Nuclear plant closure plans turn up heat on state's energy debate
Officials come to grips with potential adverse impacts of closure
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Hampered by heightened federal oversight of its operations and low natural gas prices, the owners of Pilgrim Nuclear Power Station, which began operations in 1972, announced plans Tuesday to close the Plymouth facility by 2019, jolting the regional electricity market, spurring new calls for renewable energy, and forcing Massachusetts officials to think about long-term plant decommissioning and plans for spent nuclear fuel.
The announcement Tuesday morning by Louisiana-based Entergy Corp. triggered a wave of reactions. Pilgrim workers urged Entergy to reconsider, citing 600 jobs and the plant's role in covering about 12 percent of the state's electricity needs. Gov. Charlie Baker said the closure could mean an energy shortage and promoted his hydro energy plans. Solar energy, transmission, and other power industry officials said they were ready to fill voids. Sen. Edward Markey urged Entergy to devote the resources needed to remove spent nuclear fuel from an "overcrowded" pool. And officials began coming to grips with potential adverse impacts in the area where Pilgrim is located.
Pilgrim generates 680 megawatts of electricity, or enough to power more than 600,000 homes.
"It's a temporary blow," South Shore Chamber of Commerce President and CEO Peter Forman told the News Service. "It's going to be a blow to Plymouth. It's going to be a blow to the energy supply."
Entergy said shale gas production had dropped natural gas prices and "significantly" affected Pilgrim's revenues. Entergy blamed a $40 million reduction in Pilgrim revenues on a drop in current and forecast power prices of about $10 per megawatt hour.
But Pilgrim also faced higher operational costs in connection with the Nuclear Regulatory Commission's announcement in September that they will increase oversight of the plant after inspectors raised concerns about findings associated with the performance of a safety relief valve. The NRC findings stem from a special inspection at the plant following its unplanned shutdown in January. Entergy estimated up to $60 million in direct costs associated with enhanced NRC inspections, not including costs that might arise due to inspections.
Pilgrim was expected to incur after-tax net losses ranging from $10 million to $30 million for 2015, 2016, and 2017, before taking into consideration plans to close the plant or costs associated with testing the plant for "impairment" in connection with the NRC's heightened oversight.
Entergy said Pilgrim would close by June 1, 2019, with the exact timing to be determined during the first half of 2016 following talks with ISO-New England, the region's electric grid operator.
Rep. Thomas Golden (D-Lowell) said he shares concerns about lost jobs and tax revenues in the Plymouth area. Pilgrim's closure will take a significant energy source offline and raises the stakes for ongoing energy policy talks. "Four years gives us some time," Golden told the News Service. "I don't think there's reason to panic today."
While calling Pilgrim's closure "something that has to be taken into serious consideration sooner rather than later," Golden said he favors continuing a "very slow approach" on energy policy.
"I don't think it's something we can rush," he said. "We still have committee hearings going on. The members of the House are weighing in very, very heavily. This is something we need to get right. I really believe it is the issue of the decade-plus."
Golden identified energy storage as a potential "big game changer," and said policymakers are likely to be dealing for years with changes in energy technology.
Entergy indicated state energy proposals influenced its decision.
In addition to citing wholesale energy market "design flaws" that adversely affect prices paid for nuclear energy, Entergy also said Pilgrim's performance had been "undermined by unfavorable state energy proposals that subsidize renewable energy resources at the expense of Pilgrim and other plants." Entergy also described as "detrimental" proposals to provide "above-market prices to utilities in Canada for hydro power" and a state agency order that the company said would further lower natural gas prices and reliance on the fuel.
"The decision to close Pilgrim was incredibly difficult because of the effect on our employees and the communities in which they work and live," Leo Denault, Entergy chairman and CEO, said in a statement. "Our people at Pilgrim are dedicated and skilled, a wonderful blend of young professionals and seasoned, experienced veterans, who for decades have been generating clean power and contributing millions of dollars of economic activity to the region. But market conditions and increased costs led us to reluctantly conclude that we had no option other than to shut down the plant."
A decommissioning process will follow the plant's closure. Entergy said there was $870 million in a Pilgrim decommissioning trust as of Sept. 30, 2015, "representing excess financial assurance of approximately $240 million for license termination activities above NRC-required assurance levels."
Future NRC filings will address funding for spent fuel management, "which will be required until the federal government takes possession of the fuel and removes it from the site, per its current obligation." Entergy said it does not anticipate additional funding.
Gov. Charlie Baker said the decision to close Pilgrim did not surprise him given what was known about its finances and the safety upgrades that were needed, and pledged to stay involved with Entergy, the NRC and ISO New England as the closure moves forward.
