Good afternoon. I'm delighted to have the opportunity to address this impressive gathering of professionals in the nuclear energy industry. I'm equally delighted to be back in your beautiful country … in the region of the fabled Black Forest and two of the world's best-known rivers, the Danube and the Rhine.

I'm also proud to represent an energy source that helps limit the environmental damage to irreplaceable natural resources—such as the Black Forest, which has suffered the effects of acid rain in some areas.

Acid rain is a threat to forests, lakes and rivers throughout the world … thanks to automobile exhaust and a variety of industrial processes—including some forms of electricity generation.

And yet some people who claim to care about the environment are trying very hard to shut down emission-free nuclear power plants.

What do they think is going to replace these plants? Nuclear energy produces the large amounts of electricity needed to support a thriving economy and a high quality of life—without emitting harmful pollutants.

Air pollution is a global issue—even with nuclear power plants providing 17 percent of the world's electricity. Imagine what the situation would be like without those plants!

One of the greatest geniuses of this millennium—Goethe—once observed that "nothing is more terrible than ignorance in action." Yet that is what we're seeing when so-called environmentalists lobby against nuclear energy.

We have experienced a great deal of that in the United States over the years. But an interesting change is taking place. Many people are becoming more aware of environmental issues and the threat of global warming. Some of nuclear energy's long-time critics are beginning to acknowledge its positive environmental role.

I've been asked to provide an overview of the nuclear energy industry in the United States—where we are today and what we expect in the future.

During the past few years, we have witnessed an extraordinary convergence of several key issues that affect the U.S. industry. The effects of this convergence are very positive.

Today, we have a highly competitive, dynamic industry that is poised for tremendous progress in the next several years. And in the future—early in the next century—we expect to see a modest expansion of nuclear energy in the United States.

This afternoon, I'm going to discuss three key points:

• First, there is growing consensus among policymakers that nuclear energy is vital for the United States to meet its clean air requirements. Nuclear energy matters. So issues that are important to the industry—such as used fuel disposal and regulatory reform—are getting the attention they need.
• Second, many states have ordered the electric power industry to open up to competition. Other states are moving in that direction. And that is good news for nuclear power plants.
• Third, the nuclear energy industry is very dynamic and forward-looking. While some utilities are leaving the power generation business, others are embracing generation—and nuclear generation in particular. The U.S. nuclear industry is poised for a renaissance. Indeed, that renaissance is under way.
  

My first key point: There is growing consensus that the United States must rely on nuclear energy to meet its goals of continued economic growth and cleaner air.

The United States has long recognized the need to develop solar and wind power. Taxpayers have poured billions of dollars into these technologies. So far, the gains have been small, but we should continue to invest in these energy sources so they can continue to play a role in our nation's energy mix.

What is new is the growing recognition that nuclear energy belongs in the same category as those technologies: It, too, is emission-free.

Those of us in this room have known that all along. But before the United Nations climate conference in Kyoto in 1997, few governments acknowledged nuclear energy's role in mitigating greenhouse gas emissions.

Now, policymakers are starting to recognize that the United States needs emission-free electricity, whether it's from hydroelectric plants, solar photovoltaics, windmills—or nuclear power plants.

U.S. Under Secretary of State Stuart Eizenstadt told a Senate committee early last year that "nuclear energy has a very real role to play" in addressing the climate change issue.

Senator Pete Domenici, in a speech last November, said "maintaining and even expanding our reliance on nuclear energy will be essential to maintain progress in clean air."

And just last month, Joe Barton of our House of Representatives had this to say:

"I want a broad-based energy supply for this country… As we look at the potential for global warming-and if we want to reduce emissions of greenhouse gases-nuclear energy has to play a large role."

These statements are clear and direct: The United States needs nuclear energy.

This technology already plays an important role in helping to avoid air pollution in the United States.

Between 1973 and 1997, nuclear generation helped meet electricity demand—while avoiding the emission of 81.5 million tons of sulfur dioxide … and more than 37 million tons of nitrogen oxides. As you know, these are the ingredients of acid rain.

In 1997 alone, emissions of sulfur dioxide would have been about three million tons higher … and emissions of nitrogen oxides would have been 2.1 million tons higher … if utilities had built more fossil-fueled plants instead of nuclear plants.

So nuclear generation has helped meet current clean air regulations by avoiding additional emissions as our nation's electricity output grew.

Most nuclear power plants are located in areas that are densely populated and have a high concentration of activities that generate air pollution.

Many of these same areas are having trouble complying with regulatory limits on nitrogen oxides or other pollutants—even though a large portion of their electricity comes from nuclear plants. These areas will soon face revised standards that will impose even tougher restrictions.

Currently, our clean air regulations do not recognize the significant role of emission-free generation in clean air compliance.

We call this the "hidden value" of nuclear power. Under current regulations, that value remains hidden as long as a given plant continues to operate. If the plant closes down, that "hidden value" quickly becomes obvious … because nuclear generation must be replaced with something else—typically fossil generation. And fossil generation has clean air compliance costs associated with it.

