Hearings - Testimony
Subcommittee on Clean Air, Climate Change, and Nuclear Safety
Oversight Hearing on the Regulatory Processes for New and Existing Nuclear Plants
Thursday, June 22, 2006
J. Barnie Beasley
President and CEO, Southern Nuclear Company

Mr. Chairman, thank you for the opportunity to appear before the subcommittee today regarding the NRC’s regulatory oversight of our nation’s nuclear power plants. My name is J. Barnie Beasley Jr. I am President and Chief Executive Officer of Southern Nuclear Operating Company. I have attached a brief resume to my testimony as Exhibit 1.

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

Southern Nuclear is the licensed operator of the Alvin W. Vogtle Electric Generating Plant and the Edwin I. Hatch Nuclear Plant, which are both two-unit nuclear plants partially owned by Georgia Power Company, and the Joseph M. Farley Nuclear Plant, which is a two-unit nuclear plant owned by Alabama Power Company. The six nuclear units operated by Southern Nuclear comprise over 6000 megawatts of generating capacity and represent approximately 17% of the total annual generation of the Southern Company system. Southern Nuclear’s fleet historically has been recognized as among the best performing nuclear plants in the country and are among Southern’s most efficient generating resources. They provide our customers with reliable and reasonably priced electric energy.

Plants Hatch and Farley have already extended their operating licenses for an additional twenty years of operation each, and the application for Plant Vogtle’s license extension will be filed with the Nuclear Regulatory Commission (“NRC”) next year. The renewal of Plant Vogtle’s license will ensure that Southern will be allowed to operate its existing fleet into the middle of this century.

Southern Nuclear has also been charged by Southern Company with performing the technical work necessary to preserve the option of new nuclear generating capacity to meet the growing needs of the Southern system. In this role, Southern Nuclear will file an application for an Early Site Permit later this summer in order to determine the suitability of the Vogtle site for two additional nuclear units at Plant Vogtle. Southern is also a member of the NuStart LLC consortium, which is a party to a cooperative agreement with the Department of Energy (“DOE”) to develop a standard application for a Combined Operating License (“COL”) for two reactor technologies and the final, construction-quality design for those reactors. Southern is on a schedule to submit its own application for a COL by early 2008 for two additional units at the Vogtle site in Georgia.

I am gratified to have the opportunity to appear before the Committee today to discuss the regulatory environment in which our nuclear units operate. Prior to my current position, I served Southern Nuclear in a variety of positions including Plant Manager of Plant Vogtle, Vice President of the Vogtle and Farley Plants, and Chief Nuclear Officer for the Southern fleet. My experience leads me to believe strongly in the benefits nuclear power provides to the nation’s economy and to the environment. Southern Company is committed to the continued safe and economical operation of our nuclear fleet. We also believe that the renewal of interest in the construction of new nuclear units by the nation’s electric generating companies is a very healthy development and that the construction of new nuclear units will help the nation continue to provide better lives for its citizens and to compete in the global economy. We very much appreciate your leadership, Mr. Chairman, and that of the rest of the Committee, in enacting the nuclear provisions of the Energy Policy Act of 2005, which not only included needed and prudent amendments to the Atomic Energy Act, but also helped to spur the resurgence of interest in new nuclear generation in this country.

Based on many years of experience in operating nuclear power plants, I am convinced that a consistent, transparent, and predictable regulatory environment in which both nuclear operators and the public have confidence is essential to preserving the benefits from the existing nuclear fleet and to realizing even greater benefits from a new fleet of advanced light water reactors across the country. We appreciate the unique status of nuclear power plants in this country and welcome the public’s scrutiny of the safety and security of our operations. The excellent nuclear safety record of the industry’s existing fleet, and the innovative safety features of the advanced light water reactor designs that will comprise the next fleet of nuclear plants, provide ample evidence that these units can be and have been operated at extremely high levels of safety. In order for companies to make decisions to commit the investment necessary to construct these new designs, the economic risk associated with the licensing, construction and operation of these facilities needs to be comparable to that of other forms of base load generation. The deployment of these new units will depend in large part on investors’ perception of that risk, as demonstrated by the NRC’s licensing process, the NRC’s oversight of our existing facilities and the operating performance of the current fleet of plants. Although we obviously believe that the regulatory environment is a positive one for the development of new units, we also believe that the industry and NRC should continue to work together to make more improvements in the regulation of the existing nuclear fleet and to ensure that the process for licensing the next fleet is predictable, prompt and efficient.

