ML20091D535

Comments of Cajun Electric Power Cooperative,Inc on Antitrust Info Filed by Texas Utilities Electric Co Per Reg Guide 9.3

ML20091D535
Person / Time
Site:	Comanche Peak
Issue date:	03/25/1992
From:	Rudebusch T DUNCAN, WEINBERG, MILLER & PEMBROKE, P.C. (FORMERLY
To:
Shared Package
ML20091D530	List: ML20091D527 ML20091D535
References
FRN-57FR6340, RTR-REGGD-09.003, RTR-REGGD-9.003 NUDOCS 9204100261
Download: ML20091D535 (13)

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. UNITED STATES OF AMERICA BEFORE TiiE NUCLEAR REGULATORY COMMISSION In the Matter of )

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TEXAS UTILITIES ELECTRIC COMPANY ) Docket No. 50-446A

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(Comanche Peak Steam )

Electric Station, Unit 2) )

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COMMENTS OF CAJUN ELECTRIC FOWER COOPERATIVE, INC.,

ON ANTITRUST INFORHATION FILED BY TEXAS UTILITIES ELECTRIC COMPANY PURSUANT TO REGULATORY GUIDE 9.3 i

Cajun Electric Power Cooperative, Inc. (" Cajun"),

pursuant to the Nuclear Regulatory Commission's (" Commission" or "NRC") notice issued Februa y 14, 1992, 57 Eed. Egg. r340 (February 24, 1992), of receipt of antitrust information filed by Texas Utilities Electric Company ("TV Electric") in the above-referenced docket, files these Comments and states as follows.:

I. BACKGROUND TU Electric is currently the majority owner and operator of the Comanche Peak Steam Electric Station ("CPSES"),

Unita 1 and 2', over which the Commission exercises antitrust review responsibilities according to Section 105 of the Atomic Energy: Act of 1954 ("AEA"). The Commission issued a construction permit for CPSES, Units 1 and 2, in December 1974, with certain ,

i antitrust license conditions. The antitrust conditions were l imposed because of allegations, which were examined by the l-i 9204100261 920325 PDR- ADOCK 05000446 L M PDR '

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-Department of Justice, that TU Electric's' Idominant market positioniin generation and transmission restrained the competitive alternatives of other power systems in Texas. Enn Department of Justice advice letter to Atomic Energy Commission, dated January 17, 1974.

On June 21, 1978, at the operating license stage of review, the Commission issued a "significant change" finding, according to Section-105c(2) of the AEA, seeking the advice of the Department of Justice on the antitrust aspects of TU Electric's activities related to the operating license for CPSES.

Eng 7 N.R.C.-950-(1978). The significant changes in circumstances related to TU Electric's efforts, in concert with llouston Lighting & Power Company, to isolate the Texas electric bulk power market from interstate commerce by opening their interconnections-with another Texas-utility, Central Power &

Light company (" Central"), when Central sought to interconnect ,

its operations with affiliated companies located outside the Electric Reliability Council of Texas ("ERCOT").

On August 1, 1978, the Department of Justice recommended an antitrust hearing, stating:

(B]ecause of [TU Electric's]'and HL&P's adherence to a policy of intrastate only operations in' light of the present market circumstances, and considering the unprecedented disruptive action of disconnection undertaken by applicant and HL&P to enforce this policy and agreement, an antitrust hearing is necessary to determine whether additional conditions should be 1/. 'At the time TU Electric was-known as Texas Utilities Generating Company.

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. attached to the operating license of Comanche Peak....

Department of Justice letter dated August 1, 1978, at 3-4.

Following this recommendation of the Department of Justice, the Commission convened an antitrust hearing and consolidated it with a proceeding examining HL&P's South Texas Project, Units 1 and 2, Docket No. 50-498A, et al.

Following extensive litigation before the Commission, the Federal Energy Regulatory Commission ("FERC") and the Securities and Exchange Commission ("SEC"), TU Electric, HL&P, Central and other parties reached several settlement agreements.

As reflected in the Memorandum and Order issued on May 6, 1982, by the Commission's presiding administretive law judge, a portion of the settlements involved additional antitrust conditions on CPSES. Egg 15 N.R.C. 1143 (1982). The May 6, 1982 Order made the license conditions. effective immediately. Id. The license conditions were designed to preclude TU Electric (or HL&P) from acting in concert with any other entity to disconnect from interstate power systems.

