ML19308B222

Memo in Support of Motion of Piedmont Cities Power Supply, Inc & 11 Piedmont Electric Cities to Dismiss Application of Duke Power Co for R&D Licenses for Const & Operation of Oconee Station.Certificate of Svc Encl

ML19308B222
Person / Time
Site:	Oconee
Issue date:	08/10/1967
From:	Harris J, Reeder S, Tally J PIEDMONT CITIES OF NORTH CAROLINA, PIEDMONT CITIES POWER SUPPLY, INC.
To:	US ATOMIC ENERGY COMMISSION (AEC)
Shared Package
ML19308B217	List: ML19308B216 ML19308B219 ML19308B222
References
NUDOCS 7912160135
Download: ML19308B222 (24)

Text

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O 3efore The i

UNITED STATES ATOMIC ENERGY COMMISSION DCCKETS NOS. 50 - 269, 50 - 270, and 50 - 287 MAT"'ER OF THE APPLICATION OF DUKE POWER COMPANY FOR LICENSES UNDER THE ATOMIC ENERGY ACT OF 1954 AS AMENDED FOR THE CONSTRUCTION AND OPERATION OF OCONEE

. NUCLEAR STATION, UNITS 1, 2 and 3 MEMORANDUM IN SUPPORT OF MOTION OF PIEDMONT CITES POWER SUP?LY, INC., and ELEVEN PIED:.*ONT ELECTRIC CITES TO DISMISS THE APPLICATION OF DUKE POWER COMPANY FOR RESIARCH AND DEVELOPMENT LICENSES UNDER SECTION 104(b) OF THE ATOMIC ENERGY ACT FOR THE CONSTRUCTION AND OPERATION OF OCONEE NUCLEAR STATION, UNITS 1, 2 and 3 FOR LACK OF JURISDICTION Pied:nont Cities Power Supply, Inc.

City of S atesville, Nor:h Carolina City of High Point, North Carolina City of Lexing:on, North Ca:clina City of Monroe, Nor:h Carolina City of Shelby, Nor:h Carolina City of Albe:narle, North Carolina Town of Cornelius, North Carolina Town of Drexel, Nor:h Carolina Town of Granite Falls, North Carolina Town of Newton, North Carolina Town of Lincolnton, North Carolina Movants Jack R. Harris J. C. Tal.y, Jr.'

Spencer W. Reeder A::orneys for Movants 9/1/00/35

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Eefore The UNITED STATES ATOMIC ENERGY COMMISSION DOC: CTS NOS. 50 - 269, 50 - 270 and 50 - 287 MATTER OF THE APPLICATION OF DU:C ?OWER COMPANY FOR LICENSES UNDER THE ATOMIC ENERGY ACT OF 1954 AS AMENDED FOR THE CONSTRUCTION AND OPERATION OF OCONEE NUCLEAR STATION, UNITS 1, 2 and 3 MEMORANDUM IN SUPPORT OF MOTION OF PIEDMONT CITIES PCWER SUPPLY, INC., and ELEVEN PIEDMONT ELECTRIC CITIES TO DISMISS THE A??LICATION OF DU:C POWER COMPA.Tl FOR RESEARCH AND DEVELOPMENT LICENSES UNDER SECTION 104(c) OF THE ATOMIC ENERGY ACT FOR THE CONSTRUCTION AND OPERATION OF OCONEE NUCLEAR STATION, UNITS 1, 2 and 3 FOR LACK OF JURISDICTION This is a proceeding filed in the United States At omic Energy Commis-sion by Duke Power Company for research and developmen: licenses under Section 104(b), of the A:omic Energy Ac: of 1954, as amended, for the construction and operation of Oconee Nuclear Station, Units 1, 2 and 3.

This applica:icn, as supplemented and amended, for forty year licenses, discloses upon its face that the Oconee Nuclear Station, with its proposed t

capacity of over 2,600,000 kilowa::s (2622 megawatts electrical) capable of mee:ing owr 60% of the maximum integrated ne: demand on Duke ?cwer Company's system up to December 1,1966, and estimated to cos over

$340 million, is not a research and development activity, either in 1:s proposed construction er in its prcposed opera:icn.

