Edison Con? San Onofre Nuclear Plant Owner Proposes Reactor Restart

Containment domes or shell game? (Aerial view of San Onofre Nuclear Generating Station by Jelson25 via wikipedia)

Southern California Edison (SCE), the operator of the troubled San Onofre Nuclear Generating Station (SONGS), has proposed to restart one of the facility’s two damaged reactors without repairing or replacing the parts at the root of January’s shutdown. The Thursday announcement came over eight months after a ruptured heat transfer tube leaked radioactive steam, scramming Unit 3 and taking the entire plant offline. (Unit 2, offline for maintenance, revealed similar tube wear in a subsequent inspection; Unit 1 was taken out of service in 1992.)

But perhaps more tellingly, Edison’s plan–which must be reviewed by the Nuclear Regulatory Commission–was issued just weeks before the mandated start of hearings on rate cuts. California law requires an investigation into ratepayer relief when a facility fails to deliver electricity for nine months. Support of the zombie San Onofre plant has cost California consumers $54 million a month since the shutdown. It has been widely believed since spring that Unit 3 would likely never be able to safely generate power, and that the almost identical Unit 2 was similarly handicapped and would require a complete overhaul for its restart to even be considered.

Yet, calls for more immediate rate rollbacks were rebuffed by Edison and ignored by members of the California Public Utilities Commission (CPUC). Despite studies that showed SONGS tube wear and failure was due to bad modeling and flawed design, and a company pledge to layoff of one-third of plant employees, San Onofre’s operators claimed they were still pursuing a restart.

Thursday’s proposal for that restart does not directly engage any of the concerns voiced by nuclear engineers and watchdog groups.

When SONGS installed new turbines in 2010 and 2011, it did not replace “like with like”–that would have required a costly custom machining of parts no longer routinely manufactured. Instead, San Onofre’s owners moved to “uprate” their generators–cramming in more transfer tubes to increase output–with the nuclear industry equivalent of “off the shelf” parts. It was a transparently profit-driven decision, but more crucially, it was a major design change that should have required a lengthy license-amendment process at the NRC.

Federal regulators, however, took on faith industry assurances that changes were not that big a deal, and approved San Onofre’s massive retrofit without an extensive investigation into the plan.

What is now understood to have happened is that the design of new parts for San Onofre was based on flawed computer models that failed to anticipate new fluid dynamics, increased vibration, and more rapid wear in the numerous thin, metal, heat transfer tubes. It’s a flaw that presumably would have turned up in a more rigorous regulatory review, and, again, a problem not directly addressed by Edison’s restart plan.

Rather than repair or replace the tubes and turbines, San Onofre’s owners propose to simply plug the most severely degraded tubes in Unit 2 and then run that reactor at 70 percent power. After five months, Unit 2 would be shut down and inspected. (There was no plan offered for the future of Unit 3.)

Why 70 percent? Edison said it believes that would lessen vibration and decrease the rate of wear on the heat transfer tubes. Does that make any scientific sense? Not in the eyes of nuclear engineer Arnie Gundersen, who has produced three studies on San Onofre’s problems:

Restarting San Onofre without repairing the underlying problems first turns Southern California into a massive science experiment. Running at the reactor at a 30 percent reduction in power may not fix the problems but rather make them worse or shift the damage to another part of the generators. It’s a real gamble to restart either unit without undertaking repairs or replacing the damaged equipment.

S. David Freeman, former head of the Los Angeles Department of Water and Power, as well as the Tennessee Valley Authority, and now a senior advisor to Friends of the Earth, is even more pointed:

Neither of the reactors at San Onofre are safe to operate. While Edison may be under financial pressure to get one up and running, operating this badly damaged reactor at reduced power without fixing or replacing these leaky generators is like driving a car with worn-out brakes but promising to keep it under 50 miles an hour.

That is the scenario now before the NRC. An experimental roll of the dice within 50 miles of 8.4 million California residents, offered up with a “trust us” by the same folks who got the modeling dangerously wrong last time, versus multiple studies calling into question the viability of a plant that already has a long history of safety and engineering problems. Regulators are at least talking as if they understand:

“The agency will not permit a restart unless and until we can conclude the reactor can be operated safely,” NRC Chairman Allison Macfarlane said. “Our inspections and review will be painstaking, thorough and will not be rushed.”

The right words, but hardly reassuring ones given the commission’s past actions (or inactions) on San Onofre and numerous other dangerous events across the nation’s aging nuclear fleet.

The sting that keeps on stinging

But does NRC approval really matter to Southern California Edison, at least in the short run?

