ML19341A840

Comments in Response to 810115 Order Re Agreement Between Sc Public Svc Authority & Central Electric Power Cooperative.No Further Antitrust Review Warranted. Certificate of Svc Encl

ML19341A840
Person / Time
Site:	Summer
Issue date:	01/23/1981
From:	Knotts J DEBEVOISE & LIBERMAN, SOUTH CAROLINA ELECTRIC & GAS CO.
To:	NRC COMMISSION (OCM)
References
ISSUANCES-A, NUDOCS 8101280331
Download: ML19341A840 (12)

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UNITED STATES OF AMERICA 4 l NUCLEAR REGULATORY CCMMISSION Cp k h

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BEFORE THE COMMISSION ] , 9/

1. 4. :q r % 3 In the Matter of: O s t \ f.

SOUTH CAROLINA ELECTRIC & GAS }

COMPANY and )

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SOUTH CAROLINA PUBLIC SERVICE ) Docket No. 50-395A AUTHORITY )

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(Virgil C. Summer Nuclear )

Station) ) ,

COMMENTS OF SOUTH CAROLINA ELECTRIC & GAS COMPANY IN RESPONSE TO COMMISSION ORDER OF JANUARY 15, 1981 INTRODUCTION On January 14, 1981, counsel for South Carolina Public Service Authority (" Authority") filed an update on negotiations between that entity and the Central Electric Pcwer Cooperative, Inc.

(" Central"), acccmpanied by a signed agreement. 1/ On January 15, 1981, the Commission requested comments 2] on the effect, if any, of the Agreement on the significant changes determination new pending before the Commission.

Accordingly, South Carolina Electric & Gas Compan j LI submits this response. g /[

.,. m .. b a 1/ " Power System Cocrdination and Integration reeme mq

%Q Between Scuth Carolina Public Service Autho i and Central Electric Power Cecperative, Inc. 4/ .

7 hereinafter: " Agreement".

• 2_/ Ccmments were requested frem Central, the Authority, and l SCE&G by January 23, 1981; from the Department of Justice l

by January 30, 1981; and from the NRC Staff by February 5, 1981.

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. As we understand the agreement between the Authority and Central, it was contingent upon REA approval (Article XIV).

We are advised that REA approval has now been given. In general, the thirty-year Agreement provides for integ-ration of the Authority and Central as a combined system for generation and transmission planning and operations, with distinct ownership of facilities or portions thereof.

To the extent Central does not acquire generation, the Authority provides Central's requirements on a cost of se_vice basis. In the event of a shortfall, the Authority will acquire off-system power and wheel to Central. Since the Agreement affords both the access to the Summer Nuclear Plant, and the mechanism for " power exchange services" sought by Central, it is the view of SCE&G that the signi-ficant changes determination heretofore requested by Central 3/ should be denied. This is so even though we see nothing in the agreement which calls for Central to withdraw its request for a significant changes determination.

Background

In its June 30, 1980 Memorandum and Order in the captioned matter (CLI-80-28), the Commission pointed out that Section 105.c.(2) contemplates that the change or changes asserted to require an operating license antitrust review must, inter alia, i

"have antitrust haplications that would likely warrant some 3/ Amended Petition of Central Electric Power Cooperative, l Inc. for a Finding of Significant Changes and Opposition

! of Central Electric Power Cooperative to Motions of South Carolina Electric & Gas and Santee-Cooper to Dismiss or For Summary' Disposition. January 31, 1979, hereinafter: " Amended Petition". l l l l -

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Cermission remedy" (Memorandum and Order at 7). The Commission went en to explain that this criterion was a gloss on the meaning of the word "significant" in Section 105.c.(2) of the statute (Memorandum and Order at 8, 23). And further, the Commission saw two facets to this question, of which the first is most pertinent here:

"(a) whether an antitrust review would be likely to conclude that the situation as changed has negative antitrust implications" (Memorandum and Order at 24)4/

The Commission made clear that Central's allegations regarding conduct of the Applicants leading up to territorial legislation were not to be a factor in its significant change determination, since once the legislation was enacted, the parties were entitled to conform their conduct to it, and the legislation could not be repealed, even if allegations were proven, by NRC (Memorandum and Order, fns. 42 and 47).

