1. Challenges Facing Nuclear Operatoring Plants Today
Paul Harden
Sr VP & Chief Operating Officer
FirstEnergy Nuclear Operating Company
January 2018
EnergySolutions 16th Annual Conference & Training Session
Meeting
Location • Date

2. The Markets for Electricity
EnergySolutions 16th Annual Conference & Training Session
January 30, 2018

3. Regional Transmission Organizations (RTOs)
About 60% of U.S. power supply is managed by RTOs
Independent, membership-based, nonprofit organizations
Ensure transmission reliability and optimize supply and demand bids for wholesale energy and capacity markets
Independent Electricity System Operator
Midcontinent ISO
EnergySolutions 16th Annual Conference & Training Session
January 30, 2018
Electricity Markets, Fuel Source Diversity and Innovation to Support Grid Reliability
Case Western Reserve University • September 2, 2014

4. Restructuring Map
EnergySolutions 16th Annual Conference & Training Session
January 30, 2018

5. U.S Electricity Generation Fuel Sources*
In April 2015, natural gas overtook coal as top fuel for electricity generation for the first time ever at U.S. generating stations with 31% gas, 30% coal and 20% nuclear**
*Source: U.S. Energy Information Administration
** Source: New York Times, July 13, 2015, with data from U.S. Dept. of Energy
EnergySolutions 16th Annual Conference & Training Session
January 30, 2018

6. Available Generating Capacity
Markets forecasts point to continued over supply of generation
*Source: U.S. Energy Information Administration
EnergySolutions 16th Annual Conference & Training Session
January 30, 2018

7. Natural Gas Forwards (as of 1/19/18)
Historical forwards always showed upward price expectations but are now relatively flat
EnergySolutions 16th Annual Conference & Training Session
January 30, 2018

8. Market Conditions
Cleared capacity prices have declined from $165/MWd in 2018/2019 to $77/MWd in 2020/2021 planning years
Data: Forward energy prices are the average, AD Hub around-the-clock price forwards as of each date in the periods above
EnergySolutions 16th Annual Conference & Training Session
January 30, 2018
Meeting Name
Location • Date

9. Market Conditions | Forward Energy Prices
The forward trendline suggests that energy prices will remain at currently depressed levels through 2021
EnergySolutions 16th Annual Conference & Training Session
January 30, 2018
Meeting Name
Location • Date

10. Market Effects on Nuclear Operators
EnergySolutions 16th Annual Conference & Training Session
January 30, 2018

11. Nuclear Units Under Stress
Nuclear facing competition from renewables, low-priced natural gas
Natural gas plants or renewables setting the market price for electricity
Renewables can be profitable at negative market prices due to tax subsidies
Flat demand growth for electricity & rising generating capacity
Suppresses electricity market prices
Reactors at risk of premature shutdown despite safe and efficient operations
Nuclear plants in competitive markets face the greatest near term risk exposure
Some nuclear plants facing challenges in regulated markets as well
EnergySolutions 16th Annual Conference & Training Session
January 30, 2018

12. Cash Flow | Illustrative Example
($ per MWh)
1000 MWe Plant
Coal
Nuclear
CC Gas
Revenue per MWh1
$23
$33
$30.2
Fuel 26 7 24
O&M 16 21 3
CapEx 4 5 1
Costs per MWh2
$47
$34
$28
1 Assuming energy and capacity prices of $27/MWh and $77/MWd with industry average capacity factors of 60% for coal, 92% for nuclear & 87% for gas
2 Average cost data from U.S. Energy Information Administration
Even ignoring market impacts from renewables, gas can set an unsustainable price for coal & nuclear
EnergySolutions 16th Annual Conference & Training Session
January 30, 2018
Meeting Name
Location • Date

13. Nuclear Plants Closing in Restructured States
Nuclear plant that has closed / announced closure
Nuclear plant seeking / received assistance
Operational nuclear plant
Restructured state
EnergySolutions 16th Annual Conference & Training Session
January 30, 2018

14. Nuclear Plants Are Closing Prematurely
Location MW
License Expiration
Premature Closing Date
Reason for Closure
Kewaunee
Wisconsin (MISO)
556
2033
2013
PPA ended, low energy and capacity prices
Vermont Yankee
Vermont (ISO-NE)
620
2032
2014
Low energy and capacity prices
Fort Calhoun
Nebraska
478
December 2016
Cheaper to purchase elsewhere
FitzPatrick
New York (NYISO)
838
2034
February 2017*
Ginna
610
2029
March 2017 *
Clinton
Illinois (MISO)
1,098
2026
May 2017**
Quad Cities
Illinois (PJM)
1,880
May 2018**
Palisades
Michigan (MISO)
800
2031
2022
Upon PPA termination; cheaper to purchase elsewhere
Pilgrim
Massachusetts (ISO-NE)
690
May 2019
Indian Point
2,080
2035 (renewal pending)
April 2021
Low energy prices, public opposition
Perry
Ohio (PJM)
1,260
2026 (eligible for license renewal)
TBD
FirstEnergy publicly stated its intention in Nov to be a fully regulated company; all of its competitive generation including the nuclear plants will either be placed in a regulated-like construct, sold or closed
Davis-Besse
900
2037
Beaver Valley
Pennsylvania (PJM)
1,800
2036 / 2047
Three Mile Island 1
803
September 2019
“U.S. Nuclear Plant Closures”, Power Magazine June 25,
Kewaunee, Vermont Yankee, Fort Calhoun, FitzPatrick, Clinton, Pilgrim, Quad Cities, Oyster Creek
“Palisades Nuclear Plant Closing Shocks Many in South Haven Area”, Mlive December 9,
Palisades
“Ginna Nuclear Power Plant Gets a Lifeline”, Power Magazine, February 18,
Ginna
Entergy Press Release, January 9, 2017
* FitzPatrick and Ginna closures were announced, however recent actions by the New York State Public Service Commission will provide additional compensation to the plants allowing for their continued operation
** Clinton and Quad Cities closures were announced, however the Illinois legislature passed SB 2814, providing additional compensation and allowing for their continued operation
EnergySolutions 16th Annual Conference & Training Session
January 30, 2018
Meeting Name
Location • Date

15. What, if anything, will alter the course?
Federal Policy?
Unlikely in near term
State Policy?
Yes, so far in
New York
Illinois
Connecticut
But waiting to see in
Ohio
New Jersey
Others?
EnergySolutions 16th Annual Conference & Training Session
January 30, 2018

16. Thank You! EnergySolutions 16th Annual Conference & Training Session
January 30, 2018