Dominion Announces Intention to Renew North Anna Nukes

Dominion Energy Virginia has informed the Nuclear Regulatory Commission (NRC) of its intention to file for licenses to operate two nuclear units at its North Anna Power Station in Louisa County for another 20 years.

North Anna One began commercial service in 1978, North Anna Two in 1980.  Originally licensed to operate for 40 years, both had their licenses renewed for an additional 20 years. The pair provides 1,892 net megawatts of electricity, enough electricity to power 473,000 homes. As base-load plants, they operate around the clock, except when they are taken off-line for periodic maintenance.

“Renewing North Anna Power Station’s licenses for a second 20-year period is the right thing to do for our customers, the regional economy and the environment,” said Daniel G. Stoddard, chief nuclear officer for Dominion’s nuclear generation division. “The planned relicensing of North Anna and Surry ensures that the benefits of these clean energy sources will continue to provide affordable, reliable, carbon-free electricity to our customers through the middle of the century. Our nuclear power stations have proven to be among the most-efficient and most-reliable sources of electricity in our fleet.”

North Anna directly support more than 2,000 high-paying jobs in Virginia and pays millions of dollars yearly in state and local taxes, Stoddard said. Continued operation of the units will help Dominion meet state goals for lowering carbon dioxide emissions from its fleet of power plants.

Despite nuclear’s zero-carbon attribute, many environmental groups oppose the technology on the grounds that the disposal of nuclear fuel creates its own set of environmental hazards. If the company were thwarted in its effort to re-license the nukes, it would have to acquire base-load capacity from another source. Coal, which emits more CO2 than any other power source, is out. Natural gas is much cleaner than coal, but still emits CO2, and environmentalists say that it is no better than coal once the full “life cycle,” including gas drilling and collector pipelines, is taken into account. The problem is that the environmentalists’ preferred power sources, wind and solar, are intermittent, which means they often do not produce electricity when it is needed. Battery storage is seen as solution to the intermittentcy issue, but batteries add a big new layer of cost.

Dominion argues that re-licensing its existing nuclear units, which have operated efficiently for five to six decades, (a) is not coal and does not emit CO2, (b) provides a stable source of electricity, and (c) keeps economic activity, jobs, and taxes in Virginia.

The company, which says that it foresees “no significant barriers” to renewal of the North Anna nuclear units, estimates that re-licensing and refurbishing the North Anna and Surry power stations will cost a total of $4 billion. That is roughly comparable to the cost of building four state-of-the-art gas-fired power units that provide roughly the same amount of electricity. The difference is that the cost of nuclear fuel is cheaper and less volatile than the cost of natural gas.

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17 responses to “Dominion Announces Intention to Renew North Anna Nukes

  1. “The difference is that the cost of nuclear fuel is cheaper and less volatile than the cost of natural gas.”

    Really? Hard to beat $2 natural gas. Maybe trying to say cheaper than building 4 new nat gas plants?

    In any case, I am not sure if it is best to extend the plants or not. That would require some thought. I can understand keeping the option open, for the moment.

  2. I want to correct some of the factual errors in the report so that others who might read this can form an opinion based on accurate information.

    The article states that it would take four new combined cycle units to equal the electricity generated from these two nuclear power plants. The assumption is that the nuclear units would be cheaper because of their lower fuel costs. This is not correct.

    The Greensville combined cycle plant, currently under construction, will cost $1.3 billion for a 1588 MW facility. The rated output of the Surry plant is 1710 MW and 1892 for North Anna, for a combined total of 3602MW. It would take 2.27 Greensville plants to equal this capacity, not four, as stated. The capital cost of the combined cycle units would be 36% cheaper than the nuclear units for an identical capacity.

