PEST(EL) in the Nuclear Industry – The Economic (part 4)

The first “E” in PESTEL is for economics. In a classic PESTEL analysis of the macro environment (in this case the Nuclear Industry) one is supposed to be looking at the effects of interest rates, economic growth, inflation and exchange rates.

Let’s try to take these things and review them through the nuclear lens. What makes this interesting in context of the nuclear industry is that the analysis changes whether you are looking at the current fleet or evaluating potential new build. It’s important to be clear about which one is being evaluated and what the impact might be.

Interest rates

Interest rates for what might be the first question. The Federal Reserve has announced historic lows for interest rates and made a public commitment to keep them that low for the next two years. Pressure in the opposite direction is the recent announcement by Standard and Poors to downgrade the quality of the US debt. It is not clear how this will affect interest rates, but in general a downgrade works to increase rates on the debt instruments of that entity. Depending on what debt one is purchasing either the Fed or the bond rating could have impact on the interest rate.

Current operating fleet generally runs in 2 year cycles in the US. Even in the rest of the world cycle length is at least annual. The primary impact of interest rates in the current fleet comes in the affect on fuel cycle costs. Low interest rates means that the time between purchase of uranium (ore, conversion, enrichment) and the actual use in reactor costs less. This time value, when interest rates are high tends to drive utilities to delay fuel purchasing decisions and push final deliver to latest possible time to avoid as much interest as possible. When each bundle can cost between $250,000 and $1,000,000 (depending on the type of reactor and the amount of enrichment), small variations in interest rate can have more significant impacts on actual costs. Fuel purchases are most impacted the the Fed’s interest rate rather than the US government bond rating.

In new build, low interest rates are even more appealing. A single new reactor is currently estimated to be between $5 and $6 billion dollars. From first shovel to operation is estimated to be between 4-10 years. So the interest rate can have a profound impact on the total project cost. This is, in part, why the industry requested loan guarantees from the government. The uncertainty over timing (especially within the NRC) and the high cost of the project make interest rates of significant concern to the utilities. However, it is possible that the current downgrade of the US government’s debt could adversely impact the rate at with the federal government will guarantee the loans for new plant build.

Economic Growth (or lack thereof)

The growth of electricity demand tends to track the economic growth of the country. With the past several years of limited growth and gloomy forecasts, electricity demand has also slowed.

The primary effect on the current fleet is to delay the push to upgrade the current plants to provide more power. Nuclear plants general operate as baseload power and modifying the current plants to generate more power is generally perceived as an inexpensive way to get more benefit out of an existing asset. However, these costs are not trivial and if electricity demand is soft, the push for further power uprates tends to be delayed.

The real impact of slowed economic growth is in the new plant build. Soft demand makes companies leery of these huge investments toward new nuclear power plants. Such investments require significant confidence in the long term growth of demand. Where new build has continued to push forward is in the SouthEast of the US where growth in demand has remained strong. A similar pheonomena regarding the cancellation of new plants occurred in the 1970’s when oil embargos caused the economy to suffer and electricity demands to slow.

Inflation

The nuclear industry is relatively inflation proof. Although high inflation can affect the costs of goods and raw materials involved in the construction of a power plant, once the plant is built, the main costs for production of electricity is fuel and operation and maintenance. Uranium has been relatively immune to inflation and in any case constitutes only about 1/3 of the cost per MWH. Operation and Maintenance costs are more contingent on inflation as one of the only variables is worker costs for operating the plant. In periods of high inflation, this can provoke a rise in the cost per MWH. However, because nuclear costs are very low compared to other generation sources, this is still a minor impact on the existing fleet

New build can be more affected by the rising costs of goods and raw materials. The significant amounts of steel and concrete required, make the capital costs highly sensitive to inflation.

Exchange Rates

A weak US dollar increases the costs of certain imported raw materials. Although the US has significant Uranium assets in country, today the vast majority of uranium is imported from a variety of international sources. However, as pointed out under inflation, fuel costs are quite low and a small fraction of the total costs even of the current operating fleet. However, these costs are one of the few variables that can be controlled, so watching exchange rates and hedging against significant swings in currency value is an activity that many utilities participate in

In new construction, much of the domestic capability no longer exists to manufacture key critical power plant systems. In particular, no US manufacturing capability for Reactor Pressure Vessels exists today. Thus a weak US dollar can force significant cost increases on nuclear energy facility construction. This has added significant uncertainty in trying to estimate total construction costs.

