Tag Archives: nuclear

More Question Marks Over Calvert Cliffs III

Constellation Energy has entered into a partnership with state-owned EDF to construct a third reactor at Calvert Cliffs based on Areva’s EPR design.

Current Areva projects are slipping behind schedule and EDF has raised the projected cost of Flamanville by 25 percent.

EDF is building a 1,650-megawatt, Areva SA-designed EPR at Flamanville in Normandy and plans similar models in the U.K, the U.S. and China. Areva is developing an EPR in Finland, which is over budget and behind schedule.

Areva is having money problems.

State-owned Areva was given the go-ahead for a 15 per cent capital increase to finance investments, in which EDF could raise its 2.4 per cent stake to 7 per cent, according to officials.

Part of the problem seems to be that the officials running these two entities can’t get along.

Christine Lagarde, finance minister, said on Wednesday that Areva and EDF “must imperatively get along” following months of rancour between Henri Proglio, chairman of EDF, and Anne Lauvergeon, Areva’s chief executive.

The French government recently released a report on Areva and EDF that was ordered in the wake of their failure to win a major reactor contract in Abu Dubai (it went to a South Korean firm).

Shortly after the report’s publication, President Nicolas Sarkozy’s office released a statement that Paris would look into the possibility of EDF buying a stake in Areva, a move long-resisted by Areva Chief Executive Officer Anne Lauvergeon.

This is high-stakes politics in France which gets 80 percent of its electricity from EDF’s 58 nuclear plants.

Paris’ influence in EDF has been growing over the past months. The utility’s Chief Executive Officer Henri Proglio, in place since last year, was heaved into his chair by Sarkozy. Proglio is to restore France’s position as a world-leading reactor exporter.

A major political scandal is engulfing President Sarkozy; French police have questioned a member of his cabinet.

Mr Sarkozy has also denied any wrongdoing.

Does Constellation CEO Mayo A. Shattuck mention any of this Parisian turmoil?  No.  Instead, he says the plant is endangered by the U.S. Department of Energy’s delay in granting a massive, taxpayer-backed loan guarantee for the project.  He seems to be bothered by the fact that the DOE is actually bothering to read Constellation’s application before approving it.

Ebony Meeks, a spokeswoman for the Department of Energy, said the agency understands Constellation’s frustration, but “our main priority is to be a steward of taxpayer dollars.”

Taxpayers should be grateful to the DOE.  EDF-Areva shenanigans aside, Calvert Cliffs III is a financially risky proposition.  No one has ever built a nuclear reactor in a “deregulated” wholesale market like PJM which Maryland is now part of.  All other nuclear plant have the backing of fully regulated utilities or publicly-owned utilities.  A nuclear plant represents a large “lump” of new power that will be dumped onto the PJM market in ten years’ time when the plant is finished.  What will happen to electricity prices?  Calvert Cliffs III will be burdened with debt and cost over-runs at that point.  Will it be viable without financial backing from U.S. and French taxpayers?  Shattuck knows it won’t be that’s why he’s complaining.

Meanwhile, on a serious note, French first lady Carla Bruni-Sarkozy is “struggling” with her cameo role in a new Woody Allen film, “with one scene requiring 35 takes” even though she has no lines.

Owen Wilson, who stars in the romantic comedy, reportedly offered support to the glamorous mother of one, who was watched from the sidelines by her husband, President Nicolas Sarkozy.

EDF has also been under attack for sloppy handling of nuclear waste.

Maryland Governor O’Malley has announced a new Long Term Electricity Plan for our state.  As the planning horizon extends to 2030 so it could be assumed that Calvert Cliffs III might be in operation, a careful assessment should be made of the political risks surrounding the French government’s investment in the plant.

Can we count on Calvert Cliffs III?

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FirstEnergy and the August 2003 Blackout

The biggest power outage in North America occurred on August 14, 2003.

Why should Marylanders take another look at FirstEnergy’s role in that event?  In the first place, the blackout cascade originated from FirstEnergy’s Ohio territory and spread to neighboring states.   There’s also the fact that proponents of building massive new “coal-by-wire” transmission projects keep bringing up the August 2003 blackout.  This includes FirstEnergy’s proposed merger partner Allegheny Energy who wants to build the PATH power line in Maryland.

