America’s Energy Policy Challenge
Evaluate energy from a common framework foundation

Congress must consider all energy options for value contributing to energy needs. We must evaluate sources as varied as those harkening back to sources powered by the wind to current cutting-edge options, including nuclear and clean coal. The fickle nature of wind or cloud cover incurs costs for availability like those faced by sailing ships of yore. Recovering investment for infrastructure is just that much larger, depending on multiplier. However, we must spend our funds diligently so Americans get the best deal possible for their precious tax funds.

1. Set electric infrastructure availability goals of 5% GDP growth/year (90%). Rank public energy for financial tax aid support by cost measures, based on contributions.
2. Increase public awareness of practical generation limits and costs. Amortize generation costs projections uniformly, based on availability, connection, utilization and cost. Gain acceptance for fact-based energy investments, driven by investment recovery on state of the art systems.
3. Decrease regulatory burden using non-carbon energy forms by 80%. Set national goal to increase non-carbon energy use 80% by 2060 to reduce CO2 emissions
4. Drop construction costs to $5 billion for a 1000 MWe reference light water reactor (LWR)
5. Guarantee non-carbon energy loans while other goals are achieved ($1600/kw -- $7500/kw, based on wind/solar – up to $5 billion/unit)
6. Overhaul regulatory framework to make nuclear safety more cost-effective. Authorize nuclear regulation’s cost-effectiveness role in Atomic Energy Acts of 1954 and 1974, creating commercial nuclear power and the NRC.
7. Construct new nuclear plants in 5 years or less under with current licensing methods - just as constructors do in China and Japan. Have100 new nuclear units operating by 2025, reducing oil dependence 25% from current levels.
8. Assess process improvements for nuclear design and regulation using the Commerce Department’s Baldrige Award Process. Establish customers and performance targets for energy development and regulatory control at agencies, like DOE, NRC, and EPA. Return design preeminence to the U.S. energy industry, like it was in 1954. Establish new nuclear MHR, LMBR designs that can support the hydrogen economy. Reduce solar and wind energy system costs to 50% of current levels for construction.
9. Make private financial support viable by reducing regulatory uncertainty and delays. Provide nuclear equity subsidies equivalent to those of other forms alternative energy forms. Close energy cycles economically - solar, wind, water and nuclear.
10. Provide long-term nuclear waste solutions: sell it to France (for reprocessing), provide permanent onsite storage, place it in Yucca Mountain while developing a national nuclear reprocessing facility. (France has one already.) Have a viable fuel reprocessing solution approved no later than 2015 as a national goal.


Nations with strong active nuclear programs include:

Japan
Korea
Taiwan
France
Spain
Finland
Russia

Many nations are reconsidering nuclear energy in their national energy portfolios, returning to the nuclear option based on low carbon emissions, “passive-safe” low-risk design and energy independence. These include:

Sweden
Italy
UK
Canada
India
China
U.S.
Czech Republic
Slovakia
Hungary
Romania
Bulgaria

Years without construction inflated US nuclear power generation costs with obsolete equipment and designs. Compared with state of the art equipment in China, France, or Japan US nuclear plant designs offer no digital controls. Regulatory approval is pending with completion projected for new nuclear construction, about 2015.

If stimulus options for renewable non-carbon energy don’t consider nuclear energy, who excluded its authorization, and what were their goals? Why doesn’t nuclear get factored into America’s future energy mixture with the same considerations as other stimulus? America’s best option for energy independence is nuclear technology developed right here at home? Nuclear power remains a viable option to reduce carbon emissions significantly, at low overall cost.

Total ownership costs of various generation forms and their energy. Spreadsheet cost/utility factors comparison.

Strategic Plan Input Strategic or Not?

Upon invitation by the US NRC to comment on their stratgic plan last year, we submitted a thoughtful input. Much to our chagrin, the NRC discounted it. It was not strategic, so they left it out. All of it. Readers, please decide for yourself:



Draft 2007-12 Strategic Plan: Public Comment

Re: The NRC encourages all interested parties to comment on the draft Strategic Plan. The comment period ends September 7, 2007. Comments on the draft plan are to be submitted in electronic format (Microsoft Word) using e-mail to: StratPlan@nrc.gov or mailed to Chief, Rules and Directives Branch, mail Stop T6-D59, Office of Administration, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001; or faxed to: Chief, Rules and Directives Branch at (301) 415-5144

Ref: Submittal Comments August 14, 2007



Summary:

Nuclear regulation should take advantage of new technologies – including information management – to improve productively, safety and realize other benefits. The strategic plan should boldly capture the highest aspirations of the nuclear industry to better realize its intrinsic strengths – safety, technology and people. Advancing a risk-informed, performance-based regulatory framework should support the nuclear industry with new initiatives that develop actionable, risk-informed, performance based operations. The industry should address historical weaknesses – undue dependence on traditional hardcopy paper, complexity, slowness to embrace proven technologies, and licensees who seek NRC direction before attempting low risk innovations or other beneficial improvements. The nuclear industry should strive to find a legitimate home for cost consideration in the risk-informed framework, so that end-users – the public – realize maximum benefits from new nuclear technology and regulation.


Dear reviewer:

Please consider the following summarized strategic plan recommendations. Their intent is to increase NRC’s strategic plan clarity, and directly improve the safety and economic viability of the next generation of new nuclear plants. Blue italics identify source document reference excerpts.

