Nuclear Energy Caucus Hearing: The Federal Government Is Not Going To Act In Time To Save Nuclear Power Plants

The operators of Pennsylvania’s nuclear power plants told the bipartisan House-Senate Nuclear Energy Caucus Tuesday the federal government will likely not act in time to prevent the closure of up to one quarter of the nuclear power plants in the state.

FirstEnergy Solutions, Talen Energy and Exelon said while the Federal Energy Regulatory Commission, U.S. Department of Energy and the PJM Interconnection are discussing potential solutions, they are “working around the edges” of what needs to be done.

The companies all agreed only the state could act in time like Connecticut, Illinois, New Jersey and New York have already done.

The members of the Caucus also heard an overview of a study released Monday by The Brattle Group which outlined the impacts the announced closure of four nuclear power plants in Ohio and Pennsylvania will have, including an annual increase of over 20 million metric tons of carbon dioxide emissions, tens of thousands of tons of incremental air pollutants and an annual increase of electricity costs by an estimated $285 million.

Company Overviews

Each of the companies provided an overview of their nuclear plant operations in Pennsylvania.

Donald Maul, President and Chief Nuclear Officer for FirstEnergy Solutions, said the company announced plans on March 28 to shutdown the 1,872 MW Beaver Valley Nuclear Power Plant in Beaver County in 2021.  A few days later FirstEnergy Solutions filed for bankruptcy.

Maul said the Beaver Valley plant prevents 9.5 million tons of greenhouse gases from being emitted annually, employs 1,000 people and is responsible for an additional $70 to $120 million in contracted services annually.

Maul noted, economically, this is the kind of employer communities and states would be fighting to get.

He said Connecticut, Illinois, New Jersey and New York have already taken steps to value the environmental benefits of nuclear energy in the marketplace and to promote grid resiliency and fuel diversity and urged Pennsylvania to do the same.

Deborah Raggio, Vice President for Regulatory and External Affairs Counsel for Talen Energy, said they have diverse portfolio of 8,400 MW of generation in Pennsylvania, including the 2,600 MW Susquehanna Nuclear Power Plant in Luzerne County as well as coal and natural gas plants.

She noted the Susquehanna plant prevents 10.5 million tons of greenhouse gases from being emitted annually, has 1,000 full time jobs and an additional 2,000 contractors to support refueling and other activities.

Raggio said while Talen has not announced a shutdown of their plant and they do have a strategy in place to improve performance at the plant that could be in jeopardy if Talen is not compensated for the plant’s environmental benefits, like other no or low carbon energy sources.

Efforts by the Federal Energy Regulatory Commission and PJM to deal with valuing these benefits may not happen or be delayed, Raggio said.  If action is to be taken, it looks the state will have to take it like others have, she added.

Kathleen Barron, Senior Vice President of Federal Regulatory Affairs and Policy for Exelon noted Pennsylvania is second only to Illinois in the amount of electricity generated by nuclear power-- 40 percent. 

Exelon operates the Three Mile Island (Dauphin County), Peach Bottom (York County)  and Limerick (Montgomery County) nuclear power plants in Pennsylvania.

She cautioned in the next three years one-quarter of Pennsylvania’s nuclear generation could be gone with the closures already announced, including the 837 MW Three Mile Island Nuclear Power Plant, which Exelon said would close by September 2019 if steps are not taken.

Barron said, “Help is not coming from Washington” and the existing electricity markets are not designed to capture the value of the environmental benefits nuclear power plants provide.

She said there has been a heavy investments in wind and solar energy in Pennsylvania totalling $3.5 billion, including $1 billion in state Renewable Energy Credits and federal tax credits which has resulted in 1,300 MW of wind and 325 MW of solar electricity generation.

Barron said even if you double these annual investments, it would take up to 15 years to get where Ohio and Pennsylvania are now in terms of environmental benefits with the Three Mile Island, Beaver Valley, Davis-Besse and Perry nuclear power plants now in operation.

The loss of the four nuclear plants would wipe out more than 25 years of progress toward a future built on low-carbon energy.

