|Word Document PDF Document|
COM/MP1/RSK/gir Mailed 12/19/05
Decision 05-12-040 December 15, 2005
BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA
Application of Southern California Edison Company (U 338-E) for Authorization: (1) to Replace San Onofre Nuclear Generating Station Unit Nos. 2 & 3 (SONGS 2 & 3) Steam Generators; (2) Establish Ratemaking for Cost Recovery; and (3) Address Other Related Steam Generator Replacement Issues.
(Filed February 27, 2004)
Carol A. Schmid-Frazee, John W. Spiegel, Charles D. Siegal, and Martin D. Bern, Attorneys at Law, for Southern California Edison Company, applicant.
Paul Angelopulo, Attorney at Law, and Mark R. Loy, for the Office of Ratepayer Advocates; Matthew Freedman, Attorney at Law, for The Utility Reform Network; James Weil, for the Aglet Consumer Alliance; Alcantar & Kahl, LLP, by Michael Alcantar, Attorney at Law, for the Cogeneration Association of California; Ellison, Schneider & Harris, LLP, by Andrew B. Brown, Attorney at Law, for the Independent Energy Producers Association; Daniel W. Douglass, Attorney at Law, for the Western Power Trading Forum; Adams, Broadwell, Joseph & Cardozo, by Marc Joseph, Attorney at Law, for the Coalition of California Utility Employees; James F. Walsh, Attorney at Law, Amy Peters and Wendy Keilani, for San Diego Gas and Electric Company; Jennifer K. Post, Attorney at Law, for Pacific Gas and Electric Company; James Ross, for Chevron Texaco McKittrick Cogeneration Company; Alcantar & Kahl, LLP , by Nora Sheriff, Attorney at Law, for the Energy Producers and Users Coalition; Karen Tarranova, Attorney at Law, for THUMS Long Beach Company; Brian T. Cragg and Lucina Lea Moses, Attorneys at Law, for City of Anaheim; Ronald Liebert, Attorney at Law, for California Farm Bureau Federation; Sabrina Venskus, Attorney at Law, for California Earth Corps; interested parties.
TABLE OF CONTENTS
I. Summary 22
II. Background 55
III. SCE's Request 55
IV. SDG&E Participation in the SGRP 66
V. Need for and Timing of the SGRP 77
VI. SCE's Cost-Effectiveness Model 99
VII. Model Inputs 1010
VIII. Combustion Engineering Issues 3939
IX. Reasonableness Review-SGRP 4848
X. Reasonableness Review- Management of the Original Steam Generators 5050
XI. Aglet and TURN Proposals for Guaranteed Savings 5151
XII. Ratemaking Treatment 5353
XIII. Cost-Effectiveness Conclusion 6363
XIV. CEQA Review 6767
XV. Conclusion 7272
XVI. Affirmation of ALJ Ruling 7575
XVII. Categorization and Need for Hearings 7878
XVIII. Comments on Alternate Proposed Decision 7878
XIX. Assignment of Proceeding 7979
Findings of Fact 7979
Conclusions of Law 100100
By this order, we present our findings as to the cost-effectiveness of the steam generator replacement program (SGRP) proposed by Southern California Edison Company (SCE) for San Onofre Nuclear Generating Station Units 2 & 3 (collectively SONGS, separately Unit 2 or Unit 3), and related matters.1 Based on these findings, we approve the SGRP subject to the requirements imposed herein. In addition, we certify the Final Environmental Impact Report (Final EIR) as the Environmental Impact Report (EIR) for the SGRP pursuant to the California Environmental Quality Act (CEQA).
Based on our analysis of the SGRP as discussed herein, we find that:
· The SGRP is cost-effective.
· $680 million ($569 for replacement steam generator installation and $111 million for removal and disposal of the original steam generators) is a reasonable estimate of the total SGRP cost, excluding accumulated Allowance for Funds Used During Construction (AFUDC).2
· We do not intend to conduct an after-the-fact reasonableness review if the SGRP cost does not exceed $680 million.
· If the SGRP cost exceeds $680 million, or the Commission later finds that it has reason to believe the costs may be unreasonable regardless of the amount, the entire SGRP cost shall be subject to a reasonableness review.
· Parity of treatment with that accorded Pacific Gas and Electric Company in Decision 05-11-0263 provides an additional $102 million above the estimated total costs to account for future cost uncertainties to result in a maximum allowable SGRP cost (cap) of $782 million as adjusted for inflation and cost of capital.4 SCE will not be allowed to recover SGRP costs in excess of this amount.
· SCE may record in a balancing account the revenue requirement associated with the steam generator replacement for each unit as of the date of operation of each unit.
· SCE may record in a balancing account the revenue requirement associated with the removal and disposal of the original steam generators for each unit as of the date removal and disposal is completed.
· SCE may include the revenue requirement for steam generator replacement for each unit in rates on January 1 of the year following commercial operation of each unit. Implementation shall be by advice letter.
· SCE may include the revenue requirement for removal and disposal of the original steam generators for each unit in rates on January 1 of the year following completion of the removal and disposal of the original steam generators for each unit.5 Implementation shall be by advice letter.
· After completion of the SGRP, SCE will be required to file an application for inclusion of the costs thereof permanently in rates, regardless of whether the costs exceed $680 million. If a reasonableness review is performed, it will be done in connection with the application. In the event the removal and disposal of the original steam generators is delayed significantly beyond the commercial operation dates of both units, it may be addressed in a subsequent application.
· SCE is authorized to recover through depreciation a total of 20% ($22.2 million) of the estimated costs of removal and disposal of the original steam generators for both units over 2006-2011.
· In future ratemaking proceedings that determine the revenue requirement associated with SONGS operations and maintenance (O&M) costs and capital additions, the O&M costs and capital additions estimates shown in Attachment A maybe subject to change. We decline to place a cap on O&M costs and capital additions.
· The reasonableness of the transfer of all or part of SDG&E's ownership share to SCE will be addressed in SDG&E's future § 851 application, which we will require SDG&E to file within 120 days of adoption of this decision.
San Diego Gas & Electric Company (SDG&E), a co-owner of SONGS, has elected not to participate in the SGRP. Its participation is not addressed herein, and will be addressed in an application to be filed by SDG&E pursuant to § 851.6
The Commission retains the discretion to determine the appropriate ratemaking treatment, including the possibility of a reasonableness review of costs incurred, if the SGRP is cancelled for any reason.
1 San Onofre Nuclear Generating Station Unit 1 (Unit 1) is shut down and undergoing decommissioning.
2 All dollar figures are in 2004 dollars unless otherwise specified.
3 Pursuant to Evidence Code Section 451 and Rule 73 of the Commission Rules of Practice and Procedure, we take official notice of Decision 05-11-026.
4 The $782 million cap will be adjusted for actual inflation and cost of capital. All references to the cap are as adjusted for actual inflation and cost of capital.
5 The calculation of the amount to be included in rates shall recognize the recovery of 20% ($22.2 million) of the costs of removal and disposal of the original steam generators for both units through depreciation over 2006-2011.
6 All section references are to the Public Utilities Code unless otherwise specified.