ML20215N445
| ML20215N445 | |
| Person / Time | |
|---|---|
| Site: | Braidwood  |
| Issue date: | 10/29/1986 |
| From: | Harold Denton Office of Nuclear Reactor Regulation |
| To: | |
| Shared Package | |
| ML20215N440 | List: |
| References | |
| A, NUDOCS 8611050413 | |
| Download: ML20215N445 (11) | |
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REEVALUATION AND AFFIRMATION OF N0 SIGNIFICANT CHANGE FINDING PURSUANT TO THE BRAIDWOOD STATION UNIT 1 OPERATING LICENSE ANTITRUST REVIEW By letter dated September 15, 1986, the Illinois Municipal Electric Agency (IMEA), represented by counsel, Mr. Marvin S. Liebeman, requested a reevaluation of my " Finding of No Significant Change" pursuant to the captioned antitrust review which was published in the Federal Register on August 15, 1986 (51 Fed. Reg.29350). For the reasons set forth below, I have decided not to change my Finding of no significant antitrust changes.
BACKGROUND l
Commonwealth Edison Company (CECO) underwent an antitrust review at the construction pemit (CP) stage for the Braidwood facility by the Atomic Energy Commission staff and the Department of Justice (Department) in accordance with Section 105c of the Atomic Energy Act of 1954, as amended.
Allegations of anticompetitive conduct on the part of CEC 0 arose during the CP review and identified by the Department in its advice letter to the ,
Atomic Energy Connission dated March 4,1974. The Department highlighted three principal areas of concern involving CECO's activities with smaller competing power systems in northern Illinois: (1) the inability of smaller power systems to gain access to the benefits associated with baseload generating facilities--nuclear power in particular; (2) the practice employed i by CECO to limit the number of its wholesale customers by imposing restrictive provisions in its wholesale for resale power contracts--the practice identified by the Department as a " wholesale freeze"; and (3) certain pricing practices employed by CECO resulting in a " price squeeze" for CEC 0's all requirements wholesale for resale customers.
8611050413 861028 6 DR ADOCK 0500
. After extensive negotiations among CEC 0, its wholesale for resale customers and the staffs of the Department and the Atomic Energy Comission, these competitive concerns were resolved after CECO agreed to remove certain restrictive provisions in its wholesale tariff and mitigated the effects of a possible price squeeze for its wholesale for resale customers by offering ownership access to its LaSalle nuclear plant. Moreover, the Department indicated in its Byron /Braidwood advice letter that the alleged price squeeze issue could be resolved at the Federal Power Commission (now the Federal Energy Regulatory Comission or FERC). In light of these comitments by CECO and the likelihood that the price squeeze issue alone would not appear to warrant an antitrust hearing before the Atomic Energy Comission, the Department concluded that an antitrust hearing would not be necessary pursuant to CECO's application to construct the Byron and Braidwood nuclear power stallons.
By letter dated March 22, 1979, CEC 0 submitted information pursuant to changes in the licensee's activities that have occurred since the antitrust review at the CP stage--per the Nuclear Regulatory Commission's (Commission) Regulatory Guide 9.3. Due to slippage in fuel load dates for both Byron and Braidwood, my staff requested CECO to furnish an updated response to Regulatory Guide 9.3, which was supplied by CEC 0 via letter dated January 14, 1985. CEC 0 furnished i
In 1977 the Supreme Court ruled that the FERC had jurisdiction and must consider the competitive implications associated with " price squeeze" issues.
O the staff with additional data on June 20, 1985 pursuant to a settlement agreement with one of its wholesale customers. After reviewing the changes (those with competitive significance) that have occurred since the construction permit review for Byron and Braidwood and the results of antitrust reviews associated with other CECO nuclear plants since the Byron /Braidwood CP' review (i.e., the Carroll County construction permit and LaSalle operating license reviews in 1976 and the Byron Unit 1 operating license review in 1983), my staff recomended that no formal operating license (0L) antitrust review of CEC 0's Braidwood Station Unit I was necessary. Based upon the staff's analysis, I issued a no significant change finding pursuant to the Braidwood Station Unit 1 OL application on August 8, 1986. By letter dated September 15, 1986, the Illinois Municipal Electric Agency, through counsel, Mr. Marvin S. Lieberman, requested a reevaluation of my Finding.
Section105c, Paragraph (2)oftheAtomicEnergyActof1954,asamended, directs the Comission not to conduct a full scale antitrust review (similar to that required at the construction pemit stage) "...unless the Comission determines such review is advisable on the ground that significant changes in the licensee's activities or proposed activities have occurred subsequent to the previous review by the Attorney General and the Comission under this subsection in connection with the construction permit for the facility." On September 12, 1979, by memorandum from Chairman Hendrie to William J. Dircks, Director, NMSS, and Harold R. Denton, Director NRR, the Comission delegated its "significant change" responsibility to the Director of the Office of Nuclear Reactor Regulation.
