power deregulation may shut nuke units

["Sandy Perle" <sandyfl@earthlink.net>]

Wednesday September 2, 7:24 pm Eastern Time

WASHINGTON, Sept 2 (Reuters) - The U.S. Energy Information 
Administration said Wednesday that deregulation of the nation's 
electricity markets could lead to early retirement of some nuclear 
power units, coal mine closures and increased use of natural gas 
for power generation.

The EIA, which is the statistical arm of the U.S. Department of 
Energy, released its findings in a new report that suggested 
widespread changes were in store for fuel suppliers as a result of 
plans to restructure power markets.

``Restructuring will change the financial risks faced by the 
industries that supply the fuels used to generate electricity and 
place
new demands on their supply and transportation systems,'' the EIA 
said.

Major impacts were predicted for the coal industry, which currently 
supplies 56 percent of utility power generation. The EIA
said market restructuring will result in renewed pressure for cost-
cutting and consolidation, squeezing small firms out of business 
and enlarging already sizable firms.

``Power generators will attempt to pass on market risks to coal 
producers and carriers (primarily railroads) wherever they
can,'' said the EIA.

The nuclear power sector may be forced to shut some units before 
they had originally planned since competitive electricity
prices may be too low to cover operating costs.

Uncertainty over how individual plants would be able to account for 
its capital costs, or stranded costs, also played into how
nuclear operators would be able to reduce expenses.

The EIA report said natural gas would gain as the ``fuel of choice'' 
as deregulation accelerates. ``Deregulation of electricity
markets could lead to greater integration of the electricity and 
natural gas industries and the emergence of competitive energy
markets,'' the EIA said.

The higher demand for natural gas for electricity generation was 
forecast to increase gas prices at a faster pace than would
have been noted without competition, and at the sametime result in 
slightly lower coal prices.

Crude oil-derived fuels were not expected to witness much change 
in the face of restructuring since only 2 percent of the
nation's petroleum consumption goes for electric power uses, the 
EIA said.

The report saw no stimulus for renewable energy technologies 
unless required by government policies.

Federal deregulation legislation was expected to be acted on next 
year when Congress reconvenes, after both the House and
Senate ran out of time to fashion a comprehensive plan agreeable 
to both Republicans and Democrats this year.

States have taken up deregulation on their own, with some like 
California and Illinois already restructuring their industries, and
others partially moving to free wholesale markets to competition. 
Two states, Florida and South Dakota have taken no
significant action on the issue, EIA said.

California in late March became the first state to open its retail 
electricity market to competition, and a number of retail access
pilot programs were underway in other states. 

------------------
Sandy Perle
Technical Director
ICN Dosimetry Division
ICN Plaza
3300 Hyland Avenue
Costa Mesa, CA 92626
Office: (800) 548-5100 x2306 
Fax:    (714) 668-3149
  
sandyfl@earthlink.net
sperle@icnpharm.com

ICN Dosimetry Website:
http://www.dosimetry.com

Personal Website:
http://www.geocities.com/CapeCanaveral/1205

"The object of opening the mind, as of opening 
the mouth, is to close it again on something solid"
              - G. K. Chesterton -

The opinions expressed are solely, absolutely, positively, definitely those of the author, and NOT my employer
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