Nuclear Power in New York State Jamie Caldwell University at Buffalo Law Student

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1 FACT SHEET October 27, 2010 Nuclear Power in New York State Jamie Caldwell University at Buffalo Law Student When and where did nuclear power plants start in New York State? Nuclear power has been in New York State since The site of the first nuclear power plant was Nine Mile Nuclear Power Station, Unit 1 in Oswego, New York. 1 How many nuclear power plants are currently in New York State and where are they located? New York currently has six nuclear power reactors. 2 Indian Point Nuclear Generating, Units 2 and 3, are located 24 miles north of New York City. 3 Nine Mile Nuclear Power Stations, Units 1 and 2, as well as James A. Fitzpatrick Nuclear Power Plant are all located in Oswego, NY. 4 Lastly, R.E. Ginna Nuclear Power Plant is located 20 miles northeast of Rochester, NY. 5 How much of New York s current energy supply is produced from nuclear power? The six power plants represent 13% of New York s electric generating capacity, 26% of its power supply and 11% of New York s total consumption. 6 Even though energy consumption has risen in New York since the nuclear reactors were first put in place, the percentage of consumption they account for has remained constant. This is mainly due to more efficient operation and output increases which were approved for the Nuclear Regulatory Commission (NRC) for all the plants in New York except Nine Mile 1. 7 How are New York s nuclear power plants financed? A nuclear power plant can cost billions of dollars to finance. Originally nuclear power plants were built and owned by the electric utilities companies. 8 When the companies believed that new capacity was needed, they had to get approval by the state for a new plant. 9 The cost of the new plant was paid back through the customers in fees. 10 However, in 1978 Congress passed the Public Utilities Regulatory Policy Act (PURPA),

2 which required utility companies to buy power from any seller who would offer it for less than the utility s own estimated cost of generating it. 11 PURPA created more independent power production and opened the door for merchant generators. 12 All of New York s nuclear plants are currently run by such generators. In the mid-1990s, New York went through electric restructuring, which created a power market under the oversight of the New York Independent System Operator (NYISO). 13 With NYISO, New York regulators introduced changes intended to move towards a future where utility regulators relied more on market forces than administrative proceedings to better regulate costs in the power industry. 14 These changes were complex, and together: (a) allowed greater choice for customers in determining what entity would supply their generation services over wires that would continue to be owned by the existing electric utilities; (b) encouraged vertically integrated, investor-owned utilities to divest their power plant assets so as to separate the competitive generation functions away from the monopoly wires functions; (c) required the existing electric distribution utility to remain supplier of last resort for retail customers; (d) streamlined the regulatory process for siting generation and transmission facilities; and (e) established an independent grid operator to manage the operations of the grid and wholesale electricity markets in a non-discriminatory way. 15 Put simply NYISO allowed customers to buy from the supplier of their choice. 16 This establishes a system where generators get paid on the basis of the power they deliver and don t have profits limited to a fair rate of return. 17 The change shifted the risk of cost overruns, poor performance, declining demand or declining costs of alternatives largely from the customers to the investors. 18 All of New York State s currently operating nuclear power plants were in service at the start of the NYISO markets and have done exceedingly well under this new structure. 19 This is partly due to much lower operating costs compared to gas-fired units. 20 Also, the capital cost for building nuclear power plants was detached from the competitive power market and added to the monopoly distribution systems as a nonbypassable fee. 21 Therefore, these capital costs need not be recovered in the power 2

3 market, so improvements to existing plants were favored over the building of new nuclear power reactors. 22 How has NYISO affected nuclear output? In the decade before NYISO took charge of the New York grid, nuclear plants averaged approximately 29,000 gigawatt hours ( GWh ) of electricity generation each year. 23 Since 2000, nuclear output increased significantly even though no additional capacity was added until From 2000 through 2005, output increased 33 percent relative to the average annual output from 1990 through Another increase occurred after 2005, when Indian Point Units 2 and 3 and Ginna nuclear power plants received approvals from federal nuclear regulators to make changes that increased the output of these plants. 26 After these improvements, the average annual electricity production at New York s nuclear plants increased by 46 percent relative to the period prior to restructuring. 27 The increased output of power from nuclear plants meant that less efficient and more expensive power plants could be dispatched less often, thus creating significant downward pressure on prices. 28 Are there any plans for new power plants in New York? The Energy Policy Act of 2005 contained incentives for a few new nuclear power plants. 29 First, there is a federal loan guarantee of $18.5 billion. 30 This guarantee assures payment no matter what happens to the power plant. These loans become governmental obligations which lower both the interest rate and amount of more expensive equity capital that must be raised, but to do this they shift the risks to taxpayers. 31 Secondly, some of the new plants can receive a 1.8 cent/kwh production tax credit. 32 Third, the Act provides up to $500 million in risk insurance for the first two units built and $250 million for units The insurance is paid only if the delays in licensing are not the fault of the license applicant. UNISTAR has proposed a new unit for New York, but the cost would be astronomical. 34 Currently a UNISTAR unit is being built in Finland; it is two years behind schedule and is $1.5 billon over budget. 35 Therefore, there is a need for a federal loan to bring the new unit to New York. The 3

