ML19329E839
| ML19329E839 | |
| Person / Time | |
|---|---|
| Site: | Midland |
| Issue date: | 01/26/1976 |
| From: | Brunner T, Ross W, Watson K CONSUMERS ENERGY CO. (FORMERLY CONSUMERS POWER CO.), WALD, HARKRADER & ROSS |
| To: | |
| Shared Package | |
| ML19329E831 | List: |
| References | |
| NUDOCS 8006180634 | |
| Download: ML19329E839 (54) | |
Text
{{#Wiki_filter:- -
.m. s .,; ,;b '
g
, - o f_ c w .
s,-} :
- f. ,
.m u .
/
f- b M. m:. :M'.R h *s u;: .wwm' ss ,
;;.r:1 w
+.x* t, .
r ,. , n,
.;. . .
.- . . . .' x' ,
w ; w . , , - , a wer:m&y-
, .. +
, % y ' ,~ . -
v.
' Y : .d4
~
i T iUNITED STAT 5S OF AMERICA
~
e ' .
' N. UCL5AIREGUL'ATORY' C'OMMISSION s ,. .
, j hy[\ - .
y'. [ e, . .i .s S.
; w m.. _
, r + . -
x '.' - s;.i ,^ $ ;f ,N. v...,-r , Q
-1; ,,7 u.
.g
. . .. s, .
.v. gg --%".h2**'1
.,,,A
.c u , ~
;.L
^
,a 1' 'f i . , ,
, J_ , *'j .. -
. y:'r v. W ry.u
- ,, ~' '
-4 s I , . r!Q t i V~ ' -
A.v M ec '
+, e ,a
- In 'the. Matter of "w : #
- ', ~
' '[ ' ', '
wMM~
~ "
-' Docket Nos. 50-329A
'CONSU.ME, RS POWER COMPANY
< and 50-330,d ; ~.,
uOY ..,. .md .aD
- (Midland Units 1 & 2). - .s , . ,
.t y sc..m W,x.; w~,%
1 .,,_ ,. _ ., .,%s .m ,
, . o\ w,s w .m. .
e r n . e:.g. m , .- u ,
>;'*
r ,
.M ,
.~ -
~,, ,
e [",)- ~Q:n%:rN'*f e
. ry4 ,+ e y:? h.
e.
. ;0
. ,4 -
s .u . ,
. ,. ' .. ..e To the. Atomic Safety and Licensing Appeal Board: ' %." y..Q(?x ,
v e
.n
, !p d
. .;' .
- q. y . \ . d y '.' .g-
- - s~,p-. m. g-[4,,
u. a .- -
.m. +
/
.. s %r,h8 qxh, s n /
+vg.m .n up:m.n.%;
x
.a ..
~. -
- g. e~ .ch,.ww
. ~ - . ..
- j ,;,.. ,
M + g:.
'? BRIEF OF ~
A t @ m -en
- %[ O * - .
CONSUMERS POWER COMPANY
..+:
' ' i.. ,
- m
@~. -ev k. *
. w g. ;
.F.b. ,6
...:. ~. .. ..s ~ > . - ;,w . 4
. . << * .PARTll
- : v tfG. p /d
#g:- ;y' " .A <,. 3 m..N.,,
4 . :+- x1,
..m>
., . .s ,o , ...-
. . m.g p.
.g,-_
,, o, ,, ,
s r.-
;. - .- .~ . -
- s. e y.
. ; ,. +
w .,s..n,
.- Qyw,.m!r+: m :
- h ; M**,. n,3
.4, '
i [.? ,
. . -;
< q: ' _ .. - ;+; -.-
- y tp:..&: r.p.: A . ,
. .e . 7, - . 3 ,
- y. . - -
7; , ,,.p.c g n .t; a., e : . ,
- n. ,, ~. .,y, s .
~ c .
. - . ., ;;. n a, . ,;
. . . 2 n.::a cJ s. . 7 "9 p ' 3*;
-e Y- ,
..WM. WA RFIELD .ROSS, 1 . . t,
, - (KEiT.H S WATS.ON,
;WU$%;h.O F.
, ., ~ -. . .
s LTHOMAS W. BRUNNER, , K,V.Q -
' ~
rMA,Rl( SCHATTNER, #,.s. O M NE' ' -
? ,
sGERALD B. WETLAUFER, . f " W W,..J _ , :w , - - v . ,;.
-4
, + f. , : 9 %f '
*~
4, '
' Attorneys for Consumers.
~
. ww. ' ": < $ 4ND., ...' '
. - w. # . . # y
",,,n., ~w.,
.a. :;,- = Power Com,pariy
~
3;
.-i, M.,y M ,$,g .ti Q-.s,
- e. . .. .. ,
~- :
6'u x .,W
.. ALD, HARKRADER & ROSS J 4 4? .1320 Nineteenth Street, N.W.
~
. f" JAMES B. FAL_AHEE, '
Washirigton, D.C. 20036 ', a
. .WR *v WAYNE A.+KIRKBY s' -
.m,<- - ,
- a. m u ! - .: '
. :y w T.,-
.- r . ..
+e u.- . a, . o. .
y _* .- . r - r 3 4
,c.- . ,. ,v .
Of Counsel' m w i ;"
~
4 _ 7 4 ' ,.. T 4 " o x
/., : . . gm 1 a,- , ,
; j' e m , . . -. m;/
w y;.n % 4..:1. . p o ,
<;
, .y
, ,, . , , ., pg _
o ~
,, , yx-CONSUMERS POWER COMP NY[ * ~ ~~
- ,p[ .
D'N_ ,7-212' West Michigari Ave'nue ~ \ - "e. I I Jackson, Michigan -49201 :.
~~, , .
.r..
'w !.O >
% r. .-
- C ?
January 26,1976iu * , , \ ' I
,. , 5 ;. e
',,'i. 4 1
,-?.,,,"
;-
s R ", p + l _ E a
% e y- *- ,d .r *i ~
( y j n
'#. ., J-p t
- n /
**'. y se ; e
, 3,
, ' 4 -
~
- h I+a'_' ,
s , 4
,- ;
1..? F.4-W , , , ,
- ' 7 . s ..
.( -T .gs..
, 3 v.
-i.. . . -,
y- . , ,
.w ,
- c' g .- i
;). .
p ,. u.. _Q 4 6 yggg,. %rg , jg. [y}yg7fyy ;q
, n., jwg,my y ( 4. y , _
u' -
~ -
, , . , _ :; . ,
, n . .
- w. ~ . 1 :. . ,
- w . e -; : u t n -; - W . ~,- D ,
i
- 362 -
VI. The License Conditions Proposed By Our Adver-saries Are Unnecessary, Unreasonable And Unlawful. t The Initial Decision concluded that the activities I of Consumers Power Company under the Midland licenses will t. not create or maintain a situation inconsistent with the antitrust laws and, we submit, the foregoing sections _, demonstrate that this Board should affirm that holding. In the event the Initial Decision is not affirmed, we
'~
i urge that the case be remanded to the Hearing Board for further consideration -- including, if appropriate, the [ examination of possible license conditions. The Hearing
,_ Board, of course, did not have occasion to pass on the i
reasonableness or the lawfur.nesc of our adversaries' pro-posed conditions. It is our position that the Hearing 6
"~
Board should be afforded that opportunity prior to review by this Board. All of the benefits derived from the rendering of an initial decision by those who have actually conducted the e proceeding apply fully to the formulation of complex and poten-
~
tially costly license conditions. As this Board recently ob-served in rejecting certification of an issue in the Davis-
.- Besse antitrust case, "it has not been satisfactorily explained I
_ to us why we must step in before the Licensing [ Hearing] l d L e A E s Ae
& -M 4
- 363 -
r 1/ Board has passed upon the question " - Here, as in that { . . . . _. case, permitting the Hearing Board to act would enable this Board to "have the benefit of that Board's reasoning" and I also may render moot, or at least reduce the scope of, many
-- 2/
of the issues now presented to this tribunal. Moreover, the relatively brief period required to accomplish this result would create no undue delay since the Midland operating licenses
! (and hence the proposed antitrust license conditions) will
[- not be effective until the Units are ready to go on line -- some four years in the future.--3/ We recognize, however, that this Board could choose
,_ to reject our position and draft license conditions without a remand. Thus, we address here issues raised by the license r
conditions proposed by the other parties. In discussing these matters, we in no way intend to waive or minimize our position that there has been no showing of a situation inconsistent with the antitrust laws and that no conditions are required or auth-c orized.
--1/ Toledo Edison'Co. (Davis-Besse Nuclear Power Station, Unit '- 1), NRC Dkt. No. 50-346A, Memorandum and Order (ALAB-297),
slip op. at 3.(Nov. 5, 1975).
^
2/ Id. at 3-4; see Subsection IV-A-3, pp. 199-202, supra.
~ _3/ Tr. 9161. We do not understand our adversaries to urge that any license conditions should take effect before
~ ~ the Midland Units come on line. Obviously, there is no nexus between any alleged antitrust situation and the licensed units prior to the operation of those units. l 1 l 1 w
=~
- 364 -
I' ( A. License Condition Principles. l- We disagree with the contentions of our adversaries t which would have this Board impose onerous and open-ended license conditions that would permanently shift a substantial par t of the economic burden of power production from the In-
. tervenors to Consumers Power's customers. While there are many deficiencies in their proposals, they are particularly defec-tive in three respects; specifically the proposals (1) would i impose inappropriate and unjustified burdens on the Company L
and its customers, (2) lack any " nexus" to the Midland Units m and (3) ignore the regulatory authority of the Federal Power Commission. We explore these in turn. 1. Unjustified Shift in Power Production Costs.
'j Perhaps the most significant deficiency of the other parties' license condition proposals is that they would sub- .r-stantially and inequitably burden the Company's customers --
thus unfairly transferring costs from one group of customers The unduly burdensome pro-to another no more worthy group.
~
visions will be identified and discussed in later pages. At this juncture, however, it is important to note that this
'l tribunal must take account of these burdens in draf ting any u
license conditions and must tailor those conditions to prevent
;
such burdens. This principle was clearly articulated by Chief Justice Warren, writing for a unanimous Supreme Court, in reviewing the action of an administrative agency which had blocked the consummation of a merger on antitrust grounds: _q
t
- 365 -
,, "Our duty is to give ' complete and effica-cious effect to the prohibitions of the
;- statute' with as little injury as possible g~
to the interests of private parties or the general public. . . . [T]he choice of remedy c is as important a decision as the initial construction of the statute and finding of a L violation. The court or agency charged with this choice has a heavy responsibility to tailor the remedy to the particular facts
; of each case so as to best effectuate the remedial objectives just described." Gilbert- -- ville Trucking Co. v. United States, 371 U.S.
j 115, 130 (1962). (Emphasis added.)
,- In Gilbertville, the Supreme Court reversed a decision of the Interstate Commerce Commission because that Commission had not shown that its choice of a broad remedy
{ was reasonable. Here, relief proposals of our adversaries are intended to provide preferential advantages to the smaller systems. In so doing, they will necessarily impose significant I
- i. additional costs on Consumers Power's retail customers. More-
^ 4/
over they are totally unjustified by competitive realities. -- a This is precisely the type of unnecessary " injury . . . to the interests of private parties or the general public" the 5/ Gilbertville Court cautioned against. [ _4/ See pp. 384-89, infra.
