Public Power Weekly Exclusive: NEI's Fertel Addresses Clean Power Plan's Treatment of New Nuclear

 

 

 

Public Power Weekly Exclusive: NEI’s Fertel addresses Clean Power Plan's treatment of new nuclear

From the July 13, 2015 issue of Public Power Daily
Originally published July 10, 2015

By Paul Ciampoli, News Director

Marvin Fertel, president and CEO of the Nuclear Energy Institute, recently offered his thoughts on a range of issues related to the nuclear power industry including the Environmental Protection Agency's (EPA) treatment of new nuclear power under the EPA's Clean Power Plan to reduce carbon dioxide emissions from existing power plants. He made his remarks in an exclusive interview with the American Public Power Association.

[The following story is the first of two articles based on Fertel's responses to questions during the interview, which took place at NEI's offices in Washington, DC, on June 17, 2015.]

During the interview, Fertel was asked to offer his thoughts about the EPA's treatment of nuclear power under the agency's Clean Power Plan – and specifically, nuclear generation under construction. The EPA's approach has faced criticism from some in the power industry on the grounds that the Clean Power Plan in effect penalizes utilities and states that are pursuing new nuclear power projects.

"I think we've been very consistent in our position with EPA on the Clean Power Plan, as has I think [APPA, the National Rural Electric Cooperative Association and the Edison Electric Institute] at least on new nuclear," that "you shouldn't be including new nuclear, like Vogtle or Summer or Watts Bar, in the rate setting – that that's penalizing the states for taking very aggressive action to not only provide electricity, but to reduce carbon emissions – and that they should be used for compliance value after the plant gets operational," Fertel said.

"To be honest, we're cautiously optimistic that EPA has taken that recommendation and they will change that, for at least the new plants," the NEI president and CEO said. "We have not seen anything, but certainly in discussions – they have not been explicit – but we get the sense that they're going to fix that."

Fertel also noted that "We have also advocated that license renewal" be treated similar to a new plant in the context of the Clean Power Plan.

The Clean Power Plan, which is expected to be finalized in August 2015, calls for reducing carbon dioxide emissions from the electric sector by 30 percent — from 2005 levels — by 2030.

In its Dec. 1, 2014 comments on the proposed Clean Power Plan, NEI urged the EPA to remove nuclear generating capacity under construction from the rate-setting formula, and allow states to include "new" nuclear generating capacity, when it is operating, in their compliance calculations, "thereby providing an incentive to expand carbon-free nuclear generating capacity."

NEI said in the comments that "new" nuclear should include, among other things, nuclear plants relicensed to operate beyond 60 years – a second license renewal – and any nuclear plants that had not received license extensions to operate beyond their original 40-year license term as of the beginning of the 2012 baseline year.

In the comments, NEI notes that approximately three-quarters of the reactors operating today have received Nuclear Regulatory Commission approval to operate to 60 years.

On its website, NEI states that by 2030, the U.S. "could experience electricity shortages if a significant number of nuclear plants are retired in a short period. One way to avoid this outcome is renewing the operating licenses of nuclear power plants a second time for up to an additional 20 years. Companies are expected to seek these second license renewals in the coming years."

In its comments to the EPA, NEI said that although the industry and the NRC "are now developing the framework for an additional 20-year license renewal (past 60 years), it is not certain that all of today’s nuclear power plants will take advantage of this option."

Some of this capacity "will likely seek a second license renewal to operate past 60 years, but some will not. (In fact, some of today’s capacity may not reach 60 years.) Additional capital investment will almost certainly be required to operate past 60 years and, in some cases, market conditions or other factors may not justify that capital investment," NEI said.

This situation "places a high premium on (1) preserving existing nuclear generating capacity by ensuring workable regulatory requirements for second license renewal (i.e., past 60 years), and (2) building new nuclear generating capacity to maintain, at a minimum, nuclear energy’s current 20-percent share of U.S. electricity supply," NEI said in the comments.

In addition, NEI has advocated that uprates "also count towards compliance, just like it was a new plant addition," Fertel noted in the interview. In its Clean Power Plan comments, NEI said that "new" nuclear capacity should include power uprates at existing nuclear plants "initiated at the beginning of the 2012 baseline year or thereafter."