Then, having reviewed the gist of Central's complaints, and having affirmed the application of the state action doctrine, the Commission concluded that, since choices were left to th applicants under the state plan in regard to (1) participation in the Summer unit and (2) contracting for transmissien services, then it could properly consider

-4/ The second facet was "(b) whether the Commission has available remedies". The Commission concluded in that respect that it likely had the power to fashion remedies, if needed. (at 30-31) l

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"anticompetitive implications" in those two areas if such there were. (Memorandum and Order at 29-30) 5/ I The Central / Authority Intecration Acreement ,

Provides Central Access to Nuclear Generation  :

and to Transmission l In the view of SCE&G, the agreement between Central and the !

Authority materially alters the range of permissable inferences at this threshold stage regarding the competitive implications of the two areas of conduct which the Commission concluded were open to NRC inquiry and possible remedy: (1) participation in the Summer facility itself and (2) terms for transmission services (excluding the dual rate / cost allegations which the Ccmmission dismissed in its Memorandum and Order at note 54).

Access to Participation in Summer

The " Power System Coordination and Integration Agreement r

Between South Carolina Public Service Authority and Central Electric Pcwer Cooperative, Inc.", provides in Article III, paragraph C (page 11) an option to Central to acquire up to one-third of the Authority's share of the Virgil C. Summer Nuclear Generating Station. 6/

-5/ The Commission solicited the views of the Department of Justice in this regard. The Department's October 10, 1980 reply was generally non-responsive in this respect.

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Such option apparently has terminated, having not been exercised by January 20, 1981, as required by the Agreement as modified by an amendment which we understand extended the option from January 1, 1981 until January 20, 1981. Incidentally, Article III, Paragraph 3 also

appears to give Central an option to own up to 45% of each unit of another specified (non-nuclear) generating station. Further, Central has access to all future Authority generating additions. (Article IV Paragraph C).

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It would appear that any basis for concluding as a threshold matter that there might be anticompetitive impli-cations sufficient to warrant a hearing unless Central were offered access to Summer has been ecmpletely dissipated by the option to Central. It is immaterial for this purpose that Central, for whatever reason, has not exercised such option.

Transmission Services As we understand the Agreement between the Authority and Central, it also provides transmission planning, ownership arrangements, access and services such as to alleviate any basis for concluding, again as a threshold matter, that there might be sufficient prospect of anticompetitive implications to warrant an operating license antitrust review and at least an s

opportunity for hearing.

Principal features of the Agreement dealing with trans-mission appear to be Articles VI, VII and X, a-d Appendix B.

Briefly, the Agreement contains the Authority's undertaking to provide transmission services and a somet <t limited reciprocal undertaking by Central (Article VI and Appendix B). The Agree-ment also provides for the Authority to prepare an annual transmission expansion and improvemant plan based, inter alia, on Central's requirements and its plans to cons Juct and own generation. ( Article VII Paragraph A) . The parties will coordinate planning of future transmission facilities.

(Article VII Paragraph B). These plans would lead to apportioned segments of ownership of transmission.

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(Article VII Paragrapha C - D). Responsibility for owner-ship, design, construction, operation, maintenance, alter-

. ation, etc. of existing or future transmission is also allocated between the Authority and Central. (Article VII Paragraph E). Transmission service is to be made available over the Authority's lines from one of three specified classes of points (its generation stations, its interconnec-tions with cther utilities, or its points of receipt from Central, such as future Central-owned generating stations) to existing or approved future Central member delivery points or points of interconnection between Authority and Central. (Appendix B, Article I, A and C).

