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49–530 PDF 2009

S. HRG. 111–21 

NUCLEAR ENERGY DEVELOPMENT 

HEARING 

BEFORE THE

COMMITTEE ON 

ENERGY AND NATURAL RESOURCES 

UNITED STATES SENATE 

ONE HUNDRED ELEVENTH CONGRESS 

FIRST SESSION 

TO

RECEIVE TESTIMONY ON NUCLEAR ENERGY DEVELOPMENT 

MARCH 18, 2009 

( 

Printed for the use of the 

Committee on Energy and Natural Resources 
(II) 

COMMITTEE ON ENERGY AND NATURAL RESOURCES 

JEFF BINGAMAN, New Mexico, Chairman 

BYRON L. DORGAN, North Dakota 

RON WYDEN, Oregon 

TIM JOHNSON, South Dakota 

MARY L. LANDRIEU, Louisiana 

MARIA CANTWELL, Washington 

ROBERT MENENDEZ, New Jersey 

BLANCHE L. LINCOLN, Arkansas 

BERNARD SANDERS, Vermont 

EVAN BAYH, Indiana 

DEBBIE STABENOW, Michigan 

MARK UDALL, Colorado 

JEANNE SHAHEEN, New Hampshire 

LISA MURKOWSKI, Alaska 

RICHARD BURR, North Carolina 

JOHN BARRASSO, Wyoming 

SAM BROWNBACK, Kansas 

JAMES E. RISCH, Idaho 

JOHN MCCAIN, Arizona 

ROBERT F. BENNETT, Utah 

JIM BUNNING, Kentucky 

JEFF SESSIONS, Alabama 

BOB CORKER, Tennessee 

ROBERT M. SIMON, Staff Director 

SAM E. FOWLER, Chief Counsel 

MCKIE CAMPBELL, Republican Staff Director 

KAREN K. BILLUPS, Republican Chief Counsel 
(III) 

C O N T E N T S 

STATEMENTS 

Page 

Bingaman, Hon. Jeff, U.S. Senator From New Mexico ........................................ 1 

Blackwell, Deborah Deal, Vice President, Licensing & Public Policy Hyperion 

Power Generation, Inc. ........................................................................................ 48 

Cochran, Thomas B., Ph.D., Senior Scientist, Nuclear Program, and Christopher E. Paine, Director, Nuclear Program, Natural Resources Defense 

Council, Inc. .......................................................................................................... 31 

Fertel, Marvin S., President and Chief Executive Officer, Nuclear Energy 

Institute ................................................................................................................ 19 

Klein, Dale E., Chairman, Nuclear Regulatory Commission ............................... 3 

Murkowski, Hon. Lisa, U.S. Senator From Alaska ............................................... 2 

APPENDIX 

Responses to additional questions .......................................................................... 53 

(1) 

NUCLEAR ENERGY DEVELOPMENT 

WEDNESDAY, MARCH 18, 2009 

U.S. SENATE, COMMITTEE ON ENERGY AND NATURAL RESOURCES, Washington, DC. 

The committee met, pursuant to notice, at 9:38 a.m. in room SD– 

366, Dirksen Senate Office Building, Hon. Jeff Bingaman, chairman, presiding. 

OPENING STATEMENT OF HON. JEFF BINGAMAN, U.S. 

SENATOR FROM NEW MEXICO 

The CHAIRMAN. OK, why don’t we go ahead with the hearing? 

Our meeting this morning has two purposes, both to consider the 

nomination of David Hayes to be the Deputy Secretary of Interior 

and also to hear testimony on nuclear energy development. 

To report the nomination or take any action on it, a quorum of 

12 members must be present. In the absence of a reporting 

quorum, I would propose that we go ahead with the hearing at this 

time, and once a reporting quorum is present, then we could briefly 

recess the hearing and consider Mr. Hayes’s nomination and then 

return to the hearing once that has been completed. 

Nuclear power is an essential part of our energy mix. The 104 

nuclear power plants now operating in this country supply 20 percent of our electricity. They do so reliably, cost effectively, and 

without emitting greenhouse gases. 

Nuclear power is an essential part of our energy mix and must 

remain so for the foreseeable future. The current generation of nuclear power plants was mostly built in the 1960s and 1970s and 

1980s. For nearly 30 years, utilities did not order a single new nuclear power plant. But in the last 2 years, 17 companies or groups 

of companies have ordered 26 new reactors. 

Our focus this morning will be twofold. First, we have invited Dr. 

Dale Klein, who is the chairman of the Nuclear Regulatory Commission, to give us an overview of the licensing process that the 

commission uses to license new nuclear power plants and review 

for us the status of new reactor applications. 

The original licensing process was often blamed for the construction delays and cost overruns that were experienced in the past. 

But the commission and the Congress replaced that process with 

a new, streamlined, one-step process that is now in place but has 

not yet—but has yet to be fully demonstrated. 

So we look forward to hearing from Dr. Klein on this licensing 

system and on the status of applications. 
2 

Our second panel will focus on the financial challenges and other 

obstacles facing new nuclear power plant development. The high 

capital cost of building a new nuclear power plant is a serious obstacle to developing these plants. We have previously tried to address the financial challenge through loan guarantees, delay and 

accident insurance, and production tax credits, and we will ask the 

second panel for its perspective on these financial challenges and 

on any other problems facing the industry at this time. 

What to do with the spent fuel from nuclear power plants is, of 

course, one of the biggest unsolved problems facing the nuclear industry. Nuclear waste is not the subject of today’s hearing. I hope 

we can schedule a separate hearing on nuclear waste in the weeks 

ahead. 

Nonetheless, I recognize the keen interest Senators have in the 

problem and in the Administration’s decision to stop work at the 

Yucca Mountain repository. I expect we will have questions for the 

panel on the waste problem as well as part of this hearing. 

So, with that, let me defer to Senator Murkowski. 

STATEMENT OF HON. LISA MURKOWSKI, U.S. SENATOR 

FROM ALASKA 

Senator MURKOWSKI. Thank you, Mr. Chairman. 

I appreciate the hearing on the development of nuclear energy 

here in the United States. We have seen a resurgence of the nuclear power industry with 26 license applications from 17 entities 

pending for new reactors. But even with the benefits of nuclear energy, which are no emissions, stable baseload, and large-scale job 

creation, there has been conflicting evidence from the new Administration on what role they will play to support this revival. 

If nuclear power has a place in our overall energy policy to meet 

future energy needs and reduce greenhouse gas emissions, and I 

firmly believe that it does, then we in Washington need to be doing 

all that we can to move it forward now. While there has been some 

mention about nuclear energy being part of the overall energy 

strategy, the actions of the Administration do not necessarily support that claim. 

So far, this Administration has sought to kill Yucca Mountain as 

a long-term repository for spent nuclear fuel without yet providing 

an alternative. They have shown an unwillingness to increase the 

loan guarantee program funding levels to support the construction 

of new nuclear plants, and they have focused on renewable and alternative fuel developments to reduce our carbon emissions literally without any mention of nuclear energy. 

So where the nuclear energy as an initiative truly stands with 

the current Administration is a bit of a mystery to me. 

The U.S. may have the largest number of nuclear power plants 

in the world, but no new reactors have been ordered in the United 

States since 1978. Since that time, over 250 new reactors were constructed outside the United States, compared to just over 50 domestically. 

China alone has 24 new nuclear reactors under construction, 

which will be online between 2010 and 2015. Japan intends to increase the amount of electricity it gets from nuclear from today’s 

30 percent to over 40 percent by the year 2020. France already gets 
3 

78 percent of its electricity from nuclear. It is safe to say that nuclear has achieved a significant level of international acceptance. 

Unfortunately, as other countries have moved forward, the 

United States has been stagnant in perhaps more ways than one. 

Not only did we effectively stop building new reactors 20 years ago, 

but we have allowed our nuclear work force and our manufacturing 

infrastructure to disappear. It will take hard work and investment 

as well as stable regulation and Government policies to reestablish 

our domestic nuclear industry and expand our Nation’s primary 

source of carbon-free energy. 

We have just begun to see the rebirth of the nuclear energy industry in this country, and I credit a great deal of that to the leadership of Senator Domenici, who sat next to you for so many years 

here, Mr. Chairman. 

I look forward to working with my colleagues on this committee 

as well as those within the Administration to continue the development and look forward to the comments from the witnesses. 

The CHAIRMAN. Let me ask Chairman Klein—Dale Klein, who is 

chairman of the Nuclear Regulatory Commission, to go ahead and 

take the chair here. Our first panel is made up of the Honorable 

Dale Klein. He is the chairman of the Nuclear Regulatory Commission, and we look forward to hearing from you as to your view on 

this set of issues. 

Please go right ahead. 

STATEMENT OF DALE E. KLEIN, CHAIRMAN, NUCLEAR 

REGULATORY COMMISSION 

Mr. KLEIN. Thank you, Mr. Chairman, Senator Murkowski, and 

members of the committee. 

I am pleased to appear before you today to talk about the Nuclear Regulatory Commission’s new reactor licensing process. My 

written testimony provides considerable detail on this subject. So 

let me take this time to highlight the main points. 

First, an update of the current status of new reactor applications; 

the second, how the agency has improved and streamlined the licensing process for proposed new reactor applications with no compromise of safety; and third, our extensive preparations to develop 

the staff and resources necessary to provide timely reviews of the 

applications. 

As you indicated with regard to the current applications, the 

NRC has received 17 applications or combined operating license applications for a total of 26 new reactors. A map depicting the locations and types of proposed reactors is included in my written 

statement. Based on industry information submitted to the NRC, 

we could see up to five more COL applications for seven more reactors by the end of 2010. 

Unlike the current combined license process, the commercial nuclear power plants currently operating in the United States were 

licensed under a two-step process—first for construction and a second step for operation. This led to a ‘‘design as you go’’ approach, 

which deferred resolution of important safety issues until plant 

construction was well underway, and it allowed commercial reactors to be built with an unusual degree of variability and diversity. 
4 

The Agency’s new process approves a plant design before construction begins while maintaining significant public participation 

throughout the licensing application process. It also provides two 

other significant procedures—first, review and approval of standardized designs through a design certification rulemaking and, second, review and approval of a site suitability prior to a decision to 

build a particular plant through an early site permit. The applicant 

may also request a limited work authorization, which allows applicants to perform limited work activities to prepare the site. 

I should mention that not all the applicants are taking full advantage of this new, improved licensing process. In addition, some 

applications received to date initially lacked information that the 

staff needs to complete this review. But the NRC is working with 

the stakeholders to overcome these challenges, and we are confident that the agency will be well prepared to make timely regulatory decisions. 

To prepare for the increased licensing activity we are experiencing at the NRC, we made plans several years ago for the staffing. Most significantly, the Commission created the Office of New 

Reactors, or NRO, to lead the agency’s effort to establish the regulatory and organizational foundation necessary to address the new 

reactor licensing demand. Staffing the new office was given high 

priority, and today, we have over 475 highly competent and trained 

employees. 

We also created a new reactor construction inspection organization in Region II in our Atlanta, Georgia, location. 

Mr. Chairman, my written testimony addresses other important 

subjects, such as our cooperative efforts with regulators abroad on 

construction and vendor inspection, but I think I have mentioned 

the highlights. 

This concludes my overview of the NRC’s licensing process for 

the new reactor applications and the current status of the license 

applications, and I will be pleased to answer questions you may 

have. 

[The prepared statement of Mr. Klein follows:] 

PREPARED STATEMENT OF DALE E. KLEIN, CHAIRMAN, NUCLEAR

REGULATORY COMMISSION

Mr. Chairman, Senator Murkowski, and Members of the Committee, I am pleased 

to appear before you today to discuss the Nuclear Regulatory Commission’s new reactor licensing processes. 

Let me begin by noting that just last week the NRC hosted our annual Regulatory 

Information Conference, which was attended by nearly three thousand individuals, 

including regulators, members of industry, stakeholders, and representatives from 

31 other nations. Our annual conference is part of the NRC’s ongoing efforts to 

share information, best practices and lessons learned to enhance nuclear safety and 

security both domestically and abroad. 

Mr. Chairman, my testimony will explain the current licensing process for new 

reactor applications; contrast this with the agency’s older, less efficient, two-step 

process; and discuss the current status of new reactor applications. 

Congress has provided the NRC with the resources needed to meet the growing 

renewed interest in additional commercial nuclear power in the United States. 

These resources have enabled the NRC to successfully complete, on schedule, significant new reactor licensing activities. Over a number of years, NRC has taken steps 

to improve the licensing process. These actions have served to increase the effectiveness, efficiency and predictability of licensing a new reactor while maintaining our 

focus on safety and security. All currently operating commercial nuclear power 

plants in the United States were licensed under a two-step process for approval of 
5 

construction and later for operation. But, all of the new reactor license applications 

have been submitted under a new combined license application approach (also 

known as ‘‘COL’’), which essentially takes the previous two-step review process 

down to one step. To date, the NRC has received 17 COL applications for 26 new 

nuclear reactors. A map depicting the locations and types of proposed reactors is attached. Based on industry information submitted to the NRC, we could see up to 

five more COL applications for seven more reactors by the end of 2010. 

In the simplest terms, under the original two-step licensing approach the NRC 

would first issue a construction permit, based on evaluation of preliminary safety 

and design information, to allow construction of a nuclear power plant, and then 

later issue an operating license upon completion of construction. The applicant was 

not required to submit a complete design at the construction permit phase. Before 

the scheduled completion of construction, (typically when the plant was 50% completed), the applicant filed an application for an operating license. At this point, the 

applicant had to provide the complete design bases and other information related 

to the safe operation of the plant, technical specifications for operation of the plant, 

and description of operational programs. 

Criticism of the two-step process centered on a design-as-you-go approach to constructing the plant, which deferred resolution of important safety issues until plant 

construction was well underway. The deferral of design details until after construction was authorized allowed commercial reactors to be built with an unusual degree 

of variability and diversity—in effect, a set of custom-designed and custom-built 

plants. Other criticisms included regulatory requirements that kept changing, and 

a seemingly inefficient and duplicative review and hearing process. 

To address these problems, the process set forth in Part 52 of the NRC’s regulations allows an applicant to seek a combined license, which authorizes construction 

based on a complete design and provides conditional authority to operate the plant, 

subject to verification that the plant has been constructed in accordance with the 

license, design, and the Commission’s regulations. Part 52 maintains significant 

public participation throughout the licensing application process. A graphic depiction of the licensing process is attached. 

Part 52 provides two other significant procedures: (1) review and approval of 

standardized designs through a Design Certification rulemaking, and (2) review and 

approval of a site’s suitability, prior to a decision whether to build a particular 

plant, through an Early Site Permit (ESP). The applicant may also request a Limited Work Authorization (LWA), which allows applicants to perform limited work activities to prepare the site before approval of the COL. 

So far, only one of the five designs currently being referenced in COL applications—the Advanced Boiling Water Reactor—has completed the certification process 

and is only referenced in one COL application. It should be noted that although the 

Westinghouse AP1000 is also a certified reactor design, the design that was approved in 2006 has two revisions under review by the NRC. A final decision on the 

design changes is expected in 2010. 

In addition, the design certification applications and some COL applications received to date initially lacked information that the staff needs to complete its review. Staff reviews have been further complicated because some applicants are revising submission dates and submitting modifications to their applications, often 

with late notice to the staff, which is disruptive to the work planning process. The 

result is that the early COL applications are unlikely to achieve the full benefits 

of the Part 52 process. The NRC is working with stakeholders to overcome these 

challenges and is confident that the agency will be prepared to make timely regulatory decisions. As this process matures, the Commission will seek the continued 

support of Congress to sustain these efforts. 

I would like to focus my comments briefly on improvements we have made to 

date, and what we expect down the road in new reactor licensing. 

The NRC has sought to position itself strategically to be ready to respond to the 

new reactor licensing workload. The Commission created the Office of New Reactors, 

or NRO, to lead the agency effort to establish the regulatory and organizational 

foundation necessary to address the new reactor licensing demand. Staffing the new 

office was given high priority, and today NRO has over 475 highly competent and 

qualified employees. 

The NRC has made great strides in addressing the new reactor licensing challenge: 

• The NRC published a revised 10 CFR Part 52 (titled, ‘‘Licenses, Certifications, 

and Approvals for Nuclear Power Plants’’) in August 2007 to clarify the applicability of various requirements and to enhance regulatory effectiveness and efficiency in implementing the licensing and approval processes. The rule also in-
6 

corporated lessons learned from the reviews of the first design certification and 

early site permit applications. • Similarly, the NRC published a final rule on Limited Work Authorizations, or 

LWAs, which supplements the final rule on 10 CFR Part 52. This rule allows 

certain early construction activities to commence before a construction permit 

or combined license is issued. The rule specifies the scope of construction activities that may be performed under an LWA, and specifies activities that no 

longer require NRC approval. Like the Part 52 revision, these changes were 

adopted to enhance the efficiency of the licensing and approval process and to 

reflect more clearly NRC’s authority. • In March 2007, the NRC completed the first comprehensive update to the 

NRC’s Standard Review Plan (SRP), which provides guidance to the staff on 

how to perform technical reviews. The update brought the SRP into conformance with the Part 52 revision, and extends the applicability of the SRP to the 

Part 52 licensing process. • The NRC issued a new regulatory guide, RG 1.206 (titled, ‘‘Combined License 

Applications for Nuclear Power Plants’’), which provides guidance to potential 

applicants on standard format and content of new reactor combined license applications, and also recently issued guidance for applicants on complying with 

the LWA rule. • The NRC has implemented a computer-based project management system that 

significantly enhances the staff’s ability to plan and schedule work. • In 2004, the NRC promulgated substantially revised rules of practice intended 

to streamline and make the hearing process more effective. • The NRC promulgated an electronic filing rule that is further increasing the efficiency of the hearing process. • The NRC created a new reactor construction inspection organization in the Region II Office in Atlanta, Georgia. To prepare for the commencement of construction activities, the staff has observed ongoing new construction activities 

in China, Finland, France, Japan, Korea, and inspected the refurbishment and 

startup of the Tennessee Valley Authority (TVA) Browns Ferry Unit 1, which 

has been idle since 1975, and is currently inspecting the completion of TVA’s 

Watts Bar Unit 2, which had been in a suspended state since 1985. • Finally, the NRC conducted an efficient review of project management using the 

Six Sigma problem-solving methodology to streamline the design certification 

rulemaking process. 

With these activities, I believe that the NRC has established a strong regulatory 

foundation for the review of new reactor license applications. 

I should also mention that the agency has made a consistent effort to improve our 

coordination with other Federal agencies involved in new reactor licensing. For example, consistent with its lead responsibility for off-site nuclear emergency planning 

and response, the Federal Emergency Management Agency (FEMA) supports the 

NRC’s COL application reviews by providing input to ensure that the off-site emergency plans are adequate. 

In addition to COLs, the NRC staff has completed the review of three early site 

permit applications and is proceeding with the review of the fourth application. 

With respect to design certifications, the staff is continuing its review of General 

Electric’s Economic Simplified Boiling Water Reactor, commonly referred to as the 

ESBWR; Areva Nuclear Power’s U.S. Evolutionary Power Reactor, or U.S. EPR; 

Mitsubishi’s U.S. Advanced Pressurized Water Reactor, or US-APWR; and amendments to Westinghouse’s AP1000 design certification. 

The NRC has completed preliminary work for the licensing of the Next Generation Nuclear Plant, or NGNP. In August 2008, the NRC and DOE delivered a licensing strategy to the Congress, as required by the Energy Policy Act of 2005. 

I would like to touch briefly on the GAO’s 2007 audit of the NRC’s readiness to 

conduct reviews of COL applications. In general, the GAO’s findings were positive 

assessments, acknowledging the NRC’s extensive preparations and the quality of 

plans. The NRC continues to believe that the GAO assessments provide useful insights to the agency’s management. The GAO identified four recommendations: 

• Fully develop and implement criteria for setting priorities to allocate resources 

across applications by January 2008. 

• Provide the resources for implementing reviewer and management tools needed 

to ensure that the most important tools will be available as soon as is practicable, but no later than March 2008. 

• Clarify the responsibilities of Office of New Reactor’s Resource Management 

Board in facilitating the coordination and communication of resource allocation 

decisions. 
7 

• Enhance the process for requesting additional information by (1) providing more 

specific guidance to staff on the development and resolution of requests for additional information within and across design centers and (2) explaining forthcoming workflow and electronic process revisions to combined license applicants 

in a timely manner. 

I am pleased to report to you that the NRC has completed its work in response 

to these recommendations. 

The NRC is also working with its international partners on many areas of common interest. One program that we have initiated is the Multi National Design 

Evaluation Program (MDEP) in order to take advantage of international experience 

in licensing and constructing two EPR plants in Europe to assist the NRC in its 

review of the US EPR application. The NRC also has recently established interactions with regulatory counterparts in China, Canada and the United Kingdom to 

exchange information on the licensing review of proposed AP1000 reactors in the 

United States. 

In addition to focusing on completing licensing reviews, the NRC is working on 

the development and implementation of a new Construction and Vendor Inspection 

Program. The program is building upon prior experience, including lessons learned 

during the construction of the 104 currently operating reactors. Numerous historical 

lessons provide insights related to quality and oversight problems during the previous period of construction in the United States, and abroad. The most important 

of these lessons is that a commitment to quality, instilled early in a nuclear construction project, is vital to ensuring that the facility is constructed and will operate 

in conformance with its license and the regulations. 

The NRC staff is working with the industry to ensure that a strong commitment 

to quality is part of the foundation of every new reactor project in the United States. 

Many of the components that will be used in the construction of possible new reactors in the U.S. will be manufactured abroad, so NRC inspectors are also visiting 

manufacturing facilities and working with our regulatory counterparts in other 

countries to ensure the quality of the manufactured components. Quality assurance 

(QA) inspections of engineering and site activities are contributing to the conduct 

of effective and efficient reviews of design certifications, COLs, and early site permit 

applications. The agency has also sought stakeholder involvement in an effort to 

make construction and vendor inspection a timely, accurate and transparent process. 

While the Commission is satisfied that we have in place an effective regulatory 

process, we are always looking for ways to improve. Just as industry can become 

more efficient, the NRC is constantly working to improve its efficiency with no compromise in safety. 

Mr. Chairman and Members of the Committee, this concludes my overview of the 

NRC’s licensing process for new reactor applications, and the current status of license applications. I would be pleased to respond to any questions you may have. 

The CHAIRMAN. Thank you very much. 

Let me just ask what kind of a timeline you anticipate for actually—you have 17 applications pending. Is that correct? 

Mr. KLEIN. That is correct. 

The CHAIRMAN. How quickly do you expect that you will be able 

to act on these applications? Are some of them on track to be dealt 

with fairly soon, or what is the timeframe? 

Mr. KLEIN. We are actively reviewing those applications, as we 

speak. What we do in our process, once an applicant submits their 

COLA, we will review for that application to review for its completeness. 

Once it is completed, then we will docket that application, and 

we currently have many applications under review. So our 475 individuals are actively at work, as we speak, reviewing those applications. 

The CHAIRMAN. So you have not yet docketed the applications? 

Mr. KLEIN. We have docketed almost all of them. 

The CHAIRMAN. Oh, you have docketed them. 

Mr. KLEIN. Yes. 
8 

The CHAIRMAN. So, you are now in the review process, which will 

lead to a yes-or-no decision by the commission as to whether they 

can proceed. 

Mr. KLEIN. That is correct. In this process, under this new approach, what we are expecting is that it will take us about 30 

months for the initial technical review, and we are allowing another 12 months for the hearing process, for a total of 42 months. 

We expect, as the second wave of these applications go through, 

we will have efficiency of scale and be able to reduce that time with 

no compromise on safety. One of the areas that we have little control over is that hearing process. 

The CHAIRMAN. The 42 months, when would you say that began 

with regard to some of these applications? 

Mr. KLEIN. The first applications that we received was in 2006. 

The CHAIRMAN. OK. So the 42 months began in 2006? 

Mr. KLEIN. That is correct. 

The CHAIRMAN. You can count forward from that to see when you 

might actually be in a position to act. 

Does the Nuclear Regulatory Commission have adequate staff to 

review all of the combined license and design certification and 

early site permit applications that it has received and expects to 

receive in the foreseeable future? 

Mr. KLEIN. Mr. Chairman, we do. We have, I think, been successful in articulating our need for personnel. We have a highly trained 

staff. So, we have organized our New Reactor Office in such a manner that we believe we can do the timely review of those applications. 

The CHAIRMAN. As to legal authority, are you satisfied that the 

NRC has all of the statutory authority that it needs to make this 

regulatory process work efficiently, or should we be legislating 

changes in the law to help you in this regard? 

Mr. KLEIN. We believe currently we have the legal authority to 

make the necessary decisions for the licensing. 

The CHAIRMAN. Let me ask about the so-called ‘‘waste confidence 

rule. As I understand the commission’s original waste confidence 

rule, the commission was confident that we would have a repository available by the years 2007 through 2009 based, in part, on 

the Nuclear Waste Policy Act, which called for such a repository by 

1998, I believe. 

Last October, when we still thought that Yucca Mountain repository might some day open, the commission proposed amending the 

waste confidence rule to say that you were only confident that 

there would be a repository 50 to 60 years after the 60-year extended life of a reactor. 

I guess my question is what effect will the Administration’s announcement that it intends to not proceed with Yucca Mountain 

have on your proposed rulemaking and on your confidence in this 

area? 

Mr. KLEIN. Mr. Chairman, as you indicated, we are going 

through our waste confidence rule process currently. The comments 

for the public portion ended recently, and our staff will be evaluating and giving a recommendation. We expect the Commission to 

make a decision on waste confidence this summer. 
9 

Based on our rationale, the reason we looked at the waste confidence was that we wanted to have a clear understanding of our 

confidence in the event that the Yucca Mountain site at the time 

was not successful. As you know, our job as a regulator and required by law is to evaluate that application. Because of the uncertainty of the license application, we wanted to make sure that we 

were confident in the case that the license application was not successful that there were options forward to handle safely the spent 

fuel. 

The CHAIRMAN. So you expect this summer to make a new decision as to your view as to the confidence that you can have in this 

process? 

Mr. KLEIN. Yes, sir. We do. 

The CHAIRMAN. All right. 

Senator Murkowski. 

Senator MURKOWSKI. Thank you, Mr. Chairman. 

I want to follow up with the chairman’s inquiry here. The decision that was made by the Administration through the—actually, 

I shouldn’t say it is a decision yet. But through the budget blueprint that essentially pulls back on Yucca to an extent that I think 

you have suggested makes it problematic in keeping to the deadlines, which you were required to meet. I understand that is by 

2012. 

Can you speak, just very quickly, to what the regulatory commission needs in terms of funding to meet that mandatory deadline? 

Mr. KLEIN. Senator Murkowski, being a regulatory agency, we 

try to follow the law ourselves, and Congress had given us guidance that they expected us to evaluate the applications, once docketed, within a 3-year period, with 1 year additional in order to 

allow for contingencies. So that meant maximum of 4 years. During our 2009 budget process, we were initially $36 million 

short of the funds we expected to be required to meet that timely 

response. During the omnibus bill that was recently passed, we 

were provided about $11 million of our $36 million additional that 

we needed. 

So it will be a challenge for us to meet our statutory obligations 

on a 4-year—— 

Senator MURKOWSKI. Can you meet it? Can you meet it, given 

the funding that you have received through the omnibus, and meet 

that 3-year period? 

Mr. KLEIN. We are early enough in the stage that it is hard to 

give you a definite answer. But it will be very difficult for us to 

meet the 4-year commitment with the limited funding that we have 

been receiving. 

Senator MURKOWSKI. Let me ask you about the challenges that 

you face just with the staffing and the expertise that you need. You 

mentioned you have got 475 staff that have been brought on to 

handle the workload. What challenges do you see in these years 

ahead? 

You are stepping up in terms of the workload and the handling 

the permits and the applications. What challenges do you see in 

terms of the staffing, recruitment, and retention within the Commission and being able to keep good people on for the extended periods of time? 
10 

I understand that while you have a sufficient number of employees, that slightly less than half of the staff have been with the 

agency for less than 5 years. Can you just speak to the manpower 

issue that we are facing? 

Mr. KLEIN. Senator, as you indicated, we have been staffing up 

for the last several years in anticipation of our increased workload. 

The good news is, we have been able to recruit very talented individuals. 

One of the reasons that has helped us recruit is that we were selected in 2007 as the best place to work in the Federal Government. So we take advantage of that in our recruiting activities. 

So I think our challenges are twofold. One is training. We have 

a very massive training program because we do have a lot of new 

hires, and so we want to make sure that we train and give the resources needed for our individuals to make their proper decisions. 

So training is an area we focus heavily on. 

I think our next challenge will simply be retention. As the industry starts construction and building up, I think we all know that 

industry oftentimes can pay more than the Federal Government. So 

we need to pay attention to the needs of our employees and continue with that number-one ranking so that our employees will 

want to stay with us rather than go elsewhere. 

