ML18088A901

Response of Florida Power and Light Company in Opposition to: Joint Petition of Florida Cities for Leave to Intervene Out of Time; Petition to Intervene; and Request for Hearing

ML18088A901
Person / Time
Site:	Saint Lucie, Turkey Point
Issue date:	09/01/1976
From:	Bouknight J, Mathews J Florida Power & Light Co, Lowenstein, Newman, Reis & Axelrad, Mathews, Osborne, Ehrlich, McNatt, Gobelman & Cobb
To:	Atomic Safety and Licensing Board Panel
References
Download: ML18088A901 (105)

Text

UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION BEFORE THE ATOMIC SAFETY AND LICENSING BOARD In the Matter of Florida Power a Light Company ) Docket No. 50-389A (St. Lucie Plant Unit No. 2) ) Docket No. 50-335A (St. Lucie Plant Unit No. 1) ) Docket Nos. 50-250A (Turkey Point Plant Units No. 3 and 4) ) 50-251A RESPONSE OF FLORIDA POWER AND LIGHT COMPANY IN OPPOSITION TO: JOINT PETITION OF FLORIDA CITIES FOR LEAVE TO INTERVENE OUT OF TIME; PETITION TO INTERVENE AND REQUEST FOR HEARING On August 6, 1976, the Florida Municipal Utilities Association (FMUA} and twenty Florida municipalities (collectively, "Petitioners" )

submitted a Joint Petition (the "Petition" ) requesting that: (i) the Petitioners be granted "late intervention" in Docket No. 50-389A and an antitrust hearing be commenced therein in connection with issuance of a construction permit; and (ii) proceedings be com-menced to determine whether the operating licenses issued by the Commission pursuant to Section 104b of the Atomic Energy Act of 1954 as amended (the "Act") for Turkey Point Units No. 3 and 4 and 1/

St. Lucie Unit No. 1 should be "revoked or modified" on 1 Operating Licenses No. DPR-31, DPR-41, and DPR-67, issued in Docket Nos. 50-250, 50-251 and 50-335, respectively.

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antitrust grounds. ~

Florida Power and Light Company (FPL) is the applicant for

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a construction permit for 'St. Lucie Unit No. 2 and the holder of operating licenses for Turkey Point Units No. 3 and 4 and St.

Lucie Unit No. 1, and submits this Response in such "capacity.

The request for an antitrust hearing with respect to St. Lucie Unit No. 2 is late by more than two and one half years, and no substantial showing of good cause for this lateness appears in the Petition. Moreover, to begin an antitrust hearing at this late date would result in substantial prejudice to FPL, which has proceeded with the development of the project in reliance on the antitrust review I completed more than two years ago, and would almost inevitably delay significantly the issuance of the construction permit.

There is no legal basis for commencing any proceedings respecting the three operating units in response to this Petition.

In the first place, the Commission's regulations contain no 2/ Petition, p. 3. For purposes of convenience, FPL is responding to the Joint Petition in a single document. Since it is the position of FPL that the Joint Petition should be denied in every respect, it is not necessary to raise any argument, as to the propriety of the Joint Petition's attempted de facto consolidation of various licenses and applications, but no such argument is hereby waived.

provisions for entertaining, other than in the manner specified in Section 2.206, any request for proceedings to modify or revoke licenses. However, the Petitioners'rgument is flawed substantively as well as procedurally. The three operating licenses in question were issued under Section 104b of the Act; consequently, they are 0 not subject to antitrust. review except, in very limited. circum-stances not here pertinent.

We should note, moreover, that the equitable and practical circumstances which surround this Petition overshadow the purely legal issues. This Petition imposes a cloud on the validity oi operating licenses which represent a significant percentage of FPL's assets and casts doubt upon FPL's ability to construct St.

Lucie Unit No. 2 in the planned time frame. Even though the

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Petition wholly lacks merits, the very fact that it is pending could

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have an adverse impact upon FPL's ability to obtain needed capital on favorable terms by the sale of securities to the investing public. No action by FPL or dramatic external event can be identified as prompting this novel and far-reaching filing by the Petitioners at this particular time. The only discernable parallel is to the antitrust hearing in Docket.No. P-636A, in which.

prehearing procedures are now in'rogress, and where FPL has sig-nailed its intention to defend vigorously against the unwarranted allegations brought by the FMUA and a group of municipalities which largely overlaps with the Petitioners here. The submission of

pleadings which

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may have the effect of impairing the financial strength of an electric utility, in the expectation of strengthening the filing parties'argaining leverage in other contexts, represents a deplorable abuse of this Commission's processes.

For the foregoing reasons, as supported in detail below, it is the position of FPL that the Petition should be summarily denied in all respects.

Z. PROCEDURAL BACKGROUND A. The Operating Plants On March 25, 1966, FPL applied for licenses to construct 3/

and operate Units 3 and 4 at the Turkey Point plant. The applica-tion reauested licenses pursuant to Section 104b of the Act. On 4/

April 29, 1967, the Commission issued construction permits for 5/

the Turkey Point facilities. On July 19, 1972, the Commission 3/ Docket Nos. 50-250 and 50-251.

4/ The Nuclear Regulatory Commission succeeded to the licensing responsibilities of the Atomic Energy Commission pursuant to 42 U.S.C. 5841, enacted October ll, 1974. Throughout. this Pesponse the term "Commission" refers without differentiation to the Nuclear Regulatory Commission and its predecessor, the Atomic Energy Commission.

5/ 3 AEC 195.

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issued an operating license

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for Turkey Point Unit. No. 3 and, thereafter, on April 10, 1973, an operating license was issued for Turkey Point Unit No. 4.

Q7 All such licenses were issued pursuant to Section 104b of the Act, and no antitrust review pursuant to Section 105c was requested by any person or conducted by the Commission in connection with any of the licenses described above.

The application for licenses for Unit No. 1 of the St.

Lucie plant, submitted on January 29I 1969, also requested licenses 8/

pursuant to Section 104b. A construction permit was issued by 9/

the Commission on July 1, 1970, followed by issuance of an operating 10/

license on March 1, 1976. Both such licenses were issued pursuant to Section 104b, and no antitrust review pursuant. to Section 105c was requested by any person or conducted by the Commission in connection with either license.

At no stage of the licensing or operation of any of these three plants was any request for a hearing on antitrust matters received from any member of the public until this Petition was submitted on August 6, 1976.

6 Operating License No. DPR-31, Docket No. 50-250.

7/ Operating License No. DPR-41, Docket No. 50-251.

+8 Docket No. 50-335.

9/ 4 AEC 373.

'1o/ Operating License No. DPR-67, Docket No. 50-335.

B. St. Lucie Unit. No. 2 The application for a construction permit for St. Lucie Unit No. 2 was docketed on September 4, 1973. In accordance with the 11/

Act as amended in 1970, the application requested licenses under Section 103 of the Act. Accordingly, the Commission embarked on an antitrust review pursuant to Section 105c of the Act. The application was transmitted to the Attorney General of the United States for his review and advice. On November 14, 1973, the Attorney General advised the Commission that "[i]n view of the consideration Applicant is now giving to the question of access by other entities to the nuclear generation, and the probability that participation in St. Lucie Unit No. 2 will be made available to certain of these

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entities [footnote omitted], the Department does not at this time

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recommend an antitrust hearing."

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Instead, the Attorney General recommended that the Commission "abide the outcome" of FPL's further consideration of certain matters, primarily regarding offering of an opportunity to participate in St. Lucie Unit No. 2 (together with necessary support services) to certain entities which had 13/

indicated an interest in participation.

ll/ Public Law 91-560 (84 Stat. 1472) (1970).

12/ 38 Fed. Reg.. 26483-26484. The complete advice letter is attached as Attachment A.

On November 21, 1973, the Commission published a Notice of Receipt of Attorney General's Advice and Time for Filing of Petitions to Intervene on Antitrust Matters, specifying December 28, 14/

1973, as the final day for filing of intervention petitions.

No such petitions were filed by any of the Petitioners or any other person.

Subsequently, FPL and the Staff of the Commission agreed upon certain license conditions which the Commission's Director of Licensing found "would satisfy the staff with regard to the anti-trust issues that have been raised in connection with this applica-tion and the position of the Department of Justice as expressed in its letter of November 14, 1973, and accordingly obviate an antitrust hearing."

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'5/ As a result FPL was advised that the 'agreed upon "conditions will be included in any license issued in connection

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with the above application."

Thereafter, FPL wrote to the City of New Smyrna Beach, the only Petitioner named in the license conditions, transmitting a copy of the license conditions, stating FPL's willingness to offer participation to New Smyrna Beach and suggesting a meeting to discuss the matter further.

14/ Id.

15/ The letter of February 25, 1974, from the Commission's Director oF Licensing together with the attached license conditions are attached hereto (Attachment B). FPL indicated its acceptance of those conditions by letter to the Director of Licensing of February 26, 1974 (Attachment C). Hereafter, these license conditions will be referred to as "the St. Lucie Unit No. 2 license conditions" or "the license conditions."

16/ Id., Attachment B.

From the time of docketing of the application for St. Lucie

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Unit

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No. 2, throughout the

~ antitrust review process described above, and continuously through the present date, correspondence received by FPL from New Smyrna Beach indicates that New Smyrna Beach was actively advised and represented by Robert A. Jablon, Esquire of Spiegel and McDiarmid, the attorney for'he Petitioners.

In the meanwhile the St. Lucie Unit No. 2 application has progressed through a contested hearing on environmental and site 17/

suitability matters and through evidentiary hearings on radiological health and safety matters. Work is now in progress pursuant to a limited work authorization issued by the Commission on March 17, 1975. Upon the completion of such further proceedings as may be required before the Atomic Safety and Licensing Board, including proceedings necessary to comply with the decision of the Appeal Board in ALAB-'335, that Licensing Board will be in a position to 18/

authorize issuance of a construction permit. At present FPL is hopeful that a construction permit will be issued near the end of 1976.

If an antitrust hearing were to be convened in connection with the construction permit proceeding, it is clear that the Commission would not issue a construction permit for the facility 17/ See Partial Initial Decision, Florida Power 6 Li ht Com an (St. Lucie Plant, Unit 2), LBP-75-5, 1 NRC 101 (1975 ), affirmed in part and remanded in part, ALAB-335, NRCI-76/6, 330 (June 29, 1976).

I 18/ FPL i.s unable to predict at this time whether any further proceedings will be required as a result of the steps described

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by the Statement of Policy issued by the Commission on August 13, 1976.~

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an effective decision

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had been rendered on the antitrust.

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issues,

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except upon unanimous agreement by the parties to the

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antitrust proceeding. The Petitioners state that "they do not seek a delay in actual construction" of St. LucieUnit No. 2, 20/

thus implying that they would, enter into such an agreement.

However, the Petitioners disclaimer of intent to delay construction is also couched with references to a "temporary [construction] permit" 21/

and is carefully conditioned upon some form of interim relief" which 22/

they characterize as "in the nature of a preliminary injunction."

Thus there is no realistic possibility of construction being permitted to proceed during an antitrust hearing as a result of an agreement among the parties. Moreover, it is by no means certain that FPL's management would invest hundreds of millions of dollars in construction prior to final issuance of a construction permit.

Accordingly, it must be assumed that convening of an anti-trust hearing at this date would significantly delay issuance of a construction permit, and, therefore of construction of the facility.

19/ Louisiana Power and Li ht Co. (Waterford Steam Electric Gen-erating Station, Unit 3) 6 AEC 48, 50, n.2 (February 23, 1973);

6 AEC 619, 621-22 (September 28, 1973); Duke Power Co. (Catawba Nuclear Station, Units 1 a 2), 7 AEC 307, 309 (April 8, 1974);

Toledo Edison Co. (DavisMesse Nuclear Power Station, Unit 1),

ALAB-323, NRCI-76/4, 331, 340 (April 14, 1976).

20/ Petition, pp. 14, 39.

21/ Id,. p. 39, n.l.

22/ Id., pp. 14, 84-85.

II. THE REQUEST FOR A HEARING ON THE OPERATING LICENSES FOR TURKEY POINT UNITS NOS. 3 AND 4 AND ST. LUCIE UNIT NO. 1 SHOULD BE DENIED Petitioners acknowledge that the operating licenses for Turkey Point Units Nos. 3 and 4 and St. Lucie Unit No. 1 (the "existing licenses" ) were issued under Section 104b of the Act, and seek review of these licenses "to determine whether the Commission has 'impose [d] the minimum amount of... regulations and terms of license as will permit, the Commission to fulfillits obligations under [the Atomic Energy Act],'" pursuant to such section (Petition,

p. 2) . They state that they seek a hearing under the provisions 23/

of Sections 104, 185, 186, 197 and 188 of the Act as to whether these licenses should be revoked or modified to remedy the 24/

effects of FPL's alleged anticompetitive activities.

It should'irst be noted that the tardy requests as to the existing licenses should be denied because they do not comply with any procedure available under the Act or regulations. Nothing in the sections of the Act cited by Petitioners authorizes any person to request an antitrust hearing with respect to an out-standing license. The Petitioners do not cite any Commission regulation 23/ At page 46, however, they cite Sections 183, 185, 186 and X87 of the Act, and not Section 188. It is difficult to under-stand how Section 188, "Continued Operation of Facilities", could possibly relate to the subject matter of the Petition.

24/ Petition, pp. 2-3

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which authorizes the filing of such a request, and, in fact, no such regulation exists. The one established means for suggesting that a proceeding should be initiated to revoke or modify a license is by filing of an appropriate request with the Director of Nuclear Reactor Regulation under Section 2.206(a). Clearly, the Petition does not purport to have been submitted under the provisions of thi.s regulatioa. Thus, there simply is no procedural basis for entertaining the Petition as it relates to the existing licenses.

However, the Petition is flawed substantively as well as procedurally, because there is no statutory basis for the Commission to conduct the requested antitrust review of the existing licenses or to revoke or modify them on the antitrust grounds alleged by

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Petitioners.

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It is difficult to attempt to rebut Petitioners'egal theory as to the jurisdictional basis for their hearing request, since they never set it forth explicitly. However, there appear to be two threads to their argument.

First, Petitioners appear to contend that the antitrust review provision of Section 105c are somehow applicable. In this regard, they state that "$ t]o a large extent the Commission's obligation to provide for appropriate antitrust review for these units is analagous to its obligation as to St. Lucie Unit No. 2" Petitioners'eferences to Sections 50.54 and 50.100 only reflect that licenses are subject to revocation, suspension or modification, "in accordance with the procedures provided by the act and regulations" (Section 50.54(e)) nothing therein provides for the initiation of a hearing simply by the filing of a request therefor.

and attempt to incorporate their St. Lucie Unit No.

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2 argument 26/

into their argument about the existing licenses.

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En addition, by pointing to the language changes in Section 104b made by

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Congress in 1970 and by their repeated underscoring of the "now 28/

or thereafter" language of Section 183, the Petitioners appar'ently contend that the 1970 amendments to the Act were intended to subject Section 104b licenses to the antitrust review reauirements of Section 105c. Finally, Section 186, which defines the Commission's power to revoke licenses, and which is cited throughout the pertinent-section of the Petition, provides for revocation for reasons "which would warrant the Commission to refuse to grant a license on an initial application.<< Thus, Petitioners'rgument appears to be

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grounded on the contention that the pre-licensing review provisions

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of Section 105 would apply to the issuance of any of the existing licenses, were the Commission initially considering any such issuance at this time.

The second thread of the argument appears to be that one or more of Sections 183, 185, 186 and 186 of the Act authorize the Commission, independently of Section 105c, to conduct a proceeding to determine whether a licensee is in compliance with the anti-trust laws, and, to modify or revoke a license i it is not.

26/ Petition, p. 44 27/ Petition, p. 45 28/ Petition, p. 46-47.

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There is no merit whatsoever to either of these arguments.

A. The Antitrust Review Provisions of Section 105c Do Not Apply to the Existing Licenses It is clear beyond question that, prior to the 1970 amendment to the Act, the antitrust provisions of Section 105c were not 29/

applicable to licenses issued under Section 104b. Indeed, the Petitioners do not. appear to challenge this proposition. The ques-tion that they appear to raise is whether, as a result of the 1970 amendments, there is some basis for applying the antitrust provisions of Section 105c to licenses issued under Section 104b.

An examination of the legislation itself and of the accompanying legislative history leaves no doubt that Congress did not intend

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such a result, except in one specifically defined area not

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pertinent here. ~

Prior to 1970 the Act provided that the Commission could license power reactors under Section 104b (for research and develop-ment and demonstration purposes) or, after it made a finding of "practical value," under Section 103 (for commercial purposes).

the Commission had not made such a finding by 1970, all power reactor licenses to that date were issued under Section 104b. No antitrust review pursuant to Section 105c was conducted by the Commission in con-nection with the. issuance of any of these Section 104b licenses.

29/ See Cities of Statesville et al. v. AEC, 441 r .2d 962 (D.C.

Cir.~ 1969) .

30/ Section 105c('3) .~

This procedure was challenged by the petitioners in the Statesville case and upheld in every respect by the Court, which concluded that "Section 105c is patently restricted to Section 103 licensing" and, therefore, is not applicable to Section 104b 31/

licenses.

In part as a result of the controversy reflected by the 32/

Statesville,case, Congress conducted lengthy hearings and, acting in late 1970, amended the Act in significant respects. In the 1970 amendments to the Act, Congress abolished the requirement that the Commission make a finding of "piactical value" and provided that "any license hereafter issued for a utilization or production facility for industrial or commercial purposes shall be issued 33/

pursuant to Section 103." ~ However, Congress provided in Scc-tion 102b that if

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construction or operation of facilities with "industrial or commercial" purposes had been authorized under a

Section 104b prior to the 1970 amendments, any license hereafter issued "shall be issued under subsection 104b." The Joint Com-mittee, in explaining the purpose of this provision, stated that:

it would impose an unnecessary hard-ship on subsection 104b licensees to compel 31/ 441 F.2d at 973.

32/ Hearings Before the Joint Committee on Atomic Energy on Prelicensing Antitrust Review of Nuclear Power Plants, 91st Cong., Parts 1 and 2 (November 18-20, 1969 and April 14-16, 19701 (hereinafter "Joint Committee Hearings" ) .

33/ Section 102a.

them to convert their permits .to section 103 licenses; the matter of potential anti-trust review of certain subsection 104 licenses is specifically dealt with in Section 6 of the bill, and is discussed below, and it appears to the committee that no useful purpose could be serve by compelling any conversion to Section 103."

The provisions for antitrust review by the Commission are set forth in Section 105c and apply, with one exception, only to applications for construction permits and operating licenses filed under Section 103. The one exception is contained in Section 105c(3) which provides that if a construction permit had been issued under Section 104b prior to 1970, persons who intervened or who sought to intervene in the construction permit proceeding "to obtain a determination of antitrust considerations or to advance a j urisdic-

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tion basis for such determination" would have the right to request,

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within a specified time, an antitrust review of the operating license application. The purpose of this section was to give persons who had sought and had been denied antitrust review of Section 104b construction permit applications the opportunity to raise these 35/

issues in connection with the applications for operating licenses.

TEuis it is cl'ear that Congress carefully consideied the question of antitrust review in connection with issuance of operating licenses 34/ Report of Joint Committee on Atomic Energy, H.R. No. 91-1470, 91st Congress, 2nd Session .(September 24, 1970) (hereinafter "Joint Committee Report" ) pp'. 26-27.

35/ ZQ., p. 30.

