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. (a) For purposes of establishing rates for any electrical or
gas corporation, the commission shall disallow expenses reflecting
the direct or indirect costs resulting from any unreasonable error or
omission relating to the planning, construction, or operation of any
portion of the corporation's plant which cost, or is estimated to
have cost, more than fifty million dollars ($50,000,000), including
any expenses resulting from delays caused by any unreasonable error
or omission. Nothing in this section prohibits a finding by the
commission of other unreasonable or imprudent expenses. This
subdivision is a clarification of the existing authority of the
commission, is not intended to limit or restrict any power or
authority of the commission conferred by any other provision of law,
and applies to all matters pending before the commission. This
section does not prohibit the commission from establishing rates for
an electrical or gas corporation on a basis other than an allowed
rate of return on undepreciated capital costs.
(b) Whenever an electrical or gas corporation fails to prepare or
maintain records sufficient to enable the commission to completely
evaluate any relevant or potentially relevant issue related to the
reasonableness and prudence of any expense relating to the planning,
construction, or operation of the corporation's plant, the commission
shall disallow that expense for purposes of establishing rates for
the corporation. This subdivision does not apply where the commission
determines that a reasonable person could not have anticipated
either the relevance or potential relevance, to an evaluation of
costs incurred on the project, of preparing or maintaining the
records or the extent of recordkeeping required to adequately
evaluate those costs.
(c) For purposes of this section:
(1) "Planning" includes, but is not limited to, activities related
to the initial and subsequent assessments of the need for a plant
construction project; the selection of contractors and the
negotiation of contract provisions; certification; project
organization; and site selection, including the investigation and
interpretation of environmental factors such as seismic conditions
and other external factors affecting the construction, operation, and
safety of the plant.
(2) "Construction" includes, but is not limited to, activities
related to engineering such as the development and use of
specifications, drawings, and procedures; the preparation and use of
construction plans, including blueprints; procurement activities;
repairs, replacement, redesign, or repositioning of equipment and
facilities; startup activities; and quality assurance and quality
control activities.
(3) "Operation" includes, but is not limited to, activities
related to decisions affecting the timing and nature of the use of
the plant; dispatch and control activities and decisions; and plant
operation, fuel loading, and maintenance.
(4) "Error" includes, but is not limited to, any action or
direction which causes an avoidable (i) increase in the time required
to bring the plant to full commercial operation, (ii) change in the
number or types of personnel or firms required to bring the plant to
full commercial operation, (iii) increase in the number of worker
hours required to complete any portion of the plant construction
project, or (iv) change of equipment, configuration, design,
schedule, or program.
(5) "Omission" includes, but is not limited to, any failure to act
or to provide direction which causes an avoidable (i) increase in
the time required to bring the plant to full commercial operation,
(ii) change in the number or types of personnel or firms required to
bring the plant to full commercial operation, (iii) increase in the
number of worker hours required to complete any portion of the plant
construction project, or (iv) change of equipment, configuration,
design, schedule, or program.