- A new deal to resolve billions of dollars in costs related to the San Onofre nuclear plant shutdown in 2012 is awaiting regulatory approval.
- Adopting the proposed settlement means the California Public Utilities Commission is unlikely to ever determine who was at fault for the plant failure.
- Other important questions remain unanswered six years after the shutdown.
The latest plan to divvy up costs for the San Onofre nuclear plant failure between utility shareholders and customers would save consumers hundreds of millions of dollars. But if approved, it would also close an investigation without answering basic questions about what went wrong.
Foremost among the unresolved issues might be how the replacement steam generators installed by majority plant owner Southern California Edison managed to knock the plant offline despite warnings years earlier A close runner-up may be the status of a criminal investigation by the state Attorney General’s Office into potential corruption across the California Public Utilities Commission. San Onofre has proved to be a critical element of the probe, which stalled under a new attorney general.
Equally unresolved is the question of whether backchannel communications between utility executives, regulators and the Governor’s Office influenced the commission’s 2014 decision — now being revised — to charge ratepayers $3.3 billion of the $4.7 billion in San Onofre closure costs.
At least one force behind the proposal for a revised settlement deal said important questions still have not been answered, but consumers will benefit by no longer paying for the plant breakdown.
“The most we can say is stopping hundreds of millions of dollars of customer payments is better than not stopping them,” said San Diego lawyer Michael Aguirre, who sued the commission and Edison over handling of the broken nuclear plant and negotiated for the new deal.
The plan announced Jan. 30 would reduce by $775 million the amount that Edison and minority owner San Diego Gas & Electric were allowed to pass along to customers under the 2014 agreement, or some $68 for every residential customer over the next four years.
The plant broke down in January 2012 as a result of a faulty steam generator replacement project. Utility officials declined to comment on any open questions related to the closure, but touted the agreement as a good deal in their news release last month and said they want the case closed quickly.
“The parties undertook extensive efforts over many months to reach agreement and SCE looks forward to timely regulatory approval,” Edison president Ronald Nichols said in the statement.
Consumer groups like the Alliance for Nuclear Responsibility, which was first to call on regulators to modify the settlement approved in 2014, said securing relief for ratepayers is more important than establishing responsibility for the plant breakdown.
“In A4NR’s judgment, the dollars and cents are more meaningful to ratepayers than a formal assignment of blame, and the agreed upon amount is a suitable proxy for fault,” attorney John Geesman said in an email.
Attorney Matthew Freedman of the Utility Reform Network or TURN was one of the chief negotiators of the settlement approved by the commission four years ago. He said the new agreement builds on the benefits he helped secure in 2014.
“In reaching a settlement, the consumer parties focused on getting the best possible deal for customers,” he said by email. “We believe that the settlement achieves this goal.”
Freedman said state regulators were disinclined to completely rethink the arrangement they approved in 2014. Instead, they just halted payments that were being collected from customers.
“It isn’t clear that additional litigation at the CPUC would reveal any new information that was not identified in the arbitration process,” he wrote. “Furthermore, the CPUC had not indicated an interest in conducting its own investigation into the causes of the steam generator failure.”
State regulators put off opening their own investigation into the San Onofre closure for nine months, the latest a probe could be launched, by law. When it initiated the review in October 2012, the commission pledged to get to the bottom of what happened.
“The investigation will allow this commission to assess where the fault is in this outage,” then-commissioner Timothy Simon said at the time.
But according to documents subsequently released under the Public Records Act and others released by order of the commission, Edison officials soon began discussing the San Onofre case with regulators and with Gov. Brown.
For example, former commission judge Melanie Darling contacted Edison executive Russell Worden in December 2012, an unusual move for a judge assigned to a multibillion-dollar case.
Records show Darling and Worden spent 15 minutes discussing the investigation and damages the utility might recover from Mitsubishi Heavy Industries, the company that manufactured the steam generators.
Around the same time, Edison CEO Ted Craver approached commission president Michael Peevey about speeding up the proceeding so the utility could start billing customers the millions of dollars a month it was spending on replacement power.
“President Peevey indicated to us that he did not see a viable path to short-cut the proceedings and was highly skeptical that a settlement was likely,” Craver told his board of directors in a February 2013 memo obtained by The San Diego Union-Tribune.
