NEW NUCLEAR
POWER
Ed Cummins
Westinghouse Electric Company
June 29, 2006
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A Nuclear Renaissance is Beginning



Major Driving Factor
- Price of natural gas more than doubled.
- Volatility of natural gas prices
- High long-term projections for natural gas prices
Additional Considerations
– Energy security
– Uncertainty in the future emissions regulations (monetization of airborne
pollutants such as carbon and mercury)
– Availability of advanced nuclear plant designs
– Relative stability of regulatory environment
– Public policy (political) support (Energy Legislation in the U.S.)
Challenges
- Spent fuel disposal
- Resource availability (human and supply chain)
- Project Management
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New Plant Licensing Process

New NRC Licensing Process
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AP1000 Design Certification
Received From NRC 12/30/05
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U.S. Government Support
“To build a secure energy future, we need to
expand production of safe, clean nuclear
power.”
President George W. Bush
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New Plant Licensing Process

Early Site Permit
- ESP is a partial construction permit .
- ESP addresses site safety issues, environmental
protection
issues and plans for coping with emergencies.
- Independent of the review of a specific nuclear
plant design
- Three ESP applications submitted in 2003
(Dominion,
Exelon and Entergy).
- Southern Company has scheduled an ESP
application
in August 2006.
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New Plant Licensing Process Cont’d.

Combined License (COL)
- COL authorizes construction and conditional operation of a
nuclear power plant.
- COL application should include information required for a
construction permit and operating license.
- Must include the proposed inspections, tests and
analyses which
the licensee shall perform and associated acceptance
criteria
(ITAAC) .
- The NRC must also find that the ITAAC have been met
before
granting authorization to operate.
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Nuclear Power 2010

Dominion pursuing COL for ESBWR at North Anna.

NuStart Project Status
- Two sites selected for COL Application - Bellefonte (TVA)
for AP1000 and Grand Gulf (Entergy) for ESBWR.
GE filed an application for design certification of
ESBWR in August 25, 2005.
- Design certification of AP1000 was issued in December
2005 .
Engineering work needed for COL applications
under way.

Submit COLs in the fourth quarter 2007.

Obtain COL license in 2010.
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United States New Plant Market Status

Commitments for COL License
AP1000
NuStart (TVA)
Duke
Progress
Progress
SCANA
Southern
ESBWR
Dominion
Entergy
2 units
2 units
2 units
2 units
North Carolina
Florida
2 units
2 units
12 units
2 units
2 units
4 units
EPR
Constellation
ABWR
South Texas
1-2 units
2 units
Power Companies Evaluating Technology
Florida Power and Light
AMEREN UE
Texas Utilities


Strong preference for passive plants
Preference for design and licensing maturity of AP1000
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2005 Energy Policy Act

President Bush signed the comprehensive energy bill
into law, called 2005 Energy Policy Act. on August 8,
2005.

Nuclear Related Provisions
- Federal risk insurance that would pay up to $2B if there
are delays in full power operations of the first six
advanced power reactors receiving NRC’s new combined
construction and operating licenses. This covers
100% of the cost of delay for the first two new plants, up to
$500M each, and 50% of the delay costs up to $250M
each for plants three to six.
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2005 Energy Policy Act Cont’d.

Nuclear Related Provisions (continued)
- Federal loan guarantee of up to 80% of the project cost.
- Production tax credit for new reactors of 1.8 cents per
kilowatts-hour for nuclear generated electricity over eight
years. Implementing rules share benefits among qualifying
new plant projects.
- All decommissioning funds are taxed at 20% rate (reduced
from the current rate).
- Extension of Price-Anderson Act through 2025 (accident
insurance).
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AP1000 Schedule to Commercial Operation
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1Q2 Q3 Q4 Q1Q2 Q3 Q4
FDA
AP1000
DC
COL
Engineering
Submit
COL
FOAK Design Details
COL
Issued
Place Order
Pre-Construction Site
Activities
Constructi
on
Early Procurement
Activities
Startup
Commerci
al
Operation
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Westinghouse Fifteen Year
Investment in Passive Technology
Westinghouse developed AP600, its first passive safety
reactor

system in the early 1990s (1,300 man-years of design and
testing).
NRC issued AP600 design certification in 1999 following
extensive

licensing review of more than 130 man-years and
independent
confirmatory testing of critical systems.
Westinghouse embarked on AP1000 development to
improve cost

competitiveness.

Half billion dollars and over 15 years invested in the
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AP1000: No Technology Risk

AP1000 power generation systems (fuel, NSSS, turbine
generator, support systems) are of “traditional design” and
involve no new or novel technology. Operating experience
is directly applicable.

“Passive” safety systems are, in general, very simple
consisting largely of tanks, pipes and a few air or DC
operated valves.