"On some level it creates a certain sense of urgency around our hydro proposal, which would make it possible for use to generate significant megawatts to serve that baseload loss on a go-forward basis and to do so in a way that would be competitive and cost effective for business and families in New England," Baker told reporters Tuesday morning.
Baker said hydropower holds the potential to more than replace the energy that will be lost when Pilgrim closes. "That's one of the reasons I want to test the water on hydro, pun intended," Baker said. "There's thousands of megawatts of relatively affordable clean renewable energy coming from hydro providers all over the northeast and in Canada and we should test the waters with them and see how much power they think they can generate to support our baseload requirements."
Asked how quickly hydropower could be put online given opposition to transmission projects like Northern Pass through the White Mountains of New Hampshire, Baker said, "It all depends on when the legislation would pass that would make it possible for us to test the market and see what's out there. There are four or five different routes between New York and the New England states that can get down into the New England region and connect, from a transmission point of view. Actually, I was surprised at how many options were available to us. There are a lot more than just the Northern Pass."
Baker said his administration has talked to Pilgrim about its 600 employees and understands the "vast majority" will be put on "retention agreements" with some working through the plant's closure before they retire and others moving to other Entergy facilities.
"We'll work very hard to make sure that anybody else who's left at the end of that two- or three-year period has options to pursue if they want to stay here and continue to work," Baker said.
While workers urged Pilgrim to reconsider closure, Baker said, "The only scenario under which I would be willing to even consider aggressively advocating for Pilgrim to stay open would be if they deal with all the safety issues that have been raised over the course of the last several years."
Reactions began pouring in following Tuesday morning's news.
-- Gov. Charlie Baker's statement:
"Our Administration will work closely with Pilgrim's leadership team and federal regulators to ensure that this decision is managed as safely as possible, and we will continue to work with ISO and the other New England Governors to ensure that Massachusetts and New England has the baseload capacity it needs to meet the electric generation needs of the region. Losing Pilgrim as a significant power generator not only poses a potential energy shortage, but also highlights the need for clean, reliable, affordable energy proposals which my administration has put forward through legislation to deliver affordable hydroelectricity and Class-I renewable resources. The closure of Pilgrim will be a significant loss of carbon-free electricity generation and will offset progress Massachusetts has made in achieving the 2020 greenhouse gas emission reduction goals, making it more challenging to hit these targets. I look forward to working with the legislature to make our proposal for clean, base-load generation law, as it represents a diversified and balanced approach that will be needed to achieve the commonwealth's greenhouse gas goals."
Sen. Edward Markey:
Markey noted that Pilgrim was in the NRC's Column 4, or the"least safe rating for an operating reactor," and said Entergy operates the only other two U.S. reactors with that rating.
"The rating means that Pilgrim has had multiple and repetitive safety problems that require increased NRC oversight," he said in a statement. "Restoring a reactor from Column 4 back to normal levels of NRC oversight is estimated to cost more than $100 million."
Markey added, "While nuclear energy was once advertised as being too cheap to meter, it is increasingly clear that it is actually too expensive to matter. Pilgrim Nuclear Power Station is just the latest example of how nuclear power simply cannot compete in the current energy market. And alongside the economic conditions that Entergy blames this closure on, there also have been decades-long and repetitive operational safety and security concerns with the facility that have contributed to this announcement. The remaining period of operation of Pilgrim needs to be with the utmost attention to safety and security, and must include rigorous oversight by the NRC to ensure that Entergy has and is spending the resources needed.
"As the plant moves towards permanent shut down, priority must be given and special attention paid to worker assistance and transition training. The workers at Pilgrim are committed, skilled and valuable and have been an important part of economic activity in the region. The NRC must also ensure Entergy dedicates adequate financial and technical resources to remove the spent nuclear fuel from the overcrowded spent fuel pool and decommission the reactor quickly. We cannot allow the public to pay the price if Entergy comes up short on the bill to safely close this plant.
"With this announcement we must also recognize that the time is now in New England and around the nation to rapidly transition towards the safe, affordable clean energy of wind, solar and geothermal power and continue to invest in energy efficiency and making the vehicles on our roads even more fuel efficient."
-- U.S. Rep. William Keating of Bourne:
"Entergy's shutdown announcement was not surprising given their unwillingness to deal with current safety standards. This announcement marks the next phase where great scrutiny is necessary to make sure Entergy is responsible for maintaining proper safety standards throughout the closure process -- something they failed to do during their operations. To this end, Entergy must maintain their skilled workforce at Pilgrim, where workers are both trained and experienced in addressing emergencies. They also must cooperate with the Town of Plymouth and federal officials on waste removal and storage issues. I have already begun coordination and oversight efforts, including at all levels of government involved, and will continue to monitor Entergy's decommissioning plan."
-- Senate President Stanley Rosenberg said he wasn't surprised by Entergy's decision, citing a pattern among New England nuclear facilities.
