Platts - Friday, May 08, 2009 http://www.platts.com ------------ NRC requests small increase for fiscal 2010 budget Washington (Platts)--7May2009 NRC requested $1.071 billion for fiscal 2010, up about 2% from the $1.046 billion approved for FY-09. Both of the agency's program areas -- nuclear reactor safety, and nuclear materials and waste safety -- would receive modest funding increases under the proposed budget. The agency anticipates making about $5.3 million in cuts to some of its programs, including the Office of General Inspector's budget, which would receive about $758,000 less than the FY-09 funding. In the budget proposal released May 7 by President Barack Obama's administration, NRC asked for $56 million from the Nuclear Waste Fund for reviewing DOE's high-level waste repository application. NRC Chief Financial Officer Jim Dyer said the requested funding would not be an increase over the $49 million allocated in FY-09 because NRC has an additional $10 million in carryover funds from FY-08, bringing the total available funding through September to $59 million. ------------ US Senator Reid says Obama budget will end Yucca Mountain project Washington (Platts)--7May2009 US Senate Majority Leader Harry Reid on Wednesday declared dead the federal government's controversial effort to develop a high-level nuclear waste respository at Yucca Mountain, Nevada, saying the White House will propose in its fisal 2010 budget only enough money to shut the site down. Reid, a Nevada Democrat, who has long opposed the program, told the League of Conservation voters at a dinner Wednesday that President Barack Obama's budget scheduled to be released Thursday morning will end the program. "Yucca Moutain is history," the senator said. In a statement issued by his office Wednesday, Reid said the proposed budget would provide less than $197 million to the program in the next fiscal year that begins October 1. The proposed funding level would be the smallest budget in the program's decades-long history and is $90 million below what the program received in the current fiscal year, Reid added. The senator said the money proposed for the program by the White House would be used to fund a Blue Ribbon Commission that would examine alternatives for disposing of spent commercial reactor and defense nuclear waste and to wind down work at Yucca Mountain. "Today's budget announcement by the Obama administration reaffirms its strong commitment to the death of the failed Yucca Mountain idea," Reid said in the statement. "The termination language in its plan could not be any clearer--Yucca is history. The record-low budget for Yucca is only enough to maintain the site until it's closed, and the people of Nevada can feel safe and secure in the knowledge that we will never be this country's toxic dumping ground." ------------ US DOE to fund 71 nuclear energy R&D projects Washington (Platts)--7May2009 The US Department of Energy on Wednesday said it would use $44 million to fund 71 nuclear energy research and development projects. The funding will go to 31 universities and fund projects for the Advanced Fuel Cycle Initiative, the Next Generation Nuclear Plant, Light Water Reactor Sustainability, as well as Investigator-Initiated Research, according to DOE. "As a zero-carbon energy source, nuclear power must be part of our energy mix as we work toward energy independence and meeting the challenge of global warming," Energy Secretary Steven Chu said in a statement. "The next generation of nuclear power plants -- with the highest standards of safety, efficiency and environmental protection -- will require the latest advancements in nuclear science and technology." Chu has voiced his support for nuclear energy since becoming energy secretary in January, but the administration's decision to stop pursuing a national nuclear waste repository at Yucca Mountain has led some to charge that DOE no longer supports nuclear power. The $44 million in funding announced Wednesday will be provided over three years and the project contracts will be awarded by Idaho National Laboratory contractor Battelle at the end of September. --Derek Sands, derek_sands@platts.com ------------ USEC reports first-quarter loss Washington (Platts)--6May2009 USEC reported a loss of $2 million during the first quarter, versus net income of $4.4 million for first-quarter 2008. The sales volume of separative work units, or SWU, increased 66% at a higher average sales price from a year ago, USEC said in a May 6 statement. It said revenue, which at $505.6 million was 47% higher than the same period last year, was partially offset by higher costs for producing and purchasing SWU. Revenue from SWU sales was $427.9 million, an increase of 75% over first-quarter 2008, USEC said. Cost of sales for the first quarter for SWU and uranium was $414.9 million, an increase of $154.2 million, due to the substantial increase in SWU sales volume and higher SWU unit costs, it said. Revenue from uranium sales decreased by $18.6 million to $28.6 million. Revenue from USEC's government contracts division was $49.1 million, down from $51 million for the same quarter last year. ------------ EDF Energy plans UK forum for suppliers to nuclear new build Barcelona (Platts)--6May2009 EDF Energy will detail some of the 150 contracts worth "many billions" of pounds that UK suppliers may compete for as part of the utility's plans to build four Areva EPR reactors in the UK. The utility said Wednesday it plans a suppliers forum June 30 in London to "provide information about the EDF Energy procurement process, and give potential suppliers more details about our new business structures, and the work packages which will be available for bids." EDF Energy CEO Vincent de