News & Events

Thank you to the Medical University of South Carolina and the James E. Clyburn Transportation Center of the South Carolina State University for inviting me to this conference, “Securing Our Future, the Nuclear Alternative.”  It is a subject I enjoy speaking about! Today I’m here to advocate how our country might meet future energy requirements while reducing the generation of greenhouse gases — and in so doing — reduce or avoid the impacts of climate change.

Future economic growth and population increase will drive staggering electricity demand in the United States.  The Energy Information Administration predicts electricity demand will increase by at least 20 percent between today and 2030.  To address this expected increasing demand for electricity, while simultaneously reducing the emissions impact on the environment, our nation must first implement energy efficiency and conservation in all phases of American life to reduce the projections. 

We should employ renewable generation capacity — such as wind, solar and hydro — to the fullest extent possible.  But we will still be faced with a gap between demand and supply.
 
There is no one silver bullet to fill this gap.  Rather the United States must maintain an energy portfolio with diverse energy sources.  This energy portfolio must include the only proven baseload generation technology, deployed or deployable on a large scale, 24 x 7, with no air pollutants or greenhouse gas emissions during production.  That source is nuclear energy.

If I may quote Congressman Clyburn:  

“We must look at long term solutions.  I am an ardent supporter of expanding our country's nuclear capacity.  Here in South Carolina, more than 50 percent of our electricity is produced by nuclear power.  New technology makes nuclear a very safe, and viable energy alternative.”

As usual, Chairman Clyburn is exactly right.  So, yes, nuclear power is that energy technology, a domestic technology, with fuel from the United States and reliable trading partners. 

There is, in fact, a growing consensus that any credible program to meet electricity demand while reducing greenhouse gas emissions in the United States and worldwide will require a portfolio of technologies and approaches, and that nuclear energy is an indispensable part of that portfolio.  This conclusion is beyond scientific question and supported by an impressive body of mainstream research and analysis.
 
Most recently, on June 10, the U.S. National Academy of Sciences endorsed a statement of the scientific academies of the 13 leading industrial and developing nations, which urged world leaders to act more forcefully to limit the threat posed by climate change.  The statement included a recommendation to speed the adoption of new energy technologies, including increased investment in nuclear energy technologies, solar technologies and projects to capture and store carbon dioxide. 

Analyses of the various Congressional proposals to reduce greenhouse gases — including modeling conducted by the Environmental Protection Agency and the Energy Information Administration — show that nuclear energy must be significantly expanded in a carbon-constrained world. 

In the Energy Information Administration’s analysis of legislation to limit greenhouse gases that was considered earlier this year by the U.S. Senate, the model generates more new nuclear capacity than could realistically be built during the forecast period. 

And in those modeling runs where nuclear energy expansion is artificially constrained, carbon emissions and carbon prices are higher, electric sector consumption of natural gas soars, electricity and gas prices are higher, and GDP losses are greater. 

This analysis and others like it conclude we simply can’t address the conundrum of meeting increasing baseload electrical requirements while reducing greenhouse gas emissions without nuclear energy. 
 
Let me assure you that the U.S. nuclear industry hears this call to action and is moving forward as quickly as we are able to license, finance and build new nuclear plants in the United States. 

The country is well beyond “consideration” of expansion of nuclear energy.  Seventeen companies or groups of companies are preparing license applications for as many as 31 new reactors.  This includes a new reactor proposed by South Carolina Electric & Gas and Santee Cooper at the Summer nuclear power plant site and another by Duke Energy in Cherokee County.  Eleven applications for construction and operating licenses are currently under review by the Nuclear Regulatory Commission for a total of 18 new plants. 

So we have 18 plants on the drawing board under active consideration by the NRC and an additional 13 plants on the drawing board being prepared for NRC license application.

But not all of these plants will be built immediately.  We expect four to eight new U.S. nuclear plants in operation by about 2016.  As they undergo construction and assuming those first plants are meeting their construction schedules and cost estimates, the rate of construction will accelerate.  With the necessary investment stimulus and financing support, we could see as many as 15-18 new plants on line by about 2020.

As lawmakers write environmental legislation and policy to include targets and timetables for carbon reduction, they must also help enable the technology and the means to achieve those targets and timetables.  In my view, that will require an aggressive program of financing support — more aggressive and ambitious than anything in place today.
 
For new nuclear plant construction, one of the most significant financing challenges is the cost of these projects relative to the size, market value and financing capacity of the companies that will build them.

New nuclear reactors are expected to cost at least six to eight billion dollars in 2008 dollars.  U.S. electric power companies generally do not have the economic strength to finance new nuclear power projects on their corporate balance sheet, on their own — particularly at a time when they are investing heavily in other generating capacity, transmission and distribution infrastructure, and environmental controls. 

These first projects must have financing support — either loan guarantees from the federal government that provide access to capital at an acceptable and more competitive rate, or assurance of investment recovery from state governments, or both.  Consumers will reap the benefits and should demand this action from their elected officials.