Summary

Today, with the slow economic growth and weak US dollar, several utilities have indicated a slowdown in their new plant build. While some have attributed the slowdown to impacts of Fukushima, it appears to me that the real driver for slowdown is a lowered demand growth, as well as interest rate and exchange rate uncertainty. When the economy begins to recover, we will see renewed growth in electricity demand. Further, as the drive to end our reliance on fossil fuels continues, nuclear energy will become an increasingly obvious choice to replace coal and natural gas for electricity production.

PEST(EL) in the Nuclear Industry – The Political (part 3)

Two weeks ago I discussed some of the basic political landscape affecting the nuclear industry. Last week we looked at the myriad agencies that affect the industry. This week is the final (I think) installment on Politics in the Nuclear Industry. We’re going on an international tour. There are a lot of countries out there with active nuclear programs or have expressed a desire for such to review each of those countries would take far more time and expertise than I possess. I’m rather going to look at some broader issues.

Non-Proliferation Treaty. The grand idea was to get all nations to forswear the use of nuclear in the making of weapons. There are currently 189 countries that are party to the treaty. Countries that already had nuclear weapons at the time of the treaty entered into force (March 1970) got to retain their programs, those that didn’t have such weapons were to agree never to build them. India, Israel, and Pakistan never signed it. North Korea has withdrawn. Taiwan isn’t recognized, but accepts IAEA oversight. The treaty allows non-weapons states to explore all aspects of the peaceful use of nuclear energy. It requires significant oversight by the IAEA to assure the world that each state is not developing an ability to generate highly enriched uranium.

Export Control concerns. I wrote about the impact of current export control regulation in the US on the domestic industry at the ANS nuclear café in October of 2010. Nothing has changed from there. We still have a mess of regulation.

Reprocessing. In the U.S. presidents Carter and Reagan in the late 70’s and early 80’s ended the US effort to reprocess used commercial nuclear fuel to extract the remaining uranium and plutonium to reuse it in reactors. This was the birth of the National Waste Policy Act (NWPA) and the debate about the disposal of used nuclear fuel. It was President Carter’s vision to set the example to the world not to reprocess such fuel to prevent any risk of the resulting material being used to develop weapons. However, much of the world ignored Mr. Carter’s advice and either developed reprocessing facilities or sent their fuel to other countries to be reprocessed.

New Nuclear States (and some not so new). A number of countries have stated their intention to build or expand their nuclear programs. Most of them have maintained that desired even after the events at Fukushima. Unfortunately, the U.S. government has not been able to develop and consistently support a strategy toward these countries. There seems to be a belief that if the US doesn’t support the country it will not develop nuclear energy capabilities. Russia, France, and South Korea have all made it clear that they will work with these countries and help them move forward. The US is rapidly becoming a non-player in these markets.

So what does all of this mean?

There are reasons BEYOND economics or environment for nuclear energy to be a part of this nation’s energy program. It is clear that many nations in the world are going to continue to use nuclear energy as a fundamental part of their energy portfolios. If the United States does not participate in the development of new technologies, in the design of new reactors, in the building of new nuclear facilities, and chooses to end its leadership in this technology, we will no longer be at the table with the rest of the world in determining the best, safest, and most accountable operations of these facilities.

The genie of nuclear energy is out of the bottle and no amount of wishful thinking will put that genie back into that bottle. If, we, as a nation want to continue to lead the world in this technology to guide the peaceful use of nuclear energy, to ensure the safety and accountability of all nations, we must lead the way in developing those technologies and demonstrating the safe, economic, and reliable use of nuclear energy in our society as well. We must continue to be the “gold standard” that other nations look to in determining how to implement this technology.

PEST(EL) in the Nuclear Industry – The Political (part 2)

Last week I discussed some of the basic political landscape affecting the nuclear industry. This week I’m looking at the myriad agencies that affect the industry. I had tried to start a blog post series last fall on the alphabet soup of agencies out there and started out with some descriptions of DOE, NRC, and IAEA. Here, I’m just going to talk about the political aspects of these agencies.

