ML17209B114

Brief,In Form of Motion,Requesting That Aslb Should Grant Res Judicata or Collateral Estoppel Effect to Listed Cases. Board Should Find Situation Inconsistent W/Antitrust Laws. W/Matl Facts Not Genuinely Disputed & Discovery Memo

ML17209B114
Person / Time
Site:	Saint Lucie
Issue date:	05/27/1981
From:	JABLON R A FLORIDA CITIES (FLORIDA MUNICIPAL UTILITIES ASSOCIATE, SPIEGEL & MCDIARMID
To:	Atomic Safety and Licensing Board Panel
Shared Package
ML17209B115	List: ML17209B114 ML17209B116 ML17209B117 ML17209B118 ML17266A459 ML17266A460
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ISSUANCES-A, NUDOCS 8105290149
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QiBEFORETHEUNXTEDSTATESNUCLEARREGULATORYCOMMZSSIONBEFORETHEATOMICSAFETYANDLZCENSINGBOARDInTheMatterOfPloridaPower6LightCompany(St.LuciePlant,UnitNo.2))))DocketNo.50-389A)))~MOTIONTOESTABLISHPROCEDURES,FORADECLARATIONTHATASXTUATXONINCONSXSTENTWITHTHEANTITRUSTLAWSPRESENTLYEXISTSANDFORRELATEDRELZEPRobertA.JablonAlanJ.RothDanielGuttmanbOCfQ7EbZItiSNRrMAY27)98)t0OfficeoftheSecreta'ocketfogg$<+>ceBranchCOCPSPXEGEL5McDIARMXDSuite3122600VirginiaAvenueN.W.Washington,D.C.20037AttorneysfortheGainesvilleRegionalUtilities,theLakeWorthUtilitiesAuthority,theUtilitiesCommissionofNewSmyrnaBeach,theSebringUtilitiesCommission,andtheCitiesofAlachua,Bartow,PortMeade,KeyWest,LakeHelen,Mount.Dora,Newberry,St.Cloud,andTallahassee,FloridaandtheFloridaMunicipalUtilitiesAssociationMay27,1981I TABLEOFCONTENTSPacaeINTRODUCTION(1)-ImmediateProcedures(2)DiscoverytoDate(3)BasisforFindingsofa"situationinconsistent"withtheantitrustlaws(4)SeparatingtheIssueofRelief(5)BasisforlimitingissuesI.SUMMARYOFPRINCIPALLEGALARGUMENTS1017A.B~RefusalsByFPLToDealWithSomeCitiesinFloridaPowerCorporation'sRetailServiceAreaAreIllegalFPL'sDealingWithSomeCitiesButNotOthersConstitutesACombinationInRestraintOfTrade1720C~FPL'sRefusalsToDealWithFloridaCitiesAreDirectlyContraryToTheTeachingsOfOtterTailAndConsumersPower23STATEMENTOFFACTS24I.FPL'sPlanning,ConstructionandOperationOfItsNuclearFacilitiesHasBenefittedFromCoordinationWithOtherFloridaUtilities2420Sincethe1950'sFPLengagedinjointnuclearactivitieswithTECOandFloridaPowerCorporationThroughoutthe1960'sFPLengagedincoordinatedplanningandoperationsthroughtheFloridaOperatingCommittee/FloridaPoolbutwithouttheCities2630 3.FPLreliedoncoordinationwiththeFloridaOperatingCommitteeinconstructingitsnuclearunits34II~FPLHASLONGDENIEDCITIESACCESSTOTHEECONOMIESOFCOORDINATIONANDSCALEgINCLUDINGNUCLEARPOWER........oo....o.oo...oooo.....oo.....43A.FPLWasOnNoticeThatSmallerSystems,SuchAsCities,'equiredAccessToEconomiesOfSizeAndCoordination,IncludingAccesstoNuclear,InOrderToCompeteEffectively441.Smallersystemsrequirecoordinationtobuildlargeunits2.FPLknewthatcoordinationandlargeunitsareessentialtoparticipationinnuclearpower463~Fromthestart,FPLsoughttouseitssize-basedmonopolyofnucleargenerationasalevertoacquiresmallersystems47B~FPLRefusedToDealWithCities,AndDeniedThemTheMeansOfDealingWiththers~~~~o~~~~~~~~~~~~o~~~~~~~~~~~~~~~~~~~~~054C.AlthoughFPLXtselfRefusedToDeal,CitiesStillSoughtTheBenefitsOfCoordination,'ncludingTheAbilityToShareInNuclearnits~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~U74l~2~Studyanddiscussionofpossiblepoolingarrangementsamongsmallersystemso~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~FMUAcommittees763.TheGainesvillelitigation4.TheTallahasseeexperience7980D~FPLCouldHaveBuiltLarge,MoreEconomicalPlantsAndSharedThemWithCities PacaeARGUMENTINTRODUCTION~~~~~~~~~~~~~~~o~~~~~~~~o~~~~~~~~~~~~~~~~I~FPLCANNOTLAWFULLYRESTRICTRELIEFTO"INSIDE"CITXES;THERESTRICTXONCONSTITUTESANUNLAWFULCOMBINATIONZNRESTRAINTOFTRADEANDAPERPETUATIONOFAMARKETDXVISION9093II.THECASELAWCONCERNINGANTITRUSTABUSESBYELECTRICUTILITIESCONFIRMSTHEUNLAWFULNATUREOFFPL'SREFUSALSTODEALWITHFLORIDACITIES~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~99III.STATEMENTCONCERNINGRELIEF.................~..115CONCLUSION~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~118Attachments1-5Appendices,VolumesI-III(separatelybound)

TABLEOFAUTHORITIESPacaeCOURTCASESAdmiralTheatreCor.v.DoulasTheatre~Cor,585F.2d8778thCir.1978AmericanTruckinAssociation,Inc.v.Atchison,ToekaandSantaFeRailwaCo.,387U.S.397196797AnsulCo.v.Uniroal,Inc.,448F.2d1018(1972)e.s.e..ee..........ee......e.e....see.e115AssociatedPressv.UnitedStates,326U.S.11945~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~19,93,94,110BaltimoreandOhioRailroadCo.v.UnitedStates,"ChicagoJunctionCase"264U.S.258(1924)114BellTelehoneCo.ofPennslvaniav.FCC,503F.2d12503dCir.1974),cert.denied,422U.S.1026(1975).....,..........110BerkePhoto,Inc.v.EastmanKodakCo.,603F.2d2632dCir~1979,cert.denied,444U.S.1093(1980)BorouhofEllwoodCitv.PennslvaniaPowerCo.,D.C.Pa.1979462F.Supp.1343~~~~~~~~~~~~~e~~~~~e~~~~~~~~~~~~~~~~~~~~~~~~~~103Brulottev.ThsCo.,379U.S.29(1964)..............115Californiav.FPC,369U.S.482(1962).~~~~..~~~~~~~~~12CitofAnaheimv.SouthernCaliforniaEdisonCo.,C.D.Cal.No.CV-78-810-MMLMay19,1981)............;.........................12CitofBartowv.FloridaPowerCororation19CitofLaafette,La.v.SEC,454F.2d941D.C.Cir.1971),affirmed,subncm.GulfStates,infra108iv CitofMishawaka,Indianav.AmericanElectricPowerCo.,Inc.,560F.2d13147thCir.1977,cert.denied,436U.S.922(1978)~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Pacae109ConwaCororationv.FPC,426U.ST271(1976)112EastmanKodakCo.v.SouthernPhotoMaterialsCo.,273U.S.359,47S.Ct.400,71L.Ed684(1927)~~~~e~~~~4~~~~~~~~~~~~~~~~~~~~~~~~~~~e~~100FashionOriinators'uildofAmericav.FederalTradeCommission,312U.S.457941~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~193FTCv.NationalLeadCo.,350U.S.419(1956.)100FloridaPower6LihtComan,OpinionNo.517,DocketNo.E-760,37FPC544(1967),reversed430F.2d1377(5thCir.1970),reversed,Floridapower5LihtComanv.FPC,404U.S531972~~~~~~~~~~~~~~~~~~~~~~e~~~~~~~~~~~~22,34,48,55,56,92FloridaPower6LihtCo.v.FERC,CA5No.80-5259April4,1980Ft.PierceUtilitiesAuthoritoftheCitofFt.Piercev.UnitedStatesNuclearReulatorCommission,D.C.Cir.No.0>>1099~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~e~~~~~~859,103116GainesvilleReionalUtilities,etal.v.FloridaPower6LihtComan,U.S.DistrictCourtfortheSouthernDistrictofFlorida,No.79-5101-CIV-JLKt:October31,1979])GainesvilleUtilities

Deartmentv.FloridapowerSLihtComan,

573F.2d2925thCir.,cert.denied,439U.S.966(1978)~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~4,83GainesvilleUtilitiesDet.andCitofGainesville,Floridav.FloridaPower~Car.,402PPC12271968,affirmed,402U~S~515(1971)~~~~~~~~~~~~~~~~~~~~~~~~~e~~~~~55,107Gamco,Inc.v.ProvidenceFruitProduceBuildin,Inc.,194F.2d4841stCircert.denied,344U.S.817(1952)19,93-94,95 PacaeGulfStatesUtilitiesCo.v.FPC,411U.S.7471973~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~108Hechtv.Pro-Football,Inc.,570F.2d982(197cert.denied,436U.S.956(1976)7)F~~~~~~~~~110InternationalBusinessMachinesv.UnitedStates,298U.S.1311936.......................113ICCv.DelawareLackawana8WesternRailroadCo.,220U.S.235191197InternationalRailwasofCentralAmericav.UnitedBrands,532F.2d231certioraridenied,50L.Ed.2d100(1967).....................106InternationalSaltCo.v.UnitedStates,332U.S.3921947...............................113JerseCentralCo.v.FPC,319U.S.61,67681943~~~~~~~~~~~~~e~~~~~~~~~~~~~~~~~~~~~~~~108Klor's,Inc.v.Broadwa-HaleStores,Inc.,359U.S.207195993Koninkli'keLuchtuaartMaatschapi'.V.K.LMv.Tuller,292F.2d775D.C.Cir.1961,BurgerJ.)15LorainJournalCo.v.UnitedStates,342U.S.14372S.Ct..181,96LEd162(1951)100F110F112LouisvilleandNashvilleRailroadCo.v.UnitedStates,238U.S.1191597MissouriPacificRailwaCo.v.LarabeeFlourMillsCo.,211U.S.612221909Montaue&.Co.v.Lowr,193U.S.38(1904)~~~~9797Mullisv.ArcoPetroleumCor.,502F.2d290~7thCir.1974perStevens,Cir.J.)106MunicialElectric.AssociationofMassachusettsv.SEC,413F.2d1052D.C.Cir.1969106,113MunicialLihtBoardsofReadinandWakefieldMass.v.FPC,450F.2d1341D.C.Cir.1971Vi 0

PacaeNationalAirCarrierAssoc.v.CAB,436F.2d185D.C.Cir.197016NorthAmericanCo.v.SEC,327U.S.686(1946).~~~~~~~108NorthernPacificRailroadCo.v.UnitedStates,365U.S.11958.......oo......o..ooo.oo.o.....o.113OtterTailPowerCo.v.UnitedStates,410U.S.3661973)6,110PackaedProrams,Inc.v.WestinhouseBroadcastinCo.,255F.2d7083dCir.1958~~~~~~~~~~~~~~~~~~~~~~~~~~~o~~~~~~~~~~~~~~~~~101PeelersCo.v.Wendt,260F.Supp.193W.D.Nash.1966).................................115PosterExchane,Inc.v.NationalScreenServ.,431F.2d334(5thCir.1970cert.denied,401U.S.912(1971)....~~~.~~~~~~~~~105RadiantBurnersv.PeoplesGasLiCo.,364U.S.6561961ht6Coke93Silverv.NewYorkStockExchane3411963~~~~~~~~~~~~~~~~~~373U.S.19,93,110,SixTwent-NineProductions,InesTelecastin,Inc.,365F.2d4v.Rollins78(5thCir.1966"~~o~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~101Stronv.GeneralElectricCo.,305F.Supp1084N.D.Ga.1969,affirmedercuriam,434F.2d10425thCir.1970),cert.denied,403U.S.906(1971)~~~~~~~~~~o~~115UnionCarbideRCarbonCor.v.Nisle300F.2d56110thCir.1962,~aealdismissed,371U.S-801(1963)............114UnitedStatesv.AluminumCo.ofAmerica,148F.2d4162dCir.1945........................90,112,114UnitedStatesv.AmericanTelehoneSTelegrahCo.,83FRD323D.D.C.1979~~~~~~~~~~~~~~~~~~~~~~~~~~~~o~~~o~~~~~~~~~~~~o50UnitedStatesv.CaitalTransitCo.,325U~ST357(1945~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~vl.3.97 PacaeUnitedStatesv.FloridaPowerCororationandTamaElectricComany,CIVNo.68-297-TUnitedStatesv.Griffith,334U.S.10019101F110UnitedStatesv.GrinnellCor.,384'.S.563(1966)99UnitedStatesv.KlearflaxLinenLooms,63F.Supp.32DeMinn.1945105UnitedStatesv.Loew's,Inc.,371U.S.381962~~4~~~~~~~~~~~~4~e~~~~~~~~~~~~~~~~~~~~~~~112,113UnitedStatesv.NationalLeadCo.,332U~ST3191947)~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~'~~~~114UnitedStatesv.OtterTail-PowerCo.,331F.Supp~~~~~~~~~~100UnitedStatesv.ReadinCo.,253U.S.261920~~~~~~~~~~~~~~~~~~~~~~~~~~'a~~~~~~~~~~~~~~~~e114UnitedStatesv.TerminalR.R.Ass'n.ofSt.Louis,224U.S.383191293,101,110UnitedStatesv.UnitedShoeMachiner~Cor~sura,110F.Supp.at346United,Statesv.UtahConstructionS10612UnitedStatesv.YellowCabCo.,332U.S.2181947~~~~~~~~~~~~~~~\~~~~~~~~~~~~~~~~~~~~~~~~114WoodsExloration8ProducinCo.v.AluminumCo.ofAmerica,438F.2d1286(5thCir.105ZenithRadioCor.v.HazeltineResearch,Inc.,395U.S.1001969115viii

PacaeAGENCYCASESConsumersPowerComan(MidlandUnits1and2(ALAB-468'NRC465(1978)ConsumersPowerComan(MidlandUnits1and2,ALAB-452,6NRC892(1977)FloridaPower5LihtComan,OpinionNo.57,32PUR4th313Aug.3,1979),~a~pealdismissed,FloridaPower6LihtComanv.'ERC,D.C.iCir.No.79-2414April25,1980)FloridaPowerSLihtCo.(St.LuciePlant,UnitNo.2,PrehearingConferenceOrderNo.1(July29,1976)FloridaPowerRLihtComany(SouthDadePlant,NRCDocketNo.P-636-AFloridaPowerSLihtComan,FERCDocketNo.ER78-19,etal.,PhaseI,Tr.843-44)~~~~~~~~~97-8P1134,103133841QFloridaPowerSLihtCo.,DocketNo.50-389AALAB-420,July12,1977)GulfStatesUtilitiesCo.(RiverBendStation,Units1and2),7513NRC246(LicensingBoardPanel1975,denyingsummarydisposition)~~~~~~~~~89HoustonLihtinSPowerCo.(SouthTexasProject,UnitNos.1and2,CCl-l-77-13,5NRC1303(1977)..................................IndianaaMichianElectricCcman,~sura33FPC7391966~e~~~~~~~~~~~~~~~~~~~~~~~~~~~~~1234PublicServiceCo.ofNewHamshire(SeabrookStation,Units1and2,7NRC1,(CommissDecision1978)PublicServiceCo.ofNewHamshire(Seabrook,Station,Units1and2,6NRC33(AppealBoardDecision1977)TamaElectricComan,FederalPowerCommissionDocketNo.77-549,etal.won131340ix PacaeToledoEdisonCo.,etal.(Davis-BesseNuclearPowerStation,Units1,2,and3),5NRC557(CommissionDecision1977)ToledoEdisonComan(.DavisBessePlant,Units1and2and3),ALAB-560,10NRC265(1979)ViriniaElectric&PowerCo.(NorthAnnaNuclearPowerStation,Units1and2),ALAB-584,llNRC451(1980)~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~14,408,19,94STATUTESANDREGULATIONSAtomicEnergyActSection1,42U.S.C.$2011Section2,42U.S.C.$2012Section3,42U.S.C.$2013Section105,42U.S.C.$2135FederalPowerAct919Section202,16U.S.C.824(b)Section204,16U.S.C.$824cFederalRulesofCivilProcedure,Rule56FederalRulesofEvidence,Rule801(d)(2)(D)FederalTradeCommissionAct1810815Section593PublicUtilityHoldingCompanyAct,Section10@15UNSICK$797~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~49Stat.803-804,847-848107108 PacaeMISCELLANEOUSHER.Rep.No.91-1470toHER.18679AtomicEnergyActof1954,91stCong.,2dSess.(1970)12H.R.Rep.No.1318,74thCong.,1stSess.,3p78~~~~~~~~~~~~~~~~~~~~~~~~4~~~~~~~~~~~~~~~~~~108S.Rep.No~91-124712S.Rep.No.621,74thCong.,1stSess.,14,17~20~~~~~~~~~~s~~e~~~~~~4~~~e~~~~~~~~~~~~~~~~~~~~108DepositionofRichardC.Fullerton,GainesvilleUtilitiesDet.v.FloridaPower6LihtCo.,M.D.Fla.No.68-305-CIV-T83FederalPowerCommission's1964NationalPowerSurvey\~~~s~~~~~~e~4~~~~~~~~~~~~~~~~~~~~~~~~ReortoftheNationalCommissionfortheReviewofAntitrustLawsandroceduresP1Moore'sFederalPractice,PartElManualforComplexLitigation).....................5AntitrustLawDeveloments(AmericanBarAssociation1975),p.328.......................~.114Note,RefusalstoDealbVerticallInteratedFloridaPower6Light,Company1979AnnualReort,page1437.FloridaPoweraLightCompany1980Annual~Reore,pages8,14-15FloridaOperatingCommitteereport,"CoordinatedPlanforthe1970GenerationandTransmissionReuirementsfortheElectricUtilitiesofFloridaApril19603722-23Xi BEFORETHEUNITEDSTATESNUCLEARREGULATORYCOMMISSIONBEFORETHEATOMXCSAFETYANDLICENSXNGBOARDInTheMatterOfFloridaPower&LightCompany(St.LuciePlant,UnitNo.2))))DocketNo.50-389A))MOTIONTOESTABLISHPROCEDURES'ORADECLARATIONTHATASITUATXONINCONSXSTENTWITHTHEANTITRUSTLAWSPRESENTLYEXISTSANDFORRELATEDRELIEFINTRODUCTIONOnApril27,1981,thisBoardapprovedasettlementofantitrustissuesbetweenFloridaPower8LightCompany("FPL")andthegovernmentparties.Citiescontendthatthelicensecon-ditionsdonotcureoradequatelyremedytheallegedsituationsinconsistentwiththeantitrustlaws.TheBoard'sOrderofApril27,1981providesthatCitiesshouldmakeappropriatemotionswiththeBoardforfurtherproceedings.Citiesfilethismotionforfurtherproceduresandforotherrelief.

(1)ImmediateProcedures.Fl'oridaCitiessetfortnhereintheprincipalfactualandlegalbasesfortheirbeliefthatthereisasituationincon-sistent.1/Theyalsosetforth(Attachment2)areportondiscoverytodate.Opposingpartiesshouldrespondasto(1)factualissuesthataregenuinelyincontroversy,(2)legaldefenses,and(3)identificationofanyfurtherdiscoveryneeded.Inthismanner,ifadditional"discoveryiswarranted,itcanbeordered;ifmattersareripefordecision,theycanbedecided;andifhearingsarerequired,theycanbeheldwithdispatchastoissuesgenuinelyincontroversy.TheCitiesdemonstratebelowthatsummarydispositionisappropriateastowhetherthereisa"situationinconsistentwiththeantitrustlaws".Partieshavehadextensivediscoveryagainsteachotheroveracourseofyears.Pullevidentiaryhearings,involvingsimilarissuesandvirtuallythesamepartieshavebeenheldinotherdockets,resultinginopinionsandorders,whichhaveestablishedfactswhicharebindinghereunderthedoctrineso8resjudicataandcollateralestoppel.InternalPPLandpublicdocuments,aswellasdepositiontestimony,furtherestablishabasisforsummaryfindings,unlessFPLorotherpartiescan"setforthspecificfactsshowingthatthereisagenuineissueoffact".HuclearRegulatoryCommissionRegulations,10C.F.R.$2.749(b).1ThebulkofthefactualmaterialsareinaseparateappendixandreferencedtoAppendixpageswithletterprefixes.

IftheBoardshouldrulethatevidentiaryhearingsarerequired,theyshouldbelimited.Additionaldiscovery,ifnecessary,shouldbebaseduponashowingofneedinlightofthediscoverythathasbeenprovidedandthefactsstillincontroversy.Withinreasonablelimits,partiesshouldhavethetimetheydeemnecessarytorespondtothispleading,orsuchtimeastheBoarddeemsreasonable.Theyshouldrespondastospecificissuesthattheybelieverequiretrial.Becausetheycannotanticipatedefensesorcounter-argumentsthatmayberaised,FloridaCitiesrequesttimetorespondtoansweringpleadings.Becausetheoutcomeofthesepleadingswillshapeallfutureproceedings,theyalsorequestaconferencebeforetheBoardastosuchfutureprocedures.Afterrulingsonproceduresandthescopeoftheissuesthatneedtobetriedandafterconsultationwiththeparties,theBoardmaywishtoorderthepartiestodiscusssettlementandtoreport,toitafter30daysoftheprogressandlikelihoodofreachingagreementorpartialagreement.UndertheCommission'srules,10CFR52.759(andasamatterofcommonsense),settlementsaretobeencouraged.SettlementwouldbeencouragediftheBoardeitherrulesonsummaryjudgmentorguidesthepartiesbystatingitspreliminaryviewastowhethera"situationinconsistent"exists.Ifthereappearstobenohopeofsettlement,theBoardshouldnoworderascheduleforanydiscoveryandhearingsthatmayberequired.

(2)DiscovetoDate.TheCitiesandFPLhaveeachhadanimmenseamountofdisco-veryagainsteachother.Thiscasecommencedin1976,althoughdiscoverywasintermittentduetoappealsandsettlementdiscussions.However,discoveryintheMiamiDistrictCourtcasebeganinlateNovember1979(GainesvilleReionalUtilities,etal.v.FloridaPower&LihtComan,U.S.DistrictCourtfortheSouthernDistrictofFlorida,No.79-5101-CZV-JLKI.October31,1979]);theoverlapofrequestsinthatdocketwiththoseinthiscaseisvirtuallycomplete.Withperhapslimitedexceptions,Citieshavecompliedwithdocumentrequests.Thepartieshavehadnearlytwoyearsofintensivediscovery.FPLhashadanopportunityforcomprehensivediscoveryofthecitiesofHomestead,NewSmyrnaBeachandStarkeinFederalEnergyRegulatoryCommissionDocketNo.ER78-191/andhasusedFlorida'sPublicRecordsActtoinspect,cityfilesinLakeWorth,NewSmyrnaBeach,Gainesvilleandpossiblyothercities.FPLandGainesvillehavehaddiscoveryintheGainesvilleDistrictCourtcase(GainesvilleUtilities

Deartmentv.FloridaPower8U.S.966(1978)).1SeeFloridaPower6LihtComan,

OpinionNos.57and57-A,32PUR4tgFeeraEnergyRegulatoryCommission,1979).FortheconvenienceoftheBoard,Opinions57and57-AareAttachment3.

TheAntitrustCommissionReortrecommendsthatCourts"establishamaximumof24monthsforthecompletionofpre-trial,notasanormandextendableonlyintrulyextraor-dinarycases."80FRDat5l6.Discoveryrelatedtotheantitrustissuesinthisproceedinghaslastedforyears.Itistimetoclosediscovery.1/(3)BasisforFindinsofa"situationinconsistent"withtheantitrustlaws.Inthispleading,Citiesshowthata"situationinconsistentwiththeantitrust,laws"exists,baseduponFPL'shistoricandCourtsancommentatorsareencouragingjudicialbodiestotakeanactiveroleinsupervisingdiscoveryandotherprehearingprocedures,astheNRCboards,aidedbytheStaffandparties,oftendo.Indeed,.itisnowalmostuniversallyacknowledgedthattheabsenceofjudicialinterventionduringdiscovery,andpre-trialproceduresisinappropriateincomplexantitrustlitigation.UnitedStatesv.AmericanTelehone&TelegrahCo.,83FRD323,327,n.1D.D.C.1979cxtz.ngboththeReportoftheNationalCommissionfortheReviewofAntitrustLawsandProcedures("NationalCommissionReport:)andtheManualforComlexLitiation).Thisisbecause"Perhapsthemostsignificantproblemwithantitrustlitigationincomplexcasesisdelay....A,principalcauseofunnecessarydelayinantitrustandothercomplexlitigationistheabsenceofjudicialmanagementandcontrol....'I.T]heabsenceofstrongjudicialcontrolpermitsdiscoverytomushroomandissuestogounfocused;delayandobfuscationaremorelikelytobeadoptedaslitigationtactics;...Asaresult,excessivemotionpracticeandotherexamplesofdilatoryandoverlylitigousconductproliferate,whileincen-tivesforstipulationandotherpotentiallyexpeditingtypesofbehaviorarereduced.'"UnitedStatesv.ATILT,83FRDat326-327(quotingfromNationalCommxssxonReportcitationsomitted);AdmiralTheatreCor.v.DoulasTheatreCor,585F.2d877,889~8thCir.1978.Indeed,initspretrialmemorandumfortheparallelcivilcaseinwhichCitiesseekrelieffromFPL,GainesvilleReionalUtilitiesv.1980)hadbeencomprehensive(p.3ofMemorandum,attachedasAttachment4),althoughitstatedthatitneededadditionaldiscovery,butthatit.intendedtoproceed"expeditiously".

continuinganticompetitiveactsandpractices.Thefactualbasesfortheseconclusions,asmorefullydescribedbelow,arederivedfrom(1)FERCOpinionNo.57andcertainotherfindingsandrulingsbyFERC;(2)theFifthCircuitdecisioninGainesville292(5thCir.),cert.denied,439U.S.966(1978);(3)internalFPLdocuments(and/ordocumentstransmittedtoFPL),pluscertainFloridaPowerCorporationdocumentsattributabletoFPL;(4)publicdocuments;and(5)sworntestimonyofferedinhearingsordepositions.Amongotherthings,FloridaCitiescontendthatFPLhasunlawfullyrestrainedtradebydividingwholesalemarketsinaFlorida.ThisfacthasbeendeterminedbytheUnitedStatesCourtofAppealsfortheFifthCircuit.GainesvilleUtilitiesCir.),cert.denied,439U.S.966(1978).TheCourt'sfindingisbinding.FloridaPowerCorporationmayhaveabandonedtheconspiracy,whenitenteredintosettlementswiththecitiesintheearly1970's.However,FPLhascontinuedtorefusetodealinimpor-tantwholesalepowerserviceswithCitiesoutsidetheperimeterofitsretailservicearea,therebyperpetuatingtraderestraintsagainstthoseCities.FloridaCitiesalsocontendthatFPLhasrefusedtodealinessentialproductsandservicescontarytotherequirementsofOtterTailPowerCo.v.UnitedStates,410U.S.366(1973).AsthisBoardknows,untilFPL'ssettlementswiththeGovernmentpartiesinthiscase,FPLhadrefusedtodealwithCitiesin nuclearpower.Ithasalonghistoryofrefusingtodealintransmissionandcoordinationservices,asisdiscussed,infra.IthasrefusedtosellwholesalepowertogeneratingCitiesat.thesametimeitwasseekingtoacquiresuchCitiesandservetheirloadsatretail.1/Thus,theCompanywouldsellwholesalepower(generationandtransmissionservices)~onlifitcouldselldistributionservices,aswell.ItisalsodemonstrablethatwhileFPLwasrefusingtodealwithCities,itwasengaginginbeneficialpowersupplycoordinationwithFloridaPowerCorporation("FPC")andTampaElectricCompany("TECO"),thesecondandthirdlargestelectricsystemsinFlorida'.Thesefactsareshownbyjointlyfileddocumentsandpublicstatements.Underthestandardcontainedin$105oftheAtomicEnergyActauthorizingthisCommissiontocorrect"situationsinconsistentwiththeantitrustlaws",andinaccordancewithsubstantiveantitruststandardsforcertainoffenses,anticompetitivemotiveor"specificintent"neednotalwaysbeproven.However,thereisabundantevidencethatFPLhasbeenmotivatedinitsdealingswithCitiestoweakencompetitioninordertopreserveandexpanditsretailmonopolyanditsdominantpositioninwholesalepowermarkets.FPLfilingsanddocumentsshowthatFPLlookstoPeninsularFloridaforpowersupplyinterchangeandbackuparrangements.ThecontrollingantitruststandardsforthisagencyhavebeenestablishedinConsumersandToledoEdison.ConsumersPower1Alternatively,it.hassoughttoconditiondealings,withaCityonitscoordinationofFPLacquisition.

~Coman(MidlandUnits1and2),ALAR-462,6HRC892(1977);ToledoEdisonComan(DavisBessePlant,Units1,2and3),ALAB-560,10NRC265(1979).Cities'llegationsherearelikethoseadjudicatedinMidlandandDavisBassaandcanheassessedbyapplication.ofthestandardssetforthinthoseopinions.TheCommissionhasrecentlynoticedaproceedingtoadoptregulationstolimitunnecessarycomplexityinlicensingproceedings.46Ped.Reg.17216(March18,1981).TheCommission'sgoalisconsistentwiththepurposesofadministrativeagenciesingeneraltoprovideapracticalmeansofresolvingproblems.AsisnodoubtobvioustotheBoard,however,inspiteofthesettlementbetweentheNRCStaff,theDepartmentofJusticeandFPL,thereremainsasubstantialdisputebetweentheCitiesandFPL.FPLhastakenthepositionthatitisnotwillingtograntfurtherrelieftotheCitiesunlesscompelledbyaBoardorderandthattheBoardhasnolegalauthoritytoissuesuchorderwithoutmakingafindingthatasituationinconsistentwiththeantitrustlawsexists.Apartfromthequestionwhethera"situationinconsistent"existsatall,therewouldappeartobetwobasicunresolvedissuesdividingtheparties:First,whetherFPLhasanyobligationstodealwithmunicipallyownedutilitiesinPeninsularFloridaotherthanthosenamedintheNRClicenseconditions;second,theextentofFPL'sobligationstodealinpowersupplyserviceswithsmallercities.Thereareotherimportant questions1/;however,iftheseissuescouldberesolved,theothersshouldbelessdifficult.(4)SegratintheIssueofRelief.Assumingthatreliefisjustified,thenatureofthereliefwillnecessarilyrequireabalancingofinterests.SeeAtomicEnergyAct,$105(c)(6),42U.S.C.2135(c)(6).Further,thecostsandbenefitsassociatedwithspecificareasofreliefnecessarilyraisefactualquestionsofparties'pecificneeds,whichmaybeaffectedbyaspectrumofconsiderations.Itispreferablethatreliefbenegotiatedamongaffectedparties.FloridaCitiesbelievethat.itislikelythatifrulingsorten-tativerulingscouldbemadeonissuesastoFPL'sobligationstooutsidecitiesanduponitsobligationstodealinpowersupplymatters,oriflimitedhearingscouldbeheldastothesematters,settlementontheissueofreliefwouldbeencouraged.Theissueofreliefshouldthereforebedeferreduntilafterpre-trialrulingsorafterrequiredhearings2/Citiessetforththeir1AmongtheseareissueswhetherFPLhasactedtoundulyrestrictFloridaCities'abilitytobuyandsellpowerorpowersupply(e.g.,throughactualorproposedresalerestrictionsonwholesalepower);whetherithasunlawfullytiedpowersupplyservices;whetherthelicenseconditionsthemselvesareanticompetitive;andappropriaterelicf.2/TheproceduressuggestedareconsistentwithMidland.ConsumersPowerComan(MidlandUnitsland2),~sura,6NRCat1098-1100,wheretheAppealBoarddeterminedissuesrelatingtoliabilitybutremandedtopermitthefashioningofremedies.AftertheCommissiondeniedcertiorarireview,thepartiesdeterminedtoopensettlementdz.scussxons,whichultima-telyprovedsuccessful.Onceissuesofliabilityaredeterminedornarrowed,settlementastoreliefisfacilitated.SeeConsumersPowerComan(MidlandUnits1and2),ALAB-468,7NRC4651978 10basiccaseonthesematterstopermitthepartiestofocusontheseissues.However,subjecttoscheduling,FloridaCitiesarenowpreparedtogotohearingeitheronlimitedissuesoronthefullcase,includingrelief.(5)Basisforlimitinissues.ThecoreconcernofCongressinpassingtheantitrustprovi-sionsoftheAtomicEnergyActwastopreventlicensees,suchasFloridaPowerRLightCompany,fromrestrainingtradebyusingtheeconomicadvantagesofnuclear.powertoplacesmallersystemsatcomPetitivedisadvantage.ZntheGainesvillecase,~sura,FloridaPowerSLighthasbeenspecificallyfoundtohavebeen"partofaconspiracywithFloridaPowerCorporation(Floridapower)todividethewholesalepowermarketinFlorida".573F.2dat294.TheCompanyhasbeenfurtherfoundtohaveanticom-petitivelyrestrictedorsoughttohaverestrictedtheavailabi-lityofwholesalepowerandotherpowersupplyservices.FloridaPower5LihtComan,OpinionNo.57,32PUR4th313(August3,1979),~aealdismissed,FloridapoweraLihtCo.'.FERC,D.C.CircuitNo.79-2414(April25,1980)andFloridaPowerandLihtCo.,OpinionNo.57-A(October4,1979).TheCompanyhasmadewrittenproposalstoacquireindependentelectricsystemsandtorenewfranchises,citingtheadvantagesofitsnucleargenerationandcoordination(withotherlargeutilities),whileatthesametimerefusingtosellthecitywholesalepowerandtransmissionortoengagewithitincoordination.FPLhassteadfastlyrefusedtodealwithCitiesineithercapacityorunitpowersalesfromitsoperatingnuclearunits.Ithas offeredSt.Lucis2capacitytosomeCitiesonlyunderthepressureofGovernmentlitigation.1/Ttstillrefusestodealwithothers.Thesefactsestablishthatthereis,at.theleast,licensewould"createormaintainasituationinconsistentwiththeantitrustlaws".ConsumersPower,~sura,6NRCat'907-909.Summaryjudgmentproceduresare,ofcourse,availablebeforecourtsandthisCommission,wheretherearenogenuinefactualissuestobetriedorwhenotherequitabledoctrinessowarrant.NuclearRegulatoryCommissionRegulations,10CFR$2.749(b);FederalRulesofCivilProcedure,Rule56;MunicialLihtBoardsofReadinandWakefieldMass.v.FPC,450F.2d1341,1345-1346(D.C.Cir.1971);VirginiaElectric6PowerCo.(NorthAnnaNuclearPowerStation,Units1and2),ALAB-584,11NRC451(1980).2/SuchobjectivesareespeciallytobeencouragedbeforetheNuclearRegulatoryCommissioninantitrustcases,1ThesettlementwiththeGovernment,ofcourse,cannotbetakenasanadmissionofliabilitybyFPL.Ontheotherhand,itdoesrepresentFPL'statementofwhatitwilldo.FPLmaynotusethesettlementorchangedpoliciestodenya"situationinconsistent"thatotherwiseexists.Forexample,inConsumers,theLicensingBoardrejectedaConsumersPowerstatementofpolicyduringthemiddleofaproceeding,asjustificationforavoidinganadversefindingorforlimitationofrelief.ConsumersPowerCo.(MidlandUnits1and2),LBP-75-39,2NRC29,91-92(1975);reversedonothergrounds,~sura6NR,C892;See6NRC1036,n.537.Otherwise,anyapplicantcouldbypasstheauthorityoftheCommissiontoimposereasonableconditionsthroughrelianceuponsettlementsorstatementsofposition.2/Accord,GulfStatesUtilitiesCo.(RiverBendStation,Units,1and2),LBP-75-10,753NRCX246,248(1975)(denyingsummarydisposition):Onecannotavoidsummarydispositiononthemerehopethatattrialhewillbeabletodiscreditmovants'vidence....Onecannot'gototrialonthevaguesuppositionthatsomethingmayturnup.'"

