March 15 (Bloomberg) -- The future of President Barack Obama’s plans to redesign the U.S. energy system with low-emission nuclear plants may hinge on reactors across the Pacific Ocean as Japan’s nuclear disaster renews a debate about the safety of plants.
Engineers are battling to prevent a meltdown at the Fukushima Daiichi power station crippled last week by a tsunami and the 9.0 magnitude temblor off Japan’s coast. U.S. regulators may first closely scrutinize San Francisco-based PG&E Corp.’s Diablo Canyon seaside nuclear plant in earthquake-prone California, Hugh Wynne, an analyst at Sanford Bernstein & Co. wrote in a note to clients yesterday.
“Nuclear, long term, will be decided over the next couple of weeks,” said Abel Mojica, who manages energy-related limited partnerships at Tortoise Capital Advisors in Leawood, Kansas. “If there are decisions after the post mortem, that there are additional safety features required, that could add to costs.”
Obama’s energy plan relies heavily on nuclear power to reduce carbon-dioxide emissions harmful to the climate as well as to reduce dependence on imported oil. The president proposed tripling federal loan guarantees to $54.5 billion to help build new reactors in the 2012 budget plan he sent to Congress.
‘Lot of Chaos’
As the 1979 Three Mile Island accident near Harrisburg, Pennsylvania, brought investment in nuclear power to a standstill for three decades, the disaster in Japan probably will have a similar effect as safety-related costs rise, said Marin Katusa, chief energy investment strategist at Casey Research in Phoenix. The company oversees about $100 million in energy-related assets.
“There is going to be a lot of chaos,” Katusa said. “Nuclear is going nowhere. A lot of these plants are over 40 years old and should be replaced. But the costs are going to be high.”
Around the globe, governments are probing the safety of operating reactors and delaying steps to keep them going. German Chancellor Angela Merkel today halted the country’s seven oldest nuclear plants, some of which were already offline, as part of a nationwide review to run through June. Switzerland yesterday suspended efforts to renew three of the country’s five power stations, while China, India and Britain also paused new plant development pending a review of Japan’s events.
In Washington, officials indicated no change in energy policy has been made because of the crisis in Japan.
Nuclear power “remains a part of the president’s overall energy plan,” Jay Carney, the White House press secretary, told reporters yesterday at a briefing.
The Nuclear Regulatory Commission remains confident that plants operating in the U.S. are safe, Gregory Jaczko, the NRC chairman, said at the same briefing. The agency sets safety rules for the industry and must approve new-plant construction.
“If we do get information that will cause us to take action, we will take action,” Jaczko said. “All our plants are designed to withstand significant natural phenomena, like earthquakes, tornadoes and tsunamis.”
Representative Edward Markey of Massachusetts, the top Democrat on the Natural Resources Committee of the U.S. House of Representatives, called for a moratorium on permits for reactors in seismically active areas. “This is going to cause real tremors in the nuclear investment area,” Markey told Peter Cook on Bloomberg Television’s “In the Loop.”
Markey requested today more information on the seismic safety features of U.S. reactors near earthquake-prone zones in a letter sent to the Nuclear Regulatory Commission.
“We are concerned that these reactors may not have the features necessary to withstand the sort of catastrophic earthquake and tsunami that has crippled several reactors in Japan,” wrote Markey and Representative Lois Capps of California, a Democrat.
Regulators in the U.S. have been asked to extend the operating licenses of 13 plants with 20 reactors, according to government figures. Companies run 104 nuclear power stations to supply about 20 percent of U.S. electricity.
The most active earthquake zones in the U.S. include California’s San Andreas fault and the New Madrid seismic zone in Arkansas, Missouri and Tennessee, according to the U.S. Geological Survey. There is a “continuing concern for a major destructive earthquake” along the New Madrid fault, while California registered the greatest number of temblors in the country during the past week, the agency said.
“Nuclear power plants should not be built in seismically active areas,” said Liz Apfelberg, a spokeswoman for Mothers for Peace. The San Luis Obispo, California-based group opposes extending PG&E’s license to run the nearby Diablo Canyon plant about 185 miles (298 kilometers) northwest of Los Angeles.
“No nuclear plant can be built robust enough in an earthquake zone,” Apfelberg said, citing the events in Japan.
Her group is challenging PG&E’s application for a 20-year license extension, based on seismic issues. In 2008, U.S. scientists discovered a new fault line near the plant that raised additional safety concerns, the Nuclear Regulatory Commission said.
In February, a group of California lawmakers cited the seismic threats to Diablo Canyon in a letter to a federal commission examining the issue of handling nuclear waste.