Department of Energy (DOE)

Much of the DOE’s budget is dedicated to managing the national lab system which is more or less dedicated to military rather than commercial uses of nuclear power. This confounding confuses the public and works to help anti-nuclear organizations make claims relative to subsidies and military support.

Some funding is provided to DOE to research various areas of interest to the commercial nuclear industry. However, this funding is erratic and frequently changes focus. This inconsistency makes it difficult to manage the long lead times research in the industry requires.

Since 2005, loan guarantees have been offered to the industry through the DOE. Unlike loan guarantees to renewable energy which do not require any up front capital from the recipient, the nuclear loan guarantees require the recipient to make a significant non-refundable “down payment” to the government to cover the potential risk. These payments can be a significant fraction of the total plant cost (8-10%).

Nuclear Regulatory Commission (NRC)

Remembering that “L” of PESTEL is Legal framework, which gets into the details of regulation, the NRC will appear in that post as well. This time around, we’re going to concentrate on the political.

Up until recently, the NRC was pretty non-political. They have been pretty intrusive regulators, but the commission was set up to be pretty balanced between the two political parties and the laws regarding the chairman and the commissioners were intended to keep politics out of the equation. However, the current chairman (Dr. Jaczko) was chosen as a part of a political deal between President Obama and Senator Reid of Nevada. I’ve already written about his actions here.

Dr. Jaczko has essentially “pocket-vetoed” the review of the Yucca Mountain submittal by the NRC. The commission is split 2-2 (with one abstention) regarding the withdrawal of that review. By continuing to hold the vote open at the NRC, he has created an opportunity for him to unilaterally act to end the review by withholding any funds.

Dr. Jaczko has continued to try to force his political agenda on the rest of the commission. Fortunately, the commission arrangement does not allow him unilateral policy decisions. He must get at least two other commissioners to vote with him in order to move forward. As of this writing, all of the remaining four commissioners voted against his stated wish to complete reviews in 90 days and force implementation of the Fukushima task force within 5 years and have stated a preference for a more deliberate pace.

This repudiation of the chairman’s stance may be as much about the other commissioners making it clear to the president that the current state of affairs at the NRC is no longer acceptable.

International Atomic Energy Agency (IAEA)

With the events at Fukushima, there have been calls for increased authority in an international agency. The IAEA is clearly the agency that would gain that power.

I believe this will not happen. It would require each nation to give up power over its own electricity supply. While many nations import some energy from neighboring countries, I cannot imagine any country allowing an outside agency to have significant influence over the such a vital sector of their economy.

The more likely scenario is that those countries that are just beginning to develop commercial nuclear power will be “encouraged” to allow the IAEA a larger role in the development of regulation and oversight. Perhaps even to have the IAEA work side-by-side with their fledgling regulatory authority.

Conclusion

It looks like there will be third week of Political in my PESTEL analysis. After that, I promise to move on to the first E (Economics).

Entergy’s Vermont Yankee Fuel Bet

I’ve read and heard a number of different assessments of Entergy’s fuel bet concerning Vermont Yankee. Unfortunately, people both for and against VY have assessed this bet incorrectly in terms of what they can and cannot do with that fuel once it has been loaded into the reactor. It happens that in one of my jobs at GE, I analyzed possible uses for the spent fuel from the Shoreham nuclear plant. I’d like to clarify what is and isn’t possible, reasonable, and/or cost effective.

Statment #1: Once the fuel has been exposed in the core, it can’t be used or transported to another nuclear facility.

This is not true. Used fuel has been transported from one facility to another. Time is the nuclear engineer’s friend. Fuel that has been out of core for a few years is both less radioactive and quite a bit cooler. With some shielding and a strong cask, the fuel can be moved anywhere in the country. Utilities with multiple reactor sites have taken advantage of larger used fuel facilities and moved fuel from one to the other for longer term storage.

Statement #2: The fuel can easily be used in other facilities.

Also not true. Boiling Water Reactors have several different designs operating in the US today. Only a fraction of them can even consider using the fuel from VY. There are two main constraints. The exact dimensions of the fuel bundle, both height and spacing of the rods is different. In the Entergy fleet of BWR’s only Fitzpatrick (in NY) or Cooper (a reactor they manage in Nebraska) could even consider taking these bundles.

