HomeMy WebLinkAboutReso 1990-129 - Summarily vacating a public service and temporary access easement across property located at 1693 strauss lane in-1'6'V! TO 13469 , •
CITY OF REDDING
760 Parkview Ave.
Redding, CA. 96001
RESOLUTION NO. ?OW?
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF REDDING SUMMARILY
VACATING A PUBLIC SERVICE AND TEMPORARY ACCESS EASEMENT ACROSS PROPERTY
LOCATED AT 1693 STRAUSS LANE.
WHEREAS, a public service easement and temporary access easement
encompassing the entirety of Lot 43 of the Redding Highlands Subdivision, as
more particularly described in the exhibits attached hereto and incorporated
herein by reference, were heretofore illustrated on the recorded map for the
Redding Highlands Subdivision; and
WHEREAS, the Director of Public Works of the City of Redding has duly
investigated the proposed abandonment of said easements which is more
particularly described in Exhibit "A" and shown on the maps attached hereto
and incorporated herein by reference,. and has advised the City Council that
there is no indicated that it will ever be required; and
WHEREAS, it is believed by and appears to the City Council of the City of
Redding that the portions of the above-mentioned public service and temporary
access easement are no longer necessary; and
WHEREAS, the City Council of the City of Redding elects to proceed in
this matter under the provisions of the Public Streets, Highways, and Service
Easements Vacation Law as the same is set forth in Section 8300, et seq. , of
the Streets and Highways Code of the State of California.
NOW, THEREFORE, BE IT RESOLVED AND ORDER by the City. .Council of the City
of Redding as follows:
1. The public service easement and temporary access easement, as more
particularly described in Exhibit "A" and shown on the maps attached hereto
and incorporated herein by reference, is no longer necessary and is hereby
vacated as a public service and temporary access easement.
- 1 - i 0
Ill I
2. The City Clerk of the City of Redding is hereby directed to record a
certified copy of this Resolution, attested to by her under seal of the City
of Redding, in the office of the Shasta County Recorder.
I HEREBY CERTIFY that the foregoing resolution was introduced and read at
a regular meeting of the City Council of the City of Redding on the 20th day
of March , 1989, and was duly adopted at said meeting by the following
vote:
AYES: COUNCIL MEMBERS: Buffum, Fulton, Johannessen, & Carter
NOES: COUNCIL MEMBERS: None
ABSENT: COUNCIL MEMBERS: Dahl
ABSTAIN: COUNCIL MEMBERS: None
SCOTT CARTER, Mayor
, . City of Redding
ATTEST:":
erg •Z iee:te,
ETHEL A. NICHOLS, City Clerk
FORM APPROVED:
' A GALL A. HAYS, Cit Attorney
- 2 - sm
411
•
EXHIBIT "A"
A-9-89
That certain temporary access easement and public service easement over and
across Lot 43, Redding Highlands Subdivision, filed for record April 10, 1987
in Book 18 of maps at page 41, Shasta County Records.
sooK2Jo6 PAGE 052
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13 4 6 9 - sooa 5�2PAGE 055
Attachment 2 to Part III
DIABLO
PERFORMANCE AND BASIC REVENUE REQUIREMENT
MECHANISM AND METHODOLOGY
• •
1. Diablo Rates
1.1 The Diablo Basic Revenue Requirement Energy Rate and the Diablo
Performance Energy Rate, to be effective during the term of this Part III,
shall be as provided in this Attachment 2. An example of how these rates
will be calculated is shown in Appendix 1 to this Attachment 2.
1.2 The Diablo Basic Revenue Requirement Energy Rate and the Diablo
Performance Energy Rate to be effective for the period from January 1, 1990
through June 30, 1990, are as follows (see calculation provided in Appendix 1
of this Attachment 2) :
Diablo Basic Revenue $0.00302/kWh
Requirement Energy Rate
Diablo Performance $0.01129/kWh
Energy Rate
1.3 The Diablo Basic Revenue Requirement Energy Rate and the Diablo
Performance Energy Rate, to be effective on July 1, 1990 and July 1 of each
year thereafter during the term of this Agreement, shall be calculated in
accordance with the following formula:
Diablo Basic Revenue
Requirement Energy Rate
($ per kilowatt-hour) E/F
Diablo Performance
Energy Rate
($ per kilowatt-hour) — (D/F) - Diablo Basic
Revenue
Requirement
Energy Rate
1
Where:
A) 13,245,120,000 kWh, estimated produced at the Diablo bus. For
the true-up described in Sections 2.1 and 2.2, the actual data
will equal the Diablo recorded kWh, at the Diablo bus, for the
calendar year (January through December) immediately preceding
January 1 of the current year as shown on page 403, line 12, of
the Annual Report submitted each year to the Federal Energy
Regulatory Commission (FERC Form 1) .
B) During the period up to and including July 1, 1993, the price (in
cents per kWh) for energy produced from Diablo during the period
July 1 of the current year and June 30 of the next year, as
described on pages 131 and 132 and Appendix C, pages 1, 2 and 3,
and Appendix D, pages 3 and 4, of Attachment 1 to Part III of the
Agreement (CPUC Decision No. 88-12-083) shall be the average
price in effect during the period, calculated as the sum of the
prices in effect during the current calendar year and the next
calendar year divided by 2. For the 12-month period beginning
July 1, 1994, and each subsequent 12-month period beginning July
1, such price shall be the price established pursuant to the CPUC
Settlement for the then-current calendar year.
C) The dollar amount of Nuclear Fuel Expense recorded in Account 518
for the calendar year immediately preceding January 1 of the
current year as shown on page 320, line 24, of the FERC Form 1.
2
D) PG&E's Performance Revenue entitlement for Diablo, calculated as -
(A x B) - C.
E) Diablo Basic Revenue Requirement as described on pages 135 and
136 and page 6 of Appendix D of Attachment 1 to Part III of the
Agreement (CPUC Decision No. 88-12-083) or as subsequently
adjusted by an action of the CPUC. Pursuant to CPUC Decision No.
88-12-083, Appendix G, page 4, the Diablo Basic Revenue
Requirement for 1988 is $221,858,000 ($110,929,000 x 2) .
F) System Energy at Backbone Transmission level in kilowatt-hours,
calculated by dividing the sum of PG&E's monthly system kilowatt-
hours, at generation bus, for the calendar year preceding January
1 of the current year as shown on page 401, line 45, of the FERC
Form 1 by the system Backbone Transmission loss factor of 1.0281.
2. True-Up
2.1 On or before July 1, 1991, the Diablo Basic Revenue Requirement
Energy Rates and the Diablo Performance Energy Rates effective during the
1990 calendar year will be "trued-up" by calculating the difference between
the amount PG&E billed to Redding, for Diablo, during the 1990 calendar year,
and what would have been billed based on the Diablo Basic Revenue Requirement
Energy Rate and the Diablo Performance Energy Rate, calculated pursuant to
Section 1.3 of this Attachment 2 and actual data for the 1990 calendar year.
The dollar difference, plus interest, will be charged or refunded to Redding
pursuant to Section 8 of Part III.
3
s 4
2.2 Beginning in 1992, on or before July 1 of each year, the Diablo
Basic Revenue Requirement Energy Rate and the Diablo Performance Energy Rate
effective in the immediately preceding calendar year will be "trued-up" by
calculating the dollar difference between PG&E's bills for Diablo to Redding
during that period and what those bills would have been at rates calculated
pursuant to Section 1.3 of this Attachment 2 and actual data for the
immediately preceding calendar year. The dollar difference, plus interest,
will be charged or refunded to Redding pursuant to Section 8 of Part III.
The last true-up of the Diablo Basic Revenue Requirement Energy Rate and the
Diablo Performance Energy Rate shall be done on or before July 1 of the
calendar year following the calendar year in which the Sale Agreement and/or
the CPUC 1988 Diablo Settlement terminates.
2.3 PG&E shall provide Redding with copies of calculations,
workpapers and supporting documentation for "true-up" calculations made
pursuant to Section 2.1 and 2.2 of this Attachment 2.
2.4 PG&E shall notify Redding of any error in computations or the
accuracy of data, not subject to CPUC scrutiny as part of its administration
of Part III, based on such computation known to it and shall rectify such
error pursuant to Sections 2.1 and 2.2 above.
4
111
Appendix 1 to Attachment 2
AN EXAMPLE OF HOW
DIABLO CANYON FORMULA RATES
WILL BE CALCULATED
•
SUMMARY AND SAMPLE RATE CALCULATION
PROPOSED DIABLO PERFORMANCE
AND BASIC REVENUE REQUIREMENT
MECHANISM AND METHODOLOGY
1. The Diablo Annual Revenue Entitlement (Variable D) is calculated as the
product of 13,245,120,000 kilowatt-hours (kWh) estimated produced from Diablo
(Variable A) and the sum of the fixed and escalating prices established in
the CPUC Diablo Settlement -- the average of two calendar years is used
because rates are established for a July-June fiscal year -- whereas the 1988
CPUC Settlement Diablo prices are established for a calendar year (Variable
B) , less Diablo Fuel Cost -- which is recovered through the FCA (Variable C) .
Basic Data
(1988 Calendar Year)
A) Diablo kWh 13,245,120,000
B) Diablo Prices - 1989 $0.08335/kWh
(From CPUC 1990 $0.08931/kWh
Settlement) Average $0.08633/kWh
C) Nuclear Fuel Expense $ 92,871,768
(From FERC Form 1)
D) Diablo Annual Revenue $ 1,050,579,442
Entitlement
(A x B) - C)
2. The Diablo Basic Revenue Requirement Energy Rate is calculated as the
quotient of the Diablo Basic Revenue Requirement -- which is approved by the
CPUC (Variable E) and PG&E's System Energy Adjusted for losses to
transmission Backbone (Variable F) .
E) Diablo Basic Revenue Requirement $ 221,858,000
(As approved by the CPUC Decision
1
r i
No. 88-12-083, Appendix G, page 4:
(110,929,000 x 2 — 221,858,000))
F) PG&E System Energy 73,416,174,497
(75,479,169,000 kilowatt-hours
From FERC Form 1 divided
by Backbone loss factor of 1.0281)
Diablo Basic Revenue Requirement Energy Rate
▪ E/F
— $221,858,000/73,416,174,497 kilowatt-hours
- $0.00302/kilowatt-hour
3. The Diablo Performance Energy Rate is calculated as the quotient of the
Diablo Annual Revenue Entitlement (Variable D) and the PG&E System Energy
(Variable F) , less the Diablo Basic Revenue Requirement Energy Rate (see Step
2) .
Diablo Performance Energy Rate
- D/F - Diablo Revenue Requirement Rate
- 1,050,579,442/73,416,174,497 - $0.00302/kilowatt-hour
$0.01431/kilowatt-hour - 0.00302/kilowatt-hour
- $.01129/kilowatt-hour
2
410
PACIFIC GAS AND ELECTRIC COMPANY Supplement No. 10 to
Rate Schedule FERC No. R-1 Supplement No. 1 to
Page 16 of 20 Service Agreement No. 9
Under FPC Electric Tariff
Original Volume No. 2
PART IV
1. The provisions of this Agreement are subject to acceptance by
FERC of this Agreement in its entirety and without change or condition
unsatisfactory to either Party. Each term of this Agreement is in
consideration and support of every other term herein. Should FERC
modify any provision of this Agreement in a manner unsatisfactory to
either Party, this Agreement shall not become effective but shall be
deemed terminated and withdrawn, and shall not constitute any part of
the record in any FERC proceeding or be used for any other purposes
whether between the Parties or between any Party and Third Parties. In
the event that FERC action with respect to this Agreement results in
the termination and withdrawal of this amendment, PG&E and Redding
shall use their best efforts to renegotiate this Agreement.
2. The Parties agree to defend and uphold both the terms of this
Agreement and the rates established pursuant to this Agreement in any
forum whether judicial, administrative or otherwise, in which it is
alleged that any term of this Agreement or any rate established
pursuant to this Agreement is unjust, unreasonable, unduly
Issued by: Gordon R. Smith, Vice President, Finance and Rates
Effective: January 1, 1990
•
PACIFIC GAS AND ELECTRIC COMPANY Supplement No. 10 to
Rate Schedule FERC No. R-1 Supplement No. 1 to
Page 17 of 20 Service Agreement No. 9
Under FPC Electric Tariff
Original Volume No. 2
discriminatory or preferential, or otherwise unlawful or that such term
or rate results in a "price squeeze", and agree that neither Party
shall initiate or pursue any action in any forum based upon such
allegations; provided that Redding may request a hearing pursuant to
Section 206 of the Federal Power Act for the sole purpose of showing
PG&E's alleged failure to accurately apply the terms of this Agreement
to the computation of the level of rate components in Part II of this
Agreement or the accuracy of data, not subject to CPUC scrutiny as part
of its administration of Part III, used in such computation.
3. Except as otherwise provided in this Agreement, nothing in this
Agreement shall be construed as affecting Redding's rights under
Section 205 and 206 of the Federal Power Act. Nothing in this
Agreement shall be construed as affecting in any way the right of PG&E
under this Agreement unilaterally to make application to the FERC or
its successor for a change in rates under Section 205 of the Federal
Power Act and pursuant to the Commission's Rules and Regulations
promulgated thereunder, nor shall either Party be deemed to waive its
rights to object to or seek rejection of any filing or action by the
other Party which is inconsistent with the provisions of this
Issued by: Gordon R. Smith, Vice President, Finance and Rates
Effective: January 1, 1990
PACIFIC GAS AND ELECTRIC COMPANY Supplement No. 10 to
Rate Schedule FERC No. R-1 Supplement No. 1 to
Page 18 of 20 Service Agreement No. 9
Under FPC Electric Tariff
Original Volume No. 2
Agreement, provided that the Customer Charge, Demand Charge and Energy
Charge shown in Part II will not be subject to change by PG&E or
objection by Redding prior to January 1, 1993, except pursuant to the
terms of this Agreement.
