ML19317E370

Supplemental Memorandum of DOJ on atty-client Privilege.Asks That Carolina-VA Power Pool Agreement Documents Not Be Considered Privileged.Certificate of Svc & atty-client Correspondence Encl

ML19317E370
Person / Time
Site:	Oconee, McGuire, Mcguire
Issue date:	12/07/1973
From:	Brand W, Hatfield C, Leckie D JUSTICE, DEPT. OF
To:	US ATOMIC ENERGY COMMISSION (AEC)
References
NUDOCS 7912170570
Download: ML19317E370 (23)

Text

{{#Wiki_filter:* l<S-7-7] UNITED STATES OF MERICA BEFORE THE ATOMIC ENERGY CODIISSION . In the Metter of ) DUKE PCNER COMPANY Docket Nos. 50-259A_ 50-270A (0conee Units 1, 2 and 3 ) 50-zd/A, 50-369A McGuire Units 1 and 2) ) 50-370A SUPPLEMENTAL MZMORANDUM OF DEPARTMENT OF JUSTICE ON ATTORNEY-CLIENT PRIVILEGE To the Special Master: This memorandum by the Department of Justice is submitted to supplement the memorandum filed by the Depart-ment on November 19, 1973, concerning the scope and applica-tion of attorney-client privilege. The discussion contained herein will be limited to the application of attorney-client privilege to the so-called "CARVA documents," i.e. , documents addressed to or from, or circulated among the parties to the Carolinas-Virginia Power Pool Agreement. The parties to the Agreement, which was terminated in 1970, were Duke Power Company, Carolina Power & Light Company, South Carolina Electric & Gas Company, and Virginia Electric and Power Company, four privately owned utilities operating in the three-state crea of Virginia, North Carolina, and South Carolina. I. Legal Status of CARVA , l CARVA was not an entity in itself, but was rather  ! a contractual agreement between four separate corporate entities.

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The purpose of the agreement uas to attain mar.imum economy and bulk power supply reliability through planning and coordinating the power production resources of the four companies with a view to common usefulness. The agreement did not constitute a merger or joint venture, but formed one type of what is generally called a

       " power pool."   For these purposes, we adopt the definition of power pool set forth in "The 1970 National Power Survey,"

Federal Power Commission, Part I-17-2: The term ' formal power pool' as used here means two or more electric systems which coordinate the planning and/or operation of their bulk power facilities for the purpose of achieving greater econcmy and reliability in accordance with a contractual agreement that establishes each member's responsibilities. Individual members usually are able to obtain the econcaic and other advantages available to much larger systems while retaining their separate corporate identities. CARVA was listed in the " Survey" as a formal power pool. The CARVA Agreement states " . . . each Company will retain its separate corporate identity and individual freedom in rendering service to the public within its respec-tive area." (Recitals to Agreement) The relationship of the Companies to each other and to third parties is stated as follows: 513. Indeoendent contractors. - By entering into this Agreement ror contractual ccordination of power

         ,  production and transmission facilities, the Com-panies shall not become partners, but, as to each other and to third persons, the Ccmpanies shall remain independent contractors in all matters relating to this Agreement.

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s Thus, the agreement itself makes the legal status of the parties abundantly clear--they are parties to a contract and for the purposes of the privilege, nothing more. II. The CARVA Fool in Persnective These are many different types of coordination agreements, but most of them could be classified as falling within one of two broad categories (listed in ascending degree i of complexity):*/ (1) operating coordination making the best cooperative use of existing facilities, and (2) coordinated development which involves making the best cooperative use i of new and existing generation and/or transmission facilities. Pooling under the broad heading of coordinated development, the second category listed above, could be further broken-down into four general types (also listed in ascending degree of complexity): (a) simple transfers of bulk power from cne company's system to another system and not from any particular unit, (b) sales of capacity and energy frcm particular units which have been developed according to the pooling plan, (c) joint ventures or common ownership involving specific generation and/or transmission facilities, and (d) pooling development and operation carried out by a separate operating company which fr tions on behalf of the pool members. .

         */    See Cencrally, " Methods of Cuning and Selling Generating Capacity," Report of the Task Force on Interconnection Arrange-ments of the Edison Electric Institute, August, 1965; "The 1970 National Power Survey," Federal Power Commission, Part I-17.
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i i The types of pooling involved'in (c) and (d) above frequently appear in holding companies, such as the American Electric Power system, er other arrangemens of common cwnership. Pooling in categories (a) and (b) above involve no common ownership but are accomplished through contractual agree-ments between the companies. While the corporate interests of the member companies may be bound together to a certain extent in (c) and (d), there is simply no reduction of corporate soverignty in pools of the (a) and (b) types. With regard to attorney-client privilege, we suggest drawing the line to deny the privilege to (a) and (b) and to extend the privilege to (c) and (d) to the extent there is a common corporate interest in the particular communication involved. The CARVA Agreement would fall within category (b) discussed above. CARVA unouestienably was a sophisticated agreement involving a high degree of coordination. However, the CARVA companies were not bound together to the magnitude of holding companies or joint enterprises with common ownership of facilities; nor was CARVA operated as a single system. Certain generating facilities of each company were designated as " participation units" and purchases and sales of capacity and energy between the companies were sales from ther,ercertain facilities, as opposed to the single-system concept. (Letter of Mr. Carl Horn to Mr. Gordan Grant, Secretary of FPC, July 10,1970, Doc. No. 20236) . In addition, CARVA had no central econcaic dispatch as in more highly developed pools, 4

