Three Mile Island fights once again for its nuclear survival

MIDDLETOWN, Pa. — Workers are setting the groundwork at Three Mile Island for a maintenance outage this month to replenish Unit 1's uranium core, an elaborately choreographed event that requires 1,500 contract workers and injects millions of dollars into the local economy.

But TMI's biennial refueling outage has a tinge of melancholy this year: It could be the last time fuel is ever loaded into Unit 1, whose neighboring twin reactor shut down in 1979 after the nation's worst commercial nuclear accident.

Exelon Generation, the company that operates Unit 1, announced in May that it plans to prematurely shut down the power plant in 2019 unless the Pennsylvania legislature rescues the nuclear industry, which is struggling to compete in a world where newfound natural-gas resources have driven down electricity prices.

"We've got almost 300 people over there who are scared to death they're going to lose their jobs," said John Levengood, president of Electricians Local 777, which represents about 40 percent of the plant's full-time employees. "That's my biggest concern."

As workers erected scaffolding around the plant for the upcoming outage, nuclear-industry lobbyists are erecting a political foundation 12 miles up the Susquehanna River in Harrisburg to secure support for the state's five nuclear plants — a bailout, opponents say. It's unclear when or in what form nuclear subsidies will be proposed, but it's likely that electricity customers, not taxpayers, would be asked to pay the cost through higher rates.

The nuclear industry, by far the largest producer of zero-carbon-emission electrical power, is facing a similar struggle nationwide as plans for new reactors get scrapped and existing plants battle to compete in states with deregulated power markets. Some wonder whether natural gas, with a history of price volatility and occasional scarcity, has really entered a golden era of reliable abundance with the development of hydraulically fractured shale gas.

TMI's 675 total employees remain committed to operating the plant safely and efficiently even though their future hangs in the balance, said Thomas P. Haaf, the Unit 1 plant manager.

"Our folks are optimistic that something might change, but they're committed that even if we are going to shut down in 2019, they're going to be the best plant that ever shut down," Haaf said on a recent tour of the plant, located just outside Middletown in Londonderry Township. "That's the only thing we can do."

The 852-megawatt reactor has lost $300 million in the last five years, even though it operates 96 percent of the time and is one of Exelon's most efficient units.

"We're not going to be able to cost-cut ourselves out of this situation we're in," said David Fein, an Exelon Corp. vice president for state government affairs. "There needs to be some policy changes to address the market flaws and market challenges we're seeing."

Exelon and its allies have marshaled an arsenal of arguments about the dangers of allowing the plant to shut down: The loss of TMI's $60 million payroll; a reduction in local and state tax payments from the plants; and the environmental and competitive risks of losing a reliable source of emissions-free energy.

But an alliance of large energy customers and the natural-gas industry, which stands to gain share in the power-generation sector with the closure of nuclear plants, say government should not change electricity-market rules to favor one industry.

They expect nuclear's supporters will try a similar approach adopted in Illinois and New York state, which approved zero-emissions credits to lift the price nuclear producers receive for power, similar to renewable-energy credits that incentivize solar and wind producers. The cost of the credits are passed on to customers in electricity rates.

Opponents in Illinois and New York have sued to overturn the subsidies, but the states and the nuclear industry have prevailed in the first round of appeals. Neither bailout has gone into effect, so it's difficult to test the competing claims that the subsidies will have either a negligible or a catastrophic impact on consumers.

In Pennsylvania, the debate may not be resolved until after next year's statewide elections, and is being closely monitored in other states, said Martin Williams, business manager of Boilermakers Local 13 in Philadelphia, which represents about two dozen TMI contract workers.

"If Pennsylvania doesn't act in a similar way to Illinois and New York, I just wonder about the message that's going to send to other states in the region that are grappling with the same issue, such as Ohio, New Jersey, Massachusetts, and Connecticut," he said.

