Any California consumers who still believed this state’s big privately-owned utility companies are either willing or able to protect the interests of their many millions of customers must surely be disabused of that notion today.
Yes, companies like Pacific Gas & Electric, Southern California Gas, San Diego Gas & Electric and Southern California Edison are talking a good customer service game lately, repeatedly advertising efforts to make pipelines and other features of their vast systems safer, while also selling energy for less than in some earlier times.
But the outcome of an arbitration case that Edison touted for years as a huge coming benefit for customers demonstrates that talk is cheap.
Edison long cited the case as a coming bonanza for its ratepayers, noting it had demanded $7.6 billion from Japan’s Mitsubishi Heavy Industries as a penalty for furnishing flawed steam generators that wrecked the San Onofre Nuclear Generating Station, finally shut down in 2012.
Customers were ticketed to get half Edison’s winnings under terms of a so-called “settlement” reached between the company, the state Public Utilities Commission and two purported consumer groups in 2014, an agreement that saw consumers assessed 70 percent of San Onofre’s $4.7 billion in closure costs.
Oops. The decision by an arbitration panel of private judges from the International Chamber of Commerce arrived this spring: Instead of $7.6 billion, Edison will only get $125 million, or about 3.3 percent of what it has hyped for years. Customers will get half that amount, a net benefit of about $3.61 each to the 17.3 million persons in the service areas of Edison and SDG&E (a part-owner of San Onofre).
This result was partly the result of the fact that then-Edison vice president Dwight Nunn in a 2004 letter warned Mitsubishi that “…there is the potential that design flaws could be inadvertently introduced into the steam generator design that will lead to unacceptable consequences.” Edison later dispatched some of its own engineers to work with Mitsubishi’s, but no design changes followed and the generators were eventually installed. Nunn’s prediction came true a few years later.
By awarding Edison only a tiny fraction of the money it demanded, the arbitration panel essentially held the utility at least partially responsible for the outcome.
And yet, Edison managed in a series of secret meetings highlighted by a session involving some of its officials and the disgraced former PUC President Michael Peevey in a hotel in Warsaw, Poland, to get a deal where it would pay far less than half San Onofre’s closing costs, sticking its customers with 70 percent of the bill.
This was so blatantly unfair that the PUC in a first-ever move last year reopened its proceedings on that deal, which was agreed to by supposed consumer groups Toward Utility Rate Normalization (TURN) and the state Office of Ratepayer Advocates (ORA). TURN subsists to a large extent on so-called “intervenor fees” awarded by the PUC when it decides rate cases and other matters where TURN participates, while the ORA is actually part of the PUC bureaucracy. So a settlement by the PUC with these outfits amounts to little more than a settlement with itself.
Similar irony came when the PUC fined Edison more than $16 million last year for not reporting its secret meetings with PUC officials. Of course, because PUC officials were in those meetings, they were no secret to the commission, but only to customers the commission is supposed to protect.
The arbitration result essentially vindicated independent consumer advocates like San Diego’s Charles Langley, head of an outfit called Public Watchdog. “It’s smoke and mirrors,” Langley said in 2015 about Edison’s claim of a big upcoming arbitration benefit. “They’ll never see that money.”
Now it’s official. Neither Edison nor customers will see much of that money.
The logical conclusion: If an international arbitration panel has, in effect, held Edison largely responsible for San Onofre’s failure, why shouldn’t the PUC do the same? With the entire San Onofre matter still unresolved after the case was reopened, the PUC now has an opportunity to at last demonstrate some independence from the utilities it regulates.
Sadly, though, no one who knows the commission’s longtime patterns has reason to expect a new decision that’s any more than a token improvement.