Details for: SDG&E AL 3234-E.pdf


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Clay Faber - Director
Federal & CA Regulatory
8330 Century Park Ct
San Diego, CA 92123
CFaber@semprautilities.com

June 11, 2018
ADVICE LETTER 3234-E
(U-902-E)
PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA
SUBJECT:

REQUEST FOR AUTHORIZATION OF AMENDMENTS TO SAN DIEGO GAS &
ELECTRIC’S
NUCLEAR
FACILITIES
NON-QUALIFIED
CPUC
DECOMMISSIONING MASTER TRUST AGREEMENT

PURPOSE
San Diego Gas & Electric Company (SDG&E) hereby submits for filing this request for approval
from the California Public Utilities Commission (“Commission” or “CPUC”) of its proposed
Amendment to the San Diego Gas & Electric Company’s Nuclear Facilities Non-Qualified CPUC
Decommissioning Master Trust Agreement (Trust Agreement) pursuant to Section 2.10 of the
Trust Agreement, and Decision (D.) 13-01-0391. The Trust Agreement was implemented and
approved by the CPUC in D.87-05-062, Resolution E-3057, and D.92-01-027.
Specifically, SDG&E seeks approval from the CPUC of Amendment 14 for the Non-Qualified
Master Trust Agreement, (“Proposed Amendment”, provided in Attachment A). The Proposed
Amendment would establish a non-qualified nuclear decommissioning trust fund for San Onofre
Nuclear Generating Station (“SONGS”) Unit No. 3 (“Unit 3”), and enable CPUC-approved
transfers between SDG&E’s non-qualified nuclear decommissioning trust funds for SONGS
Units 1, 2 and 3. The Proposed Amendment was approved by the Nuclear Facilities
Decommissioning Master Trust Committee (Committee) at its May 31, 2018 meeting and
approved by Trustee BNY Mellon, and is proposed to be executed if no objections are received
by the CPUC within 30 days after this filing, pursuant to Section 2.10 of the Non-Qualified Trust.
BACKGROUND
SDG&E currently has Non-Qualified Nuclear Decommissioning Trust Funds (“NQ Funds” or
“NQT”) for Units 1 and 2; however, SDG&E has no NQT established for Unit 3. SDG&E has
recently recognized, as a result of two recent events, that there is a benefit of having a NQT for
Unit 3. First, in December 2014, the IRS issued a private letter ruling pertaining to spent fuel
management (“SFM”) costs. This private letter ruling is known as the “Dominion” Ruling in the
industry,2 and is discussed in SDG&E’s testimony filed on March 15, 2018 in the current Nuclear
1

D.13-01-039 at 39 states that all amendments to the Master Trust Agreements will be approved through
a Tier 2 Advice Letter (“we retain the Tier 2 AL process for review of amendments to the MTA”).

2

In December 2014, the IRS issued a Private Letter Ruling (“PLR”) for a Dominion nuclear facility. The
PLR states that the three NRC bucket categories (i.e., License Termination, Spent Fuel Storage and
Site Restoration) are nuclear decommissioning costs and may be paid out of the Trust. However, the





