[Senate Hearing 112-216]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 112-216
 
AN EXAMINATION OF THE SAFETY AND ECONOMICS OF LIGHT WATER SMALL MODULAR 
                                REACTORS

=======================================================================

                                HEARING

                                before a

                          SUBCOMMITTEE OF THE

            COMMITTEE ON APPROPRIATIONS UNITED STATES SENATE

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                            SPECIAL HEARING

                      JULY 14, 2011--WASHINGTON DC

                               __________

         Printed for the use of the Committee on Appropriations


   Available via the World Wide Web: http://www.gpo.gov/fdsys/browse/
        committee.action?chamber=senate&committee=appropriations

                               __________



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                      COMMITTEE ON APPROPRIATIONS

                   DANIEL K. INOUYE, Hawaii, Chairman
PATRICK J. LEAHY, Vermont            THAD COCHRAN, Mississippi, Ranking
TOM HARKIN, Iowa                     MITCH McCONNELL, Kentucky
BARBARA A. MIKULSKI, Maryland        RICHARD C. SHELBY, Alabama
HERB KOHL, Wisconsin                 KAY BAILEY HUTCHISON, Texas
PATTY MURRAY, Washington             LAMAR ALEXANDER, Tennessee
DIANNE FEINSTEIN, California         SUSAN COLLINS, Maine
RICHARD J. DURBIN, Illinois          LISA MURKOWSKI, Alaska
TIM JOHNSON, South Dakota            LINDSEY GRAHAM, South Carolina
MARY L. LANDRIEU, Louisiana          MARK KIRK, Illinois
JACK REED, Rhode Island              DANIEL COATS, Indiana
FRANK R. LAUTENBERG, New Jersey      ROY BLUNT, Missouri
BEN NELSON, Nebraska                 JERRY MORAN, Kansas
MARK PRYOR, Arkansas                 JOHN HOEVEN, North Dakota
JON TESTER, Montana                  RON JOHNSON, Wisconsin
SHERROD BROWN, Ohio

                    Charles J. Houy, Staff Director
                  Bruce Evans, Minority Staff Director
                                 ------                                

              Subcommittee on Energy and Water Development

                 DIANNE FEINSTEIN, California, Chairman
PATTY MURRAY, Washington             LAMAR ALEXANDER, Tennessee
TIM JOHNSON, South Dakota            THAD COCHRAN, Mississippi
MARY L. LANDRIEU, Louisiana          MITCH McCONNELL, Kentucky
JACK REED, Rhode Island              KAY BAILEY HUTCHISON, Texas
FRANK R. LAUTENBERG, New Jersey      RICHARD C. SHELBY, Alabama
TOM HARKIN, Iowa                     SUSAN COLLINS, Maine
JON TESTER, Montana                  LISA MURKOWSKI, Alaska
RICHARD J. DURBIN, Illinois          LINDSEY GRAHAM, South Carolina
DANIEL K. INOUYE, Hawaii, (ex 
    officio)

                           Professional Staff

                               Doug Clapp
                             Roger Cockrell
                            Leland Cogliani
                    Carolyn E. Apostolou (Minority)
                         Tyler Owens (Minority)
                          Tom Craig (Minority)
                       LaShawnda Smith (Minority)

                         Administrative Support

                          Molly Barackman-Eder


                            C O N T E N T S

                              ----------                              
                                                                   Page

Opening Statement of Senator Dianne Feinstein....................     1
Opening Statement of Senator Lamar Alexander.....................     4
Statement of Peter B. Lyons, Assistant Secretary For Nuclear 
  Energy, Department of Energy...................................     6
    Prepared Statement of........................................     7
The Case for SMRs................................................     8
Safety Features of SMRs..........................................     8
Safety of Multiple Modules.......................................     8
Fuel.............................................................     9
Waste Management.................................................     9
Siting...........................................................     9
Advanced R&D.....................................................     9
Global Competitiveness...........................................    10
Statement of William D. Magwood, IV, Commissioner, Nuclear 
  Regulatory Commission..........................................    10
    Prepared Statement of........................................    12
Federal Subsidy for Nuclear Power................................    15
Safety and Logistics of Clustering Reactors......................    15
Need for Federal Appropriation...................................    16
Spent-fuel Management............................................    16
Concerns Raised in Light of Japanese Natural Disaster............    17
Nuclear Waste Reprocessing.......................................    18
Nuclear Technology Competition...................................    19
H-Canyon.........................................................    20
On-site Spent-fuel Storage.......................................    20
Cost to Federal Government.......................................    22
Nuclear Plant Operation Subsidy..................................    24
Lessons learned From Fukushima...................................    24
Statement of Dr. Edwin Lyman, Senior Scientist, Global Security 
  Union of Concerned Scientists..................................    25
    Prepared Statement of........................................    27
Statement of E. James Ferland, Jr., President, Americas 
  Westinghouse Electric Company, LLC.............................    30
    Prepared Statement of........................................    32
Statement of Christofer M. Mowry, President, Babcock & Wilson 
  Nuclear Energy.................................................    34
    Prepared Statement of........................................    36
Inherent Safety of SMRs--Robust Defense-in-Depth.................    36
The Economics of SMRs--Competitive and Financeable...............    40
Public-private Partnership--Investment in Clean Energy and U.S. 
  Jobs...........................................................    41
Statement of Dr. Paul G. Lorenzini, CEO, Nuscale Power, Inc......    42
    Prepared Statement of........................................    44
Statement of Dr. Ernest J. Moniz, Professor of Physics, 
  Massachusetts Institute of Technology..........................    51
    Prepared Statement of........................................    53
Light Water Small Modular Reactors...............................    53
Economics of Individual SMRs.....................................    58
Low-carbon Energy Options........................................    61
SMR Production Business Models...................................    61
Reactor Design in Light of Fukushima.............................    63
Clean Energy.....................................................    63
Energy Storage...................................................    64
Role of Federal Spending in Research and Development.............    65
Concerns About Nuclear Waste Disposal............................    65
Agreement on Federal Policy......................................    66
Prepared Statement of the Nuclear Energy Institute...............    69
Small Reactor Development Advances Energy, Environmental Benefits 
  in New Markets.................................................    69
Small Reactor Safety and Security--Enhanced by Design, Required 
  by Regulation..................................................    70
Public/Private Partnerships are Essential To Support Small 
  Reactor Development............................................    70


AN EXAMINATION OF THE SAFETY AND ECONOMICS OF LIGHT WATER SMALL MODULAR 
                                REACTORS

                              ----------                              


                        THURSDAY, JULY 14, 2011

                               U.S. Senate,
      Subcommittee on Energy and Water Development,
                               Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 10:02 a.m., in room SD-192, Dirksen 
Senate Office Building, Hon. Dianne Feinstein (chairman) 
presiding.
    Present: Senators Feinstein, Alexander, and Graham.


             OPENING STATEMENT OF SENATOR DIANNE FEINSTEIN


    Senator Feinstein. This hearing of the Subcommittee on 
Energy and Water Development will come to order and I want to 
welcome everyone. This is an oversight hearing on the safety 
and economic issues for the proposed light water small modular 
reactor (LW SMR).
    The program proposed by the administration is a major 
investment of taxpayer funds to help two private companies 
develop their designs and submit them to the Nuclear Regulatory 
Commission (NRC) for certification.
    In today's hearing, we will look at the safety features and 
potential economics of LW SMRs. We may not arrive at definitive 
answers today to the questions that are raised. That will 
likely require the NRC to take action on the actual 
application.
    However, it's important that we try to understand the 
potential benefits and deficits and acknowledge uncertainties 
to determine whether such a large investment by the Federal 
Government is justified.
    My friend, the distinguished ranking member of this 
subcommittee, often talks with me about subsidies for wind 
energy. I look at this program and think that it appears to be 
one heck of a proposed subsidy.
    The administration has proposed a 5-year, $452 million 
program to develop the designs for two LW SMRs. These designs 
would then be presented to the NRC for certification.
    It's important to note that the program will have a cost 
share of at least 50 percent from industry, but this 
immediately raises, I think, a significant point.
    I'm told that the total cost to take two designs through 
the proposed process will cost at least $1.5 billion. On a 50-
50 cost-share basis, that would make the Federal contribution 
$750 million, not $452 million.
    So one thing we must determine is how the administration 
plans to make up this difference. Will it require a higher 
industry cost share, say 70 percent? Will the administration 
choose only one design rather than two? Or will we blindly move 
forward hoping $300 million in additional funding will be 
approved by the Congress?
    As with any hearing in the nuclear industry, we have to 
recall the recent earthquake, tsunami, and subsequent nuclear 
disaster in Japan. Just this morning the Japanese Prime 
Minister--in The Washington Post, at least--has said that he 
wants the country get out of nuclear power entirely.
    These events have rightly caused an examination of nuclear 
safety internationally and here in the United States.
    For me, one of the fundamental issues raised by events in 
Fukushima is whether multiple reactors should be collocated. 
The threat of high-level radiation exposure at one plant 
clearly compromised the ability of workers to adequately 
respond to events at nearby plants in the Daiichi site.
    The premise of the SMR program is that utilities could 
start with a small number of units and then install more as 
funding allowed and demand necessitated. Now, how does that 
premise stack up against possible problems?
    The Fukushima crisis also demonstrated the potential danger 
of storing spent fuel in pools on site, and yet the proposed 
SMR designs do not appear to make any improvements in this 
method of spent-fuel storage.
    Bluntly, I'm struggling to reconcile the lessons of 
Fukushima with the principal design premise of SMRs, and so I 
look forward to witnesses addressing these issues today.
    This hearing is not about spent fuel, but it's hard to have 
a hearing on new nuclear power without considering the issue of 
what we do with the waste. This country has not--and I stress 
not--done a good job dealing with defense or commercial nuclear 
waste. That's simply a fact.
    Today, we have no national policy to address our commercial 
spent nuclear fuel, and we store it at every nuclear plant in 
the country in pools and dry casks for decades without end.
    Yet, today we're considering investing $452 million in LW 
SMRs that will result in more spent fuel stored at sites with 
no permanent storage for waste.
    By law, the Federal Government must take this waste and 
store it permanently but, today, the Federal Government is 
being sued and is making payments for lost cases because it 
cannot fulfill that obligation.
    This is not inexpensive. The Government Accountability 
Office estimates that we face $12.3 billion in liability 
through 2020 if we fail to take the spent fuel from utilities. 
That's $12.3 billion of liability.
    Now, that's a very deep concern and should concern every 
one of us in this Congress. Presumably, building new plants 
licensed under the SMR program would only increase this 
liability.
    While we discuss the specific safety and economic issues of 
LW SMRs, I continue to view these issues with the absence of a 
spent-fuel policy.
    I visited our two reactors in California and, candidly, I 
don't know how the NRC can say it's fine to keep re-racking 
spent fuels, adding more rods, keeping them there in California 
for 24 years, transferring to dry casks, most of which are 
designed for transportation to permanent storage, and we have 
no permanent storage. We have no repository. We have no 
regional storage. We have no permanent storage, and yet we're 
looking at a new start.
    So I'm struggling to understand how these reactors will 
also be economical. The central premise I've been given is that 
for SMRs to be economical, they must offset the loss of 
economies of scale with economies of manufacturing.
    If true, we need to determine how many reactors must be 
constructed to achieve cost effectiveness and competitiveness 
and how many must be sold to maintain a factory production 
level necessary to justify the capital investment.
    The Nuclear Energy Agency, an arm of the Organization for 
Economic Cooperation and Development, recently released a 
report that said that electric power from SMRs would cost 10 to 
40 percent more than large reactors.
    I've been told that anywhere between 20 and 1,000 reactors 
would be needed to be produced in order to be economical. How 
many are needed to be cost effective? Clearly, a larger number 
makes the endeavor questionable.
    I understand the University of Chicago is completing a 
study for the Department of Energy (DOE) on the economics of 
these reactors and perhaps that will provide some clarity. But, 
in the meantime, my hope is that representatives from the 
companies that are here today will elaborate on this particular 
issue.
    Whether the companies would be selling these units in the 
United States or overseas, I would like to have a better 
understanding of what is necessary in terms of production 
levels to be economical and thus be a justified expenditure of 
Federal resources.
    On our first panel today, we will hear from Pete Lyons, the 
Assistant Secretary for Nuclear Energy at the DOE. Dr. Lyons 
also, at one time, was a commissioner at the NRC.
    We will also hear from Dr. Bill Magwood, a current 
commissioner on the NRC. Interestingly, he used to hold the 
position Dr. Lyons holds today.
    On our second panel, we will hear from Dr. Ed Lyman from 
the Union of Concerned Scientists and Dr. Ernie Moniz of 
Massachusetts Institute of Technology. Both of these have spent 
time considering the merits of SMRs.
    The second panel will also feature Mr. Jim Ferland from 
Westinghouse, Mr. Christofer Mowry from Babcock & Wilcox and 
Mr. Paul Lorenzini from NuScale. These gentlemen represent 
three companies interested in pursuing the cost-shared program, 
but I understand there may be other companies interested as 
well.
    So I look forward to everyone's testimony, and even more so 
to the question-and-answer period and I thank everyone for 
coming.
    Now, I'd like to turn to our distinguished Ranking Member, 
Senator Alexander.


              OPENING STATEMENT OF SENATOR LAMAR ALEXANDER


    Senator Alexander. Thanks, Madam Chairman, and thank you 
for the way you're approaching this hearing in your typical 
style, which is straightforward and with a fair presentation 
and an attempt to get the answers. I appreciate that very, 
very, very much.
    As the chairman said, we're talking about a 5-year, $452 
million program that will end up with two SMRs operating by 
2020. And, as she said, we're talking about LW SMRs.
    We know how to build and operate LW SMRs. The NRC knows 
what they are. All 104 of our big, commercial reactors are LW 
SMRs, and these are smaller versions of those.
    I believe we need to move ahead with this program of 
research and development as quickly as possible if we want to 
get to the 2020 timeline.
    The goal should be are these designed to be safe? Can 
exporting our technology that is safe around the world make the 
world safer, keeping nuclear materials out of the hands of 
people who shouldn't have them? And, third, is this a useful 
way to promote clean electricity in a country that uses nearly 
25 percent of all electricity in the world?
    Talking about safety first, it's a subject we take very 
seriously. I believe we have the best regime of making reactors 
safe in the world. We certainly have the best record. No deaths 
ever, either at our Navy reactors or at our commercial 
reactors. No one was even hurt at Three Mile Island, our big 
nuclear accident. No one was hurt at that. No other form of 
energy has that record.
    So the NRC's review of the design and licensing will help 
us know whether they themselves are safe and the places they 
will be located are safe, and I'm very interested in that 
result.
    There are several questions that I'll be interested in 
hearing more about. I'm told the passive design of the systems, 
which means they'll work automatically without using any device 
that could fail in the event of an accident, will make them 
perhaps safer.
    The problems at Fukushima with nuclear power all had to do 
with no water, no electricity to pump the water to cool the 
reactors.
    We're not the only country in the world that is interested 
in small nuclear reactors. There are at least five or six other 
countries that are moving ahead with them--Russia, China, 
France, South Korea, Argentina, and Japan.
    If we don't, arguably, the world will be deprived of our 
safety regime and our technology, and we'll be deprived of an 
industry that will make it easier and cheaper for us to create 
private-sector jobs by new ways to have low-cost, reliable, 
clean electricity.
    It's important to note there are now 60 countries that are 
considering introducing nuclear power to their power grids. 
South Korea is helping the United Arab Emirates build reactors. 
I would argue that the world needs our technology and our 
safety standards as much as we do.
    My final point is this: The Energy Information 
Administration estimates that electric consumption in the 
United States will rise by more than 20 percent by 2035. Where 
will that electricity come from?
    We know where it comes from now--nearly one-half coal, 20 
percent nuclear power, 20 percent natural gas, and a very small 
amount from renewables.
    Most of us believe we need clean electricity, and we know 
where that comes from--67 percent nuclear power, .10 of 1 
percent from solar, a little less than 8 percent from wind. So 
any new way to safety and inexpensively create new options for 
nuclear power, I would argue, is something we should treat 
seriously.
    The Tennessee Valley Authority has recently said it would 
close a number of coal plants, 18 of its coal plants. What will 
it replace them with? It will still have coal--35 percent--but 
it'll be going up to 40 percent nuclear power. That's really 
its only option, other than natural gas, and we've seen the 
natural gas prices go up and down over the years.
    So because of our safety record, because of the opportunity 
that it presents for an American business, because of the lower 
cost and the possible improved safety standards, even though 
the reactors we now have are safe, I think this is a promising 
opportunity and I welcome the chairman's decision to hold this 
hearing to consider whether to go ahead.
    I would make these points, if I may, in commenting on what 
Chairman Feinstein said. In terms of used nuclear fuel, I agree 
with her. We badly need a place to put, in the end, used 
nuclear fuel. But all the used nuclear fuel we have today from 
all of our plants would fill one football field 20 feet deep. 
So it's not that much mass, but we need a place to eventually 
put it.
    The NRC and Dr. Chu have said it is safe where it is for 
100 years, and the President has appointed distinguished people 
to figure out how to deal with that. I think we can do it.
    In terms of subsidies, my view on subsidies is we should 
use subsidies to jump start technologies, like offshore wind, 
but we shouldn't be spending $26 billion over the next 10 years 
to support subsidies for mature technology, which is existing 
wind, and the 104 commercial nuclear reactors today operate 
without Government subsidy.
    So I would expect to hear from the industry folks whether 
they would expect subsidies once we get past this research and 
development stage.
    Those are my comments, Madam Chairman. I agree with you. 
The questions and answers will be the most important part of 
this, and I thank you for the balanced cast of witnesses that 
we have and your inquiry into important questions.
    Senator Feinstein. Thank you very much, Senator. I very 
much appreciate your comments and really look forward to 
working with you, as we always have.
    Senator Alexander. Thank you.
    Senator Feinstein. Mr. Secretary, can we begin with you, 
Secretary Lyons?

STATEMENT OF PETER B. LYONS, ASSISTANT SECRETARY FOR 
            NUCLEAR ENERGY, DEPARTMENT OF ENERGY

    Dr. Lyons. Thank you, Chairman Feinstein, Ranking Member 
Alexander and Senator Graham. Thank you very much for the 
opportunity to appear before you today to discuss SMRs and the 
administration's request to begin a cost-shared program to 
accelerate the certification and licensing of LW SMRs.
    The Department believes that SMRs have the potential to 
provide our Nation with clean, cost-effective energy, improved 
safety and an opportunity to compete in the global clean-energy 
marketplace.
    In my written testimony, I address the role of nuclear 
power to provide the Nation with clean, safe energy and the 
strong support from the administration to increase utilization 
of nuclear power.
    I also noted that the capital investment in large plants 
makes it very, very difficult for utilities to move ahead with 
them. SMRs offer a chance to change that paradigm by providing 
power in increments that may better fit utilities' fiscal 
constraints.
    In my oral comments today I'll just focus on a few of the 
issues that are sometimes raised with SMRs.
    In general, enhanced safety is easier to achieve in smaller 
reactors as many design challenges are simplified when reactor 
size is reduced.
    Current SMR designs offer notable safety advantages, 
including passive safety features that minimize the need for 
prompt operator actions in any upset conditions. In addition, 
these SMRs utilize so-called integral designs resulting in a 
much lower susceptibility to a loss of coolant accident.
    You'll hear from some prospective vendors in the second 
panel about a host of innovative approaches that they are 
including to significantly enhance SMR safety and security.
    For example, features like underground siting offer 
increased resistance against seismic events while also 
providing for more robust security. SMRs are also designed for 
long periods of unattended operation under accident conditions.
    Some have suggested that SMRs can only succeed if safety 
and security requirements of the NRC are weakened. Such 
statements, I think, confuse weakened safety or security with 
the reality that the character and risk presented by SMRs may 
enable identical or enhanced safety and security to be 
addressed with alternative prescriptions, and, in any case, 
licensing of any SMR would be considered through the normal, 
rigorous, open, transparent processes of the NRC.
    Concerns have also been raised about the potential 
proximity of multiple SMR modules and the potential that any 
concern with one module might affect the safety of other 
modules.
    These modules are being designed such that their safety 
systems are completely independent, but, again, the NRC will 
address any potential common failure mode as the licensing 
process progresses.
    And, finally, I'd like to just very briefly address the 
intertwined issues of global competitiveness and global 
security. Innovative technologies certainly contribute to our 
Nation's global competitiveness providing good jobs for 
American workers.
    As Secretary of Energy Steven Chu noted in his Wall Street 
Journal editorial about SMRs: ``If we can develop this 
technology in the United States and build these reactors with 
American workers, we will have a key competitive edge.''
    As part of a robust, nuclear industry supply base in the 
United States, SMRs may also contribute to our national 
security interests by helping to increase the global reach of 
U.S. nuclear technology.
    The nations that export and build the majority of nuclear 
power plants will strongly influence safety standards for the 
world. A strong U.S. presence in the global marketplace will 
allow U.S. safety standards to be adopted more broadly around 
the world while also improving the ability of the United States 
to influence decisions about waste management and 
nonproliferation.


                           PREPARED STATEMENT


    In conclusion, while there are significant uncertainties in 
the future competitiveness of SMRs, the DOE's proposed LW SMR 
licensing tech support program would address those 
uncertainties to enable a demonstration of their market 
potential.
    The United States is by no means the only country exploring 
these technologies. Some countries are already licensing or 
building SMRs. In my view, SMRs represent our best and perhaps 
our only option for regaining a larger share of the nuclear 
technology global market.
    Thank you and I'll look forward to your questions.
    [The statement follows:]

                  Prepared Statement of Peter B. Lyons

    Chairman Feinstein, Ranking Member Alexander, and members of the 
subcommittee, thank you for the opportunity to appear before you today 
to discuss small modular reactors (SMRs) and the administration's 
request to begin a cost-share program to accelerate the certification, 
licensing, and deployment of light water (LW) SMRs. The Department 
believes SMRs have the potential to provide our Nation with clean, 
cost-effective energy, improved safety, and an opportunity to compete 
in the global clean-energy marketplace.
    Today in the United States, nuclear power provides about 20 percent 
of all electricity consumed. It accounts for 70 percent of our carbon-
free electricity. And it has demonstrated an outstanding safety record. 
Many attributes of our nuclear power operations contribute to this 
record, starting with independent regulation from the Nuclear 
Regulatory Commission (NRC). In addition, industry groups such as the 
Institute for Nuclear Power Operations (INPO) help maintain robust 
operational excellence in the industry. The NRC provides the necessary 
regulatory enforcement and INPO relies on peer evaluation, peer 
pressure, information sharing among operators, and financial 
incentives. Our combination of efforts has established the 
international ``gold standard'' for nuclear operations.
    President Obama has repeatedly emphasized the importance of clean 
energy to our Nation's future. During his State of the Union Address 
earlier this year, he outlined a goal of obtaining 80 percent of our 
electricity from clean-energy sources by 2035. It's an ambitious goal. 
And as he noted, we're going to need all clean-energy sources--
including nuclear energy--to achieve that goal. As the President has 
said, ``To meet our growing energy needs and prevent the worst 
consequences of climate change, we'll need to increase our supply of 
nuclear power. It's that simple.''
    The reactors being considered by utilities today are in the 
gigawatt (GWe) class--meaning they provide at least 1,000 megawatts of 
electrical power. These are large plants and the size of the investment 
to build them is correspondingly large. A new, GWe class nuclear 
powerplant requires an investment on the order of $6 billion to $10 
billion, which poses a challenge even to large nuclear utilities whose 
market capitalizations are around $19 billion. A major rating agency 
has characterized this kind of investment as a ``bet the farm'' 
endeavor for most utilities. Certain polices can help mitigate some of 
this risk, but construction of such plants remains a significant 
financial risk for a utility.

                           THE CASE FOR SMRS

    SMRs may provide an alternative to these larger plants that 
overcomes some of these challenges. Because we expect that they would 
be built in factories in a mass production format, SMRs could achieve 
cost savings through replication, rather than relying upon the 
economies of scale for larger reactors built individually at each 
construction site. Of particular note is the prospect for driving down 
costs over time through the process of learning-by-doing in a factory 
setting with an experienced workforce. The Department anticipates that 
SMR powerplants will be able to be purchased in smaller sizes that 
better fit the financial needs of the utilities, and generation 
capability could be expanded to meet demand.
    For this business model to work the economics of factory 
fabrication will need to prove successful and that is still uncertain. 
Based upon the experience of cost savings in the U.S. Navy submarine 
program or in the aerospace industry, there is reason for optimism that 
these learning effects can be substantial, but it is unproven for this 
application.
    Operational efficiencies may also be possible for SMRs, but the NRC 
will determine if any such possibilities are acceptable without 
compromising safety or security. For the SMR business model to be 
viable, an improved economic case must materialize. The proposed DOE 
light water reactor (LWR) SMR Licensing Technical Support program will 
focus on engineering support related to design certification and 
licensing for two LWR-based SMR designs through cost-shared 
arrangements with industry partners, which is expected to help to 
reduce some uncertainties and increase the potential for reducing costs 
over time.
    To understand these issues, the Office of Nuclear Energy has 
supported a study on the economics of nuclear energy with a particular 
emphasis on SMRs. This report is currently undergoing review, but one 
of the anticipated findings is that a mature SMR industry will likely 
be competitive with natural gas generation. The smaller upfront capital 
investment should reduce the financial risk of the projects, but more 
work is still needed to reduce the uncertainties around the 
construction costs for SMRs over time.

