ML19308B281

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Responds to Applicant'S Motion to Amend Prehearing Order 2. Requests Denial.Responses to Atty General Questions & Certificate of Svc Encl
ML19308B281
Person / Time
Site: Millstone, Oconee, Mcguire, McGuire  Duke Energy icon.png
Issue date: 07/30/1973
From: Brand W, Leckie D
JUSTICE, DEPT. OF
To:
US ATOMIC ENERGY COMMISSION (AEC)
References
NUDOCS 7912180999
Download: ML19308B281 (15)


Text

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-m UNITED STATES '0F AMERICA BEFORE THE ATOMIC ENERGY CGIGIISSION

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In the Matter of )

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DUKE POWER COMPANY ) Docket Nos. -2691 50-270a (Oconee Units 1, 2 and 3 ) 50 ,co,A, 30-3593 McGuire Units 1 and 2) )

50-370A ANSWER OF TiiE DEPAPTMENT OF JUSTICE TO AP?LICAliT '5 IOTICN TO Ai2ND PFSH2ARING Ol'.FGR NUM2EP. TWO The Depagtment of Jus tice hereby answers Applicant Duke Power Ccapany's Motion to Amend Paragraph E(2)(b) cf Prchcaring Order Nundar Two, dated July 18, 1973. We respect-fully request that the Board deny applicant's motion and order it to producc i:=cdiatcly documents responsive to Item 6(f)(2) of the First Joint Request.

Having failed to make a timely objection toiro- l ducing these documents, Applicant seeks now,nine months leter, to bring them 'within the ambit of the Board 's crdar' custaining its " political activity" objection--i.e. , parabraph B(2)(b) of Prehearing Order Number Two. We believo this result trould be inappropriate.

First, it is not at all certain that an objection '1 to Item 6(f)(2) productics. would have been sustained by the l Board had this matter been raised and argued cieng with Applicant's other objections. Intervenors argue convincingly M2180

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in their answer to Applicant's_ motion that Applicant's

" communications to or about elected officials , councils and boards" regarding " inquiries , invitations , negotiations ,

evaluations and proposals for the acquisition olIelectric power facilities of municipalities , electric ccoperatives

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or other electric utilftie5I' cre in cacance communications between competing business enterprisc; and qualitatively different from the c_ccmunications to disinterested govern-

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ment agencies and officials that were at issue in the Noarr and Pennington cases.*/

Second,_we note that the Board 's order sustEining 7pplicant's " political activity" objection was specifically "uithout prejudica to a renewal [of such discovery requests]

en the showing of prerequisites required by lau." In ru_ ling on the objection at the November 17,1972, prehearing con-ference, Chairman Bannett elaborated on this point:

[U]e believe at this time, that we vill sustain the objection to the information uith respect to the politic ~cl ac tivity. This does not mean that --

on a prcper chowing of some reason for it and -

relevancy, thac we will necessarily exclude an additional-e-ttempt to secure more _ specific informa-tien en a showing of the need for it and the reason for it. Transcript, p. 177. __

The documents sought under Item 6(f)(2) are clearly relevant to issues in this proceeding. The elimination and attempted elimination of competitors and potential ccmpetitors through

  • / Eastern Railroad Presidents Conference v. Neerr Motor Freight, Inc., 365 U.S. 127 (1961); United Mine Workers v.

Pennington, 381 U.S. 657 (1965).

2 l ._

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l acquisition would be evidence of Applicant's abuse of its monopoly power (subissue 2(a) of the final statement of subissues, Prehearing Order Number Six). Communications regarding acquisition or possible acquisition would also be

- relevant to subissues 2(m) and (n) , dealing with the-ecmpeti-tive viability of the small systems absent access to coordina-clon.

That Applicant has acquired or sought to acquire municipal and cooperative electric systems in its area is not merely a guess on our part. applicant 's prolific efforts in this regard ara admitted in its various nuclear license applications--i.e., in the responses to Questions 17, 18,

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and 19 posed by the AttoEney General. A. copy of these responses as submitted with the McGuire apolication is attached as Appendix A hereto. Furthermore, discovery already obtained from Applicant shows a concerted program to acquire ccppet-ing electric distribution systems in its area (e.g. , docu-ments 75226-75223, 75460 and 75462, attached as Appendix 3 hereto). We believe this is a sufficiant showing to justify production of this narrow category of docuqa_nts that will enable us to demonstrate and characterize for the Bo.ard the_

manner in which Applicant-carried out this concerted acquisition _

program. Applicant should not be permitted tc withhold this relevant material by recourse to an expansive reading of the

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holdings of Noerr and Pennineten.