12whereCongresshasspecificallyrefusedtoapplythestricterstandardsapplicabletoajudicialgrantofantitrustrelief,buthasgiventheCommissiontheauthoritytocorrectprobable,inci-pientharm.HoustonLihtinSPowerCo.(SouthTexasProject,UnitNos.1and2),CCI-1-77-13,5NRC1303,1314-1316(1977).Cf.Californiav.FPC,369U.S.482,488-490(1962).AstheAppealBoardheldinConsumers:"ThemembersoftheJointCommitteeagreedthatproofofconditionswhichrancountertothe~oliciesunderlyingthoseLantitrustjlaws,evenwherenoactualviolationofstatuteswasmadeout',wouldwarrantremediallicenseconditionsunderSection105(c)"Accord,S.Rep.No.91-1247andH.R.Rep.No.91-1470,91stCong.,2ndSess.,14-15(1970)("JointCommitteeReport")andseeauthoritiescollectedatConsumers,~surad,NRCat908.Itisacceptedfederallawthatcourtsmaybindalitiganttotheprioradjudicationofissueslitigatedanddeterminedinthepreviousforum.Itisnowbeyonddoubtthatpriordeterminationsbyanadministrativeagencymayestopthepartiesfromre-litigatingissuesresolvedearlier."Whenanadministrativeagencyisactinginajudicialcapacityandresolvesdisputedissuesoffactthatareproperlybeforeitwhichthepartieshavehadanadequateopportunitytolitigate,thecourts'havenot,hesitatedtoenforcerepose."UnitedStatesv.UtahConstruction&MininCo.,384U.S.394,422(1966)(footnotesomitted).CitofAnaheimv.SouthernCaliforniaEdisonCo.,C.D.Cal.No.CV-78-810-MML(May19,1981,pp.4-5ofSlipOpinion).Attachment5.

13ItisclearthatFPLhashadampleopportunitytomakeitsOcasebefore,e.g.,FERCandtheFifthCircuit.Ithashadeveryincentivetolitigate,andhasnotignoreditsopportunitiestocontestclaims.Afortiori,ifagencyadjudicationisenforceablebyacourtwithbroadremedialpowers,itshouldbindFPLbeforeanotheragencyforum.TheNRChasappliedthisprincipletoitsownproceedings.PublicServiceCo.ofNewHamshire(SeabrookStation,Units1and2),ALAR-422,6NRC33,70(1977)(~citinUnitedStatesv.UtahConstructionandMininCo.,384U.S.394,421-22(1966);PublicServiceCo.ofNewHamshire(SeabrookStation,Units1and2),CLI-78-1,7NRC1,23-28Accord,FloridaPowerSLightCo.(St.LuciePlant,UnitNo.2),PrehearingConferenceOrderNo.1(July29,1976),pp.3-6:"ToprevailintheGainesvillecase,thecomplainantwasrequiredtoproveanexplicitviolationofSection1oftheShermanAct.Here,ofcourse,theStaffandCitiesfacethelesserrequirementofestablishing.under$105oftheAtomicEnergyActthattheactivitiesunderthelicensewouldcreateormaintainasituationinconsistentwiththeantitrustlaws,includingSection5oftheFederalTradeCommissionAct."TnPublicServiceofNewHamshiretheCommissionstateditsreasonsforbindingitselftothefactualdeterminationspre-viouslymadebytheEPA:Butperhapsthestrongest,reasonforacceptingasconclusivetheEPAdeterminationsofaquaticimpactistoavoidprotractedrelitigationsofthesefactualissues.Wherelitigantshaveonefullandfairopportunitytocontestaparticularissue,theyneednotbegivenasecondopportunitytoreopenthematterbeforeanothertribunalwherethesameissueisrelevant.

147NRCat26.SeealsoToledoEdisonCo.,etal.(Davis-BesseNuclearPowerStation,Units1,2,and3),ALAB-378,5NRC557(1977):[A]sageneralmatter,ajudicialdecisionisentitledtopreciselythesamecollateralestoppaleffectinalateradministrativeproceedingasitwouldbeaccordedinasubsequentjudicialproceeding.5NRCat561.ItisthusclearthattheBoardcanandshouldexpeditethiscasebyadoptingfindingsoffactmadebyasisteragency,FERC,inOpinionNo.57,andbytheFifthCircuitCourtofAppeals,inGainesville.Further,FPLmust,betakentobebound,asamatteroflaw,byitspublicpositionsanddocuments.Forexample,FPLpublishedanadvertisementintheVeroBeachPressJournal(September5,1976)addressed"AnopenlettertoeveryVeroBeachresident..."justbeforeapublicvoteonsaleofthesystem.ThatadvertisementcomparedFPLandVeroBeach'sprospectiverates,stating:"WeexpecttohaveanewnucleargeneratingunitatSt.Lucieinserviceinthenearfuture.Thisshouldbringannualfuelsavingsofmorethan$100millionthatwillbepasseddirectlytoourcustomersthroughareductioninthefueladjustment,whichhasbeenreflectedabove""Wesincerelybelievethattheproposedsalewillbeagoodthing-goodforVeroBeachelectriccustomersandgoodfortheCityitself.Ifitisapproved,wepledgetodeliveryoureliableelectricserviceatthelowestpossiblecost.Wehopeyouwillgiveustheopportunitytokeepthispromise."Appendix,p-D12~Thus,FPLuseditscontrolovernuclearfacilitiestotrytoextenditsretailmarket,simultaneouslyrefusingtosellany partofitsnucleargeneratedpowertoVeroBeachorothersthroughwholesalesales.UnlessarulewereestablishedthatFPLisnotboundbythenecessaryconsequencesofitsacts,theremustbeafindingthatFPLwasseekingapprovalofthesaleoftheVeroBeachsystemonthebasisofFPL'snuclearadvantage.Similarly,whenFPLentersintosettlementsthatcontinuetodenynuclearaccesstosome,itcannotdenythatitisrefusingtodldeal.Moreover,thesheercumulationofevidencefromFPL'sowninternaldocumentsofitsanticompetitiveactivities,coupledwithitsexternalacts,supportasummaryjudgmentfindingthatasituationisinconsistentwiththeantitrustlaws.internaldocumentsofapartyopponentareadmissibleunderRule801(d)(2)(D)oftheFederalRulesofEvidence.UnitedStatesv.AmericanTelehoneandTelerahCo.,CCH1981-1TradeCases,'K63,938(D.D.C.1981).8eealeeKcninkli'keLuchtuaartMaatschai'.v.ELMv.Tuller,292F.2d775,782(D.C.Cir.1961,BurgerJ.).TheCourtinAmericanTelehoneGTelerahCo.notedtheenormouscostandburdenofidentifyingtheauthorsofsuchdocumentsandotherwiselayingafoundation.TheCourtalsonotedthatcontrolovertherelevantfoundationalinfor-mationremainedwiththeopponentparty.TheCourtheldthatsuchevidencewaspresumptivelyadmissible,butallowedtheopposingpartyto,rebutthepresumptionofadmissibility.XfFPLwishestodenytheauthenticityorveracityofsuchdocuments, themeanstodosoarewithinitspower.Otherwise,documentsfromitsownfilesstandasadmissionsbytheCompanyofmattersstatedinthedocuments.AmericanTelehone8TelerahCo.,~sura.InarecentorderofMay19,1981,inCitiesofAnaheimv.SouthernCaliforniaEdison,~sura,(Attachment5),JudgeLucasdeterminedcertainfactstobe"withoutsubstantialcontroversyanddeemedestablishedforpurposesofthisaction,"determinedthatcertain"principlesoflawareapplicabletothisaction",collaterallyestoppedSouthernCaliforniaEdisonfromdisputingfactualissuesdeterminedinFERCproceedings,andrestricteddiscoverytoissuesremainingincontroversy;buttheCourtdeniedafurtherlimitation"withoutprejudice"andorderedfurtherbriefingandconferenceastoissuesfortrial.FloridaCitiesbelievethatasimilarorderwillbeappropriatehere.Intheremainderofthispleading,FloridaCitiesplacebeforetheBoard,courtandadministrativeagencyfindincisthatFPLhasviolatedtheantitrustlaworpolicyorhasactedinconsistentlywiththem.Attachment.1,Citiesprovideastatementoffactswhichtheybelievearenotgenuinelyindispute.FloridaCitiessubmitthatthejudicialandadministrativefindingsaredeterminitivethat,a"situationinconsistent"doesexist.Indeed,itisvirtuallyinconceivablethattheCommissioncouldlawfullyfinda"situation 17inconsistent"doesnotexistinlightofthesefindings.Theyrecognize,however,thatFPLwilldisagree.IfFPLcannotpro-videafactualbasistodenya"situationinconsistent"existsortocontestthefactswhereFPLisnotestoppedfromcontestingthem,thentheissuesareripefordetermination.IfFPLdoesprovideabasisforcontrovertingmaterialfactsorraisesappli-cabledefenses,thereshouldbeahearing.Ahearingwillberequiredastcrelief..Seepp.115-17,indra.I8specificaddi-tionaldiscoveryisrequired,FloridaCitieswillcooperateinordertoprovideabasisforspeedyresolutionofthecase.However,FPLshouldsetforthwhatfactsremainincontroversytopermittheirearlyresolution.I.SUMMARYOFPRINCIPALLEGALARGUMENTSA.RefusalsByFPLToDealWithSomeCitiesinFloridaPowerCorporation'sRetailServiceAreaPerpetuateAnIllealMarketDivision.FPLrefusestodealinvariouspowersupplyresourceswithcertaincitiesinFloridaPowerCorporation'sretailservicearea("outsidecities"),evenwhereitiswillingtodealwithothersinthesameorsimilarmatters.Ifthereisanyquestionregardingthematter,FPLneedmerelystateitswillingnesstodealwithsuchcities.,Thisrefusalconstitutesadirectviola-tionoftheantitrustlaws;evenifFPLhastechnicaldefensestoaShermanActclaim,itsconductisinconsistentwiththoselaws.Inthesedockets,astheBoardisaware,FloridaCitieshavebeenseekingrightsofaccesstoFPL'snucleargeneratedpower,transmission,wholesalepowerandpooling,amongotherthings.

18PPL'settlement.licenseconditionsexpresslylimitrelieftocertaindesignated"inandnear"cities(i.e.,withinorneartheperimeterofFPL'sretailservicearea).PPLrefusestodealwiththeexcludedcities.Moreover,evenifthesettlementwerenotconsidered,PPL'spolicyisthesame.Theonlyquestionisthelegalityofsuchrefusals.Thefacts,asaresetforthbelow,plainlydemonstratethatPPLenteredintoaterritorialagreementwithFloridaPowertodividewholesalepowermarketsinFlorida,GainesvilleUtilities

Deartmentv.FloridaPoweraLihtComan,

~sura57,3F.2d292;that,thisconspiracywasineffectatthetimeFPL'snucleargenerationwasplanned;andthatFPLhasofferedSt.Lucie2capacitytoatleastthreecitiesoutsideitsretailservicearea-Gainesville,LakeHelenandOrlandoUtilitiesCommission.Moreover,FPLhasplanned,constructedandoperateditsnucleargenerationinthecontextofelectricalcoordinationwithFloridaPower,TampaElectricandtoalesserextentOrlandoandJacksonville;otherCities-Citiesingeneral-havebeenexcludedfromequivalentcoordination;FPLknowsthatsuchcoor-dinationisimportanttobothFPLandthesmallercities;andthepurposeandeffectofsuchexclusionwastolimitpowersupplyopportunitiesofsmallersystems,therebyreinforcingFPL'seco-nomicpowerinretailandwholesalemarkets.Coordinatedactivityintheelectricpowerindustryisnotonlylegal,butisencouraged.E.g.,FederalPowerAct,$202,16U.S.C.824(b).However,wherejointactionisexclusionary,it 19iscondemned.CasessuchasAssociatedPressv.UnitedStates,326U.S.1(1945);Silverv.NewYorkStockExchane,373U.S.341(1963);Gamco,Inc.v.ProvidenceFruitproduceBuildinInc.,194F.2d484(1stCir.),cert.denied,344U.B.817(1952);andtheCommission'sownDavisBessedecision(ToledoEdison~Coman(DavisBessePlant,Units1,2and3),ALAB56-0,10NRC265(1979)establishthatcompaniessuchasFPLcannotlegallyjointogetherwithotherutilitiesformutualadvantage,totheexclusionofothersmallerutilitiesinthesamegeographicarea.Moreover,FPLandFloridapower,whoalongwithTampaElectric,dominateelectricgenerationandtransmissioninPenin-sularFloridahavebeenfoundguiltyofamarketconspiracyintheGainesvillecase,~sura.1/Thus,itwasheldthatFPLandFloridaPowercouldnotlawfullyagreetodividewholesalepowermarketsinFlorida.Intheearly1970'sFloridapowersettledtheGainesvillecaseitselfandothercasesalleginganticom-petitiveactivities.Certainly,however,itisinconsistentwiththeantitrustlawsforFPLtocontinuepoliciesof"territoriality",whichhavethesameeffectasiftherewereaformalagreement.2/Moreover,sincetheusefullifeofgenera-tionisfordecades,theeffect,oftheGainesvilleconspiracycan1FloridapowerandTampaElectricsettledacasebrought,bytheDepartmentofJusticealleginganillegalmarketdivisionUnitedStatesv.FloridaPowerCororationandTamaElectric~Coman,CXVHo.68-297-T.Thepartiesagreednottoagreetoorenforceterritorialormarketlimitationsofthesaleforresaleofbulkpower.AppendixI148-I153.2/Aterritorialagreementbetweenthecompanieswhichwasactuallywritten,butnotsigned,isattachedasAppendixI89-I110-20hardlybesaidtohaveended,Forexample,FPL'soperatingnuclearunitswereplannedduringthemid-1960's1/heydayoftheterritorial"conspiracy"foundinGainesville.B.FPL'sDealingWithSomeCitiesButNotOthersConstitutesACombinationInRestraintOfTrade.FPLagreestograntsomenuclearaccessandotherrelieftocertaindesignatedcities,butnottoothers.tagorespecifically,FPLoffersnuclearaccess-atleasttoSt.Lucie2-whole-salepower,andlimitedtransmissiontoCitieswithinitsretailserviceareaandofferssomerelieftotheOrlandoUtilitiesCommission,GainesvilleandLake-Helen,whicharenearbutnotwithinFPL'sretailservicearea.LakeHelenpurchaseswholesalepowerfromFloridaPowerCorporation.Orlandoisoneofthelargestmunicipalgeneratingcities.Inthiscase,,theCommissionhasfoundthatOrlandowas"misled"asaresultofactionsbyFPL-Gainesville,ofcourse,wontheFifthCircuitterritorialmarketdivisioncase.TheFifthCircuitalsoreferredtoLakeHelenbyname,withregardtotheterritorialconspiracy.573F.2dat,298.WhileFPLmayhavebusinessorothermotivationsforofferingSt.Lucie2tosome,havingdoneso,itcannotrightlyexcludeotherssimilarlysituatedinPeninsularFlorida.Ofcourse,FPLhadthechoicetostandfirmandnotofferSt.Lucie2toany-1Deposit>.onofRobertJ.Gardner,pp.90-94,98-108.AppendixA.Affidavitandexhibitreferencesaretoaffida-vitsordepositionexhibitsinGainesvilleReionalUtilities,etal.v.FloridaPowerSLihtComan,S.D.Fla.No.

21bodyortoseektolimitittonon-generatingsystemsorsomeotherlimitedclass.Indoingso,itmighthavetakenunaccep-tablelitigationrisks.TheFERCrejectedFPL'spositionthatitshouldnotberequiredtosellwholesalepowertogeneratingsystemsexcepttosupplementtheirgeneratingcapacity;theFERCfoundsuchrefusalsillegalundertheFederalPowerAct,prin-cipallybecauseof"anticompetitive"effects.FloridaPower8LightComan,OpinionNos.57,57-A,~sura.However,havingmadethechoicetoofferSt.Lucietosomesystems,whichwillhelpfinancetheplantandprovideamarketforitspower,includingsystemsinFloridaPower'sretail"territory",FPLcan-notlawfullyexcludeothers.Failuretooffersimilar.rightsandbenefitstoothersconstitutesagroupboycott,condemnedunderSection1oftheShermanAct.Seecasescitedatpp.93-94.EvenassumingthepossiblevalidityofFPL'srefusalstodealinnuclearpowerunderSection2,thecasesareabundantlyclearthatjointexclusionaryactioniscondemned.WhenadominantcompanysuchasFPL,whichcontrolssubstantialnuclear,transmissionandotherpowersupplyfacilitiescombineswithothers,therebycombiningeconomicstrengths,itcannotexcludesomedisfavoredutilities.1/HavingbeenfoundguiltyofaterritorialconspiracytodividewholesalepowermarketswithFloridaPowerinthe1ThisCommissionhasconsideredindepththe'onsequencesofexclusionofsmallersystemsfromcoordinationarrangements.Ofcourse,afavoredsmallersystemhaslittlechoicebuttopreferanopportunitytocoordinatewithaverylargesystemasopposedtosmallerones.Theinevitableresult,however,istoweaken~sura,6NRCat945-977,997-1009,1046,1047-1090;ToledoEdison,~sura10NRC,at334-358.

22Gainesvillecase,~sura,573F.2dat299,303,FPLhasnobasisforanargumenteitherthatitdidnotbenefitfromtheconspiracyorthatitsactionsdidnotinjureCitieswithinFloridaPower'retailarea.AsthetextofthedecisioninGainesvilleillustrates,thecondemnedconductdidnottakeplaceinavacuum,butwasforthepurposeofrestrainingcompetitionbysmallersystems.Thus,bythesametoken,FPLhasobligationstodealwithsuchsystemsinwhattheFifthCircuitcalled"wholesalepowermarkets".Accord,OpinionNos.57and57-A,Attachment3.AswesetforthextensivelyintheStatementofFacts,theFifthCircuitfindingofconspiracyisbuttressedandsupportedbyproofofjointactionamongFlorida'sthreemajorinvestor-ownedutilitiestotheexclusionofmunicipalsystems.FPLplanned,constructedandoperateditsnuclearunitsinthecontextofbeneficialcoordinationwithFlorida'sotherutilities.AstheFederalPowerCommissionspecificallyfoundin1967,inrejectingFPL'sclaimthatitplannedandoperatedindependently:"FPLisdirectlyinterconnectedwithfourotherFloridaelectricsystems,asfollows:FloridaPowerCorporation(Corp),TampaElectricCompany(Tampa),OrlandoUtilitiesCommission(Orlando),andthecityofJacksonville(Jacksonville).FPL,Corp,andTampaformtheFloridaOperatingCommittee(FloridaPool)withJacksonvilleandOrlandoasassociatemembers.Opinion-No.517,FloridaPowerkLihtComan,DocketNo.5-760,37FPC544,547-548(1967),reversed,430F.2d1377(5thCir1970.),reversedFlor,adaPower&LihtComanv.FPC,404U.~S.4531972.OpinionNo.517isAttachment3.Thethreecompaniesthemselvesadmit,inaletterintroducingan\April1960,FloridaOperatingCommitteereport."CoordinatedPlanforthe1970GenerationandTransmissionReuirementsforthe 23ElectricUtilitiesofFlorida"(emphasisadded)(App.B106):treatedasifitwereservedb~one~fullintegratedelectric~cornan"Thiscommittee,thoughslowingettingoutareport,feelsthatmuchhasbeenaccomplished;thatthisisabasic~stetoward~reducinthecostofelectricserviceinthisarea.'hus,thecompaniesjointlyrecognizethattheytreatedPeninsularFloridaasasingleintegratedarea.And,indeed,FPLciteditscompetitiveadvantageovermunicipalsystems,whichresultedfromsuchcoordination.Seetext,pages48-51.Frankly,wearemystifiedhowFPLcanpossiblyargue,asitapparentlyintends,thatreliefisjustifiedforLakeHelen,whichpurchaseswholesalepowerfromFloridaPowerCorporation,butnotforothersmallgeneratingsystems,whodothesame;orthatreliefjustifiedforGainesville,butnotsmallerAlachuaorDewberry,locatedinthesamecounty;orforOrlando,butnotKissimmeeandSt.Cloud-Citiesthataresmaller,butgeographicallyandelectricallynotfarfromeitherOrlandoorFPLC.FPL'sRefusalsToDealWithFloridaCitiesAreDirectlyContraryToTheTeachingsOfOtterTailAndConsumersPower.Byanytest,itisplainthatFPLdominatesalargeretailpowersupplymarketineasternandsouthernFlorida,thatitcontrolsessentialtransmissionfacilitiesfortransactionsamong 24variousFloridaCitiesandthattogetherwithFloridaPoweritcontrolsmosthighvoltagetransmissioninPeninsularFlorida.Further,itownsthreeofFlorida'sfouroperatingnuclearunitsandhastheonlyadditionalplannedunitunderconstruction.NorcantherebeanyrealquestionthatFPLhasrefusedtodealwithsmallercities.TheGainesvillecase,~sura,establishesFPL'refusalstodealwithsystemsinFloridaPower's"territory";iftherewereanydoubt,theNRClicenseconditionsconfirmthisfact.InOpinionNo.57theFERCfoundthatFPLhadengagedinvariousspecificrefusalstodealwithmunicipalsystemsinitsretailservicearea.32PUR4that317-318,327-335.UnderthestandardsofOtterTailandConsumersPower~Coman,suchrefusalsmandateafindingthata"situationinconsistent"exists.Thesettlementisa~artialcureodthe"situationinconsistent",forthefavoredCities.Moreisneededforthem,andmuchmorefortheexcludedCities.STATEMENTOFFACTS1/I~FPLSPLANNINGgCONSTRUCTIONANDOPERATIONOFITSNUCLEARFACILITIESHASBENEFITTEDFROMCOORDINATIONWITHOTHERFLORIDAUTILITIES.Asmorefullydemonstratedbelow,1Thefactsinthissection(exceptforafewadditionshere)werepresentedtotheDistrictCourtinGainesvilleReionalUtilities,etal.v.FloridaPowerSLihtComan,S.D.Fla.No.79-5101-CIV-JLK,in"FloridaCities'nswerto'MotionofFPLForSummaryJudgmentofCityofTallahassee'sNuclearAccessClaim'"onMay15,1981.

25'-a.Thefactsshowthatfromabout1955to1965FPLsoughttodevelopnuclearpowerinFloridathroughjointactionwithTampaElectricCompanyandFloridaPowerCorporation(buttotheexclusionofmunicipalsystemsincluding,asdiscussedbelow,othersthatFPLknewtobeinterestedinnuclearpower).Inadditiontorelyingontaxpayers,governmentcontractorsandequipmentvendors,FPLalsoreliedonotherutilitiesinFloridaduringtheplanningandconstructionofitsnuclearunits.FPLalsobenefittedfrommembershipinbroaderindustrygroups,fromwhichCitieswereexcluded,suchasEdisonElectricInstitutecommitteesonatomicpower.InitsapplicationtotheAECtobuildtheTurkeyPointunits(App.C32-C44),FPLexpresslyandsolelyreliedonthesejointactivitiesasevidenceofitstechnicalexperience(App.C39-C40).b.Thefactsshowthatfromatleast1959FPL,TampaElectricCompany("TECO"),andFloridaPowerCorporation,withtheoccasionalparticipationoftheOrlandoandJacksonvillemunicipalsystems(buttotheexclusionofTallahasseeandtheotherintervenors)wereengagedinjointandcooperativeplanningandcoordinatedtheiroperationssoastoachieveefficienciesthatwouldnototherwisebeavailable.Thiscooperationspecificallyincludedjointstudyofnucleargeneration,aswellasothermatters.rFurthermore,FPLreliedonthepurchaseofpowerfrom,andthesharingofreserveswith,othermembersofthe"Florida OperatingCommittee",whichincludedthesesystems,duringtheentireperiodinwhichitsnuclearunitswereplannedandunderconstruction.1.Sincethe1950'sFPLengagedinjointnuclearactivitieswithTECOandFloridaPowerCorporation.WhenFPLappliedfortheTurkeyPointnuclearlicensesinMarch1966,itsparticipationinjointactivitieswasthesoleevidenceofits"technicalqualifications."Asstatedatpages7-8oftheapplication(App.C39-C40):"Beginningsometenyearsago,Applicant[FPL]participatedwithFloridaPowerCorporationandTampaElectricCompanyinanuclearpowerplantstudygroup,andhasworkedwithothersinthenuclearfield.Theobjectivewastobeinapositiontoconstructanuclearplantwhenjustified."Mr.GeorgeKinsman,VicePresidentinchargeofengineeringandpowerplantconstruction,.servedasafoundingmemberoftheSouthernInterstateNuclearBoardrepresentingthepowerindustry.CurrentlyheistheBoardMemberrepresentingtheStateofFlorida.HehasbeenamemberoftheFloridaNuclearandSpaceCommissionsince1956andalsoservesonAtomicIndustrialForum,EdisonElectricInstitute,andSoutheasternElectricExchangecommittees."AsFPLdiscoverydocumentsshow,FPLengagedinanumberofnuclearactivitieswithTampaElectricCompany("TECO")andFloridaPowerCorporationinthedecadebeforeitdeterminedto 27buildtheTurkeyPointnuclearplants.1/TheseincludedaCommission,an"atomicpowercommittee"comprisedofrepresenta-tivesofthethreecompanies,formedinoraboutlate1961(GardnerExh.4,5,App.B73-B76)andperhapsotherprojects(GardnerExh.8,App.B77-B78).1ThereisnoevidencethatanyCitieswereinvitedtoparticipateinanyofthesegroups,eventhoughFPLwasawarethatbothmunicipalsandcooperativesystemsinFloridawerethenexpressinginterestinnuclearpower(seeKinsmanExhibitNos.28-32,App.G8-G32,andKinsmandepositionin~citofGainesvillev.FloridaPowerSLihtComan,S.D.Fla.No.79-5101-CIV-JLKat101-111.Theinitial1956agreementamongthethreecompaniesprovidedthat"Thereports,proposals,documentsorotherdatarelatingtotheprojectshallnotbedisclosedwithouttheunanimousapprovalofthepartiestothisagreementnorshallanypressorpublicityreleaserelatingtothisagreementortheprojectbeissuedwithoutsuchapproval."(KinsmanExh.3,at2,App.G2)Bycontrast,theevidenceisthatCitieswereaffirmativelyexcludedfromthejoint,activitiesofFPL,FloridaPowerandTECO.Mostsignificantly,asdiscussedabove,from1959untiltheearly1970'sCitieswereexcludedfromtheFloridaOperatingCommitteewhichsoughttooperatethesystemsofitsmembersas"onesystem."FPLdocumentsshowtheexclusionofCitieswassystematicandconscious.Forexample,in1957,FPLwasaskedbyapromoterofcoaltoputtogetheragroupofutilitiestolearnaboutcoal.FPLdocumentsshowthatwhilethepromoterswishedthatsomeCitiesbeincludedinthegroup,FPLdidnotwanttoincludeanymunicipalsystemsandarrangedameetingthatincludedFPL,FloridaPower,andTECOalone(seeKinsmandepositionat159-165;KinsmanExh.45-48,App.957-961).

28Furtherdiscoverydocumentsshowthataboveandbeyondcom-municationsconcerningtheirownjointactivities,FPLandFloridaPowerCorp.officialskeptoneanotherinformedoftheircommunicationswithothersregardingcompetitivedevelopmentsinnuclearpower.Forexample,asshownatApp.C45-C46,whenruralelectriccooperativesappliedtotheFederalgovernmentforagranttobuildanuclearunitintheearly1950's,theyevi-dentlyaskedFloridaPowerCorporationtoprovidethebackupneededtoconstructtheunit.FloridaPowerCorporationdeniedtherequestandsent,ablindcopyofthedenialtoFPLofficials.1/Ironically,asevidencedbyFPL's50-yearcorporatehistory,thejointeffortsneverborefruitbecausethecom-panieswereaversetotherisks.2/1Similarly,whenFPLPresident.RobertFitesenta1959lettertotheSouthernCompanystatingFPL'sviewthatitdidnotbelievenuclearpowertobecompetitivewithconventionalplants,copiesweresenttoexecutivesofotherprivateutilitiesinFlorida,althoughnottocityofficials(GardnerExh.16todepositioninGainesvilleReionalUtilities,etal.v.FloridaPower5Lihtcoman,S.D.Pla.No.79-5101-CIV-JLK,~suraApp.B79-BSO.TheCourtofAppealsinGainesville,~sura,relieduponsuch"routine"exchangeofletterstosupportafindingofillegalconspiracywithoutremandinforatrialhearin.573F.2dat295-297.2/"AHalfCenturyofPeopleServingPeople"at94-95,App.Bl-B9.FollowingthedeathofthisproposalTampaandFloridaPowerCorp.continuedtheirresearch,andattemptedanotherpro-posalin1967(whichwasalsorejected).FPL,however,didnotparticipate(Kinsmandeposition,KinsmanTr.44-45).

