Management of the Omaha Public Power District (OPPD) has recommended that the 478-MW Fort Calhoun nuclear power plant in Nebraska, which is among the smallest in North America, should close at the end of 2016.
President and CEO Tim Burke told the board of directors at a regular meeting on May 12 that continued operation of Fort Calhoun Station (FCS) is not in the long-term financial best interests of OPPD or its customer-owners.
Burke said the decision was based on a recommendation from senior management, which did a thorough review of OPPD’s resource planning efforts. The board will review the recommendation and is anticipated to vote on it at the June 16 board meeting.
If the recommendation is approved, OPPD proposes no general rate increases through 2021. Fort Calhoun would start the decommissioning process after retirement.
Chairman Mick Mines had asked for potential scenarios regarding the future resource portfolio at the April 14 board meeting and directed senior management to provide a recommendation at the May board meeting.
The request was prompted, in part, by dynamic and rapid changes that are taking place in the industry, OPPD said in a May 12 news release.
The request also builds on the success of the 2014 resource generation plan that led to a bold reform of OPPD’s generation portfolio.
OPPD cites economics of small, single reactor
“The economic analysis clearly shows that continued operation of Fort Calhoun Nuclear Station is not financially sustainable,” Burke told the board. “The analysis considered market conditions, economies of scale and the proposed Clean Power Plan.”
Larger and multi-unit nuclear plants can spread many costs across more megawatts produced. At 478 MW, FCS is the smallest rated unit in North America, based on accredited capability, OPPD officials said in the news release.
Entergy (NYSE:ETR) has recently announced retirement plans for a couple of nuclear plants in the Northeast and Exelon (NYSE:EXC) has said a couple of its plants in Illinois will close unless legislation is passed soon in that state.
OPPD has been using Exelon to help with operations at Fort Calhoun. Fort Calhoun was offline was about two years between 2011 and 2013 following a 2011 refueling outage that was extended due to record flooding, an electrical fire and significant performance issues.
“While the recommendation to cease operations at Fort Calhoun Nuclear Station was a difficult one, it was a determination that had to be made in order to fulfill the district’s mission and our responsibility to our customer-owners,” Burke added. “This recommendation is not reflective of employee or Exelon performance.”
“OPPD would make every effort to absorb as many employees as possible into other areas of the district, based on qualifications and open positions,” Burke said.
The recommendation aligns with the strategic directives established by the OPPD board of directors in collaboration with senior managers in July 2015.
Customer-owners want affordable rates, and the board has directed senior management to drive those rates to 20% below the regional average. Continued operations of FCS, with its high operating costs, would impede OPPD from moving toward its goal of being 20% below the regional average.
“Decommissioning takes years and staffing reductions would take place in a thoughtful and phased manner,” Burke said. “We are assessing positions that would need to be retained to ensure public safety and site security if we move forward in this process.”
OPPD will continue to look at resource options, including the possibility of constructing or purchasing additional generation of many types (natural gas, wind, solar) as necessary.
Fort Calhoun is a pressurized water reactor (PWR) that started commercial operations in the early 1970s.