Questions cling to nuclear power

Questions cling to nuclear power

Apr 12 - Central Penn Business Journal

It took months to sort out what happened at Three Mile Island in the early morning of March 28, 1979. But it didn't take long to figure out what the partial meltdown at Unit 2 meant to the nuclear power industry.

Twenty-five years ago, David Schanzer was director of investor relations at Philadelphia Electric Co. On the morning of the accident, he was in New York listening to a speech by a top executive at Commonwealth Edison. The Illinois utility had been bullish on nuclear power.

"We all felt like the world had come to an end," said Schanzer, now an analyst with brokerage firm Janney Montgomery Scott in Philadelphia.

Yet, a quarter-century later, nuclear power is still breathing.

The nation's 103 nuclear plants are providing more power than ever to a country whose appetite for electricity has grown unabated. Nuclear energy provides about 21 percent of electric power in the United States, according to the U.S. Energy Information Administration.

There is even talk of building new nuclear generators. No new plants have been ordered since 1979.

At the same time, concerns that dogged nuclear power 25 years ago continue to haunt the industry. Plant safety and security top the list, particularly since the terrorist attacks of Sept. 11, 2001. Since then, state officials have periodically posted National Guard troops at the gates of nuclear plants and regulators have beefed up security requirements.

The question of nuclear waste also hangs over the industry. The nation has yet to decide how to dispose of the industry's radioactive leftovers, which continue to pile up at the plants themselves.

"These 103 sites were not designed to store radioactive waste indefinitely," said Eric Epstein, 44, chairman of Three Mile Island Alert, a Harrisburg-based watchdog group.

By 2005, nuclear plants are expected to house 52,000 metric tons of waste, up from 36,600 tons in 1997, according to the Nuclear Regulatory Commission, which oversees the industry.

Operators also must ensure adequate funding is available to clean up plants that close, a process known as decommissioning. In general, plant owners are doing OK, according to a report by the General Accounting Office, a federal agency. But individual plants, including Unit 1 at Three Mile Island, could face funding shortfalls, the agency warned.

The operating license for Unit 1 expires in 2014, said Pete Resler, a spokesman for Exelon Nuclear, a division of Exelon Corp., which owns Unit 1. The company hasn't decided whether it will seek an extension from the Nuclear Regulatory Commission.

Regardless of the decision, Resler said, Exelon will have enough money for decommissioning.

Nuclear energy appealed to power companies at a time when fossil fuels appeared to be growing scarce. In the 1970s, the country reeled from an oil embargo imposed by Arab countries and from a shortage of natural gas.

Nuclear plants were expensive to build. But, they were cheap to run. Nuclear fuel to day is about one-quarter the cost of fossil fuels, according to the Energy Information Administration.

In a regulated market, utilities could build nuclear plants and pass capital costs onto customers through rates fixed by state utility commissioners. Companies could wait decades to recover investment costs.

After the accident at Three Mile Island, construction and operating costs shot up, observers said.

Companies incorporated lessons learned at TMI as they finished plants they had begun. But, they didn't start any new ones.

Utilities even canceled a few plants, sparking legal battles over whether customers should pay the cost, said Scott Rubin, 46, an attorney and utility consultant in Monroe Township, Snyder County.

In a case from western Pennsylvania, the U.S. Supreme Court ruled in 1989 companies couldn't burden ratepayers with the expense of abandoned plants, Rubin said.

"You never know the 'what if,"' Rubin said. "But, I think most people in the industry look at the accident at Three Mile Island as being a real dividing line. Up to that point, nuclear energy looked like it would be the energy of the future."

The energy of the future was likely to suffer an accident such as TMI at some point, said David Lochbaum, 45, a nuclear safety engineer for the Union of Concerned Scientists, a watchdog group in Washington, D. C.

The design of Three Mile Island wasn't unique, Lochbaum said. "Three Mile Island just happened to be the unfortunate volunteer for the wake-up call."

A freeze on new investment wasn't the accident's only effect, Lochbaum and others said.

Plant operators grew more careful. Indeed, the lessons learned from Three Mile Island may have helped the industry improve performance through the years. In 1979, TMI was operated by Metropolitan Edison, a subsidiary of New Jersey-based GPU Corp.

"It drove home to what was a complacent, we-know-it-all industry that you have to be vigilant every second," said John Hanger, 46, a former Pennsylvania utility commissioner. "As soon as that vigilance slips, you're courting disaster, literally."

Nuclear plants today operate at about 90 percent of their capacity, said Hanger, chief executive officer of PennFuture, an environmental group in Harrisburg. A decade ago, they ran at less than 70 percent of capacity, he said.

A competitive power market is one reason for higher nuclear usage, Hanger and others said.

In the late 1990s, state regulators nationwide ended the monopoly system that governed electric utilities.

Increasingly, power companies became subject to market forces. Competitive pressures pushed them to squeeze as much as they could out of power plants.

New plants today are more likely to run on natural gas, observers said. Gas-powered plants are cheap to build, reducing upfront capital costs, although fuel prices are more volatile.

In Pennsylvania, wind power also has taken hold over the last few years.

New nuclear plants are unlikely to be built, said Stuart Hoffman, 54, chief economist at PNC Financial Services Group Inc. in Pittsburgh. Politics and the fear of terrorism could weigh against the industry, he said.

A competitive environment isn't inherently unsafe for nuclear generators, Lochbaum said. But he warned against complacency.

"If we get to that mindset that Three Mile Island is in the distant past and we can never revisit it," he said, "it's probably the best way to ensure that we do."

Plants are aging, he said. Operators must balance the need for proper maintenance and upkeep with the temptation to defer costs.

Lochbaum was troubled by recent surprise problems, such as corrosion found on the vessel housing the reactor core at the DavisBesse nuclear plant in Ohio. The plant's extended outage cost its owner, FirstEnergy Corp., $289 million in 2003, according to filings with the U.S. Securities and Exchange Commission.

Plants around the country, including Three Mile Island, scrambled to check for similar corrosion.

"Davis-Besse was a problem," acknowledged Schanzer, the analyst. "But, it was a problem that was caught in time."

The nuclear industry may have been nonchalant before the TMI accident, Schanzer said.

Since then, he said, it has gained knowledge and confidence. He said he didn't worry about aging plants.

Nuclear plants are here to stay. The Nuclear Regulatory Commission has renewed licenses for 23 units at 10 plants, including units 2 and 3 at Peach Bottom nuclear plant in York County.

New plants probably won't come on line until at least 2010, Schanzer and others said. The biggest obstacle is finding storage for nuclear waste.

The federal government picked Yucca Mountain in Nevada. But elected officials there are opposed, said Hanger, the former utility commissioner.

The technical challenge is as daunting as the political challenge. The country must find a place where radioactive material can sit undisturbed for 10,000 years. "Human beings have never stored anything for 10,000 years," Hanger said.