Nuclear Plans Stay Powered: New Plant Hopes Thriving Despite Market Turmoil

NEW YORK - Sep 24 - Augusta Chronicle, The

The current turmoil in credit markets is unlikely to derail plans by power companies to begin ordering the first new nuclear plants since cost overruns and public opposition virtually killed the industry three decades ago.

Nearly 30 years after Three Mile Island, Entergy Corp., Dominion Resources Inc., Exelon Corp. and the Tennessee Valley Authority are expected to be among the first to seek regulatory approval to build new plants. Constellation Energy Group has already filed a partial application with the Nuclear Regulatory Commission, which expects as many as seven requests this year and 28 by 2009. The first plants could be online by 2014 or 2015.

TVA's plans to expand its nuclear capacity have begun, with the recent restart of a reactor at Browns Ferry Nuclear Plant in Athens, Ala.

The nation's largest public utility is also a partner in a consortium to resume construction at the Bellefonte plant site in Hollywood, Ala., and is looking to finish a second reactor at the Watts Bar plant in Spring City, Tenn.

"I think investors are relatively positive on companies that are ... planning the next round of nuclear plants," said Barry Abramson, an analyst and portfolio manager at GAMCO Investors Inc., in Rye, N.Y. "The numbers seem to work."

Utilities see in nuclear plants an opportunity to affordably meet demand for electricity, which the Energy Information Administration is predicting will grow by 42 percent by 2030. High natural gas prices and the prospect of taxes or constraints on greenhouse gases are making gas- or coal-fired plants less attractive. New modular designs and a streamlined regulatory process further strengthen the argument for nuclear power.

"At the end of the day, we believe ... nuclear will be cost- competitive," said Randy Hutchinson, the senior vice president of nuclear business development at New Orleans-based Entergy.

But this nuclear renaissance faces challenges. No company has lined up financing, and their ability to borrow will depend on federal loan guarantees and state rules about when utilities can raise rates to pay for construction. Construction costs are rising because of growing global demand for raw materials, and activism, an accident or a terrorist attack could stoke public opposition.

Still, reactor vendors, such as General Electric Co., Toshiba Corp.-owned Westinghouse Elec-tric Co. and France's Areva Group, in a new joint venture with Con-stellation, are positioning themselves to profit. GE, in a joint venture with Japan's Hitachi Ltd., sees its annual reactor business growing from $1.1 billion to $8 billion over the next decade.

To strengthen its hand, the industry is pushing legislation to expand federal loan guarantees, available for 80 percent of plant costs. Utilities are lobbying state lawmakers to let them raise rates to recover construction costs.

The Energy Department is helping, paying half the cost of three early applications.

Experts doubt the current credit market dislocations will affect nuclear plant financing. Lenders will view reactors as safe and desirable investments because of the federal guarantees and state cost recovery rules, and because they'll be built by established utilities with long track records of operating power plants.

Originally published by John Wilen Associated Press.