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April 3 2009 Marvin Fertel

Marvin S. Fertel
President and Chief Executive Officer
Nuclear Energy Institute

U.S. House of Representatives
Appropriations Subcommittee on Energy and Water Development

Washington, D.C.
April 3, 2009

Testimony for the Record

The Nuclear Energy Institute  (NEI) supports Fiscal Year 2010 (FY10) funding for the following Department of Energy programs:  the Innovative Technology Loan Guarantee Program Office ($20 million), Nuclear Power 2010 Program ($121 million), Office of Radioactive Waste Management ($340 million), Advanced Fuel Cycle Initiative ($160 million), Generation IV Program ($245 million), Light Water Reactor Systems ($25 million), Nuclear Hydrogen Initiative ($15 million), Integrated University Program ($45 million), Research Reactor Infrastructure ($8.1 million), the Advanced Test Reactor User Facility ($15 million), Idaho Facilities Management ($198 million) and Space and Defense Infrastructure ($35 million). NEI also supports the FY10 funding levels for the Nuclear Regulatory Commission budget and environmental cleanup at DOE sites.

NEI appreciates the opportunity to provide the subcommittee with its perspective on the nuclear energy-related programs under the subcommittee’s jurisdiction.

The nation’s nuclear power plants in 2008 continued to operate at high levels of safety and efficiency, which has cemented their role as the nation’s most reliable carbon-free electricity source.  Performance indicators compiled both by the Nuclear Regulatory Commission and the World Association of Nuclear Operators (WANO) reflects the industry’s exemplary performance in 2008.  The nuclear industry’s median unit capability factor in 2008 was 91.1 percent, according to WANO’s analysis. That is the ninth consecutive year that unit capability factor— a measure of a plant’s on-line production time—topped 91 percent. A related metric, capacity factor, a measure of total power generated as a percentage of design production, also stood at 91.1 percent in 2008, according to preliminary estimates.

This reliability—the highest among any sources of electricity—enabled the nation’s 104 nuclear power plants to produce enough electricity (805.7 billion kilowatt-hours) for about 80 million homes last year.  Overall, nuclear power plants operating in 31 states provide one-fifth of U.S. electricity supplies; they provide nearly 75 percent of the nation’s electricity generation that comes from carbon-free sources.

NEI’s statement for the record addresses the industry’s highest policy priorities.  In several cases, NEI believes America’s energy security and environmental imperatives justify increases in FY10
funding above the levels provided by Congress in the FY09 Omnibus legislation.

Innovative Technologies Loan Guarantee Program

The nuclear industry appreciates the support provided by the Subcommittee for the loan guarantee program.  The FY09 omnibus bill made the authority for the authorized loan volume of $47 billion available indefinitely. 

Last year, the industry submitted 13 license applications to the NRC for new nuclear projects, bringing the total to 17.  Over the last several years, the industry has invested over $4 billion in new nuclear plant development and plans to invest another $8 billion in the next several years to be in position to have plants operating in the 2016-2017 timeframe.  The clean energy loan guarantee program created by the 2005 Energy Policy Act is essential for companies planning investments in the electricity infrastructure.  Given the capital investment required in the electric sector, and the cost of new electric generating facilities, additional loan volume will be required in the coming years to support the number of new plants currently projected.

DOE has issued solicitations inviting loan guarantee applications for eligible technologies and, in all cases, the available loan guarantee volume is significantly oversubscribed.  For example, initial nuclear power solicitations resulted in requests from 14 projects seeking $122 billion in loan guarantees, with only $18.5 billion available.  Ten nuclear power projects reportedly submitted Part II loan guarantee applications representing $93.2 billion in loan volume.  Two uranium enrichment projects submitted applications seeking $4.8 billion, more than double the available amount.  NEI also understands that the solicitation for innovative coal projects results in requests for $17.4 billion in loan volume, more than twice the $8 billion available.

