Regulators, Utilities Agree to Close Oldest San Onofre Nuclear Reactor

State utility regulators and two Southern California power companies agreed in principle to shut down the oldest of the three nuclear reactors at San Onofre, officials representing the three groups announced Thursday.

After a year of wrangling over operating costs at the San Onofre Nuclear Generating Station Unit No. 1, the utilities consented to a recommendation to close the 24-year-old reactor at the end of its current fuel cycle, which should be within a year and a half.

State regulators said the cost of fixing and upgrading Unit 1 would add up to more than simply closing it down.

The agreement, which would allow the utilities to charge higher rates to recover $450 million of their investment in the plant, must be approved by the California Public Utilities Commission.

Repairs to the aging reactor--the oldest reactor operating in California--during the last five years have lowered use to 50%, said Robert Kinosian, project manager for the commission’s review of the plant. Consumers stood to pay another $250 million to $750 million to keep the reactor operating through its life expectancy, until the year 2007, Kinosian said.

According to the study, conducted by the commission’s public advocacy division, the plant also would need $125 million in upgrades to meet current safety requirements, Kinosian said.

Officials at Southern California Edison and San Diego Gas & Electric Co., the plant’s owners, said any cost estimate is difficult to project and would be unreliable given fluctuating fuel prices. However, they conceded that the plant was susceptible to costly malfunctions.

“You just don’t know what’s going to happen with an older unit,” said Stephen Baum, general counsel to SDG&E.; “With respect to costs, the future is uncertain. . . . That’s one of the factors that compelled us to settle.”

Another point of contention was the amount of return on the utilities’ investment.

Construction costs for the reactor in 1968 totaled $97 million. Additional investments have been made to upgrade the reactor to increasingly stringent Nuclear Regulatory Commission standards.

According to the agreement, SDG&E; will be entitled to recover $100 million of its investment during the four years following approval of the agreement. Edison is entitled to $350 million. Ownership of the plant is split 80%-20% between Edison and SDG&E;, respectively.