Good luck predicting future of energy

Two years ago, the Nuclear Energy Institute, a nuclear power industry group, analyzed the economic outlook for three Exelon Corp. nuclear plants (Clinton, Quad Cities and Byron) in Illinois.

“These three plants are at a significant risk of premature retirement because of a perfect storm of economic challenges — sluggish economy, historically low natural gas prices and the unintended consequences of current energy policies,” the NEI said.

If anything, the situation has worsened in the last two years — the Illinois economy continues to struggle, natural gas prices reached a 17-year low in March and U.S. energy policy is, according to Rep. John Shimkus, R-Collinsville, a “fickle system of rules, regulations, climate and tax incentives or disincentives” that make things difficult for big, base-load energy suppliers like nuclear and coal power plants.

The temptation is to assume that the long-range outlook is the same as the short-range outlook: Natural gas prices will remain low, economic growth in the Midwest will be slow and steady, transmission lines won’t be affected by climate or terrorism and national energy policy — despite all the talk of reducing carbon emissions — won’t shift much.

Based on those assumptions, it appears central Illinois and the Midwest could easily handle next year’s planned closing of the Clinton nuclear plant, which was announced last week by plant owner Exelon Corp.

(Whether the DeWitt County economy and even the central Illinois economy could easily handle the plant closing is another issue. The 2014 NEI study said that shutting down the plant would mean more than 2,500 direct and secondary jobs lost in the area by 2020. It will, at the least, mean the loss of 700 jobs at the Clinton plant, where the median income is more than $90,000 a year).

But is it wise to run with assumptions with something as critical to the economy as the energy supply? Will natural gas supplies remain plentiful and cheap? What happens if coal plants continue to retire at the current rates (20 percent of the coal capacity is expected to be gone by 2020)?

Eight nuclear plants already either have shut down or are planned to shut down, with as many as 15 or 20 more going offline in the next 10 years. Is there enough clean, reliable capacity to replace that amount?

Marvin Fertel, president of the pro-nuke Nuclear Energy Institute, said last month in a speech at a Department of Energy nuclear summit that the country “needs a diverse portfolio of generating assets,” particularly carbon-free sources such as wind, solar and nuclear.

“In the last 20 years, the United States has built approximately 350,000 megawatts of gas-fired capacity, 75 percent of all capacity additions and that trend continues,” Fertel said. “Natural gas is clearly part of our nation’s strength in energy resources, but overreliance on gas or any single generating source could expose consumers of natural gas and electricity to price volatility and loss of reliability.”

Decades ago, concerns about air pollution prompted the electric utility industry to begin to turn away from coal-fired power plants and toward nuclear energy.

And in 1973, Illinois Power Co. President Wendell Kelley announced that booming economic growth in downstate Illinois and the federal government’s commitment to nuclear power required the construction of two large nuclear power plants near Clinton.

But how quickly things changed and assumptions were discarded. A 1979 accident at the Three Mile Island nuclear plant in Pennsylvania ended decades of growth for the nuclear industry.

And later that year, Wendell Kelley said he regretted, chiefly because of politics, IP’s decision to go nuclear. The Clinton plant ended up costing far more and took far longer to build than what was first assumed.

By 1991, Kelley was out as IP chairman. By 1999, Illinois Power had sold what had become a problematic plant to AmerGen (which eventually became Exelon) at the bargain-basement price of $20 million. And by 2004, IP ceased to exist when it was folded into Ameren.

Now, less than 30 years from the day the Clinton plant went online, it’s assumed that it’s all over, that the plant is not needed, that nuclear power has no future and that natural gas, wind and solar energy are America’s energy future.

If the past has taught us anything, it’s that predictions often go wrong and that assumptions often are flawed.

Tom Kacich: news-gazette