There are no new nuclear plants in the foreseeable future for Exelon Corp., the largest U.S. reactor operator. Old plants, though, are a different story. Exelon’s proposed acquisition of Baltimore-based Constellation Energy, announced yesterday, would add five nuclear reactors at three plants to the 17 reactors at 10 plants that the Chicago-based company already runs. Exelon’s total nuclear capacity would climb from 17,047 megawatts to nearly 19,000 if the projected $7.9 billion deal is completed. “They can buy them much more cheaply than they can build them,” said Ellen Vancko, nuclear project manager for the Union of Concerned Scientists.
Although the disastrous accident at Japan’s Fukushima Daiichi nuclear complex may lead to new regulations and higher costs for owners of existing U.S. reactors, that risk did not sidetrack merger negotiations between Exelon and Constellation, which began months before the March 11 earthquake and tsunami. The reason, industry representatives and critics agree, is that the existing plants remain very profitable, even with the decline in electricity prices that followed the market crash and recession in 2008.
The Nuclear Energy Institute, the industry’s main trade organization, ranks current nuclear plants as the cheapest source of U.S. electricity, with operating, maintenance and fuel costs of just over 2 cents per kilowatt-hour in 2009, compared to 5 cents for electricity from natural gas-fired plants and 3 cents for coal generation. Exelon said its generating plants returned average margins of 3.76 cents per kilowatt-hour last year, despite lower power prices, and two-thirds of Exelon’s overall generation capacity comes from nuclear plants. “These [nuclear] plants, which are fully depreciated, were purchased at a discount and are, in fact, cash cows,” said industry critic Mark Cooper, a senior fellow at Vermont Law School’s Institute for Energy and the Environment.
Christine Tezak, an energy analyst with Robert W. Baird & Co. Inc., said that Exelon has been regarded by the Nuclear Regulatory Commission’s staff as among the best managers of nuclear plants in the United States. Adding Constellation’s nuclear plants in New York and Maryland creates opportunities for leveraging nuclear operations expertise and resources, the companies said yesterday.
Excerpt, PETER BEHR,Why Older Nuclear Power Plants Remain ‘Cash Cows’ Despite Fukushima, NY Times, April 29, 2011,