Senator MURKOWSKI. Do you have any concern that perhaps the 

signals that are coming out of the Administration right now in 

terms of, in my opinion, a lack of support for the nuclear industry 

may affect your ability to recruit and retain good, qualified, skilled 

individuals? 

Mr. KLEIN. I think the area that we will have to watch, both the 

Government and the industry, is what the enrollments are our academic programs. We will need to watch those trends to make sure 

that people believe that they have viable careers in the nuclear 

field. So that is one area that I think we all need to watch. 

Senator MURKOWSKI. I think we need to be watching it very, very 

carefully. 

Very quickly, you mentioned 42 months in terms of the time required to complete these first reference licenses. Can you tell me 

how that compares to the international experience in terms of review and completion of the permits? 

Mr. KLEIN. Senator, it is comparable. Our processes are a little 

different. As you might expect, each country will do things slightly 

different. France, for example, takes a little bit longer on their initial siting, and then they will still do the two-step process. 

But in general, when we look at countries like France and Finland and Japan and Korea, most countries are about in the 3-to 

=year period when you compare all of it. So we are within the 

range. The UK is currently looking at their process, and they are 

pretty well following our process. So we are not outliers currently. 

Senator MURKOWSKI. OK. Thank you, Mr. Chairman. 

[Recessed.] 

The CHAIRMAN. Senator Udall, why don’t you go ahead with your 

questions? 

Senator UDALL. Thank you, Mr. Chairman. 
11 

Mr. Klein, nice to see you here. Thank you for taking your time 

to come up and speak with us about this very important energy 

source. 

I would like to focus on your workload. In that context, with so 

much that you are facing, do you have adequate budget and human 

resources? If we gave you more—that is, if the Congress provided 

you with more resources, what would be your priorities for using 

those resources? 

Mr. KLEIN. Senator Udall, as you know, when we build our budgets, it is always a 2-year process where we start in the out-years, 

and then when we come to the actual fiscal year, we sometimes 

have to make adjustments. For 2009, the only area that we have 

funds that are of a concern would be enough resources for the evaluation of the Yucca Mountain application. 

If we had more funds available in out-years, I would say we 

would probably look at additional types of training and also additional scholarships to recruit additional individuals into the nuclear profession. 

Senator UDALL. Do you see a lack of people interested in being 

nuclear engineers and being part of the nuclear industry? Have you 

done inventories? Do you have a sense of that potential future work 

force? 

Mr. KLEIN. I am on leave of absence from, as I often say, a small 

university in Texas, the University of Texas at Austin, where I 

taught nuclear engineering for a number of years. We did see declining numbers for a number of years in nuclear education and in 

health physics. 

We are now seeing those numbers increase, and I think what we 

need to do is make sure we sustain those levels. Because if we send 

a signal that there may not be employment opportunities, we may 

see a drop-off again in the interest of the young people in the nuclear profession. 

Senator UDALL. Moving to a related subject, this is this year, I 

believe, the 30th anniversary of the incident at Three Mile Island. 

The industry was directed to implement changes in procedures and 

safety protocols. What are you all doing to encourage 21st century 

safety culture at your existing facilities? 

Mr. KLEIN. Senator, I think everyone learned a lot from the 

Three Mile Island accident—the industry, academia, Government— 

all across the board. Certainly, the NRC learned a lot. I believe 

that we are a much better regulator today. We have a much more 

rigorous reactor oversight program. We have a safety culture that 

is recognized both within the NRC and within the industry as important. 

I think one of the most significant aspects after Three Mile Island was the creation of the Institute of Nuclear Power Operations 

by the industry, where the industry recognized that they needed to 

have more activity, more responsibility, more self-checking among 

themselves. 

So I think post TMI, we have all learned lessons, and we have 

all implemented those lessons. I think the record speaks for that. 

The operational efficiencies are higher. The safety issues that we 

see are less, but the thing that we all need to watch is that we can 

never become complacent. We have to maintain high standards. 
12 

Senator UDALL. I know at a previous hearing, there was a discussion about Yucca Mountain. I know Senator McCain was particularly interested in what the plans were for Yucca Mountain. If 

Yucca Mountain were taken offline, what is plan B? What is the 

agency’s approach to the waste at, I think, some 100 sites around 

the country? 

Mr. KLEIN. As you know, we are the regulator. So we don’t propose the solution. So what we would do is, we currently have an 

application that we are required by law to evaluate, and we are 

going through that process. That application is long. It is 8,000 

pages, referencing a million documents, and it will take our staff 

several years to evaluate that application to see if it is sufficient. 

In the interim, dry cask storage is safe. We license those facilities. We monitor them. So, at-reactor sites, dry cask storage currently is plan B. 

Senator UDALL. When you provide those licenses for the dry cask 

storage, what is your estimate of the time that that storage can be 

utilized before your concerns rise? In other words, is it a 10-year 

timeline? Fifty years? What is the timeline you operate off of? 

Mr. KLEIN. Currently, our staff has evaluated that issue, and in 

the past, we had looked at 100 years for the dry cask storage of 

being safe and secure. The current waste confidence that we are 

looking at may extend that an additional 20 years to look at maybe 

a 120-year period for the dry cask storage to be safe and secure. 

Senator UDALL. Do you have any concerns about the security 

around that dry cask storage? 

Mr. KLEIN. We watch it. Security is an issue that we always 

watch. So, we have policies and procedures in place to ensure that 

they are secure. 

Senator UDALL. Thank you. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you. 

Senator Bennett. 

Senator BENNETT. Thank you very much, Mr. Chairman. 

Mr. Klein, I have been in the facility in France where the spent 

fuel rods are reprocessed, and instead of being stored—the final 

waste product, instead of being stored in something like Yucca 

Mountain, I asked where is it, and they said, ‘‘It is in that green 

building over there.’’ 

I said, ‘‘What happens when the green building gets filled?’’ They 

said, ‘‘Well, we will build another building.’’ 

The reduction in mass as well as the reduction in radioactivity 

is dramatic. I have been in the plant physically, and the degree of 

safety process is to make sure that anybody who is in the plant is 

properly taken care of, are very obvious and more than adequate. 

I understand that we in this country decided not to do reprocessing. President Carter is the one who made that decision. Although 

President Reagan reversed it, by that time, the industry had pretty 

much left our shores or the boat had left the dock, and we have 

simply not done that. Other countries have. 

My conviction is that we need to now say let us do reprocessing. 

Let us get into that business. Reverse the decision that Jimmy 

Carter made—factually, not just legally. What is your experience, 
13 

and what would be your recommendation with respect to reprocessing? 

Mr. KLEIN. Senator, as the regulator, we need to be prepared to 

evaluate and establish the requirements in the regulations if we 

move toward recycling in the United States. So, we have been having consultations with the Department of Energy to understand 

what they might be proposing so that, as the regulator, we will be 

ready if they proceed forward in that direction, either they or private industry. 

Senator BENNETT. You are a nuclear engineer. Do you see any 

technical or engineering problems with reprocessing? 

Mr. KLEIN. I have visited the same facilities that you have in 

France, and I have talked to the regulators in France. Clearly, 

those facilities are operated safely and securely. If they were built 

in the United States, we would also operate and make sure they 

were built safely and securely as well. Technically, it is well understood. 

Senator BENNETT. If we were to increase the number of nuclear 

plants, not just continue the current 20 percent, but if we were to 

say let us drive toward 30 percent or even 40 percent of American 

electricity generated by nuclear, how big a reprocessing plant 

would we need, and would we need more than one? 

Mr. KLEIN. That would really be a question probably better directed toward industry and DOE. But if you look just at the size 

of the facilities, France has about 58, 59 reactors. They have the 

one facility that you visited in La Hague. We have about 104 running today, so one could scale accordingly. 

Senator BENNETT. So, as I say, if we were to increase beyond the 

100-some odd that we currently have, as I think we probably need 

to, then perhaps we would need 2 or even 3 of these in the United 

States to handle that load? 

Mr. KLEIN. It would be likely that we would. As the regulator, 

we would make sure that those facilities were safely and securely 

operated. 

Senator BENNETT. But you have no reason to believe that they 

would present any kind of safety hazard? 

Mr. KLEIN. I believe that we would be able to evaluate those accordingly. 

Senator BENNETT. Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you very much. 

Senator Shaheen. 

Senator SHAHEEN. Thank you. 

Good morning, Chairman Klein. Thank you for being here. 

New Hampshire, as you may know, is home to the Seabrook nuclear power plant, which I believe was the last power plant licensed 

in the United States and actually constructed and operating. It was 

quite a process to get that plant operating. It took 10 years longer 

than expected, and it wound up costing 12 times more than projected. The final cost was over $6.5 billion. 

The debt that resulted from the bankruptcy of Seabrook’s major 

utility owner, Public Service Company of New Hampshire, was the 

fourth-largest bankruptcy in corporate history at the time. There 

are many of us for whom the challenges of Seabrook and the 

memories of that are still quite vivid. 
14 

One of—you talked about your process to streamline licensing of 

plants. Do you think that streamlined process would have made a 

difference in how long it took to license and have Seabrook begin 

to operate? 

Mr. KLEIN. Senator, I think the answer is yes. I think, in other 

words, if we did a new Seabrook today, it would be, hopefully, more 

predictable. The regulator, namely the NRC, I think better understands our requirements today, and I think industry would have a 

better understanding of how they intended to build and design and 

operate those facilities. 

As I indicated in my opening comments, one of the challenges 

that we had with the existing fleet is that every one is different. 

Standardization will make it a lot easier, both for the regulator and 

for the operator. So, I believe that we have done two things that 

are fundamentally different now than in the first wave, and that 

is standardization and a one-step licensing process with no compromise on safety. 

Senator SHAHEEN. One of the things that I think drove up the 

cost of Seabrook was the fact that Three Mile Island happened in 

the middle of that construction, and there were significant changes 

made to what was required of the plan. 

How would the one-step licensing process take into consideration 

any future Three Mile Islands or other accidents that might affect 

understanding of how construction should be done? 

Mr. KLEIN. There were a lot of changes, as you indicated, immediately after Three Mile Island, both equipment and regulatory aspects. I think those have stabilized. I think we now articulate our 

requirements. The industry knows what those are. 

So I don’t believe that you would see those changing requirements today. I believe we have decades of years of experience since 

Three Mile Island. We now use a risk-informed regulatory process. 

We know better what to look for. We have a better oversight program, and we have a lot more experience not only in the United 

States, but nationwide. 

Senator SHAHEEN. To switch topics to cost, which is obviously 

one of the big challenges with Seabrook, as you know the Energy 

Policy Act of 2005 authorized the Secretary of Energy to guarantee 

loans of up to 80 percent of construction costs for energy projects 

that reduce greenhouse gas emissions, including nuclear power. 

You have pointed out that there are 17 pending applications before the Nuclear Regulatory Commission. My understanding is that 

there are about $18.5 billion in loan guarantees available for that 

program. How many plants do you think that funding could support in terms of the pending applications that are before you? 

Mr. KLEIN. As a regulator, we tend not to look at the financing 

that much, and I think it depends on how the Department of Energy wants to run that program. That might be a better question 

to ask the next panel. As the regulator, we don’t follow the loan 

guarantees, per se. 

Senator SHAHEEN. OK. As you are thinking about economies of 

scale, which, hopefully, the standardization that you are talking 

about would help lead to, how many reactors do you think it would 

take to get to those economies of scale? Or do you think you have 

already done that? 
15 

Mr. KLEIN. We hope that with our standard design process and 

holding the industry to those standardization requirements, we 

hope to do the standardization through the design certification 

process and do that on the front end. 

Now what happened was that there are more vendors than I 

think we initially expected. We thought there might have been 

three, and currently, there are a few more than that. So what we 

hope is within each vendor, we will have a standardized fleet, and 

we will do that standardization through the design certification 

process before construction starts. 

Senator SHAHEEN. Thank you. 

The CHAIRMAN. Senator McCain. 

Senator MCCAIN. Thank you, Mr. Chairman. 

Thank you for your good work, Commissioner Klein. Are you operating under the assumption that Yucca Mountain will become a 

reality? 

Mr. KLEIN. No. 

Senator MCCAIN. You are not. 

Mr. KLEIN. Our staff has not yet evaluated the license application, and so we are beginning that process. 

Senator MCCAIN. Are you operating under the assumption that 

Yucca Mountain will become a reality, that plans are in motion and 

the process is moving forward for Yucca Mountain to be a nuclear 

waste repository? 

Mr. KLEIN. We are not counting on Yucca Mountain being successful. 

Senator MCCAIN. You are not counting on it? Meaning, then 

what are you looking at for an alternative? 

Mr. KLEIN. Dry cask. For the interim, dry cask storage. 

Senator MCCAIN. Dry cask storage. Spent nuclear fuel sitting in 

pools and in dry casks at nuclear power plants all over America. 

Is that what you are planning on? 

Mr. KLEIN. Yes, sir. 

Senator MCCAIN. Have you consulted any experts on national security on this issue to have these spent nuclear fuel sitting around 

nuclear power plants all over America? 

Mr. KLEIN. Yes. We have. We look at the security both of the operating facilities and of the dry cask storage, and we consult on a 

lot of our tactics and techniques with the Department of Defense. 

Senator MCCAIN. They say that that is no national security 

threat? 

Mr. KLEIN. I think there is always security threats. Before I 

came to the NRC, I was at the Department of—— 

Senator MCCAIN. What did they say? 

Mr. KLEIN. I was at the Department of Defense, and there are 

a lot of targets, including chemical plants and other facilities. So, 

we have a wide variety of targets, including tall buildings, as 9/11 

demonstrated. 

Senator MCCAIN. I am asking again, what did the Department 

of Defense tell you about this threat to our national security if you 

consult with them? 

Mr. KLEIN. The challenge the Department of Defense and all the 

intel agencies have is exactly where a terrorist might strike. 
16 

Senator MCCAIN. The point is, obviously, that we would rather 

have a one place where it can be stored. Any national security expert or amateur will tell you that we need to have one place to 

store it, and that is not going to happen now because the Administration has declared that. 

So now your answer is dry cask storage all over the United 

States of America. I don’t think many Americans believe that that 

is a good solution. There is now presently 104 nuclear power plants 

in operation. Is that correct, roughly? 

Mr. KLEIN. Yes. That is correct. 

Senator MCCAIN. How many of them will be in operation 20 

years from now? The existing plants. 

Mr. KLEIN. My guess, assuming that those whose licenses are 

about to expire do a license renewal and we approve those, all of 

those plants could be running in another 20 years from now. 

Senator MCCAIN. I have talked to many utility executives who 

say they aren’t going to continue that operation. Have you heard 

that? 

Mr. KLEIN. No. 

Senator MCCAIN. But you intend—you think that every one of 

those 104 that are now operating will be relicensed? 

Mr. KLEIN. If they meet our requirements, yes, sir. 

Senator MCCAIN. They can meet your requirements, you believe? 

Mr. KLEIN. So far, 51 of the 104 have. 

Senator MCCAIN. On this waste confidence issue, again, a repository can reasonably be expected to be available within 50 or 60 

years beyond the license life for operation of any reactor. Do you 

think that with Yucca Mountain being canceled that you can meet 

the ‘‘waste confidence criteria,’’ which has been changed, as we 

know? 

Mr. KLEIN. We are going through that evaluation, and we hope 

to make that determination by this summer. 

Senator MCCAIN. You mentioned to Senator Bennett that you 

have seen the reprocessing facilities in France? 

Mr. KLEIN. Yes. 

Senator MCCAIN. You believe that also that technology could be 

employed here in the United States? 

Mr. KLEIN. I believe that the NRC could establish the frameworks, and that could be a viable option for the United States 

Senator MCCAIN. Do you believe that there is a problem with the 

material that is reprocessed as far as a national security concern 

is involved? 

Mr. KLEIN. I believe that we could establish rules and procedures 

that would make that a minimum issue. 

Senator MCCAIN. But there are no plans, obviously, for any reprocessing here in the United States, at least that you are aware 

of? 

Mr. KLEIN. No applicant has come forward with an application 

to the NRC. 

Senator MCCAIN. I guess, finally, if it is 42 months, as you mentioned, the process of licensing now, and you mention in your testimony that first licensing began in 2006 application. Is that correct? 

Mr. KLEIN. Yes. I think I made an error. I think we really started in 2007. 
17 

Senator MCCAIN. So that would mean that a license could be 

issued in late 2010, 2011? 

Mr. KLEIN. The COL could be issued in that timeframe, and then 

the utility would start construction. So I think the first time electricity would be expected to be coming out of a new nuclear plant 

is in the order of 2016. 

Senator MCCAIN. I thank you. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you very much. 

Senator Landrieu. 

Senator LANDRIEU. Yes, Mr. Klein, I am very impressed with 

your grasp of this issue, and I understand that you have been 

doing this now for quite some time. I think my predecessor, Bennett Johnson, when he chaired this committee and authored the 

Yucca Mountain legislation, worked with you and all the way back 

to Speaker Wright. 

So I am glad that someone that is knowledgeable, both with a 

background of defense and energy and with your academic background, is in that chair because my general feeling—and I am no 

expert, but I am a promoter of nuclear energy and power for this 

country—it really is a sad and expensive story of a policy that 

would make sense being torpedoed from the left years ago from environmentalists that couldn’t quite understand the benefits of nuclear power to the country and from the right about America’s natural—sometimes it works well, sometimes it doesn’t—tendency for 

just let the free market build whatever kind of system. 

The combination of it has been devastating. I hope that now 

President Obama can find a middle road between the kind of Government-private sector planning that is necessary for something 

this substantial and that we can put to bed forever some of these 

environmental concerns because the development of this industry 

has a record, particularly not—in Europe and other places of safety 

and security. 

I want to point for the record a couple of things on the cost that 

I think is particularly interesting to my constituents on nuclear 

power and its cost in production of electricity. Since projected out 

and back through 2007, the kilowatt-hour of nuclear is $1.76. Coal 

is $2.47. Gas is $6.78, and petroleum is $10.26. I am sorry I don’t 

have what it is for wind and solar. 

But as you can see, not only is the cost lower for nuclear and 

coal, two completely different sources, but they are also stable. I 

think what America is looking for first are lower energy prices that 

are stable, a system of producing electricity in this country where 

we can produce as much domestically as possible or from friendly 

allies relatively close geographically, and energy that is clean. 

I think you and, hopefully, some of the leaders in this Administration can understand that nuclear meets all of those objectives 

and must be pushed forward with great haste and needs to be a 

critical component of our energy regime in this country. 

But let me ask you this, and you have talked a bit about this. 

I want to ask you two questions. In the cross-examination of 

Jeanne Shaheen or her comments—no, maybe I think it was Senator McCain—you said, Technically, it is well understood. 
18 

* See Appendix I. 

Do you remember that phrase that you used in conjunction? 

Could you elaborate a little bit about that? Technically, it is well 

understood. 

Mr. KLEIN. It was regarding the reprocessing of the spent fuel 

and separating and getting the usable material out and then 

throwing away the residues. So, I think the technical community 

understands recycling. I think there is—— 

Senator LANDRIEU. Inferring that it is just the political situation 

that might be difficult. But technically, you think you have got it 

done? 

Mr. KLEIN. I think there still needs to be some additional research on what might be the best technology. But I think we all 

understand the chemical processes. Reactor spent fuel has, as you 

know, been around for a long time. We know how it behaves. 

Then there is a lot of experience, both in the laboratory and commercial sides, on the recycling options. The Department of Energy 

wants to look at maybe some optimal techniques on what you 

would do for what they call the back-end of the fuel cycle. What 

we need to do, as a regulator, is whatever the Department of Energy might propose, that we are ready to ensure that it can be done 

safely and securely. 

Senator LANDRIEU. Let me ask you this. I hear the NRC has revamped its process for licensing new power plants. It is not progressing as well as some of us would like. Can you talk about some 

of those difficulties in a little bit more detail than you have? Under 

the combined licensing process, I know that you all are having 

some difficulties there, I hear. Can you explain a bit about that? 

Mr. KLEIN. What we had hoped the way the process would work, 

and this is where you sort of design how you would like it to be, 

and then reality comes in. We would, as a regulator, we would 

have liked to have the plants completely certified and all of that 

finished before an application comes in. 

Then we would like to look at the siting of that plant at a site, 

do an early site permit, and then look at the combined license application. So that is the way that we envisioned the process to work 

in the perfect world. 

The perfect world is oftentimes overcome by reality, and there 

was a need for baseload electricity. So, we have received a lot of 

applications before we have completed the standardized designs. 

Now we will not issue the combined license until those design 

certifications are finished, but we won’t really optimize our onestep licensing process until we go through this complete system of 

design certification and then the combined license application. 

Senator LANDRIEU. I know my time has expired. But for the 

record, you can submit this in writing. Would you outline for me, 

and I will share it with the members of the committee, the significant differences in design or licensing requirements between the 

United States and other countries, that perhaps we could learn a 

little bit more about the way they are doing it and improve our system here?* 

Thank you so much. 

Mr. KLEIN. Thank you. 
19 

The CHAIRMAN. Thank you very much for your excellent testimony. We appreciate you taking time out of your busy schedule to 

be here with us, and why don’t we go on to the second panel at 

this point? 

Mr. KLEIN. Thank you. 

The CHAIRMAN. Our second panel is made up of Marvin Fertel, 

who is the president and chief executive officer and chief nuclear 

officer for the Nuclear Energy Institute here in Washington. Also 

Dr. Thomas Cochran, who is the senior scientist for the nuclear 

program with the National Resources Defense Council. 

We appreciate both of you gentlemen being here and giving us 

your views. Why don’t we start with you, Mr. Fertel, and then Dr. 

Cochran, and then we will have some questions for both of you. 

So if you will just take 5 or 6 minutes each and tell us the main 

points you think we need to be aware of. Please. 

STATEMENT OF MARVIN S. FERTEL, PRESIDENT AND CHIEF 

EXECUTIVE OFFICER, NUCLEAR ENERGY INSTITUTE 

Mr. FERTEL. Thank you very much, Chairman Bingaman, Ranking Member Murkowski, Senator Udall. 

We appreciate the opportunity to be here to share with you our 

thoughts on policies that could facilitate the deployment of new nuclear plants in our country. The U.S. nuclear industry’s top priority 

is and always will be the safe and reliable operation of our existing 

fleet of plants. 

As Chairman Bingaman said in his opening remarks, we have 

104 nuclear plants, and they continue to sustain excellent levels of 

performance. In 2008, we achieved an average capacity factor of 91 

percent and avoided emissions of almost 700 million metric tons of 

carbon dioxide. 

Construction of new nuclear plants will address two of our Nation’s top priorities—additional supplies of clean energy and creation of jobs. Today, nuclear energy provides approximately 75 percent of carbon-free electricity generation. 

Even with aggressive efficiency measures and historically low 

growth in demand, the United States will need additional baseload 

generating capacity. Every form of clean energy technology, including nuclear, will be needed to reduce the electric sector’s carbon 

footprint. 

As you heard from Chairman Klein, the Nuclear Regulatory 

Commission is reviewing construction operating licenses for 26 new 

reactors, totaling about 34,000 megawatts of capacity. Safety-related construction of the first new nuclear plants we believe will 

start in 2012, with four to eight in commercial operation by around 

2016. 

Because of these new plant projects, jobs related to nuclear energy are expanding rather than contracting in our country. Over 

the last several years, the nuclear industry has invested over $4 

billion in new nuclear plants and will invest as much as $8 billion 

more before 2012. 

Investment to date has already created 15,000 jobs over the last 

2 to 3 years as reactor designers, equipment manufacturers, and 

fuel suppliers expand and build new facilities. The number of new 
20 

jobs will expand significantly early in the next decade when the 

first wave of new projects start construction. 

If all 26 reactors currently in licensing were built, it would result 

in over 100,000 new jobs to support construction and operation. If 

the 26 reactors being licensed today were built by 2030, they would 

maintain nuclear at 20 percent of our electricity supply. 

Increasing nuclear energy’s contribution to meet the 2050 climate 

goals we are talking about requires a building rate of four to six 

plants per year. This rate was achieved in the 1970s and 1980s, despite the challenges we encountered during the period. With standardized designs and improved construction techniques, this deployment rate is achievable after the first wave of plants are constructed. 

However, the electric power industry must invest between $1.5 trillion and $2 trillion by 2030 to meet increases in electricity demand and reduce carbon emissions. This is a formidable financing 

challenge. The loan guarantee program created in the 2005 Energy 

Policy Act is critical to ensure that capital is available to finance 

modernization of our electric infrastructure and to support financing of new generating facilities. 

Achieving workable implementation of the title XVII loan guarantee program has been a challenge. However, many of the difficulties can be corrected through rulemaking, and NEI understands 

that DOE is developing revised rules to address the defects in the 

current rule and implement the new loan guarantee program authorized in the economic stimulus legislation. 

This committee can play a key oversight role in ensuring that 

necessary revisions to the existing rule are promulgated appropriately and quickly. If the changes cannot be implemented 

through rulemaking, we encourage you to take statutory action to 

fix it. 

Existing limitations on loan guarantee authority are also a constraint on expansion of nuclear energy and other technologies eligible for title XVII loan guarantees. Ten nuclear power projects have 

applied for approximately $93 billion in loan guarantees, well in 

excess of the current loan volume limitation of $18 billion. 

The original goal of the title XVII loan guarantee program to 

jumpstart construction of the first innovative clean energy projects 

remains as valid today as it was in 2005. But today, the United 

States faces new and larger challenges. Financing large-scale deployment of clean energy technologies, the United States must 

have an effective long-term financing platform to ensure deployment of clean energy technologies in the numbers required. 

During the last Congress, Chairman Bingaman introduced legislation to create a 21st century energy development corporation, and 

Senator Domenici, the ranking member of this committee during 

the last Congress, introduced legislation to create a clean energy 

bank. Both proposals have merit, and we encourage this committee 

to start with those legislative proposals and address clean energy 

technology financing in the new energy legislation now being developed. 

Let me now comment briefly on the need to develop a sustainable 

used nuclear fuel strategy. Used nuclear fuel is managed safely 

and securely at nuclear power sites today and can be managed 
21 

safely and securely for an extended period of time either at sites 

or at centralized interim storage facilities. 

For this reason, we don’t believe used nuclear fuel represents an 

impediment to new nuclear plant deployment. It is, however, an 

issue that must be addressed for the long term. The nuclear industry has supported implementation of the Nuclear Waste Policy Act 

as the law of the land since 1982, and customers across our Nation 

have paid over $22 billion into the Nuclear Waste Fund. 

We are not aware of any technical issue that would disqualify 

Yucca Mountain from the mission Congress assigned to it more 

than 20 years ago. Nonetheless, we recognize the position the Administration has taken with regard to the Yucca Mountain project. 

Therefore, we support Secretary Chu’s proposal to establish an 

independent qualified commission to undertake a reassessment of 

the Federal Government’s program to manage used nuclear fuel 

and for it to produce a roadmap for a sustainable long-term program, including recommendations for legislative changes. In our 

view, a credible program includes interim storage, advanced recycling, and a permanent disposal facility. We encourage this committee to provide effective oversight of this independent commission activity. 

We do not believe, however, that we can abandon current law before a new policy and associated program are defined. To do so 

would likely provoke additional litigation among the Federal Government, utility contract holders, and the State officials who have 

authorized collection of the nuclear waste fee from customers. 

In conclusion, nuclear energy can and must play a strategic role 

in meeting national environmental, energy security, and economic 

development goals. The nuclear energy industry has a limited, 

well-defined public policy agenda to ensure our Nation continues to 

enjoy the benefits of nuclear energy. 

That agenda includes near-term actions to ensure that the title 

XVII loan guarantee program works as intended; creation of a 

broader permanent financing platform to ensure access to capital 

for the large-scale deployment of advanced technologies, including 

nuclear energy facilities that will reduce carbon emissions; and a 

sustainable strategy for management of used nuclear fuel and ultimate disposal of waste byproducts. 

I thank you for the opportunity to be here and look forward to 

your questions. 

[The prepared statement of Mr. Fertel follows:] 

PREPARED STATEMENT OF MARVIN S. FERTEL, PRESIDENT AND CHIEF EXECUTIVE

OFFICER, NUCLEAR ENERGY INSTITUTE

Chairman Bingaman, Ranking Member Murkowski, and members of the committee, thank you for your interest in nuclear energy and in addressing the policies 

that can facilitate deployment of new nuclear plants to meet national energy needs 

and reduce carbon emissions. 

My name is Marvin Fertel. I am the President and Chief Executive Officer of the 

Nuclear Energy Institute (NEI). NEI is responsible for establishing unified nuclear 

industry policy on regulatory, financial, technical and legislative issues affecting the 

industry. NEI members include all companies licensed to operate commercial nuclear power plants in the United States, nuclear plant designers, major architect/ 

engineering firms, fuel fabrication facilities, materials licensees, and other organizations and individuals involved in the nuclear energy industry. 

