ING. RAFAEL FERNANDEZ DE LA GARZA APRIL, 2006

The Revival of the Nuclear option in the

United States and Canada

24 plants are under construction, 113 more are planned worlwide

1Israel

41Iran

2Indonesia

249India

1France

1Finland

1Egypt

2Czech Republic

274China

41Canada

1Bulgaria

1Brazil

1Argentina

# Planned orProposed

# UnderConstruction

Country

11324Total

2Vietnam

1USA

1Ukraine

3Turkey

1So. Africa

2Slovakia

94Russia

31Romania

1Pakistan

8S. Korea

11N. Korea

122Japan

# Planned orProposed

# UnderConstruction

Country

“In the 21st century, our nation will need more electricity, more safe, clean, reliable electricity.

It is time for this country to start building nuclear power plants again”

President Bush on June 22, 2005 while visiting

Calvert Cliffs Nuclear Power Plant

Reasons for Encouraging NewNuclear Construction

• Need for Additional Electric Power• Fossil Fuels Cost• Environmental Protection• Energy Security

Source: EIA

Share of Total US Electricity Generation by Fuel(2003)

Coal51.3%

Oil 3.1%

Gas16.4%

Renewable and Other 2.5%

Hydro 6.9%

Nuclear 19.9%

US Nuclear Power Plant Operations

Source: EIA Annual Review 2004

1960 1970 1980 1990 2000

Nuclear

Total

Total Electricity and Nuclear electricity Net Generation, 1957-2004

Trill

ion

Kilo

wat

thou

rs

Nuclear Share of Electricitity Net Generation, 1957-2004

1960 1970 1980 1990 2000

Per

cent 20%

in

2004

Capacity Factor, 1973-2004

Per

cent

91%

in

2004

1975 1980 1985 1990 20001995

Nuclear Capacity with and without LicenseRenewal(2005-2050)

Source: Platts POWERdat

Source: EIA’s 2005 Annual Energy Outlook

U.S. Electricity Demand 2003-2025(bkWh)

New Generating Capacity:

Estimated Power Costs ($/MWh)

Nuclear ($2,000/kW)

Combined Cycle Natural Gas ($6.00/MMBtu)

Pulverized Coal($1.3/MMBtu)

Nuclear ($2,000/kW with80% Loan Guarantee)

Nuclear ($2,000/kW with80% Loan Guarantee and

PTC’s)

Safety of Nuclear Power Reactors• There have been two major reactor accidents in the history of

civil nuclear power:

• These are the only accidents to have occurred in some 12,000 cumulative reactor-years of commercial operation in 32 countries.

Source: Ball, Roberts & Simpsons, ResearchReport ·20, Centre for Environmental & RiskManagement, University of East Anglia, 1994; in: IAEA, Sustainable development and Nuclear Pwer, 1997; Severe Accidents in theEnergy Sector, Paul Scherrer

Institut, 2001).

– Three Mile Island

– Chernobyl

2 of every 3 Americans favor nuclear energy

Support for nuclear energy is widespread and growing

Nuclear Licensing Process:

The most critical process affectingproject success.

Strategies for New Plant Licensing

• Design-Centered Approach

• Parallel reviews of design certifications and COLs

• Amending Design Certification Rules

StandardizationStandardization

Standardization

• Standardization of desing certification, includingsupplemental rulemakings (Proposed 52.63)

• Standardization in COL applications

• Standardization in COL reviews (“one-for-all”)

Overview of the Old “Two-Step”

Licensing Process

Overview of the New Licensing Process

Time-to-Market Under New Licensing Process

•First applications

�ESP: 33-36 months�DC: 36-60 months�COL: 27-60 months (depending on whether

application references DC and/or ESP)

•Nth applications

�COL: 22-36 months (depending on whether application references ESP); Target = 24 mos.

•Construction: 36-45 months – first concrete to fuel load; Target = 36 mos.

