San Onofre bailout under growing fire

Jason Hickey / flickr

Jason Hickey / flickr

California’s powerful, politically connected giant electricity utilities are used to getting their way and to getting help when things go wrong.

When an ineptly designed state power “deregulation” law exposed Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric to catastrophic losses in early 2001, Gov. Gray Davis and the state Legislature jumped in with controversial state-dictated emergency deals that stabilized the companies. Earlier this year, the Public Utilities Commission approved a deal in which PG&E’s $1.6 billion fine for the 2010 San Bruno natural-gas disaster included $850 million for transmission-line safety upgrades and improvements the utility intended to make anyways.

But in San Diego County, there’s been slowly building opposition to the PUC’s November approval of a plan in which $3.3 billion of the $4.7 billion cost of closing both the reactors at the San Onofre nuclear power plant is borne by ratepayers. Edison is 80 percent owner of the plant, while SDG&E owns the remaining 20 percent. As part of the plan, there has been no formal PUC investigation into the problems that led to the plant being shuttered.

The PUC, Edison and SDG&E maintain that the deal was in keeping with established practices in the utility industry and that there is nothing unusual or onerous about how the costs were divvied up. They note that the initial proposal from the PUC staff was modified to make it more friendly to ratepayers.

However, the circumstances of the initial negotiations — in which key decisions were made on March 26, 2013, in a secret meeting between then-PUC president Michael Peevey and an Edison executive named Stephen Pickett in a hotel room in Warsaw, Poland — continue to produce headlines and ongoing civil and criminal investigations. Peevey’s home was raided by FBI agents early this year.

The PUC’s resistance to independent investigators is also adding to the fire. Utility officials have long resisted releasing basic information about the San Onofre decision-making process.

san.onofreBut beyond the veneer of scandal, many San Diego County ratepayers keep returning to the circumstances that led to San Onofre’s closure.

Both reactor units [went offline in] January 2012, after a small leak of radioactive gas prompted shutdown of one unit; the other was already offline for routine maintenance.

 

Unexpected wear was found in the metal tubes that carry radioactive water in all four of the plant’s steam generators, two generators for each reactor.

 

The steam generators were installed between 2009 and early 2011 in a $670 million operation.

That’s from the O.C. Register.

‘Where do we find accountability?’

Dozens of letter-writers and online commentators argue that Mitsubishi, the Japanese conglomerate that made the defective generators, should be forced to pay damages beyond refunds it has already agreed to do in litigation.

These critics also wonder how Edison and SDG&E can only be socked with 30 percent of the San Onofre closure costs when their management of the plant’s upkeep was so poor that huge, costly, essential new machinery started faltering almost immediately.

A reporter for Northern California’s KQED caught the public’s mood in a visit to San Diego this spring:

Sorrentino’s Pizza owner Patrick Quinn is tired of watching the energy bill at his San Diego restaurant go up each month [as a result of SDG&E’s big rate hikes] …

 

Quinn calls [the $4.7 billion] settlement illegitimate because the Public Utilities Commission allowed it without a full investigation of who was responsible for the plant’s failure and who should be held accountable.

 

“Where do we find accountability?” Quinn said. “The steam generators — why did they fail? These are simple questions that should be asked.”

‘I’m not here to answer your goddamned questions’

MikeAguirreThe San Diego trial lawyer who is targeting the PUC and utilities in a lawsuit — former City Attorney Mike Aguirre — opposed the San Onofre deal from the start. As the Union-Tribune reported, this led to an ugly turn at a May 2014 PUC board meeting.

The president of the California Public Utilities Commission swore and angrily refused to answer questions last week at an unusual hearing at which he was asked about communication with his former employer, Southern California Edison.

 

The president, Michael Peevey, was questioned by former San Diego City Attorney Mike Aguirre about his role if any in reaching a proposed settlement between utility companies and consumer advocacy groups regarding $4.7 billion of shutdown costs for the San Onofre nuclear power plant.

 

Aguirre asked Peevey if he had any meetings with Edison, the company he once headed, regarding the settlement.

 

Such contact would be inappropriate because Peevey and the commission are supposed to be impartial arbiters at public proceedings regarding whether the settlement is fair to all parties.

 

Aguirre is making the case that it’s a bad deal for utility customers to cover $3.3 billion of the shutdown costs, as proposed in the settlement.

 

“I’m not here to answer your goddamned questions,” Peevey told Aguirre. “Now shut up — shut up!”

Eight months later, emails obtained by the Union-Tribune revealed that Aguirre’s speculation was correct: Peevey had met with the Edison executive in Poland in 2013 to talk about San Onofre’s closing and who would pay for it.

