Are changes to how existing and new nuclear are treated in the final Clean Power Plan a win for the industry? During today's OnPoint, Marv Fertel, president of the Nuclear Energy Institute, discusses the impacts of U.S. EPA's action on nuclear and explains what the agency missed in the rule with respect to his industry.
Monica Trauzzi: Hello, and welcome to OnPoint. I'm Monica Trauzzi. With me today is Marv Fertel, president of the Nuclear Energy Institute. Marv, nice to have you back on the show.
Marv Fertel: Thanks for having me, Monica. Nice to be here.
Monica Trauzzi: Marv, a shift on how nuclear is treated in the final Clean Power Plan. Is it a win overall for your industry?
Marv Fertel: Yes, we believe it is. We believe that the new Clean Power Plan actually recognizes the power of nuclear much better than the proposed plan. We're obviously still reviewing it. We're not through it all, but on just a few points. First of all, they took our recommendation of those of our companies and others to treat new nuclear plants like Vogtle and Summer and Watts Bar, and new uprates post-2012 not in rate setting, but certainly in compliance, and we think that was the right thing to do and we're really pleased. We also believe that by going to a mass-based regime, which they are encouraging and seems to be cheaper from a compliance standpoint, at least according to their numbers, that will also help recognize the value of nuclear much better, something that we've been arguing for for years about getting better appreciation and understanding for the value of nuclear. So we see real progress there. We think that dropping the 6 percent, which never made any sense, makes sense. So that was good. We probably are continuing to try to understand on the issue of like license renewal, which we don't think they wanted to do, whether we did a good enough job in educating them on the business decisions, the regulatory reviews and particularly the costs involved in making those decisions.
Monica Trauzzi: So what did they miss? I mean, would it just be that last point?
Marv Fertel: I think so. I think that they don't appreciate -- maybe didn't appreciate, and again, we would take some responsibility for that, that it's a pretty expensive endeavor from a capital expenditure thing to renew a license from 60 to 80, and it is a major business decision.
Monica Trauzzi: What does the Clean Power Plan tell you about the way this administration views nuclear overall as a part of the U.S. energy strategy?
Marv Fertel: Well, actually, one of the things in the Clean Power Plan that we were encouraged by was the recognition in it explicitly by EPA that nuclear energy and renewables have the same value. And we've always felt that way. In fact, to be honest with you, we feel we actually have maybe more value. Not that renewables are bad, but we're there 24-7 and they're not. So we've always said we should be getting more value and more recognition, and we were real pleased to see that, and I think that also the emphasis on mass-based, we think shows that they're appreciating that all low-carbon sources are really very important.
Monica Trauzzi: But there's also this emphasis on renewable energy like wind and solar. There's this Clean Energy Incentive Program. Do you think that sort of that overall push could drive some utilities away from continuing with nuclear investments and more towards renewables?
Marv Fertel: Well, I think the administration has been very high on renewables all along, so I think the companies are making their decisions, looking at the bigger picture of what they need for their particular customer base as opposed to maybe what the administration may be telling them. I think that we would look at the way they treated renewables in that 2021 and 2022 time frame and maybe think about whether you should have treated uprates similar. But we haven't gotten that deep into it yet, Monica, to know whether that makes any sense.
Monica Trauzzi: So there are some states and utilities that are grappling with the challenges of expensive nuclear facilities and whether to keep them operational. How does this plan fit into those scenarios and affect those states and utilities?
Marv Fertel: Well, I think -- well, first of all, one of the things we need to remember is that if it goes forward and doesn't run into lots of litigation, it's still a number of years away before you're really implementing. So we've got a period where you know what's coming but you're not there yet, and knowing what's coming can be very helpful. If you go mass-based, it has, I think, a positive impact on even some of our plants at risk because what's going to happen is you're going to have a trading program which is going to result in some "cost" to our fossil competition, which will drive a bit on market prices, which may help some of our plants that are at risk in those competitive markets.
Monica Trauzzi: So how much uncertainty currently exists because of that potential for legal challenges, the possibility that the rule could be struck down fully or partially? How much uncertainty exists in the industry?
Marv Fertel: Well, I would assume in the utility industry, all of our companies are reviewing it from every aspect possible, as are their states. So there's going to be significant uncertainty, at least till they get through it and see what parts of it are implementable and which parts are going to be challenged. So there clearly is uncertainty for some period of time, but again, you know, you deal with uncertainty in business all the time, and this'll be just another dimension that the companies will deal with, and they've managed, Monica, from my perspective, to keep the lights on really well, so I'm sure they'll continue to keep the lights on and be a reliable supplier to customers in America.
Monica Trauzzi: All right, we'll end it right there. Thank you for coming on the show.
Marv Fertel: Pleasure. Thank you.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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