Appendix A to Resolution EGPB-6
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PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Consumer Protection and Safety Division May 15, 2008

Electric Generation Performance Branch Resolution EGPB-6

RESOLUTION

RESOLUTION GRANTING APPROVAL OF THE FINAL REPORT ON THE AUDIT OF THE ETIWANDA GENERATING STATION PERFORMED BY THE ELECTRIC GENERATION PERFORMANCE BRANCH OF THE CONSUMER PROTECTION AND SAFETY DIVISION, AND AUTHORIZING PUBLIC DISCLOSURE OF THE FINAL AUDIT REPORT

SUMMARY

This Resolution grants the request of the Consumer Protection and Safety Division ("CPSD" or "staff") for approval of the Electric Generation Performance Branch's (EGPB) Final Report on the Audit of the Etiwanda Generating Station owned by Reliant, Inc. ("Etiwanda" or "the Plant") dated March 27, 2008, ("Final Audit Report"). This Resolution also authorizes disclosure of the redacted Final Audit Report.

BACKGROUND

General Order 167, "Enforcement of Maintenance and Operation Standards for Electric Generating Facilities" (effective September 2, 2005) sets forth maintenance, operation, and logbook standards for electric generating facilities in California (referred to as "Generating Asset Owners" or "GAOs" in the General Order.) General Order 167 was adopted in response to legislation enacted by the California Legislature in 2002, codified in Public Utilities Code 761.3, which requires the Commission to "implement and enforce standards ... for the maintenance and operation of facilities for the generation of electric energy" in California. Section 11.1 of General Order 167 notifies GAOs subject

to the General Order that regular and systematic audits will be conducted in order to ensure compliance with General Order 167.1

The Etiwanda audit is the sixth audit conducted by CPSD for compliance with General Order 167. CPSD requests Commission approval to issue a final public version of the final audit reports at the conclusion of each of the plant audits, detailing its findings and recommendations. The Etiwanda Final Audit Report is the result of an iterative process between CPSD staff and Etiwanda Staff, including the review of data requests, a four day on-site visit by the CPSD audit team, issuance of the Preliminary Audit Report, review and receipt of Etiwanda's response and corrective action plan, a meet-and-confer teleconference, and the issuance of a semi-final report reflecting corrective actions taken by Etiwanda.

Section 15.4 of General Order 167 allows GAOs to request confidential treatment of information by indicating the specific law or statutory privilege prohibiting disclosure. CPSD's practice is to issue a public version of all final audit reports and request Commission approval by way of a resolution. Etiwanda has not submitted a request for confidential treatment of the Final Audit Report; however, consistent with CPSD's policy not to disclose sensitive plant security information, CPSD's audit team has redacted specific portions of the audit report which address security issues from the public version of the Final Audit Report.

DISCUSSION

1. Final Audit Report Findings and Recommendations

On May 5, 2006, CPSD notified the plant of the General Order 167 audit. From June 4, 2006 to June 8, 2006, the CPSD audit team; comprised of Ben Brinkman, Winnie Ho, Chris Lee, and Alan Shinkman, visited the Etiwanda Generating Station to determine compliance with Logbook, Maintenance and Operations Standards in General Order 167.

During the audit, CPSD's team focused on:

The methods used to conduct the audit included:

· Review of plant performance;

· Preparation of detailed data requests;

· An on-site visit from June 4th through 8th, 2005;

A full description of the audit, including the procedure, findings, recommendations and conclusions is contained in the Final Audit Report attached as Appendix A to the Final Resolution.2

CPSD's Preliminary Audit Report, which CPSD provided to Etiwanda on July 13, 2007, identified thirteen potential violations of the Operations and Maintenance Standards. Upon further review, one potential violation was changed to an observation, leaving twelve potential violations of the Operations and Maintenance Standards. CPSD asked the plant to respond by August 15, 2007 with a Corrective Action Plan. The plant requested and CPSD granted an extension of this deadline. The plant submitted its response on August 21, 2007. CPSD and Etiwanda held a teleconference on October 23, 2007 to discuss the plant's response, during which CPSD and the plant resolved all outstanding issues. Ben Brinkman, the audit team leader, visited the plant on December 12, 2007, meeting with the Etiwanda Plant Manager to verify completed corrective actions, and acquire further documentation of corrective action.

The Final Audit Report details staff's preliminary findings and recommendations, the corrective actions that the Plant has taken to date, and CPSD's recommendations for follow-up action. In most instances, Etiwanda has already resolved the finding by taking corrective action. In three instances, CPSD has requested that the plant report on the progress of its corrective actions and submit an additional analysis.

The results of CPSD's audit indicate that the continued implementation of the proposed corrective actions will adequately address all of the findings in the Final Audit Report. CPSD found no need for formal enforcement action based on the audit findings. CPSD does, however, request that the Commission order Etiwanda to complete implementation of corrective action items 2.2, 2.3, and 2.7, listed in the section of the Final Audit Report entitled "Executive Summary", as well as Section 2 of the Final Audit Report.

We hereby grant CPSD's request for approval of the Final Audit Report. CPSD's General Order 167 audits provide a thorough assessment of the Plant's efforts to comply with General Order 167's maintenance, operation, and logbook standards. Our approval of the findings and recommendations in the Final Audit Report endorses the findings therein and requires Etiwanda to implement the corrective action measures identified in the Final Audit Report and provide progress or status reports as requested by CPSD.

