Transcript|Energy   86 Minute Read

New Millennium Nuclear Energy Summit

Published December 7, 2010

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INTRODUCTION:
MATT BENNETT,
VICE PRESIDENT FOR PUBLIC AFFAIRS, THIRD WAY

MODERATORS:

MATT BENNETT
VICE PRESIDENT FOR PUBLIC AFFAIRS, THIRD WAY

ADMIRAL JOHN GROSSENBACHER,
DIRECTOR, IDAHO NATIONAL LABORATORY

TUESDAY, DECEMBER 7, 2010,

WASHINGTON, D.C.

Transcript by
Federal News Service
Washington, D.C.


MATT BENNETT: Good morning, everyone. My name is Matt Bennett. I am co-founder and vice president of Third Way. And on behalf of Third Way and the co-hosts of this event – Admiral John Grossenbacher and the Idaho National Labs – I’d like to welcome all of you – our participants, our guests and media – to this New Millennium Nuclear Summit. We’re delighted to have all of you.

We’re going to move very quickly through the beginning of this because, as you’ll hear from the senators, they’re going to need to depart shortly to take care of some important Senate business.

So without too much further ado, let me introduce the co-chair – a co-chair of my organization, Third Way, a co-chair of this effort, an old and very close friend of Third Way, someone who has been an inspiration to us and the man who chairs the Senate nuclear oversight panel and who has been deeply involved in nuclear issues for his entire career, Senator Tom Carper.

SENATOR TOM CARPER (D-DE): Please hold your applause. (Laughter.) Good morning, everybody. O-H –

AUDIENCE: I-O.

SEN. CARPER: Oh, yeah, we’ve got some Ohio people in here, okay. I’m an old Buckeye, so had to get that off my chest. A warm welcome on a chilly December morning and special thanks to George Voinovich, really, for coming up with the idea for holding this summit in the first place and a special thanks to Third Way and to the Idaho National Labs for collaborating and bringing this all together, what I think is going to be an interesting, enjoyable, exciting and important day.

I also want to thank – especially thank – Carol Browner, Secretary Chu. I want to thank Chairman Jaczko and everybody around the table and those that are participating this morning in this morning’s session. And they’re going to be here this afternoon for that session as well. The key word, I think, for what we’re kicking off here today is “results.” We want results. We don’t want studies or papers to put out there. We want – in the end we want results. And we need to have those results.

December 7th, a day that FDR said “will live in infamy.” December 7th is also Delaware Day. December 7th, 1787, is the day that Delaware became the first state to ratify the Constitution and for one whole week, we’re the entire United States of America. (Laughter.) And we opened it up, let in Pennsylvania, some of the rest of you. I think it’s turned out pretty well.

Winston Churchill used to say about democracy – democracy, worst form of government devised by wit of man except for all the rest. And we’ve been watching the president and our congressional Republicans are negotiating some tentative tax agreements and sort of trying to figure out if there’s a way that we can negotiate an agreement to keep the economy, the economic recovery on course and maybe to speed it up a little bit.

I think our mission today is similar. And the idea here, I think, is to keep this renaissance in nuclear energy on course. And if we can, to find ways that make sense to speed it up just a little bit. The reasons, I think, for doing that are self-evident. We have air that needs to be cleaned up. We have a dependency on foreign oil and on fossil fuels that needs to be reduced.

We have concerns about too much carbon in our atmosphere and the need to reduce that in a way that doesn’t hamstring our economy. We need to ensure that as GM rolls out the Volt and Nissan the Leaf and folks in Fisker roll out their vehicles in a year or two that there’ll actually be people who want to buy them and they’ll be fueled by clean energy, not by dirty energy – creating electricity.

And finally, we want to be able to develop new technologies, technologies that’ll put people to work here, enable us to create products that are made in America, manufactured in America and sold around the world. We want to make sure that we put people to work building nuclear power plants, operating nuclear power plants.

And finally, we want to make sure we do it all safely. I’ll close with this: When I was a kid in high school, I took driver’s ed. My guess is both – most of us did. And my car in driver’s ed., we had two sets of controls. On the left, student, steering wheel, brakes, accelerator. On the right, steering wheel, brakes, accelerator, free instructor. And sometimes the students would go too fast. And we would have an instructor over there with a foot on the brake.

And what we really need going forward is a foot on the accelerator and we need a foot on the brakes. And we need to be mindful all the time of safety – all the time of safety because at the end of the day, if we don’t operate safely in nuclear power, we’re going to find this renaissance is short-circuited and short-lived.

So that’s kind of the leadoff here. And I love being a leadoff hitter to my best bud George Voinovich. And this is really George’s idea. And I’m going to miss him very, very much, but this is just part of the legacy that he’s going to leave here. And I’m happy to be here with you today, George. Thank you.

SENATOR GEORGE VOINOVICH (R-OH): Thank you, Tom. I first of all want to thank you for your leadership. And Matt, thank you. And Admiral, thank you. Jim Risch, we’re glad you’re here. I’m glad you invited me to the Idaho lab over a year-and-a-half ago when I had the chance to meet the admiral and we got talking about what they were doing out there.

I’d also like to thank Third Way for including the white paper that was put together by our taskforce in Ohio in conjunction with Ohio State University and the Edison Welding Lab (sic).

I think the report that – is a good report. And it should be – looked at it along with the work that was produced by the – by Third Way. And there’s been a lot of work done, and I think that we don’t have to reinvent the wheel. It’s all there.

As Tom mentioned, this to me is the culmination of something that I’ve been working on for 10 years. And I want to emphasize the purpose of this summit – and I think you did it very well, Matt, in your paper – is to develop a set of recommendations in executable detail – executable detail – that will comprise the multi-decade strategy to help America run restart and expand its nuclear energy industry and once again lead the world in research development, demonstration and deployment of nuclear energy applications.

That’s a mouthful, but it’s one that I think is worthy of our consideration. As I mentioned, I’ve turned the baton over to Brother Carper. And we worked together for a long period of time, got to know each other when we were both governors. I am very, very pleased that Secretary Chu is here today. I’m very, very pleased that Carol Browner’s here today. And I’m very pleased, Greg, that you are here today.

Carol and I, we’ve known each other since I was governor of Ohio. And Greg, we worked with – when you were with Harry and then – I think you’ve done a fine job – of leadership at the NRC. And Dr. Chu, I think you’re doing great. And to Dr. Chu as he’s doing great, and the White House listens to him – (chuckles) – which is very important.

I’m pleased that nuclear energy has risen to the extent that we are having this summit today. I think all of us know there are challenges out there. How are we going to finance these big reactors? How are we going to deal with the – what do you call it? The loan credit subsidy?

That’s something that we’re very, very concerned about. And many of us that are concerned about modular nuclear, how we’re going to go about funding that, particularly when we don’t know whether we’re going to have a (sic) appropriations bill or whether we’re going to have a continuing resolution? So there are a lot of things that Dr. Chu can do, but if we have a continuing resolution without some exceptions, some of the things that have been talked about won’t happen.

So I think that we’ve got a wonderful opportunity here to make a difference. I think we should also look at nuclear power in terms of what’s good for the country concerning our national concerns about energy security, nonproliferation, clean-energy jobs, grid reliability, the environment, global competitiveness and of course the – of course, the cost.

And I think that – I think out of a set of parameters we can make an intelligent choice on the right mix of energy sources. And I think that – we’re talking about nuclear today, but let’s face it: We’re talking about all energy sources. Where do they all fit in to the picture in terms of our future? Where do we put our money? What kind of return on investment are we going to get?

And I think that we also ought to understand that we’re not doing this in a cocoon. We’ve got to look around the world at what other countries are doing. They’re moving forward with building new nuclear power plants. Global leaders are reaching the same conclusion that nuclear energy is a safe, homegrown, cost-effective and emissions-free solution to increasing energy demand, most notably, I think, in China but several other countries as well.

And I think that we know there are 440 reactors working around the world. There are 59 that are under construction. And I think these countries exhibit the common characteristic that their governments and industry are aligned in support of nuclear power. And it’s different in the United States. Most of these things are run by the government. This is a – we have a public-private partnership. This is business and government.

And Secretary Chu, you stated in your remarks at the National Press Club last week, we’re facing a Sputnik moment where we can choose to meet the challenges from these countries, particularly China, in a manner similar to the challenge posed by the Soviet Union for supremacy in space.

So I’m hoping that the summit and any follow-on task groups can assess and make recommendations on the role of government and industry in nuclear power. And I’ve already mentioned that one of the things that I think has great potential for us are these SMRs. I believe it’s a way of moving forward. The cost is less.

And my dream would – I’ve talked to Carol Browner about this – is that we would get the technology, move a rest – ahead of the rest of the world, manufacture them here and punch back into the global nuclear energy competition that we have not been a part of for too many years. Time is right; let’s do it now.

MR. BENNETT: I think we need – we just need a moment to swap out a faulty cable, so we’re going to hold for just a moment. I’m actually going to talk the old-fashioned way, without a microphone so we can keep moving forward. One member of this panel not only has a Nobel Prize in physics but cut short his trip to Cancun to be here today. I’m not sure how difficult that was for him –

MR. : Left there? We would’ve come.

MR. BENNETT: We thought about that. We are deeply honored and grateful to have Secretary Chu join us. All of the work of his life has been to move America forward when it comes – move the world forward when it comes to energy. He has devoted his recent career – the work of his recent career to stopping global climate change. And that’s part of the reason, I believe, that he has agreed to be here today.

All of you know his body of work. All of you have seen what an extraordinarily effective secretary he has been – spokesman for this administration. And he truly is the perfect person to help us kick off this nuclear summit. So with that, I give you Secretary Chu.

SECRETARY STEVEN CHU: Thank you very much. I left my avatar in Cancun – (laughter) – so at least some part of me is enjoying it. I want to thank Senators Voinovich and Carper and all the people here – Carol, Greg, everybody – and Third Way and the Idaho National Laboratory. Without a doubt, the administration believes that nuclear energy is going to have to be part of the energy mix in this century. And we are doing what we can to promote that.

There are a number of things – loan guarantees – we are pushing as hard as we can. Let me pause a little bit about loan guarantees as fuel for the discussion. In addition to loan guarantees, you need an environment that’s right, that makes it look like a good investment because these are loan guarantees.

And one of the issues is, absent of a long-term signal on how we’re going to price carbon, how do you actually allow manufacturers of nuclear reactors and merchant reactors and even utility companies to build these things when in the next one or two decades, we think that gas prices will remain fairly low?

The decisions to building nuclear reactors is not a 20-year decision or a 30-year decision. It’s a 70-year decision. And so the question is, how do you make the right decisions on that appropriate time scale?

And I hope we can discuss policies that can do that – a clean energy portfolio standard as one example of a potential policy that the administration and Congress should discuss that could – able to draw – you have – so that if you build a nuclear power plant, yes, you can sell your electricity even if it is 2 percent over the retail cost, the going price or something like that. If it’s not, if you’re a merchant supplier, you won’t be able to sell it. And so that’s one of the issues.

In addition to that, the Department of Energy has a very robust R&D program. We’ve looked it over very carefully. And we’re asking what value-added can we – what value can we add to what industry is doing? One of the things high priority on the list is a so-called energy innovation hub.

So this is bringing together a bunch of people from industry, from academia, from national labs, experts to work under one roof and decide what can the U.S. government do in order to promote nuclear energy to help us get back into a leadership position. One of the things we feel very strongly about is that the United States excels in simulation. And we can design new nuclear reactors, new fuel rods, new ways going forward that can increase the yield without the long development time that you would need normally.

This has been done in airplane development where previously, if you designed a 767 or airplane you would have to build several prototypes. You would build, say, on-scale literally 80 wings, test them, break them, see what was happening. Of the Boeing 787, you build of-scale 10 wings, break them, see what happens because the advanced computer designs enable you to leap-frog a lot of the make it, break it, fix it, see what comes next.

We need to do this with nuclear reactors because everything in the nuclear reactor realm is extended. So the modeling and energy simulation is a big deal. We are also continuing our program. There is a shortage of nuclear engineers. And I’m not just talking about Ph.Ds. but at the bachelor and especially master’s level. What’s in-house? America has about 4,000 engineers. They want to expand by thousands more. But they’re looking; they came in.

