The regional trading of carbon dioxide (CO2) allowances has yet to become robust enough to save certain financially-struggling nuclear plants, Federal Energy Regulatory Commission (FERC) member Cheryl LaFleur concluded Oct. 21.
LaFleur offered the assessment during a joint meeting between the commissioners of FERC and the Nuclear Regulatory Commission (NRC). In particular, LaFleur was reacting to a presentation on the “market factors influencing nuclear power economics” by Arnie Quinn, who directs FERC’s Office of Energy Policy and Innovation.
LaFleur pointed to the recent announcement by Entergy (NYSE:ETR) that it will retire the 680-MW Pilgrim plant in Massachusetts, possibly as soon as 2017.
With Pilgrim announcement, now Massachusetts has lost much of its carbon-free generation. Quinn said. “Our energy markets and our capacity markets don’t attempt to capture environmental benefits right now,” Quinn said.
So although the Regional Greenhouse Gas Initiative (RGGI) offers regional CO2 trading, the allowances are “not priced high enough to save Pilgrim.” Quinn agreed that was a fair assessment.
The expectation under the EPA Clean Power Plan is that carbon trading could increase and it would eventually make nuclear plants more valuable, Quinn said. That issue has come up frequently in meetings that FERC has held with regional organizations, Quinn said.
LaFleur also noted that “all the Yankees are gone” from the nuclear power business in the Northeast. Her remark was a reference to the now-retired Connecticut Yankee plant in Connecticut, the Yankee Rowe nuclear power plant in Massachusetts and the most-recently-retired Vermont Yankee in Vermont.
During the presentation, Quinn noted that some nuclear plants in competitive organized markets have been having a difficult time. This remains true although PJM and ISO-New England (ISO NE) have introduced capacity market reforms that place more emphasis on resource performance, Quinn said.
Quinn said that the declining cost of natural gas, and to a lesser extent coal, has driven down the marginal price of energy.
The Oct. 21 session marked the eighth joint meeting between NRC and FERC over a number of years. FERC hosted the Oct. 21 session at its headquarters in Washington, D.C. Departing FERC Commissioner Philip Moeller applauded the fact that FERC and NRC meet jointly from time-to-time.
“The NRC is primarily a safety regulator and we are primarily an economic regulator,” said Moeller. “That’s why it’s important for us to talk to one another. It’s even more important for the staffs to talk to each other, he added.
Moeller will leave the agency at the end of October, he said in an Oct. 6 statement, setting the stage for what likely will be another Republican to replace him on the commission.
There was also discussion of potential impacts of “electromagnetic pulses” on the grid and on nuclear power plants. In the late-1970s the NRC became concerned with these events and produced some reports, including a couple that are publicly-available, said Jennifer Uhle, NRC’s deputy director of the Office of Nuclear Reactor Regulation.
Like NRC, the North American Electric Reliability Corp. (NERC) is also studying “high-impact, low-frequency events,” said NERC Senior Vice President and Chief Reliability Officer Mark Lauby.
This is akin to what NRC calls “beyond design basis” events, Lauby acknowledged. Much emphasis is being placed on having spare equipment available that can be transported to the scene of a plant failure, he noted.
In the wake of the Fukushima disaster in Japan, NRC has been working with the nuclear industry to coordinate establish of two emergency-response centers in Memphis and Phoenix