Skip banner
HomeHow Do I?Site MapHelp
Return To Search FormFOCUS
Search Terms: yucca mountain, House or Senate or Joint

Document ListExpanded ListKWICFULL format currently displayed

Previous Document Document 25 of 131. Next Document

More Like This
Copyright 2000 Federal News Service, Inc.  
Federal News Service

 View Related Topics 

June 8, 2000, Thursday


LENGTH: 4127 words


 Mr. Chairman and Members of the Committee:

I am Corbin A. McNeill, Jr., and I am the Chairman, President, and Chief Executive Officer of PECO Energy Company of Philadelphia. PECO Energy currently owns and/or operates 6 nuclear reactors at three sites in Pennsylvania and New Jersey. - PECO's AmerGen partnership with British Energy owns and operates two reactors and has agreements in place to acquire two additional units. Finally, PECO and Unicom Corporation, the parent company of Commonwealth Edison Company, have announced our intention to merge later this year. Once final regulatory approval is received from a myriad of federal and state agencies, our combined company - to be called Exelon Corporation - will own and/or operate 20 of the nation's 103 operating nuclear reactors.

Thank you for the opportunity to appear before you today to discuss the current challenges facing nuclear energy and the role nuclear energy can play as part of the nation's long-term National Energy Policy.

As the electric utility industry is deregulated, it will be critically important to have a comprehensive and up to date National Energy Policy in place. Only such a plan will guarantee that policy makers will have the information necessary to make sound decisions for assuring a safe, clean, reliable and economic supply of energy for the future. Electricity growth over the last 25 years has largely paralleled economic growth in the United States. Thus, assuring an adequate supply of electricity is vital both for our nation's economic growth and for the quality of life of all Americans. Nuclear energy can and, I believe, will continue to play an important role in providing that electricity.

My comments today will focus on three themes:

First, existing Federal policy towards nuclear energy can best be described as one of neglect. This is distressing since nuclear energy is the second leading source of electric generation.

Second, the NRC's current regulatory reform efforts, paired with the consolidation of companies owning nuclear plants, will help ensure the continued safe, clean, reliable and economic operation of the vast majority of the nation's existing reactors.

Third, while the continued operation of existing plants and the development of a new generation of plants will depend upon nuclear power's ability to compete in a deregulated electric market, the Federal government has a responsibility to provide a stable regulatory environment, to avoid artificial distinctions which disadvantage nuclear energy, to uphold its commitments to manage used nuclear fuel, and to provide honest and objective information to the public to dispel public unwarranted concerns about risks related to nuclear power.

Current Federal Policy The Federal government's existing policy toward nuclear energy can best be described as one of neglect, bordering at times on open hostility. While this assessment may seem harsh, the facts speak for themselves:

* With few exceptions, Federal policy makers completely disregard the role of nuclear energy in meeting the nation's energy needs. It is a constant source of amazement and frustration to read or listen to speeches by the nation's leading energy policy makers - both within the Administration and within Congress - which address energy and electricity policy without once mentioning the word "nuclear." As recently as May 24, during this Subcommittee's first hearing on National Energy Policy, the Department of Energy's written statement, which was 20 pages long, mentioned nuclear energy only once, and then only as part of a laundry list of research and development initiatives.

* In nuclear power, we have a mature baseload technology that generates billions of kilowatts of electricity annually without emitting any of the pollutants associated with acid rain, smog, haze, ozone, or global climate change. Yet, nuclear power is rarely credited with its role in emissions avoidance or cited as a source of future avoided emissions. To put the role of nuclear power in perspective, if the U.S. closed all 103 nuclear plants and replaced them with fossil fired plants, we would have to remove 90 million cars from America's highways just to maintain the air quality at its current level.

* Just two years ago, funding for the Department of Energy's research and development program for improving commercial nuclear power plants was completely eliminated. In fiscal year 1998, not a single Federal dollar was spent on research and development for an energy source that provides over 20 percent of the electricity generated in the U.S. Funding for this important program was begun again, at a modest level, in 1999 and continues today. But increased funding is necessary to avoid significant negative impacts on efforts to recruit and sustain an educated workforce to design and operate nuclear plants in the future.

