STATE OF CALIFORNIA ADMINISTRATIVE LAW JUDGE …ADMINISTRATIVE LAW JUDGE MARIBETH A. BUSHEY,...

PUBLIC UTILITIES COMMISSION, STATE OF CALIFORNIASAN FRANCISCO, CALIFORNIA

BEFORE THE PUBLIC UTILITIES COMMISSION

OF THE

STATE OF CALIFORNIA

ADMINISTRATIVE LAW JUDGE MARIBETH A. BUSHEY, presiding

Joint Application of SouthernCalifornia Edison Company (U338E)and San Diego Gas & Electric Company(U902E) to Find the 2014 SONGS Units2 and 3 Decommissioning CostEstimate Reasonable and AddressOther Related DecommissioningIssues.

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EVIDENTIARYHEARING

Application14-12-007

REPORTER'S TRANSCRIPTSan Francisco, California

August 27, 2015Pages 352 - 533

Volume - 3

Reported by: Thomas C. Brenneman, CSR No. 9554Wendy M. Pun, CSR No. 12891

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353

I N D E X

WITNESSES: PAGE

ADAM H. LEVINDirect Examination By Ms

Salustro357

Cross-Examination By Mr.Freedman

359

Cross-Examination By Ms. Gilmore 368Cross-Examination By Mr. Geesman 380Cross-Examination (Resumed.) By

Ms. Gilmore386

Cross-Examination By Mr. Lutz 394Cross-Examination (Resumed) By

Ms. Gilmore397

Redirect Examination By Ms.Salustro

400

Recross-Examination By Mr.Geesman

403

Examination By ALJ Bushey 404Recross-Examination By Mr.

Geesman405

Recross-Examination By Ms.Gilmore

406

Recross-Examination By Mr. Lutz 407

TRACY M. DALUDirect Examination By Ms.

Salustro408


410

Examination By ALJ Bushey 417

NORMA G. JASSODirect Examination By Ms.

Salustro421

Cross-Examination By Mr. Lee 423

RANDALL G. ROSEDirect Examination By Ms.

Salustro432


434

BRUCE A. LACYDirect Examination By Mr.

Freedman458

Cross-Examination By Mr.Matthews

461

Cross-Examination By Ms.Salustro

478

Cross-Examination By Mr. Geesman 488Redirect Examination By Mr. 496

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354

FreedmanRecross-Examination By Ms.

Salustro500

Exhibits: Iden. Evid.

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355

SAN FRANCISCO, CALIFORNIA

AUGUST 27, 2015 - 9:00 A.M.

* * * * *

ADMINISTRATIVE LAW JUDGE BUSHEY: The

Commission will come to order.

This is the time and place set for

the continued evidentiary hearing in

Application 14-12-007.

Good morning. Today we are going to

have cross-examination of San Diego Gas and

Electric Company's witnesses. While we were

off the record we identified all of their

exhibits. The titles of these exhibits have

been slightly modified. I will read to you

the official title that we're going to use

and also tell you what has been excised from

the title.

Exhibit 18 is titled Prepared Direct

Testimony in Support of the 2014

Decommissioning Cost Estimates on Behalf of

San Diego Gas and Electric Company. We have

removed from the title the words "second

errata to revised."

(Exhibit No. 18 was marked foridentification.)

ALJ BUSHEY: Exhibit 19 is titled

Rebuttal Testimony in Support of the 2014

Decommissioning Cost Estimates on Behalf of

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San Diego Gas and Electric Company. We have

removed from that title "errata to prepared."


ALJ BUSHEY: Exhibit 20 is Rebuttal

Testimony, Trust Funds, Regulatory Balancing

and Memorandum Accounts, and Ratemaking on

Behalf of San Diego Gas and Electric Company.

We removed from that title "errata to

prepared."


ALJ BUSHEY: Exhibit 21 is Prepared

Direct Testimony Financial Modeling, Trust

Fund Contributions and Ratemaking on Behalf

of San Diego Gas and Electric Company. We

removed from that title "second errata to

revised."


ALJ BUSHEY: Exhibit 22 is entitled

Supplemental Direct Testimony of Jonathan

Atun, SONGS 2 and 3 Updated Equity Scale Down

and Trust Allocations on Behalf of San Diego

Gas and Electric Company. We added the word

"direct" to that title.


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ALJ BUSHEY: Exhibit 23 is San Diego

Gas and Electric Company Workpapers for

Witness De Marco.


ALJ BUSHEY: Exhibit 24 are Workpapers

for Witness Atun.


ALJ BUSHEY: Anything further?

Hearing none then, Ms. Salustro,

would you like to call your first witness.

MS. SALUSTRO: Yes. Thank you, your

Honor.

SDG&E calls Adam Levin.

ADAM H. LEVIN, called as a witnessby San Diego Gas and Electric Company,having been sworn, testified asfollows:

ALJ BUSHEY: Please be seated. State

your full name for the record and spell your

last name.

THE WITNESS: My name is Adam H. Levin.

Last named is spelled L-e-v-i-n.

ALJ BUSHEY: Ms. Salustro.

MS. SALUSTRO: Thank you.

DIRECT EXAMINATION

BY MS SALUSTRO:

Q Good morning, Mr. Levin. Mr.

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Levin, a moment ago the judge identified

several exhibits, specifically Exhibit 18,

Exhibit 19, and Exhibit 20. Do you have

those documents in front of you?

A Yes, I do.

Q You're sponsoring sections as

indicated in the table of contents within

each of these three exhibits, correct?

A That is correct.

Q And was this testimony prepared by

you and under your supervision?

A Yes, it was.

Q Do you have any additional changes

or corrections to make at this time?

A I do not.

Q To the extent that these documents

contain facts, are those facts true and

correct to the best of your information,

knowledge, and belief?

A Yes, they are.

Q And to the extent these documents

contain opinions, do those opinions

constitute your best professional judgment?

A Yes, they do.

Q Do you adopt these exhibits as your

sworn testimony in this proceeding?

A Yes, I do.

MS. SALUSTRO: Your Honor, the witness

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is available for cross-examination.

ALJ BUSHEY: Thank you. Let's start

with Mr. Freedman.

CROSS-EXAMINATION

BY MR. FREEDMAN:

Q Good morning, Mr. Levin.

A Good morning, Mr. Freedman.

Q Mr. Levin, I'd like to ask you to

take a look at your rebuttal testimony,

Exhibit 20, page 12.

A I'm sorry. Exhibit number?

Q 20.

A 20. Yes.

Q And on this page you discuss the

NRC Nuclear Regulatory Commission oversight

of the decommissioning trust funds, and you

state that the NRC oversight prohibits any

return of trust funds until final

decommissioning has been completed; is that

correct?

A That is correct.

Q What does final decommissioning

mean?

A Final decommissioning is the point

at which the NRC's Part 50 license,

licensee's Part 50 license is terminated.

Q So when does SDG&E expect that the

Part 50 license will be terminated for SONGS

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Units 2 and 3?

A Assuming that the Part 50 license

remains in place as long as spent nuclear

fuel is on site, it would be in 2052.

Q Are you familiar with the

provisions of the SONGS master trust that

addressed the disbursement of excess funds

from the trust and the termination of the

trusts?

MS. SALUSTRO: Objection. Your Honor,

this witness is a decommissioning NRC

witness. He doesn't work for SDG&E or

Sempra. So master trust agreements for

Sempra are outside the scope of his

testimony.

MR. FREEDMAN: Your Honor, the witness

is free to say that he does not know about

them. However, this question is directly

relevant to his contention regarding NRC

requirements that govern master trusts and

the termination of such trusts.

ALJ BUSHEY: He was referencing IRS

requirements.

MS. SALUSTRO: NRC requirements, your

Honor.

MR. FREEDMAN: My questions, your

Honor, go to the Nuclear Regulatory

Commission requirements. I'm not asking him

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about Internal Revenue Service code

requirements.

ALJ BUSHEY: The testimony you're

referencing is about the Internal Revenue

Code, though.

MR. FREEDMAN: No. Your Honor, I'm

actually asking about the prior section,

Section C, in which Mr. Levin makes

contentions regarding the Nuclear Regulatory

Commission requirements.

ALJ BUSHEY: Oh, I see. I see. Yes,

you're absolutely correct. Yes. If the

witness doesn't know, he can say he doesn't

know.

THE WITNESS: I have read the master

trust agreement for San Diego Gas and

Electric.

MR. FREEDMAN: Q And are you aware

then that the master trust agreement

addresses a threshold -- it references a

point at which SDG&E would initiate a filing

with the California Public Utilities

Commission for return of any remaining funds

in the trust, does it not?

A No, it does not.

Q So you're not familiar with a

reference to the 90 percent threshold of

costs incurred?

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A I am familiar with that reference.

Q From your perspective, what does it

mean?

A As I understand the trust

agreement, it says that at the 90 percent

threshold of costs that have been

anticipated, any further disbursements

require the -- require a submission to the

CPUC for any further disbursements for costs

incurred.

Q Don't all disbursements require a

filing with the Public Utilities Commission?

A I don't know if I can answer that.

Q So you don't know what the

difference would be regarding PUC filing

requirements before and after the 90 percent

threshold?

A I do not have complete knowledge of

that.

Q And so to the extent that there

were any provisions in the master trust that

called for a potential termination of the

trust prior to the termination of the Part 50

license, it's your contention that that would

be a violation of NRC requirements?

A Can you repeat that? There was

something I didn't quite catch in the middle.

Q So to the extent that there's any

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provision of the master trust that specifies

the potential termination of the trust prior

to the termination of the Part 50 license, is

it your contention that that would violate

NRC rules?

A I'm not aware of anything in the

trust that potentially talks about

termination of the trust prior to termination

of the NRC license.

Q Are you familiar with, when you're

referencing NRC rules, are you referencing 10

CFR Part 50.75?

A And associated guidance.

Q Now, the NRC guidance, doesn't it

mention that transfers are permissible to

another financial assurance method prior to

the completion of decommissioning?

A I make that statement in my

testimony. That is correct.

Q And what other financial assurance

methods are acceptable under the NRC rules?

A Financial assurance methods under

NRC regulations are either a sinking fund or

a nonbypassable surcharge, a letter of

credit, or another method as approved by the

Nuclear Regulatory Commission.

Q And does that also include

prepayment? Is that one of the methods

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that's permissible?

A That is correct.

Q And dose the NRC also permit a

surety method, insurance, or other guarantee

method?

A I recall that being part of 10 CFR

50.75 financial assurance methods, but I

believe that that method was something that

the NRC has removed from 50.75.

Q So if I were to look at the current

version of 50.75 subpart (e)(1) little 3 that

states a surety method, insurance, or other

guarantee method is permissible, you're

saying that that doesn't exist anymore if I

were to look for that subdivision?

A If that is the current regulation,

then you are correct.

Q So is it fair to say that the NRC

allows multiple methods of complying with

these requirements for adequacy of

decommissioning funding?

A Yes.

Q And that the maintenance of an

external sinking fund is not the sole method

that satisfies NRC requirements?

A That's correct.

MR. FREEDMAN: Thank you. I have one

cross-examination exhibit at this time, your

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Honor, I'd like to distribute.

ALJ BUSHEY: Okay. We'll be off the

record.

(Off the record.)

ALJ BUSHEY: We'll be back on the

record.

While we were off the record we

numbered Exhibit 25, TURN cross-examination

exhibit.


ALJ BUSHEY: Mr. Freedman.

MR. FREEDMAN: Thank you, your Honor.

Q This exhibit contains the response

by SDG&E to TURN Data Request Set 1, Question

3. Mr. Levin, are you sponsoring or are you

the author of this response?

A I am sponsoring this response.

Q Great. And in this response SDG&E

is asked what approvals might be required

from the NRC for transfer of funds between

qualified nuclear decommissioning trust

funds, and the answer is:

At a minimum a temporary

exemption request from 10 CFR

50.82(a)(8) would have to be

approved by the NRC in order to

move a facility's funds from

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one unit's trust to another

unit's trust.

Do you see that?

A Yes, I do.

Q Why would an exemption from 10 CFR

50.82 be required?

A NRC regulations require that

licensees have a dedicated decommissioning

trust fund for each nuclear unit for each

nuclear license. And 10 CFR 50.82 identifies

the limitations with respect to the

expenditures of those funds. One part of 10

CFR 50.82 identifies that withdrawals from

those funds can be made for legitimate

decommissioning expenses.

The NRC has taken the position that

transfer of trust funds from one unit to

another does require an exemption. And I'll

cite that by talking about an exemption that

was filed that I'm familiar with by Arizona

Public Service for Palo Verde, the Palo Verde

site which has three units. And in that

exemption request APS requested the ability

to move decommissioning funds up to $5

million from Unit 1 decommissioning trust to

the Unit 3 decommissioning trust. And as I

said, that required an exemption approval by

the NRC.

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Q Mr. Levin, was that request for an

exemption for Palo Verde approved?

A Yes, it was.

MR. FREEDMAN: Thank you. Thank you,

Mr. Levin. Those are all my questions.

ALJ BUSHEY: Mr. Peffer.

MR. PEFFER: Your Honor, Ms. Gilmore

will be conducting questioning.

ALJ BUSHEY: Okay.

MS. GILMORE: Okay. Sorry. Didn't

have my glasses on.

MR. PEFFER: Your Honor, if it's

possible, I'd like to reserve five minutes

possibly after the break for this witness.

ALJ BUSHEY: For what purpose?

MR. PEFFER: I'd like to ask some

followup questions potentially, but we need

to do some printing first. We will subtract

that from this. So there shouldn't be any --

ALJ BUSHEY: We'll be off the record.

(Off the record.)


record.

Ms. Gilmore. Ms. Gilmore, are you

ready to begin your questioning?

MS. GILMORE: Yes.

MR. PEFFER: Your Honor, Ms. Gilmore

would like to approach the bench. She has

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some exhibits.

ALJ BUSHEY: Exhibits.

We'll be off the record.

(Off the record.)


record.

Ms. Gilmore, your first question.

CROSS-EXAMINATION

BY MS. GILMORE:

Q Okay. My first question is, all

right, on page 7 it starts, line 16, you

know, Witness Gilmore argues spent fuel pools

are only viable method to remediate a failed

spent fuel canister. And then on the next

page I reference the DOE document stating in

order to repackage a used nuclear fuel waste,

that's another term for spent fuel canister,

that it would require, according to the DOE,

it would require either a storage pool or a

hot cell facility.

MS. SALUSTRO: Objection, your Honor.

I understand that Ms. Gilmore is reading what

she --

MS. GILMORE: Yeah. I just was putting

it in reference for the question.

ALJ BUSHEY: Okay. Ms. Gilmore, you

don't need to do that.

MS. GILMORE: Okay.

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ALJ BUSHEY: You don't need to read

anything. It's already in the record.

MS. GILMORE: Okay. All right. Okay.

Q So regarding your mention of

repairing a canister as an option, what were

you using as your interpretation of failed

spent fuel canister when you were responding

to that?

MS. SALUSTRO: Objection. Could we get

a reference to --

MS. GILMORE: He's saying -- he's

saying that repairing is an option.

ALJ BUSHEY: Ms. Gilmore, a line

reference, please.

MS. GILMORE: Q Okay. I'm sorry.

Line 3 references a failed spent fuel

canister. So you're making a statement that

I should have considered the canister can be

repaired. I'm asking you what your

definition is of a failed spent fuel

canister. You were responding to that.

MS. SALUSTRO: And your Honor, I have

to object here. This is twisting not only

Mr. Levin's written testimony, but also Ms.

Gilmore seems to be twisting her own

testimony that's quoted here. ]

MS. GILMORE: Okay. I'm making it

simple.

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Q What is your -- what is your

definition -- on line 3 it says failed spent

fuel canister. What is your understanding of

the term, "failed spent fuel canister," when

you were responding to this?

MS. SALUSTRO: And again, your Honor, I

have to object because all he's doing is

quoting Ms. Gilmore on the previous page.

ALJ BUSHEY: Right. Sustained.

Ms. Gilmore, he's just quoting you.

MS. GILMORE: All right. I'll go

further down, and we'll get to this. Okay.

All right.

Q Down in tools to repair a flawed

canister, line 26. Are you aware of any

tools that are currently available today to

repair a canister -- successfully repair a

canister filled with spent nuclear fuel?

A In my testimony on lines 25 and 26,

I've said, "my experience absent tools to

repair a flaw." So that is correct. I am

not aware of any tools.

Q Okay. All right. So -- okay. So

you're not aware of any tools. Okay.

So are you aware of any other

options besides future repair tools or pools

or hot cell to deal with a failed canister?

MS. SALUSTRO: Objection, there's a

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lack of foundation. I'm not sure any of

those methods have been substantiated.

MS. GILMORE: Okay. Well, I have to

learn how to ask questions better.

ALJ BUSHEY: Okay. Ms. Gilmore, hold

on.

Isn't the answer, Mr. Levin, to the

question found at the top of the next page?

THE WITNESS: Yes, it is, your Honor.

ALJ BUSHEY: Okay.

MS. GILMORE: Okay.

ALJ BUSHEY: Ms. Gilmore, this is

already in the record.

MS. GILMORE: Well, I'm trying to

understand -- okay -- his point here. Okay.

All right.

Q Let's go to line 10 on page 9 where

you say that -- your belief that the DOE will

proceed with developing tools for repairs.

Are you aware of any projects -- you know,

what -- is your belief based on any documents

or knowledge of -- of project in place to --

to do this?

A I'm sorry. Can you repeat which

line you're on?

Q On number -- line 10, where you

state, "It is my belief DOE will proceed with

developing tools for making any needed

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repairs down the road."

A Yes, I stated that in line 9 that

DOE has programs in flight to develop tools

for inspecting canister surfaces, and I

identified a reference by Dr. Marshman at

Idaho National Laboratory.

Q No, my question is regarding tools

for making repairs, not for inspecting. It's

the second part of your statement.

A And my response is that you need to

have tools to identify the flaw. And down

the road, DOE will follow on with development

of tools to repair the flaws.

Q Okay. But my question is are you

aware of any projects that are in the queue

for the repair part.

A I'm not aware of any.

Q Okay. All right. That's what I

needed to know there.

Okay. This may go -- this may go

-- this may go quicker than I thought.

And -- and your -- wait a minute.

Okay. Page 9, line 4. So you say that it

can be placed in a larger canister, oversized

concrete storage module. Are you aware of

any NRC-licensed cask or canisters to do

this?

A It would require an amendment to

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any of the existing systems as I know about

them today.

Q Okay. Are you aware of any

currently licensed vendor that has a larger

canister available that they could put into a

slightly oversized concrete storage module?

A Again, it would require an

amendment to the systems that I'm aware of

today in order to do that.

Q Okay. Could it possibly require a

new license as opposed to just an amendment?

Are you sure it's just an amendment?

MS. SALUSTRO: Objection, your Honor,

it's asks for hypotheticals based on --

MS. GILMORE: I'm just asking -- I'm

just trying to clarify that he said a license

amendment, and I'm asking is it possible that

it could require a new license versus an

amendment.

