Text

Submits Comments on Behalf of La Consumer League,Inc Re Proposed Purchase by Cajun Electric Power Cooperative.Addl Info Should Be Acquired & Hearings Held to Determine Existence of Antitrust Implications.W/Encl
	ML19309H070
Person / Time
Site:	River Bend
Issue date:	04/18/1980
From:	Irving S; PUBLIC LAW UTILITIES GROUP
To:	Rubenstein L; Office of Nuclear Reactor Regulation
References
	NUDOCS 8005080300
	Download: ML19309H070 (13)
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l poc::ET nut.icca 8005080Mo facoguuL FAC. Ihh p Cr Public Law Utilities Group One American Place, Suite 1601 Baton Rouge, Loulslana 70825 (504)383-9970 Stephen M. Irving, Director ,

Y g CCCKETED April 19, 1980 USNRC -

g5 APR 221980 >

Office

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Mr. L.S. Rubenstein, Acting Chief Dcd a gq athaSece servka @

Light Water Reactor Branch No. 4 BP" l

. Divisi6n of Project Managem,ent g

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U.S. Nuclear Regulatory' C,ommission N

Washington, D.C. 20555 i

RE: Comments on Antitrust Review -

Riverbend Station No. 1, Docket i No. 50-458 - Proposed Purchase by l Cajun Electric Power Cooperative,Inc.

Dear Mr. Rubenstein:

7-This letter is being submitted as a comment on behalf of the Louisiana Consumer's League,Inc. relative tp,the above matter. Before proceeding with'our comments I wish to point out td"the Commiccion that the pub-lished notices of this action were inadequate in that all of those l published locally ommitted the statement as to the date by which com-ments were due. I have attached" copies of. the advertisements in which you will note that the last paragraph of the official notice was ommitted.

This has caused a delay in the transmittal of our comments.

Our organization has met with representatives of Cajun Electric Power Cooperative, Inc. and the cooperatives which own and participate in Cajun. All indications to us have been that Cajun is not becomming ,

I involved in the River Bend plant because it needs or even wants the project. The interest of Cajun is in concessions from Gulf States Utilities relative to transmission lines which the cooperatives feel are vital to their continued existence. It appears to us, based on statements by cooperative representatives that GSU may have used its control of transmission facilities necessary for Cajun to deliver power to its members to coerce the cooperative into buying a portion of the River Bend facility. .

1 In addition to the statements made by cooperative representatives we !

offer as additional evidence in support of our position the fact that l Cajun's reserves will be quite adequate without the River Bend purchase '

and an associat'ed agreement in which GSU agrees to purchase a portion of Cajun's 1993 coal unit. When all of these agreements are considered Cajun's: reserves will fall to only 7% in 1994 - dangerously low. Tnis information is taken from data filed with the REA which has not been filed with the NRC (copy attached).

An agency of the Louisiana Consumers' league. Inc., funded by the Community Services Administration I

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Public Law Utilities Group One American Place, Suite 1601 Baton Rouge, Louisiana 70825 (504)383-9970 Stephen M. Irving, Director PAGE TWO .

MR. L.S. RUBENSTEIN APRIL 19, 1940

Finally, providedwe thenote NRC that GSU with hasnotice either not formally of and/o(or.perhaps r the details even of informally) its agree-ments with Cajun to bu'y an interest in Cajun's 1993 coal fired unit and the transmission line agreement (see discussion in attached pros-pectus). Since these agreements were all part of the River Bend package they should be considered in the antitrust review process.

Based upon the above comments, we ask that the Commission request the additional information and hold the necessary hearings to fully in-vestigate the above matters to determine if there are antitrust implica-tions in the method used to obtain the agreement of Cajun to purchase an interest in River Bend.

Sincer f,' -

Sp p n I ng .

Director SMI/ro /

Enclosures:

Multiple CC: Darl Hood, Div. of Project Management, NRC Lisa Singer, Esq., NRC A. Toalston, NRC Docketing and Service Section, NRC Attorney General - U.S. Dept. of Justice - Antitrust Division l l I

l An agency of the Louisiana Consumer's' league. Inc.. funded by the Community Services Administration

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5A' MORNING ADVOCATE, Baton Rosae, La., Tees., Jas. 8,1980 e o UutseafATESNUcutAR

naoui.ATORY comumsieu GULF STATES UTEmES COMPAlff .

RIVER 358 STATNHis UtllT 1 occKETiso.,se eas amesOr RacerT or Anomoew.

