WASHINGTON—The federal government has an important role to play in stimulating investment in the nation’s energy infrastructure, including the first few new nuclear power plants that industry expects to build, a Nuclear Energy Institute (NEI) executive told a Senate energy panel today.
“Lack of investment in our nation’s critical energy and electric power infrastructure is a major problem. Our country is not investing enough in new baseload coal and nuclear plants, and we’re not investing enough in new electricity transmission,” NEI Chief Nuclear Officer Marvin Fertel testified before the Senate Energy Subcommittee.
The congressional hearing was convened by subcommittee Chairman Lamar Alexander of Tennessee to discuss new nuclear power generation in the United States.
New nuclear power plants will be essential to achieve important public policy imperatives, including:
diversity of energy sources
future electricity price stability not available from power plants fueled with natural gas, thereby relieving cost pressures for other uses of natural gas
and meeting clean air goals and the U.S. goal of reducing the economy’s intensity of greenhouse gas emissions linked to the threat of global warming.
“Nuclear power plants will continue to contribute to the fuel and technology diversity that is the strength of the U.S. electric supply system,” Fertel said. “And they produce emission-free electricity. But, what we do today is not enough. We believe nuclear power plants must play an even greater role in meeting these needs in the years to come.”
The need for greater investment in the nation’s energy infrastructure is evidenced by the U.S. Department of Energy’s forecast that electricity demand will increase 50 percent by 2025.
“We are underinvesting for our energy future – relying too much on old, less efficient generating capacity and not investing in new, more efficient and cleaner facilities,” Fertel said.
New nuclear power plants can compete with other forms of baseload electricity generation at the industry’s construction cost targets of $1,000 to $1,200 per kilowatt of capacity, he said.
The industry believes targeted and limited financial stimulus from the federal government is necessary to “jump start” construction of the first few new nuclear plants as their construction and licensing applications are reviewed by the Nuclear Regulatory Commission (NRC) under an untested licensing process established in 1992.
The energy bill also includes provisions authorizing a cost-shared program between industry and government to support the design, engineering and licensing of new advanced plants.
“Although industry/government programs are seeking to eliminate uncertainty from the licensing process, there is potential for unanticipated cost increases as a result of delays during construction or delays in commercial operation of a nuclear power plant,” Fertel said.
“These delays could be caused by the NRC’s failure to deliver necessary approvals on time, or by court challenges to agency actions that are later dismissed. These risks are beyond the private sector’s control and would jeopardize private sector investment in new nuclear power plants.”
To minimize the uncertainties with such capital-intensive projects, Congress should enact energy policy legislation that contains “broad-based stimulus for investment in new energy infrastructure, including new nuclear power plants and cleaner coal technologies,” Fertel said.
In addition, current depreciation schedules for nuclear plants – 15 years – should be reduced to seven years to allow faster recovery of investment through reduced income tax liability, Fertel said. “Such updated tax treatment would simply recognize that depreciation conventions established for a regulated business environment are not appropriate for a competitive business environment.
“Nuclear energy produces electricity for one of every five U.S. homes and businesses today without producing air pollution. As our energy demands continue to grow in years to come, nuclear power should play an even greater role in meeting those needs.”
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.