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G20130211 - 7/22/13 E-mail from J.Azulay to R.Guzman - Supplemental Information to 2.206 Petition Financial Qualifications Fitzpatrick/Vermont Yankee/Pilgrim
	ML13205A251
Person / Time
Site:	Pilgrim, Vermont Yankee, Yankee Rowe, FitzPatrick File:NorthStar Vermont Yankee icon.png
Issue date:	07/22/2013
From:	Azulay J, Katz D; Alliance for a Green Economy, Citizens Awareness Network
To:	Richard Guzman; Plant Licensing Branch 1
	Guzman R
References
	G20130211, 2.206
	Download: ML13205A251 (39)
	v • d • e

AGREE New York 2013 East Genesee Street Syracuse, NY 13210 Alliance for a Green Economy 315.480.1515 agreenewyork.org info@agreenewyork.org Richard Guzman July 22, 2013 NRC Petition Manager US NRC Richard.Guzman@nrc.gov Re: G20130211

Dear Mr. Guzman,

We would like to submit the attached documents to the Petition Review Board to supplement the petition filed by Citizens Awareness Network, Alliance for a Green Economy, Vermont Citizens Action Network and Pilgrim Watch concerning Entergy and its subsidiaries' financial qualifications to operate FitzPatrick, Vermont Yankee and Pilgrim reactors.

1. Entergy's Preliminary 2nd Quarter Earnings Guidance. This article provides some updated information on the financial performance of Entergy Wholesale Commodities in the second quarter of 2013. In keeping with the predictions already cited in our petition, Entergy saw lower second quarter earnings, attributed to continued low energy prices, and also to refueling and unplanned power outages.

The refueling outages totaling 50 days at Pilgrim and Vermont Yankee are mentioned in the article as contributing to lower revenue and hurting company performance, but it should be noted that this average outage length of 25 days is within industry performance standards, and well above historical standards in the industry. Additionally, unplanned outages and power changes continue to plague the reactors at issue in our petition. At our hearing in April, we noted that the UBS predictions were likely best-case scenarios for Entergy's earning potential at the reactors in question because of very high percentages of uptime. We believe this recent second quarter report illustrates that Entergy continues to struggle financially due to the squeeze of energy prices and age-related outages.

2. Reports Regarding Entergy's Workforce Reductions. Entergy has announced plans to cut its workforce, and media reports last week predict major workforce reductions at Entergy nuclear facilities.

While the extent of the reductions at the plants named in our petition have yet to be announced, there is already media reporting about significant workforce reductions at Vermont Yankee. We believe these developments are relevant to our petition and should raise further concern at NRC about Entergy's cost cutting measures.

3. "Renaissance in Reverse: Competition Pushes Aging U.S. Nuclear Reactors to the Brink of Economic Abandonment" by Mark Cooper, Senior Fellow for Economic Analysis, Institute for Energy and the Environment. Vermont Law School. This newly released analysis identifies several factors that have contributed to recent nuclear plant closures and identifies currently operating reactors in the US that have those risk factors. We call your attention to this report because it sums up several of the investment community's reports on economic distress in the U.S. nuclear fleet, and because it lists all three reactors named in our 2.206 petition in the list of reactors with particularly intense challenges.

Thank you for your continued attention to these important issues.

Sincerely,

/s/---------------

/s/--------------

Jessica Azulay Deb Katz Organizer, Alliance for a Green Economy Executive Director, Citizens Awareness Network

7121/13 EntergyPrcMdes PrelirrinarySecood Quarter Earnings GLidance - PR NewsvAre - The sacramento Bee html ruESACRAMENfO BEE SLlct)flt~,C(}m Entergy Provides Preliminary Second Quarter Earnings Guidance Published Tuesday, lui. 16, 2013 NEW ORLEANS, July 16, 2013 -- /PRNewswire/ -- Entergy Corporation (NYSE: ETR) today indicated that it expects second quarter 2013 as-reported earnings of approximately $0.91 per share and operational earnings of approximately $1.00 per share. Results for second quarter 2012 were $2.06 per share on an as-reported basis and $2.11 per share on an operational basis. Entergy also affirmed previously issued operational earnings guidance for 2013.

(Logo: http://photos.prnewswire.corrVprnh/20120913/MM74349LOGO)

As-reported results are prepared in accordance with generally accepted accounting principles (GAAP) and are COrTllrised of operational earnings (described below) and special items. Special items were recorded for:

expenses associated with the IrTlllementation of the human capital management strategic irTllerative in second quarter 2013 and

expenses associated with the proposed spin-off and merger of Entergy's electric transrrission business with ITC Holdings Corp. In the second quarters of 2012 and 2013.

Utility The decrease in Utility second quarter 2013 operational earnings was due primarily to substantially higher income tax expense than the prior year. The prior year period reflected the effect of an agreement reached with the Internal Revenue Service regarding storm cost financings in Louisiana, significantly reducing second quarter 2012 income tax expense. Also contributing to lower results were higher non-fuel operation and maintenance expense and higher depreciation expense.

Higher Utility net revenue provided a partial offset to these items. Second quarter 2012 net revenue reflected a regulatory charge for customer sharing of the benefits of the IRS agreement noted above. Pricing adjustments due to nuclear and coml:.>lned cycle natural gas fired-generation Investments placed In service in 2012 also contributed to the net revenue increase. Partially offsetting was lower sales volume, including the effects of weather.

Weather was below normal In second quarter 2013 cOrTllared to the warmer-than-normal temperatures experienced one year ago.

Entergy Wholesale Commodities The quarter-over-quarter decrease in operational earnings at Entergy Wholesale COrTlTl)dities was due primarily to lower net revenue and higher decomrrissionlng expense, partially offset by lower income taxes. A decomrrissioning liability adjustment reduced decomrrissioning expense in second quarter 2012 due primarily to an updated decorrmissioning cost study.

The decrease in EWC net revenue was driven by lower volume and energy prices on EWC's WNN.sacbee.corrl2013107/16N-printl5569525'entergy-prcMdes-prelirrinary-secood.t1trJ; 1/3

7121/13 EntergyPrOlAdes PrelirrinarySecond Quarter Earnings Glidance - PR Newsv.ire - The Sacramento Bee nuclear fleet. Nuclear production declined due to rrore unplanned and refueling outages.

Refueling days at Pilgrim Nuclear Power Station and Verrront Yankee Nuclear Power Station totaled 50 days in second quarter 2013, versus 35 days at two other plants for the same quarter last year.

Parent & Other In the Parent & Other disclosure segment, results declined during the quarter due to an Increase in income tax expense on Parent & Other activities. Second quarter 2012 benefited from a favorable federal appeals court decision affirming Entergy's entitlement to claim foreign tax credits for the U.K. Windfall Tax.

Eamings Guidance Entergy affirmed its previously issued 2013 operational earnings guidance to be in the range of

$4.60 to $5.40 per share.

Entergy will report second quarter earnings results before the market opens on Tuesday, July 3D, 2013, and host a teleconference at 10 a.m. CT that day to discuss the earnings announcement. The teleconference may be accessed by dialing (719) 457*2080, confirmation code 4532989, no rrore than 15 minutes prior to the start of the call. The call and presentation slides can also be accessed via Entergy's website at www.entergy.com. A replay of the teleconference will be available for seven days thereafter by dialing (719) 457*0820, confirmation code 4532989.

Entergy Corporation, which celebrates its 100th birthday this year, is an integrated energy company engaged primarily in electric power production and retail distribution operations.

Entergy owns and operates power plants with approximately 30,000 megawatts of electric generating capacity, including rrore than 10,000 megawatts of nuclear power, making it one of the nation's leading nuclear generators. Entergy delivers electricity to 2.8 million utility customers in Arkansas, Louisiana, Mississippi and Texas. Entergy has annual revenues of rrore than $10 billion and approximately 15,000 employees.

Additional investor information can be accessed online at www.entergy.com/investocrelations...

In this news release, and from time to time, Entergy makes certain "forward*looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995.

Except to the extent required by the federal securities laws, Entergy undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Forward*looking statements involve a number of risks and uncertainties. There are factors that could cause actual results to differ materially from those expressed or implied in the forward*looking statements, including (a) those factors discussed in: (i) Entergy's Form 10-K for the year ended Dec. 31, 2012, (ii) Entergy's Form 10-Q for the quarter ended March 31, 2013 and (iii) Entergy's other reports and filings made under the Securities Exchange Act of 1934; (b) uncertainties associated with rate proceedings, formula rate plans and other cost recovery mechanisms; (c) uncertainties associated with efforts to remediate the effects of major storms and recover related restoration costs; (d) nuclear plant relicensing, operating and regulatory risks, including any changes resulting from the nuclear crisis in Japan following its catastrophic earthquake and tsunami; (e) legislative and regulatory actions and risks and uncertainties associated with claims or litigation by or against Entergy and its subsidiaries; (f) conditions in commodity and capital markets during the periods covered by the forward looking statements, in addition to other factors described elsewhere in this release and subsequent securities filings and (g) risks inherent in the proposed spin-off and subsequent merger of Entergy's electric transmission business with a subsidiary of ITC Holdings Corp.

Entergy cannot provide any assurances that the spin*off and merger transaction will be WHN.sacbee.c0m'2013107/161v-printl55695251enfergy-prOlAdes-prelirrinary-second.htI"Ii 2J3

7121/13 Entergy Pr<Mdes PrellrrinarySecond Quarter Earnings GLidance - PR Ne.\\6v.tre - The Sacramento Bee completed and cannot give any assurance as to the terms on which such transaction will be consummated. The spin-off and merger transaction is subject to certain conditions precedent, including regulatory approvals.

SOURCE Entergy Corporation

Read more articles by Entergy Corporation Order Reprint Share Facebook Twitter Share Stuni:>leUpon Errail lIWIW.sacbee.com'2013107l16Jv-printJ5569525lentergy-pr<Mdes-prelirrinary-second.hIrr1

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Entergy expects workforce reduction BY TED GRIGGS Advocate business writer New Orleans-based Entergy Corp. expects an undetermined number of layoffs to result from efforts to increase efficiency, the company said Tuesday after releasing second quarter earnings estimates.

In an earnings forecast that's less than half what it was a year ago, Entergy, the largest corporation based in Louisiana, said its second-quarter results will include expenses associated with its "human capital management strategic imperative."

In response to questions about that imperative and potential layoffs, the company issued a statement.

"We have a number of companywide strategic imperatives underway examining how we meet both the challenges and opportunities oftoday's business realities," company spokesman Chanel Lagarde said in the brief statement.

"One specific initiative is focused on finding ways to increase efficiencies in all parts of our business.

"We do expect workforce reductions to be one result ofthis initiative."

The company said it does not have "final specifics at this time regarding who or how many employees will be affected."

Entergy has been working to get regulatory approval to sell its 15,400 miles of high-voltage transmission lines and substations to ITC Holdings Corp. Once the $1.8 billion deal goes through, local regulators will turn over most of their oversight authority to federal regulators.

In addition, Entergy will join the 13-state Midwest Independent Transmission System Operator Inc., based in Carmel, Ind. Midwest Independent will manage the transmission lines. Entergy says the move will save customers more than $1.4 billion over the next decade.

The company's earnings forecast Tuesday noted expenses associated with the proposed spinoffand merger of Entergy's electric transmission business affected the second quarters of 2012 and 2013.

It also cited expenses associated with "the implementation ofthe human capital management strategic imperative."

lof2 7/2112013 8:45 PM

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Entergy said its second-quarter profit also was hit by substantially higher income taxes on its utility segment.

Entergy estimated its second-quarter earnings at 91 cents per share compared with

$2.06 a year earlier.

Entergy noted that for the same period last year, the company and the Internal Revenue Service worked out an agreement on financing storm costs in Louisiana, which reduced the company's tax bill for that quarter.

The estimated 91 cents in per-share earnings this year are well below the $1.38 per share projected for the second quarter by Wall Street analysts surveyed by Thomson Reuters.

Entergy said it still expects 2013 earnings in the range of $4.60 to $540 per share.

Entergy will report second-quarter earnings results before the stock market opens on July 30.

7121/13 VTDigger Verrront Yanlee 0YtflElI": '~I YoOrld'orce reductions'

- VTDigger - http://vtdigger.org-Vermont Yankee owner: 'Expect workforce reductions' Posted By Andrew Stein On July 18, 2013 @ 7:59 pm In ~ I 22 Comments

[1]

Vermont Yankee cooling tower collapse, 2007 Entergy Corp., which owns the Vermont Yankee nuclear plant, is preparing to cut back its labor force in an effort to reorganize the company.

"We do expect workforce reductions to be one result of this initiative," national spokesman Chanel Lagarde said In a statement Thursday. "We don't have final speCifics at this time regarding who or how many employees will be affected. We remain focused on all our key stakeholders throughout this process, and we will deal fairly and communicate openly and honestly."

