How can we stop premature nuclear plant closures?

By Rod Adams

During an earnings call on February 6, 2014, Exelon Corporation indicated that it may decide to shut down two or more of its nuclear reactors because of poor economic return. Exelon spokespeople have been warning about the effects of negative electricity prices for several years.

On February 8, 2013, almost exactly a year ago, the Chicago Tribune published a story titled Exelon chief: Wind-power subsidies could threaten nuclear plants. The Tribune noted that Christopher Crane, Exelon’s CEO, was concerned about the continued operation of some of the units in the company’s large fleet of reactors:

“What worries me is if we continue to build an excessive amount of wind and subsidize wind, the unintended consequence could be that it leads to shutting down plants,” Crane said in an interview.

Crane said states that have helped to subsidize wind development in order to create jobs might find themselves losing jobs if nuclear plants shut down.

The Chicago-based company doesn’t have any immediate plans to mothball nuclear plants, although at least one analyst has predicted that could occur as soon as 2015.

“We continue to believe that our assets are some of the lowest-cost, most-dispatchable baseload assets and don’t have any plans at this point of early shutdown on them,” Crane said.

If the discussed nuclear reactor shutdowns occur, they would be numbers six and seven in the count of prematurely closed nuclear power plants in the United States since the beginning of 2013. Though there are certainly antinuclear activists and analysts who will point to this record with a delighted “We told you so,” this is not a trend that bodes well for the economic stability of the United States or for the continued effort of the US to reduce its dependence on hydrocarbon fuel sources.

It is also a trend that puts a number of nuclear professionals at risk of suffering a significant economic setback and life-altering job loss, despite having participated in an exceptional example of continued performance improvements over a sustained period of time.

During a recent industry gathering hosted by Platts, Dr. Pete Lyons pointed to the trend of shutting down well-maintained and licensed nuclear power plants as something that is worrying the current Administration, especially because it will make it difficult to achieve progress in reducing CO2 emissions.

Jim Conca, writing for Forbes, noticed Exelon’s announcement and wondered about its effect on a number of important attributes of energy production. He reminds his readers that nuclear plants represent a large fraction of the emission free electricity produced in the United States each year. He also points out that the longer nuclear plants run and produce revenue, the better. Construction costs are already sunk, the plants already have stored inventories of spent fuel, and they already require some form of decommissioning. The costs and pollution associated with all of those features should be spread over as many kilowatt hours of generation and revenue as possible.

There are several things that nuclear energy advocates can do that might help to eliminate the pressures that have been encouraging nuclear plant operating companies to either shut down or consider shutting down useful assets.

  1. Learn enough about the natural gas market to discuss it with your friends and colleagues
  2. Advocate policies that put a fair value on generating clean electricity
  3. Advocate policies that reward generating sources for reliability
  4. Cheer efforts to market electricity to restore growth in demand

During the winter of 2013-2014, there have been a number of examples of the risks associated with concentrating heating, industrial uses and electricity production on natural gas, just because it has been accepted as “clean” and seems to have become abundant and cheap—ever since 2008—which is apparently a long time ago in the memory of some market observers and decision makers. The Nuclear Energy Institute continues to produce excellent materials and testimony about the importance of fuel diversity; they need as much assistance as they can get in spreading the message.

This winter there have been reported shortages and price spikes that have exceeded $100 per MMBTU. That is roughly equivalent to oil prices hitting $580 per barrel, since every barrel of oil contains 5.8 MMBTU of heat energy. Natural gas price spikes have not been limited to the northeast; spikes exceeding $20 per MMBTU (five times the pre-winter price) have occurred in the mid-Atlantic, the Pacific Northwest, the Chicago area, southern California and even Texas. Last week, a price spike of $8.00 per MMBTU even showed up at Henry Hub, at the intersection of several prime US gas production areas.

Henry Hub spot prices as of Feb 10, 2014

Henry Hub spot prices for week ending Feb 5, 2014

When gas prices reach the levels seen this winter, many customers stop buying, even if they have no alternative fuel source available. If they are operating an industrial facility that needs the gas to run, they stop operating. If they are operating a household that needs the gas to stay warm, they put on more sweaters. If they are operating a school system; they shut the doors and tell the children to stay home.

In markets where wholesale electricity prices have been deregulated, gas fired generators are usually the marginal price setters, so the spikes in natural gas prices have directly affected electricity prices at times of peak demand, driving them to infrequently seen levels. It remains to be seen how the electricity price spikes this winter have affected revenues at generating companies, but it is unlikely to have harmed their bottom line. Unfortunately, brief spells of profitability may not be enough to encourage nuclear plant operators to keep running their plants if wholesale prices return quickly to loss-making level for much of the year.