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Duke's appifca: ion, as supplemented and amended, does not disclose any fac:s which could, by the mos: liberal cons: rue: ion of the pleading, confer jurisdiction upon the Atomic Energy Commission to issue research and cevelopmen: licenses under See: ion 104(b) cf :he A:cmic Energy Act of 1954, es amended, for he construction and operation of Oconee Nuclear S:ation, Units 1, 2 and 3, whien obviously Duke seeks to build fcr commercial anc industrial purposes, and not for research anc development purposes, u APPLICABLE STATUTE Duke's application for the Oconee Nuclear Station, Units 1, 2 and 3, as amended and supplemented, is for a research and developmen: license under Section 104(b) of the Atomic Energy Act of 1954 as amended [42 USC 2134(b)] , which provides:

"2134. Medical therapv. research. and development licenses; limitations

. . . . . . . . . . . . . . . (b) The Commission is au9ericed to issue licenses to persons applying therefer for uti ication and pro-duction facilities involved in the conduct of research and develocment activities

• leading to the de=cnstration of :b practical value of such facilities for industrial or commercial purposes. In issuing licenses under this subsection', the ,

Commission shall impose the minimum amcunt of such regula-tions and :erms of licenses as will permit the Commission to fulfill its obligations under this chapter to promote the common defense and security and to protect :he Malth and safety of the public and will be compatible with :he regulations and terms of licence which would apply in the even: that a ccomercial '

license were~1a:er to be issued pursuan::o section 2133 of

• Underlining ours unless otherwise indicated thoughout the memorandum e

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this title for tha: type of facility. In issuing such licenses, pricrity shall be given to :bse activities which will, in the opinion of the Commission, lead te major advances in the application of atomic energy for industrial or commercial purpos es . "

Duke's application for the Cconee Nuclear Station, Units 1, 2 and 3, as amended and supplemented, is net fcr a commercial license under Sec: ion 103 cf the A:cmic Energy Act of 1954 as amended (42 USC 2133),

which, together with section 101 and Section 102 thereof provides

[ 42 USC 2131 - 2133 (a) (b) (c)1 :

"2131. License recuired It shall be unlawful, except as provided in sec:icn 2121 of this title, for any person within the United States to transfer or receive in interstate commerce, manufacture, produce, transfer, acquire, possess, use, imper:, or export any utill ation or production facility except under and in accord-ance with a license issued by the Commission pursuant to sec:icn 2133 cr 2134 of this title. Aug . 1, 19 46, c. 72 4, I s.101, as added Aug. 3 0, 19 5 4, c. 107 3, s . 1, 6 8 Stat .

936, and amended Aug. 6,1956, c.1015, s.11, 70 S:at.

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2132. Findinc of practical value '

Whenever the Commission has made a findine in writine that any type of utilization or predn.::icn facility has been suffi-ciently developed to be of practical value for industrial or commercial purposes, the Commission may thereafter issue licenses for such type of facili:y pursuant to section 2133 of this ti:le. Aug.1,1946, c. 724, s.102, as added Aug. 30, 1954, c.1073, s.1, 68 S:a:. 936, 2133. Commercial licenses--Conditions (a) Subsequent :0 a finding by the Commission as required in sec:ica 2132 of this ti:le, the Cc= mission may issue licenses to ::ansfer or receive in interstate commerce, manufacture, produce, transfer, acquire, possess, use, import, or expor: 3 under the terms of an agreement for cooperation arranged i pursuant :o sectica 2153 of this ti:le, such :ype of utilization er production facility. Such licenses shall be issued in i

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3 accordance with the provisions of subchapter X7 of this chap:er and subject :o such conditions as the Commission may by rule or regulation establish to effectuate the pur-poses and provisions of this chapter.

Nonexclusive basis (b) The Commission shall issue such licenses on a ng exclusive basis to cersons accivinc therefer (1) whose proposed activi:les will serve a useful purpose proper iona:e to the quantities of special nuclear ma:arial or source material to be utili::ed; (2) who are equipped to observe and who agree to observe such safety s:andards to protect health and to minimize danger to life or property as the Commission may by rule establish; and (3) who agree to make available to the Commission such technical infor-mation and data concerning activities under such licenses as the Commission may de ermine necessary to promote the common defense and security and to protect the health and safetyof the public. All such information may be used by the Commission only for the purposes of the common defense and security and to protect he health and safety of the public.

I.icense ceriod (c) Each such license shall be issued for a specified period, as determined by the Commission, depending on the type of activity to be licensed, but not exceeding for:y years, and may be renewed upon the expiration of such period."

