Sonal Patel reports that two more U.S. nuclear power plants are facing early retirement, joining a string of generators whose fate was determined by market conditions, political pressure, or financial stresses assailing the sector. Several others may be poised to join them. The 647-MW Duane Arnold nuclear plant in Palo, Iowa, will likely close in 2025 after a current contract with the facility’s primary customer expires, said NextEra Energy Resources’ chief financial officer, John Ketchum, in a fourth-quarter earnings call on January 26.
“Without a contract extension, we will likely close the facility at the end of 2025 despite being licensed to operate until 2034,” Ketchum said. “As a result, during the fourth quarter, Duane Arnold’s book value and asset retirement obligation were reviewed, and an after-tax impairment of $258 million was recorded that reflects our belief it is unlikely the project will operate after 2025.” Ketchum added, however, that NextEra will continue to pursue a contract extension. On the same day, the Toledo Blade reported that FirstEnergy Corp.’s Davis-Besse nuclear plant in Oak Harbor, Ohio, is headed for premature closure, citing James Pearson, the company’s chief financial officer. Pearson told the newspaper that no date has been set for the closure of Davis-Besse. He also reportedly said that the outlook for the company’s Perry plant in Ohio and twin-reactor Beaver Valley nuclear plant in Pennsylvania is “bleak.” FirstEnergy is intent on exiting its competitive business, but though the company may want to sell the plants, they are “probably impossible to sell in today’s market,” he reportedly said.
The plants join a series of generators recently stricken by financial pressure primarily by competition from cheap natural gas, expanding renewable capacity, and lethargic power demand growth. Throughout the short history of the U.S. nuclear power sector, 31 reactors licensed to operate have been permanently shut down—11 between 1960 and 1980; four in the 1980s; and nine in the 1990s. The recent streak began in 2010—12 years after the nation’s last reactor, Millstone 1 in Waterford, Connecticut, had been shut down in 1998—as Exelon announced it would shutter its Oyster Creek plant in New Jersey by 2019 owing to economic conditions and changing environmental regulations. In February 2013, Duke Energy (then Progress Energy) retired its Crystal River reactor in Florida, unable to repair damage to the containment structure. A string of casualties then ensued, as Kewaunee in Wisconsin was closed in May 2013; two units at San Onofre in California were formally shuttered in June 2013; Vermont Yankee in Vermont was shut down in December 2014; and Fort Calhoun in Nebraska closed its doors in October 2016. Other units slated for near-term shutdown include Pilgrim in Massachusetts and Palisades in Michigan. (For more, see, “THE BIG PICTURE: Nuclear Retirements.”)
Early retirement has also been proposed for Clinton and Quad Cities in Illinois and for Nine Mile Point, Fitzpatrick, and Ginna in New York—but their fate appears dependent on the outcome of legal challenges to “bailout” programs to keep those plants operating for economic reasons. The states’ measures are being legally challenged by several independent power producers—including Dynegy, Eastern Generation, NRG Energy, and Calpine Corp.—and, prominently, competitive power producer trade group the Electric Power Supply Association. The consortium has long argued that the state rules interfere with Federal Energy Regulatory Commission (FERC) jurisdiction over wholesale electric rates and unlawfully interfere with interstate commerce.
In January, FERC, an independent regulatory government agency that is officially organized as part of the Department of Energy (DOE), thwarted a DOE proposal to require independent system operators and regional transmission organizations to establish “just and reasonable” rates for resilient and reliable plants, such as coal and nuclear baseload generators. The regulatory body has since queried grid operators in a new docket on what defines resiliency and sought their input on how it can be measured. Meanwhile, state subsidies are also under consideration in Connecticut, where Dominion, the owner of the Millstone 2 plant, though profitable, has argued it will need incentives to help the state meet long-term economic and environmental goals. In Pennsylvania, a nuclear caucus—convened March 2017 as the first of its kind in the nation—has specifically advocated for keeping open Exelon’s Three Mile Island. In New Jersey, a bill to help keep open Hope Creek and Salem will be voted upon by a state Senate committee on February 5.
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