ML19312C608

Applicant'S Statement Re Outstanding Items Subpoenaed from Epic.App A,App B & Certificate of Svc Encl

ML19312C608
Person / Time
Site:	Oconee, Mcguire, McGuire
Issue date:	05/16/1973
From:	Avery G, Golder T DUKE POWER CO., WALD, HARKRADER & ROSS
To:	US ATOMIC ENERGY COMMISSION (AEC)
References
NUDOCS 7912181007
Download: ML19312C608 (23)

Text

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NN UNITED STATES OF AMERICA  ;

ATOMIC ENERGY COMMISSION I

In the Matter of )

) Docket Nos. -264 ,

50-270A, DUKE POWER COMPANY ) 50-287A, 50-369 A, (Oconee Units 1, 2& 3 ) 50-370A McGuire Units 1 & 2) )

STATEMENT OF APPLICANT REGARDING OUTSTANDING ITEMS SUBPOENAED FROM EPIC Pursuant to paragraph B.3 (b) of Prehearing Order Number Six, Applicant submits its statement concerning items in the subpoena served on EPIC for which response or other disposition has not been made. As of May 2, 1973, Applicant had available to it the full report underlying the EPIC feasibility study, and has sinco reviewe'd it. This report, l

now titled " EPIC Project Report", dated November 1972, con-sists of a transmittal section, a summary section and nine supporting sections , with accompanying figures and tables 3' (hereinafter " Report") . In all, the Report consists of approximately 183 pages of textual material.

While the degree of detail in the supporting sections is quite comprehensive, the Report does not provide adequate  ;

documentary responses to certain items concerning interconnection  ;

l and coordination which were contained in the subpoena served on i

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$912180 g

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EPIC. These items include: 4(d), 4(e), 5(o), 6, 22(b),

22 ( c) and 28. In addition, the Report does not respond to data and information in the possession, custody or control of EPIC concerning its individual participants. These items include: 4(b), 12, 13, 14, 23, 24, 25 and 31. Finally, items 3(n), 5(n) and 29 of a miscellaneous nature are not disposed of by the material in the Report. Except for the W

item numbers just listed and the outstanding documents (if any) which EPIC agreed to provide, Applicant will not seek to compel EPIC to respond further to the subpoena issued by this Board on December 9, 1972.-2/ Applicant, however, reserves j the right to pursue further discovery against EPIC by means of deposition or otherwise in regard to matters relevant to this proceeding or in regard to any statement or reference made in the documents which EPIC has produced or may prodt.ce.

Accordingly, pursuant to Paragraph B.3(b) of Prehearing 1/ The text of each of these items is set out in Appendix B, ,

attached hereto.

l 2/ Responses to the following items , previously lef t open, have i been provided by 'information in the Report: 3(k), 3(1), 4(c),

4(k), 4(1), 5(a) through (d) , 5(g), 5(h), 5(j), 5 (1) , 5(m),

5(p), 5(q), 5 ( t) and 27. Applicant also agrees to withdraw items 5 (r)~ and 5 (s) .

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Order Number Six, Applicant hereby renews and sets forth below its amended requests for production of documents . These are set forth in full in Appendix A, attached hereto. The documents requested include those now in the possession, cus tody or con-trol of EPIC or which were in its possession, custody or control on December 18, 1972, the date on which the subpoena was served on EPIC, which were dated , prepared, sent or received during the period January 1,1960, to date. The definition of the term

" Documents" is set forth in the Attachment to the Subpoena Duces Tecum served on December 18, 1972.

Renewed Requests Interconnection and Coordination. -- Many of the issues in this case focus on Applicant's coordination activities with other sys tems : for example, whether Applicant has refused co-ordinatic. of generation between itself and municipal and cooper-ative systems; whether it has engaged in such activities with other i; and if so, what the implications of these actions are in this proceeding.-3/ In addition, if the activities under the licen-l l

3/ These issues are set forth specifically in paragraphs C.3(e) , I (f) and (g) of Prehearing Order Number Six. Related issues also are included, for example, in paragraphs C.2(m) , C. 3 (d) ,

C.3(h) and C.4(f) of that Order.

