Let Nuclear Plants Die; Markets Choosing Gas
Dropping high-cost nuclear power in favor of natural gas has long-term implications that could touch pocketbooks and benefit millions of Pennsylvanians. Because electricity is a basic necessity, the economic implications of shutting down the financially ailing Beaver Valley and Three Mile Island nuclear plants and replacing the three reactors with gas-fired generating capacity are potentially huge. Low-cost natural gas would benefit consumers, while spurring economic development. Nationally, natural gas already has made nuclear power more challenging, displacing 10 nuclear plants in different parts of the country since the shale revolution opened up vast new supplies of gas a decade ago. There is no question that depressed natural gas prices have an adverse effect on nuclear power, leaving the country with an aging fleet of reactors. Among the most vulnerable are the Beaver Valley and Three Mile Island plants, which have been unable to compete with natural gas at wholesale electricity auctions. It would be a huge mistake if Pennsylvania state government intervenes in the energy marketplace to keep uneconomic reactors running. Electricity consumers would wind up paying the bill for financial assistance to utilities that own the reactors. That is why Pennsylvanians should not be fooled into thinking they would benefit from such intervention. First, we should recognize that Marcellus shale will continue to meet Pennsylvania’s gas needs well into the future. Second, the cost of nuclear-generated electricity continues to increase, due to the rising cost of reactor components and equipment, along with nuclear fuel, that must be imported from suppliers in Europe and Asia. Instead of hobbling our economy with a costly bailout for nuclear plants, the state Legislature should focus on ensuring that policy actions match the needs of consumers. Witness the demise of Westinghouse, the country’s last major nuclear company. Now bankrupt, with no reactor orders from U.S. utilities, Westinghouse is expected to get back on its feet eventually, but it won’t be anything like the company that once dominated nuclear power in the United States. The trend away from nuclear power is worth pondering. A report from the Massachusetts Institute of Technology Energy Initiative said, “The recent experience of nuclear construction projects in the United States and Europe has demonstrated repeated failures of construction management practices in terms of their ability to deliver products on time and within budget.” What’s more, the existing fleet of operating U.S. nuclear plants has been plagued by high costs and the continuing political logjam over the disposal of high-level nuclear waste. Efforts to launch construction of a repository for nuclear waste at Yucca Mountain in Nevada have been met by fierce opposition from Nevadans. By contrast, there has been much less resistance to the production of natural gas and the construction of pipelines to supply power plants with gas. The amount of natural gas produced for a given amount of drilling activity in the Marcellus has increased significantly. Producers have learned how to drill faster, frack with greater accuracy, and do nearly everything with more efficiency. Enabled by reduced costs and greater productivity, the natural gas industry has assumed a larger role in electricity production, in the Pennsylvania market and the national natural gas market.