Edison decides to close San Onofre; foes claim victory

Edison International (NYSE:EIX) subsidiary Southern California Edison (SCE) is giving up on its effort to win approval to restart one of the San Onofre Nuclear Generating Station (SONGS) units and will instead permanently retire the dual reactor plant with a generating capacity of 2,200 MW.

The two pressurized water reactors (PWRs) are located in San Clemente, Calif.

“SONGS has served this region for over 40 years,” said Edison International Chairman and CEO Ted Craver, “but we have concluded that the continuing uncertainty about when or if SONGS might return to service was not good for our customers, our investors, or the need to plan for our region’s long-term electricity needs.”

In connection with the decision, SCE estimates that it will record a charge in the second quarter of between $450m and $650m before taxes ($300m – $425m after tax), in accordance with accounting requirements.

Units 2 and 3 have been idle since January 2012 after unusual tube wear was discovered in two Mitsubishi Heavy Industries steam generators that were replaced a few years earlier.

Revival of San Onofre Unit 2 had been vehemently fought in legal and administrative fronts by Friends of the Earth (FOE) and other groups. San Onofre foes had an important ally in Sen. Barbara Boxer, D-Calif., who chairs the Senate Committee on Environment and Public Works.

Boxer has slowed the confirmation process of Nuclear Regulatory Commission (NRC) Chair Allison Macfarlane over NRC’s handling of San Onofre.

“I am greatly relieved that the San Onofre nuclear plant will be closed permanently,” Boxer said June 7. “This nuclear plant had a defective redesign and could no longer operate as intended. Modifications to the San Onofre nuclear plant were unsafe and posed a danger to the eight million people living within 50 miles of the plant.”

“I want to thank the community organizations that came forward with information which demonstrated that the plant redesign presented a great risk to the public,” Boxer went on to say.

During a conference call on San Onofre, FOE President Eric Pica said his organization had taken no position on Macfarlane’s nomination to a new term. Macfarlane’s current term expires at the end of June. FOE officials said during the call they believe that NRC has been “captured” by the nuclear industry.

SCE had hoped to restart Unit 2 at 70%

After months of analysis and tests, SCE submitted a restart plan to the NRC in October 2012. SCE proposed to safely restart Unit 2 at 70% power for an initial period of five months starting this summer.

A “turning point” in the San Onofre saga came in a May 13 ruling by the NRC’s Atomic Safety and Licensing Board. The ASLB agreed with an FOE petition in 2012 that restart proceedings for Unit 2 should be treated as a license amendment case.

On June 7, SCE said it would work toward a safe, orderly retirement of these units. Full retirement of the units prior to decommissioning will take some years in accordance with customary practices. Actual decommissioning will take many years until completion. Such activities will remain subject to the continued oversight of the NRC.

SCE intends to pursue recovery of damages from MHI, the supplier of the replacement steam generators, as well as recovery of amounts under applicable insurance policies.

Only last month, Dominion (NYSE:D) retired the Kewaunee nuclear plant in Wisconsin for economic reasons. Also earlier this year, Duke Energy (NYSE:DUK) said it would not pursue restart and instead permanently retire the Crystal River 3 nuclear plant in Florida.

The four nuclear unit retirements this year illustrate how unreliable that aging nuclear plants can be, FOE officials said in their conference call. They also claimed that SCE is at fault for allowing “defective” steam generators to be installed at SONGS at a cost of more than $670m

San Onofre needs to be retired, FOE officials said. It is in the middle of a seismic zone and millions of people live near it, they said.

NEI: NRC took too long to act on restart

An industry trade group, the Nuclear Energy Institute (NEI), suggested NRC’s slow-moving review was partly to blame.

“This situation underscores the need for an efficient and effective regulatory process that results in timely decisions on the operation of these critical energy resources,” NEI said.

“SCE’s restart plan was based on work done by engineering groups from three independent firms with expertise in steam generator design and manufacturing. When three different independent reviews indicate that it is safe to restart the reactor, it’s simply intolerable to delay decisions that impact millions of customers and the company’s obligation to provide electricity to those customers.”

Sempra Energy (NYSE:SRE) subsidiary San Diego Gas & Electric (SDG&E) issued a statement saying that impact of the closing should be blunted this summer by opening of the Sunrise Powerlink, and use of additional contracted resources.

SDG&E has a 20% minority ownership interest in SONGS, and, historically, has received 20% of its power from the facility. The city of Riverside, Calif., owns less than a 2% interest in the plant.

Days earlier, a MidAmerican Energy Holdings (MEH) unit announced that it would not pursue a nuclear plant in Iowa anytime soon, although it does like the idea of small modular reactors.

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 wayneb@pennwell.com.