My testimony will cover five major areas: 
22 

1. Current status of the U.S. nuclear energy industry 

2. The need for new nuclear generating capacity 

3. Progress toward new nuclear power plant construction 

4. Financial challenges facing the electric power sector 

5. Policy actions necessary to address the challenges facing new nuclear plant 

development 

I. Current Status of the U.S. Nuclear Power Industry 

The U.S. nuclear energy industry’s top priority is, and always will be, the safe 

and reliable operation of our existing plants. Safe, reliable operation drives public 

and political confidence in the industry, and America’s nuclear plants continue to 

sustain high levels of performance. 

Just last week, the Nuclear Regulatory Commission published a Fact Sheet highlighting the dramatic improvements in every aspect of nuclear plant performance 

over the last two decades: ‘‘The average number of significant reactor events over 

the past 20 years has dropped to nearly zero. Today there are far fewer, much less 

frequent and lower risk events that could lead to reactor core damage. The average 

number of times safety systems have had to be activated is about one-tenth of what 

it was 22 years ago. Radiation exposure levels to plant workers has steadily decreased to about one-sixth of the 1985 exposure levels and are well below federal 

limits. The average number of unplanned reactor shutdowns has decreased by nearly ten-fold. In 2007, there were two shutdowns compared to about 530 shutdowns 

in 1985.’’ 

This high level of performance continued last year. In 2008, the average capacity 

factor for our 104 operating nuclear plants was over 90 percent, and output of over 

800 billion kilowatt hours represented nearly 75 percent of U.S. carbon-free electricity. According to the quantitative performance indicators monitored by the Nuclear Regulatory Commission, last year’s performance was the best ever. This performance represents a solid platform for license renewal of the existing fleet and 

new nuclear plant construction. 

II. The Need for New Nuclear Generating Capacity 

Construction of new nuclear plants will address two of our nation’s top priorities: 

Additional supplies of clean energy and creation of jobs. 

Nuclear energy is one of the few bright spots in the U.S. economy—expanding 

rather than contracting, creating thousands of jobs over the past few years. Over 

the last several years, the nuclear industry has invested over $4 billion in new nuclear plant development, and plans to invest approximately $8 billion more to be 

in a position to start construction in 2011-2012. 

The investment to date has already created 15,000 jobs over the last two to three 

years, as reactor designers, equipment manufacturers and fuel suppliers expand engineering centers and build new facilities in New Mexico, North Carolina, Tennessee, Pennsylvania, Virginia and Louisiana. These jobs represent a range of opportunities—from skilled craft employment in component manufacturing and plant 

construction, to engineering and operation of new facilities. The number of new jobs 

will expand dramatically early in the next decade when the first wave of new nuclear power projects starts construction. If all 26 reactors currently in licensing by 

the NRC were built, this would result in over 100,000 new jobs to support plant 

construction and operations, and does not include additional jobs created downstream in the supply chain. This would be in addition to the 30,000 new hires in 

the next 10 years to support operation of the existing fleet of plants through the 

extended license period of 60 years. 

New nuclear plants will also help the United States meet its climate change objectives. Predominantly independent assessments of how to reduce U.S. electric sector 

CO2 emissions—by the International Energy Agency, McKinsey and Company, 

Cambridge Energy Research Associates, Pacific Northwest National Laboratory, the 

Energy Information Administration, the Environmental Protection Agency, the Electric Power Research Institute and others—show that there is no single technology 

that can slow and reverse increases in CO2 emissions. A portfolio of technologies 

and approaches will be required, and that portfolio must include more nuclear 

power as well as aggressive pursuit of energy efficiency and equally aggressive expansion of renewable energy, advanced coal-based technologies, plug-in hybrid electric vehicles and distributed resources. 

NEI is not aware of any credible analysis of the climate challenge that does not 

include substantial nuclear energy expansion as part of the technology portfolio. In 

fact, removing any technology from the portfolio places unsustainable pressure on 

those options that remain. 
23 

Analysis last year by the Energy Information Administration of the LiebermanWarner climate change legislation (S. 2191) demonstrates the value of nuclear energy in a carbon-constrained world. In EIA’s ‘‘Core’’ scenario, which included new 

nuclear plant construction, carbon prices in 2030 were 33 percent lower, residential 

electricity prices were 20 percent lower and residential natural gas prices were 19 

percent lower than in the ‘‘Limited Alternatives’’ scenario, which severely limited 

new nuclear construction. 

It is also clear that the United States will need new baseload electric generating 

capacity even with major improvements in energy efficiency. Recent analysis by The 

Brattle Group, an independent consulting firm, showed that the United States will 

need between 133,000 megawatts of new generating capacity (absent controls on 

carbon) and 216,000 megawatts (in a carbon-constrained world) by 2030. These 

numbers assume 0.7 percent per year growth in peak load—a significant reduction 

from historical performance. Annual growth in peak load between 1996 and 2006 

was 2.1 percent, and the Energy Information Administration’s Annual Energy Outlook assumes a 1.5-percent annual increase in peak load. 

NEI estimates that if the 26 reactors being licensed today (approximately 34,000 

MW) were built by 2030, this would simply maintain nuclear at 20 percent of U.S. 

electricity supply. To increase nuclear energy’s contribution to 2050 climate goals, 

build rates of 4-6 plants per year must be achieved. This was possible in the 1970s 

and 1980s even with the old licensing process and lack of standardization. With 

standardized designs and improved construction techniques, this accelerated deployment is feasible after the first wave of plants are constructed. 

III. Progress Toward New Nuclear Power Plant Construction 

The Nuclear Regulatory Commission is reviewing construction and operating license applications from 17 companies or groups of companies for 26 new reactors 

totaling 34,200 MW. These new plants will be built at a measured pace over the 

next 10-15 years. Safety-related construction of the first new nuclear plants will 

start in 2012, and NEI expects four to eight new nuclear plants in commercial operation in 2016 or so. The exact number will, of course, depend on many factors—U.S. 

economic growth, forward prices in electricity markets, capital costs of all baseload 

electric technologies, commodity costs, environmental compliance costs for fossilfueled generating capacity, natural gas prices, growth in electricity demand, availability of federal and state support for financing and investment recovery, and more. 

We expect construction of those first plants will proceed on schedule, within budget 

estimates, and without licensing difficulties, and a second wave will be under construction as the first wave reaches commercial operation. 

Supported in part by government-industry cost-shared programs like the Department of Energy’s Nuclear Power 2010 program, detailed design and engineering 

work on advanced reactor designs is nearing completion. This detailed design information will allow companies to develop firm cost estimates. Based on what is known 

today, however, there is a solid business case for new nuclear generating capacity. 

Nuclear energy is a capital-intensive technology. NEI estimates a new nuclear 

power plant could cost $6 billion to $8 billion, including financing costs. This large 

capital investment does not mean that new nuclear plants will not be competitive. 

Capital cost is certainly an important factor in financing, but it is not the sole determinant of a plant’s competitive position. The key factor is the cost of electricity from 

the plant at the time it starts commercial operation relative to the other alternatives available at that time. Based on NEI’s own modeling, on the financial analysis performed by companies developing new nuclear projects, and on independent 

analysis by others, new nuclear capacity will be competitive. (NEI’s white paper, 

‘‘The Cost of New Generating Capacity in Perspective’’, is attached for further information on this topic.) 

Florida Power and Light and Florida Progress demonstrated this in the financial 

modeling that supported their requests last year to the Florida Public Service Commission for ‘‘determinations of need’’ for new reactors at Turkey Point and Levy 

County. In FP&L’s modeling, the only scenario in which nuclear was not preferred 

was a world in which natural gas prices were unrealistically low and there was no 

price on carbon. The Florida PSC has approved both projects. Independent analyses 

reach the same conclusion. In an integrated resource plan developed for Connecticut 

last year, The Brattle Group concluded that new nuclear plants are a lower-cost 

source of electricity in a carbon-constrained world than supercritical pulverized coal 

with carbon capture and storage (CCS), integrated gasification combined cycle with 

CCS and gas-fired combined cycle with CCS. 

Understanding the Past.—Many of the nuclear power plants commissioned in the 

1960s and early 1970s completed construction in four to five years with construction 

costs around $500 million. By the late 1970s and early 1980s, however, construction 
24 

was averaging 10 to 12 years, and construction costs ranged as high as $5 billion. 

The nuclear industry has conducted detailed and extensive analysis of this experience, which demonstrates that the nuclear plants built after the early 1970s were 

built under extremely unfavorable conditions—caused by several major factors converging at roughly the same time. 

Nuclear energy technology in the United States scaled up quickly. The industry 

scaled from the first 200-megawatt-scale plants to 1,000-megawatt-plus plants in 

just a few years. This rapid increase in reactor size occurred at a time when electricity demand was growing at seven percent a year on average, which required a 

doubling of electric generating capacity every 10 years. In that business environment, bigger was better for new power plants. Larger plants meant greater economies of scale. Larger was also more complex, however, and that complexity coupled 

with other factors discussed subsequently created project management challenges. 

Construction times stretched out and economies of scale vanished with schedule 

delays and rising costs. 

Changing regulatory requirements and licensing difficulties added to the challenge of managing these large construction projects to schedule and budget, but licensing and regulatory requirements were not the sole cause of cost increases and 

schedule delays. Construction started before design work was complete. Some 

projects were managed by companies with no prior nuclear construction experience. 

Project planning and management tools equal to the complexity of the task did not 

exist at the time. 

Finally and of significant importance to the increasing cost, the first generation 

of nuclear power plants were built under difficult business and economic conditions. 

Growth in electricity demand slowed from six to seven percent a year to one to two 

percent in the mid-1970s. Many utilities intentionally slowed construction. The 

prime rate reached 20 percent in the early 1980s. As project schedules stretched out, 

costs increased and companies were forced to borrow more at double-digit interest 

rates. 

Lessons Learned: Roadmap for a Successful Future.—The root causes of past construction delays are well understood and both industry and government have taken 

steps to ensure that past experience is not repeated. 

The licensing process has been restructured to increase efficiency and effectiveness and reduce uncertainty and financial risk. Today’s plants were licensed under 

a two-step process: Electric utilities had to secure two permits—a construction permit to build the plant and a second operating license to operate it. Under the new 

process, all major safety and regulatory issues—reactor design, site suitability—will 

be resolved before construction begins, and a company receives a single license to 

build and operate the plant. The use of certified standardized designs will also reduce licensing and construction times through repetition. Once a design has been 

certified, the NRC reviews will focus only on site suitability and plant operations. 

The industry is working together to ensure that the standardization carries over 

into their license applications, construction practices and operating procedures to 

fully enjoy the benefits of a standard fleet of plants. 

As construction proceeds, inspections and tests are performed to ensure the plant 

has been built in accordance with the approved design. These inspections, tests, 

analyses and acceptance criteria—or ITAAC—are included in the plant’s construction and operating license. ITAAC are a key risk-management tool. When the 

ITAAC are met, the NRC and the public know that the plant has been built according to its design and will operate safely. 

In addition to an improved licensing process, the next generation of nuclear plants 

built in the United States will benefit from an industry-wide inventory of lessonslearned. The roadmap for future success includes: 

Detailed design essentially complete before construction.—Companies planning to 

build new nuclear plants intend to have virtually all detailed design complete before 

construction is started. 

Standardized, design-specific pre-build preparation.—Starting in 2006, the nuclear 

industry formed design-centered working groups (DCWG) with each reactor vendor. 

These groups are charged with maintaining standardization within each reactor design, which will enhance licensing, preparation for construction and construction. 

Focus on quality assurance.—While quality assurance is a core competency at existing plants, in 2005, the U.S. nuclear industry formed a New Plant Quality Assurance Task Force. In conjunction with the Institute of Nuclear Power Operations 

(INPO), this task force is conducting a systematic lessons-learned review of past and 

present nuclear construction projects in the United States and around the world. 

Corrective action programs.—The industry is adapting the corrective action program (CAP), which is standard at operating plants, for use in new plant construc-
25 

tion. A CAP includes a structured database to capture and categorize potentially 

safety-significant items, enabling constructors to identify and trend quality deficiencies, record that corrective action was taken, and report to the appropriate levels of management. 

Focus on safety culture as part of construction.—Safety culture, corrective action 

programs and programs that encourage employees to raise safety concerns are now 

an essential part of the operating philosophy at the 104 operating plants. The work 

force building new plants will have the same safety focus. 

Preparation for construction inspection.—In 2001, the U.S. nuclear industry 

formed a New Plant Construction Inspection Program Task Force comprised of utilities, reactor vendors and major construction companies. The task force is formulating guidance and developing programs and processes to implement the inspections, tests, analyses and acceptance criteria that the NRC will use to determine 

whether the plant is built according to the approved design and is ready to operate 

safely. 

Improved planning and construction management tools.—Project and construction 

management at new nuclear plants will benefit from a suite of sophisticated construction planning and management tools equal to the complexity of the task, none 

of which were developed when the last nuclear plants were built. Companies did not 

have computer-aided design (CAD) to enable design changes. Databases for tracking 

components and resources were not yet mature. Computerized tools that linked resources with design and construction schedules were in their infancy. 

Improved construction techniques.—Construction of new nuclear plants in the 

U.S. will also benefit from improved construction techniques (such as modular construction), many of which were developed overseas, for the U.S. nuclear navy or for 

other industries. 

Successful Track Record.—Recent construction and operational experience demonstrates that an experienced project management team—with effective quality assurance and corrective action programs, with detailed design completed before the 

start of major construction, with an integrated engineering and construction schedule—can complete projects on budget and on schedule. The global nuclear industry, 

including the U.S. nuclear industry, has performed projects ranging from major upgrades to plant restarts to refueling outages efficiently, without delay. As recently 

as 1990, maintenance and refueling outages at U.S. reactors lasted more than 100 

days; today’s average is 37 days. There are other examples that provide confidence 

that new nuclear plant development in the United States will proceed smoothly: 

• The Tennessee Valley Authority returned Unit 1 of its Browns Ferry nuclear 

plant to commercial operation in May 2007. The five-year, $1.8-billion project 

was completed on schedule and only five percent over the original budget estimate, a significant achievement during a period of rapidly escalating commodity 

costs. The Browns Ferry 1 restart project was comparable in complexity to the 

construction of a new nuclear power plant. Most systems, components, and 

structures were replaced, refurbished, or upgraded, and all had to be inspected 

and tested. 

• At the Fort Calhoun plant in Nebraska, Omaha Public Power District replaced 

the major primary system components—steam generators, reactor vessel head 

and rapid refueling package and pressurizer—as well as the low pressure turbines, the main transformer and hydrogen coolers, among other equipment. The 

outage began in September 2006 and ended in December of that year, lasting 

85 days. The $417-million project was completed approximately $40 million 

under budget and five days ahead of schedule. 

• Nuclear construction experience in South Korea over the last 15 years demonstrates the ‘‘learning curve’’ that can be achieved. The ‘‘first of a kind’’ nuclear power plants—Yonggwang Units 3 and 4—were built in the mid-1990s in 

64 months. The next two units—Ulchin 3 and 4—were built in 60 months at 

94 percent of the ‘‘first of a kind’’ cost. The next plants—Yonggwang 5 and 6— 

were built in 58 months for 82 percent of the ‘‘first of a kind’’ cost. By 2004, 

Ulchin 5 and 6 were built in 56 months for 80 percent of the ‘‘first of a kind’’ 

cost. The next two plants—Shin-Kori 1 and 2—will be in service next year. Construction duration: 53 months and 63 percent of what it cost to build 

Yonggwang 3 and 4. South Korea’s goal is a 39-month construction schedule. 

• Nuclear power plants in Japan achieve construction schedules similar to those 

in South Korea. The first two Advanced Boiling Water Reactors built were constructed in times that beat the previous world record and both were built on 

budget. Kashiwazaki-Kariwa Unit 6 began commercial operation in 1996, and 

Unit 7 began commercial operation in 1997. From first concrete to fuel load, it 

took 36.5 months to construct Unit 6 and 38.3 months for Unit 7. Unit 6 was 
26 

built 10 months quicker than the best time achieved for any of the previous 

boiling water reactors constructed in Japan. • The Qinshan nuclear power plant in China consists of two 728-megawatt pressurized heavy-water reactors. First concrete was placed on June 8, 1998. Unit 

1 began commercial operation on December 31, 2002, 43 days ahead of schedule. 

The construction period was 54 months from first concrete to full-power operation. Unit 2 began commercial operation on July 24, 2003, 112 days ahead of 

schedule. 

U.S. projects will also benefit from this learning curve in other countries, since 

most of the reactors being licensed in the United States will be built overseas prior 

to U.S. construction. South Texas Project Units 3 and 4, for example, are Advanced 

Boiling Water Reactors of the type already built in Japan. There are 44 nuclear 

plants under construction worldwide, and 108 more ordered or planned. 

IV. Financial Challenges Facing the Electric Power Sector 

The U.S. electric industry faces a formidable investment challenge. Consensus es- timates show that the electric sector must invest between $1.5 trillion and $2 trillion in new power plants, transmission and distribution systems, and environmental 

controls to meet expected increases in electricity demand by 2030. To put these 

numbers in perspective: the book value of America’s entire electric power supply and 

delivery system today is only $750 billion, which reflects investments made over the 

last 60 years. 

Addressing the financing challenge will require innovative approaches. Meeting 

these investment needs will require a partnership between the private sector and 

the public sector, combining all the financing capabilities and tools available to the 

private sector, the federal government and state governments—particularly at a 

time when the electric sector is already showing some signs of stress. 

The financial crisis has forced investor-owned utilities to reduce capital spending 

for 2009 by approximately 10 percent, on average. The industry is experiencing 

downward pressure on equity returns, largely because rate increases have not kept 

pace with rising costs. Bond spreads are also wider (in some cases, significantly 

wider) and, although all-in debt costs are not dramatically higher because yields on 

Treasuries are so low, the cost of debt will be significantly higher than historical 

norms when Treasury yields recover if bond spreads remain at current levels. Industry leverage is beginning to rise—not to the levels seen in 2003, when debt represented about 61 percent of the investor-owned utilities’ capital structure—but it 

has increased somewhat over the last three years and debt now represents about 

56 percent of industry capital structure. 

In summary, the electric power sector is in the early stages of a major, 20-year 

capital investment program, and is not as well positioned for these capital expenditures as it was in the 1970s and 1980s when it last undertook a major capital expansion program. 

For new nuclear power plants, the financing challenge is structural. Unlike the 

many consolidated government owned foreign utilities and the large oil and gas 

companies, U.S. electric power sector consists of many relatively small companies, 

which do not have the size, financing capability or financial strength to finance 

power projects of this scale on their own, in the numbers required. Loan guarantees 

offset the disparity in scale between project size and company size. Loan guarantees 

allow the companies to use project-finance-type structures and to employ higher leverage in the project’s capital structure. These benefits flow to the economy by allowing the rapid deployment of clean generating technologies at a lower cost to consumers. The recent stimulus bill recognized the need to provide access to low-cost 

capital to encourage rapid deployment of renewable energy projects. Similar support 

is required for nuclear energy since, in many cases, new nuclear plants and renewable energy projects are built by the same utilities. 

Loan guarantees are a powerful tool and an efficient way to mobilize private capital. The federal government manages a loan guarantee portfolio of approximately 

$1.1 trillion to ensure necessary investment in critical national needs, including 

shipbuilding, transportation infrastructure, exports of U.S. goods and services, affordable housing, and many other purposes. Supporting investment in new nuclear 

power plants and other critical energy infrastructure is a national imperative. 

The loan guarantee program created by title XVII of the Energy Policy Act is an 

essential and appropriate mechanism to enable financing of clean energy technologies. In fact, an effective and workable loan guarantee program is significantly 

more important today than it was when the Energy Policy Act was enacted in 2005. 

The title XVII program currently includes 10 technologies that are eligible for 

loan guarantees. They include renewable energy systems, advanced fossil energy 

technology (including coal gasification), hydrogen fuel cell technology for residential, 
27 

industrial, or transportation applications, advanced nuclear energy facilities, efficient electrical generation, transmission, and distribution technologies, efficient enduse energy technologies, production facilities for fuel efficient vehicles, including hybrid and advanced diesel vehicles, and pollution control equipment. Each of these 

technologies presents different financing challenges. 

The financing challenges are, of course, somewhat different for the regulated integrated utilities than for the merchant generating companies in those states that 

have restructured. But these challenges can be managed, with appropriate rate 

treatment from state regulators or credit support from the federal government’s loan 

guarantee program, or a combination of both. 

Supportive state policies include recovery of nuclear plant development costs as 

they are incurred, and Construction Work in Progress or CWIP, which allows recovery of financing costs during construction. Many of the states where new nuclear 

plants are planned—including Florida, Virginia, Texas, Louisiana, Mississippi, 

North Carolina and South Carolina—have passed legislation or implemented new 

regulations to encourage construction of new nuclear power plants by providing financing support and assurance of investment recovery. By itself, however, this state 

support may not be sufficient. The federal government must also provide financing 

support for deployment of clean energy technologies in the numbers necessary to address growing U.S. electricity needs and reduce carbon emissions. 

The title XVII program also represents an innovative departure from other federal 

loan guarantee programs. It is structured to be self-financing, so that companies receiving loan guarantees pay the cost to the government of providing the guarantee, 

and all administrative costs. For this reason, a title XVII loan guarantee program 

is not a subsidy. In a well-managed program, in which projects are selected based 

on creditworthiness, extensive due diligence and strong credit metrics, there is minimal risk of default, and minimal risk to the taxpayer. In fact, the federal government will receive substantial payments from project sponsors. 

V. Policy Actions Necessary for New Nuclear Plant Development 

Financing 

Since enactment of the Energy Policy Act in August 2005, achieving workable implementation of the title XVII loan guarantee program has been a challenge. The 

implementation difficulties predate formation of the Loan Guarantee Program Office. In fact, NEI is impressed with what a relatively small staff in the Loan Guarantee Program Office, operating under chronic budgetary constraints, have been 

able to accomplish in the time—slightly more than a year—that they have been at 

work. 

Despite this significant progress, implementation of the program by the Executive 

Branch continues to be difficult, for reasons outside the control of the Loan Guarantee Program Office. The staff is working to address problems with the regulations 

governing this program that were promulgated by the Department of Energy in 

2007, but one of the major difficulties stems from an unnecessarily narrow and restrictive reading of the original statutory language by the DOE Office of General 

Counsel. Section 1702(g)(2)(B) of title XVII asserts that ‘‘[t]he rights of the Secretary, with respect to any property acquired pursuant to a guarantee or related 

agreements, shall be superior to the rights of any other person with respect to the 

property.’’ This language can be misinterpreted as a prohibition on pari passu financing structures, and a requirement that the Secretary must have a first lien position on the entire project. Counsel for NEI and many of the project sponsors, with 

substantial experience in project finance, believe that Section 1702(g)(2)(B) gives the 

Secretary a ‘‘superior right’’ to the property he guarantees, not to the entire project. 

The current interpretation of this language is thus a major obstacle to co-financing of nuclear projects. Projects financed as undivided interests cannot proceed if 

this interpretation stands. Financing from export credit agencies in other countries 

like France and Japan, would be equally difficult. This result makes little sense 

since such co-financing will leverage the existing loan volume of $18.5 billion, and 

reduce the risk to which the Department of Energy is exposed. 

NEI is encouraged by Energy Secretary Steven Chu’s intent, expressed before this 

committee during his confirmation hearing and at other times, to address the difficulties that have arisen during implementation of the title XVII loan guarantee 

program. Many of these problems can be corrected through rulemaking, and NEI 

understands that DOE is developing revised rules to address defects in the current 

rule and to implement the new loan guarantee program authorized in the economic 

stimulus legislation. The Energy and Natural Resources Committee can play a key 

oversight role in ensuring that the necessary revisions to the existing rule are promulgated quickly, and do not become entangled in internal Executive Branch procedural difficulties, as has happened so often in the past. If the necessary changes 
28 

1 AEnergy Policy Act of 2005, Section 1703(a)(2) 

cannot be implemented through rulemaking, it will, of course, be necessary to seek 

statutory changes to accomplish the same purpose. 

Insufficient Loan Volume.—The title XVII loan guarantee program was an important step in the right direction. That program was designed to jump-start construction of the first few innovative clean energy projects that use ‘‘technologies that are 

new or significantly improved . . . as compared to commercial technologies in service in the United States at the time the guarantee is issued.’’1

That goal remains as valid now as it was in 2005, but today the United States 

faces a larger, additional challenge—financing large-scale deployment of clean energy technologies, modernizing the U.S. electric power supply and delivery system, 

and reducing carbon emissions. As noted earlier, this is estimated to require investment of $1.5-2.0 trillion between 2010 and 2030. 

The omnibus appropriations legislation for FY 2008 and FY2009 authorizes $38.5 billion in loan volume for the loan guarantee program—$18.5 billion for nuclear 

power projects, $2 billion for uranium enrichment projects, and the balance for advanced coal, renewable energy and energy efficiency projects. 

DOE has issued solicitations inviting loan guarantee applications for all these 

technologies and, in all cases the available loan volume is significantly oversubscribed. For example, the initial nuclear power solicitation resulted in requests from 

14 projects seeking $122 billion in loan guarantees, with only $18.5 billion available. 

NEI understands that 10 nuclear power projects submitted Part II loan guarantee 

applications, which represented $93.2 billion in loan volume. Two enrichment 

projects submitted Part II applications, seeking $4.8 billion in loan guarantees, with 

only $2 billion available. NEI also understands that the solicitation for innovative 

coal projects resulted in requests for $17.4 billion in loan volume, more than twice 

the $8 billion available. 

It is, therefore, essential that limitations on loan volume—if necessary at all in 

a program where project sponsors pay the credit subsidy cost—should be commensurate with the size, number and financing needs of the projects. In the case of nuclear power, with projects costs between $6 billion and $8 billion, $18.5 billion is 

not sufficient. 

The scale of the challenge requires a broader financing platform than the program 

envisioned by title XVII. An effective, long-term financing platform is necessary to 

ensure deployment of clean energy technologies in the numbers required, and to accelerate the flow of private capital to clean technology deployment. 

During the 110th Congress, Senator Bingaman introduced legislation to create a 

21st Century Energy Deployment Corporation. Senator Domenici, ranking member 

of this committee during the last Congress, introduced legislation to create a Clean 

Energy Bank. Both proposals address aspects of the financing challenge facing the 

United States and its electric power industry. 

NEI believes that the existing title XVII program and the DOE Loan Guarantee 

Program Office, operating under workable rules, could serve as a foundation on 

which to build a larger, independent financing institution within the Department of 

Energy. There is precedent for such independent entities, equipped with all the resources necessary to accomplish their missions, in the Federal Energy Regulatory 

Commission and the Energy Information Administration. This approach could have 

significant advantages: 

1. An independent clean energy financing authority within DOE could take 

advantage of technical resources available within the Department, to supplement its due diligence on prospective projects and to identify promising technologies emerging from the research, development and demonstration pipeline 

that might be candidates for loan guarantee support to enable and speed deployment. 

2. An independent entity within DOE would have the resources necessary to 

implement its mission effectively, including its own legal and financial advisers 

with the training and experience necessary for a financing organization. Providing the independent entity with its own resources would eliminate the difficulties encountered during implementation of the title XVII program. 

3. Programmatic oversight in Congress would remain with the Energy Committees, which have significantly more experience with energy policy challenges, 

and in structuring the institutions necessary to address those challenges. 

Development of a National Used Fuel Strategy 

Used nuclear fuel is managed safely and securely at nuclear plant sites today, and 

can be managed safely and securely for an extended period of time. For this reason, 
29 

used nuclear fuel does not represent an impediment to new nuclear plant development in the near term. It is, however, an issue that must be addressed for the longterm. 

The Administration has made it clear that Yucca Mountain ‘‘is not an option.’’ 

The nuclear industry’s position on used fuel management is clear: 

• The Nuclear Waste Policy Act establishes an unequivocal federal legal obligation to manage used nuclear fuel, and remains the law of the land. Until that 

law is changed, the nuclear industry believes the NRC’s review of the Yucca 

Mountain license application should continue. 

• If the Administration unilaterally decides to abandon the Yucca Mountain 

project without enacting new legislation to modify or replace existing law, it 

should expect a new wave of lawsuits seeking further damage payments and refunds of at least $22 billion in the Nuclear Waste Fund already collected from 

consumers that has not been spent on the program. 

• Given the uncertainties associated with the Yucca Mountain project, DOE 

should reduce the fee paid by consumers to cover only costs incurred by DOE, 

NRC and local Nevada government units that provide oversight of the program. 

• A credible and effective program to manage used nuclear fuel must include 

three integrated components: interim storage of used nuclear fuel at centralized 

locations, technology development necessary to demonstrate the technical and 

business case for recycling used nuclear fuel and, ultimately, the licensing of a 

permanent disposal facility. 