Last week, another lawsuit was filed in San Diego federal court, the U-T reported.

A federal lawsuit filed this week accuses two top Edison International executives of harming shareholders by failing to disclose secret meetings with California regulators regarding a $4.7 billion settlement of costs for the failure of the San Onofre nuclear plant.

 

The lawsuit alleges that Edison CEO Ted Craver and Chief Financial Officer Jim Scilacci failed to disclose private communication with decision makers at the California Public Utilities Commission, including a March 2013 meeting at a luxury hotel in Poland.

Meanwhile, civil and criminal investigations of the PUC continue. There are no indications, however, that indictments or fines will be announced anytime soon. The PUC is still deciding which documents to provide investigators, and utilities have also balked at some requests for information.

11 comments

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  1. Brandon
    Brandon 14 July, 2015, 10:14

    The California Public Utilities Commission (CPUC) is simply a California taxpayer funded $1.33 billion dollar regulatory bureaucracy that is in cahoots with the power and natural gas regional monopolies/energy cartels that control this state. California taxpayer and ratepayers are getting ripped off by the CPUC and the California energy cartels.

    IT IS TIME FOR A FREE MARKET FOR ELECTRICITY AND NATURAL GAS IN CALIFORNIA. GET RID OF THE CPUC AND THE REGIONAL ENERGY MONOPOLIES/CARTELS. LET THEM COMPETE FOR RATEPAYERS DOLLARS.

    Reply this comment
  2. Dyspeptic
    Dyspeptic 14 July, 2015, 15:07

    This article describes a classic example of regulatory capture, where a revolving door exists between regulators and the industries they are supposed to regulate. In an honest regulatory system high ranking executives from the regulated companies wouldn’t be allowed to become top regulators, or vice versa. Yet it happens all the time.

    This scam is also very common at the Federal level, as is the revolving door between White House PR flacks and the establishment news media that act like extensions of the DNC.
    Doofus Americanus doesn’t seem to care though. Too busy obsessing over Kardashian booty pics I guess.

    Man what a stupid, complacent and repulsive country we have become. Love those government schools.

    Reply this comment
  3. Bill Gore
    Bill Gore 15 July, 2015, 06:37

    San Onofre: The nightmare will NEVER end!! Built on top of a FAULT, right next to the ocean (tsunamis) with nowhere to send its many hot tons of spent fuel rods, which will be extremely toxic for millenia – truly an american engineer’s wet dream. And not one IOTA of accountability, of course, just an endlessly revolving door between industry and regulators. And the Peevey getting peeved and losing his cool in a public forum-NOT COOL. Someone get back to Mr.Peevey and tell him that Rule 1 of con men is you NEVER lose your cool, EVER. Icy, crisp as a fresh cucumber from the produce section. Cheers to Mike Aguirre-the last honest man in San Diego!

    Reply this comment
  4. CaptD
    CaptD 17 July, 2015, 13:43

    Readers might be very interested to learn that Pomerantz LLP is now involved in San Onofre Gate*:

    Edison sued over secret Poland talks Shareholder says company erred in not disclosing

    http://www.sandiegouniontribune.com/news/2015/jul/09/edison-sued-san-onofre/#sanonofregate

    Snip:

    The lawsuit filed Monday at the U.S. District Court in San Diego alleges that Craver and Scilacci were personally motivated to make false statements and omit information about the settlement from Edison’s earlier financial reports in order to benefit from the sale of Edison stock in their own portfolios.

    Days after the settlement proposal was announced in March 2014, Craver exercised stock options worth at least $5.6 million and Executive Vice President James Scilacci took home $3.7 million, according to federal filings by Edison.

    The lawsuit was filed on behalf of a representative shareholder, Harold Eng, by the New York-based securities law firm Pomerantz LLP, with offices in Beverly Hills. Attorneys handling the lawsuit did not respond to emails or phone calls.

    (Web address http://pomerantzlawfirm.com/ added for clarity)

    * #SanOnofreGate The new hashtag that will allow you to keep up to date on the ongoing investigation into the multi-billion $ SCE-CPUC ripoff.

    Reply this comment
  5. CaptD
    CaptD 17 July, 2015, 13:46

    From:
    http://m.sandiegoreader.com/news/2015/jul/06/ticker-attorney-general-seeks-documents-peevey/

    Karen Clopton, Chief ALJ of the CPUC and SDG&E are both “laying low” trying to not get their names involved in the public’s demand for a much wider investigation into what I call San Onofre Gate*; but I believe that time will show that they both are not only already involved but they failed the public trust by not speaking out when they first learned of the illegal behavior of both their CPUC colleagues and their counterparts at the Utilities, who the CPUC is charged with regulating!

