ML17209A489

Order Denying Cities of Gainesville & Tallahassee Motion for Declaratory Order.Parties Have Right to Settle or Compromise Dispute W/O Knowledge of Petitioner.Util 770916 Ltr to Hc Luff & RA Jablon Encl

ML17209A489
Person / Time
Site:	Saint Lucie
Issue date:	07/03/1980
From:	King J U.S. DISTRICT COURT, SOUTHERN DISTRICT OF FLORIDA
To:	GAINESVILLE, FL
Shared Package
ML17209A483	List: ML17209A482 ML17209A486 ML17209A489 ML19351F068 ML19351F069
References
79-5101-CIV-JLK, NUDOCS 8012290404
Download: ML17209A489 (13)

Text

UNITED STATES DISTRICT COURT SOUTHERN DXS RICT OF FLORIDA S

MIAMI'DIVISION Civil Action No. 79-5101-Civ-JLK THE CITY OF GAINESVXLLE AND THE GAINESVXLLE-ALACHUACOUNTY REGIONAL UTILITIES BOARDS THE LAKE WORTH UTXLITXES AUTHORITY, THE UTILXTXES COMMISSION OF NEL0 SMYRNA BEACH, THE SEBRXNG UTILXTXES COMMISSION@ THE CITIES OF ALACHUAg BARTON g FT ~ MEADE g HOMESTEAD g KXSSIl51EE g MOUNT DORA'EWBERRY g ST ~ ) ORDER DENYING MOTION CLOUD, STARKE and TALLAHASSEE, FOR A FLORIDA, ) DECLARATORY ORDER Plaintiffs, FLORIDA POWER 6 LIGHT COMPANY, Defendant.

Plaintiffs have filed a Motion for a Declaratory Order reauesting the Court to order that counsel and officers of de-fendant FLORIDA POWER 6 LIGHT COMPANY (FPL) should not communicate with any plaintiff's officials about this case unless FPL first (1) notifies counsel of record for plaintiffs, at least three days in advance, of the officials and subject matter of proposed discussions, and (2) receives the consent of plaintiffs'ounsel of record for such communication.

The Court has considered the memoranda fi;led in support of and in opposition to the Motion and, on July 1, 1980, heard oral argument on the Motion, and has concluded as follows:

1. There is a strong public interest in the resolution of disputes by way of settlements by the parties, instead of through litigation.

2. Any of the parties to this litigation have a right to settle or compromise the dispute between them without the

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knowledge or consent of their counsel, and the Court may not

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<S enjoin discussions between w'illing principals'in this litigation.

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Lewis v. S.S. Sauna, 534 F.2d 1115, 1121-24 (5th Cir. 1976) .

3. FPL counsel, including attorneys in FPL's Legal Department, represent that they have not communicated with any plaintiff in the absence of its counsel, and that they have 'no intention of engaging in such communications.

4. Officers and employees of FPL whose responsibies are represented not to include legal representation of FPL, including FPL's Vice President, Robert J. Gardner, may communi-

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cate directly with officials of a plaintiff about this case, and each plaintiff shall be fr'ee to determine for itself whether it wishes to engage in settlement discussions with FPL and whether it wishes to involve counsel of its selection in any such dis-cussions.

On the basis of the foregoing, plaintiffs'otion for a Declaratory Order is hereby denied.

DONE and ORDERED in Chambers at Miami, Dade County,

Florida, this day of July, l980.

3M.'(t.h Lll'lI"""" ~5<

JAMES LANRENCE KING UNITED STATES DISTRICT JUDGE Approved as to form:

Attorney o Plaint .ffs Copies furnished to:

Spiegel & HcDiarmid Ervin Varn Jacobs Odom & Kitchen Lowenstein Heenan Reis Axelrad & Toll Covington & Burling Steel Hector & Davis

I P. O. BOX 013100, MIAMI, FL 33101 i~4",

FLORIDA POWER & LIGHT COMPANY September 16 1o77 Mr. H rrv C. Luff, Jr., Chairman Intervenor Steenng Conm)ittee Mr. R. A. Jablon Attorney for ! nie1 venors Gentl er)nn:

I have been asked to respond to your letter addressed to marshall Mcdonald, dated July 2P, !97'?, but apparertly mailed during the first part of Aug!1st, and whic"', is capticned "Settlement of INRC Dockets Nos. P-S3o-A and 50-389'),

et, al."