The nuclear energy industry supports creation by the Executive Branch of a bipartisan blue-ribbon commission of credible experts to undertake a reassessment of 

the federal government’s program to manage used nuclear fuel, and produce a roadmap for a sustainable long-term program. 

Regulatory Effectiveness and Predictability 

An objective, effective Nuclear Regulatory Commission is a key factor in ensuring 

safe and secure operation of the 104 operating nuclear generating plants. An objective regulatory process—i.e., a process that is safety-focused and performancebased—will ensure that nuclear plant operators remain focused on safety-significant 

issues and that management attention is not diverted by matters of low safety or 

security significance. For new nuclear plants, a central element of the regulatory 

process is a predictable licensing process for the review and inspection of new reactor designs and new construction. The industry and the financial community must 

have confidence that the licensing process provides the level of predictability necessary to support large capital investments. 

Research and Development 

NEI appreciates this committee’s recognition—in the draft research and development legislation published recently—of the strategic importance of increased funding for research and development. Substantial increases in energy R&D investment 

will be necessary in the years ahead to create a sustainable electric supply infrastructure. Unfortunately, recent trends are in the opposite direction. In a 2007 analysis, the Government Accountability Office found that DOE’s budget authority for 

renewable, fossil and nuclear energy R&D declined by over 85 percent (in inflationadjusted terms) from 1978 through 2005. The need for new technologies to address 

critical energy needs has not diminished over the same time period, however, nor 

have the energy and environmental imperatives facing the United States become 

any less urgent. 

The Electric Power Research Institute (EPRI) has estimated that the United 

States must increase investment in energy R&D by $1.4 billion annually between 

now and 2030 to develop and demonstrate the technology portfolio necessary to 

bring electric sector carbon emissions back to 1990 levels by 2030. That additional 

cumulative investment of approximately $32 billion in R&D would reduce by $1 trillion the cost to the U.S. economy of bringing electric sector emissions back to 1990 

levels, according to EPRI’s analysis. 

A robust research and development program is necessary if nuclear energy is to 

realize its full potential in the nation’s energy portfolio. In 2008, the directors of the 

10 DOE national laboratories, including now Secretary of Energy Chu, published a 

report recognizing that ‘‘nuclear energy must play a significant and growing role in 

our nation’s energy portfolio in the context of broader global energy, environmental, 

and security issues.’’ The report also expressed support for the required R&D effort: 

‘‘The national laboratories, working in collaboration with industry, academia, and 

the international community, are committed to leading and providing the research 

and technologies required to support the global expansion of nuclear energy.’’ 
30 

The report from the national laboratory directors identified areas of research that 

were incorporated, earlier this year, into a comprehensive strategy for nuclear R&D 

developed by EPRI and the Idaho National Laboratory. NEI supports the R&D priorities identified: 

• Maintaining the high performance of today’s light water reactors and extend 

their operating life beyond 60 years, to 80 years. R&D will be required, among 

other items, to develop advanced diagnostic and maintenance techniques, to extend component life and introduce new technologies, and to enhance fuel reliability and performance. 

• Completing the cost-shared government-industry Nuclear Power 2010 Program, 

to complete the design and engineering work that will support the nuclear 

plants on track to start construction over the next several years. 

• Developing proliferation-resistant recycling technologies that will capture the 

vast amount of energy that remains in used nuclear fuel and reduce the volume 

and toxicity of the waste by-product that requires permanent disposal. 

• Developing high-temperature gas-cooled reactors to produce electricity and for 

non-electric applications. High-temperature reactors can reduce greenhouse gas 

emissions from large-scale process heat operations in the petroleum and chemical industries currently fired by liquid fuels and natural gas. This technology 

will also be capable of producing hydrogen economically for fuel-cell vehicles 

and industrial applications, as well as desalinating water cost-effectively. 

The national laboratory directors, EPRI and INL point out that the leadership position of the U.S. in the global nuclear enterprise is at stake. Participation in the 

development of advanced nuclear energy technologies will allow the U.S. to influence energy technology choices around the world, and to ensure that non-proliferation regimes are in place as other countries develop commercial nuclear capabilities. 

Therefore, technical leadership is in the interest of the Administration, the congress, 

and the industry. 

Supply Chain 

During the 1970s, the United States had the manufacturing capability to produce 

the large vessels, steam generators and other components necessary for nuclear 

power plant construction. Much of that capability—and the associated jobs—moved 

offshore over the last 30 years. 

In the nuclear sector, there are signs that U.S. manufacturing capability is being 

rebuilt. In North Carolina, Indiana, Pennsylvania, Virginia, Tennessee, Louisiana, 

Ohio and New Mexico, among other states, U.S. companies are adding to design and 

engineering staff, expanding their capability to manufacture nuclear-grade components, or building new manufacturing facilities and fuel facilities—partly in preparation for new reactor construction in the United States, partly to serve the growing 

world market. 

Last year, for example, AREVA and Northrop Grumman Shipbuilding formed a 

joint venture to build a new manufacturing and engineering facility in Newport 

News, Va. This $360-million facility will manufacture heavy components, such as reactor vessels, steam generators and pressurizers. Global Modular Solutions, a joint 

venture of Shaw Group and Westinghouse, is building a fabrication facility at the 

Port of Lake Charles to produce structural, piping and equipment modules for new 

nuclear plants using the Westinghouse AP1000 technology. In New Mexico, LES is 

well along with construction of a $3-billion uranium enrichment facility, scheduled 

to begin production this year. Even for ultra-heavy forgings, Japan Steel Works is 

expanding capacity, and companies in South Korea, France and Great Britain are 

planning new facilities. 

Although progress in this area is encouraging, federal government policy could accelerate the process of creating new jobs and generating economic growth. Specifically, the expansion and extension of investment tax credits for investments in manufacturing provided in the stimulus would ensure continued expansion of the U.S. 

nuclear supply chain and help restore U.S. leadership in this sector. 

Work Force 

The U.S. nuclear industry recognizes the critical importance of a skilled, welltrained and dedicated work force to operate and maintain the 104 nuclear plants 

that supply 20 percent of America’s electricity, and to build and operate new nuclear 

plants in the years ahead. 

The nuclear industry is working with the federal government, state governments, 

universities and community colleges, high schools, labor unions, utilities, other trade 

associations and professional organizations to address the work force challenge. 
31 

Electric utilities have created 42 partnerships with community colleges to train 

the next generation of nuclear workers. The industry is developing standardized, 

uniform curricula to ensure that graduates will be eligible to work at any nuclear 

plant. Sixteen states have developed programs to promote skilled craft development. 

Enrollment in nuclear engineering programs has increased over 500 percent since 

1999. Grant programs from the NRC, the Department of Energy, the Department 

of Labor and the Department of Defense for education and training are having a 

major impact on increasing our trained workforce. 

NEI commends Senators Bingaman and Murkowski for the attention to workforce 

development in the draft legislation published recently on research and development. As with the nuclear supply chain, targeted tax credits to encourage companies 

to invest in apprenticeship programs and other work force development would accelerate job creation and training in the nuclear energy sector. 

VI. Conclusion 

In conclusion, the need for advanced nuclear plants is well established. Nuclear 

energy clearly can and must play a strategic role in meeting national environmental, energy security and economic development goals. The nuclear energy industry has a limited and well-defined public policy agenda to ensure our nation continues to derive the benefits that nuclear power provides. Those policy conditions 

include: 

1. near-term actions to ensure that the title XVII loan guarantee program is 

working as intended, and creation of a broader, permanent financing platform 

to ensure access to capital for the large-scale deployment of advanced technologies including nuclear facilities that will reduce carbon emissions, 

2. a sustainable strategy for the management and ultimate disposal of used 

nuclear fuel, 

3. an effective and predictable licensing process, and 

4. a research and development program that will allow the nation to meet environmental goals and provide leadership on issues related to expansion of nuclear technology and non-proliferation. 

Mr. Chairman, thank you for the opportunity to testify, and this completes my 

testimony. 

The CHAIRMAN. Thank you very much. 

Dr. Cochran, go right ahead. 

STATEMENT OF THOMAS B. COCHRAN, PH.D., SENIOR SCIENTIST, NUCLEAR PROGRAM, AND CHRISTOPHER E. PAINE, 

DIRECTOR, NUCLEAR PROGRAM, NATURAL RESOURCES DEFENSE COUNCIL, INC. 

Mr. COCHRAN. Mr. Chairman, Ranking Member Murkowski, Senator Udall, Senator Sessions, thank you for providing the Natural 

Resources Defense Council the opportunity to present its views on 

several current issues related to nuclear energy. 

Our testimony focuses on three issues—whether additional Federal loan guarantees should be provided to construct new nuclear 

power plants, whether the United States should engage in reprocessing of spent nuclear fuel, and whether Congress should intervene in the Nuclear Regulatory Commission’s proposed 

rulemakings on temporary storage of spent fuel and the so-called 

waste confidence rule. 

Turning to the first issue, Congress should not provide additional 

loan guarantees to construct new nuclear plants. Sufficient nuclear 

loan guarantee authority already exists to accomplish the legitimate public purpose that is involved here—namely, to shift much 

of the downside financial risk involved in the initial commercial deployment of new or significantly improved low-carbon energy technologies from private interests to the Federal taxpayers. 

To avoid serious and lasting distortion of the U.S. energy marketplace and an economically inefficient decarbonization effort, nu-
32 

clear loan guarantees should be limited to the lead units of new nuclear plant designs not previously deployed in the United States or 

in similar markets abroad with comparable regulatory requirements. These designs must incorporate substantial design innovations promising improved safety, increased operating efficiency, significantly reduced capital costs, and lower environmental impacts. 

In our view, few, if any, of the Generation III+ reactors being 

proposed today plausibly meet this description. But if any of them 

do, it could only be the lead units of new passive safety, small-footprint, less capital-intensive designs that have not yet been deployed elsewhere. Fitting this description currently are the AP1000 

and the ESBWR. Possibly later, the very high-temperature gascooled reactor under development by the Department of Energy 

might also qualify. 

But even here, we find there are currently three regulated utilities, each proposing to add two AP1000 units to their respective 

rate bases. These do not appear to require loan guarantees for financing, or at least full loan guarantee coverage at 80 percent of 

the total project cost. Thus, we believe the $18.5 billion is already sufficient to support 

construction of more than just the lead units of the innovative 

standardized reactor designs currently available to the United 

States market. Therefore, no additional loan guarantee authority is 

needed. 

More loan guarantee support to underwrite the U.S. market penetration of additional designs already deployed or under construction in foreign markets would only further distort the energy marketplace and undermine the goal of design standardization, which 

is a widely shared objective of DOE, NRC, the nuclear industry, 

and others concerned about the future effectiveness of NRC safety 

regulations. 

Federal loan guarantees should not be abused to insulate an entire industry from competition with a host of new energy technologies that promise comprehensive environmental and social benefits. Unlike improvements in efficiency and renewable technologies, nuclear power is a decarbonization solution packaged with 

a host of noncarbon environmental, security, and waste problems. 

For these reasons, nuclear power should not be considered for inclusion in any renewable electric standard Congress may legislate. 

Turning to the second issue, the Federal Government should not 

encourage or support commercial spent fuel reprocessing. Reprocessing of commercial spent fuel, as it is practiced today in France, 

Russia, and Japan, offers no advantages and numerous disadvantages over continuing to rely on the once-through nuclear fuel cycle 

as practiced in the United States and most countries with nuclear 

power plants. The trend in recent years has been for more countries to abandon reprocessing than to initiate reprocessing. 

Relative to the existing open fuel cycle, the use of a closed or partially closed MOX fuel cycle in thermal reactors has proven to be 

more costly, less safe, leads to greater routine releases of radioactivity into the environment, greater worker exposure to radiation, 

larger inventories of nuclear waste that must be managed, and it 

does not appreciably reduce the geologic repository requirements 

for spent fuel or high-level waste. 
33 

Putting aside for the moment the serious proliferation and security concerns involved in any future global shift toward reprocessing, it is clear that combating climate change is an urgent task 

that requires near-term investments yielding huge decarbonization 

dividends in a 5- to 20-year timescale. For thermal reactors, the 

closed fuel cycle is unlikely ever to be less costly than the oncethrough fuel cycle, even assuming significant carbon controls. 

But setting aside even these near-term cost barriers, commercial 

viability for a closed fuel cycle employing fast reactors is an even 

longer-term proposition. So even fervent advocates of nuclear power 

need to put the reprocessing agenda aside for a few decades and 

focus on swiftly deploying and improving the low-carbon energy solutions. 

Spent fuel reprocessing, plutonium recycle, and fast reactor 

transmutation are currently uneconomical, high-risk, 100-year answers to an urgent climate question that now requires low-risk, 5- 

to 10-year solutions. For now, Congress and the new Administration should terminate the Global Nuclear Energy Partnership program of the Department of Energy and its associated efforts to 

close the nuclear fuel cycle and introduce fast burner reactors into 

the United States. 

Finally and very quickly turning to the last issue, as the political 

sun sets on the proposed Yucca Mountain project, the Federal Government needs to begin identifying alternative geologic disposal 

sites for the country’s nuclear waste. Congress should initiate a 

search for a new geologic—one or more new geologic repository 

sites for the disposal of spent fuel and to assure adequate Federal 

funding—ensure that adequate Federal funding is available to retain the technical community associated with the Yucca Mountain 

project so that this expertise will be available to assess and develop 

new proposed geologic waste disposal sites. 

Congress should not interfere in the NRC’s ongoing waste confidence and temporary storage rulemakings and let this regulatory 

body attempt to fulfill its independent regulatory mandate. 

Thank you very much, Mr. Chairman. I would be pleased to answer questions. 

[The prepared statement of Mr. Cochran follows:] 

PREPARED STATEMENT OF THOMAS B. COCHRAN, PH.D. SENIOR SCIENTIST, NUCLEAR

PROGRAM, AND CHRISTOPHER E. PAINE, DIRECTOR, NUCLEAR PROGRAM, NATURAL

RESOURCES DEFENSE COUNCIL, INC. 

I. Introduction 

Mr. Chairman and members of the Committee, thank you for providing the Natural Resources Defense Council (NRDC) the opportunity to present its views on several current issues related to nuclear energy. NRDC is a national, non-profit organization of scientists, lawyers, and environmental specialists, dedicated to protecting 

public health and the environment. Founded in 1970, NRDC serves more than 1.2 

million members and supporters with offices in New York, Washington, D.C., Los 

Angeles, San Francisco, Chicago and Beijing. 

Our testimony focuses on three issues: a) whether additional federal loan guarantees should be provided to construct new nuclear power plants; b) whether the 

United States should engage in reprocessing of spent nuclear fuel; and c) whether 

Congress should intervene in the Nuclear Regulatory Commission’s proposed 

rulemakings on temporary storage of spent fuel and so-called ‘‘waste confidence,’’ 

that is, whether sufficient confidence exists today in our long-term ability to isolate 
34 

1 NRC, Consideration of Environmental Impacts of Temporary Storage of Spent Fuel After 

Cessation of Reactor Operation (hereinafter ‘‘Proposed Temporary Storage Rule’’) 73 Fed. Reg. 

59547 (October 9, 2008), and Waste Confidence Decision Update, (hereinafter ‘‘Proposed Waste 

Confidence Rule’’) NRC, 73 Fed. Reg. 59551 (October 9, 2008). 

spent fuel from the biosphere that we can responsibly license new reactors that will 

add to the nuclear waste burden.1

II. Summary of Recommendations 

A. Loan Guarantees.—Congress should not provide additional loan guarantees to 

construct new nuclear plants. Sufficient nuclear loan guarantee authority already 

exists to accomplish the legitimate public purpose that is involved here. Let us define here what we believe to be the legitimate purpose of loan guarantees—they are 

intended to shift much of the downside financial risk involved in the initial commercial deployment of new or significantly improved low-carbon energy technologies 

from private interests to federal taxpayers. 

Since the underlying light-water reactor technology to be supported by these guarantees has been around for 45 years, has been the prior recipient of many tens of 

billions of dollars in government support, and already accounts for 20% of U.S. gridconnected power generation, the technology innovation case for nuclear loan guarantee support is weak, and at best, a very narrow one. To avoid serious and lasting 

distortion of the U.S. energy marketplace and an economically inefficient 

decarbonization effort, nuclear loan guarantees should be limited to the lead units 

of new nuclear plant designs, not previously deployed in the United States or in 

similar markets abroad with comparable regulatory requirements. These designs 

must incorporate substantial design innovations promising improved safety, increased operating efficiencies, significantly reduced capital costs, and lower environmental impacts. 

In our view, few if any of the Gen III + reactors being proposed today plausibly 

meet this description, but if any of them do, it could only be the lead units of new 

passive safety, smaller footprint, less capital intensive designs that have not yet 

been deployed elsewhere. Fitting that description currently are the AP-1000 and the 

Economic Simplified Boiling Water Reactor (ESBWR), and possibly later the Very 

High-Temperature Gas-Cooled Reactor (VHTGR), now in the early stages of development by the Department of Energy (DOE). 

But even here, we find that there are currently three regulated utilities, each proposing to add two AP1000 units to their respective rate bases, which do not appear 

to require loan guarantees for financing, or at least full loan guarantee coverage at 

80% of total project cost. We believe that the $18.5 billion is already sufficient to 

support construction of more than just the lead units of the innovative standardized 

reactor designs currently available to the U.S. market, and therefore no additional 

loan guarantee authority is needed. 

More loan guarantee support to underwrite the U.S. market penetration of additional designs, already deployed or under construction in foreign markets, would 

only further distort the energy marketplace and undermine the goal of design standardization, which is a widely shared objective of the DOE, Nuclear Regulatory Commission (NRC), nuclear industry and others concerned about the future effectiveness 

of the NRC’s safety regulation. 

Federal loan guarantees should not be abused to insulate an entire industry from 

competition with a host of new energy technologies that promise comprehensive environmental and social benefits. Unlike improvements in efficiency and renewable 

technologies, nuclear power is a decarbonization solution packaged with a host of 

non-carbon environmental, security, and waste problems. For these reasons, nuclear 

power should not be considered for inclusion in any ‘‘Renewable Electricity Standard’’ Congress may legislate. 

B. Spent Fuel Reprocessing.—The federal government should not encourage or 

support commercial spent fuel reprocessing. Putting aside for the moment the serious proliferation and security concerns involved in any future global shift toward 

reprocessing, it’s clear that combating climate change is an urgent task that requires near term investments yielding huge decarbonization dividends on a 5 to 20 

year timescale. For thermal reactors, the closed fuel cycle (spent fuel reprocessing 

and recycling plutonium) is unlikely ever to be less costly than the once-through fuel 

cycle, even assuming significant carbon controls. But setting aside such near-term 

cost barriers, commercial viability for a closed fuel cycle employing fast reactors is 

an even longer-term proposition. So even fervent advocates of nuclear power need 

to put the reprocessing agenda aside for a few decades, and focus on swiftly deploying and improving the low-carbon energy solutions. 
35 

Think about it. In pursuit of closing the fuel cycle, the U.S. government could eas- ily spend on the order of $150 billion over 15 years just to get to the starting line 

of large-scale commercialization. But all that spending will not yield one additional 

megawatt of low-carbon electricity beyond what could be obtained by sticking with 

the current once-through cycle, much less by investing that $150 billion in renewable and efficient energy technologies. Spent-fuel reprocessing, plutonium recycle, 

and fast reactor waste transmutation are currently uneconomical, higher-risk, 100- 

year answers to an urgent climate question that now requires low-risk 5 to 20 year 

solutions. For now, Congress and the new Administration should terminate funding 

for the Global Nuclear Energy Partnership (GNEP) and its associated efforts to close 

the nuclear fuel cycle and introduce fast burner reactors in the United States. 

At any point along the way, Mr. Chairman, we can revisit this issue to assess 

whether there may be truly disruptive innovations in nuclear technology that would 

alter this negative assessment, and induce us to view closing the fuel cycle as a 

more cost-effective pathway to decarbonization than the host of cheaper alternatives 

we have available to us today. 

C. Nuclear Waste Disposal.—As the political sun sets on the proposed Yucca 

Mountain project, the federal government needs to begin identifying alternative geological disposal sites for the country’s nuclear waste. Congress should initiate a 

search for a new geologic repository site for disposal of spent fuel, and insure that 

adequate federal funding is available to retain the technical community associated 

with the Yucca Mountain project, so that this expertise will be available to assess 

and develop new proposed geological waste disposal sites. The Congress should not 

interfere in the NRC’s ongoing Waste Confidence and Temporary Storage 

rulemakings, and let this regulatory body attempt to fulfill its independent regulatory mandate. 

III. Detailed Observations 

A. Loan Guarantees—Congress should not further subsidize the construction 

of new nuclear power plants and not provide additional loan guarantees 

for this purpose 

In the United States existing nuclear power plants operate efficiently and are 

profitable either because ratepayers long ago paid the piper for their stranded capital costs, or these assets were heavily discounted when corporate ownership 

changed in the 1990’s and now are carried on the books of the new owners at a 

small fraction of their original asset value. The domestic nuclear power industry, 

however, is confronting two big economic dilemmas with respect to new nuclear 

plants. New plants remain uneconomical when compared to other electricity generating technologies and improvements in end-use efficiency; and the unit costs of new 

nuclear plants are so high that they are difficult to finance in the private capital 

markets, especially today. 

As a purely commercial proposition, when stripped of all the various forms of federal and state subsidies, new nuclear plants are likely to remain non-competitive 

with other forms of baseload generation in most areas of the country until the price 

of carbon emissions exceeds $50 per ton of carbon dioxide. We note, however, that 

efficiency and many renewable sources are competitive with nuclear now and will 

only become more so. To bridge this gap, the nuclear industry, through its congressional boosters, has already received production tax credits for the first 6,000 

megawatts of new capacity, licensing cost sharing with DOE, ‘‘regulatory risk’’ insurance against delays in construction, and to date some $18.6 billion in federal 

loan authority to support the construction of new plants. In addition, most new reactor projects are benefitting from additional subsidies and incentives, such as tax 

abatements and worker training programs, offered by state and county governments. 

Now the industry is returning to Congress for yet more support, essentially stipulating that nuclear power ‘‘must be part of the energy mix’’ needed to mitigate climate change and to provide for jobs under the economic stimulus plan. We should 

reject this categorical imperative, command economy type approach. It reminds us 

of the mindset we used to encounter in Minatom, the old Soviet Ministry of Atomic 

Energy. The economically efficient way to mitigate climate change is to internalize 

the cost of carbon emissions through a declining cap-and-trade program, which 

NRDC strongly supports. 

This Committee should reject any broader attempt to use loan guarantees to recapitalize a technically mature industry, or to shift the overall terms of trade in the 

electricity marketplace in favor of nuclear power. This runs a serious risk of 

misdirecting investment capital away from commercialization of low-carbon energy 

technologies that are cheaper, cleaner, and more versatile than currently available 

nuclear power plants. 
36 

Shifting the overall terms of energy commerce in favor of low-carbon solutions, 

nuclear power included, is the task of a climate bill, not the federal loan guarantee 

program. At best, federal loan guarantees should be construed as bridging the gap 

between successful prototype development and a foothold in the commercial marketplace, by spreading the risk of the initial capital investments required to bring a 

new technology to commercial scale. 

But federal loan guarantees should not be abused to insulate an entire industry 

from competition with a host of new energy technologies that promise comprehensive environmental and social benefits. Unlike improvements in efficiency and renewable technologies, nuclear power is a decarbonization solution packaged with a 

host of non-carbon environmental, security, and waste problems. For these reasons, 

nuclear power should not be considered for inclusion in any ‘‘Renewable Electricity 

Standard’’ Congress may legislate. 

In sum, the economically inefficient way to mitigate climate change is to broadly 

subsidize deployment of currently available nuclear power plant technologies. This 

will crowd out or slow investment in improved energy efficiency, utility-scale renewable electricity supply, and decentralized smart-grid technologies that can mitigate 

climate change in less time, with less cost and risk. If Congress is unwilling or unable politically to let a climate bill do the work of sorting out the most cost-effective 

low-carbon energy technologies, one possible way to mitigate economic inefficiency 

would be to closely couple any additional federal loan guarantees for nuclear with 

utility commitments to phase out existing coal capacity, such that future electricity 

demand growth in the affected service area or regional grid must be met in the first 

instance by large improvements in less costly energy efficiency, and by the development of renewable sources having environmental impacts and a marginal cost of 

generation less than nuclear power. 

The idea that the nuclear and coal dependent Southeastern region of the United 

States is without renewable resources worthy of development is a gross distortion 

that needs to be dispelled. The region has vast distributed potential for photo-voltaic 

solar development, waste-heat cogeneration, bio-gasification, small hydro, and offshore wind. Above all, with the highest rates in the nation of energy consumption 

per unit of economic output, the region has a huge energy efficiency resource that 

can be tapped at far less cost than nuclear. The fact that the dominant utilities and 

electricity grid in that region are not currently structured to take advantage of these 

resources does not mean that they do not exist. 

We should not use loan guarantees, or any other federal subsidies, to promote the 

economically inefficient use of nuclear power ahead of low-carbon energy alternatives that will be available sooner, at lesser cost, and with fewer environmental 

impacts. Under a well designed cap and trade system with competitive open access 

to the transmission and distribution grid, if nuclear power is needed for 

decarbonization, the marketplace for low-carbon energy will get around to demanding more of it, but not before it has exhausted the potential of other available energy resources (including all cost-effective avenues for extracting energy savings 

from improvements in efficiency) that can displace CO2 at a lower cost per ton than 

nuclear power. 

An appropriate role for direct federal support of low-carbon energy is to underwrite research, development, and demonstration of meritorious new technologies 

that are unlikely to be developed by private industry acting alone, either because 

the return on the investment is too distant or because the investment risks are too 

high. Alternatively, society may reap benefits by using production or investment tax 

credits to more rapidly expand the market for beneficial emerging technologies, 

thereby helping to driving down unit costs of production to a level that allows the 

technology to become self-sustaining in the marketplace. 

Further subsidization of new nuclear power plants does not meet either of these 

criteria. The first 6,000 megawatts of nuclear new-build capacity are already covered by a production tax credit comparable to wind, and sufficient loan guarantee 

authority ($18.5 billion) has already been made available to support construction of 

the first ’new’ Gen TIT+ reactor designs proposed for the U.S. market—the ToshibaWestinghouse AP1000 and the GE-Hitachi ESBWR. All other reactor designs proposed for construction in the United States either don’t qualify as innovative, have 

already been constructed elsewhere, or both. 

Furthermore, loan guarantees are not essential for nuclear plants currently being 

developed by regulated utilities as evidenced by Progress Energy’s efforts to build 

two new units in Levy County, Florida, Georgia Power’s efforts to build two units 

(Alvin W. Vogle Units 3 and 4), and South Carolina Electric & Gas’s efforts to build 

two units (Virgil C. Summer Units 2 and 3). All six of these proposed units are 

AP1000 designs. 
37 

Finally, as NRC Chairman Dale E. Klein noted last week, the ‘‘excessive exuberance’’ for nuclear power has declined because of the global credit and economic 

crisis. The current economic recession has reduced the projected demand for electricity and there is a reduced need to build new base-load electricity generating capacity. 

B. Reprocessing—The Federal Government should not encourage or support 

commercial spent fuel reprocessing 

Reprocessing of commercial spent fuel, as it is practiced today in France, Russia 

and Japan offers no advantages and numerous disadvantages over continuing to 

rely on the once-through nuclear fuel cycle as practiced in the United States and 

most countries with nuclear power plants. The trend in recent years has been for 

more countries to abandon reprocessing than to initiate reprocessing. Relative to the 

existing open fuel cycle, the use of a closed or partially closed mixed-uranium and 

plutonium oxide (MOX) fuel cycle in thermal reactors has proven to be more costly 

and less safe. It leads to greater routine releases of radioactivity into the environment, greater worker exposures to radiation, larger inventories of nuclear waste 

that must be managed, and it doesn’t appreciably reduce the geologic repository requirements for spent fuel or high-level nuclear waste. 

Because reprocessing as it is practiced today does not appreciably reduce repository requirements it is not an alternative to Yucca Mountain. Should GNEP’s advanced reprocessing technologies—essential to the success of the GNEP vision— 

prove technically feasible, they are unlikely to significantly impact repository requirements, because the fast reactors required for efficient waste transmutation are 

likely to remain more costly and less reliable than conventional thermal reactors, 

and hence will not be commercially deployed in sufficient numbers to effect the desired reductions. 

The GNEP vision of burning the long-lived actinides, requires that some 30 to 40 

percent of all reactor capacity be supplied by fast reactors. In other words, for every 

100 thermal reactors of the type used throughout the United States today, some 40 

to 75 new fast reactors of similar capacity would have to be built. The commercial 

use of large numbers of fast reactors for actinide burning is unlikely to occur because—to borrow observations made by U.S. Navy Admiral Hyman Rickover more 

than 50 years ago that remain true today—fast reactors have proven to be ‘‘expensive to build, complex to operate, susceptible to prolonged shutdown as a result of 

even minor malfunctions, and difficult and time-consuming to repair.’’ 

