"Exelon cuts dividend by 41%," as NRC investigates "deliberate" deception regarding decommissioning funds

As reported by the Chicago Tribune, "Exelon's stock has dropped by nearly two-thirds since its high in 2008." The company partly blames "higher nuclear fuel costs" for its "diminished earnings."

Ironically, the biggest nuclear utility in the U.S. is looking to expanding its renewables portfolio to expand its earnings:

'...It would also seek customers interested in contracting with Exelon for wind and solar power. Such power purchase agreements would guarantee steady and predictable returns.

..."When the balance sheet is tight like it is right now, you would want to make investments that have a short investment period," [Exelon CEO] Crane said. "Wind and other smaller assets really do fit that profile. Within a year, you're getting a return."'

Gouging its ratepayers at the earliest opportunity also seems to be in the Exelon business plan:

'...At Exelon, all eyes are looking forward to 2015 when approximately 19,000 megawatts of coal-fired electricity plants will have retired. Coal plant retirements are expected to increase electricity prices Exelon's nuclear power plants take and help to counteract stubbornly low natural gas prices have been driving down the company's earnings.' (emphasis added)

The article also lists "significant headwinds" ahead, and "several legal and regulatory matters that could add to its woes," including "an investigation by the U.S. Nuclear Regulatory Commission," and "still unknown costs associated with NRC-mandated upgrades that came out of the 2011 Fukushima Daiichi nuclear disaster in Japan."

NRC appears to have just busted Exelon for "deliberate" deception -- the company appears to have intentionally low-balled the price tag for eventual nuclear power plant decommissioning, in order to mask the woeful inadequacy -- amounting to around a billion dollars -- of its dedicated decommissioning funds. Bloomberg reportedthat "[t]he shortfall totaled $1 billion in 2009." (emphasis added) Crain's Chicago Business has reported on this story.

U.S. Representative Ed Markey (D-MA), currently serving as Ranking Member on the House Natural Resources Committee, has long shined a spotlight on the inadequacy of nuclear power plant decommissioning funds, as by requesting Government Accountability Office (GAO) investigations of NRC's oversight, or lack thereof.

The long term "deliberate" deception is reminiscent of Exelon's decade long cover up of massive tritium leaks into ground and surface waters at the Braidwood nuclear power plant. These were brought to light thanks to freedom of information act requests made by Cynthia Sauer, whose daughter Sarah contracted a rare form of childhood brain cancer at age 7. The family lived close to Exelon's Dresden nuclear power plant, not far from Braidwood.

The decommissioning of the twin reactor Zion nuclear power plant, 30 miles north of Chicago, is the biggest decommissioning project in U.S. history, with a projected price tag of around a billion dollars. EnergySolutions of Salt Lake City is in charge, itself embroiled in serious financial troubles.

British Nuclear Fuels, Ltd. (BNFL), absorbed into the EnergySolutions empire several years ago, carried out the decommissioning of the Big Rock Point atomic reactor in Charlevoix, Michigan, on the Lake Michigan shore, from 1997 to 2006. Despite being paid $366 million for the "clean-up," BNFL left radioactive contamination -- including plutonium -- in the soil and groundwater. It didn't even bother to check the contamination level in the sediments of Lake Michigan, not even in the canal into which Big Rock Point had "routinely" discharged radioactivity (with federal and state permission) for 35 years (1962-1997). Remarkably, NRC blessed the Big Rock Point decommissioning with a permit for "unrestricted re-use," meaning the contaminated land can be used for any purpose, ignoring the lingering radiation hazard.

Update on February 7, 2013 by admin

Reuters has reported that Exelon, in an effort to shore up its credit rating and shareholder dividends, has cancelled $2.3 billion in atomic reactor power uprates and other projects.Since 1977, NRC has rubberstamped nearly 150 power uprates at U.S. reactors, increasing their output by 6,823.4 Megawatts-thermal.  That's around 2,275 Megawatts-electric worth (2/3rds of the heat generated by splitting atoms is lost -- discharged to surface waters and/or the atmosphere -- as "waste heat"). This, despite the inherent increase in safety risks. Power uprates at an IL reactor led to so much vibration that a giant steam dryer crashed to the floor. Fortunately, no one was injured or killed. A 20% power uprate at Vermont Yankee led to a cooling tower collapse, as well as an explosion and fire, when long-dormant metallic slag was picked up by the increased steam flow pressure and slammed into a transformer (photo left).

