Jack B. AllenSenior Vice President – Operational ExcellenceWestinghouse Electric Company

ASQ 2006 Energy and Environmental Conference

Nuclear Power Initiatives and Quality Perspectives

2

Overview

•World Nuclear Snapshot

•U.S. Plan

•New Plants Opportunities

•QUALITY Foundation

3

World Electricity Demand Growth (bkWh)

16,00018,875

21,40023,677

26,018

0

5,000

10,000

15,000

20,000

25,000

30,000

2005 2010 2015 2020 2025Source: EIA International Energy Outlook - Updated 07/05

63% Increase Needed in Next 20 Years

4

Forecast Electricity Demand by RegionSource: EIA Annual Energy Outlook 2004Source: EIA Annual Energy Outlook 2004

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

1990 1995 2000 2010 2015 2020 2025

(Billion KWh)

Asia

Europe

U.S

Rest of World

Extensive expansion of installed generating capacity needed!

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Nuclear…A Major Role in Global GenerationNuclear…A Major Role in Global Generation

7877

58

53

4644

42393939

3635343131

29

23232020

1513

1187

444431

0

10

20

30

40

50

60

70

80

90

Lithuan

ia

France

Belgiu

m

Slova

k RP

Ukrai

ne

Swed

en

Bulgar

ia

Korea

RP

Hungar

y

Slove

nia

Switz

erla

nd

Armen

ia

Japan

Finla

nd

Ger

man

y

Spain

United

Kingdom

Taiw

an

United

State

s

Czech

RP

Russia

Canad

a

Romani

a

Argen

tina

South A

frica

Brazi

l

Nether

lands

India

Mex

io

Pakis

tan

China

Source: International Atomic Energy Agency & World Nuclear Association Database

Percentage

New Construction in Progress

441 Operating Commercial Nuclear Power Plants Worldwide

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Anticipated Global Nuclear Capacity Demand

286

100 8761 64

37 33 26 19 2045 31

82

2 09111773631

121 25

0

50

100

150

200

250

300

350

400

450

500

2050 (High)

2050 (Low)

2000

GWe

Ref: The Future of Nuclear PowerAn Interdisciplinary MIT Study (2003) and Westinghouse Analysis

477

200

175

6862

4937 32 39

91

1746

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The Nuclear Renaissance

New plants under construction or strong consideration:New plants under construction or strong consideration:CanadaCanada South AfricaSouth AfricaChinaChina South Korea South Korea Czech RepublicCzech Republic Switzerland Switzerland FinlandFinland TaiwanTaiwanFranceFrance TurkeyTurkeyIndiaIndia U.K. U.K. RussiaRussia U.S. U.S.

VietnamVietnam

New plants under construction or strong consideration:New plants under construction or strong consideration:CanadaCanada South AfricaSouth AfricaChinaChina South Korea South Korea Czech RepublicCzech Republic Switzerland Switzerland FinlandFinland TaiwanTaiwanFranceFrance TurkeyTurkeyIndiaIndia U.K. U.K. RussiaRussia U.S. U.S.

VietnamVietnam

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New Plant Markets Present Significant Growth Opportunities - Asia• China: 9 operating units; 2 under construction

– Demand growth of 250% over 15 years– Evaluating AP1000 - 4 plant bid– Plan to build 35 – 40 new plants

• South Korea: Commitment to balanced energy policy – Will award two additional orders in 2006 / 2007

• Japan: Toshiba ownership expands Westinghouse name/market

• India: Establishing U.S. nuclear relationship

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Growth Opportunities – Europe and South AfricaOpening of markets in European Union provides

opportunities for U.S. companies

• Finland: New reactor under construction

• Belgium, Germany, Sweden: Future energy policy under review; owners investing in upgrades

• Eastern Europe (EU): Evaluating energy needs;more new nuclear build programs likely

• United Kingdom: Gap looming with old nuclear units retiring soon. Energy review includes nuclear

• Republic of South Africa: 1-2 units needed, PBMR later

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Drivers of Global Market for Nuclear Plants• Rapidly growing economies in Asia• Coal transport limits • Need for fuel supply security, price stability

- Russia cuts natural gas deliveries (contract dispute)• Kyoto Accords (reduce greenhouse gas emissions)• Old plants retiring• IAEA projection of nuclear by 2030: - Low estimate: 54 GW more than 2005 capacity