Notwithstanding the preceding provision, the Parties agree that
PG&E may, at its election, file another general rate increase under
Section 205 of the Federal Power Act on or after August 1, 1992,
affecting charges shown in Part II, with a proposed effective date no
earlier than October 1, 1992. It is further agreed that any such
general rate increase filing by PG&E will contain PG&E's consent to a
January 1, 1993 effective date. Redding agrees to actively support the
January 1, 1993 effective date, so long as such date allows at least a
one-day suspension of the proposed rates and a 60-day notice period.
The abbreviated filing procedure provided for in Section 13 of Part III
of this Agreement and the limitation in Redding's ability to seek a
maximum suspension period provided for in Section 12 of Part III of
this Agreement shall not apply to such a filing unless otherwise agreed
by the Parties.
Issued by: Gordon R. Smith, Vice President, Finance and Rates
Effective: January 1, 1990
a
PACIFIC GAS AND ELECTRIC COMPANY Supplement No. 10 to
Rate Schedule FERC No. R-1 Supplement No. 1 to
Page 19 of 20 Service Agreement No. 9
Under FPC Electric Tariff
Original Volume No. 2
4. Should Section 205 of the Federal Power Act or Section 35.13 of
the FERC Regulations or any successor law or regulation be unavailable
as a means of changing the rates established pursuant to this
Agreement, PG&E reserves the right to change rates in the Agreement
pursuant to Section 206 of the Federal Power Act or any successor law
or pursuant to any other applicable law.
5. Ambiguities or uncertainties in the wording of this Agreement
shall not be construed for or against either Party but shall be
construed in a manner which most accurately reflects the intent of the
Parties when this Agreement or any part thereof was executed.
6. This Agreement shall be effective as of January 1, 1990.
Issued by: Gordon R. Smith, Vice President, Finance and Rates
Effective: January 1, 1990
•
PACIFIC GAS AND ELECTRIC COMPANY Supplement No. 10 to
Rate Schedule FERC No. R-1 Supplement No. 1 to
Page 20 of 20 Service Agreement No. 9
Under FPC Electric Tariff
Original Volume No. 2
7. This Agreement shall remain in effect until changed, superseded
or terminated, in whole or in part, by agreements between the Parties
or by unilateral rate or rate schedule changes filed with the FERC in
accordance with this Agreement and accepted for filing, provided this
Agreement shall terminate no later than the termination date of the
Sale Agreement.
r)h144-
ROBERT J. HAYWOOD CITY OF REDDING
Vice President MAYOR
Power Planning and Contracts
Pacific Gas & Electric Company
Date: FORM APPROVED
1044.4ear /Atr.-
CITY LEGAL DE
Issued by: Gordon R. Smith, Vice President, Finance and Rates
Effective: January 1, 1990
• s
A.84-06-014 , A.85-08-025
APPENDIX C
two shall each have the right to nominate an
additional two candidates in the first year or
one candidate in any subsequent year.
q. The joint nomination list shall be submitted to
the appointing authorities on or before January 1
of each year. In any year in which there is no
agreement on a joint list, the separate lists,
after exercise of the rights to strike, shall be
submitted to the appointing authorities on or
before February 1 of that year. Appointments
shall be made by March 1 of each year. Each
Safety Committee term shall commence on July 1 of
the year of appointment.
h. The Chairman of the CEC and the President of the
CPUC shall exercise their powers under this
agreement after consultation with their respec-
tive commissions in public session.
II. Smog of Committee O erations.
A. Receipt of Reports and Records.
The committee shall have the right to receive on a
regular basis such cf the following operating reports and
records of Diablo Canyon as the committee may request. Such
.4-
• •
A.84-06-014 , A.85-08-025
APPENDIX C
•
reports and records shall be provided quarterly as available:
•
1. Automatic scrams while critical
2. Significant events
3 . Safety system actuations
4. Forced outage rate
5. Collective radiation exposure
6. Industrial safety loss time accident rate
7 . NRC public reports and evaluations of Diablo Canyon
8. Such other reports pertinent to safety as may be produced
in the course of operations and may be requested by the .
committee
B. Annual Site Inspection.
The committee shall have the right to conduct an
annual examination of the Diablo Canyon site. 'If the committee
requires additional information regarding a specific issue
raised by the quarterly reports, the committee may request such
information, and, upon proper notice to PG&E, conduct a site
visit to investigate that issue.
PG&E shall cooperate with the committee in arranging
times for the committee's visits to the site and shall be res-
ponsible for insuring the cooperation of PG&E employees and
contractors in providing access to the plant and facilities of
PG&E and to pertinent records. Any such site visit must comply
•
-5-
III
A.84-06-014 , A.85-08-025
APPENDIX C
with all applicable federal laws, regulations and NRC policies,
including laws, regulations and policies governing screening of
persons who may participate in site inspections. ,
C. Committee Reports and Recommendations.
The committee shall prepare an annual report, and sect
interim reports as it deems appropriate, which reports shall
include any recommendations of the committee. The report shall
be submitted first to PG&E, and PG&E shall respond in writing
within 45 days. PG&E's response shall be made part of the
report which shall then be submitted to the CPUC, the Governor,
the Attorney General and the CEC. The CPUC, the Governor, the
Attorney General and the CEC, or any one of them, may file a
request pursuant to 10 CFR S 2.206 for the Director of Nuclear
Reactor Regulation to institute a proceeding to require PG&E to
adopt any safety recommendation made by the Committee. PG&E is
free to oppose any such recommendation before the NRC.
D. Confidentiality of Information.
•
In the course of review of Diablo Canyon operations,
committee members may receive confidential information. Federal
law restricts disclosure of certain information; accordingly,
committee members shall seek approval of the NRC for access to
such information and shall comply with all laws, regulations and
policies applicable to access to, possession and use of such
-6-
S O
A.84-06-014 , A.85-08-025 AppENDIX C
information. To the extent that PG&E believes that other
information sought by the committee, not regulated by the Atomic
Energy Act, constitutes confidential business information, the
disclosure of which might injure PG&E in its business, PG&E may
so designate that information. Information so designated shall
be treated as confidential and not disclosed outside the com-
mittee unless a majority of the committee challenges the pro-
priety of the claim of confidentiality by vote taken within 30
days of designation. A dispute between the committee and PG&E
on a claim of confidentiality shall promptly be submitted to
binding arbitration. Committee members and all persons who
receive confidential information in the course of or as a result
of the committee's activities shall have a duty to maintain the
confidentiality of that information and, in addition to the com-
pliance with the requirements of federal law and regulations,
shall execute a confidentiality agreement.
The committee may contract for services, including the
services of consultants and experts, to assist the committee in
its safety review. Disclosure of PG&E information or records to
any such person shall be governed by the provisions of this
agreement in the same manner as disclosure to members of the
committee. No disclosure shall be made to any person who does
not have a need to receive the information in order to assist
the committee in its safety review. Nor shall disclosure be
made to any person with a conflict of interest.
-7-
• •
A.84-06-014 , A.85-08-025
APPENDIX C
This provision shall not preclude the committee from
submitting relevant information to the NRC or to the CPUC, the
Governor, the Attorney General or the CEC to the extent per-
mitted by federal law. Prior to the disclosure of any confi-
dential information, however, the committee shall give PG&E
notice of its intention to do so and an opportunity to designate
specific documents or information which should not be publicly
disclosed and to seek to prevent public disclosure by the entity
to which disclosure is made.
E. Compensation of the Committee.
Members of the committee shall be compensated in an
amount established by the CPUC, to be commensurate with fees
PG&E pays for similar services. The fees and expenses of the
committee and its contractors shall be paid by PG&E and included
in its ordinary rate base operating expenses. The fees and
expenses shall not exceed $500,000 in the first year; thereaf-
ter, the $500,000 shall escalate at the same rate as the total
price set for Diablo Canyon generation. The committee and its
contractors shall keep accurate books, records and accounts
which shall be open to inspection and audit by the CPUC or its
designee and by PG&E. Such audit shall include review of the
reasonableness of fees and expenses and review for conflicts of
interest.
-8-
(END OF APPENDIX C)
•
• •
. A.84-06-014, ,x.85-08-025
APPENDIX D
MPLEMENTING AGREEMENT
This Implementing Agreement is made among Pacific
Gas and Electric Company (PG&E) , the Division of Ratepayer
Advocates (DRA) of the California Public Utilities Commission
(Commission) , and the Attorney General of the State of
California. These same parties have entered into a
Settlement Agreement, dated June 24, 1988, covering the
operation and CPUC jurisdictional revenue requirements
associated with the Diablo Canyon Nuclear Power Plant (Diablo
Canyon) for the 30-year period following the commercial
operation date of each unit.
1. INTERPRETATION
A. This Implementing Agreement supplements and
clarifies portions of the Settlement Agreement. The
Settlement Agreement and this Implementing Agreement are
intended to be interpreted as a single, integrated agreement.
In the event of any conflict between the terms of the two
agreements, this Implementing Agreement shall govern.
S. All references in this Implementing Agreement to
paragraphs are to the Settlement Agreement, unless otherwise
specified.
C. For the purposes of the Settlement Agreement, Diablo
Canyon shall be considered a single entity, i.e. , no unit by
unit distinction should be made with the exception of term .
1
41 . e
A.84-06-014 , A. 85-08-025
APPENDIX D
peak period price differentiation, megawatt rating and
abandonment provisions.
D. The Settlement Agreement and the Implementing
Agreement are not intended to set any precedent, implied or
otherwise, with respect to any other investment or activity of
PG&E or of any other regulated utility, nor are they intended
to be used to determine any pricing provisions of any other
contract or tariff.
E. The word "annual , " as used in the Settlement
Agreement and the Implementing Agreement, means a 12-month
calendar year, unless stated otherwise.
F. The Settlement Agreement and this Implementing
Agreement represent the complete agreement among PG&E, DRA and
the Attorney General as of the date of this Agreement. This
Implementing Agreement is subject to approval by the
Commission.
G. Except as expressly provided herein or as may be
agreed to by all parties to the Settlement and Implementing
Agreements, any material change in these agreements shall
render the agreements null and void.
2. EXCLUSIVE RATEMAKING (Paragraph 1)
The Settlement Agreement shall govern the amount paid by
the ratepayers for Diablo Canyon power for the 30-year period
following the commercial operation date of each unit,
regardless of the organizational or financial structure or
form of cwnership of Diablo Canyon. The parties acknowledge
2
Ill 410
A.84-06-014 , A.85-08-025
APPENDIX D
that the advantages and disadvantages for them of the
Settlement Agreement may vary during its effective period.
Nevertheless, and in full recognition of this fact, the
parties intend that the Settlement Agreement remain in effect
for its full term unless the provisions of Paragraph 13
(Abandonment) are invoked.
3. TERM (Paragraph 2)
The term of this Implementing Agreement shall be the same
as the term of the Settlement Agreement.
4 . PRICE ESCALATION AFTER DECEMBER 31, 1994 (Paragraph 4)
A. The CPI (as defined by the U.S. Department of Labor,
Bureau of Labor Statistics (all urban, all items) ) change used
for each January 1 price escalation after December 31, 1994
shall be the percent change in the CPI from the end of the
prior year (y-1) , where y represents the current year,
compared to the CPI at the end of the second prior year (y-2) ,
determined or calculated on a consistent basis, according to
the following formula:
(y-1) CPI
-1.
(y-2) CPI
Example: The 1995 CPI change is equal to
end of 1994 CPI
-1.
end of 1993 CPI
3 •
410 411
A.84-06-014 , A. 85-08-025
APPENDIX D
If the above calculation produced a CPI change of 0. 06 (6
percent) , the 1995 escalation factor would be (0.060 +
0.025)/2 - 4 . 25% .
B. Since Energy Cost Adjustment Clause (ECAC)/Annual
Energy Rate (AER) filings are made on a forecast basis prior
to the computation of the relevant year-end CPI, an estimated
CPI will be used in the forecast and an appropriate adjustment
will be made in the next ECAC/AER filing based on the actual
CPI. The amount recorded in the Energy Cost Adjustment
Account (ECAA) will be based on the actual LPI.
5. PEAK PERIOD PRICE DIFFERENTIATION ("Paragraph 5)
"700 hours of full operation" referred to in Paragraphs
5A and 5B is equal to 751.1 gigawatt-hours of generation for
Unit 1 and 760.9 gigawatt-hours for Unit 2 for the periods in
question.
6. BALANCING ACCOUNT (Paragraph 6)
A. The first sentence of Paragraph ISA is modified to
read (additions are shown by underlining) : "PG&E waives all
rights to amortize in rates the amounts that have accrued and
Bre uncollected in the Diablo Canyon Adjustment Account (DCAA)
from the respective dates of commercial operation of Units 1
and 2 through June 30, 1988." However, as sat forth in
Paragraph 6B, PG&E shall be entitled to retain all amounts
earned as interim rates for Diablo Canyon service provided
•
4
III
A.84-06-014, A.85-08-025
APPENDIX D •
through June 30, 1988 and those amounts shall no longer be
subject to refund.
B. It is the intention of the parties that rate changes
required by the Settlement Agreement shall be effective
immediately after the filing of tariffs by PG&E with the
Commission.
