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NRC official: Regulation, other factors threaten nuclear competitiveness

Many factors, including costs of U.S. Nuclear Regulatory Commission licensing and regulation, are damaging the competitiveness of nuclear power in the U.S. and must be addressed to provide a level playing field for current nuclear units and advanced reactors being developed, according to a former NRC member.

Jeffrey Merrifield was asked during a panel discussion in Washington, D.C., on Dec. 10 why some US nuclear power plants are "struggling financially," with some of them closing prematurely, as a result, even though their average operating costs are low compared to other generation sources.

Merrifield, who served on the commission from October 1998 to June 2007 and is now a partner in the energy practice at the Pillsbury law firm, noted such frequently cited factors as persistent low natural gas prices as well as the significant addition of capacity and generation from renewable resources such as wind and solar power that receive investment tax credits.

Such renewable generation, he said, can in some cases "allow those assets to operate at almost zero pricing," driving down power prices in deregulated electricity markets and making it difficult or impossible for even "very efficiently" operated nuclear power plants to compete.

"You can talk about free markets, but they're not truly free when you have massive government investments in some [energy sources] but not in others," Merrifield said.

The panel discussion took place at an event on "The Fate of Nuclear Power," sponsored by the Keystone Policy Center, a nonprofit organization that works on agriculture, environment, energy, education and public health issues.

Merrifield said cutting the costs of developing and licensing new advanced reactor technologies, which are extremely high due in part to the costs of NRC reviews, is also very important. He recalled that decades ago "almost all our current nuclear power plants" were licensed "with almost no NRC cost." But today, NuScale Power LLC said it expects to have to pay $40 million to $50 million in NRC fees to certify its small modular reactor design.

"No other [generating] source has to pay a national regulator," Merrifield said. He, therefore, urged the NRC to "take user fees off the burden of small advanced reactor developers" and address that issue in a revised licensing and regulatory framework it is developing for advanced reactor licensing reviews.

NRC is required by law to recover 90% of its annual budget from licensee fees. S.512, the Nuclear Energy Innovation and Modernization Act, was passed by Congress in December 2018 and requires NRC to make revisions in the way its advanced reactor program, including the development of a new regulatory framework, is funded. The intent is to give some economic relief to such developers.

Edwin Lyman, acting director of the Nuclear Safety Project at the Union of Concerned Scientists, emphasized during the discussion that, contrary to some claims, the cost of safety and security regulations issued by the NRC "is not a major factor" in U.S. nuclear power's competitiveness problems.

The cost of complying with NRC regulatory requirements is "often scapegoated" for the industry's economic woes, and the agency is sometimes "blamed for overregulation that is affecting the economic competitiveness of nuclear power," but such regulation is at most "only a minor factor if at all," Lyman said.

For example, Lyman noted, the cost of implementing enhanced measures to mitigate severe accidents in response to the 2011 Fukushima Daiichi accident in Japan, as required by NRC in a rule approved in January, is "only a small fraction" of what operators are spending in France and Japan to implement enhanced safety measures required by their regulators.

The average cost to implement post-Fukushima upgrades at U.S. nuclear power plants is on the order of $40 million to $50 million per reactor, "so the NRC is taking a much cheaper route," Lyman said. "I don't think overregulation is a significant factor."

Lyman did express concern, however, that economic pressures on nuclear plant operators, and an ongoing initiative at NRC to risk-inform the agency's power reactor oversight process, in some cases by reducing the number or frequency of inspections, could result in diminished safety, especially as power reactors age.

"You can't skimp on the investment that you need to make sure that plants are working right," he said.

Merrifield challenged that point, saying that "NRC staff are all very dedicated" and "any regulator needs to ensure that their skill set is in the right place and be self-questioning." An "ever-ratcheting set of inspections" by NRC is not needed to ensure nuclear safety, Merrifield said.

This article was written by Steven Dolley, a reporter for S&P Global Platts. S&P Global Market Intelligence and S&P Global Platts are owned by S&P Global Inc.