#Beaver_Valley hangs in the balance of nuclear subsidy efforts in two states RSS Feed

Beaver Valley hangs in the balance of nuclear subsidy efforts in two states

One way or another, come next year, FirstEnergy Corp. is getting rid of the Beaver Valley nuclear power station.

Either the Ohio-based company will shut down the 1,800-megawatt plant, two decades ahead of schedule, or it will sell it to another operator. The latter option is a nonstarter unless something — aka someone, aka legislators in Pennsylvania and Ohio — intervenes to give nuclear energy a boost.

The Beaver County nuclear plant and two others in Ohio share the same chopping block as about a dozen fossil fuel plants in FirstEnergy’s portfolio across several states where electricity generation is not directly supported by ratepayers.

But getting legislation that would recognize — monetarily — nuclear energy’s lack of carbon emissions is FirstEnergy’s top priority, according to the firm’s CEO Chuck Jones, even though FirstEnergy won’t stick around to operate the plants either way.

“I don’t think there’s any guarantee, absent some other support for these units, that they’re going to keep running far into the future,” he told analysts during a call last month. Without something to “make them attractive to a buyer, there’s only one way for us to exit this business,” he said.

That something isn’t ambiguous.

In Ohio, it will be legislation seeking to create a program where customers would pay a surcharge to fund zero-emission credits given to nuclear plants. A similar mechanism supports the purchase of renewable energy in Pennsylvania and in Ohio, although the Buckeye State’s program had been frozen for the past two years and some in the state Legislature are attempting to neuter its mandates by making them penalty-free goals instead.

Mr. Jones expects an Ohio bill in support of nuclear energy to be introduced soon and said he’s optimistic, “given the discussions we’ve had so far,” that it will pass.

In Pennsylvania, Exelon is taking the lead. The Chicago-based operator of three of the state’s five nuclear power stations has been emboldened by recent victories in Illinois and New York, where it credited the 11th-hour approval of zero-emission credits with saving several plants from early retirement.

This year, Exelon added a significant number of Harrisburg lobbyists to its roster.

Paul Adams, a spokesperson for the company, said, “It is too soon to speculate on possible legislation or other solutions that may be considered to address Pennsylvania’s energy policy goals.”

On the company’s fourth-quarter earnings call last month, Exelon’s executive vice president for government and regulatory affairs, Joe Dominguez, said that the company’s activities in Pennsylvania revolve around “establishing a recognition that nuclear is the lowest cost and most reliable zero-carbon option for our customers.”

Once that message permeates, he said, stakeholders can start hammering out a mechanism to reward nuclear energy for those attributes, whether it’s through zero-emission credits or by folding it into the state’s existing alternative-energy portfolio standards.

It’s unclear whether changes would come quickly enough to impact FirstEnergy’s decision about the Beaver Valley plant. So the Akron company is looking to Ohio to help out Beaver Valley as well.

“While we don’t know what language the state will ultimately agree upon in Ohio, it is important that resources outside the state are eligible” for credits, said Stephanie Walton, a spokesperson for FirstEnergy. “Whether Beaver Valley qualifies is yet to be determined, but we are hopeful that it would be eligible.”

If New York is any indication, Beaver Valley might serve as a sweetener for Pennsylvania lawmakers to act quickly.

When New York was mulling a nuclear credit program, Exelon said it would buy the FitzPatrick nuclear plant from Entergy Corp. — which planned to shut it down — if emission credits were approved.

Nuclear vs. gas

The primary reason why nuclear is in trouble is cheap, plentiful natural gas.

Nuclear plants don’t ramp up or down with demand. They’re steady workhorses, running when it’s economical as well as when it isn’t and providing a backbone to the electric grid. In the U.S., about 20 percent of electricity comes from nuclear power.

In Pennsylvania, which ranks second in nuclear power production in the nation, it’s closer to 35 percent.

But the price of electricity is determined by a regional wholesale market each day. Power plants offer to produce power at various prices and their offers are accepted from the lowest to higher until the demand for electricity is met.

The price offered by the last plant in that line becomes the price for all plants called on to produce power.

More often than not, the price is set by a plant that runs on natural gas. As the price of that fuel has fallen over the past several years, the price of electricity on the grid has fallen as well.

That dynamic, along with regulatory costs and lower electricity demand overall, has hurt not only nuclear plants but coal plants as well.

Last month, FirstEnergy reported a $9.2 billion impairment of its competitive generation business, erasing all but $1.5 billion of the value of its three nuclear plants and many of its fossil fuel assets. The debt associated with these plants far exceeds their current value, Mr. Jones said last month, so one of the options the company is exploring is bankruptcy protection.

The writeoff is the latest step in FirstEnergy’s strategy to untangle its business from unregulated generation and focus solely on utility and transmission businesses, which are supported by ratepayers. The company announced in November that it would seek to sell or close down its unregulated plants.

Exelon has not yet threatened to close any of its nuclear plants in Pennsylvania, but the company is gearing up for a campaign. That hasn’t gone unnoticed by interests in the natural gas industry who worry that a nuclear subsidy would disadvantage the proliferation of natural gas power plants being built.

Read full article at PowerSource