Battle looms over who gets to pay for San Onofre shutdown costs
'...Edison International (EIX) faces a regulatory battle over who will pay for about $3.4 billion of costs related to the decision to retire the San Onofre nuclear plant amid a record number of U.S. nuclear closures.
Southern California Edison, the utility unit that owns and operates what had been California’s largest source of round-the clock electricity, has a $2.1 billion investment in the two reactors and may have to refund some of the $1.3 billion collected from customers since the plant quit producing power in January 2012, Chief Executive Officer Ted Craver told reporters today on a conference call.
Four commercial nuclear-power units, including Edison’s two, have been permanently closed in the U.S. this year, the highest-ever annual total, according to U.S. Nuclear Regulatory Commission data. A glut of shale-fed natural gas and government-subsidized wind has upended power-market dynamics and squeezed margins, making costly repairs uneconomical for some nuclear operators.
“It no longer makes sense to restart San Onofre,” Craver said today. Buying power on the open market became the cheaper alternative because a year of delay cut too deeply into its operating life, he told reporters. The reactor license expires in 9 years. Edison was spending $30 million a month preparing for the restart, he said.
Edison estimates that shareholders will absorb after-tax costs of $300 to $450 million, although further writedowns are possible, Chief Financial Officer Jim Scilacci said. The company hasn’t determined how much it will seek from customers, he said...
The California Public Utilities Commission will decide how much customers will have to pay for the retirement of the reactors, which provided almost 20 percent of the power for Edison’s customers.
The CPUC will decide “as quickly as possible” who will pay for the shutdown, Michael Peevey, president of the CPUC, said in an e-mail statement.
Sempra Energy (SRE), which had a 20 percent stake in San Onofre, expects California regulators to allow it to recover its $519 million investment from ratepayers, the San Diego-based company said in a filing today. The company’s San Diego Gas & Electric Company utility will likely record an after-tax charge of $30 million to $110 million in the second quarter of 2013 related to the plant...
Edison should be able to bill ratepayers for its investment in the plant based on previous commission decisions, Smith from Drexel Hamilton said today. He rates Edison shares buy and owns none.
Some of the $529 million Edison charged customers for replacement power since the plant was shut or the $813 million charged for operating it when it wasn’t generating electricity, will have to be refunded given previous rulings, he said...'
June 9, 2013