ML19329E772
| ML19329E772 | |
| Person / Time | |
|---|---|
| Site: | Midland |
| Issue date: | 05/15/1973 |
| From: | Aymond A CONSUMERS ENERGY CO. (FORMERLY CONSUMERS POWER CO.) |
| To: | |
| Shared Package | |
| ML19329E760 | List: |
| References | |
| NUDOCS 8006170931 | |
| Download: ML19329E772 (62) | |
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cc::su: sus Pom:n cc:masr ) nIDLAND UUIT31 Arm 2 ) ACC 17Jf!3tnD 50-32CA and ) 500330A ) ______________J This is the ccposition of ALFno::GC II. AY110:a, taken befecc 1: alter n. Lauckner, llotary Public in and for the county of Oakland, Michigan, at consumers Power company, Jackson, nichigan, co . encing on Tuesday, May 15, 1973. APPEAC.WCES :
;G. VALL.Tct EDWARD BRAIID ar.d C. FORREST DAI:mN Assictant United States District Attorneys Anti-Trust Division Departrwnt of Juntice ifashin3t on, D.C.
Appearing on behalf of the United States. MR. FODERT J. VERDISCO Attorney for the Atomic Encrgy cc.:rniosion Washington, D.C. Appearing on behalf of the Ato::.ic En::rgy Co=.tincien. 7 IG. ?!AURICE CSSIEIt Office of Anti-Trust and Endc.:nity of the Atomic Energy Commission tinshington, D.C. Appearing on bohalf of the Atomic rnorgy cc= mission. W. R. LAUCENER & ASSOGLtTES DETROIT, MICHIG AN 48226 WOODWARD 3 1118
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- 173 municipal system, but not create an entity that will really take over the entire =arket of the state.
Q And you feel yourself endangered? A Yes. O Does consu=cra Power enjoy tax benefits? A To a limited c= tent, yes. 0 I show you your annual report for 1972, could you tell me what, percentage of tarca, federal incom taxen that Consu=orn paid in 1972 when co= pared with consumers Poucr's not incono as reported on your annual report, i roughly? A Dy tancs raid do you ecan paid in cash? O Would you refer to the lino that states faderal in-exame tax 7 What amount is shown thero? A Tho foderal income tax for 1972 is shown as
$11,370,000,00.
O What's the incoco figure, what's the net income figurc? A Seventy-eight saillion one hundred and seventy-cight thousand dollars. Q To your knowledge, does the federal income tax figuro reprencnt tanos paid in cash? A Yes. In. addition to that the campany pays state in-come taxes and cust make provisica for deferred federal W. R. LAUCENER & ASSOCIATES ; CFTROIT, MICHIG AN 48226 WOODWARD 3 1118 e
I 174 and stato incor.e taxes. Q Your company takes advantage of investment tar. credit, does it not? A Yes. Q It also takes advantage of liberalized depreciation, does it not? A .Yes. Q Are those two benefits directly azzociated with the building of large additional plants? A Yes. O Incidentally, did Consumers Power elect to use ADR, that's the asset depreciation range system? Itr. Aymond, can ycu tell me cinco you have been chairman of the board, what do think have been your c:ajor accomplishments? MR. ROSS: Unlocs relevancy is catablished I'm going to object to the question and instruct the witness not to answer it. MR. JADLON: I think ".r. Aymond is the chaircon of the board and the president of the consumers Power company and I think the goals of the company, how the company sces itself are affceted by competition and effect competition and I think it W. R. LAUCENER & ASSOGIATES DETROIT, MICHG AN 48226 WOODWARD 3 - 1118
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9 APPENDIX E: Consumers Power's Reasons for Development of Nuclear Generation. , 6 1 i l l l i
t A%r TC I'LTnGY CO'07tCSTOtt b In the natter of: )
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COEU:GES POWER COMPANY ) MIDLM:D U3173 1 At;D 2 ) AEC ::UM3tnS 50-329A and ) 500330A ) _ _____________J . This is the Doposition of ALPHOIISC H. AY1citD, taken before Walter n. Lauckner, notary Public in and for the Cornty of Oakland, Michigan, at consumers Power company, Jackson, Michigan, cocr.ercing on Tuesday, May 15, 1973. APPEAEANCEGs IE. WALL 7sCE EDNAnD DRAND and C. FORREST D.MRTAN Accistant United Staten Dintrict Attorneys Anti-Trust Division Departracnt of Justice Washington, D.C. Appearing on behalf of the United States.
!!R. SODERT J. VERDISCO Attorney for the Ator.lic Incrgy Cot:rnission Washingtor., D.C.
Appearing on behalf of the Ato:r.ic Energy Cot =nission. Im. )nU"tICE firSSIElt Office of Anti-Trust and Endcr.tnity of the Atc ic Energy co=nission Unshirigton, D.C. l Appearing on behalf of the Atoadc I:ncrgy co=uiccion. ! W. R. LAUCKNER & ASSOCIATES DETROIT. MICHIGAN 48226 WOODWARD 3 - 1118 l
o . 164 didn't epend a large amount of time on these : natters. Could you toll us on what matters do you spend the most time? A I spend a great deal of timo on matters related to the financial affairs of the company, its rates, its operations, both in the gas and olcetric ends of the busincan, the gas supply, the planning for additional facilitics, the organi=ation of the cccpany, the meetings of various committees of the board of directors and the beard of directors itself and I don't know whether I mentioned the provision of additional facilitics to supply increaced loada. The fuel cupply for the company's electric planto, mattern relating to public relations. Q tihen you say operations of gas and electricity, what do you refer to by operations? A The carrying on of the busincos and the service to the customers. Q You didn't mean that in an engineering sense? A No, I did not. I'm not an engineer. Q Aosu:nc that the Midland applications are granted, schat broad benefits do you see to Consumcrs Powcr? A Wo will receive some much nocdod enorgy for our inte-W. R. LAUCKNER & ASSOCIATES DETROIT. MICHIG AN 4822 6 WOODWARD 3 - 1118 e
165 grated =yste:n at a price that I think will be as favorable an any alternative that would be available to us and in view of the substantial investment that we aircady made in planning the design and prelimitmry construction of that facility, wo will be abb to ro-cover the cocts that we have diverted to it. The alternative to which wo.sid be quito a significant burden to the company. O Looking toward tho middle and long range futurc, do you believe that nuclear pouer offers an equal or botter cource of fuel than coal for baca load po'.wr? IG. RCSS: You said source of fuel, I thought you ccant scurce of enerry/. THE UITIMS: Source of electric energy. O (Dy Mr. Jablon, continuing) Source of electric energy. A Yes, I think so. Q Why is that? 4 A Largely, I would say that the reason is that because of the limited availability in large entitics of fossil fuola for additional goncrc. tion and the anti-cipated increase in the price of those fuola in the futuro, now, let me qualify that by caying there is W. R. L.tucKNEu & Assoc 1ATEs DETROIT MICHIGAN 48226 WOOD' NARD 3 1118 d
1GG plenty of high sulfur coal available, but environmental li:sitations and the present state of teclutology do not make that an attractivo alternative. Q Your anuucr would be roughly the osme if I asked you about gas or oil? A UcIl, gan juct isn't available for new generation and for plants our size I don't believe oil in either. Dy our nico I mean by the si=e ue would build for baco loads. O I bellovo nr. Drand asked you a number of questiona y(sterday about the advantage of coordination and pooling in general and specifically about your past and procent arrangements uith Detroit Edicon. Could I got you to curamarise the advantages of coordination and pooling as you ceo it?
- 22. RC3S: Mr. Jablon, it would bo helpful to the witnecs if you could be a bit more specific. L'or cample, it'd be a much casier question for him to answer if you said what are thr advantages that ho thinks his company derives with the electric coordination agreement with Detroit Edison. Then you can go ahead and ack the advantagen that could bo derived froa something clue and comething olce.
W. R. L.tucKNIm & ASSOCIATES DETROIT. M CHIG AN 48226 WOODWARD 3 - 1118 l e
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( RE!!CK3 0F 'JNC3 H. CN.shtL',' p?.5.::IDE:.7, C02:S'JVT.RS PCER CO::PM:Y PRESS CO:'FERE :0E, E0YI.T MO*,;;c/c:t LCD3E, 30Y;:E FALLS, lHCHIGA:t JULY 17, 19c0 Many of you con unioubtedly are well acquainted with ~ Consu ers Power Cc=pany and with what we are doing at Big Rock Point. So=e of you cay not be. So perhrqs the best way to begin this dis-cussion is by telling you a few basic facts, first, about Consumers Power Co pany, end, second, about our nuelcar generating plEnt pro-ject. . Consumers Power Co.pany,is an independent, investor-owned electric and gas utility Co.:pany operatics wholly within the' State 6f MichiCan. -Its service area covers about 70 per cent of the Lower . Peninsula of Fichigan, ence passing core than 28,000 squarc =iles. This service area extends from the border with Ohio
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and Indiana north to the Straits of Itckinac, c.cd from Lake Huron and Lake Eric on the east to Lake Michican on the vest. There are, how-
. ever, within the arca I have deceribed, a nu:ber of other electric and cas corpanies, notably Tne Detroit Ediscn Cc pany and Michigan
-., Consolidnted Gas Cc:pany. There are also sc e cunicipal electric operations and a few rural c1cetrLe cooperative associaticas.
