The Closing of the Last Nuclear Plant in California & What it Means for the Future of American Nuclear

By: Meghan Boland, Esq.

 

Last week Pacific Gas & Electric Co. (“PG&E”) announced that the 31-year-old Diablo Canyon nuclear plant between Los Angeles and San Francisco will shut down by 2025.  As California has already banned the construction of new facilities until the federal government finds a permanent disposal site for radioactive waste, California will soon become a nuclear-free state. The Diablo Canyon facility has been controversial for decades, largely due its proximity to seismic faults and the Pacific Ocean.[1] The announcement of the closure of Diablo Canyon reactor comes at a time when other states are closing nuclear plants or have announced plans to do so, and with America’s most populous and most-environmentally conscious state turning away from nuclear power, many are now wondering what this means for the future of nuclear in America.[2]

With dramatic advances in solar and wind technology and the low prices of gas, nuclear is becoming an increasingly unpopular option. Although PG&E said the Diablo Canyon power will be replaced by renewables,[3] it is likely that many of the other nuclear plants closing around the country will be replaced with coal or natural gas. To be sure, nuclear energy has plenty of problems: reactors can melt down, they are ripe targets for terrorists, they are wildly uneconomical, mining uranium is both dangerous and environmentally destructive, and no one wants the spent fuel stored nearby. However, nuclear power remains a central component of America’s renewable portfolio and should not be cast aside until a viable alternative has been secured.

Obstacles to Nuclear in the U.S.

The federal government remains more involved in commercial nuclear power than in any other industry in the U.S. There are lengthy, detailed requirements for the construction and operation of all reactors and conversion, enrichment, fuel fabrication, mining and milling facilities. The review process preceding the construction of new reactors can take 3-5 years.[4] For these reasons, the aging nuclear fleet in the U.S. is becoming increasingly uneconomical to sustain. No new U.S. nuclear plant has opened since Watts Bar 1, in Tennessee, in 1996. Though a handful are currently under construction, 20 more may soon close.[5]

While it is expensive to develop any kind of energy infrastructure, the cost of nuclear energy has not fallen over time the way other renewable resources have. Under current conditions, it would be completely uneconomical without loan guarantees provided by the federal government.[6]

Solar and natural gas are both much cheaper than nuclear and are getting cheaper every day; whereas nuclear is no more cost-efficient than it was 60 years ago. Since the 1950’s, the cost of nuclear power has gone up by a factor of three, and the cost of solar has dropped by a factor of 2,500.[7] If current economic trends persist, more and more of U.S. plants may retire in coming years, leaving the communities they serve forced to rely on fossil fuels until solar and wind technologies are developed enough to totally fill the gap left by nuclear.

Finally, environmental groups are divided on just how green nuclear power actually is. Despite its low carbon footprint, environmental groups like the Sierra Club[8] and Greenpeace[9] totally oppose nuclear power due to the potential danger and the problems associated with disposal of nuclear waste. Other groups, like Natural Resources Defense Council, support relicensing plants in situations where it is safer and the plants cannot yet be replaced by renewable energy, and call for the closure of those that are uniquely dangerous.[10]

Nuclear’s Not Dead Yet

Nuclear energy’s saving grace is that it has virtually no carbon emissions. Nationwide, the U.S. gets about 20% of its electricity from nuclear power and nuclear makes up 64% of the country’s clean energy. But now California has effectively taken the position that nuclear power is not needed to win the war against climate change.

As our need for electricity continues to grow dramatically, which means in order to reach the target emission reductions electricity will have to be dramatically greener than current energy sources. Cutting out nuclear entirely will make greening our electricity system even harder. Under current U.S. policies, renewables will not account for a majority of our energy portfolio for at least another two decades. In that context, lopping twenty years off the life of a nuclear reactor by failing to renew its license may very well mean higher carbon emissions than relicensing existing facilities. Nuclear plants would likely be replaced by natural gas or coal plants, which would drive up carbon dioxide emissions.[11] For example, retired nuclear plants in the Northeast and California have been mostly replaced by increased natural gas usage,[12] partly because there is excess coal- and gas-burning capacity in the current energy system. While generating additional electricity from existing solar or wind facilities can be cheaper than burning coal, building a whole new set of wind turbines is more expensive than just feeding more gas into existing gas-fired plants.

Proponents of nuclear energy argue that it is essential to global efforts to keep global warming below 2 degrees Celsius. With global temperatures already rising by 0.8 degrees, cutting nuclear would make staying below the 2-degree threshold even more unlikely.[13] Furthermore, the smallest nuclear reactors in America have a comparable generating capacity to the average coal plant, meanwhile the largest nuclear plants can generate three times as much. Simply put, nuclear power plants can generate tremendous amounts of energy.

