Nucleo-electricidad en Chile International Seminar Final Comments By Dr. Nils J. Diaz The ND2 Group, LLC Santiago, Chile January 28, 2010

The Chilean Government has conducted necessary studies to establish the results needed for decision-making. A significant part of the Secretary of Energy’s mission has been to assess the need and to reduce the risk for deployment of nuclear electricity generation. The Seminar has brought together the experts and stakeholders that have contributed or would contribute to the decisions that lie ahead. Most of the following comments are summarized from current US and international experiences, and from what has been discussed by the Chilean Government. Nuclear Electricity Generation in Chile Introductory Comments

Fission-powered Electrical Generation Deployment - a predictable & executable process - Fission-powered electrical generation should be relied upon as a key part of Chile’s energy portfolio. Nuclear and hydro are the only large base-load additional capacity without a carbon burden, and should be major contributors to Chile’s energy independence and cost predictability, supportive of the development of renewables. It does require Establishment of a predictable and executable Government policy Establishment of a predictable and executable regulatory infrastructure Establishment of a sustainable financial infrastructure Establishment of a sustainable human capital and industrial infrastructure All these are necessary and should be sufficient when tailored for Chile 3

New Base Load Generation for Chile - Nuclear and Hydroelectric Capacity - Benefits Long & Reliable Plant Life (60 years or longer) Low Variable Costs Large & Steady Output Diversification of Generation Portfolio Secure & Independent Fuel Supply Clean generation source Near zero emissions from operations Concerns High Capital Cost Long Lead Deployment Times

Nuclear Deployment Siting and Environmental Considerations once the decisions are made The most important first step in establishing a nuclear reactor deployment program is to ensure there are suitable sites available. The second most important step is to ensure that the site will meet all requirements for emplacement, with existing and needed transmission capacity and environmental considerations foremost. A typical environmental review will include analysis of impacts to air, water, animal life, vegetation, natural resources, and property of historic, archaeological, or architectural significance. The review will evaluate cumulative, economic, social, cultural, other impacts, and environmental justice. A preliminary assessment of the site physical characteristics is to be done early, including its seismology, meteorology, geology, hydrology and demography. Additional siting considerations include energy market access, available cooling water resources, supportive local and regional communities, and attractive overall site potential. 5

Nuclear Power Generation Dominant Issues - Safety Environment… and Climate Change Security Lifecycle Economics Industrial Infrastructure Regulatory Framework Socio-political Climate Public Confidence Used Fuel Disposition NON-PROLIFERATION Plant Cost and Financing

7 US Nuclear Production Cost Lowest of Thermal Base-load Generations Source: US Energy Information Agency

Plant Cost and Financing: The Dominant Issue The absolute and relative cost of a single or dual nuclear power station The infrastructure and management of the plant construction The financing of the plant construction The financial incentives, or lack thereof The cost of interest Cost escalation during construction... The Need for Initial Cost Improvement and Predictability

Proposed Global New Nuclear Build Paradigm New reactor build activities shall not interfere nor take resources from operating reactors, and other related obligations. New reactor build activities shall be done openly and on schedule, relying on high quality and complete applications from industry, using best global experience, with established regulatory frameworks. Major licensing activities and decisions, commencing with siting and environmental decisions, shall be done before major investments are made. ONE LICENSE issued to construct and operate, as licensed. Inspect to ensure compliance during construction and operation (ITAAC) Most (about 80%) of the final design shall be completed before major construction work is started. Reactors with US certified designs or equivalent are preferred. Major project interfaces, including the utility/vendor plus the architect/engineer, constructor and interrelations shall be clearly defined by contractual arrangements. Bottom line: activities are strongly coupled yet done by independent parties. They require active coordination of milestones and interfaces, in accordance with established frameworks and schedules.

10 “New” Licensing Process for U.S. Nuclear Reactors Combined Construction Operating License (COL)

Regulatory Infrastructure The skunks work approach: small and simple Independence: technical decision-making, with national policy mandate Lead environmental assessment, fully cognizant of national environmental regulations and corresponding agreements with agencies Licensing and regulatory capabilities, connected but separate A full skunks work team: 1 director, 2 licensing lawyers (one environmental and one “nuclear”); dedicated experts: 2 reactor systems and safety, 2 structures and civil work, 2 electrical systems and I &C, 2 Probabilistic Safety (Risk) Assessment, 2 radiological/fire protection and preparedness, 2 monitoring/inspection and QA At least 2 team members must have power reactor operating experience Chile have the capability to establish an effective regulatory infrastructure on schedule, using the proper sequence: licensing and regulation

Programmatic Approach for fission-powered electricity generation I believe the approach suggested is the right one for Chile: focus on deployment of the power plants, with sound policy backing and independent licensing and regulation, with protection of public health, the environment and national security, first and foremost. “The enemy of the good is the better”: do the doable and needed first and well: deploy clean, carbon-free base load fission-powered electrical generation, without ancillary activities. Evaluate additional potential activities after securing the energy portfolio