Chairman Inhofe, Ranking Member Graham and distinguished members of the subcommittee, I am Ralph Beedle, senior vice president and chief nuclear of fleer at the Nuclear Energy Institute, the Washington, D.C. policy organization for the nuclear industry. I am pleased to testify regarding the performance of the commercial nuclear industry and the industry's safety regulator, the Nuclear Regulatory Commission.
The Nuclear Energy Institute (NEI) establishes industry policy positions on various issues affecting the nuclear energy industry, including federal regulations that help ensure the safety of the 103 operating commercial nuclear power plants in 32 states. NEI represents 275 companies, including every U.S. utility licensed to operate a commercial nuclear reactor, their suppliers, fuel fabrication facilities, architectural and engineering firms, labor unions and law firms, radiopharmaceutical companies, research laboratories, universities and international nuclear organizations.
The United States has the largest commercial nuclear power industry in the world, with more than 2,200 reactor years of operating experience. More than 100 nuclear power plants continue to safely and reliably produce nearly 20 percent of America's electricity. Over the past decade alone, improvements in nuclear plant operating efficiency have effectively added the equivalent of twelve 1,000-megawatt plants to the national electric grid. The U.S. nuclear industry also is the global leader in the development of advanced nuclear power plant technology. The foundation for this leadership role is the extensive use of nuclear power in this country and the industry's outstanding safety and performance records.
Nuclear power provides our nation with tremendous environmental benefits. Without nuclear energy, the United States could not meet air quality standards established by the Clean Air Act or international commitments to reduce greenhouse gases, including carbon dioxide. Nuclear power plants are the nation's largest emission-free source of electricity, and they produce power at a competitive price -- with production costs that are only a fraction of a cent higher than coal- fired electricity and substantially cheaper than natural gas, solar or wind power.
Within Congress, and indeed across the United States, there is a growing awareness that nuclear power is a proven, dependable technology and a vital part of our nation's electricity generating system. Nuclear energy will become even more essential if our nation is to meet the multi-faceted demands of economic expansion, environmental stewardship and population growth in the 215' Century.
Nuclear Energy: Safe and Reliable
The U.S. electricity industry is rapidly changing, and America's nuclear industry embraces the challenges and the opportunities of the new competitive marketplace. Most U.S. utilities with nuclear energy are well positioned for competition.
The performance of U.S. nuclear plants has in each of the last two years reached record high levels. In a restructured electricity market that eliminates the rate base, a fully depreciated nuclear plant will demonstrate enormous economic potential. Recognizing nuclear energy's success and its importance both to economic growth and environmental protection, we ask the subcommittee to maintain its oversight of the Nuclear Regulatory Commission. Today's outstanding nuclear power plant performance and safety must be maintained for the long term. The NRC's transition to a nuclear plant oversight process that focuses on safety is an important component for the future nuclear energy industry.
Attached to this testimony is the 1999 list of the World Association of Nuclear Operators' (WAND) performance indicators for nuclear reactors.
The nuclear industry's continued commitment to safe nuclear plant operation must be accompanied by the NRC's commitment to fulfill its mission as an effective and credible regulator. Both are essential to maintain public trust and confidence in nuclear energy. In addition, Congress must continue strong oversight over the NRC and support the regulatory changes being made by the NRC.
Relicensing and License Transfers
Nuclear power plants are valuable and highly marketable facilities, with some plants being sold by those companies choosing to leave the electricity generation business. In addition, the owners of the vast majority of nuclear power plants are expected to extending the operating licenses for an additional 20 years. The market demand for nuclear power is evident in the purchase of Three Mile Island 1 and Clinton nuclear power stations by AmerGen Energy Co., and the purchase of the Pilgrim nuclear power plant by Entergy Operations Inc. Future power plant sales and anticipated consolidations in the industry will require the NRC to transfer operating licenses in a timely manner.
