NRRI 15-06 NARUC-NRRI Nuclear Retention

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In recent years, nuclear generation in the United States has encountered numerous challenges in the face of economic, operational, and policy pressures. In 2014, electricity generated from nuclear power accounted for nearly one-fifth of total net generation in the United States. In that year, nuclear plants generated electricity in 31 states, providing service to consumers within and across their borders. While there are concerns about the management of spent nuclear fuel, nuclear power does provide carbon-free baseload generation, is a reliable and dispatchable resource, contributes to fuel diversity, and is an economic stimulus to local areas. Because the operating cost of a nuclear plant is only minimally affected by the cost of fuel, it is, for the most part, a resource that is more immune to fuel price volatility than other energy resources. However, the nuclear industry now faces economic challenges as it attempts to compete with other energy generation technologies, especially low-cost natural gas-fired generation. Nuclear plants in several states have struggled in today’s energy marketplace and regulatory environment, causing closures, abandonment of planned construction, and concerns about future viability. State legislators and regulators have begun to examine the future of existing nuclear power plants within their respective jurisdictions, and are considering policies that focus on either the continued operation or closure of such plants.

This report identifies and summarizes various issues facing the nuclear industry about which states are concerned. Several case studies are examined to see if there are similarities in the pressures that cause cancelled uprates or early closures at these generating stations, and conclude that economic competitiveness appears to be a central factor, but that operational and policy factors may have also had a hand. The report suggests conceptual options for states to consider when exploring their options for retaining their existing nuclear plants in the face of these pressures, including sample practices for states to examine, should they choose to act on the retention of nuclear generating assets within their individual borders, including tax incentives, integrated or other resource planning efforts, resource definitions in state portfolios, dispatchable capacity products, carbon pricing, and/or legislative and regulatory actions that signal support to the nuclear power generating sector.