Wednesday, April 7, 2010

Exelon will take its time in Texas

Firm files with NRC for an Early Site Permit which is good for 20 years

stepping-stones-5425The Nuclear Regulatory Commission’s idea of an Early Site Permit (ESP) is that it is a stepping stone to applying for a combined construction and operating license (COL) to build a commercial nuclear reactor.

However, Chicago-based Exelon (NYSE:EXC), the nation’s largest nuclear utility, has other plans. It sees the ESP as a marker for the “idea” that it might build a new nuclear reactor, or two, deep in the heart of Texas.

It’s not that many could find fault with Exelon’s cautious view of the nuclear industry in the Lone Star State. The firm has hit a series of rough spots there.

First, Exelon hitched its wagon to the GE-Hitachi ESBWR only to find out the Department of Energy thought the new reactor’s time-to-market might be later rather than earlier giving it a low score in terms of favorable mention loan guarantees. Exelon changed horses in mid-stream to the fully certified ABWR, but it was too late.

Second, Exelon’s attempted all-stock hostile takeover of NRG failed to gain traction last year with the target firm’s largest institutional investors who voted in July 2009 to stay put rather than sell their stock. It was a remarkable vote of confidence in the growth prospects for the South Texas Project and an unanticipated setback for Exelon.

NRG also got itself on the short-list for federal loan guarantees with twin ABWR reactors. Another Texas nuclear utility, Luminant, is a fifth runner up to the final four on the DOE short list for loan guarantees with plans for twin Mitsubishi APWR 1,700 MW reactors. The APWR is still in the design certification process at the NRC.

Third, Exelon originally planned to build two new reactors at Victoria, Texas, but as the recession took hold, along with declining demand for electricity, in July 2009 the firm closed its project office there. The Early Site Permit when approved by the NRC will give Exelon an option to re-visit development of a reactor at the Victoria site.

Thomas O’Neill, a spokesman for Exelon, said last July, “We’re not leaving Victoria, but today’s economic realities compel us to defer any decision on construction.”

Local response to the move was mixed. The Victoria Advocate, the local daily newspaper, reported March 25 that Mayor Will Armstrong said, “All I know is we’re still on their radar screen. I think that’s a real good sign. The national economy seems to be improving and we’re still part of their picture.”

The fact that Exelon is spending money on the ESP would indicate the site is indeed still in the picture. It shows that John Rowe, the firm’s CEO, is tenacious and has not given up on his ambitions to be a player in the Texas electric utility market.

The 411 on the ESP

envpermitExelon on March 25 filed an "early site permit" application with the Nuclear Regulatory Commission for an 11,500-acre site in Victoria County, Texas. At the same time, Exelon formally withdrew its application for a combined construction and operating license for the same site. The proposed site is 13 miles south of the City of Victoria.

If approved by the NRC, the early site permit would effectively reserve the property for new nuclear construction for up to 20 years with the possibility of renewal for another 20. The ESP, does not authorize construction of a new plant. NRC's review of the ESP application could take three to four years.

If Exelon decides to proceed with a new reactor project in Texas, it would be required to re-start the application for a combined construction and operating license.

"A decision whether to build in Victoria County will be made years in the future," said Marilyn Kray, Exelon’s vice president for nuclear project development. "The ESP allows us to establish the suitability of the site, which lessens the amount of work to do should we later decide to pursue a license."

Exelon does not have to reference a specific reactor design in the ESP. It allows the firm to keep its options open until it files a COL. In the next few years, all the major reactors now in the design certification process at the NRC are expected to exit the process with a "good to go" stamp from the regulators. This is not the case for a bevy of small reactors which are just ramping up to submit their applications for design review. It is unlikely Exelon would choose a small reactor, e.g., less than 500 MW, for the site given the size of the markets it is intended to serve in Texas.

Much of the data gathering and analysis contained in the ESP application had been performed for the combined construction and operating license application filed in 2008. Work on that application was suspended last year at Exelon’s request because of uncertainties in the domestic economy, lowered expectations of future electricity demand and related economic considerations.

Under the ESP process, the NRC evaluates site safety, environmental impact and emergency planning regarding a proposed nuclear plant. By issuing an ESP for a specific site, the NRC is certifying that the site satisfies federal criteria in those evaluation areas. If the company later chooses to pursue construction, the ESP becomes part of the combined construction and operating license application, which requires a separate review, public input and approval by the NRC.

