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Customer Refunds Ordered for San Onofre Plant Failure

Two California Public Utilities Commission (CPUC) administrative law judges (ALJ) on Tuesday proposed that utility ratepayers be refunded up to $94 million total for alleged "unsound" decision making regarding the closure of the San Onofre Nuclear Generating Station (SONGS), the largest baseload source of power in Southern California.

Refunds are to be put in place Jan. 1 for customers of SONGS’ majority owner/operator, Southern California Edison Co. (SCE), and Sempra Energy's San Diego Gas and Electric Co. (SDG&E), which owns 20% of the facility. SONGS has been shuttered since January 2012.

ALJs Melanie Darling and Kevin Dudney indicated that SCE may have used "an unsound decision-making process" in May 2012 to pursue a re-start for the nuclear facility after both of its units were shut down because of problems with critical parts of newly installed steam generators.

Two years of being idle and the cost to permanently close the facility, as well as costs for securing electricity supplies to fill the gap for the 2,200 MW that SONGS supplied, have been debated for several years (see Daily GPI, June 11). Darling and Dudley ordered refunds of $74.2 million to SCE customers and $19.3 million to SDG&E customers, which they said resulted from reduced operating costs in 2012. A CPUC spokesperson said the proposal is the "first of many expected actions to ensure that consumers do not overpay for electricity due to the outage and subsequent closure.”

CPUC members indicated that they would consider the ALJs’ proposal at the Dec. 19 meeting.

"The CPUC is considering hundreds of millions of dollars in additional refunds to customers resulting from replacement power costs, steam generator replacement costs, and removing San Onofre from rate base," said lead CPUC Commissioner Mike Florio.

SCE is in the midst of a long legal battle with Mitsubishi Heavy Industries, which manufactured the flawed steam generators. SCE is seeking reimbursements for its costs, and state energy planners are trying to determine what mix of added natural gas-fired and renewable generation will be needed to replace SONGS in the long run (see Daily GPI, Aug. 16).

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