1. Jack B. Allen Senior Vice President – Operational Excellence Westinghouse Electric Company ASQ 2006 Energy and Environmental Conference Nuclear Power Initiatives and Quality Perspectives

2. 2 Overview World Nuclear Snapshot U.S. Plan New Plants Opportunities QUALITY Foundation

3. 3 World Electricity Demand Growth (bkWh) Source: EIA International Energy Outlook - Updated 07/05 63% Increase Needed in Next 20 Years

4. 4 Forecast Electricity Demand by Region Source: EIA Annual Energy Outlook 2004 (Billion KWh) Asia Europe U.S Rest of World Extensive expansion of installed generating capacity needed!

5. 5 Nuclear…A Major Role in Global Generation Source: International Atomic Energy Agency & World Nuclear Association Database Percentage New Construction in Progress 441 Operating Commercial Nuclear Power Plants Worldwide

6. 6 Anticipated Global Nuclear Capacity Demand GWe Ref: The Future of Nuclear Power An Interdisciplinary MIT Study (2003) and Westinghouse Analysis 477 200 175 68 62 49 37 32 39 91 17 46

7. 7 The Nuclear Renaissance New plants under construction or strong consideration: CanadaSouth Africa ChinaSouth Korea Czech RepublicSwitzerland FinlandTaiwan FranceTurkey IndiaU.K. RussiaU.S. Vietnam New plants under construction or strong consideration: CanadaSouth Africa ChinaSouth Korea Czech RepublicSwitzerland FinlandTaiwan FranceTurkey IndiaU.K. RussiaU.S. Vietnam

8. 8 New Plant Markets Present Significant Growth Opportunities - Asia China: 9 operating units; 2 under construction –Demand growth of 250% over 15 years –Evaluating AP1000 - 4 plant bid –Plan to build 35 – 40 new plants South Korea: Commitment to balanced energy policy –Will award two additional orders in 2006 / 2007 Japan: Toshiba ownership expands Westinghouse name/market India: Establishing U.S. nuclear relationship

9. 9 Growth Opportunities – Europe and South Africa Opening of markets in European Union provides opportunities for U.S. companies Finland: New reactor under construction Belgium, Germany, Sweden: Future energy policy under review; owners investing in upgrades Eastern Europe (EU): Evaluating energy needs; more new nuclear build programs likely United Kingdom: Gap looming with old nuclear units retiring soon. Energy review includes nuclear Republic of South Africa: 1-2 units needed, PBMR later

10. 10 Drivers of Global Market for Nuclear Plants Rapidly growing economies in Asia Coal transport limits Need for fuel supply security, price stability - Russia cuts natural gas deliveries (contract dispute) Kyoto Accords (reduce greenhouse gas emissions) Old plants retiring IAEA projection of nuclear by 2030: - Low estimate: 54 GW more than 2005 capacity (about 45 plants) - High estimate: 309 GW more (about 257 plants)

11. 11 Impact to U.S. Resources Lessons learned for design, manufacture and construction of new plants Potential to move focus from current plant upgrade, maintenance and operation Step change demand to a consolidated infrastructure Call to arms for knowledge transfer

12. 12 Nuclear Power - 20% of U.S. Electricity Production (Number of operating units per site shown in parenthesis) Columbia (1) Diablo Canyon (2) San Onofre (2) Palo Verde (3) Monticello (1) Prairie Island (2) Ft. Calhoun (1) Cooper (1) Wolf Creek (1) Duane Arnold (1) Callaway (1) ANO (2) Comanche Peak (2) South Texas (2) River Bend (1) Waterford (1) Turkey Point (2) St. Lucie (2) Farley (2) Hatch (2) Vogtle (2) Sequoyah (2) Oconee (3) Catawba (2) H. B. Robinson (1) Summer (1) McGuire (2) Harris (1) Brunswick (2) Surry (2) North Anna (2) Calvert Cliffs (2) Hope Creek (1) Salem (2) Oyster Creek (1) Millstone (2) Pilgrim (1) Seabrook (1) Vermont Yankee (1) FitzPatrick (1) Nine Mile Point (2) Ginna (1) Clinton (1) La Salle (2) Kewaunee (1) Point Beach (2) Palisades (1) Cook (2) Fermi (1) Davis- Besse (1) Perry (1) (2) Susquehanna Peach Bottom (2) Three Mile Island (1) Limerick (2) Indian Point (2) Quad-Cities (2) Byron (2) Dresden (2) Braidwood (2) Crystal River (1) Grand Gulf (1) Browns Ferry (3) Watts Bar (1) Beaver Valley (2) 103 Nuclear Power Plants Totaling 97,018 MWe

13. 13 Key Developments Renewed U.S. Interest in Nuclear Natural gas prices soar Focus on greenhouse gas emissions Existing nuclear plants operating safely and economically NRC new licensing process (avoid another Shoreham) Energy Policy Act 2005 Electricity demand growth Advanced plant designs

14. 14 U.S. Needs by 2030… 45 % More Electricity Source: Energy Information Administration

