Current Market & Industry’s Path Forward Janet Schlueter Senior Director, Radiation and Materials Safety Nuclear Energy Institute

Today’s Market: How Did We Get Here? Electricity Service is a Monopoly Requiring Regulation to Help Ensure Availability and Avoid Price Fluctuations Individual Companies Cannot Set Prices but Must Cover Costs of Service and Provide Return on Investment Public Utility Commissions Regulate Utilities, Determine Prudency of Costs, and Review Resource Plans Electricity Competition is Good!

Operating Nuclear Power Plants – 60 59 Sites in 30 States (Oyster Creek Ceased Operations 9/17/18)

Nuclear Contributions

U.S. Electricity Generation Fuel Shares in 2017 Wind – 6.3% Biomass & Petroleum – 2.1% Solar – 1.3% Geothermal – 0.4% ~20% of U.S. energy generation comes from nuclear 99, 635 MWe of baseload capacity 804.9 billion kWh ~56% of U.S. emissions-free energy comes from nuclear Nuclear 20.0% Hydro 7.6% Coal 30.1% Natural Gas 31.7% Source: U.S. Energy Information Administration Updated: March 2018

Continuing Surge in Supply of Low-Cost Shale Gas Industry Challenges Continuing Surge in Supply of Low-Cost Shale Gas Low Growth in Total Electricity Demand Failure of Markets to Recognize Environmental Attributes Fuel/Technology Diversity is Undervalued State and Federal Policies Promote Only Renewables Transmission Constraints Market Design Issues

Declining Electricity Prices

Premature Nuclear Power Plant Closures and Announced Shutdowns MWe Closure Year Reason Final Year Generation (billion kWh per year) Final Year CO2 Avoided (M tons/year) Crystal River 3 860 2013 Mechanical 7.0 3.8 San Onofre 2 & 3 2,150 18.1 8.0 Kewaunee 566 Market 4.5 Vermont Yankee 620 2014 5.1 2.4 Fort Calhoun 478 2016 3.4 3.3 Oyster Creek 625 2018 Policy 5.4 4.0 TOTAL 5,299 43.5 25.3 Three Mile Island 1 803 2019 6.9 5.0 Pilgrim 678 2.3 Davis-Besse 908 2020 7.9 5.7 Duane Arnold 619 5.2 Indian Point 2 & 3 2,061 2020-2021 Market & Policy 15.3 7.1 Beaver Valley 1 & 2 1,872 2021 11.1 Perry 1,268 9.8 Palisades 789 2022 6.1 5.3 Diablo Canyon 1 & 2 2,240 2024-2025 17.9 11,238 89.5 55.5 Source: Emissions avoided are calculated using regional and national fossil fuel emissions rates from the U.S. Environmental Protection Agency and latest plant generation data from the U.S. Energy Information Administration. Updated: September 2018.

Impacts of Plant Closures Communities are Stressed Financially Loss of Hundreds of Well-Paying Jobs Erosion of Tax Base Impacts Local Services, e.g., Schools Emissions Increase Vermont Yankee’s generation replaced by Natural Gas San Onofre Led to Additional 9M tons of CO2 emissions Electricity Prices Increase CA Consumers paid $350M more Energy Replacement is Expensive

NATIONAL NUCLEAR ENERGY STRATEGY CREATE THE NUCLEAR IMPERATIVE PRESERVE SUSTAIN INNOVATE THRIVE Appropriately value nuclear generation Create sustainability via improved regulatory framework and reduced burden Innovate, commercialize, and deploy new nuclear Compete globally

Appropriately value nuclear generation Preserve Deliverables PRESERVE SUSTAIN INNOVATE THRIVE Appropriately value nuclear generation Create sustainability via improved regulatory framework and reduced burden Innovate, commercialize, and deploy new nuclear Compete globally Significantly impact conversation around proper valuation of nuclear generation Advance state-level policy actions Pursue ISO and FERC market reforms to recognize nuclear power attributes

State of the States

Nuclear Plants Saved from Premature Closures by State Action MWe Projected Closure Year Reason for Potential Shutdown Electricity Generated in 2017 (billion kWh per year) CO2 Emissions Avoided in 2017 (Million metric tons/year) Clinton 1,065 2017 Market 8.3 8.1 Fitzpatrick 852 6.2 2.9 Ginna 582 4.7 2.2 Hope Creek 1,172 ~2020 10.6 7.7 Millstone 2 & 3 2,096 16.5 7.4 Nine Mile Point 1 & 2 1,770 2017-2018 16.0 Quad Cities 1 & 2 1,819 2018 15.4 11.2 Salem 1 & 2 2,328 ~2020-2021 18.0 13.1 TOTAL 11,683 95.7 60.0 Benefits: 11,683 MWe baseload capacity More than 7,400 direct jobs saved More combined electricity generation than all utility solar in 2017 60.0 million metric tons of CO2 avoided Source: Emissions avoided are calculated using regional and national fossil fuel emissions rates from the U.S. Environmental Protection Agency and latest plant generation data from the U.S. Energy Information Administration. Updated: August 2018.

