By Russell Gold and Cassandra Sweet
Utilities are closing U.S. nuclear-power plants at a rapid clip
as they face competition from cheaper sources of electricity and
political pressure from critics.
New York's Indian Point plant about 35 miles north of Manhattan,
a major source of power for the city and its surrounding suburbs,
looks to be the latest casualty. Owner Entergy Corp. and New York
Gov. Andrew Cuomo, who has long criticized the plant as a safety
threat, are expected to announce a deal this week to close it, say
people familiar with the matter.
Its closure would bring the tally of plants set to close by 2025
to four, including PG&E Corp.'s Diablo Canyon plant in
California and Entergy's Palisades unit in Michigan. Four others
have already closed in the past four years, including Dominion
Resources Inc.'s Kewaunee plant in Wisconsin.
The retirements are poised to leave 61 nuclear plants in the
U.S. by the middle of the next decade. That includes two facilities
that are building new reactors. A small number of nuclear plants
have closed in the past due to safety or the need for expensive
repairs. What's new is the number of plants closing that are
licensed and operational, but no longer profitable in competitive
markets.
Nuclear plants everywhere are facing a powerful economic foe:
fracking. The extraction technique has unlocked vast amounts of
natural gas, making generating electricity from that fuel much less
expensive and lowering power prices across the country.
Nuclear plants generated 20% of U.S. power in the past 12
months, following natural gas at 35% and coal at 30%, according to
federal energy data. The balance was 7% hydro, 6% wind and 1%
solar.
The increasingly poor economics of nuclear power have led
nuclear plant operators in New York, Illinois and elsewhere to seek
new state subsidies to keep the plants operating. The owners argue
that they create high-paying jobs in rural areas, and are critical
tools to combat air pollution and climate change because they
produce emissions-free electricity.
Lawmakers in Connecticut, Ohio and Pennsylvania are expected to
face tough choices in the next couple of years: Approve rate
increases or other changes to bolster the finances of nuclear
plants, or prepare for them to close.
Exelon Corp., the nation's largest nuclear-power plant operator,
has succeeded in persuading states to provide new financial
incentives to keep its nuclear-power plants open.
Last month, Illinois lawmakers voted to allow Exelon to collect
up to $235 million annually from customers in exchange for keeping
two nuclear-power plants open. Earlier in 2016, the New York Public
Service Commission agreed to pay as much as $480 million annually
to keep three upstate nuclear plants open. Exelon operates two of
the three, and has a deal to purchase the third from Entergy,
pending federal approval.
Joe Dominguez, Exelon's executive vice president for public
policy, said states were paying for clean electricity, similar to
how the federal government subsidizes wind and solar energy.
Nuclear power "is the cheapest and most reliable zero-carbon
resource," he said.
FirstEnergy Corp. said recently it could close three plants in
Ohio and Pennsylvania if it couldn't arrange better compensation
for the power they provide. A FirstEnergy spokeswoman said the
company had watched the Illinois legislation closely and hoped to
negotiate something similar.
Kristine Hartman, who tracks energy laws for the National
Conference of State Legislatures, said she expects Arizona, New
Jersey and New Mexico to consider modifying laws that encourage
wind and solar to include nuclear as a power source free of
greenhouse-gas emissions.
Without additional support, "you will continue to see plants
that are challenged," said Maria G. Korsnick, the president and
chief executive of the Nuclear Energy Institute, an industry
advocacy group.
An analysis by the U.S. Energy Information Administration found
that when nuclear plants were closed, states increased their use of
natural gas and coal to generate power.
Jessica Lovering, director of the energy program at the
Breakthrough Institute, an environmental think tank, said a modern
gas plant can have just a dozen employees, while nuclear plants
need upward of 1,000.
But those large workforces are proving to be a political selling
point as owners argue to state legislators that nuclear-power
plants have great economic importance in rural areas. All five
nuclear-power plants receiving new subsidies in Illinois and New
York are located in rural areas.
Still, the deals have been controversial. "I am pronuclear
power, but I am not pro-bailing nuclear out," said Jeanne Ives, a
Republican state representative from Wheaton, Ill.
In New York, the deal brokered by Mr. Cuomo, a Democrat, to keep
three upstate nuclear-power plants alive has been met by protests
against what activists claim is a nuclear tax.
The new subsidies have also riled up independent power
producers, which claim that nuclear operators are being given an
unfair advantage.
Dynegy Inc. and NRG Energy Inc., which operate coal- and
natural-gas-fired power plants, are suing New York regulators to
reverse their decision to provide what they estimate could be more
than $7 billion in subsidies to nuclear plants.
Bob Flexon, chief executive of Houston-based Dynegy, said he
hopes the Trump administration will set a national energy policy
that allows for a level playing field.
"Someone needs to let them know that you're killing coal if you
throw billion-dollar subsidies to nuclear," Mr. Flexon said.
--Mike Vilensky contributed to this article.
Write to Russell Gold at russell.gold@wsj.com and Cassandra
Sweet at cassandra.sweet@wsj.com
(END) Dow Jones Newswires
January 09, 2017 05:44 ET (10:44 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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