There are two other major issues with using the fuel in a different reactor. First, once the fuel is loaded into a reactor core and run and any significant power level, the ceramic pellets are prone to cracking. This phenomena is well understood and accounted for in normal operation of the fuel. However, to transport fuel to another site, the fuel bundle would be laid on its side and transported by truck, rail, or barge. Any of these methods will subject each bundle to significant vibration. This jostling could significantly shift chips or other pellet fragments within the rods. For this reason, the fuel will have to held to much lower power levels within the core.

Which brings us to the third issue. Nuclear fuel is not a commodity like natural gas or coal. It is a highly engineered product that is designed specifically for the intended application, in this case operating 18 month cycles at Vermont Yankee. While there is an ability to accommodate these designs in other reactors, the fuel will not be operated to its maximum potential. When the low power constraint is added, this fuel will not be easy or cost effective to move it to another facility to extract the remaining energy.

Conclusion:

Entergy is placing a significant bet on the future of Vermont Yankee. They are spending a significant sum of money (I’ve seen numbers in the range of $60million.) that they will operate VY at least one more cycle. In fact, the fuel being loaded would still have significant energy left in it at the end of the first cycle. Most fuel runs in core 3 cycles or so; at the end of one cycle there is still more than half the energy left in the fuel. If the fuel was worth $60million, that means Entergy is gambling on getting an additional $30million out of that fuel.

If they are forced to shutdown at only 6 months of operation, the fuel will have only been used for about one-sixth it’s potential so Entergy will be out something around $50million in value. The cost of storage and the transportation to another facility, plus the limited power levels the fuel will be allowed to see after such transportation will severely limit the amount of energy they would extract in a different core. That’s a big bet.

My guess is that Entergy is expecting this to go on for quite some time. No matter what the judge’s decision, the losing side is likely to appeal to a higher court. Too much is at stake on either side. Once the reactor starts up, Entergy can go back to the court and ask for the extension and have some large cost numbers to claim as an impact. They can at least keep generating some income while they fight in court and create a more planned ultimate shutdown.

And, it is in Entergy’s best interest to fight this. There are too many parallels between this fight and the one to keep Indian Point open in New York. Giving up on Vermont Yankee could set a court precedent that will cost them Indian Point as well. I expect the Vermont Yankee saga will keep us entertained for years to come.

PEST(EL) in the Nuclear Industry – The Political (part 1)

I’ve been going through some exercises to refine my consulting business model. More on that later, but a part of that was to do a high level analysis of the nuclear industry. It’s an interesting technique called a PESTEL analysis. The acronym stands for Political, Economic, Social, Technical, Environmental, and Legal. The idea is to look at the landscape your business is operating in and use that to determine where you should be working. So, for the next few posts, we’re going to work through this analysis and see where it leads.

There’s a great deal of territory to cover in the Political Landscape, so we’re going to break this into several posts.

Republicans and Democrats

For years, the tradition was that Republicans were pro-nuclear and democrats were anti-nuclear. Recently these waters are significantly muddier. The Democratic president, Yucca Mountain deals and NRC chairmanship aside, has been generally supportive. The Republican congress has been prone to cutting funding to all project rather indiscriminately. Some extreme drives to limit government have proposed significant cuts to all energy programs. This has a direct impact on research and development projects traditionally funded by the DOE.

Energy Policy

Generally, however, one of the most significant issues in the political realm is a lack of consistent energy policy on the part of the government. The two-year Congressional term has become the de facto length of any policy as campaigns, polls, and fundraising dominate the decision-making in the House of Representatives. This lack of consistency in an industry that operates on 60 year plant life time and operating cycles as long as a congressional term make business decisions in the industry much more difficult. Embarking on a multi-year development cycle for new technology without a clear likelihood of at least a neutral policy environment adds significant risk.

Taxation

Taxes (or their moral equivalent “fees”) have (or could have) impacts on the industry, some good, some not. Taxes that come immediately to mind:

National Waste Policy Act Fees

Currently all commercial nuclear power plants pay $1 for every generated MW of electricity. This tax, started in the early 1980’s has generated about $30B in revenue for the US government. The money was supposed to be earmarked to pay for the used fuel repository known as Yucca Mountain, but in practical fact, was used to cover general operations.

