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Thank you, John, for that candid assessment of the state of our industry and what we must do to secure our future.

We are assembled here today almost exactly six months from elections to decide the next president of the United States and who will represent us in the United States Congress.

There’s a great deal at stake for an industry like ours, poised on the brink of the largest capital investment program in its history, for an industry whose interests are so closely tied to national politics and the federal government and to elected officials who blow sometimes hot and sometimes cold depending on which way the polls are blowing.

At times like these, all of us try to guess how the various candidates, if elected, might govern.  Whether policy pronouncements during the campaign are merely statements of political convenience, designed to win votes or appease a certain constituency, or whether they represent fixed and deeply held positions.

John Rowe challenged us to create realistic expectations, and to shape opinion and perceptions about nuclear power and new nuclear plant construction.

As we seek to educate and thereby influence candidates for public office – from potential presidents to members of Congress to governors to state regulators to county commissioners –I can think of no better place to start than with the facts.

As we attempt to shape perceptions and policies, I can think of no more powerful antidote to prejudice and ignorance and wishful thinking than the facts.

As we reach out to the financial community to mold its perception of the risk associated with new nuclear construction, I can think of no better instrument than the facts.

As we approach this election to select our next president, perhaps we can learn something from one who passed this way before, from a man who served two terms as vice president and one as president.  “Facts are stubborn things,” said John Adams, “and whatever may be our wishes, our inclinations, or the dictates of our passion, they cannot alter the state of facts and evidence.”

Here, then, are some facts about the challenges facing the U.S. electric sector and our nation.

First, we have managed to dig ourselves into a deep hole in the United States when it comes to our electricity infrastructure.

We have roughly one million megawatts of electric generating capacity available to the grid.

About 45 percent of that infrastructure is more than 30 years old.  Approaching 20 percent is more than 40 years old.

Of that one million megawatts, roughly 315,000 megawatts is coal-fired capacity.  About two-thirds of that is 30 years old or older.  About one-third is 40 years old or older.

Age is not always a precise indicator of a power plant’s useful life.  We expect to run today’s nuclear plants for 60 years and possibly longer.  But in the case of coal-, oil- and gas-fired power plants, age is important.  Older generating capacity is less efficient, is generally not equipped with the latest environmental control technology and is not economic to retrofit.

Continuing to operate that older, less efficient, generating capacity, continuing to defer capital investment in newer, cleaner, more efficient generating technologies is frustrating our ability to achieve cleaner air and reduce carbon emissions, and will continue to do so.

Those are facts.  And facts are stubborn things.

My second point follows logically from the first.  It is that first law of hole-digging:  When you find yourself in a hole, best to stop digging.

The numbers tell us that America is increasingly dependent on older, less efficient, more costly generating capacity that should be replaced.

And that dependence reflects the fact that we have deferred investment in new, more efficient, cleaner high-capital-cost nuclear and coal-fired baseload power plants – not to mention the transmission necessary to move that power to market.

America’s electric power industry is pushing a mountain of capital investment in front of it.  How much?  More than the book value of the entire U.S. electric system.  About one trillion dollars between now and 2020 for new generating capacity, new transmission and distribution, efficiency programs, and environmental controls.  That does not include the potential costs of controls on carbon.  Unlike fine wine, this problem will not get better as it ages.

We are living off investments made by our fathers.

These are facts, stubborn and beyond dispute.

And so to my third point.  Tackling this problem – and we must tackle this problem – will require innovative approaches to financing.

Meeting these investment needs will require a partnership between the private sector and the public sector.  The times demand innovative approaches, combining all the financing capabilities and tools available to the private sector, the federal government and state governments.

In terms of 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 capability of the companies that will build them.

The U.S. electric power sector consists of many relatively small companies, certainly by comparison with the major oil companies and electric companies overseas like Electricite de France or Tokyo Electric Power Company.

As John Rowe said, new nuclear power plants are expected to cost at least six to seven billion dollars in all-in costs.  Although six to seven billion dollar projects are not unique in the energy business, such projects are typically the province of much larger companies.

U.S. electric power companies do not have the size, financing capability or financial strength to finance new nuclear power projects on balance sheet, on their own.  To do so could place the entire company at risk – if the project could receive Board approval in the first place.  These first projects require credit support – either loan guarantees from the federal government or assurance of investment recovery from state governments, or both.

In turn, we must explore business arrangements – joint ventures, for example – that may someday allow us to finance and build these projects on our own, without resort to the government as the financier of first resort.

The modest loan guarantee program authorized by the 2005 Energy Policy Act was a small step in the right direction, but it does not represent a sufficient response to the urgent need to rebuild our critical electric power infrastructure.

We may need something new and different and more expansive.  A new model.  Senator Pete Domenici, still and always a visionary among our political leaders, recently proposed creation of a Clean Energy Bank, a government corporation modeled on the Export-Import Bank and the Overseas Private Investment Corporation, to ensure that capital flows to critical infrastructure development in the electric sector.

The Export-Import Bank has $100 billion of loan guarantee authority to support American companies doing business overseas.  The federal government manages a successful loan guarantee portfolio of approximately $1.1 trillion 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 shipbuilding, steelmaking, student loans, rural electrification, affordable housing, construction of critical transportation infrastructure, and for many other purposes.

