San Onofre Inquiry Spreads to Securities Commission

By Published On: February 22, 2013

As Southern California Edison’s quarterly earnings report is set for this coming week, Rep. Ed Markey (D-MA) alleged the utility “may have violated federal securities laws by failing to publicly report safety information to investors” about the San Onofre Nuclear Generating Station. By sending a letter to Securities & Exchange Commission chair Elisse Walter Feb. 21, Markey involved another federal agency in San Onofre’s shutdown and potential restart. The Nuclear Regulatory Commission has been involved since San Onofre was shut down more than a year ago because of steam generator unit wear and a radioactive leak. Markey referred to information that he and Sen. Barbara Boxer (D-CA) alleged Feb. 6. They said that San Onofre’s primary owner, Edison, and steam generator manufacturer Mitsubishi Heavy Industries “were aware of serious problems” with the facility’s steam generators before installation. The information the lawmakers cited was a 2012 document, Root Cause Analysis Report for Tube Wear Identified in the Unit 2 and Unit 3 Steam Generators. That report has not been made public. Edison did not seek a full NRC hearing when it replaced the steam generators. Without applying for a “design change” for the facility, nuclear regulators passed it though staff rather than the full commission. “To my knowledge, this is new information to investors; I have not found in Edison’s SEC filings any allusions to this strategy of foregoing additional safety to shorten the licensing process,” Markey wrote. To the Securities Commission, he questioned whether the utility violated the Securities Act of 1933, and asked if any penalties would be forthcoming if so. While investor-owned utility Edison owns a majority of the plant, San Diego Gas & Electric also owns 20 percent. Markey did not mention the San Diego utility in his letter. “It is simply not accurate to suggest, as Rep. Ed Markey has, that when the steam generators at San Onofre were installed, Southern California Edison was aware of serious problems with the design of San Onofre nuclear power plant’s replacement steam generators,” Jennifer Manfrè, Edison spokesperson, stated. Edison is set to report its first quarter earnings to the financial community Feb. 26. In the last year, its financial reports have been showing strain from the closure. California’s Division of Ratepayer Advocates estimates that ratepayers have contributed over $600 million for the shutdown plant, while its revenue is counted in financial disclosure documents. Concurrently, Edison is requesting approval for a five-month trial to run unit 2 at 70 percent power, after which the utility, regulators, and the steam generator manufacturer are set to evaluate the plant’s operation. If approved, it would lend a reason for state regulators to retain part of the plant in ratepayers’ bills. A tube rupture in January 2012 in unit 3 caused a radioactive leak and subsequent facility shutdown. Edison has revealed no plans for a unit 3 restart. Steam generator tubes at both units have been plugged where they’ve shown excessive wear. As well as a pending decision on the proposed restart, a nuclear commission board is considering a legal motion by Friends of the Earth for a retroactive evidentiary hearing on the $670 million steam generator installation. That motion awaits a decision. Federal regulators are responsible for health and safety issues, including emergency evacuations and earthquake preparedness. The California Public Utilities Commission is tasked with economic decisions on nuclear plants. The commission is currently investigating whether ratepayers should continue paying for the non-working plant, as well as looking into operator Edison’s management. The state commission hosted a meeting in Costa Mesa Feb. 21 “about whether the CPUC should remove the value of any portion of the SONGS facility from rate base, disallow rate recovery of any expenses related to the operation of SONGS, and/or make any findings of fact, conclusions of law, or orders direction [to Edison] to take specific actions as a result of the non-operation of SONGS.” The meeting--not webcast, nor accessible via conference call--did not allow for reporting results at press time. However, the state commission-hosted Costa Mesa meeting reportedly only drew a few dozen attendees, compared to the thousand that have recently shown up for more publicized and webcast Nuclear Regulatory Commission meetings on the plant’s proposed restart.

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