    It is true that fuel costs are a smaller percentage of operating costs for nuclear units compared to natural gas combined cycle units (NGCCs). However, that difference would take decades to make up in order to overcome the over $1 billion of greater capital costs for the nuclear units. Nuclear fuel is selling far below its current production cost. Either the cost remains in its current range and nuclear fuel becomes unavailable on the market or the price will go much higher, perhaps a 100% or more increase from today’s prices.

    The nuclear capital costs are estimates in today’s dollars. The Greensville costs are actual costs being incurred now. If we have learned anything about the construction (or refurbishment) of nuclear plants, it is that the final costs are far higher than the original estimates. The license for the first Surry unit would be extended in 2032 and the second North Anna unit would be extended in 2040. This would require the current cost estimates for the nuclear units to be valid for at least the next 15-23 years. That would require more than a leap of faith, it would require belief in fairy tales.

    Dominion posits a false choice. Neither nuclear nor natural gas provide the most reliable or lowest cost option. Energy efficiency costs about 1/3 of the cost of energy produced by a combined cycle plant and is completely carbon-free and available 24 hours per day, 365 days per year, better than the capacity factor for a nuclear plant (and far cheaper too).

    If we achieved 1.5% energy savings each year in the Dominion service territory, an amount achieved by many utilities throughout the nation, we would create new capacity equal to the amount from Surry in less than 6 years, 10 years before the plant is due for a license extension. If we achieved only half of that amount each year we would still offset the total amount needed from Surry, several years before it is needed.

    In another 6.3 years, we would offset the need for the North Anna units.

    This is not an option that Dominion would consider, because it reduces their revenues. They need a continual stream of additions to the rate base to prosper under the current rules, and nuclear units provide the largest additions to the rate base. But the best option for families and businesses in Virginia, is energy efficiency. It would lower energy costs for all ratepayers and result in thousands more long-term jobs than would be created by the conventional energy sources.

    We must add the modern, intelligent options to our energy conversation and find a way for our utilities to do well in the 21st century. Otherwise they will drag down our economy, stifle innovation, and keep us stuck in the 20th century.

    It will be important for the SCC to make a careful evaluation of the proposal to extend the operation of the nuclear units. The ratepayers will pay far more, if we accept the presentation as currently made by Dominion, without a thorough review.

  3. One of the discussions going on in my condo building, a converted 1950s hospital, is how to prepare for electric vehicles. Virginia continues to attract huge server farms and industry continues to automate. So I’m a bit skeptical about claims we can get consumers, with carrots or sticks, to reduce demand a full 1.5 percent annually compounded. Probably the best way to do it would be to let the price of electricity continue to skyrocket!

    But I fully agree that the SCC should subject this proposal to hard scrutiny and look at all the reasonable alternatives. And I’d really like to know how much of the billions needed to refresh these plants represents engineering and capital costs, and how much is for lawyers and consultants producing mounds of documentation for regulators or fighting last-ditch permit and court battles. Any ROE attached should be only for the capital costs.

    I was a fan of nuclear power before I started working for a nuclear company and the existing plants have been fabulously successful for Dominion and for us, and they were built before “carbon footprint” entered the language. On its face an extension makes sense, but they do have to make the economic case. It will be expensive – all the more reason to make sure the entire electric bill is just and reasonable to all of us.

    • As far as the economic case, don’t get me started. Re: utilities everyone including Dominion has an rationale why the more cost-effective option is the wrong option.

      Electric cars are a little off-topic, but the demand is fairly weak except for the following incentives:
      (1) Federal $7500 tax credit
      (2) State tax credits (VA=$0. but many Blue states now)
      (3) State mandates for EV Sales (mostly Ca. right now)
      (4) Free HOV for Plug-ins/EV (big factor in Ca. – recently extended)

      This is recently in the news because the House tax bill draft would propose killing the $7500 Fed credit, but the Senate tax Bill draft keeps it. Anyways my point is planning for EV’s will depend on these incentives, and how they develop in Va. I am personally not a huge advocate, but I am expecting longer term that mandates will force adoption, a little like ethanol E10.