* The nation's management program for used nuclear fuel is at least 12 years behind schedule. The Federal government's failure to meet its contractual and statutory deadline to begin accepting used fuel by 1998 threatens the continued operation of some of the nation's best run nuclear power plants. The Clinton Administration has failed to offer a concrete plan for addressing the crisis faced by these plants, while Congress has failed to reform a flawed funding process that will lead to even more delays if the problem is not resolved soon. President Clinton's veto of recently-passed used fuel legislation ignored what has traditionally been broad, bipartisan support for addressing this issue.

Given these facts, it is hard to argue that Federal policy toward nuclear energy can be characterized as anything but neglectful at best.

Nuclear power, as with all energy sources, is not without its challenges, but those challenges can be addressed successfully and should not overshadow the significant positive contribution of nuclear energy in meeting America's energy needs.

Continued Operation of Existing Plants Contrary to conventional wisdom just a few years ago, the future for the existing fleet of nuclear reactors in the United States is bright. While some forecasters predicted that dozens of current plants would shut down prematurely and that dozens more would shut down at the end of their current licenses, many of those same analysts are today predicting that only a handful of plants will close prior to the expiration of their licenses and that the vast majority of plants will seek 20 year renewal of their current licenses. In fact, some studies now are predicting that total electric output from nuclear plants will increase, even without new reactors coming on line, as a result of productivity gains by current reactors.

What has sparked such a dramatic reassessment of the industry? In addition to tremendous strides in operational efficiency, outage reduction, and plant improvements, regulatory reform and the movement towards consolidation of nuclear power plant ownership have presented the nuclear energy industry with new and exciting opportunities to compete in the electric marketplace.

From 1990 to 1999, increases in output as a result of plant upgrades, increased capacity factors, and shorter maintenance outages were the equivalent of adding 16 new 1,000 megawatt plants. These dramatic improvements in plant performance have made nuclear plants increasingly competitive economically.

Two other factors are key to maintaining the current nuclear capacity in the U.S.: the Nuclear Regulatory Commission's transition to a stable, safety-focused regulatory regime and the trend toward plant consolidation in the industry.

The NRC in recent years has served as a model of regulatory reform, adopting a new oversight process that relies on performance-based, objective indicators to judge acceptable levels of plant operations. The new process is more transparent and open than the old system and uses quantitative performance indicators. Revised inspection and enforcement programs have been integrated into this process as well.

This new approach enhances safety by focusing management and regulatory attention on areas with the greatest safety significance. The NRC is to be commended for implementing this new system.

Consolidation of nuclear plants will also have a significant impact on efforts to retain the current capacity of nuclear plants by allowing many plants that may be marginally economic on a standalone basis to continue to operate as part of a much larger nuclear organization.

Consolidation achieves savings by having one organization handle operations, maintenance, outage planning and administration for a number of plants. These costs can be spread over a number of plants instead of being borne by a single unit.

This consolidation is occurring through plant purchases, mergers, and operational arrangements. PECO's AmerGen partnership with British Energy has completed the purchase of two plants and has agreements in place for the purchase of two additional units. Entergy Corporation has completed one purchase and has an agreement to purchase two other plants. Other companies have expressed serious interest in purchasing nuclear plants in the U.S., and seven plants in the Midwest, belonging to five different utilities, are now being operated by a newly formed nuclear operating company. The number of plant transfers is expected to increase as states deregulate their electric generation markets.

Three policy changes are important to remove potential barriers to permitting otherwise economical plant consolidations: revision of Section 468A of the Internal Revenue Code which addresses the tax treatment of nuclear decommissioning trust funds, repeal of the Public Utility Holding Company Act (PUHCA), and elimination of the statutory requirement that the Nuclear Regulatory Commission conduct an anti- trust review when conducting a license transfer proceeding.

