By Michael Gougis - Contributing Writer
July 03, 2012 - Water and natural gas should be plentiful and prices should remain stable for the short term in the Long Beach area, while electricity has a question mark hanging over its head due to the shutdown of the Southern California Edison nuclear-powered generating facility in San Onofre.
With the peak demand of the summer months looming, SCE officials have announced plans to replace the generating capacity caused by the shutdown of both reactors at the San Onofre Nuclear Generating Station. The reactors at the station, which is jointly owned by the City of Riverside, SCE and San Diego Gas & Electric, have been operating for nearly 30 years and can generate 2,200 megawatts of power, enough to provide service to 1.4 million Southern California homes at any given time.
As the state moves to tighten air pollution emissions, a facility like San Onofre, which generates power with virtually no release of traditional air pollution, is attractive to utilities. But after replacing a series of steam transfer tubes in each of the two reactors in recent years, plant officials determined earlier this year that the replacement components were experiencing a rapid rate of deterioration.
On January 9, one unit was taken off-line for refueling; while it was shut down, the other unit developed a leak in a steam tube and was immediately shut down. Both units remain off-line for an indefinite period of time while the company and nuclear regulators investigate the cause and determine an appropriate solution.
The difficulty is that SCE must replace those 2,200 megawatts of power in the middle of the summer season, when the demand for power, driven by the demands for air conditioning, are the greatest. SCE officials have said they hope to fill the gap by re-firing a natural gas plant in Huntington Beach and purchasing electricity on the open market.
On the waterfront, the City of Long Beach should experience no difficulties in meeting the demands of its homes and businesses, according to Kevin Wattier, general manager of the Long Beach Water Department. “Availability looks very solid. I don’t see any issues,” Wattier says. “Even though we had a dry year in Southern California, the year ended well in Northern California. It was pretty dry here in the Colorado River basin, but that came after a very wet year.
“And the Metropolitan Water District’s storage reserves are in better shape than they were before our last drought. So we’re in excellent shape for the next couple of years.”
That means good news for Long Beach water customers on the financial front, Wattier says. “We just set our rates that will take effect on October 1, and we held our water rates constant for the third year in a row. We held our sewer rates constant as well.”
In the short term, one project of the department has been caught up in the wake of the financial turmoil created by the state’s decision to shut down local redevelopment agencies. The Long Beach Water Department was partnering with the City of Paramount to jointly construct a new well that had the potential to generate 2,000 to 3,000 acre-feet of water annually. A single acre-foot can supply two or more homes with all of their annual water needs in areas where water conservation efforts are in force.
The project was expected to be located on a 0.3 acre parcel purchased by the City of Paramount with $500,000 in redevelopment funds. However, with the uncertainty created by the dissolution of redevelopment agencies, the project is on hold; as Wattier says, “It’s not really clear who actually owns the property now.”
Wattier is hopeful that the project will get the green light to go ahead sometime over the next six months. In the broader scheme of things, it offers potential cost savings for Long Beach, but is not critical to meet the needs of its customers.
Longer term, the city’s water department is continuing efforts to modify the court order adjudicating the use of water stored in the Central Basin aquifer. Long Beach and other cities want the court order regulating access to that underground water supply altered to allow for increased storage, although some with rights to the Central Basin are opposed to any such changes.
On the natural gas front, supplies are expected to remain plentiful, officials with Oxy Long Beach and the Long Beach Gas & Oil Department say. “For the first half of 2012 . . . natural gas prices were disproportionately low at about $2.75 per mcf (1,000 cubic feet),” says Frank Komin, president and general manager of Oxy Long Beach.
And even as prices for natural gas remain low, demand for the fuel continues to lag behind production. The U.S. Energy Information Administration in its June Short-Term Outlook noted that at the end of May, natural gas working inventories totaled “an estimated 2.9 trillion cubic feet, about 31 percent above the same time last year.”
Simply put, there is a lot of the product on the market right now – and, once again, that is positive news for the wallets and bank accounts of Long Beach customers and rate payers, says Christopher Garner, director of the Long Beach Gas & Oil Department.
“Natural gas is still relatively low. There’s just such a glut of supply right now. With the development of shale gas, it’s really increased the supplies, and that benefit is realized by our customers – so it’s a good thing,” Garner says. “I would expect that they would see lower gas bills this year over last year. While we have not finalized our calculations yet, we expect a rate reduction of somewhere around 10 percent.”
In terms of operations, the department is hoping to introduce its modernized billing system during the spring of 2013, and has just concluded a visit by federal regulators. “We get audited by the federal government every so often. We just wrapped up one of those, and we did very well. We’re continuing to reinvest our rate payer revenues back into the infrastructure,” Garner says.
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