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- DISCUSSION The Comission delegated its authority to make significant change findings to the staff and established a definite set of criteria the staff must follow in making the determination whether or not a significant change has occurred.
l The change or changes, (1) must have occurred since the previous antitrust review of the licensee (s); (2) are reasonably attributable to the licensee (s);
I and (3) have antitrust implications that would likely warrant some form of I Comission remedy. It is within this framework established by the Comission that I made my initial " Finding of No Significant Antitrust Change" in August of 1986 and it is within this framework that I have analyzed IMEA's request to reevaluate my Braidwood significant change Finding.
In its request for reevaluation, IMEA contends that CEC 0 has engaged in a series of anticompetitive activities including, (1) the elimination of IMEA as an actual and potential competitor in the Illinois electric bulk power services market; (2) the unlawful dental of access to CECO's transmission facilities; (3) refusals to deal by CEC 0; and (4) the imposition of monopoly rents on wholesale for resale customers. The activities described by IMEA in its request for reevaluation and related documents do not depict anticompetitive 4
The Comission delegated its authority to make significant change findings to the staff by memorandum dated September 12,1979(see '
previous footnote). The Comission included in this delegation of authority specific procedures the staff should follow in conducting its significant chan InitsSummerdecisions(11NRC817(1980) and 13 NRC 862 (ge reviews.1981)), the Comission outlined the criteria the staff must employ in making a finding as to whether or not there have been significant changes (with competitive significance) since the previous i antitrust review.
behavior by CECO that would likely warrant a remedy by the Nuclear Regulatory Commission. Consequently, I have found no reason to conclude that there has been a change in CECO's activities since the CP review that would cause me to amend my " Finding of No Significant Antitrust Change."
The thrust of IMEA's request is that the Connission staff did not consider the
" predatory discriminatory pricing practices" of CECO in its analysis of changes in the licensee's activities and finding of no significant antitrust changes. IMEA's concerns revolve around a series of events relating to l competition for wholesale for resale loads between IMEA and CECO over the past l
few years. Pursuant to a settlement agreement between CECO and its full
! requirements wholesale for resale customers reached before the FERC in 1984 (ER83-437-000), CEC 0's wholesale customers were given the option, upon one years notice, of tenninatirig service from CECO and taking their power requirements over CEC 0's transmission system from other bulk power suppliers.
It appears that this settlement agreement has provided a competitive stimulus in the Illinois bulk power services market and many of the concerns expressed by IMEA in its request for reevaluation are the result of competition between IMEA and CEC 0 for wholesale power loads.
Subsequent to the settlement agreement between CECO and its full requirements wholesale customers, two of the wholesale customers, the cities of Geneva and Rock Falls, elected to take their power requirements from a supplier other than CECO. Per the 1984 settlement, CECO filed a full requirements transmission tariff before the FERC to facilitate the transmission of power to the cities. The transmission tariff was challenged by Geneva, Rock Falls and n . . ..
. IMEA before the FERC as being discriminatory. The FERC agreed with the position taken by CEC 0's wholesale customers and ordered CECO to file a new wheeling tariff based not upon marginal costs but on average system costs. The just and reasonable wheeling rate is presently under review by the FERC.
During 1985 and 1986, all of CEC 0's full requirements wholesale customers began to explore the feasibility of taking their power and energy requirements (through IMEA) from suppliers other than CECO. This interest in alternative power suppliers has heightened competition for wholesale loads between CECO and IMEA. Moreover, the municipal electric systems that were full requirements customers of CEC 0 and also members of the IMEA joint action agency had begun to negotiate power supply contracts on their own, directly with CECO. As a result of this development, IMEA claimed that CECO was refusing to deal with IMEA and denying access to its transmission facilities. Staff considers CEC 0's activities in this instance (s) to be reactions to increased competition in the Illinois electric bulk power services market. As a result of the discussions between CEC 0 and its wholesale power customers, three of the cities remained full requirements wholesale customers of CECO and two opted to take their power requirements through power secured by IMEA (see discussion above). The contracts negotiated by the three remaining cities included a provision giving the cities access to CECO's transmission facilities if the cities decided to tenninate their service from CECO. These newly negotiated contracts, which
. The Illinois cities of Naperville, Batavia and St. Charles.
The contract limits levelized energy cost increases to 3% per year for the next five years. For the second five year period of the 10 year contract, levelized cost increases are to be kept at or below 5%. If costs rise above these projections, and the cities are able to find less costly sources of supply, they have the option to disconnect from CECO I
and take power over the CECO transmission system.
. are presently under review by the FERC, Docket No. ER86-615, do not appear on their surface to represent an unwillingness to provide access to transmission or a refusal to deal by CECO.
