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Copyright 1999 Federal News Service, Inc.  
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Mr. Chairman, Ranking Member Bingaman and distinguished members of the subcommittee, my name is Erle Nye. I am chairman and chief executive of Texas Utilities Company. My company owns and operates two nuclear units at the Comanche Peak nuclear power plant in Somervell County, Texas. Unit 1 went into operation in 1990 and Unit 2 went into operation in 1993. Together, the Comanche Peak units and the South Texas Project nuclear units operated by STP Nuclear Operating Company in Matagorda County provide more than 4,800 megawatts of electricity to Texas, the fourth-largest nuclear-power electricity generation portfolio of any state.
I am also chairman of the Nuclear Energy Institute, and today I am representing the nuclear energy industry's position on S. 608, the Nuclear Waste Policy Act of 1999.
I want to express my gratitude to you, Mr. Chairman, as well as to Senators Craig, Grams and Crapo for introducing this important legislation in the Senate earlier this month. I also want to compliment this committee for its continuing commitment to resolving the nuclear waste issue. Broad bipartisan support for similar legislation to S. 608 during the last two Congresses is a clear signal that the Administration must fulfill its statutory obligation to accept used nuclear fuel and that the Administration must adopt an integrated plan, such as S. 608, to manage the nation's nuclear energy byproducts.
Nuclear power plants supply about 20 percent of America's electricity, the secondlargest source of electricity for the nation. More than 100 nuclear generating units from Maine to California also are the nation's largest source of emission-freeenergy--an important distinction recognized by policymakers who appreciate the unmistakable connection between energy and environmental policy. In Congress, and indeed across the United States, there is growing appreciation for the industry's vast experience of more than 2,000 reactor years of safe and reliable operation. There also is a growing awareness that the industry offers a unique opportunity to meet energy production and clean air needs of the 21st century.
Without nuclear energy, the United States will find it impossible to meet increasingly stringent U.S. clean air regulations and to significantly reduce carbon dioxide emissions. The nation's nuclear power plants provide clean air benefits while producing electricity at a competitive price--with production costs that are a fraction of a cent higher than coal-fired electricity and more cost effective than natural gas, solar or wind power. However, an essential component to ensure nuclear energy's continued benefits is the federal acceptance and disposal of used nuclear fuel.
Mr. Chairman, for almost two decades, the Energy Department has been siting and developing an underground geologic repository for the disposal of used nuclear fuel and defense-related waste. In recent years, however, the agency has failed to fulfill an important objective of the program--the acceptance of used fuel. A little more than a year ago, the Energy Department was scheduled to start consolidating used fuel and nuclear waste now located in 40 states at more than 100 commercial nuclear power plants, federal research facilities and defense-related sites. The agency missed its deadline in violation of its clear statutory duty under the Nuclear Waste Policy Act of 1982. The law requires disposal at a single, federally monitored location. The failure to take fuel has resulted in more than 61 state agencies, various state officials and utilities suing the federal government, thereby subjectingit to billions of dollars in potential liabilities. Many more lawsuits are likely to follow.
Instead of beginning receipt of this fuel, the Energy Department has not met its legal responsibilities. DOE has claimed delays in the repository project and the lack of authority in citing a temporary storage facility for its failure to act. This conduct is inappropriate of the federal government. It breaks the spirit of the law by reinforcing the agency's reluctance to treat nuclear waste disposal as a high priority. And it certainly violates the letter of the law.
In September 1998, a shift in policy seemed possible. As part of events leading to the U.S. Senate confirmation of Energy Secretary Bill Richardson, President Clinton wrote a letter to the chairman of this committee stating that Mr. Richardson would have the "portfolio" to represent the Administration in working with Congress to resolve the used nuclear fuel disposal problem.
