Platts - Friday, January 30, 2009 http://www.platts.com ------------ Utility APS eyes new renewables, nuclear to meet resource needs Portland, Maine (Platts)--30Jan2009 Arizona Public Service unveiled a long-range resource plan that calls for spending about $18 billion to add renewable, nuclear and energy efficiency capacity to meet the Phoenix-based utility's needs through 2025. APS expects to need 6,500 MW by 2025 to meet growing customer demand and to replace expiring power purchase agreements, the resource plan says. To meet it, APS would add more than 1,660 MW of renewable capacity, largely solar; 800 MW of nuclear capacity and 587 MW of energy efficiency programs. The utility also would need about 3,000 MW of peaking resources. APS has no plans for new coal-fired generation. "APS believes that the risk of future climate change legislation and the resulting potential for significant increases in cost currently make coal-fired generation an unattractive resource choice," the report says. The utility is planning only small amounts of new natural gas-fired generation. As a result of the proposed generation mix, APS expects its carbon emissions to remain essentially flat through 2025. On the nuclear front, APS owns a 1,147-MW stake in the Palo Verde nuclear plant near Wintersburg, Arizona. The utility expects to begin planning over the next three years for additional units that could be in place by 2022. APS is calling for significant new transmission to bring solar and nuclear power from the Palo Verde hub into the Phoenix area. Because of an economic slowdown in Arizona, APS does not expect to need new capacity, beyond current plans, until around 2015. APS developed the resource plans over the last 18 months, with public input. The Arizona Corporation commission will review the utility's plan. ------------ Areva revenue, order book up in 2008 Paris (Platts)--29Jan2009 Areva's sales revenue rose 10.4% in 2008, to Eur13.2 billion (US$16.8 billion), and its order book totaled Eur48.2 billion, a 21.1% increase over 2007, according to annual figures released January 29. Areva said back orders for its Nuclear business sector came to Eur42.5 billion at year-end 2008 due to "several major, multiyear contracts" in its Front End and Reactors and Services divisions. Revenue from the Nuclear business was up 6.5% from 2007, to Eur8.093 billion, with an 11.8% increase in revenue in the Reactors and Services division, a 7.1% increase in the Front End division, and a 2.7% decline in Back End division. The Plants business unit (new nuclear plant projects) increased its contribution to revenue of the Reactors and Services division by 40% in 2008, Areva said. Foreign exchange -- essentially the decline of the US dollar in relation to the euro -- had a negative impact during 2008 of Eur53 million in the Front End, Eur47 million in Reactors and Services, and Eur3.5 million in the Back End, Areva said. The group's Transmission and Distribution sector revenue increased 17% in 2008, to Eur5.065 billion. Areva is scheduled to release its full 2008 financial results on February 25; they are expected to reflect ongoing problems with the group's turnkey EPR construction project at Olkiluoto in Finland. ------------ Dominion 'well positioned' to get loan guarantees: CEO Farrell Washington (Platts)--29Jan2009 Despite uncertainty about what reactor design it will select, Dominion is "well positioned" to receive loan guarantees from the Department of Energy for a possible new power reactor in the "first wave" of such awards, Chairman, President and CEO Thomas Farrell said Tuesday in a conference call. Dominion said last month it would consider designs other than GE Hitachi's Economic Simplified Boiling Water Reactor for its North Anna-3 project in Virginia because it had been unable to reach with GE an agreement on an engineering, procurement and construction contract. "While we plan to continue the process of obtaining a [combined construction permit-operating license] with GE's ESBWR design, a technology we continue to find attractive, we nonetheless are receptive to other vendors' proposals. If a change in design were to occur, we would discuss any schedule impacts" with the US Nuclear Regulatory Commission, Farrell said on the call, in which his company discussed fourth-quarter earnings. "It is our intent to establish the optimal risk-sharing agreement between Dominion and its contractor before we file an application with [the Virginia State Corporation Commission] and embark on the construction of a third unit [at North Anna]. We could not reach an appropriate risk-sharing agreement with GE. In the interim, we will continue to keep all of our options open by moving forward and pursuing a COL and continuing with our federal loan guarantee application," Farrell said. Thomas Wohlfarth, Dominion's senior vice president and chief accounting officer, said on the call that the company had written off "well over" $15 million dollars in one-time losses in Q4 2008 related to terminating Dominion's ESBWR agreement with GE. --Steven