New U.S. operating standards imposed in the wake of the reactor meltdowns in Fukushima, Japan, last year may prompt owners of single nuclear plants to consider selling them, PPL Corp. (PPL) Chief Executive Officer William Spence said.
Requirements that are more efficiently met by owners of multiple plants may lead companies that own a single plant to sell it, Spence said in an interview at Bloomberg headquarters in New York yesterday. PPL has no such plans and views its 2,289-megawatt Susquehanna nuclear plant 70 miles (113 kilometers) northeast of Harrisburg, Pennsylvania, as a key strategic asset, Spence said.
The five-member Nuclear Regulatory Commission is weighing rules to improve safety at 104 operator U.S. nuclear reactors and may issue its first Fukushima-related orders by March 9, David McIntyre, an NRC spokesman, said in an e-mail yesterday.
“There will be a lot of companies like ourselves that will have to look hard at their role in nuclear,” Spence said.
A 9-magnitude earthquake and tsunami March 11 caused explosions and a loss of power at Tokyo Electric Power Co. (9501)’s Fukushima Dai-Ichi plant, leaving storage pools unable to keep spent fuel-rods cool and triggering meltdowns and radiation leaks. Trapped hydrogen gas from water molecules fractured by radiation ignited, causing explosions.
The NRC’s upcoming rules are expected to address concerns highlighted by a task force in July that plant owners don’t have sufficient instruments to keep nuclear-waste cooling pools safe and must take steps to withstand power losses, according to proposals by NRC staff made public Feb. 17.
Regulators may require sturdy venting systems to relieve pressure in General Electric Co (GE).-designed reactors similar to those that failed at Fukushima. PPL’s plant has two such reactors.
“Capital requirements for hardened vents and ongoing modifications we’d need to make at Susquehanna are going to be very manageable,” Spence said.
The U.S. trade group, the Nuclear Energy Institute, on Feb. 12 proposed that plant owners operating in the same region be allowed to pool portable emergency equipment such as back-up pumps and generators.
Operational requirements that increase costs, such as dedicated emergency response crews, might make single plants less competitive than groups of reactors, Spence said.
PPL and 13 other companies each operate a single nuclear plant, according to NRC data. Exelon Corp. (EXC), the largest U.S. reactor operator, also has nuclear plants in Pennsylvania. Exelon operates 17 reactors at 10 sites.
U.S. power prices, depressed by a shale-driven glut of natural gas, may rebound in 2015 as coal-burning plants capable of powering millions of homes close because they can’t afford to operate under new air-pollution rules, Spence said.
PPL, which derives about 40 percent of its power from nuclear plants and hydroelectric projects, expects as much as 17,000 megawatts of power plant capacity to be shut in its Pennsylvania market as a result of the rules, Spence said.
An economic rebound may also benefit PPL, Spence said. Profit from generating power have shrunk as wholesale electricity prices have fallen since 2007. The average benchmark power price in the PJM market, the largest in the U.S., was $40.53 a megawatt-hour in the fourth quarter, down from $70.08 in the last quarter of 2007.
“It’s been slow and sluggish, but there are signs that things are slowly improving with demand,” Spence said.
Spence, who was named PPL’s CEO in November, said the company isn’t actively seeking acquisitions as it absorbs recent purchases of regulated utilities in Kentucky and the U.K.
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