The nuclear industry has proven that it can be an efficient producer
of electric power while operating in a manner that is more environmentally
friendly than virtually any other energy source. And we’ve been doing
so since Westinghouse built the world’s first commercial pressurized water
reactor in Shippensburg, Pennsylvania in 1957.

However, despite the optimistic forecasts issued at the birth of nuclear
power 43 years ago and despite the clear advantages that nuclear has over
most other power-generation fuels, nuclear still plays a relatively minor
role in the generation of electricity. Most of the world’s energy is derived
from fossil fuels: coal, oil, and natural gas. Only about 17 percent currently
comes from nuclear power. That percentage must increase in coming years
if the world is to satisfy its growing need for not only more, but also
cleaner electricity.

This increase in demand for more and cleaner power is driven primarily
by concern over greenhouse gases and global warming and an ever-increasing
world population. Forecasts are that over the next 50 years the world’s
population will grow by an astonishing 50 percent. An increase of that
size – and there are those who contend that 50 percent could prove to
be a rather conservative estimate – could double and even triple world
demand for energy by the year 2050.

A Growing Appetite for Power

But we really won’t have to wait 50 years to see demand for electric
power increase. It already is happening and has been happening for some
time. In the United States alone, electricity use has increased by 60
percent since 1973. And, because more and more Americans every year are
buying and using more and more computers, air conditioners, household
appliances, tools, and other things that once were considered luxuries
but now are thought of as necessities, increased energy demand in this
country threatens to outpace our power generation capabilities very soon
– unless we increase those capabilities significantly.

Americans are not the only ones on an electric-equipment buying and using
spree, of course. It is an international phenomenon. Demand is up worldwide
and promises to continue to rise as populations grow, and all manner of
electrical equipment becomes more affordable to more people.

In short, our global appetite for electricity, and the attendant rise
in the standard of living that comes with it, is on the rise.

Developing nations in all parts of the globe, eager to become more active
and more technologically sophisticated participants in the global marketplace,
are in need – in many cases desperate need – of power to fuel their infant
industries so they can jumpstart their economies.

The Threat of Global Warming

That widespread need for more power presents companies in the nuclear
industry with numerous opportunities. The world certainly cannot generate
the additional power needed to meet increased demand by significantly
increasing the use of fossil fuels. Burning fossil fuels produces large
amounts of carbon dioxide, or CO2, and other gases that trap infrared
radiation from the sun.

As a result of past and current reliance on coal, oil, and natural gas
to fuel the world’s power plants, the earth’s atmosphere is heating up
like the inside of a greenhouse. Scientists tell us that unless we reduce
the rate of CO2 gas emissions, the earth’s temperature will rise by as
much as six degrees Fahrenheit in the next century. Global warming to
that extent could cause floods, droughts, and changes in ocean currents,
among other unspeakable calamities. To prevent such dangerous climate
changes from occurring, there cannot be – there must not be – any appreciable
increase in CO2 gas emissions, scientists warn. Those emissions will have
to be kept at current levels or reduced. So in order for increased energy
demands to be met without destroying the environment, the world will have
to consume less oil, coal, and natural gas, and rely more on nuclear energy
and on renewable energy sources like solar, hydro, and wind.

With the exception of nuclear, these other sources cannot be relied upon
for large, reliable blocks of baseload power.

So nuclear energy, the clean technology, will have to become a more significant
player. Our industry is up to the challenge. We have the know-how. We
have the technology. And we have proven over the decades that we can do
the job without harming the environment.

Nuclear Power is the Answer

Increased reliance on nuclear power will help, not harm, the environment.
Nuclear reactors produce virtually no greenhouse gases, so they do not
contribute to global warming like power plants that burn fossil fuels,
and their operation does not produce acid rain. (Those 400-foot high “chimneys”
that are the most visible parts of nuclear power plants are not smokestacks
but cooling towers. And what you see coming out of them is not some mysterious
and harmful pollutant but harmless water vapor.)