Coal-by-wire proponents raise the blackout danger in a thinly veiled attempt to intimidate public officials into approving their wasteful and unnecessary — though very profitable — projects.  If you examine the PATH application (Case 9223) before the Maryland Public Service Commission (PSC), then you will find numerous references to blackouts, including a specific reference to the August 2003 blackout on page 24 of the PATH-supplied testimony by PJM transmission planner McGlynn.  (McGlynn chairs the PJM Transmission Expansion Advisory Committee whose approval of PATH qualified it for FERC’s special 14.3 percent incentive rate of return.)

Unfortunately for PATH proponents, there is no evidence that the August 2003 blackout was caused by a lack of transmission capacity.  A recent report from the Congressional Research Service concluded:

as discussed in the official blackout report and other analyses, the 2003 blackout was not caused by a utility having built too few transmission lines, or because power line towers and substations were falling apart. The blackout was apparently due to such factors as malfunctioning if not obsolete computer and monitoring systems, human errors that compounded the equipment failures, mis-calibrated automatic protection systems on power plants, and FirstEnergy’s failure to adequately trim trees.  (p. 31, emphasis added.)

PATH proponents can’t resist exploiting the blackout talking point because the August 2003 was a big deal that impacted nearly 50 million Americans (and 10 million Canadians).  Michigan Governor Grantholm described the impact of the outage that spilled over from Ohio in Congressional testimony.  The Michigan Public Service Commission issued its own report on the disaster and had some rather unflattering things to say about FirstEnergy’s role.

In his Congressional testimony, FirstEnergy CEO Peter Burg listed several generators which were off-line on that fateful day:

FE units Davis Besse Unit 1 (880 MW), Sammis Unit 3 (180 MW), and Eastlake Unit 4 (240 MW) were off-line for maintenance outages.

This makes it sound as though the Davis Besse nuclear plant outage was routine whereas in actuality that plant was in the midst of a two-year outage caused by what may be the worst nuclear incident since Three Mile Island.

The Michigan report goes on to describe what happened:

…FirstEnergy’s Davis Besse nuclear plant had been out-of-service for some time. It appears that, with the Davis Besse nuclear plant off-line, the tripping of Eastlake Unit #5 was a major event in the northern Ohio region. FirstEnergy was left in a precarious position as far as meeting its load on that day. Power had to come from other sources in order to meet the requirements of the FirstEnergy system. (See page 18.)

All agree that coordination and management problems contributed to the crisis.  MISO is the Midwest Independent System Operator that supervises the transmission system in the Midwest:

According to the MISO telephone transcripts, MISO called First Energy at 3:43 p.m. and questioned FirstEnergy about the Hanna-Juniper line. The FirstEnergy operator was not able to respond to MISO’s questions and said that he didn’t know, that he would have to take a look. MISO requested that FirstEnergy call it back. At 4:04 p.m., FirstEnergy called MISO and stated that they had some problems. The FirstEnergy operator still seemed unsure about exactly what was happening. The operator lists a number of lines that are “off”, the Eastlake Plant unit that had gone off-line earlier in the day and the Perry plant that was “having a hard time maintaining voltage”. The FirstEnergy operator then asks MISO what it has going on. When MISO responds that FirstEnergy Hanna-Juniper line is open, the FirstEnergy operator questions that. MISO responds that it had discussed this with FirstEnergy earlier. The FirstEnergy operator states that they have “no clue” and the computer is “giving us fits.” A FirstEnergy control room operator told a MISO technician minutes before the blackout, “We don’t even know the status of some of the stuff around us.” (See page 19.)

Readers are encouraged to review the Final Report of U.S.-Canada Power System Outage Task Force to better understand this complex event.

If the merger of FirstEnergy and Allegheny is consummated, then FirstEnergy will be operating transmission lines in Maryland.  Furthermore, they will be the owner of the proposed PATH power line.  The Maryland PSC certainly ought to take a close look at FirstEnergy’s role in the August 2003 blackout.

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FirstEnergy and Three Mile Island and Maryland

First Energy and Allegheny Energy have filed applications with FERC and the Maryland Public Service Commission (PSC) for permission to merge their companies. The prospect of this merger raises many issues for Marylanders who hope that the PSC will fully explore them.

