Platts - Friday, October 10, 2008 http://www.platts.com ------------ German EnBW to begin deconstruction of Obrigheim nuclear reactor London (Platts)--10Oct2008 German utility EnBW has received state approval for the deconstruction of its phased-out nuclear power plant Obrigheim, the company said Friday in a statement. The 357 MW nuclear reactor was commissioned in October 1968 and shut down in May 2005. EnBW formally applied for deconstruction permission in December 2004 after Germany's previous government passed a nuclear phase-out law in 2002, limiting nuclear life-spans to an average of 32 years. "Ahead of us lies a big engineering task," said the head of EnBW's nuclear sector Michael Wenk. He added that the first deconstruction phase would last around two years during which the facility's non-nuclear elements were to be removed. The second phase will then see the reactor's contaminated parts removed and stored, according to EnBW. During phase three and four EnBW said it would remove the reactor's remaining parts, such as the shell and canal system. EnBW said it expected deconstruction to be completed around 2020. ------------ Lithuania to keep Ignalina-2 running unless more aid provided Stockholm (Platts)--9Oct2008 Lithuania will keep Ignalina-2 running until 2012 if the European Union doesn't provide an additional Eur 1 billion in aid and permit the Baltic country to increase the number of greenhouse gas emission allowances it can issue, Economy Minister Vytas Navickas said in a statement October 9. Under the terms of its EU membership accession treaty, Lithuania is scheduled to shut the 1,300-MW RBMK at the end of 2009. But the government says that closing the unit then will result in a serious electricity shortfall and more dependence on imported Russian electricity. A referendum on whether to keep the unit running is scheduled for October 12, in conjunction with the national election. ------------ Prices for UK power zigzag around highs ahead of Nov surplus data London (Platts)--9Oct2008 Prices for UK power continue to zigzag around record highs while traders await the publication of forecasts for available supplies next month, market players told Platts Thursday. Nuclear outages and EU-imposed limits on the number of hours coal-fired stations can run have reduced the margin of spare capacity available to the grid in November, meaning the National Grid, the UK's power-transmission network manager, last week cut its power surplus forecast for the week starting November 10 to just 756 MW--the equivalent of just one medium-sized coal plant, and well under the normal 5 GW for the time of year. "The data's unlikely to change too much. It's going to be tight, whatever happens," one trader said Thursday. "Some generators are starting to come back in preparation for deep winter, although they might be too late for the party in November," he added. Last week's data helped to propel the front-month contracts to a new high, with November base trading Tuesday up at GBP150.5/MWh while peak reached an eye-watering GBP232/MWh. By contrast, November 2007 base was trading at an average of GBP50.8/MWh in October last year, according to Platts data. A trader said then he thought a degree of short-covering was responsible for the sharp spike in contracts, with November peak increasing in increments of GBP5 during the day. "If you need to cover now, you cover," he said. "You aren't bothered about a few pennies here or there in this market. But I feel sorry for anyone short at the moment--demand is massive next month and there's next to no availability." Prices for the front-month contract have since come under a degree of selling pressure, falling to GBP136.50/MWh and GBP205/MWh for the respective base and peak contracts Thursday, with players continuing to position themselves ahead of today's data, which is due out around 13:00 London time (12:00 GMT). "People were frozen out on the way up, but the longs have started to sell today," one trader said. "It's going to be interesting to see what happens later." ------------ Areva-Bechtel team gets engineering contract for Maryland EPR Washington (Platts)--8Oct2008 An Areva-Bechtel Power team will complete engineering for UniStar Nuclear Energy's proposed Evolutionary Power Reactor, or EPR, project near Constellation Energy's Calvert Cliffs reactor site in Maryland, Areva announced October 8. Areva spokesman Jarret Adams said October 8 that the value of the contract was "hundreds of millions" of US dollars. Areva said the team has been awarded a "multi-year" contract to complete "detailed design engineering work," including "full plant specifications and design of plant facilities and buildings." The work will give UniStar "the information needed to make important decisions about plant-related equipment purchases and construction-site preparations, should a final decision be made to build a plant," Areva said. Areva Inc. CEO Tom Christopher said in a statement that the agreement involves "nearly 500 Areva and Bechtel engineers." The Areva EPR is a 1,600-MW PWR design. UniStar and partners AmerenUE and PPL are developing plans for US-EPRs in Maryland, New York, Missouri and Pennsylvania, Areva said. The NRC is reviewing an application for a combined construction permit-operating license for the Calvert Cliffs project submitted by UniStar in March. ------------ New nukes to cost at top end of $4-bil to $10-bil range: analyst Washington (Platts)--8Oct2008 One factor in securing investment for new nuclear construction will be "solid, well-substantiated" cost estimates for construction, a Wall Street analyst said Wednesday. Caren Byrd of Morgan Stanley said the "considerable divergence" of current cost estimates for a new nuclear plant -- she cited figures of $4 billion to $9 billion or $10 billion -- was "risk appearing." Speaking at a "nuclear energy summit" at the