^ AILY REAI^ING F'^ T E 

Gaines, Cynthia 

From:	 Michael Bradley [mbradley@mjbradley.com ] 

Sent:	 Friday, January 24, 2014 2:55 PM 

To:	 Mccarthy, Gina 

Cc:	 Feldt, Lisa; Vaught, Laura; Carrie Jenks 

Subject:	 316(b) CEO Letter Regarding Nuclear Units 

Attachments:	316(b) Letter to Gina McCarthy Jan 24 2014.pdf 

Gina, 

Please find attached a letter from the CEOs of Dominion, Exelon, NextEra, PG&E, and PSEG highlighting the 

potential implications of the Endangered Species Act provisions in the 316(b) rule, as we understand them, for 

the U.S. nuclear fleet. Please let me know if you have any questions. 

Thank you and have a good weekend, 

Michael

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January 24, 2014 

The Honorable Regina A. McCarthy 

Adrninistrator 

U.S. Environmental Protection Agency 

William Jefferson Clinton Federal Building 

1200 Pennsylvania Ave., NW 

Washington, DC 20460-0001 

Dear Administrator McCarthy: 

As follow up to our last meeting with you on the Clean Water Act Section 316(b) rulemaking, 

this letter highlights the rule's potential implications for nuclear units. Since the rule was 

proposed in April 2011, three issues have arisen that could trigger the premature retirement of a 

significant portion of the nuclear fleet. The loss of these units would have significant economic, 

reliability, and ciimate change implications. These issues include: 

1. Requirements for repowered, replaced, or rebuilt units that could require units to 

install cooling towers if they undertake nuclear uprates or routine maintenance, 

including the replacement of turbines and condensers; 

2. Language that could be interpreted to require the use of willingness-to-pay surveys to 

monetize non-use benefits that could result in significantly overstated benefits that 

justify a decision to install towers; and 

3. Overly broad Endangered Species Act (ESA) provisions that could require facilities 

to cease operation or install cooling towers if a threatened or endangered (T&E) 

species is located in a water body from which a facility draws water even without 

evidence of impact to that species. 

Our letter to you dated December 20, 2013 outlines these concerns in detail. AIl three issues 

remain key areas of concern for the industry and must be resolved in order to preserve the U.S. 

nuclear fleet. However, the balance of this letter focuses on the potential implication of the ESA 

provisions, as we understand them, for nuclear units—the largest source of zero carbon 

electricity generation in the fleet today. We urge EPA to study the unintended impact of these 

provisions on the nuclear fleet and the clean energy benefits the fleet provides. 

First, we believe the Services should conclude the rule is "not likely to adversely affect" T&E 

species. We agree with EPA's original tinding that the rule does not authorize any actions that 

could potentially harm T&E species because the rule provides additional protections for species 

from impingement and entrainment at cooling water intake structures. Moreover, this rule 

applies to existing sources, and T&E issues have long been evaluated and addressed at each of 

our facilities as required by the ESA. Facilities that have already undertaken an ESA Section 7 

consultation or obtained a Section 10 permit should not be required to revisit these 

authorizations, and the final rule should make that clear in the regulatory text.
Second, any ESA monitoring and study requirements must be focused on T&E species directly 

affected by the intake through entrainment or impingement. We understand that the proposed 

ESA provisions will require permittees to identify listed species that may be in the waterbodies 

from which a facility draws water and might be indirectly affected by intake structures, including 

by potential impacts to their prey. This overly broad approach could be interpreted to require 

facilities to prove that the facility is not adversely affecting any T&E species present or that may 

be present. Attempting to prove this negative would be extremely burdensome and potentially 

impossible. As a result, this approach could lead to the imposition of requirements not 

specifically included in the ESA, including potentially requiring a facility to cease operations 

immediately or install cooling towers. Moreover, the approach used to incorporate proposed 

ESA provisions into the state 316(b) permitting process represents a dramatic departure from the 

current NRC-initiated Section 7 consultations proeedure used for nuclear facilities that involves 

multiple federal agencies. Having the ESA consultation take place prior to submittal of a state 

permit application would shift the decision-making to a single federal agency. Rather, any ESA 

study or consultation should occur as an integral part of the current permitting process and not 

separately. In summary, the rule, as we understand it, would impose new ESA requirements that 

are beyond the scope of this rulemaking and that set an untenable precedent for future EPA 

rulemakings. These new ESA provisions are much more expansive than the current applications 

of ESA in the existing NPDES perrnitting process and are not supported by court decisions 

interpreting the requirements of the ESA. 

