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Proposed Settlement Would Shift $1.4 Bil in SONGS Shutdown Charges to Shareholders

The settlement still has to be agreed to by the state Public Utilities Commission.

SONGS just south of San Clemente. Patch file photo.
SONGS just south of San Clemente. Patch file photo.

Originally posted at 3:33 p.m. March 27, 2014. Edited to add new details.

A proposed settlement reached today would relieve customers of Southern California Edison and San Diego Gas & Electric of paying $1.4 billion in utility charges related to steam generators that caused the shutdown of the San Onofre Nuclear Generation Station.

The settlement agreed upon by The Utility Reform Network, state Office of Ratepayer Advocates and the two utility companies still needs approval from the state Public Utilities Commission.

According to TURN and the state ORA, the deal would retroactively prevent the utilities' customers from having to pay for the steam generators from the time of the shutdown in late January 2012. The financial burden would be shifted to the utilities' shareholders.

For Rosemead-based SCE, that works out to $1.12 billion, according to the ORA. For San Diego Gas & Electric, the total is $286 million.

SDG&E owned 20 percent of the plant on the northern San Diego County shoreline, and received one-fifth of the power it generated.

"This settlement agreement is an extremely good deal for customers who will see a refund of hundreds of millions of dollars in the coming years," said Joe Como, ORA's acting director.

The ORA also announced that the utilities' customers could share in additional savings, depending on whether Edison is successful in litigation against Mitsubishi Heavy Industries, the Japanese firm that manufactured the steam generators.

According to TURN, SCE and SDG&E would also refund any money collected from ratepayers since the beginning of last year in excess of the actual operational costs of the plant, and would refund to customers any money resulting from the sale of extra materials and supplies along with unused nuclear fuel.

A small, non-injury leak forced the closure of one of San Onofre's reactors two years ago. The other unit was undergoing scheduled maintenance at the time, and was never restarted.

Edison shelved restart plans last June and decided to retire the reactors.

"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 Edison President Ron Litzinger. "Our customers will pay for replacement power they received. The settlement, if approved by state regulators, provides certainty regarding the appropriate cost recovery for the remaining investment in the San Onofre nuclear plant, replacement power costs and authorized revenues."

He said the deal provides a "clear road map" for SCE to pursue claims against Mitsubishi.

SDG&E President Jeffrey Martin called the proposed settlement "fair and reasonable" for balancing the interests of customers and shareholders.

"The settlement ensures that customers will not have to pay for San Onofre's faulty steam generators post-shutdown and also allows shareholders to recoup the majority of their non-steam generator investment in the plant, which provided clean, reliable, low-cost energy to the region for more than 40 years," Martin said.

SDG&E said it would "vigorously" pursue claims against Mitsubishi.

CPUC President Michael Peevey said the settlement will come before the commissioners for approval after a public hearing is held.

--City News Service


Mike Syi March 28, 2014 at 01:30 AM
The public did not cause this incident. SCE made a huge mistake and they should pay for what they caused. They did not have to increase the size of steam generators but they did it on their own. It never made sense to change design on such a complicated system.
Brainwashed_In_Church March 28, 2014 at 10:41 AM
Not sure if it makes much difference. "They" (SCE) isn't just a bunch if big fat guys sitting around smoking cigars and drinking brandy. "They" is for the most part us. If "they" pay, somehow, we'll pay.
Mike Syi March 28, 2014 at 11:01 PM
When SCE management decided to upgrade the steam generators they assumed the risk not the public. They should have stayed with the original design when worked great for many years. SCE has to be help accountable for their actions. The people who own SCE stock will pay not the ratepayers.

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