US nuclear plant operators estimate $3.6 bil in post-Fukushima costs
Washington (Platts)--6Jun2013/156 pm EDT/1756 GMT
US nuclear power plant operators might have to spend nearly $3.6 billion
over the next three to five years on modifications to the country's 102
nuclear units in response to the Fukushima I accident in 2011, according to a
Platts survey of companies.
An analyst said those costs may cut into profits at companies that sell
their power in competitive electricity markets, and an industry official said
the work could cause utilities to rearrange other capital projects. The work
is not expected to affect the length of outages, respondents said.
The cost estimate includes US Nuclear Regulatory Commission-ordered
capital expenditure on new equipment to handle threats such as floods and
earthquakes as well as the cost of conducting extensive engineering studies
about each plant's resistance to such events.
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Companies also expect increases in operating and maintenance costs in
connection with post-Fukushima requirements. While most of the costs relate
to operating units, some are from work at one unit that has been permanently
shut and from another under construction.
The responses show that modifications to containment venting systems for
certain boiling water reactors, one of the two types of power reactors
operating in the US, might account for a large portion of upgrade costs for
those units, although how much exactly remains uncertain.
The 10 respondents to the survey operate about half the US' reactors and
have a mix of boiling water reactors and pressurized water reactors.
Companies responding to the survey gave cost estimates that averaged,
using the middle of ranges, $1.855 billion for those 53 units, or $35 million
per unit. If all 102 US reactors spent that amount, the total cost for
post-Fukushima compliance would be $3.57 billion.
In March 2012, almost exactly a year after the Fukushima I accident, NRC
ordered all reactor operators to comply with new requirements designed to
strengthen their ability to keep reactors and spent fuel cooled during severe
external events such as the earthquake and tsunami that hit the station in
Japan, causing three units there to meltdown and release radioactivity.
The Nuclear Energy Institute, which represents nuclear operators and
vendors, developed a plan dubbed FLEX, and eventually endorsed by the NRC,
that would use portable equipment deployed around the plants and in regional
centers to help respond to such an emergency.
Additional orders from NRC in 2012 required improvements to instruments
that measure water levels in spent fuel pools. A third order required
operators of 31 of the US' 35 BWRs to upgrade containment venting systems.
Dimitri Nikas, a credit analyst with Standard & Poor's Ratings Services,
said the spending could hurt the already thin profit margins of merchant
plant operators, but is not expected to have an impact on credit ratings of
The spending by regulated utilities, which are often allowed to obtain a
rate of return on spending approved by state regulators, could actually
increase profits, he said in an interview Tuesday.
"For the unregulated companies, it's a question of how much your profit
margins can be squeezed," he said. S&P, like Platts, is part of McGraw Hill
Regulated utilities are likely to gain approval to recover NRC-ordered
post-Fukushima costs from ratepayers, said Rob Thormeyer, spokesman for the
National Association of Regulatory Utility Commissioners.
In almost all regulated states, upgrades mandated by regulators are
subject to recovery from ratepayers with an allowed return on investment,
including profits, that varies from state to state, he said Tuesday.
"Our members are looking very carefully at this issue," he said.
WIDE RANGE OF ESTIMATES
Platts' survey of all US nuclear power plant operators revealed a wide
range of estimates for the cost of complying with post-Fukushima requirements.
For the operators of 53 units that provided an estimate, the total cost for
compliance was between $1.78 billion and $1.93 billion, or $1.855 billion on
average. That translates to a range of $33.5 million to $36.5 million per
unit, with a midpoint of $35 million.
David Lochbaum, director of the nuclear safety project of the Union of
Concerned Scientists, said in an interview Monday that the wide range could
be a result of plant-specific issues, because the US fleet is not
standardized. "It's not going to be the same fix for each plant," he said.
Older reactors might require more upgrades than newer ones, Lochbaum
said. Half of the country's operational reactors entered service between 1969
Duke Energy, which operates the US' largest regulated nuclear fleet,
said it would spend $600 million on post-Fukushima upgrades. Duke operates 11
reactors and owns the permanently closed Crystal River-3 unit in Florida.
By contrast, Exelon expects to spend $400 million for upgrades to its
fleet of 17 units, the largest in the country, over the next five years.
American Electric Power estimates post-Fukushima costs at $30 million to $60
million for its two units.
Arizona Public Service, which operates the 4,284-MW three-unit Palo
Verde station, forecasts it will spend $90 million on post-Fukushima
Dominion, which has six operating reactors and the permanently shut
Kewaunee, will spend $30 million to $40 million per operating unit on
post-Fukushima costs, a total of $180 million to $240 million.
Pacific Gas & Electric expects to spend between $60 million and $80
million at its 2,400-MW Diablo Canyon plant.
PPL will spend $75 million on upgrades at its two units.
PSEG estimates costs of $90 million or more for work at its three units.
Tennessee Valley Authority said its six operating reactors and one under
construction should require post-Fukushima upgrades totaling $225 million to
The Duke estimate, provided to financial analysts during a presentation
in February, was a "very high level" forecast, company spokeswoman Rita Sipe
said Wednesday, adding: "Fukushima costs across the industry cannot be easily
compared and will differ based on multiple variables, such as plant location,
plant type and more."
NO IMPACT ON OTHER UPGRADES EXPECTED
It is unclear whether the spending on post-Fukushima compliance could
reduce spending on other capital improvements in either nuclear or
Even before the Fukushima accident, several operators were already
shelving plans for uprates that would increase the output of existing units.
Low electricity and natural gas prices make such uprates uneconomical in
many unregulated power markets, Exelon President and CEO Christopher Crane
said in a May appearance at an NEI conference.
S&P's Nikas said that because most nuclear operating companies have
heavy capital improvements spending every year, the amounts for
post-Fukushima upgrades might not be large enough in any given year to "crowd
out" other spending, although some impact could be felt on discretionary
spending such as for preventive maintenance or trimming of trees around
Most respondents said the post-Fukushima upgrades are unlikely to affect
the length of refueling and maintenance outages, during which much of the
work must be done. Dominion, Exelon, NPPD, PPL, and South Carolina Electric &
Gas said they do not expect any impact on outage lengths.
Duke's Sipe said in an email May 17 that "conceptual engineering" shows
much of the work could probably be done while units are online.
--William Freebairn, William.email@example.com
--Edited by Keiron Greenhalgh, firstname.lastname@example.org