Where Do We Go From Here? Reflections on
the Future of Nuclear Energy in the United States
President and CEO
Nuclear Energy Institute
Uranium Institute Symposium 2000
August 31, 2000
Excellence is an art won by training
and habituation. …We are what we repeatedly do. Excellence is
not an act, but a
Less than three years ago, many inside and outside our
industry were sounding the death knell of nuclear energy in
the United States. The forecasting branch of the U.S.
Department of Energy, in particular, predicted in December
1997 that no nuclear plant would operate beyond its 40-year
license term and 24 plants would close prematurely.
Predictions and conventional wisdom, however, are fickle
partners. Nuclear energy is in a stronger position today than
at any time in its history. A June report from BP Amoco noted
that the global use of nuclear energy last year increased by
3.8 percent compared with 1998, well above the ten-year trend
and significantly more than oil and natural gas. The rise was
powered by an 8 percent increase in nuclear production in the
U.S. plants are performing at historic levels, production
costs are at historic lows, and owners are vigorously pursuing
license renewal and acquiring additional nuclear units.
Moreover, the U.S. public and Congress increasingly realize
that economic progress and the environmental integrity of
America depend upon a diversified and secure national energy
portfolio that includes a robust nuclear energy industry.
Where We Are
A statistical snapshot of the U.S. nuclear energy industry
underscores the notion that nuclear energy is strong and
- In 1999, U.S. nuclear plants set a new performance
record by generating 728 billion kilowatt-hours of
electricity, the approximate equivalent of the combined
nuclear generation of France, Japan and Belgium. The figure
also represents a 50 billion kWh (8 percent) increase over
1998. Preliminary indications are that 2000 will be another
record year. Data for the first quarter of this year—the
most recent data available—indicates that nuclear plants are
operating at about 5 percent above the same period last
year. To put that in perspective, that is also enough
additional electricity to serve the needs of the entire
population of San Francisco.
- Capacity factors for the 103 nuclear generating units
averaged 86.8 percent in 1999. By contrast, in 1980 U.S.
nuclear units had a net capacity factor of 57.6 percent and
in 1990, 67.5 percent. World class U.S. plant performance
also led the world in unit capability factor. Last year, the
unit capability factor for plants worldwide was 84.5
percent. For U.S. plants, it was 88.7 percent.
- According to the Utility Data Institute, the 1999 U.S.
median operating and maintenance (O&M) cost for nuclear
plants was 1.64 cents per kilowatt-hour, and the average
O&M cost was 1.82 cents per kilowatt-hour. Total costs
are averaging 2.0-2.5 cents per kilowatt-hour. Cost
reductions reflect more efficient operations and power
uprates. By contrast, the average production costs for a new
gas-fired combined cycle plant were 3.0-3.5 cents per
kilowatt hour before gas prices recently reached their
- Five units have received Nuclear Regulatory Commission
approval for another 20 years of operation—for a total of 60
years. Three units have formal applications under NRC
review, and 26 other units have informed the NRC of their
intent to pursue license renewal. That means that, to date,
the owners of more than 30 percent of the U.S. reactor fleet
have decided that license renewal makes good business sense.
The industry expects that almost all units will file for
license renewal eventually.
- In 1999, nuclear energy avoided emissions of 168 million
metric tons of carbon, 4 million tons of sulfur dioxide and
2 million tons of nitrogen oxide. From 1973-1999, nuclear
energy avoided 2.6 billion metric tons of carbon, 63
million tons of sulfur dioxide and 25 million tons of
nitrogen oxide. In 1998—the last year for which statistics
are available—nuclear power plants were responsible for
nearly half of the total voluntary reductions in greenhouse
gas emissions reported by U.S. companies.
- For the eighth straight year, the United States exceeded
the World Association of Nuclear Operator's 2000 goal for
U.S. plants for availability of three key plant safety
systems—two main cooling systems and backup power supplies.
Worker safety and collective radiation exposure also
exceeded U.S. plants' 2000 goals.
How did this renaissance in nuclear energy come about?
Primarily, it was the product of innovative industry
leadership and the hard work of a dedicated workforce. It was
also a function of the industry's commitment to excellence and
the constant effort to absorb the lessons learned from more
than 2,000 reactor-years of operation. As Aristotle said,
excellence is not an act but a habit.