Based on the president's clearly stated commitment that Secretary Richardson would actively engage Congress in a dialogue on nuclear waste disposal issues, the prospects for putting this program on a clear path to success seemed promising. In fact, about three months later, the Energy Department reached a major milestone with the release the long-awaited viability assessment to Congress that supports continued scientific study of Yucca Mountain, Nevada, as the site for a permanent repository for used nuclear fuel. The report, which chronicles more than $3 billion worth of leading scientific and technical research, said:
"Based on the viability assessment, DOE believes that Yucca Mountain remains a promising site for a geologic repository and that work should proceed to support a decision in 2001 on whether to recommend the site to the President for development of a repository. Over 15 years, extensive research has validatedmany of the expectations of the scientists who first suggested that remote, desert regions of the southwest are well-suited for a geologic repository. Engineered barriers can be designed to contain waste for thousands of years, and the natural barriers can delay and dilute any radioactive material that migrates from the waste packages. Current models indicate that the possible radiation exposure to future populations living nearby could be comparable to present-day exposure levels from natural background radiation."
When DOE released this compilation of years of scientific and technical assessments of the site last December, Secretary Richardson said the Yucca Mountain viability assessment "reveals that no showstoppers have been identified to date." Despite this finding, we feel there has been no real attempt from the White House or the Energy Department to meet their obligation to move fuel from reactor sites and defense facilities. There also has been no demonstrative shift in Administration policy toward reforming the program in a manner that would lead to movement of used nuclear fuel to a centralized federal storage or disposal facility in the near term.
Today, the consequences of continued delay are severe. They can be measured first by the federal government's financial liability that, in actuality, is a liability of taxpayers. Second, the consumers of nuclear-generated electricity have paid for managing used nuclear fuel and will continue to do so during the life of the program. Third, delay will impact economic operations of U.S. nuclear plants, which serve as linchpins in the nation's electricity supply system and the administration's clean air and carbon abatement strategies. As this committee knows well, the impact of protracted delay in this program will unduly constrain nuclear facilities as they adapt to a competitive electricity market.

Storing used nuclear fuel indefinitely at nuclear power plant sites drives up on-site storage costs that commercial plants and their electricity customers were never intended to bear. Due to continued Energy Department inaction on its fuel acceptance commitment, my company has taken measures to expand the capacity of used fuel storage pools at our two-unit Comanche Peak site at an expected cost in excess of $10 million. Without these modifications, Comanche Peak would exhaust existing fuel storage capacity next year.
Utilities, state attorneys general and public utility commissions, finding no other recourse, turned to the courts to hold the Energy Department accountable for its failure to meet its 1998 fuel acceptance obligation. Electricity consumers have committed more than $15 billion, including interest, to the Nuclear Waste Fund.
Our customers who count on electricity generated at our Comanche Peak nuclear power plant as well as the South Texas Project in Texas have committed $323 million for these government services. It may interest other members of this committee that the citizens of Illinois have committed $1.9 billion to the Nuclear Waste Fund; Arkansas, $250 million; Florida, $648 million; Louisiana, $226 million; Oregon, $237 million; and Washington, $107 million.
Over the years, the federal government has diverted approximately $8 billion from the Nuclear Waste Fund for deficit reduction. This continued erosion of resources must be stopped, especially in view of the program's need for increased levels of funding as it enters a construction phase for temporary storage and the repository. Only Congress can stop the federal government's use of funds in this fashion and ensure that this project has the financial means to move forward. Without passage of S. 608, Congress cannot make the necessary funds available within the budget caps to meet program needs.Without use of a temporary storage facility, taxpayers could pay as much as $56 billion in damages for the Energy Department's default on accepting used fuel and other costs associated with indefinite storage at nuclear power plant sites. These damages would be assessed in addition to money that electricity consumers will continue to pay into the Nuclear Waste Fund for reasonable program costs.
The second consequence of continued fuel acceptance delays is the uncertainty it creates for many companies that cannot adequately plan for future nuclear power plant operation without a date certain for federal used fuel acceptance. Otherwise, the high-level waste program and its associated expenses impede our ability to make prudent decisions in a competitive market.