Consumers Power Cerpany serves about 670,000 electric cust6:ers and about 520,000 cas custeners. The population of our service crea is about four million. Sece of the larcer cities in which we operate are F1 nt, Grand Rapids, Sagin .v, Lansing, Kaln=anco, j Bay City, Pattle Creek, Jackson, Muskenen and Pentif.c. Up here id the < northern' part of the_ peninsula ve cerve C2dillac, Mutistec, Travers. -*
.h I City, Chebayc; n and, 'or croarre, a r, rent .mny craller ec:, unities
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- *So=e' day the'vorld will need a ncv coure'e~of heat for
( . the prcduction of electric power. The known cupplics of ccal, oil-and natural eac, while very large, vill not last ind6 finitely. . Concu=crs Power Conp:ny alene uses about 10,000 tons of coal every
. ~l24 hours. The United States uces abcut half a =illion tonc of coal
'every 24 hcurs, just for the production of electricity.
Now suppose the pecple of the United States go en doubling their use of electricity every ten years, as they have been
' doi g. In ten yearc it vill be a =illion' tons of coal a day, in 20 years t'o v =illicn tons, in 30 years four million tons, and so cn.
. Further= ore, ccal is al=est surply going to cost =cre
- as time goes on, if only because of the greater difficulty of =inir.;
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as vc got deeper into the sca s.
-~. Strictly frcn the standpoint of goed business, it seens fitting that Ccnsumers Pcver Cc=;any, cne of the larger electri:
utility cenpanies of the United States, should do its part in explering
'the potentialities of nuclear fissica as a source of heat ~fer the production of electricity. ,
Consu=ers Power Cc=peny is located in en area where
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it is faced with relatively hich fuel costs in connection with its operations. This is co because it is located sc=e dictance frca
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the coal ficids. Over the years, the cost of coal, and the cost' cf trancportatien of ccal, have climbed steadily upward.
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To illustrate, in 1915, the averdce cost to the Ccrreny s for a ton of coal delivered vac C2.62 per ton. Twenty years later, in
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- This increase in the cost of fuel beco es important when it'is cencidered that in 1915, the Cc=pany concu=ed only 103,010 tons of coal, and in 1935 it censured only 386,336 tons of ceal. In 1955, concu=ption was 3,219,129 tens, and, in 1959, the Cc:pany cen-sumed 3,740,000 tens of coal. .
The ecst of f.uel is a very substantial figure in . connection with Censumars Power Cc:pany's operations. Last year it n=cunted to almost $33,000,C00. . .
- In accescing this reactor project frca an econc=ic point of view, we made sc:e calculations as to the order of our total fuel bill during the next thirty to thirty-fiv,e years, which corrc'epend:
to the ccent ic life of a new conventienal generating unit just being -
. introduced on the syste=. .
Based on censervative assumptiens as to creuth of cur systen over that period, probabic upward trends in the cost of ccal, and its freight, and 'rcasenable est'-nten of foreseeable efficiency of equipment, vc have arrived at tr.c conclusion that coal deliverci to our plants, as:uning no use of atc=ic energy, vould cost ever six billica dellars in cu tlative total over the next thirty-five years. Accordin;17, the Cc=pany believes that in order for
. it to furnish electric cervice in the future, at the cost advantaccou:
prices to its cuctcrers, it nuct te interested in and develop any fuel which%ffer rescenable proepcetc of reducing the Cenpany's fuel costs. We think that atenic encrcy for electric power generatica ultimately offer: a cocd likelihool of buccain; c:ene:ieally competitive. Concequently, when va considered the installatica of n
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opportunity to advance the technolo;y of pover concratien'by rescarch and develornent of the boiling water reactor. llovever, research and develo,=ent were not our col'c considerations, for ve are convinced that the plant that ve prcpose to construct in Charlevoix Ccunty, vill ultimately produce electricity
"*for the area at a price ren~conably con =encurate with the cost of generating electricity by conventional =esas, consi,dered for a 1cng-i tem point of vicv. ,
In short, we believe that the nov plant vill cerve a useful purpoce, and vill advance nuclear scieg:e and technology at the sc=e time. Consumers Power Cc=pany in glad to centribute in thic rather inportant way to the advance =ent of the broad prop a= laid out by the Atc=ic Energy'Cen=iccion for the develo;nent of nuclear energy in the United States. Tbnk you. . e d G 4 w q
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CO?tSUlCR0 &% 0n ConrAWY ) IIICLAG U:!ITC 1 A::D 2 ) Arc :7Jf cEnc 50-32GA and ) 500330A ) ______________J This is the Ccpc..;ition of ALPHO:05 0 U. NIMOND, taken before tialter P., Lauckner, liotary Public in and for the County of Oakland,1:ichigan, at Consu::-cra rower coe:pany, Jackson, tiichigan, cc:::enciwj on Tec , day, Pay 15, 1973. AP m ."411CU3: IC4.1."6LL'. CE ED ltmD DR?.1"O and C. FOR?.L'? DA*. ;n'J Acaintant United States District Attorneys Anti-Trust Division Depart ent of Juctice irashitaJ tc3, D.C. AppearinJ on beh,tlf of the United Staten. fGl. BOOLT:7 J. VERDISCO Attorney for the Atomic Energy Cot =:niccion L:achLngton, D.C. Appcaring on bchsif of the Atomic Incrgy co= mise ten. L't. MW.IOC 2CSSIER Office of Anti-Truct and Endcatuity Jf the Atc:21c rncrgy Co:rnionica t!ashin:Jt an, D.C. Apocaring on bui alf of the Atcalc Unorgy Cc aicnion. W. R. LAUCKNER & ASSOCIATES D E TROIT, MICHIG Af14 822 6 WOOOWARD 3 - 1118
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.' . 103 O Just to be clear about it, if, say, a nunicipal cntity in the State of Chic desired to buy wholesale power from Consucero B:mer, would you cell. it?
A I don't think co. Q You do cell poutr to Ontario !!ydro, do you not? A Mall, uo c:: change pouer with catario Uydro. Q Accu:.o that Ohio power or Duckeyo power or Ontario nydro or some other entity were willing to ecl1 pcr.;or to a nunicipality within your cervico territory, would yoa sell transainsion cervices to get the power there? A The ciatter hns never como up and I think I could want to hncu noro of the details of the trancaction. O Uhat kind of thingo would you want to know? A I would want t3 know, for ono thinry, whether or not our lawycra folt uo vero obligated to do so. For another, I would want to know for what purpose the powcr was being cold and at what rate - O Sold by whom? i A Dy a selling fir . At what rato, what the receiving i utility intended to do with it, what impact it uould have in the long ran on the ability of Consua:cra Powcr Company to nmincain its pt.csent raarkcts. W. R. LAucKNicR & AssocrATes DETROIT. MICH8G AN 4822G WOODWARD 3 - 1118 i l 1 0
104 O Is it fair to usy that your judg'acnt would be based at leaat in part on your judg:nent of the extent to which the purchaco of this po.;cr by the municipalit:y or cooperative within your service territory enabled it to reduce its rates in compctition with Conc:rners Power? A I think that would be a factor. Q A large factor?
- A I think so.
O Apart from the question of your Icgal obligation, are thero any other cajor factor 0? A tiell, I think t! e sina of the trancacticn would be a factor. Q Why is that? A Well, it might be a matter that all things considered uaan't too significant. I think whether the rccciving utility actually was going to use it to invado our present market area uould be a factor. Q What do you m an by "invado cur present carket arca"? A Holl, start taking away our custoacrs which we have invected a great deal of money in order to acrvo thca. Q Are there any other major factorn? A The adequacy of our cycten to take on th'.t additional W. R. LAUcKNER & Associates DETROIT, MICH GAN 48226 WOOOWARD 3 -- 1118
. . J 105 trann:r.icolon requirement and tho impact on our system of the imposed lead. O Uhat do you mean by impact? A Well, any timo you add an increment of load on an c :inting trancaiccion syctc=, that effects the flow of energy throughout the entire cyctem and we have to otudy that to determine uhat it did to us. O Assume that an entity esde a propocal cuch as this tocorrow, hou lon3 do you think it would take Con-nuscro Power to study these factors? Im. ROSS: I question the relevancy of that to the inaue in this prccceding.
- 19. Jh0LCli You'ro instructing him not to encuer?