29In1961-62whenFPL,TECOandFloridaPowerformedan"atomicpowercommittee,"thereleaseannouncingtheCommitteestatedthethreewould"carryoncontinuingstudiesofnuclearreactortypes"(KinsmanExh.17,App.G4-G7,andKinsmandeposition,Tr.20-21).1/AsMr.Kinsmanexplained,however,nostudiesweredone.1Aszntheearlierventure,asamemberofthe"atomicpowercommittee,"FPLactivelysoughttoshareinformationwiththeotherlargeutilitiesinFlorida,butnotCities.AsMr.Kinsman,FPL'srepresentativetotheCommittee,testified(Kinsmandeposition,56-57):"Q.IfamanufacturercametoFPL,wouldyousharethatinformation?"A.Yes."Q..Whodidyoushareitwith?"A....Iftheycalledonus,Iwouldmakesuretheycalledonthem[TampaandFloridaPower]too."Q.WouldyoumakesuretheycalledonOrlando?"A.Yes-"Q.WhataboutGainesville?"A.Idon'tknow."Q.Tallahassee?"A.AsfarasIknow,noneofthemwereinterestedinnuclearpower."Q.WhataboutFt.Pierce?"A.Idon'tsuspecttheywereinterested.Ididn'tknowtheywere"Q.Isitfairtosaythatyouwerefollowingwhatwasgoingonoutthere,asopposedtodoingyourownresearch?Exactly.Ohyes."(Kinsmandeposition,Tr.55).Infact,asshownbyKinsmanExhibitV~os.28-32,smallsystemswereinterestedinnuclearpowerinthefiftiesandearlysixties.WiththeexceptionofExhibit29,anAtomicEnergyCommissionpressrelease,allwereobtainedfromFPLindiscovery.WhileMr.KinsmandidnotrecallExhibits28,and30-32,App.GS-G32,hetestifiedthat"I'msureIsaw"Exhibit29(Kinsman,Tr.101-110).

302.Throughoutthe1960'sFPLengagedincoordinatedplanningandoperationsthroughtheFloridaOperatingCommittee/FloridaPoolbutwithouttheCities.In1959FPLjoinedwithFloridaPowerCorporationandTECO,1/utilitiestowhichitwasthenandisnowelectricallyinterconnected,toformagroupthattheparticipantsreferredtoasthe"FloridaOperatingCommittee"orthe"FloridaPool."Thisgrouppermitteditsmemberstoobtain,andplanfor,greaterreliabilitythanifeachsystemhadactedalone.AsR.H.Fite,FPLPresident,explainedtoFPLstockholdersonHay15,1961(GardnerExh.28,App.B103-B105)(emphasisadded):"Backin1959.wejoinedwiththeTampaElectricCompanyandFloridaPowerCorporationinformingtheFloridaOperatingCommitteeforthepurposeofplanningthemosteiticzentandeconomicalresults.Bycoordinatingourschedulesofplantshutdownsforoverhaulandthroughsharingthespinningreserverequirementsoftheindividualcompanies,wearealreadyeffectingimportantoperatingeconomiesplusprovidinggreaterprotectiontocontinuityofservicebythegreaterdiversityofbackupreserves.Copingefficientlywithemergencysituations,suchunit,isonlyoneofthemanyadvantagestohegaanedPromourcoordinationplans.CoordinationoKdailyoperationsforgreatereconomyandefficiencyforeachparticipantisamajorobjectivee-dual~sstemsandfacilitiesasthoughthewereone1OrlandoandJacksonvillewerealsoinvitedtoparticipateinthegroup'sactivities.Itwasnotuntiltheearly1970'sthatCitieswerepermittedtojoin.

31Thisincludescoordinationofanindividualplant~me"'othinlowercosts~erKwfor~lantaddationsandthee-"InApril1960,theFloridaOperatingCommitteeissueda"CoordinatedPlanforthe1970GenerationandTransmissionRequirementsfortheElectricUtilitiesofFlorida."(emphasisadded)(GardnerExh.29,App.B106-B220).InintroducingtheplanpreparedbyFPL,TECOandFloridaPowerCorp.,theplanningcommitteestated(App.B106)(emphasisadded):"TheentirestateeastoftheAalachicolaRiveriselectric~cornanInshort,FPL,andtheotherswereplanningfortheentirepeninsulaFloridaareaservedbyCities,butexcludingthemfromtheplanning.1/InJune1961theOperatingCommittee,withthecooperationoftheOrlandoUtilitiesCommission,prepareda"JointPlanningStudy1964-65."(GardnerExh.31,App.B237-B388).Astheplanexplains,(App.B241)it.was:originallyinitiated...todeterminethetransmissionsystemwhichwouldbest,serve,asoftheendof1963,theindividualandtotalneedsoftheFloridaPowerCorporation,FloridaPower&LightCompanyandTampaElectricCompany-including,ofcourse,newgeneratingcapacitythenplannedorcontracted....InamemorandumtoMarshallMcDonald,FPL'sChairmanoftheBoardofDirectorsandChiefExecutiveOfficer,and17othertopofficialsofFPL,VicePresident.RobertJ.Gardnerrecognized:FOOTNOTECONTINUEDONNEXTPAGE 32ThesubsequentfirmingofadditionalprojectsofeachofthethreecompaniesandtheproposedintegrationofOrlandoUtilitiesCommissionintothe230kvgridrequiredchangesinthestudy.ThisreportshowshowtheOUC[Orlando]facilitiescouldfitintotheintegratedsystemplannedfor1964."Ina1963reportpreparedbyFPL,FloridaPowerandTECO1/fortheFederalPowerCommission's"NationalPowerSurvey,"thethreelargeutilitiesexplained(App.B222-B223):"Coordinatedplanningofthegeneratingandtransmissionfacilitiesofthefourmajorutliities[evidentlyOrlandoaswellasFPL,TECO,andFloridaPowerCorporation]inthestudyareahasbeencarriedonbyplanningcommitteesmadeupofpersonnelfromFloridaPowerSLightCompany,FloridaPowerCorporationandTampaElectricCompany.Atthepresent,thereisageneralplanineffectwhichisservingasaguideforexpansionuptotheyear1970.Thisplanisbasedupona"singlesystem"approach,takingintoconsiderationfactorssuchaspoolingofreserves,thesharingofunits,areaprotectionwithinter-areatransmissiontiessothattheexpansionpatternwouldbeonethatiswellcoordinatedamongtheparticipatingcompanies."FOOTNOTECONTINUEDFROMNEXTPAGE"ThePublicServiceCommissionhasmadeitclearthatitfeelsthereisanadvantagetotheStateinrequiringplanningonastatewidebasis.ThisfeelingandtheintenttofollowthroughonitisreflectedinthewordingofthePowerPlantSitingAct,theGridBill,commentsfromthestaffontheten-yearsiteplans,andmostrecent,inanorderinstitutinganinvestigationintoandrequiringpublichearingsonthesubjectofjointstateplanning."AttachmentIlll-127-1/GardnerDepositionExh.30,App.B221-B236.ThereportwastocoverFederalPowerCommissionStudyArea24,whichincludedallofPeninsularFlorida.Thereportnotesthat"contactsweremadewithrepresentativesoftheOrlandoUtilitiesCommission,theCityofTallahasseeandtheCityofLakeland'forobtainingtheirplansforthestudyperiod."(App.B222).Thus,suchcities'ctionswererelevantforthereport,butnotforinclusioninthecoordinatedplanning.

33In1964,FPL,alongwithOrlandoandJacksonville,aswellasTampaandFloridaPowerCorporationembarkedonanother"longrangepowersupplystudytobeusedasaguideforgeneratingandtransmissionadditions,aswegrowwithFloridaItwilldevelopthetransmissionsystemrequiredtocoordinatetomutualadvantage,thepresentandprojectedplansofeachparticipantforgeneratingunitadditions,andwillpointthewayforlicensedreservesandresultantsavingsincapitalcosts."(GardnerExh.32App.B390)~Thisstudy,conductedduringtheperiod.inwhich,accordingtoMr.Gardner,FPLbegantoconsidernuclearunits,evaluatedbothnuclearandfossilunits.TheJuly,1966"InterimReport"consideredinvestmentsinarangeofnuclearunits(GardnerExh.33,App.B392-B426).Tosummarize,intheperiodimmediatelypriortoandincludingthatinwhichFPLdeterminedtobuilditsnuclear'Iunits,FPLwasengagedin"joint"and"coordinated"planningofthe"statewide"systemwiththeothermajorutilitiesinthestate.Indeed,inits1967decisionfindingFPLsubject,toitsjurisdiction,theFederalPowerCommission(predecessortotheFederalEnergyRegulatoryCommission)found:"FPLisdirectlyinterconnectedwithfourotherFloridaelectricsystems,asfollows:FloridaPowerCorporation(Corp),TampaElectricCompany(Tampa),OrlandoUtilitiesCommission(Orlando),andthecityofJacksonville(Jacksonville).FPL,Corp,andTampaformtheFloridaOperatingCommittee(Floridapool)withJacksonvilleandOrlandoasassociatemembers.Significantly,inrejectingFPL'claimthaitactedindependently,theFederalPowerCommissionfoundin1967:

"ConsiderationhasbeengiventoFPL'sassertionthatbecauseoftheuniquepeninsularnatureofitsserviceareaitplanneditssystemtobeself-sufficient,andthatitpossessessufficientgeneratingcapacityofitsowntomeetitsloadswithoutanydependenceuponthespinningreservesoremergencypowerofotherFloridaorout-of-statesystems.Wedonotfindthisassertionpersuasive.ThefactthatFPLcouldoperateasaself-sufficient.utilityisnotcontrollingbecauseFPLsimplydoesnotoperateitssysteminthatmanner.TherecordinthisproceedingmakesitplainthatFPLreceivessubstantialbenefitsfromitsparticipationintheFloridaPoolinthecoordinationofspinningreserves,thearrangementofplantmaintenanceschedules,andtheassuranceofreliabilityoffrequencycontrolandfromboththeFloridaPoolandISGintheformofautomaticassistanceinthecaseofemergencies.AswestatedinouropinioninIndiana&MichianElectricCcman,~eura,L33FPC739(1966]itisthesystem'sactualmodeofoperation,nothowthesystemcouldoperate,thatisimportant.Moreover,theparticularoperatingpatternactuallyusedbyFPLisconsistentwithsoundoperatingpracticesandwiththeprinciplesenunciatedintheCommission'sNationalPowerSurveyissuedinDecember1964inwhichallsegmentsoftheelectricpowerindustryparticipatedfullyandcooperatively."FloridaPower&LihtComan,37FPC544,551-552(1967),affirmed,FloridaPowerSLihtComanv.FPC,404U.S.453(1972).3.FPLreliedoncoordinationwiththeFloridaOperatingCommitteeinconstructingitsnuclearunits.FPL'smembershipintheFloridaOperatingCommitteepermittedittomaximizeeconomiesinconstructingitsownunits.1/1Cz.trescannotstatethespecificcoordinationassumptionsactuallyemployedbyFPLinconstructingitsnuclearunitsbecauseasevidencedbytheGardnerdeposition,FPLhaseitherlostunderlyingplanningdocuments,orneverputfinalplansandassumptionsrelatingtotheunitsonpaper(AppendixA,Tr.106-108;Tr.8,17)~Ingeneral,asdiscussedintheFloridaOperatingCommitteedocumentscitedabove,interconnections,asexistedamongFloridaOperatingCommitteemembers,permitavarietyoftypesofFOOTNOTECONTINUEDONNEXTPAGE 35Forexample,asstatedabove,membersoftheFloridaOperatingCommitteeengagedinthesharingofreserves.AsexplainedbytheFederalPowerCommission's1964NationalPowerSurvey(at170,App.D310emphasisadded):"Bysharingreservesthroughinterconnections,agroupofsystemscanreducethecombinedreserveforunscheduledoutages,sinceitisunlikelythatmaximumoutagesofunitsonallsystemswilloccuratpreciselythesametimes.Tha~polingofreservesisbasedontheThus,FPL,intheperiodwhenitplannedandbuiltitsnuclearunits,andtoday,hasactedinrelianceonrisksharingarrangementswithotherutilities.FOOTNOTECONTINUEDFROMPREVIOUSPAGE:economies.Thecloseworkingrelationships,however,areshownbydocumentsinAppendixI'orexample,inanAugust1,1962letterfromFPLChiefExecutiveMacGregorSmithtoFloridaPowerPresidentW.J.Clapp(AppendixI133-I134).,regardingtheneedforaninterconnectiontosupportFPL'splannedCanaveralPlant,Mr.Smithexplained:OneofthemainreasonsforputtinginaplantatCanaveralistobeabletocontributemoretoyouandTampaElectricinreturnforwhatwewouldhopetoget.iMyfeelingalwayshasbeenthatifwehadanypower,wewouldmakeitavailabletoanyofourneighborsandwehavealwaysfoundyouandTampaElectrictobeequallyagreeable.Ihaveneverbeenparticularlyconcernedwiththerate'wewouldchargeorpayforsuchemergencyhelp.AnyfirmpowercouldbenegotiatedinamountsandforthetermcontemplatedForitspart,asstatedinaJuly24,1964letterfromMr.ClapptoFPLPresidentFite(AppendixI135),FloridaPowerbelievedthatitsoperationsincludedactivitiesthatweresolelyforFPL'sbenefit.AsMr.Clappwrote:"Foranumberofyearsnowwehavebeenmaintaininga66,000volttiewithyouatFt.White.Thistiehasbeenoperatedopen,andclosedinatyourconvenience.Thistieisofnovaluetous,buthasbeenhelpfultoyouonnumerousoccasionsbecausewemaintainamajorsourceofsupplyinthearea."

-'36AsMr.Kinsman,theFPLVicePresidentinchargeofoverseeingnucleardevelopments,putit,TampaElectric,FloridaPowerandFPLoperatedtheirsystemsduringthe1960'sas"onesystem."(KinsmanTr.293-294);.(emphasisadded)."Q.WereyousharingreserveswithTampaandFloridaPowerin1965?Didyouhavereservesharingarrangements?"A.Idon'tknowwhatyoumean'."Q.Ofcourse,youknowwhatgeneratingelectricreservesare."A.Well,we~oeratethethree~sstemsasoneIfwehad~owerand~theneededit,~theclotit.Andviceversa."Q.Thiswasinthe1960's?yesIntheperiodbetweenits(1965-1966)decisiontobuildnuclearunitsandtheDecember1972initialoperationdateofthefirst(Turkeypoint)units,FPLactivelyreliedonothersforsignificantamountsofpower,includingthepowerthatFPLrequiredtoserveallitscustomers.atthetimeofmaximum(peak)load.AsshownbyFPLForm12submissionstotheFederalPowerCommission,forexample,in1970FPLreceived265Mwatthetimeofthe-FPLpeakfromTECO,FloridaPowerCorp.,andOrlando;in1971itreceived297MwatpeakfromTECO,FloridaPowerCorp.andJacksonville,andin1972itreceived310MwfromTECO,JacksonvilleandVeroBeach.1/1SeeApp.C47-C49.ThefilingsalsoshowthatFPLdeliveredpowertotheotherlargeutilitiesatpeak,butinamountslessthanthatreceived.

37Thereiseveryreasontobelievethatsuchcoordinationwillcontinue.Forexample,intheFloridaPowerkLightCompany1979~"inthedeferraloftwonew700Mwcoalunits"wasacontractsignedwithTampaElectricCo.topurchaseoutputfromthecoalunitnowunderconstructionatTampa'sBigBendPlant.Theagreementcoverspurchaseof292Mw,208Mwand104Mwin1985,1986and1987,respectively."Thereportcoversothergenerationandoperationscoordinationaswell.Accord,FloridaPowerSLight,Company1980AnnualReort,pages8("EnergyInterchangeCutsCosts")(App.I137),14-15("GenerationExpansionplan")(App.I138-139).1/FPLhasactedwithoutreasonablebasistovetopeninsularcoordinationeffortsthatitbelievedwouldbenefitsmallersystems.Itdidsoinspiteofcredibleevidence-whichitdidnotreasonablychallenge-thattheeffortswereinFPL'sowninterestaswell.Intheearly1970'sforexample,the1InitsMemoranduminOppositiontoPlaintiff'sMotiontoDismissorforSummaryJudgment,filedinDocketHo.79-5101-CIV-JLK,onSeptember30,1980,FPLhasdescribedtheFloridaCoordinatingGroup,successortotheFloridaOperatingCommittee:"TheFCGisanon-governmentalassociationofFloridaelectricutilitieswhichhavevoluntarilyjoinedtoensurereliablesuppliesofelectricpowerandtoengageinactivecoordinationofplanning,construction,andutilizationofgenerationandtransmissionfacilitiesinFlorida.TheFCGalsoservesasaliaisonbetweentheutilitiesandtheFloridaPublicServiceCommission.Althoughnotagovernmentalorquasi-governmentalagency,theFCGisaninfluentialorganizationforFloridautilities."

38FloridaCoordinatingGroupformedapoolingtaskforce.Seepre-viousfootnote.Thereport(App.C184-C298)ofthistaskforcefoundthatcentralizeddispatchandjointgenerationandtransmissionplanninganddevelopmentamongFloridautilitiesshouldprovideadditionalbenefits.AsdetailedinanaffidavitofMr.HarryLuffoftheOrlandoUtilitiesCommission,whichhadbeenfiledinFloridaPower8LightComan(SouthDadePlant),NRCDocketV~o.P-636-A(App.C299-C305),FPLscuttledtheeffortsofthepoolingtaskforce.Inamemorandumrespondingtothisaffidavit,Mr.ErnestBivans,FPLVicePresidentforSystemPlanning,admittedFPL'srole.MoreoverhestatedthatFPL'svetowasbasedonthepercep-tionthattheproposalwouldbeofbenefittosmallersystems,butnottoFPL(App-C308-C309):"AttheOctober1975meeting,ithadbecomeevidentthatthePoolingTaskForce,chairedbyMr.Luff,wasintentonpursuingamoreformallystructuredpool,leadingtocentralizeddispatchandoperations,andcentralizedplanning.WhileFPLcouldseethattheothersmallerutilitiescouldpossiblybenefitbysuchamoreformalpool,wedidnotthen,anddonotnow,envisionanybenefitsthatwouldaccruetoFPL'scustomers.Infact,pooloperationwithcentralizeddispatchofpower,whilepossiblybenefitingthesmaller,lessefficientutilities,wouldprobablyresultinhighercostsforelectricpowertothecustomersofFPL-FPLislargeenoughtoachievealloftheeconomyofscaleonitsownwithoutbecomingpartofalargermorestructuredorganization.Therefore,attheOctober1975meeting,IstatedthatFPLwaswithdrawingfromanyfurtherefforttoforma"Statewide"poolforthereasonspreviouslygiven.IfurtherstatedatthismeetingthatFPLwouldencouragetheotherutilitiestoformasecondpoolwhichwould 39thenbeapproximatelyequalinsizetoFPL,andtheFPLwouldworkoutarrangementswherefeasibilypossibly,forthosemunicipalsystemsinitsterritorythatwouldbeisolatedfromtheproposedpool,tojoinandparticipate."DocumentsobtainedlaterthroughdiscoveryshowthatFPL'spolicyofresistancetopoolingcame,itnowappears,fromthehighestlevels.AsstatedinaFebruary20,1976FPLmemorandumfromPowerSupplyManagerN.E.CoetoH.L.Allen(SeniorVicePresident),thepolicyreflectedtheinstructionstoFPL'stopmanagementbyFPLBoardChairmanMarshallMcDonald:"MyunderstandingofMr.McDonald'sdirectionsfollowingtheSeniorManagementPlanningCouncilmeetingonRegulatoryProblemswasthatPowerSupplywastosecureuniformbilateralinterchangecontractsasadeterrenttowardsformalcolin."(App.0310)emphasissuppliedFPLtookthepositionthatpoolingandjointgenerationplanningthatincludedsmallersystemswouldbeadversetotheCompanyanditscustomers:TheFebruary1976presentationtoCompanyseniormanagementreferredtoatn.1,pp.31-32,~sura:"Ourfirstconcern(andprobablythemostimportantone)isthepossiblesevererestrictionswhichGovernmentmayplaceonourmanagementprerogatives.Intheplanningarea,thiscouldmeanlegislatingusintoapositionofhavingourplansimposedonus.Anti-trustproblemsandtheFloridaPowerCorporationsaleofCrystalRiver<<3,jeopardizeourrighttoourowngenerationfacilities.Thewheelingissuemaydrasticallyaffectouropera-tionalpractices.Alloftheseeffectscouldhavedetrimentalimpactonourcustomers'ost.ofelectricty.Thiswefeelwouldbeunjust,sinceourcustomersandinvestorshavehadtheforesighttoplanprogressively."

40Thesolutionwasto"study"theproblem(AppendixI124-I125):p.9):"Earlier,Imentionedthattheissueof"pooling"isstillcurrentandthatwearenotinterestedinitatthistime.Unfortunately,whilewemayseenobenefitstous,thisdoesnotmeanthatotherutilitiesorgovernmentalagenciesarenotinterestedinhavingusbecomeamemberoftheirpool.Withthisinmind,webelievethatthroughthevehiclesofthejointgeneration/transmissionstudyandoureducationalactionsweshould,atleastinhouse,becomeinstrumen-talinthedevelopmentofthe"pooling"issueforFlorida.Thiswaywewillbeinabetterpositiontodefine,establish,anddefendourposition."Id.at13-4.Later,whenitenteredintobilateralinterchangecontractswithTampaElectricCompanyandFloridaPowerCorporationinTamaElectricComan,FederalPowerCommissionDocketNo.77-549,etal.,FPLtookthepositionthattheFERChadnojuris-dictiontoorderpooling,andthat:"Inaddition,FPLisparticipatingfullyintheFloridaElectricPowerCoordinatingGroup(FCG)coordinationstudies.Since1976,theTechnicalAdvisoryGroupoftheFCGhasbeeninvolvedinthreemajorstudies:thePeninsularFloridaGenerationExpansionPlanningStudy,theCentralDispatchStudyandthePowerBrokerStudy.TheCompanyhassupportedeachofthesestudies,andinfacttooktheinitiativeinstartingtheCentralDispatchstudy.Theseeffortsareyieldingpositiveresults;onMarch1,1978,thepowerbrokerconceptwasimplemented.FPLmaintainsthatconsiderationofaddi-tionalcoordinatingarrangementsisproperlybeforetheFCGandnotinthisproceeding."June1,1978ReplyMemorandumofFloridaPowerSLightCompany,TamaElectricCcman,~snra,AppendixZ85-X88.WhiletheCompanysoughtto"getourstoryacross"(AppendixI123,p.12),Mr.BivanssubsequentlytestifiedthatFPLhadneverundertakenastudytotesttheassumptionthatcentralizeddispatchandjointplanningmeasuressoughtbysmallersystems 41wouldnotalsobebeneficialtoFPL(seeBivanstestimony,FloridaPower8LihtComan,FERCDocketNo.ER78-19,etal.,PhaseI,Tr.843-44).(App.C311-C312).Infact,FPL'sperceptionwasinerror.Asearlyas1960,thePlanningCommitteeoftheFloridaOperatingCommitteeconcludedthatthepoolingofrisksbyFPLandotherswouldresultinsavings:TES)ubstantialsavincasininvestmentwouldresultone~astern~area'coo~~avoictnurcatronoffacilities.However,fewoftheprojectsconsideredcouldbeacceptedwithoutfurtherstudyinvolvingalternatepossibilities."(Emphasisadded.)GardnerExh.29,page3,App.Bill.throuhintegratedlanninandexansionundertheThe1974-1975FCGstudyitself,whichwassubmittedby,interalia,FPLofficialK.S.Buchanan,specificallyidentifiesFPLasabigwinnerfromcentralizeddispatch.TablesatApp.C294-C295showthat,inthetwocasessummarizedthere,centra-lizeddispatchwouldpermitFPLtosave63,753MMBTUand116,064MMBTUona"typicalpeakloadday."Assuming,quiteconservatively,,oilpricesatapproximately$2.00MMBTU,thiswouldtranslateinto(peakloadday)dailysavingsinthe$130,000-$250,000rangeforFPLalone.TherecentlyinstitutedstatewidePowerBrokerexperiment,whichisamodestformofcentralizeddispatch,hasdemonstrablybeenbeneficialtoFPL.DuringFebruary1-April11,1979alone,forexample,FPLsaved$577,115.78(App.C313)andFPL's1980AnnualReortat8(App.I137)proclaimsthesavingsithasachieved:

42"Stillothersavingsareaccruingfromtheeconomyinterchangeofinterchangewiththe14othergeneratingutilitieswhichparticipateinFlorida'sEnergyBrokerSystem.Thisautomatedexchangesystemworkstotheultimatebenefitofconsumersbyenablingparticipatingutilitiestotakeadvantageofthemosteconomicalavailablegeneration."Inarecentdepositionwhichhasbeenrecessed,ChiefExecutiveOfficerMarshallMcDonaldtestifiedthatinthe1972-1973timeperiodFPLwas"soshortofgenerationthatwedidn'thaveapolicy[astoadequatereserves].Wejusthadwha-teverhappenedtobethere."Tr.64.Hetestifiedfurther:A.Wedidn'thaveanyreserve.MyfirstexperiencewiththecompanywouldbetwodaysafterIgotherewasthatwegotacrossthepeakbyfourmegawattsafterweboughteverythingwecouldlayourhandsonandafterwehadbeenontheradiotoaskeverybodytogetoff.Wedidnothaveanyreserve.Q.Whodidyoubuyfromwhenyou-A.Anybodywhowasavailabletoselluspower.Q.IntheentireStateofFlorida?A.Throughoutourinterconnections.Q.ThatwouldbeTallahasseeandLakeland-A.Whoever.Q.Doyourecallatthetimeyoucametothecompanyin19711-didtheyhaveapolicyonwhatreservewouldbetheappropriatereserveforplanningpurposes?A.Mo.Tr.65.Healsostated(Tr.121-122):Q.Wereyouactivelyseekingsuppliestobuyadditionalcapacityoradditionalenergysoyoucouldmeetyourload?Doyourecallthat?A.Therewasn'tanylong-termfirmpowersourceavailablewithintheStateduringthatperiodoftime.

Wepurchasedpoweraswecouldgetitdependinguponthecir-cumstancesofwhateverothersystemmighthaveaccessatthattime,butduringthatparticularperiodoftime,therewerenosignificantsourcesofsurpluspoweravailableforthefirm.Q.Again,youmadeanefforttolookallovertheState2.A.IthinkthiswasknowntoMr.BivansandtheotherswhowereworkingwiththeFloridaOperatingCommitteebecausetheyknewindependentlytheavailabilityofallplantsandwhatthemaintenancescheduleswereandwhatthedispositionofthosecom-paniesweretowardsellingpowerforaperiodoftime.Q.Whataboutoutofstate'?Youmentionedwithinthestate.A.Wedidn'thaveconnectionsthatwouldallowustogetanyfromoutofstate.Thus,FPLrejectingpoolingwiththemunicipals(andcon-tinuestorejectfullpoolingwiththem),eventhoughitperceivedthatitneededadditionalcapacity,whichmunicipalsystemscouldhavesupplied.II.FPLHASLONGDENIEDCITIESACCESSTOTHEECONOMIESOFCOORDINATIONANDSCALE,INCLUDINGNUCLEARPOWER.AsshowninSectionI~sura,ppLhasreliedonotherutili-tiesinitsoperations,includingthoserelatedtonuclearpower,duringtheperioditplannedandconstructeditsnuclearunits.EvenascoordinationandcooperationwasvitaltoFPL,FPLwouldhavebeenwellawarethatitwasespeciallyvitaltosmallersystems,includingCities.Infact,FPLhadspecificactualnoticethatCitiessoughtaccesstotheeconomiesofsizeandcoordinationonwhichFPLrelied.FPLbothrefusedtoprovidethesebenefitsitselftoCitiesandsimultaneouslyactedtoblocktheirabilitytogainthembyalternativemeans.

FPLWasOnNoticeThatSmallerSystems,SuchAsCities,RequiredAccessToEconomiesOfSizeAndCoordination,IncludingAccesstoNuclear,InOrderToCompeteEffectivelAsshown.inPartI~sura,FPLformedtheFloridaOPeratingCommitteein1959forthebenefitsitwouldachievethroughinterconnectedoperations,includingtheabilitytobuildlargerunits.IfthebenefitsofinterconnectedoperationswereevidentforlargesystemslikeFPL(andtheothermembersoftheFloridaOperatingCommittee),itislikewiseevidentthatsmallersystems,suchasCities,neededthosebenefitstocompeteeffectively.1.Smallersystemsrequirecoordinationtobuildlargeunits.Bythe1960'sitwasgenerallyunderstoodthatthereweregreateconomiestobegainedbybuildinglargerunits,ofsizesinthehundredsofmegawatts.TheCities(butnotFPL)werefartoosmalltojustifybuildingunitsofthesesizes.Theirtotalloads,inmostcases,1/werewellunder100megawatts.Bycomparison,FPL's1965-1966determinationtobuilditsTurkey1Tallahassee,amongthelargestoftheCities,hadapeakloadofabout58megawattsin1962and97megawattsin1967.ItsMarch1968engineeringreportprojectedaloadof220megawattsin1975.Asdiscussedabove,bytheearly1960'sitwasgenerallyunderstoodthatloadsofthissizecouldnotsustainacommerciallyviablenuclearunit.Indeed,since1962thesmallestnuclearunitannouncedby~anutilityhasbeen330megawatts(theFortSt.Vrainunit,in1965).Thevastmajorityofunitshavebeenover500megawatts.See,"U.S.CentralStationNuclearGeneratingUnits,"GardnerExh.1at2-20,App.B12-B30~

Pointnuclearunitsassumedpeakloadsofover5,000megawattsatthetimeoftheircompletionintheearly1970's(GardnerExh.1,Requisition,TurkeyPoint,Plant,App.B50-B51).Moreover,coordinationpermitssubstantialsavingsinmeetingreliability-of-serviceneeds.Utilitiesmustplanforthecapa-bilitytokeepthelightsonwhentheirlargestunitisoutofoperation(includingbothscheduledoutagesformaintenanceandunscheduledoutages).Ifasystemweretoinvestinalargeunitinordertomaximizeeconomies,thatsystemwouldalsoneedacomparablylarge"reserve"unitorunits.Xtwaswellunderstood,asstated~sura,thatindividualut.i-litiescouldreducetheirinvestmentinreserves-andrenderlarger--unitspossible-byinterconnectionsthatpermitthesharingofreserveswithothersystems.AstheFederalPowerCommission's1964NationalPowerSurveyexplains(at170):Theuseoflarge,economicalunitsincreasestheimportanceofreservepoolingbecauseeachsystemshouldhaveaccesstoareserveatleastaslargeasitslargestunit."(App.D310).Asshownpreviously,FPLthroughtheFloridaOperatingCommitteeplanneditsnuclearunitsinrelianceonthe"p'oolingofrisks"engagedinbythatCommittee.Asdiscussedbelow,however,atthesametime(i.e.the1960's)FPLandotherOperatingCommitteemembersexcludedCitiesfromparticipationintheirgroup.Thus,fromthetechnicalvantagealone,Citieswerefacedwithtwovastobstaclestobuildingnuclearunits:theirsmallsizeandtheirexclusionfromtheFloridaOperatingGroup.

462.FPLknewthatcoordinationandlargeunitsareessentialtoparticipationinnuclearpower.FPLwaswellawarethatsmallersystemsneededthebenefitsofinterconnectionsandsizeinordertobuildnuclearunits.In1955-1956theSeminoleElectricCooperative(inFlorida)soughtbackupfromFloridaPowerCorporationinorderto'proceedwithaproposaltothegovernmenttobuildanuclearunit.InaDecember7,1955letter,withablindcopytoFPLPresidentRobertH.Fite,FloridaPowerinformedSeminolethatitwouldnotprovidethebackup(App.C45).AsstatedbySeminole(inadocumentobtainedfromFPL'sfilesintheGainesvillecase)theinabilitytoobtainbackupkilledtheproposal(App.C46).AsfurtherFPLdocumentsshow,FPLalsofollowedFt.Pierce's1959proposaltotheAECtobuildanuclearunit(App.'52-B55).1/ThisproposalwasmadefollowingtheAEC'sannoun-cementthat,itwouldsponsorseveral"small"nuclearprojects.TheAEC,however,didnotmakeanyawardsbecause,asAECoffi-cialsexplainedina1961letter(App.D4):"Recentpotentialofplantsbasedeconomicallyhighcapitalstudiesonthecurrentstatusandeconomicsmallsizenuclearpowerplantsindicateon,existingtechnologycurrentlyarenotattractivetosmallutilitiesbecauseofcostsandrestrictivesitingrequirements."1DiscoverydocumentsshowFPLfollowedtheearlyinterestofothersmallFloridamunicipalsystemsaswell(App.Dl-D3)~

47By1966-1966,i.e.,whenPPLdecidedtobuilditsnuclearunits,theindustryknewthatlargeplantswereeconomicallyattractive,butnotsmallones.Thesmallestsizetheequipment.vendorsofferedFPLin1965was800Mw.1/Indeed,intheperiodsinceFPLannounceditsunitsin1965,thesmallestunitcommittedtoby~an~utilit(otherthantheexperimentalClinchRiverBreederReactor)hasbeen530Mw.'App.B25)Inthiscontext,theprivateutilityindustrywasgenerallyawarethatsmallersystemslackedthesizeand/orcoordinationtheyneededanddesiredtobenefitfromnuclearpower,unlessanduntiljointparticipationwithotherscouldbearranged.Forexample,assummarizedinaspeechtransmittedin1968bytheEdisonElectricInstitutetomembersofitsatomicpowercommittee,includingFPLPresidentRobertH.Fite(GardnerExh.47at3,App.B475):"Thesmallerutilities,principallythosepubliclyandcooperativelyowned,wantapieceoftheaction-theywanttoparticipateintheeconomiesofscaleassociatedwithlarge-scalenuclearfacilities.Inmanycasestheydon',havetheenergydemandsorcapitaltopermitconstructionandoperationoflargerplants,nuclearorconventional,andapparentlyinsomecaseshavebeenrebuffedintheireffortstoobtainparticipationinjointventuresbeingorganizedforthispurposeintheirregion."3.Fromthestart,FPLsoughttouseitssize-basedmonopolyofnucleargenerationasalevertoacquiresmallersystems.Asdiscussedbelow,FPL'knewthatsmallersystemsinFloridawerespecificallyinterestedingainingaccesstoeconomiesof1Bycontrast,thetotalloadofallnon-settlingCities~toda7sabout700-800Mw.Tallahassee'sloadtodayisabout,240Mw;theothercities'oadsaresmaller-somelessthan5Mw.