--5/ To similar effect is Papercraft Corp. v. FTC, 472 F.2d 927 (7th Cir. 1973), striking down an FTC order prohib-
'iting a divesting firm from competing for the customers of the divested company. The court there stressed that questions of propriety are particularly raised when I the remedy selected is "an untried and blunt instrument" l
_ which is itself anticompetitive in effect. 472 ?.2d at 933. See also Reynolds Metals Co. v. FTC, 309 F.2d 223, 230-31 (D.C. Cir. 1962) (opinion by then-Circuit Judge Burger).
r'
.I i - 366 -
I { Applying these principles to the license condition
... proposals of our opponents highlights their unreasonableness.
t i conditions which provide for coordination with unreliable or [ non-self-sufficient systems, transmission obligations which permit " cream-skimming" of existing loads or service areas,
, and untimely unit access requirements without reciprocal oppor-
- tunities will significantly increase the costs of electric I
~-
6/ service to the Company's customers. In this light, this Board must ask itself whether the antitrust laws and the s public interest would be served by license conditions which have the primary impact of increasing the cost of power to Consumers Power's customers, so as to decrease the cost to I the customers of its smaller neighbors -- most of whom al- [~ ready enjoy lower rates.
- 2. Lack of Nexus.
1 The second principal deficiency is that many of 1 I
,, the conditions proposed by our opponents bear no relation l whatsoever to the Midland Units. Thus, the proposals go far j ~
beyond providing fair and meaningful access to the output of Midland and would require the Company to engage in an variety l of coordination and wheeling services wholly unrelated to 7/
" backing up" any entitlements to Midland power.--
l 6/ See pp. 384-89, 401-413, infra. _7/ See Wolf Creek I, NRCI 75/6 p. 559.
{> (
- 367 -
'l. . 4 For example, under the proposed conditions, Consumers
'I Power would have to coordinate on a rigidly-mandated basis with
(-
' systems that do not elect to take any share of the Midland Units and would have to provide general wheeling services for distribu-f tion systems that neither own their own generation facilities nor choose to purchase a portion of Midland. --8/ These proposals are clearly inappropriate and merely reflect the continuing i'
effort of our adversaries to use the instant applications as a jurisdictional pretext for obtaining regulatory control over all bulk power relationships between Consumers Power Company l se and its smaller neighbors. This Commission has specifically recognized that J' its antitrust authcrity is limited to matters tied to its overall regulatory responsibility. In Waterford II, supra, the Commission made clear that the " substantial connection" : 7'
.. to licensed activities inherently required by Section 105c
~
applies equally to alleged anticompetitive practices and
" proposed forms of relief from them." 6 A .E.C. at 621. (Em-Phasis added.) As the Commission explained, Section 105c "does not authorize an unlimited inquiry into all alleged anticompetitive practices ,
- _ in the utility industry. The statute in- l volves licensed activities, and not the electric utility industry as a whole.
If Congress had intended to enact a broad
- - remedy against all anticompetitive practices
- - ~
_8/ Department's Appeal Brief at, 186, 187-89; Staff Appeal Brief at.87, 92; Intervenors' Appeal Brief, App. A at j_ 1, 5. L ,_,o
l'
- 369 -
l' 4 respecting such liquids. It also claimed that it could not il effectively exercise its regulatory responsibility respecting
-(
'the natural gas if it were not also empowered to regulate the
,r
- l liquids. Despite the Commission's broad authority in this-10/
-. ' area,-- 'the Court of Appeals rejected the argument, holding that:
~
" Congress did not give the FPC carte blanche to take whatever action it might consider ap-propriate in furtherance of the objectives e- of-the Act. The Commission cannot gain juris-
,) ' diction over an activity simply by character-izing it as part of a " total transaction" of _ which another part happens to be subject to i the FPC's control . . . .
. . . We recognize that the Commission must ,- have some mechanism to assure that injustice does not result. The proper method is not, however, to extend the Commission's jurisdic-tion beyond that granted by Congress." 483 if F.2d at 1248-49. (Footnotes omitted.)
- -
This substantial body of law strongly underscores the' Commission's judgment'in the Waterford cases that license .~ _. conditions must have a " substantial connection" to the licensed facility. Despite the Commission's clear pronouncements >- in this regard, our adversaries argue for expansive, open-ended l relief. For example, the Department ass"-as, without cited I-a
- authority or explanation, that the scope of the Conu i ssion's a
--10/ The FPC is broadly authorized to impose "such reasonable terms and conditions as the public convenience and neces-sity may require." Section 7 of the Natural Gas Act, i 15 U.S.C. S717f(e).
- ?
y t ( - 370 - licensing power under Section 105c is at least as expansive as the remedial power of a district court after a determination
- l. 11/
' of an antitrust violation -- even though it urges, at the i ;
same time, that an inconsistency for licensing purposes is less than a violation. Although the Intervenors' brief at least offers some
- rationale in this regard, it is unpersuasive. The Intervenors rely principally upon Niagara Mohawk Power Corp. v. FPC, 379 r F.2d 153 (D.C. Cir. 1967), for the proposition that this f
Commission possesses unlimited conditioning authority. How-ever, only the FPC's legal authority to back-date an admit-tedly proper license was at issue in Niagara Mohawk.--12/
.- Moreover, the specific license condition at issue was directly i
4 11/ Department's Appeal Brief at 180-82. 12/ In Niagara Mohawk, a utility had built hydroelectric pro-jects without obtaining FPC licenses. When Niagara Mohawk sought licenses for these projects in 1962, the FPC granted licenses specifying effective dates of 1941 and 1949, thus
, subjecting the licensee to retroactive annual charges and certain other liabilities. There was nothing in the Fed-i .- eral Power Act which specifically authorized a retroactive l time period, but nothing also which forbade it. In re-jecting the Company's complaint that those provisions could not have been made effective retroactively, the court held that under the novel facts of that case, "the Commission does have statutory authority to assign an effective date earlier than the date of the issuance of the license . . . . " 379 F.2d at 157.
I - L
r q
- 371 -
tied to a specific failure to adhere to a statutory licensing requirement. That.is far different from the unrestricted
\ Commission power, advocated by Intervenors and their allies I in the present case, to impose license conditions unrelated l
to the Midland Units, under a statute which contains a standard 13/
-~ } of conduct linked to those Units. ~
l l P --13/ The other cases cited by the Intervenors are even further i [ removed from the question of the character of the nexus l requirement applicable to license condition proposals in this proceeding. The Intervenors' Appeal Brief, App. ; B at 84 -85, relies by analogy upon the language in Gulf States Util. Co. v. FPC, 411 U.S. 747, 760 (1973), that
,, the FPC " serves the important function of establishing l
} a first line of defense against those competitive prac-tices that might later be the subject of antitrust pro-ceedings." However, that statement has nothing at all F to do with the kind of relief the FPC could order and, i
indeed, implies that a comprehensive remedy for "those competitive practices" might have to await the " antitrust proceedings." Five of the cases they cite -- United Gas
- f. Improvement Co. v. Callery Properties, Inc., 382 U.S. 223 u
(1965); FPC v. Sunray DX Oil Co., 391 U.S. 9 (1968); Atlantic Ref. Co. v. Public Serv. Comm'n, 360 U.S. 378 (1959); FPC v. Hunt, 376 U.S. 515 (1964); and Texaco, Inc.
.[. v. FPC, 753 F.2d 149 (5th Cir. 1961) -- deal with the
, power of the FPC to prescribe a price as a condition of a certificate of public convenience and necessity granted under Section 7 of the Natural Gas Act. Another of the cases, Admiral-Merchants Motor Freight, Inc. v. United States, 321 F. Supp. 353 (D. Colo.) (three judge court), aff'd, 404 U.S. 802 (197L), simply upheld an ICC order denying a rate increase and directing the repayment of interim rates in excess c f the allowed rate as a condition of granting an extension of time. Most puzzling of all is the citation of Russtil v. Farley, 15 otto 433 (1882), in which the Court held that, as a condition of granting an injunction to stay proceedings at law, a court may require the plaintiff to enter an understanding as to damages in the event that the injunction proves to have been wrongfuly granted.
~
r - - --r - y- -y ---g *- -r-y
T' { Ir ( - 372 - 7 ( Equally untenable is the Staff's position that, once [ a finding of antitrust inconsistency is made, the Commission is i free to reorganize bulk power relationships in any manner it
,. 14/ ; believes desirable. The cases cited by the Staff for that hypothesis, International Salt Co. v. United States, 332 U.S.
I 392, 401 (1947) and United States v. E. I. duPont deNemours & Co., 353 U.S. 586, 607-08 (1957), are not remotely analogous
--15/
to the situation presented here. Thus, should this Board reach the issue of appro-priate license conditions, it should reject the blanket claim i of our adversaries that there are no parameters to the Com-
; mission's conditioning authority under Section 105c. Rather, we submit that the Commission may properly do no more than insure nonapplicant. systems meaningful access to the licensed units, i.e., participation in units and whatever "back-up" services, if any, are shown necessary to effectuate such access.
w..
~
14/ See Staff Appeal Brief at 78-80.
--15/ In the duPont-GM case, the Court faced the unusual chal-
'" lenge of undoing the impact of an illegal arrangement'that , had been in effect for 38 years at the time the Court I wrote. In International Salt, the defendant had entered i into at least 790 illegal tie-in transactions, causing the l Court to stress the problems of dealing with widespread l consummated antitrust violations. By contrast, any impact l of the Midland Units on Consumers Power's neighbors will, _: by definition, be prospective since the Company itself will not enjoy any benefits from the Midland Units until they come on line some four years from now. w y..m,__ ._ - -_ , . , _.
F ( r ( - 273 - L The object of this proceeding is to assure that the [- Company's activities under the Midland licenses will not main-( tain a situation inconsistent with the antitrust laws. Assuming, I arguendo, that any license conditions are authorized, pro-viding other electric systems the 3pportunity to obtain meaningful access to the output of the Midland Units would effectively nullify any antitrust situation maintained by l I the Units. Since any possible antitrust impact of the license [ would thus be neutralized by such a condition, Section ( 16/ 105c does not authorize the Commission to go further. -- L Of course, such access may not respond to all of the alleged antitrust issues involving Consumers Power Company. But.any such antitrust allegations unrelated to the Midland Units should properly be the concern of the Federal courts m and the FPC. Their resolution is unnecessary and inappropriate g L, to the reactor licensing responsibilities of this Commission.
--16/ Certainly, there is nothing in the text of Section 105c or in its legislative history to suggest that Congress ., intended license conditions imposed by this Commission under Section 105c to reach beyond the ownership and operating arrangements of the specific licensed facility under any circumstances. Were the Nuclear Regulatory Commission, whose authority over electric utilities in other respects touches only a single type of generating source, intended to be empowered to order antitrust m relief which relates to a utility's overall operations, and which intrudes into the establi.shed jurisdictions of other government agencies, Congress surely would not do so silently and by obscure implication. The sheer i ~~.
unlikelihood of that Congressional intent should prompt this Board to avoid such an anomalous result. See l Sections II-b'and II-D, supra.
I ( r b - 374 - f 3. The Role of the FPC.
