Platts - Friday, August 01, 2008 http://www.platts.com ------------ French EDF pulls back from bid for UK nuclear firm British Energy London (Platts)--1Aug2008 Major French generator Electricite de France has pulled back from a bid for UK nuclear power generator British Energy, EDF said in a statement late Thursday. The board of state-controlled EDF met on Thursday and after journalists were invited at late notice to the company's first half earnings presentation Friday morning, there was widespread speculation that EDF would announce a bid for BE. "After in-depth discussions, EDF considers that the conditions for a major development in Great Britain are not met to date," said the company in its statement. Media reports had speculated that EDF would offer to buy BE for around GBP12 billion ($24 billion, Eur15 billion). There were also press reports last week which said that EDF may sell on 25% of British Energy to UK gas company Centrica once the takeover had taken place. The UK government holds a 35% stake in BE, which produces around a six of the UK's electricity by operating eight out of the 10 nuclear plants in the UK. With government backing for new nuclear power plants, BE is expected to play a central role in building new nuclear capacity. ------------ ASLB accepts arguments in Indian Point relicensing hearing Washington (Platts)--31Jul2008 A three-judge US Nuclear Regulatory Commission panel accepted arguments from three of eight challengers in a proceeding on Entergy Nuclear's request for a 20-year extension of operating licenses for Indian Point units 2 and 3. In an order July 31, an NRC Atomic Safety and Licensing Board found acceptable a total of 15 out of 43 arguments that the state of New York, Riverkeeper Inc. and Hudson River Sloop Clearwater filed. The ASLB panel denied hearing requests from Connecticut Residents Opposed to Relicensing of Indian Point; the town of Cortlandt, New York; the state of Connecticut; and Westchester County, New York. The panel said each petitioner had established standing but failed to offer an admissible contention. To be granted a hearing, an intervenor has to submit at least one admissible contention and also establish standing, meaning it has to show that its potential injury is traceable to the approval of extended operations at the plant. A total of 154 contentions had been submitted among all the groups. In a separate order July 31, the panel issued a scathing rejection of a joint hearing request from four parties led by the Westchester Citizen's Awareness Network, saying the groups showed an "appalling lack of candor" and had "repeatedly misrepresented facts in pleadings." ------------ Nuclear loan guarantees 'undersized': Goldman Sachs banker Washington (Platts)--31Jul2008 At $18.5 billion, the US Department of Energy's loan guarantee program for new nuclear reactors is "undersized," John Gilbertson, a managing director at investment bank Goldman Sachs said Thursday. That would only be enough for about three new reactors, Gilbertson said at a Center for Strategic and International Studies meeting on the business case for nuclear power. Fellow panelist John Matthews, a partner in the law firm Morgan Lewis & Bockius, added that the industry might need in excess of $100 billion in loan guarantees for 30 new reactors in the US. Loan guarantees are vital to the construction of new nuclear units, he said. Panelists characterized the DOE program as an important tool for managing financial risk. Oil companies have the size and financial worth necessary to handle projects with costs comparable to new nuclear units on their own, electric companies do not, said Richard Myers, the Nuclear Energy Institute's vice president, policy development. --Elaine Hiruo, elaine_hiruo@platts.com ------------ Panel says Indian Point nuke 'safe' despite local concerns Washington (Platts)--31Jul2008 The Indian Point nuclear power plant is "safe and secure but has areas that need improvement," an independent panel concluded Thursday after reviewing the station in response to opposition from local groups and officials over an application to extend its operating license for 20 years. "First, Indian Point is a safe plant," the panel said in a statement. "Second, Indian Point's relationship with the public and officials, in particular on matters regarding emergency preparedness, is not healthy." The panel recommended that plant operator Entergy make continued investments to maintain safety levels, engage in "aggressive and proactive communication" with the community and upgrade the station's emergency response facilities and safety equipment. It also said that the company should follow through on its plan to address critical staffing shortages and invest more in the aesthetics of the plant "to visibly convey to workers and the public that Entergy is committed to the care and protection of the station." Entergy CEO J. Wayne Leonard in March appointed the panel's co-chairs, who then selected 10 other panel members. Entergy asked the