S&P expects more nuclear plants, but not before 2015

New York (Platts)--26Jun2006

Standard & Poor's Ratings Services expects US companies to build more
domestic nuclear power plants, but does not foresee any stations coming online
before 2015-2016, according to a research note released on Monday.

Primary Credit Analyst Richard Cortright said the last nuclear plant in
the US was ordered more than 30 years ago, in 1973, and the only activity
since then has consisted of modest repowerings and license extensions.

However, "several influences have combined to generate a clear resurgence
of interest," he said. These include: the increased dependence on natural gas
for generation, and the price volatility this has caused; concern over carbon
dioxide emissions from coal, which fuels about 50% of US power plants; worries
about the reliability and capacity of rail transportation; the appealing
operating economics; and supportive federal and state legislation.

But, "placing any plant into operation is a long-term proposition," with
extensive siting reviews, Cortright said. As a result, plants initially
planned in 2006 would not begin operating until 2015-2016, he said. Another
hurdle is the expense, as shown by Duke Energy's estimate that two proposed
plants in South Carolina would cost $4 billion to $6 billion.

The greatest hurdle is public acceptance, due to worries over safety and
waste disposal, he said. While plant performance has been very safe, "the
threat of terrorism injected a whole new risk element into the equation,"
Cortright added, though this "does not appear to be deterring companies in the
Southeast and Midwest." Opposition comes mainly from the Northeast and West
Coast, he said.

The nuclear waste problem will remain "a very challenging political
problem, but will not be sufficiently disruptive to prevent the licensing of
new plants." Cortright said. "So, while slow and steady, the return of the
nuclear option has considerable momentum that is not likely to wane," he said.

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