Public Policy

Mr. Chairman, Ranking Member Biden and distinguished members of the committee, my name is Marvin Fertel. I am the senior vice president for nuclear infrastructure support and international programs at the Nuclear Energy Institute, the Washington, D.C., policy organization for the nuclear industry. I am pleased to testify this morning in support of U.S. ratification of the Convention on Nuclear Safety.

The Nuclear Energy Institute sets industry policy positions on various issues affecting the industry, including federal regulations that help ensure the safety of 103 operating nuclear power plants in 31 states. NEI represents 275 companies, including every U.S. utility licensed to operate a commercial nuclear reactor, their suppliers, fuel fabrication facilities, architectural and engineering firms, labor unions and law firms, radiopharmaceutical companies, research laboratories, universities and international nuclear organizations.

Summary of Key Points
The nuclear energy industry supports ratification by the U.S. Senate of the Convention on Nuclear Safety. Nuclear power plants produce nearly 20 percent of America's electricity—the second largest source of electricity. Nuclear power plants also are our largest source of emission-free electricity—an important consideration as Congress and other policymakers recognize the growing nexus of energy and environmental policy. Among the Congress, and indeed across the United States, there is a growing awareness that this is a proven industry with more than 2,000 reactor years of operating experience and with a product that will become even more valuable as we meet the demands of the 21st century.

Globally, 441 nuclear power plants in 33 nations generate 17 percent of our electricity. These nuclear energy facilities are becoming more important as the clean air benefits of nuclear energy, energy security considerations and economic factors are prompting many countries to pursue the expansion of their existing nuclear power programs, or the development of new nuclear power programs.

Ratification of the Convention on Nuclear Safety by the United States is important for these reasons:

• The U.S. government and the U.S. nuclear energy industry have provided leadership in shaping the Convention and it reflects the safety practices, programs and culture inherent in our programs. The industry believes these programs are necessary to the safety and reliability of nuclear programs worldwide;      
• All other countries that have significant nuclear energy programs, except the United States and India, have already ratified the Convention;
• The Convention provides a forum for the United States to systematically review the nuclear programs for countries, such as Russia and the Ukraine, to which the United States provides nuclear safety program assistance; and
• The Convention also provides an excellent framework and process to support the development of new, safe nuclear power programs in countries that may be looking to establish such programs for energy security and environmental reasons.

The Nuclear Energy Institute's Executive Committee, representing the leadership of the U.S. commercial nuclear industry, passed a resolution in 1997 encouraging prompt Senate ratification of the Convention on Nuclear Safety. The resolution noted "that in implementing the Convention, the U.S. government is encouraged to fully engage the U.S. industry through NEI and to include industry expertise through representation on the U.S. delegations to deliberations under the Convention."

The industry fully supports ratification of the Convention, and encourages the Administration as part of its implementation to ensure that appropriate input and involvement of the U.S. industry prior to, and possibly at, review meetings. U.S. ratification of the Convention should not impose any new regulatory requirements on the U.S. industry beyond those required to meet Nuclear Regulatory Commission (NRC) regulations.

Moreover, the Administration should not fund activities associated with implemention the Convention from user fees collected from NRC licensees for the agency's regulatory activities. Similarly, the Administration should eliminate existing governmental activities that are intended to achieve benefits that would be derived through the Convention

Given the scheduled April 12, 1999 review meeting, NEI urges the Committee and the U.S. Senate to act promptly to ratify this Convention so that the United States can attend this first review meeting. U.S. leadership and participation is essential for successful implementation of the Convention, and given the importance of assuring safe operation of nuclear plants worldwide, it is clearly in the best interests of our nation and the world at large.

Mr. Chairman, the U.S. commercial nuclear industry is committed to achieving and maintaining a high level of safety at commercial nuclear power plants worldwide. The Convention provides an internationally accepted and reasonable framework for enhancing the already high levels of safety at commercial nuclear power plants in the United States and internationally.

Without nuclear energy, the United States and many other nations will find it impossible to meet increasing electricity demand, domestic clean air goals or global efforts to reduce the effects of carbon dioxide on the global climate. U.S. nuclear power plants provide clean air benefits while producing electricity at a competitive price—with production costs that are a fraction of a cent higher than coal-fired electricity and more cost-effective than natural gas, solar or wind power. Members of Congress and other policymakers increasingly are recognizing the important benefits of nuclear energy to our economy, our environment and our energy future.