So the people, in order to do the designs of this nuclear renaissance worldwide – it was mentioned that there are roughly 60 reactors being built around the world. Thirty of them are being built in China. This is a Sputnik moment for the United States – not only China but for the rest of the world.

We were the first country to build a nuclear reactor. We were the leaders. Between 1967 and 1977, we started the entire civilian nuclear fleet that’s operating today. Ten years start time and then it stopped. So we need to look at how to restart this in earnest.

And now, finally, my last comments are regarding the small modular reactors. I think I’m in total agreement with the two senators. This is something where the United States is poised to take the real leadership position in these reactors. They have several advantages because of their size – somewhere between, you know, 100 to 150, 250 megawatts instead of the one gigawatt to one-and-a-half gigawatt reactors.

That means they’re properly sized, a utility company or a merchant supplier can build one unit, two units, three units. These units can be mass-produced in a single factory, shipped all over the country, all over the world. They’re small enough so that a utility company or a merchant supplier doesn’t have to bet the entire company.

If you’re investing $8 billion-plus in one reactor, that’s a lot of asset on one thing. If you’re investing 1 billion (dollars), $2 billion, it’s a different story. And so we think the small – and it doesn’t require a gigawatt to a gigawatt-and-a-half, electricity distribution structure at the site. So you can use existing sites and you can size them.

There are many, many reasons why we think this is something that feels very, very right and the economy, the scale and the size is made up for it by the economy, the scale in number. And so we work – are working as best we can, under the constraints. We hope that going forward, we have fewer – I mean it’s about money. (Chuckles.) But we hope that we can support the industry in the developing of the small modular reactors.

And so those are – those are just a few of my thoughts. Again, I just want to repeat. We think that there is a nuclear renaissance going around the world. For a whole host of reasons, the United States should be part of that renaissance, in fact, be a leader in that renaissance, both for our industrial competitiveness, for our role we can play in making sure that it’s developed safely around the world and the role we can play in nonproliferation. Thank you.

MR. BENNETT: Thank you, Mr. Secretary. All of –

(Audio break.)

MR. BENNETT: (In progress) – deserve fulsome introductions, but unfortunately, we just don’t have time for that, particularly because the senators are going to have to go and I know they want to hear from some of the other principle speakers.

So very briefly, let me introduce Dr. Greg Jaczko, who’s the chairman of the NRC. We’re delighted to have him with us here today. No one is more important to the future of nuclear energy than Dr. Jaczko and also the agency that he runs for all the obvious reasons.

His focus at the NRC has been on decisive regulation that also coincides with protecting the public. Before that, he held senior posts on Capitol Hill and has been involved on this issue for his entire career and we’re delighted to have him.

GREGORY JACZKO: Well, thank you and I would echo all the thanks of others, certainly to Senator Carper and Senator Voinovich. I’ve had the privilege of working with both of you in my previous capacity and in my current capacity at the NRC. And I also would like to thank Third Way and Idaho National Laboratory for organizing the summit today.

As many have said, the focus for the NRC is on safety and security. In many ways, we have a singular focus and a narrow focus in what we do, but it is, in my mind, one of the most important issues to any discussion about potential rebirth and restart of a nuclear industry in this country. The primary focus for the agency has been and always will the safety and security of the operating nuclear power reactors.

So as you talk today and as we talk today about ideas to move the industry forward, the focus for me will always – to be on how we can continue to ensure that in whatever process we follow, that safety and security stay at the forefront and that that becomes something that we continue to embody and enhance as we have over the last several decades.

Right now, it’s a very interesting time at the agency. It’s an interesting time in the industry. We have several large new reactors under licensing review. That licensing process is moving very smoothly, I think, to potential completion in the near term. At the same time, we have new reactors that are under construction under our old process.

We, in fact, have plants that were partially completed that are now undergoing the process of completion, which could actually see a new reactor actually begin operation within the next several years, not just receive a license, but actually begin operation.

At the same time, we have discussions about very novel design ideas and technologies like the small modular reactors. And those run the gamut from the kinds of reactors that are similar to what we have today, just downsized to new and advanced types of technologies and approaches.

So it makes for a very – variety of issues and activities in front of – in front of the agency. But as I said, our focus and our commitment will always be to ensure that the safety and security of the existing fleet is maintained. And that way, we have a good process to ensure the safety and security of any of those plants that are on the drawing board.

I think right now, we have a process that’s moving along very well. But I think at some point, we’ll want to take a step back and we’ll want to examine that process and see what we can do to make improvements and enhancements to ensure that we’re putting the right focus on safety, to ensure that we’re doing that in the most efficient and effective way possible.

And I think that’s something that we’ll be looking to do in the next several years as we complete the process for what we’re working on now and have an opportunity to see how that – how that worked. As we go forward and look to the possible licensing of new reactors, that will also bring about a new possible period of construction in this country.

And with that, there will be new challenges. There will be challenges with the workforce, as some have alluded to, ensuring we have the right, trained professionals, not only in the engineering disciplines, but in the skilled trade and craft that’s so vital to ultimately building and constructing reactors safely to allow for their safe operation.

So it is domestically a very interesting time, certainly, for the agency. And as others have alluded to, it’s a very interesting time internationally. And the NRC continues to be, I think, or strive to be a world leader in nuclear safety and nuclear regulation throughout the world. We continue to interact in what is now very much a global industry with our regulatory partners, with utilities and companies and vendors from all across the world.

And I think the United States has always really strived to be a global leader in enhancing nuclear safety, but here, domestically, as well internationally. So I think as we have our discussions today, I’ll be keeping a keen ear to ways that we can continue to make our processes more effective, ways that we can continue to ensure safe operation and ensure that the reviews that we’re doing will ensure safe and secure facilities going into the future.

So I appreciate the opportunity to be here and to present this perspective on these issues. Thank you.

MR. BENNETT: Thank you, Mr. Chairman. Next, we’re privileged to be joined by the president’s director of the Office of Energy and Climate Change Policy. You all know that Carol Browner, I believe, holds the record as the longest-serving EPA administrator under President Clinton and now serves as the president’s principle advisor and spokesperson on issues related to energy and climate change. And with that, I give you Carol Browner.

CAROL BROWNER: Thank you. Thank you, Matt and let me thank Third Way for bringing us here today and for the leadership that Senator Carper, Senator Voinovich have provided both in making today happen, but also on this issue throughout your tenures. It’s a pleasure to be here with Secretary Chu, with the other members of Congress, with all the labor industry members that are here, with Chairman Jaczko.

A few observations. First of all, this shouldn’t need to be said, but let me just be clear that we and the president believe that nuclear power is a very, very important part of our energy future in this country. The president said earlier this year, to meet our growing energy needs and prevent the worst consequences of climate change, we’ll need to increase our supply of nuclear power.

And so the question is how – how best do we do it? Obviously, we all, I think, can agree on the reasons to do it. Senator Voinovich articulated a number of them, as did Senator Carper, energy independence, we need to compete in the global market for nuclear energy. We were once at the forefront of this industry; we need to recapture that dominant position and there’s every reason to think that we can.

In the near term, one of the things that we’re focused on and I think many of you are also focused on is additional loan guarantee money. We have already make one conditional loan guarantee under Secretary Chu’s leadership. We would like to make more. There are projects in the queue, but I think as people are probably keenly aware, there’s not adequate resources for all the potential projects in the queue.

And so whether – I don’t know how this year’s going to end in terms of will it be a CR or will it be an Omnibus, but you know, obviously, keeping our eye on that and making sure that if there is an opportunity for additional loan guarantee funds, that we are able to secure that. We’ve had a number of positive conversations with – particularly, Steny Hoyer and others on the House side.

But we need to just watch that and not let that opportunity disappear because if we end up in a year-long CR, for example, and it’s not in there, this will push everybody down the road in a way that I don’t think is helpful to the industry. In thinking about it today, it occurred me to that sort of two questions that I think would be helpful to get some common thinking about.

And I think the first is – and I’ve talked to some of you about this, you know, ultimately, the government continuing to provide loan guarantees is probably not going to be a practical solution. And so the question would be to get this industry jump-started or restarted and to provide, you know, give us a dominant, global position.

You know, how many – how much loan guarantee – how many loan guarantees will we need the federal government to do and you know, if you talk to different people, you can get different answers, but I think the degree to which there’s some consensus around that. I think particularly when we’re all up there asking Congress for more money, it’s helpful to say there is an end in sight. This is not in perpetuity, but this is actually a strategic plan to relaunch this industry. So that would be one question.

And then I think the next question is how best to ensure that this industry is competitive in a changing energy world in terms of where we get our energy from, how we produce our energy. We believe that putting a limit on carbon emissions, putting a process on carbon would be hugely beneficial to this industry.

It would help you to give a competitive advantage, maybe, in some instances, or at least level the playing field. That may not be possible in the near term. You know, we’re going to continue to try and argue for that. But if it isn’t possible, what are the alternatives because you know, we’re facing world where gas is – natural gas prices are dropping rapidly.

The EPA has some important public health responsibilities in terms of setting air pollution – conventional air pollution standards that will lead to changes probably in where and how we generate at least part of our electricity. And if we want to make sure that nuclear is a part of, sort of this evolution, you know, absent a price on carbon, what are the other things that we might be able to do to ensure the competitiveness of this industry?

And I think if we – the degree to which we can focus on those questions today and have some sort of common understanding would be hugely helpful. And again, I thank you all for the opportunity to be here. I apologize. I’m not going to be able to stay for the whole day, but we do look forward to hearing the conclusions that are reached today.

MR. BENNETT: Thank you, Carol. I will say that the people of Idaho are extraordinarily well-represented here today. We’re very fortunate to have not only Admiral Grossenbacher representing the Idaho National Lab, but also Senator James Risch and Representative Mike Simpson. Before Senator Risch has to go, I wondered if he might have a few comments and then we can hear from Congressman Simpson and then we’ll start the moderated discussion.

SENATOR JAMES RISCH (R-ID): Well, just very briefly, what I would say about this conference is it’s about time. We’ve – I’ve sat through these last two years of Congress and been very disappointed that the discussion has not included a much more robust discussion about nuclear energy.

And the people here in this room are the people who can move this thing forward so it is good to have this discussion. As was mentioned, we had the first reactor in the world. And as a matter of fact, it was in Idaho, you know, the first city – and I use that word advisedly, Atomic City, that was actually lit by nuclear energy.

In Idaho, we are well-positioned to help move this forward. We’ve been pressing it for some time. While all the discussion about wind and solar has taken place and admittedly, it’s the politically correct thing to talk about and grabs all the headlines, we have been promoting the idea that it is nuclear that is going to provide the baseload for America, for Americans and for American business to move forward into the 21st century.

As has been pointed out here, we were the leader in the world on this and we’ve put it on the shelf and it’s time to take it back off the shelf and it’s time for us to roll up our sleeves and get to work. In Idaho, we’re ready to do that. We’ve got the right leadership at the lab with Admiral Grossenbacher.

And so we welcome this discussion and thank you for having this discussion. Thank you, Mr. Chair.

MR. BENNETT: Congressman Simpson?

REPRESENTATIVE MICHAEL SIMPSON (R-ID): Well, let me say, first of all, thank you all for putting this conference on and I am – I guess bestly described as pessimistically optimistic about what’s going on here. I mean I think we all realize, as everybody has said today, that nuclear energy is going to be a part of our future if we’re ever going to address greenhouse gases and global warming.

But let me address it just a little bit from a state – a federal legislator, appropriator perspective. I’ve in Congress, now, for 12 years. I’ve had three different administrations, I think, four secretaries of Interior and numerous people underneath that. My concern is – and my complaint has been, over the last 12 years – is that I have no idea of where we’re headed with nuclear energy.

And I will tell you that I compliment this administration for at least taking and putting nuclear energy on the table more so than any past administration, as reflected in their budget request and other things. And I compliment the secretary for that and Carol for that and all of the administration.

But I still have no vision of where we’re headed. I’ve been through GNEP. Now, we’re into small modular reactors and everything else. I don’t know what’s going to be on the table two years from now or four years from now. And as you know, nuclear energy is not a two-, or a four-, or a six-year project. It’s 20- or 30- or as was mentioned earlier, a 70-year investment that people are going to have to make.

