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The Risk of Early Retirement of U.S. Nuclear Power Plants under Electricity Deregulation and C02 Emission Reductions

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  • Geoffrey S. Rothwell

Abstract

During the next decade, most states in the USA will deregulate electricity generation. Nuclear power plants that were ordered and built in a regulated environment will continue to be regulated as nuclear facilities. However, under state deregulation the price they receive for their electricity will be set largely in non-regulated markets. This paper examines the competitiveness of the nuclear power industry with a probabilistic model to identify which nuclear power units face the highest risk of early retirement under deregulation. Projected outputs under both average-cost and marginal-cost pricing are compared with expected generation under continued rate-of-return regulation. Nuclear units at risk of early retirement are in regions with the lowest forecast prices or are old plants. But, if CO2 regulation targets an emission reduction to 9% below projected 2010 levels (projected to be 24% obove 1990 levels), there are only a few units at risk of early retirement after 2015.

Suggested Citation

  • Geoffrey S. Rothwell, 2000. "The Risk of Early Retirement of U.S. Nuclear Power Plants under Electricity Deregulation and C02 Emission Reductions," The Energy Journal, , vol. 21(3), pages 61-87, July.
    • Handle: RePEc:sae:enejou:v:21:y:2000:i:3:p:61-87
    DOI: 10.5547/ISSN0195-6574-EJ-Vol21-No3-3
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    References listed on IDEAS

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    1. Rothwell, Geoffrey, 1996. "Organizational Structure and Expected Output at Nuclear Power Plants," The Review of Economics and Statistics, MIT Press, vol. 78(3), pages 482-488, August.
    2. Avinash K. Dixit & Robert S. Pindyck, 1994. "Investment under Uncertainty," Economics Books, Princeton University Press, edition 1, number 5474.
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