Southern California Utility Faces Big Fine for 'Improper' Talks With Regulators

Ocean waves come ashore near the San Onofre Nuclear Generating Station. (David McNew/Getty Images)

Southern California Edison is facing a $16.7 million penalty for holding improper talks with utility regulators related to the now-closed San Onofre nuclear power plant.

The proposed penalty is the latest development tied to a dispute over a $4.7 billion settlement related to the shutdown of San Onofre. San Onofre was shut down in January 2012 after a small radiation leak led to the discovery of extensive damage to tubing inside virtually new steam generators. The plant never produced electricity again. Edison closed San Onofre permanently in June 2013.

Last November, commissioners approved a settlement over the closures -- in which ratepayers would shoulder about $3.3 billion of the costs, while Edison and the plant's minority owner, San Diego Gas & Electric Co., would cover $1.4 billion.

Notes about the San Onofre shutdown settlement found in Peevey's home.
Notes about the San Onofre shutdown settlement found in Peevey's home.

Consumer advocates and other critics have urged the commission to reopen the settlement, saying private conversations between the commission's then-president, Michael Peevey, and Edison gave the company an unfair advantage. The company has previously defended the 2014 deal, saying it is fair and was negotiated properly.

California Public Utilities Commission Administrative Law Judge Melanie Darling proposed the fine Monday for what she called misleading acts and omissions by the company.

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She found Edison officials held eight unreported, improper communications with one or more agency commissioners during that time.

Edison "misled the commission, showed disrespect for the commission's rules and undermined public confidence in the agency," the judge wrote.

In 2013, then-Southern California Edison Executive Vice President Stephen Pickett and Peevey met at the luxury Bristol Hotel in Warsaw, Poland, for a business conference. Notes on Bristol letterhead about the proposed shutdown came out this year after state agents raided Peevey's Los Angeles home during an investigation into an unrelated judge-shopping scandal.

Utilities, and other parties, are supposed to file a notice of an "ex parte communication" when they speak with regulators about business. Edison did not file a notice of the communication until 686 days after the meeting. Peevey also did not disclose the meeting. However, he was not required to under current commission rules. A recent independent report found that these private communications "systematically favor the interests of utilities and we-funded parties."

Edison has said Peevey initiated a one-sided conversation about a possible framework for a settlement of a probe into San Onofre's rates and operations, according to the ruling.

The judge wrote the bulk of the penalty reflected Pickett's "grossly negligent failure to accurately and timely report" the private discussion, which triggered other misleading acts and omissions.

The commission is not expected to vote on the proposed penalty until December. Edison said it is reviewing the decision.


This post includes reporting from Michael R. Blood of The Associated Press.

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