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m m o oms _ ..em o .o

a We note finally that Applicant has already ident-ified and segregated those documencs responsive to request 6(f)(2);

ordering their immediate production would require no new file search and should not unduly burden the pplicant.

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Respectfully smhmitted, -

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DAv1D .A. Lt.CKIE

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WALLACE E. BRAND -

Attorneys, Anti _ trust Division Department of Justice Washiny, ton, D. C.

July 30,19 73 -

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,  : APPENDIX A I

Ques tion No. 17 _

List adjacent systems to which applicant has offered to sponsor or to _

conduct system surveys in contemplation of an offer-by applicant to pur-chase, merge or consolidate with said adjacent system, subsequent to January 1,1960.

Answer Since January 1,1960, Duke Power Company has offered to sponsor or conduct -

surveys of the follcwing systems in contemplation by Duks to purchase, merge or consolidate such systems:

The Electric Company Town of Huntersville _

Town of Prosperity Lockhart Power Company -

Pisgah Mountain Electric Company Belton Light and Power Company __

Town o f Ninety-Six Kershaw Power and Light Company City of Greenville and County of Greenville (Donaldson Air Force Base System) -

Greenwood County R.E. A.

Clemson Agricultural College of Scuch Carolina Nantahala Power and Light Company (cffer to purchase maca 1/31/59) (In connection with this proposed purchase, Duke had accompanying discuccions with the Toun of Highlands and Western Carolina College covering service to or possible system acquisition if the Nantahala system was acquired by Duke.)

In each instance listed above, except Pisgah . Mountain Electric Company, the initial invitation to make an ef fer to purchase came from the other system to Duke Power Company. In the < ise of Eisgah Mountain Electric Company the initici request to negotiate for the acquisition of the systen came from the staff of the North Carolina Utilities Commission, which was concerned about service pro-blems being experienced by that distributien system. Since January 1, 1960, one or more salesmen in-Duke Power Company's Power- dales Departdent, who make regular calls on Duke's industrial and wholesale cus tomers with respect to re-liability of service, increases in cus tcmers' demands'~' ,etc. , may have inquired of a city electrical superintendent or other city official whether his munici-pality would be interested in selling its distribution system to Duke Pcwer Comp any. However, to the best of the Company's knowledge and belia" an such "~

inquiry resulted_in any surveys or offer; by Duke to purchase, merge or consoli-date sdch systems. --

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  • 17-1

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Question No. 18:

List applicant's offers or prahosals to purcEase, merge or consolidate with electric utilitics, subsequent to January 1,1960.

Answer:

Duka Power Company, South Carolina Electric & Gas Company, and Carolida Power

& Light Company each offered to purchase the rural electric uvuperatives in each utility's service area and to leaag,and operate the State-owned South Carolina public Service ' Authority generation, transmission and distribution system. At various times during the 1960's, there have been proposals con-sidered by the South Carolina General Assembly to make rural electric coopera-tives in South Carolina and South Carolina Public Service Authority, which is the bulk power supplier for certain of those rural electric cooperatives, sub- ~

ject to local property taxation! The companies mentioned above suggested pur-chase by .he three major electric utilities operating in South Carolina as a means of accomplishing this result. The companies' of fer was promptly rejccte/.

and no further action was taken by the companies mentioned a'_ove. Laws taxing rural electric cooperatives were subsequently passed by the South Carolina General Assembly. _,

At oiout"the same time, when the issue of subjecting North Carolina electric nembership corporations to local propeity taxation was being considered in the North Carclina General Assembly, Duke Power Company and Carolina Power & Light Company publicly announced their willingness to purchase all electric ucmber-ship corporations operating in their respective service areas in North Carolina.

The of fer was rejected and no further action was taken by the companies. fLb-sequent legislation enacted by the North Carolina General Assembly made all electric c'embership corporations in North Carolina subject to local property taxation, and provided that_Ihe North Carolina Utilities Commission should fix service territories for the electric membership corporations as well as the regulatad electric utilitiesv See answer to Question 14 for citation of statutes.

Duke Pcwer Company also made offers to purchase or lease the following systems:

I Nantahala Pcuer & Light- Company $4,000,000 (approximately) to be (offer - Jani 31, Hie 19) ital additions (offer expired after 1960) adjusted for further.

and retirements cap'ued depreciation and aUc'r to the date of acquisition. __

Pisgah Mountain Electric Company 4,000 shares Duke common-S252,298 cost of shares

~~

Belton Lighc s-?cwer Ccepany 26,000 sharam nuke common'$1,577,936 cost of sharer.