(about 45 plants)- High estimate: 309 GW more (about 257 plants)

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Impact to U.S. Resources

• Lessons learned for design, manufacture and construction of new plants

• Potential to move focus from current plant upgrade, maintenance and operation

• Step change demand to a consolidated infrastructure

• Call to arms for knowledge transfer

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Nuclear Power - 20% of U.S. Electricity Production

(Number of operating units per site shown in parenthesis)

Columbia (1)

DiabloCanyon (2)

San Onofre (2)

Palo Verde (3)

Monticello (1)

Prairie Island (2)

Ft. Calhoun (1)

Cooper (1)

Wolf Creek (1)

Duane Arnold (1)

Callaway (1)

ANO (2)

Comanche Peak (2)

South Texas (2)

River Bend (1)

Waterford (1)

TurkeyPoint (2)

St. Lucie(2)

Farley (2)

Hatch (2)

Vogtle (2)

Sequoyah (2) Oconee

(3)

Catawba (2)

H. B. Robinson (1)

Summer (1)

McGuire (2)

Harris (1)

Brunswick (2)

Surry(2)

NorthAnna(2)

Calvert Cliffs (2)

Hope Creek (1)

Salem (2)

Oyster Creek (1)

Millstone (2)

Pilgrim (1)

Seabrook (1)

VermontYankee

(1)

FitzPatrick(1)

Nine Mile Point (2)

Ginna (1)

Clinton (1)

La Salle (2)

Kewaunee (1)

Point Beach (2)

Palisades (1)

Cook (2)

Fermi (1)

Davis-Besse (1)

Perry (1)

(2)Susquehanna

Peach Bottom (2)

Three Mile Island (1)

Limerick (2)Indian Point (2)

Quad-Cities (2)

Byron (2)

Dresden (2)Braidwood (2)

CrystalRiver

(1)

Grand Gulf (1)

BrownsFerry (3)

Watts Bar (1)

Beaver Valley (2)

103 Nuclear Power PlantsTotaling 97,018 MWe

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Key Developments Renewed U.S. Interest in Nuclear

• Natural gas prices soar• Focus on greenhouse gas emissions • Existing nuclear plants operating safely and

economically• NRC new licensing process (avoid another

Shoreham)• Energy Policy Act 2005• Electricity demand growth• Advanced plant designs

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5,648

3,900

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2005 2030

Growth in Electricity Demand

Bil

lio

n k

Wh

U.S. Needs by 2030… 45 % More Electricity

Source: Energy Information Administration

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Company Site Early Site Permit Design,# of Units

Construction/Operating License

Dominion North Anna Under review, approval expected late 2006

ESBWR (1) COL application in 2007

NuStart (TVA) Bellefonte Likely straight to COL AP1000 (1) COL expected to be developed for 2007 submittal

NuStart (Entergy) Grand Gulf Under review, approval expected early 2007

ESBWR (1) COL expected to be developed for 2007/2008 submittal

Entergy River Bend Likely straight to COL ESBWR (1) COL application in 2008

Southern Company Vogtle Under development, to be submitted mid-2006

AP1000 COL preparations to start 2006 with a submittal date of 2008

Progress Energy Shearon Harris,Florida site TBD

Will go straight to COL AP1000 (4) COL preparations started, submittal in 2008

S.C. Electric & Gas/ Santee Cooper

V.C. Summer Will go straight to COL AP1000 COL application in 2007

Duke Not yet determined Will go straight to COL AP1000 (2) Will start COL preparation in 2005

Exelon Clinton Under review, approval expected mid-2007

Not yet determined

Not yet determined

UniStar Calvert Cliffs or Nine Mile Point

Will go straight to COL EPR (1) 2008 (COL and EPR design certification conducted in parallel)

Source: Nuclear Energy Institute, Washington, DC (February 23, 2006)

U.S. New Nuclear Plant Activity

Currently Planned New U.S. Units

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Leaders for Combined Operating License Process

• NuStart Energy Development– Companies engaged: 11 – Reactor designs: Westinghouse AP1000 and GE ESBWR

• Dominion-led– Companies engaged: 4– Reactor design: GE ESBWR

• TVA-led– Companies engaged: 6– Feasibility study to site GE Advanced BWR

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Operating Plant Uprate Activities

