ML19331B142

Requests Response to Questions Re Const of Plant in View of Law Suit Brought by Licensee Against Bechtel for Negligent Design & Const of Palisades Plant.Requests to Be Kept Informed on Continuing Basis

ML19331B142
Person / Time
Site:	Palisades, Midland
Issue date:	11/08/1974
From:	Ralls W, Rosenberg W, Sculthorp L MICHIGAN, STATE OF
To:	Ray D NRC COMMISSION (OCM)
References
NUDOCS 8007250834
Download: ML19331B142 (5)

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CONT ROL' NUMBE R FILE LOCATION State of Michigan, Dept. of Commerce. , 787J, Public Service Commission '

'oATE OF DOCUMENT ACTION COMPLETION DEAOLINE Wm. G. Rosenberg 11/8/74' 11/27/74 To ,

ACTION PROCES$1NG DATES PREPARE Ft1 SIGN ATURE OFr

AcknowiUged Chairmen Chairman ~1- ,

Interire Reply Director of Regulation

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. . . -X Giambusso .

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Req response to questions concerning construction of the ), ,

Midland plant in view of the law su.it brought by Consumers Power against Bechtel for negligent-~ design &' construction of , .

the Palisades plant and requests :to-be kept . informed on a continuing basis ,Ta?

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' W.rdSECY~75-1630 .-

\ l REFERRED To DATE is NOTlPICATION TO THE JCAE j RECOMMENDED 7"'

Giambusso f/ action 11/19/74 -2

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Cy.y.Muntzing Docket Tilen ) 50-255 /

Gossick PDR ) 50-329-Case '

LPDR (2) ) 50-330 Knuth Shapar DO NOT DETACH THIS COPY DIRECTOR OF REGULATION Form NQ 32 (173)

COMMUNICATION 5 ' CONTROL USAEC THIS DOCUMENT CONTAINS P00R QUAUTY PAGES 8007250 [3y

STATE OF MICHIG AN fuBLIC SERVICE COMMISSION w f William G. Rosenberg, Chairman

! Lenton G. Scutthorp William R. Ralls WILLI AM G. MILLIKEN, Governor DEPARTMENT OF COMMERCE LAW BUILDING, LANSING, MICHIGAN 48913 RICHARD K. HELM 8RECHT, Director November 8, 1974 o 32

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D7 Honorable Dixie Lee Ray E' h.?:

Chairman ';.1 at ~1 U. S. Atomic Energy Commission E

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Washington, D.C. 20545 gj  :: a

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Dear Chairman Ray:

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On August 28, 1974, Consumers Power Company, a utility regulated by this Commission, brought a lawsuit in Federal District Court, Grand Rapids, Michigan, against defendants which include th.e Bechtel Corporation and the Bechtel Company. Consumers Power alleges damages of at least $300 million due to negligent acti-vities by the defendants in the design and construction of the

, Palisades Nuclear Power Plant, as well as the preparation and training of its employees to operate the plant.

The Michigan Public Service Commission, in representing the utility ratepayers of this state, is greatly concerned over the reliability of Michigan electric generating plants. This concern is particularly brought forward by the technical difficulties at the Palisades Nuclear Power Plant of Consumers Power Company, which have interrupted operations over'the past 22 months, includ-ing the entire year beginning in August, 1973. The cost of replacement power for these outages is estimated by Consumers Power to average $5-7 million per month. To date, this cost exceeds $50 million. This has had an obvious dramatic impact on Consumers' financial condition and constitutes a financial burden on its ratepayers. The sum of $300 million mentioned in the suit reflects the company's assessment of the Palisades outage as a major and potentially devastating financial event. It also makes vividly clear the level of financial risk that must be borne if generating facilities fail to perform as expected.

The Michigan Public Service Commission is, of course, aware that Bechtel is also the prime contractor for Consumers Power in the construction of the Midland Nuclear Power Plant. We note further that the Atomic Energy Commission conducted a hearing, beginning in July, 1974, to determine whether sufficient cause existed to halt further construction activity:at the Midland plant. That aring was directed toward resolving the question of whether the MIC 3' DR . ,i , 7 4efd Off. Dir. r* %

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Chairman Dixie Lee .ay November 8, 1974

Page 2 Consumers Power quality assurance program complied with AEC regulations and whether there was reasonable assurance that Consumers Power would remain in compliance. The Atomic Safety and Licensing Board ruled in favor of the utility, permitting construction to continue. However, we note, as did the Board, that the Director of Region III, Directorate of Regulatory Operations, AEC, stated that should construction activity deter-iorate, he would not hesitate-"to step in and stop construction...."

