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Davis-Besse nuclear plant back online — but for how long?

OAK HARBOR, Ohio — FirstEnergy Corp.’s Davis-Besse nuclear plant returned to service Tuesday from what will likely be its final refueling outage.

The corporation has said repeatedly over the past year that — barring an unlikely buyer emerging in today’s highly competitive electricity market — the plant’s days are numbered. A decision on its future is expected by June.

Davis-Besse has been Ottawa County’s largest employer since the 1970s, with more than 700 engineers and other highly skilled workers.

Like many other nuclear plants — especially those in Ohio, Michigan, and other states with deregulated electricity markets — it has been unable to compete economically with natural gas since a global fracking boom grew out of a revolutionary horizontal drilling technique developed by the oil and gas industry.

The result has been record-low natural gas prices. That, along with growing investments in wind and solar power that dropped prices for the renewable energy sector, made nuclear and coal noncompetitive. Costs for operating most nuclear and coal-fired power plants now exceed those for many plants fueled by natural gas, as well as wind power, solar power, and other types of renewable energy.

In a January interview in which he outlined Davis-Besse’s bleak financial outlook, James Pearson, FirstEnergy’s chief financial officer, told The Blade it was “entirely accurate” for employees to believe this outage would likely be the plant’s final one.

Nuclear plants are refueled once every 18 months to two years, depending on the isotope of uranium in their nuclear fuel. Davis-Besse converted over to two-year cycles many years ago.

According to a statement issued by FirstEnergy Nuclear Operating Company, a FirstEnergy subsidiary, Davis-Besse returned to service at 4:03 p.m. Tuesday following a routine refueling-and-maintenance outage that began March 3.

That 24-day outage was the shortest in Davis-Besse’s 41 years of operation, FENOC said.

The previous record was 38 days in 2012. Years ago, utilities took six weeks or more for such outages. In recent years, the industry norm has been closer to and in some cases just under a month.

The 908-megawatt plant was operating at 20 percent power late Tuesday afternoon, enough to synchronize it to the 13-state regional electric grid managed by PJM Interconnection LLC of Audubon, Pa.

The plant is expected to take several days ascending back to full power.

Some 1,000 temporary contract workers were brought in during the outage to augment the work done by full-time FENOC employees.

Paul Harden, FENOC chief operating officer, said Davis-Besse “will operate at peak efficiency while generating safe, reliable, secure, and clean electricity.”

In his January interview, Mr. Pearson said the outlook for FirstEnergy’s coal-fired power plants and its other nuclear plants — its twin-reactor Beaver Valley nuclear plant west of Pittsburgh and its Perry nuclear plant east of Cleveland — was just as bleak.

Mr. Pearson said Davis-Besse and those other plants are “probably impossible to sell in today’s market.”

No more major improvements are planned for Davis-Besse, said Mr. Pearson, who agreed the Nuclear Regulatory Commission will not allow plants to continue operation indefinitely without needed upgrades. The last major upgrade was the installment of two new steam generators in 2014 at a cost of $600 million.

Ohio and Michigan embraced deregulation in 1996, a decade before the fracking boom began.

FirstEnergy Solutions, a FirstEnergy subsidiary likely to file for bankruptcy protection on behalf of the utility’s noncompetitive nuclear and coal-fired plants, has an April 2 deadline looming for a $100 million debt-principal payment.

With combined debt estimated at $3.5 billion and losses mounting daily on the competitive side of its business because of the budget drains from its nuclear and coal-fired plants, the utility has turned to a combination of hedge funds managed by four high-powered private investor groups to help move it forward with a regulated growth strategy. 

The groups — New York-based Elliott Management Corp., Dallas-based Bluescape Resources Co., Singapore-based GIC Private Limited (formerly the Government of Singapore Investment Corp.), and New York-based Zimmer Partners LP — have agreed to invest $2.5 billion in FirstEnergy to support growth in the company’s regulated utility businesses. FirstEnergy says the investment does not change its decision to cut ties with plants deemed noncompetitive.

Davis-Besse came online in 1977 and is licensed to operate through April 22, 2037. The plant’s original 40-year license expired April 22, 2017. The NRC granted a 20-year extension in December, 2015.

In 2013, a Vermont Law School economic analyst, Mark Cooper, included Davis-Besse on a list of 12 U.S. nuclear plants he considered most at-risk for a premature closing.

Mr. Cooper cited financial pressures brought on by record-low natural gas prices, as well as rising costs of nuclear operations, repairs, and retrofits ordered by the NRC in the aftermath of the historic March, 2011, disaster at the Fukushima Daiichi complex in Japan.

FirstEnergy's initial response was to dismiss the report, which used Wall Street analyses by Moody’s, Credit Suisse, and UBS, as well as an analysis of past early retirements to identify risk factors.

Contact Tom Henry at thenry@theblade.com, 419-724-6079, or via Twitter @ecowriterohio.

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