ML20010A748

FERC Investigation Rept Per Commission 780124 Order Re Fort Pierce Util Authority & Fl Power & Light Refusal to Serve Fort Pierce,Fl

ML20010A748
Person / Time
Site:	Saint Lucie
Issue date:	04/07/1978
From:	Cromes B, Konski L FEDERAL ENERGY REGULATORY COMMISSION
To:
Shared Package
ML20010A740	List: ML20010A739 ML20010A742 ML20010A743 ML20010A744 ML20010A745 ML20010A746 ML20010A747 ML20010A748 ML20010A749
References
EL78-4, NUDOCS 8108120172
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3r~70RE THE FEDERAL r;ZRGT REGULATORY COMMISSICN ~ l e FlcridA Cities )

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7. ) Dockee No. EL73-4

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Florida.?cwer E Light ) - Cemrany ) l STA E. DMESTIGATION RE20RT s'0 Bernard. A. Cromes Com=ission Staff Counsel. April. 7, 1978 Washington, D. C.

                                                .                  Luis S. Icnski Cer:: mission Staff Cennsel l                           8108120172'810807

PDR ADOCK 05000389 I M PDR

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UNITED STATES OF AMERICA FEDERAL ENERGY REGULATORY COMMISSION Florida Cities )

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v. ) Docket No. EL78-4

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Florida Power & Light ) Company ) ERRATA NOTICE (May 23, 1978)

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h STAFF INVESTIGATION REPORT (Dated April 7, 1978) The - following amendment is made to the Staff Investigation Report dated April 7, 1978, in the above-captioned docket. Page 6, second line from bottom of page, change "93 MW" to "78 MW". Page 6, last line on page, change "20%" to "35%". () Page 11, Paragraph 1, line 3, strike "20". Page 25, footnote 8, change " Billie J. Biggerstaff" to Billie E. Biggerstaff". , Y%rc h k*b %.%- Bernard A. Cromes Commission Staff Counsel

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I. PRCCIDURAL HA G N UND . . . . . . . . . . . . . 1 II ISsur S PRESEITEU AND 3?" CCNCLUSIONS. . . . . 4 III. DISCUSSICN. . .. . . .. . . . . . .. . . . . . 6 Issue I: Eas ??L Refused to serve the ??UAF. . . . . . . . . . . . . . . 6 Issue II: Whethe.:_ FPL's Refusal to Serve. FPUA. Constituted A Violation.Of The Filed SR-L Tariff and The Federal Power Act. . . . . . . . . . . 16 Lsste III: If ??L Eas Unlawfullr Refused To Serve- the FPUA, What Sac ::icn, If

              .                     Anir, Is Justified Under the Federal Pcwer Act? . . . . . . . . . . . . . .                        28 I7. A??EIDI C A. FERC, ??L Electric Rate Tariff SR-1.

, .. 3.  ??L filing in FIRC Docket No. ER78-282. f i C. Affidavit of Staff E:q:ert, Mr. Billie E. 3iggerstaff. j D. Depa:~ent of. Justice, February 8, 1977 letter c l to Drexel D. Journey on criteria to be fcLlewed l by the ??C in Referral of Cases to the Cepart=ent j fo _ C 4 4na! Prosecuticn. I L e l Ie 5 1 e O

o ... 1 PRCCIDURAL BACKGROUND l On November 7, 1977, the City of Eccestead, de Fort

                  .      Pierce Utilities Authority, the City of Starke and the Ctili-ties Cer=rissi.cn of New Smyrna Beach [ hereinafter ecliectively referred to as    Florida Citier ], all. situated wi"hi n the State of Florida, filed a petition to intervene, inter alia. F.xhihit

44. In. their petition, Ficrida Cities alleged, inter alia, that Florida ?cwer & Light Company [hereina"=- eferred i - ', to as FUL] has violated its exist .ngi SR-L tariff, .which the u-414 tr additicnally proposes to supersede by the filing of the PR and.SR-1 tariff, is Cocket No. 3279-19. Florida Cities averred. that ??L cen~#- nally refused to sell wholesale =cwer service to the Fort. Pierce U'a- lities Authority (hereinafter referred to as M or Fcre Piercel under the SR-1 =ariff, despite repeated requests for such gewer and notwithstanding the clear cmds of ??L's existing SR-1 tariff. The_m fere, lls the Florida Cities rec.uested an investigation of this issue bv.

the Ccc=ission. , On Cecember 1, 1977, ??L. answered Florida Cities' petition. " t I

                          * +4 '-it S2.       ??L's answer denied that it has excluded municipalities which can qualify frem wholesale gewer purchases s

under the tariff. T. addition, ??L asserted that the language l . cf the Federal ?cwer Act and. the history of the legislative p:c-ceeding surrounding it indicate that the Act i==cses no puhlic ut'lity serrice obligation s i dlar Oc that at cc==cn law on l l

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companies under its jurisdiction. Rather, ??L states that, the Act recognizes that a contract between a utility and its wholesale customers provides the basis for service to the custraer (citation cmitted] .

       .            On December 16, 1977,. Florida Cities responded to F?L's answer of December 1,       1977, asserting, inter alia, that the purpose of a filed tariff is .o give notice of the services that a public utility is willing to provide.                            Thus, Florida Cities argue that ??L is legally obligated to provide service in accordance with its tariff. Exhibit 53.
                    ??L proposes in Docket No. ER78-19 to ncdify the availa-bility clause of the rate schedules in its                          *'-4##  in two_ ways.

First, the SR.-2 availability clause will expressly state that service under this rate is available cnly to those named utili-ties presently purchasing their full recuirements from FPL. Second, FPL proposes to delineate the availability of its sche-d:le PR in order to expressly state that service under this rate schedule is available only to these named utilities purchasing partial requirements frcm F?L at the time of the filing. c By order issued December 30, 1977, in Cocket No. 2278-19, et al., the Commission accepted the proposed rate schedules SR-2 i and PR for filing and suspended the use of the rates until March 1, 1978, when they would beccme effectivo subject to re-fund. Further, the Commission est-blished hearing procedures and suspended and deferred the availability clauses in SR-2 and PR for five months until June 1, 1973. In the December 30,

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order, the Cc= mission also accepted ??L's proposed notice of

• cancellation of service to Eamestead in Cocket No. 2273-81, filed on December 1, 1977, suspended the proposed 7atice of cancellation for five months, consolidated the proceedings in

        .              Cocket No. IR73-19 with those in Occket No. IR78-81, and ar-dered expedited hearing procedures concerning the reasonable-ness of :he no =-d SR-2 availability clauses.

Thereafter, on January 24, 1973, the Cc= mission pursuant to applicable provisions of the Federal Power Act, instituted an investigation in Docket No. IL78-4, into the allegations raised by Florida Cities and FPL in their pleadings. The order in Cocket No. IL78-4 instituting the investigation further dele-gated authority to the investigative Staff to subpcena witnesses and records, necessary and relevant to the progress of the in-vestigation. Pursuant tc its delegation of authority, the Staff issued subpoenas to certain officers and employees of the Florida Power 1

                       & Light Ccmpany requiring their appearance to testify and to produce certain requested documents during the week of Febru-e ary 27, 1979. Exhibit Nos. 1 (~Tr . at 6) , 12 (Tr. at 89), 19 (Tr.

at 139), 29 (Tr . at 256), 32 (Tr. at 235), and 51 (Tr. at 542). Witnesses for ccmo.lainant in this c.roceedine., the Fort Pierce l Utility Authority, ac.c. eared to testify and to provide documents without being under subgcena, Tr. at 328, 458, 466, 477-73, 505. l l

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II. ISSUES PRESETTED MTD 3RIEF CONCLUSICNS The Commission's order of January 24, 1973, in Cccket t , No. EL73-4, delineated certain issues for investigation, with the Staff's investigative report :: be filed with the Cc==ission on or before April 7, 1978. The Staff's findings concerning those issues are set forth belcw:

1. Eas ??L Refused to Serve The FPUA?

The testi=cny and related evidence clearly demonstrates that a specific request to purchase SR-1 service was ccc= uni-cated to F?L on April 29, 1977, Exhibit 26, and reiterated to Mr. R. J. Garc::cr, Vice<-President, ??L, at a meeting held at Fort Pierce on August 9, 1977.  ??L did not deliver service pursuant to the request en the premise that "at the time" FPL was experiencing actual and potential restrictions on its generation capabilities, Tr. at 585, Exhibit 27. We conclude that after August 9, 1977, the FPL engaged in a refusal to provide service to ??UA pursuant to the filed SR-1 Tariff.

2. Whether FPL's Refusal to Serve ??UA Constituted 1 a Violaticn of the SR-1 Tariff and the Federal Power Act.

8 Staff's analysis indicates that the refusal to serve violates the filed SR-1 Tariff and Section 205 of the Federal Power Act. Furthermore, the defenses raised by FPL in support I

i I _3 _ . of the violation are not viable in view of the predomina-4 ting Commission interest in upholding the filed rate doctrine. l'

3. If F?L Has Unlawfully Refused to Serve the FPUA, What Sanction, If Any, Is Justified Under the Federal ?cwer Act.

The result of the Staff's investigatien clearly indicates that FPL has refused to provide service to ??UA in accordance with the availability. c. rovisions of the filed SR-1 Tariff and the Federal Power Act. Ecwever, FPL on March 24, 1978, pursuant to the SR-1 availability provisions, made available to FPUA, 33 MW of fir:t pcwer and the energy associated there-with, under its currently effective rate schedule PR, Cocke: No. ER79-282. Therefore, were it not for the ccInnencement of service to FPUA pursuant to the availability provisions of the SR-1 Tariff, the Staff would have reco mended that the Cc==ission order ??L to i==ediately cc=ence service to F?U. under the filed SR-1 Tariff and that the Cor=nission seek other i civ-3 -=-edies such as an in3 unction or a writ of mandamus. 1 0

                 ??L should discontinue SR-1 service to ??UA, the Cc= mission f

should then consider forwarding the matter to the Department of Justice as a knowing and willful violation of the Federal Power Act. D i L..

a DISCUSSION 4 I. Has ??L Refused To Serve FPUA 7

               ??L is incorporated ander the laws of the State of Florida,
       . with its principal business office at Miami, Florida.         ??L is engaged in the generation, transmission, distributica and cale of electrical energy to approximately 574 con = unities in 35 counties, with a permanent population of over 3.5 million which increases by seasonal residents.      The Co=pany serves rest of the heavily populated areas along tha east and lower west coasts of Florida, as well as the agricultural areas around the south-ern and eastern shores of Lake Okeechobee and portions of central and north central Florida. FPL has a 1977-73 winter peak load of e

approximately 7,600 MN, with ne generating capabilities for that same period to be 11,132 MN. Appendix C. FPUA is a municipal electric utility, lccated at Fort Pierce, Florida. FPUA is engaged in the generation, distribution 'and sale of electrical energy within che confines of For: Pierce. I FPUA has a1 interchange agreement with ??L and is interconnected l with the Company. The FPUA owns and cperates four base load oil / gas fired units, the largest of which is a 56 MW unit, and two diesel peaking units of ccabined capacity of 5-1/2 MW, Tr. at 45

          ??UA has installed cac.acity o f ac. c. roximatelv. 113 MW with an estimated load of 93 MW, resulting in reserves in the range of
       ,  20%. Tr. at 356-57, 493.

