Customers Stuck with Most of the $4.8-Billion Bill for San Onofre

Friday, November 21, 2014
San Onofre Nuclear Power Generating Station (photo: Orange County Register)

The U.S. Nuclear Regulatory Commission (NRC) blames Southern California Edison (SCE) for approving the design of new steam generators that ended up destroying the usefulness of the San Onofre Nuclear Generating Station (SONGS). Mitsubishi Heavy Industries was blamed for the faulty design.

On Thursday, the California Public Utilities Commission (PUC) weighed these factors before deciding customers, not stockholders, should cover most of the debacle’s cost.

By a 5-0 vote, the PUC assigned $3.3 billion of the $4.75 billion costs to ratepayers. Customers will be paying for the failed nuclear plant until 2022. It has already been factored into their bills since 2012.

Edison customers will get most of the ratepayer money, $1.1 billion, while those serviced by junior partner San Diego Gas & Electric (SDG&E) will get $290 million. The nuclear plant, located midway between San Diego and Los Angeles, still needs to be decommissioned and shed its unused nuclear fuel. The fight over those costs is just beginning.

The Orange County Register warned that customers shouldn’t stand by the mailbox waiting for a check, although the settlement repeatedly refers to refunds. “Instead, utility bills will increase at a lower rate than they would have without the settlement deal,” reporter Pat Brennan wrote.

The two reactors at San Onofre were initially closed in January 2012 when a leak of radioactive steam was discovered. Subsequent testing found hundreds of eroded steam tubes, damaged by vibration caused by new steam generators. Edison said the problems were unknowable and unpredictable when generators were upgraded in 2010 and 2011.

Subsequent investigations showed that to be incorrect. Edison blamed Mitsubishi, which blamed computer problems and bad math for the misdesigned equipment. There is evidence that both knew the design was problematic.

Edison pushed to restart the reactor units at 70% power after making some repairs, but gave up when the NRC said the utility would have to submit to a full government license review of the steam generator upgrade that it had avoided by claiming it was a relatively minor tweak. Edison gave up the effort in June 2013.

The settlement (pdf) presented to the PUC was negotiated by the Coalition of California Utility Employees, Friends of the Earth, Office of Ratepayer Advocates, SDG&E, Edison and The Utility Reform Network (TURN).

San Diego activists, anticipating the PUC decision, filed a $3-billion lawsuit (pdf) in U.S. District Court against Edison and regulators, charging they illegally collected money from 17.4 million customers to pay for bad Mitsubishi equipment. The suit, filed by former San Diego City Attorney Michael Aguirre’s law firm on behalf of Citizens’ Oversight and others, alleges that charging customers for the inoperative nuclear plant was an unconstitutional taking in violation of the Fifth Amendment.

The lawsuit also echoes a complaint by critics that the settlement process prevented a proper review of culpability in the San Onofre failure: “Mr. Peevey as CPUC President and Mr. Florio as the Commissioner assigned to the new generator proceedings have worked to thwart any investigation or determination of whether SCE was responsible for the failure and outage.”

Edison still has a shot at picking up money from insurance companies and Mitsubishi Heavy Industries. Customers are supposed to get some of that money.

–Ken Broder


To Learn More:

State Approves $4.8B Nuke-Plant Settlement (by Morgan Lee, U-T San Diego)

O.C. Taxpayers, Here's Your San Onofre Bill: $3.3 Billion (by Aaron Orlowski, Orange County Register)

San Onofre Settlement Puts Ratepayers on Hook for $3.3B (by Erik Anderson, KPBS)

Lawsuit Alleges Phantom Power Billings (by Jeff McDonald, U-T San Diego)

Ratepayers File New Suit Over Deal to Close San Onofre Nuclear Plant (by Marc Lifsher, Los Angeles Times)

San Onofre Deal Is Either a $1.4 Billion Win or a $3.3 Billion Loss for Customers (by Ken Broder, AllGov California)

Citizens Oversight Inc. et al v. California Public Utilities Commission (U.S. District Court for the Southern District of California) (pdf)

Leave a comment