                        SAFETY FEATURES OF SMRS

    The Department anticipates that enhanced safety can be more readily 
achieved in small reactors. Current SMR designs offer notable potential 
safety advantages. LW SMR designs proposed to date incorporate passive 
safety features that utilize gravity-driven or natural convection 
systems--rather than engineered, pump-driven systems--to supply backup 
cooling in unusual circumstances. These passive systems should also 
minimize the need for prompt operator actions in any upset condition. 
Some concepts use natural circulation for normal operations, requiring 
no primary system pumps. In addition, many SMR designs utilize integral 
designs, meaning all major primary components are located in a single, 
high-strength, pressure vessel. That feature is expected to result in a 
much lower susceptibility to certain potential events, such as a loss 
of coolant accident, because there is no large external primary piping. 
In addition, LWR SMRs would have a much lower level of decay heat than 
large plants and therefore require less cooling after reactor shutdown.
    Vendors are proposing an additional host of innovative approaches 
to significantly enhance SMR safety and security. For example, features 
like underground siting can offer increased resistance against seismic 
events while also providing more robust security. These systems are 
also designed for long periods of unattended operation under accident 
conditions and no emergency diesel generators are required for several 
of the designs. Several of the concepts rely only on stored energy in 
an accident, so that there is no dependence on external power sources. 
And these are only a sampling of the enhanced safety features that 
could potentially be part of these systems.
    The NRC--through their rigorous, open, and transparent process--
will determine the precise requirements for future SMR deployment and 
issue any future licenses. In that process, the NRC will evaluate 
whether the smaller size and anticipated improved safety and security 
envelope enables adequate safety and security with somewhat different 
operational mandates than those applied to the large plants.

                       SAFETY OF MULTIPLE MODULES

    Some have raised questions about safety of multiple modules at a 
site and whether a serious problem in one module might affect the 
safety other modules. The NRC will address any common mode failures and 
many more questions as the licensing process progresses. The onus will 
be on the SMR vendors to convince NRC that no common mode failure, 
including those due to natural events such as a tsunami or earthquake, 
could lead to a common failure of multiple modules or that a failure of 
one module could prevent the safe shutdown of other modules. The NRC 
will demand, as they do for any design, that the safety case proposed 
by SMR vendors be subjected to intense study and evaluation, both 
within the NRC staff review and through their standard, extensive, 
public opportunities for participation in the licensing process.

                                  FUEL

    The SMR concepts of near-term interest are based upon the well-
understood LWR technology. This is important because our current 
regulatory knowledge base and experience are built on LWR technology. 
The choice to stay within the proven performance envelope of the 
existing commercial, low-enriched uranium, nuclear fuel cycle has two 
important benefits. First, it means that the most promising near-term 
SMRs can build upon the well-established LWR fuel industry, avoiding 
the need to establish a parallel fuel manufacturing capability. Second, 
this fuel cycle minimizes the technical risk of the most demanding 
technology component of any new nuclear reactor system, a new fuel 
design, and reduces the time to license within the NRC regulatory 
system.

                            WASTE MANAGEMENT

    For the LW SMR designs that would be considered in the Department's 
proposed program, the amount of electricity produced per kilogram of 
waste will be about the same as for current LWRs since these units 
utilize very similar, and very well-understood, technologies. But in 
contrast to the current fleet of plants where used fuel pools were not 
initially designed to hold a lifetime of used fuel, most current LWR 
SMR concepts propose storing the used fuel underground where it may be 
more easily protected from external hazards or sabotage. Provisions 
have also been incorporated in the current SMR concepts to provide 
long-term cooling so that the used fuel remains safe under potential 
upset conditions.
    In the longer term, after the operational lifetime of an SMR, a 
used-fuel management program will be essential, just as it is for the 
current fleet. This question of used fuel disposition is currently the 
subject of examination by the Blue Ribbon Commission. The Department is 
eagerly awaiting their recommendations to inform the administration as 
it develops a strategy on used fuel management. Used fuel from newly 
deployed SMRs should not need another storage location during the 
plants' operational lifetime.

                                 SITING

    Traditional siting of large nuclear power stations has primarily 
been limited to locations that have abundant water for cooling, 
sufficient demand to justify the size of the plant, transportation 
capabilities suitable to handle the very large components, and other 
defining attributes that limit the places where large plants are 
feasible. While these factors will continue to be considered in the 
siting of SMR plants, the draft designs of most LWR SMRs may be able to 
overcome these limitations with reduced cooling water requirements, the 
ability to tailor the generation capacity to meet the needs of the 
local market, and more flexible transportation options based on 
transport of much smaller components to any site. Hence, new SMR 
designs could potentially open up new markets to nuclear, a step that 
could be useful for meeting our clean-energy goals.
    Some have taken these design features to imply that SMRs could be 
sited without due consideration of safety and security. Nothing could 
be further from the truth. The NRC remains the regulatory authority 
that must license any commercial reactor including an SMR and their 
review will be no less thorough for SMRs than it has been for the 
existing plants.

                              ADVANCED R&D

    DOE also proposes to support the development of advanced small 
reactor concepts that depart from the well-known LWR technology base. 
These advanced SMRs are in the very early development stage, but have 
the potential to greatly increase the amount of electricity produced 
per kilogram of waste. Such systems could increase uranium utilization 
through the use of long-lived cores, for example, which may also have 
nonproliferation benefits. Moving beyond LWR technology would allow for 
systems that are better suited to serve markets that are not practical 
for the current reactors, such as the use of nuclear energy for process 
heat or transportable deployments. The fuel cycles for these advanced 
reactors could also open the possibilities of long-lived cores or could 
enable transmutation of elements in used fuel.
    The R&D performed today will establish the knowledge base that will 
be needed to inform further development of these designs by industry.

                         GLOBAL COMPETITIVENESS

    Innovative technologies can effectively contribute to our Nation's 
global competitiveness, which can mean good jobs for American workers. 
As Secretary of Energy Steven Chu noted in his editorial in the Wall 
Street Journal supporting SMRs, ``If we can develop this technology in 
the United States and build these reactors with American workers, we 
will have a key competitive edge.'' As part of a robust nuclear 
industry supply base in the United States, SMRs may also contribute to 
our national security interests by helping to increase the global reach 
of U.S. nuclear technology.
    Today, about 60 new reactors are under construction around the 
world. The TVA Watts Bar 2 unit is completing construction, four 
Westinghouse AP-1000s are in pre-construction in the United States, and 
four are under construction in China. By any measure, the U.S. share of 
the global market in terms of new reactor builds is currently small. 
About 26 reactors are under construction in China alone, almost one-
half of the world's total. China plans substantial expansion of its 
nuclear power capabilities, with estimates reaching about 130-180 GWe 
by 2030. They intend to quickly become self-sufficient in reactor 
construction, and are clearly poised to take over the global lead in 
nuclear energy capacity in the coming decades.
    This situation is in sharp contrast to the early days of nuclear 
power. In the 1960s and 1970s, the United States was the world leader 
in nuclear technologies; we invented most of the technologies and 
successfully implemented many of them in commercial systems. In the 
1980s, virtually all U.S. nuclear plant equipment was manufactured 
domestically. Today, that figure is more like 25 percent. The United 
States still has a seat at the table internationally, but domestic 
deployment of this technology could lead to increased domestic 
manufacturing, which in turn would likely create increased export 
opportunities for the United States.
    The Nations that export and build the majority of nuclear 
powerplants are expected to strongly influence safety standards for the 
world. If industry chooses to deploy SMR technology, it can provide an 
opportunity to gain a share of the global market, and more importantly, 
leadership in this new area of nuclear technology. A strong U.S. 
presence in the global marketplace will allow U.S. safety standards to 
be adopted more broadly around the world while also improving the U.S. 
position in decisions about waste management and nonproliferation.

                               CONCLUSION

    While there are significant uncertainties in the future 
competitiveness of SMRs, the Department of Energy's proposed LW SMR 
Licensing Technical Support program will seek to address those 
uncertainties and provide a concrete demonstration of their market 
potential. But the United States is by no means the only country 
exploring these technologies. The recent report from the Nuclear Energy 
Agency of the Organization for Economic Co-operation and Development 
listed seven countries with strong SMR programs, some of which are 
already licensed or under construction.
    In addition to meeting part of our own clean-energy needs, I've 
also tried to emphasize that SMRs could help strengthen U.S. 
competitiveness in the global nuclear technology market. This would not 
only be supportive of good jobs in America, but also directly 
supportive of international nuclear safety and our nonproliferation 
goals.

    Senator Feinstein. Thank you very much, Mr. Secretary.
    Commissioner Magwood, welcome.

STATEMENT OF WILLIAM D. MAGWOOD, IV, COMMISSIONER, 
            NUCLEAR REGULATORY COMMISSION

    Mr. Magwood. Thank you, chairman. Thank you, chairman and 
Ranking Member Alexander and Senator Graham for the opportunity 
to speak today.
    Senator Feinstein. Could you see your mike is on?
    Mr. Magwood. Yes, it is. I'll try----
    Senator Feinstein. Well, bring it a little closer please. 
Great.
    Mr. Magwood. I've provided a written statement for the 
record and so I'll summarize my remarks very briefly.
    I also want to stress I appear today as an individual 
member of the NRC and will provide my personal views and 
perspectives and will not speak for the agency or the NRC as a 
whole at this particular hearing.
    The various concepts known as SMRs have garnered a great 
deal of interest both inside the Government and in the public, 
and I understand this interest for all the reasons that Dr. 
Lyons has outlined. I won't try to repeat all those points.
    These are all laudable and important interests. However, 
I'm sure the subcommittee will hear, over the course of the 
morning, that all these possibilities are really just still 
that, possibilities. We're really only at the very early first 
steps of this venture and there's much work to be done.
    I wanted to highlight in my remarks today that SMRs are 
really not a new idea. We've been talking about this subject 
for quite some time. For example, the potential advantages of 
small reactors prompted the Government to provide considerable 
financial support for the development of midsize passively safe 
reactors in the early 1990s.
    Unfortunately, these efforts proved unable to overcome the 
economic realities of building and operating nuclear plants, 
realities that tend to penalize small reactors and reward 
larger designs.
    Thus, instead of the AP-600 and the 500 megawatt Simplified 
Boiling Water Reactor of the early 1990s, the market pushed 
vendors to increase the size of their designs.
    Today, vendors offer the Generation III+ technologies based 
on those small systems, including the 1100 megawatt AP-1000 and 
the 1600 megawatt ESBWR reactor from General Electric.
    So the big question is why is today different from 
yesterday? Well, as Secretary Lyons pointed out, the greatest 
difference is the fact the technology has evolved quite 
significantly over the years.
    Having learned the lessons from the development of 
Generation III+ technologies and from the failures of previous 
small reactors, today's vendors clearly believe they have 
solved the riddle of small reactor economics.
    Today's SMR technologies apply novel design approaches, 
such as integral pressure vessels that contain reactor systems 
and are comprised of far fewer parts. These new SMRs are also 
much smaller than the systems of the 1990s. This choice was 
made to assure they could be factory built and shipped by rail 
for deployment.
    Importantly from a regulatory standpoint, today's SMRs also 
have features that could lead to very important safety 
benefits. For example, design concepts I've seen thus far 
further the advanced use of passive safety systems by applying 
gravity, natural circulation and large inventories of cooling 
water to reduce reliance on human intervention.
    And those large inventories are also used to make the 
spent-fuel pools safer, which I think is a very important 
aspect of designs.
    There's still a great deal of work to be done, and this is 
really much the same place I think we were in the 2000 
timeframe when the DOE launched the Nuclear Power 2010 program 
(NP2010) to spur the development of the certification of 
Generation III+ designs, such as the AP-1000.
    At that time, the level of design completeness was 
insufficient to enable vendors to provide utilities with 
reliable cost estimates. After this cost-shared work was 
completed, vendors and utilities were able to negotiate 
contracts on realistic bases.
    A decade later, utilities are awaiting final regulatory 
approval to begin constructing new plants based on technologies 
advanced by NP2010.
    At the same time, one often hears the industry is concerned 
that the NRC might make decisions that will render these new 
systems to be uncompetitive. In my opinion, these concerns are 
not well grounded in an understanding of how the NRC develops 
regulatory requirements.
    Using security as a general example, the size of guard 
forces and the nature of security barriers protecting U.S. 
nuclear powerplants is not determined in accordance with a set 
formula that might somehow be applied to SMRs. The security 
strategies of each individual plant are designed by licensees 
to defend their facilities against threats postulated by NRC.
    These strategies are tested on a periodic basis using 
force-on-force exercises, and when issues arise as a result of 
these exercises, licensees are obligated to make necessary 
adjustments. I believe this exact same process will work very 
well with SMRs.
    Whatever else they are SMRs are power reactors. While the 
size of SMRs may eventually prove to have financial or 
implementation benefits the fact that they are small has far 
less significance from a regulatory standpoint than I think 
many expect.
    That said, SMR vendors have proposed design components 
that, if fully realized, incorporate technologies and 
approaches that can have significant safety benefits and, 
therefore, must be considered as risk-informed regulatory 
decisions are made.

                           PREPARED STATEMENT

    At the end of the day, as the many issues SMRs present are 
discussed and resolved, I do not expect the decisions made by 
NRC will be the critical factor in the success or failure of 
these technologies.
    More likely, the success or failure of this newest attempt 
to build small reactors will depend on the ability of today's 
vendors to avoid the pitfalls of the past.
    Thank you very much. I look forward to answering your 
questions.
    [The statement follows:]

              Prepared Statement of William D. Magwood, IV

    Chairman Feinstein, Ranking Member Alexander, and members of the 
subcommittee, I thank you for the opportunity to speak to the 
subcommittee this morning. I appear today as an individual member of 
the Nuclear Regulatory Commission (NRC) and will provide my personal 
views and perspectives. I am not here today to represent the NRC as a 
whole or to speak for the agency.
    The various technology concepts that have become known collectively 
as small modular reactors (SMRs) have generated a great deal of 
attention and interest in recent years. The prospects for SMRs have 
garnered considerable press coverage, significant interest in industry 
circles, and support from Members of Congress and the administration.
    I understand this interest. For utilities, SMRs present the 
possibility of a new financial model for nuclear powerplant 
deployment--one which allows generating assets to be built and 
installed on a more certain and predictable basis. Utilities are also 
attracted by the idea that reactors could be deployed in a modular 
fashion, avoiding the large, upfront costs inherent to today's nuclear 
plants.
    For vendors, SMRs are technologies that could be manufactured in 
U.S. facilities at lower and more predicable cost than is typical of 
conventional nuclear reactors. They envision large numbers of SMRs 
being built to meet a range of energy requirements, including the 
possible replacement of outdated, small coal-fired powerplants across 
the country.
    For many Government officials, SMRs provide a means to support the 
revitalization of the Nation's heavy manufacturing base, providing 
thousands of well-paid, skilled jobs, and reducing U.S. reliance on 
overseas suppliers for vital energy technologies.
    These are all laudable and important interests. However, as I'm 
sure the subcommittee will hear over the course of this morning, all of 
these possibilities are still just that--possibilities. We are only at 
the first early steps of this venture and there is much work still to 
do.
    That is not to say that SMRs are a new idea. The conceptual 
benefits of small reactors have been the subject of discussion and 
analysis for decades, and all the potential benefits I've mentioned 
have been considered in the past. The potential advantages of smaller 
reactors prompted the Government to provide considerable financial 
support for the development of the mid-size, passive-safety reactors in 
the 1990s and to encourage the pursuit of the pebble-bed modular 
reactor in the early years of this century. Both efforts proved unable 
to overcome the economic realities of building and operating nuclear 
powerplants--realities that tend to penalize small reactors and reward 
larger designs. Thus, instead of the AP-600 and 500 megawatt Simplified 
Boiling Water Reactor of the early 1990s, the market pushed vendors to 
increase the size of their designs; today, vendors offer Generation 
III+ technologies based on those smaller systems--the 1,100 megawatt 
AP-1000 and the 1,600 megawatt Economic Simplified Boiling Water 
Reactor.
    Around the turn of the century, both DOE and industry became 
interested in the Pebble Bed Modular Reactor, or PBMR. This was a 
small, high-temperature, gas-cooled reactor with a generating capacity 
of about 165 megawatts. This technology captured considerable media 
attention after United States companies became involved in an effort to 
build a commercial pilot in South Africa. However, as the high costs of 
the project became apparent, commercial participants began to peel away 
and eventually the South African project was abandoned.
    All small reactor technologies of the past failed to find a way to 
overcome the fact that the infrastructure required to safely operate a 
nuclear power reactor of any size is considerable. Tons of steel and 
concrete are needed to construct containment buildings. Control rod 
drives, steam generators, and other key systems are hugely expensive to 
design and build. A larger plant with greater electric generating 
capacity simply has an inherently superior opportunity to recover these 
large upfront costs over a reasonable period.
    So why is today different from yesterday? The greatest difference 
is the fact that the technology has evolved significantly over the 
years. Having learned lessons from the development of Generation III+ 
technologies and from the failure of previous small reactors, today's 
SMR vendors clearly believe they have solved the riddle of small 
reactor economics. They are presenting novel design approaches that 
could lead to significant improvements in nuclear safety. For example, 
design concepts that I have seen thus far further advance the use of 
passive safety systems, applying gravity, natural circulation, and very 
large inventories of cooling water to reduce reliance on human 
intervention during an emergency. SMR designs also apply novel 
technologies such as integral pressure vessels that contain all major 
system components and use fewer and smaller pipes and pumps, thereby 
reducing the potential for a serious loss-of-coolant accident.
    Very importantly, these new SMRs are much smaller than the systems 
designed in the 1990s; this choice was made to assure that they could 
be factory-built and shipped largely intact by rail for deployment. The 
ability to ``manufacture'' a reactor rather than ``constructing'' it 
onsite could prove to be a major advantage in terms of cost, schedule 
reliability, and even quality control.
    But will innovations like these allow this new breed of SMRs to be 
successful? Maybe.
    Many years of work remain for SMR vendors to refine their designs 
and allow for the development of realistic and reliable cost estimates. 
This is much the same state of affairs that existed in the 2002 
timeframe when DOE launched the Nuclear Power 2010 program (NP2010) to 
spur the development and certification of Generation III+ designs such 
as the AP-1000. At that time, the level of design completeness was 
insufficient to enable vendors to provide utilities with reliable cost 
and schedule estimates. After the cost-shared effort to complete more 
design and engineering work, vendors and utilities were able to 
negotiate contracts on a realistic basis. A decade later, utilities are 
awaiting final regulatory approval to begin constructing new plants 
based on technologies advanced by the Nuclear Power 2010 initiative. I 
understand that DOE has proposed a similar approach that is generally 
modeled after the success of NP2010 in order to further the development 
and licensing of SMRs.
    At the same time, one often hears that the industry is concerned 
that the NRC might make decisions that will render these new systems 
uncompetitive. Industry representatives have voiced concern over 
regulatory issues such as the number of operators needed to run these 
reactors, the size of the security forces needed to protect them, and 
the requirements for emergency planning. According to these concerns, 
if NRC holds SMRs to the same requirements as currently operating 
plants, the operating costs will be too high and utilities will turn 
away from the potential benefits of small reactors.
    In my opinion, these concerns are not well-grounded in an 
understanding of how the NRC develops regulatory requirements. Using 
security as a general example, I note that it is certainly true that 
NRC requires licensees to maintain significant security capabilities to 
protect existing nuclear powerplants from a range of potential threats. 
U.S. nuclear plants are protected by highly trained security 
professionals, many of whom have military or law enforcement 
backgrounds. With these people on the job, U.S. nuclear plants are the 
most secure, best-protected, privately owned commercial facilities on 
the planet. Given the threats that exist in the world today, it is 
essential that U.S. nuclear plants be secured in this manner.
    But the size of guard forces and the nature of security barriers 
protecting U.S. nuclear powerplants are not determined by NRC in 
accordance with a set formula that might somehow be applied to SMRs. 
The security strategies of each individual plant are designed to defend 
these facilities against postulated threats. These strategies are 
tested on a periodic basis using Force-on-Force exercises and when 
issues arise as a result of these exercises, licensees are obligated to 
make the necessary adjustments. If, for example, the layout of a 
particular plant creates a blind spot that could be exploited by a 
potential adversary, then the security strategy must be modified to 
eliminate this vulnerability.
    In my opinion, it would be perfectly reasonable to apply the same 
basic approach to SMRs. Future operators of SMRs should be required to 
deal with the same potential security threats as today's plants. The 
size and configuration of the security forces required for a given SMR 
should depend on what is needed to assure the protection of the 
facility. As issues are found, SMR operators should have the same 
responsibility as current licensees to close any security concerns.
    From the early discussions I've had with SMR vendors, I understand 
that they are designing facilities that are to be largely subsurface 
facilities with security requirements anticipated in the choices made 
with regard to their configuration. I would expect to see the 
regulatory process credit the security benefits of design, 
configuration, and plant lay-out--just as it does in the case of 
today's plants. I therefore believe the current regulatory approach 
provides a reasonable framework for industry to pursue the development 
and deployment of small reactors.
    Hopefully, this simple example illustrates what I believe is a 
vital point. Whatever else they are, SMRs are power reactors. While the 
size of SMRs may eventually prove to have financial or implementation 
benefits, the fact that they are ``small'' has far less significance 
from a regulatory standpoint than I think many expect. SMR concepts may 
have unique characteristics that prompt issues such as the size of 
security forces and control room operations, but the basic concepts 
related to the licensing of reactors should not fundamentally change as 
a result of the size of the reactors. That said, SMR vendors have 
proposed design concepts that, if fully realized, incorporate 
technologies and approaches that can have significant safety benefits. 
The application of passive safety design strategies, very large water 
inventories, and subsurface configurations all must be considered as 
risk-informed regulatory decisions are made.
    The safety and security of the American people require a clear, 
strong, and consistent regulatory approach if the construction and 
operation of SMRs is to be permitted. At the same time, it is only 
rational to apply this regulatory approach in a graded manner that 
takes account of the safety and security risks presented by each 
design. I have been informed that the NRC staff is already working on 
these issues and considering how best to apply this framework to SMR 
designs.
    While I have attempted to draw a clear line today to identify 
fundamental issues, there remain numerous complex regulatory decisions 
to be made. I still have many questions that will need to be answered. 
For example, what are the safety and security implications of 
installing single SMRs in remote locations? In the case of multi-module 
facilities, what measures might be necessary to assure the safety of 
adjacent modules should a problem occur with one reactor?
    It is important to highlight the fact that industry has not yet 
submitted SMR applications for regulatory review. Once this is done, 
I'm certain that for each SMR design, there will be a public, 
transparent discussion about these and no doubt many other issues. In 
anticipation of applications that could be forthcoming in 2012 and 
2013, the NRC staff recently issued a general schedule anticipating 
that SMR-relevant analysis, stakeholder interaction, and publication of 
guidance documents regarding issues such as emergency planning 
requirements and control room staffing will continue into next year.
    At the end of the day, as these issues are discussed and resolved, 
I do not expect that the outcomes of decisions made by NRC are likely 
to be the critical factor in the success or failure of SMRs. More 
likely, the success or failure of this newest attempt to build small 
reactors will depend on the ability of today's SMR vendors to avoid the 
pitfalls of the past.
    Thank you for your attention.

                   FEDERAL SUBSIDY FOR NUCLEAR POWER

    Senator Feinstein. Thank you very much.
    I have a question. In 2005, the Congress enacted 
legislation creating a 2-cent-per-kilowatt-hour subsidy for the 
first eight newly built nuclear reactors in our country. So 
there's an existing tax subsidy for nuclear power, and it's the 
same subsidy that wind power gets in value, as I understand it.
    The new plant being built in Georgia will claim this 
subsidy, but seven more plants will take it into the future. If 
those plants are SMRs, then they will get a subsidy. Is that 
correct, Secretary Lyons?
    Dr. Lyons. Senator Feinstein, I believe that is correct. I 
would need to reread exactly the wording as to whether there 
was an expiration date on the production tax credit, but the 
1.8-cents-per-kilowatt-hour that you described, yes, that is 
correct. It is limited per plant.