- The third principal deficiency of our opponents' l
( proposed conditions is their failure to take adequate account of the responsibilities and expertise of the Federal Power Commission, which are expressly recognized in the Atomic Energy Act. Most of the license conditions sought in this proceeding
- address matters which are typically and appropriately the i
regulatory concern of the FPC. Although several of the proposed I conditions would be beyond the authority of the FPC to impose in ( the first instance, all involve types of transactions overseen 7 by the FPC where the underlying contracts are filed with that L agency. M/ While this Commission has the responsibility to I assure meaningful access to the Midland Units if it finds I that a situation inconsistent with the antitrust laws would rr otherwise be created or maintained, this license conditioning u authority should not be extended to include the formulation c of the specific rates and terms of t'ransactions deemed necessary to achieve such access. Rather, any license conditions sanctioned by this Commission should recognize that such matters are 17/ Boston Edison Co., FPC Dkt. Nos. E-8187 & E-8700, Order Denying Application for Reconsideration (Nov. 18, 1974); Connecticut Light & Power Co. v. FPC, 52 F.P.C. 175 ~ ~ (1974); City of Huntingburg v. FPC, 498 F.2d 778 (D.C. Cir. 1974); City of Cleveland v. Cleveland Electric Illuminating Co., 49 F.P.C. 118 (1973), aff'd in
? art, remanded in part sub nom. City of Cleveland v.
PPC, No. 73-1282 (D.C. Cir. Jan. 9, 1976); NEPOOL Power Pool Agreement, 48 F.P.C. 538 (1972). 1 MS
, -y-- - - . . _ . ._, .c g_ ., y
7 4 ( - 375 - P ( the proper concern of the FPS and should provide only that the rates and terms of the specified arrangements be filed 4 I there and made subject to that agency's regulatory authority. This approach was followed in Otter Tail Power Co. v. United States, 410 U.S. 366, 381-82 (1973), with the support of the
^
18/ { [ Department of Justice.-- We submit it should be also be followed here. 18/ Brief of the United States at 99-100, Otter Tail, supra, ( i The Court in Otter Tail noted that the relief ordered by the district court had carefully avoided conflict with the FPC's authority and hence "[a] t present, p there is only a potential conflict, not a present con-r crete case or controversy concerning [the authority of the two forums]." 410 U.S. at 377. Regarding sub-stantive issues, while Otter Tail rejected notions of total antitrust immunity (410 U.S. at 373-75), the
-;
Court in no way second-guessed the FPC or infringed upon its authority. Indeed, on a crucial point of
;" exper t judgment, the Court quoted the FPC as the basis L of its holding. 410 U.S. at 380, especially n. 10. Thus, far from refuting the FPC's pre-eminence in the regulation ri of electric utilities, Otter Tail provides express sup-port for the primary role of the FPC.
Significantly, the FPC reads the Supreme Court's decision in Otter Tail the same way. In Boston Edison Co., FPC c Dkt. Nos. E-8187 and E-8700, the FPC in its Order Denying Application for Reconsideration (Nov. 18, 1974) discussed the Otter Tail case and its jurisdiction over wheeling in light of that case. It concluded:
"It is clear from [ Otter Tail] that we are not ousted from the authority granted by the Federal Power Act because the transaction involved relates to wheeling.
' We are under no necessity to order wheeling because Edison agrees to wheel but the questions of discrimina-a tion and the tariff questions raised require our con-sideration based upon a factual record.
" "We agree with Norwood that parties cannot confer jurisdiction upon the Commission by consent. However, Footnote continued --
+
e4 _ ___ . _ . _ w *r" ' ""'" *
- l r l t
1 i
- 376 -
J c. i ( This position is based upon the well-accepted l r- principles of administrative comity and primary jurisdiction. I Under the primary jurisdiction doctrine, an antitrust tribunal e refers to an administrative agency those matters within its 19/
-~
specialized competence. As Judge Clark wrote for the Second
. Circuit, "the outstanding feature of the doctrine is properly
- said to be its flexibility permitting the courts to make f
a workable allocation of business between themselves and I' the agencies." CAB v. Modern Air Transport, Inc., 179 F.2d ( 622, 625 (2d Cir. 1950). i' 1 i [ While the primary jurisdiction principle has generally evolved in 'the context of court / agency relations, [" Footndte continued -- m under the Federal Power Act we obtain jurisdiction when utilities make cales or transmit electric energy in interstate commerce for resale. There is no dispute that Edison's wheeling power from NEPCO
._, to Norwood would be an act which would bring the transmission within our jurisdiction. We therefore v may properly consider the terms of the transmission arrangement under the standards of the Federal Power Act. It is an entirely different question whether
_ Edison can refuse to engage in such transmission or abandon such service. As long as Edison '3roposes to l i wheel power for Norwood or engages in suca wheeling we have regulatory responsibilities apart from any authority to order wheeling, and those responsibi-lities include resolution of the notice and damage issues which Norwood would impose on the District Court." Slip op. at 2-3. (Emphasis added). l 19
~~/ See, UT3. zuwge..,(1973).
Ricci v. As Chicago Mercantile Exch., 409 Ricci makas clear, primary juris-l '~ diction is quite independent of the antitrust immunity granted by some regulatory arrangements. Id. at 303 n.13. l
F 1 m b - 377 - (- the doctrine is equally applicable when the particular institu-r tions are both administrative agencies. In the court / agency relationship, referral of regulatory questions to the agency is designed to give the greatest possible effect to the regu-latory scheme while the court resolves those overlapping issues principally within its own authority.--20/ In the same _ vein, it is appropriate for agencies with overlapping respon-sibility to insure that to the fullest extent possible their
," respective regulatory programs are given effect. --21/ Thus, as 'l with the court / agency relationship, the doctrine of primary
[ jurisdiction requires the accommodation of overlapping regu-
,. latory schemes when coordinate agencies are involved. Cer-tainly that is the case where, as here, one agency's role is to conduct an antitrust inquiry which is similar in some respects to that of an antitrust court.
A principle of administrative comity which paral-
, 1els the primary jurisdiction doctrine is the practice of
" deference" to sister agencies on matters within their area
~
of expertise and responsibility. This practice of deference
~
is employed even though the deferring agency is also charged with the concurrent responsibility over'the matters which m sJ
--20/ Far-East Conf. v. United States, 342 U.S. 570, 574 (1952); United States Navigation Co. v. Cunard S.S.
Co., 284 U.S. 474, 481-83 (1932). i 21/ Cf. United States v. Borden Co., 308 U.S. 188, 198 (1939).
E r
- 378 -
r i were determined by the sister agency. We believe that the r circumstances in this case present a classic case for appli-r cation of the " deference" doctrine. r
; This doctrine has been applied in a setting which i
is the precise converse of this proceeding. In Northern California Power Agency v. FPC, 514 F.2d 184, 186-87, 189 m (D.C. Cir.), cert. denied, U.S. , 44 U.S.L.W. 3204 1 (U.S. October 7, 1975), the Court of Appeals endorsed the i FPC's determination that this Commission and not the FEC had I jurisdiction over an antitrust dispute concernin9 ownership
\
L arrangements for a jointly-constructed nuclear power plant.
~
Several other agencies, in actions endorsed by the
'~
appellate courts, have followed the same approach. For example, f in National Association of Women's & Children's Apparel t 22/ Salesmen -- the Federal Trade Commission declined to re-examine f L a determination of the National Labor Relations Board that
," the respondent in the FTC proceeding was not a " labor organiza-i - ,
tion," a status which would have immunized the respondent against the antitrust allegations involved. . 4
--22/ 77 F.T.C. 988 (1970), aff'd, 470 F.2d 139 (5th Cir.),
cert denied, 414 U.S. 1004 (1973). ti. 23/ Similarly the Federal Communications Commission held that it will " defer" to the Federal Trade Commission in deter-
.1 mining what is false or deceptive broadcast advertising. . _ . See Action for Children's Television, 50 F.C.C. 2d 1, 9 (1974): Alan F. Neckritz, 37 F.C.C. 2d 528, 532 (1972),
aff't,, 502 F.2d 411 (D.C. Cir. 1974); Consumers Ass'n jt ,, 32 F.C.C. 2d 400 (1971).
, eh w
-(
r
!{ - - 379 -
t-f- Whether it is termed primary jurisdiction, as is typ-i al in urt litigati n, r deferen e, as has been done by some C t'
'- administrative agencies, the basic precept running through this
{ t-body'of law is constant:- the on-going viability o an adminis-trative agency's regulatory policy requires other adjudicators to refrain from passing on issues properly within that agency's
- r. jurisdiction. License condition proposals relating to the i '
Company's system-wide operations fall squarely within this l 1 P principle. i
\
As with the more orthodox court / agency relationships, <r a' question arises in agency overlap situations as to which l agency should defer. In the court setting, this guestion , ~ . is resolved by reference to the degree to which the agency l i
\
- p . possesses authority to regulate the activities being scruti- ;
- (~ 24/
l nized. We submit that in the present case the resolution I of that balance with regard to questions such as transmission
- w
- service and cooordination arrangements is plain. ;
in.
$3 The overlapping regulatory schemes here are those l 25/ j created by the Federal Power Act,-- and the Atomic Energy
.~ : 24/ See, e. ., Ricci, supra; Pan Am. World' Airways, Inc. l h, v. Unite States, 371 U.S. 296-(1963); Luckenbach S.S. Co. v.. United States, 364 U.S. 280 (1960), aff'g
, per curiam on these issues, 179 F. Supp. 605 (D. Del.
_ 1959). 25/ See Federal Power Act, $202(b) 16 U.S.C. S824a(b); S205(a), IT U.S.C. SB24d(a); S206, 16 U.S.C. S824e; S207, 16 U.S.C. 5824f; FPC v. Florida Power & Light Co., 404 U.S. 453 , (1972); FFC v. Southern Cal. Edison Co., 376 U.S. 205 (1964). 4
. . . - - - ,.,m - o--+e w ~ - - ,,,,,.-w-.. ._p.,
m, 9 ,,_g,,.-,..n,- g p, p.m..#y--,,-e. .< n- _ . .,- - --e-,,:-.- .,- ,. _m
F i r~ {
- 380 -
26/ Act. The authority of the FPC over rates and other condi-
! tions of bulk power service under Section 205 of the Federal F Power Act is clearly plenary. Reflecting the FFC's comprehen-t sive responsibility, the Supreme Court has specifically barred inquiry by a court into the reasonableness of wholesale elec-tric rates subject to FPC jurisdiction and required dismissal of an action partially dependent on that issue. Montana-Dakota
'-- Utilities Co. v. Northwestern Public Service Co., 341 U.S.
