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NEI LAWYERS COMMITTEE MEETING
Nuclear Energy Institute March 11, 2013 • Washington, DC
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Introduction and Welcome
J. Bradley Fewell Vice President and Deputy General Counsel
Exelon Generation Company, LLC (Chairman, NEI Lawyers Committee)
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Administrative Matters
Ellen C. Ginsberg Vice President, General Counsel and Secretary
Nuclear Energy Institute
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Keynote Address
Margaret Doane, Esq. General Counsel
U.S. Nuclear Regulatory Commission
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Remarks of Margaret M. Doane General Counsel
Nuclear Regulatory Commission March 11, 2013
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Issues affecting new reactors Issues affecting operating reactors Issues regarding high-level waste Issues affecting materials licenses Agency-wide issues
Many issues are cross-cutting: ◦ Fukushima ◦ Waste confidence ◦ Vendor compliance ◦ Financial qualifications
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Implementation of Fukushima lessons learned
Financial qualifications for applicants
SMRs – licensing framework
Vendor compliance with QA and safety culture requirements
Emerging Issues ◦ ITAAC closure and hearing ◦ Construction changes
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Implementation of Fukushima lessons learned ◦ Filtered vents
Relicensing on hold due to waste confidence
State regulation and possible preemption
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Waste Confidence ◦ Status ◦ Timetable ◦ Approach
Use of funds appropriated for Yucca Mountain
Interim offsite SNF storage ◦ DOE ◦ PFS ◦ New Mexico
(2/26/13 letter from Eddy-Lea Energy Alliance)
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Sharp increase in ISR projects
Compliance with NHPA for uranium recovery
projects
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Sequestration/Continuing Resolution
Hiring and retention of high-quality staff Effective communication with public
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Massachusetts v. NRC (Pilgrim) Beyond Nuclear v. NRC (Seabrook) Brodsky v. NRC (Indian Point) Entergy v. Shumlin (Vermont Yankee)
Additional cases: Aiken County Shieldalloy v. NRC
12
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Allegations concerning incorporation of conclusions of Fukushima Task Force into NEPA analysis
NEPA does not require agency to wait for
conclusions that may be reached in the future Future safety regulations stemming from
Fukushima will be applied
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Is wind power an alternative to relicensing? Alternatives must be capable of supplying
baseload capacity Near-term viability is adequate predictor of
future energy alternatives
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What degree of public participation is required when the agency issues prepares an EA and issues a FONSI?
Unsettled area of law Assuming that CEQ regulations apply, NRC
must, at a minimum, explain why public participation is not required.
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Preemption a major issue in many states Waiting for Second Circuit decision (and
possibly beyond) New paradigm since Pacific Gas decided ◦ what interests do states continue to have in
regulating a deregulated electricity market?
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Meeting on January 31, 2013
Commission directive to issue ANPR on interlocutory review
Intervenor community continually has interest
in improving Part 2 due to prescriptive nature
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General Counsel and Deputy
Two Associates, each supervising AGCs: 1. Licensing & Regulation
(a) Legal Counsel (b) Reactors & Materials Rulemaking (c) HLW/Fuel Cycle & Nuclear Security
2. Hearings, Enforcement & Administration (a) Materials Litigation & Enforcement (b) New Reactor Programs (c) Operating Reactors (d) Administration
Solicitor
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Fukushima Update
Joseph Pollack Vice President, Nuclear Operations
Nuclear Energy Institute
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Fukushima Actions Update • Filtering Strategy
- Severe Accident Capable Vent - External vs. Internal Filtering
• Seismic - Augmented / Expedited Approach - First Submittal September 12, 2013
• Flooding - Integrated Assessments - First Group of Plants Submittal March 12, 2013
• Flex and Regional Response Centers
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BREAK
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Current DOE Nuclear Activities
Ben McRae, Esq. Assistant General Counsel for Civilian Nuclear Programs
U.S. Department of Energy
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Nuclear Energy: The Business Environment in 2013
Richard Myers Vice President, Policy Development,
Planning and Supplier Programs Nuclear Energy Institute
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Outline
U.S. nuclear power plant performance U.S. electric sector: Key trends
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0
20
40
60
80
100
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
U.S. Nuclear Plant Performance U.S. Nuclear Capacity Factor, Percent
2012 • 63 refueling outages
in 2012 (65 in 2011)
• Tied for fewest scrams in a year (62)
• Crystal River and Fort Calhoun shut down all year
• San Onofre 2 and 3 shut down for steam generator repairs
Sources: Energy Information Administration, Nuclear Regulatory Commission
89.6% in 2006 91.8% in 2007 91.1% in 2008 90.5% in 2009 91.2% in 2010 88.9% in 2011 86.4% in 2012 (est.)
