APS says Palo Verde fa­cil­ity could close

Nu­clear plant’s fu­ture linked to clean-en­ergy mea­sure, com­pany says

The Arizona Republic - - Business - Ryan Ran­dazzo

The na­tion’s big­gest pro­ducer of elec­tric­ity, the Palo Verde Nu­clear Gen­er­at­ing Sta­tion, could be forced to close in the next decade if vot­ers ap­prove a re­new­able-en­ergy bal­lot mea­sure, the plant’s own­ers said.

The plant is run by Ari­zona Pub­lic Ser­vice Co., which is fight­ing the cleanen­ergy bal­lot mea­sure on sev­eral fronts.

Although Palo Verde is im­por­tant to APS, it would not be the only nu­clear plant to shut down in re­cent years.

Six re­ac­tors have closed since 2013 and eight more re­ac­tors are planned for shut­down be­fore 2025, mostly be­cause of in­creased com­pe­ti­tion from cheap nat­u­ral gas.

The Clean En­ergy for a Healthy Ari­zona mea­sure would amend the state con­sti­tu­tion to re­quire util­i­ties to get half their elec­tric­ity from re­new­able sources such as so­lar and wind by 2030.

Sup­port­ers gath­er­ing sig­na­tures in hopes of putting the amend­ment on the Novem­ber bal­lot said APS is ex­ag­ger­at­ing the eco­nomic fall­out of the pro­posal and that there is no ev­i­dence the nu­clear plant would be forced to close.

APS of­fi­cials said the mea­sure would prompt so much so­lar- and wind-power de­vel­op­ment that there would be too much en­ergy on the grid dur­ing mild parts of the year when Ari­zo­nans aren’t crank­ing up their air con­di­tion­ers.

That oversupply would force the shut­down of its coal and nu­clear plants, which are known as baseload fa­cil­i­ties be­cause their power out­put doesn’t fluc­tu­ate, they said. If there is more power than de­mand on the elec­tri­cal grid, it causes prob­lems and can even dam­age home ap­pli­ances.

“The way we see this, it will force the clo­sure of all our baseload fa­cil­i­ties,” said Jeff Burke, APS’ re­source plan­ning direc­tor. “This re­ally closes the door on a lot of dif­fer­ent re­sources.”

The nu­clear plant is a crown jewel for the util­ity, gen­er­at­ing about one­fourth of its en­ergy sup­ply. The three nu­clear gen­er­a­tors are co-owned by seven util­i­ties in Ari­zona, Cal­i­for­nia, New Mex­ico and Texas.

The plant gen­er­ates enough power for about 4 mil­lion peo­ple.

Salt River Project, which serves the Phoenix area, is one of those co-own­ers. It would not be di­rectly af­fected by the bal­lot ini­tia­tive, but spokes­woman Patty Gar­cia-Likens the ini­tia­tive likely would af­fect that com­pany’s baseload power re­sources if en­acted.

“The en­vi­ron­men­tal goal must be to re­duce car­bon emis­sion in­ten­sity, rather than try to pick a win­ner among com­pet­ing tech­nolo­gies,” Gar­cia-Likens said.

She said SRP is tak­ing the same ap­proach as reg­u­la­tors at the Ari­zona Cor­po­ra­tion Com­mis­sion, which is mulling a new pro­posal to re­duce car­bon emis-

sions but main­tain the state’s nu­clear plant along with more so­lar, wind and other re­new­ables.

“It is the avail­abil­ity of all these op­tions that leads to the most di­ver­si­fied and cost ef­fec­tive path to re­duc­ing car­bon in­ten­sity,” Gar­cia-Likens said.

“If en­acted, the pro­posed re­new­able en­ergy man­date ini­tia­tive puts all eggs in one bas­ket ... . There is a bet­ter, more com­mon­sense way — use what­ever op­tions work best.”

It’s un­clear how the other util­i­ties who own part of Palo Verde would re­spond if APS were to de­cide to shut it down. But if a shut­down threat­ened re­li­a­bil­ity for any of their power sys­tems, the U.S. De­part­ment of En­ergy could or­der the plant to re­main op­er­at­ing tem­po­rar­ily as needed un­der the Fed­eral Power Act.

This act has been in­voked as re­cently as last year in Vir­ginia to keep coal gen­er­a­tors op­er­at­ing un­til ad­e­quate power sup­plies are se­cured for the re­gion.

Palo Verde also rep­re­sents bil­lions of dol­lars in in­vest­ments that APS of­fi­cials hope will pay div­i­dends through the mid-2040s when the three gen­er­a­tors’ op­er­at­ing li­censes ex­pire. Early re­tire­ment would harm share­hold­ers and util­ity cus­tomers fi­nan­cially.

And Palo Verde is the largest sin­gle tax­payer in the state, with a $55 mil­lion prop­erty-tax bill last year.

With­out the nu­clear plant, APS would have to build new plants to pro­vide en­ergy when cus­tomer de­mand spikes, and the com­pany sus­pects that util­ity bills could dou­ble if the mea­sure passes.

Many ex­perts con­cerned with cli­mate change ac­knowl­edge that nu­clear plants are nec­es­sary to re­duce car­bon emis­sions from fos­sil fu­els.

Kevin Stein­berger, a pol­icy an­a­lyst with the Nat­u­ral Re­sources De­fense Coun­cil in New York, said he doubts APS would need to shut down the nu­clear plant early be­cause of the bal­lot mea­sure, though his or­ga­ni­za­tion is seek­ing data to fur­ther study the ini­tia­tive’s im­pacts.

“I have not seen any ev­i­dence the plant would need to shut down,” Stein­berger said of Palo Verde. “There are plenty of fos­sil re­sources on the sys­tem APS could ramp down in­stead.

