ML20071H363
| ML20071H363 | |
| Person / Time | |
|---|---|
| Site: | Indian Point  |
| Issue date: | 05/23/1983 |
| From: | Corren D GREATER NEW YORK COUNCIL ON ENERGY |
| To: | |
| References | |
| ISSUANCES-SP, NUDOCS 8305250223 | |
| Download: ML20071H363 (12) | |
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s UNITED STATES OF AMERICA 9
NUCLEAR REGULATORY'COMISSI Mrp tn
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BEFORE THE ATOMIC SAFETY AND LICENSIN ARD; 4
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7 In the Matter of
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i CONSOLIDATED EDISON COMPANY OF NEW YORK
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Docket Nos. 50-247 SP (Indian Point' Unit 2)
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50-286 SP H
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POWER AUTHORITY OF-THE STATE OF NEW YORK-
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May 23, 1983 (Indian Point Unit 3)
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SUBMISSION BY GREATER NEW YORK COUNCIL ON ENERGY-TO THE UNITED STATES NUCLEAR REGULATORY COMMISSION REGARDING NRC ORDER OF MAY 5, 1983 AND REQUEST TO
.MAKE ORAL PRESENTATION TO THE COMMISSION ON MAY 26 The Greater New York Council on Energy appreciates this opportunity to~
address the Nuclear Regulatory Commission on the matter of its 5/5/83 order regarding the possible closing of the Indian Point plants, and respectfully.
requests the opportunity to make.an oral presentation in this regard on May 26, 1983. GNYCE is a party-to the current ASLB hearing on Indian Point and
'is -lead intervenor on Commission Question 6 with. regard to the economic impact-Cof:a shutdwon of the Indian Point plants.
It has been the clear position of GNYCE, from the start, that the result-of the ASLB hearings, or any decision regarding the continued operation of. the Indian Point plants, should be made primarily'on the. basis of plant. safety and emergency planning, --while economics should be investigated so that regulators-1
. and' government officials would know all'of the ramifications of a proposed
- actioni s
- As 'a practical matter, Lit was clear f rom the start -that economics should.
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play: a role in decisions' regarding Indian. Point's continued operations, and 8305250223 830523
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GNYCE ' appreciated the Commission's making it explicit in Question-6 of its
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- -January 8, ;1981 order establishing the -Indian Point ASLB proceeding.
As eventually ' adopted by the] ASLB, ourl contention (6.3)1 stated:
- Considering the'savingsf n operating : expense which would result.
i from: shutting down Indian Point Units 2 and 3,.and allo. wing for
. the wayanin,which co-generation'and conservation'can mitigate the costs of replacement power,.the net. costs of shutdown are.
small; in ' fact,.they are ' smaller than previous studies by UCS,
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GAO,;or -Rand suggest', and are entirely acceptable.
_ Studies done by the -Rand C rporation and the General Accounting Office generally reinforced the " conventional wisdom" that closing the Indian Point n
plants would be. economically catastrophic. While_ given much weight by the media, these studies have been thoroughly. criticized and were not submitted as l-
_ } testimony by any party' to the Indian Point hearings. '
. GNYCE sought to add testimony ~ to the record which would.be on a signifi-e cantly higher level of rigor and sophistication.
It commissioned a study by
- Energy Systems Research Group, Inc. - (ESRG)? of Boston, Massachusetts, a widely.;
1 respected energy economics analysis firm which has performed similar work for;
- various state and municipal governments, the Federal Depart
- aent of Energy, and
. the Argonne, Brookhaven, and Los Alamos National Laboratories.'
The consideration of cost impacts in the ESRG study is limited to those
- which have a' direct economic effect upon_ratepayers.- These direct economic
-impa' cts do-notLincludeisuch consequences of nuclear plant retirement as, for;
- example, health-and saf'ety trade-offs. Indeed, it is important.to acknowledge..
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'that theitwo sides of'the~ ledger --' nuclear risk versus' nuclear substitution s
7 A economics --~cannot atithis time be castsinto;a common measure and. compared with-
- onet another-in a' noncontroversial social cost / benefit L assessment'. "In defining 4I
- positionsion the plantg bhndown. issue,1 quantitative analysis 1willicontinue to be e-
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supplemented [by[subjectiUeiperceptions and norma'tive jugdments'on such concerns 1.
as the likelihood and'impac,;ttof-nuclearjaccidents,"long-term radioact'ive waste
,' ? disposal l problems, and. nuclear; fuel' security breaches.
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It is possible, however, to systematically evaluate some of the direct cost reparcussions of early nuclear plant retirement.
Assump-tions, methods,.and planning scenarios for such cost evaluations can ha clearly and consistently treated and documented.
Below, we present
-- and app 2y to the case of the Indian Point plants -- a systematic framework for computing the major quantifiable cost effects that would lw;;i s
ba felt by ratepayers as a result of a decision to shut down a nuclear power plant.
