While California energy officials wrestle with where to find more natural gas-fired, renewable-based and purchased power sources of electric generation in the immediate years ahead, regulators and utility officials will be coping with the closure and eventual decommissioning of one of the state's two major nuclear generation plants.
Southern California Edison Co.'s (SCE) decision on Friday to give up hopes of restarting two units at the troubled 2,200 MW San Onofre Nuclear Generating Station (Songs) means an estimated $3 billion cost spread up to the next 40-50 years (see Daily GPI, June 10) .
In regard to overall grid reliability in California, the Songs closure will add another challenge for state energy planners who are already working to overcome a once-through-cooling (OTC) ban on the use of coastal waters for up to 20 coastal power plants, most of which are natural gas-fired, and are in various phases of repowering plans. The closure of Songs will complicate this work, according to Ron Litzinger, SCE president.
Starting immediately, SCE will remove Songs' $1.2 billion in rate base from its collective assets on which it earns an authorized profit level, meaning about a 15-cent/share hit in lost earnings during the remaining seven months of this year, according to senior executives at the company.
Decommissioning would not start until 2022, when Songs current Nuclear Regulatory Commission (NRC) license expires, according to Jim Scilacci, CFO at SCE's parent, Edison International. As of March 31, the market value of Songs was slightly more than $3 billion, or an after-tax value of $2.7 billion, he said. SCE has maintained a decommissioning trust fund, and by 2022 that fund is expected to have sufficient dollars to pay for the decades-long decommissioning process.
"The current plan for decommissioning Songs will last in excess of 40 years," Scilacci said. "Based on our latest estimate, the approximate value of the net future cost of decommissioning Songs is approximately $3 billion. With the early shutdown, we will be evaluating the accelerated decommissioning of the plant."
Although Edison executives did not divulge their immediate intentions on a conference call with financial analysts Friday, it is expected that SCE initially will mothball the plant under NRC rules, according to a report in Sunday's Los Angeles Times.
"We're already addressing the potential for coastal power plants being shut down for water quality, or the OTC issues, and Songs will add another increment to deal with as we go through those plans," Litzinger said. "We will need to add replacement generation over time for both the once through cooling and Songs, and that work will begin in earnest now that we have eliminated the uncertainty of whether Songs is around or not.
"And depending where the new generation is located -- either inside the Los Angeles Basin or outside -- we will determine if new transmission lines will be required. We are anxious to get that started right away, given the permitting time frames for both new generation and transmission."
Three major new gas-fired generation plants will be brought on line this year (see Daily GPI, May 29). "Projections are that if we can get all of the generation inside the [Los Angeles] Basin and near the coast -- in essence repowering existing facilities -- the amount of new transmission would be fairly small," Litzinger said. "But once you begin getting away from the coast and outside the basin the potential for transmission goes up very quickly."
Edison International CEO Ted Craver said in recent days that he has spoken with California Gov. Jerry Brown and California Public Utilities Commission (CPUC) President Michael Peevey, and they indicated that the state is ready to "jump on this quickly to make sure we're doing everything possible to ensure we have good system reliability.
"I think the CPUC will be indicating that it wants to convene a group, including ourselves and San Diego Gas and Electric Co., along with all the state energy agencies, to work this with a sense of urgency. Obviously, we have a big responsibility to get after this, and I think there is a lot of focus on it by the governor, the CPUC and others."
While there will be a renewed effort to make sure power generation resources are adequate, the undertaking of closing and eventually decommissioning Songs will be a gradual and very heavily regulated process. The NRC allows utilities to either tear down old reactors or put them in "safe storage" for up to 60 years, according to the Times report. Eight reactors in the United States are in safe storage now and another 16 are either in the process of or have completed decommissioning.
Sitting on 84 acres of land that SCE leases from the U.S. Marine Corps and its adjacent Camp Pendleton training facility, there is no incentive for the utility to quickly close and dispose of the nuclear plant, even if it could, which it can't given the regulations for dealing with radioactive waste.
Some industry observers note that letting a nuclear plant site sit for years, even decades, can be beneficial to allow radioactivity to decay, and thus reduce the cost and time of dismantling the plant long term.
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