Early Shutdown Seen for Reactors as Deman, Nat Gas Drop

A handful of U.S. nuclear reactors are at risk for early retirement as aging plants face higher costs, lower demand and a drop in prices for natural gas, a competing fuel, according to a Vermont Law School report.

Sites including Entergy Corp. (ETR)’s Indian Point, Dominion Resources Inc.’s Millstone and Constellation Energy Group Inc.’s Nine Mile Point, among the largest reactors in the U.S. Northeast, are at the highest risk for shutdown, according to the report from the law school’s Institute for Energy and the Environment, which focuses on energy law and policy.

The three plants make up a combined 6,375 megawatts, or about 6 percent of U.S. capacity, according to data from the U.S. Energy Information Administration.

Nationwide nuclear output is declining this year after four reactors were permanently idled. Production may drop further as a 73 percent drop in natural gas prices over the past five years made gas plants more profitable while electricity demand dropped to the lowest seasonal level since 2009 in the week ended July 5, according to Edison Electric Institute data. Lower gas prices present an attractive alternative to nuclear production, according to the report.

Nuclear plants “are not competitive because the U.S. has the technical ability and a rich, diverse resource base to meet the need for electricity with lower cost,” Mark Cooper, senior fellow for economic analysis at the institute and law school, wrote in the report.

Generation Mix

Nuclear generation accounted for 19 percent of the power produced in the U.S. last year, while natural gas made up about 30 percent, according to EIA data. The U.S. has the capacity to produce about 107,938 megawatts per day, based on nameplate capacity in a 2013 preliminary report by the EIA.

The high cost of refueling and maintenance, along with concern for safety risks following floods that crippled Japan’s Fukushima Dai-Ichi nuclear plant in 2011, were also cited as concerns for the nuclear industry.

“The plants’ economic environment is outside the NRC’s area of concern,” Scott Burnell, spokesman for the U.S. Nuclear Regulatory Commission, said in a prepared statement. “The plants are operating safely and the NRC will ensure they continue to protect public health and safety whenever they transition to decommissioning status.”

Other nuclear reactors named for risk of early retirement include Entergy’s Palisades plant in Michigan, Vermont Yankee in Vermont and Fitzpatrick in New York; Exelon Corp. (EXC)’s Oyster Creek reactor in New Jersey; and Omaha Public Power District’s Fort Calhoun in Nebraska, which has been idled since 2011, when flooding on the Missouri River extended a shutdown.

Constellation, which operates the Nine Mile Point and Ginna reactors, is an energy company of Exelon.

To contact the reporter on this story: Christine Harvey in New York at charvey32@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

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