In the next five years, the Nation is likely to see the following changes occur:

Data management capabilities and relational data model understanding will improve as relational database technology and paper documentation systems migrate into data-centric formats, modes and software methods to replace paper. Practically, it will become more difficult to maintain large plant design bases without comprehensive, relational electronic media like computer-networked file server databases.
Basis: Advances in relational database technology and design, combined with file server networks have made traditional paper-based systems obsolete. Continued paper-based systems use as a primary source of data will lead to data errors with potentially serious safety consequences.

Changes in the regulatory environment also require that the agency's human capital planning includes provisions for knowledge management (capture, documentation and transfer),…

With the same labor market pool, labor productivity will be critical. There will be less available labor to waste on inefficient processes or design models.
Safety Goal Strategies

1. Develop, maintain, and implement licensing and regulatory programs for reactors, fuel facilities, materials users, spent fuel management, uranium recovery, decommissioning and waste-related activities to ensure the protection of public health, safety, and the environment.
Reactors regulatory programs will require more efficient use of resources to improve programs with fewer available personnel. Reactor regulatory program development should strive to simplify, clarify and streamline complex programs like those for Appendix B deterministic licensing SSC treatment requirements.
2. Prepare for and manage the review of applications for new power reactors while continuing to ensure the safe operation of existing plants.
New power reactor licensing needs to become more comprehensive and faster at the same time. Methods like standardization and repetitive work use will need to do more with less. Lessons learned from new interest areas like new reactor licensing should be used to improve existing fleet programs.
5. Use sound science and state-of-the-art methods to establish risk-informed and, where appropriate, performance-based regulations.
Assist licensees develop simple actionable methods that implement risk-informed, performance based regulations.
Using other similar consensus process standards, like the FAA-endorsed Air Transport Associations (ATA)’s MSG-3, Operator/Manufacturer Scheduled Maintenance Development, and industry experience, NRC should attempt to extend and simplify current regulations. The MSG-3 significance is providing FAA-endorsed consensus, actionable guidance to implement risk-based maintenance plan development for the airline industry.
8. Oversee licensee safety performance through inspections, investigations, enforcement, and performance assessment activities.

Use oversight operations to assist licensees develop better, more actionable risk-informed methods.
Basis: Current guidance is very confusing and complex for licensees. Ideally, risk-informed methods should translate into transparent actionable methods that licensee personnel can use to implement risk-informed regulations.

Means to Support Safety Strategies
Use sound science and state-of-the-art methods to establish risk-informed and, where appropriate, performance-based regulations.
NRC policy should investigate and apply similar programs in other high-risk, regulated industries and the most advanced technologies available, where they have already been developed and are shown to be effective.
Developing better regulatory risk structures to access and compare risk-informed equipment classifications, and relate those back to design would more-openly identify concerns that could pose safety risk. Portraying these in objective risk formats (“will cause xxx.yyy% increase…”) versus speculative format (“might cause”, or “could cause” …) should become a licensee communications operational goal.
Risk-informed regulatory approaches lack the simple safety-related/non safety related dichotomy of traditional deterministic licensing. To complete SSC classification, other organizations (NEI, INPO, ASME…).have attempted to fill gaps left when rules like 50.69, 50.65, or even traditional Part 50 Appendix A & B exclude the discussion of balance of plant equipment in risk considerations. INPO created critical equipment attempting to fill that gap. The Maintenance Rule applies risk to equipment lacking direct single failure safety threat in recognition of multiple failure event possibility. The upshot is SSC classification schemes that elevate much equipment into safety-related (or safety-significant) SSC classification on the basis of multiple failures. For traditionally non-safety related equipment, this places more equipment under the Maintenance Rule coverage, on the basis it could change the Power Output schedule planned for the facility in multiple failures. For procurements, this increases the number of SSC that must meet full 10CFR50 A&B requirements under old licensing. While the availability of a full-scope PRA corrects this situation, it only applies for new construction (which must have full PRA). Even new plant, full-scope PRAs rarely go below the SSC level into subassembly part internal failure events. Without part level PRA, all-encompassing, pervasive new plant SSC procurements prospects under Part 50 Appendix A & B (now Part 52) are very real. New plant procurements could become prohibitively expensive like the operating fleet’s. NRC should look at other risk management frameworks, like those developed by the ATA[1] and endorsed by FAA[2] (MSG-3(4), “Scheduled Maintenance Development”) to see what lessons learned could transfer to simplify nuclear risk management SSC categorization and treatments. Highly-redundant safety-critical applications need simple actionable guidance to categorize SSC and select special treatments. NRC should identify a framework whereby the new plant license holder can develop SSC internal event failure-mode identification to select special treatments, and confirm that this reduces simply to dedication practice – like that called for by 50.69, the IDP (Independent Decisions Panels). Finally, NRC should create a comprehensive list of SSC special treatments by type, placed in one location, for reference by designers and operator-maintainers so that they may readily assess SSC special treatment requirements available quickly based on safety classification.
At least three equipment risk categorizaton schemes compete with each other. Through consensus groups, NRC should encourage industry identifying a common schema that could be used simply, in conjunction with single point failure, to uniformly classify SSC safety risk. NRC should encourage the use of simple data structures that incorporate standardization into readily retrievable, consolidated formats. They should reduce SSC safety categorization (re)interpretation, while assessing safety function consequences to the lowest part subassembly level. Currently, Part 50 “dedication” process requires these steps. To improve consistency, operationalizing methods should be a practical implementation goal. Completed analysis should be retained in retrievable format for consistent reference.
Review licensing requests (e.g., new applications, amendments, renewals, decommissioning, termination) to confirm that they provide an adequate margin of safety and are consistent with regulatory requirements, and conduct environmental reviews, as appropriate, to ensure actions comply with the National Environmental Policy Act of 1970. [Supports Strategies 1 and 2]
Implement, review, and refine the Reactor Oversight Process,...
Maintain an environment in which safety issues and differing views can be openly identified without fear of retaliation. [Supports Strategies 1, 3, and 5]
NRC should encourage third party perspectives sharing licensee performance information. Contractors offer many insights into standard industry practices and specific licensee performance and practices. Soliciting candid opinions from contract organizations about license performance would also improve balance in licensee-subcontractor relationships, thereby encouraging more openness from contractors who may have performance concerns.