Department of Commerce, she said that, presented with such a range, investors would incline toward the higher estimates. Speaking at the same forum, another analyst, Daniel Mallo of Societe Generale, focused on the risks during the construction period. Many investors are more "comfortable" with the risks of operation, he said. In the past, there has been a "consistent record" of cost overruns for construction, with many of them "massive," he said. He suggested that export credit agencies in countries whose companies might be supplying key components to US reactors could help overcome investors' reservations about new nuclear construction. Through certain mechanisms, they might be able to "plug the gap" left by traditional lenders, he said. While noting the potential obstacles to nuclear construction, Byrd also sounded a note of optimism. Investors are always looking for good opportunities, and "this could be one," she said. --Daniel Horner, daniel_horner@platts.com ------------ Bush signs legislation allowing nuclear trade with India Washington (Platts)--8Oct2008 President George W. Bush signed Wednesday legislation that would allow US companies to conduct nuclear trade with India. In remarks made at a ceremony marking his signing of the bill, Bush said the legislation will enhance cooperation between the US and India "in using nuclear energy to power our economies; it will help us work together even more closely to reduce the danger of nuclear proliferation across the world." Bush said the agreement will strengthen global nonproliferation efforts because India "has committed to operate its civil nuclear energy program under the safeguards of the International Atomic Energy Agency and other international guidelines." The US House of Representatives and the Senate both approved the bill by large margins. The legislation approved a bilateral nuclear cooperation agreement that the two countries initialed and finalized last year. Bush's signature was one of the remaining steps required to allow US companies to export to India. Through a decision the Nuclear Suppliers Group made last month, companies in the other 44 members of the NSG also can trade with India. After signing the legislation, Bush will make two certifications required by the new law, the State Department said last week. Bush must certify that the conclusion and implementation of the agreement is consistent with US obligations under the Nuclear Non-Proliferation Treaty and that it is US policy to work with NSG members to tighten restrictions on transfers of enrichment- and reprocessing-related equipment and technology related to uranium enrichment and reprocessing of spent nuclear fuel. --Dan Horner, daniel_horner@platts.com --Tom Harrison, tom_harrison@platts.com ------------ Obama, McCain spar over energy in second presidential debate Washington (Platts)--8Oct2008 From US foreign policy to global warming to a question about top domestic priorities, Senators Barack Obama and John McCain kept returning to major energy and environmental issues during Tuesday night's second presidential debate. During the town hall-style debate in Nashville, Tennessee, the candidates tied US energy development to their solutions for an ailing economy and overseas challenges, putting Russia, Iran and some Middle Eastern energy exporters on notice that cutting US and European reliance on their oil is a top foreign policy priority. "We can't simply drill our way out of the problem," Obama said, noting that the US has 3% of the world's oil reserves but consumes nearly 25% of global oil supply. "We're not going to be able to deal with the climate crisis if the only solution is to use more fossil fuels that create global warming," said the Illinois Democrat. Energy would be his top priority, Obama asserted, ahead of health care and Social Security reform. And he pushed his proposed $150 billion program to help develop and commercialize alternative and renewable energy. "Energy we have to deal with today," he said, "because you're paying $3.80 here in Nashville for gasoline and it could go up. It's a strain on your family budget, but it's also bad for our national security, because countries like Russia and Venezuela and in some cases countries like Iran are benefiting from higher oil prices." McCain said energy should be the focus of an economic stimulus program. Offshore oil and natural gas drilling and building a fleet of new nuclear power plants are keys to jumpstarting the US economy, said the Arizona Republican. "Energy independence is the way to do that. It's one of them," McCain said. "Drilling offshore and nuclear power are two vital elements of that. I've been supporting those and I know how to fix this economy and eliminate our dependence on foreign oil and stop sending $700 billion a year overseas." Calling it "fundamental economics," McCain repeated his assertion that increasing oil exploration off the East and West Coasts will inject enough confidence in the global oil market to bring down oil prices. "We've got to drill offshore, my friends, and we've got to do it now," he said. ENERGY IS 'THE ENGINE' McCain insisted the government can address top voter issues all at once, especially energy, despite concern about congressional wherewithal to address expensive big-ticket domestic items after just agreeing to a $700 billion financial bailout of US banking institutions. Obama accused McCain of repeatedly voting against incentives for renewable fuels, and McCain emphasized the idea that he supports development of most domestic fuels, especially nuclear. "We can work on nuclear power plants, build a whole bunch of them, create millions of new jobs," McCain said. "We can have all of the above: alternative fuels, wind, tide, solar, natural gas and clean-coal technology." On the issue of climate change, McCain aggressively distanced himself from almost eight