The loan guarantee program is designed to be self-financing, with project sponsors responsible for underwriting the cost to the federal government of providing the credit support.  Properly implemented, there will be no cost to the taxpayer.  In fact, the program will generate revenues for the Treasury from credit subsidy cost payments made by project sponsors.  In addition, by reducing the cost of capital, the program would reduce project costs and thus reduce electricity prices to all consumers – residential, commercial and industrial.

Since enactment of the Energy Policy Act in August 2005, achieving workable implementation of the Title XVII loan guarantee program has been a challenge.  NEI is encouraged by Energy Secretary Steven Chu’s intent, expressed during his confirmation hearing and at other times, to address the difficulties that have arisen during implementation of the Title XVII loan guarantee program.  Many of these problems can be corrected through rulemaking, and NEI understands that DOE is developing revised rules to address defects in the current rule and to implement the new loan guarantee program authorized in the economic stimulus legislation.  The Energy and Water Development Appropriations Subcommittee can play a key oversight role in ensuring that the necessary revisions to the existing rule are promulgated quickly and efficiently, and do not become entangled in internal Executive Branch procedural difficulties, as has happened so often in the past.

NEI also urges Congress to support DOE’s request to fully cover the program’s administrative costs in FY10, which will result in a net zero appropriation given offsetting collections from loan applicants.

Completion of the Nuclear Power 2010 Program

Successfully completing NRC’s new combined construction and operating license (COL) process is one of the final determinants in decisions to proceed with new nuclear plant projects. The Energy Department’s NP2010 program, entering the final year of the program, has provided a critical opportunity to organize industry efforts through NuStart Energy and Dominion to develop and implement a program to demonstrate the COL process. The program, coordinated with NRC and NEI, is resolving issues and establishing processes that will benefit all new nuclear plant projects – not just those being pursued by Dominion or NuStart’s 10 electric utility members. 

The NP2010 program has two fundamental objectives: 1) to demonstrate the regulatory process for licensing new plants and 2) to complete the final design for the Westinghouse AP1000 reactor and the GE-Hitachi ESBWR reactor.

NRC is requiring a dramatically higher level of detailed information on these advanced reactor designs than envisioned when this program was started.  The designs must be essentially complete before the NRC issues the first construction and operating licenses.  As a result, the industry is investing hundreds of millions of dollars more than expected in bringing advanced reactor designs to the marketplace even before the first order has been placed by a utility.  Individual utility company decisions to begin preparation for specific projects were based on the expectation that industry could depend upon DOE’s NP2010 program to establish a viable licensing process and reduce the impact of a first-time regulatory process on engineering and licensing costs of each standardized design.  Given the successes achieved to date as a result of this cost-shared program and its critical importance to the deployment of the only major clean baseload energy technology, NEI urges Congress to ensure that the NP2010 program is fully funded next year to achieve the efficiencies promised when this program was initiated in appropriations and authorized in the 2005 Energy Policy Act. 

The industry has matched the federal government commitment to NP2010 dollar for dollar and has, in addition, invested over $1 billion more in other site-specific licensing, design and construction activities.  The program thus leverages significant additional private sector investment.

Industry seeks congressional support for DOE’s NP2010 of $121 million and the program remains the industry’s highest priority for deliverable reactor development.

Ensuring Adequate Funding for the Nuclear Regulatory Commission and the Integrated Used Fuel Management Program

The industry recommends FY10 funding at the NRC’s requested level.   However, the industry is concerned about the need for agency actions to appropriately but more expeditiously resolve open issues.  The industry applauds the continued oversight of the NRC by Congress to help identify ways to prioritize agency actions.  There needs to be greater transparency in NRC budgeting to reveal planned staffing and resource needs in individual NRC divisions.  This would demonstrate to Congress and to the industry which pays up to 90 percent of NRC’s budget that the budget fairly reflects those activities that should be being allocated toward licensee-specific charges rather than general license fees. 