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for plants for which construction permits were issued under Section 104b, and concluded, with one explicit and limited exception, that no such antitrust review should be required.

In the face of this explicit legislation and legislative history to the contrary, Petitioners appear to contend that Section 105c is applicable to FPL's existing licenses. Their basis appears to be the modifications made to Section 104b by the 1970 amendments.

Prior to the 1970 amendment, Section.104b read:

"In issuing licenses under this subsection, the Commission shall impose the minimum amount of such regulation and terms of license as will permit the Commission to fulfill its obligations under this chapter to promote the common defense and security and to protect the health and safety of the public and will be compatible with the regulations and terms of license which would apply in the event that a commercial license were later to be is sued pursuant to Section 2 133 of this Title for that type of facility. ' ~

11 It was modified in 1970 to read in pertinent part:

"In issuing licenses under this subsection, the Commission shall impose the minimum amount of such regulation and terms of license as will permit the Commission to fulfill its obligations under this chapter."

Apparently, the Petitioners contend that this deletion from Section 104b of all of the language following "to fulfill its obligations under this chapter" was intended to expand the scope.

of the remaining requirement. This perceived change in the meaning of Section 104b appears to be the reason for Petitioners'mphasis on the portion of Section 183 which makes all licenses subject to

"all of the other provisions of the chapter, now or hereafter 36/

in effect.

The only logical extension of this argument. is that by deleting certain words from Section 104b Congress intended to overrule the Statesville case and to apply the antitrust review provisions of Section 105c to all licenses whether issued under Section 103 or Section 104b. This'osition is nonsensical in view of the legislative history described above and, if adopted, would make Section 105c(3), one of the most carefully considered and drafted provisions of the 1970 amendments, completely superflous. Moreover.,

Congress stated explicitly its reasons for deleting the language in question: "In revising the text of subsection 104b, the committee has retained the present. requirement . . . but deleted the balance of the text because subsection 104b licenses would no longer be 37/

convertible to Section 103 licenses under the bill.

As a result of a thoughtful decision by Congress, the anti-trust review provisions of Section 105c do not apply to FPL's existing license, issued pursuant to Section 104b. Accordingly, no request for an antitrust hearing in the nature of a Section 105c proceeding can be granted. Moreover, any effort to modify or change the existing licenses by invoking indirectly the antitrust provisions of Section 105c must fail.

36/ Petition, pp., 46-47, emphasis by Petitioners. The Petitioners also appear to rely upon the change in Section 104b in support of the argument that one or more of Sections 183, 185, 186 and 187 permit the Commission to undertake an antitrust proceeding independent of Section 105c, i.e., to determine whether PPL is controverting the "overall purposes'! of the Act (Petition, p. 45). We address this argument in a subsequent section of this Response.

'37/ Joint Committee Report) p 28.

B. There Is No Basis For Granting The Relief Requested by Petitioners Independent of Section 105c.

The Commission's antitrust responsibilities other than as specified in Section 105c are clearly spelled out in Sections 105a and 105b.

Section 105a authorizes the Commission to "suspend, revoke or take such other action as it .may deem necessary" with respect to a license when the licensee has been found by a court to have violated the antitrust laws "in the conduct of the licensed activity. " It is clear, however, that the Commission' authority under Section 105a, as Petitioners recognize, becomes operative only after the licensee has been found by a court to have violated 38/

the antitrust laws. Thus, Section 105a provides no basis for the grant of the present Petition.

Section 105b provides only that the Commission shall report to the Attorney General any information it may have with respect to licensed plants "which appears to violate or to tend toward the violation of any of the foregoing [Antitrust] Acts, or to restrict free competition in private enterprise." Thus, it also provides no basis for the grant of the present Petition.

The Petitioners seek to invoke, generally through the provisions of one or more of Sections 183, 185, 186 and 187, and more specifically through reference to the amended language of Section 104b, 38/ One of the Petitioners, the City of Gainesville brough~ a civil antitrust, action against FPL. However, after a trial on the merits

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and a jury verdict favorable to FPL, judgement was entered for FPL by the United States District for the Middle District of Florida

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.(No.68-305 Civ.). Gainesville. has taken an appeal from the judgment.

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some expression of overriding policy in the Act which would

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justify the commencement of antitrust proceedings without reference

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to any particular jurisdictional provision of the Act. En this

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regard the Petitioners refer to Section 1 of the Act which states that one of the policies underlying the act is to "strengthen free corn" petition in private enterprise."

However, these same'arguments were considered and rejected in the Statesville case. The court charactertized and disposed of the argument as follows:

"[W]e note that the petitioners...base a broad public policy argument their'ontentions...on that can be seen running, through many the administrative law decisions of this court and other courts [footnote omitted]. They say, correctly, that the [Act] contains specific caveats urging the Commission to act in the public interest by promoting 'free competition in private enterprise'....[They] also assert that section 105(a) of the Act...makes it clear that antitrust laws are applicable to everything contained in that chapter. Also, under section 105(a) the Commission is empowered to suspend or revoke licenses in cases where courts of competent jurisdiction have found antitrust violations.

What petitioners fail to see is that, in reading the legislative history of this Act, one can find many examples of the draftors'ntent to limit antitrust considerations to specific portions of the statute while expanding the health and national security considerations of the Act as a whole." ~/

~/ 441 P. 2d at 972.

The court pointed, out that the Commission is not precluded from "keeping an administrative eye on anticompetitive effect of the use of these facilities once they are constructed under Section 104(b), "but that its proper recourse is "to report to the Attorney General any information" about such anticompet-itive effects pursuant to Section 105b. 40/

Thus, there is no basis whatsoever for 'commencing any proceeding, within or without the ambit of Section 105, to consider whether the existing Se"tion 104b licenses should be modified or revoked on grounds of alleged anticompetitive activity.

III. THE LATE PETITION FOR AN ANTITRUST HEARING ON THE CONSTRUCTION PERMIT APPLICATION FOR ST. LUCIE UNIT NO. 2 SHOULD BE DENIED A. The Board Must Consider The Late Petition To Intervene in St. Lucie Unit No. 2 In the Context Of The Statutory Scheme Set Forth ln Section 105c We will set forth in detail in the succeeding portion of this Response why this untimely Petition should be denied for failure to satisfy the pertinent requirements of Section

2. 714 (a) .

Since Section 2.714(a) has come into play more often in 40/ Id., at

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instances involving late petitions in the Commission's envir-

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onmental or health and safety proceedings, however, we believe it would be useful to the Board first to point up the distinctive framework of statutes and regulations that.

governs the initiation and conduct of pre-licensing antitrust review by the Commission. As we will show, both Congress and the Commission have taken special care to assure that any potential antitrust issues are identified at an early stage of the licensing process and resolved in timely fashion.

This special care is reflected in the explicit provisions of 1

Section 105c of the Act, the legislative history of those provisions and the Commission's implementing rules and regulations.

1.'he -Provisions of Section 105c.

The intent of Congress to provide for an early review and opportunity for hearing in connection with antitrust aspects of an application for a construction permit is made clear in the provisions of Section 105c. Although the Act is silent as to the timing of review of environmental or health and safety aspects of an application, Section 105c mandates that prompt action be taken by the Commission and the Attorney General with respect to the necessary pre-licensing antitrust review.

Thus, Section 105c(1) requires that the Commission "shall promptly transmit to the Attorney General" a copy of the construction permit application, and that the Attorney General shall render his advice within a reasonable time, "but in no event to exceed 180 days after receiving a copy" of the application. Accordingly, the statute mandates that the antitrust review begin promptly upon receipt of the application and places a strict time limit of six months upon the Attorney General in rendering his advice. As we will show below, these were carefully conceived and'deliber-ate mandates.

Thereafter, Section 105c(5) requires that "[p] romptly upon receipt of the Attorney General's advice, the Commission shall publish the advice in the Federal Register."

Publication in the Federal Register by the Commission of the Attorney General' advice is the mechanism which triggers the period for filing of petitions to intervene and requests to hold an antitrust hearing. Again, this highlights the Congressional intent that antitrust hearings, if any are required, be commenced at an early stage.

2. Congressional Intent in Providing For Early Antitrust Review The legislative history of Section 105c leaves no doubt

that Congress was acutely aware of the need to avoid delays in the issuance of construction permits arising from the requirements for prelicensing antitrust review. Although Congress did not expressly authorize the Commission to issue a construction permit prior to completion of the antitrust review and hearing, nevertheless, Congress did attempt to minimize this problem in the provisions of Section 105c by providing for early antitrust review and opportunity for hearing. Congress expected that the anti-trust proceeding would be conducted apart from the radio-logical health and safety review on a schedule that would not delay the issuance of any construction permit. This expectation is reflected in the report of the Joint Committee when Section 105c was amended:

"The committee expects and will urge the Commission to make every reasonable effort to deal with the potential antitrust. feature under subsection 105c. of the bill fully but expedi-tiously. Clearly a separate board or boards should be utilized in the implementation of paragraphs (5) and (6) of subsection 105c. The committee anticipates that all the functions contemplated by these paragraphs would be carried out before the radiological health and.

safety review and determination process is completed, so that. the entire- licensing procedure is not'further extended'xn tame'b

reason of the added antitrust review function."

1 The Commission clearly understood and agreed to implement this intent. In answering written questions submitted by the Joint Committee the Commission expressed the view that "we would expect that in most cases the prelicensing antitrust review would not extend the licensing process." It discussed the "separate hearing on antitrust issues well in advance of our usual health and safety hearings" as a potentially effective mechanism to achieve this objective.

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When Representative Holifield introduced the 1970 amend-ments on the floor of the House, he reiterated this point:

41/ Joint Committee Report, -pp. 15-16 (emphasis added). See also, for example, the exchanges between Representatives Hosmer and Holifield and Mr. Hennessey, the Commission's General Counse3, at Joint Committee Hearings, Part 1, pp. 90, 94; the further expressions of concern over possible delay by members of the Joint Committee (Rep. Holifield, Id., p. 91; Rep. Hosmer, Id., Part 2, p. 485); the testimony of representatives of z.ndustry evidencing concern about possible delay '('e~., Carl Horn, Jr., testifying on behalf of the Edison Electric Institute, Id., Part 2,. p. 328; J. Harris Ward, Chm. of the Board, Commonwealth Edison Co., Id., Part 2, p. 383) .

42/ Id., p. 98.

'"We believe a separate board can be utilized by the Commission in connection with such anti-trust considerations. This feature of the total

,licensing process should be completed by the Commission before the radiological health and safety matters are concluded in the licensing procedure." 43/

Moreover, he left no doubt that the concern for timely consideration of antitrust issues applied equally to issues raised by persons other than the Attorney General:

"In the latter regard [other persons raising antitrust issues], the committee intends that in any event, the Commission's rules and regulations will set a fixed period in which such issues may be raised.

It is hoped that, this period will coincide with and not extend beyond the specified period in which the Attorney General's advice may be rendered. The bill co'ntemplates that all aspects of the antitrust considerations constituting part of the Commission's total licensing procedure, including the ultimate findings of the Commission, would be dealt with in such a way as not to impose an additional delaying factor." 44/

In establishing an early mandatory prelicensing antitrust review, Congress was concerned, not only with the prospect of potential licensing delay, but also with providing the utility with an antitrust. decision at an early stage, before the utility committed massive funds toward the construction of the 43/ 116 Congressional Record, p. 34309 44/ 116 Congressional Record, p. 34309.

proposed facility.

In an October 15, 1969 speech that was made part, of the record of the first day of legislative hearings (November 18, 1969), the Director of Policy Planning, Antitrust Division, Department of Justice, had noted that one of the basic reasons

'I for the application of antitrust policies at the time facilities are licensed is that such procedure

.enables companies to be advised. at an early stage in the planning of projects concerning any inconsistency between their plans and competitive policies. Thus, we should be able to minimize the number of times plans are thrown into uncertainty after significant, time and resources have been committed to them". 45/

The General Counsel of the Commission, Mr.

testified to the same effect, that:

"By bringing the Attorney General into our proceedings before a license is issued, conditions which would tend to create or maintain a situation inconsistent with the antitrust laws were the plant to be built can be identified and resolved. Thus, it. should be easier to make the necessary changes before commitments by the applicant are made". 46/

Mr. Walker B. Comegys, Acting Assistant Attorney General, Antitrust Division, Department of Justice, expressed similar views in the course of his testimony. He noted that:

45/ Joint Committe'e Hearings,

~

Part 1, p. 7.

46/ Id., page 72.~

"the AEC prelicensing review may be useful in resolving antitrust problems before they seriously disrupt planning, construction and use of new facilities." 47/

He emphasized that facing antitrust questions "clearly at the outset of the licensing proceeding, and obtaining the Attorney General's advice on the issue, can permit an early and orderly resolution of problems before much money and time has been spent." 48/

Indeed, Chairman Holifield began the Joint Committee Hearings on this very note, saying in his opening statement:

"I have also tried to make it clear that no utility that, is intent on serving the public interest need fear any proposal I have made.

"preconstruction antitrust review will enable the utilities to know at an early stage in their planning whether their plans violate

.the antitrust statutes." 49/

3. The Commission's Rules and Regulations The objectives reflected in the statute and its legis-lative history hive also"been clearly reflected in the Commission' implementing regulations.

47/ Id., page 1'20.

48/ Id., p. 121.

49/ Id., p. 319.

One of the principal mechanisms to assure a timely and.

orderly antitrust review has been the adoption of provisions in Section 50.33a of the regulations requiring early submittal of antitrust information. Such information must now be submitted at least 9 months, but not more than 36 months, prior to the date that any other part of the construction permit application is filed. As explained by the Commission, such early submittal of antitrust information was required because of the significant shortening of time for safety and environmental reviews anticipated by the Commission. As stated by the Commission:

"The early filing of antitrust information General and the should permit the Attorney Commission to complete the antitrust review process, including antitrust hearings where necessary, concurrently with other licensing reviews." 50/

Similarly, Section 2.102 of the regulations specifies a time schedule for each step of the antitrust review, through the final date for submittal of petitions for leave to intervene. Appendix A to Part 2, which sets forth the general policy and procedures that the Commission expects to be followed in the conduct of licensing proceedings, expressly states the Commission's intent that its proceedings be conducted expeditiously.

50/ 39 Federal Register, p. 14613 (April 25, 1974).

According to Section Z(e) of Appendix A, which specifically relates to antitrust proceedings:

"If a hearing on antitrust aspects of the application is requested, or is recommended by the Attorney General, it. will generally be held separately from the hearing on matters of radiological health and safety and common defense and security described in Sections I-VIII of this Appendix. The notice of hearin will fix a time for. the hearxn , which wall be as soon as racticable after the recei t of the Attorney General's advice and compliance with Section 189a of the Act and other provisions of this part."

(emphasz,s added

4. Consideration of Statutory Scheme.

The carefully structured statutory and regulatory framework reflected in provisions of Section 105c, the legislative history and the Commission's rules and regulations must be carefully weighed by the Board in ruling on Petitioners'xtremely tardy Petition.

Taking the statutory scheme into consideration, the Board should not grant the Petition absent some demonstrated overriding reasons to do so in accordance with the requirements of Section '. 714 (a) .

This is particularly true since granting the Petition will cause substantial delay in the issuance of a construction permit for St. Lucie Unit No. 2 or will cause FPL to expend massive sums of funds in advance of knowing whether the construction permit will be ject to further antitrust conditions.

~

B. The Nontimely Petition Does Not Satisfy the "Substantial Showing of Good Cause" Requirements of Section 2.714(a)

~

Section 2.714 (a) of the Commission's Rules of Practice provides in pertinent part as follows:

Nontimely filings will not be entertained absent a determination by the Commission, the presiding officer or the..atomic safety and licensing board designated to rule on the petition and/or request that the petitioner has made a substantial showing of good cause for failure to file on time, and with particular reference to the following factors.

(1) The availability of other means whereby the petitioner's interest will be protected.

(2) The extent to which the petitioner's partici-pation may reasonably be expected to assist in de-veloping a sound record.

(3) The extent, to which the petitioner's interest will be represented by existing parties.

(4) The extent to which the petitioner's participation will broaden the issues or delay the proceeding."

~

Zn interpreting the general requirements of this section in instances where a late petition has been filed in an on-going proceeding, the Commission has held that "the purpose of Section 2.714(a) is to establish appropriate tests for disposition of untimely petitions in which the reasons for the tardiness as well 51/

as the four listed factors should be considered. . . . " ln other words, "the appropriate disposition of untimely petitions depends upon both (1) the sufficiency of the justification, if any,

-offered for the tardiness and (2) the assessment of four factors set forth in the Rules."

made

• 1 ' '

in the context of a

~52

'ld, 1 proceeding where a hearing was being held and would continue whether or not the late petition was granted.

The NRC Staff has recently argued in an instance involving a late petition for an antitrust hearing that "the four criteria contemplate an on-going proceeding" and "it does not appear that applying the four factors in [that] proceeding would. be of any 51 Nuclear Fuel Services, Inc. (Nest Valley Reprocessing Plant),

CLX 75 4~ 1 NRC 273~ 275 (1975) 52/ Vir inia Electric and Power Com an (North Anna Station, Units 1 and 2), AL'AB-289, 2 NRC 395, 396 (1975)

assistance." From the wording of the four factors listed in Section 2.714(a} it would'ppear, at best, unclear that the authors intended them to be applied in an instance where there did not 54/

exist an on-going proceeding. In Marble Hill the Licensing Board did apply the first factor but concluded "that the second, third.and fourth factors obtain only where there is an on-going 55/

antitrust proceeding, and thus do not apply herein."

As we will demonstrate, Petitioners have failed to satisfy the requirements of Section 2.714(a) regardless of whether the 53/ NRC Staff's "Answer to Motion for Leave to File Untimely Petition to Intervene and Request for Hearing" in Public Service

~ ~

Com an of Indiana, Inc. (Marble Hill Nuclear Generating Station, Unz.ts 1 and 2, Dockets Nos. 50-546-A, 50-547-A)(April 7, 1976)

(page 5). The NRC Staff pointed out. that "Since the Attorney

~

General did not. recommend a hearing, intervenors did not request a hearing in a timely manner,. and the Staff did not otherwise recommend a hearing, the antitrust aspects of the construction permit application have been completed." Thus in Marble Hill, as in the instant case, no antitrust hearing would be held unless the late petition was granted.

54/ Thus, the reference to "other means" implies that an existing means, namely an on-going hearing, exists; assisting "in developing a sound record" implies that a hearing record is being developed; "existing parties" implies that there is a hearing with parties; and, obviously, broadening "issues" and delaying a "proceeding" implies the existence of issues and a proceeding.

55/ Public Service Com an of Indiana,Inc. (Marble Hill Nuclear Generating Plant, Units 1 and 2), LBP-76-25, NRCI-76/6,847,856 (June 15, 1976)

four factors listed therein are to be considered. They have utterly failed to satisfy their "substantial burden in justifying 5l/

their tardiness." And, even if the four factors are considered, they do not weigh in favor of granting the Petition but instead mandate its denial.

As

.7144 7

'll

1. The Tardiness in Filing Is Not Justified the Commission noted in describing the purpose of Section "Obviously, an important policy consideration underlying the rule is the public interest. in the timely and orderly conduct of our proceedings.

As the Commission has recognized, 'fairness to all parties. . .and the obligation of administra-tive agencies to conduct their functions with efficiency and economy, require that Commission adjudications be conducted without delays.'0 CFR Part 2, Appendix A.unnecessary Late petitioners properly have a substantial burden in justifying their tardiness. And the burden of justifying intervention on the basis of the other factors in the rule is considerabl~g greater where the latecomer has no good excuse."

