Do Nukes Have a Long-Term Future in Virginia?

Surry Nuclear power station. Photo credit: Dominion

Surry nuclear power station. Photo credit: Dominion

by James A. Bacon

With little fanfare two weeks ago, Dominion Virginia Power announced its intention to extend the life of its two nuclear units at the Surry Power Station for another 20 years. Commencing service in 1972 and 1973 respectively, the units are licensed to continue operating through 2032 and 2033.

“Over the next several years, we will submit thousands of pages to the [Nuclear Regulatory Commission] demonstrating the safety and technical feasibility of extending Surry’s operating licenses,” said David A. Christian, CEO of Dominion’s generation group. “We are excited to be the first utility in the U.S. to begin this process.”

Dominion timed the announcement to coincide with a White House symposium on the future of nuclear energy, during which the Obama administration underlined the importance of nuclear power in the nation’s energy future. “As America leads the global transition to a low-carbon economy,” states a White House fact sheet arising from that event, “the continued development of new and advanced nuclear technologies along with support for currently operating nuclear power plants as an important component of our clean energy strategy.”

The contribution of nuclear power is all the more critical for Virginia, which relies upon Dominion’s four nuclear plants at Surry and North Anna 3 for about 35% of the state’s electric power output. As Dominion scales back its coal-generated capacity in order to meet a Clean Power Plan mandate to cut CO2 emissions 32% by 2030, the company will be all the more dependent upon its zero-emission nuclear plants to meet demand.

Obtaining approvals from the federal Nuclear Regulatory Commission is just one hurdle. Virginia environmental groups oppose not only building a third nuclear unit at North Anna, at a mind-boggling cost of $19 billion, but extending the life of existing nuclear units at much lower cost. Glen Besa, executive director of the Virginia Chapter of the Sierra Club, likens the aging Surry units to an old car. “The older the car is, the more unreliable it is.”

The pros and cons of the two nuclear options — building a new plant and extending the old ones — shake out very differently.

Dominion wants to spend more than $800 million over the next six years on pre-construction design, engineering and permitting work for the North Anna 3 nuclear unit just to keep open the option of building it later, and that’s on top of hundreds of millions of dollars spent and passed on to rate payers already. Dominion’s logic is that  (a) nuclear has zero carbon emissions,  (b) nuclear will be less affected by fluctuations in the price of its fuel source than natural gas, and (c) the company has gotten really good at running nuclear power plants efficiently.

In the current economic environment, however, it’s hard to imagine the State Corporation Commission approving a $19 billion project when the cost of clean wind and solar power is steadily declining and the option always exists to purchase electricity on wholesale energy markets. Environmentalists also will make an issue of North Anna’s location on a fault line and the expense of disposing of nuclear waste.

The Surry project poses very different considerations. First, the capital cost of rehabbing the power plant to operate another 20 years will be modest — in the realm of $1.5 billion or so, roughly the cost of building a major gas-generated plant. Second, Surry’s operating costs are among the lowest in the nation.

In a ranking by Nucleonics Week earlier this year, Dominion’s Surry nuclear stations were the second lowest cost producers of 27 companies that reported their costs to the federal government between 2010 and 2012 — bested only by the company’s North Anna units.

“Safety, operational excellence and low costs are goals we strive for every day,” David Heacock, chief nuclear officer, told Nucleonics Week. “Key to our low-cost performance is our highly skilled and experienced work force in addition to having identical units. It is gratifying to see that we have been very successful when compared to other operating nuclear units.”

“We have a huge advantage in being able to share spare parts, and share workforce and procedures,” Heacock said. The company also gains a cost advantage over other nuclear operators by performing more work in-house.

Besa with the Sierra Club said that nuclear power plants experience wear and tear after decades of operation. Radioactive bombardment can cause the steel and concrete in the pressurized containment vessel to become brittle and less able to withstand the pressure, increasing the odds of a radioactive incident. “The analogy with an old car is a good example,” he said. “All sort of things start to happen when you have an old car. When a car breaks down, it’s just an inconvenience. When a nuclear plant has an accident, it can be catastrophic.”

Dominion responds that the company has a decades-long record of operating nuclear power plants safely and efficiently, and that nuclear provides much-needed diversity to its power portfolio as the company phases out most of its coal-fired units. Too much dependence upon natural gas exposes rate payers to fluctuating gas prices. Gas is cheap right now, but if history is any guide, it could easily double or triple in price in the future. Too much dependence upon wind and solar creates problems as well. The electric transmission grid can handle fluctuations in wind and solar output up to about 35% of total generating capacity. Any percentage higher than that can create interruptions to the power supply.

Extending the life of the Surry nuclear station will provide that fuel diversity at modest cost for years to come, Dominion says.

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40 responses to “Do Nukes Have a Long-Term Future in Virginia?

  1. I’d be interested in Dominion’s take on radioactive bombardment making steel and concrete more brittle and subject to accident. True? Partially true? Remediable? I’d like to understand what science there may be behind Sierra’s claim, especially in light of a recent Stanford report of November 16, 2015 about lying scientists

    http://news.stanford.edu/news/2015/november/fraud-science-papers-111615.html
    CJD

    • Excellent question. I would think that the $1.5 billion in rehabbing expense addresses that very problem, but I don’t know it for a fact.

    • As for the paper about lying scientists (written in a psychology journal) compare and contrast the implications for the global warming debate.

    • CrazyJD –

      Thank you for bringing this Standford study to our attention. It is a very apt discussion on the plague of demagogy that has so long surrounded nuclear power generation in this country. A Jihad by far too many environmental groups such as the Union of Concerned Scientists, and the Sierra Club, or factions thereof or individuals therein, against nuclear power, for example. Here enormous damage has been done to our society by reason of these disinformation campaigns that are launched for the purpose of and designed to instill fear in others and raise money for the authors own coffers.

      But this Standford study also has great relevance to many other issues where similar tactics are deployed the hide the truth from other people while pretending to enlighten them instead.

      So this Standford paper on fraud and misrepresentation in science is a very fine study that should be read by all. It helps us as readers to detect many of the common techniques and telltale signs of papers written in the disguise of impartial scientific inquiry, and thus to better understand how ever more scientists today use their presumed authority of scientific analysis and expertise in order the fool, rather than enlighten the reader. How they use it to hide the truth, and to promote falsehood promoted in its stead, for their own personal interests. How scientific studies are generated to spin, twist, hide, and distort the truth so as to promote hidden agendas, often for personal gain, or ideological advantage.

