Market players weight longer SONGS outage

Friday, June 01, 2012

A sustained partial or total outage of Southern California Edison's San Onofre Nuclear Generating Station past the summer could complicate local reliability, the region's transmission grid and the flow of gas on pipelines in the Southwest, but would not necessarily wreak havoc on California power markets, where prices remain weak, according to market participants.

While the most likely source for replacement power is gas-fired generation, Bentek analyst Anders Hyde said Southern California may quickly run up against pipeline constraints that limit how much fuel can be brought in to fire those plants.

"You're looking at a region that's going to be very constrained in terms of pipeline capacity," Hyde said. "So if gas-fired generation becomes more prominent in the absence of nuclear generation… you're going to be stressing your available capacity on pipelines."

Most of the key natural gas pipelines flowing into Southern California, including Kern River and Transwestern, are already running near capacity, according to data from Bentek. The remaining option is the El Paso pipeline, but even that line has little wiggle room.

According to Bentek data, Southern California as well as other major load centers that rely on El Paso — including Phoenix — are expected to see demand grow as the economy recovers in the next few years, and Mexican demand for gas is forecast to increase by 1.4 Bcf/d by 2017.

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