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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Nebraska's Fort Calhoun Nuclear Power Station (FCS) may be the latest U.S. nuclear power plant that market forces will force to close prematurely. The one-unit, 478-megawatt (MW) facility, North America's smallest nuclear plant, opened in 1973. Located just north of Omaha, Nebraska, FCS is owned by the Omaha Public Power District (OPPD).
The OPPD board of directors heard management's recommendation May 12 that continuing to operate the pressurized water reactor (PWR) was not in the long-term financial interests of its customers. The board will decide on Fort Calhoun's fate June 16, when it holds its next regular monthly meeting. If the board accepts management's recommendation, the plant could close by the end of this year.
"The economic analysis clearly shows that continued operation of Fort Calhoun Nuclear Station is not financially sustainable," OPPD President and Chief Executive Officer Tim Burke told the board. "The analysis considered market conditions, economies of scale and the proposed Clean Power Plan."
"While the recommendation to cease operations at Fort Calhoun Nuclear Station was a difficult one, it was a determination that had to be made in order to fulfil the district's mission and our responsibility to our customer-owners," Burke added in a statement. "This recommendation is not reflective of employee or Exelon performance." (A unit of Exelon began operating the plant in 2013 after FCS was closed for about 30 months.)
OPPD adopted a strategic goal in July 2015 of lowering its electric prices to 20% below the regional average. Right now, its price are about 7% below the regional average. OPPD pays about $250 million per year to operate FCS, and continued operation of the plant would impede OPPD's ability to meet its electricity price goal, OPPD officials reportedly told the board last week. But those staffers said prices could be 20% under the regional average if FCS was closed.
Burke said electric reliability "would remain strong without Fort Calhoun Nuclear Station generation. OPPD would continue to have enough power to meet the needs of customers."
OPPD, one of the larger publicly owned electric utilities in the U.S., has been reshaping it generation portfolio in recent years in response to customer feedback and tougher environmental regulation. In 2014, it decided to retire some coal-fired units; install pollution-control equipment on other coal-fired units; repower still other coal-burning units with natural gas; sharply increase its reliance on renewables, chiefly windpower; and expand its portfolio of efficiency programs.
Since that 2014 decision, OPPD has retired Units 1 and 2 at its North Omaha Station and converted Unit 3 there to burn natural gas, OPPD spokeswoman Jodi Baker told Industrial Info. OPPD also completed installation of dry sorbent injection and activated carbon injection systems at Units 4 and 5 of North Omaha and Unit 1 of its Nebraska City Station last month. In addition to its retrofits, OPPD is building hundreds of megawatts of windpower. And management set a goal of reducing customer electric demand by 300 MW by 2023 with energy-efficiency programs.
"We're doing all this to meet our customers' request and our board's direction that (OPPD) lower" the price for electricity, Baker said in an interview.
If Fort Calhoun closes later this year, it would join several other nuclear plants that are being retired prematurely for market reasons, chiefly the low cost of electricity generated by natural gas. In 2013, Dominion Resources Incorporated (NYSE:D) (Richmond, Virginia) closed its Kewaunee Nuclear Power Station in Wisconsin, citing unfavorable regional economics for nuclear power. More recently, Entergy Corporation (NYSE:ETR) (New Orleans, Louisiana) has decided to close the Pilgrim Nuclear Power Station in Massachusetts, the James A. FitzPatrick Nuclear Power Station in New York and the Vermont Yankee Nuclear Power Plant in Vermont. For more on Entergy's decisions, see October 14, 2015, article--Entergy Announces Closure of Pilgrim Nuclear Plant in Massachusetts and December 1, 2015, article--Closure of Pilgrim Nuclear Plant Sparks New Debate Over New England's Energy Future.
The nuclear industry is trying to change market rules that have made nuclear energy uncompetitive with electricity generated with low-cost natural gas. Exelon, the nation's largest nuclear operator, is considering closing several of its nuclear units, citing unfavorable market rules which, when combined with low-priced natural gas power, makes nuclear power uneconomic. For more on that, see December 10, 2014, article - NEI Warns of Costs to Prematurely Closing Three Illinois Nuclear Stations.