One hot topic that cannot be ignored is Three Mile Island (TMI).  Indeed, the issue arose during the June 3 PSC hearing on whether the Commission should accept the PATH “coal-by-wire” transmission project proposed by Allegheny Energy.  One issue in that proceeding is the ever-shifting structure of corporate entities controlling PATH — and the proposed merger would rearrange it once more.  One attorney claimed that FirstEnergy owned Three Mile Island while another said that FirstEnergy had no connection to TMI.

What are the facts about the relationship between FirstEnergy and TMI?

On March 28, 1979, the famous disaster occurred at TMI Reactor Unit 2 (TMI 2).  (TMI 2’s sister reactor TMI 1 was acquired by Exelon Corporation in 1999 and continues to operate.  In late 2009, the Nuclear Regulatory Commission (NRC) renewed TMI 1’s operating license through 2034.)

What is the status of TMI 2 today?

TMI Unit 2 has been permanently shut down and is in monitored storage. GPU Nuclear (now owned by First Energy Corp.) placed the unit in monitored storage in December 1993. Monitoring of TMI Unit 2 and its surrounding areas will continue until the unit is fully decommissioned, with regular reports made to the Nuclear Regulatory Commission (NRC), the Commonwealth of Pennsylvania and the public.

Will the ongoing burden of cleaning up TMI 2 impact Maryland ratepayers if the FirstEnergy-Allegheny merger goes forward?  Pennsylvania ratepayers have paid dearly:

A 1995 ruling by the Pennsylvania Supreme Court allowed GPU — since bought by FirstEnergy — to charge rate payers for the TMI-2 disaster. Those same rate payers had already shelled out $700 million to build the unit, which was on line for only 90 days — just 1/120th of its planned operating lifetime — when the meltdown began. The rate payers have also footed a $1 billion bill to de-fuel Unit 2.

According to FirstEnergy’s 10-K, JCP&L is involved in an ongoing proceeding at the New Jersey Board of Public Utilities over decommissioning costs for TMI-2 (see page 222).

Meanwhile, the undamaged generator from TMI 2 is moving to a new life in North Carolina:

Officials at the Nuclear Regulatory Commission say the electrical generator from the damaged Unit 2 reactor at TMI will be used at Progress Energy Inc.’s Shearon Harris nuclear plant in southwest Wake County.

Did FirstEnergy have anything to do with the accident at Three Mile Island?  Yes and no.  No, because at the time of the accident, the corporate entity now known as FirstEnergy did not exist.  FirstEnergy was created in 1997 out of the merger of several Ohio and Pennsylvania utilities.

Yes, because today’s FirstEnergy is the corporate successor to the company that built and operated TMI 2 at the time of the accident.  TMI 1 and 2 were originally built and operated by General Public Utilities (GPU).  In 2001, GPU merged with FirstEnergy.  FirstEnergy, through its wholly owned subsidiary JCP&L, is the current owner of TMI 2.

Did mistakes by GPU (FirstEnergy) corporate managers contribute to the accident at TMI 2?  A retrospective by the Washington Post raised troubling questions.  TMI 2 began commercial operation on December 30, 1978 — just three months before the accident.

By getting TMI 2 into service 25 hours before the new year, Met Ed saved itself upwards of $40 million in taxes.

There are other signs that TMI 2 was rushed into operation:

Between March 28, 1978, when the chain reaction began in the nuclear unit, and its December entry into commercial service, the plant had been shut down for repairs 195 of the 274 days – 71 percent of the time. That was not typical of the industry as a whole, which reports about a 40 percent malfunction rate during early reactor operations. And during those 274 days, Met Ed found problems that were similar to those that occurred on the day of the Big Accident.

Does this remind you of another recent disaster?

BP had fallen behind schedule and over budget, paying roughly $500,000 a day to lease the rig from Transocean. The rig was 43 days late for starting a new drilling job for BP by the day of the explosion, a delay that had already cost the company more than $21 million.

Concerns raised by the accident at Three Mile Island remain relevant because FirstEnergy continues to own and operate three nuclear power plants: Beaver ValleyDavis-Besse, and Perry.  Of the three, Davis-Besse is the most troubled.