The loan guarantee program authorized by the 2005 Energy Policy Act was a step in the right direction, but the good intentions have nearly been gutted through tinkering by Executive Branch officials and some in Congress.  In particular, the congressional appropriations process has “artificially” constrained the loan guarantee program.  Limits imposed through the appropriations process have resulted in a loan guarantee cap that will not begin to cover the project costs.  Additionally, those same appropriators have mandated time limits that have introduced additional uncertainty into the process for nuclear, and for nuclear’s clean energy partners, solar and wind.
 
I believe the United States will need something similar to the Clean Energy Bank concept being considered by thoughtful members of Congress — a government corporation for energy projects that is modeled on the Export-Import Bank and the Overseas Private Investment Corporation.  This entity would provide loan guarantees and other forms of financing support to ensure that capital flows to clean technology deployment in the electric sector.

The federal government already manages an extremely successful loan guarantee portfolio of approximately 1.1 trillion dollars which, on balance, returns more to the Treasury in dollars than it costs the taxpayer, and returns significantly more in social value than any taxpayer cost.

We use loan guarantee programs to support student loans, affordable housing, construction of critical transportation infrastructure, shipbuilding, steelmaking, rural electrification, and for many other purposes. Why not use them to help tackle one of the most important issues facing our country today — the availability of domestic, clean, affordable energy?

America’s electric infrastructure surely is as important.  While the U.S. electric industry represents only three to four percent of U.S. GDP, the other 96 to 97 percent of our $14-trillion-a-year economy has a critical dependence on that three or four percent.

I have addressed some of the challenges facing the future nuclear power industry and the construction of new plants.  I want to also note the major successes of our existing nuclear power plants and their operations last year.
 
The 104 commercial reactors operating in 31 states provided an all-time record high electricity production.  U.S. nuclear plants generated nearly 20% of U.S. electricity last year with only 10% of installed electricity production capacity.  How is that possible?

Well, I’ve already provided the answer:  Nuclear power plants operate nearly all the time, 24 X 7.  Coal plants operate at about 70% capacity, natural gas about 40%, wind and hydro 30% and solar 20%.  Technically, this measure is called average capacity factor.  Nuclear plants achieved a record-setting average capacity factor of 92% in 2007. This performance reflects excellence in plant management of operations and maintenance and an industry-wide commitment to safety.

This highly efficient output drives superior economic performance.  Nuclear electricity production cost last year was 1.76 cents per kilowatt-hour — a record low, cheaper than coal and one-quarter the cost of electricity produced using natural gas.  Nuclear’s production costs are stable and not subject to fluctuations like the natural gas or oil markets.

And let me mention again the clean air benefits.  As I have noted, nuclear energy is our country’s only large-scale energy source capable of producing electricity around the clock while emitting no air pollutants or greenhouse gases during production.  Our 104 nuclear power plants generate 74 percent of all greenhouse gas emission-free electricity.  Nuclear plants, in fact, avoid carbon dioxide emissions equivalent annually to the carbon dioxide emissions from virtually all passenger cars in the United States.
 
These record accomplishments of American nuclear power plants are more than impressive statistics of electricity generation.  These safe, efficient generating stations represent a solid platform from which to launch the next nuclear plant build cycle.  Most importantly, these record breaking statistics are a true indicator of an industry that holds safety as its highest priority.

I want to quickly address three of the often reported concerns about nuclear energy that may also raise questions for you — safety, used reactor fuel management, and cost.

First, let me report that the mood in our country has fundamentally shifted to one of supporting nuclear energy.  Even many who have opposed nuclear in the past agree nuclear must be on the table, including both presidential candidates of our major parties, and they echo strong bipartisan support in federal, state and local governments.

In fact, in general the closer you get to existing nuclear plants, the higher the support for nuclear energy from the people who live nearby.  It’s the “Reverse NIMBY” effect:  while some 62 percent of Americans support nuclear power, 82 percent of people living within 10 miles of a plant support an additional new plant on that site.

But this is not always unqualified support.  In my travels around the country, in gatherings like ours today, I find many people disposed to accept nuclear energy, but who have lingering reservations.
 
“Yes, I think we need more nuclear power,” they tell me, “but what about safety?”  Or “What is the industry going to do with the used fuel?”  Some also say, “New nuclear plants will cost too much.”

First, I will address the exceptional safety of our nuclear plants.  The nuclear industry has created operating practices and oversight institutions that ensure the highest standards and continued outstanding safety performance of our 104 operating reactors.

Safety begins with the design of our plants.  Redundant, reliable safety systems are designed to protect you, our operators, and our facilities.

Our reactors are designed to withstand the effects of extreme natural phenomena such as earthquakes, tornadoes, hurricanes, and floods without the loss of capability to perform safety functions.  The plant design reflects the most severe of the natural phenomena that have been historically reported for the site and surrounding area plus additional safety margin.

Beyond design we are committed to a “defense in depth” safety approach that ensures safe operation.  We employ a dedicated, talented, and professional workforce that receives comprehensive rigorous training.  We operate these plants using strict procedural compliance and maintain an industry-wide database to catalog plant operating experience so that the entire industry can learn from each plant’s operations.  We also have an exhaustive inspection program.

