San Francisco (2014-03-27) -- A settlement conference was called by Southern California Edison, SDG&E and leading ratepayer advocates, the Office of Ratepayer Advocacy (ORA) and The Utility Reform Network (TURN). Those parties worked for the past several months behind closed doors to craft an agreement which was exposed today. The conference was at 10am but the actual settlement was confidential until after the close of the markets today at 4pm ET, and a release by Edison on their website, which you can see in their SCE 8K filing listed on this page:
Other parties of the proceeding attended and reviewed the settlement, and were encouraged to ask detailed questions about it.
In a nutshell, the settlement benefits ratepayers by about $1.4 billion savings over what Edison had originally asked for in the investigation.
Key points are:
- Edison will receive no compensation in rates after Feb 1, 2012 for the plant.
- All monies collected since Feb 1, 2012 as if the plant were still operating will be refunded to ratepayers.
- On the other hand, Edison will be compensated for power purchased after the start of the outage, paid at "market prices" through the normal review mechanisms. This does not include "forgone sales".
- Most of the expenditures in an attempt to restart the plant will be written off -- all of those for 2012 and a portion in 2013.
- Edison will attempt to resell unused nuclear fuel and return that to ratepayers, with 95% /5% split in favor of ratepayers.
- Edison will be able to aggressively salvage assets of the plant, returning any realized revenue at 95% to ratepayers and 5% to investors.
- Investors will be able to recapture their investment in the original plant, not including the replacement steam generators, amortized at 2.62% over 10 years.
- This agreement must be approved by the actual Commission before it becomes active.
- The comment period is 30 days.
- The total deal was $1.4 billion less than what was requested by Edison and SDG&E but the utilities are still compensated about $3.3 billion for their remaining interest in the plant, replacement power, and other costs.
- Savings to ratepayers will offset substantial deficits in the ERRA account, which is used to balance energy purchases and ratepayer revenue. However, after 2015, ratepayers will continue to see a benefit from the closure at the rate of about $600 million per year
- These savings may be offset by other infrastructure that is needed to get the power where it is needed in California (even though we generate about 56% more than we use, statewide).
Ray Lutz, National Coordinator for Citizens Oversight and a party at the proceeding under the banner "Coalition to Decommission San Onofre" commented, "I was pleasantly surprised that they had eliminated the overly-complex accounting of the plant, in their attempt to show that it was partially used (23%) after the shutdown. Instead, the settlement agreement uses the approach we advocated, a clear-cut and immediate change in status of the plant from "used and useful" to "abandoned" after January 31, 2012, and then dealing with the spent fuel pool and dry-cask storage as part of the decommissioning process.
"The plant is thus to be taken out of rates as of Feb 1, 2012, and all rates collected for the plant since that time refunded to the ratepayer through the ERRA balancing account. This account has been in a substantial deficit situation and so the ratepayer won't see any immediate reduction, but after 2015, we should realize a benefit of $600 million a year by not running the plant, and buying power at lower prices on the energy markets instead of paying extra for this failed plant.
"Our organization will be reviewing the settlement agreement and we will likely file a formal comment, however, it oes seem like a reasonable compromise in many respects at first glance. "