Energy CEO: Costs, not safety, block new nukes

The CEO of Exelon, which runs the biggest fleet of nuclear power plants in the U.S., sees little opening for new plants--mostly because of the economics.

The operator of the largest nuclear plant fleet in the United States anticipates a thorough review of its facilities due to Japan's nuclear crisis, but thinks that cost--rather than safety--is the greatest barrier to new nuclear power plant construction.

Chicago-based utility Exelon held a conference call for investors today to say that it anticipates increased scrutiny of the U.S. nuclear fleet, although executives are not clear yet on how much that will cost the company.

The company has started an internal review of emergency preparedness, spent fuel cooling, and back-up power systems at its 10 plants, which include Three Mile Island in Pennsylvania and a number of plants similar in design to the Fukushima Daiichi plant in Japan that engineers are still trying to control after a massive earthquake and tsunami caused what is considered a worse nuclear accident than Three Mile Island in 1979.

Although the investor call focused mainly on the potential impact on the Exelon's existing fleet of reactors, CEO John Rowe made clear that the biggest barrier to building new plants is cost compared to other sources of power generation .

"I believe that there is little opening for new nuclear plants in the near future but that view has come from economics, not from safety," Rowe said during the call.

There are now 104 nuclear reactors in the U.S., which account for about 20 percent of energy generation. Support for nuclear has climbed over the past decade, in part because nuclear does not have any emissions during operation. The White House has called for including nuclear power as part of its goal of getting 80 percent of U.S. electricity from "clean energy sources" by 2035.

Industry group the Nuclear Energy Institute anticipates that more plants will be built in the U.S. in the coming years. But the cost compared to other sources of power remains a barrier to new construction (click for PDF of NEI white paper). The Department of Energy has requested that $36 billion in loan guarantees be made available for new plants in the U.S.

In an interview with Bloomberg TV last week, Rowe said that natural gas is the most economic fuel source for electricity.

"At the present time in the United States, new nuclear power reactors are not economical anyway with low load growth and very cheap natural gas. Natural gas generation is now the economic way of choice for low-carbon electricity and that will be true for at least a decade," he said.

In the short term, however, the nuclear industry is focused on what sorts of changes will come from the Japanese crisis. The Nuclear Regulatory Review said earlier this week that it will have an industry-wide review of its regulations, which could affect requests to extend the license of existing plants.

Exelon executives said the company's emergency procedures differ substantially from those of Tokyo Electric Power, which operates the Fukushima Daiichi plants. They noted, for example, that Exelon's emergency back-up generators, which were taken out by the tsunami in Japan, are housed underground or otherwise enclosed and that its plants, mostly in Pennsylvania and Illinois are not in a similar earthquake zone.

Still, Rowe anticipates significant reviews to the U.S. nuclear fleet in four areas: the size of emergency evacuation zones around plants; the maintenance of spent fuel in pools versus dry cask storage; the adequacy of the Mark 1 containment building used in Fukushima Daiichi and U.S. plants; and the adequacy of seismic standards.

The company cannot yet estimate the magnitude of the cost from a regulatory review, which it thinks will largely affect operation of existing plants rather than applications to renew existing licenses.

"This is going to impose significant costs, perhaps material costs on us," Rowe said. "We take this very seriously as a new burden for the nuclear industry to carry. At the same time, we've worked our way through worse."

 

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