Timeliness: NRC decision making process is well reasoned, justified, and decisions are made in a timely fashion to ensure safety and security.
Making information that supports decision-making more centrally available and accessible should improve access to critical information improving time to develop derivative information. NRC may want to consider closing the regulatory loop for those submitting recommendations or changes to rules, policies and procedures. Currently suggestions generally receive no feedback response to submitters’.
Operational Excellence Strategies

4. Conduct the NRC's information technology and information management activities to improve the productivity, effectiveness and efficiency of agency programs and operations, and enhance the utility and accessibility of information for all users inside and outside the agency.

Advanced technologies that offer tested improvement to nuclear generation should be evaluated for transfer to stem obsolescence caused by regulatory inertia. Specifically, licensees are reluctant to try any new technology until they’ve been give NRC’s green light. Thus many effective technologies like distributed control systems, or centrifugal or rotary air compressors that offer substantial improvements over their nuclear equivalents, remain to see widespread application in nuclear industry. For data management, licensees remain committed to text document systems for critical attribute data management at a time when other industries and agencies have started migration to more advanced relational structures. NRC should encourage licensees to take measured risks in non-safety areas to develop technologies that promise to improve long term nuclear safety. Information access today is largely through document titles and PDF files. Critical attributes should be mapped to a common data structure to speed and integrate the access and logical organization of design data by plant type.
Methods that implement risk-informed guidance such as 50.69 SSC, Risk-informed Categorization and Treatment of SSC, should be made more actionable by relating new risk-informed methods with historical deterministic guidelines ones. Some practices will remain essentially deterministic at their final implementation. In some cases, risk-informed implementation method (e.g., actionable method) remains yet to develop. Others have deterministic final steps. For example, the dedication procurement of subassembly parts under 10CFR50 A&B, “dedication,” historically used a deterministic interpretation of the FSAR DBA safety events to identify (“dedicate”) parts requirements subject to 10CFR50 A&B rules. This process will still to apply under 10CFR50.69; new plant designs will have to dedicate all parts below the SSC level of the most detailed PRA – or procure entire SSC generally to the same all encompassing 10CFR50 requirements across the board. The latter choice leaves the dedication decision process for the successful supplier bidder who accepts the procurement requisition specification, and gets a Purchase Order. In each case, detailed PRA can develop parts safety requirements to the component subassembly level, removing this need and specification development requirement. NRC processes should identify actionable methods that identify how licensees and/or their suppliers should comply with complex requirements – simply. In every case, both should take full advantage of the efficiencies offered by retaining completed analysis retrievably for future access and reuse on later work.
Standardization of designs should be considered for processes and information used in the nuclear industry. Operating experience remains highly dependent on source submitters, and is not available to the general public since the Institute of Nuclear Power Operations maintains the information. Industry failure data should be as available as NRC generic communications reports.

5. Use innovative strategies to recruit, develop, and retain diverse employees, and increase the diversity of employees in senior and managerial positions to achieve a high quality, diverse work force.
So called Generation-X employees will expect more hot-linked and relationally tied information management tools that are more like advanced server applications on the web. The lack of new data management structures and continued dependence on documentation in PDF or other hardcopy files will place more workers in obsolete information management environments. This will place NRC at a disadvantage from an employee retention perspective. Furthermore, the nuclear industry follows NRC lead in information management practices. Industry organizations like NIRMA (Nuclear Information Records Management Association) remain firmly implanted in the use of microfiche and other obsolete technology in large part because of the continued nuclear operation organizations dependence on hard copy documentation. NRC should lead the way to develop better information structures because of its position in nuclear technology management.
NRC should encourage industry along the same path by creating innovative method to accomplish the same ends as formerly done by rote “nuking it out” methods. NRC should encourage more industry innovation to maintain a diverse, creative workforce. NRC might want to consider exchange programs with other highly-technical, high risk regulatory agencies like DOE, DOD FAA, and FDA to share experiences and perspectives managing public risk.

7. Sustain a learning environment that provides continuing improvement in performance through knowledge management, performance feedback, training, coaching and mentoring.

Knowledge management will be the most pressing developmental area the NRC faces with resumption of reactor design, licensing and construction and the absence of substantial changes in the processes used to accomplish these activities since the last generation of power plants was constructed. Although Engineering CAD (Computer Aided Design) systems have gained tremendous power in the past two decades, their use ends at the development of designs. They don’t allow only limited integration with the other structures on which they depend, like safety rules (10CFR50 A & B, for example). They neither allow operating entities economies of scale nor improved safety by integrating derivative systems like procurement specifications (which are based on high level design requirements’ SSC components), scheduled maintenance and operations monitoring treatments, and tag out configuration controls. The lack of design basis integration is the single most critical nuclear plant design challenge today. Since TMI there has been a continued, regular occurrence of nuclear plants unintentionally operating outside their design basis (in ignorance) that can only be attributed to the complexities and finer nuances of nuclear plant configuration management. Data duplication and complexity tracing back to the design basis should be simplified to avoid loss of critical operating information.

