Lacey's financial meltdown? What Oyster Creek's closure means to NJ

This story was updated on Feb. 5, 2018, to reflect the announcement that Oyster Creek would close 14 months ahead of schedule. This originally published in May 2017.

Oyster Creek Generating Station will never celebrate its 50th anniversary as an operating power plant. In October, it will generate its last megawatt of energy before powering down forever.

The station has energized homes and businesses throughout New Jersey as well as commerce in southern Ocean County, where it supports about 550 jobs directly and pumps about $80 million into the economy.

Those jobs and economic output will soon begin to diminish, as the nation's oldest still-operating nuclear power plant nears its closure.

Some area residents eagerly await Oyster Creek's closure. Diana Wright, who has lived in the Bayville section of Berkeley for 18 years, just seven or so miles from the nuclear reactor, has long worried about plant safety. Radioactive tritium leaks, human error, fish kills and malfunctioning equipment have checkered the plant's smooth relationship with its neighbors.

"Things (at the plant) are rusting. Things are breaking," said Wright, 67. "My biggest concern is that something is going to break, and that … if something breaks in that plant, and we’re all affected by it. A 'sorry' isn’t going to help."

But there is plenty of worry about life after Oyster Creek, which has become part of the very fabric of the local community, as an employer, economic engine, charitable benefactor, corporate citizen and community icon.

The list of unknowns is lengthy. Lacey officials and residents don't yet how their municipal and household tax pictures will change. They don't know how long decommissioning will take or how many jobs will support that endeavor. And while some hold out hope of luring another energy provider to the station, they identify no prospects.

"Everybody's nervous about the impact," said Regina Discenza of the Sunrise Beach section of the township. "I could see our taxes doubling."

An uncertain future

Oyster Creek will create a void in many respects.

Each year, more than $11 million in energy tax receipts – money Lacey receives for hosting the plant – flow into the township's tax coffers, where it supports police salaries, infrastructure and services in this township of about 27,000 people.

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"It's 42 percent exactly of our budget right now," said Committeeman Gary Quinn, a 15-year member of the governing body.

More than $80 million flows through this region annually because of Oyster Creek, including: $2.5 million in local taxes; the $11 million in energy tax receipts; and another $68 million in annual salaries, according to Exelon, the plant's parent company.

That does not include all the goods and services purchased by the plant and its well-paid, highly skilled employees.

"It’s not only a Lacey Township issue," former Mayor Peter Curatolo said of the change ahead. "The impact is going to reverberate around the county. It’s on our shoulders, and we know it… I will not let the town flounder on my watch."

The power plant is such an integral part of Lacey that the municipal seal bears a symbol of an atom. At outreach events in years past, plant staff have helped normalize nuclear power for another generation. They lent a hand as school children donned radiation protective gear.

The plant sponsored the municipal fireworks show for years and donated thousands of dollars to school programs.

"I’ve seen what it (the plant) has done for Lacey Township," said David Most, former Lacey mayor and committeeman and current Oyster Creek employee. "It’s built our school system and our parks."

Oyster Creek employees, who give annually to the social services organization United Way of Monmouth and Ocean Counties, and the power company donated $353,000 to the charity in 2016 alone.

When the plant goes "dark," so much of that likely will go away.

Timothy C. Hearne, president and CEO of United Way of Monmouth and Ocean Counties, said Exelon contributes about 10 percent of the charity's annual income and has helped the organization since 1976. Before the two counties' United Way branches merged, Exelon at one point contributed about 30 percent of the revenue collected by the Ocean County branch, Hearne said.

Their funding has helped make possible United Way's efforts to distribute school supplies and winter clothing to needy children throughout the region, he said.

"They help us both financially and through their employees volunteering in the community," Hearne said.

Powering down: Oyster Creek to close October 2018

Exelon also helps makeover parks throughout the region, supports Southern Ocean Medical Center in Stafford, and supplies money and tools to numerous local charities.

But it's the loss of jobs, property taxes and energy tax receipts that weigh heavily on the minds of locals.

Some of the station's high-paying, technical jobs will remain through the years of decommissioning; how many will remain and for how long is not yet clear, although the future is just around the corner.

In preparation for the change, Lacey officials are pushing to rezone and increase business development along Lacey Road, to the plant's north, and Route 9 to buffer against the future loss.

Committeeman Quinn said he believes the $11 million in energy tax receipts will continue to flow to Lacey's municipal budget as long as the radioactive waste remains in the township. For now, there are no plans to transfer it elsewhere.

New Jersey law directs municipalities such as Lacey receive a portion of energy tax receipts, fees collected from energy users, in lieu of property taxes from utility companies.

How much municipalities receive is calculated through a complex algorithm. A wrinkle: New Jersey's energy tax receipt fund has been skimmed by the state at different times to fill budget gaps, according to the New Jersey League of Municipalities and the Center for Government Services at Rutgers University.

Bottom line: No one is sure if those receipts will continue into the future or for long.

