 Thank you very much. My name is John Hamry. I'm the president here at CSS, and I welcome all of you. Delighted that we can have this conversation. Let me just make a couple of general announcements. First of all, I do want to say thank you to our friends from FinMechanica who've made it possible for us to do this conference. Again, let me remind you, take your cell phone, pull it out, put silence, you know, silence on no bell tones. I don't want to listen to anybody's fancy bell tones here. We are tweeting live, and I'm saying this really for the audience that's outside. But I want you to know, we're tweeting live, and it's at CSIS underscore org. And we are using, as the hash sign, it's hashtag GSF2012. And we invite people to dial in. We are going to be taking questions from all of you, and it's a small enough and intimate enough room where we can do it directly. And so I will simply make sure that the conversation flows. But this is really your dialogue with both Mayo and with Brent. And then after this session, we will have lunch. You'll just have to pick up a brown bag as we go to the next place. Now, we've had two people on Twitter who have already written us questions. And the first question is, we're going to cover these, Jens. The first question is, after Fukushima disaster, does nuclear have a PR problem? I think we're probably going to talk about that. And then the second question is, why does it matter if the US is no longer a global nuclear leader in nuclear energy? That also is something we're going to talk about. So I want to thank our friends in cyberspace who actually frame this exceptionally well. I'm going to give a little bit of an introduction just to ground all of us. And I apologize to my two speakers, because they really are the focus of this. But I think for all of us to have just a little bit of a point of reference. So let me go ahead and talk about what's we're going to talk about the history of nuclear energy very briefly. We're going to talk about the nuclear energy production on a global basis. And then we're going to take a quick look at US nuclear. So let's take a look at the history of nuclear. Now, of course, it started in 1942 when they built the Chicago Pile. And of course, this, in 1953, seminal time when President Eisenhower gave the Adams for Peace speech. If you think about it, it is still the policy framework for America. There's danger in nuclear and there's great promise in nuclear. And we have to find a way to bring these together and to reconcile them and have a policy framework that makes that work. I would argue, and we'll go through this today, that that probably still is a dominating landmark for all of us. So now as we go down, we see it was in 1957 when the Price Anderson Act was passed. Now, probably this audience knows Price Anderson. But most of Americans don't have a clue what Price Anderson is. It is the foundation where we made it possible for nuclear energy because we established a government framework for liability. And I would argue it's one of the most powerful things that still shapes the effectiveness of this industry, something, frankly, that we've been trying to encourage Japan. They need a Price Anderson Act. OK, let's just march a little bit further in time. Of course, back in 1968, it would just give you a sense of where we were scale-wise past the nonproliferation treaty in 69. And then if you look at 1974, that's the last time we approved a power plant, 1974. It wasn't when we were building them, but it was the last time that one was approved. And the reason for that, of course, is we had Three Mile Island in 1979. Now, as we go down in time, now obviously that reshaped the landscape. We passed a number of pieces of legislation. 1985, INPO was created, very important. And INPO is the driving force of efficiency in American nuclear power production. And Mayo is the head of INPO. INPO has an executive secretary down in Atlanta, but they elect from among their midst a senior leader. And Mayo is here, and he's here in that capacity, that he's with us today. He's also the co-chair with Brent of our commission. You see, we hit the high water mark in 1990 for commercial nuclear power plants. We authorized Yucca, and I will show you soon. We deauthorized Yucca. 2005, of course, is when we put in place this landscape for the so-called nuclear renaissance. And very important, it's been a little bit slow on the uptake. We saw it, but in 2007, is when we started seeing new licenses being submitted. And of course, the NRC had, in many ways, sort of collapsed and had to be rebuilt. So that's been part of this process that's going on now. And then as we go down in time, Yucca was terminated. And then, of course, in 2011, Fukushima. Now, so we've just got to brief for you. Let me take a look quickly at the global nuclear energy production. I think it's interesting to see this. And what I'm going to do is to show you, just to orient you on this, the x-axis, the horizontal bar, this is the percent of nuclear inside these countries. And the y-axis is the amount of energy production in the country. And what I'm going to do is to track various parts around the globe to give you a sense of what production is like. And now you can see where we are. OK, we're going to go out to about 2010 here. Let's stop for a second. This was the landscape pre Fukushima. And you see, as a percent of nuclear, Europe was the largest, largely led by the French. The United States, you see, we're 20%. 20% of our electricity production is coming from nuclear power in America. And what you see, you may have seen the Asia thing moving a little bit. And it went over, and it was closer to 14%. And by 2010, it's actually moved back, so it's about 8%. The reason for that is China has been building so much commercial non-nuclear plants. So it isn't that the percentage of nuclear, it isn't that the raw numbers of nuclear plants have gone down. It's that the percentage against the economy has gone down. But now I want you to see what happens. We're going out into the future. OK, so 2030. If you will have noticed, Europe slipped to the left. And that reflects both Germany and Belgium and Switzerland say, and they're not going to do nuclear anymore. They're going to start phasing out of nuclear. You see, the United States is still fairly static. It's drifted a little bit closer to 19% by 2030. But you see this skyrocketing performance of Asia. And it's because you're seeing dramatic increases in the production of nuclear power in China. OK, let's take a look at just the reactor fleets, just to give you a sense of this on a national basis. And if we're looking here, the y-axis is just simply numbers of reactors. And the x-axis doesn't mean anything. It's simply a way to spatially differentiate the countries. But let's look at the pace of time of what's happening. What's China's rise? Japan's decline. And this is in 2000. Now, we haven't seen anything yet happen for the United States, but now watch. And this is simply looking at retirement schedules for nuclear