The California Public Utilities Commission (CPUC) on Tuesday ordered utility Southern California Edison (SCE) to re-confer with interested parties to potentially adjust the $4.7 billion settlement over the premature closure of the San Onofre Nuclear Generating Station in 2013.
CPUC announced in April that it was reopening the settlement case, which ordered that state ratepayers cover $3.3 billion of the $4.7 billion cost for closing the nuclear power plant, which occurred after “faulty” replacement steam generators failed and proved too expensive to fix. Initial work to close the plant included maintenance, utility investment, and replacement power.
SCE reached the deal two years after closed-door conversations in Warsaw, Poland, between then-CPUC President Michael Peevey and then-SCE executive Stephen Pickett. CPUC subsequently fined SCE nearly $17 million for the company’s failure to report the ex-parte communications, and state Attorney General Kamala Harris has opened a criminal investigation against Peevey.
To address the impacts of the violations, CPUC in Tuesday’s ruling called on the parties to “carefully consider the modifications to the Settlement Agreement proposed by” the state Office of Ratepayer Advocates (ORA), The Utility Reform Network (TURN), and Alliance for Nuclear Responsibility (A4NR). In addition to SCE and other utilities, CPUC lists several separate groups as interested parties, including other consumer advocates, business groups, and environmentalists. The parties have until April 28 to reach a modified settlement agreement; if they don’t strike a deal, they will must file summaries of individual positions to determine the next steps with CPUC.
“The CPUC’s rules require a level playing field by mandating ex parte disclosures for ratesetting proceedings, such as this one,” assigned CPUC Commissioner Catherine J.K. Sandoval said in a statement. “The CPUC must ensure the integrity of its processes and that its decisions serve the public interest.”
TURN staff attorney Matt Freedman said in a statement Wednesday the group is pleased the commission recognized that SCE’s backroom contacts with Peevey tainted the settlement process and biased the outcome in favor of the utility. He noted, however, that the group wanted to address the matter through litigation, not settlement.
“TURN will continue to fight for an outcome that is fairer to customers and properly recognizes the fact that the premature shutdown of SONGS was due entirely to mistakes made by Edison and its contractors,” Freedman said Wednesday.
SCE on Tuesday expressed disappointment with the CPUC ruling, stating it believes the settlement “reflects an appropriate allocation of costs.” Nonetheless, the utility will confer with other parties by Jan. 31, as spelled out in the ruling.
“The settlement … protects customer interests by requiring investors to pay for the replacement steam generators,” SCE said in a press release. “SCE has provided or will provide refunds and rate reductions of almost $1.6 billion under the settlement, and this amount may be increased by recoveries from Mitsubishi Heavy Industries, the supplier of the defective steam generators.”
SCE is suing Mitsubishi for nearly $7.6 billion for liabilities tied to the steam generator issues that led to the plant shutdown. Any potential cost recovery would reportedly be split evenly between customers and SCE.
ORA spokeswoman Cheryl Cox said by email Wednesday the group looks forward to working with stakeholders to achieve a fair outcome for ratepayers.
“ORA is pleased that the CPUC’s Ruling agrees with ORA that Edison ‘through its ex parte contacts had undisclosed insights regarding what commission decision makers believed regarding the instant proceeding’ and that ‘this is a great asset in assessing litigation risk, which in turn impacts bargaining,’” Cox wrote.
