Activists are furious with the PUC’s 2014 decision to make ratepayers of Southern California Edison and San Diego Gas & Electric cover 70 percent of the $4.7 billion cost of shuttering the facility, which had severe problems with steam generators that forced its closure. After the decision, it was discovered that the parameters of the deal had been worked out clandestinely in 2013 in a meeting in a Warsaw, Poland, hotel room between an Edison executive and then-PUC President Michael Peevey.

Both the state and federal governments have launched criminal investigations of Peevey over his failure to disclose contacts with utility executives and his alleged attempts to pressure utilities for favors in return for his support on some regulatory decisions.

But while the criminal division of the state Attorney General’s Office is pursuing the criminal probe, the civil division of the office is supporting Gov. Jerry Brown in his fight against disclosing emails between his office, the PUC and utilities during the period decisions were being made about how to pay for the costs of closing San Onofre.

Recent coverage of the case in the San Diego media has featured sharp criticism of Harris’ dual role in dealing with the scandal.

“In this case, for the [attorney general] to investigate the communications with the [California Public Utilities Commission] while representing a potential witness who is a potential subject of the investigation is a conflict,” former San Diego County District Attorney Paul Pfingst told KPBS.

“One of the problems with the conflict is it invites the attorney general to narrow the investigation to avoid the conflict,” former San Diego City Attorney Mark Aguirre told the San Diego public broadcasting affiliate.

“If the investigation into the Public Utilities Commission involves the nuclear power plant, and that is something that’s the subject of the governor’s emails they are trying to keep secret, then I think there is a conflict,” Georgetown University law professor Paul F. Rothstein told the Union-Tribune. “The Attorney General’s Office should probably turn over one or the other of these cases to an independent counsel.”

“Government works best when it shines light on problems, not seeks to keep the public in the dark,” University of San Diego law professor Shaun Martin told the newspaper, criticizing Harris for helping efforts to keep public records from being released to the media.

‘Ethical firewall’ said to separate AG branches

Harris’ aides deny there is any conflict and depict their actions in working with the governor on email requests as routine:

A Harris spokesman said there’s an ethical firewall between the attorney general’s civil division representing the governor’s office and its criminal section responsible for the investigation into the California Public Utilities Commission and the state’s energy companies.

That’s from KPBS’ coverage.

But there’s a twist to this story. Recent coverage suggests that PG&E might not put up a fight when its 40-year federal licenses for Diablo Canyon’s two Westinghouse-made nuclear reactors expire in 2024 and 2025. While PG&E’s website depicts a 20-year extension of the licenses as a no-brainer way to keep supplying clean, non-greenhouse-gas power to more than 3 million people, the company’s dithering on the regulatory front has caught environmentalists’ attention.

This is from a recent Los Angeles Times account:

Although PG&E has asserted that the plant’s continued operation would save its customers as much as $16 billion during the additional 20 years, the cost of bringing Diablo Canyon into compliance with environmental and seismic mandates may in fact not be worth the effort.

 

Energy regulators and advocates have few clues to whether PG&E’s goal is to seek Diablo Canyon’s renewal or find an easy excuse for shutting it down early. “They’re so cagey about the future that I can’t help thinking there’s a strategy here,” says Matthew Freedman, a staff attorney for the consumer watchdog group Turn.

 

Freedman believes the utility’s intention is to delay the renewal proceeding long enough to hamper any opposition. In 2007, the state Public Utilities Commission directed the utility to decide whether to seek renewal at least 10 years in advance of the license expirations, so energy planners would have time to figure out how to replace Diablo Canyon’s output if the plant went dark. Waiting much longer would be “reckless and gambling with the public interest,” the PUC said.

Utility: ‘We’ve got a lot on our plates’

A San Francisco Chronicle report, however, is less conspiratorial in its analysis, depicting PG&E leaders as more interested in other issues — starting with damage control with the utility’s reputation over its pending federal criminal trial:

Once eager to extend Diablo’s licenses, company executives now say they aren’t sure. Since the deadly 2010 explosion of a PG&E natural gas pipeline beneath San Bruno, their focus has been on reforming the company and repairing its image, not relicensing Diablo.

