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Settling The Bill For Closing The San Onofre Nuclear Generating Station

Aired 5/14/14 on KPBS News.

Regulators will get a chance Wednesday to ask questions about a proposed settlement involving the closure of the San Onofre nuclear power plant.

Utilities, consumer advocates and critics are in San Francisco Wednesday to examine a proposal that breaks down the bill for the premature closure of the San Onofre Nuclear Generating Station.

They will be arguing their points before two California Public Utilities Commission administrative law judges and the lead commissioner handling the case.

The March settlement was hailed by utilities and consumer groups. Southern California Edison and San Diego Gas & Electric called it a win for ratepayers. The settlement's final cost to ratepayers is $1.4 billion below Southern California Edison's initial $4.7 billion bill.

A big chunk of that reduction is linked to the now infamous faulty steam generators.

An aerial view of the San Onofre Generating Station, May 2012

"The negotiated settlement with the consumer advocates and the utilities hammered out a difficult complex settlement agreement which is going to allow the customers not to have to pay a penny more for the faulty steam generators. Instead, the investors are going to have to pick up the rest of those costs, and customers will not have to pay for that," said Stephanie Donovan, a SDG&E spokeswoman.

That was a huge victory for the Utility Reform Network and the Office of Ratepayer Advocates.

The consumer groups are quick to point out that the steam generators were supposed to extend the life of the plant, but those generators failed and eventually prompted Southern California Edison to close the plant prematurely.

The settlement means hundreds of millions of dollars to pay off the generator replacement project will come from investors.

"It disallows any rate recovery for the replacement steam generators. Starting on February first 2012. So that's the date the outages began," said Mike Pocta, of the Office of Ratepayer Advocates.

The deal also restructures current electric rates, with ratepayers paying costs that assume San Onofre is still up and running, Pocta said. The settlement figures in the plant's closure.

But there won't be any refunds or rebates.

"The money that was overpaid, between January 2012 and when a decision is adopted will actually go to offset potential future rate increases," Pocta said.

The Office of Ratepayer Advocates and the Utility Reform Network said that rate relief is immediate and that the financial benefits diminish as time passes, which is why they want a quick resolution.

The closed-door settlement talks were difficult but productive.

"They were no pushovers, mind you. This was a tough, very complex, very lengthy discussion or debate, if you will, the whole settlement process," Donovan said.

The two ratepayer advocacy groups "were not about to let the utilities off the hook before they had their pound of flesh on behalf of customers," she said.

That pound of flesh doesn't look so substantial to critics of the proposed deal. Ray Lutz works for Citizens' Oversight, and he said ratepayers will still have to pay the $3.3 billion bill.

Ray Lutz, Citizens' Oversight

"The settlement? You're going to be on the hook for the settlement," Lutz said. "You're going to probably have to pay 10 percent more than you would otherwise for the next 10 years. Average price, I think per meter, is about $500."

That's a charge for every electric meter in the SDG&E and Southern California Edison service area.

Lutz is also not pleased that the deal doesn't include money the utilities could be getting from their insurance carrier.

Or the potential payoff from litigation against Mitsubishi, the company that designed and built the faulty steam generators.

"They want the ratepayer to cover them first, then work on these other things and then give some back to the ratepayer," Lutz said. "We're saying we don't want any part of it. We'll pay what we think is fair. You guys take care of everything else. And that's the way it's been done at the commission for every other failed engineering project."

Lutz is not happy that investors who put up the money for the generator replacement project will still get a 2.5 percent rate of return.

He said they should get their money back, but that's all. That was the original negotiating position of the Office of Ratepayer Advocates.

Lutz said investors make money and ratepayers get a bill.

"And it is bad policy. It is bad policy because what happens, it encourages bad projects. And encourages companies to not be prudent. And to take extra risks," Lutz said.

After Wednesday's meeting, the next step will be a public hearing next month before the California Public Utilities Commission in Costa Mesa.

Commissioners will then schedule a meeting in the summer to discuss the proposal.

There are three possible outcomes. Commissioners could accept the package, ask for modifications or reject it.

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Avatar for user 'CaptD'

CaptD | May 14, 2014 at 5 p.m. ― 2 years, 10 months ago

Much more on this BAD deal for ratepayers on these two links:

San Onofre: No questions allowed at next public workshop


Public utilities commission's rape of the ratepayers

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Avatar for user 'DonWood'

DonWood | May 15, 2014 at 5:15 p.m. ― 2 years, 10 months ago

"with ratepayers paying costs that assume San Onofre is still up and running". But SONGS has been shut down for two years. So why should ratepayer have to keep paying for two reactors that are not working as though they were still working? That doesn't seem to make any sense. Saying it has to be done
"because that's the way we've always done it" make no sense either, given the unique mess SCE has gotten everybody into.

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Avatar for user 'CaptD'

CaptD | May 18, 2014 at 12:49 p.m. ― 2 years, 10 months ago

With many billions of dollars at stake it is amazing to me that MSM is not talking about this issue daily, what other story beside the wildfires is more important to those living in soCal?

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Avatar for user 'CaptD'

CaptD | May 18, 2014 at 12:53 p.m. ― 2 years, 10 months ago


Don't miss this stunning video of the CPUC evidentiary Hearing on the San Onofre nuclear plant. We asked Michael Aguirre to take the lead role in our cross examination during this hearing because we had a very short time, and it requires an experienced attorney to go toe-to-toe with ALJ Darling and the commissioners. Don't miss Peevey's outburst of expletives toward the end when Aguirre put him on the spot about his discussions with SCE, which he was once president of.