The Ccmmission's autheri y to issue commercial licenses for industrial and ccmmercial purposes under Section 103 of the Act excludes any power to issue research and development licenses for such purposes under Section 104. No: only must commercial 11 censes be issued on a non-  !

exclusive basis to persons applying therefor, (Sec.103(b), supra), but also it is only in the case of commerciallicenses that: (1) the Commission is mandaterily required to notify the A::ctney General of :he proposed license and the proposed terms and conditions therecf; (2) "within a

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.s reasonable :ime, in no event to exceed 90 days after receising such notification," the Attorney General is manda:crily required :o advise the Atomic Energy Commission whe:her, insofar as he can determine, the proposed license "would tend to create cr main:ain a situation inconsisten:

with the antitrus: laws"; (3) such advice of the A::crney General is man-da:crily required to be published in the Federal Register, as shown by Section 105 of the A:omic Energy Act (42 USC 2135); (4) the Atomic Energy Commission is mandatcrily required upon the request of the A::ctney General to furnish or cause to be furnished such informa: ion as the At:ctney General determines to be appropriate or necessary to enable him to give the advice so required. Section 105 of the Act thus provides (42 USC 2135):

"2135. Anti-t us: previsions governing licenses: re;cr:s to A: orney General (a) Nothing contained in tMs chapter shall relieve any person from the operation of sections 1-13, 14-19, 20, 21, 22-27, 41-46 and 47-58 of Title 15 and sections 52 and 53 of Title 29.

In the event a licensee is found by a cour; cf competen juris-diction, either in an original action in tha: court or in : pro-ceecing to enforce or review the findings cr crders of any Government agency having jurisdic: ion under the sec: ions cited above, to have violated any of the provisions of such sections in the conduct of the licensed activity, tha Commission may suspend, revoke, or take such other action as it may deem necessary with respect to any license issued by the Commission

, under the provisions of this chapter.

(b) The Commission shall reper pronp:Iy to the At:ceney General any information it may have with respect to any utilization of special nuclear material or atomic energy which appears to violate or to tend toward the violation of any of the foregoing sections, or to restrict free competition in private enterprise.

(c) Whenever the Commissicn procosas to issue any license to any person under section 2133 of this title, it shall no:ify the A::ctney General of the crocesed license and the crocosed m 6

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terms and conditions thereof, except such classer er

vpes of licenses, as the Commission, with the appresal of the A::crney General, may cetermine would not signi-fican:1v affect the licensee's activities under the arti-trust laws as specified in subsection (a) of ths section.

Within a reasonable time, in no event to exceed 90 days after receising such notification, the Attorney General shall advise the Commission whether, insofar as he can determine, :he proposed license would tend to creete er maintain a situation inconsistent with the antitrust laws, and such advice shall be published in the Federal Regis-ter. Upon the recues: of the A: orney General. the Commission shall furnish or cause to be furnished such information as the Attorney General determines to be accrocriate or necessarv to enable him to give the advice called for by ths section. Aug. 1, 19 46, c . 72 4, s . 10 5, as added Aug. 3 0, 19 5 4, c. 10 73, s . 1, 6 8 Stat. 9 38, and amended Aug. 2 6, 19 64, Pub . L. 8 8-48 9, s . 14, 78 Stat. 606. "

ARGUMINT I.

Duke has (efined its proposed Oconee Nuclear S ation as a " commercial nuclear station" as contrasted with:he Par Plan: at Parr, S. C. , which Duke ccrrectly dubs " experimental" .

In Duke's 1965 Annual Reper: :o S:cckhc1ders, which is attached to and incorpora:ed in Duke's application as supplemented and amended, Duke

, describes the Parr Plant at Parr, S. C., as " experimental" and says that it has par:icipated in the " experimental" nuclear plant at Parr, S. C.,

"in anticipation of the day when it will be operating commercial nuclear genera:ing s a:icns". The exact words of the 1965 Annual Reper::o S:cckholders of Duke Power Company in this connection read as follows:

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"In anticipation of the day when 1: will be operating commercial nuclear generating stations, the Company is giving design and operating engineers experience in nuclear work by placing them on rotating assign-ments at the experimental Nuclear Plant a: Parr, S.C.

The Parr Plan: is operated by Carolinas-Virginia Nuclear Power Associates, a joint project of Carolina Power &

Light Company, Duke Power Company, South Carolina Electric & Gas Company and Virginia Electric and Power Company to advance peaceful use of the atom as an economical fuel for electric generation."

In Duke's 1966 Annual Reper; to S:ockholders, which has also been incorporated in Duke's applica:ica for the Oconee licenses, as supple-mented and amended, Due again refers to its par:icipation "in the experimental nuclear generating plant buil at Pan, S. C.", and in operation since 1963, but says that, ":he decision to make the Cconee Station a nuclear plant was based upon a thorough evaluation, utilicing computer studies, which compared the economics of coal and nuclear fuels ever the estimated life of the plant" .