ALJ BUSHEY: Ms. Gilmore, when a

witness' attorney objects --

MS. GILMORE: Oh, I'm sorry. I'm

sorry.

ALJ BUSHEY: Let's hear the objection.

MS. SALUSTRO: My objection is it's a

hypothetical based on uncertain facts. In

addition, we've asked several questions on

this point. I'm not sure if this line of

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questioning is helpful getting to the

determination of the reasonableness of the

estimate.

ALJ BUSHEY: The witness has provided

testimony asserting that the failed canister

could be addressed by this means and is being

cross-examined on what it would take to get

permission to do that. That seems to be

within the scope of the witness' testimony.

Whether that -- how that plays, if

at all, into the reasonableness determination

is another story. This witness has presented

testimony, and questions are being asked

regarding his testimony. So on that basis,

I'm going to overrule your objection. The

witness can answer if he knows.

THE WITNESS: It is my opinion that it

would require a license amendment and not a

new license.

MS. GILMORE: Q Okay. Can you give an

example of a -- a canister that would --

would have a -- that could get a license

amendment for this?

MS. SALUSTRO: That one I have to

object to, your Honor.

MS. GILMORE: Because a license

amendment assumes --

ALJ BUSHEY: Ms. Gilmore, we have

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375

another objection.

MS. GILMORE: I'm sorry. I'm sorry.

Objection. I'm sorry.

ALJ BUSHEY: Okay. And the objection

is?

MS. GILMORE: Calls for speculation and

in addition is calling for the witness to

speculate about an NRC action determining

whether -- what kind of license amendment

would be needed for what kind of canister.

ALJ BUSHEY: I was kind of thinking

asked and answered was where I was going with

this.

Ms. Gilmore, he's already said he's

not aware of anyone whose done this.

MS. GILMORE: Well, he's -- he said --

can I rephrase?

ALJ BUSHEY: Yes, Mr. Peffer?

MR. PEFFER: Your Honor, can I ask

that Ms. Gilmore be allowed to complete her

question before objections are lodged. She

was in the middle of the question, and she

was interrupted.

ALJ BUSHEY: I believe it was

completed.

Ms. Gilmore, had you completed your

question?

MS. GILMORE: Yeah. Well, yeah. Can I

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just -- maybe there was a thought missed

there. He -- we're here to kind of validate

the witnesses; right? To -- the credibility

or their knowledge; right? That's the part

of what --

ALJ BUSHEY: Right.

MS. GILMORE: Okay. So when he says

that, "Oh, you need a license amendment,"

that means existing canisters that are

currently approved by the NRC would be the

only ones eligible for an amendment.

Otherwise you need a new license.

ALJ BUSHEY: Okay. Ms. Gilmore, now

you're testifying.

MS. GILMORE: No, but I was trying to

explain where I was going with my question,

but --

ALJ BUSHEY: The purpose of

cross-examination is not to explain where

you're going.

MS. GILMORE: Okay. All right.

ALJ BUSHEY: You get a fact on the

record, and then you use that in your brief.

MS. GILMORE: Right.

ALJ BUSHEY: And you explain in the

brief.

MS. GILMORE: Right. And I was trying

to get another fact on the record.

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ALJ BUSHEY: Okay. What fact that's

not now in the record that you would like to

get in the record?

MS. GILMORE: I would like for him to

say what -- what approved canisters or casks

might be eligible for this license amendment.

He's saying a license amendment. To what --

to -- to -- to what existing canister, what

existing system?

ALJ BUSHEY: Let's see if the witness

has particular system in mind for an

amendment, or would any licensed --

THE WITNESS: Any licensed

canister-based dry cask storage system could

seek an amendment to allow that system to be

packed into a -- an oversized canister.

ALJ BUSHEY: Does that complete the

facts that you require, Ms. Gilmore?

MS. GILMORE: Q Would a transfer cask

be one of those for a license amendment?

A The transfer cask is a different

entity.

Q Okay. I just want --

A The transfer cask is licensed with

-- typically licensed with a system in its

original license in order to move canisters

between a storage overpack in the spent fuel

pool.

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Q Correct. I understand. What I'm

asking is -- would -- so would a -- just kind

of yes or no. Would a transfer cask

potentially be a cask that could get a

license amendment to store a failed canister?

Just yes or no.

A What would need to change for a

transfer cask is the certificate of

compliance and operations associated with the

transfer cask in the final safety analysis

report that says how long a canister can

reside in a transfer cask. And so it would

likely not be a new license. It would likely

not be a license amendment. It would be a

change of operating system requirements that

may or may not necessarily require the

license amendment.

Q Would it require an -- a license

exemption?

A Possibly, but I would expect it to

be an engineering change that's performed

under 10 CFR 72.48.

Q Okay. Would a transport -- a

transportation cask be a possible option for

a license amendment?

MS. SALUSTRO: Objection, asked and

answered.

MS. GILMORE: No, that was a transfer

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cask -- sorry. Sorry.

MS. SALUSTRO: Now we're getting to

transfer cask. I'm not sure how that relates

back to his testimony about packaging into a

storage module.

ALJ BUSHEY: Ms. Gilmore, we're --

we've gotten quite a long ways from the

witness's direct testimony.

MS. GILMORE: Well, he's -- he's

claiming that you can do this, so that's --

ALJ BUSHEY: Right. And you're

quizzing him on exactly what type of

permission would you need from the NRC. That

may or may not have any bearing on whether

this is technically feasible at all.

MS. GILMORE: Well, I -- I -- you know,

can I -- can I have a little latitude on

these questions because I --

ALJ BUSHEY: I've given you quite a bit

of latitude.

MS. GILMORE: All right. All right.

Because this is extremely relevant to -- to

the decommissioning -- the decommissioning.


(Off the record.)


record.

Mr. Geesman?

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MR. GEESMAN: Thank you, your Honor.

CROSS-EXAMINATION

BY MR. GEESMAN:

Q Good morning, Mr. Levin?

A Good morning, Mr. Geesman.

Q I'm John Geesman for the Alliance

for Nuclear Responsibility.

I would like to turn your attention

to Exhibit 18, which is your prepared direct

testimony. And go to page 9, lines 18

through 22 where you're talking about the DOE

pilot ISF program. And I believe ISF is

identified in your testimony as an acronym

for interim storage facilities.

Your reference is to a pilot

program, and my question is is your belief

that 2024 is a reasonable assumption for the

commencement of DOE acceptance of spent

nuclear fuel -- is your belief premised on

this pilot program taking place?

A I discussed the pilot program in my

testimony in as much as I used that to help

me validate the position that the

decommissioning cost estimate has taken that

2024 as a reasonable date. And based upon

that validation, I've concluded that the 2024

date is a reasonable date.

Q If there were no pilot program,

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381

would you reach the same conclusion?

A If there were no pilot program

today, I would reach the same conclusion.

However, I expect that -- as I've mentioned

in my testimony that legislation will be in

place by 2017, which will allow a pilot

program to be enacted and to begin in 2024.

Q I'd like to turn to page 8 of that

same exhibit. At lines 18 through 21, you

make reference to a Executive Order by

Governor Gray Davis from 2002. Could you

elaborate a bit more on what that Executive

Order does and how it relates to the

decommissioning cost estimate?

A Without the order in front of me, I

cannot at this time elaborate completely.

However, my familiarity with it tells me that

it potentially prevents municipal landfill

waste by governor order to be disposed of

from a nuclear facility in the state of

California.

Q And that would then focus the plant

owners on scrap metal recyclers or a

out-of-state municipal landfill?

A That is my understanding as

reflected in the decommissioning cost

estimate.

Q Do you know whether or not the

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382

plant owners have sought any variance from

this Executive Order?

A I do not.

Q I'd like to go to Exhibit 20, which

is your rebuttal testimony, and turn to page

11?

A I'm focused on Section B, which

occupies lines 1 through 19 of page 11. And

I'd like to make certain I've got the

arithmetic correct.

I look at line 6 and 7 where you

attribute to turn an estimate of

$441 million, and then you at line 16

indicate that 95 million of that is for the

intake and discharge conduit. So you believe

that ought to be subtracted from the

$441 million, which if I do that math is 441

minus 95, or $346 million attributable to the

Navy easement.


I think Mr. Geesman is looking at the -- I

withdraw that objection.

ALJ BUSHEY: Well, I have just a -- I

didn't hear an actual question in there.

What is the question?

MR. GEESMAN: Q Is my math correct?

$346 million should be attributable to the

requirements in the Navy easement for Site

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383

Restoration Period 5?

A I'll assume your math is correct.

Q Thank you. Then I would like to go

to pages 6 and 7. On page 6 --

A Excuse me, Mr. Geesman. Which

exhibit?

Q Oh, I'm sorry. I'm still on

Exhibit 20.

A Thank you, sir.

Q On page 6 I'm looking at that

numbered Paragraph 2. On line 14, you say,

"The SONGS DCE assumes all clean concrete

demolition debris is disposed of at an

out-of-state Class 3 landfill."

I want to clarify when you say,

"all," you mean not just that which is

three feet below the subsurface. You mean

all?

A Beyond three feet below existing

grade, yes.

Q Okay. And in line 17, you

attribute a cost impact of 237.8 million to

that requirement, including the contingency?

A The $237.8 million is the disposal

cost for that material.

Q Okay. Then I go to page 7, lines 2

and 3. You indicate that the SONGS estimated

cost impact is 297.8 million, including the

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384

contingency. And I believe that also

includes, does it not, the intake and outfall

facilities as well? Is that correct?

A That is correct.

Q I want to go through another

arithmetic question, and I'm focused on

Footnote 21 on page 7. And I start with the

441.5 million. That includes the intake and

outfall facilities; correct?

A For the complete disposition,

including labor, burial, et cetera, that is

correct.

Q I subtract 297.8 million to cover

that below three feet of the subsurface

requirement that only applies to SONGS. Am I

correct in doing so?

A I don't understand what you're

saying when you say, "Am I correct in doing

so?" Is there something --

Q Where I'm trying to go is a cost

number to attribute to this Executive Order,

the Executive Order which forces the plant

owners to find scrap recyclers or an

out-of-state landfill in which to dispose of

this uncontaminated rubble.

And I believe based on your

testimony, the correct way for me to do that

is 441.5 million minus 297.8 million. I'm

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385

asking if that is the appropriate way to look

at the effect of this Executive Order?

A I understand what you're looking

for. Without my workpapers in front of me

and the cost estimate to look at -- there may

be some other costs that should be in or out

associated with that, so I'm afraid I cannot

give you an answer at this time.

Q Do you know what the general

magnitude of those other costs would be? Is

it 10 percent? 20 percent?

MS. SALUSTRO: Objection. If

Mr. Geesman could be more clear about what he

means by those other costs?

MR. GEESMAN: Q The other costs that

you are concerned that without access to your

workpapers you can't give me a precise

number.

A I refrain from doing so without

having that information in front of me.

MR. GEESMAN: Thank you very much.

THE WITNESS: Sure.

MR. GEESMAN: That completes my;

questioning, your Honor.

ALJ BUSHEY: Okay.

Ms. Gilmore?

MS. GILMORE: Okay.

ALJ BUSHEY: Are you ready with your

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last questions?

MS. GILMORE: Okay.

CROSS-EXAMINATION (Resumed.)

BY MS. GILMORE:

Q Page 10.

ALJ BUSHEY: Of what exhibit?

MS. GILMORE: Of Exhibit 19.

Q And a paragraph that starts on line

13 of page 10. You're -- let's see. Is the

paper that you're referencing here in

Footnote 35 for -- for what kind of

repository? What kind of facility?

A The document I'm referencing in --

in Footnote 35 here simply is a discussion of

how the DOE may go about picking up canisters

from retired nuclear units.

Q Does it relate to interim storage

facilities or permanent repositories?

A I do not recall any discussion in

that document about a permanent repository.

I -- and with respect to the interim storage

facility, it addresses it only from the

standpoint that it would be the intent that

these canisters would go to an interim

storage facility.

Q Could you describe what an interim

storage facility is?

A An interim storage facility is a

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387

facility that will allow spent nuclear fuel

to be picked up from nuclear -- commercial

nuclear plants in advance of there being

available a deep geologic repository for

disposal. The interim storage purpose is

exactly that, for storage until a repository

is available.

Q And what kind of storage is used

for interim storage? What type?

A The technology would be very

similar to if not the same as the technology

that's currently used at commercial nuclear

plants.

Q So could you describe -- describe

at a very high level the process of moving

the existing fuel to the interim? Just a

very high level. I'm sure the Judge will

appreciate I said very high level.

A Are you requesting that I identify

the fuel that is in dry storage at a nuclear

plant?

Q Yeah, yeah, in dry storage.

A Or in wet storage?

Q Already in dry storage.

A The way that would happen is that

the Department of Energy would provide a

transportation cask of some sort into which a

canister of spent fuel at a retired reactor

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388

site or at an operating reactor site would be

transferred to be transported to the

Department of Energy. ]

Q And would this be using the

existing canisters that are there?

A That is the discussion that is in

this document.

Q Correct. Okay. Would those

canisters be inspected for any corrosion or

cracks prior to being transported?

A It's not a question or something I

can answer.

Q Okay.

A I'm not aware of it.

Q All right. Now, if it wasn't an

interim facility using the existing

canisters, if it was to take to a permanent

repository, which is what the current, you

know, law is, would the process be the same?

Would they be taking the canisters in the

existing canisters?

A That's speculation. I don't know.

Q We don't know. Okay. That's what

I wanted to -- that's what I wanted to --

On page 9, line 7, would you

describe what a transportation overpack is,

what the purpose of it and what it is?

A A transportation overpack, the

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389

purpose of it is to provide a conveyance of

package that allows spent nuclear fuel to be

moved outside or off of the plant site

boundary.

Q To?

A Wherever it may go.

Q Okay. Now, is the -- is this

normally -- what is this normally made out

of?

A It's normally made out of steel and

lead.

Q Is the steel normally thicker than

the thin canisters that it's currently in?

A You'll have to help me identify

what you're talking about.

Q Well, the -- we're putting here the

failed canister into a transport overpack.

So the thin canister goes into an overpack

for transport. Does this canister have any

additional barriers for, say, radiation or

requirements that the thin canister doesn't

have?

A The purpose of the thick canister

is threefold. It provides radiation

shielding. It provides structural support.

Q Is it designed to be reusable?

MS. SALUSTRO: Your Honor, if the

witness could -- I'm not sure if he was done

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390

with his answer.

MS. GILMORE: Sorry, sorry.

ALJ BUSHEY: All right. Ms. Gilmore,

why don't we let the witness finish his

answer.

MS. GILMORE: Okay.

ALJ BUSHEY: Okay. And let's confine

it to the reference he's made in his

testimony and not ask him to speculate about

other things.

MS. GILMORE: Okay.

ALJ BUSHEY: Okay. So if the witness

would complete his answer.

THE WITNESS: The transportation

overpack provides three functions. The first

is radiation shielding. The second is

structural support. And the third is

confinement.

MS. GILMORE: Q Are these designed to

be reusable?

A Typically that is the goal.

Q Is the cost ratio between the thin

canisters and the transport overpacks

significantly different?

A Yes.

Q In page 10, okay, on page 10 on the

paragraph 7 starting on line 7. Let me know

when you're there.

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391

A Yes.

Q Okay.

A Same exhibit?

Q Yes. Same exhibit. Yeah. Okay.

Now, where you reference that the spent fuel

pool gave Crystal River the ability to reopen

and repackage the fuel into any size

DOE-provided system, how would we -- is there

any way to do that without a pool?

A It may be possible.

Q And what might that be?

A It would require an in-air transfer

of spent fool assemblies, shielded spent fuel

assemblies.

Q Is there a name that they usually

call these facilities?

A Not that I can think of.

Q Okay. Dry transfer. Are you aware

of any of these? I'll just call it dry --

you said like a dry transfer type.

Are you aware of any of these

facilities that exist that are large enough

to perform this function?

A There was an experimental design

that I'm aware of that was up at the Idaho

National Laboratory.

Q Does that facility still exist?

A I do not know.

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392

Q Do you know what the cost of

roughly of building one of those facilities

would be in order to perform this function?

A I do not.

Q Would you think it would be

significant?

MS. SALUSTRO: Objection. Vague and

ambiguous.

ALJ BUSHEY: The witness says he

doesn't know.

MS. GILMORE: Okay. All right.

Q And do you, you know, do you know

why Crystal River would want to be able to

repackage the fuel in a DOE-provided system?

A Yes, I do.

Q And what is that reason?

A The reason is if the Department of

Energy provided a transportation system that

required a smaller package or a smaller

amount of spent fuel in it.

Q Okay. Is there a current

requirement that the utilities be able to do

that, provide the fuel to be put in a DOE

canister?

A No.

Q Would their standard contract?

A The standard contract simply

identifies a standard waste form, which is a

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393

fuel assembly. It does not specify package

sizes.

Q No. But it specifies that you need

to be able to put the -- it doesn't specify

the container it goes in. I understand that.

But that the fuel assemblies need to be able

to go into a DOE canister. Is that what

you're saying? I'm trying to make sure I

understand.

A It does not specify that.

Q It does not. Does the NRC require

that spent fuel assemblies be retrievable

from a canister?

A The NRC is currently reviewing what

retrievability means.

Q But under the current existing

requirements?

A Retrievability is on an assembly

basis.

Q Yes. Okay. Thank you for that.

Okay. In terms of, are you -- in terms of --

so do you know how long the thin type of

canisters have been in use roughly?

MS. SALUSTRO: Your Honor, I'm going to

object. I'm not sure what relevance that is

to Mr. Levin's testimony.

ALJ BUSHEY: Ms. Gilmore, do you have

a --

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MS. GILMORE: Q Well, we're talking

about -- okay. Let's go down to page 9, line

9. Okay. The whole paragraph there. Okay.

So in here we're discussing developing tools

to inspect, developing tools to repair. This

obviously assumes something went wrong. So

what would you -- how do --

MS. SALUSTRO: Your Honor, objection.

MS. GILMORE: Hold on. I need to

gather my thoughts here.


(Off the record.)


record.

Mr. Lutz.

MR. LUTZ: Thank you.

CROSS-EXAMINATION

BY MR. LUTZ:

Q Ray Lutz with Citizens Oversight.

Good morning.

A Good morning.

Q I'm looking at your testimony

regarding the pilot ISF operation, and this

is on page 9, lines 15 through 18. I'm not

sure what exhibit number this had on it.

Sorry. My eyes are getting bad. Let me get

my glasses out. Okay. Here you say that --

A I'm sorry. Can you clarify the

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395

exhibit for me, please.

Q It's SDG&E-01-R-E-A.

MR. GEESMAN: Exhibit 18.

MR. LUTZ: Is that No. 19?

MR. GEESMAN: 18.

MR. LUTZ: 18 is the number that you

guys have assigned.

ALJ BUSHEY: What page?

