Public Policy

On behalf of the nuclear energy industry, the Nuclear Energy Institute (NEI)  appreciates the opportunity to provide the subcommittee with its perspective on the nuclear energy-related programs under the subcommittee’s jurisdiction, and on the President’s proposed budget for those programs in Fiscal Year 2009 (FY09).

NEI supports FY09 funding for the following DOE programs:  the Innovative Technology Loan Guarantee Program Office ($19.8 million), Nuclear Power 2010 Program ($241.6 million), Office of Radioactive Waste Management ($494.7 million), Advanced Fuel Cycle Initiative ($302 million), Generation IV Program ($220 million), Nuclear Hydrogen Initiative ($28 million), Research Reactor Infrastructure ($10 million), and the Advanced Test Reactor User Facility ($10 million). NEI also supports the Nuclear Regulatory Commission budget ($1.017 billion) but would encourage improved efficiency in processing new plant applications.

The 104 commercial reactors operating in 31 states provide more than 70 percent of all U.S. electricity that comes from sources that do not emit greenhouse gases or controlled pollutants covered by the Clean Air Act.

U.S. nuclear power plants in 2007 posted an all-time record high in electricity production according to preliminary data.  U.S. nuclear plants generated approximately 807 billion kilowatt-hours (kWh) of electricity last year, exceeding by more than two percent the previous record-high of 788.5 billion kWh of electricity set in 2004. Nuclear energy generates nearly 20 percent of the total U.S. electricity supply, even though nuclear power plants constitute only 10 percent of installed generating capacity.

Nuclear plants also achieved a record-setting average capacity factor—a standard measure of a power plant’s availability. The 2007 industry average of 91.8 percent surpassed the 2004 record of 90.1 percent, according to preliminary figures.

NEI’s statement for the record addresses the industry’s highest policy priorities.  In several cases, NEI believes America’s energy security and environmental imperatives justify increases in FY09 funding above the President’s request.

Innovative Technologies Loan Guarantee Program.  Business conditions in the electric power sector are challenging.  The power industry must invest approximately $1 trillion by 2020 to upgrade and expand the U.S. electricity infrastructure – new power plants, efficiency programs, transmission and distribution, environmental control technology – at a time when input costs are increasing dramatically.

A recent assessment by the Brattle Group found that, between 2004 and January 2007, the cost of power plants, transmission projects and distribution equipment rose by 25-35 percent, compared to an 8 percent increase in the GDP deflator.  The cost of gas turbines was up by 17 percent in 2006 alone.  Prices for wind turbines were up by more than $400/kWe between 2002 and 2006.  The price of iron ore has gone up by 60 percent between 2003 and 2006, and for steel scrap by 150 percent.  Aluminum prices doubled between 2003 and 2006, and copper prices almost quadrupled.  These cost increases impact all new generating capacity – nuclear, coal-fired, gas-fired and renewables.

Corporate decisions to proceed with new electric generating projects – particularly the capital-intensive baseload nuclear and coal-fired power plants – are difficult, given the major challenges associated with bringing such a venture to completion on schedule and within budget.  New nuclear plants, especially, are capital-intensive with total project costs of $5 billion to $7 billion, including interest during construction.   The size of this capital investment is very large relative to the size of the companies making the investments, and the loan guarantee program provides the credit support necessary to finance these new plants. 

The clean energy loan guarantee program created by the 2005 Energy Policy Act is essential for companies planning investments in the electricity infrastructure.  NEI supports the DOE proposal in the FY09 budget to extend the loan guarantee program authorization to 2010 for uranium enrichment, coal based power, advanced coal gasification, renewables and electricity delivery and to 2011 for nuclear power facilities with a total loan volume limitation for all of $38.5 billion.  Given the capital investment required in the electric sector, and the rising cost of new electric generating facilities, additional loan volume will be required in the coming years to support the number of new plants currently projected.  We urge Congress to support the Department of Energy’s request for $19.8 million to cover the program’s administrative costs in FY09, which will result in a net zero appropriation given offsetting collections from loan applicants.  The loan guarantee program is designed to be self-financing, with project sponsors responsible for underwriting the cost to the federal government of providing the credit support.  Properly implemented, there will be no cost to the taxpayer.

