SAN DIEGO (CN) – Members of Edison International’s board of directors jeopardized the multibillion-dollar San Onofre nuclear plant settlement by hiding secret communications with state officials, a shareholder claims in a derivative complaint.
Roger Ekman sued Edison International’s CEO Theodore F. Craver Jr. and seven other board members on Monday in Federal Court, on behalf of nominal defendant Edison International.
Edison International is the parent company of Southern California Edison, one of the largest electricity providers in California. Its San Onofre Nuclear Generating Station (SONGS) is a retired nuclear power plant on the coast of northwest San Diego County. Its first reactor, Unit 1, operated from 1968 to 1992. Unit 2 was added in 1983 and Unit 3 in 1984.
Edison replaced the steam generators for Unit 2 in 2010 and Unit 3 in 2011. The upgrades were meant to last 20 years, but a leak in the heat transfer tubes in late January 2012 forced Edison to shut both reactors permanently.
The U.S. Nuclear Regulatory Commission found that design flaws in the new Mitsubishi generators caused the leaks. The California Public Utilities Commission also investigated the leaks, the company’s response, and the effects on electricity rates. Consumer advocacy groups participated in the proceedings.
In November 2014, the state approved a settlement with Edison in which ratepayers would pay $3.3 billion over 10 years to buy replacement power in exchange for $1.45 billion in consumer refunds for costs of the steam generator replacement project.
The settlement required Edison to donate $4 million from shareholder money each year for up to five years, to fund “devices and methodologies to reduce [greenhouse gas] emissions at existing and future California power plants tasked to replace the lost SONGS generation,” the complaint states, citing court documents from the settlement.
The settling parties called the agreement “a fair compromise” that was reached after “hard fought’ negotiations,” but plaintiff Ekman says that’s a bald-faced lie.
He claims Edison executives talked to public utility officials during the CPUC investigation and the settlement negotiations without reporting the communications, which is mandatory under the Public Utilities Code.
The secret talks came to light in February this year, when Edison filed a notice of ex parte communication – oral or written communication between interested parties and state decision-makers outside the formal proceedings process – and released hundreds of pages “that reveal a continuous and pervasive effort by the company to manipulate the outcome of the SONGS settlement” and to hide those talks from other parties, according to the complaint.
“The most damning of these ex parte communications took place on March 26, 2013 between SCE Executive Vice President of External Relations Stephen Pickett (‘Pickett’) and then-president of the CPUC [Michael] Peevey at a hotel in Warsaw, Poland. … The Warsaw meeting took place more than two months before settlement negotiations commenced,” during which the men discussed how to ensure the settlement “would be most advantageous” to Edison, according to the complaint.
Pickett resigned from Edison in November 2013.
Consumer advocacy groups blasted Edison for the secret talks. Among other things, they demanded that the state sanction the company and force it to return $648 million to ratepayers; ban it from further discussing the settlement with public utility officials; and modify the November 2014 settlement to favor ratepayers.
Ekman claims the board members knew about the ex parte communications, but concealed them despite CPUC disclosure rules.
“Consequently, the SONGS OII settlement is in jeopardy, and Edison could now be required to pay additional hundreds of millions of dollars as part of the proceeding,” as well as costs of civil and criminal proceedings against the company, the complaint states.
Edison International did not return requests for comment Tuesday.
Ekman seeks equitable relief and damages for breach of fiduciary duty.
He is represented by Eli Greenstein, with Kessler, Topaz, Meltzer & Check of San Francisco, who did not immediately return a request for comment.
Also named as defendants are Edison board members Jagjeet S. Bindra, Vanessa C. L. Chang, Richard Schlosberg III, Linda G. Stuntz, Ellen O. Tauscher, Peter J. Taylor, and Brett White.
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