Rebuttal Testimony of Southern California Edison for Phase 1 of the 2015 Nuclear Decommissioning Costs Triennial Proceeding PUBLIC VERSION

Transcription

1 Application No.: Exhibit No.: Witnesses: A SCE- R. Bledsoe S. Lelewer R. Worden (U -E) Rebuttal Testimony of Southern California Edison for Phase 1 of the 01 Nuclear Decommissioning Costs Triennial Proceeding PUBLIC VERSION Before the Public Utilities Commission of the State of California Rosemead, California August, 01

2 SCE-: Rebuttal Testimony of Southern California Edison for Phase 1 of the 01 Nuclear Decommissioning Costs Triennial Proceeding Table Of Contents Section Page Witness I. INTRODUCTION...1 R. Worden II. TURN'S RECOMMENDATION TO DISALLOW COSTS NOT INCLUDED IN A DCE INAPPROPRIATELY RELIES ON AN INCORRECT AND ARBITRARY REASONABLENESS REVIEW STANDARD... A. Costs Are Not Unreasonable Solely Because They Are Absent From A DCE The Reasonable Manager Standard Is The Correct Reasonableness Standard.... The Commission Should Consider Other Factors Besides The Absence Of Costs In The Approved DCEs.... The Application Of The Reasonable Manager Standard Supports A Finding Of Reasonableness Of SONGS 1 Decommissioning Costs... B. The Commission Should Disregard The Perceived Deficiencies Of The SONGS 1 DCE Raised By TURN... C. TURN s Alternative Recommendations For Either A 0% or 0% Disallowance Of Certain Costs Are Arbitrary And Overreaching... III. REBUTTAL TO TURN'S SPECIFIC RECOMMENDATIONS... B.Bledsoe A SONGS 1 Decommissioning Costs TURN Mischaracterizes The Record Concerning SCE s Identification Of The Costs Being Reviewed.... SCE Has Fulfilled The Requirements Of Decision (D.) For The Commission To Provide Final Approval Of SONGS 1 Decommissioning Costs.... NRC Fees... -i-

3 SCE: Rebuttal Testimony of Southern California Edison for Phase 1 of the 01 Nuclear Decommissioning Costs Triennial Proceeding Table Of Contents (Continued) Section Page Witness. Waste Management.... Miscellaneous Decommissioning Activities... a) Engineering And Construction...1 b) Nuclear Liability And Property Insurance...1 c) Workers Compensation Insurance...1. Utility Trench...1 B SONGS 1 Decommissioning Costs NEI Ground Water Protection Initiative...1. NRC Fees SONGS 1 DCE Preparation...1 C. Nuclear Fuel Contact Cancellation Costs...1 S. Lelewer 1. USEC a) Nuclear Fuel Contract Termination Costs For 01 Are Not Subject To Disallowance...1 R. Worden b) SCE s Nuclear Fuel Contracting Strategy Is Outside The Scope Of This Proceeding...1 c) TURN Fundamentally Misunderstands SCE s Contracting Strategy...1 S. Lelewer. USEC Legal Fees...1 D. Review Of The SONGS 1 RPV Segmentation Project... B. Bledsoe IV. CONCLUSION... R. Worden Appendix A Witness Qualifications... -ii-

4 SCE: Rebuttal Testimony of Southern California Edison for Phase 1 of the 01 Nuclear Decommissioning Costs Triennial Proceeding Table Of Contents (Continued) Section Page Witness Appendix B TURN Responses to SCE Data Request A SCE TURN-01 Dated August, Appendix C Report on Nuclear Decommissioning, Dated February, iii-

5 SCE: Rebuttal Testimony of Southern California Edison for Phase 1 of the 01 Nuclear Decommissioning Costs Triennial Proceeding List Of Tables Table Page Table III-1 01 NDCTP - SONGS Unit 1 Costs Reasonableness Review Summary of TURN s Recommended Disallowances SONGS 1 (0 Dollars in Millions, 0% Level)... Table III- 01 NDCTP - SONGS Unit 1 Costs Reasonableness Review Summary of TURN s Recommended Disallowances SONGS 1 (0 Dollars in Millions, 0% Level)...1 Table III- 01 NDCTP - SONGS Unit 1 Costs Reasonableness Review Summary of TURN s Recommended Disallowances SONGS & Nuclear Fuel Contract Cancellation (Dollars in Millions, 0% Level)...1 -iv-

6 I. INTRODUCTION This rebuttal testimony responds to testimony submitted by the Office of Ratepayer Advocates (ORA) and The Utility Reform Network (TURN) regarding SONGS 1 decommissioning costs and SONGS & fuel contract cancellation costs under review in Phase 1 of this proceeding. As an overarching principle, there should be no dispute that the Commission should approve costs related to valid decommissioning activities when there is no objection to the magnitude of the costs and there are sufficient funds in the nuclear decommissioning trusts to cover the costs. The activities and costs submitted for review in this proceeding include, among other things, NRC fees, ground water protection activities, and waste management activities. Tellingly, no party asserts these activities were unnecessary, nor the magnitude of the costs unreasonable. There is no defensible basis upon which to make such an assertion. Indeed, it would have been unreasonable and imprudent for SCE to not pay required fees or complete SONGS 1 decommissioning work required to be performed. ORA recommends no disallowances, consistent with this overarching principle. TURN, however, departs substantially from this principle and recommends disallowances of costs for NRC fees, ground water protection and waste management because SCE did not include the costs in the approved SONGS 1 decommissioning cost estimates (DCEs). The Commission should reject TURN s recommended disallowances because they are contrary to Commission precedent, and arbitrary and overreaching. TURN also asserts that three other activities a utility trench project, the preparation of the 01 SONGS 1 DCE, and legal services supporting fuel contract cancellations were imprudent or costs too high. The Commission should reject these arguments as well, because the activities were necessary for decommissioning and the costs reasonable. Section II responds to TURN s general argument that costs should be disallowed because SCE inadvertently omitted them in the approved SONGS 1 DCEs. Section III responds to TURN s specific recommendations. 1

7 II. TURN'S RECOMMENDATION TO DISALLOW COSTS NOT INCLUDED IN A DCE INAPPROPRIATELY RELIES ON AN INCORRECT AND ARBITRARY REASONABLENESS REVIEW STANDARD A. Costs Are Not Unreasonable Solely Because They Are Absent From A DCE TURN recommends a 0% disallowance of certain and SONGS 1 decommissioning costs (NRC fees, ground water protection costs, and waste management costs) because SCE inadvertently omitted the costs in the SONGS 1 DCEs reviewed and approved by the Commission for these two periods. According to TURN, SCE either knew or should have known about these costs, and SCE s failure to include known scope and costs in a DCE is a sufficient basis for the Commission to impose a disallowance. The Commission should reject TURN s recommendation as contrary to Commission precedent, and as arbitrary and overreaching. 1. The Reasonable Manager Standard Is The Correct Reasonableness Standard TURN s recommendation relies on an erroneous, single-factor review standard that the Commission should impose a disallowance when SCE did not correctly forecast costs for a known activity in a DCE reviewed and approved by the Commission. TURN asserts that when determining the reasonableness of costs absent from an approved DCE the most important question is whether the activity could reasonably have been known when the DCE was prepared and that SCE should have forecasted costs associated with ongoing and recurring activities. 1 This is not an appropriate basis for determining the reasonableness of the costs absent from the DCEs. Tellingly, TURN does not cite any Commission decision supporting its recommendation. The Commission has not adopted TURN s review standard, nor should it. Instead, the Commission has consistently applied, and should continue to apply the reasonable manager standard when reviewing a utility s activities and associated costs. Under this well- 1 Testimony of Bruce Lacy, p..

