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June 1, 1999

Nuclear Energy's Future
in the United States

Angelina S. Howard
Senior Vice President
Nuclear Energy Institute

Annual Conference
Canadian Nuclear Association/Canadian Nuclear Society
Montreal, Canada

June 1, 1999

Good morning. I'm delighted to be here for the annual conference of the Canadian nuclear industry.

Those of us from the United States feel a special kinship with Canada—our closest neighbor, ally and trading partner.

Our two nations share the longest unguarded border in the world. A wonderful testament to peace and cooperation in these troubled times.

While our two nations are close friends, each has a culture all its own. That is as clear in Toronto, Atlanta or Washington as it is here in Montreal.

One of my staff is originally from Canada—Montreal, in fact. She said there is an easy way to distinguish between a Canadian and an American: Remark that both cultures are the same and the Canadian will promptly—but politely—set you straight.

As well you should!

I've been asked to give you a brief overview of nuclear energy in the United States-how the situation looks today and what we expect in the future.

Nuclear energy is entering a new era in the United States.

During the past few years, we have witnessed an extraordinary convergence of several key issues that affect our industry. The effects of this convergence are very positive.

Today, we have a highly competitive, dynamic industry that is poised for tremendous progress in the next several years.

And in the future—early in the next century—we expect to see a modest expansion of nuclear energy here in the United States.

Today I'd like to stress two key points:

  • First, there is growing consensus among policymakers that nuclear energy is vital for the United States to meet its clean air requirements. They now have this technology on their radar screens. True in industrialized countries around the world, focused on reducing threat of global warming.
  • Second, many states have ordered the electric power industry to open up to competition … and other states are moving in that direction. That is good news for our industry. We are seeing attitudes change toward nuclear energy in the United States.
Policymakers now recognize that our nation needs emission-free electricity, whether it's from hydroelectric plants, solar photovoltaics, windmills—or nuclear power plants.

We have heard supportive comments from people like U.S. Under Secretary of State Stuart Eizenstat, who was our chief negotiator in Kyoto and Buenos Aires … Alaska Senator Frank Murkowski and New Mexico Senator Pete Domenici—just to name a few.

They know that nuclear energy plays an important role in helping to avoid air pollution in the United States.

For fiscal year 1999, Congress provided $19 million to fund the Energy Department's Nuclear Energy Research Initiative.

Energy Secretary Bill Richardson said the Clinton administration's decision to fund this program "has sent a signal that nuclear power is important."

The United States now gets about 30 percent of its electricity from emission-free sources—20 percent from 103 nuclear power plants… and 10 percent from hydroelectric plants.

The restrictions we have adopted on air emissions are based on the assumption that 30 percent of our electricity will always be emission-free … and that nuclear power plants will continue to operate.

If we had to replace nuclear-generated electricity with electricity from fossil-fueled plants, our air quality situation would change significantly.

That already has happened in Ontario, according to a recent report from the Toronto Department of Public Health.

It said that Ontario power plant emissions of sulfur dioxide and nitrogen oxide have soared since Ontario Power Generation shut down several nuclear power plants for extended maintenance and repair in 1997.

Many people don't realize how important nuclear power plants are—until those plants are off line. We call that the "hidden value" of nuclear power.

U.S. clean air regulations do not recognize the significant role of emission-free generation in clean air compliance.

The industry is encouraging state and local governments to think of emission-free generation as a compliance tool for controlled pollutants, reducing overall compliance costs.

This "hidden value" of emission-free generating capacity must be recognized … given financial value … and credited to nuclear units and other emission-free energy sources.

Several members of the U.S. Congress are exploring this concept. Getting financial credit for avoiding air pollution will enhance the competitive position of nuclear power plants.

There also have been discussions in Congress about the possibility of requiring the United States to have a certain percentage of its electricity generated by emission-free sources.

We would like to see our nuclear plants get financial credit for being emission-free generators—but their ability to compete in an open marketplace doesn't depend on that.

Most U.S. nuclear plants are very competitive today… and they are endeavoring to reduce costs even further.—which is my second point.

Competition is good for the industry, because our plants are performing at high levels of safety, reliability and efficiency. Performance records and a well-run nuclear power plant is very competitive in the marketplace.

Based on a three-year rolling average—from 1995 to 1997—the United States had nine nuclear units producing electricity below 1.5 cents per kilowatt-hour … and 40 units producing at below 2 cents per kilowatt-hour. Those figures are more than competitive.

And because policymakers now recognize that nuclear energy is important, they are more willing to support changes that affect the long-term competitiveness of nuclear plants.

For example, we're seeing progress in addressing the issue of so-called stranded costs—large capital investments that could be at risk in a competitive marketplace.

The move to open competition in the electricity marketplace has accelerated the resolution of stranded cost issues … as individual companies position themselves for competition.

Twenty states—encompassing 52 nuclear units—have taken final action on electricity restructuring plans. Most states have provided utilities with a reasonable opportunity to recover their investment costs.

I'd like to speak briefly about the United States' move toward resolving the disposition of used fuel.

