THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Sunday, April 28, 1996 TAG: 9604270473
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY DAVE MAYFIELD, STAFF WRITER
DATELINE: SURRY LENGTH: Long : 349 lines
At 5:55 on a cool, clear afternoon David A. Christian is barreling down Hog Island Road toward Virginia Power's Surry nuclear plant.
Christian, the station manager, is on his way back from the utility's nuclear headquarters near Richmond. Managers there are abuzz in preparations for a ``re-engineering'' that could cut hundreds of jobs in the nuclear division - a dropping shoe for which Christian and his 900 cohorts at Surry have been bracing for months.
That's not the subject this April evening. In a few minutes, Christian will stand before dozens of friends and relatives of Surry employees. He'll welcome the assembled husbands, wives, kids, cousins and neighbors to an open house at the sprawling plant on the James River.
Then Christian will join them for green punch and sugar cookies - a quaint little pleasure given the magnitude of what's bearing down on Surry and its employees.
Work-force cuts aren't the only things in store for this station, which has been powering about one of every seven homes and businesses on Virginia Power's grid since starting operation in 1972.
Later this week, Surry will begin a critical refueling outage at one of its two reactors. Higher-ups in the nuclear organization are counting on the scheduled 37-day tune-up to go well to accomplish their goal of sharply lowering the plant's operating costs in the next several years.
And as the world remembers Chernobyl - and is reminded of the tragic consequences of nuclear-power sloppiness - Surry approaches the 10th anniversary of its own private disaster.
On Dec. 9, 1986, a steam pipe burst and spewed 30,000 gallons of superheated water. Four construction workers eventually died from burns suffered in the accident.
That accident is remembered by many as the first in a string of problems that by June 1989 landed Surry on the Nuclear Regulatory Commission's Watch List of the nation's worst nuclear plants.
``Call it what you want. We were in the ditch,'' Christian says.
Surry's senior managers took the NRC's wake-up call seriously. Soon they were leading an improvement program that reached even the most remote corners of the plant.
A similar turnaround started at Surry's near-twin North Anna station, northwest of Richmond.
Virginia Power's diligence paid off. In little more than a half-decade, the utility's nuclear program is now widely recognized as among the industry's best. North Anna is rated the nation's lowest-cost nuclear plant, Surry ninth-lowest among the roughly 70 stations rated by the Utility Data Institute.
Good, not good enough
In the past few years, the two plants have enjoyed several record-long runs without tripping off line, and they've garnered top scores from regulators and industry groups on safety and reliability.
This is no small matter for Virginia Power and its customers, particularly its big job-producing industrial customers, which increasingly take electricity costs into account when deciding where to build factories.
Virginia Power's nuclear stations supply more than 30 percent of its power generation compared with a national average of 20 percent.
It can't afford to have inefficient nuclear plants, says Thomas Hamlin, a utility analyst for Wheat First Butcher Singer in Richmond. Nuclear's turnaround is a ``key reason they're one of the lowest-cost electricity producers in this part of the country.''
But in an industry where competition is no longer a concept, being good is not good enough.
Some wholesale buyers of power like co-ops and cities have begun shopping around for electricity. Now some policymakers envision forcing utilities like Virginia Power to pass through - even to choosy homeowners - the electricity generated by lower-cost power producers several states away.
All this is prompting Virginia Power and other utilities to cut costs across the board. Their nuclear programs aren't being spared. In recent years, nuclear managers have spent more and more time figuring out how to improve the cost-effectiveness of their operations.
That has raised concerns even among some industry supporters. Former NRC Chairman Ivan Selin warned in 1994 that economic pressures could cause utilities to ``cut corners'' at nuclear plants.
``They may be tempted to put off capital investment that we consider necessary to maintain equipment in top shape,'' he said. ``We have to be that much more alert about the safety implications.''
Safety vs. costs
Nuclear's detractors say Selin's warning has already been proven in at least one case - that of Northeast Utilities' Millstone plant in Waterford, Conn.
That plant's three reactors have been taken off line one by one since last November after the NRC accused the utility of numerous safety violations. Among other things, employees at the plant complained that Millstone managers sidestepped safety requirements when refueling reactors to cut outage times. For each day a reactor is off line, utilities have to pay hundreds of thousands of dollars to buy replacement power.
