Oyster Creek: A historic perspective

Exelon Corp. last week announced it will close its Oyster Creek nuclear plant in southern New Jersey near Toms River this October, a year ahead of schedule. The Chicago-based utility holding company, the nation’s largest nuclear plant operator, said high operating costs at the General Electric boiling water reactor plant and low electricity prices led to the decision to shut the plant ahead of schedule.

The plan to shut down in 2019, ten years ahead of when its Nuclear Regulation Commission operating license would expire, came in a deal with New Jersey regulators, which allowed the utility to avoid building a closed-cycle cooling tower to replace the original once-through cooling water system drawing water from Barnegat Bay. The 2018 shutdown allows Exelon to avoid a scheduled refueling that would require major expenditures this month, the company said.

Oyster Creek

Beyond a further example of the travails of civilian nuclear power in the U.S., the early closure of the 636-MW unit will bring the curtain down on a significant tale in the history of the U.S. nuclear program.

Oyster Creek is one of the nation’s oldest nuclear plants, beginning commercial operation on Dec. 1, 1969. It came about as a result of a commercial war between the two pioneer reactor vendors, Westinghouse with its pressurized water reactors and GE with its BWRs, to establish positions in the market for commercial nukes.

In 1963, Westinghouse, with a leg up with the 1957 Shippingport plant near Pittsburgh, the nation’s first civilian nuclear plant, was winning the battle. GE got an opportunity to score a victory when Jersey Central Power & Light, said it was seeking to build a nuclear plant to serve a growing demand. In July 1963, TIME magazine reported, “The two companies are knocking heads over Jersey Central’s reactor; for General Electric’s prestige, that contract is almost a must.”

Jersey Central had estimated a plant of the size it wanted would cost around $90 million, in line with the costs of smaller plants that had been built with subsidies from the U.S. Atomic Energy Commission.

GE decided to place a big bet on the project. The company offered Jersey Central a “turnkey” bid of $66 million. GE would supply everything, including obtaining licenses and permits, for a fixed price. The company figured it would lose money on the deal, but would open a path to more orders and establish the company as the key competitor to Westinghouse. GE also figured the deal would establish nuclear power as cheaper than coal-fired power, at least in areas far from access to low-cost coal.

JCPL quickly accepted the offer, claiming that the new nuclear plant would be considerably less costly than similar coal capacity. The GE offer won astonished praise from nuclear power interests. AEC Chairman Glenn Seaborg told the White House it was an “economic breakthrough,” language President Lyndon Johnson echoed in a speech.

But there were skeptics, led by Philip Sporn, head of New York-based American Electric Power, an advisor to the AEC, and a long-time critic of the economic claims for nuclear energy. Sporn told the congressional Joint Committee on Atomic Energy that Oyster Creek didn’t represent a breakthrough. He said the Oyster Creek contract was a product of the intense bidding war between Westinghouse and GE that obscured the economics. The bids, he said, were based on wishful thinking and on “extrapolation,” not engineering experience.

Sporn compared Oyster Creek to the Nine Mile Point plant going up in New York that was being built on conventional terms, buying only the nuclear steam supply system from the vendor. The utility estimated the cost of its project, of similar size, at $90 million.

Oyster Creek construction began in December 1964. While GE was providing the project at a fixed price, delays increased the cost for Jersey Central, as it had to continue to pay the loans it took out to finance the project. GE had promised to have the plant in service at the end of 1967.

In April 1968, before the plant went into commercial service, JCPL’s parent GPU decided to sue GE to recoup its losses. The 1971 suit claimed GE owed the utility $63 million. The companies ultimately settled for an undisclosed amount.

Philip Abelson, a nuclear physicist who was a long-time editor of Science magazine, took note of the hyperbolic promise of Oyster Creek and the performance on the ground during construction. It was, he wrote, “a dramatic confrontation between rosy optimism and harsh reality.”

Oyster Creek has had an excellent operating record throughout its life. According to NRC data, the plant had a five-year average capacity factor of 89% between 2008 and 2012.

— Kennedy Maize


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