In March 2002, damage to the reactor pressure vessel was discovered and the plant shut down for two years.  In 2006, FirstEnergy entered into a deferred prosecution agreement with the Department of Justice related to charges arising out of the incident.  Andrew Siemaszko, an engineer at the plant, was sentenced to probation for lying to the NRC.  The Union of Concerned Scientists backed Siemaszko, arguing that he was used as a scapegoat by the NRC and FirstEnergy for serious problems at Davis-Besse.  Some observers consider the 2002 incident to our nation’s worst nuclear accident since Three Mile Island.  Problems continue at Davis-Besse.

Anything that affects the financial health of FirstEnergy could affect its regulated subsidiaries in Maryland if the merger with Allegheny goes ahead.  A close examination of FirstEnergy’s nuclear management record will better inform the PSC’s understanding of the future riskiness of the merger entity.

On February 11, Standard & Poor’s downgraded FirstEnergy’s debt:

We downgraded FirstEnergy Corp. and subsidiaries to ‘BBB-‘ from ‘BBB’ based on its intention to merge with lower-rated Allegheny Energy Inc. We affirmed the ‘BBB-‘ ratings on Allegheny and subsidiaries because the proposed merger would only slightly improve its credit profile. An extended merger approval will place further stress on management’s resources while economic and regulatory challenges need to be successfully met to maintain credit quality. If the merger is not completed, FirstEnergy’s ratings would remain at the lower level due to our changed assessment of its risk appetite and commitment to credit quality.

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Build Nukes Or Stabilize Climate?

Maybe you are one of those folks who decided not to worry about the new wave of applications to build nuclear power stations.  After all, nuclear plants have low carbon emissions which is good for stabilizing our grandchildren’s climate, right?

Time to think again, according to a new report from Environment Maryland entitled Generating Failure How Building Nuclear Power Plants Would Set America Back in the Race Against Global Warming. The report was announced at a press conference on the steps of Constellation Energy Group who is planning to build a third nuclear reactor at Calvert Cliffs with a French partner.

New nuclear plants are not the most cost effective way to cut carbon emissions.  According to a new report from the Calfiornia Energy Commission:

But it gets worse.  Not only is new nuclear a wasteful way to avoid carbon emissions, it’s actually counter-productive.  Here’s why: delay and diversion.

Based on the historical record, it will take six to ten years to complete construction following permit approval.  While we are waiting and waiting and waiting to turn on our shiny new nuclear plant, carbon dioxide emissions continue to built up in the atmosphere.  CO2 “hangs around” for a hundred years or more.  Having allowed the build-up to continue while we wait for new nuclear, we will be forced to make more drastic and costly cuts later.

Then there’s the diversion of funds.  Building the proposed 100 new nuclear plants would cost upwards of $600 billion dollars.  Regardless of whose budget this comes out of, resources devoted one task cannot be used for another at the same time.  Public opinion remains confused about climate policy, it’s not reassuring to take the least cost effective route.

According to Moody’s Investor Service, “…nuclear generation has a fixed design where construction costs are rising rapidly, while other renewable technologies are still experiencing significant advancements in terms of energy conversion efficiency and cost reductions.”

Generating Failure also challenges myths about the reliability of nuclear plants.

…when power is supplied in huge blocks by large central station power plants, the failure of any individual power plant or power line carries a great risk of widespread electricity supply disruption. at another 35 reactors resulted in one or more outages of at least one year… it can take days or weeks for a nuclear reactor to return to full output after an emergency shutdown.

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Maryland’s Nuclear Gamble

Earlier this year, a Constellation-EDF joint venture won permission from the Maryland Public Service Commission to build a third reactor at Calvert Cliffs, based on Areva’s EPR reactor design.  (The fate of the Constellation-EDF financial merger should be resolved soon.)

The Nuclear Regulatory Commission will decide on the proposed reactor in 2011 or even 2012.  The NRC may want to check with their European colleagues:

In a rare joint statement, nuclear safety bodies in France, Britain and Finland on Monday ordered France’s Areva (CEPFi.PA) and EDF (EDF.PA) to modify the safety features on its European Pressurised Reactors (EPR) due to insufficient independence between the day-to-day systems and the emergency systems.

