1. Future Direction of the Nuclear Industry: Developing a Path Forward
Paul Harden
Sr VP & Chief Operating Officer
FirstEnergy Nuclear Operating Company
April 2018
Spring 2018 LLW Forum Meeting
Meeting
Location • Date

2. The Markets for Electricity
Spring 2018 LLW Forum Meeting
April 17, 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
Spring 2018 LLW Forum Meeting
April 17, 2018
Electricity Markets, Fuel Source Diversity and Innovation to Support Grid Reliability
Case Western Reserve University • September 2, 2014

4. Restructuring Map
Spring 2018 LLW Forum Meeting
April 17, 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
Spring 2018 LLW Forum Meeting
April 17, 2018

6. Available Generating Capacity
Markets forecasts point to continued over supply of generation
*Source: U.S. Energy Information Administration
Spring 2018 LLW Forum Meeting
April 17, 2018

7. Natural Gas Forwards (as of 1/19/18)
Historical forwards always showed upward price expectations but are now relatively flat
Spring 2018 LLW Forum Meeting
April 17, 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
Spring 2018 LLW Forum Meeting
April 17, 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
Spring 2018 LLW Forum Meeting
April 17, 2018
Meeting Name
Location • Date

10. Market Effects on Nuclear Operators
Spring 2018 LLW Forum Meeting
April 17, 2018

11. Domestic Nuclear’s Greatest Challenge
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
Imperative to remain focused on improving performance
In the past 5 years industry average performance has improved
O&M ↓ >6%, Capex ↓>38%, Fuel ↓>10%, Capacity Factor ↑>6%
During same period competitive market prices have declined more than 30%
Spring 2018 LLW Forum Meeting
April 17, 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
Spring 2018 LLW Forum Meeting
April 17, 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
Spring 2018 LLW Forum Meeting
April 17, 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**
Oyster Creek
New Jersey (PJM)
625
October 2018
Cost to comply water discharge rules
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)
May 2021
Low energy and capacity prices.
On March 31, 2018 FirstEnergy Solutions, all of its subsidiaries, and FENOC voluntarily filed petitions under Chapter 11 of the Federal Bankruptcy Code.
Davis-Besse
900
2037
May 2020
Beaver Valley
Pennsylvania (PJM)
1,800
2036 / 2047
May/Oct 2021
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
Spring 2018 LLW Forum Meeting
April 17, 2018
Meeting Name
Location • Date

15. Unfavorable Outlook for Nuclear Power in U.S.
*Source: U.S. Energy Information Administration
Spring 2018 LLW Forum Meeting
April 17, 2018

16. Planning for Future Waste Management Needs
Plant closure announcements = unpredictability
Closure decision can change if financial conditions change
Many factors impact timing of decommissioning after closure
Regulated utility versus non-regulated ownership
Nuclear Decommissioning Trust Fund value
State permitting and other requirements
Number of decommissioning projects underway in parallel
Approach to spent fuel management will typically be similar
Move all spent fuel to ISFSI as expeditiously as possible following shutdown (taking 3 to 7 years)
Spring 2018 LLW Forum Meeting
April 17, 2018

17. What, if anything, will alter the course?
Federal Policy?
Uncertain & Complex
State Policy?
Yes - so far in
New York
Illinois
Connecticut
But waiting to see in
Ohio
New Jersey
Pennsylvania
Others?
Spring 2018 LLW Forum Meeting
April 17, 2018

18. Questions?
Spring 2018 LLW Forum Meeting
April 17, 2018