The cost of this burden has an insignificant impact on the current operating fleet, but is a consideration when looking at the economic viability of new construction. A modern 1200 MWe power plant with an expected life of 60 years at an average capacity of 90% could expect to pay almost $600MM to this fund.

Currently, a number of utilities are suing the DOE for return of these funds. The claim is that the DOE has failed to uphold its part of the law in providing a national waste repository.

Carbon Tax or Other Carbon Policy

There has been much discussion about forcing industries that generate significant atmospheric carbon to pay a tax or cap emissions through a cap and trade program. So far such an initiative has not garnered enough support in Congress to be law. Such a law could provide a significant economic parity for nuclear relative to carbon based electricity sources.

The nuclear industry as a whole has not been overly supportive of such taxation despite its obvious benefits to the industry. This appears to be due to the fact that few companies are solely nuclear, or low carbon based generation. Utilities frequently have a mix of generation with nuclear and coal providing baseload. Even the vendors are rarely pristine. GE, for example, in addition to nuclear plants and service, sells wind turbines, gas turbines, and steam turbines for coal plants as well as equipment for the oil industry.

Price-Anderson Nuclear Liability Insurance

This insurance policy was created by the federal government as early as 1957. It has been one of the few consistent nuclear stances the government has maintained. This policy is frequently perceived as a subsidy by nuclear opposition. This is due, in part, to the government requirement to pay beyond the required payment by the utilities. However, this is more correctly characterized as an insurance pool.

To date, claims totaling $151MM have been paid, including $71MM for Three Mile Island. No government funds have been paid out except for claims relating to national labs and military nuclear work.

Next week

Next week, we’ll look at agencies (DOE and NRC) as well as trade regulations. I won’t try to summarize until we finish the look at the whole political landscape. What have I missed?

Lessons Learned from Fukushima Part 3 – Political

For the last two weeks, I’ve been writing about lessons learned from Fukushima. This third and final part is to look at the broader impacts and see what lessons we can learn at the political level.

There are several interactions to look at between corporations, regulators, and governments, nationally as well as globally. Like the technical and the corporate lessons learned, more lessons will be learned as time goes on and more information comes to light.

NISA independence and oversight

Much has been made of the apparent cozy relationship of TEPCO and NISA. There are clear indications that TEPCO as the largest nuclear utility in Japan had far too much influence on NISA, including some preferred hiring practices. Every country should look closely at the relations between the regulated and the regulator in every industry that has such oversight.

Here in the U.S. it was recognized in the 1970’s that having the same organization both promote nuclear energy and regulate it created a potential conflict of interest that might put regulatory oversight in a position of lower importance. From that recognition, the NRC and the DOE were created to separate the two functions. Similar changes were NOT made in other agencies, leaving mining and drilling as a combined agency. Some believe that this led to some of the inadequate enforcement practices that allowed the BP accident to occur.

However, we must be careful not to over-reach in demanding complete separation between the staff of the regulator and the industry. If no one in the regulator has ever worked within the industry, a vital expertise is lost to the regulator. Experience in operation, design, and analysis in the real world make a huge difference to the effectiveness of the regulator. Similarly, having people from the regulator work in the industry can provide a more balanced view of the risk assessment and concerns to assure ideas and products are safer and more robust in their design and operation.

Political Interference – domestic

There have been reports that Prime Minister Kan of Japan was too involved in the response to the Fukushima incident. We’ve heard that he tried to prevent seawater injection and his desire to fly over the site delayed some of the vital activities. In addition, it appears that he bypassed some of the pre-planned emergency response systems that would have assured more balanced expert advice.

In contrast, in the US after the BP accident in the Gulf of Mexico, the government of the US provided strong oversight, but did not directly interfere with BP’s efforts to cap the spill. This was despite significant political pressure to do so.

The US response while emotionally unsatisfying, was the right, measured response. Strong oversight to ensure worker and public safety, but let the experts get the job done.

Political Interference – International

One of the most egregious examples of political grandstanding was NRC Chairman Jaczko’s presentation before Congress on March 16th. He declared that the unit 4 pool was dry and likely on fire and recommended a 50 mile evacuation zone for US citizens. The Japanese government vehemently denied the allegation and was ultimately proven correct.