And as an appropriator, what I need to know is where are we now? Where are we headed? What’s our vision for the future? And this takes industry to get involved in it because we’re not going to use these reactors ourselves. Industry’s going to do it. So where are we headed and how do we sustain a long-term effort to get there through changing administrations, changing secretaries and that’s – we have to somehow lay down a footprint to do that.

And I don’t – so far, I don’t have the answer, but I think this could be the first step in getting us the vision that’s necessary so that I know, when I’m appropriating dollars, why I’m doing it so that we’re not changing directions every two, four years.

So I appreciate this conference and all of those participants. And hopefully, this can be the start of a discussion that can lead to cooperation between industry and government of what each role is because both have a role to play, obviously, so that we know where we’re headed and what’s expected of us in terms of Congress. Thank you.

SEN. CARPER: Senator Voinovich and Senator Risch, I have to leave for a short while. The House has impeached a sitting federal judge, in essence, indicting this person. The job of the Senate is to conduct a trial and we begin that by a live quorum call that starts just any minute. So we’re going to head back to the Capitol to do that and then return here. And you know, this keeps this car on the right path. I think we’re off to a good start, thanks.

MR. BENNETT: Thank you, senators. As they make their way out, let me note Carol Browner mentioned that she has to leave, but Secretary Chu and Chairman Jaczko are going to be with us the entire time. We have the rest of our panel with us and the senators will be returning.

So there will be some in and out here over the course of the next couple of hours, but we will be proceeding all the way through till 11:30. One note, if anyone needs to get up, use the restroom, please feel free anytime during this discussion.

Let me just do a brief introduction for our – my colleague and our cohost, Admiral John Grossenbacher. He is the director – not only the director of the Idaho National Lab, but the president of Battelle Energy Alliance. At one time, when he was a vice admiral in the Navy, he commanded all of the U.S. naval submarine forces.

So we are honored and delighted to have him serving as a co-moderator today. He and I will tag team through the next series of conversations. But let me just set it up for you and then I’m going to turn it over to him. The broad purpose of this discussion, which Senator Carper and Senator Voinovich laid out at the top, is to get actionable ideas on the table.

That’s the reason that you see these screens around the room and we are going to start using them in just a moment. We have, at this table, an extraordinary gathering of the senior leadership, not only of the nuclear industry, the utilities and the manufacturers, but also of labor, the financial community, NGO community.

If the nuclear renaissance is to move forward – and of course, the government folks, you’ve heard from already – if the nuclear renaissance, the nuclear revival is to happen in this country, it’s going to be the people at this table who are going to need to work together to make that happen.

So it was our purpose in bringing these folks together to start that process. And rather than just hear a series of speeches, what we wanted to attempt was to get actual ideas out on the table and then immediately begin to put those ideas into practice.

So as soon we close here this morning at 11:30, their staffs and the deputies are going to move into the closed session, where we begin immediately putting some of the ideas that go up on the screen today into actionable form, where we can make suggestions to government and industry on how they can work better together.

Quick note on how this is going to work. This is going to be a moderated discussion. All of you have cards that are just in front of your microphones. If you want to speak, just turn them over and we’ll recognize you. We’ll also exercise the moderator prerogative to call on folks occasionally if we would like you to weigh in on various things.

Our goal is to get around this table. There are a lot of folks here, so we’re going to ask everyone to keep it rather brief and if anyone’s going on too long, we’ll exercise moderator prerogative to move the conversation forward.

We’re going to proceed in three parts this morning, between now and 11:30. Three separate discussions and for each discussion, we’re going to ask people to make their comments and then our folks over here are going to try to capture just the barest essence of your point because we have very little room, so just three of four words of your point, we’ll put up on the screen. If we get it wrong, let us know and we’ll change it.

We will begin with a question relating to public and private partnerships. Very broadly, the question that we’re going to address is: How can the government and the private sector work together to bring about this revival? It’s kind of the question that all of the speakers this morning have already addressed and we’d like to unpack that a little bit further. So let me turn it over to Admiral Grossenbacher.

ADMIRAL JOHN GROSSENBACHER: Yeah, thank you, Matt. I do want to just comment that, you know, last week, at about this time, the President’s Council of Advisors on Science and Technology talked about transforming our energy system. And so I think the timing of this is very important.

Their emphasis on the private sector’s role, the other D in RDD&D, deployment, actually getting technology deployed in the country and the fact that energy is a policy amalgam and complicated, I think, are all – are all important. And I think the peculiarities of nuclear energy have all been pretty much emphasized here by the participants thus far.

I would like to emphasize it’s not just technology, of course, it’s policy and regulation and the importance depends on the time frame and the objectives of those three things. So with that, public-private partnerships – what are the most important needs for public-private partnerships?

And please think in terms of new light water reactors and the advanced light water reactors. We want to build, now, future reactors, including non-electricity generation applications of nuclear energy, industrial processes, those kind of things. And of course, we’re not going to talk about the waste, but certainly the issue of reactors in the future that contribute to better waste management.

So what – what do we need in terms of public-private partnerships? What have we done? NP2010 is often cited as a great example. And to Ms. Browner’s question, if loan guarantees are a public-private partnership, and I think that’s appropriate, what do we need? So I’d like to open the floor to comments on that. Tom?

TOM FANNING: Thank you and thanks for putting on this conference. I think it’d be very helpful to us. I think it’s probably appropriate that I weigh in at this point. We are the ones starting the renaissance of new nuclear in America. And we would not have done it without the support of the administration. We appreciate that, Secretary Chu, you all have been terrific to work with.

And I must say also that we have a terrific support network back in our state – this is in Georgia. So the legislature, the regulators, widespread public support, polling for this is exceedingly positive. In fact, you know, we always translate these strategic initiatives at Southern as to its effect on customers.

And when you think about nuclear in America, the effect on customers is clear. It is a reliable source of energy. It is clean and it has a reasonable economic consequence. It represents terrific boon to the economy and a source of terrific jobs for people to grow into.

When I think about the kind of things that are coming together, therefore, it is the policies that we put in place as well as the local politics that make this all doable. When we think about how do you stage nuclear versus gas versus coal versus renewable and let’s not forget about energy efficiency as one of the most important methods of new energy capacity here, I think it is clear that we can’t be swayed by anything that appears to be in vogue at the moment.

For example, cheap so-called tight gas supplies and we know that those have volatility. At Southern, what we like to say is that we need all the arrows and the quiver, that we need a broad mix.

And in fact, Southern is the only company doing large, new nuclear. We’re now in over $2 billion investment so far on our Vogtle 3 and 4 facility near Augusta. As well, we’re doing a clean coal plant that will have the carbon footprint equal to or better than natural gas and a variety of other things.

Why nuclear? Well, when I think about the kind of companies that we believe, going forward and nuclear, we think they need to have three characteristics. The first is scale. These things, in our case, about $14 billion. Credit quality – going to take 10 years from start to finish and therefore, given the vagaries of financial markets, you’re going to have to finance this thing over time. And therefore, you better be able to participate in a strident way during good markets and bad.

And then finally, credibility of operations. You better know what you’re doing. Especially going forward, when I hear about all the other ideas, that’s great and we have embraced all the ideas, but I think we better be successful on this first one and we’re all looking forward to that.

So those would be my opening comments and I think specifically about any initiative, in order to jump-start this thing, loan guarantees are very beneficial. In our case, all of the benefit of the loan guarantees accrue to the benefit of our customers. That is the bottom line for us and I think it all goes back to this notion of reliability, reasonable economic consequence and minimal environmental impact.

And if any of the federal policies come together to promote those things for the benefit of customers, scale, credit quality and credibility, we think we can get this thing going on a sustained basis.

MR. BENNETT: Thank you. By the way, that was Tom Fanning with Southern Company. Because the name cards are pointed towards us, if you all could just say your name and who you’re with. And when we call on you, it would help the audience to understand who you are. Peter Bradford, one of the skeptics of the table, has a comment on this.

PETER BRADFORD: One of the skeptics?

MR. BENNETT: One. (Laughter.)

MR. BRADFORD: Thanks, Matt. My career has been largely in the public sector, both in regulating nuclear plants and in setting the rates to pay for them. So let me just say a few words as to the public side of the public-private partnership equation because it’s going to be very important that the public part – the government part not just look to its role as a supporter in a public-private partnership context.

Most of the claims that have been made for nuclear energy this morning would, if this were a conference of other technologies, efficiency or renewables, be made with equal fervor and probably in many cases, equal validity.

The public sector has to establish the criteria for success and failure in public policy terms. And the point in doing that is going to be to focus also on developing right principles and not depending just on a gift of prophecy because all technologies will have – will make the kinds of enthusiastic claims that nuclear can make.

Nuclear power does have a lot of potential, but it also has a lot to prove. The current status of what we’ve generally been calling a renaissance more nearly resembles a bubble, that is, of the 30 reactors that were in active application stage at the NRC two years ago, we’re down to a dozen or fewer that are being seriously pursued toward construction anytime soon.

And it’s not just a matter of the shortage of loan guarantees. It’s a matter of rising costs, falling demand, falling cost of alternatives and so it’s going to take a lot in this public-private partnership in establishing real criteria for success and failure.

As Ms. Browner said, how many reactors should get public support? How rigorous will be the cutoff, you know. We often hear the phrase we need to get from the point to where we know whether they’ll be coming online, on time and on budget.

But “on budget” isn’t going to do it if “on budget” means trying to sell 12-cent-a-kilowatt-hour power in a 5-cent market. It has to be on time and at a competitive price. So the public side really has to keep in mind not just what can we do to be supportive, but what are the criteria for success and failure and how much public support for this or any other technology is too much.

And how do we choose among the technologies if we’re going to suspend the power markets and the power market verdicts? We don’t have to do that – we could put a price on carbon and let the power markets work. But if we’re not going to do that, then we’re substituting something else for a market verdict. And the markets were put in place largely in reaction to the last nuclear construction experience that we had.

ADM. GROSSENBACHER: I’m interested – and if I may, Marv Fertel, you know, your reaction to Peter’s comments – I feel compelled to emphasize the issue of, when we talk about markets, are we talking about short-term markets or long-term markets? And the peculiarities that many have already spoke to, relative to nuclear energy – a 70-year investment in a new nuclear power plant? Perhaps a hundred year – a century-long piece of energy infrastructure. So it has its peculiarities. So – Marv?

MARV FERTEL: I’ll try and give you some of the answers to your question, John. But I think what others have said already – you almost have to integrate – Congressman Simpson said is it appropriate, his frustration is not knowing from year to year what’s going to be on the table and what makes sense.

And I think that that’s because as a country, we’ve never really looked at energy policy, or maybe more narrowly, electricity policy in a holistic way to see what is it that might make sense for the government to actually – federal government to support. And that’s something that maybe should be considered for discussion, at least, within your deputies’ meetings.

Two, your public-private partnership – you mentioned NP2010. I think the best example of success on that is sitting across the table from me, and opened up this dialogue by talking about a $14 billion investment that they’re making in Georgia that was an outcome of a public-private partnership – looking at how do we license advanced light water reactors, how do we certify them, how do we move them forward.

So I think that there’s evidence that if you do it right – and it doesn’t mean you need to stumble on some things on our side and maybe even on the government side. And as Chairman Jaczko has said – and we say – the current Part 52 licensing process is a learning experience for both our side and for the NRC right now.

And that means that, every now and then, something isn’t actually perfect. But we’re making our way through that in a very successful way by being very transparent and very open and working together. And I think that that’s characteristic of a public-private partnership.

I think to Peter’s comment – we need it all, Peter. You would say efficiency is the answer; I would say efficiency is part of the answer. You would say – you know, conservation is the answer; I would say it’s part of the answer. You would say nuclear is probably not the answer, though if it can compete, that’s okay – but you’d support a renewable-electricity standard which makes sure that renewables get in.

So I think – I think policies, as you said, John, have as much to do sometimes with outcomes, as whether we put R&D dollars into something or we do loan guarantees. We’re going to talk financing, but because Carol is going to leave, I’d like to at least plant the idea that I don’t think it should be a means-test of, do you do five reactors and six windmills and then it’s proven.

I think that if we’re going to move without any price on carbon or anything like that – if we’re going to move to a much lower carbon footprint, it’s going to be expensive. If Southern Company is going to build, you know, clean-coal plants with CCS and other things, they’re expensive. Nuclear plants are expensive. If we’re going to put a lot of renewables on the grid, transmissions lines become expensive. And if we figure out how to do storage, that won’t be cheap, either, to make.