US Nuclear Regulatory Commission in April to renew the operating license for Indian Point, which has two operating reactors. Indian Point-2's license expires September 28, 2013, and Indian Point-3's expires December 15, 2015. Decommissioning of Indian Point-1, which has been shut since 1974, is expected to be completed in 2020. Several groups and county and state officials complained that a timely evacuation would be impossible in the event of a serious accident at the plant, about 25 miles from New York. ------------ Search finds two potential sites for spent nuclear fuel storage Washington (Platts)--30Jul2008 Two US communities are exploring the possibility of becoming the site of a commercial interim storage facility for utility spent nuclear fuel, according to the official leading the industry's site search. Officials from each of the small, rural communities wanted to continue looking at a commercial storage facility after touring dry storage installations at two nuclear plants in June, Marshall Cohen, the Nuclear Energy Institute's senior director of legislative programs, said in an interview Wednesday. He added that community officials will also meet with top-level nuclear fuel services executives in August to explore how a business plan might come together. Cohen would not name the communities but indicated they are in rural areas of states that already have nuclear power plants or nuclear businesses. Ideally, the nuclear industry would like to see two interim storage sites -- one in the east and one in the west -- come out of this volunteer process, he said. The fuel would be stored at the interim facilities until it could be moved to a repository now planned for Yucca Mountain, Nevada, for disposal. Each of the storage sites would be about 1,000 acres, he said. More than 50,000 metric tons of spent nuclear fuel are now in storage pools or casks at the US' 104 licensed reactors after the Department of Energy failed to begin disposing of that fuel by a 1998 contract date. Discussions have not yet gone to the state level, Cohen said. Some six or seven communities were initially involved in the industry search, he added. Under legislation that Senator Pete Domenici, Republican-New Mexico, introduced June 27, communities that notify DOE they are willing to be have a privately owned and operated storage facility would receive $1 million a year for up to three years. If a storage facility is licensed, the community would receive up to $25 million each year the facility operates and $20 million when it is closed. ------------ Independent panel to present findings on Indian Point safety Washington (Platts)--30Jul2008 An independent panel formed to examine the Indian Point nuclear power plant's safety, security, and emergency preparedness plans will hold a news conference July 31 to discuss its findings and recommendations. The panel's co-chairs were appointed in March by the CEO of plant operator Entergy and the co-chairs selected 10 other panel members. The panel was formed in response to local groups and elected officials opposing the extension of Indian Point's license for 20 more years. Entergy submitted a license renewal application in April 2007 to the NRC for Indian Point, which has two operating reactors. Unit 2's license expires September 28, 2013, and unit 3's expires December 15, 2015. Decommissioning of Indian Point-1, which has been shut since 1974, is expected to be completed in 2020. Several groups and county and state officials have said a timely evacuation would not be possible if there were a serious accident at the plant, which is about 25 miles from New York City. The press conference will be held in Cortlandt Manor, New York, near the plant site. ------------ Germany subsidizes nuclear research despite decommissioning plans London (Platts)--30Jul2008 The German government is providing a Eur10 million ($15.58 million) grant for nuclear energy research this year despite its plans to exit from the technology, a spokesman for the ministry of education and research said Wednesday. He said the focus would be on reactor safety, protection from radiation and storage of nuclear waste, but he stressed that the government was not supporting the development of new nuclear reactors. The spokesman also said the ministry was planning to raise the subsidy to Eur13 million in 2009 and Eur14 million in 2010, adding that it was important for Germany to maintain its know-how in nuclear science as long as countries neighboring Germany were constructing new reactors. The ministry official said it was also important to attract new scientists into the field. Germany's previous government, a coalition of the Social Democrats (SPD) and Green Party, passed a nuclear phase-out law in 2002, forbidding the construction of new nuclear plants and limiting existing ones to an average life span of 32 years, based on remaining allocated capacity. That coalition also stopped subsidies for nuclear research. ------------ Ground broken for AP1000s at Haiyang site in