VIII. Consistency with D.05-12-040

Footnotes in the settlement indicate that the terms of the settlement are consistent with Ordering Paragraphs 3, and 6 through 13 of D.05-12-040. We assume such consistency in our analysis and approval of the settlement.

Ordering Paragraphs 5 and 16 of D.05-12-040 provide as follows:

5. "If the SGRP cost exceeds $680 million, or the Commission later finds that it has reason to believe the costs may be unreasonable regardless of the amount, the entire SGRP cost shall be subject to a reasonableness review."

16. "If SCE cancels the SGRP for any reason at any time, and requests recovery of any of the incurred costs from ratepayers, the Commission retains the discretion to conduct a reasonableness review of the costs incurred, including cancellation costs, and to determine the appropriate ratemaking treatment, if any."

In Ordering Paragraph 5, the $680 million figure corresponds to $142 million (2004$) for SDG&E as discussed previously.

We understand that the settlement is intended to be consistent with D.05-12-040. However, the possibility of a reasonableness review or SGRP cancellation is not specifically addressed in the settlement. Although SCE is the operating agent for SONGS, SDG&E is responsible for the reasonableness of its share of the SGRP costs. Consistent with D.05-12-040, SDG&E will be subject to any reasonableness review of SGRP costs that is conducted, and the Commission's determination of ratemaking treatment in the event of cancellation. For this reason, and to avoid any misunderstanding regarding our approval of the settlement, we include ordering paragraphs consistent with the above in this decision.

Since the SGRP is not separable into a portion performed by SCE, and a portion performed by SDG&E, we do not intend to perform separate reasonableness reviews for SCE and SDG&E. Therefore, if a reasonableness review is performed, it will be conducted in connection with SCE's application to include SGRP costs permanently in rates. SDG&E can file its application to include SGRP costs permanently in rates jointly with SCE, separately subject to the reasonableness determination adopted in SCE's application, or in some other manner that would avoid a separate reasonableness review for SDG&E.