9. Provide accurate, timely, and useful financial information to agency managers for effective decision-making.

While licensee financial controls are outside the direct purview of the NRC, continuing on a deregulation path, even if limited, operating nuclear plant’s financial health needs to be assured. Under-funding nuclear plants could affect safety. To assure cost effectiveness and safety, NRC should encourage licensees to measure plant SSC level expenses, performance-basing all their financial cost-benefit metrics. This would assure plant expenses (or lack thereof) are measurable at system, train and even SSC level in meaningful ways to benchmark with comparable units and others. In short, in a competitive market NRC should encourage licensees to maintain the financial cost-benefit metrics that justify – and compare – all performance expenses.

Selected Activities to Support Operational Excellence
Information Technology/Information Management

· Improve information management processes, such as information dissemination and knowledge management. [Supports Strategies 3 and 4]

Standard plant designs selection should be complemented with the development of a standard licensing framework structured around networked, server-based relational data. The licensing of the design under the Combined Operating License could then be measured for degree of compliance to a standard, be it a Westinghouse AP-1000, GE ESBWR or other standard design approved under Part 52 with a Design Control Document. This would facilitate the simplification and standardization of reporting under 50.65, the maintenance rule, which is a significant nuclear plant/NRC staff manual personnel burden. A standard design and format would facilitate automated data input of maintenance preventable function failures and system availability to assess performance.

· Improve internal and external electronic information access and delivery systems. [Supports Strategies 3 and 4]

The integration of the critical attributes from fundamental licensing documents into a relationally linked form would provide the framework under which all information could be more readily accessed and used without the extensive experience requirements that new younger employees will lack. This will improve regulation and safety, while allowing more effective use of resources.

· Systematically evaluate, improve, integrate, and automate selected regulatory and support processes from beginning to end, considering the needs of all process participants and using the most effective redesign approaches and technologies. [Supports Strategies 3 and 4]

New plant licensing should attempt to provide an integral framework on a per unit design basis that allows integration of all regulatory processes from beginning to end. This should anticipate aligning all design basis maintenance activities from beginning to end, from the initiation of design under the top level regulatory criteria to the final release of the site for unrestricted use after decommissioning, many years later. In between, it should cover all design updates, revisions to rules, codes and standards, equipment replacements, operating experience, and other requirements needed to both maintain the design basis and automatically generate all operating treatments – operating procedures, tag-outs, procurement specifications, scheduled maintenance requirements, SSC risk classification, and other critical operating information based upon critical design attributes that are relationally linked.

· Apply information technology/information management (IT/IM) to meet high-priority business needs (e.g., new reactors, fuel cycle facilities, the high-level waste repository proceeding, homeland security). [Supports Strategies 3 and 4]

Automating the design cycle will improve not only licensee, but NRC regulatory and business needs for those programs deemed priorities by Congress and the President.

· Seek common solutions, reduce duplication, and promote sharing of data, systems, and service components across the agency. [Supports Strategies 3 and 4]

By developing a common information management regulatory framework, NRC would achieve significant synergies of licensing while allowing separate unique designs to go forward where economics dictated. For example, a common framework would support PWR, BWR and MHRs (or any other new design, for that matter) within a common set of metrics that allow cross-comparisons of performance based on the fundamental design control document. This would allow NRC to quickly identify performance outliers by quickly screening irrelevant site specific design features to get to fundamental performance. Enhanced data tools will make the oversight process more transparent, and facilitate the movement into a more design data centric framework that is more flexible by tying performance information more directly into networked performance monitoring systems

· Influence Federal initiatives that are applicable to the NRC and expeditiously adopt such IT solutions where they provide sufficient return on investment. [Supports Strategies 3 and 4]

Because many federal and state agencies, indeed whole industries grapple with similar information technology issues, yet lack the fundamental commitment framework of the nuclear industry, they can’t be effective integrating uniform server-based critical attribute data systems. For example, both DOD and VA need methods to move medical records for critical injured defense personnel from forward areas to treatment facilities. Lacking critical attribute-based personnel injury records, treatment suffers. Agencies can’t move hardcopy records with injured personal with certainty. Similar issues abound across the federal agencies like FDA, DOD (hardware), FBI, and NSA. Better data structure models elude network information designers for a variety of reasons, such as larger and more complex frameworks. Nuclear industry records have commensurate complexity but intense public interest in their accuracy, quality and safety based upon the regulatory framework in which they reside.

· Build shared services into the IT infrastructure to reduce costs of applications that require these services. [Supports Strategy 4]

Integration should begin at the design level with a common architecture and a goal to link in a common framework as experience is gained. Because efforts to link the entire design basis across all designs is so large, the first step should be at the individual design level within a common framework relational structure.

· Expand and strengthen information security capabilities to ensure that effective information protection is in place, and develop and communicate policies regarding security. [Supports Strategy 4]

Developing a common framework, each Part 52 plant design could eventually move to an NRC –controlled server. At that point, access controls could allow the same data security structures to provide information access based upon need, but restricted for safeguards based upon the logon authority of the user. This could eventually to place most information where it is most accessible, useful but still controlled.


