Annual Energy Outlook 2010: With Projections to 2035 Page: 53 of 231
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Issues in Focus
that the NRC continues to approve license exten-
sions, the decision to operate a facility is an economic
one made by plant owners. Aging plants may face in-
creased operation and maintenance (O&M) costs and
capital expenditures, which generally decrease their
profitability. Revenue projections are dependent on
electricity prices, which are uncertain due to varia-
tions in fossil fuel prices, regional economic growth,
and environmental regulations. Thus, even if the
costs of operating nuclear plants do not change,
changes in electricity prices can affect their profitabil-
ity when their generation is sold at market-based
rates.
Between 1974 and 1998, 14 commercial nuclear reac-
tors in the United States were retired. The circum-
stances of each retirement were unique to the
particular plant, but the common thread was that the
expected cost of continued operation was higher than
expected revenues, and there were less costly gener-
ating options available. Highly competitive natural-
gas-fired generation could have been a factor in those
retirements. Natural-gas-fired combined-cycle plants
were the favored option for new capacity during the
1990s, when natural gas prices were relatively low
and it was widely believed that they would remain low
for the foreseeable future. In contrast, real O&M
costs for nuclear power plants had increased by 77
percent during the 1980s [71], owners faced the risk
that new NRC regulations might require prohibi-
tively expensive retrofits, and there was widespread
concern State public utility commissions would not
allow full cost recovery for expenditures on nuclear
plants.
The economics of existing nuclear power plants are
more favorable today, because natural gas prices are
higher, the nuclear plants are performing well, and
the potential enactment of GHG regulations in-
creases uncertainty about fuel and operating costs for
power plants that burn coal and natural gas. To date,
there have been no announced plans to retire any of
the 104 operating U.S. commercial nuclear reactors.
To the contrary, the NRC and the nuclear power in-
dustry are preparing applications for license renewals
that would allow continued operation beyond 60
years, the first of which is scheduled to be submitted
by 2013. In February 2008, DOE and the NRC hosted
a joint workshop titled "Life Beyond 60," with a broad
group of nuclear industry stakeholders meeting to
discuss this issue [72]. The workshop's summary
report outlined many of the technical research needsthat participants agreed were important to extending
the life of the existing fleet of U.S. nuclear plants.
Several concerns were expressed at the DOE/NRC
workshop. Because heat, water, and radiation can
have long-term effects on the materials they are in
contact with in nuclear power plants, more effective
monitoring may be needed as the systems age, which
could require updates to instruments and controls.
Over the next several years, research is being focused
on identifying problems that aging facilities might en-
counter and formulating potential solutions. Until
that research has been completed, it will be difficult
to estimate any cost increases that may result from
extending the age of reactors.
Future cost increases may reflect only routine expen-
ditures, or they could involve major capital projects,
such as the replacement of reactor vessels, contain-
ment structures, or buried piping and cables. To date,
no plans or cost estimates for such potential modifica-
tions have been made public; however, they have the
potential to be very expensive, and they could require
extended plant shutdowns. While a plant is out of op-
eration, the generation lost will have to be replaced,
probably with expensive power purchased on the spot
electricity market.
For most existing nuclear plants, decisions about re-
tirement or life extension ultimately will be based on
the cost and feasibility of all the measures needed for
a plant to continue to operate safely and economi-
cally. It is difficult to anticipate future operating
costs, but it can be helpful to compare current operat-
ing costs with the total levelized costs of new nuclear
power plants in order to gauge the magnitude of in-
creases in O&M costs that would make retirement an
option from an economic standpoint. For instance,
with current O&M costs at the most expensive
nuclear units in operation averaging approximately
3.5 cents per kilowatthour [73] and total levelized
costs for new baseload capacity ranging from 8 cents
to 11 cents per kilowatthour, the operating costs of
existing nuclear power plants would have to increase
substantially before it would be economical to retire
even the most expensive units.
Nuclear plant owners also face the risk of future regu-
lations that could require expensive upgrades. Such a
rule was recently the subject of the Supreme Court
case Entergy Corp v. Riverkeeper [74], which focused
on whether or not the EPA could conduct cost-benefit
analyses to determine whether a plant needed toU.S. Energy Information Administration / Annual Energy Outlook 2010
44
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United States. Energy Information Administration. Annual Energy Outlook 2010: With Projections to 2035, report, April 2010; [Washington D.C.]. (https://digital.library.unt.edu/ark:/67531/metadc949175/m1/53/?q=%22energy%22: accessed June 4, 2024), University of North Texas Libraries, UNT Digital Library, https://digital.library.unt.edu; crediting UNT Libraries Government Documents Department.