Ratepayer rep’s role questioned
Union Tribune (2014-05-13) Jeff Mc Donald
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Ratepayer rep’s role questioned
Consumer advocates say group fell short on San Onofre settlement
By Jeff McDonald
6:12 p.m.May 13, 2014
As regulators and utility companies sought an answer to the tricky question of who would pay $4.7 billion to mothball the San Onofre nuclear power plant in San Diego County, a consumer advocacy group was at the table.
It wasn’t one from San Diego.
Now, with the resulting settlement on the agenda for discussion at the Public Utilities Commission today, some local advocates are wishing the ratepayer representation had been stronger.
The primary advocate — deemed an “intervenor” under state regulations — was The Utility Reform Network or TURN, a Bay Area nonprofit that considers itself statewide in reach.
TURN reached a settlement deal in March with the two owners of San Onofre, Southern California Edison and San Diego Gas & Electric. The agreement calls for ratepayers to pick up $3.3 billion of closure costs for the faulty power plant, which is $1.4 billion less than the utilities sought.
TURN staff attorney Matthew Freedman said the group worked closely with the state’s Office of Ratepayer Advocates to enter settlement negotiations, saying utilities have superior resources and there is no precedent for making Edison and SDG&E absorb the entire cost of closing the plant.
“It was about having a small number of parties representing the largest amount of ratepayers,” Freedman said. “We thought we’d get a better deal through settlement than litigation.”
TURN was founded in 1973 by consumer activist Sylvia Siegel after she learned that no one regularly challenged rate-hike applications being submitted to the state utilities commission.
The San Onofre proposal the group hashed out over 18 months has yet to be approved. In addition to the Wednesday hearing in San Francisco, regulators have scheduled a community meeting in June in Costa Mesa to discuss the agreement.
The settlement is expected to be considered by the full commission later this year.
TURN and the utilities are urging state regulators to approve the plan as proposed.
Some local consumer advocates who were not welcomed to the negotiating table say they want a better deal.
“I’m really disappointed in TURN,” said Ray Lutz of the Coalition to Decommission San Onofre. “They didn’t represent the ratepayers very well at all. It makes me wonder what’s behind it.”
One theory suggested by critics is that the state’s intervenor system — which gives payments to approved advocacy groups based on their successes — rewards consumer groups that go along with regulators and utilities more than those who do not.
“The reason TURN was able to go to the table is because they were willing to play ball,” said Mike Aguirre, a former San Diego city attorney who has unsuccessfully sought intervenor status. “TURN has made a strategic move that will make them fabulously wealthy.”
Aguirre is bothered that the proposed settlement closes a San Onofre investigation announced in October 2012 without a public review of what went wrong. He noted that Edison shares moved up after the settlement was announced.
“What’s unusual about this is how TURN sold it,” he said. “They embraced not even having a hearing and they asked for it not to be changed in any way. It was a fait accompli.”
TURN’s finances suggest it has benefitted from intervenor payments, especially of late.
The group had expenses that exceeded its revenues for five straight years before 2013, when its fortunes improved. The nonprofit reported receiving $6.2 million in revenue that year, most of it from the intervenor system.
The $5.7 million in payments were approved by the California Public Utilities Commission for work TURN completed defending ratepayers against power companies.
Freedman, the group’s staff attorney, said none of its decisions are driven by the payments that might be forthcoming from the state.
“We used our best professional judgment to figure out the best achievable outcome,” Freedman said of the San Onofre settlement. “We don’t make any deals around compensation ... If we wanted to run up the tab, we would have kept litigating.”
Other stakeholders support the settlement agreement as well.
“We think it’s a good balance between ratepayers making sure Edison has to eat the costs of this failed system on the one hand, and also making sure Edison isn’t compromised in its ability to provide reliable electrical service,” said Laurence Chaset, an attorney for Friends of the Earth, an environmental group involved in settlement negotiations.
Donald Kelly of the San Diego-based Utility Consumers’ Action Network has not taken a position on the settlement plan, and has generally stayed out of San Onofre issues.
Although he hasn’t done the research TURN has committed to San Onofre, Kelly said, he is not convinced the deal is the best possible outcome for customers.
“Do I think they might have left a lot of money on the table that another lawyer may not have? Maybe,” Kelly said. “Right now it’s an open process.”
The UCAN executive said he has nothing but respect for the work TURN performs and has no doubt Freedman got the toughest deal he could muster.
“It’s disingenuous to say they agreed because they were going to get paid,” Kelly said. “There is no financial incentive for TURN to agree to a settlement that’s not in the ratepayers’ best interest.”
The San Onofre Nuclear Generating Station was closed in January 2012 after radiation leaked from one of the reactors, a problem later traced to faulty steam generators.
Utility executives sought approval for more than a year to repair and restart the plant but abandoned that effort in June. By then, Edison and SDG&E were already months into private settlement talks with TURN and the state Office of Ratepayer Advocates.
Mark Pocta, a program manager with the Office of Ratepayer Advocates, said his office and TURN built legal cases against the San Onofre owners but entered settlement talks after examining potential outcomes.
“It’s preferred when you can achieve what’s called an all-parties settlement, but in these large cases that’s pretty tough,” he said. “The opposition is almost as if the utility shouldn’t get anything. That’s not a credible approach to the case.”
Pocta said intervenor fees are awarded based on the quality of work that is contributed to a particular case — not on the final decisions of regulators.
“Whether a cases settles or doesn’t settle, the code spells it out what intervenors need to do in order to be compensated,” he said.