Thomas Gardiner
Southern California Edison, primary owner and operator of the San Onofre Nuclear Generating Station (SONGS), this week announced $30 million net income growth in the third quarter of 2017 compared to the same period of last year.
The boost was announced in the latest earnings filing from SCE’s parent company, Edison International. The Southern California utility earned a net income of $465 million during the quarter, making up the bulk of Edison International’s $470 million net. SCE earned $1.43 per share and Edison earned $1.44 per share; that was respectively up from $1.34 and $1.29 on a year-over-year basis.
Among its regulatory assets, SCE counted $730 million it expects to recover as part of the contested settlement for SONGS’ early permanent closure in 2013. The California Public Utilities Commission in 2014 approved a settlement that would require ratepayers to pay $3.3 billion of the $4.7 billion in closure costs, but reopened it last year after learning of pre-settlement ex-parte talks between CPUC’s former president and an SCE executive.
There is no set date for CPUC to decide on a new settlement, but the schedule issued in October involves a series of meetings, hearings, document submissions, and other activities through the end of March by SCE and the other parties to the matter.
The $730 million regulatory asset from SONGS is down from $857 million listed on the company’s consolidated balance sheets as of the end of 2016. In its latest 10-Q filing with the U.S. Securities and Exchange Commission, the utility said “SCE continues to conclude that the asset is probable, though not certain, of recovery based on SCE’s knowledge of facts and judgment in applying the relevant regulatory principles to the issue.”
The reduction in the regulatory asset linked to SONGS “is due to the amortization of the asset per the San Onofre closure (OII) settlement approved the CPUC in 2014,” SCE spokeswoman Maureen Brown said. “This number will continue to drop per amortization over a 10-year period that began in 2012.”
Edison International reported a year-to-date profit of $1.1 billion, an increase of more than $20 million and $0.40 per share compared to 2016. SCE operations brought in the majority of that, measuring over $1 billion. SCE increased its earnings per share by $0.23 so far in 2017. The company attributed the uptick in earnings to rate escalations allowed in a 2015 decision by the California Public Utilities Commission.
Speaking Thursday at the SONGS Community Engagement Panel quarterly meeting, site Chief Nuclear Officer Tom Palmisano said insurance costs could drop as early as 2018. Palmisano said SONGS is currently part of a shared insurance pool comprised of active nuclear plants that boasts $12 billion in coverage. He said once the reactors were shut down, the risk levels changed and SONGS will reconsider insurance policies as “good stewards” of its nuclear decommissioning trust fund.
Tom Caughlan, a panel member and Marine Corps regional liaison, discussed the future of the Navy-owned San Onofre property as the plant is decommissioned and the land is turned back over for use by the Marine Corps. Caughlan said a number of buildings located on the non-nuclear Mesa lease, adjacent and to the west of the plant, have been saved for future military use. The Marines hope to reclaim some property no later than 2023, while other segments must wait for SONGS’ spent fuel to be removed from the site, KPBS quoted Caughlan as saying.
Decommissioning processes are on track with the original dates set forth when the plant was shut down. Transfer of remaining spent fuel from the cooling power to dry storage is expected to begin in December and to be complete by mid-2019.
In 2015, the California Coastal Commission approved SCE’s application to expand the independent spent fuel storage installation (ISFSI) at SONGS to accommodate the additional waste. Area watchdogs sued to block the expansion, citing public health and safety concerns over spent fuel storage on a fault line near both the Pacific Ocean and a major interstate. The case was settled in August, with SCE allowed to move the waste to its ISFSI while it takes steps to find an off-site location for the used fuel.
In the settlement, SCE agreed to formally request the owners of the Palo Verde nuclear plant in Arizona to take the waste. Edison has a 15 percent stake in the company, but primary owner Arizona Public Service said the plant would not accept the SONGS waste, citing NRC licensing issues.
Physical decommissioning of SONGS facilities is expected to begin by the end of 2018 and will take about 10 years to complete. It is projected to cost $4.4 billion, which would cover disposition of spent fuel, radiological cleanup, and site restoration, according to AECOM, which is teaming with EnergySolutions as general contractor for SONGS’ decommissioning.
