Despite the currently abysmal state of the market, Virginia Uranium Inc. (VUI), owner of the 119-million pound deposit at Coles Hill, continues legal efforts … [Read More...] about Eminent domain and Virginia’s ban on uranium mining
The Ft. Calhoun Station (FCS) is scheduled to shut down for good on Monday, October 24. The number of operating nuclear power reactors in the US will have been in the three digits again for a just one week.
That event will be a tragic shame for the surrounding community, for a gradually growing portion of the 700 people that were employed at the plant when the closure decision was made, for all of the people in the area where the air will be a little dirtier and for all of the people who are concerned about the long term effects of climate change driven by CO2 emissions.
The first employees to be laid off will include nuclear engineers, chemists and clerks. At the beginning of September, they received their 60 day notice that their jobs disappear on October 31, just one week after the plant shuts down for the last time.
Closing the plant eliminates a steady supply of 473 MW of ultra low emission electricity that has a low, predictable marginal cost if all goes well.
Cost increasing headwinds
All has not gone well in recent years for the Omaha Public Power District (OPPD), the owner of the Ft. Calhoun facility. Too many unpredicted things happened that added unplanned costs at the same time that temptingly cheap alternatives became available.
There was a fire in a nuclear plant in Alabama that added a long term operational cost for fire protection.
There was an attack against several office buildings near the US East Coast that added increased costs for security guards, increased capital costs for new equipment and ongoing operational costs to maintain that equipment.
There was an earthquake and tsunami in Japan that knocked out electrical power long enough to permanently melt parts of the reactor core of three nuclear units. Reaction to that event added tens of millions of dollars of capital costs plus ongoing maintenance and operational costs.
The Missouri River, on whose banks Ft. Calhoun was built, flooded and threatened the plant. An inspection after that event revealed minor operational and management issues that ended up keeping the plant off-line and unproductive for three years. When the plant was finally allowed to operate, it was in the NRC “penalty box” of enhanced supervision to improve operational performance.
Isn’t OPPD a regulated utility?
Even though OPPD is a regulated monopoly utility that can distribute prudently expended costs among a captive base of customers, the company is a public utility owned by those customers. It has continuing pressure from its owners to keep rates low. Its board of director has stated a goal of supplying reliable power at a rate that is 20% lower than the rates in nearby service territories.
In light of that pressure the board is always looking for ways to keep costs under control. Cost control and predictability is supposed to be a key advantage for owning a nuclear power plant, but those haven’t been attributes that Ft Calhoun has consistently delivered.
As Ft. Calhoun’s operating costs increased and as it experienced a lengthy period in which it was not functional, wholesale electricity prices in areas surrounding OPPD’s service territory plummeted due to the combination of a glut-induced low price for natural gas and a growing supply of wind power with its nearly zero marginal cost.
Why is FCS closing now?
In the spring of 2016, after the final version of the EPA’s Clean Power Plan showed that it would provide zero credit to existing nuclear plants for producing power without CO2 emissions, the OPPD board of directors tasked its management staff to provide cost-informed options for its future portfolio. The managers hired an (ostensibly) independent consulting company to develop a set of scenarios with various generating alternatives and power purchasing options.
That company, Pace Global, whose letterhead proudly proclaims that it is a Siemens Business, produced a report titled Overview of Omaha Public Power District’s Generation Portfolio Analysis dated May 20, 2016 that concluded that there was no analyzed scenario in which keeping FCS open was an economically advantageous option compared to an increased reliance on purchased power, demand side management, power storage in chemical batteries and increased use of weather-dependent sources of power, mainly wind and solar.
Aside: I should explain why I used the word “ostensibly” to modify “independent” with regard to Pace Global. As a Siemens business, it has a corporate parent that is a major equipment supplier for natural gas and wind generation.
While Siemens was once a major nuclear plant supplier, it has made openly announced moves to reduce its involvement with nuclear energy, seeing limited opportunities in the sector. It’s quite logical to believe that the connection to Siemens influenced Pace’s assumptions for future price of important variables as shown in a series of graphs on page 4 of its report to OPPD. End Aside.
Less than a month after the board received the report from Pace Global, it voted to close FCS and provided the following summary of the factors that influenced their decision.
Market conditions are a major factor in today’s decision by the board. Historically low natural gas prices are a contributing factor; they reduce OPPD’s cost to generate electricity using natural gas. In addition, consumers are using less energy.
The final version of the proposed Clean Power Plan is another factor. It does not give carbon-free generation credit for existing nuclear plants such as FCS.
The board also looked at economies of scale. FCS is the smallest rated commercial unit in North America, based on accredited capability. Larger and multi-unit nuclear plants can spread costs over high levels of production.
Slow load growth and increasing regulatory and operational costs have led to the recent early retirement of several other U.S. nuclear generating stations.
OPPD President and CEO Tim Burke added, “As tough as this decision is, we cannot afford to ignore the changes happening around us. We must look to the future.”
