Companies Owning Nuclear Plants Could Present Opportunity

by: Analytical Chemist

Two weeks ago a magnitude 8.9 earthquake struck off the coast of northern Japan. The earthquake, combined with the resulting tsunami caused terrible devastation, with over 10,000 dead as of the latest reporting. In the US, though, the predominant news coverage after the initial impact has been on the Fukushima Daiichi nuclear power plant.

Since both primary and backup power were knocked out, there have been a series of problems with the nuclear reactors, damaging them to the point that when the nuclear reaction has eventually cooled, the entire facility will have to be scrapped.

This has caused a worldwide conversation on the use and safety of nuclear power. Germany has shut down 7 of its 17 nuclear reactors, and has begun plans to accelerate the shutdown of all remaining power plants. In the US, to my knowledge no reactors have been shut down, but at least one power purchasing agreement that was in the works between CPS Energy and NRG Energy (NYSE:NRG) has been called off.

Although nuclear power is the most cost effective carbon-neutral form of power production, and has shown over decades of real-world use to be significantly safer than using coal, oil, or natural gas, the recent events at the Fukushima Daiichi power plant have focused a spotlight on the dangers on nuclear power.

Curious about what companies in the United States use nuclear power, I compiled what I believe to be a comprehensive list of companies that own or operate nuclear power plants in the United States.

The list of nuclear power plants was obtained from the Nuclear Energy Institute (NEI). To determine the amount of nuclear power generation, the companies web sites and annual reports were consulted, and checked against the list compiled by the NEI. I used company figures from their web sites and annual reports to obtain total power generation capability numbers, and where possible checked the calculated percentage of nuclear power.

Where possible, I used the maximum generating capacity figures, rather than the particular mix used in a given year, or by sales to customers. Additionally, not all plants were owned and operated by the same company. Where possible, I used the larger figure of operating capacity and owned capacity. This is a better way to characterize the maximum possible liability for each company.

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Table 1

Although I don’t have space to talk about each company on this list, I have a short description of the 5 companies with the greatest dependence on nuclear energy here. I also have a few notes on some of the other companies below. Remember, the US as a whole gets 20% of its electricity from nuclear power.

Berkshire Hathaway (NYSE:BRK.A) is on this list because it is owns MidAmerican Energy (MDPWK.PK). MidAmerican Energy generates only 6% of its electricity from nuclear sources. Additionally, MidAmerican Energy itself represents only 8.7% of total Berkshire revenues, so Berkshire’s total investment in nuclear power is a very small percentage of its total business.

The largest generator of electricity overall is Southern Company (NYSE:SO) at about 43 gigawatts (GW), but it actually has a below average nuclear proportion of only 15%. And the largest generator of nuclear power overall, as well as having the highest percentage of power generated by nuclear power plants is found at Exelon (NYSE:EXC), with 93% of its power generation coming from nuclear plants. Exelon is the purest stock investment for those bullish on nuclear power.

NextEra Energy (NYSE:NEE) is known for being the largest generator of solar energy in the country, and advertises that 95 percent of its power generation “comes from clean or renewable fuels.” Its seven solar facilities total only 310 MW of electric capacity. This is dwarfed by its nuclear generation capability of 2554 MW, which represents about 14% of its total generating capacity. It also possesses large hydroelectric and wind power facilities. NextEra Energy is a possible attractive investment for those betting on non carbon-based sources of electricity.

One company not in the list that is a partial owner of several nuclear reactors in the United States is the French firm Electricité de France (Euronext Paris: EDF). I didn’t include it on the list because it doesn’t appear to be traded on any U.S. exchanges, though it is down more than 5% since the earthquake in Japan. I also didn’t include any municipalities or local or regional power authorities with an ownership stake in nuclear reactors.

Nuclear power accounts for 20% of all electricity production in this country, and I hope you find helpful this list of companies owning or operating nuclear power plants. I was somewhat surprised that many of these stocks have not fallen in value very much; I was looking for opportunities to buy a beaten-down sector but didn’t find the sector particularly beaten-down. I hope you find it useful as a reference.

Disclosure: I am long D.