Ratepayer Advocate Wants Another $648 Million from Edison for San Onofre

Monday, April 20, 2015
San Onofre Nuclear Power Generating Station (photo: Orange County Register)

Critics of the California Public Utilities Commission (PUC) decision to OK a settlement last year that saddled consumers with 70% of the $4.8-billion cost of shutting down the San Onofre nuclear power plant were none too pleased to find out months afterward that then-PUC President Michael Peevey nailed down a settlement framework privately with a Southern California Edison (SCE) executive months before the decision was made.

Although that revelation in February brought sharp rebukes from two parties to the public negotiations—The Utility Reform Network  (TURN) and the Office of the Ratepayer Advocate (CRA)—neither advocated scrapping the decision.

Last Friday, the Advocate’s office, which is part of the PUC, took a different tack and said Edison and its junior partner in the San Onofre plant, San Diego Gas & Electric Co. should pay $648 million to customers because of Edison’s secret dialogue with Peevey and offered to help hunt down any other shenanigans regarding the settlement. ORA Director Joe Como wrote in a release:

“Edison’s actions have undermined the results of ORA’s good faith negotiations to represent the best interests of ratepayers. ORA looks forward to actively participating in any investigation to uncover further wrongdoing.”

Whatever that further action is, it won’t be happening in U.S. District Court. Last week, Judge Cathy Ann Bencivengo finalized her ruling that a lawsuit brought by a private group, Citizens' Oversight, belonged in state court. The group argued that it didn’t receive a fair hearing during the PUC deliberations on San Onofre because it hadn’t known about the secret talks.

“Plaintiffs remain free to argue to the CPUC and California state courts that the process used to arrive at the settlement violated their rights under the United States Constitution,” the judge wrote. The group may appeal.

Although the secret discussion, held in a luxury hotel in Warsaw, Poland, in 2013, was revealed months ago, the details weren’t known until 10 days ago when the California Attorney General’s office released the so-called “Hotel Bristol Notes,” which recorded on hotel stationary the two-page framework for settlement. They were entered into evidence during the Citizens’ Oversight lawsuit but it took a California Public Records Act request by the U-T San Diego to make them public.

The Advocate found the “Notes” and the final accord to be very similar and showed “the degree to which Peevey and [Edison Senior Vice President Stephen] Pickett collaborated to orchestrate a settlement of the SONGS outage investigation.” Still, the Advocate calculated that the final settlement saved ratepayers $780 million over the framework agreement.

But that’s not enough. “Edison was likely able to use its knowledge of Peevey’s position to steer the settlement in the direction it wanted,” the Advocate wrote. Como wants $648 million now, but believes “as more information is developed in the investigation that determines the extent to which Edison worked to mislead the CPUC by artifice or false statements, Edison should be further sanctioned.”

Further sanctions could become an even greater issue if Edison picks 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.

–Ken Broder


To Learn More:      

Judge Makes San Onofre Ruling Final (by Jeff McDonald, U-T San Diego)

Ratepayer Office Wants $648M More in San Onofre Deal (by Jeff McDonald, U-T San Diego)

Southern California Edison Joins PG&E in Expanding PUC Scandal (by Ken Broder, AllGov California)

PUC Wants San Onofre Deal Reworked So Customers Don’t Eat 70% of the Cost (by Ken Broder, AllGov California)

ORA Director Joe Como Response to Conduct by Southern California Edison and Former CPUC President Michael Peevey to Undermine the SONGS Settlement Process (Office of the Ratepayer Advocate)

Leave a comment