FPL joins w i th you in des'. ring tn end the p otracted l i ti ga ti or. to which you.

I letter refers. )/ie;;cd as a set.lement proposal, your I tier dces nothin tc advance +': s end. As nea)'s I have been aJle to determine, your proposal simply tracks the requests fcr relief which are contained in your va) ious pleadings before .he NRC, and, to the extent that anyth'.llg new is said, '.. is in the natur= of speci fylng the means OT impleNQnt! ng the measures Ãhi c)'I yc.l

)lave p!'Oposeci. I dr)ui')t that you real ly expect =-ny li ti gant to "sett':I'" 1 egal pl oceedings t)y accui esing in substanti al ly al 1 of the )41i e f requested by t)'Ia opposi')g pa)"".1 es.

However, your '.etter also suggests tl)at its proposals be cons'.d red on the'.>

economic ))arits. Perhaps by doing so and pointing ou. the ecoromi c penal ties

-: ts a ld Gperatirlg burdens w;)icn you) proposals woul d impose upon FPL and

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cus t079rs, I can bring us closer to understanding on"= another's prob 1 e 'lAd advance th day when serious discuss',ons leading to a inal resolut',on o, these matters can b" gir,.

A. Capaci ty Arrano: m n"s You prcpose .hat FP'gree tc sell tc the inte) vening ~ities undivided interests equal to 13.7." in Turkey Point Units Nos. 3 and 4 and St. Lucie Unit Nc. 1, all of wi)ich are now in co)Taercial ope)ation, and a like interest in St. Lucie Ur.

No. 2, which is now under construction. In exchange, you propose to nay scrre-thing in excess of FPL's current book investmerlt for the three units in commer-c'ial operation, to reimburse FPL for its book cost for the interest in St. Lucio Unit No. 2 and tc sell FPL a like amount of capacity in the form of existing oil a))d gas fueled generation on the systems of the various Cities.

From an economic standpoint, you oropose that FPL exchange relative'.y low cost generation for relatively high cost gen ration, throwing in sos)e premium over

>>ok cost for SOBS oF the capacity, but w.'th a very substantial econoaric gain OYLrall fc). the Inte) vel)ors and a corresponding economic loss for FPL. if FPL accept tllis p)'0))osnl, the costs (i >

hei'v'i 1)g I' s ex) s tl I g cus -: ~ -' >

PEOPLE... SERVING PEOPLE

,Messrs. Luff and Jab1on

'September 16, 1977 Page 2 would increase, and it .r would be necessary to increase FPL's wholesale and retail rates correspondingly. To state the obvious, such a proposal is not "economically beneficial...on its own aarits" to FPL.

Nor do I perceive any practical or ethical basis for recorxanding acceptance of such a proposal. To my knowledge none of the Intervenors ever requested participation in Turkey Point Unit No. 3 or 4 or St. Lucie Unit No. 1 during the planning or construction stages. FPL's customers and shareholders carried all of the financial and technological risks of bringing these units from conception to commercial operation. The Intervenors'nterest in these units materialized only very recently, after experience and changed economic conditions have demonstrated the technical and economic feasibility of the plants.

As regards St. Lucie Unit No. 2, FPL has accepted license conditions and offered ownership participation to each of the entities which expressed an interest in participation at or about the time that the application for a construction permit was docketed by the AEC. You suggest that systems which did not express an interest in participation at the planning and application stage should now be offered interests in the facility. As in the case of the operating plants, your suggestion would permit systems to benefit who have borne none of the substantial costs and risks incurred by FPL customers and stockholders throughout the four-year struggle to license this plant.

The area in which there is a meaningful opportunity for our systems to work together concerns future base load generating capacity. I wou1d like to see us resume discussions about developing a joint project in Central Florida, possibly at the East Orange or other suitable site. FPL would'be prepared to consider a commitment to share the risks of ownership of such a facility, preferably through long-term unit power purchase arrangements; we will make available transmission arrangements to assure that any municipal system in FPL's area of service which desires to participate may do so; and we offer to make available FPL's experience and capability in developing and managing large nuclear generating projects. When the large electric loads in Central and Northern Florida are combined with FPL's established capabi lity in developing nuclear projects, there is no reason why a joint project cannot become a reality on an expedited schedule. This would provide the access to base load generation which the Intervenors seek without increasing the cost of power to FPL's customers.

