1. The Reactor Oversight Process: Development and Results Tom Houghton Nuclear Energy Institute September 20, 2005

2. 2 What is NEI? The Nuclear Energy Institute is the industry’s policy organization, whose mission is to foster the beneficial uses of nuclear technology in its myriad forms The Nuclear Energy Institute is the industry’s policy organization, whose mission is to foster the beneficial uses of nuclear technology in its myriad forms NEI’s membership includes 250 corporate members in 14 nations NEI’s membership includes 250 corporate members in 14 nations NEI and its predecessor organizations have served the nuclear industry since 1953 NEI and its predecessor organizations have served the nuclear industry since 1953 NEI’s key organizations are NEI’s key organizations are Governmental Affairs Governmental Affairs Communications Communications Nuclear Generation Nuclear Generation

3. 3 NEI 2006 Business Plan

4. 4 In April 2000 NRC implemented the new Reactor Oversight Process The new process revised, and for the first time, integrated NRC’s inspection, assessment and enforcement programs The new process revised, and for the first time, integrated NRC’s inspection, assessment and enforcement programs This presentation will describe This presentation will describe ã Reasons for the change ã Results to date

5. 5 Industry Performance improved dramatically in the 1980s Safety Safety Production (capacity factor) Production (capacity factor) Cost ($/kw) Cost ($/kw)

6. 6 U.S. Capacity Factor 1981-2001

7. 7 US Electricity Production Cost Estimates (1981-2000) (in constant 2000 cents/kWh) Source: Pre 1995: UDI, Post 1995: RDI Modeled Production Cost

8. 8 U.S. Production Costs 1988-2000

9. 9 Industry’s safety performance, as measured by NRC and WANO indicators, continued to improve

10. 10 Significant Events: Industry Average (1985-2000) Source: NUS

11. 11 Safety System Performance Source: WANO 2001 Performance Indicators

12. 12 Collective Radiation Exposure - BWRs

13. 13 US Manufacturing IASR US Finance, Insurance, Real Estate IASR US Nuclear IASR* Industrial Accident Safety Rate # Number of accidents resulting in lost work, restricted work, or fatalities per 200,000 worker hours * Full- time, on- site employees Sources: WANO and BLS

14. Despite objective evidence of improving safety, NRC Violations continued to increase

15. Increase was driven by a 100% jump in Level IV Violations (minor process and procedure errors)

16. The consequences of the old approach were significant, both economically… …AND in diverting NRC and industry resources from focusing on more risk significant areas

17. 17 NRC agreed a new approach was appropriate NRC’s internal reviews found the previous approach inefficient, untimely, very subjective and inscrutable to licensees and the public NRC’s internal reviews found the previous approach inefficient, untimely, very subjective and inscrutable to licensees and the public Advances in risk assessment provided confidence that risk-informed performance indicators and simplified risk analyses could be used as effective assessment tools Advances in risk assessment provided confidence that risk-informed performance indicators and simplified risk analyses could be used as effective assessment tools

18. 18 Cornerstone Chart

19. 19 Develop Inspection Plan Assess Results Determine Regulatory Action Conduct Inspections Regulatory Oversight Model Licensee Provides Self Assessments & Audit Results* Licensee Provides Safety Performance Indicators Licensee Assesses & Corrects Deficiencies Licensee Provides Self Assessment & Audit Plans* Regulatory Oversight Process Risk-Informed, Performance-Based Assessment, Inspection and Enforcement * Future

20. 20 What are appropriate roles for Licensees and Regulators? Performance Model for Successful Plant Operations InputsManagement ActionsOutputs People Plant Processes Procedures Safety Performance Cost Effective Production Human Performance Self Assessment Corrective Action

21. 21 Reactor Oversight Process Enforcement Public Meetings Press Releases NRC WebSite PDR/ADAMS Assessment Reports Inspection Plans Inspection Findings Performance Indicators Communications Assessment Process (Action Matrix) Agency Response Management Conference Monitor Licensee Actions NRC Inspections Additional Regulatory Actions Event Response (SI/AIT/IIT) Performance Indicators Risk Informed Baseline Inspections Generic Safety Inspections Supplemental Inspections Significance Determination ProcessPerformance Indicator Thresholds Performance IndicatorsInspections Significance Evaluations Cornerstones of Safety

