ML20137B396

Informs That,Based on Review of Issues Raised in Request for Reevaluation of Updated OL Antitrust Review,Updated No Significant Change Finding Will Not Be Amended.Fr Notice & Reevaluation Encl

ML20137B396
Person / Time
Site:	Clinton
Issue date:	01/10/1986
From:	Funches J Office of Nuclear Reactor Regulation
To:	Winship R NATIONAL HYDRO CORP.
References
A, NUDOCS 8601150314
Download: ML20137B396 (1)

Text

r JAN 101986

.o D

Mr. Robert Winship, Vice President

. National Hydro Corporation 77 Franklin Street Boston, Massachusetts 02110 Re: Clinton Power Station, Unit 1 - Docket No. 50-416A; Reevaluation of Updated Operating License Antitrust Review

Dear Mr. Winship:

In response to a request to reevaluate the antitrust operating license review of the captioned plant, the Acting Director of the Office of Nuclear Reactor Regulation has considered the issues raised in the request for reevaluation and has decided not to amend the Updated No Significant Change Finding. Notice of the Director's reevaluation finding will be published in the Federal Register. The Updated No Significant Antitrust Change finding will become final thirty days after the reevaluation finding is published in the Federal Register unless the Nuclear Regulatory Commission exercises sua sponte review.

Because of the interest you have previously expressed in the antitrust review of this project, I am forwarding you a copy of the Federal Register notice, the request for reevaluation and the reevaluation finding affirming the Director's Updated No Significant Antitrust Change finding.

Sincerely, Origin?1 Siel D Jocco n:nche:

Jesse L. Funches, Director i Planning and Program Analysis Staff Office of Nuclear Reactor Regulation

Enclosures:

As stated l  :

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0FFICIAL RECORD COPY 8601150314 860110 PDR ADOCK 05000461 4 M PDR '

o 7590-1 NUCLEAR REGULATORY COMMISSION

[ DOCKET NO. 50-461A]

ILLIN0IS POWER COMPANY, ET AL.

(CLINTON POWER STATION, UNIT 1)

P Notice is hereby given that Dr. Roger Betz'has requested a reevaluation by the Director of the Office of Nuclear Reactor Regulation of the " Updated Finding of No Significant Antitrust Changes" pursuant to the operating license antitrust review of the Clinton Power Station, Unit 1. After further review by my staff I have decided not to change my updated finding.

, A copy of my updated finding, the request for reevaluation, and my reevaluation are available for public examination and copying, for a fee, at the Commission's Public Document Room,1717 H Street, N.W., Washington, DC 20555.

Dated at Bethesda, Maryland, this 02 day of January 1986. ,

FOR THE NUCLEAR REGULATORY COMMISSION Original signed tgr Darroll G. Eisenhut

- Darrell G. Eisenhut. Acting Director i Office of Nuclear Reactor Regulation '.

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1 l

'. l Maybeck Place Elsah. IL 62028

, Oct. 9. ,1985 Director of Nuclear Reactor Regulation g p , ,ggj gjp U.S. Nuclear Regulatory Commission Washington, D.C. 20555 .

Dear Sirs:

I request that your department reevaluate your decision re. Illinois l Power Co. et al that was ragistered in the Federal Register on Sept.

13. 1985 to the effect that you found no significant antitrust changes j which would necessitate a formal operating licence antitrust review '

of the Clinton Unit 1 Power Station.  ;

I have been studying the Clinton situation for three years in various l capacities; please see enclosures of my testimony before the ICC on 1 Sept. 12, 1984 and the oral statement that I delivered on June 18 l 1985. In addition. I have posted to your office a zeroxed copy of  !

the complete study that I conducted--which is referred to in the j afo'rementioned testimony. These documents summarise my understanding i j-

- of the situation as of June.  !

1 Since June, evidence has come to my attention which indicates that i I

the coopt are in dire fiscal crises--I have no hard facts in my hands to that effect, but know that others do.

It is highly likely that one or more of the 22 distribution coops will go into a chapter 11 bankrupey soon--and perhaps even WIPCO. since three of the seven coop boards now have a near majority of board members that were elected this summer of 1985 on an anti-rate / anti-Clinton slate.

l In essence, the economic situation re. Clinton is in shambles. The October 1984 accord between the coops and IP will be vigorously challenged by

. myself and others in the ICC docket 84-0472 which is in process. We, the  !

member-owners of the 22 distribution coops, are being constrained to :  !

participate in an-power purchase agreement with WIPCO and Soyland--who j are locked into an 111 fated investment in the Clinton plant . The Oct. -

1984 accord hurts both IP and coop customers; IP customers have to assume more of the capital costs for Clinton and the coop customers have to g pay more for the fewer kw that we will get for Clinton electricity as l

a. our percentage of ownership decreases. .

I urge you to investigate the financial records of all 22 distribution [

coops and WIPCO and Soyland before you rule that indeed the competitive  ;

climate has not changed in Illinois re. IP and Clinton. In a few months.  !

some of the coops may sell out to investor-owned utilities, go into i chapter 11. and/or reorganise themselves into new entities. All of these  !

activities will effect IP's fiscal status re. Clinton. .

