An important issue in a deregulated electricity-generating industry concerns the trading framework for the electricity-producing utilities. The US Californian model is described by way of example, see Shiffer (1999). In this model, the generation of electricity is carried out by independent companies (generators) with customers free to choose their supplier of choice. The price that the generators receive can either be negotiated directly with the customer or is determined by a state-owned trading entity called the Power Exchange, into which all generators bid a price for their services. Other countries have similar models; indeed the US approach was borrowed from the UK model.

There are profound financial impacts on nuclear generators arising from deregulation and this modus operandum is summarised in Table 4.1 (together with other cultural and

personnel issues). The electricity price received is clearly determined from a competitive bidding process; this price may be reducing. The revenues for the plant must cover the range of costs incurred from operation, including operation and maintenance, capital, fuel and taxes, which are broadly fixed, at least on the timescale of price fluctuations. There is considerable uncertainty on the price obtained, which may vary from hour to hour.

In the UK electricity-generation sector, competition since deregulation has forced down wholesale electricity prices. The UK currently has sufficient generating capacity, but the reduction in nuclear generation and closures of some coal stations may result in smaller reserve margins. New electricity trading arrangements (NETA) have been introduced to encourage flexibility and still further competition. This will alter the market structure and remove payment for capacity; this would tend to penalise baseload generators such as nuclear plants.

Pre-deregulation, the primary objective was high-quality technical plant and operational standards. Achieving low costs was not the highest priority. Post-deregulation, low operational costs must be achieved and these can only be attained through high operational efficiency. The challenge for designers and managers is to ensure that operational efficiency and low cost operation also equate with high reliability and standards of safety. IAEA Technical Report No. 369 provides a description of good practices.