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DOJ Has No Current Plan to Challenge Nuclear Power Plant Operators' Proposal, BNA's Antitrust & Trade Regulation Report

July 06, 2012

Reproduced with permission from Antitrust & Trade Regulation Report, 103 ATRR 10 (July 6, 2012). Copyright 2012 by The Bureau of National Affairs, Inc. (800-372-1033) <http://www.bna.com>

By Cecelia M. Assam

A proposal involving the sharing of existing resources, best practices, and coordination of joint planning and operational activities among seven nuclear power plant operators does not currently warrant an antitrust attack by the Justice Department, according to a July 3 business review letter to counsel for the proposed venture.

Stephen Paul Mahinka, of the Washington, D.C., office of Morgan, Lewis Bockius LLP, represented to DOJ that the proposed venture would be named the STARS Alliance LLC.

Based on the information provided in his request for review, the agency concluded that "it does not appear likely that the cooperative activities that STARS proposes to undertake will restrict competition."

The STARS Alliance participants are: Union Electric Co., with its Callaway plant in Missouri; Arizona Public Service Co., with its Palo Verde plant in Arizona; Luminant Generation Company LLC, with its Comanche Peak plant in Texas; Pacific Gas and Electric Co., with its Diablo Canyon plant in California; Southern California Edison Co., with its San Onofre plant in California; STP Nuclear Operating Co., with its STP plant in Texas; and Wolf Creek Nuclear Operating Co., with its Wolf Creek plant in Kansas.

Analysis

Acting Assistant Attorney General Joseph Wayland, Chief of DOJ's Antitrust Division, reiterated several assertions from Mahinka's request that factored into his no-action posture:

  • membership and participation in all the activities of STARS is voluntary;
  • STARS members would represent 13 of the 69 operating commercial nuclear pressurized water reactors in the United States and 13 of the 104 operating commercial nuclear reactors in the United States;
  • STARS members, for the most part, are in separate geographic areas and do not compete against each other for the sale of electricity;
  • in the two instances where members have reactors in the same electricity transmission organization (i.e., California and Texas), the members' nuclear units are not likely to have an impact on electricity prices given the structure of the organized markets and the particular characteristics of the plants at issue;
  • the members will be prohibited from sharing competitively-sensitive pricing or marketing information;
  • none of the contemplated activities involve the procurement of goods and services or the sale or purchase of electricity; and
  • STARS will not function as a standard-setting organization for the nuclear power industry.

Mahinka's request also indicated that the members propose to form STARS to operate as a "resource sharing organization" with the objectives of achieving "maximum efficiencies and the continued safe operation of nuclear power plants." In addition, the request claimed that the members believe their cooperative activities would be procompetitive by enhancing the efficiency of the members' operations, resulting in lower costs and the continued safe operation of nuclear plants.

"To the extent that the proposed cooperative activities increase efficiencies that result in lower costs, increased output (such as reductions in nuclear reactor outages that result in less downtime), or increased safety, the proposed conduct could have a procompetitive effect," Wayland responded.