5. URG - Nuclear Generation
SCE owns a 78.21 percent share of SONGS, Units 2 and 3, located in North San Diego County. The nameplate ratings of SONGS 2 and 3 are 1070 Megawatt (MW) and 1080 MW, respectively.
In its testimony, SCE sets forth its reasonableness showing for SONGS generation and nuclear fuel expenses incurred by SCE during the Record Period.
In its testimony, DRA found that four nuclear plant forced outages were unreasonable. In its opening brief, DRA withdrew its recommendations regarding three nuclear plant outages. The remaining contested outage involved a planned outage at SONGS Unit 2 which was scheduled for 30 days starting December 28, 2008, but was extended for an additional 18 days due to an unexpected need to replace a drive mechanism and make subsequent fixes. SCE addressed all four outages in its rebuttal testimony.
5.1. Root Cause Evaluations
In its analysis of the contested outage at SONGS, DRA based its recommendations for disallowances on root cause evaluations (RCEs) performed by the plant operators. SCE reiterates its explanations from A.09-04-002 (the 2008 ERRA) of the purpose of RCEs as follows:
Whenever SCE or APS experiences any failure, malfunction, deficiency, or non-conformance at SONGS or Palo Verde, respectively, Nuclear Regulatory Commission (NRC) regulations require the plant operator to perform a stringent after-the-fact evaluation of the event. These evaluations are commonly referred to as RCEs, Apparent Cause Evaluations (ACEs), and Common Cause Analyses (CCAs). The purpose of the evaluation is to determine the cause of the event, and to define the corrective actions required to prevent the event from occurring in the future. These evaluations are based on hindsight, using information and results available at the time the report was written - not just information that was available at the time of the incident. This stringent evaluation process reflects the high standards that are enforced both internally (by plant operators) and externally (by the NRC and other organizations) in the commercial nuclear industry, in order to achieve excellent safety and operating performance. These high standards are reflected in the performance of SCE's nuclear facilities, SONGS and Palo Verde, which generally experience fewer forced outages than SCE's other URG operations. (A.09-04-002, Exhibit 4, at 19-20.)
Accordingly, SCE asserts that the RCEs that it supplied to DRA regarding the forced outages at SONGS should not be confused with an assessment of the reasonableness of plant personnel's actions for the purposes of this proceeding. SCE urges the Commission not to draw a direct correlation between their findings and the reasonable manager standard. SCE notes that the RCE that SCE supplied for the outage at SONGS specifically states that it should not be confused with such an assessment. The SONGS RCE begins with a "Clarification of Purpose," that states that the evaluation "does not attempt to make a balanced judgment of the prudence or reasonableness of any actions or decisions taken...." SCE adds that the RCE is clear that (1) the information and result therein were not available to the organization and personnel during the time frame in which relevant actions were taken and decisions were made, (2) the purpose of using such an approach is to provide the most comprehensive analysis possible for improving future performance to the highest attainable level, and (3) use of this approach is imperative in the nuclear power industry and cannot be compromised or confused with an assessment of management or personnel prudence.
According to SCE, DRA does not acknowledge this statement of purpose in its report, or otherwise attempt to view these evaluations in the proper context, but instead relies exclusively on these evaluations to justify a finding that the outage at SONGS could have been foreseen and prevented, and were thus unreasonable. SCE asserts that this is inappropriate, and is a "hindsight bias," which causes those who know what happened after the fact to misunderstand what others who lacked that knowledge could have known at the time the events occurred. It is SCE's position that the Commission's analysis of the outage should focus on whether plant personnel at SONGS acted reasonably, and in accordance with industry standards, given the information that was known or could have been known by them at the time of these outages (i.e., without the benefit of hindsight and careful after-the-fact analysis).
We repeat our standard of review regarding evidence from an RCE from D.10-07-049, at 13, in last year's SCE ERRA reasonableness review. We recognize the purpose of the RCE as described by SCE and do not take its conclusions on face value for the purpose of determining whether a disallowance is appropriate in this case. We also recognize that inappropriate actions, root causes, or apparent causes contained in RCEs may not translate directly into unreasonable actions on the part of SCE for the purposes of this proceeding. But it is entirely appropriate for the Commission to use the facts underpinning the RCE in our analysis of whether SCE complied with the reasonable manager standard. As stated in D.10-07-049, Conclusion of Law #5, RCEs must be evaluated in conjunction with the "reasonable manager" standard2 in determining whether the outage is reasonable or unreasonable for the purposes of this proceeding. The outage at SONGS is discussed below with this principle in mind.3
SCE argues that nuclear cause evaluations cannot be used as the sole basis for assessing the reasonableness of nuclear outages in the ERRA proceeding.4 SCE would inappropriately limit the application of the reasonable manager standard to circumstances where independent analysis beyond the RCE is available. The RCE and related testimony in this case was the sole evidence for assessing reasonableness. SCE did not meet its burden of proof to show the reasonable manager standard had been met; in other words, SCE did not produce other evidence showing that its conduct was reasonable. We acknowledge that the purpose of an RCE is, as SCE states "to perform stringent, after-the-fact evaluations of events to determine their cause and develop appropriate preventative measures to prevent the event for recurring in the future."5 It is not inconsistent with this purpose that an RCE may provide clear evidence that the utility acted unreasonably.