“Cer­tainly, de­creas­ing coal gen­er­a­tion and re­duc­ing emis­sions from fos­sil re­sources is a main goal of the strength­ened (en­ergy stan­dard),” said Stein­berger, who has a bach­e­lor’s from Prince­ton Univer­sity, a mas­ter’s from Stan­ford Univer­sity and has stud­ied re­new­able-en­ergy stan­dards in the West.

APS of­fi­cials said that if Palo Verde closes to make room for re­new­able en­ergy, the state’s car­bon emis­sions will in­crease be­cause at least some of the nu­clear plant’s power would be re­placed with nat­u­ral-gas plants that can be turned on when power de­mand spikes.

“Palo Verde is the big­gest clean-en­ergy pro­ducer in the U.S.,” Burke said. “If Palo Verde goes away, emis­sions go up. We don’t have any­thing that gen­er­ates clean en­ergy 24-7 to re­place it to­day.”

Stein­berger said one pos­si­bil­ity would be shut­ting down the nu­clear plant only dur­ing sea­sons when it is least needed.

The bal­lot mea­sure would re­quire APS and other reg­u­lated util­i­ties to im­me­di­ately in­crease the amount of en­ergy they get from so­lar, wind and other re­new­able sources.

To meet the en­ergy stan­dard in the bal­lot mea­sure, APS would have to build about 3,000 megawatts of so­lar ca­pac­ity, roughly tripling the 1,600 megawatts it has to­day, Burke said. Rooftop so­lar owned by cus­tomers also is ex­pected to con­tinue to in­crease in that time.

This build­ing boom would ini­tially create con­struc­tion jobs and pro­vide an eco­nomic spark for the state, an anal­y­sis of the bal­lot pro­posal re­cently con­ducted by Ari­zona State Univer­sity shows.

But APS of­fi­cials said that be­cause of how the grid must be man­aged to meet cus­tomers’ in­stan­ta­neous power de­mands, the clean en­ergy would push out tra­di­tional power plants.

APS would end up with about 8,000 megawatts of re­new­able-en­ergy ca­pac­ity, Burke said.

That much en­ergy is fine for hot sum­mer days. In 2030, APS cus­tomers are ex­pected to need more than 11,000 megawatts of elec­tric­ity dur­ing the peak de­mand, which is late in the af­ter­noon when air con­di­tion­ers are run­ning at homes and busi­nesses and so­lar power pro­duc­tion drops off as the sun sets.

On those days, APS would need all the re­new­ables plus 3,000 megawatts of ad­di­tional power from nat­u­ral gas, coal or nu­clear plants to serve its cus­tomers dur­ing the peak hours.

But on a mild spring day, APS would see cus­tomer de­mand dip as low as 4,000 megawatts be­cause cus­tomers’ rooftop so­lar would be pour­ing into the grid. The com­pany would need to turn off some of its own power plants be­cause over­pro­duc­ing power on the grid can cause prob­lems.

If APS chose to turn off some of its own so­lar dur­ing mild weather, it would not meet the re­new­able-en­ergy man­date. So, it would turn off Palo Verde, Burke said.

Nu­clear and coal plants are re­ferred to as “baseload” be­cause they are built to run around the clock for most of the year. Turning them up or down to match the de­mand for elec­tric­ity from cus­tomers is in­ef­fi­cient and costly.

“They op­er­ate near full ca­pac­ity all the time through­out the year,” Burke said.

Cur­tail­ing Palo Verde would mean clos­ing the plant, he said.

“That spreads out over months, and it be­comes un­eco­nom­i­cal to op­er­ate the baseload,” Burke said. “They can’t op­er­ate that way. It will chal­lenge their eco­nom­ics.”

Start­ing in the mid-2020s, APS would close its Cholla and Four Cor­ners coal plants in Ari­zona and New Mex­ico, re­spec­tively. By 2025, the amount of re­new­ables would force the clo­sure of the nu­clear plant, ac­cord­ing to APS’ anal­y­sis of what it would take to meet the re­quire­ments of the bal­lot ini­tia­tive.

ASU’s eco­nomic anal­y­sis of the bal­lot ini­tia­tive looks pos­i­tive at first, re­flect­ing what ini­tia­tive back­ers have said about cre­at­ing jobs and ben­e­fit­ing the econ­omy.

“Dur­ing the con­struc­tion phase, these are big, earth-mov­ing projects — big so­lar farms and wind farms,” said re­port au­thor Ti­mothy James, re­search direc­tor at ASU’s Sei­d­man Re­search In­sti­tute.

“Then the job ef­fects flip around,” James said.

Once the so­lar farms are built, the con­struc­tion jobs go away. Once the so­lar farms dis­place the baseload plants, thou­sands more jobs go away, in­clud­ing 2,500 at Palo Verde, plus 800 to 1,000 more who are needed twice a year for month­long re­fu­el­ing pro­ce­dures when re­pairs are made.

“No­body is in a so­lar farm,” James said. “No­body is tak­ing care of a wind farm, ei­ther.”

But the econ­omy would be hit by more than the job losses.

APS would have to build some new gas plants in ad­di­tion to the new so­lar so it could in­crease power af­ter dark and con­tinue to meet de­mand when the re­new­able en­ergy wasn’t avail­able.

“We do need to make sure we keep the lights on on days when we don’t have enough so­lar pro­duc­tion,” Burke said.

Like all util­ity ex­penses, those gas and so­lar plants will be charged back to cus­tomers in rates. James es­ti­mated the pro­posal would re­duce dis­pos­able in­come for Ari­zo­nans about $42.5 bil­lion from 2018 through 2060. His fig­ures are based on es­ti­mates provided by APS.

The NRDC’s Stein­berger said APS’ es­ti­mates that elec­tric­ity prices would rise are highly de­bat­able.

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