William D. Johnson
Chairman, President and CEO
Nuclear Energy Assembly
May 22, 2012
Good morning and thank you for your participation throughout this year’s Nuclear Energy Assembly.
I especially want to thank this morning’s panelists for an insightful discussion on nuclear safety. Safety is our top priority, so it is fitting that we chose to reinforce this message, above all, throughout this conference.
In the past year, the nuclear energy industry has achieved significant accomplishments – including the first licenses for advanced reactor designs in the United States in more than 30 years, as well as continued opportunities abroad.
We’ve also been faced with major challenges – including economic headwinds and planning uncertainties that are slowing domestic expansion of nuclear energy in the near term.
U.S. utilities continue to experience sluggish growth in electricity usage as well as abnormally low natural gas prices. Meanwhile, government energy policies and regulatory priorities remain unsettled in this election season and post-Fukushima world.
Nonetheless, I have confidence that we will adapt as a nuclear industry even as we execute to high standards on the fundamentals of our business.
Working together, we will keep earning a strong place in a diverse, balanced energy portfolio as our nation and world transition to a lower-carbon economy.
Creating this positive future for our industry requires intense, relentless focus in at least three areas:
First, we must, and will, stay focused on operational safety. This is a prerequisite to any other agenda that our industry may have. Safety first is our highest responsibility and is foundational for our future.
Second, we must focus on providing the leadership across our companies that enables our employees and technologies to live up to their potential.
And this includes creating a culture of innovative thinking and productive partnerships that deliver compelling economic value for our customers.
And third, as an industry, we must collaborate to promote a regulatory and public policy framework that is focused on the issues that matter most.
The clarity, stability and integration of regulatory priorities and government policies will be a critical difference maker in the magnitude of the contribution that nuclear energy is able to make over the long term.
In a recent commentary in the Wall Street Journal, energy analysts Larry Makovich and Jone-Lin Wang from Cambridge Energy Research Associates define the current challenge for us and our nation.
They wrote: “Sometimes you don’t know what you’ve got until it’s gone. Today most people take the benefit of nuclear power in the U.S. power generation portfolio for granted. But this cornerstone of power generation diversity is something that may slip away in the not-too-distant future if we fail to take a long view about nuclear power development.”
Nuclear energy today provides 14 percent of the world’s electricity; one-fifth of America’s power.
It will be even more important in the future as we look for ways to meet the energy needs of the 7 billion people across the globe cleanly and reliably.
It is vital to drive the economic development necessary for a better quality of life … and to do this in ways that protect the rich natural resources of this planet.
Expanding the use of clean, safe, reliable nuclear energy demands relentless improvement.
Fortunately, continuous improvement is one of our industry’s strengths. It is how we have maintained the average capacity factor of our nuclear energy facilities at about 90 percent for the past decade.
Despite significant new investments in our current fleet, nuclear energy remains one of the low-cost sources of electricity and, of course, the only baseload electricity source that does not produce greenhouse gases during operation.
As our industry looks at meeting the higher electricity demand over the long term to fuel economic expansion and an increasingly electrified transportation sector, we must answer several questions.
How are we going to generate that electricity?
How much will it cost?
And what effect will it have on the environment?
Concern about clean air was a driver for the development of nuclear energy in the United States.
But despite decades of clean air regulations and enormous investment in renewable energy, less than one-third of the electricity used in the United States – 28 percent – comes from emission-free sources. And nuclear energy accounts for nearly 70 percent of our clean energy.
Earlier this year, the NRC approved construction and operating licenses for four reactors to be built at two sites: two at Southern Company’s Plant Vogtle in Georgia … and two more at SCANA’s V.C. Summer facility in South Carolina. Both projects use the Westinghouse AP1000 reactor design.
Significant early site work has already been completed, and these companies are committed to developing these projects safely, on schedule and within budget.
Regional partnerships have been important to the viability of both projects, and I think such partnerships will be instrumental in future nuclear expansion.
Southern and SCANA have invested more than $3.3 billion combined in these projects and between them have created about 3,200 jobs.
Current schedules for Vogtle 3 and 4 show that they should be online in 2016 and 2017; Summer 2 and 3 in 2017 and 2018.
TVA has undertaken a $4.2 billion project to complete Watts Bar 2 and plans to have the reactor operating by 2015. TVA also is exploring the feasibility of building small modular reactors to replace older coal-fired plants.
Yet the overall near-term pace of new nuclear plant development in the U.S. will be modest due to weak fundamentals in the economy and electricity markets.
