Entergy Watch: New CEO admits times are tough at Entergy's merchant reactors

As reported by Reuters, Entergy Nuclear's new CEO and Chairman of the Board, Leo P. Denault (pictured left), has admitted "its merchant nuclear power plants are in 'challenging economic situations,'" and "'[n]ear-term power prices are challenging for some merchant nuclear generating units in certain competitive markets.'" The admission came during a fourth-quarter earnings call.

The article continues:

"He said some plants are in the more challenging economic situations for a variety of reasons, including 'the market for both energy and capacity, their size, their contracting positions and the investment required to maintain the safety and integrity of the plants.' (emphasis added)

He would not name the plants but said, 'There are years when certain plants' cash flows can be negative at today's forward price curve.'"

UBS has concluded that the financial pressures could force Entergy to close Vermont Yankee, FitzPatrick in New York, and even Pilgrim near Boston yet this year.

All three reactors are nearly, or even more than, 40 years old, and recipients, despite their age-degradation risks, of U.S. Nuclear Regulatory Commission (NRC) rubberstamps for 20-year license extensions. They are also exact replicas of Fukushima Daiichi Units 1 to 4 -- General Electric Mark I Boiling Water Reactors.

Additional Entergy reactors have received NRC 20-year license extensions as well: Arkansas Nuclear One, Units 1 & 2; Palisades in Michigan; and Cooper in Nebraska (another Mark I GE BWR, which Entergy operates on behalf of owner Nebraska Public Power District).

Entergy's reactors at Indian Point Units 1 & 2 near New York City, as well as Grand Gulf 1 in Mississippi, have applied for 20-year license extensions.

A Dominion spokesman admitted last October that the high cost of making needed safety repairs was a major factor in the nuclear utility's decision to close Kewaunee in Wisconsin by mid-2013. It was the first announced closure of an atomic reactor in the U.S. in 15 years.

Entergy Watch: Pilgrim Coalition urges NRC to require Mark I atomic reactor to shutdown during historic winter storm

As reported by Wicked Local Plymouth, in the lead up to what is being reported as an historic winter storm about to hit the Northeast, Pilgrim Coalition and Cape Cod Bay Watch are calling on the U.S. Nuclear Regulatory Commission (NRC) to order Entergy's Pilgrim atomic reactor shutdown, "arguing that a prolonged power outage, flooding, high winds, and snow and ice could cause several serious problems at Pilgrim."

However, as of 2:30 PM, NRC's "Current Power Reactor Status" report shows that Pilgrim is operating at 83% power. All other reactors in the Northeast are also operating, either at, or very close to, 100% power levels.

In a press release, Pilgrim Coalition spokespeople stated:

“This is predicted to be a historic storm with severe consequences,” said Pine DuBois, Executive Director of Jones River Watershed Association. “Winds are supposed to pick up Friday night during high tide and continue through the even higher tide Saturday morning. Near hurricane gusts will be out of the east, hitting Pilgrim head-­‐on. At other times during high winds, Pilgrim’s water intake pumps have failed.”

“Entergy could not keep the lights on during the Super Bowl -­‐ can we be sure they’ll provide enough power to Pilgrim during the storm?” duBois added.

According to Karen Vale, Campaign Manager at Cape Cod Bay Watch, “This historic storm emphasizes that rising sea levels and frequent, more severe storms make Pilgrim’s continued operations increasing risky. We hope that the NRC will close Pilgrim until the threat of the storm passes.”

As Beyond Nuclear's Freeze Our Fukushimas campaign has warned, no matter the cause (earthquake and tsunami, or historic winter storm at high tide), any prolonged loss of power to atomic reactors can lead to meltdown and catastrophic radioactivity releases. Entergy's Pilgrim is an identical twin design to Fukushima Daiichi Units 1 to 4, a General Electric Mark I Boiling Water Reactor.

NRC recently approved Pilgrim's 20-year license extension, despite six years of resistance by Pilgrim Watch -- a national record. Pilgrim thus joins the list of 73 NRC rubberstamped license extensions. Fukushima Daiichi Unit 1 had only recently won approval for its license extension, before the March 11, 2011 magnitude 9.0 earthquake, and 45-foot-tall tsunami, struck.

