Twiddling Turbine

But the long-term contracts leave a big shortfall this year. Much as many environmentalists may dislike nuclear power and San Onofre, the failure of Unit 3 is a serious blow to California‘s power-generation portfolio. Former Sacramento Municipal Utility District director Ed Smeloff -- who led the fight to close the Rancho Seco nuclear plant a decade ago, in the only successful nuclear-shutdown ballot initiative in U.S. history -- and now heads New York’s Pace Law School energy project, notes that San Onofre has not been viewed around the nation as an especially troubled plant. How valid that perception has been may be clearer when the NRC finally releases its report on the February 3 accident.

Getting the power to keep the lights on for 1.1 million California households costs a great deal of money. In the meantime, since the out-of-state power generators that bought the California plants sold by Edison and the other private utilities after deregulation refuse now to sell power to Edison, the state has to find another 1,120 megawatts of electricity. Peak prices are around $250 per megawatt hour. Do the math, and you see that is a whopping $280,000 for every hour during peak periods of electrical use. Fortunately, power costs significantly less during off-peak hours. A good ”conservative“ rule-of-thumb price over a 24-hour period, according to Kinosian of the PUC and other experts, is $100 per megawatt hour. At that average price, the failure of Unit 3 costs $2.7 million per day. Over the five-month period that the NRC confirms the reactor will have been offline, that adds up to a whopping $400-plus million. If it remains offline longer than that -- as some suspect it will -- the cost goes even higher.

While the Edison utility company is close to bankrupt, its holding company and merchant power-generating arms are more than flush. As part of the 1996 deregulation deal, of which Edison CEO John Bryson was a major architect, Edison and the other big private utilities received more than $10 billion as a bailout for ”stranded costs,“ a term of art for big, uneconomic investments in the San Onofre and Diablo Canyon nuclear power plants. Edison turned around and invested in power plants around the world. Yet Edison‘s holding company is not liable for the cost, to taxpayers and ratepayers, of the failure of Unit 3.

San Onofre’s state of operational health is important for yet another reason. Right now, the only major transmission connection between San Diego and power plants in the rest of California is at San Onofre. Another transmission-line project has been proposed for the Temecula area in Riverside County, which experts say is necessary because San Diego County is on the verge of exceeding its reliable delivery capability.

For some reason, state officials have been very quiet about the problems at San Onofre, despite the huge burden on the state‘s deepening power crisis.

It is interesting to note that one of Governor Gray Davis’ behind-the-scenes advisers is Van Ness, Feldman, a Washington, D.C., law firm with a big energy regulatory practice. A key figure in the firm is Bob Nordhaus, former general counsel of the Department of Energy under Clinton, and former general counsel of the Federal Energy Regulatory Commission. In between, he was Edison‘s lawyer. His wife is general counsel of the NRC.

In addition, the governor has three formal power-crisis advisors with strong Edison ties: former Edison president Michael Peevey, Davis’ chief negotiator with the utilities; Edison consultant Vikram Budhraja, a member of the governor‘s negotiation team; and the governor’s energy-construction czar, Larry Hamlin, an Edison executive on leave of absence. As they say at Disneyland, it‘s a small world after all.