The NRC has recognized the importance of swift action in these transactions, and the agency should be commended for its attention to improving the license transfer process. The commission should continue to ensure timely reviews and disciplined licensing board proceedings related to license transfers and amendments.
Baltimore Gas & Electric Co., Duke Power Co., Entergy and Southern Nuclear Operating Co. have filed applications with the NRC to extend operations at eight nuclear reactors for additional 20-year periods. Electric companies have announced they will file applications with the NRC to extend the plant licenses at 22 other reactors during the next four years. License renewals and transfers will become more frequent as electric utilities reposition themselves in a competitive electricity market.
A competitive market requires efficient, standardized and timely license renewal and license transfer processes. Because the economic viability of a license transfer proposal can be impacted by a commission review, such processes are essential to enable nuclear operating companies to make timely and effective business decisions. An expeditious relicensing process best serves the public interest.
The NRC is expected to meet the original 30- to 36-month target for completing the initial two license renewal applications, submitted by Baltimore Gas & Electric Co. and Duke Power Co. In fact, those applications are being completed ahead of schedule.
Using the experience of the first two reviews to refine the process, future relicensing efforts should continue to be streamlined. The NRC's performance on license renewal applications is an example of the agency working in an efficient manner to accomplish an important objective. A true test of the NRC will be the agency management's ability to shift staffing and budget resources to review a larger number of nuclear plant licensing extension applications expected in the coming years. It is essential that the NRC incorporate efficiencies that have been learned during the first two license renewal applications into future license renewal applications.
NRC Regulatory Reform
A credible and effective regulator is vitally important to the nuclear power industry. The new oversight process better focuses resources on those aspects of plant operation most directly linked to safety. The new system will continue the baseline inspection program for all plants. Those plants that do not meet the highest level of performance, as measured by 19 key plant performance indicators, will receive increased inspection and oversight.
In moving to this new system, the NRC is replacing an oversight process rooted in subjective plant performance ratings with a safety-focused assessment process that uses objective measures of key plant performance.
This new safety-focused regulatory oversight process retains the baseline NRC inspection program at nuclear power plants. NRC inspectors will continue to work at each nuclear power plant, monitoring operations on a daily basis. In addition, the nuclear energy industry, both through the plant owners and the Institute of Nuclear Power Operations (INPO), continually performs on site plant evaluations and self-assessments.
By focusing its resources on safety-related issues, the NRC can carry out its mission most effectively. As NRC Commissioner Nils Diaz testified in July 1998, the need to change the NRC's regulatory approach "is not an indictment of the past, but a requirement of the future." Like the industry it regulates, the NRC must adapt to a changing environment.
Mr. Chairman, I would like to emphasize the importance of this subcommittee's support and oversight of the NRC in recent years. Congressional oversight hearings have been instrumental in encouraging the NRC commissioners and staff to move forward on many long-standing issues, such as implementing the safety-focused, performance-based approach for assessing nuclear power plant operations using objective plant performance measures. Positive change is underway at the NRC -- change for which you and the commission both deserve credit.
Continued congressional oversight, coupled with periodic NRC public meetings among all stakeholders, is producing the desired regulatory change at the agency. There is general consensus among the NRC and its stakeholders that nuclear safety will be enhanced by a more objective prioritization of resources based on quantifiable safety significance to plant operations. Building on this consensus for change, the industry strongly urges this subcommittee and Congress to continue its support and oversight of the NRC as it moves to a new regulatory system. Congressional oversight can help keep the agency focused on the essential public policy concern -- maintaining a high level of public safety. In that light, I would appreciate the opportunity to return and tell you about the nuclear energy industry's progress soon after the 107th Congress convenes next year.
Pilot Plant Experience
After a year long development phase, the NRC tested the new oversight process at 13 reactors in seven states during June-November 1999. The new oversight process used 19 indicators to gauge plant performance in three areas: plant safety, radiation safety and security. Performance for each indicator was measured during the course of the pilot program and placed in one of four color-coded bands. The color-coded indicators of plant performance will be posted quarterly on the NRC's website -- along with key findings from quarterly plant inspections. Preliminary data from performance indicators for all 103 reactors show that 98 percent of all indicators are at the highest level of safety.