I~ 246 (1951). The FPC's regulatory authority extends to terms and 27/ I- conditions of unit access arrangements, coordinated opera- ! l 28/ --29/ ! tions, - coordinated development and bulk power wheeling P' 30/ L. transactions. --
- By contrast, the Atomic Energy Act provides that i
"[e]very [ electric] licensee [ engaging in interstate commerce]
shall be subject to the regulatory provisions of the Federal 26/ 42 U.S.C. .SS20ll, et seq. 22/ Connecticut Light & Power Co. , 5 2 F.P.C .17 5 (1974 ) . 28/ City of Huntingburg v. FPC, 498 F.2d 778, 784 n.31 (D.C. % Cir. 1974). 29/ NEPOOl Power Pool Agreement, 48 F.P.C. 538 (1972). 30/ Boston Edison Co., FPC Dkt. Nos . E-818 7 & E-8700, Order Granting Hearing on Petition for a Declaratory Order and Consolidating Proceedings (Sept. 25, 1974), l
- s and Order Denying Application for Reconsideration I (Nov. 18, 1974).
l l j -. l-
F 1 r-h - 381 - l f Power Act," Section 272, 42 U.S.C. S2019. An even more explicit p provision assures that
"[n]othing in this chapter shall be con-y strued to affect the authority or regula-tions of any Federal, State, or local agency with respect to the generation, ~
sale, or transmission of electric power produced through the use of nuclear facilities licensed by the Commission." Section 271, 42 U.S.C. S2018. Indeed, the Commission has represented to Congress thiit it
, has no authority over rate matters and would presumably have i
disclaimed jurisdiction over other specific terms of electric 31/ service as well. -- l Thus, for example, the rates at which coordinated l
-32/ ,
services are provided should not, as the Intervenors propose, - l be established at this Commission. Not only is such rate-making 33/
.. beyond NRC jurisdiction-- but also no record exists which would permit the establishment of such rates. The establish-ment of different rate levels for different systems often may 31/
-- Letter of Lee V. Gossick for L. Manning Muntzing, Director of Regulation of the AEC, to the Hon. Warren
_ G. Magnuson, Chairman, Comm. on Commerce, U.S. Senate, July 6, 1973, in S. Rep. No. 792, 93d Cong., 2d Sess. at 60-61 (1974). 32/ Intervenors' Appeal Brief, App. A at 6-7.
--33/ Louisiana Power & Light Co. (Waterford Steam Generating a -
Station, Unit 3), Memorandum of Board With Respect to Appropriate License Conditions which Should be Attached to a Construction Permit Assuming Arguendo a Situation Inconsistent with the Antitrust Laws, RAI-74-10 p. 718, 734 (ASLB Oct. 24, 1974) (" supervision over rates is the particular province of the Federal Power Commission
. . . . ").
L
i i 1 l 1
;' - 382 - ;
I I be justified or required by particular circumstances or by s an evaluation of a particular coordination arrangement F- 34/ [ - as a package. It would also be inappropriate for this Board to dictate rate guidelines -- e.g., rates "no higher than those charged to any-other utility" -- to other regulatory
~ 35/
authorities. - In sum, this Commission is required by principles l i of administrative law and, at least implicitly by statute,
- c. to properly recognize the responsibility and expertise of
)
l the FPC. That recognition, we submit, must reserve to the (~ FPC the determination of the specific terms of arrangements, ! 'L if any, held to be necessary to assure meaningful access to ip l.. the Midland Units.
, Applying the foregoing principles to the license con- l
- - ditions proposed by our adversaries compels the conclusion that i
~
l many of them are unreasonable and inappropriate. Their j proposals encompass unit access, coordination and wheeling.
- he.4 i- I l
~
34/ Tr. 9, 24, 27-28 after 8838. 35/ Intervenors'. Appeal Brief, App. A. at 2. Not only are these questions within the scope of the FPC's regulatory jurisdiction, they have recently been raised by the j essentially same intervening systems in the Company's ' ?-; current wholesale proceeding at the FPC. Consumers Power Co. , FPC Dkt. No. ER-76-45. Indeed, as we have noted, tee intervening systems have urged the FPC to condition
- the Company's wholesale rate filing so as to require exactly the same conditions proposed here.
l m e 9 ..-,w , .- - - . . . - y e.-., ,.,----m-,- - - - . .vr.,-,....-,y-3 im . - - , ,-w .,rm.. -
F l - 383 - r In the next subsection, we examine those aspects of ( p_ these proposals which relate to the Midland Units, while { the following subsection analyzes the proposals which have F no relation to Midland. B. License Condition Proposals Providing for [~ Access to the Midland Units.
,_ The draft license conditions of our adversaries would require that other systems be granted the opportunity to p purchase an ownership interest in or, at their option, to pur- l chase the output, on a " unit power" basis, of the Midland ,-, 36/
l Units. Such proposed conditions should be rejected. We have previously explained why the Midland Units L are neither " unique" resources which will significantly af-fect the Company's cost of bulk power supply nor " essential" resources in which other systems must directly participate ~ in order to remain financially and competitively viable. ! However, assuming, arguendo, that license conditions are
,_, deemed necessary to assure adequate access to Midland, there e are three possible methods to achieve this result: wholesale l purchases, ownership interest, or unit power purchases. Each
['u of these alternatives is examined below. 1 I e - t a
-- 36/ Department's Appeal Brief at 185; Staff Appeal Brief at 84; Intervenors' Appeal Brief, App. A at 4.
37/ See Subsection III-D-2, pp. 114-24, supra.
*w e a n -. , . , -..---..w.. ,, , , -
g 4 -,.-->.y<r
1
- 384 -
P ( l. Access Through Wholesale Purchases.
-. In the Initial Decision, the Hearing Board succinctly i
I articulated the reason why a wholesale purchase arrangement
'[ is the most equitable and appropriate form of access to Consumers
- i. 38/
~~
Power's generation units:
"First, the simple fact is that in the relevant geographic market, most of the tax-
-. payers are directly receiving benefits of nuclear power because most of the users of
.~ electrical energy are direct retail customers of Applicant. Many of the remaining taxpayers
[' are retail customers of Applicant's wholesale L customers. By exercising the option to buy wholesale power from Applicant, the remaining r- smaller utilities could participate directly. j In other words, the facts in this case show that most taxpayers in the relevant geographic
,_ market benefit from nuclear power. The others do not benefit at their choice or at the choice of the management of the smaller utilities sup-
,~.
plying power to them. m "Second, the argument has been made that nuclear power is low-cost and, therefore, the
,, smaller utilities have to have direct accecs to low-cost power in order to be competitive.
v _ "The record shows that the wholesale cus-
! tomers who buy f rom Applicant are viable, grow- - ing, active competitors of Applicant. There
, ~ is no substantial evidence that any reduction in Applicant's system average-cost will not be '_ passed on to wholesale customers. . . . l l
"If access to Midland by unit-power or ,
joint-venture were to result in lower costs j s to the smaller utilities than access by purchase I of wholesale power, these lower costs would have to be made up by charging the remaining customers s 4
~
i 38/' Initial Decision at 175-77, NRCI 75/7 at 112. b se e v-4 w--w-- =q V - W
;
- 385 -
I
! of Applicant higher rates. This would be a detriment to most of the citizens in the r- relevant geographic market. No sound reason is advanced why the many should be
(_ penalized to help the few. Accordingly, based on the record in this proceeding, we find that adequate access to nuclear power is provided to both the citizens and the com-peting utilities by the sale of power by Ap- [ plicant at its retail and wholesale rates." i There is compelling support for the Hearing Board's conclusion that Midland Unit access through wholesale purchases is the most reasonable and equitable form of participation in l L whatever benefits of bulk power supply the Company possesses. r A document introduced in evidence by the Department of Justice
}
accurately describes how wholesale service provides access f to the benefits of coordination: L.
"In many instances it is advantageous for I the small system to buy wholesale energy L. from a pool. In so doing they share in the benefits of the pool because of their r- ability.to purchase reliable power at a ] low cost." Exhibit 167, p. 39008.
r Similarly, the antitrust licensing board in the Waterford case
- explained why wholesale service can provide adequate access 39/
' to nuclear generation facilities:
"[T]he price of firm bulk power reflects the
- average cost of power for the entire system of
~
the seller. The cost of power from a nuclear plant owned by the seller would be included in 39/ Louisiana Power & Light Co. (Waterford Steam Generating Station, Unit 3), Memorandum of Board, supra, RAI-74-10
, at 730.
rv.., - -
l
- 386 -
e,
) the average. In the sale of firm bulk power, i the seller must supply the power regardless of shutdowns, scheduled or unscheduled. In other
[~ words, the cost of backup power and the obliga-( tion to supply it is factored into the. price. Transmission cost over seller's system is also factored into the price of firm bulk power." As we have discussed, the Federal Power Commission [~ requires that Consumers Power's rates for wholesale service ( 40/ be based on the Company's fully. allocated cost of service.-~ F. These costs reflect all the benefits and burdens experienced 41/
, by the Company's system. Thus, as the Hearing Board found,~~
the appropriate share of any benefits flowing to the Company
~
from the Midland Units will be " passed on" directly to other systems through the company's wholesale service. r Since wholesale service provides fair and adequate acces's to any benefits that may flow frcm the Midland !acil-ity, preferential access to the Midland Units through unit {~ power sales or ownership interest is unnecessary and re-L dundant. Furthermore, as discussed in the next subsection, such preferential access would be inappropriate as a license
., condition because it would unduly burden the Company's other - customers. Indeed, as the Board neld, such participation - r- would raise the cost of power to those other customers of the Company who do not have the privilege of selectively buying l . o i" 40/ Tr. 8292, 8294-95, 50 after 7239; see cases cited at .. p. 220 n. 66, supra.
41/ Initial Decision at 176, NRCI 75/7 at 112. I l' h e
,~ ---~ v
387 - 42/ I' power only from a presumptively-lower-cost Midland plant. l ( Accordingly, should this Board determine that fair . r ! [ and meaningful access to the bcnefits of the Midland facility should be afforded the neighboring systems, it can assure i that result through a condition reflecting the Company's F previously described commitments and obligations to provide l { 43/ wholesale service to all systems.--
- 2. Ownership Interest. )
i
, Our adversaries urge the imposition of a license condition which would permit neighboring electric systems
[' i. to purchase partial ownership interests in the Midland 44/ units. While ownership participation sanctions are less I. . 42/
~~
Initial Decision at 176, NRCI 75/7 at 112. For example, assuming that the capacity of the Midland Units will L be equal to approximately 22 percene of the Company's projected peak load in 1980, 22 percent of the Company's Ti wholesale and retail cervice will in effect be supplied g by the Midland Units. It would clearly discriminate against the Company's customers and put the Company at an unfair
,p competitive disadvantage were Bay City to derive more 4
than 22 percent of its power purchased from Consumers Power from Midland, since under these circumstances Bay
,_ City's retail customers would be receiving more Midland
., power than the Company's retail customers. Tr. 68-72
- after 7239. Thus, access to nuclear units through whole-sale sales assures that all parties derive a fair and
,r non-discriminatory share of a given unit, while the unit
~
power sale and joint ownership schemes proposed by our adversaries do not. , 43/ Consumers Power Company's Post-hearing Reply Brief at !u 77-78; Tr. 8108. P 44/ See, e.g., Department's Appeal Brief at 185; Staff Appeal a ETIef at 84-85; Intervenors' Appeal Brief, App. A at 4; Stait Pre-hearing Brief at 94. I W
=
+.c - -.n,- --p. -
. - - _ , .,,p9- -. w -, y,, y -y,---,-
- 388-45/
inequitable than unit power sale proposals discussed below, they are still discriminatory in that most of the Company's _ customers, practically speaking, cannot make such a purchase. Thus, for the reasons outlined above, the favored customers receive preferential access to any advantages the Midland Units may provide. r-
;
This inherent discriminatory effect would be all - the more acute with regard to the Midland Units because no
- request direct for Midland Unit participation was made until 46
-/
four years after the time the units were designed and sized. Because the size of the Midland Units had been long established at the time ownership requests were first received, the oppor-47/ tunities for further economies of scale are no longer available. m At this juncture, to require the Company to sell part of the Midland Units to other systems would increase the Company's overall costs by requiring both the additional operation of more costly units and the purchase of power at higher cost from other utilities. The Company has calculated that this : i w
- r. 45/ For example, in a sale of an ownership interest, the purchasers would have the responsibility of financing the portion of the facility to be brought. Tr. 74 after 7239, 20 after 8838; see Subsection IV-B-4-a, pp. 266-68, supra.