Dr. Jaczko’s pronouncement did nothing to improve the safety of the people around the site, but created Fear, Uncertainty, and Doubt among the Japanese population who no longer knew who to believe between the two governments. It also delayed aid to Japanese citizens who were suffering from the earthquake and tsunami in the 50 mile zone as the U.S. military evacuated from the region.

Further, this damaged relationships between the two governments at a time when full cooperation was important to both the recovery from the earthquake and tsunami AND to the response to the ongoing emergency at Fukushima.

International Emergency Response

IAEA was quick to send people to at least provide some independent international oversight of the risk to the population and the workers on the plant site. The NRC, EPRI, and other agencies also sent personnel with expertise on these plants to provide high level advice and suggestions. Those personnel were used by the Japanese and continue to provide support.

However the international nuclear community was frustrated by its inability to provide immediate help to the stricken nuclear facility. Several factors were at play. In the era that these reactors were built, each design was unique, meaning that people familiar with the design could not simply come to Japan and provide relief to the on-site workers, nor could they provide analytical support for determining what to do next without detailed information of the exact plant design.

Suggestions have been floated to create an international “strike team” that would be available at a moment’s notice to fly to any plant that is in trouble. The idea has a certain appeal, especially to those who like heroes to ride to the rescue in dramatic fashion. I’m not convinced such a scheme is practical.

Conclusion

As I’ve said with every one of these pieces more will be learned as more information comes to light. We, as an industry, need to keep thinking and examining new information to determine how we can operate all of the nuclear plants in the world safely to continue to provide inexpensive, clean electricity to all of the people in the world.

Lessons Learned from Fukushima – the Corporate

I started this series last week with a discussion of technical lessons learned. This week, I’ve spent at the American Nuclear Society annual meeting listening and talking about lots of different topics, but the one that reverberated most was, of course, Fukushima. ANS is a professional society dedicated to nuclear science and technology. There are many different divisions within the society and each has a different specialty and looks at the event differently.

ANS has put together a committee to start to look at Fukushima and develop more lessons learned from all of those perspectives. We will be seeing more from them over the weeks and months to come.

In the meantime, here’s some food for thought on corporate lessons. Remember from last week that these are issues within the corporation. It is about TEPCO and the people within TEPCO, not TEPCO’s relationship with the government or the international governmental relationships.

I have not commented much on TEPCO’s response to this event. Frankly, the company is still working feverishly to get the situation into a stable long term cooling state. Assessing the adequacy of their response at this point is premature in that we have not yet been able to see what was really happening, what resources were available and what support was there when. That said a couple things that appear to be somewhat in common with BP’s response to the Horizon Spill are appropriate to bring up as corporate lessons learned from both events.

1)     Crisis Communication

TEPCO seemed to have been surprised by the international attention paid to the events going on at Fukushima. In the early days, their press releases and press conferences were too infrequent and did not provide enough information. The lack of transparency drove a significant amount of speculation and fueled many rumors that are still reverberating in the media. Given the similar issues seen by BP in the aftermath of the Gulf spill, it was disappointing that TEPCO did not have a stronger crisis communication plan in place.

I do not see US utilities managing this any better. Utilities still seem to loathe talking to journalists or providing them with access and information to help educate them PRIOR to an event. The flooding in Nebraska was a non-event for the nuclear facilities. However, the utilities failed to recognize the potential concerns and provide up front information, leaving anti-nuclear PR to hold sway with ridiculous statements of news blackouts.

2)   Risk Management

It was clear that both BP and TEPCO failed to consider risk adequately. This issue is a tough one for public companies to manage. In many ways, they are driven by the need to be immediately responsive to the stockholder. Thus, understanding and responding to longer term risks is harder to justify. In both events, the risk of catastrophic failure was small, but very expensive. When the shareholder ROI horizon is a few months and the CEO’s typical tenure is a few years, looking at and mitigating risks with low likelihood, but large cost is easy to delay and ignore.

3)   Emergency Response Training

This is an area that came up in several meetings both at ANS and elsewhere. It is a dichotomy that the nuclear industry needs to examine and consider. We want reactor operators to follow the rules. We want them to do what they do strictly according to standard protocols. And yet, when the unexpected happens we want the reactor operators to be able to “land the plane on the Hudson” even if that is not in the rulebook.

