Power Plant’s Closure Is Costly

The temporary shutdown of the Palo Verde Nuclear Generating Station in Arizona is forcing the Los Angeles Department of Water and Power to spend an extra $300,000 or more every day to generate electricity from power plants that burn natural gas.

The extra cost has raised fears at City Hall that electricity rates may have to be increased, although DWP officials said such worries are premature. If the nuclear plant resumes operation within a month, they said, no rate increases would be needed.

The federal Nuclear Regulatory Commission ordered the plant offline this week until engineers addressed safety issues. Energy officials said Friday they don’t know when the plant will resume operation.

Last year, Los Angeles received 11% of its power from the Arizona nuclear plant, the nation’s largest, which the city co-owns with the Arizona Public Service Co. and utilities in New Mexico and Texas.

“We’ve got a big problem,” said Los Angeles City Councilman Tony Cardenas, who heads the council committee overseeing the DWP.

He said DWP officials indicated the shutdown was not accounted for in the current budget.

“They are getting nervous. They said they can’t sustain paying $300,000 to $400,000 more each day,” Cardenas said, noting that he fears a rate increase may be necessary.

Electricity generated from natural gas costs about five times as much as nuclear power, according to Henry Martinez, a DWP general manager.

Mayor Antonio Villaraigosa is monitoring the situation, said spokesman Joe Ramallo. “He is obviously very concerned about the potential impact and has asked the DWP to explore all available avenues to avoid having to pass on the increased cost of electricity,” Ramallo said.

DWP spokeswoman Carol Tucker said Friday that federal regulators ordered two of the three reactor units at Palo Verde offline Tuesday after engineers discovered a problem with the reactor cooling system that “could compromise the safety of the system.”

The third unit was already down for maintenance through at least Dec. 22.

“Safety is the top priority,” said Mark Fallon, a spokesman for the nuclear plant. “Until the NRC is satisfied, we won’t be bringing the plant up.”

Martinez said the DWP can absorb the higher cost for weeks, but may have to revisit options if the shutdown lasts more than a month.

“Raising rates would be the last bullet in the arsenal,” he said.