Background
The United States has the largest commercial nuclear power industry in the world, and we are the global leaders in the development of advanced nuclear power plant technology. Between 1973 and 1996, nuclear energy met 40 percent of the increase in demand for electricity in the United States. Over this same period, U.S. nuclear power plants displaced 2.3 billion barrels of oil, 3.4 billion tons of coal, and 12.1 trillion cubic feet of natural gas. The oil alone would have cost $74 billion (in constant 1996 dollars). Worldwide, nuclear energy displaced 10 billion barrels of oil between 1973 and 1995, valued at over $290 billion. During the same period, nuclear energy displaced 56 trillion cubic feet of natural gas and 8.9 billion tons of coal.

In 1997, nuclear energy generated more electricity—631 billion kilowatt-hours—in the United States than any other fuel source except coal. More than 100 nuclear power plants achieved an average capacity factor of 70.3 percent. (Capacity factor, a yardstick for plant performance, measures the amount of electricity actually produced compared with the maximum output achievable.) The 1997 average is nearly 16 percentage points higher than the 1980 average. Nationally, each percentage point increase in capacity factor is roughly equivalent to adding 1,000 megawatts of generating capacity to the electricity grid. Improved nuclear power plant performance thus helps meet the growing demand for electricity in the United States.

Since 1980, more than 40 U.S. nuclear power plants have entered service. The number of nuclear power plants in commercial service now stands at 103 up from 68 in 1980.

In providing one-fifth of U.S. electricity supply, nuclear energy is our nation's largest source of emission-free electricity. Nuclear energy also provides clean air benefits at a competitive price—with production costs that are a fraction of a cent higher than coal-fired electricity and more cost-effective than natural gas, solar or wind power. Most U.S. nuclear power plants compete as low-cost electricity providers today and are well-positioned as states open their electricity markets to competition. Measured solely by economic factors—operating and maintenance costs plus fuel costs, ongoing capital requirements and general and administrative expenses—most nuclear units will be very competitive in a deregulated electricity market. In fact, many nuclear plants should be able to improve their economic performance even further.

Production costs at nuclear power plants in the last three years continue to fall well below those the nuclear energy industry incurred at the start of the decade. Meanwhile, plant performance—measured by the capacity factor of plant operation—has in the last two years reached record high levels.

The industry has built a solid record of safe, efficient performance at nuclear power plants as it enters a new business environment. But the industry's continued commitment to safe nuclear plant operation must be accompanied by the NRC's ability to fulfill its mission as a strong and credible regulator. Both are essential to build and maintain public trust and confidence in nuclear energy.

Unlike any other electric generation source, nuclear power is unique because the costs of the entire electricity production lifecycle—including the uranium fuel manufacturing process, NRC regulation, waste management and plant decommissioning—are included in the cost of electricity to consumers. To remain competitive with other generation sources that do not internalize many of these expenses, all costs in the nuclear fuel cycle must be appropriate and reasonable. Plants will close if they cannot compete, raising potential electricity system reliability problems. Moreover, the nuclear electric generation will be replaced by power plants that emit greenhouse gases and other air pollutants. If that scenario unfolds, the United States will find it impossible to meet increasingly stringent U.S. clean air regulations and international carbon dioxide reduction goals.

The foundation for the United States' leadership role in the nuclear energy industry is the extensive use of nuclear power in this country and the industry's improved safety performance. The industry's commitment to excellence in plant operations has resulted in dramatic gains in both safety and efficiency. Since 1985, for example, NRC data shows that the average number of significant events at U.S. plants has declined from nearly 2.5 per unit in 1985 to an average of .04 per unit in 1998. Moreover, improvements in nuclear plant operating efficiency since 1990 are equivalent to adding 11 large generating units to the national electric grid—further evidence of the industry's contribution to serving new electricity demand while meeting our nation's clean air goals.

Next week will mark the 20th anniversary of the accident at the Three Mile Island nuclear plant in Pennsylvania. Notwithstanding the reality that the accident hurt the nuclear energy industry's public image, the practical reality is that Three Mile Island was the catalyst for significant institutional and operational changes that translated into dramatic improvements in plant safety and efficiency.

