The Magnitude of the Financial Troubles in the Nuclear Industry

Nuclear power shutdowns could cut energy prices, increase air pollution: Penn State, TMI weigh in  

Updated 5:55 AM; Posted 5:55 AM 

While a study, soon to be published by a Penn State researcher, shows nuclear power shutdowns will not spike power prices, Three Mile Island officials counter that is not the case, and the increased cost would come with more air pollution. (File. )

By Steve Marroni

smarroni@pennlive.com

As the shutdown of Three Mile Island seems imminent, researchers at Penn State released a study indicating that, despite the economic woes this could mean for some in the community, power prices will remain steady.

And that is because natural gas power plants will be able to fill the void left behind by nuclear power at a lower cost, according to Seth Blumsack, associate professor of energy policy and economics at Penn State.

Both Three Mile Island and the Beaver Valley Nuclear Power Station near Pittsburgh have cited financial troubles due to low electricity prices, and in his study, to be published in an upcoming issue of The Electricity Journal, Blumsack says those rock-bottom power prices are expected to continue for years to come.

But Three Mile Island Vice President of Government Affairs David Fein said the closure of the plants would result in a significant economic impact - meaning the loss of 1,700 full time jobs at the plants and thousands of related jobs, like workers at restaurants and shops serving plant employees and their families.

And there is one other thing.

"If you care about the air we breathe, it neglects the harmful air emissions that come from fossil-fuel plants," Fein said about the Penn State findings. "If we lose the Beaver Valley and TMI plants, we're talking about putting 50 percent more cars on the roads. That's how much more carbon dioxide will be in the air."

Blumsack acknowledges his study focuses solely on energy prices and does not take into account environmental factors or fuel-security, but he argues the economics strongly support natural gas. 

According to his research, if TMI and Beaver Valley come offline and are not replaced, wholesale energy prices would rise 4 to 10 percent each year over a three-year period. When that lost nuclear capacity is replaced by natural gas, however, those same prices drop between 9 and 24 percent.

He also poses a triple-whammy against nuclear power plants, indicating:
Energy use has plateaued,
Efficient natural gas power plants operating at nowhere near peak production have come online,
And natural gas prices are projected to remain low.

"There's just so much extra generation capacity in this region," Blumsack said. "These nuclear power plants are big, but even if you were to lose these big power plants there's so much other generation capacity that can produce electricity at costs competitive with the nuclear plants that the market outcomes aren't going to change and the reliability of the grid won't be compromised."

In May, TMI failed for the fourth year to sell its power in the annual PJM energy capacity auction.

The plant lost $300 million over the last eight years, officials from the owning company, Exelon Corp., said last year. TMI has not been profitable for six years as a result of persistently low wholesale energy prices and market rules that treat polluting plants the same as emissions-free sources of power, Exelon says.

The plant is scheduled to close on September 30, 2019, barring any changes at the government level to compensate nuclear power for its low-carbon pollution emissions.

And that's one of Three Mile Island's arguments. As it stands now, nuclear power plants are not permitted to participate in clean energy programs, though they provide 93 percent of the clean energy out there, Fein said.

The other options are less reliable or harmful to the environment, too, he added.

"It's intermittent with wind or solar and its dirtier fuel if you're going to rely on gas or coal," Fein said. "You'll see an increase in carbon emissions."

Fein added retiring the plants "would really erase the clean-energy gains we've made throughout the whole PJM region over the last 25 years."

And Fein said the costs calculated in the Penn State study come to a different sum than another study from the Brattle Group economic consultants, showing the retirement of these plants would actually cost Pennsylvania $285 million annually in higher electric bills.

But Blumsack cited the World Bank Natural Gas Price Forecast indicating there would have to be a 300 percent increase in natural gas prices in the Appalachian trading hubs for nuclear power to again be competitive.

"The competition is really fierce and it's essentially being driven by really low natural gas prices," Blumsack said.

While the two plants also employ about 1,700 people, Blumsack says the public cost to retain these facilities would be about $200,000 for each job preserved.

Blumsack's research is part of a larger effort among a team at Penn State's Initiative for Sustainable Electric Power Systems that looks at issues confronting conventional and renewable energy markets as well as how rapidly moving shifts in the electricity market will impact consumers and businesses.