Senior management at the Omaha Public Power District have recommended the company shut down the Fort Calhoun Station (FCS) nuclear power plant by the end of 2016 and begin decommissioning, the company's President and Chief Executive Officer Tim Burke has told the board of directors.
The company announced the decision online, saying that the recommendation “came after a thorough review of OPP's resource planning efforts.” The final decision on the potential loss of the plant, however, is up the board of directors, who will vote on the recommendation at the June 16 board meeting. Almost as an afterthought, the announcement said that “if the recommendation is approved, OPPD proposes no general rate increases through 2021.”
During the April 14 meeting, the board's Chairman Mike Mines has asked senior management to provide the board with “potential scenarios regarding the future resource portfolio” for the company. In the May meeting, Burke said the nuclear power plant was “not in the long-term financial best interest of OPPD or its customer-owners.”
“The economic analysis clearly shows that continued operation of Fort Calhoun Nuclear Station is not financially sustainable,” the announcement quoted Burke as saying. “The analysis considered market conditions, economies of scale and the proposed Clean Power Plan.”
When it comes to economies of scale and spreading costs around, FCS is at a disadvantage relative to other U.S. power plants. The plant is rated as a 478.1 megawatt plant, the smallest in North America.
The reasoning behind the decommissioning decision is increasingly familiar. Nuclear power plants have far less allowance for making pricing decisions that other industries and revenue growth is slow. Operational costs, however, are not similarly regulated. In fact, regulated mandates often drive plant expenses higher. As such, there have been seven other nuclear power plants since 2013 where ahead-of-schedule decommissioning decisions has been made.
The OPPD board, representing the company's customer-owners, has directed senior management to keep customer rates at 20 percent below the regional average. That cannot happen with the small nuclear plant in the company's portfolio, the announcement said.
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