New England Coalition, Inc.
PO Box 545
Brattleboro, VT 05302
(802) 257-0336
Contact: Clay Turnbull-802-380-4462
Raymond Shadis -207-380-5994
Story of Wisconsin Reactor’s Demise follows PSB Testimony of VY Opponent Almost Step by Step.
Vermont Yankee’s need for costly equipment replacements and upgrades is on a fiscal collision course with circumstances in today’s electricity markets; all reminiscent of the 1990’s when four out of nine New England nuclear power reactors closed for good. In sum, that’s the message that Raymond Shadis, New England Coalition’s Technical Consultant laid before the Vermont Public Service Board in written testimony filed Monday afternoon.
Also appearing in national news Monday was Dominion Power Corporation’s announcement that, having failed to find a buyer, it had decided to close and decommission the 556 megawatt (e) Kewaunee Power Station, first licensed in 1973.
Dominion power cited increased competition, high maintenance costs, and the projected cost of mandated safety upgrades resulting from NRC response to the 2011 Fukushima nuclear accident as reasons for its decision. Dominion also expressed concerns over whether the EPA, following the Presidential election, would enforce its rules against once through cooling of steam-electric generating stations and require the use of cooling towers only. Operation of Vermont Yankee’s cooling towers is now mandated in summer when river temperatures are high and when fish are spawning in the area, thus summer electric generating capacity is reduced by 24 megawatts or about 3.8%. “That’s about 3.8 % less electricity available for Entergy to sell in the peal summer electricity use season,” said Shadis.” If they have to go to closed-loop cooling, towers only, that will be a year around cut.”
Kewaunee is first nuclear plant slated for decommissioning since Millstone I rounded up the list of New England Plant closures in 1998. Kewaunee and the decommissioned New England plants did not survive to the end of their forty year licensee. Vermont Yankee and Pilgrim Station in Plymouth, MA are the only New England plants operating with an extension of their licenses.
A copy of Mr. Shadis’ testimony and two news articles regarding the Kewaunee shutdown and its ramifications are appended to this release.
Low electricity prices lead Dominion to decommissionWisconsin reactor
Posted on 10/23/2012 by Greenwire

Kewaunee Power Station (Photo via NRC)

©2012 E&E Publishing, LLC
Republished with permission
By Gabriel Nelson and Hannah NortheyRichmond, Virginia-based Dominion Resources Inc. said Monday it will shut down and decommission the Kewaunee Power Station near Green Bay, which would make it the first U.S. nuclear reactor to be permanently retired since 1998.
The company said the decision was purely based on economics, which may signal trouble for other nuclear power plants at a time when cheap natural gas and the slowly recovering economy are holding down electricity prices in many parts of the country.
Dominion President and CEO Thomas Farrell gave two main reasons for the move in a statement Monday. One is that Dominion, which bought the Kewaunee plant in 2005 for $192 million, doesn’t have enough reactors in the Midwest to defray the cost of running a nuclear fleet in the region. Also, the purchase agreements for Kewaunee’s electricity are going to expire at a time when Dominion won’t be able to command as much money on the wholesale power market.
“The combination of these factors makes it uneconomic for Kewaunee to continue operations,” Farrell said in the statement.
Dominion, which also owns one nuclear power plant in Connecticut and two in Virginia, announced last year that it would try to sell the Kewaunee plant, which came online in 1974 and has a license from the Nuclear Regulatory Commission to run until 2033 (Greenwire, April 29, 2011).
The reactor will shut down in early 2013, so long as the Midwest Independent Transmission System Operator, or MISO, finds that the electric grid can handle losing Kewaunee’s 556 megawatts of power.
A U.S. nuclear power plant hasn’t been shut down for good since 1998, when the Zion power station in Illinois was retired and one of the three reactors at the Millstone power plant in Connecticut was decommissioned. Dominion still operates the other two reactors at Millstone, which has more favorable economics because Connecticut has some of the most expensive electricity in the country.
Some plants ‘on the edge’
Marvin Fertel, president and CEO of the Nuclear Energy Institute, said in a statement that nuclear power will remain a major power source in the United States. For example, there are five new reactors under construction in the United States. He said Dominion’s decision was based on local economic factors.
But others say Dominion’s plan is a sign of broader problems for the industry.
Building a reactor has become so costly that none has come online in the past decade, although existing plants have rarely run into financial trouble because of their low fuel costs. However, low natural gas prices have recently caused dozens of coal plants to be retired or idled, and Monday’s announcement suggests some nuclear plants could end up bowing to the same pressure.
Lake Barrett, the former head of the Department of Energy’s Office of Civilian Radioactive Waste Management, said Dominion’s decision highlights the many challenges facing the industry, including stiff competition from natural gas, costly repairs for aging units, uncertain regulations and a lack of congressional interest in putting a price on carbon emissions.
“You add it all up and it weighs heavily on nuclear to go forward versus simple natural gas,” Barrett said.
Barrett said some utilities are weighing costly upgrades. He pointed to Southern California Edison Co.’s possible expenditure of millions of dollars to fix leaky tubes at its San Onofre Nuclear Generating Station in California. Duke Energy Corp. may need to spend up to $1.3 billion — the most expensive nuclear repair in U.S. history — to fix the cracked concrete shell around its Crystal River plant in Florida (Greenwire, Sept. 11).
Reactors with a design similar to the Fukushima Daiichi plant in Japan may also need upgrades to protect against the type of damage the plant incurred during a magnitude-9 earthquake and tsunami last year. Regulators are considering whether to require pressure-relief vents at power stations such as the Vermont Yankee plant, owned by Entergy Vermont Yankee LLC.
“When you look at the upgrade costs post-Fukushima, you might find Vermont Yankee and other plants like that on the edge,” Barrett said.
Economics aside, the Kewaunee facility appears to be in good working order. Nuclear safety regulators at the NRC have not released any notices of violations since 2008 for the plant, which is running at 100 percent of its capacity today, and no citizen groups are loudly calling for its closure, as with Vermont Yankee and San Onofre.
Wisconsin Gov. Scott Walker released a statement lamenting the planned closure of the Kewaunee plant. He blamed the decision on “unnecessary federal regulations,” which he said are “slowing the process for companies like Dominion to take advantage of economies of scale and keep their businesses profitable and open.”
The rules he cited were a set of draft U.S. EPA standards for the cooling water intake structures at nuclear power plants. The rules that the Obama administration has proposed to protect bodies of water are not yet final, and they may well change if Republican presidential nominee Mitt Romney wins next month’s election.
Dominion spokesman Richard Zuercher told the Milwaukee Journal Sentinel Monday that he didn’t have information on the effect of those regulations, insisting that economics were behind the company’s decision.
“The plant has run very well,” he told the newspaper, but “it produces electricity at too high a cost.”
This entry was posted in News and tagged natural gas, nuclear, Wisconsin by Greenwire. Bookmark the permalink.