The decommissioning trust fund issue involves the updating of the current tax code to recognize that - in a deregulated environment - nuclear plants may be owned and operated by an entity that is unregulated in a historic cost of service sense. The tax code currently provides for the tax-free transfer of Qualified Nuclear Decommissioning Funds as part of a plant sale or license transfer when a plant is transferred from one regulated entity to another. These provisions were written in 1984, a time when Congress did not envision the possibility of a nuclear plant being sold to an unregulated entity. While the IRS has used its discretionary authority to permit a tax free transfer of these fund in Private Letter Rulings related to the three plant sales completed to date, Congress should amend Section 468A to make it clear that plant sales to unregulated entities should not trigger a taxable event when decommissioning trust funds are transferred.

Legislation has been introduced in the House by Congressmen Jerry Weller and Ben Cardin (H.R. 2038) and in the Senate by Senators Frank Murkowski and John Breaux (S. 1308) to address this issue. The provisions of the Weller-Cardin bill are also included in H.R. 2944, Congressman Barton's Electricity Competition and Reliability Act. Some of the provisions of H.R. 2038 were included in H.R. 2488, the Financial Freedom Act of 1999, and some provisions were included in President Clinton's FY 2000 budget proposal.

Repeal of PUHCA, as you know, is a primary feature of nearly every bill pending before Congress to address the restructuring of the electric utility industry. PUHCA is an outdated law that has outlived its usefulness, as evidenced by even the Securities and Exchange Commission's report a few years ago advocating its repeal. To the extent that PUHCA concerns prevent utility mergers, consolidation of nuclear plants will be less likely.

Finally, the NRC has recommended as part of a package of proposed amendment to the Atomic Energy Act that Congress repeal the statutory requirement that the Commission conduct an anti-trust review when conducting a license transfer proceeding. Such an analysis is duplicative of reviews conducted by other Federal agencies.

Long-Term Prospects for Nuclear Energy Though the future is bright for nuclear energy in the United States, that future will only be realized if industry and government, working together, can meet the long-term challenges facing nuclear power. These challenges, while significant, can be successfully addressed if Congress and the Administration have the political will to act.

Let me be clear that the nuclear energy industry's future in the United States should not be based on inappropriate government subsidies. It will be the ultimate responsibility of the industry to ensure that a new generation of nuclear plants will be safe, clean, economic, reliable, efficient, and acceptable to the public.

Nevertheless, there is an important role for the Federal government to play if the United States is to benefit from extended operation of our current nuclear plants and a new generation of nuclear power plants:

* first, the Federal government must continue to move towards safety- focused regulation;

* second, the Federal government must treat nuclear power like any other electric generating technology and should not make arbitrary distinctions that disadvantage nuclear energy (this includes the recognition in Federal environmental policies the non-emitting benefits of nuclear energy);

* third, the Federal government should meet is statutory commitment to develop and operate a repository for the permanent disposal of used nuclear fuel; and

* finally, the Federal government should strive in its public education programs to emphasize the reality that the risk from nuclear energy is small compared to other risks in society.

Safety-Focused Regulation The Federal government must continue to move toward true safety-focused regulation that provides objective and transparent standards for assessing the performance of nuclear power plants. As I stated earlier, the Nuclear Regulatory Commission's efforts in this regard deserve particular recognition as a model of regulatory reform

The NRC must continue to adapt to a maturing industry and to develop an effective, safety-focused regulatory framework. The NRC has made substantial efforts to reform its regulatory approach by implementing an innovative regulatory oversight process that is more safety-focused and performance-based and, more broadly, by developing risk informed, performance-based regulations.

While the industry supports the NRC's ongoing efforts to develop a more effective regulatory regime, Congress should continue its oversight of the NRC to ensure that the agency's actions recognize outstanding industry safety levels and that the NRC implements sound budgeting practices and long-term strategic planning.

