Application No.: A.16-1 -XXX Exhibit No.: SCE-01 Witnesses: D. Neal

R. Worden

(U 338-E)

Testimony of Southern California Edison Company in Support of the Joint Application for Cost Recovery of the Wheeler North Reef Expansion Project Marine Mitigation Costs

Before the

Public Utilities Commission of the State of California

Rosemead, California

December 1, 2016

SCE-01: Testimony of Southern California Edison Company in Support of the Joint Application for Cost Recovery of the Wheeler North Reef

Expansion Project Marine Mitigation Costs Table Of Contents

Section Page Witness

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I. INTRODUCTION .............................................................................................1 R. Worden

II. BACKGROUND OF CALIFORNIA COASTAL COMMISSION PERMITTING AND REGULATORY REQUIREMENTS FOR SONGS 2&3 MARINE MITIGATION.............................................................3 D. Neal

A. SONGS 2&3 CDP And CDP Amendments...........................................3

B. Original WNR Project Description ........................................................4

C. CCC Has Required SCE To Expand The WNR ....................................5

1. CCC Monitoring Efforts And Conclusions................................5

2. SCE’s Efforts To Protect Customer Interests ............................6

D. 2016-2020 Scope Of Work Submitted In SCE’s 2018 General Rate Case ..................................................................................7

III. SCE’S WHEELER NORTH REEF EXPANSION PROPOSAL ......................8

A. Scope Of Work For The WNR Expansion Project ................................8

B. Forecasted Expenses For The WNR Expansion Project ........................9

C. The CPUC Should Approve Cost Recovery ........................................11

1. WNR Expansion Project Costs Are A Cost Of Service......................................................................................11 R. Worden

2. The WNR Expansion Project Costs Are Reasonable And Consistent With Previous CPUC-Approved Costs For Construction Of The WNR ......................................12 D. Neal

IV. RATEMAKING ...............................................................................................13 R. Worden

A. Cost Recovery Proposal .......................................................................13

B. Forecast of SCE’s WNR Project Revenue Requirements ....................14

C. Proposed CPUC ERRA Review of WNR Expansion Project Expansion Expenditures ..........................................................16

SCE-01: Testimony of Southern California Edison Company in Support of the Joint Application for Cost Recovery of the Wheeler North Reef

Expansion Project Marine Mitigation Costs Table Of Contents (Continued)

Section Page Witness

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D. WNR Expansion Project Rate Impact..................................................16

E. Ratemaking Summary ..........................................................................17

V. CONCLUSION ................................................................................................18

Appendix A Correspondence between CCC and SCE ....................................................

Appendix B Witness Qualifications.................................................................................

1

I. 1

INTRODUCTION 2

In Decision (D.) 15-11-021 (SCE’s 2015 General Rate Case), the California Public Utilities 3

Commission (CPUC) determined that costs related to SCE’s compliance with marine mitigation projects 4

required under the California Coastal Commission’s (CCC) coastal development permit (CDP) for 5

SONGS 2&3 is a required cost of service properly paid by customers. This decision also authorized 6

SCE to submit an application, separate from SCE’s general rate case (GRC), to the extent SCE seeks 7

cost recovery for any additional reef construction not included in SCE’s GRC.1 SCE recently submitted 8

in its 2018 GRC application a forecast for 2016-2020 labor and non-labor costs for ongoing 9

management and maintenance activities related to the marine mitigation projects. Subsequent to SCE’s 10

preparation of its 2018 GRC application, the CCC directed SCE to implement an expansion project for 11

the Wheeler North Reef (WNR) marine mitigation project (WNR Expansion Project) near SONGS to 12

improve the performance of the reef, as determined by the CCC. Due to this timing and the CPUC’s 13

direction provided in D.15-11-021, the costs for the WNR Expansion Project were not included in 14

SCE’s 2018 GRC application. 15

SCE and San Diego Gas & Electric Company (SDG&E) (referred to collectively as the Utilities) 16

concurrently submit a joint application requesting the CPUC approve cost recovery for the WNR 17

Expansion Project, estimated at approximately $33 million (100% Share, 2016$). SCE plans to 18

complete the project, including all design, permitting, and construction activities by 2020. SCE will 19

update this estimate as the project scope is approved by the CCC and other permitting agencies. SCE 20

proposes to submit an annual advice letter in November each year with a forecast of WNR Expansion 21

1 See D.15-11-021, p. 289 (“In the event that CCC does require additional reef construction, or other measures,

SCE and SDG&E may file an application to recover costs at that time.”). Per D.15-11-021, expenses associated with SONGS 2&3 marine mitigation projects were moved from capital to O&M beginning in 2015. See D.15-11-021, p. 289 (“In the event that CCC does require additional reef construction, or other measures, SCE and SDG&E may file an application to recover costs at that time. In that application, SCE should demonstrate that it has made a reasonable effort to represent ratepayers’ interests in front of all applicable regulatory bodies and that its cost forecast is reasonable. As decided above, SCE and SDG&E shall recover any such costs as O&M expense, not capital expenditures.”).

2

Project expenses for the upcoming year, and requests the CPUC establish ratemaking so that only the 1

actual costs for the project are recovered from customers, with recorded costs audited annually to ensure 2

that all recorded costs are associated with activities as defined and adopted by the CPUC in this 3

proceeding.2 4

Chapter II provides background regarding the SONGS 2&3 CDP and required marine mitigation 5

projects. Chapter III discusses the WNR Expansion Project and associated costs. Chapter IV provides 6

SCE’s ratemaking proposal, and Chapter V concludes SCE’s testimony.7

2 SCE proposes that SCE’s recorded costs be audited in its Energy Resource Recovery Account (ERRA)

Reasonableness proceeding.

3

II. 1

BACKGROUND OF CALIFORNIA COASTAL COMMISSION PERMITTING AND 2

REGULATORY REQUIREMENTS FOR SONGS 2&3 MARINE MITIGATION 3

A. SONGS 2&3 CDP And CDP Amendments 4

The CCC issued the original SONGS 2&3 CDP in 1974, approving a permit for SONGS 2&3 5

construction.3 The permit provided two conditions that (1) established a three-member independent 6

Marine Review Committee (MRC) to evaluate the impact of SONGS 2&3 on the marine environment, 7

and (2) authorized the CCC to direct SCE to meet certain requirements to address any adverse impacts 8

to the marine environment identified by the MRC. During the course of SONGS 2&3 operations, the 9

CCC has amended the SONGS 2&3 CDP several times, requiring SCE to implement various marine 10

mitigation projects to address SONGS 2&3 impact on the marine environment, as determined by the 11

CCC. 12

On July 16, 1991, the CCC amended the SONGS 2&3 CDP, adding marine mitigation conditions 13

requiring SCE to: (1) develop a wetland restoration project to mitigate fish losses, (2) install fish 14

behavioral barrier devices to reduce fish mortality in the cooling water intake system, and (3) construct 15

an artificial kelp reef to mitigate impacts on the San Onofre kelp reef. On March 17, 1994, the CCC 16

amended the CDP again, adding a fourth mitigation project requiring SCE to fund a fish hatchery 17

program to be developed by a CCC-appointed entity. The CDP conditions adopted by the CCC also 18

included a requirement for monitoring the wetlands restoration and artificial reef projects. On April 9, 19

1997, the CCC amended the CDP requirements once more, changing the mitigation requirement for the 20

artificial reef project. 21

SCE has implemented the four mitigation projects required by the amended CDP, receiving CCC 22

affirmation on two. SCE completed the fish behavioral barrier devices in 2000. The CCC affirmed 23

compliance with that CDP condition in October 2000. SCE completed the fish hatchery project in 1994. 24

3 Permit No. 6-81-330-A (formerly 183-73)

http://marinemitigation.msi.ucsb.edu/documents/ccc_reports/SONGS_permit/SONGS_permit_6-81-330-A_(formerly_183-73)_May1997.pdf.