So I actually would propose, Carol, that we think differently – that one of the public-private partnerships should be something like Senator Bingaman’s CEDA bank – the Clean Energy Deployment Administration, that it look at how it stimulates and supports everything from, you know, clean energy sources to clean coal to nuclear to manufacturing facilities that allow them. And that we look at that as a way to mitigate the impact on the economy and on customers as we move to this lower carbon footprint.

Right now, interest rates are very low and money is available if you run an investment-grade company. If I had listened to what our deficit commissions are telling us, five years from now or a little bit longer, interest rates are going to be very high and money is going to be tight. And it’s going to be when we’re trying to move to this lower carbon footprint.

So I think we may need to think about it differently than when we started, which was, can we deploy five or six of these? And then the commercial market may love them and want to do it – I don’t think that’s true for nuclear or anything else anymore.

MR. BENNETT: So before we go to Carol, one process note – when you are finished speaking, if you would, just turn your microphone off so we don’t have feedback. And let me turn it back to Carol.

MS. BROWNER: I mean – the point I was trying to make – I probably didn’t do this as well as I could have – is that – and it goes to the congressman’s point as an appropriator – you know, we have to have a theory of the case, right – you know, in a tight-budget time. And we’re all focused on deficit reduction. We’re going to need a theory of the case to go back to the appropriators, the administration and the industry and others.

You know, what does it mean – I guess the question of the day is, what is that theory of the case? Is it that, if you do so many – six, seven, pick your number, I don’t know what the number is – you’ve adequately jump-started the industry such that we were creating the jobs and we were competitive in – we’re competitive in the global market?

Or to your latter point, is the theory of the case that you figure out an overall energy policy. We’ve tried to do that – we have yet to be successful. But you figure one out that then says, all of these from efficiency to conservation to renewables to nuclear can compete in that world. And I think, unfortunately, you know, we tried very hard to get a cap on carbon. We were unsuccessful.

Absent a cap on carbon, what’s that mechanism going to be so that it’s not the government – and I think the secretary and I would agree on this – sort of picking and choosing the winners and the losers? We’re not good at that. What we’re good at is setting some public policy and then allowing you all to figure out what’s the right path to achieving that public policy.

MR. BENNETT: Let me go to Chairman Jaczko, just –

MR. JACZKO: Well, I – as I listened to the conversation, I think I would echo some of the comments of Congressman Simpson – that having a sense of what the long term is, is helpful for us as a regulatory body.

There’s a variety of different technologies that have been discussed. And for us to prepare for those different technologies, we need some sense of what the future will be. Should our focus be on large reactors of the existing generation? Should we be shifting more of our priorities towards small modular reactors?

Should we be looking at license, you know, and power-up rights and extending life and operation of existing plants? All of those are very different priorities and I wouldn’t say they’re competing priorities right now at the agency. But we may come to a time in which they could be.

And so the more that there is a stronger sense of, I think, a unified direction on what the longer-term approaches are, the more we can begin to prepare, and the more we can – we can, I think, be responsive and still fulfill our important safety mission. I would just point to the work that’s been done, I think, in license renewal.

While, you know, there’s a variety of different, I think, ideas and concepts about whether our review is adequate or not, it’s a program that works very effectively because we have a good sense industry has looked long-term. There is a queue; people line up, they put themselves into the queue and then – and then we prepare to deal with a certain number of reviews in a given time frame.

And that, I think, is a very successful model for how we can go about doing our important safety work, but doing it in a way that is responsive to what the industry needs are. But it is a longer-term look. It is more than just one appropriation cycle. It’s looking out to several – really, or even a decade into the future.

ADM. GROSSENBACHER: Matt, I’d like us to finish, to at least – this part of the discussion and ask John Herron from Entergy and Doug May from Dow Chemical to talk about your experience with public-private partnerships.

John, I suspect you have some near-term experience with those – you know, with things like license extensions. And from the standpoint of Dow, the public-private partnership arrangement that you’d perceive when we get into the world of using nuclear energy for things other than electricity generation.

JOHN HERRON: Sure, John. I’ll make a couple of comments – excuse me, I got a cold here, so I’m trying to make sure I don’t lose my voice here but – you know, first of all, the reality is this: when you’re, when you’re trying to – you know, look at your – our fleet. And my fleet is somewhat unique in that I have plants that are both regulated and unregulated, so I’m dealing with a merchant organization along with the regulator organization.

And you know, one of our biggest challenges that I see – and it deals with certainty and regulation, John – is our ability to be able to predict and have predictability in regulation. And it goes right back to the congressman’s point here. What we have to have – a vision of what our energy policy is going to be for our country.

Is carbon footprint important to us? Is nuclear power going to be part of that mix? And how do we make that competitive in this environment that we’re dealing with today? I mean – the reality is right now, with respect to Entergy, you know – we’re not planning on building new nuclear with $4 gas. It just doesn’t pass the hurdles for us to invest in that – in that kind of environment.

But one thing I can tell you is that predictability in regulation, all right – the ability for us to be able to understand what our – what our drivers are, going forward from our business standpoint, is utmost importance to us. And I know we don’t want to get into high-level waste storage, John. I promised you I’d avoid talking about that. And that’s part of it. It is about predictability; it’s about understanding where does this country really want to go with respect to nuclear power.

I’ve been in this business since 1972. It’s the only way to make electricity, in my mind – sorry, Peter. All right – but you know, it to me is – it’s a country’s – our country needs to make this decision. And then we as – you know, as the drivers in this business of ours has to help make us go forward in that area.

With respect to, you know, recommendations in this area for you, John, I would tell you that the energy policy that Marv talked about – specifically, electric policy – is, I think, is key in being able to jump-start this business of ours.

MR. BENNETT: Doug?

DOUG MAY: Yeah. Well, first of all, thanks for having me down here. It’s an honor to be here with experts in the nuclear – Dow is an advanced-material manufacturing company that, to be successful among other things, requires predictable, low-cost electricity which we’ve been talking about – but as importantly, is high-temperature processed heat.

And it’s one thing to move electricity around the country, but it’s much more difficult to move high-temperature heat across the country. And so I won’t beat the drum about predictability.

It requires us, then, to manage optionality. And one of the options that we see as a potential game-changer for us in a company that requires electricity and heat is some of the advanced nuclear technology and the modular, high-temperature, gas-cooled reactors that can get us both electricity and high-temperature processed heat.

When we say there’s a game changer – if society values carbon. And that’s the question, is – what’s our position on that? So we think it’s an important option to keep progressing. And it can be economical. Certainly, everyone has a future on natural gas prices 10, 15 years down the road. But we think it has a role. And game changers can’t be done by any single company, any single industry.

And that’s where the collaboration comes into play. And Dow, as a massive energy user, is here to help developers get the kind of funding needed to help these technologies move forward. We’re willing to sign long-term agreements when there’s a clear idea of what is valued to help these projects move forward.

MR. BENNETT: I believe it’s Glenn English from the National Rural Electric Co-op.

GLENN ENGLISH: Thank you very much. And I too would like to thank Third Way for hosting this meeting. And it’s a privilege to be here. Electric cooperatives in Georgia are also participating with Southern Company on the Vogtle plant. We’re very proud to do that. We think that it’s a great solution, makes a lot of sense for electric cooperatives. I would say, though, that one of the biggest problems I see – and I’ve heard this touched on just a bit around the table here today – is a partnership has to have certainty.

And in all candor, we don’t have the kind of commitment out of the federal government that gives that kind of reassurance. And I think that the federal government is going to have to demonstrate the fact that truly, that is our long-term policy and we are going to develop nuclear power in this country – that has to be demonstrated.

And even today, we find real inconsistencies with regard to policy. We had the 2005 energy act that was passed and provided the funding, the guarantees for moving forward. Those of us with electric cooperatives, while we’ve applied to the Department of Energy – so those loans says we did on the Vogtle plant; we participated. We appreciate that, Dr. Chu, that was great – Mr. Secretary.

But the other part of it is, at the same time, we have restrictions that we can’t use any of the rural utility-service loan funds in contributing to the building of a nuclear power plant. Now, where’s the consistency with that? And how does that make any sense? That doesn’t, to us, give us a real warm, fuzzy feeling that we know what we’re doing here – and we truly have seen the United States government commit to being a full-time partner, a long-term partner as far as this effort is concerned.

I would suggest that in order to do that – and I think what we’re really speaking of here is jump-starting the nuclear industry once again. It’s been mentioned that we’re short on nuclear engineers; the commitments are not being made because they don’t see a future in it. We don’t see parts being made in this country – being built overseas.

So we’re trying to really restart this industry. And we’re talking about a very long lead time here in order to build nuclear power plants to have those come online at a time in which they’re needed. Now, that’s a lot of long-term planning.

And if you don’t have the commitment, then how do you make those kind of long-term plans? And it is really a very iffy thing. And so I would suggest that we’re going to need to see far more in the way of commitment from the United States government to be able to move this industry forward, and to meet the points Ms. Browner made – and I would agree with her.

I think we’re going to see, without question – we’re not going to see much 5-cent power going in the future. We’re going to see power costs that are going to be increasing. We’re going to have new power plants that are going to be far more expensive than they are now. We’re going to have a different world.

And in 10 years from now, as we begin to phase out some of these older plants, we need some nuclear plants coming online. And in order to do that, I think we have to have some kind of assurance. So I would suggest there needs to be some linkage here. I know this is hard for government to do, and Congressman, I was in the Congress. I understand how hard it is from a policy standpoint.

You got a lot of different committees that have got to come together on this. But I would suggest that – and this is a little political heresy here – that we talk about a little bit about the fact that TVA, for instance, seems to be coming back online. We’ve already got one plant that came online in 2009. They’ve got some more plants that they partially built. They’re now completing those plants. We’re going to have more nuclear power coming online.

And that there was a great model that worked extremely well, particularly for those of us that are consumer-owned utilities and building the dams of this country – namely, the Power Marketing Administrations.

That model might work extremely well for demonstrating the commitment to the United States government – that, in fact, we do commit ourselves to a long-term energy future that includes nuclear, and demonstrate it by also giving utilities, investor-owned utilities as well as cooperatives and municipals the opportunity to purchase power.

And let the United States government step up and take advantage of those Department of Energy, as well as DOD, facilities for the small modular reactors and the new agreements that have been signed, and sell that part of those to folks – Ms. Browner – who may be interested in phasing out some of their older power plants.

So that would show commitment. That would be a way in which we could make some real advances as far as giving some confidence to young people who might want a career in the nuclear industry. And it’s certainly – it’ll give, I think – it’ll show the kind of commitment and promise that would help a lot of people who might want to go into the business of developing equipment in this country.

MR. BENNETT: We need to move on to our next set of discussions. I think all of you seeking to speak will find your comments will fit perfectly in those sections. But before we do, I’d like to ask Carol Browner to react and then, maybe, Admiral Grossenbacher can give a quick update for Senator Carper, who’s returned.

MS. BROWNER: So to – I think – Glenn makes two points I want to comment on. The first – you raised the issue of the rural utility loan funds. And if my memory serves me right, you get your money through USDA or – and so what we have here is something that actually, I think, it’s not the administration – I don’t want to take a position on it – but it’s actually more of a congressional problem in that there are two appropriators moving here who would have to find some common ground.

I suspect your appropriators aren’t keen to fund the nuclear programs if there’s already an appropriator funding the nuclear program. So I think it’s a valid point, but I think it’s going to – it’s something that’s not an administration issue, per se, as much as it’s going to be a need for some appropriators to find a way to work together.

The second point you make is about Power Market Administration. And yes, I think that is an interesting model. One of the things we looked at in creating the Recovery Act is the ability for the government to enter into long-term contracts for clean energy. And this is – only in Washington, is something like this possible.

But those contracts, the full value of them – so if there are 20-, 30-, 40-year contracts are scored in the first year. They’re not scored over the life of the contract, so when it – you’re dealing with CBO and you’re dealing with deficits and all those sorts of things, it makes them almost impossible to do.

