Palo Verde nuclear plant clears federal oversight

http://www.azcentral.com/business/articles/2009/03/25/20090325biz-paloverde0325.html

http://www.azcentral.com/business/articles/2009/03/25/20090325biz-paloverde0325.html

Regulators affirm station has improved safety performance

by Ryan Randazzo

More than two years of intensified federal oversight ended for the nation's largest power plant Tuesday, as regulators affirmed that operator Arizona Public Service Co. had improved safety performance at the Palo Verde Nuclear Generating Station.

The move will benefit APS, which has spent millions to pay for on-site regulators and additional inspections at the plant 50 miles west of downtown Phoenix.

The move also benefits utility customers and the seven utilities that own the plant. With more reliable performance predicted from the plant, Palo Verde is less likely to suffer unexpected shutdowns, which force the companies to buy replacement power at a higher price - costs often passed on to customers.

The plant's upgrade from the most-regulated "Column 4" category - one step away from a forced shutdown - in just longer than two years was among the fastest recoveries on record, according to the Nuclear Regulatory Commission.

APS replaced its management team at the plant, tried to improve communications within the facility and emphasized a culture of safety among the nearly 3,000 people who work at Palo Verde.

Tuesday's announcement by the NRC moved the plant back to "Column 1," the category for plants operating normally, although it will require some additional inspections to ensure the plant maintains the ranking.

"We have seen notable improvements," NRC branch chief Mike Hay told Palo Verde executives Tuesday night. "It appears those actions are sustainable. However, that is a prediction. The outcome is really in your hands."

Palo Verde officials said the plant must strive to keep things running well.

"This is a milestone," said Randy Edington, executive vice president and chief nuclear officer. "We should celebrate, then we need to immediately look at what is industry excellence . . . and strive to be the absolute best."

Palo Verde had enjoyed several years of smooth operation until troubles began in 2003, when the plant had to be shut down unexpectedly several times because of mechanical problems.

Nuclear plants emphasize preventative maintenance. This means mechanical problems are supposed to be identified before they require unplanned shutdowns and ideally be fixed during the planned refueling shutdowns each of Palo Verde's reactors requires every 18 months.

Special investigative teams were sent to the plant several times in 2004 as the troubles continued.

In 2005, Palo Verde was fined $50,000 and given more scrutiny from the NRC because it inappropriately maintained water pipes in the core-cooling system, which the regulatory commission deemed a "substantial safety issue."

Twice the next year investigators found a backup diesel generator inoperable. Coupled with previous employee reports of mistrusting management, the NRC became concerned that employees were not adequately addressing the plant's problems.

In early 2007, the NRC notified APS that the plant was in "Column 4," one level above being shut down, when the issues with the generator were deemed substantial, partly because employees didn't have a questioning attitude about the cause of the problem.

Palo Verde already had begun to make changes in the weeks before it was notified of its Column 4 listing, announcing the retirement of the executive overseeing the plant in late 2006 and hiring Edington as chief nuclear officer.

More than 160 people, nearly all APS employees, showed up Tuesday at the Tonopah Valley High School auditorium near the plant to hear the NRC's report and ask the regulators questions.

One 20-year employee told the regulators that "frontline" employees got the message and planned to be vigilant about safety.

"A lot of us might say that it was management that got us here in the first place," Jerry Kingston of Peoria, a mechanic at the plant, said to the NRC officials. "The front line will not let management get us back in this predicament."

Arizona Corporation Commission Chairwoman Kris Mayes said she is hopeful the plant will stay out of trouble and continue to operate with minimal unplanned shutdowns.

"This is a plant that Arizonans paid for, and they deserve to have it running," Mayes said.

The poor status of the plant also was one of the concerns that credit agencies cited as a threat to APS' credit rating, Mayes said.

Returning to Column 1 reduces the threat of the credit rating slipping, which would impact the utility and its customers with higher borrowing costs.

That threat led the commission to grant an emergency rate increase in December and one of the reasons company executives are asking for a permanent rate increase that would boost household bills 9.4 percent, or about $11 a month.