In regard to IMEA's allegations that CECO is extracting monopoly rents from two of its wholesale power customers (Geneva and Rot? Falls) and charging predatory and discriminatory prices for its b'tlk power services, I must ultimately defer resolution of these issues to the Federal Energy Regulatory Commission. Rock Falls and Geneva (Geneva until May 1,1986 when the city began taking power from Wisconsin Electric Power Co.) are being served by CECO under fully executed and FERC approved tariffs. The fact that CEC 0's rates were higher than their newly negotiated contracts with new suppliers (which does not take effect until 1987 for Rock Falls) does not indicate any exercise of monopoly power by CECO. Moreover, CECO has filed transmission tariffs for Geneva and Rock Falls as well as wholesale power tariffs for its full requirements customers before the FERC. The determination as to whether or not these filed rates are predatory or discriminatory rests with the Federal .
Energy Regulatory Commission--not the Nuclear Regulatory Commission. The FERC has acknowledged this responsibility in its June 18, 1986 order pursuant to CECO's recent transmission rate filing:
"It should be beyond question that once Edison had elected to file the rate schedules, the Commission [FERC] was empowered to set rates for the service that would be just, reasonable, and not unduly discriminatory or preferential." (Commonwealth Edison Company, Docket Nos. ER86-76-004, et al., 35 FERC 61,352 (1986).
l The Nuclear Regulatory Comission does not have jurisdiction over taHffs for electric power and energy and consequently, could not remedy any inequities l (iffound)insuchtariffs. I believe the issues raised in IMEA's request for reevaluation would be more appropriately addressed by the FERC, where rate proceedings involving CECO, IMEA and its member cities.and the issues raised
! herein, are in progress.
For the reasons stated above, I have decided not to change my Finding of No Significant Change" pursuant to the antitrust operating license review of the Braidwood Station, Unit 1.
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Harold R. Denton, Director Office of Nuclear Reactor Regulation m ---,-e n.... .,-..
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[7590-1]
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REEVALUATION AND AFFIRMATION OF NO -
SIGNIFICANT CHANGE FINDING PURSUANT TO THE BRAIDWOOD STATION UNIT 1 OPERATING LICENSE ANTITRUST REVIEW Notice is hereby given that the Illinois Municipal Electric Agency has request d a j reevaluation by the Director of the Office of Nuclear Reactor Regulation of 1 the " Finding of No Significant Antitrust Change" pursuant to the operating license antitrust' review of'the Braidwood Station Unit 1. After further review by my staff, I have decided not to change my finding.
A copy of my finding, the request for reevaluation, and my reevaluation are available for public examination and copying, for a fee, at the Comission's Public Document Room, 1717 H Street, N.W., Washington, D.C. 20555.
Dated at Bethesda, Maryland, this 29 day of October 1986.
FOR THE NUCLEAR REGULA RY COMMISSION
/
Harold R. Denton, Director Office of Nuclear Reacter Regulation I
)
j
For: The Commissioners From: Victor Stello, Jr.
Executive Director for Operations
Subject:
REEVALUATION AND AFFIRMATION OF NO SIGNIFICANT CHANGE FINDING PURSUANT TO THE BRAIDWOOD STATION
-UNIT 1 OPERATING LICENSE ANTITRUST REVIEW
Purpose:
To inform the Commission of a completed staff action.
Discussion: Pursuant to procedures set forth by the Commission in delegating authority to the Director of the Office of Nuclear Reactor Regulation and the Director of the Office of Nuclear Material Safety and Safeguards, as appropriatc.
, the Director of the Office of Nuclear Reactor Regulation has reevaluated and affirmed a finding that no significant antitrust changes have. occurred pursuant to the Braidwood Station operating license antitrust review.
The reevaluation finding will be published in the Federal Register and will become final 30 days after publication unless the Commission exercises sua sponte review.
Coordination: The reevaluation finding was concurred in by the Office of the General Counsel.
Victor Stello, Jr.
Executive Director for Operations
Enclosure:
Director's Reevaluation Finding
Contact:
William Lambe, NRR 492-7707
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4 p aarog'o UNITED STATES NUCLEAR REGULATORY COMMISSION
, 7, f WASHINGTON, D. C. 20555
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t Mr. Marvin S. Liebennan, Esq.
Zuckert, Scoutt, Rasenberger & Johnson 888 Seventeenth St., N.W. '
Washington, D.C. 20006-3959
Dear Mr. Lieberman:
Re: Braidwood Station Unit 1; Docket No. 50-456A; Reevaluation of Finding of No Significant Antitrust Changes I appreciate the interest your client has shown in the Nuclear l Regulatory Comission's antitrust review process and have considered the ;
issues raised in your request for reevaluation of the captioned review. After 1 i review of the facts by my staff, I have determined that the issues you have raised do not fall within the scope of the Comission's antitrust jurisdiction i
4 and for this reason, I have decided not to change my Finding pursuant to the Braidwood Station Unit 1.
Sincerely,
/ --.e Harold R. Denton, Director Office of Nuclear Reactor Regulation
Enclosure:
Reevaluation Finding i
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