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Exelon, Entergy Decline on Japan Reactor Meltdown Threat

Exelon Corp., owner of the largest group of U.S. nuclear power plants, declined as engineers in Japan struggled to stabilize a reactor similar in design to four of its units.

Exelon, based in Chicago, fell 27 cents to $42.89 at 4:15 p.m. in New York Stock Exchange composite trading. The shares declined as much as 5.5 percent in intraday trading, the most since May 6. Exelon’s 17 reactors at 10 stations in Illinois, Pennsylvania and New Jersey account for 20 percent of U.S. nuclear power capacity, according to the company’s website.

Fifteen U.S. reactors use a similar design to the General Electric Co. model at Tokyo Electric Power Co.’s Fukushima Daiichi No. 1, Hugh Wynne, a New York-based analyst for Sanford C. Bernstein, wrote in a note to clients today. Exelon has relied heavily on this design, he said.

The Japanese reactor was forced to vent radioactive vapor and gas over the weekend when its cooling system failed after the March 11 earthquake and tsunami that followed. Engineers are flooding that unit and two others with seawater trying to prevent meltdowns that may result in the release of catastrophic levels of radioactivity.

“Everything in the nuclear power universe went down today,” said Bruce Allen, president of Bruce G. Allen Investments LLC in Denver, which manages more than $120 million including shares in reactor owner Southern Co. “Is it an overreaction? Probably.”

No Tsunamis

Damage to Tokyo Electric’s nuclear stations in Fukushima prefecture was primarily from the tsunami, not the earthquake, Exelon Chief Executive Officer John Rowe said today in a statement.

“Our plants are safe, particularly given the different seismic patterns in our regions and the absence of tsunami-type events where we operate,” Rowe said.

Entergy Corp., the second-largest U.S. nuclear reactor operator, is subject to the threat of regulatory delay because it’s seeking to renew licenses for four of its reactors, according to Wynne. Entergy operates 12 reactors at 10 sites in New York, Arkansas, Louisiana, Massachusetts, Nebraska, and Vermont.

“Entergy’s nuclear plants were designed and built to withstand the effects of natural disasters, including earthquakes and catastrophic flooding,” the company said in a statement today.

Entergy, based in New Orleans, fell $3.60, or 4.9 percent, to $70.09, the biggest drop since October 2008. PG&E fell $1.34, or 2.9 percent, to $44.41 and Edison International fell 98 cents, or 2.6 percent, to $36.78.

Southern Construction

Southern Co., the largest U.S. utility owner by market value, fell 63 cents, or 1.7 percent, to $37.65. Southern has begun preliminary construction on two new reactors at its Vogtle plant near Augusta, Georgia, and has been expecting Nuclear Regulatory Commission approval to begin full construction this year.

Final approval “could take longer and be more contentious than was hoped before the earthquake and tsunami,” Christine Tezak, a McLean, Virginia-based energy policy analyst for Robert W. Baird & Co., wrote in a note to clients today.

The Westinghouse AP1000 reactor Southern proposes to build doesn’t depend on pumps to cool the core after a shutdown and should be approved on schedule by the commission, CEO Thomas Fanning said today in an interview on Bloomberg Television.

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