Nebraska utility head recommends closing nuclear power plant

Fort Calhoun Nuclear Station

OMAHA, Neb. (AP) — The head of a Nebraska utility recommended shutting down the nation's smallest nuclear power plant by the end of the year, saying Thursday that it doesn't make economic sense to keep it open.

Tim Burke, the president and CEO of the Omaha Public Power District, told the utility's board that Fort Calhoun Nuclear Station isn't financially sustainable.

Shuttering the power plant would represent a shift for the utility, which serves more than 310,000 customers in 13 counties in southeastern Nebraska. Utility officials previously maintained that Fort Calhoun would be a valuable part of its plans because of its ability to generate power without adding to carbon dioxide emissions.

The board is expected to vote on the recommendations at its June 16 meeting.

The district spends about $650 million a year on generating power, which includes about $250 million on Fort Calhoun. Burke said closing the nuclear plant will help keep the utility's rates low compared to the average power cost in the region.

The utility also has to make sure its mix of power plants can comply with environmental rules and restrictions on carbon dioxide emissions. The district typically gets about 34 percent of its power from the Fort Calhoun plant, but utility officials said Thursday that other carbon-free options, such as wind power, now make better financial sense.

The economics of the utility business have changed significantly in recent years because of new environmental regulations and cheaper natural gas prices due to hydraulic fracturing. Fort Calhoun's small size and single reactor contributed to the recommendation to close it.

"It's just not viable. It's just not economically viable," board member John Green said.

Smaller nuclear plants, like Fort Calhoun, have the most difficult time competing on the price of power, especially if they have had serious safety problems, said Mark Cooper, a senior fellow for economic analysis with the Institute for Energy and the Environment at Vermont Law School.

"The older, smaller reactors are really uneconomic," Cooper said.

That description fits several reactors that closed in recent years, such as the Vermont Yankee in Vermont plant that was shut down in 2014 or the Kewaunee Power Station in Wisconsin that shut down in 2013.

New Orleans-based Entergy Corp. has announced plans to close two more of its smaller, older plants by the end of the decade — Fitzpatrick nuclear plant near Syracuse, New York, and Pilgrim nuclear plant near Boston. Entergy also owns Vermont Yankee.

It's relatively rare for utilities to close a nuclear power plant unless there are major mechanical problems, but all nuclear plants face economic pressure because of the cheap natural gas and affordable power that can be purchased wholesale from other utilities.

"The industry is having trouble competing with costs," said David Lochbaum, director of the Nuclear Safety Project for the nonprofit group Union of Concerned Scientists.

Adding to Fort Calhoun's problems is a series of setbacks it has had in recent years. The utility spent more than $140 million on repairs after flooding and a small fire damaged the plant in 2011.

Among the violations cited by regulators was the failure of a key electrical part during a 2010 test, a small electrical fire in June 2011, several security issues and deficiencies in flood planning that were discovered a year before the river spilled its banks.

It resumed operations in December 2013 after the utility hired Chicago-based Exelon, the largest U.S. operator of nuclear power plants, to run Fort Calhoun.

OPPD estimates that it will cost $884 million to decommission Fort Calhoun over at least a decade. The utility has about $373 million already set aside for that purpose.

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