∼89.2% without Crystal River 3, Fort Calhoun and San Onofre
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Snapshot of U.S. Nuclear Plant Economic Performance
In 2012, total generating costs increased 5.5% - From $32/MWh in 2007 to $44/MWh in 2012
Fuel costs in 2012 increased 4.8% from 2011 Operating costs in 2012 increased 2.2% from 2011 $8.5 billion in capex in 2012
- 9% increase from 2011 ($7.8 billion)
Source: Electric Uti l ity Cost Group
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2012 Nuclear Cost Summary ($/MWh)
Category Number of Plants / Sites Fuel Capital Operating
Total Operating (Fuel
+ Operating)
Total Generating (Fuel + Capital +
Operating)
All U.S. 61* 7.35 12.96 23.86 31.20 44.17
Plant Size
Single-Unit 26 7.52 13.17 29.85 37.37 50.54
Multi-Unit 35 7.22 12.81 19.40 26.62 39.44
Operator
Single 12 8.02 10.12 26.28 34.29 44.42
Fleet 49 7.18 13.66 23.26 30.45 44.11
Source: Electric Uti l ity Cost Group
* Excludes Crystal River 3, Fort Calhoun, San Onofre 2 and 3, Kewaunee
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Total Generating Cost 2010-2012 (Fuel + Capital + Operating)
Average in 2012 $/MWh
Quartile Generating Cost
Q1 28.22
Q2 33.00
Q3 40.94
Q4 62.36
Source: Electric Uti l ity Cost Group
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U.S. Nuclear Plant Generating Costs: Comparison with Market Prices
($/MWh)
$28.22 $33.00 $40.94
$62.36
20
25
30
35
40
45
50
55
60
65
Quartile 1 Quartile 2 Quartile 3 Quartile 4
NEPOOL
PJM West
ERCOT-Houston Indiana
Palo Verde
PJM West: $46.49 NEPOOL: $42.54 ERCOT-Houston: $36.39 Indiana: $34.52 Palo Verde: $29.65
Nuclear plant costs: Electric Utility Cost Group. Market prices are weighted average day-ahead prices from Intercontinental Exchange (ICE).
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Key Trends in 2012
• 2012 electricity consumption down 0.3% - Still not back to pre-recession (2007) demand
• Natural gas spot prices: - bottomed out at $1.95/MMBtu April 2012
• Gas displaced 220 billion kWh of coal-fired generation in 2012
• 9,000 MW of coal-fired capacity retired - average 28% capacity factor
• Wholesale spot prices across most regional power markets at 10-year low
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Rapid Capex Growth in Electric Sector
Source: Edison Electric Institute
43.0 41.1 48.4
59.9
74.1
84.2 84.2 84.8 86.6
100.0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012p
p = projected
$ Billions
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Rate Case Volume Remains High
Source: Edison Electric Institute
15 11
14
23 20
28 24
34
48 46 42
66
55 50
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
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Looking Forward: Beyond 2013
• Approx. 70,000 MW retired 2012-2017 - Approx. 40,000 MW of coal-fired capacity
• Most regional power markets do not need new resources before 2017 - ERCOT the exception; critical summer reliability
concerns
• In 2013, gas-for-coal substitution will reverse
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U.S Natural Gas Resource Base: Yes, It’s Real … But
Source: IHS CERA
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Lower-48 Gas Rig Count Has Collapsed
Source: Baker Hughes
300
500
700
900
1,100
1,300
1,500
1,700
2009 2010 2011 2012
Rigs
Approx. 600 rigs to maintain current production level
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It’s A Cold, Cruel World: Northeast Natural Gas, Electricity Prices
(Gas in $/MMBtu, Electricity in $/MWh)
Price for 4-day weekend (Sat.-Tues.)
