Entergy ponders nuclear future

Entergy ponders nuclear future

When the magnitude 9 earthquake and resulting tsunami devastated much of northern Japan on March 11, it was a human catastrophe of almost unimaginable proportion. But it was the damage at the Fukushima Daiichi nuclear power plant that potentially had the greatest implications for the United States and power companies including Entergy that generate significant electricity with nuclear power.

Although the situation in Japan has not yet been stabilized, the Nuclear Regulatory Commission said there is no evidence that overheating during the last month has resulted in any melting of the reactor vessels or their containment structures.

The New York Times reported April 5 that federal officials believe the plant is unlikely to suffer a complete meltdown, in which uranium fuel gets so hot that it melts through the bottom of the reactor and containment vessels, spewing high-level radiation into the plant’s underlying foundation. If that assessment is correct, then significant additional releases of radioactivity into the environment will be limited.

This is good news for northern Japan – and other regions around the globe where people live near nuclear plants that produce the power they consume. The probability that a particular reactor core at a U.S. nuclear power plant will be damaged as a result of a blackout ranges from 6.5 in 100,000 to less than one in a million, according to a 2003 analysis by the Nuclear Regulatory Commission.

“Compared to many more mundane technologies, such as cars and airplanes, nuclear power facilities are quite safe. For the past half century, we have assumed they are safe enough,” said Larry M. Elkin, president of Palisades Hudson Financial Group and a former editor and reporter for the Associated Press.

“The disaster at Japan’s Fukushima Daiichi nuclear complex demands that we rethink what ‘safe enough’ means,” he asserted in a piece titled “Japan Shows Us It Can Happen Here.”

Elkin said American scientists believe U.S. power plants have almost no chance of experiencing the kind of earthquake and tsunami damage that the Japanese plants sustained, but insisted, “The question we need to consider is not whether similar earthquakes and tsunamis can happen here; it is whether a plant could, for any combination of reasons, simultaneously suffer a failure of its outside electrical supply and its onsite backups.”

For residents of Southeast Texas, the threat seems more remote. The closest nuclear plant to the area is 160 miles to the west at the South Texas Project, outside of Bay City in Matagorda County southwest of Houston.

More relevant to our area is the River Bend Station nuclear power plant in Louisiana, 186 miles to the east, just north of Baton Rouge. It is owned by Entergy – and is a major source of electricity in the Golden Triangle and beyond.

“Roughly 20 percent of the power Entergy supplies to Texas comes from River Bend Station in St. Francisville, La.,” said Mike Bowling, communications manager for Entergy Nuclear.

Entergy is a utility giant, a Fortune 500 company with annual revenues of more than $10 billion in 2009 and about 15,000 employees.

Entergy is also the second-largest nuclear generator of electricity in the U.S. after Exelon Corporation, operating a total of 12 nuclear units at 10 plants including River Bend, Waterford near New Orleans and Grand Gulf near Port Gibson, Miss.

Bowling sought to allay fears aroused by nonstop coverage of the Fukushima Daiichi crisis on cable news outlets, where the name of Entergy was repeatedly invoked as a prominent American nuclear operator.

“Nuclear plants in the U.S. are designed and built to withstand threats specific to their location, including earthquakes, floods and other natural disasters,” said Bowling.“Federal regulators will grant a license only if the plant is built above and beyond any credible natural or man-made threat,” he added. “The NRC requires all safety-significant structures, systems and components in nuclear plants to be able to withstand the most severe natural phenomena historically reported for each plant’s surrounding area, plus a significant margin for error.”

It was not damage from the quake or tsunami that threatened to destroy the Daiichi plant but a loss of power that shut down the cooling system.Entergy Nuclear believes they have made such an occurrence in their plants highly unlikely.

“Systems are designed with multiple contingent backup systems to provide greater safety margins in our ability to keep cooling water in the reactor and spent fuel pool,” said Bowling.

