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If San Onofre Nuclear Plant Is Restarted, Who Pays?

Customers should not be on the hook for Edison's mistakes

Nearly seven months after the San Onofre nuclear power plant was closed because of a leak, officials are grappling with whether it makes financial sense to bring the plant fully back online, and if so, who should pay for the necessary repairs.

Fixing San Onofre is shaping up to be an expensive proposition, with the price tag jumping into the hundreds of millions of dollars if the plant's massive steam generators require replacing.

But keeping San Onofre shuttered is also proving costly to the two utilities that own the plant. Southern California Edisonhad spent $117 million by June 30 to replace the power lost when San Onofre went offline, and San Diego Gas & Electric had spent $25 million, costs that ratepayers may be asked to pick up.

Imported energy is more expensive than electricity generated at San Onofre, which had provided about 20% of the power to large swaths of Southern California.

The first task for the utilities and federal regulators is to determine whether San Onofre can safely be restarted.

But the question of costs is also looming.

"One, there's the issue of can they do it, can the units be repaired? And if they can, then there's a question of whether it's cost effective," said Mark Pocta, program manager for the California Public Utilities Commission's Division of Ratepayer Advocates.

"Safety's the first issue, and then there's cost effectiveness."

Southern California Edison has said it hopes to restart one of the plant's two reactors — probably at reduced capacity — in the coming months. But the issues with the other reactor are so severe that officials said it may be unable to restart at all without extensive repairs.

Edison is preparing to submit a plan to theU.S. Nuclear Regulatory Commissionfor restarting one of the reactors, Unit 2. The other reactor, Unit 3, has been taken off the table indefinitely.

What the necessary repairs might be, and whether they would be worth the cost, has not been determined, or at least not publicly disclosed.

Edison this week said only that "we see the reality that Unit 3 will not be operating for some time.... It is too soon and would be inappropriate to speculate as to what is needed for repair for Unit 3."

It remains unclear who would pay.

Edison said inspections and repairs have cost $48 million through June. But those costs could swell, especially if the company hopes to bring Unit 3 back online.

The utility has said it hopes to recover much of the cost stemming from the equipment problems through insurance and manufacturer Mitsubishi's $137-million warranty on the steam generators. The warranty does not cover replacement power.

Watchdogs have pushed back against the possibility that ratepayers, who are still paying for plant operating costs during the outage and for the costs of the last steam generator replacement, could be asked to help foot the bill for repairs or another replacement. The steam generator replacement completed less than two years ago has cost Edison and San Diego Gas & Electric a combined $771 million, according to recent company filings.

Matthew Freedman, staff attorney for ratepayer watchdog the Utility Reform Network, said he thought replacing the generators again—especially at the expense of ratepayers—would be a non-starter, especially since the plant's current license expires in 2022. Edison has not submitted a renewal application.

"It's not going to happen," Freedman said. "My assessment is there will be no proposal to replace the steam generators. I think it's an extreme expense, and if Edison wants to do it, it would have to be on the shareholders' dime."

The PUC's ratepayer advocate division has called the commission to slash Edison and San Diego Gas & Electric rates immediately, noting that Edison alone is charging customers about $54 million a month in costs "for a plant that is no longer 'used and useful.'"

If the outage of one or both units extends until November — which appears likely — the public utilities commission will be required to launch an investigation into whether a rate rollback is required. Rates could be reduced even if only one unit remains out of service.

On Monday, Edison announced planned layoffs of 730 employees at the plant, about one-third of the workforce. Though company officials had been talking about paring down staffing for more than two years, the final number of cuts was 230 more than had been previously projected.

Edison said in a statement that the company needs to be "prudent with its future spending while SCE and regulators review the long-term viability of the nuclear plant."

Although Edison has financial incentives to get the plant operating, it will have to first convince federal regulators that it's safe to do so.

The problem started Jan. 31 in Unit 3, where a tube sprung a leak, releasing a small amount of radioactive steam into the atmosphere. Eight more tubes failed pressure tests, which NRC officials said was the greatest number that have failed such testing at any nuclear plant.

Those tubes and more than 300 others, most of them in Unit 3, showed a rare type of wear caused when they vibrated excessively and rubbed against adjacent tubes. Thousands more tubes showed a more common type of wear caused by rubbing against support structures.

In total 1,806 tubes in Unit 3 and 1,595 in Unit 2 showed some degree of wear.

Although the tube-to-tube wear was what raised the greatest flags for regulators, it is also unusual for a plant with such new steam generators to have such a high number of tubes degrading, said Kurt Edsinger, director of the materials program in the nuclear sector at the Electric Power Research Institute, which maintains a database tracking steam generator issues.

"The numbers I've seen don't show [San Onofre] leading the pack, but they're up there," Edsinger said. EPRI would not say which other plants with replacement steam generators had higher numbers of tubes with wear because the database is proprietary.

After dispatching a special inspection team, the NRC reported that the issues appeared to be the result of inaccurate computer modeling by manufacturer Mitsubishi Heavy Industries, which had vastly under-predicted the velocity of steam and water flowing in the steam generators, leading to the excessive vibration. The problems in Unit 3 were further exacerbated by manufacturing differences in the support structures, they said.

Meanwhile, San Onofre faces a growing chorus of opponents, including the leadership of cities surrounding the plant, who say it should remain dark.

The Laguna Beach City Council earlier this month passed a resolution calling for the plant to remain shut down unless it goes through an extensive license amendment and public hearing process, and urging state officials to find new sources of power.

"It's possible that there is a new way of operating plants, a new design for plants that wouldn't be so dangerous, but what we have now has proved that it doesn't work," Councilwoman Toni Iseman said.

Date: August 21, 2012
Author: Abby Sewell
Source: Los Angeles Times


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