The evidence adduced during the course of this investi-gation indicates that the ??L and the F?UA first initiated discussions concerning the proposed purchase of approximately 30 to 33 MW of firm power and ener-v. 2 hv. Fort Pierce at a meeting between the two entities held at Fort Pierce on March 1, 1976. Tr. at 243-45, 332, 479, 507; Exhibit No. 28 at 9 and 10. Ecwever, at this meeting no specific request for SR-1 power was proffered. Tr. at 506. According to the representatives of For- Pierce, the Com=any did not adec.uatelv. address their request for firm pcwer. Tr. at 479, 497, 507;

x, h a-- v . 28.

      .                       ??UA's next request to purchase firm power from F?L occurred on April 6, 1976, when Mr. Walter Baldwin, Director of Utilities, wrote a letter to Mr. R. G. Mulhciland, Senior Vice President, f

Florida Pcwer & Light Ccmpany, Exhibit 33. Again, Mr. Baldwin's letter of April 6, 1976, did not s c. e c i f i c a-1.1.v r e c. u e s t service pursuant to che SR-1 tariff. The response to this letter was assertedly made crally at a neeting held between the parties on 1 April 8, 1976, at Fort Pierce, Florida, Tr. at 508-12; Exhibit 50, at which time firm power purchases, inter alia, were discussed. The ??;A, thereafter, on December 28, 1976, sent a letter to the Florida Power & Light Cor sny which requested partial requirements service in amounts ranging f cm 25 MN to 30 MW,

                                                   -g inter alia. Tr. at 261, 513; Exhibi. 31.                           This cor=unication, Exhibit 31, addressed to Mr. W. 2. Cce, Director of ?cwer
        . Supply, Flcrida ?cwer & Light Company, also did not recuest with particularity service pursuant to the filed SR-1 sale for resale service. On January 11, 1977, Mr. Cce responded to Foru ?ierce's incuiry indicating that the letter has been forwarded to Senior vice-? residen+t ,      R. G. Mulholland for response. Tr. 263, 289; Exhibit 37. In response to the ??UA's incuiry of December 28, 1976, Exhibit 31, Mr. Mulholland, en February 4, 1977, disclosed that the ??L had "cn file with the Federal ?cwer Commission a firm sale-for-resale rate schedule applicable to Municipal electric systems (Schedule SR-1)". Exhibit 7. Mr. Mulholland's coc=unic. tion of February 4, 1977, Exhibit 7, represents the first instance in which Schedule SR-1 is mentioned specifically

.n cccmunications by either party. Tr. at 514.

During the investigation it was disclosed that scen after ( Mr. Mulholland's apparent offer of SR-1 power to F?UA, Exhibit 7, he called for a collateral organization ccr.unittee meeting on February 9, 1977, to discuss, inter alia, ??UA's recuest for firm service of December 28, 1976, Exhibit 31, and to discuss a memorandtra to files entitled "The SR-1 T. ate Schedule versus Cost of New Generation (Manatee Number 1)", which was prepared by Mr. E. L. Sivans, Vice President for System Planning, ??L. Tr. at l

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49, 130, 215-16; Exhibit'3, G.. Mr. Sivan's memorandum dated February 7, 1977, raised the questica - "is ??L required to

      -  sell under the SR-1 rate, power in any amount to any =unicipal or ccoperative electric utility that wants it, even though it means higher cos   for pcwer to cur existing retail cus:0mers?"

Exhibit 8 ; Tr.at 129-130. The clear implication of the memorandum was that SR-1 service was not properly recovering FIL's costs and was thus uneconcmic. Mr. 3ivans indicates chau the questien raised by his memorandum was not resolved at the collateral or-ganization meeting, nor has it ever been resolved. Tr. at 129-135. Mr. Robert Gardner, Vice President for Strategic Planning of ??L, concludes tha: the question raised by Mr. 3ivans in Exhibit S has n,ot been resolved as a matter of policy, but that it was cne of the factors that led F?L to take the action in Decke No. ER73-19, et al., of limiting the SR-2 Tariff to these custcmers whom in already served. Tr.at 644.Mr. 3athen, ??CA's consultant, i.ndicates that he is of tha cpinion that Exhibit 8 shows that the Company's decision to question once again its cbligation to serve municipal customers under the wholesale , rate was not based en uncertainty regarding its ability ec serve increased demands, but rather the decision was based en the Ccmc.anv.'s recce.nition that the SR-1 =cwer would be a highly econcaic alternative for systems like Fort Pierce- Tr. at D

347-350. Conversely, another possible inference is that p rsuant to Exhibit 8, ??L chose not to serve ??UA because it was uneconomic. On April 29, 1977, ??UA, in response to Mr. Mulholland's letter of February 4, 1977, Exhibit 7, formally requested SR-1 sale for resale service. Tr. at 515; Exhibit 26. According to the record evidence, this was the first formal request by ??UA for service under the SR-1 tariff. On June 2, 1977, Mr. Mulholland answered the ??UA's letter of April 29, 1977, Exhibit 26, without responding to the request for SR-1 power. Exhibit 35. In the June 2nd letter, Mr. Mulhol-

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land indicated that his duties were being assumed by Mr. R. J. Gardner because of his impending retirement and that Mr. Gardner would be getting in touch with the ??UA concerning the matters raised in the April 29, 1977 letter. Exhibits 26, 35. On July 6, 1977, Mr. Gardner and representatives of F?L and ??UA held a get acquair.ted meeting at the Company's West Palm Beach, Florida, office but nothing of substance was accom- < plished. Tr. at 513-19. Nothing of significance appears to have occurred with respect to the negotiations for SR-1 power until August 9, 1977, when a meeting was held between the represen-tatives of FPL and the utilities authority at Fort Pierce. The purchase of SR-1 power by the ??UA was one of several issues

l 1 i l 11 - l discussed at the neeting. Tr. at 513-19, 549-50, 658, Ixhibit At the meeting of Aucust 9, 1977, Fort Pierce reiterated its request to be served pursuant to the SR-1 rate at the earliest possible date. Exhibit 11 at 6, 20; Tr. at 213, 480, 519, 643. The u.ilities authority sought to purchase up to 33 MW of annual peak demand under the SR-1 rate. According to dir. R. J. Gardner, who represented ??L at the August 9, 1977, meeting, ne was of the opinion that Fort Pierce was not seeking SR power as that rate was filed with the Cerrnission; but rather, that ??UA was seeking a special rate, a special

      . arrangement for their individual situation. Tr. at 658.                                      He stated that during this meeting, ??UA expres' sed the desire to receive Schedule D power, or SR-1 power coupled with a request to sell power simultaneously to ??L. Tr. at 544, 545.                                     >1r. Gardner added that it was this request to buy SR-1 power combined with the sell-back of power to F?L which was objectionable to FPL.

Appendix 3. These assertions by Mr. Gardner are centroverted by the minutes of the meeting of August 9, 1977, Exhibit 11, drafted by dir. Bathen and adopted by Sir. Gardner as being a reasonable record of the meeting. Tr. at 547. The minutes clearly show that service requested under SR-1 was not coupled d to selling back the same power to F?L since marketing of ??UA's excess capacity was discussed in the centext of selling net.cnly to B 2

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b u ~. .c o s s i b i v. to any other interconnected sv. stem or anv. sv.sce= to which ??L grants wheeling. Exhibit 11 at 3 25. In addi-tion, Exhibit 20, indicates that FPCA was interested in SR-1 service only, Tr. 213, 234-36. On August 17, 1977, Mr. Menge, Director of the ??CA, fc::varded a ccanication to Mr. R.J. Gardner of ??L, con-fi- 4 ng the u~4'i'4 es authority's understanding of the August 9, 1977 neeting. That letter concluded, that "it was the censensus of the Authority's staff and our consultants, R. W. Beck and Asscciates, that your response to this request a=cunted to a refusal to sell the Fort Pierce Utilities Authority pcwer and energy under the SR-1 rate. If that is not the case, clease advise us as to when che Authority can begin making such purchases." Exhibit 44. On September 12,

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1977, Mr. Gardner answered the Utility Authority's cc==unica-cien of August 17, 1977, stating, ". . ., I wculd prefer to stand on the statement that I actually made during the meeting and that is in view of the actual and potential restrictions on cur generating capability we are reluctant at this time to i extend the cbligations for utility type service over and e be.ycnd these which we have hitherto undertaken." Exhibit 27. I The actual and potential restrictions en ??L's generating capa-bilities which Mr. Gardner alluded to in his cc==unication cf

  ,     September 12, 1977, while perhaps relevant as a defense to I

I t

not having served although legally obligated is not germane

    -       to a resolution of the legal issue of whether there has beer. a refusal to serve. The ??L witnesses indicate that one of the Putnam units, a gas turbine unit, has been out of service for three or four =cnths for rather extensive repairs for blade damage. Tr. at 269, 5'75-76. In addition, the witnesses indi-cate that the biggest potential problem posed thus far is the Turke'r Point Nuclear Units.

The problem with tnose units is that a failure of the tubes within the steam generators may cause the units to be taken out of service for the next two years for extensive repair. Tr. at 95, 269, 576-80. The Turkey Point Units have s summer capability rating of six hundred and sixty-six megawatts each. Tr. at 95, 576. Further, ??L never

      . indicated to FPUA that it took the position that the SR-1 tariff was inapplicable to self-sufficient utilities. Exhi-bits 20, 25, 27; Tr. at 384, 489, 548, 628.