This study is intended to offer useful information to dn~ cision-making bodies and to the general public as it deliberates on the issue of any direct cost penalties they are willing to bear in order to avoid nuclear risk.
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- The Indian Point generating station is located some thirty miles north of'New York City.
At this writing, theqe are two operating units, 2 and 3.
Unit 2 is operated by the Consolidated Edison Company of New York (Con Ed), add unit 3 is operated by the Power Authority of the State of New York (PASNY).
Unit 2 is rated at 864 megawatts (thousand kilo-watts, or MW); unit 3, at 965 MW.
Study Approachi InI' his study ESRG has had two principal obj ectives.
First, it hast t
dsveloped a flexible computer-based cost assessment system for estimating the direct impacts of a nuclear plant closing upod ratepayers.
- Second, i
it has applied chis assessment system to the case of a shutdown of Indian Point unic 2 (IP-2) and Indian Point unit 3 (IP-3) after 1982.
The cost.assussment system is designed to simulate the increments in r'atepayer costs -- or in utility finance parlance, the increased "requir-ed revenues" -- over.a planning time frame.
Tha streams of required revenues are disaggregated into the major categories of costs that would Ly(
be affected by a nuclear plant closing.
These include generation of p
replacement power; the recovery of, and return on, invested capital; nuc-1; 1 ear fuel costs; nuclear operations and maintenance; plant decommission-ing and radioactive waste disposal; and expenditures on power plant mod-ifications.
N There is considerable uncertainty with respect to the future behavior of the variables that. influence future costs.
Cond%quently, there is no y' v
' substitute for developing scenarios comprised of clusters of variable i
ass 6nptions to establish a range of plausible effects.
Important vari-cbles included in the scenario analyses are: (1) the composition ~,of make-i up generation;.'(2) plant performance characteristics; (3) nuclear fuel i-and op'eration and maintenance (O&M) escalation rates; (4) electric ener-
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gy conservation levels; and (5) decommissioning and waste disposal costs.
Once the scenarios were developed, the Cost Assessment of Nuclear Sub-stitution (CANS) 'Model was run.
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The "ratepayers" with respect to whom this assessment was conducted ere th'ese located within the service area of the Consolidated Edison s
Company of New York.- These include, first, the retail customers of Con Ed itself, and'second, the downstate customers of PASNY, such as the Matropolitan Transportation Authority, the Triborough Bridge Authority, s
ha New3 ork Cit,y Housing Authority, and other public agencies.
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Major Findings Three "early retirement" scenarios for the fifteen-year period 1983-1997 were developed and employed in this study.
These are the High Im-pact scenario, the Low. Impact scenario, and the Mid-Range scenario.
The High and Low Impact scenarios are comprised of the analysis toward higher or lower cost effects from closing the units..
As a group,, the assumptions in either of these scenarios would therefore occur only.if a set of con-ditions, each of which may individually be considered improbabl.e, should prevail.
Thus, the High Impact scenario assumes no deterioration in plant performance from aging affects, no benefits from reductions in spent fuel end decommissioning costs, no readjustment of import power availability or nystem fuel mix in the absence of the plants, rapidly escalating make-up fuel costs, and so on.
The Low Impact scenario is, by contrast, consist-ently pessbnistic on nuclear plant performance and optimistic on make-up power economics.
Each extreme may be considered unlikely.
Together they place boundaries on plausible future conditions.
The Mid-Range results are the best estimates of the direct cost effects of early retirement of IP-2 and IP-3.
The results of the analysis for each of the three early retirement scenarios are summarized in Table 1.
The results for each scenario are presented in terms of total additional revenues requized from ratepayers during the period 1983-1997.
The results are also expressed as a percent-age increase or decrease from the revenues that would be required assuming continued plant operation during the period.
TABLE 1 REQUIRED REVENUE IMPACT OF INDIAN POINT RETIREMENTS:
SUMMARY
RESULTS FOR NEW YORK RATEPAYERS*, 1983-1997 Cumulative Total Average Percentage (Millions of 1981 Change in Discounted Scenario Discounted $)
Revenue Requirements
- 1. High Impact
$3,656 9.2
- 2. Mid-Range 746 1.9
- 3. Low Impact
-1,337
-3.5 The cumulative effect,over the 1983-1997 period, of closing the plants in 1983, is about $746 million (discounted 1981 dollars) or, on a percent-age basis, approximathly two percent (see Figure 1).
The annual impacts are relatively higher in the early years and then lessen substantially over time, as shown in Figure 2.
Make-up generation costs and nuclear costs are compared in Figure 3 for the most likely mid-range case.
This chart clearly shows the net savings from nuclear retirement which occur in later years..
Figure 4'shows the history and future scenarios used for the capacity fcetors of units 2 and 3.
This most important parameter is a measure of hsw much power the nuclear plants are actually able to produce.