AufmlUSTIMPORMAT1000: ;

TIME FOR SusalS$40010F VIEWS -

9ff ANTITHUST IRATTERS Omf Butes uussies Cemeeny, pursuant le Sseems 103 of the Atomes Enercy Act of 1964, es amended, med se Otteter at,1979,Informenon vogueseed by Ihe Anerney General for enetruet reviou se regured by to CFA Put to A#pesa L.Timeintermeses edes Cene fleetts Power sweereuse,Inc. and Som Rey =

bure G4T. he. es cirvoners et une M staten.

Une 9,

% amermeenn ses filed by Ouu stones Uuttee n m ter tenomy in eennection om emir ==r

c.gproceen permite sad opereeng stesses fee the Alvar Send Stenen, Umts t and 3. The spe for tes plenfts located in weet F easione perten, Lessionew The oriennai eneuwt34, emeen 1973, of andenfleest seensomme of ese eseheted on Seetember Recept of Asse s.een ter Caneerusene perene and

- Opereeps usenese and Avenecerv of Assesset's v-

8dttenmental flegert; Tisne for Summission of INeue en Anetruet IIenere, see outeemed in the PietitAL 110015fta en Ostseer 23,1973 (35 FA ISteek The Neese of noense ses passened in the F40GIAL RiesSTtA en Ottater 23. t673 (38 FA 3e343), '

CesidDef tee eteve stated e-o documente swe.are estaatte

=r punes insessmen a me Geessment Asen,1717 le Sweet, n. w,weesengton, D.

C. aged 6, and et the Aedunen Larery, west Fascione Spench, foresend $best, St. Prenaleses, Leefalant NHL el Interessen in tenneesen sah me emanuet rgueou of Die spos tenen ten to otteined by ortung te me U.S. lessiner moedetery Comnusenen, weeMagnee; 0, C.30666 Altensen: Anellrvet and insommet Group.

Olese et tausener neester peousesse. .;.

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'. par.; heensed to do besmees la refund upon return of the docu-Imuisiana, each in an amount equal ments within tea (10) days after 4,oes,se to 100% af the contract annount. bid date. I Na bid may be withdrawir for o Contractors, material suppliers. :

,

period of Thirty (30) days aner sub-contractors, etc., understand !

receipt of bids. that the above mentioned amounts. l

,72s.22 N Owner reserves the right to which are to be retamed, cover the :

reject any and all bids and to waive cost of the reproduction of the docu- i s 26'est*os any int rmandse incidental thereto, ments and this cost exists whether . t STATE OF LOUISIANA or not a contract is lot. N retalnage ' -

' his'sted DIVISIONOFADMINISTRATION is not conditional upon award of the .

Charles E. Roemer, H. Commis- contract after receipt of bids. .

sioner No bid may be withdrawn after s22s,622.00 i FACIUTY PLANNINO AND the scheduled or estended closing t CONTROL DEPARTMENT time for receipt of bids for at least i J. Ben Meyer, Jr., Director thirt'y (30) days. I No. 8007; 1 10; 3tc Each proposal must be accom-

.rsa pot.rce n ov , !

Tarev e13 or uss? rat,1ctama pantem UNITED MTATEN NUCI. EAR by a certifled check or Bid '

in the amount of five (5%)

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,. 7 percent of the base bl61. made pay- !

cem t' 31, 1sse able, without condition, to the UTII.ITIES COMPANY RIVER REND MTATION. UNIT I .Ownere as a guarantee that the ;

. DOCKETNO.50-455 'idder, if awarded the Contract t

'hin thirty (30) days after receipt t NOTICE 0F RECEIPTOF . ids, will promptly execute smd - i s140,000.00. Al)DITIONAl. ANTITIRUNT contract. The bid security of the

5,000.00 5,000.00*

INFORMATION: TIME FOR three (3) lowest bidders will be S00.00 MURMIMAION OF VIEWM ON retained until the Contract is ;

ANTITRUST MATTERM awarded or other disposition is i*

Culf State Utilities Company, made thereof.The bid security of all 15' ' '" ' * ? pursuant to Section 103 of the Atomic other bidders will be returned l Enerity Act of 1954. as amended, filed . shortly after the receipt of bids.

on October 28 Iris. Information requested by the Attorney General for N Owners reserve the right to .'

