By Michael Kuser
BOSTON — When Connecticut Consumer Counsel Elin Swanson Katz decided to support a controversial bill to provide state financial support for Dominion Energy’s Millstone nuclear plant, it strained relationships.
“In fact, some of our closest allies barely spoke to me during the [legislative] session,” she said.
Katz’s anecdote, related to an audience at the 154th New England Electricity Restructuring Roundtable on Friday, was one example of the schisms that have arisen in recent years as many former nuclear power opponents have traded their fear of meltdowns and nuclear waste for appreciation of the plants’ ability to produce large amounts of power with no carbon emissions.
Similarly, Katz and other consumer advocates have had to consider whether losing a plant such as Millstone would be more expensive to ratepayers than any subsidies that would ensure its continued operation.
Opening a panel discussion featuring partisans on all sides of the nuclear debate, moderator Jonathan Raab observed: “The environmental community, like the consumer advocacy community, is not of one mind on the role of nukes in our society.”
Low natural gas prices, flat demand growth and growing renewable generation have squeezed the finances of many nuclear plants, leading policymakers in New York and Illinois to approve subsidies in the form of zero-emission credits (ZECs). Officials in New Jersey, Ohio and other states are considering similar measures despite challenges to the Illinois and New York ZECs in court and before FERC. (See Exelon Encouraged by Perry’s Memo, Thinks ZECs Will Hold Up.)
Blind Markets
Matthew Crozat of the Nuclear Energy Institute told the audience that states are stepping in to save nuclear plants because wholesale electric markets have failed to price carbon emissions.
Crozat identified several plants that have closed or are slated for decommissioning by 2025. While some closed because of mechanical issues, “market forces claimed well operating plants,” Crozat said. “They just could not see a way to recover their costs in the future, and that includes Vermont Yankee here in New England.”
A combination of market forces and public policy pressures could result in the retirement of eight nuclear plants in the coming decade, for a total of about 12 GW of capacity, or some 60 million tons of CO2 avoided annually, Crozat said.
“When Vermont Yankee closed [in 2014], all of its generation was replaced by natural gas,” Crozat said. “This was not a surprise; it was the next available unit in the system. I think it was the first time in 15 years that carbon emissions from New England’s power sector had gone up, and we saw the same pattern in California as well” following the loss of San Onofre in 2013.
Controversy in Connecticut
Earlier this month, the Connecticut General Assembly failed to pass a bill, S.B. 106, that would have allowed the 2,111-MW Millstone plant to bid into the state procurement process.
Opponents of the bill said it represented a burden on state ratepayers and an unnecessary handout to a power plant that had not been proven to be unprofitable. John Shelk, CEO of the Electric Power Supply Association, who also spoke at the Roundtable, said Millstone is likely the most profitable nuclear plant on the East Coast. (See Millstone No Dead Weight for Dominion, Says Opponents’ Study.)
Katz, however, said she was concerned about what the loss of the plant — which produces half of the electricity consumed in the state — would mean to the ratepayers she represents. “It would have provided a potential opportunity, in my view, to save electric ratepayers money, and the procurement process would have allowed me to oppose a potential contract if it did not do so,” Katz told RTO Insider after the conference. “We did not think Millstone was at serious risk of closing, so we did not look at the proposed legislation through that lens.”
If Millstone retired, the region would undoubtedly have to secure new generating capacity, which would result in higher capacity costs, she said. “Connecticut and the region would presumably increase its reliance on natural gas and we would need more pipeline infrastructure to avoid infrastructure constraints. Connecticut, as you know, is at the end of the pipeline, and in cold winters that creates real problems for us.”
In addition, Millstone’s retirement “would likely see New England’s electric sector emissions increase by as much as 8 million tons, or approximately 27%,” Katz said. “Closure would make compliance with our state’s Global Warming Solutions Act challenging, as it requires that we must achieve greenhouse gas emissions 10% below 1990 levels by 2020 on an economy-wide basis.”
Not So Fast
In considering the future of nuclear power in New England, you couldn’t get more concise than a recent paper by the Rocky Mountain Institute titled “What the grid needs is a symphony, not a shouting match,” Shelk said.
“We are the lead plaintiff contesting the Illinois ZECs,” he said. “We’re also part of the litigation in New York, and we were working at the state level. … Why do we care? It’s very simple. These proposals single out nuclear, and only nuclear, for substantial state subsidies. It doesn’t extinguish the risk that nuclear plants face; it merely shifts it to the rest of us and our customers.”
EPSA has been joined in the Illinois litigation by PJM’s Independent Market Monitor, who has called ZECs a “contagion” that undermines the markets.
Shelk said that at current PJM prices of about $30/MWh, the Illinois ZECs are worth about $11.50/MWh.
“Those of us that are competing against each other, one set of competitors gets $30, and somebody else gets almost a 50% premium to the market,” he said. “And it’s unrelated to carbon. If we take steps to switch … from coal to gas or within gas to more efficient gas turbines — which are coming on the market very rapidly — we get zero for that attribute. And as you all know, a ton [of emissions] avoided is a ton avoided. So nuclear and only nuclear power, and only certain plants in PJM and New York, would get that additional price.”
Next Generation
Armond Cohen, executive director of the Clean Air Task Force, began his career as a lawyer fighting nuclear power, but he has now come to see the environmental value of nuclear power in improving air quality in New England.
“As you can see in the march towards a zero-carbon grid, nuclear contributes something … quite significant when compared to some of the other options,” Cohen said.
All the renewable energy being developed “adds up, but the point is, in scale, it’s still a little bit less than the existing nuclear,” he said. “And I’m not arguing this as an either/or; quite the contrary. I’m arguing that we should maintain the nuclear base and build on top of it. Over the longer term, the management of a very high weather-dependent system becomes complicated.”
Cohen said he has hopes for next-generation nuclear power technology, which promises to reduce costs by using coolants that remain stable at higher temperatures. He estimated costs can be achieved at about $40 to $60/MWh for the new designs.
“Those [new coolants] are things like molten salts to sodium helium and can operate at atmospheric pressure,” he said. “That reduces the need for pressurized containment, and that’s about two-thirds of the plant’s steel and concrete at Seabrook and Millstone. If you don’t have to keep water under very high pressure and containment, you vastly reduce the size and complexity of construction. That allows you to go to a factory production model with faster and more predictable completion times.”
Several developers in the U.S. have designs of next-generation nuclear power plants “at the paper stage” and foresee operational plants by 2030, Cohen said. He lamented that the U.S. has fallen behind China, which hopes to bring its first such plant online next year.
Restructuring Legalities
Ari Peskoe, senior fellow in electricity law at Harvard Law School, outlined the issues that contributed to the nuclear industry’s problems and the legal hurdles ZECs may have to clear.
“Restructuring removed generation from the rate base and severed the state’s planning authority, its environmental regulatory authority, from how the plant was actually going to earn its money,” Peskoe said. “That’s critical, because if at the end of the day the plant can’t earn its money, it’s not going to get built.”
Peskoe summarized three legal claims about ZECs at issue in federal court: That the states are regulating wholesale rates and thus intruding on FERC’s exclusive jurisdiction (field pre-emption); that they “stand as an obstacle” to FERC’s regulation of just and reasonable rates (conflict pre-emption); and that they favor in-state businesses in violation of the Constitution’s dormant Commerce Clause.
Rulings on the ZECs, Peskoe said, could have broader implications. “If ZECs are pre-empted, are [renewable portfolio standards] or the Regional Greenhouse Gas Initiative next?” And if a nuclear PPA is rejected, he asked, will Massachusetts’ procurements for hydro and offshore wind be at risk?