Implications of competitive markets for operation and funds flow at nuclear plants

Technical Report · Tue Jul 01 04:00:00 EDT 1997

OSTI ID:493364

Bright, R N; Leigh, R W ^[1]; Mubayi, V ^[2]

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1. Analytical Solutions/Anylec Research, Bayport, NY (United States)
2. Brookhaven National Lab., Upton, NY (United States)

The authors employ a detailed electric utility production costing and capacity planning model to examine the use of nuclear power plants under the current (utility-owned) arrangements and under situations which may arise in a competitive market for electric service. The modeling is carried out for a synthetic but realistic power pool based on components of actual utilities in the northeast United States. Under the current arrangements, the costs of nuclear power plant operation are subsumed under capital costs and entered into the {open_quotes}raw base,{close_quotes} the totality of which determines customer charges. A future competitive environment may be characterized by the absence of a {open_quotes}rate base,{close_quotes} at least for generation. In this environment, all generation units are in effect independently owned. The authors examine this possibility by estimating the revenue which would flow to nuclear plants at competitive market prices and compare that revenue, to anticipated expenses for fuel, O&M and amortization of capital (where appropriate), and for potential additional expenses such as safety requirements and payments to decommissioning funds. They also incorporate financial relief for the portion of these costs which can be considered {open_quotes}stranded investments{close_quotes} based on FERC and prospective state regulatory policies. In this competitive environment some nuclear plants may not remain economically viable. Their replacement by newly constructed fossil-fueled units will require substantial capital and lead to increased emissions and fuel use, which are calculated. The authors calculations show that while it may be clearly economically advantageous for individual owners to shut down unviable nuclear capacity, such early retirements may result in significant economic losses to the power pool as a whole.

• Research Organization: Brookhaven National Lab., Upton, NY (United States)
• Sponsoring Organization: USDOE, Washington, DC (United States)
• DOE Contract Number: AC02-76CH00016
• OSTI ID: 493364
• Report Number(s): BNL--63498; CONF-970531--6
• Country of Publication: United States
• Language: English

Related Subjects

21 SPECIFIC NUCLEAR REACTORS AND ASSOCIATED PLANTS
29 ENERGY PLANNING, POLICY, AND ECONOMY
COMPARATIVE EVALUATIONS
COMPETITION
COST ESTIMATION
DEREGULATION
ECONOMIC ANALYSIS
ELECTRIC POWER INDUSTRY
FUEL CYCLE
NUCLEAR POWER