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Calif. PUC calls for San Onofre parties to bargain over more ratepayer benefits

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Calif. PUC calls for San Onofre parties to bargain over more ratepayer benefits

California utility regulators directed Southern California Edison Co. and San Diego Gas & Electric Co. to seek agreement with ratepayer advocates who want the companies, rather than customers, to bear more of the costs of their premature shutdown of the San Onofre Nuclear Generating Station, or SONGS.

The ruling of two Public Utilities Commission officials basically concludes ratepayers may deserve more than they got in the PUC's 2014 decision accepting the SONGS cost settlement. If an agreement to modify the settlement cannot be reached, the PUC will consider petitions to do so.

On Dec. 13, presiding Commissioner Catherine Sandoval and Administrative Law Judge Darcie Houck ruled the SONGS owners must try to settle with parties who have called for refunds and cost disallowances of hundreds of millions or even billions of dollars more than the settlement provides.

SoCalEd expressed disappointment in a press release in response to the joint ruling of Sandoval and Houck, whom the PUC assigned to review the commission's SONGS costs decision.

"SCE continues to believe the settlement reflects an appropriate allocation of costs but will begin preparing to participate in the process spelled out in the ruling to schedule a meeting and confer with other parties by Jan. 31, [2017,]" the Edison International subsidiary said.

The utility contends the settlement that divided costs of the premature shutdown between the company and its customers "protects customer interests by requiring investors to pay for the replacement steam generators that prompted the closure of SONGS in June 2013 from the point that they failed."

SoCalEd said it has provided or will provide refunds and rate reductions of almost $1.6 billion under the SONGS settlement, and this amount may be increased by recoveries from Mitsubishi Heavy Industries Ltd., the supplier of the defective steam generators.

In approving the settlement with modifications in November 2014, the PUC split the shutdown costs, then estimated at $4.75 billion, by obligating ratepayers to pay $3.3 billion. However, the settlement included a provision that ratepayers would get half of whatever proceeds result from litigation with Mitsubishi and insurance claims.

SoCalEd alleges contract and tort claims and seeks at least $4 billion in damages on behalf of itself and its customers, according to the company's 10-Q filed Nov. 1. Mitsubishi has denied any liability, and binding arbitration was conducted under the auspices of the International Chamber of Commerce. SoCalEd said arbitration hearings concluded on April 29, and a decision may be issued by year-end or later.

The company said the PUC-approved settlement reduced the amount residential customers pay in their monthly bills for past investments to build and maintain San Onofre. SoCalEd permanently shut SONGS in June 2013, after concluding the leak-prone generator tubes were too costly to replace.

Parties representing utility customers have questioned the fairness of the settlement. In December 2015, the PUC decided to fine SoCalEd $16.74 million for failing to disclose ex parte communications utility officials had with former PUC President Michael Peevey and other PUC officials. Parties who were left out of those communications concluded the one-sided contacts improperly influenced the settlement terms.

Sandoval's and Houck's joint ruling now directs SoCalEd as majority owner of SONGS and Sempra Energy subsidiary SDG&E as a minority owner to see if they can reach an accord with customer representatives, who are calling for more generous terms than the 2014 settlement provides.

The PUC's Office of Ratepayer Advocates wants SoCalEd alone to refund an additional $383 million, while the Alliance for Nuclear Responsibility argues up to $1.4 billion is owed ratepayers. The Utility Reform Network proposes disallowance of some or all of the $2.17 billion in costs for the plant and steam generator replacements.

Sandoval and Houck said if the parties cannot reach agreement by April 28, 2017, the parties will file summaries of their individual positions. The PUC will then decide whether to hold evidentiary hearings and receive additional testimony and briefs on any petitions for modification of the 2014 settlement.

"The benchmark today for assessing the reasonableness of any proposed settlement is not the parties' former litigation positions; the benchmark today is the agreement as implemented and quantification of the loss suffered by ratepayers as a result of Edison's unlawful actions," Sandoval and Houck said in their ruling.