STATE OF NEW YORK PUBLIC SERVICE COMMISSION

Transcription

1 COMMISSIONERS PRESENT: William M. Flynn, Chairman Thomas J. Dunleavy Leonard A. Weiss Neal N. Galvin STATE OF NEW YORK PUBLIC SERVICE COMMISSION At a session of the Public Service Commission held in the City of Albany on February 11, 2004 CASE 00-E Proceeding on Motion of the Commission to Investigate the Forced Outage at Consolidated Edison Company of New York, Inc.'s Indian Point No. 2 Nuclear Generating Facility. Petition of Certain Members of the New York State Legislature Regarding Indian Point No. 2 Outage. ORDER ADOPTING TERMS OF JOINT PROPOSAL (Issued and Effective February 12, 2004) BY THE COMMISSION: INTRODUCTION On February 15, 2000, a steam generator tube ruptured in the Indian Point No. 2 Nuclear Generating Facility (IP2), forcing Consolidated Edison Company of New York, Inc. (Con Edison or the company) to shut down the plant. The plant did not resume operations until January 29, 2001, after the steam generators had been replaced. 1 On March 17, 2000, a number of Assembly Members filed a petition seeking an order staying the operation of Con Edison's fuel adjustment clause and commencing an investigation 1 On September 6, 2001, ownership of IP2 was transferred to a subsidiary of Entergy Corporation. Case 01-E-0040, Joint Petition of Consolidated Edison Company of New York, Inc., and Entergy Nuclear Indian Point 2, LLC, for Authority to Transfer Certain Generating and Related Assets and for Related Relief, Order Authorizing Asset Transfer (issued August 31, 2001).

2 CASE 00-E-0612 into the company's operation of IP2. On March 30, 2000, the Commission instituted this proceeding 2 to examine the causes of the outage, including events preceding the outage, to determine whether Con Edison's practices were reasonable and prudent, and, more particularly, whether the company's decision to postpone the replacement of the steam generators was reasonable and prudent. 3 During the extended outage of IP2, higher cost replacement power had to be purchased. If the company's operation of the plant was found reasonable, replacement power costs would have been recovered from customers in rates. Otherwise, some or all of those costs, possibly totaling as much as $290 million, 4 would have been borne by the company. A number of prehearing conferences were held between May 2000 and November 2002 addressing a variety of issues, including the scope of the proceeding, scheduling, discovery disputes, and other matters. During the pendency of the proceeding, extensive discovery, including the disclosure and review of "thousands, if not tens of thousands, of documents," was undertaken by Staff of the Department of Public Service (Staff) and its consultants, as well as by the numerous other active parties. 5 Among the areas investigated, Staff and the other parties reviewed the operation and maintenance of similar nuclear power plants, examined industry and trade group studies, Nuclear Regulatory Commission notices, rulings and findings, Westinghouse Corporation analyses of conditions at IP2, and Institute of Nuclear Power Operations and similar inspection reports concerning IP2. Staff also interviewed company personnel assigned to or with oversight responsibility for IP Case 00-E-0612, Order Instituting Proceeding (issued March 30, 2000). Ultimately, the scope of this proceeding included four IP2 outages between 1997 and 2000 (Procedural Ruling (issued March 15, 2001)). Transcript (Tr.) Staff estimated that its litigation position was worth a maximum of $290 million (Staff Statement in Support of the Joint Proposal, p. 21). Id., p