2. Public Disclosure of the Final Audit Report.

As we have indicated above, GO 167, section 15.4, allows GAOs to make a request for confidential treatment of information that it believes should not be disclosed to the public. Section 15.4 places the burden on the GAO to prove why all or part of any document should be withheld from the public, and to indicate the specific law or statutory privilege prohibiting disclosure. This is the sixth of CPSD's audits to come before the Commission; CPSD's policy and practice is to make all of the Final Audit Reports public documents. As we stated in Resolution EGPB-1,

"[I]mportant public interests may well be served by disclosure of General Order 167 audit reports. These include the public's right to know that generating facilities providing the electric service it relies on are operated in conformance with regulatory requirements. In addition, the release of audit reports will increase awareness of safety issues and best practices within the generating community. Allowing public access to audit reports will provide an incentive to GAOs to maintain their plants in top condition, which may lead to increased reliability. Moreover, in enacting Public Utilities Code 761.3, the Legislature found that "electric generating facilities and powerplants in California are essential ...[to protect] the public health and safety of California residents and business," and that it is in the public interest to ensure that they are "appropriately maintained and efficiently operated."3

(Resolution EGPB-1, p. 7.)

We also stated, "Future audit reports conducted under General Order 167 will also be subject to public disclosure, unless it can be demonstrated that under the specific circumstances, the public interest in nondisclosure clearly outweighs the public interest in disclosure." (Id.)

Here, there has been no request for confidential treatment by Etiwanda Power Plant. However, consistent with CPSD's policy not to disclose sensitive plant security information, CPSD's audit team has redacted specific portions of the audit report which address this issue, from the public version of the Final Audit Report. Based on the foregoing, we find that the redacted version of the Final Audit Report should be made public.

COMMENTS

The Draft Resolution of the CPSD in this matter was mailed to the parties in interest on April 7, 2008, in accordance with Public Utilities Code § 311(g)(1) and Rule 77.7 of the Rules of Practice and Procedure. No comments were filed.

FINDINGS OF FACT

1. General Order 167, "Enforcement of Maintenance and Operation Standards for Electric Generating Facilities" (effective September 2, 2005) sets forth maintenance, operation, and logbook standards for electric generating facilities in California. Section 11.1 of General Order 167 notifies GAOs subject to the General Order that regular and systematic audits will be conducted in order to ensure compliance with General Order 167.

2. The Final Audit Report is the result of an iterative process between staff and the plant, including the review of data requests, a four day on-site visit, issuance of the Preliminary Audit Report, review and receipt of the plant's response and Corrective Action Plan, a meet-and-confer period, and the issuance of a semi-final report reflecting corrective actions (if any) taken.

3. As part of the audit process, the CPSD audit team visited Etiwanda Plant from June 4, 2006 through June 8, 2006, to determine compliance with Logbook, Operations and Maintenance Standards in General Order 167.

4. CPSD routinely requests Commission approval to issue a final public version of the final audit reports at the conclusion of each of the plant audits, detailing its findings and recommendations.

5. Section 15.4 of General Order 167 allows GAOs to request confidential treatment of information by indicating the specific law or statutory privilege prohibiting disclosure; no such confidentiality request was made for the Etiwanda Final Audit Report.

6. It is CPSD's policy not to disclose detailed or sensitive plant security information.

7. CPSD's General Order 167 audits provide a thorough evaluation of the plant's efforts to comply with General Order 167 Logbook, Operations and Maintenance Standards.

8. The results of CPSD's audit indicate that the continued implementation of the proposed corrective actions will adequately address all of the findings in the Preliminary Audit Report. There is no need for formal enforcement action based on the audit findings at this time.

CONCLUSIONS OF LAW

1. Our approval of the Final Audit Report endorses the findings and recommendations in the Final Audit Report, and requires Etiwanda to report on three outstanding issues as described in the Final Audit Report.

2. Important public interests may well be served by disclosure of General Order 167 audit reports, including the public's right to know that generating facilities are operated in conformance with regulatory requirements, and the incentives to GAOs to maintain their plants in top condition, which may lead to increased reliability.

3. The redacted Final Audit Report should be made available to the public.

ORDER

1. CPSD's request for disclosure of the "Final Report on the Audit of the Etiwanda Generating Station," dated March 27, 2008, is granted.

2. Etiwanda shall resolve and report on the outstanding issues in Findings 2.2 and 2.3 by December 31, 2008, and submit quarterly progress reports on the outstanding issue in Finding 2.7.

3. This Resolution is effective today.

I certify that this resolution was adopted by the Public Utilities Commission at its regular meeting held on May 15, 2008. The following Commissioners voting favorably thereon:

1 See also, D.04-05-018, pp. 15-16; additional detail on audit procedures is found in the "Maintenance Standards for Generators with Suggested Implementation and Enforcement Model, Section 3, Verification and Audit Process," Appendix C to D.04-05-018.

2 The Public Version of the Draft Resolution does not include Appendix A. Appendix A is attached to the Confidential/Non-Public Version of the Draft Resolution, and will be attached to the Final Resolution if disclosure is authorized and the Final Report approved by the Commission.

3 SB 39XX, Ch. 19, Section 1, approved April 25, 2002; filed April 25, 2002.

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