      This of course is Common as Mud. It is one of history’s oldest stories, namely the efforts of some few to pervert or otherwise oppose truth to gain, maintain, or enlarge their own power, wealth and influence.

      Unfortunately this pernicious habit is rampant in our new media age. But of course it has been going on as long as men have been giving speeches to others and writing things down to sell their point of view so as to gain power, advantage and influence over people or groups of people.

      Hence, since the classical Greeks, one the greatest tests and most valued skills of the learned individual has been his facility with and mastery over the Art of Rhetoric. Effective speaking and writing is critical to our bringing illumination, knowledge, know how, skills sets, and wisdom to others. But like most things, there is a dark side to the Art. Effective speaking and writing, the Arts of Rhetoric deployed to persuade can too often and easily be twisted into a negative quest to persuade others to their disadvantage, to sell spoiled goods sold irrespective of the truth of the matter at issue, or the disadvantage its sale will bring to the mislead buyer.

      Thus, some in ancient Greece, sought and did gain the power win all sides of an argument. These folks sought to gain the power of a God, the power of lording ones influence over other people, that was then in ancient Greece and still is today the quest, the Holy Grail of most all politicians, and far too many experts, wrapping themselves in the cloth of disinterested science and “fact analysis.” The ways to accomplish this Tomfoolery are many.

      The power, or the quest for it, corrupts us all. Most particularly however, it corrupts scientists, politicians, journalists, and experts of all sorts, today’s high priests, the talking heads paid by others to sell us falsehoods or those selling their own, in our highly powerful and efficient information age. Perhaps this is the most powerful Coin of our Realm today. Perhaps today its even more powerful, or potentially so, than in the past when it was a tool of choice in the arsenal of corrupt military commanders from Julius Caesar to Napoleon to Mussolini to Douglas MacArthur, and more benign but highly effective politicians ranging from Pericles to Cicero to Winston Churchill.

      This men knew will of their power as rhetoricians. That when it is deployed in the service of evil and/or private gain and ambition, Rhetoric can often be akin to “hypnotizing” ones audience by using demagogy to play on the audience’s fears and prejudices. The effort here is to rob one’s listeners of reason and logic, and send them off as one’s mindless tools in the wrong direction for them, but the most gainful direction for their masters, the Grand Rhetoricians pulling the strings of their puppets. Hence Rhetoric goes from enlightening the listener on the subject at issue to obscuring the truth and/or facts surrounding the issue, for the sole benefit of the seller of the poison, and those in his cabal, or otherwise in alliance with the pusher.

      Here in the instance of scientific papers or the writings of other experts, think traffic experts and bond and credit underwriters who now too often today, I my opinion, go astray on a quest to use their their authority to serve their own interests or those of a high paying client, and on that quest too often to hide by jargon and obfuscations, so as to overwhelm the reader with purposefully unintelligible, irrelevant, esoteric detail on highly complex or illusive subjects such as traffic counts and patterns, highly complex finance transactions, or the reliability and risks of nuclear power generations. These are subjects that are most easily demagogued if only because they are inherently difficult to grasp, see clearly and understand, so the negative or far side of assertions are hard to prove, or counter with truth.

      Of course too the Art of Rhetoric can also be used by its masters to abuse most any subject at all, and commonly is, from political reporting to the color of peoples skin to where they were born, to most anything.

      More on this and that subject later.

    • Here are a few more reactions to this Article:

      1/ Regarding the following quote from the Article:

      “In a ranking by Nucleonics Week earlier this year, Dominion’s Surry nuclear stations were the second lowest cost producers of 27 companies that reported their costs to the federal government between 2010 and 2012 — bested only by the company’s North Anna units.

      “Safety, operational excellence and low costs are goals we strive for every day,” David Heacock, chief nuclear officer, told Nucleonics Week. “Key to our low-cost performance is our highly skilled and experienced work force in addition to having identical units. It is gratifying to see that we have been very successful when compared to other operating nuclear units.”

      “We have a huge advantage in being able to share spare parts, and share workforce and procedures,” Heacock said. The company also gains a cost advantage over other nuclear operators by performing more work in-house.”

      —-

      Regarding the above quote, and my reading of all these articles here, and all else I have read elsewhere, I sense that Dominion Power shares one distinct characteristic with the US Marine Corps, that is, namely, that:

      Both Dominion Power and the US Marine Corps reek with competence in doing their job and completing their mission. That competence appears to me to be shot through, up and down the line of, both organizations.

      This is a positive delight to me. Why?

      Because I see so many public and quasi organizations and institutions, so strong before in America, failing us now. And they are failing us by reason of growing incompetence and corruption.

      For example:

      a. there was a time that we had great, highly efficient and free public schools from K thought 12 in this country, with few exceptions.

      b. There was a time when we had great, efficient and inexpensive public and private colleges and Universities in this country, with few exceptions.

      c/ There was a time when we had great, highly efficient roads and bridges, and air and rail transport in the country, with few exceptions.

      d/ There was a time when, by and large, when we had great and highly efficient and inexpensive civil servants in this country; and

      e/ there was a time when, by and large, the vast majority of the people in this country carried their own weight and did their fair share in this country.

      f/ There was a time when Fannie Mae was one of the world’s greatest companies, so great it was envy of the world by anyone intelligent and knowledgeable enough to discern the plain facts that it was the engine that drove home ownership in the nation to unimaginable heights. So our Federal Government, Congress in particular, destroyed Fannie Mae. One example, of yet more growing incompetence in this Nation.

      In fact:

      Much of all of this competence and proven capacity for achievement that America enjoyed appears now to be mostly draining out of large segments of this country, its people and institutions. So it is a positive delight to see the few bright spots where America’s Spirit and competence remains strong and vibrant – despite the decline of so much elsewhere.

      2/ Comment Number 2

      What a shame it is that our country stopped building Nuclear power plants after The Three Mile Island accident. Imagine how better off we would now be had we not largely destroyed our ability and willingness to build new nuclear power plants. This is part of our current incompetence, the time when so much of our now overwhelming incompetence began. We blinkered and blinded ourselves then. But in hindsight now, anyone with a semblance of an open mind can see mindless demagoguery that was then deployed to stop nuclear power by scaring people with false science and false claims, and ridiculous regulation designed to kill an industry instead to making it safer. The Yucca Mountain debacle being only one of many examples.