To Scott Denman, executive director of the Washington-based Safe Energy Communication Council, Millstone ``proves that the industry is beginning to turn a blind eye toward critical safety issues.''
The accusation bristles James P. O'Hanlon, Virginia Power's chief nuclear officer.
``What they did was wrong. I'm certainly not defending them,'' he says of Millstone's operators. But he insists that it's not typical of the industry, and certainly not of Virginia Power.
``Our safety standards have not changed. They will not change,'' O'Hanlon says. ``If anybody does that, they're shortsighted. It's not good business.''
The 52-year-old O'Hanlon has spent the better part of his two decades in the nuclear power industry trying to prove that reactors can be operated both safely and cost-effectively.
He came solidly to that conclusion several years ago when reading a report from the Atlanta-based Institute of Nuclear Power Operations, for which he once worked.
INPO, which is a standards-setting industry group, tracked refueling outages at nuclear utilities. While there were some exceptions to the rule - and Millstone may be one of them - the study found utilities that finished such outages quickest generally ran their plants more safely and reliably afterward.
Short outages require good planning and coordination, O'Hanlon says, symptoms of an organization that won't abide sloppiness.
O'Hanlon serves up his views from the head of a long table in Virginia Power's Nuclear Command Center. It's on the second floor of a big glass and red-brick building in a suburban office park west of Richmond.
The lobby downstairs is distinguished by a green- and burgundy-tiled marble floor and dotted by ficus trees. Upstairs, however, the decorating scheme is wall-to-wall cubicle, and the command center is spartan by corporate standards.
On a board on one wall, someone has scribbled these words: `Nuclear is a good place to work, not a nice place to work.''
The word ``good'' is underlined.
O'Hanlon says that last summer when he and other senior managers started batting around how they'd re-engineer the nuclear operations, one man wrote down the saying. General Electric Co.'s chairman, Jack Welch, once made roughly the same distinction about GE: good, not nice. It helped Welch earn the nickname Neutron Jack for his ruthless rooting out of costs. GE has slashed tens of thousands of jobs in the past few years.
The saying struck O'Hanlon as pertinent to his group, too, so he kept it up to drive home a point. ``What we're going to,'' he says, ``is a lean, high-performance organization.'' It won't be comfortable working at Virginia Power any longer when what matters is results.
Growing nuke advice
The wiry, ruddy-faced O'Hanlon learned about proving oneself long ago. The son of an Irish immigrant laborer in a Maine paper mill, he spent eight years after graduating from the Naval Academy as a submariner, three and a half of them in Norfolk. He quit active duty in 1973 after tiring of separations from his young family. He retired as a captain in the Reserves in 1989.
The Navy taught him a lot, O'Hanlon says: accountability, attention to detail, leadership. All came in handy on his first post-Navy stop: Three Mile Island.
The words are barely out of his mouth, before he sets a couple of things straight. ``I always tell people I was on Unit 1, not Unit 2,'' he says. The latter unit lost half of its reactor core in the infamous meltdown. ``And I left before, not after.''
O'Hanlon was at Arkansas Nuclear One as general manager when he first heard about the TMI accident on March 28, 1979.
``I was shaken quite a bit by it,'' he says. ``I just couldn't understand how it happened.'' It turned out to be a thicket of explanations: operator errors, equipment malfunctions.
In the end, O'Hanlon says, what it proved to him was ``the need for very high standards all the time.''
TMI had a profound impact on America's nuclear-power program. In its wake, dozens of reactors, including two additional units at Virginia Power's North Anna plant, were canceled. No reactor has been ordered in the United States since TMI.
Lawsuits and increased regulations dramatically hiked the costs of all remaining plants to $5 billion or more for some stations. The last of the reactors ordered before TMI, a Tennessee Valley Authority plant, finally went on line just a few months ago.
The only growth field for nuclear managers after TMI was advice. Utilities were scrambling for help. O'Hanlon took advantage of the trend. At the Institute of Nuclear Power Operations, he helped develop tougher industry standards.
Accountability, mission
O'Hanlon was recruited by Virginia Power in the late '80s during the darkest days of its nuclear program. For the most part, O'Hanlon says he's following the lead set by his predecessor, Bill Stewart, who two years ago left for a job with an Arizona utility.
