SCE and Leading Consumer Groups Negotiate Fair Financial Solution to San Onofre Nuclear Plant Shutdown

The settlement has broad support among community organizations.

June 05, 2014

This Saturday, June 7, is the one year anniversary of the shutdown of the San Onofre nuclear plant near San Clemente. The shutdown, because of failed steam generators designed and manufactured by Mitsubishi Heavy Industries, created complicated financial questions for regulators, consumer groups and Southern California Edison (SCE).

In a comprehensive agreement, SCE, San Diego Gas & Electric (SDG&E), a minority owner of San Onofre, and leading consumer groups have negotiated a settlement that answers these questions in a way that is fair to all parties. Approval of the settlement now rests in the hands of the California Public Utilities Commission.

The proposed settlement means customers pay nothing for the defective steam generators from the day of the tube leak at the San Onofre nuclear plant. Customers will pay for the replacement power they already received, and SCE’s shareholders will give up well over a billion dollars in future revenue.

While a few have received media attention questioning the terms of the settlement, the settlement is fair and balanced. That’s why it has such broad support. It was negotiated over the last year directly with the principal consumer groups that are regular watchdogs of consumer interests at the California Public Utilities Commission: The Office of Ratepayer Advocates and The Utility Reform Network (TURN), two organizations that are often harsh critics of utilities.

TURN, for example, has a consumer watchdog history that goes back 40 years, during which time it has fought plans put forth by SCE and every major power and communications utility in California.

The San Onofre settlement also has the support of Friends of the Earth, an international environmental organization that led the opposition to the restart of the San Onofre nuclear plant. Other longstanding organizations that have endorsed the settlement include: the California Large Energy Consumers Association, the Utility Consumers' Action Network, which has represented the interests of San Diego County utility ratepayers for over 30 years, the Coalition of California Utility Employees, and a diverse group of community-based social justice organizations.

Taken together, the organizations that have endorsed the settlement are informed and effective advocates before the state utilities commission for the interests of consumers, ratepayers, workers, businesses and social justice. They know the record at San Onofre, they know the law, and they know a fair deal when they see one.

Meanwhile, SCE is vigorously pursuing claims against Mitsubishi Heavy Industries for the defective replacement steam generators it supplied for the San Onofre nuclear plant. The Nuclear Regulatory Commission has already determined that Mitsubishi’s faulty computer codes were the cause of the tube wear that led to the malfunctions. The proposed settlement includes a provision that requires SCE and SDG&E to share benefits with customers should financial recoveries come from Mitsubishi or insurance.

SCE’s workers and executives took diligent and prudent actions to mitigate the safety and financial risks resulting from Mitsubishi’s failed design. Although there was a small leak at only one of the two San Onofre units, SCE kept both units shut down, putting public safety first, despite the cost. Not a single individual was hurt. SCE’s employees worked around-the-clock to make sure the closure of the nuclear plant did not interrupt electric service to customers during the peak summer months.

SCE continues to do its best to provide safe, reliable and affordable electricity to customers. SCE is now working with state and federal officials to plan for the long-term changes needed without the San Onofre nuclear plant.

After SCE had to shut down San Onofre, the utility wanted to move forward. SCE decided to negotiate a settlement of the California Public Utilities Commission proceeding directly with the strongest and most capable of consumer organizations to make sure that any such settlement would be fair and therefore acceptable.

The final decision on the settlement is up to the commission. In the meantime, SCE will continue to seek compensation on behalf of its customers and shareholders.

Topics: SONGS