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Argument: Nuclear energy economies of scale are improving

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Pascal Zachary. "The case for nuclear power". SFGate. February 5, 2006 - "In recent years, several electric utilities have emerged as nuclear-power specialists, reaping economies of scale and building expertise that enables them to run safer, more secure operations.

The shift, which began 10 years ago, caught critics of nuclear power by surprise. Historically, the U.S. government never encouraged a small group of utilities to specialize in nuclear power but rather encouraged many utilities to dabble in the technology.

PG&E was typical, building only a single nuclear plant (with two reactors) at Diablo Canyon. This on-off tendency made it more difficult and costly for utilities to gain the expertise in nuclear power or to run plants properly. Vastly different in nature than coal-, gas- or oil-fired plants, nuclear power at first proved beyond the capacity of utility executives, a fact that became shockingly clear after Three Mile Island.

Utilities only mastered the technology in the 1990s, when a few of them -- notably New Orleans-based Entergy and Chicago-based Exelon -- started buying 'orphan' plants and assembling them into 'fleets,' seeking the benefits of economies of scale. Exelon, a Chicago-based utility, today owns 20 commercial reactors, one-fifth of the nation's total of 104.

With a concentration of owners came a concentration of expertise, better nuclear plant performance across the United States, fewer safety hazards and higher profits. The unlikely result is that nuclear plants have become among the most sought-after industrial properties in the country.

Utilities only mastered the technology in the 1990s, when a few of them -- notably New Orleans-based Entergy and Chicago-based Exelon -- started buying "orphan" plants and assembling them into "fleets," seeking the benefits of economies of scale. Exelon, a Chicago-based utility, today owns 20 commercial reactors, one-fifth of the nation's total of 104.

With a concentration of owners came a concentration of expertise, better nuclear plant performance across the United States, fewer safety hazards and higher profits. The unlikely result is that nuclear plants have become among the most sought-after industrial properties in the country. The most recent plant to change hands, the Ginna facility in New York, sold for $800 million, or 50 times what Entergy paid for the first reactor it bought. Says Michael Wallace, a top executive of Constellation, which bought the Ginna plant, "Nuclear plants are becoming incredibly valuable."

So valuable are nuclear plants that none is for sale today. Indeed, scores of nuclear plants, once thought to be candidates for closure, are pursuing and receiving licenses to operate for at least an additional 20 years. So far, the NRC has extended the life of about 30 plants. Because these plants are fully bought and paid for (and even the money required to de-commission them sits safely in bank accounts), utilities are leaning on them, because they only incur operating expenses, guaranteeing that nuclear-generated electricity is by far the cheapest part of their energy mix.

So far, electric utilities, while happy to harvest existing plants, are reluctant to build new ones."

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