Wednesday, December 8, 2010

Exelon calls Christie’s bluff

Utility will close Oyster Creek in 2019 ten years before the license is up

Chris-ChristieGov. Chris Christie (right) told a group of editors last week “he will decide by the end of the year” whether or not to require the Oyster Creek nuclear power plant to install $700 million in cooling towers in order reduce the amount of water the plant takes from Barnegat Bay.

Well, he's not going to have to do that. Exelon, which repeatedly told the state it would shut down the reactor if it's environmental agency insisted on cooling towers, did just that today. In a press release issued this evening (12/08/10), Exelon said economic and regulatory conditions made it impossible to continue to operate the plant at a profit.

Exelon will shut down the reactor in 2019 ten years before it's NRC license expires.

Here's the part that's really interesting. In his statements to the editors, Christie said Exelon was bluffing about shutting the plant down. Wrong.

This is a huge mistake for the State of New Jersey and its economic future does not look bright as a result.

There are two implications from this event. First, it may give encouragement to the incoming Cuomo administration in New York to push harder for cooling towers for Indian Point. Second, it will embolden anti-nuclear groups elsewhere to be more confrontational on the grounds that utilities may seem more likely to fold than fight if faced with expensive regulatory requirements.

Is Salem Next?

Oyster Creek isn’t the only nuclear reactor in New Jersey. Three other reactors provide, with Oyster Creek, about half of the state’s electricity. According to the Energy Information Administration, coal provides another 16% and natural gas provides 30%.

Neither of the two reactors at the Salem nuclear plant use cooling towers. It is likely that if the state were to similarly impose the cooling tower requirement on them, and all three reactors shut down, the state would lose 2,923 MW of electrical generation capacity.

This is equal to losing 38% of its total electrical generation capacity. It would have a stunning negative impact on the state’s economy. The replacement power would have to be purchased on the spot market and most likely from fossil sources.

Environmental groups who have mounted their sustained campaign to shut down Oyster Creek may not realize it, but, if successful, their victory would be felt far more significantly in the checkbooks of the state’s businesses and residents than in the protection of fish in Barnegat Bay.

It's another fine mess - save fish and pollute a planet.

Prior coverage on this blog

# # #


Meredith Angwin said...

Ten years is a long time. Oyster Creek has an NRC license for 20 years, whatever they tell the state.

The president of Exelon recently said it wasn't worth building nuclear plants with the present low price of natural gas. I personally don't expect gas prices to stay that low...Rod Adams has a good post on why they will probably rise. As Rod said: "you are supposed to believe that natural gas will remain cheap."

In my opinion, whatever they say right now, negotiations on Oyster Creek aren't done until the plant is actually closed. Ten years is an eternity in the natural gas pricing game.

Karen Street said...

It's not a question of new nuclear vs new natural gas, but already paid for nuclear vs new natural gas. How much does it cost to produce a kWh at Oyster Creek?

Meredith Angwin said...

Karen. You are quite right.
VY sells at 4.2 cents per kWh now...just as a benchmark. So I presume their cost is below that. However, I am not sure. They sell to Vermont utilities at that price, and sell much of their power at a higher price to other states, so who knows? If they sold to everyone at 4.2 cents, the calculation would be simple.