On October 5, 1977, Mr. Menge, Director of the ??UA, forwarded a letter to ??L requesting that it reconsider its position on the sale of SR-1 power to the utilities authority. < Exhibit 42. On December 6, 1977, th'e ??L responded to the FPUA's inc.uiry of October 5, 1977, indicating that the Ccmpany was reassessing its capacity position and would contact the utilities authority the first of the year. Tr. at 522; Exhi-bit 44. Fort Pierce responded by letter on December 3, 1977, I

I i 1 t indicaring that they would be looking forward to a response after the first of the year. Exhibit 9. On February LC, 1973, ??L remitted by letter to the FPUA an offer to =ake available to the Authority for sale during the calendar years 1978, 1979 and 1980, up to 240 MW of capacity under the terms and conditions of Schedule D of the interchange contract be-tween the parties. Exhibit 41. According to F?L, Schedule D was offered because Florida Cities indicated in their re-sponse to the answer of ??L to the Cities' petition to inter-vene, filed in Docket No. ER78-19, that " Fort Pierce Requests Schedule D Power". Tr. at 551; Exhibit 53. Fort rierce main-tains that the ??L is offering them neither firm power nor

    . economy pcwer by proposing to price the Schedule D pcwer on Sched,ule    1:es which is the highest and most expensive pcwer
          ??L has, einte Schedule 3 uses incremental energy ccsting as opposed to the SR-1 average system costing method. Thus, Fort Pierce maintaica that nothing is being offered by the letter of February 10, 1978. Exhibit 41; Tr. 2h 345, 528-29.

e Pursuant to the evidence and testimony of the transactions between FPL and ??UA described above, a specific request to purchase SR-1 service was cc==unicated to F?L by letter dated April 29, 1977, Exhibit 26, and reiterated to Mr. 3. J. Gardner, Vice President, ??L at a meeting held at Fort Pierce O

l 15 - on Augus. 9, 1977.  ???, did not honor this request en the premise that at the time the ??L was experiencing actual and pctential restrictions en its generation capabilities. Tr. at 585; F.xhibit 27. We thus conclide that after August 9, 1977, ??L engaged in a refusal to provide service to Fort Pierce pursuant ec the filed SR-1 tariff. 4 e

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II. Whether ??L's Refusal to Serve Fort Pierce Constituted A Violation of the Filed SR-1 Tariff and The Federal Power Act The analysis of whether ??L's refusal to serve Fort Pierce is a violation of the SR-1 Tariff and the Federal

          '?ower Act has been constructed within a framework of defen-ses raised by F9L in support of *.he refusal. In considering the fra=ework, it is suggested that a two level process of analysis be used. First, each defense should be considered within the context of whether there is a legal obligation to serve. Second, if there is a legal obligation to serve, i.e shculd be considered whether the defense should mitigate
   ,       the legal obligation.
                 ??L has raised several defenses for not serving Fort Pierce under Tariff SR-1.      F?L argues that 1) there is ne public utility obligation to provide service to Fort Pierce under the filed taridf,     1_/ 2) the tariff never contemplated
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1 Tariffs and rate schedules are the two rate filing formats used by the Co==ission to reflect the supply of electric service. A rate schedule is a contractual arrangement be-tween a utility and a specific party containing the rates,

    .            terms and conditions for the provisica of electric service to that particular party. An electric tariff provides gen-eral terms and conditions under which the utility holds it-self out to serve members of a specified class of customers.

The customer class to be served under the tariff is defined i throueh an availacility clause or clauses. Once a potential customer recuests service under the filed tariff, a service agraement must be executed and filed with the Commission. (Direct Testimony of Nilbur C. Earley, Jr., in, otter Tail Power Co., FERC Cccket Nos. ER77-5, E-3152, Tr. a: 2482 ; see, I3 C.F.R. SS35. l(a) , 35.2(b).

service in parallel to self-sufficient generating wholesale customers, 3) .it would be inequitable to require FPL to serve Fort Pierce under the tariff because of the additional burden that would be imposed on F?L's system and because it would be

;                      uneconcmic, and 4) it cannot take on icng term lead commit-i ments because of an uncertain capacity situation.                                                   -

1 In support of the contention that it is under no duty to serte Fort Pierce under the filed tariff, FPL posits that the language of the Federal Power Act and its legislative history indicate that' Congress did not impose on jurisdictional com . # panies a public utility service obligation similar te that re-quired at cacman 1sw. E:chibit 52 at 3-5; see, otter Tail, Power Company v. United States, 410 U.S. 366 (1973). The co= men law public utility concept imposes a duty upon a business s 1 affected with a c.ublic interest to serve all customers rec.uest-

!                      ing service. Munn v. Illinois, 94 U.S.                                 113 (1877).

i

!                           Althcugh FPL's statement of the law may be correct, it does not follow that a utility has no duty under the Power Act c

, te provide service to an interconnected party which requests ! service under the terms of an applicable rate tariff. In an l l l analogous situation the Supreme Cour*. in Otter Tail Power Ccm-t ! cany v. United States, held that although the F?dertl Pcwer I s ! Commission had no at:thority to force utilitias to wheel power under Part II of the Federal Power Act, once such service is e:ctended, the Commission has the responsibility of determining i ?

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the justness and ressonableness of such service. 340 U.S. a: 375-7, 381-2 (1973). As a result, althcugh there is no gen-eral requirement that a utility file a tariff of general applicability with the Ccemission, if a " ' t i ~y "d ' as such a tariff, it is bound to serve under the ter=s and conditions of that tariff, in a non-discriminatory =anner. Id.; Mid Centinent Area Pcwer Pcol, Docket Nc. E-7734, ??C Opinion No. 806, issued June 15, 1977, at 15. In addition, it is well established Ccmmission precedent that once a rate is filed with the Cec =ission ..ard.-accep~ted, the utility can claim no rate as a legal right which is incen-sistent with the filed race. Montana-Daketa Utilities cercany

v. Northwestern Public Service Cemeany . 341 U.S. ~24 ; 251 (1951).

Under the Cc= mission's well recceniced filed rate doctrine, _I d . , the ad=oni:icn that a utility can claim ne rate enher than the filed rate has been censistently interpreted as requiring that every public utility file with the Cc= mission, and give notice of, its c mplete rate schedults (including tariffs) which should c clearly and specifically se:. . .

                 . .   .forth all rates and charges for any transmission or sale of electric energy subject to Eb.e jurisdiction cf this Com-mission, the classifications, practices, rules and regulations affecting such races and charces and all contracts which in anv.
                 =anner affect or relate to such rates, charges, classifications, services, rules, regulations or practices, as recuired by J

Section 205(c) of the Federal Pcwer Act. (citation emitted] 13 CFR S 35. l(a) ; see also, la CFR 5 35. 2 (b) (general defin ::en of ccmpenents of an electric rate tariff]. Consequently, evanchcugh ??L had no general legal duty ec file a tariff with the Commission under the ?cwer Act, once

'                it did, and the filing was accepted by the Ccmmission, the utility became bound to the terms and conditions of its filing under the operation of the filed rate doctrine and related precedent.

e,_ Second, FPL asserts that _,the SR-t Tarif f was never =eant to apply for service in parallel to self-generating wholesale custcmers, Tr. at 11, 24, 47, 291, 545, 547, 650.  ??L states that the tariff was designed to be applicable to non-generating nunicipals and cccperatives; the partial-generating municipali-ties being served only to electri,c="y ise;1ated portions of their systens. Tr. at 13, 24, 47, 59-60, 291, 545, 547, 556, 646-48; T . in Decke No. ER73-19, et al., at 544, 612, 1717. These asserted linitations on conditions of service are not ac-parent frem the express terms of the tariff. Conversely, the c i only express linatations on SR service are in the tariff's avail-abil.ity clause, which offers service in all territories served by the Company. j2 / and in the tariff's applicability clause, 2/ The issue of whether Fort Pierce lies within ??L's ervice area is uncontreverted. According to Mr. Lloyd Williams, FPL's Director of Rates and Research , who participated in the drafting of both SR-1 and SR-2, Tr. at 20-1, For: Pierce is considered to be in F?L's service area, adjacent to it or centigucus with it, Tr. at 26, 642; Docket No. ER73-19, ec al., ".'r. at 1716.

3 _ __ which limits service to a municii al electric utility or := a ecogerative ncn-profit sambership o..: oration or3ani:ed under the provisiens of the Rural Electric C operative Law, for their

     -   cwn use or for resale. FERC,F?L Electric Tariff SR-1, Original Sheet No. 5. _-

Althcugh the terms of the tariff seem to be clear, ??L submits that the intent was far mate limited. Namely, although the terms of the tariff apparently envision serrice to anv. tv. e. e of municipality > ithi:r??D s service territory, including a mu-nicipality like Fort Pierce which is self-sufficient, F?L emphatically states that such was not the intent. Tr. at 11, 47, 290, 291, 554, 537. It is evident that neither the Cc= mis-sion, nor apparently Fort Pierce, were ever made aware of ??L's intent to limit the availability of the SR-1 Tariff until such time as FPL raised the limitation as a defense in the current ' investigation and in Cocket No. ER73-19. Tr. at 11, 377, 334, 489, 490, 525, 628; see F?C Cccket No. ER76-211 (rate SR-1 accepted). F?L now comes forward with information that it c really intended to limit the tariff regardless of the plain meaninc. c:. the exc.ress tart:.,. a.anc.uac.e , Tr. at 11, as4-mo 7; _e.. c . , Exhibit 55. Apart from the fact that this defense is inconsisten: with icgic, since if such li 4 tation were true it would have

been ce==unicated to Foru Pierce when the City first sought SR-1 _ l powcr, Exhibits 11, 20, 25, 27, such limitation would also be in contravention of the Federal ?cwer Act and the Cec =ission's Rules and Regulations. As noted earlier, the Federal Power

                -   Act and the Ccemission's Regulations recuire that every public utility file with the Ccamission all rates as well as the prac-tices affecting those rates. 16 U.S.C.5324d(c); 19 CFR.                                   535.1(a) .

