A coalition of electric power producers that operate natural gas-burning generation plants have filed suit in the U.S. District Court Southern District of New … [Read More...] about Natural gas burners file suit challenging fairness of New York Zero Emission Credts
NuScale remains on track to submit a high quality design certification application to the Nuclear Regulatory Commission by the end of 2016. That statement might surprise people who follow small modular reactor developments closely enough to be aware that the company received a status report earlier this week from the NRC that gave a grade that can best be described as an “I” — for incomplete.
That status report was in the form of a letter dated October 7 summarizing the results of a document review that assessesed the readiness of the company’s DCA for the NuScale Power Plant.
The four-page letter includes a number of specific examples, but the part that provides extra ammunition to the already well armed critics of the nation’s investment in small modular reactor development is the following paragraph.
NRC staff made two over-arching observations from the readiness assessment as described in more detail below. The first observation is that substantial information gaps currently exist in the draft DCA. The second observation is that even for the sections of the draft DCA that were available during the readiness assessment, the NRC staff identified many areas that were not technically sufficient or complete.
When I spoke to Mike McGough, the Chief Commercial Officer at NuScale, about the report, he cautiously told me that NuScale isn’t surprised that the NRC found that their current draft isn’t complete. The company knew that well before asking for the review. After all, if they thought the document was ready, they would have submitted it already.
The company requested the readiness review as part of its long-running effort — begun in 2008 — to actively engage with the NRC before submitting a formal application.
Even the regulators acknowledge that it is virtually impossible to comply with the nuclear regulatory system in place in the United States by simply following all of the written rules; many requirements are subject to interpretations that sometimes depend on the assigned reviewers. NRC leaders frequently emphasize the importance of pre-application engagement in producing documents that can be efficiently reviewed and approved.
The part of the readiness review summary report that seems to have been most frustrating to the future applicant was what it didn’t say. Nothing in the letter indicates that ten out of 21 sections in the application were considered to be essentially complete, including some of the more contentious parts of the application, like digital control systems, human factors engineering and control room staffing.
Students around the world may empathize with a company that is somewhat frustrated with a grader that publishes a public report card accessible to anyone — including funding sources — that emphasizes the amount of work a paper needs. That might be especially true knowing that the student voluntarily submitted an early draft — with the teacher’s encouragement – to ensure she was making progress towards the expected product.
Even greater empathy might be engendered by noting that the grader failed to make any positive observations about the amount of progress that the student has made or the number of areas in which work is nearly complete.
The review the NRC conducted wasn’t a freebie whose cost is included in some kind of fixed price application fee. The NRC is a bit like a accounting or law firm; they track billable professional staff hours at a current rate of $265 per hour.
There were nearly 80 regulators involved in the NuScale DCA readiness review; they began their work on September 18 and completed it on September 28 with a September 29 debrief.
Though neither the contact listed on the letter nor the NRC Public Affairs office was able to provide an estimate of the total number of professional staff hours spent performing the review, McGough said the company is bracing for a bill of perhaps $500,000. I suspect NuScale wouldn’t be completely shocked if the invoice approaches $1,000,000 for the inconclusive and, so far, rather unhelpful report. After all, the observations still have to be written up and reviewed.
Some of the NRC reviewers who visited NuScale’s Rockville office gave company employees the impression that they had only recently been assigned to the project. They knew very little about the NuScale design. That must have been disappointing considering the number of meetings and volume of correspondence generated during the past 8 years of pre-application interactions.
McGough made a number of positive statements about the learning experience associated with the readiness review. He told me his team is looking forward to the detailed report so that they will be able to use it as a partial checklist during the final reviews of their finished document. As of today, the delivery date of the final report has not been released.
Aside: As is so often the case among NRC applicants and licensees, McGough did not provide any direct criticism. The conventional approach to regulators from the nuclear industry is almost obsequious. Regulators have an immense amount of power and discretion that can add a virtually unlimited level of difficulty and cost to any project or plant. End Aside.
Nuclear energy critics often point to the time it takes to design and build reactors and to the amount of money that the process takes. They often shrug their shoulders when a nuclear energy advocate tries to explain the weight of the burden imposed by the way that nuclear energy is regulated and the way that the monopoly provider of regulatory services in the United States functions.
People who appreciate the qualities of nuclear energy but dismiss it because they think it’s too expensive and takes too long should take a hard look at this story. Perhaps they will realize that a more constructive thing to do than to complain is to recognize there is a solvable problem here. With cooperation and rather well known techniques, this process can be greatly improved to provide a better outcome with fewer resources.
Note: The letter discussed above was made available in the NRC ADAMS system on October 18, three weeks after the readiness review was completed.
Former or current Navy Nukes should be thankful that their inspections are conducted and reported with a substantially higher level of efficiency.
