NUCLEAR POWER:

Legacy of Fukushima could be costly plant closures in U.S.

This story was updated at 1:36 p.m. EDT with comment from Dominion.

At a time when the domestic nuclear industry is facing a fragile resurgence and exceedingly stiff competition from cheap gas, some experts say new costs associated with the nuclear disaster that erupted in Japan two years ago today could play into financial decisions to shutter some older reactors in the United States.

"There are some plants out there, when you look at the costs for regulations, it's questionable," said Don Jernigan, the Tennessee Valley Authority's senior vice president for nuclear power generation, during an interview at a Platts energy conference in Washington, D.C., last month.

Jernigan, a naval submariner, has more than three decades of experience in the nuclear industry. He joined TVA in 2008 and oversaw operations at the authority's Browns Ferry, Sequoyah and Watts Bar nuclear sites. Before joining TVA, he served in high-ranking positions at nuclear plants owned by Dominion Resources Inc., Florida Power & Light Co. and Entergy Corp.

Jernigan pointed to a handful of older, single-unit U.S. reactors that are "on the bubble" financially and said the weight of extra regulatory costs tied to the March 11, 2011, earthquake and tsunami that crippled three reactors on Japan's northeastern coast could push them over the edge.

"When you get a smaller piece of the pie to reinvest because you're addressing a security rulemaking or those types of things, it tends to catch up," he said.

The Nuclear Regulatory Commission began ramping up inspections and safety checks at U.S. reactors two years ago to thwart extraordinary disasters -- floods, earthquakes, explosions and terrorist attacks --- that could threaten reactors or spent fuel pools with a critical loss of power and cooling water. Regulatory oversight of the facilities also spiked after the Sept. 11, 2001, terrorist attacks, and the partial meltdown at Three Mile Island in Pennsylvania in 1979.

On Friday, Senate Environment and Public Works Chairwoman Barbara Boxer (D-Calif.) asked NRC Chairwoman Allison Macfarlane for a full report on the agency's progress and said her committee would hold a hearing on the issue.

The industry is already spending about $40 million to secure emergency equipment -- more than 1,500 diesel generators, pumps and satellite phones -- at hubs in Memphis, Tenn., and Phoenix, Joseph Pollock, the Nuclear Energy Institute's vice president for nuclear operations, told reporters last week.

Just how heavy those new requirements are weighing on the industry remains unclear.

One industry source pointed to Richmond, Va.-based Dominion's decision last year to shut down and decommission the Kewaunee Power Station near Green Bay, Wis., which the company said was based purely on economics (Greenwire, Oct. 22, 2012).

The cost to retrofit the plant's equipment to comply with new NRC rules stemming from the Japanese accident was the "icing on the cake" that cemented Dominion's decision to close that plant, the source said. Although Dominion has cited an unfavorable market and power purchase agreement, as well as cheap gas, the source said new regulatory costs tied to the Japanese disaster "just really sealed the deal."

But Richard Zuercher, a spokesman for Dominion, said the decision was solely based on the fact that the plant couldn't compete with a surge of cheap gas and inexpensive coal from the Powder River Basin. Dominion did not want to reduce staff at the plant to make it more economical because it wasn't in the interest of safety, he added. "You can't mothball a nuclear station and bring it back up when market conditions change. It requires a lot of training; you have to keep your staff," he said. "This is not Fukushima related."

Other experts said post-Fukushima Daiichi costs could weigh heavily on the operators of smaller reactors.

What may prove to be the costliest safety upgrade could be required at a third of the nation's 103 operating reactors: to install equipment called "filtered vents."

NRC's five commissioners are expected to vote soon on a staff proposal requiring nuclear companies to spend tens of millions of dollars to install filtered vents, which would allow operators to release steam and pressure from a damaged nuclear power plant while using filters to better protect the public and workers from radiation (Greenwire, Nov. 2, 2012).

NEI's Pollock said the rule, which NEI opposes and has sparked debate on Capitol Hill, could potentially be the costliest post-Fukushima reform because it "lacks the clearest definition."

That requirement could be especially difficult for Entergy's Pilgrim plant in Massachusetts, industry sources said. When asked about it, Entergy spokesman Jim Steets said the company "considers individual plant finances to be a proprietary matter."

Mark Cooper, a senior fellow at Vermont Law School's Institute for Energy and the Environment, said the underlying economics of older, smaller plants are no longer sound, which can make the burden of installing multimillion-dollar filtered vent systems more problematic. Other nuclear facilities, like the San Onofre plant in California, will close because they break, while units like Dominion's Kewaunee will shutter because they are no longer economical, he added.

"Yes, there are a bunch of reactors that could close. Fifty to 60 million [dollars] becomes a big deal when the economics of old reactors have deteriorated," he said. "They're gonna break; when they break, they're difficult to fix."

Lake Barrett, a former Department of Energy official and nuclear consultant, said smaller, older nuclear plants are most vulnerable when it comes to bearing the financial burdens of safety upgrades but added that any decision to close depends on the other economic factors at play in the regional energy markets, the cost of gas and what types of design changes may be required.

Barrett rejected the notion that nuclear companies are trying to fight NRC regulations because they're too costly. And although public fear has spiked in the wake of Fukushima, nuclear power is critical to generating the nation's power and combating climate change, he said.

"For those who believe that these [plants] are cash cows and the utility companies are just crying wolf because they want more of a profit, that's wrong," Barrett said. "Society, in my view, is completely distorted about nuclear power, and so afraid about the risk that we force upon ourselves real impacts, be it shutting down reactors or whatever it is."