* California PUC to vote Oct. 25 on probe of two hobbled units
* Investigation could reduce consumer rates by $1.1 billion
* Units shut down in January due to degradation of steam tubes
By Nichola Groom
LOS ANGELES, Oct 16 California regulators on Tuesday took steps to open a formal probe into the outage at two nuclear reactors at the San Onofre power plant, potentially reducing the burden on rate payers by $1.1 billion until southern California's largest power plant is reopened.
The California Public Utilities Commission said it would vote on Oct. 25 to formally open an investigation into the causes of the shutdown in January of the San Onofre Unit 2 and Unit 3 reactors and whether they will be restarted to provide "safe and reasonable service at just and reasonable rates".
In its filing, the commission said it could take all costs associated with the two plants out of the rate base, dating back to Jan. 1, and place them in a "deferred debit account pending the return of one or both facilities to useful service".
Rates at utilities Southern California Edison and San Diego Gas & Electric include more than $800 million in fixed costs and $300 million in annual operating costs related to the units, the commission said in its proposal.
The commission could also review some or all of the $671 million it authorized to replace the power plant's steam generators.
Both of the San Onofre nuclear units have been shut since January after a small radioactive steam leak at one unit pointed to a problem with accelerated degradation of tubes in the units' brand new steam generators.
"There are issues about how much cost, if any, should be paid by rate payers and company owners," the commission said. "Therefore, it is in the public interest to undertake an investigation into the facts and circumstances of the outages for the purpose of exercising our statutory authority over rate recovery of associated utility costs."
San Onofre, the biggest power plant in Southern California, is 78 percent-owned by Southern California Edison, a unit of Edison International. The remainder is held by San Diego Gas & Electric, which is a unit of Sempra Energy, and the city of Riverside.
A representative for Southern California Edison, which is responsible for operating the power plant, could not immediately be reached for comment.
The commission asked the two utilities to track their costs incurred on San Onofre after Jan. 1 of this year in a memorandum account.
It also warned that there may be questions about the degree to which the manufacturer of the reactors' steam generators, Mitsubishi Heavy Industries Ltd, may be responsible for expenses related to the shutdown.
Southern California Edison said on Oct. 4 that it wants to restart San Onofre's 1,070-megawatt (MW) Unit 2 and operate it at up to 70 percent of capacity for about five months before shutting it again for inspections.
The San Onofre plant carries both property damage and outage insurance issued by Nuclear Electric Insurance Limited, Edison said in filings with the U.S. Securities and Exchange Commission. The company said it has notified the carrier of potential claims.