3 CASE 00-E-0612 Many thousands of hours have been spent by the parties, the company, and Staff, which estimates its efforts alone at more than 10,000 hours. Following unsuccessful settlement attempts during the summer of 2000, the parties determined in November 2002 that the resumption of negotiations would be appropriate. Notice of settlement discussions, dated November 19, 2002, was served on all parties in accordance with 16 NYCRR 3.9. Settlement discussions continued through the Fall of 2003, and, on December 2, 2003, a Joint Proposal 6 was filed for Commission review, executed by all but one of the active parties, and otherwise unopposed. The signatories to the Joint Proposal are Con Edison, Staff, Office of the Attorney General Eliot Spitzer (Attorney General), Honorable Richard L. Brodsky, Honorable Adriano Espaillat, New York State Consumer Protection Board (CPB), Public Utility Law Project, Inc. (PULP), City of New York (NYC), Utility Workers of America, ALF-CIO Local 1-2 (Union), and the Owners Committee on Electric Rates (OCER). On December 29, statements in support of the Joint Proposal were filed by Con Edison, Staff, Attorney General, CPB, PULP, Union, and OCER. In addition, and in response to a December 18, 2003 Notice from the Secretary soliciting comments, Consumer Power Advocates (CPA), NYC, and the County of Westchester (Westchester), filed statements supporting the Joint Proposal. 7 Summary of Joint Proposal As a general matter, the Joint Proposal includes provisions by which Con Edison will refund or absorb a total of $137.5 million of replacement power costs associated with the outages investigated. The $137.5 million includes $89,543,663 in IP2 replacement power costs that were incurred by the company but not collected in rates due to our August 9, 2000 order 6 7 A copy of the Joint Proposal is attached to this Order. The transcript of this proceeding consists of 778 pages, and three exhibits were entered into evidence. -3-

4 CASE 00-E-0612 prohibiting Con Edison from collecting replacement power costs in accordance with the requirements of Chapter 190 of the Laws of Under the terms of the Joint Proposal, Con Edison would refund $45,456,337 of the replacement power costs it collected from its customers during the outages and would waive any claim to charge ratepayers for the $89.5 million of replacement power costs, which were booked but not collected from customers. In addition to the refund and the company's agreement not to seek reimbursement for incurred power costs, the Joint Proposal requires Con Edison to provide $2.5 million to New York State Energy Research and Development Authority (NYSERDA) to fund incremental energy efficiency programs for Con Edison's low-income customers. The proposal includes agreements that: NYSERDA will meet with the parties to discuss and develop appropriate programs; the fund will be apportioned between New York City and Westchester County customers (88% and 12% respectively); the New York City and Westchester programs will run concurrently; the fund will be utilized to supplement not supplant existing programs; NYSERDA will, at the request of any active party, provide a quarterly report on the program; NYSERDA will be entitled to collect up to a 7% administrative fee; and NYSERDA will use its best efforts to exhaust the fund on appropriate low-income energy efficiency programs within two years of the date of the Commission order adopting the terms and conditions of the Joint Proposal. Finally, the proposal provides that, upon the satisfaction of the above commitments, Con Edison will be released and discharged from all claims and obligations that were or could have been properly asserted in this proceeding, including IP2 outages beginning January 25, 1997, October 14, 1997, August 31, 1999, and February 15, In addition to the Joint Proposal and because NYSERDA was not an active party, the resolution of the proceeding and 8 Case 00-E-1343, Proceeding Implementing Chapter 190 of the Laws of 2000, Order Modifying Tariff and Mandating Refunds, (issued August 9, 2000). -4-

5 CASE 00-E-0612 the approval of the Joint Proposal provisions concerning the energy efficiency programs requires two additional documents. The first is a letter dated January 8, 2004 from Peter Smith, Acting President of NYSERDA to Jaclyn A. Brilling, Secretary to the Commission in which NYSERDA indicates that it has reviewed the parameters and guidelines set forth in the Joint Proposal, has no objection to them, and agrees and assents "... to accept the $2.5 million from Con Edison and to utilize the funds in the manner prescribed by paragraph 4 of the December 2, 2003 Joint Proposal." Thus, NYSERDA has agreed to abide by the terms and conditions in the Joint Proposal in return for receipt of program funds from Con Edison. In addition, to facilitate the intent that the funds provided to NYSERDA be considered and treated as incremental funds dedicated to additional low-income energy efficiency programs, a separate letter agreement between Con Edison and NYSERDA will be executed when the funds are transferred. This letter agreement, intended to encumber the funds for the purposes set forth in the Joint Proposal, is also an integral part of the Joint Proposal. A draft of that letter, containing final language as agreed upon among the active parties, Con Edison, and NYSERDA, is included in the record as Exhibit 3. Set forth below is a brief summary of the comments submitted in support of the Joint Proposal, as well as a summary of issues raised at the January 6 evidentiary hearing, followed by our discussion. Summary of Parties Comments All parties filing comments supported the adoption of the terms and provisions of the Joint Proposal, alleging that those terms fully met our standards for approval. 9 Under those standards, the parties argue, a mutually agreeable resolution to this proceeding has achieved a balance among ratepayers, utility investors, and the long term viability of the utility, and is 9 Case 90-M-0255, Procedures for Settlements and Stipulation Agreements, Opinion No (issued March 24, 1992). -5-