Modernize NRC regulatory requirements and oversight Sustain Deliverables PRESERVE SUSTAIN INNOVATE THRIVE Appropriately value nuclear generation Create sustainability via improved regulatory framework and reduced burden Innovate, commercialize, and deploy new nuclear Compete globally Modernize NRC regulatory requirements and oversight Reduce financial burden on nuclear operators Advance new and used fuel regulations

U.S. Nuclear Capacity Factors (percent) 92.2% in 2017 92.1% in 2016* 92.2% in 2015 91.7% in 2014 89.9% in 2013 86.1% in 2012 * NEI’s 2016 capacity factor calculation does not include Fort Calhoun Nuclear Generating Station Source: U.S. Energy Information Administration Updated: March 2018

Expected Subsequent License Renewal Applications Industry’s intent to pursue SLR and operate for 80 years has increased significantly in last two years Initial survey was conducted in 2016 showing a total of 20 expected SLR application submittals by plant 2018 survey shows an increase of licensees interested in pursuing SLR and a total of 53 units, demonstrating that over half of the industry currently intend to pursue SLR Initial SLR applications for 2018 will potentially exceed expectations by 200% Peach Bottom was the only SLR application initially expected for 2018 and was hand-delivered to NRC on July 10th, on schedule since 2009 The Turkey Point application was submitted on January 30, 2018 and was accepted for NRC review on April 26th The Surry application is expected in 1st quarter 2019 but is ahead of schedule NRC is rushing to complete and approve first license renewal applications by the end of 2018 in order to focus all resources on SLR Early announcements or letters of intent to NRC for those utilities looking to submit in the early 2020’s would be very beneficial for our industry and to the NRC Source: NEI June 2018 Survey

NRC Transformation Initiative NRC not prepared for new technologies including Digital I&C and advanced fuels and reactors Industry-identified areas where transformation needed, e.g., Utilize qualitative and quantitative risk insights to guide regulatory decision making Recognize current inherent safety margins Transform ROP program, e.g., eliminate white finding Risk-inform Security and EP       Allow alternative methods of compliance       

Right Size NRC Budget NRC Budget ($M) Fee Recovery ($M) 18 * All Numbers Include Office of the Inspector General Funding 18

Innovate, commercialize, and deploy new nuclear Innovate Deliverables PRESERVE SUSTAIN INNOVATE THRIVE Appropriately value nuclear generation Create sustainability via improved regulatory framework and reduced burden Innovate, commercialize, and deploy new nuclear Compete globally Encourage technology innovation Advance development of commercial deployment pathway (financing) Advance an efficient and stable regulatory framework

Continuum of Innovation AP1000 Advanced Non-LWRs Hi-temp gas Liquid metal Molten salt GEH ESBWR Large LWRs 2016 2020 2025 2030 Watts Bar 2 Small Modular Reactors Watts Bar 2 Vogtle 3 & 4 NuScale Power Module

Rapid Commercialization Ensuring US continued leadership in nuclear means: Maximizing investments in advancing technology Significant steps to improve licensing efficiency

Scale of New Builds With SLR, 20% market share requires adding ~90 GW Maintaining a role for nuclear at 20% of the electricity supply will require a significant wave of new construction. Even if many plants pursue a second license renewal, around 90 GW of new capacity will be needed to maintain that market share. ----------------------------------------- Assumptions: 40% of declared capacity retires early; 20% of concern capacity closes early; 75% of operating capacity receives SLR; 20% nuclear in 2050 with 20% of new builds from large LWRs, 30% from SMRs and 50% from advanced reactors

Licensing Inefficiency Obstacles to Deployment Added Time Added Cost Added Uncertainty Lack of flexibility requires case-by-case reviews creating unnecessary delays Overly detailed reviews add unnecessary cost Unclear licensing for new technology cause issues and delays in developing new designs Uncertainty in licensing processes discourages investors and drives innovation outside of the U.S.

New Reactor Regulatory Strategy

Create Federal government alignment in support of more nuclear exports Thrive Deliverables PRESERVE SUSTAIN INNOVATE THRIVE Appropriately value nuclear generation Create sustainability via improved regulatory framework and reduced burden Innovate, commercialize, and deploy new nuclear Compete globally Create Federal government alignment in support of more nuclear exports Increase U.S. nuclear exporter access to global markets Ensure that U.S. Export-Import Bank is fully functioning Pursue reforms to export controls

International Export Advocacy Trade Promotion: Identify Key Market & Advocacy Export Control Reform: 123 Agreements, 10 CFR 810 Improved Financing Options: Ex-Im Bank Playing Defense on “Bad Legislation”: Federal Advocacy Market Access Federal Coordination

International Nuclear Influence China and Russia are leading in constructing their domestic designs CHINA 28 11 6 9 RUSSIA 5 21 11 4 4 S. KOREA Constructed Since 1997 (domestic design) 10 5 INDIA Under Construction (domestic design) Domestic Design being Constructed in Other Countries (Since 1997 + Under Construction) USA 1 2 8 Source: International Atomic Energy Agency: PRIS Database Updated: March 2018

THRIVE  GLOBAL REACTORS UNDER CONSTRUCTION 2 18 5 4 1 Building additional reactors Planning or interested in additional reactors “Newcomers” building reactors “Newcomers” planning or interested in building Source: IAEA PRIS Database. March 15, 2018.

SUMMARY Domestic nuclear power industry faces challenges both at home and abroad Progress is being made at State and Federal Level including increased access to foreign markets by U.S. designers and suppliers NEI is working with members and broader industry to help effect positive change in the U.S. market and increase the use of nuclear globally