Operating only one of San Onofre’s reactors at two-thirds of its proposed output for five months sometime next year–which is the best-case scenario–does not provide a meaningful addition to California’s near- or long-term energy outlook. (California officials are already making plans for another year without San Onofre.) In addition, San Onofre has other problems to address, such as aforementioned staffing issues, new seismic evaluations required in the wake of the Fukushima disaster, newfound safety lapses, and ongoing concerns about the quality of the concrete used to plug 28-foot holes in both reactors’ containment domes (the holes were cut for installation of the new turbines, inquiries about the strength and durability of the concrete were made a year ago, but, to date, the NRC has not released a report).

But Thursday’s proposal does provide Edison with a modicum of cover going into an October 9 public information session and the upcoming debate over whether California consumers should still have to pay for a power plant that provides no power.

Indeed, billing for services not rendered could be considered a profit center for the US nuclear industry. San Onofre is but one case; ratepayers in Florida are also familiar with the scam.

The same day SCE submitted its SONGS plan, attorneys for the Florida Public Service Commission (PSC), Progress Energy and Florida Power & Light (FPL), appeared before the Florida Supreme Court to defend an “advance fee” that has allowed the utilities to soak Sunshine State ratepayers for upwards of $1 billion. The money collected, and additional fees approved last year by the PSC, are slated for the construction of new nuclear reactors in Levy County and at Turkey Point.

The court challenge was brought by the Southern Alliance for Clean Energy, which contends there is little evidence Progress or FPL can or ever really intend to build the new facilities. Indeed, FPL has spent some of its takings on existing operations, while Progress has blown hundreds of millions of dollars trying to repair its Crystal River nuclear plant, which has been offline since 2009, and likely will never return to service.

What do attorneys for the utilities say when challenged on these points? That their intent is borne out by the fact that both are still seeking construction and operating licenses from the Nuclear Regulatory Commission.

There is no indication NRC approval on those projects is imminent (in fact, no NRC approvals of any projects are imminent), nor are there any guarantees that the projects could be fully financed even with licenses and all that ratepayer cash.

But, be it for future fantasies or current failures, from Florida to California, electricity consumers are paying higher prices to perpetuate the myth of a nuclear renaissance and balance the books of the nuclear industry. . . while industry officials, lobbyists and favored politicians pocket a healthy share.

And not satisfied with that cushy arrangement, San Onofre’s operators are also pushing for permission to move its ratepayer-financed decommissioning fund into riskier investment properties. The industry promises this will bring higher yields, but, of course, it also chances bigger losses–and it guarantees larger fees, which would be passed on to Southern California consumers upon CPUC approval.

None of these actions–not the investment games, the rate hikes or the experiment with San Onofre’s damaged reactor–are actually about providing a steady supply of safe, affordable energy. These are all pecuniary plays. Across the country and across the board, nuclear operators seem more interested in cashing in than putting out.

More prudent for governments and utility commissions, and more beneficial for ratepayers, of course, would be to stop paying the vig to nuclear’s loan sharks, stop throwing good money after bad in a sector that is dying and dangerous, and start making investments in truly clean, truly renewable, and increasingly far more economical 21st Century energy technologies.

Until that happens, the most profitable thing about nuclear power will continue to be the capacity to charge for a service that might never be provided. Private utilities have understood this for a long time; ratepayers are becoming painfully aware of it, too. The question is, when will government regulators and utility commissions understand it–or at least fess up to being in on the con?

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Stop the Madness! Or at least learn more about it. Join me on Saturday, October 13, at 5 PM Eastern time (2 PM Pacific) when I host an FDL Book Salon chat with Joseph Mangano, author of Mad Science: The Nuclear Power Experiment.

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San Onofre, 1968 – 2012

San Onofre Nuclear Generating Station, dead at 44. (photo: Joe Wolf)

San Onofre Nuclear Generating Station, the twin-reactor power plant that spread its isotopic glow across coastal communities from Los Angeles to San Diego, was declared dead last week. SONGS, as it was affectionately known, was 44, though many of its parts are considerably younger.

Originally conceived as a single Westinghouse pressurized water reactor in 1964, San Onofre was officially commissioned on January 1, 1968. Two additional units were brought online in the early 1980s. The original Unit 1 was closed permanently in 1992, and stands as a radiant monument to nuclear’s 20th Century aspirations.

With its proximity to seismic fault lines and a history of accidents, security breaches and safety complaints, SONGS has long been deemed one of the most difficult siblings in its nuclear family. Units 2 and 3 have been offline since January of this year due to a leak of radioactive steam from a heat transfer tube. Subsequent inspections of the tubes–completely redesigned and replaced when SONGS got an extreme makeover in 2010 and 2011–revealed alarming rates of wear previously unseen at any similar facility. Both reactors have been considered too damaged to simply restart since the initial discovery.