The usual "substantial burden in justifying their tardiness" that late petitioners bear under Section 2.714(a) is even heavier under the particular circumstances of this proceeding.

In the first place, it should be axiomatic that the longer the period of tardiness involved, the greater should be the 67 57/ Id ,

~6 at 275.

justification; and, in this case, the period of tardiness is unbelievably lengthy, over 2-1/2 years. Petitioners were apparently extremely slow even to realize that they had an anti-trust concern which they believed warranted a hearing as to St.

Lucie Unit No. 2. The first such indication came in a pleading in another proceeding before the Commission filed by entities sub-stantially identical to these Petitioners on April 14, 1976, more 5S/

than 2-1/4 years after the time for intervention had expired.

And, even thereafter, Petitioners still required more than four 59/

addit'onal months until the present Petition was filed. The characterization by another Licensing Board of a petitioner's delay in filing a late petition appears equally apt here; it represents "at best, a casual attitude toward'ursuing its interest with respect 60/

to a, most. serious matter. Actually the period of tardiness here involved reflects more than."a casual attitude," it demonstrates 58/ Joint Petition of Florida Cities for Leave to Intervene and Request for Conference and Hearing, Docket No. P-636A (South Dade Plant), pp. 9-14 (April 14, 1976).

59/ Petitioners, of course, allege no good cause at all for this additional four month delay. Even this four month period alone exceeds other periods of lateness that have been held to bar granting of a petition. For example, the petition of the City of Cleveland for an antitrust hearing with respect to Beaver Valley, Unit 2 was denied in an instance involving a filing late by approxi-mately 60 days. Ducuesne Li ht Comoan, et al, (Beaver Valley, Unit

2) 7 AEC 282 (1974), rec(nest for reconsideration denied, 7 AEC 705 (1974) aff'd; ALAB-208, 7 AEC 959 (1974); aff'd; CLZ-74-25, 7 AEC 955 (1974} .

60/ Beaver Valle , 7 AEC at 284.

a serious attempt to "make

~

a mockery of procedural rules and 61/

create chaos in the licensing and hearing process."

~ ~

In addition, Petitioners nontimely petition flies in the face of the carefully conceived statutory and regulatory scheme for timely consideration of antitrust issues in licensing pro-ceedings that. we have described at length above. The Commission has recognized that the burden under Section 2.714(a) can vary depending upon the particular circumstances involved. For example, in an instance where the late petitioner had shown only a shaky claim to standing, the Appeal Board noted that "given the at best marginal basis for the asserted right, we can demand much more of [petitioner] in terms of a showing either (1) that

~ ~ ~

its not having filed the petition on time was due to circumstances

~ ~ ~ ~

beyond its control or (2) that the four factors. . . . weigh heavily

~

in [petitioner's] favor." 'imilarly> whatever "substantial

~62 burden" a late petitioner faces in a Commission proceeding pertaining to radiological or environmental issues, the Commission can "demand much more" when the grant of the late petition would so clearly serve to frustrate the statutory intent with respect to timely review of antitrust issues.

Having established the exceptionally heavy burden that these

~61'ee Beaver Valle , 7 AEC at 707.

62/ Lon Island Li htin Com an (Jamesport Nuclear Power Station, Units 1 and 2), ALAB-292, NRCI-75/10 631, 646 (1975) . (emphasis added)

-3 6-.

63/

Petitioners must bear in justifying the lateness of their Petition, we now turn to the Petition itself to ascertain how they have sought to meet such burden. As best we can determine, such attempt is made solely in the somewhat .unfocused and unclear discussion of "good cause" contained on pages 16-24 of the Petition. Apparently, Petitioners there seek to establish that they have a valid excuse for filing a petition more 'than 2-1/2 years late--that excuse being based upon events alleged to have occurred after the opportunity for intervention expired on December 28, 1973. He vill proceed 63/ It is interesting to note that counsel to Petitioners though experienced in NRC proceedings - neither discusses burden under Section 2.714(a) in the Petition nor even mentions the leading NRC decisions that provide guidance as to. the application of Section 2.714(a) to late petitions. We do note that pages 31-36 of the Petition contain a rambling discussion presumably supporting the notion that changed circumstances "legally warrant" the grant of Petitioners late petition. ~

owever, we fail to perceive the relevance of such discussion. ~

etitioners are arguing that, intervening events can, in appropriate

~ ~ ~

If instances, constitute an element of "substantial showing of good cause"

~

within the context of Section 2.714(a), their erudition is unnecessary.

If they mean that "changed circumstances" can for a late petition outside of the framework ofprovide a legal basis Section 2. 714 (a) their discussion is both obscure and wasted, since the*Commission is governed by such rule. We will briefly respond, however, to one portion of their argument, namely that "Congress certainly did not intend that intervention to raise anticompetitive issues should be foreclosed.

merely by passage of time beyond the date initially set forth for the filing of petitions to intervene." (p. 33). There is, of course, absolutely no basis for Petitioners 'mplication that Congress intended that the Commission's procedural rules pertaining to late filings be ignored. The evidence to the contrary is overwhelming, particulary in the emphasis given by Congress to the importance of timely and orderly resolution of antitrust issues. The Joint Committee Report specifically states that hearing "but if if the Attorney General does not recommend a antitrust issues are raised by another in a manner accordin to the Commission's rules and re ulations, the Commission would be obliged to give such consideration thereto as may be required by the Administrative Procedure Act and the Commission's rules or regulations." Joint Committee Report, vp. 30"31 (orL)",hasis added} ~

to discuss each of these allegations.

2. The Claims of Changed Circumstances Are Not Substantial and Do Not Provide Good Cause for the Lateness of the Petition The claimed changed circumstances appear to fall into three categories: disputes regarding implementation of the license conditions agreed upon by FPL and the Commission; allegations of refusals to deal and related conduct on the part of FPL; and, the energy cra.sos.

a. Implementation of the License Conditions The St. Lucie Unit No. 2 license conditions'provide for FPL'o afford to certain entities, including only one of the Petitioners, New Smyrna Beach, the opportunity to participate in the ownership of St. Lucie Unit No. 2, and for FPL to make arrangements for the

~

~

livery of the output of the portion owned by New Smyrna Beach to

~

that city. The Petition states that FPL and New Smyrna Beach have

~ ~

64/

not yet agreed on the final terms of the arrangements. The 64/

of It is apparent from the Petition that, the disagreement is hardly a fundamental nature. The license conditions refer to a "reasonable ownership share" and to "delivery of [the] participant's share. . .on terms which are reasonable. . ." As the Petition itself indicates, the only areas of disagreement concern the percentage of ownership which is "reasonable" and the formulation of a rate for transmission service. (Petition, p. 16, e.g. "[T]he Company has committed itself in general terms to transmit power for New Smyrna Beach from its St. Lucie Unit No. 2 entitlement share. . .") As the letter of April 15, 1976, from counsel for New Smyrna Beach (Attachment D) indicates, the idspute over the proposed ownership has narrowed to'a disagreement over approximately one megawatt of capacity. Of course, any rate for transmission service will be subject to filing with, and regula-tion by, the Federal Power Commission. 16 U.S.C. Section 824 et sea.

Petitioners apparently contend that this failure to reach agreement

~ ~

s a "change in circumstances" which provides good cause for the lateness

~ ~ ~

of the Petition, because New Smyrna Beach refrained from filing a

~ ~ ~

timely petition in reliance on the protection provided by the license conditions.

In the event, that FPL and New Smyrna Beach are ultimately unable to agree on the details of implementation of the license conditions, New Smyrna Beach's appropriate remedy will be to seek enforcement of the conditions, a remedy readily available under Sections '2.200, 'et sece. of the Commission's regulations. ln no way has the enforceahility of the license conditions been impaired in the more than two and a half years which have intervened since New Smyrna Beach's decision not to file a timely petition. The very same conditions on which

~ ~

~

ew Smyrna Beach claims it relied will be incorporated into the construc-

~ ~ ~ ~

tion permit for St. Lucie Unit No. 2 and will be enforceable against FPL. Thus there has been no change in circumstances in this respect.

moreover, to treat disagreements over the terms of enforcement of license conditions as changed circumstances providing good cause for the late commencement, of an antitrust hearing would create havoc with the antitrust review procedures which have evolved in practice before the Commission. In many instances (including St. Lucie Unit 65 The actual license 'conditions had not been formulated at the time of publication of the Attorney General's advice letter, but were finalized between the Applicant and. the iVRC Staff in February 1974 lace p. 7i ~su 'ra ) ~ . However, the advice letter described the substance of the conditions in contemplation of their finalization by the Staff.

I E

No. 2) applicants have agreed to license conditions contemporaneously ith the Attorney General's review of an application. Obviously, the purpose of agreeing to the imposition of license conditions is to avoid an antitrust. hearing, with, among other things, the attendant risk of delay in issuance of the construction permit. However, if disagreements over the implementation of such conditions, occurring prior to issuance of the construction permit, are likely to result in an antitrust hearing being convened on the eve of issuance of the construction permit, an agreement as to license conditions would be ge/

worse than meaningless.

b. Conduct by FPL The second category of allegations of changed circumstances relates to what the Petitioners call "FPL's intensified anticompetitive

~ ~ ~ ~

tivities" (Petition; ~

p. 23) .~ These allegations appear to

~

be summarized in the second full paragraph on page 21, where the

~

Petitioners refer to: "the attempted acquisition of competing uta.lxty systems; refusals to enter into an integrated statewide power pool; active opposition to legislation which would allow joint ventures by smaller systems; and other practices.

~/

between On page 17 of the, Petition, reference is made to a disagreement FPL and Seminole Electric Corporative, Inc. regarding implemen-tation of one provision of the St. Lucie Unit There is no accompanying accom an ni No. li

o. 2 xcense conditions.

explanation of why this allegation appears f 't in a pleading to which neither Seminole nor any o z. sme mb ers is art y.. Thee Pete.

discussions whichh' f t loners have no basis for alleging any ac s regar ing have been, and are, taking place between FPL and d'ons Seminole-and no in interest whatsoever in asserting Seminole's rights under the license conditions.

~

These allegations parallel the contents of a Petition filed by almost all of the same entities in NRC Docket No. P-636A. This

~ ~

Board is, of course, aware that FPL has taken sharp issue with

~

these allegations on the merits in that proceeding, and that FPL has asserted that many of the allegations are simply untrue.

However, the issue here does not concern the merit. or legal sufficiency of the charges of improper conduct on FPL's part, but concerns only whether the Petitioners have alleged changes in FPL's conduct which are significant enough to justify the granting of a Petition which is late by more than two and one half years. The Petition itself precludes such a finding. Petitioners description of "The Situation Inconsistent" (Petition, pp. 54-85) makes abundantly clear that Petitioners contend that the alleged conduct described n page 21 is consistent with, and merely a part of, a course of conduct which they contend persisted for years prior to December 67/

1973.

The allegation that FPL has "attempted acquisition of competing utility systems" (p. 21) appears to relate primarily to the City of Vero Beach, which has requested and received from FPL a proposal for the purchase of the City's electric utility facilities. Et is note-worthy that the City of Vero Beach itself is not among the Petitioners, 67 Obviously, FPL takes vigorous issue with the entire discussion which begins on page 54, and denies that it has ever been or is now responsible for a situation inconsistent. with the antitrust laws.

and is not a party to Docket No. P-63GA. It is difficult to perceive st how these bi-lateral dealings between FPL and Vero Beach constitute

~

significant "changed circumstances" justifying this late Petition

~ ~ ~

by other, uninvolved municipalities.- However in any event, the litany of accusations appearing on pages 62-66 of the Petition, under the heading "Past Acquisition Attempts", negates any argument of changed circumstances based on the possibility that FPL may acquire the electric facilities of a municipality.

Likewise, no significant supervening event can be found among the allegations of "refusals" by FPL. It is alleged that FPL has "refused to enter into an integrated statewide pool." (p. 21) . It is not alleged that any "integrated statewide pool" was either existing on imminent in December of 1973, or that FPL's position with respect 6S/

any such pool has changed at any time. Presumably, the other "refusals" to which the statement on page 21 refers are those discussed'n the section of the Petition which begins on page 70. Petitioners do not point to any of those allegations as establishing changed circumstances which would provide good cause for the lateness of the filing, and indeed they could not fairly do so.

~/ To the contrary, see footnote 2 on page 72 of the Petition.

As regards the allegation of "opposition to

~ ~

legislation which would

~ ~

liow joint, ventures by smaller systems" (p. 21), it is clear from

~

~

~ ~

Mr. Fagan's affidivait in Docket No. P-636A (which the Petition

~ ~ ~ ~ ~

purports to incorporate) that prior to November 1974 municipal partic-

• ~ ipation in joint ownership of generating facilities. was constitution-ally prohibited in Florida. Mr. Fagan s affidavit (p. 2) indicates that, "some legislation authorizing joint ownership" was passed at the 69/

1975 Session of the State legislature. Apparently, the Petitioners would have preferred that 'Bucn le'gislation should have contained broa'cter'rovisions.

Obviously, the Petitioners failure to obtain State legislation in the exact form desired is not the kind of changed circumstances which provides good cause for the late filing of the instant Petition, which, in any event, is submitted more than one 70/

ear after the close of the 1975 session of the Florida legislature.

6g Thus it is apparent that, changed since 1973, the changes to the extent that circumstances have have significantly favored the Petitioners.

7g Moreover, it is clear that the views expressed by FPL to legis-

,.lative bodies, and their committees, cannot provide the basis for a finding of inconsistency with the antitrust laws. See Eastern Rail-road Presidents Conference v. Noerr Motor Frei ht, Xnc. 365 U.S. 127 (1981); United Mine Norkers v. Pennin ton, 381 U.S. 657(1965).

Presumably the "other practices" referenced on page 21 concern uch matters as the charge that Orlando was "misled" to believe that it would be invited to participate as an owner of the South Dade

~ ~

Project (p. 19}, the reference to transmission of power from Florida Power Corporation's Crystal River Unit No. 3 to the City of New Smyrna Beach (p. 17), and the argument, in footnote 2 on page 20, that FPL is "implicit[ly]"committed to sharing of further nuclear capacity. As regards the Orlando and "implicit commitment." matters, Orlando and twenty-one other entities are currently participating in an antitrust hearing in Docket. No. P-636A where the question of any "rights" to participate in the ownership of FPL's South Dade plant is in issue. There is no logical basis for treating a dispute which has arisen, and will be resolved, in connection with a new application s a "changed circumstance" which

~

justifies extremely untimely petitions with respect to a previous application.

~ ~

The matter of transmission of power from the Crystal River Plant to New Smyrna Beach merits but brief comment. As the Petition reveals, as much by omission as by representation, FPL has agreed to provide the transmission service requested by New Smyrna Beach. The only matter on which agreement has not been reached concerns the rate to be charged for the service, a matter subject to regulation by the Federal Power Commission.

Finally, Mr. Bathen's "Supplemental Affidavit" refers to an alleged "price squeeze." Ne are unable, however, to locate any related reference in the portion of the Petition itself which

deals with "good cause" for the late filing. Zn any event, the atter can be treated briefly. The only Petitioner which purchases power at wholesale from FPL is New Smyrna Beach. Initially, New Smyrna Beach raised the subject of "price squeeze" in a pleading 71/

submitted to the Federal Power Commission on September 14, 1973.

Subsequently, in 1975, New Smyrna Beach raised the issue in another FPC rate case involving FPL's wholesale rates Docket No. ER76-211.

On December 23, 1975, FPL and New Smyrna Beach entered into a 72/

Settlement Agreement in which New Smyrna Beach agreed to withdraw "its petitions and protests in FPC Dockets No. E-8008 and ER 76-211 insofar as they relate to allegations concerning . . . price sc{ueeze or other anticompetitive issues" and "not to raise before the Federal Power Commission (or successor agency or body having similar ower) allegations concerning...price squeeze or other anticompetitive

~

issues...based upon facts occurring prior to the date of this

~

~ ~ ~

Settlement Agreement." Thus, the price squeeze issue arose before the time for filing timely petitions to intervene in the St.

Lucie Unit No. 2 docket had expired, the issue has subsequently been resolved (at least at the FPC) between FPL and New Smyrna Beach, the only Petitioner concerned, and it can scarcely be considered a significant intervening event.

71/ FPC Docket No. E-8008 .

72/ Filed with the FPC in Dockets No. E-8008 and ER 76-211, on February 24, 1976.

c.'The Energy Crisis The Petitioners contend that, one significant event. which has occurred 'since 1973 is, to quote from page 21 of the Petition,:

[P]artially as a result of the OPEC oil boycott and subsequent OPEC related oil price increases, prices for all fossil fuels have skyrocketed and a severe shortage or potentially severe shortage of some fossil fuels has developed."

In essence the Petitioners contend that, in August 1976, they have, for the first time, appreciated the significance of the energy crisis which has gripped the nation for the past several years.

This contention fails utterly upon even a cursory examination of the chronology of the energy crisis.

Although the potential for certain fossil fuel shortages was ot obscure before that date, the outbreak of war in the Middle East on October 6, 1973, signaled the beginning of the severe "energy crisis" in the United Stat'es. It appears that the curtailment of supply to the United States by the Arab nations began on October 17, 73/

1973. From that date events moved swiftly. The New York Times for October 20, 1973, reported Libya's declaration of an oil boy-cott against the United States and its announcement of an increase in the price of oil from $ 4.90 a barrel to nearly $ 9.00. 74/ On 73/ Attachment E, New York Times, October 18, 1973-74/ Attachment E .

Qctober 21, 1973 the Times reported that Saudi Arabia and four other producing nations had joined the boycott against the United States.

~ ~

75/

On November 7, 1973, President Nixon delivered a televised address to the nation on the "energy crisis", in which, among other actions, he proposed a nationwide 50 miles per hour speed limit..

In December of 1973, when presumably the Petitioners weighed the possibility of filing a timely petition in the St. Lucie Unit No. 2 proceeding, emergency energy conservation measures were in effect throughout the United States and Project Independence was a current news topic. 77/ It would hardly have been possible for any American to be unaware of the substantial implications of the energy Crisis e Of course, these increases by the producing nations soon found their way into the prices paid by electric utilities for their oil.

For example, the price paid by FPL at its Port. Everglades plant increased from less than 80 cents/mmBtu (below $ 5.00 per barrel) in early September 1973 to 180.3 cents/mmBtu ($ 11.14 per barrel) in late January 1974. 78/ In fact, FPL's most recent Form 423 filing with the FPC for April 1976, shows a cost about equal to the January 1974 cost, 187. 4 cents/mmBtu ($ 10, 89) per barrel. 79/ It strains credibility for any electric utility participating in this market to claim that it did not appreciate the operation of these forces 75/ Attachment E.

76/ Attachme'nt E, New York Times, November 8, 1973.

77/ See generally the New York Times, December, 1973.

78/ Although the largest increment of increase occurred in early January 1974, steady increases occurred throughout the final months of 1973.

See FPL filings with FPC on Form 4"3 for each month.

79/ Id.

'n December of 1973. Moreover, it would not have been possible for an oil-purchasing utility to avoid feeling the full impact in the early months of 1974 two and one half years before the Petition was filed.

