The Case and Requirements for Expansion of Nuclear Energy U.S. Climate Partnership Association Presentation November 18, 2009 Derrick Freeman, NEI Senior Director, Legislative Programs

Policy Basis for Nuclear Expansion  Reducing carbon emissions – – will require portfolio of technologies – nuclear energy must be part of portfolio – major expansion of nuclear generating capacity over the next years essential  EPA, EIA analysis of Waxman-Markey: Substantial increases in nuclear generating capacity essential – EIA analysis: 96 gigawatts of new nuclear generation by 2030 (approx. 69 new nuclear plants)  Nuclear expansion on this scale will require additional policy support from the federal government  NEI’s nuclear title represents policy support necessary

Nuclear Energy in House, Senate Legislation  Energy legislation cleared Senate Energy Committee June 17 – Creates Clean Energy Deployment Administration – Some fixes to Title XVII of EPAct 2005 – New nuclear capacity and nuclear uprates removed from baseline for calculating RES compliance obligation – Used fuel: Mandates creation of Blue Ribbon Commission, defines scope  HR 2454 passed House June 26 – Creates Clean Energy Deployment Administration (“Lite”) – Some fixes to Title XVII of EPAct 2005 – New nuclear capacity removed from baseline for calculating RES compliance obligation

Nuclear Energy in House, Senate Legislation  S legislation cleared Senate EPW Committee November 5 - provides funding for nuclear workforce training - establishes R&D programs for nuclear safety and waste management programs -

Lessons Learned in 2009  Surprisingly strong support for nuclear energy – Amendment classifying nuclear energy as renewable failed by 3 votes in House Energy and Commerce Committee – Same amendment failed on tie vote in Senate Energy Committee  Cannot move energy/climate legislation without strong nuclear component (particularly in Senate)

Major Components of Nuclear Title  Financing  More efficient, transparent licensing process  Used fuel management  Nuclear fuel supply  U.S. nuclear energy policy, R&D, etc.

Financing: Perspective on Electric Sector Capital Spending  Industry in early stages of major capital investment cycle  Total capex for : $1.5 trillion - $2 trillion – New nuclear only part of that – Need for new generating capacity higher in carbon- constrained world – Approx one-third of U.S. generating capacity is > 30 years old = inefficient, dirty

Financing New Nuclear Capacity  Financing is single largest challenge  Structural challenge: very large projects relative to the size of the companies building them  This challenge can be managed – Supportive rate policies at the state level and/or – Loan guarantees from the federal government Non-recourse to sponsor’s balance sheet Higher leverage (up to 80 percent) – Tax incentives

Clean Energy Deployment Administration  New, permanent financing platform (loans, loan guarantees)  Senate version preferable – Independent entity within DOE – Absorbs Title XVII – No limitation on support for any single technology – $100 billion in authority  Technical fixes to Title XVII program

Tax Stimulus  Production tax credit – Remove 6,000-MW limitation – Expand eligibility: Any new nuclear plant placed in service before 1/1/2025 – Index for inflation – Allow transfer of credits  Investment tax credit for new nuclear plants, uprates – In lieu of PTC – 30% credit – Allow cash grant in lieu of credit  Investment tax credit for supply chain expansion – Expansion of ARRA 30% clean energy manufacturing credit – From $2.3 billion to $5 billion  Tax credit for workforce training Consistent with treatment accorded renewables in ARRA

Standby Support  Retain 6-plant limit, allow coverage to roll over to the next plant if it is not exercised  Increase coverage on all 6 contracts to $500 million  Allow coverage of all delay costs (not just debt service) due to licensing, litigation or political factors beyond the project developer’s control  Eliminate requirement that project sponsor must absorb six months of delay costs before coverage begins  Provide for independent arbitration of claims under American Arbitration Association (AAA) Commercial Arbitration Rules

Improving Licensing Efficiency  EPAct 1992 and Part 52 restructured the licensing process (not “streamlining”)  First wave of new nuclear build is “outside of process” – “Ideal” situation: COL application references certified design, early site permit – Instead, COL reviews in parallel with design certification reviews  NEI nuclear title: Creating conditions for second wave plants (licensing in 2 years, not 4)  Licensing provisions in NEI nuclear title d o not: – compromise NEPA, limit environmental reviews – eliminate or limit public participation  Licensing provisions in NEI nuclear title do: – Eliminate unnecessary duplication

Used Nuclear Fuel Management  Mandate creation of Blue Ribbon Commission to re- examine used nuclear fuel management, define commission’s scope  Statutory finding of waste confidence  Financial incentives for development of interim storage facilities  Authorize R&D program to develop/demonstrate advanced nuclear fuel cycles*  Direct NRC to develop regulatory framework, standards to license facilities to close fuel cycle* * In Senate energy legislation

Other Provisions  Obtain Sense of the Congress resolution on strategic importance of nuclear energy (already in Senate legislation)  Create National Nuclear Energy Council  Authorize multi-year cost-shared program to develop small reactors  Authorize federal interagency working group to promote export of U.S. nuclear products and services  Expand National Institute of Standards and Technology’s Manufacturing Extension Program (provides technical assistance to U.S. manufacturers)