Though multiple scientists, engineers, public interest groups and government agencies diagnosed San Onofre’s troubles as terminal early in the year, Southern California Edison and San Diego Gas & Electric, SONGS’ “guardians” held out hope (or more likely just put on a brave face for the sake of family and friends–also known as “shareholders”) that their beloved ward could be revived. A decision last month to remove the nuclear fuel from Unit 3 made it hard to maintain that façade, and news late last week that the utilities were planning for a 2013 summer without any power produced or transferred by San Onofre made it clear that even SONGS’ oldest friends understood it was time to “pull the plug,” as electrical types are wont to say.

San Onofre is survived by its California cousin, Diablo Canyon, and 100 other frail and faltering nuclear reactors nationwide. At the time of this writing, funeral arrangements have still not been made official.

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And there’s the rub. While it is the present reality and the obvious future, the final shuttering of San Onofre has not been made official. Not by its operators, and not yet even by the California Public Utilities Commission. Acknowledging the nuclear plant’s demise would trigger a review process that would result in rate reductions for Edison and SDG&E customers. Those reviews will kick in automatically in a couple of months because SONGS has failed to generate a single kilowatt of electricity from February on, but the owner-operators of the plant have fought to drag the process out to its longest legal limit, despite the widespread understanding that a restart of even one reactor is at best very far off and likely just never to be.

The head of the Nuclear Regulatory Commission, Allison Macfarlane, has asked for a letter from Edison detailing the “root causes” of the leak and tube degradation. Edison said that letter would be delivered by the end of the first week in October. That letter will not contain any kind of a plan for a restart of Unit 2 (no one is talking about restarting Unit 3), and the NRC will have to review Edison’s report for months before there is any possibility of repair work (realistically, there should be no possibility of repair to Unit 2, since its damage is comparable to the essentially condemned third unit, but this is how these things play out, and, sadly, stranger things have happened).

Meanwhile, Edison has announced it will cut San Onofre’s workforce by one-third (730 jobs), another clear signal that nothing like a restart will be happening any time in the predictable future.

With this reality universally understood and effectively acknowledged by all parties, the NRC should stop wasting resources on any plan for a restart, and start asking the tough questions about decommissioning SONGS. And it borders on corrupt that SCE and SDG&E are still charging ratepayers $54 million a month for service not rendered, with no promise that it ever will be. The California PUC should remove San Onofre from the utilities’ rate base now.

Shockingly, some on the CPUC are looking to make this scandalous situation worse. Over the life of San Onofre, utilities customers have paid into a decommissioning fund–and though the balance in that account now approaches $3 billion, it is still considered underfunded by at least 25 percent. And now, one commissioner, Tim Simon, a former securities industry attorney, is publicly advocating lifting limits on how that money could be invested, arguing that riskier bets would yield higher returns. This suggestion was voiced last week, after the decision was made to remove the fuel from Unit 3, after the NRC made it clear that a restart of Unit 2 was far from guaranteed, and, of course, over eight months after SONGS stopped generating power altogether. It also comes after the NRC announced a delay in any final decisions on relicensing until the government developed a new radioactive waste disposal scheme, a process expected to take at least two years.

Consumer advocate Matt Freedman of The Utility Reform Network (TURN) sees this idea for what it is–socialized risk, privatized return:

“It‘s a maxim of retirement planning that as you get closer to your own personal retirement, your investments get more conservative,” Freedman said, “not more risky. But in this case, Commissioner Simon is suggesting that as these units near their retirement, that we should begin to invest more of the money in very risky investments.”

Freedman said the proposal on the table appears designed to benefit investment managers who would charge higher fees for new categories of investments. He said without a lot of time to ride out market fluctuations, ratepayers could be left on the hook for any depletion of the fund caused by market drops.

Naturally, San Diego Gas & Electric finds Simon’s idea appealing, but in the same breath, the company notes such a move means higher fees–fees that could be passed on to ratepayers with CPUC approval. It appears to be another sign that the utilities are looking to cash in before San Onofre officially is forced to check out.

But in times of trouble, responsibility ultimately rests with the family (aka the shareholders) to confront the hard truths. Owners of Edison and SDG&E stock should demand that the boards of these companies stop wasting shareholders’ money and everyone’s time and get on with divesting from their dirty, dangerous, and expensive involvement with nuclear power.

A public wake–also known as a public meeting–will be held for San Onofre by the NRC on October 9 from 6 to 9:30 PM at the St. Regis Monarch Beach Hotel in Dana Point. Mourning attire optional.

