ML19344A117
| ML19344A117 | |
| Person / Time | |
|---|---|
| Site: | Midland |
| Issue date: | 11/05/1976 |
| From: | Feld S NRC COMMISSION (OCM) |
| To: | |
| Shared Package | |
| ML19344A106 | List: |
| References | |
| NUDOCS 8007310619 | |
| Download: ML19344A117 (7) | |
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UNITED STATES OF AMERICA' NUCLEAR REGULATORY COMMISSION 4-BEFORE THE ATOMIC SAFETY AND LICENSING BOARD I
In the Matter of CONSUMERS' POWER COMPANY Docket Nos, 50-329 50-330 (Midland Plant, Units 1. & 2)
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2 NRCTSYAFF' TESTIMONY ~OF'SIDNEYE~.FELDONl~
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COST OF REPLACEMENT POWER RESULTING FROM j
SUSPENSION-4 k
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The staff has determined that when the Midland units come on-line in j
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1981 and?l982, they will have the lowest production costs of any unit,
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with the' exception.of Palisades-Nuclear and hydro capacity,.vithin
- the applicant's system.
It is therefore of some economic concern to-
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. the applicant and.its customers to have Midland available as -scheduled.
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- Clearly, if th'e Midland units are delayed, Consumers Power Company (CP) must seek out alternative power sourges to make up power that woCd have been forthcoming from the Midland units.
Since it is logical to assume '
j that the least cost units will be used to the maximum, independent of
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t whether Midland is on-line or not, all alternative power sources available i-to the applicaht will be'more costly and will require the utility to
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incur incremental costs.
The cost differential between producing the j
energy with Midland vs~. the alternative constitutes the actual cost of l
the replacement power.
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The selection of an-alternative power. source is not something one can readily predict.
Logically, the utility will utilize the least expenrive 1
- alternative available.
However, what is available will depend on the demands existing on the system in 1981 and 1982.
Seasonal patterns, as well as diurnal patterns of demand will affect this choice.
Al s'o, fl exi-bilities in the utilities planned outages and maintenance checks may well alter the final selection.
Depending on these factors, replacement power
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may.be supplied by some combination of base, intermediate, and peaking units on the system, or thru outside purchases, or the creation of additional capacity.
For the sole purpose of our analysis of the cost of replacement power we conservatively _ assume little or no growth on the CP system.
Consequently, the cost estimates developed herein are modest as they assume that the
- applicant will-be'able-to make up the energy deficiency internally thru the' utilization of_ existing capacity.
It is further assumed that either
' coal or oil' fired units will be available to make up the energy differences.
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The cost of; replacement power refers to the cost differential during E that tperiod of time between the presently scheduled availability of:the Midland units and the date of availability that would occur as a result of the proposed ' suspension, the relevant time period is 1981-1982.
In 1981 and 1982,. the. nuclear fuel cost is estimated at G.9 and 7.4-
' mills /KWh in 1981_and 1982 dollars respectively.
These estimates are l
based on infonnation previously presented in testimony at the Wolf Creek-i hearing) _Here, it was assumed that the nuclear fuel cost would escalate
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at 8% thru 1982-and at 5% thereafter.
In this testimony the staff utilized I
a number of sources of information in preparing its nuclear fuel cycle cost estimate. The' estimate considers the various fuel cycle components as_ identified by ERDA. The first step was to evaluate 1974 estimates of i
. AEC and update these costs based upon latest available information.
The h
source of these updates was to contact ERDA experts most closely associated with the various -fuel cycle components together with experts in the private sector, particularly regarding U 03 8 price forecasts.
The results of these efforts are reproduced below as Table.l.
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In 1981 and 1982, the coal fuel cost is estimated at 12.4-and'13'.0 mills /kWh_ respectively and for the same years the oil fuel cost is esti-mated at ~28.0 and.29.4 mills /kWh.
These values are also in 1981 and 1982 dollars.
These coal and oil estimates are derived from average prices-paid for coal and oil' for steam-electric plants in Michfgan in 1975 as quoted i
L in Tab'le 13 of FPC News of March 19, 1976. TheStadhasusedaiep-feUntativeWuivalinIToiilWh oT. electricity of 10,000 BTU's of coal
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or, oil... In addi. tion,1975. prices.were. escalated.at 5% 'per'. annum '(see L
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1 Thus, the average fuel ~ differential between nuclear and coal is approxi-
' mately 5.5 mills /kWh,~and between nuclear and oil, it averages out at y
about 21.5 mills /kWh.
