Shares of La. nuclear cos. take hit on earthquake

AP News
Posted: Mar 14, 2011 6:28 PM
Shares of La. nuclear cos. take hit on earthquake

The crisis with Japan's quake-damaged nuclear power stations chopped into the Monday stock prices of two Louisiana companies _ one with plans to build new reactors and another that uses the plants to generate power for utility customers and wholesale electricity markets.

An industry group said it was too early to tell what effect the earthquake would have on the U.S. nuclear industry. An anti-nuclear group called for a halt on domestic nuclear activity, including the construction of new plants and the relicensing of older generators. A utility analyst said he didn't believe the crisis would kill the U.S. nuclear industry, but he expected delays in licensing new plants, and in the relicensing process.

Shares of The Shaw Group Inc., based in Baton Rouge, La., slid 9.2 percent, or $3.54, to close at $34.87 after trading at a 52-week low of $27.61 earlier in the session. Shaw has a 20 percent investment in Westinghouse nuclear power and has contracts for several new nuclear plants in the United States and China.

Shaw CEO Jim Bernhard said in a statement late Sunday that he does not expect Japan's problems to affect those projects.

"At this time, we do not believe there will be an impact on Shaw's nuclear projects currently under construction in the United States and China," Bernhard said. "Our customers have indicated they intend to move forward and we believe the construction timelines will continue as planned."

Shaw spokeswoman Gentry Brann said the company currently has contracts to build eight nuclear units in the United States and six in China. Four are under construction in China and four are under construction in the United States, she said.

Shares of Entergy Corp., which operates regulated power utilities in Louisiana, Mississippi, Arkansas and Texas, fell 4.9 percent, or $3.60, to close at $70.09 after falling as low as $69.32 Monday. New Orleans-based Entergy owns or manages 12 nuclear plants in the United States. Five of those that generate power for the wholesale market were intended for a spinoff into a separate company, but that deal was called off last year after New York state utility regulators refused to approve the move.

Entergy Nuclear spokesman Mike Boling said Monday that company officials have been monitoring the situation in Japan. "Our officials have been participating with others in the industry and seeing what we can learn from the damage to the Japanese plants and the mechanical response of the plant," Boling said.

In a statement after markets closed Monday, Entergy said its nuclear plants were designed to withstand earthquakes and flooding _ and federal safety standards require that the plants be designed to stand up against any natural disaster that would be more severe than any recorded historical event.

On Monday, three nuclear reactors in Japan were overheating dangerously as authorities raced to prevent devastating meltdowns of the nuclear cores. There have been two hydrogen explosions at the plants.

Washington, D.C.-based Public Citizen said the Japan crisis demonstrated "nuclear power's Achilles' heel," calling it "sheer folly to pour resources into building and maintaining nuclear reactors in the U.S." The group called on the federal government to stop relicensing older nuclear reactors, stop construction of new ones and end federal subsidies for nuclear power projects.

"The U.S. should focus on developing wind power and assisting families in the installation of rooftop solar systems," said Tyson Slocum, director of Public Citizen's energy program.

The Nuclear Energy Institute, a Washington, D.C.-based industry group, said Monday that it expected the U.S. government to study what happened exactly with the Japan plants. "But it's premature to say what the effect might be on the nuclear renaissance under way in this country and around the world," said NEI spokesman Carl Babb.

Babb said utility companies would be studying their operations to "see if they have the proper procedures in place in case something like this would happen again." Babb said a number of U.S. nuclear plants _ he did not have exact figures _ are constructed near fault lines, "but that is factored as part of the design and they have tougher standards. These plants are constructed on the basis of a worst-case scenario."

Michael Worms, a utility analyst with BMO Capital Markets in New York, said there likely would be delays in permitting new plants.

" The first thing the industry will do is stop the bleeding in Japan," Worms said. "They'll do their investigation and try to figure out what to do to keep it from happening again. This will take a while."

Worms said it was possible that some design changes would be ordered _ and that also could delay relicensing of plants, all depending upon the eventual findings of what went wrong in Japan.

"Is nuclear dead because of this?" he said. "I don't think so. It survived Three Mile Island and it survived Chernobyl. But caution here will be the better part of discretion."