News & Events

Good morning, and welcome to Nuclear Energy Assembly 2011.

Every year, NEI takes this opportunity to reflect on the industry’s accomplishments and explore our top priorities in the policy arena.

It also is a time of introspection, when we examine the industry’s core assets and challenges and identify what actions may be needed to position nuclear energy for continued success.

Introspection is especially important in turbulent times.

The United States, like much of the world, is slowly recovering from an economic downturn, and electric power companies face significant regulatory and policy-driven uncertainties, as well as large new investment requirements related to infrastructure.

Electricity is so reliable and so abundant in developed countries that we sometimes forget how much we depend on it. Electricity drives the economy, powers devices we rely on, such as lights, medical equipment, refrigeration, and the BlackBerrys and iPads we didn’t know we needed but now can’t live without.

Looking forward, electric vehicles can reduce America’s dependence on foreign oil, thereby enhancing national security.

Because electricity is integral to modern life, the uncertainties and challenges that face electric power companies affect our nation more broadly. In this context, nuclear energy is an essential part of a diversified electricity supply base that is critical to our standard of living.

On March 11, an extraordinary natural disaster struck Japan—a massive earthquake followed by a towering tsunami that swept thousands of people to their deaths, ripped homes from their foundations and tossed boats and cars around like toys.

The human toll is staggering—more than 25,000 people dead or missing. For the survivors, life has changed in countless ways. Rebuilding will take years.

We are honored to have with us today Ambassador Ichiro Fujisaki, who will speak later this morning. Mr. Ambassador, on behalf of our industry, I want to extend condolences to the Japanese people … and offer our continued humanitarian and technical support as they confront this terrible situation.

As you’re well aware, the tsunami that washed over Miyagi Prefecture swamped the Fukushima Daiichi nuclear power plant and destroyed its backup power supply systems.

The Japanese workers at the site have shown extraordinary commitment and courage during the past two months, working tirelessly to restore the plant to a safe condition, aided by experts and technology from around the world.

This event is a stark reminder that nuclear energy is one industry bound together by a technology that is both remarkable and demanding. Our commitment to safety must be equally demanding, as should our commitment to international cooperation and assistance.

Fukushima is a reminder that we must always continue to learn and improve and that we must never become complacent.

As we incorporate lessons learned from Fukushima, we must proceed in a deliberate manner. Doing this the right way means weighing the benefits of actions we propose to take and the impact they may have on the resources we use every day to operate our plants safely.

It is possible to lose sight of the overall effect on plant safety if we narrow our focus too much in addressing any single development.

During the past 30 years, both the industry and our regulator have faced this challenge numerous times … and by working through the issues thoughtfully, we have honed nuclear plant performance to an extraordinary level.

America’s 104 reactors continue to demonstrate high levels of safety and reliability, producing a record 807 billion kilowatt-hours of low-carbon electricity in 2010.

For more than a decade, our reactors have sustained an average capacity factor of about 90 percent. In 2010, the average was over 91 percent—the second highest average the U.S. industry has achieved in its 40-year history.

While nuclear energy represents just 10 percent of our nation’s electric generating capacity, it produces 20 percent of our electricity. It is a low-carbon source of electricity that can produce large amounts of electricity and be expanded to meet the increased demands of a growing population and a growing economy.

Nuclear energy continues to be a low-cost supplier of electricity, on average. In 2009, the latest year for which we have data, the production cost of electricity from nuclear power plants was about 2 cents per kilowatt-hour, compared with nearly 3 cents for coal-fired plants and 5 cents for natural gas-fired plants.

Of course, economics are not uniform across the industry. Nuclear plants in some markets face economic challenges because of reduced electricity demand and lower natural gas prices.

The development of new sources of shale gas clearly is increasing our estimated reserves of natural gas, and that is a positive development for the electric power industry, although I would say the jury is still out on the long-term cost for this new, robust gas supply.

NEI believes that a diverse mix of generating sources, including nuclear energy, is in our nation’s best interests. We should continue to advocate a broad portfolio of electric generating options that ensures reliability, affordability, environmental protection and our national security.

In the United States, the so-called “nuclear renaissance” really began in the early 1990s, when our operating companies dramatically improved performance, increased output through uprates and systematically pursued license renewal, defining the regulatory and technical requirements for new nuclear plants.