8 established standard, the Commission reviews the reasonableness of a utility s actions based upon what the utility knew or should have known at the time the utility took the actions, not based on what the utility inadvertently omitted from a cost estimate or the results of the utility s actions based on perfect hindsight. The Commission s review standard also expressly provides that a utility s actions may be found to be reasonable and prudent if the utility shows that its decision making process [in taking those actions] was sound. It is therefore appropriate for the Commission to determine that SONGS 1 decommissioning activities and costs were reasonable because SCE has demonstrated the reasonableness of its actions based on what it knew when it took those actions, regardless of whether the activities and costs were in an approved DCE.. The Commission Should Consider Other Factors Besides The Absence Of Costs In The Approved DCEs TURN states that the absence of an item in the approved DCE is not the sole criteria for considering [a] disallowance. But TURN applies this criterion as though it is the sole indicator of reasonableness, completely ignoring factors demonstrating the reasonableness of the decommissioning activities and costs it recommends be disallowed. The Commission should instead consider such factors as whether the activities were completed at reasonable costs, were necessary for safety and compliance, and/or followed industry practice. Costs related to regulatory compliance, such as NRC fees, should be deemed reasonable per se, because SCE had no discretion to avoid these costs. It would have been imprudent and unreasonable (and unlawful) for SCE to not pay required NRC fees. Similarly, costs related to SCE s completion of additional SONGS Phase 1 decommissioning work also should be deemed reasonable. It would have been imprudent and unreasonable for SCE to not complete SONGS 1 decommissioning work that remained to be performed. Activities related to radiological In re San Diego Gas & Electric Company, D.0-0-0; In the Matter of the Application of Golden State Water Company, D D.0-0-0, pp. - (emphasis added). Testimony of Bruce Lacy, p..

9 decontamination, waste management, and ground water protection were core decommissioning activities that SCE had to complete. Besides these factors, it is also important to consider overall project costs in comparison to the DCE total for the applicable review periods. Evaluating the reasonableness of recorded decommissioning expenses for a single-dce-line-item activity without comparing total expenses for all activities relative to the total DCE, ignores the nature of estimates and project expenses. There will always be variances between estimated and recorded costs for each discrete line-item activity within a project. The reasonableness of an activity and associated expenses should be judged not solely on such an activity-by-activity review, but should include consideration of the overall project expenses compared to the total DCE for the review periods. Further, there is no dispute that the costs at issue here are valid decommissioning costs eligible to be paid from the utilities decommissioning trusts, and that the trusts are sufficiently funded to cover the costs. The Commission should approve, as reasonable, the costs and SCE s use of trust funds for their intended purpose. Finally, no party, including TURN, challenges the magnitude of the costs for any of the three particular activities (NRC fees, ground water protection, and waste management) that were absent from the approved SONGS 1 DCEs. In fact, TURN acknowledges that the basis for its disallowance recommendation for the activities is not that the cost [for these activities] is in itself unreasonable. Consequently, the Commission should determine the decommissioning activities and costs to be reasonable, notwithstanding that the costs were absent from the approved SONGS 1 DCEs.. The Application Of The Reasonable Manager Standard Supports A Finding Of Reasonableness Of SONGS 1 Decommissioning Costs In sum, contrary to TURN s assertion, the fact that SCE did not forecast certain costs in the approved SONGS 1 DCEs should not serve as a basis for disallowing the costs. Instead, the review Testimony of Bruce Lacy, p. ; Appendix B, TURN s Data Request Responses to Question Nos. - (agreeing that the costs should be allowed if SCE had forecasted the costs in the 00 and 01 DCEs).

10 standard for determining the reasonableness of SCE s activities and the associated costs should be based on what SCE knew at the time it took the action or made the decision. Here, what was evident at the time SCE paid NRC fees and completed additional SONGS 1 decommissioning work, is that the fees were required and the work needed to be done. SCE provides additional information demonstrating the reasonableness of these activities and costs in Section III below. B. The Commission Should Disregard The Perceived Deficiencies Of The SONGS 1 DCE Raised By TURN To support its disallowance recommendations, TURN broadly criticizes the 00 SONGS 1 DCE, asserting that the DCE created an incorrect impression that major SONGS 1 decontamination and demolition work was completed in 00 and no major decommissioning activities remained beyond maintaining and monitoring SONGS 1 spent fuel stored at the site and completing the SONGS 1 reactor pressure vessel (RPV) segmentation. TURN asserts these deficiencies (which SCE disputes) support its broader argument that the Commission should establish an effective reasonableness review process for SONGS & decommissioning. The Commission should disregard these arguments. First, TURN greatly exaggerates the perceived deficiencies of the 00 SONGS 1 DCE. TURN claims SCE completed a number of activities (including waste management, bluff stabilization, yard sump, utility trench, seawall restoration, and Southwest Quadrant work) that go beyond what might be assumed to be included in Demobilization and Document Closeout. TURN s bases this position on the additional detail SCE provided in this submittal. The scope and costs of the activities are small (less than 0.001% of the decommissioning costs incurred to date) relative to the SONGS 1 decommissioning project as a whole, and are precisely the type of smaller-scope activities completed near the end of a decommissioning phase. The additional detail provided by SCE in Exhibit SCE-0 is not a valid basis for concluding that SCE s DCE is deficient so as to warrant imposing substantial Testimony of Bruce Lacy, p..

