The Kewaunee nuclear power plant in Wisconsin will close by mid-2013 and will then be decommissioned, Dominion announced after failing to find a buyer for the plant.
Dominion bought the single 574 MWe pressurized water reactor in July 2005, in anticipation of establishing a portfolio of nuclear units in the Midwest region. The company paid $220 million in cash for Kewaunee, including $36.5 million for fuel.
|The Kewaunee plant will continue generating electricity for just a few months longer (Image: Dominion)
However, Dominion's failure to successfully bid for other suitable plants in the region when they became available diminished the strategic rationale for retaining Kewaunee and in April 2011, the company announced that it had decided to sell. At that time the company was confident that it would find a buyer for Kewaunee, especially as the plant's operating licence had recently been extended for a further 20 years, until 2033.
Having failed since then to find a purchaser, Dominion has now said it will shut down the plant, which began operating in 1974. Pending a grid reliability review by the Midwest Independent Transmission System Operator, Dominion expects to end power generation at Kewaunee in the second quarter of 2013 and to then begin decommissioning activities.
"The situation Dominion faces with Kewaunee is the result of circumstances unique to the station and do not reflect the nuclear industry in general."
Dominion chairman, president and CEO
Some $392 million in decommissioning funds for Kewaunee were transferred to Dominion at the time it bought the plant. The company said that Kewaunee's decommissioning trust is currently fully funded, and it believes that the amounts available in the trust plus expected earnings will be sufficient to cover all decommissioning costs expected to be incurred after the plant shut down.
Dominion has power purchasing agreements with two utilities, which are both due to expire in December 2013. The company said that, following the shut down of the Kewaunee plant, it will meet its power supply obligations through market purchases.
Dominion plans to recognize an after-tax charge of $281 million in the third quarter of 2012 related to the closing and decommissioning of the Kewaunee plant. The one-time charge will be excluded from operating earnings.
Dominion chairman, president and CEO Thomas Farrell commented, "This was an extremely difficult decision, especially in light of how well the station is running and the dedication of its employees." He added, "This decision was based purely on economics. Dominion was not able to move forward with our plan to grow our nuclear fleet in the Midwest to take advantage of economies of scale. In addition, Kewaunee's power purchase agreements are ending at a time of projected low wholesale electricity prices in the region. The combination of these factors makes it uneconomic for Kewaunee to continue operations."
Dominion - which continues to own and operate reactors at the Millstone, North Anna and Surry plants - still believes that nuclear power must be part of the USA's energy mix. Farrell said, "The situation Dominion faces with Kewaunee is the result of circumstances unique to the station and do not reflect the nuclear industry in general. The nation will be hard-pressed to meet its energy needs, let alone do so in a secure and affordable manner, without a robust and growing nuclear energy program."
Researched and written
by World Nuclear News