By Robert Mullin
The California Public Utilities Commission on Tuesday ordered Southern California Edison and San Diego Gas & Electric to meet with groups opposed to the commission’s 2014 settlement that saddled ratepayers with 70% of the costs related to the premature closure of the San Onofre Nuclear Generating Station.
Commissioner Catherine Sandoval reopened the record on the proceeding in light of revelations that former CPUC President Michael Peevey engaged in persistent unreported ex parte communications with SCE during negotiations leading up to the $4.7 billion deal.
“The CPUC’s rules require a level playing field by mandating ex parte disclosures for rate-setting proceedings, such as this one,” Sandoval said in a statement. “The CPUC must ensure the integrity of its processes and that its decisions serve the public interest.”
The CPUC urged the utilities to “carefully consider” changes to the agreement proposed by California’s Office of Ratepayer Advocates (ORA) and The Utility Reform Network (TURN) — both of which withdrew their support for the original deal when Peevey’s activities became public after state investigators seized notes from his home showing that he discussed terms of the settlement with an SCE executive at a Warsaw, Poland, hotel. Peevey had previously served as president of the utility.
SCE expressed disappointment with the Dec. 13 ruling but said it will comply with the directive to meet with the other settling parties by Jan. 31. The utility said it continues to believe that the original settlement represents an “appropriate allocation” of costs.
“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,” the company said in a statement.
Among the modifications sought by TURN are the removal of some or all of the $2.17 billion in plant investment currently included in the rate base and a refund to ratepayers of costs related to the failed replacement steam generators that forced San Onofre’s permanent closure.
TURN has also proposed that SCE eliminate $25 million in utility funding for greenhouse gas research at the University California-Los Angeles, a key outcome of the secret talks with Peevey.
Contending that “information has value, as does unequal access to decision-makers,” ORA has proposed that SCE refund ratepayers $383 million for the “quantifiable loss” of ORA’s litigation position — the difference between the settlement amount and what ORA says ratepayers would have negotiated if the agency had equal access to information. The agency is also recommending the utilities issue an additional $408 million in refunds.
The CPUC has set an April 28, 2017, deadline for the settling parties to reach an agreement to modify the original settlement. If no agreement is reached, individual parties will be asked to file a summary of their positions in order to inform further action by the commission.
San Onofre was shut down in January 2012 after detection of a radiation leak from one of the plant’s generating units. Operators soon discovered that the steam generators in both units on the site suffered from excess tube wear, despite having been replaced in 2009 and 2011 at a cost of $671 million. SCE decided to retire the plant in 2013.