NRC public meeting April 15

nrc sealOn April 15 NRC staff will conduct a public meeting in Victoria, Texas to discuss how the agency will review an Early Site Permit (ESP) application for the Victoria County site, about 13 miles south of Victoria.

“We’ve spoken before with residents in and around Victoria regarding Exelon’s activities, and we’re coming back to explain what’s now being proposed and how we’ll review the application,” said David Matthews, Director of the Division of New Reactor Licensing in the NRC’s Office of New Reactors.

The NRC will hold the meeting in the Mini Dome of the Victoria Community Center, 2905 E North St. in Victoria, from 7 to 9:30 PM. NRC staff presentations will describe the overall ESP review process, which includes safety and environmental assessments, as well as how the public can participate in the process. The NRC will host an open house for an hour prior to the meeting so members of the public have the opportunity to talk informally with agency staff.

Water rights an issue

Whooping CraneThe Wall Street Journal reported March 13 that Exelon’s efforts to retain water rights for the future operation of a nuclear reactor in Texas has run into a flock of environmental issues over habitat for endangered whooping cranes. Exelon is an apparent unwilling stakeholder in the issue which was undertaken by environmental groups long before the nuclear utility appeared on the scene with its plans for the reactor.

At the heart of a lawsuit filed against the Texas Commission on Environmental Quality by a green coalition is whether the water in the Guadalupe River is over-allocated. Exelon’s acquisition of senior water rights immediately added a new factor to the ongoing controversy. In drought years, the green groups maintain, there isn’t enough water in the river to service all the water rights and preserve habitat for the birds.

* * *

The Victoria County application is Exelon’s second ESP submittal. In 2007, the company received an early site permit for property beside the Clinton Power Station in Dewitt County, Ill., one of Exelon’s 10 operating nuclear power stations.

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Tuesday, April 6, 2010

Idaho’s Sen. Mike Crapo wants a national nuclear energy summit

It is a bipartisan appeal to President Obama

Mike_Crapo_official_photoIn a speech to the City Club of Idaho Falls last week, Sen. Mike Crapo, the state's senior senator, called for a national nuclear energy summit. He said that defining the nation's use of civilian nuclear energy should be handled through a bipartisan meeting involving a broad range of stakeholders.

Crapo's call for the summit was joined by 10 other senators from both parties. It represents a hand across the partisan divide which has separated republicans and democrats on energy policy since President Obama took office.

“With applications for 22 new reactors that could be built over the next ten to twenty years, and the President’s new commitment to build reactors, it is time for the Congress and the Executive Branch to join together to address our energy needs through safe, clean nuclear power,” Crapo said.

Crapo said the summit could include the President, his Cabinet, members of the U.S. Senate and House of Representatives, industry, consumers and representatives from our national energy laboratories, including DOE’s lead national nuclear lab, the Idaho National Laboratory (INL)

Crapo has discussed nuclear issues, including federal loan guarantees for AREVA’s proposed Eagle Rock Enrichment facility near Idaho Falls, with Energy Secretary Steven Chu. The Administration’s budget for Fiscal Year 2011 includes a recommendation to increase loan volume guarantee for the construction of nuclear reactors to $54 billion.

No shell games with loan guarantees

pea under the walnutIn an interview with the Idaho Falls Post Register April 5, Crapo also warned "special interests" not to try to use the nuclear energy summit to gain advantages.

He may be referring to reports that Exelon and Entergy want to use federal loan guarantees to pay for up-rates and plant improvements rather than new reactors.

Crapo said nuclear energy is too important to be left to partisan or special interests. It is a national priority.

"We need to have nuclear power be a part of our national energy policy, and today it is not. It's starting to rebound and become much stronger than it has been in the past. But the public is much more aware of the need for it. And the potential for nuclear power to be a solution for our national energy needs is phenomenal."

List of issues for the summit

The Senators’ letter to the President said the nuclear summit should address several issues, including:

  • The development of a 50-year strategy to ensure that nuclear power continues to play a vital role in our domestic energy supply;
  • Major initiatives that are currently underway or contemplated for the national and the extent to which these set the stage for the nuclear energy strategy;
  • The responsibilities of government and the private sector in fulfilling a nuclear strategy; and
  • The potential for an on-going working group providing advice and ensuring policies are implemented for a national nuclear energy policy.