We are concerned that the unreliable operation of the Palisades Nuclear Power Plant has raised public concern over the economic consequences of electrical generation in general, and nuclear power generation in particular. With these facts in mind, the Commission respectfully requests you provide us,with answers to

the following questions: ' -

1. As compared with normal AEC procedures, has the AEC taken special precautionary measures to assure adequate construc-tion at Midland Nuclear Power Plant? What changes, if any, have been instituted specifically for Midland because Bechtel is the constructor?

2. In light of the Palisades experience, is Bechtel capable of performing its Midland activities in compliance with AEC i l requirements?. l

3. Recognizing past concern on the part of AEC, what is AEC's l present opinion with respect to the quality of Consumers Power Company in construction of Midland?  ;

4. In the opinion of the AEC, will the Midland plant work reliably to provide electric power in an efficient manner to Michigan?

5. In light of the Palisades experience, does the AEC believe that contractual agreements are in the public interest which place significant financial burdens resulting from unreliable l

, plant operation on the contracting utility?

6. What desirable alternatives are there to shift the cost.of i

unreliable plant operation to the constructors.

In addition to answering these questions at this time, we would I appreciate your outlining arrangements by which we may be kept l informed on a continuing basis. l l

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i Chairman 0.ixie Lee ..ay November'8, 1974 Page 3 l

We understand the legal preemption giver. by the Atomic Energy Act to the AEC with respect to safety of nuclear plant design, con- ,

struction, and operation. The AEC must in turn recognize that '

utility ratepayers and investors ultimately can be expected to bear the major financial burden when plants fail to operate.

Michigan ratepayers and utility investors look to the Michigan 1 Public Service Commission for answers to these failures, and for  !

assurance that every reasonable effort is being made to prevent future financial problems due to plant operational failures, and for assurance that the financial strength of the utilities will be maintained. This Commission must ask the AEC for assur-ance that nuclear power plants are being designed and constructed not only to high standards of safety, but to high standards of quality and reliability. The AEC, in our opinion, has a major responsibility to assure that the public will receive the bene-fits of an operating plant that will work. The public's need for power at reasonable rates for electric service will be served only by the highest quality and reliability of generating facilities.

No concerns expressed here should be assumed to either support or oppose any matters currently before the AEC.

Your attention to these matters will assist us in carrying out our responsibilities to ratepayers and investors of Michigan utilities, and we will be pleased to receive your early atten-tion and response.

Sincerely, I Y), AW.

a Wi9ffam GT'Rosenb rg, Chairman Lent A. h -

G. Sculta rp Commi ioner 49 _

Nilliam R..RW ls', Commissioner

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75 1630 AEC SECRETARIAT TO: O COMMISSIONER DATE: 11/14 / 7tz O GEN. MANAGER O GEN. COUNSEL O INFO. SERVICES O DIR. P.EGULATION O PLAN.& ANAL. O SECRETARY U

L J INCOMING: William G. Rosenburg. Chairman : Commianinnara FRoM: Lenton G. Sculthrop & William R. Ralls. Dept.

of Commerce, PSC, Lansing. Michigan TO: Chairman Rav DATE:ll/8 /74 SU5 JECT: Reliable operation of the Midland Nucient Pnuar Plant in view of Epchral'a e nn e e ri,r ei nn nf ,- h .

Palisades Nucione Power P1nie

, O PREPARE REPLY FOR SIGNATURE OF: .-

O CHAIRMAN . ,

O COMMISSIONER O cM, OR, GC. PA, IS, SECY O SIGNATURE BLOCK OMITTED D PLE ASE RETURN ORIGINAL WITH RESPONSE D FOR OIRECT REPLY

@ SENO COPY OF REPLY TO:

C SECY MAIL FACILITY (3)

O CHAIRMAN O COMM SsicNERS O SECRETARY O FOR APPROPRIATE ACTION

. O FOR INFORMATION O FOR RECOMMENOATION REMARKS: See SeCy Ticket #75-4600

/7 FOR THE COMMISSION: /W t -

WHEN SEFARATED FROM ENCLOSURES .

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HANDLE THIS DOCUMENT AS 'I C ,

ACTION SLIP

,50-329, -330 _., page 2 Anthony-Z. Roisman, Esc.

Natural.Resou'rces Defense Council

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917 - 15th Street, N.W.

Washington, D.C. 20005 Joseph Gallo, Esq.

Isham, Lincoln & Beale 1050 - 17th Street, N.W.

. Washington, D.C. 20036 David J. Rosso, Esq.

R. Rex Renfrow, III, Esq.

Isham, Lincoln & Beale One First National Bank Plaza Chicago, Illinois 60603 Ms. Mary Sinclair 5711 Summerset Street Midland, Michigan 48640 Mr. Steve Gadler, P.E.

2120 Carter Avenue St. Paul, Minnesota 55108 Grace Dow Memorial Library 1710 West'St. Andrew Road Midland, Michigan 48640 sp, -, -

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