The vote by the California Public Utilities Commission was 5-0.
At issue has been who should take the financial hit for the early demise of the plant located between Los Angeles and San Diego — company shareholders or customers.
The settlement of who should pay the $4.7 billion cost of the closure stems from negotiations among operator Southern California Edison, minority owner San Diego Gas & Electric Co. and consumer advocates. Critics argued that the deal shortchanged ratepayers.
Consumers will pay the estimated $3.3 billion in costs over 10 years, including for power purchased after the plant shut down.
Southern California Edison said in a statement submitted to federal regulators that customers should expect to see a rate reduction in January, reflecting the settlement. The company expects rates to increase later next year to cover the costs of buying power, but the size of the increase will be buffered by the settlement's call for shareholders to pay $1.4 billion.
The settlement "is reasonable in light of the whole record, consistent with law and in the public interest," Commissioner Mike Florio said in a statement.
San Onofre shut down for good last year after a long fight over whether it was safe to restart. It had been idle since January 2012, after a small radiation leak led to the discovery of unusual damage to hundreds of tubes inside virtually new steam generators.
A federal investigation after the 2012 leak concluded that a botched computer analysis resulted in generator design flaws that were largely to blame for the unprecedented wear in the tubing that carried radioactive water.