IV. Initial Audit Program

A. Purpose

The purpose of the Initial Audit Program is to provide the CPUC assurance that maintenance programs are in effect as certified. This is essentially the same process as the Random Audit Process defined in Section V, below, with the exception that the sample size will be increased for both full and partial audits during the 6-month period following the initial certification.

B. Requirement

1. At the completion of the deadline for the initial certification process, the CPUC shall designate any generating assets for which a certification has not been received for an audit within the next 60 days.

2. For those generating asset owners who have certified their maintenance program(s), a random sample of the Generating Assets shall be audited during the first calendar year following the deadline for the initial certification. The random sample size shall be up to 10 percent of the maintenance programs being applied to generating assets. Based on the initial audit results, the CPUC may increase the sample population.

3. If during the audit of the initial random sample population, deviations are identified that result in the determination that one or more of the certifications were erroneous, the following action will be taken. If the determination of erroneous certification occurs during the audit of a specific generating asset within a portfolio of generating assets to which a common program applies, additional audits may be conducted within the portfolio to achieve the required confidence that the certification was fundamentally flawed or the deviation was a unique exception. If the deviation was a unique exception, the deviation may, or may not, result in a determination of erroneous certification. The decision will be left to the discretion of the CPUC.

4. Based on the initial audit results, the CPUC may adjust either of the following:

1. The frequency of random sample audits; or

2. The time interval between certification and re-certification.