It is self evident that limitation of a tariff to serve only

                                 ~    w                                           . __   ,                             ,

cer aircustemers 2.s a oract ce at:ects ng a rate and can only be implemented after Cormissicn review. 16 U. S .C 558 24d (a) -e (b) . Thus, since ??L failed := notify the Cc= mission of the asserted limitation of service under the tariff, at the time the

         ~

tariff was initially filed, such a limitatien is plainly in 9 violation of the Statute and the Cc=missicn's Regulations. 3/ _ The policy underlying the Power Act's filing requirement of all terms and conditions affecting electric service is clear. The filing of such terms and conditions prevents, inter alia, the possibility of misrepresentation against custeme.rs or _/ 3 There is no apparent expression of limitation of the cariff to potential municipal customers who are not self-sufficient, either in the proceeding approving the SR-1 tariff, ER76-211, or in the proceedinc. ac.c.rovine. the credecessor SR tariff, - E-8008. The express availability provisions of both tariffs are identical. Dccket No. ER78-19, et al., Tr. at 204, -

11. 15-30. Appendix A.

potential custc=ers, by preventing cost hec self-serving incer-pretations of service arrangements by the utility. Re Boston Edisen Cemeany, 24 PUR 3rd 164 (Mass. D.P.U., May 16, 1958). Ccnsequently, since FPL's defense of inten is an ille-gality and because ??L did not notify the requesti.g party that service under SR-1 was inapplicable, the utility cannet raise the i= plied intent of the tariff as a defense to the failure to serve under the filed tariff. 4/

  ~         -          ??L's third defense is based cn the alleged ecencmics of
                'the situation.   ??L maintains that the request by Fort Pierce for SR-1 pcwer, ccupled with a request for sale of pcwe     Jrcs Fort Pierce to ??L would have an adverse econcmic effect on
      .          the Cccpany, 5/ its custcmers and stcckholders. Tr. at 555-557. Cstensibly, the adverse ecencmic effect would be a result

~ of ??L having to build and maintain capacity fer a custcmer who 4/ In subsequent testi=ony before this Cc==ission in Occket No. ER78-19, et al. , ??L seems to concede the issue that FPUA is eligible to receive pcwer pursuant to the SR-1 availability clause. Tr. at 204, 205, 252, 1717. This fact is evident frem FPL's rationale in seeking to limit the ava41=hi'4 7 of proposed rates SR-2 and PR in Docket No. ER78-19, et al., Id. Further= ore the argn=ent t."at SR-1 was intended to serve only electrically isolated portions of a partial generating municipality's system is also centrary to the evidence since New Smyrna Beach has been served in parallel under SR-1 since April 1, 1977. Tr. 650-1. 5,/ Answer of FPL to Cities ' petition to intervene in FERC Cccket No. ER78-19, filed December 1, 1977, pp. 7-8.

can stop caking pcwer at any ti=e. j/ '"his statement is inac-curate since the terms of SR-1 require a two year notice of termination peried and a five year initial se: tice pericd. Never-

                     'J: ele ss , it is well settled that if a utility is otherwise cbligated to serve under a filed rate, the mere fact that service would be uneconcmical dces not excuse performance.                                                 Federal Power Cc= mission v. Sierra Paci"ic Power Ccananv, 350 U.S. 348, 354 (1956).                        In F.P.C. v. Sierra Pacific Pcwer Co., the Supreme Court held that censistent with the requirement that rates he I

jusH " led before the Cc - ission, as being just and reascnable, the public utility . n a v. agree bv. centract to a rate affording less than a fair return. M. at 355. In cencurrence with.the Sierra case, ence a utility files with the Cc= mission a rare and its corresponding terms and conditions of service, whether

               ~

by rate schedule or by cariff forman, the utility is legally constrained f cm extending or 14 iting serrice in a manner inconsistent with the filed rate. Montana-Dakota Utilities Co.

v. More. western Public Se:7 ice Ceccanv, 341 U.S. at 251. Once a utilicy files a tariff or a rate schedule with the Cc= mission and it is accepted for filing, the utility is by force cf law q l

, bound by the terms of such filing. If ??L is thus cbligated I i ec ser7e Fort Pierce under the SR-1 Tariff terms, the econcmic inadvertence of a bargain cannot serve as a defense to failure to serre. Rather, the o. rc=. er remedy for a rate which is not I 6 9 I as # l O/ ,n. ae i l

                                                                 , , . - - , - .      -..-,,   -       -   -     -- .,.     -    = - - . - . .

24 - recovering costs, if the centract so allcws 1/, is for the utility to fi.?.e for a rata increase whic.i wculd ensur= -"'- the utility is receiving a fa - d -a-"-" on its investment.

       . Thus, the remedy to under recovery of a rate is not, and could never be, to refuse service under the filed rate.

As a subsidiary part of the ??L's econcaic defense, F?L represents that it was Fort Pierce's request for SR-1 pcuer, coupled with the resale of pcwer by Fort Pierce to ??L which rendered the service under SR-1 uneconcaic. Tr. at 556-557. Ecwever, the record evidence reflects that Fort Pierce did not couple its request to be served under SR-1 to an offer to sell power to ??L. The best evidence of the transaction, the dccu-ments evidencing the request for SR-1 service, indicates that

   . Fort Pierce's request for SR-1 service was independent of any sale of power back to ??L. Exhibits 11, 20, 26 and 42. Con-trary.

to F?L's contention, it is apparent that Fcrt Pierce con-templated marketing of excess pcwer to either ??L or to other utilities. Exhibit 11, 25. Thus, ??L's ecencaic defense that F?UA's ccupling of the buying of SR-1 pcwer to a sale of equal pcwer to ??L renders service under SR-1 to ??UA uneconcmic to

         ??L, is plainly inconsistent with the evidence adduced in this Investigation.

Nor is the Ccmpany being candid when it filed on March 20,

      . 1979, as part of a notice of extension of service, a letter from Mr. Gardner to Mr. Menge acknowledging the request of

_7/ There is no question that the SR-1 tariff allows the utility to unilaterally file for rate increases.

o Fort Pierce for SR-1 pcwer on the Record in FERC Occket Nos. ER73-19 and E273-31. Appendix 3 at 9 . In that; letter, Mr. Gardner states that:

                 ??L's representatives have not previcusly had the ingression that purchase of pcwer under Rate Schedule SR-1, independent of reciprocal sales by the authority was de-sired by the authority (Fort Pierce]

Appendix 3 at 3; ER73-292. This allegatien of a change in position by Fort Pierce which caused ??L to recensider its decision not to' serve under SR-1 is not supportable by the record and exhibits in the inves-tigation. Tr. at 556, 557; Exhibits 11, 20, 26 and 42.

                 ??L's fourth general defense for not serving Fort Pierce under SR-1 can be characterized as a defense of i=pessibility of performance under the tariff due to generation problems, ExMbit 11, 25, 27;Tr.at 575-595. The documents adduced by subpcena duces tecum, Exhibit 54, and the testimony secured in the current investigation indicate that ??L =ay have had a proper basis to be concerned about actual or potential genera-C tion and reliability problems in Aucust and Sectember of 1977.

3/ l l Tr. at 94, 95, 269, 576-80, 585. Allegedly, for this reason,

            ??L was unwilling during August of 1977 to extend service to Fort Pierce under SR-1. Exhibit 11, 25, 27; Tr. at 575-595.

1 _3_/ Staff expert, Mr. Sillie J. Siggerstaff discusses ??L's reliability problems in an affidavit attached to this

         .       report as Appendix C.

L

26 -

      .            However, after a =cre opt                              i istic load forecase became avail-1 able in January , 1973, Exhibit 5 4 ( 3 ) , ??L expressed a desire to serie Fort Pierce and other potential custc=ers with up I

to 240 .W of short term firm pcwer under Schedule D of che FPL interchange agreement. Exhibit.41; Tr. at 126-7, 558-60. The offer enecmpassed service for calendar years 1978, 1979, and 1980. The present offer of Schedule D power differs frcm SR-1 power, generally, in that Schedule D power to Fort Pierce t wcult be priced on the incremental price of energy while SR-1 uses average system cost pricing methed. Also, Schedule D power would be for a short term, 3 years, as opposed to the 5 years minimum service pericd under SR-1. Exhibit 41; Tr. at 363-5, 564-5, 567-569. After the first year of~ service under i Schedule D, ??L stated that it would reconsider its capacity sicuation to see if it could continue serving under that Sche-dule Exhibit 41. l l l The Con =tission Staff has determined frem the testimony and dccuments produced by the Ccmpany in the present investigation < \ . that during calendar v. ears 1978, 1979 and 1980, the e. cwer suc. c. iv. I (reliability) situation of ??L will be tight. 9/ Appendix C, at 13. Ecwever, this situation is ex=ected to significantly improve during 1981 and 1982 Appendix C at 12-13:. Coupling _9 / Staff's study which is embcdied as Appendix C is predica-ted un.on data su=.=. lied bv. ??L. 1 i e .w.._ ., _ - - - . , , - , . y y- ,---...w, 7- , . - - ---.,m_- . ,-- - . , - ~ . . - , . . - - - - - * , , - m..-r,,,

these facts with F?L's offer to sell 240 MW of firm Schedule s D power, Exhibit 41, during the same time pericd that ??L is projected to be,according to Staff's study, Appendix C, in a ti,ht generatien situaticn, precludes as a =atter of loc.ic the contentien of the impossibility defense. If ??L can serve Fort Pierce during the three years that Staff's study has determined ??L's reliability to be inadecuate, it certainly can serve Fcrt Pierce for the two succeeding yenrs of 1980 and 1981, during which Staff has determined supply to have i= proved. It should also be taken into consideration tna: Fort Pierce is seeking only 33 MW of firm power pursuant to the filed SR-1 cariff. Exhibit 11, 26, 29, 31. As the initial term for ser-vice under SR-1 is five years, it follcws that frem the evidence i adduced there is sufficient generation to serve Fort Pierce under FERC F?L Electric Tariff SRJ1, Original the SR-1 Tariff. 10/ Sheet No. 19. Based on the foregoing discussion, Staff is of the opinion that the refusal to serve Fort Pierce was a clear violation of the filed SR-1 Tariff and of the Fedcral ?cwer Act. < 10/  ??L on March 29, 1978, in Cocket No. ER79-232, tendered for filing with the Ccamission a service agreement which makes available to Fort Pierce 33 MW of firm power and the energy under its Rate Schedule PR effective March 24, 1979. The rate schedules associated with PR becane effective March 1, 1979, subject to refund. Sut, the availability provision-

       .       of PR and SR-2 do not becc=e effective until June 1, 1979.

Thus, Fort Pierce is being served under the availability crovisions of the SR-1 cariff. Appendix A. e l l l l I.

  ~

III. If F?L Has Unlawfully Refused to Serve the

                      ??UA, What Sanction, If Any, Is Justified Under the Federal Pcwer Act?

The result of the Staff's investigation clearly indi-ca:es that ??L has refused to provide service to ??UA in accordance with the availability provisions of the filed SR-1 tariff, and the Federal Pcwer Act. Ecwever, ??L cn March 24, 1978, pursuant to the SR-1 availability provisions, made available to ??UA, 33 MW of firm power and the ermerf asso . ciated therewich, under its Rate Schedule PR. Cocket No.