MR. LUTZ: Page 9 and lines 15 through

18 is what I'm referring to.

Q Do you see those lines starting

with, "The DOE-assumed start date"?

A Yes.

Q Okay. In this passage it

references that it was predicate -- the start

date was predicated on work beginning by

January 2014, but then it goes on to say it

has yet to be launched. So is the schedule

slipping for the pilot ISF program?

A As I've mentioned in my testimony

here, DOE recognizes that federal legislation

will be in order for them to move forward,

and federal -- it's reasonable to make an

assumption at this point that legislation can

be acted, enacted by 2017. That legislation

is already in process.

Q Has the -- are you aware of any

investigation by the utilities into an

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396

in-state off-site ISFSI, or what we call it

here, a interim storage facility within

California?


By investigation, if Mr. Lutz could clarify

what he means by that.

MR. LUTZ: Q Well, in other words, in

order to create a interim storage facility,

you would have to have a site for it, a

location, transportation to it and so forth.

So there was a lot of issues regarding where

it might be. Has there been any discussion

or investigation into a location in

California that you are aware of regarding

those issues?

A The only thing I'm aware of is what

I've read in the newspaper.

Q Okay. So all right. Because

you're not really part. Have you read

anything in the newspaper about a -- since

you're an expert in this area, on a interim

storage facility within California?

A That's about the level of my

knowledge, yes.

Q So you haven't heard anything?

A Not in detail, no.

MR. LUTZ: Okay. Thank you very much.

ALJ BUSHEY: All right. Ms. Gilmore,

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are you prepared?

MS. GILMORE: Yeah.

CROSS-EXAMINATION (resumed)

BY MS. GILMORE:

Q Okay. Page 9, line 7.

A Of which exhibit?

Q Exhibit 19.

A I'm sorry. You said page?

Q Page 9, line 7. It's the third

bullet.

A Yes.

Q Ready? Okay. All right. Once you

have this canister in the transport overpack,

then what do you do with it? How do you --

you know, what's the plan for it after that

to -- you know, what would you do with it

after you do that?

A Research the options as to whether

it needs to be repaired.

Q Okay. You don't have repair

technology yet?

A I would first search the options to

see if it needs to be repaired.

Q Okay. Well, that's -- it's a

failed canister. And so what you're saying

is you would -- okay. Assume it needs --

assume it needs repairing or assume it is a

failed canister, meaning it has cracks. So

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398

then what do you do after you have it in this

transport overpack? Then what do you do with

it?

A Well, again, I would first evaluate

it to see if it needs to be repaired and if

necessary either seek an exemption from the

NRC to accept the canister as is or determine

what my repair technology might be.

Q Okay. Assuming we don't have the

repair technology yet, which is what's in

your statement, if there was a site for it to

go to, which is the eventual plan, would we

be able to transport a -- would you be able

to transport a failed canister in this

transport overpack, canister with cracks in

it?

A To be able to provide an opinion on

that requires somebody with some structural

engineering background, and I'm not of that

ilk.

Q Or have you read any technical

specifications for any of these canisters to

see what the requirement is or what the

requirements are for transportation

overpacks, that they would allow a transport

of a cracked canister?

MS. SALUSTRO: Your Honor, can I

object. This is going pretty far afield.

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399

His testimony here we've discussed quite a

bit, and his testimony was just laying out

something that Exelon staff had identified as

what to do if there was a suspected failed

canister. It doesn't go into transporting to

off-site storage and so on.

ALJ BUSHEY: I'll sustain your

objection. The witness has already said he

doesn't know. He's not qualified to opine on

this.

MS. GILMORE: He doesn't know. Okay.

That's fair. Okay.

Q Do you have any knowledge of how

long it's going to take to develop inspection

technology?

A No.

Q No. Okay. Or how long it would

take to develop repair technology?

A No.

Q No. Okay. All right.

ALJ BUSHEY: Does that conclude your

questions, Ms. Gilmore?

MS. GILMORE: Yeah. Let's see.

ALJ BUSHEY: Redirect?

MS. GILMORE: I think that's -- I think

that's it.

ALJ BUSHEY: Good. Thank you, Ms.

Gilmore.

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400

Redirect, Ms. Salustro.

MS. SALUSTRO: Yes, your Honor.

REDIRECT EXAMINATION

BY MS. SALUSTRO:

Q Mr. Levin, do you recall the line

of questionings that TURN asked you about the

SDG&E master trust agreements?

A Yes, I do.

Q For clarification, you did not

author the SDG&E six master trust agreements,

did you?

A I did not.

Q Are you at all responsible for

administering the master trust agreements?

A I am not.

Q Or interpreting the master trust

agreements' meaning?

A I am not.

Q Mr. Levin, do you acknowledge that

the nuclear decommissioning trusts, again

that you were discussing with Mr. Freedman

earlier, are not only subject to NRC rules

but also subject to IRS rules?

A Yes.

Q Ms. Gilmore asked you several

questions about the availability or the

existence of tools to repair canisters. Do

you recall your response of the existence of

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401

these tools?

A I believe I responded that the

tools for repair do not exist.

Q Thank you. Mr. Geesman from A for

NR asked you several questions about numbers

as they related to navy easements. If I

could take you back to those pages. I'm

sorry. I don't have the reference

immediately handy. Oh, I'm sorry.

Exhibit 20, pages 6 and 7.

A Yes.

Q On page 6, paragraph 2, which runs

from 14 to line 18, isn't it true, Mr. Levin,

that this paragraph is discussing the

estimated cost of disposal as that relates to

the California executive order?

A That is correct. And I believe I

made that statement previously.

Q And then further down on lines, on

page 6, paragraph 3, starting at line 19

which carries over to the next page, this

paragraph and your estimate here relates to

site restoration; is that correct?

A That is correct. Including all

costs associated with that.

Q And when you say all costs, I

believe that was a reference to line 21 --

I'm sorry -- footnote 21 on page 7?

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402

A That's correct.

Q And for clarity you said that the

number that appears in footnote 21 included

not only the costs mentioned in paragraph 3

about site restoration but also costs such as

labor that would be associated with that?

A That is correct. Labor, equipment,

materials, etcetera.

MS. SALUSTRO: One moment, your Honor.

ALJ BUSHEY: Off the record.

(Off the record.)

ALJ BUSHEY: Back on the record.

Ms. Salustro.

MS. SALUSTRO: Yes. Thank you.

Q Mr. Levin, were you present for Tom

Palmisano's testimony?

A Yes, I was.

Q Do you recall this statement in his

testimony on the stand that repair technology

exists although tools would need to still be

developed?

A Yes. His statement is, was that,

technology exists, the tools need to be

developed.

Q Do you agree with that statement?

A Yes, I do.

MS. SALUSTRO: No further questions.

ALJ BUSHEY: Thank you. Final

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403

questions? Mr. Geesman.

MR. GEESMAN: Recross.

ALJ BUSHEY: Yes. Of course confined

to the new material.

RECROSS-EXAMINATION

BY MR. GEESMAN:

Q Mr. Levin, based on the numbers in

your testimony and your responses to Ms.

Salustro's redirect, how would you isolate

the additional costs for compliance with the

navy easement attributable to the executive

order you cite in your testimony?

MS. SALUSTRO: Your Honor, that's a

mischaracterization. The executive order is

about waste disposal. The navy easement is

about as Mr. -- when Mr. Geesman was walking

through the numbers, he was referencing

numbers for the navy easement about site

restoration. They're two separate

categories.

ALJ BUSHEY: Well, it would help the

record I think if we were clear as to whether

or not -- how these numbers work together,

how the numbers in paragraph 2 and paragraph

3 work together. Is that where you're going,

Mr. Geesman?

MR. GEESMAN: That is.

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404

EXAMINATION

BY ALJ BUSHEY:

Q Yes. I will just share with you my

understanding, and feel free to correct me if

this is wrong. I'm understanding that these

two numbers are additive. So that

237.8 million plus 297.8 million gets us the

total of the executive order and the site

remediation; is that correct?

A I wish it were that simple.

Q Okay.

A The discussion in paragraph 2 not

only addresses the costs of disposing of the

material that needs to be removed because of

the navy easement but also discusses other

material that may be removed down to the

3-foot mark as an example. So it encompasses

not only the material that's below 3 feet but

all the other material at the site that ends

up going to a municipal landfill.

Q How does that relate to the

297.8 million then?

A Okay. The total costs for doing

the remediation to meet the navy easement as

well as the removal of the intake and

outfalls is $441 million. That's given in my

footnote. Subtracted from that is a portion

of the $237 million.

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405

Q Right. So the disposal costs --

A Which is applicable only to that

piece of the work.

Q Right. So the disposal costs have

already been taken out, right, of the 441

million?

A No, no, no. The disposals costs

are in there. Okay. So there's a piece of

the 237 which is the total cost of the site.

There's a piece that's associated with the

441. And what I did was backed that piece

out in order to come up with the 297.

Q So the 297 number doesn't include

the disposal costs?

A That is correct. Because I did

not -- I had included the disposal cost in

that Item 2.

Q Right.

A And so I didn't want to double

count for it as I looked through all of these

items here and added them up.

ALJ BUSHEY: All right. Okay. All

right. Ms. Geesman, questions?

RECROSS-EXAMINATION

BY MR. GEESMAN:

Q So how much of the 237 is

attributable to the executive order?

A Again, without my workpapers I

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406

can't tell you because that -- when you talk

about that piece associated with the

executive -- oh, excuse me. Let me step

back. You're asking of the 237 what is

associated with the cost of disposal?

Q That's correct.

A Associated with that executive

order?

Q Correct.

A It would be difference between the

441.5 million and 297.8 million.


ALJ BUSHEY: Okay.

THE WITNESS: Thank you.

ALJ BUSHEY: Ms. Gilmore.

RECROSS-EXAMINATION

BY MS. GILMORE:

Q One cross question, recross.

Regarding Tom Palmisano's statement yesterday

bringing up the repair tools, he mentioned

that Calvert Cliffs had a license renewal

approved. Are you aware if there's any

requirements in the renewal for repairing or

inspecting in that license renewal? ]

A I know there are some inspection

requirements. I do not know exactly what

they are.

MS. GILMORE: Okay. Thank you.

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407

ALJ BUSHEY: Mr. Lutz?

RECROSS-EXAMINATION

BY MR. LUTZ:

Q Okay. In the redirect, there was

mention made of Tom Palmisano's testimony

regarding technology but not tools available,

and the reference was to repair. There was

also another reference in that his testimony

which was regarding inspection. And from my

memory, I remembered that inspection was

possible, but the tools weren't available.

Do you agree that with inspection, the tools

are not available?

MS. SALUSTRO: Objection, your Honor,

this goes beyond my limited --

MR. LUTZ: Well, I disagree with you

that the -- I'm sorry.

ALJ BUSHEY: I understand that you

disagree with it. But when you're on

recross, you have been confined just to the

new material. And Ms. Salustro only asked

about a narrow range of Mr. Palmisano's

testimony.

MR. LUTZ: Well, let me just say that

-- before I ask, can I go off the record for

a second?


(Off the record.)

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408


record.

Final questions for this witness?

(No response.)

ALJ BUSHEY: Hearing none, then the

witness is excused.

Ms. Salustro, would you like to call

your next witness?

MS. SALUSTRO: Yes, your Honor.

MR. LUTZ: Here you go.


Yes, your Honor. SDG&E calls

Ms. Tracy Dalu.

TRACY M. DALU, called as a witnessby San Diego Gas and Electric Company,having been sworn, testified asfollows:

THE WITNESS: I do.

ALJ BUSHEY: Please be seated.

State your full name for the record

and state your last name.

THE WITNESS: My name is Tracy M. Dalu,

and my last name is spelled D-a-l-u.

ALJ BUSHEY: Ms. Salustro?


DIRECT EXAMINATION

BY MS. SALUSTRO:

Q Ms. Dalu, do you have Exhibits 18

and 19 in front of you?

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409

A I do.

Q You're sponsoring sections in both

exhibits as indicated in the table of

contents; correct?

A Correct.

Q Were these sections prepared by you

or under your supervision?

A Yes.

Q Do you have any changes or

corrections to make at this time?

A I do not.





A Yes.




A Yes.

Q And do you adopt these exhibits as

your sworn testimony in this proceeding?

A I do.

MS. SALUSTRO: Your Honor, the witness

is available for cross-examination at this

time.

ALJ BUSHEY: Thank you.

Mr. Freedman.

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410

MR. FREEDMAN: Your Honor, I have a

cross exhibit. Can I hand it out at this

time?


(Off the record.)


record.

While we were off the record, we

identified Exhibit 26. It's a TURN

cross-examination exhibit that is an SDG&E

advice letter.


ALJ BUSHEY: Mr. Freedman?

MR. FREEDMAN: Thank you.

CROSS-EXAMINATION

BY MR. FREEDMAN:

Q Good morning, Ms. Dalu.

A Good morning, Mr. Freedman.

Q I'd like to turn to your direct

testimony, Exhibit 18, pages 17 and 18.

A Okay. I'm there.

Q Great. So in this section,

Section 9, where you discuss the nuclear

decommissioning trust disbursement advice

letters, you referenced SDG&E's Tier 3 Advice

Letter 2724-E; is that correct?

A Yes.

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411

Q Were you involved in the

preparation of that advice letter?

A I provided some of the information

in that advice letter.

Q And you cite this as an example of

a request for interim trust disbursements by

SDG&E; is that right?

A Correct.

Q Okay. Let's take a look. This is

the cross exhibit that's been provided,

Exhibit 26. Do you recognize this as

selected pages from that advice letter?

A I do.

Q I'd like to ask you to turn to the

second page, which actually is page 16 from

the advice letter. There's a section,

Section 6. It's titled, "Comparison of

Recorded Costs to the DCE." Do you see that?

A Yes.

Q So does this section compare the --

the costs that are requested for disbursement

from the trust to those estimated in the DCE

for the relevant time period?

A Yes, it does.

Q And what's the relevant time period

that's being addressed in this advice letter?

A The advice letter is I believe

June 7th, 2013, to December 31st, 2013.

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412

Q Okay. And does the -- does this

section of the advice letter essentially

identify one of the key challenges to such a

reconciliation being that the DCE includes

costs over a much longer period than the six

months for which SDG&E is requesting the

trust disbursement?

A Yes, it does.

Q So SDG&E here is requesting costs

for six months from a period that runs for

approximately two years in the DCE; is that

right?

A No, SDG&E is requesting costs

through December 31st, 2013.

Q I understand. I guess my question

is -- but the period in the DCE to which this

cost is being compared runs for approximately

two years rather than six months; isn't that

right?

A That's correct.

Q And that's part of the challenge

with providing an accurate comparison for

just that six-month period?

A Correct.

Q Correct?

A We had to allocate the costs

included in the DCE to compare that to our

2013 numbers.

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413

Q And how did -- how did SDG&E

perform this allocation for a shorter time

period?

A I wasn't directly involved in that

allocation.

Q So you don't know whether it's just

a prorated share based on time?

A I believe it would be a prorated

share based on time.

Q Okay. And in the third paragraph

here there's a reference in -- the very first

sentence references SDG&E's limited ability

to directly compare estimated costs in the

early shutdown study to its own incurred

decommissioning costs. Do you see that

sentence?

A I do.

Q Does SDG&E have a strategy or a

plan for addressing this limitation in future

trust disbursement advice letters?

A SDG&E is currently working to

develop their own accounting system that

would align with Edison's accounting system

and allow us to report in the format included

in the decommissioning cost estimate.

Q Okay. So let me continue on in

this exhibit.

If you continue turning through the

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414

pages, the next page is titled, "Attachment

B," and then the next page after that shows

an estimate of costs recorded during the last

six months of 2013 versus what was in the

DCE; is that correct?

A Correct.

Q And if you were to look at the next

two pages, it shows Attachment C, and that is

followed by a graph that outlines cumulative

estimated spending versus actual cumulative

spending; is that correct?

A That's correct.

Q Is this -- the detail contained in

Attachments B and C consistent with what

SDG&E intends to provide in future advice

letters requesting trust disbursements?

A I believe this is consistent with

what we would provide, but as we receive

additional information, we -- we could -- we

will be able to provide more information.

Q And does SDG&E intend to provide

information that would allow costs to be

tracked by activity?

A Yes, we do.

Q So that's a lot more detail than is

contained in this advice letter; isn't that

right?

A That's correct.

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415

Q And looking at your testimony,

again back on page 17, you identify elements

that SDG&E will strive to provide at the

bottom of the page there at the bullet point

list to the best of its ability.

A Correct.

Q What -- are there any specific

limitations on SDG&E's ability to provide

this information?

A We're currently working with Edison

to obtain a complete mapping of all the costs

billed to us and be able to identify those

costs with lines and decommissioning cost

estimate. Once we receive that information,

we will be able to provide most of the

information included in this section of my

testimony.

Q How long has SDG&E been working on

this effort to obtain this information from

Edison?

A We started discussions with them in

I believe February of 2015.

Q And if I look at page 18, the last

bullet point at the very top of the page

there, you reference a description of

activities for which a variance of plus or

minus 10 percent between the decommissioning

cost estimate and actual costs incurs. What

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416

do you mean by a description? Do you mean

simply you would list activities that may be

over or under budget?

A Yes, that's how I would interpret

that.

Q Does that mean there would be a

narrative description or just a list of here

are the activities for which this condition

is true?

A I'm not sure I can answer that

question at this point.

Q And does SDG&E intend to provide

information on adherence to schedules that

are included in the DCE?

A We will provide schedules as long

as we have the information from Southern

California Edison.

Q And do you know whether that

information will show whether individual

activities are ahead of or behind schedule?

A I believe we will receive a report

that would give us that information.

Q And would it also show whether

individual activities are above or below the

cost forecasted in the latest DCE?

A I believe it will.

Q And to the extent that Edison

provides that information to SDG&E, would

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417

that -- would that information be then

included in the trust disbursement advice

letters?

A We are happy to provide whatever

the Commission asks us to provide.

MR. FREEDMAN: Okay. Thank you,

Ms. Dalu. Those are all my questions.


ALJ BUSHEY: Ms. Dalu, I have a

follow-up question for you.

EXAMINATION

BY ALJ BUSHEY:

Q On line 13, page 17, you say, "The

2014 costs have been paid with ratepayer

funds"?

A Correct.

Q Are these not the same cost that's

are pending in the Application 15-02-006?

A I'm sorry? What is the

Application 15-02-0 --

Q 2014 SONGS O&M and non-O&M costs.

I'm on line 13 of your testimony. I'm trying

to understand how those costs could have been

paid with ratepayer funds.

A Those costs were billed to us as

O&M and capital costs.

Q Uh-huh.

A And were recovered through the

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418

SONGS balancing account or through the SONGS

regulatory asset.

Q Decommissioning costs went to --

A We weren't billed in a

decommissioning format until -- the

decommissioning agreement wasn't signed until

April of 2015, so we were continuing to be

billed as O&M and capital up until January

of 2015.

Q So then what's in the application?

