Ralph Cavanagh, Energy Program Co-Director, San Francisco, CA
A memorable Sherlock Holmes story involves “the curious incident of the dog” that did not bark when expected, and a much more contemporary California version involves calm in the aftermath of a sudden 2013 retirement for two giant nuclear power plants. As the summer heats up, it is important to reflect on why no reliability problems have occurred or are anticipated. Credit is owed to the utilities involved, California’s statewide Independent System Operator, and the public process that has guided replacement strategies.
When Southern California Edison (SCE) made the decision to close the San Onofre Nuclear Generating Station (SONGS) in 2013, its leaders were driven both by public safety and economic considerations; recently installed replacement equipment was failing and permanent retirement was in customers’ best interest.
At that point, California found itself lacking 2,200 MW of power generation. Due to the strategic location of SONGS (halfway between Los Angeles and San Diego), the need for replacement power was initially assessed at roughly 2,500 MW: the equivalent of five large power plants. After the California Public Utilities Commission (CPUC) analyzed the savings that would come from SCE’s long-term energy efficiency investments in Southern California, along with several planned grid upgrades, it ordered SCE to procure up to 700 MW of power to replace its share of SONGS. There was an important condition: at least 400 MW must come from clean energy resources (like additional energy efficiency or renewable energy).
SCE conducted a robust solicitation process to procure a wide variety of replacement power. The utility held the state’s first “all-source” RFO (Request For Offers), in which it created standard contracts for resources like energy efficiency and energy storage as alternatives to conventional generation. Working with diverse stakeholders and counterparties, SCE delivered winners from a wide mix of resource types. In the end, the utility set the record for the largest energy storage purchase in history (which helps get more pollution-free renewable energy on the grid), and contributed to the state’s goal of replacing SONGS with clean energy resources.
At the same time, SCE negotiated a proposal with key stakeholders, including customer and environmental advocates, on allocation of costs from the shutdown. NRDC was not involved, but Friends of the Earth was an active participant, and its President noted that the ultimate proposal was “fair and a win-win” for the utility’s customers, “who need no longer fear a reactor meltdown in their backyards and instead of bailing out Southern California Edison will be getting money back” (Erich Pica, April 1, 2014).
Some are now urging the CPUC to reject the proposal, which would introduce potentially costly uncertainty about the final outcome while litigation drags on. That would be a mistake. SCE has behaved responsibly, in both the shutdown decision itself and a subsequent replacement process marked by clean energy leadership and remarkable reliability performance. The settlement would require Edison and its ownership partner, San Diego Gas & Electric, to absorb more than a billion dollars in costs for defective equipment, inspections and attempted repairs. Rates of return on plant costs authorized for recovery would be cut sharply, and the recovery itself would take ten years. Hitting Edison even harder would send a message to all owners of the nation’s 100 remaining nuclear units to think twice (or more) before acting responsibly to close generation in the face of expensive and risky repairs. The focus instead should be on continuing to ensure clean and affordable substitutes for two giant plants that many had deemed irreplaceable right up to the end.