Update on February 11, 2013 by admin

Reuters has reported that on Sunday, off-site electricity was restored to Pilgrim. The blizzard knocked out Pilgrim's three connections to the off-site electrical grid, but emergency diesel generators continued supplying the power needed to run safety and cooling systems on the reactor, the NRC has reported.

However, not mentioned by news media coverage, and little known, is the fact that NRC does not require emergency back up power on the high-level radioactive waste storage pools. Under NRC's lax regulations, pools can rely entirely, and exclusively, on the electrical grid for the running of cooling water circulation pumps. Thus, when the grid goes down, the pool begins to heat up. After enough hours or days without water circulation, the pool can begin to boil. If the evaporation goes on long enough, the pool water can boil away the water cover over the stored irradiated fuel. If the high-level radioactive waste is exposed to air, it can quickly catch fire. As pools are not required to be located within primary radiological containment structures, either (see graphic, above left), this means that catastrophic radioactivity releases into the environment could result from a pool fire, as Alvarez et al. warned in Jan. 2003, in the aftermath of the 9/11 attacks.

Pilgrim's pool contains all the high-level radioactive waste ever generated there. None has yet been moved to dry cask storage, a very rare exception in the U.S. nuclear power industry. After more than four decades of exclusively pool storage, however, Entergy has applied to NRC for permission to begin moving some fraction of the pool's inventory into dry casks.

"Retired Duke reactor may signal more U.S. nuclear shutdowns"

As Reuters reports, yesterday's announcement by Duke that it has decided to permanently shutdown its crippled Crystal River atomic reactor with a severely cracked containment in Florida, and Dominion's decision last October to permanently shutdown its Kewaunee reactor on the shore of Lake Michigan in Wisconsin (despite a 20-year license extension rubberstamp by the U.S. Nuclear Regulatory Commission), may be but the first dominoes to fall.

The article quotes UBS energy analyst Julien Dumoulin-Smith, who concluded "It's getting tougher for nuclear to compete." The UBS short list for reactors on the brink of permanent shutdown includes "Entergy Corp's Vermont Yankee in Vermont and FitzPatrick in New York, Exelon Corp's Clinton in Illinois and Constellation Energy Nuclear Group LLC's Ginna in New York," according to the article.

This, despite the fact that NRC has also already rubberstamped 20-year license extensions at Vermont Yankee, FitzPatrick, and Ginna.

The article ends by questioning if Southern California Edison's San Onofre 2 & 3 in San Clemente will ever restart, given their severe steam generator tube damage. Both units have now been shut down for over a year for safety reasons.

VDPS finds that Entergy has broken its promises to the State of Vermont, urges rejection of CPG

Echoing State of Vermont political leaders' accusation that New Orleans-based Entergy Nuclear is "a rogue corporation," on Jan. 25, 2013, Geoffrey Commons, Director of Public Advocacy at the Vermont Department of Public Service (VDPS), speaking on behalf of Vermont Governor Peter Shumlin's administration, filed a strongly worded brief in the Vermont Public Service Board (PSB) proceeding re: whether or not Entergy should be granted a renewed Certificate of Public Good (CPG), required to continue operating the Vermont Yankee atomic reactor during its Nuclear Regulatory Commission rubber-stamped 20-year license extension.

Commons highlighted that "Entergy Has Breached lts Promise Not to Operate the VY Station After March 12, 2012 Without a Renewed CPG," stating:

"Reduced to its core, this issue demonstrates that Entergy, as a business, is prepared to promise whatever it takes to achieve its immediate business objectives, and, is prepared to violate such promises if honoring them would be inconsistent with subsequent business objectives."

You can contact the PSB, urging it to deny a Certificate of Public Good to Entergy, which would force the shutdown of Vermont Yankee under state law, which Entergy had previously agreed to obey. More.

Update on February 7, 2013 by admin

The Brattleboro Reformer has reported on this story.

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

In 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.