SDG&E Rejects SONGS Investment

Southern California Edison?s plans to replace steam generators at its San Onofre Nuclear Generating Station (SONGS) have hit a roadblock that leaves Edison shouldering the entire tab of about $800 million to keep the nuclear facility running. If Edison sticks to its guns that the project can?t go forward without co-owners? support, the future could dim for the facility. With a prehearing conference on Edison?s new steam generator plans March 25 at the California Public Utilities Commission, San Diego Gas & Electric, a 20 percent owner of SONGS, said this week it is not willing to invest in new generators. Riverside and Anaheim public utilities, which own roughly 5 percent of the 2,150 MW nuclear plant, say they have no plans to fund replacement steam generators. ?Edison is asking SDG&E to write a blank check, and [we] do not feel that?s fair to our ratepayers,? said David Johnson, SDG&E spokesperson. He said SDG&E?s ratepayers would see a $140 million price tag for the new units. SDG&E?s tough stance departs from its historical ?me too? regulatory approach on SONGS. In the past, it has always echoed Edison?s filings for state regulatory approval. Johnson acknowledged SDG&E?s consistent past support of investments for SONGS. But there ?comes a time where you have to look at what the investment is versus getting safe and reliable electricity service for your customers,? Johnson stressed, adding that sinking more funds into SONGS would not be the ?correct business decision.? Despite SDG&E?s resistance, Edison does not intend to jettison plans to refurbish SONGS, according to Ray Golden, Edison spokesperson. Golden declined to say whether the utility is willing to pick up more costs to see its plans through. Edison?s portion of the price tag is $510 million and $112 million for construction financing costs. But that puts Edison in a dilemma. On one hand, Golden says Edison will not dump its plans. Yet the utility also says in its application that it won?t proceed without co-investors. Meanwhile, the clock is ticking as the utility predicts the current generators could start to erode as soon as 2009. If SDG&E doesn?t invest, its ownership of SONGS will drop from 20 percent to 17 percent, which equates to a drop in output from SONGS from 430 MW to 370 MW, according to Johnson. The utility is banking on a package of proposals before the CPUC that would make this loss insignificant, he added. For instance, contracting for the 585MW output from the Calpine-owned Otay Mesa plant is part of SDG&E?s package. The commission is expected to vote on the package by the summer. Standing on the sidelines with SDG&E are SONGS muni owners. Riverside said that it is watching developments at the CPUC and that the matter is not on the front burner. Anaheim, which owns 3 percent of SONGS, also is not ready to contribute to upgrades at the facility. Like Edison, Pacific Gas & Electric hopes to replace steam generators at its nuclear facility. Both PG&E and Edison want preapproval of recovery of contract cancellation costs?in Edison?s case, $50 million. Going further, PG&E has asked for preapproval of its replacement plans for Diablo Canyon before the CPUC has weighed in on whether the investment is in ratepayers? interests. Signaling his stance on preapproval requests, administrative law judge Jeff O?Donnell said last month that PG&E?s move seems to ?prejudge the outcome? of the case. Asked how Edison is handling the setback to its plans for SONGS, Golden said the utility ?continues to seek a solution to the [current] lack of agreement by all parties.?

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SDG&E Rejects SONGS Investment

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