              SAFETY AND LOGISTICS OF CLUSTERING REACTORS

    Senator Feinstein. It is my understanding that these plants 
on their own are not cost effective and that the eventual plan 
is to cluster them, so that you cluster 6, 7, maybe 10, maybe 
15 of them together, again, without permanent waste disposal, 
with waste remaining on the site. As you look at that, do you 
find that to be in the best interests of this country?
    Dr. Lyons. As I noted in my written and oral comments, 
Senator, the plants are designed to be completely independent, 
from a safety standpoint, between modules. That has to be 
verified by the NRC. The vendors will need to convince the NRC 
that that is the case.
    In addition, the underground siting, which can be well 
hardened, the large quantities of water, as Commissioner 
Magwood mentioned, and the substantially enhanced safety 
features of these smaller units, yes, I think we can end up 
with a very effective safety case. But it remains to be 
verified or not verified by the NRC.
    Senator Feinstein. Are you saying then that lining up 5 or 
10 or more SMRs is safer than one 1,100, 1,200 megawatt plant?
    Dr. Lyons. I'm saying that the NRC will evaluate however 
many modules are at a site from a safety perspective just as 
they would evaluate the safety of a single unit. And to the 
extent that the vendor can demonstrate to the NRC's acceptance 
that that is achieved, then, yes, they can proceed.

                     NEED FOR FEDERAL APPROPRIATION

    Senator Feinstein. Okay. Your Department is proposing this 
$452 million program to pay one-half the cost of licensing, yet 
the firms before us today seeking this help are extremely 
financially capable. B&W, for instance, had revenues exceeding 
$2.6 billion in 2010.
    In other parts of our economy, we don't invest Federal 
dollars to pay for private industry to obtain a safety license. 
We don't help Ford comply with the crash test, nor do we pay 
Boeing to obtain FAA certification.
    I don't understand why it's necessary for the taxpayers to 
pay one-half of the cost of licensing. I just said it is likely 
that they will get a subsidy. Now, in addition to that, we're 
going to pay one-half the cost of licensing?
    Dr. Lyons. The NP2010 program was a 50-50 cost share and I 
think highly successful. As part of the competitive 
solicitation that we will put out for these plants, we will 
give preference to situations where a vendor comes in with 
greater than a 50-50 cost share. So I don't know what the cost 
share will actually end up being until we have gone through the 
procurement process.
    But I am quite confident that, looking at the number of 
countries that are moving ahead rapidly with SMRs, that if we 
want to see this country competing at the table for those 
opportunities that we do need to provide Government 
encouragement to take some of the first-mover costs of 
exploring whether this model--and there is uncertainty in this 
model--but whether this model of relying on manufacture in 
factory settings, can result in sufficient economies-of-scale 
to gain a competitive system.
    Senator Feinstein. Would you agree that taking two SMR 
designs through design certification will cost at least $1.5 
billion? That means the Federal cost share at 50-50 would need 
to be $750 million, not $452 million. Do you agree with that? 
If not, why not?
    Dr. Lyons. Until we have gone through the procurement 
process, I don't know what those numbers will be.
    If you look at NP2010, for the two designs, you would end 
up with numbers right in the range that you are describing. 
Those were for different systems. They're much larger systems, 
and exactly how the overall costs for the gigawatt class can be 
compared to the smaller units, I don't know until we go through 
the procurement process.
    And, in any case, I indicated that we will give preference 
to companies that can depart from the 50-50 cost share.

                         SPENT-FUEL MANAGEMENT

    Senator Feinstein. My final question: Why should the 
Government fund a new reactor design instead of investing in 
additional R&D to help find solutions to the waste issue?
    Dr. Lyons. Our research portfolio, I believe, has a 
balanced approach based on the resources that your subcommittee 
and others are providing to us. We certainly have strong 
programs looking at a range of different approaches to 
management of used fuel.
    We also are awaiting--and we won't be waiting much longer--
for the interim report of the Blue Ribbon Commission (BRC), 
which I'm hoping will provide useful guidance to the 
administration, and to the Congress to help to move toward what 
you indicated the country so needs, which is a comprehensive 
policy on used-fuel management.

         CONCERNS RAISED IN LIGHT OF JAPANESE NATURAL DISASTER

    Senator Feinstein. I would like to make a comment and then 
I'd like to turn it over to the ranking member. I have a hard 
time with a new start before we have any permanent method of 
fuel storage. It just seems that it is not the right thing to 
do for safety reasons.
    I was profoundly impacted by Fukushima and the Daiichi 
issues that have come up, and I think we haven't seen the end 
of reaction yet. You know, this was at the time the grouping of 
large reactors together. Now, with no permanent fuel safety, 
we're proposing, well, maybe we won't do large ones. Let's do 
small ones and let's group them together. But the bottom line 
is we still have no permanent spent-fuel site.
    To me, that is putting the cart before the horse. I think 
we have to assure people that the waste can be taken care of. 
We have a permanent site. We have regional sites. The 
Government is monitoring it. It is safe. We can't say that to 
people, and we've got $13 billion in liability for not doing 
it.
    Dr. Lyons. You just said that was a comment. Do you want me 
to respond or----
    Senator Feinstein. Sure. Spice it up a little.
    Dr. Lyons. No, I will agree with many of your comments, but 
we are waiting for the BRC. Many of the suggestions you have 
made are incorporated within at least the subcommittee 
recommendations of the BRC. It remains to be seen what the full 
committee report will be, and it remains to be seen how the 
administration and the Congress will respond to that report.
    But I think a very key point with the SMRs is that the 
spent-fuel pools for the SMRs are in hardened underground 
enclosures with very, very large quantities of water. These are 
extremely robust systems designed to hold fuel for many 
decades.
    When the fuel eventually emerges from underground, it 
certainly could go in dry casks, but we're also looking at a 
time probably at least 2050, 2060, something like that. I would 
sincerely hope that the actions of the BRC, the actions of the 
administration and the Congress will have us well on the path 
to used-fuel solutions well before then.
    Senator Feinstein. I hope so, too. Thank you, Mr. 
Secretary, Senator.
    Senator Alexander. I'll defer to Senator Graham since he 
didn't have an opening statement.
    Senator Graham. Well, I want to thank the chairman and the 
ranking member for having this hearing. This is a great debate, 
long overdue.
    Mr. Lyons, I've had the pleasure of meeting with you 
several times. Do you agree with the general statement that the 
world is passing us by as Americans when it comes to nuclear 
technology development?
    Dr. Lyons. I'm afraid, Senator Graham, that you would reach 
that conclusion from any number of indicators.
    Senator Graham. As a matter of fact, in the last 30 years, 
we haven't built a reactor and we're trying to build the first 
one in 30 years. Is that correct?
    Dr. Lyons. It's more than 30 years since the last one was 
licensed.
    Senator Graham. I stand corrected.
    So to my really good friend from California who is very 
smart and has asked a lot of good questions.
    Senator Feinstein. Uh-oh, something's coming.
    Senator Graham. Something's coming. That's right.

                       NUCLEAR WASTE REPROCESSING

    The point of not having a storage plan is that we don't 
have a plan at all for nuclear power. If you shut down Yucca 
Mountain after you've spent $12 billion and say you can't have 
central storage, you've got nobody to blame but yourself. The 
French have been reprocessing for decades. So have other 
countries, and we have no reprocessing plan.
    Now, here's where I want to applaud the administration. The 
small nuclear reactor--modular reactor is the future. Either 
we're going to embrace it or get left behind and all the jobs 
that are going to be created from the nuclear power industry 
are going to come overseas or they're going to come here in 
America. We've got a chance to lead, finally.
    I embrace the administration's effort to try to lead. Why 
should you subsidize this? Because if I'm in business, I would 
be very reluctant to spend a bunch of money in a country where 
nobody's been able to build a reactor for 30 years, we've been 
building airplanes all the time.
    So, if I'm in the private sector, I'd be willing to pony up 
some money, but this is a very iffy deal because the Congress 
seems to be very schizophrenic. We complain about the lack of a 
storage plan, but we won't allow storage at Yucca Mountain and 
we can't reprocess. So the only alternative available to you is 
on-site storage. That's the problem we've created. We've got 
nobody to blame but ourselves.
    Now, the administration has put together a blue ribbon 
panel. Are you familiar with that, Dr. Lyons?
    Dr. Lyons. Yes, Sir.
    Senator Graham. All right. Here's what I'm proposing to the 
ranking member: Secretary Chu is, I think, one of the best 
Secretaries of Energy I've dealt with since I've been here 
since 1995. He's convinced me rather than spending billions of 
dollars on trying to duplicate the French PUREX system, let's 
spend a decade or so looking at ways to come up with a 
reprocessing system that's a generation or two advanced.
    That makes sense to me, and I'm here to offer to the 
country H-Canyon at Savannah River Site as an experimental 
program to see how you could come up with advanced reprocessing 
technologies.
    So to the ranking member, our choices are not new starts, 
current system. We've got to do both. We're going to have to 
lead or we're going to follow.
    So I'll support the administration's efforts to come up 
with a new generation of reprocessing. That's going to cost 
money. At the same time you're spending money in developing the 
new reactors of the future, you have to do both. If you don't 
do both, you're going to get left behind on all fronts.
    So, Mr. Lyons, when it comes to SMRs, the United States 
Navy has been doing this for a long time, haven't they?
    Dr. Lyons. Yes, Sir.
    Senator Graham. I think an aircraft carrier is about 5,000 
people?
    Dr. Lyons. At least, yes.
    Senator Graham. Yes, or more. So the concept works. Now, 
whether or not we can get it for a city of 100,000, that's what 
you're trying to do. So on the nuclear waste storage front, I 
think it was a mistake to shut down Yucca Mountain, but I don't 
see that changing any time soon.
    So what I would like to do is urge this subcommittee to be 
forward thinking, embrace the administration's suggestion to 
develop a waste-disposal system beyond what the French have 
today and encourage this subcommittee to embrace the 
competition to build a SMR in America.

                     NUCLEAR TECHNOLOGY COMPETITION

    Mr. Lyons, do you believe more competition, generally 
speaking, is better than less?
    Dr. Lyons. Yes, Sir.
    Senator Graham. So rather than having two sites that could 
develop this technology, I would urge you to think outside the 
box and there are a bunch of companies out there who are dying 
to get into this business. There are a bunch of sites, like 
Savannah River Site, Tennessee Valley Authority (TVA) and other 
places, Oak Ridge that would love to be able to show the 
country we can do this safely. So would you consider more 
competition rather than less if the Congress gives you the go-
ahead?
    Dr. Lyons. Certainly, we will be following the direction of 
the Congress, Sir.
    Senator Graham. Okay. Now, my time is about up. Do you 
agree that we have to do two things at once? We have to come up 
with a way to reprocess beyond the French. And, at the same 
time, we have to invest in new starts, because, if we don't, 
America is going to lose a golden opportunity to create jobs 
and lead the world when it comes to clean energy.
    Dr. Lyons. Senator, I'll agree if you'll let me rephrase it 
ever so slightly.
    Senator Graham. You certainly can.
    Dr. Lyons. I very much agree we need to continue with new 
starts on power reactors. I would hope that instead of 
mandating that we move ahead with reprocessing that we could 
mandate that we move toward a comprehensive fuel management 
program for the country which may well include reprocessing, 
and that, to me, should be the subject of the research programs 
of the BRC output. There are----
    Senator Graham. But we have to do both at the same time. 
But we have to deal with the waste-stream situation as well as 
new starts. You can't pick one over the other?
    Dr. Lyons. That is the intent of the research program in my 
office and that is what we will continue to do assuming it is 
funded by----

                                H-CANYON

    Senator Graham. Final question. Do you see H-Canyon as a 
national asset when it comes to being able to figure out what 
kind of waste disposal systems to adopt in the future?
    Dr. Lyons. H-Canyon is very much a national asset, and, as 
you know, Senator, we're in the process of evaluating ways in 
which H-Canyon can contribute to research in used-fuel 
management.
    Senator Graham. Well, I applaud your efforts.
    And, Mr. Magwood, I'm sure you've enjoyed these 
conversations. Do you believe as an individual member of the 
board that the country should lead when it comes to SMR because 
it is indeed the future of nuclear power?
    Mr. Magwood. Well, certainly, from an NRC standpoint, I 
don't think we're in a position to encourage one way or the 
other whether we lead in those technologies or not.
    What I can say is that we're going to be prepared to deal 
with whatever applications come before us, and I can assure you 
that the staff is very eager to take on the new challenge that 
these technologies present.
    Senator Alexander. Thank you, Senator Graham.
    Senator Feinstein had to take a call. I hope she would hear 
the answers to some of these questions, but we can go back over 
them in a little time.

                       ON-SITE SPENT-FUEL STORAGE

    Mr. Magwood, has the NRC made a decision about whether it's 
safe to store spent fuel on site?
    Mr. Magwood. Yes, the NRC has issued a waste-confidence 
determination--in fact, we did it just late last year--
indicating that spent fuel can be stored safely on site for up 
to 60 years past the licensed life of a reactor.
    Senator Alexander. Up to 60 years. And that's a 
determination by the NRC.
    Mr. Magwood. Yes.
    Senator Alexander. The chairman of the NRC has testified 
that spent-fuel rods can be safely stored on site for----
    Senator Feinstein. 100 hundred years.
    Senator Alexander [continuing]. 100 hundred years. And Dr. 
Chu has said the same.
    Mr. Magwood or Mr. Lyons, do either of you have--my 
understanding of the President's BRC to study used nuclear fuel 
is that while we safely store this material on site, which--I 
mean, it's the job of the NRC to decide whether we can or not, 
and they have repeatedly said we can. And the amount of mass 
we're talking about is about one football field worth of 
material 20 feet deep.
    Do you think it's likely that within the next 10 to 20 
years that we'll come up with new and better ways to recycle 
used nuclear fuel in a way that doesn't isolate plutonium and 
that reduces the mass even further? Either of you want to 
comment on that?
    Dr. Lyons. Well, certainly, Senator, the research programs 
within our fuel cycle R&D program are focused on exploring more 
advanced approaches than PUREX toward used-fuel management.
    At the same time, we're definitely not ruling out 
variations on the--cycle that we have now. And, again, the BRC 
will provide advice very soon now--July 29 being the deadline--
on their views for how to move ahead with an effective used-
fuel management program for the Nation.
    Senator Alexander. So where we really are is that the 
people who are in charge of looking at the safety of nuclear 
power and have so far presided over a system where there's 
never been a death in a commercial reactor and where no one was 
hurt at Three Mile Island and they have been so effective in 
looking at safety that we haven't been able to build any for 30 
years, they've said that we can store it safely on site for 60 
years.
    And the President has said--he's appointed a distinguished 
commission to say let's look carefully at the very best ways to 
recycle used nuclear fuel as a way of reducing any 
proliferation risk and reducing the mass.
    I want to go to a couple of points that the chairman 
raised, which I think are appropriate points, first. Madam 
Chairman, I agree with you that a good use of our research and 
development money would be to take the recommendations of the 
President's BRC on used nuclear fuel and do an extensive--In 
fact, I've described it as a mini Manhattan Project to find out 
the very best way to do it. And I think that's an appropriate 
use.
    I've come to the conclusion that R&D is a proper use of 
Federal money and that jump starting new technologies may be 
and that long-term subsidies probably are not, which leads me 
to the subsidy point that we've gone back and forth about a 
little bit.
    I support, for example, jump starting electric cars. The 
President has supported that. There's a bill in the Congress to 
do that, but not over the long term.
    I support jump starting better batteries. I would like to 
see us have several of these hubs, as we've discussed, which I 
call mini Manhattan Projects, in recycled nuclear fuel, in 
batteries, in making solar cost $1 a watt to give us a jump 
start, but then leave it to the private sector.
    And so that's the line I would draw is to say that R&D for 
batteries, for solar, for the first small modular nuclear 
reactors is appropriate. Long-term subsidies are not.
    I would support subsidies for offshore wind, which we don't 
know how to do yet, but I don't support them anymore for the 
mature technology.
    Mr. Lyons, for the 104 commercial reactors that are 
operating today, what is the Government subsidy in terms of 
operating cost to those 104 reactors?
    Dr. Lyons. There is none.
    Senator Alexander. There is none. There's none at all. And 
we have $26 billion of subsidies going to wind power over the 
next 10 years. It's already committed to.
    As far as the production tax credit for nuclear power, it 
probably won't be available to the small reactors because that 
production tax credit is limited to the first 6,000 megawatts. 
No one's getting it yet because there have been no new plants 
and there probably won't be small reactors in time to take 
advantage of it.
    Mr. Magwood, I wonder if you or Mr. Lyons would have any 
comment on this quote by Dr. Moniz who will testify later this 
morning. In referring to the SMR, he said the program proposed 
by the administration is modest, but sensible.
    Obviously, the Federal budget deficit makes it difficult to 
start any new programs, but a hiatus in creating new clean-
energy options, be it nuclear SMRs or renewables or advanced 
batteries, will have us looking back in 10 years lamenting the 
lack of a technology portfolio needed to meet our energy and 
environmental needs economically or to compete in the global 
market. Let's get on with it.
    Do either of you have a comment on that?
    Dr. Lyons. I am very happy to endorse Professor Moniz's 
comments and I have also learned over the years that one had 
better be very careful before one argues with Professor Moniz 
on an issue.
    Senator Alexander. Mr. Magwood.
    Mr. Magwood. I've trained myself not to answer questions 
like that since moving into the NRC. I'll let Dr. Lyons take 
that.
    Senator Alexander. I understand that, and, Madam Chairman, 
I thank you for the time.
    Senator Feinstein. Oh, thank you very much.

                       COST TO FEDERAL GOVERNMENT

    I have another question and I don't know whether the 
commissioner can explain this or Dr. Lyons can explain it, but 
why does it cost $1.5 billion to take this small reactor design 
through the NRC design process? Could even be more even with a 
50-50 cost-share basis.
    Mr. Magwood. Well, I can start that and Dr. Lyons can 
certainly add to it.
    I think that when--I'm not familiar with the specific 
number you're quoting, so I don't know what entirely is 
contained in that $1.5 billion, but when I reflect on NP2010, 
which was going on while I was at DOE, the money that was spent 
was not simply for licensing costs at the NRC.
    A lot of the money was also spent for design and 
engineering work. And it was work that was necessary to make 
not just to answer questions from the NRC. It was work that was 
done to establish sufficient design detail to make negotiations 
with utilities viable, because before that point there wasn't 
enough information for utilities to make a decision.
    So I think that the money that gets spent on these programs 
isn't just for the licensing. It's also to develop the 
engineering work in the background to be able to have those 
commercial discussions.
    Dr. Lyons. The only thing I'd add to that is certainly some 
of the NRC questions can be very detailed and should be very 
detailed and do require significant engineering design for the 
companies to provide effective answers to the NRC, and that 
also--that certainly ties in with the commissioner's response.
    Senator Feinstein. Yes. I understand that, but these are 
very profitable companies. We've already established they're 
going to be subsidized. Now, something that I learned today is 
that the engineering phase is essentially going to get paid for 
by the Federal Government, and I have a problem with that.
    You know, I'm watching everything get cut back. We're in 
one fierce argument over the debt limit. There isn't going to 
be money. We've had two continuing resolutions during the year 
that have cut back money, and the one thing that is going ahead 
without any problem so far is the nuclear stuff. Everything 
else is getting cut back.
    It seems to me that we're in a brave new world and these 
are big companies. They make profits. This is going to be very 
profitable. It's estimated it's going to raise everybody's 
utility rates. To me, it's just not the best thing since sliced 
bread.
    Dr. Lyons. Senator, if I may.
    Senator Feinstein. Go ahead, please.
    Dr. Lyons. Whether these units will be profitable remains 
to be seen. There are significant first-mover costs that they 
are going to have to take on in order to prove whether this 
model can be effective.
    So, certainly, I'm sure the companies that you'll talk to 
in a second panel are hoping to be profitable, but I think they 
would agree that there is substantial uncertainty in the models 
at this point as to exactly what will be the outcome of this.
    The other point I would make is you've highlighted the 
large companies several times, and you've also suggested 
concern over the 50-50 or whether it should be more cost share.
    I've been in several discussions with different folks on 
whether the number should be changed from 50-50. To me, it is 
far better to say as we are doing--that we will give preference 
to someone going above 50-50, but we won't put that in the 
demand.
    If you do demand a very large industry share, you will, I 
think, be guaranteeing that only the large companies can 
compete, and some of the companies who will be sitting here in 
a few minutes I don't think would fit into the category of 
large companies. Some would. Some wouldn't.
    I don't know if that response helps.
    Senator Feinstein. Well, it does help. It gives me 
something else to think about as to whether this is appropriate 
for the Government to do in a day when we just don't have 
money.
    I mean, we face terrible things happening right now on 
August 3 and yet here's a whole, huge, new-start program that 
I'm trying to grasp what the public costs are. Does this add to 
our liability of having no permanent waste? We'll get sued; I'm 
sure, somewhere and have to pay for the fact that we're keeping 
this hot stuff in pools and in casks on site.
    You know, I'm trying to, I guess, grasp the whole picture 
of what it means. Does it increase rates 10 to 30 percent as 
I'm told? Do they have to be clustered together to be cost 
efficient?
    I think all of this goes into the decision as to whether 
the Government should subsidize which we're already doing, and 
then provide these additional funds as well, so that the 
Government is bearing, really, a substantial part of the cost, 
well more than 50 percent with the subsidy.
    Anyway, those are just my humble thoughts. Do you have any 
comments you want to make?

                    NUCLEAR PLANT OPERATION SUBSIDY

    Senator Alexander. The only one, Madam Chairman, I think 
it's important that we establish as a matter of fact I asked 
Dr.--Mr. Lyons, is there any Government subsidy to the 
operation of the 104 commercial nuclear plants we have today 
and his answer was, ``No."
    Senator Feinstein. That's because the subsidy was passed in 
2005.
    Senator Alexander. That's correct. There's a production tax 
credit----
    Senator Feinstein. Two cents per kilowatt----
    Senator Alexander. Two cents per kilowatt hour for new 
nuclear plants of which there haven't been any.
    Senator Feinstein. Correct.
    Senator Alexander. Now, it's unlikely--and we can ask the 
others here when they come--that the new SMRs would benefit 
from that because under the terms of the law they'd have to be 
under construction by 2014 and in operation by January 1, 2021, 
and there'd be a limit of $175 million for that and the 
estimate is there might be two by then.
    So there's no subsidy today for the operation of a nuclear 
powerplant. There is for new ones up to 6,000 megawatts. It's 
limited and it's unlikely, I believe, that these small reactors 
would benefit.
    At the same time, if you'll excuse me for mentioning it 
again, the production tax credit for wind, a mature technology, 
continues through this year and next year at the rate of a 
couple of billion or $3 billion a year.
    So we could take some of that money and use it for this 
promising new technology. I'd like to make a difference between 
jump starting new technologies and subsidizing mature 
technologies.
    Senator Feinstein. I very much appreciate that. I think 
that's a lot of food for thought. I think, before we get into 
it, we really need to think it out what it actually means, and, 
hopefully, the next panel will be able to add some additional 
clarity.
    Secretary Lyons, Mr. Magwood, thank you very much for 
coming. Did you have a comment you wanted to make?

                     LESSONS LEARNED FROM FUKUSHIMA

    Mr. Magwood. I just want to make one comment, something you 
said earlier in your opening remarks--which I think covered a 
lot of important issues. There was one item I wanted to 
highlight.
    You mentioned the example of the Fukushima event, and, as 
you know, the NRC is working very hard to deal with the lessons 
learned at Fukushima.
    And for me personally, and I think you had the same 
reaction, watching the four reactors lined up and realizing 
that the loss of one of those reactors could lead to a very 
unfortunate set of cascading events certainly gives one pause 
when you think about the idea of having multiple reactors in 
one place.
    One thing I'd like to say about that is that, first, I 
myself have a lot of questions about how these multi-module 
reactors will work and what the safety parameters will be and 
how we'll make sure that if there's a problem in one module 
that we'll be able to protect the rest of them and make sure 
that there's not a cascading event. So that's something we're 
looking forward to interacting with the vendors about when they 
make their applications.
    But as we work to learn the lessons of Fukushima, whatever 
conclusions we reach, those conclusions and those lessons 
learned will be applied to every technology that ever comes 
before the NRC. It'll apply to the existing reactors. It'll 
apply to Generation III+ reactors like the AP-1000. And if 
they're ever approved, it'll apply to the SMRs as well. So we 
will apply those lessons learned well into the future. We'll 
not stop with what we're doing today.
    Senator Feinstein. Well, I very much appreciate that, and 
you certainly have my full support to do that. I mean, it's 
clear that the NRC has a big, big task in front of it.
    So I thank you for being here and for representing your 
personal views. And I thank you, Secretary Lyons.
    And we'll move on to the next panel.
    Welcome, gentlemen. I wish I could say ladies and 
gentlemen, but this is a field that we clearly need to level in 
terms of female gender.
    In any event, what I'd like to do is just begin with Dr. 
Lyman and go right down the line, and we have a very 
distinguished wrap-up person in Dr. Moniz.
    So, Dr. Lyman, why don't you begin?

