San Onofre Steam Gen Investment Approved, Appeal Planned

Declaring that a new analysis found a $680 million investment in steam generators "economic" for the San Onofre Nuclear Generating Station, the California Public Utilities Commission approved the investment. "We are pleased the commission reached a decision on this important matter but need to review it before commenting," stated Edison spokesperson Gil Alexander. After the nuclear plant's owner, Southern California Edison, balked at the original proposed decision, commission president Mike Peevey came up with an alternate - modified only one hour before the commission's December 15 meeting. The final version imposed a $782 million cap on the investment - not the original cap of $680 million proposed last month (Circuit, Nov. 4, 2005). There is no cap on operation and maintenance expenses, however. "The decision is incoherent, inconsistent, and unsupported by the evidence in the record," said Matt Freedman, The Utility Reform Network attorney. He vowed to file for a rehearing of the decision. Edison's top management warned commissioners in late November that they would not recommend going through with the project under the original price cap. Commissioner Geoffrey Brown said that if the utility's shareholders were worried about their risk, then the same risks to ratepayers would be "unacceptable." He added that with this decision, "Ratepayers are protected. There's no reason for Edison not to go through with the project." The commission had pulled the matter from its December 15 agenda but put it back on right before the meeting commenced. Commissioner John Bohn had it removed from the agenda for further consideration because of cost-containment concerns. However, he said he was "reasonably assured" that the investment "will be done at a reasonable cost," pointing to the 15 percent increase in the cost cap. He promised that a future commission will take a hard look at spending in excess of $680 million. The investment in new steam generators to replace the ones that are failing before their expected life spans are reached went from "marginally economic" in the original proposed decision by administrative law judge Jeffrey O'Donnell to "economic" in the Peevey alternate. The final decision used a different set of inputs to arrive at that conclusion. Basically, it adjusted the cost of replacement power if the nuke is shut down. The calculations are based on replacement power being fueled by natural gas, whose price has about doubled since the estimates for the original decision were completed. However, there was no complementary change in calculations of the cost of fueling the nuclear plant. The price of uranium, too, has doubled during the same time span. Nuclear fuel costs are not considered operations and maintenance, according to Alexander. They are reviewed in another proceeding, for the Energy Resource Recovery Account. San Diego Gas & Electric, a part owner of the San Onofre plant, was ordered to make a case to the commission for transferring its ownership share to Edison. SDG&E wanted no part of the steam generator investment strategy. The commission also approved the SDG&E order on a 4-0 vote. Commissioner Dian Grueneich abstained, saying she wanted to avoid the appearance of a conflict of interest. Her law firm had worked on a similar case for the Diablo Canyon nuclear plant prior to her commission appointment.

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San Onofre Steam Gen Investment Approved, Appeal Planned

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