A source inside the Vernon plant says managers are telling workers that the company could layoff 10 percent of the facility's roughly 650 workers.

This news comes shortly after Entergy announced that it antiCipates decreased earnings In the second quarter of 2013, dropping from $2.11 a share last year to an estimated $1 per share. Representatives of the Louisiana-based company said in a news release [2] that the decrease Is due to "substantially higher income tax expense."

Mark Cooper, a senior economics fellow at Vermont Law School, published a paper Wednesday titled, "Renaissance in Reverse: Competition Pushes Aging U.S. Nuclear Reactors to the Brink of Economic Abandonment [3]." Cooper drew from the Wall Street reports of Moody's, UBS and Credit Suisse for his analysis.

"Economic reality has slammed the door on nuclear power," Cooper concluded. "In the near-term old reactors are uneconomic because lower cost alternatives have squeezed their cash margins to the point where they no longer cover the cost of nuclear operation... In the long term new reactors are uneconomic because there are numerous low-carbon alternatives that are less costly and less risk (sic)."

In 2013, the fair value of the Vermont Yankee nuclear plant fell 69 percent, from $517.5 million to $162 million [4]. UBS Securities [5] downgraded Entergy Corp.'s stock from "neutral" to "sell." The Swiss financial services firm also projected the closure of an Entergy nuclear facility in 2013, saying "Vermont Yankee is the most tenuouslv positioned plant." [6]

An internal document provided to VTDigger about "Entergy's Human Capital Management initiative" Iotdigger.org/2013107l181\\errront-}43I11ee-0'M1er-elqJeCl-YoOrkforce-reductions/printJ 1/6

7121113 VTDigger Verrronl Ymlt:le 0Y.fIef: 'Eltpect v.<:lrlcforce reductions' shows that Entergy employees are essentially being asked to reapply for their jobs.

"We are staffing our new organization using a selection process to help us match employees' knowledge, skills and abilities with future jobs in the organization," the document says.

The document contains almost 18 pages of questions and answers and doesn't cite an exact number of layoffs or where they might occur. But the document does indicate that layoffs are coming.

"Will layoffs occur as a result of HCM?" one question asks.

"Yes. As a result of the redesign of the organization, some jobs will be eliminated."

Rob Williams, spokesman for Vermont Yankee, referred questions about layoffs to Lagarde, who would not add to the prepared statement.

22 Comments To "Vermont Yankee owner: 'Expect workforce reductions'"

1 Comment By Moshe Braner On July 18,2013 @ 8:21 pm We should get more money from Entergy into the insufficient decommissioning fund before they go "poof".

2 Comment By peter Liston On July 18,2013 @ 10:48 pm Meanwhile Entergy CEO J. Wayne Leonard makes $19.51 million per year (Forbes).

3 Comment By Mike Kerin On July 19,2013 @ 6:10 am Moshe and Peter both make good pOints. My point Is, how many people will be hurt when there are not enough there to keep the plant running safely?

I know, safety is up to the NRC and I am not allowed to mention it.

4 Comment By david klein On July 19,2013 @ 6:37 am Is the bottom line safety or profit? I really want to know.

5 Comment By Bud Haas On July 19, 2013 @ 7:40 am Love this line:

"We remain focused on all our key stakeholders throughout this process, and we will deal fairly and communicate openly and honestly."

Hah!

6 Comment By John Greenberg On July 19, 2013 @ 8:59 am Correction: Safety IS up to the NRC, as you say, but you most certainly ARE allowed to mention it.

Citizens are not preempted, and in fact, neither are state officials. States may not REGULATE nuclear safety, but they are certainly free to discuss safety issues. DPS is a regular intervenor in NRC proceedings conceming VY, for example and has been for decades.

7 Comment By Bob Stannard On July 19,2013 @ 10:36 am Do any of you recall the battle that we fought in the State House over whether or not the legislature should allow the plant to continue to operate beyond its expiration date?

I do, because I was there and what I saw was Entergy using its employees as a shield, which they could hide behind. They've been trotting out their faithful employees not only in the building, but with Wligger.orgI2013107/181\\errronl-yankee-0Y.fIef-elCf,)eCt-v.<:lrlcforce-reductionslprintl 2/6

7121/13 VTDigger Verrront YanlG:le C1MlElI': '~v.orl<lorce reductions' letters to the editor with the employees falling on the sword of support for this company.

And what reward do these faithful employee receive for their hard work? 10% of them get laid off. Nice.

Real nice.

I always said that the employees were exploited pawns in this game. This great story by Andrew Stein now proves it to be true.

8 Comment By Wayne Andrews On July 19, 2013 @ 12:26 pm if 65 employees getting the pink slip is such a harsh measure to the liberals out there just what do suppose the impact would be if a closure results in 650 pink slips?

9 Comment By Wjllem post On July 19,2013 @ 3:20 pm

Wayne, Much worse, because the 650 are highly-paid (and paying various taxes), and spend much of their money for goods and services in the local economy (sales taxes) which keeps at least 1000-1500 OTHER people employed (and paying taxes) in various businesses that provide goods and services to VY workers and the VY plant.

IBM just laid of about 400 plus highly-paid people which will have a similar multiplier effect as would VY, All this per Economics 101.

10 Comment By jim buttkowskj On July 19, 2013 @ 3:23 pm Wayne, why does one have to be a liberal to think of this as a "harsh measure?" The real point here is financial stability... this is a nuclear plant after all...people like to think that an operator of a Nuke plant is finanCially sound. It all comes down to money...no one wants to see 650 or even 65 people lose their jobs.. but we do want to see the owner operator of the this Nuke plant act resposibly, honestly, and safely

11 Comment By Jim Barrett On July 19,2013 @ 5:21 pm Ask Shumlin how much stock he owns that is in direct competition with VTY? Ask Shumlin how he justifies using millions in tax payers monies to shut down a great company without revealing his PERSONAL INVESTMENTS! The media is asleep at the wheel and those in the know understand what is gOing on......a complete attack on a private company that is not justified and the worst part of this scam is the media knows it and won't report on it because they are in bed with Shumlin!

12 Comment By Fred Woogmaster On July 19, 2013 @ 6:48 pm If you KNOW of the 'personal' investments you refer to, please state them or provide a reference; otherwise your comment is of no value.

13 Comment By John Greenberg On July 19, 2013 @ 8:50 pm "Ask Shumlin how he justifies using millions in tax payers monies to shut down a great company..."

Three points: 1) Entergy sued Vermont (actually at least 3 times now), not the other way around.

2) The State of Vermont has not spent millions to defend itself. In all of the suits combined, it may, by now have spent $1 million, though I rather doubt the figure's that high yet. The most time consuming of the cases cost about $400,000 in the lower court, where Entergy, on the other hand, spent $4.5

million,

3) The preemption and tax cases are being handled by the AG's office. If you really must aim worthless, undocumented, irresponsible comments about conflict of interest at someone, they should be directed to Bill Sorrell, not Peter Shumlin.

14 Comment By Rob Simoneau On July 19, 2013 @ 10:35 pm

\\(digger.org/2013/07l181wrrront-~1a!-0YtflEII"-e~-v.orkforc&-reductions/printJ 3/6

7121113 VTDigger Verrront Yanlee 0MIer:.~ v.orlrce reductions' "Tokyo Electric Power Company says the number of early retirees jumped to over 700 In the last fiscal year from about 130 in fiscal 2010, before the plant [Fukushima Dalichi] was hit by a nuclear accident. It says more than 1,200 employees quit in the period from the accident to last month. About 40 percent of early retirees in the last fiscal year were in key positions when they decided to leave the company.

TEPCO says it has a sense of crisis that its business, including power generation and affairs related to nuclear accident compensation, could be hampered." Source NHK Again no discussion with regard to the human cost. Please remember radiation poisoning has an incubation of about 4-5 years, especially for children.

I agree nobody want to see these people lose their jobs but Entergy is playing with our lives and environment. The plant will soon experience a major failure. Decommission Vermont Yankee now.

Decommissioning will take at least 10 years. Fukushima Daiichi will take 40 years and the current cost is 140 billion and counting. Source NHK

15 Comment By Bob Stannard On July 20, 2013 @ 7:03 am To John Greenberg: Let's not confuse Mr. Barrett with facts.

Mr. Barrett, you are sounding borderline delusional here. You may recall that the Senate vote to not allow the continued operation of the VY plant was an overwhelmingly bipartisan vote. Even Senator Randy Brock voted against VY.

Why? Because the executives of this company lied to Vermonters and allowed this plant to leak radiation into the ground. The members of the Vermont Senate realized that Entergy was not a trustworthy partner. There was a time when Entergy enjoyed good relations with Vermont, but that time has long since past. And the reason it has passed is because of their own actions. They have no one to blame but themselves.

And Mr. Greenberg is correct; it is Entergy who is suing Vermont; not the other way around.

16 Comment By Bob Stannard On July 20, 2013 @ 7:13 am Mr. Barrett, perhaps you should read this brief article on the Cooper report: [7]

17 Comment By Bob Stannard On July 20,2013 @ 7:18 am Also, Mr. Barrett, Gov. Shumlin has not used one dime of taxpayer dollars shutting down this company.

This company opted to sue Vermont (not the other way around).

They sued us over a bipartisan vote that reflected a loss of faith with Entergy. Even Sen. Randy Brock voted agalnstthem (he has Since changed his pOSition, but knew what he was doing at the time of the vote).

Entergy's problems are the direct results of Entergy's actions.

18 Comment By Norma Mannjng On July 20,2013 @ 10:00 am Something not being discussed here Is that these projected job losses are private sector and not public sector jobs. Can you imagine the impact on both the regional and state economy If we were to lose all 650 jobs at Vermont Yankee this fall? Yes the state ended the fiscal year with $26 million more than expected, but that was with tax increases and before IBM eliminated 400+ high paying private sector jobs. Additionally, we are in danger of losing our Vermont Air Guard base in Burlington. Think domino effect/negative growth.

19 Comment By Peter Liston On July 20, 2013 @ 10:34 am "Including competition from lower-cost energy sources, failing demand, safety retrofit expenses, costly repairs, and rising operating costs" AND PLUMMETING STOCK VALUE... and still the company executives are paying themselves 8 figure salaries.

They're shoveling money out of the company while it falls apart around them.

W:ligger.org/2013107/18/1.errront-}EII'l1e&-0MIer-~t-v.orlrce-reductionslprinll 416

7/21/13 VTDigger Vermont Yanlee 0\\I\\fIer: 'Elq:Iect V<<lrkforce reductions'

20 Comment By Bob Stannard On July 21, 2013 @ 6:44 am Right Ms. Manning and those jobs will be lost just as soon as Entergy's CEO determines that this plant Is no longer viable, which according to most financial institutions is not very far off.

But remember, this Is a nuclear plant. They can't just walk away from It There will be many people working for a long time to decommission the plant. Will the jobs be the same? Of course not, but the loss will be reduced somewhat.

21 Comment By Pete Novick On July 21,2013 @ 7:13 am "In this world there are only two tragedies. One is not getting what one wants, and the other is getting it."

- Oscar Wilde, Lady Windermere's Fan

Also, "There are two tragedies In life. One is not to get your heart's desire. The other is to get it."

- George Bemard Shaw, Man and Superman

22 Comment By John Greenberg On July 21,2013 @ 10:03 am If you're Interested in reading analysis of the impacts of closing VY, considerable testimony on precisely this topic has been presented in the Public Service Board docket (7682) for a new CPG for VY: [8J.

Entergy's arguments are presented by Richard Heaps. They were rebutted in direct testimony by Thomas E. Kavet and Nicholas O. Rockier and then in surrebuttal testimony by Robert Unsworth (which, for some reason, is not posted on the website above, but is, I'm sure, available from either the PSB or from DPS).

Long story short, the State witnesses contend that the long-term effects are likely to be quite minor, as they have been at the other New England nuclear plants already closed. Many of these workers will be needed for post-shutdown closure, whether or not decommissioning is Immediate or, as Entergy currently contends, it is mothballed until the funds are available to complete decommissioning. Many others -

highly paid construction workers, truckers, etc. -

will be required to actually decommission the plant. It is also worth noting that with all of the power lines converging on the site and other infrastructure, It Is an idea location for a new generating plant (hopefully and almost certainly not nuclear), and Is therefore unlikely to out of use for very long.

Fair disclosure requires that I note that I submitted comments (unOfficially) rebutting Mr. Heaps's nearly identical testimony in comments in the previous CPG Docket, #7440.

