It turns out, there is a kind of lemon law for power plants, and Southern California Edison may be about to get squeezed.
State regulators say they plan to study whether the company should lose its ability to recoup the full $680 million cost for four replacement steam generators, which were installed in recent years at San Onofre Nuclear Generating Station and quickly developed problems that have shut down the plant since January.
A state law allows regulators to suspend higher rates that consumers are charged to cover power plant upgrades if those upgrades stop working for at least 9 months. For San Onofre, that threshold would be crossed in October.
In California, ratepayers —- through higher rates on their monthly utility bills —- have already shelled out about $258 million toward the cost of replacing the generators, according to California Public Utilities Commission spokesman Andrew Kotch.
He said in an email Monday that “in light of recent events, the CPUC will review the prudence of the expenditures and may disallow further cost recovery.”
The agency is set to convene a special investigation later this year that will determine whether ratepayers should continue to offset the cost of the pricey and now failing components. The same probe will examine whether ratepayers should cover the cost of repairing the generators.
Edison spokeswoman Jenifer Manfre said in an email that the utility would cooperate with any investigation brought by the commission.
The company finished installing the 65-foot-tall heat exchangers in 2011.
To help pay for the improvements, Edison sought permission in 2005 to raise its rates by 2 percent. San Diego Gas Electric customers also experienced a similar increase because the utility owns 20 percent of San Onofre.
Edison shut down one of the plant’s two reactors on Jan. 31 after detecting a leak in one of the nearly 10,000 thin alloy tubes inside of the unit’s two brand-new generators. The plant’s other reactor —- Unit 2 —- was already shut down for refueling and maintenance when the leak was detected.
Both units have remained shut down since the last day of January as Edison looks for a solution to unexpected amounts of wear that has caused the utility to prematurely plug hundreds of tubes, which carry radioactive water.
Edison announced last week that it has spent $48 million to inspect and perform initial repairs to the generators and another $117 million to purchase replacement power since the plant went off-line.
Anti-nuclear groups have been following the shutdown at San Onofre —- and the CPUC’s response to it —- very closely.
Rochelle Becker, president of the watchdog group Alliance for Nuclear Responsibility, said Monday that she intends to ask the agency to refund what ratepayers have already spent on the steam generator upgrades.
She likened the ongoing problems at nuclear power plant to buying a new car that turns out to be a lemon.
“They want us to pay for a car that we can’t drive,” Becker said. “We’re giving the car back. If Edison’s shareholders want to fix the car and give it back to us in driving condition, we’ll discuss it.”
Other anti-nuclear groups seem to be pressing the same point. Recently a photo of the seaside plant that had been digitally altered —- its domes replaced with lemons —– popped up on an anti-nuke website.
A California statute requires public utilities like Edison to file for a “reasonableness review” if newly-minted projects like the steam generator replacement are out of service for nine straight months after they are completed.
At a hearing last week, CPUC president Michael Peevey said that Edison will file a notice regarding the nine-month limit on Nov. 1, at which point the commission is expected to open its own investigation into the costs of the steam generator replacement.
Truman Burns, an analyst for the Division of Ratepayer Advocates at the utilities commission, said commissioners have broad powers to cut a project’s purse strings if they find that its cost is no longer reasonable.
When the commission gave Edison approval in 2005 to proceed with the project and pass the cost on to rate payers, it said the costs should not exceed $680 million, Burns said.
The project also has a “hard cap” of $782 million.
The law seems to allow the commission to reconsider all costs of the project, including those that have already been paid, Burns said. So, does this mean that the utility customers might be getting a check in the mail, or some sort of rate reduction? Burns said no one really knows what will happen.
“It’s never been tested to my knowledge,” he said.
So far, the ratepayer advocate’s office has not weighed in on how the commission ought to proceed. Burns said his office is studying the issue.
“It’s definitely an area we’ve spotted, and we’re thinking about it,” Burns said.