Exelon Corporation (EXC), Duke Energy Corp (DUK): Will Uranium Costs Kill Nuclear?

Exelon Corporation (NYSE:EXC)Uranium prices are in for 2012, and costs continue to head higher. The magic molecule’s price tag is up over 400% in the past decade and could continue to cut into your dividend stocks’ profits in the years ahead. I ran the numbers for some of the top nuclear-producing utilities in the country, and here’s what I found out.

It’s not us; it’s them
In 2012, U.S. nuclear power plant owners and operators purchased 59 million pounds of U3O8 equivalent, roughly the same amount as in 2003 and well below its 2006 demand peak of approximately 65 million.

Source: eia.gov

But over the same period, prices have skyrocketed. In 2011, 10 bucks would get you a pound of uranium. Now, the same pound costs power companies an average $54.99 per pound.

Source: eia.gov

Seventeen percent of uranium originates from within the U.S. and comes with a slightly higher $59.44 cost. The remaining 83% comes from foreign sources and costs $54.07 per pound.

With relatively steady demand in the U.S., the spike in uranium prices is out of our control, regardless of whether it results from increased demand abroad or reduced global supply. Either way, that makes U.S. power companies (and your dividend stocks) price takers, not price makers.

Utility costs
Companies like to keep costs and suppliers secret, but I found an easy approximation that begins with one company’s bragging rights. According to Exelon Corporation (NYSE:EXC), this nuclear-centric power company‘s 19,000 MW nuclear fleet produces 20% of our nation’s nuclear energy.

Working my way back from these two numbers and newly released national statistics, I calculated uranium costs for four of nuclear’s heaviest hitters, and the results were fascinating.

Company Nuclear Generation
(% Total)
Nuclear Generation
(MW)
Total Uranium Cost
($M)
Exelon 55% 19,100 $638
Duke 17% 8,450 $282
Southern Company 16% 6,970 $233
FirstEnergy 20% 3,990 $133

Author’s approximations. Sources: investor-relations websites, SEC filings, eia.gov.

Exelon Corporation (NYSE:EXC) spent around $638 million on uranium in 2012, more than double Duke Energy Corp (NYSE:DUK)‘s $282 million. Each uranium outlay is directly related to nuclear capacity, so it makes sense that Exelon Corporation (NYSE:EXC)’s expenses would be highest, while FirstEnergy Corp. (NYSE:FE)‘s $133 million puts it lowest.