Too Cheap to Meter, Too Expensive to Compete

“Clean, safe, and too cheap to meter.” This sunny tagline from the early days of atomic energy has more recently become the quickest way to sum up how dark and dismal its prospects are today–as in, nuclear power has proven itself to be unclean, unsafe, and prohibitively expensive. “Clean, safe and too cheap to meter” now sounds less like boastful marketing, and more like a schoolyard taunt.

The numbers of ways nuclear power plants have betrayed their Madison Avenue mantra has pretty much been the backbeat of this column for nearly ten months now, and 2012 keeps up the cadence.

Exelon Corporation, the nation’s largest owner of nuclear facilities, has already hit a sour note. . . or two.

First, Exelon and Constellation Energy, another major nuclear operator that Exelon agreed to buy last April, have just seen Citigroup downgrade their stock from “buy” to “neutral.” The reason this time, it seems, is not due to the shaky future of nuclear holdings, but instead due to the falling price of natural gas. Gas prices have hit a two-year low thanks to the glut of gas from a nation gone frack-happy.

But why should a Citigroup not worry about the value of nuclear stocks when current problems have required costly shutdowns and repairs, and future improvements that might (might) be required post-Fukushima will necessitate more capital outflow? One need look no further than the same Exelon portfolio, as reflected in a separate story out just one week later:

The U.S. Nuclear Regulatory Commission wants Exelon Corporation to detail its plan regarding a decommissioning fund shortfall for the Limerick Unit 1 nuclear power plant in Pottstown.

“Once we receive the (request for additional information) response, we will make a determination regarding reasonable assurance of adequate decommissioning funding for the plant,” said Neil Sheehan, NRC Public Affairs, via email on Wednesday.

Sheehan said Exelon planned to request rate relief from the Pennsylvania Public Utilities Commission later this year to address the deficit.

“The relief, if approved, would take effect at the beginning of 2013,” Sheehan said.

In other words, a nuclear facility isn’t only ridiculously expensive while it is up and running, generating some power–and so, in theory, some revenue–a nuclear plant is a massive liability for years (decades, really) after it is shut down.

Decommissioning a plant is a process that the Nuclear Regulatory Commission requires operators to finish within 60 years. Yes, it can take that long to safely dismantle a facility, store its moderately radioactive parts and entomb its massively radioactive reactor shell. The cost, as estimated by the NRC itself, is “$300 million or more.”

Indeed, the emphasis should be on “more.” The NRC’s lowball figure not only assumes everything goes smoothly and there are no nasty discoveries, like, say, radioactive contamination of surrounding ground or water, it assumes a constant dollar value over the life (death?) of the decommission. Take note, for instance, that the fund for the decommissioning of one Limerick reactor is at present required to be over $628 million.

But again, why would that not more seriously affect the rating of a company like Exelon, with its vast stable of aged, faulty reactors? Because Exelon, as is the case for all its nuclear brethren, doesn’t expect to have shoulder the costs by themselves–if at all.

Feeling a little light in the decommissioning fund? Do not fear! As pointed out in the story above, Exelon expects rate relief. In other words, Pennsylvania power consumers will pick up the tab in the form of increased electric bills.

Worried the rate hike won’t quite cover it? No problem! As the NRC hints at here and has proven elsewhere, when push comes to dangerous, radioactive shove, the federal government will cover any shortfalls. After all, the alternative–a halfway or half-assed shutdown–is not an acceptable policy option.

Concerned that even with a rate hike and a government bailout something still might go wrong, resulting in pricey lawsuits? Hush, now! Thanks to the Price-Anderson Act, the liability of the nuclear plant operator is remarkably limited.

This is all part-and-parcel of the standard obfuscation procedure and pass-the-buck accounting that allows the nuclear industry to pretend to compete in the energy marketplace. Exelon executives no doubt love to praise the free market, but they are possibly the only ones that get away for anything close to free. Their taxes are discounted, their infrastructure is subsidized, their loans are guaranteed, and their accidents are indemnified, all by state and federal governments, which means all by taxpayers–taxpayers already paying up front for higher energy bills.

Lest this story be misinterpreted, the answer is not, of course, to permit more fracking to continue to drive down the price of natural gas–that option is as rife with dangers as it is ridiculously shortsighted. No, the answer is to take into account all of the money that really goes into nuclear power generation when costing out energy options. Take just a fraction of what the US government expends to backstop atomic energy and invest it instead in improved efficiency, conservation programs, and truly renewable alternatives, and then see what power source can really claim the mantle of clean, safe, and too cheap to meter.