Very soon after the board’s decision, OPPD passed the deadline by which it would have normally ordered a new batch of fuel. Without new fuel, the plant had a limited run time remaining. It began coasting down a couple of weeks ago; it was producing 81% of its full power capacity yesterday and will reach 75% before it is shut down on Monday.
I’ve tried to make contact with OPPD leaders through a contact form on the company web site, but I haven’t received any responses.
I wanted to ask if the board made any effort to find a buyer for the plant and the surrounding 660 acre riverfront site. I wonder if they had considered the option of retaining the plant in a shut down condition — like TVA did with Browns Ferry for a couple of decades. Finally, I was curious to find out if they were still confident that the natural gas prices used in the May 2016 analysis were still reasonable given recent market trends.
It’s worth noting that OPPD once began a project to add a second unit to the current site. It would have been a 1000 MWe Westinghouse 4-loop PWR. There’s plenty of land and water available for expansion; there’s even high ground only a few hundred yards from the river.
Though there is, in fact, a tiny sliver of a chance that the shut down decision can be reversed, I have been unable to find any evidence or even any hints that anyone is taking the necessary steps. Those steps include, but are not limited to, halting or delaying the action I consider to be the absolute point of nor return. Under the current trajectory, which seems unlikely to be disturbed, OPPD will submit the final document that will seal FCS’s fate sometime in mid November.
That normally single sheet letter will certify to the Nuclear Regulatory Commission that all fuel has been removed from the reactor and that the license holder will never again operate the plant. After receiving that letter, the NRC will issue a license amendment that converts the current operating license into a “possession only” license under which OPPD will have 60 years to complete decommissions activities.
In order to begin operating again, a plant with a possession only license would need to undergo a new license application process and meet all currently imposed requirements for new plants. There is a higher probability for me to win a mega-millions lottery than for FCS to be restored after OPPD gives up its current operating license. (I have never purchased a mega-millions lottery ticket and have no intention of every doing so.)
The decommissioning fund is about $800 million dollars shy of the estimated $1.2 billion decommissioning cost, so OPPD will be charging its customers a fee in their bill that will be computed to build up the decommissioning fund to full requirements by 2033.
Though the closure plan came with a promise from OPPD to freeze current rates for 5 years, that promise has a limited term. I slso suspect that there are provisions within the promise that allow rate adjustments in the case of a fuel price increase that surprises the market.
I personally wouldn’t be surprised if gas prices rise Moreno quickly than expected, given the falling production in seven out of eight major shale gas resource basins along with the increased export of gas in the form of LNG and via pipelines to Mexico. Among gas market prognosticators, I’m in a minority.
Despite the currently abysmal state of the market, Virginia Uranium Inc. (VUI), owner of the 119-million pound deposit at Coles Hill, continues legal efforts to overturn the ostensibly temporary moratorium on uranium mining in the Commonwealth of Virginia.
The most recent step in the process for overturning the moratorium, first established in 1982 pending the creation of a regulatory regime, was a pre-trial hearing during the first week of October on a lawsuit in which VUI is charging that the rule violates the state’s constitution.
Specically, VUI’s legal team argued that the prohibition on extracting uranium amounts to a regulatory taking of private property without proper compensation.
But state Assistant Attorney General Duncan Pitchford asserted that eminent domain is allowed when needed to protect the public’s health and safety and that Virginia lawmakers ful lled their responsibilities by imposing the ban.
VUI asked Judge Chadwick Dotson to require that the government clarify its assertion that the legislature has determined that moratorium is needed to protect public health.
It’s worth noting that the legislature’s only recent action regarding the moratorium was to fail to vote on a bill that would have lifted it. The measure was proposed and actively discussed in a variety of public forums, but the bills were never brought to the floor.
After his 2013 election, Gov. Terry McAuliffe (D) vowed to veto any legislation that lifted the ban. His four-year term ends in January 2018, just 15 months from now.
According to John Ohlendorf, one of the attorneys on the VUI team, VUI would like Judge Dotson to force the government to be specific about the supposed health risks associated with uranium processing and tails storage.
Ohlendorf agreed that an argument can be made that the Atomic Energy Act preempts state responsibility in judging whether those portions of uranium mining activity are being done safely.
Property Rights Protection
VUI attorneys may have a point. Via a 2012 ballot initiative, 75% of Virginia voters approved a constitutional amendment that tightly limits the criteria by which governments can exercise their eminent domain.
The amendment also made it more clear that government restrictions that limit full property value qualify as takings that deserve compensation.
Ohlendorf told me that the Attorney General’s office apparently believes it preserved the status quo, a position that could be bolstered by the lack of related case law or precedent as the amendment is only four years old.
He and other members of the plaintiff team are looking forward to the opportunity to help the state better understand what the voters wanted when they passed the initiative on eminent domain.
The new statute allows its exercise only “where the property taken or damaged is for public use and, except for utilities or the elimination of a public nuisance, not where the primary use is for private gain, private benefit, private enterprise, increasing jobs, increasing tax revenue, or economic development; (ii) to define what is included in just compensation for such taking or damaging of property; and (iii) to prohibit the taking or damaging of more private property than is necessary for the public use.”