Duke has thus defined its proposed Oconee Nuclear Station as a

" commercial nuclear station" as contrasted with the Parr Plant at Parr, S. C., which Duke correctly dubs " experimental", as is clearly shown by the following excerpt from Duke's 1966 Annual Reper to Stockholders:

"The Company has actively studied nuclear fuel as a generation heat source for 12 years, and has been a participant in :he experimental nuclear generating plant buil: a: Parr, Scu:h Carolina.

The Parr Plan: has been in operation since 1963.

The decision to make the Cconee Sta:1cn a nuclear plan was based upcn a thercugh evaluation, utili::ing compu:er stucles, whch compared the '

economics of coal anc nuclear fuels owr the estimated life of the plant."

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II.

Duke crocoses to finance the Oconee Nuclear Station as a " commercial nuclear station" and not as an experimental nuclear clant. ,

On or about the 1s: day of May,1967, Duke filed'Acendmen: No. 3 to Application for I.icenses", which was docke:cd as Docke: No. 50 - 287, because it added an application for a third uni: in the Oconee Nuclear Station thereby increasing the combined capacity of Units 1 and 2 by 50%.

This Amendment No. 3 discloses that Duke intends to finance the Oconee Nuclear Station as a " commercial nuclear station" and nct as a mere experimen:a1 cr research and development sta:1cn, of the type contemplated under Section 104 of the Atomic Energy Act. Amendment No. 3 to the Application for I.icenses reads in this regard as follows:

"2. Estimated costs of Oconee Nuclear Station are as fo11cws:

Units 1 and 2 Uni: 3 Total

$ 1,063,000 $ 0 $ 1,068,000 Site Acquisition 146.732,000 79,194,000 225,926,000 . Direct cost of plan:

$147,800,000 $ 79,194,000 $ 226,994,000 Sub:ctal 8,800,000 4,313,000 13,113,000 Engineering, general overheads, ,

and con:ingencies '

400,000 100,000 500,000 Opera:cr training - Capi:a1 pertien 400,000 100,000 500,000 I.icensing and special admin-i

' istration burdens 14,166,000 8,371,000 22,537,000 Interest during construe:icn

$171,566,000 $ 92,078,000 $ 263,644,000 Total, without substation 5,448,000 8,765,000 14,214,000 Step-up substation, including

$1,174,000 interest during ,

1 construction

$177,014,000 $ 100,844,000 $ 277,555,000 Total plan: .vith substation 36,290,000 26,710,000 63.000,000 Initial cores

$213,304,000 $ .127,554,000 $340,858,000 Grand total

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.............. 4. Excluding interest during construction, total funding requirements for Cconee Nuclear Station, Units 1, 2 and 3 are estimated as follows:

Station Initial Fuel 1966 $ 349,000 $ - l 1967 2,404,000 -

1968 30,326,000 -

1969 88,465,000 -

1970 70,582,000 18,000,000 1971 43,399,000 32,190,000 1972 16,787,000 12,810,000 1973 1,835,000 -

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5. As to source of funds for the construction of Units 1, 2 and 3, it is estimated that approximately 40% of the construc-tion funds will be generated in:ernally from retained earnings and depreciation. The balance will be obtained initially through short term borrowings from commercial banks, and will thereafter be permanently funded by sale of securities.

Due to changing market conditions, no definite s:atement can be made at this time as to the type of securities which will be sold or the date of their sa.le. It is presently anti-cipated that the Company will issue first mortgage bonds, cumulative preferred stock andcommon s:cck dnring this period . "

III.

Duke has acplied for 40 year licenses to construct and operate the commercial 260 million kilowatt, $340 million more-profitable-than-ccal-fired Oconee Nuclear Station under the quise of an experimental plant, for which only a "research and dewlopment" license would be required under Section 104 of the Act in order to escape the Congressional recuire-ments which would be attendant upon a truthful labeling of Oconee as a proposed " commercial" nuclear station, which can only be licensed as suchunder Section 103 of the Atomic Energy Act of 1954, as amended.

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Duke has applied for for:y year licenses :o construe; and operate the commercial 260 million kilowa::, $340 million =cre-profitable-than-coal-fired, Oconee Nuclear S:ation, under :he guise of an experimental plan: for which only a "research and developmen license" is required under Section 104 of :he Act, in order :o escape the following Congressional requirements which would be a::endan: upon a truthful labeling of Oconee as a proposed " commercial" nuclear sta:1on: '

"(1) A finding of practical value as to the type of reactor employed. (42 USC 2132, supra)

(2) The issuance of licenses on a non-exclusite basis to persons applying therefer (42 USC 2133(c),

supra)

(3) Regulation by the Federal Power Commission under the regulatory provisions of the Federal Power Act which is applicable only to genera-tion of " commercial" electric energy under a l

commercial license. (42 USC 2019)*

(4) The anti: rust provisions of the Atomic Energy Act, Section 105 (c), described above.

