Public Policy

Mr. Chairman.  Thank you and the Members of the Conference for your strong support of nuclear energy.

The decision by individual utilities on whether or not to build new nuclear generation is determined by their forecast of demand for carbon-free, base-load generation.

Those forecasts vary from company to company.  But I will begin today with some of the data that informs those forecasts.

The EIA estimates that U.S. electricity generation capacity will need to increase by 21 percent by 2030.

While it is impossible to forecast if, when, or how carbon may be regulated, the proposed House legislation includes a 42 percent greenhouse gas reduction target for 2030.

The Electric Power Research Institute has conducted a study generally consistent with those two parameters.  That study suggests that to achieve a 45 percent reduction in greenhouse gas emissions by 2030 we will need to deploy all available low/non-emitting generation technologies in addition to implementing energy efficiency and conservation programs.

The EPRI model suggests that the additional nuclear capacity should be 64,000 MW, which equates to 40 to 55 new nuclear plants depending on the designs being adopted.  This would require another 20 new nuclear project announcements in the next ten years in addition to the announcements for 26 reactors to date.

There are important variables and differences in this and other forecasts.  For example, the EIA analysis that concludes generation will increase 21 percent by 2030 assumes electricity demand will grow at 1.05 percent/year.  On the other hand, the EPRI analysis assumes faster adoption of efficiency and conservation programs, and so it assumes a peak electricity growth rate of 0.75 percent.

The bottom line is that these are models based on assumptions that are subject to change, and so it is difficult to predict the rate at which nuclear power plants or any other form of electricity generation will be deployed over the next 21 years.

But assuming the EIA and EPRI models as a base, the U.S. will need to build 45 new reactors by 2030.  The biggest challenge in that regard will be financing those projects each of which is forecast to cost 6 to 8 or more billion dollars.

In general, U.S. utility companies are not large enough to finance these projects using traditional utility financing schemes – a 50:50 debt:equity structure.

However, there are steps that can be taken to address that challenge.

A number of projects that are regulated by public utility commissioners will be financed using the Construction Work-in-Progress (CWIP) approach in which a company is permitted to recover part of the cost before the plant goes on-line, a concept that is similar to putting a larger down payment on a house.  Such an approach is estimated to result in long-term savings to the consumer of 25 percent.

The DOE loan guarantee program could also significantly reduce interest costs on new plants, making it possible for utilities to order plants, reducing long-term costs to consumers.

It is for that reason that NEI strongly supports reform of the DOE’s Title XVII loan guarantee program and proposals such as the authorization of a Clean Energy Deployment Administration.

It is important to understand the economic significance of constructing 45 nuclear plants.  That effort will generate up to 82,800 construction jobs (with peak employment at 128,800).

These jobs include skilled trades such as welders, pipefitters, masons, carpenters, millwrights, sheet metal workers, electricians, ironworkers, heavy equipment operators, insulators, engineers, project managers, and construction supervisors.

Once built, these 45 plants will generate up to 32,200 high paying permanent fulltime jobs in rural counties where the plants are located.

Each year, each new reactor will generate approximately $430 million in expenditures for goods, services and labor, and through subsequent spending because of the presence of the plant and its employees.

The average nuclear plants also contributes more than $20 million annually to state and local tax revenue, benefiting schools, roads and other state and local infrastructure.  By 2030 these 45 new nuclear plants will be generating over $3.3 billion in annual revenue to the federal government.

Since 1985 there has been approximately an 80 percent reduction in the number of nuclear qualified suppliers and manufacturers in the US.  The industry is taking steps to rekindle interest in the nuclear supply chain based on the new nuclear build programs.  We are holding workshops around the country to make companies aware of the potential opportunities. 

45 new nuclear plants will require approximately:

• 65,000 nuclear grade valves,
• 8,000 pumps,
• Between 180 and 900 miles of nuclear grade piping depending on the designs,
• 18 million cubic yards of concrete,
• 3 million tons of structural and reinforcing steel and
• 11,000 miles of control and power cabling.

Mr. Chairman, I know that Senator Alexander and others have called for the construction of 100 nuclear power plants by 2030, and there are scenarios in which that may be necessary and possible.

EPA models of some climate legislation indicate that to achieve an 80 percent reduction in greenhouse gas emissions by 2050 nuclear energy will need to provide 1.9 trillion kilowatt-hours of generation per year.

That is 2.4 times as much electricity as generated last year by the current 104 plants and would require 245 plants of today’s sizes.

Keep in mind also that beginning in the 2030s, a number of the existing plants will have operated for 60 years and will begin decommissioning, although it may be possible that some would receive license extensions for an additional 20 years.

We have analyzed this and similar scenarios and it is possible that 100 additional new nuclear plants could be in operation, under construction or in the licensing process in 2030.

This would require starting the licensing and eventually the construction on five to seven new nuclear power plants a year starting in 2012.

That construction rate was achieved in the 1970s but would require additional action to address the same issues I listed previously when discussing the 45 plant scenario.

Financing would be an even greater challenge if companies had more plants under construction at the same time.  We would need more licensing and construction managers.  We would need a bigger supply chain, and we would need a very disciplined licensing process.

Let me spend a minute on the licensing process.

Under the existing, new licensing process the initial licensing is taking at least six years.  Two years to prepare the application and a four-year NRC review.

We believe that this process can be reduced to three years; one year preparation and two year NRC review including a hearing, assuming the industry maintains a high level of standardization within the designs and the NRC’s Design Centered Review Approach works as designed. 

But, to achieve this scale of improvement will require a close look at the subsidiary licensing processes, such as the environmental review.  For example, if an early site permit, which requires a full environmental review and impact statement, is issued and the license application is submitted within days or even weeks it should not take 28 months to complete the environmental review for the license.

Mr. Chairman, let me close with a brief discussion of the current Yucca Mountain situation.

First, all credible scientific evidence to date suggests that Yucca Mountain is suitable to serve as a geologic repository for spent fuel.

But it is clear that due to political commitments the President made during the campaign, the administration may not support opening the Yucca Mountain repository even if it receives a license from the Nuclear Regulatory Commission.

Given that the Nuclear Waste Policy Act remains the law of the land, and recognizing the legal and moral obligation that the government has to fulfill its responsibility under that law, the industry believes the NRC’s review of the Yucca Mountain license application should continue.

In parallel, the administration should convene an independent panel of the best scientific, environmental, engineering and public policy leaders to fully investigate the critical issues and make a recommendation to President Obama and Congress on how best to proceed with managing used nuclear fuel.

Given the clear need for expansion of nuclear energy programs in the United States and worldwide, the nuclear industry proposed two years ago that our nation should revisit the decision to use a once-through fuel cycle and instead pursue a closed fuel cycle that includes recycling. This integrated approach includes at-reactor storage, private sector or government-owned centralized storage, research and development on recycling technology and continued development and licensing of a federal repository.

If the administration unilaterally decides to abandon the Yucca Mountain project without enacting new legislation to modify or replace existing law, it should expect a new wave of lawsuits seeking further damage payments as well as likely requests for refunding of at least $22 billion already collected from consumers that has not been spent on the program from the Nuclear Waste Fund. Further, given the uncertain path forward for the Yucca Mountain project and the difficult economic times facing American families and businesses, Energy Secretary Steven Chu should reduce the fee paid by consumers to cover only licensing costs incurred by DOE, NRC and local Nevada government units that provide oversight of the program.

Mr. Chairman, that concludes my prepared remarks, and I am certainly available for questions.