~~ ' 41/ See, Subsection IV-B-4-c, pp. 270-79, supra; Tr. 8529 (Mosley), 1485-86, 1202-03, 1215 (Steinbrecher), 1735 (Wolfe), 4516, 4520-21(Keen), 7934; Exhibits 22, 24, 27, 58. 41/ Initial Decision at 145-46, NRCI 75/7 at 100-01. l
- 389 -
48/ increase could be as high as $141 million. Thus, the net effect of belatedly affording other systems the opportunity to purchase a portion of the Midland Units is to accentuate the discriminatory impact of ; [~ a license condition which would require such a transaction. Presumably, it was those considerations which led the Department of Justice to warn the American Public Power Association that its members who were interested in " equal access" to generation L facilities must make their interest known "in a timely 49/
~~
f fashion", i.e., before "a system is designed and built." L Here, since the requests to purchase a portion of the Midland Units were four years out-of-time, such a license condition is inappropriate and contrary to the public interest. I L 3. Unit Power Sales. E' Among-the alternatives other than wholesale purchases
~
for achieving access to Midland, the most inappropriate would r
~
48/
~~
Tr. 9161-65; Exhibit 12,018. The study from which this , _ figure is derived assumed the amount of power required to be sold from Midland would be in addition to, and would not replace, the Company's wholesale sales. This e is a reasonable assumption since only one of the intervening systems seeking access is a wholesale customer of the Com- i , pany and only 17 percent of all the bulk power needs of small l l l neighboring systems are met through the Company's wholesale e sales. Tr. 40 after 7239, Attachment JDP-2 after 7239. 49/ Address of Donald I. Baker, Director of Policy Planning,
~~
1ater Deputy Assistant Attorney General, Antitrust Division, Department of Justice, to American Public Power Ass'n Nat'l Conference, May 16, 1973 at 12-13. n
- , , -,y v ,. y , y- - - - --. y-g
- 390 -
be a requirement that Consumerc Power sell " unit" power, i.e.,
,_. power sold to other systems at prices based solely on the 50/
costs of the Midland Units. Unit power participants are r required to invest no capital funds in the units; rather l' 51/ they pay for their entitlement as they use it. Appli- [ cation of this pricing principle would, we submit, inevitably over-burden the Company and its customers at a particularly [_ 52/
! difficult time and is therefore inappropriate as a license condition.
To be sure, unit power purchases are not unknown to the electric utility industry. Such a purchase, however, is "a very special type of transaction," one which the Federal L Power Commission held " ordinarily results from coctdinated planning of bulk power expansion programs between the buying l and selling utilities for the purpose of obtaining economies
.53/
f' for both systems." The FPC also stressed that "a unit , L. < sale is not like a typical sale by a public utility -- one 50/ Tr. 67 after 7239 20 after 8838. _5_1/ Tr. 74 after 7239, 20 after 8838. I L 52/ Tr. 6409 (Aymond), 6983, 7114, 101-02 after 7239; Consumers Power Co., MPSC Case U-4174, Order (Nov. 24, 1972); consumers p Powers Co., MPSC Case U-4576, Order Granting Partial and Immediate Rate Relief (Sept. 16, 1974). See Section II-C, pp. 102-04, supra. E 53/ Connecticut Light & Power Co., 52 F.P.C. 175, 176 (1974). m j
;
r-
- 391 -
which the utility is obliged to make as a result of its utility status. Therefore, sucn sales will not occur unless there l 54/ is an economic incentive." - Thus, according to the FPC, unless the unit power arrangement is " mutually beneficial
- to both parties," the selling utility cannot be expected to
- 55/
'I engage in the transaction. ~~ I As the Hearing Board recognized, to the extent that a unit power purchase is made at a price that is below the system average cost prevailing in the foreseeable future, it _ discriminates against the selling utility's other customers I L because a higher proportion of the costs of the utility's 56/
,- more expensive generation units must be borne by them. --
i
~
The adverse effects of a license condition requir-ing unit power sales would be further increased by the im-pact which such sales would have on Consumers Power Company's I 57/ L already difficult capital financing situation. - A unit power sale not only has the effect of thrusting the responsibility
~
for constructing the facility upon the seller, but also imposes on him the burden of financing it as well. As the Company's a f 54/ Id. at 178. _5_5/ Id. at 177. g L-56/ Initial Decision at 176-77, NRCI 75/7 at 111-112; Tr. 6059-60 (Aymond), 68-69 after 7239, 37-38 after 8838. _. 57/ See p. 389 n. 52, supra. 58/ See Subsection IV-B-4-a, pp. 266-68, supra. L
J. 392 - recent cancellation of the Quanicassee nuclear units 58/ underscores,- the extent of borrowings not only affects r the interest rate the Company must pay but also r civen the r- Company's present financial position, affects its ability I to raise capital at all. Requiring Consumers Power. Company [ to borrow not only for its own_ needs but for those of the t_ systems buying unit-priced Midl$nd power would unf airly and I L significantly add to the Company's financing burdens. p Finally, it should be noted that there is no evi-dence in the record to support the position that comparable economies are unavailable to the Company's neighbors, if they jointly construct base load generating facilities P --59/ themselves. Indeed, the record indicates that several small ]7- neighboring systems are seriously considering construction of a L- multi-unit generation plant comprised of units with capacities of q 60/
' I up to 350 megawatts each. This suggests that economies of L.
I C
--58/ Consumers Power Co. (Quanicassee Units 1 & 2), AEC Dkt.
! '- Nos. 50-475 & 50-476, Answer of Consumers Power Co. (Aug. 2, 1974). , u_ 59/ The managers and consulting engineers of the small systems in Lower Michigan often conclude that self-generation is
- their most economical source of bulk power. Tr. 1563-64
,- (Wolfe), 7883; Ex. 12,008. Thus, their tax and financing
~
advantages appear to offset the fact that these systems,
,_ standing alone, may have insufficient load to justify construction of nuclear or other large-scale generation - units.
60/ Exhibit 12,017; Tr. 4274 (Fletcher). w
- v- m - w ywp- --P-g- -e --9y -w-e- --e>--pame---+YWw N-*w--- %w- P W7-Y $W9M y"W
[~, . . r. 4
- 393 -
k , scale are in fact available to these systems without access to the Company's generation facilities. No compelling need for unit power transactions has been established, therefore, L. and no basis has been shown for imposing such a burdensome, untimely and discriminatory license condition. Assuming, argendo, that preferc,ttial access to
; the Midland Units is deemed appropriate, the license should include several safeguards for the Company. For example, it should provide for opportunities for the Company to participate
[- on a comparable basis in the future units constructed by Midland participants. As we have discussed, and as found by the Hear-ing Board, in the electric utility industry direct participation in the specific units of another system is premised upon i~ L the expectation that the participating system will construct 61/
., units in which tha first system may comparably participate. .I '
The reciprocity principle of unit participation
!T' is particularly important at the present time, given the ,L 62f Company's difficult financial condition and the rising 63/
costs of financing and constructing generation units. Under these circumstances, it would be prohibitively expensive
'L and patently inequitable to compel the Company to engage 61/
Initial Decision at 144-46, NRCI 75/7 at 101-02; Tr. 6055-56 (Aymond); 8, 18, 25-26 after 8838. 62/ See p. 390 n. 52, supra. 63/ See Section III-D-2, pp. 119-22, supra. W
- wqi---- - - - , p---- y----ww-,g-w,m y- w. -
r-
- 394 -
7: 1 64/ in non-reciprocal unit participation arrangements. -- There-
, , fore, any license conditions compelling the Company to
. grant preferential participation in Midland should specify that those granted access must agree to construct, within a reasonable time, generation units in which the Company is ..fforded the cpportunity to participate in a comparable amount and on comparable terms and conditions.
_. 4. Midland "Back-Up" or Supplemental Power. ( This Board has held that granting a system the op-r portunity to obtain an ownership interest in, or unit power purchases from, a licensed unit may not, in some circumstances, be adequate access to the unit'without so-called "back-up" or supplemental power. Such "back-up" may be appropriate, L the Wolf Creek I decision suggests, because a given unit will 65/ r at times not be operational. - The license conditions proposed by our adversaries I would require Consumers Power to provide such "back-up" power through emergency power, maintenance power and other forms of 66/ _ coordinated operations.-- There are several serious defi-ciencies in their proposal. L-64/ Tr. 6409 (Aymond), 6983, 7114. t
.; 65/ Wolf Creek I, URCI 75/6 at 562, 573-74.
66/ Department's Appeal Brief at 187-89; Staff Appeal Brief
~~ at 87; Intervenors' Appeal Brief, App. 4 at 1-2. As previously noted, the proposed license conditions are not confined to power necessary to provide "back-up" to the licensed units and, as such,are beyond the authority of this Commission to impose. See pp. 366-73, supra. ~w .
L
t- { - 395 - r-i First, the record does not show that Midland Unit F access would be inadequate without such support. Most of i the smaller systems in the relevant geographic area presently r- [ own their own generation facilities and therefore have the obvious ability to provide their own "back-up". --67/ Certainly, { they could install such facilities by the time the Midland r Units are scheduled to begin operation some four years from now. In view of this situation, and in the absence of contrary
.<- 68/
(, evidence,-- there is no basis for requiring Consumers Power
, to utilize its valuable generation and/or transmission facil- ! ities to "back-up" the Midland entitlements of other generat-ing systems.
L. Second, there is no record support for the proposi-a
! tien that such "back-up" should be provided in the form of l.
., two-way coordination arrangements. As we point out in the I l L following subsections, some Midland participants may lack ,
r- sufficient reliability to provide true coordination and thus 1: 1
- La a coordination requirement could unfairly burden the Company.
- c-L io 67/
Initial Decision at 116-17, NRCI 75/7 at 88-89; Exhibit 11,307. i 68/ A finding that back-up is essential for a given generating system requires an economic analysis whose results would
, vary with the particular load and generation capacity
,;. characteristics of the particular system. Our adversaries offered no evidence relevant to such an analysis. w4 I a
, r-
J
- 396 -
;
r- This is manifestly the case with regard to systems with no generation facilities at all. Therefore, assuming, arguendo, that Midland "back-up" services are deemed necessary, the t Company should be permitted to provide such service through r-( FPC-regulated bulk power sales to such systems. Our adversaries' only objection to such a bulk 7, power sales arrangement appears to be that the Company's f rates for this service are too high and its terms too oner-ous. This argument ignores the fact such sales are subject (,, Ic to the jurisdiction of the Federal Power Commission and that all parties are offered ample opportunity to contest, and I present their views about, rates and terms of bulk power I arrangements in that forum.--69/ Thus, our adversaries offer no credible reason why FPC-regulated "back-up" services would I [ not satisfy their concerns about meaningful access.
