California Independent System Operator (Cal ISO) President and CEO Steve Berberich is busy these days making contingency plans for the anticipated outage of Southern California Edison’s (SCE) two San Onofre nuclear units this summer.
The two units with a combined output of 2,200 MW have not produced power since January due to tube leaks in steam generators. Both SCE, which is the majority owner and operator, and the Nuclear Regulatory Commission, have promised the nuclear station won’t be rushed back into service.
Likewise Berberich said the ISO is working to ensure there will be no electric reliability rationale to rush the nuclear station back too quickly. In addition to 450 MW of fossil generation that was scheduled for retirement, Cal ISO will also be counting on conservation measures and transmission upgrades to help make it through the summer.
“We have plenty of capacity for the summer except for the San Onofre issue,” Berberich said in an April 12 meeting with reporters in Washington, D.C. “I can tell you we are planning for the worst for this summer,” Berberich said.
That means planning for the loss of this well-positioned baseload generation in an area that Berberich sometimes refers to as “the end of the universe” – positioned in a grid area between Mexico and the Pacific Ocean. Cal-ISO has experienced the occasional loss of one of the San Onofre units from time to time but never both for an extended period. As a result, the Cal-ISO is looking to use two Huntington Beach natural gas generating units that were in the process of being mothballed until the San Onofre outage happened. Huntington Beach units 3 and 4, “have been damaged” in preparation for the mothballing, the ISO official said. Basically the steps to disconnect the power units from key infrastructure had already begun.
As a result, some repair work must be done before they can generate power this summer, Berberich said.
The Huntington units in question are owned by Edison Mission Energy (EME), which like SCE is a subsidiary of Edison International (NYSE: EIX). They are operated by AES (NYSE: AES). The owners and operator of the Huntington plant units believe they can get the summer repairs done in time.
At the same time, Berberich said the fossil plant is looking for some cooperation from U.S. EPA and California environmental regulators in being allowed to provide backup generation this summer.
When asked about San Onofre’s long-term prospects, Berberich first says that he wants to make it clear he is not seeking to act as a spokesman for the nuclear plant. At the same time, however, Berberich said he clearly hopes that both nuclear units won’t be sidelined indefinitely beyond this summer.
ISO also planning around cooling water rules, 33% renewables
While this drama is playing out, the California ISO is looking at a potential deficit of 4,600 MW in a few years when new cooling water regulations kick in, potentially forcing several thousand megawatts of existing capacity to either retire or install extensive retrofits like cooling towers.
Berberich doubts all the units affected by the cooling water rule will actually shut down, but the ISO must plan for the worst. The potential 4,600-MW deficit in 2017 would grow even worse if Calpine’s (NYSE: CPN)’s 10-year old Sutter combined-cycle power plant is forced into a premature retirement.
The ISO supports helping keeping the plant operating until at least 2017 when its quick start ability will help with handling more renewable load on the grid. The California Public Utilities Commission (CPUC)recently approved a resolution urging the state’s three investor-owned utilities to negotiate a power contract with the 575-MW Sutter. Sutter could be very important as Cal-ISO tries to reach 33% renewable by 2020.
Sutter is only 10 years old and as a combined-cycle plant it has the ability to ramp up generation quickly to cope with California’s increasing reliance on intermittent generation, Berberich said. The ISO official noted that the state action does not actually compel the utilities to buy power from Sutter.
When you consider that planning, licensing and building a new power plant takes five-to-seven years then 2017 isn’t very far away, Berberich said.
When asked about another topic, Berberich said he doesn’t worry much about California utilities like SCE being forced to sell their interest in out-of-state coal plants to comply with the state’s greenhouse gas standards. “California is going to have to be a very nimble fleet [with all the renewable power] and coal just doesn’t fit.” SCE is in the process of selling its stake in the Four Corners coal plant in New Mexico.