What's next for Three Mile Island

MIDDLETOWN -- Mar 27 - McClatchy-Tribune Content Agency, LLC - Garry Lenton Reading Eagle, Pa.

It felt as if the circus were coming to town.

Hundreds of people, some with lawn chairs and blankets, lined the two-lane highway along the Susquehanna River to watch a pair of massive steam generators inch their way to the Three Mile Island Nuclear Generating Station south of Harrisburg.

That was on, 2009, a giddy time for the U.S. nuclear industry. Public support for nuclear was the highest it had been since the partial meltdown at TMI that frightened the nation 30 years earlier. Demand for electricity was predicted to rise, and worries about climate change were making nuclear's carbon-free energy more attractive to investors.

Plant owners were placing orders for new reactors, applying for 20-year license extensions to keep existing ones percolating, and investing millions in new equipment to keep their aging fleets running.

This was the nuclear renaissance.

Then the energy market underwent a seismic shift: cheap natural gas started pouring out of Pennsylvania's northern tier, government incentives aimed at reducing carbon pollution spurred growth of wind and solar energy, and a March 11, 2011, tidal wave caused a meltdown at the Fukushima Daiichi Nuclear Power Plant in Japan.

And that quickly, the renaissance was over.

"I remember briefing policymakers in 2008, and the challenge then was, where are we going to come up with all the money and resources to meet customers' demand?" said Joseph Dominguez, executive vice president of governmental and regulatory affairs and public policy at Exelon Corp., owner of TMI, along with the Limerick station in Montgomery County and Peach Bottom in York County. "I've never seen an industry flip-flop so dramatically."

Now, after failing last year to secure a contract to sell electricity to the Pennsylvania-New Jersey-Maryland Interconnection, or PJM, for June 1, 2018, to May 31, 2019, there are doubts about TMI's future. If the plant fails for a second time to obtain a contract at the PJM auction in June, it could become too expensive to run.

"We're going to bid TMI at its needed cost at this next auction and see how it does," Dominguez said. "But the future for TMI and nuclear power is cloudy at this point."

TMI is a single-reactor facility, which is more expensive to operate than a plant such as Limerick, which has two reactors.

The cost per megawatt hour for a single-unit plant is $44, and that's $11 more than a multireactor plant, according to the Nuclear Energy Institute, which represents plant owners. There are 25 one-reactor plants in the U.S., and three of those are scheduled to close by 2020.

The potential closure of TMI and other plants will pose economic challenges for their communities and environmental obstacles for the state, which would lose a large carbon-free energy source.

What happened

Monday marks the 37th anniversary of the accident that caused a partial meltdown of TMI's Unit 2 reactor. The disaster resulted in the plant's closure for seven years and launched a wave of anti-nuclear protests that soured Wall Street on the industry and stymied the construction of new plants for decades.

It now appears that the energy market, not protesters, is the biggest threat to the industry.

"Over last 20 years, we've seen more gas developed and prices being pushed lower," said Ray Dotter, a spokesman for the PJM, the regional transmission organization that coordinates the movement of wholesale electricity in 13 states in the East and Midwest. "Oftentimes, natural gas is out competing with base generation like coal or nuclear."

The impact is clear in the numbers. Though coal is still the main source of electricity in the U.S., it is responsible for less than 40 percent of all electricity generated, a 22 percent decline since 2004, according to the U.S. Department of Energy. Natural gas doubled its share and now accounts for more than a quarter of our electricity over the same period. Nuclear accounts for about 20 percent, but its share is slipping.

Worldwide, the outlook for nuclear is also troubling. According to The World Nuclear Report:

Japan went without nuclear power for nearly two years beginning in September 2013, for the first time in 50 years.

Nuclear plant construction starts worldwide fell from 15 in 2010 to three in 2014.

Areva, the French company that built TMI's new steam generators, is technically bankrupt, having lost 90 percent of its stock value since 2007.

China, Germany, Japan, Brazil, India, Mexico, the Netherlands and Spain now generate more electricity from renewables than from nuclear power.

Falling demand

Demand for electricity has slowed considerably in recent years, and only slight growth, of 1 percent, is projected over the next decade, Dotter said.

"At one time, you would have seen 10 percent a year," he said.

The decline can be attributed to successful drives to improve efficiency, such as the use of fluorescent lights, the recession and the shift away from manufacturing to a less energy-intensive economy, he said.

Since 2008, four U.S. nuclear plants shut down, and three more are scheduled to close by 2019, according to the NRC.

Harrisburg-based anti-nuclear activist Eric Epstein attributed the change to raw economics, noting that no one predicted the impact of natural gas on the American market, or the profitability of renewables. And there are other problems facing the nuclear industry, the cost of maintaining their aging plants and the unresolved issue of where to store its waste.

The energy market is cruel, and it doesn't play favorites, he said.

"The final judges are investment officers," Epstein said. "Nobody's investing in nuclear power. It's a dead end."

Even the federal agency that oversees the industry is feeling the effect. Since the gas boom hit in 2010, the NRC has reduced its staff and its budget, said Eliot Brenner, director of public affairs for the agency.

The impact was like a bank shot in pool, he said. Companies such as Exelon pulled back on expansion plans, requiring fewer employees and inspectors. By 2016, the NRC's budget is expected to dip under $1 billion a year, with 150 fewer employees, Brenner said.

-- -- -- -- -- --

-- -- -- -- -- --

The carbon question

If TMI closes, it will have a ripple effect across the state. Locally, it will be a blow to the region's economy, and statewide, it could impact the state's air quality if the plant's electricity -- enough to power about 800,000 homes -- is replaced by coal or natural gas.

"If you believe in climate change this is worrisome," said Joseph Minott, executive director and chief counsel for the Clean Air Council in Philadelphia. "The alternative to nuclear power is coal or natural gas, and they both release greenhouse gases."

Nuclear's zero-carbon status is one of its most under-valued assets, according to Marvin Fertel, president and chief executive officer of the Nuclear Energy Institute, an industry group.

The industry, Fertel told investors in February, needs to fight harder to receive credit for its zero-carbon emission status.

The industry can't control the price of natural gas or renewables, so it must focus on correcting weaknesses in its markets, meaning obtaining recognition for its impact on reducing carbon emissions, and becoming more efficient.

"Nuclear energy is by far America's largest source of carbon-free electricity, and that attribute should increase in value as the United States and the rest of the world grapple with the challenge of climate change," Fertel said.

NEI supports the Obama administration's Clean Power Plan, a program to reduce carbon emissions from power plants by imposing standards. The program was stayed last month by the U.S. Supreme Court, pending further review.

The plan requires each state to enact a plan to reduce carbon pollution. Some, such as New York, set levels for how much energy the state would use from low-carbon sources and included nuclear in the mix. Pennsylvania, however, did not, said Exelon's Dominguez. The company is trying to change that.

The carbon issue has split the environmental community, said Clean Air's Minott. Those concerned about climate change worry about nuclear plant closures if the alternative is a dirtier fuel source.

The problem, he said, is the lack of a national energy plan outlining where the country wants to be in 100 years.

"I think it makes sense to keep these nuclear plants on line for a little bit longer while we invest in the future," he said.

Nuclear energy, Exelon's Dominguez said, accounts for 90 percent of the state's zero-carbon electricity.

"If TMI were to retire, it would eliminate all of the gains we made in wind and solar times three," he said. "All we've done in 10-plus years, would be eliminated overnight by the closure of TMI."

Contact Garry Lenton: 610-371-5025 or glenton@readingeagle.com.

http://www.energycentral.com/functional/news/news_detail.cfm?did=39148961