Entergy Watch: UBS predicts "real retirement risk for units such as Vermont Yankee and FitzPatrick in '13"

If and when Entergy reactors such as Vermont Yankee, FitzPatrick, and Pilgrim permanently shutdown, large decommissioning costs will move to the forefront of Entergy shareholders' concernsIn a report for shareholders, dated Feb. 4th by UBS Securities LLC, UBS "reiterate[s] expectations for nuclear retirements" in the Entergy Nuclear merchant fleet, due to low to negative free cash flow. UBS highlights that "We see Vermont Yankee as the most tenuously positioned," but adds "Fitzpatrick (sic) in upstate NY increasingly appears at risk as well," and "Pilgrim could be at risk too, depending on market development in New England." The report is based on a Feb. 2nd meeting between UBS analysts and Entergy Nuclear's new CEO, Leo Denault, and the rest of the Entergy management team. 

A large part of the UBS report then goes on to discuss the critical importance of decommissioning costs to Entergy shareholders, if/when Vermont Yankee (VY), FitzPatrick, and/or Pilgrim (near Boston) permanently shutdown.

UBS fails to mention that VY, FitzPatrick, and Pilgrim are General Electric Mark I Boiling Water Reactors, identical in design to Fukushima Daiichi Units 1 to 4. VY (nearly 41 years old), FitzPatrick (almost 39), and Pilgrim (around 41) are also age-degraded reactors, deep into their break-down phase, the same vintage as Fukushima Daiichi.

UBS did mention, however, in its "Statement of Risk," that "As a nuclear operator, Entergy is also subject to headline risk. We believe a nuclear accident (even in a non-Entergy nuclear plant) or a change in the Nuclear Regulatory Commission/Environment (sic) Protection Agency regulations could have a negative impact on our estimates."

NRC post-Fukushima "lessons learned" safety upgrades, such as the requirement for "hardened vents" at U.S. Mark Is like VY, FitzPatrick, and Pilgrim, could easily cost Entergy tens of millions of dollars per reactor to implement.

UBS does also mention the fact that VY (at 605 Megawatts-electric), FitzPatrick (838 MW-e), and Pilgrim (688 MW-e) are relatively small-sized, single reactor nuclear power plants, which several analysts have pointed out makes them most vulnerable to "early retirement." But this is a misnomer, given the fact that their initial 40-year operating licenses have already expired, and they are now operating thanks only to U.S. Nuclear Regulatory Commission (NRC) 20-year license extension rubberstamps. Dominion's 556 MW-e Kewaunee atomic reactor in WI serves as the "canary in the coal mine," showing the vulnerability of small, single reactor nuclear power plants to permanent shutdown due to "economic reasons" (such as the inability to make a profit while making hugely expensive, major safety repairs, for example). Dominion Nuclear announced last October that Kewaunee would permanently close in mid-2013.

The UBS report also discusses the future, or lack thereof, for Entergy's Indian Point (IP) Unit 2 (nearly 40 years old) & 3 (almost 38 years old) reactors near New York City. UBS highlights that "Building the case for IP remains centered on economic case," but concludes "we perceive limited ability to do so currently with NY gov't officials." New York Governor, Andrew Cuomo, has long called for IP's closure. UBS also highlights that "Relicensing remains bottom line on IP future," specifically the NRC Atomic Safety (sic) and Licensing Board 20-year license extension proceeding, and the New York Department of Environmental Protection (DEP) State Pollutant Discharge Elimination System (SPDES) water permit. The former is being contested not only by NY AG Eric Schneiderman's office, but also by such environmental groups as Riverkeeper and Clearwater (a member group of the Indian Point Safe Energy Coalition (IPSEC)). The latter could result in Entergy being required to build cooling towers, at a cost of hundreds of millions of dollars, to prevent large-scale, ecologically destructive thermal pollution of the Hudson River (a full two-thirds of the 6,432 Megawatts-thermal heat generated at the Indian Point nuclear power plant has, for decades, simply been dumped into the Hudson River).

UBS also concludes that Entergy's underlying nuclear business is "fundamentally un-financeable on a stand alone basis." UBS highlights that despite it being "the second largest nuclear power generator in the United States," Entergy's "[n]uclear business is sub-scale," and that "eventual spin-merge or JV [joint venture]" is "certainly a possibility." UBS reports "CEO Denault, in his first day on the job, suggested that in 5 years time the EWC [Entergy Wholesale Commodities] business would belong [as] part of a bigger portfolio -- either under Entergy ownership or otherwise." UBS summarizes that Entergy's "[g]oal is to gain greater scale in [nuclear] generation," and "ETR [Entergy] will either acquire or divest the [nuclear] generation subsidiary over Denault's tenure." UBS does not speculate as to which other atomic reactors Entergy might acquire, nor which other nuclear utilities might acquire Entergy in the next several years.

