WASHINGTON, D.C., Feb. 13, 2014 (GLOBE NEWSWIRE) -- Some of America's electricity markets are failing to accurately value the commodity's contribution to modern-day society. That is putting some nuclear energy facilities at risk of premature retirement despite excellent operations, the Nuclear Energy Institute's chief executive warned Wall Street analysts today.
"Restructured, competitive markets can work effectively and efficiently," said NEI President and CEO Marvin Fertel. "But today, they are not producing price signals sufficient to stimulate investment in new electric generating capacity, with the exception of gas-fired plants, or to support continued operation of existing capacity. This is clear from assessments of these markets in New England, the Midwest, Texas and elsewhere by the independent companies commissioned to monitor market performance, and by many of the companies operating in those regions."
Particularly in unregulated "merchant" electricity markets, older, smaller nuclear power plants that provide diversity of supply and help stabilize the electric grid "are vulnerable to weak market conditions," Fertel said. "Absent necessary changes in policies and practices, this situation has implications for reliability, long-term stability of electricity prices, and our ability to meet environmental goals."
Fertel cited last year's premature retirement of the Kewaunee nuclear power plant in Wisconsin and the pending retirement of the Vermont Yankee nuclear plant as examples of market deficiencies. He described the facilities as "solid performers," noting that both achieved average capacity factors from 2010 to 2012 in excess of 90 percent.
"The decisions to close Kewaunee and Vermont Yankee were perfectly rational business decisions for the companies operating the plants in those markets. But from society's point of view, these were not rational decisions," Fertel said.
"There was nothing wrong with these plants. There is something wrong with the design and operation of the markets in which they are operating. They do not value baseload capacity that can be dispatched when needed; do not provide value for fuel and technology diversity, and do not recognize the other attributes of a nuclear power plant."
Nuclear power plants' strong performance during January's polar vortexes once again demonstrated their strategic value, Fertel said. Preliminary data shows that nuclear energy facilities operated at an average capacity factor of 90.9 percent in 2013—an extraordinary level of reliability that has been sustained for more than a decade. Nuclear power plants generated an estimated 789 billion kilowatt-hours last year, a 2.6 percent increase from 2012.
Electric utilities achieved that strong performance even while continuing to invest heavily in capital improvements that position nuclear energy facilities to run safely and more reliably farther into the future. Capital expenditures at nuclear energy facilities totaled $8.5 billion in 2012, Fertel noted.
"Remember that nuclear capex largely increases asset value. It positions the plants to run beyond the initial 40-year license term, often increases their output, and makes them safer," Fertel said.
Noting the construction of five reactors under way in Georgia, South Carolina and Tennessee, Fertel said, "We're almost halfway through a $30 billion-plus construction program. And we have a new generation of small modular reactors coming along behind them. We're working our way systematically through the licensing and regulatory issues on the small reactors."
He also highlighted advances in other areas including:
- implementation of federal regulatory requirements to add even more margin of safety in response to the 2011 Fukushima Daiichi accident
- evidence of political interest and willingness to address used nuclear fuel management issues
- intensified government efforts to improve export capabilities for nuclear energy technology and services.
The Nuclear Energy Institute is the nuclear energy industry's policy organization. This news release and additional information about nuclear energy are available at www.nei.org.
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