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Public Utilities Commission 2 June 11, 2018 Decommissioning Cost Triennial Proceeding (NDCTP).3 As a result of the Dominion Ruling, SDG&E’s practice has been to exclude withdrawing certain SFM costs from its Qualified Trusts for Units 2 and 3 that it expects will be the subject of litigation or settlement claims with the U.S. Department of Energy (“DOE”).4 As a result, SDG&E has been paying for so-called “Dominion” SFM costs itself, and then waiting for reimbursement from the DOE in the form of a settlement or litigation award. The establishment of a NQT for Unit 3 would allow SDG&E to pay SFM costs allocated to Unit 3 that it cannot pay from its Unit 3 Qualified Trust (“QT”) because of the Dominion issue. The second event that has prompted SDG&E to establish a NQT for Unit 3 is that the settlement with the DOE for the SONGS Participants5 expired on December 31, 2016. DOE has not provided any indication that it will enter into a new settlement for costs incurred on or after January 1, 2017. Without a settlement agreement with the DOE, SDG&E and the SONGS Participants will have to file litigation with the DOE seeking recovery of spent fuel management costs incurred on or after January 1, 2017. Litigation can be protracted; the last time SCE (on behalf of itself and Participants) litigated over SFM costs with the DOE, the litigation took 12 years after the first costs were incurred to reach resolution. In the meantime, SDG&E will have to pay for the costs. The establishment of a NQT for Unit 3 would allow SDG&E to pay SFM costs allocated to Unit 3 from the Trust while it awaits resolution of any litigation for those costs. After the NQT for Unit 3 is established, SDG&E intends to request CPUC approval to effectuate transfers between SDG&E’s non-qualified nuclear decommissioning trust funds for SONGS Units 1, 2 and 3 in a separate advice letter. OVERVIEW OF PROPOSED AMENDMENTS There are three sections of the Trust Agreement which need modification to establish the nonqualified nuclear decommissioning trust fund for Unit 3. In Section 1.01, sub-sections (13), (20), and (28) (the definitions of “Funds”, “Plants” and “Units”) are restated to include a reference to Unit 3. Further, sub-sections (26.1) and (26.2) are added to Section 1.01 to add a reference to, and definition of the Unit 3 Non-Qualified Fund. Lastly, Section 2.03 is amended by adding language which allows, upon prior CPUC approval, transfer of monies or securities among NonQualified Fund Accounts. PLR also states that certain spent fuel storage costs may not be reimbursed from the Trust now if they will be recovered from litigation or settlement with the DOE. While the favorable ruling that SCE received from the IRS on December 8, 2015, provides some guidance on the issue, it is not directly applicable to SDG&E’s situation and has no precedential value for any utility except for SCE. SDG&E intends to work with the IRS to gain clarity on its situation. 3 A.18-03-009, SDGE-01 at 15-16 and SDGE-04 at 12-14. 4 In December 2016, the IRS and the Department of the Treasury issued proposed regulations that clarify the definition of “nuclear decommissioning costs” as being costs that may be paid for or reimbursed from a qualified fund. The proposed regulations state that costs related to the construction and maintenance of independent spent fuel storage installations (“ISFSI”), also known as spent fuel management costs, are included in the definition of nuclear decommissioning costs. Although a clarification was made in regard to specific nuclear decommissioning costs the proposed regulations were ambiguous regarding the on-going industry-wide “Dominion Issue.” As a result, SDG&E has continued its current practice of waiting for a reimbursement from the DOE before withdrawing any of its spent fuel management costs from the qualified trusts. 5 SONGS 1 Participants are SCE and SDG&E. SONGS 2&3 Participants are SCE, SDG&E, the City of Anaheim and the City of Riverside.
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Public Utilities Commission 3 June 11, 2018 PROCEDURAL INFORMATION Under the Trust Agreements, the Committee is authorized to amend the Trust Agreement 30 days after filing a copy of the proposed amendment with the CPUC. Section 2.10 of the NonQualified Trust Agreement states: The Trustee and the Company understand and agree that modifications or amendments may be required to this Agreement from time to time to effectuate the purposes of the trust.6 The Committee may also amend this Agreement thirty days after filing a copy of the proposed amendment with the CPUC. No proposed amendment may be made if written objections to the proposed amendment are filed within the thirtyday period. Any party making written objections to the proposed amendment shall serve the written objections with a certificate of service on the