The nuclear industry firmly supported the subcommittee’s conviction that DOE needed to define workable regulations, and select an experienced management team to organize, manage and operate the Loan Guarantee Office.  We believe that has happened.  DOE must now submit its implementation plan to Congress for the 45-day period required by law before it can issue a solicitation, which will specify the award levels and eligible technologies.  We expect DOE to release its plan shortly so that companies may begin to apply for loan guarantees this year. 

Progress in the Nuclear Power 2010 Program.  Five applications for combined construction permits and operating licenses (COLAs) were filed with the Nuclear Regulatory Commission (NRC) in 2007.  Two additional COLAs have been filed so far in 2008 and the industry expects six additional applications this year, for a total of up to 15 new nuclear plant license applications by the end of the year.

The announcements include Dominion and the 10 utility members of NuStart, the industry consortium established to implement the Nuclear Power 2010 (NP2010) objectives. This progress does not suggest that the work of NP2010 is complete, but rather amplifies the need for its continued funding.  Embedded in each announcement for either an AP1000 or ESBWR new plant is the assumption that the NP2010 work will be completed as planned.

The NP2010 program has two fundamental objectives: 1) to demonstrate the regulatory process for licensing new plants and 2) to complete the final design for the selected technologies – the Westinghouse AP1000 reactor and the GE-Hitachi ESBWR.

The reference COLAs for the two NP2010 technologies were submitted on schedule.  The AP1000 application for the Tennessee Valley Authority Bellefonte site was submitted in October 2007, and the ESBWR application for the Dominion North Anna site was submitted in November 2007.  In FY09, DOE-industry work under the NP2010 program will directly support timely NRC review of these two applications.  Given the commitment to standardization by the industry, these reference reviews will also be applicable to the other companies that intend to use one of these two advanced reactor designs and will reduce the cost to consumers of electricity from those projects. 

The NP2010 program funds all phases of design completion from design certification to the first-of-a-kind engineering.  The AP1000 design has already received NRC design certification through the NP2010 program.  In FY09, DOE plans to fund continued work with the NRC on issuance of the safety evaluation report for the design certification of the EBSWR.  In addition, DOE plans to accelerate completion of the first-of-a-kind engineering for the AP1000 and EBSWR.  The requested increase in NP2010 funding is needed to enable the reactor vendors to complete the selected designs.  In FY09, DOE’s work with industry will lead to final NRC review of these reference applications.

While the funding for the NP2010 program is shared equally by government and industry, the government investment in the program has been used to spur numerous additional new plant projects.  Congressional support for DOE’s FY09 NP2010 proposed budget of $241.6 million is the industry’s highest priority for deliverable reactor development.

Ensuring Adequate Funding for the Nuclear Regulatory Commission and Oversight.  The industry supports NRC’s FY09 budget request of $1.017 billion to provide effective oversight of operating nuclear plants, timely processing of applications for license renewal and requests for power uprates. 

Given the increase in the NRC’s budget – over $300 million in the last two years – NEI urges the subcommittee to review regular progress reports from the agency on the status of its licensing and other regulatory activities.  The industry also urges the subcommittee to expect greater transparency in NRC budgeting by seeking full disclosure of planned staffing and resource needs in individual NRC divisions.  This would demonstrate to Congress and the industry, which pays up to 90 percent of NRC’s budget that more of the requested budget is being allocated toward licensee-specific charges rather than general license fees.

The nuclear energy industry fully supports NRC’s $37.3 million request from the Nuclear Waste Fund for Yucca Mountain licensing review activities.  The NRC, however, should complete the “acceptance review” of the Yucca Mountain application for a construction permit – and docket it if acceptable – no later than 90 days after it is received from DOE.

Supporting an Integrated Used Fuel Management Program.  The repository program is a key component of industry’s three-part integrated used fuel management strategy that includes:
1.    interim storage at volunteer locations;
2.    research, development and demonstration to close the nuclear fuel cycle to reduce the volume, heat and toxicity of byproducts placed in the repository and to reclaim some 90 percent of the energy that remains in the fuel after one use in a reactor; and, 
3.    development of a national geologic repository. 
Continued, demonstrable progress on all three elements of this strategy is important to preserve public confidence in nuclear energy, and to support building new nuclear plants.