My testimony today will focus on four major themes:

1. The need for consistency, transparency and predictability in the regulatory environment for the current fleet of nuclear power plants, including the effect of the regulatory environment for the current fleet on decisions to construct new plants;

2. The connection between a predictable and efficient licensing process for new nuclear power plants and the investment decisions potential investors need to make to pursue the development of new plants;

3. The need for progress on the nuclear waste issue in connection with the development of new nuclear plants; and

4. The need for adequate funding of the DOE’s nuclear power 2010 program to ensure that new plants can be licensed and constructed on a schedule that will allow the plants to come online soon enough to meet the growing demand for electricity.

1. Current Regulatory Environment

Under Chairman Diaz’ leadership, the NRC has made great strides in the last decade toward risk-informed and performance-based regulation. The NRC’s revised reactor oversight process, implemented in 2000, was a major step forward in concentrating NRC and operator resources on areas that benefit public health and safety the most, and at the same time provides for enhanced NRC scrutiny of plants that have demonstrated degraded performance in these areas. The NRC’s adoption of objective performance indicators against which plant performance is judged, instead of subjective evaluations of operating methods and practices that can vary from inspector to inspector, has improved the reliability of the regulatory process and has resulted in even greater improvements in the safety and performance of the current fleet. These improvements have helped plant operators focus resources on important issues that are essential to safety and have improved the overall performance of the industry.

It is essential that NRC continue to build on the progress made toward objective, predictable regulation. Care must be taken to increase the use of formal regulatory processes to implement new regulatory requirements. Use of formal regulatory processes ensures that the Commission has input from all affected stakeholders, provides a record for regulatory decisions that the industry, the Congress and the public can review and understand, and helps to enhance objectivity of requirements. Regulatory requirements based on such deliberative processes invariably enjoy greater acceptance by the industry and the public than those imposed informally, without full stakeholder participation.

Additional progress can also be made in the predictability of the NRC’s regulatory process, particularly with respect to the re-interpretation of requirements by NRC staff. New interpretations of previously well-understood requirements, particularly when developed without resort to formal rulemaking or backfit analyses, weaken industry confidence in the regulatory process. To the extent such re-interpretations materially improve public safety, they can surely withstand the scrutiny of formal processes, and public confidence in NRC regulation will be enhanced as a result.

2. Licensing Process For New Plants

The next fleet of nuclear plants in this country will be licensed under the process outlined in Part 52 of NRC’s regulations. This process, which is an outcome of the Energy Policy Act of 1992, was designed to avoid the licensing problems that plagued the current fleet of plants. The key factors in this process are the elimination of duplicative reviews of the same issue at successive stages of the licensing of a new plant and the final resolution of all safety and environmental issues before construction of the plant begins. The renewal of interest in nuclear power in the electric industry is closely tied to our expectation that NRC, using Part 52, can license new facilities in a predictable, efficient way. It is essential that Part 52 be implemented as intended in order for the investors to have confidence that new nuclear plants can be licensed, constructed and operated on a schedule that is both predictable and competitive with other forms of base load generation, such as large coal units.

Timely and predictable licensing is critical to investor confidence in new nuclear units. Delays in the licensing process necessarily delay the construction and operation of the units. These delays cause severe financial consequences for the builders of the plants, which must look to other, more expensive forms of generation for the supply of electricity to their customers to fill the void caused by the delays. Without a licensing process that is both reasonable and predictable, potential developers of nuclear units, many who like us have expressed an initial interest, will find it difficult to justify continuing with the final licensing and construction of new nuclear power plants, notwithstanding the obvious environmental benefits and fuel diversity that nuclear generation provides.

