A New Look at Nukes
Energy firms push to build reactors as natural gas prices soar
It's probably a bit early for the executives at Entergy to look at the bright side of Hurricane Katrina. After all, the New Orleans-based power company is still working feverishly to restore power to hundreds of thousands of its customers in the storm-ravaged region. But there is some good news out there, such as the lack of damage to its Waterford nuclear plant in St. Charles Parish, about 30 miles east of the Crescent City. The impending arrival of Katrina forced Entergy to declare a precautionary "unusual event" and shut down the reactor. The company got word from the Nuclear Regulatory Commission two weeks later that it was free to fire Waterford back up.
But the ultimate impact of Katrina on the nuclear power industry is likely to be far more extensive than a brief shutdown in a single reactor. Damage to natural gas facilities on the Gulf Coast sent high natural gas prices even higher, and a second straight year of double-digit price increases is likely for most regions in the country. And even before Katrina, the rising cost of natural gas--plus concerns about increased regulation of greenhouse gas emissions--was making energy executives take a fresh look at building new nuclear plants to meet the nation's growing thirst for energy. "This country will need more nuclear plants, and it's going to need a bunch of them," says John Rowe, CEO of Chicago-based Exelon, owner of 17 nuclear plants in Illinois, New Jersey, and Pennsylvania. Rowe adds that over the next 25 years the portion of the nation's electricity generated by nuclear power could grow to 30 or 40 percent, up from the 20 percent generated today by 104 reactors. That could mean dozens of new nuclear power plants.
The last reactor to come on line in the United States was the Tennessee Valley Authority's Watts Bar reactor in May 1996--after 24 years of construction during which the Three Mile Island accident, increasing government regulation, cost overruns, environmental protests, and the Chernobyl disaster helped put the industry into suspended animation. But this week, a consortium of nuclear power companies called NuStart Energy Development--including Exelon and Entergy--will announce which locations it has chosen as part of the group's applications to the Nuclear Regulatory Commission for the construction of and operating licenses for a new commercial reactor. New reactors could be powering up within a decade.
The federal government has been plenty eager to kick-start the moribund industry. Just last month, President Bush signed the Energy Policy Act of 2005, which contains guarantees and incentives including $2 billion to cover possible delays at as many as six new nuclear plants and annual production tax credits. More important, perhaps, Congress extended the five-decade-old Price-Anderson Act through 2025, limiting operator liability in the event of an accident. The new legislative action follows Bush's Nuclear Power 2010 initiative, launched in 2002, which promoted public-private partnerships to spur new reactor construction.
Yet all these government nudges might be going for naught were it not for the rising price of natural gas, which has more than tripled since 1999. At present, natural gas accounts for about 17 percent of U.S. electrical generation, behind coal (51 percent) and nuclear (20 percent). But those numbers understate the growing importance of natural gas in the nation's power supply. An estimated 90 percent of power plants under construction are fired by natural gas, according to the Natural Gas Supply Association. Gas-fired plants are cheaper and faster to build than coal facilities, and they produce lower emissions. But with costs soaring, nuclear has been looking more economically attractive. "Natural gas prices drive electric prices in the whole nation, and they don't look like they are going down anytime soon," says Dan Keuter, Entergy's head of nuclear business development.
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