THEREFORE, IT IS ORDERED that:

1. Limited rehearing is granted to, consistent with the discussion in this order:

(i) take into account the correct net present value calculations for the SGRP; and

(ii) calculate the GHG adder using an accurate source of data.

2. After this order issues, the assigned Administrative Law Judge shall, either at a prehearing conference, or by order, provide parties with any data or calculations needed to undertake the rehearing on net present value calculations and the GHG adder. The assigned Administrative Law Judge should determine whether formal evidentiary hearings are necessary to resolve these issues.

3. D.05-12-040 is modified as follows:

a. On page 67, a new third sentence shall be added to the first full paragraph, immediately following the reference to footnote 48. The new sentence shall state: "As discussed in Section VII. D., above, we have concluded that CEC's cost estimates for increased security should not be included separately in the net present value calculation for several reasons, and instead should be considered as an additional factor supporting the conclusion that some increase in future O&M costs and capital additions beyond the amount forecast by SCE is appropriate."

b. A new clause is added at the beginning of the second sentence of the first paragraph in Section VIII, on page 39, which sentence now begins, "SCE argues...." The new clause shall read: "Not wanting to be disadvantaged should it be required to litigate."

c. A new sentence is added to the first paragraph in Section VIII, on page 39, following the second sentence, which ends, "...recovery would have been." The new sentence shall read: "On the confidential record SCE provides further information regarding its approach to tube degradation."

d. New discussion is added to the first paragraph in Section VIII, on page 39. The new discussion shall appear at the end of the paragraph and shall read:

    "We have established a "definition of reasonable and prudent where the reasonableness of a management action depends on what the utility knew or should have known." (Costs Related to 1997 New Years Flood [D.06-01-036] (2006) __ Cal.P.U.C.3d __, 2006 Cal.PUC LEXIS 31, at p. 3 (slip op.).) A good formulation of this standard is: "The reasonable and prudent act is not limited to the optimum act, but includes a spectrum of possible acts consistent with the utility system need, the interest of the ratepayers, and the requirements of governmental agencies of competent jurisdiction." (Recovery of Costs Related to Southern California Wildfires [D.05-08-037], supra, at p. 10, 2005 Cal.PUC LEXIS 526, at p. *14, citing Southern California Edison Company [D.87-06-021] (1987) 24 Cal.P.U.C.2d 476, 486, 1987 Cal. PUC LEXIS 588, at pp. *28-29.)"

e. A new sentence and a citation are added to the last partial paragraph on page 45, which paragraph begins, "The 1987 settlement ...." The new sentence shall be inserted following the second sentence which ends, "...corrosion at that time[,]" and shall read: "The public and confidential records contain evidence that leads us to reject TURN's contention that Edison should have know of the degradation problem at this time." (Tr., vol. 6, at p. 658 (amount of degradation difficult to predict but would remain in margin), Tr., vol. 7, at pp. 836, 850, 881 (confidential).)

f. New discussion is inserted at the end of the first full paragraph on page 47, which paragraph begins, "The above history...." The new discussion shall replace the last sentence which begins, "Therefore, we...."and shall state:

    "As discussed below, the record does not show that litigation or settlement would have resulted in SCE's recouping of any significant amount of compensation for the tube degradation. We note that another settlement SCE agreed to with CE gave discounts on services purchased in the future. It is unknown if those discounts would have been available without the settlement. Evidence in the confidential record further shows that SCE's view of the significance of the tube degradation problem was justified. (Tr. vol. 7, at pp. 722, 881.) Thus, at the time SCE faced the prospect of uncertain results from litigation in combination with a problem that it did not believe was as serious as TURN claims. (We reject the contention that SCE could have predicted the outcome of federal regulatory proceedings regarding the facility's license period.) Therefore we agree with the explanation that SCE would have pursued claims against CE regarding the steam generators if it reasonably believed it had a valid claim. (Tr., vol. 7, at p. 704, 705 (confidential).)

g. The sentence beginning, "This in turn supports..." in the first partial paragraph on page 48 is replace with a sentence that shall read:

    "The fact that other parties who were financially interested in the result concurred with Edison's course of action supports the contention that Edison's approach was reasonable at the time."

