The minority 20% share in the San Onofre Nuclear Generating Station (Songs) lessens the overall costs and operational impact, but Sempra Energy and its San Diego Gas and Electric Co. (SDG&E) combination utility will deal with material consequences of the decision, according to officials.

State and utility officials on Tuesday warned electric consumers in Southern California about the uncertainties of generation this summer if the weather is hotter than anticipated or if existing baseload generation plants are forced out of service (see Daily GPI, June 11). Meanwhile, SDG&E executives also have been talking about future energy supplies as Songs’ majority owner/operator Southern California Edison Co.

In Form 8-K filings to the Securities and Exchange Commission (SEC) by Sempra and SDG&E, they said theyare prepared to take a big financial hits for the Songs closure, but unlike Edison, SDG&E may be allowed to recover substantially all of its sunk costs in the troubled nuclear plant that has been out of service for nearly 18 months. The closure may be fraught with risks, but SDG&E said “it is probable” it will recover nearly $500 million in rates, “a substantial portion of its investment in Songs and the associated costs due to date.”

Through March 31, SDG&E was responsible for $107 million of the costs related to units 2 and 3, the estimated cost of purchasing replacement power to make up for SDG&E’s 20% share of the nuke plant output. About 20% of SDG&E overall daily power supply needs were provided by Songs. In the SEC filing, SDG&E estimated it will take an after-tax charge of $30-110 million in the second quarter. The Sempra utility said that when Songs was operating, it provided after-tax net profits of about $15 million annually for the utility’s minority interest.

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