STATEMENT OF DR. EDWIN LYMAN, SENIOR SCIENTIST, GLOBAL 
            SECURITY UNION OF CONCERNED SCIENTISTS

    Dr. Lyman. Good morning. On behalf of the Union of 
Concerned Scientists (USC) I would like to thank you, Chairman 
Feinstein, Ranking Member Alexander, for the opportunity to 
provide our views on the safety and economics of LW SMR.
    UCS is neither pro- nor anti-nuclear power, but we have 
served as a nuclear power safety and security watchdog for more 
than 40 years.
    The Fukushima Daiichi crisis has revealed significant 
vulnerabilities in nuclear safety and has shaken public 
confidence in nuclear power around the world.
    If we want to reduce the risk of another Fukushima in the 
future, new nuclear plants will have to be significantly safer 
than the current generation. And to this end we do believe that 
it is appropriate for some level of support for the DOE to work 
with the nuclear industry to develop safer nuclear plant 
designs.
    But we do think that that money should be directed to spend 
taxpayer money only on supportive technologies that have clear 
potential to significantly increase levels of safety and 
security compared to currently operating reactors.
    Also, in light of Fukushima, we do believe it is 
appropriate for the Department to devote resources to 
addressing safety and security issues with the current fleet 
that have been revealed by the Fukushima crisis.
    Proponents of SMRs claim that their designs have inherent 
safety features compared to larger reactors and some even argue 
their reactors would have been able to withstand an event as 
severe as Fukushima.
    We find these claims to be unpersuasive. For any plan, 
whether it's large or small, the key factor is the most severe 
event that it's designed to withstand, the so-called maximum 
design-basis event. But unless nuclear safety standards for new 
reactors are strengthened, one cannot expect that either small 
or large reactors will be able to survive the beyond-design-
basis event like Fukushima.
    Although some LW SMR concepts may have desirable safety 
characteristics, unless they are carefully designed, licensed, 
deployed, and inspected they could pose comparable or even 
greater risks than large reactors.
    Some SMR vendors argue their reactors will be safer because 
they can be built underground. While underground siting could 
clearly enhance protection against certain events, it could 
also have disadvantages.
    For instance, at Fukushima, emergency diesel generators and 
electrical switched gear were actually installed below grade to 
reduce their vulnerability to seismic events, but this 
increased their vulnerability to flooding. In the event of a 
serious accident, emergency crews could have difficulty 
accessing underground reactors if intervention was necessary.
    Some SMR vendors emphasize their designs are passively 
safe, but no credible reactor design is completely passive and 
can shut itself down in every circumstance without need for 
intervention.
    Small reactors may have an advantage because the lower the 
power of a reactor, the easier it may be to cool through 
passive means, but accidents involving multiple small units may 
cause complications that could outweigh the advantages of 
having lower heat removal requirements for each unit.
    Moreover, passively safe reactors do require some 
equipment, such as valves that are designed to operate 
automatically, but are not 100 percent reliable.
    All passive systems will have to be equipped or should be 
equipped with highly reliable active backup systems in order to 
compensate for these uncertainties, but more backups mean 
generally higher costs and this poses a particular problem for 
SMRs, which begin with a large economic disadvantage compared 
to large reactors.
    Given there is no apparent capital cost benefit for SMRs, 
we are concerned that the industry is trying to cut the 
potential operating maintenance costs by asking the NRC for 
regulatory relief for a number of requirements.
    These do include reduced operator staffing for each unit 
and potentially reducing the number of operators that you need 
to monitor the safety of each individual unit. They also are 
interested in reducing emergency planning zone sizes and also 
adjusting security requirements that may end up with a reduced 
number of security officers.
    We think one of the early lessons of Fukushima is that you 
need to prevent serious accidents with significant margins of 
safety, so now is not the time to start reducing regulatory 
requirements for small reactors.
    Emergency planning zone should be maintained. Security 
certainly should be maintained, especially in light of 
potential increased threats following the potential for 
retaliation of the death of Osama bin Laden, and we believe 
that the multiple reactor issues will require additional 
enhancements to regulations for collocated units to make sure 
that you do not have interactions that can affect the safety of 
each site because of an accident its neighbors.
    So all these suggest that we need to increase nuclear 
safety standards, not reduce them, and to the extent that that 
may further impact the economics of SMRs, it could be an issue 
for their economic viability.
    Just one last point, with regard to export, we believe that 
SMRs should only be exported to areas where there's an 
established infrastructure to cope with emergencies and you can 
provide sufficient numbers of trained operator and security 
staff.

                           PREPARED STATEMENT

    We do agree that U.S. safety standards are worth exporting, 
but that's exactly why we need to maintain and strengthen them 
rather than weaken them.
    And I refer to my written remarks for more details. Thank 
you.
    [The statement follows:]

                 Prepared Statement of Dr. Edwin Lyman

    Good morning. On behalf of the Union of Concerned Scientists (UCS), 
I would like to thank Chairman Feinstein, Ranking Member Alexander, and 
the other distinguished members of the subcommittee for the opportunity 
to provide our views on the safety and economics of light water small 
modular nuclear reactors.
    UCS is neither pro- nor anti-nuclear power, but has served as a 
nuclear power safety and security watchdog for more than 40 years. UCS 
is also deeply concerned about global climate change and has not ruled 
out an expansion of nuclear power as an option to help reduce 
greenhouse gas emissions--provided that it is affordable relative to 
other low-carbon options and that it meets very high standards of 
safety and security. However, the Fukushima Daiichi crisis has revealed 
significant vulnerabilities in nuclear safety and has shaken public 
confidence in nuclear power. If we want to reduce the risk of another 
Fukushima in the future, new nuclear plants will have to be 
substantially safer than the current generation. To this end, we 
believe that the nuclear industry and the Energy Department should work 
together to focus on developing safer nuclear plant designs, and that 
the Congress should direct the Energy Department to spend taxpayer 
money only on support of technologies that have the potential to 
provide significantly greater levels of safety and security than 
currently operating reactors. The nuclear industry will have to work 
hard to regain the public trust.
    Proponents of small modular reactors (SMRs) claim that their 
designs have inherent safety features compared to large reactors, and 
some even argue that their reactors would have been able to withstand 
an event as severe as Fukushima. We find these claims to be 
unpersuasive. For any plant--large or small--the key factor is the most 
severe event that the plant is designed to withstand--the so-called 
maximum ``design-basis'' event. Unless nuclear safety requirements for 
new reactors are significantly strengthened, one cannot expect that 
either small or large reactors will be able to survive a beyond-design-
basis event like Fukushima. Although some light-water SMR concepts may 
have desirable safety characteristics, unless they are carefully 
designed, licensed, deployed and inspected, SMRs could pose comparable 
or even greater safety, security and proliferation risks than large 
reactors.
    Some SMR vendors argue that their reactors will be safer because 
they can be built underground. While underground siting could enhance 
protection against certain events, such as aircraft attacks and 
earthquakes, it could also have disadvantages as well. For instance, 
emergency diesel generators and electrical switchgear at Fukushima 
Daiichi were installed below grade to reduce their vulnerability to 
seismic events, but this increased their susceptibility to flooding. 
And in the event of a serious accident, emergency crews could have 
greater difficulty accessing underground reactors.
    Some SMR vendors emphasize that their designs are ``passively 
safe''. However, no credible reactor design is completely passive and 
can shut itself down and cool itself in every circumstance without need 
for intervention. Some reactor designs--large or small--have certain 
passive safety features that allow the reactor to depend less on 
operator action for a limited period of time following design-basis 
accidents. Small reactors may have an advantage because the lower the 
power of a reactor, the easier it is to cool through passive means such 
as natural convection cooling with water or even with air. However, 
accidents affecting multiple small units may cause complications that 
could outweigh the advantages of having lower heat removal requirements 
per unit. Moreover, passively safe reactors generally require some 
equipment, such as valves, that are designed to operate automatically, 
but are not 100 percent reliable.
    Operators will always be needed to monitor systems to ensure they 
are functioning as designed, and to intervene if they fail to do so. 
Both passive systems and operator actions would require functioning 
instrumentation and control systems, which were unreliable during the 
severe accidents at Three Mile Island and Fukushima. Passive systems 
may not work as intended in the event of beyond-design-basis accidents, 
and as result passive designs should also be equipped with highly 
reliable active backup systems and associated instrumentation and 
control systems.
    But more backup systems generally mean higher costs. This poses a 
particular problem for SMRs, which begin with a large economic 
disadvantage compared to large reactors.
    According to the standard formula for economies-of-scale, the 
overnight capital cost per kilowatt of a 125 megawatt reactor would be 
roughly 2.5 times greater than that of a 1,250 megawatt unit, all other 
factors being equal. Advocates argue that SMRs offer advantages that 
can offset this economic penalty, such as a better match of supply and 
demand, reduced upfront financing costs, reduced construction times, 
and an accelerated benefit from learning from the construction of 
multiple units. However, a 2007 paper by Westinghouse scientists and 
their collaborators that quantified the cost savings associated with 
some of these factors found that they could not overcome the size 
penalty: the paper found that at best, the capital cost of four 335 
megawatt reactors was slightly greater than that of one 1,340 megawatt 
reactor.\1\
---------------------------------------------------------------------------
    \1\ M.D. Carelli et al., ``Economic Comparison of Different Size 
Nuclear Reactors'', 2007 LAS/ANS Symposium, Cancun, Mexico, 1-5 July 
2007. Available at http://www.las-ans.org.br/Papers%202007/pdfs/
Paper062.pdf.
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    Given that there is no apparent capital cost benefit for SMRs, it 
is not surprising that the SMR industry is seeking to reduce operating 
and maintenance (O&M) costs by pressuring the Nuclear Regulatory 
Commission (NRC) to weaken certain regulatory requirements for SMRs. 
Deputy Assistant Energy Secretary John Kelly told the NRC in March that 
the NRC's regulatory requirements for SMRs will ``directly influence 
the operating cost, which will be a large determinant into the economic 
feasibility of these plants.''
    For example, the industry argues that regulatory requirements for 
SMRs in areas such as emergency planning, control room staffing, and 
security staffing can be weakened because SMRs contain smaller 
quantities of radioactive substances than large reactors and therefore 
pose lower risks to the public. The NRC is currently considering the 
technical merits of these arguments.
    However, small reactors will not necessarily be safer than large 
reactors on a per-megawatt basis. Simply put, the risk to the public 
posed by one 1,200-megawatt reactor will be comparable to that posed by 
six 200-megawatt reactors (assuming that all units are independent), 
unless the likelihood of a serious accident is significantly lower for 
each small reactor. But such an outcome will not be assured under the 
current regulatory regime. The NRC has a long-standing policy that new 
nuclear reactors--large or small--are not required to be safer than 
operating reactors. One consequence of this policy is that new reactor 
designs that have inherent safety features not present in current 
reactors may not actually end up being safer in the final analysis if 
designers compensate by narrowing safety margins in other areas, such 
as by reducing containment strength or the diversity and redundancy of 
safety systems. Any safety advantages will be eroded further if the NRC 
allows SMR owners to reduce emergency planning zones and the numbers of 
required operators and security officers.
    One of the early lessons from Fukushima is that prevention of 
serious nuclear accidents requires significant margins of safety to 
protect against extreme events. Earlier this week, UCS and the NRC's 
Fukushima Near-Term Task Force each issued recommendations for 
strengthening nuclear safety requirements. Consider the following 
examples:
  --Emergency planning zones around U.S. nuclear plants extend to a 
        radius of 10 miles. Yet significant radiological contamination 
        from the Fukushima accident has been detected well beyond a 
        distance of 10 miles from the plant. In fact, radiation levels 
        high enough to trigger resettlement if they occurred in the 
        United States have been detected more than 30 miles away from 
        the Fukushima site. The discussion we should be having today is 
        whether current emergency planning zones need to be increased, 
        not whether we can shrink them for SMRs.
  --As we have seen at Fukushima, nuclear plants with multiple reactors 
        that experience severe accidents present extreme challenges. In 
        its June 2011 report to the International Atomic Energy Agency, 
        the Nuclear and Industrial Safety Agency of Japan (NISA) stated 
        that:

          ``The accident occurred at more than one reactor at the same 
        time, and the resources needed for accident response had to be 
        dispersed. Moreover, as two reactors shared the facilities, the 
        physical distance between the reactors was small . . . The 
        development of an accident occurring at one reactor affected 
        the emergency responses at nearby reactors.
          ``Reflecting on the above issues, Japan will take measures to 
        ensure that emergency operations at a reactor where an accident 
        occurs can be conducted independently from operation at other 
        reactors if one power station has more than one reactor. Also, 
        Japan will assure the engineering independence of each reactor 
        to prevent an accident at one reactor from affecting nearby 
        reactors. In addition, Japan will promote the development of a 
        structure that enables each unit to carry out accident 
        responses independently, by choosing a responsible person for 
        ensuring the nuclear safety of each unit.''

          The NRC will need to consider these issues in developing its 
        licensing approach for small modular reactor sites, which may 
        host two to four times the number of units present at the 
        largest U.S. nuclear plant site today. The NRC has acknowledged 
        that some of its current regulations and procedures do not 
        account for events affecting multiple units on a site. For 
        instance, according to the NRC, emergency planning regulations 
        focus on single-unit events with regard to requirements for 
        emergency operations staffing, facilities, and dose projection 
        capability. Also, the NRC's guidance for probabilistic risk 
        assessment, an analysis tool which is used in many regulatory 
        applications, does not require the consideration of multiple-
        unit events. The NRC Fukushima Near-Term Task Force is 
        recommending that emergency preparedness requirements be 
        revised to address multi-unit events, which could have a 
        significant impact on SMR licensing.
  --Fukushima also demonstrated how rapidly a nuclear reactor accident 
        can progress to a core meltdown if multiple safety systems are 
        disabled. A well-planned and executed terrorist attack could 
        cause damage comparable to or worse than the earthquake and 
        tsunami that initiated the Fukushima crisis, potentially in 
        even less time. And although Osama bin Laden is gone, the 
        terrorist threat to domestic infrastructure may actually 
        increase over time if al Qaeda seeks to retaliate. This is the 
        wrong time to consider reducing security requirements for 
        nuclear powerplants, regardless of their size. However, SMR 
        vendors have emphasized that reducing security staffing is 
        critical for the economic viability of their projects. 
        Christofer Mowry of B&W told the NRC in March that ``whether 
        SMRs get deployed in large numbers or not is going to come down 
        to operations and maintenance (O&M). And the biggest variable 
        that we can attack directly . . . is the security issue.'' A 
        Nuclear Energy Institute representative said in a presentation 
        in June that ``optimal security staffing levels (for SMRs) may 
        appreciably differ from current levels.''
    UCS is also concerned that reducing safety and security 
requirements for SMRs could facilitate their sale to utilities or other 
entities in the United States and abroad that do not have prior 
experience with nuclear power. Some SMR vendors argue that their 
technology is so safe that it can be deployed to remote areas, military 
bases, and countries in the developing world that have relatively low 
electric demand and no nuclear experience or emergency planning 
infrastructure. However, SMRs deployed in this manner could raise 
additional safety and security concerns compared to their deployment by 
established and experienced nuclear utilities.
    The distributed deployment of small reactors would also put great 
strains on existing licensing and inspection resources. Nuclear 
reactors are qualitatively different from other types of generating 
facilities, not least because they require a much more extensive safety 
and security inspection regime. Similarly, deployment of individual 
small reactors at widely distributed and remote sites around the world 
would strain the resources of the International Atomic Energy Agency 
(IAEA) and its ability to adequately safeguard reactors to guard 
against proliferation, since IAEA inspectors would need to visit many 
more locations per installed megawatt around the world. Maintaining 
robust oversight over vast networks of SMRs around the world would be 
difficult, if feasible at all.
    UCS believes that SMRs are only suitable for deployment where there 
is an established infrastructure to cope with emergencies, and if 
sufficient numbers of trained operator and security staff can be 
provided. It is unrealistic to assume the near-term availability of 
SMRs that are so safe they can be shipped around the world without the 
need to ensure the highest levels of competence and integrity of local 
regulatory authorities, plant operators, emergency planning 
organizations, and security forces. Fukushima has demonstrated the 
importance of timely offsite response in the event of a severe 
accident, so the accessibility of reactors in remote locations also 
must be a prime consideration. Even within the United States, small 
utilities with little or no experience in operating nuclear plants need 
to fully appreciate the unique challenges and responsibilities 
associated with nuclear power and should not expect that small modular 
reactors will provide any relief in this regard.
    UCS acknowledges the concerns of Members of Congress who fear that 
the United States is lagging in creation of a robust SMR export market 
and may lose out to a country like China if it takes too long to 
develop and license SMRs. However, we believe that the best way for the 
United States to maintain a competitive edge is to establish American 
brands with the highest safety standards. If, as some say, NRC design 
certification is seen as a ``gold standard'' worldwide, it makes sense 
to preserve that standard rather than erode it by weakening SMR safety 
requirements.
    To this end, the Congress should prohibit DOE from selecting SMR 
proposals for its cost-sharing program if their business case depends 
on a weakening of NRC safety and security regulations or marketing 
reactors to countries with inadequate safety rules and regulatory 
oversight mechanisms.
    Thank you for your attention. I would be pleased to answer your 
questions.

    Senator Feinstein. Thank you, Dr. Lyman.
    Mr. Ferland is representing Westinghouse.

STATEMENT OF E. JAMES FERLAND, JR., PRESIDENT, AMERICAS 
            WESTINGHOUSE ELECTRIC COMPANY, LLC

    Mr. Ferland. Thank you. I'm very happy to be here this 
morning, Madam Chairman----
    Senator Feinstein. Could you press your microphone button?
    Mr. Ferland. Chairman Feinstein and Ranking Member 
Alexander, thank you very much for the opportunity to speak to 
you this morning.
    I am here representing Westinghouse where I serve as the 
president and oversee our operations in the United States. And 
what I'd like to do in my few minutes of introduction is see if 
I can address some of the items that you highlighted this 
morning in your introductory comments.
    So let me start with the success of NP2010. NP2010 was a 
collaboration cost-sharing program meant to kick start 
Generation III technologies.
    Westinghouse was a participant in that program, and the end 
result for us was an AP-1000 that's in the final stages of 
design certification today.
    And, as you know, four units in the United States are under 
preconstruction right now, two in Georgia and two in South 
Carolina, as a direct result of the success of that program, 
generating in excess of 1,000 jobs to those sites, and that 
number will multiply once we receive the design certification 
and the combined operating license and we move into nuclear 
construction.
    The theory behind NP2010 was as you stated. It was to kick 
start the design certification on these new passive-safety 
plants.
    And to give you a ballpark feel from a numbers perspective, 
the cost share received from Westinghouse as a result of NP2010 
was about $300 million, which was matched by Westinghouse 
upfront, and then the cost share stopped, and Westinghouse, on 
its own, given that we'd proven the viability of that design, 
spent--and is still spending--several hundred million dollars 
more on our own with no Government money to take that plant to 
completion where we have a set of design drawings that are 
ready to go to the field.
    So that program worked very well. Our view is that if we 
could extend the successes of NP2010 into a SMR program where, 
again, we used the concept to kick it off and get it going, 
prove the economic viability, get through the upfront design 
certification, we can move to a new generation of technology 
centered in the United States generating thousands of U.S. jobs 
and putting us in the middle of new nuclear development going 
forward. So we see an awful lot of benefit in the concept of an 
SMR collaboration cost-sharing program.
    A couple of comments on the Westinghouse SMR from a safety 
perspective, again, a passive plant, so we're taking advantage 
of what we learned in NP2010 with the AP-1000s that we're 
working on today in extending those passive features--smaller 
plant, single containment with everything inside it.
    So that reduces the amount of piping, significantly 
enhances the safety profile of those units, and, again, we can 
rely even more on passive technology--gravity, natural 
circulation--in the event of an incident.
    So, for example, on the Westinghouse SMR, in the event of a 
significant incident--for example, a loss of offsite power, as 
happened in Fukushima--the Westinghouse SMR would look at 7 
days, no operator action, no outside power required, where 
those units taking advantage of the passive features of the 
plant would be safe and give us plenty of time to go ahead and 
respond, so a significant step in safety in that design.
    Stand-alone units, I think very good questions. 
Commissioner Magwood, Assistant Secretary Lyons addressed some 
of the concerns about multiple units next to one another.
    The concept behind the Westinghouse SMR is that each unit 
is stand-alone, has stand-alone people, and has stand-alone 
equipment, no common systems. So each unit is able to fend for 
itself in that matter.
    I recognize that we have the detailed design yet to finish 
to make sure we can stand up to that, and we will receive 
extensive questioning and scrutiny from the NRC as we go 
through the design certification process, and from the public, 
to be able to prove that, but it's my belief that you can 
safely put stand-alone units next to each other, SMRs, and not 
magnify a potential problem. So that's our responsibility to 
prove that to the NRC, but I believe that will be the outcome 
of this.
    From an economic competitive standpoint, the key is to take 
advantage of modular construction, factory construction, 
shipping to site, and we do need some scale to make that 
happen, as you mentioned.
    Our numbers upfront show at about 10 units we come down the 
learning curve to the extent where we believe these are now 
competitive at or below the price of current units today.

                           PREPARED STATEMENT

    Last comment, on safety, safety is always our number one 
priority. That's the case at Westinghouse and in this industry 
as a whole, and we would not ever put forth a design that 
lowered safety standards, and we would never expect the NRC to 
lower safety standards. So we expect to live up to the 
standards that are in place today or will be in the future when 
we incorporate the lessons learned from Fukushima.
    Thank you.
    [The statement follows:]

              Prepared Statement of E. James Ferland, Jr.