power plants. We only took it out to 2030. So now, let me take a closer look now to the US nuclear energy production. This is, these are demography charts we've taken from population economists. And we're showing, I'm going to show you the demography profile of the nuclear power fleet. And these are numbers of reactors in each column. So if you look at the light green, it's 29 reactors that are in the age group, 25 years old to 29 years old. There are 30 reactors in that category. We're going to just watch to see what happens to our current. And this is by current investment plans. You don't see anything on the left. We're getting out of the nuclear power business. Now, one last look at this. And this is, again, I'm looking at the numbers of reactors that we have. And again, the x-axis is meaningless because it simply differentiates so that we can show. This is states. States in the United States, where we have nuclear. We have roughly 104 nuclear reactors. And we're going to watch the clock. George is going up a little bit because we still have production coming online. That is what we're looking at. OK, so let's have a conversation. Let's have a conversation with Mayo Shattuck and Brent Scowcroft. They are kindly have agreed to co-chair a commission that we're doing on the future of commercial nuclear energy. And so it's in that capacity of ask them to come. Now, Mayo is the executive chairman of Exxalon. This is a product of the recent merger of Exxalon and Constellation Energy. He had been with Constellation Energy. And he's now the executive chairman of the combined firm. Exxalon operates a quarter of all the nuclear reactors in America. So they are the powerhouse, as it were, of the nuclear power industry. Brent Scowcroft, everyone knows Brent. And Brent, if I were to really go through his resume, we would run out of time. So instead, let me say, I've asked him to be here, not only because he's on our commission, but he recently headed up a commission on behalf of the government looking at the fuel cycle. And we're going to shut down Yucca. What are we going to do? Big, important questions. So in that capacity, they both of them are deeply steeped and knowledgeable about this. And so let's explore what you've just seen. And Mayo, let me start with you. America has this great blessing right now. And that is we're a North American island of cheap gas. When you think about it, it's a great thing for the country. I mean, all of a sudden, we have this abundant fuel supply. But it's quite inexpensive. And it's really doing tremendous. It has tremendous impact on the nuclear power industry. So I'm, as a guy that has to make money every day, selling power, what is cheap gas? And I don't mean that in a negative sense. Inexpensive gas. What is inexpensive gas doing to the future of nuclear? Well, John, let me start off by saying, you're the coolest slides, I think, that I've ever seen. I'm thinking of how we might copy that. Now, I don't like anything about what they say, but I thought that they were very cool. Well, it's really interesting. I listened a little bit to the conversation in this room, just preceding this. And the abolient excitement about natural gas was prevalent in its applications and its probably infinite levels of capacity and all these things that are very exciting on many dimensions. And I must admit, in being in a highly regulated industry, it's of some relief that our customers are in a period of time where they're benefiting from low natural gas prices, both on the actual use of natural gas in their homes, but also from a electricity standpoint. Prices are way down, and customers really suffered dramatically during that commodity run-up that coincided with the hurricanes, Katrina, and Rita back in 05, such that natural gas prices got up to close to $15 per MMBTU. You contrast that to day's price, which is a little bit over two, and each day we see it keep inching down to levels that are really somewhat unprecedented. So all sort of good news for customers. We heard some things in the last session about what great news that is for the application of natural gas, whether it's for conversion to liquids or transportation industry or export. And all of those things, I would agree, are great for America and great for the states. It is really not great for nuclear. And the reason being is that the price of power is, in most regions in the country, a function of where natural gas prices are. There are central clearing prices that are really a function of the marginal unit that's being turned on. So nuclear plants, which are intended to be running all the time, it's very, very expensive, awkward. And there are safety-related issues associated with every time you actually bring down a nuclear plant. So they're really not designed to be cycled. And as a consequence, they're on all the time. And their marginal cost of operating is pretty low. And therefore, they're at the bottom of the stack. Coal is a little bit higher than you get at a natural gas plant. So as natural gas has gone down, there has been a gradual switching of where those gas plants are on this stack, to some degree, displacing coal and getting turned on before the coal plants get turned on. And that phenomenon also affects the level of profitability of the nuclear plants because of this central clearing price notion. So right now, it would not be unusual to look at the 104 plants out there today and see that some of them actually are not making any money at all. In fact, they're losing money, particularly single units, smaller, older single units. And so even the existing fleet is feeling a little bit of the pressure in this kind of environment. The next question would be, well, is there, therefore, any price signal that would lead you to believe that you should build a new plant? And we'll probably get into this a little bit more. But when we examined that ourselves, and this is during my constellation days, and Joe Turnage is here, and some others, Mike Wallace, who's very involved in this commission with John, really were leading the charge to examine whether in a new world can we start rebuilding the fleet. And I think the conventional wisdom at the time was, number one, we needed carbon policy and probably carbon pricing in the neighborhood of $20 sort of added to the stack of a power cost. And we needed natural gas prices probably in the neighborhood of $7 per MMB to use. So when you think about the fact that we have no carbon policy and gas is at two, as you could imagine, you run through the economics and it's not a very good picture in creating the price signal for entities that are making not only decisions for assets that'll last 60 years, but for assets that take 10 years to generate any revenue. So what a lot of this is about is, we're in a business of making very long-term decisions and requiring price signals that are enduring. And since the carbon debate has died on the vine recently, it will come back and gas has gone through this massive paradigm shift, it does raise very