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US power companies shut down coal-fired plants to curb cost
February 08, 2013
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NEW YORK: Since 2009, power companies in the US have announced plans to shut more than 40,000 MW of coal-fired capacity in the coming years, and nuclear plants are next.

The Kewaunee reactor in Wisconsin is the first nuclear unit to succumb, as owner Dominion Resources Inc plans to shut it this year, partly because of pressure from shale gas. 

UBS’s Dumoulin-Smith has identified other reactors in danger of shutting, including Entergy Corp’s Vermont Yankee in Vermont and FitzPatrick in New York, Exelon Corp’s Clinton in Illinois and Constellation Energy Nuclear Group LLC’s Ginna in New York. 

These older reactors operating in deregulated states will find it harder to compete, Dumoulin-Smith said, due to high fixed costs compared with gas plants, expensive safety upgrades needed to implement lessons learned from the Fukushima accident in Japan, and stricter cooling water rules, among other things.

The total capacity of those four units, plus Kewaunee and Crystal River, is about 4,500 MW, which is about 4 per cent of the nation’s nuclear capacity.

New reactors under construction at Southern Co’s Vogtle plant in Georgia, Scana Corp’s Summer in South Carolina and Tennessee Valley Authority’s Watts Bar in Tennessee would more than offset the lost capacity when they enter service over the next several years.

Tony Pietrangelo, chief nuclear officer of industry trade group Nuclear Energy Institute (NEI) however, said those reactors, including Kewaunee, are running well without producing greenhouse gas emissions and are the low-cost producers in their regions. “One of the attributes of deregulated markets is ‘the price rules,’ and they don’t value nuclear like regulated markets do,” Pietrangelo said.

“When you are not properly valued, it leads to purely economic decisions and ... a closing can happen,” he said, noting that this was what happened to Kewaunee.

Entergy does not comment on the financial performance of individual reactors, said spokesman Rob Williams at Vermont Yankee. “We remain fully focused on the safe operation of our plants today and into the future,” he said.

Exelon is not considering closing any nuclear plants, including Clinton, spokesman Krista Lopykinski said. “We do not change our long-term investment decisions based on short-term market fluctuations,” she added.  

Exelon owns about half of Constellation, which did not immediately respond to a request for comment.

Nuclear critics are also calling for the retirement of the troubled San Onofre nuclear station in California, operated by a unit of Edison International.   

Opponents recently “celebrated” the first year that the state grid operated without the 2,150-MW nuclear plant. Both reactors have been shut since January 2012 due to accelerated wear that affected thousands of tightly packed tubes inside new steam generators. 

Operator Southern California Edison has proposed a plan to restart San Onofre Unit 2, but warned that more severe damage found in Unit 3 might require a longer, costlier repair. The company did not immediately respond to a request for comment for this story.   

Bernstein’s Wynne said a utility must weigh many factors, not just the price tag of the repair, in deciding whether to fix or shut a plant, including a reactor’s age, whether its 40-year license has been renewed, its location and market structure. 

“Each of these decisions with respect to retirement is pretty much related to the individual characteristics of the plant and the costs of keeping them in service,” said Wynne. 

Lower gas prices may make the choice between a risky repair and a costly upgrade even harder.

A decision by Duke Energy Corp to retire rather than repair its damaged Crystal River reactor in Florida may signal the shutdown of other older US nuclear plants as weak natural gas prices make significant investment in them uneconomical.

Reuters

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