Smaller Nuke Operators Unite for Efficiency

 | Aug 20, 2012 | 6:00 PM EDT
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For some utilities, owning just one nuclear power station can be a disadvantage. Smaller utilities have to compete with the industry's giants to attract technical talent, find critical resources and share a knowledge base. One way to compete is to form a cooperative alliance with similar nuclear owners. That's exactly what seven utilities just did: They formed the STARS Alliance.

The STARS Alliance is intended to increase efficiencies that will lower costs. In addition, the alliance aims to accelerate learning curves for owners and regulators, resulting in increased safety and reliability.

STARS originally meant Strategic Teaming And Resource Sharing, and the name helps explains its mission. The strategic element is found in the makeup of its membership. According to World Nuclear News, all members operate nuclear power plants of similar design, and all plants fall within the same regulator. Specifically, each plant has a modern Westinghouse pressurized water reactor (PWR) as its nuclear steam supply system, all plants are located within the same Nuclear Regulatory Commission (NRC) administrative region, Region IV, and all plants are the same vintage.

Members of the alliance include Ameren's (AEE) Callaway Plant, Energy Future Holdings' Comanche Peak Nuclear Power Plant, PG&E's (PCG) Diablo Canyon Power Plant, Pinnacle West Capital's (PNW) Palo Verde Nuclear Generating Station, Edison International's (EIX) San Onofre Nuclear Generating Station, NRG Energy's (NRG) South Texas Project and Westar Energy's (WR) Wolf Creek Generating Station. Altogether, the alliance includes 13 nuclear units operated by seven utilities.

According to the U.S. Department of Justice, which recently issued the final approval letter for the alliance, the STARS Alliance is not technically a fleet. STARS members share best practices and resources such as personnel, parts and equipment, as well as coordinate contingency planning, including coordinated responses to new NRC requirements adopted in the aftermath of the nuclear disaster in Fukushima, Japan. But none of the proposed activities involves the procurement of goods and services or the sale or purchase of electric power.

The STARS Alliance is a spinoff from an older alliance, called the Utilities Service Alliance (USA). The USA is a 17-member cooperative formed in 1996, and all STARS Alliance members have been and remain USA members.

According to Power Magazine, one of the main reasons to form the new alliance was that coordinating efforts among the similar STARS stations was considered optimal, rather than the combined STARS/USA structure of 17 stations. "There are several examples of the value of forming an alliance to enable single-station companies to join forces and increase their influence and effectiveness. One of the most successful STARS initiatives enabled STARS members to pursue and obtain license renewal [from the NRC] in a very cost-effective and efficient manner." 

To date, Pinnacle's Palo Verde Nuclear Generating Station and Westar's Wolf Creek Generating Station have already received license renewals from the NRC. The remaining units are in process, and their final approvals are subject to the licensing freeze recently announced by the NRC.

Administratively, the STARS Alliance has some of the advantages of a fleet. Members align with vendor partners. As a group, they participate directly in policy and regulatory issues, and they have a stronger voice within industry organizations, such as the Nuclear Energy Institute (NEI) and the Institute of Nuclear Power Operators (INPO).

While INPO and NEI serve all members, some members, such as Exelon (EXC), Entergy (ETR), NextEra Energy (NEE) and Dominion Resources (D), own large fleets of nuclear power plants. Unlike individual STARS members, large fleets have very different priorities, interests and resources. They also have a commanding voice in policy formulation and regulatory rulemaking.

Now, with the STARS Alliance newly created, seven relatively small utilities have successfully formed the nation's largest "fleet" of Westinghouse-PWR nuclear plants. Their collaboration will likely lower each of their costs for operations, maintenance, capital and fuel. In addition, their alliance should speed up NRC's regulatory process, as technical decisions regarding one plant would likely apply to the others. They also gained a stronger voice in helping formulate nuclear policy and regulatory rulemaking for all the nation's PWRs, not just the PWRs in the alliance.

STARS Alliance is a helpful step for their members to deliver safe, economic and reliable power. Shareholders and ratepayers should expect to see higher capacity factors, lower costs and higher efficiencies.

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