       . IR78-292.         Therefore, were it nct for the 70=mencement of 33 MW of firm power service pursuant to the availability pro-visions of the           SR-1 tariff on March 24, 1979, the Staff would have recccmended:

1) That ??L be directed to i= mediately cc=mence service cc Fort Pierce pursuant to the filed SR-1 tariff;

2) That the Commission, pursuant to 5 314 (a) of the Federal Power Act, seek a permanen:

l injunction, enjoining ??L frcm such acts or l t practices and to enforce compliance wi:h the f filed tariff and che Act; or l l [ - . , - , , ,

                 + - - , ,        . --.- --- - . --

3) That the Cc= mission, pursuant to 5 314(b) of the Federal Pcwer Act, seek a writ of sandamus cccmanding FPL to ccmply with the previsions of the filed SR-1 tariff and the Act.

Cr4 inal sanctions are also available as a remedy for l- violations of the Act and the Commission's Rules and Regula-tions. 16 U.S.C. SS 825c(a-b). The procedure contemplated t by the Act is for the Ccemission to refer the evidence of criminal conduct to the Depart =ent of Justice for Cri i tal crosecutien. The Attornev General then has the discretion i i to institute criminal proceedings. 16 U.S.C. 5 825m (a) . Section 316 of the Federal Pcwer Act, 16 U.S.C. 5-825c i requires that the act or emissicr. to act in contraventien of the Statute be done willfully and knowinely. Id. Willful and knowing is a phrase of art in criminal statutes which requires that the act or caission be done not merely voluntarily but with an evil intent withcut justifiable purpcse. Felten v. c United States, 96 U.S. 699, 702 (1877). Thus, in a Depart =ent of Justice legal memorandum drafted to guide the Federal Pcwer i Ccemission in submitting criminal referrals, the Department stated: "Obviously, the requirement in both Sections 21 and

       . 316 (of the Federal Pcwer Act] that for a conviction to stand t

l l

che ac =ust be both willful and knowing recnires a high de ree of culpability". Appendix D at 5. Staff believes that at this time such a high degree of culpability cannet be deduced frem the evidence gathered in this investigatien. Ecwever, shculd ??L attempt to discen-tinue service er refuse to provide service under SR-1 con - trary to the express terms of the tariff after the Cec =ission releases this report, it is reccc= ended that a referral be made since at that point, F?L would have been on clear notice that failure to serve under SR-1 is an illegality. Respectfully sched.tred O p g$ e

• O

                                        ,f  e. . . ,..    - r      e .- e e f Bernard A. Crcmes Commission Staff Ccunsel s

• uW -

Luis S. Konski Commission Staff Ccunsel c s e e

\ e a f 1 1 f, i i -- Attachment 7 Florida Power & Light-Company, FERC Docket No.

                      'ER78-19 (Phase II), Excerpts of testimony of i                       Robert J. Gardner as to FPL"s willingness to i                       file wholesale power rate for power at the bus j                       bar,-November 15, 1979 i

i i n G

l  : \ l l $,.,- 1 i (FERC - FLORIDA PCWER & LIGHT COMPAN'I, CCCKET NO. ER78-19 (Phase n II), Thursday, November 15, 1979 at Washington, D. C., Volume - J(' 2 i NO - 4)  %

             !                                                                                                                                          4 . ,h g- j i                                                                                                                                          i        --

3 l* C,9,17 T, 5 !!, T g, l 'N WIT'TESSES DIRECT CROSS REDIRECT RECROSS < 4 I I x, Robert E. Bathen 178 211 252 Gardner (Recalled) 261 I Robert J. -, 1 . 6 l - >- l {h - 7 l I {-{ 8 R:!*{ ut p i 8i 9 fif l-10 E:GIIBITS IDENTIFIED DT EVIDENCE i 12 - Preliminary Pcwor Supply Study 203 11 for the Florida Municipal Pcwor Agency, dated February 1979 ,, 12 , i 11 211 l  !! 13 ll

                   ~

14 l ;g I i 15

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3 19 : RECESSES: ^2 - A 20 MORNziG - 211 l E;al j NOcN - 250 .

                                                                                                                                                                        .s
  . . 22                      AFTERNOGN - 291                                                                                               '

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                                                                                               , l' 4 l                                                                                            -

ina 1 l

       ,j                                       BEFORE THE                                                     [{-

i. y 2 FEDERAL ENERGY REGULATORY COMMISSION .Nj

            ,1                                                                                                y 3

________________x jj 4l In the Matter of:  : l  : Docket No. ER78-19 5 FLORIDA POWER & LIGHT COMPANY  : Phase II - s  : * [ 6I _ _ _ _ _ _ _ _ _ _ _ _ _ _ _x ti m I y ?N 7 : Hearing Rcom F ' i Federal Energy Regulatory Com:nission y s 8 825 North C0pitol Street , , Washington, D. C. t? 9l l Thursday, November 15, 1979 10 ! , !, The above-entitled Matter convened for hearing, pursuant  ! - 11 e' , to adjournment, at 10:00 a.m. I 12 g . BEFORE: 13 I1 3 7  ; l CURTI3 L." WAGNER, JR., Presiding Administrative Law Judge .[ 1% r- t APPEARANCES: , I '. ' \ 15 - (As heretofore noted) q. i l ADDITIONAL APPEARANCES: - 2 17 l -

                                                                                         ]

l JAMES E. HICKEY, JR. and ji 18 l GEORGE F. BRUDER, Bruder G Gentile, 1201 Connecticut Avenue, N. W., Suite 702, Washington, D. C. j}i g 20036, appearing . ir  ; 19 , on behalf of Florida Power Corporation. . .5 i 1 { 20 ' ' f i 21 l

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                                                                                                          .x 23 i
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F', I E l 308 } i

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g 1! way or the other. '

              .       I I

2 l Q Have you undertaken a study? I u

              *                                                                                                                            ?

I . i 3i I. A A study is being undertaken by the technical i i

                                                                                                                                    )3 4   l advisory group of the Florida Electric Power Coordination                                                    !;

o e 0 5 ! Group about a proposal that was made by FMPA to invest in j s

                                                         .x n           i g       6               all transmission systems and I don't think we want to d aw 5           .                                                                                                               .!

7 or make any conclusions one way or the other until we see e, -

n 8 . the autonce of that study.

         &           j                                                                                                               .f l

9 ! Q Has FP&L itself ever conducted a study? I I. 10 A-- I-den't think so, no. As far as I kncw, we have not. }' o'^ v JI E 11 Q Has FP&L ever conducted a study of a joint trans- l} t * -} o 12 mission rate? - 1 *; i b . I5\ c: g o 13 A Other than the testimony which we have filed in the  : ', j 2 i 3 1 4 l; two cases, I am not aware or_ any. o  ! + u 15 l: ., Q Is FP&L willing to file a wholesale power rate for ;E power at the bus bar? . l 1 6 l. .4 A

                                                                                                                                 !           I 17 f                          Yes.

i $ li ? 18 0 Now, looking at that excerpt from the front of the I4 r

     "-. 7.

Etst II j 'j 19l' exhibit, your Exhinit 3, the FMPA study, the front of that i-w i!

      =z             i
      !j        20 ;              study, take a look        at Exhibit 3.

s

                                                                                                                                    . .i     t t=

ma I ' A Yes. (%-1 a.,-s 21 <  %  :. . t

                                                                                                                                        ~;

22 Q Looking at arabic number 1 on page 2, did you -- 23 ; MR. HALL: Page 2 of what? , i 24 !l MR. GUTT:!AN : Page 2 of Exhibit 3. o i 25 l i l 1 - - - - - - - - - - - - - - -

r 4 5, 4 i e 1 i t i Attachment 8 Florida Power & Light Company, FERC Docket ? Nos. ER78-19 (Phase I) and ER78-81, Exc erpt j from " Application for Rehearing of Florida Power & Light Company", September 4, 1979 7 i 4 x 4 S

i 9

UNITED STATES OF AMERICA BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION s

                                          )   Docket Nos. ER7819 (Phase 1)

Florida Power & Light Company and ER78-81 APPLICATION FOR REllEARING OF FLORID A POWFf; & LIGIIT COhlPANY t Ilarry A. Poth, Jr. Robert T. IIall, III Reid & Priest 40 Wall Street New York, New York 10005

                                                                                                    ]

Richard St. 51erriman l Floyd L. Norton, IV i Reid & Pr est 1701 K Street, N.W. Washington, D.C. 20006 s Attorneys for Florida Power & Light Company Septeinber 4,1979 .

                                                                                ' ~ -    . . _ _ __

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

f

                                                                     -  16 -

) Such the course of 17 days. l l

• by other parties were prepared overincluding No. 57,items it is by re briefs, Even assuming the Commission has the aut oanalysis s on the Sherman Acta denial of due process to undertake suespecially wh l and reply.

l basis of a four-month proceeding, time has d its been off FPL was not aware until the Commission issuefifteen decision on August 3, 1979 (which tookd for completion of pro-that the Commission

                                                                                     )

pare as compared it was involved to the time in "a(Mimeo, allotteceedings monopolization

p. 2).1/ ting case The that un considered that under Section 2 of the Sherman Act"1977 Order of the Co l December 30,it was instituting price squeeze proceeFurther, i h was the notice of a monopolization case.it aslsuch In fact, the case sis. in his Initial Decision, w i

did not treat be a monopolization clearly not based on a Sherman Act ana yd and the Comm became what the Commission d thatconsiders transformation, to case only after the record was closein preparing ! without notice at any time during t sional process. ll systems l that The Company's willingness to serve the sma i l as discussed supra, I FPL agrees in any it way with the Commiss is FPL's-position that noton only is theinappr On the contrary, Commission's analysis unnecessary andis totally erroneous. i

;                   proceeding, but that it                                                               t     the fact i

Several examples may be used to illustra e of tatements. First (Mimeo, p.16), FPL l that the Commission is in errov tement in its s j all, contrary to the Commission's sta l f a Sherman Act The Commission supports its application eeding o with a , , , l 1/ f Staff and c analysis to the proposals in this proc"[t]he allegatio finding thatthe Intervenors together with the aissues ion typicall 2 i the Company have coalesced intoof Yet,a monopolization case u in the context (Mimeo, p.2). d FPL's position on the l of the Sherman Act" to define relevant l l analysis, the Commission disregar sthe Company's r grounds that FPL did not undertake

and that ities was essentially a

           -                     markets (Mimeo, p.16)the evidence of the Staff and demurrer that (Mimeo, p.18).its Sherman Act analysis was r by all parties is unfounded.

