5. The Generation Settlement
On July 31, 2003, PG&E, ORA, TURN, Aglet and CCSF filed a Generation Settlement resolving disputed issues regarding the forecast test year 2003 generation revenue requirements and 2004, 2005, and if applicable, 2006 attrition adjustments.11 The Generation Settlement is included as Attachment B to this decision. The Parties to the Generation Settlement maintain that the Generation Settlement resolves all issues specifically related to generation raised in PG&E's TY 2003 GRC (with the exception of the general A&G and tax issues). The Parties believe that the Generation Settlement represents a reasonable compromise of strongly held positions, permitting PG&E to recover reasonable costs of necessary capital investment in, and operations and maintenance of, its generation assets at a cost lower than the generation revenue requirement initially requested by PG&E. Key provisions of the Generation Settlement include:
11 CCSF joined in the Generation Settlement only to the extent it addresses the selective catalytic reductions project at the Hunters Point Power Plant. CCSF takes no position on the other issues resolved by the Generation Settlement.· A TY 2003 electric generation revenue requirement of $955 million, subject to adjustment for generic A&G and tax issues.
· Generation regulatory assets will be amortized over the remainder of the 10-year schedule adopted in D.02-04-016. For purposes of this agreement, the generation regulatory assets include Western Area Power Administration (WAPA), Helms, and Loss on Sale of Power Plants.
· Major components of Diablo Canyon will be amortized over 19 years beginning in 2003.
· Attrition adjustments in 2004, 2005, and, and if applicable, 2006, equal to the previous year authorized revenue requirement times the CPI, plus specific adjustments for the costs of increased security requirements and refueling outages at Diablo Canyon.
· PG&E's proposed low-pressure turbine rotor replacement projects will be reviewed as part of the TY 2007 GRC and PG&E will file a separate application for steam generator replacement project.
· Adjusts PG&E's 2004 and 2005 capital forecast by $500,000 and $15 million, respectively, to eliminate funding for the installation of Selective Catalytic Reduction pollution control equipment at Hunters Point.
