ML19326D112

Proposed Findings of Facts & Conclusions of Law Re Interim Fuel Cycle

ML19326D112
Person / Time
Site:	Midland
Issue date:	06/13/1977
From:	Gibbs M, Renfrow R, Rosso D CONSUMERS ENERGY CO. (FORMERLY CONSUMERS POWER CO.), ISHAM, LINCOLN & BEALE
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ML19326D113	List: ML19326D112 ML19326D114
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UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION Before the Atomic Safety and Licensing Board

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, In the Matter of- )

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CONSUMERS POWER COMPANY..

) Docket Nos. 50-329

) 50-330 (Midland Plant, Units 1 and 2) )

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LICENSEE'S PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW I. PRELIMINARY STATEMENT

1. The parties in this proceeding are Consumers Power Company (Licensee), the Nuclear Regulatory Commission Staff (the NRC Staf f) , all Intervenors other than The Dow Chemical Company (Intervenors) and The Dow Chemical Company (Dow). Licensee was originally granted construction permits for the Midland Plant, Units 1 and 2 by an initial decision issued on December 14, 1972 b/ and affirmed on May 18, 1973.2/

2. On July 21, 1976, the United States Court of Appeals for the District of Columbia Circuit handed down decisions in~

3 the Midland and Vermont Yankee appeals holding that nuclear waste disposal and reprocessing issues had been insufficiently considered by the Atomic' Energy Commission, Aeschliman v. NRC, 547 F.2d 622 (D.C. Cir. 1976), cert. granted sub nom. Consumers Power' Company v.'Aeschliman, 45 U.S.L.W. 3570 (February 22, 1977);

NRDC v. NRC, 547 F.2d 633-(D.C. Cir. 1976), cert. granted, 45 800'6060 3

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U.S.L.W. 35701(February 22, 1977); In addition to remanding Licensee's construction permits for the Midland Plant to the Nuclear Regulatory Commission (the NRC or the Commission) for further consideration of the fuel cycle issues, the Court of Appeals in Aeschliman remanded for further proceedings to consider energy conservation as a partial or complete alter-native to plant construction, to clarify a report by the Advisory Committee on Reactor Safeguards (ACRS), and to restrike the cost-benefit balance in view of the reconsideration of the fuel cycle and energy conservation issues. The court then went-on to state:

As this mattsr requires remand and reopening of the issues of energy con-servation alternatives as well as recal-culation of costs and benefits, we assume that the Commission will take into account the changed circumstances regarding Dow's need for process steam, and the intended continued operation of Dow's fossil-fuel generating facilities. 547 F.2d at 632.

3. On August 13, 1976, the Commission issued its General Statement of Policy -- Environmental Effects of the Uranium Fuel Cycle (41. F.R. 34707), in which it stated that as a result of the foregoing decisions it was considering whether or not to promulgate an interim fuel cycle rule to be used in licensing proceedings pending completion of formal rulemaking on this subject. The Commission indicated that proceedings could be instituted to consider whether any out-standing permits or licenses should be continued, modified or suspended until an interim rule could be made effective. With regard to the issues, other than' reprocessing and waste manage-ment, remanded in Aeschliman, the Commission stated that a

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s- s e s hearing on the merits should not be commenced until the Aeschliman decision had become final.

4. On August 16, 1976, the Commission issued its Memorandum and Order reconvening this Atomic Safety and Licen-

-sing Board (Board), ordering it to consider whether the con-struction permits should be continued, modified, or suspended pending the effectiveness of an interim fuel cycle rule and stating that no hearing on the merits of the other issues remanded by the Court of Appeals would be appropriate until 3/

the decision of the Court became final.- On September 3, 1976, the Court of Appeals issued its mandate in Aeschliman.

5. On September 14, 1976, the Commission issued a Memorandum and Order in this matter directing the Board to " consider all issues which have been remanded to the Commission by the Court of Appeals" and further directing the 4/

, Board "to undertake any necessary prcceedings."~

6. The Court of Appeals stayed its mandate in NRDC v.

NRC, the fuel cycle case, on October 8, 1976. In view of that action, the Commission suspended all the proceedings that had

-been convened due to the fuel cycle decision and the General 5/

Statement of Policy.~ In a separate order, also issued on November 5, 1976, the Commission directed that the Midland proceeding should continue in accordance with the NRC's Sep-tember 14, 1976 order with regard to all issues other than the fuel cycle matter.-6/

7. The Commission promulgated an interim fuel. cycle rule on March 14, 1977'(42 F.R. 13803). In an order issued April 1, 1977 the Commission directed the Appeal Panel to

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superintend the application of that rule in designated licensing cases (not including '41dland) as well as in any other proceeding in which the. fuel cycle issue was before it. CLI-77-10, NRCI-77/4 (April 1, 1977) . The Appeal Panel dealt with the desig-nated cases in ALAB-392, NRCI-77/4 (April 21,1977) , however an Appeal Board issued a separate memorandum and order in Midland.

That order instructed this Board to consider the fuel cycle issue, in terms of the interin fuel cycle rule, in addition to the other matters pending before it. ALAB-396, HRCI-77/5 (May 4, 1977) .

8. Pursuant to the Court of Appeals decision and the Commission and Appeal Board directives discussed above, in determining whether to continue, nodify or suspend pending completion of the remand proceedings, this Board must deter-7/

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A. Whether significant adverse environnental impacts will occur if construction continues during the period until an initial decision is reached on the remanded issues.

B. Whether there will be a need for the electricity to be generated by the Midland Plant at the time it is scheduled to come on line, and whether Dow will need the process steam to be generated by the plant at that time.

C. Whether reasonable alternatives in the areas of energy conservation, facilities to supply Dow with process steam and electricity, and the design items referred to in the clari-  !

fication to the ACRS letter will be foreclosed if construction continues until an initial decision on the remanded issues.  !

I D. What the effects wili be of a delay of the Midland l

Plant due to a suspension of construction.

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3 3 i s E. Whether the increased investment made in the project

if construction continues during the time in question will tilt the balance away from the alternative of abandonment, taking into consideration the interim fuel cycle rule.

F. Whether, after balancing the equitable factors discussed above and considering Licensee's probability of success on the marits at the hearing on the remanded issues, the equities favor the continuation of construction until an initial decision is reached on the remanded issues.

9. This Board scheduled a hearing for October 5, 1976 to determine whether the Licensee's construction permits should be continued, modified or suspended until an initial decision is reached on the remanded issues; oral testimony was to be heard. On October 4, 1976, at Intervenors' request, the Board rescheduled the hearing for November 16, 1976. Pur-suant to Board Order the Licensee and the NRC Staff filed written t'estimony and exhibits on November 5, 1976. Licensee filed with-the Commission an Environmental Report Supplement on October 26, 1976. On November 9, 1976 Intervenors again requested a continuance, and on November 10,.1976 the Board rescheduled the hearing for November 30, 1976. The hearing  ;

commenced on that date, ran for four days, and was adjourned l until December 14, 1976, at which time a prehearing conference-was held. .Due to scheduling difficulties the hearing did not resume until January 18, 1977; four days of hearings were then held, after which the-Board adjourned until January 31, 1977. . Ten more days of hearings were held, starting on that date and continuing through February 11, 1977, at which 1

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time the Board adjourned until February 15, 1977. After .

two' days of hearings, the Board adjourned until March 7,

.1977, at which time cross-examination of Intervenors' witness was scheduled. Due to another request for a continuance by

.Intervenors, however, the hearings did not resume until March 21, 1977, at which time four days of hearings were held, despite the fact that Intervenors, without giving any prior notice to the Board or the parties, failed to produce their witness for cross-examination. The hearings were then scheduled to resume on April 4, 1977, again for the purpose of' cross-examination of Intervenors' witness, but due to further continuances sought by Intervenors, they did not actually resume until May 9, 1977, when the last five days of hearings took place. In all, thirty days of hearings ,

were held in which a record of more than 6200 pages was compiled.

10. This Board takes notice of the fact that the Supreme Court has granted certiorari on all issues in Aeschliman, the decision which remanded the Midland Plant construction permits to the NRC for further proceedings.

This. development raises the possibility that the decision of the Court of Appeals will be reversed, thereby affirming the grant of the Midland construction permits and obviating the need for remanded hearings. On May 24, 1977, Licensee filed

, a motion to recall the mandate with the District of Columbia Court of Appeals. If that motion is granted, a stay of the remanded proceeding until the Supreme Court acts is also a possibility.

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II. FINDINGS OF FACT

11. As a result of the lengthy hearings and procedural delays outlined in Paragraph 9, supra, more than seven months elapsed between the time that the hearings were scheduled to commence and the date on which they were actually completed. The unexpected length of the hearings caused them to run beyond some of the time periods used in making various evaluations presented in the original testimony given in the hearings. Licensee's original testimony war prepared in October and the first week of November, 1976.

Certain portions of that testimony were based on the expectation that a decision on continuation, modification or suspension of the construction permits would be rendered on or about December 1, 1976. As a result of that expectation, two different time periods were chosen as representative of the potential-for delay and utilized for analysis of (1) the effects of delay and (2) the comparison of the cost to complete and operate the Midland Plant to the cost of abandoning Midland and installing and operating an alternative source.

Those time periods were December 1, 1976 to May 1, 1977 and 8/

December 1, 1976 to September 1, 1977.- While this Board believes that the adoption of these time periods was both reasonable and necessary, it is now obvious that the decision on continuation, modification or suspension of the construction permits was not issued on December 1, 1976 and that an initial decision on the remanded issues will not be made by September 1, 1977 However, this Board did not require or allow that

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revised testimony be submitted to update the time periods since it believed that the hearing needed to be completed at the earliest possible date. The Board believes that the re-quired analysis can be made on the record established to date. First, the Board believes that the schedule to govern the conduct of the remanded proceeding submitted by Licensee

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on June 1, 1977 is reasonable and hereby adopts that schedule.

Adherence to this schedule should result in an initial decision on the remanded issues by December 31, 1977. Thus, the elapsed time between this decision and the decision on the remanded issues is expected to be approximately four to five months.

A five month suspension would correspond with one of the time periods utilized by Licensee in its economic and environmental analyses. Next, the Board determines that a four to five month suspension of construction during the period August through 4 December of 1977 would conservatively result in a nine month delay period. See Paragraph 80, infra. However, since the-actual dates of the time period differ,'the Board also analyzed l whether the construction activities to be undertaken in the period August through December of 1977 were substantially equiv-alent to the construction activities performed from December, 1976 to August, 1977. The activities are found to be sub-stantially equivalent. See: Licensee Exhibit 4 and Board Ex-hibit 4, Table 4.1-1.

The Board then determined, by comparing the monthly expenditures hudgeted for January to September, 1977 (Licensee Exhibit 5) with the estimated monthly expendi-tures budgeted for September through December,1977, that the level of work activity would also remain approximately the same.

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• i The estimated monthly expenditures for the last four months of 1977 were calculated by deducting the amount budgeted for expenditures in 1977 through September 1, 1977 ($164,902,000) from the budget for the entire year ($245,000,000) which is set forth in Licensee Exhibit 37B, and dividing the difference by four months. According to_this computation, Licensee will be spending at an average rate of approximately $20,000,000 per month from September through December; this is equivalent to the monthly rate of expenditures during the period January through September. The Board then looked to whether the effects of delay would be similar for the two delay periods.

Since the differential power costs are calculated on an incremental basis (Attachment A to Affidavit of R. Calcaterra) for the periods of delay in the commercial operation dates of the two units (beginning in March of 1981 for Unit 2 and March of 1982 for Unit 1), the shift of the' suspension period frcm one beginning in December, 1976 to one beginning in August, 1977 will not affect the timing of the periods of delay in commercial operation dates of the two units and, consequently, will not affect the differential power costs.

The effect of delay on the capital costs of Midland may differ slightly since additional sxpenditures have been made subsequent to December 1, 1976, the starting point of the original periods studied. Consequently, escalation factors due to delay would be applied to a somewhat smaller base of future expenditures, but offsetting this factor, allowance for funds used during construction would be applied to an equally higher base of past expenditures for the additional

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period due to delay. In order to verify that the effect of the different suspension periods on delay costs would be similar, the Board calculated the monthly cost of delay for the original time periods used by Licensee. This verification was accomplished by dividing the delay costs set forth on Licensee Exhibit 16 by the number of months delayed. This calculation ($ 335,9 35,000 t 9) yields a cost of $37.3 million dollars per month for the five month suspension while the calculation ($ 578,831,000

+ 15) for the nine month suspension yields a cost of $38.5 million per month. Thus, the actual cost of delay on a monthly basis is also substantially equivalent. Finally, the Board looked at.the impact the new suspension period would have on the abandonment case. The Board finds that the addi-tional expenditure during the period of September through December, 1977 of $80,089,000 would not significantly affect the ratios set forth in Licensee's Exhibits 22 and 23. For these reasons, the Board has chosen to make its findings in this matter based upon the environmental and economic analyses currently in the record, as they provide an adequate basis for assessing the potential impacts and effects which may take place between now and December 31, '

1977. It should also be noted that the construction permits for the tiidland units were issued on December 14, 1972, more than three and one-half years prior to the remand in Aeschlinan and more than four and one-half years prior to this order.

Substantial construction has taken place during that period.

As of June 1, 1977, estimated expenditures of $518,259,000 had already been made on the plant and the construction O

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1 schedule calls for total expenditures in the amount of 9/

$594,925,000 as of August 31, 1977.- As early as November, 1976, engineering activities were approximately 63% complete 10/

and construction of the units was approximately 19% complete. --

A. LIKELIHOOD OF SIGNIFICANT ADVERSE EUVIRONMENTAL IMPACTS

12. The Commission has directed this Board to determine whether any significant adverse environmental impacts will occur.if construction continues during the period until an initial decision is reached on the remanded issues. As paragraphs 13 and 14 demonstrate, no significant adverse environmental impacts will result from continued construction during this period.

13. In assessing the environmental impacts of con-tinued or suspended construction, the Board has chosen to examine the impacts which might occur until December 31, 1977.

It should be noted that virtually all of the significant construction impacts identified in the FES have already taken place, as general preparation of the site and site 11/

excavation are essentially complete.-- The construction activities,that are scheduled to take place at the Midland -

site during the delay period analyzed by Licensee include 12/

work projects in seven major categories.-- These are the same type of construction activities which will occur in the delay period chosen by the Board, and as noted in Para-graph 11, supra, the level of construction activity will remain approximately the same.

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14. The principal impacts associated with these con-struction activities include relatively minor impacts from noise, fumes and dust; soil erosion; siltation; dewatering; 13/

traffic congestion and aesthetics.-- Due to the construction 14/

practices which Licensee. utilizes to minimize these impacts,~~

as well as the inherently small. impact projected to result from the work scheduled for this relatively late stage of_

construction, continued construction will not result in any significant adverse environmental impact.--15/

4 B. NEED FOR POWER

15. Licensee's capacity planning begins with a long term forecast of electric energy sales. Forecasting of 16/

energy sales.is done by Licensee on a continual basis.~-

Licensee is currently projecting sales increases of 3.5% for 1977, and an average annual compound rate of growth of electricity sales of 5.2% for the period beyond 1977 through

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1986.--17/Although there may be variations in the rate of growth from year-to-year, this forecast explicitly projects an average annual compound growth rate of 5.2% for the

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period 1978-1982. - The current official forecast of 5.2% l is based on the corporate adoption of the recommendations of ~

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1 Licensee's Energy Forecast Executive Review Committee (EFERC)~~

and was confirmed by an independent study using Licensee's

-more traditional analysis by class of customer.--20/

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16. The'EFERC, an experienced senior executive group, -- l l

was provided with varied input concerning historical l l

trends in electric energy sales, the causes of these trends, m

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sales.-- Background information considered by the EFERC for the forecasting analysis included material regarding population growth, home building trends, the rate structures of other 23/ -

utilities,. inventions, international affairs,-- load 24/

forecasts of other utilities in Michigan,-- economic trends 25/

and outlook,-- General Motors and other automobile industry 26/ -

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data,-- assumptions of the previous forecast,-- conservation 28/

experience and expectations,-- including governmentally 29/

mandated conservation - and commitments by industry to 30/

decrease their energy consumption,-- and load management.--31/

17. Preliminarily, lists of factors which might tend to severely affect load growth in the next ten years, either positively or negatively, were prepared as well 'as reviewed by all members of the EFERC.--32/ Those factors explicitly considered as tending to reduce demand included possible 33/ 34/

. fuel shortages, conservation,-- the price of electricity,--

environmental constraints, inflation, and general economic 35/

depression.-- Those factors considered as tending to increase demand included possible continued ecoaomic health and expansion, regulations by governmental bcd.es making

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energy more readily available and less expensive, inflation (which may affect demand either positively or negatively depending on the status of resource depletion), and the 36/

availability of fuels,-- including the need for customers to switch to electric power supply due to inadequate supply of alternate fuels.

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18. Based on a review of the factors mentioned above and estimations of their possible occurrence and resultant 37/

effects on energy sales,- EFERC members individually engaged in a session of probability enecding with the EFERC Chairman, who was experienced in ar;iying the encoding 38/

technique.-- The purpose of the encoding was to make a 39/

quan itative assessment of each individual's judgment -~

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including an exploration of the reasons for that judgment,--

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as to the probability of various levels of load growth.--

A curve aggregating the individual probability assessments 42/

was developed,- showing a range of possible growth rates from 3.2% to 7.2%, with the assessed probability of realization for each. The EFERC concluded that the most likely 44/

growth rate was 5.2% for the years after 1977,- based on the composite curve showing the highest expectation level 45/

for this rate.-- The composite curve was then presented to Licensee's senior management, which offically adopted the

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5.2% rate. -

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19. As part of the ongoing process of forecasting, a detailed confirmatory study using traditional sales forecasting methodology was performed in November 1976; future sales to each class of service (residential, commercial, industrial, and others) were separately assessed. This traditional methodology included evaluation of historical data and 48/

assessment of trends for factors such as: (a) conservation,--

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including price elasticity,-- more efficient use of appliances 50/ 51/

and more efficient types of appliances,-- and insulation;--

(b) the advent and acceptance of the heat pump, including

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the results of studies made by Licensee;--' (c) econcmic 53/

projections, partially based on econometric models;"-' (d) the amount, location, and type of General Motors' automobile 54/

production and sales;--' (e) fuel shortages and availability 55/

and use of alternate fuels;-- (f) revised rate structures, 56/

including the results of Licensee's own studies;--' (g) 57/

population projections and customer gains;"~ (h) amount 58/

and type of new dwelling construction;-~ (i) commercial sales by business code;-~59/ (j) Federal Reserve Board measures 60/

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of industrial output; and (k) new electric appliances.

All of these factors were adequately and appropriately taken into ac%ount in the forecast.

20. The result of the mathematically-cased confirmatory study is a projection that total main system electric sales will grow at an average annual rate of 5.2% after 1977, the same projection as the independent EFERC estimate of the 62/

most likely electric sales growth rate.-- On a breakdown by class, residential sales are expected to grow at an annual rate of approximately 4.5% through 1986, a reduction from the historical 6.5% growth rate of 1964-3974; commercial sales are expected to grow at a 5.5% rate, significantly reduced from a historical 9% rate; and industrial sales are i

projected to grow at 5.5%, compared to a historical rate of-  !

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7% in the 1960's and early 1970's.--~ Licensee projects 64/

peak demand to grow at the same rate as electricity. sales,--

a conservative assumption compared with the projections and 65/

historical experience of other utilities.--

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21. Licensee has factored into its forecast the energy savings expected to result from energy conservation. It is very difficult to quantify the impact of energy conservation relative to other factors tending to decrease electricity consumption.55! However, Licensee has measured the experienced effect of energy. conservation and related factors for its residential and commercial customers since November 1973.

