WASHINGTON—The challenge of building the new nuclear power plants that the nation needs will require innovative financing approaches and constructive input to the federal government from the financial community, among others, nuclear energy industry leaders told Wall Street analysts here today.
As the industry prepares federal license applications for more than 30 new plants and invests heavily in design and engineering work and the procurement of long-lead time plant components like reactor vessels, it also is striving to extract the value intended by Congress from the Energy Policy Act of 2005, Nuclear Energy Institute President and CEO Frank L. (Skip) Bowman said at NEI’s annual briefing for the financial community.
The legislation provides limited investment incentives for construction of new nuclear plants and other high-capital-cost clean energy technologies. But it does not by itself resolve all financing challenges, particularly with regard to the Department of Energy’s implementation of the clean technology-neutral loan guarantee program that the energy bill authorized, he said.
“The construction period is when a new nuclear project most needs credit support,” Bowman said. “Unfortunately, the Department of Energy’s interim guidelines published last year were developed without input from companies with financial expertise, and are not optimal for large power projects. So we must continue to work cooperatively with the agency as it moves forward. Constructive input from credible organizations and institutions, including the financial community, will be essential to making this program a success.”
Properly implemented, the loan guarantee program will reduce financing costs and thus reduce our consumers’ cost of electricity from the project, Bowman said.
Anthony Earley, the chairman and CEO of DTE Energy and chairman of the NEI board of directors, said the business challenges facing the industry are manageable.
“In fact, the business challenges facing nuclear energy are not necessarily larger or more formidable than those facing coal or natural gas or any other source of electric power,” Earley said.
“The climate for nuclear power is changing. We have a more complete understanding of the business risks associated with new nuclear plant construction than ever before. And I am confident in our ability to manage those risks.”
DTE two weeks ago announced its plans to submit an application to build a possible new nuclear plant to the Nuclear Regulatory Commission. It is among 15 companies and consortia that are preparing license applications for as many as 33 new reactors that would be built over the next 10-20 years. By the end of this year, the industry will have invested more than $2 billion in preparing license applications, procuring long-lead components and equipment and design and engineering on advanced-design plants, Bowman said.
Currently, 103 nuclear plants operating in 31 states supply electricity to one of every five U.S. homes and businesses. Early estimates for 2006 show that they produced the second-highest amount of electricity in the industry’s history—about 787 billion kilowatt-hours (kwh)—and posted a record-low electricity production cost for fuel and operations and maintenance expenses—1.66 cents/kwh.
As the industry continues to achieve excellence in operations, it also sees growing bipartisan support, particularly among leaders in the new Congress, Bowman said. He noted comments made recently by House Speaker Nancy Pelosi, who told the House Science Committee recently, “In the early days of my life in Congress, I was an opponent of nuclear energy because of questions on how to dispose of the waste. Your question is good because the technology has changed, and I bring a more open mind to that subject now because I think we should look at this technology, and compare it to the alternatives…it has to be on the table.”
Bowman said that the industry is seeing renewed interest at the state level as well. Supportive legislation has passed or is being considered in Georgia, Iowa, Wisconsin, Florida, Virginia, Kansas, South Carolina and Texas.
“We see increasing evidence that state political leaders and policymakers recognize the value of a diverse energy portfolio that includes new nuclear plants,” he said.
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 http://www.nei.org.