C. All amounts collected in rates pursuant to the
Settlement Agreement for service rendered between July 1, 1988
and the "final approval date" (as defined in Paragraph 6D)
shall be used as credits to the DCAA, ECAC or the Electric
Revenue Adjustment Mechanism (ERAM) in the event that the
Commission's approval of this settlement is overturned by any
court.
D. The difference between the revenues that would be
due PG&E under the Settlement Agreement and those revenues
earned at current rates for service provided between July 1,
1988 and the date upon which Commission approval of the
Settlement Agreement becomes effective shall accrue in the
DCAA and be transferred from the DCAA to the ECAC balancing
account as soon as those revenues can be determined and
included in an Advice Filing. The period to collect or refund
these revenues will be determined by the Commission in future
ECAC proceedings, and will be consistent with the Settlement
Agreement.
5
41,
A.84-06-014 , A.85-08-025
APPENDIX D
7. BASIC REVENUE REQUIREMENT (Paragraph 7)
A. The "utility assets" referred to in Paragraph 7B are
defined and quantified as follows:
Estimated Amount
June 30, 1988
(in minions)
Asset No. 1 - Excess AFUDC
Excess AFUDC recorded on Diablo Canyon
aver interest capitalized under SFAS
No. 34, 'Capitalization of Interest Cost $ 746
Asset No. _2 - Other incurred costs
Incurred costs on Diablo
Canyon common facilities 64
Deferred taxes on prior flow-
through timing differences 104
Incurred costs for nuclear fuel
inventory at lower of cost or market 83
Unamortized gain/loss on reacquired
debt related to Diablo Canyon 59
Net Required Utility Assets $1,056
The amounts above are net of tax and before apportionment
between CPUC and FERC jurisdictions, except for item 1 of
Asset No. 2. The calculations of The utility asset amounts
assume adoption of SFAS No. 96, Accvuntina for Income Taxes,
concurrent with the settlement.
B. The basic revenue requirement for the 1990 test
period will be included in ERAM rates by an Advice Filing.
Future changes in the basic revenue requirement will be
recovered in general rate cases.
C. The basic revenue requirement for these utility
assets will be included in the base revenue amount in EDAM and
will be modified as described in the preceding paragraph.
6
A. 84-06-014 , A. 85-0.025 411
APPENDIX D
8 . . REVENUE (Paragraph 8)
A. Within 5 days of the publication of the Commission's
decision approving the Settlement Agreement, PG&E will file
tariff sheets to:
(in millions)
1. Remove authorized nuclear fuel
related revenues from the ECAC/
Annual Energy Rate (AER) .
2 . Remove noninvestment-related revenues - $201. 600
from base rates, consistent with
Decision 88-05-027.
3 . Remove Diablo Canyon-related - $ 12 . 047
administrative and general revenues
from base rates, consistent with
Decision 86-12-095.
4 . Remove fuel savings related revenue - $472 .856
requirements from DCAC rates,
consistent with Decision 88-05-027.
5. Increase base rates for recovery of + $219.000
the basic revenue requirement.
6. Increase ECAC/AER rates for recovery of
the revenues as prescribed by Paragraph
88 of the Settlement Agreement. Rates
will be based on the forecasted level
of generation authorized in the ECAC
decision on PG&E's Application No.
88-04-057.
7. Increase base rates for recovery of + $ 0.504
the revenues required to pay for
the Independent Safety Committee.
B. In the future, rate changes under the Settlement
Agreement will be implemented as follows:
•
7
. . •
A.84-06-014 , A.85-08-025
APPENDIX D
1. The basic revenue requirement will be
computed and filed in accordance with the provisions of
Paragraph 7B of the Implementing Agreement.
2. The "Diablo Canyon annual revenue" (as
defined in Paragraph 8A) less the "basic revenue
requirement" (as defined in Paragraph 7) will be filed
through annual ECAC applications. Pro forma tariff sheets
are attached hereto as Exhibit A.
3. As described in the Settlement Agreement, all
revenues related to the Settlement Agreement shall be
excluded from AER risk allocation. To accomplish this, a
debit or credit entry will be booked to ECAA at the end of
the AER forecast period to adjust the amount of the recorded
energy expense allocated to the AER. The adjustment shall
be based on the difference between the adopted and recorded
Diablo Canyon generation multiplied by an energy price
formula approved by the Commission.
4. Except as specifically provided in the
Settlement Agreement and Implementing Agreement, the current
operation of the AER mechanism will not change.
5. The first sentence of Paragraph 8C is
modified to read (deletions are shown by overstriking) : "If
the difference between the Diablo Canyon annual revenue and
the basic revenue requirement is less than Ot/00sX/z0 zero,
PG&E shall still receive the full basic revenue
requirement."
8
111 410
A. 34-06-014 , A.85-08-025
APPENDIX D
C. For purposes of the Settlement and Implementing
Agreements, base rates are rates established in general rate
case proceedings to recover the non-Diablo Canyon portion of
operating and maintenance expenses, administrative and
general expenses, depreciation, income tax liabilities, tax •
expense other than income taxes, return on rate base and
decommissioning expenses for the Diablo Canyon and Humboldt
Bay Nuclear Power Plants, costs of the Independent Safety
Committee, and the basic revenue requirement defined in the
Settlement Agreement.
9. FLOOR (Paragraph 9)
A. To trigger the floor as provided in Paragraph 9A,
PG&E must inform the Executive Director of the Commission or
his successor in writing of its intent to do so. This
notice must be provided on or before January 31 of the year
following the year for which PG&E elects the floor payments.
Example: if PG&E elects the floor payments for 1995, notice
must be given on or before January 31, 1996.
B. The first sentence of Paragraph 9B is modified to
read (additions are shown by underlining) : "The formula
revenue shall be the sum of the then 'current fixed -and
escalating prices multiplied by a specified capacity factor
multiplied by the megawatt (MW) rating times the number of
days in the veer (365 Qr 366) times 24 hours." For example,
the formula revenue for 1989 would be:
•
9
•
A.o4-06-014 , A.85-08-025
APPENDIX D
(31. 5 + 51.85) mills/kWhr x 36% x (1073 + 1087) MW x
365 days/year x 24 hours/day = $567 .762 million.
C. Floor payments equal the greater of the formula
revenue or the basic revenue requirement minus any actual
Diablo Canyon annual revenue (as defined in Paragraph 8A)
for the year in which the floor provision is invoked. For
example, assuming the plant operated at 20% in 1989 and PG&E
elected to invoke the floor provision, the floor payments
would be:
(31. 5 + 51.85) mills/kWhr x 36% x (1073 + 1087) MW x
365 days/year x 24 hours/day = $567.762 million
minus (31. 5 + 51. 85) mills/kWhr x 20% x (1073 + 1087) MW x
365 days/year x 24 hours/day = $315.423 million
ecuals, $252.339 million.
D. The third sentence of Paragraph 9B is modified to
read (additions are underlined) : "Each time the floor is
triggered, 3% shall also be deducted from the specified
capacity factor for the next applicable year. "
E. Required floor repayments are to be made from 50%
of revenues received after operations for that year have
reached 60% of the annual capacity of Diablo Canyon. PG&E
has the option of making additional floor repayments if it
chooses.
F. Whenever floor payments received by PG&E are
repaid pursuant to Paragraph 9C, the specified capacity
factor in effect prior to the repayment shall be increased
by 3% for each year's floor payments repaid.
10 •
• 410
A. 84-06-014 , A. 85-08-025
APPENDIX D
G. PG&E shall establish and maintain a Floor Payment
Memorandum Account (FPMA) . The FPMA shall be used to record
all floor payments received by PG&E, to accrue interest on
the amount of the floor payments received pursuant to
Paragraph 9C, and to record all repayments of floor
payments.
10. DECOMMISSIONING (Paragraph 10)
In addition to the decommissioning revenues described
in Paragraph 10 of the Settlement Agreement, the costs of
updating, filing and litigating decommissioning costs shall
continue to be included in base rates.
11. PURCHASE POLICY (Paragraph 11)
"Hydro spill" is defined as water which bypasses a
hydroelectric unit which is capable of additional generation
but for which no load is available and capable of being
served. Hydro spill does not include water which may bypass
a fully loaded unit due to reservoir storage limitations.
12 . SEGREGATION OF COSTS (Paragraph 12)
A. Diablo Canyon operating and overhead costs will be
segregated from other PG&E operations. Diablo Canyon costs
shall include an allocation of franchise requirements and
uncollectible accounts expense. The detailed methodology
for allocation of common costs will be described and
determined in PG&E's general rate case. This agreement is
•
•
11
• 411
A.84-06-014 , A.85-08-025
APPENDIX D
not intended to limit the rights of the Commission as set
forth in the Public Utilities Code with respect to access' to
the books of account and associated records pertaining to
the ownership and operation of Diablo Canyon, including any
subsequent capital additions.
B. For purposes of the Settlement Agreement, Diablo
Canyon's capital structure (capital costs and ratios) will
be assumed to be the same as that of PG&E at June 30, 1988
adjusted to reflect full accrual of amounts recorded in the
DCAA. The writeoffs required by the Settlement Agreement
and associated with the waiver of amortization rights and
the waiver of the right to collect litigation expenses
reccrded in the deferred debit account as described in
Paragraph 6A, will be assigned to Diablo Canyon.
C. PG&E shall not recover any premium in its
authorized return on equity after January 1, 1989 as a
result of the Settlement or Implementing Agreement or the
operation of Diablo Canyon. Nor shall PG&E incur any
decrease in its authorized return on equity after January 1,
1989 as a result of the operation of Diablo Canyon.
D. Any net increase in PG&E's overall cost of capital
that is caused by the operation of Diablo Canyon under the
Settlement Agreement as compared to the operation of Diablo
Canyon under traditional ratemaking, assuming a $2 billion
disallowance, shall be considered as a Diablo Canyon cost,
and recovered only through the revenues provided under the
12
4
A.84-06-014 , A. 85-08-025
APPENDIX D
Settlement Agreement. Any party claiming that there has
been an increase in the cost cf capital shall have the
burden of proving the cause and amount of such increase. In
addition to any other defenses, PG&E shall have the right to
claim that there have been offsetting decreases in the cost
of capital due to the operation of Diablo Canyon. If PG&E
makes such a claim, PG&E shall have the burden of proving
that, between July 1, 1988 and the date the increase is
claimed to have occurred, there was an offsetting decrease
in PG&E's overall cost of capital caused by the operation of
Diablo Canyon under the Settlement Agreement as compared to
the operation of Diablo Canyon under traditional ratemaking,
assuming a $2 billion disallowance.
13 . ABANDONMENT (Paragraph 13)
A. The floor payments referred to in Paragraph 13A(1)
are the floor payments that would be available for the 10
years .commencing with the year of the abandonment request, •
using the specified capacity factors and prices that would
be used in those years pursuant to Paragraph 9. For
example, assuming PG&E seeks abandonment recovery in the
year 2000 and has- twice exercised the floor prior to 1997,
without repayment, the formula set forth in Paragraph 13A(1)
shall be calculated as follows: PG&E may ask for recovery
of floor payments for eight years. The price used in
calculating those payments would escalate in accordance with
the terms of Paragraphs 3 and 4 of the Settlement Agreement,
•
13
• • •
A. 84-06-014 , A.85-Oa-025 AppENDIX D
using an estimate of future CPI escalation, where necessary.
The total payments would be based on the following assumed
capacity factors:
Year Assumed Capacity Factor
2000 27%
2001 24%
2002 21%
2003 18%
2004 15%
2005 12%
2006 9%
2007 6%
B. Paragraph 13A(2) is modified to read (changes are
shown by overstriking and underlining) , "$3 .00 billion in
capital costs through 1988 , reduced by $100 million per year
ofi050 ,010$igfxoxmug on January 1 of each Year starting
in 1989. In the event of a prolonged nationwide shutdown of
all nuclear plants (not just Westinghouse plants) , the
capital cost amount computed under this subparagraph may be
increased by the CPUC to include the non-equity portion of
reasonable direct costs of capital additions made on or
After July L 1988, reduced by straight-line depreciation. "
C. If PG&E abandons operation of Diablo Canyon or
permanently retires Diablo Canyon with a net credit balance
remaining in the FPMA, as defined in Paragraph 9G of this
Implementing Agreement, PG&E shall file a request with the
Commission to terminate the FPMA. Nothing in the Settlem.::
14
• •
A. 64-06-014 , A.85-08-025
APPENDIX D
Agreement or Implementing Agreement shall preclude the
parties from proposing or the Commission from considering
such factors as the unpaid balance in the FPMA and the
financial impact of abandonment upon PG&E in determining the
reasonable level of abandonment costs to be provided to
PG&E. •
D. PG&E shall maintain the following abandonment
rights accounts:
(1) Initial Plant Allowance Account which shall
track the capital costs of Diablo Canyon through 1988 as
described in Paragraph 13A(2) ($3 billion) .
(2) Accumulated Depreciation Account which shall
track the annual reductions in the capital costs described
in Paragraph 13A(2) ($100 million annually for 28 years) .
(3) Capital Additions Account which shall track
Diablo Canyon-related capital additions described in
Paragraph 13A(2) .
(4) Accumulated Depreciation for Capital
Additions Account which shall track annual depreciation for
the amounts in the Capital Additions Account based on the
expected useful life of those additions.