The U.S. nuclear industry has been pursuing a three-pronged approach to reforming the Department of Energy's used fuel management program.

The first element is litigation. Several utilities have filed suit against the Department of Energy for not fulfilling its obligation to begin moving used fuel from plant sites by January 1998.

In a number of different decisions, the courts have concluded that DOE has both a statutory and a contractual obligation. Some utilities are litigating the amount they are to receive as damages.

One utility has been told to resolve the issue of damages through the process set up in its standard contract with DOE for handling disputes.

The second element is continued support of the Energy Department's repository program.

Under the Nuclear Waste Policy Act of 1982, Congress directed the Energy Department to locate, build and operate a deep mined geologic repository for used nuclear fuel.

The agency started with nine potential sites and narrowed the list to three. In 1987, Congress designated a site in the Nevada desert—Yucca Mountain—to be evaluated in detail.

Although a permanent repository will not be opened until 2010, at the earliest, we see continuing process. Notably, Energy Secretary Richardson said last December that the just issued viability assessment of the Yucca Mountain site contained "no showstoppers."

The viability assessment includes a design for the repository … explains how it will work … what it will take to license it … and how much it will cost.

The third element of the industry's approach to used fuel management is legislation. Clearly, we need legislation to ensure adequate funding of the repository program and to ensure the DOE meets its obligation.

Bills have been introduced this year in both the House of Representatives and the Senate, and both bills are progressing through the legislative process.

There also are tremendous changes under way in the regulatory area.

With strong support from Congress, the U.S. Nuclear Regulatory Commission has developed a more objective, safety-focused regulatory process.

This approach will enhance safety, while reducing unnecessary regulatory burdens. The agency also has changed its approach to enforcement to be more consistent with safety matters.

Today marks the beginning of a pilot project to test the new oversight process at nine plants. The pilot project will be used to fine-tune the new oversight process before it is implemented industrywide next year.

Another expected benefit of regulatory changes will come in the tone and content of communications that the public receives from the NRC.

These communications will become more objective and based on factors specific to plant safety—and, therefore, more consistent with the actual safety performance of our plants.

The U.S. nuclear energy industry is dynamic and forward-looking.

Two companies have filed for 20-year license extensions for their combined five nuclear units … and seven other companies have notified the NRC of their intention to do so in the near future.

In addition, two companies that have decided to make nuclear energy generation their core business are in the process of purchasing three other nuclear units.

And, at least two other plants are being examined as potential candidates for purchase.

All over the country, companies that operate nuclear power plants are restructuring their assets to position themselves for competition. Companies that design and service nuclear power plants are very active too, both in U.S. and in pursuing business abroad.

And importantly, the financial community is taking a more favorable view of nuclear energy's business prospects than it has for many years.

Before I close, I want to talk briefly about public opinion.

A national survey last year looked at the views of an influential sector of the American public—college graduates who are registered to vote. These are the people who are active in policy decisions.

Nearly nine out of ten agreed that we should renew the licenses of nuclear plants that continue to meet safety standards.

Three out of four agreed that we should keep the option to build more nuclear power plants in the future.

But the survey also showed what we call "a perception gap."

Sixty-two percent of those polled said they, personally, favor the use of nuclear energy. That is a clear majority.

Yet most of these individuals believe they are in the minority on this issue! They support nuclear energy themselves, but they believe it is unpopular.

The same gap is found among legislators and policymakers. Although a large majority of policymakers support nuclear energy, they perceive that their constituents do not.

Other recent surveys have uncovered two other points that bear close examination.

First, people don't know enough about what we do and how we do it. They don't understand the science of our business. Nor do they understand the lengths to which we go to provide safe, reliable and economical electricity.

And second, they are just coming to understand the beneficial environmental impact of the nuclear plants.

In the March survey, we found a positive correlation between how well-informed people feel they are about nuclear energy … and how likely they are to favor this technology.

The industry is intensifying its efforts to communicate the benefits of nuclear energy—and to reassure those who support nuclear energy that their views are shared by many others.

For example, the Nuclear Energy Institute has mounted a major advertising campaign to promote the benefits of nuclear technologies. We are extremely active in coalition-building and other outreach activities.

And in this age of the World Wide Web, we have improved our public Web site at http://www.nei.org/.

This truly is the beginning of a new era for nuclear energy in the United States. People are starting to recognize that it is an essential part of our energy mix.

It will be even more important in the future, as we deal with the competing demands of continued economic growth and protection of the environment. These are extraordinary times for the nuclear energy industry … in the United States and elsewhere around the globe. I hope you are as excited about the future of this industry as I am!

Once again, I want to say what a pleasure it is to address my Canadian colleagues in the nuclear industry.

Just as it is important for the U.S. industry to pull together, it also is important for the international nuclear industry to maintain close ties and work together to ensure the future of nuclear energy as a sustainable source of economic, available and environmentally preferable source of energy.

Thank you.

 


Copyright 2001 Nuclear Energy Institute.
All rights reserved.