      Indeed, as best as I can tell:

      Nuclear power has the best safety record by far of any major industry in the United States history. Not one death or injury in the US by radiation leakage has ever been recorded or documented by any reliable source to my knowledge.

      Meanwhile, the venetian blind industry causes many deaths and injury to humans (mostly children) annually, for example …

      Nuclear power is by far our most reliable and environmentally neutral power source in the US, far more so that solar, wind, biodegradable power, all of which are highly expensive, highly unreliable, and impose high cost on the environment, both obvious and hidden. The wealth sucked out of this nation on these failed technologies for mass electric utility power over the past 45 years is mind boggling.

      In contrast, the delivery of baseline low cost nuclear power keeps our power grid going in many parts of the country. This nuclear power will be an ever more critical source for the nation’s power if the current “war on coal and gas” continues. New and highly practical technology advances in Nuclear are likely to continue. In any case it’s own best bridge to the future until we find the silver bullet that has been so illusive even as we waste vast sums on wind and solar dictated by government fiat so unsuccessfully over the past 45 years.”

      These statements were made earlier on this website and are found at:

      baconsrebellion.com/2015/06/what-role-for-nuclear-power-in-virginias-energy-future

      Those comments found there also include caveats relevant to these issues.

      • Any statements about nuclear being a “low cost source of power” is using the economics of nuclear units built 40-50 years ago and is not considering the costs of construction for a new unit or for refurbishment of old units. Please refer to the cost estimates for North Anna 3, any other U.S. nuclear unit currently under construction (Watts Bar, Vogtle, etc.) and any unit that did not apply for a license extension because of the need for substantial repairs. These units wear out and require extremely expensive retrofits that are far more expensive than any other alternative.

      • Well, would you believe:

        1/ For decades we have been living at hugely unnecessary environmental and financial cost, and with the gross misapplication of resources, as a result a lie perpetuated by scientists and special interests for over sixty years. These lies vastly over estimated the minimum danger levels for human health by reason of exposure to nuclear radiation. This lie sky rocketed costs of constructing nuclear generation plants. This mistake may well prove to be catastrophic if the Climate Change Alarmists are to be believed, in which case much of the harm is directly attributable to the pernicious influence of the environmental movement in the country.

        2/ Now we find after decades of neglect and incompetence that our nation’s falling apart roads, bridges, and dams are every year imposing every year extra vehicle damage costs estimated at $377 per driver annually, not to mention human injury from accidents while it has also throttled America’s commerce and trade, wasted vast amounts of peoples most precious resource “time”, and now requires trillions of dollars to restore our infrastructure systems to the proper levels. (The US is now 13th in the world overall – 14 in roads, 15th in railroads, 16th in electrical supply). Here too much of the blame for this record rests squarely on the shoulders of this nation’s environmental movement that has driven the costs of building most any infrastructure sky high in the country, most particularly by their cynical manipulation of the permitting process.

        (In many cases costs are now compounded by rampant crony capitalism that often in league with federal and some state governments as well. See for example: http://www.baconsrebellion.com/2015/11/p3-mirage.html )

        Like with Nuclear Power, the Environmental movement’s goal too often is not bring projects into conformance with reasonable laws but to kill projects altogether despite a crying public need for those projects.

        Even Hillary Clinton is admitting these facts insofar as infrastructure is concerned, while the Obama Administration is admitting them as they concern Nuclear Power. Unfortunately huge damage already has been inflicted on the Nation now for nearly 50 years, and that damage mounts every day into the future as far as we can now see.

        For some details see:

        Two Years Not Ten Years – Redesigning Infrastructure Approvals by Philip K. Howard found at:

        http://commongood.3cdn.net/c613b4cfda258a5fcb_e8m6b5t3x.pdf

        See also in today’s Wall Street Journal:
        1/ A Nuclear Paradigm Shift by Holman Jenkins, Jr
        2/ Making our Roads ‘Shovel-Ready’ by William A. Galson

  2. You mentioned an important issue that, I think, deserves more attention. You said, “In the current economic environment, … it’s hard to imagine the State Corporation Commission approving a $19 billion project when the cost of clean wind and solar power is steadily declining and the option always exists to purchase electricity on wholesale energy markets.

    First, “SCC approving” goes with “ratebasing.” These nuclear plants are rate-based, meaning, retail customers are paying to amortize the capital costs and in exchange are credited with the benefit of the low operating costs. Dominion COULD renew those licenses at shareholders’ expense, operate the units as “merchant” generation selling the power for whatever it can get in the wholesale markets and pocket that revenue, hopefully bringing in more than the carrying cost of the additional investment. That’s the way most new baseload electric generation is being built in this country (but not in Virginia, where Dominion has persuaded the GA and SCC to tilt the generator licensing process in favor of old-fashioned ratebasing). (Of course, extending the life of an existing, ratebased generator in order to operate it as a merchant facility would require an allocation of operating benefits or an approved sale by DVP to its merchant generator subsidiary, but that’s a detail.) So my question: has Dominion considered the “merchant generator” option for these life extensions?

    Second, nuclear power is the epitome of “baseload” power — that is, cheap to run full-tilt, expensive and difficult to ramp up and down. Ideally, an electric company owns or has under contract enough baseload generation to match its lowest, or constant, load, and enough “cycling” or “peaking” generation to serve the rest, its variable load. A company owning more base load generation than that has to sell the excess to the market; in fact it’s possible to saturate an entire market (like PJM) with baseload generation in excess of very light total load on a cool summer night, so that the system operator actually looks for load he can pay to take the excess power. The problem with both wind and solar power is that they are NOT baseload because they depend upon, well, wind, and sunlight; but when either kind of renewable power is available you want to use it because the marginal operating cost is very low — lower even than nuclear power. Now, in that context, baseload generation is impacted by “cheap wind and solar power” ONLY if there is so much cheap wind/solar power available that you have to back down ALL of your cycling generation and ALSO some of your base load generation in order to make room for it. And, nuclear would be about the last base load generation you would back down. So, today, it’s almost impossible for solar and wind to drive nuclear power generation off-line, and even with a substantially modified generation mix due to steady construction of more wind and solar units, we are many, many years from backing-down-nuclear becoming a frequent problem for system operators in the mid-Atlantic region. That said, however, renewing a nuclear plant’s license is a 40-year gamble, so even that far-out uncertainty is a concern. On the other hand Dominion, if among the first and one of the few to extend its licenses in the mid-Atlantic region, would face the lowest practical risk from this uncertainty. It’s an even lower risk if Dominion remains one of the lowest-cost nuclear operators and continues to beat the competition. My question: isn’t that distant uncertainty and competitive advantage all the more reason for Dominion to seek to extend these plant licenses on a “merchant” basis, at its risk rather than ratepayer risk of changing marketplace dynamics?