At the forefront of the settlement was the provision

-for the construction of two direct current asynchronous transmission. lines ("DC ties") interconnecting utilities in ERCOT with utilities located in the Southwest Power Pool ("SWPP").

Egg, ng, Central Power and Light Co., 17 PERC 5 61,078 (1981),

order on Igh., la FERC S 61,100 (1982) ("FERC Original Order").

These two DC ties have been known as the " North'DC Tie" and the

" South DC Tie." The North DC Tie was placed in service late in 1984. Subsequently, HL&P and others filed a petition with FERC

seeking to delay and redefine the remaining interconnection as the East DC Tie, and to allow TU Electric to participate as an owner of the East DC Tie. Een Central Power & Light Co., 40 FERC

$ 61,077 (1987). In FERC's Order granting the petition, FERC stressed the requirement that TU Electric, among others, " permit other utilities to participate in the construction and ownership of the East [DC Tie]." 40 FERC at 61,221. The East DC Tie was to be in place no later than August 31, 1991.

On August 22, 1991, TU Electric and other East DC Tie owners U (" Petitioners") filed a petition at PERC for an extension of time to construct the East DC Tio. The Petition requested that installation of the full 600 MW of capacity on the East DC Tie be delayed until August 1998, with 300 MW being installed by August 1995. The proposed draft order stated that the East DC Tie may be delayed even further due to " reasonable contingencies, such as delays in complying with the environmental requirements of this Order...." San Central Power and Light Co.,

57 PERC 1 63,317 (1991). Cajun filed a motion to intervene in the proceeding.

Cajun is a generation and transmission cooperative comprised of thirteen distribution cooperatives (" Members") in Louisiana. Cajun stated that it has surplus capacity and energy 2/ The East DC Tie owners include the following entities in addition to TU Electric and HL&P: Central Power and Light Company (" Central") and Southwestern Electric Power Company l

("SWEPCO"). The North DC Tie owners include Public Service

Company of Oklahoma ("PSO") and West Texas Utilities Company I

(" West Texas"). Central, SWEPCO, PSO and West Texas are all operating companies of the Central & South West Corporation

("CSW").

W which it could. market to interested purchasers _ located within the ERCOT region ~

On November 6, 1991, Petitioners filed at FERC a proposed draft " Order Granting Petition" providing Petitioners the relief sought in their Petition. Cajun responded to the Petihioners' proposed order by presenting to FERC Cajun's concerns'regarding the requested relief. In its response, Cajun-stated, inter alia , that Cajun's ebility to market surplus capacity to interested purchasers which are ERCOT members is directly affected by tho~ construction and commercial operation date of the East DC Tie.

On December 6, 1992, the FERC issued an order granting,

' with modifications, Petitioners' request for an extension of time to complete the DC Tie, and stated that Cajun's concerns were not properly addressed in the contoxt of the petition for an 4 extension of time, Id. (" December 6th Order").

II, TU ELECTRIC RESPONSE TO REGULATORY GUIDE 9.3 On December 5, 1991, the Commission Staff requested certain antitrust information from TU Electric'in accordance with

Commission Regulatory Guide 9.3. Eac Staff letter dated December ,

. . l 5, 1991. The Staff letter indicates that an antitrust review is 1

-appropriate at'this time in light of the scheduled Decemner_1992 '

Lfuel load for CPSES Unit 2 and the length of time since the antitrust' review of CPSES-Unit 1, which was completed in-September 11989, i

By letter dated February 5, 1992, TU Electric responded j to the Staff's request for information in accordance with

. ~ Regulatory Guide 9.3. TU' Electric stated that in April 1991:it submitted to-regional' electric utilities requests!for responses directed _to potential alternatives-to-generation which TU.

Electric was seeking to have certified. Een TU Electric' Filing _

at 23-24. According to TU Electric's filing, Cajun responded by -

indicating that~it was interested in discussing the sale of capacity and energy to TU Electric. Id. Representatives of Cajun and TU Electric met on February 25, 1992, to discuss _

capacity sales'in Texas.

