Over the past two years, Dominion Virginia Power has experienced 14 unplanned shutdowns of its four nuclear reactors, by the Times-Dispatch’s counting. Is it time for the power company to consider spinning off its nukes or selling them to someone who can do a better job of running them?
I ask that question after encountering a new study by Lucas W. Davis and Catherine Wolfram, “Deregulation, Consolidation and Efficiency: Evidence from U.S. Nuclear Power,” published by the National Bureau of Economic Research. Here’s the argument they make:
For four decades all nuclear power reactors in the United States were owned by regulated utilities. Few utilities owned more than one or two reactors and utilities received a rate of return on their capital investments that was largely disconnected from operating efficiency. Beginning in the late 1990s electricity markets in many states were deregulated and 48 of the nation’s 103 nuclear power reactors were sold to independent power producers selling power in competitive wholesale markets. These divestitures have led to substantial market consolidation and today the three largest companies control more than one‐third of all U.S. nuclear capacity.
… We find that deregulation and consolidation are associated with a 10 percent increase in operating efficiency, achieved primarily by reducing the frequency and duration of reactor outages. Efficiency gains were experienced broadly across reactors of different types, manufacturers, and vintages, with the largest increases in the spring and fall during the peak months for refueling.
The resulting increase in electricity production exceeds 40 billion kilowatt hours annually, valued at $2.5 billion annually at current prices. “This increase is almost pure efficiency gain, achieved without building a single new plant or constructing a single additional mile of transmission capacity,” the authors note. The increased electricity output, they add, displaces mostly coal‐ and natural‐gas‐ fired power, implying an annual decrease of 38 million metric tons of carbon dioxide emissions.
I was always under the impression that Dominion ran its nukes pretty well, so that 10% efficiency gain may not apply here. But we won’t know for sure if we don’t ask. Such a gain, if possible, would delay the need to add more power-generating capacity, thus keeping a lid on electric rates. Lower CO2 emissions are a bonus that environmentalists should love. Perhaps the State Corporation Commission should look into it.
— JAB
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