Although the portion of the Petition which. pertains to "good cause" for the late filing (pp. 16-24) does not specifically discuss curtailments in the supply of natural gas, the natural gas situation is a major theme of the Petition's section entitled "The Situation Inconsistent." (p. 54 et sece. ) . However, the Petitioners cannot credibly claim that reduction of the supply of natural gas to interruptible customers is a "changed circumstance" which justifies their late filing. As early as April 1971, the Federal Power Commission (FPC)

'ssued a "Statement of General Policy" indicating that one measure hich would be considered to alleviate the growing shortage of natural gas is "the curtailment of volumes equivalent to all interruptible sales and to the curtailment of large boiler fuel sales where 80/

alternate fuels,. are available'.

On May 29, 1972--more than 22 months before the Petition was filedeight Florida municipalities, 'including four of the Petitioners, submitted, through the same counsel who subscribed the Petition, a (2

brief to the FPC in opposition to a request for extraordinary relief sumbitted by another customer of the common supplier, Florida Gas 81/

Transmission Company. The brief illuminates the Petitioners'0/

FPC Order No. 431 (April 15, 1971).

81/ Initial Brief of Cities to Presiding Law Judge, Docket No. RP74-50-1 t al, May 29, quote are 1974.

attached The as title page Attachment and F.

the page of the brief from which V

understanding at that time of the status of their natural gas supply, d of the significance of the energy crisis generally. For example, on page 24, the municipalities acknowledge their understanding that by 1975 their gas supply would be curtailed to a small percentage of the c'ontracted quantity. The discussion on page 25 of the brief indicates the municipalities'full appreciation of the impact of the energy crisis on electric utilities. Finally, harking back to a settlement agree-ment approved by the FPC on iMay 18, 1973, the municipalities admonished the 'party applying for extraordinary relief by pointing out that "Applicant cla~~vs for special relief are based upon no facts which could not have been known or anticipated at the time of the settlement and 82/

the [FPC's] order."

Thus, it is obvious from the discussion in pages 37 to 48

~ ~ ~ ~

this Response that the 'Petitioners'ake-shift allegations do

~ ~ ~

not, either individually or collectively, identify any inter-vening events or changed circumstances that could conceivably justify a delay in over 2-1/2 years in the filing of this Petition. The Petitioners have described no cause for lateness at all, let alone the "substantial showing of good cause" referred to in Section 2.714(a).

3. Assessment of the Four Factors in Section 2.714(a)

Neigh Against the Petition 4

When the Commission in West Valley determined that the four factors listed in Section 2.714(a) should be taken into account even 82/ Id., p,. 10.

in cases of inexcusable tardiness, it acknowledged, concern that its interpretation of the rule "may have the effect of reading the

'good cause'equirement out of the rule." Therefore it emphasized that:

"To obviate that result, we stress that. favorable findings on some or even all of the other factors in the rule need not in a given case outweigh the effect of inexecusable tardiness. Conversely, a showing of good cause for a late filing may never-theless result in a denial of intervention where assessment og the other factors weighs against the petition."

And, as we have previously noted, the Commission also emphasized that "the burden of justifying intervention on the basis of the other factors in the rule is considerably greater where the late-84/

comer has no good excuse." ~

85/

Application of the four factors in this proceeding reinforces the decision that this inexcusably late Petition should not be

~ ~

granted.

As to the first factor, it is clear that other means do exist to protect Petitioners'nterest. In fact Petitioners do not even dispute this point and, instead, argue that "other means to vindicate Cities'nterest may exist, but these point to the equities of 86/

granting late intervention here." In view of Petitioners'dmission, we need not belabor this point but we do wish to note 84/ Id.

85/ See pages 31-33, ~su ra as to whether the 'four factors are pplicable in instances that do not involve an on-going proceeding.

6/ Pet'tion, pp. 37-38.

briefly the extensive

~

means available to Petitioners both outside of and within the framework of NRC proceedings.

~

87/

Outside of NRC proceedings, 'etitioners'emedies are as ample and varied. as their imagination in framing complaints. If they have any disagreements as to transmission rates or wholesale rates, they have a readily available forum before the FPC. To the extent they wish to raise questions as to "unfair methods of competition," the FTC is readily available to Petitioners. More-over, if they wish to assert in another forum that FPL has violated the antitrust laws they can institute a proceeding in Federal court or they can attempt to convince the Department of Justice to initiate 1

an action.

Moreover, other means are available to Petitioners within he NRC. To the extent that Petitioners complain that FPL has not complied with the antitrust conditions in the St. Lucie Unit No. 2 construction permit, New Smyrna Beach will have ample oppor-tunity to enforce such conditions, in a show cause proceeding, if necessary. On the other hand, to the extent that Petitioners'omplaints relate to activities under licenses for future nuclear.

facilities of FPL, their forum within NRC proceedings is not only

/

view on

~

ample but is already being exercised.

on an A group of municipalities environemntal question before the New York State Board Electric Generation was determined to provide a satisfactory forum in which the pet).tioner could protect its interests and a late petition was denied. ALAB-292, NRCI-75/10 at 648.

almost identical to Petitioners has raised,, and had admitted in that-

'n that proceeding all of the antitrust contentions raised herein. 88/

~

s One final note as .to the first factor is that, even if ample other means did not exist, such consideration could not conceivably tip the balance in favor of Petitioners. Zn circumstances involving a lesser period of tardiness, the Licensing Board in Marble Hill after finding that there vere apparently no other means whereby the petitioner could protect its interest and that the other three

'll factors did not apply, concluded nevertheless that the petitioner's "extreme tardiness is inexcusable and .that intervention should not 89/

be 'granted."

'd l f g f

Such action was, of course, consistent with the on one or more factors need not outweigh the effect of inexcusable rdiness

~

~

The second and third factors assistance in "developing a sound record" and representation by "existing parties" can readily be disposed of together. These are the two factors which most obviously contemplate the existence of an on-going proceeding. and which therefore, in the absence of such a proceeding, are irrelevant or should be given no weight.

The fourth factor - broadening the issues or delaying the proceeding - weighs most heavily against Petitioners.

Perhaps tongue-in-cheek, they 'argue that since a proceeding "has 'not yet been initiated to consider St. Lucie Unit 88 T ese,munzcz.pa sties have also reauested in that docket that relief ~

be granted'o 'nclude, inter alia, par" icipation in FFL's Turkey St. Lucia facilities FPL has taken the position that it

~

~

ant and

~

uld not be proper or appropriate for such relief to be granted in

~

th'at docket. The Licensing Board there has not yet decided, the cpzestion.

89/ NRCZ-76/6 at 856.

gi No. 2, granting intervention cannot delay such proceeding."

~ ~

This absurd argument would mean that this paramount fourth

~

factor would never be considered against a tardy petitioner in those instances where his lateness is most damaging namely, where no on-going hearing is being held because all of the pertinent issues have been fully resolved by the interested parties in the absence of any timely petition. Moreover, it would be in those very instances that the most time would have been wasted and thus the petitioner's delay most

'armful because no other petitioner will have asked for a hearing and therefore no pre-hearing conferences, discovery and other time-consuming procedural steps will have taken 90/

place during the late petitioner's absence.

Recognizing the levity of their argument, Petitioners'ore serious argument appears to be that there will be no delay because they do not seek a delay in construction. Although they do not state a precisely clear proposal, they will apparently generously agree to the issuance of a "temporary permit," (cog.i p. 39'. 1} coupled somehow with the qrant of "interim relief," in the nature of "a preliminaryI injunction," which will be requested separately (e.g., pp.

14, 84-85) .

90/ In an attempt to mitigate the harmful effects of delay, wEen a late-filed petition is granted, the petitioner "may be INRC at 276. This is, of course, impossible when there is no on-going proceeding.

It is clear that the granting of the Petition will cause the most grievous delay. The Commission has held that when an antitrust proceeding is convened, a construction permit cannot be granted without, the agreement of all of the parties. 91/

Thus, if the tardy Petition were granted at this 11th hour, a construction permit for St. Lucie Unit No. 2 could not be granted unless Petitioners'greement were obtained. Obviously Petitioners'everage in any bargaining under these circum-stances would be unconscionable. Of course, Petitioners protest that they do not seek to delay construction, but these are empty words when FPL is faced with the possibility of unspecified conditions in a "temporary permit" and an ominous "preliminary injunction" for which a request has not yet even been filed.

Even if the conditions of a "temporary permit" were known and if there were no threat of a "preliminary injunction,"

there would still be an important "delay" here involved that would mandate denial of the Petition. As described above in the discussion of the statute and its legislative history, the thrust of the Congressional intent was to assure that antitrust issues were identified at an early stage and resolved in timely fashion so that an applicant would know exactly what antitrust conditions, if any, would be imposed prior to making the extensive financial commitments required 91/ See note 19, supra.

for construction of a nuclear plant. At best what Petitioners are suggesting is that they will not cause delay because they will permit construction to start, and that FPL should go ahead and invest its money without knowing what portion of the resulting plant it will own and without knowing what antitrust related conditions may ultimately be imposed prior to its I

being permitted to operate the plant.

Thus, if the Petition were granted, and if, as is extremely improbable, some agreement, were reached among the parties, FPL would be able to avoid a delay in construction only if it agreed to another equally significant delay a delay in its obtaining assurance that there are no out-standing antitrust questions relating to St. Lucie Unit No.

2. In essence, FPL would be asked to waive a most important substantive right the right to obtain such assurance prior to investment of extensive funds.

Under these circumstances, Petitioners cannot conceivably be credited for not causing delay. 92 If the Petition is 92/ It is interesting to note that in North Anna, a petitioner filing a late petition a few weeks before the scheduled start of an environmental hearing alleged there would be no delay since it. The it would take the proceeding as applicant, however, argued there would be itno finds delay only if rights against the applicant waived important procedural the petitioner, including discovery. The Appeal. Board decided that: "It is scarcely equitable to

~

give [petitioner] credit for not causing delay when that

~

result could be achieved only because the circumstances would coerce other parties into waiving substantial rights."

~

2 NRC at 400.

granted there will be serious, lengthy delays either in the commencement of construction, in obtaining assurance as to the absence of antitrust questions, or in both. Regardless of any other factors, 93/ this factor alone dictates denial of the Petition.

Thus, none of the four factors weighs in favor of granting this late Petition; they are either irrelevant or strongly reinforce a decision that this inexcusably late Petition should be denied.

C. NRC Is Not Required Under These Circumstances To Make Affirmative Findings Under Section 105(c) (5)

In pages 24-30 of the Petition, Petitioners argue that the Act requires that late intervention be granted because of the NRC's "special responsibility" for antitrust review under the Act. Although again Petitioners'heory is not precisely stated, their argument appears to be advanced as a means of circumventing the provisions of Section 2.714(a) 93/ As stated by the Appeal Board in Jamesport-

~Vndeniably, the delay factor is a parte.cularly significant one; indeed -- barring the most compelling contervailing considerations an inexcusably tardy petition would (as it, should) stand little chance of success if its grant would likely occasion an alteration in hearing schedules." 2 NRC at 651. This statement would obviously apply even more strongly if the delay were not simply in a hearing schedule (which might, be made up), but in the commencement of construction or in the ultimate resolution of the issues.

pertaining to untimely petitions. Namely, even if Petitioners have not satisfied the requirements of Section 2.714(a), the Commission should still grant the Petition .

because it must resolve antitrust questions raised by Petitioners in order to make the Section 105(c) findings that the proposed activities are not inconsistent with the antitrust laws.

lt is not necessary to explore Petitioners'rguments in any great detail because they are based upon a single wholly mistaken premise. Notwithstanding Petitioners'llegation that "the Commission is statutorily obligated to make an antitrust finding prior to issuing a construction permit, " 94/

Section 105(c) (5) does not require such a finding prior to issuance of a construction permit for St. Lucie Unit No. 2 The last sentence of Section 105(c)(5) makes quite clear that only when a hearing has been held with. respect to antitrust matters is the NRC required to make "a finding. as to whether the activities under the license would create or maintain a situation inconsistent with .the antitrust laws as specified in subsection 105a." This is emphasized by the section-by-section analysis in the 1970 Joint Committee Report which specifically states:

94/ Petition, p. 25.

"This finding by the Commission is required only in those cases where the Attorney General advises there may be adverse antitrust aspects or antitrust issues are raised by another in a manner according with the Commission's rules and regulations." 95/

Thus, we are not aware of any instance where the Commission (including the NRC Staff, Licensing Boards and Appeal Boards) has made such a finding in the absence o f an antitrust hearing.- Quite to the contrary, we believe that such finding is consistently absent in any construction permit issued without the holding of an antitrust hearing.

Commission practice in this respect is reflected in Regulatory Guide 9.1, "Regulatory Staff Position on Anti-Trust Matters," which states:

"With regard to those applications for. which antitrust hearin xs re uz.rea, ne coma.c Energy Commission, with the advice of the Department of Justice, is directed to 'make a finding as to whether activities under the license would create or maintain a'ituation inconsistent with the antitrust laws. . .'" 96/

(Emphasis added.)

95/ Joint Committee Report, pp. 30-31.

96/ Reg. Guide 9.1, Section A, p. 1 (December, 1973) . See also, Penn et al, "The U.S. Nuclear Regulatory Commission's Antitrust Review of Nuclear Power Plants: The Conditioning of Licenses," NR-AIC-OOl, (May 1976), in which the authors state "'In those cases in which a hearing is held, the Commissar.on must make a finding as to whether the granting of a license 'would create or maintain a situation inconsistent with the antitrust laws.'" (Emphasis added) (p. 5).

Accordingly, the statute itself, its legislative history and nsistent agency interpretation and implementation thereof demon-

~

~

strate Petitioners 'istaken characterization of the Commission'

~ ~ ~ ~

obligations under Section 105(c) (5) .

Since the Commission is not required to make an affirmative finding under Section 105 (c) (5) as to St. Lucie Unit No. 2, the Petitioners'ttempt to place a gloss on such non-existent obli-gation through references to legal precedents in instances where on organic statute or NEPA did require an agency to make certain findings is wholly irrelevant and need not be responded to. 97/

ZV OTHER MATTERS Apparently in the nature of suggesting some relief in the alternative to granting the interventions and hearing requested the Petition, the Petitioners appear to suggest that: (i) if the request for an antitrust hearing on the application for a construction permit for St. Lucie Unit No. 2 is denied, an anti-trust hearing concerning issuance of the operating license for 98/

tha facility should 'commence immediately; and (ii) if the Petitioners'equest for a hearing as to any unit is. denied, the Commission should transmit the Petition to the Federal Trade Commission and request that that agency conduct an investigation of FPL.

99/

97/ Our silence should not imply, however, any acquiescence in Petitioners'iscussion of those irrelevant legal precedents. We simply do not wish to lengthen an already necessarily lengthy Response.

98/ Petition, p. 39,n'. 1.

~ ~

/,IQ.,'. 48.~

Neither suggestion has any basis in law or reason, and both an be treated briefly.

The suggestion regarding an operating license antitrust hearing on the St. Lucie Unit No. 2 application, being tendered prior to 100/

issuance of a construction permit, is premature by several years.

Moreover, it is based upon the completely 'erroneous premise that an antitrust review "will be mandatory" in connection with the operating 101/

license. Presumably this statement is derived both from the Petitioners'rroneous impression that the findings on antitrust matters specified in Section 105(c) (5) must be made by the Commission before issuing any license whether or not an antitrust hearing was 102/

required, and,from the Petitioners'onviction that they have made a showing of "[s]ignificant changes in the license's activities" 103/

ince the Attorney General's construction permit review. Of course, FPL completely rejects this latter contention for reasons described on pp. 37' 46, ~su ra H.owever, there is no need to argue here the substantive questions which might be involved at some future time in the Commission's determinations under Section 105(c) (2) .

The prematurity of the request is dispositive of any question now pending before this Board.

The suggestion that the Commission transmit the Petition to 100/ See Section 50.34(b) of the Commission's regulations.

101/ Petition, pp. 31,39.

102/ This argument is addressed at pp. 56 58, ~su ra 03/ Section 105 (c) (2), quoted at page 31 of the Petition.

he FTC and request that it conduct an investigation of FPL is istinguishable only by its novelty. The Act contains no provision for consultation by the Commission with'..the FTC or for reporting of information to the FTC.

However, the Act contains detailed provisions Section 105b--

for reporting information relating to antitrust inconsistencies to the Attorney General, and of course provides for advice from the Attorney General with respect to each new license application.

Apparently, the Petitioners have become disenchanted with the Attorney General. He did not see fit to recommend an antitrust hearing with respect to FPL's South Dade application, and he has not chosen to participate in the hearing which has been convened

'n that docket. Moreover, FMUA officials have made public statements o the press in Florida expressing anger that the Attorney General, after analyzing for several weeks complaints that have recently been submitted to him 'by the Petitioners, h'as not conclude'd that any action against FPL is warranted. Ne suggest that the problems that Petitioners have had with the Attorney General are a telling indica-tion of the lack of merit of their accusations against FPZ.

is not aware of any legal or other constraints which I'PL prevent the Petitioners from contacting the FTC on their own.

However, there is no basis in the Act or the Commission's regula- .

tions for the Commission's taking the action suggested in the Petitions.

Moreover, there is no apparent reason for the Commission's lending

its prestige to the Petitioners'fforts to forum shop and attract ditional publicity to their baseless

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charges against F L.

V. THE MERITS OF Ph'l'I'I'IONEES 'ONTENTIONS As is stated on page 50 of the Petition "the substantive contentions raised in [the Petition] and in Docket No. P-636A are virtually identical." As this Board knows, FPL has taken the position in the South Dade proceeding that these contentions are wholly without merit. That is FPL s position as to the instant Petition as well. However, in that proceeding, where petitions were submitted in a timely fashion, FPL has readily agreed to meet the charges on their merits, and intends to demonstrate on that record their complete lack of factual substance. To go rough the exercise of identifying technical faults in these same contentions in this context would be an artificial exercise, wasteful of the time'f the Board and the parties. The. compelling reasons for denying this Petition in its entirety have been stated in the foregoing sections of this response.

VZ. CONCLUSION As we have demonstrated above, with respect to their late Petition for an antitrust hearing in Docket 50-389A, Petitioners have utterly failed to satisfy the "substantial showing of good cause" requirements'f Section 2.714 (a) . They have not satisfied the "substantial burden" they must bear in justifying an unbelievably

engthy tardiness of over 2-1/2 years; in fact they have not even sought to explain, let .alone justify, their casual attitude in delaying for over 4 months the filing of a petition they first threatened in April, 1976. To the extent that the four equitable factors mentioned in Section 2.714(a) are to be applied in an instance such as the instant case which does not involve an on-going proceeding such factors reinforce a decision to deny the Petition.

As we have demonstrated above, Petitioners 'ovel request for a post-licensing antitrust review of FPL's existing Section 104b operating licenses for Turkey Point Units Nos. 3 and 4 and St. Lucie Unit No. 1 is grossly defective both procedurally and substantively.

In a slightly different context, the Appeal Board has referred o "the need to preserve the integrity of the hearing process by 104/

discouraging the unjustifiably late filings of intervention petitions."

In another. proceeding where a late petition was filed "but three weeks before the hearing was scheduled to commence," the Appeal Board stated: "Thus Petitioner's procrastination made it inevitable that its entitlement to intervene could not be finally resolved until just before the hearing began, if then. Simple fairness to all parties in these proceedings mandates that such practices not be 105/

condoned." ri The instant Petition threatens the integrity not only of the

l. /~,

hearing process but; of the carefully structured antitrust review Mr. Salzman) .

05/ North Anna, ALAR-289, ~au ra, 2 NRC at 400.

framework set forth in the Act and the Commission's regulations.