    There are billions of dollars at stake here.

    • There are a couple of errors in your comment, Acbar. First, the existing nuclear units owned by Virginia Electric and Power Co are indeed in rate base, but the potential $19 billion investment in a new unit at North Anna would qualify for separate cost recovery, if approved by the SCC, under the rate adjustment clause (RAC) mechanism established by the General Assembly in the Electric Re-regulation Act passed back in 2007.

      Second, you say “Dominion COULD renew those licenses at shareholders’ expense, operate the units as “merchant” generation selling the power for whatever it can get in the wholesale markets and pocket that revenue, hopefully bringing in more than the carrying cost of the additional investment.” Presuming you mean the parent company, Dominion Resources, Inc., this is not correct. Divestment of the existing nuclear units owned by Virginia Electric and Power Co to its parent would require SCC approval. This was tried once before, in 2001, and the SCC turned it down.

      It’s extremely unlikely (though not legally impossible) that Dominion Resources would again attempt to acquire the existing nuclear facilities and operate them as “merchant generators.” Dominion Resources acquired two nuclear facilities, one in Wisconsin and another in Connecticut, in the past decade and has since closed them both because market conditions would not support their continued operation. Nuclear continues to be somewhat at-risk in deregulated markets such as Illinois, where Commonwealth Edison has been seeking regulatory support for nuclear units it spun off to its merchant affiliate. As noted, such divestiture in Virginia requires SCC approval.

      I agree with most of the rest of your observations.

      • Interesting; thanks. I had forgot that DRI tried to transfer the nuclear units to its unregulated subsidiary once before. Was it all 4 of them? That was back when de-regulation of generation was the rage, and it invites speculation where we’d be today with the GA and Dominion and the SCC if the SCC had said “yes” instead of “no” and Dominion had started down that alternative path. Also, the SCC’s staff and views have changed since 2001; I wonder if they would revisit their decision? My contention is, Dominion well positioned to compete with their nuclear units as “merchant” units in the marketplace; and they’d be good at it. The SCC should have to approve any such deal, to make sure it fairly compensates ratepayers for their initial investment.

        As for the “rate adjustment clause (RAC) mechanism,” that is simply rate-basing by another name. It would segregate the dollars involved, but it would still place any risk/benefit of profit or loss from the extended life of these nuclear units with the ratepayers not the shareholders.

  3. This touches on Virginia’s approach to the Clean Power Plan. I tend to feel Virginia should choose the rate based CO2 target of 934 lbs CO2/MWhr. This allows natural gas (f0r example) to replace nuclear. Today, Virginia’s CO2 emissions are among the lowest per capita of all states (within our state boundaries) because we import about 30% of our power and then nuclear is another 40%. So if we commit to the CPP CO2 mass limit, that is tantamount to committing to 70% carbon free generation. If the state does commit to holding to a stringent CPP CO2 mass limit, I will probably assume the reason for this is that our GA wants to commit us to nuclear.

    Needless to say, the enviro groups are strongly recommending the CO2 mass limit, to hold Va. at a low CO2 limit.

    • I don’t understand the assertion that the Clean Power Plan rate-based CO2 target will incent the replacement of nuclear with gas. Nuclear units are not affected by the CPP since they don’t emit CO2 at all. Why would any state want to eliminate the hundreds of millions of megawatt-hours produced carbon free with a like quantity of gas powered production that does emit CO2?

      • I am saying a stringent CO2 mass target could block nat gas for Virginia once we reach the CO2 mass limit (tons CO2). In that case we are totally dependent on nuclear (and renewables and imports) for the future. However, we are not mandated to do that. We can instead choose a CO2 rate-based CPP target, which allows more flexibility to use nat gas as long as it is carbon-efficient.

        • Ok, I see where you’re going. Remember, though, new gas is not subject to the very stringent limits of the CPP. Only the existing fossil plants (plus two units that were in the construction phase) are affected by those.

  4. One point needs clarification. Dominion has already received a 20-year license renewal for the Surry plants. Their license has been extended until 2032 and 2033. What Dominion is seeking is an unprecedented second 20-year license renewal. To my knowledge this has not been granted to any other facility, especially since it is probably at least 10 years premature to do so.

    The issue of radioactivity having a long-term destructive effect on containment vessels, steam generators and a variety of other safety related equipment is well known in the nuclear industry. The San Onofre nuclear plant in California did not seek a 20-year license renewal because the steam generators were so badly worn that safe operation required their replacement and it was not economic to do so. About a half dozen nuclear plants (including one owned by Dominion in Wisconsin) have not sought a 20-year license renewal because the utilities were not able to make those units economically competitive with newer gas-fired units.

    All of the nuclear plants built in the 60’s and 70’s were designed for a 40 year life, which was the length of the license granted by the NRC. Within the last 5-10 years many of these plants have sought a 20-year license renewal. The Nuclear Regulatory Commission is charged with making a thorough evaluation that these aging plants can operate safely for another 20 years or specify the repairs needed that would allow them to do so, before granting the license extension.

    Dominion is asking for a second 20-year extension that would take the plant into the uncharted territory of 60-80 years of operation. The “old car” analogy has some value. Surry would be like a Model T being asked to compete with Tesla’s. But old cars only breakdown and are hauled to the scrap heap. A broken nuclear plant might have more severe consequences. Disregarding the potential safety issues, the economic risks are very high.