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. Toun'of Ninety-Six $751,200 of fer to be adjusted at dacr ,

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of closing 18-1

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Kershaw Power & Light Company $1,260,161 offer to be adjusted at date of closing (payment - 58,639 --

shares Duke common)

City of Greenville and $304,280 County of Greenville (Donaldson Air Force Base)

Greenwood County R.E.A. $12,918,176 which includes acquisition of a distribution system, transmission system, 14,000 KW generation plant, and

$2,087,981 in cash and investments.

Duke offered to lease for 40 years at

$250,000 annually the R.E.A'. 15,000 KW hydrcelectric plant.

Clemson Agricultural College $279,068 of South Carolina Each of the systems lis ted above execpt Pisgah Mountain Electric Company initially reques ted Duke Power Ccmptny to make an of fer to purchase. The offer to purchase Pisgah Mounte.in Electric Company, a cmall rural distribution system in Lincoln County, North Carolina, was TEggested to Duke by the staff of the, North Carolina Utilities Conmission, which was concerned with service and maintenance problems on the Pisgah Mountain system.

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goestIon flo. 19:

List all acquisitions of or mergers or consolidations with electric utilities by applicant, nubsequent to

.lanuary 1, 1960, including: i

a. 'Ih e name and principal place of business of the system prior to the acquisition, merger, or consolidation;
b. The date the acquisition nerger or con:.,olidat i.un was cor. sum.nated;
c. Gross annual revenue and most recent peak load, dependable capacity and the largest themal generating unit of the system, prior to the date of consumer.ation.

Atu;we r Elect ric utilities acquired by Duke Power Compatrj sinec 1960 and data requested on such utilities are:

Revenue of Peak Load Acquisition Adjacent of Adjac.nt System Location Date System Svst;m Generation Pisgah Mountain Linco]nton, N.C. 7-17-64 $74 884 (1963) 864 KWD None Elect ric Co.

O neiton Light & Belton, S.C. 11-13-63 $621,962 (1962) 6,810 KWD liydro-electric ,

l Power Co. I 3-1000 KW 1-500 KW

  • Ninety-Six, Nine;y-Six, S.C. 10-1-69 $157,479 (year 1,920 KWD None Town of ending 9-30-68)  :

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  • Kershaw Power Ke rshaw , S . C. 8-17-70 $144,507 (6 months 3,960 KWD None

& I.ight Co. ending 6-30-70) ,

I O City of Greenville Greenville, S.C. 5-11-64 Not available 3,456 KWD None 5 Jounty of Gr3en-vi lle (formeri r { .

Donaldson Air force Base)

  • Greenwobd County Greenwood, S.C. 7-1-66 $4',144,375 (year 81,700 KWD 14,000 KW, incl.

R.E.A. i ending 6-30-66) one 10,000 KW unit.

  • Clemson Agricul- Clemson, S.C. I 12-15-64 $62,105 (app.) Not available None

, tural College of South Carolina i

l

  • Indicates that negot:.ations for acquisition by Duke Power Company were initiated by the system subsequently acquired.

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APPc. NDIX B w

GENERAL OF.FICE .

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to cc-ep, the ch:nces aro w .till h .va lines and "frienda" as ncichho 3 Also in a c.-.,1' .

the co-Op custc: crc. .

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This is not concidered as bet.g t:: r'.=portant in that if the Poce P.inenchl conlition: /.nother E~ap is financially ocund, us possibly cenld efford Lo the pay fc-op r " going valua."

probably has a large factor is that if the co-op ic in good financial ..e.po, nunbor of suburban typo cu: tomers; this uould be in our fa rcr.

)M +cr RF.',re. ton: Since toney talks, a big point in our fcc.r vould ba4o offer louer ratua. .

1H $cr rinic , bill: A 1cuer nini: ram would catch tho vote: c: T,hc louer ince:c pacplc.

Alcnc with the rate ccrpari:ct.. a big celling point

.P.cor cer-dce and ic-c cervice o:tecc: and cthcr services ruch as ths sc . ccenonist, agricultura vould be -

to cifer good ensincer, etc. . .

' cr.upo resentnant cc: car;

. 1hn.-cr bi dictato' N i nelicic5: A " dictator" t*.v2 c canc< - .

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a 1.ntr .c.ni ctic ,--n.ec..: 1.n antaconistic tan ucr by naturo wE :rcate. hcrd fcolin s caon~ .

u u his cucaccers. . .

