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Industry Outlines Federal Policies Needed to Support Nuclear Power Plant Construction

WASHINGTON—As a complement to industry efforts to bring about new nuclear power plant construction within the next five years, Congress can take limited but appropriate steps to support companies' nuclear power investment decisions, a Nuclear Energy Institute executive told a congressional committee today.

Among the policy initiatives needed to support nuclear power plant construction are:

  • Tax law changes to reduce investment risks and allow quicker recovery of capital investment; and
  • Continuation of the government/industry partnership to help validate the Nuclear Regulatory Commission's (NRC) new power plant licensing process, and to resolve technical and/or regulatory issues associated with new nuclear plant designs.

"Given the significant public policy benefits of nuclear energy, limited policy initiatives are appropriate for new nuclear power plants to support companies' investment in new nuclear plants sooner and in larger numbers than they otherwise would," NEI Senior Vice President Marvin Fertel told the House Energy Committee's subcommittee on energy and air quality.

The industry recognizes that prospects for new construction will rise or fall on the technology's competitiveness in the marketplace, Fertel said. This is why the industry is working vigorously to reduce the initial capital costs of new power plants, to create a stable licensing regime and increase regulatory certainty, and to build support among policymakers and communities surrounding potential power plant sites.

The industry is pursuing two parallel approaches to new plant deployment, he said. One path focuses on the three new reactor designs already certified by the NRC, or derivatives of those designs. The other focuses on development of advanced gas-cooled reactors that also would be standardized and modular in nature.

"The companies planning to start construction of new nuclear power plants within the next five years are doing so because new nuclear capacity represents a solid business opportunity," Fertel said.

Nuclear energy provides a reliable source of electricity with low "going-forward" or "dispatch" costs; a high level of forward price stability and protection against the fuel price volatility of gas-fired power plants; and protection against possible escalation in environmental requirements on fossil-fueled power plants. Also, for companies already operating fossil-fueled plants, new nuclear capacity can help reduce the cost of clean air compliance that might otherwise be imposed on that fossil-fueled capacity.

At a time when the industry is achieving record levels of safety, reliability, efficiency and output, it believes that increasing nuclear energy's contribution to U.S. electricity supplies "is essential to sustain economic growth, meet the electricity needs of our growing population, and satisfy our nation's clean air and environmental goals," he said.

Nuclear energy currently meets one-fifth of U.S. electricity needs and is the nation's largest emission-free source of electricity. The U.S. Energy Department's Energy Information Administration estimates that, at an average increase in electricity demand of just 1.8 percent annually, the United States will need 393,000 megawatts of additional generating capacity between now and 2020.

"As electricity demand continues to rise, nuclear energy will be even more important to American consumers," Fertel said.

He noted that, while the NRC has a new power plant licensing process in place, it is untested. Additional federal involvement would help verify that the new process works as intended and will not place private sector investment at risk. Alternative mechanisms to allow quicker recovery of capital investment include accelerated depreciation and an investment tax credit, he said. Fertel strongly supported reauthorization of the Price-Anderson Act, which he described as "the most comprehensive, effective liability protection law in the world." The act, which expires in August 2002, supports the effort to build new nuclear power plants and has been proven effective for nearly 45 years, he said.

Fertel voiced disappointment with the reduced level of nuclear energy R&D funding that the Energy Department requested for fiscal 2002. In urging the committee to approve $433 million (double this year's budget) for the fiscal year that begins Oct. 1, he noted that funding increases have been recommended in recent years by the President's Council of Advisors on Science and Technology, the Secretary of Energy's Nuclear Research Advisory Committee and DOE's Near-Term Deployment Group.


The Nuclear Energy Institute is the nuclear energy industry’s policy organization. This news release and additional information about nuclear energy are available on NEI’s Internet site at .