48scaleandcoordination,includingaccesstonuclearpower.FPLdidnotvolunteertoworkwiththosesystems,asitworkedwithFloridaPowerCorporationandTECO.1/Instead,itusedthepromiseofaccesstoFPL'seconomiesofscaleingeneralandnuclearpowerinparticularasaleverinitsrepeatedattemptstoacquiresmallersystems.Forexample,in1966,asshownbyFPLdiscoverydocuments,FPLturneddownHomestead'srequestforaccesstotheTurkeyPoint,nuclearunits.(App.D7-DS)WhenHomesteadin1967requestedwholesalepower,FPLcounteredwithanoffertoacquiretheHomesteadsystem.(App.D10-Dll)AsaninternalFPLmemorandumontheprosandconsofacquisitionputit(GardnerIExh.35,at2,App.B442):"FpsLCo.canprovidelowerratesforthecitizens.Massproductionanddiversitiesprovidegreatereconomy.Smallplantsarenotflexible~"Similarly,in1965,whentheCityofClewistonsoughttobuywholesalepowerdirectlyfromFPL,FPLrefused,andofferedtoacquirethesysteminstead.2/SeealsoOpinionNo.57at26-31,32PUR4that331-35.AninternalFPLdiscussionoftheFPLpurchaseproposallisted,asa"disadvantage"ofcontinued1/Onthecontrary,theprovisionsofthe1956agreementamongTECO,FPL,andFloridaPowerCorp.providedthatinformationdevelopedbythegroupcouldbedisclosedtoothersonlyon"unanimous"approvalofthethreelargeutilities.(Ondeposition,GeorgeKinsman,FPL'srepresentativetothegroup,saidthathedidnotknowwhythisprovisionwasintheagreement.KinsmanTr.27.)2/FPL'srefusaltodealPowerSLightComan.,37FloridaPower6LightCom1,reverseanremanwithClewistonwasdetailedinFloridaFPC544(1967)reversedsubnom.anv.FPC,430F.2d137~75thCir.e,U.S.453(1972).

municipalownership(emphasisadded)(GardnerExh.34,at12,App.B439):"TheCitymust,inthenearfuture,makedecisionsonthecourseitwillfollow.toresolveitspowersupplyproblems.Thecostofconstructingandoperatingpowergenerationfacilitiesappearstobeprohibitive;thealternativeispurchasingpowerasyouarepresently~citareunthinkablewhencomaredtotheeconomiesoftheenormous~lants~beinbuxlt~b~ublicutilities.Inthepasttwoyears,theFloridaPower8LightCompany~hasretiredasuneconomicaltwelveplantsrangingfrom12,000Kwto33,000Kwcapability."Asan"advantage"ofsaletoFPL,FPLlisted(emphasisadded)nuclearplants.In"AnOpenLettertoEveryVeroBeachResidentfromFloridaPowerSLightCompany'sRalphMulhullond",referredtoatp.~sura,publishedinthatcityin1976justbe'foreavoteontheproposedsaleoftheVeroBeachmunicipalelectricsystem,FPLstated:"We~execttohaveanewnucleargeneratingunitatSt.Lucieinserviceinthenearfuture.Thisshouldbringannualfuelsavingsofmorethan$100millionthatvillbepasseddirectlytoourcustomersthroughareductioninthefueladjustment,whichhasbeenreflectedabove."VeroBeach,Florida,Press-Journal,September4,1976(Emphasissupplied).App.D12.Similarly,ina1974"financialpresentationtotheCommissionersofViewSmyrnaBeach"(July5,1974)(App.D20),onbehalfofFPL'sproposaltoacquirethatsystem,FPLstated:

50"Nehaveawidediversificationoffuelsources.Wepresentlyuseresidualoil;we,havenaturalgasunderfirmcontractsextendingthrough1989;wehavenuclearunitsonlineatTurkeyPointandtwounitsunderconstructionatHutchinsonIslandnearFt.Pierce;weusedistillateoil;andweareworkingonplanstoincludecoalasafuturefuelsource.Thesediversifiedfuelsourcesandtheabilitytouselargeefficientpowerplantsresultinloweroverallprices."Whilecontinuingtoassertthevalueofitsnuclearpowerinitstakeovercampaigns,FPLhasbeenacutelyawarethatCities'mallsizeprecludestheirbuildinglargeunits,includingnuclear.InDecember1973,FPL'sfinancialplanningofficepro-duceda"ComparativeAnalysisofMunicipalandInvestorOwnedUtilitiesandtheBenefitstoTheirCustomers."(App.D31-D33)Theanalysisconcludedthat(App.D32):"Thesizeofmostmunicipalunitsis1imitedbythesizeofthecity.Thislimitonsizepreventsthesmallermunicipalutilitiesfromrealizingmanyoftheeconomiesofscaleavailabletolargerutilities.Thisfactwasclearlyrevealedintheanalysis.Thesmaller,utilitieshadlessefficientheatratesandhigherfuelandoperatingcostsperKwhofpowersold.Thesehighercostsappearedtobethemajorcontributingfactorsinthehighcostofpowertotheircustomers."ThedisadvantagesofmunicipalsystemswerefurtherspelledoutbyFPLVicePresidentRobertGardnerinaJuly30,1976docu-mententitled"MunicipalsandCo-operativesSituationAnalysis."Asthememorandumstatedinteralia(App.D34),"Toosmalltoindividuallyaddeconomicalgeneration...""Fuelcostsrising-supplyinjeopardy...""Relyonoilandgasforfuel...""Cannotsupportplanning,project,procurement,nuclearorganizations..."

"Legalandprocedurallimitationsonfinancing."SinceFPL'sentryintothenuclearbusiness,inshort,themessagehasbeenclear:Smallsystemscangainaccesstonucleargeneration(andothereconomies)bysellingouttoFPL,butnototherwise.EvenifFPLdidnotseektoacquiremunicipalsystemsinFloridaPower'sarea,astheGainesvillecaserecites(GainesvilleUtilitiesDet.'v.FFL,~sura,573F.2d292),itactedtoaidFloridaPoweracquisitionattemptsorfranchiseefforts,byrefusingtodealinFloridaPower's"territory".FPLthenciteditscostadvantageoverallFloridamunicipalitiesinseekingacquisitionsorfranchiserenewalsinits"territory"and,ofcourse,through'tstransmissionandcoordinationpoli-ciesotherwisepreventedmunicipalsinFloridaPower's"territory"fromservinginits"territory"andvice-versa.Seep.54,infra.FPLhadadifferentmessageforlargerutilitiesintheFloridaOperatingCommittee.In1966,forexample,1/ArmourSCompanywrotetoFPLstatingthatitwishedtobuildalargeche-micalplantnearTampa,andthatitsconsultantshadsaidthechemicalplantwouldbefeasibleifservedbya"largenuclearpowerplant."FPLBoardChairmanSmithinaSeptember16,1966letter(App.B488)informedArmourthattheproposedplantwouldbeinTampaElectric'sterritory,butthatFPLwouldhelpTampaElectricbuildthelargeplantneededtoserveTampa'scustomer.1GardnerExh.49;App.B483-B487.

52AsSmithwrote(Id.):IcalledMr.MacInnes,PresidentofTampaElectricCompanyandtoldhimthatyoufolkswouldbegettingintouchwithhimtodiscussa400,000Kwloadinhisterritory.ItoldMr.MacInnesofourmeetinganddevelopmentthat.theloadapparentlywouldbeinTampaElectric'sterritory,andIexplainedthatwewouldbewillingtoworkwithhimbyinvestinginajointplantorpurchasingalargeblocktohelpmaketheprojecteconomicallyfeasible."While.providinganunsolicitedoffertohelpTampabuildalargenuclearunit,FPLwasrefusingtodealwithsmallersystems,includingCities,asexemplifiedbelow.TheFPL/FloridaPowerefforttopreventalternativegenera-tionandtransmissionsystemsinFloridawasnotlimitedtothepreventionofnuclearpower.Intheearly1950'sSeminolecon-sideredbuildingconventionalplants.FPLworkedactivelytoopposethisproposal,eventhoughtheplantsevidentlywouldhavebeenbuiltinFloridaPower'sterritory.Forexample,anFPLofficialcalledoncitizensandpointedouttoallofthesepeoplethatthispro-posedpowerplantwillbeauselessexpenditureoffederalfundssincethereisanabundanceofpowerintheareaatthepresenttime,andthatFloridaPower'snewSuwanneeRiverplantwillhavesufficientcapacitytoservetheareaformanyyears.Itwasalsopointedoutthattherearetransmissionlinesinthisareaofsufficientcapacitytotakecareofthedistributionofthispowerandtobuildadditionaltransmissionlineswouldbeaduplicationoffacilities..."(InternalMemorandum,AppendixI71-74)InaMay8,1952lettertoSenatorSmathers(Citiesappeartohavebeenprovidedonlythesecondoftwopages),FPLVicePresidentandGeneralManagerRobertFiteexplained:

53"AlthoughtheplansbeingsubmittedbySeminoleandSoutheasternPowerAdministrationat,thistimedonotappeartoaffectFloridaPowerSLightCompanyoritscustomersdirectly,wearevitallyconcernedbecausewebelieveifthesetwoagenciesgetstarteditwillbeonlyashorttimeuntilourterritorybecomesinvolved."Asfurther-FPLdiscoverydocumentsshow,FPLworkedactivelytopreventSeminolefromgettingofftheground.InaJanuary16,1953memotoFPLVicePresidentFullerton,FPLofficialClaudeSmithstated"IsuggestthatwedoallwecandotostoptheSeminolenow."ShortlythereafterFPLtoldatleastonecooperativeservedbyFPLthatanewserviceagreementwithFPLwouldbepossibleonlyifFloridaPowerreachedsuccessfulagreementwiththeREA'sitserved.AsaJune16,1953letterfromRobertFitetotheLeeCountyCooperativeputit:"InaccordancewiththeunderstandingwhichwearrivedatwhenyouwereinmiamionJunell,thisproposalisconditioneduponcompletionofthenegotiationsbetweenFloridaPowerCroporationandtheco-opstheyserve.Assoonasthesenegotiationsarecompletedandtheagreementsfullyexecutedandapprovedembodyingtheproposedschedule,wewillimmediatelyputintoeffecttheproposalinthisletter."1/Thus,FPLactivelysoughttofrustrateeffortsbysmallersystemstoobtaintheeconomiesofjointgenerationandtransmission,evenwherethoseeffortsadmittedlywerenotdirectedimmediatelyatFPL'sownretail"serviceterritory."1FPL'sproposaltoLeeCounty,toboot,containedaprovisionprohibitingresaletomunicipalsystems.

54B.FPLRefusedToDealWithCities,AndDeniedThemTheMeansOfDealingWithOthers.FPLhaslongrefusedtodealwithCities,orhasdealtwiththemonlyonunreasonable,restrictiveterms.FPLlikewiseimpededtheiraccesstothemeansofdealingwithothers.FPL'sactivitiesmaybegroupedintoseveralschemesthatoverlapintimeandfunction.First,asfoundbytheFifthCircuitintheGainesvillecase,FPLconspiredwithFloridaPowerCorporationtodividethewholesalepowermarketinFlorida.Pursuanttothisconspiracy,FPLwouldnotdealwithsystemsthatwerewithinFloridaPowerCorporation'sterritory.Second,FPL(a)refusedtoprovideanythingotherthanemergencypower1/toCitieswithintheperimeterofitsownretailterritoryand(b)simultaneouslyrefusedorendlesslydelayedinterconnectionaridtransmissionarrangementswhichwouldhavepermittedsystemswithintheperimeterofFPL'sretailterritorytodealwithoneanotherorwithsystemsinFloridaPower'sterritory.Whiledoingthis,moreover,FPLrepeatedlysoughttobuyoutsystems,makingproposalsto,atleast,Homestead,Ft.Pierce,HewSmyrnaBeach,Starke,Clewi'ston,VeroBeach,andLakeWorth.WhileFPL'smonopolisticintentremainedconstant,itwasforcedtomodifyitsmethodsbythe1972SupremeCourtdecisionthatfoundFPLtobesubjecttoFederalPowerCommission1WhichwaspricedhigherthanwholesalepowersoldbyFPLtotheREACooperatives(App.E76).Aswasgenerallyknowninthemid-1960's,i.e.,thetimeatwhichFPLplannedandcommittedtoitsfirstnuclearunits,FpLwasrefusingtoprovideanythingbutemergencypowertomunicipalutilitieswithinitsownserviceterritory8ee.App.040-058,pp.17-19;30-33,~sura.

55jurisdiction1/anda1971SupremeCourtdecisionthatupheldtheFederalCommission'sauthoritytoorderFloridaPowerCorporationtointerconnectwithGainesville.2/FollowingtheFPCjurisdictionalcase,FPLwascompelledtofileawholesaletariffwiththeFederalPowerCommission.3/Evenso,in1976-1977FPLrefusedFt.Pierce'srepeatedrequestsfortariffserviceandsoughttoabandonwholesaleservicetoHomestead.WhenFt.Piercepersistedinitsrequests,FPLfiledanewwholesaletariffunderwhichforCitiesitproposedtolimitsuchservicetoNewSmryrnaBeachandStarkealone.Followingahearing,theFERCrejectedFPL'sproposalas"anticompetitive"andtheCompanywascompelledtocontinuetariffservicetoHomesteadandFt.Pierce.OpinionNos.57and57-A,~sura.ArticleIXofFPL'ssettlementlicenseconditionswouldrestrict"wholesalefirmpowersales"tosystemsinornearitsretailservicearea.Further,contrarytoOpinionNo.57,4/theproposedlicenseconditionspermitareductioninwholesalepoweravailability,ifasystemobtainsSt.Luciecapacityor1ForzaPowerSLz.tCo.v.FederalPowerCommission,404U.S.45319722/GainesvilleUtilitiesDet.v.FloridaPowerCor.,402U.S.5151971)3/Xnthe1960'sFPLhadlimitedmunicipalsystemstoemergency"power.Thispowerwas,bydefinition,notpoweronwhichCitiescouldplanand,washigherpricedthanthe"wholesale"powersoldtocooperativesonalongtermbasis.(App~E76)~4/32PUR4that339-40.

56capacityfromanysourcethatusesFPL'stransmissionsystem,therebymakingthepriceofobtainingdirectnuclearaccessoruseoftransmissionalossofwholesalepowerrights.Further,resalerestrictionsinArticleIX(b)couldeffectivelylimitelectricpowercoordinationbysystemspurchasingwholesalepower.1/TheCompany'spolicyofrefusingwholesalepowertomunicipa-litiesisnot,new.Forexample,suchpolicywasdetailedpubliclybeforetheFederalPowerCommissionin1965-67inapro-ceedingconcerningFPL'srefusaltosellwholesaletoClewiston.FloridaPower8LihtCo.,37FPC544(1967),orderreversed,430F.2d1377(5thCir.1970),reversedandremanded,404U.S.453(1972).ThedecisionoftheAdministrativeLawJudge,approvedinpertinent.partbytheCommissionin1967,detailedFPL'srepeatedrefusalstosellwholesaletoClewiston.FPL'sexplana-tionwasthatthemakingofwholesalesalestomunicipalitieswas"contrarytopublicpolicy,thatitwouldnotselltoamunicipalatwholesaleexceptinthecaseoffurnishinganemergencysupply."1ArticleIXisunclear.Itisassumedthattheuseoftheword"required"inArticleIX(a)referstoaneighboringentity'sretailload.However,systemsactualorpotentialloadsandreservesrequirementsincreasegraduallyandsystemsacquiregenerationtomeetfutureloads;reductionsinpresentwholesalepoweravailabilitybasedupontheexerciseofgenerationoptionscouldforceasystemtoeitherforegopresentoptionstomeetfutureneedsorlosevaluablewholesalepowerrights.Apartfromlimitingcompetitioninwholesalepowermarkets,restraintsonresaleofwholesalepowercouldlimittheeconomicabilityofsystemstoobtainpowersupplytomeetfutureneeds.

57AsdetailedinCities'esponsetoFPL'sInitialInterrogatoryNo.9,1/theFPLrefusalstodealwithClewistonwerenotatypical.ItwaswellknownamongFloridamunicipalsthatFPLwouldnot,sellwholesale.Forpurposeshere,itisexceedinglysignificantthatbothinthecaseofClewistonandthatoftheCitiesprotestingwholesalepowerlimitationsinthecontextofOpinionNo.57,therewasextremepressureforthemtoselltheirsystemstoFPL.SeeCities'esponsetoInterrogatoryNo.21,App.D59-D87.FPL'sapplicationtotheFederalPowerCommissiontoacquiretheVeroBeachelectricsystemcontainedareporttotheCitypreparedbyErnst6Ernst,whichappendedanexaminationofavailablepowersupplyoptionstoVeroBeach.Thatreport,filedasart,ofFPL'salication,listedamongotherthingsthatno"wheeling"options(or,therefore,wholesalepowersupplyoptions)wereavailable.App.C403-C404.FPLrepeatedlywroteNewSmyrnaBeachthatwholesalepowerwouldnotbeavailableonalong-termbasis:Forexample,inanAugust5,1959letterfromAlanB.Wright,VicePresidentofFPLtotheCity(PL-65),Mr.Wrightstates:"Inregardtoyourinquiryconcerningthesaleofwhole-salepoweronalong-termbasis,thiswillconfirmourpreviousstatementinregardtothisquestion;namelythatwedonothaveanyarrangementtosellwholesaletomunicipalitiesonalong-termbasisandwouldnotchangeourpolicyatthistime."1/ServedinGainesvilleReionalUtilities,etal.v.FloridaPowerSLihtComan,S.D.Fla.No.79-5101-CIV-JLK.App.D40-D58.

58InaNovember25,1970letterfromMr.WrighttoJ.T.BensleyNewSmyrnaBeach'sDirectorofUtilities,theCompanystatesthatitsprovisionsofpower"shouldnotbeinterpretedinanymannerasfirmpowerbutratherasstated,onthebasisofavailability."AsissetforthinCities'esponsetoFPLInterrogatoryNo.9(App.D40-D58),varioustestimonyoftopFPLofficialsadmittedthepolicy.TheCompanyevenwentsofarasimposingresalerestrictionsinREAwholesalepoweragreementstopreventsalestomunicipals.FPL'sChairmanoftheBoardofDirectors,Mr.RichardC.Fullerton,gaveoneexplanationforsuchpolicies:"Andwewerenotourselveswholesalingtomunicipalities,sowhyshouldweselltosomebodyelseandlethimwholesaleit.ImeanthatisasgoodareasonasIcanthinkofifyouwantmetothinkoneup."DepositionofRichardC.Fullerton,GainesvilleUtilitiesDet.v.FloridaPowerRLihtCo.,M.D-Fla.No.68-305-CIV-T,App.I79When,in1972-74FPLfinallyagreedtoafullinterconnectionwithHomestead,itconditionedtheinterconnectiononHomestead'sagreementtobearthefullcostofinterconnection.1/Then,whentheinterconnectionwasphysicallycompletedin1977,FPLsoughttousethecompletionoftheinterconnectionasanexcusetoabandonwholesaleservice.Moreover,evenafteragreeingtointerconnectionswithHomesteadandothers,itrefusedtoprovide"wheeling"ortransmissionservicessothatCitiescouldusetheinterconnectiontodealwithothersthanFPL.WhileFPLhas1Onthetheorythem,eventhoughender'hem(i.e.,neededpowerasathatFPLwouldnotobtainanybenefitsfromFPLbenefitsfromeveryexchangeofpoweritmakesaprofitasaseller,orobtainsbuyer).

59finallyprovidedlimitedtransmissionservices,ithascon-tinuallyrefusedtofileatariffcommitmenttotheseservices.1/Intheearly1970's,withtheforewarningoftheFloridaPower5Lightv.FPCjurisdictionalcaseandtheGainesvilleinterconnectioncasescitedabove,p.,~sura,theFloridaOperatingCommitteewasexpandedtopermitCitiestojoin.Intheinterimsincethisexpansion,however,FPLhasresistedeffortsbyCitiesandotherutilitiesinFloridatoachievegreatereconomiesthroughfurther"pooling."InsofarasithasofferedinterconnectionandtransmissionarrangementstoCities,ithasconsciouslydonesoinhopesthatitcouldfend.off"pooling."Forexample,asrecordedinthe1976memorandumfromFPL"powersupply"chiefW.E.CoetoFPLVicePresidentH.L.Allen,atthedirectionofBoardChairmanMcDonald(App.C310),FPL"wastosecureuniformbilateralinterchangecontractsasadeterrenttowardsformalpooling."1UnderFERCorderFERCDocketNos.ER78-19etal.),FPLhasfinallyfiledatariffcoveringtransmissionassociatedwith"interchange"service.However,ithasappealedtherequirementthatitdosoonthejurisdictionalgroundsthat.theCommissionhasnostatutoryauthoritytoorder"wheeling."FloridaPowerSinthatcase,filedJuly28,1980stated,atpage20(App.0323):"Asexplainedabove,theorderrequiringthefilingoftoextendFPL'sobligationtovicebeyondthatwhichithasSuchanorderfarexceedstheauthoritytoorderFPLoranywheel."effectoftheCommission'satransmissiontariffisprovidetransmissionser-voluntarilyundertaken.Commission'slimitedotherelectricutilitytoFOOTNOTECONTINUEDONNEXTPAGE 60TheabovesummaryofFPL'sbehaviorissupportedbyvolumi-nousdocumentation(muchofitfromFPL'sownfiles)anddetailedcourtandagencydecisions.Thisdocumentationincludesthefollowing:l.TheFifthCircuit'sdecisioninGainesville,~sura,detailstheillegalterritorialdivisionbetweenFPLandFloridaPowerCorp.AstheFifthCircuitheldat573F.2d294,"NeholdthattheevidencecompelsafindingthatFPLwaspartofaconspiracy4/withFloridaPowerCorporation(FloridaPower)todividethewholesalepowermarketinFlorida."4/Section1oftheShermanActmakesevery"conspiracyinrestraintoftradeorcommerce"illegal(15USCA$1)eeeFOOTNOTECONTXNUEDFROMPREVlOUSPAGE:FPLstatesfurther(pp.17,18):FPLwouldberequiredtoprovidetransmissionserviceforanyutilitywhichqualifiesforservicesunderthetariffcriteriaorderedbytheCommission....[A]ttheveryleast,FPLisrequiredtoprovideserviceforadditionalcustomerswhichhavenotrequestedtransmissionservicecontracts."I.Forexample,thosewhodisagreewiththeirterms].Andatpp.19-20,theCompanystates:"Arguably,theCommissioncouldchangethoseprovisionsonthegroundthatt'efiledprovisionsare"unjust,,unreasonableorunlawful,"withtheresultthatFPLcouldberequiredtoprovideabroaderscopeofservicestoagreaternumberofpotentialbuyersthantheCompanyhadcontemplatedwhenitfileditsindividualtransmissionserviceagreements."RegardlesswhetherFPLiscorrectontheFERCjurisdictionalissue,itplainlyresiststransmission.

612.OpinionNos.57and57-AoftheFERC1/detailbothFPL's1976-1977effortstolimitwholesaleserviceandFPL'srelationshipwithHomesteadandFt.Pierce,includingitsacquisitionpracticesandattemptsatrestrictivedealing.Indeed,theCompany'sfilinginthatdocketsoughttoeliminatetheabilityofmunicipalsystemshavinggenerationtobuywhole-salepowerinsteadofgenerating,wherewholesalepowerpurchaseswouldbecheaper.Thus,municipalsystemswouldbeforcedtooperateoil-firedunitsratherthanpurchasewholesalepower.Further,wholesaleservicewasproposedtoberestrictedtoexistingcustomers;andthosewhocouldobtainwholesalepower,undertheproposedfiling,weretobedisallowedfullcoor-dination.2/1FPLwithdrewitsappealfromFERC'sdecision.2/Theproposedtarifffilingwasasfollows:SaleforResaleTotalRequirementsRateSchedule-SR-2AVAILABLE:FloridaPower6LightCompany,FPCElectricTariff,OriginalVolumeNo.1,FourthRevisedSheetNo.5.deliveryfortotalpowerrequirementsofelectricutilitysystemsfortheirownuseorforresale.SuchelectricutilitysystemsareClayElectricCooperative,Inc.,GladesElectricCooperative,Inc.,LeeCountyElectricCooperative,Inc.,OkefenokeRuralElectricMembershipCorporation,PeaceRiverElectricCooperative,Inc.andSuwanneeValleyElectricCooperative,Inc.Thisscheduleshallnota1assubstituteorreplacementowertoaeneratingutilitysstemforwhichinterchanepowerareementsareavailableortowhichSaleforResalePartialRequirementsRateSchedulesPRisapplicable."(Emphasissupplied).FOOTNOTECONTINUEDONNEXTPAGE 3.Cities'esponsetoFPL'sinitialinterrogatoryrequestsintheDistrictCourtcase(DocketNo.79-5101-CIV-JLK,~sura)detailsthedocumentationsupportingthefollowingi/:FOOTNOTECONTINUEDFROMPREVIOUSPAGE:"SaleforResaleTotalRequirementsRateSchedule-PRSecondRevisedSheetNo.7.AVAILABLE:Toelectricservicesuppliedtoelectricutilitysystemsfortheirpartialpowerrequirementsatanypointofdeliverytocomlementtheinsufficienteneratincaacitand/orfirmower2"systemsareFloridaKeysElectricCooperativeAssociation,Inc.,UtilitiesCommissionoftheCityofNewSmyrnaBeach,Florida,andtheCityofStarke,Florida.Thisscheduleshallnota1assubstituteorreplacementowertoaeneratinutilitysstemforwhichfullserviceinterchaneowerareementsareTheproposedtariffsshowedthat:1)FPSLrefusedtoselltotalrequirementswholesalepowertonewcustomers.2)FPSLrefusedtosellwholesalepowertosystemshavinggenerationexcepttoreplace"insufficientcapacity;"and3)FPSLwouldnotpermita"fullserviceinterchangepoweragxeement"forsystemspurchasingwholesalepower.ThesetariffchangeswouldhavepreventedthepotentialsaleofwholesaleelectricitytonearlyeverymunicipalsysteminFlorida.TheFERCrejectedthetariff,stating(32PUR4that339):"Theproposedrestrictiveprovisionsareanticompetitive,wefindnocountervailingreasonsfortheirimplementation,andtheyaretobedeleted."1/Citiesnotethatinthecurrentdiscovery,theyhaveobtainedmaterialsfromFPLinadditiontothoseavailableatthetimeoftheinterrogatoryresponses.

63a.FPL'refusaltodealinwholesalepower(seeCities'nswertoFPLinterrogatoryno.9,App.D40-D58)1/;b.FPL'srefusaltointerconnectand/oreffortstounlawfullyconditioninterconnection(seeCities'nswertoFPLinterrogatoryno.11,App.C137-C165).FPL'sactionsaresetforthintheinterrogatoryresponses.Itsconductrestrictingpoolinganditsattemptstolimitcoordinationavailability,ifasystemisbuyingwholesalepower,areevidenceofFPL'santicom-petitiveintent.Xtissignificantthat,whileSection2ofthelicenseconditionsrequiresparallelinterconnection,nomentionismadeofanyrequirementthat.FPLshareinthecostsonareasonablebasis.c.FPL'shistoricrefusaltoprovide"wheeling"(transmission)anditsmorerecenteffortstounreasonablylimitwheeling(seeCities'nswertoFPLinterrogatory14,App.C166-C183);asnotedPPLstillhasnotfiledaPERCtariffforrefusestograntCitiesreciprocaltransmissionrightsifthey1AninternalFPLmemorandumprovidedbyFPLindiscoveryrecordedameetingwithHomesteadCityManager,OlafPearson:"Mr.PearsonagainI.illegible]ifwewouldsellpowertoHomesteadonceTurkeyPointwascompleted.Ianswered"No,itisnotourpolicytosellpowerforMunicipalDistrib[ution]."App.D7-DS.AndFPLspecificallyrefuseda1966requestofHomesteadforaccesstotheTurkeyPointunits.Eee~sura.

64investintransmission;l/;d.FPL'shistoricandcontinuingeffortstodenyCitiesaccesstothebenefitsofcoordinationthatFPLhasobtainedbyvirtueofsizeandparticipationingroupssuchastheFloridaOperatingCommittee(seeCities'nswertoFPLinterrogatoryno.15,App.D59-087);See,e.g.,pp.30-34,infra.e.FPL'refusaltoprovideCitiesaccesstoitsnuclearunits(seeCities'nswertointerrogatoryno.17,App.D88-D94);Suchrefusalisaprimarysubjectmatterofthiscase.f.FPL'sattempts,oftenrepeated,toacquirevirtuallyallthemunicipalsystemswithinitsretailserviceterritory.(SeeCities'nswertoFPLInterrogatoryNo.21,App.D95-D121);4.FPLinterferedwiththegassupplyofseveralCities,asdetailedintheCrossMotionoftheCityofTallahassee,FloridaForSummaryJudgmentofTallahassee'sNaturalGasClaims,andsupportingmemorandumfiledMarch2,1981,filedinGainesvilleRegionalUtilities,etal.v.FloridaPower&LihtComan,~eura,DocketNo.795101CI-VJLK--5.FPLhasevensoughttocapturenewtechnologyinordertodetermunicipalcompetition.Forexample,FPLhasundertakentoobtainthebenefitsofelectricitygeneratedfromwaste,andiscurrentlyengagedinaventureinDadeCounty,1Largesystems,suchasFloridaPowerorTampaElectric,whicharedirectlyinterconnectedwitheachothergainautomaticuseofeachsystem'slinesfortransactionsbecauseofthemutualinterconnection.WithregardtoCities,however,FPLinsistsonseparate,individualinterconnectionagreementstodeterformalpooling.SeeApp.C310~

Florida.Ina1973document,FPLVicePresidentforStrategicPlanningRobertGardneroutlinedtheconsiderationsinvolvedinFPL'sdeterminationtoinvolveitselfingenerationfromwaste.AstheGardnermemorandumexplainedinits"Guidelines=forPowerGenerationfromMunicipalSolidWasteOperations"(App.D123)(emphasisadded):"Theamountofdirectbenefitissmallbecausesolidwastecangenerateonlyasmallfractionofour2""'2-'"*'1s1.Augmentcommunityandcustomerresourcesbydisplayingcorporateresponsibiltyinassistingthesolutionofapressinglocalproblem.2.Gainexperienceandinsightintothepotentialforprofitablefutureincreasedinvolvementinwasteprocessing.1psanotherFPLinternaldocumentshows,FPL'sinterestincontrollingsolidwaste,generationwasnotlimitedtoitsretailserviceterritory,butextended"throughoutFlorida."(App.D127)SeealsoaMarch25,1974memorandumfromW.M.Klein,(currentlyanFPLVicePresident)toExecutiveVicePresidentF.E.Autrey.ThememorandumexplainedthatFPLhadtocontrolDadeCounty'ssolidwasteinamannerthatwouldpreventDadeCountyfromusingittogenerateelectricity.Asthememorandumstated,inpart(App.D129):"Wealsofeelthatwecannotaffordnottopar-ticipate[intheDadeCountyproject]sincetheCountyrepresentativesseemdeterminedthatthe'fuel'ortionofthesolidwastebeused.Theyhaveonseveralocca-sionsmadereferencetothefactthat'.ifFPLdoesn'usethisfuelorsteamfromthefuel,thentheywouldbuildandoperatetheirownpowerplant.'""InviewofthisattitudeonthepartofDadeCounty,FPLmustworkoutawaytoparticipateintheDadeCountyprocedurefordisposalofsolidwaste.Therefore,whileinsuringthatDadeCountyorthesuc-cessfulbidderdoesn'tgenerateelectricwemustatthesametimeavoidsettingaprecedencethatwouldbecompletelyunacceptableelsewhereonthesystem."

