Revisiting the pawn/toast prognostication as more reactors close

Another one bites the dust: New York's Fitzpatrick reactor will close permanently next year.

Another one bites the dust: New York’s Fukushima-clone Fitzpatrick reactor will close permanently next year.

In mid-September, I wrote a piece delving into prognostication–always a dangerous endeavor–identifying (with tongue slightly in cheek) the nation’s most troubled nuclear reactors and dividing them into two piles: pawn or toast. Toast was those reactors most likely to shut down; pawn indicated that while on the precipice, the utilities would go to great lengths to avoid shutting them down.

Only six weeks or so later, enough has happened to revisit that list and see how we’ve done.

I wrote then that Entergy’s Fitzpatrick reactor was toast. Yesterday, Entergy announced that Fitzpatrick will close permanently at the end of its current fuel cycle–sometime toward the end of next year. Pretty good prediction, though I wrote that Entergy wouldn’t make the announcement until December. As it turns out, the reactor is losing so much money that Entergy couldn’t wait to end its misery.

And I wrote that Pilgrim, which Entergy announced last month will close by 2019, and probably in 2017 or even earlier, was a pawn. Oops. But I also wrote, “Entergy probably wouldn’t survive as a company if it had to close Pilgrim, Fitzpatrick and Indian Point, so it will fight mightily to keep at least two of those sites open. Of course, who cares if Entergy survives?” Entergy, of course, cares whether Entergy survives, and it’s now placing all of its bets on keeping Indian Point open despite a growing grassroots campaign against it and New York Governor Andrew Cuomo’s insistence that it close.

The alternative for Entergy is to get out of the Northeast entirely and concentrate on its southern presence, which consists of badly-maintained and operated reactors like Arkansas One, which is at the very bottom of the NRC’s worst reactors list. Recognizing that its entree into the Northeast has been an abject failure would be a good move for Entergy, whose roots are in the South anyway: Entergy was born from Middle South Utilities, which operated in Mississippi, Louisiana and Arkansas; its expansion came by buying up obsolete reactors, like Pilgrim and Vermont Yankee, at a discount, and running them as cheaply as possible for as long as possible.

Despite the fact that Indian Point is, for now, a cash cow for Entergy, the handwriting is on the wall. A smart company would be trying to figure out what kind of concessions it could get from the state to go ahead and close Indian Point. Given how badly Gov. Cuomo wants it shut, those concessions could be substantial. And making some kind of deal now would allow Entergy to at least get something out of its New York adventure, and return to its base with something in its pocket.

Gov. Cuomo has said that his opposition to Indian Point doesn’t extend to Fitzpatrick, and has made some crocodile tears statements that Entergy shouldn’t close that reactor and lay off all those people. The reality however is that Entergy has been looking for a deal to keep Fitzpatrick open (at above-market electricity rates, of course) for some time now. If Cuomo had really wanted to keep it open, he already would have made that deal.

New York Senator Charles Schumer, who really should know better, also has expressed his anger about the Fitzpatrick shutdown.  “I intend to tell him [Entergy’s CEO] how furious I am about the callous closing of this plant,” he said. As long as he keeps it to that phone call, Schumer’s meddling shouldn’t be a problem. And hopefully he didn’t really mean it when he said, “I will do everything I can at the federal, state and local level to prevent this closure.” Fortunately, there isn’t much that a U.S. senator can do in this instance, but Schumer should probably wake up and realize that far more people in New York want to see Fitzpatrick, and all other New York reactors, closed than kept open–especially if keeping them open means higher electricity rates.

In fact, as NIRS and AGREE pointed out in a report just last week, closing Fitzpatrick will open up new markets for clean energy and, with a responsible jobs transition program in place, will prove to be a net economic benefit in the region.  That’s the kind of thing politicians like Schumer should be working for: establishment of just such a transition program.

Over at Exelon, I wrote in that article that its Clinton and Ginna reactors were toast. For Clinton, I wrote “Expect a shutdown announcement within a year.” About Ginna, I wrote: “Ginna will close, probably by mid-2017–although that’s several years beyond its original design life.”