Our safety record is proven by key performance indicators tracked by the industry and the Nuclear Regulatory Commission.  But even more confidence is derived from the process that produces those indicators. 
 
We have an independent and demanding regulator in the Nuclear Regulatory Commission, an agency empowered to impose fines for lapses in performance and to shut down operations on the spot.  Each plant has at least two resident NRC inspectors and as many as four.  Throughout the year these inspectors and others from NRC headquarters perform baseline inspections of all aspects of plant operations, including those key performance indicators I mentioned earlier.  These inspections constitute a minimum of 2000 man-hours each year, and hold the industry to rigorous standards of safety and security.

But we don’t stop there.  The industry itself established the Institute of Nuclear Power Operations that conducts extremely detailed two week inspections every two years.  These inspections are conducted to standards of excellence, not just the minimum standards of safety.  Exit interviews are conducted with the top leadership in the organization and then reviewed by fellow CEO’s at the following INPO Board Meeting.  Having observed this INPO process for nearly four years, I can assure you the peer pressure to perform to excellent standards is enormous.  So, yes, I take comfort in the positive trends of the “indicators” but I take even more comfort in the process.

As for our management of used nuclear fuel, I would like to address that by first dispelling several myths:

The first myth:  That there’s a lot of used nuclear fuel around.
 
Consider this:  if all of your individual electricity needs for a 70-year lifetime were supplied only by nuclear energy generation, your 70 years of used nuclear fuel would weigh two pounds and fit into a coke can.  In fact, all of the used fuel in storage today from all the commercial nuclear plants that have ever operated in America would cover one football field seven yards deep.  This is a small amount of material.  And it’s all contained.  And we know where it is.

Myth number two:  That used fuel is difficult to manage.

Just the opposite:  Today used nuclear fuel is stored safely and securely at sites in compliance with Nuclear Regulatory Commission regulations.  Used fuel is a solid material encased in steel alloy rods, stored in water-filled steel vaults or concrete and steel containers and effectively monitored and managed by the individual nuclear plant sites.

Myth number three:  That the industry doesn’t have a plan for used fuel.

Well, we do have a plan.  The original plan of deep geologic disposal of used fuel remains viable and scientifically justified.  But a parallel and complementary path features the development of advanced fuel cycle technologies to employ recycling to recover vast unused energy in the fuel, reduce waste volume and reduce radiotoxicity.  Our plan is a three-pronged integrated used fuel management strategy:

● First, interim storage of used nuclear fuel at volunteer sites while recycling technology is being developed.
● Second, research and development, demonstration, and commercial deployment of advanced fuel cycle technologies to reprocess and recycle used fuel.
● And, third, operation of a permanent nuclear waste disposal facility to isolate the residual by-products of advanced fuel recycling after we determine what those by-products will be.

What about the cost?  Today’s operating nuclear power plants are the lowest-cost large-scale electricity source in the marketplace today.  Average nuclear plant production costs have declined more than 30 percent in the past 10 years.  I already mentioned these production costs, cheaper than coal and one-quarter the cost of electricity produced from natural gas.  And these sustained low production costs are due to that historically high capacity factor and stable long-term fuel costs.

It is a fact that new nuclear power plants will be large, capital-intensive projects; as I’ve said, they will cost at least six to eight billion dollars each.  Companies considering building new nuclear plants have performed economic studies that demonstrate that especially with federally-backed loan guarantees they will be competitive in the electricity market — even without carbon regulations adding to the cost of fossil plants.  They would not build them if the costs were not competitive.
 
So, capital cost is not the only measure of power plant economics.  The long-term life-cycle operating costs are equally important, and here nuclear power enjoys a big advantage.  Fuel accounts for 80 to 90 percent of the cost of electricity produced by fossil fuel-fired generation, making electricity from fossil plants highly susceptible to fluctuations in coal and gas prices.  Only 26 percent of nuclear production costs are fuel-related costs and only about half of that nuclear fuel cost is the cost of uranium.

Independent analysts from financial and energy consulting firms also agree that new nuclear plants will be competitive when the first of these plants are ready for commercial operation around 2016.  The competitiveness of nuclear energy will be further enhanced with financial penalties likely to be imposed on carbon dioxide elsewhere in the electricity sector.

Finally, let me conclude with a question I hope many of you are asking, and propose an answer to that question.

What can individual citizens do to help?

Your support and willingness to factually consider nuclear energy will be essential to our country arriving at a well thought out energy plan.  Expressing this endorsement to your policymakers, both state and federal, will be very important.  But, equally important will be furthering this discourse within the broader business community and the general public on the role that nuclear energy can play in solving our energy crisis, preserving our air quality, and growing our economy.
 
One way you can do this is by joining the Clean and Safe Energy Coalition, which includes scores of South Carolina business and policy leaders among its 1,700-plus members.  The CASEnergy Coalition advocates the use of nuclear energy as part of the solution to our fast-growing electricity demand and is active in changing the dialogue on nuclear energy from a decades-old emotional debate to one based on facts and the reality of our energy situation.  You can join on the Web at CleanSafeEnergy.org. [Our new S.C. state managers will also be in the audience for this speech…]

Thank you again for your invitation to this important conference.