Construction of new nuclear power plants in the United States was almost unimaginable during the 1980s and 1990s. Vague rumors about possible new reactors would occasionally prompt a flurry of speculation, but they were invariably unfounded. In fact, no reactor has been ordered in the United States since 1978, and that plant was later cancelled, as eventually were all U.S. reactor orders after 1973. No U.S. reactor has been completed since 1996—the Tennessee Valley Authority's Watts Bar 1, which had been ordered in 1970. Today, there are still no orders, but interest in new U.S. reactors is no longer merely a rumor. In 2003, three utilities submitted applications to the Nuclear Regulatory Commission (NRC) for early approval of potential reactor sites under a cost-shared program with the Department of Energy (DOE). In 2004, DOE announced cost-sharing agreements with two industry consortia to apply for NRC licenses to construct and operate new reactors. Since then, a dozen more utilities and other companies have announced plans to apply for reactor licenses (as shown in Table 1 ), for a total of 34 new nuclear units. Several other companies have announced that they are considering filing applications as well. The renewed interest in nuclear power has resulted primarily from higher prices for natural gas, improved operation of existing reactors, and uncertainty about future restrictions on coal emissions. Until the recent price volatility, low fuel costs had helped gas-fired power plants dominate the market for new electric generation capacity since the late 1980s. Nuclear power's relatively stable costs and low air emissions may now appear more attractive, particularly combined with a substantial tax credit for nuclear generation and other incentives provided by the Energy Policy Act of 2005 ( P.L. 109-58 ). New nuclear plant applications can also take advantage of amendments to the Atomic Energy Act made in the early 1990s to reduce licensing delays. In announcing the new reactor license applications, however, utilities have made clear that they are not committed to actually building the reactors, even if the licenses are approved. Large uncertainties about nuclear plant construction costs still remain, along with doubts about progress on nuclear waste disposal and concerns about public opposition. All those problems helped cause the long cessation of U.S. reactor orders and will need to be addressed before financing for new multibillion-dollar nuclear power plants is likely to be obtained. Federal energy policy may play a crucial role in determining whether the current interest in new nuclear reactors leads to a significant expansion of the U.S. nuclear power industry. Nuclear opponents have long maintained that nuclear power will never be economically viable without federal subsidies and should be abandoned in favor of safer alternatives. But supporters contend that nuclear power will be vital in diversifying the nation's future energy supply and reducing greenhouse gas emissions, and that federal subsidies for at least the first few new reactors are justified. The greenhouse gas issue has also prompted some environmentalists to support nuclear power expansion. This report includes analyses of the potential effect of the tax credit for nuclear power provided by the Energy Policy Act of 2005 and possible competitive effects of various proposals to limit greenhouse gas emissions. Under baseline assumptions, the cost of electricity from new nuclear power plants is likely to be higher than power generated by new coal- and natural gas-fired plants. The new nuclear tax credit would more than offset that cost disadvantage, but it is limited to the first 6,000 megawatts of new nuclear generating capacity. That is the capacity of about four to six reactors, although the credits could be spread among a larger number of new reactors under current rules. If the tax credit results in new reactor construction, the next question will be whether nuclear construction would continue without further credits. Greenhouse gas legislation could also be an important factor in nuclear power economics; analysis shows that some proposals, if enacted, could push the cost of coal- and natural gas-fired electricity above projected nuclear costs. After the apparently successful commercialization of nuclear power in the 1960s, the Atomic Energy Commission anticipated that more than 1,000 reactors would be operating in the United States by the year 2000. But by the end of the 1970s, it had become clear that nuclear power would not grow nearly that dramatically, and more than 120 reactor orders were ultimately cancelled. Currently, 103 licensed power reactors operate at 65 plant sites in 31 states (not including the Tennessee Valley Authority's [TVA's] Browns Ferry 1, which has not operated since 1985; TVA is spending about $1.8 billion to restart the reactor by mid-2007). Despite falling short of those early expectations, however, U.S. nuclear power production has grown steadily since its inception and now exceeds electricity generated from oil, natural gas, and hydro plants, and trails only coal, which accounts for more than half of U.S. electricity generation. Nuclear plants generate more than half the electricity in six states. The