22. 22 Performance Bands SAMPLE INDICATOR Licensee Response Increased Regulator Response Required Regulator Response Unacceptable Performance

23. 23 ACTION MATRIX RESULTS INCREASING SAFETY SIGNIFICANCE All Assessment Inputs (PIs and Inspection Areas) Green; Cornerstone objectives fully met One or Two inputs White (in different cornerstones) in a Strategic Performance Area; Cornerstone objectives fully met One Degraded Cornerstone (2 W or 1 Y input) or any 3 W inputs in strategic performance area; Cornerstones met-minimal reduction in safety margin Repetitive/multiple degraded cornerstones, Multiple Y or 1R input; Cornerstone met- longstanding issues or signif safety margin reduction Overall Unacceptable Performance; Operation not permitted. Unacceptable safety margin. RESPONSE Routine Resident Inspector Interaction SRI/BC Meet with Licensee DD/RA Meet with Licensee Management EDO (or Commission) Meet with Senior License Management Management Meeting Commission Meeting with Senior Licensee Management Licensee Action Licensee Corrective ActionLicensee Corrective Action with NRC Oversight Licensee Self Assessment with NRC Oversight Licensee Performance Improvement Plan with NRC Oversight NRC Inspection Risk-Informed Baseline Inspection Program Inspection FollowupBaseline and Inspection Focused on Cause of Degradation Baseline and Team Insp. Focused on Cause of Overall Degradation Regulatory Actions None-Document Response to Degrading Area in Inspection Report Docket Response to Degrading Condition -10 CFR 2.204 DFI -10 CFR 50.54(f) Letter -CAL/Order Order to Modify, Suspend or Revoke Licensed Activities Assessment Report DD review/sign Assessment Report (w/ inspection plan) DD review/sign Assessment Report (w/ inspection plan) RA review/sign Assessment Report (w/ inspection plan) RA review/sign Assessment Report (w/ inspection plan) COMMUNICATION Public Assessment Meeting SRI or Branch Chief Meet with Licensee SRI or Branch Chief Meet with Licensee RA Discuss Performance with Licensee EDO (or Commission) Discuss Performance with Senior Licensee Management Commission Meeting with Senior Licensee Management Regional Review OnlyHeadquarters Review

29. 29 Performance Indicator Trend

30. 30 Greater than Green Performance Indicators

31. 31 Inspection Finding Trend

32. 32 Greater than Green Inspection Findings

33. 33 Inspection Findings FY 2002 - 2004 200220032004 Green696716881 White261412 Yellow220 Red310 TOTAL727733893

34. 34 “Greater than Green” Trend

35. 35 Crosscutting Issues

36. 36 Industry Actions Developing crosscutting criteria Developing crosscutting criteria Performance indicators Performance indicators MSPI MSPI Replacement for Scrams w/ loss of normal heat removal PI Replacement for Scrams w/ loss of normal heat removal PI Alternate RCS leakage PI Alternate RCS leakage PI Significance Determination Process (SDP) improvements Significance Determination Process (SDP) improvements

37. 37 ROP continues to evolve Availability of data has enhanced public confidence Availability of data has enhanced public confidence Continue to modify performance indicators and significance determination process for inspections Continue to modify performance indicators and significance determination process for inspections Focuses industry &regulator on risk significant issues Focuses industry &regulator on risk significant issues Degrading performance can be identified before serious increase in risk to public Degrading performance can be identified before serious increase in risk to public Has resulted in performance improvements by focusing on problem areas Has resulted in performance improvements by focusing on problem areas Has demonstrated need to reassess deterministic regulations Has demonstrated need to reassess deterministic regulations HOWEVER, ROP is not a substitute for vigilance, and a willingness to aggressively pursue off normal conditions HOWEVER, ROP is not a substitute for vigilance, and a willingness to aggressively pursue off normal conditions