serious questions about whether new nuclear can, particularly in the merchant market and there are some states that might be willing to, like Georgia, which might be willing to support new nuclear in order to have a more balanced footprint. But that requires the sovereign support of that state, which really means it's on the backs of the ratepayers, not the backs of the shareholders. And in a company like Exelon, we're making all of our decisions in the merchant world as an investor. So I'll stop there. I think you've shaped it. I think what to summarize, you've said, really, there are no price signals that would lead us to build new nuclear in this country. And as long as natural gas is gonna be as inexpensive it is, it's gonna be, that's a long-term, durable phenomena that we're gonna have to do. So Brent, I come to the question that our friend in cyberspace asked, which is, is there still a reason for America to be a nuclear power company, a country? Well, I think there is, but it depends on what your calculations are. Eventually fossil fuel is going to run out. That's a certainty we don't know exactly when. We thought it was gonna be earlier than it is with the new gas extraction methods. The second thing is that energy demand in the world is going to grow geometrically. We take it for granted, but much of the world is really not heavily dependent on energy now. As they modernize, as they get cars, TVs, electricity on, lights on all the time, all of these things for the globe, energy consumption is going to grow dramatically. Now, these two questions need to be answered. How long can we depend on fossil fuel? And what happens after we can't depend on fossil fuel? Well, the people who I run into who are dead against nuclear and there's a psychological aversion to nuclear energy, which I have discovered. Say, well, we can use solar and we can use wind and they're renewable and so on. Well, nothing I have seen indicates that the growing demand for energy can without some revolutionary developments in solar energy fill that gap. Nuclear is the only thing that we can count on that is, but it has these disagreeable features which are salient in nuclear and not in the other. You know, you breathe polluted air but you don't care about breathing polluted air very much because it only shows when you get lung cancer. But gee, nuclear stuff, Fukushima, look at all the people who died who were driven from their homes and so on and so forth. And Three Mile Island was one of the most significant events in our history because it really simply stopped the development of nuclear power in the United States. And so there are certain questions that need to be answered and that is, how long can we subsist on natural gas and when we've fracked everything we can then what and we go from there? Well, Brent, the only place where the wind blows 100% of the time is Washington. So I mean, this is the only place you could substitute nuclear for wind power. But let me take you also wearing your national security hat. Going back to Eisenhower, I mean, he was trying to find a framework where we would manage the danger of nuclear power but we would still allow its promise for the world. But now we're in this period where, look, America's gonna shrink. I mean, just by getting very conservative forecast, 20 years from now, we'll probably down to 50 or 60 plants in America and the rest of the world is gonna build probably 200. So there'll be about 600 plants in the world, 10% of them in the US. And if you go out another 20 years, it's probably gonna be 2% in the US. How does America shape the security environment if this trend continues? Tell us, how do you think about that as former national security? Well, I think about that a lot and I didn't even go to the national security aspects of it, which I think are dominant in a way. We're going to have a nuclear world. We're not doing anything, but Saudi Arabia the homeland of petroleum is building nuclear plants. 19th. Most of the world is building nuclear plants now rapidly. We're not. The national security aspect of nuclear weapons or of nuclear energy is also extremely important. And is there a way that we can spread nuclear power for its benefits and control the resulting capability to go to nuclear weapons, which is a world we're trying to avoid right now? And that's a difficult question, especially if we are not in the nuclear power business, then we lose all of our ability to control the development of nuclear energy around the world in a way which provides the benefits of nuclear energy without the detriment of weaponization. You know, if by 2050 we're down to two nuclear power plants, it's going to be hard to tell China with 150 how they ought to behave with the nuclear power. So I think what we have now, it seems to me, we've sketched out with both Mayo's comments and Brent's comments. It seems to me that it's policy dilemma that we're facing. We firmly believe that energy should be grounded in the private sector in America, but the private sector is not going to give price signals that let us build nuclear on an economic basis. Instead, it's the national security dimension we have to think about, but we don't know how to price national security and put it on top of customers. The only place we do it basically is in regulated utilities, and even then it's not for national security reasons. So it seems to me that's the dilemma that we're currently wrestling with. Mayo, let me ask you, how did Fukushima change your world? I mean, both as wearing your info hat and wearing your constellation are now excellent. Well, it changed a lot, as you can imagine. Now, INPO is the organization that came out of Three Mile Island, and it was really designed to collectively have a single self-regulatory body that I think is best described as the body that makes sure that our weakest link is not so weak that its safety standards are compromised. And as a consequence, a methodology was put together where we self-evaluate, and in two-year cycles, all the plants in the United States are actually examined by INPO, and they're very serious and detailed reports, and they are reported out to a group of people that are all the chief executive officers in the industry. And it has had an incredible bearing over the last 30 years on the overall safety of the nuclear plants in the United States. The best demonstrated practices are continuously put in place to better each plant when there's an event, the impacts of those events are turned into lessons learned and then disseminated throughout the industry. And this has had the added benefit, incidentally, of improving the efficiency or the capacity factor of these plants from what was back in the 60%, they're basically operating 60% of the time back in the three-mile island days and are now at 93%. So in addition to improving the overall safety of these plants, their productivity has improved dramatically also, which actually on these bubble charts shows that if they were put in terms of the actual production, nuclear has improved its