ESBWR

ABWR

CANDU

Major Elements of the Energy Policy

Act of 2005

• Investment stimulus

�Loan guarantee

�Production tax credit

• Investment protection

• Price-Anderson renewed

• Decommissioning trust funds

• Substantial R&D

Major Nuclear Energy Elements

Stimulus for Investment in New Nuclear Plants

• Loan guarantees

�Lower debt cost by $200 - $300 million

• Production tax credit

�$18 per MWhr

�Limit: $125 million per 1,000-MW per year

�6,000-MW eligible

�Rulemaking: Feb. 2006

Protection of Private Sector Investment

• Insurance protection --- delays (e.g. licensing, litigation)

• Coverage: $500 million – first 2 units$250 million – next 4 units

• Rulemaking: Aug. 2006

Price-Anderson – Third PartyLiability Protection

• Extended Until 2025�3rd Party Liability Coverage for Nuclear Incident

�Primary Layer ($300 Million)

�Secondary Layer ($95.8 Million per reactor – not increase)

• Annual Max. Increased to $15 million�To be adjusted for inflation

• Modular reactors treated as a single facility�One $95.8 million obligation

�100-300 MWe modules (up to 1,300 MWe)

Decommissioning Funding

• Elimination of “Cost-of-Service” Requirement (468A)� IRS will need to establish rules for determining the

appropriate annual contributions (level funding requirements)

• “Cost-of-Service” Plants� If IRS adopts “Safe Harbor” to allow PUC/FERC authorized

collections, this should no be an issue for “cost-of-service”plants

• “Merchant” Plants� Opportunity to make deductible deposits into Qualified Fund

over time

NCR Antitrust Review-

(Section 105)

• No mandatory NRC/DOJ Antitrust review

for new plants�Eliminates costly barrier to new plant

projects

• Other Antitrust Laws Still Apply

• Existing NRC License Conditions

DOE Programs

• Restores position of Ass’t Secretary for DOE

Office of Nuclear Energy

• Authorizes $2.7 billion for nuclear R&D�Funds 2010 program (includes COL public-private efforts)

• $1.25 billion for hydrogen production�Next Generation (Gen IV) cogeneration reactor at INL

• $100 million to demonstrate hydrogen production�At 2 existing plants (“regionally and climatically diverse”)

TOTAL: 20 UNITS

PLANS FOR NEW NUCLEAR(Under Consideration)

AP10001-2BellefonteTVA

AP10001-2VogtleSouthern

AP10001-2SummerSCANA

AP10001-21-2

Shearon HarrisFlorida

Progress

ESBWRESBWR

11

River BendGrand Gulf

Entergy

AP10001-2CarolinasDuke

ESBWR1-2North AnnaDominion

U.S. EPRU.S. EPR

1-21-2

Calvert CliffsNine Mile Point

Constellation

TechnologyNo. UnitsSite(s)Utility

Financial Barriers

• Special risk with the first few plants.

• Incentives in the Energy Policy Act of 2005.

Infrastructure

• Need to rebuild network of suppliers.

• Challenge in meeting human-resource needs.

Spent fuel

• Yucca Mountain delay.

• Need for an interim storage option.

• Avoid creating a needless barrier to new

construction.

Concerns about Proliferation

• Controversy will surround anymodification of the fuel cycle.

• Need for a proliferation-resistantapproach involving both technical and diplomatic advances.

The International Dimension

• Need for continuing attention to safetyaround the globe.

• Need for international harmonization oflicensing requirements.

Conclusion

• US is on the edge of a nuclear renaissance.

• The barriers to new construction can be overcome.

New Nuclear in Ontario

• Urgent need for new electricity supply

–80% of generation will need to be refurbished, replaced, rebuilt over the next 15 years

• Ontario Power authority (OPA) supply Mix Report –Dec 9,2005

–Need for new nuclear generation as early as 2014

• Total new build requirement could as high as 8000 MWe by 2025

• OPA “Integrated Power System Plan” (July/06) will specify generation / sites / transmission

Ontario Power AuthoritySupply Mix Report – Dec 9, 2005

Figure 1.2.14: Meeting Additional Requirements to 2025 (With Nuclear and Gas)

• Enormous need for clean, reliable, and predictably-priced energy to extract bitumen from oil sands of northern Alberta

• Nuclear can provide co-gen steam, electricity and hot water at very competitive prices to meet this need

• AECL is conducting feasibility studies with several major oil sands producers on application of CANDU technology

• Political and public acceptance challenges remain

Alberta Oil Sands