NEW YORK Oct. 15, 2008 Construction risk is the overriding risk for new U.S. nuclear power plants, according to a report published today by Standard & Poor's Ratings Services, "Construction Costs To Soar For New U.S. Nuclear Power Plants". We believe that labor and material cost increases are particularly acute for nuclear plants given their specialized labor needs, material intensity, and a tight supply chain for key components. The scanty construction track record for the new technologies and an untested regulatory process only complicate the risks.
We have broadly categorized risks pertaining to power plant construction issues in four categories. While some of these are also applicable for other types of power plants, we believe that the issues are more acute in the case of nuclear power:
-- Cost inflation in input materials and labor, especially nuclear-related labor;
-- Unavailability of turnkey engineering, procurement, and construction (EPC) contracts and supply chain bottlenecks;
-- A limited construction track record; and
-- The Nuclear Regulatory Commission's (NRC) supervision process.
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