MS. BROWNER: Now, I think there’s a very strong public-policy argument that could be made for these kind of contracts, that it’s a way in which the government can actually stimulate a certain type of investment. But I don’t think, given the scoring vagaries there is – and I’m sure CBA wouldn’t appreciate me using “vagaries” but nevertheless – (laughter) – the scoring vagaries. I’m not sure that, you know, absent of fixing that how we would be able to do that as much as I think – you know, it’s something we could be interested in.

MR. BENNETT: Admiral.

ADM. GROSSENBACHER: Senator, very quickly –

SEN. CARPER: Senator Voinovich is here, as well. He’ll be walking in the room very shortly.

ADM. GROSSENBACHER: Remember, our topic is public-private partnerships – lots of emphasis, certainly, from the private sector on the need for predictability, the need for consistency and our group policy and regulation together there.

A very important question that I won’t say that we answered, but we touched various elements of it and that’s – and Carol Browner alluded to this right from the start and I think Peter Bradford did as well. How much is too much support for nuclear? What’s the right amount? How do we – how do we gauge its competitiveness?

And there I think the question is unanswered, still, and it’s a difficult one, is from policy and regulation perspective – what rules? Is it short-term market forces? What are the factors that we use to determine our energy mix, our energy portfolio and nuclear’s role in that? So I think if the – unless I see strong objection from around the table that’s as quick a summary as I can give.

MR. BENNETT: Why don’t we go ahead and move on to our second topic. For those of you, like I said, seeking to speak earlier, I have no doubt that it will fit either in this topic or the one that follows which is on new infrastructure and new technology. Let me thank Carol Browner for joining us. And perhaps we could start here with a view from Wall Street, James Asselstine from Barclays is here and can you offer your views on the financing of nuclear power?

JAMES ASSELSTINE: Sure, I’d be happy to. Let me start by saying – describing the list of what I think investors or the rating agencies are concerned about as they look at new power plant projects. And the first item is one that Secretary Chu alluded to earlier and that’s, simply, the magnitude of the capital investment of these projects versus the size of the companies that are involved in the industry.

As Tom Fanning mentioned, his project is in the neighborhood of $14 billion. The market capitalization of his company is about $32 billion. So this is a very sizable investment relative to the size of the company. If you think of an ExxonMobil, for example, which has a market capitalization of $360 billion, making a $15-billion project investment is a much smaller bet than it is for the companies in this industry. And the fact of the matter is, this industry is relatively fragmented and these are very large investments compared to the size of the companies.

The second concern is the long lead time to develop, build and construct a new nuclear power plant. And you’re really looking at about a 10-year planning horizon from planning to working through the licensing process to building the plant to bringing the plant into commercial operation. That’s a very long time period given the magnitude of these projects.

The third is the new, but as yet untested, licensing process with the NRC that really holds the promise to correct some of the uncertainties that we saw in the licensing process for the current generation of plants but where that process has yet not been tested and worked through so that we see that the results are what we – what we hope for.

The fourth item is the ability of the companies to recover their investment in a new nuclear plant and to earn a fair return on the capital investment that they’re making. And that’s obviously a critical concern on investors’ parts, and you really have two business models in this industry. The first is the regulated-utility business model where what we’re really looking for is a close partnership between the state-rate regulators and the companies where we have a high degree of confidence that when the investment is made, the company will be allowed to earn – recover that investment in a timely manner and earn a fair return.

The second model is an unregulated-generation model, in about half the states in the country. And there what we’re looking for is assurance that this plant will be able to compete effectively given our expectation of market prices and, again, will be able to recover their investment and earn a reasonable return on invested capital.

The fifth requirement is the ability to operate the new plants safely and reliably once they go into operation. My own personal view is, that’s a relatively minor concern. All of the participants, in terms of new plants, have extensive experience in operating the existing fleet. The new designs are evolutionary, similar in many respects to the plants that have operated very successfully for the past 30 (years) or 40 years. And so I think operational issues are of relatively minimal concern.

And then finally, recognizing the ground rules, I’ll just mention it. I think investors are concerned about the ability on the part of the government to fulfill their contractual obligations to take responsibility for and ultimately ownership for the spent fuel. Those are really the six areas that I would highlight in terms of major concerns.

In terms of the second part of your question, what can the government do to help mitigate those risks? I would say, first, we need a continuation of strong public-policy support in favor of new nuclear-power development. I can – I think we’ve had that from every administration for as far back as I can remember, and the same thing is true from the Congress. So it’s more, I think, a continuation of the policies that we’ve seen in the past.

Second, on the NRC licensing process, I think we need an effective partnership on the part of the NRC and the applicants to make this process work efficiently and effectively. The NRC has its responsibilities, the industry has its, in terms of providing the necessary support for their applications, and we need to prove this process out and make sure that the process around the initial groups of plants works effectively and efficiently.

Third, from the standpoint of financial-risk mitigation, I think the most important tool to focus on is the Loan Guarantee Program. I agree with Tom Fanning, I think it is a useful tool for the regulated utilities. It provides a reliable source of low-cost financing to help support the debt component of the cost of the plants.

I think it is probably an essential tool for the unregulated generation plants, given the nature of the risk around those particular projects. And here I think the real challenge is to provide enough funding to move through at least an initial group of plants to get through the process, and second, we need a workable framework.

And I have some concerns about the existing framework and whether, particularly, in terms of the calculation of the credit-subsidy costs, this framework is working as we intended. I think it can be made to work effectively, and what you need is a fair balance in terms of protecting the government’s interests as a lender but also providing reasonable and low-cost financing to help support an initial group of projects.

MR. BENNETT: Thank you, let me make one point. A couple of people have referred to the ground rules relating to high-level nuclear waste. It was the judgment of the hosts and the co-chairs that with the president’s Blue Ribbon Commission underway there was no purpose in us spending a lot of time on the questions of waste, and so we asked participants to focus on other things. Obviously, if waste is on your mind you’re welcome to bring it up, but we hoped that folks would stay on other things.

ADM. GROSSENBACHER: Jim, I find your comments very – obviously, insightful and interesting. The one question I have perhaps for you and perhaps for others is, our financing methods – you know, did they suit this particular piece of energy infrastructure? You know, do we depreciate capital assets? Should it be different for a piece of energy infrastructure that essentially you would expect to last for a hundred years?

And a follow-on to that – perhaps others may want to chime in on this – is, this focus is all on the near term, if I may call it that, the new power plants of existing technology. How does the financing scheme change when it’s the higher-risk approach of a new-technology type of reactor with increased licensing risk, financing risks, you know, the things you outlined?

MR. ASSELSTINE: Okay. Yeah, two points. In terms of the next generation of plants, I would say there are a variety of tools that can be used, accelerated depreciation is one. There were a variety of incentives provided in the Energy Policy Act of 2005 apart from the loan guarantees which were intended to help the facilitate and encourage new nuclear-plant development.

The reality is, as I think some of our previous speakers have mentioned, in the current environment we’re in today, low-carbon energy alternatives are at somewhat of a disadvantage position, especially compared to gas-fired combined-cycle generation given where current prices are.

And so if we are going to pursue some of the low-carbon alternatives, some degree of incremental financial support is probably necessary. And you can do that by adjusting depreciation schedules, you can look at production tax credits which are already in place, investment tax credits which would be somewhat more favorable. The cash grant program for renewables that’s been in place for two years has worked very effectively in terms of stimulating low-carbon energy development. So those tools are all available.

For the longer term and for technologies that go beyond the existing plants, I would say the financial challenges are somewhat greater when you move beyond plants where we have a fair degree of experience.

The advantage of the large, new plants that are being proposed is that they’re quite similar to the plants that are currently in operation and it’s relatively easy for investors to look at the existing fleet, look at its performance, look at the new plants and have confidence that that performance will carry through into the new plants as well.

As you move to small modular reactors, other designs where we don’t have that body of experience, then some incremental degree of financial support may well be needed. I’ll go back to the point that Marv Fertel made earlier.

I’m also a big fan of Senator Bingaman’s proposal for a clean energy deployment administration. I think having one entity that is responsible for providing financing assistance for clean-energy alternatives is very helpful and especially for new technologies that are in more of the evolutionary stage. So I’ve also been a supporter of that proposal.

MR. BENNETT: Let’s move – is that Secretary Chu seeking to speak? Yes, Mr. Secretary.

SEC. CHU: Yeah, just a quick a comment as someone who’s been the throes of – in the real guts of the loan guarantees. If you’re a utility company and you’ve got a lot of assets, like Southern, you can go to the right commission and you can say this – and look, it’s a very solid company, it looks like a good investment, the rate commission says okay – then the credit subsidy can be quite low and it’s a good deal.

And for those of you who don’t know this, the builder of the nuclear power plant pays for that credit subsidy. It’s essentially like mortgage insurance. If you’re a merchant supplier and there – and you can’t bank on the cost of carbon in the coming decades – and you can probably say, at least in the first two decades, gas prices will be low, but you don’t really know what’s going to happen 50 years from now. Then there are all sorts of uncertainties that pop up.

And even if you had a single-entity, a CIDA, which I am in favor of, quite frankly, that just the finances of that – and so again, I think many people said this, the U.S. government has to decide what they want to do.

If they don’t do anything and just say, let the free market take care of it, that will always favor the incumbent way of doing – of producing energy, guaranteed. It’s the most safe way. We’re comfortable with this, the utility companies know that they have customers, they don’t want blackouts, that’s the safest way which is – so the safest way is, don’t go forward. And the only trouble with that is, many other countries around the world are going forward.

And so if you want to stimulate newer forms of energy, cleaner forms of energy, whether it be wind or solar or geothermal or nuclear, you have to have a – how do you want to do this? So how are you going to create a market draw that will guarantee a merchant supplier will be able to sell it? The government doesn’t have to pick favorites here. They can just say, it doesn’t matter what form of clean energy – f it wants clean energy – we’re willing to say that there’s a certain fraction.

And so it’s not just loan guarantees alone, it’s all these other factors – you know, the cost of coal, you know, the natural favoring of status quo, all these things. And we just have to take a deep look at, is this what we want? If we do nothing, that’s what we’ll get.

MR. BENNETT: Chip Pardee from Exelon. You already have early-site permits for your company. Why don’t you respond to about what you heard from the secretary and from others?

CHIP PARDEE: I will, rather than directly respond, I think, complement his – compliment with an E his commentary. Just for disclosure, Exelon currently owns and operates essentially 17 nuclear units. We have a great deal of experience with the current fleet.

We are also one of those companies that submitted for a combined, you know, construction and operations license and have subsequently shelved it for financial reasons. We can’t make the numbers work to support new plant construction in the merchant marketplace, and we operate our power plants in a merchant marketplace.

I think – the way I view this, we have the obligation – the obligation to provide safe, environmentally responsible, reliable, cost effective and predictable power supplies for future generations. If we leave this to, simply, market reactions or even regulatory or legislative reactions to the horizons that we’re operating with right now, it’s not going to work.

So back to your introductory comments, Admiral, we do have to view this through the lens of the long view. Otherwise I don’t think we’ll solve any of the most important problems at hand. I agree with the commentary that loan guarantees are not the only lever that we need to pull.

From a merchant – electric generator, the two things that we would look for is the lowering of the price of entry through instruments such as loan guarantees, and the subsequent stability of cash flow is the other large lever that can help us see our way clear to making these kinds of investments that we described earlier. And there’s a couple ways, going back to the first topic, where I think we could help ourselves with that.

The ability to in some form incent long PPAs, purchase-power agreements, I think is very important for those companies that operate in the merchant market. And that can come through either legislative support, incentives to sign long-term power-purchase agreements, and I mean 20-, 30-year purchase-power agreements or use the fact that the federal government is essentially the largest purchaser of electricity in this country – use that market power to cause companies like mine to be able to go construct power plants.

And I will say, with small modular reactors, the numbers become much more palatable all the way around. So I appreciate Ms. Browner’s comments about how the scoring works. I think that’s critical to merchant generators to review that, because I think we could jumpstart the construction cycle by creating that long-term marketplace that forms a surrogate for some of the conditions that Mr. Fanning was describing in his regulated marketplace. So access to the capital at reasonable costs and knowing where and for how much you’re going to sell your resource really completes the equation.

MR. BENNETT: I think Senator Voinovich had a comment?

SEN. VOINOVICH: Yeah, is John Rowe part of your company?

MR. PARDEE: He is.

