The Omaha Public Power District Board of Directors determined it is in the best financial interest of the district and its customer-owners to retire Fort Calhoun Station (FCS) by the end of 2016. At their monthly meeting today, they voted to cease nuclear operations and begin the decommissioning process.
The decision means no general rate increase is anticipated for the next five years, through 2021, furthering the district’s goal of pursuing rates that are 20 percent below the regional average.
Senior management made the FCS recommendation in May after a thorough review of various future resource portfolio scenarios. The review was requested by Board Chair Mick Mines in April. According to extensive modeling conducted by a third party, Pace Global, ceasing operations at FCS and rebalancing the generation portfolio will save the district between $735 million and $994 million over the next 20 years.
“This was a difficult vote and one we did not take lightly,” Mines said. “The industry is changing and it is imperative that we make strategic decisions to better position the district in the future for all our 365,000 customer-owners.”
Market conditions are a major factor in today’s decision by the board. Historically low natural gas prices are a contributing factor; they reduce OPPD’s cost to generate electricity using natural gas. In addition, consumers are using less energy.
The final version of the proposed Clean Power Plan is another factor. It does not give carbon-free generation credit for existing nuclear plants such as FCS.
The board also looked at economies of scale. FCS is the smallest rated commercial unit in North America, based on accredited capability. Larger and multi-unit nuclear plants can spread costs over high levels of production.
Slow load growth and increasing regulatory and operational costs have led to the recent early retirement of several other U.S. nuclear generating stations.
OPPD President and CEO Tim Burke added, “As tough as this decision is, we cannot afford to ignore the changes happening around us. We must look to the future.”
“We will move forward through the decommissioning process in a responsible and thoughtful manner,” Burke said. “The decommissioning process will take several years and you have our commitment that the safety of the community and our employees is, and will always be, our top priority.”
Safety is paramount
During the decommissioning process, the Nuclear Regulatory Commission (NRC) will continue to regulate FCS and ensure safety remains foremost in all activities.
Once the reactor is powered down, the focus will be on fuel handling and storage. Health and environmental risks during this process are no greater than when the plant is offline for a routine refueling outage.
SAFSTOR and DECON are the primary two decommissioning options the nuclear industry has implemented. OPPD will use the SAFSTOR method, which will provide both regulatory and financial flexibility as the plant is decommissioned. Both options have a similar path during the next five years. Read more about this process on OPPD’s The Wire and at NRC.gov.
The cost to decommission FCS is estimated at approximately $1.2 billion. As of the end of May 2016, OPPD has approximately $388 million in total available decommissioning funds, and was pacing toward full funding for a 2033 decommission date. To allow for decommissioning before 2033, OPPD will add to its decommissioning fund annually. The district expects to be able to cover the remaining costs without raising the existing rates.
Employee & community impact
Today’s decision is not a reflection on FCS employees who have worked extremely hard and diligently, Burke said. “They have done all that we’ve asked, and they’ve done a tremendous job. Unfortunately, in today’s market, it’s just too costly to run the plant long-term.”
The district is examining the staffing requirements needed to move properly and safely through the process. “Reductions will take place in a phased and thoughtful manner while meeting NRC regulatory requirements,” Burke said.
OPPD will work with station employees during the transition process. “We will make every effort to absorb as many employees as possible into other areas of OPPD, based on qualifications and open positions,” Burke said. “We will retrain employees where we have opportunities for success.”
The district has also enlisted the Nebraska Department of Labor, the Greater Omaha Chamber of Commerce, and other agencies in the re-employment process.
Approximately 150 FCS employees live in Washington County. OPPD is aware of the impact the plant closure may have on nearby communities. The district is committed to remaining a good energy partner and neighbor.
OPPD will continue to make annual in-lieu-of-tax payments to Washington County. These payments to county treasuries are based on the respective retail electric revenues from their communities. Washington County received $631,363 for 2015 alone.
Ensuring a Reliable Power Supply
Providing safe, reliable and environmentally sensitive energy services remains OPPD’s mission. The board’s decision to cease operations at FCS will in no way jeopardize the reliability of the electricity that OPPD provides its customer-owners.
The FCS decision is one portion of the district’s larger resource planning process. It builds upon the success of the 2014 resource generation plan that led to a bold reform of OPPD’s energy portfolio. The plan was developed following a thorough stakeholder process, with customers’ energy preferences in mind. OPPD will continue to solicit stakeholder input as it develops its long-term integrated resource planning portfolio.
The district will continue to look at resource options, including the possibility of constructing or purchasing additional generation of many types (natural gas, wind, solar) and increasing demand side options as necessary.
More information on OPPD’s resource planning is available at OPPDListens.com. The site will be updated throughout the decommissioning process.