China Washington (Platts)--29Jul2008 Shandong Nuclear Power Co. broke ground July 29 for two AP1000 reactors at the Haiyang site in China's Shandong Province. The work began a month earlier than scheduled, Westinghouse Electric Co. said in a July 29 press statement. Work on two other Westinghouse AP1000s at the Sanmen site in Zhejiang Province got under way in February. The units will be the first modular, passively safe reactors to be built anywhere in the world. Westinghouse spokesman Vaughn Gilbert said a "significant" amount of the modular sections of the plant would be constructed in China. The AP1000 has also been identified as the design for 14 potential new nuclear units in the US, Westinghouse said. ------------ Entergy expects some delay in merchant nuclear asset spinoff Washington (Platts)--29Jul2008 Entergy has pushed back to the fourth quarter the anticipated schedule for spinning off its merchant nuclear assets to its shareholders, it said Tuesday. Entergy had been targeting late September and now is looking at late November closing date. Company officials told financial analysts in a conference call that it has shifted the schedule because the administrative law judges overseeing a New York Public Service Commission proceeding extended the discovery period. In a July 23 order, the two-judge panel said the change in process means it is unlikely that the PSC will be able to issue a decision in September, as Entergy had requested. Company officials said the approvals from New York and Vermont regulators were the "critical path" to completing the spinoff. Two other key federal regulatory approvals--the Nuclear Regulatory Commission and the Federal Energy Regulatory Commission--are now complete. In a filing with the SEC, Entergy said that the administrative law judges in the New York PSC proceeding will decide following the discovery process whether, or to what extent, a hearing is required. The scope of the discovery is on the adequacy of decommissioning resources and capital for continued operation and maintenance of the plants. The judges will make a recommendation on the spinoff transaction to the PSC, which is looking at the impact of the proposed reorganization and Entergy's request for debt financing. Entergy officials told analysts that the "biggest outstanding issue" in this proceeding involves "value-sharing agreements" between Entergy and the New York Power Authority. The New York Attorney General's Office argued that following the spinoff, NYPA would potentially lose up to $432 million in payments over 2009-2014 from Entergy based on the output of FitzPatrick and Indian Point-3. NYPA sold the units to Entergy in November 2000. The other state approval needed is from the Vermont Public Service Board, which must sign off on Entergy's request for an indirect transfer of control, guarantees and assignments of contracts and amendment to a "certificate of public good." An estimated three-day technical hearing began July 29. Final briefs in the proceeding are due August 20, and a decision by the Vermont PSC is anticipated in Q3, Entergy said. --Jenny Weil, jenny_weil@platts.com ------------ Spot uranium price holds as buyers balk at some sellers' prices Washington (Platts)--29Jul2008 The spot price of uranium remained at $64.50 a pound U3O8, according to the latest reports of both TradeTech and Ux Consulting, which said buyers don't appear to be interested in chasing prices as high as $68/pound that some sellers are asking. But Ux Consulting noted there appears to be a "subset of sellers" more willing to meet buyers' terms. And one analyst on Tuesday said "pounds are available at $65/lb," adding that while the price has "come off the boil," it is still "simmering" as the market waits for more demand to materialize. And that may be on the way. UX Consulting on Monday said the price of uranium enrichment services has risen by $5/separative work unit to $156/SWU. SWU is a measure of energy needed to enrich uranium. Because U308 and SWU can be used in varying amounts to produce equal quantities of enriched uranium, a rise in SWU prices could lead utilities to boost the amount of uranium they deliver to enrichers, raising spot uranium demand and prices, analysts said. The Platts NuclearFuel range for the week was $63-$68/lb. --Mike Knapik, newsdesk@platts.com ------------ US NRC seeks comments on impact statement for ISR uranium mining Washington (Platts)--28Jul2008 The US Nuclear Regulatory Commission will receive comments until October 7 on a generic draft environmental impact statement for in-situ leach uranium recovery operations. NRC said it developed the draft EIS jointly with the Wyoming Department of Environmental Quality. The draft EIS would apply to at least four western states -- Wyoming, South Dakota, Nebraska and New Mexico -- where NRC said uranium milling companies have indicated an interest in seeking NRC licenses. Three fourths of the applications that NRC expects to receive for new operations and the restarts of existing