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ses sought herein are found to create or maintain a situation inconsistent with the antitrust laws, the remedies proposed by the Department of Justice and the Intervenors include various forms of interconnection and coordinatior. activities .-4/

The degree to which such remedies are needed and the effect of Applicant's policy concerning various forms of coordination with the systems involved, therefore, are major areas of concern in this proceeding and should be explored thoroughly.

One aspect of this inquiry involves EPIC. The Depart-ment alleges that the development of this proposed system has been hindered by Applicant's activities , including Duke 's alleged unwillingness to enter into various interconnection and coordination arrangements with EPIC. Theoe allegations make certain questions relevant: Is the development of EPIC precluded or in any way hindered without various forms of coordination?

Can EPIC effect such coordination with systems other than Appli-cant or with groups of systems in which Applicant is not a participant? How would EPIC or other systems benefit from im-plementation of these various forms of coordination?

4/ See paragraph C.5(a) of Prehearing Order Number Six.

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None of these areas is examined in detail in the EPIC Project Report. Rather the Report assumed two forms of coordi-nation (reserve sharing and emergency backup) in order to test the EPIC project's overall feasibility. The Report implies that other degrees of coordination were considered, but they are not discussed. Specifically, the Report states as follows (page III-2) :

"for purposes of testing the overall feasibility of the EPIC arrangement only reserve sharing and emergency backup arrangements were assumed.

The substantial additional benefits available under VACAR, which would substantially enhance the economic feasibility of the EPIC crrangement, including interchange power, limited term power, short-term power and coordinated maintenance scheduling have not been reflected in this report."

The Report provides no information on these other forms of coordination. Yet, such information may be contained in the EPIC files.

Thus , in lieu of items 4 (d) , 4 ( 1) , 5(o), 6, 22(b),

22(c) and 28, Applicant requests that EPIC produce the documents specified in item 1 of Appendix A.

Participants' Data and Information. -- Items 12, 13, 14, 23, 24, 25 and 31 of the subpoena sought documents containing

operating, financial and certain other information concerning the EPIC participants. Documents sought in item 4(b) also related to individual participants in EPIC. The information 5/

thus sought is relevant to matters involved in this proceeding 7 It relates , among other things , to the nature and extent of existing and potential competition and the viability of other electric systems.

The EPIC Project Report provides none of the docu-mentation requested in these items. Accordingly, Applicant renews its request that EPIC produce all of the documents specified in items 2 through 9 of Appendix A.

Miscellaneous Requests . -- All parties agree that the nature and extent of potential competition in any relevant market is an issue to be decided by the Board. Applicant therefore is entitled to explore EPIC's economic and technical capabilities to determine whether it would be reasonable to consider it a potential entrant into a relevant market. While many of Applicant's earlier inquiries in this regard have been answered by material in the EPIC Project Report, three areas of inquiry are either not pro-5/ See, e.g. , issues set forth in paragraphs C.2(b) and C.3(b) of Prehearing Order Number Six.

6/. See paragraph C.2 of Prehearing Order Number Six.

vided or not explained adequately. The requests set forth as items 10 through 12 in Appendix A therefore are posed to elicit the missing relevant documentation.

A. Subpoena item 3(n) -- The Report makes clear that EPIC intends to use a postage-stamp rate concept in pricing any power which it may sell. Applicant employs other rate-making concepts in setting its rates and the claim may be made that Applicant's rates are improper. A3 slicant is en-titled to explore EPIC's consideration of rate-making concepts other than the postage-stamp approach in order to prepare its defenses against attacks on its own rate-making. The documents specified in item 10 of Appendix A therefore should be produced.

B. Subpoena item S(n) -- It is clear from the Report that the plant siting criteria established by the Atomic Energy Commission have been considered. Nothing, how-ever, is reflected in the Report which indicates the means by which EPIC or North Carolina Consumers Power will meet these criteria. All of this bears on the feasibility of the project. l l

Accordingly, EPIC should be required to produce the documents j 7/ See , e.g. , paragraph C.3 (b) of Prehearing Order Number Six.

specified in item 11 of Appendix A.

C. Subpoena item 29 -- In developing EPIC's opera-ting costs, the Report indicates that a 1.575 percent tax rate based on plant assessed value was included in the calculation of EPIC's ad valorem taxes (Table 35, footnote 19). The Raport also indicates that a 2.52 percent tax rate based on gross plant was used to calculate Duke's ad valorem taxes. Since the development of Applicant's and EPIC's comparetive costs lies at the heart of EPIC's claim of economic feasibility and cost advantage, it is imperative that the assumptions underlying the development of those costs , which are not reflected in the Report, be made per-fectly clear. Accordingly, EPIC should be required to produce the documents specified in item 12 of Appendix A.