Most important, the renaissance of the U.S. nuclear
industry was the result of a unified industry articulating a
vision of a prosperous future and working together toward that
goal. One expression of that unity was the formation in 1994
of the Nuclear Energy Institute (NEI), a compilation of the
best elements of four predecessor organizations. NEI
represents the broad and varied interests of the diverse
nuclear energy industry. Our role is to focus the collective
strength of our nearly 300 members—about 18 percent of which
are international—in order to help shape policies in the U.S.
and globally that foster the use of a wide range of nuclear
The primary vehicle that animates those efforts, that lends
action to the industry's strategic vision, is Nuclear
Energy: A Strategic Direction for the 21st Century. In
May, NEI published the third iteration of the Strategic
Direction entitled The Renaissance Revealed.
Based on a core of eight strategic "compass points," the
Strategic Direction outlines how the industry can
implement a number of powerful ideas—some old, some new—in our
effort to navigate through a complex and dynamic business
Those compass points are:
- Ensuring a national energy policy that provides a
diverse and reliable energy supply.
- Maintaining excellence in safe and reliable nuclear
power plant operation worldwide.
- Achieving a safety-focused, performance-based regulatory
- Attaining an integrated used fuel disposal program and
flexible low-level waste management approach.
- Capitalizing on nuclear energy's intrinsic economic
- Maximizing the value of nuclear generating assets in a
competitive electricity market.
- Increasing the strong public and policymaker support for
- Building the next generation of nuclear energy plants
and related technologies.
Taken separately, these compass points are important and
give focus to the industry's work. Taken together, however,
they start a synergistic chain reaction. Advances in one lead
to progress in others, that in turn results in improvements in
That is why NEI and a number of organizations that support
our industry weave the compass points of the Strategic
Direction into the fabric of their annual and long-range
plans. Even some of our international members look to U.S.
programs and actions as articulated in the Strategic
Direction for guidance. Already translated into Japanese,
a summary of the latest version also was translated recently
How We Arrived
As noted, the excellent performance of the U.S. industry
revealed what the industry always knew: Nuclear energy is a
safe, economic and reliable generator of baseload electricity.
When considered in light of the trend toward license renewal,
the onset of market competition and the industry's reinvention
through consolidation, the future bodes well.
Adding momentum to the industry's march forward is the
innovative and objective new approach to regulation under way
at the U.S. Nuclear Regulatory Commission. Prompted by the
industry's remarkable safety and operating record—and in no
small measure, pragmatic oversight by the U.S. Congress—the
NRC is making the transition to a safety-focused,
performance-based oversight and assessment process that was
introduced industrywide in April.
Working with Congress, the NRC and other stakeholders, the
industry and NEI helped shape a new approach to regulatory
oversight that took into account the industry's remarkable
safety and performance records. This new process—which
replaces the old Systematic Assessment of Licensee Performance
and the Watch List approach—holds the promise of making the
entire regulatory process more safety-focused, more efficient,
less burdensome and less adversarial.
By heightening congressional awareness of the need for—and
the environmental benefits of—nuclear energy, the industry
underscored the negative impact of a prescriptive regulatory
system on the industry's viability. Consequently, the NRC was
provided the impetus and the confidence to make significant
changes to how it regulates. Nearly 8,000 industry man-hours
were devoted to interactions between NEI and the NRC on
developing the new program, which remains a "work in
progress." In addition, NEI and the NRC are carefully
monitoring implementation of the new process to identify
The new approach maintains the commission's position as a
strong, effective regulator and is centered on objective
performance criteria. It enhances safety by focusing
management and regulatory attention on areas of greatest
significance. Moreover, it establishes clear, quantitative
thresholds for performance, representing a vast improvement
over the old process. Notably, the program has garnered
widespread praise from industry stakeholders because it has
the promise of improving safety while significantly reducing
As the NRC implements and refines the new program, initial
reports from the stations reflect less burdensome and
subjective NRC regulation. The process will also enhance
public confidence in the industry because it is much more
transparent and the inspection results are readily accessible
via the Internet.
The NRC has also modeled its new enforcement and inspection
program on the new system, and the industry expects that this
will continue to result in fewer nonsafety-related citations
and unwarranted or arbitrary fines. For example, in 1998, the
industry received 1,037 nonsafety-related Level IV violations.
That number dropped to 79 last year. And, again, the process
is transparent, with the public and all stakeholders having
Internet access to the data.
The importance of this change cannot be overstated. When
licensees do not have to expend capital and intellectual
resources on matters not related to safety, those resources
can be better spent on items with safety and operational
significance. Moreover, the drawn out
fine—appeal—mitigation—re-inspection cycle can be very hard on
public perceptions. It is not unusual for a single nonsafety
related violation to appear in the media 4 or 5 times. The
public is generally unaware that this represents only one
minor issue that in no way challenged plant safety.