The industry has added more than 6,000 megawatts of nuclear capacity through power uprates. Another 3,200 megawatts of uprates are under Nuclear Regulatory Commission review and are expected by 2015.
Through all of these improvements in efficiency, power uprates, and the restart of the refurbished Browns Ferry 1 reactor in 2005, the U.S. nuclear industry since 1990 has added the equivalent of 29 new 1,000-megawatt reactors—the equivalent of building more than one reactor a year.

In addition, the Tennessee Valley Authority is completing its Watts Bar 2 reactor. When it begins commercial operation—projected for 2013—it will add 1,180 megawatts to TVA’s power system.

As I mentioned earlier, we have also pursued a 20-year renewal of the operating licenses for our facilities.

So far, 66 reactors have renewed licenses—including four the NRC has issued since the earthquake in Japan.

License renewal applications for 16 reactors are under NRC review, and the agency expects to receive applications for 20 more reactors by 2017. Together, these plants represent 98 percent of U.S. reactors.

License renewal is a tremendous success story and an excellent example of the NRC’s systematic work to impose a rule that addresses all the important issues efficiently.

During development of the rule, the NRC worked to differentiate between issues that are unique to license renewal and issues that are germane to plant operations under both existing and extended license periods.

Potential design issues such as seismic design fall into the latter category.

The NRC explores safety issues as part of its continuous, independent oversight of all nuclear power plants, regardless of their license renewal status.

The NRC’s continuous review process is more effective than a snapshot in time. The outstanding safety record of U.S. nuclear plants is a testament both to the industry’s effectiveness in operating these plants and the NRC’s effectiveness in regulating them.

At the agency’s annual information conference in March, NRC Chairman Greg Jaczko noted that, for the first time since 2007, the NRC is operating with a full, five-person commission. He highlighted the backgrounds of his fellow commissioners and recognized their varied and valuable contributions to the agency.

I strongly agree with Chairman Jaczko on the importance and value of a full commission. A credible and effective regulatory agency is essential to maintaining public trust, and a full slate of commissioners enhances regulatory effectiveness.

In the wake of the accident in Japan, it is more important than ever that our nation has an experienced, effective and credible Nuclear Regulatory Commission to ensure that the appropriate lessons learned are factored into regulatory requirements here and to work with regulatory agencies internationally to make nuclear energy safer everywhere.

One of the most important developments in nuclear regulation over the past 25 years—and perhaps the NRC’s biggest accomplishment to date—is the transition to a more safety-focused approach to regulation.

It is a work in progress, and there is more to be done, but both the NRC and the industry have come a long way, and U.S. nuclear plants are safer as a result.

In the late 1980s, the NRC asked the industry to conduct plant-specific safety assessments and identify potential vulnerabilities, factoring in thousands of years of reactor operating experience and knowledge of each plant’s unique design.

Through this process of individual plant examinations, our companies identified the issues or events that could most challenge plant safety for a given nuclear plant and developed strategies to make those plants safer.

Since that time, every U.S. nuclear plant has conducted a probabilistic safety assessment using state-of-the-art modeling techniques to analyze the plant and confirm those aspects that are most important to safety.

While these studies have not delivered major surprises, they helped us identify valuable safety enhancements.

Safety always is best served when the industry and the NRC allocate staff time and other resources to matters of the highest safety significance and correspondingly less time tending to areas that have little bearing on safety.

The in-depth knowledge gained through probabilistic safety assessments paved the way for a safety-focused approach to reactor oversight, which the NRC established in 2000. This approach helps the agency allocate inspection resources where they are most needed and improves the transparency of the regulatory process.

Looking at the plant performance data posted on the NRC’s website, you can see that they are getting the desired results from this emphasis on safety.

One of the NRC’s recent initiatives is the development of a policy statement on safety culture. The policy statement sets out the commission’s expectations for safety culture—at nuclear energy facilities and at the agency itself.

The industry is following a similar path. The chief nuclear officers representing every nuclear power plant in America are adopting industry guidelines for establishing and maintaining a strong safety culture.

Additionally, evaluations by the Institute of Nuclear Power Operations specifically look for effective safety culture.

The expansion of nuclear energy in the United States continues deliberately. Our opinion on near-term development of advanced nuclear plants has not changed in the past year. We expect to have four to eight new reactors online in the 2016 to 2020 timeframe.

