San Onofre Deal Is Either a $1.4 Billion Win or a $3.3 Billion Loss for Customers

Friday, March 28, 2014

Two years after the San Onofre Nuclear Generating Station (SONGS) leaked radioactive steam and was shut down by the state, the utilities who own it have agreed not to stick ratepayers with the entire cost of supporting the defunct plant and paying for replacement power.

The proposed settlement, which must be approved by the California Public Utilities Commission, only gives the utilities $3.3 billion of the $4.7 billion they sought. “This represents a huge win for consumers,” according to Matthew Freeman, an attorney for one of the settlement negotiators, The Utility Reform Network (TURN).

Ray Lutz at San Diego-based Citizens’ Oversight didn’t quite see it that way. Although he told KPCC that “on its face it's a pretty good deal for ratepayers and about the best deal that we could imagine,” he thinks Edison got bang for its billion bucks. “In a nutshell, Southern California Edison is getting out of future litigation and hearings into how they screwed up potentially, so they're giving up $1.4 billion that they asked for,” he said.

The Orange County Register warns that customers shouldn’t stand by the mailbox waiting for a check, although the $1.4 billion settlement refers repeatedly to refunds. “Instead, utility bills will increase at a lower rate than they would have without the settlement deal,” reporter Pat Brennan wrote.

The settlement was reached between Southern California Edison (SCE) and San Diego Gas & Electric (SDG&E) on one side, and TURN and the state Office of Ratepayer Advocates on the other.

The ratepayer benefit would be spread out over eight years. The settlement “will hold utility shareholders accountable for the fiasco at SONGS and expedite refunds to customers,” Freeman said.

Most of the money, $1.1 billion, would go to Edison ratepayers and SDG&E customers would 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.

Back in September, senior partner Edison was saying that it wanted ratepayers to pick up $2.4 billion of an estimated $4 billion tab for power they won’t be getting from the plant that Edison ran into the ground. SDG&E wanted $808 million.

Edison still has a shot at picking up money from insurance companies and Mitsubishi Heavy Industries, the company that designed and delivered the faulty steam generators in 2009 and 2010 that leaked radiation in January 2012. Subsequent testing found hundreds of eroded steam tubes, damaged by vibration.

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

If Mitsubishi and the insurance companies do pay up, a significant share of that money would be credited to ratepayers.

–Ken Broder


To Learn More:

San Onofre Refund Settlement: $1.4 Billion (by Pat Brennan, Orange County Register)

$1.4B Settlement Reached on San Onofre (by Morgan Lee, U-T San Diego)

Utility Ratepayers on Hook for More than $3 Billion in San Onfore Nuclear Plant Costs (by Ed Joyce, KPCC)

Customers Would Get $1.4 Billion in Refunds in San Onofre Deal (by Marc Lifsher, Los Angeles Times)

$1.4 Billion in Refunds Is a Good Deal for Customers! (The Utility Reform Network)

Edison Wants Ratepayers to Pay Shareholders $2.4 Billion for Failed San Onofre Nuclear Plant (by Ken Broder, AllGov California)

SONGS Investigation: Proposed Settlement (Office of Ratepayer Advocates)

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