           "The 1970 National Power Surv6y (Part I-17-2) states that use of the power pool as a coordinating mechanism increased" from 9, uith 23 percent of the nation's generating capacity in 1960, to 23 with 60 percent of the capacity in 1970."    of these 22 power pools, 5 "are holding company groups, with membership consisting only of corporate affiliates." Pools with noncorporately affiliated members " increased from 4 to 17 in the 1960-1970 period" with a corresponding increase in the proportion of the nation's generating capacity owned by these pool members from 12 percent to more than 50 percent.

A hasty check of the 22 pools lisced by the Survey reveals that 131 separate electric power companies held pool membership 1970. Of there 131 companies, 22 are holding company affiliates and 109 comp 9nies are noncorporately affiliated pool members. This arithmetic analysis is given to indicate the Department of Justice's alarm over the prospect of extension of attorney-client privilege to the widecpread mechanism of pcwer pools between noncorporately affiliated electric power companies. Granting the privilege to the CARVA documents in question here, could conceivably serve as a precedent for withholding communications between pooling groups of 109 separate electric power companies. Antitrust enforcement in the electric power industry could be dealt a severe blow by permitting such a protected

" zone of silence" for ccmmunications between attorneys of 5

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                                         .J separate corporations.      Seventeen power, pools representing 109 corporations (nearly alt of which are privately owned utilities) and over half the nation's generating capacity, could effectively immunize conspiratorial conduct from anti-trust prosecution by the simple expediency of having their attorneys carry out the conspiracy.          The court in Radio Corp.

of America /. Rauland Corp., 18 F.R.D. 448, 443 (N.D. Ill. 1955) was :ognizant of this concern in denying the privilege "to commu'.ications between directors, officers, or agents of differen' corporations which are made or conducted by men who happen to be members of the bar." Focusing specifically on alleged :enspiratorial conduct, the court stated, "To hold otherwise would lead to the ridiculous result that conspiracies formed and conducted by lawyers on behalf of corporations would be beyond the reach of the law." Further, extending the privilege to CARVA would be inconsistent with the general rule of construction set-forth by Wigmore and followed consistently by courts. Since the

  " benefits are all indirect and speculative" while "its obstruc-tion is plain and concrete," the privilege "ought to be l

strictly confined within the narrowest possible limits con-sistent wi+ t its principle." 8 Wigmore, Evidence, $2291 at 554 (McNaughteg rev.1961) . In the instant case, the shroud of privilege unaueseinnably obstructs the search for the truth while yielding no compelling need for application of the privilege. Each of the four companies was abic to communi-cate in confidence with its attorney; and if all the reauirements 6

d of the privilege were met, the policies;of extending the privilege w.ould outweigh the policies of disclosure. However, there is no justificatien for e: tending the privilege to situations where Duke's general counsel was advising VEPCO, or even where Duke's general counsel was advising Duke's management and transmitted informational copies to the other companies. To be sure, the four companies had to communicate about CARVA matters, but why should these intercorporate communications be privileged? Here, the policies of full disclosure of all relevant information clearly dominate over any possible need for privilege. CARVA represented a pooling of power and facilities for mutual economic benefit; it was not a pooling of corporate interests. A May 9, 1967, press release of Applicant cuoting Mr. McGuire, President of Duke Power Company, makes this clear: "McGuire emphasized that the CARVA Fool is an engineer-ing plan and has nothing to do with the ownership or financial status of the individual companies." (Applicant's Doc. No. 21132) The contract itself, in addition to reciting that the companies will not become partners but will be independent contractors, to each other and to third parties, states further: (a) each company shall construct and pay for its own facilities and be the sole owner of those facilities, regardless of the extent those facilities are used in the Pool - 53; (b) each company shall keep its own records - s4; (c) each company shall seek regulatory authorization - 55. It is also signifi-cant that CARVA had no separate operating company, as in some pools, no central staff, and no general counsel.