Hopefully, Entergy's VY, FitzPatrick, Pilgrim, and Indian Point atomic reactors will permanently shutdown long before then, along with the rest of its dirty dozen atomic reactors across the U.S.

State of Vermont makes its case against Entergy Nuclear Vermont Yankee at 2nd Circuit Court of Appeals

Bill Sorrell and David Frederick answer questions from the press in front of the Thurgood Marshall Federal Court House, Foley Square, Manhattan. Photo by Ricard Watts. (Chris Williams of CAN and VYDA is visible, back right)The fate of the State of Vermont's long struggle to shutdown Entergy Nuclear's Vermont Yankee (VY) atomic reactor (a General Electric Mark I Boiling Water Reactor, identical in design to Fukushima Daiichi Units 1 to 4) now rests in the hands of a three-judge panel at the 2nd Circuit Federal Court of Appeals in Manhattan. Yesterday, oral arguments were heard regarding Entergy v. Shumlin et al.Vermont is seeking to overturn a Brattleboro lower court judge's ruling a year ago that state laws had improperly strayed into radiological safety matters, the sole jurisdiction of the federal Nuclear Regulatory Commission, as settled by the 1983 PG&E (Pacific Gas and Electric) U.S. Supreme Court ruling. In addition to a large turn out of journalists from Vermont and beyond, a number of long-time Vermont Yankee opponents sent representatives to witness the proceeding, including Beyond Nuclear, Conservation Law Foundation, Citizen Awareness Network (CAN), Physicians for Social Responsibility, and Vermont Yankee Decommissioning Alliance (VYDA). By most accounts, the State of Vermont --represented by Attorney General William Sorrell, and David Frederick of the Washington, D.C. law firm Kellogg, Huber, Hansen, Todd, Evans & Figel, P.L.L.C. (see photo) -- more than held its own.

In March 2011, just days after the nuclear catastrophe began to unfold at Fukushima Daiichi in Japan, the U.S. Nuclear Regulatory Commission rubberstamped a 20-year license extension at VY. This came despite a Feb. 2010 vote of 26 to 4 by the State of Vermont Senate, led by Senator Pro Tem (now Governor) Peter Shumlin, that blocked VY's license extension. Costs to the State of Vermont of decommissioning and long-term high-level radioactive waste storage, if Entergy should go bankrupt and abandon the site, figured prominantly in yesterday's arguments.

Richard Watts (who took the photo above), author of Public Meltdown: The Story of the Vermont Yankee Nuclear Power Plant, covered the oral arguments on his blog. The Vermont Digger reported on this story, including a link to the audio of the full 37 minute long oral arguments. Vermont Public Radio filed two stories: "At Stake in Yankee Appeal: State's Rights and a Big Legal Bill," and "Appeals Judges Focus on 'Legislative Intent' in Yankee Case." The Associated Press, Burlington Free Press, Brattleboro Reformer, and Bloomberg have also reported on this story.

Update on January 16, 2013 by admin

And, as reported by the Associated Press, Entergy was back in court on Wednesday, this time before the Vermont Supreme Court. The New England Coalition on Nuclear Pollution requests that the Vermont Supreme Court order Entergy Vermont Yankee to shutdown, for lack of a Certificate of Public Good (CPG). Its old CPG expired, along with its original 40 year operating license, on March 21, 2012. The State of Vermont Public Service Board has yet to approve a new CPG for VY's continued operation.

UBS Investment Bank equity analyst: 'Unlikely' Entergy will continue Vermont Yankee

While the Three Mile Island and Chernobyl disasters were "break-in phase" accidents at relatively new reactors, the Feb. 2000 steam generator tube rupture at Indian Point, NY, and the 2002 Hole-in-the-Head lid corrosion near-miss at Davis-Besse, Ohio were examples of "break-down phase" accidents.Calls for decommissioning Entergy Nuclear's dirty dozen atomic reactors -- as by the Vermont Yankee Decommissioning Alliance, as well as the Sierra Club in Michigan concerning Palisades -- are growing louder. The nuclear utility's profit margins are dwindling, amidst the need for major safety repairs at the four decade old reactors.

The Brattleboro Reformer has reported that UBS Investment Bank equity analyst Julien Dumoulin-Smith has issued a white paper concluding that it may not be in Entergy's best financial interests to continue to operate its Vermont Yankee (VY) nuclear power plant. The article reports that Entergy stock has been given a "neutral rating" by UBS; that a number of Entergy's smaller, "merchant" atomic reactors, especially VY and FitzPatrick in Upstate NY, are not likely to generate much profit in the next two years, and by 2015-2016 run projected deficits. At VY, this is due to the expiration of purchase price agreements, as well as new taxes levied by the State of Vermont (recently upheld by a federal court against a legal challenge by Entergy), which since Feb. 2010 has officially called for VY's permanent shutdown.