However, the U.S. has not entirely turned against nuclear. The Environmental Protection Agency is working on how to credit nuclear for carbon-free electricity as it finalizes its climate rules on new and existing power plants, therefore making nuclear somewhat more economically palatable, even if only to a small degree.[14]

Looking Forward

Therefore, rather than signaling the death of nuclear, the closure of Diablo Canyon may serve to renew conversation on the future of nuclear in America. Though many older plants are shutting down across the country, there remains some momentum for small reactors and next-generation reactors. If proponents of nuclear can build on this momentum, Diablo Canyon may instead mark the resurgence of nuclear in the U.S.

[1]“Does California Shutdown Mean the End of Nuclear Power? Not so Fast.” Christian Science Monitor, June. 28, 2016, http://www.csmonitor.com/USA/2016/0628/Does-California-shutdown-mean-the-end-of-nuclear-power-Not-so-fast.

[2] “Last Nuclear Power Plant in California to Close by 2025” Arizona Capitol Times, June 27, 2016, http://azcapitoltimes.com/news/2016/06/27/last-nuclear-power-plant-in-california-to-close-by-2025/#ixzz4CuQeMu13.

[3] Id.

[4] “US Nuclear Power Policy” World Nuclear Association, April 2016 http://www.world-nuclear.org/information-library/country-profiles/countries-t-z/usa-nuclear-power-policy.aspx

[5]“Can America Turn Its Nuclear Power Back On?” Popular Mechanics, Jan. 21, 2016 http://www.popularmechanics.com/science/energy/a18818/can-us-nuclear-power-get-un-stuck/ .

[6] Other countries, such as China, are beginning to mass-produce nuclear power plants to drive down costs. Id.

[7] Id.

[8] “Nuclear Free Future” Sierra Club, http://www.sierraclub.org/nuclear-free.

[9] “Nuclear Energy” Greenpeace, http://www.greenpeace.org/usa/global-warming/issues/nuclear/.

[10] “The Most Dangerous Nuclear Plant in America Is About 30 Miles From New York City [Updated: Cuomo Reacts]” New York Magazine, March 2011, http://nymag.com/daily/intelligencer/2011/03/the_most. dangerous_nuclear_pla.html.

[11]“Bernie Sanders wants to phase out nuclear power plants. Is that a good idea?” Grist March 28, 2016

http://grist.org/climate-energy/bernie-sanders-wants-to-phase-out-nuclear-power-plants-is-that-a-good-idea/.

[12] Id.

[13] “Why Nuclear Power Is All But Dead In the U.S.” Bloomberg April 15, 2015, http://www.bloomberg.com/news/articles/2015-04-15/soon-it-may-be-easier-to-build-a-nuclear-plant-in-iran-than-in-the-u-s-.

[14] Id.

Update: Confidentiality Denied. Historic ESCO Pricing Info to be Public

Originally Published February 4, 2016

On June 24, the New York Public Service Commission Secretary issued a final ruling denying confidential treatment to Historic ESCO Price Filings. This ruling denied the appeals of the National Energy Marketers Association (“NEMA”) and the Retail Energy Supply Association (“RESA”), and reaffirms the Commission Records Access Officer’s (“RAO”) February 1, 2016 ruling denying confidential treatment to Historic ESCO Price Filings. Historic pricing data will now be disclosed by the Commission, negatively impacting the competitive positions of ESCO’s in the retail market. Continue reading

NYPSC ‘Resetting Order’: Recent Updates

The recent three-day weekend has not slowed the action regarding the New York State Public Service Commission’s (‘PSC’ or ‘Commission’) ‘Resetting Order,’ with several recent updates taking place on multiple fronts:

Directly with the Commission

The Resetting Order, issued February 23, 2016 as part of the ongoing Docket 15-M-0127, would limit ‘mass market’ energy products to guaranteed savings or 30% renewable energy. On February 23, the Commission also issued a ‘Notice Seeking Comments’, which solicited comments on a variety of questions regarding the future of the New York retail electricity and natural gas markets, including re-examining the role of third-party energy suppliers (or ‘ESCOs’).

On May 4, 2016 the Department of Public Service (DPS) Staff published three Whitepapers. On May 31, 2016, the Commission held a Technical Conference in Albany to discuss comments on the three proposals: Continue reading

The (Sun) Rise of the Solar ‘Prosumer’

As prices of solar installations large and small have continued to plummet, market participants are diversifying ways of producing and distributing that energy. As a result, retail customers are increasingly able not only to consume energy, but to produce it as well. In so doing, they are also affecting the future development of both the renewable energy market, and the larger national grid system.

