• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Home
  • About
  • Podcast
  • Archives

Atomic Insights

Atomic energy technology, politics, and perceptions from a nuclear energy insider who served as a US nuclear submarine engineer officer

Ontario and Exelon Both Delay Nuclear Projects While CPS and NRG Continue to Progress

July 1, 2009 By Rod Adams

The Associated Press is reporting that Exelon will be delaying its proposed two unit nuclear reactor development near Victoria, Texas. The company attributed the decision to the difficult financial markets and its failure to make the cut for the first round of US Department of Energy loan guarantees. People who have been following this project for some time will remember that Exelon initially proposed building GE ESBWR’s on the site, but then changed its plans after a failure to come to agreement with GE on project price and schedule.

That initial selection and later change in plans had to have played a large role in the DOE’s evaluation of project maturity and likelihood of success.

What is not stated in the AP article is that the electricity market in Texas has changed considerably in the past year. The dramatic drop in the price of natural gas has resulted in a 40% drop in the retail price of electricity. When you are making a capital investment in a commodity production facility like a large power generating plant, the selling price for the commodity is a big factor in the economic computation. Remember, Texas is a competitive electricity market, not one that is governed by cost of service regulation.

In another bit of nuclear market news, the government of Ontario has rejected the only bid that managed to comply with the 1000 pages of specifications issued. AECL (Atomic Energy of Canada Limited) submitted that bid, but the Ontario government spokesman stated that the price came in as “many billions” too high. Ontario Energy Minister George Smitherman reiterated his support for nuclear power as a future power source, but also stated that price is an object in the negotiation.

“Our government continues to believe that it is prudent to renew our nuclear fleet, but not at any cost,” he told a hastily called news conference yesterday at Queen’s Park.

If I was a large company with a newly announced reactor power system that was not available at the time that Ontario initially requested bids, and I had a long established presence in Canada, I would be sending my salesman to visit with Mr. Smitherman to find out just what kind of price schedule would work to land the business.

It is never a good idea to overpay for a project, but it is also not a good idea to underbid the work. It would be interesting to find out just what the market will bear when it comes to building new nuclear plants and whether that price is sufficient to provide a reasonable expectation of solid profits.

There is a more positive news story in the nuclear industry. One of the winners picked for some financial support by the US government for the first round of new nuclear plant construction is the NRG/CPS expansion of the South Texas project. CPS Energy, owned by the city of San Antonio has determined that its ownership in the project will require 5% rate increases every two years as long as it is successful in finding a buyer for a portion of the plant output. If it cannot sell that excess power, the investment in the plant would require a 7-8% rate increase every 2 years. (Those sound pretty modest to me considering the normal effects of inflation.)


(Disclosure: A small portion of my personal investment portfolio is invested in McDermott International, the parent company of the “large company with a newly announced reactor power system” mentioned above. I just might add to that investment in the future depending on how successfully they take my advice.)

Related Posts

  • Modest proposal to Chris Crane, CEO of Exelon

Filed Under: Uncategorized

About Rod Adams

Rod Adams is an atomic energy expert with small nuclear plant operating and design experience, now serving as a Managing Partner at Nucleation Capital, an emerging climate-focused fund. Rod, a former submarine Engineer Officer and founder of Adams Atomic Engines, Inc., one of the earliest advanced nuclear ventures, has engaged in technical, strategic, political, historic and financial discussion and analysis of the nuclear industry, its technology and policies for several decades. He is the founder of Atomic Insights and host and producer of The Atomic Show Podcast.

Please click here to subscribe to the Atomic Show RSS feed.

Primary Sidebar

Categories

Join Rod’s pronuclear network

Join Rod's pronuclear network by completing this form. Let us know what your specific interests are.

Recent Comments

  • Roger Clifton on Nucleation Capital’s Earth Day in Atherton
  • Rod Adams on Atomic Show #296 – Julia Pyke, Director of Finance Sizewell C
  • Colin Megson on Atomic Show #296 – Julia Pyke, Director of Finance Sizewell C
  • Colin Megson on Atomic Show #296 – Julia Pyke, Director of Finance Sizewell C
  • Ed Leaver on Atomic Show #296 – Julia Pyke, Director of Finance Sizewell C

Follow Atomic Insights

The Atomic Show

Atomic Insights

Recent Posts

Nuclear energy growth prospects and secure uranium supplies

Nucleation Capital’s Earth Day in Atherton

Atomic Show #296 – Julia Pyke, Director of Finance Sizewell C

Solar’s dirty secrets: How solar power hurts people and the planet

The Assay TV speaks with Rod Adams, Managing Partner of Nucleation Capital and Atomic Insights host

  • Home
  • About Atomic Insights
  • Atomic Show
  • Contact
  • Links

Search Atomic Insights

Archives

Copyright © 2022 · Atomic Insights

Terms and Conditions - Privacy Policy