4

The CCC affirmed compliance with that permit condition in June 1994. Construction of the artificial 1

reef, now known as the Wheeler North Reef (WNR), was completed in September 2008, but the CCC 2

has not affirmed compliance. All major construction for the fourth project, the wetlands restoration, was 3

completed in 2011 and the CCC has not affirmed compliance. 4

Although SONGS 2&3 are now being decommissioned, SCE is still obligated to meet the CDP 5

requirements for monitoring, managing, and remediating the WNR and wetlands restoration, as 6

determined by the CCC. The SONGS 2&3 CDP provides that the “the permittee shall insure that the 7

performance standards and goals set forth [in the CDP] will be met for at least the length of time 8

equivalent to the full operating life of SONGS Units 2 and 3.”4 The “full operating life” of SONGS 2&3 9

is defined under the CDP as including “past and future years of operation of SONGS Units 2 and 3, 10

including the decommissioning period to the extent there are continuing discharges” from SONGS into 11

the marine environment.5 SONGS expects to utilize the discharge conduits during the decommissioning 12

period for the foreseeable future. 13

B. Original WNR Project Description 14

The 1991 CDP amendment required SCE to construct a 300-acre artificial reef near the San 15

Onofre Kelp Bed. The WNR, constructed in two phases, was designed to support a healthy giant kelp 16

forest and associated ecosystem for fish and other marine life. Phase I, comprising 22.4 acres, was 17

intended to only cover an area large enough to represent and analyze the important processes that would 18

affect the WNR once fully constructed. The Phase I reef was to be monitored for three years. The 19

Phase II reef would be built following the completion of Phase I, covering the balance of the 300-acre 20

requirement. The 1991 CDP amendment also provided for CCC monitoring and oversight of the WNR 21

for a period equivalent to the operating life of SONGS 2&3. 22

The 1997 CDP amendments reduced the scale of the WNR by decreasing the required final size 23

of the reef to 150 acres. However, the amendments increased the project’s complexity and estimated 24

4 1997 CDP SONGS Permit No. 6-81-330-A, p. 37, fn. 3. 5 Id. (emphasis added).

5

costs by adding conditions related to the reef design, performance criteria, and performance monitoring. 1

SCE completed construction of the Phase I reef in September 1999, and completed construction of the 2

Phase II reef in September 2008. Although the CDP required only 127.6 acres of additional reef in 3

Phase II, SCE constructed 152 acres in case other portions of the reef failed to meet CDP specifications 4

following independent verification by the CCC. Thus, the total reef area (Phase I and Phase II) is about 5

175 acres. 6

C. CCC Has Required SCE To Expand The WNR 7

1. CCC Monitoring Efforts And Conclusions 8

The CCC continues to evaluate the WNR’s performance to determine whether any additional 9

mitigation measures should be required under the SONGS 2&3 CDP. CCC appointed scientists have 10

been independently monitoring the WNR’s performance since 2009, and reporting the results to the 11

public annually.6 The WNR must meet eleven relative standards (compared to natural reefs) and three 12

absolute standards. The WNR has consistently met the relative performance standards, but it has failed 13

to meet all of the absolute standards. Notably, the WNR has not met an absolute fish biomass 14

requirement of 28 U.S. tons. In the 2012 Annual Status Report SONGS Mitigation Program report, 15

CCC scientists concluded the footprint of the WNR may be too small to meet the performance standard 16

related to fish biomass.7 In a 2015 report,8 the CCC scientists concluded the present size and 17

configuration of the WNR is not sufficient to consistently support 28 U.S. tons of reef fish.9 In May 18

2016, SCE received formal notification from the CCC Executive Director that remediation of the WNR 19

is necessary to meet the CDP permit,10 and required SCE to submit a remediation plan to meet this 20

standard.11 21

6 http://marinemitigation.msi.ucsb.edu/. 7 “SONGS Mitigation 2012 Annual Status Report” https://documents.coastal.ca.gov/reports/2012/12/f11a-12-

2012.pdf 8 See “Report on the causes of low fish standing stock at Wheeler North Reef and possible solutions for

remediation,” attached to Susan Hansch letter to SCE, dated March 10, 2015 (in Appendix A). 9 See Letter from Susan Hansch to SCE, dated March 10, 2015 (in Appendix A). 10 See Letter from John Ainsworth to SCE, dated May 24, 2016 (in Appendix A). 11 See Permit No. 6-81-330-A, p. 34 (“The permittee shall be responsible for fully implementing any remedial

measures deemed necessary by the Executive Director”).

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2. SCE’s Efforts To Protect Customer Interests 1

In July 2016, SCE responded to the CCC. SCE asserted that the additional remediation 2

requirements would be contrary to Utility customers’ interest and unnecessarily increase Utility 3

customers’ costs. SCE specifically argued that the CCC should not impose the requirements because: 4

(1) the CCC’s WNR remediation requirements are premature given that the CDP affords SCE 10 years, 5

or until 2019, to achieve full performance standards compliance; and (2) the CCC should utilize a 6

relative performance standard (which is being met) comparing the WNR’s performance to other reefs as 7

the basis for determining whether the WNR’s performance is acceptable.12 SCE also requested that the 8

CCC consider accelerating the termination (sun setting) of SCE’s reef compliance monitoring 9

obligations, which SCE believes has reached a point of diminished value for compliance monitoring, but 10

continues to impose substantial expenses on SCE and SDG&E customers.13 SCE emphasized its CPUC-11

required obligations to “zealously protect” customer interests at the CPUC. Without waiving its 12

concerns and requests, SCE submitted a Draft Remediation Plan of Action (DRPA), with a proposed 13

initial schedule for expanding the WNR (see Table III-1 below), to fulfill the CCC’s requirement that 14

SCE provide a remediation plan for review. 15

In mid-September 2016, the CCC rejected SCE’s arguments and asserted that WNR remediation 16

is required now. Addressing each argument raised by SCE on behalf of customers, the CCC determined 17

that the CCC Executive Director can require remediation at any time if monitoring data indicates 18

performance standards are not being met. The CCC also rejected utilizing a relative standard, asserting 19

that doing so would diminish the likelihood that the fish biomass losses caused by SONGS 2&3 20

operations would be fully mitigated. The CCC also asserted that because the WNR has not yet complied 21

with all performance standards, reducing monitoring requirements is not justifiable or allowable under 22

the CDP. The CCC stated that it believes the most efficient way for SCE to satisfy its dual obligations 23

12 See Letter from SCE to CCC, dated July 8, 2016 (in Appendix A). 13 See Letter from SCE to CCC, dated July 8, 2016 (in Appendix A).

