Costs may slow nuclear upswing in U.S.
Despite greener energy, industry faces many hurdles

By JOSHUA BOAK
Chicago Tribune

CHICAGO - As crude oil prices leapt last week to over $120 a barrel, and one analyst suggested the price might soon reach $200, America would seem poised for a nuclear power resurgence.

But enthusiasm for a nuclear future was muted at an industry conference last week in Chicago, as executives acknowledged that financial, regulatory and waste-storage hurdles have raised uncertainties about costs. Other factors increasing the expense of construction include high demand for nuclear plants among emerging countries, limited supplies of reactor parts and increased prices for iron, steel and concrete.

As a result, the estimated price of a nuclear reactor has more than doubled to upwards of $9 billion in less than a year, according to industry estimates.

"I am emotionally biased but economically objective about this," said John Rowe, chief executive of Chicago-based Exelon Corp., the country's largest nuclear operator. "Realistic expectations about the `renaissance' of nuclear power suggest that it will unfold slowly over time."

Applications for 15 plants

There are 104 nuclear power plants in the United States, with construction beginning on the most recent one in 1977. And as concerns about global warming have displaced fears about a reactor meltdown, the industry and government are looking to update and expand a rapidly aging electric grid with an energy source that does not emit greenhouse gases.

The Nuclear Regulatory Commission has nine applications for 15 plants. "We knew this day was coming, and we do not intend to be a roadblock," said Dale Klein, chairman of the NRC. "But I have also said that our ability to review applications quickly depends directly on the quality and completeness of those applications."

The NRC is also laying groundwork to regulate the recycling of spent nuclear fuel, a crucial issue as lawsuits and political pressure have prevented producers from depositing radioactive waste in Nevada's Yucca Mountain.

Citing national security, President Ford banned reprocessing nuclear fuel in 1976, a policy formalized a year later by President Carter. But as more radioactive waste gets produced, the industry will eventually need to find a solution.

"If we had all this trouble over one Yucca Mountain, do we really want to have this problem over 10 (of them)?" Rowe asked.

Low operating costs

Each of those plants must also pass the scrutiny of governmental bureaucracies, environmentalists, inspectors and, perhaps most importantly, the bond-rating agencies that determine financial credit.

For each kilowatt-hour of electricity generated, nuclear power claims to be cheaper than coal or natural gas, which represents about 80 percent of the country's electric output. But, coal and natural gas also follow increases in crude oil prices.

The difficulty faced by the nuclear industry is that construction costs are comparatively high to other sources, while operating costs are lower, said Stephen Brown, director of energy economics at the Federal Reserve Bank of Dallas.

To spur construction, the federal government set aside $18.5 billion in loan guarantees for the industry. But with Florida Power & Light Co. planning to open two new reactors by 2020 at a cost of $18 billion, those guarantees would fail to cover an entire industry that says it must complete as many as 30 plants within 20 years to limit carbon dioxide emissions.

Source: The Houston Chonicle