Chairman Boucher, Ranking Member Upton, [Chairman Dingell and Ranking Member Barton], members of the committee, thank you for the opportunity to represent the nuclear energy industry at this hearing to discuss legislative proposals to reduce greenhouse gas emissions.  I am retired Admiral Skip Bowman, President and Chief Executive Officer of the Nuclear Energy Institute.  [With your permission I request my longer, written statement be made part of the record.]

NEI has taken no position on the specific legislative proposals currently before Congress.  We leave to others the complex policy issues of how best to structure a program to reduce carbon emissions.  Nonetheless, NEI is deeply engaged in, and committed to, the debate over climate policy.  A year ago, the NEI Executive Committee endorsed a set of principles establishing the nuclear industry’s policy on climate change.  Those principles included support for federal action or legislation to reduce greenhouse gas emissions.

In this brief statement, let me address two issues that should be recognized and reflected in any legislative initiative to control carbon emissions.
First, we see a growing consensus that any credible program to reduce greenhouse gas emissions in the U.S. and worldwide will require a portfolio of technologies and approaches, and that nuclear energy is an indispensable part of that portfolio.  This conclusion – that nuclear power is an essential component of any carbon reduction initiative – is unambiguous, beyond question and supported by an impressive body of mainstream research and analysis.

Second, we believe it is imperative to address the major investment challenge facing the electric power sector as it seeks to develop and deploy the low-carbon and zero-carbon technologies necessary to reduce greenhouse gas emissions.  Federal climate legislation must obviously include targets and timetables for carbon reduction, but legislation must also help provide industry the technology and the means to achieve those targets and timetables.  In our view, that will require an aggressive program of financing support – more aggressive and ambitious than anything in place today.

Analyses of the various legislative proposals the Subcommittee is considering today, including the modeling conducted by the Environmental Protection Agency and the Energy Information Administration, all show that nuclear plant construction must accelerate in a carbon-constrained world.  In EIA’s analysis of the Lieberman-Warner legislation, the model forecasts more new nuclear capacity than could realistically be built during the forecast period.  And in those modeling runs where nuclear energy expansion is constrained, carbon emissions and carbon prices are higher, electric sector consumption of natural gas soars, electricity and gas prices are higher, and GDP losses are greater.

Let me assure you that the U.S. nuclear industry hears this call to action and is moving forward as quickly as we are able to license, finance and build new nuclear plants in the United States.  Seventeen companies or groups of companies are preparing license applications for as many as 31 new reactors.  Nine applications for construction and operating licenses are currently under review by the Nuclear Regulatory Commission for a total of 15 new plants.

We expect four to eight new U.S. nuclear plants in operation by 2016 or so.  Assuming those first plants are meeting their construction schedules and cost estimates, the rate of construction would accelerate thereafter.  With the necessary investment stimulus and financing support, we could see approximately 20,000 MW of new nuclear capacity by about 2020.

But for new nuclear plant construction, one of the most significant financing challenges is the cost of these projects relative to the size, market value and financing capability of the companies that will build them.

New nuclear power plants are expected to cost at least six to seven billion dollars.  U.S. electric power companies do not have the size, financing capability or financial strength to finance new nuclear power projects on balance sheet, on their own – particularly at a time when they are investing heavily in other generating capacity, transmission and distribution infrastructure, and environmental controls.  These first projects must have financing support – either loan guarantees from the federal government or assurance of investment recovery from state governments, or both.

The modest loan guarantee program authorized by the 2005 Energy Policy Act was a small step in the right direction, but it does not represent a sufficient response to the urgent need to rebuild our critical electric power infrastructure.  Limits imposed by appropriations report language have resulted in loan guarantee volume that will not begin to cover the project costs.  Time limits imposed by report language have introduced uncertainty into the process.

We believe the United States will need something similar to the Clean Energy Bank concept now under consideration by a number of members of Congress – a government corporation, modeled on the Export-Import Bank and the Overseas Private Investment Corporation, to provide loan guarantees and other forms of financing support to ensure that capital flows to clean technology deployment in the electric sector.  Creation of such a financing entity should be an integral component of any climate change legislation.

Mr. Chairman, I appreciate the opportunity to testify today and I would be happy to answer any questions.