Nuclear Regulatory Commission Should Not Drop Antitrust Reviews, AAI and Others Urge

Feb 15 2000
Testimony and Interventions


Comments to the Nuclear Regulatory Commission in the Matter of Antitrust Review Authority:Clarification, Docket No. RIN 3150-AG38

The American Antitrust Institute today joined with the American Public Power Association, Public Citizen, the Florida Municipal Power Agency, the City of Cleveland, and the City of Gainesville in opposing the Nuclear Regulatory Commission's proposed rule to end antitrust reviews in connection with the transfers of nuclear plants. Specifically at issue was an N.R.C. proposal to permit utilities to avoid filing antitrust information in connection with license transfers on grounds that such information is not needed.

AAI argued that:

  • applicants for nuclear plants license transfers (including both plant sellers and plant buyers) should each state how existing antitrust conditions would be complied with;
  • applicants could avoid providing certain new information to the NRC by providing information that has been given to the Justice Department and the Federal Trade Commission under Hart-Scott-Rodino and to Federal and State regulatory commissions;
  • continued enforcement of antitrust conditions is essential to provide a framework of rights for dependant systems;
  • smaller competing systems entered into settlements and gave up rights in reliance on antitrust conditions; for example, cities and municipal power supply agencies in Florida and California had settled cases and courts have found the settlement license conditions judicially enforceable. These cases recognize the strong interest many parties have in the continued effectiveness of the conditions;
  • the recent price spikes and rate deregulation emphasize the need for strong antitrust enforcement of the kind that are provided by the license conditions; and
  • the Commission is in error that it must not conduct antitrust reviews under the Atomic Energy Act when the holder of an operating license proposes to sell a nuclear plant to a new owner.

The Comments, which were prepared by the law firm of Spiegel & McDiarmid in Washington, DC, took the position that the N.R.C. could not refuse to enforce antitrust policy in connection with license transfers in light of its Congressionally-mandated antitrust review functions. Further, the rule-making docket concerns only issues of the information that is to be filed in conjunction with plant transfer applications. It cannot be expanded to limit Commission antitrust functions without providing notice and taking other procedures. In its recent Wolf Creek decision, the Commission had just recently affirmed that it must consider existing antitrust conditions in connection with license transfers. Antitrust information would aid the Commission in making these decisions. However, in its proposed rule-making, the Commission would ignore this necessity.

Antitrust is important in these proceedings because those with monopoly power have the ability to manipulate transmission availability and market prices for electricity. In an affidavit supporting the pleading, AAI Advisory Board member David W. Penn, Deputy Executive Director, American Public Power Association, and former N.R.C. official, said:

[T]he "price spikes" themselves...are the mark of an extraordinarily dysfunctional wholesale electricity market. Electric energy prices spiked up to $7,500 per MWh to $10,000 per MWh, and even igher. Such energy would normally cost on the order of $50 or less per MWh, so these price spikes have been as much as 200-fold increases. While one expects a degree of price volatility in commodity markets, short-term increases of this magnitude are virtually unheard of in economic history and clearly signal dysfunctional markets. To put these events in everyday terms, imagine having to pay $5,000 to fill up your car's gas tank this weekend, or $300 for a loaf of bread.

A failure of the NRC to carry out its antitrust functions would be illegal and would ignore market limitations, with which no other agency is like to deal. Consumer protection is necessary to ensure that the pro-competitive conditions, such as fair customer access to transmission, coordination, and wholesale power, are retained and to correct against abuse by future nuclear owners.