Before Southern California Edison's San Onofre Nuclear Generating Station (SONGS) got shut down, wholesale power prices for Southern California (SoCal) and Northern California (NorCal) were essentially the same. However, since SONGS stopped producing power, SoCal has consistently seen higher wholesale power prices than NorCal. Here's a graph illustrating the wholesale power markets in SoCal and NorCal:
(Source: Energy Information Administration (EIA))
The loss of San Onofre's comparatively cheap nuclear energy has driven SoCal to purchase power from local generators. Although it is more reliable than imported electricity, locally produced power is also more expensive. Here's a map that shows the local power producers in SoCal, almost all of which are natural gas plants:
The disparity in wholesale power prices has averaged out to $4.15/megawatthour (MWh), or 12% of the NorCal price. While some may point to the disparity in natural gas prices in SoCal and NorCal, this only explains less than $1/MWh of the difference. Here's a graph which shows that the disparity in natural gas prices has remained relatively stable since the closing of the San Onofre nuclear plant:
Therefore, the recent disparity in SoCal and NorCal wholesale power prices can be attributed to the loss of the San Onofre plant and the lack of similarly inexpensive local power sources.
Would you like to see more utility and energy news like this in your inbox on a daily basis? Subscribe to our Utility Dive email newsletter! You may also want to read Utility Dive's look at whether utilities are being cut out of the U.S. energy industry.