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New Nuclear Construction: Still on Hold

A number of factors point to expanded nuclear generation. But when?
Fortnightly Magazine - December 2003

government intervention. Some combination of growing demand, rising gas prices, and lower nuclear capital costs eventually will convince investors, and the time may not be far off. But government action could have a very large impact on the timing and extent of a nuclear second coming. Most significantly, if U.S. energy policy would internalize the public health and environmental costs of fossil fuel combustion, market forces alone would bring about new nuclear orders and there would be no need for direct government support. Absent such a policy, direct incentives for new nuclear plants, as were debated in the energy bill, will serve as a reasonable hedge against the risks from increased reliance on natural gas, especially for baseload generation.

Endnotes

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  1. National Energy Policy Development Group, , May 2001. pp. 1-5 to 1-6.
  2. Derived from U.S. Energy Information Administration, Form EIA-860A, "Annual Electric Generator Report-Utility" and Form EIA-860B, "Annual Electric Generator Report-Nonutility."
  3. "U.S. Reserve Margins Expected to Peak in 2004 as Supply Expansion Continues," press release, Energy Ventures Analysis Inc., April 11, 2002 (available at http://www.economy.com/store/dept.asp?c=1&h=H00120024).
  4. North American Electric Reliability Council, 2002-2011, October 2002, p. 5.
  5. Ibid., p. 19.
  6. New York Independent System Operator, "Power Alert III: New York's Energy Future," May 2003 (available at www.nyiso.com).
  7. Horton, William, "Realities Constraining North American Capacity Expansion," , April 2003. p. 53.
  8. U.S. Federal Energy Regulatory Commission, "Remedying Undue Discrimination Through Open Access Transmission Service and Standard Electricity Market Design" (Notice of Proposed Rulemaking), Docket No. . The SMD is designed to organize the nation's transmission facilities under the jurisdiction of four or five regional transmission organizations, independent supervisory bodies that would oversee the maintenance and use of these facilities. The intent of organizing the nation's transmission grid in this fashion is to standardize costs of moving electricity across the grid and decisions about investing in the grid. The fate of the SMD is far from certain; as of this writing, the House and Senate versions of an energy bill, containing SMD provisions, are in conference, with the most likely outcome being that SMD implementation will be delayed until at least 2006 to placate regulated Southern and Northwestern states, as well as consumers across the country worried about the effect of transmission "wheeling" on grid reliability.
  9. A. Clamp, "Wind Flies High," , July/August 2003, p. 24
  10. Tellus Institute and the Center for Energy and Climate Solutions, "The Path to Carbon Dioxide-Free Power: Switching to Clean Energy in the Utility Sector," prepared for the World Wildlife Fund, April 2003.
  11. "The CEO Power Forum," , May 15, 2003, pp. 36-37.
  12. G. Taylor, president and CEO, Entergy Nuclear, "An Investment in the Future," , July-August 2003, p. 31.
  13. John Rowe, CEO, Exelon Corp., interview with Sustainable Energy Institute, "The Sustainable Energy Top Ten Awards 2001," January 2002. p. 67.
  14. Brown, Stuart F. "How Do You Feel About Nuclear Power Now?" , March 4, 2002, pp. 130-134.
  15. Brown.
  16. Massachusetts Institute of Technology, , 2003, pp. 80-81.
  17. S. Lazzarri, Congressional Research Service, "Energy Tax Incentives in the 108th Congress: A Comparison of the House and Senate Versions of