Public Policy

Chairman Bingaman, Ranking Member Murkowski, and distinguished members of the Senate Energy and Natural Resources Committee, I am Marvin Fertel, Senior Vice President of the Nuclear Energy Institute. I am pleased to have this opportunity to testify regarding the provisions in the Nuclear Energy Electricity Supply Assurance Act of 2001 (S. 472), legislation to require the Department of Energy to study the feasibility of developing nuclear power plants at existing DOE sites (S. 919), and legislation to amend titles X and XI of the Energy Policy Act of 1992 (S. 1147). Together, these provisions promote a robust future for nuclear energy in the United States. 

The Nuclear Energy Institute (NEI) is the Washington, D.C.-based policy organization for the nuclear industry. NEI coordinates public policy on issues affecting the nuclear energy industry, including federal regulations that help ensure a safe and robust future for our industry. NEI represents nearly 275 companies, including every U.S. utility licensed to operate a commercial nuclear reactor, their suppliers, fuel fabrication facilities, architectural and engineering firms, labor and law firms, radiopharmaceutical companies, research laboratories, universities and international nuclear organizations.

The nuclear energy industry commends you, Mr. Chairman, Ranking Member Murkowski, and the members of this committee, for the strong bipartisan support you have demonstrated toward ensuring the American people continue to have the energy security and environmental benefits associated with the use of nuclear energy in the United States. The provisions in this comprehensive energy legislation related to nuclear energy that we are discussing today are a critical component of that support.
 
Electricity: Will We Have Enough?
Today, America’s 103 nuclear power plants are the safest, most efficient and most reliable in the world.  Nuclear energy is the second largest source of electricity in the United States, and our largest source of emission-free electricity generation.  The industry last year achieved record levels of safety, reliability, efficiency and electricity production.  In our view, increasing nuclear energy’s contribution to U.S. electricity supply is not an option. It is essential to sustain economic growth, meet the electricity needs of our growing population, improve our quality of life, and satisfy our nation’s clean air and environmental goals.

U.S. electricity demand grew by 2.2 percent a year on average during the 1990s, and increased by 2.6 percent in 2000.  Even if demand grows by a modest 1.8 percent annually over the next two decades—as forecasted by the U.S. Energy Information Administration—the nation will need nearly 400,000 megawatts of new electric generating capacity, including replacement of power plants that will close during that time. This capacity is the equivalent of building about 800 new mid-size (500-megawatt) power plants—or 40 new plants every year for the next 20 years. New nuclear energy plants should account for a portion of this new capacity.

In California, shortages of electric generating capacity and rising natural gas prices have contributed to skyrocketing consumer electricity rates, the bankruptcy of one major electric company, and blackouts affecting millions of people and thousands of businesses—all at a cost of billions of dollars. Electricity shortages are also forecast for other regions of the country during the next few years.

To satisfy growing electricity demand, and ensure that nuclear energy is available as needed, the U.S. nuclear industry is implementing a three-part program:

• maintaining the contribution from its existing plants through license renewal;
• expanding the output from the existing nuclear units by continuing to improve efficiency and reliability, and by investing the capital required to increase the rated capacity of the units; and
• laying the groundwork for construction of new nuclear plants.
  

Many of the nation’s largest nuclear generating companies and suppliers, working with NEI, are implementing a broad-based plan to create the business conditions necessary for construction of new nuclear power plants. The plan includes: (1) a number of initiatives to reduce the initial capital cost of new nuclear power plants; (2) programs to create a stable licensing regime and reduce regulatory uncertainties, and (3) a series of initiatives to build support for new nuclear power plants among policymakers, the media and local communities around prospective sites for new nuclear power plants.

The companies intent on starting construction of new nuclear power plants in the United States within the next five years are doing so because new nuclear capacity represents a solid business opportunity. For an electricity generating company, new nuclear power capacity represents:

• a reliable source of electricity with low “going-forward” or “dispatch” costs;
• a high level of forward price stability and protection against the fuel price volatility that impacts gas-fired power plants; and
• protection against possible escalation in environmental requirements imposed on fossil-fueled power plants.  For companies already operating coal-fired or gas-fired power plants, new nuclear capacity reduces the cost of clean air compliance that might otherwise be imposed on that coal- and gas-fired capacity.
  

Rising energy prices topped the list of economic concerns voice by Americans in a February Wall Street Journal/NBC survey. Eighty-six percent of Americans agree that the country faces an energy problem, and they ranked energy prices as a more pressing concern than federal taxes and the budget. One-third said the United States faces an energy crisis, and more than one-half see rising energy costs as a problem.