4

( l Attachment 9 Letter from Calvin R. Henze to William Lesnett dated July 3, 1979, transmitting

                                 " Proposal for a Joint Transmission System -in the State of Florida by the Florida Municipal Power Agency to the Technical Advisory Group -

of. the Florida Electric Power Coordinating Group" J O e i - - - -

                                                                                                                                                                                       -w             - --
                                                                                                                                                                                                               -A s       e                                               ,

jf i

                        't '                .                                    F.CE!DA MUNICIPAL PCWG AGENCY
  ,.. CJ W1H "J. HEN 13

( -) % egec W . w. ar A., 7 3 , .,.a. --1 J 7e ' '- Adrisery Grcup r.

                         .           : $1               ,e       : . .n ue e .e:s:- ,. _a- .         ,  u --- . ,..

42 Kec. 5=ser, Scite d'A s a:: yay ".-~.'.>$ . 3 '.*0

                                                                         .       9 I

A.  :. D*. *dI ' ' # 2*"- ?.. Ces e* : , O_J# ""."2.0 Ge:.' ces: I

                                              ~4e have :                     ' ' ed a=d a- zehed here c T'/FA 's ;re;csal -::- a .

i=:egrsted N*ci : r=-=- #

• sic: Sys es" i: ;* #-*"'== F'.:rida as direc ed '

a.e . .a e --- a . . , e =. - u7 ., . - . . u.e . -- $1 ~- ,,- .- : . :. . . ,c ue a. : -, ..t-s --

                 .       G.rcup ( FCG) at their se=i-2---= ' =eeti:g is ""a=pa ec F-27 li, 1379.
                         *ie are c                      < heed that estC t * *h=ent cf such a. Jci:: '"r*- 'ssic: Sys                                                                                e=             '

s is is the hese interests cf s F'.criit elec ri:  :#' ':ies a 4 . heir

        .)'               *g..
                                           .rs.
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g ( , e : < g.: ,., ,. A.;ea.g

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                                                                                                                         .                      -_ 2 .    .
                                                                                                                                                                     ~ eX4 g ._g z ,a f',*.::Te6 ~Cer1*# -'-* resCC Ces.
                                              '*he Agenc7 ;Tc;cs4s *"ha                                        the Oecessar7 s:Odies a d iiscu.ssi:*.*.s
                          ' a= >' g :c ::.
                           -                                          2' 'y satisisc::ry agree =ents hesi: '                                                      ediately and pre-a . 2 .-j       ,           ,

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                                                                                                                               . ,. 6--,           .                                            . .-

ing s dies =f a prepa r veerthy, purstas: :: the Jcis r= e=issie: Syste= arrange =ent, :he Agency venid.f'-2 ce -he :::s ruc-i:= cf =ajer jci:.17 ple ed = ~ 'esic: fac':ies representi:g i:ves =en: v= . c i= excess of the Age:c7's i==ediate Md ra:ic sha e. he Age:cy vculd

• sell-hac's" s==h excess invest =s:- '- = =ch vear :: : hsr :echers cf he
• w c .'. . ~.' . ~ ~ ~ '
• s'~ - .". ,v~.. .~. .=~ 1. .a. == e . ~-~~ 7.~=.so e + ..' g a s - = # ..e . ' ..'.e diiterence he ues the Age:c?'s ces: Of cce7 a d that ci s;;h c her =e=~

he s ur,.'-' * '- e such e.ccess i= vest =en : res;cesih ' .r fre= the Agenc. .

                            *: is the Agen.'*.*f's helief *ha
                             -                                                                                SOC: 1 preFS                    :: ers the prespeC'" cf i'-=-e'-r. he'.r                           =n s ' *si = !sc ':Les i: ~he s 1 1 a:d ~.a'ecr L::ere::-

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_ rm . .- - _ i- . . 3 RCR!DA MUNICIPAL PCWE AGcNCY

          %y J
     -    CALVIN 2. HENZI b3 Senerd Merecer
                         % request ca yeu. age =da dis pecpesal fer d e Julf 12, 1971
                =eeting. A representative      ~.m de Age cy w# ' e a ra'kle fer a hrief pr*sentatiC=.

If 7ec have any questicus, please c = tac =e. Te:7 ~:1L7 yours, Ficr# M 'cipal ?c. Age:cy d N ' r#4 R. c.ence, Ge ees.L Manager

                                                                                                              )

l t C?R/w l CO: TCO T.xecutive C- =# ee Mer1ers Chair .a an?. Mechers ?2 Li Service Cc #< sic: Mi'ce Gent, General Manager, TCG W ?A Ecard,cf Direcccrs i l s U 7me:cd CTr:cs: Screet S= x bidrq. L% dC.V315 &1.1 C.=rcu1 h/P.C. 3cx iC1TNTcWw. .:. C2C:'Al 2*/.-CM

                                                                                -memca -                   ._

l l

• RCR1DA MUNICPAL POWG AGENCY

                    ~                                                                                  .

l , l CAW 1H 7. HEN::3

• b,G. erat:s Mcicq i I

l l l l PRCPCSAL TOR A JCOr- "RANSMISSICN STS IM *N '"Er STA"'I CT T 0ECA l ST *EE Tr.CRICA MUNICI?AL PCkT.R AGINCT ""C 2-2 - l TICENICAI ALV!SCRY GRCCP CT C-2 TT.CMCA E!.IC'".CC PC*iG CCCRDDIATING GRCCP l he Agency is a. feht actic= pcuer agency c =prising 25 T!:riil f

       -" 'cipal eleccic ut d les fer=ed : act as. the agent fer the =e=her cities :

j plan, finasca, ac:;uire, cc=struct, purchase, cperate, =aistais, use, share e s cf, cwn, lease, sell, er dispese of any elec=ic ;cwer supp17 ;rciec wi-"'- er , withcut -he State f=r the jcia generatica er ="* ash: cf elec=i-= t energy l ce heth, i:cludi:g fuel supply. Se pr:pesal that f=11cws is a= a: e=p by the l Ag. cy := hhiate the develepee : =f what it feels is a k g overdue conce; "

                                           <-1 g, a d use of huUc pcwer es=ssission faci.O. ties
  . ,ce=cer ' g -de ew=eship,. f#-a
    /12. -le State of Ticrida.

In general, what is envisicued is establish =ect Of a Jci : *rvem'ssien System in Tierida s#"#' " : the I::egrated Tr=~ # *sien E7 stem presently Oper-ating is Gecrgia wi-1 s =e very real distisc-ices := recog=ime the "-~~ces dM is Ticrida. Pri=ary a=c=g these differences is the existence cf substani l :u=icipally cweed ge:eratie: 1 cated at er near the cities fer whics se inte-l grated bulk pcwer transsission facilities are required c deliver ;cwer := uhi-

       = ate cust:=ers. Alsc, -lere is gecd lik=' " ccd tha: there exists sc=e. a=ce=: ef                  C inves:=r-cwned generatics wi*"'      clase proxi=ity : retail lead ce: ers, -lat dees sc: require use cf i=:egated bulk re*m'asic= fa # ties fer delivery.

A=c her disti:ction is that ==17 the 6:egated bulk ecwer r**m#

• sic facili-ties (generally 200 k7 2-r* aheve a=d -lesa 115 k7 and 138 k7 facilhies per-l fr# r an 6:epared bulk ;cuer supply ft:C~i:C - that is :CT 1:C1""# !

subca=:sissie es cf a=7 vel:2ge herween :he integated bulk ;cwer

+ e ic sys s en and whciesale er retail deliver 7 ;ci :s) wculd he i=chded

 . s b
                                                *                                                        /

Pmecci Cmes: Scmer' 5cru Licrx;;. Lee Yd OS S: uric =tc.n srescP C. k:x *Ct*,Nic-r-1 : F.mp]~_4.a:u l CM.% Cmes: Om,::c cm ses T-su. S.as WC CC ' :>e Eierx:r OrN=Cascrz::c. F. 0 3:9/t::C2) S$9 70%

 ~

WK325 7 12 co Jois: Wass=isaien Systes he which ;ari:7 is rans=ische '=ves =:n uculd be =als:ci=cd by tha rss;cetive jeist cuners. S~cco c:hcr :f;oc cf

           ,arra=ge===: behdi=g pay =es: ef nass=isshe service charges =igh; he appli-Q cable := suh:: ass =issi:n facilhies.

he Jo'- -= s=ission Sys sm wculi c: sist of a hulk pcwer ra=s-sissien fucilities, beluding land, csned by the particip:hg parties, iden-i'ied a=d. apted upc  := he behdad 6hh1'7 and := he added free ti=e := ti= a. Advantages arise f en the ::crem:ed deveh;=== cf de hdk pcwer

             ==~ed *sien fac:les f .he parties =aki=g i u=:ecessary he any par:7 :
             ~' ci.c- duplicati=g fa  'iles. A. pari 7 Sr= '= h e each pa .f := c e arrangeme:: would be devehped based upem the hads actually i=pesed ce the Jci= 5--e'*si = Sys en, a i the invescents required cf each par:r uculd he                     ,

reviewed e--= ? 'y asi adjust =ents =f hves=es er ;a'f===:s =ade ; aistal: ~l parity = der -he Jch: Wi-e' <sien System arrange =ent. .i The Agency pre;cses :: crer 6 a. Jcia: Wa=s=issie: Systen Ageement vi:5 c her participa.1:g elec=ic c:#:les i=. pe='-*ular Thrida (hvest:r - I ev=ed, re.ral elec=ic cc:c;eratives, and these ===icipa.L sys ems that are =ct j

             ===hes cf de Age =cy) = der which. all pa_---icipari=g u # ' ' ties uc" he respen-sible hr evning, :; cati:g, a i =ahtai ' g a pre;crtiera = share of de                         ,
             'i= egra:ed M.Uc ;cuer ==-= ' *shn fac ' ties wi-'#w ; '-*"'=~ I'.crida.i=cluced            [
             . ' . the Jcise ds:ssissien Systes. Such participatice by a=7 ;ar:7 and the                . -

c=rres;c=di g ces: res;casib#;7 wculd he 6.11ec of purchasi t hu'.*e ;cwer

              ==-e' esien service frem a=7 ether participating system. Such arrs=gements
              .euld he se hr-h i= a Jci : Tr=~* #* sic System C'-tership Apte=ent a:d a Jci=- ha:smissien Systen C; cati = and Fa'stenance Aptece:: := he execured by the parties. The Agency anticipates utilizing such Jois: Wa smissica System