The development of fast reactors to breed plutonium failed in the United States, 

the United Kingdom, France, Germany, Italy, and Japan. We would argue it failed 

in the Soviet Union despite the fact that the Soviets operated two commercial-size 

fast breeder plants, BN-350 (now shut down in Kazakhstan) and BN-600 (still operational in Russia), because the Soviet Union and Russia never successfully closed 

the fuel cycle and thus never operated these plants using MOX fuel. 

Moreover, the advanced reprocessing technologies are even more costly than the 

conventional PUREX method and produce even larger inventories of intermediate 

and low-level nuclear wastes. 

The closed fuel cycle technologies required by GNEP pose greater proliferation 

risks than the once-through fuel cycle. Even though GNEP’s ambitious vision of deploying new reprocessing plants and fast reactors in large numbers will surely fail 

to materialize, the partnership’s research program will encourage the development 

in non-weapon states of research facilities well suited for plutonium recovery, i.e., 

small hot cells and even larger reprocessing centers, as well as the training of experts in plutonium chemistry and metallurgy, all of which pose grave proliferation 

risks. It is for this reason that we advocate terminating the GNEP research on advanced reprocessing technologies. 

For now, Congress and the new Administration should terminate funding for the 

GNEP and its associated efforts to close the nuclear fuel cycle and introduce fast 

burner reactors in the United States. This leaves the question of what level of longterm DOE research funding is appropriate to explore advanced nuclear fuel recycling technologies. 

We hold the view that even substantial research spending in this area is unlikely 

to lead to disruptive nuclear technology breakthroughs that actually meet the stated 

goals of the research—cost-effective and non-proliferative techniques for reprocessing, recycling and transmuting plutonium-based fuels. And while the proliferation 

risks of this cooperative international research would be ongoing and tangible, we 

and many others in the nonproliferation community believe that shutting down the 

current U.S. plutonium recycle research effort, and any support it extends to foreign 

efforts, is the wisest course, at least until such time as the latent nuclear proliferation risk in the world is much better controlled than it is today. 
38 

Others, including Energy Secretary Steven Chu, appear to believe that some level 

of ongoing advanced fuel cycle research is appropriate and has some chance of yielding the desired disruptive nuclear technology breakthrough, if pursued for perhaps 

a decade or more. History has not been very kind to this view, but the plutonium 

fuel cycle community is a lot like the fusion energy community in this respect—hope 

springs eternal as long as federal research dollars are within reach. 

So weighing these contrasting glass-half-full and glass half-empty perspectives, 

Mr. Chairman, you might conclude that some modest long-term research program, 

geared to narrowing the technical and cost uncertainties surrounding the toughest 

unresolved technical, economic, safeguards, and proliferation issues, would be an appropriate and prudent middle path to pursue with respect to closing the fuel cycle. 

We would emphasize that even more important than the particular choice of technology is a better understanding of the requirements for the international institutional setting in which a large-scale fast reactor roll-out would be attempted. This, 

more than the technology, is the long pole in the closed fuel cycle tent. If one is 

serious about wanting to minimize the risks of proliferation, one is more or less 

driven to consider some form of international ownership and control over nuclear 

fuel cycle facilities, and this is likely to prove just as demanding a task as the development of more ‘‘proliferation resistant’’ strains of reprocessing. We also note that 

absent such an international structure for closely regulating the closed fuel cycle, 

we are unlikely ever to transition to a world free of nuclear weapons. 

C. Congress should not interfere in the NRC’s ongoing Waste Confidence and 

Temporary Storage rulemakings 

The issue of whether and how the availability of permanent geologic disposal 

should factor into the NRC licensing of commercial nuclear power plants has been 

with us for decades. A compromise on how the issue would be addressed in a scientific and publicly acceptable manner was reached nearly twenty five years ago 

and the basic framework of that compromise has not changed substantially over the 

years. 

To make a long story short, in June of 1977, the NRC denied a NRDC petition 

that forced the question of whether there should be a rulemaking proceeding to determine whether high-level radioactive wastes generated in nuclear power reactors 

can be permanently disposed of without undue risk to public health and safety. 

NRDC then petitioned the United States Court of Appeals for the Second Circuit 

to review the NRC decision. The D.C. Circuit remanded the matter to the NRC for 

further proceedings to determine whether there was reasonable assurance that a 

permanent disposal facility will be found. This and a related case gave rise to the 

NRC’s ‘‘waste confidence’’ rulemaking. The NRC issued a set of findings in 1984 and 

subsequently revised them in 1990, and reaffirmed them in 1999. The NRC is now 

revisiting the issue. 

The resolution of this issue properly remains with the NRC which was established 

to address health and safety issues associated with civil use of atomic energy. We 

would caution against intervention into this ongoing NRC decision-making process. 

It may be instructive to remind ourselves that the current failure to develop a geologic disposal facility for high level radioactive waste and spent fuel is due in large 

part to interventions by Congress subsequent to the passage of the Nuclear Waste 

Policy Act of 1982. 

The CHAIRMAN. Thank you both very much for your testimony. 

Mr. Fertel, I gather from your testimony you think the top priority for the nuclear power industry, as far as legislation might be 

concerned, would be fixing this loan guarantee program, getting 

this in a form that it is able to assist all of those that would like 

to go forward and construct these facilities. Is that an accurate understanding? 

Mr. FERTEL. That is accurate, Mr. Chairman. 

The CHAIRMAN. Dr. Cochran has made the argument that these 

loan guarantees should be limited to the lead units of new nuclear 

plant designs and not made available to subsequent units that employ designs that have already been built. What is your response 

to that? 

Mr. FERTEL. My response is quite straightforward on that, sir. As 

a Nation, we are looking to radically change our electricity supply 

system. We are looking to go to much lower carbon footprints for 
39 

everything. We talk about smart grid. We are clearly moving toward renewables. We need to do more efficiency. 

There is no silver bullet. We basically need a portfolio that does 

all of these things very effectively, and the only large proven baseload source of electricity that doesn’t emit carbon is nuclear. The 

reality is that if we are going to go to a low-carbon footprint across 

our electricity system, it won’t happen in 5 years, as Tom is saying. 

It will take us much longer. 

But to do that, we are going to have to finance large projects, 

and there is advantage from a public policy standpoint to loan 

guarantees, which I will explain. If I leverage—if I am a merchant 

plant in a State that actually has deregulated, I would actually leverage more debt to equity. If I had loan guarantees, I would be 

able to do that. 

That reduces the cost of electricity to our customers. So it helps 

there. It helps us deploy quicker, whether it is nuclear or renewables or anything else. 

The third thing right now in title XVII, the way you wrote it, sir, 

we actually pay the Government for the loan guarantees. It is not 

a gift. You actually get money for it. The companies want to deploy 

nuclear and they will ultimately maybe get financing in the open 

market, but in our economic situation today, you are not going to 

get a lot of financing for anything. 

So it is good public policy, in our opinion, if you are trying to 

move our electricity system in a different way and moderate the 

impact on customers. 

The CHAIRMAN. Let me ask a question about this reprocessing. 

Is there any interest on the part of private companies, Mr. Fertel, 

as far as you know, in building fast reactors or reprocessing plants 

with private capital? Is there any move to do that? 

Mr. FERTEL. There is clearly interest by a couple of the prime 

movers in that area over the last couple of years because of the 

Bush Administration discussing of GNEP, and they have been looking at it as a business case. Where I agree with Tom is it won’t 

happen fast, and it doesn’t have to happen fast. 

But we do need to look at what we should do if we do want to 

close the fuel cycle in this country, and I think Tom may be wrong 

in his premise that the rest of the world won’t continue to look at 

reprocessing. If we want to influence them on technology, on safety, 

on environmental, and on nonproliferation issues, you can’t do it 

when you say we don’t care to do it, and we think you shouldn’t. 

You have to engage. 

The CHAIRMAN. Dr. Cochran, let me ask you about this NRC 

waste confidence rulemaking. You suggest that Congress stay out 

of that. Do you believe, in light of the current state of the repository program, that the NRC can reasonably expect a repository to 

be available even in this timeframe of 50 to 60 years after the 60- 

year operating life of a reactor? 

Mr. COCHRAN. I believe that is such a long time that I don’t 

think any answer would be meaningful. First of all, half the nuclear power plants have extended their licenses for 60 years. The 

other half are expected to apply and extend their licenses. They are 

already beginning to think about a second extension to 80 years, 
40 

and then you add on another 50 to 60 years beyond that, you are 

well beyond 100 years into the future. 

Now do I have confidence that we will find a solution within the 

next 100 years? Let us review the history. Yucca Mountain is not 

the first failure to find a solution to the spent fuel or high-level 

waste disposal. It is actually the third failure in the last 50 years. 

The first failure, you recall, was efforts by the AEC to dispose 

of high-level waste at Lyons, Kansas, in a salt repository. When 

that program was terminated because the site proved to be less attractive than initially thought, the newly formed ERDA/Department of Energy proposed—this was, I think, during the Carter Administration—a retrievable surface storage facility solution, where 

we would gather up all the fuel and on an interim basis store it 

in one large central pool or pools. 

That proposal was also shot down and abandoned, and that led 

to the nuclear—development of a new alternative and the passage 

of the Nuclear Waste Policy Act of 1982. In that case, we supported 

that act. It set up a beautiful system where one Federal agency, 

the Department of Energy, was to go out and find the best sites 

in the Nation and narrow it down to two. 

A second Federal agency, the EPA, was to independently develop 

criteria for safe disposal of the waste in the repository. The third 

Federal agency, the Nuclear Regulatory Commission, would make 

the decision. 

In the intervening years, the Department of Energy and the Congress corrupted the site selection process, and it led to singling out 

Yucca Mountain. In the intervening years, the EPA took decades 

to finalize the criteria, and they corrupted that process as well. So, 

you have ended up with now a political solution that is essentially 

eliminating Yucca. 

Will that happen again? Perhaps. I think it is incumbent upon 

us—because the large inventories of spent fuel exist and geologic 

disposal is still the best solution for long-term disposal of this material, it is incumbent upon us to immediately start to identify new 

geologic repositories. We are going to lose a couple of decades if we 

simply cutoff the funding for the technical people who know this 

issue best so that they are not around to help us engage in identifying the best options under plan B. 

The CHAIRMAN. Thank you very much. 

Senator Murkowski. 

Senator MURKOWSKI. Thank you, Mr. Chairman. 

Interesting panel. Very seldom do we have just two, and really, 

you couldn’t be on—— 

Mr. FERTEL. So close together, right? 

[Laughter.] 

Senator MURKOWSKI. So close together. That is right. Anyway, it 

has been interesting hearing the comments from both of you. 

Mr. Fertel, first to you, you have—we all recognize that the number of applications that Department of Energy has received for the 

loan guarantees far exceeds, $93 billion as opposed to the $18.5 billion that is currently available and limited to. 

What does NEI believe that the authorized loan volume needs to 

be in order to get the nuclear industry reestablished? 
41 

Mr. FERTEL. That is an excellent question, Senator, and we are 

trying to get a better handle. I mean, you have an indication by 

just what was filed. 

Senator MURKOWSKI. Right. 

Mr. FERTEL. Which is $93 billion by the 10. You shouldn’t look 

at that as 10 plants. We are not privy to what they filed, but I am 

sure there are multiple units in those filings. It is not 10 applications, 10 single units. 

I think the difference, again, is that the program that the 2005 

act put in place was a program that Tom described very well. It 

was to jumpstart some new technologies. 

I think the situation is a structural problem that we are trying 

to address, which is the ability of our Nation to privately finance 

large projects and particularly when the companies are the size of 

our electric utilities. They are not the size of Electricite de France 

or some of the German companies, which are almost 10 times at 

times the size of some of our companies that you can’t finance as 

easily or at all in some cases. 

So Government intervention to support it actually has merit. Right now, the program is $111 billion, of which $18.5 billion is for 

nuclear. The rest goes to renewables and other technology. 

So we ought to be clear. Nuclear is not running away with the 

bulk of the money in the current program, but I think you have an 

indication from what has been filed. 

Senator MURKOWSKI. You made a statement that I want to follow 

up with because I made the suggestion at a hearing that we had 

last week that the Administration’s actions with regard to Yucca 

could be viewed as a disincentive to those in the industry to pursue 

new applications to advance this nuclear renaissance that we have 

been talking about. 

You have suggested here this morning that you don’t think that 

that is necessarily the case, and I appreciate that. But let me ask 

you this. If, in fact, we do not get a strong signal from the Administration that they believe—let us say that they trend toward Dr. 

Cochran’s view that, in fact, the loan guarantees are perhaps not 

that necessary or perhaps we do not need to increase the amount. 

You have that message coupled with the message on Yucca. 

What does that do to the growth of the industry? 

Mr. FERTEL. Yes, I think it immediately causes some of the companies to slow down because they can’t finance some without loan 

guarantees. You would probably lose the merchant plants just as 

a business decision. 

I think that in other boardrooms, you would have the board of 

directors sitting and saying, ‘‘Well, where is the Administration on 

this, and what do we do?’’ So I think, clearly, the combination 

would have to slow down any deployment of new nuclear. 

My comment on the waste issue is that you always had the possibility, and Chairman Klein referred to it, of Yucca not getting licensed. We think that there is great technical stuff and they have 

worked so hard and they have worked so long, but that was always 

a possibility. You would then have to go find another location. 

So that was always out there. As the chairman said, they will 

make sure you manage safely and securely the used fuel onsite or 

at any other location we put it. So we would say you could go for-
42 

ward if it was just waste, as long as there is an effort by our country to do something. 

With Senator Bingaman back in his question to Tom about waste 

confidence, let me just add maybe a perspective on waste confidence that you don’t usually hear. The reason NRC has the waste 

confidence rulemaking is because of NEPA. It is to allow them to 

deal with the issue of waste, which is an environmental issue as 

well as a safety issue under NEPA. 

This is a personal opinion. We have a law. We may not be implementing it very effectively, but it is the law. It would seem to me 

that if the Federal Government passes a law that says we are 

going to ultimately deal with waste—Tom is right—eventually, we 

should ultimately deal with the waste. 

I am not sure they should litigate that either through a waste 

confidence rulemaking or through individual proceedings in regulatory. I think you could legislatively say you have waste confidence because otherwise you don’t believe our Government will 

ever implement what it says it is going to do. 

Now I think NRC is accommodating the process very well by 

doing a very robust rulemaking and then relying on it. But that is 

why they have to deal with it, because of NEPA. 

Senator MURKOWSKI. My time has expired. But if I may, Mr. 

Chairman, just one question of Dr. Cochran? 

Because you have very clearly articulated your perspective that 

we should not expand the nuclear loan guarantee program, we 

should not pursue the spent fuel reprocessing. You have seen the 

President’s blueprint in terms of the goals that he is looking to for 

climate change and reduction in emissions. He is looking for an 83 

percent reduction in emissions by 2050. That is pretty aggressive. 

Do you believe that we can achieve the goals that he is setting 

out without nuclear? 

Mr. COCHRAN. First of all, we have nuclear. We have 104 plants. 

They have been increasing their capacity factor and their capacity, 

and there will be more nuclear plants. So nuclear is in the mix, 

and nuclear is here to stay. 

Senator MURKOWSKI. But when you say that, I want to follow on 

the question that I asked to Mr. Fertel. 

Mr. COCHRAN. I want to finish my answer. 

Senator MURKOWSKI. If, in fact, we do not have an increase, if 

we just stay at our 104, can we get there from here? 

Mr. COCHRAN. Let us put in place the policies that will achieve 

a priority objective, which is to mitigate climate change. The economically efficient, most efficient way to do that is to treat carbon 

as you would any other pollutant. 

So, the highest priority is to get Federal legislation to implement 

a cap and trade program on carbon, a meaningful cap and trade 

program. We should solve the climate issue by dealing with the pollutant, not by going out and subsidizing your favorite technologies. 

There is a role for Federal subsidies. There is a role for loan 

guarantees. 

Senator MURKOWSKI. That is clearly what we are doing. 

Dr. COCHRAN. But it is not to, as Mr. Fertel wants to do, provide 

unlimited loan guarantees to all the nuclear plant owners and op-
43 

erators that come to the table and want to build a new nuclear 

plant. Now—— 

Senator MURKOWSKI. So could we—— 

Mr. COCHRAN. Wait just a minute. 

Senator MURKOWSKI. I still want to get back to my question, 

which is can we achieve the level of reductions that the President 

is looking for, given what we have with our current nuclear capacity? 

Mr. COCHRAN. NRDC thinks we can, but more importantly, we 

ought to put in place the policies that get us there the quickest, 

most safely, and at the least cost to the Federal Government. Our 

concern is that providing these unlimited loan guarantees to the 

nuclear energy industry will ultimately reduce the efforts to deploy 

technologies that can provide carbon offsets more cheaply and more 

quickly. 

Now let me—let us just take—first of all, let us recognize that 

the loan guarantees are not needed for those utilities that are regulated because they can go to the PUCs and get money provided 

through increased rates and finance these plants. 

He mentioned that it would likely eliminate or reduce the number of merchant plants we build. Well, let us take a case. Let us 

take the business model for Calvert Cliffs plant right down the 

street. 

Calvert Cliffs is a proposal by UniStar, which ultimately is a proposal by the French government because UniStar is a joint venture 

between Constellation Energy and Electricite de France, and 

Electricite de France just bought half of Constellation Energy. 

Electricite de France is owned, 85 or higher percent, by the French 

government. 

They want to build a French plant, EPR, which is built by 

AREVA, owned by the French—— 

Senator MURKOWSKI. Dr. Cochran, I am—— 

Mr. COCHRAN [continuing]. Government. 

Senator MURKOWSKI [continuing]. Double over my time here. I 

am 5 minutes over, and I am not quite sure where you are going. 

Mr. COCHRAN. I am not sure I am not over my time, but let me 

finish my point. 

Senator MURKOWSKI. You are over your time. Where you are 

going is—— 

Mr. COCHRAN. Where I am going is—— 

Senator MURKOWSKI [continuing]. Really inconceivable. 

Mr. COCHRAN [continuing]. That your loan guarantees, you have 

got to go to your constituents and the constituents in New Mexico 

and say we want to tax homeowners, families, so that we can provide insurance to the French government so that through 

Electricite de France they can enter the American market, sell electricity below cost so the consumers in Washington, DC., and Baltimore don’t have to provide energy efficiency, and they can make a 

profit by selling nuclear energy below cost. 

I think that is a bad model for solving climate. It is a bad 

model—it is a bad business model for having efficient nuclear 

power plants. 

Senator MURKOWSKI. I think where the Natural Resources Defense Council is coming is they do not believe that nuclear should 
44 

be any part of the solution for this country, and I am disappointed 

with your response. 

Thank you, Mr. Chairman. 

Mr. COCHRAN. Senator, the highest priority program of the Natural Resources Defense Council is to achieve Federal legislation 

that will cap carbon emissions. This happens to be the single most 

important Federal policy that would help the nuclear industry. 

The second most important Federal policy that could help the nuclear industry would be to encourage the development and deployment of plug-in hybrids and electric vehicles. This is also a priority 

of our organization. So don’t tell me—— 

Senator MURKOWSKI. We will work with you on that. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you very much. 

Senator Udall. 

Senator UDALL. Thank you, Mr. Chairman. 

This previous interchange is informative and entertaining 

enough, I am tempted to yield my 5 minutes to Senator Murkowski 

and—— 

[Laughter.] 

Senator UDALL [continuing]. We will continue the discussion. I do 

think my colleague from Alaska is on to an important line of questioning, and I think it is, in many ways, why this hearing was held 

today. 

Dr. Cochran, thank you for your passion and your interest and 

the time you dedicate to understanding nuclear power. I did want 

to return to you for some additional comments. 

But Mr. Fertel, in the interest of fairness, I would like to hear 

your thoughts on loan guarantees and once again give you a couple 

of minutes to talk about why you think this is important. 

Mr. FERTEL. Thank you, Senator Udall. 

Again, I think going—not to rebuke, but some of Tom’s points. 

First of all, the loan guarantees, the citizens of Colorado and the 

taxpayers of New Mexico or Alaska or Alabama are not paying any 

money for the loan guarantees that we get. We are paying the Government money for the loan guarantees that we get, and then we 

are producing cheaper electricity with it. 

To be honest, on Tom’s sort of attack on the French, I don’t want 

to defend the French, but AREVA is in the process right now of 

building a facility in Norfolk, Virginia, that is going to employ 500 

people, that is going to build equipment for the EPR that would be 

built in this country. Their facilities in Lynchburg have hired probably more than 500 people in the last couple of years, and the people that will build the plant in this country will be unionized people that they have signed a contract with to build in Maryland. 

So I think we need to maybe not throw as many stones at some 

of what is going on. First, it is a global marketplace, and second, 

the building is going to come here and the electricity will be here. 

We think loan guarantees are a good public policy. We think that 

they allow for a more effective deployment of clean technologies. As 

I said, there is $111 billion in the loan guarantee program now, of 

which $20.5 billion is nuclear. So I don’t know if Tom thinks they 

should take out the other $90 billion that goes to renewables and 
45 

other things, too? We don’t. We think they should get it if they 

need it. We don’t imagine how they can spend it. 

It helps us reduce the cost of electricity. It helps us deploy lowcarbon technologies quicker than we could without them because of 

the size of some of our projects in particular, but others that are 

having trouble. We think that the Government actually gets money 

back for it. 

So we see it as a good public policy. We see it as something that 

achieves the end goals we want. I agree with Tom that if we do 

a climate bill with cap and trade or whatever form it takes, it will 

also have an impact on the technology decisions. 

The answer, Senator, is we need all the technologies we can use. 

How we deploy them depends upon the policies we set. 

Senator UDALL. Is it fair to say that when Dr. Cochran talked 

about his concern that the loan program was initially framed to 

promote these new cutting-edge technologies, these more modular 

units that we are now hearing that we ought to expand those loan 

guarantees to the more mature technologies, is that because of the 

marketplace and the—— 

Mr. FERTEL. That is exactly right, Senator. 

Senator UDALL [continuing]. Stresses there? 

Mr. FERTEL. Yes, we actually agree that when Senator Bingaman 

and the committee passed the 2005 act, its intent was different. It 

is still a valid thing to look at and to do. But the financing and 

structural problems that we have in deploying the bulk of technologies we need actually needs more help than what the original 

program was intended to do. 

Yes, sir. That is correct. 

Senator UDALL. Dr. Cochran, in the interest of fairness, would 

you care to comment? 

Mr. COCHRAN. The renewable industry, as I understand it, was 

not seeking loan guarantees prior to the financial meltdown. Now 

the Congress, in its wisdom, has put in large amounts of loan guarantees to reflect the difficulty of immediate financing following the 

financial meltdown. 

It is my view that the loan guarantees should be limited to application of the new innovative energy technologies, and once the 

technology has gone above, say, 5 percent of the market, you 

shouldn’t continue them. You don’t need to continue them. 

The economically efficient way to solve the climate problem is 

through a cap, a carbon cap. It is not through a loan guarantee program. There is nothing in the loan guarantee program from preventing utilities from, let us say, shutting down a gas-fired plant 

rather than a coal plant. So, we lose half the benefits, the carbon 

benefits, if they are going to shut down some other technology rather than the plants that emit the most CO2. 

So I think the economically efficient way to address that CO2

problem is cap CO2 and put a price on it. Let these guys compete 

in the marketplace, and your job ought to be to eliminate all these 

Government subsidies rather than load them up. 

There are legitimate reasons to subsidize new energy technologies. One is to do R&D on long lead-time technologies that are 

valuable to society or technologies that are high risk that the industry won’t provide the R&D. 
46 

The second is to lower initial costs by creating a market and introducing technologies, building a marketplace and reducing the 

costs in that manner. Beyond that, the Government ought to get 

out of the business and let the marketplace work. 

Senator UDALL. Thank you. My time has expired. 

That is certainly the mission of this committee and the Senate 

of the United States is to not advantage one technology over another technology. Easy to say. Harder to do. 

I am glad Senator Murkowski and Senator Bingaman are leading 

the charge so that we find our way to that goal. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you very much. 

Senator Sessions. 

Senator SESSIONS. Thank you. 

We are certainly advantaging one technology over another in 

that we are giving direct substantial subsidies for wind and also 

talking about mandating a certain amount of it. 

Whereas, all the nuclear power industry who, if we can get it 

going again, will produce far more clean baseload power with no 

emissions is a loan guarantee, which I suppose, Mr. Fertel, you intend to pay back? 

Mr. FERTEL. We not only pay it back, but we need to pay for it. 

I mean, Tom uses ‘‘subsidy’’ as a sort of throw-away line, and usually a subsidy means you are getting it for free. For our loan guarantees, we actually have to pay the Government to get it, and then, 

of course, we pay it back. So—— 

Mr. COCHRAN. There were more nuclear plants canceled than 

built in the United States. Mr. Fertel believes that there is no risk 

associated with the construction of these nuclear plants, and therefore, the Government is not at risk. 

Senator SESSIONS. Mr. Cochran, we know the history of that, and 

it is one of the dark days in this country that those plants were 

stopped. I am telling you, if we had gone forward with nuclear 

power, we wouldn’t have to be depending on France today for certain technologies. You and some of your colleagues are the reason 

that happened. 

It has damaged our emissions, increased the CO2 in the atmosphere, and if we don’t build—tell me how many plants, Mr. Fertel, 

we need to build to just keep our electricity by nuclear power at 

20 percent in America today? 

Mr. FERTEL. Our estimate right now is if we built 26, which is 

34,000 megawatts, by 2030, we would stay at 20 percent in 2030. 

Senator SESSIONS. This is—I just saw an MSNBC poll. Sixtyseven percent of Americans are in support of building more nuclear 

plants. Now the Administration has talked about it. Dr. Chu is a 

nuclear physicist. He has been cooperative and talking somewhat 

positive. But Mr. Chairman, I am not seeing any action yet. 

I know our bill that you are working and Senator Murkowski has 

got a lot of good things in it, but I don’t see anything in it would 

help us with nuclear much. So I hope we can do some things that 

signal that Congress is supportive. I am just sorry to be upset 

about that. 

I am looking, in Alabama, at the Bellefonte plant, they put $4 

billion in it, TVA did, 25 years ago. It is the fundamental reason 
47 

TVA has a large debt today, $4 billion with no income for 30 years 

nearly. They want to restart it. They are going to commence soon 

to restart that plant. 

How much better would the environment be and how much better would TVA’s bottom line be had that plant been completed and 

not stopped? 

With regard to the—hopefully, we won’t have an RPS renewable 

standards, but it strikes me, Mr. Fertel, that if required renewable 

standards are made, the purpose of renewable portfolio is reduce 

CO2 emissions, shouldn’t there be some credit for a utility that is 

spending billions of dollars over 6 years to get a massive reduction 

of CO2? 

Shouldn’t they be given some credit as opposed to somebody that 

was able to get some renewable in the interim, and should these 

utilities be required to pay fines when, in the long run, they will 

reduce CO2 far more? 

Mr. FERTEL. Obviously, we think that nuclear’s significant role in 

reducing CO2 emissions should be recognized in some way, as Congress looks at both the climate bill and as it also looks at any sort 

of electricity standards. But I have confidence that the chairman 

and the ranking member and the members of this committee will 

try and work together to figure out the best way to do that. 

We think renewables have a role. We think efficiency has a 

major role. Obviously, if we can get coal—the carbon capture and 

storage, coal will continue to play a role. If we don’t do that, the 

rest of what we do may not matter because the rest of the world 

will build lots of coal. 

So we see everything having a role, and where I differ with Tom, 

where he says let the marketplace decide, he doesn’t really do that 

because he knows which ones he wants. What I would say is that 

the marketplace will help you decide where you go with what, but 

this whole discussion on carbon, while important, you actually 

want to produce electricity, too. 

We need to make sure that we are producing electricity, and one 

of the reasons we think that you need to deal with the structural 

problem is that you really can’t build quick enough electricity 

plants, and we won’t build, no matter how much we think we will, 

a smart grid in the next 5 years. We may not define a smart grid 

in the next 5 years. 

So we really need to go about this smart as a Nation and not 

pick winners or losers, but not decrease our options by doing things 

that makes it harder to deploy the technologies we know work. 

Senator SESSIONS. Just briefly, one of the things, Mr. Fertel, that 

I think nuclear power provides us is an opportunity for smart meters, where in off-peak hours, you can utilize the baseload nuclear 

power. Is that a positive factor for the public and the environment? 

Mr. FERTEL. It is a positive factor there. It is a positive factor 

what Tom said about plug-in hybrids. 

Senator SESSIONS. I agree. 

Mr. FERTEL. It would be a really good time to be charging your 

hybrid overnight when the nuclear plant is working and producing 

electricity at the low numbers that Senator Landrieu mentioned 

from an operating standpoint. 

Senator SESSIONS. Thank you, Mr. Chairman. 
48 

The CHAIRMAN. Thank you very much. 