Stewart believed in goal-setting and was appalled to learn when taking the helm of Virginia Power's nuclear plants that they had no established mission. Soon nuclear managers were striving to land the program among the industry's best 25 percent, later the top 10 percent.
Stewart liked easy-to-understand visual devices, and he pushed to make information more widely available to people at all levels of the nuclear organization.
So up went charts in hallways at headquarters and at the plants. They track dozens of indicators, everything from the frequency of unplanned reactor trips to the collective radiation exposure of workers.
One widely displayed invention put extra heat on managers: a color-coded ``windows'' charting system, fashioned after the light-up annunciator panels in a power-plant control room.
Green blocks mean that a work group - engineering, safety, radiation control - has met the highest level of management expectations. Red signals a trouble spot. ``A scarlet letter,'' one manager says.
The value of such a system, managers say, is accountability.
When Virginia Power's nuclear program hit its nadir in the late '80s, ``everybody was stumbling over everybody'' to shift blame, says Dean Erickson, Surry's superintendent of radiological protection.
Cleanliness is a push that's grown almost fanatical under O'Hanlon. The nuclear plants, with their gleaming floors and fresh paint, don't look like typically grimy power stations.
``If you have a clean plant, as soon as you have a leak of oil or steam or water, you can see it,'' O'Hanlon explains. ``Then you can fix it right away. It's all part of having a tight system.''
Slashing without burning
Separating Virginia Power's nuclear operations into a distinct business unit in January 1994 ushered in what may be the most dramatic change, O'Hanlon says.
Suddenly, the plants had their own balance sheets and profit-and-loss statements. Managers took crash courses in corporate finance. O'Hanlon spent six weeks last summer in an executive business program at the University of Virginia.
To some degree, the nuclear managers were ahead of their counterparts elsewhere in the company in finding ways to improve.
After TMI, nuclear utilities set up programs to share ``best practices'' with one another, realizing that their industry could little afford another mistake that jeopardizes safety. Surry Manager Christian has traveled as far as Japan to ``nose around'' nuclear plants.
But O'Hanlon says the information-sharing has been largely aimed at improving safety and reliability. Now he says, ``Without losing focus on safety, we must all focus on performance and the bottom line.''
O'Hanlon aims to cut the nuclear program's production costs, already trimmed from 1.55 cents to 1.32 cents per kilowatt hour over the past five years, to 1 cent per kilowatt hour by 2000.
To help accomplish that goal, he and his fellow nuclear leaders plan to slash operating costs by 15 percent to 20 percent this year alone. Michael Kansler, one of two nuclear vice presidents under O'Hanlon, says job cuts are inevitable - and likely to begin as early as mid-May. It's too early to say how many of nuclear's 2,300 employees will be affected, he says. Union leaders say they've been told several hundred people could go before the cuts are done early next year.
Morale? What morale?
Down in the ranks, workers are struggling to accept the message.
Earlier this month at the annual shareholders' meeting of Virginia Power's parent, Dominion Resources Inc., longtime Surry employee J.P. Winfree publicly lectured his bosses for 10 minutes on his perceived shortcomings in the utility's re-engineering.
``Morale is about as low as I've ever seen it'' among workers at Surry, he said. ``A lady I work with said, `We don't have low morale. We don't have any morale.' ''
Louis Williams, president of the International Brotherhood of Electrical Workers local that covers the nuclear plants' hourly employees, confirms that the mood is grim.
``They're very upset with the way things are being done,'' he says. ``There's a lot of undue stress on employees, and I think it's starting to show on some of them.''
Williams cites a recent refueling outage at North Anna as possible evidence. Six workers there suffered heart problems - one fatal - shortly before or during the outage, which the utility completed in a record-low 30 days, four days ahead of schedule.
Most plant employees worked extended hours during that time, as many as 72 hours a week.
North Anna Manager J. Art Stall thinks the fact that many workers ``are not in optimum shape,'' may have had a lot to do with the heart problems. He concedes, however, that stress levels are high at the plant because of anxiety.