Im. ROSS: Unicss you can show tho relevancy, then I will instruct him not to answer. I'll afford you the opportunity to c::pand on it. Q (cy Mr. Jablon, continuing) Lot me ack you a differ-ent question and I'll como back to that question. Would you cay that it is the conclusien of conc =cro Pow: Co=pany that uhatever advantagen there zr.ay be en the part of zaunicipalities or cooperativos to obtaining participation in the 1 W. R. LAt:cKNER & ASSOCIATES ! 1 DETHOIT. MICHIG AN 48220 WOOOWARD 3 -- 1118
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- ;o his exacination, hau characterired the uituccs' testi-cony in a t:ay which was inaccurate. ny my silcace and failure to cbjc't I should not have taken to concluun in that characterization, I think it'n not the Lau but I juct unnted to teko that cicar.
0 (Dy O. Jablon, continuing) I holieve this =orning one of the reasonc you ncntior.td for, an limiting tha willingccca of concumers re.scr to soll trancaicaicn to publicly cwned utilitics uan tho inpact that cuch cale nicht have on coa;;ctition betucen the buying entity and Con:ucorn Pcuor. l'y question is, firat, uhother that sc-c a fair characterization and, cocondly, escunic; it was, ucre you n.ninly referring to large con:crcini and industrial custo:cr= or 4 residential customera or both7 A I una referring principally to large contocers but I think the proble:a alco exists with :: pcct to reci-dential cceto.,ers even thnugh the amounts involved in a particular arcs might be relatively n:.all inectar as the trancier of cuateners frca onc nupplier to another becauco of, no I acntioned in responso to one of I.r. Drand's questions yesterday, wo do concern cursolves with tho' relativo rates at which to are able W. R. LAucENER & ASSOCIATES DETROIT, M:CHIGAN 48226 WOODWARD 3 - 1118 e
203 to supply =cryico to our custoscra as cc pared with thoso of other entitica. Fran%1y, wo ocn't Iiko to put. curecives in a position uhcro uc are increncing the c:Pcat to which our performanco lochs bad in relationship to that of other entitico. Q Doca that coepicto your ansacr? A Just one final thought on that and that i= to the extent that un do ue increase cur c::posero tc Icsing our markets. O To the c: stent ycu do cell tranunicsion scIvicos? A Uc, to the extent uo help our compctition to undcrcut un in the carhot placc. O I believe you menticaca that c n of the advant ;co of your cocraination uith retroit Edicen a::i that cf other utilitics in that it reducca the neccc ary reserves or reserve rcquircrants; in that correct? i A Yes. ! j O Are you familiar with the Gainc, villa decision, the ; Supremo Court decisicn? , A I know oi the dccicica but I'm not familiar with it. t Q nave you cec: hoard of the equalised recerves? A I heard it but I can't define it. O Would you bt. utiling to - would consumera msc: W. R. LAUCKNER & ASSOCIATES DETROIT, MICHIG AN 48226 WOODW ARD 3 - t i t h o-
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Company be willing to :.r.onNr the entry of publicly owncd utilitics within that acrvice crea or any group of the:n into the ;tichigna pcecr pool? A under cortnin circumstar.cca, yes. Uhat circur. stances would that be? Q A If they not the critoria cet forth in our cocrdination agrec=cnt with Detroit Edicen company. Q Uithout apecifically referring you to your agreement, I'n nurc vc both have cuen it, is it a fact that the latect agrecrent hetuccn Concuncrs roi,cr Company and Dctroit D31 con, ir applied to c hcr cuallor utilitics cuch ac Holland or coldwater cr :;rne of the clienta I reprcacnt. uculd result in tht!r having larger per-centage requirc:.ica a to their lead than Concumcrc Po.scr or Dctroit Edicon hcn to its load? A I dan ' t kncu. O Assuac that that were the cacc, sould that still be a pro-condition for ned erchip? A I think to becauco I can cec the renconablencss of it. ! O Aro you opeaking for yourcelf or Cencacera Uc'.wr in
. thin? Or both?
A I think I uould cay both.
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CO:se:ms ec:ma co:wAsr ) MIDLA C U:!IC3 1 A::D 2 ) AEC wt'E G 50-329A and ) 500330A ) _ .. _ _ _ _ _ _ _ _ _ _ _ _ _) This is the Dcpcsition of TLP!10:!$C
- 11. Al:22, tal:en before t! alter n. Lauckner, Ilotary Public in and for the Cour.ty of Oakland, Michigan, at concumcra Power company, Jacheca, nichigan, cc:::xncing on Teesday, Paty 15, 1973.
A Ws,ARAUCrG ICt. IIAL'dCE EC'.iAnD DRAtID and C. FORnEST BAntaU Angistant United States District Attorneys Anti-Trust Division Departrrat of Juntice Washington, D.C. Appearing on behalf of the United Otates. ICI. TOSCRT J. VERDICCO Attorney for the Atomic Iincrgy Ccaniosion t!achington, D.C. Appearing on behalf of the Aton:ic Energy Co:=n.iccion.
- 23. W,CICE !CSSIER Office of Anti-Truct and Endc::nalty of the Atomic Energy Corr::icsion tlachington, D.C.
Appearing on bohalf of the Ator.ic Energy coraiccion. W. R. LAUCKNICR & ASSOCLiTES DETROIT, MICHIG AN 48226 WOODWARD 3 - 1118 l 7
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- 167 Im. JAUID3a I uont through ::ry notes last night and I four.d,11r. noso, a nu=bor of references and I ut trying to capsuli=a a number of qucctior.s.
Q (By Mr. Jabicn, continuing) ticuld you say that Connu2cra Poucr is very closely coordinated with the Cotroit Edicon Company? A Yes. - Q What advantages are there to Consumers Pour from this? A Cnc of the important advantcgen is increased reliability. I think tlat we have less of a rccerve requirement than would be ncceccary if wo were an isolated =yntes. He have or.portunitico for cconcay, interchange of power t.c a limited extent now, it was more importanu in the past, the staggering of construction schedules, the nearonal divoralty of our loado c;:let to aoca cztent so uo can interchango Ec.scr. uinter and nuror, on an econc=ic basia. I would cay thonc are the
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principal advantagen. O And they hcip to reduce concu=crs Power's costn? A Yes, I would say that without this agreement we ticuld have highcr costa. W. R. LAUCIINER & A SSOCIATJ'E DETROIT, fwitCH:GAf4 48226 WOOD'.VARD 3 1118 e d
- 163 O btuld you say ycur agreement is equnlly as beneficial to Detroit Edloon?
A I thinh co. I don't knou whether it's equally beno-ficial, but it's certainly beneficial to then. O The consucerc Power either with the Michi.jan pool - it is also connectad to other .ajor cutitics, is it not? A 'lcs. O Ishich entitics? A The facilitics of the liydroelectric rower Crmission of Oncario, the Toledo Edicon Cog any, the Indians and nichigan Electric company, the Northern Indiana Public Service Cor_2ission and the co=1cnwealth Edicon. O Do you obtain einilar advantages frca thecc inter-connectionn? A Do. Ha obtain acco of the .eace advantages, but not all. Q Can you state the advantages you obtain from those interconnections? A Iargely the advantage of thece connectiono has to do with reliability of service. Incidentally, one ad-
- vantago ,I neglected to cention with respect to the agreement with Detroit Edison in mutual help in W. R. LAUCKNICR & ASSOCL\TES DETROIT. r/!CHIG At4 e.8226 WOODWARD 3 1116' b
i c-o cacrgencico. Likcuico, that i= trua sith Icepcct to theco other entitics. Gi=ilarly, in all cacca .:e would have the ability to exchango power on a planned basis from tino to tinc. As one sycten might hava power in exc.:ss of its requircaonts, another one might bo deficient at the same time. Thoto are the principal advantrcca I oco with theco entitico out-cide of nichigan. Although, in the caco of Ontario thcro in a significant ocanonal diversity which in beneficial to es, here in nichigan. Q Abacnt theco interconnections we have hocn talking abcut to achicyc the came amouna of Icliability would Conrumerc ro cr have to have additional plcat capacity, additional recorve? A I think co, O Do theco interconn ctions tend to reduce your costc? A I am not cure whether all of them do or not. There arc involved cignificant coats to establish the inter-connections and I can recall many years ago when we first ucro considering catablishing thecc intercon-noctions that tha economics were not too favorablo anil it sias' dono primarily, particularly with the i interconnections to the south, for reliability rather 1 1 1 W. R. LAUCKNER & Associates ; i DETROIT. MICHIG AN 4H226 WOODWARD 3 - 1118 l
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170 than for cavings of cost.
.O Uhen you talk about reliability, is it your statement that you'rc not certain that Concuncra Foucr could not have built an additic 21 clectric goncrating station to get cquivalent reliability that they could have from your interconnections?