11 disallowances. Moreover, TURN does not assert that any of these activities were unnecessary. The activities were all valid, necessary SONGS 1 decommissioning activities. Second, the reasonableness of the approved 00 and 01 SONGS 1 DCEs is not an issue in this proceeding. The Commission approved those DCEs as reasonable in prior Nuclear Decommissioning Costs Triennial Proceedings (NDCTPs). TURN s broad criticisms amount to a 0/0 hindsight attack on final Commission decisions. Perfection in preparing a DCE is not the standard for reviewing the actual costs. The Commission should determine the reasonableness of costs based on the reasonable manager standard. Third, issues regarding the Commission s reasonableness review process for SONGS & decommissioning are beyond the scope of the issues being considered in Phase 1 of this proceeding, which is considering only SONGS 1 decommissioning costs incurred during and 01-01, and SONGS & fuel contract cancellation costs. The reasonableness review process for SONGS & decommissioning is a Phase issue. C. TURN s Alternative Recommendations For Either A 0% or 0% Disallowance Of Certain Costs Are Arbitrary And Overreaching TURN initially recommends a 0% disallowance of NRC fees, waste management costs, and the portion of ground water protection costs, without explanation why an unprecedented 0% disallowance is reasonable, even if the Commission accepted TURN s argument. Recognizing that a 0% disallowance is too severe under any review standard, TURN proposes a 0% disallowance as an alternative, again without explanation why a 0% disallowance is reasonable. TURN offers no explanation, because no explanation would be sufficient. The Commission should reject TURN s See Appendix B, TURN s Data Request Responses to Question Nos. 1-, in which TURN acknowledges that the Commission should consider whether an activity is necessary to fulfill a regulatory requirement, and agrees it was appropriate for SCE to complete waste burial in 00, pay NRC fees, perform activities related to the ground water protection initiative, and complete various other miscellaneous activities. Testimony of Bruce Lacy, pp. -,. Testimony of Bruce Lacy, pp. -,.

12 disallowance recommendations as arbitrary and overreaching. It is axiomatic that the amount of a disallowance must be supported by the record. There is no rational basis or record support for imposing a 0% or 0% or any disallowance, particularly when the costs recommended for disallowance were required or necessary to complete remaining decommissioning work, which TURN does not dispute. E.g., In Re Pac. Gas & Elec. Co., CPUC d (Nov., 1).

13 III. REBUTTAL TO TURN'S SPECIFIC RECOMMENDATIONS A SONGS 1 Decommissioning Costs Table III-1 summarizes TURN s recommended disallowances for SONGS 1 decommissioning costs. SCE responds to each of disallowance recommendations below. Table III-1 01 NDCTP - SONGS Unit 1 Costs Reasonableness Review Summary of TURN s Recommended Disallowances SONGS 1 (0 Dollars in Millions, 0% Level) Turn's Recommended Line Category 00 DCE Recorded Disallowance 1 Waste Management $ - $. $. NRC Fees $ - $ 0. $ 0. Miscellaneous Decommissioning Activities $ - $ 1. $ 1. Utility Trench $ 0.0 $ 1. $ 1.1 Mid-Bluff Stabilization $ 0. $ 0. $ - Yard Sump $ 0. $ 0. $ - Seawall Restoration $ 0.1 $ 0.1 $ - Southwest Quadrant $ 0.1 $ 0.1 $ - Other Decommissioning Activities $ 1. $ 1. $ - MARSSIM $ 1. $ 0. $ - Demobilization $ 1.0 $ 0. $ - 1 Overheads & Allocations (00) $.0 $. $ - 1 Long Term Maintenance $ 0. $ 0. $ - 1 NEI Groundwater Protection Initiative $ - $ 0. $ - 1 Overheads & Allocations (0-01) $ 0. $ (0.) $ - 1 Total $. $ 1.1 $.0 1. TURN Mischaracterizes The Record Concerning SCE s Identification Of The Costs Being Reviewed TURN opens its testimony by claiming that the Commission saved customers $1 million

14 as the result of its 01 NDCTP decision, which found that SCE had not demonstrated the reasonableness of SONGS 1 decommissioning costs. TURN s recollection of the record is incorrect. As shown in Exhibit SCE-0, SCE served a late-filed exhibit in the 01 NDCTP prior to the Commission s final decision identifying $1. million (0% share, 0$) for reasonableness review. 1 This is the amount that the Commission cited in D (01 NDCTP Phase decision) when it ruled that SCE had not met the burden of proof to determine that the costs were reasonable. SCE deposited its share of the $1. million in its SONGS 1 non-qualified nuclear decommissioning trust fund as ordered by the Commission.. SCE Has Fulfilled The Requirements Of Decision (D.) For The Commission To Provide Final Approval Of SONGS 1 Decommissioning Costs In the 01 Nuclear Decommissioning Costs Triennial Proceeding (NDCTP), the Commission declined to allow SONGS 1 decommissioning costs because SCE had not yet provided sufficient, detailed information to support final approval. Decision (D.) confirmed that the Commission intended to allow SCE the opportunity to submit additional information in support of these costs. There is no dispute that SCE has now submitted sufficient, detailed information demonstrating the reasonableness of the costs, in compliance with D Indeed, no party challenges the sufficiency of the information SCE provided, or asserts that SCE has not met its burden of proof. Therefore, SCE has fulfilled the requirements established by the Commission for providing final approval of these costs. Underscoring the unreasonableness of TURN s disallowance recommendations, if the Commission were to accept them, the Commission would be imposing a disallowance greater than the overrun for the period. An overrun by itself is not a basis for disallowing costs. The Commission should consider whether the costs are reasonable under the reasonable manager standard. Testimony of Bruce Lacy, pp Exhibit SCE-0, Appendix 1, pp. 1-.

15 Here, the activities and costs that attributed to the overrun waste management, NRC fees, miscellaneous decommissioning activities, utility trench, and NEI ground water protection activities all are valid decommissioning activities necessary for SONGS 1 decommissioning. Under the reasonable manager standard, the Commission should therefore approve these costs. SCE addresses the specific costs in the sections below.. NRC Fees TURN recommends a 0% disallowance for NRC fees $0. million (0% share, 0$) based solely on the fact that SCE did not forecast the costs in the 00 SONGS 1 DCE. 1 The Commission should reject this recommendation for the reasons discussed above in Section II, as the recommendation relies on an erroneous review standard that known costs absent from a DCE should be disallowed. The NRC fees are an unavoidable regulatory requirement. 1 It would have been imprudent and unreasonable (and unlawful) for SCE to not pay fees merely because the DCE did not include them. The costs were reasonably incurred under the reasonable manager standard, and no party, including TURN, challenges the payment and magnitude of the fees, 1 which are set by NRC regulation. TURN also fails to provide a rational basis for imposing an unprecedented 0% disallowance, or 0% disallowance as an alternative for an unavoidable and required decommissioning cost. Accordingly, the Commission should reject TURN s recommended disallowance as contrary to Commission precedent, and arbitrary and overreaching.. Waste Management TURN also recommends a 0% disallowance for waste management activities $. million (0% share, 0$) based solely on the fact that the costs for this activity were not included in the 00 SONGS 1 DCE. 1 The Commission should reject TURN s disallowance 1 Testimony of Bruce Lacy, p.. 1 C.F.R..1 and C.F.R..1 1 Appendix B, TURN s Data Request Responses to Question No. (agreeing that the costs should be allowed if SCE had forecasted the costs in the 00 DCE). 1 Testimony of Bruce Lacy, p..

16 recommendation for the reasons discussed above in Section II, as the recommendation relies on an erroneous review standard. As explained in Exhibit SCE-0, this work was necessary and reasonable to leave the SONGS 1 site in a safe condition suitable for future activities. At the end of 00, there was still low level radioactive waste (LLRW) and some hazardous (non-radiological) waste on the SONGS 1 site that needed to be disposed of in 00. As further discussed in SCE-0, this waste was appropriately handled, packaged, and sent for burial to a licensed disposal facility. It would have been imprudent and unreasonable for SCE to not complete this core decommissioning activity. The costs were reasonably incurred under the reasonable manager standard, and no party challenges the magnitude of the costs. Indeed, TURN acknowledged in its testimony and data request responses that it does not dispute that the activity and magnitude of the costs are reasonable. 1. Miscellaneous Decommissioning Activities TURN also recommends a 0% disallowance for miscellaneous decommissioning activities $1. million (0% share, 0$) based solely on the fact that the costs for this activity were not included in the 00 SONGS 1 DCE. 1 The Commission should reject TURN s disallowance recommendation for the reasons discussed above in Section II, as the recommendation relies on an erroneous review standard. As explained in Exhibit SCE-0, these costs were necessary and reasonable to support post-phase 1 closeout activities required to leave the SONGS 1 site in a safe condition suitable for future activities. This included: (1) $1. million for engineering and construction support to complete the remaining activities and support the demobilization efforts; () $0.1 million for SONGS 1 nuclear liability and property insurance; and () $0.0 million for workers compensation insurance. SCE provides additional information regarding these activities and associated costs in the subsections below. 1 Testimony of Bruce Lacy, p. ; Appendix B, TURN s Data Request Responses to Question No. (agreeing that the costs should be allowed if SCE had forecasted the costs in the 00 DCE). 1 Testimony of Bruce Lacy, p..

17 a) Engineering And Construction SCE s engineering and construction workforce provided technical expertise to address SONGS 1 decommissioning regulatory and licensing issues so SONGS would remain in compliance with federal and state regulatory requirements. The workforce also implemented SCE s quality assurance and control programs for SONGS 1 decommissioning to maintain SONGS in a safe condition. In 00, SCE s engineering and construction provided support to complete the remaining SONGS 1 Post-Phase 1 Close-out Activities, such as the bluff stabilization effort and the utility trench project, as well as the demobilization efforts to place the SONGS 1 site in a condition suitable for future uses. The engineering and construction staff is essential in maintaining the SONGS site in a safe and suitable condition and in compliance with the federal and state regulatory requirements. The costs for the engineering and construction staff are reasonable, and no party challenges the magnitude. b) Nuclear Liability And Property Insurance NRC regulations require SCE to maintain minimum levels of nuclear liability and property insurance for SONGS 1, as well as SONGS &. Under C.F.R. Financial Protection Requirements and Indemnity Agreements, each C.F.R. 0 licensee must maintain nuclear liability coverage in the form of primary and secondary financial protection. The coverage must be in place from the time un-irradiated fuel is brought onto the site until all the radioactive material has been removed from the site. The insurance costs are required by the NRC, and as such, are reasonable. It would have been imprudent and unreasonable (and unlawful) for SCE to not maintain the nuclear liability insurance. It would have been equally imprudent and unreasonable for SCE to not maintain property insurance. c) Workers Compensation Insurance California employers are required by law to provide workers compensation coverage for their employees. SCE maintains nuclear workers compensation coverage for SCE s workers at SONGS. SCE s workers compensation coverage protects customers from unexpected costs due to losses. The workers compensation insurance costs are required, and are reasonable. As with the nuclear liability insurance, it would have been imprudent and unreasonable (and unlawful) for SCE to not maintain provide coverage. 1

18 Utility Trench The 00 SONGS 1 DCE included $0.0 million (0% share, 0$) for the Utility Trench project, and SCE incurred $1. million, resulting in an overrun of $1.1 million. TURN recommends a $1.1 million disallowance for this overrun on the ground that SCE s actions were imprudent and costs too high, because SCE did not correct a condition that allowed contaminated rainwater to enter the utility trench. 1 TURN also asserts that SCE did not accurately estimate the cost to clean up the utility trench following rains. 0 TURN s objection is nonsensical because it would require SCE to be omniscient on weather conditions and that heavy rains would have overcome SCE s protective measures (see below) and required SCE to re-excavate and decontaminate portions of the trench. The Commission should reject TURN s proposed disallowance. Exhibit SCE-0 explains the need for and the importance of the Utility Trench project, which involved relocating water, telecommunications, and electric utilities to support the SONGS site. 1 The testimony also explains that SCE took steps to prepare for the possibility of rain storms and... attempted to mitigate the impacts of adverse weather through the use of sand bags, dewatering pumps, and other rain preparations.... However, due to unexpected, heavy rains that caused contaminated rain water to wash into the trench, certain re-work was required and the project rolled over into 00. SCE proceeded in a reasonable and prudent manner to resolve the problems created by the rains and complete the Utility Trench project. Disallowance of the cost for the Utility Trench project based solely on the costs being underestimated in the DCE is not reasonable, as it is contrary to the reasonable manager standard. The actions SCE took were reasonable and prudent at the time SCE was implementing the project, whereas TURN s disallowance recommendation is based on 0/0 hindsight and ignores the prudent actions SCE 1 Testimony of Bruce Lacy, pp Testimony of Bruce Lacy, pp Exhibit SCE-0, pp. -. Exhibit SCE-0, p.. 1

19 took to mitigate the impact of heavy rains. TURN s recommendation also is inconsistent with the observations made in the Independent Panel Report sponsored by TURN s witness, Mr. Bruce Lacy, in the 00 NDCTP. The report acknowledges that unplanned events such as weather delays and recontamination of work areas may reasonably cause cost increases. Therefore, the Commission should reject TURN s proposed disallowance. B SONGS 1 Decommissioning Costs Table III- summarizes TURN s recommended disallowances for SONGS 1 decommissioning costs. SCE responds to each of the disallowance recommendations below. Table III- 01 NDCTP - SONGS Unit 1 Costs Reasonableness Review Summary of TURN s Recommended Disallowances SONGS 1 (0 Dollars in Millions, 0% Level) Turn's Recommended Line Category 01 DCE Recorded Disallowance 1 NEI Ground Water Protection Initiative $ - $ 0.0 $ 0.0 NRC Fees $ - $ 0.0 $ SONGS 1 DCE Preparation $ - $ 0.0 $ 0.0 Offshore Conduit Disposition $ 1.00 $.0 $ - Spent Fuel Security and Maintenance $ 0.0 $ 0.0 $ - Total $ 1.0 $.0 $ NEI Ground Water Protection Initiative TURN also recommends a 0% disallowance for ground water protection activities $0. million (0% share, 0$) based solely on the fact that the costs for this activity were not included in the 01 SONGS 1 DCE. The Commission should reject TURN s disallowance recommendation for the reasons discussed above in Section II, as the recommendation relies on an See Appendix C, excerpts from Independent Panel Report, prepared by ABZ, TLG and Lacy Consulting Group for Application (A.) Testimony of Bruce Lacy, pp. -. 1

