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Dueling opinions over billing utility customers for shuttered San Onfore

Dueling opinions regarding the necessity and wisdom behind continuing to charge ratepayers for the full operation costs of San Onofre Nuclear Generating Station despite its failure to actually generate power for over a year played out on the pages of the Los Angeles Times and elsewhere yesterday (March 13).

Earlier this week, the Times’ Michael Hiltzik published a column calling the ongoing emergency shutdown at San Onofre a “train wreck.” Noting that customers of plant operator Southern California Edison and minority plant owner San Diego Gas & Electric are still paying upwards of $68 million per month to cover the operation costs at a non-operational plant, Hiltzik opines:

The longer the utilities keep collecting money for this road kill, the more the inequities pile up: Even if the utilities are eventually ordered to refund some or all of the costs of San Onofre, who will get the money? It's unlikely that Edison would be ordered to track down every ratepayer who has moved away. So the "refund" might take the form of lower rates in the future — but how confident can you be that the complex accounting required would be perfectly accurate, dollar for dollar?

Accordingly, the only fair way to deal with the cost of San Onofre is to stop letting the utilities collect it, by taking the plant out of their rate base instantly.

Meanwhile, Thomas Elias weighs in at Pomerado News, asserting that, given the scheduled opening of several new natural gas facilities in the area, the necessity of ever getting San Onofre functional again is called into doubt:

By late summer, even without San Onofre, Southern California will have excess generating capacity of 30 percent, and Northern California nearly 40 percent excess. Three new gas-fired generating plants — all within 80 miles of San Onofre and with a total output close to San Onofre’s maximum 2,350 megawatts — are due to come online this summer.

Yesterday, Southern California Edison president Ronald Litzinger fired back, also in the Times.

“Because all electricity in the grid is the same no matter where it comes from -- solar panels, wind farms or nuclear plants -- what customers are paying for is the constant supply of power from the entire grid, regardless of which components are currently offline,” says Litzinger, in defense of continuing to charge ratepayers for San Onofre despite the extended outage. He also points to the fact that security and safety expenditures remain while the plant is shut down, and that a portion of ratepayers’ money goes toward a long-term fund for the eventual dismantling of the facility.

Hiltzik isn’t buying Litzinger’s justifications, and quickly published his own rebuff of the utility executive’s rebuttal:

First of all, San Onofre is a fiasco, and Edison is the responsible party. The utility oversaw the $770-million replacement of its aging generators with new units that developed unacceptable wear within about 20 months. As a result, the plant was taken offline at the end of January 2012. No one is sure whether it can be restarted -- Edison's latest plan is to run one of the two units at 70% of capacity for a few months, if federal regulators allow.

The second issue is that no one is saying Edison shouldn't recover anything for San Onofre; the quesiton is whether ratepayers should be advancing the money now for a dead plant, under conditions that will make it difficult, if not impossible, for them to recover the outlay dollar for dollar even if state regulators order refunds.

The Nuclear Regulatory Commission is still weighing a proposal to allow one of the two reactors to restart and run under partial power on a five month trial basis. Edison has not released plans to restart the second unit.

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Dueling opinions regarding the necessity and wisdom behind continuing to charge ratepayers for the full operation costs of San Onofre Nuclear Generating Station despite its failure to actually generate power for over a year played out on the pages of the Los Angeles Times and elsewhere yesterday (March 13).

Earlier this week, the Times’ Michael Hiltzik published a column calling the ongoing emergency shutdown at San Onofre a “train wreck.” Noting that customers of plant operator Southern California Edison and minority plant owner San Diego Gas & Electric are still paying upwards of $68 million per month to cover the operation costs at a non-operational plant, Hiltzik opines:

The longer the utilities keep collecting money for this road kill, the more the inequities pile up: Even if the utilities are eventually ordered to refund some or all of the costs of San Onofre, who will get the money? It's unlikely that Edison would be ordered to track down every ratepayer who has moved away. So the "refund" might take the form of lower rates in the future — but how confident can you be that the complex accounting required would be perfectly accurate, dollar for dollar?

Accordingly, the only fair way to deal with the cost of San Onofre is to stop letting the utilities collect it, by taking the plant out of their rate base instantly.

Meanwhile, Thomas Elias weighs in at Pomerado News, asserting that, given the scheduled opening of several new natural gas facilities in the area, the necessity of ever getting San Onofre functional again is called into doubt:

By late summer, even without San Onofre, Southern California will have excess generating capacity of 30 percent, and Northern California nearly 40 percent excess. Three new gas-fired generating plants — all within 80 miles of San Onofre and with a total output close to San Onofre’s maximum 2,350 megawatts — are due to come online this summer.

Yesterday, Southern California Edison president Ronald Litzinger fired back, also in the Times.

“Because all electricity in the grid is the same no matter where it comes from -- solar panels, wind farms or nuclear plants -- what customers are paying for is the constant supply of power from the entire grid, regardless of which components are currently offline,” says Litzinger, in defense of continuing to charge ratepayers for San Onofre despite the extended outage. He also points to the fact that security and safety expenditures remain while the plant is shut down, and that a portion of ratepayers’ money goes toward a long-term fund for the eventual dismantling of the facility.

Hiltzik isn’t buying Litzinger’s justifications, and quickly published his own rebuff of the utility executive’s rebuttal:

First of all, San Onofre is a fiasco, and Edison is the responsible party. The utility oversaw the $770-million replacement of its aging generators with new units that developed unacceptable wear within about 20 months. As a result, the plant was taken offline at the end of January 2012. No one is sure whether it can be restarted -- Edison's latest plan is to run one of the two units at 70% of capacity for a few months, if federal regulators allow.

The second issue is that no one is saying Edison shouldn't recover anything for San Onofre; the quesiton is whether ratepayers should be advancing the money now for a dead plant, under conditions that will make it difficult, if not impossible, for them to recover the outlay dollar for dollar even if state regulators order refunds.

The Nuclear Regulatory Commission is still weighing a proposal to allow one of the two reactors to restart and run under partial power on a five month trial basis. Edison has not released plans to restart the second unit.

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