15. 15 CompanySiteEarly Site PermitDesign, # of Units Construction/Operating License DominionNorth AnnaUnder review, approval expected late 2006 ESBWR (1)COL application in 2007 NuStart (TVA)BellefonteLikely straight to COLAP1000 (1)COL expected to be developed for 2007 submittal NuStart (Entergy)Grand GulfUnder review, approval expected early 2007 ESBWR (1)COL expected to be developed for 2007/2008 submittal EntergyRiver BendLikely straight to COLESBWR (1)COL application in 2008 Southern CompanyVogtleUnder development, to be submitted mid-2006 AP1000COL preparations to start 2006 with a submittal date of 2008 Progress EnergyShearon Harris, Florida site TBD Will go straight to COLAP1000 (4)COL preparations started, submittal in 2008 S.C. Electric & Gas/ Santee Cooper V.C. SummerWill go straight to COLAP1000COL application in 2007 DukeNot yet determinedWill go straight to COLAP1000 (2)Will start COL preparation in 2005 ExelonClintonUnder review, approval expected mid-2007 Not yet determined UniStarCalvert Cliffs or Nine Mile Point Will go straight to COLEPR (1)2008 (COL and EPR design certification conducted in parallel) Source: Nuclear Energy Institute, Washington, DC (February 23, 2006) U.S. New Nuclear Plant Activity

16. Currently Planned New U.S. Units

17. 17 Leaders for Combined Operating License Process NuStart Energy Development –Companies engaged: 11 –Reactor designs: Westinghouse AP1000 and GE ESBWR Dominion-led –Companies engaged: 4 –Reactor design: GE ESBWR TVA-led –Companies engaged: 6 –Feasibility study to site GE Advanced BWR

18. 18 Operating Plant Uprate Activities Replacement of Reactor Vessel Head Replacement Steam Generators Weld Overlay of Nozzle Penetrations Upgrades to Instrumentation and Control Systems

19. 19 Dezurik Mueller Steam Daniel Valve Copes-Vulcan K-Flo Durco Byron Jackson Pacific Pumps United Centrifugal Worthington Edward Anchor-Darling Limitorque Actuators Nordstrom Valtek Voght Keystone Crosby Anderson-Greenwood Tricentric Atwood & Morrill Blakeborough Hopkinsons Flowguard EMD Target Rock Supply Base Shrinking… Pump and Valve Suppliers for Example Dezurik Mueller Steam Daniel Valve Copes-Vulcan K-Flo Durco Byron Jackson Pacific Pumps United Centrifugal Worthington Edward Anchor-Darling Durco Limitorque Actuators Nordstrom Valtek Voght Keystone Crosby Anderson-Greenwood Tricentric Atwood & Morrill Blakeborough Hopkinsons Flowguard EMD Target Rock Flowserve Weir Valves & Controls SPX Valves & Controls Tyco Flow ControlCurtiss-Wright

20. 20 Some Emerging Issues and Trends Major/Replacement Hardware Quality and Schedule Failures –Manufacturing, machining and special process controls errors –Materials and supplier qualifications Supply Base Shrinkage and Lost Quality “Pedigree” Transition to Digital Instrumentation & Controls Critical Non-Safety Related Equipment Performance –Reactor coolant pump motors and non-safety transformers

21. 21 Industry Perceptions Lacking Confidence in Supply Base –Issues, outage delays and lost expertise and knowledge Migration from ASME Nuclear to ISO-9001 or Commercial Quality Assurance Programs –Commercial dedication of components –Compensatory measures - inspection, oversight Active Customer Engagement (INPO – Institute of Nuclear Power Operations) –Human Performance, Corrective Action Programs, Operating experience and Nuclear Safety Conscious Work Environment Active Regulator Engagement

22. 22 New Techniques: Construction Modularization Large components Alternative fabrication and assembly locations Assembly transport Sub-assembly and test practices

23. 23 Step Change Growth – Multiple Plants Competitiveness Sub-Supplier Performance Assurance Continuous Improvement Behaviors –Quality and Human Performance –Waste Elimination –Product and Technology Development Alliance Relationships Supplier Base Demands and Expectations

24. 24 Thoughts …“What keeps us up at night” Commitment to Sub-supplier Oversight Achievement of Customer Expectations –Zero Tolerance for Error –Implementation of Human Performance Tools The Big Picture –Step Change for Pace and Volume of Business –New Personnel Knowledge Transfer –Re-instilling Rigor and Discipline of “Nuclear QA” –An INCIDENT Anywhere … Affects EVERYONE !

25. 25 Hayes - Wheelwright Model Timing and Impact of Attention and Influence

26. 26 World-class Environmental, Health and Safety Flawless Execution Cost Competitiveness Develop / Maintain Critical Skills System Management Customer 1 st CFL Training Project Outcome Customer 1 st Project Reviews Behavioral Modification Behavioral Differentiation Create Success for Customers Develop Leading Technology Solutions Innovation Westinghouse “Critical to Success” Objectives FY2007 Achieve Sustainable Growth by Contributing to Our Customers’ Success Customer Intimacy Operational Excellence Technology Leadership

27. 27 Quality of Execution Ease of Doing Business Lean Enterprise Six-Sigma Human Performance Behavioral Differentiation Design for Six-Sigma Design for Six-Sigma Tools Enable Improvement

28. 28 Call to Arms for QUALITY Professionals Respond to lessons learned for design, manufacture and construction of nuclear equipment Restore Nuclear Quality Programs and Rigor Implement Continuous Improvement Plans Rapidly Initiate Knowledge and Experience Transfer Maintain Industry QUALITY Conscience

29. 29 a Strong Quality Foundation and Team which … Starts with YOU New Opportunities Require Re-building …

31. 31