Electric Utility Deregulation in the United States July 1998

One of the major factors influencing nuclear fuel demand today is the deregulation and restructuring of the U.S. electricity industry. While deregulation is taking place in other markets, it has the potential to have a greater and more immediate impact in the U.S. market due to the age of U.S. reactors and the structure of the U.S. electricity industry. Already, reactors have been shut down prematurely in the U.S., and this has contributed to spot supplies and affected future market demand. By the same token, U.S. utilities have increased their reactor capacity factors in response to the growing competitive market environment, and this has resulted in an increase in nuclear fuel demand, at least over the short term.

The push toward deregulation raises a number of important questions with respect to the future of nuclear power and nuclear fuel demand in the United States, including the following:

What actions are the federal and state governments taking to implement deregulation? What is the likely timetable and scope of these reforms? What is the competitive position of nuclear power versus fossil fuel fired generation in the U.S.? How does deregulation affect ongoing regulatory activities like decommissioning and license extension? What are the prospects for premature reactor shutdowns in the U.S.? Which reactors and utilities are most likely to be affected? What is the likely net impact on U.S. nuclear fuel demand? What are the implications for future spot market volume and the nature of contract and price mechanisms?

The Ux Consulting Company has been examining these questions over the past thirteen months, and in March issued the first report in a two-part study on this topic. This report provides a background on current deregulation efforts on both a federal and state level, examines the role of regulatory bodies in the U.S. and current statutes concerning regulation, and contains a detailed discussion of the implications of deregulation for U.S. nuclear energy and fuel demand. There are three supplements to the main report which contain currently proposed federal and state legislation on deregulation. The second report, released in July 1998, updates federal and state developments and present additional analyses of the impact of deregulation on nuclear power and nuclear fuel demand. As deregulation is a very dynamic subject, this update will provide an opportunity to identify emerging trends with respect to deregulation and its impact on nuclear fuel markets. All told, the two reports in this study represent the results of a year's worth of research into key development affecting nuclear power.

For additional information please contact Eric Webb at Phone: (770) 642-7745 Fax: (770) 643-2954 Internet:

Updated: 8/02/98