* Tube degradation shuts both nuclear reactors
* Grid agency looking at conservation, other options
* San Onofre location critical for grid reliability
By Eileen O’Grady
HOUSTON, March 21 (Reuters) - California’s electric grid operator is looking for ways to keep the lights burning this summer should the ongoing shutdown of both San Onofre nuclear reactors continue into the state’s peak power-use season, the grid agency said.
Both reactors at the 2,150-megawatt San Onofre Nuclear Generating Station have been shut since January due to premature wear found on tubes in massive steam generators installed in 2010 and 2011, and operators are not saying when the units might be repaired and able to restart.
Located about halfway between San Diego and Los Angeles, San Onofre’s location makes it an integral part of Southern California’s high-voltage transmission system. Its shutdown could be more tricky to manage than the loss of the state’s other nuclear power plant, PG&E Corp’s Diablo Canyon plant, according to a California Energy Commission report.
“We are planning for the possibility that the San Onofre units will not be available for service this summer,” said Jennifer Manfre, a spokeswoman for San Onofre which is operated by Southern California Edison (SCE), a unit of Edison International.
SCE holds a 78-percent ownership stake in the station and Sempra Energy’s San Diego Gas & Electric which owns 20 percent. The City of Riverside also has a small stake.
“We are working with the Cal ISO (California Independent System Operator) on contingency plans for the summer,” Manfre said. “It’s the responsible thing to do.”
San Onofre officials have pledged not to restart the units until the cause of the tube leak and tube degradation are understood.
Southern California wholesale power prices through May have moved higher since the units shut, traders said, while summer prices of about $35 per megawatt-hour have shown less reaction.
The grid operator is looking at a variety of options, from stepping up conservation efforts, calling on retired plants to replace lost nuclear power and accelerating transmission improvements.
At San Onofre, workers have plugged nearly 1 percent of the plant’s tubes in Unit 2 which shut in early January for refueling and replacement of the reactor vessel head.
Eight tubes so far have failed a pressure testing process at Unit 3 which was shut in late January after a tube leak released a small amount of radioactive gas, Manfre said.
That prompted the ISO to take a second look at its forecast for power resources and demand for the summer months when power use typically jumps.
In a memo to the ISO board, vice president of market and infrastructure development Keith Casey said that if both San Onofre units remain offline “Southern California may face local reliability issues” which could increase the need to implement rolling blackouts to balance supply and demand.
“We are working together with Southern California Edison and San Diego Gas & Electric as well as others to develop mitigation measures should the (San Onofre) units not return to service this summer,” Casey said in the memo.
Managing system emergencies in the San Diego area as well as the ISO-controlled grid that serves the Los Angeles basin “will be essential for maintaining reliability,” Casey said.
The City of Los Angeles is served by its own municipal utility.
The ISO staff plans to update the board Thursday.
The agency’s initial summer outlook called for peak demand of 46,342 MW under normal weather conditions, 3,900 MW below California’s record summer use of 50,270 MW set during a July 2006 heat wave and 900 MW above the highest day last summer.
With just 50,300 MW of generation in the state, California relies on power imported from other states to meet demand and a surplus of at least 15 percent needed to avoid blackouts.
Southern California relies more heavily on power imports than does Northern California, the ISO said.
That is why a prolonged shutdown of the San Onofre units is so critical, according to a recent update of a report from the California Energy Commission looking at nuclear outages.
“A shutdown of (San Onofre) restricts power flows coming from out-of-state and a prolonged shutdown could cause serious grid reliability shortfalls unless the state improves the transmission system infrastructure,” the report said.
“Under moderate to heavy electricity loads, SCE would likely implement controlled rolling blackouts in the short term to reduce stress on the electric grid,” the report said.
Reporting By Eileen O'Grady; editing by Jim Marshall