This has a larger implication as well, part of next week’s “political lessons learned.”

4)   Know when to ask for help

There were some indications that TEPCO was initially reluctant to ask for help from others. Sometimes during emergencies people and companies get into a mode of looking inward to solve problems. It manifests as “it will take too much time to explain it to someone else, quicker to do it ourselves.” This is a fallacy of course, and getting outside help at crucial times is critical.

As I said at the beginning, I have been reluctant to do much “Monday morning quarterbacking” until TEPCO has brought the site to a stable cold shutdown. Allowing them to concentrate on the technical issues and get the reactors to a stable cold shutdown should be everyone’s top priority. We will revisit this area over and over as more information becomes available.

Next week – political lessons.

Latest Nuclear Carnival

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Lessons Learned from Fukushima: part I – the Technical

I’ve spent some time over the last few weeks talking about “lessons learned from Fukushima” to several different audiences. There are many different ways to look at this event and many different “lessons” that are to be taught. However, I think it is useful to consider those lessons in about three different general classes.

1)     Technical Lessons

These are internal lessons about what equipment or systems worked in what ways at the plant. There are some very specific lessons that all nuclear facilities should be looking at and learning from

2)   Corporate Lessons

Corporate lessons are the business responses that TEPCO had to the event. These are also internal to companies that are managing nuclear facilities, but could be learned by any corporation operating large industrial facilities.

3)   Political Lessons

It is always hard to take lessons at the political level, but understanding how the interactions between corporations, regulators, and government, both nationally and globally worked is critical in improving emergency response.

Each should be examined for what worked, what didn’t, and why. In the next three weeks, we will examine each. Whether or not people have died in this event, the terrible toll being paid by the evacuated people and the workers at the plant site and the immense cost of response require that we look at what happened and try to determine ways to prevent it from happening ever again.

Technical

Let’s look at things in the order of occurrence, as a sort of step through the defense-in-depth features of these plants.

1)     Natural disasters

The specific events (earthquake and tsunami) shouldn’t be the question. I have had a number of people asking me if they should be worried about the plants in their neighborhood (like Iowa or North Carolina). My stock answer has been “If you have a 9.0 subsidence earthquake and a 15 meter tsunami in Iowa, we have WAY more to worry about than the nuclear facility.” In other words, we need to look at each facility site and understand the risks and potentials for natural and man-made disasters at that facility.

In the U.S. this is an ongoing effort. Every time something happens through the INPO reporting systems and the NRC assessments, the entire industry looks at each facility and assesses any lessons learned or changes that need to be made.However, it is clear that we need to remain vigilant against complacency while balancing cost vs. risk assessments of these potentials.

2)   Long term Station Blackout (SBO)

Generally two issues stand out. Either the possibility of common cause failure needs to be eliminated, or the facility needs to be able to manage for a longer period before regaining power. The inherent issue here is how long is long enough and the fact that batteries aren’t really a practical option for driving pump power.

3)   Ultimate Heat Sink

The underlying issue of SBO is one of maintaining the ultimate heat sink during those early critical hours when the decay heat in the reactor is significant and can cause major fuel failure. Loss of the heat sink is the ultimate reason for the catastrophic failure of the fuel in core. Whether a solution separate from the SBO issues is required isn’t clear, but the issue is one to consider.

4)   Spent Fuel Pools

The issues with the spent fuel pools are still evolving. Claims made internationally regarding the status of the pools in the early days of the event have been clearly proven false. However, at a minimum these pools represented a significant diversion of resources for TEPCO that could have been better spent elsewhere.

5)    Hydrogen

aside: I’ve been told that many believe that hydrogen explosion to be like a hydrogen bomb. That is not the case. The explosion we’re talking about here is that of hydrogen and oxygen recombining rather violently to make water. It is the same mechanism that caused the explosion of the Challenger Shuttle in the 1980’s :end aside.

Much speculation has been made as to the sources of the hydrogen that caused the explosions in units 1, 3, and 4. The only thing we KNOW at this point is that the unit 4 pool was NOT the source of the hydrogen in that explosion. I explained this in more detail in a prior entry (Nuclear Power and the Witch Hunt). Given everything else, it is reasonable to assume that the hydrogen came from the zirconium cladding inside the reactor cores of units 1, 2, and 3.