Today, nuclear energy supplies electricity to one of every five homes in the country, at production costs that are cheaper than coal, natural gas and oil-fired power plants. Increased efficiency, and therefore greater production, at the nation’s 103 nuclear power reactors during the past decade, has met 22 percent of all new electricity demand during that time. Importantly, this electricity is generated without producing any air pollution or greenhouse gases.

If we are to responsibly meet our nation’s soaring demand for electricity while maintaining clean and safe supplies of air, nuclear energy must continue to be an important part of our nation’s energy mix. The industry is taking steps to ensure that nuclear energy remains a vital part of our country’s electricity portfolio. We commend this committee for its foresight that nuclear energy must be a significant component of a comprehensive energy plan for our future.

I will address the nuclear energy issues in the Committee’s draft energy policy by topic.

New Nuclear Power Plants
The industry is committed to building new nuclear power plants to meet growing electricity demand during the next 20 years. In that context, the industry supports provisions in S. 919 that would study the feasibility of building new nuclear power plants at existing Department of Energy sites.

The industry supports Section 106 of S. 388, which is mirrored in Section 130 of  S. 472, and would require the Nuclear Regulatory Commission to report to Congress on the state of nuclear power generation in the United States. The industry believes that its outstanding record of safety and performance would garner greater support in Congress—as it has in this Committee—for building advanced reactor designs as part of a balanced energy portfolio to serve Americans in the decades to come. This section also would require the NRC to assess its ability to extend the operating licenses of existing nuclear power plants and to license new nuclear plants. This information will be helpful to the NRC, Congress and other interested stakeholders in assessing the certainty of the new NRC licensing process.

Like the industry, the Department of Energy has been looking at issues related to new nuclear power plant construction in the United States. The legislation directs the Energy Department to undertake a number of initiatives, including examining the near-term prospects for completing reactors that are partially built and the long-term possibilities for building emerging reactor technology.

The Secretary of Energy would, under Section 202 of S. 472, be directed to study the feasibility of completing and operating unfinished commercial nuclear power plants. The industry believes that completion and eventual operation of unfinished commercial reactors can be done safely and economically. We also believe it will provide a much-needed bridge of electricity between today’s nuclear power plants and the facilities we will build in the near future to meet the nation’s growing energy needs.

In addition to the Energy Department’s role in studying the feasibility of completing unfinished nuclear power plants, the department would initiate a government/private partnership to demonstrate the NRC’s early site permitting process, which has part of the nuclear plant licensing reforms passed in the Energy Policy Act of 1992. The nuclear energy industry views early site permitting as one of the most important steps along the path to building new nuclear power plants. We support this provision because it helps electric companies test a process to “bank” approved sites, making the companies much more nimble in responding to the emergence of business conditions that are favorable to building new nuclear power plants.

S. 919 would require the Energy Secretary to conduct a study to determine the feasibility of building commercial nuclear power plants at existing DOE facilities. This study would provide valuable input to those private sector and/or government entities that might be considering building new nuclear power plants in the future.

To its credit, DOE has launched a project to prepare a technology roadmap for developing the next generation nuclear plants, called Generation IV. The industry is working cooperatively with the Energy Department in this projects and supports Section 204 of S. 472 that directs the Secretary of Energy to study Generation IV nuclear power systems. Similarly, the industry supports Section 205 of the bill, which requires the NRC to develop a research program to support resolution of potential licensing issues associated with new nuclear reactor technology and concepts that could be incorporated into current reactor designs. However, the NRC should avoid duplication among other federal agencies and the industry in its research efforts, and funding for the agency’s research should be separate from industry user fees where appropriate.

Used Fuel Management Issues
The nuclear energy industry also supports Section 107 of S. 388, which establishes the Office of Spent Nuclear Fuel Research within the Department of Energy’s Office of Nuclear Energy Science and Technology.

The used nuclear fuel repository program—including the Department of Energy’s commitment to forward a formal decision on the site suitability of Yucca Mountain to the president this year—is the foundation of our national policy for managing used nuclear fuel. In addition, the nuclear industry recognizes the value in researching future used fuel management technologies. The farsighted research and development programs that the new Office of Spent Nuclear Fuel Research will conduct will allow our nation to remain the world leader in nuclear technologies. However, it is important to note that even technologies like transmutation—the conversion of used nuclear fuel into less toxic materials—require a repository for disposal of the radioactive byproducts generated from the process.