The consequences of delay are far more acute at those plants that have ceased operation and used fuel awaits federal government action. The longer fuel sits at these retired plants, the longer final decommissioning will be delayed. Without legislative action, cleanup at these sites could not be fully completed for another 20 to 30 years. With S. 608, however, these plants could be decommissioned in half the time and returned to a natural, green-field state for other uses.
Nearly 30 operating nuclear units across the country face a different challenge-used fuel storage pools that have reached capacity, forcing many utilities to store used fuel rods in above-ground containers at the site. Had the Energy Department started fuel acceptance in 1998 according to its contracts with electric utilities that operate nuclear power plants, additional dry storage needs at these plants would have been greatly reduced. However, assuming the Energy Department completes work on a permanent repository at Yucca Mountain in 2015--nearly 80 percent of U.S. nuclear plants will have to add dry fuel storage capacity at the cost of nearly $5 billion to consumers--a cost that continues to grow even if DOE begins accepting fuel at Yucca Mountain on that date.The disposition of used fuel at many sites poses an economic impact on plant operations. The timing, the manner in which additional dry storage would be undertaken and the amount the site would be reimbursed for additional storage resulting from government inaction could dictate whether some plants operate in the future. Any risk to continued operation would reverberate among all electricity customers in states that receive their electricity from nuclear power plants. These uncertainties also threaten local and state tax bases where plants are located, as well as the job security of tens of thousands of their employees.
Mr. Chairman, you can see that the passage of S. 608 is essential to provide reliable used fuel acceptance dates and maintain economic stability for our region and many others that rely on the nation's 103 nuclear generating units.
Some parties argue that used nuclear fuel is best left alone, that it should continue to be stored at sites across the country. That would be a mistake. Building more dry fuel storage facilities is not feasible at many locations because of siting constraints, zoning restrictions or political resistance. For example, the Indian Point units in New York are hampered by siting restrictions. The site's limited size and restricted equipment handling capability render it unfavorable for dry storage. Meanwhile, Northern States Power and Wisconsin Electric Power Co. are hampered by state legislation and public utility commission concerns, respectively.
During testimony before Congress, Secretary Richardson said that DOE is considering meeting its fuel acceptance obligation by taking title to fuel and leaving it at existing sites in exchange for utilities dropping their lawsuits against the federal government. Secretary Richardson said the agency would pay for this program from the Nuclear Waste Fund.
As portrayed by Secretary Richardson, the proposal envisions the Energy Department beginning to move used nuclear fuel from utility sites when thepermanent repository begins operation in 2010, as currently planned by DOE. Based upon the substantial difference between historical funding for the repository program and increased future funding needs as described in DOE's viability assessment, the diversion of funding to create federal storage facilities at nuclear power plant sites would further delay the repository program and result in fuel remaining at sites even longer.
Mr. Chairman, the industry appreciates Secretary Richardson's intent. However, the Energy Department's take title proposal does not work as a stand alone concept. Fundamentally, the proposal does not result in the movement of fuel from reactor sites. It also could result in indefinite delays in a repository program--if not cancel it altogether--because of inadequate funding.
Although Secretary Richardson acknowledged "the costs and physical limitations of continued storage of spent fuel" at nuclear power plants, he has not offered Congress or the industry any details on how this take title proposal would be implemented and no definitive plan on how the Energy Department would meet its obligation to move fuel from plant sites.
Secretary Richardson's testimony before this committee was significant in two ways, however. He reaffirmed that the agency has an obligation to take used fuel from utilities, and emphasized the need for an ongoing dialogue among the Administration, Congress and stakeholders. I believe that dialogue is more appropriately focused on S. 608, a sensible approach to fulfilling the federal government's commitment to electricity consumers. We appreciate the Secretary's intention and look forward to a dialogue focused on immediate receipt and central storage of used nuclear fuel.