14 . CAPACITY FACTOR
For purposes of the Settlement Agreement and this
Implementing Agreement, capacity factor shall be calculated
for each unit according to the following formula:
(Net generation for the year in megawatt hoursl x 100%
(MW rating per Paragraph 93) x (number of hours in year)
•
15
410
A. 84-06-014 , A.85-08-025
APPENDIX D
15. SAFETY (Paragraph 16 and Attachment A)
No person shallserve as a member of the Independent Safety
Committee if he or she has received $250 or more in income (as
defined in Government Code Section 82030, but excluding dividends ,
or interest from stocks or bonds) or gifts (as defined in
Government Code Section 82028) from PG&E or an affiliated company
within twelve months prior to the start of his or her original
term, or if he or she has, at the time of the commencement of
service, an investment (as defined in Government Code Section
82034) worth $1000 or more in PG&E or any affiliated company. In
addition, no member of the Independent Safety Committee shall make,
participate in making, or in any way attempt to use his or her
official position to influence any action of the Independent Safety
Committee in which he or she knows or has reason to know that he or
she has a financial interest. The provisions of the Political
Reform Act, including implementing regulations and rulings, as
applied to Government Code Section 87100 shall be used to determine
whether a member has a conflict of interest.
Members of the Independent Safety Committee shall file a
Statement of Economic Interest at the same time and in the same
manner as designated employees of the Public Utilities Commission
must file under the Political Reform Act and Commission Conflict of
Interest Code. Members of the Independent Safety Committee shall
disclose any investment in or income from the following:
(1) An electric corporation subject to the jurisdiction of
the Commission, including any parent. subsidiary or affiliated
business entity;
16
III . 111
A.84-06-014 , A. 85-08-025
APPENDIX D
(2) A business entity that regularly supplies natural gas,
nuclear fuel , fuel oil or other forms of energy to an electric
corporation subject to the jurisdiction of the Commission;
(3) Any business entity that has done more than 610 million
of work on the design, construction, engineering or operation of
the Diablo Canyon power plant.
Copies of the members' Statements shall be filed with the
Governor, the Attorney General and the Energy Commission and shall
be available for public inspection.
DATED: July 15 , 1988 �/'' j2 /X-17/
Edward W. O'Neill
Attorney for:
DIVISION OF RATEPAYER ADVOCATES
CALIFORNIA PUBLIC UTILITIES
COMMISSION
505 Van Ness Avenue
San Francisco, CA 94102
(415) 557-2381
)71.erfrL L'Ld2e.
Mark J. Urban
Attorney for:
JOHN K. VAN DE KAMP, ATTORNEY
GENERAL FOR THE STATE OF
CALIFORNIA
1515 K Street, Ste 511
Sacramento, CA 94244
(916) 324-5347
1 � 1 ,
��o s 3ct1.
Peter W. Hanschen
Attorney for:
PACIFIC GAS i ELECTRIC COMPANY
77 Beale Street
San Francisco, CA 94106
(415) 973-3155
17
• Q —06-014 , A.85—•025 APPENDIX D
(111,11
7 (4//Pacific Gas and Electric Company
. /'I (. si,ecr Al,
�.,ur�e!lur, (.‘,/ I i (. sheer .\,,
`' S.R s,,, l•ru,/L/.,„ rulrp,nrrrr
PRELIMINARY STATEMENT
(Continued)
•
B. ENERGY COST ADJUSTMENT CLAUSE (ECAC.)
1. PURPOSE: The purpose of this Energy Last Adjustment Clause (ECAC) provision is to
reflect in rates: (1) the cost of fuel, (2) purchased power, (3) the revenue (T)
reouirements associated with fuel oil ieventory, and (k) certain other energy-related (T)
costs.
2. APPLICABILITY: This ECAC provision applies to bills for service under applicable
rate schedules and under contracts subject to the jurisdiction of the Commission.
3. EFFECTIVE RATES: The Adjustment Rates end Annual Energy Rates, in effect at any tine
and applicable to bills for service under each rate schedule and contract, shall be
the Average Adjustment Rate and Annual Energy Rate determined pursuant to the
following provisions and adjusted to reflect the rate design standards of the
Commission and the requirements of applicable law. The rates so adjusted shall
become effective for service on and after the Effective Date. The amount to be added
to or subtracted from each bill for service shall be the product of the total
kilowatt hours for which the bill is rendered multiplied by the applicable Adjustment
Rates and by the applicable Annual Energy Rates. The Adjustment Rates and Annual
Energy Rates applicable to each rate schedule will be set forth in the Rate Schedule
Summary in the Preliminary Statement.
4. DEFINITIONS:
a. EFFECTIVE DATE: The Effective Date for revised Adjustment Rates and Annual
Energy Rates shall be the applicable Revision Date or such other date as the
Commission may authorize.
b. FORECAST PERIOD:
(1) The Forecast Period for calculating Adjustment Rates shall be the
12 calendar month period commencing with the applicable Revision Date.
(2) The Forecast Period for calculating the Annual Energy Rates shall be the 12
calendar month period commencing with t e Revision Date.
c. FRANCHISE FEES AND UNCOLLECTIBLE ACCOUNTS: Franchise Fees and Uncollectible
Accounts Expense shall be included at the rate derived from PGandE's most recent
general rate case decision issued *y the Commission.
d. REVISION DATE(S):
(1) The Revision Dates for calculating Adjustment Rates shall be August 1 of
each year and, when required by the conditions set forth in Decision _ _
No. 83-02-076, February 1 of the next succeeding year.
(2) The Revision Date for calculating Annual Energy Rates shall be August 1 of
each year.
e. DIABLO CANYON SETTLEMENT AGREEMENT: The Diablo Canyon Settlement Agreement is (N)
that agreement signed June 2A, 1989, and adopted by the Commission on
(Date) by Decision No. (Number) , which describes the methods by which the
.
costs o owning and operatiFirEETTrriblo Canyon Nuclear Power Plant are to be
included in PC&E's rates. (N)
(Continues;
,
.Ii/r,ea•/Alter At, Issued lit' nate biker/
l.k ci ,.,,r Al, • Gordon R.Smith Illeciire
lice President l.'r.,,lntn,,r .\„
CLAR25 (COs) p. 1 l•ina,rc'c'undRules
• A. 84-06-014 , A.85—Ud1025 APPENDIX D •
Pacific Gas and Electric Company Irl t'
l' U.R 4rN ,t/1/„rur„
PRELIMINARY STATEMENT
(Continued)
B. ENERGY COST ADJUSTMENT CLAUSE (ECAC) (Cont'd.)
5. CALCULATION OF THE AVERAGE ADJUSTMENT RATE: The Average Adjustment Rate shall be
determined as follows:
a. The volumes of gas and of each type of oil and coal fuel estimated to be used
for electric generation in each month of the Forecast Period,w+ expressed in
millions of Btu and the volumes of geothermal production in each month of the (0)
Forecast Period, expressed in kilowatthours, shall be multiplied by the current
price of each as set forth below;
(1) The current price of gas fuel shall be the weighted average of a) the
billing price excluding markup and O&M expense for those therms of gas used
to generate energy for off-system sales and b) the G-S5 gas rate for the
remaining therms of gas used to generate energy for electric sales during
the Forecast Period.
(2) The current price of low sulphur fuel oil (LSFO) shall be the estimated
price computed on a last-in first-out (LIFO) method in each month of the
forecast period using the estimated replacement price of LSFO during the
forecast period and the estimated additions and withdrawals in each such
month.
(3) The current prices of oil and coal fuel , other than LSFO, shall be the
estimated average cost in dollars per million Btu of each type from
inventory (CPUC Account No. 151, Fuel Stock) computed as of the enc of the
month prior to each month of the Forecast Period, using the estimates
replacement price of each type of such fuel during the Forecast Period and
the estimated additions and withdrawals in each such month.
(r) The current price of geothermal energy shall be the estimated average
prices per kilowatthour of geothermal plant output (including payments for
effluent disposal) of producers effective for production during the
Forecast Period.
(D)
b. Plus: the total cost of purchased electric energy as estimated to be recorded
in the Forecast Period in CPUC Account No. 555, Purchased Power, including
payments for Auxiliary Power Sources (APS) and purchases from Cogenerators and
Small Power Producers; Less: the amount of revenue estimated to be billed
during the Forecast Period, excluding O&M at the contract rate, for off-system
sales;
c. Plus: an adjustment to reflect the revenue requirement associated with fuel oil .
inventory estimated for the Forecast Period;
d. Plus: the fuel oil contract facility charges estimated to be recorded during
the Forecast Period;
e. Plus: the fuel oil contract underlift payments estimated to be recorded during
the Forecast Period;
f. Less: 91 percent of the amount of gains (or plus 91 percent of the amount of
losses) on the sale of fuel oil and adjustments thereto estimated to be incurred
during the Forecast Period;
g. Pius: the estimated payments to others during the Forecast Period for water
used in the Utility's hydroelectric production;
(Continued)
Ad/ht./Al/0'A,, Wrier/in
/Ati un,u .\„ • Gordon R. Smith /IMP/e
l•ire Pre'.ldeut /A.M./ninon .\..
and A'utvs
CLAR25 (C04) p. 2 I�urrurc•
• •
4-06-014 , A. 85-08-025 APPENDIX D
•
r. ,I I'I r. gpivi \,,
iiiri
l F * Pacific Gas and Electric Cony r.uurc(lrut �.,r! !'r �. .1/ c r �„
t,R ‘4 in brrru,L L r.nlrh.rurn
PRELIMINARY STATEMENT
(Continued)
B. ENERGY COST ADJUSTMENT CLAUSE (ECAC) (Cont'd.) .
5. CALCULATION OF THE AVERAGE ADJUSTMENT RATE: (Cont'd.)
h. Plus: the estimated fair value of electric energy produced during precommercial
testing of any generating facility.
i. Less: nine percent of the sum of 5(a) through 5(h) above;
j. Plus: an adjustment to reflect 91 percent of the revenue requirement associated
with excess fuel oil inventory estimated for the Forecast Period;
k. Plus: the estimated amount to be recovered during the Forecast Period pursuant (N)
to the Diablo Canyon Settlement Agreement, as described in part 6.g. below. (N)
. 1. The net of 5(a) though 5(k) above shall be allocated to the sales subject tc (T)
this ECAC provision during the Forecast Period in the manner set forth in- term
6(j) below; (T)
m. Plus: 91 percent of the sum of 1/24 of the CPUC jurisdictionalized fuel (T) ,
oil inventory (F01) write-down amount on January 1, 1987 to be amortized during
the forecast period.
n. Plus: 91 percent of the sum of the monthly interest on the average balance in (T)
the FOI write-down ECAC subaccount at a rate equal to 1/12 of the balancing
account interest rate during the forecast period.
o. Plus: any estimated debit balance (or less any estimated credit balance) in the (T)
Energy Cost Adjustment Account as of the Revision Date, adjusted to amortise
such balance over the appropriate period;
p. the net of items 5(1) through 5(o) above, increased to provide for Franchise fees (T)
and Uncollectible Accounts Expense, shall be divided by the Forecast Perioe
kilowatt-hours of applicable jurisdictional sales.*
6. ENERGY COST ADJUSTMENT ACCOUNT: PCE shall maintain an Energy Cost Adjustment (T)
I
Account. Entries shall be made to this account at the end of each month as follows:
a. A debit entry equal to 91 percent of the algebraic sum of the following items:
(1) The actual cost of gas used to generate electricity for off-system sales at
the billing price (excluding markup and OW, the remaining gas used to
generate electricity at the C-55 gas rate, oil , and coal** used for the (T)
generation of electricity during the month, such cost to include underlift
and facilities payments to fuel oil suppliers and 91 percent of any gains
or losses from fuel oil sales;
(2) Plus: The actual costs of purchased electric and geothermal and other _
steam energy, such cost to include purchases from Cogenerators and Small
Power Producers, during the month;
Less: the amount of revenue, excluding 011M at the contract rate, billed
during the month for off-system sales.
(3) Plus: The actual costs of transmission of electricity by others
(wheeling), excluding nonvariable payments for continuing transmission
services;
(4) Plus: The recorded fuel expense during the month associated with fuel
receipts in payment for electric service;
•
•(Continued)
.Ir/r rc a I. -II(•r.fir,
Issued hl' Urrry I•ilc•rl
174c r`r''u \,, A Gordon R. Smith 1:11ec'trr•c• _
�' Pict•Pmsirlein ! Iunu,r At,
Fiuurtt•t•uutl Aries
CLAR25 (0001 p. 3
1111
• A.94-06-014 , A.85-0025' APPENDIX D
Carl l' (. ,/To .\„
Pacific Gas and Electric Company
a' S M 4rrr l•rrrut r.(' r.,rltp,nnrr l.uttCc llntr, (.111 /'! t )hrc t \„
PRELIMINARY STATE"ENT
(Continued)
5. ENERGY COST ADJUSTMENT CLAUSE (ECAC) (Cont'd.)
6. ENERGY COST ADJUSTMENT ACCOUNT: (Cont'd.)
(5) Plus: The carrying costs on fuel oil in inventory at the rate eouai to
1/12 of the interest rate on banker's acceptances (top-rated, three months)
for the previous month as published in the Federal Reserve Statistical
Release, C.13, or its successor publication applied to 6.107 million
barrels at $14.19 per barrel;
(6) Plus: Payments to others for water used in PC&E's hydroelectric (T)
production;
(7) Plus: The fair value of electric energy produced during precommercial
testing of any generating facility.
b. A credit entry equal to the amount of revenue billed during the month under the
Adjustment Rates excluding the allowance for Franchise Fess and Uncollectible
Accounts Expense;
c. A debit entry equal to 91 percent of the product of 1/12 of the balancing
account interest rate and the recorded inventory level in excess of
6.107 million barrels at $14.19 per barrel.
d. A debit entry equal to 91 percent of the product of 1/12 of the balancing
account interest rate and the difference between the average inventory value per
barrel ana $14.19 multiplied by the number of barrels in inventory.
e. A debit entry equal to 91 percent of 1/24 of the CPUC jurisdictionalized FOI
write-down amount on January 1, 1987.
f. A debit entry edual to 91 percent of the interest on the average of the balance
in the FOI write-down ECAC subaccount at the beginning of the month and the
balance at the end of the month at a rate equal to 1/12 of the ECAC balancing
account interest rate.
g. A debit entry equal to the amount allowed to recover the costs of owning and (N)
operating the Diablo Canyon Nuclear Power Plant as specified in the
Diablo Canyon Settlement Agreement. This debit, whether computed in accordance
with (1) or (2) below, shall exclude the allowance for Franchise Fees and
Uncollectible Accounts Expense and shall not be less than zero.