MS. SALUSTRO: Your Honor, I might be

able to provide clarification here. I'm not

sure Ms. Dalu is the right person here.

Oh, I'm sorry. So I believe that

the ratepayer funds discussed here are still

from our GRC; right?

Yeah they're still from our GRC.

The --

ALJ BUSHEY: Wait a minute. What do

you mean from your GRC?

MS. SALUSTRO: We have a authorized

revenue requirement from our 2012 GRC for

SONGS costs.

ALJ BUSHEY: Okay. So these

decommissioning costs are a line item in your

revenue requirement?

MS. SALUSTRO: They -- the SONGS costs

is a better way to describe them.

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419

ALJ BUSHEY: SONGS costs?

MS. SALUSTRO: Yes.

ALJ BUSHEY: And because you didn't

have a decommissioning agreement, these early

decommissioning costs were rolled into

generic SONGS costs?

MS. SALUSTRO: When we -- our

application for the 2012 GRC requested a

revenue requirement for SONGS costs as we had

always done. That was before -- that

proceeding was going on prior to and then

during shutdown. So our request remained the

same, and it was approved. And so we had a

revenue requirement for SONGS costs through

the 2012 GRC Decision.

Some of those costs are

decommissioning costs granted. And so when

we received the approval to reach trust funds

to pay for those costs through the advice

letter process, which was just recently

approved, the advice letter lays out how

those funds are then given back to ratepayers

in order to make everything whole for the

ratepayer.

ALJ BUSHEY: Okay. So you're going to

take money out of the decommissioning trust

and sort of pay back revenue requirement, if

you will? Or it will be a credit in a

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420

balancing account somewhere?

MS. SALUSTRO: I believe that's right.

We have Norma Jasso up next. She might be

able to describe this better than I can.

ALJ BUSHEY: I just want to make sure

there isn't any double-counting.

MS. SALUSTRO: No, no, no. We were

very careful not to engage in double

counting.

ALJ BUSHEY: That was my only question.

Final questions for the witness?

Hearing none --

Mr. Matthews.

MR. MATTHEWS: If I could briefly add

to what Ms. Salustro explained?

The ratemaking treatment is

addressed in the SONGS OII settlement. And

at least the way it works for SCE, there is a

-- there is a refund mechanism through our

ERRA of any costs that are deemed to be

decommissioning costs.

ALJ BUSHEY: Okay. Thank you I guess

for that testimony. So the witness then is

excused.

We're going to take a brisk break

until exactly 11:00 o'clock.


(Off the record.)

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ALJ BUSHEY: The Commission will come

to order.

Ms. Salustro would you like to call

your next witness?

MS. SALUSTRO: Yes. SDG&E calls Norma

Jasso.

NORMA G. JASSO, called as a witnessby San Diego Gas and Electric Company,having been sworn, testified asfollows:

THE WITNESS: Yes.



and spell your last name.

THE WITNESS: Norma G. Jasso,

J-a-s-s-o.



DIRECT EXAMINATION

BY MS. SALUSTRO:

Q Ms. Jasso, do you have Exhibits 20

and 21 in front of you?

A I do.

Q And you're sponsoring sections as

indicated in the table of contents within

both of these exhibits; correct?

A Correct.



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A Yes.

Q Do you have any changes or


A I do.

Q Could you please direct us to your

particular change or correction?

A In Exhibit 21, on page 11, line 3,

I'm adding two words,

"decommissioning-eligible." And I will read

the sentence how it reads right now and then

the revised sentence.

"SDG&E will cease recording entries

in the SONGSBA for costs incurred on or after

January 1st, 2015."

The new sentence will read, "SDG&E

will cease recording entries in the SONGSBA

for decommissioning-eligible costs incurred

on or after January 1st, 2015."

Q Do you have any additional


A No.

Q With this correction, to the extent

that these documents contain facts, are those

facts true and correct to the best of your

knowledge, information, and belief?

A Yes.



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A Yes.



A I do.


Your Honor, the witness is available

for cross-examination.


Mr. Lee.

MR. LEE: Thank you, your Honor.

CROSS-EXAMINATION

BY MR. LEE:

Q Good morning, Ms. Jasso.

A Good morning.

Q Ms. Jasso, I wasn't quite following

your correction because I was looking at

Exhibit 20. I direct your attention to

Exhibit 20.

A No, Exhibit 21.

ALJ BUSHEY: Good. Because that's

where I made the correction.

MR. LEE: Oh, Exhibit 21. I'm sorry.

Q And Exhibit 21 is labeled

SDG&E-02-R-E-A?

A Yes.

Q Thank you.

And your correction was on page 10?

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A Would you like me to repeat it?

Q Yes, please.

A Yes, on page 11.

Q Page 11, yes.

A Line 3.

Q Yes.

A I will add two words. It currently

reads, "SDG&E will cease recording entries in

the SONGSBA for costs incurred on or after

January 1st, 2015." In front of the word

"costs" I'm adding

"decommissioning-eligible."

Q Thank you. Thank you.

Ms. Jasso, your job title is

Regulatory Accounts Analyst Manager; is that

correct?

A Regulatory Accounts Analysis

Manager.

Q Thank you. What are your job

responsibilities with regard to maintaining

the SONGSBA balancing account? Did you

understand the question?

A Could you be --

Q Certainly.

Ms. Jasso, as part of your job

duties, are you responsible for maintaining

the SONGS -- not the -- the SONGSBA,

S-O-N-G-S-B-A, SONGSBA balancing account?

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425

Are you responsible for maintaining that

balancing account?

A So with the word "maintaining," I

don't know if you mean accounting journal

entries or what specifically you mean by

maintaining. I don't do accounting journal

entries, but I am responsible for compliance

with the mechanism for the SONGSBA.

Q Thank you.

Now, when you say you are

responsible for compliance, does that include

a responsibility to see that the SONGSBA

balancing account is in compliance with

Commission orders?

A Yes.

Q And how long have you had this as

part of your job responsibility?

A I have had this position for two

years.

Q So your responsibility as described

regarding SONGSBA began in 2013?

A Yes.

Q I direct your attention now to

Exhibit 20, Ms. Jasso. Page 16, lines 8

through 11.

A I'm there.

Q What do you mean on line 9 when you

say that the costs in the SONGSBA balancing

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426

account are, quote, "generally related"?

What does that mean, "generally related"?

A In my testimony, I included on the

same page -- if you go to line 23, I've

included what we are currently recording in

SONGSBA.

Q Uh-huh.

A And so when I said generally

related is because I have four bullets here.

Q Uh-huh.

A And generally those are related to

the events which occurred prior to June 2013.

Q And so the activities on page 16,

lines 23 to 31 and then going on to page 17

are the activities that are recorded in

SONGSBA?

A Yes, these are the activities.

Q Thank you.

Now, I turn your attention to

Exhibit 21, page 10.

A I'm there.

Q At lines 20 to 22.

A Yes.

Q That information indicates to me

that the Commission ordered SCE to maintain

the SONGSBA balancing account open to support

its application for reasonableness regarding

costs incurred for 2014; is that correct?

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427

A In this Decision that I mention on

lines 20 -- starting on line 20, the

Commission ordered SDG&E to retain the

SONGSBA open until the Commission directs us

to close it.

Q Thank you. Now, since the date of

that Decision, D -- excuse me -- D.14-11-040,

has the Commission issued an order directing

SCE -- SDG&E to close the SONGSBA balancing

account? ]

A No.

Q Thank you. Now, I direct your

attention to Exhibit 21, page 11.

A I'm there.

Q Thank you. Lines 3 to 4.

A Yes.

Q You use terms -- well, I direct

your attention to the term "will cease

recording entries." And would you also look

at the term "for costs incurred"?

A Yes.

Q Those are two different events, are

they not, recording and when costs are

incurred?

Let me ask you your definition.

What do you understand when you say costs

incurred? When are costs incurred?

A Cost, for the SONGS for the costs

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428

are incurred when we are -- when we

receive -- in our case when we receive the

information, the details of the cost from

Edison, then we record them. So if we

receive them, we stop, we record them, and we

consider them incurred at that time.

Q And normally when costs are

received and hence incurred, do you also

record them at the same time? I mean do

those two events take place normally on the

same day?

A In the same accounting period, yes.

Q Okay. Is there any time lag

between when you receive the details of a

cost and when you subsequently record the

costs in the SONGSBA balancing account?

A No.

Q Okay. So they generally would

happen on the day when you receive sufficient

details to say that the costs incurred, and

then you would promptly record it in the

SONGSBA balancing account?

A Yes.

Q Thank you. What are you going to

do with the costs that are incurred

subsequent to January 1st, 2015, and recorded

after January 1st, 2015?

Let me rephrase my question. I may

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429

have been mixing my dates.

You state on lines 3-4, page 11,

Exhibit 21, that SDG&E will stop recording

entries for SONGSBA regarding costs incurred

on or after January 1st, 2015?

MS. SALUSTRO: Your Honor, this was the

one correction that Ms. Jasso had. So the

sentence is actually that we'll stop

recording entries in the SONGSBA for

decommissioning eligible costs.

ALJ BUSHEY: Right. That was the

correction.

MR. LEE: Thank you. I stand

corrected.

Q So my question again, if you're

going to stop recording these decommissioning

eligible costs that are incurred after

January 1st, 2015, what happens to them?

A Yes. On that same page in my

testimony, page 11.

Q Yes.

A As we continue reading after that

sentence that we've been discussing, I do

explain that we are using the SONGS 2 and 3

Permanent Closure Non-Investment-Related

Expense Memorandum Account, otherwise known

as SPCEMA. That's the account where we are

recording the decommissioning eligible cost.

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430

Q Now, I asked you a question about

the ineligible decommissioning costs that are

incurred and recorded in the SONGSBA

balancing account after January 1st, 2015.

What are you going to do with those

ineligible decommissioning costs?

A So the cost that will not go into

SPCEMA will go into SONGSBA.

Q I understand. So you only stop

using SONGSBA for decommissioning eligible

costs but not for ineligible decommissioning

costs?

A We're stopping for decommissioning

cost, yes.

Q Eligible costs?

A Yes.

Q But you're still using the SONGSBA

balancing account for ineligible

decommissioning costs?

A I am using SONGSBA for costs that

are not decommissioning eligible.

Q Thank you. Yes. I hope we're

saying the same thing. Thank you.

Is there at all a possibility that

a cost, a noneligible, decommissioning

noneligible cost, could be incurred before

January -- strike the question. I think I

understand. Thank you.

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431

Now, I'd like to ask you to explain

something that appeared at first to me

inconsistent. On Exhibit 20 at page 16,

lines 8 through 9, you stated, continues to

record nondecommissioning cost in SONGSBA,

and then in Exhibit 21 at line 11 lines 3 to

4 you say it will cease recording entries in

SONGSBA for decommissioning eligible costs?

A Right.

Q So maybe in light of this

correction they're not inconsistent, are

they?

A Correct. That's why I made the

correction.

MR. LEE: Thank you, Ms. Jasso. You

saved me a lot of time. End of

cross-examination. Thank you.

ALJ BUSHEY: You've completed

cross-examination?

MR. LEE: I did. Thank you.


Redirect?

MS. SALUSTRO: No thank you.

ALJ BUSHEY: Witness is excused.

Ms. Salustro, would you like to call

your next witness?


Your Honor, SDG&E calls Randy Rose.

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432

RANDALL G. ROSE, called as a witnessby San Diego Gas and Electric Company,having been sworn, testified asfollows:

ALJ BUSHEY: Please be seated. State

your full name for the record and spell your

last name.

THE WITNESS: My name is Randall G.

Rose, R-o-s-e like a flower.



DIRECT EXAMINATION

BY MS. SALUSTRO:

Q Mr. Rose, you have Exhibits 20 and

21 in front of you?

A I have Exhibits 18 and 19. I don't

have 20 and 21, at least what I've numbered

as 18 and 19.

MS. SALUSTRO: Your Honor, may I

approach and make sure he has the right?

ALJ BUSHEY: We'll go of the record.

(Off the record.)


record.

Ms. Salustro.


Q So Mr. Rose, this time do you have

Exhibits 20 and 21 in front of you?

A I do.

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433

Q Thank. And you're sponsoring

sections as indicated in the table of

contents in both of these exhibits, correct?

A That's correct.



A Yes.

Q Do you have any additional changes

or corrections to make at this time?

A I don't.





A Yes.

Q And to the extent that these

documents contain opinions, do those opinions


A Yes.



A Yes.

MS. SALUSTRO: Your Honor, Mr. Rose is

available for cross-examination.


Mr. Freedman.

MR. FREEDMAN: Yes, your Honor. I have

two cross exhibits to distribute.

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434


(Off the record.)


record.


identified Exhibit 27, which is a TURN data

request and SDG&E response. It's Question 1,

2, 11.


ALJ BUSHEY: Exhibit 28 is TURN

cross-examination exhibit. It is also a TURN

data request and an SDG&E response. It is

Question 8 and its associated response.


ALJ BUSHEY: So those are Exhibits 27

and 28.

Mr. Freedman.


CROSS-EXAMINATION

BY MR. FREEDMAN:

Q Good morning, Mr. Rose.

A Good morning.

Q I'd like to ask you to turn to your

rebuttal testimony, which I believe is

Exhibit 20, page 14. Page 13.

A Page 13? Okay.

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435

Q And at the bottom of page 12

carrying over to page 13 you reference IRS

Section 468A(e)(4). And you state that the

IRS code limits the use of funds in qualified

nuclear decommissioning trusts to the three

purposes that you quote from the IRS

regulations on the next page; is that right?

A That's right.

Q Does the IRS also allow for the

termination of a nuclear, of a qualified

nuclear decommissioning trust fund upon

substantial completion of decommissioning?

A You could request a private letter

ruling from the IRS.

Q I'm asking a different question,

Mr. Rose.

A Okay.

Q There is a point where a qualified

nuclear decommissioning trust fund is

ultimately terminated?

A Yes.

Q Isn't that right?

A Yes.

Q And the IRS rules do provide for

that occurrence, do they not?

A Yes. That's in the regulation.

Q And what happens at that point to

any unspent balances that are no longer

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436

needed for decommissioning at the point that

the qualified trust is terminated?

A The assumption is those funds are

withdrawn from the trust.

Q And what is the IRS treatment of

that withdrawal? How do they --

A They tax it.

Q So the withdrawals are taxed?

A Yes.

Q Are withdrawals taxed when they are

taken from the fund at all times?

A They are generally -- yes. I think

at all times. There's a certain symmetry in

the tax code. The taxpayer gets a deduction

when they contribute funds to the

decommissioning trust. And so when funds are

withdrawn from the trust, they have to take

that into income.

Q So when SDG&E currently receives a

disbursement from the trust, that's

considered taxable income?

A Yes. And then there's an equal and

offsetting deduction for the underlying

decommissioning cost.

Q But the deduction is due to costs

being incurred. It's not related to the

disbursement mechanism itself, is it?

A That's correct.

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437

Q And so when a disbursement occurs

at the end of the trust's life, that

disbursement is similarly taxed; am I right?

A That's correct.

Q But there may be no offsetting

expense in that year to effectively

neutralize the tax impact; am I correct?

A That's right. That deduction that

would neutralize that impact occurred when

the contribution was originally made to the

trust.

Q And there's no penalty at the end

of the life of the trust when it's finally

terminated, is there?

A No. The only penalty specified in

the internal revenue code are for acts of

self-dealing.

Q And what is an act of self-dealing

at a general level? What does that mean?

A Well, that's where a disqualified

person would engage in transactions with the

fund.

Q So that's effectively the taxpayer

raiding the fund for their personal benefit?

A Yes. I mean that's one way to put

it, yes.

Q Acts of bad faith, would that be a

way to understand it?

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A Yeah. If there was an act -- if

for example, the corporation used the trust

funds for some purpose that benefited the

corporation, the IRS would deem that as a --

as an act of self-dealing. There would be an

excise tax or a penalty. And if they didn't

correct it, then the fund would be deemed

disqualified.

Q Okay. Thank you. On page 13 of

your testimony on line 15 you reference

private letter rulings that are sought from

time to time from the IRS. Have you been

involved in requests for private letter

rulings on behalf of SDG&E?

A I have.

Q Okay. Well, let's take a look at

the first cross-examination exhibit, which

has been marked Exhibit 27. And there's a

couple of responses here I'd like to just

walk you through. Have you seen these

responses previously or were you the author

of them?

A I've seen them and authored them.

Q Great. And in answer to Question 1

there's a question about whether a nuclear

decommissioning trust fund has lost qualified

status during the course of nuclear power

plant decommissioning. And am I correct in

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439

understanding your response is that you're

unaware of any instance where such a trust

has lost its qualified status during

decommissioning?

A Yes. With that caveat, during

decommissioning.

Q Right. And you state that the

consequences are so severe that a responsible

company would correct a violation prior to

disqualification.

What are the consequences of

disqualification?

A The market value of the funds

remaining in the trust become immediately

taxable.

Q And there would not be sufficient

offsetting expenses in that year to

neutralize the tax impact; is that right?

A That's correct.

Q So it's just, it all becomes

taxable at one time?

A That's right.

Q Okay. And going to page -- the

second page of this exhibit, there are

questions about transfers and IRS approval

for transfers between two qualified trust

funds. And here you explain that through a

private letter ruling companies may request

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440

IRS authorization to move funds between

qualified trusts; is that right?

A Yes. A company could request the

IRS permission to transfer between funds, but

doing so would be asking the IRS to, is it

okay if we violate the regulations, because

the regulations are quite proscriptive about

what the funds can be used for.

Q If the money is being moved from

one trust to another to pay for

decommissioning expenses, you're saying that

that would violate the trust, the

requirements of the IRS code?

A Yes. That would be my opinion.

Q And is that something that's backed

up by any particular rulings that you've

read?

A Yes. Code Section 468A broadly

defines the terms of a nuclear

decommissioning trust. In other words, a

nuclear -- a qualified nuclear

decommissioning trust is a creation of the

Internal Revenue Code, and specifically

Section 468A. And that lays out the broad

concepts. Then the regulations under 468A

define specifically what you can do in terms

of putting money into a trust and what you

can do in terms of taking money out of the

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441

trust.

And let me see if I've got it here.

If I were to go to the regulations,

specifically regulation 1.468A-5, it says in

Section 1 1 little i -- here's what it says.

An electing taxpayer can maintain only one

nuclear decommissioning fund for each nuclear

power plant with respect to which the

taxpayer elects the application of 468A. So

what it's saying is that you can set up one

qualified fund for each power plant. And

referring back to plant, in the code section

it says plant or unit thereof. So in terms

of SONGS we have three power plants, Units 1,

Unit 2, and Unit 3. Then over in section --

ALJ BUSHEY: I'm sorry. We'll be off

the record for a minute.

(Off the record.)


record.

THE WITNESS: In Section 3 of that

regulation which is entitled Limitation on

Use of Fund it says:

The assets of the nuclear

decommissioning fund are said to

be used -- are to be used

exclusively to satisfy in whole

or in part the liability of the

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442

electing taxpayer for

decommissioning costs of the

nuclear power plant to which the

nuclear decommissioning fund

relates.