The pilot program served its primary purpose by testing the performance indicators and ensuring that participants understand how to calculate and report data in each area to the agency. The industry and the agency evaluated the new processes during the pilot program, and modifications have been made to the program in preparation for an anticipated industrywide rollout in spring 2000. The evaluation and modification period should continue through the end of the initial year of implementation at all plants.
NEI believes that the new oversight process, coupled with the industry's commitment to safety, will achieve the following goals:
-- ensure that nuclear power plants continue operating safely
-- improve NRC efficiency by focusing resources on those areas most important to safety reduce unnecessary regulatory burden on licensees improve public access to information on the safe operation of nuclear power plants.
GAO Reaffirms Need for NRC Training and Strategic Planning
The nuclear industry shares the concerns of this subcommittee regarding the results of the recently released General Accounting Of flee survey of the attitudes of NRC employees. The study reports that some NRC employees are skeptical of the shift toward safety- focused regulations and a new assessment process. In reviewing those conclusions, however, this subcommittee should not lose sight of an important finding: The GAO study showed that the NRC staff -- by a 2-to-1 margin -- believes that the transition to a regulatory process that incorporate risk insights will improve nuclear plant safety.
Despite staff skepticism, the GAO study also confirms that change is beginning to take hold at the agency. Employee concerns voiced in that study are typical of any large organization in transition. The GAO conducted its survey in August and September of last year, but since that time the NRC has completed its pilot program and conducted internal and external evaluations of the program that involved staff in each NRC region.
In its assessment of NRC staff attitudes, the GAO concluded that there is a need for long- range planning and training by the agency as its makes this significant transition to a new oversight process. Planning and training are essential to improve NRC employee understanding and acceptance of the new oversight process. The GAO concluded that reform efforts were being hindered by the lack of a detailed NRC strategic plan with quantifiable goals and objectives. The industry also believes that the lack of adequate training for NRC employees and the failure to implement a long-term strategic plan could be impediments to the effective and efficient implementation of the new oversight process.
Given this recent release of the NRC's strategic plan, the industry has had time for only a preliminary review of the plan, but we believe that the NRC's strategic plan as drafted is not sufficient to guide the agency during this period of significant change. The industry agrees with the GAO that the NRC must implement a more comprehensive strategic plan to assist the agency's transition to a new regulatory framework. Many of the concerns voiced by NRC staff to the GAO may stem from a lack of effective communication between the commission and staff regarding the new regulatory oversight process. Making the NRC long-range strategic plan more detailed should be a major step in the agency's earning the support of those staff who are reluctant to embrace change. We suggest that the NRC's strategic plan be revised to specifically include the following principles:
-- a safety-focused regulatory framework that incorporates risk insights a more efficient and accountable regulator an integrated NRC strategy for achieving the objectives of regulatory reform a specific timetable and milestones to ensure the NRC's long-range plan is implemented on schedule staff resources and a fully accountable budget that supports fundamental NRC reform.
This multi-year plan also should include an annual planning process that establishes a meaningful set of NRC objectives with measurable results. The long-range strategic plan should integrate the principles of regulatory reform outlined in this testimony, with measurable goals and objectives to demonstrate progress to achieve reform of the regulatory system. It also should recognize improved plant safety and performance and account for new demands on the regulatory process, such as license renewal and transfer procedures, resulting from the transition to a competitive electricity market.
The commission must examine what appropriate levels of staffing and budget are required for future years. The NRC should optimize its resources, including an examination of its organizational structure, to conform to the new regulatory oversight process. The commission also should allocate resources in a manner that ensures adequate staff support.