    Dominion is estimating $1.5 billion in upgrade costs 17 years in advance of the time they will be needed. Any initial estimate in the nuclear industry must be multiplied by at least 3 or 4 to have some semblance of reality. So let’s assume that between 2027 – 2033 at least $6 billion (probably much more) is invested in the now 60 year-old Surry units. Perhaps 4-5 years into the extended operation something else breaks which requires another lengthy outage and other few billion to fix. A few years later – something else. We all have known about old cars that reach a point after which it no longer makes sense to keep fixing them. Once you start pouring money down a rat hole it is hard to know when to stop. There is much evidence to suggest that the time to stop is after 40-60 years. Otherwise ratepayers and their grandchildren will be paying for units that might not even generate electricity after a few years.

    One billion dollars invested in energy efficiency would provide as much or more capacity than these units, create thousands of jobs, be completely safe, and would last a lifetime.

    I am baffled about what Dominion is spending $800 billion on for North Anna 3. Additional safety studies regarding geology and meteorology for the site would cost a few million at most. The nuclear industry learned in the 70’s about the benefits of standardized designs. The GE-Hitachi reactor that Dominion has selected is basically an off the shelf design. Only minor site specific adjustments are usually required. If additional hardening is required for seismic issues, then that is not the right site for a nuclear plant. There needs to be far more disclosure about how this money is being spent. They are already nearing the cost of a new combined-cycle plant with nary a megawatt-hour produced nor likely to be. Someone must protect the ratepayers interest here. Dominion is making money on it but it is a loser for the ratepayers.

    • TomH you may or may not be aware that the steam generators that were so badly worn at the San Onofre plant in California were only installed a year or so before the NRC shut the plant down. They were, I believe, Mitsubishi turbines of a type similar to those originally proposed by DVP for installation at the prospective North Anna 3 unit. DVP has since changed over to Hitachi, as you note.

      I believe it is reasonable for DVP to seek these life extensions early. If the NRC does NOT grant the extension, then DVP will have to change its plans and perhaps advance the North Anna 3 construction, or go more heavily into renewables perhaps. If the NRC grants the extensions, DVP will have many years to decide whether or not to actually make the necessary investments to accomplish the extension. Authority to make an extension is not a mandate from the NRC for the operator to do so.

      You are not the only one baffled by the $$$$ currently being spent at the NA site on the potential third generating station. We do know that in 2013-14, DVP spent several hundred million on “site separation costs,” i.e., creating the physical space where the theoretical NA3 could be built, if ever approved. The General Assembly allowed the Company to write off these costs against its 2013-14 earnings, thereby reducing the refunds the Company was just directed by the SCC to make to its customers.

      • Rowinguy,

        I agree that from a planning perspective an early decision about whether the Surry units would be available after 2032/33 would be very helpful. A 15+ year planning horizon is almost impossible to meet for a new nuclear unit these days. That was the schedule we used in the old days when the nuclear industry was at its peak and even back then it was very difficult (actually impossible) for a nuclear plant to come in on schedule and on the original budget.

        However, we are just three years into the first 20 year license renewal for Surry. I think it would be very difficult for the NRC to grant approval for another 20 years of operation without having a better idea about the state of the facility and the need for repairs as the plant closes in on 60 years of operation. This would be the NRC’s first license renewal for the 60-80 year operating period and I believe they would be very hesitant to make it a routine approval.

        Much will change in our energy landscape in the next 5-10 years and we should wait until we can see more clearly ahead. Due to lower worldwide economic activity and low cost energy efficiency the load is likely to be less than has been forecast. We should avoid huge expenditures that provide a revenue stream to utilities but offer little advantage for ratepayers until we have better information about demand and the cost of alternatives. Renewable generation can be added very quickly as can capacity freed by energy efficiency. A minor investment in these remedies can postpone the need for the nuclear units by many years while all of this sorts out. We are rushing to build more carriages and buggy whips at the dawn of the automobile era just because the company that has an interest in horses says we must.

  5. re: “My question: isn’t that distant uncertainty and competitive advantage all the more reason for Dominion to seek to extend these plant licenses on a “merchant” basis, at its risk rather than ratepayer risk of changing marketplace dynamics?”

    then further up -you said:

    “So, today, it’s almost impossible for solar and wind to drive nuclear power generation off-line, and even with a substantially modified generation mix due to steady construction of more wind and solar units, we are many, many years from backing-down-nuclear becoming a frequent problem for system operators in the mid-Atlantic region.”

    my impression is that base load is incompatible with wind/solar because it cannot dynamically vary to complement it.

    isn’t the amount of wind/solar you can reasonably accommodate essentially determined by how much peaking power you have to deal with the load above baseload?

    In other words if you build a lot of baseload and narrow the gap between baseload and peak load – isn’t that gap the only place that wind/solar can be used?

    is there a “sweet” spot that most utilities like? is it possible to build max baseload and buy peak from PJM and simply not have “room” for wind/solar?

    am I off track here?

    • Larry,

      You are confusing the difference between demand and supply. You cannot “narrow the gap between baseload and peak load” by building more baseload power plants. Baseload is the minimum amount of power required during a 24 hour period. This is usually the load between about 11 PM and 7 AM, which continues throughout the day. Once the normal day begins, demand increases and intermediate load units (the next cheapest sources after your baseload units) kick in and operate in the 16 -hour window between 7 AM and 11 PM. When the peak occurs ( usually late afternoon in the summer and early evening in the winter) the peaking units supply the extra demand.

      If you have too much baseload capacity (as they did in the West a number of years ago) and don’t have a demand to fill, you actually have to pay someone to take your power so that you can keep your unit running at full capacity. PJM and other ISOs have helped solve some of this problem. If your utility has excess baseload capacity after it has fulfilled its customer’s demands, then that excess capacity can be used by someone else in the PJM system.

      But you can’t just keep building baseload plants hoping that someone will buy the power from you. The PJM market is very efficient, which is why Acbar was recommending that Dominion build new capacity and behave as a “merchant generator” where they are exposed to both the risks and rewards of the marketplace. By “ratebasing” the units in Virginia the ratepayers provide a guaranteed return to Dominion and the ratepayers have the burden of the risk if it proves to be a poor investment.

      Wind and solar will always be used preferentially over other sources of generation because the marginal cost of their energy is essentially zero. So there is always room for them, especially as their costs continue to decline.

