1. Update on New Nuclear Plant Development for the Kansas Energy Commission August 15, 2007 Mary Quillian Director, Business and Environmental Policy Nuclear Energy Institute 202-739-8013, mmq@nei.org

2. Overview  Factors driving interest in building new nuclear plants: – Performance of existing nuclear fleet – Fuel diversity – Public opinion – Environmental Benefits – no GHG emissions – Need for new capacity – particularly new baseload  The next wave of new plants – Who’s developing them? – New licensing process – Used Fuel – Financing – Energy Policy Act of 2005 support for new nuclear – State initiatives that support new plant construction

3. Sustained Reliability and Productivity 88.1% in 2000 89.4% in 2001 90.3% in 2002 87.9% in 2003 90.1% in 2004 89.3% in 2005 89.8% in 2006* Source:Global Energy Decisions / Energy Information Administration * Preliminary for 2006 Capacity factor (%) U.S. Nuclear Capacity Factor

4. Source: Global Energy Decisions / Energy Information Administration * Preliminary for 2006 Output Remains Near Record Levels Billion kilowatt-hours 754 in 2000 769 in 2001 780 in 2002 764 in 2003 789 in 2004 782 in 2005 787 in 2006* U.S. Nuclear Generation

5. Source: Global Energy Decisions 2000: 2.03 cents/kWh 2001: 1.89 cents/kWh 2002: 1.90 cents/kWh 2003: 1.86 cents/kWh 2004: 1.84 cents/kWh 2005: 1.76 cents/kWh 2006: 1.72 cents/kWh Solid Economic Performance Continues 2006 Cents per kilowatt-hour U.S. Nuclear Production Cost

6. U.S. Industrial Safety Accident Rate 2006 Sources: Nuclear (World Association of Nuclear Operators), Electric Utilities and Manufacturing (2005, U.S. Bureau of Labor Statistics). Updated: 4/07 ISAR = Number of accidents resulting in lost work, restricted work, or fatalities per 200,000 worker hours. Electric utilities and manufacturing do not include fatality data.

7. Fuel as a Percentage of Electric Power Production Costs 2005 Source: Global Energy Decisions Conversion Fabrication Waste Fund Enrichment Uranium

8. 63% Favor Use of Nuclear Energy (Annual Averages) Source: Bisconti Research, Inc., poll conducted March 30 and April 1, 2007

9. Five Steps of Support for New Plants Important for our energy future 80% Prepare to build 71% Definitely build 56% Accept new reactors at nearest plant 66% Renew licenses 81% Source: Bisconti Research, Inc., poll conducted March 30 and April 1, 2007

10. U.S. Electric Power Industry CO 2 Avoided Million Metric Tons 2006 Source: Emissions avoided are calculated using regional and national fossil fuel emissions rates from the Environmental Protection Agency and plant generation data from the Energy Information Administration. Updated: 4/07

11. Nuclear Energy Has an Environmental Impact Comparable to Renewables Source: “Hydropower-Internalised Costs and Externalised Benefits,” Frans H. Koch. International Energy Agency Life Cycle Emissions for Various Electricity Sources

12. Emissions Reductions in Perspective  The UNFCCC estimates that the Kyoto Protocol’s Clean Development Mechanism (CDM) will generate 1.2 billion tonnes of emission reductions by the end of 2012  Worldwide, nuclear power avoids the emissions of around 2 billion tonnes of CO 2 annually Source: UNFCCC CDM Statistics (http://cdm.unfccc.int/statistics) and International Energy Agency. Emissions avoided by nuclear power are calculated using an average fossil fuel emissions rate that is weighted by the ratio of projected coal and gas generation.http://cdm.unfccc.int/statistics

13. Magnitude of the Climate Challenge Under “business as usual” projections, global CO2 emissions from fossil fuels expected to double by 2050 – from 7 GtC/yr to 14 GtC/yr. But stabilizing atmosphere at 500 PPM CO2 requires avoiding this growth and then rapidly shrinking CO2 emissions after 2050. To get to 2050, we would need seven “wedges” of low-carbon energy, each enough to displace 1 GtC/yr. Source: Keystone-NJFF Report June 2007

14. What is a “Wedge” of Nuclear Capacity? One wedge would require that we roughly triple the size of global nuclear power plant capacity, from 370 GW to 1070 GW, or about 700 net GW. Source: Keystone-NJFF Report June 2007

15. Kansas  Wolf Creek avoided 9.3 million metric tons of CO 2 in 2006  In 2030, a new nuclear plant in SPP could avoid 9.7 million metric tons of CO 2 a year All the passenger cars in Kansas emitted 4.5 million metric tons of CO 2 in 2005 Source: NEI calculations using EPA and EIA data New nuclear plant size 1,400 MW

16. SPP Electricity Generation Fuel Shares 2006 and 2030 * Forecasted Source: Energy Information Administration’s Annual Energy Outlook 2007 Updated: 8/07 2006* 2030*

17. U.S. Electricity Generation Fuel Shares 2006* * Preliminary Source: Global Energy Decisions / Energy Information Administration Updated: 4/07

18. U.S. Electricity Generation Forecast 2005 – 2030, Billion kWh Source: Energy Information Administration Updated: 4/07 2005: 4,046 Billion kWh 2030: 5,797 Billion kWh

19. U.S. Electricity Generation Fuel Shares 2030 * Preliminary Source: Global Energy Decisions / Energy Information Administration Updated: 4/07