"Totally predictable," Rosenberg told reporters in his office. "I lived through the closure of Yankee Rowe and Vermont Yankee and the exact same pattern. These plants were built with a life expectancy of about 40 years. The company fights to get an extension of another 10 or 20 years. They get it and then they actually do the engineering studies and they find that the plant actually can't live that long without spending a tremendous amount of money."
While Gov. Baker said he hopes the closure will bring a sense of "urgency" to his hydroelectric bill to address the loss of capacity, Rosenberg said the Senate is waiting for the House to act after House Speaker Robert DeLeo indicated a desire to produce an omnibus energy bill this session.
"More green, more conservation and if we have to move forward with infrastructure we need the right kind of infrastructure, and if we're going to move forward with pipelines we need the right size in the right place," Rosenberg said.
While the Senate waits, Rosenberg said Energy Committee Co-Chair Sen. Benjamin Downing has pulled together a small group of senators to study all the issues involved, including capacity, reliability and price. An aide to Rosenberg said Sen. Daniel Wolf, of the Cape and Islands, is among those involved.
Rosenberg agreed that additional natural gas capacity could provide reliability at a good price point, but said there might be other options as well. Asked about those who believe the House will include an off-shore wind component to any bill, Rosenberg said, "I think off-shore wind is a great idea," and added that enhanced conservation could help offset the cost of green energy sources like wind.
-- House Speaker Robert DeLeo issued a statement:
"Unfortunately, this announcement does not come as a surprise. Pilgrim has posed both a financial and safety concern for the Commonwealth for quite some time now. Pilgrim's closing will certainly play a major role in the House's energy policy discussions moving forward. I continue to be in conversations with Chairs [Thomas] Golden and [Brian] Dempsey regarding energy legislation and hope to speak with them soon about Pilgrim's closing, as well as the local delegation."
-- Attorney General Maura Healey's statement:
"The Attorney General's Office has long advocated for increased safety standards at the Pilgrim Nuclear Power Station. My primary concern now is that Entergy initiates a safe and orderly closure of the Pilgrim plant, and that it invests the proper resources to do so. I'm concerned as well that measures are in place to support workers. Today's announcement also highlights the need for a long-term federal solution to the storage of spent nuclear fuel at the facility and across the country. I am as convinced as ever that the solution to our long-term energy needs must include a broad portfolio of sources that meets our environmental, jobs and cost goals for all residents."
-- Craig Pinkham, Acting President, UWUA369:
"The Pilgrim nuclear plant provides more than 600 jobs and millions in tax revenues for our region. According to a UMass study earlier this year, Pilgrim has a total economic effect worth $225 million annually in Massachusetts. The plant provides 17 percent of the electrical power to Massachusetts - essentially heating and lighting the City of Boston. Pilgrim is by far the largest sources of Green, non-carbon producing energy in this region.
"For all these reasons, Entergy needs to sharpen its pencil, go back to the drawing board, work with the Nuclear Regulatory Commission and the people who know this plant best - the utility workers - and come back with a plan to keep this plant running affordably and safely. It is not acceptable to walk away from a resource this valuable, and this important to our energy supply and to our economy, simply because it is going to require an investment to maintain its viability.
"Gov. Baker, officials at the New England power grid - ISO-NE - and our state and federal legislative delegations need to tell Entergy to work harder to find a way to keep this resource up and running, safely and economically."
-- Jack Clarke, Mass Audubon:
Clarke said achieving greenhouse gas emission reduction targets under the state's Global Warming Solutions Act "becomes more challenging" with Pilgrim closing. At 14 percent now, Clarke noted the law calls for a 25 percent reduction below statewide 1990 emission levels by 2020 and 80 percent below 1990 levels by 2050.
"Now with the price of natural gas continuing to drop, industry complaints of pipeline congestion, and Massachusetts not yet lifting the solar net-metering cap, the need for offshore wind increases," Clarke wrote in an email to the News Service. "Decommissioning will also be of concern especially as climate-change induced sea-level rise, and stronger coastal storms threaten the outdated Pilgrim Nuclear Station along the fragile and eroding Plymouth shoreline."
-- South Shore Chamber of Commerce President Peter Forman told the News Service the news was "not completely surprising given the declining profitability of plants with energy costs coming down."
"It is concerning to us on two fronts," he told the News Service in a phone interview. "One obviously is going to be the future energy supply and costs to the state and the other is the local impact to Plymouth itself. We have to be concerned about welfare of all the towns in the area when we're looking at economic development. This is going to have some negative impact on the town."
Forman said goals now are to ensure an orderly and safe shutdown and ensure that Entergy deals with spent fuel on the site and properly decommissions the plant. He also raised the possibility that Entergy would use the site for a non-nuclear power generation facility to take advantage of existing transmission infrastructure.