Please don’t tell me that America’s electric infrastructure is any less important.  It’s true that the U.S. electric industry represents only three to four percent of U.S. GDP.  But the other 96 to 97 percent of our $13-trillion-a-year economy depends on that three or four percent.

More facts.  They are stubborn things, aren’t they?

We must reshape perceptions of strategic national initiatives like the energy loan guarantee program.

Our critics, of course, attack the loan guarantee program as a subsidy for nuclear power?  What nonsense.

A subsidy is when the federal government makes a payment to a private party.  The energy loan guarantee program works the other way around.  The private parties make payments to the federal government in order to receive the loan guarantees.  That’s not a subsidy.  The cost of this program – every penny of it -- will, under the law and the implementing regulations, be paid by the industry.  Not one taxpayer dollar.

And that’s another fact.

I wish someone would tell me when the word “subsidy” became a slur, a four-letter word, not fit for polite company.  Think about it:  What is there of value in American life that is not subsidized, and appropriately so?

We subsidize home ownership through the mortgage interest deduction.  We subsidize higher education and agricultural production.  We use the tax code to subsidize certain forms of behavior that deserve encouragement.

We provide subsidies to offset market imperfections that preclude the flow of capital to activities that serve the common good and general welfare, or to encourage activities that are in society’s general interest.

Do you know who benefits from loan guarantees for advanced clean energy technologies?  Not the stockholders of the companies, but the consumers of electricity.  Loan guarantees allow us to finance more efficiently, using more debt than equity.  Because debt is always cheaper than equity, a project’s cost of capital is lower than would otherwise be the case.  As a result, the cost of electricity from that project – the amount it must recover from the market to cover all its costs – is also lower.

Consumers win.  Residential, commercial and industrial consumers all win.  The loan guarantee serves a public good.

Another fact.  Unmistakable.  Unambiguous.

No matter who is elected president in November, it seems clear that climate change will dominate the national debate over energy and environmental policy in 2009 and beyond.  Whether you believe the scientific evidence justifies mandatory controls on carbon or not, there is one fact on which we can all agree:  There is no credible strategy to address the conundrum of climate change and increasing electricity demand unless nuclear power is part of the portfolio.

That is not personal opinion.  This, too, is fact, and we have an overwhelming body of evidence to support it.

All of the analyses conducted by the Energy Information Administration of various legislative proposals show nuclear plant construction accelerating in a carbon-constrained world.  In some cases, like the analysis of the 2007 Lieberman-McCain Climate Stewardship Act, the models forecast more new nuclear capacity than we could possible deliver.  And in those cases where nuclear expansion was constrained in the model, carbon emissions or carob prices are higher, electric sector consumption of natural gas soars, and gas prices are higher.

The most recent World Energy Outlook from the International Energy Agency, perhaps the pre-eminent global energy forecast, showed world nuclear capacity increasing by about 12 percent from today’s 368 gigawatts even in its business-as-usual scenario.  IEA also produced a “450 Stabilization Scenario,” to identify what must happen to stabilize the concentration of CO2 in the atmosphere at 450 parts per million.  In that scenario, world nuclear capacity must more than double – from 368 gigawatts today to 833 gigawatts in 2030.  Obviously, that additional nuclear capacity does not shoulder the entire carbon reduction load:  end-use energy efficiency, improved efficiency of coal-fired power plants, major gains in CO2 capture and storage are also necessary – but without nuclear power, we simply can’t get there.

We find similar findings in the detailed modeling performed by Pacific Northwest National Lab, one of the few models that peers into the more distant future, out to 2100.  In PNNL’s 450-parts-per-million case, the value of nuclear is a whopping 9.8 trillion dollars.  Value is defined as the cost of achieving a 450-ppm concentration without additional nuclear capacity less the cost of achieving it with additional nuclear capacity.

There are many more independent studies like these.  They may differ in detail and degree, but not in direction.  All point unmistakably toward nuclear power as a strategic part of the portfolio of technologies required to reduce carbon emissions.

This, too, is fact.

Equally important, all the analyses conclude that no single technology – not even nuclear power – can deliver the reductions required to stabilize carbon emissions.  This task requires a portfolio of technologies and approaches – the same conclusion reached by the Electric Power Research Institute’s PRISM analysis, with which you are familiar.

John Rowe challenged all of us, correctly, to shape perceptions of nuclear power and create realistic expectations.  As we do so – and we must do so –remember that we’re dealing with a large number of gaps and disconnects.

We have gaps between how industry understands and describes our electricity infrastructure and how policymakers and politicians perceive and describe it.

Between the scale of investment required to rebuild our electric infrastructure and state and federal policymakers’ perception of that scale

We have gaps between the policy support that will be required to meet electricity demand in a carbon-constrained world and what some federal/state politicians are currently prepared to provide.

Gaps between reality (which recognizes that a diverse fuel and technology portfolio is essential) and popular and political myths and hopes (which hold that efficiency and renewables can do it all).

Between corporate timing (which is sustained commitment over decades) and political timing (which is intermittent interest over one election cycle).

Gaps between the truth about nuclear safety, used fuel, proliferation and cost and the prejudices and half-truths in which so many traffic.

We can fill these gaps.  We can fill them with facts.

We can shape perceptions.

We can change minds.

One person at a time.

One fact at a time.

We must be committed.  We must be persistent.

But facts will work in the end, because facts are stubborn things.

Let’s get to work.