Though many of us value the fact that nuclear plants do not produce any greenhouse gases or other air or water pollutants, that feature does not produce any additional revenue for plant owners. For the past twenty years, every alternative to fossil fuel except nuclear and large hydroelectric dams have been given direct subsidies, preferential tax treatment and quotas. Fossil fuel generators have not been charged for their use of our common atmosphere as a waste disposal site. It is time to put pressure on our representatives to pass legislation that establishes a price on carbon so that investors are encouraged to fairly value clean generation.

My personal favorite proposal is James Hansen’e fee and dividend approach where all hydrocarbon fuels pay a fee based on their carbon content and the public receives an equal share of the revenue. People who are careful and do not use much fuel will see a positive increase in their income; people who use more than average will see a net cost. Investors will recognize that it is worth their effort to identify technologies that do not emit CO2.

We also should advocate policies that reward generators for their ability to produce reliable electricity. It is a valuable service that helps to ensure that the grid is adequately served with a sufficient margin, and that we avoid the kind of volatility seen this past winter and that nearly bankrupted California in 2001.

Finally, we should seek to reverse the reluctance to tout the product we produce. Electricity is a wonderful tool that makes life better. It can be produced using a variety of fuels, though most readers here would probably agree that uranium and thorium are the best available electricity generation fuels. It’s time to recognize that the energy business is competitive. Like all competitive enterprises, it rewards people who fight for market share by producing a better product and by taking effective action to ensure that people know they are producing a better product.

While traveling through the southeast US last week, I heard an advertisement that made me smile. Alabama Power was offering to give people water heaters as long as they were shifting from gas heaters to electric heaters. Why have we allowed competitive energy producers to steal markets for so many years without fighting back?

I encourage people in the electricity production business to download a copy of the Jan/Feb 2014 issue of EnergyBiz and read the article titled Gas Competes with Power; A New Foundation Fuel, New Business Channels. While you are at it, you might also enjoy reading the challenge that NRG Energy’s David Crane lays down for the traditional business of generating and distributing electricity in his guest opinion piece titled Keep Digging: What Lethal Threat?

Exelon's Clinton Power Station

Exelon’s Clinton Power Station

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Adams

Adams

Rod Adams is a nuclear advocate with extensive small nuclear plant operating experience. Adams is a former engineer officer, USS Von Steuben. He is the host and producer of The Atomic Show Podcast. Adams has been an ANS member since 2005. He writes about nuclear technology at his own blog, Atomic Insights.

13 Responses to How can we stop premature nuclear plant closures?

  1. 1. There needs to be a Federal mandate that all utilities in the US must produce at least 50% of their electricity from carbon neutral resources by 2020 and 90% by 2030. Otherwise, they will be slapped with a 15% sin tax on all of the electricity (both carbon and carbon neutral) produced by their utility. It will be up to individual utilities to decide which carbon neutral energy resources will be utilized to meet the Federal standards.

    2. The TVA needs to start selling all of its carbon polluting power facilities to private utilities. The revenues accrued from such sales should then be used to construct more nuclear power plants plus methanol power plants that use methanol from urban and rural biowaste.

    Marcel

  2. I would also like to see the TVA being allowed to purchase nuclear sites from utilities that want to shut them down and add them to a national TVA utility network.

    Marcel

  3. James Greenidge

    I request and implore that ANS & NEI invite Congress members to post on these forums explaining nuclear energy policy and public support. It’s long due to put them on the carpet and see who your true friends are. Nuclear plants are being shuttered without a tear except from the neighborhoods they directly support. Or any concern about Greenhouse so suddenly. It shouldn’t be this way. Nuclear has so many laudable, humane and established merits going for it over other energy forms that one can weep that it ritually snatches defeat out of the jaws of PR victory. The pols won’t positively move on nuclear policy unless the public is enlightened and assured about nuclear’s merits and record and safety, not the other way around, and for this to occur it must be educated that closing of one nuclear plant is one additional loss for them, their children, and the environment. It’s nuts that I’m seeing glitzy natural gas commercials every twenty minutes on cable TV. I just don’t understand this suicidal lack of challenge and de-FUDing response, or that the poisonous nightmare rants of a relatively tiny group of shrill frightened irresponsible egos are hamstringing the energy security of an entire nation and the habitability of a whole global eco system. How many more plants must close before the nuclear community gets its act together and _responds_ to the problem and fear-mongers? Nuclear isn’t just bleeding in this country; it’s almost hemorrhaging, and it’s not at all fanciful to see the whole nation suckling on the natural gas teat. To preach the virtues of nuclear on nuclear blogs is unproductive masturbation; the word must get out into the “real world” of the mass media and the public and hence the pols who can actually do something about this pitiful situation. I keep citing Tylenol and BP Gulf for turning their misfortunes and sullied reputes around because they simply did what must be done to survive and prosper. It’s not Saturn V science. It can be done — but, and an important but — is such effective action must be done ASAP before the stain sets like blood. And in the U.S, at least, left unchecked by massive public nuclear education, this state of affairs is not going to reverse until the last puff of gas or drop of oil is sucked out of mother earth. When is the nuclear community/industry here going to be so the wiser? When it’s past the point of no-return?