near-record 823 billion kilowatt-hours of nuclear electricity generated in the United States during 2006 was more than the nation's entire electrical output in the early 1960s, when the first large-scale commercial reactors were being ordered, and more than twice the 2005 total electrical generation of Great Britain. As indicated in Figure 1 , although no new U.S. reactors have started up since 1996, U.S. nuclear electricity generation has since grown by more than 20%. Much of this additional output resulted from reduced downtime, notably through shorter refueling outages, which typically take place every 18 months. Licensed commercial reactors generated electricity at an average of 89.8% of their total capacity in 2006, after averaging around 75% in the mid-1990s and around 65% in the mid-1980s. Reactor modifications to boost capacity have also been a factor in the continued growth of nuclear power production. Since 1996, NRC has approved more than 60 requests for power uprates, totaling about 2,500 megawatts of electrical generating capacity—about the capacity of two large reactors. The uprates largely offset the closure of five poorly performing reactors, totaling 3,700 megawatts of capacity, in 1997 and 1998. Further uprate requests are pending. The improved operation of nuclear power plants has helped drive down the cost of nuclear-generated electricity. Average operations and maintenance costs (including fuel but excluding capital costs) dropped steadily from a high of about 3.5 cents/kilowatt-hour (kwh) in 1987 to below 2 cents/kwh in 2001 (in 2001 dollars). By 2005, the average operating cost was 1.7 cents/kwh. Falling operating costs have improved the outlook for the nation's existing fleet of nuclear power plants. From 1989 to 1998, 12 commercial reactors were closed before reaching the end of their 40-year licenses—California's Rancho Seco plant and Oregon's Trojan plant after only 14 and 16 years of operation, respectively. By the late 1990s, there was real doubt about whether any reactors would make it to 40 years. Since 2000, however, 48 commercial reactors have received 20-year license extensions from NRC, giving them up to 60 years of operation. License extensions for seven more reactors are currently under review, and many others are anticipated, according to NRC. The license extension trend has been spurred partly by favorable rate treatment of nuclear plants' unrecovered capital costs ("stranded costs") in states that have deregulated the power generation sector. Industry consolidation could also help existing nuclear power plants, as larger nuclear operators purchase plants from utilities that run only one or two reactors. Several such sales have occurred, including the March 2001 sale of the Millstone plant in Connecticut to Dominion Energy for a record $1.28 billion. The merger of two of the nation's largest nuclear utilities, PECO Energy and Unicom, completed in October 2000, consolidated the operation of 17 reactors under a single corporate entity, Exelon Corporation, headquartered in Chicago. Although no new U.S. nuclear power plant has opened in the past 10 years, commercial reactor construction has continued elsewhere in the world, particularly in Asia. Since the most recent U.S. reactor began operating in 1996, 37 have started up in other countries, an average of about four per year. Twenty-five reactors are currently under construction outside the United States. With the Energy Policy Act of 2005, the federal government has adopted aggressive incentives for building new reactors—including tax credits, loan guarantees, and compensation for regulatory delays. These incentives build on previous regulatory and legislative initiatives, particularly a more streamlined NRC licensing process and DOE's Nuclear Power 2010 program to test that process. Until 1989, licensing a new nuclear power facility involved a two-step process: (1) an NRC-issued construction permit that allowed an applicant to begin building a facility and (2) an operating license that permitted the facility to generate electricity for sale. This procedure resulted in some celebrated cases in which completed or nearly completed plants awaited years to be granted operating licenses—delays that drove up the costs of the affected plants. In 1989, NRC issued regulations to streamline this process in three ways: The Early Site Permit Program allows utilities to get their proposed reactor sites approved by the NRC before a decision is made on whether or not to build the plant. These preapproved sites can be "banked" for future use. Standard Design Certification for advanced reactor designs allows vendors to get their designs approved by NRC for use in the United States, so utilities can then deploy them essentially "off the shelf." The Combined Construction and Operating License (COL) provides a "one-step" approval process, in which all licensing hearings for a proposed plant are expected to be conducted before construction begins. The COL would then allow a completed plant to operate if inspections, tests, analyses, and acceptance criteria (ITAAC) were met. This is intended to reduce the chances for regulatory delays after a plant is completed. The relationships among these three components are illustrated in Figure 2 .