12. Nuclear Fuel Procurement Plan
PG&E is requesting approval of a Nuclear Fuel Procurement Plan that provides for forward contracting authority for obtaining uranium, along with related conversion and enrichment services, for its Diablo Canyon Power Plant. (Ex. 100-C at 7-8.) PG&E states that its proposed Nuclear Fuel Procurement Plan "adjusts its existing procurement strategy to ensure that [Diablo Canyon Power Plant] reload requirements are adequately met in the future." (Id., Appendix C at 127.)
PG&E describes the current world market for nuclear fuel and related services, and trends in that market, and accordingly states that it is "requesting approval to enter into longer term contracts." (Id.) The record is somewhat unclear on what the currently approved contract duration is. PG&E's testimony does not clearly identify the current contract duration, but PG&E says its current Commission-approved Nuclear Fuel Procurement Plan has the same authorized contract duration as PG&E is requesting here. (PG&E Reply Brief at 27.)
DRA and Pacific Environment, however, argue that PG&E's proposal constitutes a significant expansion of the permitted contract duration, and that PG&E does not need the longer contract duration that it is proposing. (See, DRA Opening Brief at 17-19.)
Regardless of its currently-authorized contract duration, the contract duration requested by PG&E would extend beyond the expiration of the current operating license for Diablo Canyon. It is not clear why PG&E needs contracting authority that outlasts the operating license for the plant supplied by those contracts. While PG&E may be assuming that its license will be renewed, we cannot make such an assumption here. Accordingly, PG&E is granted authority to enter into contracts with a duration no longer than the expiration of the operating license.10
PG&E requests that it be allowed to seek authority for transactions outside of those pre-approved here by means of an "expedited" advice letter process, but does not specify what that means. (PG&E Reply Brief at 26-27.) Rather than create a new type of advice letter, PG&E may file under the standard advice letter process pursuant to General Order 96-B, and may request an expedited review if necessary.
PG&E notes that some suppliers of nuclear fuel and services are beginning to seek caps on their liability, which would result in significantly higher levels of potential liability exposure for PG&E and its ratepayers. (Ex. 100-C, Appendix C at 132-133.) PG&E proposes that any contract that seeks to impose this additional liability on PG&E would require Commission approval by means of its proposed expedited advice letter process.
TURN argues that the advice letter process is inappropriate for allocating liability for nuclear accidents. According to TURN, this issue is too controversial and raises too many policy questions to be addressed via advice letter. The allocation of risk for nuclear accidents, the potential magnitude of such risks, and the availability of insurance for such risks would all be more appropriately addressed in an application process. (TURN Opening Brief on Nuclear Fuel Procurement Plan at 2-4.) We agree with TURN. Any contract that seeks to impose additional liability on PG&E would require Commission approval, but by means of an application, rather than an advice letter.
10 To the extent that contracts are unit-specific, the contract duration is linked to the license for the particular unit. If the contracts are not unit-specific, their duration is linked to the date of the later-expiring unit license.
