San Onofre Settlement Puts Ratepayers On Hook For $3.3B

Thursday, November 20, 2014
By Erik Anderson

California regulators unanimously approved a settlement agreement hammered out between several consumer groups, the Office of Ratepayer Advocates, Southern California Edison and San Diego Gas and Electric.

Under the agreement customers will pay about $3.3 billion of the cost of shutting down the San Onofre Nuclear Generating Station. The plant's owners will pay about $1.4 billion. Edison is the plant's majority owner.

All five California Public Utilities Commission members approved the deal.

SDG&E's senior vice president of finance, regulatory and legislative affairs Lee Schavrien praised the commission's unanimous decision.

“We are pleased the Commission has approved the SONGS settlement in a timely manner, to allow SDG&E and Southern California Edison (SCE) customers to see the benefits of the agreement as soon as Jan. 1, 2015," he said in a statement. "We believe the settlement achieves a fair balance for all parties involved, and reflects input from customers and consumer advocate groups, as well as the modifications proposed by the CPUC."

The original proposed settlement was adjusted this past summer to move the cost of the replacement electricity from ratepayers to the utility. Customers paid for electricity that was not being generated after a steam leak shut down the facility. The leak occurred in equipment installed in the plant in fall 2010. It happened in one of thousands of tubes which carry radioactive water from the Unit 3 reactor.

The settlement "is reasonable in light of the whole record, consistent with law and in the public interest," Commissioner Mike Florio said in a statement.

But not everyone was pleased with the ruling. Citizens' Oversight lobbied regulators to reject the deal. Spokesman Ray Lutz said the utility made bad decisions that caused the plant to close prematurely and they should pay for those decisions.

Ratepayers are in line for some immediate rate relief. Utility customers paid for the electricity that was bought to replace power not produced by the nuclear reactors when they were shut down.

Rates are expected to go back up as the rest of the cost of the shutdown is applied to customers' bills.

Regulators also gave ratepayers a larger share of money recovered from litigation against Mitsubishi, the manufacturer of the faulty steam generators. Those generators leaked and eventually forced the plant's majority owner, Southern California Edison, to close the plant permanently.

Customers would share equally in any legal settlements with Mitsubishi. The original agreement gave the majority of any funds gained through litigation to the owners of the plant.