Pursuant to § 1005.5(a), we have jurisdiction and the responsibility to specify in the CPCN a "maximum cost determined to be reasonable and prudent" for the Jefferson-Martin project.37 While FERC ultimately will decide how much of the costs for this project PG&E may recoup in transmission rates, we believe our cost cap has bearing on the amount PG&E may seek from FERC.
PG&E provided cost estimates for its Proposed Project and for several alternative routes considered during the proceeding. It also developed a cost matrix that allows cost estimates to be generated for full project routes by adding up the costs of various combined route segments in the cost matrix. PG&E's total cost estimates for some of the alternatives are as follow:
PG&E's Proposed Project $188.1 million
All-Underground Alternative (Route
Option 1B in south with Proposed
Project in north) $212.5 million
Proposed Project in south with
Collocation Alternative in north $244.7 million
PUA in south with Proposed Project
in north $226.7 million
Route Option 1B to Golf Course transition
to PUA to Proposed Project in north $213.5 million
Route Option 1B to Trousdale transition
To Proposed Project to Glenview Drive
transition to Proposed Project in north38 $207.0 million
PUA to Trousdale transition to Route
Option 1B to Proposed Project in north $224.0 million
PG&E explains that much of the difference in its cost estimates for the PUA compared to the southern segment of its Proposed Project stems from biology mitigation-related costs that PG&E estimates it would incur if the PUA is selected. PG&E did not provide a cost estimate for the MPUA but maintains that it would likely cost more than the PUA because of greater biological impacts and because moving the underground portion further west would somewhat increase the length of the underground cables and related trenching.
280 Citizens contests PG&E's conclusion that the PUA would cost more than Route Option 1B, and argues to the contrary that Route Option 1B is likely to be more expensive than the PUA and its variations. 280 Citizens states that PG&E is asking the Commission to believe that a 27-mile project, of which only 15 miles is underground (the PUA with the Proposed Project in the north) will cost more than a 27-mile project, all of which is underground (Route Option 1B with the Proposed Project in the north).
280 Citizens identifies several factors which, it contends, PG&E did not consider and which would increase the cost of Route Option 1B, including a deeper trench through Burlingame streets, additional splice vaults on Trousdale Drive, and removal and reconstruction of the El Camino Real median. PG&E responds that 280 Citizens has not substantiated these claims. PG&E continues to believe that trenching at a depth of twelve feet in Trousdale Drive and El Camino Real will not be necessary. PG&E also contests the need for additional splice vaults on Trousdale Drive and 280 Citizens claim that PG&E would have to remove and restore the median in El Camino Real.
280 Citizens estimates that the MPUA in the southern segment with the Proposed Project in the northern segment would cost $203.3 million. It maintains that its methodology of estimating an all-in per-mile construction cost is more reliable than PG&E's "artificially detailed" cost estimates that have no engineering to back up the details. 280 Citizens concludes that the MPUA would cost $9 million less than Route Option 1B, even if PG&E has not underestimated that cost. PG&E takes issue with 280 Citizen's "rule of thumb" approach and also contends that 280 Citizens significantly underestimates biological mitigation costs of the MPUA.
We adopt a project cost cap for the approved route based on the record developed in this case. PG&E's cost estimate for this route is based on preliminary design work, at least for the segments of the project which are part of PG&E's Proposed Project, and on detailed cost estimates for each component of the construction project. We recognize that detailed engineering estimates have not been completed for the project and that some of the adopted environmental and EMF mitigation measures may not have been considered when PG&E developed its cost estimate. The adopted project route includes Route Option 4B rather than PG&E's route Option 4A. However, we believe that PG&E included sufficient contingency factors in the estimating procedure so that its estimates are of a sufficient reliability so that we can adopt a cost cap. We have no reason to believe that PG&E cannot complete its project within the cost cap we adopt today.
We authorize a total project cost cap of $206,988,000 for the approved Jefferson-Martin project, as reflected in PG&E's detailed cost estimates contained in Exhibit 147, Attachment 134. If, upon completion of the final, detailed engineering design-based construction estimates for the approved project, PG&E concludes that the costs will be materially (i.e., 1% or more) lower than the cost cap we adopt, PG&E shall submit with the estimate an explanation of why we should not revise the cost cap downward to reflect the new estimate. If the final estimate exceeds the cost cap we have adopted, then PG&E is free to exercise its rights to seek an increase in the cost cap pursuant to § 1005.5(b). However, the cost cap will not automatically adjust upward even if the final detailed costs exceed the cost cap. As explained in Section VI.C, PG&E may also seek an increase in the cost cap if EMF mitigation expenses in excess of the target EMF mitigation budget cause the cost cap to be exceeded.37 We have affirmed our jurisdiction and responsibility regarding cost caps in several recent decisions, including D.01-05-059, D.01-10-029, and D.01-12-017. 38 This is the authorized route in Exhibit 147, Attachment 134, PG&E mistakenly labels this route as including the PUA rather than the Proposed Project between the Trousdale and Glenview Drive transition structures.