In closing, the NRC public or industry input forum should also provide a means to notify applicants that their messages have been received, and are in the agency’s docket. At present, there is no way for the submitter of a complaint or suggestion to know their communication has been received (that we’re aware of). NRC should consider closing the loop to track inputs to their source to final disposition. This could be entirely by web.

For clarifications or questions, please contact me at the location below, or by fax or email.



Sincerely,

J.K. August
President, CORE, Inc.
jkaugust@msn.com
http://www.pmoptimization.com/
303-425-7408
303-507-5272 cell
303-425-0861 fax
[1] Air Transport Association
[2] Federal Aviation Administration

D-Day for Congress: Did NRC Delays Kill GE Nuclear?

D-Day for Congress: Economic Recovery and Nuclear Energy

1. Congress must act to save the economy & nuclear energy

• The U.S. economy needs solid growth not just stimulus
• Congress must take joint leadership responsibility for economic recovery with the President developing a long-term economic strategy
• Congress must take full responsibility for funds appropriated to assure monies arespent effectively

2. Congress should authorize a bipartisan task force to explore solutions

• Find the country’s best industry experience and economic expertise
• Initiate a task force with the Executive branch and industry to find answers
• Task them to figure out the best choices for the country and present them

3. To restore economic growth, Congress must ask federal agencies to help

• Look for ways to improve industry support or substitute services
• Look at all possible ways to help the economy no restrictions on how
• Figure out if innovation support should become part of ongoing federal operations
• Change regulatory perspective from “it’s not our problem” to “we will help you”
• Establish accountability for changes that challenge agency status quo
• Target high-value agencies (by economic sectors) with high-value contributions
• Identify and run proof of demonstration pilot projects to prove the path forward
• Add emergency appropriations, if necessary, to get agency work done

4. Congress should authorize a Proof of concept pilot

• High value: Nuclear Energy

1. New Construction $200-300 billion (20-30 units; 1-2% of economy)
2. Energy relevance today addressing carbon concerns
3. Historical performance high cost, low innovation, poor construction project performance 1975-1994
4. Entrenched mindsets new technology barriers at NRC
5. Ultra-high costs cited in the press (Time Jan 2009), historically Academia leadership in contrast with industry

• Consider the U.S. NRC

1. Does the NRC discourage innovation?
2. Can nuclear regulation be indifferent to costs?
3. Does industry insider use pose conflict of interest or benefit the industry with qualified expertise?
4. Should academia leadership exclude industry participation in its own regulation?
5. Does NRC’s 1974 Congressional charter still apply?

Did NRC Delays Kill GE Nuclear?

Did NRC Delays Kill GE Nuclear?
Would the last U.S. nuclear reactor supplier please turn out the lights

For thirty years, GE’s goal was to be Number 1 or Number 2 in their markets, or get out. Today GE Nuclear is Number 3 in nuclear reactor design and sinking fast. Loss of the Economic Simplified Boiling Water Reactor (ESBWR) will force it lower. GE has no good options today, given GE Capital’s distress. If it follows past practice, GE will exit nuclear energy. Then GE will have been the last U.S.-owned nuclear reactor plant supplier. Congress alone can correct the U.S. regulatory framework before others follow the same path.

GE’s Nuclear Problem
General Electric (GE), the last major U.S. nuclear plant vender, is on the ropes with their new ESBWR design. A slow economy, other business problems, and recent utility ESBWR cancellations all hurt GE. Licensing reviews now threaten GE’s laudable passive-safe nuclear design. Though GE has other energy businesses, a GE write-down comes at a poor time. A year ago, GE said that although its energy business was small, it was a growing fraction of its portfolio. Now that GE Capital is in trouble, selling-off nuclear assets bodes ill for GE. Although anti-nuclear voices hope to put a stake through the heart of America’s last reactor supplier, consequences aren’t so clear.

With a market value of nearly $200 billion, GE employed roughly 320,000 at the start of 2008. Of that, GE Nuclear accounted for 36,000 employees, with annual sales of $30 billion. GE Capital financed $20 billion more in nuclear sales. Developments that threaten GE Nuclear bear further examination; collapsing auto, finance and other industries make timing worse. Even the best stimulus package in Washington won’t be effective if it can’t staunch financial hemorrhaging and stop heavy industry like GE from leaving the U.S.

Regulatory Burden
Complex rules and regulations layered processes deeply, making nuclear regulatory reviews lengthy, and tedious. Ponderously slow nuclear design reviews that do not meet new generation needs emerge like an anchor from the 1970’s. For nearly forty years, nuclear energy in the U.S. has been on the skids. Rising costs from litigation and delays made it prohibitively expensive. Then Three Mile Island unsuspectingly brought the U.S. NRC to a critical review role, delaying more than ever before. Antagonizing nuclear generation programs, they damaged U.S. development prospects. The new administration staunchly opposes nuclear construction. They seek to replace nuclear generation with wind or solar, regardless of trends in countries like France, Korea and Japan.

Encouraged with the best nuclear safety intentions, by submitting its safer new ESBWR design for review, GE got on the wrong side of the nuclear safety review process. Dubbed the “economically-simplified” (ES), its passive-safe boiling water reactor (BWR) sits in the throes of new licensing delays. That design review process creates schedule uncertainty. Uncertainty in finance is a bad thing. Electric utility ESBWR buyers saw delays put their prospective Congressional loan guarantees at risk and pulled the plug.