  4. Efficiency contributions from individual consumers won’t be great. Their contribution will be mostly from buying more energy efficient appliances, heating and cooling devices, water heaters, etc. Our per capita energy use declines each year, which allows our electricity use to remain stable despite population and economic growth.

    The major gains will be from commercial buildings, office complexes, government buildings, universities, hospitals, etc. Where substantial savings can be made with immediate results and no money down.

    I founded a tech company years ago and have seen first-hand how rapid technological innovation can be. I suspect that within 5-10 years the energy consumption from the server farms will be drastically reduced from what it is today. Advances in lithography, photonic computing, or things we haven’t heard about yet, are likely to substantially reduce the energy consumption from these installations. The energy planners still have to be cautious and plan ahead. But today, they are overestimating load growth in order to justify building something new.

    If designed properly, charging systems for electric vehicles can become a cheap source of storage and a source of income for electric vehicle owners. There are many low-cost, sensible options coming to the market. We just need to devise methods so that these choices can be adopted in ways that also benefit the utilities or at least cause them no harm.

    The utility business is a special case. It is based on a social contract between the public and the utility. A monopoly is granted in exchange for a fair return. Economic and environmental consequences should always be evaluated and balanced against the true (not exaggerated) benefits of a project. Some utilities in Virginia act as if they should be able to do exactly what they want, regardless of the consequences to their customers or the state at large.

  5. I think human nature puts a higher burden on those advocating change. Dominion does a crappy job of RoW maintenance, but generally delivers the power at a fairly reasonable price. It’s a known commodity. The devil you know?

    I believe there is some substance among the alternative energy groups and new technology companies. But if pressed to be totally honest with myself, I don’t trust them as much as I trust Dominion. They don’t have a track record. And from what I’ve seen over the last 10-15 years, alternative energy advocates and suppliers want to charge me more for power. And they want to exempt users of alternative energy from paying cost-based standby fees to be permitted to go back on grid in case of necessity. Another area where they want me to pay more.

    By and large, the history of energy in the United States has involved changes in technology and changes in fuel – fuel that becomes much more available and/or at a substantially lower price. We went from wood-burning to coal, to natural gas and nuclear. We went from candles to whale oil lamps to kerosene lamps, to electric lights, and now to LEDs. We went from horse manure in our streets to gasoline engines and are moving to electric vehicles. Houses had no insulation. Then they insulated with old newspapers. Etc.

    Yet I see less of market and technology changes to more of “let’s make rules to force people to adopt new energy sources and uses.” I’ve advocated before the FCC since 1984. And consistently, I have heard from staff and commissioners alike, Republican Commissioners and Democratic Commissioners, that the government makes poor economic choices. Despite a push to adopt the European mobile standard GSM, the FCC, in the Clinton Administration, refused. It allowed carriers to chose GSM, TDMA or CDMA. The FCC strives to adopt rules that are technology neutral. I think the Agency has taken the right path in this area.

    But I don’t see a similar recognition in the energy area. I see mandates, not technology and market changes. That bothers me.

    Also, I agree that energy efficiency will be largely obtained in commercial and high-end residential buildings. I don’t think the economy will permit universal weatherization of most homes and lower-end commercial buildings. More and more fixed costs will be passed along to the mass market. That bothers me.

  6. Re the skepticism regarding Tom’s thoughts for efficiency …
    http://aceee.org/fact-sheet/road-to-cutting-energy-use
    “Energy efficiency has reduced US energy use about 50% relative to what it would have been if 1980 patterns had continued. These reductions in energy use are saving every American $2,500 per year in energy bills and reduced prices for products and services.”

    “ACEEE recently conducted an analysis to see if this rate of efficiency improvement could be sustained or even accelerated. We looked at projected 2050 energy use and greenhouse gas (GHG) emissions and considered whether these could be cut in half while continuing to grow our economy. We examined 13 sets of efficiency measures, modeling their impact through 2040 and seeing if they could put us on a trajectory to halve energy use by 2050.”

