Deciding to retire rather than repair an existing nuclear power asset is always a tough call and driven by economics, the chief executives of Edison International and Duke Energy told a conference September 24.
“What’s the remaining useful life” versus the needed investment, is a key consideration, Edison CEO Ted Craver told the Bank of America-Merrill Lynch 2013 Power and Gas Leaders Conference in New York City. Craver and Duke CEO Lynn Good participated in an early-morning discussion of the state of the U.S. utilities industry.
Edison moved to permanently retire its San Onofre Units 2 and 3 in Southern California earlier this year. Craver said during the presentation that a recent Nuclear Regulatory Commission (NRC) filling indicates the steam generator problems at San Onofre were connected to “design” issues in the units that Edison ordered from Mitsubishi Heavy Industries.
Duke earlier this year announced retirement of its Crystal River 3 nuclear plant in Florida, which had been offline since fall 2009 when cracks with discovered in the structure during steam generator replacement. Duke decided against repairing a facility “with a short life” and possibly “an uncertain life,” Good said.
Despite having taken a financial hit on capital-intensive nuclear power, both agreed that nuclear energy has a place in a low-carbon economy.
“I don’t know ultimately how you get to your goals on carbon without nuclear being a part of it,” Craver said.
Likewise, Good said Duke could buy up to a 10 percent stake in the new V.C. Summer 2 and 3 nuclear units being developed in South Carolina. If the deal happens, Duke would buy part of the ownership stake currently held by minority owner Santee Cooper. SCANA is the majority owner and operator of the nuclear project.
The CEOs from opposite sides of the country also spent much time discussing the increasing role of renewable energy and distributed generation.
California is known for having the nation’s most ambitious renewable energy mandate while North Carolina, where Duke is based, also has a growing solar energy presence.
Craver said electric utilities would be mistaken to dismiss distributed generation as merely a “fringe” business in the future. The Edison chief said his company initially started in the field by supplying big solar arrays for “big box” stores.
“A lot of this is really experimental,” Craver said. Utility subsidiary Southern California Edison (SCE) used to rely on industrial customers for one-third of its load but that is now probably closer to 10 percent, Craver said.
While some argue that California policy has been inhospitable to heavy industry, it’s important to realize that manufacturers are looking to generate more of their own power, Craver said.
The utility, SCE, is also investing more in the transmission side of its business to accommodate the growing role of distributed generation in California.
Duke’s service areas in the Southeast and Midwest have not seen the extent of renewable and distributive generation as California, Good said. But Duke is looking closely at this trend in California and elsewhere, Good said.
Duke is developing a variety of resources in its service territories – including new combined-cycle and peaking units in Florida – to help compensate for retirement of the Crystal River nuclear plant and potential coal units retirements as well, Good said.