SEN. VOINOVICH: Okay.

MR. PARDEE: He would be a principal part of the company – (laughter).

SEN. VOINOVICH: Well, I remember his testimony before our committee and he just said straight out that unless you got carbon at $100-a-ton, we’re not going to build anymore nuclear power plants. And you’re saying that access to capital and these purchase-power agreements into the future could help give you another alternative to that?

MR. PARDEE: The $100-a ton – and we could argue over the number – I think we would publicly say on Wall Street, $8 gas, $25 carbon, and of course the scales slide depending on which end of the combustion cycle we’re talking about.

But the notion of having some long-term element that provide substantive indication to us for what the cost of the product, the revenue from the product would be – would help solve that problem. Hundred-dollar carbon is one of those instruments. So I don’t think we were contradictory. I certainly hope not, given that he’s the chairman – (laughter) – but I think we’re both talking about different elements that set the same landscape.

SEN. VOINOVICH: I’d just like to – I’d like to say that it’d be nice in a chart to put down a $100 a ton, and then what are the alternatives to start to balance those.

MR. BENNETT: We’ll do that for sure in the next session. Senator?

SEN. CARPER: Y’all maybe discussed when we were out of the room. But I think in his comments earlier, Secretary Chu mentioned the word clean-energy standard. George (ph) and I spoke briefly with Carol Browner as she was leaving about the same subject. Have y’all had a chance to discuss what might be part of clean energy and – different folks have different views of what a clean-energy standard is.

And my view of a clean-energy standard – and we actually had a good discussion – I mentioned to George – we had a good discussion on this at a summit on innovation in technology that some of our Democrats co-hosted out in California a couple of months ago.

And the – our Republican friends in the Senate are less comfortable with renewable-electricity standards; they’re more comfortable with a clean-energy standard that allows the utility to get some credit at least early on for really clean coal.

And I don’t know if it’s – you’re trying for man’s hope over experience that some kind of – some form of clean-energy standard might actually bridge the difference between the two sides and enable us to provide some of the incentives that are needing – we’re going to be needing given the fact that we’re not going to put a price on carbon, at least for a while.

MR. BENNETT: Let me turn first to Mike Rencheck with AREVA and then to John Dyson, who not only sits on the board of Third Way but ran the New York State Power Authority when they were building nuclear plants.

MIKE RENCHECK: I just would like – I would like to re-emphasize the necessity of the loan guarantees already on. We’re building an enrichment plant in Idaho. It’s a $3.5 billion investment in critical infrastructure in the U.S. It’ll ensure our operating fleet and any new plants have consistent fuel supply going well into the future.

I can tell you, we look forward at the marketplace and we sold the output – roughly 70 percent of the output of the plant going forward. But without the loan-guarantee credit subsidy, we would not have been able to build and construct this facility, even with a plant that has the output sold.

So access to credit market, access to loan and money is very important for us, but also like the manufacturers to gain some benefit from a production tax credit that would help us to create jobs and not only look at the initial investment, be able to set the stage for planned investments and expansion.

We think the facilities that we’re building now, including the modular-type facilities of which our plant is, could be expanded in a near-term to provide more secure U.S. infrastructure. The benefit of that: We’ll create over 5,000 jobs in the near term. We’ll provide about $5 billion worth of economic stimulus in the area and in the United States just from this single project alone.

But I can tell you, without the loan guarantee – and it is a guarantee, it’s not a giveaway; we will repay the loan – we would not have been able to build this facility.

MR. BENNETT: Thank you, Mike. John.

JOHN DYSON: I would just to like – and pardon my cold as well. Hopefully it’ll go away.

I wanted to point out a couple of things in my experience. I’m here as a trustee of the Third Way, and I thank them and also the Idaho Lab for putting it together. Admiral, I had five of your submarine commanders work for me at the New York State Power Authority, and that’s why our nuclear plants achieved the A-ratings they did.

The first thing I would like to say about finance is that all these projects we’re talking about are high-cost but low-operational. And when Niagara Falls was built it, was so big that it turned off all of the generating plants through the entire of upstate New York in the ’60s. It was not cheaper, but it was owned by a state agency and was a PSC. We made the private utilities buy it.

Today that plant – recently relicensed by the federal government – generates electricity to the word you probably haven’t heard, except people in this room, at four mills per kilowatt hour. A mill is a tenth of a cent. It’s a word that has disappeared from the inflationary world we live in. We also ran two nuclear plants built in the ’70s. And in the beginning they don’t look so good, but after a few years they look very cheap. So I would urge you to understand that these high-capital, low-cost – from an operational point of view – facilities always pay over time.

Secondly, I think the people making these judgments, with all due respect to Secretary Chu – I have done finance all my life, and the people I know in New York who have looked at the rates being offered to the merchant plants – we find them unimaginably high. We understand where there is a rate base and a bunch of rate pairs to look to that could be low. But we do not believe these numbers are fair. And I have no interest in the nuclear industry any longer, I should make clear. But I don’t think they’re fair.

The third point I would make is this financial discussion that’s extremely unbalanced. We have 80 billion (dollars) or so of direct gift subsidies for certain kinds of favored, I call them, “cute power.” And we are struggling over 50 billion (dollars) of loan guarantees – not loans, even – not subsidy, not loan, but a loan guarantee. We’re quite a long way away from spending the federal money.

The next thing that one needs to understand is, in the old days, power pools in states built these new facilities in a kind of consortium. The seven utilities of New York plus the power authority would build a project, share in the financial risk and of course share in the operating and financial benefits. I think there may be some way we can go back to that kind of model, although we’ve tried to deregulate, maybe we overdid it because in those days, big projects could be built by sharing the equity load and spreading it among a number of people.

The next thing I would say about the – trying to figure out finance is, the biggest problem the last time with nuclear plants is that the Nuclear Regulatory Commission would change the rules after construction began. And I would like to hear the chairman and the secretary to say what they intend to do now. But it seems to me you cannot build anything, even a house, without knowing that you’re not going to have changes in the rules while you’re in the middle of construction.

I saw eight-inch pipes move from one side to the other of a nuclear plant because somebody at the NRC thought it ought to be on this side of the building and not on the other side of the building after they had already been hung on the walls. That kind of stuff cannot be tolerated in the future and have any reliable cost predictions.

We have a natural -gas bubble, in my opinion. These projects are 60- and 70-years long. I think, frankly, we should take this nuclear-gas bubble as a – natural-gas bubble, rather, as a relief. And it gives us the 20 years it’ll take to get the designs approved, to get the workmen to build these facilities, which is at least 10 years, and then get them operating.

And by then, the natural-gas bubble will be disappearing, in my opinion. We have a lot of this gas under the state of New York, as well as Pennsylvania. Currently it’s opposed by the environmentalists in New York – (laughter) – so we’re – we’ve lost 8,000 jobs to Pennsylvania’s benefit. But it is, I think, only a bubble.

And the final element of financing here is the uncertainty surrounding relicensing. The existing plants have a number of issues with regulatory certainty. And business, I would urge you to remember, and financing anything, if we can get as many things certain and predictable as possible, we use the business people to figure out what are the risks of the remaining problems.

When they have a world like this where nothing is known, it is impossible to make business decisions. If you have a public-service commission that’s favorable, as in Georgia or South Carolina, that helps a lot, particularly if you have rate payers who will pick up the cost. Then it’s easy for you to give the loan guarantees, Secretary Chu.

But the hard ones are where the uncertainty is too high. One thing that would lower it is if in the relicensing, we really did assert, as Eisenhower intended, federal, national control over nuclear power. When I was running the power authority, the NRC took the view that if any one county would not participate in the emergency plan, that the emergency plan was not valid and the plant had to shut.

That policy was later reversed. The theory that anybody who was a responsible person, sheriff or somebody, would actually come to the aid of the people involved, should there be, actually, an emergency. So this local veto was removed.

Now, we have a local veto over water, the water for the cooling supply. I hope you will understand that that’s giving up federal control over nuclear power in exactly the same way as allowing local people to decide not to participate in an emergency planning exercise.

So all of those things added together don’t read, to me, as a citizen watching from New York, as there’s really a national policy to run the existing facilities and to build new ones and to make it economically possible. All those kinds of things I’ve talked about to create certainty have got to be done. Many of the people who can do them are in this room.

MR. BENNETT: So let’s hear from the secretary and the chairman and then we should probably move on to the next slide.

SEC. CHU: Very quickly, by statute, the Department of Energy doesn’t determine the credit subsidy, it’s the OMB. So that’s not in our control. However, I would say – and this comes up over and over again and I’d go back to what Senator Carper asked for because realistically, in the next couple years, we shouldn’t bank on – I think no company here would bank on a $100/ton price in carbon.

We also know that this is said over and over again, that this is a 60-, 70-, 80-year horizon. And so what should the country do in this long-term horizon to do the things? You know, I just heard from you that there was a heavy hand in government that said build hydropower in Niagara Falls. And over the long term, it was an excellent idea. There was a long-term commitment to build hydropower in the U.S. during the Great Depression.

And in the long term, that was an incredibly good investment. And so I think I go back to this. If there’s not going to be a price on carbon that industry can bank on in the near-term future, look at the other mechanisms that are available to guarantee that if someone builds a nuclear power plant, they can sell the power.

And it’s as simple as that. And if you don’t have something like that, there’ll be all this uncertainty still lingering and even if the formulas for credit subsidy were changed, there would still be a lot of uncertainty and I think it boils down to that. What should say – because it’s the federal government that ultimately is going to be responsible for the long term.

The local companies have to make decisions as best they can on what they see the price of natural gas, but no one really knows what the price of natural gas will be 50 years from today, okay? And so the government has to say, okay, in the best long-term interest of the country, what should we do? And that means a long-term, consistent policy.

MR. BENNETT: Mr. Chairman?

MR. JACZKO: Well, on the issue of the regulatory process and I think fundamentally, the agency has changed its regulatory process so that we – we do licensing up front and construction second in order to provide that certainty that once you enter into the construction process, there will not be a change in regulations.

And if there are regulatory changes, they have to go through a very high test to ensure that those are cost beneficial. So to some extent, I think the agency has attempted to solve that problem. It has brought up new problems as with any complicated process like this and that has to do, then, with the degree of certainty and finality in any of the designs.

And I think as we’re getting close to the end of the licensing process, the questions are now starting to look towards how flexible and adaptable will be the – will the construction oversight be – more from the perspective of licensees needing to make modifications to their facilities, not the NRC imposing modifications, but on the other side.

So I think we’re working to resolve those challenges as best we can, but I think as Marv said earlier, this is the first time through this process. So the expectation, I think, will be that there will be challenges. I think we’ll continue to be flexible and adaptable and have good communication with the applicants and the licensees so that we can work through those challenges and each party can fulfill their respective responsibilities.

The one thing that I do see, I think, and I think as you brought it up, is this new process was a result of the lessons that we learned in the ’70s and the ’80s about how things could go wrong. What I do tend to see a little bit of, though, is people now looking at the new process and having warm feelings for the old process because of course, the new process has some challenges.

So then, you know, now, there’s certainly, in certain areas, people are wanting to look, perhaps, as the old process, which allows you to go out and design and build, may have certain advantages, in particular, if you’re dealing with new technology. So it may be that as we go forward, the different processes will lend themselves to different types of technology.

But I think, you know, the last piece that I would just add on the process and I think it’s really a key – a crucial piece of it is standardization. And the process that we developed was really designed around the idea of standardization. Standardization is not something the agency imposes. It’s something we’ve tried to develop a framework to encourage applicants and licensees to follow.

But ultimately, that becomes a discipline on the part of the applicant. And if we’re talking about technology investments for 60, 70, 80, 90 years, design modifications that may happen over the course of two or three years may not be relevant when we’re really looking over such a long period of time.

So you know, it’s an area where as I look out at all the designs we’re seeing, you know, we hear from vendors about ways that they can tweak them, modify them, make them better. That puts us back into the design review process, which puts us back into schedule, kinds of challenges and uncertainties.

Whereas if we’re taking a design, finalizing that design, finalizing our review and having a fairly high threshold for applicants utilizing those designs, it takes a big piece out of the regulatory equation. It really wraps up the bulk of the work and allows for a much more predictable regulatory process going forward.