Company, the Committee, the Trustee, and the CPUC Staff on the same day as the written objections are filed with the CPUC. SDG&E is not seeking any rate increase or additional funding for the Master Trust in this Tier 2 AL. REQUEST FOR RELIEF Accordingly, SDG&E requires Commission approval for the Proposed Amendment to the Master Trust. PROPOSED TARIFF CHANGES This filing will not result in an increase in any rates or charges, conflict with any schedules or rules, nor cause withdrawal of service. EFFECTIVE DATE SDG&E believes this filing is subject to Energy Division disposition and should be classified as Tier 2 (effective after staff approval) pursuant to GO 96-B, and D.13-01-039. SDG&E respectfully requests that this filing be approved effective July 11, 2018, 30 days from the date filed. 6 As amended by Advice Letter 1000-E, seeking approval of Amendment 4 to the QT and Amendment 2 to the NQT (December 23, 1996), approved on November 18, 1996.
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Public Utilities Commission 4 June 11, 2018 PROTEST Anyone may protest this Advice Letter to the California Public Utilities Commission. The protest must state the grounds upon which it is based, including such items as financial and service impact, and should be submitted expeditiously. The protest must be made in writing and must be received by July 2, 2018, which is within 21 days from the date this Advice Letter was filed with the Commission. There is no restriction on who may file a protest. The address for mailing or delivering a protest to the Commission is: CPUC Energy Division Attention: Tariff Unit 505 Van Ness Avenue San Francisco, CA 94102 Copies of the protest should also be sent via e-mail to the attention of the Energy Division at EDTariffUnit@cpuc.ca.gov. A copy of the protest should also be e-mailed to the address shown below on the same date it is mailed or delivered to the Commission. Attn: Megan Caulson Regulatory Tariff Manager E-mail: mcaulson@semprautilities.com NOTICE A copy of this filing has been served on the utilities and interested parties shown on the attached list, including interested parties in A.16-03-004 and A.18-03-009 by providing them a copy hereof either electronically or via the U.S. mail, properly stamped and addressed. Address changes should be SDG&ETariffs@semprautilities.com. directed to SDG&E Tariffs by e-mail _______________________________ CLAY FABER Director – Federal & CA Regulatory at
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CALIFORNIA PUBLIC UTILITIES COMMISSION ADVICE LETTER SUBMITTAL SUMMARY ENERGY UTILITY MUST BE COMPLETED BY UTILITY (Attach additional pages as needed) Company name/CPUC Utility No. SAN DIEGO GAS & ELECTRIC (U 902) Utility type: Contact Person: Joff Morales ELC GAS Phone #: (858) 650-4098 PLC HEAT WATER E-mail: jmorales@semprautilities.com EXPLANATION OF UTILITY TYPE ELC = Electric PLC = Pipeline GAS = Gas HEAT = Heat (Date Submitted/ Received Stamp by CPUC) WATER = Water Advice Letter (AL) #: 3234-E Subject of AL: Request for Authorization of Amendments to San Diego Gas & Electric’s Nuclear Facilities Non-Qualified CPUC Decommissioning Master Trust Agreement Keywords (choose from CPUC listing): AL submittal type: Monthly Trust Quarterly Annual One-Time Other If AL submitted in compliance with a Commission order, indicate relevant Decision/Resolution #: D.87-05-062, E-3057 and D.92-01-027 Does AL replace a withdrawn or rejected AL? If so, identify the prior AL: N/A Summarize differences between the AL and the prior withdrawn or rejected AL1: Does AL request confidential treatment? If so, provide explanation: Resolution Required? Yes No 1 No. of tariff sheets: Estimated system annual revenue effect: (%): Estimated system average rate effect (%): N/A Tier Designation: Requested effective date: 07/11/2018 N/A 2 3 0 N/A N/A When rates are affected by AL, include attachment in AL showing average rate effects on customer classes (residential, small commercial, large C/I, agricultural, lighting). Tariff schedules affected: N/A Service affected and changes proposed1: N/A Pending advice letters that revise the same tariff sheets: N/A Protests and all other correspondence regarding this AL are due no later than 20 days after the date of this submittal, unless otherwise authorized by the Commission, and shall be sent to: CPUC, Energy Division San Diego Gas & Electric Attention: Tariff Unit Attention: Megan Caulson 505 Van Ness Ave., 8330 Century Park Ct., CP 32F San Francisco, CA 94102 San Diego, CA 92123 EDTariffUnit@cpuc.ca.gov MCaulson@semprautilities.com