NRC Should Seek Legislative Changes
The nuclear industry also believes that several legislative proposals regarding the NRC deserve the support of this committee. NEI supports each of the legislative proposals forwarded last year by the NRC to Congress. Amending the Atomic Energy Act with respect to foreign ownership, eliminating antitrust reviews at the NRC and providing for flexibility in the hearing process are particularly important.
NEI appreciates the efforts of this subcommittee and the full Environment and Public Works Committee in passing S. 1627 and forwarding it to the Senate for consideration. Although we were disappointed that several of the provisions recommended by the NRC were not included in the bill, the industry will continue to work with each of you to solve problems with those provisions so that they may become law.
In addition to the legislative changes recommended by the NRC, NEI urges the subcommittee to consider amending the Atomic Energy Act to allow the NRC more flexibility in the way that it is organized. Current law requires that the NRC organization include certain divisions. Those restrictions should be removed from the statute, and the commissioners should be allowed to organize the agency in a manner that is most effective and efficient and that reflects the changing regulatory environment.
Nuclear Industry User Fee Adjustment
Current law requires the NRC to collect approximately 100 percent of its budget through licensee user fees. Most of those fees are collected as a generic assessment equally levied against all licensees, creating, in effect, a "miscellaneous" category to describe nearly 80 percent of the NRC's budget. This practice is contrary to sound and accountable budgeting. By collecting the vast majority of its budget from a general user fee assessment, the NRC has failed to provide Congress and the industry with the budget data and information necessary for a thorough and complete evaluation.
In testimony last year before this subcommittee, NEI urged Congress to ensure that the NRC adheres fully to the requirements of the Omnibus Budget and Reconciliation Act of 1990 and submit legislation, if necessary, to modify the NRC fee structure so that licensees are assessed fees only for those NRC programs related directly to licensee regulation. Unrelated agency expenditures, such as international activities and regulatory support to agreement states or other federal agencies, should be excluded from nuclear plant licensee user fees. Instead, NEI recommended that those costs be included in a specific line item in the NRC's budget, subject to the authorization and appropriations process. Finally, the industry urged Congress to reexamine the agency's ability to collect user fees annually until the commission completes its regulatory reform initiatives.
As directed by this subcommittee in 1999, the agency is making commendable progress to remedy the problem of user fees supporting NRC activities unrelated to licensee activities. While these non-licensee related NRC activities may be beneficial, they do not directly relate to the regulation of agency licensees. The commission's budget for FY2001 proposes that the NRC collect approximately 98 percent of its budget from user fees levied on licensees, excluding funding from the federal Nuclear Waste Fund. Each fiscal year from 2001 through 2005, the proportion of the NRC budget derived from user fees will decrease by 2 percent. By 2005, user fees should represent 90 percent of the NRC budget base rather than the entire budget. While this is an important first step by the NRC, the most equitable outcome would be an immediate reduction in the user fee by the entire $50 million being spent on unrelated activities.
Dual Regulation
Since the agency's formation in 1975, the NRC has been effective in developing and implementing radiation safety standards to protect public health and safety. Due to duplicative and overlapping regulatory authority, the Environmental Protection Agency (EPA) has become involved in the NRC's regulatory process, most notably in the decommissioning and remediation of NRC-licensed sites. For example, the EPA has challenged the NRC regulatory program in written comments and public meetings, and it has threatened to overturn NRC regulatory decisions by listing decommissioned sites on the National Priorities List (NPL) under Superfund authority. Such dual regulation diverts licensee resources, increases costs and reduces the effectiveness of regulation by the federal government without measurably improving public health and safety. It also undermines public trust and confidence in federal regulation of nuclear technology.
Mr. Chairman, Congress cannot afford to let the federal government waste public and private resources on overlapping regulatory activities that do not improve public health and safety. This subcommittee has jurisdiction over both agencies, and the industry encourages you to eliminate dual regulation of NRC-licensed facilities and to reaffirm the NRC as the sole and proper authority for assuring radiation safety at those facilities.
