News reports circulated Friday that President-elect Donald Trump’s advisers are seeking help from the U.S. Department of Energy on ways they might stave off more premature closures of nuclear plants struggling because of intense competition from natural gas and renewable energy.
The move comes one day after another nuclear plant appears headed for premature closure because of failing economics. It might help FirstEnergy Corp.’s Beaver Valley plant near Pittsburgh, the company’s Davis-Besse nuclear plant in Ohio and DTE Energy’s Fermi 2 nuclear plant in Ohio remain in the mix, though.
Jennifer Young, FirstEnergy spokeswoman, said the utility welcomes the news of the Trump administration’s support.
“Despite their clear benefits, nuclear plants across the country are facing challenges driven by wholesale markets that do not recognize nuclear plants’ total value. We encourage and support policies that reflect and preserve the value nuclear units provide,” she said.
DTE did not respond to a request for comment about Fermi 2.
The Nuclear Energy Institute, the industry’s Washington-based lobbying arm, made reference to financial help the states of Illinois and New York recently made, which critics have labeled as bailouts that run counter to free market principles.
“Federal and state leaders must act urgently to preserve at-risk nuclear energy facilities, just like lawmakers and agency officials in Illinois and New York have done, to help achieve a stronger economy, cleaner air, and enhanced energy diversity and security,” Maria Korsnick, NEI chief operating officer, said.
The industry has called for nuclear’s attributes to be more recognized in the market now that the fracking boom has brought historically low natural gas prices and made it nearly impossible for nuclear to compete in 13 states with deregulated electricity markets.
On Thursday, New Orleans-based Entergy Corp. announced it will shut down the Palisades nuclear plant it owns and operates in southwestern Michigan’s Van Buren County, along the Lake Michigan shoreline, on Oct. 1, 2018. The decision was announced after the utility said it had reached an agreement with Michigan-based Consumers Energy to cut its power purchase agreement.
Entergy said its decision will save ratepayers as much as $172 million over four years, but will cost the west Michigan region about 600 jobs.
The Palisades site is the nation’s eighth in three years where a utility said it can no longer justify high operation costs.
In late October, Omaha Public Power announced it will soon close its Fort Calhoun nuclear plant.
Chicago-based Exelon, which owns the most nuclear plants, announced in June it will shut its single-unit and its twin-unit Quad Cities plants in Illinois in 2017 and 2018, respectively, because of poor economics.
FirstEnergy’s chief executive officer, Charles “Chuck” Jones, told analysts in November the utility giant is undertaking a 12-to-18-month “strategic review” of its competitive generation business that could lead to selling off as many as 13 power plants, including Davis-Besse and plants at its other two nuclear complexes. The latter are the Perry nuclear plant east of Cleveland, and the twin-reactor Beaver Valley nuclear complex west of Pittsburgh.
Though showing a profit for its third quarter, FirstEnergy lost millions of dollars during the first nine months of 2016 and expects to end the year with a loss as well.
“We are at a crossroads,” Mr. Jones said back then. “We have to make some tough decisions.”
In a highly contentious rate request argued for months before the Public Utilities Commission of Ohio, FirstEnergy originally sought a guaranteed cash flow of up to 15 years to ensure the viability of Davis-Besse and the utility’s massive coal-fired Sammis plant in southern Ohio.
The Federal Energy Regulatory Commission struck down a modified plan, then state regulators unanimously agreed to let FirstEnergy impose $132.5 million a year in new surcharges on its 1.9 million customers over the next three years. That comes to about $3 more a month for a typical residential customer. The deal is substantially less than FirstEnergy’s attempted compromise for an eight-year deal at $558 million per year for a total of $4.5 billion.
Critics have decried each proposal as a bailout, while the utility argued the money is necessary to help stabilize it.
The Block News Alliance consists of the Pittsburgh Post-Gazette and The Blade of Toledo, Ohio. Tom Henry is a reporter for The Blade.