Friday, September 13, 2013

Exelon Throws in the Towel, Still #1 Nuclear Power Producer

Exelon Corporation (EXC:  NSYE) is another founding member of a group of energy company banded together to promote nuclear power.  United together they expected it would be easier to apply for construction and operating licenses from the Nuclear Regulatory Commission (NRC).  They call themselves NuStart Energy.

Exelon has the capacity to generate 34,700 megawatts of power.  It takes a wide mix of energy sources to must that kind of power:  gas and oil fired turbines, nuclear, hydropower, wind, biofuel and solar.  As impressive as it is for an energy company to boast the mobilization of the full array of all available power sources, it is Exelon’s nuclear portfolio that is remarkable.  Exelon is the largest operator of nuclear power plants in the U.S.  As much as 55% of the company’s generating capacity or 19,085 megawatts is from nuclear power.

Three Mile Island Unit #1
The nuclear power portfolio of Exelon includes seventeen reactor units at ten different power plants  -  at least for now.  The facilities are located in Illinois, Pennsylvania and New Jersey.  While Exelon has submitted renewal applications for its Braidwood, Byron and Limerick facilities, the company withdrew an application for a new nuclear plant in Victoria County, Texas.  The plant was to feature two economic simplified boiling water reactors.  Exelon has also announced its intention to retire its Oyster Creek facility in 2019.

Exelon cited economic circumstances as its principal reason for nixing the Victoria site.  The low price of natural gas is the bane of nuclear.  The original application for Victoria County was submitted in 2008 and Exelon threw in the towel in 2010.  Since then natural gas prices have plunged even lower.  We do not expect Exelon to return to the NRC any time soon.

EXC is trading below average multiples for the company's peer group of diversified utilities.  Analysts covering the stock do not seem to see much growth ahead for Exelon, which is a problem for the stock.  This is probably why the consensus opinion is underweight. 

 

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.

 

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