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S&P's Epiphany

Standard and Poors just came out with a report titled "Why U.S. Utilities Are Seeing Nuclear Power In A New Light" (subscription required for actual report). The report read more like "Why S&P is Seeing Nuclear Power In A New Light.

After looking at the report, it appeared S&P had an epiphany in which they are finally understanding how much the industry has changed over the years. They recognized the new licensing framework for new plants, who the nuclear players are, what technologies we are looking at building, the costs associated and the credit implications. What's great about the report is that S&P used almost of their information from NEI's 2006 Status Report (pdf).

S&P still has much of their same reservations about the costs to build a new plant but it's great to finally see them keeping up with what's going on in the nuclear industry.

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Gunter said…
Can you explain this "epiphany" a little better?

This appears to be a rehash of the now year old January 9, 2006 S&P report "Credit Aspects of Nuclear Power for North America and Europe." Aside from the addition of all the chaff, nothing has really changed from the central issue being that introducing the financial risks from more nuclear power to a business profile jeporadizes credit ratings.

Nuclear waste remains the same question that it has for more than a half century. If anything, the licensing and opening of Yucca Mt. is ever more remote and more nuclear power means more nuclear waste with a questionable future.

With the distinct possibility that EPACT 2006 appropriations for new nukes will be whittled down under a fiscally conservative Congress it doesnt seem like Wall Street will be getting bullish on new atomic power any time soon.

And given the "deja vu all over again" that is occuring in Finland with EPR cost overruns and delays as elsewhere, I'd venture they are "keeping up" on industry intentions more out of concern for the electric utility business sector being sucked into the same old quagmire than anything else.

Gunter, NIRS
David Bradish said…
I was wondering if you would ever comment on this post.

Well, first they seem to finally understand the "New Licensing Framework" as mentioned on page 1 of the report.

"The new licensing framework aims to assure potential investors that their investment in a new nuclear plant will not be jeopardized as long as the design and construction adhere to the initial set of standards agreed by the parties involved and the NRC."

Most of the delays in the past were due to the regulatory framework and if all goes well in the new process then much of the risk is taken away for the construction of the plant.

Second, they are very specific on the types and costs of each nuclear technology and appear to understand what is being built. (pages 4-7) Many think that all nukes are the same but they are not and S&P knows that here.

And third, "Standard & Poor's does not anticipate construction of new nuclear plants to start in the next few years." (p. 8) Well duh, considering that the chart on page 3 shows that a plant won't start construction until about 3-4 years after a company files an application. And no one has done so yet. It seems like they figured that out all on their own.

But it's great they are taking the time to understand what's going on in the industry. The more they know, the better for the industry.

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