jahlon M: mmm cc: Tracy Danese Richard, Jones

eau e

WgT 4 H. te I Jle February 21I 197'7 y tgeggf 9$ %)

Stat'ement released by ih. Harshal3; HcGonal;

'Q(y I~

g' PCS tD president and chief executive of ice of Florida Powe 4 Light Company, " 3.at've to the dec'sion announced in T>>lahassee by the Plo ida Pub3.ic Serv'c Commission.

"My reaction is'ne of complete disrmy,"'arshall HcDona3d, oresident of Florida Power a Zdght Company said today.

"The decision not to g ant:-PL full inte im rate relief apparently was not based on the same accepted (make whole) ormula used prev'ous3.y by th Commission.

Cu cur ent rates a e based on ou= costs of 4<ee years ago even though in the intervening time inflati.on has increased. more than 20 percent," he said. "E" just doesn't fi" the oract'calities of sound business principles."

Florida Powe 6 Light Company had. asked'r interim ate re3.ief in the amoun of $ 235 million wh:ch represents pa t of a fu3.1 rate reaest of $ 349 million now being considered. "The $ 235 million interim would have brought us on'y to the.

3.ow&st rate" of return aut3sri "ed based on 1974 figures, " HcQonald sa'd.

"Had the Commission g anted the reouested $ 235 mill'o,.the consume would have been completely protected since the amount would have been collected subjec" to refund pend'ng the Commission's final order-

"Previously, I have voiced th t selected services and projects would have to be terminated o postponed i we received no re3.ief. Today's announcement, which has shaRen my confidence that the full $ 349 miU.ion re3.ief vill be g anted- in June, means that the Company must ta3ce hanediate action to adjust to this disappoin"'ng order," McDonald stated.

The Company has initiated steos to accozp3.ish the folloving:

+ "Can=& auz praaased tua sauth Dade nualeaz generating units, end

+ "Sell the fuel enrichment contracts for these two units;

+ "Ermdiately reduce tree t=i~g, building and grounds maintenance pe sonnel;

+ "Reduce all routine maintenance except that reruired for safety; and

activities c

+ "Cut back on service related which would affect esponse time on telephone ~eric,'rouble ~a4 zestorat'on and new service connections.

"My estimate is that these actions will affect several hundred positions wi~&in FPL in the near future.

"None of these reductions are in the long-term besk interest of'ur custome s,"

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HcDonald said, adding; "but if the money is not there then the necessary work

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simply cannot be .:::~.!~ed."

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McDonald said; 'le4 the Senior Management Ccmmittee had'een instmcted to continue to search diligently for additional cons~ction and service reduct'ons based on the monies available.

In addition to FPL positions being el~ated, cancellation of the South Dade unit means that, approximately 3,000 construction jobs, at maximize employment, wiU.

not become available. to help alleviate the higher than national average unemployment 4

in Dade County.

"We will develop a 'wait and see'ttitude on the full rate relief re~est before following through on, add'tional contingency plans which would furthe drastically reduce present and future sezvice to our customers," McDonald said A

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NOTE TO EDITORS: Additional management actions which could be taken by FPL a e included in the enclosed leaflet previously published in the event no interim rate relief was offered; the granting of an amount above "zero" but less than that requested will mean the Senior Management Committee of the Company must weigh possible alternatives.

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BEFORE THE UNITED STATES NUCLEAR REGULATORY COMMISSION BEFORE THE ATOMIC SAFETY AND LICENSING BOARD In the Matter of Florida Power & Light Company Docket No. 50-389A (St. Lucie Plant, Unit No. 2)

CERTIFICATE, OF SERVICE I hereby certify that copies of the foregoing have been served on the following by deposit in the United States mail, first class, postage prepaid, this 8th day of January, 1981.

Ivan W. Smith, Esq., Chairman Atomic Safety & Licensing Board Atomic Safety & Licensing Board Nuclear Regulatory Commission Nuclear Regulatory Commission Washington, D.C. 20555 Washington, D.C. 20555 Tracy Danese, Esq.

Michael A. Duggan, Esq. Vice President for Public Affairs College of Business Administration Florida Power & Light Company University of Texas P.O. Box 013100 Aus tin, Texas 78172 Miami, Florida 33101 Robert M. Lazo, Esq., Member Jack W. Shaw, Jr., Esq.

Atomic Safety & Licensing Board John E. Mathews, Jr., Esp.

Nuclear Regulatory Commission Mathews, Osborne, Ehrlich, McNatt, Washing ton, D.C. 20555 Gobelman & Cobb 1500 American Heritage Life Bldg.

Jerome Saltzman, Utility Finance Chief Branch ll East Forsyth Street Jacksonville, Florida 32202 Nuclear Regulatory Commission Washington, D.C. 20555 William H. Chandler, Esp.

Chandler, O'Neal, Avera, Gray/

Thomas Gurney, Sr., Esq. Land & Stripling 203 North Magnolia AVenue P.O. Drawer 0 Orlando, Florida 32802 Gainesville, Florida 32602 J.A. Bouknight, Jr., Esq. Robert E. Bathen E. Gregory Barnes, Esq. Fred Saffer Lowenstein, Newman, Reis, Axelrad R.W. Beck & Associates

& Toll P.O. Box 6817 1025 Connecticut Avenue, N.W. Orlando, Florida 32803 Washington, D.C. 20036

William C. Wise Pe ter G. Crane, Esq.

1200 18th Street, N.W. Office of the General Counsel Suite 500 Nuclear Reuglatory Commission Washing ton, D. C. 20036 Washington, D.C. 20555 Daniel M. Gribbon Donald A. Kaplan, Esq.

Herbert Dym Janet R. Urban, Esq.

Joanne B. Grossman John S. Caragozian, Esq.

Covington & Burling Robert Fabrikant, Esq.

888 16th Street, N.W. George M. Pond, Esq.

Washington, D.C. 20006 Department of Justice P. O. Box 14141 Washington, D.C. 20044 obert A. ablon Attorney or the Lake Worth Utilities Authority, New Smyrna Beach Utilities Commission, Sebring Utilities Commission, Gainesville Regional Utilities and the Cities of Alachua, Bartow, Ft.

Meade, Key West, Lake Helen, Mount Dora, Newberry, St. Cloud and Tallahassee, Florida and the Florida Municipal Utilities Association