Objections filed to plan sticking ratepayers with $3.3 billion in San Onofre nuclear plant costs

A proposed deal would make utility customers of Southern California Edison and San Diego Gas & Electric responsible for $3.3 billion in costs for replacement power due to the shutdown of the San Onofre nuclear power plant south of San Clemente. 

The deal was reached behind closed doors in March between the two utilities and two ratepayer advocate groups. But opposition to the proposal is growing. 

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The Utility Reform Network (TURN), California Public Utilities Commission's Office of Ratepayer Advocates (ORA), Southern California Edison (SCE), and San Diego Gas & Electric met behind closed doors and then announced on March 27 in San Francisco the deal on  how the costs would be divided between the utility's shareholders and its customers. Those costs include the purchase of replacement power for the plant and expenses related to defective reactor equipment.

Some of the $3.3 billion for replacement power has already been collected in SCE and SDG&E utility bills starting in February 2012 and, under the proposed agreement, would continue through January 31, 2021.

Another part of the proposed agreement  between the two utilities and consumer advocacy groups would let customers off the hook for more than $1 billion in costs associated with defective steam generators at the plant. But the utilities may be able to get some of those costs back from the manufacturer, Mitsubishi Heavy Industries. 

'Triple dipping'

Ray Lutz with San Diego-based Citizens Oversight, filed an objection to the agreement with the California Public Utilities Commission or CPUC. He said all parties in an on-going CPUC investigation were not involved in the settlement talks - and - the deal would put a halt to that investigation.

"They say they take the plant out of rates," said Lutz in an emailed statement. "But in the next breath, they say ratepayers still have to pay for it, amortized over ten years. That means they are essentially leaving it in rates, forcing the ratepayer to underwrite the mistakes of Edison and their failed steam generator project."

"It is unfair to charge ratepayers to pay for the plant and also charge them for replacement power," added Lutz. "Add to that the potential return on the Mitsubishi lawsuit, insurance and salvaging, and you have triple dipping. This is a disaster for ratepayers and should not be approved."

San Diego attorney Mike Aguirre has also filed a legal challenge to the deal, saying ratepayers should not foot the bill for the nuclear plant's problems. 

"This proposed settlement means that customers don’t pay for the steam generator project after the tube leak at San Onofre, leaving SCE financially responsible for its ownership share in the project," said Ron Litzinger, president of SCE, in a March 27 statement regarding the settlement. "Our customers will pay for replacement power they received."

But Gary Headrick with San Clemente Green said the proposal is unfair to ratepayers. 

"In fairness to the ratepayer, we should only pay for what we normally would've consumed, in terms of energy during that two-year period (when plant was closed)," said Headrick. "Anything above and beyond that should be on Edison's shoulders unless they can prove otherwise. We think the (CPUC) investigation should go on and we should see how the bad steam generators were approved in the first place and then talk about compensation."   

Gene Stone with San Clemente-based Residents Organized for a Safe Environment criticized the CPUC.

"Here's another example of the (California) PUC protecting the energy producers instead of protecting the public, the ratepayers, like they're supposed to," said Stone, who is also a member of Edison's Community Engagement Panel, which was formed to allow public input into the ongoing decommissioning process.

The CPUC must hold a hearing on the settlement proposal before a vote on it, which is not expected until at least May. 

The two utilities had sought about $4.7 billion for costs related to purchasing replacement power during the plant's shutdown and costs associated with the failed generators.

The San Onofre nuclear plant went offline in January 2012 after a small radiation leak from steam generator tubes in the Unit 3 reactor. Inspections later discovered the steam tubes in both reactors were wearing at an accelerated rate and that relatively new steam generators were defective. 

Determining who should take the financial hit, utility shareholders or customers, has been at issue since SCE announced in June 2012 it would permanently close the plant. The decommissioning process is now underway, which is expected to take a decade or more.