The final resolution of environmental and safety issues at the correct point in the licensing process is a major ingredient in the efficiencies provided by the Part 52 licensing process. Safety issues related to a standard reactor design certified by the NRC, for example, should not be re-reviewed or litigated during the proceeding on a Combined Operating License referencing that design. Similarly, environmental issues reviewed by NRC staff and resolved during the proceeding for an early site permit should be treated as finally resolved in that proceeding and should not be subject to re-review or litigation during the COL process. Elimination of duplicative and redundant licensing reviews will help NRC to use its resources more efficiently, and reduce the number of additional licensing staff needed for the multiple COL applications expected to be submitted over the next several years.

As currently drafted, Part 52 provides for such finality and provides confidence that the process can be implemented in a predictable, efficient way. There is no need for redundant review and litigation of the same issues at each step of the process, which would increase the delay and uncertainty of the process. The process that is in place for both standard design certifications and early site permits provides ample opportunity for staff review and public involvement in all issues relevant to those licensing actions. It is essential the implementation of the process, as well as any proposed changes to part 52, respect the concept of finality so that potential developers and investors can have confidence that new plants can be licensed, and therefore constructed, on a predictable schedule.

Earlier this year, the NRC proposed a rulemaking to revise its regulations, as they relate to Part 52 that is 150 pages long and contains a multitude of changes to the NRC’s rules. The sheer volume of changes contained in proposed rulemaking introduces great uncertainty into the licensing process, at a time when several applicants are actively preparing COL applications. In addition, as demonstrated by the industry comments on the proposed rulemaking submitted by the Nuclear Energy Institute, which I endorse, many of the proposed revisions conflict with the principles that make Part 52 a workable licensing process. As Chairman Diaz has emphasized, high quality applications are critical to the NRC’s ability to complete its licensing work for new plants on a timely basis. The proposed rulemaking, in its current form, will make preparing such an application much more difficult and time consuming without a corresponding benefit to the safety of the new fleet of plants.

The other keystone of the Part 52 process is the resolution of all safety issues prior to the commencement of construction of the facility. The Combined Operating License process requires applicants to provide all information necessary for the NRC to license the facility, and review operating programs and procedures, prior to the issuance of the license. All licensing issues are required to be finally resolved prior to construction, with the only questions after construction being whether the plant has been constructed in accordance with the license The licensee is required to construct and operate the plant in conformance with the Combined Operating License with oversight by NRC inspection and enforcement programs. The licensee must prove that the plant has been constructed in accordance with the license by conducting inspections, tests and analyses and by satisfying acceptance criteria prior to loading fuel. This process ensures that the unit has been constructed and will be operated as licensed. In order for the licensing process to function as envisioned by the industry, and I believe by Congress in the Energy Policy Act of 1992, NRC must strictly observe the limits on its authority to impose new license conditions or make changes to the licensing basis of the plant during construction.