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CARVA had no interests apart frca the separate and often different interests of the four parties. A July 14, 1 1969, letter of Arthur M. Williams, Jr., President of South Carolina Electric & Cas, to Shearon Harris, President of Carolina Power & Light, is illustrative (Applicant's Doc. No. 46550):

        . . . We have been talking here in the Ccmpany for scmetime about what ue feel is the necessity for providing at least one common designate to act as executive director--or whatever the title might be--

of the Pool. As matters now stand, no one is, in reality, advancing the interest of the Pool without some regard to the interest of his respective company. As I recall, this possibility was dis-cussed in the early beginnings of the Fool, but shelved. I agree that the time has certainly come to take it off the shelf; and, ' believe, to imple-ment it. To the best of our knowledge, despice Mr. Uilliam's suggestien no executive director or manager was ever appointed. Thus, not only the Pool agreement, but the actual operation of the Pool evince a clear intent to keep corporste affairs apart while cooperating in technolcgical or engineering matters for mutual econemic benefit. The companies stood not as partners or joint venturers, but as parties to a mutually beneficial contract. We submit that the management of each company cwed'a fiduciary duty to its corporation, but no s uch duty existed between the four companies inter cese as in the case of partners. For example, VEPCO had no right or duty to participate in a decision by Duke to issue securities, declare dividends, promote personnel, or settle a dispute with a cooperative over. territory to 8

be served. In short, while nonaffiliated electric power companies may pool generating facilities for cutual benefit, they pool corporate aff airs and legal advice at their own risk. If the privilege is to be extended to any power pools, it should be those where corporate interests are inseparable from engineer-ing or technological interests, as in holding companies, and not where corporate interests are intentionally kept out of the pool. Perhaps the only direct precedent available for this problem is the decision by the Board In the Matter of Consumers Power Co., (Midland Plant, Units 1 and 2), AEC Docket Nos. 50-329A, 50-330A (1973), holding that a letter between attorneys for Consumers Power Co. and the other members of the MII0 group, was not privileged (see attachments for '"the 1970 National Power Survey's" descriptiens of MII0 and CARVA). MII0 is a planning and operating agreement between six privately owned utilities in Michigan, Indiana, Illinois, and Ohio. While not as extensive or sophisticated as CARVA, MIIO, as reported by the " Survey" involves substantial inter-company development and operation of facilities, including: coordinated load proj ections , coordinated planning for reserves , coordinated system stability studies, joint or staggered participe tion in facilities development, exchanges of capacity and energy, coordination of reserve including spinning reserve, and coordination of maintenance. The significant point is that 9

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1 both CARVA and MII0 involved cooperative use of technology and facilitics and not pooling of corporate affairs. The CARVA documents, like the MIIO letter, are not validly privileged.*/ 1 l I l 1 l l 1 l

  */   See also the attached letter between an attorney for Consumers Power Co. and the attorney for the Village of Chelsea, 1 Michigan, conferring about testimony to be presented before the Michigan Public Utilities Ccmmission, which was found not privileged by the Consumers Bo ard.

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III. Special Note on DOJ Hos. 86 and 88 The Department sees no possible justification for extending the privilege to 00J Nos. 86 and 38. In DOJ No. 86, Mr. Horn, General Counsel of Duke, apparently rendered legal advice to his client, Mr. Parker, Executive Vice President of Duke about a prop osed agreement between South Carolina Electic & Gas and S. C. Public Service Authority (Santec-Cooper). Assuming all the requirements of the privilege were present, the document would be privileged. However, DOJ No. 87 transmitted copies of DOJ No. 86 to members of the Executive Committee of CARVA. (DOJ Nos. 86 and 88 are the same dccument.) This act destroyed the requirement of confidentiality for sustaining the claim of privilege. Accordingly, the document cannot be privileged. Applicant offers as justificaticn for this breach of confidentiality, an apparent link between CA2VA and the pro-posed agreement in question. It appears that Santee-Cooper, desiring membership in CARVA, was refused such membership and offered an agreement with S.C.E.&G. instead. If this be the case, the matter in question involved the corporate affairs of S.C.E.&G. and Santee-Coopar. Duke has no legal right to advise or discuss 'with another company the corporate affairs of that company and expect the communications to be privileged. 11 l

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CARVA was an engineering plan accerplished by contractual agreement; CARVA had no interests of its own and the corporate interests of the four parties were intencienclly kept out of CARVA. Mr. Horn was not an attorney for S.C.E.GG. , or any other CARVA member. Each company hed its own atterney and was quite capable of receiving privileged legal advice without relying on the general counsel of another company. If Mr. Horn was attempting to advise other corporations, the privilege fails for lack of an attorney-client relationship. If Mr. Horn was simply advising his own. cliant, and informational copies were sent to the other companias, the privilege fails due to breach of ccafidentiality. The Department submits that the dcaial of access to coordination to Santee-Cooper by refucing it membership in CARVA, may have been one ele =ent of a conspiracy between four separate corporations. Cone.;:i. rterial ec=mnications cannot be privilegad simply because cr attrrney is involved. Radio Corn, of America v. Rauland Cerm. ,13 P.R.3, 40 9, 443 (N.D. Ill. 1955). Granting the protecti:n of privilege to DOJ Nos. 86 and 88 is not only lega,lly wrong but cbstructs the search for truth while distorting the policies en which the privilege is founded. . e 0 12

