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Soaring Costs Plague California Nuke Plant Shut Down By Leak

Vibrating tubes and other ills are afflicting the San Onofre nuclear plant. More than 8 million people live within 50 miles of the shutdown plant.

May 29, 2012
San Onofre Nuclear Generating Station, Units 2 and 3. The nuclear power plants a

While investigators examine the steam generator damage that has forced the months-long outage at California's San Onofre nuclear power plant, the cost of the shutdown and any necessary repairs continues to mount—and it's unclear who will end up paying the bill.

The new costs will easily exceed $100 million—and would be substantially higher if they included ongoing work on the steam generators as well as a prolonged period with reduced or zero power generation. The outlays include equipment repair or replacement costs, the expense of securing power contracts and daily electricity purchases while the plant is off line, as well as items such as increased regulatory oversight and customer-funded incentives for energy conservation.

San Onofre's troubles are worrisome because it is located on the Southern California coast between San Diego and Orange County—a densely populated region where more than 8 million residents live within a 50-mile radius of the twin reactors. That fact, plus unease over other problems at the aging facility and heightened fears about the safety of all nuclear plants has led some community groups to call for the plant's permanent closure—a scenario similar to mounting public opposition to the Indian Point nuclear plant near New York City.

The electricity San Onofre produces—up to 2,200 megawatts at any given time—is so vital to powering daily life in San Diego and the Orange County-Los Angeles metropolitan area that government and industry officials are scrambling to secure back up sources in case the plant remains idle during a summer heat wave.

In part because of its critical role in Southern California's power grid, the California Public Utilities Commission in 2005 told San Onofre's owners they could spend $680 million (2004 dollars) to replace the plant's four massive steam generators, and recoup the costs through higher customer rates. The commission also agreed to consider additional costs up to a cap of $782 million.

The new steam generators came on line in 2010 and 2011, but the project's final bill has not yet been submitted for review. In the meantime, the steam generator investment began to sour. In late January, Unit 3 was shut down after a small amount of radiation leaked from a steam generator heat transfer tube. Further inspection revealed excessive wear on some of the 19,454 tubes in Unit 3's new steam generators. Inspection of the tubes within Unit 2, which was shut down in early January for planned maintenance, also revealed unusual tube wear. (Unit 1 was shut down in 1992 because it needed costly upgrades that were not considered cost-effective.)

San Onofre can't be restarted until the Nuclear Regulatory Commission (NRC) is satisfied that the cause of the tube damage has been identified and the necessary repairs have been made to safely operate the reactors.

The NRC and Southern California Edison (SCE), which operates the plant, have said the damage was caused by vibrating tubes knocking against each other and against the tube support structure. Investigators are still trying to determine whether the unusual wear was caused by the way the steam generators were designed, the way they were manufactured, the way they were installed, or the way they were operated.

That question, once answered, could determine who pays the bill.

The primary candidates are Mitsubishi Heavy Industries, which built the steam generators; San Onofre's owners, SCE (78.2 percent), San Diego Gas & Electric Co. (20 percent) and the City of Riverside (1.8 percent); engineering firm Bechtel and other companies involved in the replacement project; and the customers served by SCE and San Diego Gas & Electric.

If the blame rests with the steam generator supplier, repair costs up to $137 million would fall to Mitsubishi under the equipment's 20-year warranty, according to SCE. If the cause—and therefore the financial responsibility—can be disputed, it certainly will be, perhaps through lengthy legal wrangling.

Electricity customers will be in the mix, too, in spite of the cost cap the CPUC imposed when the steam generator replacement project was approved. That's because Mitsubishi's warranty doesn't cover the cost of replacement power, and both SCE and SDG&E said in financial filings that they intend to include those expenses in annual filings aimed at recouping those costs from customers. This year's power purchases will be filed in early 2013 and are subject to "reasonableness" review by state regulators.

Rochelle Becker, executive director of the Alliance for Nuclear Responsibility, a California group critical of nuclear power plants, intends to fight any attempt to make customers pay for the current outage. "We were told there was a cap on this project," Becker said of the San Onofre’s steam generator replacements. "The minute Edison files to get one penny from ratepayers on this project, we will be at the PUC opposing it."

In recent years, however, vocal opposition has rarely prevented the state Public Utilities Commission from sticking customers with the bill for the mistakes of others. The most notable example is California's 2000 electricity crisis, a disastrously expensive debacle that customers are still paying for today in the form of higher rates and special charges. (One is listed on most California power bills as the "DWR Bond charge.")

So far, the bill for San Onofre’s steam generator troubles includes:

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