6 CASE 00-E-0612 consistent with sound environmental, social, and economic policies. In the view of all the parties, the Joint Proposal produces results that are within the range of reasonable results that would likely have arisen had the matter been litigated. In addition, the parties note that our guidelines require that weight be given to the fact that a settlement has been reached among normally adversarial parties, and the exceptional breadth of agreement and complete lack of dissent apparent here suggests that this standard has been met as well. Staff concludes that each of the four outages investigated would require a lengthy and detailed consideration of highly technical issues, as well as a "somewhat" subjective application of the standard of care, in order to litigate the prudence of the company's actions. As a general matter, Staff expresses the belief that all of the outages could have and should have been either avoided or reduced in duration; but it also notes that its position includes a significant degree of uncertainty. In contrast, Staff argues, the Joint Proposal provides certainty, eliminates the need for further administrative or court litigation, and provides benefits to customers expeditiously. Regarding the potential range of damages were the case litigated, Staff estimates possible litigation outcomes between zero and $290 million. Based on a consideration of its litigation risk and its likely success on the merits, Staff believes that the proposed settlement, containing $137.5 million of benefits for the ratepayers, is fair and reasonable. 10 Con Edison also endorses the terms and conditions of the Joint Proposal, agreeing with the parties that the Commission's guidelines for adopting such terms and conditions have been fully met. The company's comments briefly review the 10 Staff Statement in Support of Joint Proposal, p. 21. Staff's quantification of the possible prudence disallowance levels does not include a consideration of the Attorney General's issue which would hold Con Edison liable (assuming imprudence) for the increased cost of electricity in the wholesale market that was caused by the loss of IP2 generation in

7 CASE 00-E-0612 defense it would have raised to the allegations summarized in Staff's statement, and the company concludes that it might have established its prudence with regard to each of the outages. 11 In reaching the conclusion that the Joint Proposal was acceptable on an overall basis, Con Edison noted that the risks and costs of pursuing litigation, the advisability of seeking a settlement to these complicated issues, and the risk of litigating the novel position set forth by the Attorney General regarding the impact of the IP2 outage on wholesale market prices, all favor the adoption of the terms and conditions in the Joint Proposal. The Attorney General, CPB, and NYC also agree that the settlement is just and reasonable, is in the public interest, and meets all the criteria set forth by the Commission on which settlement agreements may be accepted. The Attorney General expresses the view that Con Edison would likely have been found imprudent with respect to each of the investigated outages, but notes that such results are not guaranteed given the uncertainties inherent in this most complex litigation. He also argues that Con Edison could have been liable for the impact of IP2's outage on wholesale market prices, but again, litigation risk, especially in light of the novel theory regarding this adjustment, renders complete success on the merits open to considerable doubt. The Attorney General concludes that the settlement is within the range of reasonable results that would be expected from a litigated proceeding; the agreement encompasses a very broad range of normally adversarial interests; and the provisions of the Joint Proposal would benefit ratepayers by having refunds issued now rather than waiting years for the outcome of administrative litigation and possibly court appeals. CPB agrees that the terms of the proposal are in the public interest, specifically noting that the Joint Proposal would result in "... a line item... on each ratepayer's 11 Con Edison's Statement in Support of the Joint Proposal, pp