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Conclusion , For the reasons stated above, the Depcrement asks the Special M: ster to find the CARVA documents not privileged. Respectfully submitted, f 0 YL$ C. Kent Hatfield L:n, i h) g Wallace E. Brand David A. Leckie Attorneys Antitrust Division Department of Justice December 7, 1973 Washington, D.C. s e

Sziien I-Cecrdincted Mancing ccd Ct. .icptnant "MllO" GROUP U/shica.ind!=c-h!in:.is-Chio)

a. The resp:m.ibilitid f the Planning Commit-

1. Type of Organization tee inchip , , ,

Planning and Operating Agreement. {1) amtcr.a; stud.ies and mvestigattens k4 to mutually agreed upon recom-

2. Historyof Development merainms to the parties conccming Starting in 1963, repre entatives of the Michigan adec;mcy of interconnection facilitics, Pool (Consumers Power Company-The Detroit stag rdng of construction and adequacy Edison Company), Amedean E!cctric Power, Com- of gecratin;; reserves, both individually monwealth Edison Company, Northern Indiara and er.??ccthcly.

Public Service Company and The Toledo Edimn (2) Keq;h; abreast of all advances in en-Company formed a planning group to imestigate gineering ted.nology in fields allied to its the technical cnd economic feasibilities of EHV respasibilities and recommending the de-interconnections between Michigan and Indiaa.* velopent and adoptivu of new methods and between Michigan and Ohio. This group a'w

 ,                                                                                          and psible modifications of the inter-developed preliminary contractual agreements Ier                             conmetion agreements.

consideration of each party's management. In (3} The cond<icting of engiricering studies March 1966 interconnection agreements between to deennine the feasibility ei increasing the above parties were signed by the managemc::ti er a5nning the efrective amount of of the parties.Two 315,000 volt deuble circuitinter- interconnection assistance emeryncy connections are to be ccnstructed and be in scriice ayapa;e.

             - in 1969. Michigan tenninals of one of these dou5:c-

b. Tce du:i:s of the Operating Committee circuit lines will be at Detmit Edison's Wayne Sub-station with the lines proceeding south through iwfude.:

             -Consumers Power territoiy with one touchern te:=J-                        (y Tim coordination of the operation of nation at Toledo Edison's Lemoyne Substation md                                   .,h m's respective facilities in order to cany out the tenns of the agreements.

the oth er tarmmaten at AEP's Fostcna Centnri' . Q) NL natters pertatmng to the coorch.na-Substation. 'I.he otner 045,000 volt double.c.tretmt interconnection is to terminate at Consutsirs tm f rnair,tenance f thegeneratingand Power's Palisades Substation and the lines precer.ii tmissi a facilities f the parties. southward to AEP's Olive and Twin Branch {3) AZi =atters pertaining to the control of Substation. sne, frequency, energy flow, kilovar ex-change, pcmcr factor, voltage, and other

3. List of Members

a. Con:umers Power Company. similar mattets bearing upon the satis-

b. The Detroit Ed: son Comoany.

factory synchmnous operation of the sys-

c. Northern Indiana Public Serv. ice Compamv- - tems of the pac.ics. .

d. Commonwealth Edison Company. (4) Such other matters not specifica.dy pro-vided for .m the agreements upon which

e. American Electdc Power. .

f. The Toledo Edisen Company. -

cooperat. ion, coord. mat:on and agreement as to quantity, time, sncthod, tenus and

4. Requirements for Participation conditions are necessary in onler that the Limited to the six parties as listed in 3 above.

operation of the systems of the parties

5. Orgar.' na! Structure including Oficic/ P..ri.

m17 be coordinated to the end that the

                    . tions, . - Comrittees and their Functions, sti                            yatential savings in operating costs will be Methods of A. itin; at Decisions Afec:h:g                               reaT=ed to the fullest practical extent.

Group Members of the Coordinct Ccaml Two committees have been established to carn .W decisicea respecting expenditures for intercon-out the objectives of the parties under the MUO nectids faci!!Mes are mutually agreed upon by the Agreement. A Planning Committee and an Opern:- man 2gements of the parties. ing Cormnittee. i I M -107 , k

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            .6. Practices in the Planning e ' Dculoprnent of                        staggering of cor~ruction of generating facill-Scilitics                                                           ties and will be plcmented throughout the

z. Coordinated load projections Y**

7. Opcrating Practices Each patty develops individually its own load projections for the existing year and fu- a. Exchanges of capacity andenergy 4 ture years up to and including 20-> car pro- The agreements have provisions for firm jections for economic studies. The combined purchases and sales of capacity and energy loads are utilized by the Planning Committee '

imm specific units er from a system for a long- ' . In all their engineering and economic studies. term purchase. The contracts also have pro.

b. Coordinated planning for reserves vision for capacity and energy transacticns on The reserve requirement for each party is a short-term basis, i.e., wcekly. For emer.

developed individually by each party. How- gency conditions all reserve in the entire pool ever, the year.by.3 ear planned reserves of the is availab!c to the part/ that is meeting the

entire group are reviewed uy the P!anning emergency. The centracts have provision for Committee to determine the adequacy or in- exchange of energy for maintenance coordi-adequacy of reserve generating capaci;y and nation and for exchange of energy on an eco.

