Dominion (NYSE: D) said early Oct. 22 that it has been unable to secure a buyer for the Kewaunee nuclear power plant near Green Bay, Wis., and expects to close the 556-MW unit in the second quarter of 2013.
The closure, and eventual decommissioning, will come after a reliability review by the Midwest Independent System Operator (MISO), Dominion said in a news release.
This would be the first closing of a U.S. nuclear energy facility since the shutdown of the Millstone 1 reactor in Connecticut in 1998, the Nuclear Energy Institute (NEI) said following the Dominion announcement. Dominion continues to own and operate Millstone’s sister reactors.
NEI President and CEO Marvin Fertel said that the plant’s closure should not be taken as a sign of larger nuclear industry trouble.
“As stated by Dominion, the company’s decision to close Kewaunee is based on the fact that it did not acquire additional reactors in the Midwest markets, so it could not achieve the economy of scale needed to be economical in that low-price power market,” Fertel said. The NEI official also called Dominion one of the best nuclear operators in the nation.
Plant went up for sale in 2011 after Dominion Midwest effort
Dominion announced in April 2011 that it would seek to sell Kewaunee as part of a regular review of its portfolio of assets to determine which assets fit strategically and support its objectives to improve return on invested capital and shareholder value.
The company was unable to find a buyer for the facility in a market where natural gas prices are low and there is no federal regulatory regime that might place a greater value on essentially carbon-free baseload power.
Less than two years ago, in February 2011, the NRC renewed the station’s operating license for an additional 20 years, until 2033.
Greenpeace nuclear analyst Jim Riccio said it shows the “dire straits” of the nuclear industry when a buyer cannot be found for a nuclear plant with a 20-year license extension.
Similar comments were made by Clean Wisconsin attorney Katie Nekola. “We are glad to hear it because it means that much more radioactive waste won’t be pilling up along the shore of Lake Michigan,” she told GenerationHub.
Kewaunee, located on Lake Michigan about 35 miles southeast of Green Bay, began commercial operation in 1974. It has one Westinghouse pressurized water reactor. Dominion acquired the station in July 2005 from Alliant Energy (NYSE: LNT) subsidiary Wisconsin Power and Light along with Wisconsin Public Service (WPS).
Dominion plans to recognize an after-tax charge of $281m in the third quarter of 2012 related to the closing and decommissioning of the station. The one-time charge will be excluded from operating earnings.
CEO Farrell says this was ‘purely economics’
“This was an extremely difficult decision, especially in light of how well the station is running and the dedication of the employees,” said Thomas F. Farrell II, Dominion chairman, president and CEO. “This decision was based purely on economics. “
“Dominion was not able to move forward with our plan to grow our nuclear fleet in the Midwest to take advantage of economies of scale,” Farrell said. “In addition, Kewaunee’s power purchase agreements are ending at a time of projected low wholesale electricity prices in the region. The combination of these factors makes it uneconomic for Kewaunee to continue operations.”
Dominion had looked at other Midwest nuclear plants that came available, but were unsuccessful in winning the respective auctions, said a company spokesperson.
Also the Alliant subsidiary has stated publicly it does not intend to renew its agreement for the 41% of the station production it purchases, the Dominion spokesperson told GenerationHub.
MISO will review closure timing
“MISO has six months to determine if Kewaunee is needed for system reliability, including evaluation of all feasible alternatives to retaining Kewaunee temporarily for reliability needs,” said the Dominion spokesperson. “For that reason, it is anticipated that the station shutdown will not occur until the second quarter of 2013. We believe that it is unlikely that MISO will find that Kewaunee is needed,” the representative said.
“Even if Kewaunee is required to run for reliability, it would only be for a short transition period necessary to implement an alternative solution,” the spokesperson said. MISO is aware of Dominion’s plans, the official said.
Farrell said the company’s top priority will be a continued focus on safety.
“We intend to take all steps necessary to ensure the protection of the public, employees and the environment during the remaining period of power generation, as the station is shut down, and throughout the decommissioning process,” Farrell said. “We will be vigilant, and we plan to make sure the facility has the resources it needs.”
“One thing that should be perfectly clear is that the employees of Kewaunee have been doing an outstanding job, and this decision is in no way a reflection on them,” Farrell said. “I want to thank them for all they have done, and Dominion will work to make the transition as smooth as possible for them and their communities,” Farrell went on to say.
Farrell had said only days earlier that he remains a nuclear power enthusiast and hopes to see the company add a third reactor at its North Anna complex in central Virginia around 2024.
Following station shutdown, Dominion plans to meet its obligations to the two utilities that purchase Kewaunee’s generation through market purchases until the power purchase agreements expire in December 2013.
The Kewaunee workforce is estimated at 650 people. The staff was informed of the decision early Oct. 22. It’s too early to say if many of the staff members might land work on the decommissioning project, the spokesperson said.
“In general, after the shutdown and the fuel is moved from the reactor core to the spent fuel pool, we plan to reduce the workforce by about a third,” the spokesperson said. “After a period of fuel monitoring and other critical maintenance activities required to secure the systems — which we expect to take about two months or less — we will release another 100 or so people. The workforce will continue to ramp down over time. Our current plans are to retain a sufficient number of employees long term to monitor the spent fuel pool and maintain the safety of the plant,” said the Dominion representative.
Dominion is offering retention benefits to non-union personnel and is discussing similar benefits with the union representing employees represented by International Union of Operating Engineers (IUOE) Local 420. The specifics of individual benefits are confidential.
Dominion said Kewaunee’s decommissioning trust is currently fully funded, and the company believes that the amounts available in the trust plus expected earnings will be sufficient to cover all decommissioning costs expected to be incurred after the station closes.
The station will remain under the oversight of the Nuclear Regulatory Commission (NRC) throughout the decommissioning process.