(1) This amount shall be computed as:
(a) the net generation from Diablo Canyon during the month multiplied by
the price in effect as defined in Paragraphs 3, 4, and S of the
Diablo Canyon Settlement Agreement;
(b) minus the amount of the Diablo Canyon Basic Revenue Requirement, _ _
defined in Paragraph 7 of the Diablo Canyon Settlement Agreement,
included in PCIE's Base Revenue Amount, described in part 0 of the
Preliminary Statement, recorded in PCIE's Electric Revenue Adjustment
Account for the month. (N)
PG&E shall record at the end of the calendar year an adjustment to this
Energy Cost Adjustment Account, if necessary, such that the cumulative
amount recorded for the calendar year shall be the greater of (a) the
amount which would result if this computation were made based solely on the
annual net generation from Diablo Canyon minus the annual Diablo Canyon
Basic Revenue Requirement, or (b) zero.
(Continued)
.him teller Au Issued by Dow biletl
l kt c•a,.,r .\ti Gordon R.Simllb l:%/it'nre
I'icc'President Rese.lnnr .\.,
CLAR25 (CD4) O. 4
Finance and Rales
•
• R4-06-014 , A. 85-08-025 APPENDIX D
■
Pacific Gas and Electric Company P! ( /'c c" \
(� �cr,l f,�r,rer•c rulN•„u,uill
•
•
(400.1../00vr cel I'l r shed \„
PRELIMINARY STATEMENT
(Continued)
•
B. ENERGY COST ADJUSTMENT CLAUSE (ECAC) (Cont'd.) c
6. ENERGY COST ADJUSTMENT ACCOUNT: (Cont'd.)
(2) If PG&E has notified the Commission that the floor provision of Paragraph 9 (N)
of the Diablo Canyon Settlement Agreement has been invoked, the amount of
this debit shall be computed as:
(a) the net generation from Diablo Canyon (both generating units) during
the month had the plant operated at the capacity factors set forth in
Paragraph 98 of the Diablo Canyon Settlement Agreement, muitiplieo by
the prices in effect as defined in Paragraphs 3, 4, and 5 of the
Diablo Canyon Settlement Agreement;
(b) minus the amount of the Diablo Canyon Basic Revenue Requirement,
defined in Paragraph 7 of the Diablo Canyon Settlement Agreement,
included in PC&E's Base Revenue Amount, described in part D of the
Preliminary Statement, recorded in PC&E's Electric Revenue Adjustment
Account for the month. i
h. A credit entry equal to the amount computed in part 11.b. below, reflecting
repayment of revenues which may be received by PG&E pursuant to the floor
provisions (Paragraph 9) of the Diablo Canyon Settlement Agreement.
i. A debit or credit entry to adjust, if necessary, the total energy costs to be
recovered through the Annual Energy Rate due to variations in net generation
from Diablo Canyon, pursuant to Paragraph 8 of the Diablo Canyon Settlement
Agreement. This entry shall be made at the end of the AER Forecast Period ano
shall be a debit if Diablo Canyon net generation during the period was less than
the adopted forecast ano a credit if the net generation was greater than the
adopted forecast. This entry shall be computed as the product of the
jurisdictional factor adopted for the forecast period times 9 percent of the
product of the average utility-electricity-generation gas rate adopted for the
Forecast Period times the system average heat rate adopted for the Forecast
Period times the difference between the recorded net generation from
Diablo Canyon and the estimated net generation from Diablo Canyon previously
adopted for the Forecast Period. (N)
1 The components of the formula described above will be determined in each ECAC (N)
application.
j. It is intended that this account reflect only the balances to be amortized by (N)
rates for sales to which this Energy Cost Adjustment Clause applies. For the (T)
purpose of determining entries to the Energy Cost Adjustment Account,
items 6(a), 6(c), 6(d), 6(g), 6(h), and 6(1), above, in any month shall be (T)
pro-rated to applicable jurisdictional energy sales* by the ratio of such
jurisdictional energy sales and energy sales under Federal Energy Regulatory
Commission jurisdiction,* excluding sales associated with any off-system
transactions in 6(a)(2) and in 6(a)(4) above.
.
(Continued)
.Ic/rut•tell•r \” Issued hr ik iel•zIe,/
lkt•t a,rr.Y„ Gordon R. iniitb I:(jit-urr
fide President As(dninco .\,.
/•/mince mid Rules
CLAR2S (C04) p. 5
• •
• ' . c4-06-014 , A. 85-08-025 APPENDIX D
Pacific Gas and Electric Compam r.u/ / (. �i,,., \„
\
r (.rtlttl!l!Il, (.rrl /'I ( iii,•,I ,.
t M ‘.n! frtrrlt; , ,rl;l„r'ulr!
PRELIMINARY STATEMENT
(Continued)
L. ENERGY COST ACJUSTMENT CLAUSE (ECAC) (Cont'd.)
6. ENERGY COST ADJUSTMENT ACCOUNT: (Cont'd.)
k. A debit entry equal to interest on the average of the balance in this account at (T)
the beginning of the month and the balance in this account after entries 6(a)
through 6(i ) above, and adjusted as stated in 6(j) above, if the average balance (T)
is debit (credit entry, if the average balance is credit), at a rate equal to
1/12 of the interest rate on Commercial Paper (3 months) for the previous month
as published in the Federal Reserve Statistical Release, C.13. Should
publication of the interest rate on three-month Cc.mercial Paper be
discontinued, interest will so accrue at the rate of 1/12 of the previous
month's interest rate on Commercial Paper, which most closelSi approximates the
rate that was discontinued, and which is published in the Federal Reserve
Statistical Release, C.13, or its successor publication.
1. The balance in this account is subject to annual adjustment to implement the (T)
Earnings Limitation Provision, set forth in item 10 below. Any Such adjustment
shall include one-half year's interest at the annual average of the monthly
interest rates applicable to this account.
7. ANNUAL ENERGY RATE (AER): The AER shall be determined as follows:
e. •'.ine percent of the net of 5.a. thrcugh 5.h. above;
b. Plus: nine percent of the sum of 1/24 of the FOI write-down amount to be
amortized during the forecast period;
.1
(Continued)
Iclr rc, Lefler.\„
Issuer!lir Date filed
/kcr•rr..�r .\r, Gordon R.Sm iib lllitnrt
1-ice President Ator.lrrnr.11 .\..
�• .e+e rine _ e
Finance
• 4-06-014 , A.85-08-025 APPENDIX D •
Pacific Gas and Electric Companyrr' l'r ( �i+r rr \„
d' �•R ��nr Frrart f.„„ rrrlNr,rrrrrr f.rnitrlhrr; 1,,,il'r r, sh 1,1 \,.
PRELIMINARY STATEMENT
(Continued)
B. ENERGY COST ADJUSTMENT CLAUSE (ECAC) (Cont'd.)
c. Plus: nine percent of the sum of the monthly interest on the average balance in
the FOI write-down ECAC subaccount at a rate taual to 1/12 of the ECAC balancing
account interest rate during the forecast period.
The net of 7.a. through 7.c. above shall be allocated to the sales subject to
the ECAC provision during the Forecast Period in the manner set forth in term 6.g.
above and increased to provide for F-anchise Fees and Uncollectible Accounts Expense,
shall be divided by total sales durir; the Forecast Period.
B. TIME AND MANNER OF FILINC: PG&E shall file an application for authority to place
into effect revised Adjustment Rates with the California Public Utilities Commission (T)
on or before April 21 of each year with respect to the August 1 Revision Date and
December 3 of each year with respect to the February 1 Revision Date. Each such
filing shall be accompanied by a report which shows the derivation of the rate to be
applied.
9. ANNUAL REVIEW OF REASONABLENESS: In conjunction with the filing for the August 1
Revision Date, PG&E shall file with the Commission on April 7 of each year, a report (T)
on the reasonableness of recorded fuel and energy costs and other energy-
related costs includable in the Energy Cost Adjustment Account during the
twelve-month period ending January 31 of each year.
10. EARNINGS LIMITATION PROVISION:
a. PURPOSE: The purpose of the Earnings Limitation Provision is to place a
limitation on the amount of pretax earnings variations which the Utility may
experience due to unforecast energy cost changes.
b. DEFINITIONS:
(1) CAPITAL RATIO FOR COMMON EOUITY: The Capital Ratio for Common Equity is
the rate adopted in the Commission's most recent general rate decision with
respect to PG&E, applicable for the Record Period, which reflects the (T)
cannon equity component of the capital structure.
(2) RATE BASE: The Rate Base is the average California jurisdictional rate
base adopted by the Commission in the most recent general rate decisions
with respect to PG&E, applicable for the Record Period, adjusted to reflect (T)
any changes in rate base adopted by the Commission in other decisions that
affect rate base.
(3) RECORD PERIOD: The Record Period is the 12 calendar month period ending on
July 31 of each year.
•
•
(Continued)
•
hs al//)i' /hili•ti/cd
lAt c.rutl .\rr Gordon R. Smith
lice President Rt:rrin um.\r.
CLAR2S (C04) P. 7 Fiuu it t'and Ride's
• •
• A. 84-06-014 , A. 85-08-025 APPENDIX D
. Pacific Gas and Electric Company Ir! l'l (. show.�,,
4' I \�rrr hznru,c ( ,rirh,nrrrrri
(.crNcallur�, r u/ I i (0 Nhr•rr \,.
PRELIMINARY STATEMENT
(Continued)
B. ENERGY COST ADJUSTMENT CLAUSE (Cont'd.) ••
10. EARNINGS LIMITATION PROVISION: (Cont'd.)
c. EARNINGS LIMIT: The Earnings limit shall be calculated as follows:
I • RB a LRrt a 0.0140, where: I w Earnings Limit, RB w Rate Base, CRCsf -
Capital Raab for Common Equity, and 0.0140 w the 140 basis point cap bn
variations in pre-tax return on common equity adopted by the Commission in
Decision No. 83-08-048.
d. EARNINCS LIMITATION AMOUNT: nil shall calculate annually the Earnings (1)
Limitation Amount to be include.d'in the ECAC Balancing Account. This amount
shall be determined from the following calculations:
(1) Nine percent of the CPUC jurisdictional recorded total fuel and purchased
power costs and other enemy-related costs applicable for inclusion in the
. AER during the Record Period, including the adjustment described in item (T)
6(i) above;
(2) Less: the amount of revenue billed during the Record Period under the AER,
not including the allowance associated with Franchise Fees and
Uncoliectible Accounts Expense;
(3) If the net of items 10(d)11) and 10(d)(2) above is a positive amount, it
shall be reduced by the Earnings Limit. If this calculation produces a
positive amount, such asst shall be the Earnings Limitation Amount to be
debited to the Energy Cosi Adjustment Account. If this calculation
produces a negative amount, no entry shall be made to the Energy Cost
Adjustment Account. If the net of items 10(d)(1) and 10(d)(2) above is a
negative amount, it shall be increased by the Earnings Limit. If this
calculation produces a negative amount, such amount shall be the Earnings
Limitation Amount to be credited to the Energy Cost Adjustment Account. If
this calculation produces a positive amount, no entry shall be made to the
• Energy Cost Adjustment Account.
11. PC&E shall maintain a memorandum account that will accumulate any revenues received LN)
by PG&E pursuant to the floor provision (Paragraph 9) of the Diablo Canyon Settlement
Agreement end any amounts of such revenues returned to ratepayers. If PC&E notifies
the Ccomission that the floor provisions have been invoked, entries to the account
shall be made at the end of each calendar year as follows:
• a. A credit mow) to the amount by which the floor revenue debited to the Energy
Cost Adjustment Account, pursuent to part 6.g.(2) above, exceeds the amount that
would have been debited to the Energy Cost Adjustment Account pursuant to
part 6.g.(1), above, based on net generation from the Diablo Canyon Power Plant
during the year, excluding the limitation that the computation in part 6.g.(1),
above, not be less than zero. (N)
I
i
•
__. .,nuea r
.Itivite letter Al, /aruee/hl' /hut'Fierce
lAt :u,n.‘.. Gordon R. Smith l:%/it r'rrc.
17ce President /tq•sc,inival .\„
CWt25 (t04) p. 8 Finance'u,rd Rates
•
: 4-06-014 , A.85-08-025 APPENDIX D
/'J (. \!rl'l'( fir
a Pacific Gas and Electric Company
\,[rt l rurrc 1•1., ( �rlrh,nrr[r (.crcr!lrn;� (. Il I' J ( \i ll1
PRELIMINARY STATEMENT
(Continued)
•
E. ENERGY COST ACJUSTMENT CLAUSE (Cont'd.)
11. (Cont'd.)
b. A debit equal to one-half of the net generation at the Diablo Canyon Power Plant (N)
that is in excess of net generation at a 60-pereent capacity factor multiplied
by the price effective for the year as specified in Paragraphs 3, e, and 5 of
the Diablo Canyon Settlement Agreement. This computed amount is the minimum
that must be debited to the memorandum account. PC&E has the option of deoiting
a larger amount. The amount of this debit shall be limited, if necessary, to
that amount required to bring the net balance in this memorandum account to
zero.