If a petitioner filing 2-1/2 years late can benefit from his own

~ ~ ~

ocrastination and obtain significant leverage 'over the applicant

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who has relied on a decision reached years earlier, then the entire statutory and regulatory scheme for early antitrust. review is meaningless. If a cloud can be cast on operating licenses constituting a significant portion of a licensee's assets which were properly issued without a prelicensing antitrust review by the simple expedient .

of filing a request. for a hearing; then the entire statutory and regulatory scheme distinguishing between -Section 103 and Section 104b licenses is meaningless.

Simple fairness to not only FPL but to all other applicants and licensees who would be subject to the abuse of process reflected in the instant Petition "mandates that such practices not be condoned."

~ ~

FPL respectfully requests that the instant Petition be summarily denied in all respects.

Respectfull submitted, f~

A. BouRnigh , Jr.

wenstein, Ne an, eis 6 Axelrad 025 Connecticut Avenue, N. W.

Washington, D. C. 20036 (202) 833-8371 John E. Mathews, Jr.

aP Mathews, Osborne, Ehrlich, M att, Gobelman 6 Cobb 1500 American Heritage Life Building Jacksonville, Florida 32202 (904) 354-0624 Counsel for Florida Power 6 Light Company Date: September 1, 1976

UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION BEFORE THE ATOMIC SAFETY AND LICENSING BOARD In the Matter of. )

)

FLORIDA POHER AND LIGHT COMPANY ) Docket No. 50-389A (St. Lucie Plant Unit No. 2) ) Docket No. 50-335A (St. LUcie Plant Unit No. 1) ) Docket Nos. 50-250A Point Plant Units No. 'Turkey 3 and 4) ) 50-251A CERTIFICATE OF SERVICE I HEREBY CERTIFY that copies of the following:

Response of Florida Power And Light Company In Opposition To: Joint. Petition Of Florida Cities For Leave To Intervene Out of Time; Petition To Intervene; and Reauest For Hearing has been served on the persons shown on the attached list by hand delivery or deposit in the United States mail, properly stamped and addressed on September 1, 1976.

By:

C unse 1 for Florida Power

& L:ght Company

Robert A. Jablon Secretary Daniel J. Guttman U.S. Nuclear Regulatory 2600 Virginia Avenue, N.W. Commission Washington, D.C. 20037 WashingtonID AC 20555 Lee Scott Dewey Atomic Safety and Licensing Counsel for the Staff Board Panel U.S. Nuclear Regulatory Commission U.S. Nuclear Regulatory Washington, D.C. 20555 Commission Washington,D.C. 20555 David A. Leckie Antitrust Division Atomic Safety and Licensing Department of Justice Appeal Board Panel P.O. Box 7513 U.S. Nuclear Regulatory Washington, D.C. 20044 Commission Washington, D.C. 20555 Docketing and.-Service Station Office of the Secretary U. S. Nuclear Regulatory Commission

.Washington, D.C. 20555 (Original and 20 copies)

A TKCHNENT A PA.,.'5 AV: ATTORNEY T OIVINON CV:KB'JltlTAU Pepadnrerd sf J<usiiee Qaufp~ P.lIT. 2a530 g0y ].4 1S73 Howard I~. Shapar, Esauire Assistant General Counsel Licensing and Regulation U. S. Atomic Ene gy Conmissio'n Hashingto n, D. C. 20545 1 Re: Florida Power 6 Light Company St. Lucie Plant, Unit No. 2 AEC Docl<et No. 50-389A De artment 'of Justice Pile 60-415-45

Dear Mr. Shapar:

You have reouested our advice pursuant to the provisions of Sec'tion 105 of the Atomic Energy Act oz" 1954, -as amended

.by P.-. L.91-560, in regard to the above-captioncd application.

I Florida Power 5 Light Company ("Applicant" ) has applied for a construction permit for its St. Lucie Plant, Unit Yo. 2, an 810-megawatt nuclear steam generating unit to be located on Hutchinson Island off Plorida'.s e'ast coast. Operation o the facility is presently scheduled for, September, 1979,

~1'h A li Applicant is by far the largest electric utilitv in the State of Florida; it serves 'approximately half of the state-wide electric load. Headouartered in Miami, its area oz operation includes most of southern Florida and extends up the east coast to the Georgia border. As oz the end of 1972, it provided retail electric power to 574 communities with over 1,500,000 customers. Its tctal energy., sales for 1972 were 28,927,808 megawatt hours. Applicant's summer 1972 peaic load was 6,011 megawatts; its dependable generating capacity at that time was 6,585 megawatts--over 70 percent oz the genera-tion in the area. Its system of generating stations is integrated by over 3,400 miles oz high-voltage transmission lines, approximately 90 percent of tive high-voltage trans-mission in the area--including the 230-kilowatt main trans-mission grid ="or southern Florida and the east co"st.

~ I'

~ I '

a ~ I Applicant calls itself "the nation's fastest growing electric utility." Florida's rapid growth has been concen-trated in the area in which it serves; and for the past several years, the Applicant has added more new customers than any other electric utility in the United States.

Applicant's projectea peak load for 1980 is 14,475 megawatts--

.over twice its 1972 load--and generating capacity is planned to increase more than 10,000 megawatts to meet that load.

Applicant's system is directly interconnected and coordinated to some degree with most of the other electxic genexating systems in Florida: Florida Power Corporation, Tampa Electric Company, and the municipal systems of Jackson-ville, Orlando, Fort Pierce, vero Beach and Lake Worth.

Applicant coorainares,operations with still other sys'tems

.thxough the activities of the Florida Operating Committee.

Some of these coordinating arrangements have been entered into only. recently.

I Applicant supplies electric power in bulk at wholesale

-to seven rural electric cooperative distribution systems:

Lee County, Clay, Glades, Okezenoke, Peace River, Suwanee

'alley, and Florida Keys. LTith the exception of Plorida Keys,

' which has some generation oz its own, these cooperatives are exclusively dist=ibuticn systems and purchase all of power requirements. 1/ Applicant also supplies bulk power to supplement the genexation of two small municipal the'ulk systems, Homestead and New Smyrna. Beach.

There is substantial and vigorous actual and potential competi ion among electric utilities in Florida in both bulk, power supply and retail distribution markets. Florida law does not reauire elect ic utilities to restrict their service axeas. The Florida Public Service Commission has approved certain voluntary te ritorial agreements between Applicant and neighboring systems. 2/

1/ Applicant supplies the total requirements of Lee County, most of the requirements of Clay, Florida Keys, and Glades, and a portion of the requirements oz Okefenoke, Peace River and Suwanee Valley.

2/ Some territorial agreements involving the Applicant appaxently have taken the zorm of oral unde"standings and have never been submitted to the Commission.

2

Even wher e these territoria 1 a greements exist, neighbor-ing smaller systems do compete with Applicant at retail.

They still compete to attract new loads who can choose to locate either in their service areas or in Applicant s. They still of their compete to extend service in developing areas on the fringes systems. Zinally, they compete,to stay in business; their if their costs and customers may zoxce them to retail rates become sell out to too high, the Applicant.

Thexe is also competition in bulk power supply, where territorial agreements cannot lawfully operate. The smaller systems have two basic competitive alternatives; either they produce their own bulk power supply, or they buy their bulk power requirements from the Applicant.

/

Antitrust Implications of This License-.Application The Department regards Applicant' ownership of the main high-voltage transmission network in southern and east coast Plorida as a significant zactoz'n this antitrust xeview oz the St. Lucie Unit No. 2 license application.

3

..As we have advised you previously,3! there are substantial economies of scale in the business of generation and bulk supply of electric powex. Nuclear power, which is expected to be the cheapest kind of base-load electric power available to meet future load growth, may be produced economically only from large generating units--un';ts with a capacity of 500 megawatts or more. Nose electric generat.'ng systems cannot install and market power from such large units on their own.

They can employ large units--and achieve the economies of scale necessary to compete effectively in today's electr.'c power markets--only through coordination with other ~enerating systems. High-voltage transmission is the necessary ned.um for such coardination.

Applicant's control over the transmission network in its

'area has given it the power to grant or deny access to coordina-tion--and thereby access to the benefits e large-scale, 3/ ~E. .. 1etter oC advice of June 28, 1971> regarding Consume s Power Company (L~idland Units 1 and 2), AEC Docket Hos. 50-329A and 50-330A.

low-cost, base-load nuclear generation--to neighbox'ing smaller systems. There have been some aLLegations that Applicant may have used this power to deny coordinating benefits to or to take the predominant share of the benefits of smallex'ystems such coordination as has been entered into. The of this nature are (1) that Applicant insisted principal'llegations upon retail territorial allocation agreements as a prerequi-site to entering into interconnections and bulk po~er supply transactions with other systems; (2} that Applicant once refused interconnection arrangements to Gainesville in adherence to wholesale territorial allocation with Florida Power Corporation; 4/ and (3} that on one occasion in the 1960's, Applicant refused to make available to a rural electric cooperative the coordinating arrang. ments necessary tp "firm up" its own isolated generation.

Applicant's control over regional transmission and ove-access to necessary coordinating arrangements for small systems is illustrated by the curr'ent problems of two municipal systems, Homestead and New Smyrna Beach. Both have genexation of their owri and have endeavored to remain in the business o producing their own bulk power supply and to expand their gene-

~ating facilities to .co>ipete..fcr new and growing loads. 5,

'pplicant has interconnected with these two municipal systems for the sale o wholesale bulk powex. 6/ The nature of the interconnection and the terms under which the power is sold appear to be des.'ned for sys tems without any genera tion or systems planning to cease self-generation, rather than for systems seeking to cooxdinate with others.

4/ During the course of our antitrust reviow, the municipal cFistribut on system of Jacksonvill Beach (which presently obtains its full bulk power requirements from the Jacksonville municipal syst: em} advised us 'of a pending request to Applicant twhich has transmission lines ""lose by> to consider an inter-connection w th it. for the sale of bulk power. Applicant s ultimate response to this revue t should indicate its current policy with regard to selLin wholesale bulk power to a retail distribution system seeking an alternative source oz bulk

'ower supply.

5/ Homestead now has barely sufficient generation to meet its Toad requirements, and it lacks reserves. New Smyrna Beach's generation is .sufzicient to serve approximately half of its oad.

6/ 'There is some'evidence that Applicant earLier had a policy of refusing to se 1 power at wholesale to municipal systems.

He are advised that Homest:ead and New Smyrna Beach are negotiating with the Applicant for parallel intexconnections at transmission voltage and appropriate coordinating arrange-ments. Since the instant application mas filed, Homestead and Nem Smyrna Beach have sought omnership participation in oz unit power purchases from St. Lucie Unit No. 2 as a means of satisfying t:heir future pomex supply needs in coordination with their own generation. Homestead and New Smyrna Beach also have 'asked t: he Applicant to agree to pr'ovide transmission services ("wheeling" ) to accommodate fut:ure power tran'sactions with other systems as another means of satisfying their power supply expansion needs.

'The follcming example indicates how mheeling might be used. >Te are advised that the Jacksonville electric system proposes to const:ruct: tmo 1,150-megawatt nuclear units and has inauired of other Florida systems, including Homestead and New Smyrna Beach, whether they would be interested in part:icipating in those units or purchasing unit power surplus to Jacksonville's needs. Applicant, which already has a high-voltage interconnection mith Jacksonville, could txans-mit this nuclear pomer to Homestead.and Nem Smyrna Beach.

Applicant has not yet offered; however, to provide such.

transmission services to Homestead or New Smyrna Beach.

>Te have noted above that seven rural electxic coopexative systems purchase some or all of their bulk power reauixements

~

I I from the Applicant. Six of these systems, 7/ 'and six other distribution cooperatives mho do not obtain any powex. from Applicant, are memoers of Seminole Electric Cooperative, Inc.,

a corporation formed to act for its members in solving their power supply pxoblems. Seminole has at various times in the past conducted studies t:o determine the feasibility of alter-native means of power supply for it:s members. Tt appears that t: he possibility of self-generat:ion by these cooperatives as an altexnative to purchasea power has had the effect of keeping mholesale purchase rates relatively lorn, and therefore the cooperatives have continued to purchase their power

~ requixem nts from the Applicant and other large genera ting systems.

Recently, both Applicant and Florida Power Corporat:ion have filed wholesale rat:e increases mit:h t: he Federal Power Commission; and, as a result, Seminole is again exploring

. 7/ The exception ia Florida Keys.

power supply alternatives to meet the growing loads of its members. One alternative for the cooperatives would be to acquire a share of, or puxchase unit power from,Applicant's St. Lucia Unit No. 2 (in conjunction with appropriate provi-sions for power delivery, reserve sharing, and other foxms of coordination). A second alternative would be to obtain nuclear power from Jacksonville or other systems which may contemplate installing nucl ar generation> arith provision for delivexy of that power over Applicant s high-voltage

'ransmission system to those cooperatives with. which it is interconnected. Since the filing o this license application, Seminole has advised ihe Applicant of its interest in partici-pating in St. Lucie Unit ho. 2 and in other forms of coordination to achieve a feasible long-range power supply program, Applicant has recently installed its first two nuclear generating units, Turkey point Hos. 3 and 4, each with a capability of 728 megawatts. A third nuclear unit, St. Lucie Unit Ho. 1, with 810 megawatts of capacity, is projected to enter service 'in September, 1975. Unit No. 2, the subject

'of the present license application, and also 810 in size, is scheduled for operation in September, megawatts 1979. When

. Unit No. 2. comes on live,.Applicant will have over 3,000 mega-watts of large-scale, lo~e-cost, base-load nuclear generating capacity. The market:ing of power produced oy this substant al block of nuclear ge-.;eration clearly could impair 'the compet--

tive viability of the other systems in Applicant's area if they are unable to ezercise a similar opportunity to obtain their power from nuclear generation.

XX systems such as Homestead and Hew Smyrna Beach are denied both access'to nuclear genaratine units like Applicant's St Luc.re tlo. 2 and access to other systems'uclea- gene"at'on through the use of Applicant's transmission system, they will not b able to take advantage o nuclear ~eneration to m et growing 1 ca ds a s bulk power supp 1 iers . Likewis 8 without similar access to nucleax generat'on, the easibility of Seminole's members entering the bulk power supply business as an. alternative to full-requirements wholesale purchase appears greatly diminished.

Conclusion Our antitrust review led us to the following conclusions:

(1) Applicant is the dominant electric utility in Florida and because of its ownership of transmission, has the power to

I ~ ~

~ e

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grant ox deny other systems in its area the access to coordi-nation--and thus the nuclear power.--needed to compete in bulk power. supply and retail distribution markets; (2) there is some indication Applicant's dominance may have been enhanced through conduct inhibiting the competitive opportunities of the smaller systems in its area; and (3} construction and oporation of St. Luc e Ão. 2, and th'e sale of power therefrom to meet Applicant's load growth and compete.rsith the smaller systems in its area could create or maintain a situation inconsistent with the antitrust laws nied those

~

smaller if access to nuclear systems.

generation were d Ue related our concern over these matters to representa-tives o.. the Applicant. Llhile denying construction and oper"-

tion of Gt. Lucie Unit No. 2 could have the effect we feared, they advised us that Applicant would nevertheless seriously consider offering participation in St. Lucie Unit ~do. 2 (with the transmission servic'es, reserve sha'ring, and other coordi-nation necessary to support such participation) to the three utilities who, prior to ourinterest rendering this advice, have given in such participation to Applicant notice of their meet a portion of their future power supply requirements-"-

i.e.,- Homestead, New."Smyrna- Beach and Seminole Electric

Cooperative. Fuxther, because oz the status oz Applicant's transmission network as the key to cooxdination by these systems with others;, the Department requested Applicant also to consider adopting a policy to facilitate theix efforts to obtain access to other economical power souxces. It was indicated that the Applicant's zinal position on these matters will-be determined within the next 90 days; this would appear to leave sufficient time to formulate such license conditions as may be appropriate.

In view of the consideration Applicant is now giving to the question of access by other entities to nuclear generation, and the probability t'.";at partic pat" on in St. Lucie Unit No. 2 will be made available to certain oz these ent" ties, 8/

the Department does not at this time recommend an antitrust hearing. Considering that issuance oz (he construction permit 8/ In this connection we note also that Applicant will almost certaixiLy,apply to the Commission for licenses to construct and operate additional nuclear generation units.

Furthex'uestions concerning the oppoxtunities of its neighboring systems (including systems other than Homestead, Nek. Smyrna Beach, and Seminole} for access to the benefits of nuclear generation may be ripe for resolution in the antitrust review of such license applications.

for St. Lucie Unit is not contemplated until early in 1975, we believe itNo. 2 reasonable to ask the Commission to abide the outcome of Applicant's 90-day consideration prior to ultimately deciding whether or not to hold an antitrust hearing. The Department would, of course, be pleaseo to advise the Commission further on this auestion or other rele-vant questions, in the light of whatever offers Applicant may make and other intervening developments.

Sin erely you

">~s BRUCE 3. JlLSON Acting Assistant Attorney General Antitrust Division

~, ~ .

g',ltiT o'NlTED jy STATES ATOMIC ENI=RGY COMMISSION V/ASHINDTON, D.C. 20545 Attachment B

~'4(CS AEC Docket No. SO-389A F<~ 2s ts(q Nr. Ben. H. Fuqua Senior Vice President Florida Power 5 Light Company Post Office Box 3100 Miami, Florida 33101

Dear f1r. Fuqua:

By. letter of November 14, 1973, the Department of Justice recommended that an antitrust hearing was not necessary in connection with the Florida Power 8 Light Company application for St. Lucie Unit 2 in view of the consideration of the granting of access to this facility to certain entities.

In view of your expressed intent te provide reasonable access to the St.. Lucie Unit with the necessary ancillary arrangements, the fact-

-=.. that no antitrust issues have been raised by another in a manner accord-s "'i'ng with the Commission's Rules of Practice, and that no finding has

been made'hat an antitrust hearing 'is otherwise required, position that'the attached conditions would satisfy the staff with it is. our regard to the antitrust issues that have been raised in connection with this appl'ication and the position of the Department of Justice as expressed in its letter of November 14, 1973, and accordingly obviate an antitrust hearing.

Accordingly, the attached conditions will be included in any license issued in connection with the above application.

A Sincerely,

'(SIgged) John P. 0'~~

John F. O'eary Director of Licensing

Enclosure:

Subject commitments cc: Lon Bouknight, Esq.

COMMITMENTS FOR FLORIDA POWER 5 LIGHT ST. LUCIE UNIT 2 with regard to Clay County Electric Cooperative,. Inc., Florida Keys Electric Cooperative, Inc., Glades Electric Cooperative, Inc., Lee County Electric Cooperative, Inc., Okefenokee Rural Electric Member-ship Cooperat'ive, Inc., Peace. River Electric Cooperative, Inc., and Suwannee Yalley Electric Cooperative, Inc. and. the municipalities of New Smyrna Beach and Homestead:

a. Licensee will offer each the opportunity to purchase, .at licensee's costs, a reasonable ownership share (hereafter, "Participant's

~

Share" ) of the St. Lucie Plant, Unit No. 2 (the Unit).

".Licensee's costs" will include all costs associated with develop-

. ment, construction and opey ation of the Unit, determined in accordance with the Federal Power Commission's Uniform System of Accounts.

"Purchase" means payment, within a reasonable time, of parti-0 cipant's share of licensee's costs incurred through date of acceptance of the offer, and, thereafter, regular payments of

~~ the p'articipant's share of all costs incurred during development, construction and operation of the Unit.