Consistent Regulatory Treatment Retaining nuclear energy as part of a sound national energy policy requires that nuclear energy be treated in a manner consistent with other fuel sources, whether it be in regulation of radiation at all electricity production facilities or disclosure of benefits and adverse impacts in consumer labeling of electricity sources. Nuclear energy can compete today and in the future, but policy makers must treat nuclear energy as they would any other energy source and apply the same rules to all competitors in the newly deregulated electricity market.

In the coming years, the federal government and its administrative agencies must pursue policy initiatives to address issues that will have a significant impact on the industry's future. Those issues include recognizing the value of nuclear energy as an emission-free source of electricity and eliminating duplicative and conflicting regulation.

Policy makers must explicitly recognize the intrinsic economic value of nuclear power as a greenhouse gas emission-free energy source. Maintaining nuclear power's emission free capacity is necessary to prevent increases in the emission-reduction requirements imposed on emitting power sources, such as natural gas or coal. Policy makers should (1) consider ways to allow nuclear energy to capture the clean air compliance value produced by emission-free sources of generation, (2) ensure that nuclear energy is fairly labeled, and (3) ensure that nuclear energy is treated equally with other non-emitting grid capable electric generating sources if an emission-free portfolio standard is adopted.

The Energy Information Agency reported in Utility Fossil Fuel Receipts and Costs - The Year 1999 in Review, that "a 1-percent increase in the annual nuclear plant capacity factor . . . translates into a reduction in annual consumption of either approximately 4.3 million short tons of coal, 14 million barrels of petroleum, or 89 billion cubic feet of gas. Most likely, it would be a combination of each."

According to EIA data, the capacity factor for nuclear plants in 1999 was 86 percent, compared to 78 percent in 1998. Clearly, nuclear energy offers a tremendous value in helping make our air cleaner. In fact, it would be difficult, if not impossible, to meet Clean Air Act emissions standards in some parts of the country without nuclear power.

Nuclear energy, as a source of electric generation that emits no air or water pollution, should benefit from any Federal incentives awarded to other generation sources because of their clean air and clean water characteristics.

Congress must eliminate duplicative regulation that has allowed the Environmental Protection Agency to become involved in issues that are more appropriately subject of NRC authority. (For example, EPA has threatened to overturn NRC's regulatory decisions by seeking remediation under Superfund for sites decommissioned in accordance with NRC requirements. Another example of unnecessary and unproductive dual regulation is the application of the Resource Conservation and Recovery Act to commercial mixed wastes.)

Meeting Commitments on Used Fuel Management The federal government must fulfill its longstanding obligation to provide for central storage of used nuclear fuel. The national policy for management of used fuel was codified in the Nuclear Waste Policy Act of 1982 and in 1987 amendments to the Act. Although DOE currently is evaluating the suitability of a repository at Yucca Mountain, Nevada, the program will not yield timely results without additional legislation, forcing many plants to build temporary onsite storage at a cost of millions to consumers at each plant. The government's breach of its contractual obligation is creating a taxpayer liability that could eventually cost taxpayers billions of dollars.

In addition to programmatic changes, it is imperative that Congress address the budgetary mechanism for funding the Department of Energy's used fuel program. If Yucca Mountain is designated as the site of the permanent repository, the program budget will need to increase tremendously to keep the project on its revised schedule. It is difficult to imagine Congress appropriating the necessary funds given the current budgetary constraints on the program. Congress should take steps to place program spending on the mandatory side of the budget so that it is not subject to the budget caps. (Money collected from the Nuclear Waste Fund is scored as mandatory receipts.)

Energy Secretary Bill Richardson should be applauded for his efforts to address, at least partially, the financial burden placed on utilities due to DOE's failure to meet its contractual obligations by offering to enter into settlement agreements as directed by the Federal courts. Under such agreements, utilities could be compensated for costs incurred as a result of DOE's delay in accepting used fuel from reactor sites beginning in 1998. Nevertheless, compensating utilities for the costs of on-site storage is not a long-term substitute to centralized storage of used fuel. Congress and the Administration should work together to put this program - which is already 12 years behind schedule - back on track.