4 federal loan authorization is limited and is enough for no more than five power plants. 36 Most likely this money will go to several more advanced reactor designs, so New York will not see the money. What is the public perception of nuclear power? A 2003 MIT study found that A majority of the American public approve the use of nuclear power, but oppose building additional nuclear power plants to meet future energy needs. Since the accident at Three Mile Island in 1979, 60 percent of the American public has opposed and 35 percent have supported construction of new nuclear plants although the intensity of public opposition has lessened in recent years. 37 The public perception is an administrative concern for the Nuclear Regulatory Commission (NRC). While the NRC has begun suggesting changes to its nuclear licensing process which help efficiency, they are also making it more difficult for public involvement. 38 However, without public involvement New York, along with California and New England, are not likely to accept the expanded licensing. 39 Why is there hesitation from the public about nuclear power plants? NUCLEAR WASTE: The disposal of nuclear waste is a large concern with the public partly because of the radiation and partly because plutonium can be used to make nuclear weapons. 40 The public does not want the waste causing harm to people and the earth. In 1982, Congress enacted the Nuclear Waste Policy Act, mandating that spent fuel be disposed of in a geological repository (i.e., Yucca Mountain) which was to commence operation no later than This law levied the charge of one-tenth of a cent per kilowatt hour on all nuclear power plant output to pay for this repository with New York s total share by mid-2007 being $1.8 billion. 42 The license application for the repository was not submitted until 2008, and the Department of Energy has announced that the repository is estimated to open in This time frame is already being questioned and there is no certainty that the waste will be gone from individual plants in the next 20 years. However, interim waste storage in dry casks either on the reactor site or in a different facility can most likely accommodate the waste of newly constructed power plants in New York for several decades. 44 4

5 SAFETY: Another concern for the public is the safety of the power plant. Some would argue, however, that the United States has a very favorable track record when it comes to safety. Three Mile Island is the most notable U.S. accident, and it caused little harm to health. 45 Chernobyl in Russia was a far more serious accident; however, that plant lacked sophistication in design and was misoperated when the accident occurred. 46 In New York, there was a scare in 1991 at the Nine Mile Point Nuclear Station when a power outage occurred and the back-up generators did not go on. 47 For 20 minutes the operators did not have the controls to monitor the reactor core. 48 But there were no significant damage, injuries or release of any radiation due to the incident. 49 While new reactor designs bring cost and safety advantages, there is not a foolproof solution for nuclear accidents. Another safety concern is that of terrorism. While most information on terrorism attacks on nuclear power plants is classified, should an attack occur, its impact would be a huge setback to the expansion of nuclear power in general Bradford, Peter; Nuclear Power in New York s Energy Future; aper.pdf (last visited October 14, 2010). 2 Map of the United States Showing Locations of Operating Nuclear Reactors; (last visited October 14, 2010) Id. 5 Id. 6 Bradford, supra note 1. 7 Id. 8 Id. at p.4 9 Id. 10 Id. 11 Id. 12 Id. 13 Id. 14 Susan F. Tierney, Ph.D. The New York Independent System Operator: A Ten Year Review. Analysis Group, April 12, ear_review.pdf (Last Visited October 20, 2010). 15 Id. 16 Id. 17 Id. 18 Id. 19 Id. 20 Id. 5

6 21 Id. 22 Id. 23 Tierney, supra note Bradford supra note Id. 26 Id. 27 Id. 28 Id. 29 Id. at p.7 30 Id. 31 Id. 32 Id. 33 Id. 34 Id. at p.4 35 Id. at n.9 36 Id. at p Id. 38 Id. 39 Id. 40 Id. at p Id. 42 Id. 43 Id. 44 Id. 45 Id. at p Id. 47 Nuclear Power: Down for the Count; TIME; (last visited October 14, 2010). 48 Id. 49 NRC Information Notice No ; (last visited October 14, 2010). 50 Bradford supra note 1. Partnership for the Public Good Main St., Suite 1200, Buffalo NY