FBR Capital: Reconsidering the Nuclear Renaissance?
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Rating Summary:
3 Buy, 9 Hold, 2 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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FBR Capital: Reconsidering the Nuclear Renaissance?
FBR analyst says, "Our conversations suggest that U.S. nuclear supporters are holding their ground in the shadow of the ongoing reactor crisis in Japan. On Thursday, we hosted a conference call with the Nuclear Energy Institute, which expressed confidence that U.S. plants are safe and the seismic design criteria are solid, while tsunamis are largely not an issue in the U.S. Despite the concerns, nuclear generation remains a crucial low-emissions source of power broadly supported by U.S. industry. Moreover, the public appears to be reserving judgment on the safety of the U.S. fleet. We expect the political risk to grow once the initial crisis is resolved and industry critics become more vocal. It is too early to predict definitely if these events will have any impact on longer-term U.S. nuclear policy. However, we broadly expect that the policy process is more likely to result in increased compliance and litigation burdens than shutdowns or a wholly new direction in generation."
"New licensing will remain uncertain. NEI does not expect a full report to be a prerequisite for issuing a new license nor lead to major regulation, retrofits, or changes in protocols. SCANA (NYSE: SCG) and Southern Company (NYSE: SO)are scheduled to receive their COL licenses late this year or early 2012. According to NEI, the new advanced designs that SCANA and Southern are using are passive and do not require offsite power and emergency diesel in an accident. We expect that a reevaluation of safety standards will introduce an additional element of uncertainty to the Combined Operating License process."
"E&C industry exposure to policy varies by company, but we do not expect negative impact. E&C contractors under coverage, including Fluor Corporation (NYSE: FLR)(OP-rated) and URS Corporation (NYSE: URS)(OP), have both some nuclear exposure on the front-end (licensing/engineering/design) side and the capability to perform engineering, procurement, and construction (EPC) services and provide back-end decommissioning/cleanup services on a large number of DOE sites. Energy Solutions (NYSE: ES) provides the back-end decommissioning and waste disposal for federal (DOE) sites, as well as commercial sites, and owns and operates the only privately owned lowlevel radioactive waste disposal sites. It could benefit from accelerated closings longer term."
FBR analyst says, "Our conversations suggest that U.S. nuclear supporters are holding their ground in the shadow of the ongoing reactor crisis in Japan. On Thursday, we hosted a conference call with the Nuclear Energy Institute, which expressed confidence that U.S. plants are safe and the seismic design criteria are solid, while tsunamis are largely not an issue in the U.S. Despite the concerns, nuclear generation remains a crucial low-emissions source of power broadly supported by U.S. industry. Moreover, the public appears to be reserving judgment on the safety of the U.S. fleet. We expect the political risk to grow once the initial crisis is resolved and industry critics become more vocal. It is too early to predict definitely if these events will have any impact on longer-term U.S. nuclear policy. However, we broadly expect that the policy process is more likely to result in increased compliance and litigation burdens than shutdowns or a wholly new direction in generation."
"New licensing will remain uncertain. NEI does not expect a full report to be a prerequisite for issuing a new license nor lead to major regulation, retrofits, or changes in protocols. SCANA (NYSE: SCG) and Southern Company (NYSE: SO)are scheduled to receive their COL licenses late this year or early 2012. According to NEI, the new advanced designs that SCANA and Southern are using are passive and do not require offsite power and emergency diesel in an accident. We expect that a reevaluation of safety standards will introduce an additional element of uncertainty to the Combined Operating License process."
"E&C industry exposure to policy varies by company, but we do not expect negative impact. E&C contractors under coverage, including Fluor Corporation (NYSE: FLR)(OP-rated) and URS Corporation (NYSE: URS)(OP), have both some nuclear exposure on the front-end (licensing/engineering/design) side and the capability to perform engineering, procurement, and construction (EPC) services and provide back-end decommissioning/cleanup services on a large number of DOE sites. Energy Solutions (NYSE: ES) provides the back-end decommissioning and waste disposal for federal (DOE) sites, as well as commercial sites, and owns and operates the only privately owned lowlevel radioactive waste disposal sites. It could benefit from accelerated closings longer term."
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