For the reasons set forth above, EPIC should be re-quired to respond to the twelve requests for production of docu-ments specified in Appendix A, attached to this written statement.

Respectfully submitted, George A. Avery Toni K. Golden WALD, HARKRADER & ROSS 1320 Nineteenth Street, N.W.

Washington, D. C. 20036 Attorneys for Applicant Dated this 16th day of May, 1973.

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APPENDIX A RENEWED REQUEST ITEMS

1. Each study, report, memorandun, analysis, letter or other communication, and any draft thereof, prepared by or for EPIC, or any of its employees , agents or consultants , which relates to, evaluates, comments or discusses :

(a) The technical or economic feasibility i of EPIC absent all forms of interconnection or coordination arrangements; (b) The effect on the economic feasibility of EPIC, including the benefits or potential benefits to EPIC, of each of the following forms of interconnection or coordination:

(i) pool-owned transmission facilities; (ii) reserve sharing, including equalized generating capacity reserve sharing; (iii) exchange of economy energy; (iv) exchange of non-displacement energy; (v) exchange of limited term power and energy; (vi) exchange of short-term power and energy; (vii) coordination of scheduled maintenance outages of generating facilities; (viii) staggered construction of generating units; I

(ix) provision of emergency power; (x) provision of maintenance power; (xi) wheeling of power to EPIC from any source; (xii) any other form of coordination; or (xiii) any combination of interconnection or coordination arrangements, including the highest degree of coordination; (c) The possibility, or technical or economic feasi-bility, of any interconnection or coordination arrange-ment by EPIC or North Carolina Consumers Power with any electric utility system other than Applicant, or with any group of such systems in which Applicant is not a participant, including, for example, SEPA, Santee-Cooper, Yankee-Dixie and Central Electric Power Coop-eratives -in South Carolina; (d) The extent to which it would be necessary for EPIC or Nortn Carolina Consumers Power to build 500 kv and 230 kv transmission facilities in the event it has made

" satisfactory wheeling arrangements";

(e) The transmission or generating facilities needed to be added by EPIC, North Carolina Consumers Power or 1/ The term " satisfactory wheeling arrangements" should be defined as used by EPIC on page 6 of the Transmittal Section of the Project Report.

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any other electric utility to overcome the overload indicated in the load flow cases studied by EPIC dnd referred to at page III-17 of the Project Report.

2. Each cost of service study, bill freqdency analysis ,

cost or profitability analysis by customer class or as a uhole prepared by or for any electric utility serving at retail in Applicant's service area or adjacent thereto and in the posses-sion, custody or control of EPIC, or any of its employees , agents or consultants.

3. Each document prepared by or for any municipal participant in EPIC or by or for EPIC or any of its employees ,

agents or consultants, which relates to, comments on, evaluates or discusses the provision of gas, water or sewer service by any municipal wholesale customer of Applicant on that municipality's ability to obtain new or retain present electric customers.

4. Each document prepared by or for EPIC, or any of its employees , agents , consultants or municipal or cooperative participants , which relates to , comments on, evaluates or dis-cusses the effect of municipal or cooperative ownership of an

N an electric power system on electric rates, quality of electric service, industrial development, municipal tax rates, or moneys or services provided by an electric system to any other municipal department, agency or activity.

5. Any annual operating or financial report or analysis prepared by any participant in EPIC for a local, state or federal governing body in the possession, ciistody or control of EPIC, or any of its employees , agents or consultants.

6. Any rate schedule of any participant in EPIC, effective at any time since January 1, 1960, and any study, report, memorandum, letter or other communication which relates to, comments on, evaluates or discusses:

(a) any change in a participant's rates or ter:w of service; or (b) the effect of any such change on the participant's revenues.

7. Each document supplied to EPIC,'or any of its em-ployees, agents or consultants, by each or any participant in EPIC relating, for the period 1965-1969, to the monthly and annual energy purchased, monthly peak demands , hourly demands for the first full week in the months of April, August and December,1969,

J and information on the type of load served broken down into residential, commercial, industrial, farming and other cate-gories , all of which data is referred-to on page II-1 of the EPIC Project Report.