I.therefore, urge that you review your decision in this case. I remain [

g available to work further on this issue as seems appropriate.  !

Enclosures:

Sept. 12, 1984 and June 18, 1985 ICC testimony of gets.  !

Illinois coop map. .

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January 02, 1986 i

REEVALUATION AND AFFIRMATION OF UPDATED NO SIGNIFICANT CHANGE FINDING PUR5UANT TO CLINTON NUCLEAR UNIT 1 OPERATING LICENSE ANTITRUST REVIEW

, By letter dated October 9,1985 Dr. Roger Batz of Elsah, Illinois requested a reevaluation of my " Updated Finding of No Significant Antitrust Changes" pursuant to the captioned antitrust review which was published in the Federal Register on September 13, 1985 (50 Fed. Reg. 37451). For the reasons set forth below, I have decided not to change my Finding of no significant I

antitrust changes.

BACKGROUND i

Illinois Power Company (IP) underwent an antitrust review at the construction permit (CP) stage 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 (Act). Allegations of misconduct on the part of IP were j uncovered during the CP antitrust review and as a result the construction

permit was issued with a set of antitrust license conditions designed to 1

, stimulate the competitive process in the Illinois bulk power market. ,

i Illinois Power Company filed an application to amend its Clinton 1 construction permit on January 31, 1978, adding two new co-owners of Clinton 1. f Both of the new owners, Soyland Power Cooperative Inc. (Soyland) and Western Illinois Power Cooperative, Inc. (WIPCO), were reviewed by the staffs of the l Nuclear Regulatory Comission (Commission), and the Department of Justice.

, On August 11, 1978, the Department issued a "no hearing" advice letter concluding that the participation of the two new co-owners in Clinton I was a result of  !

the CP license condition that required Illinois Power Company to share ownership in Clinton and that the addition of the two new owners'did not

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create or maintain a situation inconsistent with the antitrust laws. On ,

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f February 23, 1982, I issued a finding which recomended that no formal  !

! operating license antitrust review was necessary for the Clinton 1  !

t plant (47 Fed. Reg. 10655). My finding was based upon a thorough analysis of '

the changes (with competitive significance) that occurred since the completion of the CP antitrust review.* My staff reviewed the changes in activities of l all three applicants--Illinois Power since the initial CP review in 1974 and I the two cooperatives since their CP review in 1978. After reviewing the changes that occurred since the CP reviews, staff concluded that the changes l for the most part resulted from the implementation of the CP license conditions f and had positive performance effects on the availability of bulk power supply  !

and that said changes generally enhanced the competitive process in the  !

applicants' service areas.

f l

t Since I issued my Finding in February of 1982, the fuel load date for Clinton [

was changed twice, from January of 1983 to January of 1984 and from January of l 1984 to January of 1986. The original change in the fuel load date created a i

gap in staff's antitrust operating license review and necessitated an update [

, f nit a e a mon to 1 i Clin wh c omp n t

January of 1983. The monitoring review made no recomendation to amend my i initial " Finding of No Significant Antitrust Changes". f

!. l As a result of the most recent change in the Clinton fuel load date, to {

January of 1986, the applicants' original (and most comprehensive) data i

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l Section 105c, Paragraph (2) of the Atomic Energy Act of 1954, as amended,  !

directs the Comission not to conduct a full scale antitrust review l (similar to that required at the construction permit stage) "...unless I 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 i t

and the Commission under this subsection in connection with the '

construction permit for the facility." On September 12, 1979, by  !

' memorat.dum from Chairman Hendrie to William J. Dircks, Director, NMSS,  !

and Harold R. Denton, Director, NRR, the Comission delegated its i "significant -hano '- r- siLility to the Director of the Office of Nuclear React.wi Regulat.a. i i

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submission will be almost six years old at the time of fuel load and not an adequate reflection of the current status of the applicants' activities in  :

central and southern Illinois. For this reason updated infomation was [

requested from all applicants regarding changed activity since the original (

operating license data response in May of 1980. After analyzing the updated  !

data responses and contacting members of the electric power industry in (

Illinois, my staff concluded that, "The changes that have been identified

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since the construction pemit review have by and large provided momentum for  :

l greater coordination, and consequently increased competition, between all groups of power supply systems in central and southern Illinois." Based upon  !

my staff's analysis, I issued an " Updated Finding of No Significant Antitrust Changes" pursuant to the Clinton antitrust operating license review.

j By letter dated October 9, 1985, Dr. Roger Batz, of Elsah, Illinois, requested l a reevaluation of my updated Finding. ,

! I DISCUSSION l

I The Commission delegated its authority to make significant change findings to l the Staff and established a definite set of criteria the Staff must follow in l

l 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);

and (3) have antitrust implications that would likely warrant some fom of i Comission remedy. It is within this framework established by the Comission l that I made my initial " Finding of No Significant Antitrust Changes" in i

The Comission delegated its authority to make significant change  !

findings to the Staff by memorandum dated September 12, 1979 (see i previous footnote). The Commission included in this delegation of i authority specific procedures the Staff should follow in conducting its s significant change reviews. In its Sumer decision (CLI-80-28 and l CLI-81-14), the Comission outlined the criteria the Staff must employ in i making a finding as to whether or not there have been significant changes

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(with competitive significance) since the previous antitrust review.  !

