It began around four o’clock on a hot Thursday afternoon, last August. First the lights flickered. Then within three minutes, power plants began shutting down. Ohio, Pennsylvania, New York. Trains stopped running. Elevators stopped between floors. Airports closed.

In New York City, people walked miles in the dark to get home. In New Jersey about 1.5 million people couldn’t cook, read, or work.

Was it the “blaster” computer virus? Was it lightning? Nobody knew. All the public knew was that the power was out.

Now we know a lot more about what caused the cascading blackout that disrupted lives for millions of Americans from New York to Detroit. But we also know something else. For those days in August showed Americans that we have become a nation whose lifeblood is electricity.

As we begin this Nuclear Energy Assembly, it is with the knowledge that while no one person is indispensable, our industry is.

Last year we celebrated our 50th Anniversary. But on this day, we’ll focus on the future.

Because in the not-too-distant future, we’ll have another celebration. We’ll have new plants . . . and proven way to dispose of our used nuclear fuel. A new generation will look back past the disputes, the doubts, the delays to assess what we did.

I predict that they’ll marvel—as we did last year. They’ll see that we were able to remain the stewards of clean, safe and reliable power. They’ll see an industry . . . with its incredible ability to spark the economy and preserve the environment.

Ladies and gentlemen, to look at the events of 2003 is to see that the state of our industry is strong.

Have there been reversals? Sure. But that’s always been true.

Recently, one of President Bush’s advisors published a book she called, Ten Minutes to Normal.

She was talking about being on the campaign trail outside Normal, Illinois—but she also meant how tough it is to have a normal life in politics.

We sometimes see events—like TMI 25 years ago—where there’s a huge overreaction. We think we’ll never get back to normal.

But then, what I like to call “renormalization” sets in. Why? Because in many ways, we are a unique industry. Our individual successes depend on the success of our industry as a whole. That’s why we mobilize and work together. We think ahead. Share best practices. Take action. And we take the long view.

In 2003, we worked together to make a lot of progress, whether the intricate technical details of security and Yucca Mountain, or the broad policies expressed by the White House and Congress—on both sides of the aisle. We’re taking the long view. We’re taking action.

And we’re moving forward.

Don’t take my word for it.

Look at the Moody’s Investors Service commentaries. Over the last year they consistently recognized our “reliable and efficient plant operating performance . . . record high net capacity factor . . . (the) widespread movement towards license extension.”

And look at other headlines: Dominion Energy acquires Kewaunee. Exelon acquires British Energy’s 50 percent share of AmerGen.

When a mining company in Canada buys a 25 percent stake in a nuclear energy company in Texas . . .when twelve companies are willing to spend millions of dollars just to test the licensing process for building new plants . . . you know investors are upbeat.

They’re upbeat not just because of what’s changed—but because of what will change.

What happened in 2003 that justified this optimism?

Let’s look first at the five areas that traditionally indicate success: Safety . . . Performance . . . The Marketplace . . . Energy Policy . . . The Environment

Then let’s talk about the way NEI has tackled the key issues of that anniversary year.

Finally, let’s look at the way we used 2003 to plan for the future.

No matter what else happens in our business, safety has to come first.

For a long time it’s been clear we are the safest sector of the American energy infrastructure. We’re safe for workers who average 1/12 the injury rate of American manufacturing plants, year after year. We’re safe for communities.

But we can always do better. In 2003 we did. NRC indicators demonstrate that the industry is performing at extraordinarily high levels. In fact, three-quarters of our reactors have ALL green performance indicators—the highest level of performance in the NRC reactor oversight program.

We also saw capital improvements that enhanced safety and performance for the long term. And we saw advances in materials issues.

We’ve worked with the NRC on regulations concerning the use of “nuclear grade” components and systems . . . allowing plant operators to catalog components according to their importance when it comes to safety. That will let us spend less on replacement parts for non-safety related components – and more on equipment that keeps plants safe.

Finally, we’ve been urging development of a new regulatory framework.