A That's right. O At comparablo cost? A That's right. I haven't =.00 any roccat comparicon of that, in that I'm caying. O Looking tomrd the fute.ro, do you think it would bc bettcr for consur.cra rowcr to isolato themselvca und build additional capacity? A no, I don't think co, Uc've already got the invect-cent in the interconnectionc and I don't see any rescon uhy we chould removo thca. O I accuco the company mado studica at the tino of the contparable cont? A Yos. Q And decided to go ahead on the basic of theco ctudico? A Ucil, I don't have any recollection of the studico. What I do recall is that when we firct started con-sidering the subject..the cconc."ics ucro not favorablo W. R. LALICKNER & ASSOCIATES
' DETROIT MICH;G AN 48226 WOODWARD 3 1118 e
- 171 and when we finally decided to cctablich tho inter-connections it was done on the bacis of reliability, t
not econo:ay. Q nou about - nro thero coct savings from the diversity due to coasonal loads? A There arc co=c. That is true with respect to cortain interconnections, not all. Q Uhich ones cro thoco, ploace? A I'm not cufficiently familiar with all of the other cystcma to bo able to answer that.
!!2. CADLO;T: Jat the record shou that I na chouing Mr. Aysond and have shoun his councel an "crder authorizing trancaicsion of cicctric energy to Canada and cuperceding prior authorization" of the redoral Powcr Co.~ticcion, docket number E7206 innued Octfoer 10, 1972 and that thin order la in the caco of the Detroit Edicen Co:pany and concutcrs Power company.
Let tha record further thou that I cpecifically Icforred to the uituces the last para-graph on page four, running to page five, which begins, . l "The propc:,cd increat an l l W. R. LAUCICNER & ASSOCIATES l DETROIT, M'CHIG AN 4822 6 WOODWARD 3 1118 e ___ h
'. 172 in the ccount and trananission rato of electric cncrgy exploited by applicants to Ontario nydro will further impicment the pro-visions of the agreccent it gccc on. I ack the witncno to read that paragraph.
(Examining document.) TIC IUTESS: Yes. Q (Dy Mr. 4rchion, continuiuj) Do ycu ngroo with that statement? A Tcs. Q You were dircurcing with Mr. Brand the 25 per cent rule beforo. Do you thini this rule is a good thing? A Ccncrnlly, yen. O tihy? - A Dccauce the municipalitics have certain tax and in-tcrest subnidies that enablo thca to compcto on a preferential bacis with an invcator owncd utility that hac to pay the wholo market cost of capital and the full amount of tancs icvied by governnont and to the c:: tent the citizens of a community determine that they want to have a municipal cyctem, it cocca to rae that it'n appropriato they do be allc-acd to have a W. R. LAUCENER & Associates DETHOIT. MICHIG AN 46226 WOODWARD 3 - 1118 i n
203 to supply cervice to cur custo:cra as cc:npared with those of other entitica. Frankly, wo don't liko to put curcelves in a position uhcro we-nro increasing the c= tent to uhich our performance looks had in relatienchf.p to that of other entitics. Q Does that completo your ancwcr? A Just one final thought on that and that is to the extent that uo do tu increase cur expcsure to losing our markets. Q To the entent you do cell trancricsion serviccc? A :so, to tho extont uo hcip cur ccapctition to undcrcut us in the r.arket place. O I believe you e.cationed that one of the advantages of your cocre'.ination with Ectroit Edicon and that of other utilitics in that it reduces the necccesry rescrves or rccervo requirc.ments; in that correct? h 2ca. O Are you f =iliar with the cainesvillo decicica, the Cuprece Cc'.trt decision? A I knou of the decision but I'z: not fa:tiliar with it. O nave you c ecr heard of the cTaall=cd roscrvcs? A I heard it hut I can't defino it. Q Uculd ycu be uilling to - uculd Concuscro Pcuer W. R. LAUCKNER & ASSOCIATES DETFtOIT, MICHiGMJ 48226 WOODWARD 3 - 1110
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cM Company be villing to croncer tho ent:y of publicly ownr. . utilitics uithin that acrvice arca or any group, of them into tho stichigan power pool? A Under ctrtain circt=ctances, yes. Q Uhat circu=ctances would that be? A If they nct the cri 2ria cet forth in our coordinaticn agraonent with Detroit Edicon Corgany. Q Withcut specifically referring you to your agreement, I'n curc 'ao both have caen it, is it a fact that the latcet agrcer.:ent between Ccacuccrs Power cc::rpa::y and Detroit T.dicon, if applied to other c=allcr utilitics cuch as Hollar.d or Coldwater or como of the clients I reprencnt, vculd Icsult in thei; having larger per-contago requirc.r.:nts to their load than Consu=cro Po.1cr or Detroit Edicon has to its lead? A I don't knew.. O Ancuac that that uore the caso, uculd that still tc a pre-conditica for cc:rberchip? A I think co becauco I can ecc the reasonablenc_:s of it. O Aro you cpcaking for yourcelf or ccncumero Peucr in thic? Or both? A I think I ucr.ld cay both. O In consumers Power willing to scl.1 ;.cuer at whoic alc W. R. LAccKNER & ASSOCIATES DETRO:T, MICHIG AfJ I.822 6 WOODWARD 3 - 1118
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' UNITED STATES OF M1 ERICA i
FEDERAL POWER COMMISSION Before Commissioners: John N. Nassikas, Chairman; Albert B. Brooke, Jr., Pinkney Walker, and Rush Moody, Jr.
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The Detroit Edison Company )
- 'and ) Docket No. E-7206 Consumers Power Company )
ORDER AUTHORIZING TRANSMISSION OF ELECTRIC ENERGY TO CANADA AND . SUPERSEDING PRIOR AUTHORIZATION (Issued October 10, 1972) i The Detroit Edison Company (Edison) and Consumers Power Company (Consumers) filed a joint application in
- Docket No. E-7206 on February 24, 1972, as supplemented on May 15, 1972, for a supplemental order, pursuant to Section 202(e) of the Federal Power Act, authorizing an increase in the amount and rate of transmission of elec-tric energy which Edison and Consumers (Applicants) may transmit from the United States to Canada. Edison is in-corporated under the laws of the States of Michigan and New York, with its principal place of business at Detroit, Michigan. Consumers is incorporated under the laws of the State of Michigan, with its principal place of business at Jackson, Michigan.
( Applicants are engaged in, among other things, the generation, purchase, transmission, sale and distribution aof electric energy in Michigan. In general, Edison provides electric service in the southeastern part of Michigan which borders on Lakes Huron, St. Clair and Erie and the Detroit and St. Clair Rivers, which Consumers serves nearly all DC-24 a f
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Docket No. E-7206 . other parts of Michigan except its upper (northern) penin-sula.. The service territories of Applicants are contiguous and their electric systems interconnect and exchange energy at several points. The generation and transmission facili-ties of Applicants are operated on a coordinated basis in supplying their combined loads. By reason of such inter-connections and coordinated operations, which are contrac-tually provided for, the electric systems of Applicants are known asLthe Michigan Pool. Interconnections and exchanges of energy exist between the Michigan Pool and electric s, s-tems operating in the neighboring (1) States of Ohio and , Indiana and (2) Province of Ontario, Canada. - Edison and The Hydro-Electric Power Commission of Ontario (Ontario Hydro), an agency of the Province of Ontario with its principal place of business at Toronto,
- Ontario, are interconnected, pursuant to authorizations hereinafter. mentioned, at three points on the United States-Canadian Border. The three interconnections may be generally described as follows :
- 1. One 230,000 volt overhead transmission line of Edison extending from its Waterman Station located on the property of its Delray Power Plant in Detroit, Michigan over the Detroit River to the international border where connection is made with a similar line of Ontario Hydro which extends to its J. Clark Keith Generating Station situ-ated in Windsor, Ontario.
- 2. One 230,000 volt overhead transmission line of Edison extending from its Bunce Creek Station at its Marysville Power Plant in Marysville, Michigan over the St. Clair River to the international border where connection is made with a similar line of Ontario Hydro which extends to its Sarnia Scott Transformer Station situated in the vicinity of Sarnia, Ontario.
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.- ocket:No. E-7206 '
- 3. One 345,000 volt overhead transmission line of Edison extending from its St. Clair Station located on the property of its St. Clair Power Plant in East China Township near St. Clair, Michigan over the-St. Clair River to the international border where connection is made with a similar line of Ontario Hydro which extends to its Lambton Genera-ting Station situated near Courtright, Catario. .
By Commission order issued March 1, 1966, in Docket No._E-7206 (35 FPC 292), Applicants were authorized to trans- ~ mit electric energy from the United States to Canada for de ' livery to Ontario Hydro in the maximum amount of one billion kwh annually at the maximum transmission rate of 750,000 kva over certain 115,000 volt, 120,000 volt, and 345,000 volt facilities of Edison located at the international borde be-tween the United States and Canada in the vicinity ,fI rysville, Detroit, and St. Clair, Michigan. These facilities ate covered
- by Edison's Permits signed by the Chairman of the Federal Power Commission on October 12, 1953, Docket No. E-6516, and by the Acting Chairman of the Commission on March 1,1966, Docket No.