Article printed from VTDigger: http://vtdigger.org URL to article: http://vtdlgger.org/2013/07/18/vermont-yankee-owner-expect-workforce reductionsI URLs in this post:

n.] Image: http://vtdigger.org/vtdNewsMachlne/wp content/uploads/2012/01/VYcoolingtowercoliapseSLIDER.Jpg

[2] news release: http://www.entergy.com/News_Room/newsrelease.aspx1NILID=2749

[3] Renaissance In Reverse: Competition Pushes Aging U.S. Nuclear Reactors to the Brink of Economic Abandonment:

http://216.30.191.148/0717130f020YLS0f020CooperOfo20ato/o20risk0f020reactor0f020reportOfo20FINA

[4] $517.5 million to $162 million: http://vtdlgger.org/2013/03/21/entergy-document-cltes-drastlc fall-in-value-of-vermont-yankee-nuclear-power-plant-ralsing-questions-about-its-vlability/

[5] UBS Securities: http://vtdigger.org/2013/02/20/ubs-downgrades-entergy-corporation-stock urges-investors-to-sell/

[6] "Vermont Yankee Is the most tenuously positioned plant.": http://vtdlgger.org/2013/02/06/1n report-flnanclal-flrm-forecasts-that-entergy-may-close-vermont-yankee/

[7] : http://www.vermontbiz.com/news/july/report-over-three-dozen-us-nuclear-reactors-risk early-retirement

[8] : http://psb.vermont.gov/docketsand0f020projects/electrlc/7862 1.pd IAdigger.orgI2013107l1811.ermont-)6I'lIee-O\\I\\fIer-eJqJeCt-V<<lrld'orce-reductionslprintl 5'6

vtdigger.org/2013/07/181lA3rmont-yankee-0'M1er-el'.peCt-v.orkforce-reduclions/printi 6/6

RENAISSANCE IN REVERSE:

COMPETITION PUSHES AGING U.S. NUCLEAR REACTORS TO THE BRINK OF ECONOMIC ABANDONMENT MARK COOPER SENIOR FELLOW FOR ECONOMIC ANALYSIS INSTITUTE FOR ENERGY AND THE ENVIRONMENT VERMONT LAw SCHOOL JULY 2013

EXHIBIT OF CONTENTS EXECUTIVE

SUMMARY

111 I. INTRODUCTION 1

A. THE CHALLENGE OF AN AGING FLEET B. THE IMPORTANCE OF UNDERSTANDING THE CONTEMPORARY DILEMMA AND ITS HISTORICAL ROOTS C. OUTLINE II. OLD REACTORS CONFRONT A NEW ECONOMIC REALITY 4

A. SUPPLY, DEMAND, QUANTITY AND PRICE The Economics ofAging Reactors The Margin Squeeze Old Reactors on the Edge B. CONTEMPORARY ECONOMICS OF THE "QUARK" SPREAD Declining Wholesale Prices Rising Costs The Intersection of Risk Factors III. OTHER FACTORS THAT AFFECT THE RETIREMENT CHOICE 13 A. RELIABILITY Outages Load Factor B. ASSET CHARACTERISTICS Asset Life Asset Size and Integration Regulated Reactors C. CAPEX WILDCARDS Uprates Safety, Spent Fuel and the Fukushima Effect D. REACTORS AT RISK IV. THE CURRENT ECONOMIC CRISIS IN PERSPECTIVE 27 A. THE HISTORICAL EXPERIENCE OF U.S. COMMERCIAL REACTORS Outages and Early Retirements Performance: Load Factors and Operating Costs B. FUTURE PROSPECTS FOR MARKET FORCES Natural Gas Cost History and Trends Renewables Demand C. CONCLUSION

LIST OF EXHIBITS EXHIBIT ES-1: RETIREMENT RISK FACTORS OF THE NUCLEAR FLEET IV EXHIBIT 11-1: CONCEPTUALIZING THE SUPPLY AND DEMAND FOR 4

MARKET CLEARING FOSSIL FUEL GENERATION EXHIBIT 11-2: CONCEPTUALIZING THE MARGIN SQUEEZE ON 5

OLD REACTORS EXHIBIT 11-3: SUPPLY INDUCED PRICE EFFECT OF WIND POWER, 78 MISO MARKET AREA EXHIBIT 11-4: MID-WEST AND MID-ATLANTIC FUEL COSTS AND 8

QUARK SPREADS EXHIBIT 11-5: RISING OPERATING COSTS 9

EXHIBIT 11-6: MERCHANT 'CASH MARGINS' AT DIFFERENT POWER HUBS 10 EXHIBIT 11-7: COMPARISON OF ALL-IN PRICES ACROSS MARKETS 11 EXHIBIT 111-1: HISTORIC NUCLEAR OUTAGE DAYS 13 EXHIBIT 111-2: LOAD FACTORS FOR OLDEST AND YOUNGEST REACTORS 13 EXHIBIT 111-3: REACTOR CHARACTERISTICS THAT REDUCE ECONOMIC 15 VIABILITY EXHIBIT 111-4: COST OVERRUNS OF RECENT MAJOR UPRATES 19 EXHIBIT 11-5: THE FINANCIAL EFFECT OF FUKUSHIMA: 5-YEAR 21 STOCK PRICE EXHIBIT 111-6: RETIREMENT RISK FACTORS OF THE NUCLEAR FLEET 23 EXHIBIT IV-1: U.S. NUCLEAR REACTOR DISPOSITION OVER 50 YEARS 27 EXHIBIT IV-2: EARLY RETIREMENTS AND SERVICE OUTAGES OF 28 MORE THAN ONE YEAR EXHIBIT IV-3: SIGNIFICANT CORRELATIONS BETWEEN REACTOR 29 CHARACTERISTICS AND OUTAGES AND RETIREMENTS EXHIBIT IV-4: U.S NUCLEAR LOAD FACTOR 30 EXHIBIT IV-5: AVERAGE ANNUAL NONFUEL OPERATING COSTS, 31 ALL PLANTS IN OPERATION BY 1993 EXHIBIT IV-6: THE SHALE GAS REVOLUTION TRANSFORMS NATURAL 32 GAS SUPPLY FUNDAMENTALS EXHIBIT IV-7: TRENDS FOR ONSHORE WIND OVERNIGHT COSTS 36 EXHIBIT IV-8: KEy COST TRENDS FOR SOLAR POWER: LAzARD 35 LEVELIZED COST FOR SOLAR AND COMBINED CYCLE EXHIBIT IV-9: TRENDS FOR SOLAR COSTS 37 EXHIBIT IV-10: DEMAND FOR FOSSIL FUEL GENERATING CAPACITY 38 ii

EXECUTIVE

SUMMARY

Although Wall Street analysts expressed concerns about the economic viability of the aging nuclear fleet in the U.S., the recent early retirements of four nuclear reactors has sent a shock wave through the industry. One purely economic retirement (Kewaunee, 1 reactor) and three based on the excessive cost of repairs (Crystal River, 1 reactor, and San Onofre, 2 reactors), in addition to the cancellation of five uprates (prairie Island, 1 reactor, LaSalle, 2 reactors, and Limerick, 2 rectors), four by the nation's large nuclear utility, suggest a broad range of operational and economic problems.

These early retirements and decisions to forego uprates magnify the importance of the fact that the "nuclear renaissance" has failed to produce a new fleet of reactors in the U.S. With little chance that the cost of new reactors Vvill become competitive with low carbon alternatives in the time frame relevant for old reactor retirement decisions, a great deal of attention will shift to the economics of keeping old reactors online, increasing their capacity and/or extending their lives.

The purpose of the paper is not to predict which reactors will be the next to retire, but explain why we should expect more early retirements. It does so by offering a systematic framework for evaluating the factors that place reactors at risk of early retlrement.

It extracts eleven risk factors from the Wall Street analysis and identifies three dozen reactors that exhibit four or more of the risk factors (see Exhibit ES-l).

It shows that the poor performance of nuclear reactors that is resulting in early retirements today has existed throughout the history of the commercial nuclear sector in the U.S. The problems are endemic to the technology and the sector.

It demonstrates that the key underlying economic factors -- rising costs of an fleet and the availability, of lower cost alternatives are likely to persist over the next couple of decades, the relevant time frame for decisions about the fate of aging reactors.

While the purpose the Wall Street analyses is to advise and caution investors about utilities that own the aging fleet of at-risk reactors, my purpose is to inform policymakers about and prepare them for the likelihood of early retirements. By explaining the economic causes of early retirements, the policymakers \\\\w be better equipped to make economically rational responses to those retirements (or the threat of retirement).

EXHIBIT ES-l: RETIREMENT RISK FACTORS OF THE NUCLEAR FLEET Reactor Economic I

Operational :

Safety

Factors FactorS Issues Cost Small : Old I Stand Merchant ! 2&vr<w/o 2Syrw<

Broken Reliability long, Multiple Fukushima I Alone Ext.

w/Ext.

term Safety Retrofit I Outage Issues RETlRED,2013 Kewaunee

)(

X X

)(

i Crystal River X

I o I

)(

0

)(

I San Onofre X

X X

0 X

AT RISK I

Ft.Calhoun X

X X

X 0

X I

0 X

Oyster Creek X

X X

0 X

X Ginna X

X X

X 0

X Point Beach X

X X

X 0

i Perry X

X X

X

~~.~~hanna X

I X

X X

I X_

Oavis-Besse X

0 X

X 0

X X

X i Nine Mile Point X

I X X

0 X

X X

i QuadCities X

X I

X 0

)(

Dresden X

X X

0 X

Millstone

)(

0

)( I X

0 I

)(

I

~m X

X X

X

)(

0 X

X X

I Clinton X

X X

X South Texas X

X X

X I

)(

Cammanche peak X

X X

X Three Mile Island X

)(

X X

0 X

! Paiisades X

)(

X 0

)(

Fitzpatrick X

0 X

X 0

X I

X Iv Sequoyah X

)(

X X

I I Hope Creek X

X X

X Seabrook X

I X

X X

Indian Point X

I X I X

0 I

X I Duane Arnold X

i 0

X 0

I X

X

! Calvert Cliff X

0 X

X Vt. Yankee I

X

! X X

X 0

X I

Browns ferry X

0 I

X X

X Monticello X

X X

X 0

X Prairie Island X

X

=tt 0

X Turkey Point X

i X

X 0

X I

X Robinson X

X I

I i WolfCreek X

X X

X Fermi X

X X

I X

X n

X X

I Cooper X

I X

X I

0 X

I Callaway X

X X

I X

Cook X

0 0

X X

rlaSalie X

X X

X Limerick X

L X

)(

I X

Sources and Notes: Credit Suisse, Nuclear.,. The Middle A.ge Dilcmmar, Facing Declining Performance, Higher Costs, Inevitable M()rtali~ Febmary 19.2013; UBS Investment Researcb, In ScarG:h ofWashingtolJ'S Latest Realities (DC Field Trip Takeaways), February 20, 20U; Platts, January 9, 20U, "Some Merchant Nudear Reactors Could Face Early Retirement: UBS," reporting on a UBS report for shareholders; MOOdy'S, Low Gas Prices and Weak DemSUld are Ma.:,"idng US Nuclear Plant Reliability Issues~ Special Comment, November 8, 2012.; David Lochbaum, WJ.il.king a Nuclear Tightrope:

Unlearned i..cssons ofYear-PJus Reactor Outages, September 2(}()(), (i The 1\\IReand1Vudesr Power Plant Safety in 2011, 2012~ and UCS Tracker); NRC Reactor pages.

Operational Factors: Broken/reliability (Moody"s for broken and reliability); Long Term Outages (Lochbaum, supplemented by Mood)'~s, o-current, x=past); Neat Min (Locbbaum 2012); Fukushima Retrofit (UBS, Field Trip, 2013)

Economic factors: COSt, Wholesale markets (Credit Suisse) Age (Moody"s and NRC reactor pages with oldest unit X=as old or older than Kewaunee, Le.

1974 or earlier commissioning, 0= Commissioned 1975-1919, i.e. other pre-TMI); Smail (Moody~s and NRC Reactor pages, less than 100 MW at cOlllmissjorung)i Stand Alone (Moody's and NRC Reactor pages); Short License (Credit Suisse and NRC Reactor pages).

of Jj,is paper is not to predict which reactors will next to go. Rather it seeks to demonstrate the fundamental nature and extent of the economic challenge~ that old reactors face.

The aOftlysis is primarily economic, as indicated on the left side of the tahle.

All of the reactors ha\\c signillcant eC()llornlc issues. lf anything goes any of these reactors could be retired earl),. The precipitating event could be a deterioration of the ccc)nOrnlcs, or it could be mechanical or safety related as indicated on d,e tight side of the table. The market ",ill operate faster in of merchant reactors, but economic hU\\'e become so se\\'ere huyc heen forced take action as The salTle factors call into economic \\'alue of license extensions and reactor upratcs where they Reviewing the \\'\\!all Street analyses, it is possible 10 parse through the long: list of reactors at risk and single out somc that face particularly intense challenges, although in all cnses one can site mitigating factors.

Palisades (Repair impending, local 0ppOSlUOn)

Ft. Calhoun

Ginna.