The analysis shows conservation to have had a generally diminishing 67/

effect since its peak in January 1974.-- After a period of decreased consumption during the 1973-1974 winter season, 68/

customers have shown an absolute increase in consumption.--

The residential electric space heating customer is the only customer class showing reductions in energy use each year; however, even these reductions have occurred at a decreasing 69/

rate. A 1976 survey analyzing the potential for reduced usage by commercial and industrial customers indicated that most companies have reduced lighting levels, approximately 20 percent have reduced ventilation energy use, and some i

l customers have raised thermostats in summer and lowered them in winter, reduced electric water heater temperatures, and shut down equipment during work breaks.--70/

22. The results of Licensee's studies have also shown that even if energy conservation reduces total energy sales, I it will not necessarily lower peak demand, and it is peak 71/

demand that determines generating capacity requirements. --

Specifically, a study of air conditioning conservation h,

24. Another technique being utilized by Licensee which may reduce customers' energy use or-demand is the re-structuring

, of rate concepts. Licensee implemented, from November 1973 to April 1976, a flat type rate for residential customers and this rate type was also instituted in January 1975 for 77/

some small commercial and industrial customers.-- As of April 1976 Licensee instituted an inverted residential rate 78/

block structure for most residential use.-- Time-of-day rates and load management tend to reduce system demand by moving some customer usage to off-peak time periods. --79/

Licensee has offered a form of time-of-day pricing for many years, but few customers have taken any significant advantage of this off-peak rate, and Licensee's primary commercial and industrial customers have indicated little inclination to shift load from peak load periods.--80/ In April 1976, the Michigan Public Service Commission (MPSC) ordered time-of-day rates for primary commercial and industrial customers.--81/

Load management'is also being studied by Licensee, but is of queationable practicality partially because of its cost.--82/

Licensee has also studied other rate concepts which may

, impact energy use, such as the lifeline rate and marginal cost pricing, is participating in an electric utility rate design study, and, pursuant to an order of the MPSC, Licensee and the Detroit Edison Company (Detroit Edison) have jointly hired. consultants to. study the effect of price elasticity on residential loads.--83/

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25. The effect of what has been termed energy conservation by shifting customer load to off-peak periods, such as by load 84/

management or time-of-day rates,-~ is limited for Licensee's

- system because of high customer and system load factors,

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that is, high average demand relative to peak demand. ~

Not only is the average demand level of customers high relative to their peak demand, but Licensee's system load factor is further increasild by off-peak energy use to pump the Ludington Pumped Storage Plant, which provides capacity and energy for use during on-peak periods.~~86/ Thus, there is little advantage to Licensee in shifting customers' energy consumption from higher to lower load periods since it would not tend to significantly reduce the peak demand on the system, and therefore would not reduce generating capacity requirements.-~87/

26. The effects of the energy conservation and revised rate structure measures already taken in Licensee's service area, and the effects of measures which Licensee expects may be taken and prove efficacious in the future, have been 88/

fully incorporated in Licensee's long-term forecast. -~

As shown in Paragraph 20 suora, Licensee projects significantly decreased sales growth rates for each customer class, due in great part to anticipated energy conservation. URC Staff testimony confirmed that conservation has been given adequate weight in Licensee's forecast.~~89/ In fact, an MPSC study concluded that Licensee has overstated conservation savings 90/

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in its forecast. Licensee has also identified a significant countervailing factor which may offset conservation efforts,

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which is described in Paragraph 31, infra. Thus, the effects

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l of energy conservation have been considered in calculating Licensee's need for power in general and its need for the Midland project in particular.

27. A careful and detailed evaluation made by the MPSC found Licensee's forecasting methodology to be reasonable, consistent with generally accepted practices and containing 92/

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a high degree of analysis. However, the MPSC concluded that Licensee has underestimated future sales and peak demand in its long-term growth forecast. The MPSC estimated a range of growth of 5.3% to 6% based on alternative assumptions; Licensee's forecasts of 1982 total energy sales and peak

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demand were below even the MPSC's low estimates. ~ The MPSC Study confirms the reasonableness of the result of Licensee's forecasts.~~95/

28. Another independent forecast made by the Michigan Governor's Advisory Commission on Electric Power Alternatives (GACEPA), based on an econometric model including a regres-96/

sion analysis by major customer class,~~ substantially supports the results of Licensee's forecast.~~97/ Three dif-ferent scenarios for the growth levels of causal variables were developed by the GACEPA Staff.-~98/ Licensee's forecast was again found to be reasonable, but somewhat conservative, based on the intermediate growth scenario of 5.26% for 1975-99/

1985 adopted by the Commission.~~ GACEPA also concluded that its own intermediate growth scenario contained a slightly 100/

downward bias for increases in sales and peak demand, thus making Licensee's forecast even more conservative in comparison.  !

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29. The Federal Energy Administration's (FEA) forecast for the region encompassing Licensee's service area, based on an econometric model and a class-by-class analysis, indicates that Licensee's peak demand can be expected to 101/

grow at a rate of approximately 5.29%. Thus, the FEA study also confirms that Licensee's forecast is reasonable, 102/

but slightly low. _-

30. Based on its own review of the forecast assumptions of Licensee and Detroit Edison, independent forecasts and studies of the service area of the combined Licensee and Detroit Edison systems -- the Michigan Electric Coordinated System (MECS) -- by the MPSC and GACEPA, and the regional forecast of the FEA, the NRC Staff has also concluded that Licensee's forecast reasonably represents the likely growth 103/  !

1 in electric demand.

31. Licensee's forecast may also underestimate electrical  ;

demand based on possible increased growth due to the potential l for additional substitution of electrical energy for oil and 1 104/

natural gas-fired energy. Licensee has already observed some conversions to electricity by its customers, and others 105/

have expressed. tentative plans in this direction.

It is recognized by various public and private agencies that _

substitutien may result from shortages of supply and higher 106/

prices of alternate fuels. The NRC Staff has also recog-nized that substitution constitutes a vast potential source of 107/

increased demand by certain of Licensee's customers.

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The possibility of this occurrence could offset the possibility 108/

of a c' energy conservation exceeding present estimates.

32. Once sales are forecasted, Licensee must determine the amount of generating capacity that will be needed on its system to supply these customer needs in future years.

First, in order to determine average system demand, Licensee must estimate the amount of energy required at the point of

• generation by calculating energy losses between that point and the point of sale. This is done by the use of a system

" efficiency factor." Second, because supply at the time of peak demand is the chief indicator used in capacity planning, projected generation requirements are converted to projected peak demand by an analysis of the historical relationship between the two, as well as expected occurrences that would affect this historical relationship. The variable characterizing this relationship is termed the system " load factor." Third, capacity sales (sales of undivided ownership portions of specific generating units) are deducted from installed generating capacity projected to be in service to meet system demand. Fourth, known reductions of generating capacity in specific seasons or years are subtracted from overall installed generating capability. These calculations yield a picture of the system's capability and the demand which will be placed on that capability in future years. In order to analyze the need for unit additions, Licensee then uses computer modeling to assess its system reliability in future

B years. Based on the results of this modeling and Licensee's design reliability goal, Licensee determines the generation reserve necessary, that is, the amount of generation over peak loads needed to provide reliable service to customers.

The subsequent decision as to the amount of capacity Licensee must install on its own system to achieve reliability is based on a number of factors, including an assessment of the probability of being able to purchase power from external sources. Based on these calculations and judgments, Licensee develops a plan to reliably supply its forecasted sales.

Specific descriptions of these calculations and judgments follow in Paragraphs 33 through 45.

33. In order to estimate total energy generation requirements, forecasted annual sales are divided by a system efficiency factor of 91.5% beginning in 1978. This figure is based on historical trends of energy requirements at point of generation and point of sale and occurrences 109/

expected to affect these trends. Because capacity planning is based on peak demand, the average annual demand is then computed and divided by an annual customer load factor of 67% for the years after 1978 to estimate this peak demand; this ratio reflects the historical relationship between average demand and peak demand, as well as projections 110/

of future trends in this relationship.

34. Sales of capacity, or undivided portions of specific 111/

generating units, are included as distinct from total l

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system energy sales. Based on contract negotiations to 113/

date and.an agreed-upon proposal, Licensee is projecting sales of 272 Mw of capacity of the Midland Units to two 114/

cooperatives and two municipal systems and of 60 Mw of 115/

the capacity of its Campbell Unit 3 to the two cooperatives.

The 272 Mw figure is reduced in the early years of Midland's operation because Licenhee plans to buy back the capacity 116/

not immediately needed by the purchasers. Despite the fact that they will have difficulty obtaining power from other sources, net purchases by the two cooperatives have 117/

. only been projected if the Midland Units are in service.

Sales to the two municipal systems must be assumed to occur even if Midland is not in service because Licensee is their 118/

only reasonable source of power. Licensee also plans for a capacity sale of 318 Mw based on a contractual commitment leasing this portion of the Ludington Pumped Storage Plant 119/

to Commonwealth Edison Company through 1983.

35. The planned generating capacity of Licensee's system includes a derating based on the risk of a reduction 120/

in the generating capability of the Palisades Plant.

For planning purposes, Palisades' capability is reduced by approximately 5% or 35 Mw per year until the in-service date of Midland Unit 2, at which time Palisades is assumed to 121/

be taken out of service for two years for repairs.

This planning judgment is based on a history of continuing 122/

degradation of the Unit's steam generator tubes. Despite m

efforts to eliminate the degradation, in order to maintain the integrity of the tubes and provide for continued operation of the steam generators, Licensee has found it necessary to plug tubes which have reached a certain level of degra-dation, and projects that plugging will continue to be 123/

necessary. Currently, approximately 22% of the tubes have been plugged and are therefore unable to transfer 124/

energy from the nuclear core to the turbine generator.

If degradation continues and significant additional tube plugging is required, there must be a reduction in the 125/

Unit's power production rating. Licensee is currently pursuing additional means to eliminate tube degradation and alleviate its effect; however, there is a large degree of un-126/

certainty as to whether these methods will be successful.

This uncertainty, combined with the certainty of the effects of tube degradation and plugging, makes it prudent to plan a 127/

reduction in the Unit's capability rating. Because of the possibilities of protracted outages for repair or inspection, and continuing derating of the Unit, it is also necessary to plan for the retubing or total replacemeni. of the steam gen-129/

erators, which would require removing the unit from 129/

operation. Retubing would have a one year lead time for equipment procurement and performance of decontamination 130/

procedures and would require a subsequent three year outage.

Total replacement would require a lead time of approximately 2

four years for delivery of units built to necessary speci-131/

fications, and approximately two years for their instal-132/

1ation. Studies done to date indicate that replacement of t?e steam generators is more. economical than retubing and 133/

is the p' referred choice. The retubing or replacement should be tied to the in-service date of the Midland Project for economic reasons, and to reduce the risks associated with 134/

lowered capacity reserves.

36. Generating capability must be planned to reliably 135/

serve the projected electrical demand. Therefore, capability considered necessary by Licensee includes not only the amount of generation sufficient to meet loads, but an additional amount of reserve which will enable provision of continuous supply when generating units are not operating for reasons of maintenance, equipment failure or seasonal or i

system condition deratings; or when slightly higher than 136/

expected loads are experienced. In addition, reserves ideally will permit supply when capacity may be limited due to environmental restrictions or fuel shortages; or because 137/

of failures to add generating capacity as scheduled.

Because of the East Central Area Reliability Coordination Agreement (ECAR), as.well as interconnection agreements with other groups, Licensee is bound to maintain a minimum daily operating reserve over its projected hourly peak for each 138/

day of approximately 6%.

37. The amount of reserve generating capacity required to maintain reliability, expressed as a percentage of peak demand, is dependent on several parameters, including the

~-

design reliability goal, the size and performance expectations 139/ 140/

of generating units, the system's load characteristics, and the level of support which can be expected from intercon-141/'

nected systems. By an analysis of Licensee's system using probability theory, the projected reliability of the generating system is assessed and the relationships between

, design reliability goals and capacity reserve levels are 142/

determined.

38. The design reliability goal used to determine the amount of installed reserve required on Licensee's system is 143/

a loss of load probability (LOLP) of one day in ten years.

The LOLP standard refers to the probability that the system, including installed generation and outside support, will not be able to serve its customer demand during a given 144/

period, requiring measures to prevent system collapse.

This particular LOLP standard is generally used by the ECAR group and is considered to be a recognized standard throughout 145/

the utility industry. It has a sound basis, has withstood 146/

expert scrutiny, and has been supported empirically.

To satisfy the LOLP criterion under presently forecasted conditions for the early to mid 1980's, computer calculations modeling Licensee's system'show that Licensee requires total 147/

reserves, or excess generating capacity over peak load, 148/

equivalent to 50% to 60% of its peak load. Estimates of Licensee's reserve requirements have been as high as 63% based on an analysis using historical data on generating 149/

unit availabilities.

e

39. Licensee operates pursuant to a coordination agreement with Detroit Edison as the MECS, and the two 150/

companies dispatch power and energy as a single entity.

Licensee relies on this interconnection to supply some of the 50% to 60% reserve requirement and therefore does not 151/

install generation for the full amount required. However, 152/

the companies plan their generation expansion independently and each plans for maintenance of the desired reliability level for its own system, as Licensee considers itself bound to do by the terms of its coordination agreement with Detroit 153/

Edison. Licensee also relies on other interconnected utilities to supply a significant portion of the necessary 154/

capacity for meeting its total required reserve.

Licensee estimates that it muJt install generation reserves equivalent to approximately 20% of projected peak load, thus relying on outside sources of capacity for a total of 30-40%

155/

of peak load. present major sources of purchased power include the interconnected systems of. Detroit Edison, Ontario 156/

Hydro and the ECAR Companies. Reliance on these systems for generating capacity in the magnitudes required poses significant problems for Licensee in the period of 1981-1984 157/

as the availability of this power is not certain. Also,_

the burden of providing power facilities for reliable and economic operation in a given area must be borne equitably 158/

by the suppliers within that area. Thus, planned reserves in excess of 20% for the period through 1984 would not be 159/

imprudent.

4

40. Detrait Edison's projected installed generation reserves for the years 1981-83 are generally below target levels, so that large amounts of surplus power and energy 160/

will not be available from that system.

41. Another supplier of power and capacity to Licensee, Ontario Hydro, is predicting diminishing reserve capacity during the early 1980's and has indicated concern over its 161/

power supply situation. Ontario Hydro has also indicated a reduction in the physical capability of its system to 162/

transfer power into the ECAR system during this time period.

42. The systems with which Licensee is interconnected, including Detroit Edison, cannot be relied upon to provide excess capacity and energy in the summer months because they are principally summer peaking systems, a fact which tends to make the 20% installed reserve level conservatively 163/

low. Other factors tending to decrease the availability of purchase power in the 1980's include significant possibilities of cancellation and deferral of generating plants by other 164/

utilities; potential unavailability of fuel, especially 165/

oil and gas-fired generation; and uncertainty regarding 166/

environmental requirements for generating units.

43. Uncertainties similar to those tending to decrease the availability of purchase power also tend to increase the system's total reserve requirement to meet the same LOLP 167/

reliability criterion. These uncertainties include 168/ 169/

weather extremes, ' delays in plant start-up dates, s

v - . - _ - -, - - - - , - -

170/

and fuel shortages. Thus, factors other than the reliability criterion must be considered in determining the amount of 171/

necessary reserves. The NRC Staff has determined that the potential for delays and deferrals of generating capacity by other utilities interconnecting with Licensee is very much a reality; conversely, unexpected additions of capacity 172/

are highly unlikely because of typically long lead times.

Licensee is particularly concerned about possible loss of oil-fired capacity because of changing economic and political factors, including possible export restrictions by Canadian 173/

authorities, as well as United States supply curtailments 174/

and national energy objectives. A total of 1586 Mw of Licensee's Karn-Weadock generating complex is directly fired with oil imported from Canada; in the event of loss of this 1586 Mw of capacity or a substantial portion thereof, Licensee would be faced with totally inadequate capacity reserves, resulting in frequent service interruptions, even 175/

if the Midland Units are in service as scheduled.

44. As an important characteristic of its system, the level of Licensee's load factor must also be considered in 176/

the determination of an appropriate installed reserve level.

Licensee is projecting similar summer and winter peak demands, and a very high anticipated customer load factor of 67%

for 1979 and beyond, which is increased to an 80% system load 177/

factor by the operation of the Ludington Pumped Storage Plant.

This indicates a relatively small differential between on-peak 1

_31 178/

and off-peak system usage and a large number of high load days.

Although the high load factor indicates an economically efficient use of generating units, it also causes difficulty in limit-180/

ing scheduled unit maintenance to periods of low load. Some maintenance must be scheduled at times of peak load when reserves are low, therefore requiring reserves over nominal 181/

target levels 1.o maintain reliability. The NRC Staff has indicated that Licensee requires installed reserves above 182/

25% based solely on its load factor.

45. Installed reserves of 20% are the minimum necessary to maintain the dependable and economic operation of Licensee's 183/

system during the next 5 years. Even a reserve margin of 20% does not necessarily enable Licensee to meet its LOLP 184/

goal. At a reserve level lower than 20% Licensee would not even approach achieving its LOLP goal in the early 1980's, and therefore, system reliability would be seriously jeopar-

, 185/

dized. Significantly, even a slight decrease in the percentage of Licensee's installed reserve results in a sub-186/

stantial degradation in system reliabi?.rty.

46. The Federal Power Commission (FPC) has found that most power systems require a generation reserve of between 15% and 25% to meet a one day in 10 years loss of

~

187/

load probability reliability goal. The FPC has also determined that systems with high annual load factors will 188/

require relatively higher reserves. However, there has been a tendency away from using installed reserve percentage l as the. sole planning criterion; the determination of requ'.ed k

reserve margin is more appropriately based on attainment of 189/

, a certain reliability level. There is no single percent 4

reserve margin that will assure reliability for all utility systems, even to satisfy the same reliability criterion such as an LOLP of one day in 10 years, because each particular system 190/

must be separately assessed.

47. In the event of a suspension of construction of the Midland Units and resultant nine or fifteen month delays in 191/

their in-service dates, deficient reserves of 18% at the 1981 summer peak and clearly inadequate reserves of 15.7% at 192/

the 1982 summer peak would result. (Delays of Midland to either December 1981 and 1982 or June 1982 and 1983 result in the same reserve levels because summer peak is the critical 193/

period considered.) If construction of the Midland Units were cancelled, resulting reserves would be 18% in 1981, 11%

194/

in 1982 and 4.8% in 1983. If 1586 Mw of the Karn-Weadock 195/

oil fired units was to be out of service, Licensee would have negative reserve levels of (10.6%) in 1981 and (11.5%) in 1982 in the event of a Midland delay, resulting in severe

, 196/

hardship to consumers. If construction of Midland were cancelled, under this scenario, these negative reserves would 197/

be (10.6%) in 1981, (16.1%) in 1982 and (20.9%) in 1983.

An additional indication of the impact of a delay of the Midland Units'on the reliability of power supply is shown by

. viewing the situation in terms of the overall ability of Licen-see's generating units to meet the energy needs of customers during an entire year, rather than at-the time of peak demand.

• 2

+ , - . _ ._ . - . . . _ _ __ __

• e Even at maximum practical output by generating units, energy supply would be significantly deficient in 1981 through 1983 if the Midland Units were delayed, and the deficiency would be even more significant if their construction were 198/

cancelled completely. Thus, in each of the scenarios presented, a delay in the in-service dates of the Midland Units would severely impact the system's reliability by significantly decreasing capacity reserve levels.

