Thank you, Susan, and thanks to everyone here for inviting me to join you this evening, for your hospitality and for giving me a reason to visit this wonderful part of the country.

I’m especially pleased to be here as the Savannah River Site and the Savannah River Lab continue their historical roles as a vital part of our nation’s defense establishment while also transitioning to a future dedicated to more peaceful goals for mankind and the atom.

Tonight I want to talk about the future of nuclear energy. Thanks to sustained superior performance, and to conditions in the energy markets, that future looks brighter than it has for decades.

It is a new day, and we are making a new start. In the United States and around the world, we are re-launching the nuclear energy industry to deliver the baseload electricity America and the world will need to power growing economies, lift hundreds of millions of people out of poverty and safeguard our environment for future generations.

I want to focus on three areas tonight.

First, I want to share some thoughts on energy security, and on our energy situation today, which is approaching crisis proportions. I also want to discuss U.S. energy policy, and how we managed to dig ourselves into such a deep hole. There are not many bright spots in this picture, except one: Thanks to conditions in our energy markets, our political leaders and policymakers have rediscovered the benefits of nuclear energy and have concluded that we must build substantial numbers of new nuclear plants in the years ahead.

Second, I want to focus on two of the prerequisites for new nuclear plant construction in the United States: The need for a sustained commitment to safety and reliability in operating our plants, and the need to demonstrate continued progress in our program to manage used nuclear fuel.

Finally, I want to say a few words about unfinished business still ahead of us and the strategic role that institutions like Savannah River will play. I know the Savannah River Lab’s motto—that you put science to work. Rest assured our nation needs to put science to work in order to capitalize on the potential of nuclear energy like never before.

I took the helm at NEI after 38 years of service in the United States Navy because I am convinced that nuclear energy is essential to our nation’s energy security, and that energy security is a keystone of our national security. National security involves more than protection against external military threats. National security includes public confidence in our nation’s economic prospects ... confidence that we can sustain economic growth ... confidence that we can create jobs and promise our people a higher standard of living. National security also involves our government not being held hostage to values that are in opposition to our democratic principles by people who fundamentally hate us.

Over the last 15 years, slowly, a little bit at a time, we have placed that security at risk.

Even before Hurricanes Katrina and Rita, oil and natural gas prices were increasing and our energy supply and delivery infrastructure already were stressed. The hurricanes pushed that infrastructure beyond the breaking point.

Through the summer of 2005, natural gas prices were in the $6 to $7 per million BTU range—high by any standards. But last week, natural gas at one of the major trading hubs in Texas was over $13 per million BTU, and the 12-month forecast on the New York Mercantile Exchange was above $11.

In the Gulf of Mexico, 50 percent of natural gas production and 60 percent of oil production is still shut down—either because of damage to offshore platforms or to onshore infrastructure. The Gulf of Mexico accounts for approximately one-quarter of U.S. natural gas production and roughly 30 percent of oil production. Most experts believe production will not be restored fully until the end of the first quarter of 2006, at the earliest. There’s little prospect of quick relief from the pressure on natural gas supply and prices.

Louisiana and Mississippi have suffered greatly, to be sure, but our entire nation will suffer economic damage because of higher energy prices.

In those parts of the country that depend heavily on natural gas for electric power generation—Florida, the West Coast, New England—we can expect significant increases in electricity prices. One Florida electric utility reported last week that its fuel costs have increased by about one-third this year. This, in turn, will increase the cost of electricity to commercial and industrial users by 25 to 40 percent.

Electric utilities in those parts of the country may well find themselves squeezed between rising fuel costs and state regulators trying to protect consumers from the impact of higher prices. Wall Street already is concerned about the potential for stress on utilities’ cash flow, leading to declining credit quality.

Other industries that depend heavily on natural gas, either as a fuel or a feedstock, will suffer, too—chemicals, plastics, packaging, steel, automobile manufacturing. Wall Street already is warning investors away from these sectors. Some were reeling even before Katrina and Rita drove energy prices higher. The U.S. chemical industry has shut down more than a dozen major U.S. manufacturing facilities in the last two years because of high natural gas prices and moved that production overseas. That’s more than 100,000 jobs lost.

In short ... a painfully bleak outlook. If there is a silver lining, it is this: Today’s market environment reinforces the strategic value of our operating nuclear plants and the urgent national imperative to build more.


How did an $11-trillion-a-year economy and the world’s most powerful nation get itself into this predicament?

We are paying the price today for our inability to strike a balance between what was expedient and easy in the short-term and what was prudent, but more difficult, for the long-term.

Let me give you just one example: Since 1992, when the U.S. last enacted major energy policy legislation, the electric industry has built more than 270,000 megawatts of new natural gas-fired generating capacity. In so doing, we placed unsustainable demands on natural gas supply and exposed consumers of natural gas, and of electricity from natural gas, to punishing price volatility.