"How profitable is the nuclear segment? It's not very. Entergy's nuclear portfolio doesn't generate a lot of cash," said Dumoulin-Smith.

"Notably, we believe both its NY Fitzpatrick and Vermont Yankee plants are at risk of retirement given their small size," stated the report.

Other relatively small sized, single unit, "merchant" reactors owned/operated by Entergy include the problem-plagued Palisades in Michigan, and Pilgrim in Massachusetts.

Dominion Nuclear's recently announced plan to close its small, old, single unit Kewaunee atomic reactor in Wisconsin, due to "economic reasons," has led to widespread speculation about the next domino to fall. A Dominion spokesman let slip that the utility was no longer able to afford needed major safety repairs at the four decade old reactor, deep into its "break-down phase" (see "Bathtub Curve of Nuclear Accidents," referring to the graph's shape, above left, compliments of David Lochbaum, Nuclear Safety Project Director, Union of Concerned Scientists).

Kewaunee's announced closure, and the rumors at VY and FitzPatrick, comes despite the fact that the U.S. Nuclear Regulatory Commission (NRC) has rubberstamped 20-year license extensions at the four decade old reactors.

The Brattleboro Reformer article ends on an ironic note. Entergy may try to argue that it can't afford to "retire" VY, because the decommissioning fund is insufficient to pay for the decommissioning price tag:

"What could keep Entergy from shuttering the plant is liability costs related to the decommissioning of the plant, [Dumoulin-Smith] said, and whether it would have to immediately begin cleaning up the site upon closure or if it could mothball Yankee until the decommissioning fund accrues enough cash to get the job done."

Update on January 10, 2013 by admin

Vermont Public Radio has reported on this story. VPR quotes Fairewinds Associates nuclear engineer Arnie Gundersen, who points out that UBS's financial analysis did not even look at the nearly quarter billion dollars in repairs and safety upgrades needed at Vermont Yankee in coming years. VY needs a new condensor, with a price tag of $100 million. And post-Fukushima safety upgrades ordered by the U.S. Nuclear Regulatory Commission could easily cost tens of millions of dollars to implement. VY is a GE BWR Mark I, identical in design to Fukushima Daiichi Units 1 to 4.

Vermont Digger has also reported on this story, including providing a link to the UBS report itself.

So has the Rutland Herald, as well as SNL, which focused on the vulnerability of relatively small-sized merchant atomic reactors to "early retirement" due to adverse economics, as well as on the economic complexities of decommissioning permanently closed reactors.

INVITATION to CELEBRATE: The Nuclear Age in Quebec is Over! Gentilly-2 is SHUT DOWN!

"Rest in Peace, Gentilly-2". Image compliments of CentricoisES et mauricienNEs pour le déclassement nucléaireThis tremendous good news just came in from Dr. Gordon Edwards, chair of the Canadian Coalition for Nuclear Responsibility, and co-chair of the Great Lakes United Nuclear-Free/Green Energy Task Force:

28 December: The Nuclear Age in Quebec is Over! 

Join us, in Montréal, at 1 o'clock in the afternoon

On this occasion, Sonomi and her two children-- refugees from Fukushima, Japan -- will be our special guests.

P.S. Québec will be truly out of the nuclear age only when we achieve a permanent moratorium on uranium mining, as has been done in two other provinces -- Nova Scotia and British Columbia!

(Nuclear utility Hydro-Quebec announced Gentilly-2's permanent shutdown, to occur tomorrow, last October. Gentilly-2 is a CANDU atomic reactor which has operated since 1982. The Quebec public will now avoid the wate, and risk, of billions in refurbishment costs, which Hydro-Quebec had hoped to foist upon them, in a bid to operate Gentilly-2 for 20 more years. However, decommissioning costs will now begin.)

Update on December 28, 2012 by admin

CBC has reported on this story. The article reports:

"...Environmental groups applauded the government's decision to shut down the plant...Michel Fugère, spokesman for the Mauricie's Green Movement, said the closure is a 'great gift' and represents 'a big day' for all Quebecers.

He pointed out that several polls suggested more than 60 per cent of the population in Quebec's Mauricie region supported the plant's closure..."

(Note that the article's report that dismantlement of the reactor would take place over the next 18 months is inaccurate. Only preliminary decommissioning activities will take place in the next year and a half; full dismantlement will take decades.)

Regarding the price tag for decommissioning, the article reports "The plant's closure is expected to cost $1.8 billion over a period of more than 50 years."