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ORA reaches agreement with SoCalEdison, SDG&E on SONGS

Utility customers would see about $600 million in refunds in a proposed settlement over costs tied to the shuttered San Onofre nuclear power plant in Southern California, officials said Thursday.

The overall value of the deal to consumers would be $1.4 billion when other provisions are considered, they said.

The Office of Ratepayer Advocates, the independent consumer advocate within the California Public Utilities Commission, signed a comprehensive settlement agreement with Southern California Edison Co., San Diego Gas & Electric, and The Utility Reform Network that, if approved, will prevent the utilities from charging customers, who were served by the decommissioned nuclear plant, for defective steam generators.

The estimated benefit to ratepayers on a present value basis, compared with the utilities’ $4.7 billion original request, is $1.12 billion for Edison customers and $286 million for SDG&E customers.

Southern California Edison and SDG&E have been negotiating with consumer advocates over how to divide a long list of costs from the twin-domed plant just north of Oceanside.

"We believe this settlement is fair and reasonable and balances the interests of customers and shareholders," said Jeffrey W. Martin, CEO of SDG&E. "The settlement ensures that customers will not have to pay for San Onofre’s faulty steam generators post-shutdown and also allows shareholders to recoup the majority of their nonsteam generator investment in the plant, which provided clean, reliable, low-cost energy to the region for more than 40 years."

In October 2012, the California Public Utilities Commission opened an investigation into the causes and accountability for the premature nuclear plant closure.

Edison had shut down the plant’s Generator Unit 2 on Jan. 9, 2012, for scheduled maintenance, followed by the shutdown of Generator Unit 3 on Jan. 31, 2012, due to a steam generator tube leak.

Neither unit has ever returned to service, yet customers have continued to pay tens of millions of dollars each month to support the defunct plant and to buy replacement power. The plant is owned and operated by Edison (78.21 percent) and served customers in the greater Los Angeles area including Inyo, Kern, Kings, Mono, Orange, Santa Barbara, Tulare, Ventura and San Bernardino counties. It is co-owned with SDG&E (20 percent) and the city of Riverside (1.79 percent).

If approved, Thursday’s settlement will eliminate cost recovery of the utilities’ investment in the defective steam generators as of the February 2012 shutdown date, but will allow the utilities to receive a reduced rate of return for facilities other than the defective steam generators for a short period of time.

“I am pleased that the parties have come to a proposed settlement that they believe is in the interest of ratepayers. The proposed settlement will come before the (California Public Utilities Commission) for consideration after a public hearing to evaluate it closely,” commission President Michael R. Peevey said.

The settlement also allows customers to receive a portion of any funds that Edison or SDG&E recovers in any legal actions from either Mitsubishi Heavy Industries Inc., or Nuclear Energy Insurance Limited.

“This settlement agreement is an extremely good deal for customers who will see a refund of hundreds of millions of dollars in the coming years,” said Joe Como, Office of Ratepayer’s acting director. “Customers will start to see a reduction in rates in 2015 of more than $100 million in savings by disallowing the steam generators.”

The signed settlement will be submitted to the California Public Utilities Commission for approval by the panel’s five commissioners. The settlement does not determine the plant’s decommissioning costs, which will be addressed at another commission proceeding.

“After an 18-month proceeding, it is encouraging that the parties have come to a proposed resolution. If approved, it would save us another two years of litigation and offer ratepayers a more expeditious relief,” Commissioner Mike Florio said.

The Associated Press contributed to this report.

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