Power Play

The Nuclear Regulatory Commission hasn't licensed a new reactor in three decades. That's about to change in a big way.

When Dale Klein left his job managing nuclear, chemical and biological defense programs at the Defense Department to become chairman of the Nuclear Regulatory Commission in July 2006, he had a singular worry: "I was afraid I would find a culture averse to making decisions," he says. NRC is about to take on a new high-stakes mission in nuclear power production, vastly changed since the 1960s and early 1970s, when the bulk of the nation's fleet of 104 nuclear reactors was designed. It's been nearly 30 years since the agency issued a license to build a nuclear reactor, but over the next three years, power industry executives plan to seek licenses to build at least 30 new reactors.

Klein, a nuclear engineer and scholar who spent most of his career in the University of Texas System before joining the Bush administration, says his worry was misplaced. Decision-making capacity at the agency, which in recent years has issued dozens of license renewals and requests for power upgrades, is robust, he says. Instead, he finds himself most concerned about atrophied business systems and seemingly mundane management issues-a severe space shortage as the agency recruits hundreds of new employees to handle the new licensing mission, a dependence on obsolete computer software for agency operations, and a billing and payroll system so antiquated that no vendor will maintain it.

Those management challenges co-incide with tremendous change at the agency responsible for licensing and regulating civilian uses of nuclear materials to protect public health, safety, security and the environment. It was a demanding enough mission even before utilities began informing NRC in recent years that they were planning to apply for dozens of new licenses to build and operate nuclear reactors. In anticipation of the new applications, which will start trickling in later this year and build over the next few years, the agency has begun staffing a new inspection office in Atlanta (most of the applications will be for plants in the South). And in January, it stood up a new directorate at its Rockville, Md., headquarters, the Office of New Reactors.

The hiring challenge is significant. The agency expects to grow from about 3,100 employees last year to more than 4,000 by 2010. For the most part, these will not be simple positions to fill, but rather highly skilled scientists, engineers and others with specialized knowledge and technical expertise-at a time when industry is looking to recruit many of the same skills. A study by the Government Accountability Office released in January found that about 16 percent of NRC employees are eligible to retire, a figure that will grow to 33 percent by 2010.

"Nuclear power plant owners and NRC have expressed concerns about their ability to even maintain their workforces at current levels to ensure the safety of existing plant operations and the rigor of inspections as workers retire and reactors age," GAO reported in "Retirements and Anticipated New Reactor Applications Will Challenge NRC's Workforce" (GAO-07-105). "To replace retiring employees and expand its workforce, NRC must hire from 300 to 400 employees per year through at least 2010." By late June, the Office of New Reactors had 306 employees, with another 57 slated to join by the end of September. About one-third of those were hired in the last year; others transferred from elsewhere within the agency, the majority from the Office of Nuclear Reactor Regulation-the agency's single largest office, with a staff of 547, responsible for inspecting operations at existing reactors.

There's also the issue of where to put the people the agency is hiring. NRC's headquarters campus-two adjacent buildings, one leased and one owned-is filled to capacity.

For nearly two years, NRC has been unable to reach agreement with the General Services Administration on an acceptable price for leasing more office space. GSA declined the agency's original request, and countered with a lease price far below what NRC is paying. Klein is determined to keep the headquarters in a single location in the interest of efficiency. But in the meantime, employees must shuttle between headquarters and temporary locations in Maryland, driving up costs and complicating security.

Klein and other commissioners have stated publicly that their top priority is strong oversight of the 104 reactors operating in the United States. "I think the most important thing we can do is to become more efficient where appropriate with no compromise on safety," Klein says. "When we see improvements, we will implement them."

Nuclear Renaissance

The nuclear power industry has been moribund in this country since a water pump failed at the Middletown, Pa., Three Mile Island nuclear power plant on a March morning in 1979, causing a chain of events that led to the partial meltdown of one of the reactor's nuclear cores. No one was killed or injured in the accident (multiple assessments by federal, state and independent organizations found that very low levels of radiation actually were released into the atmosphere, registering no adverse health or environmental effects). But it severely undermined public confidence in nuclear power and led to sweeping changes in the industry, the way communities near nuclear power plants plan for emergencies, and the way federal and state agencies regulate nuclear power operations. Eventually, every reactor that had been licensed after 1973 was canceled, so skittish were investors.