So in my opinion that would

preclude the company from transferring funds

from one fund to the other fund because it

doesn't relate to the same unit or power

plant.

MR. FREEDMAN: Q And if the taxpayer

were to create a new trust for the same unit

and transfer money from the old trust to the

new trust and extinguish the old trust at the

moment of the transfer, wouldn't there still

be one, only one trust attached to that unit?

A There would only be one trust in

existence at the time.

Q And do you know whether the IRS has

issued any rulings relating to that type of a

transfer for an individual unit?

A Not to my knowledge.

Q Let's move to the next page in the

data response here, Question 11. SDG&E is

asked to provide copies of any communications

with the Internal Revenue Service regarding

nuclear decommissioning trust funds since the

shutdown of San Onofre in 2013.

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443

And in response, several documents

are provided. I have only attached one, and

that relates to a request by SDG&E that

received a private letter ruling, I believe

138136-14. Do you see that?

A Yes. Yes.

Q And in this request am I correct in

understanding that SDG&E sought a private

letter ruling regarding the permissibility of

using nuclear decommissioning trust funds to

pay for the costs associated with spent fuel

storage at an independent spent fuel storage

facility in Morris, Illinois, that stores

fuels from the SONGS Unit 1?

A That's correct.

Q And in response did the IRS raise

concerns about whether these were

reimbursable from the trust funds?

A Yes. I think to give context to my

answer you need to understand exactly how

these private letter rulings work. A

taxpayer if he has questions about whether

funds can be withdrawn from the trust and

still meet the provisions of Code Section

468A may request a private letter ruling from

the IRS. The IRS will inform the taxpayer if

it intends to rule adversely on the request.

And that's what happened in this

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444

situation. The IRS said, "Yeah, we have

concerns based on the facts and the law. We

plan to rule adversely." And our response

was, "Can we come back and meet with you and

try and talk you out of it," and which we

did. And ultimately what the IRS came back

with was a no ruling letter which said,

"We're not sure that we're the right branch

of the IRS to be dealing with the issues that

you have asked us to opine on. And so what

we're going to do is allow you to withdraw

your request and resubmit it to another

branch that's better qualified to rule on

your issue. If you get a positive ruling on

that specific issue, then we'll allow you to

come back to us and see whether or not we

agree with you on the other issues that were

in the ruling request."

Q And what has SDG&E done subsequent

to that conversation?

A Mull it over and think about how we

want to respond to the IRS.

Q Understood. But notwithstanding

the ultimate resolution of this issue, which

I understand is pending, is it fair to say

that the concern identified in this private

letter ruling related to whether funds could

be reimbursed if there was also a likelihood

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445

that they could be obtained from another

source, namely, through litigation against

the United States Government?

A That was one of the concerns

expressed by the IRS. And that was the

concern that they agreed with us that they

did not have expertise to rule on.

Q So at this point it's unresolved

whether SDG&E can withdraw money from the

trusts that relate to costs for spent fuel

management that may also be included in a

damage claim against the United States

Government?

A That's right. They haven't ruled

against us, and yet they haven't said that

those are decommissioning costs.

Q And does part of the issue hinge

upon the likelihood of recovery?

A Well, that was our argument with

the IRS because what happened is they were

applying to standard that exists in a

particular code section that deals with

abandonment losses. And for example, this is

really a good example, with respect to SONGS,

we know that there's -- the SONGS was shut

down because of the failure of the steam

generator replacements. We have an action as

does Edison against the manufacturer of those

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446

steam generators.

While we're waiting for that

proceeding to conclude, we're not eligible to

take an abandonment loss under the Internal

Revenue Code. And that's Section 165. Our

argument to the IRS is, this isn't a 165

issue. This is a 162 issue. Storage of

spent nuclear fuel costs are an ordinary and

necessary business expense. They're not an

abandonment loss. So therefore, you're

applying a standard that exists in a code

section that is irrelevant to our request.

And then they said, "Gee, I think

maybe you have something there. We're not

really experts in that area. Why don't you

resubmit your request to somebody else in the

IRS that is more expert in that particular

code section."

Q And this is obviously an issue, is

it not, that pertains to a large number of

utilities facing similar facts?

A I don't know how many utilities

have the specific facts that we do because

this deals specifically with off-site storage

at this Morris facility in Illinois. And I

don't know how many companies store spent

nuclear fuel at that facility.

Q I'm actually asking about a

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447

different issue that's identified there which

has to do with this single issue of recovery

of whether disbursements can occur for costs

that have a likelihood of recovery and to the

extent that's applicable to SONGS Units 2 and

3?

A That could be an issue that a

number of companies face depending on their

facts and circumstances.

Q Well, if it turns out that the IRS

does not bend on this issue and confirms the

earlier ruling that we've reviewed here, what

would happen to funds that have already been

collected and deposited into the trust funds

and that are expected to be used for this

purpose?

MS. SALUSTRO: Objection.

Mischaracterizes. There's no ruling from the

IRS, as Mr. Rose has explained.

MR. FREEDMAN: If the IRS rules --

THE WITNESS: The IRS issued a no

ruling. So they didn't actually rule.

But I think to get to your question,

what we were asking for is to be able to

withdraw funds from the trust to pay for

these spent nuclear fuel storage costs.

Currently through 2015 those spent nuclear

fuel costs are in the revenue requirement in

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448

a general rate case. They're not part of the

nuclear decommissioning trust.

MR. FREEDMAN: Q I guess my question

is, and I understand the IRS resolution has

not yet been complete and it may go different

ways, but I'm asking you to envision a

situation in which the IRS rules adversely on

this issue against SDG&E. Now, in that

situation does that mean that any money in

the trust funds that had been assumed to be

available for use for this purpose could not

be withdrawn for any purpose?


Not only is it compound and vague, but it

also again misstates that there's some type

of subsequent ruling expected by the IRS. As

Mr. Rose explained, we received a no ruling.

We have not submitted or asked for an

additional ruling from the IRS at this point.

So there's nothing to indicate that the IRS

will speak further on this particular issue.

ALJ BUSHEY: Well, if that happens,

then what's the plan, right? Isn't that the

question?

MR. FREEDMAN: Yes, your Honor.

ALJ BUSHEY: So it's sort of, it's

almost what is the status quo? If the status

quo continues, if there's no change, what is

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449

SDG&E's plan for the costs associated with

that offsite storage?

MR. FREEDMAN: Your Honor, my question

pertains to the onsite storage at Units 2 and

3. The issue that's raised in this private

letter ruling. There are different issues.

The one I'm interested is the onsite.

ALJ BUSHEY: The onsite. Okay.

THE WITNESS: Okay. This deals solely

with the offsite storage, not the onsite

storage. So there are two different issues.

The IRS has never given us an indication that

they would disapprove of decommissioning

costs for onsite storage. They seem to draw

a distinction between offsite and onsite

storage costs and whether or not they're


MR. FREEDMAN: Q Mr. Rose, with all

due respect, the first issue presented in the

letter here that was presented, if you look

at the second paragraph of the first page,

about halfway down it states, the first issue

presented is your request, and your request

is primarily factual because of the requested

ruling would require a determination of the

likelihood of recovery of all or a portion of

the payments in question from the Department

of Energy. If a taxpayer has a right to

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450

recover such amount, they are not otherwise

deductible and are thus not nuclear


A Okay.

Q So is this kind of a separate

issue --

A It is.

Q -- that is teed up?

A It's a separate issue. There's

really two questions going on here. First of

all, in order for you to treat a cost as a

decommissioning cost, it has to be deductible

for federal income tax purposes. So there

were a couple of questions presented, and one

is whether storage costs at all were

decommissioning costs. ]

And we were limiting our request to

the IRS specifically to offsite storage. But

with respect to onsite or offsite storage,

whether or not you had a right to collect

from the IRS -- that would be nice. If you

have a right to collect from DOE, then

there's a question about whether you can

deduct the spent fuel storage costs as long

as you had a right to deduct. That was our

whole case with the IRS because we do not

have a right. We have a right to file a suit

in hopes of collecting, but we don't have a

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451

fixed right.

Q So just to follow on then with what

the judge was -- was asking, what would be

the alternative strategy if the IRS rules

adversely or does not permit in any form

SDG&E to remove money from the trusts for

spent fuel management that may be sought from

the U.S. Government?

A Well, my understanding is that in

the past, those costs have been recovered in

the general rate case. If we couldn't

recover those costs through the trust, we'd

have to seek recovery from ratepayers.

Q Okay. Thank you. Let me ask you

about the next exhibit, which has been marked

as TURN-28. And this -- this response asks

questions about the nuclear decommissioning

trust committees and the master trust

agreement. I understand you are not an

expert on the master trust agreement; is that

correct?

A You are correct.

Q So I'm not going to ask you to be

an expert about the trust agreement, but I

would like to turn your attention to the

response to Question 8B, which includes an

excerpt from the trust agreement. And in

particular, I just want to draw your

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452

attention to the first few sentences which

describe the master trust agreement

description of how SDG&E may file an

application prior to the end of

decommissioning for final disbursements from

the trust. Do you see that?

A You want to go ahead and read the

section you're referring to?

Q Sure.

The company shall apply for and

acquire CPUC approval of the

estimated final costs for

decommissioning each plant or

plants. Such application shall

be made one year in advance of

the time the company estimates

use of funds exceeding 90 percent

of the forecast of

decommissioning costs approved by

the CPUC will be required. Upon

approval of the final cost of

decommissioning each plant, the

CPUC shall authorize final

disbursements from the applicable

funds to pay the decommissioning

costs.

A Okay. Thank you.

Q Are you familiar with this

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453

provision of the trust, or is this your first

time learning about it?

A This is my first time reading it.

Q Okay. So to the extent that SDG&E

were to file an application consistent with

this provision of the trust after 90 percent

of the funds have been expended, then the

return of those funds would be effectively

taxable, any remaining funds as we discussed

earlier consistent with the IRS code, would

they not?

A Yes, I believe they would be.

Q And when you read this paragraph,

do you see anything here that is inconsistent

with your understanding of the IRS

requirements governing qualified nuclear

decommissioning trust funds?

A I don't see anything inconsistent,

no.

MR. FREEDMAN: Okay. Great. Thank

you, Mr. Rose. That's all my questions.

ALJ BUSHEY: Redirect?

MS. SALUSTRO: None.

ALJ BUSHEY: Thank you. The witness is

not quite excused. I just have to follow-up,

on this one just to confirm that should there

be a recovery from the Department of Energy

and should costs have been included in

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454

revenue requirements, the recovery from the

DOE will be credited to revenue requirement

as well?

THE WITNESS: Yes, yes, that's right.

You know, the real question that was being

asked here is whether we could take the

deduction and then if we get recovery, take

that back into taxable income so that there

again would be symmetry.

The IRS seemed to think that we

would need to wait until the final resolution

by the courts on whether DOE had to reimburse

us. And for whatever DOE didn't reimburse

us, then we could withdraw the remainder of

the trust.

ALJ BUSHEY: Right. We'll leave those

issues in the capable hands of the Internal

Revenue Service. And I'll be focused on

revenue requirement. Okay? Sounds good.

The witness is excused. Would you

like to call your next witness, Ms. Salustro?

MS. SALUSTRO: Your Honor, that

actually concludes SDG&E's witnesses at this

time.

ALJ BUSHEY: Yes. Mr. Freedman, hold

on.


(Off the record.)

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455


record.

Ms. Salustro.

MS. SALUSTRO: Thank you, your Honor.

Your Honor, there were several SDG&E

witnesses that did not appear during the

hearings because their presence had been

waived. They had sponsored various sections

of what's been marked as SDG&E exhibit -- or

marked as exhibits for identification ranging

from what's been marked Exhibit 18 through

Exhibit 24. So at this time SDG&E would --

moves for the admission of the entirety of

SDG&E's testimony, which is Exhibits 18

through 24 into the record.

ALJ BUSHEY: Does any party object?

(No response.)

ALJ BUSHEY: Hearing none, those

exhibits are received into evidentiary

record.

(Exhibit No. 18 was received intoevidence.)




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456




ALJ BUSHEY: We also have TURN

Cross-Examination Exhibits 25, 26, 27, and

28. Does any party object to having those

moved into the evidentiary record?

(No response.)

ALJ BUSHEY: Hearing none, then they

are received.





ALJ BUSHEY: That brings us to

Exhibit 29, which will be the ORA Report on

2014 SONGS Units 2 and 3 Decommissioning Cost

Estimate. That will be Exhibit 29.


ALJ BUSHEY: And Exhibit 30 will be the

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457

Southern California Edison Company Responses

to ORA Data Request 1, Questions 10B, 12A,

and 12B.


ALJ BUSHEY: I understand that all

parties have waived cross examination of the

ORA witnesses, so we will just receive these

documents into the record.



ALJ BUSHEY: That takes care of ORA's

exhibits and brings us to TURN.

Mr. Freedman.

MR. FREEDMAN: Yes, your Honor. TURN

would call to the stand our witness, Bruce

Lacy.

ALJ BUSHEY: Please come forward,

Mr. Lacy.

We'll get him sworn in, and then

we'll circulate the documents.

BRUCE A. LACY, called as a witnessby The Utility Reform Network, havingbeen sworn, testified as follows:

THE WITNESS: I do.



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458

and spell your last name.

THE WITNESS: I'm Bruce A. Lacy,

L-a-c-y.

ALJ BUSHEY: Thank you, Mr. Lacy.


(Off the record.)


record.


identified Exhibit 31, which is Testimony of

Bruce Lacy on Behalf of The Utility Reform

Network Addressing Issues Related to the

Decommissioning Costs for the San Onofre

Nuclear Generating Station.


ALJ BUSHEY: Mr. Freedman.

MR. FREEDMAN: Yes, your Honor.

Just for clarification, we had

submitted errata to the service list

approximately one week ago. The exhibit that

we have today is a clean version that

includes the errata. We are not asking for

those two versions to be separately marked.


DIRECT EXAMINATION

BY MR. FREEDMAN:

Q Okay. Mr. Lacy, are you sponsoring

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459

direct testimony that has been marked as

Exhibit 31, the Testimony of Bruce Lacy on

behalf of TURN.

A Yes.

Q And did you prepare -- was this

testimony prepared by you?

A Yes.

Q And do you have any corrections

that you wish to make at this time?

A Yes, I have two pages that I would

like to offer some small corrections on.

They do not change the conclusions or

recommendations of the report, but in the

spirit of precision on some of the numbers

being used in the proceeding, I'd like to

make those corrections.

The first correction is on page 2

of my testimony. And if we look at the

second paragraph, third line, it begins,

"Government begins removing." And it says,

"Government begins removing S and F from the

site in 2024." And that should be corrected

to say, "removing S and F from SONGS in

2024." The reason for the change there is

that the early years of fuel removal take

place from the Morris facility in Illinois

that we were just talking about, but that is

fuel that was produced by SONGS. So I just

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460

want to be very specific there.

The second correction that I wanted

to offer is on page 25 of 27, and there are

several here. But all of these corrections

relate to the exchange that took place

between Mr. Geesman and Mr. Levin. And I

will go to the fifth paragraph answer where

it says, "Changes to the U.S. Navy lease

conditions are a very real possibility."

Move down to the fourth line of that

paragraph. There's a number that says "441

million." I would like to change that to the

arithmetically proven result of Mr. Geesman

and Mr. Levin's discussion of "346."

And then going on down to the next

to the last paragraph that says, "In addition

to the specific amounts of 441 million,"

change that number to the arithmetically

correct "346 million."

And then in the next to the last

line of that paragraph, it says, "It is

important to note that these two numbers

alone represent a 10 percent reduction in the

overall project cost."

Those are my corrections. Thank

you.

Q And with those corrections,

Mr. Lacy, are the facts presented in your

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461

testimony true and correct to the best of

your knowledge?

A They are.

Q And do the opinions expressed in

your testimony represent your best

professional judgment?

A They do.

Q And do you adopt this testimony as

your own?

A I do.


Your Honor, Mr. Lacy is available

for cross-examination.

ALJ BUSHEY: Thank you, Mr. Freedman.

Mr. Matthews?

CROSS-EXAMINATION

BY MR. MATTHEWS:

Q Hello. Good morning, Mr. Lacy. My

name is Walker Matthews, and I represent

Southern California Edison.

A Good morning. We just got that

good morning in by five minutes.

Q Sure enough.

I wanted to clarify the corrections

that you just made to your testimony. And

first take you to page 25 of 27 of what has

been marked as Exhibit 31. Are you on page

25?

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462

A Yes.

Q And you had changed the number from

441 million. I wanted to confirm whether you

had changed it to 346 million or 336 million.

I didn't quite hear it.

A If I spoke incorrectly, I

apologize, but I intended to say 346.

Q Okay. Thank you. I may have

misheard.

MR. MATTHEWS: Your Honor, can we go

off the record? I have two cross exhibits.


(Off the record.)


record.


identified two exhibits. The first

cross-examination exhibit from Edison is an

Excerpt of the Report on Nuclear

Decommissioning dated February 28th, 2011.

This will be Exhibit 32.


ALJ BUSHEY: And then Exhibit 33 is

Edison's cross exhibit, Excerpt from its

Nuclear Facilities Qualified CPUC

Decommissioning Master Trust Agreement.

That's Exhibit 33.

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463

Mr. Matthews?


MR. MATTHEWS: Okay. Thank you.

Q Mr. Lacy, you participated in the

preparation of the February 28, 2011, Report

on Nuclear Decommissioning for the California

Public Utilities Commission; correct?

A Yes, I did.

Q And excerpts of that report have

been marked as Exhibit 32; is that correct?

A I assume the material you have

given me is correct. It looks familiar.

Q Okay. Thank you.

The conclusions contained in the

February 28th, 2011, report were unanimous

among the three preparers listed on the title

page of that report; correct?

A That's correct.

Q And you were one of the preparers

of that report; correct?

A That's correct.

Q The report considered among other

things differences between --

A Is there a page you would like me

to look at?

Q Not at this time. I'm still asking

general questions.

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464

A Okay.

Q The report considered among other

things the differences between the

decommissioning cost estimates for SONGS 2

and 3 and Diablo Canyon that were being

considered in the 2009 nuclear

decommissioning triennial proceeding;

correct?

A That's correct.

Q Okay. Please refer to page 14 of

the report, which is excerpted in Exhibit 32?

A I have page 14 here.

Q And it in the first paragraph

explains the panels', you know, consideration

of the two estimates. One of the differences

between the estimates identified by the panel

related to the quantity of material assumed

to be removed from the respective sites;

correct?

A Yes.

Q Now, as shown on the bottom of the

page -- or please confirm that what's shown

on the bottom of the page is the panel's

calculation of the difference between the

removal costs included in the SONGS 2 and 3

and Diablo Canyon estimates; is that right?

A Are you talking about the footnote

or the last paragraph?

