Pennsylvania to save NUCLEAR with BAILOUT

 
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BigBarney
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Post by BigBarney » Mon. Mar. 11, 2019 8:02 pm

This plan will cost every resident to save old dying power plants...

https://lancasteronline.com/news/local/bill-intro ... 5c28d.html

https://www.google.com/search?client=firefox-b-1- ... lear+power

Why hang on to plants that have huge future liabilities well

into the future , they will need much more in the years ahead

wait till the bill comes to dispose of all the waste and the plant

itself...

BigBarney


 
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Post by Riddlerlloyd » Mon. Mar. 11, 2019 10:54 pm

Well, seeing as how I live in PA and pay taxes here I personally think it’s a good thing. Yes, it’s more expensive to produce nuclear power which is a disadvantage on an open market, however just because natural gas cheaper at the moment doesn’t always mean it will be. Additionally, if what the article says is accurate and 40% of the electricity used in PA comes from nuclear then that would need to be made up with other sources. While I personally have nothing against renewables they aren’t going to bridge that gap here in the next few years. That leaves coal or natural gas. It is true that the shale gas industry is booming and the reserves are great, but the only new pipelines I have observed being built here are for liquid gas distillates going to the export market, leaving the existing infrastructure to supply gas to the power plants. That is great during normal use periods but not during cold winters where there is residential heating, industrial and commercial heating plus industrial boiler use. When pressure drops in the natural gas system it all shuts down, that leaves turning off interruptible customers who then turn to fuel oil at the same time other residential customers need it. Natural gas maybe the answer, but not until the infrastructure is built to support it. That leaves keeping the nuke plants and continuing to have a diverse electrical supply instead of limiting ourselves to two main supplies. Once a nuclear plant is fuled it’s good for 18 - 24 months. That reliability is essential for long term emergency planning and resilience. When everything is sunny and ‘normal’ natural gas and renewables are great. One pipeline break or extreme weather, a situaion like up in Lawerence MA this fall and all of a sudden the natural gas option doesn’t look so good and once the nuclear plants are gone they aren’t coming back. All that being said if it costs me double what they’re projecting and I pay $40 a year to keep them I consider it a bargain.....but that’s just my 2 errrr....5 cents

 
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Post by BigBarney » Mon. Mar. 11, 2019 11:41 pm

Maybe I didn't state why these plants are to close clearly...

2 of PA's nuclear plants have no contracts to sell any power in

the 2020-2021 time period. Their price was to high to feed the

PJM power grid .

"Three Mile Island failed to clear PJM's auction of future electricity generation for the third year in a row, making the nuclear power plant's closure more likely."

"The auction would have allowed TMI to sell guaranteed power in 2020 and 2021. While there are other ways to sell electricity, the auction generally brings in the most revenue."

https://www.pennlive.com/news/2017/05/three_mile_ ... uctio.html

https://fox43.com/2018/05/24/exelon-announces-out ... y-auction/

BigBarney

 
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Post by Richard S. » Mon. Mar. 11, 2019 11:58 pm

The primary issue is the renewable energy mandates along with the currently low natural gas prices. Nuclear and coal plants are not as adaptable as NG to meeting the requirements of unreliable energy production from solar and and wind. Simple solution is lift the renewable energy subsidies and more importantly lift the mandate.

 
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Post by franpipeman » Tue. Mar. 12, 2019 8:05 am

To Reduce coal burning power plants, because of environmental concerns , we need increased renewables and nuclear to produce base line or power to the grid when renewables are not available until Renewable are more prolific and able to . If existing nuclear is not used coal will be making a rebound . Reading about natural gas it seem the fracked gas well are dropping production sooner than expected, one spot amongst others I read this is the Wall Street journal as it giving financiers worry about return on their loans to frackers. Natural gas sustainability is suspect in my view . Nuclear being they are in existence already , is the bridge until renewables are the dominant power source , which is 20 years away at least in my view with currently political viewpoints . My view point holds that making electricity that incrementally reduces harm to the environment will of course cost more. Most of our energy production doesnt take into account dealing with the wast issues , other wise know as kicking the can down the road , nuclear is the same of course but the waste is in containers for now waiting for what to do with it fossils fuels waste are floating around the atmosphere.

 
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Post by franpipeman » Tue. Mar. 12, 2019 8:10 am


 
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Post by oros35 » Tue. Mar. 12, 2019 8:56 am

BigBarney wrote:
Mon. Mar. 11, 2019 11:41 pm
Maybe I didn't state why these plants are to close clearly...