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to protect customers and fulfill CDP requirements is to implement WNR remediation as quickly as 1

possible, and directed SCE to implement remedial actions now: 2

Monitoring data indicate that the current size and configuration of WNR is insufficient 3 to consistently meet the permit requirement for a minimum fish stand stock of 28 US 4 tons. Thus, in order to comply with the permit conditions, remedial actions must be 5 taken now.14 6

The CCC directed SCE to develop a project description and design, engineering and construction 7

plan for the CCC’s review.15 Acknowledging SCE’s obligations to protect customers and the 8

Commission’s role in approving project costs, the CCC has contacted CPUC staff to coordinate efforts.16 9

The correspondence between the CCC and SCE documenting SCE’s efforts to protect customer 10

interests is attached as Appendix A to this testimony. 11

D. 2016-2020 Scope Of Work Submitted In SCE’s 2018 General Rate Case 12

SCE submitted cost forecasts in its GRC application for the continued operation and 13

maintenance of the CCC-required marine mitigation projects, including the WNR.17 The majority of the 14

GRC forecasts for these projects are non-labor costs associated with the CCC monitoring expenses and 15

lease payments made annually to the California State Lands Commission. A detailed analysis of SCE’s 16

most-recent forecast for marine mitigation expenses was provided in supporting testimony for SCE’s 17

2018 GRC application.18 Due to the timing of the CCC’s requirement for SCE to expand the WNR and 18

requirement in D.15-11-021 that the Utilities submit a separate application for new marine mitigation 19

projects, none of the expenses identified in this Joint Application for the WNR Expansion Project were 20

included in SCE’s most-recent GRC request. 21

14 See Letter from CCC to SCE, dated September 14, 2016 (emphasis added) (in Appendix A). 15 See Letter from CCC to SCE, dated September 14, 2016 (in Appendix A). 16 See Letter from CCC to SCE, dated September 14, 2016 (in Appendix A). 17 As a minority owner, SDG&E is responsible for 20% of marine mitigation costs and therefore traditionally

receives an authorized revenue requirement for 20% of SCE’s authorized marine mitigation revenue requirements in SCE’s GRC. SDG&E then updates its revenue request in its own GRC to include this amount, plus any additional costs (i.e., SCE’s contractual overheads).

18 2018 GRC: Application (A.)16-09-001.

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III. 1

SCE’S WHEELER NORTH REEF EXPANSION PROPOSAL 2

A. Scope Of Work For The WNR Expansion Project 3

Included below (Table III-1) is the schedule of activities for the WNR Expansion Project that 4

SCE has proposed to the CCC.19 As shown in Table III-1, pre-engineering surveys and design are 5

scheduled to be completed in 2017. Permitting of the WNR Expansion Project and approval by the 6

appropriate administrative agencies will likely occur in 2018-2019. The state and federal agencies 7

requiring permits or approvals for the WNR Expansion Project include, but are not limited, to the: (1) 8

CCC, (2) California States Land Commission (SLC), (3) Regional Water Quality Control Board 9

(RWQCB), (4) Army Corps of Engineers (USACOE), (5) National Marine Fisheries Service, (6) 10

California Department of Fish and Wildlife, and (7) U.S. Coast Guard. It is not now known what level 11

of California Environmental Quality Act (CEQA) analysis is required for the expansion, as the scope of 12

CEQA requirements will be determined by the SLC during the process to amend SCE’s current SLC 13

lease for the WNR. Finally, construction is scheduled to take place in 2020, although costs of 14

construction such as procurement of rock could occur as early as 2019. 15

SCE will update this schedule and estimated costs in this proceeding to the extent any changes 16

are made during the project design, permitting, and construction process. Any changes in the scope and 17

schedule may change the cost of the WNR Expansion Project. SCE proposes submitting an annual 18

advice letter in November each year with the most recent forecast of WNR Expansion Project expense 19

for the upcoming year. 20

19 SCE is continuing to evaluate the CCC’s request that SCE accelerate the schedule.

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Table III-1 Potential Construction Schedule –

To Be Finalized with the CCC

The CCC and SCE will discuss options for WNR remediation activities. The details of the WNR 1

Expansion Project’s final design and schedule, including the final configuration and footprint of the 2

expanded reef, must be approved by the CCC. The estimate provided in this Application is for a single 3

design option. 4

B. Forecasted Expenses For The WNR Expansion Project 5

CCC scientists recommended20 several options for configuring an expanded reef, including the 6

amount of rock. For this filing, SCE selected the option requiring placement of an additional 105 acres 7

of high density rock in areas adjacent to the existing reef. This option also features a low relief of rocks, 8

which mimics the current design. If this configuration is used, SCE estimates a total WNR Expansion 9

Project cost of approximately $33 million. SCE is working with the CCC and its scientists to develop a 10

final design for the WNR Expansion Project that will maximize fish biomass, integrate with the existing 11

WNR, and reduce costs to below SCE’s current estimate. The CCC must approve the final WNR 12

Expansion Project design. 13

20 See Letter from John Ainsworth to SCE, dated May 24, 2016 (in Appendix A).

Project Element Approximate

Duration (months)

Approximate Completion

DateCCC Staff Review, Revision and Staff Approval of Plan 3 Q1 2017Consult, Plan, Prepare and Submit Lease Application to State Lands Commission (SLC); Consult with Federal Agencies for NEPA Review

3 Q2 2017

SLC CEQA/NEPA Review, Analysis, Documentation (EIR/S) and Execute SLC Lease

12 Q2 2018

Finalize Design and Engineering of Preferred Project 3 Q3 2018Consult, Plan, Prepare and Submit Permit Applications to CCC, U.S. Army Corps of Engineers, and Regional Water Quality Control Board

6 Q1 2019

Obtain all Required Permits 6 Q3 2019Procure Construction Contractor 3 Q4 2019Execute Construction 6 Q2-Q3 2020

10

The largest driver of cost is the amount of rock needed to cover the area. Rock costs include 1

procuring the rock, transporting it from Catalina Island (the likely source of the rock), and placing the 2

rock in accordance with the CCC-approved plan and design. The current-planned configuration of the 3

WNR Expansion would require 288,750 tons of rock, with an estimated constructed cost of $90 per ton. 4

Nearly $27 million of the forecast represents costs for rock procurement, transport and placement, and 5

construction mobilization and demobilization. Expenses associated with environmental studies, 6

permitting, compliance with permit conditions, engineering, and management account for approximately 7

$3.5 million. SCE has included a 10% contingency of approximately $3 million to the estimate. SCE 8

will also incur expenses related to project support for the permitting and construction work. SCE 9

estimates $440,000 for project support costs over the project period. Table III-2 below provides a 10

detailed cost estimate for the WNR Expansion Project, including estimated costs for: (1) materials, (2) 11

mobilization and demobilization, (3) environmental studies, (4) permitting, (5) surveying and 12

monitoring, (6) engineering and construction, (7) contingency, and (8) project support. 13

It is important to note that the WNR Expansion will nearly double the size of the WNR and 14

therefore require additional monitoring effort by the CCC and its scientists. The increased monitoring 15

costs will not be incurred until 2021 based on the current schedule, and would be included in future 16

GRC requests. SCE is working with the CCC to develop a revised monitoring plan that demonstrates 17

compliance with the CDP but also reduces future costs to the Utilities and their customers. 18

11

Table III-2 High Density, Low Relief Option – 105 Acres – Total Tonnage

Forecast O&M Expenses (Constant 2016, $000)

C. The CPUC Should Approve Cost Recovery 1

1. WNR Expansion Project Costs Are A Cost Of Service 2

The WNR Expansion Project must comply with the CCC’s requirement that SCE expand the 3

existing WNR to increase fish biomass to greater than 28 U.S. tons. Although SONGS 2&3 is being 4

decommissioned, SCE and the other SONGS owners have an on-going obligation to mitigate the 5

impacts to the marine environment caused by SONGS 2&3 operations, as determined by the CCC. The 6

costs for the WNR Expansion Project is a cost of service properly paid by customers. The WNR 7

Expansion Project costs should be fully allocated to customers, just like any other compliance obligation 8

Task Description 2017 2018 2019 2020 Total Cost ($)

