CPUC Investigation of SONGS Settlement
ORA Withdrawal of Support

 

Background

In April 2014, ORA, Edison, SDG&E, and TURN, filed a comprehensive Settlement agreement with the CPUC that would prevent Edison and SDG&E from recovering the cost of the SONGS' defective replacement steam generators from ratepayers.    

On November 19, 2014, the CPUC adopted the Final Decision approving parties' Amended and Restated Settlement Agreement. The Decision holds that customers are not responsible for paying for the defective replacement steam generators as of the date they ceased operating on February 1, 2012. Customers are, however, required to pay the costs associated with SONGS during the time the plant was operable and for other costs not related to the defective replacement steam generator. The estimated benefit to ratepayers on a present value basis, compared with the utilities’ $4.7 billion original request, is $1.12 billion for Edison customers and $286 million for SDG&E customers. Customers have paid into a separate decommissioning trust fund for several decades that will cover the costs to decommission SONGS.   

On February 9, 2015, Edison filed a two year overdue Late Ex Parte Notice with the CPUC, revealing that in March 2013 it had a substantive unreported conversation with then-CPUC President Peevey regarding an acceptable framework for a SONGS Settlement, during a trip to Warsaw, Poland.    

On April 10, 2015, the notes of the Warsaw, Poland meeting (memorialized on hotel stationery and commonly referred to as the Hotel Bristol Notes) became publicly available.  

On April 14, 2015, the CPUC issued a Ruling directing Edison to provide additional information in light of its Late Ex Parte Notice. The CPUC issued a subsequent Ruling on June 26, 2015 requesting supplemental information from Edison.  

On August 5, 2015 the CPUC issued a Ruling ordering Edison to show why it should not be fined $34 million for 10 violations, out of approximately 70 unreported conversations with CPUC decision-makers. Party Comments on the CPUC's Ruling are due on August 20, 2015.   

 

ORA Position

While ORA believes that it worked to strike a good deal for ratepayers based on legal precedents, ORA cannot honestly say that it got the best deal for ratepayers given that Edison was likely able to use its knowledge of Peevey’s position to steer the settlement in the direction it wanted. Nevertheless, at the time of the Hotel Bristol Notes revelation, ORA determined that it would not be beneficial to customers to allow Edison the opportunity to litigate for an outcome that might be worse than the Settlement.  

Instead, ORA recommended that, at a minimum, Edison be sanctioned and required to return to ratepayers an additional $648 million, which represents the difference between ORA’s original litigation position and what the settlement provided. ORA also filed a Motion with the CPUC, requesting that it ban communications between Edison and the CPUC on this issue. 

ORA believed then, as it does now, that the appropriate way to address the massive and pervasive violations is to extract sufficient penalties and fines that would remove any benefit Edison might have achieved as a result of its unlawful communications. However, based on the CPUC’s August 5 Ruling, it does not appear the CPUC will consider compensating ratepayers for Edison's unlawful activities that served to undermined the SONGS settlement negotiations.   

 

ORA Petition to Modify

ORA now takes the position that the interests of ratepayers will be best served by allowing ORA, TURN, the Alliance for Nuclear Responsibility, and other consumer groups to work towards a litigated outcome for all issues in the SONGS Investigation.  

On August 11, ORA filed a Petition for Modification recommending that the CPUC should overturn its November 2014 Decision on the SONGS Settlement, and it should act quickly to re-establish the SONGS Investigation proceeding:  

Phase 1: Nature and effects of the steam generator failures in order to assess the reasonableness of utility actions and expenses, and whether customer refunds are required.  

  • The Commission should vote on the Proposed Decision as soon as possible. 

Phase 2: Adjustments to Edison’s rate base and revenue requirement.   

  • The Commission should prepare a Proposed Decision quickly, given that the record is already complete.  

Phase 3: Causes of damage, allocation of responsibility, reasonableness of repair actions. 

  • The Commission should hold a Prehearing Conference to establish a schedule for testimony, hearings, briefing, and the issuance of a proposed decision. 

 

ORA Response to CPUC Ruling on Edison Ex Parte Violations

On August 20, 2015, ORA filed a Response to the CPUC’s August 5 Ruling. The Ruling raises concerns for ORA on two counts:  

  1. The Ruling fails to acknowledge and remedy the fact that the SONGS settlement arose from a tainted process. 
  2. The Ruling’s erroneous interpretation of laws regarding ex parte requirements that will have a deleterious effect on how the CPUC does business fairly and transparently in the future. 

In addition to re-establishing each of the three above phases, ORA Recommends:  

  • All ex parte violations, identified by correctly applying the law, be sanctioned to the maximum extent allowed by law. 
  • The SONGS Settlement Agreement - entered into by ORA, Edison, SDG&E, The Utility Report Network (TURN), Friends of the Earth, and the Coalition of California Utility Employees - which was adopted by CPUC Decision be rescinded due to the ex parte law violations. 

 

ORA CPUC Filings:

  • See ORA's August 20, 2015 Response to the CPUC's Ruling. 
  • See ORA's August 11, 2015 Petition for Modification requesting the CPUC overturn its decision adopting the settlement and reopen the SONGS investigation to be resolved via litigation.  
  • See ORA's May 7, 2015 Motion requesting an Interim Ban on Communications between Edison and the CPUC. 
  • See ORA's April 17, 2015, ORA Press Release expressing outrage at Edison's revelations regarding the Peevey-Edison Hotel Bristol Notes and its Late Ex Parte Notice demonstrating CPUC rule violations that occurred prior to the commencement of the SONGS settlement negotiations.  

 

Proceeding Docket

See the CPUC Proceeding docket to access the record of the case. 

Visit the docket to subscribe to updates in this proceeding.  
 

 

Other Resources

Alliance for Nuclear Responsibility Petition for Modification: Requests CPUC to Set Aside its Approval of the SONGS Amended Settlement  -- April 27, 2015