Further, under a section entitled " Communications Related to DC Asynchronous Connections", TU Electric discusses, inter alia, the attempts by it and the other East DC Tie owners to defer _i.he completion date_of the East DC Tie, and Cajun's pleadings at FERC related to that request. Id. at 35-38. TU Electric states that Cajun's pleadings, while not opposing-the East DC Tie owners' joint request for an extension of time to complete the East DC Tie, did indicate two concerns about the

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-extension, namely -(1) the 500 MW maximum system load-criterion to be a qualifying utility eligible to reserve transmission-service utilizing'the East DC Tie, since Caj , a has a peak _ load in excess of 500 MW; and-(2) the procedures _by which other entities, including Cajun, may become participants in.-the East DC Tie _

TU Electric indicates that1the FEBC, in its December 6th Order,Lgranted'in part the petitioners' request-for an extension of_ time.- Lie-57:FERC at 62,030-31. TU indicates that

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the FERC-also stated in its order that Cajun concerns about l _:

participation.in the East DC Tie were beyond the scope of the 9

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1. -- F5RC proceeding, and recommended that Cajun file a complaint if it felt the FERC's prior orders were not being properly-implemented.

On February 14, 1992, this Commission issued a notice of receipt of the TU Electric antitrust information, and established 30 days from the notice as the time for the filing of Comments.

III. COMMENTS

. While Cajun did not upoose the Petitioners request to FERC for an extension of time to complete the East DC Tie, Cajun has concerns-about the delays that have occurred in the completion-of the second DC Tie betwean the ERCOT and SWPP regions, i.e., the East DC Tie, Cajun notes that the first DC Tie ( .i . e . , the: North DC Tie) was completed in 1984. The operation of the North DC Tle, which is: limited currently to 220 MW, apparently allowed CSW to 4emonstrate.to the SEC that it was an integrated electric system within the meaning of the Public Utility Holding Company Act. Enn " Memorandum and Order 4

-Terminating' Proceeding," issued on April 1, 1982, _SEC File No. 3-4951. Cajun is concerned that the original impetus;to greater

= interconnections between ERCOT and SWPP has been stymied.

The record shows that the second DC Tie has experienced continuing delays. Since September 1989, when the most recent-

-antitrust review by Commission Staff-was conducted, the date of the i f ull ' 600101 completionJof the East DC Tie:has been1 extended to-1098 (with 300 MW to be completed in 1995). In this regard, Cajun notes that the FERC rejected the Petitioners' request that 9

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, - the East DC Tie could be' delayed even beyond August 1998 due to

" reasonable contingencies." Egg FERC's December 6th order, S7 FERC at 62,030, and'page 4, supra. Cajun is interested in the timely completion.of the East DC Tie.

Moreover,' Cajun is cot :erned about the requirement that entities qualified to reserve transmission service over the DC Ties be limited to entities with a peak load of less than 500 MW.

San TU Electric-Filing at 37. Cajun is a generation and

- transmission cooperative with thirteen Members, and is the exclusive power supplier for each of its Members. Each of Cajun's Members has'a peak load under 500 MW. In its December 6th Order, the:FERC denied Cajun's request to clarify Cajun's status in that proceeding, and stated that Cajun should file a request.for relief if. Cajun wanted a FERC order on that issue.

Cajun"has not yet filed a request for relief on its-status as a-qualifying utility with the-FERC. Cajun is not at this time requesting any relief from this Commission on this issue.

Further,-Cajun is interested in the option of participation'inLthe East DC Tie as an owner, in addition to, or in place of, utilizing the reserved transmission capacity. Cajun notes;that CPSES1 operating license conditions include the

_ following requirements:

The Applicants shall participate in and facilitate the exchange of-bulk power by-transmissi'onibetween or among two or more ,

Entities in-the North Texas Area ... and

any L Entity (ios) outside'the' North Texas' Area between whose facilities the Applicants' l ' transmission lines, including any direct current.(asynchronous) transmission lines, 1 form a continuous electrical path....

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9-If Applicants engage in joint ownership of transmission lines with any other Entity they shall not refuse to engage in similar i transactions in colnparable circumstances with 1 other Entities....

Applicants shall provide other Entitiec with reasonable access to any future interstate interconnection fac131 ties which Applicants may own....