NRC design review pace cost GE loan guarantees authorized by Congress to make new construction viable. Without loan guarantees, new nuclear plant costs as high as $24 billion made a two-unit ESBWR[i] simply too high for licensees to bear, alone. Ironically, the U.S. government itself - in the NRC - causes high construction costs that require loan guarantees. France’s EDF is building its Areva-designed Evolutionary Power Reactor (EPR) in Flamanville, Normandy, at a cost of 4 billion euros ($5.2 billion). Although France has higher labor costs, the same expertise as here in the U.S will build those units, with more efficient regulatory processes.

Impending Collapse?
Recently, GE’s CEO Jeffrey Imelt treated its nuclear subsidiary like an annoying child. At only $50 billion of $170 billion in total revenue, energy operations were a small part of overall GE value. Then problems at GE Capital caused GE stock price to plummet from $38 to $12. GE Capital financed GE equipment sales, and a plummeting economy hurt it. Today, GE Capital is in turmoil, and cannot perform its primary function - financing GE sales. GE cannot support their new nuclear business - they lack the money, and financial loss risk is simply too great. The weak economy doubly weakened GE Capital. Now, its nuclear design core problems bode ill. Will Congress let another industry icon go belly-up? Would GE Nuclear’s sale cost the U.S. its nuclear leadership, as well as our last nuclear business? Some argue that happened many years ago. While the French and Japanese embraced nuclear technology, antinuclear footage played over and over on TV in the U.S. destroyed our vision.

In 1954, the Navy’s Admiral Rickover built submarine reactors and captured the American public’s imagination, our ideal of ingenuity. With Congress, President Eisenhower brought in a new era with “Atoms for Peace,” their nuclear energy program. Of America’s original nuclear pioneers, GE alone survived. Westinghouse, Combustion Engineering and Babcock & Wilcox exist today as subsidiaries of foreign companies. Antinuclear sentiments, delayed project cost overruns, inadequate oversight, lax operations and Three Mile Island[ii] all contributed. Losing America’s last domestic nuclear supplier now poses grave U.S. economic risks. Could America let that happen, and remain a nuclear leader, especially with other burdens industry placed recently on the American taxpayer?

GE Capital’s demise only worsened financial difficulties over the past three months. In light of slow nuclear reviews, lack of urgency, and acceptance of the slow processes at the U.S. NRC, GE exhausted the financial resources needed to keep their ESBWR license moving. Delays that threw GE’s license into uncertainty caused committed clients to withdraw. Over the past two months, Exelon, Entergy, and Dominion withdrew their ESBWR applications. Entergy was the last to ask the NRC to drop GE from its COL[iii] license application. Unless Congress acts quickly to challenge NRC’s guidelines, forces will remove GE Nuclear from passive-safe reactor design. Without Congress action, NRC rules will result in a disastrous decision.

Would fewer nuclear suppliers create better nuclear design development prospects? Could nuclear plant design move overseas, entirely? Will more bailouts, further losses, or even waning Congressional interest in its Next Generation Nuclear Plant (NGNP) follow? Should the U.S. allow transfer of its nuclear leadership overseas? Utilities could convert their nuclear fleets to wind and solar, regardless of past Congressional intent. Even the mighty U.S. Navy could return to ships powered by sail, sustained by Washington’s dollars and its overwhelming push to be green. Considered ridiculous only yesterday, these possibilities have real substance today, and could follow without debate tomorrow.

Oversight of nuclear energy by Congress has been limited. Yet letting nuclear leadership pass overseas without debate is not in the American public’s interest. The time has come for direct Congress involvement. Nuclear lethargy threatens to sink the boat built by Admiral Rickover, as economic woes increase our welfare roles, demand more bailout money and tolerate indecisive or bad decisions. Meanwhile, overseas others move forward quickly. Is it better, perhaps, to send work abroad where minds are open, than fetter U.S. citizens with this burden. We could finally give away the energy resource U.S. taxpayers paid to develop. While only fitting that nuclear energy should follow steel, autos, manufacturing, and chemical production overseas, as some might think, the American Public deserves to know.

Assets at risk
Delays approving new licenses should present long-term concern. Design licensing problems hamstring not only industry, but also government. The Department of Energy (DOE) now seeks a new hydrogen-based reactor technology, the Next Generation Nuclear Plant (NGNP). Underlying new plant construction’s problems are high nuclear costs, federal loan guarantees, and the need to qualify new construction techniques for those projects. Ironically, loan guarantees that Congress provided[iv] to stimulate nuclear construction will likely be the death knell for the last U.S. supplier. Slow license review progress on the EBWR disqualified it for Federal loan guarantees. Private lender insistence on Federal delay insurance signaled its demise. The irony is that the delays that Congress sought to insure against with guarantees have already begun. Moreover, the first victim will be the last U.S. nuclear reactor supplier, GE.

Other suppliers’ design submittals aren’t as far along as GE’s. Areva’s Evolutionary Power Reactor (EPR) started two years after GE; Mitsubishi Heavy Industries (MHI) started even later. However, to participate on NRC’s schedule, applicants must have a U.S. partner. Financial commitments demonstrate support. Areva, Westinghouse (Toshiba), and MHI all have partners. Furthermore, GE’s Hitachi-built ABWR and Mitsubishi’s APWR (formerly designed by Westinghouse) enjoy commercial operation and construction overseas. Westinghouse/Toshiba’s AP-1000, designed with an approved license in the United States, remains in construction in China despite the world’s economic recession. Financially weak, GE cannot support U.S design reviews that depend totally on promises and good faith efforts, backed only by GE Capital. Congress must decide whether the last American nuclear designer deserves its support now, and whether that is palatable to the public.