E-7207. Subsequently, by Amendment to Permit, Docket No. E-6516, signed by the Chairman of the Commission on September 15, 1972,-Edison was authorized to increase the operating ities to 230,000 voltages of its 115,000 volt'and 120,000 volt facil-volts. Applicants now -seek authorization to export electric energy in an amount not in excess of four billion kwh an-nually at a transmission rate not to exceed 2.2 million kva 345,000 by means of Edison's above-described 230,000 volt and volt facilities for delivery and sale to or exchange with Ontario Hydro in accordance with the terms and con-ditions ment dated and at the rates set forth in the Interconnection Agree-May , 23, = 1969 (Agreement) among Consumers , Edison ~ and Ontario' Hydro. The Agreement, which is on file with this Commission as' Edison's Export Rate Schedule FPC No. 13, also
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8 6 Docket No. E-7206 provides for Ontario Hydro to (1) sell or exchange energy to or with Applicants and (2) coordinate the operation of its electric genert . ion and . transmission facilities with those of Applicants In support of their request, Applicants state that the net deliveries of energy to Ontario Hydro on an annual basis will normally be "only a small fraction" of
, the annual export authorization currently sought and that all energy exported pursuant to that authorization will be
" surplus to the requirements of accessible United States markets at the time of its exportation."
The National Energy Board of Canada (NEB) has licensed Ontario Hydro to export electric energy to the United States for sale or exchange to or with Applicants, ) Niagara Mohawk Power Corporation (Niagara Mohawk), and Power Authority of the State of New York (PASNY) for the period expiring December 31, 1975 at rates not less than those contractually provided for by Ontario Hydro and the aforementioned Michigan and New York electric utili-ties from various points in Ontario by means of, among. other transmission facilities, the above-described trans-mission lines of Ontario Hydro for which certificates of nublic convenience and necessity have been issued by NEB. The increased amount of electric energy proposed to be exported by Applicants , like th9t amount which they pre-sently export, will be utilized by Ontario Hydro to sup-plement its own generating resources in supplying the loads of its electric system. } The source of the-additional electric energy which Applicants propose to export will be, as in.the case of the energy currently exported by them, the resources of the Michigan Pool, including energy generated or purchased by ' Applicants . The proposed increases in the amount and transmission rate of electric' energy exported by Applicants to Ontario Hydro will further implement the provisions of the Agreement and thereby improve the coordination of the operations of T
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Docket No. E-7206- the Michigan Pool and Ontario Hydro's electric system with resultant-benefits to consumers in the United States and Canada in _ the _ fonn of more reliable and abundant sup- i plies'of energy obtained for less expenditure than the cost of installation of additional electric generating facil-ities by Applicants. In view of Ontario Hydro's intercon-nections and transactions with Niagara Mohawk and PASNY, referred to above, .the expanded energy transfers between Applicants and Ontario Hydro are expected to produce greater interregional reliability. l Written notice of the application has been given to the Michigan Public Service Commission and to the i Governoraof that State.. Notice of the application has also been given by pu'olication in the Federal Register on March 29,1972 (37 F.R. 6425), stating that any person desiring to be heard or to make any protest with reference to the application should on or before April 12, 1972 file with the Federal Power Commission, Washington, D. C. 20426, petitions to intervene or protests in accordance with~ the Commission's Rules of Practice and Procedure (18 CFR 1.8 or 1.10). No petition or protect or request to be heard in opposition to the granting of the appli-cation has Faen receivn? The Commission further finds: 5
. (1) The proposed transmission of electric energy from the United States to Canada, as limited herein and as hereinafter authorizcd and provided, will not impair the sufficiency of electric supply within the United States 'and will not impede or tend to impede the coor-cdination in' the public interest of facilities subject to the jurisdiction of the' Commission.
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5 JDocket No. E-7206- - 6-(2) :The. period of public notice given'in this matter Lis reasonable. The Commission orders:
. '(d) - Applicants are hereby_ authorized to transmit electric energy from the United States to Canada in ac-cordance-with'the terms and conditions set forth in the
. application.and subject to the provisions of this order, (B) The electric energy.which Applicants are hereby
. authorized to transmit frem the United States to Canada shall be in an amount _not in. excess of 4,000,000,000 kuh annually at'a transmission rate not to exceed 2,200,000 kva; the energy is to be transmitted over the 230,000 volt facili-ties specified in the Permit of Edison signed by the Chair- }
man of the Federal. Power Commission on October 12, 1953, as modified by the-Amendment signed by-said Chairman on
'SeptemberL15,.1972, Docket No.- E-6516, and the 345,000 volt facilities,specified in the Permit of Edison signed by the Acting Chairman of the Federal Power Commission on March 1, 1966, inLDocket'No. E-7207, referred to above. The limitations provided herein shall-apply to the net hourly rate of trans-mission over all interconnections between Edison and Ontario Hydro and the net hourly transmission of kuh of energy over
'those interconnections.
(C) The authorization herein granted may be modified from time to time or terminated by further order of the ' Com-mission, but in'no event shall such authorization extend be-yondithe date of termination or expiration of Edison's Permits, ). ~ as modified, referred to in Paragraph (B) above. _(D) Applicants shall not transmit electric energy j from the United States to Canada'under the authorization herein granted-in the event that Ontario Hydro at any time F L
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J- . Docket No. E-7206 hereafter lacks the requisite approvals of the National Energy Board of Canada to interconnect with Edison, sell or exchange energy to or with Applicants, and otherwise carry out the provisions of the Interconnection Agreement, dated May 23, 1969, referred to above, and any amendments thereof or supplements thereto or any superseding agreement. (E) Applicants shall conduct all operations pursuant to the authorization herein granted in accordance with the provisions of the Federal Power Act and pertinent rules, regulations _or orders issued by the Commission. (F) Applicants shall install and maintain adequate metering equipment to measure the flow of all electric energy transmitted from the United States to Canada , pur-suant'to the authority herein granted; shall make, keep and preserve full and comp,lete records with respect to the movement of such energy and shall furnish, in triplicate, reports annually, on or before February 15, showing for each month of the preceding calendar year, the kilowatt-hours of energy _ received and the kilowatt-hours of energy delivered over the three interconnections as a group, the maximum rate of transmission, and the consideration therefor. In addition, such reports shall show separately for each interconnection the gross monthly kilowatt-hours transmitted in each direc-tion and the maximum rates of such transmissions. (G) This authorization to transmit electric energy from the United States . co Canada shall not be transferable or as-signable, but in the event of the involuntary transfer of facilities used for such transmission by operation of law (including such transfers to receivers, trus tees , or pur-chasers under foreclosure or judicial sale) said authorization shall continue in effect temporarily for a reasonable time thereafter, pending the making of an application for permanent authorization and decision thereon, provided notice is promptly given~in writing to the Commission accompanied by a statement that the -physical. facts relating to sufficiency of supply, 1 I l
. 4 Docket No. E-7206- .
rates, and nature of use remain substantially the same as before the transfer. f A < (H) . This authorization shall be without prejudice j to the authority of any State.or State regulatory commission t
- for the exercise of any lawful authority vested in the State i
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or State regulatory commission over Applicants. (I)_ This authorization is without prejudice to the - authority of this Commission, or any other regulatory body, with respect to rates, service, accounts, valuation, esti-mates or dete rminations of cost, or any other matter what-soever now pending or which may come before this Commission, or any other regula tory body, and nothing herein shall be construed as an acquiescence by this Commission in any es-timate or determination of cost or any valuation of property claimed or asserted. (J) The authorization herein granted shall supersede that heretofore granted by Commission order issued March 1, 1966, referred to above. By the Comission. (SEAL) Kenneth F. Plumb, ~) Secretary. u .
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I Oar final c~reement with the Dev CM alcal Co=re.::y rehe it no 2cn cr i necenary for no to c.ce.11ra the:c distribution facilitics. : hic ! l appreical en : bc witht aIn f 70 any further censideration. City cf C:and T.:rida D1:tributicn and Street Lichting Synten ! 9 \ 1 no nc-1 city cd".ir'.ctratica 1:: ncu c. In 'cenalderin.; the e.gencien I and ury. .iins of - city'S OtrC t li",hti q cyuten, nni it is assx.ed th .t .:e ni;,ht ncain ::: tivate cur prcp :al te parchase 1 this cyste c r.n alternative to the city. l hPR k h!;3 (.) .
