Calvert Cliffs genre on precipice

With deregulation, nuclear power plants face fight for survival

August 08, 1999|By Kevin L. McQuaid | Kevin L. McQuaid,SUN STAFF

One of Southern Maryland's largest employers and the state's largest single power generator, Baltimore Gas and Electric Co.'s Calvert Cliffs Nuclear Power Plant is a powerful, even somewhat majestic, collection of buildings that convert the awesome force of smashed atoms to electricity.

But with deregulation and competition gripping the utility industry, nuclear plants such as Calvert Cliffs will have to fight for survival, analysts caution. The unprecedented changes in the energy industry may cause nuclear plants that are unable to withstand equally awesome economic realities of the 1990s to go dark.

Already, at least five nuclear plants across the country have ceased operations either because they have become too expensive to maintain or because of regulatory pressure stemming from poor operations. Perhaps most notably, Commonwealth Edison Co. said in January 1998 that it would permanently shut down its Zion Nuclear Station in Illinois after determining that the plant could not compete effectively in a competitive environment. Zion had operated for 25 years, but was hampered with numerous operational problems.

"It's not the long-haired environmentalists shutting these plants down, it's the utilities' executive vice president of finance, who sees that they can't compete with other forms of generation," said James P. Riccio, an energy campaigner at Public Citizen, a Washington-based group that opposes nuclear power.

BGE re-licensing leader

At Calvert Cliffs, BGE is working to become the first nuclear plant to successfully obtain a license extension from the federal Nuclear Regulatory Commission. If a current schedule holds, the NRC could grant BGE a 20-year extension by mid-2000. A draft report of an environmental impact study, one of the last significant hurdles to re-licensing, is being finalized now and could be out as early as November.

But BGE acknowledges that it will have to contend with economics as it decides the fate of the 32-year-old plant.

"An extended license is not a guarantee that the plant will operate for 20 more years, it's an opportunity to operate," said Charles Rayburn, a BGE spokesman.

"We'll operate the plant only so long as it makes sense from a safety and reliability perspective and, with deregulation, economic sense," Rayburn added. "We know that in the future we'll have to compete and the [state's Public Service Commission] isn't going to subsidize our expenses any longer. At Calvert Cliffs, we see us competing and surviving in a deregulated environment."

Nuclear or fossil?

Nuclear plants do have advantages over fossil plants. They generate kilowatt hours of power cheaply, and lots of it. In the case of Calvert Cliffs, which produces 40 percent of the region's power, BGE contends that ratepayers have saved $5 billion in fuel costs since the plant came on line.

But they require enormous operating and maintenance budgets to pay for fuel, specialized safety equipment and labor. At Calvert Cliffs, BGE is spending $500 million just to upgrade the plant's steam generators. The utility spent a total of $750 million in the late 1960s.

Whether nuclear plants can compete effectively in a competitive arena is unknown, but what is more certain is that new nuclear plants will likely not be built.

"The capital investment required to develop a nuclear plant is a multiple of that of a fossil plant, and you can't make up the difference through operations," said Michael J. Travieso, head of the state's Office of People's Counsel, a citizens' advocacy agency. "With technical changes, companies are building smaller plants, and with a nuclear plant, you really need to be bigger to gain efficiencies."

Instead, most utilities are turning to technologically improved gas-fired turbines to produce electricity. General Electric Co., one of the nation's top producers of gas-fired turbines, has a more than three-year backlog of orders for new plants, which are less expensive to build and operate than other types of plants, including nuclear.

"No utility executive in their right mind would propose building a nuclear plant in an age of deregulation and competition," Riccio said. "Gas-fired plants are beating nuclear plants from an efficiency standpoint, and that's why they are getting built and new nuclear plants are not."

Some remain optimistic

But not all utility analysts are prepared to write the obituary on nuclear energy.

"Nuclear plants produce more power for less money," said Roger W. Gale, president of the Washington International Energy Group, a Washington-based energy-consulting company.

"They aren't going out anytime soon. The ones that don't run well may have problems, but the other 70 percent or so, they will be around for a long time, because they are the cheapest way to produce power."

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