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Imperium Watch: Market Unkind to Nuclear Plants

Renewables begin to outstrip the atom as viable energy sources.

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Tuesday, March 19, 2013

It’s always news when the Nuclear Regulatory Commission turns down a request from a nuclear energy company, because the agency so seldom does that. But recently the NRC denied an appeal from French nuclear operator Electricite de France S.A. to proceed with a plan to add a third reactor to the nuclear power station at Calvert Cliffs, Md. after the company’s American partner, Constellation Energy of Baltimore, sold its interest in the plant to EdF three years ago. (Footnote on Calvert Cliffs: this plant, which was on the NRC’s list of “problem plants” from late 1988 until early 1992, is located only 40 miles from Washington, D.C.)

The reason the NRC gave for nixing EdF’s request had to do with a rule dating from old Atomic Energy Commission days about not allowing controlling interests in nuclear power plants in the U.S. to be owned by foreign companies. The agency has said EdF can start over again with a license application for a third reactor if it can find a new American partner.

Just last month, Duke Energy announced that it will close its nuclear plant in Crystal River, Fla., for good. The plant was ruined when the previous owner tried to save money by overseeing the fitting of new steam generators in 2009-2010 without outside technical help; as the Tampa Times reported February 5, “Seldom, if ever, has an attempt to save $15 million cost so many so much.”

And in Wisconsin, Dominion Energy’s Kewaunee plant will be decommissioned within a few months. The reason, in PR Newswire businessspeak: “Dominion announced in April, 2011 that it would seek to sell Kewaunee as part of a regular review of its portfolio of assets to determine which assets fit strategically and support its objectives to improve return on invested capital and shareholder value.” In a word, the plant’s not making any money, and Dominion was unable to find a buyer for it.

Speaking of unprofitable nuclear plants, an item concerning the Vermont Yankee nuclear power plant near Brattleboro comes from a Jan. 2 bulletin headed “Entergy guidance clearly illustrates no cash generation from nukes” published by UBS Research. Analysts for UBS Research, a multinational financial services company, predicted that “EWC [Entergy Wholesale Commodities, the arm of Entergy that owns Vermont Yankee and five other nuclear power plants] is unlikely to generate any meangful cash in ‘13/’14, with cash deficits projected for ‘15/’16 following the roll off of existing above-market hedges. Notably, we believe both its NY Fitzpatrick and Vermont Yankee plants are at risk of retirement given their small size... an announcement to retire the units would likely drive positive FCF [free cash flow] revisions.” This and other information prompted the Conservation Law Foundation to observe, in a Web post entitled Vermont Yankee—Worth More Dead Than Alive, “The financial world is waking up to what a drag Vermont Yankee really is.”

These developments are part of what watchdog group Beyond Nuclear is calling the “Nuclear Retreat,” a rebuttal to the much-touted “Nuclear Renaissance.” At the same time, the role of renewables in the U.S.’s energy mix is advancing. Last year the development of wind power around the world grew by 20 percent, and the U.S. saw the largest growth ever, with 13 gigawatts added—much of it in the last quarter of the year as developers hurried to get a tax credit seen as likely to expire (the credit has been extended).

In adding 13 gigawatts, the U.S. tied with China, which also added 13 gigawatts last year. In all, China leads the world with 77 gigawatts of wind power; the U.S. is second, with 60 gigawatts. In 2011, wind and other renewables, notably hydropower, supplied slightly more energy to the U.S. than nuclear power plants did, according to the U.S. Energy Information Administration’s Monthly Energy Review for February, 2013.•

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