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Cost Benefit Analysis Underway At San Onofre

Murray Jennex, August 2012, Associate Professor SDSU, Engineer specializing in information systems security management.
Katie Schoolov
Murray Jennex, August 2012, Associate Professor SDSU, Engineer specializing in information systems security management.
Is it Cost Effective to Restart San Onofre?

The future of Units 2 and 3 at San Onofre is in limbo as the operator, Southern California Edison, and regulators investigate what to do. The plant has been off line since a small radiation leak in January flagged problems in the newly installed steam generators.

Cost Benefit Analysis Underway At San Onofre
Debate about what to do with San Onofre has been focused on safety issues. But looking ahead, state regulators are focusing on a cost benefit analysis.

Murray Jennex was an engineer with Edison and worked at San Onofre in the 1980s and ‘90s. He said it’s not the first time reactor units there have had problems.

“Unit 1 went through this process in the late 90s,” he said. “It was built here as an experimental unit in the ‘60s, it was operated through the ‘80s. It shut down in ‘92 for retrofit, and it was down for a while in mothballs. Then we brought it back, and while bringing it back, the state actually made a lot of offers on tax incentives to shut it down permanently.”

Those tax incentives helped change the company’s cost benefit analysis of whether to close the reactor for good.

This year when the Federal Nuclear Regulatory Commission held hearings on the problems at Units 2 and 3. Much of the current public debate has been about whether it would be safe to bring them back on line. But Rochelle Becker of the Alliance for Nuclear Responsibility said state regulators focus on the cost benefit for rate payers.

“One of the biggest issues before the Public Utilities Commission,” she said, “is to decide whether rate payers should continue to invest in aging nuclear reactors.”

Becker compares the decision to deciding whether it is cost effective to keep running an old car. Repairing the steam generators could run into the hundreds of millions of dollars. Southern California Edison operates San Onofre, but San Diego Gas and Electric ratepayers have a 20 percent stake in it. And, Becker said other factors are changing the cost benefits.

“I would call it the $64 million question,” she said, “and that is exactly what Edison and SDG&E are paying for the new seismic study: $64 million. There’s also the question of waste: What it will cost to store waste safely on our coast for who knows how long? There are numerous cost equations that go along with safety and it’s time for the state to start putting all those cards on the table.”

One question is whether the operator would be prepared to decommission the plant. Truman Burns of the CPUC’S Division of Ratepayer Advocates said ratepayers have been paying into a decommissioning fund since the 1980s. But he said the fund is only examined publicly every three years and he cannot say exactly how much is in it now.

“It would be nice to say the current balance is 'x'" he said, “ but they don’t do that.“

Nuclear Briefings
Senate hearing on nuclear power plant issues at CPUC, April 2011

The most recent report in 2011 estimated it would take about $3.7 billion to decommission all three units at San Onofre. Edison and SDG & E combined had collected about $3.5 billion, though some of that may be needed to complete the decommissioning of Unit 1. Burns said the core is still on site. There are also questions around how market forces have affected the value of the fund. Fund managers are petitioning currently to change the way they invest the money.

Burns said the decommissioning fund does not cover one significant aspect of decommissioning a plant -- dealing with spent nuclear fuel.

“That is a completely separate problem, “ he said. “The utilities pay a tenth of a cent per kilowatt hour fee to the Department of Energy which is supposed to take on the spent nuclear fuel. They have no place to put it right now because the Yucca Mountain project is canceled.”

Rochelle Becker said whatever happens at San Onofre, San Diego ratepayers are paying the price now for a mistake that SDG&E tried to avoid. She said back in 2005, the San Diego utility opposed replacing the steam generators.

“They drew me a chart on the wall,” she said, “showing me how leaving the tubing would allow the plant to operate until the end of its current life. They didn’t think this investment was necessary. The PUC and SCE leaned on them, and now their rate payers are paying 20 percent of a non operating plant. “

But Murray Jennex said he believes Edison will argue the cost benefit analysis favors bringing the nuclear plant back on line since, even if the units operated at lower power, each unit can generate around 1,000 megawatts.

“At that load,” he said, “they generate a lot of money, a lot of income, so it’s worth putting money into them. They have another 25 or 30 years of life in the units.”

California’s Public Utilities Commission will hold hearings this fall into whether rate payers should go on paying for the plant, even when it isn’t generating any power.