8. With the exception of any document called for by item 7 above, any letter, memorandum or other communication T

from EPIC, or any of its employees , agents or consultants, to any participant in EPIC requesting any operating, technical or financial information regarding the participant's electric system, together with any response thereto and any comment, compilation, projection or analysis of the information contained in any response.

9. Each document which indicates the load growth projection of any participant in EPIC and which was used to develop Table 14 of the EPIC Pro' ject Report.

10. Each letter, memorandum, analysis , study, report or other communication considered by, or prepared by or for, EPIC or any ~of its employees, agents or consultants in connection with the development of the EPIC Project Report, or any earlier version thereof, which relates to, comments on, evaluates or discusses the use of cost-based rates , rate blocks , separation of demand and

energy charges, or the use of postage-stamp rates as compared to any other pricing method.

11. Each document prepared by or for EPIC, or any of its employees , agents or consultants , which relates to, comments on, evaluates or discusses the siting criteria est-ablished by the Atomic Energy Commission or how EPIC or North Carolina Consumers Power would comply with such criteria.

12. Each document which indicates or explains the

< development of the tax rate percentages used to calculate, respectively, EPIC's and Applicant's ad valorem taxes or the reason for or method by which it was determined to base EPIC's taxes on assessed value and Applicant's taxes on gross plant.

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IPPENDIX B SUBPOENA ITElfi UNAN3WERED

3. (Each document] relating to the economic feasibility of EPIC * *

• which refers to, describes, evaluates or comments upon:

(n) postage stamp or other rate design concepts.

4. [Each document] relating to the marketability of EPIC power * *

• which refers to, describes, evaluates or comments upon:

(b) load growth:

(i) by individual members of EPIC; (ii) by all EPIC members combined, or any group thereof; (iii) estimates as incorporated into studies for estimating project development from 1975 on; j

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(d) benefits from:

(i) exchange of short-term surplus capacity; (ii) exchange of economy power; (iii) exchange of emergency and maintenance i

energy; (iv) sharing of installed capacity reserves; (v) sharing of spinning reserves; (1) cost analyses or estimates of North Carolina and/or South Carolina electric utilities' present or potential system cperations, comparisons of cost, rates or services of' EPIC members vis-a-vis other electric utilities serving or able to serve in North Carolina and/or South Carolina at wholesale or retail; l

5. (Each document] relating to the technical feasibility of EPIC * *

• which refers to, describes ,

evaluates or comments upon: l l l l

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s (n) plant siting, including:

(iii) AEC siting criteria; (o) transmission load studies;

6. All documents relating to coordination or interconnection by EPIC with other entities, including, but not limited to, any document which refers to, describes, evaluates or comments upon:

(a) interconnection or coordination with VACAR, SEPA, CARVA, South Carolina Public Service Authority, Central Electric Power Cooperatives in South Carolina, municipal systems in North Carolina or South Carolina and/or Yankee-Dixie; (b) interconnection or pooling with any electric utility, or negotiations or discussions regarding interconnection or pooling with one or more other systems; (c) the advantages and/or disadvantages of pooling, interconnection, joint planning and/or coordination; t

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(d) the advantages and/or disadvantages of not pooling, interconnecting, jointly planning or coordinating with other systems; (e) any circumstance which would warrant not pooling, interconnecting, jointly planning or coordinating with another system (s);

( f) any change in the development of EPIC if coordination with another system (s) occurs; (g) any benefit from joint development of generation plant sites; (h) any benefi',, from joint stability studies, load flow studies and/or generation expansion studier l l

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12. All documents relating in any way to cost l of service studies, bill frequency analyses cost or ,

i profitability analyses by customer class or as a whole for any utility or group of utilities.

13. All documents relating to the effect of any municipality's provision of gas, water or sewer service on l

its ability to obtain new or retain present electric customers.

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14. All documents relating to the effect of municipal or cooperative ownership of an electric power system on electric rates, quality of electric service, industrial development, municipal tax rates, or moneys or services provided by an electric system to any other municipal department, agency or activity.

