Assignment of Proceeding
Susan P. Kennedy is the Assigned Commissioner and Jean Vieth is the assigned Administrative Law Judge in this proceeding.
Findings of Fact
1. The Settlement Agreement includes the three conditions that ORA advocated: PG&E will report annually in the ERRA on interactions between PG&E/PEFCO and Fuelco; ratepayers will receive 100% of any net nuclear fuel cost savings resulting from such transactions; and ratepayers will receive the PG&E/PEFCO share of any net proceeds on the sale or dissolution of Fuelco.
2. In order to fully monitor the effect on PG&E's ratepayers of PG&E/PEFCO participation in Fuelco, the Commission requires information about participation by PG&E/PEFCO in any activities undertaken pursuant to Article VIII, section 1(d) of the Fuelco Agreement.
1. The settlement between PG&E and ORA is an all-party settlement.
2. In order to be assured that the Fuelco Agreement is consistent with anti-trust law, Fuelco should request a safe harbor ruling from the Department of Justice. The Commission's determination that the Settlement Agreement is not contrary to law may need to be reexamined if the safe harbor ruling cannot be obtained.
3. It is reasonable to exempt Fuelco from the specified provisions of the Affiliate Transaction Rules in accordance with the terms of the Settlement Agreement and the additional requirements that PG&E: (a) provide the Commission with of a copy of the Department of Justice anti-trust safe harbor ruling for Fuelco; and (b) expand, as described in Finding of Fact 2, the report to be filed with its annual ERRA.
4. Subject to the additional requirements listed in Conclusion of Law 2, the Settlement Agreement is not adverse to the public interest and should be approved.
5. No hearings are necessary.
6. In order to provide timely advice to the entities concerned, this order should be effective immediately.
IT IS ORDERED that:
1. The June 29, 2005 Joint Motion filed by Pacific Gas and Electric Company (PG&E) and the Office of Ratepayer Advocates (ORA) is granted and the Settlement Agreement that is Attachment A to that motion and to this opinion is approved subject to these additional conditions:
(a) Upon issuance by the United States Department of Justice, PG&E shall provide a copy of the anti-trust safe harbor ruling for Fuelco LLC (Fuelco), to the Director of the Commission's Energy Division.
(b) If PG&E and/or Pacific Energy Fuels Company (PEFCO) participate in any activities listed in Article VIII, section 1(d) of the Fuelco Agreement (i.e., activities outside the scope of general purposes and business objectives listed in Article IV, section 1 of the Fuelco Agreement), then PG&E shall include those activities in the annual report required by the Settlement Agreement's Paragraph 4 and Appendix A. If doing so will adequately reflect the net impact on ratepayers, the report shall identify such activities and quantify the costs of participation by PG&E/PEFCO in a format consistent with Appendix A. If the activity does not lend itself to being reported in that format, then at a minimum, PG&E/PEFCO shall: identify and describe the activity; identify when the activity was undertaken; quantify the cost to ratepayers and the associated ratemaking treatment; and quantify the benefits to ratepayers and the associated ratemaking treatment.
2. This proceeding is closed.
This order is effective today.
Dated , at San Francisco, California.
ATTACHMENT A
BEFORE THE PUBLIC UTILITIES COMMISSION
OF THE STATE OF CALIFORNIA
Application of Pacific Gas and Electric Company for an Exparte Order Granting Limited Exemptions from the Affiliate Transaction Rules Adopted in D.97-12-088, as Subsequently Modified U 39 E |
Application No. 04-11-013 |
SETTLEMENT AGREEMENT BETWEEN THE OFFICE OF | |
In accordance with Article 13.5 of the California Public Utilities Commission's (Commission) Rules of Practice and Procedure, the Office of Ratepayer Advocates (ORA) and Pacific Gas and Electric Company (PG&E) (together, the "Settling Parties"), by and through their undersigned representatives, enter into this Settlement resolving their differences arising from Application 04-11-013. As a compromise of their respective litigation positions in A.04-11-013, ORA and PG&E agree to and support all of the terms of this Settlement.
RECITALS
A. On August 6, 2004, PG&E's wholly-owned subsidiary, Pacific Energy Fuels Company (PEFCO) entered into an "Amended and Restated Limited Liability Company Agreement" (Fuelco Agreement) with Union Electric Company, doing business as AmerenUE and TXU Generation Company LP; the Fuelco Agreement governs the operation of Fuelco, LLC (Fuelco), a limited liability company. PEFCO's ownership interest in Fuelco is currently four percent.
