UPDATE 2-Northern California urged to conserve power as heat wave peaks

(Adds latest from PG&E on Diablo Canyon and power prices for
Tuesday)
By Scott DiSavino
July 1 (Reuters) - California's power grid operator on
Monday issued a rare plea for customers in the north of the
state to conserve energy over the next couple days as a heat
wave blanketing the region is expected to peak just as the work
week begins.
As consumers cranked up their air conditioners to escape the
brutal heat, power prices in California markets jumped to at
least five-year highs.
The California ISO, which operates the grid in most of
California and parts of Nevada, issued a so-called flex alert
for northern California due to heavy demand for power and the
continuing outage of the state's biggest power unit, a nuclear
reactor at Diablo Canyon.
Generating resources in California are below par after the
permanent closure in June of the San Onofre nuclear power plant
and the unexpected closure last week of PG&E Corp's
1,122-megawatt (MW) Diablo Canyon 1 reactor.
The Diablo Canyon reactor remains down Monday, but PG&E said
it completed work on the unit and were testing the reactor. The
company could not say when the reactor would return to service.
Electricity traders estimated it would return in the next day or
two.
North American reliability coordinators in the spring had
warned that California could face "operational challenges" from
the shutdown of San Onofre, and that a prolonged heat wave could
force utilities to use rolling blackouts in the San Diego and
Los Angeles areas to keep the grid reliable.
The California ISO said it has not called for rolling
blackouts since the Western energy crisis in 2000-2001, when
market manipulation by energy traders like Enron caused a
shortage of electricity. The state however has suffered
blackouts since then due to equipment failures, high winds or
storms.
Although the grid forecast peak demand to be well below the
all-time highs set in 2006, record-setting temperatures in parts
of the state will present one of the grid's biggest tests in
years. The California ISO has issued one flex alert already this
year and only two in each of the previous two years.
PG&E is the biggest utility in California, serving about 5.1
million customers in the northern and central part of the state.
Power traders said this heat wave was hitting northern
California harder than the southern part of the state because of
the Diablo Canyon reactor outage.
The peak demand forecast for Monday is about 46,000
megawatts (MW) and 47,400 MW on Tuesday, the ISO said.
That is still below the state's all-time peak demand of
50,270 MW set in July 2006 before the economic crisis reduced
the usage of electricity, primarily by commercial and industrial
companies.
One megawatt can usually power about 800 homes, but much
less during heat waves due to heavy air conditioning usage.
Next-day power prices for Tuesday jumped about 50 percent to
the upper $100s per megawatt hour in northern California and
gained about 35 percent to the mid $100s in southern California.
The five-year average price in southern California is about $46.

SECOND FLEX ALERT OF 2013
This is the second flex alert the ISO has declared this
year. The first one in April was a conservation request for the
Silicon Valley area due to an act of vandalism.
The ISO told all of its power company members to restrict
maintenance operations so their generating plants and
transmission lines are ready for service during the heat wave
and urged consumers to watch the ISO website for updates.
For consumers, the ISO wants homes and businesses to turn
off any unnecessary lights, postpone using appliances until
after 6 p.m. Pacific Time and turn air conditioning thermostats
up to 78 degrees F (25.6 degrees C).
"Although we did not have a lot of issues over the last few
days due to the heat, conservation is something we promote
constantly," said David Song of Southern California Edison,
which serves about 4.9 million customers in southern California.
"Conservation is so important during a heat wave because it
gives the transmission equipment and power plants a chance to
rest," Song said, noting, "Equipment tends to operate better if
it gets some relief."
Southern California Edison, the second biggest utility in
California, is a unit of Edison International and is the
company that retired San Onofre.
Temperatures in Los Angeles, the biggest city in the Golden
State, will reach 89 degrees F on Monday, which is about 7
degrees over normal for this time of year, and 92 degrees F on
Tuesday before easing to 89 degrees on Wednesday, according to
Accuweather.com.
The mercury in San Jose, the biggest city in northern
California, will also reach 95 F degrees on Monday, rising to 96
F on Tuesday before sliding to 92 F on Wednesday and 88 F on
Thursday, AccuWeather.com said.
San Diego Gas and Electric Co, a unit of Sempra Energy
that serves the San Diego area, on Monday activated its
so called Capacity Bidding Program, which is a demand response
program for customers.

(Additional reporting by Eileen O'Grady in Houston and Eileen
Houlihan in New York; editing by Sofina Mirza-Reid and Gary
Crosse)