1 Materials: Rocks ($40/ton), Transportation ($5/ton), construction ($45/ton)

12,994 12,994 25,988

2 Mobilization and demobilization of construction equipment

450 300 750

3 Environmental studies and document preparation (EIR, etc.)

300 200 500

4 Permitting (CCC, State Lands Commission, US Army Corps of Engineers, State Water Resource Control Board, etc.)

100 100 100 300

5 Compliance with permit conditions (Surveying, monitoring, etc.)

200 200 400

6 Engineering, Construction Management, Construction Verification

200 200 400 800 1,600

7 Contingency at 10% 60 50 1,414 1,429 2,953 8 Project Support 110 110 112 112 444 Total 770 660 15,670 15,835 32,935 SCE 78.21 Share 602 516 12,256 12,385 25,758 SDG&E 20.00 Share 154 132 3,134 3,167 6,587

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imposed on SCE while providing CPUC approved service. This ratemaking principle is well-established 1

and consistent with the CPUC’s decision in D.15-11-021 regarding marine mitigation costs. 2

2. The WNR Expansion Project Costs Are Reasonable And Consistent With Previous 3

CPUC-Approved Costs For Construction Of The WNR 4

As stated in the cost estimate discussed above, the cost for installing an artificial reef is largely 5

driven by the costs of the building material (i.e. the rock making up the reef), including procurement, 6

transportation, and installation expenses. For WNR Phase II, SCE used approximately 126,000 tons of 7

rock at a total project cost of $17 million. The current plan for the WNR Expansion Project would 8

require 288,750 tons of rock with a forecasted total project cost of $33 million based on current market 9

rates. Based upon the amount of rock utilized and total project costs, the cost forecast for the WNR 10

Expansion Project has an overall lower cost ratio ($115 per ton of rock used) than the corresponding 11

cost ratio for the original WNR ($135 per ton of rock used) previously found reasonable and approved 12

by the CPUC.21 WNR Expansion Project cost estimate is based on market rates and follows previously 13

approved costs to construct the original reef, cost recovery should be approved as reasonable. 14

21 D.09-03-025, Section 8.2.1, p. 184.

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IV. 1

RATEMAKING 2

This chapter presents SCE’s ratemaking proposal for the WNR Expansion Project. SCE requests 3

approval to recover the actual revenue requirements associated with the WNR Expansion Project in the 4

distribution sub-account of its Base Revenue Requirement Balancing Account (BRRBA), effective upon 5

a CPUC final decision approving this Application. Beginning in 2018, SCE requests to include in 6

distribution rate levels a forecast WNR Expansion Project revenue requirement each year through 2020. 7

The annual revenue requirement change associated with the 2018-2020 WNR Expansion Project 8

forecast revenue requirements will be consolidated and made when all other previously authorized 9

revenue requirement changes are reflected in rates on January 1st of each year, consistent with current 10

practice. 11

A. Cost Recovery Proposal 12

SCE proposes to include in distribution rates a forecast annual WNR Expansion Project revenue 13

requirement, effective the beginning of each year commencing January 1, 2018 through 2020. SCE 14

proposes that customers pay only the actual WNR Expansion Project revenue requirements, recording 15

the WNR Expansion Project costs incurred to the distribution sub-account of SCE’s BRRBA each 16

month. Any difference between the forecast WNR Expansion Project revenue requirement in rate levels 17

and the actual recorded WNR Expansion Project revenue requirement will be “trued-up” in the BRRBA. 18

Through this proposed ratemaking, only the actual realized revenue requirement associated with the 19

WNR Expansion Project will ultimately be collected from customers. Any over-collection recorded in 20

the BRRBA at the end of each year would be refunded to customers in the subsequent year. Likewise, 21

any under-collection that is recorded in the BRRBA at the end of each year would be recovered from 22

customers in the subsequent year. 23

SCE’s proposal to recover WNR Expansion Project costs in the existing distribution sub-account 24

of the BRRBA is appropriate because this expense is associated with efforts to remediate the effect of 25

SONGS 2&3 operations beginning with its commercial operation date through the units’ retirement. As 26

noted in SCE’s testimony in the 2015 General Rate Case, A. 13-11-003: 27

14

[T]he regulatory requirements for this project arise out of the original 1974 CCC 1 Coastal Development Permit that allowed SONGS Units 2 and 3 to be constructed and 2 operate. SCE accepted the terms of this and subsequent permit amendments and is 3 obligated to fulfill the requirements. Maintenance, management, and monitoring are 4 required for a period equivalent to the operating life of SONGS, including the post 5 operational decommission period. SCE must manage and maintain the reef, wetlands, 6 and fish return system to comply with the conditions outlined in the permit…”22 7

The costs forecast to be incurred for the WNR Expansion Project in this application result 8

directly from SONGS operations beginning in 1984, well before the advent of departing load in 9

California. Similar to the cost recovery of funds to decommission SONGS, these expenses are the 10

responsibility of all SCE customers, not only those who may have continued taking bundled service 11

despite having the option to buy their power from a source other than SCE some years after SONGS 12

commenced operations. Further, marine mitigation costs were allocated to all customers prior to the 13

introduction of departing load. To allocate WNR Expansion Project costs only to bundled customers 14

would be wholly unfair and saddle bundled customers with costs for a facility that benefitted all 15

customers during its nearly three decades of service. 16

B. Forecast of SCE’s WNR Project Revenue Requirements 17

Table IV-3 below contains SCE’s forecast annual revenue requirements for the WNR Expansion 18

Project from 2017-2020. Pursuant to D.15-11-021, all expenses associated with the SONGS 2&3 19

marine mitigation projects are to be treated and recovered as O&M expense beginning in 2015. 23 SCE’s 20

forecast revenue requirements were derived based on the estimated O&M expenses identified in Chapter 21

III of this testimony. SCE proposes to use non-labor escalation rates and a Franchise Fees and 22

Uncollectibles (FF&U) expense rate from SCE’s most recent GRC. 23

22 A.13-11-003, Exhibit SCE-07, Volume 3, p. 30. 23 D.15-11-021, p. 289.

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Table IV-3 WNR Expansion Project Revenue Requirements

($000)

Beginning in 2018, SCE requests to include in distribution rate levels a forecast WNR Expansion 1

Project revenue requirement through 2020. The annual revenue requirement associated with the WNR 2

Expansion Project will be consolidated and made when all other previously authorized revenue 3

requirement changes are reflected in January 1 rates each year, consistent with current practice. 4

SCE proposes to file an advice letter each year to determine the WNR Expansion Project revenue 5

requirement to be included in distribution rates the following year. SCE proposes to file this advice 6

letter in November each year beginning November 2017. In the annual advice letters, SCE will update 7

16

the WNR Expansion Project revenue requirement to reflect the most recent forecast of WNR Expansion 1

Project O&M expenses for that year, including the most recent adopted escalation and FF&U rates. 2

SCE will then consolidate the changes in its distribution rates to reflect these updated WNR Expansion 3

Project revenue requirements with other authorized rate level changes in its January 1 consolidated 4

revenue requirement and rate change. 5

If the WNR Expansion Project extends beyond 2020, SCE will include costs in its 2021 GRC 6

request, along with forecasted O&M costs for all ongoing SONGS 2&3 marine mitigation projects. 7

C. Proposed CPUC ERRA Review of WNR Expansion Project Expansion Expenditures 8

During this proceeding, the CPUC will review the reasonableness of authorizing the recovery of 9

WNR Expansion Project costs. Therefore, no further after-the fact review will be required. Under the 10

CPUC-adopted process for reviewing SCE’s balancing accounts, the recorded operation of the BRRBA 11

is audited by the CPUC in SCE’s annual Energy Resource Recovery Account (ERRA) Review 12

applications. This review of the BRRBA ensures that all entries to the account are stated correctly and 13

follow CPUC decisions. SCE will include testimony specifically addressing the WNR Expansion 14