38'@*

reject any or all bids and to waive .

g '4ag.co antitrust review as required by 10 informahdes. *

. 11,400.00 CFR Part 50. Appendix L. This in- THE WEST FELICIANA 4,500.0o formation adds C,qun Electric Power j ej,ooo.co Cooperative. Inc.and Sam RayburnG PARISH POLICE JURY 4,500.00 & T, Inc. as co owners of the Rive CLARENCE E. BUSH, *

. 2,000.00 Bend Station, Unit t. Proeident .

14,600.00 . The information was filed by Gulf . No. 6004; 110; sac .

4'Q*Q. htates Utilities yOTICE TO BIDDERS ~*

Cor.png in Joe.

3g, ,, necum with tW appi caHe fw _, Sealed bids will be ned and I'$*!$ Nns for River t publicly read by the rehasing :

Unita 1 and 2.The site fw this plant 19 Section of the Dm,sson of Admirus.

179,o17.00 located in West' Feliciana Parish " tradon, Garden 14 vel West, One -

. 14uisiana , American Place, Baton Rouge, lau. .

I2s 517.oo) The original antitrust pertien of the islana, P.O. Box 44096, at 10 A.M. .

appilcation was docketed on Sep. for the following: ;

tember 24.1773, and Notice of Receipt A Plumbing Equip., Jan.14 j 25,000.00 of Application for Construc* don C-Dry Cleaning Fluhd. Jan.14 ted to bend (23,000.00) Permits and Operating Licenses and C-Orvus Hytemp Granules, Jan.

Availability of Applicant's En- 14 -

,,,, v"onmental Report. Time for Sub- . C-Polydetbanalamide-Cyclomide, mission of Views on Antitrust Mat- Ian.14 I ters, was published in the FEDERAL J. Packing House Prdts., Jan.15

112, REGISTER on October 23.11r13 (38 J. Poultry & Eggs. Jan.16 :

. , F.R. 29245). The Nouce of Hearing J-Se'afood, Jan.16 was in the FEDERAL i

area tax 191,250lo01 gblished 1, Hardware. Jan.17 nbw 2L 1773 % ".'

22,210.00 F L-Variable Speed PuDey, Jan.17- ;

p (50,727.001 ments re a alla or s N b"O *"*b inspection at the Commission's blic and Specifications may be obtained ;-

Document Renm.1717 H Street.N.W., from the Purchasing Section listed (

84 PotICE 3 RY . Washinginn. D.C. 20065, and at the above. No bide will be roceived aRer t asev als or west rut.Icfama Pantsu Audubon Library. West Feliciana the date and hour specified. h {

" #" Branch. Ferdinand Street. St. rightis reserved to roket any and all mas' 31. Isso Franelsville.l.nuisiana 7ef75. bids and to waive any informahties. .I' information in connecilon with the , CHARLES E. ROEMEk, II i antitrust twiew of this application Commissioner of Administration !

. can be obtained by writing to the U.S. PAUL A. HAYES, JR. j Projoeted Cash Flen Nucia ar Regulatory Commission, Washington, D.C. 2n655. Af tention:

Assistant to the C=' m j HUGH M. CARLETON, 1

, , , , , , Antitrunt med indemnity Group. C.P.P.O., C.P.M. !

adooted sedeet Office at N ucicar Reactor State Director of Purchasing t Itentutatu* No. 6006: 110: Ite i i

i ST. FRANCISVILLE DEMOCRAT, JANUARY 10, 1940 PAGE 13 I

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I INDUSTRIAL %@@(r%38 ,

i achieved without a carbon burn up Gas Turbine Power UNITED STATES NUCLEAR cell, acc rding to curtiss Wright.

Generation with Fluidized Performance showed low sulfur REGULATORY COMMISSION Bed Coal Combustion dioxide (0.3 pounds per million Btu with a 95 per cent rernoval rate at a GULF STATES UTILITIES COM.

The Curtiss-Wright Corporation calcium sulfur rati f 1.5) and low PANY has reported that it has ac. nitr gen oxide (0.2 pounds per mil- RIVER BEND STATION, UNIT 1 complished a key technical first in hon Btu) emission to the environ.

the use of coal for electric power. ,

ment. These emission levels, are OOCKET NO.,80 4SS One thousand hours of electrical Iower than t e present intenm new generation have been achieved with ,, , I power supplied by a gas turb,me ADDITIONAL ANTIMUST engine fired by direct coal combus.

