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Posted on Thu, Mar. 21, 2002 story:PUB_DESC
Reactor troubles loom over utility
Uncertainty surrounding FirstEnergy plant draws crowd at NRC meeting

Beacon Journal business writer

Uncertainty hangs over the damaged Davis-Besse nuclear power plant like a dark storm cloud.

People seeking answers to that uncertainty filled much of the Nuclear Regulatory Commissions lecture-hall-like main conference room yesterday afternoon. Most of the men wore suits. Some audience members chatted quietly on cell phones or tapped out e-mail messages on wireless PDAs.

A sizable number of the more than 60 people who converged on the NRCs suburban Washington headquarters were financial analysts, concerned about how the shut-down reactor will affect FirstEnergys balance sheets.

To them, its important to know whether FirstEnergy will be able to restart Davis-Besse in time for the peak summer usage season, or whether it will have to buy increasingly expensive electricity on the open market to meet its customers needs, which would decrease earnings.

One things for sure: Those investors are increasingly skittish about the damaged reactor and have driven FirstEnergys stock down seven days in a row. At one point yesterday, FirstEnergys stock fell to an intraday low of $30.34, down more than $2 from Tuesdays close, only to end the day at $31.85. The stock has dropped 18 percent since the reactor problems were first announced on March 11

Moodys Investors Service yesterday indicated that FirstEnergys credit rating may be downgraded, which would make it more costly for the Akron company to borrow money .

One of the analysts at the hearing, Paul Ridzon of McDonald Investments in Cleveland, said the implications of a prolonged shutdown of Davis-Besse are important in many ways.

For one, Ohios deregulation law means FirstEnergy cant pay for repairs, estimated to cost as much as $10 million, by charging its customers more for electricity.

``They cant pass the cost on. They eat it,'' he said.

Also, FirstEnergy will have to buy power on the open market to make up for any Davis-Besse shortfall, he said. If electricity prices spike during periods of high demand such as a heat wave, that could get extremely costly, he said.

Another analyst said hes looking at how non-nuclear utilities could benefit if Davis-Besse and perhaps other nuclear plants are forced to shut down for a prolonged period of time.

FirstEnergy has said it expects to pay between $10 million and $15 million a month in extra energy costs with Davis-Besse shut down. That estimate counts on the nuclear plant, in Oak Harbor about 25 miles east of Toledo, being restarted by the end of June. thats about when summer electricity use starts to peak.

The ongoing NRC and FirstEnergy investigation into what happened at the plant creates uncertainty because no answers have been announced, Ridzon said.

``The market doesnt like uncertainty,'' he said.

NRC officials said they hope to have an initial report done in a week on what caused the acid corrosion problem at Davis-Besse.

The officials were clustered around a conference table, answering questions from the audience who sat around them and from an additional 50 or so people who listened in via telephone hookup.

The officials again emphasized that the corrosion problem found at Davis-Besse is a serious issue with industrywide implications. The NRC on Tuesday asked the operators of the nations 68 other pressurized water reactors to report back in 15 days on whether they think they could have similar corrosion. The 15-day response time is exceptionally short for the NRC, officials said.

Davis-Besse has been shut down for refueling and a safety inspection since Feb. 16. That inspection, using ultrasonic testing, unexpectedly found two acid-created cavities in the nearly 6 -inch-thick domed reactor vessel head. One of those cavities ate through the entire 6-inch carbon steel exterior, only to stop when it hit a thin layer of stainless steel that lines the vessel heads interior. A second, much smaller cavity, was subsequently found and announced earlier this week.

Officials theorize that boric acid worked its way through hairline cracks in some of the 69 nozzles that pierce the top of the vessel head. Five nozzles were found to have these tiny cracks; three of the nozzles had cracks that went all the way through.

The corrosion had the possibility of creating a ``loss of coolant'' accident, where coolant from inside the reactor vessel spews out into the much larger sealed containment chamber. Because nuclear plants are designed for that kind of problem, safety systems would have shut the reactor down, with no release of radioactivity into the environment, the NRC officials said.

The NRC has told FirstEnergy to take a more in-depth look at the power plants entire cooling system.

Jack Strosnider of the NRC said its possible that, among other things, part of the reactor vessel head components, as well as the fuel core, may need to be redesigned.

Thats not as big a deal as it sounds, FirstEnergy spokesman Todd Schneider said. Fuel cores are usually redesigned during refueling, he said. Plus, the reactor vessel head has extra nozzles that can be put into use, he said.

FirstEnergy officials at the NRC hearing said they are confident that the damage can be safely repaired and the plant restarted within months.

``Its an engineering issue. And we have good engineers,'' Schneider said.

Jim Mackinnon can be reached at 330-996-3544 or
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