The fewest nuclear reactors in two years are shutting to refuel nationwide this fall, limiting price increases for natural gas, coal and power.
Twenty-one plants are going offline from September to November, compared with 30 last year, according to data compiled by Bloomberg. Shutdowns by companies from Exelon Corp. to Duke Energy Corp. may be 18 percent below the 10-year average as the 18-to-24-month refueling cycle enters a lull.
The drop in closures raises the prospect of increased U.S. power supply. Electricity produced from nuclear plants may be 12 percent greater in October than the same month in 2012, providing a lower-cost alternative to gas and coal, according to BNP Paribas SA. Gas futures have tumbled 6.6 percent since Sept. 19 amid weakening demand and rising U.S. stockpiles. Power for October use in the PJM Interconnection LLC region, the largest U.S. grid, is down 6.2 percent from the same month last year and is at the lowest level in at least seven years.
"More nuclear output is going to displace coal and natural gas," Kyle Cooper, director of research at IAF Advisors, said in a phone interview from Houston. "You've got two fossil fuels that are competing to lower the price because your nuclear units supply steady power at unbelievably low marginal cost. That's bearish for power prices."
The average fuel price at a nuclear power plant in 2012 was 0.75 cent per kilowatt-hour, compared with 2.93 cents for natural gas plants and 2.55 cents for coal, according to Ventyx Velocity Suite data published by the Nuclear Energy Institute.
Natural gas for November delivery was unchanged at $3.567 per million British thermal units at 10:36 a.m. on the New York Mercantile Exchange. Front-month futures are down from a two- month intraday high of $3.82 on Sept. 19.
U.S. gas stockpiles increased by 87 billion cubic feet to 3.386 trillion cubic feet last week, according to an Energy Information Administration report Thursday. It was the biggest weekly gain since Aug. 2.
"The inventory restocking has been boosted by this light nuclear refueling schedule," said Teri Viswanath, director of commodities strategy at BNP in New York. "We are not using as much gas as a replacement fuel."
PJM on-peak power for October use cost $40.25 a megawatt- hour Thursday, down from $42.90 a year earlier and the lowest price for the month since at least 2006, according to broker and grid data compiled by Bloomberg. Coal on the Nymex traded at $53.74 a ton on Sept. 25, down 13 percent from this year's closing high of $61.80 in May.
The next four weeks will probably be a period of light gas demand without the backdrop of an active maintenance season, Viswanath said.
Reactors representing about 21 percent of U.S. capacity were scheduled to shut this fall. The Southeast will see the biggest drop in nuclear output at 27 percent of the regional total, while at the 13-state PJM power grid, from Washington to Chicago, 25 percent of capacity will be offline to refuel.
None of 11 reactors in New York and New England is scheduled to shut. Companies stagger the dates reactors are taken offline to replace spent fuel rods.