FPL'refusalstodealwerepartofamoregeneralprogramwherebyFPLandFPCalsoconspiredto(a)assurethatexistingorpotentialmunicipalsystemsinoneutility'sterritorywouldnotbeabletoobtainwholesalepowerfromtheothersystem(b)assistoneanotherintheacquisitionofexistingmunicipalsystems.1/Forexample,in1962R.C.Fullerton,ExecutiveVicePresidentofFPLreceivedaletter(AppendixI37)fromacitizenofSebringregardingthepotentialacquisitionoftheSebringmuni-cipalsystembyFPL.Mr.Fullertonrespondedtothecitizenthat(AppendixI38):"ThanksforyournoteaboutelectricserviceinSebring.TheutilitycompanyservinginthatvicinityistheFloridaPowerCorporationofSt.Petersburg.Wehavetakenthelibertyofforwardingyourlettertothemforconsideration.Iappreciateyourfineattitudeandthankyouforwriting.Inforwardingthecitizen'sinquirytoaSeniorVicePresidentofFloridaPowerCorporation,Mr.Fullerton'scoverletterstated:"(A)ttachedcorrespondenceisself-explanatory.Whydon'tyougointhereandbuythisproperty?"(AppendixI39).TheSebringexchange,inturn,appearstobearepetitionofanearlierexchangeregardingLakeHelen.(AppendixI40-I43).InaJune23,1958"

DearBill"letterfrom"Bob,

"(anexchangebetweenFPL'sPresidentandGeneralManagerRobertFiteandFloridaPowerCorporation'sPresidentWilliamClapp)2/"Bob"wrote:1TeocumentsquotedinthetextaboveincludessomeofthosecitedbytheGainesvillecourt,'at573F.2d,297-299.s2/AsrecognizedbytheGainesvillecourt,at298.

"

DearBill:

WhenwediscussedtheterritorialquestioninBostontheotherday,youmentionedthatyouwereinterestedinbuyingtheelectricfacilitiesinLakeHelen.Perhapsyouhaveforgottenbutbackin1956wereceivedaninquiryfromLakeHelenandwrotethemthattheywerenotinourterritoryandwehadnoproposaltomake.AlanB.Wrightsignedtheletterandsentyouablindcopy.Iamenclosingreproductionsoftheselettersforyourinformation.Here'shopingyougetLakeHelen.Bob"Thedivisionof"acquisitionrights"wasaccompaniedbyrecognitionthatneithersystemwouldprovidepowersupplyalter-nativesforanexistingfranchisethatwishedtoconsidermunici-palownership.1/OnFebruary3,1956,(AppendixI46-I48)forexample,theCityofArcadiawrotetoFloridaPowerCorporation.ItstatedthatitsfranchisewithFPLwasexpiringandthattheCitywasconsideringthepurchaseoftheFPLdistributionsystem.Itaskedwhether"FloridaPowerCorporationwouldbeinterestedindiscussingthe1Ofspecialadditionalnoteisevidenceofearlyawarenessofthelikelihoodofprivateutilitymonopolyovernuclearpowerandthepossibilitythattheexpressdenialofsmallersystems'ccesstonuclearpowerdatesbacknearlyaquarterofacentury.Byletter-ofDecember7,1955,FPLPresidentClappwroteSeminoleElectricCooperativePresidentParksE.BakerthatFPLwouldnotprovidebackupservicesfora40MWnuclearreactorwhichSeminoleproposedtobuildnearPerry,Florida.AblindcopyoftheletterwassenttoFPL'sRobertFite.SeeAppendixI44.Onearlymunicipalrecognitionoftheimportanceofatomicpower,seeAppendixI45,obtainedfromFPLintheGainesvillecase.Thz.sdocument,aneditorialapplaudingthedecisionofLakeCityvoterstorejectmunicipalownership,recordsthatthelocalcitizens'ommitteestressedtwomainobjectionstopublicownership.Thesecondwasthat"Asmallcity-ownedplantcouldnotprovidedependableserviceandtherewasgravedangerthatitmightevenbecomeobsoleteinafewyearsduetoatomicpowerdevelopments."

wholesaleofelectriccurrenttotheCityofFlorida."ByletterofFebruary7,1956(AppendixI46-I48)to"Bob"Fite,"Bill"ClappenclosedtheCity'sletterandwrotethat:"IamaskingMr.A.V.Benson,ourDivisionManagerinLakeWales,togobyandtalktotheauthoroftheattachedletter.Byansweringthisletterverbally,IfigurewemightbeofsomeassistanceinpointingouttotheCityAttorneytheerroroftheirways.Youmaybeassuredouransweristhatwehavenopowerfacilitieswithinthisarea.Mr.BensonwillpointouttotheCityAttorneythefactthatwhattheyhaveinmindcannotpossiblypaythemaswellastherenewalofyourfranchise.hWewillgiveyouacompletereportofourcontact."InresponsetotheFebruary7letterFitethankedClappforhishelpandstatedthat"Isurehopewehaveanopportunitytorepayyou."(AppendixI46-X48).GainesvilledocumentsshowthatFPLdidrepayFloridabyrefusingwholesaleservicetoFloridaPowerfranchises.In1962-63,forexample,theCityofWinterGardenwasconsideringthecreationofamunicipalsystem.InatelegramtoaCitizensCommittee(AppendixZ49)Mr.FitestatedthatFPLdidnotpro-videwholesalepower,and,inanycase,wouldnotserveanentitynotinitsserviceterritory:FLORIDAPOWER5:LIGHTCOMPANYHASNOFORMAL'ORINFORMALREQUESTTHATIKNOWOFTOSELLPOWERTOWINTERGARDEN.WEDONOTSUPPLYMUNXCXPALSYSTEMSFIRMWHOLESALEPOWERFORDISTRXBUTXONTHROUGHAMUNICIPALDISTRIBUTZONSYSTEM.WINTERGARDENISBEYONDTHELXMXTSOFOURECONOMICSERVICEAREAWHICH~INITSELF'OULDPRECLUDEASUPPLYFROMOURCOMPANYEVENIFTHEOTHERCONDXTIONSCXTEDABOVEDIDNOTPREVAIL.Asthediscoverydocumentshows,ablindcarboncopyofthetelegramwassenttoMr.Clapp.

TherecanbelittlequestionthatFPL/FPC'slongstandinganticompetitivepracticesandpolicieswerewellknowntomunici-palsystems,andtocitiesconsideringformingmunicipalsystems,throughoutFlorida.Thus,notonlywereexistingsystemsdeniedtheopportunitytoobtainbenefitsfromwholesalepurchases,butpotentialsystemsweredeterredfromconsideringentryintotheelectricbusiness(andtherebyfromprovidingacompetitivesti-mulustoFPLandFPC).ThedeterrenceeffectofknowledgeofFPL/FPCpracticesandpolicieswasevidenced,forexample,inHainesCity.There,in1967,citizensconsideredthepossibilityofreplacingtheFloridaPowerCorporationfranchiseservicewithmunicipalservice.Asa"FactFindingCommittee"reportedtotheCity(AppendixI50-I54):"Extremelyreliablesourcesleadustobelievethefollowing:"2.Itwouldnotbefeasibleatthistimeforustocon-tact-anothersourceofpowerintheeventwemovedtodistribute.Duetotheinterconnectingsystemsinexistencebetweenthevariousdistributorsandtheirreciprocalagreementsforsupplyingeachotherasrequiredduringemergencyperiodsandpeakloadincapacity,itcouldnotbeexpectedthatanysupplierwouldtransgress.""Itshouldbestressedthatintheevent,itisdecidedthatanattemptbemadetodistributeand/orgenerateanddistribute,theCommissionshouldprepareitselfforlengthylegalandpoliticalnegotiationstoobtainanysuccessfulconclusion.Therewardsofthesaleofpoweraresuchthateveryendeavorbyexistingdistributorswillbemadetoassuretheircontinuationinthisfield.Aprecedentwouldhavefarreachingeffectsonpowercompaniesasregardsothermunicipalitiesintheeventwewereabletoacquirethelocalfacilities.ItisbelievedthatPowercompanieswouldnot 70submittothiswithoutexhaustingeverymeanstoprecludeit.ThisstandhasbeenacknowledgedbyFloridaPower.Inlightoftheaboveandtheconsideredopinionfromseveralveryreliableareas,thecommitteesuggeststhatcompleteunani-mityofopinionoftheCommissionoftheutmostimportance.The"FactFinding"reportspecificallynotedthattheCommitteehad"(I)nvestigatedthoroughlytherecentdecisionofWinterGardentograntafranchiseratherthanenterintomunici-paloperation."There,ascitedabove,FPLhadrefusedtopro-videthecitywithapowersupplyalternative.HainesCity'decisionnottoentertheelectricbusinesswasundoubtedlyinfluencedbyknowledgeofFPL's(unlawful)policy.Thus,inthecaseofHainesCity,aswellasWinterGarden,FPL'sunlawfulpolicyhelpedtopreventtheentryofnew-competitors-andthestimulusofcompetition--withintheFloridaPowerCorporationretailserviceterritory.Insum,thejointactionofFPLandFPC-actionthattookplacethroughoutboththeFPLaudFPCterritories-activelyprecludedandeffectivelydeterredattemptstocreateviablepublicelectricsystems,andviablecompetitorstoFPL(andFPC).Asitsactionsillustrate,FPL'sprogramwasnotlimitedtoaffectingmunicipalutilitieswithinitsretailservicearea,assumingsuchlimitationwouldhavebeenpossiblewheretherewaspeninsular-widecoordination.FPL'srecentcampaignstogainrenewalofitsDaytonaBeachfranchiseandtoacquiretheVeroBeachsystemprovidecompellingpublictestimonytoFPL'spercep-tionthatitisincompetitionwithpublicsystemsthroughoutFlorida.AsshownbyAppendixI55-I57,FPL'sadvertising 71campaignsfocusedoncomparisonsbetweenFPLandmunicipaladvertisingprovidedthefollowinginformation:"FloridaPower6LightCompany'sbillstraditionallyareamongtheState'slowest,asdocumentedbyJacksonvilleElectricAuthority'smonthlysurveyof21Floridaelectricutilities.IncludedintheJEAsurveyareinvestor-ownedutilities,municipalsystemsandruralelectriccooperatives."AppendixI55-I57."Since1947,You'ehadoneofthelowestelectricratesinFlorida.Backin'47,astatewidesurveyshowedthatFP&Lhadthesecondlowestratesamong23Floridaelectriccompanies.Today,we'edoingevenbetter.Becausenow,accordingtoanApril'77surveyamong20electricsuppliers,wehavethelowestrates.Andthatgroupincludedmunicipally-ownedpowerfacilities.Infact,overthepast30years,DaytonaBeachhashadoneofthelowestelectricratesinthestate.Xn1947,costsaveragedabout3.9centsperkilowatthour.Today,it'sactuallyalittlelower,atabout3.5cents.Andifyou'ebeenwonderingwhytotalmonthlybillsarehighernow,it'smostlybecausetheaveragehomeusessixtimesmoreelectricitytodaythanitdidthen.Inyourowninterests,rememberthesefactswhenyouvoteontheelectricfranchiseissueinJune.Becauseit'sthetruth."(AppendixX55-I57)"DOCONSUMERSBENEFITFROMLOWERWHOLESALERATESCHARGEDTOMUNXCIPALUTILITIES2""Themoneythatamunicipalutilitysavesbypayingwholesaleratesismorethanoffsetbythecostsofmaintainingandoperatingthedistributionsystem,alongwiththelocalizedcostsofadministration,billingandotherfunctions.The28non-hydromunicipalutilitiesinFloridachargecustomershigherretailratesthanFPSLdoesbecausethelarger,investor-ownedorganizationcangaingreatereconomiesofscaleinallfacetsofitsoperation."(Id.)

72InarevealingarticleforElectricalWorld(AppendixI58-I59),FPLCommunicationsCoordinatorAnthonyP.X.Bothwelldwelledontheimportanceofstatewideratecomparisonsin"TheDaytonaCampaign."AsMr.Bothwellexplained:ThefactthatFPLbillsrankedamongthestate'slowestwasdevelopedinaseriesofadvertisingmessagesthathadsigni-ficantimpactevenaftertheargumentlostitsnewsvalue.MonthlybillcomparisonswerepublishedinadsstartinginDecemberandcontinuingthroughMay.Reinforcementwasachievedbyairingacompanionradiospoteachtimeanewbilladwasplacedinthepaper."WhenafocusgroupofMiami,residentswasshownoneofthebill-comparisonadsusedinDaytonaBeach,theirunanimousreactionwasthatFPLmusthavejuggledthefigures.Yetthroughrepetitionandmutualreinforcement,DaytonaBeachresidentsfoundoutthefactsabouthowFPLbillscomparedtoothersinFlorida.ThereceptivityofDaytonanstothemonthlybillcomparisonswasenhancedbyotherFPLmessagesonaperipheralissue.Althoughit'shardforconsumerstothinkofanelectricbillaslow.byanystandard,mostpeopledobelieveprivateenterpriseperformsservicesatalowercostthangovernment.Thesuperior'performanceofprivateenterprisewasdevelopedbothexplicitlyandimplicitlyinFPLads,spots,andreleasesduringPhaseIIofthecampaign.Througnwhatmightbecalledperipheralreinforcement,"cognitivedissonance"wasmadetoworkinfavorofFPLonthebillsissue."Insum,FPLhashistoricallybeenmotivatedbyadesiretoeliminateorrenderuneconomicpublicsystemsthroughoutFlorida.FPLhasperceivedthatthedenialofsmallsystems'ccesstothebenefitsofcoordinationwithotherutilitiesiscriticaltothiseffort.

73FPL'sdesiretopreserveitsdominanceinbulkpowergenera-tionprovidesfurthermotivationforanticompetitivebehaviorintheStatebulkpowermarket.FPLhascometorealizethatcontrolofthestatewidemarketcanprovideanimportant,sourceofbusinessinitsownright.AsrecognizedbyFPLVicePresidentforPlanningRobertGardnerinaJuly,1976memorandum(AppendixI64,page3),"[D]evelopmentsinourrelationshipswithotherutilitiesrequirethatweviewourbusinessdifferentlythanthetraditionaland"official"way."Ratherthana"singletightlyintegratedbusi-nessservingendusecustomers,"Gardnerexplained,an"x-ray"ofFPL"revealstheexistenceoftwoprincipalbusinesses:abulkpowerbusinessandanelectricservicebusiness."AsexplainedbyMr.Gardnerinafurthermemorandum(AppendixI72,page12),theformerconsistsofwholesalesalesregulatedbytherERC,whilethelatterconsistsofretailsalesregulatedbytheStatePublicServiceCommission.Mr.Gardner'smemorandumwaswrittencontemporaneouslywithaSystemPlanningDepartmentreport(AppendixIl-I12),thatanalyzedthestatewidebulkpowermarketforthe1977-1985period.Asshowninthisdocument,1/forexample,inJuly,1976FPL'sSystemPlanningDepartmentundertookto"appraisethepotentialmarketforfirminterchangepowerinFloridaduringtheperiodfrom1977to1985."TheanalysisrevealsFPL'sperceptionthat1SeeasoAppendixI4,at3.

74generatingsystemstbrougboutpeninsularFlorida-publicandprivate-arepotentialbuyersandsellersinthebulkfirmpowermarket.Mostimportantly,forpresentpurposes,fourofthefivesystemssingledoutbytheanalysisascompetitorswithFPELinthesaleofpoweraremunicipalsystemslocatedoutsideofFP&L'sretailserviceterritory-Tallahassee,Gainesville,LakelandandOrlando.(page3).Thus,FPLnotonlyrecognizestheexist.enceofastatewidemarketforfirmbulkpower,butviewspublicsystemsinthenorthernpartofthestateasprimeIcompetition.C.AlthoughFPLItselfRefusedToDeal,CitiesStillSoughtTheBenefitsOfCoordination,IncludingTheAbilityToShareInNuclearUnits.Rebuffedbythelargestutilities,Citiessearchedforcoor-dinationpossibilitiesamongthemselvesinthe1960's.Evenso,FPLandco-conspiratorFloridaPowerCorp.'spossessionofvir-tuallyalltransmissioninpeninsularFloridameantthatthetwocompaniescouldmakejointeffortsamongCitiesvirtuallyimpossiblebylimitingCities'ccesstothetransmissiongrid.Infact,FPLbothresistedinterconnectionand,whereitdidinterconnect,refusedwheeling.Itwasnotuntil1975thatFPLfirstprovidedevenlimitedwheelingforanyofCities,sothatNewSmyrnaBeachcouldgainaccesstoFloridaPowerCorp.'sCrystalRivernuclearunit.Thus,intheirsearchforalternatives,Citieswereforcedtoconsidertheconstructionofanentirelynewelectricgrid,asanalternativetothegridoperatedbyFPL(andtheFlorida 75OperatingCommittee).That.CitiesdidconsidersuchacostlyalternativeisstrongtestimonytoboththestrengthoftheirinterestincoordinationandthestrengthoftheresistancetheyfacedfromFPLtoparticipationwithFPLandFloridaPowerCorp.AsCitiesproceeded,FPLwaswellawareofCities'earchfortheseeconomies.Itspositionandthatofco-conspiratorFloridaPowerCorp.wasoneofanxiousconcernanddeterrence,unliketheassistancetheygaveeachother.Cities'ffortsincludedthefollowing:1.Studyanddiscussionofpossiblepoolingarrange-mentsamongsmallersystems.Beginningin1964,RobertE.Bathen,anengineeringcon-sultanttosomeCitiesadvisedtheformationofamunicipalpowerpool.(App.D131-D154)FPLandFloridaPowerCorporationwereawareof,andconcernedabout,thispossibility,evenwhilesuspectingthatamongthemselvesCitiescouldnotcompetewiththeFloridaOperatingCommitteepool.InaJulyll,1967letter(App.D155),FloridaPowerCorporationPresidentW.J.ClapptransmittedtoFPLPresidentR.H.FiteandexecutivesofTECOandGulfPoweramapofthe"PotentialFloridaMunicipalPowerPool".Inaddition,'heletterenclosedaFloridaPowerCorporationanalysisthatshowedthatthemunicipalpoolcouldnotachievetheeconomiesofscaletocompetewith"thepresentlyexistingandrapidlygrowingFloridaPowerPool."(i.e.,theFloridaOperatingCommitteeofthelargestutilities).(App.D156)In1971justashewasarrivingatFPL,currentBoardChairmanMarshallMcDonald receivedamemorandumfromFPLVicePresidentH.W.Page0transmitting"apaperpresentedbyoneofthemunicipalcon-sultantsadvocatingaFloridamunicipalpowerpool.Youmaynotwishtoreaditall,butthemapisamust."(App.D159)Inthelatterpartofthe1960'ssomeCitieswerealsoinvolvedintheYankee-Dixieproject,whichproposedtolinksystemsinFloridawith"minemouth"coalplantsinAppalachia(App.D160-D205),andthe"twelve-city"study(App.D206-D222),whichconsideredthepossibilityforjointactivitiesamongmuni-cipalsystemsprimarilyreceivingpowerfromFloridaPowerCorporation.FPLfollowedtheseprojectswithconcernaswell.Asa1971memorandum,byVicePresidentBenFuquaputit(App.D224):"LetussupposethattheYankee-Dixieprojectbecameareality,withtheFloridamunicipalelectriccooperativegridasitssouthernanchor.ItisreadilyseenwhataproblemthatwouldposefortheinvestorownedelectriccompaniesinFlorida.Similarly,a1969noteevidentlytoFPLVicePresidentJ.G.Spencerregardingaclippingonthe"twelvecities"studynoted(App.225):"Theproposed'system'ouldreallybe'stretchedout'...However,thefact,thatastudyistobemadecertainlyisamatterofgreatconcern."2.FMUAcommittees.In1966-1967theFloridaMunicipalUtilitiesAssocation(FMUA),towhichCitiesbelonged,formedcommitteestoconsiderwaysinwhichsmallersystemscouldjointogethertogainthebenefitsofcoordination.

77ThedocumentsfromthesecommitteesshowthatCitieswereawarethatlargersystemswouldnotpermitthesmalleronestoparticipateintheFloridaOperatingCommitteepoolandwouldlikelyopposethemunicipals'ffortsto"goitalone."Forexample,inaJune9,1966letterannouncingthefor-mationofthe"interconnectioncommittee,"aJacksonvilleofficalwrote(App.D227):"Ithinkthecommitteeshouldalsoweightheadvan-tagesthatcanbegainedbythesmallermunicipalitiestyingtothelargermunicipalities,suchasJacksonville,OrlandoorLakelandinasmuchasthelargeronesarealreadytiedwiththeprivatepowercompaniesandtherewouldbenonecessitythenforthesmallermunicipalstochancethedominationoftheirsystembyadirectinterconnectionwithaprivatecompany."Ithink,too,thecommitteeshouldexploretheattitudesoftheofficersanddirectorsoftheprivatecompaniesinrelationtoourdeterminationtohaveamunicipalgrid.Sincecollectivelywewouldhavestrongsupportforoursystems,itmightmaketheprivatecom-paniesfacethefactsoflifeandacceptusasapartofthestatewideoperatinggridsystem.Ihavehadsomeindicationthatthereisasofteningintheirattitude.AstheJune9,1966letterstated,municipalaccesstonuclearpowerwasanexpresshopeinfoundingthecommittee.Id."Ithinkthecommitteeoughttoconsiderjointlyownedlargenucleargeneratingplantsandweshoulddiscussthelegalaspectsofjointownershipoffacilities."InestablishingtheCommitteeitwasfurtherobservedthat(App.D230):"(O)nlybybeingelectricallyinterconnectedthroughastrongtransmissionsystem,ownedandoperatedatleastinpartbytheMunicipalsystems,canthetruebenefitsofscaleinlargemodernconventionalandnuclear~lantsaccruetcMunicipalsystems."(emphasis~added 78XnaJuly1967report,theFMUACommitteeexplainedthatthesmallersystemshadnoalternativetocoordinationamongthem-selves,butthat,thelargersystemswouldmake.municipalcoor-dinationdifficult(App.D232-D233):"1.ThemunicipalsystemsinFloridamusttieordieo"2.Someofthemunicipalswillberequiredtocommitthemselvestogenerationandsomeofthemunici-palswillhavetocommitthemselvestopurchasetheirwholesalepowerrequirementsfromaFloridaMunicipalgenerationandtransmissionorganizedasanonprofitcorporation."3.ThecommitteefeelsthatagenerationandtransmissionsystemfromtheLakelandareatotheGainesvilleandJacksonvilleareaisentirelypracticalandfeasible,butthatthesamecouldnotbeaccomplishedwithinthenextfewyearsduetothepressureswemayexpectfromtheprivatepowercompaniesuponourlocalandstateauthorities."AsevidencedbyFPLdiscoverydocuments,FPLevidentlykeptcontinuingwatchonCities'onsiderationofjointefforts.DocumentsatApp.D234;D235-D236;andD237-D238arethreeofmanyreports,evidentlysubmittedtoFPLofficialsperiodically,onNewSmrynaBeach.Asthefirstreport,datedDecember1966,records(App.D234):"LittleI.NewSmyrnaUtilitiesDirectorJohnLittle]expectedtoattendameetinginJacksonvilleoftheMunicipalplantoperators.Hehaswildideasoftieingallmunicipalplantstogetherinagridformutualhelp.Hethinksthiswouldmakethemcompetive(sic]withpri-vatecompanies."

79Asthesecondreport,alsoevidentlyin1966,records(App.D235):"Littleisproposinga500Mwatomicplanttosupplyallmunicipal'plantsinanemergencyorpeakload."1/3.TheGainesvillelitigation.IfthesmallersystemsneededfurtherproofoftheirinabilitytogainaccesstothestatewidegridcreatedbyFPLandtheFloridaOperatingCommittee,itwasdramaticallyprovidedin1965-1966byFPL'sandFloridaPowerCorp.'srefusalofGainesville'srequestsforinterconnection.FollowingtheserefusalsGainesvilleundertookcostlyandprotractedlitigationtoestablishitsrightand,byextension,therightsofothersystemsvis-a-visFPLandFloridaPowerCorporation.Thislitigation,whichotherCitiesfollowedclosely(seeApp.D239-D240)resultedinaSupremeCourtholdingforGainesvilleandaCourt.ofAppealsverdictforGainesvillein1978.By1973,asFPLwasundergoingitsfirstantitrustreviewinconnectionwithanuclearlicense,2/FPLapparentlyknew,asanFPLdiscoverydocumentrecords(GardnerExh.46,App.B471):1Athirdsuchreport.recordsApp.D237):"CityManager,saysFPELhasnosparepower,couldnotandwillnotwholesalepower,soCitycouldnotbuypowerfromthem.HadaveryhardtimegettingpowerforSamsuladuringthechangeover.FloridaPowerCorp.doeswholesalepowerbutFP&Lwillnotlettheminterritory,sothereisnothingtodobutinstallanotherengine."2/TheTurkeyPointandSt.LucieIunitswerelicensedas"researchanddevelopment"plants;theywerenotsubjecttopre-licenseantitrustreview,asistheSt.Lucie2unit.

80"Citieswanttoshareownershipandwheeling;etc."1/4.TheTallahasseeexperience.AsrecordedinaninternalFloridaPowerCorporationmemoran-dum(producedintheGainesvillecase,App.El-E3),in1966TallahasseesoughtaccesstotheFloridaOperatingCommittee,butwasrebuffed.TheSeptember8,1966memorandum,concerningameetingbetweenFloridaPowerCorp.officialsandTallahassee,includingTallahasseeconsultantRobertBathen,records,App.'2,thatMr.BathenstatedthattheCitywasinterestedinbeingamemberoftheFloridaPool.Messrs.DunnandPerezt:FloridaPowerCorp.officials]assuredMr.Bathenthattherewasnopool,thattheFloridaOperatingGroupcarriednoobligationsbutwaspredicatedonfaithandgoodwillandaspiritofcooperation,andthattheCompanycouldnotinviteanyoneintotheGroupwithoutawillingnessonthepart,ofothermemberstocooperate."Tallahassee'srequestwasnotsuccessful,atleastnotuntil1971whentheFloridaOperatingCommitteewasgenerallyexpanded.Asdiscussed,~suraFPL,andFloridaPowerCorp.deniedaninterconnectiontoGainesvillein1966.Inthatyear,thesmallersystems,includingTallahassee,beganstudyingcoor-dinationandpoolingamongthemselves.TallahasseeofficialJoeB.Dykes,Jr.,workedontheFloridaMunicipalUtilitiesAssociation'spowersupplycommittees.(App.E4)Asmeetingminutesrecord,themunicipalsystemsrecognizedthatthebigutilitieswouldnotletthesmalleronesintotheirpool,and1Mr.Gardnerwasnotfamiliarwiththenotes(GardnerExh.46),andCitieshaverequestedfurtheridentification.

81thatthesmallsystemswouldneedtohangtogetherinordertoavoidhangingseparately.AsrecordedintheJune15,1967minutesoftheFMUAPowerSupplyCommittee(emphasisadded)(App.E5):"Mr.Dykessuggestedjointmunicipalandcompanytransmission.'/"Itwassuggestedthatamunicipallyownedcentralgenerationandtransmissionsystemwouldbelargeenoughforthemtotrytonegotiatewiththeprivatecompaniesonanequalbasis,itwaspointedoutthatFloridaPowerCorp.wasusingthehighwholesaleratestosmallmuni-cipalstobuyoutthemunicipalsystems."FloridaPowerCorp.andco-conspirator.FPLactivelysoughttofrustratetheabilityofCitiestoevenconsideralternativestotheFloridaOperatingCommittee.In1966TallahasseeretainedRobertE.Bathen,whohadsuggestedthe'availabiityofcoordinationandofnuclearpowerforsmallersystems.Asdetailedbelow,FloridaPowerCorporationdemandedthat-TallahasseelimitorrefuseBathen'semploymentifitwishedtodiscussinterconnectionwithFloridaPowerCorporation.FPLpromptlymadeparalleldemandswithinitsretailterritory.2/Thus,FPL'sconspiracywithFloridaPowerCorporationactedtodeprive"outside"cities,aswellas"inside"citiesfromaccesstonucleargenerationandcoordinatedoperations.InAprilof1967FloridaPowerCorporationlearned,throughanewspaperarticle,thatTallahasseewasconsideringhiringR.W.BeckRAssociatestoperformastudyforTallahassee(App.1FPL,atpresent,continuestorefuseCities'equestsforjoint.transmissioninvestment.O2/FPL'sactionsaredescribed,infra.

82ES-E9).FloridaPowerCorp.hadpreviouslywarnedTallahasseenottouseBathen.App.E26-D29andE74-E75.Mr.BathenwastheFloridaheadofBeck'sFloridaoffice.Asthearticlesummarized,(App.E9)(emphasisadded)."AcquisitionofFloridaPowerCorporation'sLakeTalquinpowerplant,participationinavastregionalpowerpoolandeventuallythedevelopmentofanuclearpowerplantaresomeofthelongrangepossibilitiesthatwouldbeincludedinaproposedelectricutilitystudyfortheCityofTallahassee."R.W.BeckproposedastudythatwouldincludeTallahassee'sparticipationinanalternatepowerpoolandinnuclearpower.TheApril1,1967R.W.Beckproposalstatedinregardtonuclearpower(at5,App.E14):unitsundertheBaseCaseintheearlyyearsofthe20yearprogramnoconsiderationwillbegivenduringatleastthefirst10yearstoanuclearpowerplant.However,ifinthelatteryearsofthe20yearprogramtheprojectedloadsindicatebaseloadgeneratingunitsofasizesufficientforconsiderationofnuclearpowerasanalternatetofossilfueledgeneration,thenadiscussionwillbeincludedintheReportastothepre-sentdayrelativeeconomicsofnuclearversusfossilfueledlargegeneratingplants.ThisdiscussionwhichwouldincludecomparativecostparameterswillbeusefultotheCityinguidingitsthinkingtowardtheproblemsandpossibilitiesofthistypeofpotentialpowersupplyinthelatterpartofthe20yearprojectedloadperiodwhenloadsmaybeintheneighborhoodof500,000Kwh."FloridaPowerCorp.promptlyandrepeatedlytoldTallahasseethatongoinginterconnectionnegotiationwouldceaseifTallahasseeproceededtoemployMr.Bathen,whohadalsoraisedthepossibilityofexpandedmunicipalcoordination.1/Asa1FloridaPowerCorp.'sinsistencethatTallahasseesevertieswithR.W.BeckwasnottheonlyconcessionthatTallahasseehadtomakeinordertogainaninterconection.FloridaPower,inparallelwithFPL,insistedthatsmallsystemsenterintoterri-torialagreementsasapreconditiontointerconnection(seeApp.E29,E71-D73).Thus,TallahasseewasrequiredtogiveupFOOTNOTECONTINUEDONNEXTPAGE 83June9,1967FloridaPowerCorp.memorandum,recordingameetingofthepriorday,described(App.E23):"AttheopeningofthismeetingweexpressedastrongunwillingnesstocontinuenegotiatingwithTallahasseeonaninterconnectionaslongastherewasanychanceofBeck6AssociatesbeingintheTallahasseepowersupplyproblem....WestressedthatifBeckdidshowup,wewouldcallahalttothenegotiations."WhileissuingtheultimatumtoTallahassee,FloridaPowerCorp.PresidentW.J.Clappsentalettertotopofficialsoftheotherprivateutilities,includingFPLPresidentRobertH.Fite,warningofthe"activities"ofR.W.BeckandAssociates(andalsoofattorneyGeorgeSpiegel).BothFloridaPowerCorp.andFPLappearedconcernedlesttheCitiesbeadvisedofthepossibi-lityofgreatercoordinationorparticipationthanwasthenavailable.tothem.AstheJuly11,1967letterstatedinpart(App.E30)(emphasisinoriginal):"IknoweachofyouisfamiliarwiththeactivitiesofGeorgeSpiegel,'ashingtonattorney,andR.W.BeckandAssociates,engineers,inthefurtheranceofpublicpowereffortsinFlorida.Perhapsyouhavealreadyreceivedcopiesoftheenclosedmap,'PotentialFloridaMunicipalPowerPool,"whichBobBathenofBeckandAssociateshasbeenadvocatingamongthemunicipaluti-litiesofthestateandaboutwhichhehasmadeseveralspeechesoutofstate.FOOTNOTECONTINUEDFROMPREVIOUSPAGE:territory.WhileseekinginterconnectionwithFloridaPowerCorp.,TallahasseeandotherCitieskeptinformedofGainesville'slitigationagainstFloridaPowerCorp.andFPL.See,forexample,theJuly16,1968letterfromGainesvilletoTallahassee,App.D239-D240).Thislitigation,whichwasini-tiatedin1968,resultedina1971SupremeCourtdecisionupholdingaFederalPowerCommissionorderthatFloridaPowerinterconnectwithTallahassee(GainesvilleUtilitiesDept.v.FloridaPowerCor.,40FPC12271968,affirmed,402U.S.5151972andthe1978FifthCircuitfindingthatFloridaPowerCorp.andFPLwereengagedinaconspiracyinviolationoftheShermanAct.GainesvilleUtilitiesDet.v.Florida'Power6LihtCo~,573F.2d2925thCir.,cert.denied,439U.S..966(1978.ThislengthyandcostlylitigationreaffirmedtheunderstandingofTallahasseeandothersthatFPLandFloridaPowerCorp.wouldrequireCitiestospendtimeandmoneytofightfortheirrightstodealwiththelargersystems.