Source: Energy Information Administration
Day-Ahead Spot Gas Price 1.22.2013* 1.23.2013 1.24.2013 1.25.2013
New England $12.34 $21.25 $29.94 $34.25
New York City $16.03 $20.75 $33.96 $36.00
Day-Ahead On Peak Electricity Price 1.22.2013 1.23.2013 1.24.2013 1.25.2013
New England $143.37 $200.74 $226.84 $260.51
New York City $146.80 $173.10 $224.96 $253.36
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Electricity Prices in New England (Day Ahead Spot: 1/31 – 2/20)
0
100
200
300
Source: Intercontinental Exchange
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Natural Gas-Fired Generators Dwarf Other End Users
38
Residential
Industrial
Commercial
Power
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Comparison of Gas Utility (LDC), Power Plant Loads and Pipeline Capabilities
Source: Electric Power Research Institute, Natural Gas for Electric Generation: The Challenge of Gas and Electric Industry Coordination, September 1992.
0 200 400 600 800 1000
Typical 20" Pipeline
Washington Natural Gas (Seattle)
Boston Gas
1,370 MW CCGT
1,270 MW CT
Wash. D.C. Gas Light
Atlanta Gas Light
Typical 36" Pipeline
(MMCFD)
Daily Equivalent of Peak LDC and Power Plant Gas Loads for Large Diameter Pipelines
Pipeline LDC Generating Unit
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U.S. Generating Capacity Additions: The Last 15 Years
New Generating Capacity: 1996 - 2011
Coal 20,500
Gas 324,500
Nuclear 1,300
Oil 7,200
Renewables 52,300
Hydro 1,100
Source: Energy Information Administration
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Planned Generating Capacity: What’s Wrong With this Picture?
Planned (151,689 MW)
2012 2013 2014 2015 2016 2017 2018 2019 Total
Coal 0 1,161 2,754 2,580 134 2,810 1,240 0 10,679
Nuclear 0 0 0 0 0 0 0 0 0
Gas 727 5,041 8,372 14,659 10,736 565 754 0 40,854
Wind 8,944 11,073 4,483 5,405 1,950 550 650 500 33,554
Under Construction (46,484 MW)
2012 2013 2014 2015 2016 2017 2018 2019 Total
Coal 3,409 997 1,200 0 0 0 0 0 5,606
Nuclear 0 0 0 1,270 1,117 2,234 1,117 0 5,738
Gas 3,789 7,988 4,549 524 624 0 0 0 17,474
Wind 8,641 2,091 121 20 0 0 0 0 10,872
Source: Ventyx Velocity Suite
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Nuclear Energy: A Solid Value Proposition
Clean Air Compliance
Value
Grid Stability
Forward Price
Stability
Fuel and Technology
Diversity
Anchor the Local
Community: Jobs, Tax Base
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Update on Federal Pre-Emption Developments
Randolph Moss, Esq. Partner
WilmerHale
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Update on Cyber Security
William Gross Senior Project Manager, Security
Lawyers Committee Meeting March 11, 2013 • NEI
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Presentation Overview
• Overview of the cyber threat
• Threats to business units and power systems
• What is being done
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The Cyber Threat - Quote
“Now, we know hackers steal people’s identities and infiltrate private emails. We know foreign countries and companies swipe our corporate secrets. Now our enemies are also seeking the ability to sabotage our power grid, our financial institutions, our air traffic control systems. We cannot look back years from now and wonder why we did nothing in the face of real threats to our security and our economy.”