The administration has thrown into the question the future course of DOE’s used nuclear fuel management program with its recommendation that the program be scaled back to include only those costs necessary to answer questions from the NRC regarding the license application for the Yucca Mountain repository project.  Further, the administration has announced its intent to create a “blue ribbon commission” to evaluate national used fuel policy and the national repository program at Yucca Mountain.  NEI believes such a commission is necessary and urges the subcommittee to provide sufficient funding to enable the commission to discharge its responsibilities.

The nuclear energy industry supports funding for DOE’s Office of Radioactive Waste Program at $340 million and NRC’s program at $43 million from the Nuclear Waste Fund for Yucca Mountain licensing review activities. 

The industry believes that a national repository program is a key component of a three-part integrated used fuel management strategy. This strategy includes:

1. Develop interim used fuel storage at volunteer locations;
2. Research, development and demonstration to recycle uranium fuel and reduce the volume, heat and toxicity of byproducts placed in the repository and to reclaim some 90 percent of the energy that remains in the fuel after one use in a reactor; and, 
3. Develop a national repository. 

The nuclear industry consistently has supported research and development of the advanced fuel cycle technologies incorporated in the Advanced Fuel Cycle Initiative (AFCI).  Consistent with the industry’s integrated used fuel strategy, NEI believes $160 million for the Advanced Fuel Cycle Initiative in FY10 will continue this important technology research and development program, and will support private sector partnerships to achieve better definition of the program.

Deployment of Advanced Reactor Technologies

NEI supports $245 million in government funding to be appropriated for the Generation IV (GEN IV) program in FY10.  Within this program, $241 million would be allocated for the Next Generation Nuclear Plant (NGNP).  The NGNP is a congressionally authorized program to develop, license and build an advanced high-temperature gas reactor (HGTR) at Idaho National Laboratory and other U.S. laboratories in partnership with industry. The HTGR technology can displace the use of premium hydrocarbon fuels such as natural gas for producing process heat, thus enhancing U.S. energy security,  stabilizing energy prices and improved economics and improving the use of finite hydrocarbon resources.  Such a transition would result in minimal greenhouse gas emissions throughout the nuclear energy life cycle.  Industry and the INL are working together to have this prototype nuclear energy system operational by the end of the next decade. 

NEI also recommends funding of $25 million for a new initiative called the light-water reactor systems program, focusing on materials science and addressing issues of materials performance in reactor operations, and $15 million for the Nuclear Hydrogen Initiative (NHI) in FY10.  The NGNP potential for hydrogen generation and the potential to couple hydrogen generation with advanced light water reactors is being coordinated and optimized under this program. 

Work Force and Infrastructure

The FY09 Omnibus Appropriations Act included $45 million for an Integrated University Program at DOE Nuclear Energy, DOE NNSA and at the NRC.  The industry appreciates the strong support this subcommittee has provided for this program.  NEI asks the subcommittee to support $8.1 million for the Research Reactor Infrastructure program for new fuel and shipping containers, reactor instrumentation and upgrades, and used fuel services.  The nuclear industry also urges the subcommittee to designate up to 20 percent of funds appropriated to its AFCI, NGNP and NHI programs for research work at universities. 

Industry also supports providing $15 million for the Advanced Test Reactor (ATR) User Facility at Idaho National Lab and $198 million for facilities management at the lab in FY10.  The ATR funding is intended to improve the capability of the facility for research on the behavior of nuclear fuels and materials by users from DOE, universities and the industry.

Legacy Management

Responsible management and clean-up of legacy sites and associated waste is a primary responsibility of DOE’s Office of Environmental Management.   The FY09 Omnibus Appropriations Act provided $6.5 billion in funding and The American Recovery and Reinvestment Act of 2009 provided an additional $6 billion to enable EM to protect human health and the environment.  We recommend providing $6.5 billion for FY10. 

In addition, industry recommends that efforts be focused both on footprint and risk reduction at legacy sites. Further, the industry recommends that that EM continue to accelerate clean- up thereby enabling nearby communities to redevelop sites and saving taxpayer money in the long-term.