"AllofthisisbeingsenttoyousothatyoucanbealertedtothefactthataconcertedeffortisbeingmadebySpiegelandBatheninthefurtheranceofpublicpowerand,'odoubt,theyaregoingtomakeeveryefforttocontactallcommunitieswhosefranchisemightbe~exirinwithinthenexttewyears."i/Theresistanceofthelargestutilitiestoallowcitiesaccesstonucleargenerationwasagainpubliclyconfirmedwhenin1968FloridaPowerCorp.flatlyrejectedGainesville'srequesttoparticipateinitsrecentlyannouncedCrystalRiver3unit(App.E38-E43).WhenGainesvillesoughttopressitsclaimattheAtomicEnergyCommission,itwasdeniedonthegroundsthattheCrystalRiverunit(liketheTurkeyPointunitsandSt.Lucie1)wastobelicensedasaresearchanddevelopmentreactorandthereforewasnotsubjecttopre-licensingantitrustreviewbytheAEC.2/D.FPLCouldHaveBuiltLarge,MoreEconomicalPlantsAndSharedThemWithCities.FPLcouldhavebutdidnotpurchaselargernuclearunitsthanitdidatalessercostperunitofpower.HadCitiesbeenofferedthatpartofthelargerunitsnotneededbyFPL,the1AsrecordedintheJuly27,1967HomesteadCityCouncilminu-tes(App.E34),twoweeksaftertheletterfromFloridaPowerCorp.,FPLopposedHomestead'shiringGeorgeSpiegel.WhenHomesteadofficialsdidmeetwithFPLtorequestwholesalepowerandinterconnection,FPLgottheCitycounciltoagree,"withouttoomuchenthusiasm,"asFPLputit,"toconsideraproposalatthesametimetopurchaseorleaseyoursystem."App.D10.2/InJanuary1965,FloridaPowerlaterofferedlimitedCrystalRivercapacitytocitiesthroughoutFlorida.

85largerunitscouldhavebeenbuiltandthecosttoFPL'scusto-merswouldhavebeenreduced.FPLlikewisecancelleditsSouthDadenuclearunits(Docket-No.P-636-A),ratherthanacceptCities'articipation.InternalmemorandatoFPL'sSeniorManagementCouncilshowtheanticompetitivereasonforFPL'srefusalstolettheCitieshaveaccesstoeconomicalgeneratingplantsby,forexample,FPL'sbuildingplantslargeenoughtoaccommodateCities'articipation.(MembershipontheCouncilincludedtheChairmanoftheBoard,PresidentandExecutiveandSeniorVicePresidents.)AsstatedatthetimeoftheCouncil'screationin1973,oneofthe"strategy"areastobeconsideredwas"Competition-TheFloridaElectricSystem".(App.D256)AdocumenttotheCouncilgeneratedbyR.G.Gardner,'icePresidentforStrategicPlanning,recognizes(App.D250):"Themunicipals-co-operativestrategy:shouldhavestatewidegenerationplanning,multiple-unitsharingandfullcoordination."ItlistedasoneofFPL'sconsequent"problems"withthemunicipals'trategy(id.):"FPaLmaynotbeabletocompeteifmunicipalsandco-operativescangainaccesstogenerationinvestmentwiththeirlow-costcapital.MunicipalspresentlyhavingfranchiseswithFPLwillbeencouragedtogopublic."In1976-1978FPLwasbeforetheFederalPowerCommissionseekingtojustifyitsproposedacquisitionoftheVeroBeachsystem.FPLhadnotpreviouslyservedVeroBeachfromits nuclearunits,norhaditofferedtoprovidenuclearaccess.1/Uponacquisition,ofcourse,VeroBeach,asallofFPL'sretailcustomers,wouldbeserved,inpart,fromFPL'snuclearunits.Insupportoftheapplication,FPLportrayedVeroBeachasagoodinvestmentbecauseofits"growth"prospects(DocketNo.E-9574,Tr.56).ItwasinthiscontextthatStaffCounselaskedFPLofficialJ.L.HowardwhethertheacquisitionofsuchnewloadwouldadverselyaffectFPL'sexistingcustomers.FPL,asMr.Howardmadeclear,indicatedthatanyqualitativelong-termeffectwouldbebeneficialtoFPL'sexistingcustomers(App.D326-D328):"BYMR.ROGERS:Inlightofyourmostrecenttestimonythattherewillbesomeincreaseinthefueladjustmentchargeasaresultoftheacquisition,somepossibleincreaseresultingfromhavingtoputonlinenewgeneratingcapacity,'ouhavestatedveryemphaticallythatno,thelastraterequestwasnotpredicatedinanywayonacquisitionofVeroBeach,isitnotaprettygoodconclusionfortheStafftodrawthat,thatacquisitionisboundtoresultinhigherratesforthepresentcustomersofFPL?A.Q~No.ShallIexplainthereasons?Yes,sir.Ilicensetosteal.fsic]1DuringtheproceedingbeforetheFERC,a"citizens"hearingwasheldatVeroBeach.Atthathearing,acitizentestifiedthatFPLhadnotofferednuclearaccesstoVero(App.C399-C402);anassertionwhichFPLhasneversoughttocontradict.(FurtherevidenceindicatesthatwhileproposingtoacquireVeroBeach,FPLwasalsodenyingitbothwheeling(App.C404)andwholesalepower(App.C405-C410).

87A.Whenyoustarttotalkoffuturegenerationyouarelookingintothefuture,itwillnotchangeourgenerationexpansionplansintheshortrun.Idon'tbelieveitwillchangeourbaserates,althoughitwillinitiallyaffectourfueladjustment.futureitwillbecoalornuclear.Giventhe~re-sentsituationinthecountry,totheextentweotherwiseIbelieveitisconsistentwiththeinterestofthe~countrandthatthecoalgenera-tion~mawillbecheaperthanthepresentgenera-tion.SointhelongrunIamnotsureitwillresultinincreases.Theremaybesomeback-and-forth.Ithinktheneteffectwillnotbenegative."(emphasisadded)Thus,FPLdeniedCitiesnuclearaccessandwholesalepurchases,whenithadtestifiedthatitwouldbenefitfromalargermarkettosupportnewcoalandnucleargeneration.Infact,FPL'sindustrialdevelopmentstaffisseekinglargenewcustomers(App.D259-D264).1/1WhenFPLsoughttodenywholesaleservicetoHomesteadandFt.Piercein1976-1979,itattemptedtojustifyitsactionbyclaiminglackofcapacity.TheFederalEnergyRegulatoryCommissionconsideredtheissueandrejectedFPL'sposition(OpinionNo.57,32PUR4that336):"FPLwould'seektojustifyitsproposedlimitationsonfullandpartialrequirementsavailabilityintermsofoperationalconstraints.Specifically,itassertsthatfuturepowersupplyistoouncertaintoallowunlimitedaccesstoitsrequirementsserviceFOOTNOTECONTINUEDONNEXTPAGE 88ZnOpinionNo.57,~eura,32PUR4th313at335,theFederalEnergyRegulatoryCommissionfound:LimitationsonAlternativeSourcesofCaacitUnrebuttedCompanydocumentsinevidenceindicatethatitisFPGL'spolicytoretainfullownershipofthenucleargeneratingplantswhichitconstructs.TheCompanyhasstatedthatthefullcapacityoftheseunitsisneededtoserveitsowncustomers,sosharingisnottobeanticipateduntilFPELreachestheoptimumamountofnuclearcapacityforitssystem(Exhibit27).However,nopartydisputesthatjointownershipofsuchfacilitieswouldprovidemunicipalandcooperativeuti-lities(aswellasotherutilitiesintheregion)withaccesstoFPEL'seconomiesofscale(ExhibitGT-1,at6).FOOTNOTECONTINUEDFROMPREVIOUSPAGE:"However,thedifficultywiththispropositionisthatithasvirtuallynorecordsupportandisbasedonafewconjecturalstatementsbyCompanywitnessesAsOpinionNo.57records,FPL'scontentioninthatcasefollowedapriorattempttousethatstrategemtodenyservicetoHomesteadin1973-1974.AstheOpinionstates(32PUR4that332,footnotesomitted):HomesteadnextrequestedpowerfromFPLinAugustof1973,proposingafirmpurchaseof12-16MWfrom1975through1980.TheCitystatedthatitintendedtousethiscapacityforbaseload,purchaseinterchangeenergytomeetitsintermediateloadanduseitsowngenerationonlyforpeakloadcapacityandreserve(ExhibitGT-29,at12).TheCompanyfirstdecidedtorespondtoHomestead'srequestwiththeso-called"MarshallTheory"[evidentlyFPLBoardChairmanMarshalMcDonald]:HomesteadwastobetoldthatFPGLhadnofirmpowertosell.Companynegotiatorswereadvisedtohaveloadandreserveesti-matesavailabletosubstantiatethisreponse(ExhibitGT-29,at14).Immediatelythereafter,'owever,theCompanyconcludedthatHomesteadhadbeenlistedasacustomerunderallrequirementsscheduleSRandwasactuallyreceivingfirmpoweratcommittedintervals.

89FPSListhesoleownerofthreeoperatingnuclearplantshavingaggregatecapacityof2,188MW.FPScLhasagreedtoshareaportionofSt.LucieNo.2nuclearplantwithneighboringsystemsincludingHomesteadandNewSmyrnaBeach;however,FPGLdocumentsinevidenceindicatethatthiswasdoneattheinsistenceoftheJusticeDepartmentandthatFPSLhasnotcommitteditselftosharethecapacityofanyfutureunit(ExhibitGT-71,at22).49/49In1973FP8LconsideredcancellingSt.LucieNo.2becauseof"escalatingcostsandJusticeDepartmentreviewofourantitruststatus"(Exhibit20).Thenin1976theCompanyconsideredashift.tocoal-firedplantsforfuturebase-loadgeneration"toeliminatetheATomicEnergyActasaroutetomunicipals'nvestmentingeneration"(ExhibitGT-1,at13).Seealso,thedeci-sionoftheAtomicSafetyandLicensingAppealBoard,NuclearRegulatoryCommission,inFloridaPowerRLihtCo.,DocketNo.50-389A(ALAB-420,July12,1977regardingantitrustreviewproceedingsonSt.LucieNo~2~FPL'ssettlementlicenseconditionswouldevenpermitrestrictionoftheamountofnuclearcapacityavailabletocitiesinunitsnotyetsizedtooffsetnuclearcapacitythatthecitiesmightotherwiseobtain.ConditionVIIgrantsthose"neighboringentitiesandneighboringdistributionsystems",whichareper-mittedSt.Lucie2entitlements"theopportunitytoparticipateintheownershipofallnuclearunitsforwhichtheCompanyfilesaconstructionpermitapplicationwiththeNRCpriortoJanuary1,1990,provided,however,thatnoopportunitytopar-ticipateneedbeaffordedtoanyneighboringentityorneighboringdistributionsysteminanamount,ifany,whichwould,intheaggregate,resultinitsowningnucleargeneratingcapacity,orenjoyingdirectaccesstheretobyunitpowerpurchaseorparticipationthroughajointagency,asapercentageofitspeakloadinexcessofwhatCompany'spercentofsamewouldbeaftertheadditionoftheproposedplant."

90Thus,FPLrecognizestheimportanceofnuclearcapacitytoCitiesandwouldassurethatCitiescannotobtainmorethanFPL,assumingthatthiswerearealistichope.ARGUMENTINTRODUCTIONUnlessFPLsetsforthgenuineissuesoffacts,summaryjudgmentshouldbeorderedthatasituationinconsistentwiththeantitrustlawsexists;alternatively,alimitedhearingshouldbeheldtoresolvefactsgenuinelyindispute.FloridaCitiesbelievethefollowingfactsarenotreasonablysubjecttodispute1/:(1)FPLcontrolsthreeoutoffouroperatingnuclearunitsinPeninsularFloridaanditisconstructingafourth(St.LuciePlant,UnitNo.2).Ithasaneffectivemonopolycontrolofnuclearfacilities.SeeUnitedStatesv.AluminumCo.ofAmerica,148F.2d416(2dCir.1945).FPLisrefusingtograntaccesstothosefacilities,exceptforlimitedentitlementundersettlementlicenseconditionsinthiscase.FloridaPowerSLightcanhardlydisputetheimportanceofsuchfacilities,sinceithasciteditsnuclearadvantageinacquisitionattemptsandhassoughttolimitCities'uturenuclearaccessinSt.Lucielicenseconditions.2/Seepp.47-53,1Attachment1containsastatementofthematerialfactswhichFloridaCitiesbelievearenotgenuinelyinissue,asrequiredby10CFR$2~749'2/TheFederalEnergyRegulatoryCommission'sfindingofFPL'spolicyagainstsharingnuclearcapacityisquoted~sura.

91~sura.Moreover,evenifitwerefoundthatnuclearfacilitiesOdonotconstituteaneconomic"market"understrict,DistrictCourtShermanActanalysis,theAtomicEnergyActdealswith"situationsinconsistent"withtheantitrustlawsandunfaircom-petitionwithinthemeaningofSection5oftheFederalTradeCommissionAct.TheAtomicEnergyAct'santitrustprovisionsmustbereadinthecontextoftheentireAct.Sections1-3oftheAct,42U.S.C.$2011-2013,establishthatthebenefitsofnuclearpowerbebroadlydirectedandthatnuclearadvantagesnotbeusedtolimitcompetition.UnderSection2oftheShermanAct,OtterTailPowerCo.v.UnitedStates,410U.S.366U.S.(1973)andConsumersPower~Coman(MidlandUnits1a2),ALAB452-,6NRC892(1977),FFL'srefusalstodealinnuclearpowerconstituteanticompetitiverestraintsoftrade.(2)TheinterconnectedsystemsgenerationandtransmissionfacilitiesinPeninsularFlorida,aswellasFPL'sactionssetforthintheStatementofFactsandconfirmedbyFederalPowerCommissionandFederalEnergyRegulatoryCommissiondecisionsonwhichthisBoardcanrely,establishthatFPLhasdominanceinbaseloadgeneration,transmissionandcoordination.FPLhasactedtorestrictCitiesaccesstobaseloadgeneration,transmissionandcoordination.(3)ThereisaPeninsularFloridageographicmarketforatleastsomewholesaleandcoordinationpowersupply.SuchmarketisconfirmedbyFPL'sactions,publicdocuments,andinternalFPLdocuments.TheCompanyhasactedjointlywithothersinthat 92markettorestrict.competitionforwholesalepowersupplythroughoutpeninsulaFlorida.TheFifthCircuitdecisioninGainesvilleUtilitiesDept.v.FloridaPowerSLihtCo.,573F.2d292,cert.denied,439U.S.966(1978)isdeterminitivethatawholesaleterritorialdivisionexisted,,thatthedivisionwasillegal,andthatitrestrainedtrade.(4)FPLplans,constructsandoperatesitsnuclearandotherbaseloadunitsincontextofcoordinationwithFloridaPowerandTampaElectric.TheFederalPowerCommissionhassofoundinanorderthatwasultimatelyaffirmedbytheUnitedStatesSupremeCourt.FloridaPowerSLihtCo.,37FPC544(1967),reversed,430F.2d1377(5thCir.1970),reversed,404U.S.453(1972).CompanydocumentsanddepositiontestimonyadmitthatFPLoperatesinlightofsuchcoordination.Indeed,FPLhaspubliclyadvertisedcoordinationbenefits.A."situationinconsistent"existsbecausetheCitiesareexcludedfromthefruitsofsuchcoordinatedactivities(e.g.,nuclearandwholesalepower)aswellasfromcoordinationitself.(5)FloridaPower6LighthasagreedtoOrlandopar-ticipationinSt.Lucie2andhasofferedparticipationtosomeCitiesinPeninsularFlorida,butnottoothers.SuchexclusionisaviolationofSection1andisotherwiseinconsistentwiththeantitrustlaws.(6)FPLhasaretailservicemonopolyineasternandsouthernFloridaandcompetesforwholesalepowersupplyorcoor-dinationthroughoutpeninsulaFlorida.FPL'srefusalstodealin 93nuclearandbaseloadpower,transmissionandcoordinationhelpeFPLtodefeatcompetitionandtopreserveandextenditsretailmonopolyandincompetitionatwholesale.SuchrefusalstodealareinviolationofSections1and2oftheShermanAct,ascon-firmedbyOtterTail,~sura,andtheprinciplesestablishedbyotheractsaswell(includingSection5oftheFederalTradeCommissionAct).I.FPLCANNOTLAWFULLYRESTRICTRELIEFTO"INSIDE"CITIES'HERESTRICTIONCONSTITUTESANUNLAWFULCOMBINATIONINRESTRAINTOFTRADEANDAPERPETUATIONOFAMARKETDIVISION.ThereisjointownershipforSt.LuciePlant,UnitNo.2.Orlandoisaparticipantandothershavebeenofferedparticipation.Underthesecircumstances,FPL'srefusalstograntaccesstootherCitiesinPeninsularFloridaisagroupbottleneckandgroupboycott.Caselawestablishesthatcom-paniesinthesamebusinessmaynotband.togethertocontrolimportantresourcestotheexclusionofsmallerfirms.Such"combination"isplainlyarestraintoftradeUnderSection1oftheAct.SuchcasesasUnitedStatesv.TerminalR.R.Ass'n.,244U.S.383,(1912);Silverv.NewYorkStockExchane,373U.S.341(1963);RadiantBurnersv.PeolesGasLihtSCokeCo.,364U.S.656(1961);Klor's,Inc.v.Broadwa-HaleStores,Xnc.,359U.S.207(1959);FashionOriinators'uildofAmericav.FederalTradeCommission,312U.S.457(1941);AssociatedPressv.UnitedStates,326U.S.1(1945);Gamcov.ProvidenceFruitProduceBuildin,Inc.,194F.2d484,487(1stCir.),cert.

94denied,334U.S.,817;ToledoEdisonComan(Davis-BesseUnits1,and2),ALAS-56010NRC265(1979).ThestandardsofSection1wererecentlyenunciatedbytheSecondCircuitinBerkePhoto,Inc.v.EastmanKodakCo.,603F.2d263(2dCir.1979),cert.denied,444U.S.1093(1980).TheCourtstatesthat"thegravamenofachargeunderSection1oftheShermanActisconductinrestraintoftrade;nofundamentalalterationofmarketstructureisnecessary."603F.2dat272.KodakismorerestrictivethanotherantitrustcasesinprotectingfirmsagainstpredisclosureofprospectivemarketingunderSection2,wheresuchprotectionisrequiredtoprotectinnovation.However,thecaseappliesastrict,standardwherethereisjointaction(orwherethereisexclusionaryconductunderSection2):Thereisavastdifference,however,'etweenactionslegalwhentakenbyasinglefirmandthosepermittedfortwoormorecompaniesactinginconcert....Wehavestatedthatwerespectinnovation,andwehaveconstrued$2oftheActtoavoidaninterpretationthatwouldstifleit.Butthisistotocaelodifferentfromanagreementamongafewfirmstorestricttothemselvestherewardsofinnovations."603F.2dat301.Normusttheproductorserviceinvolvedbeessentialinanyabsolutesense.Contractualrelationshipsaswellasfacilitiesmaybeinvolved.Forexample,inAssociatedPressv.UnitedStates,326U.S.1(1945),'heSupremeCourtfoundthattheAssociatedPressby-laws"hadhinderedandrestrainedthesaleofinterstatenewstonon-memberswhocompetedwithmembers."326QU.S.at13.TheCourtstates(326U.S.at17-1S):"Ztis 95apparent"thattherestrictivepracticescomplainedofgave"manynewspapersacompetitiveadvantageovertheirrivals";"[cjonversely,anewspaperwithoutAPserviceismorethanlikelytobeatacompetitivedisadvantage."1/AclassicexampleoftheprincipleisGamcov.ProvidenceFruitProduceBuildin,Inc.,194F.2d484,487(1stCir.),cert.denied,344U.S.817(1952)~There,lessorsofabuildinghousingwholesalefruitdealers,refusedrenewalofaleasebyGamco,butcontendedthataccesswasunnecessarysinceonecouldsellfruitvirtuallyanywhere,includingatapointadjacenttothebuilding.194F.2dat487.TheCourtfoundhowever,thatthejointactiontodenyGamcoaccesstothebuildingwasanillegalexclusion(Id.,citationsandfootnotesomitted):amonopolizedresourceseldomlackssubstitutes;alternativeswillnotexcusemonopolization....itisonlyattheBuildingitselfthatthepurchaserstowhomacompetingwholesalermustsellandtherailfacilitieswhichconstitutethemosteconomicmethodof1QuotingthelowercourtopinionofJudgeLearnedHand,theSupremeCourtnoted:monopolyisarelativeword.Ifonemeansbyitthepossessionofsomethingabsolutelynecessarytotheconductofanactivity,therearefewexcepttheexclusivepossessionofsomenaturalresourcewithoutwhichtheactivityisimpossible.Mostmonopolies,likemostpatents,givecontroloveronlysomemeansofproductionforwhichthereisasubstitute;thepossessorenjoysanadvantageoverhiscompetitors,buthecanseldomshutthemoutaltogether;hismonopolyismeasuredbythehandicaphecanimpose.~~Andyetthatadvantagealonemaymakeamonopolyunlawful."326U.S.17,n.17'ndeed,therewerenewspapersthatsurvivedwithoutmembershipintheAssociatedPress.

bulktransportationarebroughttogether.Toimposeuponplaintifftheadditionalexpensesofdevelopinganothersite,attractingbuyers,andtranshippinghisfruitandproducebytruckisclearlytoextract.amonopolists'dvantage."TheActdoesnotmerelyguaranteetherighttocreatemarkets;italsoinsurestherightofentrytooldones.TheCourtconcludedthat:"thepossibilityofduplicatingthephysicalfacilitiesLcannot]...ofitselfdestroytheillegalityoftheassertedmonopolization.Ztisclear...thatexclusionfromanappropriatemarketorbusinessopportunityisactionable,notwithstandingsubstituteopportunities."194F.2dat488.Accord,CitiesofAnaheimv.SouthernCaliforniaEdison,~sura,pp.3-4ofSlipOpinion(Attachment4).AnyargumentsthatFPLmightmakethatitshouldnotbeforcedtosellnuclearcapacitytoanyonearebesidethepoint.FPLisselling,selectively,andwithavirtualcertaintyofananticompetitiveeffect.Moreover,havingofferedsuchcapacitytoCitiesoutsideitsretailservicearea,FPLisforeclosedfrommakingthemarketargument.EveniftheCitiesofferednuclearcapacitywhicharenotwithinFPL'sretailserviceareaalongwithFPLcouldbepresumedtoestablishanewmarketarea,FPL'srefusaltodealwouldbenomorethanablatantattempttocontinuetounlawfulwholesaleterritorialdivisionfoundillegalinGainesvilleUtilitiesDet.v.FloridaPowerliLihtCo.,573F.2d292(5thCir.),cert.denied,439U.S.966(1978)..Moreover,therecanbenorationaleformakingcapacityavailabletoGainesville,OrlandoandLakeHelentotheexclusionofnearbycities.FPL'sproposedactionsareverymuchlikeKlor's,Inc.v.Broadwa-HaleStores,Xnc.,359U.S.207(1959).ZnKlor's 97sellerswoulddealwithafavorednearbyretailoutlettotheexclusionofKlor',orwoulddealwithKlor'onlessfavorableterms.Suchactionwasheldtoconstituteagroupboycottanddeclaredillegal~EarlierNRCSteLucie2licenseconditionshaveprovidedforafairshareoftheplanttobesoldtoHomesteadandtheUtilitiesCommissionofNewSmyrnaBeach,aswellastwocoopera-tiveuti1ities.FPLhasofferedeachofthesetwosystems2Nwunderthoseconditions~Othersarebeingofferedparticipationundertherecentsett1ement.dealwithsomecitiesbutnotothersinPeninsularFloridawithregardtoessentialfacilitiesandservices~Silverv.NewYorkStockExchane,~sura;Montaue&Co.v.Low,193U.ST3S(1904);ToledoEdisonCo.,~sura,(orderingofferofnuclearcapacitybydominantelectriccompaniestosmallersystemsafterfindingofviolationofantitrustlaws),1/andcasescitedimmediately~sura.1~ComareMissouriPacificRailwaCo.v.LarabeeFlourMillsCo.,211U.S.612,619,6201909;LouisvilleandNashvilleRailroadCo.v.UnitedStates,238U.S.11915;ICCv.DelawareLackawana6WesternRailroadCo.,220U~S~235(1911)UnitedStatesv.CaitalTransitCo.,325U~S~357(1945)Amer'.canTruckinAsspcwatson,Inc.v.Atchison,ToekaandSantaFeRailwaCo.,387U.S.397(1967,confirmingtheobliga-txonofutilitiestodealfairlywithal1,includingcompetitors,oncetheyengageinaparticularservice~Ifthecarrierhowever,doesnotrestbehindthatsta-tutoryshieldLpermittingrefusalstoothercarrierstouseitstracksorterminalfacilitics]but.choosesvoluntarilytothrowtheTerminalsopentomanybranchesoftraffic,ittothatextentmakestheYardpublicWhatevermayhavebeentherightsofthecarriersinthefirst.instance;~~~theAppellantscannotopentheYardformostswitchingpurposesandthendebarapar-ticu1arshipperfromaprivilegegrantedtothegreatmassofthepublic.LouisvilleandNashvilleRailroadCo.,~sura~23SU.S,atj,g.

98InToledoEdison,theNRCLicensingBoard"characterizedtheprincipalissueas'whetherdominantelectriccompaniesinarelevantmarketareawhichdonotcompetewithoneanothermaymakecompetitivebenefits,includingcoordinationandpooling,availabletoeachotherwhiledenyingthesebenefitstosmalleractualorpotentialcompetitiveentitieswithinthemarket.'heBoardjudgedthisamatterofCommissionconcernbecause'thebenefitstobesharedordeniedincludepowergeneratedfromproposednuclearstations[having]asubstantialcompetitiveimpact...intherelevantmarket."5NRCat141'nbroadoutline,thedecisionsustainedinlargemeasurethecomplainingparties'llegations,rejectedapplicants'egaldefenses,concludedthatlicensingthesefivenuclearpowerplantswouldcontinueorworsenasituationincon-sistentwiththeantitrustlaws,andimposedremedialconditionsontheirlicensestoamelioratethoseconsequences."ToledoEdisonCo.,10NRCat277-278.Afterathoroughreviewofapplicablelegalstandards,theAppealBoardaffirmedtheLicensingBoard,largelyongroundsthatundertheantitrustlawsapplicantutilitiescouldnotdenysmallersystemsbenefitstheyenjoythemselves.Moreover,toavoidobligationstoothercitiesinPeninsularFlorida,FPLmustestablishthatitsplanning,constructionandoperationofnuclearcapacitywasdoneindependentlyfromotherutilities;ifnot,itisengagedinaSection1and2conspiracyorcombinationtoinjureCitiesbydeprivingthemofessentialresources.Klor's,Inc.v.Broadwa-HaleStores,Inc.,359U.S.207(1959);UnitedStatesv.TerminalRailroadAssociationofSt.Louis,244U.S.383(1912);AssociatedPressv.UnitedStates326U.S.1(1945).Gamcov.ProvidenceFruitProduce 99(1952);CitiesofAnaheimv.SouthernCaliforniaEdisonCo.,~sura,pp.3-4ofSlipOpinion(Attachment4).However,.asismanifest,andhasbeendeterminedbytheFederalPowerCommission,FPL'sbaseloadgenerationwasplannedinthecontextofandinlightofextensivejointactionwithFloridaPowerCompanyandTampaElectricCompany.Seepp.26-29,~sura.Itsdocumentsadmit.extensivecoordinationthroughoutPeninsularFlorida.Seegenerally,StatementofFacts.Itcan-not.asserttheabsenceofjointactionofanaturethatwouldcreateobligationstodealwithallcities.II.THECASELAWCONCERNINGANTITRUSTABUSESBYELECTRICUTILITIESCONFIRMSTHEUNLAWFULNATUREOFFPL'SREFUSALSTODEALWITHFLORIDACITIES.FPLwouldarguethatithasnoobligationtograntCitiesnuclearaccess,oratleastmorethanisprovidedbythesett,lement.1/Alargebodyofcaselawconfirmsthatafirmwhichcontrolsessentialfacilities,suchasthenuclearfacili-tiesinthiscase,hasobligationsundertheant,itrustlawstoIAswehavediscussed~sura,PpLcannotlegallyhidebehindthesettlementtoarguethata"situationinconsistent"doesnotexist,.Beingcontractual,ifthesettlementitselfgivesrisetopotentialanticompetitiveeffect.sthismaybeconsidered.However,theCompanycannotprecludereliefthatwouldbeinthepublicinterestunder$105(c)(6)byaskingtheBoardtoconsiderthesettlementasexonerat.ingit.sconduct.Otherwise,apartyfearinganadversefindingcanalwaysprevent.additionalreliefbyadoptingaminimallyacceptablepolicy.AstheSupremeCourtsaidinUnitedStatesv.GrinnellCor384U.S.563,577(1966):FOOTNOTECONTINUEDONNEXTPAGE 100permitfairaccesstothem.Moreover,whereafirmsuchasFPLhasapositionofeconomiccontrolinonemarket,itcannotleveragethatcontroltoadvantageitselfincompetitioninthatorothermarketssuchasretailandbulkpowermarkets.'heleadingcaseisOtterTailPowerCo.v.UnitedStates,410U.S.366(1973),~sura.LikeFFL,OtterTailcontrolledmajortransmissionandgeneratingfacilities.OtterTailrefusedtotransmitortosellwholesalepowertoactualorpotentialsmallersystems.TheDistrictCourtheld,however,UnitedStatesv.OtterTailPowerCo.,331F.Supp.54,61(D.Minn.1971):thatdefendanthasamonopolyintherelevantmarketandhasconsistentlyrefusedtodealwithmunicipalitieswhichdesiredtoestablishmunicipallyownedsystemsontheallegedjustificationthattodosowouldimpairitspositionofdominanceinsellingpoweratretailtotownsinitsservicearea.ThecourtconcludesthatthisconductisprohibitedbytheShermanAct.Xtiswellestablishedthattheunilateralrefusaltodealwithanother,motivatedh~a~uroseto~re-~-"'"SouthernPhotoMaterialsCo.,273U.S.359,47S.Ct.400,71L.Ed6841927);LorainJournalCo.v.UnitedStates,342U.S.143,72S.Ct.181,96L.Ed162(19~61FOOTNOTECONTXNUEDFROMPREVXOUSPAGE:"Westartfromthepremisethatadequatereliefinamonopolizationcaseshouldputanendtothecombinationanddeprivethedefendantsofanyofthebenefitsofillegalconduct,anditbreaksuporrendersimpotentthemonopolypowerfoundtobeinviolationoftheAct"OrastheCourtsaidinOtterTail(410U.S.at381),~uotinFTCv.NationalLeadCo.,350U.S.419,431(1956):"Thosecaughtviolatingtheactmustexpectsomefencing1neGiventheauthorityandresponsibilityoftheHRCtofashionappropriaterelief,ifa"situationinconsistent"hadbeenestablishedwithoutthesettlement,byenteringintothesettle-menttheCompanycannotavoidbroaderrelief.