8 CASE 00-E-0612 bill enumerating the refund." 12 CPB also argues that the Joint Proposal is consistent with the economic and social policies of New York State and the Commission and that adopting the provisions of the Joint Proposal would help reduce energy costs, both for the general body of customers and through the $2.5 million dedicated to low-income energy efficiency programs. CPB also notes that the Joint Proposal has garnered support from the company, consumer representatives, labor groups, the legislature, and a number of other State agencies. It concludes that the Joint Proposal "... represents a reasonable compromise of divergent goals." 13 NYC states that it is fully supportive of the Joint Proposal and believes that its adoption would be in the best interest of all parties and the general public. It notes that the proposal is the product of extensive fact finding by the Department and the other active parties, and that protracted negotiations were necessary to resolve all of the complex issues. The Joint Proposal, according to NYC, is a comprehensive settlement of all issues, which were both complex in nature and remote in time. The age of some of the challenged actions date to the mid-1980s, adding significantly to the litigation risk. NYC also specifically supports Staff's conclusion that the Joint Proposal represents a reasonable value for the case, taking into account litigation risk and the cost of replacement power occasioned by the outages. 14 As a final matter, NYC notes that Con Edison's business has considerably changed since the 2000 outage, including the fact that the company has sold its generating stations. NYC urges the Commission to approve the terms of the Joint Proposal. The County of Westchester and the Union also support the adoption of the terms and conditions in the Joint Proposal. 12 CPB Statement in Support of the Joint Proposal, p. 4 discussed infra). 13 CPB Statement in Support of the Joint Proposal, p City of New York Statement in Support of the Joint Proposal, p

9 CASE 00-E-0612 According to the Union, both the present and the prospective elements of the company's and ratepayer's financial positions were balanced in the development of the Joint Proposal; normally adversarial parties reached agreement only after a lengthy negotiating process, including approximately three years of investigations; and litigation would have involved significant risks for both the ratepayers and the company in terms of delay, uncertainty, and additional litigation costs. The County of Westchester, noting the active part it took throughout this proceeding, including a substantial commitment of resources to discovery and preparation for evidentiary hearings, concludes that the Joint Proposal meets the standards of appropriately balancing the interest of the ratepayers and those of the company, demonstrating support from normally adversarial parties, and being based on an adequate record. PULP, OCER, and CPA also urge the Commission to adopt the terms and conditions of the Joint Proposal. OCER contends that the Joint Proposal is in the best interest of the public generally and the signatories in particular. It concludes that the Joint Proposal offers significantly greater benefits than costs, especially when one considers the extensive litigation, the probability of success, the complexity of the issues, and the inconvenience and delay that would likely result in its absence. PULP similarly reviews the standards adopted by the Commission for such agreements and concludes that those standards have been fully met. The Joint Proposal, according to PULP, represents a rational and fair resolution of the issues, and it notes, in particular, its support of the $2.5 million dedicated to the implementation of additional low-income energy efficiency programs. The Joint Proposal therefore recognizes, according to PULP, the special needs of low-income households and deliberately take steps to deal with the problem on more than a short-term basis. PULP also emphasizes the provision that requires these funds to be used to create new, incremental low-income conservation programs rather than replacing or providing funds for existing or threatened programs. -9-

