California power imports surge with San Onofre outage, EIA says

The ongoing outage of Southern California Edison’s (SCE) San Onofre Units 2 and 3has resulted in more electric power being imported into California from out of state, according to the Energy Information Administration (EIA).

The Edison International (NYSE: EIX) subsidiary has had both of its San Onofre nuclear units, and their combined 2,150 MW of generating capacity, offline since January when unusual tube wear problems were discovered in steam generators. The company recently asked the Nuclear Regulatory Commission (NRC) for permission to restart Unit 2 at reduced power. NRC has said its review could take months.

Meanwhile, the California Public Utilities Commission (CPUC) has launched an investigation. The outage has challenged the Southern California electric grid, EIA said.

The reduction of available in-state supply resulted in California importing more electricity. Electricity imports through July 2012 were about 90% higher than in the first half of 2011, EIA said in a Nov. 14 analysis posted on its website.

Some power plants located in adjacent states are partially owned by California utility companies, and special agreements exist for exporting power to California, EIA noted.

The loss of the two pressurized water reactors in San Diego County is important because between 2002 and 2011, San Onofre generated an average of 16,218,635 MWH of electricity each year. This generation represented 18% of the total electricity generation in the SCE and San Diego Gas and Electric. SDG&E, a Sempra Energy (NYSE: SRE) subsidiary, is a partial owner of San Onofre.

 Electricity demand between 2011 and 2012 remained essentially unchanged, leaving California utilities to deliver the same amount of electricity to customers without one of the largest in-state suppliers.

In addition to the loss of generation by San Onofre, in-state hydroelectric power generation was lower through July of this year. Increases in generation at natural gas-fired power plants in the state offset the reduced nuclear and hydro generation.

Natural gas generation was up through July 2012 by 24% when compared to the same period of 2011, EIA said.

Lower natural gas prices, in general, have moderated the increase in operating costs caused by using natural gas instead of nuclear generation in California so far in 2012.

Average on-peak power prices in Southern California in 2012 so far are lower than in 2011, despite increased natural gas demand, EIA said. The average on-peak wholesale price of electricity in Southern California through July 2012 was $30/MWh, down from $37/MWh during the same period in 2011.

On the other hand, the average off-peak wholesale power price during this same period in 2012 was $21/MWh, up slightly from last year’s price of $19/MWh. This was due to natural gas replacing nuclear power as the marginal fuel in Southern California during off-peak hours. The variable operating costs of nuclear power are very low, and it is often the marginal fuel during periods of low demand, EIA said.

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.