 

And any extension will involve a fight. The plant sits within a maze of earthquake faults, all of them discovered after construction began in 1968. Seismic safety fears have dogged the nuclear industry in California for more than 50 years, forcing PG&E to abandon plans for one of its first reactors.

 

“We’ve got a lot on our plates, and we just don’t need to take on another big public issue right now,” said Tony Earley, PG&E Corp.’s CEO.

 

If Diablo closes, no nuclear plant will take its place. California law forbids building more until federal officials come up with a permanent way to deal with the waste. Thirty-nine years after the law passed, that still hasn’t happened.

This aggravates nuclear power advocates, who thought the deep concerns many have about global warming would lead to a renaissance for nuclear power in California and elsewhere. Instead, Japan’s 2011 disaster at its Fukushima nuclear plant has blunted momentum.

Anti-nuclear activists have spent years comparing conditions at Diablo Canyon with those in Fukushima, suggesting its location on or near several seismic fault lines could lead to a Fukushima-style tragedy along the Central California coast. But the claims of close parallels have generally been discounted by conventional California media.

PG&E’s Diablo Canyon plant, the state’s last, has wound up in the crosshairs. As the Associated Press reported, “the company is evaluating whether to meet a tangle of potentially costly state environmental requirements needed to obtain renewed operating licenses.”

“The issues in play at Diablo Canyon range from a long-running debate over the ability of structures to withstand earthquakes — one fault runs 650 yards from the reactors — to the possibility PG&E might be ordered by state regulators to spend billions to modify or replace the plant’s cooling system, which sucks up 2.5 billions of gallons of ocean water a day and has been blamed for killing fish and other marine life.”

The fault in question has rattled nerves in the area and throughout the state. “Even before the twin reactors produced a single watt of electricity, the plant had to be retrofitted after a submerged fault was discovered 3 miles offshore during construction,” the wire noted separately. “That cleft in the earth, known as the Hosgri fault, has long been considered the greatest seismic threat to a plant that stands within a virtual web of faults. But new questions are being raised by sophisticated seafloor mapping that has found that the Hosgri links to a second, larger crack farther north, the San Gregorio fault.”

Increasing emissions

At the same time, the environmental implications of an end to nuclear power have also raised serious concerns. The last California plant to close, in San Diego county, shuttered amidst problems with its infrastructure. California’s public utility commission “approved a shutdown deal last year with the San Onofre plant’s co-owners, Southern California Edison and San Diego Gas and Electric Co., that assigned about 70 percent of the $4.7 billion shutdown bill to the firms’ customers,” as the San Francisco Chronicle reported. “The companies closed San Onofre after a January 2012 leak of radioactive steam revealed widespread damage to its cooling system.”

The consequences of the closure have worked against anti-carbon policies pushed hard from Sacramento under Gov. Jerry Brown. “With the San Onofre closure, annual statewide emissions of heat-trapping greenhouse gases linked to electricity production in California jumped by 24 percent,” U-T San Diego observed. “In San Diego, the local electric utility commissioned a major new natural gas plant and will replace an aging plant with new equipment to keep natural gas generators at the ready.” According to expert analysts, the paper added, “the experience could be replicated on a larger scale as many U.S. nuclear plant operators struggle to compete with cheaper sources of energy.”

Innovating nuclear

In response to the dilemma, some leading Californians have come out in favor of revitalizing nuclear power on a more advanced and, presumably, safer footing. In an editorial at The New York Times, Peter Thiel used the recent Paris conference on climate change to force the issue. “If we are serious about replacing fossil fuels, we are going to need nuclear power, so the choice is stark: We can keep on merely talking about a carbon-free world, or we can go ahead and create one,” he wrote.

“We already know that today’s energy sources cannot sustain a future we want to live in. This is most obvious in poor countries, where billions dream of living like Americans. The easiest way to satisfy this demand for a better life has been to burn more coal: In the past decade alone, China added more coal-burning capacity than America has ever had. But even though average Indians and Chinese use less than 30 percent as much electricity as Americans, the air they breathe is far worse. They deserve a third option besides dire poverty or dirty skies.”