It’s time to do more than change regulations one at a time. We need a comprehensive approach. That’s what a new rule we’re proposing can do. We’ll expect to file a petition for such a step this year.

We produced 766 billion kilowatt hours in 2003 . . . our third-best production year ever.

Since 1998, we’ve added 92 billion kilowatt-hours of electricity production per year. That’s like adding 2 one-thousand megawatt reactors to the U.S. grid each year over the past five years.

What about capacity factor?

Back in 1980, it was only about 55 percent. This year it was a near-record 89.4 percent -- even with some extended outages to replace large components that will ensure safe and efficient operation in the years ahead.

We have the lowest production costs of any supplier—and they’re still going down.

And we’ve sustained efforts in lowering production costs and streamlining regulatory processes, while our nuclear businesses expand.

All these are reasons we’re so competitive in the marketplace.

2003 production cost estimates for nuclear-generated electricity average $17 per megawatt hour. Coal-fired plants averaged $19 per megawatt hour in official 2002 numbers, and gas plants averaged $40.

There were other good signs. License renewals, for example.

Who knew in the 1980s and early 1990s how routine they’d be? The NRC approved 13 licenses in 2003…and about one-quarter of our industry’s plants have earned license renewal from the NRC. We commend the NRC for the business-like manner in which it has approached license renewal.

We believe eventually every reactor will renew its license for 20 years. It just makes good economic and business sense.

The economics are self-evident as we see companies expanding their nuclear business. In the case of Kewaunee and Ginna, buyers believe the assets they acquired will immediately increase earnings.

But remember: this turnaround didn’t happen overnight. Wall Street takes the long view. It sees solid performance, a commitment to safe, efficient, problem-free operation – and a steady path to future growth. That was reflected in the marketplace last year.

And it was reflected in our growing policymaker support in shaping our energy policy.

You need friends in Washington. Sometimes people criticize politicians for getting too friendly. They didn’t like Vice President Cheney and Justice Scalia going duck hunting together.

Personally, I’d rather they were hunting ducks – than ducking issues.

You know the story about the duck who goes into a bar?

Goes in every night. Asks the bartender, “Got any corn?”

After about the fifth night, the bartender gets so annoyed, he says, “No, no, no. You ask me one more time I’m gonna nail those web feet of yours to the floor.”

Next night, the duck comes in. “Got any nails?”

“No!”

“Got any corn?”

Smart duck – because he didn’t give up, and he knew what to ask for.

Did we get what we asked for in the Washington of 2003?

Not everything.

But the support for nuclear energy was strong. . . Broad… Consistent… Bi-partisan.

Two Illinois House members—one Democrat and one Republican—set in motion a change to the funding profile for Yucca Mountain so that DOE can get access to the billions of dollars in the Nuclear Waste Fund when it is needed for a repository. That was just one example.

You also saw it in the wide support for nuclear energy provisions in the Energy Bill.

There are those who worry because the bill didn’t pass.

Take the long view.

In a city where wholesale change sometimes takes decades, we saw progress in the support for renewing the Price-Anderson Act.
We saw progress in security issues, in the removal of tariffs for large components like steam generators, in the financial stimulus for new plant construction and a host of other issues.

Sometimes you see progress in strange ways.

We saw progress when there was an attempt to strip some of those incentives from the bill.

It was an unusual situation for us. Conservative Republicans opposed us because of their fiscal viewpoint. We got Democratic votes to beat them back. What better demonstration of broadened support for nuclear energy over the years?

Take this comment by Mary Landrieu – the Democratic Senator from this state:

"The Congress must recognize the important role that nuclear energy plays in our nation’s economy, our nation’s energy independence and security, and our nation’s environmental goals."

Yes, this is an election year. It’s going to be contentious, no doubt. But a year from now, we expect solid support from President George Bush . . . or President John Kerry.

Support for our issues was not limited to Congress and Pennsylvania Avenue.