101"HereOtterTailrefusestosellpowertomunicipalitieswhichwouldtherebytakeretailpowerbusinessfromdefendantandrefusestowheelpowerforotherswillingtoselltothesemunicipalities.Becauseofitsdomi-nantpositionOtterTailisabletodeprivetownsofthebenefitsofcompetitionwhichwouldresultfrommunici-pallyownedfacilities."Pertinenttoanexaminationofthelawisa.referencetocasesexpressiveofthe'bottlenecktheory'fantitrustlaw.Thistheoryreflectsinessencethatitisanillegalrestraintoftradeforapartytoforecloseothersfromtheuseofascarcefacility.HerethetheoryfindsapplicationinOtterTail'useofitssubtransmissionlines.Oneauthoritybelieves:'TheShermanActrequiresthatwherefacilitiescannotpracticallybedupli-catedbywould-becompetitors,thoseinpossessionofthemmustallowthemtobesharedonfairterms.'Thisstatementepitomizestheholdingsinfederalcaseswhichhaveestablishedtheprinciple:UnitedStatesv.TerminalRailroadAssoc.,224U.S.383,32S.Ct.507,56L.Ed.8101912;Gamco,Inc.v.ProvidenceFruitSProduceBuildinInc.,194F.2d4841stCir.1952PackagedProrams,Inc.v.WestinhouseBroadcastinCo.,255F.2d7083dCir.1958;SixTwent-NineProductions,Inc.v.RollinsTelecasting,Inc.,35F.2d4785thCir.1966)."ThebottleneckprincipleisapplicabletoOtterTail.Itscontrolovertransmissionfacilitiesinmuchofitsserviceareagivesitsubstantialeffectivecontroloverpotentialcompetitionfrommunicipalownership.Byitsrefusaltosellorwheelpower,defendant,preventsthatcompetitionfromsurfacing."(emphasissupplied;foot-noteomitted).Exceptforremandingforreconsiderationofthe"shamlitigation"issue,theSupremeCourtaffirmedonappeal:"TherecordmakesabundantlyclearthatOtterTailuseditsmonopolypowerinthetownsinitsserviceareatoforeclosecompetitionorgainacompetitiveadvantage,ortodestroyacompetitor,allinviolationoftheantitrustlaws.SeeUnitedStatesv.Griffith,334U.S.100,107.TheDistrictCourtdeterminedthatOtterTailhas'astrategicdominanceinthe 102transmissionofpowerinmostofitsservicearea'ndthatitusedthisdominancetoforeclosepotentialentrantsintotheretailareafromobtainingelectricpowerfromoutsidesourcesofsupply.331F.Supp.,at60.Useofmonopolypower'todestroythreatenedcompetition'saviolationofthe'attempttomonopolize'lauseof$2oftheShermanAct.LorainJournalv.UnitedStates,342U.S.143,154;EastmanKodakCo.v.SouthernPhotoMaterialsCo.,273U.S.359,375OtterTailPowerComanv.UnitedStates,'snra,410U.S.at377(1973).TheCities'llegationsagainstFPLarelikethosefounddeterminitiveinOtterTail,includingallegedrefusalstodeal,attemptedacquisitionsofmunicipalsystemsandforeclosureofnewentrants.Cities'llegationshavebeenvindicatedbyactualFERCfindingsmadeagainst,theCompany.OpinionNos.57and57-AoftheFederalEnergyRegulatoryCommissionhaveidentifiedandcriticizedFPL'srefusalstosellwholesalepowerandtransmissionas"unjustandunreasonableunderthestandardsofSections205and206oftheFederalPowerAct,particularlybecauseoftheiranticometitiveeffects".OpinionNo.57-A("OpinionandOrderDenyingRehearing",October4,1979,page1)(emphasissupplied).InOpinionNo.57theCommissionfound:"I:Taherecorddocumentstwentyyears'orthoffranchisecompetitionbetweenFP&Landthemunicipalutilitieslocatedwithinitsserviceterritory.AtvarioustimesFP&Lhaspromotedacquisitionorwillinglyreceivedmunicipalproposals.Most,ifnotall,ofthoseincidentsoccurredwhenthemunicipalsystemswerearrangingnewbulkpowersuppliesfromtheoptionsofself-generation,wholesalepurchasefromFP&L,andretailpurchasefromFP&Lafterfranchisedisposition.TheCompanyhasnot,su'cceededinmanyacquisitions,becausethemunicipalcandidatessolvedtheirsupplyproblemsbyaddinggeneration.However,therecord 103stronglyindicatesthatself-generationisbecominglessandlessattractivetothepointwhereFPGL'switnessGerberhasdescribedsmallscalegenerationasananachronism.-SinceFPtNLcontrolstheremainingtwooptions,weconcludethatitswholesalemonopolypowercanonlyincrease,and,thereafter,itsretailpoweraswell.See,BorouhofEllwoodCitv.PennslvaniaPowerCo.,D.C.Pa.1979462F.Supp.1343,1346.FloridaPoweraLihtComan,FERCOpinionNo.57,~sura,32PUR4that330.Thus,likeOtterTail,FPL'srefusalstodealaideditsattemptstorepresscompetitionforretailsales.Further,likeOtterTail,FPLhasrefusedtoprovidetransmissionvoluntarilyformunicipalutilities.Transmissionisnecessaryforautilitytosecurealternatepowersupplies.Priorto1975FPLrefusedtotransmitforCitiesatall.Sincethen,ithasagreedtolimitedtransmissiononrestrictedterms.FPL'sresistanceisevidencedbyFPL'scontinuingresistancetofilingatransmissiontariff.1/Ithassoughtacquisitions.Inshort,ithasengagedinsimilarmonopolizingconducttoOtterTail.SeeStatementofFacts,PartZl,pp.43-89,~sura,andOpinionNo.57,~sura.Afterthoroughexaminationofjudicialauthorities,theNRCcasesholdthatwhereacompanyusesitsdominanteconomicpower"topreserveorextendanexistingmonopoly,toforecloseactualorpotentialcompetition,togaincompetitiveadvantage,ortodestroycompetitors"itrunsafoulofthelaw.ConsumersPower1/TheCompanyhasappealedFederalEnergyRegulatoryCommissionordersthatitfileitstrans'missionpoliciesintariffformandstillhasnotfiledatariffcoveringotherthan"interchange"services.FloridaPowerRLightCo.v.FERC,CA5No.80-5259(April4,1980.See~sura 104~Coman,~sura,SNRCat922,citinciOtterTailPowerCo.v.UnitedStates,~sura,andUnitedStatesv.Griffith,~sura,334U.S.at107.Accord,ToledoEdisonCo.,~sura,10NRCat376-378,holdingillegaltheexerciseofpowertocontrolamarket,whichresultsinbarrierstocompetitionanddoesnotarisemerelyfromsuperiorbusinessskillsorbusinessacumen.Inthecontextofresolvingquestionsoflegalentitlementsofsmallersystems'btainingaccesstonuclearunits,theNRC'sAppealBoardinConsumersheldthatafirmwithamonopolysharewasnot"freeofanyobligationtodealwiththesmallutilities."Tobeginwith,therearecircumstancesinwhichtheantitrustlawsimposeanaffirmativedutyonbusinessfirmstodealwiththeircompetitors.AsevidencedbydecisionsfollowingColcaate,unilateralrefusalstodealbyafirmwithadominantmarketpositionhaveregularlybeenheldtoconstituteeither'monopolization'ran'attempttomonopolize'nviolationofSection2oftheShermanAct.501/InEastmanKodakCo.v.SouthernPhotoCo.,~sura,forexample,KodakviolatedSection2byrefusingtosellexceptatretailpricestotheplaintiff,aformerretaildistributorofKodakproducts.502/(Kodak,alreadyholdingamonopolyof501/OurdiscussionexcludescasesarisingunderSections1or2oftheShermanActinvolvingconspira-ciesorconcertedrefusalstodeal.502/TheCourt'sdecisionisunclearonwhetherKodakwasguiltyofmonopolizationoranattempttomonopolize.TheCourtwasaffirmingajuryverdictanditsdiscussionwasbrief.Itstated:althoughtherewasnodirectevidence-astherecouldnotwellbe-thatthedefendant'srefusaltoselltotheplaintiffwasinpursuanceofapurposetomonopolize,wethinkthatthecircumstancesdisclosedintheevidencesufficientlytendedtoindicatesuchpurpose,asamatterofjustandreasonableinferencetowarrantthesubmissionofthisquestiontothejury.273U.S.at375.

105productionandat.wholesale,wasexpandingintotheretailmarketandhadpurchasedotherretailoutletsinthearea.)503/InLorainJournalCo.v.UnitedStates,~sura,thesolenewspaperxnatownwasguiltyofanattempttomonopolizebyrefusingtoselladver-tisingspacetothosewhoadvertisedonthetown'snewradiostation.InPackaedprorams,Inc.v.WestinhouseBroadcastin,~sura,plaintiff,anadver-txsxngagency,averrethatWestinghouse,owneroftheonlytelevisionstationinpittsburgh,wasattemptingtomonopolizetheadvertisingmarketbyrefusingtoaircommercialsproducedbytheplaintiff.(Westinghousealsoproducedcommercials.)Thecourtheldthat.thiscomplaintstatedaclaimcognizableunderSection2oftheShermanAct..Inafactualsituationparallelingpackaedprograms,thecourtinRollinsTelecastin~sura,reversedsummaryjudgmentforthedefendanttele-vxsxonstation,andinOtterTailPowerCo.v.UnitedStates,~sura,theSurpemeCourtheldOtterTailguiltyofmonopolizationwhenthatverticallyintegratedelectricutilityrefusedtowheelpowerforandtosellwholesalepowertomunicipalitiesseekingtodisplaceit.astheirretaildistributorofelectricity.Inaword,astheSecondCircuitrecentlyruled,casessuchasLorainJournalandEastmanKodak504/are503/TwocasessimilartoKodak,i.e.,awholesalesupplier-monopolistfoundguiltyofmonopolizationbyrefusingtodealwithindependentretailersinfavorofanintegratedsystem,areposterExchange,Inc.v.NationalScreenServ.,431F.2d3345thCir.1970),cert.denzed,401U.S.912(1971)andUnitedStatesv.KlearflaxLinenLooms,63F.Supp.32(D.Minn.1945Seealso,WoodsExloration&producinCo.v.AluminumCo.ofAmerica,438F.2d1286,1308fn9(5thCir.504/Thecommonthreadrunningthroughtheseandsimilarcasesisthepossessionofamonopolyoranearmonopolyinarelevantmarketbythecompanyrefusingtodeal.Thus,forexample,Kodakpossessedamonopolyatthewholesalelevel;theJournalwasthesolenewspaperintownandpossessedamonopolyoveradvertisinginLorainuntiltheradiostationbeganbroadcasting;WestinghouseBroadcastingandRollinsTelecastingpossessedamono-poly-viaFCClicensing-inlocaltelevisionQUOTEDFOOTNOTECONTINUEDONNEXTPAGE

106SupremeCourtdecisions'whichdostandfortheproposi-tionthatwhereasingletraderrefusestodealinordertoenhanceitsmonopolyposition,at.ShermanAct]Section2violationmaybefound.'nternationalRailwasofCentralAmericav.UnitedBrands,532F.2d231,239,certioraridenied,50L.Ed.2d100(1967)~505/QUOTEDFOOTNOTECONTINUEDFROMNEXTPAGEbroadcasting;andOtterTailheldamonopolyoverretaildistributionofelectricity.Ineachcase,throughuni-lateralrefusalstodeal,themonopolisthadusedits.dominanteconomicpowerineffortseithertomaintainitscurrentmarke'tposition(e.g.,OtterTail)ortocompaniesranafouloftheSupremeCourt'swarninginGriffiththat.'useotmonopolypower,howeverlawfullyacguxred,toforeclosecompetit.ion,togainacom-petitiveadvantage,ortodestroyacompetitorisunlawful.'34U.S.at107.AsJudgeWyzanskicogentlyobserved:'Anenterprisethatbymonopolizingonefield,securesdominantmarketpowerinanotherfield,hasmonopolizedthesecondfield,inviolationof$2oftheShermanAct.'nitedStatesv.UnitedShoeMachine~Cor.,~sura,110F.Supp.at346.505/WhetherConsumers'efusalofaccesstoitstransmissionlinespresentsa'bottleneck'ituationisirrelevantinouranalysis.Suchdenialsmaybetreatedasinstancesofrefusalstodeal.OtterTailPowerCo.v.UnitedStates,~sura,410U.S.at371;Nullisv.ArcoPetroleumCor.,502F.2d290,296fn.19~7thCir.1974)perStevens,Cir.J.);seeNote,RefusalstoDealbVerticallInteratedMonoolists,87Harv.L.Rev.17201974.TheLicensingBoard'sassumption,sup-portedbyConsumers,thatbottleneckcasesmustinvolveconspiracies(see2SRCat76)isamisreadingofOtterTail.6NRCat1026-1028.Othercasesconcerningtheutilityindustrystronglysupporttheobligationofelectricutilitiestodealwithsmallercompetingsystems.InMunicialElectricAssociationofMassachusettsv.SEC,413F.2d1052,1055(D.C.Cir.1969),the 107basicissuewaswhetherapprovalofanacquisitionunderthePublicUtilityHoldingCompanyAct,Section10,15U.S.C.$79j,shouldbegiven"inamannerwhichwouldgiveMunicipalsanopportunityonreasonabletermstoobtainaccesstothisnewlowercost[nuclear]power."TheCourtcharacterizedtheissueintermsoftheutility'sblockingaccesstonuclearbaseloadpowerand"...low-costbulk-powersuppliesandtransmissionservices."413F.2dat,1058-ItwasheldthattheSECcouldnotgranttheutility'srequestforanexemptionfromtheHoldingCompanyActwithoutconsiderationoftheclaimsofanticompetitiveconductraisedbytheCities.InGainesvilleUtilitiesDet.andCitofGainesville,Floridav.FloridaPowerCor.,40FPC1227(1968),affirmed,,402U.S.515(1971),FloridaPowerCorporationrefusedtointerconnectwiththeCityofGainesville,atleastabsenta"standby"charge;theCompanyrefusedtosupplybackuppowerbecausetheinterconnectionwasmorevaluabletoGainesvillethantoFloridaPowerCorporation.InaffirmingaFederalPowerCommissionorderinfavorofGainesville,theSupremeCourtsaid:"Itiscertainlytruethatthesameserviceorcommoditymaybemorevaluabletosomecustomersthantoothers,intermsofthepricetheyarewillingtopayforit.Anairplaneseatmaybringgreaterprofit.toapassengerflyingtoCaliforniatocloseamillion-dollarbusinessdealthanoneoflyingwestforavacation;asaconsequence,theformermightbewillingtopaymoreforhisseatthanthelatter.Butfocusonthewillingnessorabilityofthepurchasertopayforaserviceistheconcernofthemonopolist,notofagovernmentalagencychargedbothwithassuringtheindustryafairreturnandwithassuringthepublicreliableandefficientservice,atareasonableprice."

108402U.S.at528.1/AsinterpretedandappliedbytheDistrictofColumbiaCircuit,theSupremeCourt'sdecisioninGainesvillerequiresthatmunicipalsshouldnotbetreateddiscriminatorily"ontermsmoreonerousthanthoserequiredofotherinvestor-ownedutilities."CitofLaafette,La.v.SEC,454F.2d941,952(D.C.Cir.1971),affirmed,subnum.GulfStates,infra.InGulfStatesUtilitiesCo.v.FPC,411U.S.747(1973),certainmunicipalsystemsallegedthatGulfStatesUtilitiesCompanyand.othershadblockedtheiraccesstogeneration,transmissionandpooling.TheysoughtantitrustconditionstoaGulfStatesfinancingunderSection204oftheFederalPowerAct,16U.S.C.$824c.TheSupremeCourtreversedtheFPC'sfailuretoconsidertheseallegationsofanticompetitiveconduct.CitingthehistoryoftheFederalPowerAct,theSupremeCourtheldThisstatutewasenactedaspartofTitsIIofthePublicUtilityActof1935,49Stat.803,850.TheActhadtwoprimaryandrelatedpurposes:tocurbabusivepracticesofpublicutilitycompaniesbybringingthemundereffectivecontrol,andtoprovideeffectivefederalregulationoftheexpandingbusinessoftransmittingandsellingelectricpowerininterstatecommerce.49Stat.803-804,847-848;S.Rep.No.621,74thCong.,1stSess.,1-4,17-20;H.R.Rep.No.1318,74thCong.,1stSess.,3,7-8;JerseCentralCo.v.FPC,319U.S.61,67-68(1943;seeNortAmericanCo.v.SEC,327U.S.686(1946~TheActwaspassedinthecontextof,andinresponseto,greatconcentrationsofeconomicandevenpoliticalpower1TheComma.sszonnotetatrespondenthadnotincludedacom-parable[backupservice]chargeinanyoftnecontractsforinterconnectionvoluntarilynegotiatedwithmembersoftheFloridaOperatingCommittee."402U.S.at523.Thus,GainesvilleprovidesdirectSupremeCourtsupportforthepropo-sitionthatFPLhasobligationstodealwithcities(includingthoseoutsideitsretailservicearea)onasimilarbasistoitsdealingswithotherFloridautilities.

109vestedinpowertrusts,andtheabsenceofantitrustenforcementtorestrainthegrowthandpracticesofpublicutilityholdingcompanies.SeeS.Rep.No.621,~sura,at11-12;UtilityCorporations-SummaryReport,70thCong.,1stSess.,S.Doc.Ho.92,Part73-A,pp.47-54;79Cong.Rec.8392(1935)."411U.S.at758.AstheMishawakaDistrictCourtputit,.[F]ederalantitrustlawrecognizescomplementaryobligationsonpersonspossessingscarceresourcesorfacilitiesthatareessentialtoeffectivecompetition."CitofMishawaka,Indianav.AmericanElectricPowerCo.,Inc.,~sura,465F.Suppat13361/~Theproblemhereissimilartothatinvolvedwiththeinter-connectionofspecializedcommoncarrierstotheAmerican6Telephone8Telegraphnetwork,wheretheThirdCircuitupheldaFederalCommunicationsCommissiondecisiononthebasisofpro-competitiveprinciples,holdingthat:1Also,amonopolist'"exclusionofitscompetitorsfromafscarce]resourceorfacilityisparticularlycondemnedbytheantitrustlaws.UnitedStatesv.OtterTail,~sura,331F~Suppat61."Id.,465F.Supp.1320,1331(N.D.Ind.1979),affirmedin~art,vacatedin~art,616F.2d976(7thCir1980.).WhileFPL'soperationinthecontextoftheelectricutilityindustrymaybetakenintoaccountinsomecontexts,itis"nowsettledaxiom"toquotetheCourtinMishawaka,thattheantitrustlawsarefullyapplicabletotheelectricpowerindustry.CitofMishawakav.IndianaaMichiganElectricPowerCo.,560F.2d1314,1321(7thCir.1977,cert.denied,436UUS.2(1978).ToledoEdison,~sura10NR,Cat.BY-WE,323-3270 110whereacarrierhasmonopolycontroloveressentialfacilitieswewillnotcondoneanypolicyorpracticewherebysuchcarrierwoulddiscriminateinfavorofanaffiliatedcarrierorshowfavoritismamongcompetitors."BellTelehoneCo.ofPennslvaniav.FCC,503F.2d1250,1262,1271-1273(3dCir.1974),cert.denied,422U.S.1026(1975).And,ofcourse,PloridaPower8LihtCo.,PERCOpinionNo.57,~sura,32PUR4th313,Providesamostrecentaffirmationoftheseprinciples.OtterTail,citedabove,isconsistentwithandreinforcedbyotherbottleneckmonopolycases.Thesecases1/confirmthatautility-orotherbusinessconcern-thatcontrolsessentialfacilitiesisobligatedtodealinthosefacilitiesonnon-discriminatorytermsand,further,thatitisobligatednottotakeadvantageofthestrategicdominanceresultingfromcontrolofsuchfacilitiestogainanadvantageinothermarkets.Porexample,PPLmaynotrestrictaccesstoitsnucleargenerationortransmissionfacilitiestoothers,whileatthesametimeusingtheeconomicadvantagesitobtainsfromsuchrestrictionin1E...OtterTaxiPowerCo.v.UnitedStates,410U.ST366T1973;UnitedStatesv.TerminalRailroadAssociation,244U.S.Uo.v.UnitedStates,342U.S.143(1951);Silverv.HewYorkStockExchane,373U.S.341(1963).Hechtv.Pro-Football,Inc.570F.2d9821977),cert.denied,436U.S.956(1978;GamcoInc.,~sura.

competitionforretail,wholesaleorcoordinationtransactions.1/ThebottlenecktheoryisinrealityashorthandexpressionforclassicSection1and2analysisthatfirmshavingmonopolypowermaynotusethatpowertogainadvantageinasecondmarket,lineofcommerceorfactorofproduction.Cf.,ConsumerspowerComan,~sura,6RRCat1028,n.505,quotedat.pp.108-110,~sura.And,astheAppealBoardheldinConsumerstheuseoftheCompany'smonopolypoweranditspotentialcom-petitiveinjurytosmallersystemsnecessitatedantitrustlicenseconditions.ConsumersPowerComan,~sura,5BRCat1095-1095.Thefacts{discussed~sura)compeltheconclusionthatPBLhasmonopolypower,whichFPLhasusedtoenhanceitscompetitivepositioninretailandwholesalemarkets.However,theSupremeCourthasheldinGriffiththatitisimpermissibleforafirmtousemonopolypowertogainacompetitiveadvantage,evenwheretheacquisitionofsuchmonopolypowerisinnocent(aswherethedefendantownstheonlymoviehouseintown):ET]heuseofmonopolypower,howeverlawfullyacquired,toforeclosecompetition,togainacom-petitiveadvantage,ortodestroyacompetitor,isunlawful."334U.STat107'FPL,whichcontrolsthreeofFlorida'sfour'uclearunitsandisplanningafourth,canhardlydenytheiressentialnature.FPL'sBoardChairman,MarshallMcDonaldhaspubliclycharacterizednuclearenergyas"anessentialanddesirablesourceofelectricpower."App.D325.

112AstheSecondCircuitsaidrecentlyinKodak(603F.2dat.275),discussingSection2:"Thisconclusionappearstobeaninexorableinterpreta-tionoftheantitrustlaws.Wetoleratetheexistenceofmonopolypower,werepeat,onlyinsofarasnecessarytopreservecompetitiveincentivesandtobefairtothefirmthathasattaineditspositioninnocently.Thereisnoreasontoallowtheexerciseofsuchpowertothedetrimentofcompetition,ineitherthecontrolledmarketoranyotherThus,afabricatorofingots,wholawfullyobtainedadominantpositionoverthemarketforthesaleofrawingotscouldnotusethatpositionofdominancetoimproveitspositioninsellingproductsmadefromtherawmaterialthroughchargingcompetitorshigherpricesfortherawingotsthanthedominantsellers'nternaltransactionalpricetoitsownfabricatingoperations.UnitedStatesv.AluminumComanofAmerica,148F.2d.416(2dCir.1945).Accord,UnitedStatesv.Loew',Inc.,371U.S.38(1962);LorainJournalCo.v.UnitedStates,342U.S.143(1951);EastmanKodakv.SouthernPhotoMaterialsCo.,273U.S.359,375(1927).Cf.,ConwaCororationv.FPC,426U.S.271(1976).Similarly,apublicutilitythatsellselectricpoweratretailcannotrefusetosellsuchpoweratwholesaletoacom-petitorinordertoretainorimproveitsshareoftheretailelectricmarket.OtterTailPowerCo.v.UnitedStates,410U.ST366(1973);FloridaPowerSLihtComan,OpinionNo.57,32PUR4th313(1979)(Attachment3).SeeGulfStatesUtilitiesCo.v.FPC,411U.S.747(1973).Inthiscase,itisnotaquestionof~~~price:Except,asprovidedforinthesettlementlicense 113conditionsFPLrefusestodealwithCitiesconcerningnuclearpowersupplyatall.1/Thebottleneckmonopolytheoryisbaseduponordinaryprin-ciplesoffairness.Onewhooperatestheonlybridgeatarivercrossing;ortheonlyinn,necessarytohumancomfortonahighway;orastockmarketexchange,throughwhichthebulkofthestocktradingisdone;oramovietheaterchainwiththeonlytheaterintown,maynot,undertheantitrustlaws,takeadvantageofthesituationtodenycompetitorsaccess.Acompanymaybeentitledtoprofitfromthatfacility;butanticompetitivedealingandrefusingtodealiswrongful,notonlyundertheantitrustlawsbutalsounderregulatorystatutes.SeeGulf.7ElectricAssociationofMassachusettsv.SEC,413F.2d1052(D.C.Cir.1969);ConsumersPowerCo.(MidlandUnits1and2),ALAB-452,6MRC892(1977).1FPLrefusedtodealinwholesalepowerevenwithsystemsit.considersinitsservicearea,untilitwasforcedtodosobyFERCorder(FloridaPoweraLihtCo.,FERCOpinion57,~sura32,PUR4th313).Thatwasanticompetitive,astheFederalEnergyRegulatoryCommissionheld.Suchwholesalesaleswouldincludenuclearpower,indilutedformaspartofthewholesalepowermix.However,FPLmadenumerousattemptstoholdoracquiresmallersystemsonthepromotionalbasisthatFPL'snuclearpowermadeFpL'selectricitymoreeconomical.See,pages55-55,~sura.Thus,FPLwouldhavesoldelectricityto.theCities'ustomersatretail(i.e.,thegenerationandtransmission~lusthedistributaon),butitwouldnotsellatwholesalealone(i.e.,generationplustransmission).Thisrefusaltosellwholesalepowerisnotonlyanact,ofmonopolization,butaclassictyingarrangement,aswell.InternationalBusinessMachinesv.UnitedStates,298U.S.131(1936,requzrxngununxngocompanytransactions).Accord,InternationalSaltCo.v.UnitedStates,332U.S.392(19~47;NorthernPacificRailroadCo.v.UnitedStates,365U.S.1(1958);UnitedStatesv.Loew's,Inc.,371U.S.38(1962).

114Thus,the,lawisnotblindtotheinherentcontrolwhichgoeshandinhandwiththedominationoffacilitiesnecessaryforbusinessinaparticularindustry.Forexample,whererailroadsalsoowncoalmines,iftherailroadscouldpricetransportationtoequalizemarketpricesforcoal,theywouldadverselyaffectcompetitionattheretaillevel.UnitedStatesv.ReadinCo.,253U.S.26(1920).Accord,BaltimoreandOhioRailroadCo.v.UnitedStates,("ChicagoJunctionCase")264U.S.258(1924);1UnitedStatesv.AluminumCo.ofAmerica,148F.2d416(2dCir.1945),Similarly,anOtterTail,ConsumersPowerorFloridaPowerSLightmaynotlegallyrefusecompetitorsaccesstonuclearpowerortobulktransmission,especiallyinordertoaffectcompetitionontheretaillevelortopreserveorextendwholesalepowermarkets.1/Theultimatethrustofthe"bottleneck"casesisthatamonopolistmaynotusehispositiontoextendthatmonopoly.Sucharuleevenappliestopatents-monopoliesgrantedbythestate.2/1/Ifnuclearorbaseloadgenerationweretreatedasa"factorofproduction"ofelectricityratherthantheendproduct,itwouldstill,besubjecttotheprohibitionagainsttheillegaluseofmonopolygower.E.cC.,UnionCarbide6CarbonCor.v.Nisle300F.2d561,585(10thCir.1962,~aealdasmassed,371U.8.801(1963).SeeUnitedStatesv.YellowCabCo.,332U.ST218.(1947).PgFOOTNOTECONTINUEDONNEXTPAGE2/"ThetestofmisuseI:ofapatent]iswhetherapatentee'sagreementsorotherconductexpandsthepatentmonopolybeyondthescopepermittedbytheConstitutionortheCongress,regardlessofwhetherthereisanysubstantiallesseningofcompetitionorothereffectnecessarytoafindingofantitrustviolation."AntitrustLawDeveloments(AmericanBarAssociation1975),p.328.Thus,UnitedStatesv.NationalLeadCo.,332U.S.319(1947)upheldcompulsorylicensingofoutstandingatentsinexchaneforreasonableroyaltiestopreventuseof 115III.STATEMENTCONCERNINGRELIEF.UnlessasettlementcanbereachedbaseduponBoardrulingsorotherconsiderations,FloridaCitiesbelievethatahearingwillberequiredtodetermineappropriaterelief.Citieswould,ofcourse,bewillingtoconsiderstipulationsastoproceduresfornarrowingthescopeofsuchhearingorsupportingotherpro-ceduresrecommendedbytheparties.FloridaCitiesbelievethatcounselforFPLisawareoftheCities'ettlementpositions.However,sincesettlementhasnotbeenreached,itmay,beusefulforCitiestosetforthprincipalareasofdisagreementwiththesettlementlicenseconditionsinthecontextofalitigatedproceeding.1.Thesettlementlicenseconditionslimitrelieftocer-tainnamedCities,andexcluderelieftootherCitiesinPeninsularFlorida,includingthosewhohaveactivelypressedtheirrightsbeforethisforumortheDistrictCourt.FOOTNOTECONTINUEDFROMPREVIOUSPAGE:patentsformonopolization.Thepatentcasesholdthatrestrictiveactivitieswhichwouldotherwisebelawfulbythosenothavingpatents(i.e.,thosenothavingmonopolypower),forexample,acontracttorequirethebuyertobuyallofcertaingoodsfromaseller,becomesmonopolisticwhenengagedinbypatentownersorothermonopolists.E.g.,AnsulCo.v.Unircal,lnc.,448F.2d872(2dCir.,cert.dented,404U.S.10181972;Strcnv.GeneralElectricCc.,305F.Supp.1084(N.D.Ga.1969,affirmedercuriam,434F.2d1042(5thCir.1970),cert.denied,403U.S.906(1971).SeeZenithRadioCor.v.HazeltineResearch,Inc.,395U.S.100,133-136(1969);Brulottev.TsCo.,39U.S.29(1964).Normayapatent,holderdiscriminateinthelicense-termsofferedtopotentiallicensees,PeelersCo.v.Wendt,260F.Supp.193(W.D.Wash.1966).CompareFPL'ssaleofnuclearcapacitytoOrlando,butnottoKissimmeeorSt.Cloud.

1162.TheamountoftotalnuclearcapacityavailabletoCitiesprovideslessthananuclearloadratiosharetotheCitiesascomparedwithFPL.IttotallyexcludesCities'ccesstotheadvantageofFPL'snuclearmonopolyfromitsoperatingplants.1/1Reliefcouldbeorderedwhichprovideslessthananownershipsharefromoperatingunits,suchasunitpowersalesataprofit.toFPL,additionalcapacityfromSt.Lucie2,etc.ConditionscouldtakeintoaccountfactorssuchasFPL'sneedforcapacity,FPL'srefusalstodealwithCities,includingafterrequestsweremade,andCitieslateinterventionhere.Withregardtothelatter,however,FloridaCitiesdeemFPL'ssubsequentcan-cellationofitsSouthDadeunitandrefusalstograntCitiesaccesstoSt.Lucie2relevant.ThesituationissimilartothatinConsumersPowerComan(MidlandUnits1and2),ALAB-452,6NRC892,10821977where:Eventssubsequentto1971confirmthatthecompany'spolicyatthetimetherecordclosedwastodenythesmallutilitiesaccesstonuclearpower.Firstinearly1971,justbeforethesmallutilitiesrequestedpar-ticipationinMidland,Consumers'rojectedpeakloadfor1980was7,790MW:by1973itsestimateddemandfor1980haddroppedto7,020MW;andbymid-1974itdroppedfurtherto5,870.MW.Althoughin1971ConsumersmayhaverequireduseoftheentireoutputfromMidlandtomeetprojectedloadgrowthonitssystem,theoutlookchangeddrasticallyinashortperiodoftime.Ratherthanengageinnegotiationswiththesmallutilitiesforsaleofsomeoftheexcessplannedcapacity,however,Consumersvoluntarilydelayedconstructionofothergeneratingunitsoriginallyplannedtocomeonlinein1978and1982.Inotherwords,thecompanyhjascon-tinuedtoplanitssystemasthoughitneverreceivedtherequestsfromthesmallsystems.(footnotesomitted)InFt.PierceUtilitiesAuthoritoftheCitofFt.Piercev.UnitedStatesNuclearReulatoCommission,D.C.Cir.No.80-1099,theNuclearRegulatoryCommissiontookthepositioninbriefandinoralargumentthatantitrustconditionsinaSection105(c)proceeding"isnotlimitedtothefacilitythatisthesubject,oftheproceeding."Brief,p.26(July1980).WhileFPLopposedsuchposition,theCommission'sstatementastoitsauthorityisbinding.

1173.Wholesalepowerprovisionsareunclear.Theypermitresalerestrictionsandlimitationofwholesalepowerrights,ifacitybuysnuclearcapacityorusesFPLtransmission.4.FPLisnotrequiredtofileatransmissiontariffattheFederalEnergyRegulatoryCommission.Xtcancontinuetoecono-micallydisadvantageCitiesandimpedemunicipalpowersupplybyfailingtoprovideforeitherajointtransmissionrateortoprovideforfull,non-discriminatorypowerpooling.CitiescanbedisabledconcerningnewtransmissiontoGeorgia.5.ThelicenseconditionspermitFPLtocontrolcertaintermsofnuclearplantparticipationadversetotheCities.6.ThelicenseconditionslimitCities'ccesstofutureFPLnuclearplantsbasedupontheirnuclearloadratioshare,includingtheirshareinthirdpartynuclearplants.7.Noprovisionismadeforsharinginterconnectioncosts.Theabovestatementisnotintendedtowaiverightstootherrelief.