    The answer … they can be cut in half.

    Add to that .. I read that PJM is now including negawatts in their capacity market … reducing demand can pay in the region if not in VA.

  7. TMT,

    I agree with you. Dominion has earned trust over decades by providing reasonable rates and reasonable reliability. Newcomers will be looked upon more skeptically.

    The market I am advocating for is what you suggest, a technology (or fuel) neutral one. Other states are developing energy systems that are not dictated solely by the utilities. Rather they are leaving the management of the wires to the utilities and the choice of energy supply (and energy efficiency) up to the customers. The utilities are well compensated for creating and maintaining the infrastructure and transactional system that makes this all possible.

    Value of Solar tariffs avoid the subsidy issues related to net metering and encourage distributed generation where it does the grid the most good.

    I prefer simpler rules that gives many players an opportunity and customers a choice. Energy supplies selected by utilities to benefit their shareholders rather than their customers, foreclose choices and raise prices.

    The progression you illustrate went from one type of fuel to another. Today’s shift involves going from one fuel to another to adding new technologies. These involve fuel-free technologies such as wind, solar, storage, energy efficiency, etc. They will actually lower energy costs if not opposed by the utilities. It is administrative obstacles thrown up by the utilities that have increased the cost of many of the alternatives you describe, because of their fear of losing revenues. We must shift from win-lose scenarios to win-win.

    I don’t understand your comment about “More and more fixed costs will be passed along to the mass market.” Energy efficiency projects would not be undertaken by private individuals unless they result in a net savings. Efficiency lowers peak and overall energy usage, avoiding the need for new generation which, if provided by conventional sources, raises everyone’s costs.

    • I should have been more clear. I’m talking about recovery of the Power Company’s fixed costs. Today, utilities tend to have a flat-rate charge, plus usage, plus fuel adjustments. But a lot of the fixed costs seem to be recovered in usage. A division of all fixed costs by the number of customers would likely result in a flat rate charge that would likely be excessive. At least, that’s what seems likely to me.

      As big users adopt energy efficiency at a rate much faster than smaller businesses and residential consumers, more of the Power Company’s fixed costs will be paid by smaller volume customers. The revenue source mix will change and, guessing, will change significantly.

      Residential customers tend to improve energy slowly. Our furnace’s computer board went out last winter. The cost of replacing the entire furnace was only about twice as much as replacing the board in the old furnace. So we now have a much more efficient furnace. But if the board’s price was 1/2, I think we’d stick with the old furnace. I think this is typical of most people. And then there are folks who simply cannot afford to upgrade and keep their appliances and systems limping along.

      On the other hand, Fairfax County supported by taxpayers can afford to remodel a building with state of the art technology and gain major energy efficiency gains. I’m not opposing this. But some of the fixed costs paid by Fairfax County or the building my office is in (which also improved energy efficiency) will be shifted to smaller business and residential customers, IMO.

      • The utilities have noticed the trend that you are projecting and are putting the cost of new projects in RACs rather than base rates. But residential rates and charges for “fixed” expenses such as transmission and distribution expenses are still based on usage. This is a concern for utilities as demand stabilizes and energy efficiency and self-generation lowers revenues.

        Utilities’ response as so far been to oppose these new choices. I think a better solution would be to provide for more choice in ways that keep utilities healthy.

        Those with more money will be the first to choose the lower cost options that require some investment, putting more onto those less able to deal with higher energy costs. Lower income families already pay a much higher proportion of their monthly income for energy than higher income families.

  8. Some day – who knows when – Nukes will become safe enough and small enough that they can be “distributed” , not be a threat of meltdown or attack from terrorists. A nice ‘extra’ would be the ability to dynamically ramp up and down … then deploy them as co-located hybrids melded with renewables.

    until that day comes – we are between a rock and a hard place on what to do different and presented with hypotheticals about energy efficiency that “will happen”.