How that hydrogen migrated to places where it could freely combine with oxygen is not understood at this point. Having that knowledge is absolutely necessary to determine appropriate mitigation. Until that is understood, comments about hydrogen recombiners or hardened vents or other issues and or solutions are mere speculation and do not serve to improve plant safety.

We can go on forever in considering possible technical issues and actions to prevent or mitigate them. As this event stabilizes and more time can be given to expert review of the equipment and events, knowledge will be gained. That knowledge will be used to make plants in the US safer and more secure.

Next week, corporate lessons learned.

The “Untouchable”

This entry was featured in the 57th carnival of nuclear bloggers on the ANS Nuclear Cafe:

There is much being made of NRC Chairman Jaczko’s job performance, his political maneuverings and congressional hearings into his performance as chairman of the NRC. What is less clear is whether any of this really matters.

After listening to and reading many articles about investigations into Dr. Jaczko’s job performance and Congressional Republican’s demand for his resignation, I decided to do a little investigating of my own. After all, the position was created by some laws that were passed by the same congress that is calling for his head.

The document is available on the NRC website. It isn’t the most exciting read out there, but a valuable one if you want to make statements about the employment of people at the top of the commission. I find it helpful to try to read original source documents when I can in order to get at the truth more directly. It allows me to understand other interpretations more accurately.

I learned several things from a fairly quick perusal of this document.

  • Only ONE person can force Dr. Jaczko out of his job, and that is the man the put him into it.

In fact, the same is true for all of the commissioners, only the president can fire any of the commissioners. The document is quite clear that the president can remove any commissioner for “inefficiency, neglect of duty or malfeasance in office”. That said, no commissioner, let alone the chairman, has ever been fired. On page 9 and 10 of the document there is a list all of the commissioners, how long they served, and why they left. When you examine that list carefully, you note that only six commissioners left prior to the end of their terms since the NRC was created out of the ashes of the AEC. They are all listed as resigning. It is possible that some of them were forced to resign, but even with that the list is very short.

  • All of the commissioners have an equal vote and proceedings are approved by a simple majority of the commissioner’s present.

It is less clear that the vote can be held up by the Chairman until he likes the outcome. The withholding of the vote on the NRC’s response to the finding of the ASLB is clearly on shaky ground. All of the commissioners (including Dr. Jaczko) have submitted their votes. It is unclear why Dr. Jaczko is refusing to make the results known.

  • The Chairman of the NRC is the CEO as well. He gets to make personnel decisions for the entire commission (except for the personal staff of each commissioner).

Well almost, he has to get the other commissioners’ approval (by simple majority) for the department heads. It’s less clear as one moves further down in the organization.

  • The Chairman of the NRC also controls the purse strings. He gets to exercise executive (decision making) and administrative (action) for the use and expenditure of funds.

The commission even has the right to revise budget estimates and distribution of appropriated funds. This is why the Inspector General says the Dr. Jaczko’s actions are within the law.

The Inspector General of the NRC’s report has been leaked to various agencies and paints a portrait of a leader who is more concerned with his political calculus than leading the agency with which he is charged. Republicans in Congress have been incensed by his actions claiming he has “politicized” the process. Congress can investigate him every which way they want, could even demonstrate that Dr. Jaczko has abused his position to further the agenda of his former bosses, Senator Reid and Congressman Markey. What they cannot do is to fire him from the position.

Unless President Obama concludes and can demonstrate “inefficiency, neglect of duty or malfeasance in office” or Dr. Jaczko has tired of the position, Dr. Jaczko will continue to serve as the chairman of the NRC. Given that the President had wanted an end to Yucca Mountain and Dr. Jaczko has enforced exactly that action within the NRC, it would appear to me that Dr. Jaczko would get high marks from the administration for supporting that effort with his own pre-emptive budget and project closure.

Much has been made of Dr. Jaczko’s management style, keeping secrets and not informing other commissioners. His handling of the international relations with the Japanese also has left much to be desired. None of these complaints are clear cut violations of those three issues. If President Obama is happy with Dr. Jaczko’s performance, then Congress can do little to force a change.