Hearings and Business Meetings

D-628 Energy Committee Hearing Room 10:00 AM

J. Barney Beasley

President and Chief Executive Officer, Southern Nuclear Company

Testimony

of

J. Barnie Beasley Jr.

President of Southern Nuclear Operating Company

 

Before the

Energy and Natural Resources Committee

United States Senate

Washington, D.C.

 

August 3, 2006

 

            Mr. Chairman and members of the Committee, my name is Barnie Beasley.  I am President and Chief Executive Officer of Southern Nuclear Operating Company. I also serve on the Executive Committee of the Nuclear Energy Institute.  I have attached a brief resumé to my testimony as Exhibit 1. Thank you for this opportunity to express the nuclear energy industry’s strong support of S. 2589, the Nuclear Fuel Management and Disposal Act.  I will also address additional provisions that we believe would strengthen the legislation’s role to enhance the management and disposal of used nuclear fuel and high-level radioactive waste, to ensure protection of public health and safety, to ensure the territorial integrity and security of the repository at Yucca Mountain.  

            Southern Nuclear is headquartered in Birmingham, Alabama, and is a subsidiary of Southern Company.  Southern Company is a public utility holding company with its principal office in Atlanta, Georgia.  In addition to Southern Nuclear, Southern Company is the corporate parent of five electric utilities: Alabama Power Company, Georgia Power Company, Gulf Power Company, Mississippi Power Company, as well as Southern Power Company and Southern Company Services, Inc.  Southern Company’s subsidiaries provide reliable and affordable electric service to 4.2 million retail and wholesale customers across the southeastern United States.

            Southern Nuclear is the licensed operator of the Alvin W. Vogtle Electric Generating Plant and the Edwin I. Hatch Nuclear Plant, which are both two-unit nuclear plants partially owned by Georgia Power Company, and the Joseph M. Farley Nuclear Plant, which is a two-unit nuclear plant owned by Alabama Power Company. The six nuclear units operated by Southern Nuclear comprise over 6000 megawatts of generating capacity and represent approximately 17% of the total annual generation of the Southern Company system.  Both Plants Hatch and Farley have extended their operating licenses for 20 years.  The application for the extension of Plant Vogtle’s operating license will be filed with the Nuclear Regulatory Commission (NRC) next year.  These plants provide our customers with reliable and reasonably priced electric energy.

            Southern Nuclear will file an application for an Early Site Permit this month in order to determine the suitability of the Vogtle site for potentially two additional nuclear units at Plant Vogtle and is on a schedule to submit an application for a Combined Operating License (“COL”) by early 2008. 

           

Summary

            In keeping with the scope of this hearing, I will focus my testimony on the following key issues:

§         The Department of Energy (DOE) must make visible and measurable progress in implementing an integrated national used nuclear fuel management strategy.  The Yucca Mountain, Nevada, repository is a critical component of any such integrated strategy. This progress will help ensure that the expanded use of nuclear energy will play a key role in our nation’s strategy for meeting growing electricity demand. 

§         The key role that S. 2589 can play in establishing a solid basis for making the necessary progress towards addressing the challenges facing the Yucca Mountain project, as well as helping set the stage for new nuclear plants. 

§         Additional legislative provisions that we urge the Committee to consider supplementing the solid foundation established in S. 2589.   The federal government must initiate actions that will lead to beginning to remove used fuel from commercial nuclear plant sites as soon as possible.

Nuclear Energy Must Play a Key Role in Our Energy Future

            In the 2006 State of the Union address, President Bush affirmed the nation’s commitment to “safe, clean nuclear energy” as part of a diverse portfolio that will meet America’s future electricity needs.  A long-term commitment to nuclear energy will make the United States more energy independent and energy efficient.  The Administration and Congress demonstrated strong leadership by enacting the Energy Policy Act of 2005, which encourages diversity of energy sources, including emission-free sources of electricity, such as nuclear energy. 

            Based on many years of experience in operating nuclear power plants, I am convinced that nuclear power offers a clean and cost-effective answer to many of our nation’s current and future energy needs.  Although our nation must continue to employ a mix of fuel sources for generating electricity, it is important that nuclear energy maintain at least the current 20 percent contribution to U.S. electricity production.  Maintaining that level of production will require construction of a significant number of new nuclear plants beginning in the next decade.