Oyster Creek

Vt. Yankee and local opposition)

l\\lillsto1lc (Tax rcason~)

Clinton (Selling into tough market)

Indian J>oim (License extcllsion, local opposition) number of these A

vulnerable.

The lesson for makers in the economics of old reactors is clear and reinforces the lesson the past decade in the economics of building new reactors.

Nuclear reactors arc not competitive, They are not competitive at the

)eginning of their lifc when the build/callcel decision is Illude, and they are not compctil1ve at the end their life cycles, when the repair/retire decision is made.

Ther are not competitive because the U.S. h\\ls the technical ability and a rich, diverse resource hase to mcet the need for electricity with lower cost, less risky alternatives.

Policy efforts to resist fundamental economics of nuclear reactors \\vill be costly, ineffective and vi L INTRODUCTION A. THE CHALLENGE OF AN AGING FLEET O\\'cr tbe lagt decade, as nuclear advocates touted a "Iluclear rcnaissance" made extremely optimistic claims aboUll1uclear reaclor costs to convince policy~

makers and that new nuclear reactors would be cost competitive with od,er for meetinll: the need for electricity. These economic analyses rcstcd on two ahout nuclear reactors.

Nt'w nuclear reactors could be built and at cost.

(2) New Nuclear reactors would run at very JC\\<els of for of time with vcry low operating costs 2 Dramatically escalating construction cost cstimates and severc con~trnctioll difficulties and delays in virtually all market economies where construction of a halldful of new nuclear reactors was undcrtaken have prmTn the first set of assumptions wrongJ Recent deci~ions to retire reactors earlv remind uS that the second set of was n('\\-('r true of the reactors' and call into tll<'

operation of fnture nuclear reactors.s In fact, the lnformatiofl Administration (EL\\)

noted that in the current rna rket, reactors arc in need of,,1""II"GH1I it may !lot be worthwhile to do so. As the El:\\ put it, "Lower Power Prices and Higher Repair Costs Dri\\'c Nuclear Retirements, hll" Inlorm.ltlon.\\dmlfllsoll.lOO, "Lower Power Price;;,md Jljgher Drive RCt.1H'me-IHS 2,20U

I-lowe\\'er, the problem is more profound than that. It is not only old, broken reactors that are at risk of retirement. As old reactors become more expensive to operate, they may become uneconomic to keep online in the current market conditions. Indeed, the first reactor retired in 2013 (Kewaunee)' was online and had just had it licenses extended for 20 years, but its owners concluded it could not compete and would yield losses in the electricity market of the next two decades so they chose to decommission it. 8 Things have gotten so bad in the aging nuclear fleet in the U.S. that Wall Street analyst have begun to issue reports with titles like

"Nuclear.

the Middle Age Dilemma? Pacing Declining Performance, Higher Costs and Inevitable Mortality,,,9 "Some Merchant Nuclear Reactors Could Face Early Retirement: UBS"'O and

"Low Gas Prices and Weak Demand are I\\Iasking US Nuclear Plant Reliability Issues.""

By July, 2013 the U.S. was already guaranteed to have the largest amount of early-retired capacity in a single year in the history of the U.S. commercial nuclear sector and the lowest load factor in m'er a decade.

B. THE IMPORTANCE OF UNDERSTANDING THE CONTEMPORARY DILEIIIIIIA OF OLD REACTORS, ITS HISTORICAL ROOTS AND FUTURE COURSE These early retirements magnify the importance of the fact that the "nuclear renaissance" has failed to produce a new fleet of reactors in the U.S. With little chance that the cost of new reactors will become competitive with low carbon alternatives in the time frame relevant for old reactor retirement decisions, a great deal of attention will shift to the eco11omics of keeping old reactors online, increasing tl1eir capacity and / or extending their li\\'es.

As has been the case throughout the history of the commercial nuclear sector in the U.S., tl,e primary obstacle to nuclear power is economic and it is critically 7The decisl')n \\vas :lnnoul1ced in late 2012. Thomas Conlenr, "Dominion says Kewaunee nuclear plant will shut dmvn for good," Tlle/oll/no/ Jrn!;,u/, (le1 22,2012 Hi\\latt \\'V'ald, "_\\, Price ofNucleat Energr Drop, a \\'\\'15consin Plant is Shut," NI?)/I York TilJleJ. i\\f~ly 7, 2013,

() Credit SUisse, Nllrlrar. TIJI' MIddle Age Dtlnn!!J(/?, Fmillg ])frilmn,p, Pnjormancr, I ligbrr wIlr, ]flfl'itl7M MOItalifJ', February 19, 2013, p. 11 10 Plaits, January 9, 2013, "Some t\\lerchant Nuclear Reactors Could Face E<lrly Retirement' UBS," reporting 011 a 1..lBS report for ~harehulders; LJBS inv('stment Re~ea[ch) EntefJ)' Corp., Re aSJfJJing Cash F/olI'J jrom tbe Nflke.r. "Jamwrr 2, 2(1); UBS Jnvestment Research, Enll'r:..PJI COIP O/ltlookjor l\\'rlt' Tf'I7!J7 AI Kirkqji, Febrnar), 4. 2013; l.JRS Investment Research, In JMr,/.J 0/ IFashll(glon'J LIles!

(DC Field Trrp T(lkerlll'q) r), h*hruary 20, 2013 II l\\[oodr'~, LOJl! G,n P/i*t.rs (/lid lI"rak Demalld (III' AImkill,J', US NI/r/ea/ F/rmt Rd/(l/)tllfJ' Jnflfs, Jpf(1(11 Comment, Noyember 8, 2012 important to cut through the hype and hyperbole on both sides of the nuclear dehate to reach sound economic conclusions." One way to do so is to have a clear picture of the history, contemporary reality and future prospects of nuclear economics in America.

J have examined the history of the build-cancel decision with respect to new reactor construction in a series of papers.lJ This paper provides an analysis of the repair-retire decision, which will certainly be a much bigger part of the near-term nuclear future in America. Examining the factors in the current market that have caused 2013 to witness the largest premature retirement of nuclear reactors in the history of the industry is critical to understanding the near-term future of the industry.

Moreover, the issues that are combining to put pressure on old reactors re,'erberate through the history of the industry, \\V~th deep roots in its past and important implications for how we think about its future.

C. OUTLINE The analysis is divided into three sections.

Section IT desc6bes the key cnrrent factors that place reactors at risk of early retirement and also undermine increases in capacity at existing reactors (uprates). It begins with a conceptualization of supply and demand factors that determine the margins aging nuclear reactors earn in the contemporary electricity market.

Section 111 discusses other factors that ha\\'e been identified weakening the economics of aging reactors and increasing the risk of early retirement. It re\\'iew reliability, capital expenditures, and safety retrofits.

Section IV,'iews the current economic crisis from two perspectives intended to help policy makers in assessing what the prospects for future early retirements are.

Pirst it presents a reyiew of the historical experience of the commercial nuclear sector that shows that tI,e current crisis is consistent with the past performance of the sector.

Then it eyaluates the likelihood that tI,e key driYers of the current crisis \\\\~ continue (wer the time frame for decision making about retiring aging reactors. It concludes with a few, brief concluding obsen'ations.

I:> IrwlO C Bupp anJ Jean Claude Derian, (I <:)78, J.lgh! IFllter7 Jlml! thr.i\\Tmlrar Dream Dl.f.!o/1,'ed, Ne\\\\' )'olk BaSK Books, 1981 The Fatled Promm q(l\\'lIdrm' Powel; New York Basic Books) cmpham:e the role of hype tn pwmotmg [he first round of cornrnerci'al reactor constructlon 11 In addition to i\\fark Cooper, Heal Utah, 2013, and Nuclear Safety, 2012, see Public [IjJk, Pnl'a!p Tivtlt, Rntrpq)'cl' COlt, U/f/t!J Jm/JI7fdel/(e. Adl'tlnred Co,rf RnOl)f~)'.fOr Rear/or COMt/1{(rIOn Crerlte.r anofher Nudem' FIrlJm, Nol a futl(llJJall(f, i\\larch zr)13; h",d(lmfl/fal FIfl/l'J 11/ SCEC:--C',r Comp(lmrule (ktollef 1, 2Ul2; POII~f' Challen,-~e.\\ (~rJ\\'l/dMr Rear(ol Constmtlloll: CO,r! EJt(lla!iolll7!1d CrolJ!dl/J~ Out.Altml(ltive.r, 2()1(l, All RlJk, No RfII/l/rd>- December 2000; Thr El'OlIomm ?l J\\'1(dfl7r RMcfors: Rf!!aifJanr~?t RrlapJe,.,June

II. OLD REACTORS CONFRONT A NEW ECONOMIC REALITY A. SUI'PLY, DElvIAND, QUANTITY AND PRICE Reactors The Economics The nuclear reactors face can be described in basic Exhibit II-I. In half of the U,S, the In these areas, the wholesale generators earn, are driven primarily by the fuel cost of running the last that needs to be to make sure supply is adegllate to meet demand (see Exhibit II I), This is price that "clears" the market In most regions of the nation, the price is set by natural gas, with coal playing that role in some places, In those areas of the U,S, were the wholesale price of electricity is set by the mrlrket, have been

""cJl1l11li",ciramatically, as conceptualized in Exhibit 11-1),

EXHIBIT lI-1: CONCEPTUALIZING THE SUI'PLY AND DEMAND FOR MARKET CLEARING FOSSIL FUEL GENERATION Price clearing prices I

2013 1""'- -

Dedining

} fud,'oSls

'" ~.,

.~

QUANTITY f'uel increasing efficiency of and consumer durable" 1\\loreO\\'er, the increase in has the lowest cost of fuel and therefore 4

runs when it is available, has lowered the demand for fossil fired This means that the market clears with more efficient cost) Diants, which lowers the market even farther. For consumers this is a they receive are The Margin Squeeze Old nuclear reactors arc particularly hard hit set fuel costs, all of the other costs of nuclear generatlon must out of tJ1e behl'een the fuel costs of the reactor and the market This is called the "quark" spread, A nuclear reactor is paid the market clearing which it must use to pay its own fuel costs, while the remainder must covcr its otller costs, While nuclear fuel costs are low (although they have been rising), their non-fllel operation and maintenance costs and their ongoing carital costs are high, The high nonfllel and maintenance costs (including capital additions) are high because the complex technology needed to control a very volatile fueL !\\s reactors these non -fuel operating and ongoing capital additions rise, As conceptua!i:ced in II-2, with "'luark" spreads falling, and operating costs the funds available may no longer cover the other coHs, or yield a rate that satisfies the reactor owner.

EXHIBIT B-2: CONCEPTUALIZING THE I\\1ARGIN SQUEEZE ON OLD REACTORS

-; Fu;'--;-No';:fuel O&M& Routine Cap..-. :-: c.sii MarginfOrAdmln 8; profit ---

-_._- -----:~*::::.:=....=o7'"..:==.:==.=:.:;-

.~ ---~. -~"

2013 costs), needs major easily Dushed over If a reactor is particularly inefficien t (has retrofit is reguircd, the old 2008 Old reactors are

The arc decllnlng, the non ~ fuel are t1>mg.

tl1 me analVSIS that first sounded the alarm At after slicing its diviclentl has deli\\"ered a simple prices wiJl rise as old percent earlier year in the face of shareholders: Be patient.

, mandated enYironmentnl price-~-wi!l increase along with them. l:5ut a shut down rarher thnn Old Reactors on the Edge the Chicago-based nudelH power genemtor's thesis: Even though market specific reactors, UBS explained the situation as follows

('of power remnin low, compelltors arc

<l new generation of plants by cheal' nalural gas in New Jersey, Ohio, and olher key Exelon FoUowillg Dorninion's tecent allt101lr1CCment to retire its Kc\\vaunee nuclear plant in markets to take the place of those old coal facilities.

Exelon's lobbying efforts to

~/is(:()nsin in October, we believe the pbnt may be lhe figut<lun: canary in the coal the construction of cornpeting wind farms and some of the new gas plants mine. Despite' substnntiaUy lower fuel COl'1ts than coal plant", fn;:cd costs are workeJ, As a result, some experts are it's just as Hkdy th~t power approximatelv 4-5x rimes higher than cc>al rhll1ts of compatable size and may be prices will stay the same or fall as it is that they ns Exclon forecasts,1/

the Question of the imDact of zero fuel cost Exhibit 1I-3, a increase in the amount of wind ill the MISO would be lowered bv i\\ similar study for redllctio~ of $O.018/kwh.

EXIIIBIT II-3: SUPPLY INDUCED PRICE EFFECT OF WIND POW'ER, MISO MARKET AREA

~:5(j

$:10

~:[ "1,') ~t"~ ',~ ~ If!,:~:c

~

~.

