ALJ/JPO/avs Mailed 12/4/2006

Decision 06-11-026 November 30, 2006

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

In the Matter of San Diego Gas and Electric Company's Application for Authorization to (1) Participate in the Steam Generator Replacement Project as a Co-Owner of San Onofre Nuclear Generating Station Unit Nos. 2 & 3 (SONGS 2 & 3); (2) Establish Ratemaking for Cost Recovery; and (3) Address Other Related Steam Generator Replacement Issues. (U 902 E)

Application 06-04-018 (Filed April 14, 2006)

OPINION APPROVING AN UNOPPOSED SETTLEMENT OF THE RATEMAKING TREATMENT OF SAN DIEGO GAS AND ELECTRIC COMPANY'S SHARE OF COSTS RELATED TO STEAM GENERATOR REPLACEMENT AT SAN ONOFRE NUCLEAR GENERATING
STATION UNITS 2 AND 3

I. Summary

By this order, we present our findings as to the participation of San Diego Gas and Electric Company (SDG&E) in the steam generator replacement program (SGRP) for San Onofre Nuclear Generating Station Units 2 & 3 (collectively SONGS, separately Unit 2 or Unit 3), and related matters.¹ We find that SDG&E's participation in the SGRP is reasonable and approve the attached unopposed settlement agreement (settlement). The settlement provides for ratemaking treatment of SDG&E's share of SGRP costs in a manner consistent with the ratemaking treatment we authorized for Southern California Edison Company's (SCE) share of SGRP costs in Decision (D.) 05-12-040. The settlement also authorizes SDG&E to recover through a two-way balancing account the difference between authorized and actual SONGS operations and maintenance (O&M) expenses billed by SCE.

¹ San Onofre Nuclear Generating Station Unit 1 is shut down and undergoing decommissioning.