B. The essential purpose of Fuelco is to act on behalf of its member utilities to assist in the acquisition of nuclear fuels and related products and services. Fuelco is currently staffed by loaned employees from the member utilities who pay the salary, administrative expenses and benefits of the personnel they supply. Fuelco shares office space and equipment with member utilities. Fuelco has also participated in transactions with non-member utilities.
C. Given its current ownership interest, PG&E's transactions through PEFCO are not subject to the Commission's Affiliate Transaction Rules, first adopted in Commission Decision 97-12-088.
D. The Fuelco Agreement permits PG&E, through PEFCO, to increase its ownership interest in Fuelco; such increased ownership interest would subject PG&E/PEFCO and Fuelco to the Affiliate Transaction Rules.
E. If the interactions between PG&E/PEFCO and Fuelco were subject to certain of the Affiliate Transaction Rules, Fuelco could not operate in the manner contemplated by the Fuelco Agreement.
F. The Fuelco Agreement specifically recognizes that increasing a member's ownership interest in Fuelco may require the member to seek regulatory approval and further requires that member to seek the approvals necessary to increase its ownership interest.
G. In the case of PG&E/PEFCO, the regulatory approvals required include a waiver of certain of the Affiliate Transaction Rules.
H. On November 15, 2004, PG&E filed Application 04-11-013 seeking the required waivers of certain of the Affiliate Transaction Rules. Specifically, the Application seeks waivers of:
· Rule III.B, to the extent it restricts transactions between a utility and its affiliate to tariffed services or services subject to competitive bidding;
· Rule III.B.1, to the extent it limits and conditions the information a utility may make available to its affiliate;
· Rules III.E and IV.B, to the extent they further restrict or condition information sharing between a utility and its affiliate;
· Rules V.C and E, to the extent they proscribe the sharing of plant, facilities, costs, equipment, personnel and information;
· Rule V.G, to the extent it proscribes the sharing of employees and officers; and
· Rule V.G.6, to the extent it applies to the pricing of services provided by Fuelco.
I. On February 28, 2005, PG&E filed supplemental information pertaining to Application 04-11-013 in response to a ruling from assigned Administrative Law Judge Jean Vieth.
J. After initiating discovery, ORA sought and was granted permission to file out of time a protest to PG&E's application; ORA filed its protest on March 9, 2005.
K. After concluding discovery, ORA served testimony and work papers in the form of a Report on May 23, 2005, opposing PG&E's request for waivers of all the Affiliate Transaction Rules listed in Recital H above, except for Rule V.G.6., a waiver of which ORA does not oppose.
L. On June 6, 2005, PG&E served responsive testimony.
M. On and after June 6, 2005, representatives of ORA and PG&E met to discuss the issues ORA raised in its testimony.
N. In light of all the circumstances, and to expedite disposition of this Application, the Settling Parties have now agreed to resolve all matters at issue.
AGREEMENT
IN CONSIDERATION of the foregoing recitals, the Settling Parties agree as follows, conditioned on receiving a final order of the Commission in a form and in substance satisfactory to each of the Settling Parties:
1. ORA's Report, Workpapers, and the Redacted Report served May 23, 2005 and the responsive testimony PG&E served June 6, 2005, should be admitted into evidence by stipulation.
2. ORA withdraws its opposition to PG&E's request for waivers of the Affiliate Transaction Rules specified in Recital H, above. ORA believes that PG&E's use of Fuelco for nuclear fuel services may result in net savings for ratepayers.
3. The Commission should grant without change or condition the waivers as requested in Application 04-11-013 and specified in Recital H, above.
4. PG&E will report certain information annually to the Commission by filing the information as part of PG&E's annual Energy Resource Recovery Account (ERRA) compliance proceeding. The form for this annual filing is attached hereto as Appendix A. This information pertains to the activities and operating costs associated with PG&E/PEFCO's interactions with Fuelco.
5. This reporting requirement shall not extend to activities of Fuelco members other than PG&E/PEFCO, whose activities do not affect or benefit PG&E. Nothing in this Settlement is intended to alter the scope or applicability of Public Utilities Code sections 314 and 309.5.
6. This settlement does not extend the Commission's jurisdiction to the members of Fuelco that currently operate outside the Commission's jurisdiction or to the transactions of those members that involve Fuelco.
7. If Fuelco generates net nuclear fuel cost savings for PG&E, those savings will be passed on to PG&E's ratepayers in full, as soon as practicable, through appropriate ratemaking mechanisms.
8. If Fuelco is dissolved or sold in the future, PG&E's ratepayers will receive PG&E/PEFCO's share of the net proceeds of the sale or dissolution of Fuelco, except to the extent that PG&E/PEFCO has infused capital for which it has not otherwise sought cost recovery. In case of sale or dissolution, PG&E will file an application with the Commission for the recovery of any unrecovered capital investment.
