SCE incurs replacement power costs for San Onofre

Edison International (NYSE: EIX) subsidiary Southern California Edison (SCE) has incurred $117m worth of replacement power costs as of June 30 due to the ongoing outage at both units of the San Onofre nuclear plant in San Diego County, Calif., company officials said in a quarterly earnings call on July 31.

“Because of the uncertainties associated with when and at what output levels the units will or may be returned to service, total potential market power costs cannot be estimated at this time,” Edison said in its latest 10-Q filing with the U.S. Securities & Exchange Commission (SEC). Costs for power are likely to be higher during the summer months, the company noted.

During the earnings call, company officials said tube-wear problems are less severe at unit 2 compared to unit 3 and suggested unit 2 might be able to reopen by end of year at reduced power. Edison also urged Wall Street analysts not to place too much importance on target restart dates that the utility is required to file with the California ISO.

The loss of roughly 2,000 MW of nuclear generation has caused the ISO to turn to replacement sources of generation during the summer.

The target dates are currently set for the fourth quarter but there are plenty of factors that could delay restarting the units.

The company has plenty of outside experts looking at San Onofre and regulators could still order additional inspections or assessments before the units can restart, said Edison Chairman and CEO Ted Craver.

SCE has a 20-year warranty with Mitsubishi Heavy Industries, which is the vendor for the steam generators where the tube wear problems resulted in the plant being idled earlier this year. There are a number of limitations to that policy and it does not include replacement power, Edison officials said during the call.

Company officials further noted that SCE could also file a claim through its nuclear insurance for the plant.

Units 2 and 3 remain off-line for ongoing extensive inspection, testing and analysis of the steam generators, company officials noted. The U.S. Nuclear Regulatory Commission released the results from its augmented inspection team on July 19. SCE released its own tube wear data on July 13.

The California Public Utilities Commission will be required to do an investigation of the San Onofre Generating Station (SONGS) outage once units are offline for nine consecutive months. That translates to November for unit 3 and December for unit 2, Edison officials said.

Edison reported second quarter 2012 basic earnings of $0.23 per share, compared to basic earnings of $0.54 per share in the same quarter last year. Additionally, second quarter 2012 core earnings were $0.32 per share, compared to core earnings of $0.56 per share in the second quarter of 2011.


About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at