IX. Reasonableness Review-SGRP

In this application, SCE is requesting that the Commission pre-approve the SGRP. SCE intends this to mean that, if granted, the Commission would not be able to disallow construction costs or their recovery in rates on the grounds that SCE's decision to implement the SGRP was unreasonable. SCE represents that it will submit the incurred costs for a reasonableness review, and that the Commission would not be relinquishing its authority to review the reasonableness of recorded costs and construction practices. Specifically, SCE proposes to file an application to establish the reasonableness of the SGRP construction costs, excluding the costs of removal and disposal of the original steam generators, six months after SONGS returns to commercial operations. In addition, SCE proposes to file an application to establish the reasonableness of the costs of removal and disposal of the original steam generators six months after the last removal and disposal costs are incurred.

TURN states that it would be willing to participate in a reasonableness review when the SGRP is complete. However, it would prefer that the Commission adopt up-front and transparent standards for the review.

Aglet states that SCE should not be allowed to recover any SGRP costs in rates without a reasonableness review.

ORA supports a mandatory reasonableness review of SGRP costs.

The effect of SCE's request for pre-approval of the SGRP is that the Commission would not be able to disallow construction costs or their recovery in rates on the grounds that SCE's decision to implement the SGRP was unreasonable. Instead of pre-approval, we accept SCE's SGRP estimate of $680 million as a reasonable estimate of the SGRP cost. 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.

Nonetheless, we accept that there is uncertainty in cost estimates and that it is appropriate to consider costs in excess of the estimated reasonable total of $680 million. As in Decision 05-11-026, we include an additional $102 million to the estimate to reach a maximum cost of $782 million. SCE will not be allowed to recover SGRP costs in excess of this amount.