    I’m pretty confident we’re going to see more efficiencies but as I sit here – we just replaced a water heater for about $1000 (including labor). We looked at a hybrid water heater – it was twice as much.. we looked at an on-demand – even more than twice as much .. so we ended up with a more efficient but thoroughly conventional heat- coil unit that has a sticker on it that says something like $550 a year. We have a washer and a dishwasher and a shower and I’m sure we’re going to use that water heater. In fact, last night I fired up the dishwasher, clothes washer and took a shower and noted the end of the “hot” water!!!

    We’ve replaced all the lights with LEDs, we have a 10 yr old heat pump that probably will need upgrading at some point. We use propane for cold weather because the heat pump sucks…

    We did install a programmable thermostat and that “works” nicely..

    we are not using any more electricity, probably a little less but not a lot less.

    So…. at the end of this blathering.. I say this – I’m not seeing what else I’m going to be able to do – to dramatically lower my use… unless I want to turn down the base temp on the water heater… and/or keep the house cooler in the winter (we upgraded insulation 3 years ago)….

    I just don’t see – at my level any further dramatic reductions that I can do so I’m not really anticipating much change.. and I’m wondering if I’m “average”. … and if so.. even though I do believe as time goes by – just mere replacements will be more energy efficient. I would be THRILLED if when the day comes that my heat pump expires that the replacement might be 20% more efficient.. but I’m not counting on it and even if it turned out true – I don’t think it would come anywhere near to cutting my total usage by 20% anyhow.

    So … I’m stuck with the amount I’m using – and needing…and I’m expecting Dom to continue to use North Anna and continue to burn gas…and perhaps and hopefully add more solar to offset the gas.

    It’s true that Dominion is going to choose generation that keeps their investors happy but it’s also true – their prices are in the lower tier compared to places like California and the Northeast.

  9. Be careful about how you take Dominion’s PR about having low rates. They do have slightly lower residential rates than the national average. But their rates are higher than other states such as Kentucky, Tennessee, and North Carolina, which share the advantages of our mild climate.

    Although rates are much higher in California, Hawaii, Alaska, etc., residential electricity bills are higher in Virginia than in these other states. There are several reasons for this such as greater energy efficiency, the lack of significant winter heating with electricity, etc. But the fact remains that electricity bills in Virginia are the 10th highest in the nation.

    As I mentioned before, the residential sector does not represent the “low-hanging fruit” for energy efficiency, just as it is not the lowest cost option for installing solar.

  10. Yes .. commercial and industrial are driving change to efficiency and onsite renewable use, but for thise of you interested in residential …
    Over the past 20 years Lawrence Berkeley National Laboratory has quantified the savings impact of a range of improvements, yielding a “loading order” for efficiency measures. Lights are at the top, followed roughly by sealing and weatherstripping, insulation, more- heating and cooling equipment.

  11. What doesn’t make sense is that evidently nukes and coal need support to be used on the grid because they are the most expensive resources and are loosing out in the capacity markets. Why spend lots to renew them?

    In TX, with their growing onshore wind production even gas is in trouble.
    “Exelon blamed the financial woes on “historically low power prices within Texas” that created “challenging market conditions for all power generators, including the five natural gas-fired EGTP plants.”

    The Exelon development comes as Vistra Energy announced plans last month to close three coal-fired power plants in Texas — part of the 5,625 MW of fossil fuel capacity that is slated to be retired or mothballed in the state in the coming year.”

  12. Well.. I’ve jousted with Tom and others here over what should be used for baseload – that is needed to power the night and there has to be “something” even in the most energy efficient mode that is conceivable.

    And I think the answer to that question in my mind is critical to the credibility of those who are advocating moving away from coals and nukes to renewables and efficiency.