The industry is encouraging state and local governments to think of emission-free generation as a compliance tool for controlled pollutants, reducing overall compliance costs.

This hidden value of emission-free generating capacity must be recognized … and given financial value … and credited to nuclear units and other emission-free energy sources.

Several members of the U.S. Congress are exploring this concept. Getting financial credit for avoiding air pollution will enhance the competitive position of nuclear power plants.

There also have been discussions in Congress about perhaps requiring states to have a certain percentage of their electricity generated by emission-free sources. If Congress moves in that direction, we will work to ensure that nuclear energy is explicitly identified as an emission-free source.

But regardless of how these issues evolve, the majority of U.S. plants are very competitive … and they are endeavoring to reduce costs even further.

This brings me to my second point: The move to a competitive electricity marketplace is good news for the nuclear energy industry.

Competition is good for the industry because our plants are performing at high levels of safety, reliability and efficiency. And a well-run nuclear power plant is very competitive in the marketplace.

Last year, U.S. nuclear plants achieved an 87 percent unit capability factor … and 98 percent of units achieved safety system performance goals set for the year 2000.

In fact, from 1990-1998, increases in capacity factor resulted in an 11 percentage-point increase in nuclear generation. That translates into the rough equivalent of adding 11 new 1,000-megawatt plants to the grid.

Based on a three-year rolling average (1994-1997), the United States had nine nuclear units producing electricity below 1.5 cents per kilowatt-hour—that's about two-and-three-quarter pfennig-and 40 units producing at below 2 cents per kilowatt-hour, or roughly three-and three-quarter pfennig.

Those figures are more than competitive.

Ten or 15 years ago, the picture was somewhat different. Our plants were safe—but many of them were not very efficient. The industry has worked very hard to get performance up to the current level and keep it there. Utilities have borrowed techniques and ideas from each other—and from some of you.

And because the industry has worked so hard and so long to prepare for the future, we are ready to make the most of the opportunities now presented to us. Careful preparation is the key.

It is important to note that plants with the lowest production costs consistently are among the most efficient units—with high capacity factors and high safety performance. Acceptance of this technology depends on a high standard of performance.

The environmental role of nuclear energy is important. But safety is our paramount concern—and it always will be.

As I mentioned earlier, there is growing support for changes that affect the long-term competitiveness of nuclear plants.

For example, we're seeing progress in addressing the issue of so-called stranded costs—large capital investments that could be at risk in a competitive marketplace. The move to open competition in the electricity marketplace has accelerated the resolution of stranded cost issues … as individual companies position themselves for competition.

Twenty states—encompassing 52 operating nuclear units—have taken final action on electricity restructuring plans. Most states have provided utilities with a reasonable opportunity to recover stranded costs.

As nuclear power plants reach the end of their 40-year licenses, their capital costs are essentially paid off. Nuclear fuel costs are low and relatively stable. Under renewed operating licenses, these plants will be extremely profitable for their owners. I'll say more about license renewal in a moment.

Another issue that is very important to the industry is disposal of used fuel. The House of Representatives is working on a bill that has many positive features. We're pleased that it has received overwhelming, bipartisan support. As the legislation progresses through the House, the industry will work with members of Congress and their staff to improve certain parts of the bill.

Consistent with our legislative process, a similar bill is under consideration in the Senate.

And this year—for the first time—the Executive Branch has entered the discussion with a suggested course of action that acknowledges the government's accountability in the matter. The used fuel issue should be resolved in the next few years.

There also are tremendous changes under way in the regulatory area.

With strong support from Congress, the Nuclear Regulatory Commission has developed a more objective, risk-informed regulatory process.

This approach will enhance safety, while reducing unnecessary regulatory burdens that threaten the competitiveness of nuclear power plants. The new oversight process relies heavily on the use of objective performance measures for specific plant activities … and to a lesser extent on NRC inspections.

The NRC also intends to revise its regulations to incorporate risk insights. Again—increasing safety, while reducing unnecessary regulatory burdens.

The agency also has changed its approach to enforcement to be more consistent with safety matters. Most of the cited violations are for very minor issues that have no impact on safety. In the past, the NRC has given every violation about the same level of attention.

Under the agency's new approach, plant managers will decide how to address these very minor issues as part of the plant's corrective action program.

These regulatory changes are remarkable. Indeed, we are witnessing a transformation in the way nuclear technologies will be regulated in the next century.

The NRC will begin a pilot project next month to test the new oversight process at nine plants. The pilot project will be used to fine-tune the new process before it is implemented industrywide in January 2000.

Another expected benefit of regulatory reform will come in the tone and content of communications that the public receives from the NRC. These communications will become more objective and risk-informed—and, therefore, more consistent with the actual safety performance of our plants. This should further enhance public support.

This brings me to my third point: The U.S. nuclear energy industry is extremely dynamic and forward-looking.

A few minutes ago, I said that a nuclear renaissance already is under way in the United States.