$:10

~

1 The problem is not a figment of the imagination of Wall Street analysts or

$~'~O

}

~

confined to a small number of individual reactors. It is \\Videspread, as demon>trated

~

~~~

~.j~r",f

,,/1 by the behavior of \\<:xelon, the nuclear utility in the U.S. with ownership "f v

,'1~~'

l' ",,~tM' "i,1I I"~

one* (juarter of all U.S. reactors.

1;

~50

~w Exelon was also a nuclear reactors began to subsidies for wind to back out expensive" its nuclear fleet enjoyed. Exdon's until the economics of old get it kicked off the board of the economics drivinll Exelon's bcila\\'ior was dr""'rilwcl in a local business

~-.:.:::,:::~r~.:=:~;;,,.:,:I,,

0.

~:m rr

X[l(I)

Bob FagAn, et, al. 111C' Potential Rare Effccts ofWlluf Energy and TI3n!,mif<sion in the IHidwcst ISO Region, Symlpsc, May 22, 2012.

higher for Addilionaily, maintenance capex of "*$St cOtlpled further irnpede their economic and reduce wind would slow down wind proposed an even mOl'e drastic

\\1 UBS, emph;l!'I~.dd-t>d rr 1 _)

\\'X'crnal1, "Exdnn Chief: \\,\\'lnd -power subsidies threaten nuclea!

CEO Chn5tnpher (mile \\V~n\\S 11 Stt't"t' U~1Ili(,]s:' E:'IC'Iou

" (fmn:r Cbi.n,go RlfJifMJ. May 13, 20lJ dmtnA'" coulcl bl'come rO$~ible; compilny Rla~hc~ divid('od,"

Febnlacy 8,2013.

Prim, Center for l\\mettnlrl October

~UJ2 GUillen, <<\\X/lod grl)up boots Exeloll ftom bO~Hd," Po/ilm) October, Impact 01 Cnpc \\\\::ind on NewF.ngLllld.Energy Ptbtu,lry 2010 6

measure. After decades of arguing that nuclear is the ideal low (fuel) cost, alwavs-on source of power and touting the benefits of free markets in electricity, Exelon is proposing to reduce its output of nuclear power to drive up the market clearing price.'" Since withholding supply for the purpose of increasing prices is frowned upon (indeed would be a violation of the antitrust laws if they applied)," it has to negotiate \\\\~th the Independent System Operator to reduce output.,2 These acts of desperation clearly suggest that the economics of old reactors are very dicey.

B. CONTE~IPORARY ECONOMICS OF TilE "QUARK" SPREAD Declining Wholesale Prices Most analysts focus on the f\\.[jdwest (MISO) and the Mid-Atlantic (P]M) regions because they ate the purest markets. They clear in gas and they do not add otl1er costs to the wholesale price. For tl1e past four years tl1e wholesale prices of electricity has hovered in the range of $30-$4()/MV/H in tl1ese two regions, as shown in Exhibit II-4. The wholesale price has declined by about $20/l\\fWI I, with the EXHIBIT 11-4: MID-WEST AND MID-ATLANTIC FUEL COSTS AND QUARK SPREADS Avemge monthly quark spreads lor the Midwest 12006.12) cia

$90 quark spread

$80

--,werage monthlv \\vl10lesal8 electricity price

$70

--average allnual nuclear fuel price dollars per lllegawalthoLir

$60

$50

$40

$30

$20

$10

$0

.1011-06 Jan-07 Jal1-08 Jal1*09

.Ian-10 Jal1-11 J811-12 Average monthly quark spreads lor the Mid-Atlantic 12006.12) dollars per llleg::r'Nattholir

$90 quark spr.ad

$80

-- a'.'erage monthly "lvl1olesale electriCity price

$70

--average annual Iluclear ruel price

$60

$50

$..l0

$30

$20

$10

$0 Jall-OG

.lal1*07 Jan-08 Jal1-09

.Ial1-10

.1811*11 J811*12 Source: Energy Information Administration, "Lower Wholesale Power Prices Reduce Quark Spreads Available to Nuclear Plant Operators, l'od.,y in Energy, April24~ 2013, pp. 1-2.

21) Steve Dameb, "\\'('1",. I':xe!on may cut Its Illinois nuke Olltput," C'rm/l'J C/I/((/)!,o

,I !\\i;lIk Cooper, Testtmony of Dr i\\[,nk Cooper all I, Ihere Life,\\ fter 7imko <ll1d 12 Dalllel,>, \\'('h), Exelon, 201 '\\

lowest prices in the I\\fidwest. This puts the "quark" spread in the range of $20

$30/M\\'VH. The prices are particularly low in the Midwest, Exelon's home region.

Rising Costs These prices alone would put pressure on nuclear power operations, but the pressure is magnified because the cost of operating old reactors is rising, as shown in Exhibit II-s. Credit Suisse estimates that in the period when "quark" spreads were falling from $40/MWH to $20-$30/MWH, the operating costs of nuclear reactors were rising to the range of $2s-$30/MWH. The resulting margins are razor thin, if not negative. The primary drivers of cost increases are non-fuel 0&1\\1 and fuel costs, which have increased about $10/MWH. Thus declining wholesale prices account for about two-thirds of the shrinking margin and rising costs account for one-third.

EXHIBIT 11-5: RISING OPERATING COSTS Fully Loaded Cost to Run Will Rise Faster

5':X' Tot3lCos1lnfl::ttion for ~

2011'1S~S%/YR~',_

3C')0

~

~ 25'"

li 'co'.

IIII r~, I i I~'

r 1:;':") I,i I I I I I_~ ~ ~

l':C'0

,rr{l r}',~~' 4'~cf>.,t*,~~),r'),p1\\ftr ;;',p.J'J p<'

.~.

,,'i<

,~'

t'

_r:-$.',1

\\".'.H f,.",)

If'/,'",

Cl\\j:~'

!,I,'.'*

Source: Credit Suisse, Nflclear... The Middle Age Dilemma?, F:lcing Deelimiw Performance, ifigher Costs, Inevitable Afortality, February 19, 2013, p. 9.

The Intersection of Risk Factors The economics of individual reactors will be affected by tl1e si7:e and condition of the reactor and tl1e market into which it sells po\\\\er. Credit Suisse points out tl,at tl1e merchant generators face the greatest challenges and concludes that "the challenge of upward cost inflation/weak plant profitability \\\\;lIlikeIy put pressure on smaller, more marginal plants that could weigh on nuclear's market share.'>23 Exhibit II-6 shows the cash margin at merchant reactors based on the \\\\'holesale price at various 23 Crecbt Suisse, 2013. p 1 S

power hubs. Credit Suisse belieycs that tbese 33 merchant nuclear reactors provide "modest cnsh margin

,,24 With parcnt overhead of $5-7/M\\'VH, unit economics look even worse."25 UTIS out four of this group as candidates for carly retirement.

EXHIBIT I1-6: MERCHANT 'CASH MARGINS' AT DIFFERENT POWER HUBS 18.00

NiHub A[)-Hub P)MW 15,00 12.00 9.00 6.00 3.00

~l_

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UBS UNITS Ar RISK RETIRED CANCELLED EXTENDED Source: Crcdil Suisse, Nl1c!£*<1r... l1J(~ Middle Al?c DUcmma?, Facing DecIinitJg Performance, }{jgher Cm;t,,,!,

Inclitt/ble "'[()rr;1/i~,'i Fcbru.uy 19) 2013, p. 11. Platts, J~nl1ary 9, 2013, reporting on a vas ({")lor! for shareholders.

Three important insights can be drawn from this analysis.

Kewaunee, retired for purely economic reasons, sits right in the middle of this group, which attests to the reality and relcyancc of thc analysis.

The cancellation of major upratcs for reactors at the upper end of the range of margins reinforces the relevance of this approach.

It is important 10 also note that not all of the reactors that are seen to be at risk arc in th,., I\\lid-West and l\\1id-i\\tlantic.

(('dit StllS~e. 2013, p Credit ~U1:::~e, 101.;, p 10

\\X'ith the exception of the Northeast, the market fundamentals for existing reactors arc quit challenging. The one of the country that is not represented in this market-oriented analysis is the where traditional utility regulation still dominates. llowever, as I have shown in recent filing in South Carolina, regulators to emulate the market in decision~mal{in". Those who fail to do so are law. The fact that market.s across the country are about the true economics nuclear power in This should influence regulatorv decisions.

not limited to the Midwest and Mid

'l11e of markets in other parts of the country, as well, as shown the annual report of the market monitor in Texas EXHIBIT 11-7: COMPARISON OF ALL-IN PRICES ACROSS MARKET I $50

I!

I

$1;0 I III. I

. " $40

$30

'0 1il $20. I tD

$ 10 I

IIII I.

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~~~~

~

N NNr-../N NNNN NNNN Nr-./NN EReOT NYISO ISO~NE Hllb P1M MISO (AlSO Av~rtlg(!

Average Average Source: POlomac Economks~ Ltd. Independent Market Monitor for the ERCOT Wholesale Market, 2012 State.'

OI1'h(',Uarkcr R('porf For The EReOT 1~-llO/(.',~a/c Elc.'ctricilJ-l11tlrket8, Exhibit 3. June 2013 7(, Cooper, Public Risk, 2013 7' f'otornat' ECOnOfTlH.'s, Ltd lndependcllt j\\-tuket l\\Ioniror for the ERr:OT WholesaJe Market, 201J SId!" or UlfMrfrkN Elf(lIiaty Mmkett, Exhibit 3, June 2013 11

This analysis shows that based 011 the energy costs, marh,t Texas (ERCOT), and California (C:\\ISO) are dose to the Midwest Atlantic (l'JJ\\I) and in these areas there are not a lot of adders put the Ncw York and New England (ISO-NE) havc energy adders.

Several other factors the reactor face in the current market, a discussed in the next Section 12 III. OPERATIONAL FACTORS THAT WEAKENED THE ECONOMIC PERFORMANCE OF AGING REACTORS A. RELIABILITY Outages reactors dowll with (Crystal River, San extended olltages for uprates also Lucie). The reactors with the longest olltages, facing River and San Onofre, have since been retired.

EXHIBIT 111-1: HISTORIC NUCLEAR OUTAGE DAYS 6,000 20%

5,126 18% j 5.000 16% t 14;; <<

!It 4,000 1I I

12% ~

10%

8i 3000

'0

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0 2008 200')

2010 2011 2012

~~DaysOut SOlltce: Credit Suisse, Nuclear.., The Middle.Age Dilcn1J11fJ?, racing Declining Pcrformrmee, Hight'r Co!.rs, Ine~i{able AfortalitYi Fe-bruary 19,2013, p, 4.

has also concern ahout rCllaDltttl' of view. \\X/ben reactors are offline, the owners not lose whatever have earned, rhey 111ust replace the power. In addition to 13

IIlC01Tle, the market Ilowcvcr, in the opinion of and demand of low cost natural gas is of that problem.

worries that if tbe outages conti.nue, replacement power will sttbstantially.

Moody's the fact that after Crystal River and San Onofre, whose led to the longest is Fort Calhoun, now in It bas been multinle issues and is Load Factor also examines the broader issue of reactor percentage of dlC year a reactor is online producing power - is an important determinant of its economic performance. Comparing the ten oldest to the ten youngest reactors for the past three years, as shown ill ExhibitlII-2, Moody's concludes that "it does not appear that the oldest plants in the U.S. have exhibited significantly lower capacity factors or experienced higher than average reliability issues than tJ1C ne\\vest _... 1_

,,:~9 between HgC and factor in the Moody's data set

<tot1<""01l" oionificant when the three year average is considered across rimel(' or and youngest arc treated as groups.

The average load factor 4~eo lower for the oldest reactors, but the standard deviation as I1lgll.

choice of a dlree year and this approach to a\\cemge load factor, captmes an important of the aging fleet. Oldcr reactors havc shorter cycles - eightecn for older (caetors versus 24 Illonths rime they would have lower load factors. Even treating the the rcJationships older reactors have lower load factors, but the

<Hl,,",Hr,"1(',"- is lower, as we w(luld expect the refueling cycles.

More in a market where are so thin, a four percentage difference in load factor represents an loss of revenue, and the mnch standard deviation represents significant uncertaint\\,. A!2:c and rcliahility matter hand in handc

.'R Low Gas Pf1Ct"~

J,ow (h~ Pncc~, p II) r= 42, p, 06

~I Chi Sg\\1;H(", P <' 03

" r=.04, p <.12, Chi Square <OB 14 EXHIBIT 111-2: LOAD FACTORS FOR OLDEST AND YOUNGEST REACTORS (2009 2011)

De. (%)

" Oldest 10 Reactors o Youngest 10 Reactors 30 25 20 15 10 (I

80 82 84 86 88 90 92 94 96 98 3 vr. A.g. load factor (%)

Source: Moody's, Low Gas Prices and W<"ak Demand are J-faskilJg US Nuclear Planr Rclftl.bJ1ity I,fSI1C8, Special Comment, Nuvember 8, 2012, p. 11.

B. ASSKf CHARACTERISTIC'S Asset Life

",,~p.'n;nt)' of the load factore I t IS a

, reactors have and recei\\Ced ex tensions, a number of the older reactors have not. This means dlat any capital expenditures may have to be recovered over a shorter of time. To the extent that there are capital costs associated with keeping these reactors online, the short life may make it difficult to recover those costs where are thine "Even assuming licenses are extended, 11 merchant nuclear units have a maximum useful life of less than 20 years,.. We "'orr), whether plants will see the full 60 years as thin capex are too hard to cover."'3 Exhibitlll-3 identifies those units not had an extension of their original license and have less than 20 years on their license.

Asset Size and The analysis of the economics of aging reactors identifies a number of other characteristics that appear to reduce the economic "iabilitv of aging reactors, which