But if the discipline isn’t there to maintain the standardization, we will be in a constant licensing effort at the design stage, which I don’t necessarily know is the most beneficial for some of the concerns that I’ve seen raised about the certainty and those kinds of things from a financing standpoint, so.

ADM. GROSSENBACHER: Well, thank you, ladies and gentlemen. I think we’ll move to our next topic, which is rebuilding the nuclear industry infrastructure and the issue of new technologies. Now, obviously, this is a huge topic.

If I may, I’d suggest we start with the – what I’ll call the industrial infrastructure in the United States to produce things nuclear as opposes the R&D, RDD&D infrastructure, or even as opposed to new technologies.

So I’d like to start there, with the question broadly written on how we do this – how this component of nuclear energy and its contribution to the economic competitiveness of the United States, its industrial competitiveness, how that can be served. And if I may, I’d like to start with Jack Fuller and Mike Rencheck on this. I think this is a place where you two sit often.

JACK FULLER: Well, thank you, Admiral. What I’d like to go back and consider, though, is a lot of what we’re trying to do is think about what is the policy of the country going to be, going forward. And there are other nations around the world that have figured this out and may be models for us to look at.

There are other nations around the world that have said we want 25, 35 percent of our energy, generational electricity to be renewable, clean or other carbon-free technologies. And I think that as part of this commission, we ought to take a look at those countries and say have they got it right or have they got it wrong? Or could we apply it differently? As you come up with a policy like that, it starts to drive where the industry will go.

In other words, if the U.S. government said tomorrow that we want 50 percent clean energy by 2050, the industry around the United States would suddenly react to that. Some of it would be nuclear, some would be wind, some would be geothermal. Some would be other technologies we haven’t even thought of yet such as solar, that would allow us to progress towards that objective, that policy decision as a country.

I think that’s one of the most important stage setters on driving the industry. Once you’ve done that, if you say that we’re going to go to a certain place – if that is our vision – then the incentives are there for industry to invest heavily in getting to that vision in some fashion, to invest heavily in the technology.

And the people to develop that vision and to find a way to build the infrastructure back up, whether it’s nuclear or other clean technologies in order to have adequate resources in this country, not only for what our needs are, but for the needs of the exports into other countries around the world.

Now, the president set a goal a while back of two times – doubling our annual exports of goods and services. What better way to do it in the U.S. except through the use of innovation and technology? So this would help us all think about where we put our resources, how we build that commitment and how we move forward.

From a nuclear-specific point of view, I think we just ought to get our heads around building 10 to 15 new plants between now and 2030. Ten to 15 new plants between now and 2030 and figure out how, between the industry and government, we can facilitate doing that. That, alone, will enable all of the U.S. industry to redevelop, to be re-encouraged, to reinvest.

But more importantly, it will then get the rest of the world to notice that the U.S. is investing – the U.S. industry as well as U.S. government investing in new nuclear technology and they’ll be more receptive to those technologies being exportable to other countries which then turns right around and becomes part of the export of new technologies, job creation in the United States as we move forward.

So I think that creates the export model and that creates the job growth in the United States and that creates the vision that we need to have going forward in the future. But I think we really need to start with what is it we want from a clean energy portfolio by some year – pick it – and then let’s all start going, work in it. Thank you.

MR. BENNETT: Mike.

MR. RENCHECK: I’d just like to advance what Jack said in the terms of the clean energy standard of clean energy portfolio. With some of the initiatives that the DOE has discussed in the past around clean energy parks and that may be a way for the DOE to enter the clean energy standard and help reuse some of the existing properties around the country or create new areas of innovation for clean energy of the portfolio that Jack would describe.

And you know, in our efforts of how do you link manufacturing, then, into those parks. Well, for a manufacturer to want to expand, they need to see a queue. They need to see the 10 to 15 plants that Jack spoke about. If they see that queue, you can attract a variety of people who are interested in becoming part of the supply chain here in the U.S.

Now, how do we know that? At AREVA, we just held what we called a supplier day for the Eagle Rock plant in Idaho. We had over 200 companies show up, willing to pay $100 registration fee that went to a local charity and over 300 people in attendance. And some of the – and we’ve done it at two other times, once in Maryland and once in Ohio. It had similar results.

And the types of information that you get from dialoguing with the companies that show up is that they’re looking to come back to the U.S. Many of them have participated abroad, but they’re looking to come back to the U.S. and set up the manufacturing and supply here in the United States, locally.

And I think they’re going to need assistance to do that, to restart here in the U.S., one from the quality assurance program perspective, one just from establishing and rebuilding the manufacturing base, some form of manufacturing tax credit that would help them get up and get started.

And then also tying into the educational system, making sure we have a robust supply of craft labor to build the facilities, a supply of technicians that work in the manufacturing plants as well as folks that can turn out the next generation of engineers that’ll help innovate and create these technologies.

MR. BENNETT: I want to make sure that we get to some of the folks who haven’t gotten a chance to speak. Obviously, Brandon Bethards, Bobcock &Wilcox has a huge stake in this and I wonder if we could hear from Bruce Burton to hear about organized labor dispute.

BRANDON BETHARDS: Thank you, Matt, and I would like to reinforce what Mike said and what my associate at GE said.

I think one of the more important or most active programs we can take going forward with regard to rebuilding the infrastructure and promoting new global competitive nuclear technologies is not so much to start from scratch, but recognize that we have one of the most successful records in the world here with regard to the owners and the operators of our nuclear facilities and with regard to the technologies that we have developed and still continue to use that are U.S.-based.

So going forward, I think one – I challenge the deputies this afternoon to think of early successes and how do you achieve early successes? You – you leverage existing positions and you look in the rearview mirror to see what’s worked recently. A number of them have been mentioned, the cooperation of public-private partnerships, using government as an offtaker of energy and using it as a – through the DOE programs as a push on new technology.

We have an existing infrastructure in the U.S. to build nuclear facilities. We just simply apply it in the Department of Defense applications and these are mobile reactor systems. So they are the highest quality, the best performance and the highest proven reliability in the world and they provide us 24/7, 24-hour protection around the world.

So in moving forward with new applications, let’s leverage that infrastructure that already exists that will attract the private capital, that will attract the human resources. We need to partner with both the public and with the operators and owners of the generating systems to look at offshore business models that we can put all that to work to be very competitive in the desired supplier.

MR. BENNETT: Bruce?

BRUCE BURTON: Thanks, Matt.

MR. BENNETT: Your mic. Yep.

MR. BURTON: How’s that?

MR. BENNETT: Perfect.

MR. BURTON: I didn’t mean to be a wallflower, but I didn’t think my comments would fit in well until about now. (Chuckles.) Let met talk first to the IBEW standing in all this and by that, I also mean the – the unionized building and construction trades and even manufacturing, that is, the labor movement.

We’re about the jobs. We’re here for the jobs. Secretary Chu, when you hear from us on loan guarantees or any other issue, it’s basically about how many people can we get to work? How many people can we have working? And that’s what we’re all about in this. We like nuclear, frankly, because it’s so labor intensive and let me give you an example of what I’m talking about.

Based on a thousand kilowatts of electrical generation, the nuclear industry will put 500 people to work on the operating and maintenance side, versus natural gas, which would put 60 people to work. And I’ll let others talk to natural gas and perhaps environmental problems with the fracking process, but for us, it’s all about the jobs.

And even on the construction side, building a nuclear plant is far more labor intensive for, in our case, electricians, than it is to build new natural gas generation. And you know, I’m 51 years old. I do recall the volatility of the price of natural gas and I don’t think that’s going to go away anytime soon.

So the other thing that we bring to the table is our training and our drug testing and alcohol programs as well. When an IBEW electrician comes out of a union hiring hall to go to work on a nuclear plant, first of all, chances are – depending on the state, he’s going to be a – or she – is going to be a licensed electrician and we also have extensive drug and alcohol testing too. So you’re getting someone who’s very competent and very clean.

That’s very important to the industry and I think it’s one of the things that we actually bring to the table. So – but that’s the – oh, I also should say to the manufacturing end of it, one of our employers, Curtiss-Wright, up in Cheswick, Pennsylvania, has about 750 people that work in the plant.

I don’t know how many of those are our members, I would guess somewhere in the neighborhood of three-and-a-quarter. So we’re also – the IBEW is part of the construction side. We’re part of the operating side and we’re also part of the manufacturing side. And the potential for job creation in this industry at a time when the national unemployment rate is almost 10 percent is just huge.

And I should also say to concerns about, you know, will there be enough qualified craftspeople to do this work? Unemployment in the building and construction trades generally runs two to two-and-a-half times the regular rate of unemployment and we’re finding that to be true with our locals as an average.

So right now, about 25 percent of IBEW electricians are unemployed. But that doesn’t tell the whole story. In my home local of Detroit, Michigan, that figure is more like about 35 percent. Now, I say that in the context of this crowd – that’s a lot of labor that’s sitting there, ready to go to work for you.

These are people that are willing to travel. That’s why we use the term “journeyperson” or “journeymen” or “journey-level tradesperson” because we go to different parts of the country to go to work. And so I would say let’s get this thing going and our people would like to go to work, so thank you much.

ADM. GROSSENBACHER: I’m interested in David Crane’s and David Christian’s perspective on this issue and I’d like to put a point on it relative to industrial infrastructure and what I’ll call the supply chain challenges associated with new nuclear power plants.

Everyone knows the story of Japan Steel Works and when it comes to a large, high-quality stainless steel forgings, that’s where you go to line up. Is there potential for the United States to get back into that aspect of this business? Not just that technology, that product, but nuclear components are often sophisticated, difficult and expensive to manufacture and really require cutting-edge technology in terms of hardcore engineering and experience.

If you just see what Japan Steel Works went through, it’s not by – it’s not a mystery that they make the highest quality stainless steel forgings in the world because they work very hard at it. So David and David, I’m interested in your perspectives.

DAVID CHRISTIAN: Perhaps I’m going to go first. My name – David Christian with Dominion and I’d like to thank Third Way and everyone in the room for the opportunity and the privilege to be here and listen to this dialogue and participate in this dialogue.

And for the Dominion customers in the room, I’d like to thank you for continuing that correspondence – (laughter) – correspondence relationship that we have every month – (laughter). And if I may, I’d just like to bridge two or three of the topics today on public-private partnership and then financing, and then quickly get to your question, Admiral Grossenbacher.

You know, we haven’t talked that much about the state public-private partnership. And one of the things that regulated utilities have to do on a routine basis is file Integrated Resource Plans where we have to look 15 (years) to 25 year in the future. And of course, this varies from state to state to far how you have to look out – look at load growth and how you’re going to meet that demand going forward.

Could we not at the federal level have an Integrated Resource Plan that goes out 100 years, and make some judgments and use that to overcome the short-term – (inaudible) – and then put into place a long view and a policy which supports increased nuclear deployment?

And the states, of course – we have, like John Herron, we have plants in both the regulated and the merchant markets, and we are, like Mr. Fanning, looking at construction at our North Anna site which is in a regulated market where there are recovery mechanisms.

And let me say that there won’t be any plants built until the next plant is built. And as a member of the nuclear community, I’m going to do everything I can, and our company will do everything we can, to make Southern successful as they go forward.

But with respect to the economic impact, and can we bring this home – in preparation for this build, we went around the world. We looked at JSW, Doosan, Shalon – where is the manufacturing? Where is the capability? What are the mistakes? What are the pitfalls? And then, who’s doing it right? I haven’t seen anything that’s being done overseas that could not be done in the United States – or in fact had not been done in the United States in the past.

We’re fully capable of doing that. When we look at the direct-, indirect- and induced-job impacts of the North Anna facility, it’s huge – and the economic impact – 2 billion (dollars) on a nationwide basis after completion in terms of direct, indirect and induced jobs.

So there is every reason to believe we can bring that capability into the United States and restart that. But the key is to get the next plant built, and the plant after that, and the plant after that. We all have to be focused on making these first few plants successful.

MR. BENNETT: David Crane?

DAVID CRANE: Thank you. I guess I’m the representative of the person trying to build nuclear plants into a non-regulated market. And I mean, in terms of this specific – and if I could, I’d like to address – answer the question you posed, but then also tie it back to something a little bit broader.

