Competitive electricity prices may be so low that nuclear power plant operators will not see enough income to enable them to recover the costs of operating and maintaining the plants and the costs of capital improvements, such as steam generator replacements. In the immediate future, some nuclear power units will be at risk of early retirement as a result of restructuring. The stranded cost recovery issue will not, however, be the major factor in retirement decisions. Ultimately, the long-term viability of nuclear power generation lies in the industry's ability to keep its operating costs competitive with new sources of generation. For nuclear plants, operating costs after deregulation will be driven mainly by plant size, age, capacity factors, and requirements for new capital improvements.
Issues surrounding the recovery of future decommissioning costs remain to be resolved.
In the long run, however, the market value for long-term firm capacity and for electricity in each region of the country will determine the value of nuclear power plants. Average fuel costs make up only about one-fourth of the operating costs for nuclear power plants, but the competitive environment created by a restructured electric power industry will encourage nuclear power plant operators to reduce all operating costs, including the costs of purchasing and managing nuclear fuel. Moreover, if early retirements of nuclear power plants result from competition in electricity markets, the demand for nuclear fuel will be reduced. To compete, suppliers in the nuclear fuel industry will be forced to reduce prices or improve efficiency. In an industry that has already seen significant contraction during a decade of depressed prices, further consolidation is likely as companies seek to pool resources and spread risks.