And if the public wasn't jittery enough about the narrowly avoided catastrophe at Three Mile Island, the power surge that destroyed the Chernobyl nuclear power station just seven years later in Ukraine, releasing massive amounts of radioactive material into the atmosphere, seemed to seal nuclear power's demise in the United States. The public, often with support from the courts, adopted a not-in-anybody's-back-yard attitude that made it extremely difficult to finish nuclear power plants already under construction in the United States.

The last new reactor was completed in 1996, nearly three decades after it was ordered in 1970. That it took 26 years to build the Tennessee Valley Authority's Watts Bar Unit 1 was a cautionary tale for utilities and investors alike. But as global warming has stirred public consciousness in the last few years, the climate for nuclear power has changed as well.

"From my time in the university, I've always observed there's more support for nuclear energy than is oftentimes perceived," Klein says. "Individuals who are opposed get a disproportionate number of headlines." Perhaps ironically, given the environmental fears stoked by nuclear power accidents, it is concern about global warming that is driving the resurgence of support for nuclear power. It essentially produces no greenhouse gases, the leading contributor to climate change. While wind and solar power also are emissions-free, they do not provide nearly the generating capacity of nuclear power.

"I think that's causing the public to shift and look at nuclear [power] with a more balanced perspective," says Klein. "There's no source of electrical generation that's perfect. We have to make trade-offs. Our job as a regulator is to give the public confidence that there are checks and balances, that we're here to ensure public health and safety while at the same time letting industry provide a product that consumers need."

The renewed interest in nuclear power has been spurred by a number of factors, including widespread expectation that carbon emissions soon will be taxed in an effort to curb global warming. Coal- and natural gas-fired power plants produce carbon dioxide as a byproduct whereas nuclear plants do not. Natural gas, although it produces far less carbon dioxide than coal when it is burned, has the drawback of price volatility, making nuclear power more economically viable. Additionally, the 2005 Energy Policy Act made tax credits and other financial incentives available to companies willing to bring on new nuclear plants.

Climate Change

Just because utilities will apply for dozens of new nuclear licenses doesn't mean they will commit to building the plants. As the March report, "Nuclear Power: Outlook for New U.S. Reactors," by the Congressional Research Service notes: "Large uncertainties about nuclear plant construction costs still remain, along with doubts about progress on nuclear waste disposal and concerns about public opposition. All of those problems helped cause the long cessation of U.S. reactor orders and will need to be addressed before financing for new multibillion-dollar nuclear power plants is likely to be obtained."

Larry Goldenhersh, president and chief executive officer of Enviance Inc., a Carlsbad, Calif., company that helps utilities and other industries meet emissions standards through environmental monitoring, is skeptical that nuclear power will ultimately prove an acceptable solution to global warming. "With the long permitting and construction timelines for bringing new nuclear power plants online, and the very short time frame we have to address the carbon problem, I don't think nuclear power is a quick fix for the greenhouse gas crisis."

NRC's Klein also worries about nuclear power being oversold as a solution to climate change. At an annual conference of nuclear industry leaders in Miami in May, he exhorted the audience "to be careful about managing expectations regarding the future of nuclear power." More to the point, he says, "I don't believe the public understands how long it takes to get new electric generation on the grid, whether it's coal or nuclear. There's a sort of euphoria right now that nuclear is going to come rushing in to save global warming, but this is a process that will take time and it's a long-term solution."

He also warned industry leaders that the wave predicted by proponents of nuclear energy easily could turn into a bubble, "and bubbles have a tendency to pop." Missteps at home and abroad could have severe consequences for nuclear power, he said. With three-quarters of the world's reactors of U.S. origin in design or construction, a significant incident anywhere would have inescapable consequences for nuclear power in the United States. "It seems to me that you have a bottom-line interest in helping ensure that the global expansion of nuclear energy proceeds in a way that promotes safe construction and operation," he told the audience.

"It's not my function as a regulator to tell industry how to manage its capital investments or construct its business models. However, I do have a legitimate interest in seeing that the captains of the nuclear energy industry have a proper appreciation for the technical, engineering and security challenges involved in operating commercial nuclear reactors. So, when I observe utilities spinning off their nuclear energy components, or see plans for changes in the ownership of nuclear power companies, I think it's worth reiterating the basic point that the nuclear energy business is in many ways unique and should be treated as such," Klein said. "Highly qualified technical leadership will continue to be essential-and so it needs to be developed and maintained."

