THE COST OF THE SAN ONFRE NUCLEAR OUTAGE

Extended nuclear plant outages raise Southern California wholesale power prices

March 26, 2013 (U.S. Energy Information Adminstration)

“The outages of both units at Southern California Edison's San Onofre Nuclear Generating Station (SONGS), starting in January 2012, have created a persistent spread in wholesale power prices between Northern and Southern California.

“Historically, wholesale power prices for Northern and Southern California tracked closely with one another, indicating minimal market differences between the two areas. However, after the shutdown of SONGS in early 2012, the relatively inexpensive nuclear generation produced by SONGS had to be replaced with power from more expensive sources. Consequently, since April 2012 Southern California power prices have persistently exceeded Northern California prices, with the spread averaging $4.15/MWh, or 12% of the Northern California price.”

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“Relative differences in natural gas prices do not seem to be driving the gap between Northern and Southern California power prices…[T]his difference accounts for less than $1 per megawatt-hour…[H]igher wholesale power prices in Southern California more likely are attributable to the need for more-expensive generation…in the densely populated Los Angeles and San Diego regions…[where] alternative sources…are more expensive…

“In 2012, the continuing SONGS closure put pressure on the electric power grid operator, the California Independent System Operator (CAISO), to adjust both generation and transmission in order to meet summer demand for electricity, and in general, continues to change the generation profile in the area…[CAISO has] requested changes to a transmission constraint rule in an attempt to resolve transmission congestion that is contributing to higher prices…[Restarting SONGS]…requires the approval of the Nuclear Regulatory Commission (NRC)…[which is expected] after May 2013.

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