(42 USC 2135(c), supra)

(5) The requiremen: that :he Commission give no: ice in writing to such regulatory agency as may have jurisdiction over the rates and services of the

• Atomic Energy Ac:, 42 US : 2019. Applicability of Federal Power Act

• Every licensee under this chapter who holds a license from the Commission for a utilization cr production facility f0r the generation of commercial electric energy under sec: ion 2133 of this title and who transmi:s such elect ric energy in interstate commerce or sells it at wholesale in interstate commerce shall be subject to the regula: cry provis10ns of the Federal

?cwer Act. Aug.1,1946, c. 724, s. 272, as added Aug. 30, 19 54, c.

1073, s.1, 68 Stat. 960.

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proposed activity, to municipalities, private utilities, public bodies, and cooperatives within transmission distance authorized to engage in the distribution of electric energy and un:11 the Commission has published nctice of such commercial application once each week for four consecutive weeks in the Federal Register and until four weeks after the last notice. [42USC 2232(c)] *

(6) The requirement : hat :he Commission shall give preferred considera:ica to applications for licenses for the generation of commercial power under Section 103 of the Ac which will be located in high cost power areas in the United States if there are con-flicting applications for a limited opportunity for such license. [42 USC 2232(d)] **

• " (c) The Commission shall nc: issue any license for a utilization or produe:icn facility for the genera: ion of commercial power under section 2133 of this title, until it has given notice in writing to such regulatory agency as may have jurisdiction over the ra:es and services of the proposed activity, to municipalities, private utilities, public bcdies, and cooperatives within transmission distance authorized to engage in the distribution of electric energy and until it has published notice of such application once each week for four consecutive weeks in the Federal Regis:er, and until four weeks af:er the last notice."

• • "(d) The Commission, in issuing any license for a utilization or production facility for the generation of commercial power under section 2133 of :his title, shall give preferred considera:1cn to applications for such facilities which will be located in high cost power areas in the Uni:ed States if there are conflicting applications for a limi:ed oppor: unity for such license. Where such conflic:ing applica:icns resulting from limited opportunity for such license include those submitted by public cr cooperative bodies such applice:1cns shall be given preferred consideration. Aug.1,1946, c. 724, s.182, as added Aug. 30,1954, c.1073, s.1, 68 S:at. 953, and amended Aug. 6, 1955, c.1015, s. 5, 70 S:at.1070; Sep:. 2,1957, Pub.L.85-256,

s. 6, 71 S:st. 579; Aug. 29,1962, Pub.L.87-615, s. 3, 76 Stat, 409."

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(7) The requirement that where such conflicting appli-cations resulting from limited opportunity for such license include these submi::ed by public or cocp-erative bodies, such applica:icns shall be given preferred considera icn. . (42 USC 2232(d), supra)

IV.

Since Duke ."ower Company cannc: satisfy the furisdictional recuire-ments of the Atomic Enercy Act. Section 104, for a research and develop-i' ment license, it mus apply for a findinc of practical value as to the type i

of reac:cr employed under Section 102 and otherwise comply with the recuirements for a commercial license under Sections 103 and related sections of the Atomic Enerav Act, as adopted by the Concress for the protection of the public.

It is manifest : hat Duke Power Company cannct sa:isfy the juris-dictional requirements of the Atomic Energy Act, Section 104, for a research and developmen: license.

Duke must, therefore, apply a: the earlies: possible date for a finding of prac:ical value as to th type of reac:cr empicyed under Section 102 and c:herwise comply with :he requirements for a commercial 11 cense under See:icn 103 and rela:ed sections of the Act, all of which were adopted by the Congress for the protec:icn of the public.

A1: hough the issuance by the Atomic Energy Cc= mission of a construc-tion permit for a nuclear facili:y does not make au:cmatic later issuance of a license to operate ?cwar Reac:ct Development Co. v. International Union of Elec. , Radic and Mach. Werkers, AFL-CIO, 367 US 396, Duke i

) -l transmit the said entitlement from the proposed Oconee Nuclear Station in South Ccrolina to the Piedmont electric cities in North Carolina.