Dolley, steven_dolley@platts.com ------------ US House Ag Committee chief to offer new commodity trading bill Washington (Platts)--29Jan2009 US House Agriculture Committee Chairman Collin Peterson has proposed a draft bill that would expand the power of the Commodity Futures Trading Commission and increase transparency in all commodity futures markets, including over-the-counter markets. The Minnesota Democrat on Wednesday circulated the "Derivatives Transparency and Accountability Act of 2009," expanding upon similar legislation that passed the House of Representatives in 2008. Like the earlier legislation, which failed to move in the Senate, Peterson's bill would require international exchanges that host US-based commodities to share data with the CFTC and adopt position limits similar to those imposed on US exchanges. It also would require the agency to break out the positions of index funds and other passive investors in all regulated markets and provide that information to the public. While Peterson's draft would require all OTC commodity transactions to be settled through a CFTC-regulated clearing organization, it would give the CFTC authority to exempt some transactions from the requirement and it would allow certain exempt commodities--such as financial contracts--to clear through an organization regulated by the Securities and Exchange Commission or the Federal Reserve. In addition, the proposal would subject OTC commodity transactions "to reporting and recordkeeping requirements as determined by CFTC" and to its large-trader reporting requirements, would give the CFTC special-call authority to obtain information on any OTC market position and would require the agency to review OTC markets to determine whether or not they should be subject to position limits. Other provisions include boosting the CFTC's staff base by 200 new full-time employees, requiring carbon offset credits and emission allowances to be traded on a designated contract market and prohibiting traders from entering into a so-called "naked" credit default swap. A House aide said the Agriculture Committee plans to hold hearings on the legislation early next week. Senator Tom Harkin, an Iowa Democrat who heads the Senate Committee on Agriculture, Nutrition and Forestry, earlier this month introduced legislation to require all OTC trading to take place on a regulated futures exchange and would subject such transactions to increased reporting and transparency requirements. --Jessica Marron, jessica_marron@platts.com ------------ French strike cuts power output by around 10 GW: union London (Platts)--29Jan2009 A widespread national strike in France has cut power output by "about 10 GW," Eric Hugelmann, spokesman for the FNME energy and mining union said at 0900 CET Thursday (0800 GMT). France's largest unions, including the CGT and the CFDT, went on strike late Wednesday in a protest aimed at leveraging greater protection for workers in light of the current economic downturn. In the last strike action called by FNME on January 15, the union said power capacity was hit by 9.7 GW. With transport workers also on strike Thursday, there were major disruptions to rail and flight networks. Energy workers began to strike at about 2100 CET Wednesday, and during the night there were power production cuts of up to 14 GW, Hugelmann said. There were also widespread cuts at nuclear plants operated by EDF, as well as at gas, coal and fuel-oil fired plants. Fossil fuel plants affected included EDF's Porcheville and Cordemais plants. The strikers reduced the impact on output early Thursday, "for grid security," he said. Power demand rises at the start of the working day, and the unions adjusted their impact so that power consumption could still be met, he said. Hugelmann said the unions intend to increase the impact on power production to above 10 GW once the morning peak period has subsided. "It will continue throughout the day and we will have higher levels [of cuts]," he said. Average half-hourly power prices on France's within-day balancing mechanism rose to almost Eur200/MWh at 0600 CET and were at about Eur190/MWh at 0930 CET, figures from grid operator RTE show. On Wednesday, day-ahead baseload power closed at Eur75/MWh and peak load at Eur94/MWh in the OTC market. EDF, which controls most of France's power output, refused to say how much the strike has impacted production. Some 23% of its workforce were taking part in the strike, a spokeswoman for the company said Thursday morning. FNME STANDS BEHIND EDF FOR NEW BUILD As well as seeking protection for workers, the FNME insists that any new nuclear plants should be built and run by state-controlled EDF rather than GDF Suez, in which the state only has a minority stake. The state owns 85% of EDF compared with just 36% of GDF Suez. Both companies have told the government they want to build new nuclear plants in France after French president Nicolas Sarkozy announced last July that a new plant will be built. Initially, Sarkozy said that one plant would be built, to follow on from the country's