Chairman of the Board and
Constellation Energy Group
Board of Directors
Nuclear Energy Institute
you, Joe. And welcome, ladies and gentlemen, to the 1999
Nuclear Energy Assembly.
is an exciting time to be a part of this industry. Perhaps as
exciting as the late 1950s and early 1960s, when nuclear
energy's potential seemed boundless.
Today, having spent more
than three decades gaining a better understanding of this
technology … and improving it … the nuclear energy industry is
again poised for a bright future.
optimism—rather than being based on a starry-eyed attraction
to a new technology—is founded on the environmental
contributions and the economic potential of well-run nuclear
power plants in a competitive market.
bright future is also founded on the collective strength of
this industry. We have amassed more than 2,000 reactor-years
of experience. We have compiled an industrial safety record
that is second to none. And our improved performance now has
policymakers considering … seriously … a revival of nuclear
of you … individually … has played a role in shaping our
as important is the collective effort of this industry.
Instead of being pulled
in countless directions, as one might expect in an
international organization with diverse interests, you—through
NEI—have come together to set a common agenda … and to pursue
the issues most important to the success of the
Through the concerted
effort of the 280 organizations that comprise the Nuclear
Energy Institute, the potential of this industry is far
greater than the sum of its parts.
During the past year to
18 months, much has happened. We have made truly remarkable
are three examples.
regulatory reform is taking root … and the shift we are
seeing toward more efficient licensing actions, as well as
the focus on risk-informed regulation, is proof that the NRC
is preparing for the fast pace of competition.
Second, through their
historic purchases of nuclear power plants, AmerGen and
Entergy have boldly proclaimed that nuclear energy will be
competitive in a restructured marketplace.
increasingly recognize the undeniable link between a clean
environment and emission-free nuclear energy.
These achievements didn't
just happen. The stars didn't align. It wasn't serendipity.
remarkable progress resulted from following a well-worn path
here to remind everyone in this room that this industry's many
achievements since its birth have resulted from years of
perseverance and unity.
our industry prepares for the day when competition replaces a
cost-of-service environment, we must continue to work together
to ensure that nuclear technology is available for the
millions of people who depend on it: for clean, reliable
electricity … for irreplaceable nuclear medicine procedures …
for the peace of mind and good health afforded by food
these reasons, and many others, millions of people in America
and around the world need us to work as one … so
they can continue to enjoy the benefits of this amazing
also have a vested interest in this technology.
Therefore, our job over
the next two days is to exchange ideas … to challenge outdated
thinking … to take advantage of the many opportunities that
are the key opportunities before us:
Opportunity #1: Maximize
asset value by getting down to the business of nuclear energy.
Opportunity #2: Support a
regulatory process conducive to competition.
Opportunity #3: Leverage
the environmental benefits of nuclear energy.
Before I address
Opportunity #1—maximizing asset value—let me first say that
the economic picture for nuclear energy is looking brighter
than ever. And that isn't just Chris Poindexter talking.
nuclear plants are producing more power than ever … for less
money. In fact, in 1998, U.S. nuclear plants set a record
capacity factor of 79.6 percent.
we can do better.
competitive market, yesterday's accomplishments are old news.
Sure, it's okay to pat yourself on the back for a job well
done. But the true measure of success is your ability to
sustain it … and build on it.
must we do then, to truly maximize the value of our nuclear
must get down to the business of nuclear energy.
requires more than incremental improvements in performance and
efficiency. Yes, increased capacity factors and shorter
refueling outages do matter. But they will serve only to
keep pace with the competition.
surpass our competitors, we must go beyond incremental.
We must think strategically and act in fundamentally new ways.
company … Baltimore Gas and Electric … as well as Duke Energy
… have a forward-looking view of the future. We have embarked
on the renewal of our plant licenses.
License renewal is unique
in its simplicity. For a minimal investment, we get an extra
20 years to take advantage of improved performance and
may seem obvious … and I am sure that most companies will come
to view renewal as an important part of their long-term
the fact remains, that obvious or not, if you are serious
about getting down to the business of nuclear energy … and if
you are serious about maximizing asset value … then license
renewal is—or must become—an absolute business imperative.
strategy emerged this spring, when several of our friends
announced the formation of a nuclear operating company.
concept will allow Northern States Power, Wisconsin Electric,
Wisconsin Public Service and Alliant Energy to maximize asset
While I'm not necessarily
advocating a consolidation of the industry, we must prepare
collectively for competition. Specifically, we must work
together to revise any ground rules that would stifle our
ability to compete.
the expertise and talents of employees
- tapping the
best practices from each company, and
costs of commonly used services.
as the industry and NEI closed ranks to ensure that states
treat stranded costs responsibly in restructuring, we must
launch a concerted, cooperative effort to overturn outmoded
laws and policies that will hinder the competitiveness of our
nuclear power plants.
issue that comes to mind is the need to remove adverse tax
consequences that could result from license transfers. AmerGen
and Entergy have set the stage for a major repositioning of
this industry through their purchases of the Three Mile
Island, Clinton and Pilgrim nuclear power plants.
would be unconscionable if these and future deals become
unworkable because of tax rulings that dampen competition.
as important, we must work cooperatively to ensure the
continued collection of decommissioning costs via a wires
are issues and challenges that get to the heart of our ability
to compete with other forms of generation. Solve them, and we
all enjoy the benefits of a level playing field. Ignore them,
and we pay the consequences—all of us.
brings me to the second opportunity before our industry:
creating and supporting a regulatory process conducive to
Earlier, I mentioned the
industry's well-worn path to success: perseverance and unity.