Expected performance under accident conditions validated
by extensive testing (>$40 MUSD) and regulatory review.

Modular construction techniques well proven in non-nuclear
applications (ship building, off-shore drilling platforms)

Mature in design and licensing – 60% complete
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AP1000
Design Features
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The Westinghouse AP1000
A compact station
•system
3415 MWt. Primary
•1117 MWe
•2-loops,
2 steam
generators
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AP1000/AP600
Reactor Coolant System
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AP1000 Turbine-Generator
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AP1000 Provides Safety and
Investment Protection
U. S. NRC
Requirements
1 x 10-4 (a)
Current
Plants
5 x 10-5
US Utility
Requirements
1 x 10-5 (a)
Core Damage Frequency per Year
Note (a) CDF includes random and internal hazard events from at-power and shutdown conditions.
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AP1000
Results
5.1 x 10-7 (a)
AP1000 Simplifications





Safety
– Use of passive safety systems
Design
– Reduced number of components and bulk commodities
Procurement
– Standardization of components
Construction
– Extensive use of modules reduces on-site construction
– Multiplexed I&C communication reduces cables
Operation and Maintenance
– Use of proven systems and components
– Man-machine interface advancements
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Passive Safety – What is it all about?

Passive Safety Systems utilizes naturally occurring physical
phenomena such as natural circulation of air, water and steam.

Gravity and gas pressure drive the flow of cooling water.

Natural heat transfer occurs through conduction, convection and
evaporation.

Flow and cooling occur in accordance with nature’s laws – There
are no pumps and motor-operated valves.

A few valves align the passive safety systems upon actuation
signals.

Greatly reduced operator dependency

AC electrical power is not required for plant safety.
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The AP1000 is Smaller and
Dramatically Simpler than Evolutionary
Plants
Sizewell B
AP1000
74147A
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Standardization

Standardization has been a key element of New Plant
Commercialization for 20 years – NPOC Strategic Plan.

The Utility Requirements Document standardized the Power
Company requirements for New Plants.

Design Certification commits the Plant Supplier and the Nuclear
Regulatory Commission to a “Standard Plant”.

NRC approach to Design Centered Combined Construction and
Operating License (COL) enhances standardization.

NRC will “punish” departure from Design Centered review with
“extended” licensing schedule.

Economics provide incentives for Standardization Beyond
Design:
– Operations
– Engineering
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- Supply Chain
- Maintenance
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Standard Plant Design Scope

Since the start of the AP600 program, Westinghouse has
maximized the scope of the Standard Plant:
– Forced Draft Cooling Tower for non-safety related Essential
Service Water System
– Spring Mounted Turbine Table Top is not sensitive to Site Soil
Conditions.
– Use of Broad Set of Environmental interface criteria
established by the URD (snow, rain, temperatures, wind, soil
conditions)’

Standard Plant is described in AP1000 Design Control
Document, Chapter 1.2.

The Scope of Standardization includes the entire plant.

Passive Plant Standardization is enhanced by:
– No need for Safety Related AC Power
– No need for Safety Related Ultimate Heat Sink (Intake
Structure)
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Standard Plant Market Approach

Reduced risk to both buyers and
sellers

Lower power generation cost

Shorter construction schedules

Enhanced public confidence

Smoother regulatory review

Improved perception/
acceptance of financial markets
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Impact of New Nuclear Plants
on Wholesale Electricity
Costs
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U.S. Electricity Production
Costs
Production Costs = Operations and Maintenance Costs + Fuel Costs
9.0
7.0
(2005 cents/kwh)
Production Cost
8.0
6.0
Nuclear 1.72
Coal 2.21
Gas 7.51
Oil 8.09
5.0
4.0
3.0
2.0
1.0
0.0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Year
Source: Global Energy Decisions
Updated: 6/06
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Natural Gas Price
U.S. Electric Generation
.
Gas Price ($/MMBtu)
9.0
8.0
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0
1980
1985
1990
1995
Year
Source: DOE/EIA – Electric Power Monthly
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2000
2005
Generation Fuel Cost
100%
90%
Cost Proportion
80%
70%
12%
35%
60%
80%
50%
40%
30%
20%
10%
0%
Nuclear
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NGCC
Coal
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O&M
Fuel
Capital
Generation Capital Cost
100%
90%
Cost Proportion
80%
70%
60%
O&M
Fuel
Capital
50%
40%
30%
68%
50%
20%
10%
14%
0%
Nuclear
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Coal
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NGCC
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Electricity Regulatory Environment

Nuclear plants can be implemented in either regulated
or unregulated electricity markets.

All power companies committed to obtaining AP1000
COL licenses operate in regulated markets (Southern,
Duke, Progress, SCANA).

In regulated markets, the plant owner obtains a
predetermined regulated return on investment. The
price of electricity is set by the regulator to achieve this
return.