    James Greenidge
    Queens NY

  4. During my letter writing campaign to environmental organizations regarding nuclear power I learned that these organizations rely heavily on the Union of Concerned Scientists (UCS) for their views. I remember the Sierra Club specifically said they rely on the UCS for their position. I also know that individual environmentalists rely on their favorite environmental organizations for their views which in turn get their views from the UCS. It rankles me no end every time I see a mainstream TV news show call on an expert from the UCS concerning nuclear issues. The influence of the UCS is well established and not going away easily. The UCS is made up of well meaning people, some with pretty good science credentials, who have bought into the China Syndrome hypothesis first proposed by nuclear physicist Ralph Lapp in his 1971 article Thoughts on Nuclear Plumbing. The hypothesis has since been proven wrong at Chernobyl and Fukushima but the hysteria it caused continues. Hysteria is difficult to deal with but we must try. The UCS is too influential to be ignored. Can nuclear advocates influence the policy of the UCS? Yes, we can influence it. With proper planning we can even change it.

    Nuclear advocates need to get involved with the UCS and make their voices heard. Attend UCS meetings, learn how they operate, apply for positions, get on their board of directors. The ANS should create a committee to plan a strategy to educate the UCS. The committee might consider a presentation to the UCS leadership that explains why they need to update their nuclear policy. Old hypotheticals about tens of thousands of deaths, cancer, and mutations have been proven wrong by the data from Fukushima and Chernobyl. Old hypotheticals have led to prejudice and an overzealous preoccupation with safety resulting in unnecessarily high costs for nuclear plants. Interesting that we could afford to build perfectly safe nuclear power plants forty years ago, but now we can’t. Energy production data reveal wind and solar will never meet the world’s power requirements. The ANS needs to get the highly influential UCS on board with nuclear power. This can and should be done because the UCS is the pivotal organization for environmentalists and news media on the topic of nuclear power. The ANS should also give their presentation to any influential groups and politicians willing to sit and listen, but the UCS is the pivotal organization. If the UCS became an advocate of nuclear power it would probably be national news.

  5. Jerry – The UCS? Are you kidding me?!

    You do realize that the vice-chairman of their board is none other than Peter Bradford, the lawyer that Jimmy Carter placed on the NRC, who now spends his time writing anti-nuclear editorials and doing the rounds on the anti-nuclear talk circuit, don’t you?

    If you want to try to influence that with a few facts and explanations about how they’ve been wrong all this time, then good luck to you. But I really don’t think that you’re going to make any progress with the Union of Corrupt Lawyers.

  6. Brian,
    From the early 1970’s up until recently, why did the public hear only from the anti-nuclear folks? It might have been because there was no data to refute the China Syndrome hypothesis. Now we have the data. I don’t think the UCS, the news media, and the public has been confronted with the data from Fukushima and Chernobyl. Nuclear advocates need to confront the UCS with the data that refutes the hypothesis on which their policy is based.

  7. Jeff Walther

    “I don’t think the UCS, the news media, and the public has been confronted with the data from Fukushima and Chernobyl.”

    The UCS is responsible for most of lies which have been put into the public’s eye regarding nuclear power for the last forty years. They are not “well-intentioned” as you wrote in your first message.

    The are a bunch of lazy corrupt, self-absorbed liars, who found a way to get a living without having to actually produce anything useful in the world.

    They have always been anti-nuclear and that is the source of their livelihood. The only way to change them is to so well-inform the public that everyone sees them as the liars that they are and stops listening to them.