Nuclear can be – and should be – categorized as a “green” technology,
the way solar energy, wind power, and hydro are, because it fits the definition
as an environmentally-friendly energy source. Spent nuclear fuel should
not be considered an environmental hazard as the proven technology necessary
to safely dispose of this material already exists.

That has been proven. France is a good example. Seventy-five percent
of that country’s electricity is produced in 54 nuclear power plants that
are, like all nuclear plants, virtually pollution free.

Besides their enviable environmental record, nuclear power plants also
are noted for their ability to produce electricity with a very high degree
of reliability and safety. The Nuclear Energy Institute reports that in
1999, the 103 commercial nuclear reactors operating in the United States
produced 725 billion kilowatt-hours of electricity – a record amount.

And they did so without compromising safety. In 1999, U.S. nuclear plants,
already one of the safest industrial work environments, again exceeded
industry safety goals and recorded only 0.34 industrial accidents per
200,000 work hours. By comparison, the injury rate in the U.S. manufacturing
sector was 8.5 per 200,000 work hours. And last year, for the eighth straight
year, American nuclear plants exceeded industry safety goals for the availability
of key plant safety systems.

Nuclear has other benefits going for it as well. The energy produced
per amount of material consumed is the highest of any fuel source. And
the amount of waste produced in a nuclear power generating plant is the
least of any major energy production process.

Four Segments of the Nuclear Industry

Considering all of the above, is it any wonder that those of us associated
with the nuclear power industry are very excited and very optimistic about
the opportunities that lie ahead, both long-term and more immediate? We’re
very confident that we are capable of taking full advantage of those opportunities.
And they exist in all of the industry’s business segments.

At Westinghouse, we are actively involved in four segments of the nuclear
industry: instrumentation and controls or automation, maintenance and
service, providing fuel for existing plants, and new-plant design and

The first three areas are, at the moment, our company’s bread-and-butter
business segments. They represent very solid businesses for us, and we
have the technology to serve those segments well and profitably. They
play a major part of our industry’s ongoing effort to keep our customers’
plants operating not only longer but more efficiently and more economically
as well. Our company has been a major contributor to some of the industry’s
most significant successes, such as trimming customers’ outages dramatically
and significantly extending fuel life .

Nuclear plants are operating longer than they once did because now their
operating licenses are being extended for as long as 20 years. Previously,
once an operating license expired, the plant was taken out of operation.
Because of vastly improved technologies, more sophisticated procedures,
and longer fuel life, many plants that once would have faced shutdown
when their initial licensing period ended can continue to operate efficiently
and economically for long periods.

License extensions have produced a new business and growth opportunity
for Westinghouse and other companies in the industry. Many nuclear plants
still have and use their original analog controls. Replacing them with
digital instrumentation can appreciably improve operational reliability.
Replacement controls also greatly simplify control rooms, to the point
where our engineers can show customers how to run a nuclear plant with
laptop computers.

While there is activity in the new plant and design segment, mostly in
Korea, we anticipate that this business will grow elsewhere in the not-too-distant
future. And when it does, our company will be ready to design and build
a plant that meets the very highest standards of technological sophistication,
efficiency, economy, safety, and environmental compliance.

The Westinghouse AP600

Westinghouse recently designed and received Nuclear Regulatory Commission
design certification for such a plant, the AP600. The AP600 is a simple,
licensed, mature design, using proven components in an innovative and
elegant approach to safety. It has the lowest cost of any licensed nuclear
plant in the world based on solid cost estimates. It has a verified construction
schedule that is at least a year shorter than other plants on the market
and is ready to be the next plant of choice in the world today. And it
is the only licensed passive safety system nuclear power plant in the

This 600 megawatt advanced pressurized light water reactor plant was
developed jointly by Westinghouse, our subcontractors and utility contributors,
the United States Department of Energy, and the Electric Power Research
Institute. Its predominately passive safety systems rely only on such
natural forces as gravity, natural circulation, convection, evaporation
and condensation rather than on AC power supplies and motor-driven components.
Passive systems and the use of experienced-based components do more than
increase safety, enhance public acceptance of nuclear power, and ease
licensing. They also simplify plant systems, equipment, and operation
and maintenance.