-s Third, the record offers no support for the view
(~ that, even though Consumers Power is willing and able to [" provide "back-up" power for Midland participants at FPC- .c regulated rates, the Company should also be compelled to
" wheel" such power from third-party sources. As the licensing . ., board's decision concerning appropriate license conditions '- in the Waterford case held, Section 105c does not authorize
-[~ the Commission to punish applicants for alleged misconduct . r .1 69/
~~
Federal Power Act: 5205, 16 U.S.C. S824d; S206, 16 U.S.C. S824e; See Sections III-A and III-B, pp. 76-92, supra.
.--e
l
- 397 -
r in the past, or in the future to put them at a " competitive c- disadvantage" vis-a-vis the intervenors or other neighbor-
! 70
-/
\
ing systems. Rather, the purpose of license conditions 71/ ( is to remedy an " imbalance in competition." - The Waterford t board recognized that its effort to create or maintain a (^ ' competitive equilibrium could be frustrated by the artifi-cial tax and financing advantages of public power systems.--72/ We have demonstrated how a wheeling requirement could permit C the expansion of these artificial advantages with resulting { 73/ social waste and misallocation of resources. In the absence { of any showing that Midland participants could not provide
,. their own "back-up" power or that Consumers Power is unwill-I L ing or unable to do so through FPC-regulated bulk power sales, imposing an additional condition concerning third-party wheel-b ing would be unnecessary, redundant and potentially contrary c
to sound public policy. {: In sum, even assuming, arguendo, that Midland owner-
- b. ship interest or unit power purchases are deemed necessary, there is no evidence that Consumers Power should be compelled to provide "back-up" services under the terms and conditions f'
La proposed by our adversaries. j' 70/ Louisiana Power & Light Co. (Waterford Steam Generating Station, Unit No. 3) , Memorandum of Board, supra, RAI-74-10 at 731 (ASLB Oct. 24, 1974). 71/ RAI-74-10 at 731. 72/ Id. ._ 73/ See pp. 303-07, supra. e
- p t
- 398 - .I r C. Proposed . Conditions Unrelated to j the Midland Units.
i
,, Ignoring the " inherent boundaries" of the Commission's ii 74/
i conditioning authority under Section 105c,- our opponents p propose many license conditions which have no relation what- '(, soever to the Midland Units. Thus, our adversaries would have the Commission condition the Midland licenses (1) to require preferential unit access to units other than Midland, (' [ (2) to engage in coordination arrangements with all systems under terms established and thereafter reviewed by this Commis-L* sion, and (3) to provide general wheeling services to all sys-
, [ tems upon demand.
t. It should be recognized that these proposals would be applicable to all systems -- whether or not they 76/ obtain direct access to the Midland Units. c- Even as to systems directly participating in Midland, they would apply P l. L 74/ Waterford II, 6 A.E.C. at 620. 4 75/ Department's Appeal Brief at 185, 187-89, 186; Staff Appeal Brief at 84-85, 90, 87, 92; Intervenors' Appeal l Brief, App. A at 4, 1-2, 5.
- e. .#
76/ TheLproposed license conditions of the Intervenors [ (Intervenors' Appeal Brief, App. A at 4) -- and by im-
- c. . plication the Department's as well (Department's Appeal Brief at 184, 186) -- would also require Consumers Power
.to grant unit access and other bulk power services to systems outside of the Company's service area -- perhaps i
even outside of the State of Michigan. We submit that i
, the license conditions should be limited to systems within the Company's service area. ; .I Footnote continued -- ~
_a !
. -- . - . . . . , . . . . - . . _ . . . . . . . - , . . , ,, ,.~..y.,_, . . .-....,m..,,-o,we ,.,y,e
r r-i
- 399 -
F# l whether or not such services were required to back-up their r Midland entitlement. { 77/ We have previously explained - that, once an in-consistency with the antitrust laws has been established, this Commission's antitrust authority permits it to require
; that license applicants grant adequate access to the licensed ,, units but extends no further.
{ Footnote continued -- i We have previously explained that Consumers Power requires
)'
all of the Midland capacity to satisfy the needs of its customers and have demonstrated the severe difficulties
, the Company is experiencing in financing generation ca- ) pacity additions. See pp. 272 & 102-04, supra. Imposing t- bulk power obligations on the Company with regard to systems outside of its service area would only exacerbate l an already unduly burdensome situation.
{' L. Further, there is no evidence that systems outside the
-- Company's service area need the arrangements which li-
{' cense conditions would require the Company to offer. The entire record of this proceeding focuses upon a relevant
, geographic market which all parties agree does not extend ; beyond the Comp &ny's service area. Many of the outside L systems are located in the service area of large systems such as The Detroit Edison Company and Northern Indiana Public Service Company -- systems which are already obliged to provide bulk power services of the variety sought here under antitrust license cond tions approved . by this Commission. See Attorney General's advice let-j ters: Detroit Edison Co. (Greenwood Energy Center, Units L 2 & 3), AEC Dkt. Nos. 50-452A & 50-453A, 39 Fed. Reg.
12373 (April 5, 1974); Northern Ind. Pub. Serv. Co. - }' (Bailly Generating Station, Unit 1) AEC Dkt. No. 50-367A, L. 36 Fed. Reg. 22325 (Nov. 24, 1971). Thus, whatever the merits of the claims of those systems within the Company's rs service area, there is no basis for extending relief to other systems. l l 22/ See pp. 366-73, supra. '
, ,m.- , , , - - . - - -
b i I - 400 - f ,
In addition, there is a fundamental contradiction k
in our adversaries' position that the operation of the Midland l Units will have grave antitrust consequences for " nexus" pur-
,_ poses, but that permitting access to these units, together I
- t. with the necessary back-up services, is insufficient to remedy If the requisite i
[' these alleged antitrust inconsistencies.
" nexus" exists between the units and an inconsistent antitrust situation, providing meaningful access to those units would appear, by definition, to be sufficient relief. See Section I V, supra.
I In short, these proposals present a classic case of L. the licensed units' " tail" wagging the total Lower Michigan power supply " dog." In addition.to this infirmity, as pres-sently formulated, these proposals unduly burden the Compaay I
- s. and its customers and infringe upon the regulatory authority of other agencies.
The following paragraphs discuss the deficiencies of these proposals in some detail.
- 1. Units Other Than Midland.
L. Our adversaries propose that the Company be compelled to grant access to all nuclear units which it may jointly 1 " 28/ 1 or severally own in the next fifty or so years. There is no . I l_ . evidence on the record to support the position that such relief ) a l a --78/ Department's Appeal Brief at 185; Staff Appeal Brief at 84-85; Intervenors' Appeal Brief, App. A at 4. l - ) .a
l
~
- 401 -
is necessary. In any even*, this proceeding involves only
,- the Midland Units; other nuclear units that may be constructed f' by the Company will be subject to their own antitrust review under Section 105c. Consequently, to compel access to units other than Midland would be both unreasonable and unlawful.
E ( 2. General Coordination Services. We have, of course, expl&ined at length why we be-I. lieve that general coordination ebligations have no relation to the licensed units and should not be imposed. Should this tribunal disagree, any licerse conditions which compel general coordination services must be carefully drafted to protect the r, Company against unreasonable and unduly burdensome demands. 1 The conditions proposed by our adversaries fail to provide these safeguards in several crucial respects. First, the license conditions are deficient because lh they fail to provide the Company with assurance that its pro-
. . . spective coordinating partners will possess either the willing- .).
- iu ness or the capacity to offer reciprocal coordination arrange-l ments. Even if a system is self-sufficient, it may not be able j t; to provide reciprocal transactions to the extent that it receives
, them. For example, its generation or transmission facilities may be inadequate to permit it to provide meaningful coordi- . f,, .v nating services, such as emergency back-up or maintenance power, so as to repay its coordinating partner. Under many 1, .
circumstances, including those which would arise if the L ,w l sJ
,, _ r. -r, e-c --
y - 402 - c.
. Gainesville formula were utilized, the result could be that one system " leans" on its coordinating partner and unfairly
- s. 79/
burdens that party. Therefore, any license conditions requiring coordinated operations should provide that the , . . . Company may insist that its coordinating partner maintain
- i. the ability to offer it comparable, equally-reliable coordi-80/ ;
I nating services.-- p i 79/
~~
Initial Decision at 72-81, NRCI 75/7 at 66-71; Tr. 8, 11-12, 23-24, 33 after 8838. See pp. 246-54, supra. I --80/ The so-called Gainesville, or " equal percentage" reserve (. sharing formula, should have no place in license condi-tions. Among our opponents' relief preposals, only the 7 Department appears to press explicitly for equal percent-L age reserve sharing as such. Department's Appeal Brief at 184, 188-89. The Intervenors propose that the reserve formula not be related to the size of generation units i (Intervenors' Appeal Brief, App. A at 2), and the Staff proposes that proper reserve levels should be established _ in NRC enforcement actions. Staff Appeal Brief at 90.
- 1 c These proposals should be rejected. The Hearing Board explicitly found and the Department's brief concedes that
~
mechanistic application of the so-called Gainesville formula could deny a coordinating partner net benefits in certain cases. Initial Decision at 77, NRCI 75/7 at 68;
. Department's Appeal Brief at 121. As we have explained, and the FPC's Gainesville decision expressly held, the method of determining the appropriate level of reserves varies with each case; the precise relief ordered in the Gaines-
[ ville decision is applicable only to that case and could a inequitably burden the Company if utilized here. Most important, again as this brief has explained, whether a gi;>n reserve-sharing arrangement is appropriate is i within the exclusive jurisdiction of the Federal Power l Commission, so that license conditions in this regard l should provide only that the'FPC should establish the j appropriate standards if the parties are unable to agree !
" about reserve arrangements.
)
Footnote continued --
- _-
e
C~ e- - 403 - I Second, the proposed license conditions require Consumers Power to engage in coordination arrangements p~ which may not offer the prospects of net benefits to each participant, ,i.e., benefits significantly in excess of the costs. The Heering Board found the " net benefit" standard to be an essentia?. prerequisite for such arrangements and C 81/ the Department now endorses the principle.
,~ As the evidence amply showed in this proceeding,
;
' mutual net benefits can be achieved only wnere each system I possesses the willingness and the ability to engage in com-( 82/
parable transactions on a reciprocal basis.-- Therefore, in w T b Footnote continued -- [' The Department's suggestion that it has demonstrated the -(. appropriateness of equal-percentage reserve-sharing in this case is pure sophistry. The Helfman study (Exhibits
- r. 200-203) which it relies on assumes the Company's coordi-
) nation with five smaller systems (some of whom were self- ' sufficient) under a given set of hypothetical assumptions.
However, the license conditions the Department proposes would apply to the Company's coordination with all smaller
- systems (not necessarily only the five mentioned) and could well include circumstances completely at odds with the hypothetical assumptions of the study.
