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March 19, 2010
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March 19, 2010
Marvin S. Fertel
President and Chief Executive Officer
Nuclear Energy Institute
U.S. House of Representatives
Appropriations Subcommittee on Energy and Water Development
March 19, 2010
Testimony for the Record
The Nuclear Energy Institute (NEI) supports Fiscal Year 2011 (FY11) funding for the following Department of Energy programs and the Nuclear Regulatory Commission:
Innovative Technology Loan Guarantee Program Office—$38 million for administrative expenses and $36 billion in new loan guarantee authority for nuclear power projects
Fuel Cycle Research and Development—$201 million
Reactor Concepts Research, Development and Demonstration—$195 million
Nuclear Energy Enabling Technologies—$99.3 million
Integrated University Program—$45 million
Advanced Test Reactor User Facility—$20 million
Idaho Facilities Management—$177.5 million
Radiological Facilities Management—$66.8 million
Environmental cleanup at DOE sites—$6 billion
Nuclear Regulatory Commission budget—$1 billion
NEI opposes the proposed $200 million annual tax on utilities to pay yet again for the decommissioning and decontamination fund at DOE uranium enrichment facilities.
America’s nuclear energy facilities in 2009 continued a decade of exemplary performance. Nuclear energy continues to surpass all other electricity sources with an industry average capacity factor of 90.5 percent. This reliability enabled the nation’s 104 reactors to produce approximately 800 billion kilowatt-hours of electricity—enough for about 80 million homes—at production costs lower than coal and natural gas-fired power plants. Nuclear power plants in 31 states generate more than 70 percent of the U.S. electricity that comes from carbon-free sources. NEI believes the budget proposed for DOE’s Office of Nuclear Energy is indicative of the administration’s belief that nuclear energy is essential to America’s future electricity supply, energy security and greenhouse gas emission reduction goals.
Uranium Enrichment D&D Fund Tax Undue Burden on Utility Ratepayers
The Obama administration is seeking reinstatement of the uranium enrichment decontamination and decommissioning fund, with a proposed tax on electric utilities of $200 million a year through 2026. Electric utilities have already paid twice for decommissioning and decontamination at uranium enrichment plants that were originally operated by DOE—first as part of the price for uranium enrichment services from the facilities and again under provisions of the Energy Policy Act of 1992. Under the 1992 law, the tax on utilities was to end after 15 years or the collection of $2.25 billion, adjusted for inflation. The utilities paid this amount in full as specified by law. The president’s FY2011 budget would impose the tax yet a third time for cleanup at these sites, which would be passed to electric utility customers, representing a new tax on all Americans. This proposal is unnecessary given the federal fund for this cleanup program has a balance of $4.6 billion. A proposal to reinstate the fund in the fiscal year 2010 budget was defeated by Congress.
Industry Supports $36 Billion for Innovative Technologies Loan Guarantee Program
The nuclear industry appreciates the support provided by the subcommittee for the DOE loan guarantee program for nuclear energy plants and uranium fuel cycle facilities. NEI urges the subcommittee to approve the administration’s proposal to add $36 billion in loan volume for nuclear energy plants. The industry has demonstrated the need for this new authority: 10 nuclear power projects reportedly submitted Part II loan guarantee applications representing $93.2 billion in loan volume. Two uranium enrichment projects submitted applications seeking $4.8 billion, more than double the available amount.
The Innovative Technology Loan Guarantee Program created by the 2005 Energy Policy Act is essential for companies planning investments in the electricity infrastructure. Given the $1.5 trillion to $2 trillion capital investment required in the electric sector and the cost of new electric generating facilities, additional loan volume is required to support new nuclear energy facilities needed to meet a projected 23 percent increase in electricity demand by 2030. The loan guarantee program for nuclear energy is self-financing, with project sponsors responsible for underwriting the cost of providing the credit support to the federal government. Properly implemented, there will be no cost to the taxpayer. In fact, the program will likely generate revenues for the Treasury from fees and payments made by project sponsors. In addition, reducing the cost of capital will reduce project costs and lower electricity prices for all consumers. Southern Co. projects that its $3.4 billion share of the $8.3 billion loan guarantee for two reactors at the Vogtle plant in Georgia is expected to save consumers $15 million to $20 million in interest costs annually over the life of the loan.