first European Pressurized Reactor plant being built by EDF at Flamanville, Normandy. But the government has yet to decide how many EPRs are to be built and which companies will build them. In an interview published Thursday in French daily Les Echos, Frederic Imbrecht, the FNME's secretary general, said EDF should be the company behind France's next nuclear fleet. "We estimate that we need three or four EPR plants, including Flamanville, to come online before 2020," Imbrecht said. EDF, which has to date been the only company to build nuclear plants in France and operates 58 reactors, must be behind the new plants because it is the only French company with the necessary experience, Imbrecht said. "It takes 10 years to build up the competencies," he said. "In a period of economic crisis, the best way is for each company to concentrate on its own core area. [EDF] must concentrate on nuclear, GDF Suez must concentrate on gas," Imbrecht said. ------------ Land company competing with utilities for UK NDA nuclear sites Barcelona (Platts)--29Jan2009 A Lancashire-based land development company is among the bidders for UK Nuclear Decommissioning Authority land being sought by prospective builders of new nuclear power plants in the UK. Nigel McGurk, managing director of Ainscough Johnston, confirmed Thursday that his company had bid for the NDA land at Oldbury, Wylfa and Bradwell--land being sought by major European utilities to build new nuclear power plants. McGurk said the land could be used for many types of energy projects, not only nuclear plants, and that, if successful, his company will team with energy companies to develop the land. Ainscough Johnston specializes in "all types of complex development projects" and has a lot of experience working with planning agencies and local authorities, McGurk said. Bidders for the NDA land are operating under confidentiality agreements and McGurk said he could not say how much the company had offered as an initial indicative bid for the three properties. However, he said it was significant enough to earn them a right to participate in the NDA's planned online auction for the properties in March. Among the other expected bidders for the land are EDF Energy, E.ON UK, RWE npower, Vattenfall, GDF Suez, and Iberdrola, all of which intend to use the land for new nuclear power plants. --David Stellfox, david_stellfox@platts.com ------------ Democrats to mull alternatives to Yucca Mountain: Carper aide Washington (Platts)--28Jan2009 Democratic lawmakers plan to discuss alternative ways to dispose of spent nuclear fuel that do not involve the proposed Yucca Mountain repository, an aide to US Senator Tom Carper, Democrat-Delaware, said Wednesday. On the sidelines of a conference sponsored by the Nuclear Energy Institute in Washington, the aide said Carper would consider dry cask storage, interim storage and even reprocessing of spent fuel as an alternative to subterranean waste storage at a site 90 miles from Las Vegas. Carper has worked closely with Senator George Voinovich, Republican-Ohio, on exploring other options to Yucca Mountain, the aide said. In spring 2008, the two hosted a roundtable discussion about reprocessing, loan guarantees and other hot button issues. By the fall, Voinovich and several other senators had proposed a bill that would create a reprocessing program in the US. Also, Carper is set to become the chairman of the newly-developed nuclear caucus in the Senate, the aide said. Senate Majority Leader Harry Reid has fought development of the Yucca Mountain project, but that does not mean that nuclear energy is off the table under this administration or this Congress, the aide said. "I don't believe Senator Reid is anti-nuclear; he's anti-Yucca," the aide said. --Dipka Bhambhani, dipka_bhambhani@platts.com ------------ Areva, EDF sign long-term uranium conversion contract Paris (Platts)--28Jan2009 Areva and Electricite de France, or EDF, have signed a long-term uranium conversion contract worth "several hundred million euros," Areva said in a press statement January 28. It said the contract will enter into force this year, but did not say how long it will run. Initially Electricite de France's uranium feed will be converted to uranium hexafluoride in Areva NC's existing Comurhex facilities at Tricastin and Malvesi. From 2012, the work will be done in the new Comurhex II conversion facilities, a Eur610 million (US$800 million) investment on which work began in 2008, Areva said. Areva and EDF last month signed a long-term agreement for reprocessing and recycling spent fuel, said to be worth several hundred million euros a year. ------------ Progress Energy's nuclear units sets company generation record Washington (Platts)--27Jan2009 Progress Energy said its five nuclear units set a company record by generating more than 35.1 million net megawatt-hours in 2008. The previous record was 35 million MWh generated in 2003, the company said in a January 27 statement. Progress Energy operates Brunswick-1 and -2 and Shearon-Harris (also called Harris-1) in North