Specialist operators

29 December 2001

Nuclear utilities are looking at ways to improve performance. One method that has been adopted by a number of utilities in the US midwest has been to take on a specialist operator for their nuclear plants.

Four upper Midwest utilities formed Nuclear Management Company (NMC) in February 1999 to operate seven nuclear units located at five sites in Wisconsin, Minnesota and Iowa. A fifth utility is planning to join NMC, which would add a sixth site in Michigan to the group.

The founding utilities created NMC in order that it could improve operational performance and sustain safety and reliability levels at the nuclear plants.

The founding utilities and their nuclear units are: •Alliant Energy, Wisconsin. Owner (with two other partners) of Duane Arnold Energy Centre in Iowa.

•Northern States Power, a subsidiary of Xcel Energy, Minnesota, owner of the Monticello plant and Prairie Island 1 and 2.

•Wisconsin Electric Power, owner of Point Beach 1 and 2 in Wisconsin.

•Wisconsin Public Service Corp, owner (with two other partners) of the Kewaunee plant in Wisconsin.

In addition, Consumers Energy of Michigan, which owns the Palisades plant in Michigan, plans to join NMC.

In May 2000, the US Nuclear Regulatory Commission (NRC) approved requests from these four utilities to transfer operating authority for their five nuclear plants to NMC.

Tranfser of operating authority, which was executed in August 2000, established NMC as an operating company for the five plants.

A similar arrangement with state and federal regulators will be made with Consumers Energy to operate the Palisades plant.

Each parent utility continues to own and market power produced by their nuclear units. Each utility also remains financially responsible for the maintenance and operating costs.

Operation NMC will have 3,250 employees at six sites, the same experienced employees who have been running the plants for years. NMC’s focus is making operational improvements, but also will benefit from administrative changes. By providing corporate administration, synergies and improved general structures, NMC expects to cut in half the costs for administration previously provided by the parent companies.

It also expects to be able to make savings as a result of being able to leverage contracts, through being able to place orders for all eight plants, rather than just one or two.

In addition, there were improvements that could be made in the organisational structure. By having combined training, for example, it is possible to quickly spread best practice around the different sites. Processes can be standardised at the different sites.

Of the eight reactors NMC operates or will soon operate, five are Westinghouse PWRs, one is a Combustion Engineering PWR, and two are General Electric BWRs. The five Westinghouse PWRs are virtually identical. In addition, Duane Arnold and Monticello are very similar.

NMC will continue to provide maintenance personnel at each site, and is concluding an agreement that will enable it to provide extra people to a site when there are special circumstances. There are discussions currently being held with various labour unions to take specialists, such as electricians or welders, and move them from site to site as required. The similarities between the reactors exceed the differences between the reactors, and there are therefore a lot of available synergies to improve the organisation.

NMC is involved in the whole fuel cycle, including uranium procurement, plant operation, and spent fuel management.

To get an idea of what the strong and weak points of each plant were, NMC formed a multi-site organisation to carry out an assessment at each site, each assessment taking 1-2 months.

This is expected to give NMC an immediate sense of the strengths and weaknesses of each site, which in turn gives it the ability to easily transfer best practice to the different sites.

One aspect that NMC is looking to address is one that is facing many companies, that of an ageing workforce. Its goal is to train and attract the right talent. The intention is to ensure that sufficient numbers of people are trained before the demographics of the industry create a serious problem.

Palisades plant NMC and Consumers Energy announced in November 2000 plans for NMC to operate Consumer Energy’s Palisades plant near South Haven, Michigan. The addition of this plant to NMC’s fleet will make it the sixth largest nuclear operating company in the USA.

Consumers Energy is seeking permission from the NRC to transfer operating authority for Palisades to NMC. The decision on whether or not to give this permission is expected to be made by mid 2001.

NMC believes that there is an increasing trend towards consolidation in the industry, and it is seeking to position itself as a top operator of US nuclear plants. It will continue to try to expand its interests by acquisition of new partners. The company intends to concentrate first on expanding its interests in the USA, with a number of prospects under active consideration. It is not yet looking to acquire interests outside of the USA.

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