    Chairman Feinstein, Ranking Member Alexander, and members of the 
subcommittee. Thank you for the opportunity to provide Westinghouse's 
views on the importance of proceeding with the Department of Energy's 
(DOE) program to develop and license light water small modular reactors 
(LW SMRs). The advancement of this technology is certain to benefit the 
American energy landscape by offering new investment options for 
emissions-free, baseload electricity that operates as an increasingly 
safe and secure generating resource. Westinghouse has appreciated the 
opportunity to provide input to DOE on the development of the SMR 
program and will continue to offer our finest scientists, engineers, 
and analysts in this productive partnership.
    Westinghouse has been at the forefront of applying advanced nuclear 
energy technology since 1953 and approximately one-half of the 
operating plants in the world today are based on Westinghouse reactor 
technology. We are currently working with the NRC, and utilities in 
Georgia and South Carolina, to build four Westinghouse AP-1000 
reactors.\1\ NRC licensing of these projects is anticipated to be 
completed around the end of this year and will benefit the nuclear 
fleet by demonstrating passive safety design.
---------------------------------------------------------------------------
    \1\ AP-1000 is a trademark and registered trademark in the United 
States of Westinghouse Electric Company LLC, its subsidiaries and/or 
its affiliates. This mark may also be used and/or registered in other 
countries throughout the world. All rights reserved. Unauthorized use 
is strictly prohibited. Other names may be trademarks of their 
respective owners.
---------------------------------------------------------------------------
    These projects have already created thousands of jobs across the 
United States to support engineering, manufacturing, and construction 
preparation. Thousands more American jobs will be created when safety-
related construction begins next year. Moreover, these communities will 
benefit from the economic multipliers of career employment for 
thousands of professional and specialized labor personnel who will 
operate the plants over their lifetime.
    As I'm sure you know, the Georgia and South Carolina projects were 
made possible by the DOE's Nuclear Power 2010 program. We thank the 
Department, this subcommittee, and the entire Congress for their 
support of this technology development partnership. We believe that the 
SMR initiative represents an even more valuable investment because we 
will be incorporating the improved safety and power performance levels 
developed with the DOE NP2010 program into the SMR design. Leveraging 
these technology breakthroughs, and combining them with the customer 
choice for lower capital cost, significantly smaller footprint, and 
incremental build-out, will open new markets for emissions-free nuclear 
energy in the United States.
    The DOE's investment in the NP2010 program was an unprecedentedly 
successful model for collaboration between government and industry that 
we believe should be reproduced. This public/private partnership 
provides value to the public, the DOE, utility customers and their rate 
payers, the NRC, and commercial vendors. The model produces multiple 
benefits: it allows the DOE to focus on research and technology 
development that ensures U.S. leadership in safe nuclear technology; it 
involves the NRC early to result in the highest safety possible in 
licensable designs; it invests in job creation; and it reduces 
investment and market risk to encourage large private sector 
investment.
    Around the globe, the hunger for emissions-free, baseload 
electricity supply has invigorated a vibrant export market for 
Westinghouse technology bearing the stamp of stringent U.S. Federal 
Government review. Sales of Westinghouse technology and expertise has 
created thousands more jobs for Americans who are managing the 
construction, installation, fuel supply, and supply chain for AP-1000 
plant projects in China.
    The essential technology advancement of the SMR designs being 
considered for the DOE program is the passive safety system, pioneered 
and licensed by Westinghouse for its AP-1000 plant design. Passive 
design means that--in the event of a significant, abnormal event--
cooling to the nuclear reactor is produced by the physics of nature 
using gravity, evaporation, and natural circulation. In contrast, all 
of the nuclear plants operating in the world today have active safety 
equipment which relies on pumps and mechanical means requiring 
uninterrupted sources of electricity to respond to emergencies. 
Rigorous evaluation proves that passive systems perform as expected 
with full confidence, without requiring human intervention or back-up 
electrical sources, and can be sustained for days instead of hours 
without outside intervention.
    The SMR reactor power output is about one-fifth that of our AP-1000 
reactor design and uses a dramatically smaller containment vessel to 
enclose the reactor. The reactor coolant system comprises a single, 
tall vessel with no need for loop system piping. This simplification 
and reduction of components cuts costs while it improves safety by 
eliminating accident scenarios associated with pipe breakage. Moreover, 
the small, robust containment can be buried underground, adding 
protection against outside events.
    In light of recent events, it's important to note that the 
Westinghouse SMR design will not require any human operator action for 
7 days after a shutdown or accident. And because the Westinghouse SMRs 
are stand-alone units that will not share equipment, structures, or 
operating personnel, concerns about response to simultaneous accidents 
at multiple units on the same site will be avoided. Onsite, used fuel 
storage will benefit from the same passive safety technology that works 
much like the reactor safety system.
    After safety, the most important factor in our ability to develop a 
viable SMR market is that it be economically competitive. The 
Westinghouse design achieves major efficiencies by dramatically 
increasing the use of factory fabrication for modules that can be used 
to build the plant.
    Almost all of the nuclear plants currently operating in the world 
today were designed to be unique, assembling every system and 
structure, one stick at a time. In contrast, the Westinghouse SMR uses 
a process that fabricates standardized systems and structures into 
modules in an assembly line, factory environment for installation 
onsite. Modular design allows tremendous advantages in productivity and 
schedule controls. Likewise, fabrication, transportation, and 
construction costs have greater certainty. And because of the compact 
size, it will allow us to fabricate major components, such as the 
reactor vessel and steam generator, here in the United States for 
shipping overseas, creating thousands more high-paying jobs here at 
home.
    The laws of economy-of-scale would say that--all things being 
equal--a 225 MWe nuclear plant would be much more expensive than an 
1,117 MWe nuclear plant, on a per-unit-of-power basis. But our 
evaluations indicate that making extensive use of inherent SMR features 
trumps the economy-of-scale penalty.
    In the interest of time, I will close my comments by addressing two 
specific issues that we believe are at the heart of the subcommittee's 
final approval to move forward with the DOE SMR program.
    First, in regard to price and economic competitiveness of SMRs, I 
can assure you that Westinghouse does not casually guess or estimate 
the market potential for any of the products or services in any of our 
business lines. As we designed our SMR, our team focused design on the 
least-cost engineering solutions and developed new and improved 
configurations. Our customers want the safest technology with the most 
efficient design. Both retail and wholesale utilities tell us there 
will be a substantial market for SMRs if the per-megawatt cost is close 
to that of large nuclear plants.
    In testimony to the this subcommittee on June 7 of this year, Dr. 
Edwin Lyman of the Union of Concerned Scientists referenced a 2007 
paper by Westinghouse employees, which estimated that factors such as 
passive safety technology and modular fabrication could produce costs 
for a particular SMR as being only slightly above the cost of a large 
nuclear plant, when compared on a per MWe basis. Four years later, 
Westinghouse believes our passive technology and increased modularity 
can enable SMR delivery at or below the current costs per MWe for 
today's plants.
    Many utilities in the United States and overseas simply cannot 
afford to invest several billion dollars all at once for a large plant, 
but they could invest in small portions for one or more SMRs. In an 
increasingly carbon-regulated world, utilities are looking at nuclear 
as a preferred, emissions-free, baseload investment. And in many cases, 
the SMRs are the best business strategy for long-term asset investment 
and fuel portfolio strategy.
    On the second issue, we disagree with, and object to statements 
made by nuclear power critics that NRC safety standards and regulation 
will be weakened to accommodate SMRs in order to help them achieve 
economic competitiveness. Westinghouse, and the entire nuclear 
industry, has a vested interest in insuring that nuclear energy is 
supplied in a safe and reliable manner. As such, Westinghouse and 
others in the nuclear industry support thorough and transparent 
regulation and oversight conducted by the NRC. We have never asked the 
NRC to lower its standards or alter a regulation merely to increase the 
economic competitiveness of SMRs; and we would never make such a 
request at the expense of safety.
    A safety focus is ingrained in our company culture as it is in our 
customers' culture. There are few business sectors that depend more on 
maintaining and improving upon safety than the nuclear industry.
    As a final note on safety, I want to say that as a leader in the 
nuclear industry, Westinghouse understands how the events at Fukushima 
have undermined public confidence in nuclear energy, and the expertise 
of the nuclear industry. The unique situation in Japan has caused a 
legitimate review of our own United States nuclear regulatory standards 
and we are participating fully in those reviews.
    At Westinghouse, we believe that a partnership between industry and 
the DOE is the most effective path for making progress on the policy, 
regulatory, economic, and infrastructure issues related to deployment 
of SMRs. We can launch the SMR program and produce the same level of 
success as we've enjoyed working as investment partners on the NP2010 
program. We stand ready to work with DOE on the exciting potential for 
small nuclear technology.
    On behalf of the 15,000 Westinghouse employees, we thank the 
subcommittee for seriously considering our views. I would be pleased to 
answer any questions.

    Senator Feinstein. Thank you very much.
    Mr. Mowry, president of Babcock & Wilcox. Welcome.

STATEMENT OF CHRISTOFER M. MOWRY, PRESIDENT, BABCOCK & 
            WILSON NUCLEAR ENERGY

    Mr. Mowry. Chairman Feinstein and Ranking Member Alexander, 
I do appreciate this opportunity to present testimony today on 
the promise of SMRs and would ask that my entire written 
statement be entered into the subcommittee record.
    Senator Feinstein. So ordered. All of them will be. Thank 
you.
    Mr. Mowry. B&W has an ongoing comprehensive effort to 
evaluate our mPower SMR design in the context of the lessons 
from the Fukushima event, an effort which is confirming that 
mPower's safety performance is already extremely robust.
    Our SMR design offers significant safety enhancements to 
current NRC safety goals through the use of inherently safer 
nuclear plant architecture and significant defense-in-depth 
systems.
    These design features can be summarized in five points. 
First, an integral nuclear steam supply system with no large 
penetrations in the primary cooling circuit, a design which 
eliminates the possibility of typical worst-case-loss-of-
coolant accidents.
    Second, a small core with low-power density and large water 
inventory, a design that provides a large buffer against short-
term challenges to core cooling.
    Third, a containment and reactor building fully imbedded 
underground, a design that effectively isolates the reactor 
module and all emergency cooling water and safety systems from 
natural disasters like what happened in Japan.
    Fourth, no requirements for AC power, emergency diesel 
generators or pumps for any of the safety systems; a design 
that instead utilizes natural circulation to remove decay heat, 
and fifth, a fully protected spent-fuel pool with its very 
large cooling-water volume located deep underground, a design 
which provides protection for spent fuel similar to that which 
is provided for the reactor core itself.
    Taken together these SMR design features result in a 
reactor planned to be two to three orders of magnitude safer 
than current NRC requirements.
    The design creates a 14-day safe haven before any outside 
intervention is required to maintain reactor core cooling and 
more than 30 days of inherent protection before the spent-fuel 
pool could experience any exposure of spent fuel.
    Furthermore, our SMR design requires zero operator action 
for the first 72 hours after an emergency shutdown and allows 
the operators to focus on long-term accident mitigation.
    Concerns that multi-module sites are less safe ignore these 
inherent differences between SMRs and the Fukushima plant. The 
imbedding of the entire B&W mPower reactor underground, 
including all necessary cooling and safety systems effectively 
isolates the reactor from such events. Each module is encased 
in its own individual containment together with its own 
independent dedicated safety systems.
    Concerns that our industry is pushing the NRC to weaken 
safety requirements are a complete mischaracterization.
    While the way in which an SMR design meets NRC regulations 
may be different from that of large reactors, the underlying 
safety requirements are exactly the same. We have no need to 
change or weaken any underlying NRC safety requirements.
    With regard to economics, B&W would not be investing our 
own company's resources in such an effort if we did not believe 
we could produce a competitive product and create a viable 
stand-alone business model in the long term.
    Some people are concerned that due to the economies-of-
scale paradigm small reactors can't compete with large 
reactors. This is no longer true. Competitive costs are 
achievable through factory assembly of integral reactors, but, 
more importantly, through the simplicity of their design.
    Nevertheless, based on our long experience manufacturing 
reactors for both the Navy and the commercial customer base, we 
believe we can achieve our cost efficiencies after less than 10 
modules.
    Recent studies of the economies of SMRs failed to consider 
that every utility does not have the capital, transmission grid 
or water resources necessary to build a large reactor, nor does 
every utility need large- generation capacity additions. In 
such cases, small, more affordable SMRs offer a better 
solution.
    New EPA regulations are likely to drive near-term 
retirements of up to 50 gigawatts of coal-fired, base-load 
generation.
    But the industry alone will not be able to develop and 
deploy carbon-free, base-load replacements for these old coal 
plants by 2020 without an effective public-private partnership. 
Such a roadmap to 2020 is also essential to maintain America's 
competitive edge in the global marketplace.
    Our international competitors are largely state-subsidized 
companies who have already started investing in their SMRs. 
Failing to move forward with this new DOE cost-share program 
will not prevent the deployment of SMRs in the United States, 
but will only ensure that foreign SMRs receive the substantial 
job and export benefits of selling their reactors to our 
domestic customers.
    Innovative LW SMRs has the near-term potential to raise 
nuclear safety to the next level while offering America a 
competitive source of domestically produced clean energy.
    In order to meet President Obama's vision of being 80 
percent carbon free by 2050, the American energy industry needs 
a practical nuclear option. Turning this SMR innovation into 
reality will depend on leadership from industry and government.

                           PREPARED STATEMENT

    We, therefore, ask this subcommittee to support the 
proposed DOE SMR cost-share program and help maintain our 
Nation's leadership role in clean-energy technology.
    Thank you for the privilege of testifying today, I'm happy 
to answer any of your questions.
    [The statement follows:]

               Prepared Statement of Christofer M. Mowry

    Chairman Feinstein, Ranking Member Alexander, and members of the 
subcommittee: My name is Chris Mowry and I am the president of Babcock 
& Wilcox Nuclear Energy, a business unit of The Babcock & Wilcox 
Company (B&W), and chairman of Generation mPower, LLC, which is a 
majority-owned subsidiary of B&W. I would ask that my entire statement 
and supplemental information be entered into the subcommittee record. 
My prepared remarks will be a summary of this statement.
    I appreciate this opportunity to present testimony today on the 
promise of small modular reactors (SMRs) and describe our innovative 
technology--the B&W mPower\TM\ reactor. I will focus my 
testimony on the technical, safety, and economic attributes of SMRs and 
I am happy to respond to any questions.
    B&W has more than 50 years of continuous nuclear engineering and 
manufacturing experience. Today we provide customers with nuclear 
manufacturing and nuclear-related services from more than 17 facilities 
across North America. These locations are engaged in activities from 
manufacturing major components for government and commercial nuclear 
powerplants, to operating the Nation's nuclear energy laboratories, to 
fabricating fuel for the High Flux Isotope Reactor at Oak Ridge 
National Laboratory and the University of Missouri's research reactor, 
both of which provide critical research and material testing services.
    B&W operates significant nuclear manufacturing facilities in 
Indiana, Ohio, Virginia and Tennessee, as well as Ontario, Canada. We 
are the only American manufacturer accredited and capable of producing 
large N-stamped components for commercial nuclear powerplants. We have 
delivered more than 1,100 Nuclear Steam Supply System (NSSS) components 
and pressure vessels, including approximately 300 nuclear steam 
generators worldwide. And, we employ (both directly and through joint 
venture companies) approximately 12,000 U.S. nuclear professionals. As 
such, we have significant experience and expertise to validate the 
technical, safety, and economic value of SMRs.

            INHERENT SAFETY OF SMRS--ROBUST DEFENSE-IN-DEPTH

    Current and next-generation U.S. large reactor designs operate at a 
remarkable level of safety, making the United States the global leader 
in nuclear safety and security. While the current fleet is considered 
safe, in the wake of the devastating earthquake and tsunami in Japan, 
and the resultant emergency at the Fukushima--Daiichi nuclear plant, 
the nuclear community--including the Congress, the Nuclear Regulatory 
Commission (NRC), the industry and the general public--is evaluating 
what additional layers of safety are appropriate to mitigate these 
types of challenges. Our efforts to work together to learn from Japan's 
experiences will help make the current U.S. fleet and new nuclear 
technologies even safer than they are today.
    The B&W mPower SMR offers significant safety enhancements to NRC 
safety goals through the use of an inherently safer plant architecture 
and significant defense-in-depth safety systems. This enhanced safety 
performance is achieved through the following design features:
  --An integral nuclear steam supply system with no large reactor 
        penetrations in the primary cooling circuit;
  --a small core, low-power density and large water inventory that 
        provide a large buffer against short-term challenges to core 
        cooling;
  --deeply embedded underground containment, which effectively isolates 
        all emergency cooling water sources and safety systems from 
        natural disasters and external threats;
  --safety systems powered by gravity and natural circulation with no 
        dependence on external AC power; and
  --underground spent-fuel storage with large cooling water volume, 
        located within the auxiliary containment structure created by 
        the underground reactor service building.
    These innovations transcend the design of the reactor at Fukushima-
Daiichi. This design results in a reactor planned to be 2-3 orders of 
magnitude safer than the current NRC requirement or EPRI Utility 
Requirements Document (URD) safety benchmark, based on core damage 
frequency (up to 10-\8\ vs. 10-\5\ NRC 
requirement or 10-\6\ EPRI URD goal). In the unlikely 
occurrence of an event, the B&W mPower reactor design also creates an 
extended period of time before outside assistance is required to 
maintain safe shutdown of the plant. Specifically, our B&W mPower 
reactor design creates a 14-day ``safe haven'' before any intervention 
is required to maintain reactor core cooling through the ultimate 
reactor cooling water source (ultimate heat sink), and provides more 
than 30 days of inherent protection before the spent-fuel pool could 
experience any exposure of spent fuel due to loss of cooling water 
volume through boiling. Furthermore, our design requires zero emergency 
operator action for the first 72 hours after an emergency reactor 
shutdown, which is best in class for all advanced LW SMR designs--large 
or small. This allows the operators to focus on long-term mitigation of 
events rather than immediate emergency actions.
    The SMR industry is in a unique position to efficiently incorporate 
both design and regulatory lessons learned from Fukushima into our 
designs. We have an ongoing, extensive effort to evaluate the B&W 
mPower SMR design in the context of what we are learning about the 
events at Fukushima. B&W's evaluation is confirming that the safety 
performance of our SMR design is extremely robust when confronted by a 
Fukushima-type event.

Integral Design and Robust Safety Margins
    The B&W mPower reactor's integral design means that the entire 
reactor and steam supply system are incorporated into one vessel, 
rather than multiple vessels connected by large piping. This integral 
design, with no penetrations in the primary cooling circuit of the 
reactor vessel below the core, eliminates the possibility of the worst-
case design basis accident occurring, an accident in which a loss of 
cooling water to the reactor is caused by a break in the reactor system 
piping. In addition, the B&W mPower reactor's small core combined with 
low density of power and large inventory of reactor coolant, results in 
operating and safety margins significantly more robust than those 
required by the NRC.

Deeply Embedded Underground Containment and Reactor Building
    The integral B&W mPower reactor module is isolated from external 
events in a steel containment structure, which is itself enclosed 
within a massive reinforced concrete reactor building that is fully 
embedded underground. This water-tight underground reactor building 
contains all emergency cooling water sources (including the refueling 
water storage tank and ultimate heat sink), isolates all safety 
equipment from natural disasters, and creates an auxiliary containment 
for the protected underground spent-fuel pool. In a Fukushima-type 
event, this means that all systems and cooling water needed to protect 
the reactor core for an extended period of time are well isolated from 
the effects of natural disasters. This underground configuration also 
offers inherent protection against external manmade threats such as 
aircraft and projectiles.

Inherent Safety Systems
    The B&W mPower reactor incorporates the most advanced inherent 
safety system architecture. This means that no AC power, either onsite 
or offsite, is required to power any safety systems. No pumps are 
required to inject cooling water to the core. Instead, the emergency 
core cooling system is powered by gravity--natural circulation removes 
decay heat and a gravity-drained storage tank supplies make-up water to 
cool the reactor core. This ultimate heat sink provides up to 14 days 
of cooling without the need for external intervention. Unlike at 
Fukushima, no diesel generators are required to provide power for any 
of these safety systems to perform their intended functions. However, 
in keeping with our defense-in-depth philosophy, two back-up diesel 
generators are provided anyway, in seismically qualified structures, 
for further protection. In addition, a 3-day battery supports all plant 
monitoring and control for 72 hours without reliance on AC power. After 
72 hours, which is the NRC's current regulatory requirement for passive 
safety designs, auxiliary power units inside the underground reactor 
building recharge the battery system, again without reliance on 
external power sources. Finally, passive hydrogen recombiners prevent 
the build-up of hydrogen, from either the reactor core or the spent-
fuel pool, in the containment and reactor building. Most importantly, 
all of the inherent safety systems, including the ultimate reactor 
cooling water source (ultimate heat sink), batteries, battery 
recharging system, and hydrogen recombiners are housed inside the 
protected underground reactor building, isolated from natural 
disasters.

Robustly Protected Spent-fuel Pool
    Our design includes a fully protected spent-fuel pool located 
within the auxiliary containment structure created by the underground 
reactor service building, at the lowest point of the structure. 
Consistent with the design philosophy of an advanced, inherently safe 
reactor, the B&W mPower SMR provides protection for spent fuel similar 
to that which is provided for the fuel in the reactor core itself. As 
shown at Fukushima, protection of spent fuel is most critical in the 
first few years after it is removed from the reactor core. Therefore, 
the spent-fuel pool's auxiliary containment structure, inside the 
underground reactor building, has a similar level of robustness as that 
protecting the reactor vessel. This ensures an enhanced level of 
protection for spent fuel recently removed from the core. In addition, 
it is designed with a large heat sink to ensure more than 30 days of 
fuel cooling without the need for external intervention, before the 
loss of water inventory sufficient to uncover fuel could occur--which 
may have been experienced at Fukushima within 1 week of the accident.
    These design safety features are summarized in Figure 1. The 
underground reactor building is illustrated in Figure 2.




                               Figure 1.




                               Figure 2.

    Some groups, including the Union of Concerned Scientists (UCS), 
have raised concerns related to the safety of SMRs. I agree that we 
have an obligation to re-examine nuclear safety based on the events at 
Fukushima. However, the UCS statements regarding SMR safety are 
unfounded and inaccurate. In particular, I would like to address 
concerns the UCS has raised related to an alleged ``weakening'' of NRC 
regulation to support SMRs, and locating multiple reactors on one site.
No ``Weakening'' of NRC Regulation
    In testimony provided to the Senate Energy and Natural Resources 
Committee earlier this year, the UCS made several statements implying 
that SMRs require softer regulatory standards to be viable, stating 
that we as the SMR industry are ``pressuring the Nuclear Regulatory 
Commission to weaken certain regulatory requirements for SMRs.'' This 
is a mischaracterization. The B&W mPower reactor design, will meet or 
exceed all of the NRC's current safety and security requirements. While 
the way in which an SMR design intends to meet or implement an NRC 
requirement may differ from large reactor designs, the underlying 
safety regulations are exactly the same. The B&W mPower SMR will be 
able to meet regulatory requirements through the robust features of its 
underground nuclear island architecture, which is being designed to 
exceed the current NRC safety goal by 2-3 orders of magnitude. In 
addition, there is no intention or need to weaken NRC regulatory 
requirements in order to reduce operational and maintenance costs, as 
the UCS implied. On the contrary, we plan to meet or exceed NRC 
requirements while simultaneously maintaining competitive costs, by 
designing the plant itself to be more operationally efficient. For 
example, we believe the inherently safe and secure design of the B&W 
mPower nuclear island will require fewer personnel to meet the NRC 
requirements to safeguard the plant against security threats. 
Therefore, we have no plans and no need to change or weaken underlying 
regulatory requirements in order to license the B&W mPower SMR.
Co-location of Multiple Modules at One Site

The UCS also stated:

    ``As we have seen in Fukushima, nuclear plants with multiple 
reactors that experience severe conditions present extreme challenges. 
At Fukushima, the need to manage multiple simultaneous crises resulted 
in what sometimes appeared to be a game of `whack-a-mole' as the plant 
operator was forced to shift limited resources from one unit to another 
as new problems cropped up. These considerations make multiple-reactor 
sites less attractive from a safety perspective.''

    The events at Fukushima were more than anything else the result of 
plant and site configuration. This statement ignores the inherent 
differences between SMRs and the Fukushima plant. As explained earlier, 
the embedding of the entire reactor building, including all necessary 
core cooling and safety systems, in an underground containment, 
significantly isolates the reactor from the threats of external events. 
In addition, each module is embedded in its own individual containment 
with independent, dedicated safety systems. There is no sharing of 
safety systems. Finally, due to the reactor's inherently safer design, 
including small size, low-power density, large water inventory and 
inherent safety systems, reactor safety after a shutdown is not 
dependent upon immediate assistance from operators or outside help. As 
stated earlier, for the B&W mPower design, no emergency operator action 
is required for the first 72 hours to mitigate accidents, allowing 
operators to focus on managing long-term effects.

Extensive Test Program
    We are currently engaged in an extensive test program to provide 
the NRC in-depth analytical and physical data to evaluate the safety of 
the B&W mPower reactor. This includes an Integrated Systems Test 
facility in Bedford, Virginia, with an unfueled, scaled prototype 
reactor system to demonstrate the thermo-hydraulic characteristics of 
the reactor. We expect this testing, which represents a significant 
investment, to demonstrate to the NRC that the B&W mPower reactor will 
far exceed current safety requirements. We are working with the NRC to 
ensure that our design meets or exceeds regulatory requirements, and we 
will continue to do so as we learn more from the events at Fukushima.

           THE ECONOMICS OF SMRS--COMPETITIVE AND FINANCEABLE

    Market analysis has concluded that the addressable market for SMRs, 
both in the United States and globally, ranges from 100-125 GWe through 
2030, and that, in addition to benefiting from the factors contributing 
to the resurgence of nuclear power in general, SMRs directly address 
the key challenges such as financing risk, cost and time certainty, 
production bottlenecks and expensive grid upgrades associated with the 
construction of large-scale, traditional nuclear plants. We would not 
be investing our company's resources in this effort if we did not 
believe we could produce a competitive product on both a Levelized-
Cost-of-Electricity and per-kilowatt (per-kW) basis to serve this 
meaningful market.
    In addition, we have a Consortium of 15 U.S. utilities and an 
Industry Advisory Council of 26 utilities, both U.S. and international, 
which demonstrates broad industry interest. In addition to the 
investment B&W has made, utilities in our Consortium have also invested 
resources in the B&W mPower development process. We are working closely 
with our Consortium, Industry Advisory Council, and our Engineering, 
Procurement and Construction (EPC) partner to validate the economic 
value of our reactor and incorporate their valuable input on life-cycle 
costs.
    There has been much discussion surrounding the economics of SMRs, 
particularly concerns that due to the principle of economies-of-scale, 
smaller reactors cannot compete with large reactors. This is untrue. 
The design, size and inherently safe features that ensure that SMRs 
will raise safety to the next level also enable SMRs to offer the 
carbon-free advantages of nuclear power in a cost-competitive, more 
financeable form. This is achievable through a paradigm shift from 
``economies of scale'' to factory assembly of simplified, integral 
reactors in a manufacturing setting--the next step beyond onsite 
modular construction. In fact, based on the Navy's successful 
experience with modular submarine construction, we have engaged a 
submarine industry leader to provide lessons learned from this effort 
as part of our B&W mPower design team. Through this paradigm shift, we 
believe we will be able to offer SMRs to our customers without any cost 
premium--that we can compete with any new-generation large reactor. In 
addition, based on our experience manufacturing reactors for both 
government and commercial customers, we believe we will achieve 
nth-of-a-kind costs in less than 10 modules, rather than 
thousands as some SMR opponents have implied. Our utility customers 
require that SMRs be competitive on a per-kW basis with large reactors. 
This is achievable through:
  --modular, integral design and factory assembly for a fully 
        manufactured product;
  --the ability to maintain a skilled workforce in a manufacturing 
        setting;
  --improved quality, efficiency, and process standardization in 
        factory settings; and
  --simplified construction onsite.
    In addition, a significant economic advantage of SMRs is the 
ability to incrementally add individual modules to a site to support 
load growth and minimize financing risk. Improved financing reduces 
costs, while individual modules provide utilities the flexibility to 
replace old fossil plants with carbon-free nuclear power while using 
existing grid and site assets, further reducing costs. While SMRs 
require more staff than a similarly sized fossil plant, the replacement 
of such plants with SMRs simply trades the higher cost of fossil fuels 
and impact of emissions, as compared to nuclear fuel, for more highly 
skilled, better paying nuclear jobs.