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s . Dere is e.n efter pen.ll:r: to the Citf cf 1.'ycnira to purchase it: strcet li.~.ht".:v cy:: tot. A decicic:: cn this offer'is c.q :cted within the ne::t fc.I cend: . 7 city cf caci:r. i 'fic%e: Tri: street tir;htirc An effer t:u sub.11tte.1 to th ? City to yurchase the atreet lic.ht-in3 cy :c.: in tc.::.~.:3 _cf 1';59. IR vill a.!vice ycu es to th2 ntatus of this effe: ct c later date. , . If ycu hr.ve eng gestio:.s ecnecrning cny of the chove, plen:c let ~ r.c kn:v. .
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mnvah, raraan 3: ,4 COUSU50TS l,' row O POWar February 18, 1970 ' - ' oirc ' - u C0iliDEDy
- c suoacer .1ppraical Reviev . ,
inicnnu. Conncseornocencc HJJ:ncen, Farnall . . cc 'I CRR:ndolphi I*ichican Ave 5 Daring the last five years several appraicals of custcner-cuned sys-to:ss have be:n =de b/ the Electric kgineering Departnent. Thece appraicals srcre =de in cooperatica with other concerned arcas in C-::icral Office and the Co= rcici Divitions. Ficace revicu tha follevinoappraisals and indicate the . status of cach.
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(d) Copy of letter dated M:rch 4,1953, :.nd copy of
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,:.*f l Tcdcrol To::cr Co ri::ica rec:cstin; denie.1 of' .
I reque:t of Citicen: for i.'.le .an County, It.c., i for a st y order; cnd s .... ^
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d (e) Co.n. o f . City of Alle;:.n to t!.a Tcder:1 Ps:xr Cc -itsien
. advir.in:: that any deln/ oc::sioned, by n :tv of the C =.* ::ica ': crd:r in L: h:t "o. 73G0 v0 :1d Crectly ir.:entcr .r.cc the City of Alle;n.n c-d that the City w.:.: preccadir.~, with plans to clo e tho : lc en M.rch 6, 1?53. -
The che.ir. .m reported to the eccting that he has been
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. the jouraa.1 entrics ce ret .forth in said court. order en.
s etti!.c :.nife, v*.:SM n*; and declarir.G null and void all provisio : o f the :*ichic n P folic Service Co. ::10 fon order in:onci: tent with s eid court order. As provided in ::Id err :::nt end court order, the cc -
*3:ny vill record en it: tooh: tE.c $1,623,160.53 pur:h:3e price of
'~ 10 ~.:~ o nunicip: 1.h:;r e sy: ten byo."
i heservice recorf.in~. electric pl..nt
$316,0'Y.97 vith cer-In at c.n ecarec:tc origin .1 cost r e:pondinc re:crve for d:preci: tion totalinc $223,G71 cr n net o r!cin:1 cc:t cf $557.955.99, ne belance of the pu ::::c price vill be rc:.rd=1 in tac clectric Pltr.t /.cqui:itica /.d.ju tac .t
- Account. This 1.tter cco. int vill be elcared, by retrc :tive chercc: to !:incellt:100u: 1. orti::tien f.ecour.t 1:25 in c:.ch of the yce.re 1953 to 19'2, inclu:ive, in the e crenzte cr.ount of
$6)),1k2.22 and by charces to Ic.ortier. tion of Utility Pl:nt
!.cquisitica //2fu:tnent: - 1ccou.t EC5 over.r. ten-y:: peried bectnning July 1,1%3 in the ccGrecate ::'.ount of $35F(,031.37 The ::id n:rce:ent cnd court order per .it the' co .;:ny to eccord Eppror.instel/ $150,CC0 rore in plent cecounto then origin lly I
ordercf b/ the C :ciscica and redu:e the ch:rce to surplus by cn equiv:lc.it r.n:unt. In diitien, all of the purch:ce price in excene of net cricid:1 :::t is ac:ounted for := an ecqsticitica ad',ustnent r .ther th n h: vin ; a p:::ica cf thi : cunt classified
- en enrcorcir.;-/ prep:rty lo . y.oreover, the enorti::tica period f:r'th $357,031.37 in -he acquisitica r.d'uct:.c.it ne :unt
.: s cxtent:d fr:n five to ten year:.
The r.ceting thercupen cdjeurned. . ek
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.thorcon upon Sap: :.bo- 1 3 a>o::sible v;22n a ctandt.r cu . ,l>" 19@, or at such carlier data na nic;ht ba ating planh bzi baan fttrr.ish:d. of enort;y other than said diccal oper-
- I am naviced that all ccncretion -t the di ccel plant hr.: .
no;t bacn disco::tinued an,i cur calva;c dopcrttent is atte:.pting to dic-po:so of the diesel cancratin; facilitica to ba rc:.oved frc= the pr0:.-
.. iscs> and retain d:: cept conycJ" one cid~ dice 21 unit ifaich tha Cit" has requested .o a th vct .
to them cc cn antique.
'Inin nozo in bein.. tiritten for the purpose of callin:; thi r.atter to crr attentica ec=2 tina p ior to 82;tencer 1.19$ co that proper i::str=..ont:
the City ca or bafore thnt dato.cf rceonveycnce r.:ay ba prcpared and deliver CI"i/db
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. RLPaul, Michi(;cn Ave - , , _ _ _ . i. ,,, _ Cp:.m..s
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RHInilor, IInsins . Rt.Conden, '.".ichiaan Ave
- J13cstrich, Michi.;cn Ave On the basis of the Re.crt and At.t.ralsal-of the. electric distribu-
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v.'.'., o n . e. . s tion sh o^weI3 o"A Ac>.ounting, and Innsing Division In.;ineering an:1 a revenue and rate analysis propred by the Rate De,artment n and other considerations, sie hope to scon sub-
', nit a proposal to the City of Eaton Rapids for the purchase of its electric system. It is o,xpected that this proposal vill consist of a cash offer for the syste.a, tcols and related equipnent, and material inventory Cu s ' ..a. . s ac a" plusyan offer to
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this acquisitica and all Cit.y accounts 111 be billed under applice.ble C ::.an"s 1 - stan-lard rates as - of the date of acquisition. The attraisal rer.ert indicates that certain system inc.revementa . ::suld
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the City vill be advised of these plans. We vill keen vou infor:cd of this situation as it d'velops; hcuever, in the neantine, if yc-[ have any cct ents or cuestions, please let ne kn0:1.
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You vill recall ny mentiening to you that Goidon Sandal had.. indicated that Alt.ena ?cwcr Cc r. an's* would be interected in sellin; cut if they cculd receive an offer similar to that :.ade to Rogers City ?cuar Co piny. 'Ja, of course, do not h:ov how r.uch
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"vcinht" this renark carries but, in any event, we had the P. ate Departtent put together :::e figures which yo t will find attached. .
The Roger: City price to revenue ratio was 3 12 and
. the price to cu:tener ratio v. 499 'Jhen app} yin;; these ratios to Alpena P,ver C ....... .
..e have a $3, JO3 CCO " revenue" figure ani 3
$1,830,CCO "custo:2r" figre.
1 Uc $v ?-h . Sandall at the 12A-yRECA necting in Traverse City and he told us, at that tice, that Ralph Fletcher had suffered a heart attack. ?crhaps tha "~" g i: prcper to investigate the possible purchase of S.e Alpena power Cc pany. Yourc very truly, .
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December 3,193
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To: L:ccutive Officers . Division Mone: cro *
\ G.O. Co=unications List .
Attached in c letter which vill be sent on Deccaber 6 to the Presidents, Board Members and Managers of the seven rure.1 elec-tric cooperatives served by I;orthern Michigen Electric Cooperctive and L'olverine Electric Cooperative. 1 - Our intent is to inform k.hca of the =ceting held on September 21 in L'c.shington, D.C. vith Mr. I; omen Clapp cad nerloers of his staff recnrding ::co RF.A loans totaling $12,hh6,000 for additicnal Gencrction a:d trrasr.iscicn in Michicca. .