EXCERPT of Mr. Shadis’ testimony regarding the Kewaunee shutdown and its ramifications are appended to this release.
(Full Direct Prefiled Testimony of New England Coalition filed on October 22, 2012 Raymond Shadis)
Amended Petition of Entergy Nuclear Vermont
Yankee, LLC, and Entergy Nuclear Operations,
Inc., for amendment of their certificate of public
good and other approvals required under30 V.SA, § 231 (a) for authority to continue after
March 21, 2012, operation of the Vermont Yankee
Nuclear Power Station, including the storage of
Spent nuclear fuel
October 22, 2012

Docket No. 7862

3 Q-10. How do you consider viability in the context of the petition for a CPG?4 A-10. It begins with asking a question: “What is the value or potential liability to5 Vermont of entertaining Entergy’s extended operation plan if it has only limited or

6 marginal viability?”

7 Over the last few years, Entergy has on multiple occasions alluded to the

8 marginally profitable, or even non-profitable, status of VY. In the mid-1990’s, in a

9 strikingly similar electricity market with an abundance of newly-developed Canadian

10 hydropower and ever-cheaper natural gas-fueled generation, I witnessed the

11 struggles of Maine Yankee Atomic Power Company, and to a lesser extent,

12 Connecticut Yankee, in trying to find the money to deal with an ever-growing

13 backlog of repairs, emergent design flaws, necessary equipment replacement and

14 up-grades. At both plants an in-depth NRC inspection or series of inspections rooted

15 out additional and previously undetected flaws that the companies could not afford

16 to correct. These costs are analogous to what VY faces in the upgrades required in

17 response to the Fukushima incident and repairs/replacements necessary to keep this

18 aging plant (with several failing and leaking components) operating. At Maine

19 Yankee, in something of an understatement, NRC’s inspection team attributed a

20 root-cause of the plant’s many accumulated flaws to an insufficiency of allocated

21 resources. Entergy appears to be facing similar prospects with VY.

22 Entergy Vermont Yankee’s proposed period of extended operation is a walk into a

23 veritable forest of financial uncertainties; something quite remarkable and possibly

1 foolhardy for a company whose CEO, J. Wayne Leonard, told a 2011 Earnings Call that

2 VY had barely met O&M costs.

I A final uncertainty with respect to viability that I wish to touch on is the2 electricity market; one that so resembles the market (1991-1997) when four of New3 England’s nine nuclear stations were permanently closed for “economic” reasons. If the

4 price of natural gas continues its downward trend, there is a tipping point at which VY,

5 with its added costs, is no longer viable and becomes a liability to Entergy rather than

6 asset. If Seabrook Station had power to sell to Vermont utilities for less than Entergy

7 VY’s lowest offer, I would question Entergy VY’s security as a baseload market

8 provider. The flip side of the industry’s brag that nukes provide baseload power is that

9 for technical reasons, nukes are not practical as demand or standby generators. This,

10 along with the many uncertainties discussed above, render the benefits of extended

11 operation claimed by Entergy to be as unreliable as the station itself.

