Critics of Pacific Gas & Electric?s plans to invest in new steam generators for its Diablo Canyon nuclear plant maintain that the utility?s estimate of ratepayer benefits is excessive, refuting PG&E?s contention that such an investment could result in up to $800 million in customer benefits. Earlier, PG&E had claimed the proposed replacement would yield a financial benefit of $1.2 billion. The latest round of arguments were filed at the California Public Utilities Commission February 14 in response to a proposed decision issued last month (<i>Circuit<\/i>, Jan. 28, 2005). ?Net benefits are now about one-third less than PG&E stated in its application,? according to environmentalists. Mothers for Peace, the Sierra Club, Public Citizen, Greenpeace, and Environment California claim the proposed decision fails to include zero or negative benefits in the methodology it accepted. The groups also expect a higher cost than PG&E?s estimated $706 million for replacing the current steam generators. The investment is necessary, according to the utility, because the current equipment is expected to develop leaks in the next few years that would make continued operation risky. They point out, for instance, that the procurement contract cost is currently 15 percent higher than PG&E?s original estimate. ?An extended outage, new security requirements, seismic upgrades or other ?unpleasant surprises? could turn PG&E?s promised [original estimate of] $1.2 billion in benefits into a net loser for customers,? added The Utility Reform Network (TURN). PG&E, however, commended the proposed decision, saying it ?correctly recognizes the enormous ratepayer benefits of the steam generator replacement project.? The utility expects the investment to yield between $129 million and $804 million in ratepayer benefits. The proposed decision would allow PG&E to invest up to $706 million without risking any disallowances if that investment turned out to be imprudent. In spite of the previous rejection by the commission?s administrative law judge, consumer groups TURN and the Aglet Consumer Alliance urged that their proposal to guarantee a minimum level of ratepayer benefits be accepted. In exchange, the utility should get regulatory authority to invest in new steam generators and receive the commission?s allowed rate of return on that investment?11.22 percent?they argued. Environmental groups also reasserted their desire to include a discussion of the cost of seismic problems, which was excised from the hearings. ?Since the approval of PG&E?s application would likely mean at least another 11 years of reactor operation, as well as the creation and storage of additional radioactive wastes on site, it is vitally important that the commission take this opportunity? to address earthquake risks, they said. Also kept out of regulatory hearings on Diablo?s potential investment were costs and availability of alternative supplies to replace nuclear power. The proposed decision ?ignores completely the fundamental question of whether the project is needed as part of PG&E?s future resource mix,? the group of environmentalists added. TURN?s major beef remains that the utility ?has not lifted a finger to obtain any discounts or payments from Westinghouse? for installing defective steam generators. Westinghouse provided the first steam generators?and is currently under contract for this second round, if approved. Because those parts appear to be failing early in the units? life, the consumer group expects the utility to demand restitution. Other nuclear utilities that have had the same problem with Westinghouse have sued the manufacturer. While generally supporting the proposed decision, PG&E asks that the commission clarify its bar on recovery in excess of the cap of $815 million if excess costs?for example, for an emergency?are warranted. Any investment over $706 million, according to the proposed decision, would be subject to reasonableness review. The investment would be capped at $815 million. PG&E also asks that any compliance costs for environmental regulation be included in an adjusted $706 million or $815 million?in other words, if the California Environmental Quality Act phase of the proceedings finds that the utility has to invest more money for compliance, PG&E wants the cap adjusted upward to reflect the higher investment.