(NSPS) for bituminous coal issued INFORMATION: TIME FOR by the U. S. Env.ironmental Protec- susMissl0N OF VIEWS ON tion in a pressurized fluidized bed I ANmRueT MAmRS (PFB). Thi achievement dioxide Y' *

'Y".^8 is?"'1.2 pounds maximum per ."Yur Gulf statea usu$es Compent pursuantio i de,monstrated that coal can be million. Btu with a 90 per cent Section 103 of the Atomic Energy Act of I burned efficiently and economically. 'emoval rate and 0.6 poursds tsn se ernende. file on Octer 26 j in an environmentally accepta11e 1 , nitr gen oxide per m,ilhon Btu.

1979,informenon requested by the Anomey 1 manner The b. S. Department of Energy I' a te t pfa RP 5 L in tio ere e eved adde Cajun Electric Power Cooperseve. Inc. ,

is a sponsor of the program at which was brought on line two years and Sem Raybum MT. Inc. es co-ownw.

Curtiss Wright, which is developing ago.The fluidized bed combustor, of <

of the River send Sistion. Unit 1.

a combined cycle power plant one megawatt thermal ootput, incor- Tne information wee filed by outf stoies whereby the usual oil or natural gas- porates full scale commercial plant utumes company in connection wttn inoir appucanon tw construction permite end fired combustor of a utility gas tur. internal heat exchanger tubes bine is replaced by a pressur, ized opeenng neenees for the River Send Ste-characterist.ic of Curtiss Wright,s non. Unite 1 and 2. The si+e for inie piant is Guidized bed in which crushed high located in Weet Feliciane Parten. Lou;s,ene. ,

arc led Guidiz@. bed concept. In ,

sulfur coal is burned in a mixture of this arrangement, only one-third of The ortetnal entitruet portion of ine op. , l dolomite or limestone. Combustion pucation wee docketed on September 24 I

. . . turbine engine compressor now is 1973. and N t.ca of Receipt of Application i temperature is mamtained at 1,650 degrees Fahrenheit where a high ".d ,f5 coa 1 combuition and the for_ Consructen Permite and Opereeng i' remamder is he6d.dn-an in bed en y'ro,nm , no Ay,ii.e,iity of Appucanre En.

reactivity between the sulfur and tube heat exchanger which takes full vi entat Report Time for Submies.on of dolomite or timestone results in advantage of the characteristically views on Anutrust uence, wee pubnened in calcium sulfate, formation rather the FEDERAL REGISTER on October 23.

h ghNheat transfer. poivided by the 1973 (36 F.R. 29245).The Notice of Hearing than sulfur dioxide. Unlike the wet turbulent movement of be.d granules. wee pubilened in the FEDERAL REGISTER stud5 e formed by Gue gas sulfur on October 23,1973 (38 F.R. 20243).

' dioxide scrubbers, the waste The one third now which has been used I r c mbustion is cleaned by a Copies of tne above stated documente are material from the fluid bed is in a series of hot gas cleaning stages and ' evadiabie for public inspection et the Com-dry, granular, easyao-handle form. .

g mission's PubHc Document Room.1717 H Street. N. W.. Weenington, D. C. 20555. and The low combustion temperature from the heat exchanger. The total at the Audubon Library. West Felicione also leads to very low formation of oxides of nitrogen (NOx b b %urbine engine st P"stator*M N and rotor ha WW ** R M*-

Louleiana 70775.

The test pIant has demonstrated informet>on in connection witn ine envirust system. The dilution effect on com. - review of inie sooncation een be obte.ned by the efficient and clean combustion of bustion gas particulates of the clean writing to the U. S. Nuctow Regu!atory Com- , i several types of bituminous coal hav .. air from the m-bed heat exchanger is mission. Washington.D.C.-20555. Arention:

ing sulfur contents greater than 3 per a key difference between Curtiss. Ant: trust and indemruty Group.' Office of cent. Consistent combustion ef- Wright's air cooled bed and the Nuclear Reactor Reguienon.

ficiency of o'ver 99 per cent was , steam-cooled beds being considered

- by others. Turbine inlet particulate Over 2.500 hours0.00579 days 0.139 hours 8.267196e-4 weeks 1.9025e-4 months of coal fired SENIOR RATE grain loadings were controlled to low operation have been accumulated on

. EN0lNEER levels during the test, with resulting the test plant to date. Initially, work negligible eIIect on the stator and was focused on bed and heat ex.