Project recorded costs in its annual ERRA Review applications. CPUC ERRA-review procedures for 15

the WNR Expansion Project costs should focus on ensuring that all recorded costs are associated with 16

activities as defined and adopted by the CPUC in this proceeding. 17

D. WNR Expansion Project Rate Impact 18

Based on SCE’s estimated 2018-2020 WNR Expansion Project revenue requirements, the overall 19

average percent increase over present rate revenue (PRR) by year is shown in Table IV-4 below. 20

17

Table IV-4 WNR Expansion Project Rate Impact

E. Ratemaking Summary 1

SCE respectfully requests that the CPUC adopt the following ratemaking for the WNR 2

Expansion Project: 3

(1) Authorize the recovery of recorded WNR Expansion Project expenses in the distribution sub-4

account of the BRRBA; 5

(2) Authorize SCE to include in distribution rates an estimated annual WNR Expansion Project 6

revenue requirement commencing January 1, 2018 through January 1, 2020; and 7

(3) Audit WNR Expansion Project recorded costs in SCE’s annual ERRA Review applications to 8

ensure that all recorded costs are associated with activities as defined and adopted by the CPUC in this 9

proceeding. 10

($000) 2018 2019 2020 Source Revenue Requirement 553 13,502 14,017 Table IV-1

Present Rate Revenue (PRR) 11,417,670 11,393,715 11,277,777 2018 GRC A.16-09-001 SCE Exhibit SCE-09, Vol. 1

Percent Increase over PRR 0.005% 0.119% 0.124%

18

V. 1

CONCLUSION 2

SCE respectfully requests that the CPUC approve cost recovery for the WNR Expansion Project.3

Appendix A

Correspondence between CCC and SCE

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Report on the causes of low fish standing stock at Wheeler North Reef and possible solutions for

remediation

SAN ONOFRE NUCLEAR GENERATING STATION (SONGS)MITIGATION PROGRAM

Submitted to the California Coastal CommissionFebruary 25, 2015

By

Daniel Reed, Stephen Schroeter and Mark PageMarine Science Institute, University of California Santa Barbara

In consultation withRichard Ambrose, University of California Los Angeles

Peter Raimondi, University of California Santa CruzRussell Schmitt, University of California Santa Barbara

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SUMMARY

The Wheeler North Reef was constructed by Southern California Edison (SCE) and its partners as partial mitigation for the adverse effects of the San Onofre Nuclear Generating Station (SONGS) Units 2 and 3 on living marine resources. Results from the first six years of independent monitoring show that the Wheeler North Reef has consistently failed to meet the performance standard for fish standing stock. Results of analyses of time series data of fish biomass indicate that the current size (173.8 acres) and configuration (low relief reef with an average of 47.6 % coverage of rock) is insufficient to consistently meet the requirement for a minimum fish standing stock of 28 US tons. If the performance standards are not met, then the SONGS permit enables the Executive Director to require SCE to perform remediation, which may require constructing additional reef. Monitoring data collected at the Wheeler North Reef since 2000 were used determine the area of different configurations of new reef needed for remediation. Results from these analyses indicate that the area of additional reef needed for the Wheeler North Reef to meet the performance standard for fish standing stock with a 90% degree of certainty ranged from 30 - 175 acres depending on the rock coverage and vertical relief of the new reef added for remediation.

BACKGROUND

A condition of the SONGS Coastal Development Permit issued by the CCC required studies of the effects of the operation of Units 2 and 3 on the marine environment offshore from the San Onofre Nuclear Generating Station and mitigation of any of its adverse impacts. Impact assessment studies conducted by the Marine Review Committee found that the discharge of cooling water from SONGS Units 2 and 3resulted in the loss of 200 acres of a medium to high density kelp bed and its associated community. As a result of these impact studies, the CCC added conditions to the SONGS permit to mitigate these adverse impacts that required SCE and its partners to construct a 300-acre kelp reef as in-kind mitigation for the loss of giant kelp forest habitat (Condition C). The 1991 conditions also required SCE and its partners to provide the funds necessary for CCC to contract marine scientists to perform technical oversight and independent monitoring of the mitigation projects (Condition D).After extensive review of new analyses of SONGS’ impacts to the San Onofre Kelp Forest, the CCC approved amended conditions in April 1997 that revised the kelp mitigation requirement in Condition C to require SCE to construct an artificial reef large enough to sustain 150 acres of medium to high density kelp, 28 tons of reef fish, and a kelp forest community that is similar to natural reefs in the region. The CCC noted that to accomplish this goal, a reef larger than 150 acres might be required. In addition, SCE was required to fund a marine fish hatchery. The CCC also confirmed in April 1997 its previous finding that independent monitoring and technical oversight were required in Condition D to ensure full mitigation under the permit. Performance standards for reef substrate, giant kelp, fish, and the benthic community of algae and invertebrates specified in Condition C are used to evaluate the success of the artificial reef in meeting the intended goal of replacing the kelp forest resources

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damaged or lost as a result of SONGS operations. Monitoring that is independent of the permittee is done in accordance with Condition D of the SONGS permit to: (1) determine whether the performance standards established for Condition C are met, (2) determine, if necessary, the reasons why any performance standard has not been met, and (3) develop recommendations for appropriate remedial measures. The performance standards fall into two categories: absolute standards, which are measured only at the artificial reef and require that the variable of interest attain or exceed a predetermined value, and relative standards, which require that the value of the variable of interest on the artificial reef be similar to that measured on natural reference reefs. The values of the absolute performance standards pertaining to giant kelp and reef fish standing stock are linked to the magnitude of SONGS impacts on these resources as determined by the impact assessment studies conducted by the Marine Review Committee. Annual evaluation of these performance standards is based on the greater value obtained from either: (1) data collected at the artificial reef that year, or (2) a four-year running average calculated from data collected at the artificial reef for that year and the previous three years. A running average recognizes that short-term fluctuations in giant kelp and fish are the norm, and it is used to allow excess kelp or fish in good years to be used as mitigation to compensate for occasional years when values for the kelp or fish are below those required by the performance standards. The relative performance standards are intended to ensure that the ecological structure and functions of the artificial reef are similar to those of natural reefs in the region. Theirevaluation is based solely on a four-year running average calculated from data collected at the artificial reef for that year and the previous three years. To receive mitigation credit for a given year the artificial reef must meet all four absolute performance standards, and at least as many of the 11 relative performance standards as the lowest performing reference reef.Under Condition C, an artificial reef would be constructed in two phases, an initial small experimental reef (~22 acres) and a subsequent mitigation reef that is large enough to meet the 150-acre kelp and 28-ton fish standing stock requirements. The purpose of the Phase 1 Experimental Reef was to determine which combinations of substrate type and substrate coverage would most likely achieve the performance standards specified in Condition C. The design of the Phase 2 Mitigation Reef was to be based on the results of the Phase 1 Experimental Reef.Construction of the Phase 1 Experimental Reef was competed in August 1999 and five years of post-construction monitoring were completed in December 2004. All reef designs tested showed considerable promise in meeting many of the performance standards established for the mitigation reef, with reefs having a higher coverage of hard substrate tending to outperform those with lower coverage for several aspects of the kelp forest community. These findings formed the basis of the Executive Director’s determination that: (1) the mitigation reef should be built of quarry rock or rubble concrete having dimensions and specific gravities that are within the range of the rock and concrete boulders used to construct the Phase 1 Experimental Reef, and (2) the percent of the bottom covered by quarry rock or rubble concrete on the mitigation reef should average at least 42%, but no more than 86% (the range of low to high coverage

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tested in Phase 1). The Commission concurred with the Executive Director’s determination for the type and percent cover of hard substrate on October 12, 2005. Construction of the Phase 2 Mitigation Reef was completed in September 2008. It was designed as 18 low relief rock polygons ranging in area from 1.35 to 38.88 acres for a total reef area of 152 acres, of which only 130 acres met the minimum requirement of 42% rock coverage. The combined area of the Phase 1 and Phase 2 reefs (officially known as the Wheeler North Reef) totaled ~177 acres, however only 155 of these acresmet the Permit requirement for a 150 acre artificial reef that averaged at least 42% cover of rock. Consequently, only the 155 acres that met that averaged 42% cover of rock are used to judge the relative performance standards established for the Wheeler North Reef. In contrast, the total area of the Wheeler North Reef is used to judge the absolute performance standards for giant kelp and fish standing stock.

