U.S. Faces Wave of Premature Nuclear Retirements

The nuclear renaissance has turned into a nuclear retirement party.

As recently as 2012, the U.S. had 104 operating nuclear reactors. With the retirement of Entergy’s Vermont Yankee plant at the end of December, that number has now fallen under 100 for the first time since the 1970s. 

Yet as rapid as that pullback has been, the U.S. fleet may not be finished contracting. As many as 10 to 15 additional reactors are at risk of closure—not because they have reached their end-of-life but because of local political opposition, an inability to compete in an electricity market that is vastly changed from what existed when these plants were first conceived, or both.

Following is a state-by-state review of at-risk plants.

Illinois

Though this state gets electricity from 11 reactors at six plants, three of them—all owned by Exelon—have been identified as the most at-risk because of market pressures: Clinton, Byron, and Quad Cities. All three have been hemorrhaging money in recent years because their costs of operation are higher than the prices they receive for their power. The five reactors at the three plants collectively represent 5,220 MW of net generation.

Exelon officials have blamed the depressed wholesale power prices on subsidies for renewable energy, especially wind. The company has repeatedly warned—most recently in May 2014—that it will be forced to shut the plants down unless there are changes in the market that will allow the plants to turn a profit.

The State of Illinois on Jan. 7 issued a report in response to Exelon’s request, spelling out various options for the plants, but not making any recommendations. The agency found that closing the plants would require hundreds of millions of dollars in new transmission capacity because of the need to import replacement power. State officials have expressed interest in keeping the plants open, but have not made any firm commitments.

“We continue to believe that the best, most cost-effective approach for preserving the benefits these plants provide is a market-based solution that properly values the emissions-free, always-on energy they generate,” Exelon said in a press release on Jan. 13.

New York

As many as four plants in New York are at risk according to observers: Indian Point in Buchanan and Fitzpatrick in Oswego, owned by Entergy, and the Exelon-owned plants R.E. Ginna in Ontario and Nine Mile Point in Oswego. The six reactors collectively represent 5,490 MW in net generation.

Unlike Illinois, the New York state government has been actively trying to force at least one of the plants, Indian Point, into retirement. The plant is currently seeking a license extension, which Gov. Andrew Cuomo is on record as opposing. The state is also seeking to force the plant to stop using the Hudson River for cooling and instead install cooling towers, a step that Entergy says is not economically feasible because of its $1-billion price tag. It wants to install a much cheaper fish exclusion system instead.

Ironically, Indian Point is probably in the best financial shape of the four because it sells its power into the higher-priced New York City metropolitan market, where it supplies about 25% of the electricity.

The Ginna plant is facing the most immediate challenge because its power purchase agreement with Rochester Gas & Electric (RG&E) expired last June, and Exelon says it needs to sell its power at rates well above the current market in order to break even. RG&E has resisted the new deal, and has instead proposed cutting the amount of power it buys from Ginna. Even under the old agreement, Ginna lost $100 million from 2011 to 2013.

Fitzpatrick faces much the same challenges as Ginna as it operates in the same depressed power market where low demand and a glut of generation have held down wholesale power prices. The plant, a boiling-water reactor, is also facing demands for costly upgrades.

Nine Mile Point is thought to be the best positioned of the four to survive, but also operates in the same upstate power market. Unit 1 is also one of the oldest reactors in the country.

New York’s apparent lack of interest in keeping its nuclear plants operating is ironic in that observers have noted that closure of some or all of these plants would send the state’s carbon dioxide emissions skyrocketing, upsetting the Regional Greenhouse Gas Initiative market and likely making the state’s CO2 reduction goals unattainable.

Ohio

FirstEnergy’s single-unit 889-MW Davis-Besse plant in Carroll Township just completed a $600 million steam-generator replacement, and the company has committed to keeping it open. Still, the plant has been pegged by observers as financially challenged because the company has said it may not survive if it has to compete directly with cheaper renewable and gas-fired generation.

Despite the state’s partially deregulated market, the company recently proposed requiring its three regulated utilities to buy all the power generated by Davis-Besse through 2031 at whatever its generation costs are. They would then re-sell the power into the market and absorb whatever losses there might be. Currently the utilities must buy power on the open market.

The proposal has drawn substantial opposition, with critics suggesting it could cost FirstEnergy’s ratepayers more than $3 billion. The Public Utilities Commission of Ohio is considering the new rate plan at several hearings this month, with a decision expected later this spring. Experts have noted that closure of Davis-Besse would seriously complicate Ohio’s ability to meet its carbon-reduction targets in the proposed Clean Power Plan.

Massachusetts

Entergy’s single-unit, 688-MW Pilgrim plant in Plymouth has weathered fierce opposition for decades. It was granted a 20-year license extension in 2012, and Entergy says it has no plans to close it. Nevertheless, it makes lists of challenged plants because of substantial market pressures, with many critics believing the plant is losing money. However, changes in the New England power market, with natural gas shortages now regularly sending power prices spiking in the winter, may provide the plant with a lifeline.

Michigan

Another Entergy plant, the 800-MW, single-unit Palisades plant in Covert Township operates in a challenging merchant power market, much as Dominion’s now-shuttered Kewaunee plant in Wisconsin did, and some experts think the plant is operating on an even lower margin. The plant was named in several recent studies as one of the most at-risk facilities.

Pennsylvania

Though 829-MW Unit 1 at Exelon’s Three Mile Island plant (the ill-fated Unit 2 was shut down in 1979) is not thought to be at immediate risk, it has shown up on several lists of endangered plants. The problem is that TMI has the misfortune of operating in the heart of the state’s shale gas boom, where surging production has sent gas prices plummeting. Several large gas-fired plants are under construction or development in the area and are soon to provide stiff competition for its electricity.

New Jersey

Exelon has slated its Oyster Creek plant to close in 2019.

—Thomas W. Overton, JD is a POWER associate editor (@thomas_overton, @POWERmagazine)