An NEI poll conducted in April this year showed 73 percent of American college graduates registered to vote favor the use of nuclear energy as one of the ways to provide electricity—equaling the record-high public favorability just after the 2001 California energy crisis. Six out of 10 said we should definitely build more nuclear power plants. [62%]

In NEI’s April poll, 58 percent said air quality protection is the most important consideration for the way electricity is produced—far and away the leading factor.

There is growing awareness that nuclear energy has been a fundamental tool for complying with the Clean Air Act and that it will be essential for global efforts to reduce greenhouse gases. In 2003 alone, U.S. nuclear plants prevented as much carbon dioxide as was reduced from the entire power sector of this country between 1990 and 2000.

Meanwhile, there’s growing agreement about the threat of global warming.

We see that around the world. We see it in Washington and in our states.

That’s why, in 2003, we worked to increase recognition that emissions prevented by nuclear plants are one of the most valuable and cost-effective clean air compliance tools. NEI has worked with industry to devise regional and state-based strategies . . . in New Hampshire’s emission trading program, for example. .

In Washington, we stood with Energy Secretary Abraham in February 2003, when he announced the Administration’s Climate VISION greenhouse gas reduction program.

The President believes that nuclear energy could provide 1/5 of the total greenhouse gas emissions-reduction goal for all U.S. industry. We agree. That’s why we worked with other electric sector trade groups to influence the design of the new DOE greenhouse gas registry.

Emissions cannot be stopped by border guards. Our work in 2003 will be felt around the globe – and down through the generations.

And because we must be such an integral part of America’s future, we worked hard in 2003 on a variety of other issues.

Let’s go through those one by one. Starting with regulatory stability. . .

There was once a man who drowned in the great Johnstown Flood, up in Pennsylvania. When he got to heaven, he asked St. Peter if some people would like to hear about his amazing experience.”

St. Peter said, “Okay – but don’t talk too long. You got Noah in the audience.”

I feel a little like that with Chairman Diaz here, today.

Mr. Chairman, I can’t emphasize enough how much you and the other commissioners have done to establish the spirit of cooperation that’s allowed this industry to move forward. Regulatory stability is important for everything we do.

We’re particularly gratified by the progress we made this year – especially with a new NRC rule designed to allow companies to identify more precisely which components have high safety significance … and therefore must be nuclear safety-grade.

The final rule is expected to go to the commission for a final vote soon. How did we get to this point? The NRC has made tremendous progress on this issue. And NEI led the industry in its effort to provide guidance for our plants. Soon, we may have a rule that, most importantly, increases safety – and reduces cost. It’s an example of what we can do when we work together.

The commission also is working on a rule revision to eliminate the requirement to consider the loss of off-site power concurrent with a large-break loss of coolant. The rule may be revised to reduce the size of the maximum hypothetical pipe break.

The NRC should get enormous credit for moving ahead with this work. Such changes would be a significant step toward joining realism with regulation.

We saw other achievements in 2003. We made progress in making the reactor oversight process more consistent. We completed a pilot project to help NRC make mitigation system performance indicators focus more on safety. I’m confident we’ll see progress on the new system in 2005.

We streamlined the format for license renewal applications, saving about $1 million per application. The new format also has streamlined the NRC’s timetable for review, and the agency is now reviewing up to 12 license renewal applications each year.

NRC also issued a new four-phased approach to addressing PRA scope and quality. That’s a big step forward, too. It lets us make practical, risk-informed improvements as our technology evolves.

Whether in the halls of Congress or at the NRC, we have been a constructive partner, not just to benefit our industry, but to benefit America.

There is nobody in this audience who doesn’t know how important it is to focus on ensuring that we maintain the safety and integrity of plant systems and components under the day-to-day stresses of reactor operations.

We’ve had unanimous executive level support on this issue. We approved a strategic plan for the industry . . . and we have committed some real money to this issue.

We’re spending $60 million a year to address relevant materials issues and related applications . . . proactively. We’ve put new inspection protocols in place.

We have the techniques to anticipate and detect potential problems. And we have the tools to fix them.