When we first proposed such a joint project, in 1976, the Intervenors attended a few of the meetings but ultimately took the position that they would co+nit no money to the project until FPL met a long 'list of conditions, including agreement to much of the relief requested in the NRC petitions. I hope that you will see fit to reconsider this position.

As regards the request that FPL agree to support certain legislation, the purpose of which is to expand the availability of tax exempt financing exclusively for municipally-owned electric generating facilities in Florida, I do not regard comnitments as to FPL's position on legislation which may be introduced in the future as within the scope of settlement discussions.

B. Partial Re uirements Service You propose that FPL make available "firm partial requirements service" to all municipal systems in the State of Florida. This request must be viewed in the context of the facts as they exist in Florida today.

Messrs. Luff and Jabl n

September 16, 1977 f'age 3 FPL is interconnected with eight municipal electric systems, all of which operate a substantial amount of generating capacity. Three of these systems have lacked the capacity required to meet their customers'ull loads at all times. FPL has provided firm partial requirements service to these Cities to supplement their deficient generation. In addition, FPL has interchange agreements with and is providing emergency and scheduled interchange service ".

to backup the generation facilities of two of these Cities.

The other five municipal systems with which FPL is interconnected all own and operate generating capacity sufficient to meet their loads on a firm basis, and they have interchange agreements and interchange power with FPL on the same basis as FPL interchanges power with other utilities in Florida. The five self-sufficient systems which are interconnected with FPL and the munici-pal systems in other areas of the State have in common that they are not in any way dependent on FPL for their regular supply of power. Sales of power from FPL to these systems other than emergency and scheduled maintenance interchanges are non-firm and are made for economic purposes.

Our management is faced currently with two problems which must be taken into account in deciding on a major expansion of FPL's firm service commitments.

First, particularly in view of the impending, and possibly lengthy, outages of Turkey Point Units Nos. 3 and 4, we are concerned about having the capacity to meet at all times FPL's firm commitments to its existing retail and wholesale customers. Second, we have. had to face the reality that rapid growth in FPL's generating capacity increases the average cost of producing electricity and thus of serving FPL's firm customers as a group.

In these circumstances FPL is reluctant to undertake substantial new public utility obligations, and is aware that offering "firm partial requirements service" to all the municipal utilities in Florida would involve undertaking just such substantial new commitments. For FPL to assume these responsibilities would increase the cost and impair the reliability of service to FPL's existing customers without the consent or the protection of the Florida Public Service Commission. We are particularly reluctant to burden FPL's existing customers in order to extend firm service to systems which have readily available alterna-tives, such as continuing to rely on their existing wholly-owned power supply sources or taking advantage of the joint project mentioned previously. Your offer to sell FPL existing capacity on the Intervenors'ystems, while mitigating the potential reliability problem in the short term, does not alter the fact that the cost of serving FPL's existing customers would be increased by acceptance of your proposal.

The best solution that I know of to our mutual problems in these respects is (i) to assure that the municipal systems have full access to any excess capacity which is more economical than their existing resources, and (ii) to work together to develop resources for the future. To further these objectives, FPL has exchanged economy energy with its municipal neighbors at all times that economi-cal capacity has been available, and a substantial and growing amount of such interchange transactions have been and are being implemented. FPL's operating personnel have made special efforts recently to expand the use of economy energy

l S' Messrs. Luff and Jab'a

,. September 16, 1977 Page 4 transactions. As I recently told representati'ves of the City of Ft. Pierce, FPL is prepared to develop variants of the economy interchange concept, providing for example for a City to shut down its generating facilities over weekends when capacity is available on the FPL system. Secondly,'FPL is prepared to offer a range of transmission services comparable to the proposal recently made to the City of Vero Beach to any municipal system with which FPL is interconnected. This will enable municipal systems to take advantage of economical capacity which may be available on any other system in the State.

Finally, in the long run, FPL is prepared to work with the municipal systems in developing new base load capacity, as detailed in the preceding section of this letter.

These arrangements would be true coordinating arrangements among generating utilities which will avoid detrimental effects on FPL's customers while preserving the independent nature of the Intervenors'ystems. For FPL to assume new public utility responsibilities to supply municipal loads which are now supplied by municipally-owned generation would not be beneficial to anyone in the long run.

