New San Onofre deal is urged

Con­sumer ad­vo­cates want to re­vamp pact that sticks ratepay­ers with most of the bill.

Los Angeles Times - - BUSINESS - By Marc Lif­sher marc.lif­sher@la­ Twit­ter:@Mar­cLif­sher

Con­sumer ad­vo­cates want PUC to re­con­sider who pays costs of closing the nu­clear plant.

SACRA­MENTO — Con­sumer ad­vo­cates, out­raged by a se­cret ne­go­ti­a­tion in Poland over the $5-bil­lion cost of closing the San Onofre nu­clear power plant, are ask­ing the Cal­i­for­nia Public Util­i­ties Com­mis­sion to re­con­sider a deal that sticks util­ity cus­tomers with the bulk of the bill.

The groups de­manded Fri­day that South­ern Cal­i­for­nia Edi­son Co. re­turn at least $650 mil­lion to cus­tomers. The fi­nan­cial penalty, they said, should be a pun­ish­ment for hold­ing back­room talks with for­mer PUC Pres­i­dent Michael Peevey dur­ing a 2013 en­ergy con­fer­ence in War­saw.

South­ern Cal­i­for­nia Edi­son de­fended the cur­rent set­tle­ment, call­ing it “fair and rea­son­able.” The PUC had no com­ment.

In sep­a­rate state­ments, the Util­ity Re­form Net­work, known as TURN, and the PUC’s Of­fice of Ratepayer Ad­vo­cates said they were shocked that Peevey and Edi­son Vice Pres­i­dent Steven Pick­ett out­lined a rough agree­ment a year be­fore a pro­posed legal set­tle­ment was an­nounced.

“The War­saw meet­ing was a fla­grant vi­o­la­tion of CPUC rules,.” said Matt Freed­man, a lawyer for San Fran­cisco-based TURN.

Fri­day’s ac­tion came as the San Onofre nu­clear plant, shut down in 2013, and ma­jor­ity owner Edi­son are play­ing a big­ger role in the un­fold­ing scan­dal at the PUC. Un­til re­cently, most at­ten­tion was di­rected at ties be­tween Peevey and the state’s largest util­ity, Pa­cific Gas & Elec­tric Co. of San Fran­cisco.

Many de­tails of PG&E’s ties emerged in emails with PUC of­fi­cials that the com­pany made public in re­cent months.

Now the PUC wants South­ern Cal­i­for­nia Edi­son to make a sim­i­lar re­lease of cor­re­spon­dence.

Most of the South­ern Cal­i­for­nia con­tro­versy cen­ters on the San Onofre plant, which was per­ma­nently closed 18 months af­ter new steam gen­er­at­ing equip­ment leaked a small amount of ra­dioac­tiv­ity.

In March 2014, the PUC, Edi­son and other par­ties an­nounced a pro­posed set­tle­ment spell­ing out who would pay how much of the cost of closing the plant.

Since then, Edi­son re­vealed that one of its ex­ec­u­tives met in War­saw with Peevey, who is un­der in­ves­ti­ga­tion by state and fed­eral of­fi­cials. Peevey has de­nied any wrong­do­ing, but has been un­avail­able to com­ment in re­cent months.

The Bris­tol Ho­tel hand writ­ten notes were among items seized in in­ves­ti­ga­tors when they searched Peevey’s La Cañada Flin­tridge home in Jan­uary.

Both the se­cret plan and a some­what more con­sumer-friendly fi­nal plan, unan­i­mously ap­proved by the PUC in Novem­ber, roughly re­quired util­ity cus­tomers to pay $3.3 bil­lion. Edi­son and its share­hold­ers would be on the hook for $1.4 bil­lion.

The re­cently re­leased meet­ing notes broke rules gov­ern­ing il­le­gal con­tacts be­tween util­ity ex­ec­u­tives and their reg­u­la­tor, Freed­man said. He noted that he only learned of the War­saw deal dur­ing a pri­vate meet­ing with Peevey on April 10, 2014.

The San Onofre plant’s new steam gen­er­at­ing equip­ment was turned off in Jan­uary 2012. Two units built in the early 1980s were per­ma­nently de­ac­ti­vated in June 2013 be­cause Edi­son couldn’t fix the de­fec­tive gen­er­a­tors at a cost of $770 mil­lion.

Joseph Como, act­ing direc­tor of the Of­fice of Ratepayer Ad­vo­cates, wants Edi­son and its ju­nior part­ner in the San Onofre plant, San Diego Gas & Elec­tric Co., to re­turn at least $648 mil­lion to cus­tomers.

Ratepay­ers might be even bet­ter served if they got back more than $1 bil­lion, Como added. The fi­nal fig­ure, he said, would de­pend on the out­come of a PUC in­ves­ti­ga­tion.

“We need to see how ba­si­cally deep the rathole goes,” he said.

Both the Cal­i­for­nia at­tor­ney gen­eral’s of­fice and the U.S. Jus­tice Depart­ment are con­duct­ing broad probes into ac­tiv­i­ties of the state’s in­vestor-owned, for-profit util­i­ties and their re­la­tions with top PUC of­fi­cials. Ac­cord­ing to the search war­rant, they are look­ing for ev­i­dence of il­le­gal com­mu­ni­ca­tions, bribery, ob­struc­tion of jus­tice and other crimes.

Michael Aguirre, a San Diego con­sumer at­tor­ney, said al­ready re­leased doc­u­ments pro­vide more than enough proof that the San Onofre set­tle­ment was il­le­gal and should be tossed out. He wants the two util­i­ties to pay for most of the nu­clear plant’s shut­down.

What’s more, Aguirre con­tends, ri­val con­sumer group TURN should be dis­qual­i­fied from legal pro­ceed­ings be­cause it didn’t no­tify the PUC judge that Peevey told them about the War­saw plan.

TURN’s Free­man said the PUC’s rules outlawed what Aguirre wanted.

“At the time of our meet­ing with Mr. Peevey, TURN had no other ev­i­dence of the War­saw meet­ing,” he said, or proof that it oc­curred.

‘We need to see how … deep the rathole goes.’

— Joseph Como, act­ing direc­tor of the PUC’s Of­fice of Ratepayer Ad­vo­cates

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