- trannnission facilhies being provided. If it nomic basis with such costs being made on a should be found that one party is plac,m g a split thc savings ban.s. Prov. . mons for seasonal burdca upon the other, t! ;mty causing such . d.iversity exchanges are also .meluded. burd:n shall take such rncasures as are neces-sary to ecmoye the hurden from the other b. Coordination of reserve including spinning reserve  ; parties or the parues shall enter into such arrangements as shall provide for equitable As stated in Item 6 above, the planned re-

- compenution. se

Te for the Grcup is coordinated by the Prctr.bility analyses of each party's generat- Planning Committee- .' t the time the inter- '

l ing units are cenducted whh further prob- connections are in service there will be com- , abih,ty stoches meshme the entire group per- , ,. . .

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formed to detennine on a probability b. ids the E"# # ."""". reserve required for a given planning criteria. c. Coordm."ttor. a of Mainunanu ,

, At the time the inscrconnect. ions are m L c. Coordinatelsystem staility

tudies service the day-to-day c:intenance is planned l Comprehensive system :tability and Icad to be coordinated to assure maximum reli-flow studies are conducted for all years begin- ability of the systems _1raintenance coordina-i - ning with the in.scrvice date of the mtercon- .

t. ion is presently hem.; utih.eed for plannm.g nectiens. They .me!ude stud:.cs for that year Purposes by the PIanm.ng Comm.ittee.

and studies for' future years with the addition of new scncratim; units and new interconnec. d. Economic dispatcfr including description of tions. The<c studies .'re run for selected con. control facilities tingencies and include disaster ca:es such as Alichigan, which includes Consumers loss of an cntite generating plant. Power and Detroit Edison, will operate at the

d. Joint or stqg: red participation in facili!!es time these interconnections are in service dcvelopment fmm a Joint Dispatch Center which will be I The interconnections are participated in completely coord! hated with the other parties' .

jointly. The centracts have provision for dispatch centers-Om m .. . WW W ., :3 - I U-2-103

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CHAPTER IV

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STATSdENT OF COORDINATION ' Generel various commit:ees and special working groups on which each company has representation. Imp!c. i Cwdination of operating pircedures and plan- . mentation of the agreement has pennitted members ning for reliability of power supply are in cEcct to install !arger size units with attendant economics ' between the various sp: ems in the Somheast. This in first cost and opemtion, and has resulted in the is being implemen:cd by Reliability Coordination shared development of plans for an extensive EIIV Agreements between neighboring sv>tems and pooh. bulk power tiansminien system among the Pcol as wc!! as by joint study programs conducted by companies. Scmc 00 miles of 500. kilovolt trans-systems on a less formal basis. Dhcussicns are now mission wi!! be in senice by 1975, with a major being held to put into effect other similar formal portion comp!cted by 1972. agreemcnts. Fm ther, other such committees and special In mest ca:es, the work involved in coordination working groups plan and coordinate operational is canied out by committees or special working raatters, gene:ation schedules, construction and groups. These committees meet periodically for the maintexance schedules, resenc requirements and purpo.c of discus irq prob! cms ard implementing power interchange. studies ! ading to increaoed rel:abi!ity These dis-The CARVA Fool companics, individually and cussions and studies deal with matters such as een- c n n, , :. g c,..+ . . . . .: E: -=.,2 ,n ,,a:;,g ,,nn cration and transmissic, ;;ianning, construction area r.nd regi nal croups intercs:cd in coordination schedo!cs. operation, maimenance schedu!cs, spin-of etcetric fr.milirics for maximum reliabili:y and ning rc<crve requhemem>, and mu:ua! asshcance economy of <ervice to all custome:s in their service durin; cmergencies. area. Statements en coordination prepared by the vari-ous systems are listed below. In April 1967, the CARVA Pool memben signed a reliability agreement with members of The SopM'- CARVA Fool ern Company Power Poc! intendcd .o fuitbeian ment reliability of each company's,.befk pow [g-The CARVA Pool, enmpnsed cf Cam!Ina Power supply through ccordination of thqxempanies', pean-