Carolina, Robinson-2 in South Carolina, and Crystal River-3 in Florida. ------------ Orlando muni in talks to buy stake in Progress nuclear station Boston (Platts)--27Jan2009 The municipal utility in Orlando, Florida, said Tuesday it is in talks with Progress Energy Florida about the possibility of taking up to a 128.5-MW stake in Progress' planned two-unit, 2,234-MW nuclear station in Levy County. Sheridan Becht, spokesman for the Orlando Utilities Commission, said that stake would give his 200,000-customer muni an about 6% ownership interest in the Levy station. He could not predict when the OUC and Progress might reach a final agreement, but said the muni's board of directors has authorized the utility to invest $3.7 million to secure an option on the Levy stake Orlando is seeking. If OUC buys the Levy station stake, it would triple the muni's overall nuclear ownership. Becht said his muni currently holds a 52-MW stake in Florida Power & Light's St. Lucie unit 2, as well as a 13-MW stake in Progress' Crystal River unit 3. The muni is seeking the Levy stake as part of a continuing effort to diversify its fuel mix, reduce fuel-cost volatility and in anticipation of federal rules on greenhouse gas emissions, Becht said. The OUC currently secures about three-quarters of its power from coal-fired plants. OUC's spokesman added that the muni's board on Monday will consider a proposed 13.7% rate hike that, if approved, would go into effect March 1. The rate hike, which follows a 7% increase last year, would boost the monthly bill of a 1,000-kWh/month residential customer by about 15%, to about $120 from the current $104. ------------ Progress Energy says four nuclear plants had record 2008 output Washington (Platts)--27Jan2009 Progress Energy on Tuesday said its four nuclear plants in the Carolinas and Florida reached record output in 2008, generating more than 35.1 billion kWh. The total surpasses the previous record of 35 billion kWh in 2003. The Raleigh, North Carolina-based company said its nuclear plants last year generated 46% of the power used by customers in its North and South Carolina service territory and 18% of the energy consumed by its customers in Florida. "Along with efficiency programs and renewable energy, nuclear power continues to be an important part of our balanced approach to meet the growing electricity demand of homes and businesses that depend on us," President and CEO Bill Johnson said in a statement. "As our country sets energy policies to address global climate change, advanced, carbon-free nuclear energy continues to be the best technology available to provide reliable electricity day in and day out." Progress operates the two-unit Brunswick nuclear plant near Southport, North Carolina, and single reactors at the Crystal River plant near Crystal River, Florida; the Harris Nuclear plant in Plant in New Hill, North Carolina; and the H.B. Robinson plant near Hartsville, South Carolina. The company recently petitioned the US Nuclear Regulatory Commission for a 20-year extension to the Crystal River plant's operating license. NRC earlier appvoed license renewals for the company's other three plants. ------------ NWE LSFO market weakens on flagging demand, nuclear plant returns London (Platts)--27Jan2009 The return from maintenance of a number of UK nuclear power plants coupled with flagging industrial demand has put pressure on Northwest European low sulfur fuel oil values in relation to high sulfur oil, market sources said Tuesday. British Energy confirmed Monday that its 1,320 Hartlepool 1 nuclear power reactor had returned from a period of extended maintenance, while a further reactor at Hartlepool and two units at the company's Heysham plants were expected to return in the coming weeks. The four units have been shut since October 2007, depriving the grid of nearly 2.5 GW of capacity. Through the cold winter, German utilities E.ON and RWE have both been burning significant quantities of LSFO, in part due to a requirement to make up for the capacity shortfall caused by the extended maintenance at the nuclear reactors. "We've seen burns of fuel by E.ON and RWE through much of the winter," said one trader, "but with the milder weather and the return of the nuclear plants we are now seeing much less evidence of this." Platts assessed LSFO cargoes loading in Northwest Europe at $258.25/mt Monday, a premium of just $6/mt to HSFO barges, which were assessed at $252.25/mt. On January 6, the premium for LSFO over HSFO was more than $60/mt. Traders mulled over the prospects for LSFO in 2009, with flagging demand from the industrial sector likely to have an impact on price levels. LSFO can be used as a feedstock for power plants, as a bunker fuel and also as a product used to generate steam for industrial factories. Traders have already noted a decline in both industrial consumption and for bunkers as the global recession and slowdown impacts industry and shipping movements. "There's simply less industrial demand out there," said one trader. "Demand direct from industry is flagging and