By Scott DiSavino June 7 (Reuters) - The crippled San Onofre nuclear plant will be retired, its operator said on Friday, leaving California scrambling to keep the state's lights and air-conditioners on this summer even as it pursues ambitious plans to reduce greenhouse gas emissions. Southern California Edison, owned by Edison International , said it would retire both nuclear reactors at the plant in the face of onerous maintenance bills and an industry-wide shift toward burning more cheap natural gas to feed the grid. The San Onofre units have been shut down safely since January 2012 after a small radioactive leak was discovered in tubes inside a steam generator, which was manufactured by Japanese engineering firm Mitsubishi Heavy Industries. Reliability regulators say California already faces "operational challenges" from the shutdowns and that a prolonged heatwave could lead to rolling blackouts in the San Diego and Los Angeles areas. SCE President Ron Litzinger said retirement of the units would eliminate uncertainty and help with the state's energy planning. But he warned that "outages, soaring temperatures or wildfires impacting transmission lines would test the system." Governor Jerry Brown said the state was working on a long-term reliability plan. "As we move into the hot summer months, we can all do our part by continuing to conserve," he added. The closure of San Onofre, located near the ocean 60 miles (96 km) southeast of Los Angeles, would leave the Diablo Canyon plant on the Central Coast as California's only nuclear plant. While always controversial in an environmentally conscious state, the reactors provide a reliable backbone for the grid as California strives to meet an ambitious mandate of 33 percent renewable energy by 2020. But high-profile lawmakers only added to lingering concerns about nuclear power when they said in February that a Mitsubishi document showed that SCE and Mitsubishi had rejected safety modifications on the steam generators. Officials at California's electric grid operator said they believe they will be able to meet power demand this summer without San Onofre, but they may call for conservation from the public and firms to ensure blackouts are not required. The two San Onofre units increase the number of U.S. reactors retiring in 2013 to four. FACTBOX "It looks like more and more with an abundant supply of cheap gas it is easier to walk away from a nuclear plant then to fix it," said Phil Flynn, senior analyst with the Price Futures Group in Chicago. "This is a trend that I think will continue." The other two reactors already shut this year are Dominion Resources Inc's Kewaunee in Wisconsin, due primarily to economics, and Duke Energy Corp's Crystal River in Florida, due mainly to the uncertain cost of major repairs. The San Onofre reactors entered service in 1983 and 1984, according to federal data. Three years ago, SCE replaced two steam generators in the 1,070-megawatt (MW) Unit 2 and then two more in 1,080-MW Unit 3, before one of them developed the leak. SECOND QUARTER CHARGES In connection with the plant shutdown, SCE will record a second-quarter charge of $450 million to $650 million before taxes, or $300 million to $425 million after tax. But the end of the uncertainty helped Edison shares rise 1.8 percent to $47.20, compared with a largely unchanged S&P utilities index. SCE will also pursue damages from Mitsubishi Heavy and seek some recovery from insurance. The company runs San Onofre for its owners, including SCE with 78 percent, Sempra Energy's San Diego Gas and Electric (SDG&E) with 20 percent, and the city of Riverside, California, which has a small stake. It was less than a year ago that SDG&E completed the $1.9 billion Sunrise Powerlink line connecting its grid with various wind and solar projects in the inland Imperial Valley. "With the Sunrise Powerlink now in service and with additional contracted resources, barring any unforeseen system emergency, our region should have adequate power supplies for this summer," said Jessie Knight, SDG&E's chief executive. Mitsubishi said it was disappointed by SCE's move and that it was confident San Onofre could operate safely and reliably. "We understand, however, the complex and challenging factors which may have driven this decision," it said in a statement. The U.S. Nuclear Regulatory Commission (NRC) has reviewed SCE plans to restart Unit 2 for eight months, and several public meetings were held. SCE said in April that if a restart was not approved by summer, it may retire the plant. An adjudicatory NRC arm, the Atomic Safety and Licensing Board (ASLB), then decided last month that more public hearings were necessary. SCE said that could result in a delay of more than a year, while it had to bear the costs of both replacement power and keeping the plant ready to restart. "That double cost ends up eroding the cost advantage (of the nuclear plant) over time," said Ted Craver, head of Edison International, who felt the uncertainty over San Onofre was not good for its customers or its investors. SCE said with the closure, it will reduce staff at San Onofre over the next year from 1,500 to about 400, with the majority of the cuts expected in 2013. Full retirement of the units prior to decommissioning will take many years, SCE said.