US energy bill favours new build reactors, new technology

12 August 2005

The signing of the Energy Policy Act of 2005 was hosted by New Mexico’s two senators, energy and natural resources committee chairman Pete Domenici (R) and the committee’s ranking democratic member Senator Jeff Bingaman, who were key players in moving the 1724-page bill through the congressional approval process.

The act, which government and outside analysts estimate will carry a price tag of about $14.5 billion, includes a sizeable package of incentives to encourage financing, construction and operation of a new generation of nuclear power plants in the USA.

In signing the act, president Bush couched its intent in economics and energy independence. “The bill will allow America to make cleaner and more productive use of our domestic energy resources, including coal, nuclear power, and oil and natural gas,” the president said. “By using these reliable sources to supply more of our energy, we’ll reduce our reliance on energy from foreign countries, and that will help this economy grow so people can work.”

Nuclear power is one of “America’s most important sources of electricity,” Bush said, vowing: “We will start building nuclear plants again by the end of this decade.” To coordinate the ordering of new plants, Bush stressed that the new Energy Policy Act “continues the Nuclear Power 2010 partnership between government and industry.”

The strong nuclear provisions in the Energy Act have set in motion “the momentum necessary to assure a strong nuclear energy component in our national energy profile,” said Jim Reinsch, president of the American Nuclear Society. “The nuclear component will allow the United States to achieve and sustain its national, economic and environmental security, and its high standard of living.”

Skip Bowman, president and chief executive officer of the Nuclear Energy Institute, the US nuclear industry trade association, echoed this sentiment. As a result of the legislation, “we have many of the tools necessary to move forward to new nuclear power plant construction in this country, along with pursuing the potential for the hydrogen economy, protecting our security through enhanced non-proliferation policies, and contributing to better public health and our environment by limiting air emissions.”

Incentives package for new build

The act provides three main forms of financial
incentives for new build advanced nuclear plants. It defines such plants as those including a reactor design approved after 31 December 1993 by the Nuclear Regulatory Commission.

First, it gives the secretary of energy broadly defined authority to approve loan guarantees for up to 80% of the cost of “innovative technologies” that “avoid, reduce or sequester air pollutants for anthropogenic emissions of greenhouse gases.” The provisions, although aimed primarily at new nuclear plant construction, also could be used for renewable energy projects and even some clean coal efforts.

The Department of Energy (DoE) may enter into contracts with sponsors of a new facility covering up to six reactors, “with the six reactors consisting of not more than three different designs.”

Second, the act creates a new category of risk insurance for the first new build nuclear plants in the USA that covers financial risks caused by licensing delays in the new combined construction and operating licence (COL) process, or by litigation that delays licensing or plant operation.

For the first two reactors that receive COLs and are under construction, the insurance would cover 100% of the cost of delays, up to $5 million per contract, for delays in full-power operation caused by the “failure of the [Nuclear Regulatory] Commission to comply with schedules for review and approval of inspections, tests, analyses, and acceptance criteria established under the combined license,” and for delays caused by litigation.

The next four units would be covered for 50% of the costs of the covered delays, up to $2.5 million per contract, after an initial 180-day period.

The act’s third nuclear incentive allows a ¢1.8/kWh production tax credit for energy generated from new nuclear power plants. The tax credit is limited to the first 6000MWe of generation capacity, for eight years of operation. It is capped at $125 million.

The new Energy Policy Act also extends for 20 years the Price-Anderson Act’s liability coverage — the framework of nuclear industry self-funded liability insurance against catastrophic accidents, and requires all utilities to meet federal reliability standards for transmission grids.

Research initiatives bolstered

The act provides funding plans and a path forward for a number of long-range research and education efforts in the nuclear arena.

These include a $1.25 billion plan to fund the Next Generation Nuclear Plant (NGNP), at the DoE’s Idaho National Laboratory. The NGNP involves research, development, demonstration and commercial application of an advanced reactor — the current reference design is a high-temperature gas reactor — with an associated hydrogen production facility.

The bill authorises continuation and a funding plan for the DoE’s advanced fuel cycle initiative to develop more proliferation-resistant nuclear fuel and develop better methods to process and manage used nuclear fuel.

Funding for university-based nuclear engineering programmes also would double by 2007, if Congress appropriates the required money to meet targets in the Energy Policy Act.

Support for medical isotope access

One surprise inclusion in the final act was an amendment added by Senator Richard Burr (R-N.C.) that reverses provisions that would prohibit US exports of highly enriched uranium (HEU) to foreign research reactor operators unless they agree to convert to low-enriched uranium fuel under the Reduced Enrichment in Research and Test Reactor (RERTR) programme. The amendment was quietly added during Senate deliberations, and survived the House-Senate conference negotiations.

The Burr amendment is primarily aimed at one company — Canada’s MDS Nordion. The company uses US-origin HEU in a reactor at Chalk River, Ontario, to produce molybdenum-99, which in turn is used to produce radiopharmaceuticals for medical diagnostic imaging. Nordion is the only supplier of Mb-99 to US medical facilities.

A spokesman for Sen. Burr, who has been championing the change for some time, said the senator’s action came at the urging of doctors in North Carolina concerned about access to radiopharmaceuticals for use in treatment of conditions such as cancer and heart disease.

The act’s language, which has upset some US nonproliferation officials, also would apply to research facilities in Belgium, France, Germany and the Netherlands.

Edward Markey (D-Massachusetts), a long-time nuclear critic, called the Burr amendment “outrageous,” adding “to save one Canadian company some money, we’re willing to blow a hole in our nonproliferation policies.”

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