ML20209C603

Provides Applicants View as Result of 990618 Memo & Order Directing Parties to Address Proper Disposition of Existing Antitrust License Condition Attached to OL for Facility Due to Planned Changes in Ownership of Facility.With Svc List

ML20209C603
Person / Time
Site:	Wolf Creek
Issue date:	07/06/1999
From:	Silberg J, Silburg J AFFILIATION NOT ASSIGNED, KANSAS CITY POWER & LIGHT CO., KANSAS GAS & ELECTRIC CO., SHAW, PITTMAN, POTTS & TROWBRIDGE
To:	Vietticook NRC OFFICE OF THE SECRETARY (SECY)
References
CON-#399-20630 CLI-99-19, LT, NUDOCS 9907120118
Download: ML20209C603 (5)

Text

t' go63D I ShawPillman A law Pinornmhng including Pro)hsional Corporations

%F in E. sutene yi @ awpittman.com om y e July 6,1999(( I -#:

Office of the Secretary U.S. Nuclear Regulatory Commission Washington, D.C. 20555 1 Re: Kansas Gas and Electric Co., et al. (Wolf Creek Generating Station, l Unit 1L Docket No. 50-482-LT I

Dear Ms. Vietti-Cook:

In its June 18,1999 Memorandum and Order in the above proceeding, the Commission directed the parties to address the proper disposition of the existing antitrust license conditions attached to the operating license for the Wolf Creek Generating Station -

due to the planiied changes in the ownership of the Wolf Creek facility. Kansas Gas and Electric QA (Wolf Creek Generating Station, Unit 1), CLI-99-19,49 N.R.C. _ (1999); 64 ,

l Fed. Reg. 33916 (June 24,1999). This letter provides the views of Kansas Gas and Electric Company ("KGE"), Kansas City Power & Light Company ("KCPL") and NKC, Inc.

(collectively," Applicants"). As explained more fully below, Applicants respectfully submit that the most appropriate disposition of the existing antitrust license conditions is the proposal set forth in their license transfer application,is, to retain all of the existing antitrust license conditions and make them applb .'oie to trm new merged entity - Westar Energy, Inc. ("Westar").

The existing antitrust conditions are set forth in Appendix C to the Wolf Creek operating license. One set of conditions applies to KGE and includes both general provisions and specific provisions applicable to Kansas Electric Power Cooperative, Inc. ("KEPCo").

Another set applies to KCP&L and provides generally for " entities" within KCP&L's service area. The proposed transaction would merge KGE and KCP&L into Westar and leave ,

Westar as the surviving corporation. Applicants' license transfer application proposed to retain the antitrust conditions and make them fully applicable to Westar. The change would be effected by simply substituting Westar as the defined " Licensee" in Appendix C in place of KGE and KCP&L. The changes necessary are shown on a mark-up submitted to the NRC by letter dated November 10,1998 from Otto L. Maynard, President and CEO of Wolf Creek Nuclear Operating Corporation. Further, the transfer application committed Westar to abide by whichever conditions were more restrictive to Westar and more favorable to KEPCo. S_qs .

Application to Transfer KGE's and KCPL's Possession Only Interest in Operating License No. NPF-42 for the Wolf Creek Generation Station and to Amend Operating License No. NPF-42 to Reflect Transfer of Ownership, submitted Oct. 27,1998 (" Application to 9907120118 990706  %

PDR ADOCK 05000482 Q PDR Washington, DC New York 2300 N 5treet, NW WasMngton, DC 20037 1128 202463.8000 Faxg202.663.8007 www.showpittmarcom London

ShawPittman _

Office of the Secretary July 6,1999 Page 2 Transfer"), at 3 n.2,9 10 nn.7 & 8. Thus, in any given circumstance, KEPCo could choose whether to rely upon the duties imposed on Westar either by the more specific KGE conditions or by the more general KCP&L conditions.

In CLI-99-10 > e Commission determined that it would no longer conduct antitrust reviews in connece with license transfer applications. KEPCo's petition to intervene on antitrust grounds was therefore dismissed. The Commission neverthe:ess sought the views of the parties on the proper disposition of the existing antitrust license conditions. The Commission identified three dispositions that might be possible:

Theoretically, at least, three possibilities exist: (1) the existing license conditions should be attached verbatim to the transferred license, (2) the existing conditions should be rescinded or eliminated in their entirety, or (3) the existing conditions should be modified and attached as modified to the transferred license.

l I

CLI-99-19, slip op. at 33. l While a good case could be made to eliminate the antitrust conditions entirely, Applicants are prepared to stand by their original proposal to retain the conditions verbatim and make them applicable to Westar. This result is quite favorable to KEPCo and will resolve all of the concems about the conditions that KEPCo raised in its Petition to Intervene.

KEPCo raised five issues conceming the antitrust conditioas, each of which is addressed below.

First, KEPCo asserted that "the antitrust conditiens to the Operating License would l

maintain a distinction between KEPCo members in the former KGE service area and members located elsewhere in the Westar Energy service area . . . ." Petition to Intervene and Request for Hearing of the Kansas Electric Power Cooperative, Inc. (dated February 18, 1999)("KEPCo Petition") at 5. This is incorrect. The distinction in the antitrust license conditions between the KGE and KCP&L service areas will no longer exist because they will be combined into a single Westar service area. This will occur automatically when the term

" Licensee"is redefined to mean Westar Energy, Inc. in both sets of conditions. Thus, for example, a KEPCe member in the former KGE service area could seek an interconnection under paragraph 2(a) of the former KCP&L conditions. This follows because paragraph 2(a) applies to entities in " Licensee's Service Area," and that term will be redefined to mean the Westar service area, which encompasses both the former KGE and KCP&L service areas.

