SCE plans to retire San Onofre Nuclear units 2 and 3

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Southern California Edison (SCE) has decided to permanently retire Units 2 and 3 of its San Onofre Nuclear Generating Station (SONGS).

“SONGS has served this region for over 40 years,” said Ted Craver, Chairman and CEO of Edison International, parent company of SCE, “but we have concluded that the continuing uncertainty about when or if SONGS might return to service was not good for our customers, our investors, or the need to plan for our region’s long-term electricity needs.”

Both SONGS units have been shut down safely since January 2012. Unit 2 was taken out of service January 9, 2012, for a planned routine outage. Unit 3 was safely taken offline January 31, 2012, after station operators detected a leak in a tube inside a steam generator manufactured by Mitsubishi Heavy Industries (MHI). Two steam generators manufactured by MHI were installed in Unit 2 in 2009 and two more were installed in Unit 3 in 2010, one of which developed the leak.

In connection with the decision, SCE estimates that it will record a charge in the second quarter of between $450 million and $650 million before taxes ($300 million — $425 million after tax), in accordance with accounting requirements.

After months of analysis and tests, SCE submitted a restart plan to the Nuclear Regulatory Commission (NRC) in October 2012. SCE proposed to safely restart Unit 2 at a reduced power level (70 percent) for an initial period of about five months. That plan was based on work done by engineering groups from three independent firms with expertise in steam generator design and manufacturing.

The NRC has been reviewing SCE’s plans for restart of Unit 2 for the last eight months, during which several public meetings have been held. A recent ruling by an adjudicatory arm of the NRC, the Atomic Safety and Licensing Board, creates further uncertainty regarding when a final decision might be made on restarting Unit 2.

Additional administrative processes and appeals could result in delay of more than a year. During this period, the costs of maintaining SONGS in a state of readiness to restart and the costs to replace the power SONGS previously provided would continue.

Moreover, it is uneconomic for SCE and its customers to bear the long-term repair costs for returning SONGS to full power operation without restart of Unit 2. SCE has concluded that efforts are better focused on planning for the replacement generation and transmission resources that will be required for grid reliability.

In connection with the retirement of Units 2 and 3, San Onofre anticipates reducing staff over the next year from about 1,500 to about 400 employees, subject to applicable regulatory approvals. The majority of such reductions are expected to occur in 2013.

Full retirement of the units prior to decommissioning will take some years in accordance with customary practices. Actual decommissioning will take many years until completion. Such activities will remain subject to the continued oversight of the NRC.

SCE intends to pursue recovery of damages from Mitsubishi Heavy Industries, the supplier of the replacement steam generators, as well as recovery of amounts under applicable insurance policies.

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