Fitch report on nuclear credit

30 November 2006

The ownership and operation of nuclear power plants can have a significant effect on the risk profile and credit ratings of US utilities, a new report from credit ratings agency Fitch says.

Fitch suggests that while nuclear ownership can accrue benefits, including low and stable production costs and low carbon emissions, the high cost of construction and the potentially severe financial effect of an extended outage warrant a careful inspection of a company's financial flexibility, liquidity resources and nuclear operating performance.

A combination of volatile energy markets, potentially stricter environmental regulations and global warming concerns have revived interest in nuclear construction. However, Fitch does not anticipate that the construction of a new nuclear plant in the United States will begin for at least 4-5 years, at the earliest.

In the mean time, credit concerns centre on operating and regulatory risks, rather than construction and financing risks.

"The potential for an extended unplanned outage is the primary credit risk of nuclear ownership," said Robert Hornick, senior director at Fitch

The full report can be found at www.fitchratings.com




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