The fate of one seems all but certain. The other two nuclear plants are in the hands of Illinois state politicians.
At approximately 479 megawatts, Fort Calhoun is the nation’s smallest nuclear reactor. Located about 20 miles outside Omaha, Nebraska, it is owned by Omaha Public Power District (OPPD) and operated by Exelon Generation.
Economic pressures have persuaded OPPD upper management to recommend to its board of directors that the plant be closed by the end of the year (2016). OPPD, responding to the demands of its customers, wants to reduce rates to 20% below the regional average. Fort Calhoun’s high operating costs will inhibit that reduction, they believe, so they have to make hard decisions:
“The economic analysis clearly shows that continued operation of Fort Calhoun Nuclear Station is not financially sustainable,” [President and CEO Tim Burke] told the board. “The analysis considered market conditions, economies of scale and the proposed Clean Power Plan.”
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Noting a trend in the industry, Burke said that slow revenue growth, market conditions and increasing regulatory and operational costs have led to the recent early retirement of several other U.S. nuclear generating stations. Since 2013, seven other nuclear units have been slated for decommissioning.
Difficult Recommendation
“While the recommendation to cease operations at Fort Calhoun Nuclear Station was a difficult one, it was a determination that had to be made in order to fulfill the district’s mission and our responsibility to our customer-owners,” Burke added. “This recommendation is not reflective of employee or Exelon performance.”
The board of directors is expected to vote on Burke’s recommendation on June 16.
TWO OTHER NUCLEAR PLANTS THREATENED
A similar situation threatens two nuclear plants in Illinois: Quad Cities (two reactors) and Clinton (one reactor). Exelon announced that these two plants have lost $800 million (combined) over the last six years as energy rates have trended downward.
Whether Exelon will choose to keep the plants running depends on two things:
Exelon announced today that it will need to move forward with the early retirements of its Clinton and Quad Cities nuclear facilities if adequate legislation is not passed during the spring Illinois legislative session, scheduled to end on May 31 and if, for Quad Cities, adequate legislation is not passed and the plant does not clear the upcoming PJM capacity auction later this month.
Without these results, Exelon would plan to retire Clinton Power Station in Clinton, Ill., on June 1, 2017, and Quad Cities Generating Station in Cordova, Ill., on June 1, 2018.
There is a battle waging in Illinois between the nuclear and solar industries over legislative favor. The solar industry is looking to expand throughout the state, but the nuclear industry seems to be fighting for survival:
The bill includes supports for the two Exelon nuclear plants that the company has maintained are in danger of closing if left to market forces.
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“It appears that solar is great when the utility owns it, and can charge ratepayers for it, but we need a policy climate that allows for a wide variety of stakeholders to have the opportunity to develop solar,” [Illinois Solar Energy Association executive director Lesley McCain] said.
At the heart of the matter is a debate over how best to address climate change: low-carbon energy production facilities like nuclear plants, or renewable energy sources like solar. The Nuclear Energy Institute (NEI) has rejected that dilemma and instead called for an energy policy that allows for both:
[NEI President and Chief Executive Officer Marvin Fertel] agreed that preserving operating reactors “requires real action now.” He put forward the idea of having states adopt clean energy standards that include nuclear energy, instead of renewable energy standards which only credit energy sources like wind, hydropower and solar.
“If you really wanted to do carbon reduction better, you would call for carbon reduction and you would change it from renewables to a much higher standard for zero- or low-carbon electricity,” Fertel said. “Use all your non-carbon emitting sources: hydro, nuclear, wind and solar. Don’t limit technology choices.”
Should Quad Cities and Clinton close, an Illinois state analysis predicts that “approximately 4,200 direct and secondary jobs and nearly $1.2 billion in economic activity will be lost for the state within four years of the plant retirements.” In their press release, Exelon said they employ almost 700 workers at Clinton and 800 workers at Quad Cities.
Twin economic challenges facing the nuclear power industry — declining revenues driven by competitive market conditions, and a 28% increase in operating costs over the past 12 years — and the potential consequences of those challenges embodied in the issues raised by Fort Calhoun and the Exelon plants have motivated the nuclear industry to take action. Under the leadership of the NEI, it seeks to reduce electrical generation costs by an average of 30% across the industry by 2018. It is doing this through the policy initiative it launched in 2016, titled “Delivering the Nuclear Promise.”