Dueling reports argue for, against Richland nuclear plant

By Annette Cary, Tri-City HeraldDecember 14, 2013 

Energy NW Aerial.JPG

The Columbia Generating Station nuclear power plant near Richland.

TRI-CITY HERALD FILE

Whether continuing to operate the nuclear power plant near Richland is costing utilities more than $1 billion or saving them more than $1 billion is a matter of which of two recently released reports ratepayers choose to believe.

One came from an anti-nuclear group, the other from those who operate and sell the power from the nuclear power plant.

First up was Physicians for Social Responsibility.

Ratepayers could save at least $1.7 billion during the next 17 years if Energy Northwest's nuclear power plant, the Columbia Generating Station, is shut down, according to a report prepared by McCullough Research in Portland for Physicians for Social Responsibility, or PSR.

But Energy Northwest countered with a report it commissioned from Cambridge Energy Research Associates, or CERA, in Massachusetts that found continuing to operate Columbia Generating Station is cost-effective.

Operating the plant through 2043 provides a $1.6 billion savings compared with the lowest-cost alternative of closing the plant and replacing it with a natural gas-fired power plant, CERA concluded.

There are no plans to consider shutting the Columbia Generating Station down, according to the Bonneville Power Administration, which markets the power produced by the plant. If that were considered, a decision would be up to Energy Northwest and BPA, it said.

The debate started in April, when the Washington and Oregon chapters of PSR said they had commissioned an economic study of shutting down the nuclear plant. The low cost of power in the Mid-Columbia could mean that power produced by the plant could be replaced economically if the plant was retired decades sooner than 2043, the last year under its recently extended operating license.

BPA and Energy Northwest already had prepared economic information to answer questions at public hearings, and Energy Northwest commissioned its study then to validate the information.

The reports come at a time when electricity production prices and sources are changing.

The Mid-Columbia relies on inexpensive hydropower. But in recent years, the cost of natural gas also has dropped and Western state mandates for more renewable energy production, not counting most hydropower, have expanded renewable energy production, including wind and solar production.

BPA paid $419 million for operating the Columbia Generating Station in fiscal 2013, according to the report by Robert McCullough. It produced enough power for a city about the size of Seattle.

But the price of the same amount of power in the Mid-Columbia, as listed at Dow Jones daily on-peak and off-peak prices, was about $219 million, he said in the report.

"The difference, $200,424,000, would have had the impact of reducing BPA's rates by 10.67 percent," the report said.

Cost savings would have varied among Northwest ratepayers who rely on BPA, but a Benton PUD customer would have saved about $45 in 2013, McCullough report said.

He based his estimate of cost savings for shutting down the plant on federal government projections of future natural gas prices in the U.S. and also did computer modeling to find the best way to replace power as it is needed in future years. He proposes natural gas power generation in western Washington in systems that would only run intermittently to back up renewable sources, such as wind, that are available as nature permits.

The Columbia Generating Station is used in part to provide consistent, or "baseload" power to the grid, to make sure consumers have electricity despite water flows that affect hydropower and weather that limits wind and solar generation.

But the CERA report commissioned by Energy Northwest finds a much greater cost to replace electricity from the nuclear power plant than McCullough did.

"It's cheaper to keep it running," said Lawrence Makovich, one of four contributors to the CERA report.

The report commissioned by PSR does not take into account the costs to build a replacement natural-gas power plant, only the cost of operating and producing electricity at existing plants, Makovich said. That produces an unrealistically low cost to replace available nuclear power, he said. McCullough denies that.

If the reports were to look at whether to build a nuclear plant or a natural gas plant today, the results might be different, Makovich said. But the Columbia Generating Station already has been built and that cost is the same whether it operates or is shut down.

Rather than looking at projected future natural gas prices to figure the cost of replacing the nuclear plant, the CERA report looked to past costs. It took an average of the prices of the past 10 years and then ran analyses using different market conditions to predict what might happen during the next 30 years.

"The price of natural gas is difficult to predict," Makovich said. "It's very cyclical."

Recent low energy prices in the Mid-Columbia are partly because of historically economical hydro production and low natural gas prices that have tumbled in part because of fracking. But the cost of natural gas in the Northwest since 2000 has been more than three times higher at its peak than recent lows, according to the CERA report.

Continuing to operate the Columbia Generating Station is not only economical, it helps manage risk for Northwest ratepayers, providing predictable rates, according to the CERA report.

As the only nuclear power plant in the Northwest, it provides a balance to the power supply's exposure to fossil fuel price cycles in addition to backup for systems dependent on snowpack and weather to provide electricity, the CERA report says.

The McCullough report also looks at operating difficulties at the Columbia Generating Station, but they predate the new management team for the nuclear plant and the improvements it has made, according to Energy Northwest.

The McCullough report says the debate about whether Columbia Generating Station is hurting or helping electric ratepayers can be settled by BPA asking for firm bids to purchase electricity to replace that produced by the nuclear plant. The power then could be purchased by Energy Northwest and supplied to BPA under an existing contract, the report says.

Energy Northwest employs 1,100 Tri-City-area workers who support the Columbia Generating Station, including 900 directly engaged in its operation. Those workers could have some continued employment through decommissioning of the plant, the McCullough report says.

The McCullough report recommends shutting down the nuclear plant before the scheduled spring 2015 refueling. But PSR does not agree. It wants the plant shut down immediately because of nuclear safety concerns, said Charles Johnson, director of the group's Joint Task Force on Nuclear Power.

The CERA report can be viewed at bit.ly/1kKDeDR and the McCullough report is at bit.ly/1kKDq60.

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