Regulators evaluate and approve generating capacity
additions based on consideration of (cost, fuel diversity,
fuel volatility and security of supply).
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Electricity Regulatory Environment-Cont’d.

New nuclear plants have been proposed in unregulated
markets (Dominion and Constellation).

Market based owners of nuclear plants sell electricity at
the “market price” and obtain a return on investment
based on the difference between market price and the
production costs.

Uncertainty in market price leads unregulated power
companies to seek long-term power purchase
contracts.
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Electricity Pricing Under Regulation Is Based On
Recovering Utility Revenue Requirements
Electricity Price =
Revenue Requirements / Electricity Generation (kwh)
Revenue Requirements =
Operating Costs + Rate Base x Allowed Rate of Return
Operating Costs =
O&M + Fuel + Depreciation & Amort. + Taxes + Fees + Accruals
Rate Base =
Gross Investment - Accumulated Depreciation
Allowed Rate of Return =
Value Determined by State or Federal Regulatory Commissions
•The price of electricity is established by the regulator to provide generating plant owners on
agreed return.
•New nuclear plants are approved if the expected cost of electricity is less than for alternate
generating sources
“Least Cost Plan”.
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Deregulated Market Pricing Example:
Plants are Dispatched in Order of Bid Price
Each Plant Assumed to be 1,000 MWe
Energy Price ($/mwh)
40
35
Plant Bid Price
30
25
20
15
10
5
0
1,000 2,000
3,000 4,000 5,000
6,000 7,000
8,000 9,000 10,000
Cumulative System Capacity (MWe)
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Deregulated Market Pricing Example: At a 5,000 Mwe Demand
Level All Plants Operating Receive $15/mwh
Each Plant Assumed to be 1,000 MWe
Energy Price ($/mwh)
40
35
Contribution to Fixed Cost
& Profit
Plant Bid Price
30
Market Clearing Price
Marginal Plant
25
20
15
10
5
0
1,000 2,000 3,000
4,000 5,000 6,000 7,000
8,000 9,000 10,000
Cumulative System Capacity (MWe)
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The Demand for Electricity Is Driven by the Shape of the Load
Duration Curve for Each of the Regions
Load Duration Curve
NERC Regions
100%
90%
80%
Percent of Peak Load
70%
60%
50%
ERCOT
40%
FRCC
NEPOOL
30%
20%
10%
0%
100%
90%
80%
70%
60%
50%
40%
30%
Percent of Hours > Load Value
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20%
10%
0%
Analyzing 2006 Wholesale Electricity Costs in
New England

2006 Regional System Plan (RSP06) estimated how
certain actions can affect costs

RSP06 will model a number of scenarios to determine their
effect on prices, including:
Change in
– Addition of a 1,000 MW base load resourcewholesale
– Addition of a 1,000 MW
– 5% load growth without
price
clean-coal generator
-5.7%
generation addition-5.6%
5.8%

Nuclear base loads impact is similar to coal. A low cost
generator is added to the generation mix.

Owners return is based on integrated difference in market
price and generating cost.
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Nuclear Breakeven Capital Cost
80
Levelized Cost ($/mwh)
70
$2,400-3,200/kwe Breakeven with NGCC
60
50
$1,800-2,300/kwe Breakeven with Coal
O&M
Fuel
Capital
40
30
20
10
0
Nuclear
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Coal Low
Coal High
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NGCC Low
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NGCC High
Market Based Nuclear Generation
Dispatching Resources

ISO uses least expensive mix of resources to meet minute-tominute power needs of the region.
– Impact of additional units depends on size of ISO and
characteristics of electric load.

Most expensive needed resource sets market clearing price for all
(Uniform Clearing Price Auction).
– Sends a clear signal to investors and the region on what
resources should be developed.
– Responds immediately to changed market conditions.
– Encourages marginal-cost based offers so that the most efficient
units are dispatched.

Marginal cost for nuclear fuel cost $5.0/MWK

O&M costs are treated as fixed at about $10.0 MWH.

Return on capital is dependent on cost of plant and capacity factor.
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Summary

The current resurgence of interest in nuclear power in the
U.S. is based on several factors:
– Need for additional base load generation in the 20102015 period
– High price of natural gas makes nuclear plants the lowest
cost generation source.
– Uncertainty in Environmental Legislation (carbon,
mercury, other pollutants) results in reluctance to build
coal plants.
– Concern about carbon emissions is expected to result in
carbon taxes or emission free incentives.
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Summary – Cont’d.

The Energy Act of 2005 provides very attractive incentives
for the first few nuclear plants.

The AP1000 is attractive as the only advanced plant that
has completed Design Certification.

Prediction: There will be AP1000 plants operating in the
U.S. by 2015.
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