production not only from that effect, but also from upgrades of the existing 104 plants. So they have become more important. And so when Fukushima happened, the day one instinct of IMPO obviously was a great alarm for two reasons. One is the desire to have an immediate understanding of what went wrong and what were the gaps associated between how the Japanese built their plants or what the designs were and us. And what have their practices been over the last 30 years to improve the safety margin relative to what we did? So there were a lot of really detailed technical questions that needed to be understood. And I think surprisingly, there wasn't a blueprint for that that you could just look up on day one and say, oh, that was such and such a containment. This is exactly what happened. And therefore we have two plants like that and we need to go address those issues in the two plants. It was not that transparent at all. And in fact, it wasn't transparent until quite a detailed examination, a commission was put in place, a study of a large group of suppliers and vendors and operators the United States could put together to try to help understand exactly what happened over there. And I'll come back to that in just one second. But the second, of course, immediate instinct was how do we make sure that Washington and others don't go ballistic on day one with respect to an assessment of this gap analysis. And so IMPO is not the advocacy arm of the industry, that is NEI. IMPO is all about safety and security and making sure these plants operate well. But in conjunction with NEI, a very important sort of, I guess I could put it in the public relations dilemma of getting out into our communities, working with the NRC, working with the administration to convey why 300 million Americans didn't need to panic on that day. And you'll all remember that in California they're buying their pills and local communities were getting stirred up. But I think that the industry did a very effective job getting on the airway. This was all pretty new to us. I mean, it's not like we have a PR arm that is ready to drive out with a campaign on day one but I think it was pretty well orchestrated that we needed to be present to counteract the hype that was going on with the media where the focus was all negative. And this was what was happening in Japan. A lot of the information was very bad in those first few weeks and the way in which it was being communicated. I mean, you just couldn't turn on CNN without saying the image of the cooling tower and it was frightening for many people. So we worked very hard at sort of mitigating the effects of that and making sure that our natural allies like the NRC and the administration were in fact supporting the industry. And we, during the same period of time could see that this was not happening very effectively in other countries as the politics in Germany quickly swung in the other direction and decided to shut down the whole thing. But the important thing after day one was to make sure that we weren't, that there was some instinct I think that could have been bad, which was to throw the Japanese under the bus. And that is to say, they do things a lot differently or their designs are different and so forth. And I think that the industry immediately concluded that that was a very bad idea because the principles of how you run these plants and most of these designs are relatively common. And so we just, we need to understand the specifics and what we learned over time was that it really wasn't the seismic event that caused the problem. It was the tsunami, but the effects of the tsunami on the plant itself were very profound and they led to certain conclusions around things like onsite power, which is a key, key consideration for all of our plants throughout the world, about 440 of them. And the fact that that had been compromised was a severe problem. And we've been immediately ever since doing the reverse engineering to understand what we can do in the States to make sure that we don't have a similar like problem. The same is true with the venting and the containment or the evacuation plans and things of that sort that all came to light through these studies. We provided a lot of technical assistance, but we were as eager to bring back all those lessons learned so that both the NRC and IMPO could put in place a plan of action of investment in all of the US plants to react to the things that we know were a result of the tsunami. You may think that the seismic issue was relevant there only with respect to what it created, but of course immediately led to a seismic study and it'll be years of study, a reevaluation here on the seismic credentials of our plants. So even though it actually didn't have an effect on what happened there, it certainly is having repercussions in the years ahead in terms of the evaluation of our plants. But I would say generally that the industry reacted very well from a humanitarian standpoint, a technical assistance standpoint and a lessons learned standpoint. And now we're in that phase of reinvestment and it's gonna cost us a lot despite deteriorating economics to react to Fukushima. But I think that the industry is going to be fine and that is not true of other more mature developed countries that have taken the political reaction and carried it through to turning the plants down. For all of you who do not know, there's only one reactor still working in Japan and because they are on 13 month refueling cycles, that plant presumably would now go down this month. They do not have an effective process to assess the restart capability. And as a consequence, they are a little stymied and we're gonna see the repercussions this summer because they will definitely be short power and they're gonna have to figure out ways to cycle and go through blackouts and so forth. I think the community at large, there's very responsive to trying to help in this respect in terms of usage but at the end of the day it's gonna be very hard to manage and one last clarification is that, no one has died there from radiological exposure. There have been people who have died out of stress, heart attacks, displacement in what was obviously a very tragic event and some could be linked to the stress of the situation within our own industry but the radiological release still being evaluated. You read last week about the water release into the ocean. There's still a number of things that have to be much better understood but so far we didn't have the kind of accident like Chernobyl that had actual mortalities. Let me just, so colleagues here have, could I make just one comment on Fukushima, on the national security aspects of it. I was visiting Japan just a month before the earthquake visiting their nuclear facilities. I didn't go to Fukushima, not their power plants but their reprocessing plants and their proposals for disposing of nuclear waste. The Japanese that I spoke with were enthusiastic about nuclear power because it gave them back a measure of energy independence. They