US May See Construction Of New Nuclear Reactor

WASHINGTON (Dow Jones) - The U.S. could eventually see the construction of a new nuclear power plant, John G. Rice, president and chief executive of General Electric (GE) unit GE Power Systems, said Thursday.

At the same time, U.S. demand for the turbines used by big natural gas-fueled power plants continues to decline sharply and is unlikely to recover in the next five years, Rice said.

GE is having very serious discussions with a half-dozen major nuclear utilities about building a new reactor, Rice said. Some of those companies are more serious than others, he said, specifically mentioning Dominion Resources (D), Exelon Corp. (EXC) and Southern Co. (SO).

"I'm cautiously optimistic that there will be a new nuclear facility in the United States," Rice said at the Power Industry Forum in Washington, D.C.

Nuclear power has a serious image problem, but it is relatively cheap and emits no greenhouse gases. It's main competitor in the baseload-power market, coal, is even cheaper but highly polluting. Gas-fired generators, meanwhile, are confronting high prices and concerns about sufficiency of supply.

"In terms of sustainable power technology, I think it's the best there is," Rice said.

Three things need to happen before a new nuclear unit can be built, Rice said. Questions regarding a permanent national repository for nuclear waste, now slated to be built at Yucca Mountain in Nevada, must be sorted out. President George W. Bush must win a second term. And the utility that decides to go forward with a new reactor will have to figure out how to sell the plan to its shareholders.

"How do you explain it to shareholders who remember Three Mile Island and Chernobyl so that your stock price doesn't get whacked?" Rice said.

Three companies are expected to submit applications to the Nuclear Regulatory Commission this summer that will allow them to reserve sites for future reactor construction. Exelon Corp. (EXC), Dominion and Entergy Corp. (ETR), with partial funding from the Department of Energy, have selected sites where they already have one or two operating reactors, but so far have no plans to build anything new.

GE Power Systems is the leading producer of turbines to run power plants fueled by natural gas and benefited from an explosion of orders in recent years as new merchant power companies undertook a massive buildup of generation.

That buildup left many power markets glutted and prices weak, however, precipitating a financial crisis in the sector and causing orders to dry up.

GE Power Systems produced about 250 combined-cycle gas turbines last year, but expects to produce only about one-tenth of that number next year, Rice said. The business of selling gas-fired turbines for baseload plants - those designed to provide power around the clock - won't pick up within the next five years, he said.

Business for smaller generators - "peakers," which run only when demand is highest, and distributed generation, which is located at the site where the power is consumed - will be better, Rice said.

Separately, the U.S. power industry needs to start acting to control emissions of greenhouse gases, even though the U.S. unlikely to sign the Kyoto treaty any time soon, Rice said.

GE Power Systems is a manufacturer of emissions-reduction equipment, and sales haven't been as strong as Rice said he expected a few years ago. High prices for natural gas could boost demand for such equipment, however, by making coal-fired plants more profitable, justifying the investment, he said.

Zdroj: Dow Jones Newswires

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