Now, we also have a clear, coordinated model for the way this industry should be proactively maintaining vital systems and components at our facilities.

New issues will always emerge. We must develop solutions before the problems develop.

As an industry, we have taken that same proactive approach to security…

Before 9/11, our plants were already the best-protected facilities in America’s critical infrastructure.

Now they’re even better.

Since 9/11, we’ve invested some $500 million in security. Implementing the new requirements will take another $500 million. That work will take place at 65 sites, and will make us more secure.

Meanwhile, we worked to make sure the new plans were practical and effective.

We worked with legislators to make sure any new legislation didn’t damage the long range interests of America. Result: the Conference Report on the Energy Policy Act of 2003 included eight provisions for security that we support.

In short, we reached out to these audiences . . . as well as to the media and our customers. And we saw the effects.

An October 2003 nationwide public opinion poll asked which of five industrial facilities were secure—nuclear plants, hydroelectric dams, chemical plants, natural gas pipelines/storage facilities or ports. The highest rating? Our industry.

One expert recently called our industry the “best defended part of our infrastructure.” This is not to say our job is done. We are continuing to work with the NRC, the Department of Homeland Security and others to implement requirements that will enhance already-strong security at our facilities. In the near-term, we must focus on the October due date for implementing the new NRC requirements . . . and we must do this efficiently and at the highest quality. We must train our energies on ensuring our industry does not carry a disproportionate security burden, compared with other industries.

But security from terrorist attack is only part of what makes Americans feel safe. We also meet that responsibility in the area of used nuclear fuel management . . .

In 2002, we took a giant step forward. The President determined Yucca Mountain was the right place for a national repository – and that this was the time to move.

Both Houses of Congress agreed. This year the Administration budgeted $580 million for Yucca Mountain – the highest ever. The Administration has also asked for $880 million in next year’s budget.

The Department of Energy took the first steps towards developing a transportation infrastructure, issuing its decision to designate a rail corridor in Nevada for the final leg of those shipments.

But we have a tough fight ahead.

A few months ago, former Nevada Governor and U.S. Senator Richard Bryan testified before a small group of congressman at a field hearing in Las Vegas about used nuclear fuel transportation. In it, you can find every myth you’ve ever heard. Nobody can guarantee safety . . . expect as many as 310 accidents . . . transportation is the “Achilles heel” of the repository program. The list goes on …

We have to counter such arguments. And so in the year ahead, I ask every one of you: speak out in your communities . . . talk to local, state and federal officials.

Eventually, funding for the Yucca Mountain Project will exceed $1 billion a year. The money’s there. Our customers contribute more than three-quarters of a billion dollars to the Nuclear Waste Fund each year. We must make sure that the funds collected for used fuel management are spent for used fuel management.

That’s the right way to proceed for consumers, for policymakers and for the industry. But we will win only by making sure the rest of America wants it, too.

Those are the essential issues for our industry today.

But we pride ourselves on looking ahead, and we have been planning for a very bright future in recent months!

We see the signals everywhere that it is time to pave the way for the possibility of building new nuclear power plants. . . Newspaper editorials. Public opinion polls. Political speeches.

And we see it in comments from your companies.

In the last few months, three consortia submitted proposals to DOE to test the NRC’s licensing process for building new plants. DOE will look at co-funding the cost of these applications. We now have 12 companies engaged in these consortia, bringing to bear the broad, proven experience of plant operators, architect-engineers and original equipment manufacturers. For the first time in decades, they are concentrated on proving those regulatory processes needed to bring a new reactor to market on time and on budget.

That’s a big step forward.

Meanwhile, we moved ahead in other areas. In 2003, Dominion, Exelon, and Entergy began testing the NRC’s early site permitting process, which is expected to take 30 months.

Right now, Wisconsin has a state moratorium on building new plants absent an operating repository. We are working to support legislation in Wisconsin State Assembly to remove it.

Meanwhile we tackled another key issue: the dilution of earnings that occurs with large capital projects. In Washington, we worked with the Executive Branch and Congress on legislation that mitigates that kind of effect.

