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Uncertainty Over Songs Plant Clouds California Energy Outlook

July 16, 2012
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California has a mandate to have one-third of its electricity from renewable energy resources by 2020, but energy planners and providers are hoping milder weather prevails this summer in the face of prospects of a permanent shutdown of one of the state's two major nuclear generating plants.

The long-term closure of the San Onofre Nuclear Generating Station (Songs) is still speculation, but pressure is being placed on the state's natural gas-weighted generation fleet. Gas plants account for about two-thirds (67.5%) of the state's 50,341 MW of available capacity, according to the California Independent System Operator (CAISO). Last week California Public Utilities Commissioner (CPUC) Catherine Sandoval said energy officials probably should begin contingency planning if Songs remains idle in 2013.

Utility energy strategists this past spring predicted that natural gas for power generation could jump this summer if temperatures soar, following action by federal regulators in late March to keep Songs closed indefinitely.

Some physical gas traders attributed a bump seen in West Coast gas prices in late April in part to the outage of the Songs units.

A recent Associated Press report suggested that the current problem caused by unusual wear on tubing connected to four new steam generators may be too costly to warrant fixing. Songs majority owner/operator Southern California Edison Co. (SCE) faced the same dilemma 20 years ago when it closed Unit 1 at Songs. SCE is not commenting on the speculation, noting that it plans to file by the end of the month a plan with the Nuclear Regulatory Commission (NRC) and expects to subsequently restart the two Songs units totaling 2,200 MW. SCE and the Scripps Institution of Oceanography are in the midst of a seismic research project related to Songs in the wake of Japan's nuclear plant meltdown last year.

Meanwhile, CAISO is conducting two studies -- one looking at short-term peak load power needs through the end of next year, and the second one looking out five-10 years. Both studies assume Songs' continued closure. The CPUC is scheduled to decide in August how to launch a statewide proceeding in which SCE and San Diego Gas and Electric Co., which has a 20% interest in Songs, will have to detail the potential added costs for utility retail ratepayers to bring the Songs units back in service, mothball them or close them permanently.

CPUC's independent consumer advocacy unit, the Division of Ratepayer Advocates (DRA), is monitoring the situation, but it hasn't filed anything with the CPUC, a DRA spokesman told NGI. "We're following what is going on with the NRC, and we're basically getting probably as much information as anyone else out there," Mark Pocta said. CPUC involvement would look at the economic consequences of a total closure, said Pocta, noting that the federal regulators at the NRC have the lead on all safety issues.

The upcoming filing by SCE and federal regulators' reaction to it should clarity the situation for DRA and other state officials, some of whom are wrestling with how much additional gas-fired generation will be needed to pick up the slack in Songs' absence. "I think we are getting to the junction in the road when something will be put out and some direction taken in the next two months," Pocta said. "Right now we are approaching the six-month period, and that is quite a long time for those units to be down."

AP cited the closed Trojan nuclear plant 40 miles northwest of Portland, OR, which was shut down as a result of leaking tubes in a steam generator after 17 years of operation -- less than halfway through its expected 40-year lifespan. SCE closed Unit 1 at Songs in 1992 under similar circumstances in which the cost of repairs was made continued operation uneconomic. Nevertheless, utility and state officials are far from throwing in the towel, even in the face of the current outages and state-wide regulations prohibiting the use of sea water to cool Songs and nearly 20 other (mostly gas-fired) generation plants located along the Pacific Coast.

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