    & Light Company, Duk2 Power Ccmpany, South                 ning for and operation of theippnera:icn shd bulk Carolina Electric & Gas Ccmpany, and Virginia              power transmission facilitier.,

f E!cctric and Power Company, was formeci at:er An in:cr-area reliability coorbruion agreement several pats' planning and argonation direc:ed was execute i betw/cn CARVI, East Central Area toward increasing coordination over the wide -co- Reliability CoordinatimrCommittee, and Midd!c graphical area served by the companics. The agree- Atlantic Area Reli2l9lty CoorJination Committec ment, wh!<.h went into fu'! cfTect on May I,1967, on Nctember 15, 1063. A pcssible coordination was the culmination of etTerts based on a mutual agreement with TVA is also being studied. desire to attain ma3:imum economy and bulh pouer Joint studies of bulk power transmission facili-supply reliability for the beneit of oser 2.6 miilion ties are in picurers between the CARVA companics customets in the States of Neith Camlina, South and d.e American E!cctric Power System; CARVA Carolina, Vhqinia, and a small part of Wdt Vii. and :he Southern companies; and CARVA and the ginia. Under :he CARVA agicement, the com- PJM interconnection. panies are specifically committed to under: ale joint All the CARVA c,mpanies have been part of planning and operation of transmission and gen- the Interconnec:cd Systems Group for many years. cration. This now is being accomplished through Each individual member has interconnection II-3-32 ,

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               *ag reements with its neighl ~ which to a greater or             participating revml years agA to t!iat thcir opera.

tions woukt be b r coordinated with those of the feuer degtte, involve put . ae and sale of power, three investw. owned spe:ns. The cc,tamhtee mem-exchange of infonnation, mutual auistance during bers have no attthesity to enter into cor.tractual emergencies, establithment cf operating procedures and joint studies of plans for traannission aficcting agreementi, to m.mit Geir organization to con-struction of facindes, yr to establish practices more than one company, all of which contribute to which are natin 2: cord with individuel organization i.nprm ed coordination. These intercor.nection

                .wreements, for the most part, were in existence be-          policy. T' e con;::dttee (ces serve as an execl!cnt fore formation of the CARVA poel and before the medium tiuogh ,..hich natual op:: rating problems inter-area agreements refened to above were con-               are reviewed cud moind in such a manner that

!uded. They continue as effective complements to technical cperations arnery wet! coordinated. This

    '                                                                          comir.itte e. Lno.vn as the Florida Operating Com.

the more embracing inter area ap cements. mittee, new mceu en a bl. monthly basis. In its meet-The CARVA Pcol companies nic represented on [' the National Electric Reliability Council. ings,it fecusa atention cu such matters as spinning

    '*                                                                         resetsc, t:adesfrtq tency relay protection, relaying and adepate cor .munications between diapatching S            The Florida Group centers h also ccordinates maintenance schedules and secc,ramends and moni:cs !cng range planning             j For purposes of this report, the five major utili-studies and stability ex.mdnations for use by the five ties in Peninsular Florida, who coordinate their op-r                                                                          indivicht:f utilities. T1nre are no "pcoEng" con-crations through ir@rmai committee action, are tracts or ecmmi:ments aumng these systems.

idrntined as the Florida Group; furthennore, for simplicity, this group is sometimes referred to as a Spimh.; rc5erve is voluntarily shared and main- { " Pool" with the understanding the term is applied tained to protect the instutanemaloss cf the largest

    ,                                                                           generat!ag unit in ren&c. The reserve is distrib-in the broadest unse, and does not connote a fonnal pool.

uted to trcugh operad:g units with proper gov-

Peninsular Florida is served by Gve principal ernor 'elaracteristics so dat a frequency drop of less thr.2. Sve-tenths of a cycle wi!! provide the full suppliers, Florida Powcr Corporation, Fiorida Power & Light Company, Tampa Electric Com. benefitt tf each mem*:e's share of assistance. The pany, and the mtmicipal systems of Jacksonville full shan el ca..:n nm. der's reserr nust be avail-l' abic to all other m-mbers and noc restricted by

           .       and Odando. These suppliers, surrcunded on three limitark:a of tensfot err, lines or other equipment.

sides by water, subjected to hurricanes and the high-est incidence of lightn!r.g in the nation, undertake In abner:nal .Guatiara shere the spinning reserve i to stand on their own feet and pmvide their oc re- of a m --h r is drier ua:available or or.ly partia!!y e.crves. They are strongly imerconnected and com- availabh the member :otices the others sa that 1 I prise what has come to be knmen as the Florida their spih:aing . serves may be incicased or reallo-

• Group. In emergencies each supplier aids the cated as :cgired. Every system disturbance is thor.

Florida system in troub:e to the .naximum extent oughly a= ped by the operating committee to of its resources. Notwithstanding the fact that cach check the respe=se of the generating units of each Florida supplier operates his own system in the most member in :nating the emergency. The amount of economical manner consistent with its individual re- spinning res: rue required is constantly under review.