20 erroneous review standard. The SONGS 1 ground water protection initiative was put in place in accordance with NEI 0-0, Industry Ground Water Protection Initiative Final Guidance Document. The industrydeveloped document applies to all nuclear power plants, including those in decommissioning, and was developed to satisfy NRC requirements. As stated in Exhibit SCE-0, The NRC relies on a nuclear power plant s effective implementation of the NEI ground water protection initiative as the means to satisfy C.F.R. 0.(c). The expenses SCE incurred could not be avoided, which TURN acknowledges in its testimony. In fact, TURN accepted the groundwater protection expenses not included in the 00 SONGS 1 DCE. The costs for the ground water initiative are necessary to satisfy NRC requirements and SCE s efforts to monitor ground water for radioactive contamination. It would have been imprudent for SCE to ignore the guidance and the potential for ground water contamination.. NRC Fees TURN recommends a 0% disallowance for NRC fees $0. million (0% share, 0$) based solely on the fact that SCE did not forecast the costs in the 01 SONGS 1 DCE. The Commission should reject this argument for the reasons discussed above in Section II, as the recommendation relies on an erroneous review standard that known costs absent from a DCE should be disallowed. The NRC fees are an unavoidable regulatory requirement. It would have been imprudent and unreasonable for SCE to not pay fees merely because the DCE did not include them. The costs were reasonably incurred under the reasonable manager standard, and no party, including TURN, challenges the magnitude of the fees, which are set by NRC regulation. TURN also fails to provide a rational basis for imposing an unprecedented 0% disallowance, or 0% disallowance as an alternative for an unavoidable and required decommissioning cost. Accordingly, the Commission should reject TURN s Exhibit SCE-0, p.. Testimony of Bruce Lacy, p.. Testimony of Bruce Lacy, p.. Appendix B, TURN s Data Request Responses to Question No. (agreeing that the costs should be allowed if SCE had forecasted the costs in the 01 DCE). 1

21 disallowance recommendation as contrary to Commission precedent, and arbitrary and overreaching.. 01 SONGS 1 DCE Preparation TURN suggests the costs recorded for preparation of the 01 SONGS 1 DCE are not commensurate with the scope and amount of the estimate, and recommends a $0. million (0% share, 0$) disallowance, which is % of the $0. million SCE incurred to prepare it. TURN is incorrect, and its % disallowance recommendation is arbitrary. The costs for EnergySolution s preparation of the 01 SONGS 1 DCE ($0. million) are reasonable for the estimating effort required and executed. TURN mischaracterizes SCE s internal costs for completing prior SONGS 1 DCEs, and uses that mischaracterization as an additional basis for its disallowance recommendation. TURN claims that SCE declined to respond when asked to provide information about the cost of the prior 01 estimate performed by SCE s estimating staff. 0 TURN is wrong. SCE provided information responsive to the question, and stated that the activity was not tracked as a separate activity and that the cost was therefore not available. The cost to prepare the DCE was charged to one account along with the cost to prepare a variety of other estimates prepared by the estimating organization. TURN also suggests that SCE did not track the costs because they were too small. 1 Not so. SCE s estimators and management did not track the costs because it would have been burdensome to do so for each estimate (SCE would have had to track estimating time for dozens of projects), not because the cost was too small to be worth tracking. The standard practice of the estimating organization was to charge all of their costs to one cost account. The $0. million incurred to engage EnergySolutions was also prudent to improve the estimating template for the 01 SONGS 1 DCE. Historically, since 00, SCE estimators prepared the SONGS 1 DCEs, including the 00 and 01 SONGS 1 DCEs. However, after the SONGS & permanent shutdown, the SONGS estimating organization was disbanded. Therefore, no SCE Testimony of Bruce Lacy, p.. 0 Testimony of Bruce Lacy, p.. 1 Testimony of Bruce Lacy, p.. 1

22 1 1 1 estimators were available to update the previously used estimating spreadsheets. In addition, as previously noted by TURN, the 00 and 01 DCEs inadvertently omitted several decommissioning costs. Thus, a simple update of the spreadsheets was not feasible/prudent for two reasons: (1) estimating staff was not available and () the prior DCE estimating spreadsheets did not provide a firm basis for forecasting future SONGS 1 decommissioning costs. The SONGS 1 DCE needed to be redone from scratch to address these issues. Using EnergySolutions to develop the 01 SONGS 1 DCE also facilitated alignment and ensured a consistent format with the 01 SONGS & DCE. Therefore, the Commission should reject TURN s disallowance recommendation and allow the full amount of the $0. million SCE incurred to complete the 01 SONGS 1 DCE. There is no basis for an arbitrary % disallowance. C. Nuclear Fuel Contact Cancellation Costs Table III- summarizes TURN s recommended disallowances for SONGS & nuclear fuel contract cancellation costs. SCE responds to each of these specific recommendations below. The reasons for identifying certain portions of testimony in Section III.C as confidential (shaded gray) are provided in the Declaration of Steve Lelewer attached to Exhibit SCE-01. 1

23 Table III- 01 NDCTP Contract Cancellation Costs Reasonableness Review Summary of TURN s Recommended Disallowances SONGS & Nuclear Fuel Contract Cancellation (Dollars in Millions, 0% Level) Line Category 01 DCE 01$ Recorded 01 $ Recorded Nominal Turn's Recommended Disallowance 1 USEC - 01 USEC - 01 Legal Fees Westinghouse Uranium One Rio Tinto Supply Chain Personnel Support $ 0.0 $ 0.0 $ 0.0 $ - Total USEC 01 TURN argues that it was unreasonable for SCE to enter into a contract with USEC (not URENCO, who was SCE s traditional supplier), and on that basis, recommends a disallowance of $ for USEC contract cancellation expenses incurred in 01. The Commission should reject this recommendation. a) Nuclear Fuel Contract Termination Costs For 01 Are Not Subject To Disallowance First, on September, 01, SCE, SDG&E, ORA, TURN, Friends of the Earth (FOE), and Coalition of California Utility Employees (CUE) entered into a Settlement Agreement regarding the SONGS OII. Section.1 of the Settlement Agreement, which TURN is well aware, states that, except as expressly provided in this Agreement, all expenses recorded in SCE s SONGSMA and SONGSOMA shall be recovered in rates, and shall not be subject to disallowance, refund, or any form of reasonableness review by the Commission. The 01 nuclear fuel contract cancellation Testimony of Bruce Lacy, pp. -1. Section.1 of SONGS OII Settlement Agreement. 1

