OPPD board votes to retire Fort Calhoun nuclear plant

The Omaha Public Power District (OPPD) board of directors voted June 16 to accept a management recommendation and close the 478-MW Fort Calhoun nuclear power plant in Nebraska at the end of the year.

The board made the vote after hearing sometimes emotional testimony from stakeholders that included ratepayers and employees. “It feels like a wake,” OPPD Board Member Thomas Barrett said just prior to the vote. The board meeting was webcast.

Senior management made the Fort Calhoun Station (FCS) recommendation in May after a detailed review of various future resource portfolio scenarios.

The review was requested by Board Chair Mick Mines in April. According to extensive modeling done by Pace Global, ceasing operations at the small nuclear plant and rebalancing the generation portfolio will save the district between $735m and $994m over the next 20 years, according to an OPPD news release.

“This was a difficult vote and one we did not take lightly,” Mines said. “The industry is changing and it is imperative that we make strategic decisions to better position the district in the future for all our 365,000 customer-owners.”

Market conditions are a major factor in the decision by the board, OPPD said in a news release. Historically low natural gas prices are a contributing factor; they reduce OPPD’s cost to generate electricity using natural gas. In addition, consumers are using less energy.

The final version of the Environmental Protection Agency (EPA)’s proposed Clean Power Plan is another factor. It does not give carbon-free generation credit for existing nuclear plants such as FCS.

The board also looked at economies of scale. Fort Calhoun is the smallest rated commercial unit in North America, based on accredited capability. Larger and multi-unit nuclear plants can spread costs over high levels of production.

Slow load growth and increasing regulatory and operational costs have led to the recent early retirement of several other U.S. nuclear generating stations.

OPPD CEO Tim Burke added, “As tough as this decision is, we cannot afford to ignore the changes happening around us. We must look to the future.” Burke noted at one point during the proceedings that the small size of the plant made its “economies of scale” unattractive to potential buyers.

Burke and other board members stressed that no blame should be placed on Fort Calhoun employees or on Exelon (NYSE:EXC), which has been working with OPPD basically as a nuclear consultant on the plant in recent years.  

OPPD board member Jack Green said he’d hoped that Fort Calhoun could remain open “if we kept the costs close.” But that was difficult “with the collapse of the wholesale market at night,” which had once been a significant source of income for the plant.

Cost-cutting by Fort Calhoun, employees, management and Exelon “simply wasn’t enough,” Green said. Green concluded that he would vote in favor of closure “as much as it hurts me.”

OPPD plans no general rate increases through 2021. OPPD has a goal of having rates that are 20% below the regional average.

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.

The Nuclear Regulatory Commission (NRC) had licensed OPPD to run Fort Calhoun until 2033.

Fort Calhoun is a pressurized water reactor (PWR) that started commercial operations in the early 1970s. Fort Calhoun had a 95% capacity factor in 2014, according to GeneraitonHub records.

Plant will run until year’s end, then start decommissioning  

Board member Anne McGuire stressed that Fort Calhoun employees will continue to operate the plant safely and professionally through the end of the year.

Fort Calhoun will start the decommissioning process after retirement.

SAFSTOR and DECON are the primary two decommissioning options the nuclear industry has implemented. OPPD will use the SAFSTOR method, which will provide both regulatory and financial flexibility as the plant is decommissioned. Both options have a similar path during the next five years, OPPD said.

The cost to decommission FCS is estimated at approximately $1.2bn. As of the end of May 2016, OPPD has approximately $388m in total available decommissioning funds, and was pacing toward full funding for a 2033 decommission date. To allow for decommissioning before 2033, OPPD will add to its decommissioning fund annually. The district expects to be able to cover the remaining costs without raising the existing rates.

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.