10 CASE 00-E-0612 CPA indicates its support for the Joint Proposal as a reasonable solution for mitigating the excessive costs borne by consumers as a result of the prolonged outages of IP2. Regarding the proposed refund, CPA recommends that the amount of the refund be listed as a separate line item on customers' bills to allow them to clearly see the actual amount of the settlement. 15 CPA also recommends that the funds to be transferred to NYSERDA be utilized for energy efficiency programs and not for load aggregation studies or pilot programs. Such programs, CPA contends, face significant implementation challenges and tend to provide less long-term value than efforts such as energy efficient window replacements. Finally, the issues that were raised at the January 6, 2004 evidentiary hearings should also be mentioned. First, the Joint Proposal (p. 1) recites Westchester County as a signatory to the agreement. Based on Westchester County's comments filed January 16, it appears that the County fully supports the proposal, but is not in fact a signatory. A second issue was raised by CPA, 16 which requests that customers be advised on their bills of the specific credit that they are receiving. The Joint Proposal states: "A statement will appear on bills explaining that the customer has received a credit related to the IP2 Prudence Proceeding." 17 Con Edison indicates that it may not be possible to include individually calculated, separate line items for these refunds on its bills. However, the company did indicate that it should be possible to include within the bill a message to the consumer identifying the refund on a per KWh basis and explaining how the individual refund could be calculated. The Administrative Law Judge noted on the record that the customer should be provided either an individually calculated credit on the bill or the information necessary for the customer to be able to calculate the credit CPA's Comments in Support of the Joint Proposal, p Tr Attachment, p Tr

11 CASE 00-E-0612 Another issue arose at the hearings concerning paragraph 5 of the Joint Proposal in which Con Edison is to be released and discharged, conditioned upon the satisfaction of the "above" commitments. As the record shows, 19 the intent of that provision was to provide a complete release to Con Edison once the company completed its Joint Proposal commitments. The document might be read, however, to suggest that Con Edison would not be released or discharged until after NYSERDA had satisfied its commitments, possibly two years or more in the future. Con Edison indicated that such an interpretation was not intended by the parties and that the actual intent of the parties, that Con Edison be released once it completes its financial commitments, should be reflected in the Commission's adoption of the terms of the Joint Proposal. DISCUSSION We have consistently found that the terms and conditions of a Joint Proposal are in the public interest and may be adopted if the following standards are met: A desirable settlement should strive for a balance among (1) protection of ratepayers, (2) fairness to investors and (3) the long term viability of the utility; should be consistent with sound environmental, social and economic policies of the Agency and the State; and should produce results that were within the range of reasonable results that would likely have arisen from a Commission decision in a litigated proceeding. In judging the settlement, the Commission shall give weight to the fact that a settlement reflects the agreement by normally adversarial parties. 20 An unusually broad range of "normally adversarial" interests have either executed the Joint Proposal or are otherwise fully supporting it. The parties supporting the Tr Case 90-M-0255, Procedures for Settlements and Stipulation Agreements, Opinion No (issued March 24, 1992), Procedural Guidelines for Settlements, p

12 CASE 00-E-0612 proposal in this proceeding include elected officials, representatives of state agencies and local governments, IP2's unionized work force, consumer groups, and the company. As Staff notes, every active party to the proceeding agreed with the proposed resolution, and no party or other member of the public has criticized the Joint Proposal in any way. We also find that the provisions in the Joint Proposal provide significant benefits to ratepayers regarding replacement power costs that were included within rates or which the company would have included in rates in the absence of this investigation. From the investors' and utility management's perspective, the agreement finalizes all of the company's operational obligations with regard to IP2, which has now been sold, and limits the company's liability to slightly less than half the total potential exposure of $290 million. Therefore, adoption of the terms of the Joint Proposal would assist the company in shifting its focus to the future and closing the book with regard to its operation of IP2. Accordingly, a fair and reasonable balance of ratepayer and investor interests has been established. We further conclude that the Joint Proposal is consistent with the policies of this Commission and the State. The alternative to the Joint Proposal is litigation that threatens to be extremely complex, expensive, and lengthy, requiring substantial efforts by numerous parties, including a number of governmental agencies and subdivisions. So long as such significant assets would be tied up litigating the merits of these claims, the parties could not as easily address current problems and plan for the future. The Joint Proposal frees those considerable resources, allows a future focus to be more completely supported, and eliminates what could have been months or years of litigation over the reasonableness of decisions made a decade or more ago. Finally, in considering Staff's description of the strength and uncertainties of its position, as well as Con Edison's summary of its defenses and acknowledged risk, we conclude that the results contained in the Joint Proposal are -12-