October 23, 2012
Aging and Expensive, Reactors Face Mothballs
THE conventional wisdom about nuclear reactors is that they are expensive to build but cheap to run.
But electricity on the wholesale market is so inexpensive, its price depressed by cheap natural gas, that some reactors may not have enough revenue to justify needed capital
expenditures. Experts say that as a result, the nuclear industry may be nearing its first round of retirements since the mid-1990s.
On Monday, Dominion, which is based in Richmond, Va., announced it would close its plant in Kewaunee, Wis., which it had been trying, unsuccessfully, to sell for about a year. It had intended to buy more units in the Midwest and gain efficiencies by operating a fleet there, but found it could not do so.
When Dominion bought the plant, in 2005, it signed agreements to sell the plant’s output at rates reflecting a strong market for electricity. As those agreements expire, with a projection for continued lower prices, it is “uneconomic for Kewaunee to continue operations,” the company said.
That could be a harbinger of more closings, but it is not the only trouble sign for the industry.
Some plants, like Indian Point in New York and Vermont Yankee, face determined political challenges to their continued operation. But plain old economics could affect a lot more plants, including Crystal River, north of Tampa on Florida’s Gulf Coast, which
has not run since September 2009, when it shut down for replacement of major
components. The installation job may have damaged the containment building, which may not be worth the $1.3 billion or so it would take to fix.
In New Jersey, Exelon agreed in late 2010 to shut down the Oyster Creek reactor, the nation’s oldest operating commercial plant, by 2019 rather than rebuild its cooling system to meet environmental rules. In California, the San Onofre reactors closed in 2012 after apparently flawed new heat exchangers developed leaks.
Even plants with no pressing repair problems are feeling the pinch, especially in places where wholesale prices are set in competitive markets. According to an internal industry document from the Electric Utility Cost Group, for the period 2008 to 2010, maintenance and fuel costs for the one-fourth of the reactor fleet with the highest costs averaged $51.42 per megawatt hour.
That is perilously close to wholesale electricity costs these days.
Bruce E. Biewald, the chief executive of Synapse Energy Economics, a consulting firm in Cambridge, Mass., compared the nuclear plants to old coal plants now facing big capital expenses. The cost of new pollution control equipment has coal companies “writing off hundreds of millions of dollars right and left,” he said. Much the same is now true for nuclear plants. “An asset that might have been worth a couple of billion dollars is now
basically worthless,” he said. And with average costs approximating average revenue, some reactors face higher-than-average costs.
Christopher Crane, the chief executive of Exelon, the nation’s largest nuclear operator, said his company’s reactors sometimes found themselves selling electricity at hours when the market price was negative, driven below zero by a surplus of wind energy late at night during periods of low demand. In other words, they have to pay when they produce power, instead of being paid. And even during hours of higher demand, prices on the open market are low because of the low price of natural gas. The price of natural gas has to recover for his older nuclear plants to avoid being “challenged,” he said.
All but one of the 104 operable reactors in the United States date from the 1980s or earlier, and utilities have broken ground on only four new units in the last few years, two each in Georgia and South Carolina. Investing in an upgrade for an old plant to become more competitive is like replacing the transmission in an old car. The owner has to decide whether there are likely to be enough miles left in the clunker for the investment to be
And reactor owners are seldom sentimental.
“It’s a business,” said Marvin S. Fertel, president and chief executive of the Nuclear Energy Institute, the industry’s main trade association. “People are going to make good business decisions.”
The hardest plants to operate profitably are the smaller ones that stand alone — as opposed to those at two- or three-reactor sites — and are run by an operator with no other assets in the vicinity, according to experts.
The stress comes after a decade of remarkable stability for the nuclear fleet, which, contrary to the expectations of some of its opponents, has shown some signs of prosperous maturity. According to industry statistics, 71 reactors have received permission to operate up to 20 years beyond their initial 40-year operating licenses and the applications of 15 more are under review. Another 17 have announced their intention to seek renewal,
leaving only one with unannounced intentions.
In addition, engineers have reanalyzed existing reactors, made some minor adjustments and coaxed another 6,200 megawatts of capacity out of them, equal the output of another six or so reactors. Another 2,700 megawatts of “uprates” to increase the maximum power level at which some plants may operate are in the Nuclear Regulatory Commission’s approval pipeline. But Mr. Crane said electricity prices were now so low that his company was re-evaluating whether it was still worthwhile to invest more in uprates.
Like high school classmates gathering for a 40th anniversary reunion, the reactor operators can see that they have lost some colleagues along the way, although none lately. Millstone 1, near New London, Conn., was the last reactor to close, in July 1998.
The industry’s renewed glimpse of its mortality comes as the Nuclear Regulatory Commission is working on the question of whether the existing plants can get a second 20-year extension, to age 80. But license extension may not be the problem. Wider
economic circumstances may be instead.
To DONATE page
NEC is a 501(c)(3) non-profit organization. All contributions are tax-deductible and urgently needed. The unprecedented number of legal proceedings in which we are intervenors or amicus curiae in 2012 and the pace of developments in these cases makes your contribution today so important. Please donate online or send a check to NEC, PO Box 545, Brattleboro, VT 05302 Thanks for your support!
The short URL of the present article is: