SONGS Investigation:
Proposed Settlement

Background

On January 9, 2012, Edison shut down SONGS Unit 2 for scheduled maintenance, followed by the shutdown of SONGS Unit 3 due to a steam generator tube leak on January 31, 2012. Neither SONGS unit ever returned to service, yet customers continued to pay tens of millions of dollars each month to support the defunct plant and to buy replacement power. SONGS is owned and operated by Edison (78.21%) and served customers in the greater Los Angeles area including Inyo, Kern, Kings, Mono, Orange, Santa Barbara, Tulare, Ventura, and San Bernardino counties. It is co-owned with SDG&E (20%) and the City of Riverside (1.79%).  

In October 2012, the CPUC opened an Investigation into the causes and accountability for the premature SONGS closure. On March 20, 2014, parties filed a Notice of Settlement Conference with the CPUC, requesting that it refrain from taking any further procedural actions in the SONGS investigation.  

Proposed Settlement:

On March 27, 2014, the Office of Ratepayer Advocates (ORA) signed a comprehensive Settlement agreement with Edison, SDG&E, and TURN, which was filed with the CPUC on April 3. The Settlement prevents the utilities from recovering the cost of the SONGS defective replacement steam generators from ratepayers. The estimated benefit to ratepayers on a present value basis, compared with the utilities’ $4.7 billion original request, is $1.12 billion for Edison customers and $286 million for SDG&E customers. The settlement will eliminate cost recovery of the utilities’ investment in replacement steam generators as of the February 2012 shutdown date, but will allow the utilities to receive a reduced rate of return for facilities other than the replacement steam generators for a short period of time. Key Settlement points include: 

  • Utilities would refund customers for defective replacement steam generators, effective February 1, 2012.
  • Utilities would refund customers for 2012 incremental steam generator inspection and repair costs.
  • Utilities would refund customers for capital and O&M revenue during the period Feb 2012 – May 2014.
  • Utilities would receive a reduced rate of return for SONGS net investment.
  • Customers will start to see reduced rates in 2015 by more than $100 million by disallowing the steam generators. 
  • Allows customers to receive a portion of any funds that Edison or SDG&E recovers in any legal actions from either Mitsubishi Heavy Industries, Inc. (manufacturer of the defective replacement steam generators) or Nuclear Energy Insurance Limited (NEIL)

 Table for SONGS release 

The Settlement does not determine SONGS’ decommissioning costs, which will be addressed in another CPUC proceeding. See the full March 27, 2014 proposed Settlement, as well as a detailed Summary of the proposed Settlement.

On April 24, 2014, the CPUC issued a Ruling, requesting that the settling parties serve Testimony in response to the questions posed in the Ruling. A CPUC evidentiary hearing was held May 14, 2014 at the CPUC in San Francisco.

Settling parties hosted a community meeting to present their settlement proposal in Costa Mesa on June 16, 204 - non-settlement parties presented their persective. 

In response to the CPUC's April Ruling, Edison and SDG&E submitted Testimony on May 1.

On September 5, 2014, the CPUC issued a Ruling that identified changes that must be made to the proposed settlement before Commissioners could consider it.

On September 19, 2014, the Settling Parties (ORA, TURN, Friends of the Earth, Edison, SDG&E and the Coalition of California Utility Employees) issued a Response informing the CPUC that they accept the suggested modifications from Commissioner Florio and the Judges to the proposed SONGS Investigation Settlement Agreement.

 

ORA Policy Position 

ORA supports the SONGS Settlement because it will refund hundreds of millions of dollars to customers, given that they have subsidized the power plant at the cost of tens of millions of dollars each month for more than 2 years, even though it has provided them no electric service. The magnitude of the Settlement agreement is unprecedented and would result in a significant rate reduction for Edison and SDG&E customers.

In August 2012, ORA had sent a letter to CPUC commissioners requesting they remove SONGS from Edison’s and SDG&E’s rates to protect customers from the mounting costs of the non-operational plant. 

ORA argued that the utilities should have received no additional funding for the defective replacement steam generators that caused SONGS to stop operating.

See ORA's May 1, 2014 Joint Testimony responding to questions in the CPUC's Ruling.

 

Proceeding Status

See the Proceeding docket.

 

Other Resources

Edison's Replacement Power Agreements 

Edison Litigation Position Comparison 

SDG&E Replacement Power Agreements 

SDG&E Litigation Position Comparison 

ORA's March 27, 2014 Press Release 

CPUC March 27, 2014 Press Release