As Price of Nuclear Energy Drops, a Wisconsin Plant Is Shut
By Matthew L. Wald - New York Times, May 7, 2013
WASHINGTON — The Kewaunee nuclear power plant in Wisconsin shut down for the last time on Tuesday, but it is preparing to break new ground for the American nuclear industry.
It may go to sleep, Snow White-style, for 50 years, to be awakened when its radioactivity has subsided. Or it may be dismantled in the next decade or so. In either case, the responsibility and the expense, probably near $1 billion, will be borne for the first time by a for-profit company, not a regulated utility.
The Kewaunee plant, which opened in 1974, was sold in 2005 to Dominion, based in Richmond, Va., by its owners, the Wisconsin Public Service Corporation and Wisconsin Power and Light. In the past, the lengthy decommissioning process that nuclear power requires was in the hands of local companies, which have had the option to go to a public service commission and ask for a rate increase to pay for the job if it proved unexpectedly difficult.
But Kewaunee was a “merchant” plant, a sort of free agent on the grid, selling its electricity on contract, at a price set by the market, not by the government.
Dominion says it has reserved enough money to do the job, and a big enough bank account if the reserve fund does not suffice. So far, the Nuclear Regulatory Commission agrees, although a commission expert said the actual budget was open to question. But “when you try to do any of these calculations beyond seven years, I’ll be frank with you,” said Michael Dusaniwskyj, an economist with the commission. “It’s a shot in the dark.”
The variables for Kewaunee, which is about 35 miles southeast of Green Bay, include the amount it can win in a legal dispute with the Energy Department, which was supposed to start taking away the spent fuel more than a decade ago but will not begin doing so for many years to come. Other factors are the scrap value of the tons of steel and copper in its equipment and structure, and the rate of return it can earn, above inflation, on the $578 million reserve Dominion has set aside.
Three Wisconsin state agencies said they had had no jurisdiction since the public service commission approved the sale of Kewaunee eight years ago. That does not mean that no one is concerned.
“It’s a strange situation for sure, for Wisconsin, which has very little to do with a decision made by another entity, and it’s going to be around for another 60 years,” said Charles Higley, the director of the Citizens Utility Board, a nonprofit agency that seeks to represent residential consumers, farmers and small businesses before the public service commission.
But the chief nuclear officer of Dominion, David A. Heacock, said his company projected that the money on hand would be enough, even before recovering money from the Energy Department, which it estimates could amount to $350 million, or the income from the sale of scrap metal.
Still, the retirement comes at a time of rapid cost inflation. Last month, Mr. Dusaniwskyj told stock analysts in a conference call organized by UBS Investment Research that the utilities’ estimate of the cost of decommissioning was rising 8 to 9 percent a year, pushed by the cost of burying the lightly contaminated concrete and steel. That cost could change markedly in coming years, depending on whether more low-level radioactive waste dumps open.
Representative Edward J. Markey, a Massachusetts Democrat, said in a letter sent to the Nuclear Regulatory Commission on Monday that several reactor owners had recently filed documents with the Securities and Exchange Commission. Those documents indicated that their plants were worth far less than previously assumed, since the market price of the electricity they produced had dropped sharply because of low natural gas prices. (That is what made Kewaunee unprofitable.)
Earlier this year, he pointed out, the owners of the Crystal River 3 plant in Florida decided to retire it rather than repair its containment structure, because of unfavorable economics. Industry experts say that several reactors are operating at a loss while their owners wait for the glut of natural gas to disappear. How long that will be, and how many will last, is not clear.
“Once these old nuclear reactors shut down — as we’re seeing now — it will take 60 years and hundreds of millions of dollars to decontaminate them,” Mr. Markey said in a statement.
“Taxpayers should have assurances that these nuclear relics don’t outlive their corporate owners and their ability to fund nuclear cleanup costs, leaving ordinary Americans to foot the bill.”
The concern is relatively new because in the past, reactors were locally owned, so their economic benefits — or their costs — accrued for a population that a utility could appeal to for money if it ran short. Mr. Heacock noted, however, that this was never assured. A public service commission might tell such a utility,
“you collected the money already, you figure out how to make it work, or go to your shareholders for the difference,” he said.
Dominion filed plans in February to shut down the reactor. Mr. Heacock said that the experience of another company, Energy Solutions, which is decommissioning Commonwealth Edison’s old Zion reactors north of Chicago, was that it might be cheaper to do the job in the next decade or so.
Decommissioning Kewaunee will require equipment that is available now, and also human skills, including the intimate knowledge gained by workers who have been at the site for years. “After 10 years, people knowledgeable about the plant were no longer around,” he said of the Zion reactors.
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