9. URG - Catalina Diesel Operations

During the Record Period, SCE purchased 57,806 barrels of diesel fuel and burned approximately 55,000 barrels of diesel for electric generation at Santa Catalina Island. The average total cost per barrel was $146.39. SCE purchased fuel from a major supplier, Southern Counties Oil Company (Orange, CA), under a long-term (3 year) contract. SCE states considering the contract structure, which is the lowest competitive pricing available, and the integrity of the supply, its diesel purchases should be found reasonable. SCE contracts with Catalina Freight Lines to provide the truck and barge transportation from the refinery to the generating facility. SCE indicates that the bulk wholesale rate is less than the tariff rate normally charged for deliveries to the island and should be found reasonable.

In its testimony, DRA generally agrees with SCE's assertions and does not find the costs to be unreasonable. DRA also indicates that it reviewed the one forced outage during the Record Period which lasted longer than 24 hours and did not find the outage to be unreasonable.

Based on the testimonies of SCE and DRA, we conclude that SCE's Catalina diesel operations during the Record Period were reasonable.