San Onofre Restart in Limbo, Regulators Delay Investigation

By Published On: August 3, 2012

Despite continued ratepayer expenditures on electricity and grid reliability tied to the shutdown of San Onofre Nuclear Generating Station, state regulators postponed opening a formal investigation into the facility’s ongoing costs Aug. 2. A California Public Utilities Commission inquiry would focus on gathering data, stakeholder comments, forecasting methodologies, and other information on rates and arrangements for the 2,100 MW plant. Regulators decided to wait until November instead of opening the proceeding this week. Commissioner Mike Florio introduced the investigation plan last June. This is the second time an investigation has been delayed. But, Florio is set to “withdraw, expand, and rewrite,” the order launching an inquiry, he said. So far, more than $1 billion of ratepayer funds could be scrutinized, according to the utility operating the nuclear plant. Those “rates are subject to refund,” commented commission president Mike Peevey after hearing public comments about the proposal. Under such an investigation, regulators could take the plant out of ratebase so customers no longer reimburse utilities for plant investments and operations. It’s known as the “used and useful” doctrine. The theory is that if customers are not receiving benefits promised from investments--like San Onofre’s electric output and system reliability--they should no longer pay for it. The facility has been shut for six months. By state law, after nine months plant owners are required to notify the commission that the plant is not operational. That deadline is Nov. 1. After that, regulators have another 45 days to respond. “The fact that we haven’t opened a formal investigation doesn’t mean we’re not investigating,” Florio said. He added the commission is keeping track of cost implications during the plant’s outage. He said that the difference between June--when he originally proposed the investigation--and now is “the complete uncertainty with whatever is going to happen with the plant.” While commissioners did not vote on an investigation initiation date, Peevey said that a revamped investigation is set to open Nov. 1. If, and when, an investigation is opened, the commission may hold hearings, gather evidence, and question stakeholders about costs, reliability and related issues about the plant’s viability. In the interim, Peevey promised to gather a task force on the nuclear plant. It would be composed of the California Energy Commission, the California Air Resources Board, the California Independent System Operator, and the State Water Resources Control Board to study what the state’s generation and grid situation may look like in the future without the nuclear plant. The nuclear plant is owned 78 percent by Edison and 20 percent by San Diego Gas & Electric, with Riverside holding a 2 percent interest. Edison operates the facility. The current amount in Edison’s ratebase for the plant is $1.2 billion, according to Jim Scilacci, Edison chief financial officer. During the outage, customers also have been paying for replacement power from the shuttered plant. As of June 30, substitute energy alone has run Edison $117 million, Scilacci said Aug. 1. Edison’s share of inspection and repair costs for the facility since shutdown are $48 million, Scillacci added. Unit 3 faced an emergency shutdown January 31 when radioactivity was released due to excessive wear in its nearly new steam generators. Unit 2 was already out for maintenance at the time and never restarted. The investment in the nearly new generators for both units was $670 million. If, and when, San Onofre might restart is unknown, Ted Craver, Edison chief executive officer, noted Wednesday. The utility must first petition the Nuclear Regulatory Commission for restart. “Unit 2 could start months in advance of unit 3,” he added, probably at partial power and for a short term so the utility and regulators can investigate what happens in a restart. “It’s not clear whether unit 3 will be able to restart without extensive repairs,” he said, adding that Edison is “focused mostly on getting unit 2 restored.”

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