Introduction
Thank you, Red. I’m pleased to be here, less than a week after the first major energy legislation in more than a decade passed the House and Senate.

Today’s situation reminds me of Winston Churchill’s words in a radio address to the English people during World War II. His words were directed at U.S. President Franklin Roosevelt. “Give us the tools,” he said, “and we’ll finish the job.”

That’s what the energy legislation does. It gives us many of the tools we need, at least in the nuclear energy sector. Now it’s up to us to finish the job.

Today I’m going to do four things:

• Discuss the obvious relationship between U.S. manufacturing and the electricity industry, and then a little bit about the U.S. electricity business.
• Discuss why nuclear energy simply must be part of our future energy mix.
• Suggest that now is the time for American industry to evaluate getting into the nuclear business.
• Ask for your help in spreading the first three messages.

The United States is using more and more of its energy in the form of electricity, and this trend will continue. Since 1973, U.S. GDP has grown by 138 percent. Electricity consumption increased by 45 percent. Overall energy use has gone up, too, but only by about one-third. It doesn’t take a math whiz to conclude that American manufacturing and the electric power industry must grow in harmony.

Electric power sales represent 3 percent to 4 percent of our gross domestic product. But the other 96 percent to 97 percent of our $11-trillion-a-year economy depends on that 3 percent to 4 percent.

We cannot afford to gamble with something as fundamental as electricity supply, and the biggest problem we face with nuclear energy is not having enough of it.

The Electricity Business Today
We face immense challenges in rebalancing our nation’s pressing short-term needs and longer-term imperatives, and I want to start there today.

The U.S. economy and manufacturing sector are paying the price today for our inability to strike that balance between what was expedient and easy in the short-term, and what was prudent and more difficult in the long-term. We are paying the price today for 10 to 15 years of neglect of longer-term imperatives.

We spent much of the 1990s restructuring, in about half of our states, the electric power business in the United States.

In the process, we achieved some substantial gains.

In the nuclear business, ownership and operating responsibility for our nuclear plants increasingly is consolidated in the hands of large nuclear generating companies for whom nuclear power is a core business—companies with the resources and capabilities to achieve much higher levels of safety, reliability and productivity than ever before.

The result: America’s 103 reactors have been consolidated under just 25 owners, and just 10 own 70 of those reactors.

The benefits have been substantial. Training has benefited, as companies have been able to share best practices and improved quality standards with more personnel. Efficiency has surged, with an average capacity factor across the industry of better than 90 percent. And through plant uprates over the past 10 years, we’ve added the equivalent of 18 new plants.

But we lost something, too, as we experimented with competition and restructuring. The old, structured, regulated system produced a coordinated joint planning process among energy companies and state public service commissions. That process ensured consideration of longer-term issues such as the need for fuel and technology diversity, transmission investment, energy security and stability of electricity prices.

We lost that long-term planning with deregulation and restructuring. With restructuring, we turned resource decisions over to that invisible force called “the market.” We must accept that restructuring cannot be undone, but we must also figure out how to recreate the long-term planning function.

Since 1992, when the United States last enacted major energy policy legislation, the electricity industry has built more than 270,000 megawatts of new gas-fired generating capacity.

By contrast, only 14,000 megawatts of new nuclear and coal-fired capacity have entered service.

Coal and nuclear energy together represent approximately 70 percent of U.S. electricity supply. 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.

Over that same period, we pursued the course of building gas plants for electricity supply and have now placed unsustainable demands on natural gas supply, exposing consumers of natural gas and electricity from natural gas to punishing price volatility, and forcing large industrial users of natural gas to move jobs and production offshore because they cannot afford $8 gas or higher as a feedstock.

Why did we build such massive amounts of gas-fired generating capacity over the last 12 years?

Partly because when that “build” cycle started, natural gas cost $2 to $2.50 per million Btu.

Partly because we came out of the 1980s long on baseload capacity, and what we needed then was intermediate and peaking capacity, and gas-fired plants are well-suited to that role.

But mostly, we built gas-fired capacity because it represented the lowest investment risk at a time when restructuring had unleashed a large number of significant business risks and uncertainties.