years of Bush administration opposition to mandatory caps on greenhouse gas emissions from power plants and the industrial sector. Still, neither McCain nor Obama discussed specific policy plans, including pending proposals to create programs that ratchet down emissions by putting a price on carbon dioxide, creating a system for trading pollution rights and encouraging electric utilities to retool and buy cleaner fuels. "I have disagreed strongly with the Bush administration on this issue," McCain said. "What's the best way to fix it? Nuclear power," he said. "Nuclear power is safe and it's clean, and it creates hundreds of thousands of jobs, and I know we can reprocess the spent nuclear fuel. The Japanese, the British and the French do it. We can do it, too." Obama said he favors nuclear power as "one component" of an expanding overall energy mix. Five million new jobs could be created in the energy sector if there's a sustained effort by the next president, he said. "It can be an engine that drives us into the future the same way the computer was the engine for economic growth over the last couple of decades," Obama said. "We've got to understand this is a national security issue as well, and that's why we're going to have to make some investments." The US and private sector will work closely to export innovative clean energy solutions to China and other developing countries, Obama said. Perhaps the toughest talk came in the area of foreign policy. Some of the $700 billion sent overseas to oil-producing countries ends up in the hands of terrorists, said the candidates. "If we can reduce our energy consumption through alternative energy so that Iran has less money," Obama said. "If we can prevent them from importing the gasoline they need and the refined petroleum products they need, that starts changing their cost-benefit analysis. That starts putting the squeeze on them." Obama stuck to the same theme when discussing US-Russia relations. "Energy is going to be key in dealing with Russia," he said. "If we can reduce our energy consumption, [then] that reduces the amount of petro-dollars they have to make mischief around the world." --Joel Kirkland, joel_kirkland@platts.com ------------ STP claims US record for consecutive continuous runs Washington (Platts)--7Oct2008 South Texas Project set a US industry record when STP-2 completed the station's fourth consecutive breaker-to-breaker run this weekend, STP Nuclear Operating Co. said October 6. South Texas Project-2 was shut down October 5 for refueling and maintenance. Stpnoc said no other US nuclear power plant has ever completed four consecutive continuous runs between refueling outages. Over the past four years, STP-1 and -2 have produced more energy than any other two-unit plant in the US, and STP-1 led all 439 operating power reactors worldwide in generation last year, Stpnoc said. The company did not say when STP-2 was expected to return to service. Each STP unit is a 1,413-MW PWR. ------------ US NRC rejects request to overhaul license renewal process Washington (Platts)--7Oct2008 The US Nuclear Regulatory Commission Monday rejected a petition seeking an overhaul of the agency's license renewal process and a suspension of hearings on four applications to provide 20-year extensions for several operating licenses at nuclear power plants. The applications are from Oyster Creek in New Jersey, Indian Point-2 and Indian Point-3 in New York, Pilgrim in Massachusetts, and Vermont Yankee in Vermont. In the vote, the commissioners also denied the request for the agency to revise the NRC staff's safety evaluation reports on three of the four license renewal proceedings. Commissioner Gregory Jaczko partially dissented in his vote. The petition request was filed by numerous groups, including Nuclear Information and Resource Service, Jersey Shore Nuclear Watch, New Jersey Sierra Club, New Jersey Public Interest Group, Riverkeeper, Pilgrim Watch, New England Coalition and the state of New York. The groups said their request was based on deficiencies with the NRC's license review process that were identified by the NRC Office of the Inspector General in a September 2007 report. One of the findings was that the NRC staff appeared to be copying and pasting statements from plant operators without demonstrating it had independently verified those statements. --Jenny Weil, jenny_weil@platts.com ------------ NRC rejects petition to overhaul license renewal process Washington (Platts)--6Oct2008 NRC commissioners rejected a petition seeking an overhaul of the agency's license renewal process and a suspension of hearings on four applications to provide 20-year extensions for Oyster Creek, Indian Point-2 and -3, Pilgrim, and Vermont Yankee. In an October 6 vote, the commissioners also denied the request for the agency to revise the NRC staff's safety evaluation reports on three of the four proceedings. Commissioner Gregory Jaczko partially dissented in his vote. The petition request was filed by numerous groups, including Nuclear Information and Resource Service, Jersey Shore Nuclear Watch, New Jersey Sierra Club, New Jersey Public Interest Group, Riverkeeper Inc., Pilgrim Watch, New England Coalition and the state of New York. The groups said their request was based on deficiencies with the NRC's license review process that were identified by the NRC Office of the Inspector General in a September 2007 report. One of the findings was that the NRC staff appeared to be copying and pasting statements from plant operators without demonstrating it had independently verified those statements. ------------ EDF takeover should not affect power liquidity: BE strategy head London (Platts)--6Oct2008 The acquisition of independent generator British Energy by vertically integrated EDF Energy should not adversely affect wholesale power liquidity in the UK, British Energy's head