Changes to the EPR design mean further delays at construction sites in France and Finland.  EDF officials have ordered a speed-up which will only drive costs higher:

The move threatens to boost the €4bn ($6bn) cost of the EPR project in Flamanville, France’s showcase for the new generation nuclear technology that it hopes to export around the world.

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EDF Ain’t Joan of Arc, Maryland

Recently, EDF has been painted as a Joan of Arc, a savior of Maryland, dispensing only goodness, dollars and jobs in The Old Line State.

Post-Halloween, the costumes come off.  As with all state-owned companies in France, EDF executives have two priorities: lining their own pockets and keeping their political masters happy.  (Those two things are intimately connected.)

Strange, isn’t, that French politicians don’t seem to care about creating jobs or stabilizing electricity rates in Maryland?

EDF has also faced pressure over its foreign expansion at home given the need to invest heavily in improving the capacity of its French reactors…

But, but, … won’t nuclear power bring energy security?  Not this year, nor last:

…[France] prepares to import costly energy for the second winter in a row.

Surely the mighty private sector is thrilled about nuclear’s future?

Government officials have also in recent weeks expressed doubts about the need for EDF to invest in the US, where scepticism is growing over the prospects of a nuclear revival given liquidity constraints of US utilities.

Attendez! Here’s the best bit:

Yesterday, roughly a third of EDF’s 58 nuclear reactors were reported out of service for maintenance or other reasons, according to an inquiry by the AFP news service.

Nuclear plants are wonderful — they run 24 hours a day — until they don’t.  But one third?  Needless to say, EDF refused to comment.  (Just a Gallic shrug.)

So what’s the score on EDF?  Let’s see.  Dumping nuclear waste in Siberia.  Strangling competition from energy efficiency.  Spying on anti-nuclear activists.

The Maryland Public Service Commission approved Constellation’s financial deal with EDF contingent on appropriate conditions to protect ratepayers’ investment in BGE, Maryland’s largest utility.  Wall Street gave a surprise “thumbs up” to the PSC’s logic:

Meanwhile on Monday, Standard & Poor’s downgraded Constellation’s credit rating to one notch above junk status. S&P lowered Constellation from “BBB” to “BBB-” with a stable outlook after reviewing the company as a stand-alone business without BGE.

The ratings service, however, upgraded BGE’s credit rating to “BBB+” from “BBB” because the conditions set by the regulators are supportive of the utility. It’s unusual for S&P to rate a subsidiary higher than the parent, the rating firm said.

Bob Ehrlich can’t figure out why anyone would be skeptical of EDF and Constellation.

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EDF Says “Au Revoir” to Maryland?

Marylanders will always be grateful for the appearance of the French fleet at the battle of Yorktown near the mouth of the Chesapeake Bay which ended the British occupation.

The benefits of EDF’s wheeling and dealing with Constellation Energy have never been quite so clear.  (The French government holds an 84 percent stake in EDF.)

Now it seems that all of the huffing and puffing may have been for naught.  The Financial Times reports that Paris may be about to pull out of the deal:

EDF, the French nuclear power operator, faces pressure from the government to abandon its US foray, where regulatory difficulties have delayed a $4.5bn deal with Constellation Energy.

M. Proglio, selected by French President Nicholas Sarkozy to take over as EDF’s chairman next month, told a parliamentary committee:

…that he was “not sure that [the US deal] needed to be done”.

Apparently, the Constellation deal was a “projet” of the outgoing chairman.

UPDATE: The Wall Street Journal has a different take:

“The process is in progress,” an EDF spokeswoman said Friday, adding that the company is waiting for a decision from regulators in the U.S. state of Maryland, where Constellation is based.

SECOND UPDATE: Reuters posted a story at 1:22 p.m.:

Maryland utility regulators on Friday approved Constellation Energy Group Inc’s (CEG.N) sale of a stake in its nuclear unit to Electrite de France (EDF.PA) if the companies comply with several conditions, including a $110.5 million payment to Baltimore utility customers.

The Maryland Public Service Commission set a deadline of November 6 for the companies to respond.

What’s French for “poker?”

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