An agreement on paying for the closure of the San Onofre nuclear power plant near San Clemente needs to be more favorable to consumers, state regulators said Friday.
As a result, electric utility officials and consumer advocates were told to make major changes in a controversial agreement about who should pay the huge costs associated with last year’s closing and the permanent shutdown of the plant.
Michael Florio, one of five members of the California Public Utilities Commission, announced Friday that a $4.7-billion proposed settlement — hammered out this spring in negotiations among plant operators, consumer groups and PUC staff members — needs big revisions.
If made, the proposed changes would make the settlement better for consumers, Florio said.
“Today’s ruling says that this formula unfairly favors shareholders over consumers and requests a modification,” he said in a statement.
The ruling follows a storm of controversy by PUC critics that unfolded after the proposed settlement was announced in March by Southern California Edison Co. and regulators. It called for ratepayers to pay $3.3 billion and the utilities to cover $1.4 billion.
At issue was whether utilities should pay more for what happened and consumers less. San Onofre closed permanently in June 2013, a year and a half after defective steam generators costing $680 million leaked small amounts of radiation.
Edison and some consumer groups had defended the agreement as fair for all parties. But settlement critics, mainly San Diego and Orange County ratepayer groups, demanded that the PUC make Rosemead-based Edison and its partner, San Diego Gas & Electric Co., pay the bulk of closing costs.
Critics of the settlement hailed Friday’s announcement as a vindication. The Utility Reform Network, a consumer advocacy group and one of the parties to the settlement, termed Florio’s ruling a modest modification that leaves the basic bones of the agreement intact.
Edison said it would review the ruling and submit comments to the commission by Sept. 19.
In Friday’s announcement, Florio spelled out what work needed to be done. He is the PUC commissioner designated to oversee the San Onofre proceeding.
Florio called for overhauling a formula for apportioning money received from any insurance settlements. He also wants to revamp the split from any recovery by Edison from legal action against Mitsubishi Heavy Industries, the Japanese firm that built the failed steam generators.
Potential savings by refinancing San Onofre assets also need to be rejiggered, Florio said.
“With the changes identified in our ruling today, I feel confident that the proposed settlement would better benefit the overall public interest and would potentially offer a constructive resolution to the challenges posed by the closure of San Onofre,” he said.
Florio’s ruling is an important breakthrough for ratepayers, said Michael J. Aguirre, a lawyer for the San Diego activists.
“He’s acknowledged that the flaws in the current draft favor the utilities over the ratepayers,” Aguirre said. “It opens the door to a whole revision.”
Any final decision should put the burden of paying for the San Onofre closure on Edison, Aguirre said. That’s what the PUC is proposing to do with a $1.4-billion fine against Pacific Gas & Electric Co. for its role in causing a 2010 fatal natural gas explosion in the San Francisco bedroom city of San Bruno, he said.