Stall may have the toughest job of all in Virginia Power's sweeping re-engineering - convincing workers at the nation's lowest-cost nuclear plant to do even better. He won't be preaching the message much longer. He starts a new job with a Florida utility next week.
His departing advice to his North Anna charges: ``Fight complacency. . . . It's one thing to get to the top. It's another to stay there.''
Dave Christian, Stall's counterpart at Surry, says such messages would be easier to get through if employees' trust weren't strained. He says workers wonder, ``Is the company making the best decisions for the future of nuclear?''
To Christian, there's no doubt. Virginia Power is planning as early as next year to file with the NRC for 20-year extensions on the licenses for both its nuclear plants. That would push Surry's licensed life to 2033, North Anna's to 2040.
You don't plan to operate stations that long, Christian says, by making wrongheaded short-term decisions.
No place for waste
It's late on another April afternoon, and Christian is leading a reporter out to illustrate what he says is the real challenge facing nuclear power in the long term: what to do with its waste.
Inside a tall, softly lit building at Surry stands a pool of water, 40 feet deep, marked by small glowing lines of deep blue near the bottom. Immersed are about 850 highly radioactive fuel assemblies that spent out their usefulness.
There's more. Nearly 650 other assemblies have been packed inside cast iron casks and moved to above-ground storage pads on a corner of the Surry property.
Virginia Power pioneered above-ground storage, when Surry's pool was close to filling in the mid-'80s. Now utilities all over are setting such storage pads at their plants. There's simply no alternative for spent fuel to on-site storage.
The reason: The federal government is decades behind and billions of dollars over original estimates in its search for a permanent storage site. The proposed site, at Yucca Mountain, Nev., is at least 15 years away from opening at a cost of at least $20 billion.
If there's anything that will halt Surry, Christian says, it's the buildup of fuel on site. At what point does somebody say ``Stop''?
It's on the back end of power plants like Surry where its detractors - in the United States, at least - are increasingly focusing their attacks.
When the final accounting is done, nuclear will look like an awfully expensive mistake, says Denman of the Safe Energy Communication Council. The waste costs aren't all. Decommissioning of nuclear plants could cost tens of billions of dollars more, he says.
No nukes, no way
Indeed, Virginia Power estimates it will spend $1.05 billion to decommission its two nuclear plants.
Why continue expending so much effort on such a flawed pursuit? Denton asks.
Even industry executives seem to have thrown in the towel. Only 8 percent of 300 industry executives polled this year by the Washington International Energy Group said they believed there will be a resurgence in nuclear power.
Don't be so sure, counters O'Hanlon. Ten years from now, he says, he wouldn't be surprised if a U.S. utility orders a new reactor.
Overseas, three dozen reactors remain under construction. And there's still research going on into new types of reactor designs.
O'Hanlon makes one thing perfectly clear: As long as he has anything to do with it, Virginia Power will be one of last of America's utilities to give up on nukes. ILLUSTRATION: Color staff photos by Bill Tiernan\The Virginian-Pilot
Spent fuel from two reactors at Virginia Power's Surry nuclear plant
is stored in cast iron casks. The casks contain a total of about 650
highly radioactive fuel assemblies. Another 850 are in a storage
pool at the plant. TOP LEFT: The turbine deck at the Surry plant.
TOP MIDDLE: Steven McCray, a reactor operator, observes instruments
and records information in Surry's control room. TOP RIGHT: The
electricity carried out of the Surry plant powers one out of seven
customers on Virginia Power's system. With company's North Anna
plant, nuclear accounts for one-third of the utility's generation.
< Above: James P. Hanlon, Virginia Power's senior vice president of
nuclear operations, says about the program's rebound; "We had to
change a lot to reach a level of excellence." Left: David A.
Christian, Surry station manager, says he's not afraid to steal
other nuclear operators' ideas. "As soon as we find out that
somebody better, we start nosing around."
Graphic
Virginia Power's Turnaround
[% of time in forced outages]
[Average shutdown days per refueling]
[Va. Power's estimated pricetag* for decommissiong its nuclear plant
keeps rising.]
In MILLIONS of Dollars
For complete text, see microfilm
KEYWORDS: NUCLEAR POWER PLANT NUCLEAR ENERGY ATOMIC ENERGY VIRGINIA
POWER by CNB