. Additient.1 infer:1 tion pcrtnir.ing to corp 2rative costs of ener;;y is includt.d in the lcttcr. /.10 0 , I c= enclosing a ne*.; state-ncnt of policy pcrtr.ini: ~. to electric rervice ir.vclving cur franchised arens wherc :.:rr.1 electric coop:.rntives nny be operating c.nd a state-
,- ncnt of policy per:cining to our ccapetitive activitics involving nunicipal,utilitics. * '
Very.truly ycurs, f). . s !(,9'.:;w.fr.j- yr^&'
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I vculd like to tche n feu ninutes of ycur time today to discut: I a very unique ph::c of our clectric busines: -- that being cur sales to lhnicipal, EA and other powr co: panics or wholceale cale: as they are defined. Alt: ,h these cnics reprc:ent a ==211 portion of our total clectric bu ince , thu anecciated prcblems and their relation: hip to the future welfre of our Ccapany c.re extrc .c1;y impermnt to all of us. In this Th::: of er bu::ines ve cre in the pccition of perpetur. ting the t exictenco cf t. cunicip:1 plants and r.A's, rhich could be the nucleu: of greater public p0.ir . cysto: yet to conc. Yet, if we don't do busines vith.thc= va.527 be forcin- their = re rapid con:clidatica and expansion. I don't n.nt to infer here that vc n' c ct cf.d: vith cll cur Who.1.c e:1c pn.*cr cutteners. ITc have c:.:treaeV cced relction: hips with ::ny cunicipal plants ani como cocperativ:.z. P.1ny of these have no cepiraticn: beyond the opration cf their ::111 plants er systens c they exist tcday, and like doin; be.'ines vith us. E vcher, vc : st never forget th:.t the Inblic ycrer proponents, of which there cre sore de:lict.ted cce: here in liichigan, cre clvays vorhinG on the:c pcopic or have their cyc cn thc=. To cet bc,ck nc.t to scro specific situations, I belicyc . . ... . .
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Introtetten-I belicyc co:t of you have heard of se:c of the probice and i activity that ha been takinc p2.cc in this area of our busines: during the past year. Sonc of you have been directly involved in come of this activity or have been involved in preparing data u:cd in this activity. Pa.rticularly, you tre preb:bly cere of the controver:y that existed between Concuter: Power Co:pany and the TEA here in Michican over the proposed expansion of Concr$ ting iacilitics and the cost of pc.rcr to the distrib'iting cooperatives and their customers. This centrover:y in a reficction of the turninc point we have reached here in Michican. L*e have just reached a point that =any other states cnd utilitics reached acte time ago; a point at which the G.'C cooperative: becesc the Cuiding force in the Pli nove ent and the distributing ccopert.tives, and their ec:bcr cu:teners scrcly beconc p:wns in this struccic. His t o: ./. Before I co further into this probles, I would like to take a few nia.ute: to review vith you the total pict.tre of our Municipal, FIS and other tholcanic pcter snic: cnd cctivitics as it exists today.
' b'ithin the Concurer: IV.rcr Co:pany cicetric service arca, or directly adjoining this area, there exists todcy 19 cunicipal electric plants, 2 git cooperatives, 9 distributin; ecoparatives and 2 :-4 1 private pcecr companics. ( 2 cce r' e cheva en the tvo cap here before you which vc vill discu: in =cre detail' later. ) . Censu=cr Pc.:cr Cc:parh is presently supply-in; a p.rt er all of the pc.cr .ecuirements of the 2 private pcVer cc panic:,
the 2 GLT cooperatives,1 distributing ccoperative and 13 tunicipal pinnts.
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4 Average 390,853,0C0 bih and $!s,303 ,000 .
'In1h55,totalcalesacountedto This figure vill be important when we again get cost per 'c./n va: 1.10). .
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- back to the Et probica.
p k Ptte : In Scit ember 1965, the Company est blished two stcndard wholesa i power rates fcr these custeners and has cince negoticted d the new con these rates with all but 2 tunicipal plcnts,1 private pcuer cc:pany cn In cencral, these rates (onc for 2 GLT's and 1 distributina eccperative. 511chtlyIc:crco:ts
- total purch::e crd one for partici purchneo) resulted in Savings in power cocts to the Citr of h*r City of power to the c customers. has not yet cicctric department vould exceed $50,000 per year,'. but the City "his is indicative of the ver/ perplexing probic:
egreed to a nc. centrnet. facin; uc in h y Cit /. f.ecuinitien of O'Sr B'.cetric Sv-te .s
'Tne first Cen1 of cur l'arhetit; netivity or.progra : concernin.;
in cur service area is, of ccurse, to cecuire the:e other utility cy: ten . Since 1950, Censurerc Pever bce,purchaced 6 tunicirc.1 electric ' syctens. . cysttus. hi offer to pur' chase the Charlevoi c systc vas turned dern, but vc In 1965, .: hen it bec:.c are nc.. cupplyins ecst of Charlevoix's recuirccents. generating plant, vc apparent that p averre Cit r _vas_ tb' cut to expand it nttempted to head this off vith a lease prepconi, but this never got ver far. 1.'c offered Traver::e City $525,000 per year for 30 years but could n "he City is presently only Cenern'.c encuch 'nterect to sell the prcpesiticn. ~ plus n reali::in; about $1C0,000 per year fren the cicetric cperatien': in sub tantially less than our $523: 0:0
$130,003 rate differential, but thi:: - . . .
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m .- ,-e. ___ . _ _ _ _ ._ ._ . . . _ syste.n (ccat.*d) icure. 21:: indicate: the difficulty in attempting'to ;archase or lea:c . thenc syntese. n a R"A crd public pc.rer crcup encrt c stren; influence
./
in Traver c' City. Drthern Michican G2" ha:: en interconnection *. tith Traver c
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t . CLty. . Also in 1965, we offered to purche c the St. Louis cicctric syste 1 for$825,000. 21 be not bcon officially acted upcn as yet. Volverine Eleetric' GET cooperative cttempted to intercet St. Ionic in a so-called interconnection nGrcement. . We cre in the proce:S of subritting purchanc propo cle to the City I of Al]er nn for its cy:: ten and to Grand E2nir's, and the City of 1.'vmin; for their street-lichtinc cysten::. Wolverine Electric Cooperative also offered , to cche a connectica uith Allectn. . Ot.h er In additica to these accuisition prebicas, vc have also been verhin~ to inercacc our wholesale pc.cr :nics to other custe:cra. D.-Incering coat ctedica verc :dc fcr Peterhe r tnd Hollend in hepc of increasing cales to these custo:cra and fore::talline, the iritallation of additional cencratinc e facilitics. Occc efferts verc succcesful in Fotockey, but Holland plcn to Go cher.d with n 30,0?3 lat unit. , Uhcre vc recently cave up property to the Cit r of Lancin~ due to nnnexation uc cre procenti/ negoticting for an exchance of prcperties brcucht on by further annexcticn. 1 REA Prcbl c-"; l As you enn ::ce fron the caps, there exists in our cicetric service
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area not one b :t two pc'. cr syste.: . The second, chcun on the c.ap in red, is l nn- .s.: uO1 $'w. g a 5.??
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' r '; Ltha interconnected syntes of Northern 111chican Elcetric Cooperative and
. Wolverine F.lectric' Cooperative end the municipal plants with which they are intercenhected. /sithcu ,) rc3atively :all today, by ec=pa--ison to cur cystem, you can ace that the extent cf the cystem is considerable. As indicated crlier, the cecperativen cre cl::o doing everythins in their pcVer to extend the systca even 1%r thcr.
- It is this cr=in; systen that presents the real problon to Con::u .cr Power Cc p.ny because the systen is not only duplicatir.3 our systen ,
. i but-it is cleo aticuptins to achieve a ccupletely independent p=cr ::ource.
, It va the source of pc.:cr to the distributing cooperatives that cau::cd all s the controre.rcy it::t year. .
. In hegotiations with 1crthern ::ichict.n Elcetric Cooperative and, it::
consultants, Daverr.n I: A::cocictc fro: Grcr.d F.1;ide, in 19@, Const .cre Tc.tcr offered to cupply the cdditic al p=cr reg:irenents of both : orthern
}:ichican cnd Wolv rine at'rcte we believed verc cubstantially lever th .n other p =cr cocts. Tne:c ".ccotic.ticn Icsted cbcut a year and vere event.ualic.-
cntered by FM repro::entatives frca 1*achington. It bcccee apparent that the cooperativc:: diJ .ot vich to buy pcuer, dnd they uced all :: orts of excu::es to find cur prcpenals uncatisfactery. C*2 the b in that rati::factery c;rce-(e conte cc. tid not be reached, the FL Administratica cyproved a $12,000,000 loan for t.co nc.r concreters. A 22,000 }ar cte:n unit to be located at Northern "ichican's Adv:nce plant cnd c 10,503 hv cc_.binatien etca -ca turbine at Wolved ~- " cetric's Burnipp station. Tacce additions vill be in operatic: in 1967 or 63. .
~
In en cttenpt to point out the fallacy of additional Cencration, - Con::ucer: Te ter prepared facts to prove the dictributinc ccc;cratives had 19818 . -. ,b Bf
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'N paid !!orthern l' chican and 1.*olverine $5,878,000 nevo for p:r.cr than they needed to over the Icst 15 year: that the Gi? he,vc been the sole supplicr: .
of thccc cooperativc . It va ::tated that this hich cost pcVer re ulted - directly. fres the C-r's self-c:ncration policy vLich can ncv being prceli:1-tated further by this prepo::cd nc r concration. ':~nc distributin; cooperativc: are paying frca 13) to 15p per hvh conpared to cur cverage wholesale p2ter i ate of 1.1C,!. - 1!ith the decision : dc to precced with cdditional Generaticn, Con:uncro P:::r withdrev our pecial rate prepocal:: and inforned the t.co GhT cooperative: and the Southeastern :'.ichice.n Raral Electric Cooperative that we ucro cancelling their cr.isting contracts. It van indicated, herever,
- that if the booperativc: vish to continue the . connection:: vith Censumer Po.:cr Conpr.y, ns:t centract: vould be n:;otiated on our then n:v standard uhole:cle pater rates. Uc have no: yet had c:rf reply frem the coop:rativc althouGh va belicyc vc vill continue to supply acte pc.rer to thca cfter the present contracts c: pire.
