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Nuclear Plants Vexed at Prices That Shift as Demand Does via The New York Times

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Today energy in most of the United States is priced hourly in a deregulated market far different from the one of regulated power plant construction that ushered in the nation’s reactors in the 1960s and 1970s. Generators — whether coal-fired plants, wind farms or reactors — are paid varying amounts over the course of the day, but in periods of light demand and high winds the price goes below zero, so generators have to pay to put kilowatt-hours on the grid and hope to make up for the loss at other times. Only wind generators, which earn a subsidy per kilowatt-hour generated, make money in that situation.

For nuclear plants, which cannot vary their production hour by hour, the pricing mechanism is a substantial blow, as is the low value placed on reactors’ ability to produce electricity when needed, as opposed to wind and sun, which produce electricity when nature cooperates. The executives who operate the energy markets say they are not playing favorites among competing forms of production. The markets are designed “to be open to all fuels and all technologies,” said Robert G. Ethier, vice president of market development at ISO-New England, the independent system operator that manages the grid in the six New England states. “We don’t take a position on what’s a good fuel and bad fuel.”

Decisions about new generating stations are being made by entrepreneurs rather than public utilities, he said, and entrepreneurs are unlikely to do what the utilities used to: commit to expensive generating stations that could take a decade to build.

In fact, the only places in the United States where new reactors are under construction are states like South Carolina and Georgia, where the decisions are still made by public utilities commissions and big utilities, not small companies judging market conditions and then building modest “merchant” generators. Five years ago, the betting was that nuclear plants would be built in Maryland and Texas, but low natural gas prices pushed down power prices in competitive markets, dooming both projects.

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