            There is strong, bipartisan support for a continuing significant role for nuclear power.  More than two thirds of the public supports keeping nuclear energy as a key component of our energy portfolio.    The industry appreciates the recognition of nuclear energy’s importance that Congress and the Administration demonstrated in the last year’s comprehensive Energy Policy Act of 2005.

            Recently, a new coalition of diverse organizations and individuals has been formed to educate the public on nuclear energy and participate in policy discussions on U.S. energy issues.  The Clean and Safe Energy coalition, co-chaired by Greenpeace co-founder Patrick Moore and former Environmental Protection Agency Administrator Christine Todd Whitman, includes business, environmental, labor, health and community leaders among its more than 200 members.

 

The Need for Legislative Action.

            In order to fully realize the benefits that nuclear power offers, however, a solution for the problem of disposal of used nuclear fuel must be found.  Since the enactment of the Nuclear Waste Policy Act of 1982, the customers of Alabama and Georgia Power Companies have paid over $ 897 million into the Nuclear Waste Fund.  In total, rate payers across America have paid over $ 27 billion into the Nuclear Waste Fund, and continue to pay an additional $ 750 million each year.  Yet, no used fuel has been removed from reactor sites as required by the NWPA.  Moreover, those same customers have had to finance costly on-site storage facilities.  Southern has had to construct two such facilities to date.

            The causes for the failure of the federal used nuclear fuel program to date are well documented.  The fundamental problem with the failure of the federal government to remove used fuel from our plant sites has not been the lack of authorizing legislation. It has been the failure to implement the legislation that has been enacted for almost 25 years by appropriating sufficient funds and by a consistent commitment to execute plans to develop the repository.  While new legislation to amend the Nuclear Waste Policy Act is important, it is even more critical that the federal government commit itself to the implementation of existing law. 

            The nuclear industry is encouraged by the ambitious schedule announced by DOE on July 19, 2006,  for submission of the license application by June 30, 2008, and the “Best-Achievable” construction schedule that could have the repository begin receipt of used fuel in March 2017.  The industry encourages DOE to submit the application as soon as possible so NRC review can begin.

            While DOE’s announcement of a schedule for licensing the repository is a significant development, past experience suggests that the schedule will be difficult to achieve without congressional action in a number of areas:

           The Congress providing appropriations consistent with Administration requests;

           An NRC construction authorization decision consistent with the timelines contained in the Nuclear Waste Policy Act;

           Obtaining any necessary Federal or state authorizations or permits for the repository and the transportation system; and

           The DOE achieving a nuclear culture consistent with that needed to be a successful NRC licensee.

Enactment of the Nuclear Fuel Management Disposal Act, S. 2589, will help advance several of these important objectives.

S. 2589 Supports the Future Role for Nuclear Power in our National Energy Strategy

Waste Confidence Is Affirmed

            The nation’s policymakers must be confident that policies are in place to ensure the safe and secure storage and disposal of used nuclear fuel.  This waste confidence determination is reflected in NRC rules that support various licensing actions. Section 9 of S. 2589 takes the very important step of codifying the waste confidence rule.  This will help to avoid potential contentions in individual plant licensing proceedings over the timing and certainty of the performance by DOE of its responsibilities under the Nuclear Waste Policy Act. We strongly support this important step in creating certainty for major new investments by the nuclear industry in response to Congress’s Energy Policy Act of 2005.

            Managing the nation’s used fuel is a firmly established federal obligation and, as such, is a matter of broad national policy.  There is solid scientific and technical justification to affirm waste confidence. In 2001, the National Academy of Sciences confirmed four decades of international scientific consensus that geologic disposal is the best method for managing used nuclear fuel. Congress approved a geologic disposal site at Yucca Mountain in 2002.

            In the Energy Policy Act, Congress included provisions that encourage the construction of new nuclear power plants, illustrating confidence in the nation’s ability to manage used reactor fuel in the future. In addition, DOE has safely operated a geologic disposal site for transuranic radioactive waste near Carlsbad, N.M. – the Waste Isolation Pilot Project (WIPP). 

            Issues regarding the timing and certainty of performance by DOE of its used fuel management obligations should be resolved in proceedings on the repository, or in Congress. Litigation of such issues in individual plant licensing proceedings is neither efficient nor appropriate. NRC has long recognized that individual plant licensing proceedings should not be burdened with debates over DOE's development of the repository.  Congress should codify “waste confidence” as called for in S. 2589, so that the NRC need not address this broad public policy matter in routine licensing proceedings.

