While the nation has been focused on new sources of natural gas and shale oil, few noticed the slow decline of an older energy source: nuclear power. Today, commercial nuclear power is struggling to stay in the game.

The power markets are hammering the nation’s nukes. Over a decade ago, several regions decided to create Regional Transmission Organizations (or Independent System Operators) and use the market to set power prices. Today, North America has ten independent RTOs/ISOs, where wholesale power is auctioned every few minutes.

Power auctions are about energy, not power plants. Auctions don’t care how power plants produce energy; they only care about the bid. The primary focus is on the last bid that clears the auction; it sets the price for all participants. That’s why the last bid is called the market-clearing price.

The difference between the market-clearing price and the generator’s production cost is the gross margin. The last bid is technically on the margin and it earns little to no gross margin. But every dollar above production costs contributes to the generator’s fixed costs.

via The Nation’s Nuclear Plants Are Nuked : Greentech Media.