Expending Rete Dept. le looking for ex , changer operating parameters and penenced Gas or Electric Rate Engineers or rotor. It ,s i ,important to note that the Accountants to propere rete incrosse ep-rotor blading, rather than the stator, hot gas clean up development, phcetione. Degree piue 3 10 yre. expwience. is the critical engine component, due which was followed by turbine N',', ,,*"NEOE. P

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to the centrifugal force field. The engine durability testing. Sup-severity of the 1,000 hour0 days 0 hours 0 weeks 0 months test plementing the test plant results are roeume to:

operating conditions was magnified a variety of other tests of in bed by the use of a small turbine with a tubes and tube materials. Aggregate Personnel 7 Energy Grp.

rotational speed effect significantly testing time exceeded 10,000 hours0 days 0 hours 0 weeks 0 months .

P.O. Box 3724 sen Francisco, CA 94119 higher than will be the ca2e in larger, The next phase of this ongoing commercial scale machines. DOE development program is to 64 PUBLIC UTILITIES FORTNIGHTLY-JANUARY 17.1980

RECElVED MAR 311960 E Eue USDA-REA-EIS(ADM)80-4-D Rural Electrification Administration (REA) finaning c of an undivided ownership interest of River Bend Nuclear Power Station Unit 1, near St. Francisville, Louisiana, for:

Cajun Electric Power Cooperative, Inc.

Sam Rayburn G&T, Inc.

Draft Supplemental Environmental Impact Statement River Bend Nuclear Power Station Unit 1 Joseph S. Zoller Assistant Administrator-Electric Us0A-REA "..

Washington, D'. C. 20250 Tel : 202 447-6237 The Draft Supple ental Environ ~mental T$' pact Statement (DSEIS) has been prepared by the REA to examine alternatives to participation in the project and examine environmental impacts associated with REA's proposed financing assistance.

Comments required by: gay 121980 i

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CAJUN ELECTRIC POWER CO3 PERATIVE. INC.

WITHOUT PARTICIPATION IN RIVER BEND NUCLEAR UNIT NO.1

("No Action" Alternative)

CEPCO Purchased Load Capacity Net Generation Total Surplus System Yea r (MW) (MW) Responsibility Additions Capacity (1) Capacity (2) Reserve

, 1983 li3b - 145 (9) 1493 '540 (3) 1830 337 39.4 1984 1560 100 (10) _1687-1830 143 24.5 1985 1701 65 (11) 1891 275 (4) 2105 214 27.6 1986 1856 115 (12) 2019 275 (5) 2380 3 61 34.4 1987 2025 115 2214 2350(6) 136 21 .7 1988 2209 115 2425 540 (7) 2890 465 36.0 1989 2410 105 2657 2890 233 24.7 1990 2529 115 2908 540(8) 3430 522 34.8 1991 2868 115 3183 3430 247 23.6 ,

NOTES: 4 1

1. CEPCO, installed capacity prior to 1983 w1,11 be as foll'ows:

Big Cajun No.1. Unit No.1 - 115 MW ~(gas / oil)

Big Cajun No.1. Unit No. 2 - 115 MW (gas / oil)

Big Cajun No. 2. Unit No.1 - 540 MW (We.htern coal)

Big. Cajun No. 2, Unit No. 2 - 540 MW (western coal) ,

2. Indicates a surplus over the 15 percent reserve requirement. !

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3. 540 MW addition represents 100 percent ownership in Big Cajun No. 2. Unit No. 3 (western coal).

4. 275 MW addition represents 51 percent ownership in Big Cajun No. 3, Unit No.1 (Louisiana lignite). Gulf States Utilities Company (GSU) and Louisiana Power &

Light (LP&L) have expressed serious interest in participation in CEPCO's lignite units. Discussions leading toward a decision of participation in these units are planned in the near future.,

5. 275 MW addition represents 51 percent ownership in Big Cajun No. 4. Unit No.1 (Louisianalignite).

6. Reflects a planned 30 MW decrease in available capacity from Big Cajun No.1 due to conversion from natural gas to fuel oil . ,

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7. 540 MW addition represents 100 percent ownership in Big Cajun No. 3, Unit No. 2 (Louisiana lignite). -

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8. 540 MW addition represents 100 percent ownership in Big Cajun No. 4 Unit No. 2 (Louisiana lignite). Participation arrangements hav,e not been considered for ;

I this unit at this time

, 16 :

Table 4.1.8 .

cont'd

9. 45 MW firm purchase has been arranged from Tex-La/SWEPCO in 1983. 100 MW nonfirm purchase available from CLECO in 1983. , ,

10. 50 MW firm purchase from Tex-La/SWEPCO and 50 MW hydro peaking capacity have been allocated from SPA.