The movement toward regulatory reform is a prime example of
the synergies between the Strategic Direction "compass
points" and NEI's innovative efforts to raise the profile of
the nuclear industry. As is well-known, the industry has
labored long and hard to get the government to live up to its
statutory and contractual obligations and pass used fuel
legislation in the U.S. Congress. While the President vetoed
the latest bill passed by both Houses of Congress, NEI remains
committed to that end.
But it is also important to remember that the industry's
own waste management efforts over the past 40 years have
worked so well that they have set a standard that other
industries seek to match as they struggle to manage disposal
and clean-up of hazardous materials. Nevertheless, NEI's
efforts to secure a bill had a number of very beneficial
NEI's work with Congress helped achieve increased funding
for nuclear energy in general, and for nuclear research and
development in particular. The Nuclear Energy Research
Initiative budget increased from $19 million to $22.5 million,
and nuclear-related education and university research reactors
rose from $700,000 to $12 million. In addition, Congress
provided $5 million for initial funding for the Nuclear Energy
Plant Optimization program, which is design to fund innovative
approaches to getting the most out of each plant. Congress
also continued these programs in the fiscal 2001
Equally important, NEI used its work with Congress to
assist in the development of a Nuclear Issues Working Group in
the House, and the Senate Nuclear Caucus as resources for
members interested in nuclear issues. Most recently, NEI
formed the Foundation for Nuclear Studies—a nonprofit
educational organization—which will help lawmakers make
prudent, informed legislative decisions by offering them the
background they need to better understand our industry's
underlying scientific and technical basis.
These are all immensely important efforts because they have
a policy "multiplier effect." Our daily interactions with key
members of Congress and their staffs have helped policymakers
gain a greater appreciation and understanding of the vital
work we do and its importance to the nation. They help
establish a confidence level in our industry because they
bring to light our safety, performance and economic qualities.
In short, the industry's and NEI's efforts to secure used
fuel legislation resulted in progress across a broad front.
They helped Congress appreciate the safety of our industry
that, in turn, furthered policymaker interest in regulatory
reform. Regulatory reform eliminated many of the financial
uncertainties of nuclear energy, which prompted the financial
community to adopt a much more "bullish" approach to the
industry. And by emphasizing nuclear energy's environmental
benefits—a topic addressed in the next section—the industry
gains additional traction with the public, with policymakers
and with business leaders.
Where We Are Going
Two dominant public policy issues will play a large role in
nuclear energy's future. Taken together, they almost
inescapably lead to the conclusion that the industry will
build new nuclear plants in the United States.
Continued economic progress depends upon a diversified and
secure energy portfolio. As the digital economy continues to
grow, the United States and the rest of the world will need
significant amounts of new baseload generating capacity.
Today, computer and Internet related uses of electricity
constitute about 14 percent of U.S. power consumption. A
decade ago, that figure stood at 4 percent. Estimates of new
generating capacity required over the next 20 years range from
300,000 megawatts to 500,000 megawatts—a dramatic increase
over today's installed capacity of 790,000 megawatts. Already,
in the first half of this year, electricity demand in the U.S.
has increased between 3.5-4 percent.
Some of this new generation will be nuclear. In fact, the
industry's excellent operation has—in a way—already added new
nuclear generation. Between 1990-1999, increased output from
the U.S. nuclear power plant fleet was the equivalent of
adding about 19 1,000-megawatt nuclear plants on line.
Nevertheless, the time is rapidly approaching when these
performance improvements will be supplanted by new nuclear
plants. Why is this the case? Because increasingly stringent
domestic clean air regulation and the potentially deleterious
effects of global climate change make it an environmental
In March, I testified before the Senate Energy and Natural
Resources Committee and explained how annually, nuclear energy
avoids the emission of 168 million metric tons of carbon in
the United States. That roughly corresponds to the difference
between current carbon emission levels and the 1990 levels we
are trying to reach under the climate change treaty. Simply
put, without nuclear energy, U.S. carbon reduction
requirements would double.
A similar situation exists here in Great Britain. A report
by the Royal Commission on Environmental Pollution recently
called for a 60 percent reduction in carbon dioxide emissions
over the next half-century. After noting that nuclear energy
is Great Britain's primary source of carbon-free energy, the
report offered four possible scenarios for reaching that goal.
All scenarios called for a large expansion of renewable energy
sources. One scenario required the construction of 52 new
nuclear plants; a second would require 19 new plants.