20. Fuel Type Average Capacity Factors (%) Nuclear89.8 Coal (Steam Turbine)71.1 Gas (Combined Cycle)39.9 Gas (Steam Turbine)17.2 Oil (Steam Turbine)14.9 Hydro31.8 Wind30.3 Solar18.8 U.S. Capacity Factors by Fuel Type 2006* *Preliminary Source: Global Energy Decisions / Energy Information Administration

21. Growing Need for Additional Capacity (2006)  Electricity demand in 2030 will be 45% greater than today  To maintain current electric fuel supply mix would mean building: Nuclear reactors (1,000 MW) Renewables (100 MW) Natural gas plants (400 MW) Coal-fired plants (600 MW) 50 93 279 261 Source: 2006 Annual Energy Outlook, Energy Information Administration

22. Nuclear Units Under Construction Worldwide CountryNumber of UnitsTotal MWe Argentina1692 Bulgaria21,906 China43,220 China, Taiwan22,600 Finland11,600 India62,910 Iran1915 Japan1866 Pakistan1300 Romania1655 Russia74,585 S. Korea21,920 Ukraine21,900 Total3124,069 Source: International Atomic Energy Agency PRIS database. Updated: 5/07

23. New Nuclear Plants Under Consideration CompanyLocation (Existing Plant)Units DominionLouisa County, VA (North Anna)1 NuStart Energy (TVA)Jackson County, AL (Bellefonte)2 NuStart Energy (Entergy)Claiborne County, MS (Grand Gulf)1 EntergyWest Felciana Parish, LA (River Bend)1 Southern Co.Burke County, GA (Vogtle)1-2 Progress EnergyWake County, NC (Harris) & Levy County, FL2-4 South Carolina Electric & GasFairfield County, SC (V.C. Summer)1-2 Duke EnergyCherokee County, SC (Lee)2 UniStar NuclearCalvert County, MD (Calvert Cliffs)1-5 Florida Power and LightTBD in FL1 NRG/STPNOCMatagorda County, TX (South Texas Project)2 Amarillo PowerCarson County, TX2 TXUTBD in TX2-5 ExelonTBD in TX2 Alternate Energy HoldingsOwyhee County, IDTBD DTE EnergyMonroe County, MI (Fermi)1 PPL CorporationLuzerne County, PA (Susquehanna)1

24. New NRC Licensing Process (1992 Energy Policy Act) * Public Comment Opportunity Early Site Permit * Construction Construction Acceptance Criteria * Operation Combined License * Design Certification *

25. Standardized Plants Benefits  Design -- designed once with one NRC approval documented in a NRC rule  Construction practices – Increased construction efficiencies & schedules with experience  Parts and components – Procurement efficiencies and shared “spare part” inventories  Regulatory interface – More efficient & effective licensing – More efficient use of regulatory resources  Design improvements – One modification package Standardizes modifications (like uprates, physical and procedural improvements)  Operating and maintenance – Procedures – Good practices & training – More efficient outages – Improved equipment reliability Standardization will reduce the cost of building subsequent plants and operating all plants

26. The “Once Through” Fuel Cycle: The Old View of Used Fuel Management Yucca Mountain Used Fuel Nuclear Plant

27. Used Fuel Management: An Integrated, Phased Program  Developing advanced technologies to recycle nuclear fuel provides needed flexibility  Sites for recycling logical candidates for interim storage – Allows DOE to meet statutory obligation to remove used fuel from operating plants – Sustains public, political, industry confidence in used fuel management program – DOE grants to 11 volunteer sites for siting studies  Yucca Mountain still needed long term

28. Used Fuel Management: New Strategic Direction Yucca Mountain Used Fuel Used Fuel Recycling, Interim Storage Nuclear Waste Recycled Nuclear Fuel Advanced Recycling Reactors

29. Capital Intensive Industries 1.Capital Intensity = total assets divided by total revenues, 2004 – 2006.. 2.Market capitalization = number of shares outstanding times share price on 7.3.07.. 3.Capital Intensity for Duke is for 2006 only. Capital Intensity 1 (three-year average) Market Capitalization 2 (billion dollars) NRG Dominion Southern Co. Exelon Corp. TXU SCANA Constellation BP Chevron ExxonMobil Progress FP&L Entergy DTE Energy Duke 3 AmerenUE PPL Corp.

30. Energy Policy Act of 2005: Production Tax Credit  $18/MWh for first 6,000 MW of new nuclear capacity  Distributed on a pro rata basis to all plants that: – Submit a COL application to the NRC by Dec. 31, 2008 – Begin construction by Jan. 1, 2014 – Start commercial operation by Jan. 1, 2021  Production tax credit – Enhances financial attractiveness of project after it is built and in commercial operation – Does not address financing challenges before and during construction

31. Energy Policy Act of 2005: Standby Support  Federal insurance coverage for delays caused by licensing or litigation  Covers debt service only  Limitations on coverage reduce value – First two $500-million policies: 100% of delay costs, no waiting period for claims – Second four $250-million policies: only 50% of delay costs after 6-month delay

32. Energy Policy Act of 2005: Loan Guarantee Program  2005 Energy Policy Act authorizes loan guarantees up to 80 percent of project cost  Should allow nuclear plant developers to – Increase leverage – Reduce financing costs – Reduce cost of electricity from project – Non-recourse to project sponsor’s balance sheet  Final regulations late 2007

33. State Policies Supporting New Nuclear Construction  Utilities and policymakers in regulated states realize need for fuel and technology diversity  Policies being implemented that: – Value diverse generation portfolio – Limit retroactive reviews of prudence – Allow PUCs to approve new plant costs, set future rate increases before construction – Allow investment recovery during construction