NEI believes the loan guarantee program’s credibility and integrity rest on demonstrable proof that the lender’s interest is well-protected. For this reason, NEI supports the rigorous due diligence being conducted by the DOE loan guarantee program office. In addition to legal, financial and market analysis of proposed projects, DOE will employ an independent engineer, consistent with commercial banking practice. The independent engineer will monitor construction progress and certify that construction is proceeding according to plan before authorizing each month’s draw against the guaranteed loan.
The nuclear industry is confident that new nuclear generating capacity will be competitive and is not aware of any credible mainstream analysis that shows otherwise. In last year’s National Academies’ report, America’s Energy Future, new nuclear capacity competes well against all other base load options in a carbon-constrained world. We see similar results in analyses by the Energy Information Administration, the Brattle Group, the Congressional Budget Office and the Massachusetts Institute of Technology.
The due diligence process conducted by DOE, together with the fact that new nuclear power plants will be competitive, should ensure that the probability of default – and thus risk to the taxpayer – is extremely low. NEI also urges Congress to support DOE’s request to fully cover the program’s administrative costs in FY11, which will result in a net zero appropriation given offsetting collections from loan applicants for nuclear energy projects.
Ensuring Adequate Funding for the Nuclear Regulatory Commission, Integrated Used Fuel Management Program
The industry supports FY11 funding at the NRC’s requested level. However, the industry recommends that NRC appropriately, and more expeditiously, resolve long-standing regulatory issues. The industry applauds the continued oversight of the NRC by Congress to help identify ways to prioritize agency actions. The agency should be more transparent in its budgeting to reveal planned staffing and resource needs by individual divisions. This would demonstrate to Congress, the public and the industry, which pays 90 percent of the NRC’s budget, that the budget fairly reflects those activities that should be allocated toward licensee-specific charges rather than general license fees. NEI supports continuation of the Integrated University Program, which includes support for universities and community colleges.
The administration’s decision to withdraw the construction license application for a federal repository at Yucca Mountain, Nev., is not a repudiation of the government’s obligation under the Nuclear Waste Policy Act to dispose of used nuclear fuel from commercial reactors and defense applications. NEI believes it is imperative that:
1. the White House and Energy Secretary Steven Chu acknowledge DOE’s statutory and contractual obligation to manage and dispose of commercial nuclear used fuel
2. termination of the Yucca Mountain project does not affect the Nuclear Regulatory Commission’s pending revision to its “waste confidence” finding
3. project termination does not affect the contract between DOE and electric utilities for used fuel management because the contracts don’t require disposal at Yucca Mountain or, in fact, refer to this project at all
NEI supports the work of the Blue Ribbon Commission on America’s Nuclear Future, but strongly recommends that the NRC continue technical review of the Yucca Mountain license application to completion (with the adjudicatory proceeding held in abeyance) to inform the deliberations of the commission. The industry supports a three-part integrated used fuel management strategy that includes:
1. on-site storage at reactor sites and development of centralized used fuel storage at volunteer locations
2. research, development and demonstration of advanced recycling technology to reclaim at least a portion of the 90 percent of the energy that remains in the fuel after one use in a reactor and reduce the volume, heat and toxicity of byproducts placed in the repository
3. development of a permanent repository
NEI does not support the termination of the Yucca Mountain repository project. Any effort to shut down the site and remediate it is premature. Numerous state and local governments and the National Association of Regulatory Utility Commissioners are seeking admission to the NRC licensing proceeding to oppose DOE’s withdrawal of the application. Several opponents also have brought suit to stop this action. The project should proceed and be funded so that the technical review of the license application is completed. If the NRC licensing proceeding for the project is terminated, it should be done in a manner that would permit it to be restarted. Project records, tests, samples, etc. should be preserved so that they can be used should the project be resumed.
