Nuclear Plant Financial Performance in a Restructured Utility System
In a paper2 two years ago to this forum (in Paris), I outlined the U.S. transition to an economically deregulated power generation economy, and what this could mean for nuclear power. My conclusion was then and it continues to be that this (market-driven economic competition) does not mean the end of nuclear power. For new nuclear plant construction starts, in, say, the next five years, the transition does not auger well, because it will be problematic for new nuclear plants to compete with natural gas-fired generation. However, the acquisition transactions in the population of existing, operating nuclear plants, offers a huge capital formation opportunity to rekindle nuclear power, this time as a market-driven technology, sans the nanny-coddling aspects of the first nuclear era. That is because nuclear plants, which are economic now, will be even more so in a market-driven economy. Earnings will not be constrained artificially as in the present regulated monopoly structure. Very large returns to equity can be realized, accrued and applied (later) to construction of new standardized, pre-licensed plants, and to other nuclear programs, such as the breeder.
KeywordsCash Flow Equity Capital Equity Return Nuclear Plant Debt Service
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