The rise of the ‘prosumer’ also has implications for other sectors (for example, the development of software to ensure secure transactions of solar credits and funds) as well as posing challenges for regulators struggling to balance energy innovation and democratization with a reliable grid for all.

Community Choice Energy/Aggregation (CCE/CCA)

Continue reading

States Meeting Renewable Portfolio Standards; not without cost

A new report by the Lawrence Berkeley National Laboratory (LNBL) analyzing the benefits and impacts of renewable portfolio standards in the U.S. finds that almost all of the 29 states with RPS programs on track to successfully meet their renewable goals, collectively creating 215 TWh of demand in 2015. However, more ambitious goals have also led to a rise in compliance costs over the last few years (from $11MWh in 2013 to $12MWh in 2014), and the current structure of most RPS portfolios are not sufficiently incentivizing the creation of new generation capacity. The study also noted that, while RPS programs have been very successful in meeting their stated goals, they have not led to a consensus on what the larger goals of such programs should be.

Even though no two state policies are the same, the national RPS achievement average in 2014 was 95%. And while the adoption of new RPS programs has stalled (largely due to the politicization of renewable energy), states with existing portfolios have continued to increase their RPS targets. Both New York and Hawaii set targets of 50% renewables by 2030 and Hawai’i aiming to reach 100% by 2045.

UD-LBNL-RPS_2016-2-04-21-2016

Continue reading

NYS Assembly Introduces Bills Affecting ESCOs

The debate over the future of New York’s retail energy market continues to heat up, with several bills addressing the role of third-party energy suppliers recently introduced into the New York State Assembly.

Two of the proposed measures seek to limit ESCOs role in the market. A9593 would repeal ESCOs’ sales tax exemption on the delivery of electricity and natural gas. A9652 would add language to the current state statutes (governing wheeling) in order to limit the sale of electricity or natural gas by ESCOs to non-residential customers only.

Supporters of the measures, including Assembly Member Dinowitz (who introduced both bills), and Assembly Members Cook, Ortiz, Steck, and Zebrowski, cite the need to protect residential consumers from deceptive marketing, and criticize the current sales tax exemption as a distorting factor on the energy markets and prices.

Less certain, however, is the timeline or likelihood of the two bills clearing the committee  (both are currently in the Energy Committee) and moving to a vote.

Court Extends TRO on PSC Resetting Retail Market Order

On Tuesday, April 6, an Albany County Supreme Court judge issued a Stipulation extending  Temporary Restraining Order placed by the  on the Commission’s “Order Resetting Retail Energy Markets and Establishing Further Process” (aka the February 23 Order’) until April 25th. The Stipulation (which was agreed to by both plaintiffs and the New York Public Service Commission) also pushed the deadline for reply comments from April 10th to April 25th. The hearing on whether to grant a Preliminary Injunction (which would essentially extend the TRO until after a trial or settlement) is now set for May 5th instead of the original April 14th.

The February 23 Order was designed to restructure the energy market for residential and ‘small commercial’ consumers by limiting the types of energy ‘products’ energy suppliers could offer, and to increase the penalties that could be imposed on suppliers’ violations of sales and marketing practices. The TRO ‘pressed pause’ on Ordering Paragraphs 1, 2, and 3 of that Order:

  • Paragraph 1 restricts ESCOs to offering either a price guaranteed to match or beat the utility price or offer 30% renewable product.
  • Paragraph 2 requires ESCOs to receive affirmative consent from a mass market customer prior to renewing that customer from a fixed rate or guaranteed savings contract into a contract that provides renewable energy but does not guarantee savings.
  • Paragraph 3 requires the CEO or equivalent to certify compliance with the Order.

While this is good news for ESCOs looking for additional breathing room to update their products and internal compliance measures, the TRO did not affect the PSC’s new ‘One-Strike’ Rule, which increases the penalties it can impose on companies violating sales and marketing regulations.

And, while companies do not have to comply with the two requirements listed above – at least for now – it is it is important to remember that the legal battle is separate from the active PSC docket, which will be instrumental in shaping the future of the New York energy market.

Below is a list of upcoming deadlines and Commission actions, and a list of the filings by the Impacted ESCO Coalition. Please feel free to email info@fellerenergylaw.com with any questions.

Upcoming Deadlines (as of April 6, 2016):

  • April 18-19: PSC Technical Conference (Albany and via Webcast)
  • April 25: Petitioner Reply Papers due (Article 78 Proceeding)
  • May 6: TRO period ends / Hearing on Preliminary Injunction (Article 78 Proceeding)

Filings by the Impacted ESCO Coalition:

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