California Dreamin’ Becoming a Reality?

By Kennedy Maize

Washington, D.C., June 25, 2012 – When it comes to electric infrastructure, no state is more dysfunctional than California. That observation, based on many years of observing the twists and turns of California electricity policy, is highlighted by the problems the state now faces with the possibility of the San Onofre nuclear power plant never starting up again.

The two-unit plant has been shut since the start of the year with unexpected and still not well-understood problems in the steam generator tubing. It will not be working for the rest of the summer, and perhaps far beyond that. A design flaw may be the root cause. A fix looks many months away, and the future of the venerable generating station is in doubt. Serious hand-wringing is underway.

Trendy California is always on the bleeding edge of political correctness when it comes to electricity. The state has focused its attention on glitzy but peripheral energy topics such as how to maximize renewables, how to minimize fossil generation, and how to avoid building anything new anywhere near anyone (that’s called “banana” policy). The electric infrastructure is so messed up that the loss of 2,200 MW of nuclear generation can potentially bring the state to its knees. In addition to limited in-state generation, California’s transmission system is built to bring power in from politically-incorrect hydro in the north and politically-incorrect coal in the south, and both of those sources are under attack.

Californians have erected a power edifice that jeopardizes every consumer, has among the highest costs in the country, and somehow believes that the rest of the country should emulate it. This truly is what Amory Lovins was talking about when he coined the phrase “brittle power.” California’s electric system is brittle to the point of breaking.

The Los Angeles Times last week discussed the bind that faces the Golden State, an electric pickle of its own making. The article raised the issue of how the nuclear outage, now five months old, could make life very difficult if it persists, calling that possibility “a wild card in already complicated discussions about the state’s energy future.” The article noted that the loss of San Onofre not only takes out a significant amount of baseload power, but also jeopardizes the stability of the transmission grid. It quotes Steve Berberich, CEO of the California Independent System Operator, who says the extended outage “laid bare” infrastructure weaknesses in the state.

The LA Times article also quotes electricity veteran S. David Freeman, who recently was in charge of the Los Angeles Department of Water and Power, the largest municipal utility in the nation. Freeman asks, “Why are we sitting here today without adequate transmission to move power freely in the state of California?”

Freeman knows the answer to his question, as do at least some of the members of the California Public Utilities Commission, the California Energy Commission, and the ISO. In fact, that list of administrative agencies exemplifies part of California’s problem. No one is in charge, and the system is rigged that way. The CPUC regulates rates for the state’s three investor-owned utilities, but has little planning authority. The CEC is a planning agency, but was created in the 1970s as a way to prevent new energy projects from being developed by the PUC. The ISO is a wholesale market and transmission agency, but has no tools to encourage market players to build generating capacity. California’s large and important munis are largely a state unto themselves.

That’s all by design. Behind the administrative mess are California’s political system and the citizens themselves. Californians have decided that they don’t want much in the way of large-scale electric generation or transmission in their state, although they like electricity just fine. They seem to like solar panels and windmills, although they would soon turn on those technologies should they ever expand to the degree that the voters say they want. They don’t want any electrons that come from coal, no matter where; the Commerce Clause of the U.S. Constitution seems a trivial obstacle to the California dream.

No doubt many in the state, if not most, would be happy to see San Onofre turned off permanently, followed quickly by Diablo Canyon, the state’s other nuclear station, with another 2,200 MW of juice and a must-run plant for grid stability.

What will Californians do if the lights start to flicker, and rates go even higher than they are today? Stay tuned. We may see the answer to that question sometime soon.