Progress on some license applications has slowed in the past couple of years, given the recession and the drop in natural gas prices. The events in Japan have added uncertainty as well, but we do not expect the accident at Fukushima to have a major impact on new nuclear plant licensing.

The need for low-carbon electricity from nuclear energy is as compelling as ever. New power plants also will be needed to replace those that are retired. Various analysts predict that 10 to 20 percent of existing coal-fired generating capacity will be closed by 2020, and other types of power plants may close as well.

We also need to build generating capacity to meet new demand for electricity. The Energy Information Administration assumes only 1 percent annual growth in electricity demand in its latest forecast, which is below historical trends.

But even that estimate would equate to a need for 220 gigawatts of new electric capacity by 2035, equivalent to 220 large power plants.

There are 12 applications for combined construction and operating licenses under active review at the NRC, plus two applications for early site permits.

The NRC is scheduled to rule on the COL application for Georgia Power’s Vogtle site at the end of this year and on SCANA’s COL for two reactors at the Summer site late this year or early in 2012.

In addition, the AP1000 design certification should be completed in the August-September time frame to support the Southern and SCANA COLs.

Like all actions in our industry, plant development is careful and deliberate. Companies will ensure that market conditions are right before moving forward with decisions to build.

Although the long-term fundamentals still represent a solid business case for new nuclear power plant development, the near-term fundamentals are more challenging.

For some companies, the pace of new plant construction depends directly on availability of financial support. That can come either from the federal government through the loan guarantee program created by the 2005 Energy Policy Act or from state governments in the form of supportive regulation.

Both the administration and Congress recognize the importance of nuclear energy and the challenges in financing new projects.

President Obama requested an additional $36 billion in loan guarantees for new nuclear plants in his budget request for fiscal 2012.

The Senate Committee on Energy and Natural Resources is considering legislation to establish a Clean Energy Deployment Administration to support financing for clean energy technologies, including nuclear plants.

In the current economic climate, both proposals face a steep uphill climb. Nonetheless, they are critical pieces of an energy policy that America needs if we are to meet future electricity demand using cleaner technologies.

There also is considerable interest, both domestically and internationally, in smaller reactor designs, which have a capacity of 300 megawatts electric or less.

Small reactors can play an important role in the market, putting electricity generated by nuclear energy within the reach of smaller companies and providing an alternative for replacing coal-fired plants.

Building these plants will add manufacturing jobs here in the United States and could certainly add to our exports in the energy sector.

The United States also has become the world’s leader in developing uranium enrichment projects.
URENCO is operating and expanding an enrichment facility in New Mexico. USEC is planning development of one in Ohio, and the NRC is reviewing license applications for two more new enrichment facilities—AREVA’s Eagle Rock facility in Idaho and GE Hitachi’s facility in North Carolina.

We’re also seeing growth in domestic uranium production. The NRC has approved operations at three in situ uranium recovery sites in Wyoming.

It is important that these licensing activities continue. We must systematically learn the lessons from Fukushima. However, new plant development must continue in this country, taking into account both the shorter- and longer-term lessons as they apply to the industry.

We certainly must and will continue to learn from Japan, but we have a responsibility to keep moving forward and safely deliver reliable electricity to meet America’s growing demand.

I now want to turn to the question that I’m sure everyone in the room has been pondering in recent weeks: What insights can we draw at this point from the events in Japan?

This issue will be a theme that is incorporated throughout our program in the next two days. I encourage all of you to be here tomorrow to listen to Jim Ellis, president and CEO of INPO, as well as the senior government officials who will speak—Dan Poneman, deputy secretary of energy, and NRC Chairman Jaczko.

I also know that we’ll benefit from the insights Laurent Stricker, chairman of the governing board of the World Association of Nuclear Operators, will share with us later today.

I’d like to share with you my initial thoughts.

Let me start by saying that the first thing we need to do—and are doing—is make sure that the significant improvements we’ve put in place to successfully respond to severe accidents at our sites will work as planned.

These include everything from capabilities for coping with the loss of all power, to the efficacy of guidelines for managing severe events, and the equipment, procedures and training that we’ve put in place at the sites
since the 9/11 terrorist attacks.

