Bloomberg News

California Utilities Cleared to Buy Power to Replace Nuclear

March 13, 2014

Edison International (EIX:US) and Sempra Energy (SRE:US) utilities in Southern California were cleared to buy as much as 1,500 megawatts of electricity to replace the power lost when the San Onofre nuclear plant shut in 2012.

Sempra’s San Diego Gas & Electric Co. was authorized by the California Public Utilities Commission today to secure 500 to 800 megawatts, with at least 175 coming from “preferred resources” such as solar, wind and energy-efficient sources and 25 from energy storage. Edison’s Southern California Edison in Rosemead was approved for 500 to 700 megawatts, with at least 400 from preferred sources.

Environmental groups including the Natural Resources Defense Council and Sierra Club had argued that all additional power should come from renewables and other clean sources, saying the alternative would lead to more emissions-intensive power such as that produced by natural gas-fired plants.

“I wish we could do 100 percent preferred resources,” Michael Peevey, president of the commission, said at the panel’s meeting in San Francisco today. “We just don’t have it in the timeframe necessary to ensure economic well-being, prosperity and keeping the lights on in Southern California.”

Nuclear Shutdown

The shutdown of Edison’s San Onofre plant in January 2012 took 2,200 megawatts off the state grid, prompting system operator California ISO to accelerate transmission upgrades to shore up reliability and increase dispatches of gas-fired power.

Gas demand rose to record highs last month as a cold front swept through the western U.S. Southern California Gas cut flows to generators in order to maintain service to homes and small businesses.

A drought shrinking the state’s hydropower supplies may further increase reliance on gas resources, Karen Edson, the ISO’s vice president of policy and client services, said in a letter yesterday to the operator’s board of governors.

“This may translate to an upward pressure on wholesale prices and an increase in greenhouse gas emissions,” she said.

On-peak, spot power at Southern California’s SP15 hub for tomorrow dropped $2.65, or 5.4 percent, to $46.02 a megawatt-hour at 1:30 p.m. New York time, data compiled by IntercontinentalExchange Group Inc. show.

Strela Cervas, co-coordinator at the California Environmental Justice Alliance, said the Huntington Park-based group was “outraged” by the commission’s decision.

‘Wide Open’

The panel is “allowing far too much new energy generation that we don’t need,” Cervas said in an e-mailed statement. “It leaves the door wide open for the vast majority of that energy to be produced with polluting fossil fuels, at the expense of our wallets and our health.”

After severe cold moved into the state Feb. 6, boosting natural gas demand, the grid operator compensated with higher output from Northern California plants, increased imports from outside the state, additional wind generation, calls for conservation and programs that allow utilities to cut service to participating businesses, Steve Berberich, the ISO’s chief executive officer, said in a report to the board of governors yesterday.

To contact the reporters on this story: Lynn Doan in San Francisco at ldoan6@bloomberg.net; Mark Chediak in San Francisco at mchediak@bloomberg.net

To contact the editors responsible for this story: Dan Stets at dstets@bloomberg.net Charlotte Porter, Bill Banker


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Companies Mentioned

  • EIX
    (Edison International)
    • $60.65 USD
    • 0.80
    • 1.32%
  • SRE
    (Sempra Energy)
    • $107.86 USD
    • 1.22
    • 1.13%
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