By John Lawrence / San Diego Free Press
We have written before about how electric utility companies try to get ratepayers rather than stockholders to pay for repairs to their equipment.
In particular, we wrote previously how SDG&E appealed to the California Public Utility Commission (CPUC) for a rate increase after the disastrous Witch Creek fire:
“It’s standard operating procedure for San Diego based SEMPRA Energy, parent corporation of San Diego Gas and Electric, to delay costly maintenance and then, when there is a breakdown in the system such as the 2007 Witch Creek Fire which burned 198,000 acres, killed two people, injured 40 firefighters and destroyed more than 1,100 homes, to go to the California Public Utilities Commission (CPUC) and get a ruling that would allow them to charge the ratepayers for costs associated with that disaster.”
Now Southern California Edison (SCE) and SDG&E, majority and minority owners, respectively, are using the same playbook with regard to the repairs undertaken at the San Onofre Nuclear Generating Station (SONGS).
Almost exactly a year ago the plant was shut down because of a radiation leak. Now after extensive repairs SCE and SDG&E want to reopen one of SONG’s reactors at 70% of full strength, and they want the ratepayers to pay for the testing and repairs that took place in 2012 even though no power whatsoever was put on the grid in 2012.
But this is nothing new. This is standard operating procedure for electric utilities all over the country. Case in point: Jersey Central Power and Light (JCP&L) after the Superstorm Sandy debacle.
The steam generators at SONGS were replaced in 2010 at a cost approaching a billion dollars for which the ratepayers have been paying. Those steam generators were supposed to last 20 years. Instead they lasted just two. The question is should ratepayers get a refund for paying for power they did not receive.
In addition what about the billion dollars that was paid by ratepayers to replace the steam generators in 2010 which only lasted two years. Should ratepayers get reimbursed for that? Also should ratepayers pay another billion dollars to fix SONGS again or should it be relegated to the dustbin of history?
John Geesman, former member of the California Energy Commission and now an attorney with the watchdog group Alliance for the Nuclear Responsibility says that, until the California Public Utilities Commission (CPUC) decides otherwise, ratepayers will still be on the hook for San Onofre – about $10 a month per household.
“The real key from my perspective is whether the senior management at Edison, once they realize they’re playing with shareholder dollars rather than just something they pass through to ratepayers, will make faster decisions on San Onofre,” Geesman said. The question is whether San Onofre is cost effective at all at this stage or whether ratepayers should be footing the bill for a nuclear generating plant that is not even operating at full capacity.
But even cost considerations take second place to the issue of whether SONGS is safe at all and should even be operating so close to so many households in an earthquake prone area. Remember Fukushima? Many local citizens like San Clemente Green chairman Gary Headrick are adamant that San Onofre should not be reopened. Reopening the plant could endanger 8 million people living nearby in Carlsbad, San Clemente and even San Diego.
Critics also say that San Onofre is not needed since we got through the summer of 2012, one of the hottest ever, without a power outage. At a meeting held to air local concerns, a local resident said, “We demand a full, transparent adjudicatory hearing and license amendment process, including an evidentiary hearing and sworn testimony and cross-examination. We cannot be [an] experiment waiting for more radiation leaks.” Such a hearing would allow outside experts to testify.
It seems that SCE and SDG&E knew for some time that there were problems at San Onofre, but did little about them. Repair work that should have been undertaken to address vibration that led tubes to rub against each other and against support structures inside the generators was never undertaken. And this is typical for electric utilities that go by the philosophy that repair work is costly and detracts from the bottom line.
Wall Street does not approve. That’s why many utility companies are laying off workers whose job it is to replace aging equipment. In fact in August 2012 SCE announced plans to lay off more than 700 workers. Their attitude is ‘let it break down; then we’ll ask the PUC for a rate increase to make repairs.’ This way it comes out of the ratepayers’ hide and not the shareholders’. This maximizes stock prices and consequently CEO pay.
Only this time we’re not just talking about utility poles that should have been replaced snapping and cutting power lines; we’re talking about nuclear radiation that could make the homes of 8 million people uninhabitable at the very least.
In “The Fine Print,” David Cay Johnston writes:
“The problem … with poorly maintained equipment is widespread. America is using up its infrastructure instead of rebuilding it. We grow slowly poorer as roads crumble, dams weaken on their way to deadly collapses, and the electric utilities siphon off funds customers pay for reliable power.
“One indicator of this? From 1983 to 2010, the number of Americans rose 36 percent, but the number of utility workers fell 15 percent. As the electric grid and the pipes carrying water and natural gas under high pressure age, more workers are needed for maintenance, repair and replacement, not fewer.”
As of January 31, 2013, California’s Attorney General, Kamela Harris, is getting involved concerning whether ratepayers should pay the billions in repairs both in 2010 and 2012. She is joining the CPUC investigation that could either cost or save ratepayers a lot of money. Should the public get reimbursed for the large expenditures which seemingly have done little good?
SCE wants the CPUC to wait until 2015 to make a decision. Why does SCE want the PUC to wait? Obviously, so they have even more time and chances to lobby the CPUC to make ratepayers not shareholders pay the costs of their blunders and so they can plan more travel junkets to Hawaii. Of course ratepayers would like to have their bills lowered now and to be reimbursed for energy they paid for but did not get.
It is well known that SCE has lobbied the CPUC for years. In fact they have paid for travel junkets for CPUC commissioners. I wrote previously that “… politicians who support the utility corporations’ agenda get their share of free travel as well. Each year more than a dozen California state lawmakers enjoy a free trip to Hawaii. In 2011 they checked into the luxurious Fairmont Kea Lani hotel in Maui. California law prohibits state lawmakers from taking more than $400 a year in gifts.
But, as ever, there’s a loophole. The $13,000. trip to Maui for lawmakers was paid for by a nonprofit corporation, the Independent Voter Project (huh?), which is a front group for [PG&E and Southern California Edison.]”
The San Onofre nuclear power plant has been offline for a year, due to faulty steam generators, but ratepayers are still paying more than $50 million a month for the non existent power.
The CPUC is considering whether ratepayers should be reimbursed and whether they should be reimbursed for the billion dollars in repairs they did a couple years ago or only for recent repairs. SCE has lobbied this one to death and it looks like the CPUC will only favor ratepayer reimbursement on a more limited basis.
Don Kelly of the Utility Consumers Action Network (UCAN) said in an interview on KPBS, “We need to decide whether we should spend another billion dollars repairing a plant that was repaired a couple of years ago for a billion dollars.” And don’t forget the billion dollars that was spent running the plant in 2012 that produced no electricity!
The CPUC is currently investigating whether ratepayers should be on the hook for those costs and if they should get a retroactive refund for the time the plant has been offline. The CPUC has scheduled two hearings on Feb. 21 in Costa Mesa to get public comment about ratepayer issues.
But the question should be asked: why doesn’t Carlsbad, San Clemente and San Diego form a municipal utility district instead of relying on corporate owned utilities to generate their power? Why is the head of Southern California Edison paid more than $3.5 million a year while the general managers of the municipally owned LA Department of Water and Power and the Sacramento Municipal Utility District each earn around $350,000. These municipally owned utilities have for years provided reliable power at lower costs then corporate owned utilities.