Artificial Constraints on Repository Operations Are Eliminated

            Currently, there is a statutory limit of 70,000 metric tons (MT) on the amount of nuclear waste materials that can be accepted at Yucca Mountain.  The Environmental Impact Statement for the project analyzed emplacement of up to 105,000 MTs of commercial used fuel in the repository.  Additional scientific analyses suggest significantly higher capacity could easily be achieved with changes in the repository configuration that use only geology that has already been characterized and do not deviate from existing design parameters.  Advanced nuclear fuel cycle technologies could provide significant additional capacity for disposing of waste products in Yucca Mountain.

            Decisions on licensing and operations of a deep geologic repository at Yucca Mountain should be based on scientific and engineering considerations through DOE technical analyses and the NRC licensing process, not on artificial constraints.  Given the decades of study and the billions of dollars invested in Yucca Mountain, it makes sense that we fully and safely utilize its potential capacity, rather than developing multiple repositories when there is no technical reason to do so.  S. 2589 will allow the nation to do just that by lifting the artificial 70,000 MT capacity limit.

 

S. 2589 Includes Key Provisions for Yucca Mountain Progress

Offsetting Collections Reclassification Will Enhance Funding Predictability

            Congress established the Nuclear Waste Fund to cover costs associated with disposal of commercial used nuclear fuel.  This fund is paid for by a one-tenth-of-a-cent-per-kilowatt-hour fee on electricity used by consumers of nuclear energy. Congress has routinely failed to appropriate to the repository program the total fees paid into the Waste Fund in that year.  Further, restrictions on the federal budget have prevented fees collected, but not appropriated, in one year from being appropriated in subsequent years.     

            As a result, Yucca Mountain budget requests have been cut by more than $1 billion over the last decade.  Program funding requirements are forecast to increase substantially over the next few years. If overall spending totals remain flat, even more significant delays could result, not because nuclear power consumers have not provided the funds necessary to support the program, but because of inappropriate federal budget accounting.

            To date, consumers of nuclear power have committed more than $27 billion in fees and accrued interest into the fund, and continue to pay at a rate of $750 million each year.  However, only some $9 billion has been spent on the project, leaving a balance in excess of $18 billion.  In recent years, fee income has been five times as high as annual spending from the fund.

            It is my understanding that S. 2589 would reclassify prospective annual fees so that appropriations up to the full amount of fee revenues for any year would not be limited by discretionary spending caps.    While this approach would be a major step forward, we believe that the Congress should also reaffirm the compact with ratepayers in the Nuclear Waste Policy Act and provide that any appropriation for the program could be offset by balances in the Nuclear Waste Fund whether derived from prospective fees or past fees and interest.

            In addition, we believe it is important for the Congress to act to maintain the integrity of the Nuclear Waste Fund.   We support amending S. 2589 to clearly define that only activities that directly contribute to meeting the federal government’s obligation under the NWPA can be supported from the Nuclear Waste Fund.   This includes expenditures related to transportation, storage, and disposal of used fuel and high-level waste.

            Advanced research on energy technologies has consistently been funded through general revenues, and there is no reason research on advanced fuel processing nuclear technologies – such as those contemplated under the President’s Global Nuclear Energy partnership program – should be financed any differently. 

            Also, Congress should reaffirm its authority over any changes in the Nuclear Waste Fee by requiring such changes be made by statutory amendment.

S. 2589 will Enhance Clarity and Stability in the Licensing Process

            The NRC repository licensing process should be restructured to ensure that the proceedings are prioritized.  First, there must be a reasonable, but finite, schedule for review of the authority to “receive and possess” fuel that would follow approval of the construction license.  This would be consistent with an established schedule for the initial review of the construction license application and could avoid dilatory procedural challenges that would undermine the government’s ability to meet its contractual obligations and avoid the significant costs of delay. 

            Second, clarification must be provided as to what activities are authorized to develop used fuel management infrastructure prior to the NRC granting a construction license, including the construction of a rail line to connect the Yucca Mountain site with the national rail network.   Regulatory authority for the transportation system needs to be clarified as well.

            Third, the hearing process for the authorization to receive and possess fuel should be simplified to provide for clear and concise decision making.