The industry’s renewed interest in pursuing a new fleet of advanced light water reactors reflects our confidence that the NRC and the Congress are committed to the regulatory philosophy embodied in Part 52. The industry and NRC have made good progress toward implementing the process, consistent with the requirements of the Atomic Energy Act and the need for new base load generation in the country. For example, the NRC and the industry have reached an understanding regarding the concept of standard COL application reviews. Except for site specific issues, NRC could review such standard application at one time for all applicants referencing a particular reactor design. Similarly, we have made some progress in adapting the Design Certification, Early Site Permit and Combined Operating License processes so that those processes can proceed concurrently for a particular plant, resulting in a more streamlined process. This could compress the total time needed to complete these processes, compared to the time required if each process was pursued sequentially. Each of these adaptations is consistent with existing law and regulation and could help NRC and industry to more efficiently utilize their limited resources. We recognize, however, that we will all have to be vigilant to ensure that the principles of predictability and finality underlying Part 52 are followed in practice. The principles underlying Part 52 and that were embodied in the Energy Policy Act of 1992 were based on the industry’s and the NRC’s experiences of the late 1970s and 1980s, when long delays in licensing and construction, uncertainty in the regulatory process, and significant cost overruns due to evolving regulatory requirements were routine. We should not let the passage of time erode our memory of those lessons. The industry is concerned that some of the revisions to Part 52 proposed by the NRC this Spring could undermine the principles underlying the improvements to the licensing process made by the Energy Policy Act of 1992. Changes to Part 52 that make the process less predictable and efficient will not only result in a less effective licensing process, they could negatively impact the current enthusiasm on the part of investors in new plants. We encourage the NRC and its staff to carefully review the industry’s comments and carefully consider them in promulgating any revisions to Part 52 and encourage the Congress to diligently exercise its oversight authority by ensuring that any revisions to the regulations are consistent with the intent of the legislation. 3. Used Nuclear Fuel

With respect to the issue of new nuclear plants, it is also important to note that there are policy issues other than the licensing process that are important to the economic viability of the plants and the acceptance of the plants by the public. The most obvious issue is the continuing delay on the part of the Federal Government to deal effectively with the issue of used nuclear fuel. Although the industry has demonstrated that used fuel can be safely stored at reactor sites on a temporary basis, the government must resist the urge to treat this temporary measure as a de facto permanent solution to the issue of where and how to dispose of used fuel. The ratepayers of Georgia Power have paid approximately $580 million and the customers of Alabama Power have paid almost $300 million to the Federal Government for used nuclear fuel disposal and have received nothing in return. State regulatory authorities authorize the collection of nuclear waste fees from customers and the recovery of the cost of temporary storage facilities on reactor sites. Since many of the new fleet of plants, including Southern’s, are expected to be built under cost of service regulatory structures, these same regulatory authorities will also play a critical role in authorizing most potential new plant developers to pursue such investments. Aside from the obvious inequity of forcing nuclear operators and their customers to pay billions into the federal Treasury for disposal services that are not being provided, the communities where our current fleet of plants operate and where the next fleet of plants will be constructed want to know when the used fuel from the plants will be removed to a central repository. State officials are becoming increasingly impatient with the federal Government’s failure to make concrete progress on this issue, which places pressure on all of our plants. The nuclear industry and the public needs and expects the federal government to fulfill its responsibilities under the Nuclear Waste Policy Act.

4. Funding for Nuclear Power 2010

Finally, in order to bring new plants on line on a schedule that matches the growing demand for new base load generation, it is essential that the Department of Energy’s Nuclear Power 2010 program be adequately funded. Appropriation of the federal share of the funding for one-time design finalization and COL development costs is a fundamental basis for the renewal of interest in new nuclear plant development. Any shortfall in the funding for this program will increase the cost and risk associated with new plants, and will reduce their attractiveness to investors as compared with other more traditional forms of generation.

5. Conclusion

In summary:

1. Risk-informed and performance based oversight of our existing reactor fleet is critical not only to our existing fleet of plants but to the industry’s willingness to invest in new nuclear power plants;

2. An efficient and predictable licensing process is critical for the licensing of new plants. Proposed revisions to Part 52 that are contrary to those principles should be rejected;

3. States with existing or proposed nuclear plants want to see real progress by the federal government in fulfilling its obligation to remove used nuclear fuel from nuclear plant sites; and

4. Adequate funding of Nuclear Power 2010 is essential to bringing a new fleet of nuclear plants online on a schedule that will satisfy the growing demand for electricity in this country.

Mr. Chairman, I want to thank you and the other members of the committee again for your support of nuclear power and for the opportunity to appear before you today. I will be happy to answer any questions you might have.


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