Absent help from Peevey, Craver took his case directly to the governor.
“He gave me nearly two hours of his time in a private one-on-one meeting in his Sacramento office,” the Edison CEO reported to his board. “We spent the entire discussion on SONGS,” the San Onofre Nuclear Generating Station.
Edison said the meeting was appropriate, nothing more than a business addressing its concerns with a government leader. A spokesman for the governor declined to answer questions about the discussion, but stated that Brown did not intervene in the utilities commission proceeding.
During an industry “study tour” to Warsaw, Poland, a few weeks later, Peevey reversed his position that a settlement was unlikely. In a private meeting with Edison executive Stephen Pickett, the two men wrote the framework of a deal to resolve the San Onofre costs on stationery from the luxury Hotel Bristol.
Terms from the March 2013 meeting became the substance of the deal approved by commissioners in November 2014. They also became key evidence in the state’s criminal investigation, according to search-warrant affidavits obtained by the Union-Tribune.
Emails and other records show that days after returning from Poland, Peevey met with commissioner Michel Florio, then in charge of the San Onofre case. At the same time, Pickett began meeting with senior Edison executives to discuss the deal hatched in Warsaw.
Weeks after that, Edison reached out to Freedman at TURN to ask about settling the San Onofre case. The commission’s Office of Ratepayer Advocates joined negotiations, and in March 2014 the parties announced that a deal had been struck.
The surprise announcement was attacked by other parties to the commission proceeding. They complained they were shut out of the process and disputed the merits of the agreement.
Peevey, Florio and the other commissioners approved the deal that November, after adding a $25 million climate-change research program to be paid for by Edison and SDG&E. The grant funds were a key deal point on the Hotel Bristol notes but were not part of the announced settlement.
Jean Merrigan of Women’s Energy Matters said the revised settlement not only saves customers up to $873 million — the $775 million amortized over four years — it was reached in consensus with all parties to the case.
“This new agreement was negotiated in a process that was open to all parties to the proceeding, which was not the case with the 2014 settlement,” she said. “We’ve been meeting with the utilities for over a year in conditions nothing like the luxury hotel in Poland, I’m sure.”
Former Attorney General Kamala Harris opened a criminal investigation of the utilities commission in September 2014 after emails were released showing the extent to which utility executives and regulators met privately to discuss supposedly public business.
Her investigators seized computers and a host of other materials from the commission’s San Francisco offices two months later. In January 2015, the Hotel Bristol notes were found during a search of Peevey’s Los Angeles area home.
State investigators continued to serve warrants on senior regulators and utility offices into 2016, but the case stalled after Harris announced she would run for the U.S. Senate seat being vacated by the retiring Barbara Boxer.
Brown quickly endorsed the attorney general, and voters promoted her to Washington D.C. in 2016.
Early last year, Brown appointed then-Rep. Xavier Becerra to succeed Harris. There’s been no apparent movement in the corruption probe of the utilities commission since. The lead prosecutor in the case left the Attorney General’s Office and became a nonprofit lawyer.
Becerra’s press office declined to answer questions about how the latest San Onofre settlement might affect the criminal investigation or the status of the probe.
Most of what has become known in the long-running examination of the nuclear plant closure was learned through documents that made their way into public release, either through the state open-records law, court papers or utilities commission filings.
But one set of records that might explain much of what happened — and what did not — remains sealed.
Even before the first settlement was announced in 2014, Aguirre petitioned the utilities commission for all communications regarding San Onofre. He received thousands of responsive documents, but the state withheld more than 100 emails to and from the Governor’s Office and commission President Michael Picker.
Aguirre disputed the commission’s argument that the documents are privileged.
He took his claim to a higher court. In October, the 1st District Court of Appeal in San Francisco ordered the commission to hand over the disputed emails so the court could determine whether they are subject to the California Public Records Act.
The court has yet to rule.
Aguirre said the appellate judges should issue a decision regardless of the new settlement.
“Whether Gov. Brown has his fingerprints on the wrongdoing is important aside from the agreement,” he said. “The people of California must know if their governor helped to saddle them with billions of dollars of debt.”
The Governor’s Office declined to comment.