9. The Settling Parties shall by joint motion request Commission approval of this Settlement and will actively support such prompt approval. Active support may include necessary reply comments, comments on a proposed decision, written and oral testimony, if required, appearances, and other means to obtain the approvals sought. The Settling Parties further agree to participate jointly in necessary briefings to Commissioners and their advisors regarding the Settlement and the issues compromised and resolved by it.
10. This Settlement embodies the entire understanding and agreement of the Settling Parties with respect to the matters described herein, and, except as described herein, supersedes and cancels any and all prior oral or written agreements, principles, negotiations, statements, representations or understandings between the Settling Parties.
11. The Settlement may be amended or changed only by a written agreement signed by the Settling Parties.
12. The Settling Parties have bargained earnestly and in good faith to achieve this Settlement. The Settling Parties intend the Settlement to be interpreted and treated as a unified, interrelated agreement. If the Commission fails to approve the Settlement as reasonable and adopt it unconditionally and without modification, either Settling Party may in its sole discretion elect to terminate the Settlement. Any material change to the Settlement shall give each Settling Party in its sole discretion the option to terminate the Settlement. The Settling Parties, however, will negotiate in good faith with regard to any Commission-ordered changes to attempt to restore the Settlement to an acceptable compromise document. In the event such renegotiation is unsuccessful and the Settlement is terminated, the Settling Parties may request that the unresolved issues be heard before the Commission at the earliest convenient time.
13. This Settlement does not constitute or create precedent regarding any principle or issue in this proceeding or in any future proceeding.
14. Each of the Settling Parties hereto and their respective counsel have contributed to the preparation of this Settlement. Accordingly, no provision of this Settlement shall be construed against any Settling Party because the party or its counsel drafted the provision.
15. This document may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
16. This Settlement shall become effective among the Settling Parties on the date the last Settling Party executes the Settlement as indicated below.
Name: /s/ GREGORY M. RUEGER
Gregory M. Rueger
Title: ______________________________
Senior Vice President
Generation and Chief Nuclear Officer
Date: June 27, 2005
Pacific Gas and Electric Company
Name: /s/ REGINE DEANGELIS
Regina M. DeAngelis
Title: Staff Counsel PUC
Staff Counsel
Date: June 28, '05
Office of Ratepayer Advocates
APPENDIX A
ANNUAL REPORT OF PACIFIC GAS AND ELECTRIC COMPANY
AND PACIFIC ENERGY FUELS COMPANY
ON THE ACTIVITIES OF FUELCO, LLC
RECORDED YEAR 20XX AND BUDGET YEAR 20XY
ADMINISTRATIVE COSTS ASSOCIATED WITH THE PROCUREMENT OF NUCLEAR FUEL AND FUEL-RELATED PRODUCTS OR SERVICES
(All Data in $000s)
RECORDED YEAR 20XX |
BUDGET YEAR 20XY | ||
1 |
TOTAL COMMON COSTS (1) |
||
2 |
Out-of-Pocket |
||
3 |
Labor |
||
4 |
Total Fuelco |
||
5 |
PG&E/PEFCO Share (%) |
||
6 |
PG&E/PEFCO Share ($) |
||
7 |
SPECIAL PROJECT COSTS (2) |
||
8 |
Out-Of-Pocket |
||
9 |
Labor |
||
10 |
Total Fuelco |
||
11 |
PG&E % (3) |
||
12 |
PG&E $ (3) |
||
13 |
Total PG&E Share ($) |
(1) Currently expensed on Fuelco books.
(2) Capitalized as deferred charges on Fuelco books.
(3) Reflects composite participation in one or more projects. Allocations may be estimated if final participation in a special project is subject to change. Allocations may reflect participation of non-members.
NUCLEAR FUEL AND FUEL-RELATED PRODUCTS OR SERVICES
PROCURED BY PG&E/PEFCO THROUGH FUELCO
RECORDED YEAR 20XX
INCLUDES CONFIDENTIAL, COMMERCIALLY SENSITIVE DATA
CONTRACT & DATE |
PRODUCT & UNIT PRICE |
TOTAL COST |
DELIVERY DATE(S) |
FUELCO TITLE (Y/N) |
MARKET UNIT PRICE AT CONTRACT* |
CURRENT MARKET UNIT PRICE* |
* A simple average of the prices reported in the most recent weekly publications of Trade Tech Nuclear Market Outlook and Ux Weekly Report.
(END OF ATTACHMENT A)
