I want to begin by thanking Gregg Renkes and Washington Policy and Analysis for organizing our discussion this afternoon. It's highly appropriate that the inaugural session of this program deals with the issue of energy. Producing the energy needed by Japan and the US is an issue that has dominated much of the 20th Century and will continue as a major concern in the 21st.

The question before both our nations - indeed every nation - is how to reconcile two objectives - adequate energy supply and a healthy environment. For too long the idea has been put forth that we can have either one or the other - but not both. I strongly disagree.

Angie Howard has just reviewed for you the status of the nuclear generating industry in the U.S. I'll take the next few minutes to discuss how one company - PECO Energy - is responding to the challenges facing nuclear power - both as a company and as an industry.

A few months ago, I held a series of meetings with our employees to discuss with them PECO Energy's vision. As change accelerates in the electric utility industry - especially in our home state of Pennsylvania - I felt employees must clearly understand where we are going.

I think many of them were taken aback by the simplicity of our vision.

Quite simply it is to become the world's leading provider of clean energy. Clearly this is not a goal that will be achieved this year, or even in the next five years. Maybe not even in the careers of many of our current employees.

This is a generational vision. It's a statement of what we're working every day to become.

There are two things every human has in common with everyone else on the planet. First, we are all mortal. Second, we all desire to leave the world a better place for our children and grandchildren. Woodrow Wilson put it clearly 80 years ago when he said "My clients are the children; my clients are the next generation."

Our mission at PECO Energy is to ensure that air and water are cleaner for generations to come. Our clients truly are future generations.

While people can aspire to a vision, it's vitally necessary to set achievable goals along the way. For that reason, we've set a goal of accumulating by acquisition or contract 25,000 megawatts of generation - almost three times our current level - by the year 2003.

Much - but not all - of that generation will be nuclear. Last year we announced plans to purchase Three Mile Island Unit One through AmerGen, our joint venture with British Energy and I am sure similar purchases will be announced in the near future.

I refer to this strategy as "contrarian," since it's contrary to the conventional wisdom that nuclear power is expensive to own and to operate.

The average production cost of generation at nuclear plants currently ranges from 1.47 to 3.03 cents per kilowatt hour. I'm proud that the four units PECO operates are on the low end of that average. I'm convinced that all of these plants can operate at lower costs and those plants at the high end can operate at dramatically lower costs. Achieving these lower cost objectives will make nuclear plants some of the best bargains available.

The plants on the high end of the scale tend to be single unit plants. These have some of the same overhead costs as companies, such as PECO, that operate multiple plants.

As the nation moves towards competition in electric generation, the owners of these single unit plants face a dilemma: Either close their plant or find a way to make it competitive.

Closing nuclear plants with many operating years still in them is not only bad for the industry - it also poses a potential threat to national security. Keep in mind that all the electricity from the over 100 nuclear plants in the U.S. comes predominantly from domestic sources of fuel. Both Japan and the U.S. are well aware of the dangers posed by being overly dependant on unstable foreign supplies of energy.

Therefore, the best option is for the owners of these single unit plants to become competitive. In most cases the best way to do that is to sell the units to a company that can achieve economies of scale - thus allowing untapped value to be extracted.

Our plan at PECO Energy is to group plants into what we call "pods". Each unit would have its own operating staff, but responsibilities such as maintenance, fuel procurement, outage management, and administration would be shared among all the units in a single pod.

Our first POD is already emerging in the Mid-Atlantic region. TMI Unit One will be grouped with units at Limerick and Peach Bottom to form this pod.

One staff of outage experts can handle refueling outages for all the plants - cutting outage length, reducing costs, and making the plants more competitive. This can be done with no compromise of safety. In fact, in many instances safety can be enhanced as worker exposure to radiation is reduced through more efficient outage management.

I liked the quote I saw in a speech NEI's President Joe Colvin gave last month. He quoted Prudential Investments David Kiefer who said, "I think people are realizing that … once you have a nuclear plant - if it operates well - its a pretty darn cheap source of power." I couldn't agree more.

Now let me move onto the important issue of maintaining and improving America's environment.

As I stated a few minutes ago, PECO Energy's vision is to be the world's leading provider of clean energy. In the 21st Century, this requires a substantial commitment to nuclear energy.

When most people are asked what they want in a "clean" environment" they'll tell you "clean air and clean water." The vast majority of Americans relate well to this goal rather than that of many environmental activists who push the more difficult objective of a "sustainable environment."

While this is a commendable long term objective, I'm not sure in all of human history we've ever a truly sustainable environment that meets the economic needs of our societies. I believe that the last time we saw a truly sustainable environment was in the age of the caveman and I do not know many who want to return to that era.

Since nuclear plants create no greenhouse gases, or any of the Environmental Protection Agency's six defined air pollutants, they do help achieve the goal of clean air most people state is their immediate environmental objective.

Let me give you a dramatic example of what would happen if we decided to stop operating every nuclear power plant tomorrow and replaced them with fossil fuel plants. Just to keep the air quality at its current level we'd have to take 90 million cars off the nation's highways.

If we did that, do you know how many cars would remain? Forty million!! We'd have to give up about two-thirds of the cars on the road today. I ask you, how many Americans would accept such a trade-off? Very, very few.

I'm convinced that without nuclear power, America will not meet the air quality standards set at Kyoto. And I believe that many environmentalists are also coming to that conclusion as well.

We cannot ignore, however, the issue of spent fuel. Continuing to store it at our plants is not an acceptable long-term solution. It is important to recognize that spent fuel management is a political, not a scientific or technical, problem.

I share NEI's increasing optimism that Federal Government is moving closer to the day when it will accept its responsibility for spent fuel. I know all of us look forward to that day.

Our two nations - Japan and US - share a common need for nuclear power. Japan generates over 35 percent of its electricity from nuclear power, while in the U.S. that figure is just over 20 percent. Neither nation can permit its nuclear industry to decline.

When I read the title of our discussion today -- "The Future of Nuclear Power in the US: Decline, or Consolidation and Rebirth?" — I was somewhat taken aback. "Decline" is not an option!

Certainly as more states move to open their markets to electric competition — as has occurred in Pennsylvania — changes will be necessary.

Consolidation will occur. Plants will have to become more efficient. Competition will force us to lower costs. But all of these are doable and should not shake our confidence in nuclear's ability to compete.

And while consolidation is inevitable, there are three reasons we should be confident that nuclear power will experience a rebirth in the future:

1. Production costs are down, and can go even lower.
2. U.S. plants operate at the highest level of safety ever.
3. No other major fuel source generates electricity without emitting greenhouse gases.

People sometimes ask me if I ever feel overwhelmed by the challenges my company and industry face. I tell them "Not only do I not feel overwhelmed, I'm excited by them."

All of us associated with the electric utility industry have been given an opportunity few people ever receive --the opportunity to transform an entire industry - an industry absolutely vital to every man, woman, and child in this nation.

Excited? Absolutely!

Every PECO employee will know that the daily decisions he or she makes bring us one small step closer to the day when we achieve our vision of being the world's leading provider of clean energy.

And our competitors will know that too!

I can think of no worthier goal. I can think of no more fulfilling aspiration. I can think of no greater opportunity.

Thank you.