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EPA proposal dashed hopes of struggling nuclear operators

Rocked by waning demand and rising use of cheap natural gas for power generation, U.S. nuclear companies were tossed a possible lifeline last year by a top Department of Energy official.

Pete Lyons, DOE's assistant secretary for nuclear energy, warned a Washington, D.C., energy conference that a flurry of premature reactor closures -- a loss of carbon-free power -- could undermine U.S. efforts to curb emissions of heat-trapping greenhouse gases.

But nuclear proponents are having a difficult time squaring Lyons' comments with how U.S. EPA treats nuclear power under its proposed regulations for slashing power plants' carbon emissions under its Clean Power Plan.

"I think that the EPA had what I call an 'oh, crap' moment. I'm pretty confident nuclear was not on their radar ... and all of a sudden, they realized that Pete Lyons was right," Greg White, a Democratic member of the Michigan Public Service Commission, told the annual Platts conference in Washington, D.C., yesterday. "[EPA], I think, scrambled to come up with some kind of provisions. ... They clearly missed the mark."

Nuclear executives, trade groups and states building new reactors have criticized the EPA proposal for building 6 percent of nuclear generation into a state's emissions target. EPA only gives a state that much credit for preserving its existing nuclear capacity, but 100 percent of a state's renewable resources count toward the rule's target -- which nuclear advocates have said creates an imbalance between the two sectors (Greenwire, Dec. 1, 2014).

Another industry concern is that the draft rule assumes new projects that are underway will go forward -- baking those reductions into state targets where nuclear construction is happening. Those states all have new nuclear facilities under construction and face tougher standards than are assigned to other states in their region.

EPA is weighing industry concerns, but the agency has made clear it's not responsible for crafting energy policy.

EPA Administrator Gina McCarthy told the National Association of Regulatory Utility Commissioners (NARUC) winter meeting this week that her agency is looking for opportunities to cut emissions while allowing fuel types to compete. The agency never intended to exclude nuclear but instead tried to send the signal that reactors are a critical and viable energy source and must be replaced with baseload capacity if they close, she said.

"But EPA is not going to tip our hand on that scale," McCarthy said. "That is not my job. My job is to look at carbon pollution and leave all options on the table."

Nanette Edwards, deputy executive director of the South Carolina Office of Regulatory Staff, said the Palmetto State's 2030 goal of reducing emissions by 51 percent from 2012 levels is made tougher by EPA's treatment of nuclear. SCANA Corp. is building two of the country's first new reactors in decades at the V.C. Summer plant near Jenkinsville, S.C.

"The reason we have that goal is because of the way the proposed rule treats nuclear. ... We've got seven operating units in South Carolina, existing nuclear. We have a huge investment in both existing nuclear and two units under construction," Edwards said. "From our perspective, this idea that you would count in the proposed emission rate goal units that are not yet up and running ... that really doesn't make logical sense to us."

Craig Piercy, the Washington representative of the American Nuclear Society, said his group rarely gets involved in federal issues but made an exception for the Clean Power Plan. The proposal, he said, is "divorced from the reality of carbon reduction as it relates to nuclear," and ANS asked EPA that nuclear power be treated equally with other nonemitting sources like wind and solar.

Without federal support, some nuclear proponents are looking to states' clean energy standards for help. Exelon Corp., for example, is focused on Illinois possibly extending its renewable energy standard to a "clean" standard to include nuclear power.

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But Piercy noted that more than a dozen states ban construction of nuclear power plants for various reasons. No states, he said, have renewable energy portfolio standards that encompass nuclear power.

"Well, technically there is one," Piercy said. "Ohio's clean energy standard includes advanced nuclear. Unfortunately, they suspended their standard last year, so there are none now."

Michigan is updating its clean energy laws, and White said they could encompass nuclear. But he said it's ultimately up to the federal government to fix what he sees as a wholesale market challenge. White said he'd like to see EPA address at-risk nuclear plants in its climate rule and for the Federal Energy Regulatory Commission to ensure markets support baseload nuclear plants struggling to compete with natural gas.

"I don't know what I can do as a retail regulator to address what I see as a wholesale issue," White said.

'Life after 60'

Amid debates over the EPA proposal, the nuclear industry is girding for the difficult task of shoring up public and regulatory support to either expand its footprint or ensure aging reactors can operate beyond 60 years. Industry officials warn that plants are currently slated to close in the 2040s, possibly jeopardizing the nation's greenhouse gas reductions.

Bill Pitesa, Duke Energy Corp.'s senior vice president and chief nuclear officer, said utilities are discussing which plants will first seek approval from the Nuclear Regulatory Commission for "life after 60." They hope to have an application prepared by 2018, and a way to relicense plants for eight decades by the 2020s.

The NRC currently licenses plants for up to 40 years and has allowed 20-year extensions for almost three-quarters of the country's approximately 100 reactors.

Nuclear operators in competitive markets are looking to grid operators and federal regulators to thwart the premature closure of plants.

PJM Interconnection last year submitted a capacity performance proposal to FERC, which as drafted could also benefit nuclear plants. The commission is expected to issue a ruling on the proposal by April 1.

In regulated markets, the EPA rule is more of a focus. Edwards said the South Carolina Public Service Commission is listening to concerns about the rule and meeting with those who might make changes to credit nuclear.

But nuclear power has also become a polarizing issue and a matter of public perception.

Pitesa said communities near nuclear plants are usually supportive of them, but opposition crops up in national debates.

"I look back at my 35-year career at Duke, I think as an industry we've not done as much as we could to advertise the benefits of nuclear power," he said.

Pitesa said the U.S. nuclear industry is now backing the Nuclear Matters campaign that Exelon launched -- featuring President Obama's former climate adviser Carol Browner -- to promote the clean, baseload attributes of nuclear power. The industry estimates the current fleet of reactors avoids 600 million metric tons of carbon dioxide each year, equivalent to removing 113 million cars from the road.

Green groups in the United States have maintained their opposition to nuclear power -- even after the Intergovernmental Panel on Climate Change's fifth assessment report last year found limiting greenhouse gas emissions to around 450 parts per million would require tripling or even quadrupling zero- and low-carbon energy sources by 2050 (Greenwire, April 17, 2014).

But Pitesa said he hopes Nuclear Matters can help address that opposition.

"I hope that becomes an arm by which we can do a better job of educating the citizens and ... help people recognize that nuclear power has so many benefits, because unfortunately, too many people associate nuclear power with Chernobyl, Three Mile Island, Fukushima," he said. "I've been to all three of those locations, and ultimately, nuclear power gone bad is a very bad day."

Reporter Jean Chemnick contributed.

Twitter: @HMNorthey | Email: hnorthey@eenews.net

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