48. The NRC Staff has reviewed the adequacy of Licensee's power supply as part of the total MECS for the early 1980's, and has determined that even with the Midland Units in service on schedule, there is a high probability of an electric power 199/

deficiency during those years. Based on the FPC's LOLP computer model, Licensee's LOLP criterion accurately matches an MECS 200/

reserve requirement of 351. Even if the Midland Units are in service as scheduled, MECS reserves do not approach this 201/

reserve level. In the event of a one year delay of the Midland Units, even allowing for the admittedly conservative assumptions of no derating or outage of the Palisades Unit, no capacity sales by Licensee to cooperatives or municzpals and adequate oil and gas supplies for generating units, the power 202/

supply of MECS would be even more substantially deficient.

Such a one year delay would in turn create a situation in which small increases in load growth rate would severely impact the 203/

reliability of service. In the NRC Staff's view, it would be imprudent and irresponsible to allow such exposure of the 204/

system. The NRC Staff has concluded that it would not be 205/

prudent to increase dependence on interconnected power systems; 9

indeed it would be extremely impractical, as shown in Paragraphs 39 to 43, supra. Even with installed reserves of over 35% in MECS and some reliance on outside power sources, there is no guarantee of system reliability, as was shown by a recent loss of load occurrence at a time when MECS had installed reserves of 206/

approximately 43% over peak hour for that day.

49. The NRC Staff has, in a separate analysis, compared projected baseload capacity to baseload demand on Licensee's system for 1981-1983, and has concluded that the Midland Units 207/

are needed to supply economical baseload capacity. A one year delay in the in-service dates of the Midland Units will 208/

cause a deficiency in this baseload capacity in 1981 and 1982.

50 The Midland Units must be in service as scheduled not only to provide reliable electric service to Licensee's customers generally, but also to supply steam to Dow. Dow presently supplies its steam requirements from its own fossil-209/

fired generating units. These units cannot be relied on for the future supply of steam for the following reasons:

(a) the units are outmoded and antiquated and cannot operate 210/

safely or reliably beyond 1984, at the latest; and (b) a Consent Order with the Michigan Air Pollution Control Commis-sion ("f1APCC") only allows their continued operation in the present fashion until July 1980, and a new Consent Order has 211/

not yet been adopted. Since Dow needs steam to operate its 212/

Midland plant and'must therefore replace the generation of its existing units, in approximately 1966 Dow undertook an econ-213/

omic analysis of alternative sources of steam supply. As a result of its decision that nuclear-produced steam was the

most economic alternative, Dow entered into an agreement with Licensee in 1967 for the purpose of replacing self-generated 214/

steam with steam produced by the Midland Units.

51. There is presently in effect a General Agreement between Licensee and Dow to which have been added a Contract For Supply of Water, an Agreement For Electric Service (Electric l 215/

Contract) , and a Contra'ct For Steam Service (Steam Contract).

Under the present Steam Contract, Dow is contractually com-mitted to purchasing a minimum of 2 million pounds per hour of 175 psig steam from Midland Unit No. I when it comes into 216/

service. Based on formal notification procedures under Section 12 of the Steam Contract, Dow has in'dicated its desire to reserve capacities of 2,400,000 pounds per hour of 175 psig 217/

steam and 400,000 pounds per hour of 600 psig steam for 1982.

These amounts are Dow's current best estimate of its need for 218/

steam in 1982.

52. The current versions of the Steam and Electric Contracts 219/

were executed in January 1974. They have been the subject of continuous review since May 1974; there have been active negotia-tions regarding possible modifications to the contracts directly 220/

relating to the Midland Project since 1975. The contrac-tual relationship was formally reviewed by a Dow executive group  !

l in a " corporate review" in September, 1976, at the request of 221/

Dow's Michigan Division. The corporate review was under-222/

taken by the Operating Board of Dow Chemical USA, the entity with jurisdiction over the affairs of the Michigan 223/

Division. Preparation for the review by a task force of 4

= .

the Operating Board included ar, analysis of the economics of 224/

various alternatives, which was presented to the Board.

53. The result of the corporate review, as stated in tes-timony filed on November 5, 1976 and sworn to on November 30, 1976, was a corporate conclusion that circumstances had not changed sufficiently to call for a modification of Dow's commit-ment to nuclear-produced steam supplied by Licensee in March 1982, and that under presently known circumstances, the nuclear plant 225/

was Dow's most economically attractive alternative. Dow expressly stated its intention to purchase process steam from Licensee beginning the first year of operation of Midland Unit 226/

No. 1. In oral testimony on December 1, 1976, Dow confirmed that it was complying with the Steam Contract in good faith and 227/

to the fullest extent of its ability.

54. On numerous occasions since the commencement of the hearings, Dow has reiterated its commitment to the Midland Project. For example, on January 25, 1977, in response to Interrogatories posed by Intervenors, Dow again stated that it intended to honor its contractual obligations to pur-chase steam from the !!idland Project and electricity from 228/

Licensee's integrated system. As a result, Dow had no contingency plan for a situation in which it determined not _

229/

to purchase such steam or electricity.

55. On February 2, 1977, the Dow witness heading Dow's Michigan Division repeatedly restated the conclusion of the corporate review -- that Dow would fulfill its contractual obligations, and it had not altered its position in support 4

7

230/

of the Midland Project. Dow's position as stated in its 231/

original prepared testimony remained uncha.Ted. The Pres-232/

ident of Dow USA, also a menber of the Dow Board of Directors, also affirmed on that day that the written testimony filed on behalf of Dow on November 5, 1976 continued to accurately 233/

reflect the Dow corporate position'as of February 2, 1977.

56. In its February 28, 1977 Interrogatory Responses, Dow indicated that it has undertaken no formal efforts to replace its existing facilities with fossil-fired facilities. 234/

At that time, Dow also explicitly stated that:

(a) the Dow Midland plant needs a dependable source of steam and electricity; (b) the conclusion of the corporate review had been that the Midland Project was the economically ad-vantageous alternative; (c) Dow's official position was unchanged since the 4

time of its corporate review;

. (d) No individual at Dow has the authoriti to change i

that position; and (e) Dow did not know of any changes sufficient to 235/

require a reevaluation of its position.

57. The lack of ambiguity in Dow's poultion as shown in the February 28, 1977 Interrogatory Response was expressly emphasized in a May 2, 1977 supplement to another Interrogatory Response. In that supplemental response, an April 28, 1977 letter from the President of Dow Chenical USA to the President of Consumers Power Company, Dow emphatically reiterated that

it had no intention of breaching its contractual obligation 236/

to Licensee.

58. Since Midland Unit No. 1, which will supply steam to Dow, is not projected to be in service until March 1, 1982, Dow must continue to generate its own steam beyond the final date in its present Consent Order with the MAPCC:

237/

July 1, 1980.

Dow is currently endeavoring to achieve agreement with the MAPCC 238/

to permit operation of its existing units beyond 1980. On January 18, 1977, Dow presented a proposal to the t1APCC for con-tinued operation of its generating units, seeking an extension of time for compliance with the MAPCC's emission limits for partie-ulates and sulfur dioxide; Dow proposed a gradual conversion from coal to oil for fueling its existing generating units, elimin-239/

ating coal as a fuel by July 1982. After numerous meetings, Dow and the MAPCC Staff reached agreement on a new Proposed Resolution and a Stipulation for Entry of Consent Order and I

Final Order. On March 22, 1977, the MAPCC Staff recommended l MAPCC adoption of the new Proposed Resolution and Consent Order, which call for Dow to meet a compliance schedule that stipu-4 lates compliance by July 1980 through conversion from coal to 240/

oil' fuel.

59. Dow is anxious to acquire a reliable source of steam supply as soon as possible so that it may shut down 241/

generating units which it considers antiquated and unreliable.

In fact, in Dow's view, the timetable of the construction of  !

242/ 1 the Midland Project is the critical factor. Dow has in-  !

243/ '

dicated that it simply cannot operate without steam and l 1 I y --.- --

/

a___

e that as soon as Midland's reliable and economic source of process steam is available, Dow intends to discontinue opera-244/

tion of its own facilities. Accordingly, Dow has great concern over the possibility that construction of the Midland 245/

, Units may be suspended. In fact, any " dispute" which Dow considers to have arisen between the parties to the contract 246/

results from delays which have occurred thus far. Dew needs 247/

steam as soon as possible. It has not undertaken any formal efforts to replace its generating units with other self-genera-248/

tion. Thus, Dow has expressed a genuine need for steam from 249/

the Midland Project at the earliest possible date. Licensee will be able to finance construction of the Midland Units and will be able to meet its current schedule so as to provide for 250/

Dow's needs.

C. FORECLOSURE OF ALTERNATIVES

60. The alternatives which must be evaluated for possible foreclosure by continued construction are those reasonable alternatives which are raised by the remanded issues. They are: (1) building the plant as planned, building a smaller plant or building no plant at all, which are alter-natives relating to the possibility of implementing energy conservation measures which might eliminate or substantially reduce the demand for electricity from the plant; (2) the alternatives of Dow building its own new steam generating units or continuing to use its existing units; and (3) design

alternatives relating to such of the eleven items listed by the ACRS in its clarifying letter of December 1, 1976 as were open at the time the construction permits were issued but which have subsequently been resolved by the ACRS. The follow-ing paragraphs demonstrate that reasonable alternatives in these three areas will not be foreclosed by continued construc-tion until an initial decision is reached on the remanded issues.

1. Energy Conservation

61. The alternatives of not building Midland, or of building a smaller plant in its stead are not viable alternatives, as Licensee's load forecast and analysis of required reserve levels have established the need for the amount of power to be generated by the flidland Plant. (Section B, suora) Furthermore, the historically-based and the anticipated effects of energy conservation have been adequately reflected 251/

in this load forecast. These effects aculd be limited because of the short period of time until 1981-1982. Even if the need for a plant the size of Midland had not been demonstrated, it would be infeasible to modify the design 252/

of the nuclear plant so as to make it smaller. Long lead times would prohibit the construction of a smaller nuclear or 253/

fossil fuel alternative by the 1981-1982 time period.

Consequently, continued construction of the Midland Plant will not foreclose reasonable alternatives arising from the effects of energy conservation.

2. Dow

62. The option of not providing process steam and electricity to Dow is not a viable alternative, since Dow needs the process steam and electricity as soon as possible

• l l

l j

251/

and not later than 1984. See section B, supra. Dow hac considered several alternatives to receiving its supply af electricity and process steam from the Midland Plant. These include a coal fired steam turbine plant; coal, gas or oil fired package boilers; and a coal gasification unit in combin-255/

ation with gas turbines and package boilers. Dow, Licensee and the URC Staff have all compared the costs of Dow's alter-256/

natives with the cost of the nuclear plant; these analycos show the nuclear plant to be the preferred alternative on a cost basis. See Section E, infra. Dow has estimated that the lead time necessary to construct a coal fired plant of the design and size which it would require, under the best conditions, 257/-

is three to four years. Dow estimates that it will not be able to operate its present fossil fueled facilities beyond 258/

1984. Thus, any suspension of the Midland construction permits which could result in a delay of the commercial oper-ation dates beyond 1984 may force Dow to abandon the nuclear 259/

option, thereby foreclosing Dow's preferred alternative.

Continued construction of the Midland Plant would have no effect at all on Dow's ability to finance construction of 260/

an alternative. Nor would the continued construction of the Midland Plant through December, 1977, place Dow in a position where it would be foreclosed from pursuing an alter-native because of Dow's projected lead time for construction 261/

of a fossil fuel plant. Therefore, continued construction will not foreclose reasonable alternatives to the Midland Plant for supplying process steam to Dow.

+

3. ACRS Items

63. The former Chairman of this Board sent a letter to the Chairman of the ACRS on October 14, 1976, inquiring as to what action the ACRS planned to take in response to the Court of 262/

Appeals order in Aeschliman. The ACRS responded by sending 263/

a letter tc Fie Chairman of the NRC on November 18, 1976 which 264/

was superseded by a letter of November 23, 1976 and further 265/

explained by letter of December 1, 1976. The purpose of the letters was to clarify the "other problems related to large water reactors" applicable to the Midland Plant which the ACRS 266/

. had mentioned in its letter of June 18, 1970. The eleven items listed in the November 18, 1976 letter are identical 267/

to the items listed in the November 23 and December 1 letters.

[This series of letters will hereinafter be referred to as the ACRS correspondence.]

64. Licensee reviewed these eleven items to determine if any were also listed in tne ACRS generic letter dated April 16, 1976, and whether any had been resolved by the ACRS. If an it.em had been resolved, a review was then made to determine whether the Midland Plant complies with such resolution. If an item has been resolved and it

~

has not yet been determined whether the Midland Plant complies, it was listed as "open" on Licensee Exhibit 6 and a review was made to determine whether completion of construction activities would foreclose adoption of the ACRS resolution.

Some of the items listed in the ACRS correspondence were not addressed in the April 16, 1976 ACRS generic letter and therefore generic resolutions of those items have not been documented by ACRS. Licensee evaluated those items to 9

4 determine if the proposed design would resolve the item by reviewing the dockets of nuclear plants which are of the same design as Midland to determine what resolution of the item was found acceptable by the NRC Staff and/or the ACRS.

If the proposed design for the Midland Plant complied with that approved for the sister plant, it was considered 268/

to be resolved. If_the design is not completed relative to resolution of the item or the URC Staff has not accepted the design, the iten was listed as "open." For those items, a review was then made to determine whether completion of construction activities would foreclose compliance with the eventual resolution.

65. The first item mentioned in the ACRS correspondence 270/

is " separation of protection and control instrumentation".

The Midland Plant complies with the resolution of this item, which is addressed by General Design Criteria 22 and 23 and 271/

IEEE 279 -- 1971.

66. " Vibration and loose parts monitoring" is the next 272/ 273/

item; this item has not been resolved by the ACRS, thus no design alternative could be foreclosed by continued 274/

construction. In addition, such equipment as might ultimately be required to resolve this item can be in the nature of add-on equipment which could be added to a plant 275/

at any time. The Licensee is committed to install 276/

such equipment when it becomes available. Thus, contin-uation of construction through December 31, 1977 will not foreclose compliance with the resolution of this item.

9

67. The third concern in the ACRS correspondence is the " potential for axial xenon oscillations" and the 277/

use of solid poison shims. The Midland Plant design 278/

complies with the resolution of this item.

68. The design of the Midland Plant complies with the resolution of the fourth ACRS item, the " behavior of the core-279/

barrel check valves in normal operation".

69. The fifth item noted in the ACRS correspondence 1

280/

is " potential consequences of fuel handling accidents".

This item has been resolved by Regulatory Guide 1.13 with 281/

which Licensee represents the Midland Plant will comply.

70. The next concern addressed in the ACRS correspondence 282/

is " effects of blowdown forces on core internals". This matter is partially resolved by Regulatory Guide 1.20 with 283/

which the Midland Plant conforms. In addition, Babcock &

Wilcox Topical Report 10008 which addresses this issue has been a'cepted by the NRC Staff and the ACRS for Oconee class plants 284/

such as Midland.

71. The seventh item discussed in the ACRS correspon-dence is " assurance the LOCA-related fuel red failures 285/

will not interfere with ECCS function". This matter has been resolved by Appendix K to 10 C.F.R. Part 50, to which 286/

the Midland Plant conforms.

72. "Effect on pressure vessel integrity of ECCS induced 287/

thermal shock" is the eighth ACRS matter. This item is partiaily addressed by Regulatory Guide 1.2, with which the 288/

Midland Plant design complies. The remainder of this item N

7

is still pending, thus no design alternative could be foreclosed 289/

by continued construction. Verification of the analytical techniques used by Babcock & Wilcox to calculate the effect of thermal induced shock are currently underway. To date, results 290/

have shown the procedures to be conservative. Thus, contin-ued construction through December 31, 1977 will not foreclose compliance with the resolution of this item.

73. The ninth item covered in the ACRS correspondence is " environmental qualification of vital equipment in con-291/

tainment". Compliance with all Pogulatory Guides ap-plicable to this item is assured except for Regulatory Guide 1.89, which has not yet been discussed with the NRC Staff.

However, continuation of construction will not foreclose implementation of Regulatory Guide 1.89 since equipment has been purchased with tho requirement that it function in post-LOCA radiation and steam environments. If it is required that aging effects be factored into equipment already purchased or in the process of being purchased, this could be accomp1.shed by conducting tests for on-going environmental effects on equip-ment af ter the plant goes into service or conducting tests for on-going environmental effects on similar equipment in other 292/ -

operating plants. Thus, continuation of construction through December 31, 1977 will not foreclose compliance with resolution of this item.

74. The next item is " instrumentation to follow the 293/

course of an accident". The first aspect of this matter, hydrogen control in the containment, is resolved by Regulatory

Guide 1.7 as supplemented by Standard Review Plan Section 6.2.5' 294/

and Branch Technical Position CSD 6-2. The Midland Plant 295/

is committed to comply with these guidelines.--- The matter of instrumentation to follow the course of an accident has 296/

not been resolved by the ACRS, thus no design alternatives 297/

could be foreclosed by continued construction. In any event, the instrumentation related to this item need not be selected until late in the construction phase, and thus continued con-struction of the Midland Plant does not affect compliance with 298/

the ultimate resolution of this matter. Thus, continuation of construction through December 31, 1977 will not foreclose compliance with resolution of thic-item.

75. The eleventh item in the ACRS correspondence is " improved quality assurance and in-service inspection 299/

of primary system". The quality assurance aspect of this item is covered by Appendix B to 10 C.F.R. Part 50 and by various Regulatory Guides, with which the Midland Plant com-300/

plies. The in-service inspection portion of this item is resolved by Regulatory Guide 1.65 and by Section XI of the ASME Boiler and Pressure Vessel Code, with which the Midland 301/

Plant complies.

~

76. As shown above, Midland either complies with the reso-lution of the eleven ACRS concerns or compliance will not be foreclosed until the final stages of construction. In addition to reviewing the eleven items mentioned in the ACRS correspondence, Licensee also examined in Licensee Exhibit 33 more than eighty generic ACRS iter..s which could be applicable to the Midland Plant to determine if they have been resolved by the ACRS, and, if so, c

whether the planned design of the Midland Plant complies with that resolution. For those items for which it has not yet been determined if the Midland Plant complies with the ACRS reso-lution, Licensee reviewed the item in light of scheduled construction activities to determine if compliance might be foreclosed by continued construction. In all cases in which a generic item applicable to the Midland Plant has been resol-ved, Licensee has determined that either the planned design of i

the plant complies with the resolution, or that continued construction will not foreclose compliance with the resolution. 302/

Design alternatives to those items which have not been resolved by the ACRS could not, by definition, be foreclosed by continued construction.

77. For the generic ACRS items referred to in Paragraph 76, supra, Licensee also perforned a review to determine whether the resolution of each ACRS item has been includ2d in the

$1.67 billion budget for the Midland Plant, whether the commercial operation date of the plant would be affected by l

implementation of the resolution, and whether compliance would be foreclosed if construction continued. In all cases, commercial operation dates of the plant would be impacted mini-mally, if at all, by implementation of the resolution. The budget for the Midland Plant includes an adequate contingency for additional costs which may be needed to resolve these ACRS design items. Continued construction of the Midland Plant will not foreclose design alternatives for the ACRS items which have been resolved since the construction permits for the Midland 303/-

Plant were granted.

.e e

48-D. EFFECTS OF DELAY

78. This Board must determine what vill be the effects of a delay in the Midland Flant due to a suspension of con-struction activities. As demonstrated in the following paragraphs, a delay would have serious effects on Licensee, its ratepayers and investors, Dow, the consumers of the elec-tricity to be produced by the plant, and the economy of the

state of Michigan.