This is in sharp contrast to overseas, where significant growth in new nuclear development continues to open significant markets for U.S. suppliers and vendors.
This level of activity will maintain the capability to build new plants when the need arises.
And I am confident that the need for new plants will emerge beyond 2020 because the long-term fundamentals for nuclear energy remain sound.
In fact, the International Energy Agency in April reported that the world’s nuclear energy capacity must nearly double by 2025 to help meet climate targets.
U.S. industry is playing an active role in the global market for nuclear technology, where as much as $740 billion in business is at stake over the next decade.
Our commercial nuclear supply chain continues to grow and add thousands of jobs due to the export of reactor technology, components and services. According to the Bureau of Labor Statistics, the nuclear energy sector accounted for 54% of all “green” jobs in the electric sector in 2010.
And that could be just a drop in the bucket.
We must focus our industry on the need to develop comprehensive and coordinated federal energy and economic policies. Outdated, inefficient trade and export policies, as well as limited financing options for nuclear energy exports, are barriers to global competition.
We need to turn this around.
Government policy support must be integrated into a seamless mechanism that includes coordination of nuclear trade policy, creation of bilateral agreements, export control reform and enhanced export financing.
Also consider that if federal policy hinders U.S. companies from participating in commercial nuclear trade, America loses an important opportunity to influence operating safety and nonproliferation around the globe.
Keep in mind: America has the world’s largest nuclear energy program. We should position our industry as a global leader fostering the highest standards of safety and security.
Since the earthquake and tsunami struck Japan last year, the nuclear energy industry and the NRC have carefully examined what happened at Fukushima Daiichi to learn how to make our nuclear energy facilities even safer.
That should be no surprise to the people in this room, who know that commitment to safety and continuous improvement is at the foundation of our industry’s culture.
Over decades, we have continually raised the bar on safety. By the time a 45-foot wall of seawater slammed into Fukushima last March, the safety profile of U.S. nuclear energy facilities had already advanced far beyond where it was in the 1970s.
The lesson from Fukushima is that a nuclear power plant must be prepared to handle extreme events simultaneously at multiple reactors, no matter the scenario.
As we heard earlier this morning, the industry’s approach creates a diverse, flexible means to maintain safety regardless of the challenge. And as we have done before, we are approaching this in a collaborative manner – leveraging expertise across all disciplines.
We have proposed a path forward that would meet the NRC’s 2016 deadline for completing this work.
To accomplish this, both the industry and the NRC must stay focused on the issues in the NRC’s Tier 1 recommendations.
It is vital that we close out the priority regulatory issues that existed before the Fukushima accident, as well as lessons learned from Japan.
We must recognize that there is a limit to the resources – both at our facilities and the NRC. We must maintain our focus on safe operation and not be diverted by secondary issues.
Finally, we must continue our efforts to communicate the importance of nuclear energy as part of diverse, balanced electricity portfolio.
These past 14 months since the Fukushima accident have tested the resolve of our industry. We’ve acted responsibly and with conviction to ensure that our nuclear energy facilities are safe.
Today, that commitment to continuous improvement remains strong, including applying relevant lessons from Japan to America’s industry.
Together, we are much more effective in setting the industry’s course for safety, policy and regulatory goals, for public engagement and for creating opportunities for the future.
We have turned the corner on the Fukushima crisis from a public standpoint. Public confidence is rebounding.
Our policy leaders have been measured in their response. Our regulator has been responsive in purpose and deliberate in the process of developing requirements for improving safety.
Now these actions must be prioritized among all the regulatory issues so as not to distract from the safe operation of our facilities.
Despite the resilience our industry has demonstrated, some question the future of nuclear energy and downplay its role in our nation’s long-range planning.
But such thinking sells our industry short.
The late Peter Drucker once said that “long-range planning does not deal with future decisions, but with the future of present decisions.”
In today’s world of rampant ambiguity and perpetual whitewater, our industry can – and will – create a positive future by our present choices.
We will choose every day to focus on safety first.
We will choose to nurture innovative thinking that delivers economic value.
And we will choose to work together for a coherent regulatory and policy framework that is focused on the issues that matter most.
I am confident that present choices such as these will enable nuclear energy to fulfill its enormous potential at home and abroad.
This strategic agenda will lead to a stronger and even safer nuclear industry – one that fosters the expansion of nuclear energy, powers America’s economic growth and sustains our environment.
Thank you for your active role in creating this future.