•
•
c. A credit equal to the interest on the average of the balance in this memorandum
account at the beginning and at the end of the year, computed at the interest
rate on 10-year single A utility bonds as listed in the last issue of Moody's
•
Bond Survey published in the year in which the floor provision is invoked.
PC&E shall credit the Energy Cost Adjustment Account with an amount equal to the
debit described in part 11.b., above. This credit is the repayment of revenues
received by PCSE oursuant to the floor provision of the Diablo Canyon Settlement
Agreement.
(N;
•
•
Except (a) for sales for which payment is made in fuel. Sales under Federal Energy Regulatory (L)
Commission jurisdiction, where used herein, shall be adjusted by multiplying such sales by the
ratio of California jurisdictional sales (excluding the foregoing exceptions) as a fraction
system generation for such sales to Federal jurisdictional sales as a fraction of system
generation for such sales.
ex
Excluding fuel receipts in payment for electric service. (L)
•
!dive Letter.\.. Issued hr Aar tiled
/Atc.►u,t.\(, Gordon R. Smith l:Vit'nr(•
I•ic•e President Remd,(n,ur.\.,
CLAR25 (CO4) p. 9 I'�uuttc'eand Kates
(ENT) OF APPENnTK n1
• •
,
A. 84-06-014 , A. 85-08-025 '
APPENDIX E
Table 1-1
Comparison of Performance Based Pricing With
Traditional Cost of Service Ratemaking
Nominal $ Millions
Performance Based Pricing Traditional
Fixed Escalating Total Cost of Service
Payment Payment Payment Ratemaking
(1) (2) (3) (4)
1985 $311 $311
1986 637 637
1987 656 656
1988 $174 $573* 747 707
1989 346 569 915 730
1990 346 634 980 2306
1991 346 707 1053 2316
1992 346 789 1134 2319
1993 346 879 1225 2319
1994 346 959 1304 2288
1995 346 997 1343 1366
1996 346 1037 1383 1376
1997 346 1080 1426 1393
1998 346 1124 1470 1412
1999 346 1170 1516 1442
2000 346 1218 1564 1463
2001 346 1268 1614 1489
2002 346 1320 1666 1529
2003 346 1374 1720 1588
2004 346 1431 1776 1628
2005 346 1489 1835 1710
2006 346 1550 1896 1760
2007 346 1614 1960 1826
2008 346 1680 2026 1901
2009 346 '1749 2095 1984
2010 346 1821 2166 2078
2011 346 1895 2241 2184
2012 346 1973 2319 2305
2013 346 2054 2400 2448 •
2014 346 2138 2484 2624
2015 233 1502 1735 2596
2016 34 230 264 2084
1985 NPV at 11.5% $10, 041 $12,601
-10,041
• NPV Difference $2,560
n a
* Includes DCAA payment for 1st ha_: cf :922.
(END OF APPENDIX E) •
411 411
A.84-06-014 , A.85-08-025
APPENDIX F
Table 1-2
Comparison of Performance Based Pricing With
Traditional Cost of Service Ratemaking
1985 Present Value $ Millions
Traditional Cost of Service
Performance Based Pricing Ratemaking, Incl. Cumulative
Fixed Escalating Total DCAA Amortization Difference
Payment Payment Payment
(1) (2) (3) (4) (5)
19£5 $311 $311 $0
1986 571 571 0
1967 527 527 0
1988 $126 $413 539 510 -29
1989 224 368 592 473 -148
1990 201 368 569 1338 621
1991 180 368 548 1205 :279
1992 161 368 529 1063 _222
1993 145 368 513 971 22E9
1994 130 360 490 659 2659
1995 116 336 452 460 2667
1996 104 313 418 416 2665
1997 94 292 386 377 2656
1998 84 273 357 343 2641
1999 75 255 330 314 2625
2000 68 238 306 286 2606
2001 61 222 283 261 2584
2002 54 207 262 240 2562
2003 49 194 242 224 2544
2004 44 181 225 206 2525
2005 39 169 208 194 2511
2006 35 158 193 179 2497
2007 32 147 179 167 2485
2008 28 137 166 155 2475
2009 25 128 154 146 2466
2010 23 120 143 137 2461
2011 20 112 132 129 2457
2012 18 104 123 122 2457
2013 16 97 114 116 2459
2014 15 91 106 112 - 2465
2015 9 57 66 99 2498
2016 1 8 9 71 2560
Total 1985 NPV @11.5% $10, 041 $12,601
(END OF APPENDIX F)
A. 84-06-014, A.85-08-025 ALJ/RAB/fs/pds**
APPENDIX G
Page 1
REVENUE REQUIREMENT REVISIONS AND ACCOUNT ADJUSTMENTS
Pacific Gas and Electric Company
Diablo Canyon
1. Revisions to Attrition Year 1989 Revenue Requirement
Revenues herein are on a CPUC-jurisdictional basis, including
franchise fees and uncollectibles (FF&U) , except where noted.
Diablo Canyon revenue revisions will be incorporated into the
revenue requirement used to set rates in PG&E 's current ECAC
proceeding (A.88-04-020 and A. 88-04-057 ) .
A. Base Energy Rate
Change to Base Revenue Amount:
Amount Item Source
($ million)
$ (201.600) Exclude Diablo Canyon noninvestment Tariff Sheet
expenses from Base Revenue Amount 10539-E
and base rates .
( 12 . 141) Exclude Diablo Canyon administrative Ex. 515, p. 49
and general expenses from Base
Revenue Amount and base rates .
+ 216 .943 Basic Revenue Requirement. 1/ Rev. workpapers
dated 12/12/88
$ 3.202 Total
1/ Calculated at 11 .04% rate of return ( 13 . 00% return on equity) .
B. Energy Cost Adjustment Clause (ECAC)
( 1) Exclusion of nuclear fuel expenses in D.88-12-040
= $(99.791) million x 0. 91 x 0 .9774 x 1 .00774
= $(89.444) million.
(2) Calculation of Diablo Canyon energy purchase cost:
In PG&E's current ECAC case the adopted level of Diablo Canyon
generation for the August 1, 1988 - July 31, 1989 forecast period
is based on a 67% full cycle capacity factor, 18 month cycle
length, 12 week refueling outage and 146 gWh generation loss
during ramp-up at the star* cf each fuel cycle. During the ECAC
forecast period there :z -.__ ref'.:e1 r.g outage forecast for Unit
2, but during calendar the one refueling outage will be for
Upit 1 . That change to ECAC forecast generation is made here .
I
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APPENDIX G
Page 2
•
Operating cycle capacity factor
= [ ( 1 .5 x 365) / ( ( 1. 5 x 365) - ( 12 x 7) ) ] x 67 = 79 . 14% .
Unit 1 capacity = 1073 MW; Unit 2 capacity = 1087 MW.
Calendar 1989 generation
= [ ( 1073 x (365 - ( 12 x 7) ) ) + ( 1087 x 365) ] / 1000
x 24 x 0. 7914 - 146
= 13, 116 .6 gWh.
Calendar 1989 Diablo energy price
= 0. 0315 fixed + 0 . 05185 escalating = $0 . 08335 per kWh.
Calendar 1989 Diablo Canyon energy purchase cost
= 13, 116 .6 million x $0 . 08335 x 0 . 9774 ECAC juris . factor
= $1, 068 .561 million.
( 2) Independent Safety Committee revenue requirement
= $500,000 x (0.08335 / 0. 078) x 1 . 00774 / 1,000,000
first year escalation FF&U
= $0.538 million.
( 3) Change to ECAC revenue requirement:
Amount Item Source
( $ million)
$ ( 89.444 ) Exclude nuclear fuel expenses . Calculation above
1 , 068 . 561 Energy purchase cost. Calculation above
(216 .943) Exclude Basic Revenue Requirement. Base Energy Rate
+ 0.538 Independent Safety Committee. Calculation above
$ 762 .712 Total
.
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APPENDIX G
Page 3
C. Annual Energy Rate (AER)
Exclusion of nuclear fuel from AER revenue requirement
= $(99.791) million x 0 . 09 x 0. 9774 x 1 .00774
= $(8.846) million.
D. Diablo Canyon Adjustment Clause (DCAC)
Revenue requirement will be reduced from the present
$472 . 856 million to zero.
E . Summary of Changes to Revenue Requirement
Amount Rate Element
($ million)
$ 3.202 Base Energy Rate
762 .712 ECAC rate
(8.846) AER
+ (472.856) DCAC rate
$ 284 .212 Total
These changes are relative to previously authorized
revenues, not present rate revenues . For this reason, revenue
changes may differ slightly from revenue changes reported for
rate design purposes in connection with PG&E's current ECAC case.
Adopted revenues are not affected.
2 . Ratemaking Account Adjustments for the Period July 1, 1988 - _
December 31. 1988
Account adjustments herein are on a CPUC-jurisdictional
basis, identified as including or excluding FF&U as appropriate.
Note that the ERAM account and AER revenue requirement include
FF&U, but the ECAC and DCAC accounts do not. Individual account
adjustments for interest charges are not shown, but PG&E should
incorporate interest charges in its calculation of the net
adjustment, including interest at the ECAC account rate on AER
revenues billed to customers .
The intent of the adjustments is to compute a single ECAC
account entry to reflect revenue impacts on PG&E as if the
settlement were effective July 1, 1988 . Many of the calculations
are only illustrative, awaiting availability of recorded data.
•
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APPENDIX G
Page 4
A. ERAM Account
For the July 1 - December 31 , 1988 period the ERAM
account balance must be adjusted to exclude debits for
noninvestment expenses and administrative and general expenses ,
and to include debits for the Basic Revenue Requirement.
( 1) Debits to the ERAM account are recorded by using the
monthly distribution factors shown on Tariff Sheet 10143-E:
July 0.091 October 0.082
August 0.092 November 0.080
September 0.090 December 0.082 .
The total for six months is 0.517 .
(2) Annual revenue requirement for noninvestment
expenses is $201 .600 million, including FF&U, per Tariff Sheet
10539-E. Stipulated annual administrative and general expenses
embedded in the Base Revenue Amount are $12 . 141 million, also
including FF&U, per Ex. 515, p. 49 .
(3) The CPUC-jurisdictional Basic Revenue Requirement
for 1988 is $110.929 million, which must be multiplied by two to
be put on an annual basis . The amount is from Ex. 515, Tab H1 .
(4 ) Net ERAM account adjustment
= 0.517 x [- $201 . 600 - $12 . 141 + (2 x $110 . 929 ) ] million
= $ 4 . 196 million, including FF&U.
This calculation does not require updating for recorded data .
B. ECAC Account
The ECAC account balance must be reduced to exclude
nuclear fuel expenses, increased for Diablo Canyon energy
purchase costs, and reduced to exclude the Basic Revenue
Requirement.
( 1) Nuclear fuel adjustments will equal recorded monthly
ECAC account entries, not recorded total expenses . The account
entries are equal to recorded expenses times the monthly recorded
ECAC jurisdictional factors times the authorized ECAC fraction.
The ECAC fraction is 0.91 from July 1 to September 21, 1988 and
1 .00 thereafter, due to the suspension of PG&E 's AER ordered by
D. 88-09-036 . The adjustment excludes FF&U.
A. 84-06-014, A. 85-08-025 ALJ/RAB/fs/pds**
APPENDIX G
Page 5
(2) Monthly Diablo Canyon energy purchase costs will be
the recorded net generation by the plant times the recorded
monthly ECAC jurisdictional factors times 7 .8 cents per kWh.
This adjustment includes FF&U, as confirmed by the settlement
proponents at the October 12, 1988 Technical Meeting.
( 3) The six month adjustment for the Basic Revenue
Requirement exactly offsets the ERAM account adjustment for that
factor, including FF&U, and is:
= 0.517 x 2 x $( 110. 929 ) million
= $( 114 .701) million.
C. Annual Energy Rate
The general approach for this adjustment is to calculate
the fraction of AER revenue requirement that is due to nuclear
fuel, then multiply that fraction by billed AER revenues for the
adjustment period July 1 - September 21, 1988. This adjustment
requires recorded billing data from PG&E and includes FF&U.
The nuclear fuel fraction of AER revenues is calculated
from the adopted revenues in Appendix B to D. 87-11-019, which was
in effect for the entire adjustment period. From that decision,
the AER allocation of energy expenses is $134 , 573,000, of which
nuclear fuel is 9% of $114 , 562, 000. Therefore the nuclear fuel
fraction is:
= 0.09 x $114,562,000 / $134 ,573,000 = 0.0766.
The net AER adjustment, including FF&U, will be 0.0766 times
billed AER revenues for the July 1 - September 21, 1988 period.
D. Diablo Canyon Adjustment Clause
This rate element will be terminated by the settlement.
The DCAC account books jurisdictional revenues, excluding FF&U,
but the DCAC rates include FF&U. Therefore the net adjustment
will be the DCAC billed revenues for July 1 - December 31, 1988
period, and it will include FF&U.
III 410
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APPENDIX G
Page 6
•
E. Summary of Adjustments
Amount ($ million)
Including Excluding Rate Element
FF&U FF&U
$ 4 . 196 2/ Base Energy Rate (ERAM)
2/ 3/ Nuclear fuel
4_/ 2/ Diablo Canyon energy purchase
( 114 . 701 ) 2/ Basic Revenue Requirement
[subtotal] [subtotal ] Subtotal ECAC adjustment
2/ AER
+ 5/ 2/ DCAC
[total] [total ) Total
2/ Amount to be determined by application of FF&U factor of
1 . 00774 to amount in other column. Multiply or divide as
appropriate.
