Entergy to Shutter its Vermont Nuclear Plant
Competition from Natural Gas is a Key Factor
With its decision today to ditch its Vermont Yankee facility, Entergy Corp. will now join a growing list of utility companies that have made similar moves. The Entergy facility, which had just renewed its license two years ago, is citing low natural gas prices as a key factor.
The New Orleans-based utility is fourth in line. It has been preceded by Duke Energy, Dominion Resources and Southern California Edison. Duke and Edison closed their Florida and Southern California facilities, respectively, because of maintenance issues while Dominion shut down its Wisconsin unit because it could not compete with natural gas in today’s market.
Meanwhile, Duke also said it would not build two nuclear reactors north of Tampa, Florida, saying that the rising construction costs and delayed completion dates stand in the way. The plant was going to cost $24 billion while it was not scheduled to begin operations until 2024.
As far Entergy’s decision to close Vermont Yankee in Vernon, Vt., it said that the impact of the shale gas revolution has resulted in sustained low natural gas prices and wholesale energy prices. It also said that the cost structure of this single plant has been to high, saying that it has invested more than $400 million into the facility since 2002.
Finally, it said that the wholesale market design flaws continue to result in artificially low energy and capacity prices in that region. That is, nuclear power plants are not adequately compensated for the power that they sell. The plant will therefore officially close in 2014. In the meantime, Entergy says that it will be working with the Nuclear Regulatory Commission to decommission the facility in a process that will take decades.
“We are committed to the safe and reliable operation of Vermont Yankee until shutdown, followed by a safe, orderly and environmentally responsible decommissioning process," says Leo Denault, chief executive of Entergy. “Entergy remains committed to nuclear as an important long-term component of its generating portfolio. Nuclear energy is safe, reliable, carbon-free and contributes to supply diversity and energy security ....”
“Our nation's energy security, economy and environment all suffer when energy markets fail to value the attributes intrinsic to nuclear energy—namely clean energy with virtually no air emissions, continuous baseload generation that enhances electric grid reliability ... adds Marvin Fertel, chief executive of the Nuclear Energy Institute.
Rash of Setbacks
Beside the current closures and uprate cancelations, of which there are nine, 38 reactors in 23 states are also at risk of early retirements, with 12 of those facing the greatest risk of being shutdown, says Mark Cooper, senior fellow at the Institute for Energy and the Environment at Vermont Law School. Uprates are the increasing of a plant’s current output -- a phenomenon that has been put on hold because of current cheap natural gas prices.
The scholar also says that says that Exelon’s Clinton unit in Illinois and Entergy’s Indian Point in New York may go. Both companies have seen their stock prices suffer as a result of the present dynamics. He, furthermore, list at risk: TVA’s Browns Ferry in Alabama and FirstEnergy’s Davis-Besse in Ohio. Meantime, Cooper says that the industry also has killed at least five large planned uprate expansion projects: Prairie Island in Minnesota, LaSalle (2 reactors) in Illinois, and Limerick (2 reactors) in Pennsylvania.
That is putting pressure on the two utilities with active nuclear projects: SCANA Corp. has said that the completion date of its South Carolina-based project will be delayed. Southern Company, meanwhile, appears to be several months behind on its two new reactors. All those reactors should be on line by 2019. The partners involved in the Georgia project are getting an $8.3 billion federal loan guarantee but will also invest at least $6 billion on their own.
SCANA is not getting a nuclear loan guarantee. In both cases, though, ratepayers are helping to fund the plants through so-called advanced cost recovery mechanisms.
As for Georgia and South Carolina, Cooper says that ratepayers there must choose between eating money already spent or shelling out more funds -- perhaps as much as $20 billion -- to pay for an uneconomical power source.
“With little chance that the cost of new reactors will become competitive with low carbon alternatives in the time frame relevant for old reactor retirement decisions, we need to start preparing now for more early retirements or the threats of such retirements," says Cooper.
Nuclear energy in the United States has seen better days. Despite the rash of setbacks, however, it still has the potential to provide clean, reliable and safe power to the masses -- something that will first be tested overseas before it any real revival would happen in this country.