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465

Q I'm referring to the last paragraph

on the bottom of page 14 of Exhibit 32.

A Sure. Okay. Let me just take a

look at this.

I've read that.

Q And the panel's calculation of that

difference was about 1.335 billion; correct?

A Yes, I think that's the sum of the

three numbers there.

Q And in fact, that's also confirmed

on page Roman 1, which is also excerpted in

Exhibit 33 -- excuse me, Exhibit 32.

A Can you tell me where you're

looking?

Q Page Roman 1, which is the

Executive Summary.

A Oh, I'm sorry. Okay.

Q It's the third paragraph. The

bottom of the third paragraph, you see the

1.335 figure?

A It's in the -- what you're talking

about is in the third paragraph near the end

of that paragraph?

Q Yes. Yes.

A Okay.

Q And that's the figure that the

panel calculated as the difference in removal

costs between the SONGS 2 and 3 and Diablo

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466

Canyon estimates considered in the 2009

nuclear decommissioning triennial proceeding;

correct?

A I want to be careful of the word

you used there. I want to go back and look

at page 14 for just a moment.

I -- I'd just be careful here. I

don't think I regard this -- in fact, I'm

confident that the 1.3 billion there is not

just material. I mean, there's a significant

indirect cost. And what's not shown in the

handout here is that we did a breakdown of

these additional costs. And. There's a pie

chart as I recall from the study. I have not

looked at it, but it details those additional

-- what those additional indirect costs are.

But I do agree that we identified a total gap

between the two of 1.3 billion.

Q Okay. Thank you for that

clarification.

The panel made this calculation

based on its understanding of the SONGS 2 and

3 and Diablo Canyon estimates being

considered in the 2009 nuclear

decommissioning triennial cost proceeding; is

that correct?

A Yes, I believe that's the basis for

the estimates used.

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Q Now, in the second paragraph on

page 14, the panel noted that the SONGS 2 and

3 decommissioning cost estimate did not

contain sufficient information to readily

determine the exact cost; is that correct?

A Yes, that's what it says.

Q So I want to understand the

recommendation that's at the bottom of page

14 of Exhibit 32, which was a recommendation

by the panel that a more accurate value be

determined for future NDCTP, nuclear

decommissioning cost triennial proceeding, by

developing a decommissioning cost estimate

specifically for the desired scope?

A I see those words.

Q Is it correct to say that the panel

was recommending that the California Public

Utilities Commission review and approve a

more accurate estimate of the SONGS 2 and 3

removal costs in a future proceeding?

A I believe that's what this intends.

Q Would you agree that this

proceeding is an opportunity for the

Commission to review a more accurate estimate

of the removal costs?

A I just want to make sure I

understand your question. Are you asking me

if I think the 2014 decommissioning cost

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468

estimate is more accurate than the one we

looked at in 2009?

Q No. I'm asking you to confirm that

this proceeding is an opportunity for the

Commission to review an updated estimate as

recommended on the bottom of page 14.

A I believe the answer is yes.

Q If you could turn to page 19 of

Exhibit 32?

A I'm there.

Q The panel begins a discussion that

-- that compares SONGS 2 and 3, Diablo

Canyon, and Palo Verde decommissioning cost

estimates that were being considered in the

2009 nuclear decommissioning cost triennial

proceeding for other cost estimates for units

across the United States; correct?

A Yes, that's the beginning of the

first paragraph.

Q The panel also stated that "The

comparison also requires care to not

oversimplify and to not get lost in details."

Do you see that statement?

A I do. Those are my own words.

Q Do you still agree with that

statement as in relation to any comparisons

of the current 2014 SONGS 2 and 3

decommissioning cost estimate --

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469

A I do.

Q -- to other estimates?

A I do.

Q On the middle of page 19, the panel

further states that "An equally important and

challenging objective was to obtain

decommissioning cost estimates that are

reasonably current." Do you see that

statement?

A I do.

Q Do you still agree with that

statement in regard to comparing the current

2014 SONGS 2 and 3 decommissioning cost

estimate to other estimates?

A Yes.

Q You cite the estimated

decommissioning costs for St. Lucie in your

current testimony; is that correct?

A Yes.

Q The St. Lucie estimate cited in

your testimony refers to a 2010 estimate;

correct?

A Yes.

Q You also cite to a Turkey Point

estimate in your testimony?

A Yes.

Q The Turkey Point estimate cited in

your testimony refers to a 2010 estimate; is

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that right?

A What I'm going to do is look at the

-- what page are you looking at, just to make

sure that --

Q It's on page 23 of 27 of your

testimony, Mr. Lacy.

A Right. I don't believe the

testimony specified those dates, but I'm not

disputing the dates that you're offering

here.

Q You would agree to the dates

subject to check?

A Yes.

Q And would you also agree subject to

check that the South Texas Project cited in

your testimony refers to a 2012 estimate?

A I believe that's correct.

Q On page 23 of Exhibit 32, in the

first paragraph about midway through, the

panel also describes potential explanations

for variations in decommissioning cost

estimates considered in -- in this report;

correct?

A In the independent panel report?

Q Yes.

A Let me read that.

I've read that paragraph. Can you

remind me of your question, please?

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Q And the potential explanations for

variations include such things as the size of

the facilities, seismic design issues, and

other site and design factors; correct?

A Yes.

Q Do you still agree that those

potential variations are valid when

considering or comparing the 2014 SONGS 2 and

3 decommissioning cost estimate to other

decommissioning cost estimates?

A Yes.

Q St. Lucie is a smaller facility

than SONGS 2 and 3; correct?

A I -- it is smaller, but I don't

recall how much smaller it is.

Q Would you agree, with all other

things being equal, that a smaller facility

would tend to reduce the estimated

decommissioning cost for that facility?

A Yes.

Q SONGS 2 and 3 is located in a high

demand seismic area; correct?

A Yes.

Q Would you agree that, all things

being equal, a facility located in a high

seismic demand area would tend to result in a

higher decommissioning cost estimate than a

facility located in a lower seismic demand

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area?

A Yes. In the spirit of the

generalities that we've been speaking, I

would say yes.

Q Can you turn back to page 15 of

your report -- excuse me -- of the panel's

report, the independent report?

A Sure. I'm on page 15.

Q I'm looking at the third and fourth

paragraphs where there's a discussion of

SONGS security costs. Do you see that

discussion?

A I do.

Q Do you want to take an opportunity

to briefly review those two paragraphs?

A Sure.

I've read them. Thank you.

Q And on this page of the independent

panel report, the panel acknowledged that due

to SONGS location adjacent to a public Beach

and interstate highway, that SONGS security

requirements during decommissioning present a

number of challenges. ]

A I apologize. Where are you

reading?

Q I'm paraphrasing.

A Oh, okay. Thank you.

Q Would you agree with that

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473

paraphrasing?

A Yes. Basically a constrained site.

Q Would you also agree that the SONGS

security requirements and challenges may tend

to increase estimated decommissioning costs

when compared to other facilities?

A Again, in the spirit of the general

line, yes, but I think in security we

actually could get into a little more of a

detailed discussion there, but generally I'll

say yes.

Q You turn to page 3 of Exhibit 32.

A I'm on page 3.

Q At the bottom half of page 3 the

panel identifies a number of cost drivers.

Do you see that?

A Yes.

Q And these are cost drivers that

will impact the cost of decommissioning,

correct?

A Yes.

Q Do you still agree that these are

cost drivers that will impact SONGS 2 and 3

decommissioning?

A Well, let me take a look. I'm

assuming the answer will be yes, but let me

just look at it to make sure there's nothing

significantly changed. Yes. I would say

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474

generally yes.

Q Okay. Mr. Lacy, can you please

turn to Exhibit 31, which is TURN's

testimony, Attachment B, which is in the back

of the testimony, and specifically turn your

attention to a TURN-SCE-2 Data Request

Question 1A, which provides the question and

SCE's response to Question 1A.

A Hold on.

ALJ BUSHEY: Mr. Matthews, is this

about account numbers?

MR. MATTHEWS: This particular set of

questions relates to the master trust

agreements where there's been some discussion

about the 90 percent threshold.

ALJ BUSHEY: Question 1A has to do with

account numbers.

MR. MATTHEWS: Are you --

ALJ BUSHEY: I'm in Attachment B.

MR. MATTHEWS: Q Are you at the back

where -- well, on the top of the page does it

say TURN-SCE-2, or does it say TURN SCE 1 in

the header?

A You said SCE-2 question what

number?

MR. MATTHEWS: Perhaps we can go off

the record briefly.


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(Off the record.)

ALJ BUSHEY: We will be back on the

record.

Mr. Matthews.

MR. MATTHEWS: Q Mr. Lacy, SCE's

response to Question 1A to Data Request Set

A.14-012-007 TURN-SCE-002 provides a response

to a data request that had been propounded by

TURN regarding the potential of return of

excess amounts from the trust funds.

Have you had an opportunity to

review SCE's response to Question 1A? And

I'm speaking in regard to the preparation of

your testimony.

A Well, I do believe I used this. In

fact, I think I referenced it in my

testimony, which I believe is why it's

attached as part of this packet to

Exhibit 31.

Q So the response was prepared by Dr.

Hunt, which is indicated at the top of the

page. Do you see that?

A Yes.

Q The response references the

90 percent -- I'll read the sentence. I'm

reading from the response, second paragraph.

The master trust agreements do

not contemplate any distribution

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476

of trust funds to ratepayers

prior to the payment of at least

90 percent of CPUC-approved

forecast decommissioning costs.

Do you see that?

A I do.

Q Do you understand that to mean that

prior to any refund of excess funds that at

least SCE's position is that the threshold

that must be reached is 90 percent spend of

CPUC-approved forecast?

A That's what I understand SCE is

saying in their current situation.

Q Thank you. I'd like to have you

please turn your attention to what's been

marked as Exhibit 33, which provides an

excerpt from SCE's nuclear facilities

qualified CPUC decommissioning master trust

agreement.

A I have Exhibit 33 here.

Q Now, I assume that you may have

never seen this page from SCE's master trust

agreement?

A I don't believe I have.

Q In paragraph 8, which discusses

final disbursements, there's a reference to a

90 percent threshold. Do you see that

figure?

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477

A I do.

Q Is the 90 percent figure shown here

consistent with the 90 percent that SCE has

offered as its understanding of the threshold

requirement prior to the refunding of excess

funds?

A Well, let me just take a moment and

see if I can look at both documents and see

if I can support what you are asking me to

support. Well, aside from some differences

in extraction of wording in the response to

the data request, it appears to me to be the

same. And the circumstances and condition

and so forth appears to me to be the same.

Q Okay. Mr. Lacy, do you have

Exhibit 28 in front of you?

A I do not.


(Off the record.)


record.

Mr. Matthews.

MR. MATTHEWS: Q Mr. Lacy, can you

look at the bottom of the first page to

Exhibit 28, which provides SDG&E's response

to Question 8. I'm looking at Section B, and

there's a paragraph --

A I see that.

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478

Q -- provided there.

A Would you like me to read that?

Q Yes. To yourself. And then it

continues to the top of the next page.

A Yes. I've read that.

Q Is the language in paragraph 8 from

Exhibit 33 which provides an excerpt of SCE's

master trust agreement nearly identical to

the quotation provided on the bottom of

Exhibit 28 which provides a quotation from

San Diego's master trust agreement?

A If they're not identical, they're

certainly very similar.

MR. MATTHEWS: Thank you for your time,

Mr. Lacy. I have no further questions.





CROSS-EXAMINATION

BY MS. SALUSTRO:

Q Mr. Lacy, if I could have you

return to Exhibit 31, your testimony, page

22.

A Just a moment.

Q Take your time.

A I have Exhibit 31. The page number

again, please?

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Q 22.

A I'm on page 22.

Q Starting on page 22 for several

pages you describe your proposal for -- or

your recommendation to establish a process

for the timely return of excess balances in

the nuclear -- in the decommissioning trust

fund; is that correct?

A That's correct.

Q How do you define excess in this

context?

A Well, I guess my thought is to not

try to be too complicated here. Excess

basically means that there are -- the trust

fund balance is greater than the need. And

that excess amount could be small. It could

be large.

Q Are you recommending that any time

there is any excess, which by your definition

would be a dollar more than the need, that

the Commission should consider returning the

funds, the trust funds to ratepayers at that

time?

A No. I think that would be a

ridiculous proposition, and I don't support

that.

Q I guess I'm confused exactly what

the recommendation is. Could you clarify

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480

what --

A The recommendation is that as I

look at the cost estimate comparison. And by

the way, let me just clarify. My comparison

here is not intended to be a precise

reconciliation between these other cost

estimates and the SONGS estimate as we

attempted in the independent panel report.

But again, looking at the magnitude

of the difference and identifying two

examples of areas where there may be possible

reduction in liability in the future, this

could result in some excess amount that's

meaningful, and you're going to ask me, what

do I mean by meaningful, but I think we're

talking about maybe something on the order of

a couple of hundred million dollars more or

less. And there are certainly circumstances

that have been talked about in the last two

days where that number might be even higher.

But the recommendation is to begin

work on a process on how the Commission would

approach that. And I think part of that

process would be some assessment of what

constitutes an excess amount, at what time

would it be appropriate for the Commission to

consider that. So beyond that, I'm offering

no recommendation other than that we begin

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481

working on a process to deal with this

potential issue.

Q A moment ago you said -- and I

tried to write it down, but I might have

gotten it wrong -- that there might be

possibly some reduction in liability in the

future. Is that essentially accurate?

A Yes.

Q But there's no definite reduction

in liability that you know of right now?

A I'm not suggesting there is, but

there's certainly examples of issues out

there where the liability could be reduced if

there were favorable actions that took place.

And those actions should they come about

could result in this opportunity for excess.

And it's very clear that returning any excess

will be involved with a lot of complicated

issues. And these complicated issues would

take time to prepare for. So anyway, long

answer to a short question. Thank you.

Q Mr. Lacy, would you agree that the

balance of the nuclear decommissioning trust

funds varies depending on the performance of

the different asset classes that the trust is

invested it?

A Yes. We just look at the earlier

part of this week.

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482

Q Yes. Indeed. And would you also

agree that the decommissioning period

specifically for SONGS is pretty extensive,

currently estimated to run until I believe

2052?

A Could you repeat your question,

please?

Q Sure. I'll rephrase it. Would you

agree that the SONGS decommissioning period

is currently estimated to run until 2052?

A Yes. That's the current 2014 cost

estimate.

Q And so that is approximately how

many years from now? I'm not very good at

math.

A Yeah. 37. Something like that.

Q 37 years?

A Over the period of time the nature

of that spending also changes significantly

too.

Q So you would agree that the

spending varies over time?

A Yes.

Q And would you also agree that the

decommissioning cost estimate is likely to

vary over time?

A Yes.

Q Mr. Lacy, I know a moment ago you

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483

said that the plants that you list on page 23

as a comparison to the SONGS 2 and 3 plants

are not supposed to be identical, identical

comparison?

A Yeah. I'm not attempting to

provide a precise reconciliation.

Q Would you agree that none of the

four plants here that you use as a comparison

have decommissioning -- have site restoration

costs that include removing building

structures more than 3 feet below the surface

or below grade?

A I think that's correct.

Q And would you also agree that among

these four plants that you have chosen as a

comparison, none of them includes site

restoration for removing conduits running

underground between the plant and the cooling

water supply intakes and outfalls?

A On that point I'd want to be more

careful. I mean I generally agree with the

thrust of your question, but all of these

plants are involved with large body of water

locations. There may be conduits at some of

the other sites, may be smaller. So I want

to be careful here, but I generally agree

with the thrust of your question.

Q Switching topics, if we could turn

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484

to page 25.

A Okay. I'm there.

Q I'm looking at the third paragraph

which starts with an A.

A I'm there.

Q And I'll just read exactly what's

written here.

A Please.

Q "The Commission should anticipate

the day when such claims will not be

considered speculative."

Is it correct to assume that by

claims here you're referring to the utility's

claims against the US Government for the

failure of the DOE to pick up spent fuel?

A Yes. And that's suggested in the

earlier paragraphs, I believe.

Q Thank you. What do you mean by the

day when such claims will not be considered

speculative? What do you mean by "not

considered speculative"?

A Well, I raised this issue in the

last nuclear decommissioning cost triennial

proceeding, and maybe we didn't use the word

speculative, but Judge Darling ordered that

it was, you know, still not a certainty that

we should assume that there will be a

continuing stream of these damage payments in

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485

the future. And that's what I'm referring to

here.

Q Do you have any additional

information since Judge Darling's ruling,

which I concur that was her finding, that

would lead you to believe that there is some

specific event on the horizon when these DOE

claims, litigation claims would no longer be

speculative?

A Well, I think the key event on the

horizon here that you and I are both -- would

need to look at would be a decision by the

California Commission.

Q And by California Commission, are

you referring to the PUC?

A California Public Utility

Commission. So.

Q I'm trying to understand your

answer. Are you saying that if the

California Public Utilities Commission

determines that DOE litigation success of

these claims is no longer speculative, then,

I guess it's roundabout, but then they'd no

longer be speculative?

A That's what I believe.

Q Are you asking the Commission today

to find that -- or in this proceeding to find

that DOE litigation claims are no longer

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486

speculative --

A No.

Q -- in their success?

A No. I just offer this, that this

is an important issue ahead of us. There's

this opportunity.

Q Are you, Mr. Lacy, aware of

Edison's current claims pending before the

courts against the DOE?

A Yes. I think that's been the

subject of some data requests, and I think

it's been discussed in some of the earlier

testimony in this proceeding.

Q And to the best of your knowledge,

those claims continue to be litigated?

A That's correct.

Q Mr. Lacy, just to return briefly to

the idea of the excess funds and your

recommendation for a plan, you're not today

stating that you believe that there are

excess funds in Units 2 and 3 that should be

returned to ratepayers, are you?

A Yeah. I think I understand your

question clearly, and the answer is no, I'm

not suggesting that there are excess funds

today. If I thought there were excess funds

today, I would have challenged the cost

estimate.

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487

Q Mr. Lacy, in your profession you

are familiar with the post-shutdown

activities report or PSDAR NRC requirement,

correct?

A Yes. For you to file that report

with them.

Q Yes. And --

A Or Edison, actually, but yeah. The

operator on behalf of the owners.

Q Yes. And it's true, is it not,

that the PSDAR must be submitted to the NRC

inclusive of the decommissioning cost

estimate; is that correct?

A I think you're saying that it must

include the decommissioning cost estimate?

Q Yes.

A Yes, I believe I agree with that.

Q Are you aware that in September of

2012 Edison on behalf of the co-owners

submitted the PSDAR including the

decommissioning cost estimate to the NRC?

A I don't recall the precise date,

but I know that a PSDAR was submitted, and I

know it was submitted by Edison, and I know

it included a cost estimate. Now, if it was

submitted in 2012, did I --

Q I'm sorry. 2014.

A Okay. Thank you. Yes. I'm more

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488

comfortable with that date.

