New generators are delivered to the Davis Besse nuclear plant in 2014.

FirstEnergy / Creative Commons

New generators are delivered to the Davis Besse nuclear plant in 2014.

Ohio ‘bailout’ plan part of larger debate over nuclear’s future

An Ohio utility’s pursuit of a lifeline for an aging nuclear plant comes at a time when both economics and public opinion are aligning against nuclear power.

On March 31, the Public Utilities Commission of Ohio ruled that all FirstEnergy utility customers should guarantee sales for all electricity produced by the Davis-Besse plant along with certain coal generating plants in which FirstEnergy Solutions has an ownership interest.

The public debate around the plans has largely focused on fairness to consumers and competitors, but has occurred with a larger national discussion about nuclear power’s role in a low-carbon future in the background.

Poll numbers released by Gallup last month show that, for the first time, a majority of Americans are opposed to nuclear power. The results follow “a downward trend in public approval of nuclear over the last six or seven years,” said Tim Judson, executive director of the Nuclear Information and Resource Service in Takoma Park, Maryland.

Meanwhile, some climate advocates are raising concerns that prematurely retiring nuclear plants will make it harder for the U.S. to reduce carbon emissions.

Climate scientist James Hansen appeared in Illinois last week to promote nuclear power as the state considers a bill to support nuclear plants in the state. And regulators in New York are considering a proposal to require 15 percent of the state’s electricity to come from nuclear.

Changing attitudes

Polling results released by Gallup last month show 54 percent of Americans opposed to nuclear energy and just 44 percent holding favorable views.

Among those holding negative views, 30 percent of respondents said they “strongly oppose” the use of nuclear energy as one of the ways to provide electricity for the United States.

The data were not broken out by state, said Stephanie Holgado at Gallup. However, the data did include information about political party affiliations.

Most notably, support for nuclear power fell among both Republicans and Democrats, reported Rebecca Rifkin at Gallup. And while Republicans remained more likely to favor nuclear energy, support in that group dropped dramatically, from 68 percent last year to just 53 percent this year.

In Rifkin’s view, increased opposition to nuclear energy did not appear to be linked to fear, particularly in light of the absence of major nuclear disasters since the meltdown of the Fukushima reactor cores in 2011.

Rather, Rifkin suggested, lower gasoline prices last year likely bolstered perceptions of the United States’ energy security, so that environmental protection may have become a higher priority for more Americans.

And on the economic side, she noted, nuclear energy is basically a “bet” on whether the high fixed costs and low marginal costs for producing electricity will be lower than the long-run costs of electricity from other sources.

As natural gas prices have continued to be relatively low, nuclear energy may appear less economically attractive.

‘Some very significant expenses’

The Davis-Besse nuclear power station and similar plants would particularly have trouble remaining competitive, in Judson’s view.

“Davis-Besse has a terrible operational history,” Judson said. “It’s had significant safety problems.”

The plant also has “some very significant expenses that are going to need to potentially be incurred in the next few years due to some significant equipment problems,” he added.

Because the plant dates back to the 1970s, replacement parts for some of its equipment probably aren’t readily available, but must be redesigned and produced on a one-by-one basis, he explained.

More generally, “Davis-Besse fits the profile of the least economical nuclear power plants in the country,” Judson added. Its 900-megawatt capacity makes it below average in size. “And it’s a single unit site. So it doesn’t have any of the economies of scale that the majority of reactors in the country have.”

Most of the country’s other nuclear reactors are at multi-unit sites with capacities well over 1,000 megawatts, Judson noted.

A ‘black box subsidy’

FirstEnergy essentially conceded that the Davis-Besse plant was not competitive when it asked the PUCO to guarantee sales for that facility, along with the Sammis coal plant and FirstEnergy’s share of two other 1950’s era coal plants.

FirstEnergy said the plan would be “Powering Ohio’s Progress.” Critics called the plan a “bailout.”

Judson suspects Davis-Besse might well turn out to be the most expensive of the four plants covered by the FirstEnergy deal, although it’s hard to tell without public disclosure of the cost data.

“The lack of transparency as to the way the costs are allocated and what they go toward…is really troubling from a consumer perspective,” Judson said.

And while there have been a couple of other instances where nuclear plants have received or sought subsidies, those other cases involved much shorter periods.

“FirstEnergy’s proposal is probably the most extreme we’ve seen in terms of there being basically a black box subsidy to support particular power plants that haven’t been demonstrated to be needed, and for an extended period of time,” Judson said.

Even if the plant were somehow needed for reliability purposes, that decision would fall to PJM as the grid operator, he stressed.

Previously, though, PJM indicated that the PUCO’s ruling on the FirstEnergy and AEP plans would not affect grid reliability. That position has not changed.

‘What does the public want?’

Challengers will likely ask the PUCO to reconsider its unanimous rulings from last week, with subsequent appeals to the Ohio Supreme Court if the rulings stand.

Meanwhile, challenges to the plan are moving ahead at FERC. Last week PUCO moved to intervene in those cases as well.

In any case, the poll results on nuclear energy and other environmental issues provide a sense of what the American public wants when it comes to nuclear energy and environmental matters, as well as other issues.

“At Gallup our goal is to get closer to a direct democracy,” Gallup researcher Lydia Saad explained at this year’s annual meeting for the American Association for the Advancement of Science in Washington, D.C., just a few weeks before the new results were released.

“So the technology of polling basically allows Americans to get a much more direct influence in public policy,” Saad continued. “You don’t have to go through a representative to make a decision. You can see what does the public want.”

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