The World Energy Council also agrees that nuclear energy is
important. That it why in its April report Energy for
Tomorrow's World, the council noted that the nuclear
option must remain open. The report predicts that in 10 years
market conditions and cost considerations will pave the way
toward new plants. That is why, says the report, research and
development should continue and emphasize both evolutionary
plants and smaller designs for markets with less electricity
That is why I tend to dismiss the German Green Party's
effort to ban nuclear energy as nothing short of Orwellian
"doublethink"—the ability to hold two contradictory beliefs in
one's mind simultaneously, and believe both of them. There is
simply no way for the Greens to act on their professed desire
to stem global climate change while simultaneously doing away
with nuclear energy.
Nuclear energy in the United States also avoids about 4
million tons of sulfur dioxide and 2 million tons of nitrogen
oxides each year. Without this emission avoidance, the United
States cannot expect to meet existing commitments under the
Clean Air Act. The U.S. needs all forms of emission-free
generation, but only nuclear energy has the ability to meet
large and growing electricity demand. Given these
contributions, nuclear energy is really a "vital partner" in
clean air compliance. Yet its role, for now, is often
unrecognized in meeting compliance goals.
One of NEI's more innovative efforts in this regard is the
development of an updated computer model that can calculate
more precisely the amount of emissions avoided by nuclear
power plants. The purpose of the model is to calculate the
role of nuclear energy in avoiding emissions controlled under
the Clean Air Act. Users will be able to determine the amounts
of sulfur dioxide and nitrogen oxide avoided annually by
nuclear generation. Separate figures are also available for
nitrogen oxide emissions avoided during the May-September
"ozone season." Nitrogen oxide emissions during the warmer
months contribute significantly to ozone levels and smog. The
model also calculates carbon dioxide emissions avoided by
As the electricity market restructures and competition
evolves, it is possible that the economic value of nuclear
energy as a compliance tool will be recognized. One of nuclear
energy's most stalwart supporters, Sen. Pete Domenici
(R-N.M.), introduced legislation that provided economic credit
for emission avoidance. While the bill fell prey to political
differences over the larger issue of electricity
restructuring, it was a very encouraging effort.
NEI's new computer model will be an important tool once the
economic dimension of emission avoidance is recognized. It has
an economic function that calculates the value of avoided
emissions based on quarterly updates of the trading price for
sulfur dioxide and nitrogen oxide contracts. If nuclear energy
is allowed to participate in carbon dioxide trading under an
eventual global climate change effort, the model can also
calculate the potential value of carbon emissions avoided by
nuclear generation. This is yet another example of the
synergies between the Strategic Direction "compass
points." Nuclear energy's intrinsic environmental benefits
help maximize the value of nuclear energy assets in a
Nuclear energy's environmental qualities also help enhance
the industry's already strong public support. To monitor
trends in that support, NEI conducts opinion polling to stay
abreast of the public attitudes about our industry. The latest
data collected in February are remarkably consistent with that
collected since 1998: two out of three Americans support
nuclear energy. In addition, 77 percent agreed that nuclear
energy should receive tangible benefits for avoiding
When asked if nuclear energy's role in reducing emissions
should be a factor in electricity deregulation policy
decisions that could influence the energy mix, 89 percent said
nuclear energy's environmental benefits are important in
policy decisions affecting continued nuclear plant operations.
NEI has consistently found that among the most influential
public sector—college educated voters—support for nuclear
energy remains high. Almost 90 percent support license renewal
and three-quarters of this group consistently support nuclear
energy and the need to keep the option open to build more
plants in the future. More than half of the respondents said
the U.S. should build more nuclear power plants in the future.
These findings make it clear that the nuclear energy
industry needs to make its case before the world and American
public. And that is exactly what NEI is doing, taking its
message directly to the public, to policymakers and
politicians, and to whoever else will listen.
In support of that effort, NEI is pursuing a number of
innovative communications strategies. As the World Wide Web
becomes an increasingly important communications tool, NEI is
moving energy policy dialogue to cyberspace. In addition to
our "member" and revamped "public" Web sites, NEI maintains a
number of specialized technical sites for the rapid exchange
of industry information and data.
In June, NEI debuted a new energy forum Web
site—SwitchonAmerica.com—and sponsored the first in a series
of online discussions between the public and select energy
industry specialists. NEI publicized the site through a series
of advertisements in the Wall Street Journal. The ad
campaign posed a series of important energy policy questions
and prompted readers to visit the new site and join the forum
discussion. NEI also regularly participates in Web discussions
sponsored by outside organizations such as the Washington
Post newspaper and the Environmental News Network.
The Road Ahead
The existing fleet of 103 nuclear power plants is a strong
foundation for the future of the U.S. industry. That is why
the industry's immediate focus is on refining the license
renewal process. Every unit that meets the regulatory and
economic standard for another 20 years of operation should be
able to do so in the most efficient and effective manner
possible. By working with our members, the public, the NRC and
other stakeholders, NEI will pursue that goal vigorously.
