Three struggling nuclear plants need ‘emergency’ rescue by Rick Perry, company pleads

Source: By Chris Mooney, Washington Post • Posted: Friday, March 30, 2018

FirstEnergy Corp.’s Beaver Valley nuclear power station in Shippingport, Pa. (Justin Merriman/Bloomberg News)

In the latest blow to the struggling U.S. nuclear industry, a subsidiary of the large Ohio-based utility firm FirstEnergy announced plans Wednesday to shut down three nuclear plants, which collectively produce a steady stream of 4 billion watts of electricity.

The company, FirstEnergy Solutions, cited “market challenges” to the plants, which are being undercut by cheap natural gas and a growing wave of renewable energy installations, according to the nuclear energy industry.

But the company went a step further, filing an emergency request with the Energy Department that asks for help to keep the plants, as well as a number of its coal plants, open.

The move reignited debate over prior attempts by Energy Secretary Rick Perry’s department to subsidize struggling coal and nuclear plants on the grounds that they provide crucial security and stability to the electric grid.

Perry previously tried to give favorable financial treatment to coal and nuclear plants in grid-compensation decisions due to the resiliency they provide, as the plants run more or less continually. But the Federal Energy Regulatory Commission (FERC), which regulates the interstate transmission and wholesale sales of electricity, rejected that effort.

FirstEnergy Solutions appears to be seeking a similar result through other means, arguing in its request that because of the emergency that plant failures could pose, Perry should order grid operators to “promptly compensate at-risk merchant nuclear and coal-fired power plants for the full benefits they provide to energy markets and the public at large, including fuel security and diversity.”

Environmental groups reacted strongly to FirstEnergy’s effort. The Sierra Club called it “clearly illegal,” because the Federal Power Act, under which the request was filed, is reserved for situations of emergency.

“FirstEnergy is desperate to pad its bottom line at the expense of its customers,” said John Moore, director of the Sustainable FERC Project at the Natural Resources Defense Council.

“The region is awash in cleaner and cheaper resources, and FirstEnergy can’t compete in the market,” Moore said. “This move is stunning given that the Federal Energy Regulatory Commission, the Department of Energy, and the state of Ohio have all rejected these bailouts.”

FirstEnergy, the parent company, has also resisted renewable energy mandates in Ohio.

The natural-gas industry — which is largely responsible for the economic challenges that nuclear plants are facing — was also dismissive of the request.

“Competitive markets have a long track record of delivering affordable power to customers,” Dena Wiggins, chief executive of the Natural Gas Supply Association, said in a statement. “It would be counterproductive and send the wrong signal to the market for DOE to grant this request.”

FirstEnergy Solutions generates electricity in parts of Ohio, West Virginia, Virginia, New Jersey and Pennsylvania. Its three aging nuclear plants, Perry, Davis Bessie and Beaver Valley (the largest plant with two nuclear reactors), are in Ohio and Pennsylvania.

FirstEnergy Solutions saw its credit rating downgraded by Moody’s in January, citing an “increased likelihood of a default occurring within the next few months,” although the parent company, FirstEnergy, was rated stable.

One part of the argument advanced by FirstEnergy Solutions to Perry is that the company “likely will file for bankruptcy by the end of March 2018.”

The company argues that the recent cold spells in the Northeast proved the value of their assets to the grid.

“If not for the over-performing nuclear and coal-fired generating plants … the eastern portion of the country would likely have seen grid reliability impacts, as natural gas plants significantly underperformed in large part due to natural-gas price spikes and supply interruptions,” the document states. It also cites a recent Energy Department report on the recent “bomb cyclone” in late December and early January, finding that coal and nuclear played a key role in keeping the lights on during that extreme cold event.

But it’s not entirely clear just how much the grid depends on the company’s nuclear plants for stability of service, several experts suggested.

Nora Brownell, a FERC commissioner between 2001 and 2006, says an “independent” assessment is needed in light of Perry’s prior support for subsidizing coal and nuclear plants.

“I think we need to make sure these aren’t political decisions, but they’re economic decisions,” she said.

“What people forget is these plants are fully depreciated. They all earned buckets of money before shale gas became the more economic choice. So maybe it’s time for them to retire,” Brownell continued. “So barring any independent validation of the need, for reliability purposes, I’d say, time to shut them down.”

From an environmental perspective, meanwhile, the struggling state of FirstEnergy’s nuclear plants is a complex matter — whatever the remedy may be.

Although the company didn’t cite the climate change benefits of its plants in its letter to Perry, those are substantial, said Sue Tierney, a former Energy Department official and an expert with the Analysis Group. That’s especially because unlike wind and solar installations, nuclear plants produce energy continually with little stoppage, and unlike natural-gas plants, they don’t emit greenhouse gases.

“The loss of 4,000 megawatts of power plants with 90 percent capacity factors in a lot of greenhouse-gas emissions reduction that would have to come from, at the moment, the combination of energy efficiency, wind, solar, biofuels and storage,” Tierney said. “That would be expensive and hard to replace immediately.”

Moreover, she added, once nuclear plants are shut down it is “not practical” to bring them back online later, she  said. “So these are lost forever, and difficult to replace at this scale quickly from a greenhouse-gas point of view.”

Under the Obama administration, Energy Secretary Ernest Moniz highlighted a pattern: As nuclear plants closed in a number of areas, greenhouse-gas emissions rose.

In 2017, the United States got about 20 percent of its electricity generated at large facilities from the country’s 61 operating nuclear plants, a number of which have more than one nuclear reactor as part of their design. But the U.S. nuclear industry has been wracked by announced plant closures in recent years, including the planned closing of California’s last nuclear plant, Diablo Canyon.

Adding the four FirstEnergy Solutions reactors, 18 reactors in total have either been shut down or set on a path to shut down in recent years, said John Kotek, vice president of policy development and public affairs at the Nuclear Energy Institute, an industry group.

And with FirstEnergy Solutions’s plants, “if they go away, the generation is going to be overwhelmingly replaced by power from fossil fuel plants,” Kotek said.