External Economic Studies--The Value of a Smaller Option
    There are several studies available on the economics of SMRs, some 
with widely varying views of the cost-competitiveness of SMRs. 
Unfortunately, many of these reach erroneous conclusions. For example, 
a recent study by the OECD Nuclear Energy Assembly, which is currently 
receiving attention, concluded that ``the investment component of the 
Levelized Unit Electricity Cost (LUEC) for a SMR would be at least 10-
40 percent higher than in the case of a Nuclear Powerplant (NPP) with a 
large reactor''. We disagree with this viewpoint. This study was 
completed without direct input by B&W, and is not consistent with our 
internal estimates. Any studies that compare estimated SMR costs to 
large reactor costs are simply comparing estimates to estimates. We 
have not yet built a new generation large reactor in this country, and 
therefore it is impossible to compare SMR costs to large reactor costs 
without making several significant assumptions about the next class of 
large reactors.
    More importantly, this type of comparison assumes that every 
utility has the same needs, that require the same solution. Not every 
utility has the capital, grid and water resources to build a large 
reactor, nor does every utility need capacity of that size. In these 
cases, which represent numerous utilities across the country, small, 
more affordable SMRs offer a better solution. In fact, despite the OECD 
study's inflated comparative cost estimates, it goes on to conclude 
that SMRs have significant potential for several market segments, 
including replacing old fossil plants, grid-limited sites, water-
limited sites, and those utilities for whom lower upfront capital 
investment, lower cost of financing and flexibility are important. It 
also concludes that ``SMRs could be competitive with many non-nuclear 
technologies.'' In short, it validates our value proposition, which is 
that SMRs offer utilities a more flexible, financeable, competitive 
carbon-free option.

  PUBLIC-PRIVATE PARTNERSHIP--INVESTMENT IN CLEAN ENERGY AND U.S. JOBS

    I will conclude with a discussion of the critical need for the 
DOE's proposed SMR cost-share program. This program, which would share 
the costs and risks associated with developing and licensing any new 
nuclear technology, is critical to the market development and viability 
of SMRs. Due to the regulatory and policy environment, there is 
significant risk associated with developing and deploying any first-of-
a-kind nuclear technology. A public-private partnership to develop SMRs 
is necessary to share these risks and make the long-term, significant 
investment justifiable to shareholders and investors, by showing the 
Government's commitment to the future of nuclear power and SMRs. This 
will provide a level of certainty critical to market development, 
competition, and long-term associated investment. In addition, broad 
market adoption of SMR technology is dependent on a successful first-
of-a-kind project. Such projects include significant nonrecurring 
costs, which represent a barrier to deployment of SMRs without a 
mechanism for public-private partnership.
    The DOE has established a goal to reduce emissions from DOE 
facilities by 28 percent by 2020. In addition, new Environmental 
Protection Agency (EPA) regulations are likely to drive the retirement 
of 25-50 GW of coal-fired baseload generation near-term, based on 
recent industry projections. Most U.S. SMR vendors, while proactively 
pursuing development of SMRs, are unable to independently invest at the 
pace needed to deploy the first SMRs by 2020, or potentially at a pace 
necessary to ensure a viable business case. Without SMR technology 
available to provide in-kind baseload power sized to replace these old 
coal plants, utilities will face grid stability and reliability issues. 
It is critical that utilities have viable carbon-free options to 
replace old, baseload coal plants by 2020. To reach this goal of 
deployment by 2020--a goal driven by government policy and regulation--
a public-private partnership to share costs and risks is critical.
    This timeline is also critical to maintain the U.S.'s competitive 
edge in the international nuclear power market. Our international 
competitors are largely state-owned or subsidized companies making 
large investments in nuclear technology, including SMRs. There are 
currently several SMRs being developed internationally, in China, 
Russia, India, Argentina, South Korea, and elsewhere.
    Failing to move forward with this program will not stall the 
deployment of SMRs in the United States or worldwide, but will simply 
stymie the U.S. industry's current early mover advantage in SMR 
technology and manufacturing leadership. Failure to fund an SMR cost-
share program will ensure that foreign SMRs (like the South Korean 
SMART reactor) receive the manufacturing jobs and exporting benefits by 
selling to U.S. utility customers. At a time when we need to ensure 
that public policy promotes U.S. competitiveness in technology 
innovation and leadership, the SMR cost-share program is the conduit to 
maintain U.S. leadership and create the manufacturing base here instead 
of overseas. Conversely, the sharing of risks and costs through public-
private partnership will ultimately result in a return on investment to 
Government by supporting nuclear technology, which can compete in the 
market without government support or subsidy, while creating U.S. 
design, supply chain, construction, and operations jobs.
    As Ernie Moniz, the Director of MIT's Energy Initiative and 
Laboratory for Energy and the Environment, testified before this 
subcommittee, on March 30, 2011, 2 weeks after the events at Fukushima:

    ``A 2020 SMR option will be available only if we start now, and 
even then it will be tight. Prior to Fukushima, the Obama 
administration submitted to the Congress a proposed 2012 budget that 
would greatly enhance the level of activity in bringing SMRs to market 
. . . The program is modest, but sensible. Obviously the Federal budget 
deficit makes it difficult to start any new programs, but a hiatus in 
creating new clean-energy options--be it nuclear SMRs or renewables or 
advanced batteries--will have us looking back in 10 years lamenting the 
lack of a technology portfolio needed to meet our energy and 
environmental needs economically or to compete in the global market.''

                            CLOSING COMMENTS

    Innovative SMRs, like the B&W mPower reactor, have the potential to 
raise nuclear safety to the next level, while offering America a 
competitive source of near-term, domestically produced, clean energy. 
In order to meet President Obama's vision of being 80 percent carbon-
free by 2050, industry needs a practical nuclear option. The President 
has explicitly acknowledged and endorsed that nuclear should and must 
be part of the generation portfolio. B&W has heard repeatedly from 
industry that a near-term light water SMR option is essential to a 
practical nuclear generation solution. Turning this innovation into 
reality will depend on leadership and foresight from both the nuclear 
industry and government through a true public-private partnership. We 
therefore ask that this subcommittee support the DOE cost-share program 
and help maintain our Nation's leadership role in nuclear power and 
clean-energy technology.
    Thank you for the privilege of testifying today. I am happy to 
answer any questions the subcommittee may have.

    Senator Feinstein. And we thank you for being here. We 
thank all of you. I know you've come a distance, and it's very 
much appreciated. So thank you.
    Next is Dr. Paul G. Lorenzini, CEO of NuScale Power, Inc. 
Welcome, doctor.

STATEMENT OF DR. PAUL G. LORENZINI, CEO, NUSCALE POWER, 
            INC.

    Dr. Lorenzini. Thank you, Madam Chair and ranking member. I 
am the CEO of NuScale Power, Inc., a startup company that is 
making no profits and is facing a very sizeable investment 
challenge as a barrier to ultimately commercializing an SMR.
    Let me confine my oral remarks to four areas--economics, 
safety, spent fuel and the importance of an SMR program.
    With regard to the economics, we've all known that there 
are economies-of-scale that would suggest that small reactors 
cannot be competitive. We challenged that with simplicity and 
with offsite manufacturing, but we also knew we would need to 
overcome our skeptics.
    So we worked with our engineering and manufacturing 
partners to develop a credible cost estimate, investing more 
than 16,000 man-hours over 2 years to develop an estimate in 
which we had confidence. That estimate showed that our unit 
costs were not just competitive with large plants, they were 
actually lower.
    We were then challenged, and so we retained an independent 
firm to review the analysis. They confirmed our estimates to 
within 10 percent.
    We, too, hear all the challenges to the economics of small 
reactors, but we've done the estimating on an actual design 
starting from the ground up. The results establish quite 
clearly that we have a plant that will completely change the 
economic story for nuclear power, and that, by the way, was for 
a first plant. And our numbers would agree with the others 
you've heard, that we reach economies-of-scale for manufacture 
with about the 8th to the 10th module.
    Next, let me address the safety question. When the NuScale 
concept was first funded by the DOE in 2001, the principal 
designer, a professor at Oregon State University, Dr. Jose 
Reyes, set out to design what he hoped would be the safest LW 
SMR ever built.
    He'd spent 10 years in the NRC and he'd been involved in 
the analysis of Three Mile Island and he understood the 
importance of making plants inherently safe. The result is the 
plant we're commercializing at NuScale Power.
    First, he revolutionized the containment design. It is 
factory built and can withstand much higher internal pressures. 
It's also immersed in a pool of water underground. This pool 
holds 4 million gallons of water and is sufficient to remove 
all the decay without ever adding more water to the system.
    In our system, the operator doesn't have to do anything. 
After 30 days, after 7 days there's enough water, followed by 
air cooling to completely keep these reactors cool. The pool is 
below ground and the building that holds it is seismically very 
robust.
    Second, he took advantage of simplicity. He designed the 
reactor to be entirely cooled by natural circulation 
eliminating pumps and pipes and valves and all the potential 
failure modes and costs that go with them. He also eliminated 
by doing this the large break loss of coolant accident.
    Finally, he sought out expert advice. Very early in our 
program he convened two expert review panels, one chaired by 
Dr. Graham Wallace, a former chair of the Advisory Committee on 
Reactor Safeguards, and a second chaired by Dr. Michael 
Corradini, a member of the National Academy of Engineering and 
a member of the ACRS.
    These independent reviews not only validated our belief in 
the safety of the plant, they also made helpful recommendations 
to enhance the safety even further.
    Now, the question has come up about multi-module 
configurations, many modules in one building. If you could 
imagine for yourself taking one Fukushima plant, breaking it up 
into 12 small pieces, each now a smaller unit, each now with a 
smaller potential for an accident, separately containing each 
unit, making it simpler and safer, and then putting it in a 
pool of water, so you now have an ultimate heat sink, putting 
it in a common building where you now have a single control 
room that can watch all 12 at the same time. We believe 
categorically that we've made that configuration safer by doing 
that.
    Prior to submitting our application for design 
certification, we will have a complete simulation of the 
control room and we will test the operators. We will challenge 
them with every multi-module configuration that we can think 
of. The NRC will as well. We won't be able to license our plant 
the way we have it configured unless we can demonstrate that 
we've made that plant safe and made it safer by doing it the 
way we've done it.
    Let me speak to the question of spent fuel and make three 
brief points.
    First, spent fuel in the NuScale plant is housed in an 
underground, protected structure.
    Second, it has approximately four times the water volume of 
a conventional spent-fuel pool per megawatt of thermal power.
    And, finally, it uses what are called low-density fuel 
racks that make it much easier to remove the heat from these 
spent-fuel assemblies.
    Madam Chair and ranking member, an SMR program serves the 
national interest by bringing to market a nuclear option, a 
noncarbon source of base-load energy that overcomes financial 
barriers and reaches markets not accessible to larger reactors.
    Second, it strengthens the domestic manufacturing base 
creating jobs and exports.
    Third, it enhances the safety of nuclear plants and assures 
that the NRC will participate in establishing the global 
regulatory framework for SMRs.

                           PREPARED STATEMENT

    There will be SMRs and they will be marketed throughout the 
world. The question is whether we are going to be in the game.
    Madam Chair and ranking member, I urge your support for 
this program.
    Thank you very much.
    [The statement follows:]

              Prepared Statement of Dr. Paul G. Lorenzini

    Madam Chair, members of the subcommittee, thank you for this 
opportunity to appear before you today. My name is Paul G. Lorenzini. I 
am the chief executive officer of NuScale Power, Inc., located in 
Corvallis, Oregon.
    NuScale Power was incorporated in 2007 and has been funded entirely 
from private sector capital. To date just under $40 million has been 
invested in our company.
    The genesis of our 45 MWe ``integrated pressurized'' small-scale 
power module began more than 10 years ago with a Department of Energy 
(DOE) grant through the Idaho National Lab and Oregon State University. 
This grant came at a time when this very same subcommittee set as a 
goal to ``spin off'' more private sector investments from the national 
lab community and leverage private capital in new companies.
    This program included the construction of a one-third scale, 
electrically heated test facility to validate the safety features of 
the plant. In other words, our plant design rests on a solid 
foundation, which involves more than paper studies.
    Since our founding in 2007, we have been encouraged by the growing 
recognition of the value of SMRs in developing a balanced energy 
policy.
    First, we have seen the response of customers. They like several 
unique aspects of the NuScale SMR--the lowered financial barriers, the 
elimination of so-called single shaft risks--if a single 45 MWe unit 
goes down, the rest of the plant continues to operate eliminating the 
need to find replacement power for the grid; and they especially like 
the ability to incrementally add new generation to match load growth. 
All of these features provide significant benefits to their customers. 
We currently have more than 10 major utilities participating on our 
customer advisory board.
    Second, the NRC's policy guidance issued in March 2010 for 
potential SMR applicants was a very positive step forward. This key 
guidance from our safety regulator has given us the preliminary roadmap 
we needed to submit a high-quality application.
    Finally, the inclusion of Federal cost sharing for the development 
of commercial SMR's in President Obama's budget last February has been 
critical to our ability to attract the investors who are obviously 
necessary for our success.
    As we now consider the future of that program, let me focus my 
remarks in four areas:
  --First, the economics of small modular reactors (SMRs);
  --Second, the ways in which they enhance the safety of nuclear power, 
        a critical question in a post-Fukushima world;
  --Third, a few brief comments on spent fuel; and
  --Last, the key question--does an SMR cost-sharing program serve the 
        national interest?
    Let me speak first to the economic question.
    Small nuclear plants have been around for a long time and in recent 
years they attracted interest because they could serve remote locations 
and electrical systems with smaller grids.
    It was always known that the investment required to build a small 
nuclear plant would be less. But it was also believed--indeed, it has 
become almost an article of faith--that the economies-of-scale would 
make them uneconomic compared with larger plants.
    When we first started NuScale in 2007, we knew this is what people 
believed. Yet we believed those old chestnuts might be wrong.
    We saw the economic advantages of the simplicity of our design.
    We saw the economic value of taking virtually the entire nuclear 
system, including its containment, to a factory where they could be 
manufactured under more controlled conditions.
    But we also knew no one--either inside or outside the industry--
would believe our assessment of the economics without some kind of 
proof.
    In 2008, working with our engineering and manufacturing partners, 
we developed a detailed, bottoms-up cost estimate. When we got the 
results, we saw where we could make improvements in design and 
construction, so we spent an additional 16,000 man-hours in 2009 to 
take a second run at it.
    We came up with unit costs--meaning $/kw--that surprised even us--
they not only compared very well with large plant numbers--they were 
actually lower. When we showed these numbers to utility executives, 
they challenged us to independently validate them. We used a firm that 
has done independent cost estimating on many large nuclear plants, and 
they confirmed our estimates within 10 percent.
    We too hear all the challenges to the economics of small reactors 
based on scaling and old rhetoric--but we've done the estimating--on an 
actual design, starting from the ground up. That's the only real way to 
answer the question. and the results establish quite clearly that we 
have a plant that will completely change the economic story for nuclear 
power, by not only lowering the financial barriers, but by doing so 
with a unit cost that is actually lower than competitive larger nuclear 
plants.
    Next let me speak to the safety question.
    When the NuScale concept was first funded by DOE in 2001, the 
principal designer, a professor at Oregon State University, Dr. Jose 
Reyes, set out to design what he hoped would be the safest light water 
reactor ever built. He had spent 10 years in the Nuclear Regulatory 
Commission (NRC) , he had been involved in the analysis of Three Mile 
Island, and he knew not only of the importance of safety, but the 
importance of validating safety through both large- and small-scale 
tests and experiments.
    With the benefit of having designed the test facilities that 
demonstrated the passive safety features of the Westinghouse AP-1000--a 
very important advance in the safety of nuclear power and one that, by 
itself, would have prevented the accident at Fukushima--he asked what 
more could be done.
    The result is the plant we are now seeking to commercialize at 
NuScale Power.
    First, he developed a revolutionary concept for the containment--
one that can be factory built, one that can withstand much higher 
internal pressures, and one that can be totally immersed in a pool of 
water underground.
    The significance of this latter feature is very important. It means 
we have a very resilient and effective passive system for removing 
decay heat. About getting rid of the decay heat. This pool holds 4 
million gallons of water and is sufficient to remove all the decay heat 
without ever having to add more water to the system.
    This pool of water is housed in a stainless steel lined concrete 
building that, because it is mostly underground, is seismically very 
strong. The effect of this pool and the building is not only to provide 
security for removing decay heat, it also makes it much more difficult 
for any radioactive release to occur because there are now additional 
barriers outside the containment structure.
    Second, he took advantage of simplicity. Drawing on the natural 
circulation learning from the AP-1000 tests, he designed the reactor to 
be entirely cooled by natural circulation--which eliminates pumps, 
pipes and valves and all the potential failure modes (and costs) 
associated with that equipment. In so doing, he eliminated the so-
called large break loss of coolant accident that largely dominates the 
safety analysis of large plants.
    Finally, he sought outside expert advice. Very early in our 
program, he convened two expert review panels, one chaired by Dr. 
Graham Wallace, a former chair of the Advisory Committee on Reactor 
Safeguards (ACRS), and a second chaired by Dr. Michael Corradini, a 
member of the National Academy of Engineering and a member of the ACRS. 
These independent reviews not only validated our belief in the safety 
of this plant, they also made helpful recommendations to enhance the 
safety even further.
    We have since completed an initial probabilistic safety analysis, 
which shows that the probability of any event leading to fuel damage in 
this plant is once every 50 million years. This exceeds the 
requirements of the NRC by a factor of 5,000.
    Because I know it is important to members of this subcommittee, let 
me speak also briefly to the question of spent fuel.
    I will make three quick points:
  --First, spent fuel in the NuScale plant is housed in an underground 
        protected structure.
  --Second, it has approximately four times the water volume of 
        conventional spent-fuel pools per MW of thermal power.
  --Finally, it uses what are called low-density fuel racks that make 
        it much easier to remove heat from these spent-fuel assemblies.
    Madam Chair and members of the subcommittee an SMR program serves 
the national interest in several ways:
  --It serves the national goal of bringing to market a noncarbon 
        source of baseload energy--that is, energy available all day, 
        every day. Nuclear power achieves that goal and SMRs further it 
        by overcoming financial barriers, and by reaching markets not 
        accessible to larger reactor designs.
  --Second, it builds the domestic manufacturing base, and thus creates 
        jobs and the potential for exports.
  --Third, and perhaps most important, it takes the safety of nuclear 
        power to a new level, something that will be demanded in a 
        post-Fukushima world.
  --Finally, and most importantly this program assures that our own NRC 
        will be engaged in the safety analysis and licensing of this 
        next generation of reactors and will preserve what is known 
        around the world as the ``gold standard`` of safety reviews.
    Madam Chair and members of this subcommittee, it takes a 
substantial investment to bring these technologies to market. It may 
not happen without some kind of assistance. we have an opportunity to 
move this program forward and capture the unique advantages of this 
next advance in the use of nuclear energy--both on an economic and a 
safety front. I urge your support for this program.
    Thank you for giving me this opportunity and I would be happy to 
answer questions.





























    Senator Feinstein. Thank you very much.
    Before we proceed to Dr. Moniz, I just want to thank the 
three heads of the companies for your straightforward 
presentations. It's very much appreciated, and I know there's a 
fiduciary issue here, but it's really appreciated, and I look 
forward to the Q and A.
    Dr. Moniz, welcome back. It's good to see you again, Sir.

STATEMENT OF DR. ERNEST J. MONIZ, PROFESSOR OF PHYSICS, 
            MASSACHUSETTS INSTITUTE OF TECHNOLOGY

    Dr. Moniz. Thank you, Madam Chair, Ranking Member 
Alexander. It's a pleasure to be back in front of you.
    Let me start by declaring very clearly what my reference 
frame is, I think, for the key question before the subcommittee 
and that is that the core argument for Government support to 
accelerate new nuclear powerplant construction in the United 
States is, in my view, the provision of a zero-carbon option 
for base-load power generation to mitigate climate risks in a 
timely way.
    Obviously, there are issues around what we will or will not 
do on carbon policy, but let me say that I certainly feel a 
sense of great urgency and believe that Mother Nature will be 
giving us increasingly clear signals.
    But I do hope that, in any event, we would all agree that 
it is prudent to prepare the technology options that we will 
need for the marketplace in the future should we, in fact, have 
a significant price on carbon dioxide emissions.
    In that context, nuclear is one of those many options, and 
I appreciate the earlier reading of my earlier statement, 
Senator Alexander, about some of the other technologies as 
well.
    Now, when it comes to the issue of Government support, I do 
believe there are a number of barriers to the private sector 
assuming the full risk for the major capital investment needed 
upfront right now for new plants incorporating new technology, 
and these include the lack of a price signal on carbon, the 
absence of end-to-end testing of streamlined licensing 
procedures at the NRC, new uncertainties about regulatory 
requirements following in the events at Fukushima and the lack 
of experience at NRC in licensing reactor technologies other 
than large light water reactors. So I believe these are market 
imperfections that do merit considering some public support.
    I think it's important for, again, the public to help 
provide options for this future marketplace that could look 
quite different from where we are today.
    Now, a major factor for nuclear plants is obviously the 
cost of capital, and, there, a major issue is the financing 
structure. Our MIT baseline economics evaluation of base-load 
plants includes a risk premium for any nuclear plant, a higher 
equity-to-debt ratio and a higher cost of capital.
    The question is will SMRs--and, by the way, it has a large 
impact, that financing risk premium. An issue is will SMRs, 
smaller cost et cetera help to work down that premium that, in 
itself, is a very, very large issue as far as the cost of 
nuclear plants.
    In fact, I would note that even if the so-called overnight 
unit cost of an SMR is larger than that of a large reactor, it 
does not mean the project unit cost is higher if construction 
times are shorter and financing is available at a more 
attractive rate.
    The 2020 SMR option, in fact, will be available only if we 
start now, and even then it will be very, very tight, and it's 
in that context that I do support the administration's request 
of $67 million to move toward essentially license or 
engineering certification studies for these technologies.
    In fact, that comes to the safety and security issues. I 
will not repeat all the issues that had been stated about 
advantages of SMRs and safety.
    I will note that these features need to be certified by the 
NRC, and there are questions. For example, I would say the 
long-term integrity and maintenance of steam generators in 
integral design and the integral system transient 
characteristics need verification. Judgments about passive 
safety should be a system judgment, not something around 
individual technologies.
    In that context, I will just note that an emerging very 
important tool is large-scale simulation, and I would note 
that, including at CASL, at Oak Ridge and the Nuclear Energy 
Advanced Modeling and Simulation program, I think we are moving 
to do that.
    I would urge that the NRC should remain very close to these 
developments to be able to suggest ways in which this helps 
safety reviews and positions them for rapid adoption of new 
tools.
    I will just also observe that earlier it was stated that--
the word ``cascading'' was used at Fukushima. They should be 
very careful. There was no cascading of events between 
reactors. They were essentially independent, driven by a common 
event, obviously, the tsunami.
    What it does raise, however, a point that Mr. Lyman made, 
is that when we think about the staffing of multi-modular 
units, we think about staffing in cases where there might be 
common problems in multiple modules.
    My last point involves policy considerations. While I do 
support moving forward, I want to point out there are, I think, 
policy risks that need to be addressed.
    The first is that we do not want this program to end up 
with the Government choosing the technologies that go forward. 
We have many contenders, not only the three at this table, not 
only LW SMRs, and I believe it's important that we have a 
transparent program design from the DOE that leaves open the 
possibility of others coming in for some assistance.
    Frankly, we don't want to repeat history and be left with 
only light water options for the long term, only because it's 
what we've always done.
    The last point I will make is that--In fact, I should add 
that the SMRs have this very attractive feature, frankly, in 
comparison to the nuclear business. There has been an unusual 
amount of innovation. That's what we want to encourage and not 
suppress, for example, with policies that channel us to one 
particular technology.
    My second and last point is that, as with light water 
reactors--I mean, conventional light water reactors--there will 
inevitably arise a request down the road for direct 
construction support for the SMRs, and I believe the case 
here--I will put an advance marker on the table--is far less 
compelling than it was for the light water reactors.
    Nevertheless, I would want to emphasize a principal as we 
go in this direction. For light water reactors, the Congress 
has approved--as was mentioned earlier, I believe--a 
substantial loan-guarantee program.
    Whereas, in our MIT 2003 report, we emphasized, rather, 
approaches that reward success and don't provide insurance 
against failure, which is one way to interpret a loan 
guarantee.