As I mentioned earlier, the agency's repeated delays have forced many utilities and 61 state officials, state agencies and municipalities to go to court over this matter,seeking legal decisions that force DOE to take waste and to pay utilities to continue storing used fuel past the 1998 date. Further, nearly 100 state public utility commissioners from 32 states wrote Secretary Richardson demanding that the Energy Department limit electricity consumer payments into the Nuclear Waste Fund until the agency provides the used fuel disposal services the fees already have paid for.
Federal judges consistently have ruled that the Energy Department must comply with nuclear utility contracts that require federal fuel acceptance in exchange for funds utility customers have been paying for 16 years. In three rulings in 1998, the U.S. Court of Federal Claims ruled that the Energy Department is liable for breaching its contract with utilities and failing to accept used nuclear fuel. That court is now considering the level of damages that should be awarded to Yankee Atomic Power Co., Maine Yankee and Connecticut Yankee for the Energy Department's breach of contract. Yankee Atomic alone is seeking $70 million. Seven other utilities have filed individual suits seeking monetary damages. Combined, these claims total $4 billion in damages and more lawsuits are expected. That figure does not include other legal claims that are expected to be filed in the future, which the Administration has testified could reach $8 billion to $35 billion.
The industry has been presented no viable alternative to litigation.

We always have believed that the preferred solution is for the Energy Department to meet its obligation to manage used fuel at a central location.
The Energy Department's waiting game has become much too costly for consumers to endure. Worse, the inability to move forward with used fuel acceptance shifts the responsibility to future generations. This is not the sort of environmental legacy we want to leave them. Today, delays in used fuel acceptance aggravate our ability to make prudent decisions in a competitive market. Let me use Consumers Energy as an example. At its Big Rock Point plant in Michigan, for instance, 58metric tons of nuclear fuel await federal management. The longer fuel sits at the retired plant, the greater the delay for decommissioning. With S. 608, the plant would be decommissioned and returned to a natural, green-field state for other uses in a reasonable time.
Consumer Energy's Palisades plant, also in Michigan, faces different challenges. The plant's spent fuel pool has reached capacity, prompting Palisades to store 125 metric tons of used fuel in 13 stainless steel containers at the site. Each time the reactor is refueled, the amount of used fuel stored at the site grows. In 1998, when the Energy Department should have started fuel acceptance, Palisades' dry storage would have been limited to 120 metric tons. By 2010--the date the Energy Department now expects to complete a permanent repository--the amount of used fuel requiring dry storage at Palisades would grow to 600 metric tons.
In the years ahead, continued delays could worsen the economic outlook as the energy landscape shifts to a competitive marketplace. By passing S. 608, this committee has an opportunity to end the delays and the financial drain on electricity consumers. This legislation provides a comprehensive management program that integrates temporary storage at one federal site, permanent disposal at Yucca Mountain, and a safe transportation network to transfer fuel so that the government can begin fuel acceptance in 2003. Once removed from sites, the fuel would be stored temporarily at a central facility until a permanent repository is completed.
Mr. Chairman, one thing is clear: used fuel must be stored properly. The question is, does it make more sense to store it in more than 100 locations across the country or at one location in the Nevada desert? Nuclear Regulatory Commission Chairman Shirley Jackson, in testimony before the committee last year, endorsed a single disposal site as a means to more safely and efficiently monitor used nuclear fuel.S. 608 does more than create certainty for fuel acceptance and disposal. The legislation ensures adequate funding through the life of the federal used fuel management program. And it establishes a risk-based radiation standard whereby radioactive releases would not exceed a level of risk equivalent to 30 millirems per year. The Nuclear Regulatory Commission would establish the radiation standard in consultation with the Environmental Protection Agency. This approach to protecting public health and safety, and the environment, is consistent with U.S. and international scientific organizations' recommendations. By comparison, the Nevada state radiation protection standard is 100 millirems.
Although the Energy Department and hundreds of scientists and engineers continue a responsible job of collecting scientific data on Yucca Mountain, we have yet to address fully the complex political dynamics that surround this issue. In light of DOE's delays, I respectfully urge the committee to expedite a used fuel management and disposal program through reform legislation--S. 608. At the same time, this committee should revive the dialogue with the Administration so that the two can work in partnership to begin waste acceptance.