As you know well, investment capital flows away from uncertainty. The uncertainties of the last 10 years or so have inhibited capital investment in long-lead-time and capital-intensive new technologies—notably, advanced nuclear power plants and advanced “clean coal” technologies that provide the highest degree of forward price stability.

Given the long lead times involved in building new infrastructure, including new baseload generating capacity, it will take years to dig ourselves out of this hole.

Given that, we must manage the short-term urgent damage and muddle through as best we can. But we also must manage long-term needs so that the short-term damage control does not become a chronic drain on our nation’s economic growth and prospects.

This situation should pose grave concerns for our country’s manufacturing sector. Our special partnership has never been more crucial. You need clean, reliable, cheap nuclear.—as new nuclear comes on line you get a two-fer—it will relieve demands on our natural gas supply, ease price pressure, and free up gas for industrial feedstock while providing, safe, cheap, reliable electricity for your needs.

The Energy Legislation: The Tools We Need
Fortunately—finally—after two periods of extreme price volatility in the natural gas markets in five years, with natural gas prices now above $7 per million Btus and oil prices over $60 per barrel and likely to remain in the $50 to $60 per barrel range for 2005 and 2006, our policymakers and political leaders have taken action to help alleviate this investment crisis.

The energy policy legislation that passed last week provides broad-based stimulus for investment in new electric power infrastructure, including nuclear and clean coal. That investment stimulus is essential if we hope to preserve the diversity of fuels and technologies that is the core strength of U.S. energy supply and delivery system.

For the nuclear energy sector, the legislation provides two essential building blocks: Investment stimulus for new nuclear power plants to offset the higher cost of the first new nuclear plants we build, and investment protection to contain the potential risks of an untested licensing process.

The investment stimulus includes a combination of tax credits and loan guarantees for a limited number of plants for a limited time period.

The investment protection is an innovative form of insurance coverage underwritten by the federal government to protect companies against delays during construction and in commercial operation of new nuclear plants.

This standby coverage will protect companies against delays due to causes beyond their control, such as breakdowns in the licensing process that caused such hardship when we licensed the nuclear plants now operating.

We hope the licensing process works as intended, of course, and would prefer the insurance is never used, but it will allow companies to move forward with plans for new nuclear plant construction.

Last week’s legislation goes a long way toward assuring debt and equity investors that their investment in new nuclear plants is sound and secure, and that they stand a reasonable opportunity to realize investment returns commensurate with the risk that they are undertaking.

To use Churchill’s words, we have the tools we need.

Nuclear Energy: A Unique Value Proposition
The legislation reflects a growing consensus on the strategic importance of nuclear energy in our national energy supply portfolio—especially among a growing number of Democrats.

Nuclear power plants provide vast amounts of electricity, reliably and safely. They provide customers like your manufacturing firms with price stability into the future—without the volatility we see with gas-fired generating capacity, where 90 percent of the cost of electricity is driven by fuel prices. And nuclear plants have clean-air compliance value—particularly important for economic development in areas that do not meet Clean Air Act standards.

So we have three major attributes to bring to our partnership: Reliable baseload power ... forward price stability ... environmental benefits. Other sources of electricity generation can claim one or two of these attributes, but only nuclear energy can claim all three.

Equally important, we enjoy support among policymakers, the public and a growing number of environmentalists. The gap between supporters of nuclear energy and those opposed is 3-1.

This support can be attributed to safe plant performance over the last two decades, along with a new generation of Americans who are seeking facts and rejecting the hysteria with which we have too often been forced to contend.

Here are some key trends from recent public opinion research conducted for NEI:

• 83 percent of Americans think nuclear power is important for our energy future
• 70 percent favor its use as a way of meeting our electricity needs
• 58 percent of Americans agree that “we should definitely build more nuclear power plants”
• 69 percent said it would be acceptable to build new plants next to an existing nuclear power plant.

Challenges Remain, But They Are Manageable
Yes. We have challenges. Perhaps the most visible is the used fuel management program. No matter how significant the benefits of nuclear energy, we always face the question: “Yes, but what are you going to do with the waste?”