                           PREPARED STATEMENT

    So, as we go forward, whether it's a production tax credit 
or a purchase-of-power agreement, we need to have any subsidies 
be those that reward the production of electricity according to 
the economics expected with successful construction and 
operation and not ensuring against failure.
    Thank you.
    [The statement follows:]

               Prepared Statement of Dr. Ernest J. Moniz

                   LIGHT WATER SMALL MODULAR REACTORS

    Chairman Feinstein, Senator Alexander, and members of the 
subcommittee, thank you for the opportunity to present and discuss 
views on the economics and safety of Light Water Small Modular Reactors 
(LW SMRs) and on some policy issues regarding possible Government 
support for accelerating their deployment. I must start by emphasizing 
that this testimony represents my personal views, not those of the 
President's Council of Advisors on Science and Technology, the Blue 
Ribbon Commission on America's Nuclear Future, or my home institution, 
Massachusetts Institute of Technology (MIT).
    The core argument for Government support to accelerate new nuclear 
powerplant construction in the United States is, in my view, the 
provision of a ``zero''-carbon option for baseload power generation to 
mitigate climate risks in a timely way. Energy security concerns are 
not a compelling reason, given the substantial coal and natural gas 
resources of the United States, as well as renewables with expanding 
deployments, such as wind and solar. Also, material displacement of oil 
as a transportation ``fuel'' is quite some time away.
    There are currently 104 nuclear plants operating in the United 
States. The urgency of the climate change risk mitigation imperative 
argues for a move toward low-carbon power generation, but there are a 
number of barriers to the private sector assuming the full risk for the 
major capital investment needed for a new nuclear plant incorporating 
current technology. These include:
  --The lack of price signals for the climate change risks associated 
        with greenhouse gas emissions from fossil fuel combustion;
  --The absence of end-to-end testing of streamlined licensing 
        procedures for new nuclear plants; and
  --New uncertainties about regulatory requirements following the 
        events at Fukushima.
    Policies are in place to accelerate introduction of 
``conventional'' large LWRs (GWe and bigger) through, for example, loan 
guarantees. Some projects are moving ahead on this basis, but the 
number is far fewer than were anticipated when the legislation was 
passed. In this testimony, I will discuss the motivation for advancing 
SMRs toward design certification and, if the economic case can be made, 
their licensing and construction.

Baseload Electricity Economics
    The costs of nuclear powerplants should be put in the context of 
baseload alternatives. These are illustrated in the table showing 
levelized electricity costs for new nuclear, coal, and natural gas 
plant construction. These data are taken from a 2010 MIT report on the 
``Future of the Nuclear Fuel Cycle''. Today's natural gas prices are in 
the $4-$5/MBtu range, making natural gas plants much more economical 
with respect to both capital requirements and levelized electricity 
cost. We have however been through many significant excursions in 
natural gas prices over the last decades, and the recent MIT 
interdisciplinary study on ``The Future of Natural Gas'' finds that 
natural gas prices slowly rise on average over time, suggesting the 
need for caution about over-reliance on any single fuel source. 
Furthermore, eventually natural gas itself becomes too carbon-intensive 
in a few decades if carbon dioxide emissions are severely limited 
relative to today's levels.
    These factors emphasize the importance of providing options for a 
future marketplace that could look quite different (e.g., a substantial 
price on carbon dioxide emissions). Nuclear is one such option. The 
generation portfolio decisions are likely to be different in different 
parts of the country depending on the integrated resource planning 
methodology of public utility commissions, the availability of 
infrastructure, the ability to incorporate costs into a rate base, 
generation portfolio standards, and State/regional carbon dioxide 
emissions requirements.

                                    COSTS OF ELECTRIC GENERATION ALTERNATIVES
                                                [In 2007 dollars]
----------------------------------------------------------------------------------------------------------------
                                                                     Levelized cost of electricity (cents/kWh)
                                  Overnight cost  Fuel cost  ($/ -----------------------------------------------
                                      ($/kW)           MBtu)                        $25/ton-CO2    Same cost of
                                                                     Base case         price          capital
----------------------------------------------------------------------------------------------------------------
Nuclear.........................           4,000            0.67             8.4             8.4             6.6
Coal............................           2,300            2.60             6.2             8.3  ..............
Gas.............................             850          4/7/10     4.2/6.5/8.7     5.1/7.4/9.6  ..............
----------------------------------------------------------------------------------------------------------------

    Coal (without carbon dioxide capture), like natural gas at the low- 
and mid-range fuel prices, has lower capital and levelized electricity 
costs than our baseline nuclear costs. However, coal is the most carbon 
intensive fossil fuel and even a modest carbon dioxide emissions charge 
of $25/ton would make nuclear competitive with coal. For reference, 
$60/ton is generally viewed as a somewhat optimistic emissions charge 
to warrant carbon dioxide capture and geological sequestration on 
economic grounds; such a charge would drive the coal levelized 
electricity cost beyond 11 cents/kWh.
    A major factor is the cost of capital, which hits nuclear 
powerplant construction particularly hard because of the high capital 
costs and the longer construction times (5 years) that are typically 
required. Our baseline financing model assigns a risk premium for 
nuclear, meaning both a higher equity/debt ratio and a higher cost of 
capital. The risk premium has a large impact, as seen in the table. 
Elimination of the premium brings the nuclear levelized cost into line 
with coal and with moderately priced gas even with no carbon dioxide 
emissions price. Of course, there is still the issue for many utilities 
of the $6-$10 billion project cost for a large LWR.
    An entirely different approach to new nuclear powerplant 
construction lies with SMRs. This has the possibility of addressing the 
cost/financing issue. SMRs come in a variety of proposed forms, some 
based on the same underlying light water reactor (LWR) technology that 
is used in almost all nuclear plants today, while others are based on 
gas- or metal-cooled designs. They range in size from 10 to 300 
megawatts. None have been through a licensing procedure at the Nuclear 
Regulatory Commission (NRC), and this is a time-consuming process for 
any new nuclear technology--especially those that are farther away from 
the NRC's established experience and procedures.
    A major advantage of SMRs is that their small size compared with 
LWRs means that the total capital cost is more in the $1 billion range 
rather than an order of magnitude higher. Capacity can be built up with 
smaller bites, and this may lead to more favorable financing terms--as 
we have seen, a major consideration for high capital cost projects that 
take years to license and build. Furthermore, the possibility of 
bringing part of a larger multi-module plant online means that cash 
flow can start earlier. This is obviously good for the plant owner, but 
it can also be important for regulators who are increasingly being 
asked to place part of the nuclear construction cost into a rate base 
before electricity is generated. Other benefits lie with more 
flexibility in providing reserve margins for shutdowns, with grid 
integration, and with replacement options for fossil plants (which 
typically are sized well below a 1,000 MWe).
    Still, the SMR must come in with a capital cost that is also 
competitive with LWRs on a unit basis; however, it is quite possible 
that a higher unit overnight cost can still yield a lower unit project 
cost because of improved financing terms and a shorter construction 
time. The LWRs have been driven to larger and larger size in order to 
realize economies of scale. The SMRs may be able to overcome this trend 
by having factory construction of the SMR or at least of its major 
components, presumably with economies of manufacturing, the ability to 
train and retain a skilled workforce at manufacturing locations, 
quality assurance, continuous improvement, and only fairly simple 
construction onsite. The catch-22 is that the economies of manufacture 
will presumably be realizable only if there is a sufficiently reliable 
stream of orders to keep the manufacturing lines busy, and this in turn 
is unlikely unless the large number of designs is winnowed down fairly 
early in the game. Reaching the n-th plant for a small number of 
reactor types is likely to require a complex interplay between 
Government support and proponents of the many contending SMR designs.
    A 2020 SMR option will be available only if we start now, and even 
then it will be tight. Prior to Fukushima, the Obama administration 
submitted to the Congress a proposed 2012 budget that would enhance the 
level of activity in bringing SMRs to market. LWR-based technology 
options would be advanced toward licensing ($67 million request), and 
other SMR technologies would be supported ($29 million request) for R&D 
needed to have them follow in the licensing queue. The program is 
modest, but sensible in light of today's fiscal realities. Obviously 
the Federal budget deficit makes it difficult to start any new 
programs, but a hiatus in creating new clean-energy options--be it 
nuclear SMRs or renewables or advanced batteries--will have us looking 
back in 10 years lamenting the lack of a technology portfolio needed to 
meet our energy and environmental needs economically or to compete in 
the global market. We need to get on with the business of providing 
low-carbon options for a carbon-constrained future, with a principal 
role of government being to help establish the engineering and economic 
performance information for credible competitors in a future 
marketplace conditioned by an explicit or implicit carbon dioxide 
emissions price. Public investment is too low by about a factor of 
three (PCAST, November 2010). The 2012 proposal offers a start for 
SMRs.

Safety and Security
    The U.S. record for nuclear power safety and security has been a 
good one for the last 30 years. Nevertheless, Fukushima has clearly 
raised the stakes. New LWR designs incorporate a greater reliance on 
passive safety systems that can help ameliorate some of the problems 
that developed with loss of power and active cooling at Fukushima, but 
SMRs have mostly been designed to enhance safety further. The designs 
generally emphasize natural convection cooling such that cooling can be 
sustained for a considerable time without external power. The small 
size of the reactors facilitates decay heat removal by natural means. 
Integral designs, wherein various primary system components such as 
steam generators are brought inside the pressure vessel, tend to 
eliminate large loss of coolant accidents. Below-grade construction for 
both the reactor and spent-fuel storage pools and enhanced seismic 
protection are also common features of SMRs.
    Nevertheless, there is some way to go before these design features 
are certified by the NRC (this would be supported partially by the DOE 
program proposed for 2012). This is especially so for non-LW SMRs, 
since the NRC experience and licensing procedures are almost 
exclusively based on LWRs. It is very important that an investment be 
made in diversifying and deepening the NRC technical strength for 
dealing with multiple nuclear technologies--such as gas reactors, fast 
reactors, molten salt reactors. Otherwise we will block out or 
seriously delay innovative technologies for lack of a regulatory basis.
    There will be questions for LW SMRs as well. For example, the long-
term integrity and maintenance of steam generators in integral designs 
and the integral system behavior during transients, including startup, 
needs verification. Judgments about passive safety will need to be made 
in the context of an integrated appraisal of system design.
    An important emerging tool for advancing design and design 
certification is leading-edge, large-scale computer modeling and 
simulation. The 2003 MIT report on the ``Future of Nuclear Power'' 
placed the highest priority for DOE nuclear R&D on development of such 
capabilities, with a perspective that the nuclear industry lagged far 
behind many others in this regard. The latter observation, in my view, 
remains true, but the DOE now has a focus on rectifying this both 
through the Nuclear Energy Advanced Modeling and Simulation program and 
the specific innovation hub Consortium for Advanced Simulation of Light 
Water Reactors (CASL). The latter is headed by Oak Ridge National 
Laboratory and involves several other national laboratories and 
universities, including MIT (I should note that I serve as chair of the 
CASL advisory board). I believe that these advanced simulation 
capabilities, when fully developed, will serve as key facilitators of 
nuclear technology certification and of nuclear science and technology 
innovation. In particular, such tools can be enablers of SMR deployment 
at the end of this decade. The LW SMR design certification could 
benefit specifically from the tools being developed at CASL, but 
alternative technologies, such as gas and fast neutron spectrum SMRs, 
should also be addressed. The NRC should remain close to these 
developments so as to be able to suggest development paths useful to 
the regulatory challenge and to position for rapid adoption and 
utilization.
    The SMR configuration may have security advantages as well, such as 
the benefits of below-grade installation. Nevertheless, the safety and 
security requirements deemed necessary by the NRC remain to be 
determined and could have a significant impact on the economics of 
SMRs. Post-Fukushima, the NRC will re-examine seismic, flooding, power 
cutoff, backup, and spent-fuel management requirements. If the judgment 
is that various functions, such as security, do not scale with size of 
the reactor or that operational savings are not realizable for 
operation of a cluster of modular reactors, then the operational costs 
for SMRs could be challenging. In the extreme, if the preferred 
position of nuclear power in the dispatch order based on marginal 
operating cost is compromised, the value proposition of SMRs would be 
seriously reduced because of the large sunk capital costs. These issues 
remain to be clarified in the licensing process.
    Nuclear weapons proliferation stemming from misuse of fuel-cycle 
technologies is another security concern. SMRs do not pose a particular 
problem relative to ``regular'' LWRs. Indeed there can be some 
advantages, for example for technologies that require less frequent 
refueling. However, apart from possible technologies that have the full 
reactor module returned to the country of origin or special fuel forms 
(e.g., TRISO particle fuel for gas reactors), the proliferation issue 
is not an especially strong differentiator among LW reactor 
technologies.
    Spent-fuel management is also a concern, especially in the absence 
of a licensed geological repository or suitable consolidated storage 
sites. The SMRs are generally designed to accommodate a lifetime of 
spent-fuel storage in below-ground pools. However, especially for a 
multi-module plant, these design features can equally be incorporated 
into the design of new large LWRs.

Policy Considerations
    While I do believe that SMRs represent a sufficiently novel and 
promising approach to nuclear power to merit public risk-sharing for 
first movers, much remains to be thought through on the specific 
implementation plan. There are some major policy risks.
    The first, and more important, is that Federal assistance at this 
stage for two LW SMRs, among the many serious candidate technologies in 
the U.S., could lock-in these technologies. This is especially so for 
SMRs (versus large LWRs) since serial production of a significant 
number of units with an identical design in a manufacturing environment 
is crucial for the value proposition. This is a challenging issue 
since, as noted earlier, practical pursuit of serial production will 
require narrowing down the options--but the Government must be very 
careful about being the arbiter of technology choice. This tension 
needs to be addressed transparently. Indeed the smaller scale of SMRs 
relative to traditional LWRs has encouraged an unusual amount of 
innovation in the nuclear technology space, and it is important to 
nurture such innovation, not suppress it. This applies both to LW SMRs 
and to the other SMR technology pathways that are not part of the 
initial design certification cost-sharing program. The DOE needs to 
propose from the beginning a program structure that, subject to 
congressional appropriations, will leave open the possibility of risk-
sharing with promising non-LW technologies that have successfully 
emerged from the R&D phase. If not we will repeat history and be left 
with LW options because that is what we have always done. The 
Quadrennial Energy Review recommended by PCAST, and the first 
installment Quadrennial Technology Review being carried out by DOE, 
offers the proper venue for carrying out the underlying analysis, but 
DOE presently lacks sufficient capacity to carry out the needed level 
of quantitative analysis for the QER/QTR; rectifying this is central to 
the Department's future effectiveness in formulating energy technology 
policy. With regard to SMRs, the marketplace should be left to decide 
the appropriate time for down-selecting to one or two designs that can 
be manufactured in serial fashion to very high-quality standards, using 
the information gained from the Government cost-shared program.
    This raises the issue of the degree to which the public benefits 
from the experience of first movers that are beneficiaries of public 
support. This issue is not specific to SMRs, but nevertheless deserves 
emphasis. When all is said and done, the public's investment in the 
first mover plants should provide information for equipment vendors, 
users, policymakers, investors, and others. The Government's interest 
is in stimulating further innovation and competition. This is not to 
say that specific IP is shared, but to date the pendulum has swung too 
far toward the cost-sharing company having proprietary rights to 
control data and information. This needs to be addressed to assure 
taxpayers that their funds are not being used to cement market control 
by individual companies.
    Second, as with LWRs, there will inevitably arise a request for 
direct construction support for the first SMRs. The case is less 
compelling here, given the relatively smaller capital exposure. For 
large LWRs, the Congress put in place a substantial loan guarantee 
program. The 2003 MIT report supported a production tax credit (PTC), 
at least for tax-paying entities, on the basis that such a credit 
rewards success in the project. In contrast, a loan guarantee can be 
interpreted as insuring against failure. Clearly, the opportunity to 
reduce the cost of capital on such a major capital commitment is 
understandable for the companies involved. For the reduced commitment 
needed for an SMR, we do not see the need for a major extended SMR 
construction subsidy beyond the legitimate areas of design 
certification review and R&D. However, if they are implemented, the 
principle should be to implement first mover subsidies designed to 
reward project success for different performers (versus failure 
insurance); this will help sort out the contenders for Federal support.

Conclusions
    SMRs represent technology innovation that could change the 
trajectory of nuclear power deployment in a relatively short period. 
However, much remains to be understood before they are licensed for 
material deployment, and the DOE should continue and grow support for 
key enabling analytical tools. The arguments for public ``first'' mover 
risk-sharing are reasonable, and should be pursued to a degree, but the 
public's interest in gaining and disseminating experience from 
demonstrations/first movers should be promoted more strongly.
    Thank you, and I look forward to addressing your comments and 
questions.
                                 ______
                                 
    Note.--The MIT reports ``Future of Nuclear Power'' ``Future of the 
Nuclear Fuel Cycle'', and ``Future of Natural Gas'' can be found at 
web.mit.edu/mitei/.

    Senator Feinstein. Thank you very much, all of you. There 
is much to think about.

                      ECONOMICS OF INDIVIDUAL SMRS

    Dr. Moniz you're an academic. You're an expert in this 
area. Are these things commercially viable on their own?
    Dr. Moniz. I think that's exactly what we need to find out. 
We have two questions. We need to certify the safety 
characteristics through a system evaluation, and I believe 
that's what this program will help accomplish, and then we have 
to find out--excuse me--if the dog hunts in terms of economic 
viability.
    I do believe that, for this decade, in my context of moving 
toward lower carbon, natural gas will be a major bridge, but 
it's only a bridge to what I believe will be a required 
deployment of zero-carbon options, and we have to see what 
nuclear's role is in there.
    I do believe the SMRs do have a lot of these attractive 
features that provide them much more flexibility in meeting 
market demands.
    Senator Feinstein. Okay. Let me put this out on the table. 
My big concern is that they're not cost effective on their own, 
that they have to be clustered, and, therefore, how many do you 
cluster? Where do you stop, that kind of thing.
    The second point is whether, in fact, they will raise the 
cost to the consumer of power. That's the 10 to 30 percent.
    So let me ask each of the three CEOs if they would care to 
comment on that question, and then Dr. Lyman, if you would, why 
don't we begin with you, Mr. Ferland.
    Mr. Ferland. Sure, I'm happy to comment on that.
    You know, our view of this is that what you have in the 
past is economy of scale has been driven by large plant, spread 
out your costs over a large number of megawatts that are 
produced.
    On the AP-1000, which we're constructing today, we are 
shifting to more of a module-type design where we manufacture 
pieces of those units somewhere else and we bring them on site 
and assemble them. So it's a step in the right direction, but 
we still rely on--honestly--on the relatively large size of 
that unit.
    And then the big jump on SMRs is true modular construction 
where we can really gain an assembly line like efficiency, and 
we think, as I said before, we can do that in the ballpark of 
about 10 units, ship the units to site and finish them and put 
them into operation.
    Senator Feinstein. Let me see if I understand you. So to be 
cost effective, you have to manufacture 10 units, but that 
doesn't mean you have to cluster them all together, right?
    Mr. Ferland. That's----
    Senator Feinstein. So it's just the manufacture of 10, and 
then is one separately operating cost efficient over time?
    Mr. Ferland. Yes, Madam Chairwoman. You're exactly correct 
in that we think we need to have 10. They do not necessarily 
have to be clustered together.
    And from that point forward, our goal is to have the cost 
of these units be at or below the current cost of nuclear 
today, so it's extremely competitive, and my belief is that 
we'll get there and exceed those numbers.
    Senator Feinstein. Thank you.
    Mr. Mowry.
    Mr. Mowry. Thank you, Madam Chairman. With regard to the 
economics, first of all, we would not be investing our own 
company's resources, and regardless of the degree of cost 
sharing that would go forward, we're talking about several 
multiples of our yearly earnings that we would have to invest 
on our own after this program, and this represents a 
significant business risk and business investment, and, 
clearly, we would not be pursuing this if we didn't believe 
that, in the long term, we would have a competitive product 
that we could sell.
    And we believe that we are going to have a competitive 
solution not only because of what Mr. Ferland said with regard 
to the factory assembly, but there is an inherent simplicity 
around SMRs because of this idea of an integral reactor design 
that allows you to simplify all of the other costly systems 
that you need around this thing to protect it properly.
    Senator Feinstein. Stop for a second. Are you essentially 
saying the same thing that Mr. Ferland said that if you can 
manufacture 10, from a manufacturing point of view, that's cost 
effective, but that you can operate one in a cost-effective 
way?
    Mr. Mowry. Yes, and, in fact, we have a consortium of 
utilities in the United States that are funding development of 
policies and other things that are important for the deployment 
of SMRs.
    We have 14 utilities that are called GNTs that are small, 
regional cooperatives that have in their network less than 
2,000 megawatts of generation requirements. They cannot afford 
and they cannot use large reactors. They don't even need a 
cluster of small ones.
    They're people who need one or two small reactors and they 
see that the potential economics of an SMR can allow them to 
basically own one or two of these and supplement their 
transmission infrastructure with carbon-free generation.
    Senator Feinstein. Thank you.
    Dr. Lorenzini.
    Dr. Lorenzini. Thank you. First of all, I would say that 
the biggest test for cost effectiveness for us is our 
investors. They grill us pretty hard, and they're not going to 
make the investment unless they're satisfied that we have a 
technology that's going to reach the market. And reaching the 
market means that it has to be competitive economically with 
other opportunities and customers have to validate that.
    So our investors go back and forth between scrutinizing us, 
talking to customers and going back and forth with that 
dialogue. Those are people with skin in the game.
    Senator Feinstein. So you're saying the same thing. Is your 
cost of production at 10 to be cost effective and one will 
stand on its own?
    Dr. Lorenzini. Our model does not involve marketing a 
single module necessarily. We can market a single module in 
some markets. We don't think it's cost effective for us to 
market one module because if you do that you wind up with a 45-
megawatt module distributed throughout the system and it's just 
not practical to do that.
    What we think we've done actually by creating this modular 
design that clusters reactors is create a huge flexibility for 
customers. We build a single building and we add modules, each 
one with its own independent system and each one totally 
contained in its own system that allows them to increase their 
load to match demand.
    The National Association of Utility--has endorsed small 
reactors, because they're looking at it from the perspective of 
customers.
    We've got as well an 11-member customer advisory board. All 
of them are interested because they see this as a huge 
opportunity for them to serve their customers and lower their 
cost to customers.
    Senator Feinstein. Thank you.
    Let me go to Dr. Lyman first. Dr. Lyman, do you have a 
comment? We've heard the three companies.
    Dr. Lyman. Yes, thank you.
    I'm not an economist, but I have to say that I still can't 
see how they can overcome some of these economies-of-scale 
hurdles with the kind of deployment they're talking about.
    First of all, in my written testimony, I refer to the one 
study that I'm aware of that tried to quantify the benefits 
that SMR vendors have been arguing can actually overcome the 
economies-of-scale disadvantage, and that study found that, at 
best, they could get it close to the cost of a large reactor, 
but--you know. So they can't beat the large reactor.
    With regards to the clustering issue, it has to do with the 
economies of scale of the balance of the plant and the 
infrastructure at the site.
    And so this is why I'm concerned that unless--this is why 
SMR vendors want regulatory relief from certain requirements.
    If you need the same number of security officers on every 
shift for a single 125-megawatt reactor as you need for a 
1,000-megawatt reactor that would lead to an excessively high 
operating maintenance cost.
    So this is why I believe that there is a fundamental tie 
toward improving the economics of SMRs at single sites with 
some of the relaxation of security and safety requirements that 
I've been talking about.
    So I don't believe unless that kind of weakening of 
regulatory requirements is granted do they stand a chance of 
competing with larger reactors.
    Senator Feinstein. Thank you very much. Senator?
    Dr. Moniz. Madam Chair, may I just----
    Senator Feinstein. Oh, I beg your pardon. Dr. Moniz, I'm 
sorry.
    Dr. Moniz. I beg your pardon. May I--I have a couple of 
comments.
    Thank you, Madam Chair, because I want to say that I do see 
how one can draw a conclusion that one cannot beat a large 
reactor, because there are many variables, including the 
potential--I'm not predicting this--but the potential for very 
different financing structures, which has an enormous impact in 
a technology where it's all upfront capital. So I think that 
remains to be seen.
    Number two, nevertheless, I would say, while I support this 
early support, as I said earlier, when it comes to 
construction, risk should remain with the private sector. Let 
these guys prove it. And if not, well, they and their investors 
will lose the money.