If the Yucca Mountain project is terminated, consumer payments into the Federal Nuclear Waste Fund should be suspended for the period of time for which there is no waste management program against which to assess costs. Consumers should no longer contribute more than $750 million in annual payments into a fund that has a $22 billion surplus and earns annual interest in excess of $1 billion until there is a definitive used nuclear fuel program being implemented.
The nuclear industry consistently has supported research and development of the advanced fuel cycle technologies proposed in the Fuel Cycle Research and Development program ($201 million). NEI believes funding in FY11 will continue this important technology research and development program and will support private sector partnerships to achieve better definition of the program. However, DOE’s plans (especially for delaying disposal decisions for several decades) should be brought into compliance with any recommendations of the blue ribbon commission that Congress ultimately accepts.
Development of Advanced Reactor Technologies
The Administration has proposed a number of new initiatives for the Office of Nuclear Energy for FY11. NEI is encouraged by DOE’s development of a road map on milestones and annual funding requirements so that Congress and the public will support these new program initiatives. NEI supports $195 million in government funding for the Reactor Concepts Research, Development and Deployment (Reactor Concepts RD&D) program in FY11. Within this program, $103 million in funding would be allocated for the Next Generation Nuclear Plant (NGNP) program. NGNP is a congressionally authorized program to develop, license and build an advanced high-temperature gas reactor. Westinghouse Electric Co. and General Atomics will begin work on next generation reactor designs after being awarded $40 million this month by the Department of Energy. This advanced reactor technology can displace the use of premium hydrocarbon fuels such as natural gas for producing process heat, thus enhancing U.S. energy security, stabilizing energy prices and improving the use of finite hydrocarbon resources. The two companies are in the first phase of the program, which entails research and development, conceptual design and development of licensing requirements and cost and schedule estimates. Based on the teams’ analyses and information from its independent federal and nuclear energy advisory committees, DOE will decide whether the project should proceed to the second phase.
NEI also recommends $25.7 million in FY11 for the Light Water Reactor Sustainability program, focusing on materials science and materials performance in reactor operations; $38.8 million for the Small Modular Reactors program; and $21.8 million for the continuation of the Generation IV program on advanced reactor concepts. NEI supports $99.3 million for the new Nuclear Enabling Technologies program, including the Modeling and Simulation Hub. The hub focuses on materials science and improving reactor component manufacturing.
Maintain Funding for Work Force and Infrastructure
Congress in the last two years has approved $45 million for an Integrated University Program. The industry appreciates the strong support this subcommittee has provided for this program. NEI requests the committee maintain DOE and NRC funding for this program. This funding is helping to effectively educate technicians and professionals for careers in all sectors of nuclear science and technology. Additionally, NEI asks the subcommittee to support $5 million for the DOE Research Reactor Infrastructure program for new fuel and shipping containers, reactor instrumentation and upgrades, and used fuel services. Industry also supports providing $20 million for the Advanced Test Reactor (ATR) National Scientific User Facility at Idaho National Lab as part of the lab’s $177.5 million facilities management budget in FY11. ATR funding is important for improving the capability of the facility to evaluate and improve nuclear fuel and materials behavior and performance for DOE, university and industry projects.
Responsible management and cleanup of legacy sites and associated waste is a primary responsibility of DOE’s Office of Environmental Management. NEI supports the FY11 budget request for $6 billion. In addition, industry recommends that efforts be focused both on footprint and risk reduction at legacy sites. Further, the industry recommends that that DOE continue to accelerate cleanup schedules, enabling communities to redevelop sites and saving taxpayer money in the long term.
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