March 20 (Reuters) - California's electric grid agency warned on Wednesday that a second summer without output from the damaged San Onofre nuclear plant presents more challenges than last year and will force the agency to rely on voluntary conservation to avert rolling blackouts.
"This summer will be more difficult than last," Steven Berberich, president of the California Independent System Operator (ISO), said at an ISO board meeting.
The 2,150-megawatt San Onofre nuclear station, owned by Edison International and Sempra Energy, has been shut since January 2012 after the discovery of premature tube wear that damaged thousands of tightly packed tubes inside the large steam generators.
San Onofre, located halfway between Los Angeles and San Diego, is the largest power plant in southern California and its extended shutdown creates reliability problems in south Orange County and the San Diego area, ISO officials said.
Grid officials are closely watching California's supply of hydro power for the summer which is expected to be about two-thirds of normal, Berberich said.
"If it's hot, we will have to lean on (conservation) programs," Berberich said.
Last summer, the ISO recalled two aging power plants to bolster electric supply in Southern California, but the Huntington Beach 3 and 4 units, owned by AES Corp can not restart this summer due to a lack of air emission credits.
Berberich said the agency still expects that the Huntington Beach units will be converted into synchronous condensers that can provide the grid with voltage support by the summer.
An AES official could not be reached for comment.
The conversion project will help increase power imports into Southern California but is not a replacement for the generating capacity available last year, Berberich said.
In 2012, the grid agency issued "Flex Alerts" during a week-long heat wave in August to encourage consumers to reduce electric consumption in the afternoon and early evening hours.
Grid officials are working on more formal energy efficiency programs that can be relied on to curb demand when supplies are tight. One ISO commissioner said it appeared consumers used more power in some instances after the Flex Alerts were issued last summer.
Berberich told the ISO board that he does not expect either San Onofre unit to produce electricity this summer even though Southern California Edison, which operates San Onofre, is working to gain approval from nuclear regulators to operate Unit 2 at a reduced rate for five months.
The U.S. Nuclear Regulatory Commission staff may make a recommendation on whether San Onofre 2 can restart in May or June, according to the NRC website.
Separately, the board voted unanimously to advance a plan to work with PacifiCorp to expand the ISO's real-time energy imbalance market to take advantage of growing renewable resources in the Northwest.
A preliminary agreement between the ISO and PacifiCorp was announced last month.
Through more frequent dispatch of power generation to match actual electric demand across a broader geographic region, officials said the voluntary energy-imbalance market will better utilize the growing amount of available wind and solar power.
An ISO report estimates benefits from increased coordination could range from $21 million to $129 million in 2017, three years after implementation. Savings depends on how much power moves between the regions.
PacifiCorp, a unit of MidAmerican Energy Holdings Co, operates utilities in California, Oregon, Washington, Utah, Wyoming and Idaho, and will invest about $2.1 million to set up its systems.
MidAmerican is a unit of Warren Buffett's Berkshire Hathaway .