Disciplines in training, operations and event reporting that grew from the lessons of the accident have made the nuclear power industry demonstrably safer and more reliable. During the 1980s, U.S. utilities committed to a major nuclear power plant improvement program. Its success is partly due to the initiatives of the Institute of Nuclear Power Operations (INPO), an industry-sponsored organization that works to ensure the highest levels of safety and reliability in all aspects of nuclear plant operations.

Teams of qualified and experienced specialists visit each U.S. plant about every 18 months, but at least every 24 months. They perform a two-week examination of workers' performance, the condition of the plant systems and equipment, the plant's operating history, the quality of programs and procedures and the effectiveness of the management. The teams then report their findings to plant and corporate management—including recommendations for improvement—based on the best practices found in the nuclear industry worldwide.

Since 1983, INPO has collected performance data from each nuclear power plant and published annual industrywide performance indicators. This data helps utilities evaluate how well each plant is performing and sets specific goals for operating excellence.

As part of its program, INPO monitors 10 key performance indicators, such as unplanned automatic shutdowns and safety system actuations. INPO collects these data from each nuclear unit, then calculates national averages, and submits them to the World Association of Nuclear Operators (WANO). Each of WANO's performance indicators reveals that nuclear power plants are operating more safely, more productively and more competitively.

U.S. Nuclear Regulatory Regime Is A Global Model
The United States has the most mature commercial nuclear regulatory regime in the world. Within the context of exceptional plant performance, both the industry and the public still need and demand a credible and effective regulatory oversight process to ensure adequate protection of the public health and safety.

Although the Nuclear Regulatory Commission has been an effective regulator during the first decades of nuclear power plant operation, the agency has recognized the inherent value of changing the existing regulatory process to make it more effective and safety focused. In this new regulatory process, regulation must have a clear nexus to objective safety standards. The key to reform is in the efficient use of risk insights, which can greatly improve the safety focus of regulatory requirements. In conjunction with risk-informed regulation is a need for a performance-based approach, where the NRC would decide how best to meet those goals. Performance-based regulation is more sharply focused on safety than the current approach, because resources are applied to plant systems and components commensurate with their importance to safety.

The Nuclear Safety Convention would augment national regulatory programs, like the NRC, reaffirming the commitment to a high level of safety worldwide. U.S. leadership in international nuclear development has been critical to ensure safe, reliable and environmentally beneficial uses of commercial nuclear technology around the world. The United States has been a leader in technical exchanges with other nations that operate nuclear power plants. Together, industry leaders and plant operating personnel from the West and the East have recognized that nuclear power safety and operations transcend national boundaries. They have worked side by side with peers from all over the world to provide assistance and operating experiences.

Shirley Jackson, chairman of the Nuclear Regulatory Commission, said in a speech earlier this month that "nuclear operators long have recognized the value and the imperative of combining their national efforts in the cause of enhanced safety." Indeed, the United States has been extremely active in cooperative assistance efforts, including those designed to address the safety of Soviet-designed reactors in Central and Eastern Europe. The Convention on Nuclear Safety would augment International Atomic Energy Agency efforts in international safety. By ratifying the treaty, the United States would maintain U.S. leadership in ensuring that nuclear power plant designs in Eastern and Central Europe, as well as in developing countries, are safe. Although it does not address the full scope of global safety issues, the Convention promotes a nuclear safety culture worldwide by providing technical cooperation on safety-related issues.

U.S. participation in implementing the Convention on Nuclear Safety is an important component of providing this U.S. leadership. Importantly, the treaty will ensure that all contracting parties will report, for review, all measures they have taken to implement the safety obligations in the Convention. This reporting is thorough and is not subject to national confidentiality.

The Convention on Nuclear Safety establishes a framework for improving nuclear safety among all countries that operate nuclear power plants and provides a basis for dialogue with those countries planning to build and operate commercial nuclear facilities. The U.S. nuclear industry is committed to working with the United States government on the Convention and urges U.S. companies to continue their long-standing assistance programs to improve efficiency, reliability and safety of nuclear power plants worldwide.