A version of the above was first published at Forbes.com under the headline of NuScale Readiness For Design Certification Submission. It is republished here with permission.
A coalition of electric power producers that operate natural gas-burning generation plants have filed suit in the U.S. District Court Southern District of New York. They are challenging the New York State Department of Public Service’s (NYSDPS) recently enacted Zero Emission Credit.
Competition wasn’t designed with customers in mind
The lawsuit filing document Indicates that the market structure that disadvantages nuclear power plants and encourages their owners to consider permanently closing is a feature, not a bug, of electricity “deregulation.” The document makes it abundantly clear that power generators burning natural gas have partnered with renewable energy marketers, appointed federal officials and antinuclear activists to create market rules that are purposely designed to make continued operation of nuclear power plants uneconomic.
Aside: Electricity market “deregulation” was an idea that received heavy marketing and lobbying expenditures by powerful corporations like Enron, Westinghous, General Electric and Siemens. Those entities touted the benefits of “competition” loudly and repeatedly, but the plan was never about providing customers with better service or lower prices. Companies don’t spend money for altruistic reasons; investors wouldn’t accept that kind of behavior.
They do, however, invest in political actions that might help them grow their businesses and increase their profitability even if it is at the expensive of competitors and customers. End Aside.
Once the owners of operating nuclear plants have reached the point at which they are losing money under the current auction rules, they are supposed to permanently exit the market. That will force capacity and energy prices to rise. The price increases will moderate after they have reached a level high enough for long enough to encourage the construction of generation systems that can be built sited and built quickly, remotely controlled or provided with skeleton crews, allowed to remain idle much of the time and respond quickly when market prices rise sharply, signaling the fact that they are needed right away.
Those new generators usually qualify to bid into capacity markets with minimal or non-existent fuel storage capacity, making them dependent on the ability of a different market and infrastructure to supply them with the fuel they need to generate power.
Risk from achieving the desired end state
Rather than being able to make relatively minor adjustments to a system with a strong foundation provided by always on, low marginal cost, stable, high-inertia electrical power generators, future grid operators will be expected to produce electricity responsively from a system offering ever fewer predictable parameters.
Instead of coordinating the output of a limited number of controllable generators to respond to changes in customer needs and desires, the grid operators are supposed to conduct a much more complex system. Their job will be akin to attempting to produce coherent music with a mix of players that includes a shrinking population of disciplined orchestra veterans, a group of variably talented jazz improvisors and a growing number of raw amateurs who recently joined the middle school band.
The power system that the Coalition for Competitive Electricity wants would include disparate, weather-dependent power systems that rely on ever rising support from hydrocarbon-burning power generators. Their desired power system does not value cleanliness, career jobs, local tax roles, predictable pricing, or onsite fuel storage produced along with electricity by nuclear plants. It assumes that the fuel delivery infrastructure can infinitely expand and that customer demand can be economically rationed to fit within available power capacity.
Of course, the filing that the coalition’s attorneys produced does not describe the members’ goals in exactly the words used above, but the intent can be gleaned from the document with only a modest reliance on critical thinking and reading comprehension.
What does the lawsuit say?
For example, page 4 of the complaint states:
The ZEC payments threaten to disrupt the economically efficient function of the FERC-approved monthly capacity market auctions administered by the NYISO. In anticiapation of significant disruption to the April 2017 and subsequent monthly capacity market results, financial over-the-counter capacity markets that trade in advance of the FERC-sponsored auctions have already shown dramatic price declines as a result of the ZEC Order. These declines reflect that nuclear plants that were scheduled to leave the market are now likely to remain in operation. The artificial retention of the nuclear units in the market has a significant effect on wholesale capacity market prices subject to FERC’s exclusive jurisdiction.
Translation: We were expecting to receive higher prices for our plants to sit idle, ready to start up if needed, as the market structure that we helped to craft forced nuclear plant operators to lose money. Those operators were supposed to respond by permanently retiring their capacity. That would leave plenty of room for our capacity while still producing the market tightness that drives prices higher.
The filing accidentally describes the benefit to the system and to customers of having large, low marginal cost, reliable generators as part of the supply mix. They keep prices under control and can help prevent the price spikes that can occur with the perception of a lack of adequate supply.
(From page 14) A large price-taking unit significantly decreases energy market prices paid to competitors, as it injects large quantities of energy into the grid, which lowers market-clearing prices. As long as energy-market prices, on average, are higher than the nuclear unit’s marginal operating costs, this may be financially sustainable for a nuclear unit, since the total revenues earned will exceed the unit’s costs of production.
(Page 21) Because capacity-market prices are sensitive to even small shifts in the supply/demand, the decrease in total capacity market costs can be large. In some cases, the reduction in total capacity market costs can exceed the artificial subsidy needed to cause the distortion in prices.