CURRENT STATUS OF THE PERFORMANCE OF THE WHEELER NORTH REEF

In 2013 the Wheeler North Reef met three of the four absolute standards and as manyrelative standards as the lowest performing reference reef1. It failed to meet the performance standard that requires the standing stock of reef fish at the artificial reef to be at least 28 US tons (Figure 1). Preliminary analysis of data collected during the 2014 surveys show a marked increase in the standing stock of reef fish at Wheeler North Reef and elsewhere in the region. Despite this large regional increase, the Wheeler North Reef still fell short of the 28 ton standard.

2009 2010 2011 2012 2013 2014

Fish

sta

ndin

g st

ock

(US

tons

)

0

5

10

15

20

25

30

2012 2013 2014

28 Ton Standarda) b)

Figure 1. Estimated standing stock of fish at Wheeler North Reef (a) annual values for 2009 - 2014 and (b) 4-year running average.

1 Reed, D. C., S.C. Schroeter, M. H. Page. 2013 Annual report of the Status of Condition C: Kelp Reef Mitigation. San Onofre Nuclear Generating Station (SONGS) mitigation program. Report to the California Coastal Commission. June 2014. 68 pp. http://marinemitigation.msi.ucsb.edu/documents/artificial_reef/annual_monitoring_reports/2013_annualreport-SONGS_kelp_reef_mitigation.pdf

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Fulfillment of the SONGS reef mitigation requirement will occur when the number of years of mitigation credit accrued by the Wheeler North Reef equals the total years of operation of SONGS Units 2 & 3, including the decommissioning period to the extent that there is continuing discharge of cooling water. Operation of Units 2 and 3 began in 1983 and 1984, respectively. Both reactors were shut down in January 2012 due to excessive wear in the cooling tubes of the steam generators, and in June 2013 both units were permanently retired. Full retirement of the units prior to decommissioning is expected to take several years in accordance with customary practices; actual decommissioning will take many years until completion. Although Units 2 and 3 have been permanently shut down, SONGS still circulates ocean water within the plant to cool the spent fuel, and thus continues to discharge cooling water. Thus the number of years of mitigation credit that the Wheeler North Reef must obtain to fulfill the requirements of Condition C of the SONGS coastal development permit is 30 years and counting. As of 2014 the Wheeler North Reef had not earned any years of mitigation credit (Table 1). The reason for this has been its failure to meet the absolute performance standards for giant kelp in the first year (2009) and for fish standing stock in all six years.

Despite the above noted deficiency in the performance with respect to fish standing stock the Wheeler North Reef has shown promise in meeting many of its objectives. For example, it consistently met the absolute performance standards pertaining to hard substrate and lack of invasive species in each of the first five years of monitoring (2009 – 2013) and the absolute standard for giant kelp in in all but the first year of monitoring.Moreover, the overall performance of Wheeler North Reef with respect to the relative performance standards has been similar to that of the natural reference reefs.

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REASONS FOR FAILURE TO MEET THE PERFORMANCE STANDARD FOR FISH STANDING STOCK

The standing stock of fish on a reef is influenced by a wide variety of factors including ocean climate, fishing pressure, and the physical attributes of the reef, such as its footprint area, rock coverage and topography. The most recent surveys show that the Wheeler North Reef has experienced a slight decrease in its footprint area and a slight increase in its percent cover of hard substrate relative to its as-built condition. Thus thebest estimate of the present configuration of the Wheeler North Reef is ~174 acres of low relief rock that covers on average 48% of the bottom. The Wheeler North Reef was designed to be low relief to mimic natural reefs in the region, including the reef at San Onofre that was damaged by SONGS’ operations. Low relief reefs in many areas are also more likely to support giant kelp, which was a major objective of the mitigation project. A critical issue in assessing the long-term performance of the Wheeler North Reef is whether its present configuration is sufficient to sustain at least 28 tons of fish over the long term. Information obtained from monitoring initiated in 2000 for Phase 1 of the reef mitigation project provides a reasonably long-term perspective for evaluating this issue. Time series data from the Phase 1 rock modules collected from 2000 to 2014 are the most useful for evaluating the effects of rock coverage on the standing stock of reef fishbecause they include estimates of fish biomass for different coverages of rock over a relatively long time period. We used these data to calculate the annual mean biomass of reef fish per unit area of reef for modules with low (41%), medium (63%), and high (81%) rock coverage. Mean fish biomass per unit area for each of the three rock coverages were scaled up to 174 acres to obtain a time series of the estimated fish standing stock for 174-acre reefs with low, medium or high rock coverage. Results from this analysis show that the ability of a 174 acre reef to support a fish standing stock of at least 28 tons increased with increasing rock coverage (Figure 2). The fish standing

2000 2002 2004 2006 2008 2010 2012 2014Fish

sta

ndin

g st

ock

(US

tons

174

acr

es-1

)

0

20

40

60

80

Low coverage (41%)Medium coverage (63%)High coverage (81%)

Figure 2. Estimated standing stock of kelp bed fish per 174 acres for the threecoverages of rock tested on the Phase 1 modules of Wheeler North Reef.

28 tons

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stock of a 174 acre reef with low rock coverage would have supported 28 tons of fish in only 1 of 12 years. In contrast, a 174 acre reef with high rock coverage would have supported at least 28 tons of fish in 8 of 12 years. A 174 acre reef with medium rock coverage was intermediate in its ability to provide for fish as it would have supported 28 tons or more in 3 of 12 years.The standing stock of reef fish at the Wheeler North Reef also was compared to that of at the San Mateo and Barn to examine the capacity of natural low-relief (< 1 m tall) reefs to sustain a fish standing stock of at least 28 tons. This also was done using annual monitoring data collected since 2000. The rock coverages at Barn and San Mateo (52% and 47%, respectively) are very similar to that at Wheeler North Reef (48%), however, their footprint areas (328 and 282 acres, respectively) are considerably larger than that of Wheeler North Reef (174 acres). Therefore, we scaled values of fish standing stock at Barn and San Mateo two different ways: (1) to their actual footprint area, and (2) to the footprint area of Wheeler North Reef. Results of this analysis show that when scaled to their actual size Barn and San Mateo frequently supported a fish standing stock of at least 28 tons (i.e., 7 of 13 years for Barn and 5 of 13 years for San Mateo; Figure 3). However, when scaled to the size of Wheeler North Reef Barn and San Mateo rarely supported a fish standing stock of 28 tons (i.e., 2 of 13 years for Barn and 3 of 13 years for San Mateo).

2000 2002 2004 2006 2008 2010 2012 2014

Fish

sta

ndin

g st

ock

(US

tons

174

acr

es-1

)

0

20

40

60

80

100

120Barn (328 acres)San Mateo (282 acres)Barn (174 acres)San Mateo (174 acres)

Figure 3. Estimated standing stock of kelp bed fish at Barn and San Mateo. Values aregiven for the actual size of each reef (328 and 282 acres, respectively) and for each reef scaled to the size of the Wheeler North Reef (i.e., 174 acres).

