COVER STORY | ENERGY
Spokane
Seattle
Columbia Generating Station
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Richland
“COSTLY TO THE CORE,” CONTINUED... It’s McCullough’s reputation for independence that appealed to Physicians for Social Responsibility, a national group that campaigns against global warming, as well as nuclear weapons and energy. The organization’s Oregon and Washington chapters wanted to draw attention to potential problems with the Columbia Generating Station after the 2011 earthquake and tsunami in Japan, where three nuclear reactors at Fukushima melted down and another exploded. In November, the group released reports saying the Columbia Generating Station is seismically unsafe — something the plant’s operators deny. The physicians group turned to McCullough last spring to see if he would consider evaluating the plant’s economics. He initially said no. “A lot of nuclear advocacy is emotional,” he says. “That doesn’t mean it’s wrong, but it’s not data-driven.” McCullough knew the plant had experienced problems controlling its costs. But a cursory glance at the plant’s recent annual reports piqued his curiosity — especially the Columbia Generating Station’s cost of producing power. “I’m not anti-nuke,” McCullough says. “[But] I was surprised to see the differential was so high.”
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o hear the owners and operators of the Columbia Generating Station tell it, the region’s only nuclear plant is essential. Mike Paoli, a spokesman for Energy Northwest, the consortium that operates the plant, says the Columbia Generating Station provides a reliable, predictably priced source of power that backs up the Columbia River dam system. He says the cost of operating the plant puts it in the middle of the pack nationally, not at the top. He also questioned McCullough’s industry expertise and pointed to a recently released study the utility itself commissioned that contradicts his findings. Their study, by Cambridge Energy Research Associates, concludes that the plant would save ratepayers $1.6 billion by continuing to operate through its anticipated life in 2043. “You could go to the market today and easily beat Columbia [Generating Station’s] cost of power using natural gas — true,” Paoli says. “But regardless of short-term performance, we looked 30 years out, and in terms of long-term cost savings, there’s no question that Columbia comes out ahead for the ratepayer.” Paoli questions the objectivity of McCullough’s report. Physicians for Social Responsibility, he says, started
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2012 for 27 operating nuclear plants built and designed on the same basis as the Columbia Generating Station. “From what we can see, it’s the most expensive,” McCullough says. As a result, he found ratepayers last year spent $418 million for power from the Columbia Generating Station. They could have purchased the same power elsewhere for $218 million. Energy Northwest spokesman Paoli acknowledges the nuclear plant has recently been more expensive than market power and other nuclear plants, but he says that is changing. “We continue to trend down toward lower cost,” Paoli says.
from the premise of wanting to close the nuclear plant, so any research the group paid for would further that goal. “They had their conclusion, and they set about proving it,” he says. McCullough disagrees. He says he had complete freedom to report what he found, not what Physicians for Social Responsibility wanted him to say. What’s more, his report draws on voluminous Energy Northwest, nuclear industry and Bonneville documents to build its case. He found there is regularly so much electricity available in the Bonneville Power Administration network that it can’t sell it all. In fact, McCullough found, in the past two years, the market has been so oversupplied that Bonneville regularly paid customers to take electricity off its hands. There are a few reasons why energy prices have fallen so low. Two consecutive rainy years have put plenty of water behind the dams. Energy companies continue rapid development of wind farms, which have become more competitive in the cost of power. And there’s fracking — the process of extracting oil and gas using pressurized water and sand — which has caused natural gas supplies to soar. It has turned North Dakota into a small slice of Saudi Arabia, goosed U.S. oil and gas production and cratered the price of natural gas. That’s why there’s been a scramble to send Wyoming coal through Washington and Idaho to proposed export terminals. Power companies often use natural gas to fire electricity-generating plants, and the cheap cost of gas has helped undercut the Columbia Generating Station’s high-cost output. The Columbia Generating Station might still be a plus for the region if its cost of making electricity were also low. But McCullough found the plant’s cost of producing a megawatt hour over the past six years is about $36, roughly 1.5 times what more efficient nuclear plants spend. McCullough also found that it appears to be the most costly nuclear plant of its kind to run in the U.S. He and his team of six analysts crunched all of the Federal Energy Regulatory Commission filings for 2006 through
hy is the Columbia Generating Station so expensive to run? One reason is location. Some of the most economical nuclear power operations exist where reactors are clustered together; where they are parts of companies such as Exelon, the Illinois utility that operates 17 reactors at 10 different plants; or where they are close to major population centers. Another is overhead costs. For example, McCullough found the plant employs 1,100 people — about one-and-ahalf times as many people per unit of energy produced as other nuclear plants. “At $80,000 a head, the high employment level is a continuing challenge to the plant’s economics,” McCullough says. Paoli says comparisons to other nuclear plants’ costs are a “red herring.” “As the only nuclear facility in the Northwest,” Paoli says, “our industry status doesn’t change our economic position as the best non-hydro — and clean — value for the Northwest.” And the plant is aging. The Columbia Generating Station is 29 years old, and McCullough says it’s no longer viable. “It’s like a computer-chip fabricator that makes large
“Let’s simply ask the market if there’s a better deal out there. If there’s not, then keep the plant operating.” wafer chips,” McCullough says. “That plant gets replaced because the technology is obsolete and the market has moved on.” Aging nuclear plants require lots of repairs, expensive parts and frequent shutdowns. McCullough found that Columbia Generating Station’s history has been plagued by above-average downtime and a failure to meet its targets for generating electricity. Even Bonneville, in a 2009 report, recognized this problem. “Although the plant’s safety record is solid,” the report read, “[Columbia Generating Station] now ranks very close to the bottom of all nuclear plants.” Paoli says the plant has made operational improvements, including securing a long-term, low-cost fuel supply. “We’re on our way to being one of the top-performing nuclear facilities in the nation by end of 2014,” he says. “Not there yet — but the trends have us climbing fast.” McCullough notes the plant’s budget for the next decade calls for nearly $500 million in spending for new equipment, which will make it even less economical.