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cc: (w/enclosures) Public Utilities Commission ORA R. Pocta Energy Division M. Ghadessi M. Salinas Tariff Unit CA. Energy Commission F. DeLeon R. Tavares Alcantar & Kahl LLP K. Cameron American Energy Institute C. King APS Energy Services J. Schenk BP Energy Company J. Zaiontz Barkovich & Yap, Inc. B. Barkovich Bartle Wells Associates R. Schmidt Braun & Blaising, P.C. S. Blaising California Energy Markets S. O’Donnell C. Sweet California Farm Bureau Federation K. Mills California Wind Energy N. Rader Children’s Hospital & Health Center T. Jacoby City of Poway R. Willcox City of San Diego J. Cervantes G. Lonergan M. Valerio Commerce Energy Group V. Gan CP Kelco A. Friedl Davis Wright Tremaine, LLP E. O’Neill J. Pau Dept. of General Services H. Nanjo M. Clark General Order No. 96-B ADVICE LETTER SUBMITTAL MAILING LIST Douglass & Liddell D. Douglass D. Liddell G. Klatt Duke Energy North America M. Gillette Dynegy, Inc. J. Paul Ellison Schneider & Harris LLP E. Janssen Energy Policy Initiatives Center (USD) S. Anders Energy Price Solutions A. Scott Energy Strategies, Inc. K. Campbell M. Scanlan Goodin, MacBride, Squeri, Ritchie & Day B. Cragg J. Heather Patrick J. Squeri Goodrich Aerostructures Group M. Harrington Hanna and Morton LLP N. Pedersen Itsa-North America L. Belew J.B.S. Energy J. Nahigian Luce, Forward, Hamilton & Scripps LLP J. Leslie Manatt, Phelps & Phillips LLP D. Huard R. Keen Matthew V. Brady & Associates M. Brady Modesto Irrigation District C. Mayer Morrison & Foerster LLP P. Hanschen MRW & Associates D. Richardson Pacific Gas & Electric Co. J. Clark M. Huffman S. Lawrie E. Lucha Pacific Utility Audit, Inc. E. Kelly San Diego Regional Energy Office S. Freedman J. Porter School Project for Utility Rate Reduction M. Rochman Shute, Mihaly & Weinberger LLP O. Armi Solar Turbines F. Chiang Southern California Edison Co. M. Alexander K. Cini K. Gansecki H. Romero TransCanada R. Hunter D. White TURN M. Florio M. Hawiger UCAN D. Kelly U.S. Dept. of the Navy K. Davoodi N. Furuta L. DeLacruz Utility Specialists, Southwest, Inc. D. Koser Western Manufactured Housing Communities Association S. Dey White & Case LLP L. Cottle Interested Parties A.16-03-004 A.18-03-009
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San Diego Gas & Electric Advice Letter 3234-E June 11, 2018 ATTACHMENT A
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AMENDMENT NO. I4 TO THE SAN DIEGO GAS £1 ELECTRIC COMPANY NUCLEAR FACILITIES NON-QUALIFIED CPUC DECOMMISSIONING MASTER TRUST AGREEMENT FOR SAN ONOFRE NUCLEAR GENERATING STATIONS This Amendment No. 14 made this 7th day oflune, 2018. by and between San Diego Gas Electric Company and The Bank of New York Mellon. a New York state bank, sucwssor by operation of law to Mellon Bank. NA WHEREAS, pursuant to Section 2.10 of the San Diego Gas J: Electric Company Nuclear Facilities Non-Qualified CPUC Decommissioning Master Trust Agreement for San Onnfre Nuclear Generating Stations dated as :2! June 29, 1992. as amended (the “Agreement") between the Company and the Trustee. the parties specifically reserve the right to amend the Agreement; NOW, THEREFORE, the Company and the Trustee agree as follows: 1. Section 1.01. section (13). section (20) and section (28) shall be restated as follows: (I3) “Funds" shall mean the SONGS Unit No. Non-Qualified Fund, the SONGS Unit No. Null-Qualified Fund, and the SONGS Unit No. Non-Qualified Fund, collectively. (20) ‘‘Plants'‘ shall mean the San onorrc Nuclear Generating Station Unit Nos. 1. 2, and 3, collectively. (28) “Units" shall mean SONGS Unit No. LSONGS Unil No.2. and SONGS Unit No. 3, collectively. The following sections shall be added to section 1.01: (26.1) “SONGS Unit No 3" shall mean Unit Three San Onotre Nuclear Generating Station. (26.2) “SONGS Unit No. Non-Qualified Fund” shall mean the Fund established and maintained under the Master Tmst for decommissioning SONGS Unit No. to which monies are contributed that are not subject to the conditions and limitations of Section 468A of the Code. The first sentence uf Section 2.0] shall he restated to read as follows: The Trustee and the Company further understand and agree that it is of the essence that no transfer of monies or securities is to occur among Fund Accounts except when explicitly indicated by a Certificate of the Company that such transfer (a) is necessary to ctrecluate the purposes of this Master Trust, and (b) is by the CPUC. Each Party hereby represents and warrants to the others that it has full authority to enter into this Amendment No. 14 upon the terms and conditions hcrcuf and that the individual executing this Amendment No. I4 on its behalf has the nequisitl: authority to bind that Patty. [Signature Page Follows]
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IN WITNESS the Company. the Trustee, and the Califumia Public Utilities Commission have set their hands and seals in agreement [(1 as or the latest dale set forth below. SAN DIEGO GAS ELE 1c COMPANY By: Dam: Jun H, 208 Allextz flf: THE BANK OF NEW YORK MELIDN By: pm; 3r; dc) id: CALIFORNIA PUBLIC UTILITIES COMMISSION By: Dale:
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