Sen. Ryan Aument (R-Lancaster), one of the co-chairs of the Caucus, asked the companies about the stranded costs paid by ratepayers to generation facility owners as a result of the 1995 deregulation of Pennsylvania electricity markets. 

The payments were intended to compensate owners for their investments in generation facilities made while those facilities were under a regulated electricity market.

Maul, from FirstEnergy, said generators were paid for stranded costs by ratepapers, but coupled with that there was a cap on what ratepayers could be charged for electricity.

Barron, from Exelon, said stranded costs were not paid in the case of Three Mile Island because there was a sale of the facility at the time and the sale price covered those costs.  Exelon did not own TMI until 2003.

Raggio, from Talen Energy, said there are continuing, significant costs for refueling and ongoing maintenance as well as the market not valuing the environmental benefits of the electricity being generated that are the issues today.

In response to a question from Rep. Robert Matzie (D-Allegheny) about the important role natural gas has played in the state’s economy, Barron, from Exelon, said no one is against natural gas, “that’s not the point.”

Barron said the markets are now looking at the fuels that are the cheapest at this point in time.  Nuclear energy is “at the end of its rope” now and once you turn off these nuclear plants they will not be turned back on.

Raggio, from Talen, said some people have suggested companies should take advantage of the bankruptcy laws to deal with this situation, but that “is not the answer.”  The issue is the market and how it values benefits and PJM and FERC have said that is not their job.

Maul said FirstEnergy is now going through bankruptcy and it is not a pretty picture, adding,  “We are looking for ways to keep these plants in the marketplace.” 

He noted FirstEnergy also filed a request for an emergency federal order to avert shutdown of nuclear and coal power plants after a DOE report showed how important these plants were in the recent cold weather events.

Sen. John Yudichak (D-Luzerne), a co-chair of the Caucus, expressed significant concerns about The Brattle Group estimate that ratepayers could see a $285 million annual increase in electricity costs for consumers, if the nuclear plants closed.

Copies of testimony/presentations: FirstEnergy Solutions, Talen Energy and Exelon.

The Brattle Group Study   

Dr. Dean Murphy, from The Brattle Group provided a summary of a new report they released Monday on the potential impact the announced closure of four nuclear power plants in Ohio and Pennsylvania will have severe environmental and economic impacts.

Specifically, these closures would likely result in an increase of over twenty million metric tons of CO2 emissions, tens of thousands of tons of incremental air pollutants, and significantly higher electricity costs to consumers.

It would also put hundreds of millions in GDP and thousands of jobs at risk for residents across Ohio, Pennsylvania and the broader region.

The report, based on prior studies of the impacts of nuclear plants in Ohio and Pennsylvania, estimates that the combined impact of closing the Beaver Valley Power Station (PA), Davis-Besse Nuclear Power Station (OH), Perry Nuclear Generating Station (OH) and Three Mile Island Nuclear Generating Station (PA) will:

-- Increase annual CO2 emissions by over 20 million metric tons, equivalent to 4.5 million cars on the roads and potential social costs of over $900 million per year;

-- Increase annual emissions of harmful air pollutants such as SO2, NOX and particulate matter by tens of thousands of tons, with potential social costs of $170 million per year;

-- Increase annual electricity costs by as much as $400 million annually for Ohio residents and $285 million for Pennsylvanians;

-- Put more than 3,000 direct jobs at risk, as well as thousands of additional secondary jobs;

Eliminate tens of millions of dollars in local tax revenues.

The increase in CO2 and several harmful air pollutants due to these closures will be a major setback to the region’s efforts to reduce emissions.

In 2017, these four nuclear plants provided one and a half times as much zero-emission energy as the wind and solar resources across the entire PJM region.

PJM is the largest electricity market in North America, covering all or part of 13 states including Ohio and Pennsylvania, and spanning from Illinois to New Jersey and Virginia.

The loss of these plants would quickly reverse the environmental benefits of all the PJM wind and solar resources developed in the region over the past 25 years – benefits which were supported with billions of dollars of customer and taxpayer investment through renewable energy credits and federal tax credits.