What is important here is to expose the ridiculous operation of this commission. Anyone watching it will definitely see how much the utilities control this so-called regulatory agency.

20140514 CPUC San Onofre Settlement Evidentiary Hearing

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Avatar for user 'CaptD'

CaptD | May 18, 2014 at 3:02 p.m. ― 2 years, 10 months ago

The point Michael Aguirre is making is that the ALJ is not allowing any discussion that relates to how SCE knew that the RSGP had serious design flaws even though SCE's own documents point that out!

In short, the ALJ is helping SCE defend itself by not allowing discovery of the documents needed to "prove" that SCE knowingly allowed potentially dangerous RSG to be built, installed and operated at San Onofre; which is why ratepayers should not have to pay one cent for SCE's RSGP debacle!

Anyone that has studies the letter (link below) by Edison vice president Dwight Nunn will understand that SCE knew that there were major issues that should have stopped the "like-for-like" replacement process.

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Avatar for user 'CaptD'

CaptD | May 19, 2014 at 1:31 p.m. ― 2 years, 10 months ago


The ALJ has decided that almost no discovery was necessary and that helped SCE try to make the case that they were wronged by MHI when in fact SCE was in charge of the RSGP, not MHI and there is SCE documentation to prove it. Since Michael Aguirre asked where the SCE supporting documentation is in the official record and SCE can't point to it, it clearly shows that it has never been "discovered" which is a major issue since any settlement must be based upon a review of all the relevant facts. Now it is clear that the ALJ was far too restrictive in what was discoverable because SCE has not disclosed all the relevant facts, so any proposed settlement based upon partial information is questionable at best!

If I were advising the CPUC, I'd suggest that they hold a meeting with all the parties that were not part of the settlement discussions and find out what they feel needs to be done to settle this case, or if that is unworkable, get ready for a lengthy legal appeals that will be both costly and time-consuming.

Once this case leaves the CPUC, I expect it to expand in its scope and that is something that can only work against SCE since they were the operators of San Onofre who installed faulty replacement steam generators, which caused this debacle.

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Avatar for user 'CaptD'

CaptD | May 19, 2014 at 2:03 p.m. ― 2 years, 10 months ago

More of SCE's Nuclear Industry documentation

Yet more info on how SCE tried unsuccessfully to game the NRC's Like-For-Like rules, while making huge changes to the Replacement Steam Generators (RSG's):

Improving like-for-like RSGs 

===> Published just before the Unit 3 leak occurred in January 2012.

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Avatar for user 'CaptD'

CaptD | May 19, 2014 at 4:17 p.m. ― 2 years, 10 months ago

As to why they went forward with the RSG knowing that they had "design issues", my best guess is that they had to since they had painted themselves into a corner by already committing themselves as the Operators that were in charge of the RSGP to the CPUC, the NRC and their shareholders, so if they suddenly had to say, "Ah, guys we think we may have some small design problems" they would have set themselves and SCE up for even bigger legal accountability issues that could have ended up with SCE being not allowed to replace the OSG, which were getting near their plugging limitation and therefore were not generating as much Energy and/or profits as SCE wanted. Another issue is the use of high burn-up fuel and its effect on the original steam generators and other related hardware, which was one of the reasons that SCE wanted to install the new RSG since they would have better corrosion resistance since they used a newer alloy for the tubing and would be able to generate more energy and profits for SCE.

Another issue is that even today, most of the decision makers at SCE do not understand FEI and the danger it poses to steam generators, so they figured that they could get away with operating the RSG's in such a way as to minimize any potential problems until they could explain them away as being unrelated to SCE's specific design. Remember that Unit 2 was replaced first and was operated with different parameters than Unit 3 for about a year and I bet these same Senior decision makers at SCE were feeling pretty confident by that time, that both Unit 2 and Unit 3 would work out OK, that is until Unit 3 started leaking, which then lead to the discovery of all the internal SG tube damage which even the NRC said was unprecedented in the history of the US Nuclear Fleet.

This NRC damage assessment was the wake up call for SCE who then shifted into CYA mode, which included coming down hard on any employees that hinted at or even worse provided documentation that these problems were predicted by SCE team members but ignored by those in charge. SCE then circled its wagons as they tried to regroup while they "studied the problem." They brought in outside experts but only gave them "some" of the data, which I believe was pre-planned and the reason that all their results conflicted with each other, creating an even bigger smoke screen for SCE to hide behind.


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Avatar for user 'CaptD'

CaptD | May 19, 2014 at 4:18 p.m. ― 2 years, 10 months ago


Since NRC Region IV accepted the like-for-like story in the first place, SCE now had some insurance that Region IV would not come down too hard on them when they did their AIT Report but that backfired on both SCE and Region IV when their findings were challenged. Once outside experts starting asking pointed questions, SCE restart plan was exposed as being technically unsound and from that time onward SCE started to accept that the only way out for them was to decommission San Onofre as "a cost savings for ratepayers", which to many just added insult to injury, as SCE continues to push for having the ratepayers pay for the debacle that SCE caused, instead of SCE's shareholders who have enjoyed huge yearly profits while this entire process was happening.

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Avatar for user 'CaptD'

CaptD | June 25, 2014 at 12:18 p.m. ― 2 years, 9 months ago

Great Youtube of San Onofre CPUC Meeting about THE SCE ratepayer ripoff going viral in CA and beyond…

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