L 7 81/ Initial Decision at 11, 67, 71-72, NRCI 75/7 at 34-35, -4 64, 66; Department's Appeal Brief at 81-82. 82/ Tr. 6-9 after 8838. v-
F - 404 - i the event that the Board imposes license conditions requiring e the Company to coordinate with others, such a requirement f should be limited to arrangements in which the Company re-ceives net benefits and in which each party to the arrange-ments demonstrates the willingness and ability to engage in (, comparable reciprocal arrangements. r Inherent in these principles of mutuality and reci-procity is that the coordinating systems should be self-f' sufficient,.that is, the capacity of their generating units L and third party bulk power sources should exceed their respec-E 83/ ( tive peak loads. For example, the Wolverine cooperative re-quires that systems with whom it coordinates have ganeration
' -84/
capacity equal to at least 110 percent of peak load. - It would I clearly be absurd to require the Company to " coordinate" with L 85/ systems such as Bay City which owns no generation facilities -- I (_ or Alpena Power which, according to the Department's post-y, hearing brief, owns only three " ancient hydro electric plants" u totalling 7 mw capacity to serve a system whose peak load 86/ is 70 mw.-- Rather, these systems require firm bulk power supply, and therefore should bear the full costs of obtaining l m
- f. that supply.
83/ See pp. 235-237a, supra. 84/ Tr. 4555-56 (Keen). L 85/ Exhibit 11,307; Attachment JDP-2, Schedule 1, p. 1 arter Tr. 7239. 86/ Department's Post-hearing Brief at 45.
- 405 -
1~ k We have previously pointed out, and the Hearing Board explicitly found, that any burdensome requirements imposed on Consumers Power will ultimately be borne by its customers, r-while the benefits of such requirements will flow to customers { 87/
- r. of the smaller systems. One of the industry's most dif fi-I cult and expensive obligations is satisfying peak load demands i~ -- demands which parties without generation capacity at least as large as their peak load cannot meet without assistance r
j from others. Since such assistance adds to the peak load obligations of the assisting party, those who require or i i seek assistance should pay no less than the full costs of [~ peak-load burdens that the Company's retail customers are re-
; 8/
quired to pay. Any license conditions which permit non-self-c sufficient systems to pay less than these full costs (through (.. " coordination" or other non-fully compensatory arrangements) r necessarily over-burdens Consumers Power's customers and offers [": 89/
-~
a windfall to the customers of the beneficiary system. 1 b b 87/ Initial Decision at 176-77, NRCI 75/7 at 112. 1 88/ 'd. See pp. 235-237a, supra. l 89/ Initial Decision at 176-77, NRCI 75/7 at 112. Y s b
.nn,n ,, , .e,- .--a e -- .,- .-- -, ,
F
- 406 -
C b We are unaware of any principle of antitrust or public policy I which is advanced through enriching one group of customers { at the expense of other, no less worthy customers. e
)
i Third, the license cond tions should not require the y, Company to treat unequal parties equally. We have previously
)
k demonstrated that coordination terms vary according to the 90/ { particular characteristics and desires of each party thereto.
;
The Company's smaller neighboring systems vary greatly in load size, in the type and reliability of their generation and 91/
,. transmission facilities, and in their managements. -~
These t systems also differ greatly from the large systems located 92/ [ adjacent to the Company's service area.-~ Consequently, the C terms of a given arrangement between the Company and a large i { system may be inappropriate, and in fact unduly discriminatory, 93/
- y. if entered into with a small system. --
L. Thus, it would be neither reasonable nor consistent
.),
with the public interest to impose license conditions upon
~~
the Company which specify the detailed arrangements which the Company must agree to in all coordination negotiations with smaller parties. Similarly, it would be neither reasonable
.~:
I 90/ Tr. 9, 26 after 8838; see pp. 227-234, supra.
' 91/ Initial Decision at 107-09, NRCI 75/7 at 84-85; Tr.
923, 932-33, 939-40, 944-45 (Westenbroek); Exhibit 14. v
-92 / Initial Decision at 107-09, NRCI 75/7 at 84-85; Tr.
923, 925, 928-32, 944-45; Exhibit 14. ~ 93/ Tr. 26-27 after 8838. M'
, . , . ~ -
,, ,y ..-7 _
t
- 407 - l I
l not consistent with the public interest to require the Com-pany, as a license condition, to coordinate with all systems i r 94/ ( on identical terms. r 3. General Transmission (Wheeling) Services. k The proposals of our adversaries concerning general 95/ !
;
transmission (wheeling) services are neither reasonable nor lawful. The Department has acknowledged that " provision of v , I transmission services, or wheeling, "may not directly in- l 96/ l
~ volve license activities."-- We have reviewed previously 1 i- the lack of any meaningful connection between Consumers Power
[~ Company's 5800 mile transmission network and the construction i 97/ or operation of the Midland Units. -- The present case there- , fore presents the circumstances contemplated by this Commis-
, sion when it held explicitly: '- " Denial of access to transmission systems would be more appropriate for consideration where the n systems were built in connection with a nuclear .. unit than where the systems solely linked non-nuclear facilities and had been constructed - . long before application for an AEC license."98/
u, w. 94/ Tr. 23-24 after 8838.
. 95/ P_partment's Appeal Brief at 186; Staff's Appeal Brief at 92; Intervenors' Appeal Brief, App. A at 5. ,
i { 96/ Department's Pre-hearing Brief at 79. 97/ See p. 347 n.13, supra. . 98/ Waterford II, 6 A.E.C. at 621. es-
- s. - =
1 L 't - 408 r [ In only one instance of which we are aware, the r Otter Tail case, has governmental authority been successfully j --99/ invoked to impose a general obligation to wheel. However, [- in Otter Tail, not only was a refusal to wheel (coupled with ( a refusal to serve at wholesale) at the heart of the predatory F conduct found there, but the small scale wheeling ordered did [ not differ substantially from the transmission service that F t Otter Tail -- which " regularly engages in the business of wheeling" -- was already providing to 18 other municipal systems. 331 F. Supp. at 57-58. In the present case, the absence of any direct con-nection between the licensed units and transmission facilities F m is compounded by the absence of any evidence that Consumers 100/ Power Company has ever refused to wheel. In fact, the Com-pany has received only one specific wheeling request from its smaller neighboring systems and that request was promptly 101/ honored. And, during the course of this proceeding, Con-(3 sumers Power Company has bound itself to wheel on reasonable 102/
; and explicitly stated terms and conditions. .s-l l
i da I
"-99/ United States v. Otter Tail Power Co., 331 F. Supp. 54 i bj (D. Minn. 1F71), aff'd, 410 U.S. 366 (1973). ., 100/ Tr. 6046-47, 6163-65 (Aymond) 7935; see pp. 294-297, supra.
L' 101/ Exhibit 12,023; see p. 299, supra. I 102/ Tr. 8106-07. m -)
- - - .n ,
- 409 -
In view of the Company's commitment to wheel upon i specified and reasonable terms and conditions, no license con- [ dition relating to the rates and other terms of the Company's r transmission services should be imposed. Rather, such matters should be left to the jurisdiction of the FPC. [ The situation here is analogous to the facts in the i 103/ Boston Edison Co. proceeding at the Federal Power Commission. F ( There, Boston Edison committed itself to offer wheeling services (- under certain conditions to the Norwood municipal system
" subject to the Commission's determination whether this
[ wheeling] is consistent with the public interest." Slip op. at.3. Norwood argued to the FPC that Edison's condi-J' tional commitment constituted a refusal to wheel and thus raised antitrust issues which could only be resolved by the federal courts. The Commission disagreed and held that the question l[: ~ u "whether the transmission of such power is in the public interest, and the terms of that [ transmission is in our opinion within the ambit of the Federal Power Act particularly Sec-tions 202(a), 205(b) and 206(a). Therefore, we shall grant Edison's request for a deter-i' mination with respect to the wheeling service." Slip op, at 4. I, t_ -) a
, 103/ FPC Dkt. Nos. E-8187 & E-8700, Order Granting Hearing on Petition for a Declaratory Order and Consolidating Proceedings (Sept. 25, 1974), and Order Denying Application for Reconsideration (Nov. 18, 1974).
- _.
~
- 410 -
r-1 One of the circumstances in which wheeling may well r- be against public policy is when it is used to permit "pirat-t ing" or " cream-skimming" of the Company's customers. See pp. e 1 306-307, supra. Significantly, no party has proposed that t Consumers Power's license condition obligations be made avail-able to retail customers. Indeed, one of the spokesmen for (- the MMCPP Pool testified at the hearing that he would not authorize his system to wheel power from another system to 104/
$_ serve one of the cooperatives' customers. Despite the
>l 105/ Hearing Board's explicit request in this regard, the post-F. 106/ .t hearing briefs of our opponents failed to explain why non- ,r self-sufficient entities like Bay City and Alpena should obtain I. preferential unit access or wheeled firm power supplies from ~' a third system while at the same time comparably-situated re- , u tail customers must take power at average cost-based rates and r 4 [ in most cases from a single supplier designated by the Michigan Public Service Commission. . }.
' Several other aspects of our adversaries' transmis-sion proposals are also inappropriate.
e .i tta
- (
104/ Tr. 1909-12 (Steinbrecher). L. 105/ Tr. 9287-88. 106/ Department's Post-hearing Brief at 256-57; Staff Post-hearing Brief at 12. t I
F
- 411 -
First, the Hearing Board in the Waterford case ex-plicitly recognized that the Nuclear Regulatory Commission has no jurisdiction over transmission rates; rather, these r 107/ (, are the "particular province" of the Federal Power Commission. Indeed, the FPC is currently conducting rate-making proceed-ings to determine whether such transmission rates should be 108/ [ incrementally priced, so that this Commission's interven-i tion in this area would be particularly inappropriate. Similarly, the Company should not be compelled to provide transmission services which jeopardize its ability to furnish economical, dependable and satisfactory service F to its customers, to satisfy its obligations to other elec-o tric systems, or to engage in coordinated transactions with . other systems. The proposed license conditions relating to n w e 4 b
--107/ Louisiana Power & Light Co. (Waterford Steam Generating Station), Memorandum of Board, supra, RAI-74-10 at 734 (ASLB Oct. 24, 1974) (" supervision over rates is the particular province of the Federal Power Commission").