Like Areva, Westinghouse has plants under construction in China[v] and enjoys Toshiba financial support. Licensing its ESBWR GE faces an uphill battle. Word on the street is that NRC does not like GE submittal quality or demeanor.[vi] Nonetheless, resolving NRC’s concerns takes time. With the last U.S. utility partner’s cancellation, NRC’s Office of New Reactors, a weak parent company financial position and DOE’s NP 2010 program guarantees - all have forced utilities to cancel their ESBWR orders. Last week’s cancellation effectively shutdown GE. With no U.S. utility partners, NRC will shutdown GE design reviews, regardless of ESBWR design quality, safety or review progress. Without support to license here in the states, GE must cancel or sell the ESBWR.

In the past, owners sold off B&W, Westinghouse and Combustion Engineering to foreign interests. Areva, Toshiba, Hitachi, or even MHI would probably acquire those assets. (Areva, a French-owned designer, enjoys government financial support.) Any nuclear supplier needs the long-term commitment and resources to weather U.S. regulatory process development costs - or the capability to take nuclear sales overseas. Countries like France and Japan have already done that, building their designs at home and in Korea, Taiwan and China. Designs built abroad enjoy strategic advantage over U.S. licensing processes. Regulators also rebuffed buyers like Warren Buffet’s Berkshire Hathaway/MidAmerican Energy in buyout efforts. Buffet saved Constellation with a temporary cash infusion in the Market crash last year, but regulators forced Constellation’s sale to France’s Electricite de France (EDF) and Areva - the highest bidder.

In contrast with the U.S., countries overseas view nuclear development optimistically. While the U.S. may be destined to return to the sail power of yesteryear, others see green value in new nuclear generation: more reliable, more dependable and less capital intensive than the wind - all with no carbon emissions. Perhaps relinquishing our naval nuclear legacy to committed defenders overseas is only way to save our tattered nuclear industry. Neither Congress nor the new administration would block the sale of GE Nuclear to the highest bidder, overseas.

NRC’s Chairman even suggested that supplier internationalization[vii] would benefit the U.S. nuclear market. However, with GE’s exit, only international nuclear reactor suppliers will remain! Without a U.S. reactor manufacturer, U.S. nuclear regulations will move abroad following international standards and license groups, like International Atomic Energy Agency (IAEA).

War on Regulatory Complacency
The law requires preventing bias, but delays of any sort - government-induced, complacency, ignorance, complex processes, or lack of engineering expertise also warrant Congressional action. Economic consequences damage U.S. competitiveness and strategic energy interest. What good does creating new U.S. jobs do today, when regulatory burdens destroy more jobs tomorrow faster than Congress can ever create them? Bearing the costs of resolving nuclear safety issues, U.S. suppliers bear most regulatory burden, helping push them overseas. Look at history; U.S. taxpayers and ratepayers bore the costs of shutting down twenty cancelled U.S. nuclear projects in the 1980’s over construction, encouraged by licensing delays. LWR regulatory concepts applied to the high-temperature gas reactor also killed that era’s best prospect for safer nuclear designs. Although commendable in their intent, effective regulatory improvements need practice. U.S. nuclear regulatory process improvements have achieved too little, too late or not at all.

Continuing slow nuclear design will cost the U.S. more jobs lost, another bailout, and loss of last U.S.-owned supplier. Economic Recovery Act monies will not help companies in distress, like GE. Congress should allocate money to improve U.S. regulatory processes. While the NRC added roughly 1000 new employees over the past two years, they still need to improve license processes to speed new design reviews. Other options need consideration, too. When NRC’s Chairman Klein asked Congress for supplemental funding[viii], Congress ignored his request - in light of the continuing budget resolution. In economic crisis now, Congress has allocated monies for many other lesser projects. Still ignoring our U.S. nuclear legacy, turning the Chairman away empty-handed again on technicalities would be sadder, or even tragic.

Improving process effectiveness to reduce regulatory burden warrants focus today. Past Government Accountability Office (GAO) audits, though well-intended, missed the point - regulatory effectiveness. The U.S. NRC hasn’t tried processes like the Department of Commerce’s Baldrige Application; few at NRC perceive their critical need. In contrast, the Army Research and Development Center (ARDEC) in Picatinny, New Jersey is one Federal agency that performed quality-based effectiveness review. Congress should follow former President Kennedy’s lead and initiate efforts to improve government agencies, declaring war on economic complacency. Then Congress could ask the NRC to perform the Baldrige Process challenge!

Regulatory Uncertainty
Uncertainty in schedules certifying the ESBWR resulted in cancellation decisions. Both Entergy and Dominion claimed that their decision did not reflect ESBWR design criticism. Dominion stated, "We believe ESBWR…technological advances…keep it very attractive..." Entergy said, "This action simply reflects the fact that we have not been able to come to mutually agreeable terms and conditions with GE for potential deployment of an ESBWR." Unlike other certified designs, the ESBWR still must go a long way to achieve license certification. GE Capital can’t accept the financial risk that NRC will take four more years to finish license reviews.

