Pa.'s ailing nuclear industry looks to Harrisburg for salvation

Three Mile Island Unit 1 is considered the most economically challenged nuclear facility in Pennsylvania and the most likely to be closed because of its difficulty competing with low natural-gas prices.

Cheap natural gas is killing off the competition, prompting Pennsylvania's ailing nuclear industry to mount a long-term campaign in Harrisburg to enact some kind of support to help its struggling reactors survive.

Exelon Corp., which operates three of Pennsylvania’s five nuclear plants, is leading an effort to promote price supports similar to the ones approved in Illinois and New York state that prevented Exelon reactors there from closing. Opponents in those states have denounced the actions as nuclear “bailouts” that will boost electric rates.

Last month, legislators here formed a bipartisan Pennsylvania Nuclear Caucus to advance discussions about nuclear power, the state’s largest source of carbon-free energy and a big source of local employment and taxes. Exelon is marshaling teams of lobbyists.

The battle lines have all the markings of a titanic struggle between two major lobbies: the shale-gas industry, which has shaken up energy markets and catapulted Pennsylvania into the position of second-largest U.S. gas producer, and the well-organized nuclear industry, which produced 37.5 percent of the state’s electricity in 2015.

“History has shown time and time again that when government picks winners and losers, Pennsylvania taxpayers end up footing the bill,” said David Spigelmyer, president of the Marcellus Shale Coalition, the gas-industry trade group. “Corporate welfare and taxpayer handouts to select industries will increase energy costs for consumers as well as [for] job creators across the commonwealth, especially manufacturers.”

Nuclear-power advocates say that emissions and electricity prices would increase if the reactors closed and that fossil-fuel generators would profit.

“It happens in every state where nuclear reactors shut down prematurely,” said John Keely, spokesman for the Nuclear Energy Institute in Washington. “Up go emissions, and up go electricity rates as you become increasingly reliant on a smaller pool of energy resources.”

A similar debate is underway in New Jersey, where Public Service Enterprise Group, operator of three reactors in Salem County, has initiated discussions in Trenton to give its carbon-free emissions the same kind of credit extended to wind and solar power. Exelon operates the Oyster Creek nuclear plant in Ocean County, though that facility is scheduled to be shut down in 2019 regardless of any legislative rescue.

The nuclear industry lost some regulatory momentum last month when President Trump killed the Obama administration’s proposed Clean Power Plan, which aimed to reward producers of carbon-free energy, like renewable and nuclear power. In the absence of a national policy, clean-power advocates are making their case in state capitals now.

The nuclear industry is trying to enlist some longtime antagonists in the environmental community, many of whom are suspicious of atomic power, despite its clean-air credentials. If climate change is the preeminent environmental threat, nuclear advocates argue, the shutdown of nuclear plants creates a large void that only new natural gas plants can fill, at an environmental cost.

"There are trade-offs that will have to be addressed," said John Hanger, a renewable-power advocate, former Pennsylvania environmental secretary, and currently an adviser to Exelon. He said that Exelon's Three Mile Island Unit 1 plant, the most imperiled of Pennsylvania's reactors, produces more carbon-free electricity than all the state's solar, wind, and hydro facilities combined.

"Environmental groups are having to reassess the importance of nuclear energy in dealing with climate change,” said Joseph Dominguez, Exelon’s executive vice president of governmental and regulatory affairs and public policy. “The reality is, over 90 percent of the carbon-free-emission power in this region is generated by nuclear power. Losing that overnight would be disastrous from a climate-change perspective, and disastrous from an air-emissions perspective."

In Illinois, part of the strategy to win over environmental support for nuclear subsidies was to expand guarantees for renewable energy. But broadening the discussion to examine a state's entire menu of fuel alternatives carries political risks. In some states, conservative legislators have moved to dilute renewable-energy mandates.

“All kinds of mischief can ensue when these things get opened up," said John Quigley, a former state environmental secretary who is now an energy fellow at the University of Pennsylvania.

The industry also is seeking to enlist business support of nuclear's clean-air attributes -- but for reasons other than climate change. Premature retirement of reactors, it argues, would lead to new gas generators that could impair air quality in “nonattainment” areas like Philadelphia, which exceeds emissions limits for pollutants such as nitrogen oxide and sulfur dioxide that are unlikely to be relaxed, even in the current antiregulatory environment. 

“When you have a nonattainment area, it means that other industrial development in the region is thwarted because there is no room for incremental emissions,” said Dominguez. “So having clean [electricity] generation has considerable commercial impact.”

The nuclear industry also is rallying support around the local economic impact of reactors like TMI Unit 1 near Harrisburg, where a payroll of about $50 million and employment of 520 is concentrated in Dauphin and Lancaster Counties.

The 837-megawatt TMI reactor has failed for two years to submit a successful bid in an auction to meet energy needs in PJM Interconnection Inc., the regional power grid serving 13 states and the District of Columbia. Though TMI 1 is licensed to operate until 2034, Exelon said it is committed only to keeping it running through May 2018.

“TMI is going to be probably the first unit where closures are announced in Pennsylvania, but it will not be the last if this environment persists,” said  Dominguez. Also struggling to compete in a low-price environment is FirstEnergy Corp.’s Beaver Valley plant in Western Pennsylvania.

Nuclear is "a significant employer in the state," said Sen. John Yudichak (D., Luzerne), the ranking Democrat on the state Senate's Environmental Resources and Energy Committee, a sponsor of the Nuclear Caucus. Talen Energy's Susquehanna nuclear plant in Berwick employs 1,300 people, many in his district.

Not everyone lauds the value of saving nuclear power. Eric Epstein, chairman of TMI Alert in Harrisburg, said the reactor's shutdown would be welcome. And decommissioning the reactors would employ hundreds. “We’ll move on, and we’ll be OK,” he said.

And last week, a coalition of the gas industry, large industrial consumers, and AARP launched Citizens Against Nuclear Bailout, a campaign to oppose efforts to prop up Pennsylvania’s nukes.

PJM Interconnection, which manages the regional electrical grid, said it is concerned states might adopt subsidies without coordinating them with the organized power markets. Last month, PJM's independent market monitor took a less accommodating view of the state-approved nuclear subsidies in Illinois and New York, saying they "threaten the foundations" of the grid operator's competitive markets.

"Subsidies are contagious," wrote Joseph Bowring of Monitoring Analytics LLC. He suggested that broader social goals of reducing carbon emissions could be met with market-based mechanisms across PJM's 13-state region, not with special carve-outs on a state-by-state basis.

In the absence of national consensus over how to value the environmental benefits of nuclear power, Exelon's Dominguez says it is valid for states to support the industry as they do now with wind and solar energy, which are singled out in state renewable portfolio standards for specific market shares in power markets.  

"Until we get to the place where we agree upon a regional or a national solution to environmental issues and are able to internalize their costs," he said, "then we think states have the right to look out for their citizens, develop programs that protect resources, and ensure better air quality within the states."

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