~

'/

Two or more of the referred-to coops may determine to agg'regate their entitlements from the St. Lucie Unit;-2 through a single representative.'

. In such'vent, -the licensee shall allocate the delivery of said entitle-ments as designated by the representative to one or more existing or mutually agreeable Florida Power 5 Light Co. delivery points on the ccmbined system provided that such delivery is technically feasible.

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l

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Participant will notify licensee of its acceptance to participate

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in St. Lucie 2 within a reasonable time after receipt of the offer. l C Licensee may retain complete control and act for. the other parti-cipants with respect to the design, engineering, construction, operation and maintenance of St. Lucie Unit', and may make all decisions relevant thereto, in so far as they deal with the relationship between the licensee and the. other participants, inc)uding, but not. limited to, decisions regarding adherence to AEG health, safety and environmental regulations, changes in construction schedule, modification or cancellation of the project, and operation at such time and at such capacity '1evels as .it deems proper, all without the consent of any participant.

., 2. Licensee shall facilitate the delivery of each participant's share of

/

"'he

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output of the Unit to that participant, on terms which are reason-4 able.and will fully compensate it for the use of its facilities, to the extent that subject arrangements reasonably can be accommodated

- from a functional and technical. standooint.

3. Licensee shall not refuse to operate in parallel to the extent that it is technically feasible to do so with the participants and shall provide emergency and maintenance power to participants as required Shen such power is or can be made available without jeopardizing e

A ~ ~

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3 w power supply to lice'nsee's customers or its other power supply commit-ments. A separate rate schedule(s) shall be est'ablished for such emergency and maintenance power exchanges.

4. At a time when licensee plans for the next nuclear .generating unit to be constructed after St. Lucie No. 2 has reached the stage of serious planning, but before firq decisions have been made as to the size and desired completion date of the proposed nuclear unit, licensee will notify all non-affiliated utility systems with peak loads smaller than licensee's which serve either at wholesale or at retail adjacent to areas served by applicant that licensee plans to construct such nuclear unit.

5. It is recognized that the fore'going conditions are to be implemented in a manner consistent with the provisions of the Federal Power Act

'and all rates, charges or practices in connection therewith are to

---be subject to the approval of regulatory agencies having jurisdiction over them.

I

~ ~ /'ttachment C iN"~r,.

FLOR(OA POWER 5 UGHT COh!PALY HAND DELIVERED February 26, 3.974 Mr. John F. O'eary Director Directorate of Licensing United States Atomic Energy Commission Washington, D.C.

Re: Florida Power and. Light Company St. Lucie, Unit No. 2, AEC Docket No. 50-389A

Dear Mr. O'eary:

The license conditions attached to your letter of February 25th are acceptable to Florida Power and Light Company as a resolution of all antitrust r r matters w'th regard to this Docket. ofAccordingly, Florida Power and Light Company agrees to inclusion these condi-tions in the licenses issued in this Docket.

~

Acceptance of these license conditions is for the purpose of avoiding an antitrust hearing in the proceeding, and is not to be construed as an admission that any situation inconsistent with th antitrust laws would be created or maintained by activities under an unconditioned license, or that Florida Power and Light Company

.is otherwise in violation of any of the antitrust laws.

Sincerely, Ben H. Fugua Senior Vice President

Attachment D LAW OFFICES ~ O'T ~t ~

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SPIEGEL % XilCDIARhIID 2600 VIRGINIA AVENUE. N. W.

WASHINGTON. D. C. 20037 TELEPHONE I202I 333 4500 GE PIEGEL

".'ANIEL I. DAVIDSON ROB . MCDIARMID t. Cli> Q, ~,.C>>I FRANCES E. FRANCIS THOMAS N. MCHUGH. JR.

SANDRA J. STREBEL PETER K. MATT ROBERT A. JABLON DANIEL J. GVTTMAN JAMES N. HORWOOD ALAN J. ROTH OF COUMSRL April 15, 1976 JAMES CARL POLLOCK J. A. Bouknight, Jr., Esq.

Lowenstein, Newman, Reis & Axelrad 1025 Connecticut Avenue, N.W.

Washington, D.C. 20036 Re: FP&L, St. Lucie Unit II, NRC 50-389A Dear Lon; The purpose of this letter is to respond on behalf .

of the Utilities Commission of New Smyrna Beach to your offer of 2 mw of St. Lucie Unit II as representing a "reason-

'able ownership share." See Tracy Danese's letter to John R. 'Kelly, January 22; 1976.

<>>+3 erat to the Ut U'sties ommis sion ' aT T'>TIIT I TI<

reasonable financing and subject to its reaching necessary legal agreement, operating and tran'smission agreements with you, 'the Commission accepts your offer of 2 mw. Itwill, of course, make all efforts to consummate necessary agreements.

I look forward to working with you towards that end.

The Utilities Commission cannot, however, waive its rights to seek a reasonable ownership share from St. Lucie Unit II. As you know, since the Company's January 22, 1976, letter, I have-had many conversations with you to attempt to resolve the matter. The Utilities Commission has given very serious attention to your 2 mw limitation, but cannot reconcile that limitation against he principle that, it simply in light of present .circumstances, the Utilities Commission should have an opportunity to acquire at least equal nuclear capacity to that which will be possessed by FPGL. Thus we cannot concede that the above acceptance of your 2 mw offer would resolve the difficulties which exist between us.

0~

J..A. Bouknight, Jr., Esq, .April 15, 1976 The Utilities Commission is

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also disturbed that your

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proposed transmission rate applicable to Crystal River III

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(and presumably to St. Lucie) makes no allowance for a j oint

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rate with Florida Power Corporation or for proper functional

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allocations necessary to allocate costs fairly between the Utilities Commission and FP&L s other services'. In addition, an analysis shows your rate proposal to overstate allocable transmission costs. The high level of your proposed trans-.

mission charges are especially discouraging in li;gh4 of your unwillingness to allow general transmission rights to New Smyrna Beach or to make provision for participation through capital investment in your transmission facilities as was proposed by John Kelly in his November 13, 1974, letter to Ralph Mulholland.

As you recall, NSB initially proposed the purchase of 30 mw from St. Lucie No. 2 under a "sell back" arrangement similar ta the Company's proposal in paragraph 2 of its March 30, 1976 letter. Letter of Tracy Danese to those requesting'articipation'n the proposed South'Dade nuclear

.units. After long .negotiations at. the suggestion of Tracy:

Danese, I agreed to recommend to the Utilities Commission acceptance of a 3.08 mw share in the hopes that this would facilitate final settlement, even though, as you recall, I and other New Swvrna Beach negotiators vigo cu"ly dis greed that this 3.08 mw represented a fair share. See my letter to Harry A. Poth, Esq., ll/25/75.

\

While any. agreement must be subject to the Utilities Commission's approval, in view of my past, offers I shall undertake 'again to recommend settlement by the Utilities Commission and their withdrawal from any St. Lucie litigation, if you will agree to the 3.08 mw share originally proposed by one of your negotiators and to a mutually acceptable trans-mission rate or formula. If. you cannot agree, the Utilities Commission reaffirms that it desires to purchase 2 mw from St. Lucie II and.suggests that a meeting be called between

.the Department of Justice and the NRC regulatory staff to..

assist in this matter.

~ 0 ~ 'l g ~

I understand from our telephone conversation of two

'weeks ago that Ralph Mulholland had been planning to telephone Bob Bathen concerning the transmission rate. Subject to your approval, I shall request Bob Bathen to call Ralph Mulholland in the hopes that both matters can be resolved. Nith good will on both sides, especially in light of what I believe

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J. A. Bouknight, Jr., Esp. April 15,. 1976 to be the mutual respect between Ralph Mulholland and Bob Ba ,'greement should be possible. However, if. that is un ling, X suggest either a meeting between us or resolu-tion by the Nuclear Regulatory Commission.

Sincerely, '

Robert A.. Jablon

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Nt;fV YORIC, VVlul(8@AY OCl'uOL."lj. lo, luZZ IARAB III>TIOIIHGUT 7 1 i 7

OIL HXPORTH BY I

g IContinucd From Page I Col 5

.tried to be neutral.

f >

I 0 The 5 pcr c:nt cutback twould he compu(cd agamst

>the previous mon(h's exports.

>The cut is'less than it would ABS CU"Jt'Qjtjt. Jj!XPQM'8 &A MQNDE Ibe il this 5 ncr cent were icomputed >,from some single point. Thus. af(er six mon(hs(

the artual reduction would be 23 per cent instead of 30, and at the end of a year, A3 per cent instead of 60.

France May be Exempt Tl>e II countries involve<l in II.S. Or/ IHIt TARGHT There was no specific mcn.

thc decision, not ail of which are oil producing countries, lion ol any country on thc were Abu Dhabi, Algeria. Bah.

"unfriendly" list other than thet United States. This was Thr Arab culback in out-Iteductiqn Is Smaller one nf many llexlble aspects put is cxpcctcd to tighten an ol thc dccbion. It allows Iho already lfght American oit Than Expected Arab states to grade customers situation but not to bring in order of their support ol the major rationfng. The rise in Effect Uncertain Arab cause. The participants oil prices will have an im.

promised to Insure that the 5 pact on Britain's balance o/

per cent monthly export cut By RICllARD EDElt would not reduce sales to payments and her efforts to 5 e<<><>> e >> >>a v>>as>ace "friendly" countries, but again curb inflation. Articles and a BEIRUT, L banon, OcL 17 chart-appear on Page 71.

they did not say v>hich countries The Arab oil. roducing nations these wrre.

proclaimed t Ight a monthly rain, Dubsi. Fgypt, Kuwait.

Observers at the meeting as- Iraq, Libya. Qatar, Saudi Aral>ia cut ln export of oil, with the sumed that France. for example, and Syria.

burllen to falj on the United would not bc subject to reduc- ~

kgypt and Sa<>di Arabia. op.

States and otl>er nations con. (lans. West C>ermany, presum- posing more militant proposals.

sidcred to be unfriendly to tile ably, >hfght bc. Japsp. whose are reported to i>ave insisted Arab cause. on avoiding measures (hat position was described by one would put relations with thc The long-awaited formal dh. participant as O>at of "odious United States beyond "Ihr cision to use o>l as a weapon neutrality." might experience point of no return,- a phrasr in Ihc hlfddie East conflict wss some difficulties. It was hard used hy the Egyptian Prrci-announced at the end of an to say what treatment'would be dent, Anwsr el.Sadal, in his eight hour mectinjI in Kuwait given to Britain, wliich h>ss also speech yesterday.

of ministers from ll countries.

-unucd on Page IS, Column 6 Reduction ls Modest The monthly export rcdu< Tonight's decision appears to lion was sct at'5 per cent off take account of Ibis view. Thc each previous 'onlh's sale, dimensions of >he cUI were considerably more modest starting with the level of sales than the kind of all.ou( ar.

in September. The measure was lion railed for l>y countries at once more modest, more surh as Syria and Iraq.

flexible and vaguer than had The l>nilrd Slates u<rs some 17 milVion barrels of cru<fe oil generally been predicted. and rrfinrd pro<(orts rarh dav.

h Significant Shill and so>ne 6A million barrrls

<>I Ibis srr imported. From the "lt was about as mild a step Arab countries the United States as. they could have taken," takes a Iotal nf rrudr and heal ~

said one oil expert who hsd ling oil rs(imated variouslv at talked i(r'the participants. At II.5 million to 1.9 million barrels

. ~ ds~v.

the same time, to have finally Th>s wcrk Ihr l>ni(rd Ststrs-co>ne lo the ucc of oil as a 'rrlrasrd fig>>rrs purporting In 4

weapon. as had bren threat- jshnw Ihst Amrricans would nn(

ened fog years, marks a signi. 'bc sc(tously aller(td e<rn l>y licant jevolution In h)iddfc :major cuts in Arab oil pro<la<"

I(ion, Eastcrq affairs. William F., Simon.'t>aim>sn Thc f cpts wouhl continue, of Pcrsi<lent Nixon's nil policy month Ity inonthuntB israel rommi(trr. said that tin evacuated th<l tcrrltr 'ceu. rn>>ld decrease i(s ron, sumption of nil by ac m>nh ac l(ni(r<l,'(a(rs pied In tha 1967 war, made Ih>cr >niflinn bsrrrlc s day if i(t provision to respect Ai .o rights. >>>sdc'hr nrrec<erv rf(<n> I

' < ~ ~ ~o> oS ro ~ Ld dcl)A Yo UI Z JBER 20 lyl2 5 NEjV"YORK TlMES, SATURDhY, OCTOBER 20, 197J I

Cutoffin Oilfor U S..Ordered by Libya Cuto fin Oil to U.S. Coulluuà Frcor Four I, CoL I would readjust her oil tax about 6,000 bafrds a day to based on the Persian Gult ad- thc United States.

Or rf.'d l)y LiEyn lurtolr ~ d y ol crud oil dl. vance, which amounted to 70 star followed thc example rectly to, the United Stat<>s and per cent. ot e area's oil giant, Saudi indirectly 100,000 barrels ot The breakdown ot the ncw Arabia, which on Thursday an-

'II.I,IA)I Ii. 8!I!IT!I pctfoleuin products out ot a Ubyan price ot $ 8.925 a barrel nounced that shc was cutting li)'.il>ya l>f<'ll n <!oui>le I>qrfel total Uiiited States consump- was a $ 6.979 posted price, a back hcr pf>oduction ot 8.5 mil-1>I'isi <If Iil'f IIII L< ('.<><i )'<'s tion ot <about 17h million bar- $ 1336 premium for low sul lion barrels a day by 10 per rels. phur. a transportation premium cent. 'Iha United States gets ter<I;<y I of<le <ilg Li ciiloff of This Ii about lh per cent ol of .458 cents because the oil is directly mo'e than 200,000 j>ar-

<ill slop iei>>s of erode oil and total America consumption, closer to consumer centers than rcls e day tfom Saudi Arabia.

peifolcb u prod<iris io the tlnit 10 pcr cOnt ot all Arab exports the Persian Gulf and a.I52mnt On Welnesday, 10 Arab oil-

<4 Slab s an<I:<In<os! <loobliiig to thc Onlted States and 3.8 premium because the Suez produclng sMes innounced a per cent.ot all Imports by this Canal is closed. mlnlmum 5 pcr cont cutback In prices I r other in>porters. county'. ;' 'Ihc increase is likely to have with an additional i)>c a mouoeemrois shocked The unportance of the Libyan the greatest Impact in Europe, pn<ductio<i an olfe. Il)'lid<>i>l<I a<xi con crude ls shat it has <i low sul- which gets n<osut ot Libya's to- 5month per cent drop in output each phur content and js blended with tal production ot 2.2 million the territorie until Israd evacuates all fused oi industry,. occupLd In 1967.

[h< no<<oui. Ahu Dlml>i. consldefdbly larger amounts ot barrels a day. The resultant other crdde oil to make heat. rise In prices of oil pioducts Arab Alms Undear one of the n<ajdf Arab oil Ing oil Icontofm to cnvin>n. will spur already rampant In- As yet it Is undeer to both pfodiic is, was Ielx><i<cd lo mental standards in many East (ation. oII indusuy executives end hc neg >tinting f0f a nail!i~ Coast cities. United States Govcnunent of-million Iollar l<>a<i, osiensil>ly New York could be particu- i John LIchtblau. head ot the fich<ls as to whether the Arabs Petroleum Industry Research larly affected by the action be- Council, for in os!rial d!.'eclopn<cnL commented: "Although intend an acfoss4he boaf4.cut-I herc as specuiat<oo, how- cause th) Consolidated Edison back of production that would all Company imports a large part the the details are not in, what atfcct all consuming countries cecf, I st Ihe funds would of its ol I<urn Itahama refin. to have producing countries appear bc use< for the d>Ifob war c f- eries, wl jch use Libyan oII to done is to have raised equally or whether the cutback otould affect only the United fofh P gc l4.j make otlicr cils acceptable the price o! running a factory, States.

I.ibya upplic<1 e}>out I 42.000 under thj city's dean-air rcgu- hcatlng a home and powering a car around the world by an lations. In Japan, whkh Imports 90

( <><ill>i<i< I on Page 7, Column 4 Tllcfe II< a question ot whcth. unprecedented degree." per cent ot her oil< Arab diplo.

cr Liby will cons!der sldp- Tuition Fees Rise mats told the Foreign hfinlster, ments top he 1)shames and clse- 'Ihe price at the wellhead for bfasayoshi Ohifa, that Japan where In[the Caribbean in the domestic oil ln the Unlthd would not bc "Inconvcfdenced" same cat) gory as shipments to States ranges betwccn $ 4 a by thc Arab actlonL the Unite jt States. barrel for "old" oil and slightly Nonetheless, the Japanese An oil. company executive inore than $ 5 for newly dis- Gosce<T<ment ycmcfday asked conunetitcd: "lt the Libyans covcfid oil under thc nation's the 24.member Organization for are seriou about thc oil weap- present Phase 4 guideline<s. Economic Cooperation and De-on, they, will embargo the In accordance with Arab pro- velopment to negotiate with the Cafibbca<I. It it Is just another duction cutbacks announced oil producers on both the price excrdse fn Arab rhetoric, they Wednesday, tho Persian.Gull rises and p<oductlon cutbacks.

won'." ! stoic ot Qatar said ycstcrday It In Sc<>ul, South Korean ofti-The Libyans rdsed the price would cut production by 10 per cials said they were consider-ot oil from $ 4.90 to,$ 8.925 a cent and take additional steps Ing rationing plans.

barrel. Theaction follows asharp to halt'supplies to the Unitod Washington sources said yes.

increase <announced Wednes. States and other countries that terday that the Administration dOy by Persian,Gulf pioduc. support IsraeL would not consider the situa-ers, including Iran, whlcli is not Qatar, which had an average tion serious until at least one Arab. Venezuela also an. production of 482,000 barrels a million barrels a day ot supply nounced yesterday that sl . day in l 972, supplied only had been cut off.

ore A r'ab Gouarttraartts Four More Arab'Governments Bar Oil 5ttpplies for U.S. Cut Off Supplies of Oil to U.S.

I conrlnued prone psz I. cob I to Israel and President Nixon's By RICIIARD EDER request for a $ 2.2-bill!on appro-Speed ~ I co '1leo ddt TIC1 Tlueso uzees. olds over ell squeeze on priation to pay for it. This BEIRUT, Lebanon, Oct. 2l- of thc oil weapon against the oil consumers was tobeapphcd seems to haiw set in motion Four Persian Gulf oil producers Unltpd States will have much flexibly. Countries that gave the second phase of the oi!

Kuwait, Qatar, Bahrain and Imnwdiate effect, although lf "concrete assitance" to thc squeeze.

Dubai today announced a main'talncd for a long period it Arab cause, iE was announced, Several slates, among them would not suffer cuts. Coun. Saudi Arabia ani Qatar, an-total embargo of oil to the could prcscnt serious problems. ~

nounced that thc first pro-tries 'onsidered unfriendly ,

United States. 'Il>cre Is, for example, no slmpl>>

the United Slates in particularI duction cut would be l0 pcr

%lie announcentents made the way to prevent oil sold to Euro- would be made to bear the[ cent rather than 5 per cent. In the case, of Saudi Arabia, cutoff of Arab oil to thc United pean countries from finding its effects of the progressive cur-I whose tallmcnt. production dwarfs that States thoorctlcally complete. waylto the United States. I of the others, the 10 pcr cent Df the l7 million barrc!s of Today's moves completed a The formula was purposely cut would replace the first two crude and heating oil and re. second phase of Arab govern. unclear and flexibie. It was de- monthly 5 per cent reductions.

signed not simply to punish The results would be roughly finery products used by the ments'ecision to use oil to put countries for supporting the the same. but the initial bite United States each day, approx. prcssure on thc United States Aratts Insufficiently, but also would be much harder.