power generation demand will fall." ------------ UK government calls for nuclear power plant site nominations London (Platts)--27Jan2009 The UK government has called for nominations of the first wave of new nuclear power stations it plans to have built, the Department for Energy and Climate Change said Tuesday in a statement. According to the statement, the nuclear industry has two months from now to nominate sites for the first wave of new nuclear power stations in the UK. The call for nominations was accompanied by publication of the criteria against which potential sites will be assessed. The energy department said "the criteria include conditions that new sites should not be near major population centers or certain types of military activity" and that "the industry has indicated that the most suitable sites for new build are in the vicinity of existing nuclear power stations." Through its takeover of the UK's nuclear power operator British Energy, French state-owned utility giant EDF intends to build nuclear power plants in the UK and has firm plans for new reactors on British Energy land. Germany's two leading utilities, E.ON and RWE have also announced plans to build nuclear power plants in Britain. Spanish Iberdrola has also expressed interest. Energy and Climate Change Secretary Ed Miliband said the government had "taken some big steps towards next-generation nuclear in the year since the publication of our White Paper, the industry continues to gear up to invest and we are on course to see new nuclear feeding into the grid by 2018." "We'll be judging each site that gets nominated against the criteria we have set out today and there will be plenty of opportunities for local authorities and the public to have their say on the options tabled," Miliband said. He also said "nuclear power can improve energy security and help the drive towards low-carbon energy supplies" and that "alongside renewables and cleaner fossil fuels, it will help us meet our climate change goals as well as ensuring the future supply of energy for the UK." Site nominations must be received by March 31 and the list of nominated sites will be published shortly after. There will be an initial month-long opportunity for the public to express views on how the sites match up to the criteria, according to the energy department. They will then be listed on the draft Nuclear National Policy Statement (NPS), which will be open for consultation during which communities and parliament can have their say on the draft list of sites. ------------ Siemens to quit Franco-German Areva NP nuclear joint venture London (Platts)--27Jan2009 Siemens is to sell its stake in nuclear joint venture Areva NP because it has been unable to exercise "entrepreneurial influence" within the partnership, the German company said Monday. "Siemens AG will terminate the shareholders agreement for the Franco-German joint venture Areva NP ... specified effective latest January 30, 2012, and sell its entire stake to the majority shareholder Areva SA under the terms of a put agreement," Siemens said. In 2001, Siemens combined its nuclear business activities with those of the French company Framatome, taking a 34% stake in the joint venture Areva NP (formerly Framatome ANP), with Areva holding the remaining 66%. Siemens said "the role as a minority shareholder considerably limits the entrepreneurial maneuverability of Siemens within the joint venture." Under the put agreement, Areva can acquire Siemens' stake in the joint venture within three years. "Siemens will fulfill its contractual obligations under the terms of the shareholders agreement for the Areva NP joint venture," the German company said. Siemens said it wanted to continue "the good cooperation with Areva with operational instrumentation and control systems. Siemens will continue to offer those products to the nuclear power plant market. Siemens will further evaluate all available options to continue its commitment in nuclear power plant business." Siemens' president and chief executive Peter Loscher said: "We want to play an active role in shaping developments--and this also applies to the nuclear energy market. That's why we've taken the initiative. In view of global climate change and the increasing power demand worldwide, for us nuclear energy remains an essential part of a sustainable energy mix." Paris-based Areva NP is a world leader in the design and construction of nuclear power plants, and the supply of fuel, maintenance and modernization services. ------------ B&W, Covidien to jointly develop medical isotope technolgy Washington (Platts)--26Jan2009 Babcock & Wilcox and Covidien signed have signed an agreement to develop technology for the production of medical isotopes, the two companies announced January 26. B&W is developing a new technique for producing molybdenum-99, which decays to technetium-99m (the "m" stands for "metastable"), an isotope widely used in molecular imaging and nuclear medicine procedures. Covidien manufactures "technetium generators," the radiation-shielded cartridges in