Moreover, Applicants have committed to apply whichever set of conditions that KEPCo may choose in a given situation. Accordingly, Westar will gain no competitive advantage from the dual license conditions.

~

4 ShawPittman __ ____ _

) ,

Office of the Secretary j July 6,1999 Page 3 Second, KEPCo notes that "the applicants do not propose to combine the KGE and KCPL license conditions." KEPCo Petition at 7. That is true, but Applicants' proposal is more favorable to KEPCo than such a combination. The new licensee will be subjected to both sets of conditions, and KEPCo will have the option of choosing whichever conditions it considers more favorable and having those conditions applied in any given circumstance.

i Thus, KEPCo will have more flexibility than if the conditions were combined into a single set.

Third, KEPCo points out that some of the KGE conditions hopee restrictions on KEPCo and that those conditions will" remain in place." KEPCe Petition at 7. For enmple, paragraph 2(b) of the KGE conditions provides that "no less than 42 percent of the total demand requirements of the [KEPCo] members in Licensee's Service Area shall be satisfied by [KEPCo] by use ofits available power from Wolf Creek." Id. at 8. KEPCo argues that it should be made clear that these restrictive conditions do not limit "KEPCo's rights or Westar Energy's duties under other license conditions." 11 at 10. KEPCo's interpretation is correct with respect to Westar's duties under the license conditions. Applicants have made clear that they will abide by whichever set oflicense conditions is more restrictive as to them.

However, the proposed merger should not provide the opportunity for KEPCo to abandon the commitments which il made as part of the original antitrust proceeding. Those commitments, as reflected in several of the current KGE antitrust license conditions, should properly remain i in effect since the proposed merger in no way changes KEPCo's ob!igations. l Fourth, KEPCo complains thr.t paragraph 1(i) of the KGE conditions defines KEPCo's " members in Licensee's Service Area" to be eight specifically named cooperatives.

KEPCo Petition at 8-9 & n.8,10-11. All of those named cooperatives, plus any others not specifically named, would also be entities in the Westar service area and thus could invoke either the former KGE conditions or the more general former KCPL conditions. The definition of KEPCo " members in Licensee's Service Area" has a specialized purpose in the

. KGE conditions and is ofkn used to limit KEPCo's obligations, in paragraph 2(b), for

xample, KEPCo rnust use no less than 42% of its Wolf Creek power for its " members in Licensee's Service Area." As discussed above, this condition reflects an obligation assumed by KEPCo (as opposed to a duty imposed on KGE and KCPL) as a part of the original antitrust proceeding, and should not be affected by the proposed merger.

Fifh, KEPCo urges that "all license conditions should apply to KEPCo's members in the entire Westar Energy service area." KEPCo Petition at 10. As explained above, this will occur automatically as to obligations imposed on Westar when the license conditions are amended to make Westar the defined " Licensee." The license conditions which restrict Westar will apply throughout the entire Westar service area. To the extent that KEPCo may wish to modify provisions which govern its conduct, the appropriate mechanism would be for KEPCo to seek to initiate its own proceeding before the Commission, and not to raise such

i ShawPittman - - - - - - - - - . . _ . - _

Office of the Secretary July 6,1999 Page 4 issues in the pending license transfer proceeding, a proceeding which is unrelated to KEPCo's obligations.

l In summary, A;7acants believe that the antitrust conditions should be retained with no changes other than to substitute Westar for KGE and KCP&L. This approach is simple, straightforward and more than fair to KEPCo. The change can be effected through a ministerial amendment that is " essentially administrative in nature" and does not require a hearing. See CLI-99-19, slip opinion at 17 n.8. If circumstances should change in the future and the conditions prove to be obsolete or unworkable, the Commission will always have the authority to amend the conditions. Ses Ohio Edison Co. (Perry Nuclear Power Plant, Unit 1),

CLI-92-11,36 N.R.C. 47 (1992). In this license transfer proceeding, however, Applicants believe that it is appropri.>te to retain the antitrust conditions and, after substituting Westar for KGE and KCP&L, to make them applicable verbatim to the new licensee.

Sincerely, 0

Jay lj. Silberg Counsel for Applicants Document #: 782135 v.I cc: Service List Li

, y,~

d l

1 ShawPittman -. .- - -- .._- -._ __

Service List Office of the Secretary Office of Commission Appellate Adjudication U.S. Nuclear Regulatory Commission U.S. Nuclear Regulatory Commission Att'n: Rulemakings and Adjudications Staff Washington,DC 20555 Washington, DC 20555 l Office of the General Counsel Harold Haun U.S. Nuclear Regulatory Commission Vice President of Admninistration and Washington, DC 20555 General Counsel Kansas Electric Power Cooperative, Inc.

i P.O. Box 4877 Topeka,KS 66604

)

William T. Miller, Esq. Charles A. Acquard, Executive Director Miller, Balls & O'Neil, P.C. National Association of State Utility 1140 Nineteenth Street, N.W., Suite 700 Consumer Advocates Washington, DC 20036 113315* Street " W., Suite 550 Washington, DC 20005 Robert W. Bishop, Esq, Daniel 1. Davidson, Esq.

Nuclear Energy Institute Ben Finkelstein, Esq.

1776 I Street, N.W., Suite 400 Spiegel & McDiarmid Washington, DC 20006-3708 1350 New York Avenue, N.W., Suite 1100 Washington, DC 20005-4798 Albert A. Foer, President William M. Lambe, Principal The American AntitrustInstitute WML Associates )

2919 Ellico+t Street, N.W. 4834 Chevy Chase Boulevard Washington, DC 20008 Chevy Chase, MD 20815 l

Document #; 784073 v.1 l

1

- - - . - . . . . . _ . - . _ ~ . - - . - , - -

- . . . . . , - - . .