Well, we are going to do what world-class, independent scientific organizations around the world—including our own National Academy of Sciences—have been recommending for decades: Isolate this material deep underground in stable, dry geologic formations while not closing out the option to reprocess the material if technology in that area matures.

Our country’s own legislators and policymakers have identified such a site, at Yucca Mountain in Nevada, and we have 20 years and $8 billion worth of scientific research to confirm that judgment.

Despite this broad policy discussion, too many people believe that the Department of Enregy is simply going to bury the used nuclear fuel and forget about it.

That’s not the plan.

It’s never been the plan.

Repository performance will be monitored closely for an extended period of up to at least 300 years. This approach would provide ongoing assurance and greater confidence among the citizens of Nevada that the repository is performing as designed, that public safety is assured and that the environment is protected. It also would permit DOE to apply evolving innovative technologies at the repository.

Through this approach, a scientific monitoring program would identify additional scientific information that could be used in repository performance models. The project then could update the models, and make modifications in design and operations as appropriate.

But we can’t lose sight of the federal government’s responsibility for used nuclear fuel disposal, as stated by Congress in the Nuclear Waste Policy Act of 1982. The industry fully supports the need for a repository so that used nuclear fuel and the byproducts of the nation’s nuclear weapons program are managed securely in an underground facility. World-class science has demonstrated that Yucca Mountain is an eminently suitable site for that facility.

We must remember that a public works project of this magnitude—the largest ever of its kind—will inevitably face challenges. None is insurmountable. DOE and its contractors have made significant progress on the project and will continue to do so as the project enters the licensing phase.

Finally, I’d like to petition your serious attention to this resurgence in U.S. nuclear and ask you to begin analysis for the business case for entering the nuclear component market as manufacturers and partners.

One of NEI’s essential activities concerns support for nuclear infrastructure, as we seek to strengthen the administrative, personnel, financial and manufacturing support the world will need to power this tremendous surge of new-plant construction.

All around the globe, countries are embarking on ambitious construction schedules for new nuclear build. China, struggling with rising energy needs, is planning on building 30 new plants in the coming decades. India, facing a similar energy crunch, has announced plans to add 40,000 megawatts of nuclear capacity in just the next decade,

France, which gets 80 percent of its electricity from nuclear energy, will see its fleet of reactors reaching the end of their design life beginning in 2010, and will need to add new plants to meet rising demand starting in 2020.

Here in the United States, a number of companies have begun to test the new plant licensing process, as three separate companies are seeking early site permits, and an industry consortium is on the cusp of announcing the locations of two more possible reactors in a manner of weeks.

All of this new construction means we’re going to have to lean even more heavily in this country on the people who bend the metal and pour the concrete. This presents a unique opportunity for your members to get a head start on what will be a rapidly developing market.

Please know that our industry wants to work with you to make this happen. And as I’m reaching out to your members today, I hope you’ll urge them to get into contact with us in what could be a mutually beneficial relationship that could last for many decades.

Conclusion
To sum up, I’m sure you understand the inextricable link between American manufacturing and the electricity sector. It’s a vitally important relationship for our country and a vitally important relationship for all of the members we represent.

But due to a number of factors, we’ve had tremendous difficulty balancing short-term needs and longer-term priorities. The result: an energy portfolio that is unbalanced in favor of natural gas, something that has introduced extraordinary price volatility into the marketplace, and hurt American business.

What our country needs now is fuel and technology diversity, transmission investment, energy security and price stability.

And if our country is serious about addressing these issues while acting as responsible stewards of the environment, nuclear energy simply needs to play a larger role in America’s, and the world’s, energy mix.

As this surge in new nuclear build spreads around the globe, your members need to consider capitalizing on it by entering the nuclear component market as manufacturers and partners—and don’t forget that the nuclear industry is here to help you as you consider that endeavor.

I hope we can continue to stand together and work together. Our partnership needs to grow. Help us spread the truth about energy supply and electricity and nuclear power in your states and communities. Let your elected officials know where you stand. Consider coming aboard in that partnership I discussed.

Stand with us, and we’ll deliver more of the clean, reliable and affordable electricity that powers your businesses and keeps America safe and prosperous.

Thank you.