which the isotope is provided to hospitals. None of the current large-scale producers of Mo-99 have production facilities in the US. All of the current large-scale production facilities use high-enriched uranium to make Mo-99; the B&W process would use low-enriched uranium. ------------ US high court hands US uranium enricher win in fight with Eurodif Washington (Platts)--26Jan2009 A unanimous Supreme Court on Monday reversed a US appeals court decision in a long-running case on US imports of low-enriched uranium and handed US enricher USEC a victory against French competitor Eurodif. The case turned on whether uranium enrichment contracts represent contracts for goods or for services. Under US trade law, goods are subject to import duties while services are not. The high court ruled that the US government was "reasonable" in saying that the trade laws applied to the uranium enrichment contracts. Courts give considerable deference to government agencies in implementing regulations. The case began in 2000, when USEC, the only company currently enriching uranium in the US, argued that US antidumping duties should apply to LEU exported to the US by Eurodif, an Areva subsidiary. The Commerce Department imposed the duties on the Eurodif LEU. While the US government sided with USEC in the case, a group of US nuclear plant operators, calling themselves the Ad Hoc Utilities Group, supported Eurodif in arguing that enrichment is not covered by the duties because it is a service rather than a good. Part of the case's complexity comes from the unusual features of the nuclear fuel market. In most utility purchases of enriched uranium, the utility pays separately for the natural-uranium "feed" and the work by the enricher to raise the enrichment level of uranium-235 to the point needed to fuel a nuclear power plant. Under such contracts, the utility provides the enricher with feed material, but the enriched uranium it later receives is not necessarily produced from the same material. Justice David Souter, writing for the court, said, "[w]here a domestic buyer's cash and an untracked, fungible commodity are exchanged with a foreign contractor for a substantially transformed version of the same commodity, the Commerce Department may reasonably treat the transaction as the sale of a good." --Daniel Horner, daniel_horner@platts.com --Tom Harrison, tom_harrison@platts.com ------------ UK prompt power supported by return of Hartlepool 1 nuclear plant London (Platts)--26Jan2009 UK day-ahead OTC power prices were stabilized Monday by the return to the grid of British Energy's 1,320 MW Hartlepool 1 nuclear power reactor, last trading at GBP53/MWh ($73.48/MWh) in baseload and GBP65/MWh in peak before 12:00 GMT. British Energy's Hartlepool and Heysham nuclear units shut October 2007 for wire-winding checks, depriving the grid of nearly 2.5 GW of capacity. All four units are scheduled to have returned to the grid by the end of the first quarter of 2009. "The return of Hartlepool 1 definitely eased the market a little bit as it means there is more power in the system that comes from a low-cost energy source," one trader said. Week-ahead base was last heard at GBP53.50/MWh with sources saying there was plenty of buying interest in the contract. The Met Office said it expected central and eastern England to remain mostly dry with fog slowly lifting, leading to rather cloudy skies. Elsewhere, cloudy and breezy with rain or drizzle, and some heavy rain for the northwest. Temperatures were forecast to reach 1 degree Celsius in southern Scotland and rise up to 8 degrees in London. Further out on the curve, March base opened the session as front-month contract at GBP53/MWh, dropped to a morning low of GBP51.50/MWh and was last heard at GBP52.95/MWh before midday. ------------ Entergy pleased with Vermont Yankee assessment Washington (Platts)--23Jan2009 Entergy says it is pleased with the results of an independent assessment of the Vermont Yankee plant. The company said January 23 that it has finished its review of the report prepared by Nuclear Safety Associates on behalf of the Vermont Department of Public Service, the state agency that represents the public on energy issues. Entergy said it would file a formal response to state regulators by the February 6 deadline. The report, which was recently released, was prepared in accordance with a statute calling for a public assessment of the reliability of the facility, its equipment and components and the management and organizational structure. The report's overall conclusion was that the plant is operated reliably and could run beyond the March 2012 license expiration. But it also listed several areas it considered to be challenges or "watch areas," such as some human performance and procedure quality issues. At the state level, Entergy needs approval from the regulators on the Vermont Public Service Board and from the Vermont General Assembly in order to operate the plant for an additional 20 years. The PSB has scheduled a hearing on the renewal request to begin in May. ------------