A damaged nuclear plant in Florida that spurred a boardroom coup at Duke Energy Corp in July is at risk of being scrapped unless the power company can justify spending more than US$1.3 billion on the costliest-ever US atomic repair.
Duke’s decision, a signpost for utilities from Japan to Belgium which are considering shuttering reactors, hinges on natural gas. Near-record low prices in the US make new gas-fired generation look more economical than fixing the 35-year-old Crystal River Unit 3 Station. The question for Duke, the biggest US power company, is whether to bet that gas will stay this low in the decades to come.
“If you close that plant down I will have a concern about the dependence on natural gas,” J.R. Kelly, Florida’s Public Counsel, said in a phone interview.
He sees the reactor that has been out of service since 2009 being replaced by gas-fired generation.
“That’s what they will build. They’ll have to,” Kelly said.
Volatile fuel prices and increased safety concerns after last year’s meltdown of reactors in Fukushima, Japan, are pushing utilities to reconsider new construction, major repairs and license extensions. Nuclear power provides almost 20 percent of US energy supplies.
Duke’s board ousted then-chief executive officer Bill Johnson hours after acquiring his former company, Progress Energy Inc, and after expressing concern he was prejudiced toward repairing the reactor, dubbed “Humpty Dumpty” for its cracked concrete shell.
The dispute underscores the stakes for US power companies weighing nuclear investments against falling power prices and risks that plants will not be relicensed or may close prematurely. Regulators have not approved Duke’s plans to pass repair expenses on to clients and decommissioning costs have not been tallied.
Edison International faces a similar decision with its 30-year-old San Onofre atomic station near Los Angeles closed since January because of leaks and unusual wear to its steam generators.
The surplus of gas-fired plants in the western US weakens the case for repairing San Onofre’s twin reactors.
“The argument that ratepayers need to keep supporting Grandma lasts for about 15 seconds,” John Geesman, a former California energy commissioner, said in a phone interview.
He serves as outside counsel for the Alliance for Nuclear Responsibility, which lobbied the state to keep that plant idle.
For Florida regulators and consumers, the costs to fix Duke’s reactor may be dwarfed by the risk of becoming dependent on a fuel where prices have swung from less than US$2 to almost US$15 per million British thermal units and then back to US$2 in the past 11 years.
Gas fueled 62 percent of Florida’s electricity generation last year, up from 31 percent 10 years ago, the US Energy Department said on its Web site.
Officials in Omaha, Nebraska, opted to repair the fire and flood-damaged Fort Calhoun Station, a nuclear plant owned by the municipality, to avoid becoming overly dependent on one fuel.
“We have seen coal go up, natural gas go up,” said Jeff Hanson, spokesman for the plant’s owner, the Omaha Public Power District. “Uranium stays somewhat stable,” he said of the fuel used to derive nuclear power.
Deciding whether to shutter a large power plant is not easy for Duke, based in Charlotte, North Carolina, or for Edison of Rosemead, California, and other owners of regulated US utilities.