facilities are for ISR facilities. Most uranium mining in the US is ISR, in which the mineral is dissolved and recovered through a solution pumped to the surface, according to the World Nuclear Association. NRC is expecting at least 20 applications for new operations and 10 applications for expansion or restart of existing facilities by 2010. ------------ NRC staff approves Entergy license transfer to holding company Washington (Platts)--28Jul2008 NRC staff approved July 28 Entergy's request to transfer the operating licenses of FitzPatrick, Indian Point-2 and -3, Pilgrim and Vermont Yankee to a new holding company, Enexus Energy Corp. The agency also approved the transfer of licenses for the permanently shut Indian Point-1 and the independent spent fuel storage installation at Big Rock Point to the new company. Entergy Nuclear Operations initially filed its request in July 2007 and later submitted six supplements. Entergy also needs state regulators in Vermont and New York and the Federal Energy Regulatory Commission to sign off on its proposal to spin off to shareholders its merchant nuclear assets. It is aiming to complete the spin-off transaction around late September. The proposed restructuring by New Orleans-based Entergy would create a separate, publicly traded company, Enexus Energy, which will own the individual licenses via holding companies. Entergy and Enexus will jointly own EquaGen Nuclear, which will operate Enexus' nuclear fleet and offer nuclear services, including decommissioning, plant relicensing, and plant operations. ------------ Advisory panel says NRC should approve Millstone-3 uprate Washington (Platts)--25Jul2008 The NRC should approve a 7% power uprate for Millstone-3, the Advisory Committee on Reactor Safeguards, or ACRS, said in a July 23 letter to NRC Chairman Dale Klein released July 25. ACRS Chairman William Shack said that Dominion had "submitted an acceptable application" and the NRC staff's safety review "was thorough and complete." A petition by Connecticut Coalition Against Millstone opposing the uprate request was rejected in June by an Atomic Safety and Licensing Board panel. Dominion requested the uprate in July 2007 to increase the unit's authorized core power level from 3,411 megawatts thermal to 3,650 MWt, an addition of about 80 MW electric. ------------ ERA's first-half 2008 uranium production down, but sale price up Washington (Platts)--25Jul2008 Energy Resources of Australia said Friday that uranium production from its Ranger mine was lower in the first half of 2008 than it was a year ago, but its revenue and profit for the period rose as its average realized sales price more than doubled. Production totaled 2,357 metric tons, down from 2,496 mt in H1 2007 because of lower mill head grade in second-quarter 2008, ERA said. ERA said it sold 1,746 mt of uranium in H1 2008, down from 2,200 mt the same period a year ago. ERA said its average realized sales price in H1 2008 for uranium was US$35.69/lb, up from $16.90/lb for H1 2007. It said it expects its likely average price in H2 2008 to be "somewhat lower" than in H1 2008. Revenue for the first half of this year was Aus$157.4 million (US$150.5 million), up from $114.3 million in first-half 2007, while after-tax net profit for the first half of the year was $38.9 million, up from $5.7 million in the same period a year ago, it said. ERA also said it has reached an agreement for a contract to supply uranium to an electric utility in China beginning in fourth-quarter 2008. After several years of negotiations and internal deliberations, Australia and China agreed in 2006 to safeguards terms covering export of Australian uranium to China. ERA said it is moving forward with plans for a potential expansion of uranium production from its Ranger mine. It said it has decided to begin the process of getting approvals from regulators for an expansion, targeting an additional 8,000 mt of uranium, and for a heap leach facility. In heap leaching, ore is placed on a pad and a leach solution is used to extract the uranium. ERA began studying a potential expansion in September 2007 as it sought to extend the mine's life. --Tom Harrison, tom_harrison@platts.com ------------ BE says it is in talks about possible sale of company Barcelona (Platts)--24Jul2008 British Energy said it is in "advanced discussions" with "one party" for a potential sale of the company. BE issued the short statement July 24 in reaction to UK press speculation that a deal is imminent. However, the press reports cited an imminent deal between BE and two other companies --France's Electricite de France, long considered the most likely buyer, and the UK's Centrica. The news reports, citing unnamed sources, said Centrica, the former British Gas, would join EDF in a bid for BE and that Centrica would take 25% of the company. Prior to BE's statement, the BBC quoted on its web site an executive close to the companies as saying: "There's a push to conclude a deal before the holiday," meaning before members of