Guy, • LED 1 indicates that the trickle voltage from the power supply has been detected by the main logic board. This LED will remain ON whenever the iMac G5 is connected to a working AC power source. The LED will remain on even when the computer has been shut down or put to sleep. The LED will '''turn off only''' if the AC power source is disconnected or the '''power supply is faulty'''."
Check the answer on here http://www.ifixit.com/Answers/View/125715/suspected+faulty+power+supply+on+iMac+intel+17%22.+How+do+I+diagnose#comment94656 and if nothing else, take a look at the power supply for obviously damaged caps.