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Southern California Edison : Customer refunds proposed in nuke-plant deal

03/27/2014 | 04:42pm US/Eastern
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LOS ANGELES (AP) — Utility customers would see an estimated $1.4 billion in savings, including $600 million in refunds, in a proposed settlement over costs tied to the shuttered San Onofre nuclear power plant in Southern California, officials said Thursday.

If approved by state utility regulators, the agreement could end a long-running dispute over who gets the bill for the defunct seaside plant, which was closed permanently in June after a bitter, costly fight over whether it was safe to restart.

Operator Southern California Edison and minority owner San Diego Gas & Electric Co. have been negotiating with consumer advocates over how to divide a long list of costs from the twin-domed plant, from replacement power purchased after the plant shut down to money invested in reactor equipment.

Under a key piece of the settlement, customers of the two utilities would not have to cover the bulk of the long-term cost for defective steam generators that were at the heart of the plant's problems, a savings of hundreds of millions of dollars.

The Office of Ratepayer Advocates — an arm of the state Public Utilities Commission — said Edison customers would be credited with refunds of about $480 million as part of the deal, and customers of the San Diego utility would receive $121 million.

"The proposed settlement represents a huge win for consumers," said Matthew Freedman, an attorney with the Utility Reform Network, a consumer group involved in the talks. "It will hold utility shareholders accountable for the fiasco ... and expedite refunds to customers."

At issue had been who should take the financial hit for the plant's demise — company shareholders or customers.

While customers will realize significant savings, the utilities will be able to collect ratepayer funds for a limited time to cover money expended on nuclear fuel and their investment in the plant, other than the defective generators, according to the Office of Ratepayer Advocates.

Edison decided to close the plant for good in June, but it hadn't produced electricity since January 2012, after a small radiation leak led to the discovery of extensive damage to tubing that carried radioactive water.

The problems at San Onofre centered on steam generators that were installed during a $670 million overhaul in 2009 and 2010. After the plant was shut down, tests found some tubes in the generators were so badly eroded that they could fail and possibly release radiation, a stunning finding inside the nearly new equipment.

"This proposed settlement means that customers don't pay for the steam generator project after the tube leak at San Onofre, leaving SCE financially responsible for its ownership share in the project. Our customers will pay for replacement power they received," Ron Litzinger, president of SCE, said in a statement.

The California Public Utilities Commission has been overseeing a broad investigation into costs at the plant. The agreement must be approved by the commission.

Under other provisions, the utilities must refund any funds collected from the sale of unused nuclear fuel or other excess materials or supplies at the plant. Customers would also get a share of any legal settlement involving the faulty generators.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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