C. P llC You propose that all of the utilities in Florida should form a "fully integrated power pool" which would involve centralized planning and dispatch of generating facilities.

The procedures now in place amount to an informal pool among the utilities in Florida. There is substantial coordination, planning, and exchange of informa-tion and forecasts through the Florida Electric Power Coordinating Group (FCG).

The FCG coordinates reserve-sharing among the utilities in the State; and interchange agreements among the various utilities provide for emergency and maintenance exchange and economy energy transactions.

FPL will cooperate in any mutually beneficial effort to improve and strengthen these arrangements. The concepts of centralized planning and dispatching for the entire State require more study and involve disadvantages which must be weighed against any advantages which are demonstrated. A committee of the FCG has recently completed a detailed study of the benefits and disadvantages of planning the electric facilities in Florida on a single-system basis. The results were that the economic benefits at best would be small and there may be no economic advantages at all. The study revealed that centralized planning is not likely to provide any real economic benefits to FPL, and that it might well be economically disadvantageous to FPL. To these considerations must be added the loss of healthy diversity in planning philosophy which would accompany centralized statewi de planning.

FPL is not opposed in principle to centralized planning and dispatch but we believe that such arrangements should produce benefits which outweigh costs for all parties. The choice is not between a "fully integrated pool" or nothing.

The arrangements already in place offer most of the benefits which you apparently perceive in such a pool, and we are continuously working with all utilities in the State to strengthen them.

,Messrs. Luff and Jablon

~ ..September 16, 1977 5 g 'age D. Transmission FPL is prepared to enter into a transmission service contract with any municipal system with which it is interconnected comparable to the arrangement recently offered to the City of Vero Beach. Moreover, FPL is prepared to make available the transmission service agreements required for any municipal system's partici-pation in a joint generating project within or outside of FPL's service area.

It is FPL's intention to provide its municipal neighbors with access to its transmission system in accordance with such agreements, stopping short only of assuming the obli gations of a coomon carrier, which we do not believe the law requires our Company to assume.

The question of "joint transmission rates" between FPL and Florida Power Corporation is not one of concept but of price. No city has encountered any problem in arranging transmission service through the two systems. FPL intends to recover its cost of providing transmission service under any agreement, subject to final determination by the Federal Power Commission. Your proposal to combine the loads of the two systems for the purpose of allocating costs to the Intervenors would permit them to pay less (in proportion to demands imposed) for use of FPL's transmission system than is borne by any other class of users.

Obviously, we do not consider such an arrangement compensatory or economically fair to FPL's customers. In any event, the two companies'ethods of determining costs are significantly different, and the suggestion that FPL and Florida Power Corporation should develop transmission rates in combination is incongruous in a proposal for settlement of antitrust proceedings.

I E. Conclusion In essence, FPL is working with the municipal systems to coordinate power supply planning and operations and is prepared to increase and improve this coordination in any mutually beneficial way. However, our management cannot accede to proposals which directly increase the cost of power or reduce the reliability of service to FPL's customers.

Sincerely, .

obert J"Gardner:

Vice Bresi dent RJG:std

APPENDIX G Additional FPSL Commitment If in the future Company enters into a new participation agreement or an amendment to a participation agreement previously entered into pursuant to Section VII of the pro-posed license conditions ("new agreement") which contains con-tractual provisions which conflict with the principles of Section VII, paragraph (i) of the proposed conditions submitted to the Licensing Board on September 12, 1980, and such provisions are included in such new participation agreement as a result of a final order of the NRC which is no longer subject to appeal and which (a) modifies or deletes paragraph (i) and (b) requires that such contractual provisions be included in such new agreement, Company, upon request of the other party to a participation agreement previously entered into pursuant to Section VII ("prior partici-pation agreement"), will consent to amend such prior participation agreement to substitute such provisions of such new agreement for the conflicting provisions in such prior participation agreement; provided that Company may, at its option, incorporate in such amendment all other substantive terms of such new agreement which differ from the terms of the prior Participation Agreement, including but not limited to provisions for conveyance of an ownership interest which is less as a percentage of such party's 1977 peak electric load than was originally conveyed in such prior participation agreement (in which event Company may include provisions for recon-veyance of the excess to Company). This provision is not intended to affect any authority which the NRC may possess independent of

this paragraph or to limit the right of any party to take any legal position on the extent of such authority.'

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