FW: Nuclear Reactor For Sale

["Jaramillo, Eric D" <edjaram@sandia.gov>]

Anyone else heard of this?

Eric Jaramillo
edjaram@sandia.gov

For Sale: Used Nuclear Reactor

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By JONATHAN RABINOVITZ

ONDONDERRY TOWNSHIP, Pa. -- Having a name that most people equate with   
nuclear
disaster, Three Mile Island might not seem to be a choice piece of real
estate.

But GPU Inc., the New Jersey utility that owns the plant on an island in   
the
Susquehanna River, is convinced it can do something that no other company   
in
the United States has done: sell a used nuclear reactor.

"We've been working on its curb appeal," said Jim Langenbach, the site
director, sounding a little like a homeowner who has just added a new   
coat of
paint before an open house. "Pulling weeds, picking up trash, planting
flowers. The real reality has nothing to do with that, but it doesn't   
hurt."

Almost 20 years have passed since warning sirens blared, schools closed   
and
more than 100,000 residents fled central Pennsylvania, afraid of   
radiation
poisoning from the most serious nuclear-power-plant accident in the   
United
States.

While the fear has faded, employees here say that when people find out   
where
they work, they still are asked whether they glow in the dark. And a   
visitors'
center attracts thousands of people every year to its observation deck to   
peer
across the Susquehanna River at the hourglass-shaped cooling towers.

Yet in the next month, the fortunes of Three Mile Island, whose mistakes   
shook
public confidence in the nuclear power industry, could signal its ability   
to
survive the worst adversity. At a time when many have predicted that   
nuclear
power will not be able to compete in the increasingly deregulated   
electricity
market, a sale of Three Mile Island would show that one company, anyway,
thinks atomic energy can turn a profit -- for the right price.

GPU, based in Parsippany, N.J., has had the reactor actively on the block
since December. Fred Hafer, the company's chairman and chief executive,   
said
in June that he had been negotiating for months with a prospective buyer,
which he declined to identify, and that he expected to announce a deal by   
the
end of July.

Only Unit 1, which was not involved in the March 1979 accident, is for   
sale.
The hulk of Unit 2, from which tons of radioactive rubble were removed   
after a
partial meltdown of its core, is not for sale. It will never produce
electricity again.

Hafer also hopes to sell the Oyster Creek nuclear plant in Forked River,   
N.J.,
in the same deal.

A dozen people who follow the industry, including analysts and nuclear
critics, say that Peco Energy Co. of Philadelphia, which already operates   
two
nuclear plants, both in Pennsylvania, is the most likely buyer. Peco   
recently
established a joint venture with British Energy PLC to acquire more   
nuclear
plants.

"We believe that we can build an even greater competitive advantage by
grouping nuclear units to exploit economy of scale," said Jim Waddington,   
a
Peco spokesman, who declined to comment on whether the company would buy   
Three
Mile Island. Jerry Rainey, who heads Peco's nuclear division, added, "I   
think
you'll see a deal announced in 1998," though he also refused to identify   
the
plants that would be involved.

To be sure, these are complicated deals, and nothing is certain until a
contract is signed, especially the price. Unit 1 is reportedly worth $600
million, but several factors must be weighed, and a determination must be   
made
of who is responsible for the ultimate costs of taking the unit out of
service. And even if an agreement is reached, it would have to be   
approved by
the Nuclear Regulatory Commission and state officials.

Nonetheless, the plant is buzzing with the possibility of a takeover,
officials of nearby towns have been notified that a change of ownership   
may
occur, and Langenbach said he already had transition plans on his desk.

If the sale takes place, Hafer will have succeeded where others have   
failed.

Over the last few years, a spate of troubled reactors have been put on   
the
market, but there have been no takers. The owners of one plant, Maine   
Yankee
in Wiscasset, even created a Web page (www.buynuclear.com), complete with
color photographs, to promote its sale, but to no avail. The plant was   
retired
instead, though its equipment is still for sale.

GPU was prompted to divest itself of its nuclear operations by a new law   
in
Pennsylvania that ends the guaranteed rate structure that benefited   
utility
monopolies.

It has opted to get out of the business of generating electricity -- from
reactors and all other sources -- and instead concentrate on   
transmission.

As more states adopt deregulation laws, other companies are likely to   
follow
suit. Connecticut, for instance, passed an electric deregulation law   
earlier
this year that requires the state's largest power company, Northeast
Utilities, to try to auction off its nuclear reactors by 2004.

Still, analysts say there are likely to be more sellers than buyers, and   
even
some companies that have successfully managed nuclear plants are wary   
about
adding more.

"We are not looking to increase our nuclear exposure," said Randy   
Wheeless, a
spokesman for Duke Energy Corp. of Charlotte, N.C., which operates seven
reactors. "There's a lot of uncertainty about how nuclear will be treated   
in a
deregulated environment. From our standpoint, it may be best to sit and   
let
those questions be answered." Duke, however, hopes to extend the useful   
life
of existing plants well into the next century.

