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US NRC disputes idea regulatory costs factored heavily in retirement decisions

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US NRC disputes idea regulatory costs factored heavily in retirement decisions

Despite increasing concerns about the impact regulatory costs are having on the U.S. nuclear fleet, the head of the U.S. Nuclear Regulatory Commission said even radical changes at the agency would not have prevented the retirement decisions of nuclear plants that have shut down to date.

Having viewed some of the profit and loss statements of the nuclear units that retired before their operating licenses expired, NRC Chairman Kristine Svinicki said June 7 during a joint meeting of NRC and Federal Energy Regulatory Commission officials: "I don't know what on Earth the regulator could have done that could have saved those units."

"The magnitude of the economic losses there, I think we could have radically changed our regulations and it would not have been enough to change the business case and the decisions to shut those units down," Svinicki said.

But that does not mean the NRC is ignoring the issue, she stressed.

"If our regulatory system doesn't keep pace with the world and isn't smart and effective, there is a diminishment in nuclear being an option for the country," she said. "We have to have a regulatory framework that isn't so safe that it means that no reactors operate or are built anywhere. I would say we go about our business extremely mindful of that impact."

With the Trump administration's plan to stave off early retirements of nuclear and coal-fired generating facilities beginning to take shape, FERC Commissioner Robert Powelson probed whether greater attention should be put on regulatory costs that may be adding to the economic burden of the nuclear fleet.

Nuclear plants 'operating on razor thin margins'

Powelson said nuclear operators anecdotally have shared that they are "operating on razor thin margins" that are driving economic decisions on whether they seek relicensing or throw in the towel. The commissioner said he was told by one company that NRC requirements were increasing its operating costs and those costs were having a profound impact on its ability to remain in service.

Powelson suggested, though, that he was unsure whether these claims should be considered "real or fake news."

In response, Brian Holian, acting director of NRC's Office of Nuclear Reactor Regulation, said the level and cost of nuclear regulation was appropriate to ensure the continued safe operation of nuclear facilities. He contended that growing industry criticism is a function of utilities looking for areas in which they have some ability to push back.

They cannot control the shale gas boom or the downward pressure it has put on power prices, and they have no influence over the competitive landscape of the energy markets. Holian said. So they have shifted their focus to their decisionmaking power over plant modifications and the costs associated with those decisions.

In addition to the price of the needed equipment, regulatory reviews for actions such as power uprates have their own costs. And utilities are asking whether they can foresee recouping those costs during the remaining life of their facility, Holian said. "So they have put an increased focus on our regulations."

NRC has responded with initiatives aimed at finding efficiencies, better forecasting the costs of reviews, focusing agency and licensee efforts on the most impactful safety tasks and scaling back on "extraneous and frivolous" matters, staff said during the meeting.

Cost overruns in part due to long dormant supply chain

Powelson also expressed concerns about significant cost overruns during the construction of new units at the Alvin W. Vogtle Nuclear Plant in Georgia.

To that, Svinicki reminded the FERC commissioner that the U.S. had not pursued the basic supply chain to build a large nuclear plant in more than 30 years.

"When you haven't done something for three decades, there is a lot of learning," she said. Many of the issues were not "the most sophisticated, complicated problems" but instead were basic quality control and manufacturing problems that "I'm sure every sector of the economy that has been dormant in something would have," Svinicki said.

Additionally, vendors were unfamiliar with the relatively strict standards for nuclear facilities and therefore experienced a learning curve in which they had to come to understand that a component going into a nuclear plant would be scrutinized more than something headed to a pipeline, Svinicki said.

But NRC staff insisted those lessons learned would greatly aid future projects and already are having a beneficial impact on the second new unit being built at Vogtle.

With premature retirements an issue that is top of mind in the nuclear sector, FERC commissioners brought up topics such as a potential imperative for nuclear plants to move toward being able to load follow and offer more flexible ramping capabilities as well as the feasibility of reviving a closed facility.

Svinicki called these "interesting policy issues" but acknowledged that they may fall outside of the realm of the NRC as a safety regulator. "We're not at a stage as an agency where we've taken necessarily all of these things onboard," she said. "It doesn't mean we have our head buried in the sand."

For instance, the decision regarding "permanent cessation of operations in advance of the termination" of a facility's license "historically ... has been a one way process," she said. But she could envision a situation in which the country could determine that "a national exigency" exists for a plant that was shut down several months prior and come to the NRC asking if that process could be reversed.

"We are looking to stay apace with changes that are needed because the world is changing around us," Svinicki said.

The NRC and FERC signed a memorandum of agreement in 2009 to promote coordination between the two agencies on issues pertaining to the nation's bulk power system reliability. The two agencies generally have been meeting every year or two since 2006 to address issues of mutual concern, and the June 7 meeting, held at FERC's headquarters in Washington, D.C., was a continuation of that effort.

Jasmin Melvin is a reporter for S&P Global Platts, which, like S&P Global Market Intelligence, is owned by S&P Global Inc.