Piedmon: Ci:1es Power Supply, Inc., a corporation not for profit, duly organized and existing under the laws of the State of Nor:h Carolina, and the eleven Piedmont electric ci:1cs of North Carolina for whose benefit said corpora ion has been formed, hereby offer to suppor: Duke in obtaining jurisdictional commercial licenses under Section 103 of the Atomic Energy Act.

The conditions attached to this offer, which is made for the purpose of expediting the Oconee Nuclear project in a sound and jurisdictional manner are:

(1) That Duke show an equal interes in expedition by abandoning its attempt to obtain non-jurisdictional research and development licenses not au:horzied under Section 104, and; (2) Offer Piedmont Cities Power Supply, Inc., an opportuni:y to buy its fair share in the Oconee Nuclear S:ation coupled wi*h a satisfactory wheeling arrangement whereby its share of the Oconee energy may be transmitted for hire from the Oconee Plant in South Carolina to :he said eleven Piedmont electric cities in Nor:h Carolina under Pederal Power Commission jurisdiction.

The arrangement so proposed for the purpose of expediting the final construction and operation of the Oconee Nuclear Station, Units 1, 2 and 3, is, we believe, in the public interest.

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i canno: escape the necessity of going the commercial license route, by suggesting that all it is asking for now is a construction permit.

A valid construction permi: cannot be issued where the application is ctheraise unacceptable by reason of being outside the jurisdiction of the Commission under :he research and development section, A:cmic Energy Act, Secticn 104. This is apparent from Section 185 of the Ac: which proudes, in pertinent par:, (42 I.TSC 2235):

"2235. Construction permits All applicants for licenses to construct Or mcdify production cr utilicatica facilities shall, if the acclica:1cn is c heraise acceptable to the Commission, he ini:ially gran:ed a con-struc:!on permit. . . . . "

Since Duke Power Company cannot satisfy the jurisdic:icnal require-ments of the Atomic Energy Act for a research and developmen: license, it is obvious that the application herein is "c heraise" unacceptable, so tha: there is no jurisdiction to issue even a construction permi: on this non-jurisdictional Oconee applica: ion.

V.

Piedmen: Ci:les ?cwer Succiv, Inc. , a corpcration not for profit, and the eleven Piedmon: electric cities fer the benefit of which said corpora:1on has been fermed, hereby offer to supccr Duke in obtaininc jurisdicticnal com .ercial licenses under See:icn 103 of the Atomic Enerev Act, upon :he condi:icns that Duke abanden its ar:empt to obtain non-jurisdicticnal research and devalcpment licenses not authericed under See:1on 104, and effer Piedmon: Ci:1es Power Supcly, 'Inc. , its fair share in Ocenee, coupled with a etisfac: cry wheeline arrancement to

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The Ecncrable Charles R. Ross, Commissioner, Federal Power Commission, who was criginally appoin:ed by Presiden: Ichn F. Kennedy, and who has recently been reappointed at :he end of his first six year term by Presiden Johnson, with expressions of grea: confidence by the Presiden: in Cc=missioner Ross' wisdom and judgment as a maker of Federal Power Policy, said on May 9,1967, in an address entitled, " Bulk

?cwer Supply for Small Systems", delivered a the 24th annual American Public Power Association conference at the Denver Hilton Hotel, Denver, Colorado, (mimeo pages 5-7):

"In addition to becoming members of a pool, the small muni-cipals must have a chance to buy into some of the organizations being formed to construct large nuclear plants. It is my under-standing tha: :he taxpayers in this nation have invested over

$40 billion in nuclear developmen:; cf the nearly $1 billion

hat is being expanded annually fcr R&D in the electric industry, roughly 5% was contributed by the major utility companies, g Under these circumstances it would be ironic if the only consumers in the nation that will benefi: from the nuclear revolution are those of private systems. With :he acceptance of the fact that :he larger the nuclear unit, the more economic 1: becomes and with the anticipation of greater economies inherent in the breeder reactor which I hope comes faster than some would will, it becomes harder than ever for a municipal:o construct a nuclear plan: fcr itself. In addition, :o the e:cen: Iccal or sta:e law requires you to locate a plant within your municipal boundaries, you may be prohibited because of safety rules. Furthermore, probably one of the most critical factors in the loca:icn of a nuclear plan:, namely an adequa:e supply of cool water, will us-ually prohibit :he location of a plant within your municipal boundaries.

g Milton F. Ken:, FORUM Magazine, Ian. - Mar., '

1967, p. 21.

