In a deregulated electricity market, you can't just pass along the costs. You're competing against other power plants. You can't just jack up your rates to cover the cost or customers will get their power elsewhere.
The question Edison had to ask itself is whether making a $1.1 billion investment was going to make a satisfactory rate of return. I don't know what the profit margin at this plant is, but it undoubtedly would take many year's profits to pay back that $1.1 billion.
Edison would be infinitely better off to shut the plant down and buy Treasury Bills with that billion bucks.
A 1500 MW coal plant has to be higher on the dispatch list than any natural gas plant. I think Edison could get the job done for a lot less than $1.1 billion, especially with the new manganese based flue gas scrub technology now coming on line.
The plant's already been running for 34 years, so can't have too much of a life left in it. That $1.1 billion (for a plant that cost $214 million to build, still less than a billion in today's dollars) won't be spread out over too-long a time, maybe only 10 or 20 years.