You know, first of all, I agree with David. I mean, we’ve gone – we’ve looked through the procurement. There’s a lot of focus on the fact that the ultra-heavy forgings can only come from Japan Steel Works, and I think that’s annoying to a lot of people. It’s probably – I think it’s very annoying to Senator Voinovich, who would certainly like to see those forgings being done in Ohio.

But I would say that, you know, in rough terms, the cost of the nuclear plant we’re talking about building is a $10 billion project – you know, the EPC price. You know, the ultra-heavy forgings are, you know, 2 (percent) to 3 percent of that total. So there’s a whole lot of stuff that goes into a nuclear plant. You don’t actually – you know – you know, I think the ultra-heavy forgings are more of an annoyance from the ultra-long lead time that’s necessary.

But as we go around and we recognize – we started down the path of deciding, if we couldn’t be, you know, within the first two or three nuclear plants to build in this country in a competitive market, we couldn’t afford to do it, because we needed all the benefits of the Energy Policy Act of 2005. And one of the big benefits, of course, is the $18 per megawatt hour production tax credit.

And one of the – you know, and I don’t want to complain about the things that have come with going first. I mean, you know, we worked well with the DOE but it’s their first time through the process, it’s our first time through the process, so that’s taken a fair amount of time.

NRC, the same thing. You know, we’ve had a great working relation with them. It just – everything takes a lot of time in the nuclear world. And hopefully, I’d say, first of all is, we’ve got to make sure that this first wave of two or three projects – that there’s learning from those projects so that the next time – that the next wave that follows, wave 1B or wave 1-2, goes a lot quicker, or else we’re not actually going to have the nuclear renaissance, because the basic problem with nuclear power plants is that the cycle to develop, construct and operate a nuclear power plant is longer than the average business cycle by a huge amount.

I mean, we have no ability to recover the cost that we’ve spent. You know, we started spending money on this in 2006, which was actually late compared to most power companies. But we’ve quickly made up for it by spending a huge amount of money, you know, $450 million. And we have no hope of any revenue from that plant. If everything goes right, we’ll get our first dollar of revenue in the year 2017. And I don’t know of that many businesses that start spending serious money in 2006 to get money back in 2017.

And the last comment I’d make is that, you know, the wholesale power industry and non-regulated markets in particular operates off the natural-gas price cycle. And right now, we’re all suffering from the tyranny of low-natural gas prices. You can imagine, when we started working on a nuclear plant in 2006, we were in a completely different natural-gas price environment – where we are.

So to the extent Secretary Chu has said a clean-energy portfolio standard is the way to go, I’m 120 percent with him. I would just ask everyone – the deputies’ group that’s working this afternoon – to recognize that a clean-energy portfolio standard is not just a renewable portfolio standard on testosterone. You know, it’s not just RPS plus nuclear. The first thing is, you’re talking about a completely different number.

And I go back to what Jack’s saying – we’re not talking about like 15 percent, create a niche for wind and solar. We’re talking about something that should be at least 50 percent. I mean, a clean-energy portfolio standard, properly done is, a national energy policy for the United States. And it doesn’t pick technologies. It allows the private sector to go out and say, okay, this is what type of thing the government wants over the next 30 years, now let’s innovate and figure out the way to do it.

So first thing I’d say, it’s a very different number. It’s like 50 percent by 2050 – I think that’s a certain – there’s a certain poetry there. The second thing is, I think – and I don’t want to talk to the honorable senators about this, but if the senators recognize the geographical differences between different parts of the country – and I think you have to make it so that every geographic region of the country can comply with something that they do within regions.

So nuclear, I’ve said, is the renewable of the South. Offshore wind is the renewable of the Northeast United States, and then, to bring to the center of the country, you got to give hope to the clean coal. And I think in particular, offshore wind and clean coal need some sort of specific help outside of the monetary, just in terms of permitting things. But since this is a nuclear conference, I won’t bother anybody with what those – what those things are.

So I really think that as the energy of this room could go in towards detailing what a clean-energy portfolio standard would look like, I think that a lot would be gained, because again, it seems to me that that’s something that perhaps Democrats and Republicans can get together on, in the way that you two are shining examples.

MR. BENNETT: Thank you. We have a hard deadline four minutes from now that we must be done. Peter has been waiting a long time. I believe Doug – is that you – one minute each, and then we’re going to return to our co-chairs, and if the secretary and the chairman want to say anything, we’ll be finished. Peter, real quickly.

MR. BRADFORD: I actually had several points to make. And let me just try to summarize them. There’s a lot of focus on how to do it without much focus here on whether or not it is a good idea. The concept of going with an all-of-the-above approach requires some discipline. And we just – we can never afford to do all of the above. We don’t use caviar to fight world hunger and we’re not going to use 15 (cent), 20-cent-a-kilowatt-hour electricity anytime soon as a principal vehicle against climate change.

Loan guarantees are not free money. And they represent a risk transfer from the investors to taxpayers. So they’re not a saving in the sense that cheaper concrete or cheaper labor is. Of course, if the full credit-subsidy cost is paid, that takes care of that concern. But the risks are real. Half of all the nuclear plants ever ordered in the U.S. were canceled.

Canceled plants can’t recover in power-market jurisdictions. So there’s a risk out there that’s well above the – sort of, the minimums. And underpricing of risk is a fundamental element in all the bubbles that we’ve seen. It’s – they’re also not new capital. They create a favored class of borrowers who will have an easier time getting capital that society may also want for other purposes.

And the last point that I’ll trouble to make now is that the idea that there’s a great deal of future stability from changes in the NRC licensing process seems to me to be very much questionable.

And it’s not that the process isn’t better and improved. It’s that the idea that this is going to eliminate or greatly reduce regulatory uncertainty is based on a misunderstanding of the history of what went on in the ’70s and ’80s. It was events that drove the changes that drove the costs higher.

The NRC did not reverse the blueprints at Diablo Canyon. The NRC didn’t hold a candle to the insulation at Browns Ferry and create changes in the entire fire protection regimen. The NRC didn’t hole the release valve open atop the pressurizer at Three Mile Island. The NRC did respond to all of those events with changes in regulation.

But if events like that happen again in 2012, ’13, and ’14, the NRC is going to have to respond again and there’s nothing in the licensing reforms that are in place now that can change that. There’s a big responsibility on the industry here too.

MR. BENNETT: Thank you, Peter. Quickly, Doug?

MR. MAY: Yeah, if I can make a few comments, I guess. You know, Dow’s been a company that’s been around for 113 years and we intend to be around for the next 13 years. And so there’s a lot of uncertainty. And the comments about a price signal is certainly important. But we can’t let uncertainty lead to inaction.

So as we think about building up this nuclear infrastructure, I’d just encourage all of us to not – to let nuclear go beyond just electric power. Back to my comment on steam and the industrial users, that’s a growth market for nuclear and helping and building out the infrastructure that industrial manufacturers like us that really operate at the nexus of energy.

We use massive amounts of energy to make the products that help homeowners and car owners reduce energy – don’t forget the role of high-temperature processed heat when you think about how nuclear can advance.

MR. BENNETT: Thank you. With that, let me turn it back to our co-chairs and let me just – one programming note. When we finish, if you could keep your seats. Observers, we’re going to have the participants file out first. That would be very helpful. Thanks. Senators?

SEN. VOINOVICH: I’m just thinking one of the things I did when I became governor was we had promised $26 billion worth of highways in the state of Ohio and I said there’s no way that we can do this. We have to have some criteria of what our priorities are going to be. So it took us three years to come up the metrics to decide tier one, tier two and three.

Now, once that was done, we got away from arbitrariness. In other words, there’s a newspaper guy up in Toledo that was always saying everybody else gets it. And I said, John, don’t attack – you know – the decision. We have a process that we’ve gone about to determine how we’re going to do that.

It seems to me that we ought to have some kind of metrics that we’re going to deciding it. Solar, you have wind, you have nuclear, you have coal and how do you determine, you know, what that should be? We’re talking about 50 percent nuclear, I don’t know, but whatever. And then look at the resources that we have – the same way with highways.

You have only a certain amount of resources. Where do you take and invest your money, understanding that there’s going to be a lot of pressure because of our unsustainable debt and budgets that are not balanced? So we’re going to have to be very, very careful. Where do we invest our money and where do we get a rate of return?

And I think the other thing is to look at the big picture. Now, somebody just mentioned the issue of the use of nuclear beyond just energy, okay? What potential is there? Air – does that have something to do with that? And then the last thing is where does – where does coal come into all of this?

And I know we had Ban Ki-moon in and I was saying to him – he was talking about, you know, it was all part of the cap-and-trade thing and everything else. He said, you guys have got to do this thing and so on. I said to him, you know, if I were in your shoes, I’d have the United Nations do a DARPA (ph) on clean coal technology.

If you’re really concerned about emissions, then we should get the best people in the world to come together and see if we can reduce the time it’s going to take to get to, quote, “clean coal” because we know everybody’s going to be using it. I mean we know that. And so I don’t think you could just say, well, let’s forget that because in terms of – if you’re an environmentalist and you’re concerned about it, I believe it’s probably the biggest contributor to greenhouse gas emissions that we’ve got in terms of producing energy.

So I think that may be as this – we go through this, that we ought to kind of start thinking about how does – how do you make those decisions, Dr. Chu? How do you make those decisions about the rate of return and all these various other considerations so that maybe it would take a year to do it? Maybe it’s two years.

But let’s get it done and once it’s done, then you don’t have people coming in and (piercing ?) it and say, well, I mean I had a guy in solar. He said we need to have the same subsidies we got in the stimulus bill. That’s what he said. And then he walked out the door. And he said, by the way, we also need loans. (Chuckles.) I mean, so the thing is how do you sift all of this out – get to the point where everybody kind of agrees, this is where we ought to be going.

SEC. CHU: Well, let me – I think these very important questions. In a clean energy type standard, you can prorate anything, clean coal, clean gas, clean cement-making, you name it. Take cement-making out of this. That’s not energy. (Laughter.) So clean coal, clean gas, wind, anything and if you, let’s say, capture 90 percent of the carbon from coal, I mean this is – you can prorate that.

There could be a very simple mechanism of allowing any clean new energy to get this – to be able to deliver into this demand. In terms of federal dollars, the clean energy standard actually doesn’t cost the federal government anything. There are costs, but it’s costs that go to consumers in a more direct way.

And so what this does is it’s saying we can debate till the cows come home as to whether nuclear will ever make the cost bar. You can also debate that about wind, about solar, about geothermal, you name it. And so this one says, okay, we don’t – and I think 50 percent by 2050 is about right, quite frankly.

I think 25 percent by ’25 is about right. Anything shorter than that – 2020, the time scale is too short for nuclear. But by 2025, there’s enough breathing room so that people can make plans. And so if you set this intermediate goal and quite frankly, if it turns out to be too expensive, we can readjust.

But if you start saying by 50, ’50, this is the goal – 50, ’25, this is another goal. I think – I’m pretty confident that America – American business, American innovation will drop those prices as time goes forward. And so – and again, in this time of fiscal austerity, this is something that I propose that Congress should think about seriously.

SEN. CARPER: George and I are going to go back and become part of the jury again and see if we can come up with a verdict. And I don’t know for the rest of you in this jury if you’ve come to any kind of verdict or not, but I think – it was Doug May who may have said it best. He said we cannot let uncertainty lead to inaction.

And I’ve heard enough around the table this morning in this discussion to believe that there’s plenty of good reasons for us to go forward. And that is not to mean we should go forth recklessly or ways that are unwise, but we need to go forward. And there’s plenty that guys like George and I and congressmen and Senator Risch can give you help in that.

And this has been a very helpful conversation for me to better understand what part of our responsibilities, but really, our opportunities are here. I just want to say on behalf of, again, of our colleagues and I, George and myself, a real special thanks to Admiral, to you and the folks at the Idaho lab and particularly, our friends at Third Way.

I never imagined six, seven years ago, when Third Way was being stood up and created out of whole cloth that we’d be sitting around a table like this and you all would be playing this kind of role. It’s just very, very, very exciting for all of you who had plenty of other things to do with your time.

The secretary and Carol, who’s gone, Mr. Chairman and all of you – all of our participants – and those that are going to be participating this afternoon, a very special thank you. You’re doing good work. We’re doing good work, I think, for our country. Thank you.

MR. BENNETT: Thank you all. (Applause.)

(Music.)

(END)

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