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Moody's calls San Onofre settlement reopening a credit negative for Edison

Moody's calls San Onofre settlement reopening a credit negative for Edison
The twin domes of the San Onofre Nuclear Generating Station (Don Bartletti / Los Angeles Times)

It's not a ratings downgrade, but Moody's Investor Service on Tuesday called reopening the financial details of the San Onofre nuclear plant shutdown a "credit negative" for the plant's operator, Southern California Edison.

The California Public Utilities Commission recently decided to take a second look at the $4.7-billion settlement. The move was prompted by disclosures that secret meetings were held before the deal was approved 18 months ago and by complaints that ratepayers are shouldering too much of the financial load.

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"We don't expect much to come out of it," said Toby Shea, vice president and senior credit officer at Moody's. "However, whenever a large sum of money is being re-evaluated there's a chance something could go wrong."

The Moody's report also cited the regulatory climate for utilities in California that it said leads to "more scrutiny than elsewhere in the U.S." and "can become contentious and litigious." Southern California Edison, a subsidiary of Edison International, carries an A2 rating, the third-highest on Moody's scale.

"This is a negative event for the company from a credit perspective but we did not change the rating or the official outlook of the company based on this event," Shea said. "They have a good credit rating overall because they have low financial risk."

An Edison representative declined comment.

The San Onofre Nuclear Generation Station closed in 2013 following the failure of replacement steam generators, which caused a small leak of radiation.

Under the original agreement, Edison ratepayers will pay $3.3 billion to help fund the costs of shutting down San Onofre, which has drawn criticism from consumer groups. The volume of complaints intensified after the San Diego Union-Tribune reported in 2015 that a cost-splitting agreement was discussed during an undisclosed 2013 meeting between Michael Peevey, who was commission president at the time, and an Edison executive.

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