Two companies have filed for 20-year license extensions for their combined five nuclear units … and six other companies have notified the NRC of their intention to do so in the near future. In addition, two companies that have decided to make nuclear energy generation their core business are purchasing three nuclear units.

At least two other plants are being examined as potential candidates for purchase.

All over the country, companies that operate nuclear power plants are restructuring their assets to position themselves for competition. Companies that design and service nuclear power plants are very active in pursuing business abroad.

Industry executives have worked closely with the financial community on this issue. The financial community is taking a more favorable view of nuclear energy's business prospects than it has for many years.

It's a new era for nuclear energy in the United States. Our nation has rediscovered this technology.

I've talked about a number of specific developments. But let me also share with you a personal perception: In discussions about nuclear energy, the tone is different now. The dialogue is measured … reasoned … and more open to new possibilities. I think people are more comfortable with nuclear energy than they were 10 years ago. They've grown somewhat used to it.

The public also appears far less susceptible now to the extraordinary scare tactics used by some of nuclear energy's critics.

There was a public meeting recently to discuss license renewal for a nuclear power plant in Maryland. This meeting drew the usual group of outspoken anti-nuclear activists. But this time, there was a difference. The people who really count, and who have a stake in the issue—the local residents—were outraged by the activities of these outsiders. They stood up for their plant-and for the company that has operated it safely in their midst for so many years.

Before I close, I want to talk briefly about public opinion.

Last year, a national survey looked at the views of an influential sector of the American public—college graduates who are registered to vote. Nearly nine out of ten agreed that we should renew the licenses of nuclear plants that continue to meet safety standards.

Three out of four agreed that we should keep the option to build more nuclear power plants in the future.

But the survey also showed what we call "a perception gap."

Sixty-two percent of those polled said they, personally, favor the use of nuclear energy. That is a clear majority. Yet most of these individuals believe they are in the minority on this issue! They support nuclear energy themselves, but they believe it is unpopular.

The same gap is found among legislators and policymakers. Although a large majority of policymakers support nuclear energy, they perceive that their constituents do not.

The survey uncovered two other points that bear close examination.

First, people don't know enough about what we do and how we do it. They don't understand the science of our business. Nor do they understand the lengths to which we go to provide safe, reliable and economical electricity.

And second, they are just coming to understand the beneficial environmental impact of the nuclear plants.

The industry is intensifying its efforts to communicate the benefits of nuclear energy—and to reassure those who support nuclear energy that their views are shared by many others.

For example, the Nuclear Energy Institute has mounted a major advertising campaign to promote the benefits of nuclear technologies. We are extremely active in coalition-building and other outreach activities. And in this age of the World Wide Web, we have improved our public Web site at www.nei.org.

This afternoon, I've discussed three key points related to nuclear energy in the United States.

First, many policymakers now recognize that nuclear energy is vital for the United States to meet its clean air requirements. They are increasingly committed to resolving long-standing issues that affect the competitiveness of this technology—such as regulatory reform and used fuel disposal.

Second, the shift to competition in the electricity marketplace is good for nuclear energy because a well-run nuclear plant is a very tough competitor. In addition, the dramatic changes taking place in the electricity industry have heightened interest in—and understanding of—nuclear energy issues.

And third, the United States has rediscovered the benefits of nuclear energy and other nuclear technologies. A renaissance is under way. I can assure you—along with the many other nations represented here today, the United States will remain a strong player in commercial nuclear technologies for many decades to come.

I've worked with nuclear energy all my professional life. It is as demanding a field as any I could imagine. As all of you know—from your own experience—it tests the intellect, the nerves and the patience.

In the course of my career, I've learned more about the workings of the political process … and the impact of the news media and public opinion … than I ever expected to when I was a young nuclear engineer.

And there is something else I've learned: Earth has the resources to nourish and support its inhabitants for countless millennia to come.

Consider how our major energy sources have shifted over time.

In the past, wood was the primary source of fuel for most of the world. As the population grew, we no longer could burn trees at that rate—or we'd have no forests left. So we turned to Earth's abundant supply of coal—which remains a major energy source.

But as the world's energy needs continue to increase, we are mindful of the potential consequences to the environment of burning greater amounts of coal.

In this century, scientists discovered another way to meet the world's growing energy needs: splitting the atom. I believe that—after a difficult few decades—we have positioned nuclear energy to become the energy source of choice for the next century.

Never have I felt prouder of the nuclear energy industry than I do today. In many respects, energy is the lifeblood of modern society … but the natural environment is its heart and soul. Think of the photographs you have seen of Earth taken from orbit. You'll understand what I mean when you see this beautiful blue planet set against the black void of space.

Emission-free nuclear energy has an important contribution to make—providing the electricity needed for a high quality of life … while helping to protect the environment of this one small planet we share. And all of us in this room are part of that.

As the English poet William Wordsworth once wrote, "nature never did betray the heart that loved her."

We are the true environmentalists. And our work is just getting started.

Thank you.