In San Francisco, federal prosecutors are laying the groundwork for a criminal trial of Pacific Gas & Electric that will begin in March. In preliminary filings, prosecutors paint a scathing picture of PG&E negligence leading to the 2010 explosion of natural gas pipelines in San Bruno, which killed eight and wiped out a neighborhood.

How is that bad for the PUC? Because implicit in the federal allegations that 28 felonies were committed by PG&E is that the utility was not facing serious regulation before the catastrophe in San Bruno, a suburb south of San Francisco. Here is part of the San Jose Mercury News’s recent coverage:

“The government intends to offer proof that PG&E’s willful decisions not to maintain records, conduct proper pipeline assessments, and otherwise comply with federal pipeline safety regulations were part of a corporate culture of prioritizing profits over safety,” federal prosecutors wrote in papers filed on Nov. 2 with the U.S. District Court in San Francisco.

 

“The prosecutors in the trial are being very aggressive,” said Peter Henning, a professor of law with Wayne State University in Detroit. …

 

“They are trying to frame this case for a jury, and the government is attempting to frame this around a single word: greed,” Henning said.

 

PG&E faces a fine of up to $1.13 billion if convicted on the federal criminal charges.

‘Edison was driving the bus’

Meanwhile, in Southern California, politicians and consumer advocates have grown increasingly critical of the PUC-orchestrated, already-approved plan to have ratepayers cover 70 percent of the $4.7 billion cost to close the San Onofre nuclear plant and safely shutter its two reactors, whose 2011 malfunctions led to the release of small amounts of radiation.

Since the plan was approved in fall 2014, it’s been revealed that Peevey had never-disclosed meetings with Southern California Edison executives over how to apportion San Onofre closing costs, including a 2013 meeting in a Warsaw hotel room between Peevey and an Edison official. Edison owns 80 percent of San Onofre and San Diego Gas & Electric owns 20 percent.

But other questions have emerged about the PUC’s stewardship that go beyond the propriety of these undisclosed meetings.

The Los Angeles Times delved into the expert testimony that the PUC reviewed before approving the settlement and reported that one expert blamed Edison’s poor management for the problems with leaking steam generators which are used to cool the nuclear reactors and keep them safe to operate. The expert questioned the utility’s insistence on blaming Mitsubishi Heavy Industries, the branch of the Japanese conglomerate that made and installed the generators.

Arnie Gundersen, a nuclear engineer who served as an expert witness regarding the handling of San Onofre’s generators, said at a minimum both Edison and Mitsubishi are at fault.

 

“When I reviewed all the data it was clear to me that Southern California Edison was the one driving the bus,” Gundersen said.

 

“Mitsubishi wanted the contract and agreed to some very onerous terms in order to get it.”

 

Gundersen said the San Onofre case is similar to two incidents in Florida, where an agreement was reached over the closed Crystal River nuclear plant that led to billions in costs to consumers. In addition, he said, the St. Lucie nuclear plant had similar steam generator problems as San Onofre.

A KPBS report also alleged that Edison acted deceptively in its 2006 meeting with the Nuclear Regulatory Commission, never telling NRC officials of concerns about the steam generators that let Edison to complain to Mitsubishi in both 2004 and 2005. It appears the PUC was unaware that the utility’s concerns about steam generator problems dated to 2004.

‘The same people always get paid’ by PUC

A San Diego Union-Tribune analysis also raised questions about the PUC negotiations that led to the agreement assigning most of the shutdown costs to ratepayers.

The biggest beneficiary of a state program aimed at leveling the playing field between utilities and their customers is a Bay Area consumer group that privately negotiated the deal assigning customers 70 percent of the costs for the failure of the San Onofre nuclear plant.

 

The Utility Reform Network, or TURN, collects millions of dollars a year in so-called intervenor compensation – almost half of all the money handed out by the California Public Utilities Commission since 2013. …

 

TURN receives as much as 90 percent of its operating income from commission awards, so it’s highly dependent on regulators for its livelihood. Whether consciously or not, the group might allow that dependency to shape its advocacy, critics say.

 

“The public really doesn’t have anyone at the commission looking out for them,” said San Diego lawyer Michael Aguirre, who is suing to overturn the San Onofre settlement as an undue burden on utility customers. “They are being charged for advocacy that really is not being performed. The same people always get paid.”