3/ Amount calculated from recorded nuclear fuel expenses .
4/ Amount calculated from recorded plant generation.
5/ Amount calculated from billed revenues .
The net adjustment to the ECAC account will be the total
in the second column of this table. Rates to refund or amortize
this amount shall be set in subsequent ECAC proceedings, over a
period not to exceed three years .
F. Advice Filing
PG&E shall make the net adjustment to the ECAC account as
soon as the necessary data are available, but no later than
January 31, 1989. PG&E shall so notify the Commission and all
parties to this proceeding by advice filing within 30 days of the
date of the adjustment. The advice filing shall include work
papers to derive all amounts in the manner shown above, including
interest charges.
A. 84-06-014, A.85-08-025 ALJ/RAB/fs/pds*
APPENDIX G
Page 7
3. Tariff Sheet Revisions
The tariff sheets in Exhibit 93, 303 modify the tariff sheets
attached to the Implementing Agreement . They in turn should be
revised to include the Diablo Incremental Energy Rate (DIER) in
the annual AER adjustment formula.
(END OF APPENDIX G)
III 111
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APPENDIX H
Page 1
COMPLIANCE REQUIREMENTS
Pacific Gas and Electric Company
Diablo Canyon
1 . Reporting
Pacific Gas and Electric Company (PG&E) shall annually file
with the Director of the Commission Advisory and Compliance
Division (or its successor) a Diablo Canyon Compliance Report,
which shall include all information shown below. The report
shall be due March 31 of each year, commencing in 1989 through
the year after both plant units are retired or abandoned.
For purposes of the report, the "historical" format requires
annual reporting of data from the previous calendar year and all
prior years, commencing with commercial operation dates of each
plant unit, preferably in the form of tables to be updated each
year. "Event" or "one time" formats require reporting events or
data from only the previous or current year, without showing
prior year data. All calendar year 1988 data should also be
separated into periods before and after July 1 , 1988, the
effective date of the settlement pricing provisions .
This appendix shows minimum reporting requirements . PG&E may
reorganize the data or revise the actual report formats as
convenient.
2 . Production
All production data shall be in the historical format through
the end of the previous year, showing unit by unit data and
summary data for both units where those summaries have meaning.
A. Cycle information
( 1) Cycle number;
(2) Refueling dates
a. Beginning of refueling outage,
b. Start of next fuel cycle or date of abandonment
or retirement;
(3) Refueling outage duration (days) ;
(4) All other outages of zero net production at either
unit lasting 15 days or longer; report dates,
durations, and brief descriptions of causes and
remedies .
•
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APPENDIX H
Page 2
•
•
B. Energy production, showing production during summer peak
pricing periods (as defined by the Settlement Agreement) , nonpeak
periods, and annual totals .
( 1) Recorded gross gWh;
(2 ) Recorded net gWh;
( 3) Adopted net gWh in ECAC forecast; show data for each
ECAC period in the year and annual total. Note the
basis for the ECAC forecast: operating or full
cycle capacity factor, cycle duration, refueling
outage duration, ramp-up losses, etc.
C. Recorded capacity factors, both full cycle and operating
cycle . Note data compiled for incomplete fuel cycles .
( 1 ) Annual;
( 2 ) Since start of cycle, even if refueling outage has
not yet begun.
D. Off-system sales of Diablo Canyon energy to regular non-
jurisdictional customers and due to hydro spill
conditions.
3. Consumer Price Index (CPI )
For the one previous year and the current year only, report
annual values and % increases from the last year. Show dates
when CPI values are reported, adopted, or made effective.
A. CPI forecast in ECAC proceeding.
B. First report of recorded annual CPI data.
C. All adjustments prior to deadline for use in pricing.
D. Later adjustments too late for use in pricing formula.
4 . Pricing. Use historical format through the current year.
A. Price as forecast in ECAC proceeding.
B. Price ultimately applicable for the year.
C. CPI values ultimately applied to pricing formula.
D. CPI % increase from last year.
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APPENDIX H
Page 3
5. Revenues . Use historical format except where noted.
A. Basic Revenue Requirement through the current year.
( 1 ) Annual values;
( 2) Current year results of operation (on one time
basis) , showing authorized rate of return and return
on equity; in 1989 report also report the 1988
results of operation.
B. ECAC forecast revenue requirement (excluding Independent
Safety Committee) for each ECAC forecast period in the year, and
weighted average. Show dates and applicable jurisdictional
factors through the most recent forecast period.
C. Diablo Incremental Energy Rate (DIER) as adopted in ECAC
proceedings, through the current year. Show proxy value in 1989
report.
D. Recorded ECAC debits for pricing formula revenues .
( 1) Monthly entries for previous year only
a. expense debits excluding interest charges ;
b. jurisdictional factor for that month;
c . applicable interest rate.
( 2 ) Historical basis data
a. annual total debits excluding interest charges ;
b. annual weighted average (by number of days) of
monthly interest rates;
c. annual weighted average jurisdictional factor.
E. Independent Safety Committee. Use historical format.
( 1) Maximum revenue requirement using CPI forecast in .
ECAC proceeding;
(2) Maximum revenue requirement ultimately applicable
for the year;
( 3) Annual recorded expenses .
6. Annual AER Adiustment
A. One time basis for previous year.
( 1) Formula inputs;
(2) Data sources;
( 3) Calculation of amount.
- Ill e
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APPENDIX H
Page 4
B. Annual adjustment amount, in historical format, noting
sign convention.
7 . Floor Payments
A. Historical record of specified capacity factor.
B. Historical record of key floor payment activities with
dates and notes on whether automatic or elective.
( 1 ) Invoking of trigger;
(2) Floor Payment Memorandum Account (FPMA) repayments .
C. Event format report of floor payment activities relating
to previous year production excluding interest charges .
( 1 ) Dates;
(2 ) Calculation of floor payment amount;
( 3) Attach copies of letters invoking elective or
explaining automatic triggers or repayments .
D. Historical record of annual FPMA transactions. Note if
automatic or elective.
( 1 ) Account debits from floor payment triggers;
(2 ) Repayments;
( 3) Interest rate for each payment;
(4 ) Interest charges for each payment;
(5) Account balance.
8. Abandonment Accounts
A. Historical format report of annual account transactions
showing capital additions on a total plant basis and the non-
equity share account entries . Note jurisdictional basis.
( 1) Annual entries;
(2) Interest rate;
(3) Interest charges;
(4 ) Account balance;
(5) For previous year only, show the basis and
computation of the non-equity share of capital
additions;
B. For previous year only, show CPUC authorized non-Diablo
capital structure, including capital ratios, costs, weighted
costs , and total .
• s
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APPENDIX H
Page 5
9 . Monthly General Order 65 Reports
PG&E shall continue to file the monthly financial statements
required by G.O. 65, showing the following information.
A. Income statement and balance sheet for total company
operations .
B. Income statement and balance sheet segregated among non-
Diablo Canyon operations (CPUC jurisdictional) , Diablo Canyon
operations, and other non-jurisdictional operations, which when
combined equal total company operations.
C. Rate of return on non-Diablo Canyon operations, Diablo
Canyon operations , and other non-jurisdictional operations .
D. Monthly allocation between non-Diablo Canyon and Diablo
Canyon for the following:
( 1 ) Transactions affecting long term debt accounts .
(2 ) Transactions affecting preferred stock accounts .
( 3) Transactions affecting common stock accounts .
(4 ) Transactions affecting retained earnings accounts .
(END OF APPENDIX H)
• •
L/pds *
Decision 89-03-062 March 22 , 1989
BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA
Application of Pacific Gas and )
Electric Company, for Authorization )
to Establish a Rate Adjustment )
Procedure for Its Diablo Canyon )
Nuclear Power Plant; to Increase )
Its Electric Rates to Reflect the ) Application 84-06-014
Costs of Owning, Operating, ) (Filed June 6 , 1984 ;
Maintaining and Eventually ) amended December 21 , 1984 )
Decommissioning Units 1 and 2 of the )
Plant; and to Reduce Electric Rates )
Under Its Energy Cost Adjustment )
Clause and Annual Energy Rate to )
Reflect Decreased Fuel Expenses . )
And Related Matters . ) Application 85-08-025
(Filed August 12 , 1985 )
ORDER MODIFYING DECISION (D. ) 88-12-083 AND
DENYING APPLICATION FOR REHEARING FILED BY
TOWARD UTILITY RATE NORMALIZATION
Applications for rehearing of Decision (D. ) 88-12-083
have been filed by William M. Bennett and Toward Utility Rate
Normalization (TURN) . On March 8 , 1989 , we denied William
Bennett ' s application in Decision No. 89-03-022 . We indicated at
that time that we were still considering the merits of TURN ' s
allegations and would rule on that application at a later date .
We have now reviewed each and every allegation of error
raised in TURN's application and have concluded that sufficient
grounds for rehearing have not been shown. However, upon further
reflection, we have determined that the decision requires
modification.
•
A. 84-06-014 , A. 85-08-025 L/pds *
THEREFORE, IT IS HEREBY ORDERED:
1 ) The following sentence is substituted for the second
sentence in the second paragraph on page 2 and the first sentence
on page 3 :
"This assumption is based on our belief that
substantial evidence has been presented which
supports the theory that Diablo Canyon will
operate over the long term at a capacity
factor similar to the average operational
capacity realized by other large scale
nuclear power plants in the United States . "
2 ) The following sentence is substituted on page 3 for the
second sentence in the fourth full paragraph:
"However, after carefully weighing the
evidence presented we have concluded that the
settlement is in the public interest . We
expect future commissions will uphold and
implement it, as they would any of our
traditional ratebasing decisions . "
3 ) The words "reasonable in light of the whole record,
consistent with law, and" are added to the last part of the
sentence in the third paragraph on page 8 before the words "in
the public interest . " The following citation is added after that
sentence : " (Rule 51 . 1 (e) . ) "
4 ) The citation "Duquesne Light Co. v. Barasch ( 1988 )
U . S . , 102 L.Ed . 2d 646 , 662-663, 108 S .Ct . 1105; " is added to
the citations in the last sentence in the first paragraph on page
53 before the citation to Public Utilities Code S463 (a ) .
5 ) Footnote 13 is deleted.
6 ) The following language is added following the second
sentence in the first full paragraph on page 54 :
"As set forth above, this policy extends to
cases involving rate setting in utility
matters . "
"A number of other states, as well as the
Federal Energy Regulatory Commission (FERC )
have approved of the use of settlements and
2
411 I
A. 84-06-014 , A. 85-08-025 L/pds *
stipulations in utility regulatory matters .
(See e.g. , Re Nine Mile Point Nuclear
Generating Facility (N.Y. 1986 ) 78 PUR4th 23,
appeal pending sub. nom. Kessell v. Public
Service Commission fN.Y. April 15, 1987 ) ; Re
Potomic Electric Power Co. (D.C . 1987 ) 81
PUR4th 587 ; Re Public Service Company of
Indiana, Inc . ( Ind. 1986 ) 72 PUR4th 660; Re
Cincinnati Gas and Electric Co. (Ohio 1985 )
71 PUR4th 140; United States v. Public
Service Commission of the District of
Columbia (D.C . 1983 ) 465 A. 2d 829 . ) -
7 ) The following language is inserted after the first full
paragraph on page 57 :
"Notwithstanding the similarities between our
settlement procedures and those employed in
class action litigation, our settlement rules
are even more closely analogous to the
FERC's . For instance, our rules, like the
FERC 's , provide that the agreement must be
approved by the Commission. (Rules 51 . 7 and
51 . 8; see also, 18 C.F.R. S385 . 602 (g) ( 3) ,
(h) ( iv) , ( i ) . ) Further, our rules on
settlement and stipulations provide for the
protection of all parties ' due process
rights . (See Rule 51 et seq. ) Under our
rules , all parties must be served with notice
of a proposed settlement or stipulation and
parties contesting a proposed settlement or
stipulation are provided a 30 day period for
filing comments contesting all or part of the
proposal . (Rules 51 . 2 , 51 . 3 and 51.4 . )
Thereafter, parties have 15 days within which
to file and serve on all parties , replies to
the comments . ( Id . ) Before the parties to a
settlement or stipulation sign the agreement ,
those parties must convene "at least one
conference with notice and opportunity to
participate provided to all parties for the
purpose of discussing stipulations or
settlements in a given proceeding . Written
notice of the date, time and place shall be
furnished at least seven ( 7 ) days in advance
to all parties to the proceeding . " (Rule
51 . 1 (b) . ) "
"When a settlement or stipulation is
contested on any material fact by any party,
the Commission will schedule a hearing on the
3
S
A. 84-06-014 , A. 85-08-025 L/pds
contested issue( s ) as soon as possible after
the close of the comment period. (Rule
51 . 6(a ) . ) Parties to the proposed settlement
or stipulation are required to provide at
least one witness to testify concerning the
contested issues and to undergo cross-
examination by the contesting parties . ( Id. )
The contesting parties are also provided an
opportunity to present evidence and testimony
on the contested issues . ( Id. ) Where the
issue contested is one of law or on an
immaterial fact , the parties may submit
briefs to the Commission if no hearing is
held. (Rule 56 . 1 (b) . ) Moreover, " [t)o
ensure that the process of considering
stipulations and settlements is in the public
interest, opportunity may also be provided
for additional prehearing conferences and any
other procedure deemed reasonable to develop
the record on which the Commission will base
its decision . " ( Id. ) All of these
procedures and more were employed in this
proceeding . "
8 ) The last partial sentence in the second full paragraph on
page 60 beginning with the words "And we" is deleted .