Q And are you aware that on August

20th, so just last week of 2015 NRC accepted

the PSDAR including the DCE for SONGS 2 and

3?

A I was not aware of that, but I'm

not surprised.

MS. SALUSTRO: Those are all my

questions.

ALJ BUSHEY: Thank you, Ms. Salustro.

Mr. Freedman. Oh, Mr. Geesman.

MR. GEESMAN: Thank you, your Honor.

CROSS-EXAMINATION

BY MR. GEESMAN:

Q Good afternoon, Mr. Lacy.

A Good afternoon.

Q John Geesman on behalf of the

Alliance for Nuclear Responsibility.

I'd like to go to the Exhibit 32,

which was one of those Edison

cross-examination exhibits Mr. Matthews used.

And on the very first page of Exhibit 32,

which appears to be the title page to the

independent panel report, could you explain

who the members of this independent panel

were and how they were selected?

A Yes. Some background on the

composition of the panel. As was suggested

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489

in some of the cross-examination earlier in

my time, during the course of the 2009

nuclear decommissioning triennial proceeding

the issue was raised about the significant

difference between the Diablo Canyon and the

San Onofre cost estimate. And various

questions and issues were discussed during

the course of the proceeding.

The result of all of that was the

formation of the panel. And so the

suggestion was the panel could be composed of

three people who had experience and knowledge

in the area of nuclear decommissioning. And

so three parties here. Nicholas Capik from

ABZ Corporation, he was a lead person in the

development of the nuclear cost estimate, the

cost estimate for San Onofre. Mr. Geoffrey

Griffiths of TLG Associates, and he had an

important role in the development of the

Diablo Canyon cost estimate. And I was asked

to be part of the panel also because of my

work with TURN and involvement in the

proceeding.

So basically we had two experts

from the industry who have substantial

background in decommissioning cost estimating

and myself who also has some background and

experience in the area and represented

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490

supposedly an independent or neutral

perspective.

Q This panel was established by a

Commission decision?

A Yes.

Q And your report was requested by a

Commission decision?

A I believe the answer to that is

correct.

Q If I go to Roman numeral i, which

is the first page of the executive summary,

still in Exhibit 32, I see in the second

paragraph the figure $3,659 million as the

2008 estimated cost to decommission the SONGS

site. Was that for SONGS Units 2 and 3?

A You know, at this point I don't

remember exactly, but I believe it was just

for Units 2 and 3.

Q Well, the sentence that leads off

the paragraph suggests that the subject of

the panel was 2 and 3. ]

A Right. I -- I mean the intent was

not to involve the SONGS 1.

Q And that's in 2008 dollars?

A Well, the -- probably, but with the

estimate in 2008, it might have been 2007

dollars. But it would certainly be 2007 or

2008. I don't remember at this point.

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491

Q Let me go down to the --

A It's not going to be anything other

than that.

Q Let me go down to the third

paragraph where you identify -- and

Mr. Matthews asked you about this -- the

$1,335 million number associated with the

Navy easement requirements. You say that's

in 2008 dollars?

A Oh, there it is. Yes. Thank you.

Q So both numbers are in 2008

dollars?

A Yes.

Q And would you accept my rough math

that 1.335 is a little more than 36 percent

of 3.659?

A Sure.

Q So if I turn to your testimony,

which has been marked as Exhibit 31, and I go

to page 25 of 27, you made the correction at

the beginning of your testimony that the

number you now associate with the Navy

easement is 346 million. That's in 2014

dollars; am I correct?

A Yes.

Q So in order to compare apples to

apples, I'd have to escalate this 1.3 billion

from 2008 dollars to 2014 dollars in order to

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492

make it a fair comparison with the 346

million?

A I disagree with that.

Q Okay. Could you -- could you

explain why?

A Yes. Setting aside the issue of

escalation, which I understand is an

important consideration, if one is trying to

do certain kinds of comparisons over time --

what I want to emphasize is again what I said

earlier in my testimony this year. My

purpose was not to do a precise

reconciliation between the SONGS estimate and

these other plants. My purpose was really

very simple.

It was to, number one, again,

illustrate the very large size of the SONGS

estimate compared to a body of other plants.

And number two, to provide a few examples of

where there may be opportunity in the future

for reduction in cost or liability. I'm

confident if Mr. Griffiths and Mr. Capik and

I spent two months going over the SONGS

estimate, that we would be able to come up

with a lot more detailed explanation of the

gap. And I believe it's possible that

additional elements of that might be related

to the Navy lease.

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493

But my purpose in my testimony was

to use a number that I could pluck out of the

study very easily, very quickly. This comes

right out of one of the periods just to

illustrate this is kind of a low end. You

might look at the independent panel as maybe

a high end. But again, I would not support

directly comparing these numbers. I used the

number to purely illustrate the possibility

that there may be future excess.

Q Okay. I will not directly compare

the two numbers. I'll compare the two

percentages.

A I would disagree with that also.

I'm sorry. Go ahead. I'm cutting you off.

I apologize.

Q In the independent panel's report,

the Navy lease was attributable for -- or

accounted for about 36-and-a-half percent of

the total decommissioning cost. In your

testimony today, you identify it as about

10 percent.

What accounts for that substantial

reduction in the proportion of total

decommissioning costs attributable to the

Navy easement requirements?

A Well, I'd go back to what I said

just a moment ago. The 1.3 billion was the

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494

result of two months worth of effort going

through on a detailed, fine-tooth comb basis

of the two estimates by myself and two other

experts in the industry. The number I

offered in my testimony that you're referring

to does not represent anything even close to

that kind of effort. So the numbers really

are apples and oranges.

Q You indicate again at page 25 about

mid way through the page, "Changes to the

U.S. Navy lease conditions are a very real

possibility." Why do you believe that?

A Very real possibility. Well,

there's a -- a lease with these -- as I

understand it from testimony in the last

day-and-a-half of some potentially ambiguous

aspects of the lease. We have Edison

actively engaged in a discussion with the

Navy, and I would be the first to say that

there's no guarantee of success.

But with an applied effort here, I

think there's a possibility of success. And

even if Edison is not fully successful in --

let's assume this 346 or whatever it is

represents a 100 percent version of success.

Even if they're only 50 percent successful,

then you're talking about -- what?

$180 million. I still believe $180 million

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495

is a meaningful number.

Q So you would regard altering the

Navy easement requirement as a good thing?

A From the point of view of being

able to return money to customers, I believe

it's a very good thing.

Q Then on page 9 of 27 of your

testimony, which is Exhibit 31, your very

first answer, second sentence, says, "The

large size of the project, over $4 billion,

decades long-time frames calls for elevated

attention by the Commission to ensure that

customers receive what they have paid for."

And then you go on, "completion of the

project," and so on.

Haven't Edison and San Diego's

customers since the trusts were established

in 1988 been paying for the complete removal

of subsurface structures on the Navy

easement?

A Well, I don't know about the

complete history, but I think that's a

reasonable assumption.


That's all I have, your Honor.

ALJ BUSHEY: Thank you, Mr. Geesman.

Redirect, Mr. Freedman?

MR. FREEDMAN: Thank you, your Honor.

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496

REDIRECT EXAMINATION

BY MR. FREEDMAN:

Q Mr. Lacy, you were just asked by

Mr. Geesman about the likelihood -- Mr. Lacy,

you were just asked by Mr. Geesman about the

likelihood of potential renegotiation of the

terms of the Navy lease. Do you recall that?

A Yes.

Q Are you suggesting that this

Commission should make any particular

assumption regarding the outcome of the

ongoing negotiations over the lease?

A No, other than that there's a

possibility that it might be favorable.

Q Are you suggesting that in the

event that there are changes in the lease

terms, that those would be relevant for

purposes of understanding the likelihood of

excess funds that could occur in the trust?

A Yes.

Q You were asked by counsel from

SDG&E about the PSDAR that was submitted to

the Nuclear Regulatory Commission. Are you

familiar with the PSDAR acceptance criteria

that the NRC applies?

A I might need my memory refreshed a

little bit on that, but generally.

Q Is it your understanding that the

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497

Nuclear Regulatory Commission reviews the

reasonableness of the cost estimate that is

presented as part of that process?

A I believe that's correct.

Q That is correct that what?

A That they do a review of the cost

estimate.

Q And do you know whether the cost

estimate there is consistent with what Edison

and SDG&E have presented in this proceeding?

A I believe it's the same.

Q You were asked about whether DOE

litigation claims are -- whether litigations

claims by the utilities against the U.S.

Government are speculative or are -- and you

were asked several questions about that. And

I wanted to know what's your assessment about

the likelihood that the utilities will

recover some damages from the United States

Government over the breach of the spent fuel

obligation?

A Experience to date suggests that

their success will be -- the probability of

their success is very high.

Q Could you say a little bit more

that would be the basis for your making that

claim?

A Well, every utility in the country

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498

who has filed a claim has been successful to

some degree. And in many cases, the level of

success has been significant. The legal

foundation for the claims has been

established. This has been through several

U.S. Courts of Appeals, so much of the claims

process at this point is item by item, line

by line claims rebutting DOE opposition to

those claims. And then the Court's ruling.

But the success rate overall has been quite

high.

Q Just to return to the question

about the Nuclear Regulatory Commission

review of the PSDAR for one moment. Is the

Nuclear Regulatory Commission concerned about

whether the cost estimate is too high?

A No.

Q Is their primary concern whether

there are -- the cost estimate satisfies a

minimum threshold for adequacy?

A Well, actually there are two

things. One is that the NRC has a formula

that they use for establishing a minimum

number. But the NRC uses the estimates

provided by the utilities. They put a lot of

reliance on that. And so they'll go through

and they have their staff. They will do an

independent calculation on the performance of

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499

the trust fund, and they basically forecast

these out and they say does the trust fund

balance exceed the current estimate. If it

does, they're happy.

Q But they're not making -- they're

not reviewing the estimate to determine

whether it is excessive, are they?

A No.

Q You were asked -- you were asked by

counsel from SDG&E about recommendations were

making for potential return of excess funds

in the future. Are you recommending that the

utilities in the coming years explore options

for the way in which excess funds could be

returned prior to 2052?

A I think -- yes, I think that's

another way of saying what I'm suggesting

here is provide a plan. This takes time to

think it through, develop options, figure out

what's reasonable. I'm sure many options

will require effort. It takes time to go

through all of that, but that's the purpose,

yes.

Q So your recommendation is based on

the assumption that there would be

substantial advanced planning required as

part of any such exercise?

A I think there is significant merit

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500

in having advanced time for planning.

Q You were asked by counsel from

Edison about the decommissioning cost

estimates for other plants that are contained

in your testimony and the dates of those

estimates being between 2010 and 2012.

Do the dates of those estimates --

are they relevant for the purposes for which

you included them in your testimony?

A Well, obviously a more current

estimate is more desirable than an older

estimate. But over the time period here, I

don't believe that's a significant factor in

the point I was trying to make.

Q You're not asking the Commission to

adopt some average of those other estimates

as the basis for finding Edison's estimate to

be unreasonable, are you?

A I am not.

MR. FREEDMAN: Great. Thank you.

Those are all my redirect questions.

ALJ BUSHEY: Final questions?

MS. SALUSTRO: Very limited.

ALJ BUSHEY: Very limited.

MS. SALUSTRO: Yeah. Thank you.

RECROSS-EXAMINATION

BY MS. SALUSTRO:

Q Mr. Lacy, back to the DOE

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501

litigation damages. A moment ago you gave

your opinion that the utilities that have

brought claims against the U.S. Government

have been in some form or another successful;

is that --

A That's correct.

Q And would you agree that those past

claims were in general for claims related to

operating nuclear facilities?

A I'm not sure I understand. Can you

clarify, please?

Q Well, that they were for claims

related to -- for facilities that have not

yet entered into decommissioning.

A Let me just say that I think the

majority of the claims, as you are

suggesting, have been for plants that were

continuing -- that were operating. However,

I believe there are also claims associated

with plants that were shutdown. And while

they represent a minority of the claims, I --

my opinion is that there's been this general

level of success.

Q Are you aware of the change in the

strategy by the U.S. Government when

litigating these claims for decommissioning

plants?

A I'm not familiar specifically with

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502

that. That sounds like something I'd like to

learn more about.


ALJ BUSHEY: Final questions for the

witness?

(No response.)

ALJ BUSHEY: Hearing none, then the

witness is excused.


(Off the record.)


record.


identified four exhibits from the Utility

Consumer Action Network.

Exhibit 34 is the testimony of Mark

Fulmer and Laura Norin.


ALJ BUSHEY: Exhibit 35 is the errata

to the testimony of Mark Fulmer and Laura

Norin.


ALJ BUSHEY: Exhibit 36 is the

attachments to the testimony of Mark Fulmer

and Laura Norin.


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503

ALJ BUSHEY: And Exhibit 37 is rebuttal

testimony of Mark Fulmer and Laura Norin.


ALJ BUSHEY: Are there any objections

to those four exhibits being received into

the evidentiary record?

(No response.)

ALJ BUSHEY: Hearing none, then they

are so received.





ALJ BUSHEY: We also have exhibits from

TURN. Those are exhibits --


(Off the record.)


record. We have Exhibit 30 and Exhibit 30 --

I'm sorry. Exhibit 29, the ORA testimony,

and Exhibit 30, an ORA data response from

Edison. Those two documents are received

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504

into the evidentiary record. I hear no

objections. Good. 29, 30 are received.

Now we begin the TURN Exhibits. 31,

32 -- 31 is the only TURN exhibit. And then

there are the cross exhibits from Edison, 32

and 33.

Are there any objections from any

party for Exhibits 31 through 33.

(No response.)

ALJ BUSHEY: Hearing none, they are all

received into evidence.




ALJ BUSHEY: There were TURN

cross-examination exhibits earlier on. 25,

26, 27, 28.

MR. FREEDMAN: I think those were

already entered into evidence, your Honor.

ALJ BUSHEY: I've already done those.

Good. Okay.


(Off the record.)


record.

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505


identified Exhibit 38. That is the prepared

testimony of John Geesman on behalf of the

Alliance for Nuclear Responsibility.


ALJ BUSHEY: Any objections to this

being received into the evidentiary record?

(No response.)

ALJ BUSHEY: Hearing none, then

Exhibit 38 is received.



(Off the record.)


record.


discussed the Gilmore testimony and the

Gilmore cross-examination exhibits. On

August 24th I issued a ruling denying

Edison's motion to strike the testimony from

the Gilmore party, however, indicating to

Gilmore that they would need to make a

demonstration linking the proposed testimony

to specific cost assumptions or contingency

planning in the record of this proceeding

before we would receive the testimony into

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506

the evidentiary record.

Mr. Peffer is now prepared to offer

oral argument on that point.

MR. PEFFER: Your Honor, I would ask

for one point of clarification.

ALJ BUSHEY: Yes.

MR. PEFFER: What is the degree of

detail you are looking for in terms of tie

ins? Are you looking for specific line items

or -- that is something that we would prefer

to argue in our brief. We are prepared to

make arguments at an issue level now.

ALJ BUSHEY: Okay. Make it at an issue

level.

MR. PEFFER: Okay. So Section 1 of the

Gilmore testimony is a introduction. I think

it's fairly straightforward and doesn't need

a tie-in.

Section 2 is the dry storage system

lifespan. That speaks directly to the

reasonableness of the decommissioning cost

estimate, which relies -- per the discussion

that we've had several times over the course

of -- of these proceedings, relies on the

assumption that the DCE is based on that the

dry storage system will last for the duration

of the decommissioning process. That

assumption has been established. We've

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507

established that the DCE relies on that

assumption. And each element of this

Section 2 directly addresses that.

So the first -- these questions

aren't numbered but if you go to page 3, line

9 through page 5, line 11, there is

discussion of the canister that was selected

by SoCal Edison, the High Storm UMAX Holtec

System. That discussion is relevant to the

lifespan of the dry storage system and the

reasonableness of that assumption because it

provides specific information regarding the

actual system that was selected and the

actual system that will be in use.

The next question again provides

specifications, that is page 513 through page

618.

The next question, which is page

620, addresses the design type of the

canisters that will be -- will be and are

being used in SONGS. They're thin steel

canisters, and that is a significant factor

in the lifespan -- determining the

lifespan -- determining the probability of a

shorter lifespan than the duration of the

decommissioning process.

Page 7 discusses whether the DCE

directly assesses the lifespan of the dry

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508

storage system, which is relevant.

And line 23, we discuss SCE's claims

regarding the lifespan of the Holtec dry

storage system. Again, all of this ties into

that assumption. And that assumption is

something that has huge cost implications

because of the possibility that if some of

these canisters need replacement mid

lifespan, that is a significant unaccounted

for cost.

Page 8, this ties into the prior

discussion. 14, this is one of the bases

that SCE -- the Holtec FSAR identified as a

basis for its assumption that the system will

last for the duration of the decommissioning

process.

824 discusses whether the dry

storage system lifespan assumption is

consistent with the Holtec canister's NRC

license. If you recall that Mr. Palmisano

raised the NRC licensing as one of the bases

that he had offered for believing that the

dry storage system lifespan assumption was

reasonable.

Page 10, Question 24, this begins to

discuss actual real world information

regarding the lifespan of the Holtec System

that was selected.

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509

And page 11, line 24, what is a

through-wall crack. Through-wall cracking is

one of the -- as this testimony establishes,

one of the primary mechanisms for aging for

this type of system. And it's one of the

most likely possibilities for -- that would

lead to casks being unusable.

And the next page, page 12 describes

how through-wall cracks affect the dry

storage system lifespan, so it directly ties

the through-wall cracking discussion into the

lifespan assumption.

Page 13, what conditions cause

through-wall cracks to develop, the same

argument.

Page 15, are the conditions for the

through-wall cracks present in San Onofre?

ALJ BUSHEY: You're just reading the

testimony to me.

MR. PEFFER: I'm making arguments point

by point.

ALJ BUSHEY: I'm looking for it to be

tied to the decommissioning cost estimate.

Ideally, the -- the Attachment A I think to

Exhibit 01, line items. ]

MR. PEFFER: Right, your Honor. The

dry storage system assumption is -- life span

assumption is not something that is

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510

specifically stated in the DCE. As we

established in the cross-examination earlier,

it is an implicit built-in assumption. And

what we would argue is to the extent that

that implicit assumption, because it has such

a significant effect on cost, to the extent

that that implicit assumption is not stated,

that's an error and a reason to find a DCE

unreasonable.

Would you like me to continue, your

Honor?

ALJ BUSHEY: I mean are you just going

to continue reading?

MR. PEFFER: Well, you asked for a

point-by-point connection. Like I said, we

don't have line item connections at this

point. That is something we are prepared to

offer in briefing.

ALJ BUSHEY: Well, we can't make

evidence in briefs. We only have arguments

there.

MR. PEFFER: Your Honor, I would object

to the fact that I think we're being held to

a more strenuous standard than other parties.

A lot of testimony has been offered in this

proceeding that is not line item specific.

ALJ BUSHEY: Like for example?