11. An additional 15 MW allccation of hydro peaking power will be available from SPA. Lose Tex-La/SWEPC0 50 MW.

12. An additional 50 MW allocation of hydro peaking power (' total of 115 MW) will be. available from SPA.

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Ta bl e 4.1.C CAJUN ELECTRIC POWER COOPERATIVE INC.

POWER SUPPLY PLAN FOR PERIOD 1983 THROUGH 1990 WITH RIVER BEND NUCLEAR UNIT NO. 1 PARTICIPATION Net Generation Total Surplus System CEPC0 Purchased Capacity Res'erve Load Capacity Responsibility Additions Capacity (MW) (1) (MW) (2) (mw) (MW) (3) (%) (a)

Year (MW) (MW) 1493 275 (5) 1565 72 20.2 1983 1430 145 (11) 1687 15_65 (122) 7.0 l t

1984 1568 100 (12)

~

1891 380 (6) 1945 54 18.2 1985 1701 65 (13) 2019 27 5 (7) 2314 295 30.9 1986 1856 115 (14) 94 (8) 2214 94 (8) 2378 164 23.1 1987 2025 115 ,

i 2663 228 25.3 1988 2209 115 2425 275(9) 2747 90 18.8 1989 2410 115 2657 n 94 (8) 2908 540 (10) 3287 379 29.9 I 1990 2629 115 104 18.

'2868 115 3183 3287 --

1991 NOTES: ...-

1. Capacity requirement equals (load minus firm purchases) times 1.15 less nonfirm j purchases.

2. CEPCO installed capacity prior to 1983 will be as follows:

Big Cajun No.1. Unit No.1 - 115 MW (gas / oil)

Big Cajun No.1. Unit No. 2 - 115 MW (gas / oil)

Big Cajun No. 2. Unit No.1 - 540 MW (western coal)

Big Cajun No. 2. Unit No. 2 - 540 MW (western coal)

3. Surplus equals total capacity minus net responsibility.

4. Surplus plus pool reserve as a percent of net responsibility.

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5. 275 MW addition represents 51 percent onership in Big Cajun No. 2. Unit No. 3 (western coal). Gulf States. Utilities ani Sam Rayburn Dam Authority have submitted a Letter of Intent to purchase 255 MW (49 percent) of this unit.

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cont'd ,

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6. 380 MW represents 70 percent ownership in Big Cajun No. 3, Unit' No.1 (Loaisiana lignite). Other utilities have expressed serious interest in participation in CEPCO's lignite units. Discussion Idading toward a decision of participation in.these units are planned in the near future.

7. 275 MW addition represents 51 percent ownership in~ Big Cajun No. 4. Unit No.1 (Louisiana lignite). Similar participation arrang,ements as described for Big Cajun No. 3. Unit No.1 are planned.

8. The three increments of 94 MW each represent participation in the 940 MW River Bend No.1 unit under construction by GSU. Based on information available. this unit will be commercial by the 1985 peak. The increments shown represent the portion of this unit's capacity required in 1986, 1987, and 1989 to meet CEPC0's load requirements with GSU buying back the capacity of the balance of the 30 percent owned by CEPCO during 1985, 1986, 1987, and 1988.

9. 275 MW addition represents 5.1 percent , ownership in Big Cajun No. 3. Unit No. 2 (Louisianalignite). Similar participation arrangements as described for Big Cajun No. 3. Unit No.1 are planned.'

10, 540 MW addition represents 10Tr-percent,9wnership in Big . Cajun No. 4. Unit,No. 2 (Louisiana lignite). Participation arrangenients have not been considered for this unit at this time.

11. 45 MW firm purchase has been arranged fr Tex-La/SWEPCO in 1983. 100 MW nonfirm purchase available from CLECO in 1983.

12. 50 MW firm purchase from Tex-La/SWEPC0 and 50 MW of hydro peaking capacity have been allocated from SPA'.

13. An ad'ditional 15 MW allocation of hydro peaking power will be available from SPA.

14. An additional 50 MW allocation of hydro peakifig'po'wer -(to'tal of 115 MW) will be available from SPA.

( .

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l PROSPECTUS l

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l Gulf States Utilities Company 500,000 Shares S.!.I.'.Y. Dividend Preferred Stock-$100 Par Value l

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND > EXCHANGE CQh1 MISSION NOR llAS THE COMMISSION l

, PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.

ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

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This Prospectus is to be used by the Company in connection with its public Invitation for bids for the purchase of.the above-mentioned Preferred Stock. The Company will receive bids for the Preferred Stock up to 11:00 A.M., New York Time, on January 17,1980, at the office of Irving Trust Company, A Level, One Wall Street, New York, N. Y. Officers and counsel for the Company, independent public accountants and couns'el for the prospective Purchasers will be available at the office of Irving Trust '

{

Company-A Level One Wall Street,' New York, N. Y., on January 9,1980, at 11:00 A.M., New York )

Time, to meet with prospective bidders to review the Registration Statement and public invitation for l bids. Copies of the bidding papers may be obtained at the ollice of Beekman & Bogue,14 Wall Street, -

l i New York, N. Y.10005, counsel for the prospective Purchasees. If the Company shall accept any such ,

l bid, this Prospectus will be amended so as to include certain information not now included. I

l The date of this Prospectus is January ,1980 l l

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borrowings which are expected to be refinanced from time to time through the issuance of additional bonds and common and preferred stocks of the Company. The amount of each class of securities sold and !

the timing of the sales thereof will depend on a namber of factors including market conditions, earnings '

tnd capitalization ratios; and the issuance of additional preferred stock and bonds and such intermediate /

tIrm borrowings will be subject to satisfaction of the interest and preferred stock dividend coverage requirements described below. The Company contemplates the sale of up to $100 million of First Mortgage Bonds early in 1980 and has received FERC authorization to sell the same, but such sale is subject to the factors described above. Due to the Company's need to raise capital from outside sources for its construction program through the issuance, among other securities, of substantial amounts of additional common stock, further dilution of earnings per share will be experienced at least for the near. term even if operating results should improve, particularly if current rnarket conditions requiring such sales to be made at prices below book value persist. ,

I The Company's Mortgage and debenture indentures place certain limitations upon the issuance of tdditional funded debt. On the basis of the unaudited financial statements of th'e* Company for the twelve months ended November 30,1979, (adjusted to give effect to the issuances on December 4,1979 of

$75,000,000 of First Mortgage Bonds,12.30% Series A due 2009 and of the New Preferred Stock and the tpplication of the proceeds therefrom to reduce short. term debt) the amount of funded indebtedness permitted to be issued under the more restrictive debenture indenture test (assuming an interest rate of 12.30% for such additional funded indebtedness) would be approximately $161,000,000. At present, only ,

$160,000,000 of additional bonds can be issued under the Mortgage limit on the aggregate amount of l bonds which may be issued thereunder. As of December 7,1979, the Company was advised by the Trustee under its Mortgage Indenture that the necessary consents had been obtained from the holders of outstanding bonds to two mortgage amendments, one of which would increase the limit on the amount of additional bonds which may be issued to $100 billion. The Company expects that such amendments ofits Mortgage Indenture will be effected in the near future. ";,

The Company's Restated Articles of Incorporation place certain limitations upon the issuance of additional preferred shares withou,t appropriate approval by holders of each class of preferred stock outstanding. On the basis of the unaudited financi.li"statemeng.of the.C. ompany for the twelve months .'

ended November 30,1979 (adjusted to give effect to the issuance of additional Bonds referred to in the preceding paragraph and the issuance of the New Preferred Stock at an assumed dividend rate of 10%%

and application of the proceeds therefrom to reduce short-term $,e,bt)1 the amount of preferred stock permitted to be issued under the most restrictive provision (at an assumed dividend rate of 10%%) would be approximately 547,000,000 in addition to the New Preferred Stock.

If it should be determined that the interest charges incurred by certain trusts should be treated as .

interest on indebtedness of the Company for purposes of calculating the limitations in the preceding two piragraphs, such limitations would be 1133,000,000 and $24,000,000 respectively.

RECENT DEVELOPMENTS On August 28,1979, Cajun Electric Power Cooperative, Inc. FCajun") and the Company executed a ,

joint ownership agreement pursuant to w'hich Cajun will become owner of an undivided thirty percent ,

interest in the Company's River Bend Unit I, a 940 megawatt nuclear unit presently scheduled to be in service in 1984. Such agreement and funding of Cajun's contributions to such project are subject to approvals by regulatory authorities having jurisdiction, including but not limited to the Nuclear Regulatory Commission and the Rural Electrification Administration. After approval, the agreement provides for Cajun to pay all construction costs until it has achieved thirty percent parity of capitalized investment in the unit, and thereafter for costs to be paid by the co-owners in proportion to their interests.