SCE cites D.10-07-049 at 21 as standing for the proposition that the Commission has "rejected the notion that cause evaluation findings can be directly equated to assessments under the reasonable manager standard."6 The language in D.10-07-049 at 21 states: "the results of the RCE can only be used to determine the reasonableness of a plant operator's actions related to a nuclear plant outage, if each of the RCE identified actions or causes is evaluated in light of the `reasonable manager' standard." Here, SCE tries to conflate the correct notion that RCEs are not, in and of themselves, the same as an evaluation under the reasonable manager standard with the incorrect claim that RCEs may not be used as evidence in evaluating the utility's actions under the reasonable manager standard. Whether an RCE is the sole documentation in the record or not, a disallowance would only be appropriate if the actions of the utility were inconsistent with the reasonable manager standard.
SCE suggests that using the RCE as evidence for considering a disallowance is bad public policy, because this may cause SCE employees to be less than forthcoming in hindsight reviews such as RCEs. According to SCE, this, in turn, could lead to safety issues at nuclear power plants if necessary steps are not taken to improve safety because of incomplete information in RCEs and similar reviews. Safety at nuclear power plants -- and all other utility facilities -- is of paramount importance to the Commission and to the public. Safe operation must also be a top priority of the utility. At the same time, disallowances based on factual evidence of unreasonable actions are a regular part of regulatory oversight of utilities. These interests are not incompatible. Under no circumstances should a utility allow the possibility of a disallowance to lead to any degradation in the utility's overall culture of safety, or in management emphasis on safety, or in efforts to continuously evaluate operations for opportunities to improve safety.
5.2. SONGS Unit 2 Outage
This SONGS Unit 2 nuclear reactor outage started as a planned outage which was scheduled for 30 days starting December 28, 2008. The purpose of the outage was to complete pressurizer dissimilar weld overlays, as well as other maintenance work. However, the outage was extended first, by 16 days due to an unexpected need to replace a control element drive mechanism, and second by approximately an additional two days because a vent valve began leaking after the unit was pressurized and in startup mode.
DRA states that SCE imprudently allowed management systems within SONGS to deteriorate. DRA claims the repair of the vent valve added at least 48 hours to the existing outage. DRA calculates that the outage extension caused 40,168 MWh of additional lost energy, costing approximately $1,516,000 to replace.
SCE maintains that it would have been acceptable for SCE to have seal welded the leaking vent valve shut and resumed start-up activities for Unit 2. SCE witness Clepper testified that the vent valves had experienced leaks in the past and had been seal welded by SCE.7 If SCE had done this, it would have reduced a substantial portion of the delay to bring Unit 2 back online.8 However, SCE had never performed this specific repair before, and claims that it decided that it was in the best interest of nuclear safety to drain the reactor coolant system and investigate the source of the leak.9 SCE then identified the problem - the steel ball in the vent valve had been left on top of the valve stem, which would have been appropriate as an intermediate step to ensure foreign material exclusion. Instead the steel ball should have been placed in its final configuration position under the valve stem. SCE then fixed the problem and proceeded to restart the unit.