The Need for Reform Legislation
Mr. Chairman, as the preceding discussion indicates, a significant shift in the Energy Department's program direction must take place in order to achieve used fuel acceptance from the nation's nuclear power plants and defense facilities. Only Congress can take the appropriate measures to chart a sure course for the nearterm receipt and storage, and ultimate disposal, of used nuclear fuel.
The Nuclear Waste Policy Act of 1999, S. 608, accomplishes this programmatic shift while protecting public health, safety and the environment and ensuring adequate near-term and long-term funding for the program. Mr. Chairman, you and themembers of this committee are quite familiar with the features of this legislation, which are virtually the same as legislation approved by the U.S. Senate during the 105th Congress. Modifications have been made to the program's funding provision to accommodate congressional budget scoring rules. With that exception, and a date change for operation of a temporary storage facility, the legislation's provisions are similar to that of the 1997 legislation. The essential components of S. 608 include:
Establishing a management system for defense waste and used nuclear fuel, including development of a licensed temporary storage facility within Area 25 of the Nevada Test Site. The site would safely hold used nuclear fuel until all the fuel is moved to a permanent repository. A temporary storage facility is necessary since the Energy Department has stated that the agency could not accept used fuel without a facility authorized under to the Nuclear Waste Policy Act. S. 608 permits such a facility; Establishing a date for operating used fuel storage. Temporary storage would begin operation in 2003.
Requiring DOE to apply to the Nuclear Regulatory Commission for construction authorization of a permanent repository by Oct. 31,2001 and ensures full funding for that project;
Complying fully with the National Environmental Policy Act requirements by establishing clear milestones and schedules for preparation of environmental documents, conduct of licensing reviews and a)! other steps involved in siting, design, licensing and construction of this central storage facility;Establishing a risk- based radiation health standard for licensing a repository whereby releases of radioactivity would not exceed a level of risk equivalent to 30 millirems per year. The standard is more stringent than Nevada state regulations and is consistent with international scientific recommendations. For example, Nevada's Administrative Code, section 459.335, states, "The total effective dose equivalent to any member of the public from (a) licensed and registered operation does not exceed 100 millirems per year;"
Creating a new funding mechanism consisting of a combination of a user fee beginning in fiscal year 2001 and a mandatory fee, with an average fee to electricity consumers of I mill per kilowatt-hour until the repository opens. During the averaging period, the fee may not exceed 1.5 mills/kWh in any year. After the repository opens, the fee is capped at the current rate of 1 mill/kWh;
Providing for fuel transportation planning that integrates the states and tribal governments in the process; for inspection and emergency response plans along preferred shipping routes or state-designated routes that are consistent with the Waste Isolation Pilot Project's transportation agreement's principles and practices. Transportation planning, training and technical assistance is provided to states, emergency responders and labor organizations; and
Providing for land conveyances and benefits for affected communities, including payments equal to taxes.
Nearly 20 percent of the nation's electricity consumers rely on nuclear power plants for energy that helps preserve air quality. With no harmful emissions, nuclear energy helps meet federal clean air regulations and will certainly play an integral role in international clean air goals. No other fuel source helps the nation achieve its air preservation goals while offering reliable, competitive electricity that can easily expand to meet future energy demand. And by balancing the nation's energy portfolio, nuclear energy provides security from international fuel crises.
For these reasons, and for our nation's energy security, Congress must tackle a significant environmental responsibility for the 21st century--securing federal acceptance of used nuclear fuel and defense waste, and providing certainty for safe disposal. Federal fuel acceptance also is the only prudent course to avoid tens of billions of dollars in potential liabilities and legal damages.
With S. 608, the industry and the nation can meet many other challenges; energy security, air quality and competitive electric production. The visionary leadership of this committee will assure a new level of intensity and commitment for this landmark initiative.

LOAD-DATE: March 26, 1999

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