Customers Will Finance Shuttered Nuclear Unit

California’s oldest commercial nuclear generator--the landmark concrete cylinder at San Onofre’s beachside--will shut down permanently late this year in the face of diminished efficiency and uncertain costs of keeping the 23-year-old plant operating.

But, even as the oldest of the three nuclear power units near San Clemente goes dark as it depletes its last fill-up of uranium fuel, Southern California ratepayers will still absorb its costs for another four years.

In an agreement blessed Tuesday by the state’s Public Utilities Commission, the two utilities that own the San Onofre Nuclear Generating Station were allowed to recover from ratepayers the $460 million in costs--plus interest--that they have sunk into the plant and have not yet recouped.

The average utility customer will pay about 75 cents additionally per month over the next four years to reimburse the utilities for the cost of Unit 1. The charge prompted critics on Wednesday to complain that they’re being unfairly stuck with the utilities’ failed investment.

“The PUC is making a massive giveaway to the utility companies and their investors by saddling the ratepayer with the entire future costs of their failed venture,” said Lyn Harris Hicks, spokeswoman for an environmental group called Guard. “No other industry is so protected when its venture fails.”

The executive director of the San Diego-based Utility Consumers Action Network said he wasn’t delighted by the PUC’s settlement but would grin and bear it.

“The settlement makes the best of a bad situation,” said Michael Shames. “Given the political reality and the makeup of the PUC, I don’t think it was prepared to do the right thing: to not sock the customers with the closing costs. But we couldn’t have reasonably expected anything better. The settlement was fair, given the political makeup of the commission.

“The whole experience of San Onofre is akin to when your least favorite in-laws finally leave town. You’re glad they’re going--but still wish they had never come in the first place, because of the cost and trauma they caused you.”

The PUC approved the closure plan and utility payoff after the commission’s ratepayers advocacy division argued that San Onofre Unit 1 was no longer cost-effective and thus had stopped being a good deal for ratepayers.

Southern California Edison Co., which owns 80% of the San Onofre Nuclear Generating Station, and San Diego Gas & Electric Co., which owns the balance, argued that the Unit 1 was still a dependable workhorse despite its years and deserved to stay operating--even at a cost of $125 million or more in additional improvements that it faced later this year.

The 450-megawatt unit, which began producing electricity in 1968 as California’s second venture into commercial nuclear power, was designed to operate to the year 2004. (The state’s first on-line nuclear power plant, a small generator in Humboldt County, is closed.)

During its first 11 years, San Onofre’s Unit 1 generally worked at more than 70% efficiency, earning the reputation of a cost effective and clean power source for Southern California. It provided about 2.5% of Edison’s power needs, and 3% of SDG&E;’s.

But, since 1980, the plant was inoperative for extended times as its owners pumped in more than $300 million in retrofitting costs and other repairs to meet new seismic and safety standards mandated by the Nuclear Regulatory Commission.

In recent years, its efficiency has slipped to between 50% and 60%--although it currently has set a record among the three San Onofre units for operating 267 consecutive days.

PUC staff officials had estimated that, to keep Unit 1 on line, ratepayers stood to pay $250 million to $750 million in additional costs. It would be cheaper, the PUC’s ratepayers advocacy office argued, to simply shut it down and buy power elsewhere and rely on San Onofre’s two newer, dome-shaped generators, built in 1984 and 1985, to pick up the slack.

Once the unit is shut down, it will be mothballed until the two newer units are decommissioned in the year 2013.

The closure of Unit 1 will cost the jobs of about 500 employees who work there--from maintenance to high-tech experts--under contract to Edison.

Edison spokesman Steve Hansen said the premature closing of Unit 1 should not suggest that the newer units won’t complete their own life expectancies.

“Unit 1 was operating in different circumstances, in a period where there were lots of new requirements that forced several retrofittings. That added to its cost,” he said. “We fully expect the other two units will operate through their design life.”