This effort is already well along as part of an Institute of Nuclear Power Operations event report, and it is being closely monitored by an independent NRC review team.

The vast majority of the items identified in the industry’s initial 30-day review are enhancements to existing programs or procedures.

These issues include:
• requiring clarification of workers’ responsibilities and improving training opportunities
• enhancing and diversifying storage and placement of equipment
• enhancing the capability for multi-reactor sites to respond to events simultaneously at all of the site’s reactors, and
• improved coordination of first responders and vendors.

In addition, some plants are not in full compliance with measures implemented after 9/11 to respond to large fires or explosions that could result from aircraft impact at a nuclear energy facility. These findings already have been entered into corrective action programs to be resolved by those companies.

As is our nature and practice, we will incorporate these lessons learned across the industry as the first step in a short-term and long-term review of enhancements that may be made at our facilities in the aftermath of the events in Japan.

Also, clearly the experience in Japan requires us to look again at multi-reactor sites and determine that we have the plans and capability to provide cooling water to all of the reactors and spent fuel pools to ensure protection of the workers and the public around the sites.

Obviously, we are committed to systematically review and absorb the evolving lessons learned from Japan and incorporate them appropriately into our activities across the industry. And where appropriate, the NRC will incorporate them into the regulatory requirements.

Also, it is essential for both nuclear safety and public confidence that we have credible, effective regulators in every country that has commercial nuclear power programs. In my opinion, the NRC provides a global model for strong nuclear energy regulation.

From a safety perspective, one of the great strengths of the U.S. nuclear energy industry is the Institute of Nuclear Power Operations, which promotes excellence throughout the industry.

INPO conducts intrusive evaluations at each plant every two years, efficiently and systematically shares operating experience, and conducts multiple programs focused on safe operation. Nuclear safety would be enhanced worldwide if WANO could provide the types of programs that INPO provides.

We have all been impressed with the commitment of the workers at the Fukushima site, and we know that the workers at our sites are as committed to safe operations as workers anywhere in the world.

As evidenced by the dynamic North America Young Generation in Nuclear meeting that took place over the past two days, we also are seeing a wonderful infusion of young women and men into our industry.

We need to be sure that our knowledge transfer programs are as effective and complete as possible, emphasizing the basic concept of continuous learning and safety as priority one.

Also, as we look at the lessons learned, we need to be sure that we are doing the right thing and that we’re doing it the right way. We need to be sure that management attention and resources, as well as budgets, are focused on activities that have the greatest value to safety.

Finally, we know that we must be transparent and credible in our communications with our key audiences—whether they are government leaders, customers or neighbors near our facilities.

We must build a bank of trust and continually make deposits into that account for times such as this. At the same time, we know that the public seeks more information from the industry at difficult times. We must be open and communicate to all of our key audiences.

It is more important than ever that we find better ways to communicate and demonstrate our commitment to safety. A recent survey showed that only a slight majority of the public believes that nuclear plants are safe, and support for building new plants has declined significantly.

While safety is job number one for the industry, enhancing our outreach to policymakers and the public is a necessary second.

Our industry is committed to continuous learning. We are fortunate that we closely examined our emergency response programs through the lens of the BP gulf oil spill last year.

At NEI, we made significant adjustments to our program and exercised our response plan so that we were more prepared to respond to the Fukushima accident.

We had a commitment to open and frequent public communications from the outset, used the Web and social media tools more than ever, and scheduled frequent briefings during the first weeks with our key audiences here in Washington. Importantly, we will further improve our emergency response planning based on lessons learned from the events in Japan.

Many of the companies represented in the room today reacted swiftly to the Fukushima accident by meeting with key stakeholders and opening your facilities for policymakers and the media.

We know from experience that opening our facilities to those beyond the industry is one of the most important communication tools we have. We must continue dedicated communications and outreach programs and make strengthening the public’s trust a high priority.

That is critical not just for today, for this month or even this year. It’s critical for the long term.

We believe that American nuclear power plants are well prepared and could withstand significant natural forces here in this country. We’ll be even better prepared as we address the lessons learned from Japan.

But today, the public wants to know that our industry approach to safety and preparedness embraces a simple concept: Expect the unexpected and plan for it with multi-layered safety features.

We are going to be held accountable for learning the lessons from Fukushima and for applying them accordingly.

I know that we can meet that standard.