2 of PA's nuclear plants have no contracts to sell any power in

the 2020-2021 time period. Their price was to high to feed the

PJM power grid .

"Three Mile Island failed to clear PJM's auction of future electricity generation for the third year in a row, making the nuclear power plant's closure more likely."

"The auction would have allowed TMI to sell guaranteed power in 2020 and 2021. While there are other ways to sell electricity, the auction generally brings in the most revenue."

BigBarney
Your reason why is not accurate. Selling guaranteed power is a play on words that is not accurate. It is way more complicated than that.

These companies are making sound business decisions based on predicted future markets. Decisions today must be made for conditions 3 years into the future. If it costs you $26 to make a widget, and you are guaranteed to sell it for $24, why would you commit to taking a loss? This is why nuclear has not cleared the auction.


 
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Post by oros35 » Tue. Mar. 12, 2019 9:01 am

So here are some words of a friend of mine. The most educated person I know on nuclear power. Sorry it's long winded, but there is plenty to talk about.

"If you perused any of the initial news reports throughout the state regarding Rep. Mehaffie’s legislative announcement today, you would have noticed the first theme developing. (As we go through this endeavor, there will be many themes pursued by the opposition in an attempt to gain traction with something, anything. This is just the first of many.) The theme is the idea that Pennsylvania’s nuclear utilities are earning hundreds of millions a year in profits, why should the ratepayers fund a bailout?

It is true that most of PA’s nuclear plants, Three Mile Island being the exception (which even the opposition acknowledges), are currently earning a profit. So then, why the urgency? Why should the ratepayers fund a “bailout” for plants that are currently profitable? Well, some if it is strictly business, some of it is nuclear.

Some talking points to share with your friends and naysayers:

- Despite what the opponents on the other side all too often appear to forget, businesses exist to earn profits. I know that’s an evil thing to say in a lot of circles these days, but it’s the truth. And shareholders are largely not Wall Street fat cats or investment tycoons, they’re you and me. I’m not sure where this idea comes from that earning money on your investments, whether you’re a company, a broker, or an individual, is somehow a badge of shame, but apparently to some people it is. I’d love to see what their 401k’s are invested in...

- But I digress. Because electricity generation is a business, we are expected to make money every year. Yes, every year. So when the long-term projections of profitability suggest that the business will not continue to be profitable in future years, preparations begin to be made to exit from that business, even if currently profitable today. It would be no different than United Airlines planning to discontinue service on a particular route because their market studies show that route drying up next year, or Frito-Lay looking ahead to suspend production at one of their traditional potato chip manufacturing plants when the market is predicting increased sales in their baked varieties instead. Neither one would tolerate millions of dollars in losses before making a decision. Looking ahead is what good businesses do.

- Now for the nuclear piece. Shutting down a nuclear plant is a bit more complicated than an airline route or potato chip factory. The regulatory process alone takes 1-2 years, not to mention decisions like long-term capital investments that need to be made based upon whether the plant continues to operate or not. These types of decisions therefore cannot wait to be made until the plant is losing tens or hundreds of millions of dollars per year. Three Mile Island is currently not profitable (which the utility predicted three years ago when it made the announcement). Beaver Valley is currently profitable, but is projected to not be beginning in 2021, the announced deactivation date. Given another few years, I assure you that the slightly larger, slightly more economical nuclear units in the state will follow suit, and they will do so based upon what the market projections are 2-3 years into the future, not what profitability is today.

This argument is an easy one. It’s pure economics. I’m pretty sure that none of you holding utility stocks in your 401k’s (which I assure you, you virtually all do) would tolerate a utility telling you that you just have to ride out this couple hundred million dollars a year in a losses for a couple more years and we’ll turn things around. And neither would our opponents."

 
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Post by oros35 » Tue. Mar. 12, 2019 9:05 am

And some more discussion:

"a story ran in State Impact Pennsylvania (an NPR product) detailing a leak of a draft piece of legislation aimed to fairly compensate PA’s nuclear plants for their carbon-free contribution to our electricity grid. I’m not going to comment on the details of the draft, because it’s three weeks old and has undergone several revisions since it was written, and quite frankly, until an actual piece of legislation hits the floor of the house and senate in Harrisburg, all the talking we do about said legislation is just that, talk.