Nuclear Energy Is An Environmentally Preferable Product
In his recent address on climate change, President Bush made a critical observation regarding the path forward on climate change, stating: “There are only two ways to stabilize concentration of greenhouse gases. One is to avoid emitting them in the first place; the other is to try to capture them after they're created.” This framework builds on our historical success with combining pollution avoidance and end-of-the-pipe controls in addressing other potentially harmful air emissions from power generation.

As early as 1969, the Department of the Interior listed increased use of nuclear energy as one of 11 methods to control sulfur dioxide emissions. Since then, the advent of nuclear energy has been a major component of achieving domestic air quality goals.

For example, from 1975 to 1990, generating electricity at nuclear plants instead of fossil-fueled alternatives avoided more tons of nitrogen oxide than were eliminated through controls under the Clean Air Act. In 2000 alone, nuclear plants avoided more than 4 million tons of sulfur dioxide, nearly 2 million tons of nitrogen oxides, and 174 million metric tons of carbon equivalent.

Without today’s nuclear energy production—which generates 20 percent of our electricity and two-thirds of all emission-free electricity—the difference between U.S. greenhouse gas emission levels and our 1990 baseline established in the Framework Convention on Climate Change would double.

Sections 301, 302 and 304 of S. 472 appropriately recognize the environmental contributions of nuclear energy. First, Section 301 provides that electricity generated by a nuclear power plant “shall be considered to be an environmentally preferable product” for the purposes of Executive Order 13101, which encourages federal agencies to use environmentally preferable products.  The industry believes this is an important first step in a broad affirmation of nuclear energy’s role in environmental protection.

Section 302 of S. 472 mirrors language in Senator Frank Murkowski’s recent legislation that recognizes nuclear energy’s demonstrated role in improving our nation’s air quality. This section modifies the current definition of “emission-free electricity source” to include “a facility that generates electricity using nuclear fuel that meets all applicable standards for radiological emissions under Section 112 of the Clean Air Act.” The industry supports this provision because it recognizes that continued operation of an emission-free electricity source or improved availability of the facility is considered a pollution control measure, and therefore is eligible for incentive programs for control measures, such as emission trading, loan funds, and tax benefits.

The industry also supports Section 304, which would prohibit the use of federal funds to support domestic or international organizations, such as the World Bank, International Monetary Fund and the Export-Import Bank, engaged in financing or developing power plants if the activities do not include nuclear power projects.

Uranium Supply
A strength of our nation’s nuclear energy program is the low cost of producing electricity at nuclear power plants and the stable forward pricing of electricity produced by nuclear power plants. The importance of this price stability was evident last year as sharp increases in natural gas prices resulted in significant increases in the price of electricity across the United States. The availability of a long-term, reliable and competitive fuel supply is a critical factor in achieving the excellent economic performance at nuclear power plants.

In that regard, the industry supports sections 128 and 129 of S. 472. Both of these provisions act to provide contingencies in the event of undesirable supply problems affecting the domestic conversion and enrichment sections of the nuclear fuel supply chain. The industry also supports section 126 of S. 472, but suggests that a more comprehensive approach establishing a broad framework for disposition of uranium by the Department of Energy be considered. The industry will forward specific changes regarding this provision to the Committee.

The industry also supports the federal government’s commitment to appropriately reimburse Kerr-McGee Chemical LLC for the federal share of cleaning the West Chicago thorium site as stated in Section 1 (a) of S. 1147. However, any increase in funding for this effort should not come at the expense of taking funds from the portion of the Uranium Enrichment Decontamination and Decommissioning Fund that is allocated for cleanup of the gaseous diffusion plants.

Conclusion
One need only look at the current energy situation in the United States, marked by thinning capacity margins and volatile prices for fossil fuels, to understand why nuclear energy is so important to our nation's energy mix.

In the future, as electricity demand continues to rise, nuclear energy will be even more important to American consumers, and to our nation's economy as a whole. Our nation's nuclear energy industry has proven over the past two decades that nuclear energy is a safe, reliable, and efficient source of electricity for our nation's economic growth. It plays a significant role in many of the states represented on this Committee, providing both electricity to power economic growth and clean air benefits that protect both our environment and our health.

Federal Reserve Chairman Alan Greenspan, in a speech before the Economic Club of Chicago in June, said that nuclear energy is “an obvious major alternative” for electricity to production in the United States. “Given the steps that have been taken over the years to make nuclear energy safer and the obvious environmental advantages it has in terms of reducing emissions, the time may have come to consider whether we can overcome the impediments to tapping the potential more fully.”

I commend the members of this Committee for having the foresight for taking this important step to tap the incredible potential that nuclear energy offers the nation and its citizens. I urge you to continue to support nuclear energy as a critical part of the United States’ diverse energy policy as you move forward with this important legislation.