Winning a prudence audit

Conference · Tue Oct 31 23:00:00 EST 1989 · Transactions of the American Nuclear Society; (United States)

OSTI ID:5486744

Shepherd, S H ^[1]; Quan, T F ^[2]; Carroll, D W.T. ^[3]

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1. Stephen H. Shepherd, PE, Phoenix, AZ (USA)
2. Arizona Public Service Company, Phoenix (USA)
3. Snell Wilmer, Phoenix, AZ (USA)

The greatest hazard that a utility faces from owning a nuclear power plant is not radiation--it is regulation. Retrospective prudence audits have been used by public utility commissions (PUCs) as a basis to disallow recovery of billions of dollars of nuclear plant construction costs. These disallowances have caused severe financial damage to many utilities. Although a final decision on rates has not been made, the Arizona Corporation Commission's (ACC's) auditor recently completed its examination of the construction costs of the Palo Verde Nuclear Generating Station (PVNGS). The auditor reported that PVNGS was prudently designed and constructed. It concluded that {approximately}1% of the project (approximately $60.2 million out of the plant's overall $5.9 billion cost) was unreasonably expended. The auditor also found that the project management team had actually saved ratepayers over $300 million through exceptional management actions. This is a resounding endorsement of the work of the staff and management of Arizona Public Service (APS), Bechtel, Combustion Engineering, the AFL-CIO, and the hundreds of suppliers and contractors that participated in the construction of PVNGS. It is also a much different result from that of other recent prudence audits. The history, strategy, planning, and conduct of the audit overcame the biases that had produced proposals for large disallowances on other good plants. This paper describes the efforts taken that promoted fair and balanced audit findings (although APS does not endorse all of the audit findings).

• OSTI ID: 5486744
• Report Number(s): CONF-891103--
• Journal Information: Transactions of the American Nuclear Society; (United States), Journal Name: Transactions of the American Nuclear Society; (United States) Vol. 60; ISSN TANSA; ISSN 0003-018X
• Country of Publication: United States
• Language: English

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