Davis-Besse Steam Generator Replacement Outage to Bring $108 Million to Ottawa County Area Economy Overall Economic Benefit of More Than $150 Million Expected Statewide
The Davis-Besse Nuclear Power Station in Oak Harbor, Ohio, will be powering the economy in northwest Ohio even when the plant shuts down for an upcoming steam generator replacement project and refueling.
The project is expected to boost the local economy by more than $108 million, with overall economic benefits expected to exceed $150 million statewide, according to an economic study recently completed by Phoenix-based consulting firm Applied Economics.
The upcoming outage includes installation of two new steam generators, 470-ton components that produce the superheated steam used to drive the turbine generator, which ultimately produces electricity. The $600 million steam generator replacement project and the refueling are expected to employ as many as 2,300 additional local union and traveling contractor workers in addition to Davis-Besse's regular workforce. Outage workers began arriving in preparation for the project last fall, with the peak number of workers expected in February and March. Of the project budget, more than $147 million is expected to be spent on salaries for on-site temporary workers during the project.
"Installation of new steam generators is one of the largest projects to occur at Davis-Besse since construction of the facility," said Davis-Besse Site Vice President Ray Lieb. "The effort requires much more equipment, supplies and manpower than a regular refueling, and workers from 13 local unions along with a large contingent of out-of-town contractors will assist site personnel with the work. Completion of the project is expected to help ensure that Davis-Besse remains an integral part of northwest Ohio's economy, and a safe, reliable and clean energy source, now and in the future."
Among the more than 1,000 local union craft that will assist with the outage are workers from Carpenters Local 744, Boilermakers Local 85, Ironworkers Local 55, Laborers Local 480 and Electricians Local 8.
FirstEnergy, its suppliers and the additional outage workforce will require many goods and services over the project's duration, with local businesses supplying much of this need. The economic impact study estimates a local benefit of more than $2.1 million to the Ottawa County area, as out-of-town workers stay in area hotels, eat in local restaurants and frequent area stores. An additional $38 million is expected to be spent on local goods and services from the area to support the outage, including building and office supplies and other construction services.
"With the large number of employees at Davis-Besse, the plant always has been a significant contributor to the economy of Ottawa County, even more so in years that include out-of-town contractors," said Larry Fletcher, executive director of the Lake Erie Shores and Island Visitor's Bureau in Port Clinton, Ohio. "We welcome these out-of-town workers and are committed to providing assistance during their stay, and look forward to showing them the warm hospitality and many top-rate services our area has to offer."
One of the ways the Visitor's Bureau is providing assistance is by helping out-of-town contractors locate lodging in the area. The lodging locator service, which was activated in January, has received a steady stream of calls, and many hotels and rental properties in the area are fully booked for the next several months as a result. In addition, some area restaurants have extended their hours to meet the round-the-clock needs of outage workers.
The Davis-Besse Nuclear Power Station, operated by FirstEnergy Nuclear Operating Company (FENOC), a subsidiary of FirstEnergy Corp. (NYSE: FE), produces 900 megawatts of carbon-free electricity with no greenhouse gases or air pollutants. Davis-Besse provides more than 700 full-time, rewarding jobs during normal operations. The plant also contributes more than $13 million each year in local and state taxes.
FirstEnergy is a diversified energy company headquartered in Akron, Ohio. Its FENOC subsidiary also operates the Beaver Valley Power Station in Shippingport, Pennsylvania, and the Perry Nuclear Power Plant in Perry, Ohio.
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Actual results may differ materially due to the speed and nature of increased competition in the electric utility industry, in general, and the retail sales market in particular; the impact of the regulatory process on the pending matters before the Federal Energy Regulatory Commission and in the various states in which we do business including, but not limited to, matters related to rates and pending rate cases; the uncertainties of various cost recovery and cost allocation issues resulting from American Transmission Systems, Incorporated's realignment into PJM Interconnection LLC; economic or weather conditions affecting future sales and margins; regulatory outcomes associated with storm restoration, including but not limited to Hurricane Sandy, Hurricane Irene and the October snowstorm of 2011; changing energy, capacity and commodity market prices including, but not limited to, coal, natural gas and oil, and availability and their impact on retail margins; the continued ability of our regulated utilities to recover their costs; costs being higher than anticipated and the success of our policies to control costs and to mitigate low energy, capacity and market prices; other legislative and regulatory changes, and revised environmental requirements, including possible greenhouse gas emission, water discharge, water intake and coal combustion residual regulations, the potential impacts of Cross-State Air Pollution Rule, Clean Air Interstate Rule (CAIR), and/or any laws, rules or regulations that ultimately replace CAIR, and the effects of the United States Environmental Protection Agency's Mercury and Air Toxics Standards rules including our estimated costs of compliance; the uncertainty of the timing and amounts of the capital expenditures that may arise in connection with any litigation, including New Source Review litigation or potential regulatory initiatives or rulemakings (including that such expenditures could result in our decision to deactivate or idle certain generating units); the uncertainties associated with the deactivation of certain older regulated and competitive fossil units including the impact on vendor commitments, and the timing thereof as they relate to, among other things, Reliability Must-Run arrangements and the reliability of the transmission grid; adverse regulatory or legal decisions and outcomes with respect to our nuclear operations (including, but not limited to the revocation or non-renewal of necessary licenses, approvals or operating permits by the Nuclear Regulatory Commission or as a result of the incident at Japan's Fukushima Daiichi Nuclear Plant); issues arising from the indications of cracking in the shield building at Davis-Besse; the impact of future changes to the operational status or availability of our generating units; the risks and uncertainties associated with litigation, arbitration, mediation and like proceedings, including, but not limited to, any such proceedings related to vendor commitments; replacement power costs being higher than anticipated or not fully hedged; the ability to comply with applicable state and federal reliability standards and energy efficiency and peak demand reduction mandates; changes in customers' demand for power, including but not limited to, changes resulting from the implementation of state and federal energy efficiency and peak demand reduction mandates; the ability to accomplish or realize anticipated benefits from strategic and financial goals including, but not limited to, the successful implementation of our transmission plan, the ability to reduce costs and to successfully complete our announced financial plans designed to improve our credit metrics and strengthen our balance sheet, including but not limited to, the benefits from our announced dividend reduction and our proposed capital raising and debt reduction initiatives, and the proposed sale of non-core hydro assets; our ability to improve electric commodity margins and the impact of, among other factors, the increased cost of fuel and fuel transportation on such margins; the ability to experience growth in the Regulated Distribution and Regulated Transmission segments and to continue to successfully implement our direct retail sales strategy in the Competitive Energy Services segment; changing market conditions that could affect the measurement of liabilities and the value of assets held in our Nuclear Decommissioning Trusts, pension trusts and other trust funds, and cause us and our subsidiaries to make additional contributions sooner, or in amounts that are larger than currently anticipated; 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