We need to stimulate investment, not hamstring it.

And in 2003, we saw legislation pass the House that could do just that. It included a production tax credit of $18 per megawatt-hour for eight years for first 6,000 megawatts of new nuclear capacity built in U.S.

That means a 1,000 megawatt plant could spin off as much as $1 billion in tax credits over the first eight years of operation. The President last week in Michigan reaffirmed his belief that the United States should revitalize the nuclear energy industry . . . and build new nuclear plants to reduce America’s dependence on foreign sources of energy and help preserve the environment.

Finally. . . how do we make sure we have the best work force for the 21st Century?

Competition is strong for highly skilled workers in degreed and craft positions. The best workers aren’t going to seek us out. We have to seek them out.

And that means finding workers that reflect the future of our country. You know, the 2000 Census made clear that over the next 50 years, the United States will become increasingly diverse. Moreover, the percentage of women wanting to work fulltime continues to increase.

We’re not interested in diversity just for the sake of diversity. . . we know we can’t find the best workers possible if we just look at half the population.

So, in 2003 we worked with the Department of Labor, unions and others to recruit and train workers. We are working on a diversity recruiting initiative with the Society of Women Engineers and the National Society of Black Engineers.

We pushed for increased funding for university nuclear science and engineering programs in the Energy and Water Development Appropriations Bill.

We developed an internship clearinghouse on the Web.

. . . Reached out to historically black colleges and universities.

. . . Stepped up coordination with technical schools, unions and the military to cultivate new industry craft workers in all the trades.

. . . And surveyed work force needs.

We’re working to make sure the best workers in America . . . work for us.

We can be so proud of what we accomplished in 2003. It is no coincidence that public approval of nuclear energy is among the highest it’s ever been. It’s no coincidence that our support comes from Democrats and Republicans alike.

Who gets the credit? Well . . . everybody likes to get credit. I once saw a cartoon of two beavers sitting outside Hoover Dam. One says to the other, “I didn’t build it but it’s based on an idea I had.”

In this case, the credit belongs to you. All of you. You worked hard in 2003 and this year not just to run a plant, but to further an idea.

We don’t always know where our ideas will lead.

I’m not going to make a lot of predictions about what the world’s going to look like a hundred years from now.

Some things we can predict, though.

We’re all familiar with our Vision 2020 goal of nuclear energy providing 60,000 megawatts of new power. That’s enough to serve 38 million homes.

We’ve talked about helping to realize our country’s Clean Air Act and Climate Vision goals. Nuclear energy has never been more relevant than today in meeting our clean air goals.

I have no doubt that we’ll succeed. I’ll leave the specific steps to the Call to Action that Joe Colvin will deliver later this morning.

Let me end not with a call to action. . . but with a commitment to principles that lie at the bedrock of our industry.

To those who want a secure America, we must say this: we do not just take pride in our record of safety, but we’re committed to protect against threats as current as today’s headlines.

To those who want to preserve America’s environment, we must say this: we will provide tools each year to make sure the air is clean whether they are hundreds of miles away from any plant – or living right next door.

To those who want to sustain power to America’s communities, we must assure them of this: our plants will be producing electricity safely and reliably on the hottest days of August, or the busiest time of day—and at a price they can afford.
I once heard a great Alabama engineer point out one truth about human history.

“On the fields of hesitation,” he said, “lie the bleached and dried bones of thousands . . . who on the very threshold of victory, lay down to rest and died.”

We cannot lay down to rest.

The record of human achievement has been shaped by those who had the strength to push on.

That is what we must do.

Will we have reversals? Disappointments? Of course. That just means the system’s working.

We’ll get back to normal. We have to take that long view – and keep on working.

We must do it with vigor.

We must work in our communities and in Washington.

We must stay the course.

That’s how, even if we can’t predict everything about the future—we can help shape it.

That’s how we will use something as small as an atom to create opportunity too large to measure.

Thank you.