I will instead focus on another small aspect of the associated article. Our friend, Steve Kratz, hired gun for the natural-gas-lobby-funded Citizens Against Nuclear Bailouts watchdog group, has of course weighed in on the draft legislation with the following: “It’s still unclear what the problem the legislature is trying to solve is other than the corporate greed of three nuclear corporations that were projected to make more than $600 million in profits in Pennsylvania in 2018 and continue to dole out dividends to shareholders.”

As I’ve said before, Mr. Kratz is quite good at what he does. And he should be, as I’m sure he’s being paid quite handsomely by the natural gas lobbies for his prowess. He tells just enough truth to avoid being called a liar, and leaves out just enough truth to avoid being truthful. A true political lobbyist, with no loyalty, no integrity, and whose services can be bought and paid for by the highest bidder to craft his pithy messages. I assure you, if the nuclear lobby came up with double the sum that the natural gas lobby is paying Mr. Kratz, he would be lobbying whole-heartedly in favor of our movement for fair treatment for nuclear plants’ carbon-free contribution to our electricity grid tomorrow, and shamelessly.

That said, thank you Mr. Kratz. Because you have again afforded me the opportunity to opine by providing all of the truth and context that you so eloquently left out, and to continue to bolster many of my points in the process.

So is Mr. Kratz’ statement regarding PA’s nuclear utilities $600 million profits in 2018 true? Yeah, it probably is. Based upon the latest public data that I have seen, the only PA reactor that was actually not profitable in 2018 was Three Mile Island. That means that the other eight reactors in PA, including the two Beaver Valley units, did make a profit in 2018. It is also true that, based upon the current market construct and conditions, Beaver Valley cannot show profitability in 2022, 2023, and so on...

You see, Mr. Kratz, here in the real world, companies need to be able to project their profits and losses out years into the future, not simply based upon what the price of electricity is going to be tomorrow, and make decisions accordingly. It looks to me that TMI’s announced shutdown date was just about right, and likewise Beaver Valley’s. This progression makes perfect sense when you understand the economics of the business. Nuclear, like most businesses, benefits from economies of scale. A multi-unit site is cheaper to operate than a single-unit site, and in general you can measure economic efficiency on a cost-per-megawatt-output basis.

So TMI, being the state’s only single-unit site, is not surprising in being the state’s first premature closure. Which is why TMI announced it’s deactivation several years ago with a targeted date that has aligned with its loss of profitability. Likewise, Beaver Valley, being the state’s lowest megawatt output dual-unit site, is not surprising in being the next. I can assure you that the slightly larger other dual-unit sites in PA are not far behind in their announced deactivations if the current market construct does not change. In our business, or any business, Mr. Kratz, you don’t get to lose a couple hundred million dollars before you figure out that you need to make a decision. Shareholders tend to frown upon that kind of fiscal irresponsibility.

Since Mr. Kratz mentioned paying dividends in his quote, I figured it was only right to bring shareholders into the discussion. So who is this nebulous population of “shareholders” that are getting these dividends? Anyone reading this have a retirement account? It always amazes me that people like Mr. Kratz in situations like these conveniently demonize the shareholders as if they were a smoke-filled room of a half dozen Wall Street fat cats getting rich off the little people. Shareholders represent well over half of the people in this country who are invested in the stock market in one way or another. And that large-scale investment in our economy is a huge part of what makes our financial system the most successful in the world. To suggest that shareholders being paid a return on their investments is somehow a nefarious act is quite astounding to me, and I hope it is to you as well."

 
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Post by oros35 » Tue. Mar. 12, 2019 9:11 am

And some more thoughts:

"Showing your value by being absent...

If you happened to watch the “This Week in Pennsylvania” segment featuring the CEO of PJM, Andy Ott, you may have noticed him get a little fidgety in his chair anytime he was asked to speak of anything long term...and for good reason.

In PJM, long term is 3 years. Period. Because that’s all the market construct considers. (And I call it a market “construct” on purpose. It is not a free market, it is a constructed market).

Mr. Ott touted the 40% decrease in wholesale electricity prices over the past ten years as a market success story, but once again failed to ask if anyone’s actual electric bills have decreased by 40%. Because they haven’t. Pennsylvania’s retail electricity prices have increased about 20%, on par with the national average of states, the majority of which are evil money-grubbing regulated environments. Here’s what else he didn’t tell you...