Crapo was joined in sending the letter to the White House by Senators Lamar Alexander (R-Tennessee), Tom Carper (D-Delaware), James Inhofe (R-Oklahoma), Amy Klobuchar (D-Minnesota), Mary Landrieu (D-Louisiana), Jeff Sessions (R-Alabama), David Vitter (R-Louisiana), George Voinovich (R-Ohio), Mark Warner (D-Virginia) and Jim Webb (D-Virginia).

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Monday, April 5, 2010

Nuclear news roundup for April 5, 2010

Sweden moves ahead on policy for new reactors

ballot-boxThe Wall Street Journal reports March 25 that the incumbent government is confident enough of public support for nuclear energy, just six months prior to an election, to introduce legislation to allow construction of new reactors. If enacted, it will complete the process of reversing a 30-year ban on new plants. A first vote on the bill will come in June.

All of Sweden’s reactors were built between 1972 and 1985. Lifting the ban on new reactors includes a plan to replace the nation’s 10 nuclear power stations as they reach the end of their service life. Sweden generates 9.4 GWe of electricity with its current fleet of reactors, all of European design, which accounts for about 35-40% of total demand for electricity.

Assuming the bill passes, the new reactors will be built by a consortium of E.ON of Germany, Sweden’s state-owned Vattenfall and Fortum, a Finnish utility.

Prior coverage on this blog

    Areva closing on contracts for two new reactors in India

    Elephant The Hindu reports March 18 that the Nuclear Power Corporation India Limited (NPCIL) and Areva, the French state-owned nuclear giant, are near agreement on the construction of two new reactors.

    The two 1,650 MW EPR reactors will be built in Jaitapur, Maharashastra. Because the majority of Areva’s stock is owned by the French government, India’s ongoing legislative debate over liability limits in the case of a nuclear accident isn’t a roadblock to the deal.

    Earlier this winter, India’s Parliament tabled a bill to set liability limits which would have opened India’s domestic nuclear industry to American firms. Instead, the Russians inked a deal for new reactors. Like France, the Russian state-owned nuclear export agency self-insures.

    Lauvergeon in Fresno

    100lauvergeonWhile Areva was wrapping up a deal in India, CEO Anne Lauvergeon (right) was opening new market opportunities in Fresno, California. Visiting the farming region March 23, she wowed an appreciative audience at an economic development conference.

    Lauvergeon is ranked by Forbes Magazine as one of the top ten most powerful women in the world. Her presence in California promoting the plant was an over-the-top experience for the Fresno Nuclear Energy Group, which has been talking about construction of a new reactor in the area for several years.

    California has had a ban on new nuclear plants for more than three decades based on the supposition that there is no solution for management of spent nuclear fuel. Lauvergeon took this issue head on. She told the conference . . .

    “We recycle paper. We recycle plastic. We recycle glass. How could recycling become evil when it comes to nuclear waste.”

    She told the economic developers that a new Areva EPR reactor would generate 4,000 construction jobs and 400-700 permanent jobs. She estimated the plant would pump $438 million into the region’s economy and contribute $20 million/year in tax revenues.

    China to build 28 more reactors by 2020

    flashIn response to the question of how far one should travel to seek wisdom about the global nuclear renaissance, the answer is to go all the way to China.

    Bloomberg wire services reported March 23 that officials from the State Nuclear Power Technology Group and China Nuclear Engineering Group said the country will now build 28 more reactors at a blistering pace of completing each one in 50 months. The new plan will reportedly add 70 GWe of carbon emission free electric power to China’s economy.

    Reuters reported last December that China is planning its first “localised” third generation nuclear reactor based on the Westinghouse Ap1000 design. State Nuclear Power Technology Corp (SNPTC) and China Huaneng Group will build it in Shidaowan, Rongcheng city in the eastern province of Shandong.

    Westinghouse is building four AP1000 reactors in China. As part of the deal, it granted generous technology transfer rights to China to adapt the design to “localised” requirements. The first new reactor at Shandong will have a capacity of 1.4 GW, but the second will be built to generate 1.7 GWe.

    China Huaneng group is also building a commercial version of a 165 MW “pebble bed reactor at Shandong.