Regardless of what advanced technology is developed to close the nuclear fuel cycle, a national repository will be needed to dispose of the by-products.  DOE expects to submit its license application for the repository to the NRC by June 2008.  The nuclear industry supports the Administration’s proposed FY09 budget of $494.5 million to support the NRC license application for the Yucca Mountain project and to continue to develop the disposal system.

The nuclear industry has consistently supported research and development of the advanced fuel cycle technologies incorporated in the Advanced Fuel Cycle Initiative (AFCI).  Consistent with the integrated used fuel strategy, the industry supports the President’s request of $302 million for the Advanced Fuel Cycle Initiative in FY09 to continue this technology research and development program, and supports private sector partnerships to achieve better definition of the program, which is critical to a long-term integrated strategy for used fuel management.

Deployment of Advanced Reactor Technologies.  NEI supports funding of $248 million for deployment of Advanced Reactor Technologies of which $220 million in government funding would be appropriated for the Generation IV (GEN IV) program in FY09.  Within GEN IV, $210 million would be allocated for the Next Generation Nuclear Plant (NGNP) and $10 million would be committed to a new initiative on metals science and addressing issues of materials performance in reactor systems including high-temperature reactors recommended by the Idaho National Laboratory (INL) –Electric Power Research Institute strategic plan. 

The NGNP is a congressionally authorized program that entails the development, licensing and deployment of an advanced high-temperature gas reactor (HGTR) at INL and other U.S. laboratories in partnership with industry. The HTGR technology can displace the use of premium hydrocarbon fuels such as natural gas for producing process heat, thus providing enhanced energy security, more stable energy prices and improved economics and improved use of finite hydrocarbon resources.  Such a transition would also result in minimal greenhouse gas emissions throughout the nuclear energy system life cycle.  Industry and the INL are working together to have the prototype nuclear energy system operational around the end of the next decade.  This involves a development, design, licensing and construction schedule that is more aggressive than envisioned in the Energy Policy Act of 2005 and would require an increase in DOE funding of $150 million for FY09 above the President’s request of $60 million.

NEI also recommends funding for the Nuclear Hydrogen Initiative (NHI) – $28 million in FY09.  The NGNP potential for hydrogen generation and the potential to couple hydrogen generation with advanced light water reactors is being coordinated and optimized under this program. 

Workforce and Infrastructure.  Investment in people and infrastructure needed for new nuclear plants is as important as investment in the technology itself.  The FY08 Omnibus Appropriations Act included $15 million for a university program at the NRC.  Although the industry strongly supports similar government funding for FY09, it believes that this fellowship and scholarship program for the nation’s most promising engineering students – many of which will find jobs in government and the national labs – should be included in DOE’s Office of Science for administration and oversight, thereby allowing NRC to remain a pure regulatory agency.  If this program remains in the NRC, the funding should be appropriated and not included as part of the NRC budget that is paid for by industry user fees.  NEI also encourages the subcommittee to support an additional program within the Office of Science authorized by the America Competes Act for undergraduate and graduate programs in radiochemistry, health physics and other disciplines important to medical, energy and other applications of commercial nuclear technology.

The nuclear industry also urges the subcommittee to support DOE’s request to designate up to
20 percent of funds appropriated to its nuclear energy R&D programs AFCI and NHI for research work at universities. 

NEI recommends increasing FY09 funds for the Research Reactor Infrastructure program from $3.7 million to $10 million for new fuel and shipping containers, reactor instrumentation and upgrades, and used fuel services.  Industry also supports providing the Advanced Test Reactor User Facility at INL an increase from $2.5 million to $10 million in FY09 to improve the capability of the facility for research on the behavior nuclear fuels and materials by users from DOE, industry and universities.

Legacy Management.  There is a growing body of evidence that suggests increased near-term investment will be needed to create a sustainable energy infrastructure that meets our national needs. This funding will be needed for DOE programs for clean up at DOE sites and former uranium enrichment facilities, non-proliferation programs including MOX, and national lab facilities.  Within the Office of Nuclear Energy, DOE has requested $487 million for the MOX program and another $260 million for research infrastructure and safe operation of lab facilities.  NEI urges Congress to support these important initiatives in FY09.