Collectively, these results suggest that the present size (174 acres) and configuration (48% cover of low relief rock) of the Wheeler North Reef is not sufficient to consistently support 28 tons of reef fish. This finding is notable and indicates that remediation in the

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form of additional reef is needed for the Wheeler North Reef to consistently meet its current mitigation requirements over the long term.

ESTIMATES OF ADDITIONAL REEF NEEDED FOR REMEDIATION

Determining the area and bottom coverage of new reef needed for remediation requires realistic estimates of the future performance of the existing 174 acre Wheeler North Reef with respect to fish standing stock, as well as the performance of the additionalreef added as remediation. The time series data of fish biomass from the Phase 1 Reef are arguably the most useful data available for predicting the future capacity of anexpanded Wheeler North Reef to sustain fish biomass because they: (1) include data for reefs with different rock coverages, (2) contain data collected in 12 years over a 15 year period, which is the longest time series of fish standing stock available, and (3)encompass a broad array of environmental conditions and a wide range of inter-annual variation in the standing stock of fish, which can be expected at Wheeler North Reef in the future. The general approach used to determine the area of different configurations of new reef needed for remediation consisted of combining the expected future standing stock of the existing 174 acre Wheeler North Reef with the expected future standing stock of fish supported by new acreage of reef added as remediation. The data collected from the seven modules of the Phase 1 Reef with low rock coverage from 2000 -2014 were usedto produce a time series of annual estimates of the tons of fish that will be supported by the existing174 acre Wheeler North Reef in the future. Because the rock coverage of the existing low coverage rock modules differed slightly from that of the existing Wheeler North Reef (41% vs. 48%) fish biomass data from the Phase 1 rock modules were adjusted to 48% rock coverage prior to analysis using the relationship between rock coverage and fish biomass density observed during Phase 1. The adjusted mean and standard deviation of fish biomass density for the existing Wheeler North Reef were used in a Monte Carlo simulation to estimate the standing stock of reef fish that would be supported by the existing 174 acre Wheeler North Reef over the long term with 90% probability (based on the upper 90% confidence limit) using either an annual or 4-year running average, which ever was highest. This estimated standing stock was 15.5 tons. Annual and 4-year running averages of fish standing stock from each of the three rock coverages of the Phase 1 rock modules (low, medium and high) were bootstrapped 1000 times to produce a distribution of the acreage required to produce the additional 12.5 tons needed for a combined standing stock of 28 tons. These distributions were used to determine the 90% probability (based on the upper 90% confidence limit) that the annual or 4-year running average of additional reef acreage (which ever was lowest) for a given reef configuration, when combined with the expected future standing stock of the existing Wheeler North reef, would meet the 28-ton performance standard for fish standing. Increased certainty that remediation would be successful in meeting the 28 ton standard for fish standing stock could be obtained by increasing this probability above 90%.Doing so would result in increasing the area of additional reef needed for remediation,while decreasing the certainty below 90% would reduce the area of additional reef needed for remediation. These probabilities are based on the assumption that the

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standing stock of fish supported by different coverages of rock on the artificial reef in the past is a good predictor of what different coverages of rock on the Wheeler North Reef will support in the future.The estimated number of acres of various configurations of new reef that are needed for the Wheeler North Reef to meet the performance standard for fish standing stock with a 90% annual probability are provided in Table 2. These results show that remediation involving the addition of low relief, low rock cover reef will require nearly twice as many acres as remediation using low relief, high cover rock (175 acres vs. 90 acres).

Although high relief reefs are known to support more fish biomass than low relief reefs with comparable rock coverage, high relief was intentionally not considered in the design of either phase of SONGS reef mitigation because the intent of the mitigation was to construct a reef that mimicked the type of low relief boulder habitat that was damaged in the San Onofre kelp forest by SONGS’ operations. However, because the existing Wheeler North Reef is currently meeting all the performance standards except the one pertaining to fish standing stock, remediation for low fish biomass that involves the addition of high relief reef would be acceptable, and could have advantages in terms of reducing the footprint area, and potential costs and impacts of reef construction. Because high relief was not considered in the initial design of Wheeler North Reef there are no time series data of fish biomass for high relief reefs available for estimating their efficacy in remediation. To address this deficiency we collected fish biomass data on seven occasions during the summer and early fall of 2014 in areas of high relief (2-3 m tall) with high rock cover (100%) and in adjacent areas of low relief (< 1 m tall) with low to medium rock cover (55%) at two natural reefs in the San Clemente region near the Wheeler North Reef (Two Man Reef and Monument Point). These data were used to calculate a ratio in fish biomass between low relief, 55% rock cover reefs and high relief, 100% rock cover reefs. This ratio was applied to the Phase 1data and analyzed using the methods described above to estimate the additional area of high cover, high relief reef needed for the Wheeler North Reef to have a 90% probability of meeting the 28 tons standard for fish standing stock. This analysis indicated that 30 additional acres of high relief reef would be needed for remediation (Table 3).

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Annual time series data of fish biomass in areas of low and high relief from 2002-2014 are available for Naples Reef off Santa Barbara via the Santa Barbara Coastal Long Term Ecological Research Project. We used these data as a measure of comparison for the data that we collected at Two Man Reef and Monument Point in 2014 (see Appendix 1 for details). Data on fish biomass collected from low and high relief areas of natural reefs in the San Clemente region revealed that the fish biomass in areas of low relief with 55% cover of rock averaged 16.5 % of that at adjacent areas of high relief with 100% cover of rock(Figure 4a). The ratio of fish biomass between areas of low and high relief at these reefs varied slightly over time ranging from of 0.1 to 0.26. By comparison the mean ratio of

Jun Jul Aug Sep Oct Nov

low

relie

f fis

h bi

omas

s /

high

relie

f fis

h bi

omas

s

0.0

0.2

0.4

0.6

0.8

2002 2004 2006 2008 2010 2012 20140.0

0.2

0.4

0.6

0.8

Figure 4. Mean (+/- SE) ratios of fish biomass between low relief and high relief reefs near: (a) San Clemente and (b) Santa Barbara. Data for San Clemente are the mean ratios of two reefs (Two Man Reef and Monument Point) measured on 7 dates during 2014. Data for Santa Barbara are the mean ratios of 7 high relief areas to1 low relief area at Naples Reef. Values for low relief at Naples Reef were normalized to 55% to match the mean rock cover of low relief areas at Two Man Reef and Monument Point.

mean= 0.137mean = 0.165

a) San Clemente region b) Santa Barbara

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fish biomass between areas of low and high relief at Naples Reef near Santa Barbara varied more substantially among years (0.03 to 0.42; Figure 4b). However, its ratio averaged 0.137 over the 13 year study period, which is remarkably similar to the average ratio of the two reefs in the San Clemente region. This reinforces the assumption that the data on fish biomass collected in 2014 in areas of low and high relief at the two natural reefs near Wheeler North Reef provide a reasonable basis for estimating the standing stock of fish that would be supported by high relief reef used in remediating the low biomass of fish at Wheeler North Reef. Remediation involving the addition of high relief reef that is 2.5 m tall and covers 100% of the bottom would require about 6 times more rock than a comparable area of low relief reef that is 1 m tall and covers 41% of the bottom ((100%/41%) * (2.5 m /1 m) = 6.1). However, results from the above analyses indicate that a high relief reef would support on average about 6 times more fish biomass than a comparable area of low relief reef (175 additional acres of low relief low rock cover needed to support 28 tons of fish compared to 30 acres of high relief high cover rock = 175/30 = 5.8). Thus the amount of fish biomass supported per unit volume of rock is likely to be roughly similarbetween a low relief, low rock cover reef and a high relief, high rock cover reef. There are other elements besides the amount of rock needed when considering remediation that involves the addition of new reef. For example, there are physical limitations to the number of acres of new artificial reef that can be added to the existing lease site. The programmatic environmental impact report (PEIR) developed in 1999 for the construction of the SONGS mitigation reef identified a total of 356 acres within the designated lease site that were suitable for artificial reef construction2. Thus the most new reef that can be added to the existing 174 acre Wheeler North Reef as per the PEIR is 182 acres. Moreover, the largest artificial reef evaluated in the PEIR was 277.6 acres. Thus under the existing regulations, remediation designs that involve adding more than 182 acres would require one or more additional lease sites to fulfill the requirement for artificial reef mitigation, while remediation that involves adding more than 103.6 acres (= 277.6 – 174) would require additional environmental impact studies. For these reasons remediation involving the addition of high relief reef may beadvantageous in terms of construction planning, impacts, and cost.