Public power utilities involved in new nuclear projects

How nuclear generation under construction is treated under the Clean Power Plan is significant given that public power utilities are involved in all three of the projects mentioned by Fertel.

The Tennessee Valley Authority is constructing Watts Bar Unit 2. When finished, the unit will generate approximately 1,150 megawatts.

The Municipal Electric Authority of Georgia, the City of Dalton, Georgia, Georgia Power Company and Oglethorpe Power, a Georgia-based power supply cooperative, are participating in the development of two new nuclear generating units under construction at the Alvin W. Vogtle Electric Generating Plant in Burke County, Georgia. Georgia Power is a subsidiary of investor-owned utility Southern Company.

Santee Cooper, South Carolina's state-owned electric and water utility, and South Carolina Electric & Gas are building two new 1,117 megawatt nuclear units — 2 and 3 — at the V.C. Summer Nuclear Generating Station in South Carolina.

Public power utilities also hold partial or full ownership of several existing nuclear power plants.

Public power, IOUs weigh in on issue

In November, top executives with the Municipal Electric Authority of Georgia, Dalton Utilities, Tennessee Valley Authority, Georgia Power, Oglethorpe Power, Santee Cooper, South Carolina Electric & Gas Co., Southern Company and Southern Nuclear Operating Company wrote to the EPA and said that it is not appropriate for the EPA to include nuclear power units under construction in the calculation of state carbon dioxide goals.

APPA, in comments filed in December 2014 on the Clean Power Plan, urged the EPA to modify the proposed rule to remove nuclear units under construction from the relevant state goal computations. Joe Nipper, senior vice president for regulatory affairs and communications at APPA, addressed the Clean Power Plan's treatment of nuclear generation under construction in an October 2014 blog.

Nuclear will maintain "a very important role"

Commenting on the value of nuclear power in the current and future generation mix, Fertel said, "What we see is nuclear maintaining a very important role."

He noted that currently nuclear is about 20 percent of the electricity mix in the U.S. "Our goal is that it never drop below 20, that it pick up and maybe be more than that, but that it's in the 20 to 20+ range as we go forward. So that's what we are expecting."

In addition, "we're expecting that many of our plants will go for license renewal," and along with the several nuclear power plants under construction, "we expect we'll be building" more new nuclear power plants after the 2020 timeframe."

Fertel also said, "We're hoping that by early next decade, we're going to see small modular reactors, which I know a number of [American Public Power Association members] are interested in, and that we would be deploying the small modular reactors also as we get into the 2020s and certainly the 2030s."

SMRs are critical to the future

"I went from someone who thought SMRs were going to be hard to do – probably 10 years ago – because it just didn't seem like we could make it work, to someone who actually believes that SMRs are not only going to be done, but they're absolutely critical to the future of the infrastructure in this country," the NEI president and CEO said in the interview.

NEI notes on its website that because of their small size — 300 megawatts or less, compared to a typical nuclear power plant of 1,000 megawatts – small nuclear reactors have "many useful applications, including generating emission-free electricity in remote locations where there is little to no access to the main power grid or providing process heat to industrial applications."

Public power has been at the forefront of work on SMRs. In 2013, Energy Northwest and Utah Associated Municipal Power Systems joined a "teaming arrangement" with NuScale Power as part of the Western Initiative for Nuclear Project collaboration to promote a commercial, small modular reactor project in the western U.S. UAMPS offers details on its work in the area of SMRs as part of its Carbon Free Power Project on its website. TVA notes on its website that it is working with Babcock & Wilcox on possible deployment of B&W’s "mPower" SMR design technology at TVA’s Clinch River Site near Oak Ridge, Tenn.

Fertel said that in competitive markets, it is "very difficult" to build large nuclear power plants, "even though we think we can get time to markets for the large ones down to about seven years – but even at seven years it's still a big chunk to do – so we see SMRs as absolutely critical for dealing in competitive markets."

In addition, Fertel said, "we also see SMRs as being potentially very significant as we look at things like micro grids — that they would be very significant. And I wouldn’t eliminate the use of SMRs even in regulated markets in some situations."

Also, "we see a very large export opportunity for SMRs. A lot of the countries that are looking to go nuclear for either environmental reasons or their growing electricity supply don't have large grids. So small modular reactors may be an essential component when you look at the export market," Fertel said.