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USEA Briefing, Marvin S. Fertel, Jan. 16, 2014

 

USEA Briefing

Marvin S. Fertel

President and CEO

Nuclear Energy Institute

National Press Club

Jan. 16, 2014

 

A common thread in much of the conversation today and over the past week has been the reliability of the electric grid. That reliability—as well as affordability of electricity—has been founded on a system that relies on an “all of the above” strategy.

The polar vortex is just the most recent reminder that the reliability of our electricity infrastructure is critical and at times at risk. And while most of these challenges to the system are storm-related, there could be a time in the near future when interruptions in our reliable electric supply are more frequent and a drag on our economy.

We can’t let that happen.

I expect you will hear that message during the electric power panel discussion later this afternoon.

Diversity in technology and fuel supply and continued investment in the grid and environmental control technologies are prerequisites for the successful transition of our electric sector over the next two decades.

In the past year, our industry has closed four reactors and another will shut down this year. Although two of the shutdowns were economic decisions based on technical and regulatory issues at the plants, the other two—Kewaunee and Vermont Yankee—have been efficient power producers that could still be operating if they were located in regulated states.

There is growing recognition that short-term decision-making—based at times on imperfect market dynamics—could undermine our long-term electricity supply and commitment to fuel diversity in the electric sector.

Short-term decision-making on power production—particularly at it affects base load electricity sources—has consequences.

In California, greenhouse gas emissions from power plants increased by 35 percent in 2012, in large part due to the early closure of the San Onofre nuclear power plant.

In Florida, natural gas-fueled power plants now produce 60 percent of the state’s electricity, and policymakers are concerned that the state is heading toward overreliance on a single fuel.

We should also learn from experiences elsewhere in the world.

In Germany, the government is phasing out nuclear energy in favor of what the Economist calls an “unruly, subsidy-fed explosion of wind, solar and biomass power.” As they make this transition, Germany’s dependence on fossil fuels is rising along with consumer electricity prices.

Due to the costs this energy transformation, Germany now has Europe's highest energy costs. Costs have risen over the last 5 years—even for industrial consumers that until recently were exempted from the renewable energy fee that consumers pay. In 2013, electricity was 4 times cheaper in the United States than in Europe, and 6 times cheaper than in Germany.

We believe and expect that nuclear energy must continue to be one of the base load power sources that drive economic expansion, certainty and affordability of electric supply for consumers, and the shift to a lower-emissions portfolio in the energy sector.

Eight in 10 Americans believe that America’s energy policy makers and electric companies should be planning at least 10 years ahead to ensure a well-balanced energy supply in the future, and majorities believe they should be planning 20 years ahead, polling by Bisconti Research and Quest Global Research found in September.

Eighty-two percent believe that nuclear energy will play an important role in meeting America’s future electricity needs, and nearly half of those say that role will be “very important.”

Not surprisingly then, 75 percent believe that electric utilities should prepare now so that new nuclear power plants could be built if needed in the next decade. And 61 percent believe that “we should definitely build more nuclear power plants in the future.”

Here’s why.

Nuclear energy has a wide-ranging value proposition.

Nuclear energy:

  • produces large amounts of electricity at industry-leading reliability and efficiency levels
  • is affordable and has forward price stability that will be important has our economy continues to bounce back
  • provides nearly two-thirds of all carbon-free electricity
  • maintains grid stability through voltage support
  • contributes to the fuel and technology diversity that is one of the bedrock characteristics of a reliable and resilient electric sector.
  • is an economic driver through high-paying jobs and taxes in the communities and states where they are located.

Recognizing this value proposition, most companies have renewed their NRC operating licenses for an additional 20 years of operation.  Seventy-three reactors already have met the NRC’s criteria for license renewal, and the agency is reviewing applications for renewal of 18 others.

So, given this value statement, let me summarize the state of the nuclear industry as we enter 2014.

America’s nuclear power plants continue to perform extremely well—with an average capacity factor of about 89 percent and generated nearly 800 billion kilowatt-hours of electricity in 2013. Our industry invested $8.5 billion in our plants in 2012 to sustain those high levels of safety and reliability.

We’ve seen action by the courts and promising signs of political will to look anew at developing a workable management structure for used nuclear fuel. This has never been a technical challenge, rather an intractable policy because of political differences in Nevada and within the Congress.

We believe the best approach is to move uranium fuel from plant sites to one or more consolidated storage facilities at volunteer sites while continuing work on a federal repository—all work that should be performed under a new management structure.

We’re responding effectively and efficiently to the lessons learned from the 2011 Fukushima accident, and we are well along with implementing our FLEX initiative. Through this industrywide approach, we are adding more portable, backup safety equipment at each plant so that we can respond to extreme natural events, regardless of the cause. We are continuing to work with the NRC on other near-term issues, such as ensuring that we can maintain safety against significant earthquakes and flooding.

Given the high safety performance of America’s nuclear power plants, as the Nuclear Regulatory Commission considers new regulatory requirements, it is vital that the agency produce smart and efficient regulation and demonstrate that these requirements will enhance safety. Given decades of additive regulation imposed on America’s reactors, we must take time to determine what regulation still is important, whether it results in safety value, and whether there are unintended consequences to the operations of our facilities.

Examining the cumulative impact of regulatory actions is a priority issue for the industry because of the potential safety implications. Regulation obviously plays an important role in the safety of our facilities, and the NRC has been a world leader in considering risk-informed or safety-focused regulation. Maintaining that focus is more important than ever.

On a very positive note, we’re almost halfway through a $30 billion- plus construction program at new nuclear energy facilities. TVA’s Watts Bar Unit 2 is scheduled to be completed late in 2015, and four new reactors under construction in Georgia and South Carolina are due on line in 2017 and 2018. Together, these projects will add more than 5,000 megawatts of electric capacity to the grid.

Looking forward, there is a new generation of small modular reactors coming along behind them, and we are working our way systematically through the licensing, design and operational issues.

An industry-DOE cost-shared program to develop the B&W mPower design and NuScale’s 45-megawatt reactor is designed to move these designs toward commercial markets in the post-2020 time frame.

Let me close with a few words about the nuclear energy export markets and why American leadership is so important in these markets.

The industry and the federal government have been working together to improve our nuclear export capability, so that American-based companies are better positioned to compete in world markets. These markets are growing and have a $740 billion potential over the next 10 years.

It is important that we succeed in this effort because U.S. exports of nuclear technology, equipment and services to these counties support tens of thousands of American jobs and billions of dollars in exports.

U.S. technology is the most advanced in the world, and while I’ll admit that I am biased, the operational safety culture at American reactors is the best in the world, and our regulator—the NRC—is the gold standard for nuclear safety regulation.

From a safety standpoint, a job creation and export perspective, and from a national security and nonproliferation perspective, significant and successful participation in the global market is in our national interest.

So, like my colleagues before me, we see significant opportunities as well as challenges as we look at this year and beyond.

Thank you for your attention, and I would be pleased to take your questions on these and other issues.