24 expenses were originally recorded in SONGSOMA, and no exception applies. In fact, no party cites an exception. Consequently, all 01 expenses recorded in the SONGSOMA, including 01 nuclear fuel contract cancellation expenses, are not subject to reasonableness review under Section.1 of the SONGS OII Settlement Agreement approved in D The approved settlement remains effective. b) SCE s Nuclear Fuel Contracting Strategy Is Outside The Scope Of This Proceeding Second, SCE s underlying nuclear fuel contracting strategy is not within the scope of review of the NDCTP. SCE s fuel contracting strategy and associated costs have been reviewed and approved in SCE s ERRA proceedings. TURN s disallowance recommendation is based on its incorrect belief that SCE was double contracted for these quantities and therefore imprudent in its contracting strategy. Even if this was true (which it is not as explained in the next subsection), the purpose of this proceeding is to review the cancellation costs, not review whether SCE s underlying strategy that resulted in the contracts was prudent. Therefore, the Commission should not impose a disallowance for contract termination costs based upon an assertion that SCE should not have entered into the contract to begin with. c) TURN Fundamentally Misunderstands SCE s Contracting Strategy Third, even if the Commission were to consider SCE s contracting strategy as a basis for determining the reasonableness of the cancellation costs, TURN fundamentally misunderstands SCE s strategy and the background of SCE s contracts with URENCO and USEC. SCE entered into the contracts before any issues arose with the replacement steam generators (RSGs), and needed enrichment services quantities to ensure continued operations through the expiration of the SONGS & operating licenses in 0. SCE submitted a request for proposal (RFP) to USEC and URENCO in 00, I.1--01, Joint Ruling of Assigned Commissioner and Assigned Administrative Law Judge, dated December 1, 01 (relieving Parties to the Settlement Agreement only of their obligations to comply with sections.1 and.). 1

25 requesting enrichment services to allow SCE to meet this operational objective. URENCO responded to the RFP but could commit only to a portion of the services SCE required, leaving a gap in coverage for enrichment services. USEC also responded to the RFP, and was able to provide the remainder of the services needed by SCE. SCE entered into enrichment services contracts with USEC and URENCO for the enrichment services, with URENCO as the primary supplier and USEC as a secondary supplier to provide services URENCO was unable to provide. Contrary to TURN s incorrect understanding, SCE was not double contracted for redundant enrichment service quantities. Notably, TURN does not challenge the magnitude of the 01 cancellation costs. SCE explains the basis for the cancellation costs in Exhibit SCE-. The Commission should determine that the 01 nuclear fuel contract cancellation expense was reasonable, as it provided a substantial costsaving to customers.. USEC 01 TURN argues that 01 USEC cancellation fees of $ are also unreasonable on the ground that SCE s fuel contracting strategy with USEC was unreasonable. The Commission should reject this recommendation for the same reason discussed in subsections III.C.1(b) and (c) above. SCE s underlying fuel contracting strategy is not within the scope of this proceeding, and as discussed above, was reasonable in any event. In 01, SCE and USEC settled outstanding 01 deliveries that were no longer required given that SCE had decided to permanently retire SONGS. As with the 01 cancellation costs, TURN does not challenge the magnitude of the 01 cancellation costs. SCE explains the basis for the cancellation costs in Exhibit SCE-. The Commission should determine that 01 nuclear fuel contract cancellation expenses were reasonable, as it provided a substantial cost-saving to customers. In addition, SCE was able to obtain an additional benefit for customers, as. Proceeds from Testimony of Bruce Lacy, pp

26 SCE s resell efforts will be refunded to customers under the SONGS OII settlement. TURN agrees that the cancellation of all other nuclear fuel agreements to be reasonable, and the Commission should find SCE s cancellation of all nuclear fuel contracts, including the USEC contract, are reasonable.. Legal Fees TURN recommends a $1. million disallowance (0% share, 0$) for outside counsel expenses relating to the Uranium One and Rio Tinto nuclear fuel contract cancellations. The only support TURN provides for this disallowance recommendation is its speculation as to what the expenses should have been. For this reason, the Commission should reject TURN s recommendation. The expenses are reasonable and should be allowed. First, contrary to TURN s characterization, the outside counsel costs involve more than just negotiating a simple settlement. The legal engagement involved two large, complex, multi-million dollar arbitration disputes that SCE, with the assistance of counsel, was able to resolve at a fraction of what was being claimed against SCE (which itself was a significant achievement). The legal costs included fees relating to preparing the two matters for the arbitration trial, including conducting fact and expert discovery, legal research, preparing fact and expert witness statements and briefs, and reviewing the other parties submissions. Had SCE been unsuccessful in the arbitrations, the combined damages could have been $ (nominal $). As such, the legal fees represent only about.% of the amount that was claimed against SCE and in dispute. In addition, the legal services resulted in a very 1 0 favorable outcome to customers, as SCE was able to settle both matters for a combined $ fraction of the total amount in dispute, a 1 Second, TURN s disallowance recommendation is inconsistent with its overall support of the Rio Tinto and Uranium One cancellation costs successfully obtained through SCE s efforts. TURN states in its rebuttal testimony that it is reasonable for SCE to use former employees and industry Testimony of Bruce Lacy, pp. -1. Testimony of Bruce Lacy, p. 1. 1

27 experts, as well as the use of outside legal counsel to support the nuclear fuel cancellation negotiations. TURN found the cancellation expenses for the Uranium One and the Rio Tinto contracts to be reasonable; this was a result of the outstanding efforts of the legal team. Consistent with TURN s overall support of SCE s efforts, the Commission should reject TURN s recommendation to disallow legal costs that contributed to a favorable outcome for customers. D. Review Of The SONGS 1 RPV Segmentation Project TURN recommends that the SONGS 1 RPV segmentation project should be evaluated for reasonableness as a project, not as a part of a calendar based review. 0 TURN s recommendation is beyond the scope of this phase of the proceeding. Phase 1 concerns the reasonableness of SONGS 1 decommissioning costs and SONGS & fuel contract cancellation costs. Phase concerns milestone framework issues for SONGS & and reasonableness of the DCEs for SONGS 1 and for Palo Verde 1,, and. Phase concerns the reasonableness of SONGS & decommissioning costs. TURN s recommendation is not within the scope of Phase 1. If TURN seeks to raise this issue, it should be done within Phase. In any event, the disposal of the SONGS 1 RPV is a project planned to be performed several years in the future and SCE will submit those costs for reasonableness review in the NDCTP that covers the year when the project is completed. Testimony of Bruce Lacy, p Testimony of Bruce Lacy, p..

28 IV. CONCLUSION The Commission should not impose any disallowances for SONGS 1 decommissioning costs and SONGS & fuel contract cancellation costs. ORA also recommends no disallowances. TURN s recommended disallowances are contrary to Commission precedent, and arbitrary and overreaching, and should be rejected in their entirety.