';c.c contract fc Scutheastern vi n c:gire in
/,ugust of thi:: year, while the centrnet for Wolverine vill c:qire in !q::t of 1957 cnd the ::crthern ::ichigan centract in Decc:bar of 1967.
Conau cra ?.:.icr Cc:pany in cts'.11 officially en reccrd c c;ponin; the ntv lean; fer concration here in !!ichigan. In September of 1955, vc officially eclled on I'r. : cr an Clapp, E'.1d. ini trater, in i.Schincton to protect the:c leans. Uc _ did not c:qcet that those protesta vould have any bearing en the situatica, but thi:: action is necessarf for building a care that at core Pature date nicht help un forestall any Parther such actica.
- One intere:: ting note should be added to this, cnd that is the point that vc verc Iersonally ccntacted by the canagers and becrd =c bcro e o n -f O. c #. ,1*'
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e . .. cf co-ic'of tho' diatrioutirc cooperative who expres:cu real concera ler :.nc netion being tchen by the Gl"': and their profe::ional =anacers, con ultant: and the ETA Ai;inistration. "nc distributing cooperatives are tied to the
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GLT's by 50-year n y ec cat: that la:t throuch the year 2000. They are bcinc lead denn the path of public pover, and the feu who see the real dancers of thicadcpovericestoactccainsttheIro's. . Service /. e?. Cemetition, As a result of their high power costs, the distributing coor:ratives' rates to their =c-ber custe us are also relctively bich. Because of this rate differential Co. =..cre Tr. cr recently began Cetting r$ny recuente fcr (. cervice from P.EA custo crc. In an area where ve ucre franchised to serve uc felt cblicated to do so, cnd began pickins up a fe:r P.Fjs custoners. Oc distributir.; cceperatives protcated to the Michic .n Fublic Service Cc-iccica Ubich ultinst:17 rc:ulted in the 520 cne"cising jurisdictica over the cooperativos nn1 innuire; the recent rules portcining to exten:icn of cin-le phase service in crc cerved jointly by two utilitics. I believe you are now all fanillra vith the:,c rules nna their application. I could go on and on about thc ET.A probles here in Michican cnd L nero this ceuntry, but time dec: not perait this todny. I hope that I have been able to enlighten ycu just a littic to this ver-/ real probica that exista vith u: tciay and vill fcr accc time to ec:c. So you vill better renenber and undcr: tend the ;rebles, I h ve copics of this =np for you to take with you. RLP ..
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Q-Genceat C*f.ce s' 2 82 West 8.t.ch.c s an Avenwa. J. ace. son. Lt.cNo.in 4 9*0s . Arco Cocer De f 2 0 0 00 J 7 December 6,1955 l You r.ny rect 11 that cene of my associates t.nd I rc.et in Washincton, D.C. , Septenber 21, with !h'. No::an Clapp cnd nerlocrs of the stcff of the P.eral Electrificatica Administration. Our discu - !o i ~ sion centered on tro PS.A 10210, one r..de to the Ucrth::rn Michica*. Electric Cc;;crr.tive tr.<i the cther to the L'olverine Electric Cc perc-
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- tuo Generatin, and "rtnomission Cooperanvec. I alno endervored to h e .i ti . . , .4. o. ..,. ...w. .. ..,
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- fro:n Oc:1sumer: Fcucr Cc=p ny t t cur ret .dar wholesale rates, these .
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tive en:Avcis of ccrperctive costs of supply. in- whole:nic power.
. o l The rundysis covers a pcried of 15 ye:rs for '.:olverine, cnd 14 years f ol. h.o.,.s..
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these-cocperativen. We hcve contrnsted these indisputable costs
- with the .nctual coct of bulh p r.:cr cold et wholesale to the custc=ers of Concu crc P:ver Ccmp;ny during the nn:r.c 15-year span.
1 We' find that distributin:', cooperatives during the period from 1950 throu ,h 1954 paid !*crthern "ichigan and '..'olycrine a starcer-inc $5,87S,Cc3 rore than they uculd have'had to pe.y if they had beuant their electricity frc- Consuncrn Pouer Cenpnny at the tvera ,e charge paid by its Thole::e]e custenern durins this period. i. t In the case of Northern ".ichir,nn, the distributing coope:hti.c; paid an nyere ,e of 1.55 cents pcr hilevett-hour cver , -(1 the pts:.t 14 years. 1*nat vn (.3 34h1,003 ::re then they voidd hnvc
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paidlif thi:: cc. crc hr d been suppl.< d at the average wholesale cht.rce of Consumer: Pcuer Cc p'.ny during this period.
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rnthec=eofmverine,tadutra=unsc-ac=- . O - tives paid en everci.c of 1.h0 cents per kilowatt-hcur over a period of 15 yccrs. That v:.: 42,437,000 = ore than the sc c crount of elec-tricity voald have cc:. , if hu ;ht ct the cercrase whcle::.le charge of Consumer: Pcwcr Cc p:.ny dring this period. , a The avernce wholesale chcrce by Consumer: P:ver Cc:peny 1 _ during thi: cre 15-ye.ar perici van 1.18 cents per kilevatt-hour.
-It i: nott.orthy that, while k'olverine's avercge rate 1".. '. c,a3 c ^...."_- c_A a n. .t . .. , '_ .;. 0 7 c . .. . ., p a. . 's...h
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(5 , h no- .~. . . vith 1.h3 cent: in 1950), it still rc:ains vc11 chove the averece
' wholennic re.tc of 1.15 cents per hilc,tatt-hour being charged todcy by Cen:vacr: Tcuer.
On the other hend, distributing ecoperr.tives buying from l'orthern Michig .n actually are pt.ying r. ore tode.y then wthey pc4.1 a
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its distrilintinr. ccq.cratives an cvernce of 13'l cents per hilcy .tt-hour. Tcdny, the cost has conc up to an average of 1.52 cent p ar hilcuatt-hour..
- Despite this di::ccurn;ing record of high ccst :: elf- .
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Jouer costs to the dia:.ributi:. ccoperntives. The refus _1 of these offer,- h. ", "t. ,.' ' < ' . ' . - . " . . ".4*...'.o~.. r .d ". . ^. 2'."c . .i. . .a F. .-. , . . o e .. ' .4 .. .' . . . '.~. ,v c. ".: _' .~. ~ -
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.yould not delibert.tely disregard the velfcre of th::c depending on the distributin; cccperatives fer their electric pcVer.
11ccent3y Censumer: Power Cc:.per.y r.nde cynilabic to c11 municip:d cnd n, rivate :wcr ccan. tnica, nnd to G&Tc cnd distributine.,
-cooperative t0ihe,-tuo ncy whole::dc pcuer rates. 'I'ncte vill further decret c bult p:ver cc. .tn. /.nd vc hcpc end believe tha; cfficient Inant.r.c:..ent t.nd ;cchwk,.:c:0 t.dynnec may :ac'-;c further rcducticn pot.nible in the yer:r nh e t.d . .
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~ We have long cppreciated the cordial relationship that >
cencrclly hr - existed between Cennu .cr Power Comp:uiy ,and the din-
.s. - For that rencon, I felt _it
.tributins cecperr.tive here'in Michican.
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. A. desircble that ycu bc =cdc cvsrc of the forer.oing nnd the probabic
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4 consequences of borrc. tin ; hunc su.:s' of cdditional money to c:cpand
' already inefficient scif-cenerating facilitics. .
Over the Icst 15 years, you cnd your =crber hc.vc paid out$5,873,000 more then vr.3 neccserry for y0'r c3cctric encrgy. Iic. the GL?. :-c bcrrcuin:; cnother $12,M6,000 to expand the::c fccilitics.
'You vill r.crec, I think, that the niturc hcrdly can be deteribed as ,
bricht. It cec s probcble to me that you nicht be interested in ho,r the cctiens of the G.W supplying you.r particulc cooperative
- mcy hcte affce:cd your cperation::. I will be happy to supply this infcrnation at your reo. nest. . . .
Sinccrc1y, ,
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BbC/phh - B. G. Ccapbell Vice President To: h esidents, F.::rd M ";.bers , Mcntger: Di::tritution Cooper:.tive
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CC: !?or:cn M. Cle.pp, T.F1, A 6.ini trr. tor . N
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