In the PJM market, generators of electricity basically get paid in two ways. 1) They get paid for the price of the electricity they produce on any given day. That’s pretty simple. It’s like filling up at the pump. Whatever the price is that day, that’s what you’re paying Exxon. 2) They get paid in the form of “capacity payments”. A little more nebulous. Capacity payments are paid based upon the results of an annual auction that looks three years into the future and essentially asks “Hey, Mr. Generator, do you guarantee that you’ll be here 3 years from now and what do you want paid for that guarantee?”

Generators can either choose to bid into the auction or not, and they do so at a particular price, in this case it’s $/megawatt-day. Once the auction has reached its “clearing price” at which point PJM has satisfied its projected demand with margin, everyone who bid in below that price is paid that price. Everyone who didn’t, is out.

As you can probably guess, the auction held in 2018 was for capacity payments to be paid for available capacity in 2021-2022, and Beaver Valley along with many other nuclear and coal generating stations that have also announced early deactivation did not enter the market. You could say they voted “absent”.

So what was the result?

In the 2017 PJM capacity auction, the clearing price was about $76 per megawatt-day. In 2018, the clearing price was $140 per megawatt-day, with a very large portion of that increase being due to the announced early retirements of coal and nuclear plants....who won’t be here in 2021.

So what does that mean to the consumer? Well let’s add it up. What the clearing price means is that that is what those generators who committed to be available will be paid on a daily basis per megawatt that they are capable of producing (not actually producing). So, consider that the PJM auction cleared about 164,000 megawatts of capacity multiplied by $64/megawatt (the difference between 2017 and 2018) multiplied by 365 days....

$3.8 Billion.

What were you saying about falling prices, Mr. Ott?"

 
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Post by oros35 » Tue. Mar. 12, 2019 9:29 am

BigBarney wrote:
Mon. Mar. 11, 2019 8:02 pm
This plan will cost every resident to save old dying power plants...

BigBarney
These are not old dying power plants. Beaver Valley is licensed for 20 more years with the possibility of extending that to 40 more years. Beaver Valley is also rated an INPO 1 Legacy plant - meaning it has been one of the top performing plants for greater than 10 years straight. An extremely difficult mark to achieve. Beaver Valley is in the top 10 best performing plants in the country (based on safety, reliability, and many other factors)

 
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Post by franpipeman » Tue. Mar. 12, 2019 1:02 pm

How many license extensions has Beaver Valley have. How safe is a system that has already reached its 40 year life span especially pressurized water.

 
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Post by McGiever » Tue. Mar. 12, 2019 2:59 pm

franpipeman wrote:
Tue. Mar. 12, 2019 1:02 pm
How many license extensions has Beaver Valley have. How safe is a system that has already reached its 40 year life span especially pressurized water.
Not to worry Fran, keep in mind it's the NRC (nuclear regulatory commission) that has to grant or disapprove any license renewals. There have already been renewals as they're in 20 year increments.

It's the NRC who can obviously answer best the projected continued safety question...and you are allowed to ask them.

BVPS1 has had it's 3 PWR steam generators and reactor vessel head replaced and BVPS2 would soon too if it would remain to operate...
Last edited by McGiever on Tue. Mar. 12, 2019 3:11 pm, edited 3 times in total.

 
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Post by oros35 » Tue. Mar. 12, 2019 3:02 pm

franpipeman wrote:
Tue. Mar. 12, 2019 1:02 pm
How many license extensions has Beaver Valley have. How safe is a system that has already reached its 40 year life span especially pressurized water.
One extension to allow up to 60 years service. Currently licensed to operate through 2036 (Unit 1) and 2046 (Unit 2)

Extremely safe. The amount of analysis and testing required to extend a license is overwhelming. Every 18 months a barrage of testing is done to ensure the safety of the plant. Both NDE and destructive testing. Eddy current exams of the heat exchanger tubes, ultrasonic exams of welds and piping, destructive testing of irradiated specimens, vibration testing, thermal imaging, flux mapping, the list of testing goes on and on. In addition, we have a Major Equipment Replacement Program that replaces motors, pumps, valves and piping that no longer meet safety standards based on life expectancy. Millions of dollars a year go to refurbishing components of the plant.

The nuclear fuel is one of the cheapest things about a nuclear plant. Everything we do to ensure the health and safety of the public is what's expensive. (and also why nuclear generation employs so many highly paid and skilled workers) And it shows when you compare the incident rate of any other industry to nuclear. Nuclear is extremely safe and reliable.

 
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Post by McGiever » Tue. Mar. 12, 2019 3:16 pm

Brian, do wearing those yellow jammies make you sleepy like they do me during a hatch watch? ;) (inside joke)


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