    Their ads forty years ago (see SciAm) were verifiable lies. We didn’t need recent data forty years ago to prove they were lying. And they aren’t going to stop lying when confronted with the proof now days either.

    The UCS is nothing but the Union of Corrupt Shills and lies hidden in a nugget of truth is their stock in trade. They are amongst the great (in the sense that they are successful) charlatans of our age, and I can only hope that they earn the place in history that they deserve and every one of their names is preserved as a perpetrator of more deaths every year than are caused by all natural disasters combined.

  8. Calm down and work the problem. We all know who the UCS is and they are the problem that needs to be solved. An emotional response will get us us nowhere. Lets work the problem without emotions.

  9. There has to be a national policy that recognizes the value of the generating infrastructure that produces reliable, economical, emissions-free electricity, and takes the necessary steps to preserve that infrastructure as a matter of national economic and strategic security. And that should take the form of, when it is necessary, taking control of generating assets no longer wanted by private entities and allowing them to be purchased at fair price by quasi-government agencies like TVA or BPA. Revenues generated by those plants above operating costs should be used to retire debt incurred from purchasing those assets. When debt is fully amortized, revenues should be placed in a secure, dedicated fund for both decommissioning and also redevelopment of equivalent power sources, such as Gen III and Gen IV reactors at existing, licensed sites.

    Before anyone flames me about advocating nationalization or socialism, let me say that this is not my preferred solution. The best thing would be to get rid of all subsidies currently afforded unreliables and let them compete head to head with other generating sources. As mentioned in the article and by others, there should also be put in place some kind of mechanism whereby fossil generators pay some kind of cost for control or management of their waste products, instead of allowing them to be dumped into the atmosphere with no accountability or consequence. That would squelch almost all artificial market distortions, and allow a level playing field. I feel reasonably confident that nuclear could favorably compete if the game were not rigged against it as it is now. But, lacking that, with the game rigged as it is, to preserve valuable national assets, we may have to go the route noted earlier.

  10. Excellent post, Rod!

    It would be terrific to have a level playing field, but it isn’t likely to happen, I think. I mean, the coal industry has successfully fought any meaningful regulation of its ash ponds—you think a carbon tax is going to be easier to implement? Or that a law requiring carbon sequestration is just around the corner?

    And coal isn’t the problem, anyway. To me, the biggest problem is within the nuclear industry. A coal plant can shut down for six years and wait out the natural gas “bubble”. (I have a post on why I think these low prices are a bubble.) However, the way nuclear plants are licensed, a nuclear plant can’t sit it out. When the nuclear plant is shut down, it is shut down. When the company begins tapping into the decommissioning fund, it is REALLY shut down, in a way that coal plants never experience.

    I mean, there’s an old coal plant structure practically in downtown Burlington, on the shores of Lake Champlain, and nobody knows what to do with it. Some college kids have some ideas.

    http://vtdigger.org/2013/12/08/state-derelict-coal-plant-two-college-kids-fire-new-waterfront-vision/

    There is nothing but willpower and economics to prevent this coal plant from starting up again. There’s a lot more than that (NRC licenses, etc) that keeps Kewaunee from starting up again.

    I don’t think we can level the playing field completely, but we could work at achieving reasonable time-out methodologies for nuclear plants.

  11. Wasn’t Brown’s Ferry basically put to sleep for a few years while TVA was deciding what to do? Also, in Canada, the Bruce station was in hiatus for quite a time. Is there anything we can learn from that? I’ll admit for a private concern (not TVA) you’ll have stockholders up in arms if you continue to spend money on a shutdown unit. Maybe that’s another reason why a national quasi-governmental agency might be best to take on the problem of maintaining infrastructure, even if it is in time out for a while.

  12. Why not treat this as a marketing campaign? We are trying to sell a product and if we want to succeed why not try selling this product to the public? I have always said that if this industry wants to continue succeeding, we need to convince the public that nuclear energy is the best option for our future, along side with alternative resources. I don’t know how many times I wrote to Florida Power and Light, the Department of Energy, and Babcock and Wilcox only to stress that the public needs to be reassured about this industry. If we get enough people to come back to the nuclear side, the demand will grow. I say stop complaining and finally start a action plan.

  13. > Sean | February 14, 2014 at 16:20 |Why not treat this as a marketing campaign? We are trying to sell a product and if we want to succeed why not try selling this product to the public?II say stop complaining and finally start a action plan. <

    Problem is we don't got to reinvent the wheel. We already got nuclear power organizations and groups with the manpower and money from dues needed to do all this. The real problem is something else.