29 Appendix A Witness Qualifications

30 SOUTHERN CALIFORNIA EDISON COMPANY QUALIFICATIONS AND PREPARED TESTIMONY QUALIFICATIONS OF ROBERT D. BLEDSOE Q. Please state your name and business address for the record. A. My name is Robert D. Bledsoe, and my business address is 000 South Pacific Coast Highway, San Clemente, California -01. Q. Briefly describe your present responsibilities at the Southern California Edison Company. A. I am presently a project manager for Edison s Regulatory Affairs Department, assigned to the San Onofre Nuclear Generating Station (SONGS). I perform special projects, including developing submittals to the CPUC regarding SCE s responsibilities for decommissioning SONGS and the Palo Verde Nuclear Generation Station (Palo Verde). Q. Briefly describe your educational and professional background. A. I earned a Bachelor s Degree in Business Management from the Brigham Young University in 11, an MBA from UC Irvine in 10, and a Juris Doctor Degree from Western State University College of Law in 1. I completed Project Management certificate program from UC Irvine Extension in 01. I joined Edison in 1, and was assigned to the Site Emergency Preparedness Division at SONGS. In that assignment, I coordinated the implementation of the fire protection programs at SONGS. Since then, I have worked in a variety of areas, with increasing levels of responsibility, in support of SONGS operations and decommissioning. In 1, I transferred to the Nuclear Information Services Division as a Computer Applications Engineer. There, I developed and implemented computer software applications to support the SONGS fire protection and work process control programs. In 1, I transferred to the Nuclear Rate Regulation and Participant Services Division, where I worked as a staff specialist on numerous rate related matters pertaining to SONGS and Palo Verde. In 1, I became Edison s representative on the Palo Verde Engineering and Operations Committee. In 1 I became involved in planning for the SONGS 1 decommissioning project, and served as a project manager throughout that effort. There, I was responsible for developing Edison s submittals for A-1

31 1 1 1 each NDCTP. In 00, I transitioned to the SONGS Finance Department, where I continued to be responsible for Edison s NDCTP submittals. Q. What is the purpose of your testimony in this proceeding? A. My testimony in this proceeding sponsors the reasonableness testimony in Exhibit SCE-1 Rebuttal Testimony of Southern California Edison for Phase 1 of the 01 Nuclear Decommissioning Costs Triennial Proceeding as identified in the Table of Contents above. Q. Was this material prepared by you or under your supervision? A. Yes, it was. Q. Where this material is factual in nature, do you believe it to be correct? A. Yes, I do. Q. Where this material is for opinion or judgment, does it represent your best judgment? A. Yes, it does. Q. Does this conclude your qualifications and prepared testimony? A. Yes, it does. A-

32 SOUTHERN CALIFORNIA EDISON COMPANY QUALIFICATIONS AND PREPARED TESTIMONY OF STEVEN A. LELEWER Q. Please state your name and business address for the record. A. My name is Steven A. Lelewer, and my business address is 000 Pacific Coast Hwy, San Clemente, California. Q. Briefly describe your present responsibilities at the Southern California Edison Company. A. As Nuclear Fuel Procurement Manager, I have responsibility for the procurement and administration of contracts for the supply, transportation, delivery, storage, disposition and disposal of nuclear fuel. Q. Briefly describe your educational and professional background. A. I received a Bachelor and Master of Science Degree in Chemical Engineering from Michigan State University in 1, and 1. I am a Registered Professional Engineer in the State of California in the Mechanical Engineering branch. I have been employed by Southern California Edison Company since 00 in the Project Management Division at the San Onofre Nuclear Generating Station. In December 01, I was appointed Nuclear Fuel Procurement Manager. Q. What is the purpose of your testimony in this proceeding? A. The purpose of my testimony in this proceeding is to sponsor Exhibit SCE-, as identified in the Table of Contents thereto. Q. Was this material prepared by you or under your supervision? A. Yes. Q. Insofar as this material is factual in nature, do you believe it to be correct? A. Yes, I do. Q. Insofar as this material is in the nature of opinion or judgment, does it represent your best judgment? A. Yes, it does. A-

33 Q. Does this conclude your qualifications and prepared testimony? A. Yes, it does. A-

34 SOUTHERN CALIFORNIA EDISON COMPANY QUALIFICATIONS AND PREPARED TESTIMONY OF RUSSELL G. WORDEN Q. Please state your name and business address for the record. A. My name is Russell G. Worden, and my business address is 1 Rush Street, Rosemead, California. Q. Briefly describe your present responsibilities at the Southern California Edison Company. A. I am presently the Director of State Regulatory Operations in SCE s Regulatory Affairs Department. In this capacity, I oversee all California Public Utilities Commission (CPUC or Commission) jurisdictional ratemaking, revenue requirements, revenue forecasting, load research, pricing and tariff functions. My responsibilities also include management oversight of SCE s CPUC General Rate Cases (GRC) and Energy Resource Recovery Account (ERRA) proceedings. I have previously served as the case manager for SCE in the CPUC investigation of the outages at the San Onofre Nuclear Generating Station (SONGS), investigation (I.) , and SCE s 00, 00, 00 and 01 general rate cases. Q. Briefly describe your educational and professional background. A. I received an Associate of Arts degree from Cabrillo College, in Aptos, California in 1. I graduated from San Francisco State University in 1 with a Bachelor of Arts degree in Political Science, cum laude. After college, I joined the Washington, D.C. staff of U.S. Senator Richard Stone (D-FL) where I served as a Legislative Aide until December 10. From January 11 until March 1, I served as a Legislative Assistant to then Congressman Ron Wyden (D-OR). In March 1, I joined the Washington, D.C. office of Southern California Edison as a Governmental Affairs Assistant, and in May 1, I transferred to Edison s Revenue Requirements Department. I promoted to my current position in February 01. Q. What is the purpose of your testimony in this proceeding? A-

35 A. The purpose of my testimony in this proceeding is to sponsor Exhibit SCE-, as identified in the Table of Contents above. Q. Was this material prepared by you or under your supervision? A. Yes, it was. Q. Insofar as this material is factual in nature, do you believe it to be correct? A. Yes, I do. Q. Insofar as this material is in the nature of opinion or judgment, does it represent your best judgment? A. Yes, it does. Q. Does this conclude your qualifications and prepared testimony? A. Yes, it does. A-

