Surrender at Ft. Calhoun

The nation’s smallest nuclear power plant, at 479 MW, threw in the towel this week.

fort-calhoun-power-plant

Ft. Calhoun surrounded by Missouri River flood waters June 2011

Update: OPPD Board makes it official 6/15/16.

The management of Omaha Public Power District (OPPD) has recommended that the single-unit Fort Calhoun nuclear power station in Nebraska be permanently shut down.

Rising costs, record low natural gas prices, and flat or declining demand for electricity have made it impossible to run the reactor in the black.

OPPD CEO Tim Burke told the company’s board of directors that he is recommending the reactor, which began commercial operation in September 1973, cease operations by the end of 2016 and begin the process of decommissioning which will take decades to complete.

Burke said the utility’s position is financially untenable.

“The economic analysis clearly shows that continued operation of Fort Calhoun nuclear station is not financially sustainable. The analysis considered market conditions, economies of scale and the proposed Clean Power Plan.”

All of these vectors are going in the wrong direction for the plant. Electricity use is not increasing, natural gas prices are at record low levels, and the federal government’s efforts to impose limits on CO2 emissions have gone nowhere due to court challenges.

The utility also suffered significant financial setbacks starting in 2011 with a flood of the Missouri River which was followed by a long period of being out of service to implement corrective actions to meet NRC safety requirements.

The OPPD board will review Burke’s recommendation with a vote scheduled for June 16. The Fort Calhoun nuclear power plant in Nebraska accounts for one-third of OPPD’s total electricity generation.

While it’s owned by Omaha Public Power District, Fort Calhoun is operated through an agreement with Exelon Generation. The reactor is located in Nebraska, 19 miles north of Omaha. The plant began the commercial production of electricity in 1973. It received a license extension from the NRC in 2002 and is licensed to operate until 2033. It employs 700 people.

A Rough Half Decade

OPPD’s proposal to close the plant follows a tumultuous half decade in which it experienced a major flood, stringent oversight by the NRC, and false rumors that it had blown up.

In 2011 the flood stricken Ft. Calhoun reactor postponed its restart to sometime in 2013. It shut down in April 2011 for a scheduled fuel outage. Rising flood waters along the Missouri River in June damaged in the plant site though the reactor and switch yard remained dry.

The plant’s management had initially resisted demands by the NRC to strengthen its flood barriers, and only installed them a short time before the rising Missouri river came within a few feet of overtopping the inflatable boom that kept water out of the reactor and turbine building and the plant switch yard.

In the pre-dawn hours of June 27, 2011, a fork lift punctured the eight foot high, 2000 foot-long boom being used to keep the flood waters out of the plant. Plant operators started emergency diesel generators as the flood waters approached the switch yard and the plant was taken off the grid. Emergency repairs prevented significant damage to the facility.

The plant did not restart once the flood receded. The NRC resident inspectors found numerous deficiencies in plant operations and imposed a stiff set of requirements on it. The agency said the Ft. Calhoun plant must fulfill a long list of safety requirements before the NRC would let it power back up. To speed things along, OPPD hired Exelon to operate the plant. It took until December 2013 to get a green light from the NRC to re-start the reactor to generate electricity and produce revenue for the utility. During this time the utility had to buy the equivalent amount of replacement power from other sources.

In February 2012, OPPD cancelled plans for a power uprate for the reactor citing the multiple safety issues facing the plant which were still in the process of being addressed by the utility.

While Burke may be correct in his assessment of the financial situation, the fact is the utility’s senior management were unable to effectively address the NRC’s findings, and in a timely manner, which resulted in the hiring of experts from Exelon to do the job for them.

The closure, due to a poor response to the 2011 flood, and a long imposed outage over safety concerns, with no revenue coming in as result, contributed to the utility’s plan for plant decommissioning. The plant was out of service from April 2011 to December 2013.

OPPD in its 2015 annual report estimated that the cost to decommission Fort Calhoun would be $884 million. The utility has only $373 million on hand for those costs. The utility’s customers will be on the hook for most, if not all, of the over $500 million difference.