Another primary goal is to continue improving the
industry's performance trend. As previously noted, the past
year was a record one for the industry, and indications are
that 2000 will be even better. How far can the industry
improve performance? Preliminary analysis suggests that the
U.S. nuclear fleet should be able to produce 790-800 billion
kWh a year. The increase in kilowatt-hours would come from two
primary sources, higher capacity factors and power uprates.
If all 103 units achieve a 90 percent capacity factor,
nuclear output would be about 758 billion kWh a year. At 92
percent, capacity factor output would reach 775 billion kWh a
year. Both milestones should be achievable. The top two
quartiles of plants already operate at 90 percent and the top
plant quartile has a three-year rolling average capacity
factor of 93.1 percent.
On top of the extra output from improved capacity, increase
in power uprates could also boost production. The industry has
already planned an additional 842 MW of capacity uprates
beyond the 2,200 MW captured between 1988-1999. Moreover, a
recent change to NRC regulations could allow a one percent
increase at each unit. For the entire U.S. fleet, that
represents about 970 MW of additional capacity. Each 1,000-MW
of added capacity represents approximately 7.5 billion kWh of
output a year.
But what about new plants? Nuclear power plants—like clean
coal technologies and many renewable energy sources—are high
initial-capital-cost technologies. Competitive electricity
markets are driven primarily by short-term economic
considerations. As a result, today in the U.S. most plants
being built are lower-capital-cost technologies like gas-fired
plants—even though these units are very sensitive to
fluctuations in natural gas prices and have been severely
impacted by dramatic price increases.
The nuclear industry has a number of programs under way to
reduce capital costs—either through more efficient design and
construction techniques, or through design changes and
simplifications. To help identify policy initiatives that
might be needed for new plants to be constructed
competitively, NEI has developed a project financing computer
model. In the coming months, the model will be used for
sensitivity studies on the key cost and schedule targets a new
plant must meet. In concert with this effort, NEI is
proceeding with a number of benchmarking efforts designed to
lower operating costs while sharing "best practices" between
It is also important to remember, however, that there are
three new standardized U.S. plant designs approved by the NRC.
While none are currently being built in the U.S., Japan
recently completed construction of two advanced boiling water
reactors using a General Electric design. The Japanese
experience in building these plants in about four years will
help refine the process. With eight units already based on the
ABB Combustion Engineering System 80 design in operation or
under construction, in 1997 the Republic of Korea selected the
AAB CE System 80+ (now a part of Westinghouse) as the
technology base for the advanced Korean Next Generation
Reactor. In addition to the General Electric ABWR and the
System 80+, the NRC has also certified Westinghouse's modular
design AP600. Westinghouse is currently exploring with the NRC
the necessary steps for certifying an AP1000 design.
Nevertheless, NEI continues to support the U.S. Department
of Energy in an effort to define the "Fourth Generation" of
nuclear reactor design. The goal of this international
cooperative effort is to offer an even more viable and
flexible nuclear energy option for the future.
Finally, construction of new nuclear units in the United
States depends on continued refinement of the regulatory
process and the continued progress toward construction and
operation of adequate storage and disposal facilities for used
nuclear fuel. Both are ongoing NEI priorities. In terms of
regulatory reform, NEI will continue its hands-on work with
the NRC to help improve the concepts behind and the
application of safety-focused, performance-based regulation.
Department of Energy to emphasize continually the scientific
bases for a repository decision. According to Secretary of
Energy Richardson, the administration remains committed to a
safe, permanent geologic repository. To that end, NEI will
continue to work with DOE so Sec. Richardson can make a
decision next year to recommend Yucca Mountain to the
President as the repository site. The industry will also
continue its impeccable environmental stewardship of used fuel
until the government fulfills its longstanding obligation.
The nuclear energy industry in the United States is in a
stronger position today than at any time in its history.
Production levels and safety are at historic highs, and costs
are at historic lows. Owners are also vigorously pursuing
plant relicensing, and the industry is redefining itself
through consolidation. The habit of excellence is contagious,
and the industry is well-positioned for the onset of
competition and market restructuring.
The future also bodes well for the industry. Increased
demand for reliable baseload electricity, coupled with the
growing importance of nuclear energy's emission-free nature,
set the groundwork for industry expansion. While the immediate
emphasis must remain the timely and efficient relicensing of
all units seeking another 20-years of operation, innovative
approaches to new plants are also merited. The current 103
nuclear units provide a sound foundation for the future.
Innovation and excellent operation will provide the mortar for
new plant construction—new construction that is likely to
begin well before the doubters think.