    The first of the four Westinghouse AP1000 reactors being built in China is expected to enter revenue service in 2013 according to Wang Binghua, Chairman of the SNPTC.

    In other nuclear news from China, the initial section of the steel liner for the first of two Areva EPRs being built in China at a plant in Guangdong province was put in place at the end of March. Both reactors are being built at Taishen and are expected to enter revenue service in 2013 and 2015 respectively.

    Poland picks site for new nuclear power station

    Reuters reported March 16 the Polish government has chosen a site 77 km northwest of Gdansk in the northern provincial town of Zarnowiec for construction of the country’s first nuclear power plant. A Polish electric utility will build the plant. A competition is currently underway to select a reactor vendor. The government said it would choose one by 2013 following feasibility studies. Current plans are to build two new nuclear power stations for about 3,000 MW each.

    greenhouse_gasesBuilding the plant will reportedly be a tough sell as anti-nuclear sentiment runs high in Poland. However, the country gets 90% of its power from coal and much of it is low grade which spews a lot of pollution into the air.

    The government is facing a requirement from the European Union which will impose increasingly stringent limits on carbon emissions by 2030. This policy is driving the government to plan to build the reactors.

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    Sunday, April 4, 2010

    Uranium could rise to $60/lb, but not for a while

    Experts cast doubt on speculation of $100/lb

    Money futuresAll it takes is one uranium mining CEO to get some ink from a speech at a major conference, and people pile on to comment, but in this case it may be with good reason. The CEO is Amir Adnani from Texas-based Uranium Energy Corp. (AMEX:UEC) which has several production sites using ISR methods.

    Speaking at a meeting of miners and investors in Hong Kong on March 31, Adnani startled industry experts by claiming prices could jump to $100/lb due to rising demand for nuclear fuel by China, India, and South Korea. He predicted prices in the range of $75/lb within five years.

    “We are going to see some hyper activity,” he said, because utilities will discover increasing demand for electricity amidst rapid growth globally for new nuclear power plants. The IAEA notes there are 436 reactors operating worldwide with 56 under construction and four times that number in the planning stage.

    According to a report by Bloomberg wire service, which covered the conference, Adnani said that mines that could go into production will remain shut until the price exceeds $55/lb. The reason, he said, is rising costs. Adnani must not have spoken recently with Cameco (NYSE:CCJ) which told this blog in February they are producing uranium at a cost per pound in the mid $30s at the Crow Butte ISR mine in Nebraska.

    What drives the interest in Adnani’s remarks that in 2007 uranium prices spiked at a record high of $136 pound. However, the rapid rise was followed by an equally rapid fall. The price has been hovering in the range of $42/lb for months according to Ux Consulting’s report for March 30th.

    Hyper price activity unlikely

    cold-water-tapThe Wall Street Journal also poured cold water on speculation about a rapid rise in the spot price of uranium. The newspaper reported April 5th that slower than anticipated development of nuclear reactors in the U.S. and market surpluses from Kazakhstan will work to keep the price down.

    While the Megaton-to-Megawatts program will wind down in 2013, Russia is already selling large quantities of uranium to U.S. utilities at market rates. It follows that that country will continue to blend down HEU into commercial nuclear fuel.

    There is rising demand for uranium. Evidence in the U.S. includes the fact that White Canyon mining (CVE:WU) an Australian firm, brought the Daneros Mine in Utah into production in February. Also, Energy Fuels Corp (TSE:EFR) is building a new 500 ton per day uranium mill in Montrose, Colorado, to take ore from nearby mines.

    The Wall Street Journal gets the last word here . . .

    “The lesson of uranium's last boom and bust is that, as with any industrial metal, prices are cyclical and feed back into shaping the fundamental factors of supply and demand. These are well balanced for now. Beware any predictions of an imminent explosion in prices.”

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    New York takes another swing at Indian Point

    The State of New York denied a water quality permit to Entergy’s Indian Point nuclear power station saying it’s once through cooling system kills too many fish.

    cooling towers You knew it was coming. In January the State of New Jersey issued a draft water quality permit to the Oyster Creek nuclear plant demanding that Exelon (NYSE:EXC), its owner, replace the once through cooling system with a $600-800 million cooling tower to protect fish in Barnegat Bay. Now in a copy cat move, the State of New York on April 2 denied a water quality permit under the Clean Water Act to Entergy”s (NYSE:ETR)Indian Point nuclear plants located on the Hudson River about 35 miles north of New York City. The action isn’t final as Entergy has 30 days to request a public hearing on the issue.

