Disputed Decommissioning Funding Okayed by CPUC

By Published On: October 11, 2003

Pacific Gas & Electric?s $65 million decommissioning fund request for its Hunters Point power plant was approved by the California Public Utilities Commission October 2. Prior to the 3-2 vote, local activists objected because the decision lacked assurances that PG&E would spend all the approved funds when it does close and clean up the reviled plant in the low-income, predominantly minority community. Activists were, however, pleased PG&E agreed to double the amount in the closure fund, originally set at $30 million, and to clean the site to residential standards, in place of the less stringent industrial one. But, they backed commissioner Loretta Lynch?s unsuccessful proposal that would have returned unspent funds to ratepayers. Lynch asserted a balancing account was needed to keep PG&E from pocketing any unspent decommissioning funds. Including a balancing account, according to Lynch, was ?a simple form of insurance? that would ?eliminate incentives for PG&E to cut corners on decommissioning.? Commissioner Geoffrey Brown, who voted with the majority and against Lynch, said her proposal would hurt PG&E shareholders and ?give ratepayers a windfall.? More controversial were two decisions approving the annual revenue requirement for Southern California Edison?s, San Diego Gas & Electric?s, and Pacific Gas & Electric?s decommissioning funds for their nuclear units. The CPUC voted to increase Edison?s yearly revenue requirement by $7.8 million?from $25 million to $32.8 million?and to raise SDG&E?s by $1.7 million to $6.7 million for the San Onofre Nuclear Generating Station and Palo Verde units. PG&E’s revenue requirement was set at $27 million for its Diablo plant. There were significant differences of opinion over funding levels, the rate of return and radioactive waste burial costs. The Office of Ratepayer Advocates pushed to lower funding to reduce the hit on ratepayers. Environmentalists wanted the fund amount higher because of uncertainties about what decommissioning will actually cost. The commission set a 10. 5 percent pretax return on equity and a 6 percent return on fixed assets, which were close to the high range proposed by Edison. One of the most significant costs involved in the facilities closure cost will be the off-site disposal of the radioactive wastes. Costs estimates ranged from $55 per cubic foot of contaminated material to $404 million per cubic foot. The CPUC approved a $200 per cubic foot burial cost, along with a 0.5 percent escalation cost. In another matter, the CPUC voted unanimously to adopt the Department of Water Resources? recommended allocation of its gas contract with Williams Energy to San Diego Gas & Electric and Southern California Edison.

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