Fort Calhoun Station (FCS) appears to be the next in a string of nuclear plants that have ceased operations or plan to retire as a result of difficult economics.
Tim Burke, president and CEO of Omaha Public Power District (OPPD)—the plant’s owner—presented senior management’s recommendation to close FCS by December 31, 2016, to the board of directors during its monthly meeting on May 12 (Figure 1). The board will review the recommendation and is expected to vote on it during its June 16 board meeting. If approved, FCS would likely shut down for the last time in October when it begins a scheduled fall outage.
1. OPPD board meeting. The board met on May 12 to discuss, among other things, the fate of Fort Calhoun nuclear station. Courtesy: OPPD
The recommendation came after OPPD Board Chairman Mick Mines asked for potential scenarios regarding future power resources during the April 14 board meeting. A team was assembled—with members from transmission, generation, nuclear, financial, corporate planning, and demand side management divisions—to develop an enterprise resource plan.
“The key findings were Fort Calhoun drops out of every case where the model is given an option to drop it out,” said Mary Fisher, corporate planning and analysis division manager for OPPD. “Additions are economically driven, not compliance driven, so we’re looking for the lowest cost portfolio. The extended power uprate is not economic as we went through this modeling. We found that other carbon-free options are more economic.”
Earlier in the meeting, the OPPD board unanimously approved a resolution to establish a rate target 20% below the average published rates on a system average basis for the Energy Information Administration’s West North Central region, which includes Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, and South Dakota. Currently, OPPD rates are 7.1% below the average. However, according to a slide presented by Edward Easterlin, vice president and CFO for OPPD, the district’s average retail rates would reach the 20% target by 2020, if FCS retirement were approved.
“This has nothing to do with the performance of Fort Calhoun. Fort Calhoun’s performance right now is the best it’s been since before the flood,” said Anne McGuire, OPPD board member for subdivision two, referring to flooding that occurred in 2011. The plant remained offline for nearly three years as a result of that and other issues.
Burke noted that last fall plant staff was asked to reduce costs and they responded admirably. In the modeling, OPPD was able to forecast cost reductions of about $30 million per year as a result of the staff’s efforts. But even that was not enough; Burke said the economic analysis clearly showed that continued operation of FCS was not sustainable.
According to Burke, three things were reflected in the recommendation to close FCS: the changing energy market landscape, the economies of scale of a small nuclear plant (at 478 MW, FCS is the smallest in the U.S. fleet), and existing nuclear was not considered in the Clean Power Plan.
“What rewarded us so many years in the past is not creating that reward in the future,” Burke said (Figure 2).
2. Tough decision. OPPD Board Chairman Mick Mines (left) reviews documents as OPPD President and CEO Tim Burke (right) details the case against continued operation of the Fort Calhoun nuclear plant. Courtesy: OPPD
If the board approves the recommendation, OPPD doesn’t expect any major layoffs to occur immediately. The decommissioning process would still need to be selected, such as DECON or SAFSTOR, which would determine how long certain staff would remain at FCS (10 years or 60 years). In addition, Burke said OPPD would “work really hard to retain” the plant’s employees by moving them to other OPPD facilities.
—Aaron Larson, associate editor (@AaronL_Power, @POWERmagazine)