Simplicity is the key technical concept behind the AP600 and makes the
plant easier and less expensive to build, operate, and maintain. Besides
helping to reduce capital costs, simplification also provides a hedge
against regulatory driven operating and maintenance costs by eliminating
equipment subject to regulation. It has 60 percent fewer valves, 75 percent
less piping, 80 percent less control cable, 35 percent fewer pumps, and
50 percent less seismic building volume than a conventional reactor.

Despite its greatly simplified design, the AP600 meets all NRC regulatory
and safety requirements and all Advanced Light Water Reactor Utility requirements.

And the simplification of plant systems, combined with increased plant
operating margins, greatly reduces the actions required by the operator
in the unlikely event of an accident. This plant’s passive systems use
only natural forces – gravity, natural circulation, and compressed gas
– simple physical principles we rely on every day. There are no pumps,
fans, diesels, chillers, or other rotating machinery required for the
safety systems. A few simple valves align the passive safety systems when
they are automatically actuated. In most cases, these valves are “fail
safe.” They require power to stay in their normal, closed position. Loss
of power causes them to open into their safety alignment.

The Value of Modular Construction

The future of nuclear energy greatly depends on our ability to reduce
the cost of constructing commercial nuclear power plants. The two major
components of plant construction cost are the cost of financing during
construction and the cost of skilled craft labor needed on site during
construction. Modular construction techniques can significantly reduce
these two components.

By using modular construction techniques we can conduct construction
activities in parallel, thereby reducing the calendar time for plant construction
as well as the cost of money and the exposure risks associated with plant
financing. By concentrating construction activities off site, we reduce
the amount of skilled labor needed on site to complete the plant, because
shop-labor costs are substantially less than field-labor costs. Also,
by welding and fabricating in a factory environment, we improve the quality
of the work, increase flexibility in scheduling, and reduce the amount
of specialized tools we need on site.

It is not difficult to see why the AP600 could well become the new standard
for economic comparisons of nuclear power plants. However, we recognize
that the cost of producing electricity with the AP600, currently estimated
at 4.1 cents per kilowatt hour, is far from competitive in the U.S. market,
although it is a vast improvement over past experiences, when construction
of nuclear plants in the United States took 10 to 15 years and ended up
costing $4,000 a kilowatt. We know that we are competing against combined
cycle gas turbines that cost $400 to $500 a kilowatt and can be built
in two to three years. That is the standard, and we will have to stretch
our creativity and our imaginations to meet it.

In the Near Future

That is why we at Westinghouse have begun work on developing a new plant,
the AP1000. The AP1000 applies economies of scale to passive safety plants
in an effort to reduce kilowatt-hour costs.

We will be able to take the evolutionary step from the AP600 to the AP1000
and with only minimal changes we’ll design a nuclear plant that can produce
electricity with a kilowatt-hour cost well within the range of today’s
electricity prices. The changes represent a very modest increase in the
overall plant capital cost. This slight increase, when divided by the
large increase in power output, results in a significantly lower cost
– about three cents per kilowatt hour.

These new designs, along with improvements in technology and procedures
at operating nuclear plants, will help us at Westinghouse help the nuclear
industry take its rightful place as an even more significant contributor
to our growing energy needs. Nuclear power has too much to offer in the
way of safety, reliability, and efficiency to be shunted aside and ignored
as the world struggles to meet the increased demands for electric energy
without further polluting the atmosphere with deadly CO2 emissions and
acid rain. The time has come for nuclear to be allowed to fulfill its
promise, given to the world 43 years ago, as the energy source of the