V. Cost-Effectiveness Conclusion

The following table shows the NPV, in 2005 dollars, of the Low, Most Likely and High Cost Scenarios for continued SONGS ownership including participation in the SGRP and replacement of its SONGS share with a CCCT.⁴

Table of Results
($ Millions)
Assumptions			Scenario
		Low		Most Likely	High
SONGS		1,356		1,390	1,602
CCCT		1,076		1,411	1,948
Net Benefit of SONGS Participation		(280)		21	346

No party objected to SDG&E's cost-effectiveness analysis. SDG&E provided a detailed explanation of its analysis. Thus, it made a prima facie case in support of its contention that the SGRP is cost-effective. In addition, DRA performed a cost-effectiveness analysis and agrees that the SGRP is cost-effective for SDG&E. We have reviewed SDG&E's modeling methodology and inputs and find they are generally consistent with the analysis performed in D.05-12-040. We also find that, to the extent that inputs are different from those used in
D.0512-040, they represent changes due to more recent information and the fact that the analysis was performed from SDG&E's ratepayers' point of view rather than SCE's ratepayers, or are conservative in that they tend to reduce the
costeffectiveness of the SGRP. For the above reasons, we find SDG&E's
cost-effectiveness analysis reasonable.

The above table shows that the costs incurred will be somewhere between one and two billion dollars regardless of whether SDG&E participates in the SGRP. Under the Most Likely Cost Scenario, the net present value of the revenue requirement associated with participation in the SGRP is $21 million, or about 1.5% of the costs to be incurred regardless of whether SDG&E participates in the SGRP. Thus, the SGRP is cost-effective. Because the cost-effectiveness analysis involves forecasts of costs and benefits through 2022, they may not be accurate to within 1.5%. However, because the cost-effectiveness analysis showed a positive result, we find SDG&E's decision to participate in the SGRP a reasonable business decision.

⁴ The NPV is the net present value of the revenue requirement resulting from the total net costs and benefits.