Nuclear Energy Progress and Opportunities Moving Forward: Perspective on Building New Nuclear Power Plants Dr. Joe C. Turnage Senior Vice President - Strategy, UniStar Nuclear Energy EPRI Summer Seminar, August 4, 2008

2 Agenda Worldwide New Nuclear Development Perspective on building New Nuclear Plants in U.S. –Driving Forces for a Nuclear Renaissance –Risks & Mitigation –Indicative Timeline for New Nuclear Deployment Summary, Q&A Appendix materials

3 Worldwide Nuclear Share of Electricity Production (2007) Source: World Nuclear Association Worldwide ~439 commercial reactors, 372,000 MW capacity, operating in 30 countries 16% of world’s 2007 electricity production 16 countries have at least 1/4 of their total electricity supplied by nuclear plants 2/3 of reactors now have >75% CF, up from 1/4 of reactors in 1990 –and, 1/3 now have >90% CF From , capacity up 13.5% (44 GW); and production rose 40%. The reasons: –Increased availability of units (56% of total) –New construction (37% of total) –Uprates (7% of total) United States: Avg. CF is now >90%, up from 65% in of top 25 performing reactors in world

4 Rest of World Nuclear Units Under Construction or Planned Total = 62GW Increased Worldwide Demand For Nuclear 35 new plants now under construction in 14 countries (29 GW), with majority in developing countries Global competition for resources Source: World Nuclear Association

5 Emerging Renaissance in the U.S. Potential 45 GW in New Capacity, from 5 Technologies ( ) AP1000 Westinghouse 1,117/unit 15.4GW APWR MHI 1,700/unit 3.4GW ESBWR GE 1,550/unit 7.75GW ABWR GE 1,350/unit 2.7GW Unspecified 1,350/unit (avg) 6.75GW US EPR Areva 1,600/unit 9.6GW Source: Based on NRC-filed applications or placeholders Potential U.S. New Nuclear Power Plant Proposals 5 Technologies ~45GW Total (~34 units) Most new U.S. nuclear activity targeted in the Atlantic Seaboard and the South (see appendix)

6 Driving Forces for a U.S. Nuclear Renaissance U.S. demand is beginning to outstrip capacity Energy prices are escalating Concern for the environment and CO2 accelerating Nuclear generation –Viable and cost competitive –Higher construction cost, but –Lower production costs, and –No CO2 emissions New Nuclear Plants Supply / Demand Regulatory Process Public Acceptance Climate Change (CO2) Energy Security Energy Policy Act The Nuclear option is inevitable. Current economic, political, environmental factors create favorable conditions for new nuclear construction in the U.S.

7 Supply and Demand Fundamentals The U.S. has a growing need for new generation $MWH - Average Yearly Wholesale On Peak NWPP ERCOT FRCC VACAR PJM NYISO Estimated year when 18% reserve margin is reached Source: Cambridge Energy Research Associates – Reserve Margin Dates Source: Internal Research – Map colors indicative of peak power prices Supply / Demand

8 Nuclear: A Lower Carbon Energy Future A political issue whose time has come –Prominent environmentalists are rethinking nuclear opportunities –Drove wide bipartisan support of the Energy Policy Act of 2005 “Zero Emissions” Generating Source Gains new Allies –“Nuclear energy is the only non- greenhouse-gas-emitting power source that can effectively replace fossil fuels while satisfying the world’s increasing demand for energy” - Patrick Moore, Co-Founder Greenpeace Life Cycle CO2 Emissions Analyses Tonnes CO2-Equivalent per GWh "Life-Cycle Assessment of Electricity Generation Systems and Applications for Climate Change Policy Analysis," Paul J. Meier, University of Wisconsin- Madison, August, 2002 Nuclear energy lifecycle CO2 emissions on par with renewables Climate Change (CO2)

9 % Oppose % Favor Source: Bisconti Research Inc., NEI Website “Overall, do you strongly favor, somewhat favor, somewhat oppose or strongly oppose the use of nuclear energy as one of the ways to provide electricity in the United States?” Major Shift in Public Acceptance of Nuclear Energy ~ 2/3 favorability among general public -- even higher in communities near nuclear power plants: - 82% of residents near nuclear plants favor nuclear energy - 86% have a favorable impression of the local plant Public Acceptance

10 Energy Policy Act of 2005 Significant support – Congress and the Administration Addresses many risks in “new nuclear” development and deployment Three critical components to jump start the nuclear industry –Loan Guarantees –Production Tax Credits –Standby Default Coverage Longer term – nuclear power needs no Federal subsidy Energy Policy Act

11 Multiple Issues – Many Risks can be overcome Lack of U.S. nuclear infrastructure –Manufacturing –Services –Craft labor force Knowledge and experience of nuclear construction from “last time” seriously diminished –Abundance of caution –Many risks Global competition for resources Untested licensing process Global expertise & availability –Engineering –Construction –Supply Chain New approaches and partnerships with labor Visibility and predictability of licensing process Issues Requirements for Success

12 Loan Guarantees – to address the biggest Risk Federal Loan Guarantees are imperative to the New Nuclear solutions –Capital requirements would likely strain balance sheets of the largest regulated and merchant nuclear power generating companies –Perceived risk by financial community requires federal government risk mitigation Fundamental benefits of Loan Guarantees is creating: –A viable financial structure –Reasonable financing costs Loan Guarantees are critical for “New Nuclear” 1st Wave

13 Summary Slow but steady progress Nuclear Renaissance – a reality Success requires –Leadership –Resources –Management of Risks

Nuclear Energy Progress and Opportunities Moving Forward: Perspective on Building New Nuclear Power Plants Dr. Joe C. Turnage Senior Vice President - Strategy, UniStar Nuclear Energy EPRI Summer Seminar, August 4, 2008