San Onofre

Reopening San Onofre nuclear settlement a ‘credit negative’

By Rob Nikolewski |
May 17, 2016 – 2:35 p.m.

It’s not a ratings downgrade, but Moody’s Investor Service on Tuesday called reopening the financial details of the San Onofre nuclear plant shutdown a “credit negative” for the plant’s operator, Southern California Edison.

The Moody’s report comes eight days after the California Public Utilities Commission decided to take a second look at the $4.7 billion settlement amid disclosures that secret meetings were held before the deal was approved 18 months ago and complaints that ratepayers are shouldering too much of the financial load.

The CPUC decision calls on SCE to file a summary of the settlement by June 2 and raises the possibility that specifics of the deal will change.

“We don’t expect much to come out of it,” said Toby Shea, vice president and senior credit officer at Moody’s. “However, whenever a large sum of money is being re-evaluated there’s a chance something could go wrong.”

The Moody’s report also cited the regulatory climate for utilities in California that it said leads to “more scrutiny than elsewhere in the U.S.” and “can become contentious and litigious.”

Shea told the Union-Tribune that Moody’s still has confidence in SCE, which carries an A2 rating, the third-highest on Moody’s scale.

“This is a negative event for the company from a credit perspective but we did not change the rating or the official outlook of the company based on this event,” Shea said in a telephone interview from New York City. “They have a good credit rating overall because they have low financial risk.”

SCE is a subsidiary of Edison International.

The Union-Tribune emailed SCE for comment but the utility’s representative declined.

Located along the coast in the northwest corner of San Diego County, the San Onofre Nuclear Generation Station, or SONGS, closed in 2013 following the failure of replacement steam generators, which caused a small leak of radiation.

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