.}l--cutral Do-rd cc Dircetorg: In en all cut"btg-" fi&.t a neutr-.1 Board uculd be very  :

heluful. -

In a rcuv out" battic a cc r - ' c tion channel i,o tho "Friendiv

.".Dir2cto* or ". nnaenr:

r nic.ny enrac.:.c. to covelop t:nic conc. . . .itica may sa -.:;.,1cu.i.9 . .a c.a.

Boara. 1c Skeleton vort forcq: A s:111 uork . force indicctea the probs':"ity that customer cervico io not being capaasiced.

Ro ~onthlv vblic2'.icn: A locEl publicatica coverin;; local nW3 l of co-op cc=bers has oco to tho co-op. Such tuch nppeal und probacly vill recult in coca cochers fccli .I a publicaticn vould 'oc a hinJrance in a purchaca atte:3pt. ,

c^--,3 tten: This is cennidered a cu:: n.ca .would be corposed of I.n ex.ce.l. lent "ecil c :t" influenMal co-op nomborsa v' o will cetively pusu the projcet. _ , .

Our usvingnger enuit.- n,yi mrh.t m . cin, vainc t

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-- r n,t-bc.r_or no..rcee o -ecrc .eito nec,1.c: Louer rates,,' icwcr nini::.a and cc.uity ~

ptixnt coula cc a big .:.rract.icn to ,hla group of pcopic.

U3_.r!.L'tyens /.n active minutcean organic: tion airc:dy c tab'iched would be prepared. 1 to f1;u, us c:td wuld have tho "kncu-hou" recourecc already ecubliched. l

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- .I request eithn:- for:ral c.r infon.al approval hith cny adjuctments in the fo$r. of tidditions, cli.ination, or revisioar,) for the point plan.

. Tno reason that apprcval is request

  • d in that rc can proceed to est up the proceduro to obtain irrcdiato.ly prelininary inferr.atica for cll co-css in car crea. -

if approval fer the point plca is given, the follouing procedura 10 offcada n =. . v. p. .n _

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1.  !! ave our rt.nagers ;ivo us a report whencycr any P.EA cucteper e unrect appenrs.

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Custor..:r nancs, cr.r ary of cc acnts between our repronontativ' and I.3A custor r to b0 nadc. Evaluaticn to bo r. ado of custoscr influenco, etc. -

2. Cultivate direct:re cnd nanagerc. (Ecins covered in coparato acac_randan.)

--h Endecvor to.f;;t a " friendly" director clected to beard. ,

4 Obtcin if possibic : opy of by-In .a fo: im co-ops. ,' .

5. Datcr:.b.. for cli ec..c;;s if thcy h:.vo r.dnutocca (heu cany), conthl7 ~

publicat,icn, c:.pital crciit p'cn, et,0 6.- If poasible, dt on :.siling lict for conthly publicatien. -

7. Deter:11no quality of cervico rendered b7 co-op. .

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3. . -A co-op in cc1cctc:1., - ,

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2. A ec:rt.ittco of co op custonors ic foi'acd. -

3 Ca.r=itte circulatcc en " offer" pctitica uncre Duke vould be acked to --

propara bid. , -

4. 'lcabera vote on "cffer' prcpocition. -

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~ l 6, "achers vote to ccl1 l

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June 27, 1960 __

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MR. l', D. HUFF -

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SUBJECT:

PURCIO.SE OF FOREIGN O'..".'ED DISTRIEUTIW SYSTEMS _

I have evaluated the replies to Mr. Miller's letter of 4-27-60 conTerning foreign owned systems and have for=cd the following conclusions. Some of our districts need a push on our part by our giving them autnority to proceed to contact officials of mill villages to cadcavor to purchase. _

Contacts have been made in thc past cnd in sece instances offers made for mill villages with no recent follow-up given. A general plan to purchase or lease municipal systc=s needs to be formulated. A tickler file Nhould be estchlished and reviewed at specified intervals to continually prc=ote such purchase's--

~

There are 116 foreign systems,and 169,620 custocers in our area excluding 21 coops and the Cannon Mill Villages. In total there arc approxicately 300,0';0 custo=crs being served by others in our service area. Approximately 60 systems with 35,000 customers should be actively pursued at the present time.

It is recomranded that we give this project top priority with a continuous push to purchase these systems. The following recommendations are proposed:

1. to establish a tickler file. The attached form is proposed.
2. to write our districts where feasi31c suggesting contacts.
3. to activate any of fers we Faee mcdc in the past.

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4 '. to formulate a cunicipal p rchase plan.

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3 ht- . C, N Henry L. Cranford 1 V

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PilKE POWER COMPANY .

GcNcRAL Of FICC CH ARLOTTn 1. N. C.