"We supported relicensing a few years ago but understood it is going to be reaching the end of its usable cycle at some time in the foreseeable future," Forman said.
-- New England Power Generators Association President Dan Dolan:
"Pilgrim Nuclear Power Station has long served Massachusetts consumers and those across the region. With its announced closure, New England's power generators stand ready to continue providing safe, environmentally-responsible, reliable and competitively-priced electricity for consumers. Already, more than 1,800 megawatts of new power plants, enough to serve approximately 1.3 million households, are under construction and under development including nearly 1,000 megawatts in Massachusetts alone. Notably, all of these new plants are entering the market without a ratepayer-backed contract or special subsidies. Thousands of megawatts of additional new facilities are also competing to come into the marketplace to replace retiring units.
"Unfortunately, programs to subsidize particular technologies or resources and other out of market actions have led to undervaluing the services many generators provide. These actions serve to undermine power plant economics and contribute to the premature retirement of some facilities. To provide affordable, competitive pricing the open electricity markets in New England must continue to be refined without further subsidies and interventions that pick winners and losers.
"With the retirements of a number of power plants over just a few years, it is clear that New England's electricity system is going through a time of unprecedented change. Despite that, 2015 has seen some of the lowest wholesale electricity prices in over a decade, reliability of the system is sound and carbon dioxide emissions from power plants have been cut by nearly 50 percent since 2005. At the same time, billions of dollars of new investment are flowing into the region without ratepayer guarantees or subsidies. These markets are working."
-- Ed Krapels of Anbaric Transmission, a Massachusetts company that has built transmission lines and has proposals to bring wind and hydro power from Vermont and New York to southern New England, said Pilgrim's plan "adds to the urgency for investment in clean energy infrastructure. Clean energy resources are available; now is the time to invest in the transmission infrastructure that can deliver that energy to our homes and businesses."
-- Vote Solar is working on state solar energy legislation in Massachusetts and has pushed solar bills in California, Colorado, Florida, Massachusetts, and Pennsylvania. Its regional manager Seth Garren said in a statement, "The Pilgrim Nuclear Power Station closure announcement is yet another indication that Massachusetts needs a new energy future. It begs the question: why are we allowing the solar industry to wither under needless net metering caps when we need that clean, renewable energy and economic development so urgently. It should also be noted that the solar industry employs 12,000 workers in Massachusetts with plans to grow if net metering caps are lifted - a ready answer for the loss of jobs at Pilgrim that cannot be replaced by Hydro Quebec or natural gas pipelines."
-- New England Clean Energy Council President Peter Rothstein, whose group represents regional business, said in a statement:
"The closure of Pilgrim Nuclear Power Plant is a significant loss of the Commonwealth's non-emitting electricity generation. However, there are large amounts of in-region large-scale clean energy resources that can be used to meet the Commonwealth's electricity needs, while achieving its climate goals - especially energy efficiency, solar, wind and other resources that qualify as Class I under Massachusetts Renewable Portfolio Standards (RPS). Onshore wind also can be combined with hydro from within New England and Canada to provide clean deliverable energy.
"NECEC believes this is an opportunity for the Commonwealth to act on pending legislation that will enable distribution utilities to solicit additional long-term contracts for RPS Class I eligible resources, potentially in conjunction with hydro to facilitate the development of cost-effective transmission to deliver the power to customers.
"In addition to grid-scale renewables, distributed energy resources, notably solar, have demonstrated that they have a role to play in filling the gap. However, solar remains on hold in Massachusetts due to the net metering cap, which must be lifted immediately to ensure that solar development continues to flourish in Massachusetts and solar customers can take advantage of federal tax credits scheduled to expire at the end of 2016."
-- Nuclear Matters, a nuclear industry and business group, said Pilgrim generates 12 percent of the state's electricity and 79 percent of the state's "emission-free" electricity.
"The premature closure of Pilgrim due to low wholesale power prices that do not adequately reward existing nuclear energy plants for generating clean, reliable power is disappointing. To continue down a path where plants like Pilgrim - and the rest of the existing nuclear fleet - are not properly valued is simply untenable and deprives communities of important economic benefits such as price stability for consumers. Its closure will clearly hamstring Massachusetts' ability to meet the emissions targets set forth by the Environmental Protection Agency's recently finalized Clean Power Plan to reduce carbon emissions and ensure a cleaner energy future for the country."
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Michael Norton, State House News Service. Covers major media, lobbying firms, government agencies, political junkies, as well as Towns/Regions Covered: Statewide. Read Mike's previous stories here.Source.
Matt Murphy covers major media, lobbying firms, government agencies, political junkies as well as towns Statewide. He likes to cover politics and campaigns.
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