                  - quirements and policies, there is a strong recogni-                To ascM art excessive number cf generating units
 .!                  tion of the need to coordinate operating matters.            being oct of service simultaneously for maintenance and to.ihure the ma dmum availabiUty of installed An informal committee was established in Janu-ary 1959 by the three imestor. owned utilities listed         reserves,:b five individual systems coordinate their mainta=tnce :checht!cs through the Fiorida Operst-j                    above for considering and ccordinating mutual J                      prob! cms relating to interconnected operation. The          ing Cm=it ce.

committec consisted of engincedng and operating Load ehedding has been used as an emergency personn:1,and informal meetings were held on a preced:m by =cmbers of the Florida Group since 1957. Fu some time two ot the systems have had randomlr scheduled basis. As the activities of the ' I*) formal committee proved to be beneficial, repre. capabithy of shedding more than t,000 megawatts of load by underirequency relays, and since the five

                      =entatives of the Jacksonville and Orlando munici-Pal systems we-c asked to participate. They began            systems are strongly tied together, this protection II-3-33 I
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                                                                                                       "' / < '                  CODSUMOTS I N T E R N A L C O R.R E .S P O N D E N C E                                           sD                POWOT C0mp3Dy I
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Octobcr 13, 1%7

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                                                           . Enclosed is. copy. of a letter dated .0ctcber 13, lW7 vhich I have sent to each law /ci ~ representing a jnrty' to the ~M-I-I-0 contracts. The enc 1ccu-es with the letter cet fcrth the proposed revisions to the Facilitiec Agreement cnd the prcposed crendment.to the Operational Agreenent between the Michigan Cc panics and Indiana Co=per.y. 'Inc enclosures are the carc ac those which you revicued pur-sucnt to I:7 letter of September 25 except that no reference to the -

crosc-State lines to be ccnctructed by Censu= crc power ami Detroit Edison is cade in Section 1.03 cf the Facilitics A.greement. l The map (Appendix A) reflects the preposed changes which I discucced with you ba/ telephone yesterday. If ycu are not in agrec=ent with n'1 of the change: en the rap, plcace centact me

                          'cn Menday and I will notif/' the other lar/ers by letter of your desired ccrrecticns.

Yours very truly, s HPG/ab H. P. Graves Enc

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gg;;.r3;1y i General Coun set K./ Geneemt off.ces: 2:2 West u.cnegan Avenue..lackson.u.cr aen 4020s . Area Code S17 700 0910 October 13,1%7

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.. .s ,.. ,3. xu u m y,j- .y... g g...g .g .g. g ..o f August'll, 1%7; I am

    -       -       ;cnclosing new drafts concerning.the proposed cha.nges in.the Facilities Agree =ent and in the Operating Agreement between the Michiga.n Co=panies and Indiana Cc:pany.          The new drafts have-also been sent to cach of the other lavycrs representing a party to the M-I-I-3 centracts.

In connecticn with the Facilitie: Agreement, the changes are so numercus that it vculd appear desirable *.o have a new printing of the entire ie;reement so as to have a " clean" ccpy. Accordingly, cne of the enciesures sets forth the portions of the Fac"itics Agreement as to which changes will be =ade and I have unt'erlined the changes.. Attached to this enclosure is a preposed revisits of the map (Appendix A) en which I have made several additienal pro :ced changes. The bal-ance of the /q;rectent dces not appear to require any = edification, ex-cept that the date en the cover should be chan.r_d 1Y :s March 1, 1c66 to September 1,1%7 and the reference to Appe iir A in the Centents should confora to the new caption of Appendix 1. With respect to the Operating Ag: cement between the Michigan Cc= panics and Indiana Cc=pany, the verds._" Indiana Cc=pany" should be changed to "Censumers" in line 3 of sectien. 3.02. Since this is the only change to be made in this Agraa~nt, I suggest that

  .                   the change be handled by a Supple = ental Agree ~e as set fcrth in the enclosure.

I hope that we can conclude thia matrer at an early date. To this end, I would appreciate receiving your - ents by Octcber 20.3 1%7, if possible. Sincerely yours, HpG/sb H. P. Graves . 255h por na e m x w.- & - i gn ; a.. .,+ , n ., . ; :... . . m 3. a , ,

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2 D@@T CONSUMERS POWER COMPANY GENEn/.L OFFICES o J ACKSON. .N!!Cl!IG AN - LEGAL DEPATsT.\!ENT

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• D. R. BOOD

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D**' g ~T%g J.1. BACON R.F.CODD01,r O h WW b_ _ . Y u _, A. D.13 ASS ATTCRNETS

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• JCl4N P. K.CUSCH -

ATTonncy AT law CH et.s ca. MicHIG AN 23 December 1964

               ~

• Mr. Judd Bacon, e

               ' Attorney 1037 Consumers Power Company Building O             h       D   '3'     yf 212 Michigan            Avenue, o w     JM  a  [[   ,
                                                                                                                                   )]  j\.      ,

