Testimony for the Record
Marvin S. Fertel
President and Chief Executive Officer
Nuclear Energy Institute
Appropriations Subcommittee on Energy and Water Development
U.S. House of Representatives
March 29, 2013
The Nuclear Energy Institute1 (NEI) appreciates the opportunity to provide testimony on DOE and NRC programs to the House Appropriations Subcommittee on Energy and Water Development.
In general, NEI believes the federal government’s nuclear energy research and development programs in Fiscal Year 2014 should focus on (1) developing technologies and other solutions that can improve the reliability, sustain the safety, and extend the life of current reactors; (2) developing new reactor types that will enable nuclear energy to help meet the nation’s energy and environmental goals; (3) developing a sustainable used fuel management program; and (4) minimizing the risks of nuclear proliferation.
Specifically, the nuclear energy industry:
Opposes reinstating a tax on nuclear power plant operators to pay the cost of decontaminating and decommissioning the federal government’s uranium enrichment plants;
Supports a robust and sustainable strategy for used nuclear fuel management;
Supports funding for the DOE Office of Nuclear Energy, including the small modular reactor program;
Supports safety-focused and more efficient regulation by the Nuclear Regulatory Commission (NRC);
Supports completion of the Mixed Oxide (MOX) Fuel Facility, and
Supports the reforms necessary to make the loan guarantee program a workable financing platform for clean energy technologies, including advanced nuclear power plants.
Uranium Enrichment D&D Tax
NEI strongly opposes any plan to reinstate the uranium enrichment decontamination and decommissioning tax, which would have a negative impact on consumers of electricity in an economy struggling to recover. Despite its negative impact on all consumers of electricity, the Obama Administration continues to propose reinstatement of this tax as a means of raising revenue. The three uranium enrichment plants in question operated for 25 years as defense facilities and were irretrievably contaminated long before any sales of enrichment services to the commercial industry. In addition, the industry has twice paid its share of the funds necessary to clean up these facilities – first, payment was received as part of the price for DOE uranium enrichment services from the facilities, and again under the Energy Policy Act of 1992. Under the 1992 law, the tax on electric utilities was to end after 15 years or the collection of $2.25 billion, adjusted for inflation. The industry paid this amount in full. The industry appreciates the support of the subcommittee in previous years to reject this proposal and again encourages members to continue to oppose this unjust tax on consumers.
Used Nuclear Fuel Management
First, consistent with current law, The Nuclear Waste Policy Act, Congress should provide sufficient funds to the Department of Energy and the Nuclear Regulatory Commission to complete the licensing of the proposed Yucca Mountain repository.
Second, NEI is disappointed that the Executive Branch has not proposed legislation to manage used nuclear fuel and high-level radioactive waste based on recommendations of the Blue Ribbon Commission on America’s Nuclear Future (BRC). NEI urges the subcommittee to provide direction and funding to DOE in support of the following three BRC recommendations:
Establish a new organization dedicated solely to implementing the nuclear waste management program and empowered with the authority and resources to succeed;
Establish one or more consolidated storage facilities for used nuclear fuel while making substantial progress toward developing a repository for fuel disposal; and
Provide access to the annual collections and corpus of the Nuclear Waste Fund for the purpose of managing used nuclear fuel.
Advanced Reactor and Fuel Cycle Technologies
NEI supports programs managed by DOE’s Office of Nuclear Energy that seek to accelerate commercial deployment of new reactor technologies, sustain safe operation of the reactors that provide one-fifth of America’s electricity and two-thirds of our nation’s emission-free electricity, and develop advanced fuel cycles to manage used nuclear fuel. NEI considers certain programs as extremely high priority:
Small Modular Reactors (SMRs)
As originally conceived, the SMR licensing support program was to promote accelerated deployment of these technologies by supporting first-of-a-kind activities for design certification and licensing activities for up to two SMR designs through cost-shared arrangements with industry partners. One team was chosen from those that responded to the first Funding Opportunity Announcement (FOA), and DOE has released a second FOA to support an additional team or teams. NEI supports the second FOA and encourages the Department to complete the procurement process by September 2013, as it has proposed. Given the benefits to job creation, export value and domestic clean electricity supply, we encourage the subcommittee to ensure that this program is effectively and expeditiously implemented. Accelerated, near-term deployment is critical to ensure the international competitiveness of U.S. SMRs. Federal government cost-share funding for SMR development is necessary and appropriate. The subcommittee should ensure that this program is provided sufficient funds and certainty in funding – at a minimum the $452-million, five-year program originally proposed by DOE –to achieve the mission.
Sustaining Safe Operation
NEI supports the Light Water Reactor Sustainability (LWRS) program, in which DOE has partnered with industry and the NRC to coordinate research needs and share costs. Industry is investing in the near-term research needs, and within the LWRS program DOE and the NRC are addressing the longer-term research. Among other issues, this federally-funded research provides the technical basis to manage age-related material science, and addresses post-Fukushima lessons learned, particularly advanced engineering of light water reactor fuel.