Uranium Politics Making News Again
Meanwhile, two challengers vying to represent the fifth district in the Virginia House of Delegates believe that uranium mining remains a issue for which continued support of the ban equals more votes.
Democrat Jane Dittmar is running a television and YouTube ad called “Doing,” with background text saying that Republican Tom Garrett supports uranium mining.
Her campaign staff said the support is a result of two $1,000 contributions, one in 2011 and one in 2012, made by VUI while Garrett occupied a seat in the commonwealth’s senate.
According to the Democrat, Garrett’s vote on HB179, the bill that established the Virginia Nuclear Energy Consortium and the Virginia Nuclear Energy Consortium Authority, proved he supports uranium mining.
Garrett’s campaign issued a strong denial, saying he never voted to lift the uranium mining ban. According to communications director Andrew Griffin, HB179 said nothing about removing the moratorium.
Bearing Drift, a conservative Virginia blog, noted and condemned Garrett’s decision to claim he opposes uranium mining. According to Shaun Kenny, the author of the piece, uranium “rocks.”
Virginia Company Sells to Uranium Miners
An editorial in the Richmond Times-Dispatch noted that a press release from Gov. McAuliffe took credit for a recent $300,000 sale by Ceramic Technology. That 32 year-old company sells ceramic coated fabrications initially developed for the coal mining industry.
The editor criticized the governor for claiming that Ceramic Technology’s sale was a direct result of the company’s participation in the Go Global with Coal & Energy Technology (GGCET) program. GGCET supported a sales trip to Canada, providing an opportunity for Ceramic Technology to pitch its valuable products to the gold and uranium mining industry.
Yet McAuliffe continues to oppose the development of the multi- billion dollar uranium deposit located less than 200 miles from Ceramic Technology’s Cedar Bluff fabrication facility.
Developing that deposit will require millions of dollars in equipment that could be supplied by Virginia’s experienced mining industry. Digging rocks out of the ground is a Virginia core competency.
As Ohlendorf said, uranium has been patiently waiting in the ground at Coles Hill for a long time. Until it has been mined, there will be continuing efforts to unlock its value.
Note: A version of the above was first published by Fuel Cycle Week. It is reposted here with permission.
After the first hour of the second Trump-Clinton debate, I was beginning to worry that I wouldn’t be able to fulfill my assignment to write about the way that the candidates spoke about my coverage area. There was no mention of energy, clean energy, nuclear energy or climate change. Finally, at 1:02:40 on this video […]
Late on a Friday afternoon (September 23), the Department of Energy released an updated performance report on the MOX Fuel Fabrication Facility (MFFF). DOE’s internal Office of Project Management Oversight and Assessment in partnership with the U.S. Army Corps of Engineers produced the report using assumptions and data provided by DOE leadership. The report concludes […]
Human activity has created a carbon dioxide problem. Dr. Frank Shu and his team have a partial solution called “supertorrefaction” that is worth sharing. Problem Solving Versus Panicking When faced with problems, rather than panic or fret, people with an engineering mindset prefer finding solutions using the best available tools. The more creative members of […]
This is a call to action. The Department of Energy is soliciting comments on its excess uranium management plan. The deadline for comments, initially announced as August 18, 2016, has been extended until September 19. That is just 4 days away. Here is a quote from the Federal Register request for information: The U.S. Department […]
A high fidelity simulation of the North American Eastern Interconnect known as ERGIS–Eastern Renewable Generation Integration Study–indicates that the system could continue to function in the year 2026, even if as much as 30% of its annual electricity generation and consumption was produced using variable power sources like the wind and the sun. At the […]
Loyal Atomic Insights readers might wonder why it’s been more than a week since I last wrote a post here. Those who follow @atomicrod on Twitter might have noticed a few hints about what I’ve been busily doing for the last ten days or so. It seems likely to me that Thomas Gold, Dimitri Mendeleev, […]
Deepwater Wind has completed attaching blades to the last of five massive, 6 MWe peak capacity wind turbines that make up the 30 MWe Block Island Wind Farm. That is one of the final steps in the process of installing and commissioning the facility. By the end of 2016, the developer expects that the project […]
Joe Romm recently wrote a piece for Climate Progress titled Nuclear Power Is Losing Money At An Astonishing Rate. In that post Romm exaggerates the amount of support that the New York Zero Emissions Credit (ZEC) will provide, absolves the massive build out of industrial scale wind and solar from any responsibility for contributing to […]
If you plan to attend future nuclear energy rallies, it might be worthwhile to practice singing Battle Hymn of the Atom. It’s sung to the tune of Battle Hymn of the Republic Update (posted August 16 at 6:45 PM EST) After incorporating the inputs from comments here, this is the current version. Battle Hymn of […]
Amory Lovins recently visited the Pentagon. After a glowing introduction by the flag officer who is in charge of fleet readiness and logistics for the US Navy, Lovins told people who are tasked with looking into the future and planning budgets that human society is moving from an age of carbon to an age of […]