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_. Sena:or Aiken of my native State of Ver=cnt, I am proud to I say, has already indica:ed his awareness of these types of prcblems which face *he municipal utility. In a recen:

hearing on the I.icensing and Regulation of Reac:crs, he stated,

'One thing I wanted to ask about, following your discussion, is that in granting a license I don't see :hl: you give any weighting to the possible creation of a monopoly in the pcwer supply for an en: ire regicn. Wha I mean is this: suppose there are 20 or 25 utility companies of varying size ser-vicing an entire region. 71ve of them are what we call big boys; the other companies vary in size from pretty good size down to ra:her small, local dieribu:icn systems. Suppose :he five big ones get cgether and say, We will apply for a 750,000 or a one million kilowa:: nuclear plant. When we ,

ge; it, we will squeeze these li::le nuisances right out of business.

How do you handle that situation? Ecw do you act to prevent establishing a monopoly in the hands of a very few people? ' g

'Up in New Enciand, I presume you know that the larger companies which hase applied for a license have now offered to sell stock to the smaller ones who criginally were excluded from their plans. Of course, that is an ideal way, I:hink, of handling the situa-tion if it works, although their application for a license, I believe, s:a:es that :he en: ire amount.cf ,

power will be used by :In companies that are applying for it. Tha:, however, could be changed.

'I think 1: is sericus, because we have used a lot of

, public funds in developing low-cos: nuclear power.

That would be low-cost in the area I come from; it might nc: be in some other parts of the coun:ry.' g g H+arings bef0re the Joint Committee en At omic Energy en :ha I.icensing and Regulation of Reac:crs, April,1957,

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Transcript, pp. 327-8. I W ldd , a: 329.

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! "In replying to these queries by Senatcr Aiken, A.E.C.

indicated tha: if there were competing applications and a question were raised, they would refer it to the Justice Department.

That progress is being made is evident by the fac: noted by Senatcr Aiken, namely, that the Vermont State Public Service Board under the Chairmanship of Ernest Gibson, Jr., has en:ered an crder providing for Vermont Yankee Nuclear Corp. to allow participa:icn by the municipals and coops. This is really a truly significant step by Vermon; and as Senatcr Aiken noted, the par:icipants in this project have authorized an offer to the Vermon:

municipals and coops. While some negotiation still remains as to the offer, it is encouraging that :he concern reflected by Sena cr Aiken and :he Vermon State Public Service Board is being taken into accoun:."

Commissioner Ross further remarked:

"In my opinion, unless all segments of the industry can avail themselves of the economies of nuclear generation through voluntary efforts, it may become necessary to provide legal means to achieve a fair share for the muni-cipals and coops.

Simply put, it has been the taxpayers of the whole nation, priva:e and public, who financed the research and develop-ment of the nuclear power industry. I.iving as we are under the shadow of the nuclear bomb, let's make sure that the one major peaceful use of the atom is available to all at the lowest possible price so that we can at least feel ourselves a li::le into believe that "i:" isn't so bad after all.

In par:icipating in these nuclear pools cr organizations, I see no reason why a municipal, if local or state laws allow it and they should, should not be able to secure its revenue requirements to buy-in through 1:s normal municipal channels.

This certainly is a matter of local discretion and if the tax laws allow :he municipal to raise funds on such a basis to build and opera:e plants of their own, then they should be allowed to cb so here. In addition, condi:icns for buying-in should nc: he enercus for small buyers in comparisen to the large systems. By this, I mean that municipals and cocps shouldn't be required to put a11 their eggs in one basket any

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more than a private system would. Along these lines, then, I would suggest that municipals and cooperatives not be

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3 ._ obligated to buy-in a share greater than the ratio of the private company's interest in the new plan: to its total system supply. In this way, the small system will still be flexible enough to buy from new, =cre efficien: plan:s as they come on :he line. Moreover, municipals and cooperatives should hase the righ: to buy in o a new plan: at least at that same ratio. This would assure the small systems tha: :bir share in the new plan: wculd be more than token recognition."

We repea: :ha: Pied =cn: Cities Power Supply, Inc., a corpcration not for profit and the eleven Piedmont electric cities for the benefit of which said corporation has been formed, hereby offer to supper: Duke in cb:aining jurisdictional commercial licenses under Section 103 of the Atomic Energy Act, upon the conditions that:

(1) Duke abandon its attemp o cbtain non-jurisdictional research and development license not authoriced under section 104 of the Atomic 2nergy Act; and, (2) offer Piedmont Cities ?cwer Supply, Inc., its fair share in the Oconee Nuclear Station, coupled with a satisfac: cry wheeling arrangement :o transmi Pied =cn: Cities ?cwer Supply, Inc. 's share of the Oconee power from :he proposed Cconee Nuclear Station in South Carolina to Piedmont electric ci:1es in North Carolina.

CONCLUSION THE UNITED STATES ATOMIC ENERGY COMMISSION HAS NO TURISDICTION TO ISSUE TO DUKE THE RESEARCH AND DEVELOPMENT LICENSE A?? LIED FOR.

As s a:ed above, Mcvants wculd, willingly and in the public interest, sup;c:: Duke (upon the conditions abcVe stated) if Duke would make applica:icn, correctly and legally, fcr a commercial license. But, until Duke does so, this Cc= mission has no jurisdiction to issue Duke a con-struction permi: or license under :M empty and unfac:ual label of research

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and development.

It is simply beside :he poin that :he Commission has not yet fel:

itself jus:1fied to make a finding of practical value under Section 102 of the Act. And that, until it does,1: may not grant a cc=mercial license under Sectica 103 of the Act. A:omic Energy Ccemissicn (10 CFR ch.1)

(Dedcat No. PRM-102-3) Cer ain types of light, water, nuclear pcwer reac:crs, Notice of Denial of Petitions for Rule Making.

The point is that the Commission cannot enter:ain what is sbwn en 1:s face and in all its substance and parts tc be an application merely for a license to construe: and operate a cc=mercial nuclear electric generator because the physical paper is mis-labeled a research and developmen: license application.

In the words of the Atomic Energy Act, Sec: ion 1(a), the Congressional definition of the term "research and develcpment" is (42 USC 2014(x):

" (x) The term "research and development" means (1) thecretical analysis, explcration, or experimentation; or (2) the ex ension of investigative findings and thecries of a scientific or technical nature into prac-tical applica:icn for experimental and de=cnstra:1cn purposes, including the experimental production and testing of mcdels, devices, equipmen:, ma:erials, and processes."

It is respectfully submitted : hat the Commission should in this case concern itself with substance and not with form. The Atomic Energy Co==ission has no jurisdic: ion to issue to Duke a research and develop-men: license applied for.

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f' Q.s Respectfully submi::ed, Jack R. Harris Sui:e 207 - S:impson-Wagner 31dg.

Statesville, Ncnh Carolina I. O. Tally, Jr.

P. O. Drawer 166C Faye::eville, Nonh Carolina Spencer W. Reeder Spencer Building St. Michaels, Maryland A::crneys for Movants Dated: August 10, 1967 t) . _;

UNITED STATES OF AMERICA

. ATOMIC ENERGY COMMISSION IN THE MATTER OF: )

)

DUKE POWER COMPANY )

) DOCKET NOS.: 50-269 (OCONEE NUCLEAR STATION, ) 50-270 Units 1, 2 and 3) ) 50-287

)

CERTIFICATE OF SERVICE I HEREBY CERTIFY that copies of the foregoing documents dated August 10, 1967, were s =rved upon the follow-ing by deposit in the United States Mail, First Class or Air il Mail, this the +sth day of August,1967:

Samuel Iensch, Esquire Chairman, Atomic Safety and Licensing Board United States Atomic Energy Commission Washington, D.C.

Dr. John Henry Buck The Budd Company Phoenixville, Pennsylvania

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2 Dr. Hugh Paxton Los Alamos Scien:ific Labora:Orf Los Alamos, New Mexico Dr. Clarke Williams Deputy Direc:cr Brookhaven National Laboratory Upton, Long Island, New Ycrk Reece A. Hubbard County Supervisor Oconee County, South Carolina Roy 3. Snapp, Esquire 1710 "H" Street, N.W.

Washington, D.C. 20006 Carl Horn, Esquire Vice Presiden: and General Counsel Duke Power Company Charlotte, North Carolina Honorable Robert McNair Governer of the State of South Carolina State House Columbia, South Carolina Honorable Dan K. Moore Governor of State of North Carolina Capitcl Building Raleigh, Nor h Carolina S:anley T. Robinson,Jr.

Chief Public Proceedings Branch Office of the Secre:ary United States A:omic Energy Commission Washington, D.C. 20545

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Algie A. Wells., Chairman A:omic Safety and Licensing Board Panel United S:ates A:omic Energy Commission Washing:on, D. C. 20545 Thomas F. Engelhard:

Na1 Counsel Atomic Energy Commission Regulatory Station IJnited Sta:es Atomic Energy Commission Washington D.C. 20545 William H. Grigg Assistant General Counsel Duke Power Company Charlotte, North Carolina Harry M. Eightsey, Jr.

Assistan: Attorney General The South Carolina Public Service Commission 325 Hampton State Office Suilding Columbia, South Carolina g

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Special Counsel for Peti:1oners

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