Ultimately, we are concerned that these new ESA provisions could require owners and operators 

of cooling water intakes to install cooling towers even if there is no evidence that the facility is 

causing an adverse impact. Cooling towers are particularly problematic for existing nuclear units 

because of high retrofit costs associated with safety issues at nuclear plants and space 

constraints. This is true for nuclear units in competitive and regulated markets. In recent years, 

the economic conditions in competitive markets have caused the profitability of nuclear units to 

deteriorate. For example, the precipitous and sustained decline in natural gas prices since 2008 

has significantly undermined the economics of nuclear generation by lowering the market price 

for energy. In Eastern PJM, the profitability of nuclear units (after accounting for normal 

operating and maintenance costs) has fallen to levels comparable to those realized by natural gas 

fired combined cycle generators. These economics tend to favor construction of new natural gas 

facilities compared to making large capital investments in existing nuclear plants. In fact, the 

North American Electric Reliability Corporation (NERC) concluded in a 2011 report that most 

nuclear units facing an obligation to install cooling towers would retire, and that 25 to 39 GW of 

electric generating capacity could be economically vulnerable to retirement as a result of a 

316(b) rule that imposes closed cycle cooling. I 

Similarly, cooling tower retrofits pose a problem for nuclear units in regulated states where 

retrofits are limited to what the public utility commission will approve. There is no certainty that 

state regulators will determine that investing billions of dollars to retrofit an existing nuclear unit 

with a cooling tower is the "lowest reasonable cost option" to meet the requirements. Rather, 

' North American Electric Reliability Corporation, Potential linpacts of Future Environmental Regtclations 

(November 2011).

2
state regulators will likely elect to allow a nuclear unit to shutter and instead approve an 

investment in a new natural gas combined cycle unit, resulting in higher greenhouse gas 

emissions. 

The retirement of even a small number of nuclear units would have significant reliability and 

climate change implications. For example, Exelon has decided upon early retirement of its 

Oyster Creek Generating Station in New Jersey rather than installing uneconomic cooling 

towers. Assuming that generation from Oyster Creek would be replaced by existing resources in 

New Jersey, Oyster Creek avoided nearly two million metric tons of CO2 emissions in 2012 

alone. 

In Virginia, Dominion's preliminary estimate for retrofitting tlle Surry Nuclear Power Station 

with cooling towers is approximately $3 billion. As the NRC licenses for Surry's two nuclear 

units expire in 2032 and 2033, it is unlikely that such a significant investment in a facility with a 

limited remaining useful life will be viewed by Virginia's State Corporation Commission (SCC) 

as serving the best interests of Dominion's customers. With the long lead time necessary to plan 

and construct cooling towers coupled with the uncertainty of possible 316(b) ESA requirements 

and Dominion's obligation to reliably serve its customers' electric power needs, it is highly 

likely the SCC could reasonably find a new natural gas combined cycle facility to be a more 

viable option. 

Similarly, in California, the Diablo Canyon Power Plant serves about 10 percent of the state's 

electricity needs with no greenhouse gas emissions. The state is currently implementing its 

once-through cooling regulations and estimates show that requiring closed-cyele cooling at 

Diablo Canyon would cost about $9 billion to $12 billion, providing a negligible environmental 

benefit.' State regulators and independent scientists have reviewed Diablo Canyon's impacts on 

numerous occasions, and all have reached the same conclusion: the facility's low impingement 

does not warrant any further assessment or action.3 

Since Oetober 2012, companies have announced the retirement of five reactors representing 

nearly 4,200 megawatts. Nuclear currently provides one fifth of the nation's electricity and 62 

percent of U.S. clean generation. 4 Emissions would inerease if generation from fossil fuel-fired 

power plants replaces a large share of the retiring nuclear units' generation. As shown in the 

attached graphic, if the current pace of nuclear retirements continues, 25 percent of the nuclear 

fleet would likely retire by 2020. This outcome would cause the U.S. to lose over half of the 

progress we have made to date toward meeting President Obama's 2020 emission reduction goal 

of 17 percent of 2005 emissions. 

We appreciate the time you and your staff have taken to hear our concerns on this rule, and 

please do not hesitate to contact us if you have any questions regarding our ESA concerns as 

'- Bechtel Power Corporation, Final Technologies Assessment for Alternative Cooling Technologies or Modifications 

to the F-Yisting Once-Thf•oi+gh Cooling System for Diablo Canyon Power Plant (Final Draft) (September 2013) 

(PG&E Comments submitted October 2013). 

3 See e.g., Tenera, Diablo Canyon Power Plant 316(b) Demonstration Repor • t (March 2000), pp. 1-2; Central Coast 

Regional Water Quality Control Board, Staff Testimony (July 10, 2003), pp. 6-7. 

4 Energy Information Agency (EIA), Net Generation Data 2003 to June 2013 (Available at: http:llwww.eia.gov).
they relate to nuclear units. We look forward to continuing to work with you to finalize the rule 

in the coming weeks. 

Sincerely, 

Christopher M. Crane 

President & CEO 

Exelon Corp. 

Anthony F. Ear ey, Jr. 

Chairman, President & CEO 

PG&E Corp. 

Thomas F. Farrell 

Chairman, President & CEO 

Dominion 

^ ^ 

Ralph Izzo 

Chairman, President & CEO 

Public Service Enterprise Group, Inc. ^., t r 

;i 

James L. Robo 

Chairman, President & CEO 

NextEra Energy, Inc.

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