'Ii Credil St1lS5t', p 19 15

EXI-lIBIT III-3: REACTOR CHARACTERISTICS TIlAT REDUCE ECONOMIC VIABILITY IS,frO

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IJ BS {J NITS AT RETIRED CA-NCEJ.l.EO EXTENDED UPRATES x =units with less than 20 remaining on ticense (and no extension granted) a =alone (i.e. either single unit or not geographically and organizational integrated into a fleet) s =small (700MW or Jess)

Source: Credit are also identified in Exhiuit 111-3. Smalll1nits that stand alone geograplllCallyor are believed to have higher costs and dlerefore arc more vlllnerable in the current markt't cnvironrnent Both of these factors reflect ecol1olJ1it's of scale since operating costs are spread across a smaller alllount capacity and output.

multi-unit sites integrated into cOll'orale fleets of1'eacton; can share indivisible costs. The retirement of Kewaunee underscores the fact that the economic 16 benefits of part of a flret of reactor~ are dencndcnt on the IZeofrf;\\lJhic location of the rractors as well.

descriued the effects of as follows:

nuclear operations I11ey are in il better anlong their oWn fleets and to compete fot' talent in this Because they operate economics Because of these advantages, fl number of single unit nuclear plant operator have decided to contrilct out all or part of the management of their nllde~r opC'ttltions to one of the more experienced companies in the field, The fact that single as,et nuclear operators have contracted out the management of their units may soh'e the administrative problem, but it docs not ne,ce,;salCllY mean they enjoy lower costs. These contracts have been negotiated after term and serious failures of management and the of the services do not have a lot of options, The seller of the service may well capture the economies of scale and Exhibit 11-shows the characteristics undermine the economics of reactors stack up for a dozen merchant reactors.

Regulated Reactors Credit Suisse presents a similar for regulated reactors, noting that market prices arc somewhat relevant but we think.. illustrate the challenges to economics of regulated nuclear as well." !'Ihrket economics may not rule in these cases, but these reactors exbibit similar diffIculties. Using Kewaunee economics as the dividing line (cash flow of auout $9/J\\[WH); there are almost two dOlen regulated reactors 'W1th challenging economics. In this groups are retirements Onofre), canceled llprates (Prairie Island), and a long term ontage (Fort Calhoun). \\"\\!e fmd seven standalone assets, reactors with less than 2tl years on their licenses, and half a dozen small reactors (700 1\\[W or less). There arc 14 reactors that have t\\vo or more of tllese characteristics. Thm, in terms of basic economics, there are three dozen reactors that arc on the razor's E. CAPEX WILOCAROS The above analysis describes the "normal" process of operaang Heet in the context of an energy economy in which low cost resources are to meet 11 MOOth-, 2012, p. K ~.'l Credit SUJS'iC, p 12. 17

needs, W'i th the economic viability of an increasing numher of reactors coming illto the of !"tiC need for capital becomes ominous, The prudence of making major expenditures to meet

concerns, and install technologies to increase output (uprates) called into there is a to treat UJcse extl'aordinary events, they are enough to merit consideration as part and narcel of the 'nuclear ecor;omic Uprates

]n of old reactors two important

I'irst, the characteristics of the indiddual reactor and the market into which it sells pmver are extremely important.
Second, one must not confuse ule history 01

!l1U1or were relatively inexpensive and resulted in increases in canacin' and major that are q\\lite large (-'> increases in It was always a stretch to assume that success in executing the former guaranteed success in executing the latter and in the current mnrket; it \\vould be a major rnistake, The abandonment of the LaSalle and Limerick uprntes sends the same strong for uprates that Kewaunee did for retirements, The earlier Island uprate did not attract as much attention, even the assumed economic costs were similar,3" Prairie.: bland reminds liS dlat ratc base projects can be halted, with prudence reviews and disallo\\vancc. of costs possiblc.37 The economics of uprates arc on the economic razor's Iviorc()\\'er, the commercial nuclear industry has Illstotlcallv ,11ll! that prol Onofre was precipitated by that in the need for major The Florida uprates substantial cost overrullS. The tvionticello life extension and uprate V'NtlClearStITct, Xrcl to SCt<1P Prairie Nl1d~ar Plant S.2012,,\\b,mdonment fefNs to projt"'cts tbt were l10cler

llld involve-lhat were nt.>t under \\,Iiar 18 cost overruns of over 80 percent." The response of Executives "Mn"ncihlp for the /Vlonticello upmte is "lIJt's a

\\vith manv intricate components from the Xeel's chief nu"dear officer, subrrutlcd to state regulators., olher reactor projects Grand Gulf in lvlississippi, Turkey Point and St. Lucie in ['lorida and \\\\I/atts Barr in Tennessee also experienced cost overrUllS, in one case doubte the original estimate, Defending cost overmns by the same problem more an indictment In fact, the severe contemporary execution risk of keeping old reactors online or ncr~'"rl the output has started to look a lot like the contemporary (and historical) execution risk of building new reactors, \\'</ith almost three dozen uprates annroved since 2009, over half have been abandoned cancelled or put on hold, that have moved forward have suffered major cost overruns, The costs of the uprates mention by the Xcd executive arc summarized in Exhibit ilIA, The estimates are based on press accounts and assume, in the case of Monticello that tile uprate has caused a proportionate share of U1C total cost o"errutl, Although the cost and viability of uprates vary from reactor to reactor, some observations can be offered, The major up rates that have been and in a number of cases cancelled or abandoned, generally have cost estimates in the range of $1800 to $3500 per kW, W t\\chlal costs have been much higher, in the range of $3400 to $5800/kW, actual costs of the uprates are three to four times as milch as new cycle gas plant costs, Even the initial cost estimates were almost Since the reactors being proposed for upratcs are still old reactors, they to have si[snificant operating costs, the uprates may improve their performance, \\'Vith new gas plants being more as well, and having much lower capital costs and short lead times, it may well be that choosing between an uprate and a new gas plant has become a \\'crv close call, 'll,is exnlains the mLxed record of major nprates in U1C past Since uprates most reactors will witness and most nuclear the poor nerformance is for rhr FlOrida 19

The~e are afflicted by the same flaws as new builds, pnst and present, cost overruns, demand and low cost alternath'es, EXHIBIT III-4: COST OVERRUNS OF RECENT MAJOR UPRATES $!kw r'" Initial Estimate Flnat Co,t 6000 i*ii 5000 4000 3000 2000 1000 a Monticello Fla Power Grand Gull Sources: Staff Writer, IIMi!:Hdssippi PSC Approves Eluergy Mississippi's Plan" To Upgrade Grand GulfNudl'ar Power Sration/' EBR, December 2,2009; New "eaml $724 Million Grand Gulf Nuck.ar Plant Uprate Will SOOI\\ Create 4,000 Jobs, Nuc}t'ar Street December 13) 2011; Susan Salisbury, "Customer!'; should not have to ray escalating costs for nuclear projects) witness, Palm Beach Post', September tt, 2012; Du\\'id Shaffer, "Monticello nuclear phmt repairs surge $267 million over budget," Star Tribune" Jul), 14, 2013 Safety, Spent Fuel and the Fukushima Effect Une factor to which UBS devotes a great deal of attention, but Credit Suisse does not mention, is safctv related cmts. the risk ofh"rden~d we see of up to $30*40 scenario; while other t'stlmntcs: suggest costs range PPJ ~ ests Fukushima* related costs of $50*GO I\\ln, excluding vents fur SUst)tlchanmt unit. II' Pkms, L\\BS Rf"pnrt f)( Sho:trch0Id£!fS, p 20 lip the license extension cnallCnve fO its '\\vaste confidence" Fukushima and the "waste confidence" rullng remind investors that nuclear power has a unique set of risks that may on economic decisions, In a major a analysis of the nuclear sector UBS called it a "tail risk" This is an event that may ha\\'c a very low probability, but which can have a huge impact on the value of an investment." It has come to be identified more popularly as a "black swan," Tokyo Electric Power Company (f'EPCO), the owner of the Fukushima Reactors and the fourth largest utility in the world, sllch an event, as described in Exhibit Ill,S. Electric Power it pay for its cuttent esrimate of costs, which Iy and there is some question about l11e estimate of$137 billion, if that about nuclear safety and nuclear First, the disaster bankrupted the Its stock collapsed and it has been taken over by the government (as shown in 111,15). If only $137 billion can bankrupt the fourth largest utility in the world, the "tail risk" associated with nucIear reactor O\\vtlt'fship should get the attention of investors. Second, the economic impact of nuclear accidcn ts docs not How from the health effects, but from the disruption of the affected community. The most of nuclear accidents mal' not be the deaths that they cause, but the economy and sociallifc of a large surrounding area and cause. Illl\\'e shown that Fukushima de-serves the attention it gets in both the historical and contemporary contexts:' but there is a larger lesson here. Safel" is an concept ill nuclear power because the power source is so volatile .1/ U DS, In Search 6, rHlticiplltcs resolut.ion br lale 2014 with Little although it ones anlicipatc relatcd tn,Wen beyond the immccil<"lte po'>t ret..:lJ!nmendauons I~ ImS InYestol Research, Can fUlI'I//I1/'/,(J!1lcr ff!lHI!r! FHkmbimi1?,.\\pn! 4, 2011 .11 Coopt(, Nudeat Safety, 2012 Nuclear Saf('t)', 2011, "Post Fuk\\1shim~ Calle tor Ending Plice.\\nderson," Hlrfldtn o(()u /11(}1?/1I.ll'wlftst,c 2.011; "The fmplications of Fukll'lbim:l' The C1~ r('t~r('ctl\\'('," HI/llrl," 0/ thr Almw!" I'wnfn/J July!,\\t1gu~t 2011 67: ~-13. 21

15000 to control it becomes extreme),' and internal weakness arc re,-ealed, to them becomes costly for existing reactors, since retrofits are tli rficult. As older reactors fartlwr and farther out of sync with the cn,lving understanding of the cballenge grows, EXHIBIT 111-5: THE FINANCIAL EFFECT OF FUKUSHIMA: 5-YEAR STOCK PRICE Tokyo Electric Power Company, (in Japanese Yen)

r6(10.00

./1 r\\lov.., .,'\\

,"....,r, lr-" 1I~~EPCO "'0%

. "fill (HI V\\

'V Stock nec 2"DlIlI Ol) loe,,* eo f T,"n(lXI(1 I'LlDO,00 ~"/'~r'__'-'__'_'J-~'-' NIKKEIINDEl< Niltkei Index Rises:::: 50% 500(1 ~ http://www,marketwatch,rom!investillg!index!nik'!countrycode=jp F. REACTORS AT RISK to the fl1ture, there are a number of reactors, a third of the the characteristics that put reactors at risk for 22 Exhibit lII-6 summarizes the risk factors faced The first six factors cost, small size, old, standalone - reflect the economic aunenS10f The next fh*c risk actors involve factors (broken, and long term and safety factors (i\\Iultiple issues and Fukushima There reflect the operational! repair dimension of the analysis, The first three reactors evaluated have been retired early and they highlight the two different or factors that create risk. Kewaunee the purely economic factors, River and San Onofre epitomize the factors. I have only included reactors that exhibit at least three of the risk factors as identified in the sources cited. to I!()," The 111stOtlcai to the retirement However, the vulnerability numbers of reactors suggests that there will be future early retirements and uprates will be slow to

come, The analysis is primarily economic, as indicated on the left side of the table.

All of the reactors have significant economic issues. If anything goes wrong, any of these could be retired e'lfl)'. The precipitating event could be a further deterioration the economics, or it could be mechanical or safety related problems, on the right side of the table, The market will operate faster reactors, but economic pressures have become so severe that forced to take action as well, The same factors call into of license extensions and reactor uprates where Reviewing the Wall Street analyses, it is possible to parse through the long list of reactors at risk and out some that face particularly intense challenges, although in all cases one can site mitigating factors, Ginna Oyster Creek VI. Yankee (Tax and local opposition) l\\Ellsto!lc reasons) 23