Citizens Against Nuclear Bailouts, an advocacy group backed by large manufacturers and the gas industry, says that competitive wholesale electricity markets have served consumers well in the 21 years since they were adopted in Pennsylvania and should not be tinkered with.

"Should competitive electricity markets be turned on their head to save a dinosaur?" Steve Kratz, a spokesman for Citizens Against Nuclear Bailouts, said of Three Mile Island.

TMI's Unit 1 was acquired by Exelon in 2003 and is licensed to operate until 2034. The adjacent Unit 2 — shut down in 1979 after the infamous accident that put the brakes on the nation's nuclear program — is owned by FirstEnergy Corp. Final cleanup of the damaged Unit 2 reactor awaits the retirement of the surviving unit.

Opponents say the 10-year dismantlement and decontamination of the site would be an employment boost on its own. "We believe there are more jobs to be had from decommissioning the plant than keeping it open," said David N. Taylor, president of the Pennsylvania Manufacturers' Association.

But TMI's supporters say the plant's ongoing contribution to the community, in terms of jobs, taxes, and a charitable corporate presence, is immeasurable.

"If the plant goes, we will be hurting," said Mike Pries, a Dauphin County commissioner and co-chair of an Exelon-supported coalition, Clean Jobs for Pennsylvania. He said the value of the property, and the $1 million a year Exelon pays in property taxes, would plummet the moment Unit 1 shuts down.

Pries says lawmakers need to "level the playing field" so that nuclear energy receives value for its emissions-free power similar to that given other renewable-energy resources.

Opponents of a nuclear bailout say the industry already received a handout during the 15-year transition to competitive wholesale markets, when the state allowed utilities to maintain capped electricity rates to recover their "stranded investments" — primarily the sunk costs of the expensive nuclear fleet. Peco Energy Co., an Exelon subsidiary, kept rates in place until the end of 2010, mostly to pay for its Limerick Generating Station in Montgomery County.

"We don't want to purchase the same rug at the bazaar another time," Taylor said.

Exelon's Fein said the state-approved rate caps allowed the company to recoup investments that went to build power plants, but did not pay for new capital costs to comply with greater security measures imposed after the Sept. 11, 2001, terror attacks or the 2011 Fukushima Daiichi nuclear disaster.

As with other nuclear reactors, the visible new security measures at Three Mile Island are impressive. The place is a fortress.

The main employee parking lots were relocated about 200 yards from the plant entrance, separated by massive concrete barriers. The property is swarming with black-uniformed security personnel carrying military-style weapons, and bristles with guard towers, security gates, cameras, motion-detection devices, and steel ballistic barricades for delaying the advance of enemy combatants.

On an upper floor inside the plant's turbine building, Haaf pointed to two new 500-kilowatt diesel generators, an additional redundant power supply installed to comply with new rules imposed after a tsunami knocked out the backup power supply at the Fukushima complex, triggering a disastrous meltdown.

"The whole plant can keep operating even if the island is completely underwater," said Haaf.

The cost to produce nuclear power nationwide was about $34 a megawatt hour last year, according to the Nuclear Energy Institute. That's higher than the $20 to $30 current wholesale price of electricity.

But production costs were 22 percent higher at single-unit plants, which are more expensive to operate than multi-unit sites, such as Exelon's Limerick and Peach Bottom plants, according to the institute. Many of the reactors slated for early retirement are single-unit plants, like Three Mile Island.

Whether Pennsylvania legislators are willing to pay the extra cost for nuclear energy's attributes remains to be seen. Nearly 70 legislators signed on to an industry-inspired Nuclear Caucus this year, but legislative leaders have made no commitments. At a time when the Trump administration is skeptical of the climate-change threat, it's unclear whether TMI's zero-emission credentials alone are sufficient to swing the debate in Harrisburg.

"Different constituencies see different value in what nuclear power brings," said Exelon's Fein. "The resiliency and the fuel diversity and even the national-security issue is real important to a lot of people. Whether the federal government ever does something on climate change— and we've seen the mood in Washington — we've also seen states taking action."