Let me just ask you one more question, Dr. Cochran. Is it your 

view that the NRC should go ahead with licensing new reactors before Congress comes up with a solution to the nuclear waste problem? I mean, if Yucca Mountain is not going to be the solution, do 

you see that as an impediment to the NRC going ahead and granting applications or granting licenses? 

Mr. COCHRAN. I don’t see that as an immediate impediment. But 

there is a rulemaking process ongoing before the Nuclear Regulatory Commission to resolve that issue and to address the environmental issues that Mr. Fertel raised, which are part of that rulemaking process. 

I think the proper way to deal with that issue is for the NRC to 

complete that rulemaking, to go back and revise the environmental 

assessments that are assumed for all nuclear power plants—is 

going to be zero emissions associated with a geologic repository and 

that the repository is going to be in some salt deposit somewhere— 

and do that in an orderly, proper rulemaking procedure where the 

public can engage on those issues. 

The CHAIRMAN. That concludes my questions. 

Senator Murkowski, do you have any other questions? 

Thank you both very much. I think it has been a useful hearing. 

Thank you. 

[Whereupon, at 11:35 a.m., the hearing was adjourned.] 

[The following statement was received for the record.] 

STATEMENT OF DEBORAH DEAL BLACKWELL, VICE PRESIDENT, LICENSING & PUBLIC

POLICY HYPERION POWER GENERATION, INC. 

The Committee’s interest in nuclear energy development is appreciated. It is no 

secret that nuclear must be part of the ‘‘mix’’ of energy generating tools for the future of the United States and the world. Clean, emission-free energy from nuclear 

power plants can provide the baseload power today that is required and that wind, 

solar and hydro will probably not be able to supply for decades. 

And, the people of the United States are ready to accept more nuclear power. This 

year’s Gallup Environment Poll has found new high levels of support. Seventy-five 

percent of Americans whose total annual household incomes are at least $75,000 

favor using nuclear power to produce electricity in the United States. With all income levels factored in, 59% now favor the use of nuclear power. A global survey 

just released from Accenture reveals that more than two-thirds of people around the 

world believe that their countries should start using or increase their use of nuclear 

power 

However, little attention has been paid to a key development in the nuclear industry—small, modular nuclear power reactors (SMRs). SMRS solve many of the problems of large-scale nuclear power plants. According to an independent report by the 

Wall Street Journal, each of the next traditional-sized new nuclear power plants will 

cost $6 billion to as much as $12 billion, and they will take as long as 12 years to 

build and license. 

Clearly financing of such expensive projects is going to continue to be a problem. 

The loan guarantees approved by you and your colleagues are welcome and appreciated. But, they will only assist in the building of perhaps three or four traditionally large-scale plants. As you realize, four additional nuclear plants will not meet 

the burgeoning need for baseload power in this country. 

The answer may well lie in the development of SMRs. There are less than a handful of companies developing SMRS that have been identified by the Nuclear Regulatory Commission as upcoming license applicants. And, there is only one whollyAmerican owned and operated private company that is developing for global commercialization, a small nuclear power reactor for distributed power from the U.S. 

Department of Energy and that is Hyperion Power Generation. The company’s SMR 

was invented at Los Alamos National Laboratory. It has been licensed to Hyperion 

through the lab’s technology transfer program. 
49 

Providing 70 MW thermal power (27 to 30 MW of electric), each stand-alone proliferation-resistant Hyperion Power Module provides enough power for 22,000 average American-style homes or the industrial equivalent, for a capital investment of 

only $25 to $30 million per module. (Modules can be teamed for greater output.) The 

HPM, with its small amount of low-enriched fuel, makes the benefits of nuclear 

power available almost anywhere in the world without a multi-billion dollar investment. And, as the HPM will be mass produced in an American factory and is only 

1.5 meters wide by 2 meters tall, the time from purchase to installation can be only 

a matter of months—not years, depending on the site. 

Because the HPM is transportable, the design provides a desirable solution for 

emergency response and U.S. military installation use, among many others. Attached is a more in-depth discussion of the Hyperion Power Module and its global 

applications. 

Thank you for your attention. We appreciate the Committee’s interest in our national energy security and in its commitment to increasing U.S. economic security 

through technical innovation and small business development. 

ATTACHMENT.—THE HYPERION POWER MODULE (HPM) 

Perhaps the most important component of U.S. infrastructure is its system for 

generating and distributing electric power. Supplied by conventional centralized 

power plants and transmitted often hundreds of miles by an aging grid system, electricity is the lifeline of the country. Terrorism aside, the system is frightfully vulnerable due to normal wear and tear and simple accidents, as evidenced by the blackout several years ago in the Northeast. In addition to replacing or providing backup 

for the existing infrastructure, the amount of electricity needed for residential, commercial, industrial and military use is growing at an unprecedented pace. 

While solar, wind and hydropower technologies can deliver peak power, they will 

not be able to deliver reliable baseload power—the electricity that is needed 24 

hours a day, seven days a week, to run the world’s infrastructure for schools, homes, 

government, commercial, and industrial purposes. Nuclear energy is the only viable 

baseload power solution for the rest of the 21st century. 

But nuclear power in its current configuration cannot meet global needs now or 

in the future. 

Conventional nuclear power reactor plants, designed to serve large regions, cost 

billions of dollars to construct. A recent article in the Wall Street Journal forecast 

that the next new nuclear plant would end up costing $12 billion and take 15 years 

to license and build. The national and global economy will not be able to support 

such investment in time or funds. Conventional plants cannot be financed and built 

fast enough to meet the growing demand for energy. 

Now, for the first time, the advantages of nuclear power—efficient, cheaper, and 

non-polluting with no greenhouse gas emissions—are available in a significantly 

smaller, less capital intensive, less complex package. The small modular reactor 

(SMR) for ‘‘distributed generation’’ can have an impact on electricity needs and a 

place in the history of mankind’s accomplishments that far exceeds its metaphoric 

miniature version—the common battery. Distributed generation systems generate 

electricity from many small energy sources instead of one large, vulnerable and capital-intensive site. They reduce the size and number of power lines that must be 

constructed. And, they reduce the amount of energy lost in transmitting electricity 

because the electricity is generated very near where it is used. An aesthetic and environmental improvement, distributed generation also makes widespread outages 

less likely regardless of cause. 

Designed to provide distributed power, SMRs can be manufactured at a single location and shipped wherever they are needed. They provide essential power to even 

the most remote locations without designing and building individual, massive, and 

costly conventional power plants. The only U.S. small modular power reactor (SMR) 

design feasible for deployment within the next five years is the Hyperion Power 

Module (HPM). 

American Innovation, American Jobs, the Hyperion Opportunity 

The HPM was invented at Los Alamos National Laboratory. Through the U.S. 

government’s technology transfer initiative, the exclusive license to develop and 

commercialize the invention was granted to Los Alamos, New Mexico-based 

Hyperion Power Generation, Inc. (HPG). The company has now retained the nation’s 

top nuclear power design and engineering teams, including staff from U.S. federal 

laboratories and industry, to further develop the reactor. HPG will also partner with 

industrial leaders for the production, operation, and maintenance of the HPM. 

Hyperion Power Generation, Inc. is a small business totally owned and operated by 
50 

* While individual HPM units produce 70WM thermal power, the units can be ‘‘ganged’’ for 

even greater energy output. 

U.S. citizens, and is the only U.S. owned and controlled small reactor design firm 

in the world. 

In addition to generating income for the labs involved in the project, Hyperion 

Power Generation can stimulate both short and long-term jobs in the private sector. 

Construction of a U.S. manufacturing facility will involve a variety of building 

trades. Long-term, the factory will ensure a wide variety of positions ranging from 

assembly, forging and security, to quality assurance, testing and management. Additionally many jobs would be created and ensured for complementary technology and 

manufacturing companies both new and currently existing. Already, over $7 billion 

worth of HPMs are in the company’s ‘‘sales pipeline.’’ The company expects to 

produce at least 2,000 units in the first ten years of operation and a great number 

of those will be sold before the factory is open. This early enthusiasm for the product is a clear indication of the product’s coming success and contribution to future 

U.S. employment. 

Applications for the Hyperion Power Module 

Generating nearly 70 megawatts* of thermal energy and from 27 to 30 megawatts 

of electrical energy, the HPM is the world’s first small transportable reactor, taking 

advantage of the natural laws of chemistry and physics and leveraging all of the 

engineering and technology advancements made over the last fifty years. 

The HPM was initially created in response to the need for an efficient source of 

steam to power equipment for removal of fossil fuels from oil sands and shale. Thus 

far, retorting and processing equipment cost an unacceptable amount of the very resource that is being accessed and the HPM was created to eliminate that unsatisfactory paradigm. Using hydrocarbons to recover heavy hydrocarbons is inefficient and 

unnecessary. 

However, Hyperion Power Generation’s small modular, self-stabilizing reactor (the 

HPM) offers such attractive advantages that it could alter the manner in which nuclear energy is harnessed for generating electricity and creating industrial steam. 

As such, the possible applications for the technology are enormous. Meeting all the 

nonproliferation criteria of the Global Nuclear Energy Partnership (GNEP), the 

HPM is appropriate anywhere cost, safety and security is of concern. 

There are five main areas of application for the HPM: 

• Distributed ‘‘baseload’’ power for urban and rural communities 

• Quickly installed back-up and emergency power for disaster areas 

• Military bases (independent, baseload power) 

• Oil & gas recovery and refining, including in oil sands and shale recovery 

• Remote communities lacking accessibility to a source of electrical generation. 

Energy Savings Around the Globe 

A key design objective of the HPM is the ability to produce electricity anywhere 

in the world for less than 10 cents a kilowatt hour. As an example, the costs of the 

HPM for use in heavy oil recovery have been estimated to save over $1 billion dollars a year, for a single, high-power application when compared with the present 

cost of using natural gas. The estimate is based on the projected 5-year life of the 

HPM reactors, and includes the cost of refueling and waste handling. The savings 

come from the higher energy content of nuclear fuel and the low personnel costs for 

operating the HPM. The inherent safety of the HPM’s core, coming from its chemistry-based self-control, minimizes the human oversight needed for operation. The 

compact design permits staged introduction of the new power source to any application and the low unit costs reduce financial risk, both for the initial demonstration 

programs and for final deployment. Furthermore, the compact design and ‘‘walkaway’’ safety can permit, for the first time, the distributed production of power from 

nuclear sources. 

The compact nature and inherent safety opens the possibility for low cost mass 

production and operation of HPM reactors. The overnight capital costs and the operating costs for this device have been estimated and found to be very attractive. The 

capital costs were estimated by an expert in the nuclear industry and found to be 

$1,400 per kW of electricity, which compares favorably with an estimate of $4,500 

for the same electrical production but from gigawatt scale installations. The operating costs for thermal power steam production have been estimated to be $3 per 

million BTU, costs that are not only lower than natural gas but also more stable— 

all without CO2, nor NOX nor SOX emissions. 
51 

Summary of Unique Advantages of the HPM: 

• ransportable baseload power source 

• Installed within a day or so once minimal site prep is performed 

• Substantial power—enough power for an entire community infrastructure 

(20,000 homes) 

• Reliable, continuous power—enough for five to eight years depending upon demand 

• No refueling on site 

• No maintenance of heat source 

• Only small area required for sighting 

• Attractive costs and low investment 

Technical Overview 

The Hyperion Power Module (HPM) was specifically designed to avoid the high 

construction costs and uncertainties associated with traditional reactor technology. 

Each unit will generate approximately 27 megawatts of electrical power. A one and 

one-half meter diameter core, without internal mechanical moving parts, permits 

the reactor to be sealed at the factory, sited underground, and eventually returned 

to the factory for fuel recycling and refueling after a useful life of five to seven 

years. 

The HPM has the following attributes: 

• Single-unit, sealed construction and dispersed, underground siting also provides 

anti-tampering protection. 

• The inherent simplicity and compactness of the design will enable mass production of Hyperion modules as turnkey devices. 

• The modest size of the modules greatly reduces the financial investment risk 

in both the development and the eventual deployment of the reactors. 

• Mass-production and the minimal required operational oversight make the 

Hyperion reactor economically competitive and attractive for new and distributed power production deployment, and could substantially contribute to national energy independence. 

The physical characteristics of uranium hydride, a combined fuel and neutron energy moderator, are ideal for the generation of safe nuclear power. The reactor operates at an optimum temperature of 550°C. At 550°C, the dissociation pressure for 

the hydrogen above the hydride is approximately eight atmospheres, which permits 

easy transportation of the gas without presenting significant high-pressure risk. The 

temperature-driven mobility of the hydrogen contained in the hydride can change 

the moderation, and therefore the reactor criticality, making the HPM reactor selfregulating and passively safe. 

The hydrogen forced out of the core during any over-temperature excursion reduces the neutron energy moderation necessary for nuclear criticality. The Hyperion 

Power Module is inherently fail-safe, since any temperature increase from excess activity immediately reduces the criticality parameters and thus the power production. 

The consequent power reduction causes the temperature to decrease and that temperature decrease eventually reverses the process, resulting in relaxation oscillations that quickly damp out to steady-state operation. 

History of the Fuel & Technology 

Hydride materials have long been recognized as possible controls for self-regulating nuclear reactors. In addition, uranium hydride was demonstrated to be a successful reactor fuel very early in the nuclear era, although the hydride was cast into 

blocks using a polymeric binder to prevent the hydrogen from escaping. This binding 

of the fuel precluded any observation of the self-regulation characteristics inherent 

to the material. 

While the science of the Hyperion reactor has been around for this long time, it 

has not been implemented because the conditions for self-regulation had not been 

explored and the limits on those conditions delineated. We have now performed the 

critical modeling and thereby discovered the critical feature and design criteria for 

exploiting the safety and self-regulation advantages of hydride materials within the 

reactor that make a hydride reactor practical for construction and deployment. 

Hyperion is proposing a new concept for an inherently safe nuclear power source 

that is self-stabilizing and requires no moving mechanical components. The modest 

size of the modules reduces the financial investment risk for both development and 

deployment. The potential for mass-production and the minimal operational oversight make these reactors economically attractive for new and dispersed power production deployment. 
52 

In Conclusion 

Transportable and buried safely underground out of sight, HPMs, with their small 

size, but mighty power, and virtually maintenance-and proliferation-free design, 

offer the long-awaited solution to our country’s desire for increased national security 

through independent and robust distributed power systems. 

Hyperion will seek a design certification from the U.S. Nuclear Regulatory Commission. The company expects its first installation to go live in late 2013. 
(53) 

APPENDIX 

RESPONSES TO ADDITIONAL QUESTIONS

RESPONSES OF DALE E. KLEIN TO QUESTIONS FROM SENATOR MURKOWSKI

Question 1. The increased interest in new reactor licensing over the last few years 

has put the NRC in the position of certifying new reactors while at the same time 

reviewing license applications. 

Do you see any issues with this fact in terms of continuing to maintain the safety 

of new reactor construction or maintaining public involvement in the process? 

Answer. The NRC has long sought standardization of nuclear power plant designs, and the enhanced safety and licensing reform that standardization could 

make possible. The NRC’s licensing process, regulation (Part 52 to title 10 of the 

Code of Federal Regulations), provides a predictable licensing process, including certification of new nuclear plant designs. This process reflects decades of experience 

and research involving reactor design and operation. The design certification process 

provides for early public participation and resolution of safety issues prior to an application to construct a nuclear power plant. 

NRC approval of each standard design is formalized via a specific design certification rulemaking. This process allows the public to review and comment on the designs up front, before anyone builds a plant of this design. NRC design certification 

fully resolves safety issues associated with the design. 

A specific provision of Part 52 allows applicants to reference a certified design 

that has been docketed but not approved. Thus, although the Commission anticipated that applicants would first seek to have designs certified before submitting 

combined license (COL) applications that reference those designs, the NRC’s regulations, nonetheless, allow an applicant—at its own risk—to submit a COL application 

that does not reference a certified design. The Commission’s Policy Statement on the 

Conduct of New Reactor Licensing Proceedings addresses this very situation and its 

effect on public participation in COL adjudications. The Commission determined 

that issues concerning a design certification application should be resolved in the 

design certification rulemaking and not in a COL proceeding. When an issue is 

raised in a COL proceeding that challenges information in the design certification 

rulemaking, under NRC processes, that issue should be referred to the staff for consideration in the design certification rulemaking. This makes the process more effective and efficient by allowing the NRC review and a public COL hearing to focus 

on remaining issues related to plant ownership, design issues not resolved earlier, 

and organization and operational programs. Granting a COL signifies resolution of 

all safety issues associated with the plant. The new licensing process affords multiple opportunities for public participation in the process. 

With respect to maintaining the safety of not only new reactor construction but 

the operating reactors as well, the NRC reorganized the Office of Nuclear Reactor 

Regulation to create an Office of New Reactors to ensure effective oversight of operating nuclear power plants and prepare for the industry’s interest in licensing and 

building new nuclear power plants in the near term. The agency also added a new 

organizational unit, headed by a Deputy Regional Administrator for Construction in 

its Atlanta office, to oversee inspections related to expected new construction of nuclear facilities. These changes will ensure we maintain our focus on the safe and 

secure operation of existing nuclear power plants, while enhancing our effectiveness 

in processing the anticipated new plant licensing workload. 

Question 2. The NRC has recently proposed changes to the 1990 Waste Confidence 

Decision that would base this decision on the probable availability of a deep geologic 

repository for wastes within 60 years of the end of any reactor’s operating license. 

Recently the Administration has made it clear that although it intends to continue 

to support the Yucca Mountain license review, it does not intend to open the repository. 
54 

In light of the proposed waste confidence decision changes do you feel the Administration’s position will impact the NRC’s ability to grant new reactor licenses or extend current licenses? 

Answer. As published in the Federal Register on October 9, 2008, the Commission 

sought public comment on proposed revisions to two elements of its 1990 waste confidence findings, one of which would potentially alter the date when a geologic repository may be expected to be available. The public comment period closed on February 6, 2009. NRC staff will review these comments and prepare a recommendation for a final rule to be presented to the Commission for action later this year. 

The proposed revision issued for public comment would predict that repository capacity will be available within 50 to 60 years beyond the licensed operation of all 

reactors and would affirms the Commission’s confidence that spent fuel can be safely stored for at least 60 years beyond the operating license. Changes to existing U.S. 

policies—or revisions to strategies—for the long-term management of high-level 

waste, should any be adopted, would be considerations as the Commission deliberates its waste confidence findings. 

RESPONSES OF DALE E. KLEIN TO QUESTIONS FROM SENATOR CANTWELL

Question 1a. While nuclear power has proven to be a reliable way to generate 

greenhouse gas emissions free electricity—including about 10% of the power in 

Washington state—there seems to be continued doubt about the economic viability 

of any new reactor plants. 

Given the current credit crisis, tightness in the supply chain, lack of skilled craft 

and sub-suppliers, among other challenges, how many nuclear plants do you think 

can be built in the U.S. in the next decade? 

Answer. NRC agrees there am challenges; however, as a safety regulator engaged 

in the process of reviewing combined license applications, it would be inappropriate 

for the NRC to speculate on the number of nuclear plants that will be built in the 

next decade. To date, the NRC has received 17 combined license applications for 26 

units. Part of the review process for a combined license application includes a review of the applicant’s financial qualifications to carry out the licensed activities. 

For an application to be approved, the NRC must have reasonable assurance that 

the applicant possesses or can obtain the funds necessary to cover estimated construction costs, related fuel cycle costs, and provide decommissioning funding assurance. An applicant must also demonstrate that it possesses or can obtain the funds 

necessary to cover the costs of operation for the period of the license. If the NRC 

approves the application and issues a license, the decision to construct the facility 

is the licensee’s business decision. 

Supply chain issues, lack of skilled craft and sub-suppliers are among the challenges the NRC is anticipating and our inspection program is being developed to assure quality is maintained if construction moves forward. 

Question 1b. Is it accurate that only about four or five U.S. utilities even have 

the financial capacity to build a two-unit nuclear plant? 

Answer. Of the 17 combined license applications that the NRC has received to 

date, nine utilities have submitted applications for two-unit nuclear power plants. 

These applications are still under review, including the financial qualifications review. The utilities are: Tennessee Valley Authority, Luminant Generation Company, 

LLC, Progress Energy Florida, Inc., Progress Energy Carolinas, Inc., South Texas 

Project Nuclear Operating Company, Exelon Nuclear Texas Holdings, LLC, Duke 

Energy, South Carolina Electric & Gas, and Southern Nuclear Operating Company.Senator Maria Cantwell to Chairman Dale Klein 

Question 5a. I understand the NRC is currently considering applications that reference five different reactor designs and the industry is expected to submit additional designs for NRC review and approval. But in a speech last week, NRC Commissioner Jaczko characterized current new reactor licensing as ‘‘a situation where 

we have incomplete designs and less than high quality applications submitted for 

review.’’ And pointed out that ‘‘today, almost a fifth (3 of 17) of the combined operating license applications we have received are on hold at the request of the applicants themselves.’’ 

If one of the factors leading to the massive nuclear construction costs overruns 

in the 1970s and 1980s was the lack of standardization among reactor designs at 

the time, what is the NRC doing to ensure that only a limited number of the safest 

and most cost-effective advanced technologies are approved? 

Answer. The NRC’s licensing process for new reactors (10 CFR Part 52) evolved 

from 30 years of lessons learned in licensing today’s 104 operating commercial reactors, and is expected to make the licensing review process more effective and efficient. Under the Part 52 licensing process, the NRC established regulatory require-
55 

ments for Design Certifications. The design certification process allows an applicant 

to obtain approval of a nuclear reactor design, independent of an application to construct or operate a plant. During the design certification review, the NRC reviews 

the safety issues associated with the proposed nuclear power plant design. Because 

the certification of a reactor design requires rulemaking, the issues addressed and 

resolved in the certification process have a high degree of regulatory finality. A design certification is valid for 15 years from the date of issuance, but can be renewed 

for an additional 10 to 15 years. Any applicant can reference a certified design in 

a combined license application, which addresses site-specific design features and environmental impacts. This newer licensing process resolves design issues early in 

the process before construction begins, reduces regulatory uncertainty, and encourages the standardization of reactor technology within the U.S. 

The NRC’s reactor licensing process under Part 52 permits an applicant to submit 

an application which references a reactor design that is not yet certified. If an applicant selects a reactor design that has not yet been certified, however, then the design certification rulemaking is conducted concurrent with the combined license review. The applicant assumes the likely risk that this will result in a more resourceintensive review process compared to a combined license application that references 

an already-certified design. 

Question 5b. Is there anything Congress can do to support more plant design 

standardization? For example, should we make nuclear financing contingent on one 

or two standardized designs? 

Answer. The NRC believes that the current NRC licensing process provides sufficient incentive for applicants to use standardized designs while not constraining innovation or continued improvements to reactor technology. In general, applicants for 

new reactor combined licenses are choosing among the 5 designs currently under review on the basis of their power planning needs, their experiences with reactor technologies already in their reactor fleets, and other economic and business considerations that the individual applicants are best equipped to address. 

RESPONSE OF GREGORY B. JACZKO TO QUESTION FROM SENATOR CANTWELL

Question 5a. I understand the NRC is currently considering applications that reference five different reactor designs and the industry is expected to submit additional designs for NRC review and approval. But in a speech last week, NRC Commissioner Jaczko characterized current new reactor licensing as a situation where 

we have incomplete designs and less than high quality applications submitted for 

review.’’ And pointed out that ‘‘today, almost a fifth (3 of 17) of the combined operating license applications we have received are on hold at the request of the applicants themselves.’’ 

If one of the factors leading to the massive nuclear construction costs overruns 

in the 1970s and 1980s was the lack of standardization among reactor designs at 

the time, what is the NRC doing to ensure that only a limited number of the safest 

and most cost-effective advanced technologies are approved? 

Answer. Standardization is important. From the regulatory perspective, it is technically an efficiency issue and not a safety issue, but it is crucial to an effective and 

predictable license review process. 

Standardization does not necessarily mean moving forward with only one new design. Having some diversity is beneficial so that any generic safety issues that may 

be discovered in the future will not affect all plants simultaneously. However, we 

are now looking at the possibility of applications to build more than six unique new 

designs, including the potential of two separate versions of the Advanced Boiling 

Water Reactor and small modular light water reactors. We have approached an unnecessary and inefficient number of reactor designs to review and potentially regulate. Such a situation would only make the NRC’s application review and potential 

oversight work more complicated. 

There has been recognition on the part of the industry that standardization is important, Applicants have developed a set of working groups around specific designs. 

Vendors and applicants are working together to ensure applications are as uniform 

and consistent as possible. The NRC has attempted to encourage applicants to continue their coordination and to provide high quality applications for the agency’s review if they desire a predictable license review schedule. 

The NRC is committed to thoroughly review each license application and provide 

oversight of operating reactors to ensure the Atomic Energy Act standard of ‘‘a reasonable assurance of adequate protection’. is met. Without additional standardization, however, the Nuclear Regulatory Commission may ultimately be challenged to 
56 

secure and manage the resources necessary to conduct licensing reviews and regulate a large number of diverse new reactors if they are approved and built. 

Question 5b. Is there anything Congress can do to support more plant design 

standardization? For example, should we make nuclear financing contingent on one 

or two standardized designs? 

Answer. There are a couple of steps the Congress could take if it wanted to support additional requirements for nuclear reactor standardization. It could provide 

additional guidance to the NRC about how to prioritize its resources. It could also 

restrict the use of financial incentives to a finite number of designs. 

RESPONSES OF DALE E. KLEIN TO QUESTIONS FROM SENATOR BARRASSO

Question 1. Chairman Klein, can I have an update on the in-situ recovery General 

Environmental Impact Statement (GEIS)? As you know, the prompt resolution of 

the GEIS will allow several Wyoming uranium production operators to move forward on their In-situ Recovery (ISR) permit applications. 

Answer. The NRC expects to issue the final GEIS by June 2009. The final GEIS 

addresses approximately 2200 comments received on the draft GEIS, which was 

issued for public comment on July 28, 2008. These comments were received from 

federal, state, and local agencies, the uranium mining industry, advocacy groups, 

and interested members of the public. The purpose of the GEIS is to provide a starting point for NRC’s environmental reviews of applications to obtain, renew, or 

amend NRC licenses for in-situ recovery (ISR) uranium recovery facilities, in accordance with NRC’s NEPAimplementing regulations at 10 CFR Part 51. Each site’s environmental characteristics will be evaluated specifically in a supplemental environmental impact statement that addresses issues not covered by the GEIS. It is expected that the GEIS will improve the efficiency of NRC review of ISR applications. 

The NRC is currently reviewing five license applications for new ISR facilities in 

Wyoming. The NRC has been using the draft GEIS in the environmental reviews 

for these applications. The NRC expects to make its licensing decision on each application within the two-year schedule it provided to the applicants at the start of 

NRC’s review—This schedule is dependent on the timing and quality of each applicant’s submittals, the response to NRC requests for additional information, and on 

the availability of sufficient resources. 

Question 2. The Wyoming Bureau of Land Management (BLM) is currently not 

recognizing NRC’s primacy over regulating ISR sites in Wyoming and is requiring 

their own Environmental Assessments and/or Environmental Impact Statements for 

ISR projects already licensed by the NRC. 

What progress has been made by the NRC towards signing a Memorandum of Understanding or similar document between the NRC and the BLM? 

Answer. The NRC and the BLM initiated discussions regarding formal cooperation in September 2008, which has resulted in a draft Memorandum of Understanding (MOU). Several meetings have occurred to discuss the structure and content of the MOU including the roles and responsibilities of each agency and the 

process by which information on environmental impacts wouid be shared between 

the agencies. It is anticipated that the MOU will be finalized before the end of summer 2009. 

The NRC and BLM have agreed to share information to increase efficiency and 

avoid duplication of efforts—Timing differences in the availability of environmental 

information will likely preclude developing one environmental document that can be 

used by both agencies. In many cases, the BLM is required to complete an environmental analysis on the potential impacts of exploratory drilling, an activity that is 

not within the NRC’s jurisdiction. Therefore, BLM begins its environmental review 

before the applicant applies to the NRC for a license. 

NRC’s National Environmental Policy Act analysis, in comparison, begins when 

a company’s application for a sou’ce materials license for uranium recovery is accepted for docketing. Further, given the different applicable legislation, the different 

agencies’ missions and the resultant differing decisions stemming from the agencies’ 

environmental evaluations, the content of the two documents may necessarily differ. 

Nevertheless, coordination and communication between the two agencies will allow 

the environmental documents prepared by the two agencies to be tiered or to have 

information incorporated by reference. 

The NRC continues to work closely with the individual BLM field offices in Wyoming (without a formal MOU) on the uranium recovery applications that have been 

received, accepted, and for which environmental documentation is being prepared. 