Rivaz and UK energy minister Mike O'Brien will be attending the event. EDF Energy intends to have the first EPR operational by the end of 2017. Such major investment in infrastructure will generate considerable commercial opportunities for the UK supply chain and British workers, EDF said. "We are beginning our procurement process for new build this year and now is the time for the UK companies to prepare so that they can take maximum advantage of the multi-billion pound opportunities available," said EDF Energy's managing director for nuclear new build, Humphrey-Cadoux Hudson. Attendance at the event is by invitation only. Interested parties may register their interest at www.edfenergy.com/newnuclearopportunities. ------------ Spot uranium price continues to strengthen; reaches $46/lb Washington (Platts)--6May2009 The spot price of uranium rose this past week. It reached $46/lb U3O8 Monday, according to Ux Consulting, a $2/lb increase over Ux's price on April 27. Ux said sellers are showing "no urgency to sell into the price upturn." TradeTech, another price publisher, left its price unchanged at $45/lb in its May 1 report, unchanged from its end-of-the month assessment on April 30. Ux said there is no lack of supply, adding that more than 800,000 lb has changed hands sold so far in May. Rather, Ux said, the sellers are exercising "restraint" in the offers they make. Sellers want to see how sustainable the current the price rally is, Ux said. "The key will be whether demand falls off with the increase in price, or whether it remains at current levels or even increases," Ux said. About 50% of the uranium purchases this year have been by utilities, with China accounting for "a very significant portion of that buying," said Cameco marketing and business development executive George Assie during the company's May 1 earnings call. However, both Ux and TradeTech said that producers, such Cameco, also remain possible buyers, hoping to influence the market and to take advantage of the low spot prices to acquire material for future deliveries at a profit. Both Ux and TradeTech maintained their long-term prices at $65/lb and $69/lb, respectively, this week. Market analysts and price publishers often have slightly different definitions of spot and long-term deliveries, but spot deliveries typically occur within about three to four months, but can sometimes stretch out to 12 months; long-term deliveries are multi-year deliveries that typically start 18-24 months in the future, but can sometimes start as soon as 13 months out. ------------ More potential reactor sites in UK available soon Barcelona (Platts)--5May2009 At least two more potential reactor sites will become available in the near future to utilities looking to build in the UK. The disposal of a 250-hectare (618-acre) government-owned site at Sellafield will begin "within weeks," Nuclear Decommissioning Authority spokesman Bill Hamilton said May 5. And EDF Energy spokesman Kaa Holmes said May 5 that the utility would make an announcement soon on the process for disposing of surplus land at its existing reactor sites at Heysham or Dungeness. NDA land at Wylfa, Oldbury and Bradwell was auctioned last week. The Sellafield site is the only one of 11 sites nominated to the government's Strategic Siting Assessment program as a potential new nuclear site that is not already in commercial hands. Hamilton said he could not say whether the Sellafield land would be auctioned or sold via another mechanism. He said the NDA was currently undergoing private discussions "with the market" and would have an announcement soon. ------------ US Senate panel queries DOE, Interior nominees on nuclear, oil Washington (Platts)--5May2009 Two Department of Energy nominees on Tuesday faced few hard questions during a Senate energy panel hearing to consider their nominations, but they did address concerns on several hot-button issues, including offshore drilling and a national repository for nuclear waste. Daniel Poneman, nominated to be deputy energy secretary, told the Senate Energy and Natural Resources Committee that while the administration would appoint a so-called blue ribbon panel to consider the Yucca Mountain nuclear waste repository in Nevada, it was a crucial problem to solve. Only four members of the committee asked questions. President Barack Obama has opposed the Yucca Mountain facility and Energy Secretary Steven Chu has said the department needs to reconsider the decades-old project in light of new technology and science. The administration, however, is legally bound to continue with the application process for building the facility. Alaska Senator Lisa Murkowski, the ranking Republican on the committee, asked Poneman how the commission could operate outside the political debate that has stood in the way of Yucca Mountain. Poneman, who has dealt with nuclear proliferation issues on the National Security Council in both Republican and Democratic administrations, was adamant that it would be based on sound science. "I am not naive to think that something that has engendered this much emotion would become merely antiseptic. But as someone once famously said, everyone is entitled to their own opinion, but they are not entitled to their own facts," Poneman said. GAS PIPELINE FROM ALASKA Murkowski also asked Poneman if he agreed with Chu that nuclear power would remain a part of the energy mix. Poneman was adamant that it would. "I have personally not seen any studies on how we would be able to close the gap on where we want to be with greenhouse gas emissions without a significant deployment of nuclear energy," he said. The committee also heard from David Sandalow, nominated as DOE's assistant secretary for policy and international