Public Policy

Congressmen Nunes, Latta, McCarthy and Terry, thank you for your invitation to discuss the value of nuclear energy, including the Diablo Canyon facility here in San Luis Obispo, to America’s energy portfolio.

Nuclear energy is unique in America’s electricity production portfolio.  It is the only large-scale, low-carbon, affordably-priced and expandable electricity source that is powering America today and it should be a significant element of a smart grid of low-carbon energy options.

Last year, America’s 104 nuclear power reactors operated safely at the highest efficiency of any electricity source.  They produced 806 billion kilowatt-hours of electricity—enough to meet nearly 20 percent of all electricity use nationwide. 

In California, two reactors each at the Diablo Canyon and San Onofre nuclear power plants generate 35.8 billion kilowatt-hours of electricity, or enough to serve about 4 million homes. 

California also imports 27 percent of the electricity production from three reactors at the Palo Verde nuclear power plant near Phoenix.  That provides another 8 billion kilowatt-hours of low-carbon electricity to the state’s power grid—enough for more than 750,000 homes.

GREEN POWER, GREEN JOBS

Looking to the future, the U.S. Energy Information Administration projects that the economy will begin a slow recovery in 2010, and that we will need 20 percent more electricity by 2030. 

For consumers struggling to meet their monthly utility bills, nuclear power plants, on average, have lower production costs than power plants fueled by natural gas or coal and are significantly less than renewable sources.

Nuclear energy is one of the few bright spots in the U.S. economy – expanding rather than contracting, and creating thousands of jobs over the past few years.  Over the last few years, the nuclear industry has invested more than $4 billion in new nuclear plant development and created 15,000 jobs.

The number of new jobs will expand dramatically early in the next decade when the first wave of new nuclear power projects starts construction.  If all 26 reactors currently in licensing by the Nuclear Regulatory Commission were built, this would result in over 100,000 new jobs to support plant construction and operations. This number does not include additional jobs created downstream in the supply chain.

The Nuclear Regulatory Commission is reviewing construction and operating license applications from 17 companies or groups of companies for 26 new reactors.  These new plants will be built at a measured pace over the next 10 to15 years.  Construction of the first new nuclear plants will start in 2012, and NEI expects four to eight new nuclear plants in commercial operation in 2016 or 2017. 

If these 26 reactors are built by 2030, this would simply maintain nuclear energy at 20 percent of U.S. electricity supply.  To increase nuclear energy’s contribution to 2050 climate goals, build rates of four to six plants per year must be achieved. 

This scale of nuclear plant development was achieved in the 1970s and 1980s.   With standardized reactor designs and improved construction techniques, this accelerated deployment is feasible after the first wave of plants is built.

To be sure, renewable energy sources have a role to play in our electricity portfolio. But to quote an op-ed published last month in The Washington Post by former Energy Secretary James Schlesinger and energy analyst Robert Hirsch, “some serious realism in energy planning is needed.”

The Massachusetts Institute of Technology last week recommended a large-scale expansion of nuclear energy to meet growing electricity demand while reducing America’s carbon footprint.

MIT reported that, compared to its 2003 study on the future of nuclear energy, the motivation to make more use of nuclear energy is greater and more rapid progress is needed in enabling the option of nuclear power expansion to play a role in meeting the climate change challenge.

MIT said:  “The sober warning is that if more is not done, nuclear power will diminish as a practical and timely option for development at a scale that would constitute a material contribution to climate change risk mitigation.”

FINANCING NEW NUCLEAR ENERGY FACILITIES

The electric utility industry must invest as much as $2 trillion in new power plants, transmission and distribution systems, and environmental controls to meet the 20 percent increase in electricity demand by 2030.

The pace of clean technology deployment is largely dictated by the ability to secure financing—a challenge at the best of times, but even more so in today’s tight credit markets.  Addressing this financing challenge will require innovative approaches to financing.

This need is being recognized in U.S. government policies and practices that support the development of clean energy technology, including nuclear energy, through limited investment incentives made available by the Energy Policy Act of 2005.
In addition, earlier this month, the House Energy and Commerce Committee and the Senate Energy and Natural Resources Committee also approved similar provisions to comprehensive energy policy to develop a Clean Energy Deployment Administration. 

This innovative financing body would be modeled on the U.S. Export-Import Bank, with sufficient financing capability to ensure that capital flows to clean technology deployment—renewables, advanced coal-based systems, nuclear and other clean fuels—in the electric sector.

If it is sound public policy to support export of U.S. goods and services through the Ex-Im Bank, surely it is also good public policy to support deployment of clean energy infrastructure and create tens of thousands of green jobs here at home. These innovative financing mechanisms also will help moderate the impact of future electricity costs on consumers.

SAFELY, SECURELY MANAGING USED NUCLEAR FUEL

Finally, allow me to address the issues of managing used nuclear fuel.  Used reactor fuel rods are stored safely and securely at each nuclear power plant, awaiting the federal government’s commitment in law and in contracts with each company to take this fuel and manage it in a federal disposal facility.  The government is 11 years late in meeting this commitment, yet plans to locate this facility at Yucca Mountain, Nevada, have been reversed under the current Administration.  

Consistent with our industry’s policy on used fuel management, we believe that the administration and Congress should consider a national policy that includes:

• centralized temporary storage at a few locations, preferably hosted by communities that volunteer for these facilities;
• development and deployment of advanced technology for recycling used fuel;
• and ultimately, a geologic disposal facility for the byproducts of recycling and for material that cannot be recycled.

A blue-ribbon panel to be appointed by the administration should conduct a thorough, impartial assessment of the government’s approach to radioactive waste management … review the existing research to determine its consistency with international standards … and develop a sustainable strategy for managing used nuclear fuel. Scientific reality should underpin the panel’s work.

CONCLUSION

In conclusion, we are at a pivotal time both in our industry and in the evolution of energy policy. Because of the safe and reliable operation of our existing nuclear energy facilities, we have a tremendous opportunity to establish the business and policy foundation for expansion of nuclear energy. 

70 percent of Americans support building a new reactor at the nuclear energy facility closest to where they live, according to a March survey by Bisconti Research.  Here in California, half of the state’s voters surveyed in a July 2008 Field Poll said they support building new nuclear power plants. 

Like them, we believe that nuclear energy must be part of a comprehensive energy policy that ensures there is affordable electricity for the benefit of all people.