1

79. Licensee's schedule for the construction of the Midland Plant currently calls for the units to begin commercial operation 304/

in March 1981 and March 1982, respectively. The construc-tion schedule Licensee plans in order to meet these dates is 4

305/

reasonable. Licensee is capable of financing the continued construction.of the Midland Plant called for by this schedule, '

as well as the other projects in its construction program which are planned through 1982, in order to meet the imminent needs of 306/

Dow and the other consumers of power from Licensee's plants.

The analysis of Licensec's financial ability, based on various possible scenarios, shows that even under the conservative assumptions of (a) no increase in the authorized rate of return on common equity in Licensee's current or future rate cases; (b) no acceptance by the !!PSC of Licensee's current request for approval of accounting changes to increase cash flow; and (c) no revenue resulting from capacity sales of the Midland Units to third parties, present plans are adequate to finance the Midland Plant, and financing can be structured l

I r M 7*- we 4-* ,--- :1' +-er p-+=ee-P

so as to finance Licensee's entire electric construction 307/

program,-through 1982. Even under the foregoing conser-vative assumptions, financing of the total construction program can be accomplished with levels of interest coverage in excess of required minimums by using moderate anounts of 308/

unsecured debt and preference securities. Under less conservative assumptions, financing of the total construction program can be accomplished without the need for unsecured 309/

debt and preference securities.

80. A five month suspension in the effectiveness of the construction permits for the Midland plant would result in a delay of nine months in the commercial operation dates of the project. Unit 2 would have a commercial operation date of December 1, 1981 instead of March 1, 1981 and Unit 1 would have a commercial operation date of December 1, 1982 instead 310/  ;

of March 1, 1982. The delay period is longer than the  !

suspension period due to a combination of the following factors: .

i (1) The uncovering, inspection and cleaning of materials and building areas could not commence until the suspension period t had ended; (2) The recruitment, organization, training, i qualification, and assignment of all manual labor workers to all work areas could not be completed until some of _

the activities described in (1) are fin-ished; and

-(3) The time required to increase manpower to the levels existing previously is 311/

contingent upon partial completion of (2) .

Based on Licensee's experience of past remobilizations in 1973 and 1975, it would take at least four additional months to 312/

accomplish those tasks. Since Licensee's construction

-n . - - , - . . . _ -

I schedule already reflects the use of approximately 300 people on double shifts, the delay period could not be reduced after

. restart of construction by addition of another shift, which would be neither feasible, given the availability of manpower, 313/

nor efficient. The Board finds that these factors would also be applicable to a suspension period of August through December 1977. Since the number of construction personnel on the site has increased from a December 1976 level of approximately 1,000 to approximately 2,500, the Board finds that a four to five month suspension period between August and December 1977 would result in at least a nine month delay because of further 314/

work force remobilization efforts that would be required.

81. A suspension of the construction permits for nine months would result in a 15 month delay in the commercial 315/

operation dates of the project. The particular delay periods are based upon specified assumptions, including the continuation of design engineering, the retention of current Home Office manpower and field non-manual personnel levels, and the fact that Licensee would not be prevented from 316/

expending funds during the suspension period. It is also assumed that the construction craft labor force would be reduced to a minimum level; future equipment and material purchase order deliveries would be made in accordance with the revised scheduler project activities would be oriented toward minimizing the delay effects of the suspension, and construction activities would 317/

resume without restraint at the end of the suspension period.

In the case of a nine month suspension, however, Home Office man-power levels would be reduced during the suspension period in

areas which are related to construction activities, and field 318/

non-manual personnel would also be selectively reduced. If

, any of these assumptions turned out not to be true, the resulting delay in the commercial operation dates would be even greater.

82. For both the five month and the nine month suspension cases, a suspension would cause the manual labor force to be reduced substantially. However, for the purpose of estimating the periods of delay, it was assumed that an unrestricted supply of labor would be available due to extensive recruiting efforts which would be undertaken to support the reactivation of construction. If this assumption should prove to be invalid, 319/

the delay periods would be longer than estimated.

83. The total capital cost of the Midland Plant w3uld increase $142,000,000 if a four to five month suspension were 320/

ordered. Adding the resulting increase of $11,935,000 in the cost of nuclear fuel and the $181,900,000 increase in the purchase and/or differential power costs for the nine month delay in the operating date, the total costs attributable to 321/

a four to five month suspension period would be $335,935,000.

See Paragraph 11, supra.

84. In the case of a suspension period of nine months, the total plant capital cost would increase $245,975,000, the nuclear fuel cost would increace $19,756,000, and the purchase and/or differential power costs for the 15 month delay in commercial operation would be $313,100,000. Therefore the total delay costs attributable to a nine month suspension 322/

would be $578,831,000. See Paragraph 11, supra.

s

i

.,+ .

85. The component costs which make up the total costs attributable to a suspension are itemized in Licensee Exhi-bit 16. They are the balance of plant delay costs of the Plant's architect-engineer, Bechtel, consisting of manual labor, non-manual labor, distributables, direct 4

i materials and subcontracts, engineering and home office 323/

j support, contingency and escalation, and Licensee's delay costs, which include charges for a direct component, i i

an administrative component, other overhead, the allowance for funds used during construction (AFUDC) and miscellaneous  !

324/

work orders.

86. The largest single item contributing to the increase in the total plant cost is AFUDC, which amounts to approximately

$58 million in the case of a five month suspension and $120 325/

, mill!cn for a nine month suspension. The economic impact of APUDC costs will be felt primarily by the Licensee's rate-payers in the form of a higher price per kWh once the plant 326/

goes into operation.

i 87. Should the commercial operation date of the Midland Plant be delayed, the total electrical output which would have been generated by the units must be obtained from other sources.

t Since the Midland Plant is a low cost of energy unit, the cost of 327/

replacement power will exceed the Midland Plant's energy cost, with a resulting increase in the price of electricity. The re- s placement power and/or differential power costs for a four to five and a nino month suspension, which would be paid by all consumers of the electricity from the-Midland Plant, are approximately $182 4m 1

l l

l l

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

million for a four to five month suspension and $313 million 328/

for a nine month suspension.

88. If the construction permits for the Midland Plant were suspended, it would have an adverse impact upon Licensee's ability to sell securities in order to finance the Midland project, as well as all other construction projects which Licensee has underway or is planning to undertake. This is true since a suspension would, at the very least, create uncertainty in the financial community as to Licensee's prospects. At worst, investors could perceive a suspension as a prelude to a license cancellation, and with-draw entirely from any interest in further investment in the company. If the latter situation develops, severe cut-backs would have to be implemented in projected expenditures, and Licensee's overall construction program would be sharply curtail-ed. A resultant inability to add capacity would have a dele-329/

terious effect on the economy of Michigan. Recently some of Licensee's securities have received improved ratings from the rating agencies, but a suspension would also make unlikely for an extended period of time any further upgrading of Licensee's security ratings, thus resulting in higher cost to ,

330/ '

Licensee in marketing its securities. Should the Midland construction permits be suspended and later reinstated, Licensee  ;

would have a more difficult time financing the Midland Plant, 1

but barring a long suspension er a very severe investor reaction, {

331/

it would probably be able to complete the project. l 1

1

89. A delay in the commercial operation date of the Midland Plant would have an effect on the bills of Licensee's ratepayers during three different time periods: the actual period when the customer would pay replacement. power. costs due to the delay in the commercial operation date; the first

'three years after commercial operation, when the customer would pay the additional cost'.of nuclear fuel associated with the initial core for the Midland plant; and the full life of the plant, when the customer would pay the higher annual fixed charges associated 332/

with the higher cost of the plant. Assuming a four to five month suspension, the increase of the average monthly bill of one of Licensee's customers due to replacement power costs (which would be paid for over a 24 month period) would equal $1.72 (3.7%), $8.41 (2. 7% ) , $367.49 (5.0%), and $326.67 (4.7%) for residential, commer-333/

cial, industrial, and other customers, respectively. The monthly increase due to the additional cost of fuel for the first three years of operation, assuming a four to five month suspension, would equal S.06 (0.1%), $.28 (0.1%), $12.18 (0.2%) and $10.83 (0.2%)

for residential, commercial, industrial and other customers, re-334/

spectively. The monthly increase due to the additional plant costs over the life of the Midland Plant, assuming a four to five month suspension, would equal $.38 (0.8%), $1.85 (0.6%), $71.04 (1.0%) and $67.67 (1.0%) for residential, commercial, industrial 335/

and other customers, respectively. Similar bill increases 336/

would occur in the event of a nine month suspension.

90. The delay costs associated with suspending the construc-tion of the Midland Plant will also have an adverse impact upon t

l J

the Licensee's investors by reducing the quality of earnings, the interest coverage on outstanding debt, and the physical property 337/

available per investor. Total external financing by Licensee would have to increase by approximately $200 million in the case of a five month suspension and by approximately $400 million in 338/

the case of a nine month suspension. The need to raise the additional external capital requirements increases the risk to all investors because the additional investors would 339/

dilute the physical property available per investor. While the earnings per share, excluding AFUDC, are only moderately af#9cted during the delay period, the impact in the years in wnich the Midland Plant goes into commercial operation 340/

is dramatic. For example, Licensee estimates that earnings excluding AFUDC in 1982 would be $1.56 lower per share 341/

because of the five month suspension. These results effec-tively produce less cash to be either reinvested for the future 342/

benefit of the stockholders or paid in the form of dividends.

With regard to the mortgage inde sture coverage, the most sig-nificant impact of delay occure during the period 1982-1983.

Should there be a five month suspension, the indenture coverage would be reduced from 3.2x to 2.4x in 1982. Such reductions ln indenture coverage would reduce the protection provided to investors in Licensee's first mortgage bonds during 343/

the delay period.

91. A delay in the commercial operation date of the Midland Plant due to a suspension of construction would have a deleterious impact upon Licensee's installed generation reserves 344/

and thus upon its ability to reliably serve its customers.

--e

F .. o, -

Licensee requires installed generation reserves equal to approx-345/

imately 20% of the projected load. A delay of the Midland Plant would result in marginal reserves of 18% in the critical summer period of 1981 and clearly inadequate reserves of 15.7%

346/

in the summer of 1982. See Paragraph 47, supra.

92. In terms of Licensee's ability to meet the energy needs of its customers through its own generating units, the delay of the Midland units would result in significant short-falls of total generation ability as compared to total gener-ation requirements. As the length of the delay is extended, 347/

the insufficiency becomes increasingly acute. These shortfalls would affect Licensee's customers to the extent that replacement energy could not be purchased from other 348/

utilities. See Paragraph 47, supra. Even if purchased power is available, this would result in increases in Licensee's customers' electric bills, see Paragraph 89, suora.

93. A suspension of construction activities would also impact the work force of the Midland Plant and its equipment warranties. The delay caused by the suspension would require Licensee to face an additional round of labor contract nego-tiations; the impact of those additional negotiations has not 349/

been factored into the delay costs. A suspension of con-struction of the Project, which has experienced previous shut- ,

downs, would have an adverse impact upon the morale of the 350/

work force. A suspension would also have an impact upon the warranties on equipment for the plant, which are written m

m y- - , e

for specific periods of time. The cost of self-insurance for those items for which extended warranties cannot be 351/

obtained is not-included in the delay cost.

94. A suspension of construction would have a variety of adverse socio-economic impacts upon the community in which 352/

the Midland Plant is located. The largest short-term impact would be the immediate layoff of approximately 2500 353/

construction workers. There are no other large construc-

-tion projects scheduled in the area of the Midland Plant during the projected suspension period which could employ those 2500 354/

persons. The economic cost of the unemployment includes the payment of unemployment compensation which would be a large burden on employers, unemployment compensation insurance carriers, 355/

and the state and federal governments. In addition, tax revenues would be lost by the city, county, state and federal

~~

gyrarnments as well as school districts, in the form of personal 356/

property, sales and income taxes. As the suspension of the Midland Plant would mean that the taxable valuation of the district would not increase as planned, the costs for other taxpayers would 357/

probably increase. Taxpayers would also incur added costs, as county payments for General Assistance and community services 1 358/

would be likely to increase as a result of the suspension.

The suspension of construction would also have a harmful effect l

on community planning for such services as education, housing 359/ i needs, and public utilities.

i

95. A suspension of constructior. act..d t(sve an adverse impact upon Dow, as Dow's antiqua+pc .ls i spd power facilities cannot operate safely, economically and reliably after the end 1

c

360/

of 1984. Due to the lead time necessary for Dow to con-struct an alternative source to meet its needs for process 361/

steam and electricity, a suspension of the Midland Plant, and the attendant uncertainty as to the plant's commercial operation dates, may cause Dow to abandon the economically preferred nuclear plant in order to be certain of having 362/

a reliable source of steam and electricity by the end of 1984.

Furthermore, any delay in the commercial operation dates of the nuclear units will mean that Dow will use its existing fossil fuel generating facilities for a longer period of time,

• thus increasing the quantities of atmospheric emissions pro-363/

duced by those facilities.

E. TILTING THE BALANCE

96. This Board must determine whether the increased investment to be made in the Midland Plant, if construction continues until an initial decision is reached on the remanded issues, would tilt the balance away from the alternative of 364/

ab7, ~.donment .

Because the need for the installation of the capacity provided by the Midland Plant has been demonstrated in Section B, supra, the situation this Board must analyze is aban-doning the proposed Midland Plant and building an alternate _

generating facili3y, either nuclear or fossil fueled, to supply the required amount of capacity. The appropriate cost compari-son is then the cost to complete and operate Midland versus the cost of abandoning Midland and installing and operating 365/

alternative capacity. As explained below, the Midland l

I I

Plant has so great a cost advantage when compared with the next best alternative that continued construction of and investment in the Project during the hearings on the remanded issues could not tilt the balance away from the alternative of abandonment. This remains true when the interim fuel cycle rule is taken into account.

97. Licensee and the NRC Staff have performed economic evaluations of proceeding with the Midland Plant versus abandoning the nuclear facility and constructing an alternative 366/

equivalent generating station. Intervenors presented a comparison of costs between a nuclear plant of lower capacity than Midland and an alternative which consisted of a combination of a separate coal-fired plant to generate process steam and electricity for Dow and another coal-fired plant to generate 367/

electricity for Licensee's system. The combined alternative suggested by Intervenors has a lower capacity than even the 368/

smaller version of the Midland plant to which it was compared.

Consequently, the comparison was not for an alternative equiva-

.r lent to Midland, nor one between smaller equivalent plants.

Intervenors, unlike Licensee and the NRC Staff, did not make their evaluation on the basis cf current incremental costs for the two alternatives, but instead made their comparison on the basis of postulating that neither the smaller version of Midland nor its alternative had begun and, therefore, they 369/

considered the total costs for both from a standing start.

Consequently, their ccmoutations are based on a hypothetical situation, which does not comport with the actual situation

with which we are faced, in which Midland has been under con-struction for four and one-half years, is more than 19% complete, and has had more than $518,259,000 invested in it. (See Para-graph 11, supra.) This Board concludes that the only procedure, both 1. ;ically and legally, for making a decision on whether to continue with Midland or to abandon it and construct an equivalent alternative requires an incremental cost analysis based on current 370/

conditions.

98. In selecting an alternative to the Midland Plant, a coal-fired facility is found to be the only feasible alternative. First, it is unrealistic to assume that suf-ficient quantities of oil or gas would be available for an 371/

alternative plant the size of Midland. Further, because of the lead time on licensing and construction of nuclear facil-ities, it would be impossible to construct a nuclear alternative at another site on a schedule which would allow Licensee to meet 372/

its projected loads. The delay inherent in constructing an alternative coal-fired facility would seriously jeopardize Licensee's ability to meet its projected loads, but the much greater delay in constructing an alternative nuclear facility would virtually assure that projected loads would not be met. 373/

99. Two different coal-fired alternatives were considered.

Licensee compared Midland to two 800 MWe coal-fired units which could be fired by either high or low sulfur content coal. 374/

The use of two 800 MWe coal-fired units as an alternative is conservative, i.e., favors the coal alternative over the nuclear alternative, for purposes of the cost-benefit analysis, while the two 800 MWe units are equivalent in energy output to Midland, the capital costs for this alternative are less

than if two 650 MWe coal plants, which would be approxi-mately equivalent to the electrical capacity from the Midland Plant, plus a process steam facility to supply Dow's 375/

steam needs were analyzed. The NRC Staff evaluated both the alternative proposed by Licensee, and the combined alternative

-of Dow building and operating four.high sulfur coal units capable of producing 2.4 million' pounds / hour steam and 167 MW of elec-tricity and Licensee constructing and operating a low sulfur 376/

coal. plant with a net electrical output of 1178 MWe. The NRC-Staff's analysis has shown, however, that the latter alter-native is clearly disadvantageous compared to Midland and is also much more costly than the alternative postulated by Licensee of two 800 MWe coal-fired plants; thus, using NRC Staff figures, Mid-land has a 47% cost advantage over the alternative of separate facilities to provide the energy requirements of Licensee and Dow, and Midland has a 37% cost advantage over the alternative of two 377/

800 MWe coal-fired plants. Thus, the alternative of two

! 800 MWe coal-fired plants is conservative and will be utilized for purposes of the economic analyses performed in the tilting the. balance comparison. The Board also notes that Licensee submitted an analysis which indicated that, using Intervenors' comparison of a smaller version of Midland and-the even smaller combined alternative described in Para-graph 97, supra, the smaller version of Midland has an overwhelming cost advantage when compared to the even smaller 378/

Leombined alternative submitted by Intervenors.

a p- 4 g -a r+ w- w ee-

'100. In order to bring the two 800 MWe coal plants on line as soon as possible, thus minimizing the costs of dif-ferential and/or purchased power, the units would be con-structed on two different existing sites which are already 379/

partially developed. Using these assumptions, the earliest date on which these units _could be in service is 1984, which

~380/

s is seven years after the assumed aban onment date (1977).

The capital costs for the coal-fired alternatives were based on Licensee's 1976 estimate of capital cost for its 800 MWe Campbell unit which is scheduled for operation in 1980; these capital costs were then escalated at 7-1/4% per year for 381/

1984 operation.

101. The alternate plant operation costs for low and high sulfur coal plants include fuel, operation and maintenance, 382/

insurance, taxes and decommissioning. The costs are based on a 34 year life; however, the evaluation includes the costs only through the date that the Midland Plant would be retired. This is done so that the costs of the nuclear and coal plants can be evaluated over the same time period.

The operation and maintenance costs for the. fossil-fired alternative for the years after Midland would be retired are 383/

not' properly, considered, because to do so would result in charging the fossil-fired alternative with costs for a longer period than Midland. The costs of purchased power required for the time between'when the nuclear plant would come on line and the time when the coal plant would come into service are. considered in~ Paragraph 102, infra. These costs must be included in assessing the alternative of abandoning Midland

1 l i because they reflect a true cost of abandonment. The coal costs utilized in ev luating the alternative are based on late 1976 costs which ar, ncalated at 12 percent per year for 1977 through 1978 and chen 10 percent per year for 1979 through i

1983; coal costs from 1984 on were escalated at nine percent 384/

per year. The base coal prices used for low sulfur coal and high sulfur coal are reasonable for planning purposes and for the comparison of alternatives; the escalation rates applied to the base coal prices reasonably predict future 385/

trends in' coal prices.