2 Resource Insights. Final Program Environmental Impact Report for the construction and management of an artificial reef in the Pacific Ocean near San Clemente, California. May 1999. http://marinemitigation.msi.ucsb.edu/documents/artificial_reef/sce_reports/programatic_eir4SONGS_reef_vol1-may1999.pdf

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Appendix 1

Data from a 13-year time series of fish biomass density at Naples Reef off Santa Barbara, CA were used as a measure of comparison for differences observed in fish biomass between low and high relief reefs near San Clemente in summer 2014. The number, size and species identity of reef fish at Naples Reef have been recorded annually in summer since 2002 by the Santa Barbara Coastal Long Term Ecological Research project (http://sbc.lternet.edu/cgi-bin/showDataset.cgi?docid=knb-lter-sbc.17). Data at Naples Reef are collected within eight permanent transects using methods very similar to those employed at Wheeler North Reef by the SONGS mitigation monitoring project. Seven of the transects are located in areas of high relief (2-3 m tall) bedrock that covers 100% of the bottom. The remaining transect is located in an area of low relief cobble that covers 85% of the bottom.

Because the percent cover of rock in the low relief area at Naples Reef differed from that at the two natural reefs near San Clemente (85% vs. 55%) we converted the fish biomass data fromthe low relief area at Naples Reef to that expected for low relief with 55% cover of rock. This was done using the relationship between fish biomass density and rock cover collected at the 92 transects at Wheeler North Reef during 2009-2013 (Fig. A1.1).

We calculated the ratio of fish biomass density of each high relief transect at Naples Reef to that of the low relief transect (adjusted to 55% cover rock) for each year in the time series. We used this annual average to calculate the overall mean low relief (55% rock coverage) to high relief(100 % rock coverage) biomass ratio for Naples Reef for the entire time series (n = 13 years). This value was compared to that estimated for the two natural reefs near San Clemente sampled during the summer of 2014.

Rock cover (%)

20 30 40 50 60 70 80 90

Fish

bio

mas

s de

nsity

(g /

m2 )

0

20

40

60

80r2 = 0.255, p < 0.001y = 0.56x - 10.6

Figure A1.1. The relationship betweenthe percent cover of rock and the biomass density of reef fish on Wheeler North Reef for the period 2009-2013. Data represent the meanvalue for a transect averaged over all years. N = 92 transects.

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Appendix B

Witness Qualifications

B-1

SOUTHERN CALIFORNIA EDISON COMPANY 1

QUALIFICATIONS AND PREPARED TESTIMONY 2

OF DONALD NEAL 3

Q. Please state your name and business address for the record. 4

A. My name is Donald Neal, and my business address is 6040 Irwindale Ave, Irwindale, CA 91702. 5

Q. Briefly describe your present responsibilities at the Southern California Edison Company. 6

A. I am the Director of Corporate Environmental Services. I am responsible for developing and 7

implementing programs necessary for SCE to comply with applicable environmental 8

requirements, including biological mitigation and restoration programs. 9

Q. Briefly describe your educational and professional background. 10

A. I hold a Bachelor of Science (B.S.) degree in Biology from the University of Massachusetts – 11

Boston (1980) and a Master of Science (M.S.) degree in Biology from the University of 12

Massachusetts – Boston (1983). The focus of my academic studies was marine biology. I have 13

worked for SCE for over four years. Prior to joining SCE, I was the head of corporate 14

environmental health and safety for Calpine Corporation, where I was responsible for 15

environmental compliance programs, including those related to cooling water intake and 16

discharge. 17

Q. What is the purpose of your testimony in this proceeding? 18

A. The purpose of my testimony in this proceeding is to sponsor Exhibit SCE-01, titled Testimony 19

of Southern California Edison Company in Support of the Joint Application for Cost Recovery of 20

the Wheeler North Reef Expansion Project Marine Mitigation Costs, as identified in the Table of 21

Contents thereto. 22

Q. Was this material prepared by you or under your supervision? 23

A. Yes, it was. 24

Q. Insofar as this material is factual in nature, do you believe it to be correct? 25

A. Yes, I do. 26

Q. Insofar as this material is in the nature of opinion or judgment, does it represent your best 27

judgment? 28

A. Yes, it does. 29

Q. Does this conclude your qualifications and prepared testimony? 30

A. Yes, it does.31

B-2

SOUTHERN CALIFORNIA EDISON COMPANY 1

QUALIFICATIONS AND PREPARED TESTIMONY 2

OF RUSSELL G. WORDEN 3

Q. Please state your name and business address for the record. 4

A. My name is Russell G. Worden, and my business address is 8631 Rush Street, Rosemead, 5

California 91770. 6

Q. Briefly describe your present responsibilities at the Southern California Edison Company. 7

A. I am presently the Director of State Regulatory Operations in SCE’s Regulatory Affairs 8

Department. In this capacity, I oversee all California Public Utilities Commission (CPUC or 9

Commission) jurisdictional ratemaking, revenue requirements, revenue forecasting, load 10

research, pricing and tariff functions. My responsibilities also include management oversight of 11

SCE’s CPUC General Rate Cases (GRC) and Energy Resource Recovery Account (ERRA) 12

proceedings. I have previously served as the case manager for SCE in the CPUC investigation of 13

the outages at the San Onofre Nuclear Generating Station (SONGS), investigation (I.) 12-10-14

013, and SCE’s 2003, 2006, 2009, and 2012 general rate cases. 15

Q. Briefly describe your educational and professional background. 16

A. I received an Associate of Arts degree from Cabrillo College, in Aptos, California in 1974. I 17

graduated from San Francisco State University in 1977 with a Bachelor of Arts degree in 18

Political Science, cum laude. After college, I joined the Washington, D.C. staff of U.S. Senator 19

Richard Stone (D-FL) where I served as a Legislative Aide until December 1980. From January 20

1981 until March 1985, I served as a Legislative Assistant to then Congressman Ron Wyden (D-21

OR). In March 1985, I joined the Washington, D.C. office of Southern California Edison as a 22

Governmental Affairs Assistant, and in May 1988, I transferred to Edison’s Revenue 23

Requirements Department. I promoted to my current position in February 2015. 24

Q. What is the purpose of your testimony in this proceeding? 25

A. The purpose of my testimony in this proceeding is to sponsor Exhibit SCE-01, titled Testimony 26

of Southern California Edison Company in Support of the Joint Application for Cost Recovery of 27

the Wheeler North Reef Expansion Project Marine Mitigation Costs, as identified in the Table of 28

Contents thereto. 29

Q. Was this material prepared by you or under your supervision? 30

A. Yes, it was. 31

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Q. Insofar as this material is factual in nature, do you believe it to be correct? 1

A. Yes, I do. 2

Q. Insofar as this material is in the nature of opinion or judgment, does it represent your best 3

judgment? 4

A. Yes, it does. 5

Q. Does this conclude your qualifications and prepared testimony? 6

A. Yes, it does. 7