Perhaps the area where the nuclear power industry will build public and investor confidence most is in improved efficiency, which has significantly boosted generating capacity and profitability at many plants. CRS found that in the mid-1980s, nuclear power plants were operating at 65 percent capacity. That average grew to 85 percent capacity in the mid-1990s, and topped 89 percent in 2006.

"Falling operating costs have helped renew the economic viability of the nation's fleet of nuclear power plants. From 1989 to 1998, 12 commercial reactors were closed before reaching the end of their 40-year licenses. By the late 1990s, there was real doubt that any reactors would make it to 40 years," according to CRS. But since 2000, more than 40 operators of commercial reactors sought and received 20-year license extensions from NRC, and more applications are pending.

Increased efficiency has made nuclear power second only to coal in producing electricity in the United States. As CRS notes: "The near-record 823 billion kilowatt-hours of nuclear electricity generated in the United States during 2006 was more than the nation's entire electrical output in the early 1960s, when the first large-scale commercial reactors were being ordered, and more than twice the 2005 total electrical generation of Great Britain."

Antiquated Systems

Just as the nuclear industry has become more efficient through equipment upgrades and better business practices, so must NRC modernize, Klein says. "When I got here we had no BlackBerrys," he says of the ubiquitous wireless communications devices that keep most officials connected to the business of Washington. "I'm not a salesman for BlackBerry, but if we don't use the modern tools of communication, we're not as efficient as we should be. When I traveled, I couldn't catch up with my e-mail."

The world turned to Microsoft's Outlook for e-mail and Word for document production in the 1990s, but when Klein arrived last summer, NRC was still using Novell and WordPerfect. "We'd send documents to people that they couldn't open," he says. "Just think, if you're going out to a university and trying to recruit the best and brightest out of science and engineering, and you say, 'Come work for the NRC, we use WordPerfect and Novell.' Everybody coming out of the academic world was trained on the Microsoft Office Suite, so what we were having to do was retrain people on an old system."

The agency's inspectors are especially burdened by obsolete technology because they must allocate their time using 10,000 separate codes. "It's too cumbersome. We need to do a lot of things that are more efficient and more reliable," Klein says. In late April, NRC hired Darren Ash, who led the Transportation Department's capital planning and enterprise architecture efforts, to become chief information officer. In late June, NRC announced that William McCabe, acting chief financial officer at Education and a former senior manager for financial solutions at KPMG International, a financial consulting firm, would become the agency's CFO. "We're getting there," says Klein. "We now have a lot of BlackBerrys. We're making the migration to Outlook as our e-mail system. [Our] new CFO will bring in some new ideas and better practices. We're not there yet, but we see a path forward."

That path likely will put NRC in competition for talent with the very industry it regulates. "Right now, there's a decent bench strength of skilled expertise," says Michael P. McMahon, president of Day & Zimmermann's power services business, the maintenance contractor for 50 of the nation's 104 reactors. When a plant shuts down for maintenance, Day & Zimmermann or one of its competitors typically deploy several hundred skilled craftspeople to repair equipment and perform engineering upgrades. But a shortage is on the horizon, he says. Just as the wave of retirements hits NRC, so too will it hit the industry. Both the private sector and government must create incentives for training and education that will produce the skills needed for any resurgence in nuclear power.

"A lot of people who built the nuclear power plants in the '70s and '80s aren't 35 anymore. The skilled workforce needs to be developed," McMahon says. "NRC needs to be recruiting, developing and training inspectors along with everybody else. For a long time, there was not an industry for a high school kid to go away and become a nuclear engineer because there were no power plants being built."

Klein agrees. "We need to increase the applicant pool for nuclear-trained people and also people in electrical engineering. As the utilities start hiring to ramp up their activities, there will be a lot of pressure on the applicant pool, and all of us will be going after the same limited numbers if we don't increase the pool."

At NRC, agency managers have begun rehiring recent retirees as part of a "knowledge management" program aimed at retaining institutional knowledge during this period of tremendous flux. "If you look at the numbers, by 2009, we will have about 1,200 employees with less than three years of experience. That means about one-third of our workforce is new," says Klein.

"I've been impressed by the staff doing that knowledge transfer," he says. "They brought back good people for training the next generation of inspectors. I'm confident."

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