EXHIBIT llI-6: RETIREMENT RISK FACTORS OF THE NUCLEAR FLEET Reactor i Economic

Factors I

Operational I 1 Factors i Safety Factor I I , Small I Old: Stand I Merchant 20yr<w/o 2Syrw<

Alone :

Ext. wI Ext. i Cost Broken 'Reliability long 'Multiple term Safety Outage Issues Fukushima Retrofit I Kewaunee x x i-'R~ET=IR~EO=2:;:O",1",3~_t-__-l_.._.-l-_+-_-+i___-+__ )( )(! X x

Crystal River x

I 0 I J( o X San Onofre )( X X o i x AT RISK I ! ft. Calhoun X )( I X X o X I o )(

Oyster Creek x

X X i X x o J( X Ginna x X x x o X Pornt Beach x x X X o Perry x x I I X X x )( x X X x X Davis-Be,.e x o X X o X )( x Nine Mile Point )( x i X o x x X Quad Cities X X X o X Dresden X X X o i x ~M~iI=IR~o~n=e___-l_~x~_-l_-+-=o-+_x -L1__X~_+I'___-lI_~O~-l____-+___~___+-~X~-l___~ .:.P""ilgr"'i."m:c..___-+_..:.X_--f-.....X::....-l-X:.:... I-_--'I__X"-- ~_--f---'o'---ll__ X X X Clinton X X X X I South Texas)( X X X X I Comanche Peak X )( x X x Three Mile Island 'X )( X 0 X i Palisades X X X 0 X I x X Sequoyah X )( )( X ~. Hope Creek )( )( )( )( Seabrook )( )( )( )( Indfan Point )( i X X 0 X Duane Arnold X 0 I X 0 X X Calvert Cliff X 0 I X 0 i X i X Vt. Yankee X X X I X I 0 i X Browns Ferry X i 0 X X X Monticello X X X X 0 x

Prairie Istand X

X X I 0 X Turkey Point X X X )( 0 X X ! Robinson X X )( WolfCreek X X X )( i Fermi )( I )( X i X I X Diablo canyon )( X X I X , Cooper X X )( 0 X I calla~av X X X )( Cook X 0 0 I )( X i laSalle l( X X X Urnerick X X l( i X Sources and Notes: Credit Suisse, lVudear... The Middle Age Dilemma?, Pacing Declining Performance, Hig11t!r Costs~ Inevitable lVortality, february 19,2013; VDS Investment Research, In SeMCh of Wasbington's Latest Realities (DC Field Trip Takeaways), February 20, 2013; Plans~ January 9, 2013, "'Some Merchatu Nuclear Reactors Could Face Early Retirement: UBS," reponing on a VDS report for sbareholders; Moody'S, LAw' Gas Prices 1l11d Weak Demandare Masking US Nuclcu Plant ReUabiIity Issues, Special Comment, November 8, 2012.; David Lochbauro, Wtdking:;( NudeM Tightrope: Vnle:uncd LeSSOIU. ofYear-Plus Reactor Outages, September 2006. U The NRC andNuclear Power Plant Safety in 2011.2012. and UCS Tracker); NRC Reactor pages. Operational factors: Broken/reliability (Moody's for broken and reliability); Long Term Outages (LochbaWD1 supplemented by Moody's, o~current, x"'past): Near Mis. (Loehbaurn 2012); Fukusbima Reuofit (UB:>, Field Trip, 2013) Economic Factors! Cost, Wholesale markets (Credit Suisse) Age (Moody's and NRC reactor pages with oldest unit X=as old or older than Kewaunee, i.e# 1974 or earlier commissioning! 0= Commissioned 1975-1979, i.e. other pre-TMI); Small (Moody~s and NRC Reactor pages~ less than 700 MW at commissioning); Stand AJone (Moody's and NRC Reactor pages); Shot'{ License (Credit Suisse and NRC Reactor pages). 2S 24

Clinton into tough market)
Indian Point (License extension, local nnn')qitiol1i A couple of other reactors appear to be amicted by a large nnmber of tbese factors (Davis-Besse, Pilgrim), so they could be particnlarly,"ulncrable. A number of the reaclors on this list also face significant local opposition, which aclds to the pressllre.'5 The key 10 the fate of these reactors is the extent to which these factors will of decades when the retirement clecisions will be made.

t\\vo perspectives on that issue.

1*1O,Y does current crisis fit into the historical nerformance of the
Will the current conditions that place old reactors at risk in the future?

4~ The most ObVIUlf, example, based on press accounts would include at least the fhvis"flessc, Pilgum, Fit?patri.:k, fndi;1H Point, Vermont Y~HkN', BW'l.vns Ferry, penni, 26 IV. THE CURRENT ECONOMIC CRISIS IN PERSPECTIVE A. THE HISTORICAL EXPERIENCE OF U.S. COMMERCIAL NUCLEAR REACTORS The dire straits in which a part of the U.S. commercial nuclear fleet flnds itself are not an aberration or a sudden shift in prospects. It is part and parcel of the history of the industry in the U.S. In fact. the quiet period of high performance in the late 1990s and early 20005 is the rather than the rule. \\'Y'ith the of the huge cost overruns in the 1970s and 1980s fading. the quiet period of played an important part in creating the misimpression that new reactors hum along. This contributed to the misleading economic analvsis on which once About proposed or even online, is not consistent with the U.S. all reactors ordered docketed at the Nuclear Rcgulatol were cancelled or abandoned. Of those that were completed wefe reti.red early. 23 percent had extencled outages of one to three years, and percent had outages of more than three years.' In other words, more than one-third of the reactors that were brought online did not just hum along. i\\nothcr 11 percent were turnkey projects, which had cost o\\"erruns and whose economics were unknown. Outages and Early Retirements magnitude of outages and early retirements is sufficient to require that be incorporated into the economic analysis of nuclear power. The time reinforces the observation that the high level of performance in the 2UOOs were all rather than the rule, as shown in Exhibit IV-2. After a large number of reactors came on line there werc a number of outages in the earl)' 19ROs. i\\gain in lhe 1990s there were a number of outages and retirements. The lull of problems in the late 19905 and early 2000s has been followed by a sharp increase in problems. Ultimately, since the start of the conunercial industry, oyer one*C]l1arter of all U.S. reactors have had outages of more than one year. There are three causes of these outages: refresh parts that have worn (lut ~r:.. Cooper,.\\ffwd\\lbk 2012. I11e current Ilt11J1UetS differ sl;ghtlr from the NrJ! analysis since the recent outages and reti!erm:rH~ have Rdded to the database 27

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Q,I'E~~Jt =r: _ ~ 0 lit ..: !f;-1J.~ ~ ~ ~ ~ ~ ~ ~ It! I"!I \\I

)0..

Vi t;I) ~ 'S ~ ~::~~:g ... ~ ""'i!:;. ~~~,~~

Retrofit-to meet new standards that are rlp"pj,,,,p,,

knowlcd2c and o{)eraLing experience (e.g. cvent,)

ReICoverv-nece"itnted by breakage of major components EXIIInlT IV-2: EARLY RETIREMENTS AND SERVICE OUTAGES OF MORE THAN ONE YEAR.

10 ,I # Plants in long TermOutage o ~~~~~~~~~~~~~~~~~#~~~~~~ - -,_.*., ;:";'"--:r" ~~.~;----. ~o'mm1ssion The average cost of an outage 2005 dollars), even before tJ1C most recent outages, was more than $1.5 billion, the hi..,hest cost tODPin(:: $11 billion." The costs of the recent tJ'lat led to retirement in and San Onofr~ run into the

18 Exhibit IV-3 presents the results of pairwise correlations between variables and outages and retirements. The database includes 122 reactors that have in lhPf"t1nfl, but excludes the turnkey reactors. They are updated from an earlier by including more reactors, the recent retirements and long-term outages, and 29

a set of variables to capture the extent of The Exhibit includes all of the sk'1lificant variables from a list of O\\~er four dozen. EXIlIBIT IV-3: SIGNIFICANT CORRELATIONS BETWEEN REACTOR CH,\\.RACTERlSTICS AND OUTAGES AND RETIREMENTS Dependent Variable Independent Outage Retirentent Variable sig. sig. Outage 0,8 2nd Outage 0,51 0.43 Permit Year -0.27 -0,28 Capacity -0.15 -0,22 Size -0.22 -0.27 Rule at Oulset -0.19 -0.16 Change in Rules 0.17 t .1, <.05, , **** <.OOl of the early retirements and outages to retire reactors. The occurrcnce of outages has a with retil:ement, as does the occurrence of a second outage. retirement reactors are older ann smaller. The early retired reactors were online before agency (originally tJle Atomic Energy Commission) to adopt and enforce safety regulation. They arc not worth repairing or keeping online when new requirements are imposed, or when the reactors are in need of significant Outages exhibit similar relationships. The larger the number of rules in place when constrllction was initiated, the less likely there was to be an outage or an early rettrcmenls. The larger the increase in rules during construction, the greater the likelihood of an outage. While the interprets the existence and of rules as an expensive nuisance, I have shown that they rd1ect stroug concerns safety that were triggered by the poor,afety record of the in its early I*CaIS. 50 The older reactors more outages and needed more retrofit, to gct back or star online. before performance was nerformed noodv and outage and retirement cOllseclucnces. decision to retire a reactor involves a cornbinatiol1 of factors stich as major failure, system deterioration, ~'j Cooper, Nude;;; Safery, 2012. Conpr£, Nudear Safety, 2012 30 Economics is the most cause, and is the most frequent factor that triggers the economic reevaluation. Although popular opposition "caused" a couple of early retirements (a referendum in the case of Rancho Seeo; state and local goycrnmcnt in the case of Shoreham), this was far from the factor, and in some cases local opposition clearly failed (referenda failed to Trojan or Maine Yankee). External economic factors, such as declining demand or more-cost.competitjve resources, can render existing reactors uneconomic on a "stand-alone" basis or (more often) in conjunction with one of the other factors. Performance: Load Factors and Operating Costs The increasing problems faced by nuclear reactors are reflected in the load factor. ;\\s shown in Exhibit 1I1-4, average load factor for the nuclear rnrnlll/ll(Hlf its history of commercial in the United States has been less than 75%. While it is true that on:r the from the IMe 19908 through the end of the 2000s the load factor was 90%, it is also true that it took twenty years to get that level and the industry has recenuv fallen below it. EXIIIBIT IV-4; U,S NUCLEAR LOAD FACTOR 100% 90% 80% .~ ~c ill'" 70% 60% 50% j~1' _. Unadi~'i.d~ %Ofope,.bi. Capacity 40% 30% .___",,-~..AdJu.!Il.!:lI_=.lji J!:lflllJ:.l!p_'t~jI¥Jll~I"~Jng 20% Ret'rements and long Term Outages 10% 0% .,(l'.,~~4'...~""'.if'$""~"'.,,,~"~"':,~<I:,<t':,#.,<t""'~#...#...<f::f..,.<f'...¥$'.I:.$'.I:.,#!,#,#:.,,p';#'~#:~~<f~.,,,, Sourc("s and Notes: Adjustt'd IQad factor includes retirements and long term outage~, Outag~s frum LOChf1aum; unadjusted load factors from This is the source of concern expressed by the Wall Street about the aging fleet, but it also raises all important point about new reactors, New technologies shake out periods nud tJ1e more complex are, the longer the period. The of a 90% load factor for new builds is suspect. 1 31

Moreover, the calculation of load factor" in Exhibit IV3 actuaUy overestimates the actual load factor because the denominator includes reactors that are operable. Reactors that haye been retired early or are on term outage (not in service for the entire year) are not included in the analysis. an adjusted load factor that includes in the denominator the term outages and early retirements. assume that all the early retirements were reactors that were expected to still be on line, but for the difficulties that "hm them chwn. £\\s shown in Exhibit IV I, aboye, this number is substantiaL \\,\\'hel1 early retirements and long term outages of lllore than a year are taken into account, the load factor has been ahout 70%. costs appear to exhibit a similar as load factors Exhibit IV 5). 'll1cre was a long period of of modest decline and relative However, as costs have begun to rise EXHIBIT IV-5: AVERAGE ANNUAl. NONFUEL OPERATING COSTs,ALL PLANTS IN 1993$/ kw 160 t 140

~ 120 100 '1~. 80 60 40 20 o ">0,,,,,, -$"" ">0,,,'0,>0,,,,, -$"'b,,>0,"0, -$' ,,>o,'b">,,>0," Source: Energy information Administration: An Analysis of Nuclear Power PlatH Operating Costs: A 1995 Update, Aprill??5 B. FUTURE PROSPECTS FOR MARKET FORCES 111cte is always a great desire to predict the future of individual reactors but that is a perilous business. Explaining the past and evaluating its for the futllfc is less and m')!'e informau\\'e. \\X!hat we can say about the recent past is that in a short of time the has experienced a fnll compleml'l1t of the bad things that can happen to old reactors - purely economic retirement, broken 32 reactors, an ul'rate dlat developed into a broken plant and an early retirement, cost overruns for new builds and llprates and abandonment of uprates. We can the circumstances that. brought these events about and show that arc not only short term aberrations, but are consistent with the 1""...._.".*."