J ackson, Michigan

Dear Judd:

i In accordance with our conversation of yesterday, the' is enclosed herewith the Village's copy of the September 14 D @ 4..A 9.r,,c e m e n t eith Consuners Power Company relating to the

      ~nb . ,,_, . - sale of certain' di's'tri~buti'on' f acilities ;anci.a, . contract for .
       'M k : " future service.                          .   . ,..       .,,,,..,,,g,,,,,, ...,.,c~,...,... _:,; c ,c being a copy of the projosed Bill of Sale Exhibit "B" has been altered by deleting the words " outlined in green"so as to conforn with the language of the Agrcr.ent. M r . Howa rd lia sclschwardt , village president and George                                         k!inans , village such td=c as a proper clerk, lyave initialed the change. At representative of Consuners Power Cenpany has indicated                                             to either approval of the change, Ityou                  nay        return      the is my understandir.g that we wi31  .4;rcement Mr. h'i nans or =yself.                                                                                          in        -

receive the Conr.umer Power Cc=pany's copy cf the Agreement c>: change for the or.e enclosed. Mr. Ni::en will, I an sure, prior to the hearing have an independent statement as to the replacer. cat costs of the This distribution f acilities being acquired by tie Village. the Village will renove any doubt occasioned by his belief that could have constructed duplicate facilities for a lesser suc. Very truly yours, O t/ t

                                                                        '            ~
                                                                                                                  .    ( .\pA) .

e John P. Keusch

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                         . UNITED STATES OF AMERICA       .

BEFORE THE ATOMIC ENERGY C0>2 FISSION D**D *D'9~ o [f oj .wJ31 _m In the Matter of )

                                       )      Dochet Nos. 50-269A, 50-270A DUKE PONER COMPANY (Oconce Units 1, 2 cnd 3                )                        50-287A, 50-369A McGuire Units 1 and 2)               )       .                50-370A
                             ,C_ERTIFICA?E OF SERVICE I hereby certify that copies of SUPPLEMCUTAL MEMCRANDUM CF DEPARTMENT OF JUSTICE ON ATTORNEY-CLIET? PRIVILEGE, dated December 7,1973, in the above-captioned matter have been served on the following by deposit in the United States mail, first class or air mail, this 7th day of December:

Honorable Ws1.ter W. K. 22nnetc Mr. Frank W. Koras, Chief Chairman, t.tcmic Safc:y and Public Proceedings Ercnch Licencing Ecard Office of the Secretcry of Post Offica Box 135 the Ccemissica Pinchurst, North Carol.ina 28374 U. S. Atemic Energy Ccamission llencrable Joseph F. Tubridy Atomic Safety and Licencing Board Joseph Rutberg, Escuire 4100 Cathedral Avenue, N.W. Benjamin H. Voaler, Escuire Washington, D. C. 20016 Robert J. Verdisco. Escuire Antitrust Counsel for AEC ilonorable John B. Farmakies Rc;;ulatory Staf f Atcaic Safety cud Licensing Board U. S. Atomic Energy Commission U. S. Atcaic Energy Lcr.11ssion Washingten, D C. 20545 Ucshington, D. C. 20545 William Warfield Ross. Escuire Mr. Abraham Braitaan, Chief George A. Avery, Escuire Office of Anrierust and Indemnity Keith Waston, Ecouire U. S. Atomic Energy Ccc_e.ission Toni K. Gciden, Escuire Washington, D. C. 20545 Wald, IIerkradcr & Ross 1320 Nineteenth Street, N.W. Atemic Safety and Licensing Washington, D. C. 20036 Board Panel U. S. Atomic Energy Ccmmission Carl Horn, Esnuire Washington, D. C. 20545 President, Duhe Power Company 422 South Church Street Chair 7.an, Atomic Safety and Charlotte, N:.rth Carolina 23201 Licensing Appeals Board . U. S. Atomic Energy Cc:. mission Washington, D. C. 20545 -

Uilliam H. Grigg, Esquire Troy B. Cenner, Esauire Vice Presicent Duke and General Counsel Pcuer Comtany Craner &'Knotts 422 South Church' Street 1747 Pennsylvania Avenue' N.W. Charlotte, North Carolina irashington , D. C. 20026 28201 W. L. Porter, Esquire David Stover, Ecquire Duke Poucr Ccepany Trlly & Tally 422 South Church strcet Suite 307

• Charlotte, North Carolina 28201 13C0 Connecticut Avenue, N.W.

Usshington, D C. 20036 J. O. Tally, Jr., Esquire ' Tally & Tally

• Post Office Drawer 1660 Fayetteville, North Carolina 23302 ~ * *
• l' D If D h oo o .b $ =

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Aterrney, Antitrust Division DT.zrtment of Justice Washington, S. C. 20530 e # 9 e I a

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