I am sending this letter at the request of Robert Gruber, who is the executive director of the Public Staff-North Carolina Utilities Commission (NCUC), which is the state agency charged with representing the public in matters before the NCUC. In the article, “New Day for Prudence,” (by Kris R. Nielson, Patricia Galloway and Charles Whitney, December 2009) the authors state (p. 49) that, in North Carolina, “the Office of Public Counsel filed testimony creating even more uncertainty as to how prudence reviews of costs not yet incurred would be handled.” The group that filed the quoted testimony is not “the Office of Public Counsel.” It consists of a number of non-profits and associations that banded together and called themselves the Public Advocacy Groups for the purpose of intervening before the NCUC. This group includes the following: the North Carolina Waste Awareness and Reduction Network (NC Warn), Public Citizen, the NC Public Interest Research Group, the Nuclear Information and Resource Service, Common Sense at the Nuclear Crossroads, Clean Water for North Carolina, and the Blue Ridge Environmental Defense League. (In at least one response, Duke called these parties the “Anti-Nuclear Groups.”)
North Carolina has no Office of Public Counsel. Because the Public Staff-NCUC is the state agency charged with representing the public in matters before the NCUC, we’re concerned that the authors’ erroneous labeling of this group will be interpreted to mean that a state agency (specifically the Public Staff) took the quoted position.
We’re also concerned because the article’s description of the NCUC’s ruling is erroneous. The Commission explicitly did not hold that “it was reasonable and prudent for a utility to proceed with the construction of the Lee nuclear units,” as the article states on page 50. The order explicitly states that the approval of the utility’s current decision generally to incur project development costs does not constitute a finding that additional base load capacity is needed, nor a finding that the nuclear plant in question should be built. (See conclusion of law number 3 from the order, below.) The commission was ruling pursuant to a new statute that specifically states that a utility may request, at any time prior to filing an application for a certificate to construct a potential nuclear generating facility to serve North Carolina retail customers, that the commission review the utility’s decision to incur project development costs. The commission held that the utility “had met its burden by demonstrating that its decision … to incur project development costs so that the proposed Lee Nuclear Station can be maintained as a potential resource option … is reasonable and prudent.” Both the statute and the order are explicit that such a ruling does not constitute any findings with respect to whether the utility may engage in any specific activities or incur any specific amount of costs.
At an earlier oral argument related to the incurrence of project development costs, a discussion occurred as to what effect a commission ruling with respect to prudence would have. Such a ruling was described as a ruling that the activities and the costs could not be attacked solely on the grounds that the utility should not have been pursuing a nuclear plant at all. The commission’s order was never intended to mean any more than that (and indeed cannot mean more than that because of the wording of the statute), and it certainly does not involve “a certified prudent decision” (to proceed with construction) that “can be reviewed tomorrow based on the results of the decision,” as stated in the article. The decision to incur project development costs (up to the stated limit) to maintain nuclear as an option in the future, and only that narrow decision, has been found to be prudent. That narrow decision cannot be re-reviewed. Nothing else has been ruled on and, therefore, a later consideration will be the initial review, not a re-review.
For your convenience, I have copied below relevant sections of the NCUC order (June 11, 2008, Docket No. E-7, Sub 819).
Conclusions of Law (p. 22 of order):
2. Duke has met its burden by demonstrating that its decision, as of the date of the application, to incur project development costs so that the proposed Lee Nuclear Station can be maintained as a potential resource option to satisfy future projected load and energy requirements is reasonable and prudent.
3. The Commission’s findings and conclusions with respect to the reasonableness and prudence of Duke’s decision to incur proposed project development costs do not constitute approval to engage in any specific project development activities, nor to spend any specific amount. The determination of the reasonableness and prudence of specific project development activities and expenditures is reserved for later proceedings. Additionally, this approval of Duke’s current decision generally to incur project development costs does not constitute a finding that additional base load capacity is needed within the relevant time frame; nor does it constitute a finding that the Lee Nuclear Station should in fact be built.
Ordering Paragraph (p. 22 of order):
2. That approval of the $160 million cap is not approval of any particular activities being undertaken or any particular costs being incurred during that period of time. No specific activities or costs are being approved, and all activities and expenditures will be subject to later determinations as to their prudence and reasonableness.
Thank you in advance for your consideration of the foregoing information.
Gisele L. Rankin, Staff Attorney,
Public Staff-North Carolina Utilities Commission.