§ 58-33-225 — Project development applications; prudency determinations; disallowance of imprudent costs; deferral of costs of abandoned project.

(A) The provisions of this section apply to the preconstruction costs of a nuclear-powered facility. (B) At any time before the filing of an application or a combined application under this act related to a specific plant, a utility may file a project development application with the commission and the office of regulatory staff. (C) In a project development application, the utility shall: (1) describe the plant being considered and shall designate: (a) the anticipated generation capacity (or range of capacity) of the plant; and (b) the projected annual capacity factors or range of factors of the plant; (2) provide information establishing the need for the generation capacity represented by the potential plant and the need for generation assets with the indicative annual capacity factors of the potential plant; (3) provide information establishing the reasonableness and prudence of the potential fuel sources and potential generation types that the utility is considering for the plant; and (4) provide such other information as may be required to establish that the decision to incur preconstruction costs related to the potential nuclear plant is prudent considering the information known to the utility at the time and considering the other alternatives available to the utility for supplying its generation needs. (D) The commission shall issue a project development order affirming the prudency of the utility's decision to incur preconstruction costs for the nuclear plant specified in the application if the utility demonstrates by a preponderance of evidence that the decision to incur preconstruction costs for the plant is prudent. In issuing its project development order, the commission may not rule on the prudency or recoverability of specific items of cost, but shall rule instead on the prudency of the decision to incur preconstruction costs for the nuclear plant described in Section 58-33-225(C)(1). (E) Unless the record in a subsequent proceeding shows that individual items of cost were imprudently incurred, or that other decisions subsequent to the issuance of a project development order were imprudently made considering the information available to the utility at the time they were made, then all the preconstruction costs incurred for the potential nuclear plant must be properly included in the utility's plant-in-service and must be recoverable fully through rates in future proceedings under this chapter. (F) To the extent that a party in a general rate proceeding or revised rates proceeding establishes the imprudence of specific items of cost or of specific decisions made subsequent to the issuance of a project development order as set forth in Section 58-33-225(E), then the commission may disallow the resulting costs but only to the extent that a prudent utility would have avoided those costs considering the information available to the utility at the time when they were incurred or the decisions at issue were made. (G) If the utility decides to abandon the project after issuance of a prudency determination under this section, then the preconstruction costs related to that project may be deferred, with AFUDC being calculated on the balance, and may be included in rates in the utility's next general rate proceeding or revised rates proceeding, provided that as to the decision to abandon the plant, the utility shall bear the burden of proving by a preponderance of the evidence that the decision was prudent. Without in any way limiting the effect of Section 58-33-225(D), recovery of capital costs and the utility's cost of capital associated with them may be disallowed only to the extent that the failure by the utility to anticipate or avoid the allegedly imprudent costs, or to minimize the magnitude of the costs, was imprudent considering the information available at the time that the utility could have acted to avoid or minimize the costs. Pending an order in the general rate proceeding or revised rates proceeding, the utility, at its discretion, may commence to amortize to cost of service the balance of the preconstruction costs related to the abandoned project over a period equal to the period during which the costs were incurred, or five years, whichever is greater. (H) Prudency determinations under Section 58-33-225(D) may not be challenged or reopened in any subsequent proceeding including proceedings under Section 58-27-810 and other applicable provisions and Section 58-33-220 and other applicable provisions of this article. (I) At any time after an initial project development order has been issued, a utility may file an amended project development application seeking a determination of the prudency of the utility's decision to continue to incur preconstruction costs considering changed circumstances or changes in the type or location of nuclear plant that the utility is pursuing or considering other characteristics or decisions related to the plant. The amended project development application must be considered in a separate docket; however, the testimony and other evidence of the prior docket must be considered to be part of the new docket. (J) Pursuant to Section 58-33-240, the commission shall enter an order granting or denying a project development order or amended project development order within six months of the filing of the application. If the commission fails to issue an order within the period prescribed in this section, a party may move that the commission issue an order granting or denying the application. If the commission fails to issue an order within ten days after the motion is served, the application will be considered granted.

Legislative History

HISTORY: 2007 Act No. 16, SECTION 2, eff upon approval (became law without the Governor's signature on May 3, 2007).