h. The first full paragraph on page 60 is restated to read:

    "TURN's recommendation is based on decisions addressing new plant, not existing plant. The stranded cost issue is not unique to the SGRP, and is beyond the scope of this proceeding. We do not believe the revenue requirement for SONGS should be considered in isolation. Therefore, we will not address it herein. It is more appropriately addressed in connection with any consideration of the reopening of direct access or other similar market changes, where all elements of Edison's revenue requirement can be considered."

i. Attachment A to D.05-12-040 is deleted.

j. The two full paragraphs on page 73, beginning "Our estimates for O&M costs...." and ending, "...cap on our estimates[]" and the paragraph spanning pages 73 to 74, beginning "The O&M costs..." and ending "...rates are set[]" are replaced with the following text: "We have determined not to use this proceeding to limit the amounts that may be authorized as O&M costs and capital additions costs in future proceedings that determine the revenue requirement associated with SONGS. It is more appropriate to review and approve these costs in ratemaking proceedings where we traditionally adjudge the reasonableness of utility costs. These costs may be subject to change and we decline to place limits on them in this proceeding. In our future proceedings we will remain cognizant of the effect of passing high O&M costs and capital additions costs on to ratepayers will have on the cost-effectiveness of the SGRP."

k. Finding of Fact 184 is deleted.

l. Finding of Fact 185 is deleted.

m. Conclusion of Law 7 is deleted.

n. Ordering Paragraph 14 is restated to read: "In future SCE ratemaking proceedings that determine the revenue requirement associated with SONGS operations and maintenance (O&M) costs and capital additions, the amounts authorized in rates will not be capped based on amounts used for the cost-effectiveness calculation made in this proceeding. Those future proceedings will be conducted in light of the fact that higher-than-expected O&M costs or capital additions costs could have an effect on the cost-effectiveness of the SGRP"

o. The single paragraph in Section XVIII on page 78 is deleted and replaced with: "The alternate decision of President Peevey was provided by electronic means, and served on parties on or before December 2, 2005. This achieved substantial compliance with Rule 77.6 of the Rules of Practice and Procedure, except that the formal comment period was reduced by one day due to late service. Comments were filed on December 8, 2005 by The Utility Reform Network, Western Power Trading Forum, the Commission's Office of Ratepayer Advocates, Aglet Consumer Alliance, Southern California Edison Company and San Diego Gas and Electric Company. Reply comments were filed by Southern California Edison Company and San Diego Gas and Electric Company. To the extent changes were necessary as a result of the filed comments, they were made in this order. Since the alternate decision was mailed only one day late, and parties were able to file comments, we see no reason not to exercise our authority to allow a one-day deviation from Rule 77.6 to allow the timely rendering of a decision on this matter today. We authorize this pursuant to Rule 87, in order to prevent delay of almost a month in rendering this decision. We note that this deviation does not contravene Public Utilities Code section 311(g), which sets a minimum ten day comment period."

p. A new Finding of Fact 211 is added at page 100, stating: "The formal comment period on the alternate decision of President Peevey was reduced by one day due to the late service of the alternate."

q. A new Finding of Fact 212 is added at page 100, stating: "Parties were able to file comments on the alternate decision and there is no benefit to delaying this decision for almost a month until our next meeting."

r. A new Conclusion of Law 73 is added at page 108, stating: "The Commission should exercise authority pursuant to Rule 87 to deviate from its own rules for the purpose of allowing a one-day reduction in the comment period on the alternate decision of President Peevey."

s. A new ordering paragraph, 32a is added stating: "Pursuant to Rule 87 of our Rules of Practice and Procedure, a deviation from Rule 77.6 is authorized to allow the timely rendering of a decision today."

t. The single sentence in Section XIX, on page 79, is restated to read: "Geoffrey F. Brown is the Assigned Commissioner and Jeffrey P. O'Donnell is the assigned ALJ in this proceeding."

u. The reference to D.04-10-105 in the fifth sentence of the second paragraph of page 66 is deleted and replaced with D.04-10-015.

This order is effective today.

Dated June 15, 2006, at San Francisco, California.

Commissioner Grueneich recused
herself from this agenda item and was
not part of the quorum in its
consideration.

 

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