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05/10/96 BUSINESS AND PROFESSIONAL PEOPLE FOR

May 10, 1996

BUSINESS AND PROFESSIONAL PEOPLE FOR THE PUBLIC INTEREST AND CITIZENS UTILITY BOARD, PETITIONERS,
v.
ILLINOIS COMMERCE COMMISSION AND COMMONWEALTH EDISON COMPANY, RESPONDENTS.



Petition for Review of Order of the Illinois Commerce Commission in Ill. C.C. Docket No. 90-0448.

The Honorable Justice Cousins delivered the opinion of the court: McNULTY, P.j., and Gordon, J., concur.

The opinion of the court was delivered by: Cousins

JUSTICE COUSINS delivered the opinion of the court:

The petitioners, Business and Professional People for the Public Interest and Citizens Utility Board, appeal from an order of the Illinois Commerce Commission (Commission) which found that Commonwealth Edison (Edison) had established the prudence of its cost of fuel for inclusion in Edison's rate base as required under section 9-220 of the public Utilities Act (Act) (220 ILCS 5/9-220 (West 1992)). In the Commission proceedings, petitioners contended that Edison should bear the costs of four unplanned temporary shutdowns at Edison's nuclear plants that Edison's employees had caused through various errors. Petitioners claimed that these errors were conclusive proof that the costs incurred were not "prudent" as required under section 9-220. However, the Commission held, "Edison cannot be faulted for the human error of its employees unless the evidence shows that Edison failed to adequately hire and train the proper employees." Petitioners appeal from the Commission's order allowing Edison full recovery of its fuel costs, claiming that: (1) the order violates section 9-220 by placing the burden of proof on petitioners instead of Edison; (2) the Commission misconstrued the "prudence of fuel costs" standard of section 9-220 by substituting an extraneous investigation into the adequacy of Edison's hiring and training; (3) the Commission's interpretation of section 9-220 is contrary to basic principles of agency law and is unfair to consumers; and (4) the order does not contain findings or analysis sufficient to allow informed judicial review.

We affirm.

BACKGROUND

On December 2, 1990, the Commission commenced its annual reconciliation proceedings to reconcile Edison's fuel costs for the year of 1989 as governed by section 9-220:

"The Commission may authorize the increase or decrease of rates and charges based upon changes in the cost of fuel used in the generation or production of electric power, changes in the cost of purchased power, or changes in the cost of purchased gas through the application of fuel adjustment clauses or purchased gas adjustment clauses. *** Cost shall be based upon uniformly applied accounting principles. Annually, the Commission shall initiate public hearings to determine whether the clauses reflect actual costs of fuel, gas, power, or coal transportation purchased to determine whether such purchases were prudent, and to reconcile any amounts collected with the actual costs of fuel, power, gas, or coal transportation prudently purchased. In each such proceeding, the burden of proof shall be upon the utility to establish the prudency of its cost of fuel, power, gas, or coal transportation purchases and costs." 220 ILCS 5/9-220 (West 1992).

The Commission held 14 hearings from June 5, 1991, to February 2, 1994, to determine the prudence of Edison's 1989 fuel costs. On January 15, 1992, Citizens Utility Board filed a petition to intervene, and on February 4, 1992, Business and professional People for the public Interest filed its petition to intervene.

The petitioners contested fuel costs that Edison sustained from four unplanned outages at 2 of its 12 nuclear plants. The details of the four outages were: (1) a technician deenergized the wrong circuit breaker, causing a two-day outage; (2) an employee or contractor improperly installed a screw, causing a leak that resulted in a 19-day shutdown; (3) an employee or contractor installed a defective turbine test switch that caused a two-day outage; and (4) an admitted "management deficiency" when a reactor was not pressurized correctly caused a two-day extension of a planned five-day maintenance period. The petitioners contended that these negligent acts resulted in imprudent and excessive replacement fuel costs. Edison responded that it had been prudent because it had properly managed its facilities with adequate hiring and training for its employees.

On January 5, 1995, the Commission issued its order approving the reconciliation of costs submitted by Edison. The order outlined the individual outages and stated that an Edison witness "contended that the [circuit breaker] shutdown was not due to a lack of preventive maintenance and that the outage was solely due to human error." Under the heading "Commission Conclusions," the order stated:

"Edison has presented the testimony of Mr. Galle and Mr. Wallace regarding the prudent operations of its nuclear plants in 1989. *** The Commission is of the opinion that Edison has made a prima facie showing that it operated its nuclear units prudently during the 1989 reconciliation period."

The Commission concluded:

"With respect to the specific forced outages complained of by BPI, the Commission has examined the record and concludes that there is no showing of imprudence relating to the four outages previously described. *** The Commission has consistently maintained that Edison cannot be faulted for the human error of its employees unless the evidence shows that Edison failed to adequately hire and train the proper employees. There is no evidence that Edison's training or hiring was improper. Thus, human error under the circumstances described in this case was excusable. In addition, there is no ...


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