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PUC dithers as consumers keep paying to 'run' crippled San Onofre

August 29, 2012|Michael Hiltzik
  • The San Onofre Nuclear Generating Station was shut down Jan. 31 after a tube in its recently replaced steam generators began to leak.
The San Onofre Nuclear Generating Station was shut down Jan. 31 after a tube… (Los Angeles Times, Allen…)

Welfare is a deadening system, at least according to the discussion being waged these days in connection with the presidential campaign. It saps ambition, discourages enterprise, allows the undeserving to sit on their haunches endorsing checks. We all know the talking points.

So why aren't we more outraged by the $54-million welfare check going out every month to the shareholders of Southern California Edison, courtesy of the utility's ratepayers? That's how much Edison is collecting every month to operate its San Onofre Nuclear Generating Station.

The joke, of course, is that San Onofre isn't operating.

Thanks to a thoroughly botched $770-million equipment "upgrade," the plant hasn't been online since January and may not operate ever again. The best-case scenario is that it might get restarted sometime around the end of this year or early next, but there's no guarantee that it will run at full strength even then.

Meanwhile, the ratepayers keep paying. Over the more than six months that San Onofre has been dark, the bill has come to $25 for every Californian in its service district, man, woman and child. The old adage that "you get what you pay for" apparently doesn't apply in Edisonland.

This situation is one of the reasons that we have the Public Utilities Commission in California, vested with the authority to examine utility operations and judge how much of their costs should be borne by customers rather than shareholders. What's the PUC doing about this?

Glad you asked. The answer is nothing. The commission is planning to wait at least until the end of October, and possibly not for an additional six weeks after that, before deciding whether to take San Onofre out of Edison's rate base. The law says, however, it could act today.

The law also says, however, that rate-making can't be retroactive. As a result, Edison gets to keep every dime forked over before then for this nonfunctioning plant. Refunds to ratepayers aren't permitted.

One body that has sounded the alarm about San Onofre costs is the PUC's Division of Ratepayer Advocates. On Aug. 13 the division sent a letter to the PUC proposing that San Onofre be removed from utility rates instantly.

What did the PUC do about that request? Glad you asked. The answer is nothing. That's also within the commission's authority. It doesn't have to comply with any requests from the ratepayer advocate. The advocates division can intervene in existing rate cases and PUC investigations as a consumer representative, but it can't launch cases on its own. Indeed, the PUC doesn't actually have to respond to the division at all. And in this case it hasn't.

The bottleneck seems to be PUC Chairman Michael Peevey, a former Edison president whose chummy relationship with the company and the energy industry has drawn objections from consumer advocatesfor years.

The standoff underscores a major flaw in California's utility regulations. Put simply, the division of ratepayer advocates has no power.

This isn't unique among utility ratepayer advocacy bureaus, which have been established in 39 other states. The authority of most of them appears to be limited to intervening in existing rate cases or involving themselves in service-quality and consumer-protection issues. But at least 14 operate out of their states' attorney generals' offices, which suggests that they also can act proactively.

In some states, moreover, the public utilities commission can't simply turn its back on the ratepayer advocate, as the PUC can in California. In Massachusetts, for instance, utility regulators must open an investigation requested by the attorney general's office of ratepayer advocacy if it involves gas or electric rates.

In the San Onofre case, the California ratepayer advocate has raised some important points about what's happened at the plant and the PUC's legal responsibility. "It's very simple," Joseph P. Como, acting head of the division, told me last week, "though people are trying to make it complicated."

The plant, which sits in all its billowy glory on the coast just south of San Clemente, hasn't operated at full strength since Jan. 9, when its Unit 2 was shut down after a radiation leak. Unit 3 was shut down Jan. 30. Neither unit has generated power for customers for a single day since then.

The culprits are 2-year-old steam generators that may have been poorly engineered, poorly installed or both. Federal nuclear regulators are investigating. The problems may be so severe that it won't make economic sense to restore the nuclear plant to service.

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