How the Agreement Affects Central's Allegations Regarding SCE&G Central's counsel took exception in his pleading of December 9, 1980 to the view that his client's case was primarily directed against the Authority, and alleged a generalized need for pcwer exchange services from both SCE&G and the Authority. Most of the allegations t'

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4 against SCE&G have already been dismissed in the commission's June 30, 1980 Memorandum and Order,for purposes of a significant change determination, as shown above. In considering whether the Agreement affects the matters pending before the Commission, it may be helpful to consider what .entral's Amended Petition (note 3 above) said about Central's needs for transmission services, and what the Agreement itself, which ties Central to the Authority for thirty years, says.

We turn first to selected excerpts frcm Central's Amended Petition. As to power exchange services, the following excerpt is illuminating:

"Since Santee-Cooper's competitive role in-South Carolina has changed, Central no longer has certainty of the price or stability of its major power supply source and seeks itself to enter into bulk power supply ownership and operation as the best alternative.

It can do so only by obtaining power exchange services from either Santee Cooper or SCE&G who control the high voltage transmission and bulk generation in Central's service Area or by regaining control over its own facilities." (Amended Petition at 5-6) (emphasis added) 7/

7/ Central's General Manager's affidavit, attached to the amended petition, adverts to the desirability of power (Continued on page 8) i I

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F Note that the Agreement confirms Central's eventual surrender of leased facilities; assures Central of power and energy in excess of its own generation resources, if any (i.e., on a partial requirements basis) from the Authority for thirty years; and provides for pcwer exchange (transmis-sion) services. The Amended Petition continues:

"In the Spring of 1974, Central commenced nego-tiations with Santee-Cooper to obtain pcwer exchange services or facilities. Central sought ownership interest in thermal generation and transmission in proportion to the respective loads

of Central and Santee Cooper. If Central was able to secure ownership interest in transmission, or obtain in some other way power exchance services, Central would no longer be at the mercy of Santee Cooper, who has the discretion to fix Central's wholesale power costs without governmental supervision." (Amended Petition at 45)

As we understood the Agreement, Central can now own transmission and can obtain " power exchange services". In other words, Central has obtained what it said it needed.

While Central also made allegations about SCE&G, its whole thrust was the Authority's " realignment" . Central's 7/ (Continued from page 7)

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exchange services from "either or both" applicants (Allen affidavit at 4). Since the Authority has undertaken to wheel from specified point to specified point, subject to system protection limitations and against a background of joint planning of transmission additions and allocations of ownership for transmission, and since it is undisputed that SCE&G has expressed its willingness to un=cl on a case-by-case basis, it would surely be reaching for problems outside its sphere (see Section 271 of the Atomic Energy Act; compare sections 210-212 of the Federal Power Act) for the NRC to to conclude that there remain anticompetitive implications for it to resolve.

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amended petition refers to the historical dependency of Central on Santee-Ccoper, and repeatedly emphasizes the alleged " realignment" of the Authority with SCE&G starting in 1973. (Amended Petition at, e.g., 44, 48, 49, 50).

Suffice it to say that even a cursory examination of the Agreement will reveal that if ever two separate entities were " aligned", Central and the Authority now are. The two systems will be planned and operated as one, even to the point of central dispatch if and when Central acquires ger.eration.

The Agreement itself also casts doubt on whether Central has any real and specific needs from SCE&G which might have Subsection 105.c.(2) dimensions. The recitals to the Agreement include this one, which t* veals that Central desires to receive its power and energy from its own resources or from the Authority:

"Whereas, Central desires to purchase and receive from Authority all of the electrical power and energy requirements of Central's Members not supplied from Central Capacity Resources."

Further, the recitals indicate that Central desires that l

its transmission needs be met by the Authority:

• Whereas, Central desires Authority to transmit and deliver electric power frem Central Capacity Resources and from Authority's Capacity Resources across Authority's transmission system to Central-owned transmission facilities and Delivery Points of Central's Members".

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Conclusion In these circumstances, and given the documented pattern of cooperation and acccmodation of Central and its constituents by both the Authority and SCE&G 8/, there is no reason to conclude as a threshold matter that an anti-competitive situation is likely to be created or maintained in the areas of generation access or transmission services by the licensing of the Summer facility without remedial conditions, such that no further antitrust review is warranted in this matter.

Respqctfully submitted, b

u sepp B. Knoths, Jr.