102. In order to determine whether the increased invest-ment made in the Midland Plant, if construction continues until an initial decision is reached on the remanded issues, would tilt

.the cost-benefit balance away from the alternative of abandonment, Licensee made two types of economic analyses: (1) comparing the costs of abandoning the Midland Plant under five different conditions, and (2) comparing the costs to complete and

-operate the Midland Plant versus the costs of installing and operating the alternative plant (two 800 MWe coal-fired units) in the same five cases. The figures used in performing these two types of comparisons are set out in Table 1 on the following

~

page. .The assumptions which went into calculating these figures are as follows: The figures for " Plant Expenditures to Date" were obtained by taking the actual costs through August 31, 1976, and adding the estimated expenditures for the period during 386/

which construction is continued. The accuracy of this estimate has been verified, as the actual costs expended through the end.of 1976 were only approximately $3 million less 387/-

'than the amount budgeted through that date. Cancellation

M g7p g p m Exhibit 17 ,

Eatinated Abandonment Cost Data - $1,000's * '

Abandon Plant Abandon Plant Abandon Plant' Abandon Plant Abandon on5/1/77 On5/1/77 on9/1/77 On9/1/77 Deserfption Plant Construction Continued ended Construction Continued Construction Suspended On 12/1/T6 To 5/3/77 Construction From 12/76 Susp/77 to 5 To 9/1/77 From 12/76 to 9/1/77

1. Plant Expenditures to Ihte 4 h12,000 $ 500,000 A. Calvage Value of Material $ 478,000 $ 595,000 $ 535,000 (45,000) (52,000) (52,000) (50,000) (53,000)

2. Plant Material and Sabcontacts Co::nitted But Not Paid 136,000 169,000 154,000 A. tenec11ation Cost of Material 134,000 115,000 and Subcontmets 56,000 59,000 58,000 B. Salvage Value of tinterial h1,000 40,000

.(7,000) (7,000) (7,000) (6,000) (6,000) 3 Eclear Fuel Cost Expenditures to Date 6,000 6,066 A. 6,006 6,174 6,174 Fuel Cost Corsitted But Not Paid 205,037 204,951 216,886 B. Cancellation Cost of Fuel 204,863 224,619 86 88 68 C. falve e value of Fuel l(6,000) (6,000) 70 70 (6,000) (6,000) (6,000)

-%. Site Restention Cost 59,000 76,000 59,000 101,000 59,000 5 Dov Dual Purpose Cost Reinbursement (52,000) (70,000) (65,000) (84,000) (77,000)

6. Cost of Alternate (1600 MW) Fossil Plant

• A. Low Sulfur Coal 1,061,000 l'062,000 B. 1:1ch Saltur Coal , 1,119,000 l'063,000 l',158,000 1,270,000 1,272,000 1,340,000 1,273,000 1,387,000

7. Purchase Power and/or Dttferential Power Cost From Midland Inservice Dates to Alternate Plant U Inservice Dotes

• 661,000 755,000 596,000 829,000 582,000

8. Midland To-Go Capital Cost 1,258,000 1,170,000 1,334.000 . 1,075,000 1 ,380,000 9 Midland Operation Costa j A. Fuel 1,600,000 1,600,000

B. 1,670,000 1,600,0() 1,700,000 Operation and Paintenance,

!;uclear Incurence and Taxes 1,231,000 1,231,000 1,320,000 1,231,000 1,332,000

10. Alternate Plant Operation Cost (Iow Sulfur)*

A. Fuel 6,374,000 6,272,000 6,923,000 6,173,000 7,284,000 B. 0;eration and Maintenance, Insumnce and Taxes 775,000 774,000 828,000 768,000 859,000

11. Alternste Plant Operation Cost (High Sulfur)*

A. Fuel 3,728,000

^

3,666,000 4,047000' - ~ ' ' ~

D. Operation and Maintenance, 3,615,000 - ~ ' ~ 4',269,0C0 ~ ~ ,

I Insurance and Taxes 1,120,000 1,119,000 1,205,000 1,112,000 - ~

1,253,000

• See single asterisk footnote on Exhibt* 20.

j TMLE I g

costs were estimated for plant materials and subcontracts com-mitted but not paid for; however, cancellation costs were not included in the cost of abandonment calculations, but only 388/

shown to indicate the value of committed expenditures.

Licensee's expenditures for nuclear fuel were obtained by taking the booked costs through August 31, 1976 and adding the expen-ditures to December 1, 1976, May 1, 1977, and September 1, 1977 389/

as appropriate. The costs for site restoration include amounts for work required by orders of the Midland Township Zoning Board of Appeals in the event that the site is abandoned 390/

as a generating facility site. Because the Dow-Licensee Steam Service Contract includes a requirement that Dow reimburse Licensee for certain costs if the plant cannot be completed, this reimbursement was included as a credit in the 391/

costs of abandonment. As there is a difference between the Midland Plant in-service dates of 1981 and 1982 and the alternate units' in-service date of 1984, the purchased power and/or differential power costs for this period were included 392/

in the cost of abandonment. These costs are based on computer modeling which simulates the economic dispatch of Licensee's generating units, Licensee's normal power exchanges with Detroit Edison, and estimates the Licensee's _

additional purchase power requirements and associated costs 393/

from other utilities. The Licensee's Palisades nuclear plant is assumed to be in service but derated at 5% per 394/

year. The Midland Plant to-go capital costs are based on the current estimate of $1.67 billion less the plant expendi-395/

tures shown "to date". Licensee's present estimate of the

total capital costs of the Midland Plant of $1.67 billion is reasonable. Licensee justifiably rejected Bechtel's Fore-cast 2, which predicted an increase of $90 million in the capital

. costs of the project, as the increase is less than 5% of the present estimate of total cost, and Licensee's present estimate still contains major allowances for a variety of contingencies which may not occur. This Board believes it is possible that the total capital costs et the project could increase by

$80 million, although that cannot be determined with certainty at this time. Even if that should occur, the cost-benefit

} analysis would not be affected significantly, as the total capital costs would be in the range of $1.67 to $1.75

'396/

billion. For the calculations which assume suspension of construction and subsequent abandonment of the plant, the to-go costs include the costs attributable to suspension 397/

which are shown or Licensee Exhibit 16. The Midland Plant Operation cost includes the cost of fuel, operation and main-398/

, tenance, nuclear insurance, taxes and decommissioning. These costs are based on the plant being in service on the scheduled 399/

l date and continuing in' operation for 34 years. T1s nuclear fuel costs are based on Licensee's current prices for the first core and the various components are escalated at different 400/

rates for the first 20 years of the plant life. The costs for the remaining 14 years were escalated at a composite 4

401/

, rate of 4.8 percent per year. The nuclear fuel costs used 402/

in these calculations are reasonable. The decommissioning cost was based on dismantling and removing a Midland-type 9

& *V' '

plant in 1981; since this cost is not incurred until the re-tirement date of the plant, the 1981 estimate was escalated to the retirement date and then discounted to 1981 at a rate 403/

of 11.75 percent. The Alternate Plant Operation. costs are detailed in Paragraph 101, supra.

103. As a result of the circumstances described in Para-graph 11, supra, Licensee compared the costs of abandoning the Midland Plant under the follcwing five conditions: (1) aban-donment costs at December 1,1976; (2) abandonment costs at May 1, 1977, assuming construction continued until that date; (3) abandonment costs at May 1, 1977, assuming suspension of construction at December 1, 1976; (4) abandonment costs at September 1, 1977, assuming construction continued until that date; and (5) abandonment costs at September 1, 1977 assuming 404/

suspension of construction at December 1, 1976. The results of these comparisons are detailed in Table 2 on the 405/