Information is being shared on a regular basis, including NRC requests to the applicants for additional information to support an environmental analysis, and notices 
57 

submitted by the applicant to the BLM for exploratory and confirmatory drilling on 

the site. In addition, BLM field office personnel give NRC staff regular updates on 

applicant activity on the uranium recovery sites. 

NRC and BLM will continue to communicate with industry to improve understanding of both agencies’ processes, which should help facilitate applicants’ planning process. 

Question 3. I have a question regarding the infrastructure needs in the domestic 

uranium production industry. Do you agree there is an urgent need for new milling 

capacity for domestic conventional uranium mining projects? What is NRC doing to 

promote or assist in the licensing of such milling facilities? 

Answer. As a health and safety regulator, it would be inappropriate to comment 

on whether there is a need for new milling capacity for domestic conventional uranium mining projects. The need for domestic uranium milling capacity is generally 

reflected in the price of uranium. Both spot prices and long-term prices are substantially higher than they have been over the past decade and beyond, reflecting a gap 

between supply and demand. As a result, new applicants have emerged to fill this 

gap. Countries like the United Kingdom, China, India, and Russia are planning significant expansions of nuclear energy; other nations are also planning new reactors. 

Many new reactors are under construction today throughout the world. U.S. companies are considering or planning to build up to 33 new reactors. Building all of these 

reactors would likely put substantial pressure on current uranium supplies. 

The NRC’s mission is to license and regulate the Nation’s civilian use of byproduct, source, and special nuclear materials to ensure adequate protection of public 

health and safety, promote common defense and security, and protect the environment. Under this mandate, the NRC does not promote nuclear projects, but provides 

the regulatory framework to enable the safe use of radioactive material. In its uranium recovery program, the NRC regulates the construction, operation, and decommissioning of conventional and heap leach uranium mills and in-situ recovery operations, but does not regulate conventional uranium mining. 

The NRC licensing process is designed to be efficient, effective, and stable. In that 

regard, we have updated regulatory guidance for licensing new facilities, held a new 

licensing workshop with prospective licensees to guide them through the licensing 

process, committed to meet with applicants throughout the licensing process, and 

implemented operational metrics that ensure that NRC’s licensing activities are 

completed in a transparent and timely manner. 

The NRC is nearing completion of a Generic Environmental Impact Statement addressing common issues for environmental reviews of ISR facilities to allow a more 

efficient environmental review process. The NRC has also increased its coordination 

with the State of Wyoming, the Bureau of Land Management, the U,S. Forest Service, and Indian Tribes to enhance efficiency and maintain consistency for regulatory 

actions and to effectively engage our stakeholders in NRC’s regulatory process. In 

addition, NRC co-sponsors an annual uranium recovery workshop in Denver, Colorado with the National Mining Association to discuss licensing issues and other uranium recovery topics of interest. Over 250 attendees participated in the last workshop. 

RESPONSE OF DALE E. KLEIN TO QUESTION FROM SENATOR LANDRIEU

Question 1. Would you outline for me, and I will share it with the members of 

the committee, the significant differences in design or licensing requirements between the U.S. and other countries, that perhaps we could learn a little bit more 

about the way they are doing it and improve our system here? 

Answer. The regulatory licensing process used by the countries currently involved 

with the review and construction of new nuclear power plants is similar to the original, 10 CFR part 50, NRC licensing process. This process uses a two-step licensing 

process. After the regulator is satisfied that the design selected by the applicant 

meets established safety criteria, the regulator issues a construction permit. The 

level of inspection effort during construction varies from country to country but once 

construction is completed and startup testing and preoperational testing are successful, the r egulator will issue an operating license. This process allows for construction for new designs to start before the vendor completes the design process 

and before the regulator has an opportunity to complete a full design review. The 

NRC is currently implementing a one-step licensing process in which we complete 

a design review before issuing a license to begin construction. 

The NRC is participating in international initiatives, through bilateral and multilateral agreements among regulators, and through programs facilitated by international organizations such as the International Atomic Energy Agency and Nuclear 

Energy Agency, which are designed to better understand each other’s regulatory 
58 

regulatory requirements and increase multi-national convergence of codes, standards and safety goals. One example is the Multinational Design Evaluation Program—a program that includes 10 countries that are currently in the process of reviewing designs similar to those that the NRC is reviewing. Significant progress is 

being made on the overall MDEP goals of increased cooperation and enhanced convergence of requirements and practices. Particularly noteworthy accomplishmnets 

include: performance of the first joint vendor inspection, establishment of the MDEP 

library, development of common positions in the area of digial instrumentation and 

controls, and development of a comparison table which will identify the similarities 

and differences between the Korean, Japanese, and French codes for class I pressure 

vessels as the compare to the ASME code. MDEP has developed a process for identifying common positions on specific issues among the member countries which may 

be based on existing standards, national regulatory guidance, best practices, and 

group inputs. NCR is using this program, and other vehicles, to better understand 

the other regulators’ processes so that we can cooperate with them on design reviews with the goal of making our reviews more efficient and effective. 

RESPONSES OF THOMAS B. COCHRAN TO QUESTIONS FROM SENATOR CANTWELL

Question 2a. What are utilities estimating the per kilowatt cost of constructing 

a new nuclear power plant? 

(b) How long will it take to build a plant once its license is approved? 

(c) I understand that AREV A’s experience building one of their new standardized 

plants in Finland has not been ideal. What can we learn from that project that can 

inform the current debate on whether to construct new nuclear plants today? 

(d) Given the other clean energy alternatives out there and the need to quickly 

build more capacity to meet growing electricity demand, what is the business case 

for a utility to build a new nuclear plant? How do the costs of new reactors compare 

with projected costs for wind or solar facilities in the decade it will likely take to 

get a new nuke plant up and running? 

Answer. (a) The best recent public estimates of the cost of construction of new nuclear plants in the United States are those that have been presented to public utility 

commissions associated with: the proposal by Progress Energy to build two API000 

plants (Units 1 & 2) at a new site in Levy County, Florida; the proposal by Georgia 

Power, a unit of Southern Company, to build two API000 plants (Units 3 & 4) at 

the existing Alvin W. Vogtle Nuclear Power Station in Georgia; and the proposal 

by South Carolina Light and Gas to build two APlOOO plants (Units 2 & 3)at the 

existing Virgil C. Summer Nuclear Power Station. The estimated plant ‘‘overnight 

costs,’’ i.e., construction cost before borrowing charges, allowances for inflation and 

real cost growth during construction, and other owner’s costs, are in the range of 

$3,000 to $6,000 per kilowatt, where the upper end of this range includes the cost 

of new transmission lines and facilities. New nuclear plant cost estimates are a 

moving target given that the best estimates of the costs of new nuclear plants have 

doubled over the past five or six years. 

(b) If a license for a new plant is approved, it would likely take from four to six 

years to construct the reactor and perhaps another year before it is fully operational. The nuclear industry is in a better position than NRDC to estimate the actual time of construction. 

(c) Construction of AREVA’s new Evolutionary Pressurized Water Reactor (EPR) 

at the Olkiluoto nuclear site in Finland began in August 12,2005, but has already 

fallen three years behind schedule to 2012, after safety and quality-assurance problems with the piping, containment liner and concrete base slab were discovered. 

This has put the Finnish EPR 50 percent over budget with a current estimated cost 

of at least $6.7 billion. 

AREVA’s partner Siemens has pulled out of the project, leaving AREVA to buyout 

Siemens’ share at an estimated cost to AREVA of $2.6 billion. 

Construction of a second EPR, at Flamanville, France, began December 3, 2007, 

and the construction period was estimated to be 54 months but has encountered 

problems. Construction of this plant is being managed by Electricite de France 

(EdF). In the summer of 2008, Autorite de Surete Nucleaire (ASN), the French nuclear safety authority, shut down the construction site due to safety concerns about 

technical and quality-control problems with the reinforced steel used in the concrete 

base. ASN’s action followed a series of letters from the agency to Flamanville’s construction manager. In the letters, ASN inspectors highlighted a range of problems 

including nonconformities in the pinning of the steel framework of the concrete base 

slab, incorrectly positioned reinforcements and inadequacy of technical inspection by 

both the construction companies and EdF. Inspectors also uncovered inconsistencies 
59 

between the blueprint for reinforcement work and the plan for its practical implementation. They noted incorrect composition of concrete that could lead to cracks 

and rapid deterioration in sea-air conditions. Concrete samples were also not collected properly, according to ASN. Cracks have already been observed at part of the 

base slab beneath the reactor building. The supplier of the steel containment liner 

reportedly lacks the necessary qualifications. Fabrication of the liner was continuing 

despite quality failures demonstrating the lack of competence of the supplier. As a 

result, one quarter of the welds of the steel liner in the reactor containment building 

were deficient. [WISE, ‘‘Flamanville EPR Construction Suspended, ‘‘Nuclear Monitor, June 5, 2008]. 

EdF insists the Flamanville EPR will open on schedule in 2012, despite news reports that put the project nine months behind schedule after just nine months of 

construction. In early March 2009, EdF ran afoul of the European Commission, 

which raided the company’s offices, suspecting EdF of antitrust violations and illegal 

price hikes. 

(d) Commercial nuclear power plants are not a ‘‘clean energy alternative.’’ In light 

of the potential for improvements in energy efficiency and the recent downturn in 

the economy, we do not see a ‘‘need to quickly build more capacity to meet growing 

electricity demand.’’ 

In any event, the cost of new nuclear plants and other supply alternatives will 

vary from site to site and over time. Before committing to build a new nuclear power 

plant a utility or energy generating company should, among other considerations, 

be required by the public utility commission to demonstrate that the projected energy need cannot be met by an integrated portfolio of alternatives that has a lower 

average delivered cost to the customer. The mix of alternatives should include improvements in energy efficiency, matched with renewables firmed by natural gas 

and distributed sources of industrial waste-heat cogeneration. Estimates of the cost 

of fossil-fueled alternatives should be based upon meeting effective constraints on 

carbon emissions, and nuclear electricity costs should be assessed without assuming 

that they will be paid down by federal, state and local government subsidies and 

federal loan guarantees, and should include charges that cover the full cost of storing and disposing of spent nuclear fuel. 

To us the most important public policy issue with respect to nuclear financing is 

not what the plants will ultimately cost-the honest answer today is nobody really 

knows-but who should bear the financial risk of such large and costly nuclear 

projects. The best science and engineering available suggests that we are not close 

to the point of exhausting the cost-effective decarbonization potential available from 

a wide range of renewable energy and efficiency technologies that are cleaner, intrinsically less hazardous than nuclear power and can be deployed more quickly. 

Basic considerations of economic logic and sound public investment suggest that we 

turn our attention first to exploiting the full potential of these more benign energy 

sources where it is economical to do so, and turn to nuclear at the point when the 

marginal cost of adding another megawatt of efficiency savings, wind, biogas, or 

solar exceeds the true life cycle cost to society of adding a megawatt of nuclear 

power. 

The public policy justification for taxpayers to bear the downside economic risks 

of private investments in costly new nuclear plants that, from a technical standpoint, do not differ significantly from existing nuclear power technology, and show 

no likelihood of delivering lower costs to electricity consumers and ratepayers, is 

highly dubious in our view. On the one hand, there are a host of rapidly evolving 

clean energy and efficiency technologies that have low current market penetration 

and enormous decarbonizing potential. On the other hand, we have a mature nuclear power industry with a 20 percent market share demanding public support for 

massive reactor investments that in many regulated electricity markets will likely 

displace, not dirty cheap existing coal-fired generation, but relatively cleaner new 

natural gas capacity and potentially cheaper distributed generation from biomass, 

biogas, waste-heat cogeneration, wind, and PV solar. 

If the utilities and merchant companies seeking to deploy new nuclear units are 

truly convinced of their economic viability, and are merely concerned that the firstof-a kind project execution risk for their own particular project could undermine 

their individual balance sheets, then the appropriate solution is more widespread 

private cross-ownership of the initial tranche of reactor projects, so that several 

companies share the risk of each individual project. The solution is not to load the 

downside economic risk of a historically noncompetitive industry onto taxpayers, 

while reserving the risk-reduced economic upside for highly leveraged limited liability corporations with only 20 percent equity invested from one or a few private owners. 
60 

Bottom line on cost: Let the $18.5 billion in loan guarantee authority already provided by Congress do what it was originally designed to do: reduce the economic risk 

of deploying the first two or three ‘‘first-of-a kind’’ units of innovative reactor designs new to the American market. If these initial projects vindicate the economic 

potential of new Gen 3+ nuclear power plants, then presumably there will be no 

need for further government support. If they do not provide such evidence of viability, then presumably both industry and government will look to other generating 

technologies in the near term, and focus on a program for developing a more costeffective nuclear reactor candidate for deployment in 2025 and beyond. Either way, 

enlargement of the nuclear loan guarantee program is not needed now, and could 

even be harmful by handing a position in the market to nuclear power technologies 

and projects that do not deserve to be there based on their intrinsic levels of performance. Either ratepayers or taxpayers will be forced to make up the difference. 

Question 3. As you know, Congress authorized DOE to guarantee loans that support early commercial use of advanced technologies if there was a reasonable prospect of repayment. And currently, $18.5 billion of the allotted $38.5 billion for the 

loan guarantee program is earmarked for nuclear power projects. But the GAO has 

since estimated that the average risk of default for DOE loan guarantees could be 

50 percent or higher and Wall Street has put the industry on notice that it won’t 

provide loans without a complete underwriting by the federal government. 

Do you agree with GAO’s assessment of the average risk of default for new nuclear plants? If you disagree please detail your objections to their analysis and provide your estimate of the average risk of default for the 17 pending nuclear plant 

applications. Given your estimate, please quantify the likely cost to the US Treasury 

of those defaults. 

Do you support the Energy Department pursuing non-cash equity such as land 

or other assets as part of a loan guarantee package? 

Answer. We do not have independent information to determine the validity of the 

GAO assessment of the probability of default for new nuclear plants. In the United 

States there were 110 operational nuclear power plants in 1990 and 104 operational 

plants today. According to our records, more than 130 proposed U.S. power reactors 

were cancelled before becoming operational. Of these cancelled reactors, many were 

cancelled before construction. We have identified one reactor that was cancelled 

after construction was completed. We have identified another 20 reactors that were 

cancelled during construction. And we have identified yet another 22 reactors that 

were cancelled after a construction permit was issued. While these data suggest that 

the future default rate could be high, we are not in a position to judge the relevance 

of this historical information for estimating future default rates. One reason to expect a lower default rate is precisely because of this financial train wreck that ended 

the first nuclear build-out. People have presumably learned from this experience 

and would not rush headlong into risking large sums without due diligence and 

more careful sharing of the risks between reactor vendors, constructors, and owners. 

Equally important, the global economy is in recession because bank and other financial institutions bundled toxic assets with less risky assets in order to remove 

or lessen the risks associated with the higher risk loans. Surely we have learned 

that separating the risk of investments from the investments themselves carries a 

significant risk. 

In short, for the reasons outlined in our testimony, we do not support Federal loan 

guarantees for the construction of new nuclear power plants in any form. 

Question 4. When the loan guarantee program was created in the 2005 Energy 

and Policy Act it was intended to promote a small number projects for new and innovative energy sources that did not have the proven track record necessary for 

Wall Street financing. 

Please describe how the 17 projects that have applied to the DOE loan guarantee 

program to date employ ‘‘new and innovative’’ technology relative to the 104 nuclear 

power plants up and running today. 

Answer. Some of the proposed reactor designs are not new or innovative. The 

ABWR, for example, is an old design although none are operating in the United 

States today. General Electric submitted the Standard Design Certification Application for the ABWR to the U.S. Nuclear Regulatory Commission (NRC) in piecemeal 

format from September 29, 1987, through March 31, 1989. The NRC issued a final 

rule certifying the ABWR design on May 12, 1997. Two ABWR in Japan, 

Kashiwazaki Kariwa Units 6 and 7, began construction in September 1991 and February 1992, and became operational in 1996 and 1997, respectively. Both were then 

shut down as a consequence of the earthquake near the site on July 16, 2007. Three 

additional ABWRs are under construction, two in Taiwan and one in Japan. 

AREV A claims the USEPR is safer than previous PWRs built in France, but 

AREV A also claims the EPR is ‘‘a mature design based on familiar technology.’’ 
61 

The French government owns 93 percent of the stock in AREV A, which is the 

vendor of the USEPR. The French government is also the principal investor in 

Electricite de France (EdF) which proposes through a joint venture (Unistar Nuclear) with Constallation Energy (partially owned by EdF) to build a USEPR at the 

Calvert Cliffs Nuclear Power Station in Maryland. If built EdF would own about 

one-half of the new unit. It makes no sense for U.S. taxpayers to subsidize the construction of a French plant whose majority owner will be EdF, the French government electricity monopoly, or guarantee the French government’s investment risks 

in these plants through U.S. taxpayer-backed loan guarantees. If the French government wishes to insure EdF against the risks of investing in the U.S. nuclear power 

market, in the same way that the Overseas Private Investment Corporation (OPIC) 

reduces risks for U.S. investors making overseas investments, the French government is welcome to do so, but there is no reason why U.S. taxpayers should assume 

the vast share of the economic risk of helping a foreign state-owned company to penetrate the U.S. nuclear electricity market, and drive up their electricity costs in the 

process. This outcome makes no economic or political sense. 

RESPONSE OF THOMAS B. COCHRAN TO QUESTION FROM SENATOR MURKOWSKI

Question 1. In your written testimony you refer to the political sun setting on the 

Yucca Mountain project and argue that the Congress should initiate a search for 

a new geologic repository site for spent nuclear fuel. 

Given that the Department of Energy conducted such a study in the early 1980s 

why is the NRDC confident that such a study would yield substantially different results today? 

Why is it reasonable to assume that any site selected would avoid the same political fate as the Yucca Mountain repository? 

Answer. The site selection process for two geologic repositories as required by the 

Nuclear Waste Policy Act of 1982 (NWPA of 1982) was corrupted. First, the Department of Energy (DOE), in its initial selection of candidate media and sites for a repository, showed a preference for sites on DOE and other federal lands. Then, the 

U.S. Congress short-circuited the site selection process by choosing the single Yucca 

Mountain site for development as a repository. 

Before initiating a new site selection process, Congress and the Administration 

should seek an independent study, followed by Congressional hearings, to fully understand what went wrong in the site selection process of the 1980s and then put 

in place safeguards to prevent repetition of previous mistakes. If something along 

these lines is not done, NRDC would not have confidence that a new search would 

yield results different from the failed efforts to site a repository at Lyons, Kansas 

or at the Yucca Mountain site in Nevada. 

RESPONSE OF MARVIN S. FERTEL TO QUESTION FROM SENATOR MURKOWSKI

Question 1. Over the last twenty years the nuclear utilities have achieved a remarkable level of operational efficiency and worker safety that is far better than the 

industrial sector in general and rivals that of the financial industry. You referred 

to a number of statistics in your testimony. The industry will require thousands of 

new workers all across the country to construct and operate just the new reactors 

that have already submitted license applications to the NRC. 

In NEI’s view what is the best way to perpetuate the nuclear industry’s commendable safety culture as we go through the coming expansion? 

Answer. There are many ways by which the nuclear industry will perpetuate the 

high levels of safety performance. First, all companies are implementing knowledge 

transfer and retention programs to ensure that the experience gained over the first 

3,000 reactor operating years is maintained. These programs include formal interviews and documentation from experienced personnel as well as mentoring programs for younger employees. Second, the industry is continuing to expand its training programs by partnering with many universities and community colleges to ensure there is a steady pipeline of qualified personnel. Finally, and perhaps most importantly, the industry will continue to do what it does best—learn from operational 

events and benchmark the best practices in the world as it strives for continuous 

improvement. 

RESPONSES OF MARVIN S. FERTEL TO QUESTIONS FROM SENATOR CANTWELL

Question 1a. While nuclear power has proven to be a reliable way to generate 

greenhouse gas emissions free electricity—including about 10% of the power in 
62 

Washington State—there seems to be continued doubt about the economic viability 

of any new nuclear plants. 

Given the current credit crisis, tightness in the supply chain, lack of skilled craft 

and sub-suppliers, among other challenges, how many nuclear plants do you think 

can be built in the U.S. in the next decade? 

Answer. Despite the current economic crisis, nuclear energy is one of the few 

bright spots in the U.S. economy—expanding rather than contracting, creating thousands of jobs over the past few years. Over the last several years, the nuclear industry has invested over $4 billion in new nuclear plant development, and plans to invest approximately $8 billion more to be in a position to start construction in 2011- 

2012. 

In the nuclear sector, there are signs that U.S. manufacturing capability is being 

rebuilt. In North Carolina, Indiana, Pennsylvania, Virginia, Tennessee, Louisiana, 

Ohio and New Mexico, among other states, U.S. companies are adding to design and 

engineering staff, expanding their capability to manufacture nuclear-grade components, or building new manufacturing facilities and fuel facilities -partly in preparation for new reactor construction in the United States, partly to serve the growing 

world market. 

Last year, for example, AREVA and Northrop Grumman Shipbuilding formed a 

joint venture to build a new manufacturing and engineering facility in Newport 

News, VA. This $360-million facility will manufacture heavy components, such as 

reactor vessels, steam generators and pressurizers. Global Modular Solutions, a 

joint venture of Shaw Group and Westinghouse, is building a fabrication facility at 

the Port of Lake Charles to produce structural, piping and equipment modules for 

new nuclear plants using the Westinghouse AP1000 technology. In New Mexico, 

LES is well along with construction of a $3-billion uranium enrichment facility, 

scheduled to begin production this year. Even for ultra-heavy forgings, Japan Steel 

Works is expanding capacity, and companies in South Korea, France and Great 

Britain are planning new facilities. 

Although progress in rebuilding the supply chain is encouraging, federal government policy could accelerate the process of creating new jobs and generating economic growth. Specifically, the expansion and extension of investment tax credits 

for investments in manufacturing provided in the stimulus would ensure continued 

expansion of the U.S. nuclear supply chain and help restore U.S. leadership in this 

sector. 

Electric utilities have created 42 partnerships with community colleges to train 

the next generation of nuclear workers. The industry is developing standardized, 

uniform curricula to ensure that graduates will be eligible to work at any nuclear 

plant. Sixteen states have developed programs to promote skilled craft development. 

Enrollment in nuclear engineering programs has increased over 500 percent since 

1999. Grant programs from the NRC, the Department of Energy, the Department 

of Labor and the Department of Defense for education and training are having a 

major impact on increasing our trained workforce. 

As with the nuclear supply chain, targeted tax credits to encourage companies to 

invest in apprenticeship programs and other work force development would accelerate job creation and training in the nuclear energy sector. 

The supply chain and work force are responding to the opportunities offered by 

the expansion of nuclear energy. Access to financing in the current credit markets, 

however, is a potential constraint. 

The United States faces a significant challenge—financing large-scale deployment 

of clean energy technologies, modernizing the U.S. electric power supply and delivery system, and reducing carbon emissions. This is estimated to require investment 

of $1.5-2.0 trillion between 2010 and 2030. 

The omnibus appropriations legislation for FY 2008 and FY2009 authorizes $38.5 

billion in loan volume for the loan guarantee program—$18.5 billion for nuclear 

power projects, $2 billion for uranium enrichment projects, and the balance for advanced coal, renewable energy and energy efficiency projects. 

DOE has issued solicitations inviting loan guarantee applications for all these 

technologies and, in all cases the available loan volume is significantly oversubscribed. For example, the initial nuclear power solicitation resulted in requests from 

14 projects seeking $122 billion in loan guarantees, with only $18.5 billion available. 

NEI understands that 10 nuclear power projects submitted Part II loan guarantee 

applications, which represented $93.2 billion in loan volume. Two enrichment 

projects submitted Part II applications, seeking $4.8 billion in loan guarantees, with 

only $2 billion available. NEI also understands that the solicitation for innovative 

coal projects resulted in requests for $17.4 billion in loan volume, more than twice 

the $8 billion available. The recent stimulus package added an additional $60 billion 
63 

in loan volume to the existing allocation of $10 billion for renewable technologies 

and transmission projects to assist with financing constraints. 

It is, therefore, essential that limitations on loan volume—if necessary at all in 

a program where project sponsors pay the credit subsidy cost—should be commensurate with the size, number and financing needs of the projects. In the case of nuclear power, with projects costs between $6 billion and $8 billion, $18.5 billion is 

not sufficient. 

The scale of the challenge requires a broader financing platform than the program 

envisioned by title XVII. An effective, long-term financing platform is necessary to 

ensure deployment of clean energy technologies in the numbers required, and to accelerate the flow of private capital to clean technology deployment. 

Safety-related construction of the first new nuclear plants will start in 2012, and 

NEI expects four to eight new nuclear plants in commercial operation in 2016 or 

so. The exact number will, of course, depend on many factors—U.S. economic 

growth, forward prices in electricity markets, capital costs of all baseload electric 

technologies, commodity costs, environmental compliance costs for fossil-fueled generating capacity, natural gas prices, growth in electricity demand, availability of federal and state support for financing and investment recovery, and more. We expect 

construction of those first plants will proceed on schedule, within budget estimates, 

and without licensing difficulties, and a second wave will be under construction as 

the first wave reaches commercial operation. 

To increase nuclear energy’s contribution to 2050 climate goals, build rates of 4- 

6 plants per year must be achieved. This was possible in the 1970s and 1980s even 

with the old licensing process and lack of standardization. With standardized designs and improved construction techniques, this accelerated deployment is feasible 

after the first wave of plants is constructed. 

Question 1b. Is it accurate that only about four or five utilities even have the financial capacity to build a two-unit nuclear plant? 

Answer. It is accurate to say that most utilities will have difficulties building a 

two unit site without support from the federal loan guarantee program, support 

from state regulators (such as construction work in progress), or both. Several 

projects also involve partnerships to spread the costs and risk. 

Unlike the many consolidated government owned foreign utilities and the large 

oil and gas companies, U.S. electric power sector consists of many relatively small 

companies, which do not have the size, financing capability or financial strength to 

finance power projects of this scale on their own, in the numbers required. Federal 

loan guarantees offset the disparity in scale between project size and company size. 

Loan guarantees allow the companies to use project-finance-type structures and to 

employ higher leverage in the project’s capital structure. These benefits flow to the 

economy by allowing the rapid deployment of clean generating technologies at a 

lower cost to consumers. The recent stimulus bill recognized the need to provide access to low-cost capital to encourage rapid deployment of renewable energy projects. 

Similar support is required for nuclear energy since, in many cases, new nuclear 

plants and renewable energy projects are built by the same utilities. 

Question 2. What are utilities estimating the per kilowatt cost of constructing a 

new nuclear power plant? 

Answer. The per kilowatt cost of a new nuclear plant will depend on the size of 

the units and infrastructure required at a given facility location. However, an evaluation by the Brattle Group conducted for the state of Connecticut showed a cost 

of 8.34 cents per kilowatt hour for a base case. This study showed that new nuclear 

was the least expensive option with the exception of combined cycle natural gas 

with no carbon controls. If a carbon tax is imposed, nuclear will likely be the least 

expensive baseload electricity. 

Overnight capital 

cost (2008 $/kW) 

Electricity cost 

(c/kWh) 

nuclear 4038 8.34 

supercritical coal 2214 8.65 

supercritical coal + CCS 4037 14.19 

IGCC 2567 9.22 
64 

Overnight capital 

cost (2008 $/kW) 

Electricity cost 

(c/kWh) 

IGCC + CCS 3387 12.45 

gas combined cycle 869 7.60 

gas combined cycle + CCS 1558 10.31 

CCS = carbon capture and sequestration 

IGCC = integrated gasification combined cycle 

Figure 1. Comparison of electricity generation technology capital and electricity costs from ‘‘Integrated Resource 

Plan for Connecticut,’’ The Brattle Group, January 2008 

Similarly, Florida Power and Light, Florida Progress, Southern Company, and 

SCANA demonstrated new nuclear’s competitive busbar cost. These costs were presented in the financial modeling that supported their requests in the past two years 

to their respective state public service commissions (PSCs) for ‘‘determinations of 

need’’ for new reactors. For instance, FP&L modeled nine different scenarios. The 

only scenario in which nuclear was not preferred was a world in which natural gas 

prices were unrealistically low and there was no price on carbon. The Florida, Georgia, and South Carolina PSCs have approved these new nuclear plant projects. 

Question 2a. How long will it take to build a plant once its license is approved? 

Answer. The timeline to build a new plant once a license is approved by the NRC 

is estimated at roughly 60 months for the first plants in the U.S. However, once 

the process has been tested, foreign experience shows that with standard designs, 

the timeline can be significantly shortened. As an example, the Japanese have demonstrated that they can build an Advanced Boiling Water Reactor in less than 39 

months from the first safety related concrete pour until the unit is synched to the 

grid while meeting budget goals. 

Question 2b. I understand that AREVA’s experience building one of their new 

standardized plants in Finland has not been ideal. What can we learn from that 

project that can inform the current debate on whether to construct new nuclear 

plants today? 