is no better example of the value of working together than the
progress we have seen in the area of regulatory reform.
month, for example, we witnessed the end of the Watch List.
weeks from now, the industry and NRC staff will launch a pilot
program at nine of our plants to test a dramatically new
oversight process … one that replaces subjectivity with
consistency and risk-informed judgment.
applaud this new process for several reasons. For one thing,
it benefits our industry because it is based on real
measures that focus on what is important to safety.
also benefits the public, by providing a plant oversight
process that is committed to their health and safety … and
that can be clearly understood.
as significant is the improved professional relationship
between the industry and the NRC that has grown out of this
improved relationship--coupled with the commitment to reform
the regulatory process by the commissioners and senior
staff--provides us with numerous opportunities to implement
a transition, I believe, will allow both the industry and the
NRC to enter the new millennium ready for the challenges of
opportunity, however, is predicated on maintaining the trust
of our regulator. We have gotten this far, in large part,
because improved and consistent performance has given the NRC
the confidence to reform the way it regulates our plants. If
our performance or safety record slips, so too will the NRC's
said, we have an opportunity—along with the NRC—to develop a
regulatory process that ensures safety, yet does not hinder
date, no other agency or industry can boast an oversight
process that protects safety without creating unnecessary
burdens on those who are regulated.
We—the industry and the
NRC—have a historic opportunity to create a regulatory process
that can be replicated by other industries and agencies as a
model for safety and fairness.
would like to pledge to the commission the commitment of a
unified industry to work with the Nuclear Regulatory
Commission to develop such a model process.
brings me to Opportunity #3: leveraging nuclear energy's
a few years ago, nuclear energy's emission-free nature was
seen as a fringe benefit.
Today, with an increased
emphasis on reducing carbon emissions and air pollution,
policymakers have awakened to what we call the "hidden value"
of nuclear energy.
fall, for instance, Stuart Eizenstat told a gathering of
environmental groups that any emission-reduction strategy must
include contributions from nuclear energy.
Clinton administration's lead negotiator on climate change
said, and I quote: "Those who think we can accomplish these
goals without a significant nuclear industry are simply
administration's Energy Information Administration—an arm of
the Department of Energy—projects that to reduce carbon
emissions 3 percent below 1990 levels, most existing nuclear
plants will have to renew their operating licenses.
want to make real gains … if we want to attain the aggressive
targets in the Kyoto Protocol … EIA says that under certain
scenarios the United States will need to build 42,000
megawatts of new nuclear capacity by 2020.
I'm not going to suggest that we'll be building any new plants
in the next few years.
Although I believe that
time will come, I'd prefer to address a challenge with
greater near-term significance: attaining widespread
recognition among policymakers of nuclear energy's crucial
role in clean air compliance.
addressing this challenge, we must … as an industry and
through the Nuclear Energy Institute … work together to
achieve several policy initiatives.
Foremost is the need to
gain economic recognition for the clean air compliance value
of emission-free nuclear energy. Future regulations should
recognize the value of electricity sources that avoid
emissions, as well as the value of curbing emissions from
other types of plants.
Another policy issue that
must be addressed is the trend toward disclosure and labeling.
All sources of generation are required to reveal their
emissions, discharges or other waste streams created.
Everyone knows about our
used fuel … but few people seem to realize that all forms of
generation have environmental impacts.
issues point to a fundamental need for equity and fairness in
the treatment of nuclear energy—particularly as we enter a
What's in it for you?
Increased awareness of the environmental benefits of nuclear
energy and economic recognition for these significant
another way, working together to solve environmental policy
issues will help maximize the value of your nuclear power
is one other issue I need to address: the enactment of used
fuel legislation that benefits our entire industry.
many of you may view this as a challenge, I view this
as an opportunity … one that may be lost if this
industry is divided and tempted by short-term solutions.
don't need to tell you that dozens of nuclear power plants are
fast running out of used fuel storage capacity. You're also
aware of the political and public relations gauntlet that must
be run to add on-site storage.
Finally, it is no secret
that—for several plants—the only thing that stands in the way
of decommissioning and license termination is the removal of
of these are compelling reasons to pursue resolution of our
integrated, three-pronged approach to reforming DOE's used
fuel management program.
first element is litigation. The courts have upheld
DOE's obligation, and have told utilities to resolve the issue
through our standard contracts. This requires that we retain
our right to litigate.
second is continued support of the repository program.
Although the opening of a permanent repository remains a long
way off, we saw significant progress last December, when
Secretary Richardson said that the Yucca Mountain viability
assessment contained "no showstoppers."
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 just
as clearly, we need the help of Congress to ensure that DOE
meets its longstanding contractual obligation to begin
accepting used fuel by a date certain.
can't lose sight of the synergistic effect of this integrated
approach: Success in one area assures progress in the others.
enter a new millennium … and as we make the historic
transition to a competitive industry … we have a number of
opportunities before us:
The past experience of
this industry … and our past success … lead me to believe we
can turn each of these challenges into opportunities.
maximizing the value of our nuclear power plants.
creating and supporting a regulatory process that is
conducive to competition.
leveraging the environmental benefits of nuclear energy.
- And fourth,
enacting nuclear waste legislation that benefits the entire
said earlier, this is an exciting time to be a part of this
industry. At no time in my career have the prospects for
nuclear energy looked so good.
we can't take success for granted.
such, our mandate is clear: We must continue along that
well-worn path to success. With unity and perseverance, we
will transform this industry's enormous potential into