22. All documents relating to the following subjects located in the files of those individuals who by ..

job or title since EPIC was formed are now.or have been responsibile for, have prepared an analysis of, or have forecasted the effects of the indicated subjects:

(b) interconnection arrangements with any other electric utility or group of electric utilities; (c) coordinated system operation, genera-tion and transmission facilities expansion, or pooling arrangements involving one or more other electric utility.

23. Any annual operating or financial report or analysis presented by any member of EPIC to its local govern-ng body in any year 1960 to date.

24. Any rate schedule of any menber of EPIC, effective at any time during the period January 1, 1960, to date which is contained in the files of EPIC or any of its consultants.

25. All documents which reflect for any member of EPIC (a) any change in any rate schedule, tariff, contract, agreement or terms and conditions of service, or (b) the effect of any such change on such member's revenues (in dollar or percentage terms).

28. Any cost of service study relating to wheeling or transmission service on EPIC's proposed system at any time during the period 1972-1985 or on Duke Power l Company's system at any time during the period 1962-1985. I

29. All documents relating to the liability,

, or potential liability, of EPIC or any of its member's electric systens for taxes.

31. Any communication from EPIC or any of its consultants to any member of EPIC requesting any operating, technical or financial information regarding the member's electric system (including, but not limited to, any form dcrig.ed to elicit information from any member of EPIC,

i ElectriCities of North Carolina or North Carolina Electric Membership Corporation on growth rates, number of customers, i lead diversity, load shapes, or load duration curves),

together with any response thereto and any comment, compila-1 tion, projection or analysis of the information contained

in any response.

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UNITED STATES OF AMERICA ATOMIC ENERGY COMMISSION In the Matter of )

) Docket Nos. 50-269A, 50-270A .

DUKE POWER COMPANY ) 50-287A, 50-369A (Oconee Units 1, 2& 3) 50-370A McGuire Units 1 & 2)

CERTIFICATE OF SERVICE I hereby certify that copies of STATEMENT OF APPLI-CANT REGARDING OUTSTANDING ITEMS SUBPOENAED FROM EPIC, dated May 16, 1973, in the above-captioned matter have been served on the following by depcsit in the United States mail, first class or air mail, this 16 th day of May, 1973:

Walter W.K. Bennett, Esquire J.O. Tally, Jr., Esquire P. O. Box 185 P.O. Drawer 1660 Pinehurst, North Carolina 28374 Fayetteville, No. Carolina 28302 Joseph F. Tubridy, Esquire Troy B. Connor, Esquire 4100 Cathedral Avenue, N.W. Connor & Knotts Washington, D. C. 20016 1747 Penna. Avenue, N.W.

Washington, D. C. 20006 John B. Farmakides, Esquire Atomic Safety and Joseph Rutberg, Esquire Licensing Board Panel Benjamin H. Vogler, Esquire Atomic Energy Commission Antitrust Counsel for Washington, D. C. 20545 AEC Regulatory Staff Atomic Energy Cormnission Atomic Safety and Washington, D. C. 20545 Licensing Board Panel Atomic Energy Commission Mr. Frank W. Karas, Chief Washington, D. C. 20545 Public Proceedings Branch Office of the Secretary Abraham Braitman, Esquire Of the Commission Special. Assistant for Atomic Energy Commission Antitrust Matters Washington, D. C. 20545 Office of Antitrust and Indemnity Joseph Saunders, Esquire Atomic Energy Commission Antitrust Division Washington, D. C. 20545 Department of Justice Washington, D. C. 20530

William T. Clabault, Esquire J.A. Bouknight, Jr., Esquire David A. Leckie, Esquire David F. Stover, Esquire Antitrust Public Counsel Section Tally, Tally & Bouknight Department of Justice Suite 311 P. O. Box 7513 429 N Street, S.W.

Washington, D. C. 20044 Washington, D. C. 20024 Wallace E. Brand, Esquire William T. Crisp, Esquire Antitrust Public Counsel Section Crisp & Bolch Department of Justice P. O. Box 751 P. O. Box 7513 Raleigh, North Carolina 27602 Washington, D. C. 20044 Mr. Gary Tabak Executive Vice President EPIC, Inc.

1330 St. Mary 's Street, Suite 528 Raleigh, North Carolina 27605 Wald, Harkrader & Ross By:

Attorneys for Duke Power Company 1320 Nineteenth Street, N. W.

Washington, D. C. 20036