1. THE NUCLEAR INDUSTRY’S RESPONSE: DEREG 2.0 AND THE ASSAULT ON CLIMATE SOLUTIONS Tim Judson NIRS Executive Director Contact: (301) 270-6477 x14 timj@nirs.org www.nirs.org Twitter: @nirsnet

2. Economic Conditions in the Industry Bad and worsening economic fundamentals Long-term market downturn Operating costs rising for aging reactor fleet Median age = 35 years Average operating cost hit $44/MWh in 2012 “Nuclear Renaissance” never materialized Fukushima exposed inherent safety problems NRC forced to do something on safety Doing ANYTHING = Rising Costs

3. Wall Street Rethinks Nuclear Kewaunee closure unexpected UBS publishes industry analyses Predicts VY closure Est. reactor to lose $109 million by 2016 More firms publish reports 20+ reactors in economic trouble

4. Fundamental Market Shifts 2005-2008: Electricity prices rise sharply with gas costs 2008: Prices hit historic highs ($.21/kWh in NYC Aug. ‘08) 2009-2012: Multiple factors collide Fracking boom sets in, fuel price collapses Great Recession causes slump in commercial energy demand Efficiency programs and technologies ramp up Wind and solar: costs decline, supply grows dramatically Fukushima

5. Deregulation 1.0 14 yrs., 7 mos. Reactor Closures by Decade 1960s 2 (0) 1970s 8 (1) 1980s 4 (2) 1990s 9 (8) 2000s 0 2010s 5 (5) – so far U.S. Nuclear Reactor Closures by Date and Rated Capacity (MWt) Key Features that Benefitted Nuclear Liability-free Asset Transfers Stranded cost bailouts Below-market reactor sales Tax-free transfer of decom funds Market Dynamics Pre-fracking NG market Rising demand Low levels of renewables NRC Regulations Relicensing Power Uprates (5,400 MWe) High-burnup fuel 2-year refueling cycles Risk-informed regulation Lower standards Less enforcement

6. Phase-Out vs. Relicensing Economics Helping Where Regs Are Not Current License Expiration Dates and Capacity (MWe) Status Quo by Decade 2010s66 2020s143 2030s5249 2040s3142 2050s14

7. Industry Campaign: What They Want Restructure energy policy to support even the most marginal nuclear plants Deliberately vague about specifics Manufacturing perceived crisis to make bad policies palatable No one solution is enough Multiple things at multiple levels Overall Goals New Subsidies for Old Reactors Lock in Baseload Grid Block renewables

8. Industry Campaign: Major Actors Largest Nuclear Power Generators Exelon Entergy Others: Dominion, Duke, FirstEnergy, PSE&G Network of Front Groups: Nuclear Energy Institute Nuclear Matters Center for Climate and Energy Solutions

9. Undercut Renewables End subsidies Wind and Solar Tax Credits Create market barriers End/Restrict Net Metering Solar Connection Fees Renewable Energy/Portfolio Standards Cut back renewable energy goals Undercut renewable energy credit markets Switch “dispatch order” to favor baseload Restore demand growth Roll Back Efficiency Goals/Standards Indiana and Ohio legislation

10. Deregulation 2.0 Reorganize Markets to Support “Baseload” Power Sources Capacity Markets Target eligibility to baseload plants Benefits coal and nuclear equally Exclude renewables, conservation, and demand response Wholesale Market Reforms Not totally clear, but now on the table “Dispatch Order” - make baseload first Nuclear before wind and solar Could benefit coal, too Clearing price preferences Set price floor for baseload Prevent “negative pricing” and curtailment fees

11. Other Measures Above-market contracts Simplest and most palatable, but industry is saying “No thanks” Locks them into operating uneconomical reactors Limits “upside” potential if markets rebound Tap into existing clean energy revenues System Benefits Charges RGGI funds in CT, MD, MA, NH, and NY New ratepayer subsidies Modeled on System Benefits Charges, but targeted to nuclear Emissions, jobs, economic impacts, reliability, etc.

12. What Are They Doing? Multi-level PR Campaign Op-eds in national, state, local, and legislative media outlets Hiring former government officials as spokespeople Using front groups and astroturf strategies Lobbying: federal, state, regional market regulators Drumming up a sense of crisis Reliability/Blackouts Disparage renewables Local jobs and property taxes “Economic Engines” Loss of “vital national assets” Climate change “more than 60% of carbon-free electricity” Giant fig-leaf, greenwash the whole agenda – divide enviromentalists … Make any “solution” seem acceptable

13. Manufacturing a Crisis “Shutting some of the 100 reactors that provide about 20 percent of America's electricity would cause a crisis on electrical grids. You'll have rolling blackouts. It's going to take a significant emotional event to institute change.” – Peter Sena III, chief nuclear officer for FirstEnergy April 9, 2014 Is that a prediction or a promise ?

14. What Are They Doing?: Federal Level End subsidies for renewables Wind Production Tax Credit Solar Investment Tax Credit Influence regulatory appointments New FERC Chair Regional market change approvals Preemptive (top-down) orders on market rules NRC Commissioners One seat to be vacated this year, possibly two Post-Fukushima regulations Enforcement generally Waste Confidence Rule Financial Qualifications Rule

15. What Are They Doing?: Illinois Exelon threatening closures of three plants Clinton Quad Cities 1 and 2 Byron 1 and 2 – may be part of “crisis” PR strategy Chicago Tribune: all 11 reactors unprofitable for several years Legislative fix/es under discussion Above-market contracts proposed by legislators Carbon-free Energy Credits Has been proposed before Directly undercut wind and REC market

16. What Are They Doing?: Energy Markets PJM Interconnection (Mid-Atlantic energy market) Market Monitor proposals for extensive rule changes Target capacity market to baseload generators Exclude demand response PJM Director issued statement favorable to baseload argument New England Entergy pushing NEISO market reforms Exploiting gas supply crisis even while profiting off it Indian Point and Pilgrim revenue jumps Gas transmission constraints problematic last two winters NEISO concerned about reliability

17. What Are They Doing?: New York Amenable Upstate Politics Jobs and property tax losses Coal plant closures already controversial Capacity market reforms NYISO position may change New head is former Exelon executive New downstate capacity zone precedent Creates $100 million windfall for Entergy at Indian Point Contrary to state policy on closure and replacement Include nuclear in RPS Nuclear Matters op-ed in Albany Times Union (April 24) Also proposed market reforms to benefit nuclear