13 CASE 00-E-0612 within the range of reasonable results that would likely have arisen in a fully litigated proceeding. Regarding the timing of Con Edison's release and discharge, the Joint Proposal should be interpreted as noted above. In addition, customers should be provided the most specific notice possible on their bills regarding the amount of the refund each receives, and Con Edison should consult in advance with Staff and interested parties regarding its plans and capabilities in this area. Finally, CPA's concern that NYSERDA may dedicate the funds from this Joint Proposal to aggregation programs seems misplaced. Low-income energy efficiency programs are specified in the Joint Proposal, as is the requirement for NYSERDA to discuss program details with the parties in advance. Aggregation programs are neither mentioned nor implied. We are confident that programs can be devised that will be found by all parties to be appropriate. CONCLUSION Based on the above, we conclude that the Joint Proposal is in the public interest, and we are hereby adopting its terms and conditions, as clarified herein, as our order in this proceeding. The Commission orders: 1. The terms and conditions of the Joint Proposal described herein and attached hereto are adopted, as clarified herein, as the order of the Commission in this proceeding. 2. Subject to the completion of Con Edison's and NYSERDA's commitments hereunder, this proceeding is closed. By the Commission, (SIGNED) JACLYN A. BRILLING Secretary -13-

14 NEW YORK STATE PUBLIC SERVICE COMMISSION x In the Matter of : : Proceeding on the Motion of the Commission to : Investigate the Forced Outage at Consolidated Edison : Case 00-E-0612 Company of New York, Inc. s Indian Point No. 2 Nuclear : Generating Facility. : : Petition of Certain Members of the New York State : Legislature Regarding Indian Point No. 2 Outage. : x JOINT PROPOSAL ON THE INDIAN POINT 2 PRUDENCE PROCEEDING December 2, 2003

15 Case 00-E-0612 JOINT PROPOSAL ON THE INDIAN POINT 2 PRUDENCE PROCEEDING The Parties to this Joint Proposal, which settles the issues in Case 00-E-0612, are: Consolidated Edison Company of New York, Inc. (Con Edison), New York State Department of Public Service Staff ("Staff"), Office of Attorney General Eliot Spitzer (OAG), Hon. Richard L. Brodsky, Hon. Adriano Espaillat, New York State Consumer Protection Board (CPB), The Public Utility Law Project of New York, Inc. (PULP), City of New York (NYC), County of Westchester (Westchester), Utility Workers Union of America, AFL-CIO Local 1-2 (Union), Owners Committee on Electric Rates (OCER), and such other Parties whose authorized representatives have signed the execution pages. The Parties agree to the terms of this Joint Proposal, which is to be presented to the New York State Public Service Commission (Commission). In a petition filed in March 2000, Assemblymembers Richard L. Brodsky, Ann Margaret Carrozza, Adele Cohen, Adriano Espaillat, James Gary Pretlow, Roberto Ramirez, William Scarborough, Ronald Tocci, Albert Vann, Eric Vitaliano, and Keith Wright requested that the Commission examine the reasonableness of Con Edison s actions regarding the operation and maintenance of its Indian Point Unit No. 2 Nuclear Generating Facility (IP2), and, in particular, the events leading to forced outage that occurred on February 15, Similar requests were made by Westchester, NYC, and the State Senate. After considering those requests, and issues identified during an investigation immediately following the February 15 outage by the Department of Public Service, Department of Health and State Emergency Management Office, acting collaboratively under the direction of Governor Pataki, the Commission issued an Order Instituting Proceeding to Investigate Outage at the Indian Point No. 2 Nuclear Generating Facility on March 30, 2000, instituting this proceeding to investigate the circumstances surrounding the February 15 outage and other issues relating to Con Edison s management and operation of IP2. Prehearing conferences were held before Administrative Law Judge Jeffrey E. Stockholm on May 2, 2000, August 21, 2000, November 10, 2000, February 28, 2001, May 31, 2001, and November 8, 2002, at which the scope of the issues to be addressed in this proceeding, the schedule for the proceeding, discovery disputes, and other matters were discussed.

