Nuclear Power Beats Coal On Cost

For the first time in more than a decade, production costs at U.S. nuclear power plants are the lowest of any major reliable electricity source. The price of nuclear power has dropped below coal-fired power plants, according to the latest available full-year figures from the Utility Data Institute. In 1999, production costs (outlays for fuel and operations and maintenance) at nuclear power plants averaged 1.83 cents per kilowatt-hour, lower than coal at 2.07 cents/kWh and still far lower than oil-fired plants at 3.18 cents/kWh and natural gas plants at 3.52 cents/kWh. In 1998, average production costs for coal-fired plants were 2.07 cents/kWh, with nuclear energy plants at 2.13 cents/kWh, oil-fired units at 3.24 cents/kWh and natural gas plants at 3.3 cents/kWh. Utility Data Institute data is taken directly from the Form 1 filings that utilities are required to file annually with the Federal Energy Regulatory Commission. The past year's spikes in oil and natural gas prices are not yet reflected in the full-year data available from Utility Data Institute. "At a time when the eyes of the nation are on energy prices, nuclear power's re-emergence as the low production-cost leader is a reminder that the United States needs a diverse energy portfolio that relies in no small part on nuclear energy," said Nuclear Energy Institute Senior Vice President Marvin Fertel. "Electricity consumers of all kinds, as well as state and federal lawmakers, should take notice that nuclear power plants provide tremendous value-economically, environmentally and with regard to reliability, energy security and stable electricity price. Nuclear energy is unmatched among large-scale electricity sources capable of producing electricity 24 hours a day, seven days a week."

Average production costs at nuclear power plants have not been lower than those for coal-fired plants since the mid-1980s, when safety improvements initiated industrywide caused the nuclear industry to lose the production-cost advantage that it had held for years.

Fertel noted that, although production costs do not represent the complete cost of electricity at nuclear power plants, low production costs position these facilities to thrive in a competitive electricity marketplace even after capital costs, property taxes and other expenses are added.

"Assuming electricity markets average between 2.5 cents and 3 cents per kilowatt-hour on a total cost basis, U.S. nuclear power plants already are very competitive," Fertel said.

In other production news, NEI announced that, through the first nine months of 2000, electricity generation by U.S. nuclear power plants increased 5.1 percent over the same period in 1999. The 103 reactors operating in 31 states produced 571.2 billion kilowatt-hours through September 2000, compared to 543.5 billion kilowatt-hours through September 1999, according to the U.S. Department of Energy's Energy Information Administration. For the full year, the nuclear energy industry in 1999 generated an all-time high of 728 billion kilowatt-hours, providing 20 percent of U.S. electricity needs. Industry estimates show an expected 4 percent increase over that record production level for 2000.