Damages analysis for the failure of San Onofre Nuclear Generating Station

In a high-profile international arbitration case following the 2012 failure of the San Onofre Nuclear Generating Station’s (SONGS) replacement steam generators, Brattle was retained to estimate damages from the delay or possible inability to repair and restore the plant. Our approach involved the use of two power price forecasting models, Xpand, for long-run capacity replacement, and PSO, for local congestion price premiums in the Los Angeles area most affected by the outage. These were used to estimate expected power prices and greenhouse gas (GHG) prices in California through 2050. The GHG component of the model included costs of carbon mitigation from both the power sector and the commercial and transportation sectors of the California economy. Results were accurately benchmarked against historical unit dispatch and near-term forward prices for power. Alternative repair scenarios were evaluated and uncertainty surrounding long-term plant viability was captured with an options framework to simulate plant operations under range of likely market fundamentals.