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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

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