following page. The comparisons demonstrate that for abandonment on May 1, 1977, assuming continued construction until that date, the amount spent on plant expenditures would be only $22 million more (1.3% of the total estimated project 406/

~~~

cost ) than if construction were suspended between 407/ -

December 1, 1976 and May 1, 1977. In addition, the total cost figure for abandonment is only 35 million more if 408/

construction continues during that period. The expenditure of $22 million would avoid a delay cost due to suspension of

$336 million, at a risk of a potential increase in abandonment 409/

costs of only $35 million. The results are similar in the 410/

case of a September 1, 1977 abandonment.

+

Exhibit 19 Analysis I Co=carison of Midland Abandonment Costs - 81,000's Abandonat5/1/77 Abandonat5/1/77 Abandon at Assuming Continuation Assuming Suspension 12/1/76 Of Construction Of Construction

1. Plant Expenditures to Date $412,000 $500,000 $478,000 A. Salvage Value of Material (45,000) (52,000) (52,000)

2. Plant Material and Subcontracts Co=mitted But Not Paid -_- --. .--

A. Cancellation Cost of -

Material and Subcontracts 56,000 59,000 58,000 B. Salvage Value of Material (7,000) (7,000) . (7,000) 3 Nuclear Fuel Expenditures to Date 6,000 6,000 6,000 A. Fuel Costs Co..nitted But Not Paid __- ___ ___

B. Cancellation Cost of Fuel 86 174 174 C. Salvage Value of Fuel '(6,000) (6,000) (6,000)

4. Site Restoration Cost 59,000 76,000 59,000

5. Dow Dual Purpose Reimbur::ement (52,000) (70,000) '

(65,000)

TOTAL $423,086 $506,174 5471,174 Abandonat9/1/77 Abandon at 9/1/77 Assuming Continuation Assuming Suspension Of Constructitn Of Construction

1. Plant Expenditures to Date $595,000 $535,000 A. Salvage Value of Material (58,000) (58,000)

2. Plant Material and Subcontracts Cca:mitted But Not Paid ___ ___

A. Cancellation Cost of Material and Subcontracts 41,000 40,000 B. Salvage Value of Material (6,000) (6,000) 3 Nuclear Fuel Expenditures to Date 6,000 6,000 A. Fuel Costs Committed But Not Paid --- ---

B. Cancellation Cost of Fuel 244 244 C. Salvage Value of Fuel ,(6. 000) (6,000)

4. Site Restoration Cost 101,000 59,000 5 Dov Dual Purpose Reimbursc=ent (84,000) (77,000)

'IOTAL $589,2hh $493,24h p

2/4/77 9

104. Licensee then performed the second required comparison and compared the cost to complete and operate the Midland Plant with the cost of abandoning the Midland Plant and installing and operating the alternative of two 800 MWe coal-fired plants (low or high sulfur coal) in the 411/

five cases referred to above.

105. The comparison reflects the econonic cost analysis which would have to be made, in each of the five assumed cases, in order to weigh whether continuation with the Midland Plant or abandonment of the Midland Plant and instal-lation of an alternative is the preferred decision on economic 412/

grounds at the point in time and under the conditions assumed.

The analysis reflects all appropriate costs, including capital costs, taxes, operation and maintenance, insurance and fuel 413/

costs. Credit is given to the cost of the alternative for material salvageable frem Midland and reimbursement of 414/

certain capital costs by Dow. Debits include the can-cellation cost of nuclear fuel material orders and subcontracts, net of salvage value, required site restoration costs at Mid-land and the purchased power and/or differential power costs incurred during the period between the scheduled commercial operation date of Midland and the earliest possible date of 415/

conmercial operation of the alternate.

106. The results of these comparisons are presented in Table 3 (The Low Sulfur Coal Alternative -- Licensee Exhibit 20) and Table 4 (The High Sulfur Coal Alternative -- 1 Licensee Exhibit 21) on the following pages. In each of the five cases studied by Licensee, the cost of abandoning the Midland l i

1 I

I Plant and proceeding with the alternative far exceeds the cost 416/

of proceeding with the Midland Plant. For example, the cost of completing and operating the Midland Plant on September 1,1977, assuming a continuation cf construction to that point, would be $3.916 billion, while the cost of the low-sulfur coal al-417/

ternative plant at that date would be'$8.8279 billion. In the case of a high-sulfur coal alternative, the cost of that plant on September 1, 1977 would be $6.8274 billion, compared with the cost of completing and operating the Midland Plant at that 418/

date, assuming a continuation to that date, of S3.916 billion.

107. The cost ratio between abandoning the Midland Plant and proceeding with the assumed alternative on the one hand, and continuing with the Midland Plant on .the other, varies very slightly at the decision points of May 1, 1977 or September 1, 1977, whether or not construction has been 419/

suspended. These ratios are set out in Licensee Exhibits 420/

22 and 23. For example, the economic cost ratio between abandoning the Midland Plant and continuing with it at Septem-ber 1, 1977, assuming continued construction, is 2.25 (for the 421/

low-sulfur coal alternative). This same ratio, assuming a suspension of construction from December 1, 1976 to September 422/

1, 1977, is 2.20. The variation in ratios (2%) is insignificant in view of the vast advantage of the nuclear 423/

alternative over the low-sulfur coal alternative.

108. As a result of the circumstances described in Paragi.ol 9, supra, the decision on whether or not to suspend was not me 'e on December 1,1976. Rather, it is being made as of August, 977. Moreover, the Board expects that an ini-

j

• s-

~ Analysis II Exhibit 20 Cost to Complete and Operate Midland Vs Cost of Abandoning Midland and Installing and Operating Alternative Capacity (Iow Sulphur Coal)

(Millions)*

• To Complete at 12/1/76 To Complete t 5/1/77 To Comrilete at 9/1/77 Assuming Suspension Assuming Suspension Assuming Continuation of Construction Assuming Continuation of Construction of Construction at 12/1/76 of Construction at 12/1/76 ftIDIA4D PLA'lT*

Midland to-go Capital Cost 1.258 1.170 -

Taxes 1.334 1,075 1.360 768 768 833 768 880 Fuel 1.600 1.600 1,600 Operation & lhintenance 1.670 1,700 410 410 432 410 446 naclear Insurance 53 53 55 53 Deccanissionin,g 10 56 10 11 10 11

,- *1btal Generation Cost 4,099 4,011 4,335 3.916 4,473 Abandon at 12/-1/76 Abandon at 5/1/77 Abandon at 9/1/77 Assuming Suspension Assuming Suspension Assuming Continuation of Construction Assuming Continuation of Ccostruction i

of construction at 12/1/76 of Construction at 12/1/76

! ALTER.3ATIVE8 Capital Cost 1,061.0 1,062.0 1,u9.0 1,063 0 1,153.0 Calvageable Material (61.3) (68.9) 1 Dov Dual Purpose Cost (72.3) (75.3) (81.k)

(70.8) (92.8) (90.h) (109.0) (108.1)

Reimbursement Cancellation Cost of Material 66.7 68.9 70.9 45.4 ar.d Subcontracts Minus Sal- h7.7 vage Value (llet of % umber .

2A-2h)**

Site hestoration Oost 80.3 100.8 82.0 131.0

• Parchasing Power and/'r 661.0 82.8 775.0 596.0 829 0 582.0 Lifferet4tial Power Cost Taxes & insurance 503 504 530 504 ruel , 6,374 549 6,272.0 6,923.0 6,173.0 7,2tm.0 Operation & Maintenance '272.0 270.0 298.0 264.0 310.0 Naclear Fuel Cost 0.1

(:let of nu=ber 3 + 3B -3C)**

0.2 0.2 0.3 0.3 Leco:mnissioning 2.5 2.5 2.7 2.5 '

2.8

• 1btal ceneration Cost 8,889.5 8,873.7 9,459.1 8,827.9 9,827.1

• Costs are stated in future value dollars as of the date of coernercial operation of Midland Unit 2, ie, coltans 1, 2'and 483/1/81, Column 3 8 12/1/81 and column 5 e 6/1/82.

- **From Exhibit 17.

I r e ~ABLE 3 m 5/6in

. - . . _ _ . . _ . _ _ . . _ _ _.m m _. . _ . _ _ _ _ _ .__.--___.__._m.. ._ . _ . . . . . . - . _ _ _ . . . . . . _ , _ . . - _ , _ _ , . _ . _ . . . _ , , _ ,

.c t

Analysis II -Exhibit 21 Cost to Complete and Operate Midland Vs .-

Cost of Abandoning Midland and Installing and Operating Alternative Capacity (111gh Sulphur Coal)

(Millions)

To complete at 12/1/76 To Com1ete at 5/1/77 ToCcmpleteat9/1/77 Assuming Continuation Assumin6 Suspension Assuming Continuation Asswaing Suspension -

of Construction of Construction at of Construction of Construction at 12/1/76 12/1/76 MINAND PIAfff Midland to-go Capital Cost 1,258 1,170 1,334 1,075 Tcxes .1,38,0 768 768 833 768 880 Nel 1,600 1,600 1,670 1,600 i Operation & W intenance 410 1,700 410 432 410 446 Nuclear Insurance 53 53 55 De comunissioning 10 53 56 -

10 11 10 11 2btal Generation Cost 4,099 h,011 k,335 3,916 b,473 Abandon at 12/1/76 Abandon at 5/1/77 Abandon at 9/1/77 Assusaing Continuation Assuming Suspension Assuming Continuation Assuming Suspension of Construction of Construction at of Construction of Construction at 12/1/76 12/1/77 ALTERNATIVE Capital Cost . 1,270.0 1,272.0 1,340.0 1,273.0 I

Salvageable mterial (61.3) 1 337.0 Dev Dual Purpose Cost (68.9) (723) (75 3) ($1.4 3

9 (70.8) (92.8) (90.4) (109.0) (108.1) )

-Reimbutsement 4

Cancellation Cost of mterial 66.7 68.9 70.9 45.4 j '

and Subcontracts Minus Sal- 4T.T vege value (Net of L:nber 2A-23)*e 1 Site Restozution Cost 80.3 100.8 82 131.0 Purchased Power and/or 82.8

' Differential Power Cost 661 755 596 829

- Taxes & Insurance 602 582

.603 635 604 657 Fuel 3,728 Operation & mintenance 666 3,516 4,0k7 61 8 269 518 570 3,508 4,5%

Nuclear Fuel Cost (Net of number 3 + 3B - 3C)a* 0.1 0.2 0.2 0.3 Decom=issionira 3 0.3 3 3.2 3 13

-Total Generation Cost 6,777 6,823.2 7,181.6 6,627.4 7,435.6 -

• Costs are stated in fbture val [e dollars na of the date of comunercial operation of Midland Unit 2, i.e., columns 1, 2 and 4 8 3/1/81, column 3 8 12/. D andcolumn5e6/1/82.

• • From Exhibit 17.

f g g t TABLE 4 ,

5/6/77'

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

l i-.

2 I

, tial decision.on.the remanded, issues can be issued by December- 31, 1977.- As a result, the period to be studied Iz :is more approximately August 1 to December 31, 1977. Con-l: sequently, this Board has undertaken an evaluation, on the basis 1of the tables set forth above and the record as a whole,

of the approximate costs of the following cases: (1) abandon-I ' ment cost as of September 1,1977; (2) abandonment costs at 4

December- 31, 1977, assuming construction continues.until that date; . and (3)' abandonment costs at December 31, 1977, assuming suspension of construction at September 1, 1977.- The Board has chosen these cases-because it believes they adequately represent i

the current procedural setting of the case and, as a matter of convenience, because of the ready availability of September 1, I 1977 data in the record. The cases chosen by the Board will en-l able it to closely approximate the effect of a suspension or of continued construction on the economic balance.

This Board then

. compared the approximate cost to complete and operate the Midland Plant with the approximate cost of abandoning the Midland Plant

?

and installing and operating the alternative of two 800 MWe high sulfur coal plants in the three cases referred to. The 4

Board arrived at its estimates in the following manner:

f 1:

(1) The cost to complete and operate Midland at 9/1/77 _

j is the same as the cost to complete and operate Midland at 9/1/77, assuming continuation of con-i struction to that date, as shown on column 4 of.

-Table 4. That cost is S3,916 million.

l (2) . The cost to abandon and build and operate the 1

alternative as of 9/1/77 can also be obtained from column 4 of Table 4. That cost is S6,827.4

'million.

i I.

(3) In computing the cost to complete and operate ix Midland at 12/31/77, assuming continuation of con-i struction to 12/31/77, the Board, on the basis of l

1 s

f L-

its findings in Paragraph 11, supra, particularly the facts that construction activities in the last four months of 1977 will be of an equivalent nature and level as those in the first eight months of the year, finds that the change in costs to complete and operate Midland, due to continued construction, for the four months between 5/1/77 and 9/1/77 will approximate the change in cost to conplete and oper-ate Midland, due to continued construction, for the period 9/1/77 to 12/31/77. The change in that cost for the period ben"een 5/1/77 and 9/1/77 can be ob-tained by taking t..; difference between columns 2 and 4 of Table 4. That difference is $4011 million less $3916 million or a decrease of $95 million.

Deducting this difference from the cost to complete and operate Midland as of 9/1/77 gives us an approx-imate cost to complete and operate Midland as of 12/31/77, assuming construction continues to that date, of $3821 million.

(4) Applying the same analysis, for the same reasons, to the cost to abandon and construct and operate an alternative as of 12/31/77, assuming construction continues to that date, the difference between columns 2 and 4 of Table 4 is only an increase of

$4.2 million (S6827.4 million less $6823.2 million).

Adding this difference to the abandonment case at 9/1/77 of $6827.4 million gives us an approximate cost to abandon and build and operate the alter-native, as of 12/31/77, assuming continued construc-tion to that date, of $6831.6 million.

(5) In computing the cost to complete and operate Midland as of 12/31/77, assuming suspension as of 9/1/77, the Board, for all of the reasons stated in subparagraph (3) above and particularly because of the facts set forth in Paragraph 11, suora, with regard to the minimal variation that could be ex-pected in effect of suspension on capital costs due to suspension later, rather than earlier, in 1977 and the substantial equivalence of the cost of delay on a monthly basis, finds that the change in costs to complete and operate Midland, assuming suspension as of 9/1/77, would be approximately equal to the effect on such costs of a suspension for a similar period earlier in 1977. Consequently, the Board has taken the difference between cost to complete and operate Midland at 12/1/76 and cost to de so at 5/1/77, assuming a suspension at 12/1/76 (a five month period) from columns 1 and 3 of Table 4 as a base for computing the change in cost to complete and operate Midland at 12/31/77, assuming suspension at 9/1/77. This difference is an increase of $246 million ($4335 million less $4099 million) . In order to reflect a four month suspension period (9/1/77 -

12/31/77), instead of a five month suspension period, this difference was multiplied by four-fifths which

gives a result of an increase of $188.8 million, which when added to the cost to complete and operate Midland at 9/1/77 of $3916 million, results in a cost to complete and operate Midland at 12/31/77, assuming suspension at 9/1/77, of $4104.8 million.

(6) Applying the same analysis, for the same reasons, to the cost to abandon and construct and operate an alternative as of 12/31/77, assuming suspension at 9/1/77, the difference between columns 1 and 3 of Table 4 is an increase of $307.7 million ($7181.6 million less $6797 million x 4/5). When this amount is added to the cost to abandon and complete and operate the alternative as of 9/1/77 (S6827.4 million), it results in a total cost of the alter-native as of 12/31/77, assuming suspension at 9/1/77, of $7135.1 million.

Table 5 below summarizes the results of the foregoing computations:

TABLE 5 Cost to Complete and Operate Midland versus Cost of Abandoning Midland and Installing and Operating Alternative Capacity (High Sulfur Coal)

(Millions of Dollars)

To Comolete at 9/1/77 To Comolete at 12/31/77 Assuming Assuming Continued Suspension Construc- of Construc-tion tion at 9/1/77 Midland Plant 3,916 3,821 4104.8 (Total generation ecst)

Abandon at 9/1/77 Abandon at 12/31/77 Assuming Assuming Continued Suspension Construc- of Construc-tion tion at 9/1/77 Alternative 6,827.4 6,831.6 7135.1 (Total generation Cost)

Ratio (between 1.74 1.79 1.74 Midland and Alternative)

Y'

The Board then computed the ratios between cost of completing and operating Midland and cost of abandoning Midland and completing and operating the alternative for each of these three cases, which are also shown on Table 5. As a result of those computations, the Board concludes that: (1) in each of these three cases, Midland has a vast cost advantage over the alternative; (2) continued construction during the period of approximately September 1 to December 31, 1977 will not tilt the economic balance between Midland and the alternative; and (3) in fact, the change in the ratio of the cost of Midland to the cost of the alternative if construction is continued during this period is so small (2.8%) as to be insignificant in light of the vast cost advantage of Midland.

109. The environmental impacts of the nuclear fuel cycle are itemized in Table S-3 of the NRC's interin fuel cycle 424/

rule. Due to the enormous economic advantage of the Midland nuclear facility when compared to a low or high sulfur coal fired alternative, as demonstrated above, and in view of the Commission's guidance that the values in the old Table S-3 and those in the interim rule are not substantially different, so that it appears unlikely that the use of the new rule could 425/

tilt a cost-benefit balance against a facility, the cost-

' benefit balance for the Midland Plant will not be tilted away from the alternative of abandonment by consideration of the interim fuel cycle rule.

1

~

i e

~ -w*- -s,- u e w",--os.-wmn.w F. OTHER EQUITABLE FACTORS AND PROBA-BILITY OF SUCCESS ON THE MERITS 110. This Board has been directed by both the Commission and the Appeal Board to resolve the question of suspension vel non pending an initial decision on the remanded issues on the basis of (1) a traditional balancing of equities and (2) consideration of any likely prejudice to further decisions 426/

that have been called for by the remand, 111. The equitable factors to be balanced are those 427/-

analyzed in Sections A through E, supra. All of the equities in those categories militate strongly in favor of continued construction, thus there is no " balancing" of the e

equities to be done. In Section A, the majority of the en-vironmental impacts related to construction have already taken place, therefore a continuation of construction will 428/

I have only minimal impacts. The equities in Sections B and D support the continuation of construction. The need for the electricity and steam to be produced by the Midland Plant has been demonstrated, and a delay of the project 429/

would severely impair the reliability of Licensee's system.

A suspension would also increase the cost of the project, and have a deleterious effect upon Licensee's investors and rate-430/

, payers. The community would also suffer adverse impacts in terms of increased costs of government, lost tax revenues and a depressed effect on local businesses in addition to the direct impact upon the construction workers laid off if 431/

a suspension of construction were-ordered. Furthermore, b

t

, + .

suspension could have an adverse impact on the entire state of Michigan, as financing problems resulting from a suspension could prevent Licensee from' completing its over-all program 431A/

of constructing generating facilities. A suspension of construction could also have the adverse effect of forcing Dow to abandon the nuclear alternative, which is its preferred choice, in order to have an assured source of process steam by 432/

1984. Alternatives in the areas of energy conservation, Dow alternatives and ACRS items will not be foreclosed by further construction, thus the equities in Section C 433/

favor a continuation of construction. The cost-benefit balance for the Midland Plant will not be tilted away from the alternative of abandonment by the continuation of construction; this remains true when the interim fuel cycle rule is taken into 434/

account. Thus the equities in Section E also weigh in favor of a continuation of construction. The Licensee's pro-bability of success on the merits must also be considered.

' Due to the fact that this proceeding was far more extensive in terms of days of hearings held, witnesses heard, and docu-mentation received, than is contemplated for a typical suspension proceeding, this Board can confidently determine that Licensee has a high degree of probability of succeeding on the merits 435/

at the hearing on the remanded issues. There is volu-minous and well-documented evidence demonstrating that after factoring in the historical and anticipated effects of energy con-servation, Licensee needs the power to be produced by the Midland 436/

Plant; on December 1, 1976 the ACRS clarified in its earlier letter and the items identified therein have either been resolved

- or are in the process of being timely resolved for the Midland l

L._

437/

Plant; and that Dow needs process steam from the nuclear plant as soon as possible and intends to retire its existing fossil-fuel units as soon as a reliable supply of steam is available from 438/