36 Appendix B TURN Responses to SCE Data Request A SCE TURN-01 Dated August, 01

37 TURN responses to SCE Data Request A SCE TURN-01 August, 01 Question: 1. On page of the Testimony of Bruce Lacy, submitted in A , the testimony states, Absence of an item in the approved DCE is not the sole criteria for considering some disallowance. a. What additional criteria should be considered by the California Public Utilities Commission (Commission or CPUC) when completing a reasonableness review to decide whether to allow or disallow costs for an activity, when the activity is absent from an approved DCE? b. Should the fact that an activity is necessary to fulfill a regulatory requirement be a criterion considered by the CPUC when completing a reasonableness review to decide whether to allow or disallow costs for an activity, when the activity is absent from an approved DCE? If your answer is not an unqualified yes, please explain why. Response: a. When completing a reasonableness review to decide whether to allow or disallow costs for an activity that is absent from an approved DCE, the Commission should consider whether the utility knew or should have known that the activity was likely to occur. The Commission should also consider the nature and scope of the activity and the extent to which actions (or inaction) by the utility and/or its contractors may have resulted in avoidable delays or unnecessary increases in cost. There may be other relevant factors the Commission should consider depending upon the specific history and circumstances associated with a particular activity. b. When completing a reasonableness review to decide whether to allow or disallow costs for an activity that is absent from an approved DCE, the Commission should consider whether the activity may be necessary to fulfill a regulatory requirement. B-1

38 TURN responses to SCE Data Request A SCE TURN-01 August, 01 Question:. On page of the Testimony of Bruce Lacy, submitted in A , the testimony states, The waste burial amount of $. million should be found to be 0% unreasonable. The basis for this is not that the cost is in itself unreasonable, but that this was a known issue in 00 and should have been properly forecasted in the 00 SONGS 1 DCE. a. If SCE had forecasted costs of $. million for waste burial in the 00 SONGS 1 DCE, should the Commission allow 0% of the costs as reasonable? If your answer is not an unqualified yes, please explain why the costs should be disallowed? b. Does TURN agree that it was prudent for SCE to complete waste burial activities for SONGS 1 decommissioning during 00-01, notwithstanding the fact that costs for the activity were absent from the 00 SONGS 1 DCE? If your answer is not an unqualified yes, please explain why SCE s decision to complete waste burial activities for SONGS 1 decommissioning during was imprudent. Response: a. Yes, subject to review of these costs pursuant to the factors identified in response to Question 1(a). b. Although TURN agrees that it was appropriate for Edison to complete waste burial in 00, the failure to include this known expense in its DCE constitutes imprudence and justifies the proposed disallowance. B-

39 TURN responses to SCE Data Request A SCE TURN-01 August, 01 Question:. On page of the Testimony of Bruce Lacy, submitted in A , the testimony states, The Commission should impose a 0% disallowance on the NRC fees, $0. million (0$) and miscellaneous decommissioning activities, $1. million (0$) for the same reason as the recommendation related to LLRW burial costs. Response: a. If SCE had forecasted costs of $0. million for NRC fees in the 00 SONGS 1 DCE, should the Commission allow 0% of the costs as reasonable? If your answer is not an unqualified yes, please explain why the costs should be disallowed? b. Does TURN agree that it was prudent for SCE to pay the NRC fees for SONGS 1 during 00-01, notwithstanding the fact that costs for the activity were absent from the 00 SONGS 1 DCE? If your answer is not an unqualified yes, please explain why SCE s decision to pay the NRC fees for SONGS 1 during was imprudent. c. If SCE had forecasted costs of $1. million for miscellaneous decommissioning activities for SONGS 1 decommissioning in the 00 SONGS 1 DCE, should the Commission allow 0% of the costs as reasonable? If your answer is not an unqualified yes, please explain why the costs should be disallowed? d. Does TURN agree that it was prudent for SCE to complete miscellaneous decommissioning activities for SONGS 1 decommissioning during 00-01, notwithstanding the fact that costs for the activity were absent from the 00 SONGS 1 DCE? If your answer is not an unqualified yes, please explain why SCE s decision to complete the miscellaneous decommissioning activities for SONGS 1 decommissioning during was imprudent. a. Yes, subject to review of the 00 NRC fees pursuant to the factors identified in response to Question 1(a). b. Although TURN agrees that it was appropriate for Edison to pay NRC fees in 00, the failure to include this known expense in its DCE constitutes imprudence and justifies the proposed disallowance. c. Yes, subject to a more detailed review of the miscellaneous costs pursuant to the factors identified in response to Question 1(a). d. Although TURN agrees that it was appropriate for Edison to incur some 00 miscellaneous, the failure to include this known expense in its DCE constitutes imprudence and justifies the proposed disallowance. B-

40 TURN responses to SCE Data Request A SCE TURN-01 August, 01 Question:. On pages - of the Testimony of Bruce Lacy, submitted in A , the testimony states, The Commission should impose a 0% disallowance on the ground water protection initiative s recorded costs of $0. million (0$). The basis for this disallowance is the fact that this project was known to SCE prior to the submission of the 01 SONGS 1 DCE. a. If SCE had forecasted costs of $0. million for NEI ground water protection initiative in the 01 SONGS 1 DCE, should the Commission allow 0% of the costs as reasonable? If your answer is not an unqualified yes, please explain why the costs should be disallowed? b. Does TURN agree that it was prudent for SCE to complete NEI ground water protection initiative activities for SONGS 1 decommissioning during 01-01, notwithstanding the fact that costs for the activity were absent from the 01 SONGS 1 DCE? If your answer is not an unqualified yes, please explain why SCE s decision complete NEI ground water protection initiative activities for SONGS 1 decommissioning during 01-01was imprudent. Response: a. Yes, subject to review of the 01 groundwater protection initiative costs pursuant to the factors identified in response to Question 1(a). b. Although TURN agrees that it was appropriate for Edison to perform activities related to the groundwater protection initiative, the failure to include this known expense in its DCE constitutes imprudence and justifies the proposed disallowance. B-

41 TURN responses to SCE Data Request A SCE TURN-01 August, 01 Question:. On page of the Testimony of Bruce Lacy, submitted in A , the testimony states, The Commission should impose a similar 0% disallowance on the $0. million (0$) in recorded costs for NRC fees. The reasoning here is the same as expressed for prior similar disallowances. a. If SCE had forecasted costs of $0. million for NRC fees in the 01 SONGS 1 DCE, should the Commission allow 0% of the costs as reasonable? If your answer is not an unqualified yes, please explain why the costs should be disallowed? b. Does TURN agree that it was prudent for SCE to pay the NRC fees for SONGS 1 during 01-01, notwithstanding the fact that costs for the activity were absent from the 01 SONGS 1 DCE? If your answer is not an unqualified yes, please explain why SCE s decision to pay the NRC fees for SONGS 1 during was imprudent Response: a. Yes, subject to review of the 01 NRC fees pursuant to the factors identified in response to Question 1(a). b. Although TURN agrees that it was appropriate for Edison to pay NRC fees in 01, the failure to include this known expense in its DCE constitutes imprudence and justifies the proposed disallowance B-

42 Appendix C Report on Nuclear Decommissioning, Dated February, 0

43 Report on Nuclear Decommissioning Report on Nuclear Decommissioning February, 0 For The California Public Utility Commission Prepared by Nicholas Capik Geoffrey Griffiths Bruce Lacy C-1