In the short term, the reactor’s fuel will be removed, put in cooling pools, and eventually, dry casks. Fort Calhoun houses spent fuel rods in a 40-foot (12 m) deep spent fuel pool next to the reactor. The pool nearly reached capacity in 2006. At that itme OPPD began to store older spent fuel rods above ground in dry cask storage.

However, it could take five-to-ten years to complete the process of moving all the spent fuel from wet to dry storage. Until the decommissioning fund has enough money in it to move forward with demolition, the plant will be kept in a safe, secure, shutdown configuration and maintained by a skeleton staff.

The plan to close the plant will result in throwing away decades of capital improvements. The reactor is a Combustion Engineering PWR. The plant underwent refurbishment in 2006 by replacing its steam generators, pressurizer, reactor vessel head, low pressure turbines and main transformer.

OPPD’s two Nebraska City coal-fired plants at 682 MW (opened 2009) and 649 MW (opened 1979) MW are both significantly larger than the reactor. They will have to pick up the load once the reactor shuts down for the last time next October.

Ft. Calhoun is Number 8 in Reactor Closings

OPPD’s decision to close Ft. Calhoun is the latest in a series of plant closings in the U.S. Four other reactors have announced plans to shut down for similar economic reasons and two of them are already out of service.

Closed plants are Dominion’s Kewaunee, WI; Entergy’s Vermont Yankee. Planned closures are Energy’s Pilgrim, MA; and, FitzPatrick, NY.

Two reactors at Southern California Edison’s San Onfre nuclear power station were shut down in 2012 over technical failures in its steam generators. Progress Energy shut the Crystal River, FL, plant in 2009 as a result of severe damage to the containment structure during a steam generator replacement operation.

As is the case with each of these reactors, these closures led to layoffs of 600 or more workers at each site with the accompanying loss of their payroll in the surrounding communities.

Also, in New York Governor Cuomo continues to pursue a campaign to close the 2200 MW Indian Point nuclear power station on environmental grounds. The impetus for this effort appears to be coming from environmental groups who also contribute to the governor’s political re-election efforts.

NEI Response to Latest Closing of a Reactor

In Washington, DC, at the Nuclear Energy Institute (NEI), senior director for business policy, Matt Crozat, said the proposed closure of Ft. Calhoun demonstrates why policies to preserve existing nuclear power plants are necessary.

“This announcement reflects the fact that several nuclear power plants around the country are vulnerable to weak market conditions, particularly smaller facilities in competitive markets,” Crozat said.

“There is an urgent need to develop policies that will prevent additional, premature nuclear plant retirements, because the economic and environmental consequences are incredibly detrimental.”

At a nuclear energy summit held this week at the Department of Energy. NEI CEO Marvin Fertel said that 15-20 nuclear power plants are at risk over the next five to 10 years. He blamed low power prices brought on by auctions in deregulated markets, competition from natural gas, and government subsidies for solar and wind energy plants at the federal and state levels.

Fertel also said that two more reactors, Exelon’s Quad Cities nuclear plant in Illinois, were at risk of shutting down in the next few years, or sooner, if the legislature doesn’t address the issue.

He added that change is needed at the Federal Energy Regulatory Commission, which has long favored renewable energy sources over nuclear.

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9 Responses to Surrender at Ft. Calhoun

  1. Pingback: Surrender at Ft. Calhoun - Neutron Bytes - Pro-Nuclear Power Blogs - Nuclear Street - Nuclear Power Plant News, Jobs, and Careers

  2. Nuclear Ninja says:

    Surrender is a terrible word for the title of this article. The executive management may be recommending to shut down, but it still has to be voted on by the board of directors. Please look into the #saveFCS movement by the workers. The workers have not “thrown in the towel.” They fought a 500 year flood, a fire in the middle of that flood, change management that brought in all new management and new procedures, and regulatory recovery. For what? To come online for two operating cycles and better performance by leaps and bounds. Only to have you say the plant threw in the towel? The workers are the plant, they are the ones that fought the flood, the fire, and learned all new procedures. Senior management, despite what they may say, weren’t there filling sandbags for a month straight often in temperatures at or above 100F. They didn’t unroll and fill the thousand foot long black plastic waterbed called a berm not a boom. (Officially it’s called an Aquadam.) Senior management didn’t put on bunker gear while the switchgear filled with smoke, or try to figure how to isolate electricity to the fire when improper design changes allowed the fire to cause unexpected faults on unrelated breakers.
    The article is great, just disagreeing with the choice of words for the title and that the plant threw in the towel.