Midland. Furthermore, the cost-benefit balance for the Midland Plant, although not yet finally re-struck, shows a tremendous 439/

economic advantage for the nuclear plant; the small effects of the interim fuel cycle rule and the revised Table S-3 could affect 440/

the cost-benefit balance only marginally. As Licensee nas demonstrated a high degree of probability that it will succeed on the merits at the forthcoming hearing, to continue with the project that will in all probability be approved cannot result in any prejudice to the other parties or to the decision yet to be reached. Furthermore, to suspend construction of the project during the remanded hearings, only a four or five month period, is not reasonable in view of the relatively late stage of con-4 struction and the large expense which would be caused by a delay due to suspension.

III. CONCLUSIONS OF LAW 112. The Board has reviewed the entire record of this proceeding and concludes that the= record contains sufficient ~

.information to support the specific conclusions that follow.

113. We conclude that:

A. No significant adverse environmental impacts will occur i construction activities continue until an initial decision is reached on the remanded issues.

_ B. 1. Based on a long-term energy sales forecast adequately incorporating the historical and anticipated effects of energy s e -

=

conservation and other relevant factors, Licensee's system must-add the capacity of the Midland Units in 1981-82 in order to provide reliable electric service to its customers. Even with the capacity of the Midland Units, Licensee will have to rely on purchased power to achieve system reliability, and it is not prudent to further rely on such power. The particular characteristics of Licensee's system capacity and load mandate that capacity reserves cannot be allowed to fall to the level that would exist if the Midland Units were delayed.

2. The Midland Units must be in service in 1981-1982 in order to supply process steam to Dow. Because of regulatory

constraints as well as considerations of reliability and economics, Dow must replace the steam generation of its own fossil-fired units as soon as possible. Dow has affirmed its intention to honor its contractual commitment to receive its steam requirements from the Midland Project.

C. 1. Continuation of construction activities until an initial decision is reached on the remanded issues will not foreclose reasonable alternatives in the area of energy conservation, as the Licensee has already factored the historical and anticipated effects of energy conservation into its load growth projections, demonstrating that Licensee's system needs the amount of capacity to be supplied by the Midland Units at the time they are projected to come on line.

2. Reasonable alternatives to the Midland Plant supplying electricity and process steam to Dow will not be fore-closed by the continuation of construction until an initial de-L I

cision is reached on the remanded issues. Regardless of the

. amount of construction completed or the amount Licensee has

-invested in the project, Dow would not be foreclosed from making a decision to construct an alternate source of steam and electricity.

i

3. Continued construction during the period until an initial decision is' reached on the remanded issues will not foreclose the adoption of design changes for items in the clarified ACRS letter which were open at the time the construc-tion permits were issued but which have subsequently been resolved by the ACRS. Design alternatives to those items which are still pending resolution cannot, by definition, be foreclosed by continued construction. The budget for the plant includes an allowance for any costs associated with resolving ACRS items. The resolution of items at a future date will affect the operation, dates of the plant marginally, if at all.

D. Suspending the construction permits for the plant pending the outcome'of the hearings on the remanded issues, causing an even longer delay in the commercial operation of the Midland Units, would have serious effects on Licensee, its ratepayers and investors, Dow, and all the users of the elec-

~

tricity to be produced by the plant. The delay would adverse 1y affect the reliability of the Licensee's system. Suspension would inflict a.significant financial penalty on the Licensee (and therefore on its ratepayers and investors) as a result of the increased cost of the plant, increases in nuclear fuel costs, and the purchase and/or differential power costs due to the delay. The increased cost of the plant due to suspension t

i

would have a deleterious effect upon Licensee's ability to finance the project, although it would probably be capable of continued financing. A suspension of construction would also greatly impair Licensee's ability to raise the funds necessary to finance its other generating facility construction projects; this could severely impact the availability of power in, and the economy of, the state of Michigan. A suspension of con-struction would be likely to have adverse and disruptive social and economic impacts upon the community in which the plant is located. A suspension of construction, with the atten-dant delay in the commercial operation dates of the plant, will create an uncertainty as to whether the Midland Plant will be on-line in time to serve Dow, which cannot use its existing facilities indefinitely, given their present

- conditior.. This uncertainty, coupled with the lead-time Dow needs to make alternate arrangements for obtaining steam and electricity, means that a suspension of construction may force Dow to abandon the nuclear project, which is its preferred alternative.

E. The cost-benefit balance for the Midland Plant will not be tilted away from the alternative of abandonment by the increased investment made in the plant if construction  !

continues during the hearings on the remanded issues, taking j l

into account the interim fuel cycle rule as well as all other relevant factors. Furthermore, the evidence is clear that a nuclear plant is the preferred alternative to meet the demands for electricity and steam.

l l-

F. The Licensee has demonstrated a high degree of probability that it will succeed on the merits at the hearing i ~

on the remanded issues. Balancing.the factors involved in this proceeding: the fact that no significant adverse environ-J. mental impacts will occur due to continued construction; the fact that alternatives-related to energy conservation, facili-ties to supply Dow with process steam and electricity, and the ACRS items, will not be foreclosed by further construction; the fact that a suspension of construction would have an adverse impact upon Licensee, its ratepayers and investors, the users of the electricity from the project, the surrounding community in general, the economy of the state of Michigan and Dow; the fact that the need for steam and electricity from the project has been demonstrated; the fact that Dow intends to fulfill its contractual obligations to purchase process steam from Midland and intends to retire its existing fossil-1 .-

t fuel units as soon as this steam is available; the fact that increased investment during the period in question will

'not tilt the balance in favor of the nuclear project; and i

the fact that Licensee is likely to succeed on the merits at e the remanded hearings, this Board concludes that the equities favor the continued construction of the Midland Plant pending i the outcome of the hearing on the remanded issues.

i' .

IV. ORDER 114. On the basis of the Board's findings and conclusions, and pursuant to the Atomic Energy Act of 1954, as amended, and the Commission's regulations, IT IS ORDERED that the Director 1

of Nuclear Reactor Regulation should not terminate, suspend or modify in any way the construction permits previously issued with respect to the Midland Plant, Units 1 and 2.

t 115. IT IS FURTHER ORDERED, in accordance with 10 CFR SS2.760, 2.762, 2.764, 2.785 and 2.786 that this Initial Decision shall become effective immediately and shall constitute with respect to the matters covered therein the final action of the Commission thirty (30) days after the date of issuance hereof, subject to any review pursuant to the Commission's Rules of

, Practice. Exceptions to this Initial Decision may be filed by any party within seven (7) days after service of this Initial Decision, and a brief in support of such 9xceptions may be filed by any party within fifteen (15) days [ twenty (20) days in the case of the Staff] thereafter. Within fifteen (15) days of the filing and service of the brief of the appellant [ twenty (20) days in the case of the Staff], any other party may file a brief in support of, or in opposition to, the exceptions.

[ Alternative Request for Relief]

116. [In the event that the Board decides to suspend construction, Licensee requests that the Board stay the ef fectiveness of its decision pursuant to 10 CFR S2.764 (a) l while Licensee pursues the review process provided by the l

Commission's Rules of Practice. In support of this request l

for a stay, Licensee submits that it, along with its rate-payers and investors, Dow, and all those who will use the electricity produced by the plant, would suffer irreparable harm if construction were suspended, e.g., increases.in con-struction costs; increased purchase and/or differential power costs; disruption of the labor force and the community in general; a detrimental ~effect on Licensee's ability to finance the nuclear project, as well as the rest of its construction program, which would have a severe impact upon the economy of the state of Michigan. Furthermore, Licen-see has demonstrated that it is likely to succeed on the merits at the hearings on the remanded issues. The issuance of the stay would in no way harm other parties to this proceeding, and Licensee believes that the public interests of those who will need the power produced by the plant, of the Midland community in particular and of the state of Michigan in general favor the continuation of construction.

Thus, Licensee believes that it meets the standards governing the issuance of a stay set forth in Vircinia Petroleum Jobbers Associations v. FPC, 259 F.2d 921, 925 (D.C. Cir. 1958), which has consistently guided URC Licensing and Appeal Boards in evaluating requests for a stay under 10 CFR S2.764, see, e.g.,

Public Service Company of New Hampshire (Seabrook Station, Units 1 and 2) , ALAB-338, NRCI-76/7, pp. 10-19 (July 14, 1976) and cases cited therein. Licensee therefore requests that, should the Board decide to suspend construction, it adopt the following Paragraph 117 in lieu of Paragraph 115 above.]

e

117. [IT IS FURTHER ORDERED, in accordance with 10 C.F.R.

SS2.760, 2.762, 2.764, 2.785 and 2.786 that this Initial Decision shall not become effective immediately but shall be stayed while any party or parties seeks review pursuant to the Commission's Rules of Practice. Exceptions to this Initial Decision nay be filed by any party within seven (7) days after service of this Initial Decision, and a brief in support of such exceptions may be filed by any party within fifteen (15) days (twenty (20) days in the case of the Staff] thereafter. Within fifteen (15) days of the filing and service of the brief of the appellant [ twenty (20) days in the case of the Staff), any other party may file a brief in support of, or in opposition to, the exceptions.]

It is so ORDERED.

Respectfully submitte ,

Of 0$$f nw

~

s Ag. 3

//

R" Rep' Rp' f row, IIIN I

,ff %/u l

1 0 Martha E. Gibbs 7 db(v l

CAryl A. Bartelman Attorneys for Consumers Power Company Isham, Lincoln & Beale One First National Plaza Chicago, Illinois 60603 312/786-7500 June 13, 1977 i

I l

I

. FOOTNOTES

1. Consumers Power Company (Midland Plant, Units 1 and 2),

LBP-72-34 (December 14, 1972).

2. Consumers Power Company (Midland Plant, Units 1 and 2),

ALAB-123, RAI-73-5, pp. 331-357 (May 18, 1973).

3. Consumers Power Company (Midland Plant, Units 1 and 2),

CLI-76-11, NRCI-76/8, p. 65 (August 16, 1976).

4. Consumers Power Company (Midland Plant, Units 1 and 2),

CLI-76-14, NRCI-76/9, pp. 163, 166-67 (September 14, 1976).

5. See the NRC's Serplemental General Statement of Policy issued November 5, 1976 (41 F.R. 49898) and CLI-76-18, NRCI-76/ll, p. 470 (November 5, 1976).

6. Consumers Power Company (Midland Plant, Units 1 and 2),

CLI-76-19, NRCI-76/11, pp. 474-75 (November 5, 1976).

See also Public Service Ccmpany of New Hampshire (Seabrook Station, Units 1 and 2), CLI-76-17, NRCI-76/ll, pp. 451-469 (November 5, 1976).

7. For a more detailed discussion of the issues, see Motion of Consumers Power Company To Specify the Issues Encom-passed By and Delineate the Factors To Be Utilized In Reaching A Decision In The Suspension Proceeding And The Hearing On The Remanded Issues (January 13, 1977).

8. Letter, Licensee to Board, January 17, 1977.

9. Licensee Exh. 5.

10. Keeley testimony at I-2, foll. Tr. 602.

11. Wells testimony at 2, foll. Tr. 2946, Tr. 2968, 2970.

12. Wells testimony at 3-9, foll. Tr. 2946; Keeley testimony at I-1-6, foll. Tr. 602; Licensee Exh. 9.

13. Wells testimony at 3-13, foll. Tr. 2946.

14. Id.

15. Id; Tr. 2957; Echols testimony at 2, foll. Tr. 3059.

16. BIckel testimony at 1, foll. Tr. 3995; Tr. 1907, 1996; 3227-29.

17. Heins testimony at 2, foll. Tr. 1648; Tr. 3429-39, 3441-45, 3448; Board Exh. 4. p. 1.1-17.

18. Tr. 3431-32, 3442, 3453-54; Intervenors Exh. 11, p.

III(2),

19 Tr. 1646, 3241, 3364; Board Exh. 4, p. 1.1-17.

2C. Bickel testimony, foll. Tr. 3995; Tr. 1996-97, 2033-34, 3375-77; Board Exh. 4, p. 1.1-17,

21. Tr. 3221-22, 3236-37, 3303-04.

22. Tr. 3389-90; Bickel testimony, foll. Tr. 3995.

23. Tr. 3327-29. ,

24. Tr. 3234-35,

25. Tr. 3230-31, 3234-35, 3385, 3426-29; Intervenors Exh. 22; Licensee Exh. 59.

26. Tr. 3230-31, 3322-24.

27. Tr. 3234-35.

28. Heins testimony at 6, foll. Tr. 1648,

29. Tr. 3225

30. Tr. 3424-25.

31. Tr. 3297-98; see Tr. 3234 and Bickel testimony, foll.

Tr. 3995.

32. Tr. 3239-40.

33. Tr. 3264-68.

w L_

34. Tr. 3269.

35. Tr. 3258-59.

36. Tr. 3326-33.

37. Tr. 3287-90.

38. Tr. 3240; 3303-05.

39. Tr. 3239.

40. Tr. 3237-38, 3393-95.

41. Tr. 3237-38; Intervenors Exh. 11 Addendum (Licensee Exh. 60).

42. Tr. 3240; Intervenors Exh. 11 Addendum (Licensee Exh.

60); Board Exh. 4, p. 1.1-17.

43. Tr. 3360-61; Intervenors Exh. 11 Addendum (Licensee Exh. 60).

44. Tr. 3307-12; Intervenors Exh. 11 Addendum (Licensee Exh. 60).

45. Tr. 3309; Intervenors Exh. 11 Addendum, p. 2 (Licensee Exh. 60)

46. Tr. 3360-61; Board Exh. 4, p. 1.1-17.

47. Bickel testimony, foll. Tr. 3995; Tr. 1645-46; Heins testimony at 2-4, foll. Tr. 1648; Board Exh. 4, pp. 1.1-17 to 1.1-19; Intervenors Exh. 11.

48. Bickel testimony at 5-7, 9 foll. Tr. 3995; Heins testimony at 3, 4, 6, foll. Tr. 1648; Intervenors Exh. 11; Tr. 1881-82, 1890-92, 1894.

49. Tr. 1879-82, 1890, 1902-08, 1916-18, 1933, 4464; Intervenors Exh. 11; Board Exh. 4, p. 1.1-12.

50. Bickel testimony at 5-7, 11 foll. Tr. 3995; Heins testimony at 3 foll. Tr. 1648; Tr. 1882, 1890-91, 1953-1958; Intervenors Exh. 11.

51. Tr. 2014-15; Intervenors Exh. 11.

52. Bickel testimony at 5-6, foll. Tr. 3995; Tr. 1912, 1917; Heins testimony at 7-8, foll. Tr. 1648; Board Exh. 4,

p. 1.1-17a; Feld testimony at 25, foll. Tr. 4375; Intervenors Exh. 11.

53. Bickel testimony at 3-4, 13, foll. Tr. 3995; Intervenors Exh. 11.

54. Bickel testimony at 11-12, foll. Tr. 3995; Tr. 1970-84; Heins testimony at 3-4, foll. Tr. 1648; Board Exh. 4, pp. 1.1-17, 18; Intervenors Exh. 11.

55. Bickel testimony at 4, 9, 10, 13, 14, foll. Tr. 3995; Tr. 2012-14; Heins testimony at 3, foll. Tr. 1648; Board Exh. 4, p. 1.1-17a; Intervenors Exh. 11.

56. Tr. 1885; Heins testimony at 7-8, foll. Tr. 1648; Board Exh. 4, pp. 1.1-8 to 1.1-14; Intervenors Exh. 11.

57. Bickel testimony at 2, foll. Tr. 3995; Tr. 1963; Board Exh. 4, p. 1.1-17a; Intervenors Exh. 11.

58. Bickel testimony at 2, 5, foll. Tr. 3995; Tr. 1959, 1961-63, 1967-68; Intervenors Exh. 11.

59. Bickel testimony at 8-9, foll. Tr. 3995; Board Exh. 4,

p. 1.1-18; Intervenors Exh. 11.

60. Bickel testimony at 12-13, foll. Tr. 3995; Board Exh. 4, pp. 1.1-17, 18; Feld testimony at 25, foll. Tr. 4375; Intervenors Exh. 11.

61. Tr. 1959-60; Intervenors Exh. 11,

62. Bickel testimony at 15-16, foll. Tr. 3995; Tr. 1995, 1920-22; See footnote 20 supra.

63. Heins testimony at 2-3, foll. Tr. 1648, as revised at Tr. 1646; Board Exh. 4, pp. 1.1-17 to 1.1-19; Intervenors Exh. 11, p. III(2).

.=

64. Feld testimony at 22, foll. Tr. 4375; Intervenors Exh. 11 Addendum (Licensee Exh. 60).

65. Feld testimony at 22, foll. Tr. 4375.

66. Feld testimony at 24, foll. Tr. 4375.

67. Heins testimony at 6-7, foll. Tr. 1648; Tr. 1915, 1917-18, 1930, 1933, 1935-36; Bickel testimony at 9, foll. Tr. 3995; Feld testimony at 24-25, foll.

Tr. 4375; Board Exh. 4, pp. 1.1-6 to 1.1-8.

68. Heins testimony at 6, foll. Tr. 1648; Board Exh. 4,

p. 1.1-7.

69. Heins testimony at 7, foll. Tr. 1648; Board Exh. 4,

p. 1.1-7.

70. Heins testimony at 7, foll. tr. 1648; Board Exh. 4,

p. 1.1-8.

71. Heins testimony at 5, foll. Tr. 1648; Board Exh. 4, pp. 1.1, 7, 10, 11, 13, 16; see Licensee Exhs. 11, 12.

72. Heins testimony at 7, foll. Tr. 1648; Board Exh. 4,

p. 1/1-7, 13.

73. Board Exh. 4, pp. 1.1-1 to 1.1-6; Feld testimony at 23, foll. Tr. 4375; Tr. 4466-67.

74. Board Exh. 4, p. 1.1-2; Feld testimony at 23, foll. Tr.

4373.

75. Board Exh. 4,'pp. 1.1-3 to 1.1-5; Feld testimony at 23, foll. Tr. 4375; Tr. 4466.

76. Board Exh. 4, p. 1.1-5.

77. Board Exh. 4, p. 1.1-9.

78. Board Exh. 4, pp. 1.1-9, 10.

79. Heins testimony at 5, 7, foll. Tr. 1648.

80. Board Exh. 4, pp. 1.1-10, 11.

I

81. Board Exh. 4, p. 1.1-11.

82. Heins testimony at 7, 8, foll. Tr. 1648; Board Exh. 4,

p. 1.1-11.

83. Heins testimony at 7, foll. Tr. 1648; Board Exh. 4, pp.

1.1-5, 1.1-10 to 1.1-13.

84. Heins testimony at 5, foll. Tr. 1648.

85. Heins testimony at 6, foll. Tr. 1648; See Paragraphs 33 and 44 infra; Tr. 5110-12.

86. Heins testimony at 6, foll. Tr. 1648.

87. See Paragraph 22 and footnota 71 supra; Tr. 5110-12.

88. Heins testimony at 2-8, foll. Tr. 1648; Feld testimony at 28, foll. Tr. 4375; Board Exh. 4, pp. 1.1-15 to

.l.1-19; Intervenors Exh. 17; see footnote 89 infra.

89. Feld testimony at 1, 4 and 28, foll. Tr. 4375; Tr. 4466.

90. See Paragraph 27 infra; Feld testimony at 35-27, foll.

Tr. 4375.

91. Heins testimony at 2-6, foll. Tr. 1648; Board Exh. 4, pp. 1.1-19, 20; Tr. 1655; Feld testimony at 4, 28, foll.

Tr. 4375; Tr. 4466; See footnote 88 supra.

92. Feld testimony at 10, foll. Tr. 4375; Bickel testimony at 16, foll. Tr. 3995.

93. Feld testimony at 10-12, 14-15, 25-27, foll. Tr. 4375; Bickel testimony at 16, foll. Tr. 3995,

94. Feld testimony at 14, foll. Tr. 4375; BiOxel testimony at 16, foll. Tr. 3995.

95. Tr. 4378; See footnotes 92-94 supra.

"6. Feld testimony at 15, foll. Tr. 4375.

97. Tr. 4378; See footnote 99 infra.

98. Feld testimony at 15-17, foll. Tr. 4375.

12

a

99. Feld testimony at 18, foll. Tr. 4375; Bickel testimony at 16, foll. Tr. 3995.

-100. Feld testimony at 16-18, full. Tr. 4375.

101. Feld testimony at 19-22, foll. Tr. 4375.

102. Feld testimony at 22-23, foll. Tr. 4375; Tr. 4378-79.

103. Feld testimony, foll. Tr. 4375; Tr. 4379.

104. Heins testimony at 3, foll. Tr. 1648; Feld testimony at 29-35, foll. Tr. 4375; Board Exh. 4, pp. 1.1-14, 15; Gundersen affidavit at 5 (Supplemental Testimony).

105. Board Exh. 4, pp. 1.1-14, 15; Feld testimony at 30-31, foll. Tr. 4375.

106. Feld testimony at 16-17, 29-35, foll. Tr. 4375.

107. Feld testimony at 34, foll. Tr. 4375.

108. Feld testimony at 28, 31, 35, foll. Tr. 4375; Board Exh. 4, p. 1.1-14.

109. Heins testimony at 4, foll. Tr. 1642; Tr. 1650-51; Board Exh. 4, p. 1.1-19.

110. Heins testimony at 4-6, foll. Tr. 1648; Tr. 1653-55; Board Exh. 4, pp. 1.1-19, 20.

111. Tr. 1787, 4037.

112. Licensee Exh. 11, 12; Board Exh. 4, p. 1.1-20.

113. Heins testimony at 9, foll. Tr. 1648; Tr. 1821-22, 4033-35.

114. Heins testimony at 9, foll. Tr. 1648; Tr. 4034-35, 4037; Board Exh. 4, p. 1.1-21.

115. Tr. 1796, 4035; Board Exh. 4, p. 1.1-21.

116. Heins testimony at 9-10, foll. Tr. 1648; Tr. 1803-04, 4037-39; Board Exh. 4, p. 1.1-21.

117. Licensee Exhs, 11, 12; Tr. 1790-92.

118. Licensee Exhs. 11, 12; Tr. 4050-51, 1797-1803, 1819-24, Intervenors Exhs. 15, 16.

119. Licensee Exhs. 35, 11, 12; Tr. 4057-59, 1811-14; Board Exh. 4, p. 1.1-20, Table 1.1-6.

120. Licensee Exhs. 11, 12, 13; Heins testimony at 10, foll. Tr. 1648; Board Exh. 4, p. 1.1-21.

121. Licensee Exhs. 11, 12, 13; Heins testimony at 10, foll.

