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NatGas Squeezed in California Climate Change Push, Say Edison Execs

Between aggressive carbon-reduction measures and a ban on using coastal waters for generation plant cooling, natural gas-fired electric generation will increasingly play a smaller role in California's power mix, executives at Edison International (EI) said Monday during a quarterly earnings conference call.

CEO Pedro Pizarro outlined the plans of EI's principal subsidiary, Southern California Edison Co. (SCE), to roll out a comprehensive long-term electrification program in response to California greenhouse gas (GHG) emission reduction goals and retirements of coastal gas-fired third-party generation plants.

Pizarro said the importance of upgrading SCE's transmission system to create a smarter, more efficient grid is critical for reducing GHG emissions and in adjusting to the upcoming retirements of several water-cooled baseload gas-fired plants along the coast. "Most have to shut down by the end of this decade," he said.

Given state’s goals of relying on 40% renewables by 2030 and 80% by 2050, Pizarro said gas is one of the resources in the generation stack and it is needed.

"We need to be sure that the prices in the market are fair to all the parties involved, including gas generators, but in the longer term as the amounts of renewables and other resources increase the amount of gas for generation will be squeezed down."

GHG emission reductions and environmental targets basically make this scenario inevitable.

"With the reduction in natural gas, we are going to see more of it being peaking plants and very flexible generation to be able to meet the ramps that we now see with the increase in renewables," said SCE President Ron Nichols. "But those plants will be burning increasingly less fuel over time."

Last month General Electric (GE) and SCE unveiled a battery-natural gas turbine hybrid system at an SCE electric generation site in the Los Angeles area, the first of two units GE is providing the utility this year.

"We integrated 10 MW/4.3 MWh of battery energy storage, and to Ron's point, that is the type of flexibility that is needed now that our gas-fired generation is no longer aimed at meeting peak loads, it is all about meeting the ramps," Pizarro said.

For 1Q2017, EI reported net income of $362 million ($1.11/share), compared with $281 million (86 cents) in the year-ago period.

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