Advanced Fuel Cycle Technologies
NEI supports a systematic and focused program to develop advanced separations technologies and reactor types that can maximize the utilization of used nuclear fuel from commercial nuclear power production. At times like these, when budgets are constrained, NEI believes that this program should be focused on, and guided by, reasonable prospects for commercial deployment and, wherever possible, coordinated with industry and similar programs being pursued by our international colleagues.
Safety-Focused and Efficient Regulation
The nuclear energy industry’s first priority is operating America’s nuclear energy facilities safely and reliably. The companies that produce electricity at nuclear power plants continuously incorporate lessons learned from best practices at all U.S. facilities as well as operating experience worldwide. Safety enhancements made over more than 40 years, including new processes and procedures based on lessons learned from Fukushima, have resulted in sustained high levels of safety.
The industry welcomes the oversight of the NRC by Congress to ensure that the agency effectively prioritizes its activities, based on safety significance, and achieves closure on issues in a timely manner. The agency is making important initial progress in these areas – addressing the cumulative impacts of its regulatory activities – and the industry believes the agency should be encouraged to continue these efforts.
The NRC’s annual budget has grown from $442.1 million in 1990 (when the agency was regulating 112 reactors) to $1.1 billion in 2012 (when the agency was regulating 104 reactors). The number of NRC employees increased from 2,881 in 1999 to over 4,000 in 2012. Recognizing that NRC licensees pay 90 percent of the $1.1 billion budget of the NRC, we appreciate the subcommittee’s oversight to ensure that NRC activities and budget are more transparent and cost effective.
NEI also continues to support NRC funding of the Integrated University Program, which provides important nuclear science and engineering research and workforce training at America’s universities and community colleges. NEI hopes the subcommittee will maintain the funding level in FY2014 – at $15 million – to enable NRC to continue its participation in this program.
Completion of the MOX Fuel Facility
NEI supports completion of the MOX fuel facility now under construction at the Savannah River Site in South Carolina. This facility, which is approximately halfway through construction and in which approximately $4 billion has been invested, is important to U.S. national security and as a demonstration of America’s commitment to nonproliferation. When operating, the facility will convert at least 34 metric tons (at minimum 17,000 weapons) of surplus weapons-grade plutonium into MOX fuel for use in commercial power reactors. It is estimated that the fuel produced from the MOX project would produce $50 billion worth of electricity and enable the federal government to eliminate the expense of storage and surveillance of the plutonium in the future. Construction and operation of the MOX plant is the result of years of work and commitments with the Russian Federation, the state of South Carolina, and thousands of workers at the site and across the country. Each of those parties made commitments on the assumption that the U.S. government is a credible partner capable of fulfilling its arms control and nonproliferation commitments. Failure to complete this project will validate those critics of the government, and the DOE in particular, who claim it simply cannot complete complex projects, particularly those concerning nuclear materials disposition.
Reform DOE’s Clean Energy Loan Guarantee Program
The nuclear industry appreciates the support provided in previous years by the subcommittee for the DOE loan guarantee program for new nuclear energy plants and nuclear fuel cycle facilities. NEI urges the subcommittee to maintain the appropriated funds for projects under development.
NEI continues to believe that the loan guarantee program authorized in the 2005 Energy Policy Act had (and continues to have) great potential. There is no cost to taxpayers for nuclear energy project loan guarantees, but there is significant benefit to consumers. The use of loan guarantees will lower the overall cost of nuclear energy projects, ultimately reducing the cost of electricity to consumers. Companies granted loan guarantees by DOE for nuclear energy projects must pay a premium (the credit subsidy cost) for use of the program, and cover all administrative costs.
New nuclear projects must have financing support–either loan guarantees from the federal government or assurance of investment recovery from state governments, or both. The states are doing their part. Throughout the South and Southeast, state governments have enacted legislation and implemented regulations to advance new nuclear plant construction. A comparable federal government commitment – in the form of a workable loan guarantee program – is essential.
For the nuclear energy industry, one of the most significant challenges involves determining the credit subsidy cost. NEI believes the methodology used by the Executive Branch inflates the credit subsidy cost well beyond the level required to compensate the federal government for the risk taken in providing the loan guarantee.
NEI encourages the subcommittee to require DOE – possibly through the Secretary of Energy Advisory Board – to conduct a systematic, disciplined, open assessment of implementation of the Title XVII loan guarantee program, identify the weaknesses in implementation, and develop recommendations to ensure that this program becomes the workable financing platform originally envisioned. This assessment must include consultation with, and participation by, the nuclear energy industry in order to understand fully the successes and failures in implementation.
1 NEI is responsible for establishing nuclear industry policy on matters affecting the nuclear energy industry, including regulatory, financial, technical and legislative issues. NEI members include all companies licensed to operate commercial nuclear power plants in the United States, nuclear plant designers, engineering/construction firms, fuel facilities, and other organizations and individuals involved in the nuclear energy industry.