PUC Shifts Costs for San Onofre to Shareholders

Shareholders of Southern California Edison and San Diego Gas & Electric should pay $265 million of $344 million in disputed construction cost overruns at the $4.51 billion San Onofre Nuclear Generating Station, the state Public Utilities Commission ruled Wednesday.

The utilities in December appealed a PUC decision that shareholders, not ratepayers, should absorb the $344 million in overruns at the plant that was completed in 1984.

If Wednesday’s ruling stands, Edison shareholders would be forced to absorb $198.9 million and SDG&E; shareholders would absorb $53 million for cost overruns at the plant, which was originally expected to cost $437 million. The two utilities have 30 days to lodge an appeal with the California Supreme Court.

Edison and SDG&E; were “gratified by the ($79.6 million) disallowance reduction . . . but disappointed” that the PUC didn’t rule that the remaining $265 million in construction costs were reasonable, Edison Chairman Howard P. Allen said.

If the decision stands, SDG&E; earnings would be reduced by 47 cents per share because of construction cost overruns at the plant. However, the utility has already taken writeoffs equal to 43 cents per share during recent quarters and the most recent decision would reduce earnings by an additional 4 cents per share.

Edison, which operates the plant, owns 75% of San Onofre. SDG&E; has 20% ownership stake, with the remainder owned by a group of municipal utilities not affected by Wednesday’s decision.