SCE & Leading Consumer Groups Have Negotiated a Fair Financial Solution to the San Onofre Shutdown

The shutdown of the San Onofre nuclear power plant because of failed steam generators designed and manufactured by Mitsubishi Heavy Industries created complicated financial questions for regulators, consumer groups, and Southern California Edison (SCE). In a comprehensive agreement, SCE, San Diego Gas & Electric (SDG&E, a minority owner of SONGS) and leading consumer groups have negotiated a settlement that answers these questions in a way that is fair to all parties.  Approval of the settlement now rests in the hands of the California Public Utilities Commission (CPUC).

Simply put, the proposed settlement means that customers pay nothing for the defective steam generators from the day of the tube leak at San Onofre.  Customers will pay for the replacement power they already received, and SCE’s shareholders will give up well over a billion dollars in future revenue. 

While a few have received media attention questioning the terms of the settlement, the settlement is fair and balanced. That’s why it has such broad support.   It was negotiated over the last year directly with the principal consumer groups that are regular watchdogs of consumer interests at the CPUC: The Office of Ratepayer Advocates (ORA) and The Utility Reform Network (TURN), two organizations that are often harsh critics of utilities. TURN, for example, has a consumer watchdog history that goes back 40 years, during which time it has fought plans put forth by SCE and every major power and communications utility in California. 

The San Onofre settlement also has the support of Friends of the Earth, an international environmental organization that led the opposition to the restart of San Onofre.   Other longstanding organizations that have endorsed the settlement include the California Large Energy Consumers Association, the Utility Consumers' Action Network, which has represented the interests of San Diego County utility ratepayers for over 30 years, the Coalition of California Utility Employees, and a diverse group of community-based social justice organizations. 

Taken together, the organizations that have endorsed the settlement are informed and effective advocates before the CPUC for the interests of consumers, ratepayers, workers, businesses, and social justice. They know the record at San Onofre, they know the law, and they know a fair deal when they see one.

Meanwhile, we are vigorously pursuing claims against Mitsubishi for the defective replacement steam generators it supplied for San Onofre. The Nuclear Regulatory Commission has already determined that MHI’s faulty computer codes were the cause of the tube wear that led to the malfunctions. The proposed San Onofre settlement includes a provision that requires SCE and SDG&E to share benefits with customers should financial recoveries come from Mitsubishi or insurance.

SCE’s workers and executives took diligent and prudent actions to mitigate the safety and financial risks resulting from Mitsubishi’s failed design.  Although there was a small leak at only one of the two San Onofre units, SCE kept both units shut down, putting public safety first despite the cost.  Not a single individual was hurt. SCE’s employees worked around the clock to make sure that the closure of San Onofre did not interrupt electric service to our customers during the peak summer months.  We continue to do our best to provide safe, reliable and affordable electricity to our customers.  SCE is now working with state and federal officials to plan for the long-term changes needed without San Onofre.

After we had to shut down San Onofre, we wanted to move forward. We decided to negotiate a settlement of the CPUC proceeding directly with the strongest and most capable of consumer organizations to make sure that any such settlement would be fair and therefore acceptable.  

The final decision on the settlement is up to the CPUC. In the meantime SCE will continue to seek compensation on behalf of our customers and shareholders.