118CONCLUSION1~Basedupontheforegoing,theBoardshouldgrantresjudicataorcollateralestoppeleffectto(a)GainesvilleUtilitiesDet.v.FloridaPower&LihtCo.,573F.2d292(5thCir.1978),cert.denied,344.U.S.817(1978);(b)FloridaPower5LihtCo.,OpinionNos57and57-A,32PUR4th313(August3,1979),aealdismissed;FloridaPowerLihtCo.v.FERC,D.C.Cir.No.79-2414(April25,1980);and(c)FloridaPower5LihtCo.,37FPC544(1967),reversed,430F.2d1377(5thCir.1970),reversed,404U.S.453(1972).2.Basedupontheforegoing,theBoardshouldfindthata"situationinconsistentwiththeantitrustlaws"existsunlessFPLraisesmaterial,disputedfactualissuesthatrequirehearings;ifFPLdoesraisesuchissues,theBoardshouldlimitfurtherdiscovery(a)toissuesthatremainindisputeand(b)toadditionaldiscoveryfairlyrequiredinlightofdiscoverythathastakenplacetodate.Additionaldiscoveryshouldnot.overlapdiscoveryinGainesvilleReionalUtilitiesetal.v.Florida3.TheBoardshouldpermit,answersbyotherpartiesandareplybyFloridaCities.

-119-4.TheBoardshouldconveneaprehearingconferencetodiscussmattersraisedbythesepleadingsandfuturescheduling.Intheeventthatsettlementdoesnotappearlikely,ascheduleshouldbeadoptedforfurtherproceedings.Afterrulingsrelatingtomotionsforsummarydispositionandfurtherdiscovery,ifrequired,ahearingscheduleshouldbeadopted.Respectfullysubmitted,RobertA.JablonAlanJ.RothDanielGuttmanAttorneysfortheGainesvilleRegionalUtilities,theLakeWorthUtilitiesAuthority,theUtilitiesCommissionofNewSmyrnaBeach,theSebringUtilitiesCommission,andtheCitiesofAlachua,Bartow,FortMeade,KeyWest,LakeHelen,MountDora,Newberry,St.Cloud,andTallahassee,FloridaandtheFloridaMunicipalUtilitiesAssociationRobertA.JionMay27,1981LawOfficesofSpiegel8McDiarmid2600VirginiaAvenue,N.W.Washington,D.C.20037(202)333-4500 UNITEDSTATESNUCLEARREGULATORY,COMMISSIONBEFORETHEATOMICSAFETYANDLICENSINGBOARDIntheMatterof))FloridaPowerSLightCompany)DocketNo.50-389A)(St.LucieNuclearPlant,Unit1Vo.2))MOTIONTOESTABLISHPROCEDURES,FORADECLARATIONTHATASITUATIONINCONSISTENTWITHTHEANTITRUSTLAWSPRESENTLYEXISTSANDFORRELATEDRELIEFIndexofAttachmentsATTACHMENT1MaterialFactsNotGenuinelyInDisputeATTACHMENT2MemorandumRe:DiscoveryBetweenCitiesandFPLATTACHMENT3ExhibitAtoAttachment2-JulyJuly2,1980LettertoE.GregoryBarnesfromMartaA.Manildi.andJosephL.VanEatonRe:NRCDocketNo.50-389A-DiscoveryReFloridaPowerandLihtComan,OpinionNo.57,FederalEnergyRegulatoryCommissionDocketNos.ER78-19(PhaseI)andER78-81(August3,1979)FloridaPower&LihtComan,OpinionNo.57-A,FederalEnergyRegulatoryCommissionDocketNos.ER78-19(PhaseI)andER78-81(October4,1979)ATTACHMENT4ATTACHMENT5MemorandumofFloridaPower&LightCompanyConcerningTheScheduleForFurtherGainesville,etal.v.FloridaPowerRLiht~Comany,S.D.Fla.No.795101C-ZVJL-K-OrderSpecifyingCertainFactsToBeWithoutSubstantialControversy,AndRequiringFurtherBriefingOnOtherIssues,CitiesofAnaheim,Riverside,Bannin,ColtonandAzusa,California,v.SouthernCaliforniaEdison~Coman,D.C.Cal.No.CV-78-810-MML ATTACHMENT1MATERIALFACTSNOTGENUINELYINDISPUTEl.FPLcontrolsthreeoutofthefouroperatingnuclearunitsin.PeninsularFloridaandisconstructingitsfourth.FPLhasaneffectivemonopolycontroloversuchfacilitiesthere,whichithasusedtoadvantageitselfincompetition.Exceptasprovidedundersettlementlicenseconditionsinthiscase,FPLrefusestograntFloridaCitiesaccesstothesefacilities.'.FPLhas(a)dominanceinPeninsularFloridaand(b)amonopolyinitsretailserviceareaovereconomicbaseloadgeneration(includingnucleargeneration),transmissionandcoordination.SeeStatementofFactsandFERCOpinionNos.57and57-A.3.FPLhasaretailservicemonopolyineasternandsouthernFlorida.FPL'spresentorpastrefusalstodealinnuclearandbaseloadpower,wholesalepower,transmissionandcoordinationhaveadvantageditincompetitiontopreserveandextend.itsretailmonopolyandincompetitionforwholesaleorIcoordination.OpinionNo.57,StatementofFacts.4.FPLhasactedtorestrictordenyCitiesaccesstobase-loadgeneration(includingnuclear),transmission,wholesalepowerandcoordination.SeeGainesvilleUtilitiesDet.v.FloridaPower8LihtCo.,FERCOpinionNo.57,StatementofFactsandpositionstakenbyFPLinthiscase.

5.APeninsularFloridageographicmarketexistsforwhole-saleandcoordinationpowersupply.FPLisinterconnectedwithotherelectricsystemsinFlorida,includingFloridaPowerCorporation,TampaElectricCompanyandothermunicipallyandcooperativelyoperatedutilities.FPLhasreceivedsubstantialbenefitfromitscoordinationwiththeseotherutilitiesintheoperationorplannedoperationofitsnuclearandotherbaseloadgeneratingunits.SeeStatementofFacts,FPCOpinionHo.517..6.FPLwaspartofaconspiracywithFloridaPowerCorporation(FloridaPower)todividethewholesalepowermarketinFlorida.SeeGainesvilleUtilitiesDet.v.FloridaPower&7.FPLandthemunicipalutilitieslocatedwithinitsretailserviceterritoryengageinfranchisecompetition.AtvarioustimesFPLhaspromotedacquisitionandhasbeenreceptivetomunicipalproposals.Most.,ifnotall,ofthoseincidentsoccurredwhen.themunicipalsystemswerearrangingnewbulkpowersuppliesfromamongtheoptionsofself-generation,wholesalepurchasedfromFPLandretailpurchasesfromFPLafterfranchisedispositionandwithouttheoptionofsharinginFPL'snuclearorotherbaseloadunits.SeeStatementofFactsandOpinionNo.57.8.Infilingsandpublicstatements,FPLhasadvertisedtheeconomicbenefitsfromitsbaseloadgeneration(includingnuclear)andcoordination.Suchstatementswereofanatureto inducefranchiserenewalsforFPLorsalesofmunicipalsystemstoFPL.9~FPLhassoughttoacquireindependentmunicipalsystems.SeeGainesvilleUtilitiesDet.v.FloridaPowerSLihtCo.,Opinion5l7,Opinion57,Opinion57-A,StatementofFacts.10.FPLcancelleditsproposed.SouthDadeUnitafterreceivingrequestsforparticipationbymunicipallyownedsystems.SeeStatementofFacts.~ll.FloridaPowerRLighthasagreedtoselltheCityofOrlandoortheOrlandoUtilitiesCommissionparticipationinSt.LucieUnit2andhasofferredparticipationtosomeotherCitiesinPeninsularFloridawhichhaverequestedsuchaccess,buthasnotofferredparticipationtoutilitiesotherthanthoselistedintheSt.LucieUnit2licenseconditions.SeeStatementofFacts.

ATTACHMENT2MEMORANDUMRE:DISCOVERY,BETWEENCITIESANDFPLExtensivediscoveryhas'alreadybeenconductedbetweenFloridaPower&LightandtheinterveningCities,overthecourseofyearsandinconnectionwiththisandotherdockets.Thereremainslittleif'anythingintheCities'ileswhichhasnotbeenmadeavailabletoFPLalready,orwhichwillnotsoonbeprovidedtoFPL.Mostrecently,alltheintervenorsexceptLakeHelenhaveansweredinterrogatoriesand/orrespondedtovoluminousdocumentrequests,asmorefullydescribedbelow.CitiesnotethatalthoughHomestead,KissimmeeandStarkearenotnamedpartiesinDocketNo.50-389A,1/theyhaveintervenedinFloridaPowerR'LihtCo.(St.LucieUnitNo.2),NRCDocketNo.50-389,andareplaintiffsinadistrictcourtsuitagainstFPLinwhichtheyareseeking,amongotherthings,theopportunityforaccesstoFPL'snuclearunits.Therefore,thesethreeCitiesareincludedinthediscussionofdiscoverybelow.Referencesbelowto"districtcourt"discoveryaretotheantitrustcasecurrentlypendingintheSouthernDistrictofFlorida,MiamiDivision,GainesvilleReionalUtilitiesv.FPL,No.79-5101-Civ-JLK.ThatproceedinghasasplaintiffsFloridaCities,includingallintervenorshereexceptKeyWest,LakeHelen,andFMUA.1/Homestead,KissimmeeandStarkearerepresentedthroughtheirmembershipinFMUA.e FPLDISCOVERYOFCITIES1.DistrictCourtInterroatories.Cities(exceptKeyWestandLakeHelen)haverespondedtotwosetsofinterrogatoriesfromFPL,totalling40separateinterrogatories(notincludingsub-parts)andabout300pagesofanswers.Inaddition,theCityofTallahasseehasrespondedtoasupplementalsetofinterrogatories.TheanswerstoFPL'sfirstsetofinterrogatorieswereservedonFebruary22,1980;answerstothesecondsetwereservedAugust1,1980;andTallahassee'sresponsetosupplementalinterrogatorieswasservedSeptember17,1980.Inaddition,FPLservedCitieswithathirdsetofinterrogatoriesandrequestforproductionofdocumentsrelatingtoCities'amageclaimsinthetreble-damagesuit.Answersarenotrelevanttothisproceeding,wheresuchdamagesarenotbeingsought.2~DistrictCourtDocumentReuests.CitieshavealsorespondedtotwosetsofdocumentrequestsfromFPLinthedistrictcourtlitigation.'Theresponsetothefirstsetwaslargelycompletedinthesummerof1980,bywhichtimedefendantshadcopiedfromCities'iles98shelf-feetofdocuments,selectedfromamonghundredsofthousandsofdocumentsproducedintheCities.Thedistrictcourtdocumentrequest,was,ifanything,broaderthantherequestfiledbythecompanyinthisdocket.ExhibitAheretoisaletterfromCities'ounseltocounselforFPL,datedJuly2,1980,describingtheoverlapin 3discoveryrequestsandsettingforthindetailtheonlyareasofdiscrepancybetweenthetworequests(seepp.4-6oftheletter).ISincethetimeofthatletter,discoverywashadatKeyWest,withtheexceptionofafewfileswhichcanbe.providedtoFPLimmediately.OnlyLakeHelenhasnotproduceddocumentstoFPLineitherthisorthedistrictcourtdocket.CitiesnotethatintheirletterofJuly2,theystated:WewouldbeagreeabletoyoursuggestionthatwesearchLakeHelen'sfilesandprovideyouwithalistofresponsivefilesuponourreceiptfromyouofnoticethatyouwishtogotoLakeHelentoinspectdocuments.Wewouldrequiretwoweeksnotice.LakeHelencanbemadereadybyJuly18I:1980],subjecttosuchtwo-weeks'oticefromyou.FPLhasnotsoughtdiscoveryofLakeHeleninthetenmonthssincethatletter.NorhasFPLindicatedanyobjectionduringthattimetotherepresentationsbyCitiesthattheybelievetheyhaveotherwisecompliedwiththedocumentrequestfiledinthepresentdocket.Moreover,alsoinconnectionwiththedistrictcourtcase,FPLwasprovidedwithcopies,aftertheinitialdocumentproduction,ofsupplementaldocumentswhichCitieswerenotabletolocateatthetimeofinitialproduction;FPLwasaffordedtheopportunitytore-examinecertaindocumentsrelatingtofuelcostsinStarkeandHomestead;FPLmisplacedallbutafewofitscopiesofdocumentsfromtheCityofNewberry,andwasallowedtore-examineallfilesinthatCity;andTallahasseemadeavailableadditionalfileswhichhadbeenomittedinitially.

FPLandCitiesdisagreeconcerningtheinterpretationof,theinitialdistrictcourtdocumentrequestasitrelatestoi>fountDora;thepartieshaveexchangedcorrespondenceconcerningthismatterwhichinvolves,atmost,ahandfulofdocuments.CertainHomesteaddiscoveryremainstobecompletedforthedistrictcourtsuit.FPLnotifiedCitiesthatresponsivedocumentshadapparentlybeenoverlookedinthatCity.Uponinvestigation,Citiesfoundthatthiswastrue.Acompletere-searchofHomestead'sfileshasnowbeencompleted,andproductionofdocumentstoFPLwillbemadeveryshortly.Xnaddition,Citieshavere-checkedtheirsearchinStarke,theGainesvillepowerplants,andSebring.There-checkingestablishedthattheproductionhadbeencorrectandcompleteintheseCities,withperhapsafewoversightsduetohumanerror.Ofcourse,allresponsivedocuments.foundintheseCitiesduringthere-searchwillalsobeprovidedtoFPLveryshortly.Are-searchofKissimmee'filesindicatedcertai;nfilecabinetsandboxesnadbeenoverloooked.ResponsivematerialfromtheCityarenowbeingcopiedforproductiontoFPL.Are-searchof4ViewSmyrnaBeach'sfilesisnowinprogress.AlldistrictcourtplaintiffshavealsocompliedwithasecondwavedocumentrequestbyFPL.Thus,theonlyoutstandingmattersfromthevariouswavesofproductionofdocumentsbyCitiestoFPLare(a)tocompleteproductionofHomesteadandcorrectionsfromotherCitiesasnotedabove.CompletionisexpectedbyearlyJune,and(h)completionoflistsofdocumentswithheldasprivileged.CitiesandFPLhavebothproduced'onecompletelistofprivilegeddocumentsasaresultofdiscoveryinthedistrictcourt,case.

AtFPL'srequestanduponitsrepresentationthatitwouldreciprocate,Citiesarerevisingtheirlistsinordertoprovideafullerstatementofeachprivilegeddocument.CitieshaveproducedmorethanhalfofthisrevisedprivilegedlisttoFPLandexpecttocompletetheremainderbyJune.CitieshavenotyetreceivedFPL'srevisedlist.3.OtherdiscovebFPLfromCities.(a)FPLhashadcomprehensivediscoveryoftheCitiesofHomestead,NewSmyrnaBeachandStarkeasintervenorsinFERCDocketHo.ER78-19,whereafullevidentiaryhearingwasheld,culminatinginFERCOpinionNo.57;(b)FPLhasavaileditselfofFlorida'sexpansivePublicRecordsActtoinspectfilesinLakeWorth,HewSmyrnaBeach,Gainesville,Homestead,andpossiblyotherintervenors;(c)FPLhasextensivelydiscoveredGainesvilleinpreparationforGainesvilleUtilities

Deartmentv.FloridaPowerwhichtheFifthCircuitfoundthatFPLhadconspiredinviolationoftheantitrustlawstodivideterritoryforsalesofwholesalepowerinFlorida.4.Districtcourtdeositions.In'ecentmonths,

FPLhasdeposedofficials.orformerofficialsinTallahassee,Kissimmee,Newberry,Mt.Dora,Homestead,Starke,Ft.MeadeandLakeWorth.

5.Consultantdiscover.FPLhasalsohadextensivediscoveryfromatleasttwoofCities'ajorconsultants,R.W.BeckRAssociates,Orlando,Florida,andSmithSGillespie,Jacksonville,Florida.Discoveryiscomplete,withminorexceptions:(a)bothBeckandSmithSGillespiehaveyet.toproducelistsofprivilegeddocuments;(b)certainfilesandnotesofMr.RobertE.Bathenarebeingproducedininstallments;thefirstofthreeinstallmentshasbeencompleted;and(c)non-FloridaofficesofR."W.Beckhavebeenreviewedforresponsivematerial;responsivefilesarebeingcopiedfromofficesinDenver,Colorado;Seattle,WashingtonandWellesley,Massachusetts,andwillbeproducedshortly.CITIES'ISCOVERYOFFPL1.LikeFPL,CitieshavehaddiscoverythroughFERCDocketHo.ER78-19andtheGainesvillelitigation,althoughnotundersunshinelaws.2.Inthedistrictcourtantitrustproceeding,Citieshavereceivedanswersandobjectionstoonesetofinterrogatoriesanddocumentrequests(withFPL'srevisedlistofprivilegeddocumentsnotyetreceived)-CitieshavetakendepositionsofcertainpresentorformerFPLofficialsandaformerofficialofFloridaGasTransmissionCompany.

CitiesstillhavecertaindiscoverymattersoutstandingfromFPL:TheynaveprovidedFPLwithalistofdocuments1apparentlyoverlookedinFPL'sinitialproduction;theyhaverequestedpermissionfromthecourttoserveasecondsetofinterrogatories;theyhavesoughtdocumentsfromthefilesofFPLconsultants;andtheyhavenoticedandintendtonoticedepositionsofotherFPLpresentorformerofficials'.Forpurposesofthisproceeding,CitieshavenonethelessreceivedamplediscoveryoverthecourseoftimefromtheCompany,andtheysubmitthatFPLhashadamplediscoveryoftheCities.Thereisnoneedtodelayrulingsuntiltail-enddiscoverymattersinthedistrictcourtcasearecompleted.

ExhibitAtoAttachment2GEORGESPIEGEIP.C.BERTC.MCDIARMIDORAJ.STREBELOBERTA.JABLONJAMESN.HORWOODALANJ.ROTHFRANCKSE.FRANCISDANIELI.DAVIDSONTHOMASN.MCHUGH.JR-DANIELJ.GUTTMANPETERK.MATTDAVIDR.STRAUSLAWOFFICESSPIEGEL8MCDIARMID2600VIRGINIAAVENUE.N.W.WASHINGTON.O.C.20037TELEPHONEI202I333-4500TELECOPIER(202)333.2974July2,1980BONNIES.BLAIRROBERTHARLEYBEARTHOMASC.TRAUGERJOHNMICHAELADRAGNACYNTHIAS.BOGORADGARYJ.NEWELLMARCR.POIRIERMARTAA.MANILDIJOSKPHL.VANEATONE.GregoryBarnesJEsq.Lowenstein,Newman,Reis&Axelrad1025ConnectioutAvenue,N.W.Washington,D.C.20036Re:NRCDocketNo.50-389A-Discover

Dear'Greg:

Asyousuggestedinourrecentphonecall,andforyourconvenience,wearecommittingtowritingcertaindetailsregardingdiscoveryintheNRCcase.Ourpurposeistogiveyourfirm,Mr.Leon,andCovingtonandBurlinganopportunitytoreviewthesepointsnowsothatanywrinklescanbeironedoutearlyandourdocumentproductioncanproceed,efficiently,toourmutualadvantage.Aswediscussedonthephone,wehavemadeacarefulreviewofyourNRCrequestsforproductionofdocuments,com-paringthemtoyourrequestsintheSouthernDistrictofFloridacase.Ourcomparisonconfirmedthatthedistrictcourtdocumentrequestsequalorcovercorrespondingrequestsforproductionin50-389A,withafewexceptionsdiscussedbelow.EnclosedisalistingofeachNRCrequest,exceptthosenotallowedbyCommissionorder,andthecorrespondingdistrictcourtrequest.Byusingthislistinconjunctionwiththefilelistwhichwasprovidedtoyoupriortoproduction'intheCities,youwillbeabletodetermineeasilywhichdocumentsareresponsivetowhichNRCrequests.EachNRCrequestlistedhasthusbeenfully-answeredbyourdistrictcourtcaseproduction,withthelimitationsnotedherein,forallNRCintervenorsexceptLakeHelen,KeyWest,andFMUA.Astothese,weproposethefollowing:

dbdyf'tionuntilJuly18x,nNRC50-389A.However,KeyWesthasbeensearchedandisreadyforinspection;subjectto'lientapprovalwewouldbewillingtoproducedocumentstherean'ytimeafterJuly10.AswasthecasewithotherCities,youwillbeprovidedwithalistoffiles(or,asappropriate,storageboxes)con-tainingresponsivedocuments,andalistofassumptionswemadeduringoursearchofCityfilespriortoproductioninKeyWest(theassumptionswillbethesameassumptionsasthosemadeinotherCities).BecauseFP&ZquestionedcertainassumptionsforcertainCitiesinthedistrictcourtcase,wewillalsosendyoucopiesofsomedocumentswhichtypifytheassumptionswearemaking.'hiswillenableyoutodeterminewhetherandtowhatextentyouwanttoseeanydocumentsthatweassumearenon-responsiveorirrelevant.Youshouldalsobeawareoffourpoints:a.AlthoughaccordingtotheNRCorderondiscoveryweareonlyrequiredtoproducedocumentsthroughOctober31,1978,wehavesearchedKeyWest'filesthroughJune1,'980.Filescontainingdocumentsthroughthatdatewillbeincludedonourlisttoyou.Wedonotintendtomodifyobligations.-undertheNRCorderorourMemorandumofUnderstanding,butweassumethatyoumaybeinterestedinthemorecurrentdocumentsandthatitwouldbemoreconvenientforyoutoinspectthoseatthesametimeyouareinKeyWesttoinspectpre-November1978documents.And,frankly,itwaseasiertoincludethansegregatethe.morerecentdocuments.b.KeyWestkeepstapesofitsUtilityBoardmeet'ings.Thesewillbeavailableforyourlisteningand/orcopyinginKeyWest.Ifyouexpecttomakecopiesofthetapes,itwouldbehelpfulifyouwouldsoadviseusinadvanceofscheduledproduction.c.Weanticipatethatitwilltake10daystotwoweekstocompleteproduction,inspection,andcopyinginKeyWest.d.Inadditiontotheresponsivefilelist,organizedaccordingtodocumentrequestnumbers,wewillalsoprovidealistorganizedbythelocationofthefiles,whichcanbeourguideduringproduction.Thisshouldmakeproductionandinspec-tionmoreefficient.Wewillprovidethislistthemorningpro-ductionbeginsinKeyWest.(Thisitemmaybeclassifiedunder"learningfrompastexperience."Ifyouhaveothersuggestionsforstreamliningprocedures,theywouldbewelcome.)

AsisthecaseforKeyWest,theofficesoftheFMUAhavebeensearchedandarereadyforinspection.WewouldbeamenabletoproducingtheseofficesbeforeJuly18ifareaso-nableschedulecanbeworkedout.IttookusonedaytosearchFMUAoffices;weexpectitwilltakeyoulonger,becauseofcopying.3.LakeHelen:YouindicatedthatduringthelasttwoweeksofJulyyourofficemightbeunavailableforinspectioninLakeHelen,duetodepositionsandothermatters.,Asweexplainedtoyou,itwouldbeill-advisedforustosearchLakeHelen'sfilestoofarinadvanceofyourarrivalthereforinspection.TheCityusesitsfilesdaily,mayneedtoreorganizethem,andsoon.Thelikelihoodofchangedlocationsoffilesandhenceconfusionanddelayintheproductionprocessbecomesgreaterastheinter-veningtimebetweensearchandproductionincreases.Weare,therefore,reluctanttoproceedwithourplannedsearchofLakeHelen'sfilesuntilschedulingcanbearrangedmoredefinitely.WewouldbeagreeabletoyoursuggestionthatwesearchLakeHelen'sfiles'andprovideyouwithalistofresponsivefilesupon-ourreceiptfromyouofnoticethatyouwishtogotoLakeHelentoinspectdocuments.Wewouldrequiretwoweeksnotice..LakeHelencanbemadereadybyJuly18,subjecttosuchtwo-weeks'oticefromyou.Youarenodoubtawarethatincertaincasesthew'ordingofdistrictcourtandNRCrequestsdonotcorrelateprecisely,givingrisetothepointslistedbelow.Weraisethepointsbelowinordertobecompleteandtoavoidanypossiblemisunderstanding.Atthistimeisappearsunnecessarytous(andyouten-tativelyindicateditseemsunnecessarytoyou)toreturntothoseCitiesalreadyproduced,toinspectdocumentsagain.Weshallprotestifyouaskustoproducecopiesof"ElectricalWorld"orothertrademagazineswhichFPGLitselfreceives,andwhichinanycasewere.availableinourearlierproduction.Nevertheless,althoughmeterbookswerepresentedtoyouineveryCityinourearlierproduction,wewouldbewillingtoreturntotheCitiesshortlyafterJuly18andproducethemagainforyourinspection.

Weareconfidentthatyouhavebeenpresentedallrelevant,responsivematerialinCitiesotherthanKeyWestorLakeHelen.Moreover,webelievethatappli.cationoftheprin-ciplesstatedintheMemorandumofUnderstandingsupportstheinterpretationwehavemadeofyourrequests.Theparticularsare:1.NRCDocumentRequests1-8askforallCityorganiza-tionalmanuals,jobdescriptions,etc.Aswemadeexplicitinearlierproduction,wedidnotsearchindividualcitydepartmentsthat.arenon-utilityrelated,suchaspoliceandfiredepartmentfiles.Thus,.intradepartmentalorganizationalchartsofsuchdepart-ments,whichinanyeventarenotrelevant,werenotproduced.2.DocumentsresponsivetoNRCDocumentRequest45wereproducedinresponsetodistrictcourtrequestNo.30.Althoughtherequestsaredifferentintheirparticulars,the-informationsoughtisavailablefromthesamerawdata(primarilymeterbooks)alreadyproduced.Allotherextantrecordsregardingthereasonslargecustomersterminatedtheiraccountshavebeenprovided.Thus,youhavehadaccesstothedocumentsneededtoansweryourquestion.IneveryCity,FP&Lchosenottoexaminetherawdata.3.NRCDocumentRequest112AasksforbillsforpowerpurchasedfromCrystalRiver3.Inthedistrictcourt~production,samplesofsuchbillswereprovided.FP&Ldeclinedtocopyorexamine.suchmaterials,althoughitwasmadeexplicitthatsuchbillswereavailableinallCities.4.NRCDocumentRequest183seeksdocumentsregardingeach'"expansionorcontractionoftheCities'ervicearea."Itisnotclearwhatismeantbythequestion.If,asyouindicatedyouthoughtwaslikely,thisquestionisdirectedatchangesinthegeographicalbordersoftheareaservedbyeachcity,allresponsivedocumentshavealreadybeenprovided.If,ontheotherhand,thisrequestisintendedtoincludeachangeinthenumberofmetersservedbythecity,somedocumentsmaynothave.beenproduced.Forexample,ifanapartmentcomplexwasbuiltwithintheservicearea,relateddocumentsmaynothavebeenproduced.Aswe.madeexplicitduringpriordiscovery,wedidnotsearchorproduceeverycustomeraccountfileineverycity.5.NRC'DocumentRequests118and119havebeenfullyrespondedto,exceptthattrademagazines,advertisements,etc.,describingparticularunitswerenotprovided,unlesstheywereinfileswhichalsocontainedotherresponsivedocuments.

6.AlldocumentsresponsivetoNRCDocumentRequests,219and290havebeenproduced,exceptthatcertainindustry-generaldocumentswerenotproducedinGainesville,suchasSERC,NERC,orNEPOOLreports,asexPlicitlysetforthin"GAINESVILLE,I.A.1."ofourintroductiontothelistsofresponsivedocumentfiles.7.NRCDocumentRequests31and34askforcertainveryparticularfinancialandoperatingdata,whichconceivablymaycoversomedocumentweoverlooked.However,inrespondingtoyourbroaderdistrictcourtrequestforsuchdata,wecompiledcomprehensively.IfyoubelievewehavenotproducedanyitemrequestedbyNRCDocumentRequests31or34,pleaseadviseus.8.NRCDocumentRequest238referstocertainspeci-ficswithregardtolobbyingandrelateddocuments.Thedistrictcourtrequest,104,iswordedmorebroadly.Wereadthemtomeanthesamething.I9.NRCDocumentRequest320asksforallmaterialrelatingtoenvironmentalconstraintsoncoalplants.Asnotedintheprefacetothedistrictcourtlists,weprovideddocumentsregardingenvironmentalconsiderationsinsofarastheyaffectedtheplanning,design,costs,constructiontimerequired,etc.,fordevelopmentofanytypeofplant(includingcoalplants).Inourdistrictcourtresponsewealsonotedthatsomedetailedenvironmental-relatedinformation,suchasdataonemissionsasderivedfromastacktest,andenvironmentalimpactstate-mentswereavailable.Theywerenotrequested.10.NRCDocumentRequests353,357-358askquestionsspecificallyconcerningtheJacksonvilleElectricAuthority,OrlandoandtheCoordinatingGenerationStQdyGroup.Thismaterialwasprovidedinsofarasitrelatedtojointpower-supplyplanning,pooling,andsoon.However,wedidnotcloselyreadanumberofbindersinthepossessionofMr.RichardHestercon-cerningtheJacksonvilleElectricAuthoritywhichgenerallydealtwiththeorganizationofthatsystem,andwhichwerenotthem-selvesresponsivetothedistrictcourtrequest.Thesedocumentshavenotbeenprovided.ll.CertaindocumentrequestsrequireCitiestosimplyproduceonecopyodspecificmaterial,seee.cC.,NRCDocumentRequest394.Thesedocumentswillbeprovided.12.Cities'utytoproducedocumentsinsomeinstances,(forexample,NRCDocumentRequest264)dependsontheanswertotheinterrogatory.Allsuchfurtherdocumentswillbeproduced.ShoulditbenecessaryforyoutoreturntotheCities,giveusacallandwewillsetupareasonabletimetableforproduction.

NRCInterrogatoriesandDocumentRequests302-393makereferencetoHarryLuff'saffidavitandaredirectedattheOrlandoUtilitiesCommission,whichisnolongerapartyintheNRCcase,andneverwasapartyinthedistrictcourtcase.AllotherCitieshavealreadyturnedovertoyouallmaterialrelatingtoOrlandoreceivedthroughFCG,FMUAorFMPA,andallresponsivecorrespondencebetweenotherCitiesandOrlando.Ifyoudesiremoreinformation,pleaseseekthatinformationdirectlyfromOrlando,throughitsattorneys.Asyouknow,wedonotnowrepresenttheOrlandoUtilitiesCommission.Finally,inordertoavoidduplicationandwaste,weproposethatconsultants'fficesbesearchedandproducedfortheNRCcaseinthesametimeandmannerasinthedistrictcourtcase..Yousaidtentativelythatthisseemedreasonabletoyou.Wehopethisletterishelpfultoyou.Thankyouforyourcooperation,andweanticipatehearingfromyousoon.Sincerely,MartaA.ManildiJosephL.VanEatoncc:JackLeon,Esq.HerbertDym,Esq.

CROSS-REFERENCENRC-DISTRICTCOURTDOCUMENTREQUESTSNRCReuestNumberDistrictCourtReuestNumber810ll1322A23.24293032.3335,36A3738394041424444A4546474849505152535455,5759616263,6667686970,72A73747576365664,6571,71A,721112414517,10510545676113,462626282729131430301515111163231'38344263pr'odres52526'19,61,57,61575745,70(from1950)83ucedasgenerallyponsive31,53,Int9Int961 NRCReuestNumberDistrictCourtReuestNumber77787980,81848586878888A89909293949596979899100101103103A104104A106107108109113-1191211'23(g)124(11)127(b)128(8)130131132133,134135136137138139140141142142m142C142D142'46-47,82,8315152'5657/16157575859,60,Ent1270646965,66,6765-69,Int14617172,73,-Int15,1619,31'42424242325,29232538'8,7638,76767676767676Int3,Ent3777,Int179,109,109,10106179798081818181818181828383-86,Int19,2082,Int188239~52~56~58~61 NRCReuestNumberDistrictCourtReuestNumber162163164165166167168169170172173174175176177'78-180181182183185187188194IntInt23/IntInt23/2323/23/99,99,Int18,194444124443872012,20,88,261(inpart)1Int11(inpart)1Int1Int1Int1Int30Int3030993147,51,53,59,60,95,Int6,9,12,21,196218221223224226228230,231232233234236,238241(g)243245248251268296297304/305/30631731932176,434571/72/6272/Int74,103103103104929291,89,9237/4923/55,7981798178,79,Int22737274,Int15,1674/90/101/102/15,16,31-33Int1694,Int23,2592,Int22Int335/4748/49/50/59,62,etc.

NRCReuestNumberDistrictCourtReuestNumber322324325327331334336339341344346(inpart)352,353,354355356359360361362369370373374,375376-380381390392393397'398399401404(c)405409412415416418419420421818123233S,72f617261,276147,61,72g72/7217S,72I65,72I72I71692312,2320,cf.2117,49,Int248,747472IS9,72I74747410474,68747487887545,74Int3170,andproducedrallyresponsive70~76~77'870'6J77/7810asgene45,45,Int9259,59,50'7,17,55,55,47,47,40,60,9560,95897017,45,37'360,61,72,74,9574