affairs. Sandalow, a fellow at the Brookings Institution and former State Department assistant secretary for oceans, environment and science, has long been an advocate for reducing US dependence on oil. Murkowski, whose state is one of the nation's largest producers of oil, pressed Sandalow on previous statements opposing offshore oil production. In his response, Sandalow stuck to the stated view of the administration, that the US needs a comprehensive energy play that includes environmentally safe offshore drilling. He also assured Murkowski that he would work closely with Canada toward a natural gas pipeline from Alaska to the US Midwest, and that he considered natural gas a key component to moving US transportation away from reliance on oil. Sandalow also reassured Wyoming Republican John Barrasso that he agreed the US should be a leader in technology to allow the capture and storage of carbon dioxide emissions from coal-fired power plants. Wyoming is the largest producer of coal in the United States. The committee also heard from two nominees for the Interior Department: Rhea Suh, nominated for assistant secretary for policy, management and budget, and Michael Connor, nominated for commissioner of reclamation. Utah Republican Robert Bennett, who has already personally held up two Interior nominees over the administration canceling 77 oil and gas leases in his state, indicated he would not place a hold on Rhea's nomination. But he also asked her for assurances that she would work to finish a review of the leases. Suh said she would be happy to work with the senator to look into the issue. --Derek Sands, derek_sands@platts.com ------------ Entergy Nuclear's first-quarter earnings down Washington (Platts)--4May2009 Entergy Nuclear's first-quarter earnings were $180.9 million, down from $187.5 million the same period last year, parent Entergy Corp. reported May 4. The company attributed the lower revenue primarily to additional planned refueling outage days and to a charge for a loss in its decommissioning trust fund investments. First-quarter 2008 included the first seven days of Indian Point-2's refueling outage. First-quarter 2009 included 21 days of Indian Point-3's refueling outage and nine days of Palisades' refueling outage. Energy Nuclear is the business unit for its six merchant reactors, FitzPatrick, Indian Point-2 and -3, Palisades, Pilgrim, and Vermont Yankee. Entergy said it still plans to spin off these reactors into a new, publicly traded company called Enexus Entergy. Company officials told analysts in a teleconference that regulatory approval from New York and Vermont regulators is key to completing the transaction. They said they did not anticipate any problem with requesting an extension of NRC's approval, effective until July 28, for the spin-off. ------------ US lawmakers to consider nuclear waste bill Wednesday Washington (Platts)--4May2009 US lawmakers are set to consider legislation later this week that could significantly alter America's policy for disposing of spent fuel from nuclear power plants. The bill, which is slated for a vote on Wednesday in the Senate Energy and Natural Resources Committee, would establish an 11-member commission to study various options for dealing with the tens of thousands of tons of spent fuel stacking up at nuclear power plants across the US. The proposed committee reflects the wishes of the Obama administration, which earlier in 2009 abandoned a nearly 25-year-old US government plan to send the waste to the still-incomplete Yucca Mountain repository in Nevada. Energy Secretary Steven Chu has said that building Yucca Mountain is no longer "an option" for safety and environmental reasons, an argument that has drawn fire from the US nuclear energy industry and its Republican allies in Congress. The bill to be considered this week would task the commission to study several options for dealing with the waste, including storing it long-term at the plants where it is used. The committee would also consider the pros and cons of establishing one or more "regional storage facilities" for the waste, according to a draft of the bill released by the Senate panel. The bill would also require the committee to study "reprocessing," an approach using chemicals and other means to create new fuel from the waste. Reprocessing would represent a radical shift in US policy, as President Carter banned the practice in 1977 for fear that rogue nations and terrorists could acquire the plutonium and other nuclear materials that the process would generate. President Reagan later lifted the ban, but the US has still not engaged in reprocessing. The draft bill would also task the committee with studying "deep geologic disposal" of the spent fuel, which is the approach that the Yucca Mountain project would have used. But selecting a location for a national nuclear waste dump would likely meet great resistance in Congress, as most lawmakers would not want such a facility in their states or districts. Under the draft bill, the committee could not recommend a new repository or a regional storage facility unless it determined that there was a "reasonable assurance that the public and the environment will be adequately protected from the hazards" posed by the facility. Moreover, the facility would have to be "acceptable to the public," the draft bill says. The committee would also study "alternative approaches" to dealing with the US' nuclear waste, including establishing a "private corporation" for handling the job, the draft bill says. That idea was floated during the Bush administration, when Republican lawmakers considered transferring the Yucca Mountain program from the Department of Energy to a "non-governmental entity." Under the bill, the