16 Settlement negotiations were conducted periodically in this proceeding in the year 2000 without success. After Staff and other parties spent thousands of hours conducting discovery, reviewing documents, and analyzing the issues in this proceeding, a determination was made that renewing settlement discussions would be appropriate. Accordingly, in accordance with the Commission s rules, all parties to this proceeding, and the Secretary to the Commission, were notified by letter dated November 19, 2002 that settlement negotiations would recommence on December 12, The negotiations scheduled for that date were adjourned at the request of some parties to January 16, Additional settlement negotiations were held on January 29, April 21, April 29, September 18, and September 24, Con Edison, Staff, OAG, Hon. Richard L. Brodsky, NYC, Westchester, CPB, PULP, the Union, and OCER participated in some or all of those meetings. All settlement conferences and negotiations were conducted in accordance with 16 NYCRR 3.9 and the Commission's Settlement Guidelines, set forth in Opinion No As a result of their efforts, the parties have reached a comprehensive proposed resolution of this proceeding, as follows: 1. Con Edison will refund or absorb a total of $137,500,000 of the replacement power costs it incurred during the outages identified in paragraph 5, below, in the manner set forth in the following paragraphs In accordance with the requirements of Chapter 190 of the Laws of 2000 (Chapter 190), on August 9, 2000, the Commission issued an Order prohibiting Con Edison from continuing to collect IP2 replacement power costs associated with the February 15, 2000 outage. 2 Chapter 190 was ultimately adjudged unconstitutional by the federal courts. 3 During the time it and the Commission Order remained in effect, customers did not pay Con Edison $89,543,663 in IP2 replacement power costs, and the company has a claim for recovery of those costs. That amount will be offset against the $137,500,000 settlement sum Cases 90-M-0255 et al., Opinion, Order and Resolution Adopting Settlement Procedures and Guidelines, Opinion No (issued March 24, 1992). Case 00-E-1343, Commission Proceeding Implementing Chapter 190 of the Laws of 2000, Order Modifying Tariff And Mandating Refunds (issued August 9, 2000). Con Edison had been collecting such costs in customer bills since the beginning of the outage. Consolidated Edison Co. of New York, Inc. v. Pataki, 292 F.3d 338 (2002). 2

17 3. Con Edison will refund $45,456,337 to its customers by crediting their electric bills for such total amount over a three month period beginning as soon as practicable, but in no event later than 30 days, following the issuance of a Commission Order approving this Joint Proposal. The refund will be distributed on a usage basis to all current customers, both full service and retail access, to ensure equity between NYC and Westchester customers. A statement will appear on bills explaining that the customer has received a credit related to the IP2 Prudence Proceeding. Because total usage and the credit per kwh will be estimated each month, Con Edison will reconcile actual to estimated usage for the three month period and make the appropriate adjustments, if any, during the following month to ensure that customers receive the full amount of the refund. 4. Con Edison will provide $2,500,000 to the New York State Energy Research and Development Authority (NYSERDA) to fund one or more energy efficiency programs for Con Edison s low income customers. Usage of the funds will be administered by NYSERDA and governed by the following principles: a. NYSERDA shall meet with Staff, Con Edison, CPB, PULP, NYC, Westchester and any interested signatories to this Joint Proposal to discuss NYSERDA s existing low income energy efficiency programs no later than 30 days after the date of the Commission Order approving this Joint Proposal. NYSERDA shall then distribute to the participating parties for review and comment a brief plan describing how the fund will be spent to enhance one or more of these existing programs. Meetings among the interested parties to discuss the plan should occur as expeditiously as possible. After receiving this input from the parties, NYSERDA shall determine how the fund will be allocated among its programs. b. The fund shall be utilized to assist Con Edison low income customers located in New York City and Westchester County in an 88% to 12% ratio, respectively. c The fund may be used for different purposes in New York City and Westchester County, provided the programs run concurrently. d. The fund has been established to supplement existing programs. Therefore, it shall not be used to supplant existing funding for any 3

