1. If Rod’s prediction that natural gas will go thru the roof soon, this Kewaunee plant closure will look ridiculous.

      But the corporate guys got their bonus and that’s the way the game is played. Short term.

    2. Robert – Believe it. Even when natural gas pricese were high, Kewaunee was never profitable during all the years it was owned by Dominion, losing more than 25 million dollars every year.

      Dominion was willing to absorb the losses until the contracts for electricity expired expecting profitable returns on new contracts. Only problem was that natural gas prices tanked and electricity from coal and hydro supplied from Canada was also cheap. Dominion was unable to negotiate new electricity contracts for even the same unprofitable price as before.

      What would you do, Robert? How long would you gamble taking >>> 25 million dollar losses every year before natural gas prices spike back up? Utility executives conservative estimate is that natural gas prices would stay low for the next 20 years.

      The alternative was to close Kewaunnee and take a guarenteed profit by managing the decommissioning fund – something utility executives are good at and with little or no risk. Utilities that survive are not in the business of losing money every year.

  1. One consequence of the closure of SONGS is that the replacement power for the next few years (at least) must come from fossil fuels. California requires CO2 emission permits which are obtained through a carbon trading auction. The proceeds of these auctions are supposed to fund development of renewables. However, the state has been borrowing this money to balance the state budget. So, not only does the closure of SONGS require an increase in fossil fuels which must be purchased by unregulated out of state generators, the promised renewables won’t be available. Now, there was no way that renewables could have filled the gap even under optimistic assumptions. However, the auction proceeds now serve as a secret slush fund for the state of California. With the increasingly stringent CO2 emission targets required by California, the bidding pressure for emission permits will only increase the auction proceeds.

  2. I left a longish comment at the original article. First to point out some facts about the shut down that I think would make the original article more persuasive and second to refute a bunch of the anti-nuke commenters who always show up.

    I don’t think I got the shut down details exactly right, so if someone wants to follow up and correct me that would be great. I should have read Rod’s article on the topic (at ANS?, couldn’t remember where I saw it, which is part of why I didn’t refresh my memory first) before posting, but I was in a hurry. I may not be as accurate as I’d like, but I’ll be more accurate than the anti-nuke folks, or anyone from the Vermont SOL ever dreamed of being.

  3. Without them relaesing the reasons why, one can only guess for sure. But, intervention I would guess, is a huge part of it. They were asking the NRC for a License Amendment to allow reduced power operation at 70% and it looked like the NRC was going to say OK, however, there was a growing storm, that in order to restart, the intervenors (Boxer especially) was pushing for a full license review. That would have been a is a very long and expensive process, VERY expensive. One thing to get a license renewal when the plant is generating, your making revenue, but with both units shutdown and probably a 2 to 3 years to drag through the courts, thats another story.

    I was on startup at Seaboook. Oringinal estimate $500 mil for 2 units. Final cost around $4.7 bil for one unit. Lots of contributing facts like management, poor estimates, etc. However, the utility released information shortly before I left in 85. They could directly attribute 50% of the cost overrun to litigation. Yes almost $2 billion in attorney and legal fees. They had for several years, 100 attorneys in NH and Mass on retainer, at 100K per year. Thats $10 mil to have attorneys on call if you needed them.

    Little town north of the site, very anti-nuke, passed an ordance that would not allow emergency sirens in thier town limits. They went nuts when the utility started installing them and filed a law suit. The sirens went up on State owner property, so the town lost the case. Gov (Dukaus) of Mass said not to bother opening the emergency plan, we won’t review it and the plant won’t start up. It only went on line because Reagan signed an executive order, in effect saying it is a federally licensed facility, if you choose not to participate, we’ll license it anyway.

    So, was the decission to shutdown the SONGS partly due to intervenors, yes, it would have to too costly to fight the battle. Some times retreat is the best option.

    As for Kewanne, another factor is Point Beach, they are litterally only a few miles apart and are for serving the same market. FPL bought Point Beach and just did massive improvments and power uprate. Competition probably had a role in its closing.

  4. @ Rod

    Dan McSwain’s economic analysis seems to be very wrong in my opinion. He says “My spreadsheet says that consumers are looking at a minimum of $13.6 billion in costs.”
    He posits the following costs to consumers:

    $4.1 billion for decommissioning the plant
    $4.5 billion in potential new utility profits over 25 years
    $4.3 billion in uncollected San Onofre costs

    Here are my problems with the analysis:

    1. McSwain is including decommissioning costs of $4.1 billion. This money is already in the bank – there is no new cost to consumers.

    2. Consumers do not get $4.5 billion in potential new utility profits over 25 years – that is just speculation. Profits get spread around to SCE administration, investors and consumers. McSwain provides no backup to his number. This future profit is not a cost to consumers.

    3. The $4.3 billion in uncollected San Onofre costs is exaggerated. McSwain does not provide any backup to his number. It does not consider insurance payments, steam generator manufacturer MHI liability payments, actual replacement power costs, PUC actions and SCE’s own payments for their mistakes.

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