            Finally, clarification is needed with respect to land management, what regulations will apply to repository construction and operations, and which agencies will administer those regulations.

            S. 2589 addresses each of these issues to increase the prospect that the “best achievable” schedule announced by DOE can be met.

Congress Should Consider Additional Steps to Promote Comprehensive Used Nuclear Fuel Management

            While industry fully supports S. 2589 and believes its enactment would be a major milestone in implementing our national strategy for managing used nuclear fuel, we believe there are a number of additional issues that Congress should consider in comprehensive legislation.

DOE Should Move Used Nuclear Fuel from Reactor Sites As Soon As Possible

            The industry’s top priority is for the federal government to meet its statutory and contractual obligation to move used fuel away from operating and decommissioned reactor sites.  The government already is eight years in arrears in meeting this obligation, and it will be at least another decade before the repository is completed.  That failure is the subject of more than 60 lawsuits.  These lawsuits potentially expose the federal government to billions of dollars of judgments and settlements. 

            Further delays in federal receipt and movement of used nuclear fuel and defense waste products will  only add to utility damage claims, and, according to DOE, will increase taxpayer liability for defense waste site life-cycle costs and Yucca Mountain fixed costs.

            While DOE moves forward to license, construct and operate the Yucca Mountain repository, the government must take title to used fuel and move it to secure federal facilities as soon as practicable.  A number of proposals have been made to address the issue of “interim storage.” 

            The best approach would be for the federal government to begin to move fuel in proximity to the planned repository.  Both House and Senate appropriations bills for FY 2007 have provided direction on this issue.  While there is clear interest in looking at options for early movement of fuel, none of the options has yet demonstrated that it is politically and technically workable and could be accomplished in a timely manner.  A cooperative and supportive host site is critical to meeting these criteria. 

            It appears that one or two interim storage sites that provide benefits desired by the host state and community are the appropriate approach.  Industry experience demonstrates that such facilities can be sited, licensed, and constructed on an expedited schedule.  We are encouraged that DOE has advised the Congress, in its solicitation for prospective sites for nuclear fuel recycling facilities, that there will of necessity be some interim storage of used nuclear fuel involved.   A number of communities have expressed initial interest in participating in such a project. We believe Congress should work with DOE, industry and potential host sites to determine what steps will best facilitate the movement of used fuel from utility sites, and incorporate appropriate provisions into S. 2589.

            The industry does not believe that the “take title” approach suggested in S. 2099 either meets the federal obligation or  provides any benefit. The requirement in that legislation that all used fuel at reactor sites be moved immediately into dry cask storage could add up to $800 million a year over five years to the costs of producing nuclear energy. Regardless of the interim storage strategy chosen, it is critical that those activities not divert attention and resources from repository development.

New Reactor Waste Disposal Contract Issues Need to Be Addressed

            As utilities prepare to license and construct new nuclear power plants, it is important that appropriate changes be made in the Standard Contract for Disposal of Spent Nuclear Fuel and/or High-Level Radioactive Waste originally established by rulemaking (10 CFR, Part 961) to reflect developments since these contracts were originally drafted in the 1980s.  While the language in both the NWPA and disposal contracts allows for an existing contract to be amended adding new plants, DOE’s failure to perform, and the subsequent litigation, has created a situation where this option may be difficult to execute.  Instead, the preferred path forward would be to enact legislation directing DOE to enter into new disposal contracts for new nuclear plants that are consistent in form and substance with the existing disposal contracts, but which take into account the schedule for the operation of new plants.  In particular, the 1998 deadline in the existing contracts should be revised in contracts executed for new plants.

            The Congress should also consider steps that could facilitate early resolution of future claims by utilities against the federal government for its continuing failure to meet its obligations under the NWPA.

The Yucca Mountain Licensing Process Should Provide Flexibility to Address Future Developments

            As provided by existing regulations, Congress should direct DOE to incorporate features into its repository development plans that maintain flexibility for future generations to make informed decisions based on operational experience, changing energy economics, and technological developments.  It should be made clear that it was always the intent that the repository design retains the ability to monitor and, if needed or desired, retrieve the used fuel.

            The nuclear energy industry supports enhancements to the Yucca Mountain repository that would provide greater long-term assurance of safety and permit DOE to apply innovative technology at the repository as it is developed.  These enhancements include:

·        extensive monitoring of the used nuclear fuel placed in the repository and its effects on the surrounding geology for 300 or more years;

·        the ability to retrieve the used nuclear fuel from the facility for an extended period; and

·        periodic review of updates to the repository license that takes into account monitoring results and ensures that the facility is operating as designed.

