CALIFORNIA FACING DEJA VU ALL OVER AGAIN?

Byline: Richard Nemec Local View

IF spring is here, summer electricity worries cannot be far behind. And, sure enough, the front page of The New York Times and the lead item on national news broadcasts in recent days carried reports of scary levels of undetected corrosion in the reactor head of an Ohio nuclear plant, of which there are 68 similar ones scattered around the United States, including California's two major nuclear plants.

Here we go again. Rolling blackout threats all last year, and now radiation poisoning in 2002!

Preliminary assessments, however, indicate what Californians have to fear most from the sudden discovery of potential design or materials flaws in ``pressurized-water reactor'' type nuclear generating plants is not nuclear fallout, but more like political and economic disaster all over again.

Believe it or not, within hours of the initial news reports of the Nuclear Regulatory Commission asking all 68 other plants like the one near Toledo, Ohio, (Davis-Besse) to take steps to inspect and, if necessary, mitigate any problems, people who get paid mucho bucks to watch wholesale natural gas and electricity prices already saw the gas prices creeping upward.

It was in anticipation of a whole bunch of nuclear plants being taken out of service this spring and summer, putting pressures on our generating capacity to meet peak summer demand.

While environmentalists and anti-nuke activists may relish the thought of 68 nuclear generating plants going out of service, electricity consumers - particularly the fickle, weather-beaten ones out West - should not welcome such an occurrence.

What the heightened sense of regulatory and public safety concerns masks is the dirty little secret that although we have gone some 10 months without rolling blackouts and months without power alerts that became daily facts of life last spring, the state is still dependent on good weather, smooth mechanical operations and good luck to keep our still-strained electric infrastructure humming along.

Californians may wish for the bygone days when vertically integrated utilities were fully regulated and excess generating capacity was at the 25 to 30 percent level, but those days are not likely to return anytime soon.

Generation and the wholesale market for selling to end-users and retailers are increasingly deregulated, although some federal wholesale price caps remain in effect this summer should the state experience another excessive spike in prices as we did two years ago.

The nuclear plant situation at this early juncture appears manageable. That's the initial report from Pacific Gas and Electric Co.'s Diablo Canyon nuclear plant along the Central Coast west of San Luis Obispo and from Southern California Edison Co.'s San Onofre plant just south of San Clemente. (The DWP has a minor interest in the Palo Verde nuclear plant in Arizona that is operated by an Arizona-based utility).

PG&E and Edison's respective nuclear plant officials said they anticipate being able to fulfill the NRC requirements during scheduled refuelings at their respective plants this spring and next winter, without added downtime, which is the potential catalyst for added price and supply problems this summer.

So, despite the potential pervasiveness and seriousness of the recently surfaced problem, if the electric industry doesn't have to cope with excessive added out-of-service time for the nuclear plants, power supplies this spring and summer should be adequate. But we have to remember last year's ``perfect electric storm'' that hit the West, particularly California.

Nuclear plant outages, plant cancellations/malfunctions, and financial- constraints on energy utilities combined with extremely hot weather and major infrastructure meltdowns from natural or man-made disasters (Western fires, Eastern floods, hurricanes, etc.) could add up to a very dicey supply picture.

In this election year in California, that could cause the repoliticization of the energy situation even before the first rolling blackout or power alert is declared.

The harbinger of all this would be climbing wholesale prices for energy - which we have begun to see some indications of in the natural gas industry. (In the last week of March, some Wall Street energy analysts already were declaring higher natural gas prices ``are here to stay'' because this year's gas supply/demand is ``tighter than the market understands.'')

Hopefully, with the advance warning of the nuke scare and some price movement upward, the state's regulators and policy-makers will approach any tightening of the market and our energy infrastructure in a nonpartisan, measured way. Given all that we have learned the past two years, this is no time to push the political panic button. We're all forewarned this time and should act rationally.