Peevey is facing criminal investigations by both the state and federal government. His home in La Cañada Flintridge, a Los Angeles suburb, was searched by investigators in January.

The deal requires 70 percent of shutdown costs to be borne by ratepayers. It has drawn intense questions in the past year as evidence amassed of a you-scratch-my-back-I’ll-scratch-yours relationship between longtime California Public Utilities Commission President Michael Peevey and Edison, SDG&E and the state’s third investor-owned utility, Pacific Gas & Electric. Emails obtained from the PUC show Peevey frequently linking beneficial regulatory actions with the utilities taking actions he approved, including donating money to fight a 2010 initiative that would have scrapped AB32, the state’s landmark 2006 law forcing a shift to cleaner but costlier energy.

Peevey left the PUC board in December but has remained in the news ever since because of federal and state criminal investigations of his actions as the state’s top utility regulator. The most damning revelation came in February, when documents were discovered that showed the framework for the San Onofre bailout was established in an improper, never-disclosed 2013 meeting in a Warsaw, Poland, hotel room between Peevey and an Edison executive.

This meeting and other undisclosed communications between PUC officials and utility executives led Administrative Law Judge Melanie Darling last week to order a $16.7 million fine against Edison. The edict needs to be approved by the PUC — Darling works for the PUC, an example of the tidy way that regulators and utilities operate in California — but that is considered pro forma.

The fine is seen by some observers as a confirmation of the seriousness of the ethical failings on display in the Edison-PUC back-room relationship. It is certain to trigger fresh interest in the Legislature in adopting PUC reforms.

Six were approved in the most recent session, only to be vetoed three weeks ago by Gov. Jerry Brown on the grounds that they were an “unworkable” mish-mash of changes. The vetoes irked Assemblyman Anthony Rendon, the Lakewood Democrat who is slated to become speaker later this year and who has expressed extreme dismay over how the PUC has acted.

But the fine is considered irrelevant by the consumer advocates and trial lawyers who are the PUC’s loudest critics, given how much Edison will save because ratepayers will have to pay $3.3 billion of the $4.7 billion needed to safely shutter San Onofre.

Mike Aguirre, the former San Diego city attorney, suggested the administrative law judge’s recent hearings on Edison’s relationship with Peevey and the PUC were kabuki — a staged show to prop up the status quo.

“With one hand the CPUC is giving Edison $3.3 billion, with the other hand they’re taking back some extra change,” Aguirre told the Los Angeles Times. “This is all cosmetic.”

But the honeymoon could be over for millions of Southern California residents served by municipal utilities. Moody’s Investors Service warns they will be hard-hit by the state’s latest edict on increased use of renewable energy to supply electricity:

On Oct.. 7, Gov. Jerry Brown signed a bill requiring all California utilities to generate 50 percent of the electricity they sell to retail customers from renewable energy by 2030. The legislation will be credit negative for municipal utilities if ratepayers balk at higher prices that come with the transition to renewable energy from coal-fired generation.

 

Municipal electric utilities in Southern California would be particularly affected given their reliance on coal-fired generation. Coal-fired generation has historically supplied cities like Los Angeles and Anaheim with more than 40 percent of their electricity. In contrast, Northern California cities such as San Francisco and Sacramento derive all of their electricity from sources other than coal such as solar, hydroelectricity and natural gas.

 

The Los Angeles Department of Water and Power and other Southern California municipal utilities have thus far managed the shift to other sources from coal without major ratepayer protest, allowing them to increase rates and maintain a sound financial performance. But Los Angeles ratepayers are facing a likely 3.4 percent annual water and power rate increase over the next five years to help support the further transition to cleaner energy.

 

For utilities, the Clean Energy and Pollution Reduction Act of 2015 increases the percentage of electricity coming from renewable energy to 50 percent by 2030 up from the current 33 percent by 2020. We expect the utilities will meet the 33 percent requirement. However, ratepayer affordability and technical challenges will become increasingly difficult as utilities reach towards the more significant 50 percent renewable standard.

