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OPPD Board Shutters Fort Calhoun Nuclear Plant, Freezes Rates for Five Years

June 20, 2016 By Cheryl Kaften

In Nebraska, the Omaha Public Power District (OPPD) Board of Directors voted at its meeting on June 16 to pass Resolution No. 6122, approving a plan to cease nuclear operations and decommission the expensive-to-maintain Fort Calhoun nuclear power plant by year-end 2016.

Due to the decision, first discussed in May, general rates for about OPPD customers are not expected to rise for at least five years. The cost of retiring the plant will be about $1.2 billion, but OPPD already had $388 million in funds available for the initiative. The board anticipates adding to that fund annually, so that remaining costs can be covered without a rate increase.

This was a difficult vote and one we did not take lightly,” OPPD Board Chair Mick Mines said, in a statement released by the directors.

Mines added, “The industry is changing and it is imperative that we make strategic decisions to better position the district in the future for all our 365,000 customer-owners.”

According to extensive modeling conducted by a third party, Pace Global, ceasing operations at Fort Calhoun Station (FCS) and rebalancing the generation portfolio will save the district between $735 million and $994 million over the next 20 years. 

“This was a difficult vote and one we did not take lightly,” Mines said. “The industry is changing and it is imperative that we make strategic decisions to better position the district in the future for all our 365,000 customer-owners.”

Factors Considered

Market conditions were identified as the factor that drove the decision by the board. Historically low natural gas prices are a contributing factor; they reduce OPPD’s cost to generate electricity using natural gas. In addition, consumers are using less energy.

The final version of the Environmental Protection Agency’s Clean Power Plan  represented yet another factor.The does not give carbon-free generation credit for existing nuclear plants.

The board also looked at economies of scale – noting that Fort Calhoun Station  is the smallest rated commercial unit in North America, based on accredited capability. Larger and multi-unit nuclear plants can spread costs over high levels of production.

Slow load growth and increasing regulatory and operational costs have led to the recent early retirement of several other U.S. nuclear generating stations.

OPPD CEO Tim Burke added, “As tough as this decision is, we cannot afford to ignore the changes happening around us. We must look to the future. We will move forward through the decommissioning process in a responsible and thoughtful manner.

“The decommissioning process will take several years and you have our commitment that the safety of the community and our employees is, and will always be, our top priority,” Burke stated.

Safety is Paramount

During the decommissioning process, the Nuclear Regulatory Commission (NRC) will continue to regulate the plant and ensure safety onsite.

Once the reactor is powered down, the focus will be on fuel handling and storage. Health and environmental risks during this process are no greater than when the plant is offline for a routine refueling outage, the OPPD Board of Directors said.

OPPD will work with station employees during the transition process. “We will make every effort to absorb as many employees as possible into other areas of OPPD, based on qualifications and open positions,” Burke said. “We will retrain employees where we have opportunities for success.”

The district has also enlisted the Nebraska Department of Labor, the Greater Omaha Chamber of Commerce, and other agencies in the re-employment process.

Approximately 150 FCS employees live in Washington County. OPPD is aware of the impact the plant closure may have on nearby communities. The district is committed to remaining a good energy partner and neighbor.

The Fort Calhoun Station decision is one portion of the district’s larger resource planning process. It builds upon the success of the 2014 resource generation plan that led to a bold reform of OPPD’s energy portfolio.

The district will continue to look at resource options, including the possibility of constructing or purchasing additional generation of many types (natural gas, wind, solar) and increasing demand side options as necessary.

The  Fort Calhoun plant was first commissioned in August 1973, and, when fully operational, accounted for 25 percent of OPPD’s net generation.

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