ALJ/JPO/jva Mailed 11/21/2005
Decision 05-11-026 November 18, 2005
BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA
Application of Pacific Gas and Electric Company (U 39 E) for Authority to Increase Revenue Requirements to Recover the Costs to Replace Steam Generators in Units 1 and 2 of the Diablo Canyon Power Plant. |
Application 04-01-009 (Filed January 9, 2004) |
(See Attachment A for List of Appearances)
TABLE OF CONTENTS
Title Page
OPINION 2
I. Summary 2
II. Background 4
III. PG&E's Request 5
IV. Interim Decision 6
V. Cost-Effectiveness Conclusion 7
VI. CEQA Review 12
VII. Conclusion 17
VIII. Comments on Proposed Decision 18
IX. Assignment of Proceeding 22
Findings of Fact 22
Conclusions of Law 24
ORDER 27
Attachment A List of Appearances
Attachment B DCCP Steam Generator Replacement Report
I. Summary
By this order, we present our findings as to the cost-effectiveness of the steam generator replacement program (SGRP) proposed by Pacific Gas and Electric Company (PG&E) for Diablo Canyon Power Plant Units 1 & 2 (Unit 1, Unit 2, collectively Diablo), and related matters. Based on our analysis of the SGRP as discussed herein, we find that the SGRP is cost-effective, and approve the application. In addition, we certify the Final Environmental Impact Report (Final EIR) for the SGRP pursuant to the California Environmental Quality Act (CEQA).1 Our approval of the application is conditioned upon PG&E's acceptance of the requirements imposed herein. Our findings and requirements are as follows:
· The maximum allowable SGRP cost (cap) is $815 million (November 2008 dollars) as adjusted for actual inflation and cost of capital.2 PG&E will not be allowed to recover SGRP costs in excess of this amount.
· $706 million (November 2008 dollars), as adjusted for actual inflation and cost of capital, is a reasonable estimate of the SGRP cost.3
· We do not intend to conduct an after-the-fact reasonableness review if the SGRP cost does not exceed $706 million.
· If the SGRP cost exceeds $706 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.
· PG&E shall record in the Utility Generation Balancing Account (UGBA) the revenue requirement associated with plant additions up to the cap as of the date of operation of each unit.4
· PG&E shall include the revenue requirement associated with each unit in rates, up to $326 million for Unit 1 and $380 million for Unit 2 on January 1 of the year following commercial operation of each unit, subject to refund. PG&E shall file an advice letter to request authority to implement the above rate increase for each unit. The rate increase shall not take effect until and unless the advice letter is approved by the Commission.
· After completion of the SGRP, PG&E shall file an application for inclusion of the costs thereof permanently in rates, regardless of whether the SGRP costs exceed $706 million. If a reasonableness review is performed, it shall be done in connection with that application.
· PG&E shall carry out the SGRP using the environmentally superior alternatives as specified herein and shall comply with all applicable mitigation measures as specified in the Final EIR.
The Commission retains the discretion to require a reasonableness review, and/or specify a different ratemaking treatment. In addition, the Commission retains the discretion to determine the appropriate ratemaking treatment, and conduct a reasonableness review of costs incurred, if the SGRP is cancelled for any reason.
1 The CEQA statute appears at Cal. Pub. Res. Code Sections 21000 et seq.
2 The $815 million cap will be adjusted for actual inflation and cost of capital by the same percentage as the $706 million amount addressed later in this decision. All references to the cap are as adjusted for actual inflation and cost of capital.
3 All references to the $706 million figure are as adjusted for actual inflation and cost of capital. The $706 million figure includes $326 million for Unit 1 and $380 million for Unit 2.
4 The $815 million cap is a total SGRP cost cap. It is not divided into a specific amount for each unit, and only applies to the SGRP as a whole. Therefore, if the cap is reached, it will likely be after the first unit is completed.
