San Onofre Nuclear Plant Is Dead, but Zombie Costs Will Plague the Public

Monday, June 10, 2013
San Onofre Nuclear Power Generating Station

The decision last week by Southern California Edison not to reopen the San Onofre Nuclear Generating Station left a lot of questions unanswered about the facility and its demise. Detailed, though not definitive, explanations and insights abound about the efficacy of nuclear power, the performance of regulatory agencies, the effects of losing San Onofre power and the cause of the plant operator’s questionable engineering choices.

As for the financial side of things, the Los Angeles Times had this to say in a Q&A summing up issues surrounding the San Onofre closure:

How much will this cost? “It remains unclear.”

Who will pay for these costs? “It has not been determined.”

What is known is that customers and taxpayers could be on the hook for hundreds of millions of dollars if Edison manages to avoid picking up the tab. Times business columnist Michael Hiltzik thinks they should grab the check before leaving the table.

“Who's responsible? Edison, 100%. Accept no argument that it did the best it could in overseeing a $700-million generator replacement project, but accidents happen. This wasn't an accident: It was the product of what Edison claims was its rigorous oversight of contractors.”

Don’t charge taxpayers for dismantling the plant and disposing of the nuclear waste that sits onsite at the plant, located between San Diego and Los Angeles. And don’t charge customers, Hiltzik argued. In fact, he recommended an immediate 5% rate cut, since San Onofre no longer delivers power to Edison customers.

Hiltzik is properly skeptical that California’s Public Utilities Commission (PUC) won’t see it that way. Last week, four attorneys who work for the commission were reassigned when they refused to sign off on a proposed settlement of the San Bruno pipeline explosion that killed eight people and leveled a neighborhood in 2010.

The lawyers felt the commission was about to let Pacific Gas & Electric totally off the hook on a $2.25 billion penalty by giving it credit for funds used to rebuild PG&E infrastructure—repair work it should have been doing all along—and giving it access to state and federal tax breaks.

Customers are paying about $600 million a year to Edison for San Onofre power that isn’t being produced. Edison Chief Executive Officer Ted Craver told reporters last week that Edison has a $2.1 billion investment in the plant and is still $300 million shy of funding its $3 billion decommissioning expenses. Customers have been paying around $8 million a year into that fund.

According to Bloomberg, Sempra Energy, which has a 20% stake in San Onofre, indicated in a filing that it expects regulators to let it recover its $519 million investment from ratepayers.

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.  

With controversy swirling about, Edison asked the U.S. Nuclear Regulatory Commission in October for permission to restart one of the units at 70% power. But the utility found out last month that it would have to go through a lengthy regulatory process—the one it probably should have gone through when it first replaced the generators—in order to proceed.  

Edison declined. And instead has embarked upon the lengthy process of extricating itself from absorbing the costs of its ill-fated San Onofre enterprise.

–Ken Broder


To Learn More:

Edison Faces Regulatory Battle over San Onofre Shutdown Cost (by Mark Chediak and Jim Polson, Bloomberg)

California Commission’s Legal Team Probing Deadly San Bruno Pipeline Blast Abruptly Resigns (by Garance Burke, Associated Press)

Who Should Pay for San Onofre Fiasco? The Answer Is Obvious (by Michael Hiltzik, Los Angeles Times)

Redacted San Onofre Report Indicates Early Desire to Avoid Full NRC Review (by Ken Broder, AllGov California)

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