Washington (Platts)--15Feb2012/405 pm EST/2105 GMT

The likelihood of a US "nuclear renaissance" this decade is faint and changes in state regulatory treatment of nuclear projects is needed before utilities outside Georgia and South Carolina build new reactors, credit rating agency Standard & Poor's said Wednesday.

A sluggish economy has depressed demand and low natural gas prices have allowed utilities to postpone or cancel plans for new nuclear units in favor of new gas-fired generation, S&P analyst Dimitri Nikas wrote in a report.

The US Nuclear Regulatory Commission's approval last week of licenses for Georgia Power's new two-unit Vogtle nuclear plant expansion is "a milestone," and South Carolina Electric & Gas plans a two-unit expansion of its Summer station when it receives NRC permission, S&P said. But these actions alone will not lead in the short term to additional orders, S&P said.

Article continues below...

Sign up for Nucleonics Week
	Since 1960, Platts Nucleonics Week has been the leading source of global news for the commercial nuclear power business. Electricity and uranium traders and other industry professionals rely on Nucleonics Week for information about the nuclear power industry that will help them make informed, accurate, and profitable decisions.

"In our opinion, the current market conditions combined with nuclear projects' long planning and construction timelines will prevent the construction of additional new units until at least the end of this decade," the report said.

Among the issues that must be resolved before nuclear plant construction can take off is a government policy for handling spent nuclear fuel, S&P said. A permanent disposal site for such spent fuel "would mitigate a significant obstacle to new nuclear construction," S&P said.

Further, pre-approval of a nuclear project's budget and schedule, recovery of financing costs during construction and provisions for recovery of investment if the project is abandoned are all needed at the state level before additional plants will be ordered, S&P said. Only Florida, Georgia, and South Carolina have such provisions and in Florida they are not being utilized fully, S&P said.

Georgia Power, a subsidiary of Southern Company, and several partners are building two 1,100-MW nuclear reactors at the Vogtle site in eastern Georgia, where two nuclear units already operate.

The new construction will be watched closely by utilities considering new nuclear units, S&P said. "All industry participants will likely keep a very close eye on how well the actual nuclear construction proceeds and whether the plants are built on budget and on schedule," the report said.

The resulting "hiatus before the next round of new construction" may benefit the nuclear industry, giving it time to learn construction lessons and develop more supportive state regulatory frameworks, S&P said.

S&P, like Platts, is a unit of The McGraw-Hill Companies.

--William Freebairn, william_freebairn@platts.com

Tweet