Addressing Economic Challenges Facing Nuclear Power Plants

Reprinted with permission. Original published on Forbes.com on May 20, 2016.

On Thursday, May 19, the Department of (DOE) hosted a four-hour, invitation-only summit in a meeting room in the Senate Office building. Billed as an action-oriented forum for a variety of stakeholders to discuss what they can do about the economic challenges facing nuclear power plants, it came remarkably close to living up to its promise.

This topic might seem esoteric to some, but the live webcast of the event so animated people interested in the fate of our fleet of nuclear power plants that the hashtag #ActforNuclear reached the top ten trending list by the time the session was adjourned. Nearly 2,000 tweets in the four hour period contained the hashtag.

The agenda was fast paced with talks by the Secretary of [entity display=”Energy” type=”section” active=”false” key=”/energy” natural_id=”channel_1section_2″]Energy[/entity], two Senators, two Congressmen, the CEO of the Nuclear Energy Institute, the President of the Utility Workers of America, a representative from a new NGO focused on preventing the loss of clean power generation, and a Selectboard chair from a town whose local nuclear plant was shut down long before its license expired.

There were also three moderated panel discussions, one focused on actions that the industry is taking and can take in the future, one focused on actions that can be done by state and local governments, and one focused on actions that can be taken by Congress, the Federal Energy Regulatory Commission (FERC) and independent system operators (ISO).

John Kotek, the Acting Assistant Secretary of Energy for Nuclear Energy, was the master of ceremonies wielding the big hook to ensure that the speakers and panels kept the schedule moving.

During his introductory remarks Secretary of Energy Moniz expressed a primary reason why the federal government is growing more concerned about the prospects for more nuclear power plant closures.

The idea is we are supposed to be adding zero carbon sources, not subtracting or simply replacing to just kind of tread water.
…
When natural gas replaces coal, it has one CO2 impact. When it replaces nuclear, it has the opposite. This is not very complicated, but it’s obviously quite important.

Marv Fertel, CEO of NEI, followed Secretary Moniz and quickly established the theme of his remarks. “There’s a lot of things going on, but we need a much, much greater sense of urgency to address the issues that we’re seeing right now.”

Senator Cory Booker (D-NJ) gave a passionate explanation of his growing interest in nuclear energy since being elected to the Senate. He remarked about the irony of a “political scientist” addressing a crowd of nuclear engineers and scientists, but he reminded the crowd of the importance what they do to produce clean energy. He did that through stories about children who frequently missed school due to problems with asthma exacerbated by breathing dirty air. He also said the following.

I know what the urgencies are here in the immediate right now. I know the challenges that global warming poses to my state in the rise of sea levels, the acidification of our oceans, even the moving of our traditional fisheries, disrupting that industry. I also know we can’t get there unless we substantially support and even embolden the nuclear energy sector. It just doesn’t work unless we focus on this sector.

Participants described how low wholesale electricity market prices do not reflect the value of services that nuclear plants naturally provide–like grid frequency stability from large rotating generators, emission free power, and reactive voltage control. The low prices are not due only to the current oversupply of natural gas but also to generous tax credits, renewable portfolio standards, and below market financing have encouraged the installation of excess capacity from weather dependent generators.

In certain restricted areas of the power grid the excess capacity is so large that the wholesale market price drops below zero and customers get paid to take electricity to keep the grid stable. Occasional negative prices make it impossible for even an efficient nuclear station like Quad Cities, which has an all-in cost per MW-hr of just $28, to earn enough revenue to pay its bills.

Craig Glazer, Vice President, PJM — a regional system operator covering all or part of 13 states plus the District of Columbia — rejected many of the arguments. He reminded the attendees that regional power markets were designed to ensure reliable flow of electricity at the lowest possible price, measured mainly on hourly or daily time scales.

The markets operate under the assumption that variable pricing signals will result in sufficient generation being available. He explained how market operators have occasionally tweaked their auction rules as they learn more about the value of reliable capacity. He reminded the audience there are numerous interest groups that all want their product to be protected. He said his customers want electricity, but none of them have expressed any interest in paying extra for “nuclear electricity.”

Mike Langford, National President Utilities Workers Union of America, shared a sensible proposal that received a fair amount of resistance during later talks. He suggested that areas with what Sec. Moniz referred to as “restructured markets” move back to full regulation where utilities can engage in integrated resource planning. He reminded the audience that electricity is the backbone on which the rest of our economy rests. It is too important to leave to market forces that focus on short term returns.

During the rest of the meeting, several representatives from various levels of government indicated that they believed it was too hard to go back to a regulated market. Instead, they suggested that responsible market operators continue making adjustments to the increasingly complex “deregulated” markets.

Matt Bennett, Co-Founder, Third Way issued a clarion call to action.

It is terrifying to think about the loss of our nuclear fleet for lots of reasons. Whether you are animated by climate change as I am or by the loss of fuel diversity as we all should be or by the impact on communities or all the other things that have been discussed today. And they’ve been discussed thoroughly but, I think, in a dry way. We need to acknowledge, first, that the house is on fire. There is something that we can do to dowse the flames, but we have got to do it.
(Emphasis in original.)

One sacred cow escaped a share of the responsibility for increasing operating costs.

Unless I missed it, there was no discussion about the possibility that the Institute of Nuclear Power Operations (INPO)–created 36 years ago as one of several reactions to the Three Mile Island accident–might have evolved into a self-perpetuating bureaucracy whose cost exceedings its benefits.

Based on communications from a number of power plant employees, the cost of maintaining the INPO organization is much more than the fees that members pay to support their offices, travel expenses and salaries. It also includes the additional costs that INPO evaluations and metrics collection efforts impose on each plant. I recently received another note; here is an excerpt that needs to be shared.

I watched [my plant] shift its whole focus from safe, economical operation of the plant to an endless paperwork trail of getting high INPO performance indicators, meeting INPOs demands, filling out paperwork that INPO demands we fill out to “prove” we’re qualified to do a task, trying to impress INPO visitors, taking training that INPO demanded, etc. There were literally weeks on end where I never did a task related to the plant itself. It never ended.

Senator Crapo (R-ID) provided closing remarks that reemphasized the importance of the task and the growing interest in devising and implementing effective actions.

I can tell you that we do have bipartisanship in Congress in support of nuclear. I won’t go into personalities or names, but I’ve had conversations today, with colleagues, that are very different about nuclear power than I had with the same colleagues ten years ago.

The fact that the summit happened is one more piece of evidence that a serious, solutions-oriented discussion about the importance of nuclear energy, especially in the form of the plants that are already operating and producing virtually emission free, reliable, and affordable electricity is in progress.