      The problem occurs the other way. Let’s say you had a high penetration of solar in Virginia (30-40% of system capacity) on a sunny but not too hot spring day (so no air conditioning load); the amount of energy generated from the solar panels, plus that being generated by baseload units could exceed the system demand. The solar energy would be cheaper than any other source (nuclear, gas or whatever) so the excess baseload power would have to be sold over the PJM network. If the other participants were also experiencing a similar situation there might not be a market for the excess baseload power and some units would have to be throttled down.

      My guess is that in Virginia, this would be just a hypothetical problem. By the time we reached a high percentages of renewables, storage such as batteries (and demand control methods) would be affordable and widespread so that this would not be an issue.

      • One thing specific to Virginia is the existence of the Bath County pumped storage facility which effectively acts as the “sponge” for all the excess baseload produced by primarily those DVP nuclear units. When satisfaction of existing demand is being approached, the operator just turns on the pumps there and starts the water flowing back up the hill.

        • This is true. But the reservoir is usually filled during the night in order to meet the peak load late in the afternoon or evening. If the surplus generation occurred before the reservoir is drawn down there is no room to store excess generation, especially during the off-system peak sunny months in the spring and fall.

      • I probably did not explain it as well as I should have.

        what keeps any utility (like Dominion) from building as much baseload as it needs to serve demand and buy ALL peak from PJM- and if they did that what would they have to complement wind/solar?

        In other words – the only way that wind/solar can exist – is if there is _something_ that can step in and provide power when wind/solar subside.

        I see that as peaker plants running off of natural gas.

        if natural gas gets depleted.. what do you run instead to complement wind/solar when they are are low ebb?

        Pretend 50 years from now – when natural gas may not be an economically viable fuel source -what do you use to offset/fill in for wind/solar when they ebb?

        isn’t the key to wind/solar – natural gas plants?

        • Dominion is essentially buying all of its energy from PJM now using locational marginal pricing. PJM requires Dominion to have sufficient capacity from either owned units or units under contract in order to meet its share of the PJM system peak plus 15% reserve capacity.

          I think your point is that gas-fired peaking units are the best current method of dealing with the variability in output from solar facilities. You are exactly right. That is why Dominion is proposing to add additional peakers as the installed base of solar expands.

          As natural gas prices increase, the cost of energy from peakers would be affected only a bit because they run only about 10% of the time (although this would increase with more solar) and fuel cost is a relatively small percentage of the total cost of the output. The gas-fired baseload plants would be affected to a much greater degree by higher natural gas prices, since they are projected to operate about 80% of the time.

          If you look 50 years down the road, I doubt that natural gas prices will be much of an issue. The renewable/energy efficiency technologies are just beginning to move from the traditional utility realm into a portion of the information technology realm and innovation will accelerate dramatically. Fifty years from now, if we make the appropriate choices today, we will have a far more vibrant economy which uses about as much energy as we consume today. Most of the energy will be produced with renewable sources, with various energy storage and demand response methods used to match demand with supply. But we do need the gas-fired peakers as a bridge in the short run to get us there. Progress with these new technologies can occur rapidly, with the types of cost declines (but not as drastic) that we have seen in information technology. It is because of this possibility that I keep recommending that we move slowly in investing multiple billions in 20th century technology that might prove to be a costly burden in the long run.

  6. you can generate baseload from both nukes and natural gas eve after coal is gone.

    I don’t know much about gas plants other than I’m seen them classified for both peak and base load designs.

    the question is why would you go through all the time, effort and money for Nukes if you could use natural gas for baseload which would have the additional benefit of multiple units for redundancy and dispersed units for geographic load balancing?

    what is the argument for Nukes over natural gas?

    the only one I can see is that some might feel that nukes will outlast our natural gas supply and that building natural gas baseload plants would hasten the depletion of finite supplies of natural gas.

    • There are two main types of gas-fired power plants, peaking units and combined-cycle plants. The peakers are simple combustion turbines (like a jet engine) that can alter their output at about 20% of their rated capacity per minute, so they are effective at following variations in load. They are only used about 10% of the time so their capital cost can be spread over only a small amount of generation, which makes them expensive to run.

      The combined-cycle plants that Dominion is building have three simple combustion units and the heat from the exhaust gas from all three units is extracted to run one steam turbine. This increases the overall efficiency of the facility but it can vary its output by only about 2% of its rated capacity per minute so it is not very valuable as a complement to solar units.

      A gas-fired combined cycle plant would be 1/10th (or less) than the cost of the proposed North Anna Unit 3. Gas-fired baseload units are also likely to be less expensive than the refurbishment costs for the Surry plant, whatever they turn out to be. These are just capital costs, however. There are legitimate concerns about the long term availability of affordable natural gas. Nuclear fuel prices are going up too, but they are a much lower percentage of the overall cost of power compared to gas-fired plants.

      The main argument for nuclear over gas relates to the CPP. New gas-fired combined cycle plants do not meet the CO2 limits proposed by the CPP, so additional non-carbon sources of generation must exist to meet the state requirements. Dominion believes that nuclear (as well as solar) is the answer to this need. Others believe that a combination of energy efficiency and greater use of renewables would provide more power and the same CPP credit for a tiny fraction of the cost proposed for North Anna 3.

      A second 20 year license renewal for Surry poses the same uncertainties. The nuclear industry has a long history of extremely high cost overruns and schedule delays. The certainty that a multi-billion dollar investment would actually provide 20 years of return for a 60-80 year old nuclear facility is highly suspect and there is no precedent to support that it would.

      Once Dominion receives approval for these high-capital cost projects, they are guaranteed a rate of return but the rate payers are not. If Dominion wants to take such risks, they should be required to do as Acbar suggested – as “merchant generators”. The CPP issues would be the same, but ratepayers would not be on the hook for faulty decision-making.

    • Larry, You’re still not including renewables and we haven’t considered efficiency at all. Virginia needs to include renewables in baseload. I agree with Tom that there is going to be appropriate storage to make that happen soon but it seems that we’re ignoring that alternative.

      • VaC – how can renewables be baseload when both can drop to near zero on output even across wide geographic areas?

        Solar goes to zero at night and you’d have to have one whale of a lot of turbines in a geographic area to count it as any kind of baseload.

        but leave wind aside at the moment and talk about solar.

        what do you run at night to make up for the solar ?

        you can’t ramp the nukes up so what kind of fuel and plant will be used to make up for solar when it’s not running?

        • Solar, in particular, has some characteristics of baseload because it is largely available at all times during daylight hours. Of course, it drops to zero after sunset, but demand largely drops off then as well. Its variability is and will likely remain for some time much more predictable than that of wind.

