- Associated Press - Friday, March 28, 2014

LOS ANGELES (AP) - A lingering dispute has been resolved at the shuttered San Onofre nuclear power plant in Southern California: who gets to pay the bill it left behind.

About 10 months after the plant shut down, a tentative settlement Thursday would free utility customers from having to shoulder the remaining cost of faulty equipment that led to the plant’s demise.

Overall, consumer advocates said customers at two utilities would see an estimated $1.4 billion in savings, including $600 million in refunds, under the deal.

“The proposed settlement represents a huge win for consumers,” said Matthew Freedman, an attorney with the Utility Reform Network, a consumer group involved in the talks. “It will hold utility shareholders accountable for the fiasco … and expedite refunds to customers.”

The plant’s operator, Southern California Edison, and minority owner, San Diego Gas & Electric Co., have been negotiating with consumer advocates and state officials over how to divide a long list of costs from the twin-domed plant, from replacement power purchased after the plant shut down to money invested in reactor equipment.

If approved by state utility regulators, the agreement could end a long-running dispute over who has to pay for the defunct seaside plant, which was closed permanently in June after a costly fight over whether it was safe to restart.

The California Public Utilities Commission, which has been overseeing a broad investigation into the costs, must approve the agreement.

Commissioner Mike Florio said in a statement that it is “encouraging that the parties have come to a proposed resolution. If approved, it would save us another two years of litigation and offer ratepayers a more expeditious relief.”

Under a key piece of the settlement, customers of the two utilities will not have to cover the bulk of the long-term cost for defective steam generators that were at the heart of the plant’s problems, a savings of hundreds of millions of dollars.

The Office of Ratepayer Advocates - an arm of the state utilities commission - said Edison customers would be credited with refunds of about $480 million as part of the deal, and customers of the San Diego utility would receive $121 million.

At issue had been who should take the financial hit for the plant’s troubles - company shareholders or customers.

While customers will realize significant savings, the utilities will be able to collect ratepayer funds for a limited time to cover funds expended on nuclear fuel and their investment in the plant, other than the defective generators, according to the Office of Ratepayer Advocates.

Edison decided to close the plant for good in June, but it hadn’t produced electricity since January 2012, after a small radiation leak led to the discovery of extensive damage to tubing that carried radioactive water.

The problems at San Onofre centered on steam generators that were installed during a $670 million overhaul in 2009 and 2010. After the plant was shut down, tests found some tubes in the generators were so badly eroded that they could fail and possibly release radiation, a stunning finding inside the nearly new equipment.

“This proposed settlement means that customers don’t pay for the steam generator project after the tube leak at San Onofre, leaving SCE financially responsible for its ownership share in the project. Our customers will pay for replacement power they received,” Ron Litzinger, president of SCE, said in a statement.

Under other provisions, the utilities must refund any money collected from the sale of unused nuclear fuel or other excess materials or supplies at the plant. Customers would also get a share of any legal settlement involving the faulty generators.

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