BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Transcription

1 BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA Alliance for Nuclear Responsibility, Complainant, vs. Southern California Edison Company (U338E), Defendant. Case No. C (Filed February 19, 2013) SOUTHERN CALIFORNIA EDISON COMPANY S (U 338-E) REPLY BRIEF IN SUPPORT OF ITS MOTION TO DISMISS THE COMPLAINT BY THE ALLIANCE FOR NUCLEAR RESPONSIBILITY DOUGLAS K. PORTER WALKER A. MATTHEWS RUSSELL A. ARCHER Southern California Edison Company 2244 Walnut Grove Avenue Post Office Box 800 Rosemead, CA Telephone: (626) Facsimile: (626) Walker.matthews@sce.com HENRY WEISSMANN JONATHAN E. ALTMAN JOHN B. OWENS LIKA C. MIYAKE Munger, Tolles & Olson LLP 355 South Grand Avenue, 35th Floor Los Angeles, CA Telephone: (213) Facsimile: (213) Henry.Weissmann@mto.com Dated: May 6, 2013

2 Pursuant to the authorization granted by Administrative Law Judge Darling by on May 2, 2013, and in accordance with Rule 11.1(f) of the Rules and Practice and Procedure of the California Public Utilities Commission ( Commission ), Southern California Edison ( SCE ) respectfully submits this reply in support of its motion to dismiss the Complaint filed by the Alliance for Nuclear Responsibility ( A4NR ). SCE limits this reply to new matters raised in A4NR s opposition brief ( Opp. ), which largely fails to defend the substantive merits of A4NR s claims. A. A4NR s Plea For The Commission To Institute An Action Does Not Save Its Complaint. A4NR s major theme is that its failure to allege valid causes of action entitling it to relief is irrelevant because it is just asking the Commission to bring those claims. A4NR is mistaken, for two reasons. First, A4NR, as the complainant, must allege facts showing the injury complained of. Rule 4.2(a). As set forth in SCE s motion, the complaint fails to allege injury to A4NR or anyone else. If A4NR wishes to encourage the Commission to take its own action, A4NR can continue to do so after its Complaint is dismissed, e.g., by writing a letter. Second, A4NR s Complaint fails to provide a basis for the Commission to bring an action because all of its claims lack merit and because the Commission lacks jurisdiction to enforce or bring claims under the laws cited in the complaint (except for Rule 1.1). Motion to Dismiss ( Mot. ) at 10-11, 25 n.8. B. The Securities Fraud Claims Are Without Merit. A4NR makes much of the fact that EIX and SCE have changed their securities disclosures, arguing that this shows that the earlier disclosures were false and misleading. Opp. at 3-4. Not so. In their February 26, Ks, EIX and SCE stated, In 2005, the CPUC authorized expenditures of approximately $525 million ($665 million based on SCE s estimate after adjustment for inflation using the Handy-Whitman index). Previous filings had referred to ($665 million when adjusted for inflation). The - 1 -

3 clarification to the reference to the inflation adjustment, however, does not establish that the earlier statements were false or misleading. A4NR cites no authority holding that securities fraud is established whenever a company makes a disclosure that is more explicit and specific than it has made in the past. On the contrary, A4NR has the burden of proving that the earlier disclosures were false and misleading, and it cannot meet that burden simply by pointing to the new disclosures. Indeed, A4NR does not even attempt to rebut SCE s showing that the structure and grammar of the challenged statements, reasonably read, would not lead an investor to A4NR s interpretation. Mot. at Nor has A4NR alleged facts that would establish scienter. The Commission s Steam Generator Replacement Project ( SGRP ) approval decision did not mandate the use of Consumer Price Index ( CPI ), but stated that whatever inflation adjustment was made should be made based on reliable publications such as the Consumer Price Index. D , 2005 WL at *42 (Findings of Fact 149) (emphasis added). SCE s testimony supporting its SGRP Cost Review Application (A ) explains why the Handy-Whitman Index and burial escalation rate are the appropriate indices to deflate recorded SGRP costs to 2004 levels. SCE-6 at A4NR did not protest that application. Neither of the two parties who did file protests challenged the use of those indices, and no party suggested that the CPI should be applied instead. As a result, A4NR s allegation that the reference in securities filings to figures adjusted using the Handy-Whitman index was a deliberate lie is baseless. A4NR also fails to show that the difference between the inflation adjustment using Handy-Whitman and another index was material. That difference (which is not alleged in A4NR s Complaint) is significant only to determining whether the recorded SGRP costs, when adjusted to 2004 dollars, would be higher than the reasonableness threshold set in D , with the potential result of making a reasonableness review of the SGRP costs more likely. Mot. at 3 (quoting D , 2005 WL , at *46 (Ordering Paragraph 4)). A4NR fails to allege facts establishing that this would be - 2 -