                       LOW-CARBON ENERGY OPTIONS

    Third, we should note again in this context of options for 
the future--in particular low-carbon future--that about one-
third of our coal fleet is more than 40 years old, less than 
300 megawatts and inefficient. Those plants are not going to 
get any kind of major investment for retrofits. I don't mean 
only carbon capture. I mean for criteria pollutants and 
mercury, et cetera.
    We are going to need some technologies, which I hope will 
be very low-carbon technologies, whether it's nuclear or wind 
and storage, et cetera, but we're going to need those 
technologies in a 10-to-20-year timeframe in spades.
    That's why I feel that even though our finances are pretty 
stretched at the moment, and I have sympathy for your job on 
appropriations, we just need to make some low-carbon options 
available in 10 years. We do not have very attractive options 
at this stage in terms of cost.
    Senator Feinstein. Can you be more precise on whether coal 
can be a real source for these?
    Dr. Moniz. Well, I think that will be a decision to be 
made, of course, by the utilities and the plants, but another 
point about finances, which is why I think we should not make 
black-and-white statements, is that the cost of a--let's say a 
green-field plant of any type, it's not just the power source, 
it's all the balance of plant--hooking up the transmission 
systems, et cetera, et cetera.
    Well, if you're replacing an existing 250-megawatt plant 
and you can use--you're all set up into the grid, et cetera, 
that's another huge financial implication.
    So all I'm saying is I don't know the answer, but it sure 
sounds like the kind of option we'd like to have if these guys 
can produce what they're saying, and if they can't, I'd say put 
the risk on them.
    Senator Feinstein. All right. Thank you very much, Senator, 
very interesting.
    Senator Alexander. It is, and I thank all five of the 
witnesses for the diversity of views here.

                     SMR PRODUCTION BUSINESS MODELS

    Senator Feinstein has honed in on a very important point. 
Let me ask the three of you in the middle, Mr. Ferland, does 
your business model--I'm not asking you to say whether you 
would turn down Federal money if Senator Feinstein offered it 
to you. I'm just saying does your business model for SMRs 
include a Government subsidy after the first 10?
    Mr. Ferland. No, it does not. The assumption is that we use 
it to kick start the program upfront. It lets us accelerate the 
R&D spending and the engineering work faster than we normally 
would, and then we rely, as my colleagues have said, on the 
fundamental business case----
    Senator Alexander. So it'd be the marketplace. So you 
wouldn't--well, I'm not asking you to say you'd reject it, but 
you're not moving ahead with the idea that after the first 10 
are made that you need Government support to succeed in the 
marketplace.
    Mr. Ferland. That's correct. We just need the upfront help.
    Senator Alexander. Mr. Mowry, what about you?
    Mr. Mowry. Our business model does not include subsidies.
    If I could just amplify for a moment here, there was a 
comment made earlier with regard to a cost premium, and I can 
say, in discussions with our potential customers, they're not 
looking necessarily for a relative cost reduction. They would 
like to have the ability to invest in incremental power 
generation without a cost premium.
    In other words, if you're going to sell me a reactor that's 
10 percent of the size, I would like to invest 10 percent of 
the money.
    And this whole discussion about subsidies, a lot of the 
challenges that we have today are related not to the relative 
cost of nuclear, but to the--as Dr. Moniz said--to the large 
magnitude of the investment that's required that, frankly, it's 
betting the farm for a lot of utilities.
    You can cut that investment down by a factor of 10, all of 
a sudden a lot of the drivers for things like loan guarantees 
go away and this becomes a more standard economic decision for 
a utility.
    And so we don't see the need for subsidies in the long 
term. Our goal is to create a carbon-free, base-load option 
that is competitive in the marketplace without long-term 
subsidies.
    What we are looking for is risk sharing as we try to get a 
first-of-a-kind option out there by 2020.
    Senator Alexander. Mr. Mowry, without--even though Senator 
Feinstein is chairman of the Intelligence Committee, I don't 
want to get you in any trouble with classified information, but 
you already know something about making small reactors, right?
    Mr. Mowry. Yes, we do.
    Senator Alexander. Would you say the United States is the 
world's leader in the production of small reactors today?
    Mr. Mowry. At this point, yes.
    Senator Alexander. Yes. And does your company make money?
    Mr. Mowry. Some. Yes.
    Senator Alexander. Well, I mean, is it a profitable 
business?
    Mr. Mowry. Yes, it is profitable.
    Senator Alexander. Yes. So you're already in a very 
profitable--you're already in a profitable business making 
small reactors for the United States Government.
    Mr. Mowry. Yes, we are.
    Senator Alexander. Is that right?
    And they're used in 103 nuclear Navy vessels. Is that 
correct? Or a number----
    Mr. Mowry. They are used in the Navy, yes.
    Senator Alexander. Whatever the number might be.
    Senator Feinstein. Yes.
    Senator Alexander. Mr. Lorenzini, does your business model 
include subsidies, say, after the first 10 from the Government?
    Dr. Lorenzini. No, Sir. Our business model says it requires 
a substantial front-end investment to develop the design and to 
get the design licensed and certified before the NRC. Once 
that's been done, we go to market. We don't need any further 
subsidies.
    Senator Alexander. So Dr. Lyman thinks you may not make 
money, but that's really your problem, right? I mean, unless 
the Government decides it wants to create some sort of 
permanent subsidy for what you're doing, which I think is very 
unlikely and which I would not be inclined to support.

                  REACTOR DESIGN IN LIGHT OF FUKUSHIMA

    Dr. Moniz, I believe Mr. Mowry said that the design of his 
SMR would make it such that--well, let me ask this way: What 
happened at Fukushima was that there was no water to cover the 
spent-fuel rods, basically, right?
    Dr. Moniz. That was one of many problems.
    Senator Alexander. Well, let's say if there had been water 
to cover the spent-fuel rods from the instant of the natural 
occurrences, there wouldn't have been a problem. Is that right?
    Dr. Moniz. Both for the spent fuel and for the reactor 
cores as well if they had remained----
    Senator Alexander. So, now, he said that there wouldn't 
be--with his passive system that nothing would happen for 7 
days. Does that sound plausible to you?
    Dr. Moniz. Sounds plausible, but, again, I would rely upon 
a hard review by the NRC.
    Senator Alexander. Now, as I understand your testimony, 
you're saying that this is not something that we should barge 
forward with 100 miles an hour today to start building small 
reactors.
    You're saying that we should move ahead with the R&D phase 
as quickly as we can to see whether we should license the 
safety of these and the sites upon which they should go.
    Dr. Moniz. Well, I would term it not so much R&D as it is 
kind of design and engineering certification and an evaluation 
to get a license.
    Senator Alexander. And some of those dollars are spent so 
that the Government can do its job properly in terms of 
supervision of such reactors. Is that not correct?
    Dr. Moniz. I agree with that, yes.
    Senator Alexander. Now, as I also understand----
    Dr. Moniz. If I may just add, and, again, I think we need 
to also--and it's not only for LW SMRs. I think we need more 
investment in the NRC to develop the capability on a broader 
range of technologies to move promptly into a licensing----
    Senator Alexander. I have two other questions, if I may, 
Madam Chairman.
    Senator Feinstein. Yes.

                              CLEAN ENERGY

    Senator Alexander. One is you began with the climate-change 
point, which is that we're going to need as many good options 
of clean electricity as we can have. And by clean, that means 
without sulfur, nitrogen, mercury, carbon, and you mentioned 
natural gas.
    Today, coal is 46 percent of our electricity. Natural gas 
is 22--going up fast, because that's what utilities are buying, 
but natural gas has considerable carbon in it. Does it not?
    Dr. Moniz. Well, it's carbon light and----
    Senator Alexander. Forty or 50 percent as much as the 
cleanest coal plant?
    Dr. Moniz. Well, if you factor in efficiencies of the 
plants, I would call it about 45 percent of the carbon 
intensity of coal.
    Senator Alexander. Yes.
    Dr. Moniz. And if we look--we do have at MIT a recent 
report on the future of natural gas and fundamentally the 
analysis comes out confirming the idea of gas as a bridge for a 
while. If it substitutes for coal, it's a key part of carbon 
reduction, but, eventually, it itself is too carbon intense and 
needs zero carbon.
    Senator Alexander. And am I correct in saying that nuclear 
power today is nearly 70 percent of our carbon-free 
electricity?
    Dr. Moniz. Yes, I would say roughly, yes.
    Senator Alexander. And you mentioned the closing of the 
coal plant, Senator Feinstein, on the TVA region. They've 
decided to close 18 coal plants, which mean they're too dirty 
to operate, and they're too expensive to put on the pollution-
control equipment. And that means they're going to go from 50 
percent to 35 percent coal.
    So the question is then what do we do, because we don't 
want expensive power. Otherwise, our companies go overseas, and 
the decision we've made in the TVA area is that we're opening 
new nuclear plants, which is the--so nuclear power is going 
from 30 percent to 40 percent.
    As you envision a future for the United States, Dr. Moniz, 
do you see a situation where we could do what we need to do to 
have carbon-free electricity at a reasonable cost as a reliable 
source without nuclear power?
    Dr. Moniz. Well, my view is we have a limited number of 
arrows in the quiver. We have nuclear. We have renewable, 
especially wind and solar, in terms of a possible more 
ubiquitous deployment, and we have carbon capture and 
sequestration.
    Today, I think that nuclear and wind, obviously are poised 
to make major contributions, and are. Solar has a ways to come, 
although I'm very optimistic in the long term for solar, but we 
have to solve storage problems.
    CCS, frankly, of those I must say I would call at the 
moment the most challenged in terms of the economics.
    Senator Alexander. I agree. I think the Holy Grail of--the 
scientist who figures out how to capture carbon from a coal 
plant----
    Dr. Moniz. More cheaply.
    Senator Alexander [continuing]. Will win many prizes.

                             ENERGY STORAGE

    Madam Chairman, this gets to a discussion we've had before 
and we're likely to have again.
    Dr. Moniz mentioned storage. Batteries we've had a little 
discussion about, but wind or solar or any intermittent power 
is not going to be very useful to us unless we have much better 
batteries, correct?
    Dr. Moniz. Well, storage, in general. Batteries, but also--
--
    Senator Alexander. Batteries are the leading opportunity--
--
    Dr. Moniz [continuing]. Or other opportunities, but storage 
is absolutely critical for intermittent renewable.
    Senator Alexander. And here's my last question. Dr. Chu is 
organizing his Department around objectives which I find very 
interesting.
    For example, R&D to try to get the cost of driving an 
electric car down to 1 cent a mile for fuel, getting the cost 
of solar down to $1 per kilowatt, finding new ways to recycle 
used nuclear waste.

          ROLE OF FEDERAL SPENDING IN RESEARCH AND DEVELOPMENT

    Does that sound like--and batteries, trying to find ways 
generally to improve that. Does that sound like an appropriate 
way to spend Federal dollars as opposed to permanent subsidies 
to energy companies that might be operating mature 
technologies?
    Dr. Moniz. I am strongly in favor with your statement that 
extended subsidies for any technology are just an indication of 
a failed policy and a failed technology.
    So I think there is a role, as you have emphasized, for 
limited-time subsidies when they offer the real prospect of 
having the technology become marketplace competitive at the end 
of that period of support. I think that's the criterion.
    I just might add, by the way, earlier you did scare me a 
little bit when you said jump-start batteries. It reminded me 
of February in Boston, but anyway, that's--but I think--I 
totally agree with that philosophy, certainly.
    Senator Alexander. Thank you, Madam Chairman.
    Senator Feinstein. Thank you very much, Senator.
    I want to thank everybody. I think this has been a very 
good hearing. It's been a very interesting hearing for me.

                 CONCERNS ABOUT NUCLEAR WASTE DISPOSAL

    I think it's fair to say that my colleague, who I have 
great respect for, has been an enthusiastic supporter, and I 
think it's fair to say that I am very reticent about this.
    I'm reticent about it because if we let this go without a 
policy for spent fuel, if we close the plant or the repository 
in Nevada after spending $14 billion on it, we have $13 billion 
in liabilities because we can't dispose of the waste as we're 
supposed to. Adding to these problems doesn't seem to me to 
make good sense.
    So I think the question comes--and something that I really 
want to tackle, and, Lamar, that I hope you'll work with me on 
is how do we develop a spent-fuel policy for the Nation. Is it 
a regional system? Is it one repository?
    I think the last report I was reading said it should be 
voluntary on the part of the State. I agree with that, and I 
gather there is at least one State that's willing to step up.
    I think we have to deal with these issues. Otherwise, I 
feel from my vote that I just compound the problem down line.
    I've also come to believe that nobody knows what Mother 
Nature is capable of in terms of earthquake or hurricane or 
tornado. I never thought I'd see a nuclear plant encircled by 
water, but we saw it in Nebraska. I never thought I'd see a 
tsunami the height of this tsunami, but we saw it. I never 
thought that the Ring of Fire would be setting off earthquakes 
of the size that are now happening around the Pacific.
    So my own view is that we need to solve that waste issue, 
and I would certainly welcome any suggestions for anyone that's 
listening to this or particularly the people at this table.
    Candidly, I'm much more--how can I put it? I'm much more 
persuaded to your point of view by hearing your presentations. 
And yet I have a certain amount of doubt. You know, are they 
just saying what we want to hear or do they really mean they 
won't take a subsidy or what is it really going to do to the 
cost of electricity for the average Joe and Susie Smith?
    And yet what Dr. Moniz--who I have respect for--points out 
is we have all these coal plants, aging and dirty. What do you 
replace them with? Maybe this is the logical answer.
    So there's a lot to think about, and I'd like to work with 
you on it.
    Senator Alexander. Well, I thank you for the hearing. This 
has been very helpful. This is the kind of hearing that we 
welcome here to have such diverse and well-informed views.

                      AGREEMENT ON FEDERAL POLICY

    I think we've identified some things we can work together 
on, the kind of--you know, what's the appropriate role for 
limited Federal dollars in terms of energy? I mean, where do we 
draw the line in terms of what is R&D, what is joint cost 
sharing, what is a subsidy and what is a permanent--we should 
tackle that one.
    Second, what are we going to do with used nuclear fuel?
    And the President's BRC is coming out. I commend President 
Obama on his approach to this. He appointed a distinguished 
panel and good NRC board members and I think we can work----
    Third, I'll be glad to go with you and talk to Harry Reid 
about reopening Yucca Mountain if you want to, but I don't 
think we're going to have any success.
    And, finally, I think back when I was Governor. The 
previous Governor hadn't been able to locate a prison because 
he wanted to put it somewhere.
    So I was not having any success either. So I announced that 
we only had one and we'd have to have a competition for it. And 
we actually had four counties compete to get it and we located 
it and then we located another one.
    So I think the idea of having Federal incentives to 
persuade communities or States either to have a single 
repository or more than one is the obvious way to go, but I 
think we wait until we hear from the President's BRC.
    In the meantime, though, as you could tell from my 
comments, I think we should go ahead and make sure we have this 
option. I mean, all we're talking about is doing the 
preliminary work to see if industry can make it--in such a way 
so that they can make money and so that the Federal Government 
can do it in such a way so they can regulate it safely, and 
then we get to the point where then we go forward.
    That's probably--I mean, the talk is about one or two or 
three small reactors by 2020. So just having the arrow in our 
quiver, as Dr. Moniz said, I think is what we're talking about, 
and obviously we've got a lot more talking to do.
    But this--I thank the chairman for her open mindedness and 
willingness to hear points of view that might not agree with 
hers. That's----
    Senator Feinstein. How many at TVA?
    Senator Alexander. Small reactors?
    Senator Feinstein. Yes.
    Senator Alexander. TVA is thinking of one, which would be--
they have a partner with the Oak Ridge National Laboratory, and 
the Oak Ridge Laboratory--Dr. Chu would like to do that as part 
of his carbon-free quota for his Department.
    And Oak Ridge would like to do it. They estimate that a 
single reactor of about 125 megawatts would power the entire 
complex there--the super computers, the nuclear weapons 
operation and the citizens in the community.
    I think they're working with B&W on that. Is that right or 
are they working with anybody in particular?
    Mr. Mowry. Yes, they're hoping to, yes.
    Senator Alexander. But TVA and the Oak Ridge Laboratory 
have an agreement to explore it, but it would all depend upon 
this several years of work by the NRC and the companies whether 
it would come to reality or not.

                         CONCLUSION OF HEARING

    Senator Feinstein. Well, thank you very, very much. We 
appreciate the testimony. There's much food for thought, and 
the hearing is concluded.
    [Whereupon, at 12:06 p.m., Thursday, July 14, the hearing 
was concluded, and the subcommittee was recessed, to reconvene 
subject to the call of the Chair.]


              MATERIAL SUBMITTED SUBSEQUENT TO THE HEARING

    [Clerk's Note.--The following testimony was received by the 
Subcommittee on Energy and Water Development for inclusion in 
the record.]

           Prepared Statement of the Nuclear Energy Institute

    In testimony provided to this subcommittee on April 7, 2011, the 
Nuclear Energy Institute (NEI) \1\ supported the administration's 
request for fiscal year 2012 funding of $67 million for the Department 
of Energy's (DOE) Small Modular Reactor Licensing Technical Support 
program. This cost-shared, public-private partnership built on a 
similar request by President Obama for fiscal year 2011, which the 
nuclear industry also supported. In its April testimony, NEI noted that 
this cost-shared development program is the nuclear energy industry's 
highest priority in the fiscal year 2012 budget request. I urge you to 
approve DOE's request to begin this program during this fiscal year.
---------------------------------------------------------------------------
    \1\ The Nuclear Energy Institute (NEI) is responsible for 
establishing unified nuclear industry policy on matters affecting the 
nuclear energy industry, including regulatory, financial, technical, 
and legislative issues. NEI members include all companies licensed to 
operate commercial nuclear powerplants in the United States, nuclear 
plant designers, major architect/engineering firms, fuel fabrication 
facilities, materials licensees, and other organizations and 
individuals involved in the nuclear energy industry.
---------------------------------------------------------------------------
    NEI also provided testimony for the record in support of small 
reactor development to the Senate Energy and Natural Resources 
Committee on June 7, 2011. NEI's testimony focused on S. 512, the 
Nuclear Power 2021 Act, which we support broadly. The Nuclear Power 
2021 Act also contemplates a cost-shared, public-private partnership to 
accelerate the development and deployment of small modular reactors 
(SMRs).

 SMALL REACTOR DEVELOPMENT ADVANCES ENERGY, ENVIRONMENTAL BENEFITS IN 
                              NEW MARKETS

    Analyses by the Environmental Protection Agency and the Energy 
Information Administration, and global studies by the UN's 
Intergovernmental Panel on Climate Change and the International Energy 
Agency, conclude that a significant expansion of nuclear energy and 
other carbon-free generation sources is needed to meet the world's 
growing electricity requirements and reduce the electric power sector's 
emissions of carbon and other air pollutants.
    Small-scale reactors can complement large nuclear plant projects by 
expanding potential markets in the United States and abroad for carbon-
free energy production. Smaller reactors provide energy companies and 
other users with additional options to achieve strategic energy and 
environmental objectives.
    Their small size--less than 300 megawatts--and innovative features 
like dry cooling expand the range of sites suitable for deployment, 
such as remote and arid regions. These and other attributes make them 
well-suited to replace older coal-fired generating capacity. (Various 
analyses show that 30,000-50,000 megawatts of older coal-fired 
generating capacity may be shut down before 2020 as a result of tighter 
air quality requirements.)
    Modular construction will allow these new small reactors to be 
manufactured in a controlled factory setting, transported to the site 
by rail, truck or barge, and installed module by module. This 
manufacturing approach is more efficient than onsite field 
construction, and should reduce cost and construction time. Modern 
shipbuilding uses modular construction extensively, and it has been 
adopted for the construction of large advanced nuclear powerplants, 
such as the four Westinghouse AP-1000 plants under construction in 
China and the four reactors in pre-construction today in Georgia and 
South Carolina. Because they can be manufactured in North America to 
meet growing domestic and export demand, SMR deployment will create 
high-tech U.S. jobs and improve our global competitiveness.
    According to a February 2011 Commerce Department study \2\ on small 
reactors, a ``robust program of building SMRs could make use of 
existing domestic capacity that is already capable of completely 
constructing most proposed SMR designs. This ability could mean 
tremendous new commercial opportunities for U.S. firms and workers. A 
substantial SMR deployment program in the United States could result in 
the creation of many new jobs in manufacturing, engineering, 
transportation, construction (for site preparation and installation) 
and craft labor, professional services, and ongoing plant operations.''
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    \2\ The Commercial Outlook for U.S. Small Modular Nuclear Reactors, 
U.S. Department of Commerce, February 2011.
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    In addition, small reactors manufactured in America will help the 
United States re-establish its leadership position in nuclear energy 
technology around the world. By developing the innovative, clean-energy 
technologies the world demands, the United States can transfer its 
safety, security, and nonproliferation culture with the technology.

  SMALL REACTOR SAFETY AND SECURITY--ENHANCED BY DESIGN, REQUIRED BY 
                               REGULATION

    SMRs being developed today benefit from decades of advancements in 
materials, design, instrumentation, controls, and operational 
experience.
    SMRs are being designed with separate, independent underground 
containments for each module, as well as separate, independent safety 
systems protected within those underground containments. These same 
features provide the capability to withstand aircraft impacts and, 
coupled with their small footprint and limited access points, provide 
improved defense against any terrorist threat.
    SMRs rely less on engineered safety features (so-called ``active'' 
safety systems like pumps and motors), and rely instead on natural 
safety features (so-called ``passive'' safety systems like gravity feed 
of cooling water in the event of loss of electrical power, and natural 
convection to carry away heat). This design approach provides 
significant safety advantages.
    In addition, each of the lead light-water SMR designs uses an 
integral approach where the steam generators, pressurizer, control rod 
drive mechanisms, and coolant pumps (if used) are contained within the 
reactor vessel. There are no penetrations into the reactor vessel below 
the top of the core, which eliminates the possibility of large-break 
loss of coolant accidents.
    Because of their small size, integral design, and reliance on 
natural convection and gravity-based cooling systems, these small 
reactors can remain safe, even without onsite or offsite AC power, for 
7 days or longer.

  PUBLIC/PRIVATE PARTNERSHIPS ARE ESSENTIAL TO SUPPORT SMALL REACTOR 
                              DEVELOPMENT

    A number of analyses have documented the potential economic, energy 
security, and environmental benefits of SMRs. There are challenges to 
realizing those potential benefits, however, including design and 
first-of-a-kind engineering costs, Nuclear Regulatory Commission (NRC) 
licensing costs, and fabrication/construction costs. These challenges 
inevitably influence the economics of small reactors.
    In order to determine the business case for small reactors, NRC 
design and operational requirements must be finalized. Small reactors 
must meet or exceed all of the NRC's safety and security goals and 
requirements. Today's regulations are designed to ensure that large, 
light water-cooled reactors achieve these requirements. Tomorrow's 
small reactors may need new or modified regulations to ensure that they 
also meet or exceed these safety and security goals and requirements.
    The nuclear industry and other stakeholders are working with NRC to 
define the regulatory requirements for SMRs. This work is at a 
relatively early stage. The NRC and the industry have identified a 
number of generic regulatory issues--including license fees, 
decommissioning funding assurance, emergency planning requirements, 
security, control room staffing, loss of large areas of the plant due 
to terrorist activity and a number of others--that should be considered 
when developing the licensing framework for SMRs.
    The industry is developing position papers on many of these issues, 
and discussing them with NRC staff. These interactions between NRC and 
the industry are conducted in public meetings open to all.
    Based on these discussions and its own analysis, NRC will develop 
the licensing and regulatory requirements for SMRs that, in its view, 
would protect public health and safety. These requirements will be 
subject to review by (among others) NRC senior management, the NRC's 
Advisory Committee on Reactor Safeguards, and the NRC commissioners 
before they are finalized. Since these regulatory requirements will be 
promulgated as rules, they will also be subject to public review and 
comment before being finalized.
    Once finalized, these requirements must be factored into the 
design, licensing, construction and operation of a standardized small 
reactor. Only at this point will the initial economics be known for the 
first-of-a-kind or lead plant. Further work will be needed to optimize 
the factory fabrication and reduce the cost of future SMRs in much the 
same way our shipbuilding and aerospace industries have done.
    The cost-shared, Government-industry SMR program proposed by the 
President is designed to address these issues and reduce the risk and 
uncertainty of moving forward. Traditional partnerships among 
technology vendors, component manufacturers and end users are 
necessary--but not sufficient in themselves. Industry is prepared to 
absorb its share of these initial development costs, but revenues from 
the sale and operation of the first SMRs are some years away, and some 
level of Government investment in this promising technology is both 
necessary and appropriate. Absent additional business risk mitigation 
through Government investment, the potential benefits of these SMR 
concepts may go unrealized, or may be realized later than desirable.
    Leveraging private sector resources through public partnerships 
with the Department of Energy and other Government entities will help 
move these new reactor technologies to market, capturing their many 
benefits while maintaining U.S. nuclear energy technology leadership.

                    CONCLUSIONS AND RECOMMENDATIONS

    The potential benefits of small, modular, nuclear powerplants are 
substantial. These technologies should be pursued and supported. These 
designs expand the strategic role of nuclear energy in meeting national 
environmental, energy security and economic development goals.
    While the United States has the lead today in developing these 
small reactors, other countries are already developing them. Reducing 
the time to market is key to ensuring that U.S. companies gain a share 
of the global market and influence the international safety and 
security culture. The proposed DOE cost-shared small reactor program 
will help achieve this goal.

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