18 program, whether from Con Edison, the System Benefit Charge, or other sources. Also, all interest accrued on the $2.5 million will be added by NYSERDA to the fund. e. Upon the written request of any active party in this proceeding, NYSERDA shall provide the party a quarterly report on the program activities undertaken and expenditures made from the fund. f. As soon as practicable, but in no event later than 30 days, after approval by the Commission of this Joint Proposal, the $2.5 million shall be delivered by Con Edison directly to NYSERDA and, upon such delivery, Con Edison s commitment under this Paragraph 4 shall be deemed to be fully satisfied. g. NYSERDA will be entitled to collect its standard administrative fee from the corpus of the fund in an amount up to a maximum of 7% or $175,000. h. NYSERDA will be requested to use best efforts to exhaust the fund on appropriate low income energy efficiency programs within two years of the date of the Commission Order approving this Joint Proposal. 5. In return for, and conditioned upon satisfaction of, the above commitments, Con Edison will be released and discharged from all claims and obligations that were or could properly have been asserted in this proceeding relating to its operation and management of IP2 from 1985 through the date of the plant s sale in 2001, including, but not limited to, claims and obligations relating to: a. The outage from January 25, 1997 through March 17, 1997 relating to the grit blasting of the steam turbines in b. The outage from October 14, 1997 through September 10, 1998 relating to the DB-50 circuit breakers and the management of IP2, generally. c. The outage from August 31, 1999 through October 18, 1999 relating to the reactor scram. d. The outage from February 15, 2000, through January 29, 2001 relating to the rupture of tube R2C5 in Steam Generator 24 and subsequent replacement of all of the steam generators. 4

19 e. Additional payments made by Con Edison s customers for energy during the outage as a result of the impact of the loss of IP2 s power on the wholesale electric power markets, as identified by OAG. 6. Nothing in this Joint Proposal shall be construed as an admission by any party with respect to the prudence or imprudence of any decision or action by Con Edison related to its management and operation of IP2 or as to the remedies appropriate in any such case. 7. The parties agree and acknowledge that each provision of this Joint Proposal is in consideration and support of all the other provisions, and expressly conditioned upon their acceptance by the Commission. In the event that: (a) the Commission fails to adopt this Joint Proposal according to its terms or adopts it with material modifications that are adverse to any party; (b) this Joint Proposal or a Commission Order approving it, or any provision of either is materially and unacceptably modified by a court order which has become final and nonappealable and such modification is adverse to any party; or (c) a statute, rule, order or regulation is enacted or issued by any federal, state, local or other governmental, regulatory or administrative agency, commission, department or board that imposes liability on Con Edison for any of the discharged claims or obligations enumerated in paragraph 5, above, then each of the signatories to this Joint Proposal so adversely affected reserves the right to withdraw its acceptance of this Joint Proposal, upon reasonable notice to the other parties, and to renegotiate and, if necessary, to litigate without prejudice, any or all issues as to which the signatory agreed in this Joint Proposal. Any signatory who so withdraws its acceptance of this Joint Proposal shall not be bound by its provisions, and this Joint Proposal shall be null and void as to that signatory. 8. The terms and provisions of this Joint Proposal apply solely to, and are binding only in the context of, the purposes and results of this Joint Proposal. None of the terms and provisions of this Joint Proposal may be cited or relied upon by any party hereto or any other party in any fashion as precedent in any proceeding before this Commission, or before any other regulatory agency or any court of law for any purpose except in furtherance of the purposes and results of this Joint Proposal. 9. The parties hereto agree to submit this Joint Proposal to the Commission and to individually support and request adoption by the Commission of the Joint Proposal as set forth herein. 5

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