[BETA] Fortnightly

Too many rules can make any plant uncompetitive.

Now, more than ever, the commission must weigh

the costs when it looks at health and safety, decommissioning and antitrust impacts. Nuclear assets seem to pop to the surface wherever one looks for causes behind the current upheaval in the U.S. electric utility industry. The nuclear experience (em with its costly prudence reviews so prevalent during the 1980s (em has helped fuel a major shift in attitude.

Senior utility managers have now come to accept fundamental changes in the electric industry. This change in attitude stems in part from high production costs in isolated areas and marked regional differences in retail rates. And, in many cases where electric rates are considered "high," a heavy commitment to nuclear power is involved.

One scenario for a restructured industry would envision an independent, unregulated generating sector. In fact, some proposals have already surfaced that would have utilities divest themselves of some or all of their generating assets, including nuclear plants.

If utilities should proceed as suggested, and transfer ownership of their nuclear assets, the U.S. Nuclear Regulatory Commission would likely play a significant role, based on the substantive and procedural laws and regulations currently in place. The specter of NRC involvement in turn poses key questions: How will the NRC react to proposals to transfer nuclear assets? Moreover, how will the NRC enforce rules, regulations and nuclear legislation, now that generation may become deregulated, putting at risk any costs incurred by plant owners to comply with NRC directives?

One thing is certain, the NRC will not lessen its commitment to safe operation of nuclear facilities. In a speech given at Massachusetts Institute of Technology this year, NRC Chair Shirley Jackson stated the commission's view clearly:

Our focus is on ensuring that, as the business environment changes, economic pressures do not erode nuclear safety. That means that nuclear electric generators must continue to maintain high safety standards, with sufficient attention and resources devoted to nuclear operations, and with decommissioning funding secure. ... [I]t is not the NRC's mandate to ensure the economic viability of nuclear power or to jeopardize it, only to ensure that whenever nuclear power is used, it is used safely, and that, when a nuclear plant is shut down, there is adequate funding to ensure that it can be decommissioned safely.

Jackson's statement identifies the two major areas in a restructured industry in which the NRC will exert considerable influence: operational safety and decommissioning funding. The commission will address these issues both for nuclear plants that do not change hands and for plants proposed for transfer. While the NRC has not yet taken action, it has given hints that changes are imminent.

While the NRC considers that protection of health and safety remains its fundamental responsibility in regulating nuclear power, the issues of health, safety and decommissioning costs have now acquired an economic component that did not previously concern the commission.

In a restructured industry, market forces will determine the price for generation output. In this setting, the costs incurred to comply with NRC-imposed rules