That last point is important and says what many nuclear advocates have been saying for a long time. Moderate revenue increases, probably much lower than the cost of replacing their capacity, are suffficient to keep nuclear plants running.
By the document’s own admission, the reduction in capacity payments to nuclear competitors might reach $15 billion during the 12-year period in which the maximum ZEC payment to retained nuclear plants would be $7.6 billion. The authors try to minimize the importance of that cost comparison with the following statement.
While artificially depressed (below-market) energy and capacity prices may save New York ratepayers money in the short run, these savings will be [partially] offset by both increased costs of the ZECs themselves and by the enormous [vague and uncalculated] forgone benefits of competition and more efficient generation over the long run.
The document also describes what the current market dynamic is doing to nuclear plant income.
Recent decreases in energy-production costs, however, largely driven by access of cheap shale gas, have decreased energy prices below the level necessary to keep some nuclear plants operating.
If gas prices rise faster than currently expected by most market observers, energy prices will quickly rise to levels that are sufficient to keep nuclear plants operating. NYSDPS recognized and accounted for this possibility when it designed the ZEC; the price for the ZEC phases down gradually once prices exceed a certain level and disappears completely once prices hit a second trigger point.
Here’s another intriguing statement (from page 22).
Artificially suppressed prices threaten the viability of more efficient generators, including Plaintiffs, and discourage investment in efficient new, flexible generators better suited to integrate weather-dependent, zero-carbon renewable generating resources like wind and solar. Accordingly, not only will the ZEC program ultimately lead to higher wholesale prices, but it will also stifle the unquestionable environmental benefits derived from competitive electric markets.
That statement raises a number of questions. By what measures are the generators “more efficient?” It seems that the only measure of importance for the Plaintiffs is the ability to bid at the lowest prices in short term markets and to be able to dramatically reduce carrying costs if the electricity isn’t being sold at a high enough price.
How long will it take before the higher wholesale prices predicted will materialize? What if the moderate revenue rewards for clean energy, good jobs and local tax considerations help to keep those “uneconomic” nuclear plants running for another several decades and encourage the construction of additional units that can qualify for the ZEC?
By whose judgement are the environmental benefits of replacing zero emission nuclear with a combination of moderate emission natural gas plus zero emission wind and solar “unquestionable?” What if the efficient market solution is a mostly gas grid – as long as unexpected price spikes and supply interruptions never occur?
Why haven’t plaintiffs filed suit against RECs and tax credits?
When discussing this lawsuit with colleagues, some have wondered why the coalition hasn’t challenged the market damaging effects of favoritism toward wind and solar? Why do they support the continuation of federal tax credits — which amount to direct market subsidies for systems that might otherwise be completely uneconomical — and renewable energy credits (RECs) that are similar to the ZEC for nuclear for wind and solar?
The — rather weak — defense of this seeming disconnect can be found on page 23.
Since the fundamental basis for the complaint is that New York’s ZEC is preempted by the federal governments assertion of jurisdiction over wholesale electricity markets under the interstate Commerce Clause, the defense of renewable source favoritism rests on federal law.
According to the plaintiffs, federal law allows states to set different prices for certain types of renewable generators but does not allow states to establish favorable prices for nuclear generators. That might be the case if you limit the areas of federal law and regulations referenced, but the Clean Power Plan will most likely allow states to devise structures that encourage nuclear plant construction and retention to meet emission reduction goals.
The plaintiffs also take a pass on challenging the federal government’s decision to subsidize renewables. That’s probably prudent, the federal government is hard to sue.
There is one part of the complaint that might be on solid legal ground. As currently structured, nuclear generators from outside of New York that sell their power into the state’s wholesale market are not eligible for ZECs. Neither are other zero carbon — like small hydro or Indian Point — sources of electricity. A case can be made that excluding out of state vendors amounts to interference in interstate commerce and that exclusion of other sources of zero-carbon electricity that are not already able to qualify for RECs is unfair.
I am no fan of competition in electricity markets. Continuous, reliable supply of the product is too important to the functioning of our society to allow it to be left to market forces, especially the kind of imperfect market that is the result of the special characteristics of electrical power.
Without careful crafting, markets do not value product features like strong employee training programs, contributions to local organizations, environmental cleanliness, STEM education encouragement or local tax bases.
Electricity is a vital product. The system that delivers it to customers really is a natural monopoly that should be fully integrated from power generation to current delivery. It should be operated by well-supervised and regulated technical and operational experts who are adequately compensated to serve the public.
The United States created such a system out of the mess produced in the Insull era of the 1920s. The power system our grandparents created became the envy of the world and was immitated by many others. There’s no reason we cannot return to thosetraditional electric utility system structures. We know how it was done and have a number of excellent examples still operating today.
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 […]
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 […]
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 […]