MR. PEFFER: Like, for example, most of

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511

Palmisano's testimony.

ALJ BUSHEY: He was supporting the

whole thing.

MR. PEFFER: And this is directly --

what we would say is this is directly

relevant to the whole thing.

ALJ BUSHEY: Okay. So?

MR. PEFFER: Let me ask you, your

Honor. How you would you like me to proceed

on this?

ALJ BUSHEY: I was hoping that you were

going to tell me that, you know, there's a

particular number, and that is -- that needs

to change.

MR. PEFFER: Your Honor, what we can

say is all of the dry storage system cost

assumption relates to the $405 million.

ALJ BUSHEY: Okay.

MR. PEFFER: ISFSI costs.

ALJ BUSHEY: Okay.

MR. PEFFER: So we don't have -- and

the 25 percent contingency that goes into

that.

ALJ BUSHEY: Is there 25 to support?

MR. PEFFER: I believe it's 25 percent

across the board. I may be --

ALJ BUSHEY: It averages to that, I

think. Is the 25 percent included in the

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512

405?

MR. PEFFER: I'm sorry, your Honor?

ALJ BUSHEY: Does the 405 include the

25 percent contingency?

MR. PEFFER: That is my understanding,

and I believe that's what was testified to.

ALJ BUSHEY: Okay. So it's your

position that the 25 percent contingency is

insufficient?

MR. PEFFER: That is something that,

yes, your Honor, but that's something we'd

like to cover in briefing.

ALJ BUSHEY: But you're going to need

some sort of factual basis for your

recommendation.

MR. PEFFER: Yes, your Honor. This is

the factual basis for that.

ALJ BUSHEY: This being the testimony.

So somewhere in this testimony there's a

number that says not 25 percent contingency

but something else?

MR. PEFFER: No, your Honor. I didn't

know that we were required to include that in

the testimony. This is the factual basis for

the recommendations that we make in the

briefing.

ALJ BUSHEY: But you don't have one

yet?

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513

MR. PEFFER: At the moment, no. But

your Honor, my understanding is that many

parties in this proceeding have not offered

specific line item adjustments for all of

their arguments.

ALJ BUSHEY: Most of the parties aren't

opposing the estimate itself. For example,

ORA is opposing some of the procedural

mechanisms. TURN is suggesting that there

needs to be a, for want of a better word, a

refund mechanism adopted. You know, that's

where they're focusing.

MR. PEFFER: Right, your Honor. But

this isn't within the scope. I mean

challenging the reasonable notice of the

ISFSI assumption in the DCE, that is

clearly -- clearly pertains to the

reasonableness of the DCE.

ALJ BUSHEY: Okay. All right. Do you

want to conclude, and then we'll go to Mr.

Matthews.

MR. PEFFER: Your Honor, there are

other issues besides the life span issue.

ALJ BUSHEY: But don't they all relate

to the reasonableness of the system, the

casks?

MR. PEFFER: No. There are a couple of

issues that relate to -- at least one issue,

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excuse me -- that relates to the -- well, we

have a spent fuel pool retirement.

ALJ BUSHEY: Okay. And I see concrete

degradation as well.

MR. PEFFER: Concrete degradation, your

Honor, is an issue that falls within the

scope of the dry storage system life span

assumption.

ALJ BUSHEY: Okay. Okay. All right.

Does that conclude your presentation?

MR. PEFFER: No, your Honor. I'd also

note that we have a section on reliance on

speculative technologies for inspection.

That's a matter that's been discussed in

detail over these hearings. And it relates

directly to whether or not the scheduling

cost estimates that do to some extent rely on

the availability of inspection technology are

consistent with Assumption 3 of the DCE,

which provides that -- I can actually read

that, which essentially states that all

decommissioning cost activities will be

performed using currently available

technology.

Your Honor, we also have testimony,

this is page 27, Item 7, regarding the 2024

waste acceptance date. And that's an issue

that's been well covered here. And items,

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page 29, Item 8, which is dry storage system

costs. And then page 31, Item 10. These

again directly address the reasonableness of

the 405 million dry storage system cost. And

I would note that SoCal Edison did not object

to these and did not -- did not ask for these

to be stricken in a motion to strike.

ALJ BUSHEY: Okay. Thank you, Mr.

Peffer.

Mr. Matthews.

MR. FREEDMAN: Your Honor, I'd like to

offer an argument in support of Ms. Gilmore's

position.

ALJ BUSHEY: Okay.

MR. FREEDMAN: Your Honor, we're not

taking a position on the specific relief

requested by Ms. Gilmore in this proceeding.

However, we would point out that in past

nuclear decommissioning cost triennial

proceedings there have been substantial

arguments about specific assumptions

including operational assumptions that

utilities have made in providing their cost

forecasts.

For example, in the Humboldt Bay 3

decommissioning proceeding, the last NDCTP

was divided into two phases. The first phase

dealt with Humboldt 3, which was in active

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decommissioning. There was a dispute about a

specific assumption PG&E had made regarding

the removal of the underground structures at

the facility. And TURN raised very specific

concerns about the particular measures that

PG&E was proposing to take and whether or not

they represented a least-cost solution.

Those issues were within the scope of that

case, and there was no debate about whether

those issues could or could not be litigated.

In the last NDCTP when the cost

estimate for Diablo Canyon was presented,

PG&E had made a number of assumptions

regarding specific actions that they would

take in the decommissioning, and those were

the subject of a litigation. And the

Commission ultimately found that PG&E had not

justified many of those very specific choices

they were claiming were reasonable.

In this case we're presented with a

very difficult issue where it's not clear

when a specific decision related to the

selection of waste canisters would ever be

found within the scope. As I understand it,

the issue that was raised by Ms. Gilmore

relates to a potential situation far down the

line well after the initial expenditures for

these canisters had been found to be

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reasonable when Edison and SDG&E may decide

that they need to seek a lot more money

because of a decision that previously had

been found reasonable.

This leaves the Commission in a

difficult situation where a decision to find

this project reasonable early might end up

having to be undone by a subsequent

reasonableness determination. And I'm sure

the litigation around that would be quite

thorny.

I raise this because I think it's

important for the Commission to at least

consider this issue now. And again, we're

not taking a position on whether or not the

selection of the Holtec system is not

reasonable or is reasonable, but in a project

of this magnitude it is hard to understand

how such an important decision would simply

be deemed outside the scope of the proceeding

and be ineligible for review really at any

time.

If it were a construction project

for a new facility, the Commission would

exact -- would undertake this exact type of

review and would find this exact type of

operational decision relevant. So we think

it's within the scope of this case, and we

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518

think Ms. Gilmore should be allowed to

present her arguments.

ALJ BUSHEY: Mr. Matthews.

MR. MATTHEWS: Thank you, your Honor.

I think the statements from TURN's counsel

are -- would be more appropriately addressed

in the upcoming 2014 reasonableness review

proceeding as well as subsequent

reasonableness review proceedings. In this

proceeding it's focused on the reasonableness

of the SONGS 2 and 3 decommissioning cost

estimates.

And as SCE understands your Honor's

ruling, what you are seeking is for Ms.

Gilmore to tie her testimony to a specific,

you know, recommended, you know, cost

estimate number or adjustment to the SONGS 2

and 3 decommissioning cost estimate that is

before your Honor in this proceeding.

Gilmore hasn't done that, but if I

could compare that to what some of the other

parties have done. And this responds to one

of the arguments from Ms. Gilmore's counsel

is I think some of the other parties actually

have presented some real numbers. A for NR,

you know, counsel in cross-examination, you

know, definitely made their, you know, their

assertion as to what the removal cost would

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be. You know, that was done during

cross-examination. SCE doesn't necessarily

agree with the calculation, but the

recommendation was made.

I think, you know, TURN, the witness

as well has identified real numbers in their

testimony. And I think that that's the kind

of testimony that the, you know, the

Commission should be focusing on in this

proceeding. I also think that it would be

inappropriate for this to be done in brief.

I think it would be certainly out of order

the way things are normally done.

You know, if there was such a tie-in

done in brief, SCE and SDG&E would not have

an opportunity to conduct cross-examination.

So I think it's flipping it and putting it

out of order, and it would be inappropriate.

I'd also note that, you know, so far

all we've done is talk about the, you know,

the body of the testimony. We haven't talked

about the attachments. Now, there's 45

attachments to this testimony. It's quite --

it's quite voluminous. Most of the materials

are, you know, copies of, you know, the

various government agency letters. I think

those types of materials don't necessarily

need to be received into evidence and can be

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520

cited, you know, in brief.

I also think that, you know, the

attachments are cumulative. This, you know,

your Honor has discretion in order to, you

know, to reduce the volume of evidence that's

received, does not have to hear or consider

cumulative evidence. I mean there's dozens

of various reports and letters regarding

stress corrosion cracking and things of that

sort. And I don't think we need -- I think

it would be inappropriate to have that

cumulative evidence in the record.

There also are a number of documents

in the attachments that have not been

authenticated. I don't think there's any way

for Ms. Gilmore to authenticate them at the

time. There's a number of purported

presentations that were presented in NRC

meetings or DOE meetings. We don't know who

presented those, those presentations. We

don't know if it was the NRC. We don't know

if it's members of the public. And there's

not an opportunity for cross-examination on

those things.

I'll list those exhibits before you

with attachments. It's 10, 17, 20, 22, 24,

27. I'd also note that Attachment 14 is a

declaration of Ms. Gilmore. It provides her

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521

version of a transcript of statements made by

a Holtec representative during a October 14th

community engagement panel meeting. I think

that attachment is hearsay.

There's just lots of problems with

these attachments. Again, they're

cumulative. They're out of scope. They

haven't been authenticated, and a number of

the attachments are hearsay. And I think to

receive this into the record would, you know,

would be a mistake and would be an incorrect

ruling.

ALJ BUSHEY: Thank you, Mr. Matthews.

I'm going to rule unequivocally that the

reasonableness of the Holtec system is not

within the scope of this proceeding, and that

is not something that is going to be included

in the proposed decision. That's not --

that's completely consistent with the scoping

memo.

So that leaves us, though, with the

cost estimate. Mr. Peffer, you have focused

in on the $405 million and whether that's a

reasonable -- whether that's a reasonable

number.

MR. PEFFER: Yes, your Honor.

ALJ BUSHEY: You believe there are

reasons that it should be higher.

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522


ALJ BUSHEY: That means that the

25 percent contingency factor, that's the

obvious place to adjust that. You are not

prepared today and your witness has not made

a specific recommendation?

MR. PEFFER: No, your Honor.

ALJ BUSHEY: And presumably, your

recommendation, which you believe you will be

able to make in your brief?


ALJ BUSHEY: Okay.

MR. PEFFER: Your Honor, may I make a

point very briefly. The scoping memo

includes as one of the areas for the --

within scope of this proceeding is the

reasonableness of the assumptions. Now, is

that something that you're saying -- so to

make an argument regarding the reasonableness

of an assumption, are parties required then

to connect those arguments to specific cost

figures?

ALJ BUSHEY: No. You have to tell me

what assumption it is that you believe to be

unreasonable. I understand it to be -- your

position to be that the $405 million for the

dry cask system is unreasonably low. It

should be higher. Is that a fair summary of

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523

your position?


ALJ BUSHEY: Okay.

MR. PEFFER: I would also say, go back

and restate my argument regarding there being

an implicit assumption regarding life span.

It should have been stated in the DCE. To

the extent that it wasn't, the DCE is flawed.

So I would tie --

ALJ BUSHEY: But that would go to this

number. This number should be something

else, right?


ALJ BUSHEY: Because that's all we're

doing is looking at a cost estimate. If you

can't tie your testimony to a specific number

and ask the Commission to do something with

that number, then it's not relevant to this

proceeding, because we're not going to look

at the reasonableness of operational

decisions. You know. Those are dealt with

elsewhere. We're just looking at the

reasonableness of the cost estimate.

This is what I'm thinking. I'm

thinking that we will grant your request to

let you make your numerical recommendation in

your brief.


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524

ALJ BUSHEY: We will allow you to move

the testimony into the record, the testimony

alone.

MR. PEFFER: Okay.

ALJ BUSHEY: With its factual

assertions and its references, because most

of the references to the attachments are

readily available materials. But we will not

move in the attachments.

MR. PEFFER: So your Honor, there are a

couple of attachments that I do believe are

essential.

ALJ BUSHEY: Okay. Which ones would

those be?

MR. MATTHEWS: May I approach, your

Honor?

ALJ BUSHEY: Yes. What do you have?


(Off the record.)


record.


discussed the attachments to the Gilmore

testimony. This is what we're going to do.

We're going to mark the testimony as next in

order, which is 39.


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ALJ BUSHEY: It will be received into

evidence.


ALJ BUSHEY: And we will have

late-filed Exhibit No. 40, which will be

provided within ten days by Gilmore. That

will be a compendium of the data responses

that were included in their proposed

attachments. That will be late-filed Exhibit

No. 40.



(Off the record.)


record.


discussed briefing schedule. Concurrent

opening briefs will be due on October 15th.

Concurrent reply briefs will be due on

November 5th. We've made a special exception

for the Gilmore party to include their

recommendation on the contingency factor to

be applied to the dry cask storage system.

If the utilities wish to respond to that

factual assertion, they will have five days

after receiving the brief to make that

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526

response.

And the proceeding will be submitted

with the filing of reply briefs on

November 5th.

MR. PEFFER: And your Honor, we have a

couple more comments.

ALJ BUSHEY: Comments on what?

MS. GILMORE: Yes. The 400 million was

about the dry casks. The category of spent

fuel management is what we're focused on.

And a big part of that of course is the

canister cost, but there's other parts that

are integrated in that. So the one that we

want to address is that almost $1.3 billion

spent management category because it deals

with the pools, and it deals with the dry

cask system. They're interrelated. So if we

can have this at a higher level, at the

category level, then that's what we would be

addressing.

ALJ BUSHEY: So in your brief you will

address what the spent fuel management cost

estimate should be in your recommendation.

MS. GILMORE: Right.

ALJ BUSHEY: Okay.

MS. GILMORE: Okay. And then on the --

when the testimony was prepared, if we're

just going to include the name of the

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527

document, some of these are hard for people

to find that may actually want to look at

documents to determine, you know, the

evidence. If we could provide the link, we

could do it as part of what we submit is the

list of the items and just provide the name

and the link to that document. It would make

it easier for anybody that's trying to review

this.

ALJ BUSHEY: We understand what your

testimony is, and we understand the source

documents that you're referring to, but we're

not going to bring the source documents into

the evidentiary record. So.

MS. GILMORE: Right.

ALJ BUSHEY: But as a practical matter,

everyone has a copy of them now anyway

because you distributed them. So I think the

practicalities are addressed. And I think

this way we keep the record fairly clean.

And you have an opportunity that no other

party has to basically make your case in

chief in your briefs. So I think that's a

pretty good deal.

MS. GILMORE: Okay.

ALJ BUSHEY: Okay.

MR. PEFFER: Just one other matter. I

don't know if this was included in the data

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528

request responses. But Attachment 42 is an

e-mail that SCE provided us in response to a

data request. I'd like to include that in

the --

ALJ BUSHEY: In the late-filed exhibit?

Okay.

MR. PEFFER: Yes.

ALJ BUSHEY: Mr. Lutz.

MR. LUTZ: Yes, your Honor. Citizens

Oversight is planning to make arguments in

our brief regarding spent fuel management

especially with respect to the various

options that were considered by the utilities

about where they're putting the spent fuel

dry cask system which was explained in their

responses to some of our questions. We're

planning to include those in our briefs. So.

ALJ BUSHEY: That's what you do in

briefs. Yes.

MR. LUTZ: So I just wanted to make

sure that that wasn't excluded by your ruling

just now. ]

ALJ BUSHEY: No we want to hear your

arguments --

MR. LUTZ: Thank you, your Honor.

ALJ BUSHEY: -- legal and policy in

your briefs.

Is there anything further to come

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529

before the Commission?

Yes, Mr. Geesman.

MR. GEESMAN: Mr. Matthews distributed

a common briefing format, and I wonder if it

would be appropriate to discuss that?

MR. MATTHEWS: I was going to raise it.

I don't know if we want to do it on the

record or off the record.


(Off the record.)


record.


discussed a proposed common briefing outline

offered by Edison. The parties will meet and

confer over the next 20 days to arrive at a

common briefing outline to the extent that

they can. If they cannot, the parties are

free to address these issues in whichever

manner they deem best for their client. I

will let you know that I will be following

something similar to this, so that will

assist you.

Is there anything further to come

before the Commission?

Yes?

MR. PEFFER: Yes, your Honor. There

were two additional exhibits that were

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530

cross-examination exhibits yesterday for

Bledsoe.

ALJ BUSHEY: Right. And you read all

of those into the record that were relevant,

the components of those.

MR. PEFFER: Well, we would like to

move to put those into the record.

ALJ BUSHEY: Why don't you include

those with your late-filed exhibit?

MR. PEFFER: And just another

clarification. So when we do include the

late-filed exhibit, is that something that's

going to be open to argument, will be ruled

on or --

ALJ BUSHEY: No, as long as you comply

with I've said.


ALJ BUSHEY: And if you don't, there

will be motions to strike.


And sorry. One other item. Will

there be an exhibit matrix distributed? Is

anyone preparing that?

ALJ BUSHEY: An exhibit matrix?

MR. MATTHEWS: SCE has been preparing

one. Maybe when we do the common briefing

outline, we'll send it to the parties --

we'll send what we have as our exhibit list.

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531

ALJ BUSHEY: Okay. Sounds good.

Final matters?

(No response.)

ALJ BUSHEY: Hearing none, this

evidentiary hearing is concluded, and this

matter will be submitted with the filing of

reply briefs.

(Whereupon, at the hour of 1:43p.m., this matter having been submittedupon receipt of reply briefs November5, 2015, the Commission thenadjourned.)

* * * * *]

532


OF THE

STATE OF CALIFORNIA


))))))))))))


CERTIFICATION OF TRANSCRIPT OF PROCEEDING

I, Thomas C. Brenneman, Certified Shorthand

Reporter No. 9554, in and for the State of California

do hereby certify that the pages of this transcript

prepared by me comprise a full, true and correct

transcript of the testimony and proceedings held in

the above-captioned matter on August 27, 2015.

I further certify that I have no interest in the

events of the matter or the outcome of the proceeding.

EXECUTED this 27th day of August, 2015.

_________________________Thomas C. BrennemanCSR No. 9554

533


OF THE

STATE OF CALIFORNIA


))))))))))))


CERTIFICATION OF TRANSCRIPT OF PROCEEDING

I, Wendy M. Pun, Certified Shorthand Reporter

No. 12891, in and for the State of California do

hereby certify that the pages of this transcript

prepared by me comprise a full, true and correct

transcript of the testimony and proceedings held in

the above-captioned matter on August 27, 2015.

I further certify that I have no interest in the

events of the matter or the outcome of the proceeding.

EXECUTED this 27th day of August, 2015.

_________________________Wendy M. PunCSR No. 12891

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