“We believe the seismicity, and remaining uncertainty, of California creates unique concerns which deserve to be more closely examined,” said the lawmakers, including Senator Sam Blakeslee, a Republican whose district includes San Luis Obispo.
“New evidence has emerged about previously undiscovered faults that may exist near or even beneath” the Diablo Canyon plant, said Blakeslee, a geophysicist who has studied earthquakes, in a separate statement. “The devastating events in Japan underscore the importance of addressing the seismic uncertainty surrounding California’s nuclear power plants.”
Diablo Canyon has been built to withstand “all environmental hazards in the region,” including a tsunami and an earthquake with a magnitude of as much as 7.5 on the Richter scale, Kory Raftery, a PG&E spokesman, said by telephone.
All of the plant’s equipment and buildings have been reinforced and tested to ensure it can withstand “far above the largest credible earthquake that could happen in our area,” Raftery said. U.S. scientists and regulators have determined that to be 6.0 to 6.5 in Richter magnitude, he said.
The California power station is one of a handful across the U.S. that may pose seismic safety risks. Plants in the Northeast and South are also within known fault zones.
In Arkansas, two pressurized-water reactors at the Russellville Nuclear One plant supply 30 percent of the state’s power, U.S. Energy Information Administration data show. The plant is about 180 miles from the New Madrid fault line.
The power station employs about 950 people in the area and holds a significant place in the community, according to state Representative Andrea Lea, a Republican whose district includes the Russellville plant and whose husband works there.
“You’ll never see a Kiwanis, Rotary or Lion’s club without an employee of Arkansas Nuclear One involved,” Lea said by telephone.
The damage resulting from the Japanese temblor and tsunami isn’t likely to be repeated in the area, said Haydar Al-Shukri, the director of the state earthquake center at the University of Arkansas at Little Rock. The most severe quake generated by the New Madrid fault would be no more than a magnitude of 8 on the Richter scale, about one tenth as powerful as the one that caused the disaster in Japan, he said.
In New York, Entergy Corp.’s two Indian Point reactors, about 24 miles north of New York City, are near the intersection of two seismic zones, identified in 2008 by scientists at Columbia University’s Lamont-Doherty Earth Observatory. A magnitude 7 earthquake in the region is possible, based on features of the faults, according to the scientists.
The reactors, which supply 25 percent of the power used by New York City and suburban Westchester County, are designed to withstand at least a magnitude 6 temblor, said Jerry Nappi, a plant spokesman. Entergy and the NRC determined that the power station “is still safe under the worst-postulated earthquake” after the seismic study, he said.
Years of Inquiry
More inquiries by nuclear regulators in other countries are likely to follow the Japanese accident and will take years, said James Acton, an associate in the Nuclear Policy Program at the Carnegie Endowment in Washington.
“It’s necessary to have a sober and careful reassessment of the seismology,” he said in an interview. “There are valid safety concerns and it will be hard for the industry to rebut those arguments. But if additional safety costs become an economic issue, investors may not be willing to cough up the extra money.”
Design similarities with the Daiichi reactors and the nature of the disaster that caused the problems there may ratchet up risks for U.S. reactor operators, according to Hugh Wynne of Bernstein Research in New York.
“Regulators, politicians and activist groups are likely to view power plants of any design faced with similar risks to constitute a potential hazard,” Wynne said yesterday in a report. PG&E’s Diablo Canyon and the San Onofre plant operated by Southern California Edison, a unit of Rosemead, California-based Edison International, are “particularly at risk” because of their seaside locations, Wynne said.
The San Onofre plant is designed to withstand a 7.0 magnitude earthquake, greater than the maximum “credible threat” for the region as determined by federal regulators and scientists, said Gil Alexander, a spokesman for Southern California Edison. The power station north of San Diego is protected by a seawall to deal with tsunamis as high as 30 feet, he said.
Cameco Corp., Canada’s largest uranium producer, and power-plant builder Shaw Group Inc. yesterday fell the most in more than a year, after paring drops of 28 percent each. Shaw has a 20 percent stake in Westinghouse Electric Co., a nuclear-power technology provider controlled by Tokyo-based Toshiba Corp.
Uranium for immediate delivery fell $7.49, or 11 percent, to $60.75 a pound, according to MF Global data, the biggest one-day drop since at least July 2007. Cameco executives said uranium prices may fall further.
Many U.S. plants rely on batteries to maintain reactor cooling systems in the event of a blackout, David Lochbaum, of the Union of Concerned Scientists, said today on a conference call with reporters. The back-up power supplies are less capable than those at the Daiichi plant, he said.
“We’re more vulnerable” said Lochbaum, who has worked in U.S. nuclear power stations for 17 years. “Many of our reactors are also vulnerable to hurricanes or ice storms.”