NEI's Fertel says imminent state, federal policy changes could keep existing plants open

As utilities continue to shut down existing nuclear facilities due to a range of concerns including economic viability, state and federal regulations, and market dynamics, could imminent policy changes help remaining facilities stay viable? During today's OnPoint, Marv Fertel, president of the Nuclear Energy Institute, discusses the future of existing and new nuclear and the policy prescriptions required for each to maintain relevance in the market.


Monica Trauzzi: Hello, and welcome to OnPoint. I'm Monica Trauzzi. With me today is Marv Fertel, president of the Nuclear Energy Institute. Marv, it's always nice to have you on the show.

Marv Fertel: Always nice to be here, Monica. Thanks for the invite.

Monica Trauzzi: Marv, this week, Energy Secretary Moniz will be convening a summit focused on the future of existing nuclear. It's an interesting conversation at a time when we see many utilities shutting down existing nuclear facilities. What is the prescription for saving existing nuclear?

Marv Fertel: Well, one, we want to thank the secretary for holding this summit. He -- they did -- the administration did hold an earlier summit this year which looked forward towards advanced nuclear and what we're doing there, so we think the future looks actually very good for nuclear, but we're very concerned about the present. And to your question on the prescription, first of all, we think that what's going on in New York with Governor Cuomo looking at a clean energy standard is a very, very good and appropriate idea. We certainly hope that in Illinois the Legislature can act on the bill that was introduced by Exelon, environmental groups and consumers which would create a zero emissions standard as well as other things for that state to help save both ... and Clinton. And to be honest, we've love to see FERC have a greater sense of urgency in what they're doing in price formation and other things that they're looking at.

Monica Trauzzi: We hear, though, from utilities that nuclear isn't economically viable and that paired with new regulations, it just can't compete with natural gas. So it seems that the market is sort of moving away, not moving in nuclear's direction. So how effective will any type of government intervention be, whether it be on the state or federal level, if the market is not going in that direction?

Marv Fertel: I'd have two points I'd make on your comment, Monica, on what some of the utility guys are saying. Nuclear -- nothing's really very competitive with $1 gas from ... or $2 gas in general, but it won't stay there. Now, we don't expect it's going to go to $10, but it will get to $4, maybe $5 over time. The nuclear plants we're talking about are producing electricity at 3.5 cents a kilowatt-hour. No one in their right mind would believe that a 3.5-cent-per-kilowatt-hour plan is not competitive. We are not being rewarded monetarily or any other way, for that matter, for the attributes that we bring. No emissions. We get nothing. Renewables get a lot. We provide stability to the grid. We are base load, which is being lost when people think about it. So from a reliability standpoint, from a clean air standpoint, and something that may be hard for, you know, the feds to do, but the states out to think about the thousands of jobs that are involved, the tax base that these plants provide, and to be honest, the long-term diversity it provides for them to be able to actually meet the Clean Power Plan and the reliability on the system. So I think that if, one, the plants are really pretty economic and, two, the reason they're in trouble is that the markets are somewhat dysfunctional. Gas prices are unbelievably low, and we don't get the value for the attributes that the plants provide.

Monica Trauzzi: So if you -- you think that if those things evened out, we could see utilities keeping these facilities open? The facilities that are left?

Marv Fertel: Yeah. Yeah, we -- I think that would be -- absolutely be the case. And to be honest, we have 99 plants right now. We think that, right now, if things don't change, we have somewhere between 10 and 20 plants at risk. I have no intention of us losing those plants, certainly not all of them, but even if we were down to 89 plants or 80, we'd still have the largest program in the world.

Monica Trauzzi: That's an interesting point. If the Clean Power Plan does not survive court challenges, what do you believe that would mean for nuclear and its future?

Marv Fertel: Actually, we don't see tremendous value from the Clean Power Plan for our existing plants. Obviously it helps new plants, but it doesn't do a lot for our existing plants. We think eventually our country, whether it's the Clean Power Plan or some derivative of it, is going to deal with carbon in some way. Maybe it's all at the state level as they're doing things with clean energy standards and things like that. So we see for the long term carbon being a positive from our country's standpoint and a positive for nuclear, though in the near term, it's not necessarily helping us unless it's done at the states.

Monica Trauzzi: So on new nuclear, there's legislation moving in both chambers this week. The legislation is focused on spurring innovation for new nuclear reactors. Is that really where the game is, in new nuclear, and is that sort of where the focus needs to be for the industry?

Marv Fertel: I think that when we think about it, we're looking at the existing plants are the backbone of basically our non-emitting -- 63 percent of our non-emitting source. It's really important reliably. We are looking at second license renewal. So we see the existing plants still playing a very important role in our country, but everybody's excited about what's going on in new plants, both small modular reactors. The advanced light water reactors that we're building in Georgia and South Carolina. I think Watts Bar is going to start up soon, and that's going to be good in Tennessee. And then the non-light water reactors, which these bills are really looking at, I think it would be absolutely great. We think we have tremendous bipartisan support in the House and the Senate for the bills. I think it'd be wonderful for it to get to President Obama's desk for him to sign nuclear legislation before he leaves office.

Monica Trauzzi: So you'll be retiring from NEI at the end of the year. With about six months to go, what are your sort of final goals for NEI?

Marv Fertel: Well, obviously one of the biggest things is what we're doing with the summit this week. What can we do to minimize the loss of really good plants? To be honest, we're also looking a lot at what we can do to set up the regulatory framework for new plants in our country, and we have an awful lot going on trying to make sure we can sell overseas into where the markets are growing to not only help our companies here but also to rebuild the supply chain infrastructure. So there's a lot going on. I'm not sure I'll finish it all, but I know the people at the organization will do a great job when I'm gone.

Monica Trauzzi: All right, we're going to end it right there. Thanks for coming on the show. Nice to see you.

Marv Fertel: Thank you for the invite.

Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.

[End of Audio]



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