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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
  1. H.R. 6 and the Senate Finance Committee Amendment," Aug. 19, 2003.


Success at Existing Plants

The biggest surprise to date regarding nuclear power in a deregulating environment is simply how well nuclear plants have survived. As deregulation began in the 1990s, nuclear was considered a dying industry. The market value of plants had plummeted, and some owners were anxious to get rid of them. But in the last 10 years, operators have managed to greatly improve reactor performance industry-wide. Moreover, with the industry's restructuring under deregulation, large power companies like Exelon, Entergy, Dominion, and Constellation have purchased these plants from regional utilities. These consolidators and other operators have improved operations and turned nuclear plants into sound, highly competitive investments.

As a result of these efforts, capacity factors and refueling outages have improved to record levels, and perhaps most importantly, plants that are nearing the end of their initial 40-year licenses, far from being decommissioned as many once predicted, are in fact applying for 20-year license extensions. The market value of reactors increased dramatically in some cases, and power companies with nuclear assets generally have outperformed those without them in the stock market. To the surprise of many, nuclear plant operators made their plants far more competitive operationally during the first decade of electricity deregulation in the United States.

To be sure, industry critics question whether this operational improvement has come at the expense of safety. The Union of Concerned Scientists warns that "extreme pressure to cut costs at marginal nuclear plants has one very serious possible consequence: It could reduce the margin of error on safety." 1 Nuclear Regulatory Commission (NRC) safety performance indicators thus far show continuing safety improvement through 2001, the latest year for which data are available. 2 Clearly, the NRC as well as the industry itself must continue to be vigilant in ensuring that the competitive pressures of deregulation do not compromise plant safety.

Assuming continuing safety improvements, the good fortunes of existing plants in the deregulating electricity industry will contribute to improving the prospects for new ones. One key factor is that the restructuring of the power industry has resulted in larger and stronger nuclear operating companies that are more likely to build additional nuclear units. 3

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  1. Union of Concerned Scientists, "Nuclear Safety in a Changing Electricity Industry" (available at http://www.ucsusa.org/clean_energy/nuclear_safety/page.cfm?pageID=180).
  2. U.S. Nuclear Regulatory Commission. Information Digest, 2002 Edition. NUREG-1350, Vol. 14, pp. 50-51 (available at http://www.nrc.gov/reading-rm/doc-collections/nuregs/staff/sr1350/v14/fig25.html).
  3. Neil J. Numark and Robert D. MacDougall, "Nuclear Power in Deregulated Markets: Performance to Date and Prospects for the Future," , 2001.

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