Skip to main content

NEI's Richard Myers on the Wall Street Journal Story on Natural Gas and Nuclear Energy

NEI VP Richard J. Myers
The following statement concerning today's story on nuclear energy and natural gas ("Can gas undo nuclear power?") that appeared in the Wall Street Journal can be attributed to Richard J. Myers, NEI's Vice President, Policy Development, Planning and Supplier Programs:
Electricity production issues are not quite as cut-and-dried as portrayed in the article, certainly not from the vantage point of energy companies who must evaluate an array of factors to determine what their future generating mix will and will not be. A nuclear energy facility produces benefits well beyond the electricity it generates. They include economic benefits like jobs, taxes and procurement; grid reliability benefits in the form of voltage support and ancillary services; the environmental benefit of avoided emissions; and the energy security benefits of an electricity source that adds diversity and forward price stability to the electricity supply portfolio.

It also bears noting that extremely low natural gas prices in the United States are not sustainable. Low natural gas prices are caused by a combination of reduced demand for natural gas (due to subpar economic growth), abnormally mild weather for the past several winters and a major increase in supply (due to improved drilling techniques that have unlocked vast reserves of shale gas). As the result of low gas prices, producers of natural gas have already slowed drilling: the number of rigs drilling for natural gas in the United States has dropped approximately 50 percent in the past 12 months. At the same time, the historic volatility of natural gas prices continues to be seen in the spot market. Just last week, natural gas prices in New England and New York City topped $30 per million BTUs, the highest level seen this winter, according to the U.S. Energy Information Administration. For New England, this was actually the highest level seen since January 2004.

Judgments about the viability of any given nuclear power plant are business decisions made by individual utilities based on economic circumstances unique to the facility. The Nuclear Energy Institute’s long-term belief is that, beyond the ongoing construction of five reactors in Georgia, South Carolina and Tennessee, new nuclear energy facilities will be built once electricity demand rebounds. Demand for electricity in the United States has not yet returned to the level seen in 2007, before the financial crisis.
For those who might have missed it, here's a table from the Energy Information Administration's Northeastern Winter Natural Gas and Electricity Alert that highlights those dizzying spot prices Richard referenced in his response.

For our earlier post on the story, click here.

Comments

AK Engineer said…
You use a SPOT price for Natural Gas in New York in the winter to make the case for Nuclear? Maybe some utility is buying spot gas to make power but let’s hope not. It’s more correct to point out that gas users pay for pipeline transportation charges and some users pay a premium for firm delivery so the Henry Hub price is not the price paid by gas consumers. Gas users also protect themselves from price fluctuations by buying futures contracts. I favor free market solutions - right now the low cost of gas must figure into any generation decision. At some point gas prices will move up and the market will find a new equilibrium based on the new reality of lower cost gas. Higher gas prices will promote more drilling, and that provides jobs and economic growth too. Let’s maintain balance in the ongoing dialogue of energy deployment.
David Bradish said…
AK, the case Myers was making in reference to the Northeast spot prices was that natural gas continues to be volatile even with its abundance. Sure, spot prices reflect only a small percentage of the gas consumed. But the contracts and hedges that are made are based off of the spot price. So the spot price does matter. Seems to be a balanced argument to me...
Anonymous said…
The spot price wouldn't be high if nobody was buying.
J Melito said…
The lack of a spot price (nobody buying) is indicative of a dysfunctional or non-functioning market. The Soviet Union tried that approach; today, there is no Soviet Union. My take is that the comparison between nuclear and metered-fuel thermal power has always been a mistake. Load demand variations were, are, and should remain the supply system's concern. But in truth, everyone would like to get most of their electric power directly from large hydro-generation sources like Niagra Falls, or Bonneville or Hoover dams. Nuclear, a non-metered thermal power source, can be illustrated this way: A reactor heats pressurized water to boiling, the steam flows up a long channel of say 10,000 feet above grade, there a large chamber condenses the steam by surrendering the heat to the surrounding cooler atmosphere, the condensate flows back down from on high and passes through a water-wheel that drives a generator (just like a hydro-reservoir), returns to the reactor and the cycle repeats. However, unlike a large hydro-generation project, a nuclear power plant can be built in the middle of a dead flat plain, even a desert, or on low coastal lands, or just about anywhere. And, no matter where, once a price is established the nuclear plant will steadily produce power for decades. In fact a large, well operated nuclear generation plant produces a thermal output of about 0.1 quad or over 1 billion therms every year. Currently, we have not even technically confirmed for just how long a well-built, well-maintained nuclear unit can do this. Given that there are hydro-reservoirs that have operated since the mid-17th century and the Roman Forum has been around for 2 millenia, most of us (all?) will not live long enough to ever know - how's that for ROI.

Popular posts from this blog

How Nanomaterials Can Make Nuclear Reactors Safer and More Efficient

The following is a guest post from Matt Wald, senior communications advisor at NEI. Follow Matt on Twitter at @MattLWald.

From the batteries in our cell phones to the clothes on our backs, "nanomaterials" that are designed molecule by molecule are working their way into our economy and our lives. Now there’s some promising work on new materials for nuclear reactors.

Reactors are a tough environment. The sub atomic particles that sustain the chain reaction, neutrons, are great for splitting additional uranium atoms, but not all of them hit a uranium atom; some of them end up in various metal components of the reactor. The metal is usually a crystalline structure, meaning it is as orderly as a ladder or a sheet of graph paper, but the neutrons rearrange the atoms, leaving some infinitesimal voids in the structure and some areas of extra density. The components literally grow, getting longer and thicker. The phenomenon is well understood and designers compensate for it with a …

Why America Needs the MOX Facility

If Isaiah had been a nuclear engineer, he’d have loved this project. And the Trump Administration should too, despite the proposal to eliminate it in the FY 2018 budget.

The project is a massive factory near Aiken, S.C., that will take plutonium from the government’s arsenal and turn it into fuel for civilian power reactors. The plutonium, made by the United States during the Cold War in a competition with the Soviet Union, is now surplus, and the United States and the Russian Federation jointly agreed to reduce their stocks, to reduce the chance of its use in weapons. Over two thousand construction workers, technicians and engineers are at work to enable the transformation.

Carrying Isaiah’s “swords into plowshares” vision into the nuclear field did not originate with plutonium. In 1993, the United States and Russia began a 20-year program to take weapons-grade uranium out of the Russian inventory, dilute it to levels appropriate for civilian power plants, and then use it to produce…

Nuclear Is a Long-Term Investment for Ohio that Will Pay Big

With 50 different state legislative calendars, more than half of them adjourn by June, and those still in session throughout the year usually take a recess in the summer. So springtime is prime time for state legislative activity. In the next few weeks, legislatures are hosting hearings and calling for votes on bills that have been battered back and forth in the capital halls.

On Tuesday, The Ohio Public Utilities Committee hosted its third round of hearings on the Zero Emissions Nuclear Resources Program, House Bill 178, and NEI’s Maria Korsnick testified before a jam-packed room of legislators.


Washingtonians parachuting into state debates can be a tricky platform, but in this case, Maria’s remarks provided national perspective that put the Ohio conundrum into context. At the heart of this debate is the impact nuclear plants have on local jobs and the local economy, and that nuclear assets should be viewed as “long-term investments” for the state. Of course, clean air and electrons …