Well, the Clinton announcement came, but it wasn’t shutdown, it was Exelon CEO Chris Crane saying he will keep Clinton going at least another year and see if he can still get some sort of bailout from the Illinois legislature before then. He could do that for two reasons: one, Clinton got a bit of a reprieve from the MISO grid it operates in, another form of bailout Exelon had been seeking. The other is that, follow me here, Crane is a lot like the New York Mets Matt Harvey, who pitched a great game through the eighth inning of Game 5 of the World Series last week, and then–bull-headed and egotistical as he is–insisted on going back out in the ninth inning instead of allowing the Mets’ world-class closer Jeurys Familia to do his normal ninth inning shutdown. Harvey promptly gave up a walk and a run-scoring double, leaving a guy on base for Familia, who normally comes in at the beginning of an inning with the bases empty–that’s a different kind of pitching. Another run scored, the game was tied, and Kansas City went on to win the game and the World Series.

When it comes to nuclear power, Crane takes the Matt Harvey approach. Where most other utility executives recognize that nuclear reactors are just one generation source of several possible, Crane is ideologically committed to nuclear power despite its miserable economics. Closing a reactor for Crane is like Harvey giving up that ninth inning to another pitcher; it’s something he refuses to do until forced to, despite the potential consequences to his company. In this case, when the decision comes around again next year, Clinton still won’t be economic, and Crane will be forced to close it–a year later than he should have.

As for Ginna, it’s still running, but a deal made at the New York PSC to keep it running for now (at well above market rates for its electricity) probably means that mid-2017 shutdown date is its future. But Crane will no doubt try to keep it running longer anyway.

That same kind of bull-headedness has been demonstrated in Washington DC in recent weeks. In late September, the DC Public Service Commission voted unanimously to reject the proposed takeover of the local utility Pepco by Exelon. Undeterred, Exelon ran to DC Mayor Muriel Bowser and offered some sweeteners to the deal to try to get her backing. Despite the fact that the sweeteners were actually pretty darned sour, Bowser bit and now supports the takeover. And Crane won the second round too, when the PSC voted to reconsider the application with the sweeteners, rather than force Exelon to submit a new application–which would have delayed the process for a year or so.

What Bowser, and several DC city council members who now support the deal, don’t understand is that the opposition to the takeover has never been about the exact terms of the merger. It’s been about Exelon itself, and the facts that a utility that is based on aging and expensive nuclear reactors, that is openly hostile to renewable energy, and that wants to take over Pepco only to move its steady revenues out of the DC area and into Exelon’s balance sheets to counteract the decline in those sheets due to its nuclear losses, is not the kind of utility that is going to lead DC into the era of clean renewable energy and energy efficiency that the city has long stated is its goal. Indeed, DC’s stated goal is to be the greenest city in the country; Exelon’s goal is to prop up its nuclear power losses. The two goals couldn’t be more fundamentally in conflict.

Whether the DC PSC truly understands that, or will bow to the increasing pressure Mayor Bowser and others (including hundreds of thousands of dollars in newspaper and radio ads from Exelon) are putting on it to accept the new terms won’t be known until the PSC actually issues a new decision.  That could come before the end of the year.

One guy who does get it, however, is Maryland Attorney General Brian Frosh, who recently filed a petition in circuit court to force the Maryland PSC to reconsider its 3-2 vote last summer in favor of the merger.  Frosh fears, with very good reason, that Exelon will set back the state’s efforts, which are embodied in state law, to build a more renewable energy system.

We’ll continue to revisit the toast/pawn list periodically as events warrant. The next reactor on the list to get a decision probably will be Davis-Besse. Its future hangs on a decision from Ohio regulators to FirstEnergy’s demand that the state guarantee above-market electricity rates for it and some coal plants. FirstEnergy is expecting a decision soon, possibly before the end of the month.

Michael Mariotte

November 3, 2015


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