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  3. Mitchel Gant says:

    NEI should break out of conference halls and strut its preaching into the mass media and reaching real live voters.

    Liked by 1 person

  4. That's So Bobo says:

    The proposed plan values the plant at about 1bio, which they write off. Somehow this is a good idea even tho it’s licensed to operate until 2033. And they spent a bunch to bring it back post flood, so it’s as close to new as it can be at age 43. From what I read elsewhere, it produces power for less that 2 cents per kwh based on annual output and a 250mm per year reported cost. This is cheaper than any other option.

    Allegedly closing FCS allows OPPD to not increase rates for a few years. What happens after that? Debt ratios go up too. None of this makes sense. I question the accounting. Plus the underfunded decommissioning fund.

    Maybe they shouldn’t have built 400MW of wind power if demand was flat? Who pays for wind tax subsidies? Taxpayers! Off balance sheet financing? And last I checked Nebraska does not have a renewable portfolio standard.

    I think this may be the start of someone trying to dismantle what’s left of public power. Without seeing the actual model used to reach this conclusion I can only say the devil is in the details (discount rates, probability risk assessments); it feels like the fix is in.

    Things change over 5 year periods (2011 pre flood), but this doesn’t pass the smell test. We knew about fracking and gas was cheap then too.

    Why is OPPD’s goal to set rates 20% below a chosen benchmark? Is that even realistic? Not unless you’re in the Pacific NW with mostly hydro.

    Plus laying off all those people will devastate Ft. Calhoun and the surrounding communities that rely on the payroll of that plant.

    OPPD – PLEASE CHECK YOUR NUMBERS AND TRY AGAIN

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  5. Ikemeister says:

    My understanding is that their labour costs are very high. I was quoted $85/MWh, I know that doesn’t sound right. Are financial figures publicly available?

    Like

    • Ikemeister says:

      Sorry, a correction. I should have checked the figures before quoting. I’m told there’s 750 staff, plus a management contract with Exelon. The staff costs were actually estimated to be $23/MWh assuming baseload 94% Capacity Factor. That’s more believable but still high. Financial figures should be able to confirm labour costs much better than an extrapolation from staff size.

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  6. djysrv says:

    The CEO would not go public, in a big way, unless he is confident of board support. If the board over rules him, the action could result in his being shown the door.

    The chair and vice chair, and treasurer, of OPPD all have political backgrounds. They are not business executives who have years of profit and loss experience. CEO Tim Burke’s bio shows the same type of background.

    You don’t encounter anyone in the senior leadership team with nuclear expertise until you get to the Exelon representative who represents the firm that is actually running the plant for OPPD.

    My view is that the CEO and the board leadership most likely already agree on the closure decision, and that the run up to the June meeting is just part of a spin cycle.

    If the CEO had any doubts about which way the wind was blowing with the board, he never would have made such a big press splash with his “recommendation.”

    Like

  7. Mark Bailey says:

    “OPPD’s two Nebraska City coal-fired plants at 682 MW (opened 2009) and 649 MW (opened 1979) MW are both significantly larger than the reactor. They will have to pick up the load once the reactor shuts down for the last time next October.”
    How many tons of CO2/year will result from this closing? While I am not sure about global climate change, due mainly to the mismatch between previous predictions and actual results, I do believe in limiting coal plant emissions which include CO2, mercury, NOX, and radioactive particles. This is a loss for nuclear power and for clean energy.

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