Skip to main content

In California, Nuclear Turns Off and Prices Go Up

What would happen to electricity prices in the event of a significant nuclear power plant shutdown? If recent events in Southern California are any measure, electricity prices would go up.

In January of 2012, both reactors at San Onofre in Southern California were taken out of service. The result? Electricity prices in the north and south of the state are no longer comparable. Prices were up 12% in 2012 in “the Southland” compared to Northern California where PG&E’s Diablo Canyon keeps humming along, according to new data from the US Energy Information Administration.



Electric Light & Power magazine says that the difference is one of simple substitution. Switching off nuclear power has led to more expensive alternatives.

But don’t look to natural gas prices as the culprit.
Relative differences in natural gas prices do not seem to be driving the gap between Northern and Southern California power prices…
Electricity imports (from other states) aren’t to blame either. In fact, one of the more affordable import sources turns out to be nuclear energy from Arizona.
Generation from outside the state is often less expensive [emphasis added]. Some power plants located in adjacent states are partially owned by California utility companies, and special agreements exist for exporting power to California. For instance, 18% of the Palo Verde Nuclear Power Plant, located in Tonopah, Arizona, is owned by California-based utilities.
Rather, it’s local (non-nuclear) sources of electricity generation that may be causing the price increases.
The major nearby alternative sources, however, are more expensive, and seem to be contributing to higher wholesale power prices.
The article isn’t clear on whether this price rise is due to “transmission congestion” or local natural gas plants (see chart below). But the root cause remains the same: The lack of nuclear-based generation from San Onofre is driving electricity prices higher in Southern California.


This overall dynamic is not unique to California, Germany has seen electricity prices escalate as a result of its nuclear shutdown and switch to pricier renewables.

Nuclear energy already suffers from a raft of myths and misconceptions. Here’s hoping that if anything is learned from the shutdowns in California and Germany, it’s that nuclear power is one of the most cost effective ways to generate electricity.

Comments

Rod Adams said…
It should never be a surprise that prices go up when supply goes down and demand does not change. That is a fundamental feature of commodity markets.

People that campaign against nuclear energy on the basis of "we don't need it because there are plenty of other alternatives" either cynically know the truth and want to sell non nuclear energy at higher prices or they are ignorant about the economic effects of artificially constraining supply.
jimwg said…
Greetings!

I'm no ad-man and don't go around promoting blogs, and the following isn't that case. If nuclear energy is to get a fair shake in the court of public opinion then it needs to be viewed free of tainted, biased, FUD, and often pernicious assertions divorced from fact or study. Rod Adams has vented anti-nuclear activists whose credential pretenses and outright lies has caused great grievous injury to the public perceptive and acceptance of nuclear power. Two such excellent and long overdue ventings can be viewed here:

http://atomicinsights.com/2013/04/was-gundersen-a-licensed-reactor-operator-and-senior-vp-nuclear-licensee.html#comments

I hope more blogs step up to the plate to debunk and expose anti-nuclear zealots and organizations. Nuclear blogs ought have a persona notorious headliner on these types to tip off a clueless web surfer. I implore all nuclear advocates join me, even redundantly, to embedding this above address on as many nuclear sites as possible for a heads-up on the same page on our common unscrupulous nemesis who is almost literally getting away with mass murder in league an unchallenging often sympathetic media. Doing so is not strutting a blog; you are doing a public good by enlightenment for the irresponsible pro-fossil actions of anti-nuclears has cost the health and lives of real-life non-specutalated tens of millions of people worldwide.

James Greenidge
Queens NY

Popular posts from this blog

An Ohio School Board Is Working to Save Nuclear Plants

Ohio faces a decision soon about its two nuclear reactors, Davis-Besse and Perry, and on Wednesday, neighbors of one of those plants issued a cry for help. The reactors’ problem is that the price of electricity they sell on the high-voltage grid is depressed, mostly because of a surplus of natural gas. And the reactors do not get any revenue for the other benefits they provide. Some of those benefits are regional – emissions-free electricity, reliability with months of fuel on-site, and diversity in case of problems or price spikes with gas or coal, state and federal payroll taxes, and national economic stimulus as the plants buy fuel, supplies and services. Some of the benefits are highly localized, including employment and property taxes. One locality is already feeling the pinch: Oak Harbor on Lake Erie, home to Davis-Besse. The town has a middle school in a building that is 106 years old, and an elementary school from the 1950s, and on May 2 was scheduled to have a referendu

Why Ex-Im Bank Board Nominations Will Turn the Page on a Dysfunctional Chapter in Washington

In our present era of political discord, could Washington agree to support an agency that creates thousands of American jobs by enabling U.S. companies of all sizes to compete in foreign markets? What if that agency generated nearly billions of dollars more in revenue than the cost of its operations and returned that money – $7 billion over the past two decades – to U.S. taxpayers? In fact, that agency, the Export-Import Bank of the United States (Ex-Im Bank), was reauthorized by a large majority of Congress in 2015. To be sure, the matter was not without controversy. A bipartisan House coalition resorted to a rarely-used parliamentary maneuver in order to force a vote. But when Congress voted, Ex-Im Bank won a supermajority in the House and a large majority in the Senate. For almost two years, however, Ex-Im Bank has been unable to function fully because a single Senate committee chairman prevented the confirmation of nominees to its Board of Directors. Without a quorum

NEI Praises Connecticut Action in Support of Nuclear Energy

Earlier this week, Connecticut Gov. Dannel P. Malloy signed SB-1501 into law, legislation that puts nuclear energy on an equal footing with other non-emitting sources of energy in the state’s electricity marketplace. “Gov. Malloy and the state legislature deserve praise for their decision to support Dominion’s Millstone Power Station and the 1,500 Connecticut residents who work there," said NEI President and CEO Maria Korsnick. "By opening the door to Millstone having equal access to auctions open to other non-emitting sources of electricity, the state will help preserve $1.5 billion in economic activity, grid resiliency and reliability, and clean air that all residents of the state can enjoy," Korsnick said. Millstone Power Station Korsnick continued, "Connecticut is the third state to re-balance its electricity marketplace, joining New York and Illinois, which took their own legislative paths to preserving nuclear power plants in 2016. Now attention should