•Replacement of Reactor Vessel Head

•Replacement Steam Generators

•Weld Overlay of Nozzle Penetrations

•Upgrades to Instrumentation and Control Systems

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Dezurik

Mueller Steam

Daniel Valve

Copes-VulcanK-

Flo

Durco

Byron Jackson

Pacific Pumps

Unite

d Ce

ntrif

ugal

Worthington

Edward

Anchor-Darling

Limito

rque Actu

ators

Nordstrom

ValtekVoght

Keystone

Crosby

Anderson-GreenwoodTricentric

Atwood & Morrill

Blakeborough

Hopkinsons

Flowguard

EMD Target Rock

Supply Base Shrinking…Pump and Valve Suppliers for Example

Dezurik

Mueller Steam

Daniel ValveCopes-Vulcan

K-Flo

Durco

Byron Jackson

Pacific Pumps

United Centrifugal

Worthington

Edward

Anchor-Darling

DurcoLimitorque Actuators

Nordstrom

ValtekVoght

Keystone

Crosby

Anderson-Greenwood

Tricentric

Atwood & Morrill

Blakeborough

Hopkinsons

Flowguard

EMD

Target Rock

FlowserveWeir Valves & Controls

SPX Valves & Controls

Tyco Flow Control Curtiss-Wright

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Some Emerging Issues and Trends

• Major/Replacement Hardware Quality and Schedule Failures– Manufacturing, machining and special process controls

errors

– Materials and supplier qualifications• Supply Base Shrinkage and Lost Quality “Pedigree”

• Transition to Digital Instrumentation & Controls

• Critical Non-Safety Related Equipment Performance– Reactor coolant pump motors and non-safety transformers

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Industry Perceptions• Lacking Confidence in Supply Base

– Issues, outage delays and lost expertise and knowledge

• Migration from ASME Nuclear to ISO-9001 or Commercial Quality Assurance Programs– Commercial dedication of components

– Compensatory measures - inspection, oversight

• Active Customer Engagement (INPO – Institute of Nuclear Power Operations)– Human Performance, Corrective Action Programs, Operating experience and

Nuclear Safety Conscious Work Environment

• Active Regulator Engagement

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New Techniques: Construction Modularization

• Large components• Alternative fabrication and assembly locations

• Assembly transport• Sub-assembly and test practices

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• Step Change Growth – Multiple Plants

• Competitiveness

• Sub-Supplier Performance Assurance

• Continuous Improvement Behaviors– Quality and Human Performance

– Waste Elimination

– Product and Technology Development

• Alliance Relationships

Supplier Base Demands and Expectations

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Thoughts …“What keeps us up at night”

• Commitment to Sub-supplier Oversight

• Achievement of Customer Expectations– Zero Tolerance for Error– Implementation of Human Performance Tools

• The Big Picture– Step Change for Pace and Volume of Business – New Personnel Knowledge Transfer– Re-instilling Rigor and Discipline of “Nuclear QA”– An INCIDENT Anywhere … Affects EVERYONE !

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Hayes - Wheelwright Model

Timing and Impact of Attention and Influence

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• World-class Environmental, Health and Safety• Flawless Execution• Cost Competitiveness• Develop / Maintain Critical Skills

Sy

stem

Man

ag

emen

tC

us

tom

er

1st

• CFL Training• Project Outcome• Customer 1st Project Reviews• Behavioral Modification

• Behavioral Differentiation• Create Success for Customers

• Develop Leading Technology Solutions • Innovation

Westinghouse “Critical to Success” Objectives

FY2007

Achieve Sustainable Growth by Contributingto Our Customers’ Success

CustomerIntimacy

OperationalExcellence

TechnologyLeadership

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Quality of Execution

Quality of Execution

Ease of Doing Business

Ease of Doing Business

Lean EnterpriseLean Enterprise Six-SigmaSix-Sigma Human Performance

Human Performance

Behavioral Differentiation

Behavioral Differentiation

Design for Six-Sigma

Design for Six-Sigma

Tools Enable Improvement

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Call to Arms for QUALITY Professionals

• Respond to lessons learned for design, manufacture and construction of nuclear equipment

• Restore Nuclear Quality Programs and Rigor

• Implement Continuous Improvement Plans • Rapidly Initiate Knowledge and Experience Transfer

• Maintain Industry QUALITY Conscience

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a Strong Quality Foundation and Team which …

Starts with YOU

New Opportunities Require Re-building …

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