Isame.as SourceLfor Table.l.
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3-These price differentials are then mulitplied by the number of kWh's of nuclear generated electridty for.egone due to the delay.
Assuming a-165% capacity factor, the Midland units would have been capable of
. generating 0.6 billion kWh per month.- Thus, if the energy is n:ade up with coal units, the cost of replacement power would approxima.te 3.3 niillion dollars per nnnth.
If oil is the alternativs, the cost of replacement. power would approximate 13.0 million dollars per month.
Table 2 shows the cost of replacement power per month under different
' capacity factor assumptions and under different alternative fuel assumptions.
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TABLE 1 ESTIMATED NUCLEAR FUEL GENERATION COSTS
('982' DOLLARS)
Cost Component Mills /kWh Mining and Milling ($40/lb of U 0 )
2.33 38 Conversion-to UF -($2.57/lb U) 0.12 i
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' Enrichment ($128.50/kgSWU) 1.84 Fabrication ($171/kg U) 0.66 Shipping and Reprocessing ($249/kg U) 1.07 Pu Credit ($26/g)
(0.66)
Waste Management 0.17 Subtotal f
5.53 Carrying Charge (at-15%)
1.85 Total 7.38 Source:. Supplemental. Testimony of Darrel A. Nash before the Atomic Safety and Licensing Board,' Wolf Creek Generation Station, Unit No.1,
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. COST OF REPLACEMENT POWER PER MONTH CAPACITY FACTORS COST OF REPLACEMENT POWER PER MONTH (in millions of dollars)
Coal vs. Nuclear 55%
2.8_
65%
3.3 75%
3.8 011 vs Nuclear 55%
11.0 65%
13.0 75%
15.0
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-Enclosure 1 Justification for a 5% Per Annum Escalation Rate for the Price of Coal i
Several steps were taken to: arrive at a 5% escalation rate for
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projecting the price of coal. These steps included-A.
A review of the current literature on the subject matter.
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This included an examination of:-
2 (a) th_e National Energy Outlook-1976 prepared by the l.
Federal Energy Administration, (b) A ' Study of Coal Prices prepared by the Executive
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Office of the President, Council on Wage and Price j
Stability, and l
(c) -several other reports _ on fuel price projections pre-f pared by, among others, Arthur D. Little, the Federal Power Comission, and the Environmental Protection Agency.
j B.. Collecting' computerized pricing data on recent coal l
deliveries to every electric utility in' the U.S.
This data was obtained on a computer tape from the FPC.
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C.
Discussions with -knowledgeable indivir!"als in the field
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of fuel prices.
This included discussions with repre-i sentatives of FEA, FPC, Arthur D. Little, and Sobotka and t
h Company.
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In making this recomendation on projected coal prices, it is recognized that by simply escalating the 1975_ price of coal, one ignores, to a degree many of the factors which might influerfce coal prices in the i-
' futt:re. - For example, there are several factors which would tend to lower tha future price of coal.
These factors include, among others, the availability of vast supplies of western coal and the relative ease of strip: mining operations' in the west. On the other hand, there-are forces at work which could substantially 1:. crease the price of coal.
These include the continuing labor difficulties and rising coal miner wages
. coupled with; declining productivity.
In addition, strip mine.r'eclamation
- programs could add significant costs to the price of coal.
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,n JThr staff's approach to. projecting future coal prices would be ' based
. "on the assumption that these factors would tend to cancel one another out and' that the net effect would be that coal prices will increase at the nomina 1' inflation rate of. 5 percent per year.
I Based on-discussions with the parties identified in Item C above, 4
the staff's approach to projecting coal prices may be conservative.
FEA representatives stated that in their opinion, future prices of low-sulfur coal will escalate substantially over existing prices in real terms and that high-sulfur coal sill probably escalate at the normal inflation rate.
An FPC representative indicated that in real terms, coal prices can be expected to increase by 50 percent by the early to mid-1980's.
When this 50 percent real increase.is added to. the 5 percent. inflation rate assumed in the proposed treatment, this yields price increases ranging from 9.6 to.
12.0 percent per year.
5% Escalation for the price of 011 With respect to oil, staff believcs that a 5% escilation rate is very conservative given the continued long-term outlook for a shortfall in supply of this fuel.
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