/.. . -u._ ._ ~y = _.

Januar7 3> 1961 -- ...,

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Mr. Z. M. Har:j, l'anager _.

Duke Potter Ccapany -

Salisbury, N. C. ,

Dear Sir:

In August last year we received a report from you cn all foreign electric - distribution s.-estems in yote territer . . This rcrort . ,

c 3.nclua.ce, nanc, .tocat:.on, c:.T.er, numscr oz cus:cacra, cona:.aon of system and your oprion about ote chances to acquire. Attached hereto is a list of those cystems in your ter:-itory that in your opinion we hcd a fair or gced chance to buy. _.

Picase check over this list and give us: ,

Icur present opinion cn our chanccc to acquire. - [ '/O' s y , . t..

I.

II. I,ist in space pro.-ided priority in uhich they should bc {

handled. (1,2,3, etc. ) .y III. /.pp[rexi=o.te date you thin'.: to shoulf. begin negotiations.

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IV. Has estimated value been submitted to G. O. (Yes or Ko) f" ) s H ' , p

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Return one copy to thin office as soon as-possibic after obtaining \ ',',. I" infornation. _

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Sincerely yours, ,

,saa /a m/f-)0n.__

_. Chas. 3 Lller, Jr .'

Assistant ' lice President, CBM/jr./c , ; ; i."'/ ^rs A n . ..' f* i l' ,' -

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UNITED STATES 01_ AFERICA BEFORE THE_

ATOMIC ENERGY COMMISSION In the Matter of )

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DUKE POWER COMFANY __ -) - Docket Nos. 50-269A, 50-270A 50-287A, 50-369A (Oconee Units 1, 2 and 3 )

McGuire Units 1 and 2) ) 50-370A

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CERTIFICATE OF SEP.VICE _

I hereby certify that copies of ANSWER OF THE DEPARTMENT OF JUSTICE TO iPPLICANTS MOTION TO /JSND PREHEARII:G ORDER UUMBER Two, dated July 30, 1973, in the above-captioned natter have been scr.ed en the follouing oy deposit in the United States mail, first class or air mail, this 30 th day o f July , 19 732--

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IIcacrchle Wniter W. K. E2nnett__ William Warfield Ross, Esquire Chairman, Atomic Safety and George A. Avery, Esquire Licensing Board Keith Watson, Esquire Post Office Bcx 185 Toni K. Golden, Esquire Pinchurst, North Carolina 20074 Uald, Harkrader &_ Bess _

1320 Uine t .enth S tree t , N.U.

Ecnorable Joseph F. Tubridy Washingten, D. C. 20036 Atomic Safety and Licensing Board 4100 Cathedral AvenueT li . W . J. O. Tally, Jr., Esquire Washington, D. C. 20016-J. A. Bouhnight, Jr. . Esquire Tally, Tally & Ecuknight Hcncrable John B. Farmakides Post Office Drawer 1660 Atomic Safety and Licensing Board Fayetteville, North Carolina 28302 U. S. Atcaic Energy Commission Washington, D. C. 20545 Troy B. Conner, Esquire Reid & Pries t . ..

Carl Horn, Esquire 1701 K S treet , N.W.

President, Duke Pcwer Company Washington, D. C. 20006 _- '

422 South Church Street  !

Charlotte, North Carolina 28201 Joseph Rutberg, Esquire Benjamin H. Vogler, Esquire

__ Willinm M. Grigg, Esquire Antitrus t Counsel for AEC Vice Presicent and General Counsel Regulatory Staff Duke Power Company U. S. Atomic Energy Ccmmission 422 Scuth Church Streat

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Washington, D. C. 20545 Charlotte, North Carolina 28201 Mr. Abraham Eraitman, Chief W. L. Porter, Esquire Of'. ice of Antitrus c and Indemnity Duke Power Company U. S. Atomic Energy Commissien 422 South Church Street Washington, D. C. 20545 Charlotte, North Carolina 28201 I --

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David Stover, Esquire Mr. Frank W. Karas, Chief -

Tally, Tally & Bouknight Public Proceedings Branch 429 N Street, S.-W. Office of the Secretary of the Washington, D. C. 20024 Cor=nission

__ U. S. Atomic Energy Commission Atomic Safety and Licensing Washington, D. C. 20545 Board Panel U. S. Atomic Energy Commission Chairman, Atomic Safety and Washingten, D. C. 20545 -

Licensing-Appeals Board _

-- U. S. Atomic Energy Couaission Washington, D. C. 20545 ITavid n. Leckia , ettorney Antitrus t Division -

Department of Justice Washington, D. C. 20530

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