In that same time period, we’ve added only 14,000 megawatts of new nuclear and coal-fired capacity—all of which started construction back in the 1980s. Today, coal and nuclear energy together represent approximately 70 percent of U.S. electricity supply, and they provide the highest degree of price stability. But investment in new nuclear and coal-fired power plants has virtually disappeared in the last 10 to 15 years. There’s something seriously wrong with this picture.

The American electricity business faces major challenges: rising electricity demand; more demanding environmental regulations; and a decade of chronic underinvestment in new generating plant, long-distance transmission and other critical energy infrastructure.

Investment capital runs away from uncertainty, and market restructuring during the 1990s resulted in significant business risks and uncertainties, which inhibited capital investment in advanced nuclear power plants and coal technologies.

We must reverse this trend. We’re living off energy investments made by earlier generations, not making the investments necessary to serve our own needs, and that is a sorry legacy for our children and grandchildren.

Fortunately, with oil and natural gas prices at record highs, America’s political leadership has taken action.

This year’s Energy Policy Act provides broad-based stimulus for investment in new electric power infrastructure, including a new generation of nuclear plants. That investment stimulus is essential to preserve the diversity of fuels and technologies that is the strength of the U.S. energy supply and delivery system.

The legislation provides two essential building blocks for new nuclear plant construction:

First, investment stimulus for new nuclear power plants, in the form of loan guarantees and production tax credits, to offset the higher cost of the first new nuclear plant designs that we build.

Second, investment protection for the first six reactors—standby insurance, if you will, in the event of delay in the regulatory process beyond the industry’s control. We believe the Nuclear Regulatory Commission’s new licensing process, under which we receive a single license to build and operate a new nuclear plant, will work as intended. But we cannot be certain, and the insurance will allow boards of directors to authorize multibillion-dollar investments in new nuclear plants, confident that they are protected against unforeseen delays.

The policy initiatives in the energy legislation will ensure that nuclear plant deployment activities now underway will accelerate.

Two consortia are developing applications to the Nuclear Regulatory Commission for combined construction and operating licenses. Several other companies are seriously considering them. We expect to see six or seven applications for combined construction and operating licenses over the next two to three years.

Three companies are seeking early site permits from the Nuclear Regulatory Commission, with others waiting in the wings. Three advanced reactor designs are in varying stages of the Nuclear Regulatory Commission’s design certification process.

We expect to break ground on new nuclear plants in the United States around 2010, with commercial operation around 2014. Once those first plants are built and operating, and as companies and investors gain confidence in the new licensing process, we can expect construction of significant numbers of new reactors after 2015.


Clearly, favorable market conditions are among the prerequisites for new nuclear plant construction, and current business conditions certainly dictate a need for new nuclear capacity. But there are other prerequisites, and I’d like to touch on two of those: Safety and performance, and used nuclear fuel management.

First, safe performance.

Nuclear power can be an unforgiving technology, although our conservative design approach of “defense in depth” helps ensure complete protection of public health and safety.

We also operate in an unforgiving public environment where the penalties for mistakes are high and where credibility and public confidence, once lost, are difficult to recover.

Managing this technology successfully requires high standards and eternal vigilance.

The U.S. nuclear power industry has achieved dramatic gains in productivity, reliability and safety over the last 15 years. The U.S. nuclear plant fleet has an average capacity factor around 90 percent, and our best plants are achieving three-year average capacity factors above 95 percent.

We have reached a high operational plateau, but we must still guard against complacency and remain mindful of our challenges.

As electricity markets are deregulated, we must resist pressures to shave investment in staff, in training, in preventive maintenance and in equipment. As plants age, we must devote more attention to materials issues, anticipate potential degradation mechanisms and manage them before they have an impact on plant performance or regulatory confidence. We have had a few surprises in this area, and we cannot tolerate surprises.

We must rebuild our infrastructure, starting with the work force. The slowdown in nuclear plant construction over the last 20 years has reduced the cadre of qualified people, and those we have are—like our plants—aging.

The second prerequisite is for continued progress in managing our used nuclear fuel ... in developing the centralized storage and disposal facilities necessary to discharge that responsibility. We do not believe a permanent disposal facility must be operational in order to start construction of new nuclear plants, but we do believe that we must have a plausible program in place that is making visible progress.

People who are opposed to nuclear energy say that we don’t know what we’re going to do with the high-level radioactive waste. That is a myth. We know exactly what we’re going to do with it. We’re going to follow the course recommended for decades by independent scientific organizations around the world, including our own National Academy of Sciences. We’re going to isolate this material deep underground in stable geological formations, in a dry environment, remote from people.