= deliver := its =enhers ce eurpur cf generati g u=hs the Agenc7 =ight build itself er ich:17 participate 6, :o =ake all ypes of b erchange ===sacti:= 2 rith cther utilities, a:d := deliver pcwer purchased fres cthers he delivery :=

its =echers. Facilities Seided he ==-e# *sion fa ties that wculd c+ise de Jch: Wa:ssissie: Syste=, a:d which .muld receive hves =e= recogni ice, wcuid have := he desig-sated and apted upc a=c=g the -les. ?rier := signing de a pse=e::s, de f.ar.ies wc"'" have := si dev= a:d, == a state-wide basis , cu:~a7 agree c;ce which specifi: lines wculi he Schded i= the Jcist U2:smissic Systa=. 34si-=y. thesa fa :les wculd censis ef all ecse facilities used er useable := rans=i:

     \        ;cwer, ee :;ca:1:g ver as, of *.ich is 1.u w er highe ,=d = =a=cers ; cue,

Pago 3 the high icirage side of which is 115 k'I er higher, perf:=ing a= 1 :egrated hul'c

             . wer su ,.

p3.,

                          ,   .e.
                                   ,. e
                                             , s.t. . .x , ..a :
                                   --- - .. . - -                 4  su  .' .'... k. 'T ,  .- % # e .'.e.'  7 ' .' g e #ae ' ' ' - ' es c .
      ; ,perfer # g a bulk ;cuer supply f=ction, and all hver voltage facilities per-femi=g a suht:s:ssission f=c-ic=, and exclu d ' g n ransf =atics and switchl=g fa  ies h eated at generati:                         step-up substariens. Certain H W fa # :les which serve as the scle 1 :erdensee-ics he:veen systecs =icht aise he '- '"ded i=

the Jois: Tra- =issie: System. hves=ent ?es:c:sih '- er That is. hei=g *erepcsed here is fer exa=ple pe;cses c=ly and shculi =ce s.e .:

         .        .. . ,~. ..ed as .s.e c=.37            e i d,, , .w
                                                                        ..s        : -5 _ wm .. e .s. ed .:..
                                                                                                               ,.,,...t,-     --

s a w. - . , i=ves=en: .:= der this concept. C= der the Jois: Tr=-*- # < sic = Cwnership Agreement, each pa: 7 wculd -= # - _

             '#   ,  =--"a " 7, pari T invest:ent i: the Joi:0 "'r"-*-*#* sic: Syste                                    fac'" ries as                 ,

previcusly defined. The pari 7 f ="' = for de:e-- # ~' g each par 7's invest =en: .- resp sib 7 wculd he -le ratic. hat a. par-ies average of the welve-ec :h coincident peak W use cf the Jois Tre -- esic System hears : the sus cf the average of the welve-ce: .*: eci= cide:: pea'c W use cf the t a=s=.'ssie Systen of

            ~

P af ' the par:ies := the agree =e:: =ultiplied by the teral et p' = invest =ent i=

         -le Jcia: Tr=~ '*sice Systent facilities cw=ed by -le ec=hised par-ies.                                                 yer the Agency, the prepesed use =ade- cf -le Jcist Tr="-'# esic: Eystem, initi=7, a:d thus the peak W used is the aheve pari 7 for="' = , wculi include its =echer cities share of Flcrida ?cwer C.:rperatica's C v.s =' 2'ver Nc. 3 Nuclear C i (C2-3)1 and
         ;ar:#-requireces s a:d f"' T-re1uirements wholesale .cwer .=cchased by its me:hers if priced a: the hus har.                    S'  =-17 ,. leads cf c:her ==icipal syste=s and :=al

cp e ative systems for use i the pari 7 fe="'a wculd he ' ' ' :ed c deliveries j fres generatic: =ct heated c= such c:# ties ew: sub-rans=issie: systec, inc1"d' g c deliveries fm C2-3 and frca Semi .cle F.lectric C:cpera-iv=s p'a- ed =its a

          ?=:ka* plus firs cwer        r      pechased frec ethers for deliver.r := such syste=r.                                       Ter I

i= vest:r-cwned utili-ies, the hads : he used 12 the pari 7 fe="' r wculd he the

          =c=     517 peak cei=ciden: W hads of each sys es reduced by cwer delivered d=ing such hcur fr:c g=_ eration heated c= sub-=2:r # < sics fac# ' ':iet where use of :he hulk        es=issics syste= is c                    req'lired := =ake deliveies := re  had ce :er s.

se do =ct helieve ra s=issie: service charges shculd he =ade f:: sher: - Te m inter '2 ge serrice such as e=ergency, scheduled, er ece =7 energy service,

   ,, . excect fer          ce- #-m ' a=c=:s , er -la such interchange service shculd he isc.'.ude.d in
           -le hads used is -le pari y fer="' = .                       "cuever, a: pr :se :, serer =.1                      :#:ies a e engaged i ;cchases u= der Echedule D, Tir= M:er ' e ge Iervice, h.ich we believe sh uld he rea ed as a had '=pesed == -he cia: rar e'ssie: Syste= asi included

an - n - , m . -,--

                                                                                               . w ~ _                 _n                    - - -       . :..- -

Pago 4 h do pari:7 f:caula. for the scn:hs i any annual. ; cried that such Schsdulo 3 purchases and sales are =ade. To the ex e:: :har any party :: d e Jo b : Trs:s=issien C-tership Agree-

             >~
                  .e=: is under ce ever parhy durbg a given calendar year, such par-f wculd =ake pay =ents := cr receive revenues fre=, respectively, de ether par-ies, based upc a f:rsula reflecting the g eatest fixed ces rate cf any cf the parties, and the dagree by which such par f's invest =ent is under er over pari 7 The fixed ces ra:e uculd include, as applicable, previsic: for depreciatie=, ad valere = axes insurance, cperatic: and aiste=ance expe=ses ('includi=g ad # '< rative a=d general.

expenses procer1T a=i reascrably ="ccable deretc), and he cese of fu ds, in-

_. ci-d'~g ince=e axes.

                              .The Agenc7 pre;cses . hat it wcu' d i=1:#2"y =eer hs investse=; respcu-sib:7 u= der such ar a=gement threugh a purchase a:d acq"# <hieu. cf a ;cr-ict.                                                                     ,

cf .he existing tra=s=issica facilities prese -ly cu=ed c: under c ustrue:1 = hy i et'er par-les. The Agency wc"'" =eer hs fut=e 1: vest =ent respc=sih" ':7 :.'..cugh fut. e acquisitics, constructice, a=d cw=ership cf jci :17 pleed. ra:ssissice l fac" ' ies. *: ad>' tic =, the Agency wculi he respcssihie fe:- bz pecperticcare share =f de =peratic: and =aistenanc.e and. ad- ' # < rative a:d general. expenses e pr:perly a-4 reasc:ahiy alle@' e := .he far ' ties which ir veuld ev '

             , ).

Mher ?~:vi.sicus 4 The Jcir: Tra:s=issic: Systes Cv=ership Ag te=ent, a:d the- Jci:: *ra=s-sissie: Syste= Cperatien and .'aiit-a ce Ag ee=ents shculd ecstai the i:11:ving

her prev isic =s based upc= zhe cc:::=e cf the negoziazicus a=caz he par-Les:

(a) Joi== p's-

• z cf te par-Les f : ::ansmissics far" ities; (h) Ce er~.~==:. : cr : a:s=:.ss:..:=

sses; (c) Agreements he:veen the Age:cy and the c her par-les as c ce=structics a=d. eperatic cf de facilities :s he cweed by '

d e Age:cy;

         ~

(d) Respcusib'?' 7 cf the parties with respect Oc inve : cries of spare parts e=d equipnent; (e) Israblish=ent cf a re riew ce=2i: ee and p.~.visi = for re-sciutic: cf disputes; and (f) Other pr:visicas as required :: effect are the pur;cses ef the Ag: ee=ent. 5th'tra:1=Lssion Tacili:Les eg Q Cp Oc this ;ci= , we have discussed the --=~ # mi: ef ;ever supply rescurces ever ce J is: Trans=issics Sys:e= cir, a:c ha re cc addressed c2117eries crer da sub m - e sic: and distributi:= systems. Sc== : her y;e of ar-argecent,

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

W m m % Fic2EGn m m mwr+wm A. ,

• Faga 5 inclJ'# g payme=T Of t."30smissiO: Service Charges, might he- Applicable :O these fac# ' # ies.

         .                It 13 rec 0gnised that sC=e 2"-#Oipals and. COcperatives takil delivery cf pcwer at vel: ages icwer m -lese defined. as par cf the Jcia *ransmissie:

System. In such instances, that entity shculi have the ah!. lit 7 to receive-this pcwer and.ce=pensate -le aavering par 7 either through ac inves =ent pari 7 agree ent is suhtr=-< # < sic: and. distributic far-" # ies er by paying a ra ssissic _ service charge. C dar the lat er ::: cept, if a=. entity uses icwer vel age far# '- ities fer any fir:r. trs=ssissier service- , in night rake a. =c= h17 payme=r for e' e use directly to the cwners cf he Icwer veltage fac"iries. Ce der =" e of ha:d" g-Icwer vol age r=-*adens w'" have := he developed and. agreed. upcc by the parties pricr to fi-=' '-i=g the Jci== dans=issic: System concept. g..

          )-

6 e e l ~ t

O Attachment 10 Excerpts from 1970 National Power Survey (Part II), Federal Power Commission. m l l l l l 9

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CHAPTER IV f a

                                                                                                                                                         .x STATEMENT OF COORDINATION                                    s             . .,7 General 4f
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various committees and special working group ~

              -                                                                                        which each company has representation. Impt Coordination of operating procedures and plan-          mentation of the agreement has permitted mem '

ning for reliability of power supply are in eHect to install larger size units with attendant economies between the varicas systems in the Sou6 east. This in first cost and operation, and has resulted in the is being imylemented by Reliability Coordination shared development of plans for an extensive EHV Agreemenc between neighboring systems and pools, bulk power transmission system among the Pohl as well as by joint study programs conducted by companies. Some 450 miles -of 500. kilovolt trans.

