Columbia Generating Station Regional Value
Energy Northwest operates Columbia Generating Station, the Northwest’s only nuclear energy facility. The 1,190-megawatt Columbia Generating Station produces enough electricity to power a city the size of Seattle.
In late 2012 the Bonneville Power Administration and Energy Northwest came together to analyze the financial value of Columbia in light of low energy prices in the wholesale electricity market and historic low fuel costs for natural gas-fired power plants. The agencies studied three scenarios and overwhelmingly concluded that Columbia’s continued operation is the most cost-effective option for consumers – to the sum of billions of dollars.
There are several other benefits from maintaining Columbia as a key part of the Northwest regional power system, including its key role in meeting capacity demand; its dependability for electric energy production as a baseload power source; and the role it plays in greenhouse gas abatement.
Columbia also provides a vital risk management contribution toward maintaining the diversity of the region’s generation portfolio. The region’s Public Power Council, which represents consumer-owned utilities throughout the Pacific Northwest, observed in 2014 that the variable cost of Columbia operations in recent years were slightly above spot market energy prices. However, the council noted that a single unanticipated shift in the markets “can easily wipe out years of anticipated benefits” gained from replacement power, and pointed to the Western Energy Crisis of 2000-2001 to prove the point. During that relatively short energy crisis, the cost benefit of Columbia’s power “dwarf[ed] the modest benefits that would have been achieved” through replacement power. “In 2001 alone the operation of Columbia Generating Station compared to the market saved Bonneville Power Administration ratepayers $1.4 billion,” according to the council.
Columbia Generating Station Value Study
Together, Energy Northwest and the Bonneville Power Administration conducted a study to determine the value of Columbia Generating Station to the region. The agencies studied three scenarios based on (1) the continued operation of Columbia, (2) the temporary shutdown of Columbia’s reactor ( a five-year off-line scenario), and (3) the permanent closure of Columbia with replacement by natural gas.
The scenarios yield the following results:
Continuous operation of Columbia: 30-year estimated levelized cost of $47.39/megawatt hour (through operating license expiration in 2043). Levelized costs represent present value of the total cost of future capital and operating costs of the described scenario, converted to equal annual payments and amortized over expected annual generation.
Five-year temporary shutdown/off-grid: Most of Columbia’s costs are fixed and must be paid, regardless of power level. Fixed, combined with replacement power costs, equal a 30-year estimated levelized cost of $53.11/megawatt hour.
Cost savings to energy consumers by not utilizing this option and instead opting for the continuous operation of Columbia is in excess of $1 billion.
Permanent closure of Columbia with replacement by natural gas: Results in substantial risk exposure to the volatility of natural gas prices. Anticipate a 30-year estimated levelized cost of $59.73/regional megawatt hour at expected price of gas, with no carbon tax.
Cost savings to energy consumers by not utilizing this option and instead opting for the continuous operation of Columbia is more than $2.5 billion. If carbon costs/taxes are applied, this amount increases to more than $5.4 billion.
In April 2013, Energy Northwest commissioned a third-party study by IHS Cambridge Energy Research Associates, a firm with a 75-year reputation for independent expertise in the fields of energy, economics, market conditions and business risk. IHS CERA came to the same conclusion as the joint BPA-EN study: Columbia Generating Station remains the best value when compared to all practical alternatives for Northwest ratepayers.
In January 2014, the Public Power Council, representing Northwest consumer-owned utilities, examined the CERA market assessment and a competing report and concluded that the continued operation of Columbia “is economically advisable for the region.” The council’s assessment supports public statements by BPA affirming Columbia’s provision of unique, firm, baseload, non-carbon emitting generation with predictable costs for the region’s ratepayers.
Columbia Generating Station is currently a key part of the Northwest regional power system supply portfolio. Columbia provides about nine million power customers with the electricity that they want, when they want it – produced in a reliable, efficient, and environmentally responsible way. Columbia, licensed to operate for another 30 years, remains key to meeting these consumer demands.
Additionally, the closure of Columbia, combined with a volatile replacement such as natural gas, presents other non-tangible threats:
Cost burden for power buyers
Distorted market-clearing power price
Societal costs of rising carbon emissions
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