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Title: Winning a prudence audit

Abstract

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 biasesmore » 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).« less

Authors:
 [1];  [2];  [3]
  1. (Stephen H. Shepherd, PE, Phoenix, AZ (USA))
  2. (Arizona Public Service Company, Phoenix (USA))
  3. (Snell Wilmer, Phoenix, AZ (USA))
Publication Date:
OSTI Identifier:
5486744
Alternate Identifier(s):
OSTI ID: 5486744
Report Number(s):
CONF-891103--
Journal ID: ISSN 0003-018X; CODEN: TANSA
Resource Type:
Conference
Resource Relation:
Journal Name: Transactions of the American Nuclear Society; (United States); Journal Volume: 60; Conference: Winter meeting of the American Nuclear Society (ANS) and nuclear power and technology exhibit, San Francisco, CA (United States), 26-30 Nov 1989
Country of Publication:
United States
Language:
English
Subject:
21 SPECIFIC NUCLEAR REACTORS AND ASSOCIATED PLANTS; NUCLEAR POWER PLANTS; MANAGEMENT; AUDITS; CONSTRUCTION; DECISION MAKING; DESIGN; ELECTRIC UTILITIES; LEGAL ASPECTS; PALO VERDE-1 REACTOR; PALO VERDE-2 REACTOR; PALO VERDE-3 REACTOR; PALO VERDE-4 REACTOR; PALO VERDE-5 REACTOR; PLANNING; PROGRAM MANAGEMENT; REGULATIONS; REVIEWS; DOCUMENT TYPES; ENRICHED URANIUM REACTORS; NUCLEAR FACILITIES; POWER PLANTS; POWER REACTORS; PUBLIC UTILITIES; PWR TYPE REACTORS; REACTORS; THERMAL POWER PLANTS; THERMAL REACTORS; WATER COOLED REACTORS; WATER MODERATED REACTORS 210200* -- Power Reactors, Nonbreeding, Light-Water Moderated, Nonboiling Water Cooled; 210800 -- Nuclear Power Plants-- Economics; 210700 -- Nuclear Power Plants-- Regulation & Licensing

Citation Formats

Shepherd, S.H., Quan, T.F., and Carroll, D.W.T.. Winning a prudence audit. United States: N. p., 1989. Web.
Shepherd, S.H., Quan, T.F., & Carroll, D.W.T.. Winning a prudence audit. United States.
Shepherd, S.H., Quan, T.F., and Carroll, D.W.T.. Wed . "Winning a prudence audit". United States. doi:.
@article{osti_5486744,
title = {Winning a prudence audit},
author = {Shepherd, S.H. and Quan, T.F. and Carroll, D.W.T.},
abstractNote = {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).},
doi = {},
journal = {Transactions of the American Nuclear Society; (United States)},
number = ,
volume = 60,
place = {United States},
year = {Wed Nov 01 00:00:00 EST 1989},
month = {Wed Nov 01 00:00:00 EST 1989}
}

Conference:
Other availability
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