Infrastructure costs also likely to buffet ratepayers

Moody’s says another factor could also yield future rate shocks:

[Municipal] utilities will face another major challenge in whether the transmission grid can adequately handle the intermittent renewable resources that will begin to dominate California’s power supply mix. LADWP benefits from owning and operating its transmission system and has variable resources such as a pumped storage facility and gas-fired units to balance the system. The city of Anaheim recently added the Canyon natural gas fired unit and Southern California Public Power Authority financed the Magnolia unit in Burbank to help compensate for shortfalls in solar or wind energy. In the long term, the need to successfully integrate more renewables into the grid will likely require similar additional capital investment.

But while customers of the region’s two giant investor-owned utilities — Southern California Edison and San Diego Gas & Electric — won’t be as hard hit by the latest state edict, they will also pay unique bills in coming years not borne by customers of municipal utilities. Unless a California Public Utilities Commission decision is overturned, customers of the two utilities will pick up 70 percent of the $4.7 billion cost of shuttering the broken San Onofre nuclear power plant. SCE owns 80 percent of the plant, SDG&E 20 percent.

The board will take up possible changes in state rules affecting Diablo Canyon’s cooling water intake structure, a common feature of power plants build next to large bodies of water that are crucial to reducing excess heat during power production but that also can hurt nearby ecosystems. Diablo’s two nuclear generators, which produce more than 2,200 megawatts total, are located on the Pacific Ocean 13 miles south of San Luis Obispo.

It’s considered highly unlikely that the state water board would do anything dramatic. Federal law leaves the most important decisions on nuclear plants to federal authorities. But greens believe that their years of raising questions about the San Onofre nuclear power plant helped clear the way to the decision to shutter the north San Diego County facility in 2011 after it had severe problems with defective steam generators at both its towers.

The owner of the Diablo Canyon plant, Pacific Gas & Electric, has quietly made major progress toward keeping the plant in operation through 2045. This is from a July 13 greentechmedia account:

The license renewal process for Diablo Canyon, California’s last remaining operational nuclear power plant, has just been restarted by the Nuclear Regulatory Commission (NRC).

 

Diablo Canyon’s reactors became operable in 1985 and 1986 and their licenses expire in 2024 and 2025. … PG&E started applying to the NRC for a 20-year license extension in 2009, but Japan’s Fukushima incident put the extension on hold until new seismic studies for Diablo Canyon were completed and submitted to the NRC and California Public Utilities Commission.

 

In September of last year, the seismic study conducted by PG&E to determine the safety of the Diablo Canyon plant found that the facility was “designed to withstand and perform [its] safety functions during and after a major seismic event.”

Seismic study sure to face questions

This study is sure to face sharp criticism at the state water board meeting next week. A preview of the criticisms can be seen in a San Francisco Chronicle story on the seismic report earlier this month.

Activists who never wanted Diablo in the first place have been pushing hard to close it, particularly after California’s only other commercial nuclear plant — San Onofre, north of San Diego — shut down in 2012.

 

They argue that PG&E has consistently underestimated earthquake threats to the plant, and that PG&E has a long record of snafus at Diablo, such as replacing the steam generators and vessel heads without first conducting a necessary seismic test. PG&E, in contrast, says the plant boasts a solid safety record.

 

“Our point is, this is a pattern with them,” said Jane Swanson, with Mothers for Peace. “They keep screwing up — and this is a nuclear plant.”

A different dimension to this energy fight

But this battle has different overtones than many fights over energy sources, which often involve declarations that fossil fuels should be scrapped entirely as soon as possible because of their role in generating the greenhouse gases believed to contribute to global warming. Some defenders of Diablo Canyon say it’s their side that has the moral high ground because the plant is a crucial component of an intelligent policy to address climate change. This is from the Chronicle:

California law forbids building more nuclear plants in the state until the federal government comes up with a long-term solution for dealing with the radioactive waste. And with San Onofre closed, nuclear advocates say the state needs Diablo Canyon in order to rein in greenhouse gas emissions. Nuclear plants generate electricity without pumping carbon dioxide into the air, and unlike solar power plants and wind farms, their output doesn’t vary from one hour to the next.

 

“We really need to have a low-carbon, base load source of electricity,” said Jessica Lovering, a senior analyst at the Breakthrough Institute, an Oakland think tank focused on energy and the environment. “Taking offline the last nuclear plant would be pretty detrimental to carbon emission reduction goals.”

