New Accounting for San Onofre Costs Proposed

By Published On: September 26, 2013

A proposed decision by the California Public Utilities Commission Sept. 23 would put ratepayer money gathered from San Onofre Nuclear Generating Station owners Southern California Edison and San Diego Gas & Electric into a new tracking account. The account would hold at least most of those funds. The proposed change was touted by the commission as denying reimbursement to the plant's owners. While it may do that in the short term, the change in accounting does not make it permanent. In essence, it only delays a decision on how to handle utilities' plans to reimburse themselves, if allowed, from ratepayers. "Deferral of the net [San Onofre costs] does not pre-judge recovery or disallowance, but holds the costs in stasis until a final determination is made," wrote administrative law judge Sean Wilson. "Replacement costs are in the new account," said Truman Burns, Division of Ratepayer Advocates project manager. "The other costs get punted to" the ongoing hearings investigating whether or not to continue ratepayer funding for San Onofre. Hearings at the commission continue over whether to keep requiring customers to pay for the plant that was shut down in January 2012 and permanently closed earlier this year in June. They are set to resume Oct. 7-11 with a public meeting in San Diego Oct. 1. Edison had a proposal to increase rates by $200 million/year for replacement power, but with this proposed decision the utility would not be able to do so, Edison noted in a Sept. 25 filing with the Securities & Exchange Commission. The filing echoed the proposed decision, stating, "[It] makes no determination regarding the accuracy of the methodology used to determine the net San Onofre costs or the reasonableness of the costs. Those determinations will be made in the San Onofre [commission docket]. Absent approval of the proposed decision, [Edison] would continue to undercollect for fuel and power procurement-related costs, which we expect to approximate $970 million by December 31, 2013, and may finance unrecovered power procurement-related costs with commercial paper or otherwise." Traditionally, utilities put the amount of funds they forecast to be required from ratepayers in an energy resource recovery account. Edison customers' costs for San Onofre in 2013 were pegged by the utility at $3.8 billion and for SDG&E customers at $933 million. That account acts as a "placeholder," according to the commission. In order to track separately with the open-ended hearings, the proposed decision sets up the San Onofre Nuclear Generating Station memorandum account for ongoing outlays and replacement power costs.

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