PUC Says Utilities’ Owners Should Pay to Repair San Onofre

A highly critical Public Utilities Commission staff report concludes that Southern California Edison Co. and San Diego Gas & Electric Co. shareholders rather than their customers should pay for repairing the San Onofre nuclear power plant’s Unit 1.

Saying that their investigation has uncovered “some of the most extreme examples of imprudence we have ever discovered,” the PUC staff said that Edison has only itself to blame for setbacks in its legal effort to make Westinghouse Electric Corp. pay for manufacturing defects in three steam generators at San Onofre.

Edison and SDG&E;, which owns 20% of the oceanfront nuclear power plant, have launched a major effort to convince the commission that the staff report is misguided, premature and unfair.

So far, the utilities, which expressed outrage at both the conclusions and tone of the report, have won a delay of a commission decision on whether the firms must refund $56 million to their customers. The commission was originally scheduled to consider the staff recommendation Thursday, but the matter has been put off until next month, PUC spokesman Walt Thompson said.

If the staff’s recommendation is accepted, the effect on consumers’ electric bills will be small, utility officials said. It would reduce monthly electric bills by less than 1% for the next three years, they estimated.

The money represents about three-fourths of the repair costs for the steam generators, which developed leaks and caused a 14-month shutdown of Unit 1 during 1980 and 1981.

The 41-page report said the utilities might have successfully recovered the repair cost in their federal lawsuit against Westinghouse had Edison officials earlier not made a series of “incredible statements” to the commission that “virtually doomed any chance of later claiming that Westinghouse was negligent.”

Utility officials say the lawsuit is still alive in U.S. District Court in Los Angeles, despite a summary judgment in July dismissing several causes of action. They said, too, that Edison officials who were criticized in the staff report for making supposedly imprudent statements were merely being candid with the commission, which insisted on the legal action in the first place.

Edison officials, trying to convince the commission to approve rate hikes in 1981 and 1982, made a series of statements that Westinghouse later used in its court defense:

- An Edison engineer told the commission that Westinghouse’s design was “up to date” and that “better alternative systems did not exist.”

- Edison President Howard Allen told the commission that “no responsible manufacturing company” could be expected to honor a warranty for replacement energy costs during a shutdown.

- A company brief submitted to the commission said Westinghouse could not have foreseen the generator problems and that Edison had “no chance of prevailing in any suit.”

“These were incredible statements for Edison to make given its knowledge that it could soon be involved in adverse litigation against Westinghouse,” the PUC staff report said.

Edison spokeswoman Becky Sordelet said the report was unfair and “reached a number of incorrect conclusions.”

“Edison believes that it acted prudently in refitting San Onofre Unit 1 and returning it to operation,” she said.

“Edison is extremely disappointed in both the tone and the position reflected” in the report, Sordelet added.

Randy Childress, an SDG&E; lawyer, said he found the report “fairly inflammatory” and somewhat misguided. Despite legal setbacks, Childress said the fraud claim in the lawsuit by Edison and SDG&E; is still being tried.

The negligence and warranty claims could be restored, he said, if the utilities are successful in showing that Westinghouse officials were aware of similar problems at plants in Florida, but never made San Onofre owners aware of them.

At the very least, Childress said, the commission should wait until the outcome of the suit and its probable appeals before acting.

If the commission does not remove the $56 million from the rate structure, Robert Cagen, PUC staff counsel, said utilities will interpret it as “carte blanche to conduct future outrageously imprudent activities without answering to the commission or the ratepayers it protects.”

Edison, the operating partner, owns 80% of the power plant.