4 material either. Nor could it. Every 10-Q or 10-K cited in A4NR s Complaint makes clear that the Commission could conduct a reasonableness review even if the recorded costs were below the threshold: Those [SGRP] expenditures remain subject to CPUC reasonableness review upon submission of SCE s final costs for the overall project. E.g., Compl. 15; see also id., 14 (similar statement by Mr. Craver). The total mix of information put investors on notice of the potential for review of SGRP costs regardless of which inflation index was used. C. A4NR Has No Basis To Contend That SCE s Advice Letters Applied An Inflation Adjustment In attempting to support its claim that SCE violated Commission Rule 1.1 in Advice Letters 2355-E, 2521-E, 2648-E-A, and 2834-E, A4NR points to discussions during SONGS Board of Review meetings. Opp. at 13 (citing Complaint 7, 9, 10, 12, 13). A4NR, however, fails to explain why these discussions are relevant. They are not, because those discussions do not even hint that an inflation adjustment was used in the relevant Advice Letters. The Board of Review discussions considered the application of an inflation adjustment to SGRP costs for a different purpose: determining whether the recorded SGRP expenditures were below the reasonableness threshold set in the Commission s SGRP Decision. A4NR s contention that SCE used an inflation adjustment in those Advice Letters is unsupported and refuted by the uncontroverted facts set forth in Exhibit SCE-5. Declaration of Douglas Snow Ex. 1. As explained in SCE-5 and the Declaration of Douglas Snow ( 3), the relevant Advice Letters used recorded costs, without applying any kind of inflation adjustment. A4NR asserts that the Commission cannot consider these facts but instead must limit itself to the allegations of the Complaint. Even if that were so, the Complaint fails to allege facts that would support its claim that SCE used an inflation adjustment in setting interim rates. But A4NR is wrong. A4NR fails to rebut black-letter Commission rulings that extrinsic evidence may be considered on a motion to - 3 -

5 dismiss, and that the Commission considers all facts presented in briefing on a motion to dismiss as a civil court would treat motions for summary judgment, that is, whether based on the undisputed facts, the moving party is entitled to judgment as a matter of law. D , 2013 WL , at 3.1 (citing Cal. Code Civ. Proc. 437c)); see also D , 2013 WL , at 4. Date: May 6, 2013 Respectfully Submitted, DOUGLAS K. PORTER WALKER A. MATTHEWS RUSSELL A. ARCHER HENRY WEISSMANN JONATHAN E. ALTMAN JOHN B. OWENS LIKA C. MIYAKE _/s/ Walker A. Matthews By: Walker A. Matthews Attorneys for SOUTHERN CALIFORNIA EDISON COMPANY 2244 Walnut Grove Avenue Post Office Box 800 Rosemead, California Telephone: (626) Facsimile: (626) walker.matthews@sce.com - 4 -

6 CERTIFICATE OF SERVICE I hereby certify that, pursuant to the Commission s Rules of Practice and Procedure, I have this day served a true copy of SOUTHERN CALIFORNIA EDISON COMPANY S (U 338-E) REPLY BRIEF IN SUPPORT OF ITS MOTION TO DISMISS THE COMPLAINT BY THE ALLIANCE FOR NUCLEAR RESPONSIBILITY, on all parties identified on the attached service list C Service was effected by one or more means indicated below: Transmitting the copies via to all parties who have provided an e- mail address. Placing the copies in sealed envelopes and causing such envelopes to be delivered by hand or by overnight courier to the offices of the Commissioner(s) or other addressee(s). ALJ Melanie Darling CPUC - DIV of ALJ's 505 Van Ness Ave, Room 5115 San Francisco, CA Commissioner Michel P. Florio CPUC 505 Van Ness Ave San Francisco, CA Placing copies in properly addressed sealed envelopes and depositing such copies in the United States mail with first-class postage prepaid to all parties for those listed on the attached non- list. Executed this May 6, 2013, at Rosemead, California. _/s/ Raquel Ippoliti Raquel Ippoliti Project Analyst SOUTHERN CALIFORNIA EDISON COMPANY 2244 Walnut Grove Avenue Post Office Box 800 Rosemead, California 91770

7 CPUC - Service Lists - C Page 1 of 2 5/6/2013 CPUC Home CALIFORNIA PUBLIC UTILITIES COMMISSION Service Lists PROCEEDING: C ALLIANCE FOR NUCLEAR FILER: ALLIANCE FOR NUCLEAR RESPONSIBILITY LIST NAME: LIST LAST CHANGED: MARCH 27, 2013 DOWNLOAD THE COMMA-DELIMITED FILE ABOUT COMMA-DELIMITED FILES Back to Service Lists Index Parties JANET S. COMBS, ESQ. JOHN L. GEESMAN SR. ATTORNEY ATTORNEY SOUTHERN CALIFORNIA EDISON COMPANY DICKSON GEESMAN LLP 2244 WALNUT GROVE AVE., PO BOX HARRISON STREET, STE ROSEMEAD, CA OAKLAND, CA FOR: SOUTHERN CALIFORNIA EDISON COMPANY FOR: ALLIANCE FOR NUCLEAR RESPONSIBILITY (A4NR) Information Only CASE ADMINISTRATION HENRY WEISSMAN SOUTHERN CALIFORNIA EDISON COMPANY SOUTHERN CALIFORNIA EDISON 2244 WALNUT GROVE AVENUE / PO BOX WALNUT GROVE AVE. ROSEMEAD, CA ROSEMEAD, CA RUSSELL A. ARCHER RUSSELL G. WORDEN ATTORNEY DIRECTOR SOUTHERN CALIFORNIA EDISON COMPANY SOUTHERN CALIFORNIA EDISON COMPANY 2244 WALNUT GROVE AVE. / PO BOX WALNUT GROVE AVENUE ROSEMEAD, CA ROSEMEAD, CA WALKER A. MATTHEWS III CALIFORNIA ENERGY MARKETS SENIOR ATTORNEY 425 DIVISADERO STREET, SUITE 303 SOUTHERN CALIFORNIA EDISON COMPANY SAN FRANCISCO, CA 94117

8 CPUC - Service Lists - C Page 2 of 2 5/6/ WALNUT GROVE AVENUE, ROOM 390 ROSEMEAD, CA State Service MELANIE DARLING CALIF PUBLIC UTILITIES COMMISSION DIVISION OF ADMINISTRATIVE LAW JUDGES ROOM VAN NESS AVENUE SAN FRANCISCO, CA TOP OF PAGE BACK TO INDEX OF SERVICE LISTS