14. Project Cost Cap

We will adopt a project cost cap based on the record developed in this case. We recognize that detailed engineering estimates have not been completed for the routes we select, so there is some uncertainty associated with the firmness of the cost cap we adopt today. However, we believe that the cost cap contains sufficient contingency factors in the estimating procedure to make the estimates of a sufficient level of reliability that we can adopt a cost cap. We have relied on PG&E's construction cost estimates, which were based on detailed engineering estimates for the project through difficult terrain (with minor adjustments for routing through flatter terrain), we have relied on PG&E's land cost estimates using a fee interest valuation, rather than an easement interest, and we have included significant contingency factors for each of these project cost areas. We have no reason to believe that PG&E cannot complete its project within the cost cap we adopt today.

If, upon completion of the final, detailed engineering design-based construction estimates for the alternatives selected, PG&E concludes that the costs will be materially (i.e., one percent or more) lower than the cost cap we adopt, PG&E shall submit with the estimate an explanation of why we should not revise the cost cap downward to reflect the new estimate. If the final estimate exceeds the cost cap we have adopted, then PG&E is free to exercise its rights to seek an increase in the cost cap pursuant to Pub. Util. Code § 1005.5(b). However, the cost cap will not automatically adjust upward even if the final, detailed costs exceed the cost cap.

We authorize a total project cost cap of $118,359,015 for the adopted Tri Valley 2002 Capacity Increase Project as reflected in Table 4.

TABLE 4

Project Cost Cap

Adopted Routing Alternatives

				Dublin Area Project -			North Livermore Area Project -
	Pleasanton Area Project - S2A/S2			PG&E Proposed +P2/P3			Substation/Feeder Costs Only
	Transmission Line Construction	$ 32,338,856		Transmission Line Construction	$ 27,716,411		Substation Engineering and Construction		$ 6,599,735
	Overhead	$ -		Overhead	$ 4,819,144
	Underground	$ 32,338,856		Underground	$ 22,897,267		Distribution Feeders		$ 3,403,000
	Land Costs	$ 6,350,139		Land Costs	$ 2,664,484		North Livermore Area Subtotal		$ 10,002,735
	Transition Station(s)	$ 1,982,885		Transition Stations	$ 3,965,770
	Substation Engineering and Construction	$ 5,192,734		Substation Engineering and Construction	$ 7,654,000		Costs Independent of Route Selected
	Distribution Feeders	$ 4,847,000		Distribution Feeders	$ 4,885,000		Project Planning and Certification Costs	$ 10,332,000
	Remote Terminal Protection Upgrades	$ 427,000		Dublin Area Subtotal	$ 46,885,666
	Pleasanton Area Subtotal	$ 51,138,614
							Project Cost Cap	$ 118,359,015