Nuclear plant shutdown to increase California's reliance on natural gas

Sun Jun 9, 2013 1:17am EDT
 
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By Scott DiSavino

NEW YORK (Reuters) - California's growing reliance on natural gas to fuel its power plants will increase and power prices will remain elevated following Southern California Edison's decision to retire a crippled nuclear power plant.

Both reactors at the 2,150-megawatt (MW) San Onofre plant will be permanently closed due to uncertainty over the cost and timing of restarting one of the units, said SCE, a unit of California energy company Edison International, on Friday.

While the grid agency has warned that the loss of San Onofre could cause rolling outages this summer as use of air conditioners soars, old and new power plants fueled by natural gas will likely pick up the slack.

"Any time you have a large plant closure, it affects both existing plants as well as future planning to replace the energy the plant was producing," said John Chillemi, west region president of NRG Energy Inc, which has more than 5,000 MW of gas-fired generation in California at 11 sites.

"I can tell you that when (San Onofre) first went off-line, NRG experienced increases in power generation at our southern California-based energy stations," said Chillemi.

Because the San Onofre reactors have been shut since January 2012, analysts said there should be little immediate impact to electricity or gas markets from SCE's decision not to seek regulatory approval to restart the nuclear plant.

"We kind of knew San Onofre might not come back this summer. Now we know for certain," said Paul Patterson, energy analyst at Glenrock Associates in New York.

SHUT DOWN TO KEEP PRICES ELEVATED   Continued...

 
A man walks his dog next to the damaged San Onofre power plant located next to San Onofre State Park in California, in this November 8, 2012 file photo. REUTERS/Mike Blake