had run out, Japanese had run out of coal so they're wholly dependent on imports of gas and oil for their energy and nuclear was seen as a way to mitigate that dependency. And so this was a profound shock to them. Now, as Mayo says, they have one plant operating. They can't start up the plants without the approval of the local regional governors, none of whom are prepared to give approval. This is not a courageous political situation. They can overrule it. But now Japan is faced with a fundamental national security problem. The prime minister announced shortly after Fukushima, we're getting out of the nuclear business. But now they're changing their mind because if they get out of the nuclear business, where do they get their energy? And they're facing the problem which I outlined which is down in the future for us. Germany's done the same thing. We're closing down our nuclear, well, but Germany is being duplicitous about it all. They're just gonna use French nuclear energy to power their system. So the problem remains and it's, as Mayo says, it's very acute in Japan. Now they're going to run out of energy this summer if they don't do something about it. And what can they do? I think what two very important things I've heard come out of these interventions. One is as Brent just said, I mean there's a profound economic impact of why Japan needs to get back in the business just because they can't afford to slow up their economy. GDP's gonna take a real hit if all of a sudden energy prices go up 20% because they have to import everything. Also I would argue we need them to be back in the game as leaders in Asia thinking about things nuclear because they have been responsible states. This was a very tragic development but they have been among the most responsible thinking about managing the security side of nuclear. Mayo made a very important point. I don't know how many of you heard it and that is that at the time of Three Mile Island the efficiency of American nuclear power plants was only 60%. And in because of the reforms, largely because of INPO, the efficiency today is 93%. We have effectively built 20 nuclear reactors in this country simply by improving the efficiency of nuclear power. Now that was done by INPO. It wasn't done by the NRC. That was done by INPO. And just because I'm gonna come to ask a question here. You understand why INPO is so important? Go back on that little moving chronology. You remember the Price-Anderson Act 1957? Now Price-Anderson Act established the legal liability that the industry had to take on. They had to insure themselves for the first $3 billion worth of losses. Beyond that the government would step in but the first $3 billion, each of the power companies had to pay for that. So they formed an insurance company, a mutual insurance company, so that they could then cover this and then they have to pay premiums every year. Well, who decides the risk of individual plants and what their premium ought to be? It's INPO. So there's this dynamic. This is an exceptionally important organization. It's in the private sector but it's an exceptionally important organization. And I guess, so I come to this, may I share with us how the industry evaluates itself. Because I mean this is, you have to decide, if you run a shoddy, if somebody else runs a shoddy plant, you're gonna be paying for it with higher premiums unless you can find a way to bring the industry up. How does that work inside INPO? Well, John, it is uniquely the most interesting culture that I've ever seen because you have at the table, there's about 600 employees of INPO, but you have at the table the guys and women that run the nuclear plants in the United States. You've got the CEOs of every company. And they've all endorsed the notion that we're going to evaluate each other. And so there's a very, very rigid process of every two years. The INPO team goes to a plant and ends up rating these plants and there's a rating system that goes from excellent to needs to be shut down. It's confidential, but it's very important, as you suggested, to the insurance coverage of each plant. You get a low number, your premium skyrocket, so there's a natural incentive to do well. The industry is naturally very self-critical. And so if there is a hint of defensiveness or arrogance or whatever in the response to an INPO evaluation, the board of directors is gonna hear about it. So there is, fortunately, a very high level and consistent respect for the INPO input at each plant. And one anecdote that I'll give you that gives you a flavor of this, and it was a personal anecdote because I was brand new to the industry and I went to my first CEO conference, the annual event. And at that conference, we spend two or three days together, there's a private session where if you have one of these low-rated plants, you have to stand up in front of all your colleagues and, in effect, conduct a mea culpa and describe exactly everything that you're doing. These sometimes take an hour. And in the first one that I went to, the CEO was brought to tears in this session, which gives you a sense of the emotional pressure that we apply to each other to make sure that everything that can be done to improve the operating safety of all 104 plants is being done and that we're gonna help each other. This was an unusual concept for a guy who's been in an investment bank for 20 years and basically wanted to win, win, win to get into a culture where this wasn't about winning, this was about cooperating and helping each other and making sure that the weakest link didn't destroy us. And that's exactly what happens when you probably, if there's an incident at Davis-Bessie as there was with a reactor head a number of years ago, the earthquake that hit the East Coast that affect the Santa Ana, the Dominion plant, and fortunately in an evaluation that was found not to have affected the plant. But whenever something like this happens, we need to rally to understand what the lesson is from that so that we can react. And it's not, these plants are constantly being rebuilt, incidentally. This isn't, these plants don't go up for 60 years and then get shut down. They're massive ongoing investment. The redo of a steam generator or reactor head or the reason that these plants can be re-licensed is that the guts of them are actually constantly being rejuvenated and so a lot of money goes into maintaining them. But it is a, it has become a very valuable and unique organization for our industry and it's got a very low profile naturally because we're not in the business of frightening people about what is an incredibly important technology where we go about conducting our business. But I would say that IMPO was sought out after the Gulf crisis to see whether our model might actually apply to offshore drilling. And there was some very interesting testimony in front of Congress that went back over the history of INPO to try to in a way create a little bit of a catalyst to see whether that industry could get together to talk about best remonstrated