of strategy and business development said in an interview late Friday. Since French utility EDF's Eur15.6 billion (US$23 billion) takeover of the UK's biggest independent producer was agreed upon in late September, there have been fears that an already illiquid UK forward power curve will dry up further, with power fed through to the customers of EDF rather than sold directly into the market. The acquisition expands EDF's operations in the UK, where EDF Energy is already one of the UK's big six household energy retailers. The French utility supplies gas and electricity to about 5 million customers in the UK, with the deal increasing EDF's installed capacity in the UK to 16.5 GW, representing about 20% of total capacity. However, British Energy's strategy head Paul Spence disputed claims that handing more power to an upstream generator will have an adverse affect on market liquidity, saying that the expectation at BE is that liquidity will improve, not lessen, if and when the deal goes through. Spence cited EDF's plans to build four new nuclear reactors as guaranteeing market liquidity over the long-term. "We don't see it like that [liquidity declining] at all," Spence said in a call. "Our generation is not disappearing. The hope and expectation is that by being part of a much larger group, we will be able to guarantee future supply and keep the stations running. That will guarantee liquidity in the market. Although Spence could not give an exact figure on how much output in future will be sold into the market, as opposed to being fed directly to EDF Energy--"We haven't got to that level of discussion yet"--he predicted the enlarged group will be able to take a more active presence in the power markets than British Energy alone. Up to now, British Energy's ability to trade forward power has been limited by credit constraints, which requires the company to back trades with large amounts of collateral. "We have a sub-investment grade credit rating, which means we have to think very carefully how and when we trade," Spence said. "The new group will have a much better credit rating, which will release that constraint and allow for more trading in the markets." Spence added that British Energy remains a member of the UK's Futures and Options Association that is pushing for the establishment of a UK forward power exchange, aimed at deepening liquidity in the UK's wholesale market. "We look forward to seeing an exchange for UK power, very much so," Spence said. "Another thing to remember is that currently the total number of buyers and sellers of our power is roughly the same as our generation, at around 50 to 60 TWh, whereas EDF's ratio is around 60% higher. "So in theory there should be a 60% uplift in our ability to trade forwards [once the deal goes through]. "Our direct sales to large industrial users amounts to around 20 to 25 TWh, which doesn't go near the wholesale market. "Net all of that together, and there will be more, not less liquidity," Spence said. Spence, a board member of British Energy, was optimistic the proposed deal would be sanctioned by the European Commission, and said the company was working with EDF on the formal notification document that will be sent to Brussels. EDF's acquisition gives EDF control of eight British nuclear plant sites, as well as sites on which new stations can be built. Centrica is also in talks to take a 25% stake in all new nuclear plants built by British Energy once it is in French hands. Furthermore, Spence said EDF's plans for the four new nuclear reactors was not threatened by the impact of the credit crunch. "Funding for new build will largely be taken on from the balance sheet of the parent companies," Spence said. "Even if the deal doesn't go through, for whatever reason, we'd look to form consortia to build new nuclear stations on our sites," he said. Spence said the decision to proceed on a deal with the French giant was "not taken lightly, believe me," having carefully considered other offers including a proposed merger with British Gas owner Centrica. ---James Allen, james_allen@platts.com ------------ SGT wins $120 million contract for Waterford-3 change-outs Washington (Platts)--3Oct2008 Entergy has awarded a contract worth $120 million to SGT LLC for a steam generator and reactor vessel head replacement project at Waterford-3 in Louisiana, URS Corp. said October 3. SGT, a joint venture between URS' Washington Division and Areva NP Inc., says it will be providing project management, engineering and construction services for the component replacement project scheduled in spring 2011 at the Entergy reactor. The unit's two steam generators, the vessel head and control rod drive mechanisms will be replaced during the outage. In an August financial filing to federal regulators, Entergy estimated the entire cost of the project at around $511 million. SGT says it and its predecessor companies have replaced steam generators at 20 other US facilities. ------------ British Energy says it will restart Dungeness before year-end Barcelona (Platts)--2Oct2008 British Energy said October 2 it will restart its two-unit Dungeness station before the end of 2008. The two units, which total 1,110 MW of capacity, in Kent, southeast England, have been undergoing a planned maintenance and refueling outage since the end of June. BE spokeswomen Sue Fletcher said October 2 the two units will be brought back at different times, between now and year-end. The market has been concerned over power availability this winter, with base power prices for November soaring to more than 130 pounds per megawatt-hour (US$229/MWh) on concerns over small surplus power margins. According to data from grid operator National Grid October 2, there is an expected surplus of just 756 MW for the week beginning November 10 -- the equivalent of one mid-sized coal-fired power station. ------------