The nuclear industry’s top lobbyist told Wall Street analysts Thursday that the industry has reached a “tipping point” in gaining Washington’s attention to keep nuclear power plants from closing.
“We are reaching a tipping point as policymakers have come to appreciate the risk of losing nuclear plants,” said Maria Korsnick, the new president and CEO of the Nuclear Energy Institute. “We have come a long way in a relatively short period of time.”
Since 2013, the nuclear group has been pressing federal officials to address the growing problem of nuclear power plants losing their profitability in the energy markets overseen by the federal government. She recalled a meeting with the Department of Energy and the nation’s grid watchdog, the Federal Energy Regulatory Commission, when the idea of losing a big chunk of the nation’s nuclear power plants was off their radar during the Obama administration.
“At the time, the Kewaunee plant in Wisconsin had just closed, and the Vermont Yankee plant was scheduled to close at the end of 2014,” Korsnick recalled to a gathering of financial analysts in New York. “We told DOE and FERC that many others were at risk – thanks to low growth in electricity demand, low natural gas prices, state and federal policies to promote renewables, transmission constraints, and other factors,” she said, according to her prepared remarks.
“This was a surprise to many,” said Korsnick, paraphrasing what she said was a typical response from one of the commissioners who she left nameless.
“I had no idea … I thought it would always be 20 percent of U.S. electricity supply. I guess I was taking it for granted,” she recalled the nameless commissioner saying.
Since then, seven reactors have closed or announced closures. “However, I believe the tide is turning,” Korsnick said. “The federal government, the regional transmission organizations and the states now recognize the problem, and are moving to reform the competitive markets where the greatest threats exist.”
She said the key role the Federal Energy Regulatory Commission will play is making sure nuclear plants receive proper compensation for being the backbone of the electrical grid.
“First, the FERC is taking actions to support reforms to the capacity markets and the energy markets,” she said. “Accurate price formation in the energy markets is particularly important, because a baseload nuclear plant derives most of its revenue from the energy markets. While we don’t think these changes will solve the problem, they will be part of a solution.”
Although the number of renewables and natural gas power plants is increasing, grid experts say a diverse array of energy resources is better than being reliant on one or two for keeping the lights on. A natural gas line could rupture when demand is at its highest, keeping a natural gas power plant from running. On the renewable energy front, wind and solar energy are notoriously intermittent and need the 24-hour-a-day power that comes from nuclear to back up the grid.
However, Korsnick’s prepared remarks ignored the unprecedented closure of FERC last week after the departure of Obama appointee and former Chairman Norman Bay. The five-member panel requires three commissioners to function. The commission had only two members, both Democrats, as of Saturday.
The action that Korsnick wants FERC to finish is on hold until the commission is restored. President Trump has not nominated a new chairman or Republican commissioners to complement the two remaining Democrats.
Korsnick said the nuclear industry will be working with the regional transmission operators, the giant nonprofit utilities that FERC oversees, to work out ways to keep the fleet afloat. The federal actions will undergird initiatives that states such as New York and Illinois have taken in recent months to provide subsidies for power plants.
Natural gas power plants are fighting those programs at FERC, saying the billions of dollars they provide nuclear energy undermines the competitive markets the commission oversees. The Electric Power Supply Association, representing the gas plants, said in response to Korsnick’s remarks that they support her work at FERC, but not her promotion of state subsidies, which will end up in lengthy litigation.
“Jeopardizing the rest of the power market in the name of a level playing field through proposals that would in fact further tilt the playing field helps no one, not even nuclear units,” the power supply group said. “As the aftermath in New York and Illinois amply shows, adoption of single-fuel remedies to market-wide challenges only results in lengthy litigation, sustained uncertainty and considerable controversy.”
Korsnick said her group is “painfully aware of the serious challenges facing us” and the “forces” at work “taking their toll on the nuclear fleet.”
“But 2016 is also when we began to see the ocean liner change its bearing,” she added. “We see states, regions and the federal government taking actions to preserve our nuclear power plants,” she said. “The industry was able to work with stakeholders to preserve five nuclear plants that would have otherwise shut down. We will continue working to find policy solutions that allow these plants to remain part of our electric infrastructure.”