D e oise & Liberman -

Attorneys for South Carolina -

Electric & Gas Company Of Counsel:

Edward C. Roberts General Counsel South Carolina Electric

& Gas Ccmpany Date: January 23, 1981 l

-8/ See attachments 15 and 16 to "NRC Staff Response to Amended Petition of Central Electric Power, Inc. for Significant Change Determination and to Ccmmission i Order" dated March 19, 1979; and lecter and attachments, Nichols (SCE&G) to Chilk (NRC), August 25, 1980.

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UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION BEFORE THE COMMISSION In the Matter of:

SOUTH CAROLINA ELECTRIC & GAS )

C W m and ) Docket No. 50-395A

)

SOUTH CAROLINA PUBLIC SERVICE )

AUTHORITY )

)

(Virgil C.* Summer Nuclear Station, )

Unit 1) )

CERTIFICATE OF SERVICE I hereby certify that copies of " Comments of South Carolina Electric & Gas Company in Response to Commission Order of January 15, 1981" in the above captioned matter were served upon the following persons by deposit in the United States mail, first class postage prepaid or by hand delivery as indicated by an asterisk this 23rd day of January, 1981.

• Chairman Ahearne Samuel J. Chilk Office of the Commission Secretary of the Commission U.S. Nuclear Regulatory U. S. Nuclear Regulatory Commission Commission Washington, D.C. 20555 Washington, D.C. 20555

• Commissioner Gilinsky

• Docketing and Service Section Office of the Commission Office of the Secretary U.S. Nuclear Regulatory U.S. Nuclear Regulatory Cmuni ssion Commission Washington, D.C. 20555 Washington, D.C. 20555

• Commissioner Hendrie Atomic Safety and Licensing Office of the Commission Appeal Board Panel U.S. Nuclear Regulatory U.S. Nuclear Regulatory Commission Commission Washington, D.C. 20555 Washington, D.C. 20555

• Commissioner Bradford Atomic Safety and Licensing Office of the Commission Board U.S. Nuclear Regulatory U.S. Nuclear Regulatory Commission Co= mission Washington, D.C. 20555 Washington, D.C. 20555

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Jereme Saltzman, Chief George H. Fischer, Esq.

Utility Finance Branch Vice President and Group U.S. Nuclear Regulatory Executive - Legal Affairs

Commission South Carolina Electric & Gas Washington, D.C. 20555 Company P.O. Box 764 Hugh P. Morrison, Jr., Esq. Columbia, South Carolina 29202 Charles S. Leeper, Esq.

Michael Rand McQuinn Robert Medvecky, Esq.

Cahill, Gordon & Reindel Reid & Priest 1990 K Street, N.W. Ste. 650 1111 19th Street, N.W. Ste. 1100 Washington, D.C.. 20006 Washington, D.C. 20006 Mr. W.C. Mescher Edward C. Roberts, Esq.

President' General Counsel C. H. McGlothlin, Jr. South Carolina Electric & Gas South Carolina Public , Esq. Company -

Service Authority P.O. Box 764 223 N. Live Oak Drive Columbia, South Carolina 29202 Moncks Corner, S.C. 29461

• Joseph Rutherg, Esq.

Mr.-P.T. Allen Fredric D. Chanania, Esq.

Executive Vice President Office of Executive Legal and General Manager Director Central Electric Power U.S. Nuclear Regulatory Cooperative, Inc. Commission P.O. Box 1455 Washington, D.C. 20555 Columbia, South Carolina 29202 C. Pinckney Roberts, Esq.

1 . Dial, Jennings, Windham, Thomas & Roberts Joseoh 3. Knotts, Jr.

P.O. Box 1792 Columbia, South Carulina 29202 Robert Fabrikant, Esq.

Donald A. Kaplan, Esq.

• Janet R. Urban, Esq.

P.O. Box 14141 Washington, D.C. 20044 Wallace E. Brand, Esq.

Edward E. Hall, Esq.

Brand & Hall 1523 L Street, N.W.

Suite 200

' Washington, D.C. 20005 l

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