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Saturday, Aug 13, 2022

Summer Heat Could Spur Power Plays by Local Companies

Edmundo Rosas, a production supervisor at an iron casting plant in South Gate, remembers the dark days of summer 2001. The furnaces had to shut down repeatedly because Southern California Edison ran out of power.

“We got shut down dozens of times,” Rosas recalled. “Sometimes the calls from Edison came twice a day. Each time we had to shut down our furnaces and it would take hours to restart them. It was a complete mess and we lost some orders because of it.”

Now Rosas is concerned that this summer may bring more of those problems. Even after 2001, Pacific Alloy Castings remained in Edison’s interruptible power program; it is one of 300 facilities in Los Angeles County that participate. Those in the program get discounts of up to 30 percent on their electricity bill in exchange for being first to get their juice cut off when electricity is in short supply.

The risk of that happening has dramatically increased this year because Edison’s San Onofre nuclear power plant – the single largest source of power for the region – has been shut down and is expected to remain offline through part of the summer. The state’s electricity grid manager, California Independent System Operator, has warned that power supplies will likely be tight this summer.

SCE, a unit of Rosemead-based Edison International, is scrambling to generate replacement power. But if power runs low, SCE will call Rosas’ Pacific Alloy and tell the company to shut down most of its operations or face penalties that could reach thousands of dollars per hour.

Linde Industrial Gases, a subsidiary of Munich, Germany-based Linde AG, with four plants in the county, is another company in the interruptible power program.

“We’re concerned about more frequent power interruptions this summer because of a lack of reserves,” said John Occhipinti, vice president of energy for the Americas at Linde. “We expect more frequent calls to interrupt our power at these plants.”

Linde operates plants in Carson, City of Industry, El Segundo and Torrance that make argon and other gases used in industrial processes, and employ about 125 people.

But armed with the lessons of 11 years ago, Linde, Pacific Alloy and other companies in the program are taking steps to deal with the prospects of plant shutdowns. They are stocking up inventories, lining up auxiliary power generators, and preparing to shift operations to the nighttime and early morning hours.

Most of all, though, plant operators are wishing the summer won’t bring a lot of heat waves, which lead to huge demands on the power grid.

“We’re hoping the power interruptions will only be occasional this summer,” Rosas said.

San Onofre problems

While the Los Angeles Department of Water & Power, which serves L.A. city residents and businesses, has a similar program, the DWP doesn’t get any power from San Onofre, so the impact on DWP customers is expected to be minimal. In case of extreme heat, however, San Onofre’s shutdown could mean the DWP would have trouble buying additional power.

Edison’s power problems began Jan. 31, when SCE was forced to shut down the San Onofre nuclear plant after a small radiation leak. During subsequent inspections, several steel tubes connecting to the steam generators were found to have excessive wear.

SCE has said the plant will remain shut down until the root causes are investigated and resolved; spokeswoman Jennifer Manfre said there is no set timetable.

SCE has a 78 percent ownership stake in San Onofre; San Diego Gas & Electric, a unit of San Diego-based Sempra Energy, owns 20 percent and the city of Riverside 2 percent.

The loss of San Onofre is a huge blow to the region’s power supplies. The plant generates about 2,200 megawatts of electricity, enough to supply about 1.4 million single-family homes and about 9 percent of the region’s total power generation.

“San Onofre is the largest power source in Southern California and is the baseline for SCE,” said Stephanie McCorkle, spokeswoman for the state’s power grid operator, known as Cal-ISO.

The grid managers last month issued a forecast that warned of localized power shortages if San Onofre remained shut down for much of the summer. The forecast said the impact would be most severe in San Diego County and southern Orange County, but also warned that Los Angeles County could face a shortfall of about 240 megawatts. McCorkle added that “certain pockets” of Los Angeles County were especially vulnerable, but did not elaborate.

To close some of the power supply gap, Edison has been working with AES Corp., an Arlington, Va., company, to restart two natural gas-fueled power generators in Huntington Beach. The generators, which AES had operated under a lease arrangement with Edison, were retired Jan. 1. AES Southern California President Eric Prendergrast said last week that the generators are expected to come back online by mid-May, in time for summer.

But those two generators can only produce about 450 megawatts of electricity, leaving a shortfall of about 1,750 megawatts. A couple of hundred megawatts of power from newly constructed renewable energy projects are expected to come online throughout the summer and an Edison spokesman said the utility is also expanding the grid capacity near several substations to ease transmission bottlenecks.

“With the baseline power from San Onofre down, the system remains incredibly vulnerable if anything further happens,” Cal-ISO’s McCorkle said. “All it would take is a single transmission line going down or a power plant tripping and that could really tip things.”

Interruptible power

The Cal-ISO forecast said that reliance on power conservation and “demand response” programs such as the interruptible power program will be crucial in avoiding rolling blackouts.

SCE’s interruptible power program was launched in 1979 but doesn’t often result in power interruptions. The last time was in summer 2006. Customers were hit hard 11 years ago.

Companies in the program are heavy users of electricity, typically factories or industrial concerns. They get discounts off their power bills, generally around 10 percent, but sometimes as high as 30 percent. But in exchange, the companies agree to reduce their power use when called upon in an emergency. If they cannot reach their reduced power levels, they are subject to fines averaging $13 per kilowatt hour, which for major power users could mean thousands of dollars each hour they exceed the levels.

Most of the participating companies contacted last week said they would have to cut their power usage about 90 percent, which means shutting down almost all operations.

“When that call comes, we have to be off the grid completely,” said Thomas Hutchinson, president of Medway Plastics Corp., an injection molding company in Long Beach that employs about 200.

Companies learned some lessons in 2001 and some will be better prepared this year.

In order to avoid a complete plant shutdown, Hutchinson said Medway has built a small cogeneration plant on its premises. He expects that plant will be used frequently this summer. But the cogeneration plant has limited capacity and would only partly offset the loss of grid power. Hutchinson said that manufacturing output would have to be reduced during power interruption episodes.

Linde’s Occhipinti said that his company has agreed to reduce its power consumption by 95 percent at its four county industrial gas plants when the power interruption calls come. To prepare, plant operators have been filling up storage tanks with extra gases. Last year, the company built two more tanks to boost storage capacity from an about five-day supply to seven-day supply.

“We’re running the plant at higher capacity right now so that by June 1, those tanks are all full and we have the capacity to withstand power interruptions,” Occhipinti said.

Pacific Alloy’s Rosas said his company is taking similar steps, making extra iron alloy castings now to increase inventories in the event his plant is forced to shut down to meet interruptible power program targets. He also plans to move the morning shift even earlier starting in June, to 3 a.m. from 5 a.m.

“We’re hoping that shutdowns don’t occur,” he said. “But if they do, at least we’ll have some extra inventory so we won’t be caught like we were 11 years ago.”

Howard Fine
Howard Fine
Howard Fine is a 23-year veteran of the Los Angeles Business Journal. He covers stories pertaining to healthcare, biomedicine, energy, engineering, construction, and infrastructure. He has won several awards, including Best Body of Work for a single reporter from the Alliance of Area Business Publishers and Distinguished Journalist of the Year from the Society of Professional Journalists.

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