SONGS CPUC Hearings Feature Economic, Radioactive Risks

By Published On: February 5, 2005

Although the future of nuclear power in California is arguably a matter for politicians, policy makers, and voters, it is being played out in a tiny, sparsely-attended hearing at the California Public Utilities Commission. The ongoing San Onofre Nuclear Generating Station case will decide whether, in effect, to shut down Southern California Edison?s nuclear plant. It could, on the other hand, require ratepayers to underwrite continued dependence on a technology that creates lethal waste. If Edison loses this case, the state will be in the position of trying to find replacement power for the nuclear plant?s 2,100 MW in supply-strapped Southern California. This week, environmentalists attempted to pin down the risks of a terrorist attack and the resulting radioactive releases from Edison?s San Onofre facility. The regulatory hearings that kicked off this week vet the utility?s controversial proposal to invest about $700 million in new steam generators. Those opposed to extending the life of Edison?s nuke also raised questions about exposure risks from an accident attributed to the lengthening the aging plant?s operating life. Also at this week?s hearings before administrative law judge Jeffrey O?Donnell, consumer groups tried to pin down Edison witnesses on their theories and evidence concerning financial risks that the utility claims it and its shareholders face if the investment doesn?t proceed according to the utility?s plans. Edison?s witnesses contend that if the CPUC does not allow it to invest in major new equipment for the nuclear plant, it could shut down in 2010 because of increasing leaks in the current steam generator tubes. ?Removing SONGS from operation without transmission mitigation would have substantial impacts on the availability of generation in Southern California and on the reliability of the transmission grid,? argues the utility. Edison maintains that the investment provides net benefits in the range of 1.38 to 1.78 times greater than installation costs?from $261 million to $541 million. As hearings stretch to February 11, some of the major issues and positions include:<ul><li>A proposal by Aglet Consumer Alliance that the commission guarantee that $480 million?half of Edison?s forecast benefits?will reach ratepayers. The Utility Reform Network expects to support Aglet?s proposal. Edison said such a plan could lead to the possible write-off of part of the project, ?which would lead to shareholder uncertainty and concern in the investment community. . . . Worse yet, the risks associated with Aglet?s proposal would be layered on top of all the other risks that Edison currently faces in operating its business.?</li> <li>The Office of Ratepayer Advocates? contention that the investment is not cost-effective. ORA proposes a one-third disallowance?up to $185 million?on the basis that a newly refurbished plant wouldn?t operate until 2022. Edison responded that the office?s methodology includes ?fatal errors.? Calling it ?cherry picking,? Edison said the proposal would ?unfairly penalize shareholders.?</li> <li>Edison?s call for an up-front payback for its investment. Traditionally, utilities take the risk that their investments will lead to a power plant that will operate. Only once it is operational do consumers have to start paying the utility back for its investment. In this case, the utility wants funds for ?construction work? prior to the plant going on line. ?This is the first time that such a request has been made by an energy utility in 23 years,? noted Bill Marcus, principal economist for JBS Energy. Back then, Pacific Gas & Electric also asked for cash flow during Diablo Canyon?s construction, but the commission rejected it.</li> <li>Edison?s contention that by keeping the plant in service, new transmission lines (at a cost of up to $800 million) can be avoided. Opponents say that the transmission lines will have to be built in any event.</li></ul>The hearings come right on the heels of a similar proposal to invest $706 million in steam generators at PG&E?s Diablo Canyon nuclear plant. A proposed decision by the same judge late last month would basically grant PG&E its investment (<i>Circuit</i>, Jan. 28, 2005). Although similar in many ways, there are some significant differences between the cases. PG&E owns the land surrounding Diablo; Edison has a more tenuous hold on the SONGS land, with a lease from the federal government?s Camp Pendleton military base. Diablo was designed to allow steam generator replacement, with access to the reactor from what is basically a super-heavy-duty garage door. San Onofre would have to have a hole cut into it in order to install new equipment. ?Few utilities have ever cut containment holes to remove steam generators, and none of those containment structures has reinforcing tendons of the type installed at SONGS,? according to James Weil, representing Aglet. Another difference between the cases is a different lineup of intervenors?whose respective strengths and weaknesses can guide cases in different directions. Aglet, TURN, and ORA are constant in both. Mothers for Peace, along with the Sierra Club, are participating in the Diablo case but not in the Edison hearing. Another environmental organization, Earth Corps, is involved in the SONGS case. The Western Power Trading Forum was involved in the Diablo case, arguing that third-party generators could provide cheaper power than extending the life of a nuclear plant, but is absent in the current hearing because of a lack of funds. In the Diablo case, the investment under consideration is by a single owner. San Onofre has several owners. San Diego Gas & Electric has the largest minority stake, with 20 percent. SDG&E, along with Anaheim (3.16 percent interest), has refused to seek approval for the new investment. The lack of participation skews potential investment benefits. If the steam generator replacement goes forward and ?SDG&E does not participate, Edison ratepayers are unfairly burdened with added SONGS 2 and 3 ownership, while SDG&E ratepayers enjoy significant benefits without paying for them,? according to Edison. Aglet argues that without SDG&E participation, any claimed benefits to ratepayers in general are reduced. In related news, on February 3, SONGS unit 2 tripped off line. Edison?s report to the Nuclear Regulatory Commission classified the trip as ?non-emergency.? The utility is investigating. The report added, ?All control rods fully inserted. Decay heat is being rejected to the main condenser. The electric grid is stable.?

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