SCE performed a cause evaluation to determine the root and contributing causes of the incident and define corrective measures. The cause evaluation notes that a first line supervisor thought he had been instructed to leave the valve in a state short of final assembly.10
DRA contends that SCE admitted the end result of its actions resulted in miscommunication, incorrect assembly and incomplete documentation.11 DRA refers to multiple organizational and procedural mistakes that were detailed in the RCE. DRA claims the focus of SCE's actions that should be considered imprudent is that the vent valve was reassembled wrong and required two days to correct. DRA contends that the proper test for imprudence is "the event[] is to be reviewed based on facts that are known or should have been known by utility management at the time."12 DRA contrasts this standard to SCE's claim that the event was not imprudent because of what the supervisor knew at the time, given the facts that were known to him at the time.13
SCE's position is that DRA inappropriately used the RCE in determining that SCE's actions were unreasonable with respect to this outage at SONGS. SCE claims that DRA ignores the fact that the RCE findings were made in hindsight, with the benefit of information and results that were not available to SONGS personnel during the time frame in which relevant actions were taken and decisions were made. Further, SCE claims that while the cause evaluation is critical of many steps that led to the vent valve leak, this does not mean that the supervisor's decision was unreasonable. SCE witness Clepper argues that the supervisor's actions were reasonable given his understanding of the situation.14
As discussed in Section 5.1.1, for the purposes of this proceeding, the results of the RCE can only be used to determine the reasonableness of a plant operator's actions related to a nuclear plant outage, if each of the RCE identified actions or causes is evaluated in light of the reasonable manager standard. In this situation, there is uncontroverted evidence that a supervisor erred in not properly ensuring the valve was in the proper final assembly state. The evidence is provided in the RCE. This error, in turn, led to the outage in Unit 2 being prolonged by approximately two days.15
The question is whether the evidence shows that this error was unreasonable in light of the reasonable manager standard. The error of the supervisor did not occur in a vacuum; he did not properly understand instructions. Put another way, management did not clearly communicate instructions to the supervisor. SCE has admitted such miscommunication, stating that the RCE "identified the direct causes of the problem to be a failure to recognize that vent valve work required a formal work authorization and work plan, and subsequent miscommunication and failures to follow plant procedures." 16
We find that SCE's actions in this instance were unreasonable under the reasonable manager standard. The reasonable manager standard includes the following concept: "The action taken should logically be expected, at the time the decision is made, to accomplish the desired result at the lowest reasonable costs consistent with good utility practice."17 It is not reasonable to conclude that SCE management thought the actions of the supervisor were consistent with good utility practice at the time the decision was made, regardless of whether the supervisor followed correct procedures based on an incorrect understanding. SCE management should have clearly communicated the proper instructions, ensured that proper procedures were followed, and ensured that the supervisor understood these instructions and procedures. If these appropriate management systems had been followed, the outage would not have been prolonged.
DRA recommends a disallowance of approximately $1,516,000 for the outage related to the valve at Unit 2. SCE places the upper limit of replacement energy at $1,442,200. Both estimates are based on an estimated loss of 40,169 MWh. The difference between the calculations is related to DRA's use of a simpler calculation methodology as compared to SCE. SCE explains that it is not possible to calculate the exact cost of the economic loss due to a specific outage. SCE used a methodology considering published energy price indices and the unit's avoided variable cost of production, while DRA simply used the day-ahead values for all hours.
We find that SCE's calculation for replacement energy for the outage at SONGS Unit 2 is reasonable and more accurate than DRA's simplified methodology, because SCE uses information more precisely calibrated to the hours of the outage. We will disallow $1,442,200 for this outage.
2 Briefly, by the "reasonable manager standard, utilities are held to a standard of reasonableness based upon the facts that are known or should have been known at the time. The act of the utility should comport with what a reasonable manager of sufficient education, training, experience, and skills using the tools and knowledge at his or her disposal would do when faced with a need to make a decision and act." (See D.09-09-088, 37 CPUC2d 488, 499.)
3 SCE claims that we are changing our standard of review from the "reasonable manager" standard to a "strict liability" standard. This is not correct. Our standard has not changed from D.10-07-049; the "reasonable manager" standard has been in place for decades. A "strict liability" standard would essentially require a disallowance based on any admitted errors. By contrast, the "reasonable manager" standard is as stated herein in Footnote 2.
4 SCE Opening Brief, at 8.
5 Id. at 7.
6 Id. at 14.
7 RT, 115:9-15
8 Exhibit SCE-7 (T.Clepper), at 25, lines 3-5.
9 RT,112:25-27
10 See Appendix D to Exhibit SCE-8.
11 SCE Rebuttal Testimony, at 24, lines 14-15.
12 D.90-09-088, at 21.
13 SCE Rebuttal Testimony, at 24, lines 9-21.
14 RT 96;18-27.
15 SCE's claim that it could have restarted the plant without a delay of two days is irrelevant; SCE did not do so. SCE's claim that penalizing SCE for not restarting the plant without the delay is a disincentive for the utility to take prudent actions for safety purposes is misdirected. Had SCE restarted the plant immediately, SCE would have risked that an even greater problem would have developed, with potential resulting litigation regarding the reasonableness of that action.
16 SCE Rebuttal Testimony, at 23.
17 D.90-09-088, at 21.
