DOE to fast-track Civil Nuclear Credit bids from the most at-risk reactors

April 21, 2022, 12:00PMNuclear News
The DOE’s guidance for Civil Nuclear Credit Program applicants opens a window for an owner—present or future—to submit a bid for credits that could keep Palisades, in southwest Michigan, operating past its planned May closure date. (Photo: Entergy)

The Department of Energy has announced the steps that would-be applicants must take to access funds from the $6 billion Civil Nuclear Credit (CNC) Program. Guidance published April 19 invites owners or operators of those plants most at risk of near-term closure to apply during the program’s first award cycle. With shutdown planned next month, Entergy’s Palisades plant would top that list (read on for more on Michigan’s efforts to keep the plant operating), but any reactor with publicly announced plans to close by September 30, 2026, that meets other program criteria could be certified for credits. Successful applicants won’t have to wait long for good news: the DOE plans to announce award decisions as soon as 30 days after the May 19 deadline for submitting certification applications together with sealed bids for credits.

Vital assets: “I am pleased to see that the Department of Energy has worked with incredible speed and determination to deploy the Civil Nuclear Credit Program, authorized and funded by the Bipartisan Infrastructure Law. This will allow at-risk reactors to begin submitting bids over the next 30 days,” said Sen. Joe Manchin (D., W.V.), chairman of the Senate Energy and Natural Resources Committee. “This program will keep our reactors operating, preserving American jobs, reducing emissions, and bolstering our energy security. We have taken the reliability and resiliency of our nuclear fleet for granted and it is about time we acted to preserve these vital assets."

The nation’s current fleet of 93 reactors provides 52 percent of the nation’s clean electricity. Twelve nuclear power reactors have been shut down since 2013 due to electricity market pricing and other economic factors.

The shutdowns have not only taken clean power capacity off line. They have also increased emissions in those regions, leading to poorer air quality, and caused the loss of thousands of high-paying jobs and financial contribution to local communities. According to the DOE, “The CNC Program will equitably address these challenges while supporting the president’s clean energy goals to ensure that communities across the country continue to see the benefits of sustainable energy infrastructure.”

Energy secretary Jennifer Granholm said, “We’re using every tool available to get this country powered by clean energy by 2035, and that includes prioritizing our existing nuclear fleet to allow for continued emissions-free electricity generation and economic stability for the communities leading this important work.”

Eligibility: The DOE issued a request for information on the implementation of the CNC Program in February. Several respondents called for the program to prioritize reactors that have already announced plans to cease operation in public filings, and those suggestions were incorporated in the CNC guidance. Qualifying public announcements made before November 15, 2021, and not later withdrawn “may include, but are not limited to, Certifications of Permanent Cessation of Power Operations filed with the NRC, SEC 10-K or 10-Q filings, or filings with state regulators” and can include statements that a reactor will cease operations if “specific and verifiable” market conditions “have occurred or will occur” prior to September 30, 2026.

All applicants, for the first and future award cycles, must demonstrate that a reactor is projected to close for economic reasons and that closure will lead to a rise in air pollutants and carbon emissions; additionally, the Nuclear Regulatory Commission must have reasonable assurance that the reactor will continue operating safely. Future award cycles—including the second cycle, expected in the fourth quarter of 2022—will not be limited to nuclear reactors that have publicly announced their intentions to retire and will be executed over a longer timeline.

Other elements of the CNC guidance suggest that an opportunity has been crafted for interested stakeholders to apply for credits for Palisades, which is expected to have a new owner in June. An “applicant” is defined as “an entity or collection of entities, at least one of which is an owner or operator of an NRC-licensed nuclear reactor that submits a certification application. Multiple owners or operators of one nuclear reactor are permitted to submit a joint certification application as an applicant, but under no circumstances will multiple certification applications for the same nuclear reactor be accepted.”

Furthermore, an owner or operator is defined as “an individual entity that is, or will be during the applicable award period, authorized to possess, use, or operate a reactor unit at the nuclear reactor under an NRC facility license” (emphasis added).

Michigan PSC speaks up: Michigan has four operating nuclear power reactors that generated about 29 percent of the state’s electricity in 2020, according to Energy Information Administration data. Only one of those reactors—Palisades, owned by Entergy and supplying power to Consumers Energy—is at risk of immediate closure. After shutdown, the plant is set to be sold to Holtec International for decommissioning with a closing date of no later than June 30. While Entergy’s intent to sell the plant is clear, and Entergy, unlike several other nuclear operators, did not submit comments to the CNC RFI, the Michigan Public Service Commission submitted comments focused on giving Palisades a chance for continued operation.

In comments submitted on March 8, the Michigan PSC urged the DOE to “ensure a reasonable opportunity for all reactors—including and especially those reactors with announced looming retirement dates as early as May 2022—to apply for the credits. A failure to structure the program to meaningfully enable those reactors most in jeopardy of closure would frustrate the intent of Congress in providing support to avoid such an outcome. . . . Reactors with a higher probability and shorter timeframe to shutdown should be assigned additional priority due to the urgency of the need.”

The PSC also suggested that “the program should allow for a change in the nuclear operating license and license holder prior to or during receipt of credits. Credits should be allocated to the reactor, not owner or operator.”

From one governor to another: Michigan governor Gretchen Whitmer sent a letter to energy secretary—and former Michigan governor—Jennifer Granholm on April 20, lauding the DOE’s actions of opening an application window with a due date of May 19 as “a meaningful opportunity for the CNC to aid and prevent the closure of plants such as Palisades.”

Noting that the state of Michigan “has already had numerous conversations with the plant owner . . . and leading nuclear operators who may be interested in purchasing the plant and keeping it operational through its 2031 licensure date,” Whitmer said that the state would support an application.

“I intend to do everything I can to keep this plant open, protect jobs, and expand clean energy production,” Whitmer wrote. “The state of Michigan will continue working with all parties involved in this process—including the DOE, Nuclear Regulatory Commission, Entergy Corporation, Holtec International, potential owners, operators, and power purchasers, and the plant’s employees—to protect this critical clean energy asset and ensure Michigan workers can stay in Michigan. At the same time, I urge all parties involved to do the same—it will take every stakeholder thinking creatively and optimistically to keep this opportunity on the table.”

At this writing, Palisades continues to operate at 100 percent power.

Funding: The total of $6 billion appropriated by Congress can be awarded at $1.2 billion per year over fiscal years 2022–2026, with funds distributed annually to a successful applicant over a four-year period beginning on the date of the selection. Funds that are not paid out in each year will be available for future credit allocation until spent or until the end of fiscal year 2031, whichever is sooner. Applicants may apply for recertification after receiving credits for four years, and additional credits may be allocated subject to the availability of funds.

The CNC guidance states that while the DOE has the authority to award up to $1.2 billion for the first award year of the first award period, “In deciding how much funding to award in the first award cycle, DOE will consider, among other factors, the following objectives: (a) allocating credits to as many certified nuclear reactors as possible, to the maximum extent practicable, (b) maximizing the cost effective use of available funding, and (c) ensuring that sufficient funding remains to provide a reasonable opportunity for nuclear reactors to be awarded credits in future award cycles during the term of the CNC Program.”

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