Last week, the North American Electric Reliability Corp. said it expects the San Onofre Nuclear Generating Station (SONGS) to remain offline at least through the summer. The SONGS facility is comprised of two 1,100 MW nuclear generators located on the coast about midway between Los Angeles and San Diego. The units have been offline since January due to premature wear in steam tubes and there is not a return to service date available from the facility’s operator Southern California Edison.
NERC is not counting on the plant to meet reliability needs and in its assessment released last week said that extreme temperatures this summer could “result in the deployment of load-shedding procedures” (aka, rotating blackouts) in the San Diego and Los Angeles basins. Aside from the significant role a plant of this size plays in a dense energy consuming region like Southern California, it also plays a major role in transmission stability for moving energy between the two load pockets. Without the availability of SONGS either for its generation or its role in facilitating the transmission of electricity, reserve margins are likely to be stretched thin under high demand situations.
If you are an energy consumer in Southern California here are a few things to consider:
– Day ahead and real-time electric index prices may be especially volatile. In a prolonged high heat scenario emergency generation in Los Angeles and San Diego may be called upon if high-voltage transmission lines that bring needed electricity into this area are insufficient to meet demand. In many cases this means that less efficient generators which are infrequently run because of their high cost of operation are needed. This will raise electric costs in the SP15 load zone, remember the bid cap at the CAISO is $1000/MWh. In the most extreme cases it will require load curtailments. If you are purchasing your electricity on an index basis consider insulating your energy spend with partial fixed price purchases. Your Constellation representative can help you determine what is right for your business.
– If you are not yet participating in a load response program with either your utility or Constellation, consider doing so. You will hear repeated warnings from your utility and the CAISO this summer about local reliability problems and requests to reduce usage at crucial times. All of the load response programs present an opportunity to create a revenue stream as they will compensate you for your ability to curtail.
– Natural gas consumers in the region should be aware this situation may effect them as well. The most likely source for replacement power for SONGS is natural gas-fired generation. For example, the CAISO recently brought 440MW of natural gas generation that had been mothballed at the Huntington Beach power plant back into service. As gas generation is called upon this region may quickly run up against pipeline constraints that limit how much fuel can be brought in to fire generators. Most of the key natural gas pipelines flowing into Southern California, including Kern River and Transwestern, are already running near capacity.
Longer term, NERC noted that once SONGS does return to service it may only operate at 50% – 80% of capacity. Under a protracted outage there may be a variety of grid problems for consumers to consider, including higher baseline energy costs in the SP15 load zone and higher basis costs on natural gas pipelines. While it is too soon to tell how long the units will remain offline, in May the Los Angeles Times reported that the units may never return to full service. If this plays out, the long-term solutions necessary to address the energy needs of this densely populated area like upgraded transmission capability, new generation and new gas pipelines could take years to install.