The idea that someone would want to buy Three Mile Island has some local
people reeling.

"I had customers who were just sitting here laughing about it," said Alma
Zeager, 42, the owner of Village Homestead, a nearby restaurant. "I still
don't think it's safe, but I don't want to move to Philly."

But what makes the deal appear promising is that many think that Unit 1   
of
Three Mile Island is among the best-run reactors in the world. As company
executives are at pains to point out, there are, in a sense, two Three   
Mile
Islands, the bad one of 1979 and the good one of today.

Only a football field away from Unit 2, which will never operate again,   
Unit 1
last year completed a continuous run of 616 days and 23 hours, a world   
record
for uninterrupted operation of a light-water nuclear reactor, the type in
commercial use in the United States.

While many of the 107 reactors now operating in the United States are not   
able
to produce electricity as inexpensively as plants powered by gas, coal   
and
oil, Unit 1 is an example of how nuclear power can be competitive.

GPU has projected that any power company that has operating costs of more   
than
3 cents a kilowatt-hour in the New Jersey, Pennsylvania and Maryland   
market
will be unable to survive, and Unit 1 comes in at 2.5 cents. That is in   
stark
contrast to Oyster Creek, for instance, which the company estimates has a   
cost
of 3.7 cents a kilowatt-hour.

"This unit has been one of the industry's best performers," said Kit   
Konolige,
an analyst at Morgan Stanley Dean Witter. David Lochbaum, a nuclear   
engineer
with the Union of Concerned Scientists, a watchdog group, said, "It is   
very
competitive."


Plant workers and company executives say that the industry as a whole,   
and
Unit 1 in particular, learned valuable lessons from the accident at Unit   
2.

The accident occurred when operators failed to close a pressure relief   
valve,
allowing a million gallons of cooling water to escape and causing the
radioactive core to reach a temperature as high as 5,000 degrees. If   
operators
had closed the valve and turned on an emergency cooling system, the   
accident
could have been averted.

But the plant had begun operating only a few months earlier, and the   
workers
did not comprehend what was happening. They mistakenly thought that a   
light on
the control panel meant the pressure-relief valve was shut.

Advocates for nuclear power contend that this mistake would not be made   
today.
They say that the industry now requires more training, that every reactor   
has
an on-site simulator for practice, that the number of control-room   
workers has
increased, that management is required to be more actively involved in   
daily
operations and that federal regulators have stepped up their oversight.

And if Unit 1 is sold, the deal will confirm the belief of many workers   
that
they have overcome the past. "We were a joke in the industry," said Dave
McCurdy, a maintenance supervisor for 29 years. "This would show that   
we've
come back."

Already there are people who once fought to close the plant who now   
support
it. "I've got to be fair about it," Mayor Stephen Reed of Harrisburg   
said.
"The plant has made some major advances."

Indeed, Unit 1 was closed for six years as the plant revamped its   
operations.

But Eric Epstein of Three Mile Island Alert, an anti-nuclear group, said   
that
improvements were overstated. He noted that only last year the NRC fined   
GPU
$210,000 for a string of violations, including inadequate engineering   
designs
and poor implementation of emergency preparedness programs.

Still, the NRC has an overall favorable impression of Unit 1. "If you get
beyond the image that so many members of the public have," said Neil   
Sheehan,
an NRC spokesman, "its performance has been pretty successful."

The idea that the reactor could be sold to Peco troubles Epstein because   
of
that company's past. In 1987, federal regulators shut down Peco's Peach   
Bottom
nuclear plant in Delta, Pa., because operators were found to be sleeping   
on
duty in the control room.

Since then, Peco has overhauled its operations, becoming, according to
analysts, a leader in the industry. Peach Bottom was restarted in 1989,   
and
this year it and Peco's other nuclear plant, in Limerick, received Power
magazine's Powerplant Award, marking them as among the nation's   
best-managed
reactors.

But Epstein noted that Peco was fined $55,000 in June by the NRC because
scraps of netlike nylon cloth, used for maintenance, were discovered in   
an
emergency cooling pump at Peach Bottom, and that could have hampered its   
use
in an accident.

A sale of Three Mile Island to Peco, Epstein said, would be like   
"transferring
the title from the Three Stooges to the Marx Brothers." He said the true
lesson of Three Mile Island had yet to be learned: No nuclear plant, he
contends, can be operated safely.

Visitors at the observation-deck gift shop one recent afternoon did not   
seem
troubled by any of this as they considered buying Three Mile Island   
T-shirts,
beer mugs, bottle openers and ice scrapers.

Bill Hollinger, who works in the visitors center, said that he gets lots   
of
tourists from abroad, and that Europeans are surprised they can get so   
close
to the accident site. Schoolchildren sometimes stand at the bottom of the
defunct cooling towers, shouting upward to create an echo.

The visitors, Hollinger said, "can't believe that this is where it   
happened."