Todd Maddison
Updated 7/22/2024 8:08 AM

Some inside-California info for those of my friends out there who are not here and don’t follow our politics that closely…

A few years ago our local utility (Sempra Energy) had some issues with decommissioning a nuclear power plant (the San Onofre Nuclear Generating Station, called SONGS). There were problems with the plant, culminating in a need to replace the steam generators. This was done, replacing them at a cost of $680 million.

https://www.sandiegouniontribune.com/news/watchdog/sdut-san-onofre-anniversary-2016jan30-htmlstory.html

The new generators turned out to be defective. Steam tubing in them leaked radiation. A serious issue.

Rather than go back to Mitsubishi and tell them the products they provided were defective and they needed to replace them – as you or I would do if that money were coming out of our own pocket – the utilities decided they simply wanted to shut SONGS down.

That was going to cost money – big money, $4.7 billion dollars. Not only to close down the generators but to replace the power they generated.

Where would that money come from?

Utilities in California (like most states) are given a monopoly over specific areas, in exchange for being (supposedly, as we’ll see) “regulated” by state entities tasked with doing that, in theory “on behalf of the people.” This is done by the California Public Utilities Commission (CPUC).

Members of the CPUC are political appointees. They are selected for their position by the Governor. Their job is to protect the interests of the people from being exploited by the utilities, who could easily do that given their monopoly power.

Often those “regulators” are former utility executives, who likely still have deep ties to the executives in the companies they’re regulating. For years they worked together – sitting in their offices, going to lunch and dinner, traveling together, playing golf, etc… Then they were appointed to “regulate” those same executives.

Not exactly a process that leads to objective viewpoints, especially when decisions need to be made that might benefit people but create problems for those executives or their companies.

Proposals were made to the CPUC to determine where the money would come from to decommission the plant. Given the entire responsibility for the issue lies in decisions made by utility executives, one might think the responsibility for paying to fix the problems they created might lie with the utilities themselves.

Nope. Because “accepting financial responsibility for the decisions they make” is not a standard in any public entity – unlike private business.

The utilities involved were typically paying out close to $1B a year in dividends to shareholders and ownership (now, in 2024, $3.7 billion), so while $4.7 billion is a large number, it would represent 5 years of dividends – and the process of shutting the reactors down will undoubtedly take longer than that (it has now – as of July 2024, been going on for 12 years and counting…) And perhaps created problems with paying executives tens
of millions every year.   

Having to pay the entire $4.7 billion cost would wipe out much of the utilities ability to make such large dividend and compensation payments. 

Of course the utilities thought it best if they did not have to pay that cost themselves. A big chunk of that cost should be borne by the ratepayers. The fact that ratepayers had nothing to do with the decisions that created the problem was not a factor.

The CPUC got involved in negotiating that agreement. Again supposedly to protect the interests of the people. Like any public entity, those negotiations are supposed to be done in public. In the open. So we can know whose interests are being represented.

At the end of the process a “settlement” was made saddling ratepayers with responsibility for paying $3.3 billion of that cost. The utilities would absorb the remaining $1.4 billion. In other words, about a year and a half of dividend payments.

After that settlement was approved by the CPUC, some interesting information came out – as a result of a Public Records Request – on details in that negotiation process.

It turned out in the course of those negotiations the President of the Utilities commission flew to Poland for “lunch” with a representative of the company. That meeting was documented in emails as well as notes on a napkin from the restaurant, later later discovered and revealed by investigators. That lead directly to the agreement forcing ratepayers, not utility shareholders, to pay the majority of the cost of decommissioning.

Ratepayers who had nothing to do with the poor decisions that lead up to those costs. Nor did the ratepayers ever benefit from that billion dollars in annual dividends paid out by the utilities involved .

The profits of shareholders – who benefit from those dividends – and compensation of executives are apparently far more important to the California Public Utilities Commission than raising rates for The People, including poor people, seniors, people “going solar”, etc.

That meeting was, of course, illegal collusion. The President of a government regulatory body is not allowed to meet privately and hammer out a deal out of the public view, with anyone. Much less flying to a foreign country to do it.

Enter Kamala Harris.

Once uncovered, Harris – as the CA Attorney General at the time – initiated a legal investigation. Doing her job, as she should, and as we expect our Attorney General to do. On behalf of the People.

The state had pretty hard evidence – flight records, cell phone records, and the actual napkin the deal was sketched out on. It’s likely the end result of that suit would have invalidated that agreement and sent it back for renegotiation.

Maybe someone would even have gone to jail, the crime is a felony.

At a minimum renegotiation would have drawn a lot of scrutiny, likely resulting in a worse deal for the utility shareholders. And of course going to jail would be very inconvenient for any of the parties involved.

Kamala Harris, the self-described “Top Cop” of California, and in theory the best legal mind available to the People of our state, conveniently missed the filing deadline for that case, by ONE day….

Oops.

Oops?

The result? Utility shareholders get to keep a billion or two that they may not have been able to keep, and ratepayers get to pay for that… Sorry about that.

And of course anyone involved who would have spent time in prison doesn’t have to worry about that.

Convenient for both, don’t you think?

Now… in a suit the size of this one – with $4.7 billion at stake, one would think the California Attorney General, would have had a very good fix on what the filing dates were.

Just maybe?

Think she knows how to use her calendar?

Or perhaps it was simply convenient to miss that deadline, given that it resulted in literally BILLIONS of dollars flowing to special interests AND highly connected people staying out of jail.

Do we think those people might feel a bit of gratitude for that?

Our “regulated” utilities contributed over $110 million political causes from 2017 to 2022. So apparently their profit stream is still doing well.

So….

On one hand we could just say “she’s incompetent”, right?

On the other, we could say saving utility shareholders a few billion dollars and avoiding sending people to jail worked out better for her than prosecuting Sempra Energy and the Public Utilities Commission.

You make the call, but I think it’s obvious.

But now that she’s running for President, I’m sure this will be largely – if not completely – ignored. Because the American People will always turn a blind eye to incompetence (or corruption) in government if “their side” demands they do that and vote for their appointed candidate.

Will you do that?

KPBS 4/16 – Deadline Passes In Probe Of Secret San Onofre Deal

Jacobin Magazine 8/17 The Two Faces of Kamala Harris