We have just such a place. We also have 20 years and $6 billion of scientific investigation that demonstrate that the site is suitable for long-term isolation and management of used nuclear fuel.

Let me also clarify one other point: In my discussions with people about used nuclear fuel management, I find many who believe that the Department of Energy is simply going to bury the used nuclear fuel at Yucca Mountain and walk away, trusting in the site’s natural geological characteristics and the engineered safety features of the containers to contain the waste by-products.

That’s not the plan. It has never been the plan.

This facility will remain open and closely monitored for 100 to 300 years. The law requires an unspecified period of retrievability. And the Department of Energy’s Final Environmental Impact Statement describes this plan.

Extended monitoring and the ability to retrieve the casks will allow us to recover the energy content in the fuel if it becomes cost-effective to do so, or if we choose to reprocess used fuel in order to reduce the volume of the waste.


Someone once said that people who use crystal balls often end up eating broken glass, but let me give you my perspective on how the future of nuclear energy technology might unfold.

In the near-term, we are approaching a new build cycle for advanced light water reactors. These reactors are well-suited for bulk electricity production, and we will build many more of them well beyond 2025.

By 2025, we should also have demonstrated and started commercial deployment of high-temperature gas-cooled reactors, with a more varied product slate—electricity, yes, but also hydrogen and process heat for a variety of industrial and social applications, such as water desalinization.

And sometime after that, but certainly within the next 25 to 30 years or so, we should see deployment of spent fuel processing facilities to separate unburned uranium and plutonium from the rest of the used fuel, to separate actinides from fission products, to immobilize the fission products in a stable, inert medium suitable for long-term disposal. We also should see deployment of new-design reactors capable of burning the actinides, thereby reducing a 500,000-year disposal challenge to something much shorter and more manageable.

I am convinced that Savannah River can make an enormous contribution as this future unfolds. This vision for nuclear energy plays to this institution’s core competencies: Developing the advanced thermochemical hydrogen production technologies that can be married to high-temperature reactors ... developing advanced processing and treatment techniques for used nuclear fuel ... immobilizing the legacy wastes from Cold War weapons production programs to demonstrate that we can manage radioactive by-products safely for the long-term ... and much, much more.


In closing, let me offer a perspective on the strategic value of nuclear energy, and the moral imperatives associated with energy supply.

Nuclear power plants have three distinguishing characteristics.

First, they produce large volumes of low-cost electricity around the clock at extremely high levels of safety and reliability.

Second, they produce electricity at a stable price, at the lowest marginal cost of any source of electricity, without punishing price volatility.

Third, nuclear plants are the largest source of emission-free electricity we have and they play a key role in preserving air quality.

Three attributes: Reliable, affordable electricity at low cost. Forward price stability. Clean air.

Other sources of electricity have one or two of these attributes, but only nuclear plants have all three. That is what makes nuclear energy a unique value proposition, and that is why America needs more nuclear energy now.

Finally, it seems to me that those of us fortunate enough to live in the richest countries in the world have a moral obligation to think more broadly about energy and environmental issues than we often do.

As we plan and implement energy and environmental policies for America, we should do so against the larger backdrop of the world’s energy and environmental needs, mindful of the pressures and imperatives that exist globally.

Wealthy as we are, we are not insulated from energy and environmental trends elsewhere in the world. Oil prices soared past $50 a barrel this year in large part because of China’s growing appetite for oil—mostly for electric power production—to drive its double-digit economic growth.

Efforts to reduce greenhouse gas emissions will be overwhelmed by increases in emissions from countries like China and India as they burn vast quantities of coal to fuel economic growth.

So it’s not just America that needs more nuclear power plants. The world needs massive deployment of carbon-free technologies like nuclear energy.

We know there is a direct correlation between a country’s per capita income and its people’s access to electricity ... between that access to electricity and infant mortality rates ... between that access to electricity and life expectancy.

I believe the world is approaching a crossroads—two possible futures—in terms of energy supply, as our global population increases from 6 billion today to 9 billion by the middle of this century, with most of this growth in impoverished areas—areas without access to electricity.

Down one path lies a future I do not care to contemplate: A world in which we fail to supply the energy needed to ensure that most of the world’s people are fed and sheltered, educated and employed ... a world in which children yet unborn are condemned to a life of poverty and misery and sickness.

But down the second path lies a brighter world: A world in which energy development is managed in a sustainable way ... a world in which we no longer fight wars with guns and bullets ... a world instead in which we use science and technology—including nuclear energy technology—to fight poverty and sickness and environmental damage.

Please remember those two possible pathways. And when you leave this place, please remember that you are more than scientists and engineers working at a nuclear-oriented facility. You are so much more than that.

Each one of you is an ambassador for a vision of a better world. And by continuing to put science to work, the people of Savannah River can help build a bridge to that better world.

Thank you.