“Various emergency diesel generators at Entergy plants are located within hardened structures and at elevations designed to protect the emergency diesel generators from the sites’ design-basis environmental disasters, including hurricanes, tornadoes, earthquakes and flooding.”

These redundancies give the utility a high degree of confidence.

“A nuclear plant can maintain a shutdown condition isolated from the bulk power transmission system indefinitely,” asserted Bowling, who noted, “During Katrina, Entergy’s Waterford 3 plant shut down safely in anticipation of the hurricane’s landfall. Although the electric grid was down for five days, plant systems ran safely on diesel generators stored in reinforced concrete bunkers until power was restored.”

One irony on the American nuclear landscape is that many nuclear plants are not operated today by the company that originally constructed them.

“River Bend Station, which now supplies power to Texas, originally began operation in 1986 and was owned by Gulf States Utilities Inc. Entergy announced plans to acquire Gulf States Utilities in 1992 and completed the merger in 1993,” said Bowling.

What the Japanese crisis means for the nuclear industry in this country is less clear. A long-planned addition of two nuclear reactors at the South Texas Project has been indefinitely put on hold, with partners CPS Energy and NRG reportedly having a difficult time finding new investors and selling the 2,700 megawatts the new units would produce, in part because of the reduced demand for power and the persistent low price of natural gas.

Suggestions that this failure to attract new investors means Wall Street wants nothing to do with nuclear plants were rejected by Bowling.

“I wouldn’t say that this is a fair characterization,” he said. “There is no question that the United States hasn’t built new reactors in decades, and it will take new plants being built on time and on budget to assure Wall Street that new nuclear build is a good plan financially.”

Elkin also cautioned against a rush to judgment on these financial questions. In an interview with the Business Journal, he said, “I don’t know that anybody’s nuclear business is booming – and certainly what has gone on in Japan in the last month hasn’t helped – but it’s a little early to say what the long-term fallout is going to be in the industry.”

The bottom line for the financial markets, of course, is money.

“As long as there is a market for these kind of securities, I don’t think it’s a fair statement to say that Wall Street isn’t interested in the industry. General Electric is a major player in nuclear power, and they certainly have a following on Wall Street,” he said.

The fact is this nuclear construction moratorium was already ending before the recent events in Japan.

“Note that plants are being built overseas at rapid rates,” said Bowling. “Here in the United States, loan guarantees – not loans or grants, but the ability to receive limited loans with the backing of the federal government – are helping to jump start the build process. Companies like Southern have already broken ground for new reactor preparation, in Southern’s case, at the Vogtle site in Georgia.”

So what is Entergy’s corporate strategy going forward in terms of the kind of plants the company will construct?

“Entergy has made no commitment to build new nuclear plants, but the company does want to keep options open for meeting future energy needs,” said Bowling, who indicated any new nuclear plants are likely to be built on existing sites.

“Entergy has construction and operating license applications for both River Bend Station in Louisiana and Grand Gulf in Mississippi on file with federal regulators, but work on both applications was temporarily suspended in 2009 after Entergy was unable to reach a business agreement for deploying a new reactor with potential vendor GE-Hitachi,” he said.

But Elkin, the AP editor turned financial advisor, offered a darker assessment of the American nuclear future.

“What happened in Japan proved that safety measures there were unacceptably weak. Our plants run similar risks, and we ought to acknowledge that our safety measures are equally unacceptable. A 6.5 in 100,000 risk is low, but when it comes to radioactive materials, it is too high, especially given the margin of error in our own ability to estimate such risks,” he said.

Bowling takes sharp exception to such declarations.

“Entergy knows that we can operate each of our plants safely, regardless of its location,” he said. “We believe very strongly in nuclear power and in the health and safety of the public near them. Entergy would not operate units that it did not believe were safe. The nuclear power industry will learn from this event and will redesign our facilities as needed to make them safer in the future.”


Originally Published in the April 2011 issue of The Beaumont Business Journal