Radiation Standards
Protection of public health and safety is the industry's priority, and this concept extends to the practice of sorting solid material that can be removed from nuclear power plant and other facilities that use nuclear technologies without safety consequences. These materials are slightly radioactive, but significantly less so than low-level radioactive waste or used nuclear fuel, both of which must be disposed at facilities licensed by the federal government. The NRC has established safe standards for the control of liquids and gases at these facilities, but no consistent federal standard has been established for the removal of solid materials. Good public policy demands consistency in the application of government regulations for all materials.
In the interests of good public policy, the NRC is considering a rulemaking to set standards for the removal of safe solid materials and equipment to and from nuclear facilities. Materials above the NRC safe release standard would continue to be fully regulated with regard to safe handling, transportation and disposal. No high-level radioactive waste or used nuclear fuel would qualify for safe uncontrolled release under this type of standard. NEI commends this NRC initiative and encourages the agency to move expeditiously through formal rulemaking to establish a safe standard for removal of solid materials.
The international community has established guidance for the removal of solid materials through the International Atomic Energy Agency (IAEA). Member states of the European Community must have clearance regulations in place by May of this year. On Aug. 31, 1999, the American National Standards Institute approved ANSI/HPS N13.12, "Surface and Volume Radioactivity Standards for Clearance, " which the NRC could endorse. It is time for this nation to establish a standard for the clearance of safe materials from nuclear facilities, and the NRC is the appropriate federal agency to do so.
Summary of Key Points
In 1999, the nuclear power industry had a record year for safety and electricity production. In fact, there has been a steady improvement in nuclear power plant safety, as demonstrated both by NRC and industry plant performance indicators. Through November of last year, the average capacity factor for all 103 reactors was 86.8 percent -- a 9.2 percent increase over 1998.
This outstanding safety record has set the stage for the NRC's transition to a new nuclear power plant oversight process. This process will focus attention on those areas of the plant most important to ensuring safety, as indicated by a regular NRC inspection program based on 19 plant performance indicators. Continued congressional oversight of the NRC and support for this new process by this subcommittee is important to continue a successful transition to safety-focused oversight.
As the General Accounting Office's study of the NRC's new oversight process reveals, change is beginning to take hold at the agency. However, there is some skepticism of the new process among NRC staff, as one might expect during this kind of transition by a large organization. GAO recommends that the NRC implement additional training and planning to educate the agency workforce on this new oversight process. The industry agrees with GAO. There is a need for employee training and long-range strategic planning by the agency to ensure that NRC employees understand the new oversight process and that adequate resources are available for initial implementation at all nuclear power plants.
NEI has recommended, in previous testimony before this subcommittee, that the NRC adopt a comprehensive five-year strategic plan. Given the release of the NRC's draft strategic plan just last week, the industry has had time for only a preliminary review of the plan. However, the industry believes that the NRC's strategic plan as drafted is not sufficient to guide the agency during this period of significant change. The NRC's strategic plan should recognize improved industry safety and performance and account for new demands on the regulatory process, such as license transfer and renewal procedures. The agency should optimize its resources, including an examination of its organizational structure, to allocate resources in a manner that ensure adequate staff to set the foundation for broad regulatory reform.
The NRC should also incorporate sound budgeting practices into its strategic planning. Under the current user fee system, most of the fees are collected as a generic assessment equally levied against all licensees. This creates, in effect, a "miscellaneous" category to describe nearly 80 percent of its budget. This system also fails to provide Congress and the industry with the budget information necessary for a thorough and complete evaluation of its effectiveness and efficiency.
The industry strongly encourages this subcommittee and the Congress to continue its oversight of this agency as it moves to a safety-focused regulatory oversight program. NEI appreciates this opportunity to submit testimony, and recommends that this subcommittee holds a hearing early in the 107~ Congress to examine the industrywide implementation of the new regulatory oversight process.