Constellation urges quick New York PSC action on nuclear support program

Constellation Energy Nuclear Group LLC (CENG) told the New York State Public Service Commission that it should not allow further delay in a case that has a direct impact on the viability of two of its nuclear power plants.

CENG was respodning to the Alliance for a Green Economy’s (AGREE) July 11 request for an extension of the deadline to file comments on Department of Public Service Staff’s Responsive Proposal for Preserving Zero-Emissions Attributes. Comments on the proposal currently are due by July 18.

CENG objects to AGREE’s request for extension of at least 45 days to comment on the Staff Proposal and AGREE’s and other intervenors’ suggestion that the Public Service Commission has not provided ample due process to all parties in this proceeding. It said that time is of the essence for the commission to adopt a Clean Energy Standard (CES) program that would provide incentives to keep open two of its nuclear power plants.

Said the company: “CENG must make critical business decisions by September 2016, regarding the future of its nuclear electric generating facilities, Nine Mile Point and R.E. Ginna, and those decisions cannot be made in reliance on a CES proposal that is merely proposed. That is, a decision to invest tens of millions of dollars in units that have been and are losing money cannot be justified on the mere hope that the CES proceeding will ultimately result in contracts that will justify the investment. Accordingly, if the CES is to help prevent the premature retirement of existing nuclear facilities such as R.E. Ginna and Nine Mile, the extension of the comment deadline cannot lead to a delay in the issuance of a final order in the CES proceeding.

“As CENG explained in the June 13 Letter, Nine Mile Unit 1 is scheduled to commence a refueling outage during March 2017. The refueling process typically requires a lead time of nine months to a year for the prefabrication (essentially the engineering work) and the fabrication or making of the fuel. Prefabrication includes the preparation of reload and safety analyses that will determine the number of bundles of fuel and the level of enrichment needed for the fuel to meet the individual specifications of the unit. Once engineering is complete, the vendor begins to fabricate the fuel by sintering (similar to baking) uranium powder into ceramic pellets. The pellets are then loaded into 12 foot long rods. These rods are assembled into fuel bundles, which ultimately will be installed in the unit. The bundles and pellets are made to the unit’s specifications as determined by the prefabrication work. Once the fabrication of the fuel is completed, the fuel is delivered to the unit a few weeks in advance of the start of the refueling outage. Nine Mile Unit 1 has not yet ordered fuel, even though refueling would need to take place in March 2017.

“CENG and the Nuclear Generators need the certainty of the Commission’s Order approving the CES, and the Commission’s approval of the Nuclear Generators’ subsidies under the program before CENG makes a decision regarding the investment of approximately $55 million that will be necessary to refuel Nine Mile Unit 1. Although as noted above, the prefabrication and fabrication processes generally take nine months to a year to complete, the processes can be compressed into six months with additional expense. Thus, for Nine Mile Unit 1, CENG will need to determine whether to order the fuel no later than the end of September 2016.

“Additionally, under the Joint Proposal that the Commission approved in the R.E. Ginna Reliability Support Services Agreement (‘RSSA’) proceeding, R.E. Ginna Nuclear Power Plant, LLC (‘GNPP’), must file a notice of its intent to continue commercial operations with the Commission by September 30, 2016, if it does not intend to retire at the expiration of the RSSA term. Under the terms of the RSSA, the continued operation of R.E. Ginna after the expiration of the RSSA term would trigger an obligation for GNPP to incur substantial capital recovery balance costs. Thus, GNPP must make the critical decision whether to continue operations no later than the end of September 2016.

“In order for CENG to make the investment and commitment necessary to keep Nine Mile Unit 1 and R.E. Ginna in operation, it needs the certainty provided by a Commission order approving the CES and a signed contract procuring zero emission credits from the Nuclear Generators. CENG cannot make substantial investments on the mere possibility that the program ultimately adopted by the Commission is sufficient to justify the substantial investments and commitments required to enable continued operation of CENG’s Nuclear Generators. Thus, CENG will need a contract in hand by September 2016.

“To allow for sufficient time between an order and finalizing a contract for the zero-emission attributes of the CENG assets, CENG and the State will need an order from the Commission by August 1, 2016. In sum, time is of the essence.

“In addition, as recently reported, Exelon Corporation is in discussions with Entergy Corporation to purchase the James A. Fitzpatrick Nuclear Power Plant (‘Fitzpatrick’) located in Scriba, New York. Entergy had announced in November 2015 that it planned to close and decommission the FitzPatrick facility, later adding that it planned to cease facility operations in January 2017. The transaction is contingent on the final terms and timing of the CES/ZEC program. Exelon understands that Fitzpatrick must also soon make near-term investment decisions, including a refueling determination similar to CENG’s Nuclear Generators. Accordingly, if there is any hope of saving Fitzpatrick, then the Commission must act quickly to issue a final order in this proceeding.”

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.