          Effective storage coupling will be needed to fully realize the potential of variable resources.

        • Been out of touch for a couple of days with family. LarryG, I completely endorse these answers you’ve been getting from TomH and Rowinguy and VaC. If there’s a bottom line, it’s simply that “it’s complicated” and too often politicians gravitate toward solutions that aren’t flexible or farsighted enough. I’m impressed with Dominion overall on that score.

          There’s an interesting article that’s expected in the next issue of Scientific American, about a proposal for generation that’s near 100% renewables (wind/solar/hydro); the authors set out to prove that the necessity for baseload is a fallacy, by showing that all-renewables could do the job. I urge caution reading this article because it portrays an end-state without the transition costs, including the reasonable cost of continued operation of existing generation for its useful life simply because it’s already built and paid for, but — it makes a valid point: we probably could, at some cost, with determination and planning and a proper transition period, achieve a carbon-less generation footprint on a regional basis (such as, PJM-wide) even without nuclear power. Perhaps this article will answer some of your questions about how baseload, cycling and peaking units work in complement today and how that must evolve on a grid with more renewables and batteries.

          Now, once eyes are opened to what 100% would require, there are lots of variations which we should talk about from an economic point of view, one of which is, keep nuclear instead of building NGCC (nat gas comb cycl) for new baseload, and another, using new natural gas units heavily for peaking (as currently) and cycling (already inclined there), and another, invest much more heavily in storage options (under development, esp batteries) to increase the flexibility of the system when pressed to extremes (as, for example, unusual weather could do to a system heavily reliant on intermittent wind/solar).

          We are decades away from phasing out all existing grid technology, due not only to the massive cost of doing so, but also the limited resources to build it all. And how much load will we need to serve? Distributed generation is a real wild card: we should see significant DG solar “penetration” fairly quickly if all the political and regulatory forces aligned to promote it and building codes get out of the way and developers come to realize that built-in solar in new construction homes is a sales asset. Significant at first anyway; but retrofitting and adoption by the less-wealthy new home buyer will come more slowly, so higher percentages of load served by DG are more speculative. And then there’s the uncertainty of energy efficiency gains, again particularly how much will we see of the higher-cost sorts of retrofitting gains (insulation, home heating systems, etc.). And electric load growth forecasting is the source of nightmares due to changing load patterns and quantities due to shifts/declines in manufacturing, possible major added electric loads such as auto (and truck and bus) charging, possible major changes due to changing commuting and shopping preferences, along with those possible improved home energy efficiencies. What loads exactly will we be generating for?

          In short, how all that will shake out in 20 years has got to be the question confronting Dominion and its decision to seek life-extension for nuclear.

  7. maybe go at this another way. what power is generated when wind/solar are insufficient to meet demand?

    would you be using Nukes to do that?

  8. so here’s a question.

    do we run baseload plants even when there is no demand for all the baseload that is currently running?

    not just in Va – but in PJM?

    in other words – is it possible for Dominion Virginia to need more power and to buy it from PJM – and the source of it is a baseload plant somewhere in PJM?

    • Larry,

      Acbar could probably provide the most precise answer to your questions, but I will give you a general response.

      First, the 1600 MW of nuclear generation at Surry is licensed to operate until 2032 and 2033 (another 20 year license extension is being considered by Dominion). The 1800 MW of nuclear generation at North Anna is licensed to operate until 2038 and 2040. These nuclear units have an annual capacity factor in the 80-90% range. That is, Dominion wants them to run as much as is absolutely possible. Only refueling and maintenance requirements, take them offline.

      As Dominion’s current lowest cost sources of electricity, they are the first units used to meet baseload requirements (all supply and demand transactions are passing through PJM). The output of these units are used to pump up the reservoir in Bath County during the night for later use to meet peak loads. The lowest cost sources of generation (the nuclear units) are used for pumped storage because this provides a competitive cost of peak energy (after efficiency and transmission losses are factored in). If baseload capacity still exceeds demand, then the excess would be available to others in the PJM system. But Dominion has a demand of at least about 6,000 MW 100% percent of the time (its baseload), so the nuclear units would always be used to meet DVP needs when the nuclear units are available, in the foreseeable future. Unless Dominion was operating the units as a merchant generator, then they could auction the output to the highest bidder.

      Dominion will buy the lowest cost power available to meet its demand at any time of the day. Most often this would be from one of their own units because of locational marginal pricing (lower transmission costs). But this is not necessarily the case.

      In the next 10-15 years, solar will be used more widely in Virginia. Most of the solar output will displace intermediate (cycling) and peak load units, because these are the most expensive sources of power used during daylight hours. When solar output declines, these displaced units will fill in – using the lowest cost units first (that can match the variation in load).

      Beyond 2025, things become more confusing. Economic factors and energy efficiency might considerably alter the traditional load growth projections. As could more widespread customer use of distributed generation and new uses such as electric vehicles.

      New nuclear units are available in only big chunks (1000+ MW) and have a lead time of at least 15-20 years, so they are not a very good response to uncertain times. Energy efficiency and solar and wind can add to capacity in small amounts and relatively quickly (within a few years), so they are much better tools for responding to uncertain situations.

      Technological advances could rapidly decrease the cost of solar and energy storage, which could make those technologies suitable for base load operation. It is this possibility and the uncertainty of future load growth that make our choices for new generation so important over the next few years. We might select an option that looks good now, but within the first few years of its operation, it could become economically non-competitive. Then we are stuck with decades of expense for something from which we gain no value. Old habits will not serve us well during this period of transition. We must keep an open mind and provide ourselves with as much flexibility in choices as possible.

  9. @TomH – thanks! the only inconsistency I think I see is the cost of the “intermediate (cycling) and peak load ” plants ..

    It was my understanding that the Marcellus Shale gas is now cheaper than Nukes… . at least for now….

    also a totally separate question – any kind of baseload plant – which is online and generating power – for which there is no need – in Va or PJM – what happens? Do they just let the plant continue to burn fuel but not turn turbines?

    If that’s the case – for Nukes – then committing to build a Nuke – essentially commits to running that Nuke 24/7 for baseload – right?

    is that a viable strategy for beyond 2020 if demand is flat?