(POTUS, SOTU, 02/12/2013)
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Cyber Threat Actors and Consequences
Chinese Actors
Theft of IP, PII, Secrets
Grid Disturbance Sabotage Denial of
Service (DOS)
Extremist Groups
Hacktivists Nation States
Soviet Bloc Actors
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The Cyber Threat Actors
Chinese Actors
Theft of IP, PII, Secrets
Grid Disturbance Sabotage Denial of
Service (DOS)
Extremist Groups
Hacktivists Nation States
Soviet Bloc Actors
Chinese Actors Loose affiliation with government Objective: Steal EVERYTHING Focus has been on corporate secrets Skill: Playing with their “F” game. Attacks are loud, easy to detect. Worry: Capabilities have not been tested. Could be hired by other actors.
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The Cyber Threat Actors
Chinese Actors
Theft of IP, PII, Secrets
Grid Disturbance Sabotage Denial of
Service (DOS)
Extremist Groups
Hacktivists Nation States
Soviet Bloc Actors
Soviet Bloc Actors Corporate affiliation with government Objective: Financial Focus has been on bank access and PII Skill: Attacks are quiet, difficult to detect. Worry: Substantial capabilities. Russia not an ally. May collude with other actors.
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The Cyber Threat Actors
Chinese Actors
Theft of IP, PII, Secrets
Grid Disturbance Sabotage Denial of
Service (DOS)
Extremist Groups
Hacktivists Nation States
Soviet Bloc Actors
Hacktivists No real affiliations. Objective: Political message Focus on DOS or incriminating information Skill: None, but subject to membership Worry: Business disruption or grid disturbance.
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The Cyber Threat Actors
Chinese Actors
Theft of IP, PII, Secrets
Grid Disturbance Sabotage Denial of
Service (DOS)
Extremist Groups
Hacktivists Nation States
Soviet Bloc Actors
Nation States Particularly those unfriendly to U.S. Objective: Cyber attack as means of war Skill: Capabilities vary, but a heavy focus on building. Active recruitment of people, skills. Worry: Could challenge our prevention capability.
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The Cyber Threat Actors
Chinese Actors
Theft of IP, PII, Secrets
Grid Disturbance Sabotage Denial of
Service (DOS)
Extremist Groups
Hacktivists Nation States
Soviet Bloc Actors
Extremist Groups Same general worry as nation states. These folks are actively building their cyber attack capability.
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Threat Objective, Target, and Public Policy Cyber
Threats
Business Assets
Generation Assets
Theft of IP, PII, Secrets, DOS
FERC DHS
(EO/PD21) NRC
Objective
Target
Policy
Grid Disturbance Sabotage
Safety, Security, EP
Systems
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Threat Objective, Target, and Public Policy Cyber
Threats
FERC DHS
(EO/PD21) NRC
Objective
Target
Policy
99% of attacks are here.
The basis for a lot of the recent hysteria is here...
Systems, vulns, and
protection measures are very different here…
1% of attacks are here.
But public policy is focused here…
And here…
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Key Players and Activities – Nuclear
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Internet Accessible Control Systems - US
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Policy Implications for Nuclear Facilities
• Nuclear Regulatory Commission - Power reactors – 10 CFR 73.54 - Other facilities – evaluating (SECY-12-0088)
• Executive Order and Policy Directive 21 (PD21) • FERC/NERC
- Iterations of the Critical Infrastructure Protection (CIP) Reliability Standards.
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Executive Order/Policy Directive 21
• Four objectives - Information sharing - Framework for standards development and adoption - Critical infrastructure identification - Privacy
• NRC not directly impacted - Will likely be engaged and participate
• Establishes key actions to be performed - Many actions due within 1 year.
• Unclear of what the results will be
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Nuclear Plant Cyber Implementation
• Address Essential Attack Vectors to the Plant - Assemble team and identify assets – DONE - Network isolation (wired/wireless) – DONE - Portable media and equipment – DONE - Enhance insider mitigation – DONE - Security controls on essential assets – DONE
• To Be Done – By date approved by NRC - Implement controls on other assets - Programmatic elements to maintain program
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Other Business
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Adjourn
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NEI LAWYERS COMMITTEE MEETING
Nuclear Energy Institute March 11, 2013 • Washington, DC