Irnatcly 6 per cent les been im. to abandon ot reduce its sup- to encourage them to change Then over the last three days, ported from thc Arab. states. port 'of Israel. their policies. Countries that the oil states began succes-ht thc same tinfe, thc Nether. Last Wednesday, mcctlng In 'adopted a stiffer line toward sively announcing a total em-lands. which has been accused Kuwait, t!ie Arabs announced 'Israel could find thetnselvcs bargo on oil to the United placed in a more favored cate- States. By tonight these in-.

by the Arabs of being pro Is that each na'tion would cut oil gory racl, was the object of reprisals production:by 5 per cent each cluded Saudi Arabia, Libya.

At the same time, the use of Kuwait, hbu Dhabi. Qatar, Al-today. Iraq announced thc na. month. These escalating cuts the over.all reduction in pto. geria. Bahrain and Dubai.

tlcnallzation of Dutch oil hold- would coniinue, It was declared, duction, especially as it es- The total embargo on the Ings in tbe country. Previously until Israel evacuated thc I'nds calated each month, would United States could mean that Iraq h" d nationalized Am:rlcro taken ln IS07 and made recto. make it less and less likely that the other form of prcssure, the holdings. ration to the P lcstlnlsn'cf. thc European countries, for in. production cut. will begin to be stance, would allow oil sold to felt in Europe and Japan some-Nut even tha hr!.b producers them to be sent to the United what htcr than it otherwise themselves'bclfuve that the use Continued on Pt;ge 20, C"Ium 7 IStatcs.. would have done. This is be-The Kuwait meeting was cause the United States took ifollowcd by announcements of close to 10 per cent of the more United States military aid Arab output.

Tl(('-'f'IV Tlh(LS. TIIURSl)<fy, NPVPhfBPR 8 (97$

T1ansctipt of Presidents Address on the EnerI;y Si(L(a.tion I'i>ihnvltlX >s <> (n>> isc'Ilp(

<>f I'i<<sutra( Kcxun's hruud. I rom these discussions has i( will rrqmr s n>e

~ <<L<<( ~ >dill>'cs c>> i r>>c<<rgy Iron> emerged a broad agreenient suin(ifr by all Aine'r>rang.

(pushing(un (us( mgh(. us fr. that we as a nation must hluscle Not Daniagrd co<cled by Ifhr (<<'rw Yuck 16 now sct upon a ncw course.

In the short run, this course XVC'>>>lit hc'>lfe that nuf I'>mrs.

7)~O t".)=.iitsJf Gf a Fu-t Cri "iS means that we must use Irss moil "ii(al nrrds .>rc. mrl (Ic>c<<t evening. I want (o talk Io yuu tumgh( ala>ut a seri. hwr<o<>sort>c<<ots p<><day

<<$ cncrgy that nicans Irss ~

c nrst ant nur Ir<is( im."

<<por(anl ar(>v>l>rs are Ihc first heat. less electricity. less oui na(tonal prnhlrm. A gasoline. In Ihe long run, it In hr rut hark, and we must prc>blcm wc n>ust all (ace to. .f<< f<<<<<<<<)Ntc S'<

y is being years i>hr>ld. U.S. Congulnplion will give uc Ihe rapacity Io Inmmrd Ihr niuscie is not As America has grmvn and of Pctrolounil Products n>cct our ncecls without rc. irr><>usly damabrd. prospered >n rcwrnt yean, 13 lying on any (orcign nation. To help us carry out that our c nrrgy cirniands I>ave be- ,c Wy The immediate shortage rrspunsih>Ii(1 I am (onight gun Io rxc'rrd availahIc sup- will a(feel the lives of each announcmg Ihe followmg lies. In recent months wc and cvcry one of us. In our slrps: ave taken many actions 12 (af tories. our cars, our First. I am directing that supplies and to re- to'nnrasr homes. our offices we will industrirs and utilities whirh dure consumption. But even C use roal. which is our most have In use less fuel than with our best efforts we knew that a period of tempo. 11 ... we arc accustomed to using. abundant rcsourc.e, bcprcvcnt-rd ftc>m.converting from coal Some school and factnry racy shortages was inevi- schedules may be realigned. to oil. Efforts will also be Iabte. l Add some jct airplane flights niadc to rc>overt power plants Unfortuna(cly. our expec- will bc cancclco. from the use of coal-of oil tations B>r Ibis winter have This does not m4n that . tn Ihe usc nf coal. nc>w bren sliarply al(cred hy we'e going to run out of Second, wr are aliocaling the ircrnt con(li>t in thc 'i + gasoline, or (hat air travel reduced quantities of fuel for I.liddle East. Brc'ause of that will stop, or that we will aircraft. Now this is going war. nmst uf tiie Micldlc I;ast- U.S. Produolion o j Crude Oil I .8 (rcczc in our homes or of- Bi (ead to a cutback of more ern c>ll pimll>c'cfs have fc- ficrs anyplace in America. thun 10 pcr cent i>f the nmn-cluc rd <<vcr all pfcxiurt ion and Thc fuel crisis need not her of flights and some re-co( <>ff Ilirir ihipmrn(i c>f oil I mean genuine suffering for scheduling of arrival and de-In (hr Ih>i(ed Statrs. any American. parture times. By thc cnd uf tiYis inonlh, 1%3 1%4 1965 1966 1967 1968 1969 1970 1971 1972 Third, (hcre will be rcduc. ll><>fc'hai> Iwo ln>ll>on l>af Soiree, 8u<oauot Mines lions of approximately 15 i>cr rrls a day n( oil we cxpertcd rent in the supply of heattn<( to in>poit into Ihc United (sc ><c<<Y<<s h<<c>l><c<< i. >in oil for homes and of(iccs anIj States will no longer bc n(hrr establishments. To be availat>le. sure that there is enough )0 pcr Cenl Short go around for Ihe entire oi'n We must Ihcreforc face up winter all oicr the country tn a vrry stark fact. We arc i( will br essential for all of hradmg tc>>'vard Ihe most us to I we and work m lower acute shortages of energy Icmpcra lures. since Worl<i War II. Our sup- 68 Degrees ply of prtrfiicum Ibis winier tVe must ask everyone Io will be at least 10 pcr cent lower thc thermostat in your short of our anticipated dc-inands an<f it em>id fail short home hy at least six dcgrces hy as niuch as 17 pcr cent. so that wc can achieve a na-(tow even l>cforc war broke tional daylime average o( 68 nn( in thc htiddlc fast these degrees. Incidentally my doc-prospcrtivc shoflagcs were tor tells mc that in a Iem thc iubjrc I of in(ensive dis. pcrature of 66 to 68 degrees c ussinni among n>nnbcrs. of you'e" really more hcallhy than when it's 75 to 78, if my Administration. Icadcrs that's any corn(ort. nf Ihe Congress. Governors, i>(aynrs and other grmips. ln '((lees. (actories and commercial eslablishmcnts, wc must ask Ihat you achieve Ihe eqiiivalcnl of a 10 degree reduction by either lowering the thermostat or curtailing working hours Fourth. I sm ordering addi- Dccause nf the hard work Nn<v some of yo>> may tional reductions In the con- speed limits to 50 miles pcr <m<h'r >vhcthrr w<"rr (uin. Let mc turn now .to our that's already bccn done on must hsvd Ihc legal sumption of r by the hour. this bill hy Senators Jackson g back thc < lock ln annthrr long range plans. lo srt Federal Govr e This action alone if it is While a resolution o( thc rrasonsblg and I'annin and others. I am '.r. Gas rationing. Oil sh>>it- for thr cur(are taken reduce have'lready adopted on s nationwide confident that we can meet <c, Brdu<<c<l speed limi(s. immediate crisis is our high- I f roal. ru><l >vr muct thr Governmei >nsump- hacis couhl save over 200.000 >ry sll co>ll>>l l>kc '>> vay of est priority, we must act now linn by 7 per cent. Thc cuts barrels of oil a day just that goal. And I will have the bill on this-desk and will c we lrft behind with Glenn to prevent a recurrence of I>s c organizational s(rur-turcs to incct snd administer must now go deeper an>I >educing the speed limit lo ilier in the war of Ihr f>>r- such a crisis in the (uturc. must bc made by cvcry agen- 50 l>>>les pcr ho<lr. be able to sign it. This is a matter of biparti ~ our energy prop(an>c. This proposed Icgislstiog s. KVCII in farl part of ouf A>>d there(or< lonipht. as cy and every dcpsrtmcnt in Now all nf these ac(ions rrrnt problem also stems san concern. It's going lo rc. the Govcrnmcnt. I am direct- would enable the executive quire a bipartisan response. I dhl (hie morning in mr<<t-will result In substantial branch (o mcct the energy oni war, the war in thy ing that the dsylime tem- savings o( energy. More than iddir Fcs(. Dut o>>r <lccprr Two years sgo, in the first ing with Ihe Congrrssinnsl peratures in Federal of(icrs emergency in,several im- Iridrrs. I again urged Ihc that, most of these are ac- portant ways. <rgy problems mme not cncrgy message sny Presi-he rrducrd immedia(cly to a lions that wr can take Fight >m wsr hut from p<a<<r and dent has ever sent lo Ihc Conprrsc In give its at(rn(i<<n Irvrl nl l>rtwecn G5 and 68 now without (uithcr dc(ay. First, il would aulhorizc ~ .~ ' ~ iro>>> anundnncc. We aie run-Congress, I called attention to th<'>>itis(ives I rrr>>m. mended six >non(hs ng>> (>> drgiccc, snd that mesne; in The key to their success lies, to our urgent cricrgy prob-this room. (oo, ss well as in an iinmediate return to day- ning out of energy today bc. meri Ihrcc nrc<lc tlmt I have however. not just herc in lem. Last April, this year. I every other . room in the lipht saving time on a year- cause our economy has grown reaffirmed to the Congress drsnihrd. Washington but in every round basic. Whi(y Ilnusc. home in every community enormn>>sly and because in the magnitude of that prob- Ilrsources I.lated In sddilion. I am ordering 'Second, It would provide the prosprri(y ivhat werc once across Ihis country. lem, and I called for sc(ion Finally I have ctrrccrd rr-that all vehicles owned by ncnssary authority to relax consldcrr<l hlx>lrirc afe no>v on scvcn major legislative I( each ot us joins In this environmental regulstionc on considered ncrcssitios. pra(cdly Ihc n<ccscity of in-effort, joins with thc spirit and s temporary case by case initiatives. c<racing our energy rrcrairh the Federal Government, thr dclcrmination lhat have Consume 30 Per Cent Again in June, I called for snd develop>>>rnt rff>>rtc. I sst sre over a hal( a mil- basis, (hus permitting an ap-and'here always praccd the American propriate balancing o( our en- liow many i>f you can action. I have done so fre- Junc, I announced s (I<r yrar lion o( them. (ravel no faster cl>aracter, then half the battle quc>>tly since then. than 50 miles per hour ex- vironmental in(crests, which rrmcml>cr wjirn it >vas very $ 10 billion program lu dr-cept in emergencies. will already be won. sll of us share, with our en- unusual to have a home air- But thus. far. not one ma- vrlnp hrt(< r >vsys of uci>>g This is a step which I have Additional Steps ergy requirements which, of rondi(lone<I? And yct this ic jor eneigy bill tliat I pave <'>>rife i>l>d lo rxplorr al>d courcc. arc indispensable. very co>nn>on in almost all asked (>>r has been cnsctrd. <lrvrh>p new rnrrgy cu>>rrrs. also asked Governors, May- Dut we should recognize parts of lhe nation. As a I realize (hat the Congress ors and local officials to take that even these steps as es- Third. it would grant au- (act m>>n(h I ann>>un<<id (h>>rity to impose special rn- result, the avcragc American has been dictrsctcd in this. plans (or an immrdis(r sr-Immediately with regard to sential as (hey are msy not will consuino as much cncrgy period J>y other matters. buti vehicles under their au- be enough. We must be pre- crpy conservation measures. rclrrstion of thol pr>>piam. such as r<strictions on the in thc next scvcn days as the time has now come for thority. pared to take additional steps most other people.-in lhe the Cungrcss to gct on with We can lake heart in thc (act Fifth, I'm asking thc Atomic and (or that purpose addi- working hours (or shopping that wc in the United S(ates centers and nther commer- world will consume in an this urgent buciness. provid. Energy Commission to speed Iional authoritics must bc cial estsblichmcnts. entire year. ~ ing the Icgishtion that will have half the world's known up the licensing and con- provided by the Congress. And, fourth, it would sp- We have only 6 pcr cent meet not only the .current coal reserves. IVe have huge s(ruction o( nuclear plants. I have also dircctcd my o(. tl>e world's people in crisis but also thc long.range untapped sources of natural We must seek to reduce the chief adviser for energy pol. America. but wc col>sul>>c challenge that wc face. gas. We have the m<>st ad-time rcquircd to bring nu- icy. Governor Love. and other prove and fund increased ex- over 30 per cent o( sll the Our failure lo art now on vanced nuclear technology clear phnts on line, nuclear Administration officials to ploration. development and energy in the world. Now our lonp-term energy prob- known to man. We have oil in plants that can produce . work closely with the Con-production from <>ur naval our growing den>ands have lems could seriously endan- our continental shelves. YVC power. gress in developing an Emer- bumped up against the limits ger thc capacity of our farms have oil shale out in lhe To bring them on line froin gency Energy Act. petroleum rcscrvcs. Now. these reserves of available supply. and of our fartorics to em- wec(nn part of the Uni(cd 10 years to 6 years rcducc I mct with the leaders of are rich ploy Americans at record- States. sources of oil. From one of And until we provide ncw that lime lag. Congress this morning and I them alone. Elk Ilills, in Cali- sources of energy for to. brcaking rates. Nearly 86. And we have some of the SixU>, I'm asking tl>st Gov- asked that they act on this morrow. we must bc pre- million pc>>pie arq now st finest tech(>iral and sricn(itic ernors and Msyors reinforce 'egislation on a priority basis. fornia, wc could . produce work in this cquntiy and to morc than IG0,000 barrels of pared to tighten our belts minds in the world. In short, these actions by taking ap- lt is imperative that this oil a day within two months. today. provide thc highest standard > we have all the resources we propriate steps at thc state Icgiclstion bc on my drisk (or of livinp we pr sny other I ( ~ need (o meet thc great chal and local level. a signature before thc Cong- Fl(th. it would provide the nation hss cvr>f known in his- lrnge before us. We'vc already Icarncd, for ress rccesscs this Deccml>er. Federal Government with au- tory. It rou(d dure the ra. Now, wc muct demonstrate example (rom the Slate of thority to reduce highway <pacity of our farmers tu pro. thc will to meet that <'hal ~ Oregon, that considerable speed limits throughout the vide the fond we nrcd: it nation and linally, it would Icnge. smounLc of cncrgy csn be could jr>>par<lize our entire saved simp'ly by curbing expand the power of thc Govc transportation system; it v>>\In 4World tVsr II America < NIh the cces.iiy liphtinp. and s(igi>t- . un-.'ecessary crnment's regulatory agencies ly altering thc school y<ar. to adjust the schc<lules of planes, ships and other csr- <<o>>hl seriously wrakcn thc S(sggcr Wo>king llourc rirrs. .>hi(i(y of America (>> continue I ain rrco>nmendinp that tu gi<e the leadership ether communities (nllnw this, If shortages persist tlrspile all of these actions hnd de. >>nl<'vr ran pr>>cidc towhich keep example. And also scck ways spite inevitable increases in (hc pear< tha>t wc have won to stagger working hours, to the price of cncrgy at such great cost of thou-cncourapc greater usr of it may Ihcn becomeproducts sands of our finest young mass transit snd rar pools. sary-msy become neces- Americans. liow many lanes have yoii to take even necessary That is why It is time to pine along thc hiphway or measures. stronger It is only prudent act now on vital energy legi-the freeway. whercvc( thr that wc he ready to Cut the slation that <vill affect our case may be, snd scen hun- consumption of oil products daily lives, not just this year, drc<ls snd hundreds ol cars such ss pccolinc by rationing but for years to come. AVe wi(h only onc individual in or by a (air syst<m of tsxa-must have the Icgisla(ion now tl>st csr. Thic wr nuist sll ti>>n and consequrn(ly I have which will authorize con-coopers(c tn change. struction of thc Alaska pipe-d>irctrd that con(>l>gcl>cy line. Consictrnt v:ith sa(c(y snd plans, if ibis lfccon>cs i><<rs-economic considerations, I ~ I.egislation which is not s.>ry, hc prrparrd for that burdened with irrelevant and sm also asking Govern>>is to p>lfp>>sc. take a>cps to red>><<e highway unnecessary provisionc. tVe must have lrgisla(ivrsu(hor-i(y to cncourag< pro<lurtinn of our vast quantitirc of na(- ural pac, onr of thc clrsncst sml h ci sn>>r<<rc nf energy. of developing nn Because of the urgent n<cd bility. The cir. Deplorable tyatcrgctc . aton for an organization that cumst were great. Re- wouhi provide focused Irad. Wc have made progrcs to-sponding to that challcngh cfslllp fof tl>hc cffo!t. I nil> upon to unite In tne ac>~.~ N crd l>ur gona( nf a ri cl proc this nation brought together asking the'ongress In ron. of their country. I am p fi(y ivithou( <car The . its finest scientific skills and sider my proposal for nn confident that while su-'remely of unco>plo>ment is do<<n Io ils finest administrative skills the days and wccks ahead 4.5 pcr cent ivhirh is Fncrpk Research and Drvel-in what was known as Ihe opnlcllt Adllllnls(ra(loll. ceps may be a time rr some hard- loivcst uncinploymcnt lhc in manhattan Project. With all ra(c from any other organi ~ ship for many of us they will peace(bnc that ivc've had in lhe needed resources at its zationnl initiatives. also be a time of renewed 16 yccrs And iv< a!c finclly command, wilh the highest And to cnart Ibis Icpicla- commitment and concentra- beginning to make proprrss riority assigncii to its cf. tion in (h< prcscnt sccsion tion to thc national Intcrcsts. in our fight against the risc orts, the h1anhattan Project of (hr Congrcs'c.. Wc have an energy crisis, In (h< cost of living. gave us the atomic capacity I.rt us unite in rommi((ing but there is no crisis of the > Thrcc arc suhctantinl that helped to cnd the war in thc resources nf t(iic nation American cpirit. Lct us go. arhi< vemcnts in this year thc Pacific and to bring peace Io n major new endeavor. forward then doinp'hat 1979, Io Ihe world. An rnil< avor (hn( m this needs to be uone, proud of. Bu( I <<nuld I> Ircv Ihan Twenty years later, re- hiern(enninl rra ivc ran ap. what ivc have accomplished rnn<lul if I wr>c not to adnut. sponding to a different chal ~ pr<qiiia(cly rnll Project Indr. together in the past. and con- Ilia( (hic has not been ni) lcnge. we focused our scien- 1>cndrnrc. fident of ivhat ive can acrom- racy year in!Odie o(hcr rr-tific and tcclmological genius. I.ct uc cet ac onr national phsh Iogelher m the fufure. spcr(c as all of you arc quih'. on the frontiers of space. We ~ poal, in Ihc cpirii of Apollo 1st us find in this time of ~ aivafe. pledged to put a man on the aml ivi(h (h< dr(rrn>inn(ion national necessity a rcncwcd. moon before 1970. and on Ac a recul( nf (hr ilrph>r-nf thr hlnnha<(an projecl. awareness of our capacities ahlc Watrfpatc mat(er, picat July 20. 1909. Neil Armstrong Ihat by the end of thic as a people, a dccpcr sense made that historic giant leap numbers of Amcriranc Jinvc decade. ivc <<ill have ifcvel.. of our responsibilities as a had dnuh(c raised ac to thr for mani'ind when hc stepped oped Ihc p>ten(in( (o meet nation. and an increased un- <>n the moon. in(egiiti of (hc Pr(!ident of onr own energy ncc>ts <<1th., dcrstandin gthat the measure Ihc tini(cd h(a(cs. I vc <vcn The lessons of the Apollo out deprn<ling on any b>r- and the meaning of America proJcct and of thc earlier no(<d that son>n pui>lica(iona %manhattan projrrt are Ihc eign enemy foreign energy has nlways been detcrmincd have called on mr tn rcclgn sources. hy the devotion which each the offirc nf Pircidcnt of thc. same lessons that are taughi of us brings to our duty as l>v Ihc whole of American Some Ilardship 1>nitrd Statcc. c>(izcns of Ainerica. Tnnipht I <<onld like Io give I>>story. Whenever Ihe A(ncri- I.et us pledge that by 1990 ran people arc faced with a I should like to close with my nnciver (o those wlr> under Project Indcpcndcnce ;i personal note. It is Just one rlcar goal and they'rr rhal. <<e shall be able to meet 1>ivr snppcstrd II>at I re. Icngcd tn meet it, ivc ran do America's energy needs from i<<ar ago that I was rc.circled sign. extraordinary things. as Prcsidcnt of the tfnitc<I, I havr no in(rntinn ivhnt. America's own energy re. ~ Today the challnig< ic to States of America. During <vcr of ivalking nivny fri>in ~ sources. this past yrar we have made regain thd!(rrng(h ivc had the joh I wnc clef(cd tn do. earlier in (hie century the ln speaking to you tonigljf in terms as direct as Ihcce pica( progress in achieving (h< goals (hat I have sct %c '.Ong ns I nm phyc<enl(y strcng(h of self-sufficiency. my concern has been to by Olde. I nm go>nn (o con(inoc for(h in niy re.election cam- i>ni oik 10 (o I>< hour ~ Scrvicc of Pcacc before you the full facts of paipn. 'Lye have ended the <lcv fof Ihe rance of ii rra( Our ability to meet our . the nation's energy shortage; longest ivar in America's his- ahioad. nnrl for Ihc own cncrgy needs is direc(ly It is inipor(ant that each of tory. All of our prisoners of I noc> of oeocoeiiiv v:>(hroi( limited to our continued abil. us understands ivhat the sit- ivar have been rc(urncd home. ity Io act decisively and in- uation ic. and hnw the cffor(s hnd for Ihe first time In

