IMPLICATIONS OF COMPETITIVE MARKETS FOR OPERATIONS AND FUNDS FLOW AT NUCLEAR PLANTS

摘要

We employ a detailed electric utility production costing andcapacity planning model to examine the use of nuclear powerplants under the current (utility-owned) arrangements and undersituations which may arise in a competitive market for electricservice. The modeling is carried out for a synthetic but realisticpower pool based on components of actual utilities in the northeastUnited States. Under the current arrangements, the costs ofnuclear power plant operation are subsumed under capital costsand entered into the rate base, the totality of which determinescustomer charges.A future competitive environment may be characterized bythe absence of a rate base, at least for generation. In thisenvironment, all generation units are in effect independentlyowned. We examine this possibility by estimating the revenuewhich would flow to nuclear plants at competitive market pricesand compare that revenue to anticipated expenses for fuel, O&Mand amortization of capital (where appropriate), and for potentialadditional expenses such as safety requirements and payments todecommissioning funds. We also incorporate financial relief forthe portion of these costs which can be considered strandedinvestments based on FERC and prospective state regulatorypolicies. In this competitive environment some nuclear plantsmay not remain economically viable. Their replacement by newlyconstructed fossil-fueled units will require substantial capital andlead to increased emissions and fuel use, which are calculated. Our calculationsshow that while it may be clearly economically advantageous forindividual owners to shut down unviable nuclear capacity, suchearly retirements may result in significant economic losses to thepower pool as a whole.