Correction:

A previous version of this article incorrectly attributed a quotation. It was Frank Russell, senior vice president of Concentric Energy Advisors, and not the company’s chairman, John J. Reed. This version has been corrected.

In U.S., nuclear energy loses momentum amid economic head winds, safety issues

Mark Ralston/AFP/Getty Images - Fishermen beside the San Onofre Nuclear Power Plant in north San Diego County in 2011.

Two years after the tsunami that crippled Japan’s Fukushima power complex, the U.S. nuclear industry is facing fundamental and far-reaching challenges to its own future.

Only five years ago, industry executives and leading politicians were talking about an American nuclear renaissance, hoping to add 20 or more reactors to the 104-unit U.S. nuclear fleet.

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But today those companies are holding back in the face of falling natural gas prices and sluggish and uncertain electricity demand. Only five new plants are under construction, while at least that many are slated for permanent closure or shut down indefinitely over safety issues.

On Monday, the Nuclear Regulatory Commission (NRC) reiterated its refusal to issue a license for a new unit at Calvert Cliffs, Md., that a French company had hoped to make the model for a fleet of reactors. A pair of reactors in Southern California are under scrutiny over whether a major contractor and a utility there concealed concerns about potential cracks in the tubes of a steam generator. And nuclear plants in Wisconsin and Florida are closing down because their owners said they cannot compete with less expensive natural-gas-fired electricity.

Industry officials still make the case for nuclear as a domestic source of energy that does not emit greenhouse gases. “Anyone concerned about global warming should acknowledge that if society seriously aspires to be anti-carbon, it also needs to be seriously pro-nuclear,” Thomas F. Farrell, chief executive of Dominion Resources, said at a recent conference in Washington sponsored by the industry newsletter Platts.

But Caren Byrd, executive director of Morgan Stanley’s global power group, said at the same conference that, on an economic basis, “it is hard to make the case for nuclear.”

One illustration of that is a joint venture called UniStar, formed to build half a dozen identical nuclear units modeled on a new reactor planned at the existing Calvert Cliffs site. But the Atomic Energy Act bars foreign companies from having “ownership, control or domination” of U.S. nuclear plants, which became a problem in late 2010 when Constellation Energy gave up its 51 percent stake in the joint venture and left UniStar wholly owned by Electricite de France.

Since then, UniStar has been unable to find another U.S. partner. On Monday, the NRC reiterated that it would not issue a license to UniStar, which had asked the NRC to overturn the prohibition on foreign ownership.

Low natural gas prices are discouraging other nuclear investors and utilities. “The natural gas issue is terrific for the U.S. economy and energy mix,” said Frank Russell, senior vice president of Concentric Energy Advisors. “It just isn’t so good for those of you sitting out there today.”

Dominion, the owner of the Kewaunee nuclear plant in Wisconsin, and Duke Energy, owner of Crystal River Unit 3 in Florida, recently announced plans to permanently close these reactors because of economic factors, even though the plants have licenses extending well into the future. Wind and natural gas are cheaper.

“It’s a fantastic plant,” Farrell said of the Kewaunee unit, which Dominion bought eight years ago. But it failed to renegotiate a power-selling agreement that expires at the end of the year and could not find a company willing to buy the plant. “Unfortunately, the economics just don’t work,” he said.

Meanwhile, safety issues are plaguing a handful of reactors, and three have been closed for more than a year.

NRC inspectors have kept two reactors at California’s San Onofre complex closed since January 2012 amid an inquiry into whether the manufacturer, Mitsubishi Heavy Industries, and perhaps the utility, Edison International, covered up the danger of cracks in the tubes of the reactors’ steam generators.

The utility has denied any wrongdoing, pointing the finger at Mitsubishi.

Documents released Friday said that Mitsubishi and Southern California Edison, a subsidiary of Edison International, jointly investigated the problem of vibrations that could accelerate wear and tear in the steam generators before they were installed. And the documents, released publicly by the NRC after Mitsubishi redacted them to protect trade secrets, state that the companies did not change the design because it would have triggered a lengthy license amendment procedure with the NRC.

“Each of the considered changes had unacceptable consequences and the AVB Design Team agreed not to implement them,” the document said.

San Onofre’s Unit 2 was taken out of service Jan. 9, 2012, for a planned outage. Unit 3 was taken offline Jan. 31, 2012, after station operators detected a leak in a steam generator tube. The tubes had lasted about a year. The closures are costing Edison International hundreds of millions of dollars. Replacing the steam generating system could also cost hundreds of millions of dollars.

The company has asked the NRC to allow Unit 2 to operate at 70 percent of capacity to reduce vibrations, but the NRC has not granted permission.

“Understanding the root cause . . . is a problem,” NRC Chairman Allison M. Macfarlane said in an interview. “We are not going to let the plant restart unless we are sure it can operate safely.”

The NRC has also been keeping an eye on a pair of new reactors the Southern Co. has been building at its Vogtle complex in Georgia. Financing costs were lowered sharply by a promise of a federal loan guarantee by the Obama administration and by a Georgia state law that allows Southern’s subsidiary, Georgia Power, to pass much of the cost along to ratepayers while the plant is under construction. Most states require a power plant to go online before customers have to pay for it.

Within months, however, Southern said that as much as $900 million could be added to its subsidiary’s share of the $14 billion cost. An industry consultant, who requested anonymity to preserve his business relationships, said that the contractor put too much space between steel rebar in the foundations at the heart of the new reactors. To resolve the problem, Southern said it created a 1,000-cubic-yard “mock-up” of the site where concrete would be poured.

“NRC inspectors have identified code compliance issues with the rebar design of the basemat and walls, which delayed pouring concrete for the ‘nuclear islands,’ or bases, of the reactors,” Macfarlane said Feb. 28 in testimony before a subcommittee of the House Energy and Commerce Committee. She said the problems were being resolved and that the companies were planning to start pouring concrete in March.

Despite the relatively stagnant growth of U.S. nuclear power plants, the industry has found ways to maintain its roughly 20 percent share of electricity generation. The NRC has issued 73 license renewals for plants, and operators have figured out ways to improve efficiency and add the equivalent of 24 new 1,000-megawatt units over the past 20 years, according to Farrell.

Many companies are also talking about the possibility of turning to smaller, cheaper reactors. Macfarlane said she expects an application for design certification in 2014.

The NRC is tightening up guidelines for existing U.S. plants as a result of the Fukushima disaster, adding safeguards and measurement devices for spent fuel pools; ordering hardened, more-reliable vents from containment buildings; and requiring greater emergency communications — all areas that failed at Fukushima.

Utilities are already adding new backup generators at or near reactor sites to make sure power to plants does not fail as it did in Fukushima.

Some nuclear industry executives are already raising concerns about the cost of the post-Fukushima proposals, but Macfarlane plans to push ahead.

In December, she visited Fukushima.

“I was at loss for words,” she said. “It was awesome in a way, but in the negative sense, to see these villages. Everything is there. The gas stations, little shops but nobody there, and weeds taking over parking lots. A nice garden with dry dead stuff. Weeds growing over the train tracks.” At the nuclear site, she surveyed tsunami debris and “the rusting carcasses of overturned trucks.”

Macfarlane said the lesson for the NRC might be to raise the level of the urgency it gives to considering rare events, including tornado hazards. “You might fold climate change into this,” she said.

 
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