An economic evaluation of the economics of the Rancho Seco nuclear reactor

Escalating costs of operating reactors may make it economically advantageous to close them down and purchase small, cheap technologies such as combined-cycle systems. We examine the arguments pro and con for the Rancho Seco nuclear reactor, owned by the Sacramento Municipal Utility District (SMUD) and now permanently shut-down. We conclude that if the reactor could be run no better than it has run in the past, there was no clear advantage to continued operation. Optimistic scenarios show a net advantage to running it, and pessimistic scenarios show a net disadvantage. The total range of plausible costs is narrow; the financial impact of either choice on consumers would have been small. The analysis suggests that decisions on whether to close down existing reactors are highly case specific, but that strong economic arguments for shut-down can exist if reactor performance is poor and/or if maintenance expenses are high.