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Calif. regulators approve new settlement for San Onofre nuclear plant costs

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Essential Energy Insights - January 2021


Calif. regulators approve new settlement for San Onofre nuclear plant costs

California utility regulators approved an agreement between two utilities and consumer parties to refund about $750 million to ratepayers concerning costs of closing the San Onofre Nuclear Generating Station.

Plant owners Southern California Edison Co., or SoCalEd, and San Diego Gas & Electric Co., or SDG&E, agreed to the new deal to resolve a dispute over a 2014 settlement that required ratepayers to pay about $3.3 billion in costs of the early 2012 shutdown of the plant due to premature wear of steam generator tubes and a tube leak. SoCalEd, the majority owner and operator of the plant, known as SONGS, decided to give up attempts to salvage the facility and decided to permanently close it in June 2013. SDG&E has a 20% ownership share. Mitsubishi Heavy Industries had installed the generators in 2010 and 2011.

The California Public Utilities Commission on July 26 adopted a recommended decision a PUC administrative law judge issued on June 22 to accept the settlement the utilities made with ratepayer advocates, consumer and environmental groups and a utility employees union in January.

Consumer groups demanded the original 2014 settlement splitting SONGS costs between utility shareholders and customers be reopened following disclosures of a secret meeting and communications between former PUC President Michael Peevey and a former SoCalEd vice president and other undisclosed exchanges with PUC and utility officials. Ratepayer groups argued there was evidence the earlier settlement was skewed in the utilities' favor because nonutility parties did not have all the facts that were imparted in those communications. Subsequently, the PUC agreed to reopen the case and directed the utilities and other parties to enter into talks to resolve disputed issues.

SoCalEd has estimated that implementation of the revised settlement will require the company to record a total pretax charge of $716 million and a total after tax charge of $448 million.

The just-approved settlement should resolve all outstanding rate issues concerning the premature SONGS closure, the PUC said.

SoCalEd and SDG&E are subsidiaries respectively of Edison International and Sempra Energy.