By John Stang
A major chunk of Edison International’s fourth-quarter 2017 net loss of $545 million can be linked to the settlement over costs for premature closure of the San Onofre Nuclear Generating Station (SONGS), according to the utility’s latest earnings report Thursday.
Edison International lost $1.67 per share in the three-month period ended Dec. 31, down from net income of $1.01 ($329 million) in the same quarter of 2016. Net income at Southern California Edison, the subsidiary utility that is SONGS’ majority owner, dropped from a $328 million gain to a $109 million loss on a year-over year basis.
“SCE and EIX results in the fourth quarter were impacted by two significant non-core items – the revised SONGS settlement and tax reform,” Edison International Chief Financial Officer Maria Rigatti said in prepared remarks for the company’s quarterly earnings call. “SCE had $1.48 per share of non-core charges in the fourth quarter. This relates to a $448 million after-tax charge, or $1.38 per share, associated with the revised SONGS settlement and a $33 million charge, or $0.10 per share, related to tax reform.”
On Jan. 30, SCE and SONGS co-owner San Diego Gas & Electric agreed to trim $775 million from the $3.3 billion charge to ratepayers for the plant’s shutdown. The owners permanently closed the facility in 2013 due to problems with faulty steam generators installed in its two remaining operational reactors.
The California Public Utilities Commission had in 2014 signed off on the ratepayer charge, part of a broader $4.7 billion settlement, but reopened the case in 2016 after it was found that senior SCE and CPUC executives had conducted ex-parte talks on the matter prior to the decision.
The new settlement translates to $68 per SCE residential customer over the next four years. “We determined that outcome was in the best interests of our customers and shareholders,” said Edison International President and CEO Pedro Pizarro on Thursday.
The California Public Utilities Commission must still approve the settlement reached between SONGS’ owners and a number of consumer organizations. The commission is taking public comments on the proposal through March 1, and is likely to hold at least one public hearing on the matter.
“If approved by the CPUC, this settlement will eliminate further uncertainty and bring closure to what otherwise could have turned into very lengthy litigation after factoring in likely appeals in the absence of settlement,” Pizarro said during the conference call. “The revised settlement will resolve all issues under consideration in the OII and will also result in the dismissal of a federal lawsuit currently pending in the 9th Circuit Court of Appeals challenging the CPUC’s authority to permit rate recovery of San Onofre costs.”
Edison’s International core businesses’ portion accounted for $0.97 per share of earnings in 2016 and $1.10 per share in 2017. in total dollars, core earnings went from $316 million in the fourth quarter of 2016 to $357 million in the fourth quarter of 2017.
But the non-core portion — including the San Onofre operation — went from $0.04 cents in the black in 2016 to $2.77 in the red in 2017.
For the full year, Edison’s net income was more than halved from $1.3 billion in 2016 to $565 million last year. Core earnings, though, were up from $1.3 billion to $1.5 billion.
Edison said it would issue its 2018 earnings guidance upon conclusion of the SCE 2018 General Rate Case.
Meanwhile, the San Diego Union-Tribune noted earlier this week that an unanswered question remains on why San Onofre’s replacement steam generators failed in 2012 despite earlier warnings that their design was flawed.
The newspaper also noted the California Attorney General’s Office is still investigating whether corruption within CPUC occurred due to secret negotiations among the parties in Poland in 2014 that led SCE and San Diego Gas & Electric to charge ratepayers $3.3 billion of the $4.7 billion in San Onofre closure costs.