    Shortnose sturgeon - source Canadian Museum of NatureAccording to local news media in the lower Hudson region, the 23-page letter was sent late Friday April 2. It reportedly says the permit is denied because the plant harms shortnose and Atlantic sturgeon, an endangered species, when they are pulled against intake screens for the cooling system which uses 2.5 billion gallons a day. The water is returned to the Hudson 20-to-30 degrees warmer.

    The denial of the permit is a potential roadblock to relicensing the two reactors at the Indian Point plant. The U.S. Nuclear Regulatory Commission (NRC) requires all state environmental permits to be in place, and the plant in compliance, before it will extend the licenses for the two reactors for another 20 years. The plant licenses expire in 2013 and 2015.

    In its letter, the New York state Department of Environmental Conservation wrote that because Indian Point is causing “fish mortality,” the plant is “not in compliance.”

    leverage This is exactly the type of fulcrum for political leverage that environmental groups like Riverkeeper have been seeking for years. Their objective, which now appears to be reaching its intended conclusion, is to impose regulatory burdens on the plant that make it too expensive to operate forcing Entergy to shut it down rather than pass along the costs to stockholders.

    The political environment in New York is so hostile to the power station that there is no certainty even if Entergy agreed to build the cooling towers that the state Public Utility Commission would allow the firm to recover the costs from rate payers. Last month the state’s utility regulatory agency rejected a financial plan submitted by Entergy to spin-off six nuclear reactors into a new merchant corporation. The staff wrote in a letter to the commission the plan had too much debt and was not in the public interest.

    Cost of cooling towers

    Entergy said in a series of statements to the New York Times and the Wall Street Journal that new cooling towers, which would support a closed loop system, would cost $1 billion and take the plant out of operation for as long as 42 weeks. Permit approvals could take years before the the first shovel of dirt was moved to build them.

    In New Jersey Exelon officials made no bones about their response to the cooling tower issue. A spokesman for the firm said at a public hearing it would close the plant taking its 600+ MW of carbon emission free power permanently offline. By comparison, according to the Energy Information Administration, the two reactors at Indian Point provide three times this amount of electricity at 2,045 MW with a capacity factor of 97%. If Entergy chose to close the plants rather than build the cooling towers, the electricity supplied to the New York city region would also have to come from fossil sources.

    Is this really about fish?

    Alexa Matthiessen RiverkeeperAccording to the Wall Street Journal, Alex Matthiessen, (right) president of Riverkeeper, said the power generated from Indian Point “is replaceable,” but he did not say from what sources. In a more telling comment to the New York Times, he said, “For all we know, this is it – the beginning of the end.”

    Entergy spokesperson Jim Steets told a lower Hudson newspaper, “We disagree with the findings.” He declined to say anything further except that the letter has been turned over to the firm’s lawyers for review.

    At the heart of the disputes in New Jersey and New York is the question of what constitutes “best available technology” for preventing fish kills with once through cooling systems. Cost effectiveness is a critical component of the finding required by the Clean Water Act. In New Jersey, until this year, prior efforts to impose cooling towers on Oyster Creek have been found to be financially onerous. However, the new administration of Gov Chris Chistie has other things on its mind like a mind boggling budget deficit. The cooling tower issue for Oyster Creek has been put on a back burner.

    Andrew_CuomoThis is not the case in New York. There State Attorney General Andrew Cuomo, (right) a leading candidate for governor, has filed multiple contentions with the NRC opposing the renewal of the operating licenses for the two reactors. The difference in New York is that the focused political ambitions of a top state official are driving the attacks on continued operation of the plant.

    Cuomo knows he needs the “green” vote to win the election. His efforts to put roadblocks in the path to license renewal for Indian Point are designed to win those votes. Neither the green groups nor Cuomo seem to have given any thought to the cost of the replacement power imposed on rate payers or the fact that it will come from fossil sources.

    Entergy may yet prevail either as a result of a public hearing or in court, citing evidence that improved fish screens are far more cost effective than a $1 billion set of cooling towers. The Clean Water Act was never intended to be a bludgeon to be used in defense of sturgeon. In the meantime, the NRC licensing process still has a way to go. Stay tuned.

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