State’s Nuclear Future on the Line

Electric companies say nuclear energy could disappear from California within a decade if state regulators reject plans for $1.4 billion in repairs to aging generators at the San Onofre and Diablo Canyon atomic power plants.

The future of the state’s nuclear power industry rests with the California Public Utilities Commission, which must decide within months whether to approve work at the state’s two nuclear plants and raise electricity rates to pay for the improvements.

Southern California Edison, which operates San Onofre in northern San Diego County, plans to spend an estimated $680 million to replace four generators that serve two reactors. Pacific Gas & Electric estimates that installing eight new generators at Diablo Canyon, north of San Luis Obispo, will cost $706 million.

At San Onofre, removing the massive generators would require cutting holes in the protective containment buildings and releasing the tension from steel support cables -- a delicate and expensive operation. The work would be somewhat simpler at Diablo Canyon, which has large hatches through which the generators could be removed.

If the work is not done, the generating stations may have to be shut down in five to 10 years as their steam-driven generators deteriorate, plant owners say.

But two utility companies that share ownership of San Onofre with Edison, along with some consumer and environmental groups, wonder if the repairs would be worth the expense -- and if ratepayers would get stuck with unexpected bills.

“This is a potential bottomless pit. I don’t want to sink my customers’ dollars into this plant,” said Jim Avery, a senior vice president of San Diego Gas & Electric Co., which owns 20% of San Onofre.

“After 20 years of history, every project they have undertaken has been more expensive than they thought.”

Proposals for the two plants are pending before the Public Utilities Commission, a five-member panel that must determine if the generator projects are reasonable and beneficial to the utilities and their customers.

If the commission approves one or both projects after a series of hearings, members will set electricity rates to help the owners recover their costs. The commission is expected to rule by summer.

“Next year is the year we decide the fate of California’s nuclear power plants,” said Matthew Freedman, an attorney for the Utility Reform Network, a nonprofit consumer organization.

Edison and PG&E; officials say the new generators are needed to keep San Onofre and Diablo Canyon operating until their federal licenses expire in 2022 and 2025, respectively.

The utilities say the projects will save customers up to $3 billion they would have to pay to obtain electricity elsewhere. San Onofre can generate 2,150 megawatts of power, enough electricity for 2.2 million homes. Diablo Canyon is slightly larger at 2,200 megawatts.

Steam-driven generators contain thousands of small tubes that carry heated water from the reactor. The hot tubes turn a secondary source of water into steam that spins the plant’s turbines to create electricity.

Over time, the tubes corrode and crack and must be plugged to take them out of service. When more than 15% of the tubes are blocked, reactors must be shut down, according to federal regulations.

Edison officials say San Onofre could exceed the federal limit by 2009. Diablo Canyon could reach that level in 2013 or 2014. Both utilities want to complete their replacement projects within five years.

“We feel that San Onofre has a very valuable and cost-effective project,” said Alan J. Fohrer, Southern California Edison’s chief executive. “It is an important resource as a power plant and has value to the transmission grid.”

The proposals are being heavily scrutinized by utility companies that own shares in the two plants. Their ratepayers would be asked to share the expense.

Leading the opposition at San Onofre is San Diego Gas & Electric, which has refused to provide its $163-million share of the cost for the new generators. SDG&E; serves about 1.2 million customers.

SDG&E; executive Avery said he had no faith in Edison’s cost estimates and did not like the plan to open the containment buildings. Avery said his company would seek power from other conventional plants and increase its reliance on renewable energy sources, such as solar, wind and geothermal.

The city of Anaheim, which owns about 2.3% of San Onofre, also has opted out of the project. Instead, city officials say, they plan to spend $24 million to secure renewable sources of energy.

Edison officials say they can go ahead without SDG&E; and Anaheim, which will probably see their ownership shares shrink somewhat as a result of opting out of the repair project.

The city of Riverside, which owns 1.7% of the plant, remains a participant in the San Onofre project and plans to commit about $12 million.

The generator projects also have raised concerns among ratepayer organizations, whose views, like those of the utilities, must be weighed by the Public Utilities Commission.

Groups such as the Utility Reform Network, the state’s Office of Ratepayer Advocates, and California Earth Corps say the companies’ projected savings and the estimated cost of the replacement programs are unreliable.

Paul Angelopulo, an attorney with the Office of Ratepayer Advocates, said the cost estimate for Diablo Canyon’s generators was “untrustworthy guess work” given a historic pattern of cost miscalculations at the plant.

The consumer groups say PG&E;’s benefit analysis is riddled with highly optimistic assumptions, cost omissions and pessimistic assumptions about the price of alternative energy sources.

Freedman said PG&E;’s projections neglected to consider the possibility of “unpleasant surprises” or unexpected costs that might make the replacement plan more expensive. He said the plant was now replacing reactor vessel heads at a cost of $67 million, an expense that was not expected several years ago.

A Utility Reform Network study concluded that the generator replacement at Diablo Canyon would be cost-effective in 12 of 19 possible scenarios, and not cost-effective in seven.

In papers filed with commission, Freedman requested that the company’s analysis be rejected and that PG&E; guarantee that customers receive at least $600 million in benefits from the project.

The Utility Reform Network and the Office of Ratepayer Advocates have not finished preparing their positions on the San Onofre proposal. But Freedman said the network was considering arguments similar to those related to Diablo Canyon.

Don May, president of California Earth Corps, a statewide environmental group, also questioned the opening of San Onofre’s containment buildings. He said it might compromise the integrity of the station in the event of a radiation leak and increase the vulnerability of the plant if terrorists attacked.

Fohrer and Jeff Lewis, a PG&E; spokesman, defended their companies’ cost-benefit analysis as fair and accurate. They said 50 other nuclear power plants in the nation had replaced their generators.

“We would not put numbers before the Public Utilities Commission that we do not have confidence in,” Fohrer said. “We have a good team at San Onofre, and the numbers are a fair estimate of what it is going to take.”