This blog is designed to highlight the diversity of views and news stories on urban energy topics that appear daily in the media. They are intended to provoke discussions on how cultural, geographic, political, and institutional influences shape the way energy markets operate and energy policies are made in cities around the world.
Friday, September 07, 2012
Life Without Indian Point, Redux
By MATTHEW L. WALD
The consequences of running the Indian Point nuclear reactors or shutting them down run from easy-to-spot to hard-to-calculate.
Is a serious accident plausible? Would retiring the reactors open the way for alternative sources of electricity that pose a lower safety risk? Or simply ensure an economic blow?
Two Westchester County business groups have sponsored a study, released on Friday, that takes the latter view — a counterpoint a 2011 study by opponentsthat argued that there was nothing indispensable about the reactors.
The new report, by Howard J. Axelrod, a longtime economics consultant, predicts payroll and tax payment losses (which seem pretty certain) and takes a stab at predicting electricity rate increases and a general decline in economic activity. The study was sponsored by the Business Council of Westchester (of which Entergy, Indian Point’s owner, is a member), and the Westchester Business Alliance
The report updates a version commissioned by Westchester business interests four years ago.
Some of the numbers are straightforward. Indian Point has 1,200 employees and uses another 200 contractors. The employee payroll is $130 million, and the plant pays $75 million in property taxes plus additional taxes to New York State.
The study quotes an earlier estimate that the plant contributes $363 million to local purchases. (Some fraction of the payroll and property taxes would continue during the decommissioning of the plant’s reactors.) A high-efficiency natural gas plant of the same capacity might employ only 20 workers, the study said.
It’s a little harder to estimate the effect on electric rates.
New York State’s electricity system relies on a complicated auction method whereby utilities like Con Edison say how much electricity they think they will need and generating companies say what price they need to produce electricity.
A computer tallies up the demand and ranks the suppliers by price, from lowest to highest. It then decides which generators will run, beginning with the lowest-priced and continuing until demand is met, with the last megawatt-hour being the priciest. Yet all generators get paid the price demanded by the last supplier.
Indian Point is a relatively low-cost supplier. If it disappears, the computer will have to reach higher into the stack of generation offers to match supply to demand, and that last megawatt-hour will be more expensive. So all generators will receive more income, and all consumers will pay more.
Mr. Axelrod’s study puts Indian Point’s energy costs at $44 to $53 per megawatt-hour. He says that the least costly alternative would be a plant burning natural gas at high efficiency, which would cost $76 to $109 per megawatt-hour. He estimates an increase in electricity rates of 6.3 percent, or $374 million a year.
Of the two functioning Indian Point reactors (Unit 1 closed down in 1974), Unit 2’s license expires in 2013, and Unit 3’s in 2015. The Nuclear Regulatory Commission has yet to turn down a request for a license extension, although it wants some steps to be taken on safety at the plant.
Gov. Andrew Cuomo wants the plant retired, and while the state has no jurisdiction over safety, it is trying to deny a vital water-use permit. Under the commission’s rules, the plant’s existing licenses are valid beyond their expiration dates if an application for a renewal is still under consideration.
The debate over the effects of shutting down the plant will surely drag on.