            DOE already has committed to facilitate the use of these elements in its repository planning  For a period of 50 to 300 years, the federal government will “collect, evaluate and report on data” to assess the performance of the repository and the ability to retrieve the used fuel within the facility, if desired. In addition to monitoring material within the facility, DOE will conduct tests and analyses to ensure that the repository is constructed and operated according to strict guidelines.  Although DOE is pursuing these elements, Congressional direction on the proposed enhancements would provide greater certainty on the scientific and regulatory oversight of long-term repository operation and the condition of the material stored there.

            Doing so would require no modification to the existing federal statutory or regulatory framework.  DOE could include these enhancements as part of its “receive and possess” application and the commitment to complete them should be incorporated as a condition of the NRC license. 

            This direction will offer greater assurance to the public that long-term stewardship of used fuel at Yucca Mountain will be carefully monitored throughout repository operation. It would also allow DOE to take advantage of future technological innovations to improve the repository or provide for the potential reuse of the energy that remains in the fuel.

Used Nuclear Fuel Recycling

            The nuclear energy industry has shown consistent and strong support for research and development of advanced fuel cycle technologies incorporated in the Advanced Fuel Cycle Initiative (AFCI).  In anticipation of a major expansion of nuclear power in the United States and globally, it is appropriate to accelerate activities in this program.  The resurgence in development of nuclear energy is expected to require advanced fuel cycles.  However, a repository will be necessary to handle defense wastes, legacy commercial used nuclear fuel, and waste by-products regardless of which fuel cycle is ultimately developed.

            President Bush has presented a compelling vision for a global nuclear renaissance through the Global Nuclear Energy Partnership (GNEP).  This initiative provides an important framework to satisfy U.S. and world needs for an abundant source of clean, safe nuclear energy while addressing challenges related to fuel supply, long-term radioactive waste management, and proliferation concerns.  It may be possible that currently available technologies could be used creatively to jump-start the development of the needed advanced nuclear fuel cycle technologies.

            We recognize that the Congress has important questions regarding this program.  DOE’s near-term focus for GNEP is to determine, by 2008, how to proceed with demonstration of advanced recycling technologies and other technological challenges.  Consequently, the industry fully supports increased funding for AFCI in fiscal 2007.  However, neither AFCI nor GNEP, reduces the near-term imperative to develop the Yucca Mountain repository.

A Constructive Role for Nevadans

            The nuclear energy industry supports an active and constructive role for Nevada in the development of Yucca Mountain to help ensure the safety of its citizens.  The industry also supports compensation for the State to account for the program’s socioeconomic impact, as called for in the Nuclear Waste Policy Act.  This model is consistent with the siting and operation of the Waste Isolation Pilot Plant.

            The industry is encouraged by the steps DOE has taken to work with affected local governments in the State, and we further encourage DOE to expand its interactions with Nevadans interested in constructive engagement in the project.   The industry urges the Congress to include provisions in S. 2589 to foster these developments.

Conclusion

            We must never lose sight of the federal government’s responsibility for civilian used nuclear fuel disposal, as stated by Congress in the Atomic Energy Act of 1954 and the Nuclear Waste Policy Act of 1982.  The industry fully supports the fundamental need for a repository so used nuclear fuel and the byproducts of the nation’s nuclear weapons program are safely and securely managed in a specially designed, underground facility.  World-class science has demonstrated that Yucca Mountain is an eminently suitable site for such a facility. 

            A viable used fuel management strategy is necessary to retain long-term public confidence in operating existing nuclear power plants and in building new nuclear power plants to meet our nation’s growing electricity needs, and to fuel our economic growth.  The public confidence necessary to support construction of new nuclear plants is linked to successful implementation of an integrated national used fuel policy, which includes a continued commitment for the long-term disposition of used nuclear fuel.  This requires a commitment from the Administration, Congress, and other stakeholders to ensure that DOE makes an effective transition from a scientific program to a licensing and construction program, with the same commitment to safety.  New waste management approaches, including interim storage and nuclear fuel recycling, are consistent with timely development of Yucca Mountain.

            Enactment of S. 2589 is the critical pre-requisite to implementing our national policy for used fuel management.