nfla(ion and without ivar. at dependently. at home and we together can take to help h'roc 25 years no young hincricans hnd abroad. in Ihe service of peace .Io mcct it are essential (o '.n thc months ahead. I not only for America, but our total effort.

are being drafted into the Armed Services. shall do eierything that I can for all nations in the world: ~ Yo people in the world (<> sce that anv doubts as (o I lave oiilercd funding of perform more nobly than (he ihe integrity of >hc man who ~ this effort to achieve self- American people when called occupies thc highest offirc in suffiricncy Iar In exr<cc of (his land to remoir (lance the Rmds that ivcrc cxpcndcil doubts ivhcre they cxis(. in Ihc 51anha(tan project. But And I a m confident (liat money is only onc of Ihc in. in those months ahead. the grcdients cs!cn(ial to (he suc- American pcoph will rome to cess of surh a project. realize that I hnii nnt vin. We must also have a une lated tl.c trust that they fied commitment to that placed in me<<hen (hcy goal. We must have uni. ilrc(cd m< ac Picci<lcn( nf fied direction of (he effort to  :!>r I'ni(rd S(airs in (he pact. accomplish it. And I plcilpr to you.to-night that I sha(l always do every(lung <>>> I rin to h< vor(hv of that trus( in the , u(<II'<'. 1'hank you nnd good nigh( + '"'N)~&gp ', "g gC~I@ ~4 IY . 'Vg 'i< ~ ~ '\

e. ' ATTACHMENT F ~ r I

BEFORE THF. r'Fjgp'/<A,pg~~ .:.FEDERAL PONER CO~i1I1ISSlON ,~ ,.';.-.'""",;'Plo"ida Gas Tran'mission'ompany . ) .. {Basic'agnesia, Incorporated) ) Docket: b.o. RP.7".-50-1 et. al.

)

~ . ~ > ~ ', '. ~ ~ """'; '.'XXITT>X BRIEF OF CXTXES TO ' ' "" ','"~." '-'=-" "-"-"'..'c"'~'-'PRESXDXHG T~";Pi'UDGE f r l C ,r I Robert P.. Jzblon attorney for. the Fort Piercc Utility;-uthox~t:~ I of the City of Fc: t Pie.".c P ~ ~ 1 4 Gainesv3 3 le Alee-lua County r Regional Electric, Nater and E S~ Sever. Utiliti=s, itomes"..e;:cl, P Kiss imm.'~e Qaj'cl:'ijd S~'bl'3 ncf p Utj.liti.w Commission, St;~rke FloL'ida an<'a1 Bhzssee ~ 'ay','2 9, 1974 ~ '~... -. '".:i,'...LBx Off1ces of-9G(.ar j"";".,'.~ i Spiegel & McDiarmid 2600"Virginia'venue, N.N.-- ';, =Nashington, s D.C.. 20037 i ( MAY,". ~);gp) ~ .5 cC I, l +I gT~Ol p I ~ ~ l 5 1 The reason for imposing strict standards is implied in the applications themselves. These ere applica tions for "extra-ordinary" relief. Since there is a limited amount of gas available, in derogation of contract and certificate rights, granting these applications has the direct result of taking gas from other customers. Granite City Steel Co. v FPC, 320 Fed 711 (CADC, 1963), compare Cascade Na turv Gas Cor l oration v El Paso Natural Gas Cor oration, 386 US 129 (1967) . 'I Fairness demands that the general standards set as a result of the FGT tariffs and the settlement element be followed to the extent possible. These priorities have a historic basis; They have been sanctioned by se t tlement. I t is of moment that the applicants for special relief neither 5 et al, 3/95-121(May 18, 1973) . This ~, contested the settlement agreement nor appealed from the Commission's Order approving the settlement, both of which occurred last year. See Statement ' for citations. The settlement '6 66-4 take. on practical significance when the importance of planning is recognized. if ~ 0 For'xample', parties know of a lack of long range availa-bility* 'of fuel, they can plan for alternative supplies, make appropriate. equipment changes, adjust pricing, and afford notice to cus tomers .. However, freely granting applica t'ns for 'special relief negates and even counteracts such planning, forcing: parties to make abrupt changes often in adverse market situations.'t is, precisely'or such reasons that parties have a right to rely on. tariff provisions, settlement agreements and generalized regulatioris. See e.g., Texas Eastern Transmission Co., v.. FPC,. 306 F2d, 345 (CAS, 1962) . Applicants 'laims for special relief are based upon .'o facts which could not have been known or anticipated at the time of the settlement and Commission's order. Moreover, applicants for special relief, Cities as well as others who'ould be affected by transferringgas tb applicants have the "same type, of preferred interruptible contract While per-haps contractual agreements cannot be said to be inviolate in an absolute sense, contractual agreements do constitute a means to provide for commercial planning and an os-~g of affairs. For this reason, the Commission has been admonished many times that its regulatory authority is to be exercised within the context of private agreements. Eg., United Gas Pine Line Co.v 6 l.. .. 356 32 (16563: Lensdale Penns lvania, v FPC, CADC 73-1031 et al (March 15, 1974). 5 5 IV. THE CONTINUED AVAILABILITYOF NATURAL GAG'O ~ TI1E CXTXES TS OF VXTAL PUBLIC INTEREST ll As was stated hy Cit:ies'itness Phil'its, head of an informal organization of the Cities to aid in m~.cong available fuel supply, the Cities are not seeking either special e favors or special treatment. as a result qf this proceeding. (5/966: 7-16) 'However, they do xecognize theix'bligation to their citizens and

ratepayers.- '

"Granting these four. applications for special relief alone w'ould reduce the amount:.of gas available to other prefer ed interrupt-ible, customers by an additional 6.5 pezcent above.already projected '.,'.-curtailments" in 1974. Xn 1974 the applicants for special. relief would, receive 82.5 percent of their annual contractual amounts, hut the other members of the preferred interzuptible class would receive .'.-.'"48.2 percent; in 1975 the applicants for special relief would cont:irue ", -'. >'-,.....,."..to receive 82.5 percent (i.e;, theix'equests), while tho zest of- .he g".':.-,':.class:would;receive 19.6" percent", '6/1073: 21-1075i 1) (Hrhihit ".6) . ':-'A'. natural gas*may become less available the impact of "'::--'-.: -granting special exemptions so 'that certain cu tomers receive the ";.,-;~'.:.-full amounts of their claimed needs on a guaranteed basis becomes ...,':.";.naze s and moze I significant ..'n this ituation the Commission must weigh the importan("e of gas and of the needs of othex'ustomers. As an illustration, ~ ...",. set forth how important natural gas is. to t:he Cities, alt:hough wc ,='-,.' have no doubt that natural gas i;s also of great impoxtance to other members of the preferred interruptihle class wno have not partici-pated, in'this litigation. ' rs>C' . ~ ...."."..:,",..At the outset," the importance of electricity to ociety vk must he stressed.. Xtprovides the means for almost all ha.".ic pro- ..=-'..: duct:ion or .nearly every-product produced in the United State and

--

;.-'for all health and welfare needs. Indeed, electricity underlies

,

t:he entixe. st:ructure of modern life. Ahsence of electricity, inevi-

),": .,';::,".tably means loss of vital services, such as police protection, fire

.;-

=.-,".'," .pro" ection, healt:h 'services, water supply, stree" lighting and traffic control and humancomfoxt needs (5/917:19-918:3; 918: 19-920:

2; 6/1096:6-1097:3). This is especially true in Florida where ~,:; 'electricity; serves many of the uses normally served hy direct: fuel use elsewhere.~ (Exhibit 50) .. .~The. economics of dir<<t fuel use in Florida aze much less favorable t:han elsewhere in. the United States because of the disproportionate amount of air. conditioning and xeduced amounts o space heating. On .::.coldex days, like elsewhere in the country heat:ing is an absolute

':. necessity.. However, in Florida of equipment foz heating which 'is it often pays to utilize the same type used fox air-conditioning arid th'exefore heat hy electricity rather than to install ' furnace or

. '.. ot:her equipmeit to u~e:direct fIiels. (6/1084:6-1."'; ~ ~ ~ ~ . t I Ne state the'mportance of electricity, because perhaps o obvious and supply has been assured for such a long pe'iod o f time in most areas of the country that it is taken for granted. ,, - However; '. '.. if the question is amilability of fuel ox'upply, electri-c .. city. production must rank of primary importance. Xndeed, becau e ... ," of t: he necessity of continued supply, as a condition of granting any special relief, should electric service be threatened, a con-dition should be applied to the granting of the applications ',-* that such relief. would then discontinue. .'."';,'"- .To the extent that claims for special relief are predicate upon genezal fuel shortage, the utilities would be faced wi.th the same difficulties of obtaining alternative supplies and. a superi. or ~ claxm, to ze13.ef e ~ ~ ~ I "; -'. The. same factors that "make electricity a vital service ~ "."..mal-e it soci'allv essential that electric rates not be allowed to become excessive. Xndeed, this Commission is well aware of the .:-:-':-."." 'pxoblems of large electric rate increases. Because a use of elec-tricity is pervasive, the impact~ of i.'ncreased costs affect oux entire economy and, evezybody in it. No segment is immune. The ~ 'very- ". poor or the elderly, who often congxegate in Florida on reduced incomes, would be especially hard hit by drastic electricity pri.ce ~ ~ ~ = increases.+ (5/931: 14-932:5) .

'--.The rise of electricity prices and i~s implicat

ion.. are alarming;". Even wi.thout the natural gas short:age, oil pzices have i.nczeased. often moxe than three-fold and for spot purchases moxa than six .fold,. The. need to meet environmental standards is likely

.".to mean oil at $ 22 a barrel rather than recent $ 3 prices. (5/925:6-929: 93; '6/1092: 8-1094: 22) . l% ~ This means. that even without considering environm ntal .'.=.impacts", spot pri.ces or fuzther inflation, substituting oil for. .'".'-.;-'.:;:: na'tu'ral,gas by the utilities can easily double electric bills,<< .,- -:."..'.-.'..::."considering, environmental restraints 'nd. spot purchase prices, the '.increase..can'be well over 300 percent.~* (6/1092:8-1095:22) 2;"xhibit '1, 52. +/ t The fezti'lizer and phosphate food manufacturexs stress the import-ance of their products arid we do not disagxee. However, likewise, people on -low incomes can be restricted in the food that they can afford to purchase because of-mounting electricity bills.

• • /

~The., arithmetic is demonstxated in witness Bathen's Exhibit:s Today, fuel costs can account for fifty pex'cent through 52 . - of. electric bills. Substituting 53 cents mcf natural gas ~~ith its oil equivalent of $ 1.50 to $ 3lOcan and has resulted in = doubling '-'o 'a'rip3.ing'f electricity costs. ~ 4 '.'Xn c viewing these figures, it must be borne in mind that fertilizer or feed additives axe a small pzoportion of grain or meat prices,'ut =that fuel cost increases have an immediate and direct impact on the bills of electric users. , ~ ~ . The result of incxeases in fuel cost in Floxida would .:.--, tend to be much more seveze than elsewhere in the country because of. the lac3: of availability for the most part of coal resources and,

'-.,'again, because of the gxeater dependency upon electricity. Florida

.:":-':".':.'is a State whose economy has been built on air-conditioning, which - is largely electric. Exhibit 50 .(6/1081:9-1084:18). -:.- Pinally, 'Cities competitive situation should be taken into -.'.;,.'.;,.='ccount. Zf through its orders,'he Commission will talce direct ':.-,:;:,"'.";,- action to gzarit, special exemptions reducing available ga co Cities .:-,':".';,",.seti11 further, it, must. recognize that this can have sexious economic '-) -'::::;:;---:::zmpaccts on:them.: 'They ate suzzouncte8 by and aze in competing:ion with ., .;.:.,major utile. ies.... The continued, existence of Cities as independent

-.',.'.:..'.;!" generating *entities .is of gen ral advantage. The Commission and co'a ts'have:. often 'recognized '-he importance of maintaining competi-

..".-'-..-':;.'tion, where'o sible-,. in the. electric industry. For it can be demonstrateQ thai where there are'comparable services from smaller and large '.;utilities available, this tends to have a general cost reducing i act and improved efficiency on the laxgez 'nvestor owned s

• '-,23%

utility 1) as well as. advantages .". ~,~;..: '...,i .'.. '...,. a 'to Cities. (6/1097:7-13, 1119:21-1121: ': '; -..;:;.".For historic.and still. existing reasons, Cities are more -.-. -.,gas reliant: than'he major investor overed utilities, Florida Power .....and Light,'lorida Pooper and. Tampa Electric Company. Tho e utilitie have had',greater potential or actual access to nuclear power and 'oal in contrast to Cities... Fuzthermore, Florida Power and Florida Power-and, Light have been able to obtain independent natural gas .'.,"":-::; -contracts from producers, which are transported by Florida Gas. ~ ',.6/1081:5-3.083:6/1097:13-18; 929: 11<<931:7) Exhibit 49. Transfers of ayailab1e natural gas from Cities could have a devastating effect

., '.'--.".. on the competitive situation, the economics of Cities and the rates their'itizens must pay foz electricity.+/ Air auality fac'-ors further mitigate. against an abrupt transferal of gas. 5/997: 19-998: 3, 6/1097:

23.-1098., Exhibit 56),. ,4/ Apart from. the human impacts of such potential price increa es, they can affect the location. of industry and the well-heing of an -..:- area. (5/932:13-22, 933 20-934:7). D, I ~ ~ i ~ r ~ ~ >S r,. ~ t (s'... .. Xt should be noted that, especially for thc smaller systems,'he necessity of abruptly transferring fuel supply can ~ result -in a 'lack of available alternate oil supplies. In t:his r ~ f situation, .it's by no means certain that the existing intertics (or underlying interchange corttracts) would be sufficient t:o main- 'tain adequate -electr'ic supply.++ .(6/1083:9-17) . ~ e "."'"- -:Finally, we. note that in certain contexts, use of gas for '...-'.': =generation has been criticized. He would merely point out that .'. -""sixch'criticism has no p3.ace here. Such criticism ha" always had ,'; ::.':,as'.ts - premise the availability of economic ubstitute fuels. Nhat- '.'=".:- ';"."ever'ts. validity, the sudden increa e in .=- .. 'M '1'll'>>!l '..-..priority Co other uses. L1oreover, because of their competitive j oil pxices combined with 'ev ';;-:;'" ituation in their location in Florida, other altnerat:ive.'uels --'::.;-..~,are- no" available. Servicing human needs-.-and the economics of +Q -:i':",Plorida demands availability of natural gas for generation.ee/ g ~ 4P '" ."';'V; "~S SHOULD NOT BE TAKEN PROWL CITIES NITIiOUT ,'DEQUATE COi~lPEMSATXON. i r, ( ',.<;~(,' ' "I

-".",:Assume that-the Presiding Law Judge and Commission decade to grant,'ne oz more of Che applications for ..pecial relief, fox example, the Gardinier .feed, stock gas'. Gardiniex has claimed Chat

-'".. '--.... it must: have natural gas for feed Cock because of the inhe ent un- ..: suitability of alternate..fuels. Xn other words, it claims it needs the gas to supply it:s pxoduct.. Xt makes no economic claim Chat it J s t.",,", - - Indeed, t:he. economics of the Florida~ Gas Transmi. sion Company pipeline i~as predicated upon such use. (6/1071:2-1072:4) . '.To*.the extent and use arguments are predicated upon higher >-.';.'-.,':;--'-'efficiencies of direct fuel use, they are inapplicable in Ploric.a. IIoreo.y 'rein t.erms of total enery conservation, as between gas and o the argument. becomes irrelevant.. It'should 'be pointed out that:, it is'assumed'that electx'icity use moxe fuel that comparably direct if

"

:,;,"..;...".use '( which, is by no,means certain due to the need Co ezhaust gas a~

". -";""'.=:oil through ch'mneys or otherwise), the impact of u.,ing the more ex-pensive. feul "per BTU for electric generation .is to greatly inure.ase ";.',""'.:..".<lectricity costs.. Since electric use will undoubtedly continue, s uch policy cannot be supported., (5'/996: 10-997:4) . I~hile various of the applicants for special relief have averted Co theirr""highez pxiority" position allegedly under other. possible cur-tailment programs, smal.3.er cities such as Starke and Sebring would .:.:,: a1.so'.be a 'higher p iority. These systems are generat ng a vital pro duct: and'.would have all':ie problem the Commission xefer ed to in .:-'..'.-.- obtaining alternat'e supplies of. any .smaller, user of nat:ural gas- 1 0 4