"Certainly in the back of our minds is always that fear that, even though it (law) would have to be changed at the state Legislature ... that the (energy tax receipt) money could be taken away from Lacey Township and moved elsewhere," Quinn said.

Rep. Tom MacArthur, a Republican representing New Jersey's 3rd Congressional District, has joined the push to make the property attractive to a future energy producer.

"He (MacArthur) is committed to working with all parties to ensure that the transition is environmentally sound and the residents of Lacey Township do not face any unnecessary hardships resulting from the closure," his spokeswoman Camille Gallo said in an email.

Why Oyster Creek is closing

What is clear is that time has passed Oyster Creek.

A half-century ago, scientists and politicians believed the future lied in nuclear's seemingly limitless possibilities.

The nearly self-sustaining chain reaction opened a new reservoir of energy that supplied expanding homes and a growing array of electric gadgets. Oyster Creek's location was ideal. It was close to an abundant water supply, needed for cooling the plant, but away from major population centers.

Oyster Creek "was a big deal in this area," said Suzanne D'Ambrosio, spokeswoman for the plant. (D’Ambrosio is married to Asbury Park Press News Director Paul D’Ambrosio. He had no editorial oversight of this story and did not read it prior to publication.)

At the time of construction, the region was mostly farmland and woods, she said.

But the glory days of nuclear power have passed. Suburban neighborhoods have crept closer to the plant's 700-acre site. Additionally, financial pressures are squeezing older nuclear plants out of the energy market. Renewable energy sources and natural gas are proving to be less costly competitors to the nation's aging fleet of nuclear reactors.

"The older plants that date back to the '50s and '60s, by and large, the requirements take up too much investment on the part of utilities," said Robert Rosner, an astrophysicist and founding director of the Energy Policy Institute at the University of Chicago.

About 15 years ago, about half of the electrical energy in New Jersey was generated by nuclear, making it one of the most nuclear states in the nation, Rosner said. But by 2015, natural gas surpassed nuclear power for electricity generation in New Jersey for the first time, according to the U.S. Energy Information Administration.

Oyster Creek, which turns 50 on Dec. 23, 2019, was not even among the top 10 most-productive power plants in the Garden State in 2014, according to the administration's latest generation report.

Oyster Creek is "roughly half the (generation) size of a typical nuclear power plant," said Frank Felder, director of the Center for Energy, Economic & Environmental Policy at Rutgers University's Edward J. Bloustein School of Planning and Public Policy.

When Oyster Creek shuts down, energy consumers are not likely to notice the change or see any noticeable change in prices. Felder expects other plants connected to the electrical grid to fill in the gap in supply.

"There won’t be rolling blackouts, not because of this," he said. "People have been thinking about this (and planning) for a long time."

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Even in New Jersey, where nuclear power still plays a major role in energy generation, demand for Oyster Creek's aging technology is nearing an end.

The plant "represents a technology that today is no longer in favor," said Rosner, of the Energy Policy Institute. "It’s a boiling-water reactor. The modern reactors that are being installed, for example in the South, in South Carolina and Georgia, there’s all pressured-water reactors."

Local and state officials hope to attract another plant, maybe gas, to the property that will eventually be left vacant by Oyster Creek's departure. Officials say the power lines are there, making it an ideal location for another generating facility to pick up where Oyster Creek leaves off.

Before that can happen, it will likely take a decade or more for Oyster Creek's buildings to be removed.

Curatolo, the former mayor, said Lacey will use every resource possible to plan for life here without the nuclear plant.

"We're up against it," he said. "It is serious. I don't want to sound like an alarmist. There will not be a Wednesday announcement, a Thursday closure and goodbye. This is going to be a long process, but the future belongs to the prepared."

As far as the atom on Lacey's municipal seal, officials say it's not going anywhere.

"That'll remain," said Quinn, the committeeman. "That's the history that's made this town."

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Oyster Creek, by the numbers

1965 - Jersey Central Power & Light Co. begins construction.

1969 - Oyster Creek is completed at a cost of $90 million, or $597 million in today's dollars, and the plant powers up for the first time.

1986 - The accident at Three Mile Island triggers plant upgrades and the number of employees at Oyster Creek rises to 1,276.

2003 - Exelon takes sole ownership of Oyster Creek with the acquisition of AmerGen.

2005 - AmerGen files an application to extend Oyster Creek's operating license to 2029.

2009 - Oyster Creek's 40-year license would have expired, but Exelon and New Jersey officials agree to a 10-year license renewal instead of 20-year. The company, in return, avoids being forced to build expensive water cooling towers to protect aquatic life in the creek and nearby Barnegat Bay.

2011 - The Fukushima Daiichi nuclear power plant undergoes a catastrophic meltdown, and U.S. nuclear regulators begin reassessing safety at American plants.

Source: Asbury Park Press archives, the New Jersey Department of Environmental Protection.

Amanda Oglesby: 732-557-571; aoglesby@GannettNJ.com