    We KNOW what those who are opposed to renewables want and we know what some utilities like DOM want but what is the credible alternative path?

    Should we do away with nukes and coal and burn a lot more gas?

    What’s the best existing model to point to?

    I KNOW at some point in the future – as more and more technology evolves that we WILL completely rid ourselves of coal… but that will actually make us more reliant on something else – at this point – either nukes or gas burned for baseload.

    I need to see a credible path forward myself.. in order to advocate abandonment of all coal and nukes.. and I’m a STRONG supporter renewables and efficiency but still a strong skeptic of “storage” which feels aclittle too much like “cold fusion”.

    I continue to believe the best places to see real change is the islands in the world that do not have native fossil fuels and much import whatever they use which is usually fuel oil.

    Those generators CAN ramp up and down and one would think that those islands would be the most promising candidates for evolutionary changes to efficiency and storage since many of them pay 30-40 cents kwh.

  13. Larry,

    We have been around this circle before. But let’s go through it one more time. Energy efficiency is the “baseload” replacement for nuclear units. By substituting 24-hour per day efficiency instead of retrofitting the nuclear units, there is no need for more gas-fired plants. The demand has been reduced by the energy efficiency. The existing non-nuclear units will continue to meet the remaining baseload requirements just as they did when the nuclear units operated. At 2-3 cents per kilowatt-hour, energy efficiency is the lowest cost source of generation in Virginia. It is more reliable than any mechanical source of generation and operates at 100% capacity factor, better than any other type of generation.

    There is no need to add additional generation of any type. Energy efficiency picks up the load that was supplied by the nuclear units and the remaining generators operate as they normally did to serve the remaining load.

    This is a proven technology. No pie-in-the-sky estimates of what might be available in the future are required. Greater adoption of energy efficiency would benefit from more awareness of its benefits and low cost and perhaps some easy ways of financing and making payments. No subsidies or special programs are necessary. Although, a program to make it easier to improve the efficiency of substandard housing would benefit low-income residents and everyone else (because of lowering the peaks). Tens of thousands of long-term jobs in the building trades would be created.

    The only group that would not benefit from such a large-scale push for more energy efficiency would be the utilities. But that can be fixed too.

  14. I was addressing only the replacement of the nuclear units in this post, in order to avoid spending $4-$8 billion for just 3600MW of capacity. I was not recommending replacing all of the coal-fired units (yet).

    Some have suggested that it might be better to allow the most efficient coal-fired plants to operate until retirement, rather than replace them with expensive new gas-fired units that will require 40 years to pay for, regardless of how much they will actually be used.

    You somehow shifted gears to solar and storage. I just wanted to remind you that two installations on Kaua’i are reliably using your “cold fusion” option of battery storage.

    In 2016 Tesla/SolarCity installed a 13 MW solar array with 53 MWh of battery storage to provide energy for night-time use. The cost of energy from this solar/battery facility is 14.5 cents/kWh, cheaper than the cost of diesel fuel (15 cents/kWh).

    Another facility, provided by AES, is under development. It will add 20 MW of solar and 100 MWh of batteries and produce energy at 11 cents/kWh for night-time use. The current residential price of electricity on Kaua’i is about 32 cents/kWh. The price of the solar/battery combinations has dropped 30% in the last two years.

    The Kaua’i utility is producing 42% of its energy with renewables in 2017 and expects to provide 73% of its energy from renewable sources in 2025.

    You keep waiting for “proof” of these concepts. It is operating now. It’s a far cry from cold fusion. Granted the prices are still too high for Virginia, but in the time frame that I have been discussing (2020-2030), these options are likely to be some of the low-cost choices for various applications.

    We will use coal, nuclear, and natural gas for some time to come. I have been focusing on what we do next as units retire or new ones need to be built. I am recommending that energy efficiency be considered one of the sources of new generation, since it is the cheapest, requires no fuel, has no emissions, and is the largest job creator of any energy alternative.

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