If OPPD decides to close Fort Calhoun, it said it "would make every effort to absorb as many employees as possible into other areas of the (utility), based on qualifications and open positions," Burke said. "Retraining would be made available in cases where there would be strong potential for success. OPPD's committed to treating employees fairly and with honesty and transparency as we would work through this very difficult process."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.
The OPPD board of directors heard management's recommendation May 12 that continuing to operate the pressurized water reactor (PWR) was not in the long-term financial interests of its customers. The board will decide on Fort Calhoun's fate June 16, when it holds its next regular monthly meeting. If the board accepts management's recommendation, the plant could close by the end of this year.
"The economic analysis clearly shows that continued operation of Fort Calhoun Nuclear Station is not financially sustainable," OPPD President and Chief Executive Officer Tim Burke told the board. "The analysis considered market conditions, economies of scale and the proposed Clean Power Plan."
"While the recommendation to cease operations at Fort Calhoun Nuclear Station was a difficult one, it was a determination that had to be made in order to fulfil the district's mission and our responsibility to our customer-owners," Burke added in a statement. "This recommendation is not reflective of employee or Exelon performance." (A unit of Exelon began operating the plant in 2013 after FCS was closed for about 30 months.)
OPPD adopted a strategic goal in July 2015 of lowering its electric prices to 20% below the regional average. Right now, its price are about 7% below the regional average. OPPD pays about $250 million per year to operate FCS, and continued operation of the plant would impede OPPD's ability to meet its electricity price goal, OPPD officials reportedly told the board last week. But those staffers said prices could be 20% under the regional average if FCS was closed.
Burke said electric reliability "would remain strong without Fort Calhoun Nuclear Station generation. OPPD would continue to have enough power to meet the needs of customers."
OPPD, one of the larger publicly owned electric utilities in the U.S., has been reshaping it generation portfolio in recent years in response to customer feedback and tougher environmental regulation. In 2014, it decided to retire some coal-fired units; install pollution-control equipment on other coal-fired units; repower still other coal-burning units with natural gas; sharply increase its reliance on renewables, chiefly windpower; and expand its portfolio of efficiency programs.
Since that 2014 decision, OPPD has retired Units 1 and 2 at its North Omaha Station and converted Unit 3 there to burn natural gas, OPPD spokeswoman Jodi Baker told Industrial Info. OPPD also completed installation of dry sorbent injection and activated carbon injection systems at Units 4 and 5 of North Omaha and Unit 1 of its Nebraska City Station last month. In addition to its retrofits, OPPD is building hundreds of megawatts of windpower. And management set a goal of reducing customer electric demand by 300 MW by 2023 with energy-efficiency programs.
"We're doing all this to meet our customers' request and our board's direction that (OPPD) lower" the price for electricity, Baker said in an interview.
If Fort Calhoun closes later this year, it would join several other nuclear plants that are being retired prematurely for market reasons, chiefly the low cost of electricity generated by natural gas. In 2013, Dominion Resources Incorporated (NYSE:D) (Richmond, Virginia) closed its Kewaunee Nuclear Power Station in Wisconsin, citing unfavorable regional economics for nuclear power. More recently, Entergy Corporation (NYSE:ETR) (New Orleans, Louisiana) has decided to close the Pilgrim Nuclear Power Station in Massachusetts, the James A. FitzPatrick Nuclear Power Station in New York and the Vermont Yankee Nuclear Power Plant in Vermont. For more on Entergy's decisions, see October 14, 2015, article--Entergy Announces Closure of Pilgrim Nuclear Plant in Massachusetts and December 1, 2015, article--Closure of Pilgrim Nuclear Plant Sparks New Debate Over New England's Energy Future.
The nuclear industry is trying to change market rules that have made nuclear energy uncompetitive with electricity generated with low-cost natural gas. Exelon, the nation's largest nuclear operator, is considering closing several of its nuclear units, citing unfavorable market rules which, when combined with low-priced natural gas power, makes nuclear power uneconomic. For more on that, see December 10, 2014, article - NEI Warns of Costs to Prematurely Closing Three Illinois Nuclear Stations.
If OPPD decides to close Fort Calhoun, it said it "would make every effort to absorb as many employees as possible into other areas of the (utility), based on qualifications and open positions," Burke said. "Retraining would be made available in cases where there would be strong potential for success. OPPD's committed to treating employees fairly and with honesty and transparency as we would work through this very difficult process."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.