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4 1982 and it is within this framework that I have analyzed Dr. Batz's request to reevaluate my Clinton significant change Finding.

In his request for reevaluation. Dr. Batz raises concerns pertaining to the

fiscal viability of the Clinton applicants as well as the distribution cooperatives served by the Clinton applicants. He indicates that, (1) the distribution cooperatives served by WIPCO and to a lesser extent by Soyland  ;

are in "... dire fiscal crises..." and "...it is highly likely that one or more of the 22 distribution coops will go into chapter 11 bankrup[t]cy soon..."; (2) the 1984 power coordination agreement between Clinton and co-applicants WIPC0 ,

and Soyland adversely affects Illinois Power customers and the coop customers i served by WIPC0 and Soyland; (3) the Nuclear Regulatory Comission should conduct an investigation of the financial records of WIPCO and Soyland and all of the twenty-two distribution cooperatives; and (4) some of the coops may sell out to investor-owned utilities or reorganize into new entities, thereby adversely affecting Illinois Power's fiscal status regarding power sales from the Clinton plant. In applying the Commission's significant  !

change criteria to each of Dr. Batz's concerns, I have found no reason to  :

conclude that there has been a change in the applicant's activities that j would cause me to amend my " Updated Finding of No Significant Antitrust l Cha.nges." The activities described by Dr. Batz in his request for  !

reevaluation and accompanying testimony do not depict any type of f

l anticompetitive behavior that would likely warrant a remedy by the Nuclear l Regulatory Comission. l t

i The connon thread running throughout Dr. Batz's request for reevaluation is a j concern over the wholesale rate increase expected to accompany Clinton's comercial operation and the 1:npact such an increase may have on the distribution cooperatives served by WIPC0 and Soyland. The Federal Energy Regulatory Comission (FERC) has a policy requiring utility companies  !

engaged in capital intensive construction projects to phase in the costs  !

associated with the particular project over a period.of years, with no more l i

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4 than fifty percent included in the rate base during the first year of the plant's comercial operation. Even though utilities are allowed to phase in l only fifty percent of a particular project the first year, the sums can be substantial when associated with a large nuclear power plant. This " rate shock" is what Jr. Batz seems to be referring to in his request when he j indicates that some of the distribution coops, i.e., those most likely to be affected by increases in wholesale power rates, in Illinois are fiscally unstable and any large rate increase could cause these coops to declare backruptcy, reorganize or merge with other power systems.

i I have found no evidence to indicate that the Clinton owners acted in an anticompetitive fashion by including Clinton construction costs in their rate bases. If Dr. Batz believes that the wholesale rates projected for the distribution cooperatives in Illinois are in any way inequitable or may result

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in competitive injury to sellers or consumers of electric power and energy in Illinois, he should petition the FERC and/or the Illinois Conenerce Comission for rate relief. The Nuclear Regulatory Commission does not have jurisdiction j over tariffs for electric power and energy and consequently, could nat i . remedy any inequities (if found) in such tariffs.

l Dr. Batz also expresses concern over the Ownership Participation Agreement and

accompanying Power Coordination Agreement signed by the Clinton owners in October of 1984. These two Agreements changed the manner in which ownership

( shares of Clinton were divided among the three owners, allowing WIPC0 and Soyland to participate in Clinton on a sliding scale based upon an absolute dollar expenditure ($450 million) by the two Cooperatives rather than a percentage ownership share as provided for in the original agreement among the Clinton owners signed in August of 1976. Dr. Batz contends that these Agreements hurt both Illinois Power customers and the customers of WIPC0 and Soyland by requiring Illinois Power customers to assume more of the capital costs associated with the construction of Clinton and at the same time require i

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WIPCO and Soyland customers to pay more for fewer kilowatt hours of electricity as the percentage of ownership allotted to WIPCO and Soyland decreases. The Clinton owners have jointly decided that a new ownership arrangement would be beneficial to all three parties. I have no evidence to indicate that WIPC0 and Soyland were in any way coerced into reducing their ownership shares in Clinton (from a combined twenty percent share to a sliding scale share) and see no anticompetitive effect upon bulk power supply in Illinois as a result of this change in ownership shares.

I believe the issues raised in the request for reevaluation concerning Clinton wholesale power rates as well as the terms and provisions of the Ownership Participation Agreement and the accompanying Power Coordination Agreement would be more appropriately addressed by the FERC, where both Agreements have been filed, or the Illinois Connerce Commission, where, as ,

Dr. Batz notes, there is an open Locket pending.

For the reasons stated above, I have decided not to change my " Updated Finding of No Significant Antitrust Changes" pursuant to the antitrust operating license review of the Clinton Power Station, Unit 1.

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'Da'rriTIN. en t, c ing Director Office of Nuclear Reactor Regulation ,

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