                                . . . . systems on a less fornul basis. Discussions are now mission will be in service by 1975, with a major being held to put sto effect other umihr formal                                                                %

pertion completed by 1972. agreements. Further, other such committees and specal In most cases, the work involved in coordinatica I working groups plan and coordinate operational is carried out by committees or spec 2al working matters, generation schedules, construction' and groups. These committees meet periodically for the maintenance schedules, reserve requirements and purpose of discussing problems and implementing power interchange. studies leading to increased reliability. These dis-The CARVA Pool companie~s, individually and

                  ,                      cussions and studies deal with matters such as gen-collectively, continue to be act've in working with eration and transmission planning, construction             area and regional groups interested in coordination schedules, operation, maintenance schedules, spin-
                  -                                                                                  of electric facilities for maxunum reliability and
  .,                                     ning reserve requirements, and mutual assistance y y                                                                                                   economy of service to all customers in their service during emergencies.

area. . l, 'f Statements on coordination prepared by the vari-In April 1967, the CARVA Pool members signed ous systems are listed below.

   -                                                                                                 a reliability agre ment with members c'The South-g[                                                                                        ern Company Power Poolintent' I to further aug-

} CARVA Pool ment reliability of each company's bulk power '[-~ S The CARVA Pool, comprised of Carolina Power supply through coordination of the companies' plan-

                                        & Light Company, Duke Power Company, South                  ning for and operation of their generation and bulk 1* [                                     Carolina Electric & Gas Company, and Virguna                Power transmission facilities.

g{T Electric and Power Company, was formed after An inter. area reliability coordination agreement f6# several years' planmng and negotiation directed was executed between CARVA, East Cental Area towar; increasmg coordination over the wide geo. Reliability Coordination Committee, and Middle graphical ares served by the companies. The agree. Atlantic Area Reliability Coordination Committee

                     ,                  ment, which went into full effect on May 1,1967,            on November 15, 1968. A possible coordination was the culmination of efforts based on a mutual           agreement wit h TVA is also being studied.
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desire to attain maximum economy andTulk power Joint studies of bulk power transnission facili-supply reliability for the benefit of over 2.6 million ties are in progress between the CARVA companies customers in the States of North Carolina, South and the American Electric Power System; CARVA Camlina, Virguua, and a small part of West Vir- and the Southern cor.panies; and CARVA and the ginia. Under the CARVA agreement, the com. PJM interconnection.

                      '                 panies are specifically committed to undertake joint            All the CARVA companies have been part of planning and operation of transmission and gen.           'the Interconnected Systems Group for many years.

eration. This now is being accomplished through Each individual member has interconnection II-342 -

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_-a.--- _ __ ..m___ p agreements with its neighbors which to a greater or participating several years ago, so that their opera- , lesser degree, involve purchase and sale of power, tions would be better coordinated with those of the three investor-owned systems. The committee mem-exchange of information, mutual assistance during bers have no authority to enter into contractual emergencies, establishment of operating procedures and joint studies of plans for tran mission affecting agreements, to commit their organization to con-more than one company, all of which contribute to struction of facilities, nor to establish practices which are not in accord with individual organization improved coordination. These interconnection agnemer.ts, for the most part, were in existence be . policy. The committee does serve as an excellent medium through which mutual operating problems , fore formation of the CARVA Pool and before the

• inter-area agreements referred to above were con- are reviewed and resolved in such a manner that cluded. They continue as effective complements to technical operations are very well coordinated. This ,

g ,, committee, known as the Florida Operating Com-  : the more embracing inter-area agreements. The CARVA Pool companies are represented on . mittee, now meets on a bi-monthly basis. In its meet- , bers ' the National Electric Reliability Council. ings, it focuses attention on such matters as spinning i reserve, underfrequency relay protection, relaying g,  ; and adequate communications between dispatching gy The Florida Group centers. It also coordinates maintenance schedules IPool and recommends and organizes long-range planning  ; For purposes of this'ieport, the five major utili-ties in Peninsular Florida, who coordinate their op- studies and stability exammations for use by tha five m @r individual utilities. There are no " pooling" con-

          .                  erstions, through infonnal committee action, are identified as the Florida Group; furthermore, for                tracts or commitments among these systems.                      i g                                                                                                   Spinnirg reserve is voluntarily shared and main-sunPlicity, this group is sometimes referred to as a bnal                          " Pool" with the understanding 'he term is applied               tained to protect the instantaneous loss of the largest and                          in the broadest sense, and does not connote a formal            generating unit in service. The reserve is distrib-            ,

and uted to enough operating units with proper gov-pool. , g Peninsular Florida is s rved by five principal ernor characteristics so that a frequency drop of md suppliers, Florida Power Corporation, Florida less than five-tenths of a cycle will provide the full g benefits of each member's share of assistance. The Power & Light Company, Tampa Electric Com-g, , fdl share of each member's reserve n us: be avai!- Pany, and the municipal systems of Jacksonville land , able to all other members and not restricted by

             '    D-          and Orlando. fese suppliers, surrounded on three hee                                                                                             limitation of transformers, lines or other equipment.

i sides by water, subjected to hurrica es and the high-In abnormal situations where the spinning reserve est incidence of lightning in the r.ation, undertake g to stand on their own feet and provide their own re-of a membe.r is either unavailabh or only partially g available, the member notifies the others so that

             <                 serves. They are strongly interconnected and com-

. *"# their spinning reserves may be increased or reallo-prise what has come to be known as the Florida twer Group. In emergencies each supplier aids the cated as required. Every system disturbance is thor-oughly analyzed by the operating committee to

 ;*f" j;                        Florida system in trouble to the maximum extent of its resources. Notwithstanding the fact that each            check the response of the generating units of each Florida supplier operates his own system in the most member in meetmg the emergency. The amount of b*"*                              economical manner consistent with its individual re-            spinning reserve required is constantfy under review.

To avoid an excessive number of generating units quirements and policies, there is a strong recogni-g* being out of service simultaneously for maintenance tion of the need to coordinate operating matter]s. and to insure the maxunum availability o"nstalled k** I An informal committee was established in Janu. reserves, the five individual systems coordinate their I ary 1959 by the three investor. owned utilities listed maintenance schedules through the Florida Operat-above for considering and coordinating mutual I. - problems relating to interconnected operation. The, ing Committee. committee ccasined of engineering and operating Load shedding has been used as an emergency personnel, and informal meetings were held on a procedure by members of the Flodda Grotip since g randomly scheduled basis. As the activities of the 1957. For some time two of the systems have had informal committee proved to be beneficial, repre- capability of shedding mote than 1,000 megawatts of load by underfrequency relays, and since the five sentatives of the Jacksonville and Orlando munici-pal systems were asked to participate. They began systems are strongly tied together, this protection L i 1 IIL3.-33 t - s e I i

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j has been available to all five members as a second-or third-contingency back-up. Now, all members of fully coordinated in the planning and operation o f the group have provided for such installations and transmission systems and in generation requus. a completely coordinated plan was fully imple- m-its. Savannah has two 110-kilovoit transmiss

• ties with Georgia Power. The primary purpose og a load shedding capability of at least 30 percent ofmented in ! ate 1968 its peak load, and each member's portion of load the other company is in trouble. In fact, there is D shedding will be available to other members during provision in the interchange contract between, any emeipncy operation. Stability examinations are Georgia and Savannah for estabrshing coordination' for achieving maximum reliabilitz in the operatioi i

used to assist in determming the amounts and loca-of the two systems. W tions of load to be shed, and the frequencies for l which the relays should be set. - ~ In order to assist both companies in planning future generatic,n and transmission, joint network Each of the Sve sptems uses an on-line computer for dispatching, and the dispatching offices of the. analyzer studies are made. These studies are the individual group members are new and modern. basis for determining the best operation for the twi Thes of5ces are linked by excellent communication companies' systems and what additional transmis. sion is required to best serve both companies. - facilities consisting of microwave, leased circuits, teletype, and radio. They are also linked to the The type of protection installed in existing ties power plants and substations by excellent communi- was determined after joint conferences between the :

           '                                 " cation facilities. Information is exchanged con-               two companies. The type of relap snd actual relay 1 stantly concerning loads, reserves, and unusual              settings were deurmined by the relay sections of:

both companies working together. Savannah and 7 i operating conditions. In time of emergencies, the dispatchers can communicate very quickly and take Georgia consider that they have taken advantage, (L proper corrective steps on the basis of factual and of opportunities available for impmving reliability; i 1 up-to.the-minute information. and increasmg efiiciency which could not exist were f t they actingindependently. ^ On December 1,1967, Florida Power Corpora- - i tion and the Southern System companies entered Through the foreging arrangements, Savannah , into a reliability coordinatica agreement for the is represented on the National Electric Reliability Council. purpose of augmenting coordination for rGability

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of bulk power supply. The agreement calls for the appointment of an Executive Committee which South Carolina Public Service Authority 7 - .. shall review principles and procedures on matters A affecting bulk power supply, such as (1) coordina- The South Carolina Public Service Authodty has an operating agreement with the South Carolina , tion of generation and transrmssion planning, Electrit & Gas Company and for many years has construction, operation, and protection; (2) coor-worked with its neighbors through interconnection ~ - dination of interconnections for assistance in emer-gencies; (3) initiation of joint studies and agreements involving emergency support, economy power interchange, coordinated maintenance investigations pertaining to emergency performance scheduling and direct sales and purchases. In addi-

• of bu'k power supply facilities; (4) coordination of maintenance schedules of generating units and lines; tion, the Authority has a 1-year purchase powerj (5) coordination of communication facilities; (6) contract with South Carolina Electric and Gas Com U pany for the year May 1,1969, to April coordination of load relief measures and restoration The Authority's transmission system is connected }

procedures; and (7) coordination of spinning re-sene requirements. with the CARVA Pool (through interchange points g Florida Power Corporation is represented on.the with the South' Carolina Electric & Gas Company) 4 National Electric Reliability Council at four' locations, and future planning is exp-eted q

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to recognize additions of generation and traramis ;

                  ;                                                                                      sion facilities in the area.                             .y Savannah Electric and Power Company                              The Authority has been attempting to reach en -

agreement with the CARVA Pool whereby its ctis-Savannah Electric and Power Company has an

                           -                interchinge contract with the Georgia Power Com-             tomers may receive the full benefits of pooling opportunities such as installation of larger rnits 7 pany .md considers that the two companies .are with ' attendant economies, coordinated planning, II-3-34
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! Attachment 11 Gulf States Utilities Company, FERC Docket No. ER76-816, " Order Approving Settlement Subject to Condition", October 20, 1978 I l

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