U.S. Nuclear Program – A Status Report

APPA Board of Directors Meeting

Marvin S. FertelPresident and Chief Executive Officer

September 14, 2010

Sustaining Excellent Reactor Performance

200

300

400

500

600

700

800

'81 '85 '89 '93 '97 '01 '05 '09

Record electricity production in recent years

Produces 20% of electricity with 10% of U.S. capacity

50

60

70

80

90

100

'81 '85 '89 '93 '97 '01 '05 '09

Nuclear energy dominates CO2-free electricity portfolio

Most reliable electricity producer at 90% capacity factor

2009: 799 billion kilowatt-hours

2009: 90.5% capacity factor

Strong Public Support Continues

74% Favor Use of Nuclear

Energy

87% Favor

RenewingLicenses

87%Important

forOur Energy

Future

70%DefinitelyBuild NewReactors

77%Acceptable

atNearest

Site

Source: Bisconti Research Inc./Gfk Roper

March 2010 poll of 1,000 U.S. adults; margin of error is +/- 3%

U.S. Public Opinion 1983 – 2010: Favorability to the Use of Nuclear Energy for Electricity

Annual Averages Until 2010, Percentages

Bisconti Research, Inc. survey of 1,000 U.S. adults; margin of error +/- 3 percentage points

U.S. Public Opinion: Acceptability of Adding a New Reactor

Next to Nearest Operating Nuclear Power Plant (2005 – 2010)

Percentages

Bisconti Research, Inc. survey of 1,000 U.S. adults; margin of error +/- 3 percentage points

Source: U.S. Nuclear Regulatory Commission

Nuclear Plant Uprates

Uprate Highlights

5,744 MW of power uprates approved since 1977

3,526 MW of uprates under review and expected to be implemented by 2014

Plant Completions

Watts Bar 1123 Mwe (under construction)

Bellefonte Unit 1 & 2 1256 Mwe (construction suspended – being considered)

59 Granted

18 Under NRC Review 21 Intend to Renew

Source: U.S. Nuclear Regulatory Commission

6 Unannounced

Preparing for Longer-Term Operation

DOE and EPRI collaborating on extended operation

Industry investing in extended operation through replacements, upgrades and uprates

EIA’s 2010 Annual Energy Outlook reference case assumes 41 nuclear units will operate beyond 60 years

License RenewalsContinue ...

Obama Administration ActionsThat Support Nuclear Energy Expansion

Significantly improved and expanded the loan guarantee program– Announced $8.3 billion loan guarantee for Southern Co.’s

$2.0 billion for AREVA Uranium Enrichment Plant– $36 billion increase in loan volume in FY 2011 budget

$73.8 million in clean energy manufacturing tax credits awarded too nuclear manufacturers

Nominated three qualified candidates for the U.S. Nuclear Regulatory Commission

22 reactors under active review at NRC– First licenses late 2011, early 2012

Nuclear plant design certification– Three design certifications in progress– Two previously certified designs being updated

First movers have started site preparation, ordered long-lead components

Expect four to eight reactors in commercial operation 2016-2018

U.S. manufacturing supply chain growing

Snapshot of New Nuclear Plant Development

Cost of Electricity from Nuclear and Gas-Fired Capacity

Technology NuclearGas

(Combined Cycle)

Project Structure

PF with LG 

80% Debt20% Equity

RB with CWIP  

50% Debt50% Equity

PF  

50% Debt50% Equity

EPC Cost ($/kWe)

$4,000 - 4,500 $1,000

Total Cost($/kWe)

$5,500-$6,100

$4,800-$5,400

$1,200 $1,200 $1,200

Fuel Cost (nuclear - $/MWh)(coal/gas - $/mmBtu)

$7.50 $4.00 $7.00 $10.00

Capacity (MWe)

1,400 400

First Year Busbar (2009 $/MWh)

$75 - 81 $106 - $116 $56 $76 $97

Levelized Busbar(2009 $/MWh)

NA $80 - $86 NA NA NA

Impact of C02 Price at $30/Ton(2009 $/MWh)

NA NA Add $18.00

Source: NEI Financial ModelPF – Project Finance, RB – Rate Base, CWIP – Construction Work in Progress, LG – Loan Guarantee

4753

6460

58 56

100%94%

82% 80%

63%

Construction Cost(% of First of a Kind)

Construction Duration(Months)

1995 1998 2002 2004 2010 ~ 2011

63%

Learning Curve Opportunity – Korean Example

39

Goal

Yonggwang3, 4

Ulchin3, 4

Shin Wolsong 1, 2

Yonggwang5, 6

Ulchin5, 6

Shin Kori 1, 2

Reactors Under Construction and Planned Worldwide

2311

42

61222

11112

11

3314

2012

69

622

222

1

ChinaRussia

IndiaJapan

S. KoreaUS

China, TaiwanBulgariaUkraine

ArgentinaIran

PakistanFrance

SlovakiaBrazil

Finland

Under construction

Planned

Sources: International Atomic Energy Agency for units under construction and World Nuclear Association for units on order or planned.

*Chart includes only countries with units under construction. **Countries planning new units are not all included in the chart.

Planned units = Approvals, funding or major commitment in place, mostly expected in operation within 8-10 years.

Updated: 8/10

Totals: 61 units under construction* 149 units on order or planned**

Advanced Reactor Technologies Small modular reactors (25-350 Mwe)

– Light water, high temperature and fast reactors– Generation, process heat and improve fuel use– Could be under construction in 10 years– Built in modules at a factory and shipped to site– T&D planning activities reduced– Potential replacements for old inefficient coal plants– Time to market -- six years assuming an ESP – Need more design information before economic

assessments can be completed

Summary of Studies on Climate Change Mitigation

New Nuclear Generation Capacity Required

Source Study /AnalysisNumber of

new reactors*

Gigawatts

Timeframe

Energy Information Administration

Annual Energy Outlook 2010 6 8 2035Kerry/Lieberman, American Power Act (2010)

52 72 2035

Waxman/Markey (2009) 69 96 2030Lieberman/Warner (2008) 191 268 2030

Environmental Protection Agency

Kerry/Lieberman, American Power Act (2010)

181 253 2050

Waxman/Markey (2009) 187 262 2050Lieberman/Warner (2008) 179 250 2050

National Academy of Sciences

America’s Energy Future: Technology and Transformation (2009)

77 108 2035

Electric Power Research Institute

Prism/Merge Analyses: 2009 Update

46 64 2030

McKinsey & CompanyU.S. Greenhouse Gas Abatement Mapping Initiative - Mid-Range Case (2007)

18 25 2030

*Based on a 1,400 MW average nuclear plant.

Administration terminating the Yucca Mountain project– Blue ribbon commission to develop recommendations

on used fuel management Interim storage safe, securefor indefinite period of time Used fuel issues not an

impediment to operatingreactors or new plantdevelopment

Used Nuclear Fuel: The New Reality

On-site storage for used fuel at the Surry station in Virginia

Political Agenda

Relationship strengthening/building and education

NRC Commissioners Nomination/Confirmation

Energy Policy Positions– Financing platform– Tax issues– Licensing clarifications

Nuclear Waste Policy Act

Political Agenda

Oppose imposition of inappropriate new costs– D&D tax– Increase in decommissioning fund tax rate

NRC oversight

Conclusions

Current 104 units sustained good performance Industry pursuing plant uprates ~ 3500 MW’s+ Industry pursuing license renewal – all 104 units

– Greater than 60 years operation being explored New plants – 4-8 reactors in commercial operation

2016 – 2018 New small modular reactors being developed Significant expansion of nuclear necessary to meet

80 percent CO₂ reduction by 2050