An, agreement' was also executed obligating the Company to purchase from Cajun after commercial operation of the unit 100% of Cajun's share of the unit's capacity during the first year,66b% the second year, and 33%% the third year. These agreements were executed as part of the overall arrangements between tha Nenv and Cajun pivuuu,g ior new inemnanection and transmission aereements, for LJun to assume load control responsety or its system and for transfer by the Company to Cajun of responubmty tor the load of Southwest Loutuana Electric Membership Cooperanve f rom which the_

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Company receives less than FERr -ved r~ -rable service. As a further part cf thue

'atrangemcm me (ompany presently exocris to participate in several generaung umts to be built hv Cajun, mcludmg a 540 megawati coal fired umt planned for completion in avaa ano inree 340 megawatt hgmte umts seneouico for service later in the 19RO's. ,

On October 11,1979, Sam Rayburn G & T. Inc., the rural electric cooperative affiliate of SRDE, joined in the River Bend Unit I joint ownership agreement described above. Pursuant to such agreement, Sam Rayburn G & T, Inc. will become owner of a seven percent interest in the unit subject to all necessary regulatory approvals. The Company and SRDE have executed a letter ofintent providing for agreements

to be reached covering interconnection and transmission arrangements, wholesale service, disposition of hydroelectric power generated by the Sam Rayburn Dam hydro project, purchase by the Company of decreasing amounts of River Bend Unit I capacity from SRDE, and opportunities for SRDE to participate in future units of the Company.

The Company's system peak load for 1979 occurred in August and was 5,224.9 megawatts, at which

~ ' time the Company had generating reserve

capacity of approximately,18%. This repiesents an increase in peak load of approximately J.7% over 1978. AltFough kilowatt hour sales for the twelve months ended November 30,1979 were'approximately 3% greater than those for the twelve months ended November 30, 1978, the increase in such sales was less than anticipated. Indications are that mild weather in the summer and fall of 1979 was a significant factor, and that energy conservation by consumers probably was an element,in holding the increase in peak load below the 6.6% previously estimated by the Company and in the less than anticipated increase in kilowatt hour sales. Due to deferral of certain construction work during various portions of the past few years and the current needs for generation and reserves,it is not anticipated that the lower than estimated increase in peak load will affect the Company's current construction projects.

Sabine Unit 5 has been placed in co/ninercial operation fueled by natural gas supplied by Exxon Company, USA. The Department of Energy (" DOE") issued a determination on August 23,1979, that such unit will qualify as an " existing" facility under its rules. This makes the unit eligibic to use fuel oil as fuel but an exemption from DOE is re~ quired M order fome company to be able to use natural gas. An application for such an exemption has been filed by the Company and under present rules permitting use of natural gas pending a ruling on the application, the Company has commenced operation of the unit with natural gas. However, it cannot be assured that it will be allowed to continue to operate the unit with natural gas. Applications have also been filed for temporary'public interest exemptions to burn natural gas in other units beyond the amounts permitted under the Power Plant and Industrial Fuel Use Act and pending action thereon the Company has endeavored to reduce the use of fuel oil and burn additional natural gas when available.

As a result of the accident at the Three Mile Island nuclear plant, the Nuclear Regulatory Commission

("NRC") has announced a moratorium on the issuance of construction permits and the licensing of nuclear power plants until it completes reviews of NRC staff proposals concerning operation of existing nuclear power plants, recommendations of the President's special commission to investigate the Three Mile Island accident, and a special study of the NRC and its procedures, and promulgates new rules for emergency planning for nuclear accidents. President Carter stated in December 1979 that the moratorium would not last more than six ngonths thereafter. The Company has construction permits for its River Bend Units I and 2. River Bend Unit I, which is presently under construction,is scheduled for completion in 1984. While no impact is currently foreseen on the Company's present construction schedule, it is not possible to determine the effect of the moratorium, or of any changes in the NRC or its policies which may result from the review or from Congressional or executive action, upon the construction and licensing of such units. the approval of participations in such units or the effect upon the Company's financial position or results ofits operations.

Financial Resu'Its Earnings for the twelve months ended ' November 30,1979 were adversely affected by the lower than l

expected kilowatt hour sales referred to above as well as increased maintenance expenditures, which are expected to continue, and increased interest costs. In November 1979 the Company changed its composite 8

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ML19309H070

Text

Dear Mr. Rubenstein:

Enclosures:

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