A major investment bank downgraded shares of Edison International Tuesday amid concern that shareholders could be on the hook for more costs related to the Rosemead electric utility’s 2013 closure of the San Onofre nuclear power plant.
Deutsche Bank analyst Jonathan Arnold downgraded Edison to “hold” from “buy,” citing increased risk that the state Public Utilities Commission might throw out the multibillion dollar settlement after a PUC judge ruled last week that Edison failed to report meetings and communications over the settlement terms between its executives and PUC regulators.
Throwing out the settlement would usher in months of uncertainty over how much Edison shareholders would ultimately have to pay in San Onofre shutdown costs.
The settlement reached last year apportioned the $4.7 billion in costs associated with the shutdown of the northern San Diego County plant. Edison had an 85 percent stake in the plant and San Diego Gas & Electric owned most of the remainder. Under the settlement terms, Edison and San Diego Gas & Electric shareholders assumed $1.4 billion of the shutdown costs, with ratepayers paying the rest.
But late last year, it came to light that Edison executives met with former PUC President Michael Peevey – a former Edison executive – at a hotel in Warsaw, Poland, and discussed the outlines of the San Onofre settlement; the meeting was never entered into public record. The revelations were part of a larger scandal about backchannel meetings that Peevey held with the utilities he was tasked with regulating; Peevey resigned his post in December.
Last week, a PUC administrative law judge ruled that Edison executives or their representatives failed to report 10 communications they had with Peevey or other PUC officials.
In response, Edison released a statement last week saying it was “disappointed” in the judge’s ruling.
“Based on the information we had at the time, we did not believe these communications were reportable,” Southern California Edison President Pedro Pizzaro said. “We’re disappointed that the ruling reaches a different conclusion.”
But the judge’s ruling prompted Joe Como, director of the Office of Ratepayer Advocates to state Monday that his office would pull out of the San Onofre shutdown settlement. A major consumer group, the Utility Reform Network, had already pulled out of the settlement in June.
Edison released another statement Monday saying that reopening the settlement and negotiating another deal could result in even higher rates for consumers.
Edison shares fell nearly 1 percent on Tuesday, closing the day at $59, following a 2.4 percent drop on Monday.