4 Nuclear Operators Facing Closer Scrutiny

by Susan J. Aluise | March 22, 2011 11:46 am

Only two weeks ago, Middle East tensions and volatile oil prices seemed sure to trigger a “nuclear renaissance”.  Nuclear power not only is greener than fossil fuels, many lawmakers said, but it’s the quickest way the U.S. can achieve energy independence. 

But the surest things can change – and the catastrophe at Japan’s Fukushima I nuclear plant has called into question many of the experience-based certainties about U.S. nuclear energy, reviving that old  “trust, but verify” mantra. 

U.S. lawmakers and regulators are scrambling to determine whether oversight of domestic nuclear plants has been rigorous enough to ensure that the same thing can’t happen here.  President Obama last week ordered the Nuclear Regulatory Commission to conduct a comprehensive review of the safety of all U.S. nuclear plants.

The review comes in the wake of a nuclear plant safety report released by the Union of Concerned Scientists last week.  The report discussed 14 “near-misses” at U.S. nuclear plants during 2010 that exposed a variety of shortcomings, such as inadequate training, faulty maintenance, poor design, and failure to investigate problems thoroughly. 

The report called on the NRC to step up its oversight and become a more effective watchdog for the public interest.  Tougher regulations – and greater enforcement of existing regulations – are likely to be costly for nuclear plant operators.  Here are four nuclear plant operators likely to come under scrutiny in the coming weeks and months:

Bottom Line: Shares of major nuclear operators took about a 5% hit last week, but are edging back up as investors remember the overall safety trend the U.S. nuclear sector has been able to boast about since the Three Mile Island accident in 1979.  (And of course there’s that minor distraction of Libyan military operations to consider.) 

Still, the events in Japan have reminded the public in general – and their duly elected representatives in particular – that things can fall apart.  And when you’re talking about a 40-year-old nuclear power plant near highly populated areas, lawmakers tend to mitigate risk by putting plant operators on the hot seat. 

No doubt about it, there will be greater oversight for the industry this year.  Whether that scrutiny is simply limited to license renewals or whether it digs deeper into plant operations (and operators’ pockets) remains to be seen.  But while nuclear energy is basically on sound footing for the long term, expect the pendulum to swing back toward risk management in the near future. 

As of this writing, Susan J. Aluise did not hold an interest in any of the stocks mentioned here.

Endnotes:
  1. EXC: http://studio-5.financialcontent.com/investplace/quote?Symbol=EXC
  2. ETR: http://studio-5.financialcontent.com/investplace/quote?Symbol=ETR
  3. TVE: http://studio-5.financialcontent.com/investplace/quote?Symbol=TVE
  4. PCG: http://studio-5.financialcontent.com/investplace/quote?Symbol=PCG

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