practices and hold themselves accountable to making sure that we didn't have a Gulf disaster. That hasn't taken on a great deal of legs incidentally. And I don't know whether that's the right answer or not but it's certainly conceptually for something that had as devastating a consequence when something goes wrong as an offshore drilling it's a pretty interesting thing and model to evaluate. My personal guess is that it will take off but that right now we're in this litigious environment where people are worried about, you know getting to out in front of the lawyers and all that. It could take a little while probably for us to set down but INPO is a remarkable success story and it's where the private sector shares the burden of governance for an important national asset. It's an important thing for people to know. Brent, my last question and I'm gonna turn to all of you. And that's you, I don't know how many commissions you've headed up Brent, national commissions. I mean, hundreds probably. But the most recent one, you and Lee Hamilton headed up the commission looking at what are we gonna do about the fuel cycle post closure Yucca Mountain. And this of course hangs over this industry. It hangs over our popular understanding of nuclear. So just give us a thumbnail sketch. How serious is this problem? What, how do we solve this problem? You know, what kind of priority do we give to this problem? Well, it's a serious problem with the respect that nuclear power plants, nuclear energy produces waste. And after you have burned the nuclear pellets, incidentally we use about 3% of the energy. And so there's about 97% of the energy left, but we take them out of the plants and then you have to dispose of them. And that's a problem. It's a problem that we've spent 30 years on because everybody understands it has to be put somewhere but it's not in my backyard really that phrase started on nuclear waste facilities. And that's what this commission is designed to do. For a long time we, the government, narrowed the focus, narrowed the focus and then decided that Yucca Mountain was the solution. Well, the Nevada government didn't like it. The counties in which Yucca Mountain exists wanted it, but the state didn't. So anyway, the president said Yucca Mountain is dead. And set up this commission to look at alternatives. We do have nuclear waste that is waiting at decommissioned nuclear plants for storage. The nuclear utilities or the utilities are paying the government for storage of nuclear waste. And it isn't being stored. So this commission was set up to deal with that problem. And that is what we're trying to do to give you an idea of the scope of it. And incidentally, even if we revolutionize nuclear power plants, even if we reprocess and so on, there still is going to be some nuclear waste that is highly radioactive material that has to be put away somewhere because we can't figure out how to get the energy out of it. But the nature of the problem, at least and may or may be you can refine this, the nuclear waste that's been produced so far is about the size of a football field 20 feet deep. Now, you know, that's not an awful lot. But it has to be shielded, it has to be protected, and at least some people say it has to be protected for millions of years. Well, we're actually looking. And in New Mexico, there are salt deposits that have remained unchanged for 300 million years. So there are ways to do it, but the problem is how do you make it acceptable to the people? And that's what this commission is trying to do. I was on the floor of the Senate. I was a staffer on the Senate when Senator then-Senator Chick Hick said, we're never going to let Nevada become the nuclear suppository for America. I'm not sure that was a Freudian slip, actually. But there's one place in New Mexico near the Carlebad Caverns called the Whip Waste Isolation Pilot Project. It has been enthusiastically embraced by the locals in New Mexico and generally by the state itself. So it can work. But, Brenda, I think to your point, though, this is not the mountainous problem that's made out in the popular press. There's a nuclear facility. I think you own it about 20 miles from here. It's been operating for 25 years. The entire waste stream is stored on the equivalent of two tennis courts. This is not a huge problem. It's a huge psychological problem. Because, you know, in my commission, we had public hearings around the country. And one woman got up and she said, radiation is the worst thing that's ever happened. It's responsible for obesity, for diabetes, for, you know, you go. But it's that kind of fear, which is what you have to deal with. And I think the way to deal with it is to show that it can actually be attractive because near a nuclear waste facility, you could have a nuclear research laboratory hiring a lot of very intelligent people. What can we do with nuclear waste? How can we make it productive and so on? So there are ways to do it. If you just visit Yucca Mountain and, you know, which is a remarkable thing, you feel like you're on the moon. There's no other place like it in the United States, I don't think. And it's a course where we practiced our bombing in, you know, earlier years. So it has some experience with the industry. But Yucca Mountain is a geological repository and there's a big, you know, five-mile hole with a train that goes down through it. And it's designed that you can take these titanium canisters that have the spent fuel in them and slot them into a spot where, in theory, they could be recovered 100 or 200 years later and used again as Brent said. You know, there's still a lot energy left in spent fuel and the technologies might be available 100 years from now to reuse what is put in there. But if you actually physically see the simplicity, not just in terms of how small the physical volumes actually are that we're talking about, but that, you know, there are ways to care for this that are a lot smarter than having it sit on site at our plants. Now, these are also safe, but sort of temporary holding facilities. And it really has been a shame that we haven't been able to move this off the dime. It's, you know, very much about local politics. But from the standpoint of the science and safety of it, it's, you know, it really was quite a sound idea. Okay. I've taken too long. And I apologize to all of you. We've got about 15, 20 minutes. We can open up for conversation here. We do have microphones, I think, right? And what we do want you to use the microphone because we've got friends in cyberspace. So we'll start right over here, please. Yes, ma'am. Hi. My name is Peggy Evans. I'm with the Senate Intelligence Committee. And I've been reacting to the psychology issue that you all mentioned. One place in the United States where we haven't had that problem is with the U.S. Navy. And in fact, the Navy has, in humanitarian instances, provided power from its vessels to areas that have suffered some sort of meteorological problem. Given that, how would you react to a proposal that