industry, the future fate of old reactors will be decided by the interaction of these underlying characteristics and the conditions in the marketplace. Here I a couple of key factors. First and foremost, consistent with the we have used to describe the plight of e't:<.u l<.llY markets. The question is:

"rm,nU,1<- pressure on the margins of ae.ine. reactors with Natural Gas Cost History and Trends long-term natural gas has been described as a llnclf'rt"kmg, but a consensus has emerged among most reasonable period of low gas prices is upon lts. Projecting price may be but twenty years is less so and that is the relevant time frame reactors. I\\xelon's battle with wind, its efforts to moye the market clearing and its decision to cancel the upratcs at Limerick and LaSalle and earlier decision abandon its plans to build a ne\\v reactor,51 reflect the very challenging economics that nuclear faces in today's market. Those economics are driven a belief that gas are likely to remain low for the relevant economic time John Rowe, of Exelon has been adamant in this Colorado School of IIlines has tBtimated that the available resetves have increased by 60 between 2000 and ,~nd every collSuitant T can hire predicts real 11.11 rcal orices for mtural gas least this decade and two (4) I've seen of wrong forecasts in 27 years. But the c:guations on powerful tlnd T helieve real [or a long And, what's more, r than to het against it, bel on (l different fuel source and literal.lv murdered But I've also seen the guarantee we'll 'never sec spike hut neither can J find <l from any reputable followe.r of the business that projects that we're going to have higb prices on a consistent ba:>is any time in the next several decades. /\\nd I work on the best facts I can find and 1 inycst 011 the I can find, and facts gas is queen, whether I love her or not. 52 cites cheap ,\\ug 28, 2012, Do No Haftn," En!errnse lnsli('utc. Marth ):f)11, p_ 14 33

to the technologically driven shift in the fundamentals of the natural gas supply-demand balance as cailing into questions predictions of very high natural gas prices. The top graph in Exhibit 1lI-6 shows the key variables in EXHIBIT IIl-6: THE SHALE GAS REVOLUTION TRANSFORMS NATURAL GAS SUPPLY FUNDAMENTALS Reserves Drive Prices on a Forward Looking Basis -- Reserve-to*Consumption Ratio 14 12 10 4 ~. 8 y "" -0.5634)1' + 1LS28x 51,8S1 R" =O:16ll1 y =2.6548)( *11,06 RJ ""0;7397 4 PreShole Gas

Post*Shale Gas 9

10 11 12 13 14 Reserv~_ ~~~,~_~_su~p~ion Ratio Sources: EIA, N;1ttl"011 Gas nata; Nymcx Ht'nry Hub. 34 "",qJ> "o,~ "o,'b'b "o,<f' ,,0,0,'>.:;>,Jp,,0,0,'1, '1,# '1,&'1, {'~ f'",'b '1,0"'" '1,,,,,,,, ",,,,0' ",0,,<0 '1,0,,'b '1,,,,f' The Shift in the Natural Gas Supply Curve Welthead Price $20l01MCF 9 the reserve-toconsumntion ratio. As Rowe points out, The upper graph also includes out through the end of the decade. Traders on the do not see a high gas price over that such a 'I11e years. Renewables pru'PCLl' of natural gas prices are no\\' the only factor that will on the supply side. j\\s we have seen, wind power supply-curve in such a way that it lowers the market is added to meet long-term needs, it has this short-term effect Onshore wind is becominl! more comncritive as a Rowe also notes tJlat there arc renewahles that will compete with nuclear in the next decade - "Bur, as 1 look, I think wind and solar do become more economic, wind much the [irst. N udear plants may become economic again but not in the next decade,"s:; Longer*term cost trends support Rowe's obst~rvation that alternatil'es to nuch:ar power beyond gas are becoming more attractive options. Jn contrast to nuclear reactor construction costs and cost estimates that have been rising uramatically, several of the alternatives arc exhibiting reductions in cost, driven by innovation, by doing, and economics of scale. Onshore wind, the target of Exelon's enmity has exhibited a stgmtlcant co,t decline that is expected to continuc, as shown in Exhibit TV-7. Onshore wind is cost compet!t!"c wid1 gas in many arcas today and will be more so in the future. Some analysts believe solar will play in increasingly larger role for t*wo reasons. thc short term, solar may already be with peak load costs, If soiaI' puts a cap 011 or reduces demand for fossil fuels at the peak, the wholesale will be reduced at the mOlilent when the largest margins can be earh'. Lazard's observation on of solar with cutrent the time of day a resource is available and where it enters ~, Ro\\,ve, "EIlCl"fW p.6 35

considerations. Lazard believes solar will be competitive with gas within a decade, as shown in Exhibit IV-8. EXHIBIT IV-7: TRENDS & PROJECTIONS FOR ONSHORE OVERNIGHT WIND COSTS $2010/KW Actual 5000 ~__._.*~___ Projct_eil crc.. 4500 _ J~Q'ibl'r"'l-,-cte.d 4000 .~~+-,_~21l%'P,edicted.._ 3500 3000 2500 7000 1500 1000 500 0 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 Sou tees: Ryan Wise r, et at, Recent Deve/open,s in flu!' LeJ"CIiZt}(/ coSt ofEnergy PUUl1 U.S. Wl11d PURer Projt"crs,.NREI., February 2012; Eric Lantz, Maureen Hand and Ryan Wiser, The Pas( and Frmrt'e CuBt of l'f'ind J:J:l1erfI)'J NREL, August 2012; California Energy Commission, CC)!;t ofCenrrnl Station Generation, J(Ullinry 2012. EXHIBIT IV-8: KEy COST TRENDS FOR SOLAR POWER: LAzARD LEVELIZED COST FOR SOLAR AND COl\\IBINED CYCLE LeOE IWIITh)

"\\i) 121*

sri} WQ "~~ !117

-1 5,0

~Ol! 20[;

eli
01': '1)18 2D!9 1020 Thi..'>Film ~0!;U p\\" - ~o ~1\\)l~,d;~; -

I}..iIl.F:lm ~ob\\ P\\' (mtall:C-f ~Obl F\\'. ~o Sl\\h!idi~! ...- C1rm.!litle' SO!A! Pi' G"H,odCCGT Source: L~7,ilrd, LeH~/bed Cosr ofEnergy Alla(vsis - Version 5.0, June 2011; 36 Exhibit IV*9 combines the Lazard projections with recent, past cost trends as estimated by analysts at Lawrence Berkeley Laboratory, There is no reason to believe tbat the pressures on the market clearing from alternative sources of suoolv will

ease, EXHIBIT IV-9: TRENDS & PROJECTIONS FOR SOLAR

.-.---.-~----. $/W 12 ~~.'-----...- *. ---'-'---***-----'- ,*.*lE 10 MW 10 ,..* *10*lE 100 MW 8 --.*_-;,**GT-100 MW-,,* 4 _..... _~=o,,....:: o 1998 2002 2006 2010 2014 2018 2022 2026 2030 SQurce: Lazard, Levelb:ed Cosr ofEnergy Anal;".lu'll - Version 5,0, June 2011; Galen Barbose) et aLI PhOlOyolt:dc (PV) Pricing Tremis: Hisrurical, Recenr, find Near-Term Projections, LBL and NREL, November 2012. Demand On the demand side, while there is certain to be a great debate about how mnch the reduction in electricity consumption reflects the recession, there is no doubt that increasing efficiency will change the trajectory of demand (see Exhibit The IOIlI!: term trend to declininz e1ectricitv consumption per dollar of CDP has fuel consumplioll in the utility sector increased even more. however. 37

offset increases in population and GDP, resulting in, at best, fht The debate (lver climate change has also great emphasis on 111111t11\\'1Oo efficiency and usinl! rencwables. S6 EXHIBIT III-lO: DEMAND FOR FOSSIL FUEL GENERATING CAPACITY: 1985 =1 18 1.6 ~ 0""'1::'-:~'-_ '. 1q

r*....

..,;,--=--.,--- <<"',.~ 1.2

'~---7."f"\\'ft'r"nn~"

'C7',-::;;;.......--,--:: 0.8 0.6

rai.1 ~wn 0.4

= J(Wlil~ GOP IReal!' 02 Fo.sii FiJei!K1.'rH o ~~~~~~~N~~~*~~~~~~~~~~~~~~9~ ~~~~~~~~*~~~~~~~~~ff~f~~~f~~~ Soun;e: Energy Information Administration! Jfonfhly energy Rel1"t'\\f'tlata tab1es, With aggregate demand likely to b flat, at best, and renewable costs falling and output rising, the downward pressure on market clearing is likely to continue. It that the pressures on the market clearing will continue [or the decisions about rcorin\\! aging nuclear reactors will be made. C, CONCLUSION Nuclear economics have been marginaJ at best. The first cohort of cummercial reactors was much more costly than the available alternatives, but those reactors were forced online by a regulatory system that did not have a market to look to, or carc to do so even if one existed. It can be argued that the locomotive that pulled half the nation toward restructuring and much greater reliance on market 38 signals was the reaction against the excessive costs of nuclear advocates of restructuring loudly declared restructuring nuclear fiascoss lronicall)', it appears that an unintended consequence of the shift toward markets will be to force the early retirement of the very reactors that a market ne,'er the first place. While half the country does not rely on markets to set the price of electricity, the prcscl1cc of markets across the counll-y sends strong signals to regulators that keeping aging reactors online, especially if need repairs or retrofits, does not make economic sense. 'rhus, although the outcome is ironic in the long sweep of nuelenr history in the U.s. it is perfectly consistent,vitll dlC fundamental economics of nuclear power throughout that history. While the purpose of d,c \\'(!all Street analysis is to advise and caution investors about utilities that own the fleet of at-risk reactors, my purpose is to inform r,'rnol""rs about and prepare them for the likelihood of early retirements. the economic causes of early retirements, the policy makers will be better to make economically rational responses to those retirements (or the threat Economic has slammed the door on nuclear power.

In the Ilcar,term old reactors are uneconomic because lower cost alternatives have their cash margins to the point where no cover the cost of nuclear
[n the mid-term, things get worse because the older reactors get, the less viable they become.
In the term new reactors are uneconomic because there are alternatives that are less costly and less risk The lesson for policy makers in the economics of old reactors is clear and it reinforces the lesson of the past decade in the economics of building new reactors.

Nuclear reactors arc flot competitive. They have never been competitive at the beginning of their life whell dle build/cancel decision made, and they are not competitive at the cnd their life cycles, when the repair/retire decision is made. are not competitive because the U.S. has the technical ahilit)' and a rich, diverse n Severin ilorenstein B\\lS!lllCll, "E!CClridty Restrw.:turing' DerrguhltlOo Or Re,ccI!'Jlallonl."

47. Other states-those had nf}t nudear power and bad been cautious signing contHers..,mder PURr,\\-~retajiled low prices. ThaI (OHUasl probably the driving forct'

,e'tru,;elu"n. movement in the United Stal;.'s. >!! James "Nuclear Fullies," hlrbH, February 1 t, 1985, fhe terrn "ua:>co" 39

resource base to meet the need for electricity with lower cost, less risky alternatives. Policy efforts to resist fundamental economic reality of nuclear power will be cosdy, ineffective and counterproductive. 40

Guzman, Richard From: Jessica Azulay <jessica@allianceforagreeneconomy.org> Sent: Monday, July 22, 2013 5;28 PM To: Guzman, Richard

Subject:

G20130211 - supplementary information Attachments: 2206JitzPatrick-Pilgrim-VYJ -22.pdf; entergy _2Q2013 _earnings.pdf; theadvocate_entergy_workforce.pdf; vtdigger_vy_workforce.pdf; 071713 VLS Cooper at risk reactor report FINAL1.pdf Categories: Action

MrGuzman, Please find attached communication and documents regarding the 2.206 petition G20130211.

Thank you, Jessica Azulay Jessica Azulay Staff Organizer Alliance for a Green Economy 315.480.1515 jessica@allianceforagreeneconomy.org 1}}

v t e Letter Sequence Request
TAC:MF1092, (Open)
Initiation Request, Request, Request, Request, Request, Request, Request, Request, Request, Request Acceptance... Administration Meeting, Meeting Questions Answers Results Approval... Other: JAFP-13-0024, Entergy’S Overall Integrated Plan in Response to March 12, 2012 Commission Order Modifying Licenses with Regard to Reliable Hardened Containment Vents (Order Number EA-12-050), ML13154A313, ML13154A331, ML13357A024
MONTHYEAR2013-06-28 [Table View]

ML13205A251

Text

Dear Mr. Guzman,

SUMMARY

SUMMARY

Subject:

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