Photo: Bloomberg / David Ryle
California may face the biggest regional power shortages in more than a decade this summer, sending wholesale prices higher, as idled nuclear reactors and low hydroelectric output cut generating capacity.
The California Independent System Operator Corp. said last month that managing the state grid, especially in parts of Southern California, will prove “difficult” because the system will be operating without Edison International (EIX)’s San Onofre nuclear power plant and two natural gas-fired units, while hydroelectric output will be at a three-year low. The nuclear plant, California’s single largest source of baseload power, accounts for 3.7 percent of the state’s capacity.
Southern California wholesale electricity for July through September already is at the highest level for this season since 2008 on the outlook for a shift to costlier, more volatile fossil fuels. A strain on the grid could lead to power failures reminiscent of the state’s worst energy crisis in 2000 and 2001, when generation shortfalls and market manipulation by traders at companies including Enron Corp. sent prices to record highs and triggered blackouts that affected millions of customers in the most populous U.S. state.
“California may see the biggest test since Enron manipulated the market,” Stephen Schork, president of Schork Group Inc., an energy consulting group in Villanova, Pennsylvania, said in an April 15 interview. “If you have a reactor down and you don’t have as much hydro, your fuel for air conditioning is going to have to come from gas.”
Electricity at Southern California’s SP15 hub for July through September rose $1.40, or 2.3 percent, to $61.25 a megawatt-hour yesterday, a five-year seasonal high. Prices today fell 40 cents, or 0.7 percent, to $61.
Bloomberg has the full article
