A California Nuclear Plant Is Shutting Down Permanently, And That's Bad News For Energy Prices

Southern California Edison is decommissioning the remaining two units at a nuclear plant that powered as many as 1.4 million homes, Sky News reports, 

The San Onofre facility, located just south of Los Angeles, had been shut down for the past year after inspectors discovered a leaking tube inside a steam generator.

But by April costs of the shutdown had soared to $553 million, Sky reports. In a release, SCE said it will have to report a charge of up to $450 million after tax as a result of the move.

Energy analyst Stephen Schork tells us the decision will likely cause chaos in western power markets:

You've lost one of your cheapest sources of baseload nuclear generation. In the northern part of the state, very limited snow-melt is already affecting hydropower, so they're constrained on their two cheapest sources of energy. So the region is going to be susceptible to spikes in natural gas [prices].

California may have to go back to importing power from Arizona, he added, and both states are expected to see more record temperatures this summer.

The EIA also expects prices will rise:

Replacing the power from a low-cost source of generation like [San Onofre] already has changed wholesale electricity prices in [California]. Rising natural gas prices are likely to increase that effect in 2013. In its annual report, CAISO noted that 2012 wholesale power prices were higher than prices in the previous three years even when adjusted for the lower 2012 natural gas prices. In addition, the unusually large spread in wholesale electricity prices between the northern and southern portions of the state indicates system congestion.

It's also another setback for the nuclear crowd, Schork said, creating a trifecta of recent bad headlines along with Fukushima and questions over renewing New Jersey's Indian Point plant.

The LA Times says 1,100 workers will now be laid off.

San Onofore's second and third units were completed in 1983 and 1984. Unit 1, which began operating in 1967, was shuttered in 1992.

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