Tr. 1648; Tr. 1668; Board Exh. 4, p. 1.1-21.

122. Tr, 1682-83; Noble testimony at 2, foll. Tr. 4754.

123. Noble testimony at 4-6, foll. Tr. 4754; Tr. 4761.

124. Noble testimony at 6, foll. Tr. 4754.

125. Noble testimony at 6-8, foll. Tr. 4754.

126. Noble testimony at 4-5, 10-13, foll. Tr. 4754.

127. Noble testimony at 11, 13, foll. Tr. 4754; Tr. 1676-78, 1682-83.

128. Noble testimony at 13, foll. Tr. 4754; Tr. 4785.

129. Tr. 4789-91.

130. Noble testimony at 13-14, foll. Tr. 4754.

131. Nobel testimony at 14, foll. Tr. 4754; Tr. 4785-87, 4792-93.

132. Noble testimony at 14, foll. Tr. 4754.

133. Noble testimony at 13, foll. Tr. 4754.

134. Tr. 1828-34, 1852.

135. Heins testimony at 8, foll. Tr. 1648; Gundersen testimony at 3, foll. Tr. 5101.

136. Heins testimony at 8, foll. Tr. 1648; Ringlee testimony at 6, foll. Tr. 4801; Gundersen testimony at 3, foll. Tr.

5101.

137. Ringlee testimony at 3, foll. Tr. 4801; Gundersen testimony at 3, foll. Tr. 5101.

^

, 138. Ringlee testimony at 5-6, foll. Tr. 4801; Tr. 3998, 4030-31, 5118.

139. Heins testimony at 8, foll. Tr. 1648; Gundersen testimony at 3-4, foll. Tr. 5101; Tr. 4815-17.

140. Heins testimony at 8, foll. Tr. 1648; Gunderson testimony at 3-4, foll. Tr. 5101; Tr. 4814, 5104; Ringlee testimony at 10, foll. Tr. 5101.

141. Heins testimony at 8, foll. Tr. 1648; Ringlee testimony at 8-10, foll. Tr. 4801; Tr. 4814-16; Gundersen testimony at 5-6, foll. Tr. 5101.

142. Heins testimony at 8, foll. Tr. 1648; Board Exh'. 4, S 1.1.3.2, Figure 1.1-2; Tr. 1662-63.

143. Heins testimony at 9, foll. Tr. 1648; Tr. 1656; Board Exh. 4, p. 1.1-22.

144. Heins testimony at 9, foll. Tr. 1648; Ringlee testimony at 7-8, foll. Tr. 4801; Tr. 4854-61: Gundersen testimony at 4, foll. Tr. 5101.

145. Feld testimony at 4, foll. Tr. 4375; Ringlee testimony at 8, foll. Tr. 4801; Gundersen testimony at 5, foll.

Tr. 5101; Tr. 1658-59, 1684, 5104.

146. Gundersen testimony at 4-5, foll. Tr. 5101; Tr. 4837, 5132.

147. Gundersen testimony ~at 3, foll. Tr. 5101; Board Exh. 4,

p. 1.1-22.

148. Heins testimony at 9, foll. Tr. 1648; Tr. 1659-60, 3991, 4404, 4409, 4428, 4441; Board Exh. 4, 51.1.3.2.

149. Tr. 5140; Board Exh. 4, p. 1.1-22, figure 1.1-2; Gunderson Rebuttal Testimony at 1, Special Transcript 3-23-77.

150. Tr. 1660-61, 4486, 5163-64; Feld testimony at 2, foll.

Tr. 4375.

151. Tr. 1656-57, 1660-61, 4870.

152. Tr. 1660-61, 5164.

153. Board Exh. 4, p. 1.1-24; Tr. 4474-75.

154. Tr. 1656-57; Board Exh. 4, pp. 1.1-22, 23.

155. Tr. 1660, 3991-92, 4062; Board Exh. 4, p. 1.1-23; Heins testimony at 9, foll. Tr. 1648.

156. Heins testimony at 13, foll. Tr. 1648; Tr. 3998.

157. Heins testimony at 13, foll. Tr. 1648; Tr. 1858-60, 4079, 4081, 4452, 5154.

158. Gundersen Rebuttal Testimony at 3, Special Transcript 3-23-77.

159. Heins testimony at 13, foll. Tr. 1648; Tr. 4079-82, 4827-31; Board Exh. 4, p. 1.1-23.

160. Heins testimony at 13, foll Tr. 1648; Heins affidavit at 3-5.

161. Heins testimony at 13, foll. Tr. 1648; Tr. 4804.

162. Tr. 4804. _

163. Tr. 4062-63, 4069-70, 4450-51.

164. Feld testimony at 8-9, foll. Tr. 4375; Gundersen affidavit at 4-5 (Supplemental Testimony); Heins affidavit at 5.

165. Gundersen affidavit at 5-6 (Supplemental Testimony) ; Tr. 4027; Heins affidavit at 5.

166. Tr. 4027.

167. Tr. 4836-37.

168. Tr. 1845, 4869; Ringlee testimony at 8-9, foll. Tr. 4801.

169. Feld testimony at 8-9, foll. Tr. 4375; Ringlee testimony at 9, foll. Tr. 4801.

170. Tr. 4817, 4836; Ringlee testimony at 9, foll. Tr. 4801.

171. Feld testimony at 9, foll. Tr. 4375; Board Exh. 4, p.

1.1-23; Ringlee testimony at 10, foll. Tr. 4801.

94 I

B

~88-172. Feld testimony at 8-9, foll. Tr. 4375.

173. Heins testimony at 11, foll. Tr. 1648; Tr. 4056-57, 4070.

174. Heins testimony at 11, foll. Tr. 1648; Tr. 1755-56, 1777-78; Feld testimony at 8, foll. Tr. 4375.

175. Heins testimony at 11, foll. Tr. 1648; Licensee Exh. 12.

176. Gundersen testimony at 3-4, foll. Tr. 5101; Tr. 4814-16, b106.

177. Heins testimony at 6, foll. Tr. 1648; Tr. 1652-53, 4031; Board Exh. 4, pp. 1.1-19, 20.

178. Tr. 4816; Heins testimony at 6, foll. Tr. 1648.

179. Tr. 5107-08, 5110.

180. Heins testimony at 5-6, foll. Tr. 1648; Tr. 4031, 4816; Tr. 5107, 5110; see Board Exh. 4, S 1.1.3.1.

181. Ringlee testimony at 10, foll. Tr. 4801; Tr. 4031-32, 4816, 4866.

182. Gundersen testimony at 3-4, foll. Tr. 5101; Tr. 5106-07.

183. Ringlee testimony at 10, foll. Tr. 4801; Tr. 4829-30; Gundersen testimony at 6, foll. Tr. 5101.

184. Tr. 4802, 4830, 4873-74.

185. Tr. 4801-02, 4829-30, 4871.

186. Tr. 4830; Gundersen testimony at 5-6, foll. Tr. 5101.

187. Gundersen testimony at 3, foll. Tr. 5101; Tr. 5103.

188. Gundersen testimony at 3, foll. Tr. 5101; Tr. 5106-10.

189. Tr. 4828; Gundersen testimony at 4, foll. Tr. 5101.

190. Gundersen testimony at 3, foll. Tr. 5101; Tr. 4878-79, 5104.

191. See Paragraphs 80, 81 infra.

192. Heins testimony at 10-11, foll. Tr. 1648; Licensee Exh. 11; see Board Exh. 4, S 1.3.

193. Heins testimony at 10, foll. Tr. 1648.

194. Licensee Exh. 11.

195. See Paragraph 43 supra.

195. Licensee Exh. 12; Heins testimony at 11, foll. Tr.

1648.

197. Licensee Exh. 12.

198. Heins testimony at 13, foll. Tr. 1648; Licensee Exh. 13.

199. Gundersen testimony at 1, foll. Tr. 5101; Feld testimony at 1, 2, foll. Tr. 4375.

200. Gundersen testimony at Attachment No. 4, foll. Tr. 5101; Tr. 5105; see Tr. 1657, 1660.

201. Feld testiraony at 4, 5 [ Table 1], foll. Tr. 4375.

202. Feld testimony at 1, 4, 5 [ Table 1], 8, 9, foll. Tr. 4375; Tr. 4380.

203. Gundersen testimony at 4, 5, 6, Attachment Nos. 2, 3, foll. Tr. 5101; Gundersen affidavit at 4 (Supplemental Testimony) 204. Gundersen testimony at 5, 6, foll. Tr. 5101.

205. Gundersen affidavit at 6 (Supplemental Testimony) .

206. Gundersen testimony at 6, foll. Tr. 5101; Tr. 5139.

207. Feld testimony at 1, 6, foll. Tr. 4375.

208. Feld testimony at 6, 7, foll. Tr. 4375; Tr. 4381, 4405-06.

209. Temple testimony at 3, foll. Tr. 220.

210. Temple testimony at 3, 5, foll. Tr. 220; Dow's 1-25-77 Response No. 1 (pp. 3, 6-8), 4(p. 13), 8(p. 20) to Intervenors 12-27-76 Interrogatories; Tr. 2550-51.

=

U r .

211. Temple testimony at 3-4, foll. Tr. 220; Licensee Exh. 8a-8g; Tr. 345; Dow's 2-28-77 and 3-29-77 Reponses to NRC Staff's 1-27-77 Interrogatory No. 1(k); also see Paragraph 58 infra.

212. Tr. 2357-58; Dow's 2-28-77 Response No. 14 to NRC Staff's 1-27-77 Interrogatory.

213. Temple testimony, foll. Tr. 220.

214. Dow's 1-25-77 Response No. 1(b) (p. 6) to Intervenors' 12-27-76 Interrogatories; Howell testimony, foll. Tr. 2074.

215. - Licensee Exh. 7a, 7b, 7c.

j 216. Licensee Exh. 7c (p. 1); Howell testimony at 3, foll. Tr. 2074; Tr. 2205, 2210, 2342.

217. Licensee Exh. 7c (pp. 29-30); Tr. 2088; Temple testimony at 8, foll. Tr. 220 (correction at Tr. 219).

218. Tr. 2467, 2646.

219. Howell testimony at 2, foll. Tr. 207; Licensee Exhs.

7a, 7b, 7c; Tr. 2582-83.

220. Temple testimony at 2, 6, foll. Tr. 220.

221. Temple testimony at 2, foll. Tr. 220; Tr. 2567, 2606-07, 2693-94; Board Exh. 1, 2.

222. Tr. 424-25, 2606-07.

223. Tr. 428-29, 2717.

224. Tr. 2566-69, 2697-99; Temple testimony at 2-3, 5-6, foll.

Tr. 220.

225. Temple testimony at 2-3, 5-6, foll. Tr. 220; Tr. 431-32; Dow's 2-28-77 Response No. 14 to NRC Staff's 1-27-77 Interrogatory.

226. Temple testimony at 8, foll. Tr. 220.

227. Tr. 321-23, 358, 451.

228. Dow's 1-25-77 Response Nos. 1(b) (p. 7), 4 (c) (p. 15) to Intervenors' 12-27-76 Interrogatories.

229. Dow's 1-25-77 Response No. 4 (c) (p. 15) to Intervenors' 12-27-76 Interrogatories.

230. Tr. 2515, 2570, 2588, 2659, 2670.

231. Tr. 2584-85.

232. Tr. 2688 233. Tr. 2688-89, 234. Dow's 2-28-77 Response Nos. 8, 15 to NRC Staff's 1-27-77 Interrogatories.

235. Dow's 2-28-77 Response No. 14 (p. 11) to NRC Staff's 1-27-77 Interrogatories.

236. Dow's 5-2-77 Supplemental Response No. 1 (p. 2) to Intervenors' 12-27-76 Interrogatories.

237. Licensee Exh. 8a; Dow's 1-25-77 Response No. 1 (p. _6) to Intervenors' 12-27-76 Interrogatories.

238. Tr. 320; Dow's 2-28-77 and 3-29-77 Response No. 1 (p. 4; pp. 2-3) to NRC Staff's 1-27-77 Interrogatories.

239. Board Exh. 3; Dow's 1-25-77 Response Nos. l(b), 8(b) to Intervenors' 12-27-76 Interrogatories; Dow's 3-29-77 Response No. 8 to Intervenors' 12-27-76 Interrogatories, including Exh. A.

240. Dow's 2-28-77 Response No. 1(k) to NRC Staff's 1-27-77 Interrogatories; Dow's 3-29-77 Response No. l(k) to NRC Staff's 1-27-77 Interrogatories (also labeled Response No. 8 to Intervenors' 12-27-76 Interrogatories),

including Exhibit A.

b e

241. Temple testimony at 3, foll. Tr. 220; Dow's 1-25-77 Responsa No. 1(b) (p. 6) to Intervenors' 12-27-76 Interrogatories; Dow's 2-28-77 Response No. 14 to NRC Staff's 1-27-77 Interrogatories; Tr. 1302-05.

242. Temple testimony at 5-7, foll. Tr. 220.

243. Tr. 2357-58.

244. Tr. 310; Howell testimony at 5, foll. Tr. 2074.

245. Tr. 2453.

246. Dow's 1-25-77 Response No. 1 (p. 3) to Intervenors 12-27-76 Interrogatories.

247. Temple testimony at 3, foll. Tr. 220; Tr. 1302-05, 2733, 2144.

248. Dow's 2-28-77 Response Nos. 8, 15 to NRC Staff's 1-27-77 Interrogatories.

249. Tr. 2669, 1302-03.

250. See Paragraph 79 infra.

251. See Paragraphs 21 through 31, supra.

252. Crocker testimony, "The Possibility of Constructing a Smaller Nuclear Plant at Midland," at 1-3, foll. Tr.

4177.

253. Keeley testimony at IV-3, foll. Tr. 3646; Tr. 3923, '

3947-48. 1 254. See Paragraphs 50 through 59, supra.

255. Temple testimony at 3, foll. Tr. 220; Tr. 2322-23.

256. Licensee Exh. 31; Intervenors' Exh. 26; Brzezinski testimony at 1-5, foll. Tr. 4959; Feld testimony, "The Alternative of Dow Generating its Own Steam & Electric Power," at 1-3, foll. Tr. 5169.

257. Licensee Exh. 31 at 25-26.

258. Temple testimony at 3, foll. Tr. 220; Licensee Exh.

31 at 13.

259. Licensee Exh. 31 at 13; Tr. 2608-09; Temple testimony at 3-5, foll. Tr. 220.

260. Tr. 1335; Tr. 2740-41.

261. Licensee Exh. 31 at 25-26.

262. 547 F.2d 622, 631-32 (D.C. Cir. 1976), cert. granted

sub nom. Consumers Power Company v. Aeschliman, 45 U.S.

L.W. 4570 (February 22, 1977).

263. NRC Staff Exh. 1.

264. NRC Staff Exh. 3.

265. NRC Staff Exh. 2.

266. NRC Staff Exh. 2.

267. Tr. 1529-30; NRC Staff Exh. 1, 2 and 3.

268. Keeley testimony at II 2, foll. Tr. 1742; Tr. 1379-81; Licensee Exh. 32 and 33.

269. Keeley testimony at II 2, foll. Tr. 1742. See also Paragraph 11, supra.

270. NRC Staff Exh. 2.

271. Licensee Exh. 6; Crocker testimony, " Draft Analysis of ACRS Report of 11/18/76," at 3-4, foll. Tr. 4177; Tr.

1426-29.

272. NRC Staff Exh. 2.

273. Licensee Exh. 6; Crocker testimony, " Draft Analysis of ACRS Report of 11/18/76," at 5, foll. Tr. 4177.

274. Keeley testimony at II 2, foll. Tr 1742.

275. Crocker testimony, " Draft Analysis of ACRS Report of 11/18/76," at 5, foll. Tr. 4177.

276. Tr. 4296-97.

1 l

r .

277. Licensee Exh. 6; Crocker testimony, " Draft Analysis of ACRS Report of 11/18/76," at 6-7, foll. Tr. 4177; Tr. 1381-82.

278. Id.

279. NEC Staff Exh. 2; Licensee Exh. 6; Crocker testimony,

" Draft Analysis of ACRS Report of 11/18/76," at 8-9, foll. Tr. 4177.

280. NRC Staff Exh. 2.

281. Licensee Exh. 6; Crocker testimony, " Draft Analysis of ACRS Report of 11/18/76," at 10, foll. Tr. 4177.

282. NRC Staff Exh. 2.

283. Licensee Exh. 6; Crocker testimony, " Draft Analysis of ACRS Report of 11/18/76," at 11, foll. Tr. 4177.

284. Licensee Exh. 33.

285. NRC Staff Exh. 2.

286. Licensee Exh. 6; Crocker testimony, " Draft Analysis of ACRS Report of 11/18/76," at 12, foll. Tr. 4177.

287. NRC Staff Exh. 2.

288. Crocker testimony, " Draft Analysis of ACRS Report of 11/18/76," at 13, foll. Tr. 4177.

289. Keeley testimony at II 2, foll. Tr. 1742; Licensee

, Exh. 6.

290. Licensee Exh. 33.

291. NRC Staff Exh. 2.

292. Keeley testimony at II - 3, foll. Tr. 1742; Tr. 1377-78; Licensee Exh. 6; Crocker testimony, " Draft Analysis of ACRS Report of 11/18/76," at 14-15, foll. Tr. 4177.

293. NRC Staff Exh. 2.

294. Crocker testimony, "Draf t Analysis of ACRS Report of 11/18/76," at 16, foll. Tr. 4177.

295. Licensee Exh. 6; Crocker testimony, " Draft Analysis of ACRS Report of 11/18/76," at 16, foll. Tr. 4177; Tr. 1374-75.

296. Licensee Exh. 6; Crocker testimony, " Draft Analysis of ACRS Report of 11/18/76," at 17, foll. Tr. 4177.

297. Keeley testimony at II 2, foll. Tr. 1742.

298. Crocker testimony, " Draft Analysis of ACRS heport of 11/18/76," at 17, foll. Tr. 4177.

299. NRC Staff Exh. 2.

300. Licensee Exh. 6; Crocker testimony, " Draft Analysis of ACRS Report of 11/18/76," at 18-19, foll. Tr. 4177.

301. Licensee Exh. 6; Crocker testimony, " Draft Analysis of ACRS Report of 11/18/76," at 19, foll. Tr. 4177.

302. Intervenors Exh. 8; Tr. 1399-1405; Licensee Exh. 32 and 33; See also paragraph 11, supra.

303. Licensee Exh. 32.

304. Licensee Exh. 30; Board Exh. 4, Figure 4.1-1; Keeley tescimony at III - 1, foll. Tr. 3638; Tr. 2931.

305. Tr. 2925; Licensee Exh. 30; Board Exh. 4, Figure 4.1-1; Keeley testimony at III - 1, foll. Tr. 3638; Tr. 2931.

306. Boris testimony, foll. Tr. 4912, including Licensee Exhs. 36A and 37B.

307. Tr. 4930; Boris testimony at 4, foll. Tr. 4912; Licensee Exh. 36A at 1; Licensee Exh. 37B.

308. Boris testimony at 4, foll. Tr. 4912; Tr. 4917-18; Licensee Exh. 37B.

309. Boris testimony at 3-4, foll. Tr. 4912; Licensee Exh. 36A.

~

-a .

310. Keeley testimony at III - 1, foll. Tr. 3638.

311. Id.

312. Yd; Tr. 4188-91.

313. Kdeley testimony at III - 1, foll. Tr. 3638; Tr.

3667-69, 3682.

314. Licensee Exh. 30.

315. Keeley testimony at III - 3, foll. Tr. 3638; Crocker testimony, " Delay of Construction and Make-Up of Lost Time," at 1-7, foll. Tr. 4177.

316. .Keeley testimony at III - 2, foll. Tr. 3638.

317. Id.

318. Yd. at III - 3.

319. Yd. at III 3.

320. Yd. at III - 3; Licensee Exh. 16, 321. Keeley testimony at III 7, foll. Tr. 3638; Licensee Exh. 16; Heins testimony at 13-16, foll. Tr. 1648; Licensee Exh. 14.

322. Id.

323. Licensee Exh. 16; Keeley testimony at III 5, foll.

Tr. 3638.

324. Licansee Exh. 16; Keeley testimony at III 7, foll.

Tr. 3638, 325. Licensee Exh. 16; Meltz testimony, "The Financial i

Costs of Delay," at 1-2, foll. Tr. 4573.

326. Meltz testimony, "The Financial Costs of Delay," at 3, foll. Tr. 4573.

327. Calcaterra Affidavit, Attachment 1.

328. Heins testimony at 14, foll. Tr. 1648; Licensee Exh. 14; Keeley testimony at III - 7, foll. Tr. 3638; Licensee Exh. 16; Calcaterra Affidavit, Attachment 1.

329. Boris testimony at 5-6, foll. Tr. 4912; Tr. 4937-45.

330. Boris testimony at 5, foll. Tr. 4912; Tr. 4944.

331. Tr. 4940.

332. Climer Affidavit at 2-3.

333.

Climer Affidavit, Attachment A.

334. Id.

335. Yd.

336. CTimer Affidavit, Attachment 3.

337. Fisher Affidavit at 1-7.

338. Id. at 6.

339. Yd.

340. Fisher Affidavit at 6 and Attachment E.

341. Id.

4 342. Fisher Affidavit at 6. ~

343. Fisher Affidavit at 7 and Attachments B through E.

344. Heins testimony at 9-13, foll. Tr. 1648; Licensee Exh.

11, 12 and 13; Tr. 4077.

345. Heins testimony at 9, foll. Tr. 1648.

346. Heins testimony at 11, foll. Tr. 1648; Licensee Exh. 11; Board Exh. 4 at 1.3-1.

m I

i l

347. Heins testimony at 12, foll. Tr. 1648; Licensee Exh.

13; Crocker testimony, " Delay of Construction and Makeup of Lost Time," at 6, foll. Tr. 4177.

348. Heins testimony at 12, foll. Tr. 1648.

349. Keeley testimony at III - 7, foll. Tr. 3638, 350. Id. at III - 8.

351. YH.

352. Yd. at III 12.

353. Eoard Exh. 4, Table 4.1-1.

354. Keeley testimony at III - 10, foll. Tr. 3638.

355. Id. '

356. Y2.

357. Y2. at III 11.

358. YE. at III - 11.

359. Yd. at III 12.

360. Temple testimony at 5, foll. Tr. 220; Licensee Exh. 31 at 11, 13, 20.

361. Licensee Exh. 31 at 25-26.

362. Tr. 2608-09; Licensee Exh. 31 at 11, 13-14, 20; Temple testimony at 4-5, foll. Tr. 220. See also Paragraph 50, supra.

363. Board Exh. 4 at 5.6-1 to 5.6-2, Tables 5.6-1, 5.6-1A.

364. See Licensee's January 13, 1977 Motion, supra note 7, at 26-27.

365. Public Service Company of New Hampshire (Seabrook Station, Units 1 and 2), CLI-77-8, NRCI-77/3, p. (March 31, 1977 366. Keeley testimony at IV-1-8, foll. Tr. 3646; Licensee Exh. 17, 19, 20-23; Feld testimony at 1-9, foll. Tr.

4509, 367. Timm testimony, Special Transcript.

368. Id. at 83-88.

369 Y2. at 83-88.

370. Public Service Company of New Hampshire (Seabrook Station, Units 1 and 2), CLI-77-8, NRCI-77/3, p. . (March 31, 1977).

371. Keeley testimony at IV-3, foll. Tr. 3646.

372. Id; Tr. 3923.

373. Keeley testimony at IV-3-4, foll. Tr. 3646; Heins testimony at 9-13, foll. Tr. 1648.

374. Keeley testimony at IV-3, foll. Tr. 3646.

375. Tr. 3686; 4548-50.

376. Feld testimony, " Alternative of Dow Generating Its Own Steam And Electric Power," at 1-3, foll. Tr. 5169.

377. The 37% figure is calculated frcm numbers in Table 1 of Feld testimony " Updating Coal Cost Estimates," foll. Tr.

5169. The difference between the total cost of-the low sulfur coal alternative (59.2 mills per KWh) and the total cost of Midland (43. 3 mills per KWh) is 15.9 per KWh.

This difference, di vided by the base case, that is,the total cost for Midland (43.3 mills per KWh) shows a 37%

cost advantage fer Midland over the low sulfur coal alternative (15.9 - 43.3 = p.37). The 47% figure is calculated from numbers in Table 1 of Feld testimony i

" Alternative of Dow Generating its Own Steam and Electric Power," foll. Tr. 5169. The difference between the total

cost of the Midland base case and the total cost of separate facilities for Dow and Licensee, assuming the reference nuclear fuel costs, is $1775 million.

This difference, divided by the base case, that is, the total cost for Midland (assuming reference nuclear fuel costs), shows a 47% cost advantage f7r Midland a

- over the alternative of separate facilities for Dow and Licensee. (1775

• 3816 - 0.47).

378. Brzezinski Affidavit it 1-8, Attachment A.

379. Keeley testimony at IV-3, foll. Tr. 3646.

380. Id; Tr. 3947-48.

381. Edeley testimony at IV-3, foll. Tr. 3646.

382. Id. at IV - 4A-5.

383. YH. at IV-5.

384. TH: Wilkinson testimony at 3-5, foll. Tr. 4881.

385. RIlkinson testimony at 1-10, foll. Tr. 4881; Licensee

, Exh. 38-51.

386. Keeley testimony at IV-1, foll. Tr. 3646.

387. Tr. 1224-25; Licensee Exh 17.

388. Keeley testimony at IV-1, foll. Tr. 3646.

389. Id. at IV-2.

! 390. Yd; Licensee Exh. 18.

391. Reeley testimony at IV-3, foll. Tr. 3646; Licensee Exh. 7 (c) .

392. Keeley testimony at IV 4, foll. Tr. 3646; Licensee Exh. 17.

393. Keeley Testimony at IV - 4, foll. Tr. 3646; Heins testimony at 14-15, foll. Tr. 1648. '

394. Keeley testimony at IV-4, foll. Tr. 3646.

395. Id.

396. R6well Affidavit at 1-2.

397. Keeley testimony at IV - 4, foll. Tr. 3646; Licensee Exh. 16.

4 398. Keeley testimony at IV - 4, foll. Tr. 3646.

399. Id.

400. YH.

401. 12.

402. R6berts testimony at 1-6, foll. Tr. 5099.

403. Keeley testimony at IV - 4A, foll. Tr. 3646.

404. Id. at IV 5A.

405. TH; Licensee Exh. 19.

. 406. Reeley testimony at IV - 5A, foll. Tr. 3646.

407. Id. _

408. TH.

409. Yd. at IV - 6.

410. Yd.

-411. YH.

412. Id. at IV - 7.

413. TH.

414. Yd.

415. 13.

416. Yd; Licensee Exh. 20 and 21; Feld testimony, " Cost of Midland v.-Coal Alternatives," at 2, foll. Tr. 4509.

417. Licensee Exh. 20.

418. Licensee Exh. 21.

419. Keeley-testimony at IV 8, foll. Tr. 3646; Licensee Exhs. 22 and 23.~ -

e m>s -

420. Keeley testimony at IV - 8, foll. Tr. 3646.

421. Id Licensee Exh. 22. .

422. II.

423. Keeley testimony at IV - 8, foll. Tr. 3646.

424. 10 C.F.R. 5 51. 2 0 (e) , as amended effective March 14, 1977 (42 F.R. 13803); Board Exh. 4 at 5.9-1, Table 5.9-1.

425. CLI-77-10, NRCI-77/4, p. (April 1,1977) .

426. Public Service Company of New Hampshire (Seabrook Station, Units 1 and 2), CLI-77-8, 5 NRC (March 31, 1977), slip op. at 29; Consumers Power Company, (Midland i Plant, Units 1 and 2), ALAB-395, 5 NRC (April 29, 1977), slip op, at 25.

427. See NRC's General Statement of Policy on the Environmental

' Effects of the Uranium Fuel Cycle, 41 F.R. 34707, August 13, 1976, and Licensee's Motion of January 13,

1977, n. 7 supra.

428. See Paragraphs 12 through 14, supra.

429. See Paragraphs 15 through 59, supra.

430. See Paragrapns 83, 89 and 90, supra.

431. See Paragraph 94, supra.

• 431A. See Paragraph 88, supra.

432. See Paragraph 95, supra.

433. See Paragraphs 60 through 77, supra.

434. See Paragraphs 96 through 109, supra.

435. See Paragraph 9, supra.

436. See Paragraphs 15 through 59, supra.

437. See Paragraphs 60 through 77, supra.

438. See Paragraphs 50 through 59, supra.

439. See Paragraph 106, supra.

440. See Paragraph 109, supra.

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