echoes a decision made by President Kennedy to put a large trans- or to make, for government policy to make possible the implementation of large transmission lines around both coasts, and then to use the technology that exists in naval vessels to start on an offshore basis to start offering the opportunity to U.S. industry to invest in large transmission lines and then begin to implement other sorts of power beyond the carbon fuels, wind, wave, nuclear, using that technology that doesn't have the same emotional reaction that the large land-based power plants do? Well, let me start while you're collecting your thoughts, because you talk about Navy nuclear power as if it's pristine. It has the same problems as other power. What do you think happens when they decommission a ship? It goes out to Idaho. And Idaho has passed a law that by 2035, it all has to be gone. Where's it going to go? So it doesn't solve the problems by taking it offshore and building the power plants offshore, if that's what you have in mind. Well, I know, but you have to do something with it. And the storage is the same problem, whether the plants in Illinois or whether it's in a ship sailing around the world. I'm not the expert on this, but there are oddly enough the same number of reactors in the Navy. 104 reactors as there are on the commercial side. And of course, they're a lot smaller, and they require and use much higher levels of enrichment, and it would be against international standards. Because I've asked this question, we just go to sort of higher power levels. But because of the international standards, it would not be regarded as acceptable. They are, of course, unbelievably expensive when they're designed as such to be in a naval vessel. And so I think as a consequence, there's always something that's more efficient. And it gets back to this issue of, should there be nuclear capacity in the United States that survives this generation of plants? And of course, I'm a big advocate for nuclear and feel like the footprint, the generation footprint of 50 to 60 years from now has to have some nuclear. And for us in a business where it takes so long to build things and just presume that natural gas is going to be the fuel choice forever is, to me, a little naive. And all it would take between now and 10 years from now is for there to be carbon policy implemented or a terrorist attack on a gas pipeline. Or something that happens to the cost deck in fracturing that rapidly raised the cost of extraction from our mental standpoint. So there are all these things that, to me, could easily occur in just in the next few years that would change the game again. So the big paradigm shift that we're all just assuming is like this endless windfall. I wouldn't trust that as someone responsible for the reliability of the grid. And so the thing that makes me most nervous, I probably won't be alive on the day where people wake up to the issue, which is that we can be dependent on a single fuel type. And so if we are going to ignore the dialogue we're having today and just say, now what the heck, let's just, we will keep putting up gas plants. There's no, in the near term, because that's what the price signals are telling us. But we have to deal with the policy issues because what I just described is a national security problem. If we got to the point in 20 years where we were dependent on one fuel type and something radically changed, and all of a sudden we've got an unstable grid and God knows what could happen to us. So the idea of having a mix is that we have to have policy considerations that keep in mind that we don't want the end game to be 100% of anything. And the intermittent energy sources like wind and solar, we're very supportive of it and we're in the game and so forth, but they can't be more than a certain percentage of our total output. So I consider it not just a national security problem as it relates to supporting our military establishment. So there's one big issue which is that our supply chain and vendors and so forth, we have gone from an era where 90% of all the stuff that went into our reactors came from the United States to it being just the opposite now. And so we've lost the supply chain game, which has an effect on the military establishment, which I think is, you know, we don't have the people interested in nuclear, you know, coming through the schools and we don't have, you know, people building, you know, important components to nuclear standards. So I think that that's a national security issue and I think bad decisions on the diversification of the generation footprint is a national security issue. And when you put those two things together, I conclude, you know what, we've got to figure out a way to keep nuclear in the game. And that's, you know, I think which is why this kind of dialogue is so important. Jim Hoglund. Thank you, John. Jim Hoglund from The Washington Post. It was Fukushima that brought IMPOC to my attention and what I've learned has impressed me and that extends to your remarks this morning. I wanted to ask you in that spirit about a reference you made to the fact that IMPOC can issue a notice saying this plant should be shut down immediately. Has that ever happened? If yes, can you describe how it's resolved? If no, what's the most dramatic notice of that kind that you're aware of and how has it resolved? Well, that is a complicated question because when a plant is in trouble, usually there's a decision made that's quite simple to keep it offline. And that is usually a collection of decision makers that certainly would involve the NRC, would involve INPO, and would involve the company itself just thinking about the natural course, what's safe. And so we certainly have a lot of plants that over, I shouldn't say a lot, we have had some plants that over the course of time you would consider being of the lowest rating, but they're not on. And so right now as an example, the Fort Calhoun plant in Nebraska is offline because of those floods and the impact and assessment of the floods in Nebraska and the NRC and INPO, we're trying to figure out how to get it back online. When it comes back online, it will soon thereafter get a rating and one would hope that it would have a rating of that satisfactory. The San Onofre plant in Southern California is offline. There are a lot of concerns about understanding once again, as always in the California plants, including Diablo Canyon, the seismic impacts on those plants. But we've never had an instance that I'm aware of where we've had to force against the wishes of the company that a plant had to shut down because we felt that it was unsafe. I think they were hopefully way in front of the game on that front since Three Mile Island where we know long beforehand that this plant needs a long outage, needs to do X, Y, and Z, and they react accordingly. I think just for the mechanism, the mechanism I think, Jim, is that the INPO rates for purposes of insurance what the rating would be and if they give it the lowest rating, the mutual