Figures 5 and 6 show breakdowns of the generation mix for the years 1983, 1990, and 1997, with and without Indian Point.
Relative to the Mid-Range average cumulative impact of 1.9 percent, four sensitivity tests were' performed to investigate the responsiveness of these results to changes in Key varlaoles, rirst, increasing the length of the time period for analysis (from a final year of 1997 to one of 2000) dscreases average impacts to 1.2 percent.
Second, delaying the times of retirement from 1983 to 1985 decreases averages impacts 0.8 percent.
Third, increasing the assumed discount rate (from 12 to 14 percent) in-creases the impacts to 2.0 percent.
Finally, assuming that caplacity fac-tors: do not deteriorate over time increases the net impacts to 3.9 percent.
i Since the 1982 completion of the study, however, oil prices have fal-t len and not risen as we had conservatively projected.
In fact, in the study we find that by April, 1983, ESRG had overpredicted oil prices by about 17 percent for con Ed.
If only this change were made for 1983 in the oil price assumptions (leaving the price escalation assumptions as they were),
the rate impact of early retirement in the Mid-Range case would be reduced from about 2 percent over the next 15 years to about 0.2 percent.
Thus we see that this single event has tended to almost completely eliminate any average 15-year impact on ratepayers of closing the Indian Point un'its now.
This economic result, which is quite contrary to utility claims, is ex-t tremely important for the NRC, the State,'and the public to take into ac-count when deciding on the closing of the Indian Point plants.
GNYCE believes the results of the ESRG study strongly support the validity of our original contention that the economic impact of closing Indian Point is most likely to be small and manageable.
Furthermore, we find ehat the record in the ASLB hearing, taking into account testimony by the Licensees, the NRC Staff and the Members of the New York City Council, each weighted according to its defensibility under cross-examination, also supports a finding that the economics are manageable. The results of the various testimony centers in the area of a $3 to $4 billion (discounted) dollar impact through the end of the century, roughly equivalent to a 5% to 10% increase in required electric revenue for the region. The NRC Staff conclusion, in particular, was $4 billion, and the Licensees' witnesses, when held to similar more reasonable assumptions L
regarding nuclear capacity factors, operating and maintenance costs, future oil i
l costs, and electric demand growth, yielded similar results.
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While GNYCE believes that a consensual conclusion of $3 to $4 billion exaggerates the costs of a ' shutdown, even this result demonstrates the economic feasibility rf closing the plants if safety imperatives so require.
The economic impact of closing the Indian Point plants cannot be construed as a
" compelling reason" for continued operation while emergency planning and
- preparedness requirements are not-satisfied.
Respectfully submitted, W
v Dean Corren Greater New York Council on Energy New York University 26 Stuyvesant Street New York, New York 10003 I
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FIG.3 INDIAN POINT 2&3 RETIREMENT MID-RANGE IMPACT-
$ Millions (1981)
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Make-up Generation Total Nuclear Cost s
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INDIAN POINT 2 CAPACITY FACTOR SCENARIOS
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FACTOR Case (PERCENT) 40-Mid-Rang'e Case 20-Low Impact 0
Case 1975 1980 1985 1990 1995 2000 o
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60 CAPACITY FACTOR SCENARIOS CAPACITY High Impact FACTOR Case (PERCENT) 40-Mid-Range Case 20 Low Impact 0
Case 1975 1980 1982 1990 1995 2000' YEAR i
Regression Prediction. 1976-1990 Actual Experience
d FIG.5 SOURCES OF GENERATION FOR CON EDISON SYSTEM INCLUDING INDIAN POINT 40
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NUCLEAR 22.7%
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7.6%
30 DOMESTIC 6.2%
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O' PURCHASES
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23.4%
CANADIAN 16.4%
23.4%
PURCHASES BILLION 20 N
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COAL 11.8%
N 22.5%c i
22.6%b 10 OIL 41%
30.9%
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O 1983 1990 1997 YEAR Includes 1.9% from PASNY's Fitzpatrick nuclear plant.
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- b. Includes 0.9% from the Peekskill solid waste plant.
- c. Includes 0.9% from the Peekskill solid waste plant.
- d. Does not include any natural gas for utility boiler fuel.
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~ FIG.6 SOURCES OF GENERATION FOR COH EDISON SYSTEM WITHOUT INDIAN POINT 40 N
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DOESTIC 12.5%"
10.2%
PURCHASES 10.6%
i CANADIAN 30 19%
PURCHASES 28,7%
27.9%
COAL 12.4%
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BILLION i
20 KWH 27.1%
33.2%
OIL 56.1%
j 33.6%
28.7%
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Includes 1.'9% from PASNY's Fitzpatrick nuclear plant.
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b.
Includes 0.9% from the Peekskill solid waste plant.
- c. Includes 0.9% from the Peekskill solid waste plant.
- d. Does not include any natural gas for utility boiler fuel.
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