The difficulties in the aftereffects of the earthquake and resulting tsunami that hit Japan on March 11 have brought issues of nuclear safety to the world’s attention. Germany, which had used nuclear power for 22% of its electricity, has already shut down seven of it 17 nuclear reactors, and plans to accelerate the shutdown of the remaining reactors. CPS Energy has cancelled its power purchase plan with NRG after NRG announced that the construction of two nuclear reactors would be slowed. I believe this is an overreaction, and wanted to look at some utilities with significant nuclear power production.
I recently compiled a list of the publicly-traded power generation companies and the percentage of their electricity generated by nuclear plants. Five of these companies depend on nuclear power for more than 30% of their total power generation. Where possible, I used the maximum generating capacity figures, rather than the particular mix used in a given year, or by sales to customers. Also where possible, I used numbers from power plants operated by the company, although if this number was smaller than the ownership, I used the larger of operating capacity and owned capacity.
The company most dependent on nuclear power in the U.S. is Exelon (EXC). Nuclear power plants produce 93% of its 31,000 MW power generation. It owns and operates nine nuclear plants, operates but does not own two other nuclear plants, and has one nuclear plant that it owns but does not operate. The operator in that case is PSEG Nuclear, a subsidiary of Public Service Enterprise Group (PEG). PEG, oddly enough, owns one of the two plants that Exelon operates but does not own. MidAmerican Energy, a subsidiary of Berkshire Hathaway (BRK.B), owns the other.
Exelon is making a strong push for more nuclear generation, including starting a series of upgrades to its nuclear plants in 2009 that are designed to increase power generation by 1300-1500 MW, equal to one new nuclear plant. Since the earthquake in Japan, Exelon has fallen 5% from $43.16 to $41.01 (all prices as of close on March 24). For comparison, the S&P 500 has risen about 0.4% in that time.
Next on the list of most dependent companies on nuclear power generation is the rural utility Central Vermont Public Service (CV). It claims to be the only Vermont company traded on the NYSE, and generates 54.5% of its electricity from nuclear sources, 38.4% from hydroelectric sources, 3.6% from wood (wood!), and 0.1% from CVPS CowPower, the nation’s first “manure-to-energy program.” It also made Forbes 100 Most Trustworthy Companies in America, and tied for second place on that list among publicly-traded small-cap companies. Central Vermont Public Service is actually up 1.7% to $23.49 from $23.09 since the Japanese earthquake.
Third on the list is the El Paso Electric Company (EE), an electric company providing power to western areas of Texas and southern New Mexico. 38% of its electricity is generated by the Palo Verde Nuclear Generating Station, which is jointly owned by seven companies and municipal power agencies. El Paso Electric Company stock is up about 4.3% over the last two weeks, from $28.63 to $29.85.
Constellation Energy (CEG) receives 32% of its electricity generation from nuclear sources, good for the fourth-highest percentage. Constellation operates and owns five nuclear reactors at three sites in Maryland and New York. The Long Island Power Authority and Electricité de France (EDF) are co-owners of the reactors. CEG is down 4.1% to $31.11 from its $32.45 close on March 11.
Lastly, Pinnacle West (PNW) like El Paso Electric, partially owns the Palo Verde Nuclear Generating Station. The Palo Verde Nuclear Generating Station represents 31% of the electricity generation capability of all power plants that Pinnacle West has ownership stakes in. It stock is down 3.4% from $43.56 to $42.10 since March 11.
CV and EE are the two lowest-capitalization public corporations that own or operate nuclear power plants. It is perhaps not surprisingly that these stocks have not been as affected by the coverage of the continuing problems faced at the Fukushima Daiichi power plant. I am, however, surprised that they have increased in value over the last two weeks. The other three stocks have fallen modestly, with Exelon having the greatest reliance on nuclear energy as well as the greatest drop in share price.