insurance company, Neal, I think it is, will not write the policy and by law you can't operate a plant if you don't write the policy. So I think it really is a powerfully positive dynamic on how this works in this industry. We've got a question over here. Dave, can we just go over here Dave Person? He's also a member of our commission. And here's a real nuclear expert. I just thought it's worth commenting and asking you to comment on this waste problem issue in comparison in two regards. One is the nuclear industry tracks its waste which is very small and compact and solid in form to the nearest gram and we know where all of it is and the cost of that is internalized already through the collection of fees from customers to the tune of somewhere around $15 billion thus far. So the question is if you use this scenario above would the rough carbon equivalent result of this as an additional 400 million tons per year of carbon going into the atmosphere so would you rather have a small compact waste form where you know where it all is and easily isolated and separated from the environment where the costs are already internalized and where would you rather have this other problem of 400 million tons of carbon going out where the costs are not internalized and I'd like for you to maybe comment on that internalization of the waste form and the trade-offs between those two. Well I think it's remarkable that we have ignored the costs to society of our coal and oil fired plants and we look at the statistics that result but we don't internalize them as making any difference and that's where I say there's a psychology about nuclear which doesn't flow out to the other energy producers and it's probably because they've been around forever and they're just part of the environment. We did pass a clean air act and it helped a lot but just because you can't see it doesn't mean it's not there but that's one of the psychological problems that we need to deal with both making the nuclear put it in its perspective as to how important it is and how it does or does not affect people and what it is we're replacing not just because it's running out but because it's a hazard to human health. You know a lot of when the carbon debate was in full force it appeared that most people thought that the electricity industry should reduce its contribution to carbon which is significant by 80% over a certain period of time and so we began to put together forecasts of how might you reach an 80% reduction in our carbon imprint obviously coal being the main contributor to that being 50% of all generation in the states so you needed a lot of renewables and you definitely needed a lot of nuclear and the one thing that always was the sticking point as attractive as gas was is that gas still has 50% of the carbon imprint as coal so you can't put into that model anything that has lots and lots of gas and ends up with the 80% reduction so there's a limit in getting back to the generation mix issue that yes we should we have not been good in America at pricing the externalities the environmental externalities into the price of power and as a consequence you have federal and state issues that are complicated that I think the EPA is trying to resolve through policy but if you're a Maryland generator as we are and you're working towards the Healthy Air Act standards in Maryland which are the tightest in the nation but West Virginia is not and they're burning coal and they're shipping their power into Maryland which we're a 30% importer of power and we're getting all their air emissions coming in our direction so all of our own efforts that's an economic unfairness issue that hasn't this is why there's an interstate commerce related issue but it's a small anecdote of why this business gets pretty complicated from a policy standpoint and we have to keep in mind that as Dave rightly points out the externalities that are nuclear are actually have already been built into the pricing we've raised $15 billion to build the Uckham Mountain and try to get to the solution and potentially that will all go by the wayside we're going to wrap up with the last question Dave Garmin with Decker Garmin Sullivan with a question for Mayo really we've outlined a scenario that I've entered a guess that very few of us like and it's dictated by a failure to enact any kind of carbon pricing and low natural gas prices I guess the question arises is there an opportunity for something you know to change that outcome to change that scenario with innovation say in small modular reactors you know factory fabricated rail deployable mass produced SMRs that might change the business case you know I think that that's that really is the great hope here that particularly with SMRs that you know technology advances and that we you know we're able to figure out another way to use the science that's efficient and effective it's not there yet and one of the key considerations and all that is not just the production of the power but there's a lot of infrastructure that goes around the plants getting back to where you know this is another kind of security issue which is that you know the protection of our plants is second to none in the world you know you go to France and visit a French reactor and they have five security guards and rely on the local gendarmes for security I don't know how long that will last that I will say that I can't describe what it is on our front but it's a lot different from that and if you visit a nuclear plant you'd observe that but the natural security infrastructure required around anything nuclear is vast in this you know and important in this country so this is where I get a little bit tricked up on the issue of the SMRs is that you know even if they're like Bill Gates wants to bury them you know underground and they never need to be refueled for 20 years and then they just sort of die out I mean a lot of different notions in this respect but at the end of the day there's some infrastructure costs that don't go away and but having said that I think that you know it's not an industry that's known for you know technology innovations rapidly changing things obviously gas is the biggest paradigm shift in you know 50 years just in terms of the efficiency of the extraction and that is changing the game so hopefully there'll be either another technology or a combination of technology and policy that lead us back to again the generation mix of the future that is well balanced and well thought out double thank you first I want to say thank you to Brent and Mayo for chairing this commission we will have our commission report will be out in July and the second thanks is of course for leading a fascinating discussion today our goal was to try to have Americans think about nuclear power we don't think much about it and the goal here was to try to put the dimention, the richness of this issue in front of all of you with the expectation that you're going to carry this conversation further so would you please thank these two men with your report thank you