This week, the California Public Utilities Commission (CPUC) will start to reconsider the San Onofre Nuclear Generating Station settlement that was reached in March 2013 and left consumers on the hook instead of utility shareholders for $3.3 billion of a $4.7 billion negotiated settlement for a broken nuclear power plant that was forced to shut down after a radiation leak in January 2012. The commission itself has been under investigation since 2014 for its seemingly inappropriate relationships with the very utilities it is supposed to regulate.
Reopening the settlement allows ratepayers the opportunity to get a more fair and balanced position at the negotiating table while parties divide the costs of the failed steam generator replacement project that lead to the premature shut-down of the San Onofre reactors.
It has been discovered that the settlement that assigned ratepayers (not the utilities that owned and operated the plant) the majority of the costs for the premature shutdown, was negotiated and defined almost entirely in private communications and backroom meetings between the regulators and company officials, and not through the appropriately designed public process – which would have ensured that the public interest was being upheld.
The settlement process is designed to guarantee representatives from all stakeholder parties; regulatory agencies, the ownership organizations, and appointed representatives for the ratepayers, a seat at the negotiating table. Instead, Edison, the company that owned and operated the San Onofre nuclear power plant cooperated closely with regulators behind the scenes to subvert the public process and negotiate the terms of the settlement and strategy for dealing with the backlash from the public when the settlement would be presented.
In March 2014, Edison revealed the settlement to the public, portraying it as a $1.4 billion “rebate” for ratepayers – referencing the amount of costs that the utilities would cover for the premature closure of the plant. Consumer groups started criticizing the deal after it was learned that the ratepayers would be funding the other $3.3 billion of the $4.7 billion settlement.
Ultimately, it was the news media that uncovered the truth and laid it bare before the public. Reporters uncovered a wealth of e-mails and corporate correspondence which exposed the backchannel communications and how terms of the settlement were established.
Simply stated, Edison, a company that was supposed to be under investigation by the CPUC, was instead working covertly with the regulators that were supposed to be investigating them, to discretely negotiate a critical settlement that ultimately transferred billions of dollars of costs from the utility to the public.
One of the reasons that this corruptive behavior may have occurred was because both Edison and the CPUC shared an interest in obtaining documents from Mitsubishi Heavy Industries – the company that manufactured the faulty steam generators that ultimately forced the plant to shut-down. Edison is in court with Mitsubishi, seeking $7.6 billion for the failed steam generators.
For several months, commission lawyers worked directly with Edison attorneys to draft and issue subpoenas used in the case against Mitsubishi. The …read more