Will Ohio lose both its nuclear power plants? If gauging the response of legislators is any indication, Ohio’s nuclear plants seem to be doomed.
Clearly, grassroots organizers such as Generation Atomic, the American Nuclear Society, and North America Young Generation in Nuclear have failed to convince legislators to act to save Ohio’s only nuclear generation assets. These organizers have been working for months under the ultimatum from FirstEnergy Corp, the plant’s owners: convince Ohio lawmakers to pass ZEN (Zero Emission Nuclear) legislation by June 30th or else the plants will close and decommissioning will begin. That threat carries with it the loss of more than $1 billion in economic activity for the state, the loss of more than 1,000 good paying jobs, and the local county tax bases where the plants reside will be hit with a near extinction level event.
Why is this happening? Why have Ohio’s nuclear plants become so unprofitable?
“It’s the federal government’s fault, stupid” is the answer given by nuclear energy supporters in their plea to get State legislators to protect these generation assets from egregious federal policies.
For the nearly four decades since the Three Mile Island (TMI) nuclear accident, the fastest growing source of zero-carbon energy, nuclear, has been stymied. Insanely expensive new rules and regulations imposed by the federal Nuclear Regulatory Commission (NRC), since the TMI accident has exponentially ratcheted up the cost of nuclear power. Power plants that once took only a year to build and cost $1 billion now take 10 years to build and cost near $10 billion.
“This is the price of progress” said Jon Morrow, chief economist with the eGeneration Foundation. “The costs associated with innovating within the nuclear space to keep pace with other technologies, like natural gas, became cost prohibitive. Combine bad federal policy to the policy of lobbying organizations, such as the Nuclear Energy Institute (NEI), that have just maintained the status quo for the industry, and the Nuclear energy industry as a whole, is now learning a very painful lesson: innovate or die!”
Maintaining the status quo policy for the nuclear industry was, in hindsight, setting up many nuclear plants, like Ohio’s Davis Besse and Perry Nuclear power plants, for failure when breakthroughs in natural gas extraction came to fruition.
Natural gas is cheap, abundant, and clean and it is politically popular to keep energy costs low and the environment clean. So as the petroleum industry rushes to build out more cheap natural gas plants, the diversification of Ohio’s energy mix becomes more concentrated in the hands of natural gas.
“Throwing all of our eggs into one basket for a fuel source that prices historically fluctuates wildly from decade to decade is not a wise move.” said Steve Arndt, Ohio State House Representative. “This decade, the price of natural gas is cheap, but through expanded use and with greater exportation, who knows, there is a good possibility that nuclear could be very competitive within the free market again.”
Recently, grassroots organizers arranged a forum at the Ohio State House that brought in many national figures in the nuclear industry. The overarching theme was: nuclear energy provides added value that Ohioans should pay for. Nuclear delivers carbon free energy. While, the forum was well attended, few legislators showed up and even fewer of their aides showed.
Why the no shows?
Ohio passed Senate Bill 221 (SB221) in 2007. This legislation mandated that Ohio adopt a “Renewable Portfolio Standard” RPS that forced Ohio’s energy providers to invest in higher cost zero emission wind and solar technologies. The effect was an immediate rise in energy costs that helped to make Ohio’s energy intensive industries, like the steel industry, less competitive worldwide and has only added to Ohio’s economic woes.
The sales pitch in 2007 is the same pitch that grassroots organizers are making now. “The need for higher cost energy to save the planet from global warming.”
That message, however, no longer holds weight with Ohio’s legislature that has a super majority of Republicans in both chambers of its legislature. Many Ohio Republican legislators either do not believe in man-made global warming or do not feel they should destroy the Ohio economy in reducing carbon emissions.
Is there a solution to save Ohio’s nuclear plants besides the proposed ZEN legislation?
There is chatter in the halls of Ohio’s statehouse about potential re-regulation of Ohio’s electrical generation market. Generally, this move away from the free-market is being considered due to former President Obama’s war on coal.
Ohio’s coal plants were built when Ohio’s electricity market was regulated. This regulation guaranteed that energy companies deserved to make a small profit on the energy they produced no matter what new regulation the federal government imposed. Ohio deregulated its markets in the 90’s and as a result there is no longer any guarantee to energy producers of profits and no guarantee that federal regulations won’t destroy any successful business model.
Re-regulation of Ohio’s energy markets would save Ohio’s nuclear energy plants and most likely would cost rate-payers less than the currently proposed ZEN legislation. Re-regulation would also allow a tremendous amount of investment into Ohio’s energy infrastructure. Ohio has not had any significant amount of investment in its energy infrastructure for a long time.
Others do not want to see re-regulation, but instead, want to see tools to allow all energy markets in Ohio to be better managed.
“Mankind quickly realized if you let the entire village hunt the herd, very quickly there would be no herd, and that is why mankind adopted conservation measures to survive” Morrow said.
“The rush toward natural gas should of been better managed, and is very much akin to everyone in the village going out hunting and killing the entire herd,” Morrow added.
Morrow also went on to explain the repercussions of natural gas for the State of Ohio:
“This rush to natural gas has caused a negative price bubble that will most likely burst in five to eight years with greater natural gas exports and present day nuclear technology will become competitive again. Unfortunately, because the rush to natural gas was not well managed, Ohio’s nuclear assets will most likely be decommissioned, never to return. Ohio could correct its mistake now by placing a tax on all the natural gas that is not used within the State of Ohio. The funds from that tax could be used to support Ohio’s nuclear power plant until the free-market corrects itself.”
Still, other environmental groups, would like to see an expansion of SB221 to include all reduced carbon technologies and not just renewable energy technologies. They want to let all technologies compete to produce carbon-free or reduced-carbon energy.
If this were implemented, many of the companies like FirstEnergy, that have to purchase renewable energy from outside of Ohio would then be allowed to meet its mandates using its own nuclear energy produced within Ohio.
Many experts believe that would allow the nuclear plants to be saved, would keep more money inside Ohio, and would not increase any costs to ratepayers, and may even lower costs, while addressing global warming concerns.
It remains to be seen what direction Ohio will go if FirstEnergy keeps it promises. There is very little time for the Ohio legislature to act and to come to some sort of compromise.
It does not look good for the nuclear industry in Ohio but one thing is for certain that if Ohio legislators do not act to correct their blunders and the blunders of the federal government, the entire state may face an economic death spiral due to its energy policies.