    I heard from a trusted source that Ms. Clopton is “cooperating” with the Investigation, which I believe is causing major changes in the CPUC as well as the way they have been conducting business without any true oversight!

    Also, when SDG&E gets added to the corruption investigation I bet we will begin to see employees of SCE, SDG&E and even the CPUC start talking in trade for being exempt from prosecution; then the axes will begin to fall, despite all their high priced lawyers…

    Reply this comment
  6. CaptD
    CaptD 17 July, 2015, 13:50

    The CPUC ALJ (Administrative Law Judge) Darling (who was choose by Peevey to hear the San Onofre case) simply choose not to allow ANY “discovery” into the reasonableness of how SCE handled the Replacement Steam Generator Project, an investigation required by State law since San Onofre Unit 2 and Unit 3 were off-line for more than 9 months, which is the time specified in the CPUC code that an investigation must be initiated. Her “opinion” kept Aguirre and Severson from asking SCE employees for data and testimony “on the record”. She singlehandedly derailed the entire “investigation” and I predict that time will show that she played a pivotal role in the inner group that worked behind the scenes and off the record, to limit the scope of the investigation and/or promote the one sided Pro-Utility settlement. You have already written about her “conversations” with SCE officials, I believe that is just the tip of the iceberg, and now all of her emails should be released and analyzed.

    Perhaps the next step is for Aguirre and Severson to officially request that Karen Clopton, the Chief ALJ to initiate an investigation into how the entire San Onofre Investigation was conducted, I am sure that will provide some much needed “daylight” being shed upon this in this $5 Billion ratepayer ripoff investigation, which has already had far too much back room dealings revealed to the public.

    http://www.cpuc.ca.gov/PUC/aboutus/Divisions/ALJ+Division/clopton.htm
    Snip:
    Karen V. Clopton is the first African American Chief Administrative Law Judge for the California Public Utilities Commission (CPUC) and manages the Administrative Law Judge (ALJ) Division, including over 40 judges. She served as the CPUC’s Interim General Counsel from March 1, 2014 until February 28, 2015 managing over 70 attorneys and implementing best legal and human resource management practices; improving accountability, timeliness, efficiency, continuing legal education, and ethical considerations. The Board of Trustees for the State Bar of California appointed Chief Judge Clopton on January 28, 2015 to the Commission on the Rules of Professional Conduct to assist in reviewing and revising the ethical code of conduct for California attorneys for submission to the California Supreme Court in 2017.

    Post before on 06-27-15
    http://m.sandiegoreader.com/news/2015/jun/24/ticker-reverse-rape-ratepayer/#c188282

    Reply this comment
  7. CaptD
    CaptD 18 July, 2015, 12:29

    In an interview, Rendon expressed growing frustration with Picker.

    “His responses are unsatisfactory,” Rendon said. “I’m frustrated that he hasn’t even given me a timeline for the release of the emails.… I’ve lost confidence in the Public Utilities Commission.”

    http://www.sandiegouniontribune.com/news/2015/jul/17/emails-san-onofre/

    Committee seeks San Onofre emails again

    The chairman of the Assembly committee that oversees the California Public Utilities Commission has given the agency until the end of this month to secure and turn over certain emails and other documents from Southern California Edison.

    Chairman Anthony Rendon, D-Lakewood, is asking Commission President Michael Picker to use his authority to demand that Edison provide internal and external emails about the failed San Onofre nuclear plant north of Oceanside. His letter this past week was his third since March.

    “It has been nearly four months since the committee’s initial request for emails,” wrote Rendon, who chairs the Assembly Committee on Utilities and Commerce. “Given this delay, I am writing to ask you to produce the requested emails by July 31, 2015.”

    ###

    NOTICE THAT RENDON IS NOT ASKING THE CPUC FOR ALL RELATED SDG&E EMAILS YET… WHY, since they had to be “IN” on any settlement deal since they are 20% owners of San Onofre!

    Reply this comment

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Chris Reed

Chris Reed

Chris Reed is a regular contributor to Cal Watchdog. Reed is an editorial writer for U-T San Diego. Before joining the U-T in July 2005, he was the opinion-page columns editor and wrote the featured weekly Unspin column for The Orange County Register. Reed was on the national board of the Association of Opinion Page Editors from 2003-2005. From 2000 to 2005, Reed made more than 100 appearances as a featured news analyst on Los Angeles-area National Public Radio affiliate KPCC-FM. From 1990 to 1998, Reed was an editor, metro columnist and film critic at the Inland Valley Daily Bulletin in Ontario. Reed has a political science degree from the University of Hawaii (Hilo campus), where he edited the student newspaper, the Vulcan News, his senior year. He is on Twitter: @chrisreed99.

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