~ 108/ Amendment of Regulations Under the Federal Power Act, FPC Dkt. No. RM75-3, Notice of Proposed Rulemaking to ~ Amend Regulations Under the Federal Power Act Covering Emergency Actions Pursuant to Section 202(c) of the Federal Power Act, at 7 (Aug. 26, 1974). See also Detroit Edison Co., FPC Dkt. No. E-7906, Opinion No. 748, Opinion and Order Determining Rates, slip op. _ at 9 (Dec. 30, 1975). w
PN L
- 412 -
I' ( transmission offer the Company no protection in these vital 109/ p- areas. I- Therefore, assuming arguendo that any license condi-tion relating to transmission services are deemed necessary, they should: (1) provide only for services necessary to deliver power from Midland and Midland "back-up," in the event that
;
c. t this Board imposes this form of access: (2) provide that ( transmission services should not jeopardize the Company's l (' service reliability, obligations to other systems, or co-l ( ordinating opportunities; (3) provide that transmission ser- l [ vices under the license not facilitate " pirating" or " cream skimming" of the Company's customers; and (4) provide ! L l l r 109/ That this concern is not illusory is evidenced by the [ Federal Power Commission's statement in its coal-by-wire order: I b " Capacity and energy transfers between electric power systems are a function of the system oper-ating condition at a particular time. To attempt [ any transfer of capacity or energy through other l L than these dispatch communication channels is an i invitation to a system blackout or other major system disturbance. This is true because power
' system conditions are dynamic and subject to )
many internal and external forces which could require major System adjustments. These adjust- ! l l. a ments require detailed knowledge of the involved system and some knowledge of the interconnected systems." I L New England Power Pool Participants, FPC Dkt. No. RM74-22, Order Permitting Withdrawal of Petition for Emergency Relief (Dkt. No. E-8589) and Accepting Rate Schedules
- -
- Permitting Withdrawal of Rate Schedules, Disposing of Procedural Matters and Terminating Proceedings, at 23
,. (August 26, 1974). I w: 1
r
- 413 -
[' for the establishment of terms and conditions approved by the r-l Federal Power Commission in the event the parties can not agree as to such terms and conditions. In sum, should any license conditions be ordered by i r- this tribunal, the proposals of our adversaries must, in the I least, be re-draf ted so as to delete those aspects which are unduly burdensome, unrelated to the Midland Units, and more appropriately resolved at the Federal Power Commission. (' t an L , I .L P" 4 b
- u.
f
- L
. 3, l L. ,- r - 1 js. I iw
, . , ,.~-,. - - - , . . , , - - . . , - , - . - - - - -,
(' . l
- 1
- l
- 414 -
F - I CONCLUSION f For the foregoing reasons, Consumers Power Company i respectfully submits the Initial Decision in this proceeding F
;
should be affirmed. Respectfully submitted, ( f" Wm. Warfield Ross (- Keith S. Watson [
- r. Thomas W. Brunner i
p Mark Schattner i Gerald B. Wetlaufer r g Attorneys for Consumers Power Company WALD, HARKRADER & ROSS u 1320 Nineteenth Street, N.W. Washington, D. C. 20036 James B. Falahee, Esquire Wayne A. Kirkby, Esquire Of Counsel Consumers Power Company 212 West Michigan Avenue Jackson, Michigan 49201 January 26, 1976 w4 he.' y .- + . -
~
(~ , i UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION (
;
In the Matter of ) ) F ) NRC Docket Nos. 50-329A CONSUMERS POWER COMPANY ) 50-330A ! { Midland Plant (Units 1 & 2) ) l CERTIFICATE OF SERVICE I HEREBY CERTIFY that I have this day served a copy ; 1 of the Brief of Consumers Power Company upon the following persons by depositing a copy thereof in the United States mail, with first class or air postage affixed, or by hand delivery, this 26th day of January, 1975: Alan S. Rosenthal, Esquire
, Chairman Atomic Safety & Licensing Appeal Board U. S. Nuclear Regulatory Commission Washington, D. C. 20555 i
L Michael C. Farrar, Esquire Atomic Safety & Licensing Appeal Board
- r. U. S. Nuclear Regulatory Commission Washington, D. C. 20555 m
Richard S. Salzman, Esquire f.. Atomic Safety & Licensing Appeal Board e U. S. Nuclear Regulatory Commission Washington, D. C. 20555 Hugh K. Clark, Esquire Chairman Atomic Safety and Licensing Board U. S. Nuclear Regulatory Commission Washington, D. C. 20545 'I Dr. J. V. Leeds, Jr. a_ P.O. Box 941 Houston, Texas 77001 Q- n v -
-..-as
r-Robert Jablon, Esquire k 2600 Virginia Avenue, N. W. Washington, D. C. 20037
- Robert Verdisco, Esquire Antitrust Counsel for Nuclear Regulatory Staff U.S. Nuclear Regulatory Commission Washington, D. C. 20545 Atomic Safety and Licensing Board U.S. Nuclear Regulatory Commission Washington, D. C. 20545 Frank W. Karas, Chief Public Proceedings Branch Nuclear Regulatory Commission U.S. Office of the Secretary Washington, D. C. 20555 Mark Levin, Esquire i Forrest Bannan, Esquire Antitrust Public Counsel Section F U.S. Department of Justice
[ P. O. Box 7513 Room 8114 Washington, D. C. 20044 P Keith S. Watson m kN l' C
, r-i_
D P s.
a nj -', ~v
- i 5 'd, A 2 -,
+.....,j+
i m* = 4
- D &, .
j b"?% ;~ 4 , ' stj,.,y,.,n. g.v y g f , y
' , t c
'~
y,_ . ,g) m u
;x.y 3m ~m s s~ m., ,+; r e
- a. ".m, mfo..
s
- , s n
. e. .+... . ~ -w7, nm~
..f a
w
,o ., ~-
;-,
s >y,
~
j f.a . . , *, . *
.e
<J a ;
.y'
- . . , 3.
*i'g'
, ..s *.7so'-
-] 4,*
-e
- s. e-." ") :7 e?
., +
.l .' ,
3-. , {
- 9*
s s .
' % ; ,. ,g ,
. , . u ,'
.'[,
' f*y
~r
~pa ;4 p'
. - ' - s
,J .,
4< =: , M, e, 3 V
- 4
.;4 - ,
y "5_'.. e
<n , /h . . -
. _,, y:,,-
p :;, + , .,.., l,. r
, s- 5 s s
s,. . 47-n, s ' w..-, 1
.*z,
~
- I I. , .,=~,p - ,v:
*u.<
p ,
+. s
*. ( p r ~ c;;- f. .,c , a s t a.1 {
'd
. * .y-.
1 [ --{, iss . ,%
,. j ; - . *
>e a _,'.5gpms% &
, t l _~ c - .
,J
. , . 4 s 2 .y.M. : '
i
',~k,". .u .
,1
' , , '/
s' d
*!s < - l. Mi t
~
e
.' ' .(N . . 's \
; ,
% $i -
< t, z Cl,' A' *,os q,..k q, 3 ? '
.y
. , .t*'w .
~ g
*^
Q',
),
gr, p
.',,. gy
, r,'t ayw, l t'<
g>M,,~
~ , _
N ,* ' * **r ,, s'
.-*,.'s,a y s"is,
.zw(,
, , 'ir l W; ) *y ?J,, Q& Q .
,$. j, ,l, lp,e'.d Q[e.d (, M.
/ ,
\'i
.O ' [ N* pe .f E"4a7:
3 4y
.3, s t
*-: (. .,
a Y ' ,[ 'er?s
* [
a s '3 *.'..,%,e , r-3-a,,,ss %. . S
- e' %,) ;.m f +%: + 'ff .
z: 5
< g. .??; d 1 ' et m-1 *P't n. t.n*
.t r V :
s
'O' , - ;f ;- : .
n
+
- - :- c.. s ., v _p:v.n,,.;, . :e e
e n. r. a
- n n% 5
.-: - ??'
'W-sL j., r;v;>;'%d isc 5 aM4
~ y .f _ Y w' b.];'
W_ _
- Ly a4 /&.
- s.'9
.* _}. F ' 't?'. ~
t ., T> j 3 % @cd.y ,,
. .y w , .:
1
- + iM m e a s,. $,.e $
NOTICE - gg&@'g_ 9 3.,.';u,"g,fg. .; c.ky . {~ Q, :g?p,1 L RECORDS OF THE -? i-f47 g,g4 O THEY HAVE BEEN ' l+ }};, WS THE ATTACHED FILES ARE4 ,,OFFICIADIVIS g.;g .* y ., cf;g gg,yg; F ACILITY - .g f., RECORDS j *g[{y.p ;.ppgy. ' TO THE CHARGED TO AIL.YOU MUST BE RETURNED PLEASE REMOV AL OF ANY FOR A LIMITEDO , t ef f, M 4 A g2 y NOT g w&p.,:. wxy e ..1QG. w .p ._ S BR ANCH 016. EPRODUCTION MUST - - , ,
< ,x~ .:w m704 .4 .g c Q;
CHARGED BE REFERRED TO FILE PERSONN OUT THROUGH THE MPAGE(S) E L. p W;., g, gA sg y p ,w F
> >* Q . J.h; ,:T.Dr?,;)W,h
- x. s .
m
. . .$r
,q..
w,. e .
,_4 7,s We
- 4, . . gb.o: mra%
,7ry.
- C . w.W:w:9y
. ' , .~s ^ gv, y,.y,o aca..i ~--
-%,, , ,s _
t '.
,' ;' < : r w;!:q DEADLINE RETURN DATE z s ~
2 z - .. - e n
- %y,n,
..,~
A' .- . > , y r.- .m
~-
r; y
; y.7.ng ,ag, a.s
^ . -
- , e#t me , .g
- n ., <. .
'~~~ ,
1 w.y p'.,g ~ 4 y-
, M s ,5 m, y ..,,,a i 4 w * . -
+
<-S
,.u E ,r
- y. w., .%), c
~. ..a-yf, 2 ,,
( :f.^ ., [ft
<:p. -
~, , , g
,;. . *'
, ",'4.." ,_ g jA RECORDS F ACILITY BRANCH , _ 4 . 'M & <
x .
.cfgg % ep
;*>g'.,.k
\, _w
' 4p_ <*<-e,__ 4 g,, J .
f hlr .b ' .y g y%
',?,,, .v.
t (;. . ;,,. . - .. vv. - .T
- n 4
,-P .s #- j i
%e n.
ra. ' 4,
-,h., _< -
n d, y 4 7 e 4
~,,g..%.
.g r,,
L.
,, > # ,le e .
3 , #
) ',
\
, .g= 3$ M 4- 8
. , - Ji ' ., g u
i f . 6, n
, , -4
<;,,,. d',--' ..^
.a
' .E . e
*j3 ,;,,,,
% p N- , , N
.4-_ ' r ., [ a. , e i.3 4-4 p ,F*
9 *
> p w . .
g,
%,aq ,
.-w'k y--
-* +. V .:. .: y ..
. < _ ., 4 a + ,. e ,
, ,t ,
Y; 'D
,P , s e
/ _..A,.
* # 3 2 *
- u ' h 7, ', . z 1_ m
** p.* , , ,
+ ',,hg *
.A'
' ,A L.
O
'J.*... T'
.1,'.
s
, '. ;
s
,W.9 _~ sm s _, ,>c e "'g, M.#v
. 'Y - .
A
> A 1
..g.n E ., 49
%. Q;v QQ 3 ,S' V g>., " ?' :. b p y
- a. y
,a .yw
, +
..,,e y j s' .,_* - yi _i* y .* *" k = e ..t. r>-]
- 1 #
.A Q .A ', .,
ly . > Q ' &c;.rn < e, <( .-- s
<: .y
, ;
7 . _
*g ', i b' e
..e. m w4 -n qa., - t- "y-
'. u, .Ue ,, t s
, .Q, -.~..w,..;'.
r
. . ; .- L
'.% - . , . . &,.y'.n ,r ,.,; . 4 W c ,, 'f,g . %h
'%-, M'-, s .f . - s - oc .s
[ A b Y-' 'h> h s ,
,a .* ,
," W,; -
> i 4 ,#'
' O,;,f .Q 7~.' ~+ M,r. .?y, w- [*w~ wyig,g .
- ,_ -- _ _ -}}