The future of the troubled San Onofre nuclear power plant could balance on an inescapable question: Is it worth the money to fix it?
Engineers face a daunting task finding a solution for problems that knocked the seaside plant offline last winter. And even if they come up with a plan that fully addresses safety and operational issues, will it all make sense on a balance sheet?
The twin reactor plant between San Diego and Los Angeles has long been a source of lower-cost power, but its complex and costly mechanical troubles have raised questions that might have seemed unrealistic just months ago.
"Shutting down the plant, at the end of the day, might not be the worst-case scenario for shareholders or customers," says Travis Miller, director of utilities research at equities analyst Morningstar Inc.
Two decades ago, San Onofre's Unit 1 reactor was shut down and then dismantled when owners faced the prospect of swallowing a $125 million bill for upgrades and repairs. Oregon's Trojan nuclear plant closed its doors in 1993, rather than replace steam generators that had leaky tubes.
Now, similar issues will be on the table for San Onofre's two remaining reactors, shuttered as engineers try to figure out how to stop unprecedented decay in generator tubes that carry radioactive water. The plant hasn't produced electricity since Jan. 31.
The plant normally generates enough power for 1.4 million homes. With summer here and no restart date in sight, state officials are encouraging conservation to ensure the lights stay on in Southern California when temperatures and electricity use peak.
Regulators and plant owners insist the reactors won't be restarted until all safety issues are addressed. Meanwhile, costs mount and scrutiny intensifies.
The state Public Utilities Commission plans to vote on an order next month requiring plant owners Southern California Edison and San Diego Gas & Electric to disclose the potential economic hit for ratepayers, ranging from a relatively quick restart to a permanent shutdown of the twin reactors.
The agency, which determines how much utilities can charge homeowners and businesses for electricity, plans to scrutinize the cost of replacement power, repairs and, ultimately, who gets stuck with a bill that is increasing daily, according to a draft order.
Majority owner Edison hasn't updated potential cost figures since March 31, when the utility said it had spent $30 million on replacement power and estimated repairs could hit $65 million.
That was at a time when Edison was discussing a June restart for at least one of the reactors, and before the Nuclear Regulatory Commission determined design flaws caused heavy vibration that damaged tubing. Eight tubes failed during pressure tests in the Unit 3 reactor, an unprecedented number in the industry.
Now, the repair cost is likely higher, as is the cost for replacement power.
The key issue, says analyst Miller, is whether the PUC allows the company to recover its costs from customers.
Among the questions: Is it fair to continue charging customers for generators that, at least for now, don't work? Who should pay for replacement power that's been needed during the long-running shutdown? And does continued operation make economic sense, with plenty of economical gas-fired electricity available?
The cost connected to the steam generator crisis is just part of the financial wallop that could come for a plant with just 10 years left on its 40-year operating license.
A multimillion-dollar study of earthquake risks is under way and could lead regulators to require expensive safety upgrades. And two years ago, state water regulators ordered San Onofre and other coastal power plants that suck up ocean water to phase out equipment in coming years blamed for killing fish and other sea life. There is continuing discussion over how that decision will impact nuclear plants, but one study commissioned by Edison estimated that it could cost up to $3 billion to comply at San Onofre.
Could the looming costs become so large that they would make operation of San Onofre financially unworkable?
"The short answer is they could," said Mark Pocta, a manager with the state Division of Ratepayer Advocates, an independent arm of the PUC. "You are talking about a lot of uncertainties."
Edison officials declined a request for an interview.
The trouble began to unfold in January, when the Unit 3 reactor was shut down as a precaution after a tube break released traces of radiation. That began a spiral of events that led to a months-long federal probe.
The NRC blamed a botched computer analysis for creating excessive vibration inside the generators that damaged hundreds of tubes, with agency officials saying last month it's not known how the generators can be fixed.
The NRC left open the possibility that one or more of the huge machines, installed in a $670 million overhaul in 2009 and 2010, might have to be replaced.
At the now-defunct Unit 1, costly upgrades sought by federal regulators drove the decision to shut it down, said engineer Murray Jennex, a San Diego State University professor who worked at San Onofre for nearly two decades.
At the time, state utility regulators argued Southern California Edison could find cheaper ways to produce kilowatts.
Jennex sees a tipping-point scenario for Unit 2 and Unit 3, in which costs for replacement power, repairs and possible seismic and other upgrades will be decisive. He also said running the plant at lower power, as has been suggested as part of a fix, would drive up maintenance costs.
At lower power "it's like a car you drive at 35 mph all the time — you are not running it where it wants," Jennex said.
The Trojan nuclear plant was closed in 1993, rather than replace steam generators that had leaky tubes. The plant, about 40 miles northwest of Portland, was completed in May 1976 at a cost of $460 million and was designed to last 40 years. The projected cost of the replacement generators: $200 million.
Edison has indicated it plans to submit a plan to the NRC later this summer to restart the Unit 2 reactor, where tube damage has been more limited than at its sister, Unit 3.
In one Unit 3 generator, 420 tubes have been taken out of service, either because of heavy wear or the possibility they could be damaged by vibration. In the unit's second generator, 387 tubes have been taken out of service, or what the industry calls "plugged."
The generators, which make steam to turn turbines that produce electricity, are designed to operate with up to 778 retired tubes. That means that in less than one year of service, one Unit 3 generator is more than halfway to reaching the limit and the other is almost there.
Although the two Unit 3 generators were installed in late 2010, they did not go into service until February 2011.
The tubes are a critical safety barrier — if one or more break, there is the potential that radioactivity could escape and serious leaks can drain cooling water from a reactor.
Activists critical of the nuclear industry argue it's too dangerous to restart a damaged plant with 7.4 million people living within 50 miles of its twin domes.
The tube damage "has the potential to cause extremely serious releases of radioactivity into the environment, which in turn could cause grave injury to public health," environmental group Friends of the Earth said in a recent petition to the NRC. The group has argued that Edison misled the NRC about modifications, including adding 400 tubes to each generator.
An assessment of its finances will be critical as the three-decade old plant moves into the sunset years of its operating license, which expires in 2022. Edison has not said if it intends to seek a license renewal from the NRC or close the plant at that time.
San Onofre is owned by Edison, SDG&E and the city of Riverside. The Unit 1 reactor operated from 1968 to 1992.
San Onofre's troubles come at a time when some saw signs of a new dawn for the long-struggling U.S. nuclear industry, with plants being constructed in Georgia, Tennessee and South Carolina.
"The decision for closing a nuclear plant is much above and beyond economics," says University of Southern California engineering professor Najmedin Meshkati. "Closing (San Onofre) really has a very heavy political burden."