    • Larry,

      Energy generated from a newly constructed gas-fired combined cycle baseload power plant using gas at current prices is considerably lower than the cost of an equivalent size new nuclear plant, but I doubt that it is cheaper than power from the existing nuclear plants (although I have not seen any published numbers for these units – they were built over 40 years ago and all of the financing for them has been repaid, so the old nuclear units are quite cheap to run).

      Surry and North Anna units comprise only about 3400 MW of the 6000-9000 MW of baseload demand on Dominion’s system. As the lowest cost sources of power, they would always be kept running when they are available. If baseload demand dips into the lower portion of the range, the other baseload power plants such as the old coal plants would probably be the first units to be put into spinning reserve (as you suggested) if it appeared that load would pick up again soon and if there was no market for their output elsewhere in PJM.

      Nuclear units are designed only for constant baseload type of operation. The difficulty is that new nuclear units are so expensive that the price of their power might compare to peak load unit prices without providing any of the advantages of rapid variability. The only advantage is that they emit no CO2 from operation (there is a huge amount of CO2 associated with their construction, however).

      When renewing the license for existing nuclear units, it is not clear what investments might be required for their continued safe operation. With another license extension you would be gaining the advantage of that output for only another 20 years. Whereas, the same investment in another type of generation could yield power for another 30-60 years.

      A flat or declining load curve makes decisions to invest in nuclear even more difficult. Which is why investments in energy efficiency and solar can meet the demand requirements through 2020-2025 and could push back the dates that new nuclear (or extensions of old nuclear) units would be required. This would give us more time to evaluate the true demand and the actual cost of solar, as opposed to projections. This improved perspective would likely yield far superior decisions for both Dominion and its ratepayers rather than rushing to build more old technology that will have long term costs, whether any reasonably priced power is produced or not.

  10. Thanks TomH, much appreciated!

  11. LarryG, again TomH has it just right. I know we’ve strung this discussion out way beyond the usual blog format but sometimes there’s no adequate shortcut. Extending the life of a nuclear generating plant is not a topic for shortcuts.

    I’d like to underscore Dominion’s need for flexibility. Tom says, “When renewing the license for existing nuclear units, it is not clear what investments might be required for their continued safe operation.” Given the changing political winds and huge up front investments involved, as well as huge lead times for regulatory scrutiny, and the fact that there aren’t other examples of re-licensing to judge by, I imagine Dominion is electing to hold the NRC’s feet to the fire a little here by saying they want to re-license, while keeping their options open. That may be the only way to flush out exactly what they would have to do to comply with all the regulatory rules changes since these units were built, plus some that probably haven’t even been adopted yet. Ditto, the SCC.

    TomH does say one thing I’ll comment on. “Dominion will buy the lowest cost power available to meet its demand at any time of the day. Most often this would be from one of their own units because of locational marginal pricing (lower transmission costs).” I agree, Dominion will buy the lowest cost power available; but proximity is not normally significant. More likely the marginal generating unit operating in PJM will be a gas unit in Kentucky or a coal unit in Ohio, and Dominion will buy at a locational marginal price (LMP) predominantly reflecting that marginal PJM unit.

    The way this works in PJM, Dominion is both a “load serving entity” (LSE) and a “generator” of power. Thus it wears separate hats on both sides of the energy market. Dominion’s generation is dispatched by PJM on a least cost basis along with all other generation in PJM, so not all of Dominion’s will always be dispatched; however, if a given Dominion unit is dispatched, Dominion is paid the PJM energy market price for ALL of what it delivers to the grid, wherever delivered, and Dominion then (wearing its other hat) pays PJM the energy market price for ALL energy it takes from the grid, wherever received. If those two events happen at the same location, the transactions simply occur at the same energy price and cancel out. Importantly, Dominion-the-LSE does NOT buy first from its own units and fill its REMAINING need from the PJM market; it buys ALL its requirements from the market. It pays the locational market price (LMP) calculated on an ever-changing basis at each delivery point for deliveries to that point. Separately, it pays a transmission rate to PJM for “Network Service” which is a fixed monthly rate based on Dominion’s total annual peak demand; that transmission rate does not vary depending upon which PJM generation actually supplies Dominion’s load from time to time. What changes is the cumulative bill for all energy deliveries over time to Dominion’s delivery points from the PJM energy market; these deliveries are priced at the LMP at each deliver point at the time of delivery (all LMPs are recalculated by PJM every few seconds).

    The LMP at each delivery point at a given moment is PJM’s energy market price, which is (roughly speaking) the cost to operate the highest-cost generator running in the market, adjusted locally for (1) the congestion on the grid, and (2) marginal losses. LMP isn’t significantly affected by congestion and losses adjustments unless congestion levels are high; in a congested situation (when transmission approaches maximum loading), it means PJM can’t deliver to all customers at the unconstrained market price, so some higher-cost generation in the “constrained” area has to be run to avoid overloading the lines into that area, and if a Dominion delivery point is within such a constrained area, Dominion will pay the higher LMP (reflecting the higher cost generation running locally, slightly offset by the lower losses associated with deliveries from nearby sources).

    In short, unless transmission congestion interferes, Dominion-the-LSE will pay essentially the same PJM energy market price as customers in Chicago or Akron or Pittsburg; and Dominion-the-generator will sell from whichever of its units are competitive in the PJM energy market regardless of where they are located. Absent congestion, proximity doesn’t matter. If transmission congestion does arise, PJM will dispatch additional generation locally to deal with it, and, if that congestion happens frequently, PJM and Dominion will work together (with their regulators) to design and build a transmission fix.

  12. I’ve found the several threads on energy to be exceptionally informative and so am appreciative to the guys who are sharing their knowledge!

    thanks !

    I WILL say one thing. It appears to me that any plan that Dominion makes needs to be consistent – compatible with the amalgamation of other utilities that participate in PJM.

    For instance, if PJM is going to have ample power – baseload and peak – available – in the next 20-30 years – what’s the advantage of Dominion replicating that resource ? Would it really be cheaper for DVP to build their own plants than buying PJM dispatch power especially for baseload if PJM baseload is coming from older plants already amortized?

    What this continuing conversation had demonstrated (once again) is how ignorant one can be … about something – ever so important to us (try going 8 hours without power) – and yet we take it for granted and in some respects I’m quite sure DVP prefers less others “involved”.

    😉

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