“As this report makes clear, policymakers should take note of the critical environmental and economic contributions of our nation’s nuclear plants, especially where their continued operation is threatened,” noted Brattle Principals and study authors Drs. Dean Murphy and Mark Berkman. “Any discussion of Pennsylvania’s and Ohio’s energy futures must recognize the significant environmental and economic risks associated with allowing these four plants to close. The impending closures indicate a significant concession in their clean energy commitments.”

Additional findings regarding the impact of these closures from the Brattle report include:

-- An electricity price increase of up to $2.43/MWh and $1.77/MWh for Ohio and Pennsylvania residents, respectively (not accounting for any financial support the plants might need to continue operating); and

-- Another 15 years, at the current renewable growth rate, for the region to return to the level of zero-emissions generation in 2017.

“Thousands of lost jobs, major hits to local tax revenues, higher electricity costs for consumers, and more harmful pollutants – any lawmaker should take steps to avoid such a situation,” said Nuclear Matters Advocacy Council Member and former Senator Judd Gregg (R-NH). “It is imperative that we act to prevent the closures of these four nuclear plants which contribute needed diversity to Ohio and Pennsylvania’s overall energy supply and provide residents a dependable power source in extreme weather situations. Following Vermont Yankee’s shuttering in New England, we saw devastating effects. The loss of tax revenues forced local officials to make major budget concessions to the detriment of their residents, including cutting their municipal budget by 20 percent, drastically reducing police services and raising their property taxes by 20 percent. Furthermore, in the year following the closure, carbon emissions increased by 2.5 percent due to nuclear energy being replaced by emission producing sources. It would be nothing short of irresponsible to allow the people of Ohio and Pennsylvania to share a similar fate.”

“If these plants close, the livelihoods of thousands of Ohio and Pennsylvania residents will disappear. The over 3,000 highly skilled individuals directly employed by these sites will leave to seek employment at other facilities still operating around the country,” said Lonnie Stephenson, President of the International Brotherhood of Electrical Workers. “In total, thousands of jobs that directly or indirectly rely on the nuclear industry in this region will be lost. Positions at nuclear plants are good, well-paying jobs for hardworking residents, and without them the fabric of these communities will be torn apart.”

In response to a question, Dr. Murphy pointed to a PJM evaluation which said the loss of the nuclear plants would not affect the overall ability of PJM to meet electricity demands.

He also said the loss of jobs from the nuclear plants would not be made up by replacement natural gas power plants because they take so few people to operate.  Dr. Murphy said the most significant jobs impact comes from the loss of secondary jobs throughout the local economy around the nuclear plants.

“Impact of Announced Nuclear Closures in Ohio and Pennsylvania” was prepared for Nuclear Matters by Dr. Dean Murphy and Dr. Mark Berkman of The Brattle Group.

To develop the collective estimates outlined in the report, The Brattle Group drew from previous work estimating the impacts that the loss of the Ohio and Pennsylvania nuclear plants would have on electricity prices and emissions: “Ohio Nuclear Power Plants’ Contribution to the State Economy” (April 2017) and “Pennsylvania Nuclear Power Plants’ Contribution to the State Economy” (December 2016). This latest report compares the results of these most recent previous studies with sensitivity cases in order to outline various approximations.

Click Here for a copy of the new report.

Sen. Aument said near the end of the hearing the least cost strategy for electricity has benefitted ratepayers, but now there is no strategy for the long term and that’s what the General Assembly needs to look at.

Sen. Aument told PLS Reporter after the hearing, “A bailout, subsidy type approach that we’ve seen in New York, Illinois, now New Jersey — I’ve not been satisfied that is politically viable here in Pennsylvania."

He cited both intense lobbying from the natural gas industry and the state’s tight fiscal situation in declining to immediately pursue subsidies for nuclear power.

Click Here for a video of the hearing.  Copies of testimony/presentations: FirstEnergy Solutions, Talen Energy and Exelon.

Senators Ryan Aument (R-Lancaster) and John Yudichak (D-Luzerne) along with Representatives Becky Corbin (R-Chester) and Rob Matzie (D-Allegheny) serve as co-chairs of the Nuclear Energy Caucus.

(Photo: Three Mile Island, Dauphin County.)


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[Posted: April 17, 2018]


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