Answer. The schedule delays and cost overruns at Areva’s Olkiluoto Unit 3 project 

in Finland are due to deficient project management, according to a report by the 

Finnish regulator. These project management deficiencies are similar to those that 

helped cause delays in nuclear power plant construction during the 1970s and 

1980s. 

However, the root causes of these construction delays are now well-understood. 

Over the last several years, industry teams have conducted systematic assessments 

of what caused construction delays, and developed a detailed inventory of lessonslearned that are shared industry-wide. The industry also undertook a comprehensive project to benchmark major maintenance and upgrade projects at operating 

plants, to identify the characteristics of successful project management. Based on 

this research and analysis, the industry then developed project management strategies and techniques intended to ensure completion of major projects on time and 

within budget. 

Largely as a result, the nuclear industry, including the U.S. nuclear industry, has 

performed major projects efficiently and without delay-ranging from $400 million 

material upgrades such as the Fort Calhoun refurbishment, to the $1.8 billion plant 

restart at Browns Ferry Unit 1, to refueling outages averaging 37 days industrywide. 

Recent construction and operational experience demonstrates that an experienced 

project management team, with effective quality assurance and corrective action 

programs, and with detailed design completed before the start of major construction, 

can complete projects on budget and on schedule. 

Question 2c. Given the other clean energy alternatives out there and the need to 

quickly build more capacity to meet growing electricity demand, what is the business case for a utility to build a new nuclear plant? 

Answer. Nuclear energy provides base load electricity that can be widely deployed 

and has a capacity factor in the ninety percent range. In addition, a single new nuclear plant typically provides between 1,000 and 1,700 megawatts of generation 

which allows fewer plants to deliver significant increases in electricity to the grid. 
65 

* Figure 2 has been retained in committee files. 

1 ‘‘Department of Energy: New Loan Guarantee Program Should Complete Activities Necessary for Effective and Accountable Program Management’’, GAO-08-750, July 2008. 

As discussed earlier in this response, two utilities in Florida have had certificates 

of need approved by the state public utilities commission based on nuclear providing 

the lowest cost option for rate payers. Similar decisions have been made in South 

Carolina and Georgia in support of building new nuclear units. 

Seventeen companies have applications under NRC review for twenty-six new nuclear plants to ensure that they preserve the option for nuclear generation as demand grows. It is anticipated based on the efficiencies in the new licensing process 

and new construction techniques for standard designs that the timeline to build a 

new plant will be gradually trimmed to seven years once the first wave of new 

plants is licensed and constructed. 

Question 2d. How do the costs of new reactors compare with projected costs for 

wind or solar facilities in the decade it will likely take to get a new nuke plant up 

and running? 

Answer. It is difficult to predict the costs for wind or solar facilities in the future. 

The costs of these projects tend to be site specific depending on the natural resources available. In addition to the costs of the generating capacity, solar and wind 

technologies typically require transmission upgrades and back-up electricity sources 

such as a combined cycle natural gas plant. 

Predominantly independent assessments of how to reduce U.S. electric sector CO2

emissions—by the International Energy Agency, McKinsey and Company, Cambridge Energy Research Associates, Pacific Northwest National Laboratory, the Energy Information Administration, the Environmental Protection Agency, the Electric 

Power Research Institute and others—show that there is no single technology that 

can slow and reverse increases in CO2 emissions. A portfolio of technologies and approaches will be required, and that portfolio must include more nuclear power as 

well as aggressive pursuit of energy efficiency and equally aggressive expansion of 

renewable energy, advanced coal-based technologies, plug-in hybrid electric vehicles 

and distributed resources. 

Recent analysis by the Electric Power Research Institute (EPRI) suggests that nuclear will be the low cost generating option going forward as carbon taxes are imposed. As shown on the graph in Figure 2*, the costs of non-greenhouse gas emitting 

technologies are constant while the costs of natural gas combined cycle (NGCC) and 

coal without carbon capture and sequestration (CCS) climb as the carbon tax increases on the x-axis. 

As discussed in previous answers, analyses by several other parties also indicate 

that new nuclear plants will be a competitive source of baseload power. Deployment 

of a combination of technologies will be the best path forward to meet our climate 

change goals in the most expeditious and economic manner. 

Question 3. As you know, Congress authorized DOE to guarantee loans that support early commercial use of advanced technologies if there was a reasonable prospect of repayment. And currently, $18.5 billion of the allotted $38.5 billion for the 

loan guarantee program is earmarked for nuclear power projects. But the GAO has 

since estimated that the risk of default for DOE loan guarantees could be 50 percent 

or higher and Wall Street has put the industry on notice that it won’t provide loans 

without a complete underwriting by the federal government. 

Do you agree with GAO’s assessment of the average risk of default for new nuclear plants? If you disagree please detail your objections to their analysis and provide your estimate of the average risk of default for the 17 pending nuclear plant 

applications. Given your estimate, please quantify the likely cost to the U.S. Treasury of those defaults. 

Answer. No, NEI does not agree with the assessment cited. The reference to the 

default rate is unsupported and is misleading. 

On page 20 of its July 2008 report1, the GAO estimates that the loss rate (the 

product of default rate times recovery rate) would be over 25 percent. The report 

says this rate was calculated using the assumptions included in the fiscal year 2009 

president’s budget. A footnote references Table 6 of the Federal Credit Supplement, 

Fiscal Year 2009. In that document, a default rate of 50.85 percent and a recovery 

rate of 50 percent were assumed for the entire loan guarantee program. Furthermore, as Note 4 in Table 6 explains, these rates are ‘‘[a]ssumptions reflect[ing] an 

illustrative example for informational purposes only. The assumptions will be determined at the time of execution, and will reflect the actual terms and conditions of 

the loan and guarantee contracts.’’ Thus, the cited basis for the GAO’s assumed default rate of more than 50 percent recognizes that the actual default rate and recovery rate to be used in estimating loss rate must be based on the details of individual 
66 

projects and deals. It is unlikely that a single value (50.85 percent) chosen to be 

illustrative of the entire pool of guaranteed projects would be representative of a 

specific portion of that pool (e.g., the nuclear power projects) with its particular 

risks and characteristics. 

Similarly, a CBO estimate of 50% default probability is also an unsupported assumption. The CBO language dates back to a 2003 analysis of S.14, the Energy Policy Act of 2003, which was considered (but never passed) during the 108th Congress. 

The loan guarantee program in the 2003 legislation bore no resemblance to the loan 

guarantee program in the 2005 Energy Policy Act. The 2003 program was nuclearspecific, not technology-neutral. It did not require project sponsors to pay the credit 

subsidy cost, and thus did not have the significant fiscal discipline associated with 

title XVII. The CBO ‘‘analysis’’ simply asserted that there will be a 50 percent default probability, with no modeling or financial analysis to support that assertion. 

The Nuclear Energy Institute believes that the nuclear projects now undergoing 

NRC licensing review will not present any risk of default to the DOE loan guarantee 

program. These projects have been structured and are being managed in ways designed to minimize risks. 

The federal government uses loan guarantees widely to ensure investment in critical national needs, including shipbuilding, transportation infrastructure, exports of 

U.S. goods and services, affordable housing, and many other purposes. The federal 

government successfully manages a loan guarantee portfolio of $1.1 trillion. A disciplined process is used to ensure that the taxpayers’ interests are protected before 

federal agencies issue loan guarantees. The Department of Energy will use a similar 

process for its loan guarantee program. 

The title XVII loan guarantee program evaluation process includes financial analysis, due diligence and underwriting performed by expert outside financial, technical 

and legal advisors (whose fees and expenses are paid by the companies developing 

the projects) to assist in the underwriting, negotiation, documentation, and monitoring of the projects. The strength and credit worthiness of the project can be measured by indicators (widely used by investment banks and rating agencies) such as 

the credit rating of the project sponsor, project capital structure, project cash flow, 

strength of power purchase agreements, borrower’s exposure to market and commodity risks, management and operator experience, etc. Projects that do not meet 

defined metrics will not be approved for loan guarantees. 

In the case of new nuclear power projects, the companies will have significant 

shareholder equity ($1 billion or more per project) at risk. This equity is in a ‘‘firstloss’’ position—i.e., the company forfeits that equity in the event of default. For most 

electric companies, such a loss would be unsustainable. The significant amount of 

money at risk imposes a high level of discipline on investment decisions. As a result, 

the companies seeking loan guarantees for nuclear power plants have a powerful incentive to ensure that projects are properly developed, constructed, operated and 

maintained to achieve commercial success. The federal government’s interest and 

the company’s interest are completely aligned. Like the federal government, the nuclear companies wish to avoid default at all costs. 

The energy loan guarantee program is self-financing: There is no cost to the taxpayer. The 1990 Federal Credit Reform Act created a standardized way of accounting for loan guarantee programs in the federal budget. Federal agencies that provide 

loan guarantees are required to calculate a ‘‘cost,’’ following standardized protocols. 

In most loan guarantee programs, this cost appears in the federal budget as an appropriated amount. The energy loan guarantee program took a different and innovative approach. The Department of Energy cannot issue a loan guarantee unless the 

company receiving the loan guarantee has paid the cost of the guarantee and all 

administrative fees and costs incurred by the agency in administering the program. 

Based on the above, NEI believes that the nuclear projects subject to the loan 

guarantee program will cost the U.S. Treasury nothing and will actually return a 

profit to the Treasury through the payment of credit subsidy fees. 

Question 3a. Do you support the Energy Department pursuing non-cash equity 

such as land or other assets as part of a loan guarantee package? 

Answer. Yes. NEI believes that non-cash project assets, such as land, should be 

allowed as part of the project sponsor’s equity contribution. 

Question 4. When the loan guarantee program was created in the 2005 Energy 

Policy Act it was intended to promote a small number of projects for new and innovative energy sources that did not have the proven track record necessary for Wall 

Street financing. 

Please describe how the 17 projects that have applied to the DOE loan guarantee 

program to date employ ‘‘new and innovative’’ technology relative to the 104 nuclear 

power plants up and running today. 
67 

Answer. The 17 applicants that originally applied to the loan guarantee program 

are planning to construct and operate advanced nuclear power facilities employing 

passive and evolutionary design features. These features are new and innovative 

when compared to the existing 104 operating reactors that provide 20 percent of the 

country’s electricity. Although several projects are under consideration, the nuclear 

power facility proposed by each is one of five standardized designs that is or will 

be certified by the NRC. 

A key example of the use of new and innovative technology is in the area of instrumentation and control. Most of the operating reactors today use hard wired 

point-to-point control room to field monitoring and control systems. In simple terms 

this means there is one wire per function or ∼30-50,000 wires coming from the field 

to the plant control room. The new reactors are designed with three-layer instrumentation and control system that uses extensive multiplexing and fiber optics. Single multiplexer units can generally handle 300 to 400 signals. Fiber optics allows 

the plant operator to interface with all screens, peripherals and alarms. 

Also, many of the new reactors designs are utilizing modular construction. These 

modules are rail shippable, which allows construction to take place in a controlled 

environment and then shipped to the construction site. Advances in 3D computer 

modeling play a significant role in this modular construction approach. This approach reduces construction time and ensures efficient use of field manpower. 

Two of the five new plant technologies achieve enhanced safety through incorporation of passive or inherent safety features. These features require no active controls 

or operational intervention to avoid accidents in the event of malfunction, and may 

rely on gravity, natural convection or resistance to high temperatures. Traditional 

reactor safety systems are ‘active’ in the sense that they involve electrical or mechanical operation on command. Inherent or full passive safety depends only on 

physical phenomena such as convection, gravity or resistance to high temperatures, 

not on functioning of engineered components. There is no need for active equipment 

such as pumps, fans, and other rotating machinery. 

In addition to advanced instrumentation and control systems, all five new reactors 

benefit from: 

• Use of NRC-approved probabilistic risk assessments that show the likelihood of 

a release of radiation is significantly below that of operating facilities and well 

below the NRC safety goals. • Enhanced protection from fires through physical separation of equipment and 

cables and redundancy in safety systems • Enhanced protection against aircraft impacts • Fewer valves, less piping, less control cabling, and fewer pumps than the existing operating fleet based on lessons learned from over 30 years of experience 

with commercial operation 

Question 5a. I understand the NRC is currently considering applications that reference five different reactor designs and the industry is expected to submit additional designs for NRC review and approval. But in a speech last week, NRC Commissioner Jaczko characterized current new reactor licensing as ‘‘a situation where 

we have incomplete designs and less than high quality applications submitted for 

review,’’ and pointed out that ‘‘today, almost a fifth (3 of 17) of the combined operating license applications we have received are on hold at the request of the applicants themselves.’’ 

If one of the factors leading to the massive nuclear construction cost overruns in 

the 1970’s and 1980’s was the lack of standardization among reactor designs at the 

time, what is the NRC doing to ensure that only a limited number of the safest and 

most cost effective advanced technologies are approved? 

Answer. It is important to remember that many of the plants constructed in the 

1970’s and 1980’s were built and commissioned under the most unforgiving conditions. 

The defining event for the 1980s-vintage plants was the accident at the Three 

Mile Island nuclear power plant in 1979. After that accident, nuclear power plantsboth operating plants and those under construction—were engulfed in new regulatory requirements imposed by the Nuclear Regulatory Commission. The changing 

requirements forced extensive redesign and rework at nuclear units under construction. This stretched out construction schedules and—to make matters worse—the 

delays coincided with a lengthy period of double-digit inflation and national economic distress. All this combined to drive up the cost of these nuclear units to several times the original cost estimates. For some of these nuclear plants, half the 

total cost was interest on debt raised to finance construction. 

The 104 nuclear power plants now supplying about 20 percent of U.S. electricity 

also were built under a two-step licensing system. Under this system, electric utili-
68 

ties had to secure two permits-one to build a nuclear power plant, a second to operate it. Many companies started construction before design and engineering was complete. In fact, in many cases, the design/engineering work had barely started. 

This ‘‘design as you go’’ approach led to big problems. The Nuclear Regulatory 

Commission (NRC) obviously could not finish its review and approval of the plant 

design until the plant was built and the power company requested an operating license. Even before the accident at Three Mile Island, requests for operating licenses 

were complex and contentious. After the accident, they became even more difficult. 

The reviews, conducted by licensing boards, were formal adjudicatory proceedings 

with all the trappings of a courtroom trial-discovery, cross-examination and the like. 

They were typically lengthy, bitterly contested, divisive events. And they caused 

delays in plant operation, which added hundreds of millions of dollars to the cost. 

Based on that experience, the electric power industry resolved that future nuclear 

power plants would be fully designed before construction began. Never again would 

electric utilities start building a nuclear power plant that was only partly designed, 

or do extensive design and engineering work during construction. The change in design philosophy was accompanied by a complete overhaul of the licensing system, 

which was ratified by Congress in the Energy Policy Act of 1992. 

The new licensing process delineated in 10 CFR Part 52 allows nuclear power 

plant designers to submit their designs to the NRC for ‘‘certification.’’ When a design is certified, electric utilities can order that plant, confident that design and 

safety issues have been resolved. 

The new process also lets a company request a combined license to build and operate a new nuclear unit. As long as the design is pre-approved, and as long as the 

plant is built to pre-approved specifications (and the Nuclear Regulatory Commission will be on-site, checking to make sure that it is), then the power company can 

start the plant up when construction is complete—assuming of course, that no new 

safety issues have emerged. 

Taken together, the new design philosophy and the new licensing system ensure 

that the major licensing issues—design, safety, siting and public concerns—will be 

settled up front before a company starts building a nuclear power plant and puts 

billions of dollars at risk. 

In summary, the conditions that led to large cost increases for some operating nuclear power plants no longer exist. Past experience is useful in identifying the weaknesses in the regulatory process and fixing those weaknesses. Past experience does 

not, however, provide useful guidance as to the cost of nuclear power plants that 

will be built in the future, or the length of time it will take to build them. 

Regarding design certifications, the NRC’s statutory responsibility is to ensure the 

designs are safe. As noted in their policy statement on regulation of new reactors, 

the Commission expects, as a minimum, at least the same degree of protection of 

the environment and public health and safety and the common defense and security 

that is required for current generation light-water reactors. Furthermore, the Commission expects that advanced reactors will provide enhanced margins of safety and/ 

or use simplified, inherent, passive, or other innovative means to accomplish their 

safety and security functions. How many designs are ultimately certified and whether those designs are cost effective is not for NRC to decide. The market place will 

make that determination. 

The industry agrees that reviewing the design certifications and COL applications 

in parallel is not ideal, but is necessary for the first wave of applications. The NRC 

has completed acceptance reviews formally accepted (docketed) all of the design certifications and COL applications submitted by the industry to date. The NRC has 

provided review schedules to applicants and has been successfully meeting early 

milestones which is another indication that the applications are complete. 

The long lead times for these new nuclear projects allow the sponsors to make 

adjustments as market conditions change. A limited number of applicants have 

placed their NRC reviews on hold pending resolution of business issues. The NRC 

has requested notifications from applicants as soon as possible if there are changes 

in the content or schedule for applications to support the NRC’s work load management efforts. The NRC and industry are working to prioritize the review activities 

to ensure project sponsors will be able to meet their online need dates for power. 

Note that all review activities are paid for by project sponsors through hourly billing 

by the NRC. 

Question 5b. Is there anything Congress can do to support more plant design 

standardization? For example, should we make nuclear financing contingent on one 

or two standardized designs? 

Answer. Presently three standardized designs and one design certification amendment are under review by the Nuclear Regulatory Commission. The Department of 
69 

Energy’s Nuclear Power 2010 program plays a critical role in supporting the design 

and licensing activities needed for the NRC to complete its reviews of two standardized designs. Congressional support of funding for this program in fiscal year 2010 

would be beneficial. 

As discussed above, standardized designs serve a function in reducing risks before 

a project sponsor proceeds with construction. Financing for construction activities 

should not be tied to a limited number of designs as the major construction risks 

related to design certainty will already be addressed at that point. 

RESPONSE OF MARVIN S. FERTEL TO QUESTION FROM SENATOR SHAHEEN

Question 1a. As you know the Energy Policy Act of 2005 authorized the Secretary 

of Energy to guarantee loans for up to 80% of construction costs for energy projects 

that reduce greenhouse gas emissions, including new nuclear facilities. Last June, 

DOE solicited applications for guarantees of loans totaling up to $18.5 billion. The 

DOE now has received 17 applications for 26 new reactors seeking guarantees for 

a total of $122 billion in loans, which it is now evaluating. 

How many reactors do you think the current amount of funding that is available 

for loan guarantees, $18.5 billion, will cover? 

Answer. It is difficult to predict how many new nuclear power plants will be built 

with the $18.5 billion in federal loan guarantees currently authorized. Some projects 

have multiple co-owners, and it is possible that not all co-owners will choose to avail 

themselves of the loan guarantee program. Some projects will receive partial support from the government export credit agencies of France and Japan, which testifies to the degree of confidence the French and Japanese governments have in nuclear power. Such co-financing will leverage the $18.5 billion in existing loan guarantee authority and, as a result, it may cover 3-4 projects. 

Certainly, the $18.5 billion in existing loan guarantee authority will not cover all 

the projects that filed Part I loan guarantee applications with the Department of 

Energy. DOE originally received loan guarantee applications from 17 companies for 

21 new reactors, with an aggregate loan volume loan volume of $122 billion and 

total project costs of $188 billion. Those applications represent 28,800 megawatts of 

carbon-free generating capacity and would, NEI estimates, avoid 183 million metric 

tons per year of CO2, 124,000 tons of NOX, and 348,000 tons of SO2 (based on a 

90% capacity factor). 

Question 1b. In your opinion, how many new reactors will be necessary for economies of scale to begin to kick in and the costs of each reactor begin to come down, 

making it easier to secure financing? 

Answer. International experience proves that each consecutive construction 

project using a standard design will benefit from efficiencies learned from the first. 

Particularly in the U.S. where the reactor designer and architect/engineers are 

teamed for construction, this will be the case. 

The United States faces a significant challenge—financing large-scale deployment 

of clean energy technologies, modernizing the U.S. electric power supply and delivery system, and reducing carbon emissions. This is estimated to require investment 

of $1.5-2.0 trillion between 2010 and 2030. 

The omnibus appropriations legislation for FY 2008 and FY2009 authorizes $38.5 

billion in loan volume for the loan guarantee program—$18.5 billion for nuclear 

power projects, $2 billion for uranium enrichment projects, and the balance for advanced coal, renewable energy and energy efficiency projects. 

DOE has issued solicitations inviting loan guarantee applications for all these 

technologies and, in all cases the available loan volume is significantly oversubscribed. For example, NEI understands that 10 nuclear power projects submitted 

Part II loan guarantee applications, which represented $93.2 billion in loan volume. 

Two enrichment projects submitted Part II applications, seeking $4.8 billion in loan 

guarantees, with only $2 billion available. NEI also understands that the solicitation for innovative coal projects resulted in requests for $17.4 billion in loan volume, 

more than twice the $8 billion available. The recent stimulus package added an additional $60 billion in loan volume to the existing allocation of $10 billion for renewable technologies and transmission projects to assist with financing constraints. 

It is, therefore, essential that limitations on loan volume—if necessary at all in 

a program where project sponsors pay the credit subsidy cost—should be commensurate with the size, number and financing needs of the projects. In the case of nuclear power, with projects costs between $6 billion and $8 billion, $18.5 billion is 

not sufficient. 

The scale of the challenge requires a broader financing platform than the program 

envisioned by title XVII. An effective, long-term financing platform is necessary to 
70 

ensure deployment of clean energy technologies in the numbers required, and to accelerate the flow of private capital to clean technology deployment. 

During the 110th Congress, Senator Bingaman introduced legislation to create a 

21st Century Energy Deployment Corporation. Senator Domenici, ranking member 

of this committee during the last Congress, introduced legislation to create a Clean 

Energy Bank. Both proposals address aspects of the financing challenge facing the 

United States and its electric power industry. 

NEI believes that the existing title XVII program and the DOE Loan Guarantee 

Program Office, operating under workable rules, could serve as a foundation on 

which to build a larger, independent financing institution within the Department of 

Energy. There is precedent for such independent entities, equipped with all the resources necessary to accomplish their missions, in the Federal Energy Regulatory 

Commission and the Energy Information Administration. This approach could have 

significant advantages: 

• An independent clean energy financing authority within DOE could take advantage of technical resources available within the Department, to supplement its 

due diligence on prospective projects and to identify promising technologies 

emerging from the research, development and demonstration pipeline that 

might be candidates for loan guarantee support to enable and speed deployment. 

• An independent entity within DOE would have the resources necessary to implement its mission effectively, including its own legal and financial advisers 

with the training and experience necessary for a financing organization. Providing the independent entity with its own resources would eliminate the difficulties encountered during implementation of the title XVII program. 

• Programmatic oversight in Congress would remain with the Energy Committees, which have significantly more experience with energy policy challenges, 

and in structuring the institutions necessary to address those challenges. 

RESPONSES OF MARVIN S. FERTEL TO QUESTIONS FROM SENATOR STABENOW

Question 1. Retooling Plants. In your testimony, you emphasize that the U.S. is 

ramping up its ability to manufacture nuclear components. This is partly to serve 

as a growing world market. Do you see any attempts being made to retool existing 

manufacturing facilities that were once used for other purposes—such as what is 

happening in Michigan—with manufacturing plants? 

Answer. Yes, the U.S. is seeing retooling of existing facilities, development of new 

facilities and expansion of existing product lines (with augmented quality programs). Some examples include: 

Retooling—Precision Custom Components, LLC in York, PA has retooled their existing manufacturing facility with machine tools and other needed equipment to expand into the commercial nuclear industry. PCC provides reactor vessel internals, 

reactors servicing equipment such as integrated reactor head packages and spent 

nuclear fuel casks. 

Holtec in Turtle Creek, PA added 90,000 square feet to its manufacturing division 

in a facility that had been an old Westinghouse factory. They manufacture dry fuel 

storage canisters and high-tech fuel racks for electric utilities in the United States 

and around the world. With this expansion, Holtec added 75 new jobs last year and 

has announced plans for 500 new hires in the next three to five years, including 

manufacturing and welding engineers, production workers and machinists. 

Development of New Facilities—Curtiss Wright Flow Control Corporation is building a $62 million, state-of-the-art, multipurpose Large Manufacturing Complex in 

Cheswick, PA. The nine-story, 48,000-square-foot facility will be used to build commercial nuclear reactor coolant pumps as well as support the production and testing 

of other new large products. 

AREVA and Northrop Grumman Shipbuilding are building a new manufacturing 

and engineering facility in Newport News, Va., to supply the growing American nuclear energy sector. The 300,000-square-foot facility represents an investment of 

more than $360 million, and will manufacture heavy components, such as reactor 

vessels, steam generators and pressurizers. This will result in more than 500 skilled 

hourly and salaried jobs. 

Global Modular Solutions, a joint venture of Shaw Group and Westinghouse, is 

building a 600,000-square-foot module fabrication facility at the Port of Lake 

Charles to produce structural, piping and equipment modules for new nuclear plants 

using the Westinghouse AP1000 technology. The new facility is scheduled open in 

the summer of 2009 and will employ 1,400 workers or more at full capacity. 
71 

Augmenting Quality Programs—In order to supply many nuclear components, it 

is necessary to have an appropriate quality certification and/or quality program in 

place that meets the industry standards. One such quality certification is the ASME 

N-Stamp. Over the past 2 years, the industry has seen a nearly 20 percent increase 

in the number of N-Stamps held in the U.S. from only 221 in 2007 to 263 today. 

The Nuclear Energy Institute has been actively engaging U.S. businesses to encourage them to consider entering the global nuclear supply chain through a series 

of regional workshops that bring together procurement and supply chain leaders 

from reactor vendors and engineering, procurement and construction firms with 

businesses exploring the nuclear market. 

In February, NEI conducted our fourth workshop in Chattanooga, Tennessee and 

nearly 450 people participated. Our next event is scheduled in Detroit on June 4th 

and will target manufacturers in the Great Lakes Region. Local co-sponsors for this 

event include the Michigan Chamber of Commerce, the Michigan Minority Business 

Development Council and the Michigan Manufacturers Association. Nationally, 

these events are co-sponsored by the U.S. Department of Energy, the National Association of Manufacturers and the Association of Mechanical Engineers. 

NEI believes that Congress can help accelerate this retooling and manufacturing 

expansion by: 

• Providing a manufacturing tax credit to allow the development of new facilities 

or the expansion or retooling of existing manufacturing facilities. 

• Providing grants and technical assistance to small and mid-sized business to assist them with putting appropriate nuclear quality programs in place. 

• Providing a worker training tax credit to assist with the development of a qualified workforce to support this expansion of nuclear manufacturing capacity. 

• Encouraging the export of nuclear products and services by better coordinating 

federal policy initiatives and actively advocating for the industry. 

Question 2. Incentives for Nuclear Manufacturing. When nuclear manufacturing 

in the U.S. is discussed, a lot of the focus is on heavy manufacturing that not only 

takes long lead times, but is done overseas. What do you think will be done in the 

manufacture of non-heavy components for nuclear plants—such as wiring—in the 

U.S.? 

NEI believes that there is substantial opportunity to manufacture both heavy and 

non-heavy components for nuclear plants in the U.S. In addition to heavy components, the first eight new nuclear plants built in the U.S. may require: 

• Over 1,800 miles of cable 

• 4,000 to 24,000 nuclear grade valves 

• 1,000 to 2,000 pumps 

• 30 to 150 miles of nuclear grade piping 

• Over 3 million cubic yards of concrete 

• Over 700,000 electrical components 

• Roughly 500,000 tons of structural and reinforcing steel 

• 500 to 1,300 large and small heat exchangers 

Many of these components and commodities are produced in the U.S. Yet with the 

advent of licensing and eventually constructing 26 reactors in the U.S. and potentially 200 overseas, there is an opportunity to significantly expand U.S. manufacturing capacity. Additionally, while there are U.S. manufacturers capable of producing components, many lack the necessary quality programs required to participate in the nuclear market. 

A key criteria in selecting the locations of the industry’s regional manufacturing 

outreach workshops (described above) is the current industrial base that exists in 

the region. In 2008, workshops were held in Columbia, SC, Cleveland, OH and San 

Antonio, TX to reach out to the existing industrial base for components like valves, 

pumps, cabling, cable tray, hangers, fasteners, steel, etc. The 2009 program also targets regions of the country with an existing manufacturing base that can be 

repurposed to support the nuclear industry. As mentioned in the first response, the 

next event is scheduled in Detroit on June 4th and will target manufacturers in the 

Great Lakes Region. 

Finally, we are seeing growth in the heavy component manufacturing area as 

well. The Babcock & Wilcox Company has the ability to fabricate heavy components 

at their facilities and the recent announcement by AREVA and Northrop Grumman 

Shipbuilding will add additional heavy component manufacturing capacity in the 

U.S. 
72 

NEI believes that the policy recommendations outlined above can help accelerate 

U.S. industry’s entrance into the nuclear market for heavy and non-heavy components. 

Æ