The California Coastal Commission at some point is also likely to have some regulatory say over any relicensing of Diablo Canyon.

PG&E is believed to consider the plant to be a cornerstone of supply generation for decades to come. But as the greentechmedia account noted, the giant utility “has not yet made a decision about whether to move forward with the relicensing process” — despite building a case for an extended permit for nearly a decade.

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.

But 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’

The 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.

The Golden State’s struggle to keep the lights on in winter 2000-01 produced a political crisis for Gov. Gray Davis. His response was signing a long-term deal in March 2001 with out-of-state suppliers that committed the state to spend $43 billion for power at the rate of 8 cents per kilowatt hour. Economists instantly criticized the deal as unnecessarily costly and lengthy — an overreaction to unusual circumstances. This ended up proving conventional wisdom and was a contributing factor to the public anger with Davis that led to his October 2003 recall election.

In a few years time, will the conventional wisdom about another bold state energy policy — the huge long-term commitment to massive alternative-energy plants — be similarly negative? Given how rapidly the solar-energy picture is changing, it seems quite possible.

‘Obsolence’ for traditional electric utilities?

The world’s largest solar-power plant, the 550-megawatt Desert Sunlight project, opened in February near Joshua Tree National Park. Three even bigger projects have won approval from state regulators and are progressing toward completion, as well as several smaller plants.

But these industrial solar projects might not even be needed if the “distributed solar” boom, in which homes and businesses generate power with their own panels, continues. As the cost of photovoltaic panels comes down — they’re now 60 percent cheaper than in 2010 — reliance on utilities for electricity keeps dropping. And if Tesla’s promised breakthrough on home batteries to store surplus energy comes to pass, the basics of electricity will change in much of America. Utilities would face enormous problems paying off their long-term sunken costs.

Most of the coverage of utilities’ opposition to distributed solar has focused on their criticism of requirements that they buy surplus power from individual homes or businesses at favorable rates that don’t help utilities pay for the cost of maintaining their energy transmission grids.

But in March, The Washington Post obtained and reported on a private presentation made to the nation’s utility companies in 2012 by an executive for the Edison Electric Institute, the trade association representing all investor-owner electricity generators in the U.S. It depicted the problems posed by the rise of distributed solar power in much starker fashion:

Three years ago, the nation’s top utility executives gathered at a Colorado resort to hear warnings about a grave new threat to operators of America’s electric grid: not superstorms or cyberattacks, but rooftop solar panels.

 

If demand for residential solar continued to soar, traditional utilities could soon face serious problems, from “declining retail sales” and a “loss of customers” to “potential obsolescence,” according to a presentation prepared for the group. “Industry must prepare an action plan to address the challenges,” it said.

 

The warning, delivered to a private meeting of the utility industry’s main trade association, became a call to arms for electricity providers in nearly every corner of the nation. Three years later, the industry and its fossil-fuel supporters are waging a determined campaign to stop a home-solar insurgency that is rattling the boardrooms of the country’s government-regulated electric monopolies.

CA forced utilities to make costly investments

The Post article noted that utilities were making relatively little progress in encouraging state legislatures to obstruct rooftop solar’s rise but some progress in getting utility regulators to accept their agenda of self-preservation.

In California, however, rooftop-solar advocates are so powerful that it seems extremely unlikely that the Public Utilities Commission would impose fees and surtaxes on rooftop solar, as regulators have done in Arizona and Wisconsin.

On the other hand, the PUC has shown deep concern for helping investor-owned utilities keep a healthy bottom line. The shuttering of the San Onofre nuclear power is going to cost $4.7 billion. But PUC officials secretly negotiated a deal in which San Onofre’s majority owner (Edison International) and its minority owner (San Diego Gas & Electric) must only pay $1.4 billion — with the utilities’ ratepayers picking up the remaining $3.3 billion in coming years.

This has rankled ratepayers and watchdogs alike, since a case can be made that better management at San Onofre would have identified the problems with defective Mitsubishi steam generators at the plant that led to its closure.

The PUC could in coming years face similar questions of how to divvy up the multibillion-dollar costs of the construction of giant solar plants in the state’s southeast corner — if they are no longer needed to operate at full capacity, or at all.