Antitrust License Condition for Comanche Peak Steam Electric Station Units 1 and 2, $5 3.D.2(i), 3.D.2(j)(a) and 3.D.2(j)(b),

respectively.I' However, since TU Electric became a participant in the East DC Tie in 1986, no other entities ha been allowed to becoma participants, despite the fact that Cajun has indicated, since at least July 25, 1989, that Cajun is interen ed in maeting to discuss ownership. Eng Cajun's July 25, 1989, Reply to Solicitation offered by Petitioners, attached as 1/ In this regard, Cajun notes that the 1981 FERC Original Order states that:

Other utilities in ERCOT and SWPP have an opportunity to participate in the construction and ownership of the interconnections on the condition that each such party pays its pro rata share of the capital costs of constructing the interconnection in which it wishes to participate and undertakes.to pay its pro rata share of the costs of operating and raintaining the interconnection.

Furthermore, at maximum intervals of three years from June 30, 1983, to June 30, 2004, other utilities which are members of ERCOT or SWPP will be given an opportunity to participate in planning and ownership of any capacity increases in the interconnections.

17 FERC at 61,169.

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A'ttachment A, Cajun notes that'a meeting among representatives I

of Cajun, the CSW Operating Companies, HL&P and TU Electric l

occurred on December 11, 1991, to explore this matter.

Cajun is exploring the option of' ownership in the East

'DC Tie, and is interested in developing a working relationship with the East DC Tie owners. As TU Electric states in its filing, Cajun has not filed a complaint with the PERC. Egg TU Electric filing at 38. Cajun respectfully suggests that the Commission review in this proceeding, the opportunities and procedures whereby interested utilities may participate in the

. East DC Tie, pursuant to CPSES License Conditions Paragraphs 3.D.2(1)-and (j).

-These procedures should be clarified in at least two respects. First, the participation contemplated by the CPSES Antitrust Conditions should be initiated by any interested.

utility in the-ERCOT or SWPP regions, and not merely by the Petitioners. Second, such participation should provide a forum for regional planning of. transmission, with the focus on the capacity in the DC Ties.

Cajun's comments' reflect the intent of the Commission's ,

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-Orders to-permit other. utilities to-participate in the ownership of-the East DCUTie and.to increase opportunities for transfers between ERCOT and-SWPP.  ;

IV. CONCLUSION l WHEREFORE, for-the' foregoing reasons, Cajun Electric

< Power Cooperative, Inc., respectfully requests that the LCommission consider the foregoing information in its J

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. c'onsideration of whether cignificant changes have occurred since the previous antitrust review and, further, clarify the pro edures under which interested utilities may participate in ownership of the East DC Tie, consistent with the CPSES License conditions.

Dated: March 25, 1992 Respectfully submitted,

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James D. Pembroke Thomas L. Rudobusch Charles A. Braun DUNCAN, NEINBERG, MILLER

& PEMbROKE, P.C.

1615 M Street, N.W.

Suite 800 Washington, D.C, 20036

( '!0 2 ) 467-6370 Attorneys for Cajun Electric Power Cooperative, Inc.

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ATTACHMENT A

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REPLY TO SOLICITATION DATE: July 25, 1989

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Mr. James A. Bruggeman Vice-President, System Engineering

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Central and South West Services, Inc.

P. O. Box-660164 Dallas,-Texas 75266-0164 ,

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Cajun Electric Power Coop., Inc. is interested in participating, pursuant to the orders-in FERC Docket EL79-8, E-9558 and EL79-8-002', in:the planning and ownership of an increase in the capacity of the-200 megawatt nominal capacity direct current ,

asynchronous' interconnection between Public Service Company: of Oklahoma and West Texas-Utilities Company at Oklaunion, Texas, described in the letter of June 30, 1989 from Merle L. Borchelt, Chairman and Chief Executive Officer of Central and South West .

Services, Inc.

7 Cajun will= attend a meeting of-interested parties to be scheduled-by Central and South West Services, Inc. and will be represented at that meeting.by Resal Craven .

Plea'se: forward all further communications-regarding the meeting of interested parties and-the planning of any expansion

.to : -

Caluu Electric Power Cooperative. Inc.

P.O. Box 15540 Baton-RouRe. Louisiana 70895

,l Attention of: R. A. Craven JUL 311989 S 9D:s 4 l .4

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f1.!N00 $V5TU.1 FUJANUM By: Phillip C. Harris Vice President-Operati g Title