parliament and other government officials depart for the summer's parliamentary recess. "We hope it will be done in the next few days," the executive said, according to the BBC report. BE's board is insisting that EDF pay more than 7.50 pounds/share, (US$15/share) and perhaps even as high as 7.75 pounds/share, which would value the company at more than 12 billion pounds, the BBC said. In June, BE rejected a bid approach from EDF, thought to be around 6.85 pounds/share because the offer was below its then 7.35 pounds/share price. BE shares closed July 24 at about 7.29 pounds/share. "There can be no certainty that the discussions will lead to an offer being made for British Energy," BE said in its two-sentence statement. ------------ US NRC panel denies challenge to Oyster Creek license renewal Washington (Platts)--24Jul2008 A review of challenges to the Oyster Creek nuclear power plant's license renewal request will not be reopened to consider metal fatigue issues, a US Nuclear Regulatory Commission Atomic Safety and Licensing Board panel said in a Thursday order. Nuclear Information and Resource Service and five other groups petitioned the panel in April to reopen its proceedings, which were concluded in December, to consider whether to accept a newly filed contention. The contention said that new information from NRC suggested that a metal fatigue methodology may have been inaccurately applied by licensee AmerGen, an Exelon subsidiary that operates the Oyster Creek plant, in analyses used to support its application for a 20-year extension of the station's license, which expires in April 2009. In its order, in which two judges concurred, the panel said the groups had failed "to demonstrate that the newly proffered contention raises a significant safety issue" and did not "demonstrate that consideration of its evidence would likely result in a materially different outcome in the license renewal process." Judge Anthony Baratta, in a dissenting opinion, said that the petitioners "have shown they have met the standards for reopening, in a timely motion" that "a serious safety issue" should be addressed, and that denying admission of the contention "would be a grave error." Richard Webster, an attorney representing the six groups, said that the panel's ruling would be appealed to the commission. --Steven Dolley, steven_dolley@platts.com ------------ House panel sets terms for US nuclear cooperation with Russia Washington (Platts)--24Jul2008 The US House of Representatives Foreign Affairs Committee voted Thursday to approve a bill establishing conditions for US-Russian nuclear cooperation, which also may increase the chances that the two countries' cooperation deal will go into effect before the end of the year. Before approving the bill (H.R. 6574), some members of the panel emphasized that it was "first and foremost" a bill approving the cooperation agreement, as one Democrat put it. Nuclear pacts such as the one with Russia can enter into force without congressional action if they lie before Congress for 90 days of continuous session. But the Bush administration submitted the agreement to Congress May 13, meaning that if Congress adjourns as planned September 26, it will be about two weeks short of the 90 days and the new president would have to submit the agreement to a new Congress next year. Enacting a bill such as the one the House panel approved would make the 90-day clock irrelevant, but it would require the House and Senate to agree on the text. During the Thursday markup, Representative Brad Sherman, a California Democrat, suggested that the Senate was likely to seek conditions less stringent than those in the panel's bill. The bill would make the issuance of licenses for nuclear exports to Russia contingent on a presidential certification that Russia was not providing Iran with assistance relevant to nuclear or other types of weapons. The president would have to make the certification for each fiscal year in which nuclear export licenses were issued. Exports for Iran's Russian-supplied Bushehr reactor would be explicitly excluded. The president also would have to certify that Russia was "fully and completely" supporting US efforts to impose "effective" international sanctions on Iran in response to the country's nuclear program, which the US and other countries have said is designed to give Iran a nuclear weapons capability. Russia also would have to ratify the Convention on Supplementary Compensation for Nuclear Damage or enact "domestic law that provides adequate liability protections" for US firms to engage in nuclear trade with Russia, Another provision of the bill would revise the congressional procedures for reviewing future nuclear cooperation agreements. Advocates of the agreement say it would enable Russia and the US to broaden their technical and commercial cooperation in important ways. It also would help solidify Russian support for US nonproliferation efforts, the advocates say. --Daniel Horner, daniel_horner@platts.com ------------