Developing an integrated solution to managing used fuel is a political, not a technical, problem. The issue is not how to manage used fuel, but where to manage it.

Public Education The federal government can and should play an important role in educating the public about the very low and manageable risks related to commercial nuclear power as compared other endeavors in society. DOE's public education efforts should clearly convey the relative risks associated with all energy forms and uses.

Similarly, DOE should respond aggressively to correct misinformation regarding the risks and safety record of the commercial nuclear energy industry. Whether it is a television network developing a made-for-TV movie featuring a runaway train with atomic fuel on board that "explodes," or an irresponsible allegation that nuclear fuel shipments are the equivalent of "mobile Chernobyls," the Department of Energy should publicly denounce such misinformation.

The public looks to the federal government for guidance on complex issues, and while DOE should not be an advocate for nuclear energy, it should be responsible for challenging characterizations that deliberately mislead the public.

New Technologies to Improve Efficiency and Reduce Environmental Impacts Mr. Chairman, one of the issues the committee asked witnesses to address was the potential for new technologies that would improve efficiency and reduce environmental impacts.

The good news is that such technology already exists in the form of today's commercial nuclear reactors. Efficiency improvements have increased dramatically over the last decade, and I have cited in detail the environmental benefits to be gained from continued reliance on nuclear energy. Nuclear energy accounts for nearly two-thirds of all the emission-free electricity generation available to the U.S. electric grid today.

In terms of the long-term outlook, the next generation of nuclear reactors has already been designed and is being built in overseas markets. The Nuclear Regulatory Commission has certified three advanced reactor designs - the Westinghouse AP600, the GE Advanced Boiling Water Reactor, and the ABB System 80+. While I personally believe that the future of current advanced light-water designs in the emerging competitive U.S. marketplace is uncertain, I would note that these advanced plants are being built today in Asia.

My personal view is that the next generation of plants to be built in the United States will be modular reactors as small as 100 megawatts in size. These "Generation IV" plants, as they have been called by some, may offer great opportunities for both increased safety - in that such reactors could remove the risk of severe fuel damage - and appropriate cost and market risk features that would make such plants attractive to investors. These plants could be technically and economically feasible within the next five years.

In anticipation of the development of a small, modular reactor design, Congress should consider changes to the Price-Anderson Act when it is renewed to reflect these design advances. Specifically, Price- Anderson's annual premium should be based on plant size ("per megawatt") rather than levied as a flat "per reactor" fee. As you know, Price-Anderson is scheduled to be reauthorized during the next Congress. I would urge the Committee to begin its review of Price- Anderson soon to ensure timely reauthorization of this important legislation.

Conclusion Mr. Chairman, this is not an exhaustive list of the Federal changes needed to ensure nuclear energy's continued role as part of the nation's diverse and secure energy supply, but it addresses some of the major concerns facing the industry.

The nuclear energy industry fully recognizes that in a competitive marketplace, it will have the primary responsibility for ensuring the viability of nuclear technology. The industry must be responsible for making sure that nuclear plants are operated safely, cleanly, reliably, and economically. At the same time, the Federal government has a vital role to play, a role that industry cannot. These government responsibilities include: providing a stable regulatory environment, avoiding artificial distinctions in its environmental and other policies which arbitrarily disadvantage nuclear energy, upholding its commitments to manage used nuclear fuel, and providing honest and objective information to the public to dispel public unwarranted concerns about risks related to nuclear power.

Mr. Chairman, thank you again for the opportunity to appear before you today. I will be happy to answer any questions that you may have.


LOAD-DATE: June 10, 2000

Previous Document Document 25 of 131. Next Document


Search Terms: yucca mountain, House or Senate or Joint
To narrow your search, please enter a word or phrase:
About LEXIS-NEXIS® Congressional Universe Terms and Conditions Top of Page
Copyright © 2002, LEXIS-NEXIS®, a division of Reed Elsevier Inc. All Rights Reserved.