(a) For purposes of establishing rates for any electrical or gas corporation, the commission shall disallow expenses reflecting the direct or indirect costs resulting from any unreasonable error or omission relating to the planning, construction, or operation of any portion of the corporation’s plant which cost, or is estimated to have cost, more than fifty million dollars ($50,000,000), including any expenses resulting from delays caused by any unreasonable error or omission. Nothing in this section prohibits a finding by the commission of other unreasonable or imprudent expenses. This subdivision is a clarification of the existing authority of the commission, is not intended to limit or restrict any power or authority of the commission conferred by any other provision of law, and applies to all matters pending before the commission. This section does not prohibit the commission from establishing rates for an electrical or gas corporation on a basis other than an allowed rate of return on undepreciated capital costs.
(b) Whenever an electrical or gas corporation fails to prepare or maintain records sufficient to enable the commission to completely evaluate any relevant or potentially relevant issue related to the reasonableness and prudence of any expense relating to the planning, construction, or operation of the corporation’s plant, the commission shall disallow that expense for purposes of establishing rates for the corporation. This subdivision does not apply where the commission determines that a reasonable person could not have anticipated either the relevance or potential relevance, to an evaluation of costs incurred on the project, of preparing or maintaining the records or the extent of recordkeeping required to adequately evaluate those costs.
(c) For purposes of this section:
(1) “Planning” includes, but is not limited to, activities related to the initial and subsequent assessments of the need for a plant construction project; the selection of contractors and the negotiation of contract provisions; certification; project organization; and site selection, including the investigation and interpretation of environmental factors such as seismic conditions and other external factors affecting the construction, operation, and safety of the plant.
(2) “Construction” includes, but is not limited to, activities related to engineering such as the development and use of specifications, drawings, and procedures; the preparation and use of construction plans, including blueprints; procurement activities; repairs, replacement, redesign, or repositioning of equipment and facilities; startup activities; and quality assurance and quality control activities.
(3) “Operation” includes, but is not limited to, activities related to decisions affecting the timing and nature of the use of the plant; dispatch and control activities and decisions; and plant operation, fuel loading, and maintenance.
(4) “Error” includes, but is not limited to, any action or direction which causes an avoidable (i) increase in the time required to bring the plant to full commercial operation, (ii) change in the number or types of personnel or firms required to bring the plant to full commercial operation, (iii) increase in the number of worker hours required to complete any portion of the plant construction project, or (iv) change of equipment, configuration, design, schedule, or program.
(5) “Omission” includes, but is not limited to, any failure to act or to provide direction which causes an avoidable (i) increase in the time required to bring the plant to full commercial operation, (ii) change in the number or types of personnel or firms required to bring the plant to full commercial operation, (iii) increase in the number of worker hours required to complete any portion of the plant construction project, or (iv) change of equipment, configuration, design, schedule, or program.
(Added by Stats. 1985, Ch. 1212, Sec. 1.)