commission's 11 members, including its chairman, would be appointed by the president. That would be a small victory for the nuclear industry, which has expressed concerns that some of the members would be chosen by Senate Majority Leader Harry Reid, a Democrat who has vowed never to allow the Yucca Mountain project to open in his home state of Nevada. In another probable concession to the industry, the bill says that no more than six members of one party -- likely Democrats -- would serve on the 11-member panel, and that it would be "fairly balanced in terms of the points of view represented." But the bill offers no details on how that balance would be achieved. The commission would have two years to submit its policy recommendations to the White House and Congress. --Brian Hansen, brian_hansen@platts.com ------------ AEP: Cook-1 could resume operation in October Washington (Platts)--1May2009 Cook-1 could resume operations as early as October at reduced power, plant owner American Electric Power Co. said May 1. AEP had earlier estimated that the unit could return at reduced power in September under a "best-case scenario." In a filing to the US Securities and Exchange Commission, AEP said its subsidiary Indiana Michigan Power Co., which operates Cook-1 and -2, is working on repairs to equipment in the turbine building that forced the unit to shut down in September. A fire on the electric generator, suspected to have started from blade failure, initially caught the crew's attention because of turbine vibrations. The costs of replacing the turbine rotors and other equipment and repairs to property damage are estimated at up to $330 million. But AEP says a significant portion of the expenses might be recovered through the warranty from the turbine vendor, Siemens, as well as through the insurance company and regulatory proceedings. If operation is unsuccessful after the repairs, the company said it might have to extend the outage into 2011 to replace equipment. ------------ Cameco Q1 income down to C$89 mil on lower uranium sales volumes Washington (Platts)--1May2009 Cameco, the world's largest producer of uranium, said Friday that its net income declined to C$89 million (US$74.6 million), down from the C$133 million it reported in the same quarter of 2008 because of lower sales volumes in its uranium and gold businesses. The company reported earnings of C24 cents/share, slightly missing Wall Street expectations of C28 cents/share. The Saskatoon, Canada-based company earned C43 cents/share in the same quarter of 2008. Cameco produced 4.8 million pounds of U3O8 in the first quarter, 20% more than in the year-ago quarter. It was insufficient, however, to make up for the C$2-million dip in revenues of C$336 million, compared with the same period last year. The company attributed the lower uranium revenues in the first quarter to lower sales volumes, totaling 7.1 million pounds U3O8, down from 7.4 million pounds during the same period of 2008. The revenue decrease occurred despite the 5% increase in average uranium realized prices of C$46.72/lb and a favorable exchange rate, the company added. Overall, the company expects to see its sales costs go up 15% to 20% through 2009, as it intends to take advantage of buying uranium through trading at prices higher than its production costs. In Q1, Cameco saw a significant increase in its nuclear generation business, but a decrease in its uranium fuel services business. Cameco's revenues from its uranium fuel service business decreased by C$5 million to C$54 million in the first quarter because sales volumes decreased, the company said. In sharp contrast, Cameco, which has a 31.6% share in Bruce Power Limited Partnership, saw pre-tax earnings there of C$44 million, up from C$6 million in the year-ago period. According to Cameco, this increase was attributable to "improved generation and revenue, and lower costs as there were no planned outages during the quarter." Cameco revised its uranium production outlook for 2009 to 32 million to 34 million pounds, up from 31 million to 33 million pounds. ------------ US NRC move to delay Florida units at least 20 months: Progress Boston (Platts)--1May2009 The completion of two 1,117-MW nuclear units that Progress Energy Florida is planning in Levy County will be delayed by "a minimum of 20 months," the company said Friday. The US Nuclear Regulatory Commission triggered the delay in its determination that it will not authorize excavation and foundation preparation work until it issues a combined operating license for the plant. The work originally was to be completed while the company was seeking the COL. Progress had been planning to begin commercial operation of the first Levy unit in 2016 and the second in 2018. Progress also is seeking Florida Public Service Commission approval to spread, over five years, certain costs for the Levy project and a 180-MW uprate at its existing 900-MW Crystal River nuclear unit, thereby "lessening the yearly impact on the customer and providing some short-term customer price relief," it said. "Shifting this portion of the work until we have the combined operating license in hand enables us to spread some of the costs over a longer period," said Jeff Lyash, Progress Energy Florida's president and CEO. "We believe this is in the best interest of our customers, particularly during this continuing economic slowdown." If approved, the deferral would result in a nuclear charge of $6.69/month for a typical 1,000-kWh/month residential customer in 2010, down from a $12.63/month charge allowed by the state's nuclear cost recovery law. The PSC will hold hearings on Progress' nuclear cost recovery in September and is expected to make a decision in mid-October. ------------