9 ) The second full paragraph on page 61 is modified to state:
"The above language regarding the impact of
this decision on future Commissions is
consistent with the position taken by the
FERC, and its orders which extend into the
future, and presents no conflict with the
provisions of the Public Utilities Code . "
10 ) The second and third sentences in the first full paragraph
on page 63 are deleted and replaced with the following:
"In some areas it is easy, e . g. , the price
for electricity through 1994 ; in other areas
it is less certain, e. g . , determining the
effect of Diablo Canyon on PG&E 's rate of
return; but we can at least recount the
factors we have considered in our public
interest determination . "
11 ) The second sentence of the third full paragraph on page 65
is deleted.
4
r !
A . 84-06-014 , A. 85-08-025 L/pds *
12 ) The fourth full paragraph on page 72 is modified by adding
the following sentence to the beginning of the paragraph:
"As discussed supra , due process was accorded
to all parties in this proceeding. "
13 ) The following sentence is added to the end of the last
paragraph on page 73:
"Therefore, the ALJ ' s denial of the motions
filed by the Redwood Alliance was proper. "
14 ) The following is added at the end of the third full
paragraph on page 74 after the citation:
"Moreover, no showing was ever made that the
Attorney General ' s testimony was necessary or
would provide the parties with any relevant
information they could not otherwise, through
less burdensome means , receive. The Attorney
General was not present at any of the
settlement negotiations but had authorized a
Special Assistant Attorney General to
represent him throughout all settlement
negotiations . The Assistant Attorney General
did testify and was subject to cross-
examination. Thus , testimony by the Attorney
General himself was unnecessary and the ALJ
ruled correctly. "
15 ) The following is added as a footnote at the top of page
75 , following the citation:
"The final version of settlement rule 51 . 9
adopted in D. 88-09-060 is consistent with the
proposed rule cited above . "
16 ) The following sentence is added to the beginning of the
last paragraph on page 75 :
"All parties to this proceeding received due
process of the law. "
5
110 •
A. 84-06-014 , A. 85-08-025 L/pds *
17 ) The words "PG&E gave" are added to the first sentences of
the third and fourth full paragraphs on page 79 after the words
'reason" and before the words "for" .
18 ) The words "PG&E believes that " are added at the beginning
of the first sentence in the second full paragraph on page 80.
19 ) The words "PG&E realized that " are added at the beginning
of the first sentence of the third full paragraph on page 80 . The
word "it" is substituted for the word "PG&E " in the middle of
that sentence .
20 ) The words "PG&E testified that" are added to the
beginning of the first sentence in the fourth full paragraph on
page 80 .
21 ) The words "PG&E believes that " are added to the beginning
of the first sentence in the first full paragraph on page 81 .
22 ) The words "PG&E witnesses testified that " are added to the
beginning of the first sentence in the first full paragraph on
page 82 .
23 ) The words "PG&E believes that it is in its best interest"
are substituted for the words "It is in PG&E 's best interest " in
the beginning of the first sentence of the fourth full paragraph
on page 83 .
24 ) The words "Mr. Maneatis testified that- are added to the
beginning of the first sentence on the second full paragraph on
Page 84 .
25 ) The words "Mr. Long noted that" are added to the beginning
of the first sentence of the fourth full paragraph on page 85 .
26 ) The words "Mr . Ahern believes that " are added to the
beginning of the first sentence of the second full paragraph on
Page 89 .
27 ) The words "according to Mr. Ahern" are added in the first
sentence in the third full paragraph on page 89 after the word
'settlement " and before the word "is " .
28 ) The words " In the DRA' s opinion" are added to the
beginning of the first sentence of the fourth full paragraph on
page 90 .
6
• •
A. 84-06-014 , A. 85-08-025 L/pds *
29 ) The words "Pursuant to the settlement agreement " are added
at the beginning of the first sentence in the second full
paragraph on page 91 .
30 ) The words "Mr . Ahern offered" are added to the beginning
of the first sentence in the third full paragraph on page 91 , and
the word "to" is added in the first sentence after the word
"comparisons " .
31 ) The words As Mr . Ahern testified, " are added to the
beginning of the first sentence in the third full paragraph on
Page 92 .
32 ) The words "according to Mr . DeBerry, " are added to the
first sentence in the first full paragraph on page 94 after the
word "states, " and before the word "some" .
33 ) The words "Mr . DeBerry testified that" are added in the
first sentence in the second full paragraph on page 94 , after the
word "unusual , " and before the word "studies, .
34 ) The words "Mr . DeBerry noted that " are added at the
beginning of the first sentence in the third full paragraph on
page 94 .
35 ) The words "Mr . DeBerry testified that" are added to the
beginning of the first sentence in the second paragraph on page
95 .
36 ) The words "the Opponents contend that' are added after the
words "under the scheme, " in the fourth sentence in the second
paragraph on page 129 .
37 ) The first full paragraph on page 130 is modified to read :
"We have previously discussed the issue of
our authority to bind future commissions . As
we stated earlier, although we have
specifically held that we cannot bind the
actions of a future commission, we do intend
that all future commissions give all possible
consideration to the fact that this
settlement has been approved based upon the
expectations and reasonable reliance of the
parties and this Commission that all of its
terms will remain in effect for the full term
of the agreement .
7
• 411
A. 84-06-014 , A. 85-08-025 L/pds *
This position is fully consistent with the
provisions of the Public Utilities Code,
requiring the Commission to ensure that rates
charged by a public utility are just and
reasonable. Based upon a careful analysis of
the evidence of record, we find that the
rates resulting from the settlement agreement
are reasonable. We specifically recognize
the great benefit to the ratepayers of the
shift of operating risks from the ratepayers
to the company. Under traditional ratemaking
methodology, the ratepayers would have to pay
for Diablo Canyon regardless of its
production. "
38 ) The following language is substituted for the last
paragraph on page 135 and first full paragraph on page 136 :
"Paragraph 8D provides that the operation of
Diablo Canyon is exempt from reasonableness
reviews by the Commission. The opponents of
the settlement perceive this provision as an
abdication of the Commission's duty to fix
just and reasonable rates for PG&E. We
reject this contention. We see no present
conflict between this Agreement and our
statutory responsibility to ensure just and
reasonable rates .
In balancing the evidence of record, the
rates resulting from the prices set in the
Agreement over the duration of the Agreement,
appear to be just and reasonable .
Furthermore, we have already acknowledged
that we cannot bind future Commissions . The
Commission retains the authority to regulate
in furtherance of our constitutional and
statutory obligation .
Therefore, we conclude that in adopting and
approving the settlement, there is no
abdication of our duty to fix just and
reasonable rates . We do, however, expect
that future commissions will abide by all
terms of the settlement, and uphold the
decision as we would any traditional
ratebasing decision, unless in doing so, it
would compromise the responsibility of the
Commission under the Constitution and Public
Utilities Code. "
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43) The following language is added as the second full
paragraph on page 165:
"We recognize that the settlement entails a
long-term ( 28 year) treatment of the costs
associated with Diablo. However, so does
traditional ratebasing. Both approaches
create a payment stream through which the
utility recovers its investment in a power
plant over the projected useful life of the
plant . Under traditional ratebasing, we
approximate the reasonable value of the plant
to ratepayers by establishing the amount of
utility expenditure that was prudent. Under
the settlement , we approximate the reasonable
value of the plant to ratepayers by
establishing a performance criterion. The
settlement results in the shift of operating
risks from ratepayers to the utility. We
think both approaches are fully compatible
with sound ratemaking principles, and in the
context of Diablo, the risk-shifting aspect
of the settlement makes it the more desirable
approach from the standpoint of ratepayers .
We are convinced that the performance-based
approach created in the settlement is a just
and reasonable method for valuing Diablo. As
the United States Supreme Court has recently
affirmed, utility regulators are not limited
to a single ratemaking method, but are free
to adopt other methods as appropriate to
particular circumstances . (Duquesne Light
Co. , supra, 102 L.Ed . 2d at 662-663 . ) "
44 ) The first full paragraph on page 165 is modified to state:
"The DRA and the AG., while admitting that
good performance by PG&E is possible, expect
the equivalent disallowance to be greater
than $2 billion. We find that the weight of
the evidence supports the assumption of an
approximate $2 billion equivalent
disallowance. We also find that the
settlement is in the public interest because
it shifts the risk of operation from the
ratepayers to PG&E . This shift in risk is
the most significant benefit gained by the
ratepayers . "
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39 ) The following language is substituted for the first full
paragraph on page 152 :
"We cannot bind future Commissions; however,
we do expect that future Commissions will
abide by the terms of the settlement, and
uphold the decision as they would any
decision, including those based on
traditional ratebasing, as long as such
action is in compliance with applicable law. "
40 ) The word "would" in the last partial sentence on page 156
is modified to read "could" .
41 ) The third paragraph on page 161 is modified to state:
"A major factor for the proponents of the
settlement in seeking to resolve this
proceeding through a settlement is the
avoidance of the risk of litigation. For the
reasons discussed at length above, we believe
both PG&E and the DRA faced a risk in
bringing their cases to trial . As a means
of reasonably balancing the risk between
ratepayers and shareholders , we reaffirm the
reasonableness of the settlement . "
42 ) The last paragraph beginning on page 164 and continuing to
page 165 is deleted and the following language substituted:
"We are of the opinion that PG&E does not
believe the equivalent disallowance is $2
billion. PG&E has agreed to the arithmetic,
not the assumptions . If PG&E thought that it
was giving up the equivalent of $2 billion in
rate base, prudence would dictate that it
negotiate a $2 billion rate base reduction
and keep the plant in rate base, let the
ratepayer retain the risks of downtime,
inflation, cost overruns , capital additions ,
NRC regulations, etc. Its acceptance of the
settlement signifies to us that it believes
it can operate the plant at more than a 73%
capacity factor, at reasonable costs for the
term of the agreement . And it believes it
can operate the plant safely. "
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45 ) The following language is added to the end of the last
sentence in the first partial paragraph on page 166:
-but it is this risk of significant outages
that reduces the capacity factor and makes
the assumption of a 58% capacity factor
reasonable. "
46 ) The first sentence in the second full paragraph on page
166 is modified to state:
"A review of the testimony highlights the
dispute surrounding the adoption of a 58%
capacity factor . "
47 ) The first full paragraph on page 168 is modified to read:
'The 58% capacity factor estimate is based on
averages of nuclear plants, some that operate
much better than average and some that
operate much worse . The opponents to the
settlement contend that none have operated
for 30 years, at most 15 years for a
comparably sized plant, that none of the
analysts made a specific analysis of Diablo
Canyon taking into account that it has been
the most closely inspected plant ever
constructed, and that none considered the
views of the managers of the PG&E as to how
well the plant is expected to operate. We
have not ignored those factors . In fact,
this is not the first time we have relied on
national historial averages . (See e.g. ,
D. 86-07-004 ; where we directed the utilities
to use national averages when a particular
plant has a short operating history for
purposes of Standard Offer *4 . ) In addition,
because the weight of the evidence supports a
58% capacity factor and because of the
importance we attach to shifting the
operating risks from the ratepayers to the
company and the high risk of unscheduled
outages, we accept the 58% capacity factor of
the DRA and the AG as a reasonable basis to
compute the equivalent disallowance.
Despite the evidence to the contrary, we find
that reliance on the nation-wide industry
average for comparable prices is reasonable .
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Such an average is more persuasive evidence
than the current high capacity factor of the
plant, because it takes into account the high
risk of significant unscheduled outages . We
will, therefore, adopt the testimony of the
expert witnesses supporting a 58% capacity
factor. "
48 ) The first full paragraph on page 174 is deleted.
49 ) The third sentence of the last paragraph on page 182 is
modified to state:
"Our discussion of the two alleged
construction errors was not to determine
whether they had or had not occurred, but to
determine if there was any merit in the
contention that they had occurred and to
evaluate the potential risks for both parties
if they had occurred . "
50 ) The following is added after the last sentence in the
first partial paragraph on page 183:
"This supports the reasonableness of the
settlement in view of the substantial
litigation risks to both sides and
corresponding risk to the ratepayers, if the
case were tried on its merits . Litigation
risk directly translates into financial risk
to be borne between ratepayers and
shareholders . "
51 ) The first paragraph under Findings of Fact on page 184 is
modified to state:
"In our findings regarding the adequacy of
the settlement we have made specific findings
on all material issues . We do not believe it
necessary to make separate findings on every
paragraph in the Settlement Agreement and the
Implementing Agreement . "
52 ) The word "would " in the first full sentence on page 185 in
Findings of Fact No. 4 is modified to read "could" .
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53 ) The word "would' in the third sentence in Finding of Fact
No . 5 on page 185 is modified to read "could" .
54 ) Finding of Fact No . 5A is added to state:
"There are substantial litigation risks to
both the DRA and PG&E, and corresponding
risks to the ratepayers, in going to hearings
on these issues and it is reasonable to
approve a settlement which appropriately
balances this risk. "
IT IS FURTHER ORDERED:
1 . Rehearing of Decision No . 88-12-083, as modified
herein, is denied.
2 . The Executive Director shall cause a corrected
decision to be published in this proceeding, incorporating the
changes ordered above.
This order is effective today.
Dated March 22 , 1989 , at San Francisco, California .
G. MITCHELL WILK
President
FREDERICK R. DUDA
STANLEY W. HULETT
JOHN B. OHANIAN
Commissioners
Commissioner Patricia Eckert ,
present but not participating
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