Costs for nuclear increase

Monday, June 2, 2008

A utility's credit quality could be negatively impacted by building a new nuclear power plant, according to a report released June 2 by Moody's Investors Service.

The report said that an electric utility might find a 25% to 30% deterioration in its financial credit metrics. The sheer size, cost and complexity of new nuclear construction projects can increase the business and operating risk of a utility, potentially exposing it to downward rating pressure over the intermediate- to longer-term horizon Moody's Vice President/Senior Credit Officer Jim Hempstead said in a statement.

The report called nuclear technology costly, potentially exceeding $7,000 per installed kilowatt, which could make it twice as much as a scrubbed coal-fired plant or three times as expensive as a combined-cycle natural gas-fired plant.

It also said utilities should not rely solely on federal loan guarantees in deciding whether to build because it says that program's "form and substance" remains unclear and will be "subject to a material amount of political influence" into the future. Nonetheless, it said there are some benefits to building nuclear plants, including providing fuel diversity and an emission-free source of generation.

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