SoCal Edison, PUC to Speed Cost Settlement : Rules Set for Payment of Palo Verde Investment

Southern California Edison and the California Public Utilities Commission said Wednesday that they have agreed on ground rules for deciding how much of Edison’s $1.5-billion share in the Palo Verde nuclear plant in Arizona the utility can recover from customers.

The agreement links the Palo Verde decision to the outcome of deliberations over Edison’s investment in another nuclear plant, San Onofre.

The PUC is expected to decide later this month how much of Edison’s $4.5-billion San Onofre investment it can recover.

Wednesday’s agreement “avoids a protracted and costly reasonableness review” of the Palo Verde plant, Edison said in a statement.

Recovery From Customers

Edison was referring to the lengthy process used to determine the “reasonableness” of San Onofre and other nuclear plants. The portion deemed “reasonable” can subsequently be recovered from customers.

The PUC decided last winter to look for alternative methods in the case of the Palo Verde plant near Phoenix, which is similar to San Onofre and is 16%-owned by Edison. Other owners include the Los Angeles Department of Water and Power and several Arizona utilities.

The second of three units at Palo Verde began commercial operation last month, and the third is scheduled to open next year. When the plant is in full operation, it is expected to supply about 4% of Edison’s power.

The deal approved Wednesday says that for every $100 million the PUC decides was unreasonable in the San Onofre project, $20 million will be disallowed on Palo Verde. Rates can then be phased in by Edison to recover its investment over a 10-year period, with most of the recovery in the second five years.

The agreement also sets penalties for Edison if Palo Verde operates at less than 55% of capacity and sets rewards if it exceeds 80%.