That could be a thornier question for the PUC than San Onofre, however. Edison, SDG&E and Pacific Gas & Electric could say they committed to the massive solar plants under legal and political pressure because of laws like AB32 and ardently green governors like Arnold Schwarzenegger and Jerry Brown.

That pressure — and how it was applied with PUC dictates — could end up being another chapter in the yet-to-be-written biography of Michael Peevey, whose 2002-2014 stint as president of the commission ended in a maze of controversies over his close ties to utilities.

Last year Southern California Edison mothballed its 2.3 gigawatt San Onofre Nuclear Generating Station. As CalWatchdog.com reported at the time, the actual reason probably was mechanical defects caused from retrofitting the plant to ramp up and down rapidly to back up erratic green power.

The Environmental Defense Fund and other green advocates now are celebrating that California is replacing the loss of that nuclear power with solar and wind power, electricity storage, energy efficiency and peak-load curtailments.  The California Independent System Operator, which runs the grid, proposed to procure 50 percent of that lost power from “preferred resources,” meaning anything but fossil fuels.

However, the reality is San Onofre generated 2.2 gigawatts of clean energy, while Edison is only looking to replace that with 46 megawatts of green power — about 1/40th of San Onofre’s prior generating capacity. The rest of the load will shift to natural-gas power.

The reason: All electrons do the same work, but don’t arrive at the same time. San Onofre’s power was constant, 24/7. Wind and solar are unpredictable.

Here is the breakdown of Edison’s procurement to replace San Onofre’s power for the West Los Angeles area:

          Southern California Edison Energy Procurement to Replace San Onofre

Fossil fuels

So 76.7 percent of the power to replace San Onofre is coming from new fossil-fuel natural gas-fired electric generating plants.

Ironically, according to The Carbon Brief, studies from Europe show “gas power costs twice as much if it only runs half the time.” That’s because it costs money to just ramp up and ramp down power plants.

Not all of Edison’s procurement is to replace lost power from San Onofre. Edison also must replace 17,500 megawatts of power lost from the retirement of six other coastal power plants. The retirement is needed to comply with requirements to shift from using ocean water to cool steam plants to air-cooled systems in order to protect fish larvae.

The plants to be retired are: Humboldt Bay 1 and 2, Potrero, South Bay, Morro Bay 2 and 4 and Contra Costa 6 and 7. 

Why new power must be sited in Orange County and L.A.

According to AES California:

“AES Southland is currently developing plans to replace its existing natural gas power plants in Long Beach, Huntington Beach and Redondo Beach with modern, more attractive and far more efficient facilities, which will take up less space at the sites. Modern and more flexible natural gas plants are critical to integrate renewable energy into the electric grid and help California meet its important clean energy goals. 

“Our plans to redevelop our power plants will increase the local taxes we pay, and allow us to continue providing jobs, doing business with local merchants, and supporting these communities through our charitable giving.” 

Why must the new power plants be located close to customer bases in Orange and Los Angeles counties? For several reasons:

First, voltage is like water pressure in a hose. San Onofre created enough voltage to “pressurize” the power grid so that electrons would flow smoothly.

By contrast, green power cannot provide much, if any, voltage because it is not consistently available to the power grid 24/7. It’s like taking a shower where the water cycles on for 1 minute, then off for 3 minutes.

Second, to prevent any future big transmission line outages, called an “N-1-1 event.”  N-1-1 means the number of transmission lines (N) that are lost in a catastrophic event is 1 and 1, or 2.  Edison must plan for two transmission lines going down simultaneously.

The problem with two lines being out of commission at once is overload that could create a cascade of shutdowns throughout the entire state grid.

Third, the Duck Chart Problem, which CalWatchdog.com detailed last month. Basically, the Duck Chart shows there is a demand in California to ramp up 13,500 megawatts of conventional power in a narrow two-hour window of time at sunset each day to replace solar power going offline. That would be enough power for about 6,750,000 homes per hour.

The imported electrons are the problem because they must be transmitted on transmission lines that may be out of service in a catastrophic N-1-1 event. So local power sources are preferred.

Fourth, the old Encina Power Plant in Carlsbad has been shut down and is being retrofitted for an ocean water desalination plant and new co-generation natural gas power plant.