Today Part 52[ix] licensing accepts lengthy reviews, despite faster performance forty-years ago. Reviews today take longer than Admiral Rickover used to develop the entire design-construct-test-run schedule for the USS Nautilus, in 1952. Furthermore, nuclear design improvements stem from Navy design foundations. Nearly sixty years support light water reactors (LWR) safety analysis. A half-century and thousands of reactor-operating years later, designer reviews progress at a glacial pace. Independent reviewers suggest there are faster ways to complete reviews of iteratively-improved LWR designs. Because greater uncertainty based upon regulatory status created potentially large loan guarantee program payouts, ESBWR projects fall into higher risk categories. Congress intended to protect our industry against government schedule delays by insuring project owner recipients. Even before the program started, however, regulatory delays eliminated the safer ESBWR. Ironically, in its attempt to promote safety, NRC reviewers guaranteed the very outcome they least sought. By slowing regulatory reviews and increasing their total project cost, they analyzed safer new designs to death. GE played the good guy, complying with laborious NRC processes, reviews and delays, never questioning schedules or impact on cost. They also lost.

Schedule uncertainty in industrial projects creates huge costs. Time drives costs; the time value of money for delay on a finished $10 billion project costs billions - depending on interest rates. Delays ended U.S. nuclear prospects in the 1980’s. Owners and their lenders who cannot predict how long a project will take to complete cannot predict its final costs. Interest expenses keep growing, along with other expenses like equipment rent, salaries for the design management team, work site services, regulatory fees… Whether owners and their constructors make progress or not, delays raise costs. Delayed nuclear projects in the past raised costs many times their original estimates, and regulatory burden’s associated delays contributed. The U.S. remains poised to repeat this tragedy, today. Despite Energy Policy Act of 2005 assurances, NRC Part 52 licensing, and congressionally authorized insurance (e.g., DOE’s NP 2010)[x], delays appear to be the order of the day, again. The first new nuclear cancellations, ironically, are safer designs that should lead the way. GE Nuclear is the first victim of new nuclear delays.

Regulated utilities painfully remember past lessons, including schedule delay costs. Their lenders remember those important lessons, too. They will not subscribe to endless projects with open-ended funding, no schedules, founded on meaningless cost projections with no guarantees. Customers care how much their power costs - utilities learned that from Public Utility Commissions (PUC’s)[xi]. They disallowed nuclear construction project “wasted” costs. Lenders now know that without the public’s blessing, regulators will not let their lenders - or borrowers, utilities - roll construction costs into the rate base. They suspect that “green energy” can easily turn red, once industry and ratepayers see real green energy costs hit their constituent’s bottom lines and pocketbooks.

At least two years behind GE’s ESBWR, Areva’s EPR and Mitsubishi’s APWR prospects survive. For Areva, its owner - the French government - has a plant under construction in Finland, commitments to build one in France and others around the globe. Areva will also build a French EPR at less than half the cost of building an EPR here in the United States. Other bids in Turkey and construction in China, makes their cost case argument compelling. Although not yet certified here, sales momentum around the globe for Areva’s EPR is increasing. Mitsubishi likewise remains poised for the long haul, even though their applications have just began. The real problem GE faces is a lack of total commitment. Lack of single-minded focus on their nuclear work - and the ESBWR - keeps them from pressing the NRC hard for schedule performance. Without overseas sales to support them, there’s little they can do.

Those who oppose nuclear plants claim that government assistance shows the nuclear renaissance is doomed to fail. They also know that regulatory delays kill any privately financed construction project. Look no further than the nuclear collapse in the 1980s - promoted by regulatory delays and their cost burden. Regulatory delays caused those financial losses that resulted in financial collapse. Ratepayers (and taxpayers) bore - and still bear - the cost of that collapse. Can the U.S., after a trillion dollars invested[xii], let that happen again? Congress alone is in a position to act. [END]

By: J.K August, PE
CORE, Inc
jkaugust@msn.com
303-425-7408/303-507-5272
[i] Florida Power and Light.
[ii] The nuclear industrial accident, March 28, 1979, in Harrisburg, PA.
[iii] Combined License Application, under Part 52 (Subpart C).
[iv] The U.S. Department of Energy (DOE) developed the Nuclear Power 2010 initiative (e.g., NP 2010) in accordance with the Energy Policy Act of 2005.
[v] AP-1000, for Advanced Passive, 1000 MWe net
[vi] Other submittals show NRC “requests for additional information” (RAI’s) are resolved statistically mostly by clarification; a few make changes to license design materials - less than 25%. Substantive changes in design are almost nil: around 5%.
[vii] Institute of Nuclear Power Operations (INPO), Atlanta, November, 2008
[viii] Senate’s Environment & Public Works (EPW) Subcommittee Hearing on Clean Air and Nuclear Safety July, 2008
[ix] Code of Federal Regulations, Part 52 (10CFR52): LICENSES, CERTIFICATIONS, AND APPROVALS FOR NUCLEAR POWER PLANTS
[x] To determine how best to invest $18.5 billion dollars in Congressional loan NP 2010 project guarantees, DOE NP 2010 ranked project viability using uncertainty. However, NP 2010 project design planning preceded the current economic crisis.
[xi] PUCs regulate public utilities, forcing them to be accountable for due diligence decisions that pass along costs to ratepayers in utility charge ratebases.
[xii] Total cost of all U.S. nuclear power development costs, including all commercial and U.S. Navy reactors, AEC administrative costs of the Atoms for Peace Program, DOE (including ERDA) development costs, and costs of U.S. Nuclear Regulatory Commission 1976-2009: $961 billions (2005 dollars).